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Is seeking legal recourse the best bet for embattled Sun TV Network?

Is seeking legal recourse the best bet for embattled Sun TV Network?

Author | Abhinna Shreshtha | Wednesday, Jun 24,2015 8:29 AM

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Is seeking legal recourse the best bet for embattled Sun TV Network?

If rumours are to be believed then Sun TV Network might not get the much needed security clearances from the Home Ministry. This means is that there is now a real possibility that its network of 33 TV channels and 45 FM radio stations (under the brand name RED FM and Suryan FM) are in the danger of going off air, if the Home Ministry remains adamant.

Sun TV-Home Ministry stalemate: A quick rundown

The Sun Group can approach the courts to seek legal intervention and it is looking likely that this might come to pass if there is no solution to the current stalemate soon. As one radio executive opined, this might be the best course of action available for the company.

Separating the institution from the person

Sun TV Network’s troubles lie in ongoing cases against the Maran brothers—Dayanidhi and Kalanithi Maran; the latter being the promoter of the Sun Group, which owns Sun TV Network. The brothers are under investigation by the CBI in two cases, one of which is the Aircel-Maxis case. Sun TV Network is also being probed by the Enforcement Directorate (ED) for alleged money laundering in the Aircel-Maxis case, which has also seen the attachment of assets worth Rs 742 crore.

Legal experts we spoke with point to two fundamental factors in favour of the company; the first being that a company cannot be held responsible for the actions of an individual. The second point is that all the cases are still under investigation and the courts have not yet passed a guilty verdict.

“The right to do business is a fundamental right. Unless you can show that the company has been incorporated to run illegal activities then there is no reason for the company to suffer,” opined the Managing Partner at a Mumbai-based law firm.

This is an argument that even the radio industry had put forward earlier, with some pointing out that Sahara did not suffer even after founder Subrata Roy was imprisoned.

Industry backs RED FM-Suryan FM as standoff continues

The prevalent view seems to be that the two FM brands and their employees should not be forced to shut down.

However, something that might potentially complicate this argument is that the ED has specifically alleged that South Asia FM Ltd (SAFL), which runs the radio channels RED FM and Suryan FM, was one of the companies through which kickbacks were received in the Aircel-Maxis deal. It has also been claimed by ED that the money was used by the company in investments and business. In fact, part of the assets attached by ED are owned by SAFL, a subsidiary of Sun TV Networks Ltd (it owns 60 per cent stake in SAFL).

Attorney General’s decision in Sun TV’s favour

On Friday, the company received some welcome news when Attorney General Mukul Rohtagi stating that the decision to not grant security clearances to the network was not legal.

Despite Attorney General's views, MHA stands by Sun TV Network verdict

Though the government does not have to necessarily follow through with the Attorney General’s opinion, as the top lawyer for the government, his views carry weight and will be influential if and when the company does decide to pursue the matter in court.

“Legally, the Attorney General's opinion is right as a company cannot be denied security clearance on the basis of corruption cases, which, by the way, are still continuing in court. The court will also take his opinion into consideration as he will be representing MIB in court, once it goes there. If the Home Ministry still sticks to its decision despite the court asking for a review of the decision on the basis of the merits, Sun TV Network has the option of challenging the order in the court,” opined the legal head of a media company, who did not wish to be named.

What does this mean for the radio industry?

The standoff between Sun and the Home Ministry is now the only obstacle standing in the way of the Phase III auctions. Sources within the industry have confirmed that all other preparations have been completed. Though MIB officials have allegedly promised radio operators that Phase III auctions will be completed in July, irrespective of whether RED FM and Suryan FM are allowed to participate, this could still be a potential stumbling block.

When asked whether the company can request for a stay on the auctions till the situation is cleared, legal experts suggested that it would be well within its legal rights. “If they (RED FM and Suryan FM) miss out on a public bid because of this then how will the government reimburse them later?” opined one.

The most likely way forward, according to them, was for the company to approach the court for a directional order for a stay on auctions. This could take as less as 2 weeks. If the court's decision favours the network it can tell the government bodies (MIB & MHA) to consider granting the network the license on the basis of merit. If both still cannot come to a consensus then the wait could be as long as 2 months till the court comes out with its verdict, they opined. 

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