Supreme Court Clears Path for Ncell Ownership Dispute Resolution Through Regulatory Process

Kathmandu-Nepal’s long-running legal dispute over the ownership of private telecom operator Ncell appears to be nearing a resolution after the Supreme Court published the full text of its verdict dismissing a petition seeking to invalidate the company’s 80 percent share transfer agreement.

The ruling effectively shifts the matter from the courts to the regulatory framework, allowing the Nepal Telecommunications Authority (NTA) to resolve the ownership issue through established legal and administrative procedures.

A joint bench of Justices Sapana Pradhan Malla and Tek Prasad Dhungana rejected a writ petition filed by Amaresh Kumar Singh, ruling that there were no legal grounds to issue a certiorari order annulling the share transaction or a mandamus preventing recognition of the agreement.

The court stated that the legality and validity of the share transfer should not be determined through a writ petition, concluding that judicial intervention was unnecessary in the circumstances.

While dismissing the petition, the Supreme Court issued directive orders to both the NTA and Ncell. It instructed the telecom regulator to carry out its regulatory responsibilities in accordance with the law and directed Ncell to operate transparently and in compliance with legal provisions.

The verdict means the NTA can now proceed with the regulatory process under the Telecommunications Act, its regulations and related bylaws to determine the legality of the ownership transfer.

The case had challenged the share purchase agreement signed on December 1, 2023, between Axiata Investments (UK) and Spectrlite UK, seeking to prevent recognition of the transaction and have it declared void.

However, the Supreme Court held that since the regulatory authority is already empowered to exercise its legal jurisdiction, there was no need for the court to issue additional extraordinary orders. The judgment provides a clear legal basis for the NTA’s new board to resolve the ownership issue through regulatory mechanisms.

According to the full verdict, the NTA has the authority to issue necessary directives, make decisions relating to telecom licences, and impose legal action or financial penalties if licence conditions are violated.

The ruling therefore shifts the ownership dispute away from litigation over the validity of the agreement and toward resolution through Nepal’s telecom regulatory framework.

Once the NTA completes the required legal procedures, the long-pending uncertainty surrounding Ncell’s ownership is expected to move toward a final resolution.

In January, Ncell submitted letters to the Office of the Prime Minister and Council of Ministers and other relevant government agencies, requesting a review of previous government decisions and conditions in an effort to resolve the dispute.

Industry experts have warned that if the government fails to resolve the issue, the investment dispute could once again be taken to international arbitration. Ncell had also indicated earlier this year that it would seek legal remedies if the matter remained unresolved.

The Supreme Court’s verdict is expected to have implications beyond Ncell’s ownership dispute, sending a broader message about the regulation of Nepal’s telecommunications sector. The court emphasized that the telecom regulator must ensure effective oversight of all licensed telecommunications service providers in accordance with the law.

The ownership dispute and prolonged legal uncertainty have raised concerns for years about Ncell’s future operations and Nepal’s overall investment climate. The latest ruling is widely seen as a significant step toward resolving one of the country’s most closely watched foreign investment disputes.