Government approval for British telecom giant Vodafone's takeover of Hutch-Essar now depends on whether the two minority stakeholders in the company can prove through documents that they are not acting as benami shareholders for Hutchison Telecom International.

"We have asked for the copy of the original agreement on stake sale to two minority shareholders in Hutch-Essar from Kotak last year and financing of these purchases to decide on the Vodafone's deal," a key official source told PTI.

In the absence of these documents, essential to establish these minority shareholders are not fronting for HTIL, the Foreign Investment Promotion Board had on Thursday deferred a decision on whether Vodafone's acquisition of Hutch-Essar hit the 74 per cent FDI cap.

It is alleged that last year HTIL hiked its holding by 12.26 per cent in Hutch-Essar by buying out the Kotak stake, but due to regulations it routed the investment through HEL managing director Asim Ghosh and Max group's Analjit Singh.

FIPB is looking into the allegation that to execute these transactions, both Ghosh and Singh formed three firms each.

Hutch used its credit facilities of $124.5 million and $200 million for arranging two loans of Rs 489 crore (Rs 4.89 billion) and Rs 792 crore (Rs 7.92 billion), respectively, for Ghosh and Singh to buy the entire stake of Kotak group.

While Ghosh brought 4.68 per cent, Analjit Singh purchased 7.58 per cent stake.

The RBI will examine whether these loan agreements between HTIL and Ghosh-Singh duo violated any FEMA or ECB guidelines, and the FIPB would look into whether the stake purchase by Singh and Ghosh violated FDI cap of 74 per cent in telecom sector, the official said.

The source said FIPB would basically examine whether Singh and Ghosh bought shares in their individual capacity or as benami shareholders for Hutchison Telecom.

It is also probing whether as per loan agreement, Hutchison Telecom (and now Vodafone) can buy these stakes of minority stakeholders at par value of Rs 10 by 2016, whereas the valuation of Hutch Essar has moved up by three times to $18 billion now from $6 billion a year ago.

FIPB has sought comments regarding the breach of FDI cap from the law ministry as well, but they have not come so far.

However, the home ministry has said in its comments that FDI cap in the transaction should be properly examined before giving approval to Vodafone.

Hutchison (whose stake was purchased by Vodafone) owns 52 per cent in Hutch Essar, India's fourth-largest mobile player. The Indian company is alleged to have hit the FDI cap of 74 per cent after taking into account the 22 per cent stake held by Mauritius-based Essar companies.

If the 12.26 per cent stake owned by Singh and Ghosh is, in fact, benami stakes for Hutchison Telecom, then FDI cap of 74 per cent would be breached, the official said.

• The race for Hutch-Essar: Complete Coverage