Supreme Court quashes 122 2G licences awarded in 2008

On the eve of the UP elections, the UPA government has been hit by a decisive Supreme Court judgment that cancelled all the 122 telecom  licences that were issued by disgraced minister A Raja in January 2008. But giving the companies a short breather, the court ruled that status quo would be maintained for four months while asking the government to follow the regulator Trai’s recommendations within a month for auctioning the licenses afresh.

The 85-page judgment comes at a time when the UPA government has been battling several charges of corruption, much of which was vindicated by the CAG’s report that pegged the notional loss at Rs1,76,000 crore in the 2G scam. The 122 licences were given by Raja for over Rs 9,000 crore.

The judgment, delivered by a double bench of justices GS Singhvi and AK Ganguly, cancelled licences issued to companies like Uninor, a joint venture between Unitech and Telenor of Norway, Loop Telecom, Sistema Shyam, Etisalat DB, S Tel, Videocon, Tatas and Idea.

Three companies, Unitech Wireless, Swan telecom and Tata Teleservices, were fined Rs5 crore each because they “benefited by a wholly arbitrary and unconstitutional action taken by the DoT
(department of telecommunication)… who off-loaded their stakes
for many thousand crores in the name of fresh infusion of equity or transfer of equity.”

Half of the fine will go to the defence ministry for welfare programmes and the remainder to the Supreme Court legal services board.

The bench pointed out flaws in the first-come-first-served (FCFS) policy and said, “There is a fundamental flaw in the principle of FCFS as much as it involves an element of pure chance or accident. In matters involving use of public property, the invocation of FCFS principle has inherently dangerous implications.”

In what is bound to cause acute discomfort to the UPA, the bench noted that “any person who has access to power corridor at the highest or the lowest level may be able to obtain information from the government files that a particular public property or asset is likely to be disposed of or a contract is likely to be awarded or a licence or permission would be given. He would immediately make an application and would become entitled to stand first in the queue at the cost of all others who may have a better claim”.

Blaming the state for not utilising its resources properly, the bench said it advocated auctioning since “any other methodology for disposal of public property and natural resources/national assets is likely to be misused by unscrupulous people who are only interested in garnering maximum financial benefit.”

Justice Singhvi also observed that had it not been for some “enlightened citizens” who were vigilant enough to bring to the court’s attention to evidence of irregularities in the telecom licence allotment, the rest of the unsuspecting citizenry might have been robbed off its right over a precious national resource, namely, spectrum.

The apex court also rejected the government’s contention that it was crossing into the domain of the executive stating that “it is the duty of the court to exercise its jurisdiction in larger public interest and ensure that the institutional integrity is not compromised by those in whom the people have reposed trust”.

The order came in response to a petition filed by the Centre for Public Interest Litigation (CPIL) led by seasoned advocate Prashant Bhushan. “It is a historic judgment and this will send a strong signal to the entire country and in particular to the corporate world that this country is no longer willing to allow these corrupt corporates and the corrupt public officials to retain the benefits of illegal and corrupt acts,” he said.

The affected telecom operators may now approach the SC through a curative petition or a review petition seeking relief against Thursday’s order.