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Supreme Court cancels 122 spectrum licences
nTrial court to decide on CBI probe against Chidambaram n Govt told to auction 2G spectrum afresh in 4 months
R Sedhuraman
Legal Correspondent

New Delhi, February 2
In a huge embarrassment to the government and a jolt to the telecom sector, the Supreme Court today cancelled 122 2G licences granted during the tenure of former Telecom Minister A Raja declaring it as “illegal” and blamed the government's flawed first-come-first-served policy.

In a second crucial verdict, the court refused to order a probe into the alleged role of Home Minister P Chidambaram in the spectrum scam. It said the special CBI court that is holding trial against former Raja and others will decide as to whether the CBI should also investigate the alleged role of Chidambaram in spectrum pricing in 2008 when he was the Finance Minister.

In a separate 11-page order, the SC Bench rejected a plea for appointing a monitoring team for supervising the CBI probe in the 2G case. It said the CBI “has satisfactorily conducted the investigation” since the SC order December 16, 2010. However, the apex court asked the Central Vigilance Commissioner (CVC) and the Senior Vigilance Commissioner to assist the SC for “effectively monitoring the further investigation of the case”. It directed the CBI, ED and I-T department to submit periodic status reports to the CVC for scrutiny.

Holding as “illegal” the issue of licences and the allocation of spectrum to private telecom companies on or after January 10, 2008, a Bench of Justices GS Singhvi and AK Ganguly, who retired today, quashed the government orders in this regard.

The Bench directed the government to sell the licences and the 2G (second generation) spectrum afresh through auction within three months. The auction should be held on the basis of fresh recommendations from telecom regulator TRAI, the apex court said. It asked the regulator to come out with its recommendations based on the auction method followed for the sale of 3G spectrum within two months.

In the 85-page verdict written by Justice Singhvi, the court clarified that today’s cancellation of 122 licences embedded with the 2G spectrum “shall become operative after four months” by when the proposed auctions would have been through.

The apex court delivered the judgment on PILs filed by NGOs -- Centre for PIL (CPIL), Lok Satta and Common Cause - and Janata Party president Subramanian Swamy.

The Bench held that Raja, who has since been arrested and chargesheeted, went ahead and issued licences “rejecting” Prime Minister Manmohan Singh’s advice for “transparency and fairness” and “brushing aside” then Law Minister M Veerappa Moily’s suggestion for leaving the pricing to an Empowered Group of Ministers (EGoM).

Raja also “did not consult the Finance Minister (P Chidambaram) or officers of the Finance Ministry” as he was “very much conscious of the fact that the Secretary, Finance, had objected to the allocation of 2G spectrum at rates fixed in 2001,” the court noted. Pointing out that Raja had also “arbitrarily” changed the cut-off dates for the receipt and consideration of applications for licences, the apex court noted that though this action “appears to be innocuous was actually intended to benefit some real estate companies that did not have any experience in dealing with telecom services and had made applications” just a day before the September 25, 2007 cut-off.

Further, the September 25 cut-off date decided by Raja on November 2, 2007 was not made public till January 20, 2008 and the first-come, first-served (FCFS) principle that was being followed since 2003 was changed by him at the last moment through a press release on January 10, 2008.

“This enabled some of the applicants, who had access either to the minister or officers of the DoT to get the bank drafts etc. prepared towards performance guarantee etc. of about Rs 1,600 crore,” the SC held.

“The manner in which the exercise for grant of Letters of Intent (LoIs) to the applicants was conducted on 10.1.2008 leaves no room for doubt that everything was stage-managed to favour those who were able to know in advance change in the implementation of the FCFS principle,” the Bench noted.

The Bench imposed a cost of Rs 5 crore each on telecom companies Etisalat, Unitech and Tata Teleservices and Rs 50 lakh each on Loop, Estel, Allianz Infratech and Systema Shyam Teleservices for their involvement in the “wholly arbitrary and unconstitutional exercise”.

The SC accepted in principle Attorney General GE Vahanvati’s contention that the judiciary should exercise its power of review with “great care and circumspection” and avoid interfering with the policy decisions of the government in financial matters.