SC cancels all 2G licences, orders fresh spectrum auction

02 Feb 2012

 In a big blow to the telecom sector, the Supreme Court today ordered the cancellation of all 122 licences granted after January 2008 for operating 2G mobile services in India, saying they were granted in an arbitrary and unconstitutional manner.

The licences will be cancelled in four months from now and the Telecom Regulatory Authority of India must issue fresh licences by auction during this period, it ruled.

Justices G S Singhvi and A K GangulyThe bench of Justices G S Singhvi and A K Ganguly held that this judgement was for the accountability of the corporate citizen, saying those who enjoy the fruits of the government's decisions should also pay for it.

Out of the 122 licences, 85 do not meet the eligibility criteria, the court found.

On the matter of indicting home minister P Chidambaram, who was finance minister in 2008, the apex court referred it back to the trial court – which comes as a breather, though not complete relief, for the home min ister. The apex court asked the trial court to decide the matter within two weeks.

A finance ministry note to the prime minister's office signed by Pranab Mukherjee was also taken on record by the apex court. The note suggested that the scam could have been averted had Chidambram suggested an auction instead of a first-come, first-served policy on allocation of spectrum.

Furthermore, a penalty of Rs5 crore each has been imposed on Unitech Wireless, Swan Telecom and Tata Telecom. A penalty of Rs50 lakh has also been imposed on Loop, S-tel, Allianz and Sistema Shyam.

Operators that will be affected by this order are:

  • Telenor / Unitech Wireless Unitel JV (all 22 licences),
  • Sistema Shyam Teleservices Limited (21 licences),
  • Etisalat (15 licences),
  • Idea Cellular (6 licences),
  • Swan Telecom (13 licences),
  • Loop Telecom (21 licences),
  • Videocon (21 licences) and
  • Tata Teleservices (3 licences).

On a third petition, the Supreme Court ruled said that there was no need for a court-appointed special investigation team (SIT) to monitor the 2G scam probe.

The verdicts came on Janata Party president Subramanian Swamy's petition seeking a Central Bureau of Investigation probe into the alleged role of Chidambaram in the scam, and on two pleas by lawyer Prashant Bhushan seeking cancellation of 2G licences and setting up of a SIT.

Swamy has alleged that Chidambaram, then the finance minister, could have prevented jailed former telecom minister A Raja from giving away spectrum at throwaway prices to select companies, but chose not to do so.

Swamy had won a success in the court on Tuesday when Justices Singhvi and Ganguly upheld his right to seek the prosecution of Raja for the 2G scam and indicted the prime minister's office for delaying prosecution of the sacked telecom minister.

(Also see: Telecos shocked and anguished)

(Also see:
Licence cancellation favours larger telcos: Fitch)

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