NEW DELHI: The Supreme Court has declined to reconsider its order cancelling 122 telecom licences, possibly setting the stage for further legal battles before international arbitration panels, even as it agreed to hold further hearings on the government’s review petition questioning parts of the judgement that had appeared to mandate auction of natural resources.
The order, uploaded on the court’s website late Wednesday evening, virtually marks the end of the road for Datacom and S Tel that had been ordered to surrender all of their licences. It also comes as a setback for Tata Teleservices and Idea that had lost some of their licences.
But companies such as Norway’s Telenor and Russia’s Sistema have invoked provisions in bilateral investment protection agreements that allow them to sue the Indian government before international arbitration panels for losses caused by state actions such as expropriation.
“I would be surprised if they don’t (invoke bilateral treaties),” senior counsel Harish Salve told ET NOW.
In all, seven companies had filed review petitions before the court. These are Datacom, S Tel, Etisalat-DB, Uninor, Sistema Shyam, Tata Teleservices and Idea.
All the 122 licences were issued by former telecom minister A Raja in 2008. Raja, incarcerated in Tihar jail, is facing trial in corruption cases linked to the award of some of these licences. A review petition filed by Raja, questioning parts of the court’s ruling criticising his role in the award of licences on the ground that his right to a fair trial will be affected, was also turned down.
The SC in its February 2 orders had also directed the government to redistribute licences and airwaves through an auction process.
“We will carry out auctions under the direction of the SC. The companies that have lost their licences can take part,” Telecom Secretary R Chandrashekhar said. He expressed happiness over the court’s decision to hear the government’s review petition on April 13.
Chandrasekhar further clarified that the SC had not set a four-month deadline for carrying out the auctions.
“The SC in its earlier order has only said quashing of licences will become effective after four months. We have filed the detailed auction timeline and explained that the process will take 400 days. Our interlocutory petition that is before the SC states our plans,” he added. The telecom secretary also said the government was ‘clear that quashing of licences stays as per the apex court’s earlier orders’.
The government has not questioned the cancellation of licences but has taken issue with portions of the ruling that appear to foray into the domain of the executive.
The court had also declared that the method for awarding telecom licences, essentially to those who applied first, a procedure known as first come first served (FCFS), was illegal and arbitrary. But the Centre has questioned this part of the ruling saying the court could not mandate a method of allocating natural resources. Uninor, the Indian affiliate of Telenor, and Sistema Shyam expressed regret over the court order.
“By entertaining the review petition and hearing the case again, the Supreme Court would have been able to appreciate arguments and evidence that challenge the very basis of its order. We are disappointed that the court has declined to do so. We will now move a curative petition and again urge the Supreme Court to keep its order in abeyance until these arguments are seen and appreciated by the new Bench,” a Uninor spokesperson said.
The Sistema Shyam spokesperson said the company maintained that being a pure-play CDMA operator, its legal case is significantly different compared with other mobile operators.
“For example, there is no finding or suggestion by the CAG report that CDMA spectrum was equally or anywhere near in demand as GSM back in 2008. To protect the interest of more than 16 million customers and investments of over $3.1 billion, SSTL had filed for a review petition before the Honorable Supreme Court.
It is extremely disappointing to know that SSTL’s review petition has not been accepted. To protect its interests further, SSTL currently is in the process of deliberating its future course of legal actions.”
Noted constitutional expert Rajeev Dhawan termed the SC judgement as ‘disappointing’. “The SC failed to rectify the damages it had done to the companies. It not only adversely affects foreign investments in the country but also gives a bad impression to those who are working in the industry.
The cancellation of the licences after a long time from the date of their issuance was a damaging effect on the companies which was required to be have been rectified,” Dhawan added.