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Cancellation of 2G licences: SC notice to govt, telcos

Last updated on: January 10, 2011 13:17 IST

Cancellation of 2G licences: SC notice to govt, telcos

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The Supreme Court on Monday issued notice to the central government on the plea seeking cancellation of 2G spectrum licenses allocated during the tenure of former telecom minister A Raja.

The Apex Court also issued notices to 11 companies which allegedly did not fulfil the roll-out obligations as per the terms and conditions of allocation of the spectrum.

"After considering submission of the petitioner's counsel that since Trai has sent a letter dated November 15, 2010 to secretary, DoT, which indicated that many companies have not complied with the roll out obligation and not started the services, we deem it fit to entertain the petition," the bench said.

"Accordingly, Trai, through its Secretary, is impleaded as a party," it said.

The bench was hearing a petition filed by an NGO Centre for Public Interest Litigation seeking cancellation of the licenses alleging that all norms were violated.

The companies which were issued notices were Etisalat, Uninor, Loop Telecom, Videocon, S-Tel, Allianz Infra, Idea Cellular, Tata Teleservices, Sistema Shyam Teleservices, Dishnet wireless and Vodafone-Essar.

The bench was also hearing the petition filed by Janata Party Chief Subramanian Swamy who has also sought identical directions.

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Photographs: Reuters
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However, the bench asked Swamy to make the companies, who have not fulfilled the roll out obligations, as parties, and then it will hear the matter along with the CPIL petition.

 Advocate Prashant Bhushan, appearing for the CPIL, elaborated the grounds for the cancellation of the 2G licenses.

The bench also questioned the silence of Trai, which is the highest regulatory authority in the telecom sector, on the issue of alleged delay in fulfilling roll-out obligations of the companies which were issued 2G spectrum licenses.

"Why did the Trai not take action. Why was it silent for around one year and seven months. Trai is treated as the highest regulatory authority in the telecom sector and even in terms of the consumer. What was it doing?" the bench asked.

When contradictions in the actual loss to the national exchequer was mentioned, the bench said it will be for the government to spell out the actual loss suffered by the national exchequer in the allocation of the spectrum which was done by allegedly flouting several norms.

"How much loss has the national exchequer suffered? We will ask the government," the bench said.

However, when Bhushan said that CAG report has given the amount, the bench said it is not the government's version.

Bhushan submitted that there was a huge loss to the government as the licenses were sold to other entities next day after its allocation at three times the original price.

However, the bench said that the amount of loss has now become a debatable issue.

When Bhushan made a submission that Telecom Minister Kapil Sibal had disputed the CAG report on the presumptive loss of 1.76 lakh crore (Rs 1.76 trillion) saying it was not correct, the bench said, "We cannot take cognisance of that as it is not part of the record."

A bench comprising justices G S Singhvi and A K Ganguly sought the response from the Department of Telecom and the companies within three weeks and posted the matter for hearing on February 1.

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Image: Former telecom minister A Raja.
Photographs: Reuters
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Janata Party chief Subramanian Swamy had moved the Supreme Court seeking cancellation of the 2G spectrum licences allotted during the tenure of A Raja allegedly in violation of all norms and procedure causing huge loss to the state exchequer.

The PIL filed by Swamy had sought a direction to the government for holding a fresh auction for eligible entities for all the 122 licences in 22 circles across the country.

Swamy had alleged in his petition that the allotment of spectrum, which according to the CAG report has caused a loss of Rs 1.76 lakh crore (Rs 1.76 trillion) to the state exchequer, has been sustained despite judgments of the Delhi high court that struck down the policy of allocating radio waves at the 2001 price on first-come-first-served basis in 2007-08.

Sibal on Friday had rejected the estimates of the Comptroller and Auditor General on the losses of Rs 1.76 lakh crore (Rs 1.76 trillion) on account of allocation of 2G spectrum to telecom operators saying it "had no basis and was utterly erroneous".

Asserting that there were actually no losses to the exchequer, Sibal said "CAG has done injustice to itself and the Opposition is doing injustice to aam aadmi."

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Image: Telecom Minister Kapil Sibal.
Photographs: Reuters
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"We are extremely pained at methodology adopted by CAG for arriving at 2G spectrum (allocation loss) figures that have no basis," Sibal had said.

Swamy's petiton was second after an NGO, Centre for Public Interest Litigation, filed an identical PIL on December 14, 2010, seeking cancellation of the licences for 2G spectrum after the apex court decided to monitor the probe into the scam by CBI and Enforcement Directorate.

The Janata Party leader in his petition contended the Department of Telecom, then headed by Raja, had arbitrarily and with malafide intention to benefit certain entities advanced the cut-off date for making application for allocation of 2G spectrum from October 1 to September 25, 2007.

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Photographs: Reuters
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Swamy submitted DoT changed the cut-off date without consulting the Trai and gave a go-bye to various norms to benefit Raja's four favoured firms--Swan, Unitech, Loop and Datacomm. There has been allegation that Swan was owned by Reliance Infocom, while real estate major Unitech later entered into a joint venture with Telenor of Norway and Loop and Datacom were owned by Ruia Group and Videocon respectively.

In later November, Sibal had said that the government would send notices to 85 companies asking why their licences should not be cancelled for suppressing facts. These telecom firms will be given 60 days within which to respond, he had said.

The Department of Telecom will issue notices to telecom companies which were ineligible to get spectrum. Many companies applied for 2G licences may not have disclosed all facts, Sibal had said.


Photographs: Reuters
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