2G scam: Supreme Court cancels Raja's licences, refers Chidambaram role to trial court

New Delhi - 03 Feb 2012: In a huge blow to the country's telecom sector, which has spawned India's biggest scandal, the Supreme Court on Thursday quashed the 122 licences granted by former telecom minister A Raja, holding that the scandal-tainted 2008 sale was conducted in ''totally arbitrary and unconstitutional'' manner.

The apex court, however, granted relief to Union Home Minister P Chidambaram by directing the trial court to examine his alleged role in the grant of spectrum. The apex court refused to direct the Central Bureau of Investigation to probe Chidambaram's decision, saying the CBI trial court was competent enough in deciding the matter.

Janata Party chief Subramanian Swamy, who had brought the matter before the apex court, has also filed his petition on Chidambaram in the trial court. The apex court asked the trial court to decide the matter within two weeks.

The bench of Justices G S Singhvi and A K Ganguly cancelled the 122 licences stating they were granted in an ''arbitrary and unconstitutional'' manner. Licences held by five companies including the local joint ventures of Norway's Telenor and Abu Dhabi's Etisalat were cancelled in the verdict, calling into question the government's telecom decisions three years ago.

Imposing a fine of Rs 5 crore each on three telecom companies, which offloaded their shares after getting the licences, the court said this judgement was for the accountability of the corporate citizen, those who enjoy the fruits of the government's decisions.

The Supreme Court ruling said the current licences will remain in place for four months, in which time the government should decide fresh norms for issuing licences.

The court asked telecom regulatory authority TRAI to make these fresh recommendations. The bench said the allocation of spectrum should be done through auction within four months.

The licences granted by Raja in January 2008 during the tenure of the UPA-I government were for over Rs 9,000 crore. 3G auctions for a smaller number of licences had fetched the government a sum of Rs 69,000 crores.

The companies set to lose are Uninor (joint venture between Unitech and Telenor of Norway), Loop Telecom, Sistema Shyam (joint venture between Shyam and Sistema of Russia), Etisalat DB (joint venture between Swan and Etisalat of UAE), S Tel, Videocon, Tatas and Idea.

The court also asked the CBI to give a status report on the investigation to the Central Vigilance Commission.

The apex court however dismissed the demand for a special investigation team (SIT) probe into the 2G scandal.

The Supreme Court was hearing petitions seeking a direction for a probe into the alleged role of Chidambaram in the 2G spectrum scam and for the cancellation of 122 radiowave licences.

The role of Chidambaram in the 2G scam was raised in the Supreme Court by the petitioners who had pointed out that there was evidence on record showing the decision on pricing of spectrum was taken jointly by him and A Raja.

A Finance Ministry note to the PMO signed by Pranab Mukherjee was also taken on record by the apex court in which it was stated that the scam could have been averted had Chidambram suggested the policy of auction instead of first-come-first-served policy on allocation of spectrum.

The Centre and the CBI had vehemently opposed any probe against Chidambram who was the Finance Minister at the time of allotment of spectrum in 2008.

They had maintained that Chidambaram was not in direct communication with A Raja in determining the price of the radio waves.

However, Swamy and the Centre for Public Interest Litigation (CPIL) had refuted the claims of the CBI that Chidambaram was not in the picture till January, 10, 2008, when the Department of Telecommunication (DoT) headed by Raja issued 122 Letters of Intent (LoIs) to telecom companies without following the policy of auction.

Swamy and CPIL's counsel Prashant Bhushan had contended Chidambaram was "consistently" informed of what was going on and "till November 30, 2007, Chidambaram was apprised of what Raja was up to".

Swamy and Bhushan said Finance Ministry officials were for auction but they were overruled by Chidambaram.

Swamy said there are documents that show Raja and Chidambaram met four times on the issue.

It was also alleged by petitioners that Chidambaram had advised Raja it was legal to "dilute" shares by telecom companies after getting licence though which Swan Telecom and Unitech Wireless made huge profits by selling 45% and 60% respectively to two foreign firms Etisalat and Telenor.

Bhushan had said officials of the Finance Ministry repeatedly pointed out that spectrum allocation could not be determined by the entry fee of 2001.

"That it should be allocated through a market discovered price. It was impossible for Raja to move ahead without the concurrence of the then Finance Minister," he had said.

"Despite the fact that the Finance Secretary had taken such a strong view which had been recorded in the DoT's approach paper, Chidambaram chose to side with Raja on the issue of pricing," he had said.

In the case relating to cancellation of licenses, people from civil society also approached the apex court to reverse the decision taken by Raja.

Former Chief Election Commissioner J M Lyngdoh, T S Krishnamurthy and N Gopalaswami, along with former Central Vigilance Commissioner P Shankar, moved the SC along with CPIL and Swamy.

They alleged Raja's decision was marred by "multiple illegalities, corruption and favouritism".

The proceedings in the case had witnessed a virtual telecom war with the old service providers who contended spectrum allotted to them was valid and that they should not be compared with new players whose licences were under the judicial scrutiny.

source: Indian Express