2G: SC issues notice to Centre, 11 telcos

The 11 telecom companies have allegedly not fulfill the roll out obligations as per the terms.

New Delhi: The Supreme Court on Monday decided to examine the alleged illegalities in allocation of 2G spectrum during the tenure of former Telecom Minister A Raja asking the Centre and telecom companies to explain why the licences be not cancelled.

"Why won`t the licences be cancelled by this court" a bench of Justices G S Singhvi and A K Ganguly said while questioning the role of Telecom Regulatory Authority of India (TRAI) which remained silent when the telecom companies failed to fulfill the roll-out obligation for the 2G spectrum.

It made TRAI a party to the petition and issued notices to the Department of Telecom and 11 companies which allegedly did not fulfill the roll-out obligations as per the terms and conditions of allocation of the spectrum.

The court took note of the submission that TRAI did not react when the telecom companies, which were issued licences in January 2008, failed to roll out the spectrum within a year of allocation.

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

The Bench was hearing the petition filed by an NGO, Centre for Public Interest Litigation (CPIL) seeking cancellation of all licences issued allegedly flouting all norms and which according to the CAG report has caused a loss of Rs 1.76 lakh crore to the national exchequer. However, it refused to be drawn into the controversy in the wake of the statement of Telecom Minister Kapil Sibal who has disputed the CAG`s figure of Rs 1.76 lakh crore.

"We cannot take cognizance of that as it is not part of our record here," the Bench said.

The Bench was also informed that those companies which had failed to roll-out the services in stipulated time had been regularised after the payment of penalties.

However, it took note of the submission of CPIL`s advocate Prashant Bhushan that TRAI has taken cognizance of some of the companies` failure to meet the roll-out obligation and a communication has been sent to DoT regarding this.

"After considering submission of the 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," it said.

"Accordingly, TRAI, through its Secretary, is impleaded as a party," it said while issuing notices to 11 telecom companies -- Etisalat, Uninor, Loop Telecom, Videocon, S-Tel, Allianz Infra, Idea Cellular, Tata Tele Services, Sistema Shyam Teleservices, Dishnet wireless and Vodafone-Essar.

The Bench asked all of them to respond within three weeks and posted the matter for hearing on February 1.
Janata Party Chief Subramanian Swamy, who also sought cancellation of licences for 2G spectrum, was asked by the Bench to make the companies, which failed to fulfill the roll out obligations, as parties.

The Bench said it will hear both the PILs on the issue of cancellation of the licences for the 2G spectrum, which has led to debate on the quantum of alleged loss to the exchequer.
It said it will be for the government to spell out the actual loss suffered by the national exchequer in the allocation of the spectrum.

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

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

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

He alleged licences were issued to ineligible entities and gave the example of real estate major Unitech, now called Uninor, which sold its stake to Norway-based telecom operator Telenor within a few days at a price three times of the original rate.

The bench said the amount of loss has now become a "debatable" issue and when it passed an order for a CBI probe and decided to monitor the investigation into the 2G spectrum scam, it has noted everything about the case.

"All we have noted in our order," the Bench said referring to petitions on 2G spectrum scam which reached the apex court from the Delhi High Court by way of an appeal which was the basis of the matter and during its pendency, CAG`s draft and final reports on the alleged loss was placed before it.

The bench said it had also noted the how the CVC has noted that there were several wrongs in allocation of 2G spectrum, which finally led to the registration of FIR against the unnamed officials of DoT.

Bhushan had made a submission that Sibal, who has taken over as Telecom Minister from Raja, has disputed the CAG report on the presumptive loss of 1.76 lakh crores saying it was not correct and there was no loss.
The lawyer elaborated the grounds for cancellation of the 2G licenses by saying that it was granted in 2008 at the price prevailing in 2001 and the cut-off date was advanced from October 1 to September 25, 2007 to favour certain companies which eventually resulted in knocking out two-third applicants.

When the Bench wanted to know about the competent authority which can cancell the licences, the advocate said it can be done by the government itself.

"Why not it cancel the licences if it is illegal" the Bench said at one point during the hearing.

The court also wanted to know the companies which benefitted from allocation of spectrum.

The Supreme Court is currently seized of two public interest petitions seeking cancellation of allocation of telecom licences to ineligible operators during Raja`s tenure as Telecom Minister.

While one petition was filed jointly on December 14 by various civil societies, including Centre for Public Interest Litigation, Telecom Watchdog and Common Cause, another was filed by Subramanian Swamy on January 4.

Several eminent persons like former Chief Election Commissioners J M Lyngdoh, T S Krishnamurthy and N Gopalaswami and former Central Vigilance Commissioner P Shankar are also petitioners in the petition filed by civil societies.

The second petition was filed after the apex court on on the plea of CPIL decided to monitor the ongoing probe into the scam by CBI and Enforcement Directorate.

Citing two judgements by the Delhi High Court and the CAG`s report on the issue of spectrum allocation, the two petitions have alleged the process of spectrum allocation was marred by "multiple illegalities, corruption and favouritism."

They said 85 of the 122 licences were given to companies which were not even eligible and 343 applications were not even considered by DoT.

The petitions have also pointed out that even TRAI has recommended cancellation of 69 out of the 122 licences as the licencees have failed to roll out their services as stipulated by the condition on which they were given the licences.

The petitions said internationally, in most legal systems, transactions tainted by bribery or corruption or made in violation of established norms and procedures are considered illegal and unenforceable.

Swamy, 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.

He submitted DoT changed the cut-off date without consulting 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 which sold its stake to Etisalat through a Mauritius-based firm, 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.