Cabinet clears presidential reference on 2G ruling

Two months after the Supreme Court cancelled all 122 telecom licences issued “illegally” in 2008 by the then Telecom Minister, A. Raja, the Union Cabinet decided to make a presidential reference to the court, seeking clarity on several key issues relating to the other licences issued before 2008 on a first come, first served basis, and also on the allocation of natural resources across all sectors.

“Today [on Tuesday], the Cabinet cleared all questions for which we are seeking presidential reference under advisory jurisdiction,” Telecom Minister Kapil Sibal told journalists here. But he refused to give details. Chaired by Prime Minister Manmohan Singh, the Cabinet meeting cleared the Telecom Ministry's proposal to seek the Supreme Court's opinion on at least seven key issues relating to the entire telecom licence and spectrum allocation process, covering both the NDA and UPA regimes, besides asking the larger question whether auction should be made mandatory for allocation of all natural resources in all sectors and under all circumstances.

Notably, the court had found serious faults in the government policy of not allocating natural resources through a market-driven mechanism. “In matters involving award of contracts or grant of licence or permission to use public property, the invocation of the first come, first served principle has inherently dangerous implications,” it said in its judgment.

The government would also seek clarity on investments made by the foreign companies affected by the ruling. These firms, such as Telenor and Sistema, did not participate in the auction, but later bought stake in Indian firms and then invested heavily in network rollouts and operations.

The government is under diplomatic pressure from Norway and Russia, whose companies, after having invested in the Indian telecom sector, now find the licences issued to their Indian partners cancelled following the historic judgment.

The presidential reference would ask about the status of licences granted during 1994, 2001, 2003 and 2007 on a first come, first served basis, and also the dual licences given to the CDMA players by Mr. Raja in 2008.

It would seek clarity on charging of spectrum with retrospective effect and ask about the status of operators who got 3G licences through a highly competitive bidding process but whose 2G licences were cancelled.

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