The fine print of the 2G verdict is out and the government and the telcos get a sigh of relief.  Is it because it could have been worse or is it because the worst is over?

This comment on the apex court’s verdict bears me out on my own humble submission made on this website regarding the Business Fallout of the 2G Verdict.

As I have said earlier, the supreme court judgment cancelling 2G licences, 122 in all, is no doubt historic. ??

The gist of the directions in the order are:??

- the licences granted to the private respondents on or after 10.1.2008 pursuant to two press releases issued on 10.1.2008 and subsequent allocation of spectrum to the licensees have been declared illegal and are quashed;

- the directions shall become operative after four months;

- the TRAI shall make fresh recommendations for grant of licence and allocation of spectrum in 2G band in 22 Service Areas by auction, as was done for allocation of spectrum in 3G band;

- the central government shall consider the recommendations of TRAI and take appropriate decision within next one month and fresh licences be granted by auction.

- those telcos who have been benefited at the cost of public exchequer by a wholly arbitrary and unconstitutional action taken by the DoT for grant of UAS licences and allocation of spectrum in 2G band and who offloaded their stakes for many thousand crores in the name of fresh infusion of equity or transfer of equity have been directed to pay the cost of Rs. 5 crore each. 

- Other telcos have been directed to pay cost of Rs. 50 lakh each because they too had been benefited by the wholly arbitrary and unconstitutional exercise undertaken by the DoT for grant of UAS licences and allocation of spectrum in 2G band. 

- The court has not imposed any cost on the respondents who had submitted their applications in 2004 and 2006 and whose applications were kept pending till 2007.

- 50% of the cost to be deposited with the supreme court legal services committee within four months for being used for providing legal aid to poor and indigent litigants. The remaining 50% cost shall be deposited in the funds created for resettlement and welfare schemes of the ministry of defence.

The verdict is silent on the issue of refund of fees paid by the telcos to the government.

The verdict has evinced various reactions:

- the verdict strikes at the heart of politician-corporate nexus;

- the judgment simply seeks to call what is ‘wrong’ as a ‘wrong’, and therefore what is wrong must go;

- the wrong has been quashed but the last mile is yet to be covered. 

To say the least, the verdict has left various stakeholders a vulnerable lot, because:??

- A multitude of lenders in the telecom area including numerous banks and financial institutions, both Indian and global, are likely to end up with huge NPAs on their books as a result of a default of payments resulting from cancellation of the licences.? 

- The verdict has strengthened the lack of confidence of the international community on certainty of governmental actions in India which will impact the investment climate in India.?? This, despite the Vodafone verdict sometime ago, prescribing certainty as being an integral to rule of law. 

- The ordinary Indians who have become subscribers of the services being offered under these licences have been left to the mercy of the other dominant telcos who have been left free to rule the market.

- the Competition Commission of India, the guardian of anti-competitive market conditions in India, has neither acted suo moto nor has been mandated in the verdict to take steps to protect the rights of the consumers in the event of the 122 licences, now cancelled.??

- ?While Swamy has made his goal, the team playing for upholding guarantees for well being of citizens as enshrined in the constitution of India has lost poorly.

While the ‘wrong’ has been finally recognized as a ‘wrong’, has the best remedy been implemented to cure the wrong and deliver justice to the citizens?

The players in this ‘wrong’ of throwing transparency out of the window and arbitrarily allotting/issuing spectrum/licences, included both sides, the beneficiaries (read telcos) and the officers of the government of that day alike.

Leaving the criminality of there respective actions aside, is there a case to say that:

- although the telcos indulged in corrupt practices, they should not be reprimanded in a manner that such a process is not repeated again. Is a mere Rs. 5 crore fine sufficient instead of blacklisting or a bar from participating in new auction etc? The scale doesn’t look even;

- the lower court should decide the criminality of actions of certain finance ministry officials although the verdict gives a finding in numerous places that the finance ministry officials were not consulted/informed repeatedly by the department of telecom;

- refund of fees paid by the telcos is not required although there is not enough basis to verify their culpability deserving there blacklisting.

More and more questions remain unanswered for the stakeholders affected most by the verdict as we unravel the implications of the verdict.

The central point which still remains is the need to respect guarantees of the constitution in general and the principles of natural justice & promissory estoppel in particular. In the face of a clear impropriety of a few engaged in a governance process, should they be let off and other bonafide stakeholders be aloud to suffer. 

Where does the larger benefit of the society and the citizen lie in the present circumstances as against this verdict being passed within weeks of the allotment/issue of spectrum/licences? 

Is this the best and deserved consequence of the finding of lack of transparency and arbitrariness in governmental action or is there a need to still respect the rights of stakeholders like lenders/consumers/competition commission who had derived further estoppel rights on account of the licences having become operational – and to hear them before the present verdict attains finality?