The controversial S-Band spectrum deal between ISRO's commercial arm Antrix and private firm Devas Multimedia was scrapped on Thursday.

The move came even as it emerged that the prime minister may have ignored the finance ministry's suggestion on the 2G spectrum allocations (see last related story).

The decision to annul the deal was taken at a meeting of the Cabinet Committee on Security (CCS) chaired by Prime Minister Manmohan Singh on the basis of a recommendation from the Space Commission.

The annulment comes in the wake of a raging controversy over the deal for handing over 70 Mhz of S-Band spectrum to the private firm for Rs 1,000 crore on which the CAG has already initiated action.

According to certain estimates, this deal may have resulted in a loss of Rs two lakh crore to the exchequer.

After news reports about the possible revenue loss appeared, the Government and ISRO said the project was already under review and action has been initiated for termination of the contract.

The prime minister had told editors of TV channels in a press conference at his residence on Wednesday that the deal had never been operationalised and rejected suggestions that his office had held "backroom" talks with Devas after the Space Commission's decision to scrap the deal.

He had said that if there had been delay in scrapping the deal, this has been "only procedural".

Devas Multimedia had yesterday termed as "disturbing and inappropriate" the government's "unilateral" decision to terminate the agreement and threatened to take legal action.

It said the government had reached the decision "without due investigative process and without following the principles of natural justice".

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BJP wants complete inquiry into Antrix-Devas deal

As the Government annulled the S-Band spectrum deal between ISRO's commercial arm Antrix and Devas Multimedia, BJP today sought to know the reasons for signing the agreement in the first place and as to why it took so long to scrap it.

BJP spokesperson Nirmala Seetharaman said the people of the country should clearly understand why it took several months for the government to scrap the deal despite Space Commission's recommendation to do so.

"Why wasn't the deal scrapped (then) when the Space Commission recommended for its scrapping. There should be a complete inquiry and people (concerned) should give nation the due answers," she said.

She was reacting to the decision by the Cabinet Committee on Security (CCS) to annul the deal on the basis of a recommendation from the Space Commission.

The annulment came in the wake of a raging controversy over the deal for handing over 70 Mhz of S-Band spectrum to the private firm for Rs 1,000 crore on which the CAG has already initiated action.

She said the BJP wanted to know why the deal was being terminated at a "critical stage" when it was to come into effect in a few months.

"We want to know what went wrong leading to the cancellation of the deal. We can accept the commissions and omissions in the governance of the country," she said.

She wanted to know whether the government was allowing foreign firms to have a "back-door entry" into the fields where private firms have not been allowed so far.

"The band of spectrum which was to be sold is being used by agencies like Coast Guard. It certainly raises issues of national security," she said.

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Did PM ignore finance ministry on 2G spectrum allocations?

Just a day after prime minister Manmohan Singh sought to explain away the controversial 2G spectrum allocations of 2008, it emerges that the finance ministry may not have agreed completely with the conditions of the allotments after all. In what seems contrary to the prime minister's claim in his meeting with the editors of TV channels, a note written by the then finance minister to the prime minister, as reported by the Times of India newspaper on Thursday, takes a different view of the spectrum allocations.

While Singh said that he felt there was nothing improper in the companies diluting their equity in order to raise money, the then finance minister P Chidambaram, in his letter to prime minister Manmohan Singh, had suggested that the licensees should be made to share their profits with the government in case they sold their entitlements.

In his defence on Wednesday, the prime minister had said that though he had received several complaints regarding the 2G spectrum allocations he did not find sufficient reasons to intervene in the matter at the time. He had said that besides the telecom ministry the telecom regulator TRAI had given its nod to the allocations as had the telecom commission and the finance ministry.