The supreme court judgment cancelling 2G licences, 122 in all, is no doubt historic.

But the learned judges may have unwittingly impacted the telecom industry and our economy in more ways than they intended. This column is about that part of the story. The judgment is not yet available and thus reliance has been placed on reports published relating to the ruling.

First, the judgment adds up to the ‘refund’ liabilities of the centre, something that our finance minister has not factored in the budget. He could have done without this given his liability towards Vodafone!

The gist of the directions in the order are:

- Cancellation of 122 licences for mobile networks issued during A Raja's tenure.

- TRAI to make recommendations afresh on the allotment of licences within a period of four months. 

- The order is as a consequence of finding that allotment of these licences in the first place was done in an unconstitutional and arbitrary manner.

- A fine of Rs 5 crore each on three telecom companies, which offloaded their shares after getting the licences

- A direction that the allocation of spectrum to be done through auction within four months.

While the judgment clearly seeks to call what is ‘wrong’ as a ‘wrong’, the consequential directions and orders as a result of the wrongs committed by the minster(s) of the day engaged has left us vulnerable in the following manner:

1. Lenders rights and concerns:

This ruling is likely to effect a multitude of lenders in the telecom area including numerous banks and financial institutions, both Indian and global.

Is there a case that the petitioners before the supreme court were unaware of the fallout of the relief they were seeking on the lenders concerned?  If yes, did they not carry a responsibility to implead all lenders into the proceedings to enable them to plead before the court why such orders which would affect them the most – should not be passed by the court?

Is there a case being made out that in cases involving corrupt practices, principles of natural justice (of giving a right of hearing before passing any adverse order and promissory estoppel would not apply)? If yes, then have the concerned affected lenders been given a chance to plead otherwise.

2. Impact on the investment climate in India:

Undoing the actions of the department of telecom (DoT) leading to a lack of certainty of governmental actions will impact the investment climate in India.

Just a few days back, in the Vodafone case, the supreme court had given lessons to the taxman about certainty being an integral to rule of law. The court had reiterated the need for certainty and stability in the context of fiscal system.

Certainty and predictability is integral to the confidence and credibility of India as an investment destination. Is there a need, therefore, to depart from this principle only after hearing the affected parties and assessing the impact of a view on the investment climate in India?

Is this a case that punishing the guilty be distinguished from cancellation of the illegal acts that could lead to devastating effects on an industry in particular and an economy in general?

3. Consumers and subscribers rights:

Where does this entire development leave a bona-fide consumer? Can the same yardstick of doing a due-diligence before investment by investors be applied to a humble consumer who have become subscribers of the services being offered under these licences and may well be in large numbers from all walks of life and from different economic background?

Have consumers been left to the mercy of the sinking telecos whose licences have been cancelled and the now dominant telecos who have been left free to rule the market?

Was there a need therefore, to also implead the Competition Commission of India, the guardian of anti-competitive market conditions in India to suggest strategies to protect the rights of the consumers in the event of the 122 licences being cancelled?

4. More tax burden – to cover under the table payments:

The finance ministry had clearly not factored the string of orders directing it to refund huge sums of money under orders of the Court. With nearly Rs 11,500 crore to refund to Vodafone and the 122 licencees, does the finance ministry have the fire power to organise the liquidity to comply with the orders of the supreme court?

Are we therefore also looking at a possibility of increase in taxation or levy of additional tax by whatever name to foot the bill? What could be the rationale for such a move when the kickbacks were paid a select few? Why should we the taxpayer be penalised?

5. Swamy’s priorities versus the constitutional guarantees :

In the petitioner Subramaniam Swamy’s short run to the post and his urge to score a political goal versus the rights and guarantees enshrined in the constitution of India – where should our priorities lie?

The constitution guarantees fundamental rights to its citizens. This would include the taxpayer, the civil society, as much as the lender, consumer, equipment provider, apart from every citizen of India.

Do we need to draw a balance in a case like this where possibly the licences and the operations of telecos has achieved an irreversible stature unless we take a call to sacrifice an entire industry and push the investment climate back by a few years?

Is there a need to identify what measure to correct the loss of revenue and work around measures to ensure that the government receives the revenues lost? Or is there a need to undo the growth of the industry itself? Can we really achieve a status quo ante?

A status quo ante at what cost?

- banks suddenly having huge NPAs in their books;
- consumers and subscribers paying higher tariff for poorer service due to consumers falling into the lap of incumbent telecos;
- investment into India dipping in the near future and gains made in the Vodafone verdict being squandered here;
- the world losing confidence in the guarantees of the government of India?

Is there a need, therefore, for a review? Would the government have the guts to call a spade a spade?