JOIN USCourt rap : The Supreme Court ruling is a lesson in governance and a warning to industry to play fair.
A single judgement having far-reaching impact on industry, governance and politics as done by the Supreme Court ruling against the 2G spectrum allocation, is rather rare. The February 2, 2012 verdict not only struck down the first come, first served (FCFS) policy followed by the government in the distribution of scarce airwaves, but also told the government what needs to be done in future in the key area of scarce national resource.
The verdict may have saved Prime Minister Manmohan Singh but, along with another ruling of January 31, it dealt a blow to what may be perceived as ‘arrogance’ of the Prime Minister’s Office in not responding in time to the plea for sanction for prosecution of then telecom minister A Raja. While this in itself is a lesson in governance, the verdict is also a warning to industry to do business honestly and in a transparent manner.
The apex court, for decades to come, has laid the roadmap regarding some policy matters, the utilisation of natural resources in particular. Strongly rebuking former telecom minister A Raja, now in jail, and the Department of Telecom (DoT) he headed, the court observed that they “virtually gifted away an important national asset at throwaway prices by wilfully ignoring the concerns raised from various quarters, including the Prime Minister, Ministry of Finance. This becomes clear from the fact that soon after obtaining the licences, some of the beneficiaries off-loaded their stakes to others, in the name of transfer of equity or infusion of fresh capital by foreign companies, and thereby made huge profits”.
With clear intentions that such devious deeds do not recur, Justices G S Singhvi and A K Ganguly, who delivered the historic verdict, pointed out: “We have no doubt that if auction had been adopted for grant of licences, which could be the only rational transparent method for distribution of national wealth, the nation would have been enriched by many thousand crores (of rupees).”
The verdict also questions the bidding process for other critical resources such as coal, energy, water, land etc. Mahesh Uppal, telecom consultant, told Deccan Herald: “SC has laid down a law. This will be more important to those resources where the demand is greater than supply. I don’t expect this verdict to be a big deal for resources in abundance. Even if you are to hold auction, it will raise high value only if there is high demand.”
Even as the court came down hard on Telecom Regulatory Authority of India [Trai], whose FCFS policy Raja exploited to dole out licences, it reposed faith in the regulator. The court asked Trai to make fresh recommendations on grant of licence and 2G spectrum allocation through auction in the next two months.
The court also raised the issue of fresh entrants in the sector, virtually through the back door and made some stinging remarks: “This arbitrary action of the Minister (Raja), though appears to be innocuous, actually benefitted some of the real estate companies who did not have any experience in dealing with telecom services...” Of the 11 firms who bagged the licences in a highly questionable manner, Unitech, DB Realty, Videocon had no exposure to telecom sector.
The judgement has raised the contentious issue of judicial activism or ‘overreach’ as some would call it. However, the division bench has all but set to rest the spectre of judiciary entering the executive decision-making arena while directing Trai to make fresh recommendations “ within two months,” and said the Centre “shall consider” them within next one month.
The bench also observed: “it is clearly demonstrated that the policy framed by the state… is contrary to public interest or is violative of the constitutional principles, it is the duty of the court to exercise its jurisdiction in larger public interest”. Says K N Bhat, former Additional Solicitor General: “It is fine, the courts are increasingly doing it on PIL matters. Years ago, issues such as these judgements would have raised eyebrows but not any longer.”
The court has not referred to the licence fee the firms have paid – which is said to be around Rs 1650 crore. Says Uppal: “I imagine that may be some process of pay back in pro-rata fashion would be drawn up by Trai so that unused part of their fee is repaid – the licence was for 20 years.”
In the entire 94-page judgement, the government has come across as a poor decision-maker, failing to control a minister on the rampage. What is shocking is that even after the scam came into the open, Trai had asked the government, at least twice - first in November, 2010 - to cancel 69 licences awarded since 2008 for failure to roll out networks in time. This would have given back the government roughly 300 MHz of spectrum valued at about Rs 40,000 crore at the 3G benchmark price. The Singh-led government took no decision! The government did not find it fit to review the decision even after CAG drafted a scathing report.
PM safe
How did the 2G judgement, along with the one delivered by the Delhi CBI special court rejecting a petition by Janata party leader Subramanian Swamy seeking prosecution of Home Minister P Chidambaram for his role as former Finance Minister, pan out to the Congress-led UPA government. The apex court may not have passed any caustic remarks against the PM, but his PMO got the stick for the delay in taking decision on sanction for prosecution.
However, the relief that Chidambaram earned from Judge O P Saini, brought back smiles in the Congress camp – a rare sight these days in the wake of serial scams and adverse court decisions the UPA government has been battling.
With the crucial elections in Uttar Pradesh starting next week, Congress has reasons to cheer. The lower court order has come as a welcome relief although the party is not a contender for power in the state.
Among other things, the government would be relieved that the Opposition cannot heckle it in Parliament – with a lengthy budget session starting next month – on the issue of 2G.
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