The Supreme Court on Thursday cancelled the 122 telecom licences that jailed former telecom minister A Raja had issued to eight companies in 2008, calling the allocation illegal, “wholly arbitrary, capricious and contrary to public interest”.
It ordered the government to auction the revoked 2G licences within four months.
The judgment, delivered by justice GS Singhvi and justice AK Ganguly — the latter on his last day on the bench — comes at a time when the UPA-II government has been politically weakened by a series of major scams, a popular civil society-led backlash against corruption and rigid allies pulling in different directions.
Senior ministers and Congress leaders went into a series of high-level meetings through the day to discuss the fallout of the verdict —delivered coincidentally exactly a year after Raja’s incarceration on February 2 last year — but a closer reading showed that the judgment had severely indicted only the former telecom minister. It was silent on the PM and other ministers.
The BJP, however, held Prime Minister Manmohan Singh and the home minister P Chidambaram, who was finance minister when Raja issued licences in 2008 at prices seven years earlier, responsible.
“The finance minister is the custodian of the public exchequer and it is his job to protect the country’s financial interest,” said Arun Jaitley, leader of the opposition in the Rajya Sabha, adding “the continuation of P Chidambaram as a minister has become untenable.”
The PM, who, he said, had tried to cover up the scam in the media and on the floor of Parliament, could not escape his responsibility.
Addressing a press conference, telecom minister Kapil Sibal said: “The direction of the court is consistent with government policy… The PM and the (then) finance minister (Chidambaram) were in no way responsible for whatever was done by the then minister A Raja.”
Pushing the ball back into the BJP's court, Sibal added: "The SC judgment says the first come first serve policy introduced by the NDA government was discriminatory per se. This means that there should never have been a first come first serve policy."
The strongly worded order, which will take effect four months from now, says Raja's "arbitrary and wholly unconstitutional" act of selling 2G telecom licenses well below market rates were designed "to benefit some real estate companies… at the cost of the public exchequer".
The SC directive will affect about 5% of India's 900 million subscribers, who can, however, switch to other service providers.
Following the verdict, established players like Airtel (up 7%) and Idea Cellular (up 2.7%) gained on the Bombay Stock Exchange on the expectation that a number of subscribers from the affected companies could migrate to them.
Reliance Communications, which is in the eye of a storm over allegations of its links with Swan Telecom, which had its licenses cancelled, was down 3.6%. The Sensex didn't react much, rising 0.76% to 17431.85.