Cabinet approved the Presidential Reference on 2G Ruling of Supreme Court

Yesterday in this blog the details were given regarding the DoT’s move seeking for the approval of the Cabinet for its draft of the Presidential Reference on the judgment of the Supreme Court cancelling the 2G licenses (122) granted in 2008. The Cabinet met yesterday (10-4-2012) and approved the said Presidential Reference. The Presidential Reference will now be sent to the President of India for ratification. After the ratification of the President, it will be submitted to the Supreme Court. The important clarifications sought for by the Presidential Reference from the Supreme Court are as below:

1. The Supreme Court cancelled the 122 licenses issued in the year 2008 on the ground that they were allotted on the basis of FCFS (First Come First Served) principle, which was termed as arbitrary and unconstitutional by it. The Supreme Court held  that the natural resources are the property of the people and hence they should not be arbitrarily allotted by the Goveernment to the private parties and further held that auction is the method for allotting natural resources to private parties. The question raised in the Presidential Reference is whether all the 2G licenses allotted since 1994 through a policy other than auction have to be cancelled?
2. Whether auction is the only method to be followed by the Government for allocating natural resources to the private parties?
3. Whether the dual technology licenses (For example Reliance Communications has CDMA spectrum only initially and did not take GSM spectrum. It provided 2G services using CDMA spectrum. But later on during Raja’s period it was given GSM spectrum without auction. Like this some other Companies also were given this dual technology license) are legal or illegal?
4. Whether the 3G license given to the Companies whose 2G licenses were cancelled by Supreme Court, should be given back to the Government?
5. If Government makes a policy and the Court strikes it down, then what is to be done with the investments made by the foreign companies on the basis of the policy? What is to be done regarding the issue of compensation raised by the foreign companies invested in the companies whose licenses were cancelled by the Supreme Court?

But the Government, even though  it is the Executive of the Country having the aucthority to decide the policy, cannot decide it as per its whims and fancies, and it has to be decided by following the norms laid down in the constitution of India. It cannot go on making policies violating the constitutional provisions and then say cancelling such policies or the results of such policies will trouble the investors.

The Supreme Court may or may not respond to the Presidential Refeerence. It has the option. Earlier, the Government filed a review petition requesting the Supreme Court to review its judgment cancelling the 2G licenses. In this review petition, the Government submitted the point that as per the law under Mines and Minerals (Development and Regulation) Act 1957, natural resources like coal, minerals etc can be distributed on the basis of the FCFS (First Come First Served) policy. But the Supreme Court said the FCFS policy adopted for allocating 2G licenses is unconstitutional. Without asking for review of the cancellation of the 2G licenses, this review petition of the Government raises the question of the authority of the Government to make policy.

It is to be noted that the review petitions  filed by the private telecom operators whose 2G licenses were cancelled by the Supreme Court(Videocon, STel, Sistema(MTS), Tata Teleserrvices, Uninor, Etisalat and Idea. But in case of Tata  Teleservices and Idea, only the licenses in a few circles are cancelled and in most of the circles their licenses are continuing), were already dismissed by the Supreme Court. But the Supreme Court however accepted the review petition of the Government and it will be heard on 13^th April 2012.

Thus the Government is trying its utmost to protect the private operators whose licenses are cancelled and also the foreign investors who invested in the telecom companies whose licenses are cancelled, by filing review petition and also by making a presidential reference.

But the mining law allowing the Government to allot natural resources on FCFS basis itself is unconstitutional and it requires to be quashed.

Let us see the response of the Hon’ble Supreme Court on the Review Petition of the Government as well as on the Presidential Reference.