Supreme Court allows 2G spectrum auction from March 4

The auction has been allowed on the condition that the results will not be finalised without the court's permission

The Supreme Court on Thursday allowed the auction of telecom spectrum, scheduled to start on March 4, on the condition that its outcome wouldn’t be finalised without the court’s permission.

Telecom companies say the move has led to uncertainty for all stakeholders and questions are being raised on whether the government will be able to avail of the 2014-15 Budget estimate of the first trance of the mop-up (about Rs 22,000 crore) from the auction, which will go a long way in bridging its fiscal deficit.

The government expects to raise Rs 80,000-1,00,000 crore through the sale of spectrum, of which about 25 per cent has to paid upfront by operators this financial year. The auction, one of the biggest ever, is the first under the government led by Prime Minister Narendra Modi.

“Let the auction go on and let us see what emerges from it,” said a Supreme Court Bench comprising judges Dipak Misra and Adarsh Kumar Goel. The Bench declined to stay the auction process for a few days, saying no successful bidder could claim any equity in the bidding process. “Prima facie, there is inconsistency in the stand of the government but that is not a grounds for staying it (the auction),” it said.

The court has said telecom companies participating in the auction will not claim any benefit on the basis of equities and to avoid such claims, an order in this regard would be published on its website.

After hearing the government’s appeal for two days, the court transferred the writ petitions moved by telecom companies in the high courts of Karnataka, Allahabad and Delhi to itself and directed all courts, including the Telecom Disputes Settlement and Appellate Tribunal, not to proceed with hearing petitions related to the auction. The court will hear all the transferred petitions on March 26.

Telecom companies, including Bharti Airtel, Idea Cellular, Reliance Communications and Sistema Shyam had moved the court, challenging various clauses of the notice inviting application for the sale of spectrum in the 800-, 900-, 1,800- and 2,100-MHz bands. Some had also questioned why the licences should not be renewed for another 10 years, as was earlier decided, if telecom companies paid the market price.

Rajan Matthews, director general of the Cellular Operators Association of India, said, “The auction has brought uncertainty again. As the government won’t be able to announce the winners of the auction, no demand for money can be made on them. So, even the government will be uncertain about whether it will get the amount it was looking for this financial year at all.” He added the problem would have been resolved if the government would have accepted the Telecom Regulatory Authority of India-recommended base price for the auction.

A Department of Telecommunications official, however, said the auction would go ahead as scheduled, adding he was confident the funds would be raised this financial year, as a hearing in this regard was scheduled before the end of 2014-15.

Earlier, the Supreme Court had stayed a Tripura High Court order, passed on February 12, against which the government had moved the apex court. The high court had allowed telecom companies such as Bharti Airtel and Reliance Telecom to offer two bids for a total of 8.8 MHz in the Northeast circle.
APEX ORDER

• Telecom companies say the move has led to uncertainty for all stakeholders
• Questions are being raised on whether the govt will be able to avail of the 2014-15 Budget estimate of the first tranche of the mop-up (Rs 22,000 cr) from the auction
• The govt expects to raise Rs 80,000-1,00,000 crore through the sale of spectrum, of which about 25% has to paid upfront by operators this year
• The court has said telecom companies participating in the auction will not claim any benefit on the basis of equities