SC rejects government plea in S Tel case

Also accepts firm’s apology for taking up sub judice matter.

The Supreme Court today accepted an apology from S Tel, the telecom service provider, for having written to the Department of Telecommunications (DoT) on issues pending before the judges. The court had rapped the company and demanded an explanation.

However, in a blow to the government, the SC also upheld the S Tel case on the manner it which it had been earlier denied a telecom licence for various areas (circles). S Tel’s case on the matter had been upheld by a bench of the High Court of Delhi, and then by a larger bench of the same court when the government appealed. The government then chose to appeal to the SC.

The bench headed by Justice B Sudershan Reddy rejected the arguments of Attorney General G E Vahanvati that the HC judgment, if allowed to stand, would have serious implications in formulating future policies of the government in allocation of spectrum and in other matters. The bench not only rejected the argument but also allowed the criticism by the HC of the way the government had gone about the matter to stand.

The issue involved the government having suddenly advanced the cutoff date for considering applications for second-generation (2G) telecom licences. Both earlier HC verdicts indicted the government for doing so, adding that this seemed to have been done to benefit a few telecom companies.

The Attorney General argued that every applicant couldn’t claim a right to get a licence and the government only followed a ‘first come, first served’ policy; S Tel’s application wasn’t rejected, but only kept in abeyance, to be considered when more telecom spectrum became available.

The HC had said the communications ministry’s notification advancing the cut-off date for granting licences (from October 1 to September 25, 2007) was arbitrary and devoid of any rationale. And, the SC declined to allow the government plea or to remove these remarks.

S Tel is a joint venture between the Chennai-based Sivasankaran group (usually termed the Siva group) and Bahrain Telecom; the latter has a 42.7 per cent stake in it. It has 800,000 subscribers in the telecom circles of Himachal, Bihar and Orissa.

Its counsel told the SC that market conditions had changed drastically since 2007 and the earlier proposal (for telecom licences in certain circles) was no longer economically viable for it. He read out the apology filed in the court yesterday, which the judges accepted. He stated that the changed market conditions, severe competition, increase in number of operators in certain service areas and new technologies like 3G and 4G had forced the company to review its business strategy.