Cabinet approves Presidential Reference to SC on 2G order

The government on Tuesday decided to make a Presidential Reference to the Supreme Court asking it whether its judgement in the 2G telecom licences case makes auctioning of natural resources across all sectors mandatory in all circumstances.

The Union Cabinet, chaired by Prime Minister Manmohan Singh, cleared the Telecom Ministry's proposal to seek Supreme Court's opinion on various issues arising out of is February 2 judgement cancelling 122 2G licenses issues on first-come-first-serve basis.

The court had also observed that auction was the best suited route for allocation of natural resources like telecom spectrum because the policy of first-come-first-serve was flawed.

"Today, the Cabinet cleared all questions for which we are seeking presidential reference under advisory jurisdiction," Telecom Minister Kapil Sibal told reporters after the meeting.

The department of telecom feels that the judgement has ramifications on several other sectors which also use the Supreme Court condemned first-come-first-serve policy for allocation of natural resources and had hence sought Presidential reference.

The Supreme Court admitted the government's review petition filed earlier seeking clarification on the process of auction to be followed on the cancelled licences. But it rejected 10 other petitions filed by telecom companies seeking review of its February order.

The Presidential Reference raises a question whether telecom licences granted in 1994, 2001, 2003 and 2007 on first-come-first-serve basis be treated as illegal in wake of the February 2 judgement.

If the Court agrees with this contention, then what should the government do to deal with such licences. If the answer is no, then whether the government of India is obliged to amend the terms of those previous licenses to ensure a level playing field among all licensees.

In particular, the Reference seeks to know whether the government would be required to withdraw the spectrum allocated to the existing licences or charge with retrospective effect for spectrum allocated to them and if so at what price and what date.

Another important question raised in the Presidential Reference is whether the February judgement lays down auction as mandatory for allocation of all natural resources across all sectors and in all circumstances or for allocation of spectrum in all circumstances or for allocation of spectrum in the specific circumstance of the present case.

Also, the Reference would seek to clarify if an investor invests in a company under a government policy and that policy is struck down the courts, then what should be done to take care of the investment.