Bloomberg News

India’s President to Seek Clarity on Phone Permit Cancellations

April 10, 2012

India’s cabinet decided to invoke a constitutional provision under which President Pratibha Devisingh Patil can ask the Supreme Court to clarify some parts of its Feb. 2 order canceling 122 mobile-phone licenses.

The cabinet “cleared referring certain questions” to the top court, Telecommunications Minister Kapil Sibal told reporters in New Delhi yesterday. He declined to elaborate further.

The Supreme Court in its February verdict said the government’s policy of granting permits without auctions in 2008 was “flawed” and had been influenced by those with “money power.” On April 4, the court rejected review petitions of seven companies to reconsider its judgment. It accepted for hearing on April 13 the government’s plea questioning the court’s jurisdiction over policy matters.

The February ruling forced companies such as Emirates Telecommunications Corp. (ETISALAT), known as Etisalat, to start winding up its operations. Norway’s Telenor ASA (TEL) and Etisalat wrote down their investments in India. Telenor and Russia’s AFK Sistema threatened to invoke bilateral trade treaties to protect their businesses and said they may seek international arbitration. The closures will affect 69 million customers.

Article 143 of the Indian constitution says “if at any time it appears to the President that a question of law or fact has arisen, or is likely to arise, which is of such a nature and of such public importance that it is expedient to obtain the opinion of the Supreme Court upon it.”

Curative Petition

Uninor, the joint venture between Telenor and India’s Unitech Ltd. (UT), said April 4 it will file a curative petition and ask the court to keep its order in abeyance until a new bench hears the case afresh.

If the Supreme Court’s response to the president “is positive, it will favor the government in fighting the case before the court,” said Davendra B. Goswami, a constitutional lawyer, who practices in the top court in New Delhi.

Former telecommunications minister Andimuthu Raja is in jail after the nation’s chief auditor in 2010 reported that the sale of the airwaves lacked transparency and ineligible bidders bought them at “unbelievably low prices.” The auditor also said the policy chosen by Raja may have deprived the exchequer of as much as $31 billion, sparking the nation’s biggest graft probe. Raja and the other accused have denied any wrongdoing.

The mobile-phone license scandal contributed to an 18-month slowdown in policy making by Prime Minister Manmohan Singh’s government. In local elections last month, Singh’s ruling Congress party suffered defeats, two years before a national election.

To contact the reporters on this story: Bibhudatta Pradhan in New Delhi at bpradhan@bloomberg.net; Abhijit Roy Chowdhury in New Delhi at achowdhury11@bloomberg.net

To contact the editor responsible for this story: Hari Govind at hgovind@bloomberg.net


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