Asim Abbas, Partner with Khaitan & Co spoke to CNBC-TV18 about his view on the legal recourse that telecom operators are looking forward to with regard to the 2G verdict. He says that the scope for the review petition is quite limited.
Below is the edited transcript of the interview.
CNBC-TV18: How far can this legal recourse really go because the argument that's being presented by foreign telecom companies is that the TRAI made it's recommendation saying that there shouldn't be an auction because that was not what they thought was most appropriate, they made those recommendations in August 2007, nobody challenged them, the government accepted those recommendations in January 2008, nobody challenged them, we went along with what was the policy of the government, why are we being held accountable for something that we were not a part of, we are the innocent victims of something what the government did! So how do they build their case from hereon?
Asim Abbas: The legal option available is the review petition in the Supreme Court. But the problem of review petition is that the scope is very limited. On the issue of recommendation which TRAI had given, the Supreme Court has stated very categorically that it was a flawed recommendation; level-playing field cannot be the basis. Same is the case with the policy. On the merits and demerits of the recommendations of TRAI and policy, the Supreme Court has dealt at length in its judgment as to how natural resources have to be treated.
There are well-defined principles on the basis of which the review petition can be admitted or heard. So the grounds have to be developed and one possible ground could be that the foreign investors who have made investment in a company which had a valid license and that valid license was given by Department of Telecom, and they had no idea with three years down the line, those licenses will be canceled.
CNBC-TV18: One of the options or possibilities for exiting could actually be the exit policy of the government, but the policy very clearly is for license holders. Now that the licenses stand quashed, how do these operators who have been affected stand to benefit from the proposed exit policy?
Asim Abbas: The normal understanding of an exit policy is that it is applicable to a licensee. The exit policy concept is also in the draft National Telecom Policy of 2011 and Trai is also working on it. But yesterday, it is a new situation which has emerged. The exit policy could provide some solution to the telecom operators whose licenses have been cancelled because the license fee is non-refundable and the duration was 20 years. So I think the government can treat these separate entities whose licenses have been cancelled as a separate block and give some sort of benefits to them in terms of participation in 2G auction, that could be a mitigation strategy as far as the effected telcos are concerned.
CNBC-TV18: Speaking about auctions what is the sense that you are getting while there has not been any intimation of the pricing mechanism that will be adopted, one can go by what happened in 3G auction as perhaps the model or the way forward. But given the fact that the environment stands vitiated and also that we are dealing with fiscally constrained telecom companies, what is your take?
Asim Abbas: Telecom companies in terms of foreign investment is virtually a dead company for the last one year, and there are not many companies who want to invest here because of the 2G Scam. So one good aspect of this judgment is that it has cleared or it has bought certainty as far as policy is concerned. If there is certainty before the auction process as far as the new telecom policy is concerned, I think it could boost the telecom sector and there could be takers who would participate in 2G auction.
So if there is certainty and predictability with a National Telecom Policy before the auction process, I think it may give an impetus, and maybe more players would participate in the auction process.
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