Indian Court Accepts State Appeal on Phone-Permit Cancellation

By Pratap Patnaik and Andrew MacAskill - Apr 4, 2012

India’s Supreme Court accepted the government’s appeal against a judgment that scrapped mobile- phone licenses awarded in an allegedly corrupt sale, a move that may allow companies to operate till a final decision.

The government in its review petition questioned the court’s jurisdiction over policy matters and also sought time till March next year for conducting fresh phone-license sales. Judges G.S. Singhvi and K.S. Radhakrishnan will hear the government’s argument on April 13, according to the order on the court’s website yesterday.

The acceptance of the appeal may throw a lifeline to companies such as Emirates Telecommunications Corp. (ETISALAT) and Russia’s AFK Sistema (AFKS), said Madhu Narayan, a Supreme Court lawyer not connected with the case. The companies’ permits were among the 122 canceled two months ago after the Supreme Court said the sale was “flawed” and had been influenced by those with “money power.” The cut-price permit sale in 2008 may have lowered government revenue by $31 billion, according to a report by India’s chief auditor.

Allowing the government’s appeal “is good for companies that want to continue their operations in India,” said Narayan. “If the court grants time till March 2013, it will help them to participate in the auction and tie up with new partners.”

The cancellations meant operators had to close their businesses within four months, which would affect 69 million users. The court yesterday rejected appeals by seven individual companies that had their permits rescinded, including Telenor ASA’s (TEL) local partner Unitech Ltd. (UT)
‘Curative Petition’

“By entertaining the review petition and hearing the case again, the Supreme Court would have been able to appreciate arguments and evidence that challenges the very basis of its order,” according to an e-mailed statement by Uninor, the joint venture between Telenor and Unitech. “We are disappointed that the court has declined to do so.”

The company said it will file a curative petition and ask the court to keep its order in abeyance until a new bench hears the case afresh.

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 heavy defeats as it was punished for alleged corruption two years before a national election.

Former Telecommunications Minister Andimuthu Raja, officials and business executives are charged with conspiring to award permits to ineligible companies in the 2008 sale. All of the accused have denied the charges.

To contact the reporters on this story: Pratap Patnaik in New Delhi at ppatnaik2@bloomberg.net; Andrew Macaskill in New Delhi at amacaskill@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net
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