Verdict on 2G spectrum case opens door for foreign companies to sue govt

With the special CBI court acquitting all 17 accused in the 2G spectrum case, the legal experts say that it has opened the doors for foreign companies who had invested in the Indian telecom sector during the time of UPA government to sue the government. The experts believe that operators like Loop Telecom, Russian conglomerate Sistema and Telenor may relook their strategy to recover losses they have incurred due to the flawed procedures followed by the department of telecom (DoT).

"These players have an excellent chance to relook everything and start recovery or whatever compensation they can get from the government," says Ashish Bhan, partner at Trilegal. The Supreme Court cancelled 122 licenses in 2012 on grounds that the procedure followed by DoT for giving out licenses was flawed.

"You have a position of the Supreme Court which says that the process was illegal and unconstitutional. The CBI court sees no criminality into the awarding of the license. It means that the process was wrong but the process was not set by the private players. The process was set by the government. Bad process cannot be attributed to private players," says Bhan adding that players like Loop have already started acknowledging this and possibly they will move forward.
But given that these foreign players could have challenged the DoT's flawed procedure (as proven in SC's decision) even before the special CBI court's verdict, Bhan says when the SC squashed licenses, these players had tried to intervene in the SC but nobody was ready to hear them.

"Entities who have exited India tried to prove the gross irregularities but their argument took a back seat because there was pending case going on [in the special CBI court] and the government was also trying to put pressure on them. Because of the whole atmosphere that was created around 2G scam, if these players had moved on with suing the government for recovery of money, the government would have pressurised them," says Bhan.

He says that ED's and CBI's decision to challenge the recent verdict in the High Court is unlikely to change the scenario. "It took seven years for the special CBI court to prove that there was no criminality in the case. I am of a strong view that unless the High Court finds a loophole in the evidences considered by the special CBI court, they would find it difficult to overturn its verdict. The interference of the High Court would not be easy," he says.