After 2G Verdict, Telecom Companies to Sue Government Over Cancellation of Licenses

While some of these complaints were launched at the telecom tribunal before the verdict, other claims will be pursued freshly or with renewed vigour.

New Delhi: After the special CBI court verdict in the controversial 2G case on December 21, the government faces compensation claims worth over Rs 17,000 crore from telcos like Videocon Telecom, Loop Telecom and STel who suffered loss of business after the Supreme Court scrapped 122 licences in 2012.

These licences were issued in 2008 by the-then UPA government. The CBI court this week acquitted all accused including the-then telecom minister A. Raja, saying it did not find any evidence of wrongdoing against them.

These telcos now plan to pursue their compensation claims with a new vigour. Videocon Telecom and Loop Telecom have already filed compensation claims of Rs 10,000 crore and Rs 4,000 crore respectively in the telecom tribunal, which they now want to put on fast-track.

Meanwhile, serial entrepreneur C. Sivasankaran too is ready to file a Rs 3,400 crore claim against the government. Sivasankaran’s company, STel, lost six licences following the 2012 Supreme Court order.

Sources said Videocon Telecom will expedite its case filed against the government in the telecom tribunal in 2015, where it had sought damages of up to Rs 10,000 crore due to loss of business as a fallout of the 2012 Supreme Court judgement.

The company had filed the case just before the three-year period of pleading against the SC decision, and the demand at that time was between Rs 5,500 crore and Rs 10,000 crore, after taking into account financial losses, loss of business and compensation.

According to sources in Videocon, the company had taken a Rs 25,000 crore loan to invest in its telecom business and the cancellation of 21 licences caused it a huge financial losses. The company could not sustain the business because of rising spectrum cost in auction and later sold all spectrum in 2012 auction to Bharti Airtel. Videocon Telecom feels that it has a strong case as there it had no no fault.

Loop Telecom is likely to restart legal proceedings on two fronts seeking damages from the Indian government after the special CBI court acquitted promoters I.P. Khaitan and Kiran Khaitan of charges of criminal conspiracy and cheating in the acquisition of 21 licences.

In the case filed with the Telecom Dispute Settlement Appellate Tribunal in May 2012, Loop Telecom had sought a refund of Rs 1,454 crore paid as entry fees, interest of Rs 738 crore, compensation of Rs 1,000 crore for loss of reputation and about Rs 830 crore on account of expenses incurred for rolling out services. The total claim works out to Rs 4,000 crore.

Arbitration in the matter was initiated by Mauritius-based Kaif Investments and Capital Global, the majority investor in Loop Telecom. It had invoked the Bilateral Investment Promotion and Protection Agreements in April 2012. Both parties halted the process pending resolution of the 2G scam case. But now that the verdict has come out, Loop wants to fast-track proceedings for speedier resolution of its compensation claim.

Loop has squarely blamed acts and omissions of the department of telecom and the regulator for quashing of the first-come, first-serve policy in the issue of 2G licences and the subsequent allocation of spectrum, which affected the company.

Sivasankaran too is set to take the government to the Supreme Court in the wake of the 2G case acquittals, seeking Rs 3,400 crore that he said he lost after STel’s six telecom licences were cancelled in 2012 following the Supreme Court ruling.

“I want my money back. I have lost Rs 3,400 crore that I had invested in the company overall. I had brought in equity and taken loans from Indian commercial banks and spent on network and people,” Sivasankaran told the Economic Times.

Sivasakaran-owned STel had bagged telecom licences and spectrum in Assam, the northeast, Bihar, Orissa, Himachal Pradesh and Jammu and Kashmir, and had subsequently sold a 42.7% stake to Bahrain Telecommunications (Batelco) for around $175 million. However, after STel’s licences were cancelled, Batelco sold the stake back to its Indian partner for $175 million. After Sivasankaran failed to pay up, Batelco won an international arbitration order claiming damages of around $211 million from Sivasankaran.

“I will file a petition against the department of telecommunications in the Supreme Court next month. If I have not done anything wrong, as per the courts, I want my money back. I want justice. I do not want to seek any other damages.” He said his company had been penalised though it was blameless and the latest order will strengthen claims for a refund.