2G licence cancellation: Experts say arbitration better route for cos seeking compensationhttps://indianexpress.com/article/business/economy/2g-licence-cancellation-experts-say-arbitration-better-route-for-cos-seeking-compensation-4998708/

2G licence cancellation: Experts say arbitration better route for cos seeking compensation

The Central Bureau of Investigation, which was the prosecutor in the case at the trial court, has said that it would appeal the order given by Justice OP Saini last week.

Experts say arbitration better route for cos seeking compensation
The latest development comes following the acquittal by the trial court on the criminal cases in the decade old 2G case.

Investors and companies who lost their licences after the 2012 Supreme Court order are gearing up to move the Telecom Disputes Settlement & Appellate Tribunal (TDSAT) as well as international arbitration to seek damages from the government, including the fee paid to acquire the licences back then. The latest development comes following the acquittal by the trial court on the criminal cases in the decade old 2G case. However, lawyers and legal experts are of the view that while moving the tribunal was one of the options, the companies — many of which are foreign — would stand a better chance through an arbitration.

“At the TDSAT, the government can argue that the Supreme Court’s judicial order can’t be appealed. Also, arbitration works better when seeking compensation against the Union,” one of the lawyers representing a foreign telecom company said on condition of anonymity. The firms that saw their licences being cancelled included those with investments from foreign players, such as Norway’s Telenor, the UAE’s Etisalat, Russia’s Sistema, Bahrain Telecommunications, Malaysia’s Maxis, etc, apart from their local counterparts such as Videocon Telecommunications, Loop Mobile, Tata Teleservices, etc. Some of these companies have approached the TDSAT earlier as well, however, without any success.

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In 2012, Loop Mobile, which had acquired licences for 21 service areas, sought compensation from the government after its licences were cancelled by the Supreme Court order. The company had sought the refund of the fee it paid to acquire the licences. However, TDSAT quashed the appeal on account that there were pending criminal cases against the company. The telecom operator’s lawyers, which had sought the refund as mandated by the Contract Act, argued that “if any wrongdoing by the petitioner is established in the criminal trial, it would face the consequences, but it cannot be denied restitution on the ground of pendency of the criminal case”.

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The TDSAT, in its 2015 judgement of the case had said: “In any event, no direction for refund in terms of section 65 Contract Act can be made in favour of the petitioner by the Tribunal at least until the possibility of its being in pari delicto is completely removed; in other words, until the petitioner is exonerated of the charges in the criminal trial”.

It had also said: “The petitioner’s licences were quashed by the Supreme Court in exercise of its Constitutional powers and in a proceeding of judicial review of the process followed by the Government for grant of licences. The Supreme Court order appears to be in the realm of a public law remedy”. This was cited by the aforementioned lawyer, who said that 2G trial court’s judgement was not likely to have an impact on TDSAT’s decision, which is based on the cancellation of licences by the Supreme Court.

A former legal director at one of the now-defunct telecom companies said that petitioners can choose to approach both TDSAT as well as take the case up for compensation in international arbitration. “There was no criminality or wrongdoing by any of the companies in either the Supreme Court order or the trial court judgement, but still the licences were cancelled and the investments were written off. The companies can take any approach,” the person said.

The Central Bureau of Investigation, which was the prosecutor in the case at the trial court, has said that it would appeal the order given by Justice OP Saini last week, but legal experts peg that the companies are expected to make their move to seek compensation from the government at the earliest as waiting for a decision from a higher court on the trial court’s verdict could take time.