It’s payback time. The department of telecom (DoT) will issue on Monday its first set of show cause notices to companies that were ineligible to receive 2G licences/spectrum in 2008, as well as to those that failed to meet their basic rollout obligations.

According to DoT secretary R Chandrashekhar, legal opinion from the law ministry is in place, which is the precursor to the issuance of show cause notices to these firms. “DoT’s actions will impact roughly 200 licences. We will issue the first few notices on Monday, but the process could run into several days,” Chandrashekhar told ToI. The Comptroller and Auditor General ( CAG) had identified 85 of 122 licences issued in 2008 as ineligible because these companies had misrepresented facts.

In addition, TRAI had written to DoT on November 18 this year, asking it to cancel 38 licences and legally examine another 31 for failure to meet rollout obligations. In both cases, DoT, as licenser, should have been the one to identify these irregularities, which it failed to. The department now faces investigations from several quarters to uncover the violations in procedures that led to the loss of Rs 1.76 lakh crore to the public purse.

Even if 100 companies qualify for licence cancellations, it would mean 440 MHz of spectrum will return to the government, ending the prevailing spectrum scarcity mindset. The companies impacted by this include Unitech (Uninor), Loop Telecom, Datacom, S Tel, Swan Telecom (Etisalat) and Sistema Shyam (MTS).

It’s likely that these companies will resort to litigation to protect their interests. Much of this will be open to interpretation. The TRAI Act provides for dispute resolution between the licenser (DoT) and the licensee (defaulting companies) under Section 14. The first point of appeal will be TDSAT from where a right to a statutory appeal lies with the Supreme Court.

It may be difficult for SC to club these matters since it would seem that the details of each specific case would be different. It will also require DoT to effectively reinforce its legal team including law officers since Sanchar Bhavan simply isn’t ready for this quantum of litigation.

The only way out of such widespread litigation will be a huge settlement package, which will minimally have to be accompanied by recovery of thousands of crores of lost exchequer revenue. Without that, any proposal for settlement will be rejected outright by courts, and seen as a sellout by Parliament, especially the Opposition parties, which are refusing to budge from their demand for a JPC, which may well continue into the Budget session. It seems the uncertainties in India’s telecom investment environment will worsen before they get better.

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