In a move that might cause some embarrassment to the government and attorney general Goolam E Vahanvati, the commerce ministry has said that Norwegian telecom operator Telenor has a case to seek compensation for cancellation of its licences under the provisions of Comprehensive Economic Cooperation Agreement (CECA) between India and Singapore.
The commerce ministry has said so in a recent note, which has the approval of the commerce secretary, to an inter-ministerial group (IMG) headed by department of telecommunications secretary R Chandrasekhar that is looking into the issue of foreign telecom firms seeking compensation for cancellation of their licences by the Supreme Court via its February 2 order. So far other members of the IMG, from the ministries of finance, external affairs and law and the department of industrial policy and promotion, have not taken such a view on the matter.
Telenor, which has a 67.25% stake in Uninor, lost all its 22 circle licences as a result of the judgment, which also cancelled the licences of eight other firms. Telenor, which has made total investments of around R14,000 crore in the country, subsequently sent a notice to the government under CECA (since its India operations are through its Singapore subsidiary) seeking an amicable resolution pending which it would seek compensation. Other foreign telecom operators that have joint ventures with Indian partners who lost their licences — Russia’s Sistema, Capital Global and Kaif Investments, Mauritius, and Axiata Group, Malaysia — have also sent similar notices under the bilateral investment promotion agreements with the government.
The commerce ministry’s views stating that Telenor has a case to seek compensation on the grounds of “expropriation” under chapter VI of the CECA also runs contrary to the opinion of attorney general Vahanvati, who has opined that judicial pronouncements are outside the ambit of bilateral investment treaties. According to Vahanvati, the notices by the companies concerned to the government seeking compensation is erroneous since they do not understand the concept of division of powers between the legislature, executive and judiciary.
The licences have been cancelled by the court and not the government so there can be no case of claiming compensation from the government, Vahanvati has opined.
The IMG is now expected to hold another meeting to firm up its views on the notices it has so far received from foreign telecom operators in the aftermath of the cancellation of licences.
The commerce department has said that Telenor’s