In what could prove a major setback to telecom minister A Raja and an embarrassment for the UPA government, the Delhi High Court has held as illegal the telecom department?s arbitrary advancement of a cut-off date for licence eligibility in 2007. This benefited eight companies, who were awarded licences in January 2008. Of them, Unitech Wireless and Swan Telecom have since sold stakes to foreign telecom majors at huge valuations.

This arbitrary advancement left the applications of 16 companies, including that of AT&T of the US, in limbo. Of the aggrieved companies, S Tel, which was denied licences for eight circles because it failed to meet DoT?s revised deadline, had then moved the court.

The judgment, delivered on Tuesday by a Delhi High Court division bench headed by Chief Justice AP Shah, upheld a single-bench judgement on the matter delivered in July last year. Describing the single-bench verdict as ?well-reasoned?, former standing counsel for telecom regulator Trai Meet Malhotra said the latest ruling would open a Pandora?s Box, which could impact the upcoming 3G auctions.

The judgement has huge ramifications for the telecom sector, as it means licences and spectrum would now have to be awarded to companies whose applications are still pending with DoT. At

Raja?s behest, DoT had invited applications up to October 1, 2007 and then suddenly announced on January 10, 2008 that only applications that had been submitted by September 25 would be eligible for fresh licences.

The most serious implication of the judgement would be on Trai?s current exercise to frame recommendations on capping the number of operators in each circle. If accepted, it would have enabled DoT to reject all those pending applications. This exercise itself is controversial because the government had assured the high court during the hearings that the pending applications would be processed in due course.

The development would also give a fillip to ongoing investigations by CBI into the reasons behind the arbitrary advancement of the cut-off date.