New Delhi: In a major development having implications for the corporate sector, the Supreme Court on Thursday cancelled the 122 2G spectrum licences granted by former telecom minister A Raja on the ground that they were issued in a "totally arbitrary and unconstitutional" manner.

READ MORE: Bhushan backs SC order on 2G case

Imposing a fine of Rs five crore each on three telecom companies, which offloaded their shares after getting the licenses, the court directed regulator Telecom Regulatory Authority of India (TRAI) to make fresh recommendations on allocation of 2G licences.

Asking the government to take steps on the recommendations of TRAI within a month, a bench comprising justices G S Singhvi and A K Ganguly said the allocation of spectrum will be done through the policy of auction within four months.

The order came on petitions filed by NGO CPIL and Janata Party President Subramanian Swamy alleging scam in the allocation of spectrum licences by Raja in January, 2008 during the tenure of UPA-I government, on which the CAG had assumed the presumptive loss of upto Rs 1.76 lakhs.

The 122 licences were given by Raja for over Rs 9,000 crore, while 3G auctions for a smaller number of licences had fetched the government a sum of Rs 69,000 crores.

The companies that are set to lose on account of the cancellation of the licences are Uninor (joint venture between Unitech and Telenor of Norway), Loop Telecom, Sistema Shyam (joint venture between Shyam and Sistema of Russia), Etisalat DB (joint venture between Swan and Etisalat of UAE), S Tel, Videocon, Tatas and Idea.

The Apex Court also refused to direct the CBI to probe the alleged role of Chidambaram in the case and asked trial court to decide on the Home Minister within two weeks.

Collective failure of Centre: Swamy

Cancellation of 2G licenses by the Supreme Court clearly brought out the big scam and it was a "collective failure" of the Government which ‘overlooked’ warnings given by the CAG and the CVC on the issue, Janata Party chief Subramanian Swamy said on Thursday.

"Everyone had warned including the CAG and the CVC but the government overlooked it," Swamy said soon after the Supreme Court cancelled the 122 spectrum licences and left it to the trial court to decide on whether to probe P Chidambaram.

Swamy said "it is a collective failure" of the government that 2G licences were issued in an "illegal and corrupt" manner and nobody felt that the Cabinet should be called and the licenses scrapped.

On prosecution of Chidambaram, he said, "I am very happy that the court has said since the matter is in the trial court and the matter has been reserved, the trial court perfectly competent to decide on the matter whether the Home Minister should be proceeded against or not."

"It is being made clear that the trial court is fully seized of the matter. Now the CBI could not add anything by way of an investigation.

"It is the best posssible judgement that could be possible for the three judges. The country can be justifiably proud of Supreme Court," he told reporters.

Sibal meets PM after SC judgement

Telecom Minister Kapil Sibal met Prime Minister Manmohan Singh shortly after the Supreme Court judgement that canncelled all 122 licences issued in January, 2008.

He is understood to have discussed the implications of the Court order and steps to be taken.

The Supreme Court has cancelled 122 licences holding that they were issued in a "totally arbitrary and unconstitutional manner" and asked the government to initiate process to allot fresh licences based on auction of spectrum.

The government has been asked to seek recommendations from telecom regulator TRAI in this regard and complete the process within four months.

The major companies affected by this verdict are Uninor, Sistema-Shyam, Videocon, Etisalat DB, Loop telecom and Idea among others.