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The Government will seek the Supreme Court's direction on how to deal with foreign investors who have invoked bilateral treaties to protect their investment in 2G licences.
The move is aimed at protecting India's image as a favourable destination for foreign investments.
The Government's concern will be placed before the apex court through a Presidential reference, which was approved by the Union Cabinet on Tuesday.
Two foreign players – Telenor and Sistema – have invoked bilateral treaties after the apex court gave an order to scrap all 2G licences issued after January 2008.
A Government source told Business Line that during the Cabinet meeting on Tuesday, a very senior minister opined that it was right for the Government to seek a remedy as foreign investment is governed by bilateral treaties and is operated by the executive's policy.
“Now if the court strikes down a policy, then it may affect the country's image as an investment destination,” the source said.
“There is a view that international bilateral treaties are outside the purview of the judiciary. So, countries from where the companies have invested, would invoke the treaty to protect their investments,” the source added.
At present, India has bilateral treaties with 82 countries. Sistema has invoked the treaty between India and Russia, while Telenor invoked the agreement with Singapore. Telenor had made its investments into Unitech Wireless through a Singapore subsidiary.
The source said that the Government did not put forth its commitments under such bilateral treaties during the 2G hearing. Although some of the Cabinet Ministers were not in favour of raising the treaties issue in the Presidential reference, it was finally decided that a group of four comprising the Home Minister, Mr P. Chidambaram, the Telecom Minister, Mr Kapil Sibbal, the Law Minister, Mr Salman Khurshid, and the Attorney General, Mr Goolam E Vahanvati, will draft the final petition.
Mr Vahanvati was specially invited for the Cabinet meeting.
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