In another major development, the Delhi High Court has said that the government can not act upon its threat of encashing the bank guarantees of three private sector telecom service licensees--Tata Teleservices, Hughes Ispat and Essar Commvision--who have defaulted on a tranche of fee payment for 10 days. The three have been told to pay up 20 per cent of their licence fees within that period, or "face the consequences".

Under fire from allies on the parliament floor itself, the government on Wednesday directed the Trai to keep its recommendations on telecom tariffs in abeyance till "the entire issue is considered by the government". The government move followed intense pressure by theopposition and allies led by the government ally Trinamool Congress which staged a walkout.

Top department of telecom officials said that the government had decided to invoke Section 25 of the TRAI Act 1997 which allows the government to issue directions to the TRAI in the interest of sovereignty and integrity of India, security of the state, friendly relations with foreign states and public order among other reasons.

It was a day of high drama in Sanchar Bhavan and Parliament. The decision to put the order on hold followed a high level meeting of senior DoT officials convened by communication minister Jagmohan in his office.

Sources said that Jagmohan had expressed extreme disappointment over the TRAI order as they would affect the poor and middle class consumers. Expressing displeasure over the TRAI order, Jagmohan told officials: "The TRAI restructuring of telecom tariffs is against the policy of the government that aims to expand the base of telecom users and will badly hit the pace of economicdevelopment and teledensity".

Taking a strong stand against the TRAI tariff, the minister said that India could not afford to ape the West on the issue of cross subsidisation. "The new policy does not take into account the compulsions of the Indian scene and has laid undue emphasis on the higher end consumers", he said.

As per the Act, TRAI is bound by any directions on questions of policy as the central government may issue to it. The clause also provides the TRAI opportunity to express its views before any direction is given under this sub-section. However, the decision of the central government will be final irrespective of the issue of whether it concerned policy or otherwise.

TRAI officials refused to comment on the government's intervention which came after a uproar in Parliament and Jagmohan's statement in the Lok Sabha. It now appears certain that the views of the Somnath Chatterjee-led Parliamentary Standing Committee on communications would be taken more seriously.

Jagmohan told the LokSabha: "We will give due respect to the recommendations of the committee which had suggested against any hike in telephone call charges".

Industry sources indicated to The Financial Express that among telecom industry players who had chosen to desist from fighting the government in court over the licence fee issue, a consensus for working towards a rapproachment was evolving, whereby they would pay up their licence fee tranche, and the government could be counted upon not to act against them till a new payment basis such as revenue sharing could be structured.

The High Court ordered Tata Teleservices, the licence holder for Andhra Pradesh basic telecom circle, to pay about Rs 24 crore (20 per cent of Rs 120.60 crore excluding interest). Essar Commvision, the licensee for Punjab circle, is supposed to pay approximately Rs 26 crore which is 20 per cent of total dues of over Rs 132 crore, according to a document submitted to the court by DOT. Hughes Ispat, the licensee for Maharashtra, needs to payabout Rs 80 crore (20 per cent of its total dues of over Rs 379 crore). Its bank guarantee is only worth Rs 50 crore.