A bench of the Supreme Court comprising of Justices G S Singhvi and A K Ganguly cancelled one hundred and twenty two 2G licences issued in 2008, when A Raja was telecom minister in the central government. The court held that the allocation was ''wholly arbitrary, capricious and contradictory to public interest, apart from being violative of the doctrine of equality.'' The court was also critical of the telecom regulatory authority, TRAI, for recommending what was '' contrary to the decision taken by the council of ministers.'' According to the apex court, A Raja used these recommendations and ''virtually gifted away the important asset at throwaway prices.''

According to the court, the roots of the scam were the recommendations given by TRAI on August 28, 2007. The court observed, '' Although, while making recommendations on 28.8.2007, TRAI itself had recognised that spectrum was a scarce commodity, it made recommendations for allocation of 2G spectrum on the basis of 2001 price by invoking the theory of level playing field.'' This was contrary to the decision of the Council of Ministers, which endorsed the recommendations of the Group of Ministers ( GoP ) on October 30, 2003 that DoT and Ministry of Finance were to finalise the formula for fixing the price of the spectrum.

The court observed, '' To say the least, the entire approach adopted by TRAI was lopsided and contrary to the decision taken by the Council of Ministers and its recommendations became a handle for the then the Minister of C&IT and the officers of DoT who virtually gifted away the important national asset at throwaway prices."

The court also criticised the FCFS policy. The court said, '' There is a fundamental flaw in the principle of first-come-first-served inasmuch as it involves an element of pure chance or accident." "When it comes to alienation of scarce natural resources like spectrum etc., the State must always adopt a method of auction by giving wide publicity so that all eligible persons may participate in the process. Any other methodology for disposal of public property and natural resources/national assets is likely to be misused by unscrupulous people.''