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Telecom major Reliance Telecom told the Supreme Court on Tuesday that auction of spectrum based on "irrational" tender conditions may meet the government's goal of higher revenue but is not in conformity with the overall objective of public policy.

"The auction may meet the government's need for higher revenue collection and bleed the industry which is recovery mode but it was certainly not in conformity with the overall objective of public policy involving the government revenue, consumer use and the viability of the industry," senior counsel P. Chidambram told a bench of Justice Dipak Misra and Justice Prafulla C. Pant.

Appearing for Reliance Telecom, a subsidiary of the Anil Dhirubhai Ambani Group, Chidambram assailed the tender conditions at the level of micro-classification, saying that it presented an uneven playing field to existing telecom operators and new entrants which also included those whose licences would be coming to an end by the ends of the current year.

Taking the court through about half a dozen micro-classifications in different band-width, Chidambram. pointing to the glaring mismatch, said that if any existing telecom service provider (TSP) makes bid for 1.25 MHz of spectrum in a particular band, then the new entrant will have to make bid for five MHz to enter the bidding process.

He said that in certain cases, the new entrant will have to make bids that are 8.5 times more than the bid made by the existing TSP.

Describing the micro-classification as "irrational and having no nexus to the objective sought to be achieved", Chidambaram said that in a situation of spectrum being in the supply constraint, the prices will be artificially jacked as existing TSPs would not only be competing among themselves but with new entrants as well.

Describing the government policy as "fiscally myopic" and "selective" in accepting the "convenient" recommendations by telecom regulator TRAI, he said that revenue gain would be more to the government but the loans by the financial institution would get converted into NPAs.

He made his arguments during the course of the hearing of a batch of petition challenging the tender condition for the auction of spectrum.

The court had, on February 25, embarked on examining the various challenges to the tender condition for the auction of spectrum which had concluded March 25 garnering government whopping Rs. 1,09,000 crores. It had stayed proceedings in five matters before the Allahabad, Delhi, Karnataka and Tripura High Courts wherein Reliance Telecom, Bharti Telecom, and Idea Cellular have contested tender conditions and transferred them to itself.

In the hearing of the matter on February 25, Chidambram, referring to the NTP-2012, had told the court that it recognises "the predominant role of the private sector in this field and the consequent policy imperative of ensuring continued viability of service providers in a competitive environment".

He had urged the court to give more weightage to the TRAI recommendation which had favoured fixing lower ceiling on the minimum spectrum for which bids could be made by the TSPs saying that the TRAI which had "evolved over the years" and had the "institutional and technical capabilities" to decide such matters.

Hearing of the matter is rooted in the centre government's appeal challenging the Tripura High Court's February 12, 2015, order permitting Reliance Telecom and Bharti Hexacon to make two bids - one for 4.4 MHz and other for 5 MHz of 2G spectrum in 900 MHz band - for the northeastern states.

Further hearing of the matter will take place on Thursday.