The Supreme Court will give its verdict on Thursday whether 2G spectrum licences granted

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to several companies in 2008 should be revoked, in the latest judgement in one of the country's biggest-ever corruption scandals.

The judgement will be closely watched as a test case of how stable business contracts and government regulation is in India, with any cancellation of licences likely to damage the country's reputation with foreign investors.

The scandal over the alleged allocation of telecom licences at below-market prices, which CAG said could have lost New Delhi up to $36 billion, has crippled the ruling Congress party and damaged business confidence in Asia's third-largest economy.

The Comptroller and Auditor General (CAG) has said, of the 122 zonal licences issued in the 2008 grant process, 85 licensees, including the local units of Telenor and Etisalat, were not eligible to get them as they had suppressed facts or given false information to gain lucrative telecom permits.

The court will rule on a petition by non-governmental organisations and some individuals seeking the cancellation of the licences, which they say were given out in an arbitrary manner and as many companies were later found ineligible by the state auditor.