On 02-02-2012, the hon’ble Supreme Court of India pronounced a
historic judgment cancelling 122 the telecom licences and consequented spectrum
allocation granted illegally and irregularly by the then Minister for
Communications&IT Sri A.Raja.
The 122 licences quashed by this order of the Supreme Courtt are(Note-the
telecom operators have to take licence for each circle separately and hence if
22 licences aree canceelled, it means in 22 circles the licence of the company
is cancelled)—(a)Uninor=22; Sistema Shyam(MTS)=21; Loop Telecom=21; Videocon=21;
Etisalat=15; Idea(Idea and Spice)=13; S-Tel=6; Tata Teleservices(DoCoMo)=3
This judgment was given in the case of the following Writ
Petitions:
(a) W.P(Civil) No.423 of 2010 filed by filed by Centre for Public Interest
Litigation, a registered Society formed by Shri V.M. Tarkunde (former Judge of
the Supreme Court ) for taking up
causes of public
interest and conducting
public interest litigation
in an organised manner,
Lok Satta, a
registered Society dedicated to
political governance,
reforms and fight
against corruption, Telecom
Watchdog and Common Cause, both
Non-Governmental Organisations registered as Societies for taking up issues of
public importance and national interest, Sarva Shri J.M. Lingdoh, T.S.
Krishnamurthi and N.
Gopalasamy, all former
Chief Election Commissioners, P. Shanker, former Central Vigilance Commissioner, Julio F. Ribero, former
member of the
Indian Police Service,
who served as
Director General of Police, Gujarat, Punjab and C.R.P.F. and
Commissioner of Police, Mumbai, P.R. Guha, an eminent Senior Journalist and
visiting faculty member of various institutions including
IIMs, IITs, FTII,
IIFT, Delhi University, Jawaharlal Nehru University and
Jamia Milia Islamia University and Admiral R.H. Tahiliyani,
former Chief of
Naval Staff, former
Governor and former Chairman of Transparency
International India
(b) W.P.(Civil) No. 10 of 2011filed by Dr.Subramanian Swamy, a
political and social activist.
The relevant portions regarding questions raised in these writ
petitions and the decision of the hon’ble Supreme Court on these questions are reproduced
below, from the text of the judgment of the Supreme Court:
The questions raised in these writ petitions are:
“(i) Whether the
Government has the
right to alienate,
transfer or distribute natural
resources/national assets otherwise than by following a fair
and transparent method
consistent with the
fundamentals of the equality clause enshrined in the Constitution?
(ii) Whether
the recommendations made
by the Telecom
Regulatory Authority of
India (TRAI) on
28.8.2007 for grant
of Unified Access Service Licence (for short `UAS
Licence') with 2G spectrum in 800, 900 and 1800 MHz at the price fixed in 2001,
which were approved by the Department of Telecommunications (DoT), were
contrary to the decision taken by the Council of Ministers on 31.10.2003?
(iii) Whether the exercise undertaken by the DoT
from September 2007 to March 2008 for grant of UAS Licences to the private
respondents in terms of the
recommendations made by
TRAI is vitiated
due to arbitrariness and
malafides and is contrary to public interest?
(iv) Whether the policy
of first-come-first-served followed by the DoT for grant
of licences is
ultra vires the
provisions of Article
14 of the Constitution and
whether the said
principle was arbitrarily
changed by the Minister
of Communications and
Information Technology (hereinafter referred
to as `the
Minister of C&IT'),
without consulting TRAI, with a
view to favour some of the applicants?
(v) Whether the
licences granted to
ineligible applicants and
those who failed to fulfil the terms and conditions of the licence are
liable to be quashed?” .…………………………………………………………………………………………………………………………………………………………………………………………………………………….
The decisions given by the Supreeme Court on these questions are as
below:
“Question No.1:
……………. In conclusion, we
hold that the
State is the
legal owner of
the natural resources as a trustee of the people and although it is
empowered to distribute the same,
the process of
distribution must be
guided by the
constitutional principles including the doctrine of equality and larger
public good.
Question No.2:
Although, while making
recommendations on 28.8.2007,
TRAI itself had recognised that spectrum was a scarce
commodity, it made recommendation for allocation of 2G spectrum on the basis of
2001 price by invoking the theory of level
playing field. Paragraph
2.40 of the
recommendations dated 28.8.2007 shows that
as per TRAI's
own assessment the
existing system of
spectrum allocation
criteria, pricing methodology
and the management
system suffered from number of
deficiencies and there was an urgent need to address the issues linked with
spectrum efficiency and
its management and
yet it decided
to recommend the allocation of spectrum at the price determined in
2001. All this was done in the name of growth,
affordability, penetration of wireless services in semi
urban and rural
areas, etc. Unfortunately, while
doing so, TRAI completely overlooked that one of the
main objectives of NTP 1999 was that
spectrum should be utilised efficiently, economically, rationally and
optimally and there should be a
transparent process of allocation of frequency spectrum as also the fact that
in terms of the decision taken by the Council of Ministers in 2003 to approve
the recommendations of the Group of Ministers the DoT and Ministry of Finance
were required to discuss and finalise the spectrum pricing formula. 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 the DoT who virtually gifted
away the important
national asset at throw
away prices by
willfully ignoring the
concerns raised from
various quarters including the
Prime Minister, Ministry of Finance and also some of its own
officers. This becomes
clear from the
fact that soon
after obtaining the licences, some of the beneficiaries
off-loaded their stakes to others, in the name
of transfer of
equity or infusion
of fresh capital
by foreign companies,
and thereby made huge
profits. We have no doubt that if the
method of auction had been adopted for grant of licence which could be the only
rational transparent method for
distribution of national wealth, the nation would have been enriched by many thousand crores.
While it
cannot be denied
that TRAI is
an expert body
assigned with important functions
under the 1997
Act, it cannot
make recommendations
overlooking the basic
constitutional postulates and
established principles and make
recommendations which would
deny people from
participating in the distribution of
national wealth and
benefit a handful
of persons. Therefore, even though the scope of
judicial review in such matters is extremely limited, as pointed out
in Delhi Science
Forum v. Union
of India (supra)
and a large number of
other judgments relied
upon by the
learned counsel of
the respondents, keeping in view
the facts which have been brought to the notice of the Court that the mechanism
evolved by TRAI for allocation of spectrum and the methodology adopted by the
then Minister of C&IT and the
officers of DoT for grant of UAS Licences may have caused huge loss to the
nation, we have no hesitation to record
a finding that
the recommendations made
by TRAI were
flawed in many
respects and implementation thereof
by the DoT
resulted in gross
violation of the
objective of NPT
1999 and the
decision taken by
the Council of Ministers on
31.10.2003. We may
also mention that
even though in
its recommendations dated 28.8.2007, TRAI had not specifically
recommended that entry fee be fixed at 2001 rates,
but paragraph 2.73
and other related
paragraphs of its recommendations state that it has decided not to recommend the
standard option for pricing of spectrum in 2G bands keeping in view the level
playing field for the new entrants. It is impossible to approve the decision
taken by the DoT to act upon those recommendations. We also consider it necessary to observe
that in today's dynamism and
unprecedented growth of telecom sector, the entry fee determined in
2001 ought to
have been treated
by the TRAI
as wholly unrealistic for grant of licence along with
start up spectrum. In our view, the recommendations
made by TRAI in this regard were contrary to the decision of the Council of
Ministers that the DoT shall discuss the issue of spectrum pricing with the
Ministry of Finance along with the issue of incentive for efficient use of spectrum
as well as
disincentive for sub-optimal
usages. Being an
expert body, it was incumbent upon the TRAI to make suitable
recommendations even for the 2G
bands especially in light
of the deficiencies of
the present system which it had itself pointed out. We do
not find merit in the reasoning of TRAI that the consideration of maintaining a
level playing field prevented a realistic reassessment of the entry fee.
Question Nos.3 and 4:
There is a fundamental flaw in the first-come-first-served policy
inasmuch as it involves an element of pure chance or accident. In matters involving award of contracts or
grant of licence or permission to use public property, the invocation of first-come-first-served policy
has inherently dangerous
implications. Any person who
has access to the power corridor at the highest or the lowest level may be able
to obtain information from the Government files or the files of the agency/instrumentality of the State that a
particular public property or asset is likely
to be disposed
of or a
contract is likely
to be awarded
or a licence
or permission is likely to be
given, he would immediately make an application and would become entitled to
stand first in the queue at the cost of all others who may have
a better claim.
This Court has
repeatedly held that
wherever a contract is to be awarded or a licence is to
be given, the public authority must adopt a
transparent and fair
method for making
selections so that
all eligible persons get a fair
opportunity of competition. To put it differently, the State and its agencies/instrumentalities must always
adopt a rational method for disposal of public property and no attempt should
be made to scuttle the claim of worthy applicants. When
it comes to
alienation of scarce
natural resources like spectrum etc., it is the burden of the
State to ensure that a non-discriminatory
method is adopted
for distribution and
alienation, which would
necessarily result in protection of national/public interest. In our view, a duly publicised auction conducted
fairly and impartially
is perhaps the
best method for discharging this burden and the methods
like first-come-first-served when used for alienation of natural
resources/public property are likely to be misused by unscrupulous people who
are only interested in garnering maximum
financial benefit and
have no respect
for the constitutional ethos
and values. In
other words, while transferring or alienating the natural resources, the
State is duty bound to adopt
the method of
auction by giving
wide publicity so
that all eligible persons can
participate in the process.
The exercise undertaken by
the officers of the DoT between September, 2007 and March 2008, under the
leadership of the then Minister of C&IT was wholly arbitrary,
capricious and contrary
to public interest
apart from being violative of the doctrine of
equality. The material produced before
the Court shows that the Minister of
C&IT wanted to favour some companies at the cost of the Public Exchequer
and for this purpose, he took the following steps:
(i) Soon after his appointment as Minister of
C&IT, he directed that all the
applications received for
grant of UAS
Licence should be
kept pending till the receipt of
TRAI recommendations.
(ii) The
recommendations made by
TRAI on 28.8.2007
were not placed before the full Telecom Commission
which, among others, would have included the Finance Secretary. The notice of the meeting of the Telecom Commission
was not given
to any of
the non permanent members despite
the fact that
the recommendations made
by TRAI for allocation of
spectrum in 2G
bands had serious
financial implications. This has
been established from the pleadings and the records produced before this Court that after
issue of licences, 3 applicants transferred their equities for
a total sum
of Rs.24,493 crores
in favour of
foreign companies. Therefore, it
was absolutely necessary for the DoT to take the opinion
of the Finance
Ministry as per
the requirement of
the Government of India (Transaction of Business) Rules, 1961.
(iii) The officers of the
DoT who attended the meeting of the Telecom Commission held
on 10.10.2007 hardly
had any choice
but to approve the
recommendations made by
TRAI. If they
had not done
so, they would have incurred the
wrath of Minister of C&IT.
(iv) In view
of the approval
by the
Council of Ministers
of the recommendations made by
the Group of Ministers in 2003, the DoT had to
discuss the issue
of spectrum pricing
with the Ministry
of Finance.
Therefore, the DoT
was under an obligation to involve
the Ministry of Finance before
any decision could be taken in the context of paragraphs 2.78 and 2.79 of
TRAI's recommendations. However, as the
Minister of C&IT was very much conscious of the fact that the Secretary,
Finance, had objected to the allocation of 2G spectrum at the rates fixed in
2001, he did not
consult the Finance
Minister or the
officers of the
Finance Ministry.
(v) The Minister of
C&IT brushed aside the suggestion
made by the Minister of Law and Justice
for placing the matter before the Empowered Group of Ministers. Not only this, within few hours of the
receipt of the suggestion made by the Prime Minister in his letter dated
2.11.2007 that keeping in view
the inadequacy of
spectrum, transparency and
fairness should be maintained in the matter of allocation thereof, the
Minister of C&IT rejected the same by saying that it will be unfair,
discriminatory, arbitrary and capricious
to auction the
spectrum to new
applicants because it will not give them level playing field.
(vi) The Minister
C&IT introduced cut
off date as
25.9.2007 for consideration of
the applications received for grant of licence despite the fact that only one
day prior to this, press release was issued by the DoT fixing 1.10.2007
as the last
date for receipt
of the applications. This
arbitrary action of the Minister of C&IT though appears to be
innocuous, actually benefitted some of
the real estate companies who did not have any
experience in dealing
with telecom services
and who had
made applications only on 24.9.2007, i.e., one day before the cut off
date fixed by the Minister of C&IT
on his own.
(vii) The cut off date,
i.e. 25.9.2007 decided by the Minister of C&IT on 2.11.2007 was not made
public till 10.1.2008 and the first-come-first-served policy, which was being
followed since 2003 was changed by him on 7.1.2008 and was incorporated in
press release dated 10.1.2008. This enabled
some of the applicants, who had access either to the Minister or the officers
of the DoT
to get the
demand drafts, bank
guarantee, etc. prepared in
advance for compliance of conditions of the LoIs, which was the basis
for determination of
seniority for grant
of licences and allocation of spectrum.
(viii) The meeting of
the full Telecom
Commission, which was scheduled to be held on 9.1.2008 to
consider issues relating to grant of licences and pricing of spectrum was
deliberately postponed on 7.1.2008 so
that the Secretary,
Finance and Secretaries
of three other
important Departments may not
be able to
raise objections against
the procedure devised by
the DoT for
grant of licence
and allocation of
spectrum by applying the
principle of level playing field.
(ix) The manner
in which the
exercise for grant
of LoIs to
the applicants was conducted
on 10.1.2008 leaves
no room for
doubt that every thing was stage managed to favour those
who were able to know in advance the
change in the implementation of the first-come-first served policy.
As a result of this, some of the companies which had submitted applications in 2004 or 2006 were pushed down
in the priority and those who had
applied between August
and September 2007
succeeded in getting
higher seniority entitling
them to allocation
of spectrum on priority basis.
The argument
of Shri Harish
Salve, learned senior
counsel, that if
the Court finds that the exercise undertaken for grant of UAS Licences
has resulted in violation of
the institutional integrity,
then all the
licences granted 2001 onwards should be
cancelled does not deserve acceptance
because those who have got licence between 2001 and
24.9.2007 are not parties to these petitions and legality of the licences
granted to them has not been questioned before this Court.
In majority
of judgments relied
upon by learned
Attorney General and learned counsel for the respondents, it
has been held that the power of judicial review should be exercised with great
care and circumspection and the Court should
not ordinarily interfere with the policy decisions of the Government in financial matters.
There cannot be
any quarrel with
the proposition that
the Court cannot substitute
its opinion for
the one formed
by the experts
in the particular field and due
respect should be given to the wisdom of those who are entrusted with the task
of framing the policies. We are also
conscious of the fact that the
Court should not
interfere with the
fiscal policies of
the State. However, when it is
clearly demonstrated that the policy framed by the State or its agency/instrumentality and/or
its implementation is
contrary to public interest or is violative of the constitutional
principles, it is the duty of the Court to exercise its jurisdiction in larger
public interest and reject the stock plea of
the State that the scope of judicial review should not be exceeded
beyond the recognised parameters. When
matters like these are brought before the judicial constituent of the State by
public spirited citizens, it becomes the duty of the Court to
exercise its power
in larger public
interest and ensure
that the institutional integrity
is not compromised
by those in
whom the people
have reposed trust and who have taken oath to discharge duties in
accordance with the Constitution and
the law without
fear or favour,
affection or ill
will and who, as any other
citizen, enjoy fundamental rights and, at the same time, are bound to
perform the duties
enumerated in Article
51A. Reference in
this connection can usefully
be made to
the judgment of
the three Judge
Bench headed by Chief Justice Kapadia in Centre for P.I.L. v. Union of
India (2011) 4 SCC 1.
Before concluding, we
consider it imperative to observe that but for the vigilance of
some enlightened citizens
who held important
constitutional and other positions
and discharged their
duties in larger
public interest and
Non Governmental
Organisations who have
been constantly fighting
for clean governance and
accountability of the
constitutional
institutions, unsuspecting citizens and
the Nation would
never have known
how the scarce
natural resource spared by Army has been grabbed by those who enjoy
money power and who have been able to manipulate the system.
In the result, the writ
petitions are allowed in the following terms:
(i) The licences
granted to the
private respondents on
or after 10.1.2008 pursuant to two press releases
issued on 10.1.2008 and subsequent allocation of spectrum to the licensees are
declared illegal and are quashed.
(ii) The above direction
shall become operative after four months.
(iii) Keeping in view the
decision taken by the Central Government in 2011,
TRAI shall make fresh recommendations for grant of licence and
allocation of spectrum in 2G band in 22 Service Areas by auction, as was done
for allocation of spectrum in 3G band.
(iv) The Central
Government shall consider
the recommendations of
TRAI and take appropriate
decision within next
one month and
fresh licences be granted by auction.
(v) Respondent Nos.2, 3 and 9 who have been
benefited at the cost of Public Exchequer by a wholly arbitrary and
unconstitutional action taken by the DoT for grant of UAS Licences and
allocation of spectrum in 2G band and who off-loaded their stakes for many
thousand crores in the name of fresh infusion of equity or transfer of equity
shall pay cost of Rs.5 crores each.
Respondent Nos. 4, 6, 7
and 10 shall
pay cost of Rs.50
lakhs each because
they too had been
benefited by the wholly arbitrary and
unconstitutional exercise undertaken by the
DoT for grant of UAS Licences and allocation of spectrum in 2G band. We have
not imposed cost on the respondents who had submitted their applications in 2004
and 2006 and whose applications were kept pending till 2007.
(vi) Within four months,
50% of the cost shall be deposited with the Supreme Court Legal Services
Committee for being used for providing legal aid to poor and indigent
litigants. The remaining 50% cost shall
be deposited in the funds created for Resettlement and Welfare Schemes of the
Ministry of Defence.
(vii) However, it
is made clear
that the observations made
in this judgment shall not,
in any manner,
affect the pending
investigation by the
CBI, Directorate of Enforcement and others agencies or cause prejudice
to those who are facing prosecution
in the cases
registered by the
CBI or who
may face prosecution on
the basis of charge sheet(s) which
may be filed
by the CBI in
future and the Special Judge, CBI shall decide the matter uninfluenced by this judgment. We
also make it
clear that this
judgment shall not
prejudice any person in the
action which may be taken by other investigating agencies under Income Tax Act,
1961, Prevention of Money Laundering Act, 2002 and other similar statutes.
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