TMI Blog2010 (12) TMI 1252X X X X Extracts X X X X X X X X Extracts X X X X ..... also the report of the Central Vigilance Commission, which was forwarded to the Director, CBI on 12.10.2009 and the findings recorded by the CAG in the Performance Audit Report, need a thorough and impartial investigation. However, at this stage, we do not consider it necessary to appoint a Special Team to investigate what the appellants have described as 2G Spectrum Scam because the Government of India has, keeping in view the law laid down in Vineet Narain s case and orders passed in other cases, agreed for a Court monitored investigation. The reports produced before the Court show that the CBI and the Enforcement Directorate have started investigation in the right direction. Keeping in view the statements made by the learned Solicitor General and the learned senior counsel representing the CBI and with a view to ensure that in a serious matter like this, comprehensive and coordinated investigation is conducted by the CBI and the Enforcement Directorate without any hindrance, we deem it proper to issue the following directions: (i) The CBI shall conduct thorough investigation into various issues highlighted in the report of the Central Vigilance Commission, which was forwar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resident of India as per the requirement of Article 151 of the Constitution, a compact disc allegedly containing conversation of Ms. Niira Radia with some public representatives, businessmen, journalists and alleged middlemen and written submissions. 4. On 29.11.2010, Shri K.K. Venugopal, learned senior counsel appearing for the CBI produced two sealed envelopes containing status report prepared in relation to Case No.RCDAI 2009 A0045 (2G Spectrum case). 5. On 8.12.2010, Shri Harin P. Raval, learned Additional Solicitor General representing the CBI and the Directorate of Enforcement produced before the Court the report prepared by the Enforcement Directorate in a sealed envelope, which was opened in the Court. After going through the report, the report was placed in the sealed cover and returned to Shri Raval. 6. For detailed examination of the issues raised by the appellants, it will be useful to notice the background in which spectrum licences were given to different parties in 2008. These are: (i) Till 1994, telecommunication services were absolute monopoly of the Government of India. In November, 1994, the Central Government framed National Telecom Policy (NTP) perm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xx xxx (vii) xxx xxx xxx (viii) xxx xxx xxx (ix) ensure effective compliance of universal service obligations; (c) levy fees and other charges at such rates and in respect of such services as may be determined by regulations; (d) perform such other functions including such administrative and financial functions as may be entrusted to it by the Central Government or as may be necessary to carry out the provisions of this Act; Provided that the recommendations of the Authority specified in clause (a) of this sub-section shall not be binding upon the Central Government: Provided further that the Central Government shall seek the recommendations of the Authority in respect of matters specified in sub-clauses (i) and (ii) of clause (a) of this subsection in respect of new license to be issued to a service provider and the Authority shall forward its recommendations within a period of sixty days from the date on which that Government sought the recommendations: Provided also that the Authority may request the Central Government to furnish such information or documents as may be necessary for the purpose of making recommendations under sub-clauses ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les). (xi) On 25.1.2001, DoT issued guidelines for issue of license for basic telephone service. (xii) On 27.10.2003, TRAI forwarded its recommendations on Unified Licensing Regime. Paragraphs 7.15 to 7.19 and 7.37 to 7.39 of those recommendations are extracted below: Recommendations on Entry Fee, Rollout obligations and Performance Bank Guarantee: 7.15 To decide the benchmark for the entry fee for Unified Access Licensing Regime three alternatives could be considered which are discussed in the subsequent paragraphs. 7.16 The first alternative could be inviting bids from existing operators as well as from the new prospective Unified Access Licensing Operators. This is possible since additional spectrum is now being made available by Ministry of Defence and the existing contractual commitments to existing cellular and WLL players can easily be met, leaving out a balance for more players. The benchmarks fixed through this process will be up-todate based upon the current market situation and will be done through a transparent process. The problems associated with the bidding process are as follows: i) The fixing of the benchmarks through a bidding process cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entry fee and the entry fee paid by them. It may be recalled that, even in the past, entry to cellular and basic services has been on fixed fee basis, e.g., for metros in the case of cellular and for the second BSO. 7.19 It is recommended that the 3rd alternative as mentioned in para-7.18 above may be accepted for fixing the entry fee for migration to Unified Access Licensing regime for Basic and Cellular services at the circle level. xxx xxx xxx xxx xxx xxx xxx xxx xxx Competition 7.37 On the issue of introducing more competition, the TRAI has always been in favour of open and healthy competition. In its recommendations on the introduction of the 5th and 6th Cellular Mobile license, the TRAI opined that Induction of additional mobile service providers in various service areas can be considered if there is adequate availability of spectrum for the existing service providers as well as for the new players, if permitted. Taking cognizance of spectrum availability, the TRAI is in favour of introducing more competition. However, we feel that it in lieu of more cellular operators, it would be more appropriate to have competition in a Unified L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded to accept and process UASL applications in the same manner as was done in the case of BSO applications. (xvii) On 13.1.2005, TRAI recommended that till Unified Licensing comes into effect, the current regime of spectrum pricing will continue and the telecom services should not be seen as a source of revenue for the Government. On 14.12.2005, revised UASL guidelines were issued. (xviii) On 13.4.2007, a reference was made to TRAI by the DoT stating that after finalisation of UASL policy, 159 licences had been issued for providing Access Services (CMTS/UASL/Basic) in the country and the Access Service Providers were mostly providing services by using the wireless technology (CDMA/GSM). It was also indicated that as per the existing policy of granting license, there was increase in the demand on spectrum in a substantial manner and the Government was contemplating review of its policy. A suggestion was also made that a limit can be put on the number of Access Service Providers in each service area because the spectrum is a scarce resource and to ensure that adequate quantity of spectrum is available to the licensee to enable them to provide their services and to maintain the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Telecom Commission. In that meeting, a committee of 6 officers all belonging to DoT was constituted and the committee submitted its report on 10.10.2007 virtually dittoing the recommendations of the TRAI. (xxii) Three of the four companies, which were providing CDMA based mobile services under UAS licence had applied in 2006 for permission to use GSM technology. At the relevant time, combination of technologies (CDMA, GSM and/or any other) was not permitted. Therefore, the DoT did not accept their request. After receipt of the recommendations of TRAI, a decision was taken by the DoT on 17.10.2007 for use of alternate technology albeit without referring the mater to full Telecom Commission. DoT issued press release on 19.10.2007 on the issue of use of alternate technology. However, a day before that i.e., 18.10.2007, three operators who had applied for use of alternate technology were given in principle approval for using GSM technology. (xxiii) In the meanwhile, a press note was issued by DoT incorporating therein the decision that new applications for UASL will not be accepted after 1.10.2007 till further orders. As on that date, 167 applications had been received. These ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DoT expressing his serious reservation on the decision of the DoT on the issue of determination of fee for grant of licences in 2007 at the rate determined in 2001. He emphasized that in view of the financial implications, the Ministry of Finance should have been consulted before finalizing the decision and requested that further action to implement the licences may be stayed. In reply, the Secretary DoT sent D.O. dated 29.11.2007 stating therein that entry fee was finalised for UAS regime in 2003 as per the decision of the Cabinet and the dual technology licences were issued on TRAI recommendations of 28.8.2007. (xxix) On 3.1.2008, a meeting of full Telecom Commission was fixed for 9.1.2008 to consider the following issues: (i) Performance of telecom sector. (ii) Pricing of spectrum. (iii) Any other item with the permission of Chairman. However, vide letter dated 7.1.2008, Joint Secretary (T), DoT informed the members of the Commission that meeting scheduled for 9.1.2008 has been postponed to 15.1.2008. (xxx) After three days of postponement of the meeting of Telecom Commission, a press release was issued by DoT that the department had decided to issue Letter of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the learned Single Judge was dismissed by the Division Bench and the order of the learned Single Judge was upheld. (xxxv) Special Leave Petition No. 33406/2009 filed by the Union of India, which was converted into C.A. No. 2355/2010 was disposed of by this Court on 12.3.2010 after taking into consideration the additional affidavit filed by the writ petitioner and suggestion made by the Attorney General. However, the finding recorded by the High Court on the issue of change of cut off date was not disturbed. (xxxvi) On 4.5.2009, appellant No.2 Telecom Watchdog submitted detailed representation to the Chief Vigilance Commissioner (CVC) pointing out irregularities committed in the grant of UASL. After 5 days, one Shri A.K. Agarwal made a complaint to the CVC to highlight how manipulations were made by some of the applicants for getting the licences and how the exercise undertaken by the DoT for grant of UASL has resulted in serious financial loss to the public exchequer. (xxxvii) The CVC got conducted an inquiry under Section 8(d) of the Central Vigilance Commission Act, 2003 and noticed some grave irregularities in the grant of licences. On 12.10.2009, a copy of the repo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he recommendations made by TRAI has resulted in loss to the public exchequer to the tune of more than ₹ 1,76,000 crores. 8. Learned counsel submitted that since the spectrum was scarce, the grant of licences on the basis of 2001 price was ex facie contrary to public interest and a mala fide action on the part of respondent No.5 and officers of DoT who had connived with the private operators and others including those in realty and infrastructure sectors for extraneous considerations. Learned counsel emphasized that majority of 122 applicants to whom the licences were granted were ineligible and, therefore, the TRAI has recommended cancellation of their licences. Shri Bhushan then submitted that the CAG has assessed the loss by using different methods and, therefore, the report prepared by him should constitute a basis for further investigation. Learned counsel made a pointed reference to the finding recorded by the CAG that soon after getting licences for a price of ₹ 1600 crores or less, the licensees have transferred their stakes to the operators outside the country and made profits running into many thousand crores. Learned counsel submitted that the mechanism ado ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia v. Sushil Kumar Modi (1997) 4 SCC 770, Superintendent of Police, CBI v. Tapan Kumar Singh (2003) 6 SCC 175, M.C. Mehta v. Union of India (2007) 1 SCC 110, Divine Retreat Centre v. State of Kerala (2008) 3 SCC 542, Dukhishyam Benupani, Assistant Director, Enforcement Directorate (FERA) v. Arun Kumar Bajoria (1998) 1 SCC 52, Janta Dal v. H.S. Choudhary (1992) 4 SCC 305, D. Venkatasubramaniam and others v. M.K. Mohan Krishnamachari (2009) 10 SCC 488, State of Haryana v. Bhajan Lal (1992) Supp 1 SCC 335 and argued that the Court should not make any order which may cast any reflection on the ability of the CBI to conduct the investigation into a case in which allegations of corruption have been leveled against various functionaries of the Government including respondent No.5. Learned senior counsel emphasized that the CBI has always conducted investigations objectively and, therefore, there is no reason to think that the investigation in the present case will not be fair and impartial or that any attempt will be made to shield any one. Learned counsel pointed out that after registering the first information report, the CBI has conducted raids, collected voluminous records and copies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He invited the Court s attention to the report, which was produced in a sealed envelope to show that serious efforts are being made by the Department to find out whether there has been violation of the provisions contained in the two Acts and loss has been caused to the public exchequer. Learned counsel assured that the Department will produce report on the basis of further investigation conducted by it. 12. Shri T.R. Andhyarujina, learned senior counsel appearing for respondent No.5 submitted that the report of the CAG is flawed on various aspects and the estimation of loss is based on totally unfounded assumptions. Learned counsel referred to various paragraphs of the CAG report and emphasized that till the completion of investigation no conclusion should be drawn by the Court on the culpability of respondent No.5. Learned senior counsel repeatedly emphasized that his client should not be condemned in the eyes of the public by unwarranted media publicity even before completion of the investigation by the CBI and the authorities of the Income Tax Department. 13. At this stage, we may mention that during the course of hearing, the learned Solicitor General and Shri K.K. Ven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance, we deem it proper to issue the following directions: (i) The CBI shall conduct thorough investigation into various issues highlighted in the report of the Central Vigilance Commission, which was forwarded to the Director, CBI vide letter dated 12.10.2009 and the report of the CAG, who have prima facie found serious irregularities in the grant of licences to 122 applicants, majority of whom are said to be ineligible, the blatant violation of the terms and conditions of licences and huge loss to the public exchequer running into several thousand crores. The CBI should also probe how licences were granted to large number of ineligible applicants and who was responsible for the same and why the TRAI and the DoT did not take action against those licensees who sold their stakes/equities for many thousand crores and also against those who failed to fulfill rollout obligations and comply with other conditions of licence. (ii) The CBI shall conduct the investigation without being influenced by any functionary, agency or instrumentality of the State and irrespective of the position, rank or status of the person to be investigated/probed. (iii) The CBI shall, if it has already ..... X X X X Extracts X X X X X X X X Extracts X X X X
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