TMI Blog2012 (2) TMI 568X X X X Extracts X X X X X X X X Extracts X X X X ..... 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? 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? - W.P.(C) 423 OF 2010 - - - Dated:- 2-2-2012 - SINGHVI, G.S AND GANGULY, ASOK KUMAR, JJ. JUDGEMENT G.S. Singhvi, J. 1. The important questions which arise for consideration in these petitions, one of which has been filed by Centre for Public Interest Litigation, a registered Society formed by Shri V.M. Tarkunde (former Judge of this 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 Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s introduced 1984 onwards. 3. In 1839, the first telegraph link was experimented between Calcutta and Diamond Harbour covering 21 miles. In 1851, the telegraph line was opened for traffic, mostly for the official work of the East India Company. In course of time, telegraphy service was made available for public traffic. The Indian Telegraph Act was enacted in 1885. It gave the exclusive privilege of establishing, maintaining and working of telegraphs to the Central Government. It also empowered the Government to grant licences on such conditions and in consideration of such payments as it thought fit, to any person to establish, maintain or work a telegraph in any part of India. 4. After independence, Government of India took complete control of the telecom sector and brought it under the Post Telegraph Department. One major step taken for improving telecommunication services in the country was the establishment of a modern telecommunication manufacturing facility at Bangalore under the Public Sector, in the name of Indian Telephone Industries Ltd. The reforms in the telecommunication sector started in 1984 when the Centre for Development of Telematics (C-DoT) was set up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ai (Madras). In the second phase, in December 1995, after following a competitive bidding process, 14 CMTS licences were awarded in 18 state circles, 6 Basic Telephone Services (BTS) licences were awarded in 6 state circles and paging licences were awarded in 27 cities and 18 state circles. However, this did not yield the intended results apparently because revenue realised by the cellular and basic operators was less than the projections and the operators were unable to arrange finances for their projects. New Telecom Policy 1999 8. On the directions of the Prime Minister, a high level Group on Telecommunications (GoT) was constituted on 20.11.1998 to review the existing telecom policy and suggest further reforms. On the basis of the report of the GoT, a draft New Telecom Policy 1999 (NTP 1999) was formulated. After its approval by the Cabinet, NTP 1999 was announced to be effective from 1.4.1999. NTP 1999 had the following objectives: (i) to make available affordable and effective communications for the citizens, considering access to telecommunications as utmost important for achievement of the country's social and economic goals; (ii) to provide universal service to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovider and making it available to various users under specific conditions. (iii) With the proliferation of new technologies it is essential to revise the National Frequency Allocation Plan (NFAP) in its entirety so that it becomes the basis for development, manufacturing and spectrum utilization activities in the country amongst all users. NFAP was under review and the revised NFAP was to be made public by the end of 1999 detailing information regarding allocation of frequency bands for various services, without including security information. (iv) NFAP would be reviewed no later than every two years and would be in line with radio regulations of the International Telecommunication Union (ITU). (v) Adequate spectrum is to be made available to meet the growing need of telecommunication services. Efforts would be made for relocating frequency bands assigned earlier to defence and others. Compensation for relocation may be provided out of spectrum fee and revenue share. (vi) There is a need to review the spectrum allocation in a planned manner so that required frequency bands are available to the service providers. (vii) There is a need to have a transparent process of alloca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Secretary and the full time Members of the Commission shall be drawn from the best persons available, including from within the Department of Telecommunications. 3. Functions The Telecom Commission shall be responsible : (a) For formulating the policy of the Department of Telecommunications for approval of the Government; (b) For preparing the budget for the Department of Telecommunications for each financial year and getting it approved by the Government; and (c) Implementation of the Government's policy in all matters concerning telecommunication. 4. Within the limits of the budget provision, approval by the Parliament, the Commission shall have the powers of the Government of India, both administrative and financial, for carrying out the work of the Department of Telecommunications. 5. Chairman (a) The Chairman, in his capacity as Secretary to the Government of India in the Department of Telecommunications, shall be responsible under the Minister of Communications for arriving at decisions on technical questions and advising Government on policy and allied matters of telecommunication. All recommendations of the Commission on policy and allied matters shall b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... technological improvements in the services provided by the service providers; (vi) type of equipment to be used after inspection of equipment used in the network; (vii) measures for the development of telecommunication technology and any other matter relatable to telecommunication industry in general; (viii) efficient management of available spectrum; (b) discharge the following functions, namely:- (i) ensure compliance of terms and conditions of licence; (ii) (ii)notwithstanding anything contained in the terms and conditions of the licence granted before the commencement of the Telecom Regulatory Authority of India (Amendment) Act, 2000, fix the terms and conditions of inter-connectivity between the service providers; (iii) ensure technical compatibility and effective inter- connection between different service providers; (iv) regulate arrangement amongst service providers of sharing their revenue derived from providing telecommunication services; (v) lay-down the standards of quality of service to be provided by the service providers and ensure the quality of service and conduct the periodical survey of such service provided by the service providers so as to prot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority may within fifteen days from the date of receipt of such reference, forward to the Central Government its recommendation after considering the reference made by that Government. After receipt of further recommendation if any, the Central Government shall take a final decision. (2) Notwithstanding anything contained in the Indian Telegraph Act, 1885 (13 of 1885), the Authority may, from time to time, by order, notify in the Official Gazette the rates at which the telecommunication services within India and outside India shall be provided under this Act including the rates at which messages shall be transmitted to any country outside India: Provided that the Authority may notify different rates for different persons or class of persons for similar telecommunication services and where different rates are fixed as aforesaid the Authority shall record the reasons therefor. (3) While discharging its functions :under sub-section (1) or sub- section (2) the Authority shall not act against the interest of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality. (4) The Authority shall ensure tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors barring DOT/MTNL be selected through a competitive process. This is recommended to be a multi stage bidding process preceded by a pre-qualification round. 4.6 Pre-qualification Prospective operators would be required to meet pre-determined criteria in order to qualify to bid for the licence. Pre-qualifications will mainly be on the following grounds :- - Financial strength and experience as Telecom Service Provider - Minimum roll out obligation - Technical Plan - Business Plan - Payment terms and other commercial conditions It is recommended that prospective bidders who meet the pre- determined threshold as set out in the pre-qualification criteria be short-listed for bidding for entry fee in the next stage. No weightages need be attached to the pre-qualification criteria. The criteria for pre-qualification could be developed on the following lines:- 4.11 The Structure of the Bidding Process Selection from amongst all those who pass the pre-qualification round will be by a process of bidding. The bids will be carefully structured so as to guard against the possible misuses of the process such as preemptive over-bidding or cartelisation. For this purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r each licence will have the claim to the license in question. Licences will become effective on payment of the amount of the winning bid for the entry fee within a period specified in the tender document. 4.14 The same process of bidding will also enable selection of operators where two slots in the same circle are vacant viz. J K and Andaman and Nicobar where no operators exist. In these circles, two bidders may be selected and it is recommended in this regard that while the second highest bidder in these circles may be considered for the second slot available, he need not be asked to match the bid of the highest bidder. It may be provided though that if the difference between the first and the second highest bids is substantial, say more than 25 %, fresh bids for the second slot will be invited. Such an arrangement while being equitable will act as a good incentive for attracting bids for these circles which have not proved to be attractive in the past. (III). Entry of the Fourth Operator: 4.15 DOT/MTNL, the incumbent in basic services, are to enter the field of cellular mobile services as the third operator in terms of NTP 99 with the existing availability of spectrum. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... report on Cellular Mobile Services (para 20 page-V) of the report). Accordingly, TRAI is of the opinion that a view can be taken in this matter only after getting a full report from the DOT on the quantum of spectrum being made available for the CMSPs, existing as well as the proposed new entrants and its location i.e. whether it is going to be in the 900 MHz or in 1800 MHz bands. (underlining is ours) 15. On 5.1.2001, the Government of India issued guidelines for issue of licence for CMTS. These guidelines envisaged a detailed bidding process for selection of the new service providers. 16. On 27.10.2003, TRAI made recommendations under Section 11(1)(a)(i), (ii), (iv) and (vii) of the 1997 Act on Unified Licensing. TRAI referred to international practises, NTP 1994 and NTP 1999 and growth of telephone density - national objective and priority. Para 7.2 of those recommendations read as under: 7.2 The Guidelines would be notified by the licensor based on TRAI recommendations to include nominal entry fee, USO, etc. The charges for spectrum shall be determined separately. The operator shall be required to approach the licensor mainly for spectrum allocation. Since, spect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices, thus severely limiting their availability for the mobile telecom operators. 2.1.2 In the above context, GoM recommended the following: (1) Adequate spectrum be made available for the unimpeded growth of telecom services, modalities for which will be jointly worked out by Wireless Planning Coordination (WPC) Wing of Department of Telecom and Defence services. The Ministry of Defence would coordinate release additional spectrum in a number of cities for which requirements have been projected within a month. (2) The Ministry of Finance will provide necessary budgetary support to Ministry of Defence for modernization of their existing equipment to facilitate release of required spectrum. The actual fund requirements including its phasing will be worked out between the Ministry of Defence Ministry of Finance and the Department of Telecom in a time bound manner. (3) The Department of Telecom and Ministry of Finance would discuss and finalise spectrum pricing formula which will include incentive for efficient use of spectrum as well as disincentive for sub-optimal usages (4) The allotment of additional spectrum be transparent fair and equitable, avoiding monopolistic si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d access regime while basic operators to pay the differences between fourth cellular operators licence fee and the BSO fee already paid by them (iv) Reliance Infocom required to pay Rs. 1096 crores for migration in addition to penalty of Rs. 485 crores for offering cellular type services. (v) Process of migration to the new regime to be voluntary. (vi) The existing BSOs after migration to Unified Access Licensing Regime may offer full mobility however WLL(M) operators after migration will be required to offer limited mobility service to such customers who so desire. (vii) No additional fee to be paid for any of the circles where there is no fourth cellular operator. 2.4.4 Enhancing the scope of current Telecom Policy (NTF-99) to provide category of Unified License and Unified Access Service License NTP-99 recognises access service providers as a distinct class. For the purpose of licensing, this has been sub-divided into cellular fixed and cable service providers. NTP-99 also states that convergence of both markets and technologies is a reality that is forcing realignment of the industry. This convergence now allows operators to use their facilities to deliver some servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... giving any compensation package to them, because of the perception that the finances of the cellular operators are strained and because of the effect these may have on financial institutions. Finance Ministry would address the difficulties of the cellular operators, if any, separately and appropriately. (vi) If new services are introduced as a result of technological advancements which require additional spectrum over and above the spectrum already allotted/contracted allocation of such spectrum will be considered on payment of additional fee or charges, these will be determined as per guidelines to be evolved in consultation with TRAI. (emphasis supplied) 20. The recommendations of the Group of Ministers were accepted by the Council of Ministers on 31.10.2003. 21. Thereafter, DoT issued Office Memorandum dated 11.11.2003 and made some additions to NTP 1999. The same day, DoT issued new guidelines for UAS Licences. Two salient features of these guidelines were that the existing operators would have an option to continue under the existing licensing regime or to migrate to new UAS Licence and the licence fee, service area, rollout obligations and performance bank guarantee u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mining the possibility of creation of a spectrum relocation fund. After five days, the Minister C IT wrote letter dated 28.2.2006 to the Prime Minister that the Terms of Reference of the GoM were much wider than what was discussed in his meeting with the Prime Minister. He appears to have protested that the Terms of Reference would impinge upon the work of his Ministry and requested that the Terms of Reference be modified in accordance with the draft enclosed with the letter. Interestingly, the Minister's draft did not include the important issue relating to Spectrum Pricing. Thereafter, vide letter 7.12.2006, the Cabinet Secretary conveyed the Prime Minister's approval to the modification of the Terms of Reference. The revised Terms of Reference did not include the issue relating to Spectrum Pricing. 25. On 14.12.2005, the DoT issued revised guidelines for UAS Licence. Paragraph 11 of the new guidelines reads as under: The licences shall be issued without any restriction on the number of entrants for provision of unified access services in a Service Area. In terms of paragraph 14 of the guidelines, the licensee was required to pay annual licence fee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carce availability of spectrum. Paragraphs 2.37, 2.40, 2.69 and 2.73 to 2.79 of the TRAI's recommendations dated 28.8.2007 are extracted below: 2.37 Accordingly, the Authority recommends that no cap be placed on the number of access service providers in any service area. 2.40 The present spectrum allocation criteria, pricing methodology and the management system suffer from a number of deficiencies and therefore the Authority recommends that this whole issue is not to be dealt with in piecemeal but should be taken up as a long term policy issue. There is an urgent need to address the issues linked with spectrum efficiency and its management. 2.69 The Entry fee for acquiring a UASL license enables the licensee to become eligible for spectrum allocation in certain specified bands without any additional fee for acquisition of spectrum which means that allocation of spectrum follows the grant of license subject however to availability of spectrum. There is only one direct cost to the operator for spectrum i.e. spectrum charge in the form of royalty. 2.73 The allocation of spectrum is after the payment of entry fee and grant of license. The entry fee as it exists tod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppen in semi-urban and rural areas where affordability of services to the common man is the key to further expansion. 2.76 However, the Authority is of the view that the approach needs to be different for allocating and pricing spectrum beyond 10 MHz in these bands i.e. 800, 900 and 1800 MHz. In this matter, the Authority is guided by the need to ensure sustainable competition in the market keeping in view the fact that there are new entrants whose subscriber acquisition costs will be far higher than the incumbent wireless operators. Further, the technological progress enables the operators to adopt a number of technological solutions towards improving the efficiency of the radio spectrum assigned to them. A cost- benefit analysis of allocating additional spectrum beyond 10 MHz to existing wireless operators and the cost of deploying additional CAPEX towards technical improvements in the networks would show that there is either a need to place a cap on the maximum allocable spectrum at 10 MHz or to impose framework of pricing through additional acquisition fee beyond 10 MHz. The Authority feels it appropriate to go in for additional acquisition fee of spectrum instead of placing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the wireless sector will go against the principle of level playing field. This is specific and restricted to 2G bands only i.e. 800, 900 and 1800 MHz. This approach assumes more significance particularly in the context where subscriber acquisition cost for a new entrant is likely to be much higher than for the incumbent wireless operators. 2.79 In the case of spectrum in bands other than 800, 900 and 1800 MHz i.e. bands that are yet to be allocated, the Authority examined various possible approaches for pricing and has come to the conclusion that it would be appropriate in future for a market based price discovery systems. In response to the consultation paper, a number of stakeholders have also strongly recommended that the allocation of spectrum should be immediately de-linked from the license and the future allocation should be based on auction. The Authority in its recommendation on Allocation and pricing of spectrum for 3G and broadband wireless access services has also favored auction methodology for allocation of spectrum for 3G and BWA services. It is therefore recommended that in future all spectrum excluding the spectrum in 800, 900 and 1800 bands should be auctioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.10.2007 may be announced as the cut-off date for receipt of new UAS Licence applications. Shri A. Raja who was, at the relevant time, Minister of C IT did not agree with the suggestion and ordered that 1.10.2007 be fixed as the cut-off date for receipt of applications for new UAS Licence. Accordingly, press note dated 24.9.2007 was issued by the DoT stating that no new application for UAS Licence will be accepted after 1.10.2007. 30. It is borne out from the record that Vodafone Essar Spacetel Ltd. (respondent No.12) had made an application for UAS Licence in 2004 and 3 others, namely, Idea Cellular Ltd. (respondent No.8), Tata Teleservices Ltd. (respondent No.9) and M/s. Aircel Ltd. (respondent No.11) had made similar applications in 2006. However, the same were not disposed of by the DoT and they were included in the figure of 167. Between 24.9.2007 and 1.10.2007, over 300 applications were received for grant of UAS Licences. Member (Technology), Telecom Commission and Ex-officio Secretary to Government of India sent a letter dated 26.10.2007 to Secretary, Department of Legal Affairs, Ministry of Law and Justice seeking the opinion of the Attorney General of India/Solicitor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new licences. Paragraph 13 of the statement of case is extracted below: Issue of LoIs to M/s. TATA and others for usage of Dual Technology spectrum based on their applications received after 18.10.2007. Whether (i) To treat their request prior to existing applicants or (ii) To treat their request after processing all 575 applications. 31. The Law Secretary placed the papers before the Minister of Law and Justice on 1.11.2007, who recorded the following note: I agree. In view of the importance of the case and various options indicated in the statement of the case, it is necessary that whole issue is first considered by an empowered Group of Ministers and in that process legal opinion of Attorney General can be obtained. 32. When the note of the Law Minister was placed before the Minister of C IT , he recorded the following note on 2.11.2007 - Discuss please . On the same day, i.e., 2.11.2007 the Minister of C IT did two things. He approved the note prepared by Director (AS-1) containing the following issues: (i) Issuing of LoIs to new applicants as per the existing policy, (ii) Number of LoIs to be issued in each circle, (iii) Approval of draft LoI, (iv) Conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pe this will satisfy the Industry. 34. In the meanwhile, the Prime Minister who had received representations from telecom sector companies and had read reports appearing in a section of media sent letter dated 2.11.2007 to the Minister of C IT and suggested that a fair and transparent method should be adopted for grant of fresh licences. That letter reads as under: Prime Minister New Delhi 2 November, 2007 Dear Shri Raja, A number of issues relating to allocation of spectrum have been raised by telecom sector companies as well as in sections of the media. Broadly, the issues relate to enhancement of subscriber linked spectrum allocation criteria, permission to CDMA service providers to also provide services on the GSM standard and be eligible for spectrum in the GSM service band, and the processing of a large number of applications received for fresh licenses against the backdrop of inadequate spectrum to cater to overall demand. Besides these, there are some other issues recommended by TRAI that require early decision. The key issues are summarized in the annexed note. I would request you to give urgent consideration to the issues being raised with a view to ensu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t bother to consider the suggestion made by the Prime Minister, which was consistent with the Constitutional principle of equality, that keeping in view the inadequate availability of spectrum, fairness and transparency should be maintained in the allocation of spectrum, and within few hours of the receipt of the letter from the Prime Minister, he sent a reply wherein he brushed aside the suggestion made by the Prime Minister by saying that it will be unfair, discriminatory, arbitrary and capricious to auction the spectrum to new applicants as it will not give them a level playing field. The relevant portions of paragraph 3 of the Minister's letter are extracted below: 3. Processing of a large number of applications received for fresh licenses against the backdrop of inadequate spectrum to cater to overall demand. The issue of auction of spectrum was considered by the TRAI and the Telecom Commission and was not recommended as the existing licence holders who are already having spectrum upto 10 MHz per Circle have got it without any spectrum charge. It will be unfair, discriminatory, arbitrary and capricious to auction the spectrum to new applicants as it will not give them level ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry, DoT had also replied to the Finance Secretary's letter on the above lines. 38. Although, the record produced before this Court does not show as to when the policy of first-come-first-served was distorted by the Minister of C IT , in an apparent bid to show that he had secured the Prime Minister's approval to this act of his, the Minister C IT sent letter dated 26.12.2007 to the Prime Minister, paragraphs 1 and 2 of which are extracted below: 1. Issue of Letter of Intent (LOI): DOT follows a policy of First-cum-First Served for granting LOI to the applicants for UAS licence, which means, an application received first will be processed first and if found eligible will be granted LOI. 2. Issue of Licence: The First-cum-First Served policy is also applicable for grant of licence on compliance of LOI conditions. Therefore, any applicant who complies with the conditions of LOI first will be granted UAS licence first. This issue never arose in the past as at one point of time only one application was processed and LOI was granted and enough time was given to him for compliance of conditions of LOI. However, since the Government has adopted a policy of No Cap on nu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grant of UAS licences under which initially an application which is received first will be processed first and thereafter if found eligible will be granted LOI and then who so ever complied with the conditions of LOI first will be granted UAS licence. -------- Department of Telecom (AS Cell) 10-01-2008 (underlining is ours) 42. On the same day, another press release was issued asking all the applicants to assemble at the departmental headquarters within 45 minutes to collect the response(s) of the DoT. They were also asked to submit compliance of the terms of LoIs within the prescribed period. The second press release is also reproduced below: Department of Telecommunications Press Release Date : 10 th January 2008 Sub : UASL applicants to depute their authorised representative to collect responses of DOT on 10.1.2008. The applicant companies who have submitted applications to DOT for grant of UAS licences in various service areas on or before 25.9.2007 are requested to depute their Authorised signatory/Company Secretary/ authorised representative with authority letter to collect response(s) of DOT. They are requested to bring the company's rubber stamp for re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ster of C IT , filed Writ Petition No.636 of 2008 in the Delhi High Court with the prayer that the first press release dated 10.1.2008 may be quashed. After hearing the parties, the learned Single Judge vide his order dated 1.7.2009 declared that the cut-off date, i.e., 25.9.2007 was totally arbitrary and directed the respondents in the writ petition to consider the offer made by the writ petitioner to pay Rs.17.752 crores towards additional revenue share over and above the applicable spectrum revenue share. The observations made by the learned Single Judge on the justification of fixing 25.9.2007 as the cut-off date read as under: Thus on the one hand the respondent has accepted the recommendation of the TRAI in the impugned press note, but acted contrary thereto by amending the cut-off date and thus placed a cap on the number of service providers. The stand taken by respondent and the justification sought to be given for fixing a cut- off date retrospectively is on account of large volume of applications, is without any force in view of the fact that neither any justification was rendered during the course of argument, nor any justification has been rendered in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is about fixing a cut-off date which might be an exercise in the discretion of the Appellant, those decisions are not helpful in deciding the revision of a cut-off date after applications have been received in terms of the previous cut-off date, is amenable to judicial review on administrative and constitutional law parameters. We are of the view that the two situations cannot be equated. The Government would have to justify its decision to revise a cut-off date already fixed, after applications have been received from persons acting on the basis of the earlier cut-off date. It would be for the court to be satisfied when a challenge is made, that the decision to revise a cut-off date after receiving applications on the basis of the cut-off date earlier fixed was based on some rational basis and was not intended to benefit a few applicants while discriminating against the rest. In the present case, for the reasons pointed out by the learned Single Judge, with which we concur, the Appellant has been unable to show that its decision to revise the cut-off date after receiving the application of the Respondent was based on some rational criteria. It is vulnerable to being labelled arbi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment of the Division Bench, which was approved by this Court and pleaded that once the Court has held that the cut-off date, i.e., 25.9.2007 fixed for consideration of the applications was arbitrary and unconstitutional, the entire procedure adopted by the DoT for grant of UAS Licences with the approval of the Minister of C IT is liable to be declared illegal and quashed. Another plea taken by the petitioners is that the DoT violated the recommendations made by TRAI that there should be no cap on the number of Access Service Providers in any service area and this was in complete violation of Section 11(1) of the 1997 Act. The petitioners have relied upon the report of the Comptroller and Auditor General (CAG) and pleaded that the consideration of large number of ineligible applicants and grant of LoIs and licenses to them is ex facie illegal and arbitrary. The petitioners have also pleaded that the entire method adopted by the DoT for grant of licence is flawed because the recommendations made by TRAI for grant of licences at the entry fee determined in 2001 was wholly arbitrary, unconstitutional and contrary to public interest. Yet another plea of the petitioners is that whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersely affected. (vii) That the private respondents have been able to secure foreign direct investment of thousands of crores for providing better telecom services in remote areas of the country and any intervention by the Court would result in depriving the people living in those areas of telecom services. (viii) The Government and TRAI have already initiated action for levy of penalty/liquidated damages for non-compliance of the roll out obligations and violation of conditions of the license. That the licensees have not violated any conditions of the license and that the notices issued by TRAI alleging the same have already been challenged before TDSAT and in most cases, interim orders have been passed. That the remedy, if any, available to the petitioners is to approach the TDSAT. (ix) Some of the respondents have also questioned the application of the policy of first-come-first-served by asserting that even though they had applied in 2004 and 2006, and licences had been granted to them before 25.9.2007, the allocation of spectrum was delayed till 2008 and those who had applied in 2007 were placed above them because they could fulfil the conditions of LoI in terms of the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omes entitled to get licence and spectrum. (vi) The first-come-first-served policy was manipulated by the Minister of C IT to favour some of the applicants including those who were not even eligible. Shri Bhushan pointed out that, out of 122 applications, 85 were found to be ineligible and those who could obtain information either from the concerned Minister or the officers of DoT about the change of the criteria for implementing the first-come-first-served policy got advantage and acquired priority over those who had applied earlier. (vii) The meeting of the Telecom Commission scheduled for 9.1.2008 was deliberately postponed because vide letter dated 22.11.2007 the Finance Secretary had strongly objected to the charging of entry fee fixed in 2001. (viii) Shri Bhushan pointed out that the recommendations made by TRAI on 28.8.2007 were contrary to public interest as well as financial interest of the nation because at the time of entry of 4th cellular operator the same TRAI had suggested multi-stage bidding and even for allocation of 3G spectrum the methodology of auction was suggested but, for no ostensible reason, the so-called theory of level playing field was innovated f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l technology on 18.10.2007, i.e. even before the policy was made public. Learned senior counsel argued that the decision not to auction UAS Licences was based on the recommendations of TRAI and as the petitioners have not challenged the recommendations for two years, the exercise undertaken by the DoT for grant of UAS Licences in 2008 and subsequent allotment of spectrum should not be nullified. Shri Salve argued that the question of institutional integrity is involved in the matter and if the Court comes to the conclusion that auction is the only method for grant of licences and allocation of spectrum then everything should be annulled right from 2001. Learned senior counsel submitted that multi-stage bidding was done only for the purpose of entry of 4th cellular operator but, thereafter, no auction was held. He submitted that if the spectrum was allotted free of charge till 2007, there could be no justification for auction of licences or spectrum in 2007. 54. Shri C.A. Sundaram, learned counsel appearing for respondent Nos. 2 and 4, heavily relied on paragraphs 7.2, 7.4, 7.12, 7.29, 7.30, 7.37 and 7.39 of TRAI's recommendations dated 27.10.2003 and argued that the recommendatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 would have received licences bundled with spectrum without competition/objection from anyone. 58. Shri Dayan Krishnan, learned counsel for respondent No. 6, adopted the arguments of other learned counsel and submitted that the licences granted in 2007 should not be quashed at this belated stage. 59. Shri Rakesh Dwivedi, learned senior counsel for TRAI, referred to TRAI's written submissions to justify why it had not recommended auction of licences. Learned senior counsel extensively referred to the recommendations made by TRAI in 2007 and submitted that even though it was specifically suggested that the DoT should take a comprehensive decision on the allocation of spectrum, no effort was made in that direction and the licences were granted without determining availability of spectrum. Shri Dwivedi also submitted that TRAI has already initiated action for cancellation of licences of those respondents who have violated the terms of licence and/or failed to fulfil roll- out obligations. 60. Learned counsel for both the sides relied upon a large number of decisions. Shri Prashant Bhushan and Dr. Subramanian Swamy relied upon the following judgements: K. Manjusree v. State of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tement dated 29.1.2011 issued by the present Minister of C IT : In future, the spectrum will not be bundled with licence. The licence to be issued to telecom operators will be in the nature of `unified licence' and the licence holder will be free to offer any of the multifarious telecom services. In the event the licence holder would like to offer wireless services, it will have to obtain spectrum through a market driven process. In future, there will be no concept of contracted spectrum and, therefore, no concept of initial or start-up spectrum. Spectrum will be made available only through market driven process. While moving towards a new policy dispensation, it is necessary to ensure a level playing field between all players. Hence going forward, any new policy of pricing would need to be applied to equally to all players. Additionally, assignment of balance of contracted spectrum may need to be ensured for the existing licensees who have so far been allocated only the startup spectrum of 4.4 MHz. It may be recalled that show cause notices have been issued to certain licensees for cancellation. Only in respect of the licences that will be found valid after the process is comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. In Article 39(b) of the Constitution it has been provided that the ownership and control of the material resources of the community should be so distributed so as to best sub-serve the common good, but no comprehensive legislation has been enacted to generally define natural resources and a framework for their protection. Of course, environment laws enacted by Parliament and State legislatures deal with specific natural resources, i.e., Forest, Air, Water, Costal Zones, etc. 64. The ownership regime relating to natural resources can also be ascertained from international conventions and customary international law, common law and national constitutions. In international law, it rests upon the concept of sovereignty and seeks to respect the principle of permanent sovereignty (of peoples and nations) over (their) natural resources as asserted in the 17th Session of the United Nations General Assemble and then affirmed as a customary international norm by the International Court of Justice in the case opposing the Democratic Republic of Congo to Uganda. Common Law recognizes States as having the authority to protect natural resources insofar as the resources are within the inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... methods. In Fomento Resorts and Hotels Limited case, the Court referred to the article of Prof. Joseph L. Sax and made the following observations: 53. The public trust doctrine enjoins upon the Government to protect the resources for the enjoyment of the general public rather than to permit their use for private ownership or commercial purposes. This doctrine puts an implicit embargo on the right of the State to transfer public properties to private party if such transfer affects public interest, mandates affirmative State action for effective management of natural resources and empowers the citizens to question ineffective management thereof. 54. The heart of the public trust doctrine is that it imposes limits and obligations upon government agencies and their administrators on behalf of all the people and especially future generations. For example, renewable and non-renewable resources, associated uses, ecological values or objects in which the public has a special interest (i.e. public lands, waters, etc.) are held subject to the duty of the State not to impair such resources, uses or values, even if private interests are involved. The same obligations apply to m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applied in cases dealing with environmental jurisprudence, it has its broader application. Learned Judge then referred to the judgments, In re Special Reference No. 1 of 2001 (2004) 4 SCC 489, M.C. Mehta v. Kamal Nath (1997) 1 SCC 388 and observed: This doctrine is part of Indian law and finds application in the present case as well. It is thus the duty of the Government to provide complete protection to the natural resources as a trustee of the people at large. The Court also held that natural resources are vested with the Government as a matter of trust in the name of the people of India, thus it is the solemn duty of the State to protect the national interest and natural resources must always be used in the interests of the country and not private interests. 69. As natural resources are public goods, the doctrine of equality, which emerges from the concepts of justice and fairness, must guide the State in determining the actual mechanism for distribution of natural resources. In this regard, the doctrine of equality has two aspects: first, it regulates the rights and obligations of the State vis-`-vis its people and demands that the people be granted equita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licy, which shall be made known to the public by publication in the Official Gazette and other recognised modes of publicity and such policy must be implemented/executed by adopting a non-discriminatory and non-arbitrary method irrespective of the class or category of persons proposed to be benefited by the policy. The distribution of largesse like allotment of land, grant of quota, permit licence, etc. by the State and its agencies/instrumentalities should always be done in a fair and equitable manner and the element of favouritism or nepotism shall not influence the exercise of discretion, if any, conferred upon the particular functionary or officer of the State. 71. In Sachidanand Pandey v. State of West Bengal (1987) 2 SCC 295, the Court referred to some of the precedents and laid down the following propositions: State-owned or public-owned property is not to be dealt with at the absolute discretion of the executive. Certain precepts and principles have to be observed. Public interest is the paramount consideration. One of the methods of securing the public interest, when it is considered necessary to dispose of a property, is to sell the property by public aucti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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. 74. 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 counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ighest 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 dul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de 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 Mini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 79. 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een 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 E ..... X X X X Extracts X X X X X X X X Extracts X X X X
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