TMI Blog1996 (2) TMI 548X X X X Extracts X X X X X X X X Extracts X X X X ..... tor into basic telephone services were announced and a Committee was set up to draft the tender documents for basic telephone services under the Chairmanship of G.S.S. Murthy. Ministry of Communications published the 'Tender Documents for Provision of Telephone Service'. It specified and prescribed the terms and conditions for the basic services and it also conceived foreign participation but as a joint venture prescribing a ceiling on total foreign equity so far the Indian Company was concerned was not to exceed 49% of the total equity apart from other conditions. Pursuant to the notice inviting tenders, tenders were submitted for different circles, but before licences could be granted by the Central Government, writ petitions were filed in different High Courts as well as before this Court. All writ petitions filed before different High Courts were transferred to this Court to be heard together. Telecommunications has been internationally recognized as a public utility of strategic importance. The variety of Telecommunications services that has become available globally in the last decade is remarkable. It is being realized that economy is increasingly related to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication being a sensitive service should always be within the exclusive domain and control of the Central Government and under no situation it should be parted with by way of grant of licences to non-Government Companies and private bodies. The national policies in respect of economy, finance, communications, trade, telecommunications and others have to be decided by the Parliament and the representatives of the people on the floor of the Parliament can challenge and question any such policy adopted by the ruling Government. In the case of R.K. Garg etc. etc. v. Union of India Ors., (1982) S.C.R. 347 a Constitution Bench of this Court said: Another rule of equal importance is that laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion etc. It has been said by no less a person than Holmes, J. that the legislature should be allowed some play in the joints, because it has to deal with complex problems which do not admit of solution through any doctrinaire or straight jacket formula and this is particularly true in case of legislation dealing with economic matters, where, having regard to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new Telecom Policy was placed before the Parliament and it shall be deemed that Parliament has approved the same. This Court cannot review and examine as to whether said policy should have been adopted. Of course, whether there is any legal or Constitutional bar in adopting such policy can certainly be examined by the court. The primary ground of the challenge in respect of the legality of the implementation of the policy is that Central Government which has the exclusive privilege under Section 4 of the Indian Telegraph Act, 1885 (hereinafter referred to as the 'Act') of establishing, maintaining and working telegraphs which shall include telephones, has no authority to part with the said privilege to non-Government Companies for the consideration to be paid by such companies on basis of tenders submitted by them; this amounts to an out and out sale of the said privilege. The expression 'telegraph' has been defined in Section 3(1): 3(1) telegraph means any appliance, instrument, material or apparatus used or capable of use of transmission or reception of signs, signals, writing, images and sounds or intelligence of any nature by wire, visual or other e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cence to any Person to establish, maintain or work such telegraph including telephone within any part of India. With that object in view, it was provided and prescribed that licence may be granted to any person on such conditions and in consideration of such payments as the Central Government may think fit. If proviso to sub-section (1) of Section 4 itself provides for grant of licence on condition to be prescribed and considerations to be paid to any person, then whenever such licence is granted, such grantee can establish, maintain or work the telephone system in that part of India. In view of the clear and unambiguous proviso to sub-section (1) of Section 4, enabling the Central Government to grant licences for establishment, maintenance or working of telegraphs including telecommunications, how can it be held that the privilege which has been vested by sub-section (1) of Section 4 of the Act in the Central Government cannot be granted to others on conditions and for considerations regarding payments? According to us the power and authority of the Central Government to grant licences to private bodies including Companies subject to conditions and considerations for payments cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irect or approve the general level and structure of fares to be charged by the LTE for the carriage of passengers on its transport system, although unqualified by any express words in the Act. may none the less be subject to implied limitations when expressed to be exercisable by a local authority such as the GLC ........ As such Central Government is expected to put such conditions while granting licences, which shall safeguard the public interest and the interest of the nation. Such conditions should be commensurate with the obligations that flow while parting with the privilege which has been exclusively vested in the Central Government by the Act. A stand was taken that even if it is assumed that because of the proviso to sub-section (1) of Section 4, the Central Government can grant licences in respect of establishing, maintaining or working of telecommunications to Indian Companies registered under the Indian Companies Act, such power should have been exercised only after framing of rules under Section 7 of the Act. In support of this stand, attention was drawn to second proviso to sub- section (1) of Section 4 which says that 'the Central Government may, by rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause (b) of the second proviso controlling or over-riding in any manner the first proviso which does not speak of the grant of licence by any rules made under the said Act. Section 7 enables the Central Government to make rules consistent with the provisions of the Act for the conduct of all or any telegraphs established, maintained or worked by the Government or by persons licensed under the said Act. Clause (e) of sub-section (2) of Section 7 prescribes that rules under the said Section may provide for conditions and restrictions subject to which any telegraph line, appliance or apparatus for telegraphic communication shall be established, maintained, worked, repaired, transferred, shifted, withdrawn or disconnected. there is no dispute that no such rules have been framed as contemplated by Section 7(2)(e) of the Act. But in that event, it cannot be held that unless such rules are framed, the Power under sub- section (1) of Section 4 cannot be exercised by the Central Government. The power has been granted to the Central Government by the Act itself, and the exercise of that right, by the Central Government, cannot be circumscribed, limited or restricted on any subordinate l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f of the Government or authority, which can be held to be State within meaning of Article 12 of the constitution courts have to address while examining the grievance of any petitioner as to whether the decision has been vitiated on one ground or the other. It is well settled that the onus to demonstrate that such decision has been vitiated because of adopting a procedure not sanctioned by law, or because of bad faith or taking into consideration factors which are irrelevant, is on the person who questions the validity thereof. This onus is not discharged only by raising a doubt in the mind of the court, but by satisfying the court that the authority or the body which had been vested with the power to take decision has adopted a procedure which does not satisfy the test of Article 14 of the Constitution or which is against the provisions of the statute in question or has acted with oblique motive or has failed in its function to examine each claim on its own merit on relevant considerations. Under the changed scenarios and circumstances prevailing in the society, courts are not following the rule of judicial self-restraint. But at the same time all decisions which are to be taken by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Traffic will be routed through the Long Distance Network of DOT (Department of Telecommunications). The eligibility conditions for bidders which were specified in Clause 2.1 Part I Section II of the Tender Documents: 2.1 ELIGIBILITY CONDITIONS FOR BIDDERS: i) Indian Company: The bidder must be an Indian Company registered, before the date of submission of bid, under the Indian Companies Act, 1956. However, the bidder must not be a Government Company as defined in the Indian Companies Act, 1956.( 19 ) ii) Foreign Equity : Total foreign equity in the bidding Company must not exceed 49% of the total equity. iii) Networth : Networth of the bidder Company and its promoters, both Indian and Foreign, as reflected in the latest audited balance sheet, must not be less than the amount mentioned in Table I for each category of Service Areas provided that the networth of a Foreign promoter shall not be taken into account for this purpose if its share in the equity capital of the bidder Company is less than 10%. A bidder Company which meets the minimum requirement of networth for a Service Area of one category may bid for any number of Service Areas of that or lower category. ___ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ign participation, if already taken, otherwise copy of the application submitted to the competent authority of Government of India, in this regard together with proof of submission. (viii)Certificate from the competent authority in the Government of India to the effect that the total foreign equity in the bidder company does not exceed 49%. (ix) Documentary evidence in support of the experience claimed and other items quoted in the bid. Clause 12 provided for the award of tenders. The relevant part is as follows: The maximum number of Service Areas, a successful bidder can be licensed for, is dependent upon the total networth of the bidder. A successful bidder can be awarded X, Y, Z numbers of category A B and C areas respectively if the total networth calculated as ; per Clause 2.1 (iii) above equals or exceeds Rs.(300X + 200Y + 50Z) Crores............................. ................................... .................................. TELECOM AUTHORITY is free to restrict the number of service areas for which any one Company can be licensed to provide the SERVICE. (emphasis supplied) Section III contained different conditions including in respect of Securi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith a specific foreign partner getting a majority of Circles) should be avoided. (4) Taking all these factors into consideration, imposition of a limit on the maximum number of Circles to be allotted in 'A' 'B' category circles, seems to be called for. The restriction can be as follows: (i) Out of category 'A' `B' circles bid, not more than three circles should be allotted to any single bidder. This restriction need not apply to category 'C' circles which have evoked poor response from the bidders. (ii) Subject to this restriction, the H1 bidder should be given an option to choose the Circles. (iii) The Circles which are vacated by H1 bidder after exercising the above option will need to be offered to the rest of the bidders in the descending order of their ranking for matching the package offered by the H1 bidder. (5) The Committee felt that the gap between H1 and the H2 bids in such Circles referred to in para B 4(iii) above is so wide that there appears to be remote possibility of any of the bidders matching the H1 package. In such a situation, the Department may have to go in for retendering for these Circles. However, the Commit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al monopoly, the said M/s HFCL Bezeq having emerged as a single largest dominant private undertaking. The learned counsel appearing in different writ petitions have attacked this policy of capping. However, in spite of repeated queries, none of them could satisfy as to how in this process the said M/s HFCL - Bezeq had been a gainer or the nation has been a loser. It was pointed out that if this capping system would not have been applied, then a much higher amount would have been received because of the high tenders submitted by said M/s HFCL - Bezeq for other circles which on principle of capping was denied to the said Company. It was also Submitted that in any event, no choice should have been given to the bidders to select the circles and in respect thereof unilateral decision should have been taken by the Central Government. As pointed out above, the decision regarding capping and putting a limit in respect of category 'A' and 'B' circles bid to not more than three was recommended by the Tender Evaluation Committee which appears to have been accepted by the Central Government. Unless it is alleged and proved that the Tender Evaluation Committee's decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall not have total foreign equity in excess of 49%. In the instant case, the foreign Company admittedly does not have foreign equity in excess of 49%. It was also pointed out on behalf of the respondents that when the tender document prescribed about the networth of the bidder Company, it did not mean the actual investment of that amount. If a foreign Company having equity less than 49% has networth to fulfill the requirement of the bidder Company, its bid had to be examined by the Tender Evaluation Committee as has been done in the present case. Counsel appearing for writ petitioners and M/s HFCL - Bezeq were heard on the question as to whether clauses 2.1 and 2.2 of Section II of the Tender Documents in respect of Eligibility Conditions had been complied with by aforesaid M/s HFCL Bezeq. Mr. Venugopal, the learned counsel appearing for the said respondent pointed out that 30.3.1995 was the date fixed for submission of the tenders which was later extended to 23.6.1995. He further stated that the said respondent submitted different documents specified in clause 2.2 of Section II of the Tender Documents along with the bid and as such there has been full compliance of clauses 2.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt enactments. In United Kingdom under the Telecommunications Act, 1984 a Regulatory Authority has been constituted to secure that the telecommunications services are provided throughout the United Kingdom and to supervise the connected issues. Such Authority has to promote the interests of the consumers, purchasers and other users in the United Kingdom (including in particular those who are disabled or of pensionable age) in respect of prices charged for and the quality and variety of, telecommunications services provided. It also maintains and promotes effective competition between persons engaged in commercial activities connected with telecommunications in the United Kingdom. The Authority is also responsible to encourage persons providing telecommunication services and telecommunication apparatus in the United Kingdom to compete effectively in the provision of such services and supply of such apparatus outside the United Kingdom. In United States the Federal Communication Commission- created by the Communication Act, 1934 is a primary federal regulator of the communication industry. The Federal Communication Commission is currently organized into six bureaus. As a general rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st of Secretary or Additional Secretary to the Government of India or to any equivalent post in the Central Government or the State Government for a period of three years. The term of the Chairperson has been fixed at five years from the date on which he enters upon his office. So far the Member is concerned, he has to hold office for a term of five years from the date on which he enters upon his office or until he attains the age of 62 years, whichever is earlier. The other conditions have been prescribed in the said Chapter. Chapter III prescribes the powers and functions of the said Authority. Section 11 opens with a non-obstante clause saying that notwithstanding anything contained in the Indian Telegraph Act, 1885, the functions of the Authority shall be as specified in the said Section including to ensure technical compatibility and effective inter-relationship between different service providers, to ensures compliance of licence conditions by all service providers, to facilitate competition and promote efficiency in the operation of telecommunication services, to protect the interest of the consumers of the telecommunication services, to levy fees at such rates and in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir activities can be regulated in accordance with the provisions of the said Ordinance. Section V of Tender Documents contains financial Conditions. Clause 2.0 thereof says: TARIFF: Tariff for the SERVICE provided by the LICENSEE shall not be more than DOT's Tariff. Tariff is subject to regulation by Telecom Regulatory Authority of India, as and when such an authority is set up by the Government of India. The aforesaid condition provides that licensee shall not charge tariff for service more than DOT's tariff and such tariff shall be subject to regulation by Telecom Regulatory Authority of India. This condition shall safeguard the interest of the persons to whom services are provided by the licensees. The new Telecom Policy is not only a commercial venture of the Central Government, but the object of the policy is also to improve the service so that the said service should reach the common man and should be within his reach. The different licensees should not be left to implement the said Telecom Policy according to their perception. It has rightly been urged that while implementing the Telecom Policy the security aspect cannot be overlooked. The existence of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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