TMI Blog2017 (8) TMI 342X X X X Extracts X X X X X X X X Extracts X X X X ..... er 2012, March 2013 and February 2014. The objectives state that the primary objective of the NTP–2012 is maximizing public good by making available affordable, reliable and secure telecommunication and broadband services across the entire country. The main thrust of the Policy is on the multiplier effect and transformational impact of such services on the overall economy. It recognizes the role of such services in furthering the national development agenda while enhancing equity and inclusiveness. Availability of affordable and effective communication for the citizens is at the core of the vision and goal of the NTP–2012, at the same time as being investor friendly and attracting additional investments. The NTP–2012 also recognizes the predominant role of the private sector in this field and the consequent policy imperative of ensuring continued viability of service providers in a competitive environment. Pursuant to the NTP–2012, these principles have guided the decisions needed to strike a balance between the interest of users/consumers, service providers and government revenue. Revenue maximization is not the sole objective of the Government as alleged by the TSPs. The auction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ases, namely, Transfer Case (Civil) No. 43 of 2015, Transfer Case (Civil) No. 64 of 2015 and Transfer Case (Civil) No. 65 of 2015, had their origin in the High Courts of Delhi, Tripura and Karnataka respectively. The High Courts were moved under Article 226 of the Constitution challenging the terms and conditions of Notice Inviting Application-2015 (for short, NIA ) for allocation of spectrums in various areas. The High Court of Tripura in W.P.(C) No. 52 of 2015 and W.P.(C) No. 53 of 2015 was prayed for grant of interim relief which included extension of permission to the participants in the NIA to be bidded for minimum 4.4 MHz, IN 900 MHz band in the North East service area. The High Court, while dealing with interim prayer, directed as follows:- Therefore, at this stage, we feel that only the following order should be passed: Both the petitioners are permitted to submit 2 applications instead of one. One application may be for 4.4. MHz and the other application will be for a minimum of 5 MHz and may extend up to 8.8, if the petitioners so desire. We have been informed at the Bar that two applications may not be possible to be submitted because it is online. We are not sure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the interim order passed on the earlier occasion should be modified granting leave to the Union of India to finalize the auction, subject to the final decision of the special leave petition and the transferred cases. Mr. P. Chidambaram and Mr. Gopal Jain, learned senior counsel appearing for the contesting respondents, per contra, would contend that the competitive bidding was not really competitive, but a compulsive bidding as parties were obliged to bid because of their survival. In addition, it is put forth by them that the amount that has to be thought of being collected by the Union of India, is factually incorrect, inasmuch as the bidders who are successful have to deposit the amount within ten days from the completion of date of auction, that is, 25th March, 2015. Learned senior counsel would further submit that the entire design of the Notice Inviting Tender is gloriously faulty and solely because the auction has taken place and money is likely to be collected, would not be a justification for the modification of the interim order. Having heard learned counsel for the parties, we are inclined to modify the order to the extent that the Union of India would b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sence of the said affidavit is that:- (a) After completion of the present auction, what is the quantum of spectrum available with the Union of India? 4. With reference to item (a) above, it is submitted that in the spectrum bands put to auction namely 800 MHz, 900 MHz, 1800 MHz 2100 MHz in March 2015, the table below indicates the availability of spectrum post auction with the Government of India for commercial use:- Band (MHz) Quantum of Spectrum put on Auction (MHz) Quantum provisionally won by bidders(MHz) Remaining quantum of spectrum(MHz) 800 108.75 86.25 22.5 900 177.8 168.00 9.8 1800 99.2 93.80 5.4 2100 85 70.00 15.0 Total 470.75 418.05 52.7 b) What is the possibility of getting the non-vacating spectrum from the defence band and within what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hz band. 456 MHz spectrum in this band was co-ordinated from defence and got released for telecom commercial services in 2010 and was auctioned. Further, as per the decision of the Government in January 2015 an additional 85 MHz of spectrum in this band was released by defence and was part of the auction conducted in March 2015. It is also submitted that efforts are being made to get released 15 MHz of spectrum in each of 22 service areas in 2100 MHz band also from Defence. Although in this case also no time frame can be put as to when it would be made available but it is expected to be released during the process of completion of harmonization of 1800 MHz band spectrum. This will make 345 MHz of spectrum available in this band. Therefore, it is proposed to be included in the next auction. 7. As a part of identifying new brands technologies and releasing for providing commercial services 880 MHz spectrum in Time Division Duplex (TDD) mode was also included in 2300 MHz band for auction conducted in 2010 and 320 MHz of spectrum in this band is proposed to be included for the next auction. Similarly 440 MHz spectrum in 2500 MHz band was allocated to BSNL and MTNL in 2007-08. Howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. In addition, TRAI has been requested on 9th July, 2015 to provide recommendations on applicable reserve price and associated conditions for auction of spectrum in 700 MHz, 800 MHz, 900 MHz, 1800 MHz and 2100 MHz bands for all the service areas under the terms of Clause 11(1)(a) of TRAI Act, 1997, as amended and expedite the recommendations on applicable reserve price for 2300 MHz and 2500 MHz bands for all the service areas. Presently, the matter is with TRAI and after consideration of the recommendations of TRAI in respect of the reserve price and associated terms and conditions, the next auction would be conducted and the available spectrum will also be included in the auction. 13. It is humbly re-iterated that the availability of spectrum in all the bands may vary vis- -vis the quantum of spectrum indicated above, as a result of harmonization exercise with Defence, taking into consideration the requirements of Defence and/or the policy decisions by the Government on related matters. (d) Whether in the auction that is going to beheld, the concept of capping would still remain and, if so, what would its formula and how it would be interpreted and applied? While calcu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether or not there is a business case for them to hold on to the spectrum. Moreover, once the guidelines of the spectrum sharing and spectrum trading are notified by the Government, the TSPs will have alternate options to manage their spectrum holding. Therefore, the Authority is of the opinion that the Government should not take back spectrum assigned to TSP even if it is less than 5 MHz in any band. 15. The above comments of TRAI are under consideration of the answering respondent. 16. In the above context with reference to query (d), it is humbly submitted that before the next auction, the answering respondent will take a considered decision on the comments of TRAI as stated above with reference to the methodology of calculating the CAP for future periods. 17. With reference to query (e), it is humbly submitted that as already indicated that the successful bidders who have got less than 5 MHz of spectrum and in case they fail in the next auction, they can share the spectrum or trade the spectrum, the guidelines for which are being formulated and likely to be in place shortly. At present, there is no rule/statute to take back the spectrum which has been awarded after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons dated 15.10.2014 and not allowed the new/expiring licensees in the 900 MHz band to bid for a minimum of 2 x 3.6 MHz in those Licensed Service Areas (LSAs) where spectrum put to auction was 10 MHz or more and 2 x 2.4 MHz in the remaining LSAs. Similarly, in 1800 MHz band, DoT has not allowed the new/expiring licensees to bid for a minimum of 2 x 0.6 MHz spectrum. This condition that relates to the eligibility criteria invites the frown of Article 14 of the Constitution. 10. The NIA dated 9.1.2015 suffers from over-classification between different categories of bidders inasmuch as the minimum bidding criteria for different classes of bidders, as has been set out in the NIA, has no nexus with the object which the NIA seeks to achieve. The criteria adopted by the DoT is in stark contrast to the TRAI recommendations dated 15.10.2014, which recommended that the minimum quantity that a bidder is required to bid for should be kept as 2 x 3.6 MHZ in the LSA where spectrum availability is 10 MHz or more in the 900 MHz band; and the minimum quantity may be kept as 2 x 2.4 MHz in the remaining LSAs which would be applicable for expiring licensees as well as new entrants. Though these re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entrants/expiring licensees but the existing operators could bid for 0.6 MHz of spectrum. In North East service area also, the total spectrum put up for auction was 8.8 MHz, but because of the condition of bidding for a minimum of 5 MHz, only one successful bidder would have been able to win the bid and others were bound to be unsuccessful. 13. If minimum bidding criteria is different for different categories, it will create a dent in the level playing field. For example, where the minimum bid for Bidder A is 0.6 MHz and the Bidder B, it is 5 MHz and the block size is 0.2 MHz, Bidder A can enter the arena with funds sufficient to bid for 3 blocks (3 x 0.2 MHz), whereas Bidder B can enter the arena only if he has funds to bid for 25 blocks (25 x 0.2 MHz). Bidder A can also artificially push up the price per block because he will have to pay for only 4 blocks. As such, Bidder B will be forced to match the price of Bidder A or quit the race, which brings out the arbitrariness and discrimination in the minimum bid criterion as stipulated in the NIA. 14. Spectrum is a natural resource which is held by the Government in public trust for the benefit of the people. The Government is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subscribers. The challenge by the petitioners pertaining to tender conditions formulated by the Union of India invoking the power of judicial review is not tenable as no valid grounds for interference, as postulated in Tata Cellular v. Union of India (1994) 6 SCC 651 and Delhi Science Forum and others v. Union of India and another (1996) 2 SCC 405, have been made out. 18. The statutory requirement of seeking TRAI s recommendations and the procedure to be followed is set out in Section 11 of the TRAI Act. The proviso to Section 11 has been interpreted by this Court in Association of Unified Tele Services Providers (supra) wherein it has been held that the recommendations of TRAI are not binding on the Government. In the case at hand, the Government, after deliberating on the recommendations of TRAI and sending it back to TRAI for reconsideration, has chosen not to accept the recommendations of TRAI. Keeping in view the concept of minimum availability of spectrum with a bidder and regard being had to allow space to the new entrants to compete, it is urged that Government has always given due weightage to the recommendations of TRAI. Further, the Government of India does not want t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her an entity is a new entrant or an existing service provider as the Government has always been consistent with the trend that new entrants would have to bid a minimum of 5 MHz and the existing service providers have to top up (capacity enhancement) their present holding of spectrum to achieve a goal of maximizing efficiency and avoid any restraint for the consumers and the service providers. In the NIA for auction of spectrum in 2015, across all bands, a new entrant is required to bid for a minimum of 5 MHz and this requirement has always been the same for earlier auctions also conducted in 2012, 2013 and 2014. The minimum bid quantum is reduced only in those cases where 5 MHz is not available in a LSA or contiguous 5 MHz is not available. An existing licensee has to bid for a minimum of 0.6 MHz of spectrum in order to top up so as to come to the level of 5 MHz (as minimum administratively allocated spectrum in 900 MHz/1800 MHz band is 4.4 MHz) and be in a position to provide services compatible with new technology. Moreover, the existing licensee, who will be bidding for a minimum of 0.6 MHz so that he may come to the level of 5 MHz, may also bid for more than that. The idea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opment that may take place in the next 20 years, if a service provider is satisfied with the technology that it is presently using and such service provider does not want to give to its customers/consumers better services, then he would remain within the realm of the already allotted spectrum without wanting to top up or go up to 5 MHz, in which case not only is he likely to suffer but his customers are also likely to suffer. The argument that the petitioner was knocked out of availability of only 8.8 MHz in the North East and due to the term of minimum of 5 MHz for a new entrant including expiring licensees is incorrect. In the North East, while 8.8 MHz was available in 900 band, there were other spectrum available, i.e., 800 band (13.75 MHz), 900 band (8.8 MHz), 1800 band (8.4 MHz) and 2100 band (5 MHz) out of which the writ petitioner-Reliance has won 5 MHz in 800 band and 5 MHz in 1800 band at the auction as it already had spectrum in 2100 band. The trend of the 2015 auctions has shown that this company has substituted its 900 band with 1800/800 band in most circles where the bid was lower than the 900 band and it has also bid for the 900 band spectrum and remained unsuccessf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it petition. The objectives of the present auction are in consonance with the National Telecom Policy-2012 (NTP 2012). These objectives are the same as in the previous auctions conducted in November 2012, March 2013 and February 2014. The objectives state that the primary objective of the NTP 2012 is maximizing public good by making available affordable, reliable and secure telecommunication and broadband services across the entire country. The main thrust of the Policy is on the multiplier effect and transformational impact of such services on the overall economy. It recognizes the role of such services in furthering the national development agenda while enhancing equity and inclusiveness. Availability of affordable and effective communication for the citizens is at the core of the vision and goal of the NTP 2012, at the same time as being investor friendly and attracting additional investments. The NTP 2012 also recognizes the predominant role of the private sector in this field and the consequent policy imperative of ensuring continued viability of service providers in a competitive environment. Pursuant to the NTP 2012, these principles have guided the decisions needed to strik ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entions raised in a composite manner. 27. None of the operators have challenged the Spectrum Cap Clause [Clause 5.3.1.] in the NIA 2015. In the absence of such challenge, anything which flows out from that clause including the methodology/calculation cannot be questioned and/or not open to challenge and as a natural corollary, the arguments pertaining to the clause being arbitrary, discriminatory or contrary to public policy cannot be raised. Once the policy itself cannot be faulted, the method of implementation thereof would not be supervised by the Court and no mandamus can be issued in that regard. The methodology of ensuring the capping has to be left to the State and no direction should be issued as to how the capping is to be implemented. 28. So far as the interpretation of clause 5.3.1 is concerned, the said clause, as it stands, is unambiguous and clear, and therefore, the said clause ought to be literally interpreted. Furthermore, the NIA, being an invitation to offer, the rules of interpretation of contracts would apply and not the rules that may be applied in the case of interpretation of statutes. 29. The NIA, being an invitation to offer, and Clause 5.3.1 bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the market, and that is why, TRAI has recommended on 02.07.2015 that the basic objective of prescribing a spectrum cap is to prevent a TSP from acquiring large holdings of spectrum through auction, M A or trading, as it may lead to non-level playing field thereby disturbing the competition in the market. It cannot be left to the market forces alone to decide the maximum spectrum holding as a TSP and, hence, the provision of cap should continue on the spectrum holding that a TSP may acquire or otherwise. The argument that the Respondent should have notionally included the spectrum surrendered by BSNL/MTNL would result in creating a situation where though the spectrum put to auction remains the same (i.e., limited), yet a large/big player will be able to bid for the entire spectrum (which it otherwise could not have done due to Clause 5.3.1) thereby effectively giving a tool to the large/big operators to deprive/starve small operators, who quite avowedly, cannot match the buying power of larger operators of spectrum. 32. There cannot be any legitimate expectation based on the terms and conditions relating to NIA more so, in the sphere of auction of spectrum. The 2013 auction in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard-looking reliefs, even while preserving past actions. Further, there is neither allegation of any mala fide in the conduct of the auction, nor has it been alleged that the policy was structured so as to convey benefit to a particular player/players over others. 34. Having noted the contentions of the parties, we think it necessary to refer to the earlier decisions that have been rendered in the context of spectrum and the principle to be adhered to while disposing it by way of granting licence. The litigation relating to spectrum had a beginning. In Centre for Public Interest Litigation (supra), be it noted, the controversy had arisen in a different canvas. But it is necessary to allude to it. The two-Judge Bench framed five questions:- (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 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he State vis- -vis its people and demands that the people be granted equitable access to natural resources and/or its products and that they are adequately compensated for the transfer of the resource to the private domain; and second, it regulates the rights and obligations of the State vis- -vis private parties seeking to acquire/use the resource and demands that the procedure adopted for distribution is just, non-arbitrary and transparent and that it does not discriminate between similarly placed private parties. xxxxxxxxxx 89. 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. 36. Answering the question nos. 3 and 4, the Court held:- 95. 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 Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional 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 the Army has been grabbed by those who enjoy money power and who have been able to manipulate the system. We are not referring to the directions given therein as we are not really concerned with the said directions in the present case. 37. After delivery of the said judgment, the President of India, on 12.4.2002, made a reference under Article 143(1) of the Constitution, which was answered in Natural Resources Allocation, In re, Special Reference No.1 of 2012 (supra). The issue of maintainability of reference was raised and the Court answered that the reference was maintainable as long as the lis in 2G case, inter parties, is left unaffected. On merits, the majority proceeded to hold as follows:- 129. Hence, it is manifest that there is no constitutional mandate in favour of auction under Article 14. The Government has repeatedly deviated from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the endeavour of this Court to evaluate the efficacy of auction vis- -vis other methods of disposal of natural resources. The Court cannot mandate one method to be followed in all facts and circumstances. Therefore, auction, an economic choice of disposal of natural resources, is not a constitutional mandate. We may, however, hasten to add that the Court can test the legality and constitutionality of these methods. When questioned, the courts are entitled to analyse the legal validity of different means of distribution and give a constitutional answer as to which methods are ultra vires and intra vires the provisions of the Constitution. Nevertheless, it cannot and will not compare which policy is fairer than the other, but, if a policy or law is patently unfair to the extent that it falls foul of the fairness requirement of Article 14 of the Constitution, the Court would not hesitate in striking it down. 147. Finally, market price, in economics, is an index of the value that a market prescribes to a good. However, this valuation is a function of several dynamic variables: it is a science and not a law. Auction is just one of the several price discovery mechanisms. Since multi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the applications of the licensees were considered and rejected by the Government of India. Aggrieved by the said rejection, the licensees approached TDSAT, which dismissed the petitions vide order dated 31.1.2014. 40. After appeals were dismissed, the appellants therein preferred appeals under Section 18 of the TRAI Act. The grievance related to seeking of an extension of the period of licence. The Court in Bharti Airtel Limited v. Union of India (2015) 12 SCC 1, relying on Union of India and another v. Assn. of Unified Telecom Service Providers of India and others (2011) 10 SCC 543, came to hold that it is a settled position of law that a licence granted under Section 4(1) of the Telegraph Act such as the one granted to each of the licensees herein is a contract between the licensor and the licensee. Thereafter, the Court posed the question, whether there was any right of extension of licence granted in favour of the licensee under the contract. Analysing the terms of the clauses in the contract, referring to various passages from the 2G case and considering the view of TRAI and the pronouncement in Natural Resources Allocation, In Re (supra), the two-Judge Bench answered th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned, both uplink and downlink, for Telecom services in 900 MHz band. ** For the purpose of arriving at Spectrum Cap in 900 MHz band, the Total Spectrum Assigned in a Service Area in 900 MHz band is considered as the sum total of the current holdings of all the telecom operators in 900 MHz band in the respective Service Area PLUS the Spectrum put to auction in 900 MHZ band in that particular Service Area. ** It may be noted that the Spectrum which is expiring in 2015-16 will not be considered in the Current Holdings. The same spectrum will only be considered as the Spectrum put to auction. 42. The stipulations in the said Clause are criticized by the petitioners on the ground that it creates different classes of bidders without any justification and, in fact, the classification is absolutely unreasonable. As the Clause reflects, certain conditions have been envisaged by which three categories of bidders, namely, existing licensees , expiring licensees and new entrants have been introduced. The submission is that there was no warrant to put a cap and further fix a minimum bidding criteria. The argument on behalf of the petitioners is that the above auction being n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... auction will also be treated as New Entrants . (iv) Entities (not an existing licensee) will be treated as New Entrants and will have to obtain a Unified License. (v) Licensees covered by the note under Clause 1.4 of UAS licence condition are allowed to bid only for the spectrum band which they currently hold. For the limited purpose of this provision, 900 MHz and 1800 MHz will be treated as same band. (vi) For the purpose of this auction, a cap of 25% of the total spectrum assigned in 800/900/1800/2100/2300/2500 MHz bands with applicable paired band put together and 50% within a given band in each of the access service area shall apply for total spectrum holding by each operator. For the purpose of calculation of the cap in this auction, the spectrum put to auction would be included in the total spectrum assigned . This cap will be applicable as on the last date of application for participating in Auction. Total Spectrum assigned for unpaired and both unlink and downlink spectrum in case of paired spectrum is taken into account. 44. Clause 3.3 deals with unified licences, Clause 3.4 provides for associated licences, Clause 3.5 deals with prospective new ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50.60 Kerala 52.45 Kolkata 48.80 North East 48.80 Odisha 52.50 Punjab 43.45 Rajasthan 46.60 Tamilnadu 65.00 Uttar Pradesh (East) 47.25 Uttar Pradesh (West) 39.90 *50% of total assigned spectrum and spectrum put for auction in the band in a service area. It may be noted that for a service area in 1800 MHz band, the total of the current holding of spectrum in 1800 MHz band and the total spectrum for which the bidder is submitting the bid for a service area should not exceed the cap which is mentioned in the Table 5-E above. Total spectrum assigned for both sides of spectrum in case of paired spectrum is taken into account. 45. The principal grievances of the petitioners, as is lucent, are that the principle of capping adopted by the respondent keeps the petitioners away from bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... To buttress the said submission, example has been given of West Bengal where 5 MHz is not available in 900 MHz band and only 4.4 MHz is available in 800 MHz band. Similarly, the said principle is followed in 800 MHz and 1800 MHz bands. The existing licensee has to bid for minimum 0.6 MHz spectrum in order to top up so as to come to the level of 5 MHz. 46. The interest of the consumer and the maximization of price has been highlighted. It has also been urged that the petitioners have participated in the auction and have been successful in certain areas and have failed in certain places and the whole intention is to monopolise the market. It is contended that the limit for acquisition of spectrum is intended to discourage the hoarding of spectrum and to encourage level playing fields and to advance healthy competition and keep at bay any kind of artificial escalation. Commenting on the transfer case of Reliance Telecom Ltd., it is argued that the spectrum available for the auction was 8.8 MHz in the 900 MHz band and the entire 8.8 MHz of spectrum in 900 MHz has been bid and the successful bidder is M/s. Bharti Hexacom Ltd. The other petitioner, M/s. Reliance, has been successful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hz of spectrum in 800 MHz band in 20 LSA, 177.8 MHz of spectrum in 900 MHz band in 17 LSA, 99.2 MHz spectrum in 1800 MHz band in 15 LSAs and 85 MHz of spectrum in 2100 MHz band in 17 LSAs. The estimated result of the auction has been brought by way of tabular chart, which we think it necessary to reproduce:- Band (MHz) Quantum of Spectrum put on Auction (MHz) Value of the Spectrum put on offer at Reserve Price (in Rs. Crore) Quantum provisionally won by bidders (MHz) Value of the Spectrum provisionally won by bidders at Reserve Price (In Rs. Crore) Value of the Spectrum provisionally won by bidders at Auction determined price (In Rs. Crore) 800 108.75 13562.50 86.25 9710.00 17158.79 900 177.8 40223.80 168.00 37841.00 72964.54 1800 99.2 8936.20 93.80 8292.40 9636.17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod of seven days. from receipt of such request: Provided also that the Central Government may issue a licence to a service provider if no recommendations are received from the Authority within the period specified in the second proviso or within such period as may be mutually agreed upon between the Central Government and the Authority: Provided also that if the Central Government, having considered that recommendation of the Authority, comes to a prima facie conclusion that such recommendation cannot be accepted or needs modifications, it shall refer the recommendation back to the Authority for its reconsideration, and the Authority 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. 52. In Association of Unified Telecom Service Providers of India (supra), the Court has held that notwithstanding sub-section (1) of Section 4 of the Telegraph Act vesting exclusive privilege in the Central Government in respect of telecommunication activities an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the spectrum. Therefore, the criticism that is advanced that once there is a reference back, the Central Government should have been guided by the recommendations has no justification inasmuch as the Central Government has the ultimate authority to take a decision. Of course, such a decision, especially a decision relating to frame a policy for NIA has to be in accord with the norms of Article 14 of the Constitution. 53. Presently, we shall refer to certain authorities in the field and, thereafter, adjudge the grievances so eloquently articulated by the learned counsel for the petitioners. 54. In Tata Cellular (supra), a three-Judge Bench, after extensive consideration of the earlier decisions in the matter of judicial review and its scope of applicability to government contracts and tenders, ruled that the modern trend points to judicial restraint in administrative action and the court does not sit as a court of appeal but merely reviews the manner in which the decision was made. It further opined that the court does not have the expertise to correct the administrative decision and if a review of the administrative decision is permitted, it will be substituting its own d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... more qualified to address the issues. 58. In Union of India v. International Trading Co. and another (2003) 5 SCC 437, this Court held that non-renewal of permit by the Government to a private party on the ground of change in its policy cannot be faulted if such change is founded on reasonableness and is otherwise not arbitrary, irrational and perverse. It was observed that if the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities and adopt trade policies and the ultimate test is whether, on the touchstone of reasonableness, the policy decision comes out unscathed. It further ruled that reasonableness of restriction is to be determined in an objective manner and from the standpoint of the interests of the general public and not from the standpoint of the interests of the persons upon whom the restrictions have been imposed or upon abstract consideration. A restriction cannot be said to be unreasonable merely because in a given case, it operates harshly. In determining whether there is any unfairness involved, the nature of the right alleged to have been infringed, the underlying purpose of the restriction im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt, after referring to the principles stated in Tata Cellular (supra), observed that the government policy can be changed with changing circumstances and only on the ground of change, such policy will not be vitiated and the Government has discretion to adopt a different policy or alter or change its policy calculated to serve the public interest and make it more effective as the choice in the balancing of the pros and cons relevant to the change in policy lies with the authority, but change in policy must be in conformity with Wednesbury reasonableness and free from arbitrariness, irrationality, bias and malice. 63. In Michigan Rubber (India) Limited v. State of Karnataka and others (2012) 8 SCC 216, the Court, after referring to Jagdish Mandal v. State of Orissa and others (2007) 14 SCC 517 and Tejas Constructions Infrastructure (P) Ltd. v. Municipal Council, Sendhwa and another (2012) 6 SCC 464, expressed the view that the basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play and actions are amenable to judicial review only to the extent that the State must act validly for a discerni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter of evaluation of their tenders and it is well settled that award of a contract is essentially a commercial transaction which must be determined on the basis of considerations that are relevant to such commercial decision and, hence, the terms subject to which tenders are invited are not open to judicial scrutiny unless it is found that the same have been tailor-made to benefit any particular tenderer or class of tenderers. The Court further held that in the matter of award of contracts, the Government and its agencies have to act reasonably and fairly at all points of time and to that extent, the tenderer has an enforceable right in the court which is competent to examine whether the aggrieved party has been treated unfairly or discriminated against to the detriment of public interest. 65. In Census Commissioner Others v. R. Krishnamurthy (2015) 2 SCC 796, a three-Judge Bench of this Court, after noting several decisions, held that it is not within the domain of the courts to embark upon an enquiry as to whether a particular public policy is wise and acceptable or whether a better policy could be evolved and the courts can only interfere if the policy framed is absolutely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have affected the individual interest of certain categories of licensees or aspirants but that cannot weigh over the public interest. 68. As far as the classification is concerned, it is noticed that some bidders have not been allowed to participate in respect of certain areas. The argument on behalf of the Central Government is that it has been done to curtail the monopoly and to encourage a broad based competition and further to allow certain entities who do not have the adequate spectrum so that there is augmentation of revenue as well as enhancement of efficiency in providing the service. It is further explained that it has been done keeping in view the commercial interest and the holistic concept of public interest. Learned counsel for the petitioners would contend that it is demolition and ruination of public trust because the State holds spectrum in trust and it cannot be allowed to hoard by adopting such a subterfuge. It is apt to note here that after holding of the auction, what is available is 52.7 MHz in various bands. Explaining the same, the Union of India has submitted that historically, all the identified 75 MHz spectrum for mobile services in 1800 MHz band in all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and was auctioned. Further, as per the decision of the Government in January 2015, an additional 85 MHz of spectrum in this band was released by the defence and was part of the auction conducted in March 2015. It is also submitted that efforts are being made to get 15 MHz of spectrum released in each of the 22 service areas in 2100 MHz band also from the Defence. Although in this case also, no time frame can be set as to when it would be made available, yet it is expected to be released during the process of completion of harmonization of 1800 MHz band spectrum and it will make 345 MHz of spectrum available in this band; and accordingly, there is a proposal to include the same in the next auction. It is further canvassed that as a part of identifying new bands and technologies and releasing for providing commercial services, 880 MHz spectrum in Time Division Duplex (TDD) mode was also included in 2300 MHz band for the auction conducted in 2010 and 320 MHz of spectrum in this band is proposed to be included for the next auction. Similarly, 440 MHz spectrum in 2500 MHz band was allocated to BSNL and MTNL in 2007-08. However, 160 MHz spectrum was surrendered by them. TRAI has been re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the principle of judicial review. The procedure adopted in this kind of auction is neither to be equated nor compared with the process meant for grant of ordinary largesse. It is because of its complexity, technical expertise, enormous financial impact and the larger public interest. Recently, in Tamil Nadu Generation and Distribution Corporation Ltd (TANGEDCO) Rep. by its Chairman Managing Director and Anr. etc. v. CSEPDI Trishe Consortium, Rep. by its Managing Director Anr. 2016 (10) SCALE 69, the Court, while discussing the role of fiscal evaluation, has observed that:- At this juncture we are obliged to say that in a complex fiscal evaluation the Court has to apply the doctrine of restraint. Several aspects, clauses, contingencies, etc. have to be factored. These calculations are best left to experts and those who have knowledge and skills in the field. The financial computation involved, the capacity and efficiency of the bidder and the perception of feasibility of completion of the project have to be left to the wisdom of the financial experts and consultants. The courts cannot really enter into the said realm in exercise of power of judicial review. We cannot s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in execution and adherence to the time schedule. But, that does not mean, these tenders will escape scrutiny of judicial review. Exercise of power of judicial review would be called for if the approach is arbitrary or malafide or procedure adopted is meant to favour one. The decision making process should clearly show that the said maladies are kept at bay. But where a decision is taken that is manifestly in consonance with the language of the tender document or subserves the purpose for which the tender is floated, the court should follow the principle of restraint. Technical evaluation or comparison by the court would be impermissible. The principle that is applied to scan and understand an ordinary instrument relatable to contract in other spheres has to be treated differently than interpreting and appreciating tender documents relating to technical works and projects requiring special skills. The owner should be allowed to carry out the purpose and there has to be allowance of free play in the joints. 74. It is necessary to add a clarification. In TANGEDCO (supra), the question arose with regard to grant of contract of a particular work and it involved a complex situatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain entities to bid is not an arbitrary one as it is based on the acceptable rationale of serving the cause of public interest. It allowed new entrants and enabled the existing entities to increase their cap to make the service more efficient. The Court cannot get and dwell as an appellate authority into complex economic issues on the foundation of competitors advancing the contention that they were not allowed to bid in certain spheres. As the stipulation in the tender was reasonable and not based on any extraneous considerations, the Court cannot interfere in the NIA in exercise of the power of judicial review. The contention is that the State cannot hoard the spectrum as per the 2G case. We are disposed to think that in the case at hand, it cannot be said that there has been hoarding. The directions given in the 2G case had been complied with and the auctions have been held thereafter from year to year. The feasibility of communication, generation of revenue and its maximization and subserving of public interest are to be kept in view. The explanation given by the Union of India for not putting the entire spectrum to auction is a reasonable one and it is put forth that an en ..... X X X X Extracts X X X X X X X X Extracts X X X X
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