Supreme Court of India
CENTRE FOR PUBLIC INTEREST LITIGATION AND OTHERSversusUNION OF INDIA AND OTHERS
- Citation
- 2012 INSC 68
- Decided
- 2 February 2012
- Disposal
- Case Allowed
- Bench
- G S SINGHVI
Holding
The allocation of 2G spectrum licences on a first‑come‑first‑served basis at the 2001 entry fee was arbitrary, violated Article 14 and the 2003 Council of Ministers’ decision, and therefore the licences and spectrum granted after 10 January 2008 are quashed and must be re‑allocated by auction.
Summary
The Supreme Court examined the allocation of 2G spectrum licences by the Department of Telecommunications (DoT) between September 2007 and March 2008, which were based on Telecom Regulatory Authority of India (TRAI) recommendations to use the 2001 entry fee and a first‑come‑first‑served policy. Petitioners argued that the process was arbitrary, violated Article 14 and the 2003 Council of Ministers’ decision, and amounted to an unlawful alienation of a national asset. The Court held that TRAI’s recommendations ignored the scarcity of spectrum, failed to ensure efficient and transparent allocation, and that the Minister’s alteration of the cut‑off date and first‑come‑first‑served method was capricious and discriminatory. Consequently, the licences and spectrum granted after 10 January 2008 were declared illegal and quashed, and the Court directed that fresh licences be awarded by public auction. The judgment also imposed costs on certain respondents and clarified that the order would not prejudice ongoing investigations.
Issues considered
- Whether the Government may alienate, transfer or distribute natural resources such as spectrum without a fair and transparent method consistent with Article 14 and the doctrine of equality.
- Whether TRAI's 28‑August‑2007 recommendations to allocate 2G spectrum at the 2001 entry fee contravened the Council of Ministers' 31‑October‑2003 decision requiring a revised pricing formula.
- Whether the DoT's exercise from September 2007 to March 2008 in granting Unified Access Service (UAS) licences was arbitrary, malafide and contrary to public interest.
- Whether the first‑come‑first‑served policy, and its subsequent alteration by the Minister of Communications and IT, violated Article 14 of the Constitution.
- Whether licences granted to ineligible applicants or those who failed to fulfil roll‑out obligations should be quashed.
Legislation cited
Subjects
2G spectrumnatural resourcesArticle 14TRAItelecommunicationsauctionfirst-come-first-servedpublic trust doctrinejudicial reviewallocation of spectrumgovernment policyconstitutional law
Judgment
[2012] 3 S.C.R. 147
CENTRE FOR PUBLIC INTEREST LITIGATION AND A
OTHERS
v.
UNION OF INDIA AND OTHERS
(Writ Petition (Civil) No. 423 of 2010)
B
FEBRUARY 2, 2012
[G.S. SINGHVI AND ASOK KUMAR GANGULY, JJ.]
Telecommunications:
c
2G Spectrum - Allocation of - Under-pricing of spectrum
based on theory of level playing field - Whether the
recommendations made by the Telecom Regulatory Authority
of India (TRAI) on 28.8.2007 for grant of Unified Access
Service Licence (UAS Licence) with 2G spectrum in 800, 900 D
and 1800 MHz at the price fixed in 2001 were contrary to the
decision taken by the Council of Ministers on 31.10.2003 and
whether the exercise undertaken by the Department of
Telecommunications (DoT) from September 2007 to March
2008 under the leadership of the then Minister of C&IT for
grant of VAS Licences to the private respondents in terms of E
the recommendations made by TRAI was vitiated due to
arbitrariness and malafides and was contrary to public interest
- Held: While making recommendations on 28.8.2007, TRAI
itself had recognised that spectrum was a scarce commodity
- It, however, completely ignored that spectrum was to be F
utilised efficiently, economically, rationally and optimally -
The decision of the Council of Ministers in 2003 that the Do T
and the Ministry of Finance should discuss and finalise the
spectrum pricing formula was ignored by TRAI - The entire
approach adopted by TRAI was lopsided and contrary to the G
decision taken by the Council of Ministers and its
recommendations became a handle for the then Minister of
C&IT and the officers of the Do T who virtually gifted away the
important national asset at throw away prices by willfully
147 H
148 SUPREME COURT REPORTS [2012] 3 S.C.R.
A ignoring the concerns regarding fairness and transparency in
spectrum allocation raised from various quarters including the
Prime Minister, Ministry of Finance and also some of its own
officers - This is also clear from the fact that soon. after
obtaining the licences, some of the beneficiaries off-loaded
B their stakes to others, in the name of transfer of equ/fy or
infusion of fresh capital by foreign companies, and thereby
made huge profits - There was no merit in the reasoning of
TRAI that the consideration of maintaining a level playing field
prevented a realistic reassessment of the entry fee - The
C material produced clearly showed that the then Minister of
C&IT wanted to favour some companies at the cost of Public
Exchequer and took various steps to achieve same - In view
of illegality of entire process, licences and spectrum a/location
quashed - Costs of Rs 5 crores each imposed on parties
getting the' most undue benefit - Directions issued for regrant
0
of licences and a/location spectrum in 2G band in 22 service
areas by auction, as was done for a/location of spectrum in
3G band Central Government to consider
recommendations of TRAI and take appropriate decision
within next one month and fresh licences to be granted by
E public auction - However, licences/spectrum granted
previously through FCFS method i.e. between 2001 and
24.9.2007 not disturbed because said earlier cases were not
questioned before this Court.
F History of the growth of telecommunications in the country
and the reforms introduced 1984 onwards - Discussed.
New Economic Policy of India as announced on
24.7.1991; National Telecom Policy 1994 and National
G Telecom Policy 1999 - Objectives of - Discussed.
Constitution of India, 1950:
Articles 38, 39, 48, 48A and 51A(g) - Natural resources
- Concept of - Held: Even though there is no universally
H accepted definition of natural resources, they are generally
CENTRE FOR PUBLIC INTEREST LITIGATION & 149
ORS. v. UNION OF INDIA & ORS.
understood as elements having intrinsic utility to mankind - A
They may be renewable or non-renewable - They are thought
of as the individual elements of the natural environment that
provide economic and social services to human society and
are considered valuable in their relatively unmodified, natural
form - A natural resource's value rests in the amount of the B
material available and the demand for it - .The latter is
determined by its usefulness to production - Natural
resources belong to the people but the State legally owns
them on behalf of its people and from that point of view natural
resources are considered as national assets, more so c
because the State benefits immensely from their value - In
India, the Courts have given an expansive interpretation to
the concept of natural resources and have from time to time
issued directions, by relying upon the provisions contained
in Articles 38, 39, 48, 48A and 51A(g), for protection and 0
proper allocation/distribution of natural resources and have
repeatedly insisted on compliance of the constitutional
principles in the process of distribution, transfer and alienation
to private persons.
Article 14 - Doctrine of equality - Distribution of national E
resources - 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 - Held: The State is the legal F
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 -
Like any other State action, constitutionalism must be G
reflected at every stage of the distribution of natural resources
- By virtue of Article 39(b), the ownership and control of the
material resources of the community should be so distributed
so as to best sub-serve the common good - A duly publicised ·
auction conducted fairly and impartially is perhaps the best H
150 SUPREME COURT REPORTS [2012] 3 S.C.R.
A method for discharging this burden and the methods like first-
come-fi rst-served when used for alienation of natural
resources/public property are likely to be misused by
unscrupulous people who are only interested in Qarnering
maximum financial benefit and have no respect for the
B constitutional ethos and values.
Article 14·_ Policy decision - Whether the policy of first-
come-first-served followed by the Do T for grant of licences is
ultra vires the provisions of Article 14 of the Constitution -
Held: There is a fundamental flaw in the first-come-first-served
c policy inasmuch as it involves an element of pure chance or
accident - In matters involving award of contracts or grant of
licence or permission to use public property, the invocation
of first-come-first-served policy has inherently dangerous
implications - Wherever a contract is to be awarded or a
D 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.
ADMINISTRATIVE LAW· Judicial review - Scope of -
E Held: 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
F 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 - The Court
should also not interfere with the fiscal policies of the State -
However, when it is clearly demonstrated that the policy
G framed by the State or its agency/instrumentality and/or its
implementation is contrary to public interest or is violative of
the constitutional principles, it is the duty of the Court to
exercise its jurisdiction in larger public interest and reject the
stock plea of the State that the scope of judicial review should
H not be exceeded beyond the recognised parameters - When
CENTRE FOR PUBLIC INTEREST LITIGATION & 151
ORS. v. UNION OF INDIA & ORS.
matters like these are brought before the judicial constituent A
of the State by public spirited citizens, it becomes the duty of
the Court to exercise its power in larger public interest and
ensure that the institutional integrity is not compromised by
· those in whom the people have reposed trust and who have
taken oath to discharge duties in accordance with the B
Constitution and the law without fear or favour, affection or ill
will and who, as any other citizen, enjoy fundamental rights
and, at the same time, are bound to perform the duties
enumerated in Article 51A.
On 28.8.2007, TRAI made recommendations C
regarding the principles of fair competition, no restriction
on the number of access service providers in any service
area, scarce availability of spectrum, need for spectrum
management, measures to increase spectrum efficiency,
allocation of spectrum and compliance of roll out D
obligations by the service providers. It also
recommended that in future all spectrum excluding the
spectrum in 800, 900 and 1800 MHz banCls in 2G services
should be auctioned.
E
On 17.10.2007, the Minister of C&IT approved the
recommendations made by TRAI. However, no action was
taken in terms of paragraph 2.40 of the r.ecommendations
wherein it was emphasised that the existing spectrum ,,
allocation criteria, pricing methodology and the F
management system suffered from a number of
deficiencies and the whole issue needed to be
addressed keeping in view issues linked with spectrum
efficiency and its management. The DoT also did not get
in touch with the Ministry of Finance to discuss and G
finalise the spectrum pricing formula which had to
include incentive for efficient use of spectrum as well as
disincentive for sub-optimal usage in terms of the Cabinet
decision of 2003 which required the Department of
Telecom and Ministry of Finance to discuss and agree on
H
152 SUPREME COURT REPORTS [2012) 3 S.C.R.
A s~ectrum pricing .. In the meanwhile, on 24.9.2007, the
DoJ prepared a note mentioning therein that as on that
date, 167 applications were received from 12 companies
for 22 service areas and opined that it was difficult to
handle such a large number of applications at any point
B of time.
The Minister of C&IT fixed 1.10.2007 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
C would be accepted after 1.10.2007. Few companies had
ma~e applications for UAS Licence in 2004 and some 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,
D 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
E of the Attorney General of India/Solicitor General of India
on the issue of the mechanism to deal with what he
termed as an unprecedented situation created due to
receipt of large number of applications for grant of UAS
Licence.
F "
The Law Secretary placed the papers before the Law
Minister on 1.11.2007 who recorded in the note that the
said .issue required discussion. When the note was
placed before the Minister of C&IT, he on his own
recorded that the Loi may be issued to the applicants
G received upto 25.9.2007. Simultaneously, he sent letter
dated 2.11.2007 to the Prime Minister and criticised the
suggestion made by the Law Minister by describing it as
totally out of context. He also mentioned that the DoT has
decided to continue with the existing policy of first-come-
H
CENTRE FOR PUBLIC INTEREST LITIGATION & 153
ORS. v. UNION OF INDIA & ORS.
first-served for processing of applications received up to A
2.5.9.2007 and the procedure for processing the
remaining applications would be decided at a later date,
if any spectrum is left available after processing the
applications received up to 25.9.2007.
B
The Minister of C&IT did not bother to consider the
suggestion made by the Prime Minister that a fair and
transparent method should be adopted for grant of fresh
licences. The Minister of C&IT sent a reply to the Prime
Minister wherein he brushed aside the suggestion made C
by the Prime Minister by saying that it was unfair,
discriminatory, arbitrary and capricious to auction the
spectrum to new applicants as it would not give them a
level playing field. On 22.11.2007, the Finance Secretary
dispatched letter to the DoT expressing his doubt as to
how the rate of Rs.1600 crores determined in 2001, could D
be applied without any indexation for a licence to be
given in 2007. He also emphasized that in view of the
financial implications, the Ministry of Finance should
have been consulted before the matter was finalised at
the level of the DoT. E
The DoT replied to the Finance Secretary that as per
the Cabinet decision dated 31.10.2003, the DoT had been
authorised to finalise the details of implementation of the
recommendations of TRAI and in its recommendations F
dated 28.8.2007, TRAI had not suggested any change in
the entry fee/licence fee. In the context of letter dated
22.11.2007 sent. by the Finance Secretary, Member
(Finance), DoT submitted note dated 30.11.2007
suggesting that the issue of revision of rates should be G
examined in depth before any final decision is taken in
the matter. When the note was placed before the Minister,
he observed that the matter of entry fee was deliberated
in the department several times in light of various
guidelines and the TRAI recommendations and H
154 SUPREME COURT REPORTS [2012] 3 S.C.R.
A accordingly decision was taken not to revise the entry
fee. The Minister C&IT sent letter dated 26.12.2007 to the
Prime Minister changing the first come first serve policy.
The letter stated that an applicant who fulfilled the
conditions of LOI first would be granted licence first,
B although several applicants would be issued LOI
simultaneously. After 12 days, the DoT prepared a note
incorporating therein the changed first-come-first-served
policy to which reference was made by the Minister of
C&IT in letter dated 26.12.2007 sent to the Prime Minister.
c On tlile same day the Minister of C&IT approved the
change. The meeting of the full Telecom Commission,
which was scheduled to be held on 9.1.2008 to consider
two important issues i.e., performance of telecom sector
and pricing of spectrum was postponed to 15.1.2008. On
10.1.2008 i.e., after three days of postponement of the
0
meeting of the Telecom Commission, a press release was
issued by the DoT wherein it was stated that DOT has
been implementing a policy of First-cum-First Served for
grant of UAS licences under which initially an application
which is received first will be processed first and
E 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. On the same day, another press
release was issued asking all the applicants to assemble
at the departmental headquarters within 45 minutes to
F collect the response(s) of the DoT. They were also asked
to submit compliance of the terms of Lois within the
prescribed period.
AU the applicants including those who were not even
G eligible for UAS Licence collected their Lois on 10.1.2008.
The acceptance of 120 applications and compliance with
the terms and conditions of the Lois for 78 applications
was also received on the same day. Soon after obtaining
the Lois, 3 of the successful applicants offloaded their
H stakes for thousands of crores in the name of infusing
CENTRE FOR PUBLIC INTEREST LITIGATION & 155
ORS. v. UNION OF INDIA & ORS.
equity. One of the applicant who had applied for grant of A
licence pursuant to press note dated 24.9.2007, but was
ousted from the zone of consideration because of the
cut-off date fixed by the Minister of C&IT, filed writ petition
in the High Court with the prayer that the first press
release dated 10.1.2008 may be quashed. The High Court 8
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 pe~itioner to pay
Rs.17.752 crores towards additional revenue share over
and above the applicable spectrum revenue share. The C
decision of the High Court was upheld by the Supreme
Court.
The questions which arose for consideration in these
writ petitions were whether the Government has the right
to alienate, transfer or distribute natural resources/ D
national assets otherwise than by following a fair and
transparent method consistent with the fundamentals of
the equality clause enshrined in the Constitution;
whether the recommendations made by the Telecom
Regulatory Authority of India (TRAI) on 28.8.2007 for grant E
of Unified Access Service Licence (UAS Licence) with 2G
spectrum in 800, 900 and 1800 MHz at the price fixed in
2001, which were approved by the Department of
.Telecommunications (DoT), were contrary to the decision
taken by the Council of Ministers on 31.10.2003; whether F
the exercise undertaken by the DoT from September 2007
to March 2008 for grant of UAS Licences to the private
respondents in terms of the recommendations made by
TRAI is vitiated due to arbitrariness and malafides and is
contrary to public interest; whether the policy of first- G.
come-first-served followed by the DoT for grant of
·licences is ultra vires the provisions of Article 14 of the
Constitution and whether the said policy was arbitrarily
changed by the Minister of Communications and
Information Technology (the Minister of C&IT'), without H
156 SUPREME COURT REPORTS [2012] 3 S.C.R.
A consulting TRAI, with a view to favour some of the
applicants; and 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.
Allowing the writ petitions, the Court
B
HELD: 1. The history of the growth of
telecommunications in the country and the reforms
introduced 19134 onwards. [Para 2] [179-E-F]
C 1.1. 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
0
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,
E maintain or work a telegraph in any part of India. 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 ·
F 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-
G DoT) was set up for developing indigenous technologies
and permissions were given to the private sector to .
manufacture subscriber-equipment. In 1986, Mahanagar
Telephone Nigam Ltd., (MTNL) and Videsh Sanchar
Nigam Ltd., (VSNL) were set up. The New Economic
H
CENTRE FOR PUBLIC INTEREST LITIGATION & 157
ORS. v. UNION OF INDIA & ORS.
Policy of India was announced on 24.7.1991. It was aimed A
at meeting India's competitiveness in the global market;
rapid growth of exports, attracting foreign direct
investment; and stimulating domestic investments. With
a view to achieve standards comparable to international
facilities, the sub-sector of Value Added Services was B
opened up to private investment in July 1992 for the
following services: (a) Electronic Mail; (b) Voice Mail; (c)
Data Services; (d) Audio Text Services; (e) Video Text
Services; (f) Video Conferencing; (g) Radio Paging; and
(h) Cellular Mobile Telephone.In respect of services (a) to c
(f), the companies registered in India were permitted to
operate under a licence on non-exclusive basis. For
services covered by (g) and (h), keeping in view the
constraints on the number of companies that could be
allowed to operate, a policy of selection through a system 0
of tendering was followed for grant of licences. [paras 2-
5] [178-G-H 179-A-G]
1.2. National Telecom Policy 1994
National Telecom Policy 1994 (NTP 1994) was E
announced on 13.5.1994. This was the first major step
towards deregulation, liberalization and private sector
participation. The objectives of the policy were: (i)
affording telecommunication for all and ensuring the
availability of telephone on demand; (ii) providing certain F
basic telecom services at affordable and reasonable
prices to all people and covering all villages; (iii) giving
world standard telecom services; addressing consumer
complaints, dispute resolution and public interface to
receive special attention and providing widest G
permissible range of services to meet the customers'
demand and at the same time at a reasonable price; (iv)
creating a major manufacturing base and major export of
telecom equipment having regard to country's size and
development; and (v) protecting the defence and security H
158 SUPREME COURT REPORTS [2012] 3 S.C.R.
A interest of the country. In furtherance of NTP 1994,
licences were granted to eight Cellular Mobile Telephone
Service (CMTS) operators, two in each of the four
metropolitan cities of Delhi, Mumbai (Bombay), Kolkata
(Calcutta) and Chennai (Madras). In the second phase, in
B 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
c 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. [Paras 6-7] [179-H;
180-A-G]
D 1.3. New Telecom Policy 1999 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
E 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
F telecommunications as utmost important for achievement
of the country's social and economic goals; (ii) to provide
universal service to all uncovered areas including the
rural areas and also provide high level services capable
of meeting the needs of the country's economy by
G striking a balance between the two; (iii) to encourage
development of telecommunication in remote, hilly and
tribal areas of the country; (iv) to create a modern and
efficient telecommunications infrastructure taking into
account the convergence of IT, media, telecom and
H consumer electronics which will in turn propel India to
CENTRE FOR PUBLIC INTEREST LITIGATION & 159
ORS. v. UNION OF INDIA & ORS.
become an IT superpower; (v) to convert PCOs wherever A
justified into Public Teleinfo centres having multimedia
capability such as Integrated Services Digital NetWork
(ISDN) services, remote database access, government
and community information systems, etc.; (.vi) to
transform, in a time bound manner, the 8
telecommunications sector in both urban and rural areas
into a greater competitive environment providing equal
opportunities and level playing field for all players; (vii)
to strengthen research and development efforts in the
country and provide an impetus to build world class C
manufacturing capabilities; (viii) to achieve efficiency and
transparency in spectrum management; (ix) to protect
defence and security interests of the country; and (x) to
enable Indian Telecom Companies to become truly global
players. NTP 1999 categorized 8 services in the telecom
sector, namely; (i) Cellular Mobile Service Providers D
(CMSPs), Fixed Service Providers (FSPs) and Cable
Service Providers, collectively referred as 'Access
Providers'; (ii) Radio Paging Service Providers; (iii) Public
Mobile Radio Trunking Service Providers; (iv) National
Long Distance Operators; (v) International Long Distance E
Operators; (vi) Other Service Providers, (vii) Global Mobile
Personal Communication by Satellite (GMPCS) Service
Providers; (viii) V-SAT based Service Providers. NTP
1999 dealt with, and provided the framework for, all these
categories of telecom service providers. The policy on F
spectrum management as enumerated in NTP 1999 was
as under: (i) Proliferation of new technologies and the
growing demand for telecommunication services has led
to manifold increase in demand for spectrum and
consequently it is essential that the spectrum is utilized G
efficiently, economically, rationally and optimally. (ii)
There is a need for a transparent process of allocation
of frequency spectrum for use by a service provider and
making it available to various users under specific
conditions. (iii) With the proliferation of new technologies H
160 SUPREME COURT REPORTS [2012] 3 S.C.R.
A 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
8 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
C 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
D 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 allocation of frequency spectrum
which is effective and efficient and the same would be
E further examined in the light of ITU guidelines. In this
reg a: rd the following course of action shall be adopted
viz.: spectrum usage fee shall be charged; an lnter-
Miniisterial Group to be called Wireless Planning
Coordination Committee, as a part of the Ministry of
F Communications for periodical review of spectrum
availability and broad allocation policy, should be set up;
and massive computerization in WPC Wing would be
started in the next three months so as to achieve the
objective of making all operations completely
G computerized by the end of the year 2000. [Paras 8-10]
[180-H; 181-A-H; 182-A-H; 183-A-H; 184-A-B]
Establishment of the Telecommunication Commission
and the Telecom Regulatory Authority of India.
H· 2. On 11.4.1989, the Council of Ministers passed a
CENTRE FOR PUBLIC INTEREST LITIGATION & 161
ORS. v. UNION OF INDIA & ORS.
resolution and decided to establish the Telecom A
Commission. The Rules of Business for the Telecom
Commission were also framed in 1989. In terms of para
2 of the Rules of Business read with item 1 of Annexure
'A' appended thereto, all important matters of policy
relating to Telecommunications are required to be B
brought before the Telecom Commission. In 1997,
Parliament enacted the Telecom Regulatory Authority of
India Act, 1997 to provide for the establishment of TRAI.
By Act No.2 of 2000, the 1997 Act was amended and
provision was made for establishment of the Telecom c
Disputes Settlement and Appellate Tribunal (TDSAT).
[Paras 11-12] [184-C-D; 187-B-D]
3.1. Question No.1: Even though there is no
universally accepted definition of natural resources, they
are generally understood as elements having intrinsic D
utility to mankind. They may be renewable or non
renewable. They are thought of as the individual elements
of the natural environment that provide economic and
social services to human society and are considered
valuable in their relatively unmodified, natural form. A E
natural resource's value rests in the amount of the
material available and the demand for it. The latter is
determined by its usefulness to production. Natural
resources belong to the people but the State legally owns
them on behalf of its people and from that point of view F ·
natural resources are considered as national assets,
more so because the State benefits immensely from their
value. The State is empowered to distribute natural
resources. However, as they constitute public property/
national asset, while distributing natural resources, the G ,
State is bound to act in consonance with the principles
of equality and public trust and ensure that no action is
taken which may be detrimental to public interest. Like-
any other State action, constitutionalism must be reflected
at every stage of the distribution of natural resources. In . H
162 SUPREME COURT REPORTS [2012] 3 S.C.R.
A 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
B 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. The ownership
regime relating to natural resources can also be
c 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 sdvereignty (of peoples and nations) over
(their) natural resources as asserted in the 17th Session
0
of tlhe United Nations General Assembly and then
affirmed as a customary international norm by the
International Court of Justice in the case of Democratic
Republic of Congo v. Uganda. Common Law recognizes
States as having the authority to protect natural
E resources insofar as the resources are within the
interests of the general public. The State is deemed to
have a proprietary interest in natural resources and must
act as guardian and trustee in relation to the same.
Constitutions across the world focus on establishing
F natural resources as owned by and for the benefit of the
country. In most instances where constitutions
specifically address ownership of natural resources, the
Sovereign State, or, as it is more commonly expressed,
'the people', is designated as the owner of the natural
G resource. Spectrum has been internationally accepted as
a scarce, finite and renewable natural resource which is
susceptible to degradation in case of inefficient
utilisation. It has a high economic value in the light of the
demand for it on account of the tremendous growth in
H the telecom sector. Although it does not belong to a
CENTRE FOR PUBLIC INTEREST LITIGATION & 163
ORS. v. UNION OF INDIA & ORS.
particular State, right of use has been granted to States A
as per international norms. [Paras 63-65] [241-F-H; 242-
A-H; 243-A-C]
3.2. In India, the Courts have given an expansive
interpretation to the concept of natural resources and 8
have from time to time issued directions, by relying upon
the provisions contained in Articles 38, 39, 48, 48A and
51A(g), for protection and proper allocation/distribution
of natural resources and have repeatedly insisted on
compliance of the constitutional principles in the process C
of distribution, transfer and alienation to private persons.
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 D
regulates the rights and obligations of the State vis-a-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 E
regulates the rights and obligations of the State vis-a-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. F
[Paras 66, 69] [243-D-E; 246-D-F]
Secretary, Ministry of Information & Broadcasting, Govt.
of India v. Cricket Assn. of Bengal (1995) 2 SCC 161: 1995
(1) SCR 1036; Reliance Natural Resources Limited v. G
Reliance Industries Limited (2010) 7 SCC 1: 2010 (5) SCR
704; Re Special Reference No. 1 of 2001 (2004) 4 SCC
489: 2004 (3) SCR 534; MC. Mehta v. Kamal Nath (1997)
1 SCC 388: 1996 (10) Suppl. SCR 12; Akhil Bharatiya
Upbhokta Congress v. State of M.P. (2011) 5 SCC 29: 2011
H
164 SUPREME COURT REPORTS [2012] 3 S.C.R.
A (5) SCR 77; Ugar Sugar Works Ltd. v. Delhi Administration
(2001) 3 sec 635: 2001 (2) SCR 630; State of UP. v.
Choudhary Rambeer Singh (2008) 5 SCC 550: 2008 (4) SCR
610; State of Orissa v. Gopinath Dash (2005) 13 SCC 495:
2005 (5 ) Suppl. SCR 699; Meerut Development Authority
B v. Association of Management Studies (2009) 6 SCC 171:
2009 (6) SCR 663; Ramanna Dayaram Sheffy v.
International Airport Authority of India (1979) 3 SCC 489:
1979 (3) SCR 1014; S.G. Jaisinghani v. Union of India AIR
1967 SC 1427: 1967 SCR 703; Kasturilal Lakshmi Reddy
c v. State of J & K (1980) 4 SCC 1: 1980 (3) SCR 1338;
Common Cause v. Union of India (1996) 6 SCC 530: 1996
(6) Suppl. SCR 719; Shrilekha Vidyarthy v. State of UP.
(1991) 1 sec 212: 1990 (1) Suppl. SCR 625; UC v.
Consumer Education and Research Centre (1995) 5 SCC
0 482: 1995 (1) Suppl. SCR 349; New India Public School v.
HUDA (1996) 5 sec 510: 1996 (3) Suppl. SCR 597;
Sachidanand Pandey v. State of West Bengal (1987) 2 SCC
295: 1987 (2) SCR 223 - relied on. ·
Illinois Central Railroad Co. v. People of the State of
E Illinois 146 U.S. 387 (1892) M.C. Mehta v. Kamal Nath (1997)
1 SCC 388: 1996 (10) Suppl. SCR 12; Jamshed Hormusji
Wadia v. Board of Trustee, Port df Mumbai (2002) 3 SCC
214:; Intellectuals Forum, Tirupathi v. State of A.P. (2006) 3
SCC 549: 2006 (2) SCR 419; Fomento Resorts and Hotels
F Limited v. Minguel Martins (2009) 3 SCC 571: 2009 (3) SCR
1; P. l.L. v. Union of India (2011) 4 SCC 1: 2011 (4) SCR 445
- referred to.
4. Question No.2:
G Although, while making recommendations on
28.8.2007, TRAI itself had recognised that spectrum was
a scarce commodity, it made recommendation for
allocation of 2G spectrum on the basis of 2001 price by
invoking the theory of level playing field. Paragraph 2.40
H of the recommendations dated 28.8.2007 shows that as
CENTRE FOR PUBLIC INTEREST LITIGATION & 165
ORS. v. UNION OF INDIA & ORS.
per TRAl's own assessment the existing system of A
spectrum allocation criteria, pricing methodology and the
management system suffered from number of
deficiencies and there was an urgent need to address the
issues linked with spectrum efficiency and its
management and yet it decided to recommend the B
allocation of spectrum at the price det~rmined in 2001. All
this was done in the name of growth, affordability,
penetration of wireless services in semi urban and rural
areas, etc. Unfortunately, while doing so, TRAI completely
overlooked that one of the main objectives of NTP 1999 c
was that spectrum should be utilised efficiently,
economically, rationally and optimally and there should
be a transparent process of allocation of frequency
spectrum as also the fact that in terms of the decision
taken by the Council of Ministers in 2003 to approve the 0
recommendations of the Group of Ministers, the
Department of Telecommunications (DoT) and Ministry of
Finance were required to discuss and finalise the
spectrum pricing formula. The entire approach adopted
by TRAI was lopsided and contrary to the decision ,,taken
E
by the Council of Ministers and its recommendations
became a handle for the then Minister of C&IT and the
officers of the DoT who virtually gifted away the important
national asset at throw away prices by willfully ignoring
the concerns raised from various quarters including the
Prime Minister, Ministry of Finance and also some of its F
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. If the method of auction G
had been adopted for grant of licence which could be the
only rational transparent method for distribution of
national wealth, the nation would have been enriched by
many thousand crores. While it cannot be denied that
TRAI is an expert body assigned with important H
166 SUPREME COURT REPORTS [2012] 3 S.C.R.
A functions under the 1997 Act, it cannot make
recommendations overlooking the basic constitutional
postulates and established principles and thereby deny
people from participating in the distribution of national
wealth and benefit a handful of persons. Therefore, even
B though the scope of judicial review in such matters is
extremely limited, ckeeping in view the facts which have
been brought to the notice of the Court that the
mechanism evolved by TRAI for allocation of spectrum
and the methodology adopted by the then Minister of
c C&IT and the officers of DoT for grant of UAS Licences
may have caused huge loss to the nation, the
recommendations made by TRAI were flawed in many
respects and implementation thereof by the DoT resulted
in gross violation of the objective of NPT 1999 and the
0 decision taken by the Council of Ministers on 31.10.2003.
Even though in its recommendations dated 28.8.2007,
TRAI had not specifically recommended that entry fee be
fixed at 2001 rates, but paragraph 2.73 and other related
paragraphs of its recommendations state that it has
decided not to recommend the standard option for
E pricing of spectrum in 2G bands keeping in view the level
playing field for the new entrants. It is impossible to
approve the decision taken by the DoT to act upon those
recommendations. In today's dynamism and
unprecedented growth of telecom sector, the entry fee
F determined in 2001 ought to have been treated by the
TRAI as wholly unrealistic for grant of licence along with
start up spectrum. The recommendations made by TRAI
in this regard were contrary to the decision of the Council
of Ministers that the DoT shall discuss the issue of
G spectrum pricing with the Ministry of Finance along with
the issue of incentive for efficient use of spectrum as well
as disincentive for sub-optimal usages. Being an expert
body, it was incumbent upon the TRAI to make suitable
recommendations even for the 2G bands especially in
H light of the deficiencies of the present system which it
CENTRE FOR PUBLIC INTEREST LITIGATION & 167
ORS. v. UNION OF INDIA & ORS.
had itself pointed out. There is no merit in the reasoning A
of TRAI that the consideration of maintaining a level
playing field prevented a realistic reassessment of the
entry fee. [Paras 73-75] [248-G-H; 249-A-H; 250-A-H; 251-
A]
B
Question Nos.3 and 4:
5. There is a fundamental flaw in the first-come-first-
served policy inasmuch as it involves an element of pure
chance or accident. In matters involving award of
contracts or grant of licence or permission to use public C
property, the invocation of first-come-first-served policy
has inherently dangerous implications. Any person who
has access to the power corridor at the highest or the
lowest level may be able to obtain information from the
Government files or the files of the agency/instrumentality D
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 E
all others who niay have a better claim. 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, F
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 G
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.
A duly publicised auction conducted fairly and impartially
is perhaps the best method for discharging this burden
H
168 SUPREME COURT REPORTS [2012) 3 S.C.R.
A and the methods like first-come-first-served when used
for alienation of natural resources/public property are
li°kelir to be misused by unscrupulous people who are
only interested in garnering maximum financial benefit
and have no respect for the constitutional ethos and
B values. In other words, while transferring or alienating the
natural resources, the State is duty bound to adopt the
method of auction by giving wide publicity so that all
eligible persons can participate in the process. The
exercise undertaken by the officers of the DoT between
c September, 2007 and March 2008, under the leadership
of the then Minister of C&IT was wholly arbitrary,
capricious and contrary to public interest apart from being
violative of the doctrine of equality. The material
produced before the Court showed that the then Minister
of C&ff wanted to favour some companies at the cost of
0
the Public Exchequer and for this purpose, he took the
following steps: (i) Soon after his appointment as Minister
of C&IT, he directed that all the applications received for
grant of UAS Licence should be kept pending till the
receipt of TRAI recommendations. (ii) The
E recommendations made by TRAI on 28.8.2007 were not
placed before the full Telecom Commission which,
among others, would have included the Finance
Secretary. The notice of the meeting of the Telecom
Commission was not given to any of the non permanent
F members despite the fact that the recommendations
made by TRAI for allocation of spectrum in 2G bands had
serious financial implications. This is established from
the pleadings and the records produced before this Court
which show that after issue of licences, 3 applicants
G transferred their equities for a total sum of Rs.24,493 ·
crores in favour of foreign companies. Therefore, it was
absolutely necessary for the DoT to take the opinion of
the Finance Ministry as per the requirement of the
Government of India (Transaction of Business) Rules,
H 1961. (iii) The officers of the DoT who attended the
CENTRE FOR PUBLIC INTEREST LITIGATION & 169
ORS. v. UNION OF INDIA & ORS.
meeting of the Telecom Commission held on 10.10.2007 A
hardly had any choice but to approve the
recommendations made by TRAI. If they had not done so,
they would have incurred the wrath of the Minister of
C&IT. (iv) In view of .the approval by the Council of
Ministers of the recommendations made by the Group of B
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 TRAl's c
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 0
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 E
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. F
(vi) The Minister C&IT introduced cut off date as 25.9.2007
for consideration of the applications received for grant of
licence despite the· fact that only one day· prior to this,
press release was issued by the DoT fixing 1.10.2007 as
the last date for receipt of the applications. This arbitrary G
action of the Minister of C&IT though appears to be
innocuous, actually benefitted some of the real estate
companies who did not have any experience in dealing
with telecom services and who had made applications
only on 24.9.2007, i.e., one day before the cut off date H
170 SUPREME COURT REPORTS [2012] 3 S.C.R.
A fixed by the Minister of C&IT on his own. (vii) The cut off
date, i.e. 25.9.2007 decided by the Minister of C&IT on
2.11.2007 was not made public till 10.1.2008 and the first-
come-first-served policy, which was being followed since
2003 was changed by him on 7 .1.2008 and was
B incorporated in press release dated 10.1.2008. This
enabled some of the applicants, who had access either
to the Minister or the officers of the DoT to get the
demand drafts, bank guarantee, etc. prepared in advance
for compliance of conditions of the Lois, which was the
c basis for determination of seniority for grant of licences
and allocation of spectrum. (viii) The meeting of the full
Telecom Commission, which was scheduled to be held
on 9.1.2008 to consider issues relating to grant of
licences and pricing of spectrum was deliberately
postponed on 7.1.2008 so that the Secretary, Finance and
0
Secretaries of three other important Departments may not
be able to raise objections against the procedure devised
by the DoT for grant of licence and allocation of spectrum
by applying the principle of level playing field. (ix) The
E manner in which the exercise for grant of Lois to the
applicants was conducted on 10.1.2008 leaves no room
for doubt that every thing was stage managed to favour
those who were able to know in advance the change in
the implementation of the first-come-first served policy.
As a result of this, some of the companies which had
F submitted applications in 2004 or 2006 were pushed
down in the priority and those who had applied between
Augustand September 2007 succeeded in getting higher
seniority entitling them to allocation of spectrum on
priority basis. The argument that if the Court finds that
G the exercise undertaken for grant of UAS Licences has
resulted in violation of the institutional integrity, then all
the licences granted 2001 onwards should be cancelled
does not deserve ,acceptance because those who have
got licence between 2001 and 24.9.2007 are not parties
H to these petitions and legality of the licences granted to
CENTRE FOR PUBLIC INTEREST LITIGATION & 171
ORS. v. UNION OF INDIA & ORS.
them has not been questioned before this Court. [Paras A
76-78] [251-8-H; 252-A-H; 253-A-H; 254-A-H; 255-A-B]
6. 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 8
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 C
framing the policies. The Court should also not interfere
with the fiscal policies of the State. However, when it is
clearly demonstrated that the policy framed by the State
or its agency/instrumentality and/or its implementation is
contrary to public interest or is violative of the
constitutional principles, it is the duty of the Court to D
exercise its jurisdiction in larger public interest and reject
the stock plea of the State that the scope of judicial
review should not be exceeded beyond the recognised
parameters. When matters like these are brought before
the judicial constituent of the State by public spirited E
citizens, it becomes the duty of the Court to exercise its
power in larger public interest and ensure that the
institutional integrity is not compromised by those in
whom the people have reposed trust and who have taken
an oath to discharge duties in accordance with the F
Constitution and the law without fear or favour, affection
or ill will and who, as any other citizen, enjoy fundamental
rights and, at the same time, are bound to perform the
duties enumerated in Article 51A. [Para 79] [255-C-G]
G
7. It is imperative to observe that but for the vigilance
of some enlightened citizens who held important
constitutional and other positions and discharged their
duties in larger public _interest and Non Governmental
Organisations who have been constantly fighting for H
172 SUPREME COURT REPORTS [2012] 3 S.C.R.
I
A 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
B manipulate the system. [para 80] [256-8-C]
K. Manjusree v. State of Andhra Pradesh (2008) 3 SCC
512: 2008 (2) SCR 1025; Monarch Infrastructure (P) Ltd. v.
Commissioner, Ulhasnagar Municipal Corpn. (2000) 5 SCC
C 287: 2000 (3) SCR 1159; Home Communication Ltd. and
Anr. v. Union of India and Ors. 52 (1993) DLT 168; Jamshed
Hormusji Wadia v. Board of Trustees, Port of Mumbai (2004)
3 SCC 214: 2004 (1) SCR 483: Chaitanya Kumar v. State
of Karnataka (1986) 2 SCC 594: 1986 (2) SCR 409;
D Shivsagar Tiwari v. Union of India (1996) 6 SCC 558: 1996
(7) Suppl. SCR 478; Common Cause, A Registered Society
(Petrol pumps matter) v. Union of India (1996) 6 SCC 530:
1996 (6) Suppl. SCR 719; Nagar Nigam v. Al Faheem Meat
Exports (P) Ltd. (2006) 13 SCC 382: 2006 (10) Suppl. SCR
354; Delhi Science Forum v. Union of India (1996) 2 SCC
E 405: 1996 (2) SCR 767; BALCO Employees' Union (Regd.)
v. Union of India (2002) 2 SCC 333: 2001 (5) Suppl. SCR
511; Vil/ianur lyarkkai Padukappu Maiyam v. Union of India
(2009) 7 SCC 561: 2009 (9) SCR 225; Ministry of Labour and
Rehabilitation v. Tiffin's Barytes Asbestos & Paints Ltd. (1985)
F 3 SCC 594: 1985 (2) Suppl. SCR 302; Vnited India Fire and
General Insurance Co. Ltd. v. K. S. Vishwanathan (1985) 3
SCC 686; State of TN. v. M.N. Sundararajan (1980) 4 SCC
592: 1981 (1) SCR 471; Sunil Pannalal Banthia v. City &
Industrial Development Corporation of Maharashtra Ltd.
G (2007) 10 SCC 674: 2007 (3) SCR 798; Bombay Dyeing &
Mfg. Co. Ltd. (3) v. Bombay Environmental Action Group
(20.06) 3 SCC 434: 2006 (2) SCR 920; Prem Chand
Somchand Shah v. Union of India (1991) 2 SCC 48: 1991
(1) SCR 232; Sanjeev Coke Mfg. Co. v. Bharat Coking Coal
H Ltd. (1983) 1 SCC 147: 1983 (1) SCR 1000 - referred to.
CENTRE FOR PUBLIC INTEREST LITIGATION & 173
ORS. v. UNION OF INDIA & ORS.
8.ln the result, the writ petitions are allowed in the A
following terms:
(i) The licences granted to the private respondents
on or after 10.1.2008 pursuant to two press releases
issued on 10.1.2008 and subsequent allocation of 8
spectrum to the licensees are declared illegal and are
quashed.
(ii) The above direction shall become operative after
four months.
c
(iii) Keeping in view the decision taken by the Central
Government in 2011, TRAI shall make fresh
recommendations for grant of licence and allocation
of spectrum in 2G band in 22 Service Areas by
auction, as was done for allocation of spectrum in 3G o
band.
(iv) The Central Government shall consider the
recommendations of TRAI and take appropriate
decision within next one month and fresh licences
be granted by auction. E
(v) Respondent Nos.2, 3 and 9 who have been
benefited at the cost of Public Exchequer by a wholly
arbitrary and unconstitutional action taken by the
DoT for grant of UAS Licences and allocation of F
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.SO lakhs each because they too G
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. No cost is imposed on the respondents
who had submitted their applications in 2004 and H
174 SUPREME COURT REPORTS [2012] 3 S.C.R.·
A 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
B
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. However, it is made clear that the
observations made in this judgment shall not, in any
c manner, affect the pending investigation by the CBI,
Directorate of Enforcement and others agencies or
cause prejudice to those who are facing prosecution
in the cases registered by the CBI or who may face
·prosecution on the basis of chargesheet(s) which
D may be filed by the CBI in future and the Special
Judge, CBI shall decide the matter uninfluenced by
this judgment. Jhis judgment shall not prejudice any
person in the action which may be taken by other
'investigating agencies under Income Tax Act, 1961,
E Prevention of Money Laundering Act, 2002 and other
similar statutes. [Para 81) [256-D-H; 257-A-F]
Case Law Reference:
2008 (2) SCR 1025 referred to Para 60
F
2000 (3) SCR 1159 referred to Para 60
(1993) DLT 168 referred to Para 60
2004 (1) SCR 483 referred to Para 60
G 1986 (2) SCR 409 referred to Para 60
1996 (7) Suppl. SCR 478 referred to Para 60
1996 (6) Suppl. SCR 719 referred to Para60
H 2006 (10) Suppl. SCR 354 referred to Para 60
CENTRE FOR PUBLIC INTEREST LITIGATION & 175
ORS. v. UNION OF INDIA & ORS.
1996 (2) SCR 767 referred to Para 60 A
2001 (5) Suppl. SCR 511 referred to Para 60
2009 (9) SCR 225 referred to Para 60
1985 (2) Suppl. SCR 302 referred to Para 60.
B
(1985) 3 sec 686 referred to Para 60
1981 (1) S~R 471 referred to Para 60
2007 (3) SCR 798 referred to Para 60
2006 (2) SCR 920 referred to Para 60 c
1991 (1) SCR 232 referred to Para 60
1983 (1) SCR 1000 referred to Para 60
146 U.S. 387 (1892) referred to Para 66 D
1996 (10 ) Suppl. SCR 12 referred to Para 66
(2002) 3 sec 214 referred to Para 66
2006 (2) SCR 419 referred to Para 66
E
2009 (3) SCR 1 referred to Para 66
1995 (1) SCR 1036 relied on Para 67
2010 (5) SCR 704 relied on Para 68
2004 (3 ) SCR 534 relied on Para 68 F
1996 (10) Suppl. SCR 12 relied on Para 68
2011 (5) SCR 77 relied on Para 70
2001 (2) SCR 630 relied on Para 70
G
2008 (4) SCR 610 relied on Para 70
2005 (5) Suppl. SCR 699 relied on Para 70
2009 (6) SCR 663 relied on Para 70
1979 (3) SCR 1014 relied on Para 70 H
176 SUPREME COURT REPORTS [2012] 3 S.C.R.
A 1967 SCR 703 referred to Para 70
1980 (3) SCR 1338 relied on Para 70
1996 (6) Suppl. SCR 719 relied on Para 70
1990 (1) Suppl. SCR 625 relied on Para 70
B
1995 (1) Suppl. SCR 349 relied on Para 70
1996 (3) Suppl. SCR 597 relied on Para 70
1987 (2) SCR 223 relied on Para 71
c 2011 (4) SCR 445 referred to Para 79
.CIVIL ORIGINAL JURISDICTION : Writ Petition (Civil) No
423 of 2010.
Under Article 32 of the Constitution of India.
D
WITH
W.P. (C) No. 10 of 2011.
Prashant Bhushan, Pranav Sachdeva, Dr. Subramanian
E Swamy (Petitioner-in-Person) in W.P. No. 10 of 2011 for the
Petitioners.
G.E. Vahanvati, AG, Indira Jaising ASG, Rakesh Dwivedi,
C.S. Vaidyanathan, Ramji Srinivasan, Dr. Abhishek Manu
Singhvi, Meet Malhotra, C.A. Sundaram, Vikas Singh, Arijit
F Prasad, T.A. Khan, Sonam Anand, Nishant Patil, Saket Singh,
Abhishek Chaudhary, Varun Chaudhary, Preetika Dwivedi,
Manjul Bajpai, Ankur Saigal, Mansoor Ali Shoket, Pukhnambam
Ramesh Kumar, Nitin Kala, Vibha Dhawan, Manu Nair, Adit S.
Pujari, Gopal Jain, Manik Karanjawala, Ruby Singh Ahuja (for
G Karanjawala & Co.), Ritu Bhalla, Sahil Sharma, Omar Ahmad,
Ananya Ghosh, Jai Mohan (for Suresh A. Shroff & Co.), Dayan
Krishnan, Gautam Narayan for the Respondents.
The Judgment of the Court was delivered by
H
CENTRE FOR PUBLIC INTEREST LITIGATION & 177
ORS. v. UNION OF INDIA & ORS.
G.S. SINGHVI, J. 1. The important questions which arise A
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 the Bombay
High Court) for taking up causes of public interest and
conducting public interest litigation in an organised manner, Lok B
Satta, a registered Society dedicated to political governance,
reforms and fight against corruption, Telecom Watchdog and
Common Cause, both Non-Governmental Organisations
registered as Societies for taking up issues of public
importance and national interest, Sarva Shri J.M. Lingdoh, T.S. c
Krishnamurthi and N. Gopalasamy, all former Chief Election
Commissioners, P. Shanker, former Central Vigilance
Commissioner, Julio F. Ribero, former member of the Indian
Police Service, who served as Director General of Police,
Gujarat, Punjab and C.R.P.F. and Commissioner of Police, D
Mumbai, P.G. Thakurta, an eminent Senior Journalist and
visiting faculty member of various institutions including llMs, llT,
FTll, llFT, Delhi University, Jawaharlal Nehru University and
Jamia Milia lslamia University and Admiral R.H. Tahiliyani,
former Chief of Naval Staff, former Governor and former
Chairman of Transparency International India and the other has E
been filed by Dr. Subramanian Swami, a political and social
activist, are:
(i) Whether the Government has the right to alienate,
transfer or distribute natural resources/national assets F
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 G
Regulatory Authority of India (TRAI) on 28.8.2007 for grant
of Unified Access Service Licence (for short 'UAS
Licence') with 2G spectrum in 800, 900 and 1800 MHz at
the price fixed in 2001, which were approved by the
Department of Telecommunications (DoT), were contrary H
178 SUPREME COURT REPORTS [2012) 3 S.C.R.
A /to the decision taken by the Council of Ministers on
31.10.2003?
(iii) Whether the exercise undertaken by the DoT from
September 2007 to March 2008 for grant of UAS Licences
to the private respondents in terms of the
B
recommendations made by TRAI is vitiated due to
arbitrariness and malafides and is contrary to public
interest?
(iv) Whether the policy of first-come-first-served followed
c by the DoT for grant of licences is ultra vires the provisions
of Article 14 of the Constitution and whether the said policy
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
D favour some of the applicants?
(v) Whether the licences granted to ineligible applicants
and those who failed to fulfil the terms and conditions of
the licence are liable to be quashed?
E 2. For detailed examination of the issues raised by the
petitioners, it will be useful to briefly notice the history of the
growth of telecommunications in the country and the reforms
introduced 1984 onwards.
F 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
G 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
H to establish, maintain or work a telegraph in any part of India.
CENTRE FOR PUBLIC INTEREST LITIGATION & 179
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
4. After independence, Government of India took complete A
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 B
"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 for developing
indigenous technologies and permissions were given to the
private sector to manufacture subscriber-equipment. In 1986, c
Mahanagar Telephone Nigam Ltd., (MTNL) and Videsh
Sanchar Nigam Ltd., (VSNL) were set up.
5. The New Economic Policy of India was announced on
24. 7.1991. It was aimed at meeting India's competitiveness in
the global market; rapid growth of exports, attracting foreign D
direct investment; and stimulating domestic investments. With
a view to achieve standards comparable to international
facilities, the sub-sector of Value Added Services was opened
up to private investment in July 1992 for the following services:
(a) Electronic Mail; (b) Voice Mail; (c) Data Services; (d) Audio E
Text Services; (e) Video Text Services; (f) Video Conferencing;
(g) Radio Paging; and (h) Cellular Mobile Telephone. In respect
of services (a) to (f), the companies registered in India were
permitted to operate under a licence on non-exclusive basis.
For services covered by (g) and (h) mentioned above, keeping F
in view the constraints on the number of companies that could
be allowed to operate, a policy of selection through a system
of tendering was followed for grant of licences.
National Telecom Policy 1994
G
6. National Telecom Policy 1994 (NTP 1994) was
announced on 13.5.1994. This was the first major step towards
deregulation, liberalization and private sector participation. The
objectives of the policy were:
H
180 SUPREME COURT REPORTS [2012] 3 S.C.R.
A (i) affording telecommunication for all and ensuring the
availability of telephone on demand;
(ii) providing certain basic telecom services at affordable
and reasonable prices to all people and covering all
villages;
B
(iii) giving world standard telecom services; addressing
consumer complaints, dispute resolution and public
interface to receive special attention and providing widest
permissible range of services to meet the customers'
c demand and at the same time at a reasonable price;
(iv) creating a major manufacturing base and major export
of telecom equipment having regard to country's size and
development; and
D (v) protecting the defence and security interest of the
country.
7'. In furtherance of NTP 1994, licences were granted to
eight Cellular Mobile Telephone Service (CMTS) operators, two
E in each of the four metropolitan cities of Delhi, Mumbai
(Bombay), Kolkata (Calcutta) and Chennai (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
F 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.
J
G 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
H
CENTRE FOR PUBLIC INTEREST LITIGATION & 181
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
further reforms. On the basis of the report of the GoT, a draft A
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 8
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 all uncovered areas C
including the rural areas and also provide high level
services capable of meeting the needs of the
country's economy by striking a balance between
the two;
D
(iii) to encourage development of telecommunication in
remote, hilly and tribal areas of the country;
(iv) to create a modern and efficient
telecommunications infrastructure taking into
account the convergence of IT, media, telecom and E
consumer electronics which will in turn propel India
to become an IT superpower;.
(v) to convert PCOs wherever justified into Public
Teleinfo centres having multimedia capability such F
as Integrated Services Digital Network (ISDN)
services, remote database access, government
and community information systems, etc.;
(vi) to transform, in a time bound manner, the
telecommunications sector in both urban and rural G
areas into a greater competitive environment
providing equal opportunities and level playing field
for all players;
(vii) to strengthen research and development efforts in H
182 SUPREME COURT REPORTS [2012] 3 S.C.R.
A the country and provide an impetus to build world
class manufacturing capabilities;
.(viii) to achieve efficiency and transparency in spectrum
management;
•I
8 (ix) to protect defence and security interests of the
country; and
(x) to enable Indian Telecom Companies to become
truly global players.
c
9. NTP 1999 categorized 8 services in the telecom sector,
namely; (i) Cellular Mobile Service Providers (CMSPs), Fixed
Service Providers (FSPs) and Cable Service Providers,
collectively referred as 'Access Providers'; (ii) Radio Paging
D Service Providers; (iii) Public Mobile Radio Trunking Service
Providers; (iv) National Long Distance Operators; (v)
International Long Distance Operators; (vi) Other Service
Providers, (vii) Global Mobile Personal Communication by
Satellite (GMPCS) Service Providers; (viii) V-SAT based
Service Providers. NTP 1999 dealt with, and provided the
E framework for, all these categories of telecom service providers.
10. The policy on spectrum management as enumerated
in NTP 1999 was as under:
(i) Proliferation of.new technologies and the growing
F
demand for telecommunication services has led to
manifold increase in demand for spectrum and
consequently it is essential that the spectrum is
utilized efficiently, economically, rationally and
optimally.
G
(ii) There is a need for a transparent process of
allocation of frequency spectrum for use by a
service provider and making it available to various
users under specific conditions.
H
CENTRE FOR PUBLIC INTEREST LITIGATION & 183
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
(iii) With the proliferation of new technologies it is A
essential to revise the National Frequency
Aflocation 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 B
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 C
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. D
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.
E
(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
allocation of frequency spectrum which is effective F
and efficient and the same would be further
examined in the light of ITU guidelines. In this regard
the following course of action shall be adopted viz.:
a) spectrum usage fee shall be charged; G
b) an Inter-Ministerial Group to be called Wireless
Planning Coordination Committee, as a part of the
Ministry of Communications for periodical review of
spectrum availability and broad allocation policy,
H
184 SUPREME COURT REPORTS [2012) 3 S.C.R.
A should be set up; and
c) massive computerization in WPC Wing would be
started in the next three months so as to achieve
the objective of making all operations completely
computerized by the end of the year 2000.
B
(emphasis supplied)
Establishment of the Telecommunication Commission (for
short. 'the Telecom Commission') and the Telecom
c Regulatory Authority of India.
11. On 11.4.1989, the Council of Ministers passed a
resolution and decided to establish the Telecom Commission.
The relevant portions of that resolution are extracted below:
D "CABINET SECRETARIAT
New Delhi the 11th April, 1989
RESOLUTION
E CONSTITUTION OF TELECOM COMMISSION
No. 15/1/2/87-Cab. 1. Telecommunication service is
an essential infrastructure for national development. It has
impact on social and economic activities. Besides,
F business, industry and administration depends heavily on
information and telecom for productivity, efficiency and
their day-to-day operations. Its development, therefore, is
vital for nation building.
In order to promote rapid development in all aspects
G of telecommunications including technology, production
and services, the Government of India consider it
necessary to set up an organisation, which will have
responsibility in the entire field of telecommunications.
H After careful consideration, the Government of India
CENTRE FOR PUBLIC INTEREST LITIGATION & 185
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
have decided to establish a Telecommunication A
Commission with full executive and financial powers
modelled on the lines of the Atomic Energy Commission.
2. Constitution of the Commission
(a) The Commission will consist of full time and part 8
time Members;
(b) The Secretary to the Government of India in the
Department of Telecommunications shall be the ex-
officio Chairman of the Commission; C
(c) The full time Members of the Commission shall be
ex-officio Secretary to the Government of India in
the Department of Telecommunications. One of
these Members shall be Member for Finance; and D
(d). 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.
E
3. Functions
The Telecom Commission shall be responsible :
(a) For formulating the policy of the Department of
Telecommunications for approval of the F
Government;
(b) For preparing the budget for the Department of
Telecommunications for each financial year and
getting it approved by the Government; and G
(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 H
186 SUPREME COURT REPORTS [2012] 3 S.C.R.
A 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
B 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
c telecommunication. All recommendations of the
Commission on policy and allied matters shall be
put to the Minister of Communications through the
Chairman.
D '(b) In case of any difference of opinion in the meetings
of the Commission, the decision of the Chairman
shall be final, but in financial matters, Member
(Finance) of the Commission will have access to
Finance Minister.
E ,(c) The Chairman may authorise any Member of the
Commission to exercise on his behalf, subject to
such general or special orders as he may issue
from time to time, such of his powers and
responsibilities as he may decide.
F
6. Member Finance
The Member of Finance shall exercise powers of
the Government of India in financial matters
concerning the Department of Telecommunications
G except in so far as such powers have been, or may
in future be conferred on or delegated to the
Department.
..
7. The Commission shall have power to frame its own
H rules and procedures. The Commission shall meet
CENTRE FOR PUBLIC INTEREST LITIGATION & 187
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
at such time and places as fixed by the Chairman. A
8. - The Telecom Commission shall take over all legal
and statutory authority vested with the Telecom
Board."
12. The Rules of Business for the Telecom Commission B
were also framed in 1989. In terms of para 2 of the Rules of
Business read with item 1 of Annexure 'A' appended thereto,
all important matters of policy relating to Telecommunications
are required to be brought before the Telecom Commission.
c
13. In 1997, Parliament enacted the Telecom Regulatory
Authority of India Act, 1997 (for short, 'the 1997 Act') to provide
for the establishment of TRAI. By Act No.2 of 2000, the 1997
Act was amended and provision was made for establishment
of the Telecom Disputes Settlement and Appellate Tribunal D
(TDSAT). Sections 11 and 13, which have bearing on the
decision of these petitions read as under:
"11. Functions of Authority. - (1) Notwithstanding anything
contained in the Indian Telegraph Act, 1885 (13of1885),
the functions of the Authority shall be to- E
(a) to make recommendations, either suo motu or on a
request from the licensor, on the following matters, namely:-
(i) need and timing for introduction of new service
F
provider;
(ii) terms and conditions of licence to a service
provider;
(iii) revocation of licence for non- compliance of terms G
and conditions of licence;
(iv) measures to facilitate competition and promote
efficiency in the operation of telecommunication
services so as to facilitate growth in such services;
H
188 SUPREME COURT REPORTS [2012] 3 S.C.R.
A (v) 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;
B (vii) measures for the development of
telecommunication technology and any other matter
relatable to telecommunication industry in general;
(viii) efficient management of available spectrum;
c (b) discharge the following functions, namely:-
(i) ensure compliance of terms and conditions of
licence;
D (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
E the service providers;
(iii) ensure technical compatibility and effective inter-
connection between different service providers;
(iv) regulate arrangement amongst service providers of
F 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
G
of such service provided by the service providers
so as to protect interest of the consumers of
telecommunication service; >
I
(vi) lay-down and ensure the time period for providing
H local and long distance circuits of
CENTRE FOR PUBLIC INTEREST LITIGATION & 189
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
telecommunication between different service A
providers;
(vii) maintain register of interconnect agreements and
of all such other matters as may be provided in the
regulations;
B
(viii) keep register maintained under clause (vii) open
for inspection to any member of public on payment
of such fee and compliance of such other
requirement as may be provided in the regulations;
c
(ix) ensure effective compliance of universal service
obligations;
(c) levy fees and other charges at such rates and in
respect of such services as may be determined by
regulations; D
(d) perform such other functions including such ·
administrative and financial functions as may be
entrusted to it by the Central Government or as
may be necessary to carry out the provisions of this E
Act:
Provided that the recommendations of the Authority
specified in clause (a) of this sub-section shall not be
binding upon the Central Government:
F
Provided further that the Central Government shall seek
the recommendations of the Authority in respect of
matters specified in sub-clauses (i) and (ii) of clause (a)
of this sub-section in respect of new licence to be issued
to a service provider and the Authority shall forward its G
recommendations within a period of sixty days from the
date on which that Government sought the
recommendations: ·
Provided also that the Authority may request the Central H
190 SUPREME COURT REPORTS [2012) 3 S.C.R.
A Government to furnish such information or documents as
may be nec.essary for the purpose of making
recommendations under sub-clauses (i) and (ii) of clause
(a) of this subsection and that Government shall supply
such information within a period of seven days from receipt
B 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
c 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
D 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
E · 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
F
Telegraph Act, 1885 (13of1885), 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
G 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
H fixed as aforesaid the Authority shall record the reasons
CENTRE FOR PUBLIC INTEREST LITIGATION & 191
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
therefor. A
(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
8
order, decency or morality.
(4) The Authority shall ensure transparency while exercising
its powers and discharging its functions.
13. Power of Authority to issue directions. - The Authority c
may, for the discharge of i~s functions under sub-section
(1) of section 11, issue such directions from time to time
to the service providers, as it may consider necessary:
Provided that no direction under sub-section (4) of section
12 or under this section shall be issued except on the
0
matters specified in clause (b) of sub-section (1) of section
11."
14. After its establishment, TRAI made various
recommendations either suo motu or on the request of the E
licensor, i.e., the Central Government or the Telegraph Authority.
On a reference made by the Ministry of Communications and
Information Technology on four issues including the issues of
appropriate level of entry fee, basis of selection of new
operators and entry of 4th cellular operator, TRAI made its F
recommendations, which were communicated to Secretary,
DoT vide D.O. No. 250-14/2000-Fin (DF) (Vol. II) dated
23.6.2000. Paragraphs 4.1 to 4.3, 4.5 to 4.6 and 4.11 to 4.15
of that letter are extracted below:
"4. For the purposes of clarity each issue on which TRAl's G
recommendation has been sought has been stated
separately and recommendations have been given
therefor.
4.1 (A) Appropriate level of entry fee, basis for selection H
192 SUPREME COURT REPORTS [2012) 3 S.C.R.
A of new operators and entry of fourth operator
The issues under this head can be broken under three
main subheads. These are :
(i) Level of entry fee;
B
(ii) Basis for selection of new operation;
(iii) Entry of the fourth operator.
. We take these issues sequentially.
c
4.2(1) Level of Entry Fee:-
New operators are to be licensed in the following vacant
circles/slots:
D (a) Jammu & Kashmir - Andamans & Nicobar Islands;
(b) Assam and West Bengal;
(c) DOT/MTNL as the third operator.
E (d) Fourth operator in circles where migration has been
permitted.
4.3 DOT/MTNL wherever they come in as the third
operator as also the fourth operator to be introduced will
F be required to pay as licence fee the same percentage
share of their revenue as recommended by TRAI for the
existing CMSPs who are being allowed to migrate to
revenue sharing arrangement in accordance wit_h NTP 99.
The fourth operator will also pay an. entry fee which will be
G .fixed through a process of bidding.
4.5 (ii) Selection of new operators:
The TRAI recommends that all new operators barring DOT/
MTNL be selected through a competitive process. This is
H recommended to be a multi stage bidding process
CENTRE FOR PUBLIC INTEREST LITIGATION & 193
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
preceded by a pre-qualification round. A
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 B
- Financial strength and experience as Telecom Service ·
Provider
- Minimum roll out obligation
c
- Technical Plan
- Business Plan
D
- Payment terms and other commercial conditions
It is recommended that prospective bidders who meet the
predetermined 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- E
qualification criteria. The criteria for pre-qualification could
be developed on the following lines:-
4.11 The Structure of the Bidding Process
F
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 purpose,· a bid structure
involving "Multi Stage Informed Ascending Bids" is G
recommended. It is also recommended that such bids be
invited for the entry fee for selection of operations and
issuing licenses to them. Although, as recommended
earlier in the case of NLDO, TRAI is primarily of the opinion
that because of its greater relevance, direct impact on H
194 SUPREME COURT REPORTS [2012) 3 S.C.R.
A operations and being equitable, revenue sharing is a
better basis on which to invite bids for licenses, in the case
of CMSPs this choice is not available except in two vacant
circles/slots. The 34 incumbent operators have already
been given licenses through a process of bidding and it
B would not be correct to subject them to yet another process
of bidding, this time concerning revenue sharing. They
·have already been asked to pay as license fee, albeit on
a provisional basis a fixed amount of the revenue share
viz. 15%. It is, therefore, recommended that a fixed
c percentage of revenue share be paid by all operators as
the license fee and this percentage be the same for all the
operators barring the exceptions specifically mentioned in
the paragraph 5.9 below.
4.12. While, the detailed bid structure can be prepared at
D the time bids are being called and assistance/advise of
experts may be taken in doing so, based on the
experience of such successful bids elsewhere, the basic
outlines of the proposed structure can be given. Bids can
be invited for more than one licence at a time. The total
E number of rounds in which the bids will be finalised will be
pre-determined and all bidders should be eligible to bid
for all licenses on offer in each of the rounds. The licensor,
may, however, if it so desires, stipulate beforehand the
total number of licences that can be finally allotted to a
F single bidder. The TRAl's recommendation in this regard
is that the number of licences that can go to a single
bidder need not be restricted. This will favour the serious
and techno-financially strong bidders and will help keep the
bids at operationally feasible optimal levels.
G
4.13. After each stage of bidding, bids received will be
.,
made public and all bidders (those lower than the highest
bidder as well as the highest bidder) will be permitted to
raise their bids in the subsequent rounds of bidding. The
process will be deemed complete only on the completion
H
CENTRE FOR PUBLIC INTEREST LITIGATION & 195
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
of the pre-determined number of bid rounds at the end A
of which the highest bidder for 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. B
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 C
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 D
%, 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.
E
(Ill). Entry of the Fourth Operator:
4.15 DOTIMTNL, 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
F
of spectrum. TRAI, however, has no information about the
availability of spectrum either for the third or the fourth
operator. The financial analysis conducted by the TRAI for
the purpose of studying the revenue share which the
operators can part with as licence fee assumes entry of
the third operator in the sixth year of licence i.e. in the G
current year and of another i.e. the fourth operator two
years later in accordance with NTP 99. The analysis
reveals that -even if the business in each of these
metropolitan areas and circles is required to produce a
reasonable IRR say 16-18 % and a decent return on the H
196 SUPREME COURT REPORTS [2012] 3 S.C.R.
A capital say around 20%, it would still enable the operators
to share upto about 25% of the Gross (adjusted) revenue
as the licence fee. In the· circumstances, it would be
reasonable to assume that on purely economic grounds,
in most circles there is even at present, a fair case for the
B entry of the fourth operator. In this context, however, more
than the market, the determining factor has to be the
availability of a spectrum and its optimal utilisation.
Moreover, it is also a matter for careful consideration that
even when additional spectrum is released, whether it
c should be utilised to augment the number of service
providers or for improving the quality and coverage of the
already available services. In the GSM 900 band the
maximum frequency spectrum made available to the
operators in a large number of countries is a pair of 12.5
MHz. Against this in India the circle operators have been
D
given a pair of less than 5 MHz and the metro operators
of less than 7 MHz. It is learnt that in a number of metros
and circles, no further expansion of services is possible
unless additional spectrum is made available to the
existing operators. Paucity of frequency spectrum is also
E adversely affecting the quality of service in a number of
service areas. In the circumstances a fair balance
between the two objectives of increasing competition on
the one hand and improving the quality, coverage and
price-efficiency of the service on the other will have to be
F struck so that the larger objective of providing quality
services at affordable prices is not jeopardised. A sub-
optimal cost structure and quality of service may finally turn
out to be detrimental to the growth of tele-density
notwithstanding a higher number of service providers.
G Similar views were expressed also by the BICP in their
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
H available for the CMSPs, existing as well as the proposed
CENTRE FOR PUBLIC INTEREST LITIGATION & 197
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new entrants and its location i.e. whether it is going to be A
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 8
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 c
Licensing. TRAI referred to international practices, 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 D
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, spectrum is
a scarce resource, it needs to be regulated separately. E
Spectrum should be distributed using such a mechanism
that it is allocated optimally to the most efficient user."
17. Paragraphs 7.'15 to 7.19 of the 2003
recommendations contained various alternatives for deciding F
the benchmark for the entry fee for Unified Access Licensing
Regime. In paragraph 7.30, TRAI laid emphasis on efficient
utilization of spectrum by all service providers and indicated that
it would make further recommendations on efficient utilization
of spectrum, spectrum pricing, availability and spectrum G
allocation procedure shortly, and the DoT may like to issue
spectrum related guidelines based on its recommendations.
18. In the meanwhile, a Group of Ministers was constituted
on 10.9.2003 with the approval of the Prime Minister to
consider the following matters: H
198 SUPREME COURT REPORTS [2012] 3 S.C.R.
A (i) To recommend how to ensure release of adequate
spectrum needed for the growth of the telecom
sector;
(ii) To recommend measures for ensuring adequate
resources for the realization of the NTP targets of
B
rural telephony;
(iii) To resolve issues relating to the enactment of the
Convergence Bill;
c (iv) To chart the course to a Universal Licence;
(v) To review adequacy of steps and enforcing limited
mobility within the SDCA for WLL(M) services of
basic operators, and recommend the future course
of action;
D
(vi) To appraise FDI limits in the telecom sector and
give recommendations thereon;
(vii) To identify issues relating to mergers and
E acquisitions in the telecom sector and recommend
the way forward; and
(viii) To consider issues relating to imposition of trade
tax on telecom services by the State Governments.
F 19. After considering the entire matter, the Group of
Ministers made detailed recommendations on 30.10.2003, the
relevant portions of which are extracted below:
"2.1 1st Term of Reference: to recommend how to ensure
release of adequate spectrum needed for the growth of the
G
telecom sector.
2.1.1 .. The GOM was informed that the availability of
adequate spectrum in appropriate frequency bands, i.e.
1800 MHz in a timely manner is crucial, for the growth of
H
CENTRE FOR PUBLIC INTEREST LITIGATION & 199
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
mobile telephone services. The growth of mobile services A
and resultant spectrum needs are mainly in metro, major
and main cities having population above 1 million.
However, the frequency bands of 1800 MHz are ·
extensively used by Defence services, thus severely
limiting their availability for the mobile telecom operators. B
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 C
which will be iointly 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 D
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 E
spectrum. The actual fund requirements including its
phasing will be worked out between the Ministry of
Defence Ministry of Ffnance and the Department of
Telecom in a time bound manner.
(3) The Department of Telecom and Ministry of Finance F
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 G
and equitable, avoiding monopolistic situation regarding
spectrum allotment usage
(5) The long term 15-20 years, spectrum requirements
along with time frames would also be worked out by
H
200 SUPREME COURT REPORTS [2012] 3 S.C.R.
A Department of Telecom.
(6) As per the directions of GoM, a Task Force has been
constituted under the chairmanship of Wireless Adviser to
the Govt. of India with representatives from Department of
Telecom, Ministry of Defence and Ministry of Finance. The
B
terms of reference of the Task Force and the progress of
its work so far are given in Annexures II & 111.(Page 17-18).
2.4. 4th Term of Reference:- To chart the course to a
Universal Licence:
c
2.4.1. The GoM took note of the exercise that had already
been indicated by Telecom Regulatory Authority of India
(TRAI), in regard to Unified Licensing Regime in the
Telecom Sector Chairman, TRAI and Chairman HDFC
D were specially invited made presentations before the
GoM.
2.4.2. TRAI submitted its recommendations to the
Government on this matter on 27.10.2003. TRAI has
recommended that the present system of licensing in the
E Telecom Sector should be replaced by Unified Licensing/
Automatic Authorization Regime. The Unified Licensing/
Automatic Authorization Regime has been recommended
to be achieved in a two-stage process with the Unified
Access Regime for basic and cellular services in the first
F phase to be implemented immediately. This is to be
followed by a process of consultation to define the
guidelines and rules for achieving a fully Unified Licensing/
Authorization Regime. TRAI has recommended that it will
enter into a consultation process so that the replacement
G of the existing licensing regime by a Unified Licensing
Regime gets initiated within 6 months. Broad rationale key
recommendations and some key policy issues that have
been addressed by TRAI are listed in the Annexure
IV(pages 19-21). ,,
;
H
CENTRE FOR PUBLIC INTERESTllTIGATION & 201
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2.4.3. The salient points of TRAI recommendations in A
regard to the Unified Access Licensing (basic and cellular
mobile), are as under:
(i) Unification of licenses to be done in two
stages B
(a) Unified access regime for basic and cellular
services in the first phase immediately
(b) Unified authorization regime encompassing
all telecom services in the second phase. c
(ii) Fee paid by fourth cellular operator to be benchmark
for migration of basic players to the new access regime.
(iii) Cellular operators not to pay any entry fee for migration
to the unified access regime while basic operators to pay D
the differences between fourth cellular operators licence
fee and the BSO fee already paid by them
(iv) Reliance lnfocom required to pay Rs. 1096 crores for
migration in addition to penalty of Rs. 485 crores for E
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) F
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. G
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 H
202 SUPREME COURT REPORTS [2012] 3 S.C.R.
A 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
B their facilities to deliver some services reserved for other
operators necessitating a re-look at NTP-94 policy
framework.
For bringing into effect the regime of Unified Access
Service for basic and cellular service licenses and Unified
c Licensing comprising all telecom services, it would be
necessary to enhance the scope of NTP-99 to include
these as distinct categories of licenses as pet of NTP-99.
2.4.5 TRAI recommendations on entry fee of WLL(M)
D based on TDSAT judgement:
TRAI. has also submitted its recommendations in regard
to additional entry fee payable by basic service operators
for providing WLL(M) services on which Government had
sought its recommendations based on the judgment of
E
TDSAT dated 8/8/03 in the WLL(M) case. TRAI has given
detailed reasoning on this matter and has recommended
additional entry fee for such of the Basic Service
Operators who provide WLL(M) service. The salient
features are in Annexure-V (page 22).
F
2.4.6 Based on the above the GoM has recommended the
following course of action
(i) The scope of NTP-99 may be enhanced to provide for
G licensing of Unified Access Service for basic and cellular
license services and Unified Licensing comprising all
telecom services. Department of Telecommunications may
be authorized to issue necessary addendum to NTP-99 to
this effect.
H (ii) The recommendations of TRAI with regard to
CENTRE FOR PUBLIC INTEREST LITIGATION & 203
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
implementation of the Unified Access Licensing Regime A
for basic and cellular services may be accepted.
DoT may be authorized to finalise the details of
implementation with the approval of the Minister of
Communication & IT in this regard including the calculation
8
of the entry fee depending upon the date of payment
based on the principles given by TRAI in its
recommendations.
(iii) The recommendations of TRAI in this regard to the
course of action to be adopted subsequently in regard to C
the implementation of the fully Unified License
Authorisation Regime may be approved.
DoT may be authorized to finalise the details of
implementation with the approval of the Minister of 0
Communications & IT on receipt of recommendations of
TRAI in this behalf.
(iv) The recommendations of TRAI in regard to additional
entry fee payable by basic service operators for providing
WLL(M) service on which Government sought its E
recommendations based on the judgment of TDSAT dated
8.8.2003 in the WLL(M) case may be accepted.
(v) While there appears to be no,case for giving any
compensation package to them, because of the F
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. G
(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
H
204 SUPREME COURT REPORTS [2012] 3 S.C.R.
A on payment of additional fee or charges, these will be
determined as per guidelines to be evolved in consultation
with JRAI."
(emphasis supplied)
B· 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
c 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
0 guarantee under UAS Licence was to be the same as the 4th
CMTS.
22. Vide letter dated 14.11.2003, the Chairman, TRAI, on
his own, made recommendation regarding entry fee to be
charged from the new UAS Licensees. On 24.11.2003, the
E Minister of C&IT accepted the recommendation that entry fee
for new UAS Licensees will be the entry fee of 4th cellular
operator and where there is no 4th cellular operator, it will be
the entry fee fixed by the Government for the basic operator. A
decision was also taken by him in F. No.20-231/2003-BS-lll
F (LOls for UASL) at 4/N that,
"As regards the point raised about the grant of new
licences on first-come-first-served basis, the announced
guidelines have made it open for new licences to be issued
G on continuous basis at any time. However, the spectrum
is to be allotted subject to availability. This in effect would
imply that an applicant who comes first will be granted the
spectrum first so it will result in grant of licence on first-
come-first-served basis."
H Although, in terms of the decision taken by the Minister of C&IT.
CENTRE FOR PUBLIC INTEREST LITIGATION & 205
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
the applications for grant of UAS Licence could be made on A
continuous basis and were required to be processed within 30
days, some applications were made in 2004 and 2006 and the
same were kept pending.
23. On 13.5.2005, TRAI made comprehensive B
recommendations on various issues relating to spectrum policy,
i.e., efficient utilisation of spectrum, spectrum allocation,
spectrum pricing, spectrum charging and allocation for other
terrestrial wireless links. These recommendations were not
placed before the Telecom Commission. Though, the then
Secretary, DoT submitted the file to the then Minister of C&IT · C
on 16.8.2005 for information with a note that he will go through
the recommendations and put up the file to the Minister for.
policy decision, the file was returned on 12.9.2006, i.e., after
one year and no further action appears to have been taken.
D
24. In the meanwhile, on 23.2.2006, the Prime Minister
approved constitution of a Group of Ministers, consisting of the
Ministers of Defence, Home Affairs, Finance, Parliamentary
Affairs, Information and Broadcasting and C&IT, to look into
issues relating to vacation of spectrum. Deputy Chairman, E
Planning Commission was special invitee. The Terms of
Reference of the Group of Ministers, among other things,
included suggesting a Spectrum Pricing Policy and examining
the possibility of creation of a spectrum relocation fund. After
five days, the Minister C&IT wrote letter dated 28.2.2006 to the F
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 G
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 H
206 SUPREME COURT REPORTS [2012] 3 S.C.R.
A 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
8 under:
"The licences shall be issued without any restriction on the
number of entrants for provision of unified access services
in a Service Area." -
c In terms of paragraph 14 of the guidelines, the licensee was
required to pay annual licence fee at 10/8/6% of Adjusted
Gross Revenue (AGR) for category A/B/C service areas,
respectively excluding spectrum charges. This was in addition
to the non-refundable entry fee. In terms of paragraph 19 the
o licensee was required to pay spectrum charges in addition to
the licence fee on revenue share basis. However, while
calculating AGR for limited purpose of levying spectrum
charges, revenue from wireless subscribers was not to be taken
into account.
E 26. After one year and about six months, the DoT vide its
letter dated 13.4.2007, requested TRAI to furnish its
recommendations under Section 11 (1 )(a) of the 1997 Act on
the issues of limiting the number of access providers in each
service area and review of the terms and conditions in the
F access provider licence mentioned in the letter. Paragraph 2
of-that letter is extracted below:
"2. Fast changes are happening in the Telecommunication
sector. In order to ensure that the policies keep pace with
G the changes/developments in the Telecommunication
sector, the government is contemplating to review the
following terms and conditions in the Access provider
(CMTS/UAS/Basic) license
i. Substantial equity holding by a company I legal
H
CENTRE FOR PUBLIC INTEREST LITIGATION & 207
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
person in more than one licensee company in the A
same service area (clause 1.4 of UASL
agreement).
ii. Transfer of licences (clause 6 of the UASL)
iii. Guidelines dated 21.02.2004 on Mergers and B
Acquisitions. TRAI in its recommendations dated
30.1.2004 had opined that the guidelines may be
reviewed after one year.
iv. Permit service providers to, offer access services ' c
using combination of technologies (CDMA, GSM
and/or any other) under the same license.
v. Roll-out obligations (Clause 34 of UASL).
vi. Requirement to publish printed telephone · D
directory."
27. In furtherance of the aforesaid communication, TRAI
made recommendations dated 28.8.2007. The main emphasis
of these recommendations was the principles of fair E
competition, no restriction on the number of access service
providers in any service area, need for spectrum management,
measures to increase spectrum efficiency, allocation of
spectrum and compliance of roll out obligations by the service
providers. It was also recommended that in future all spectrum
F
excluding the spectrum in 800, 900 and 1800 MHz bands in
2G services should be auctioned. In paragraphs 2.33, 2.39, ·
2.41, 2.54 and 2.63, TRAI repeatedly mentioned about scarce
availability of spectrum. Paragraphs 2.37, 2.40, 2.69 and 2.73
to 2. 79 of the TRAl's recommendations dated 28.8.2007 are G
extracted below:
"2.37 Accordingly, the Authority recommends that no
cap be placed on the number of access service
providers in any service area.
H
208 SUPREME COURT REPORTS [2012) 3 S.C.R.
A 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
B 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
c 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
D 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
E exists today is, in fact, a result of the price
discovered through a markets based mechanism
applicable for the grant of license to the 4th cellular
operator. In today's dynamism and unprecedented
growth of telecom sector, the entry fee determined
then is also not the realistic price for obtaining a
F
license. Perhaps, it needs to be reassessed
through a market mechanism. On the other hand
spectrum usage charge is in the form of a royalty
which is linked to the revenue earned by the
operators and to that extent it captures the
G economic value of the spectrum that is used. Some
stakeholders have viewed the charges/fee as a
hybrid model of extracting economic rent for the
acquisition and also meet the criterion of efficiency
in the utilization of this scarce resourc~. The
H Authority in the context of 800, 900 and 1800 MHz
CENTRE FOR PUBLIC INTEREST LITIGATION & 209
ORS. v. UNION OF !NOIA & ORS. [G.S. SINGHVI, J.]
is conscious of the legacy i.e. prevailing practice A
and the overriding consideration of level playing
field. Though the dual charge in present form
. does not reflect the present value of spectrum it
needed to be continued for treating already
specified bands for 2G services i.e. 800, 900 and B
1800 MHz. It is in this background that the
Authority is not recommending the standard
options pricing of spectrum, however, it has
elsewhere in the recommendation made a strong
case for adopting auction procedure in the c
allocation of all other spectrum bands except 800,
900 and 1800 MHz. ·
2.74 Some of the existing service providers have already
been allocated spectrum beyond 6.2 MHz in GSM
and 5 MHz in CDMA as specified in the license D
agreements without charging any extra one time
spectrum charges. The maximum spectrum
allocated to a service provider is 10 MHz so far.
However, the spectrum usage charge is being
increased with increased allocation of spectrum. E
The details are available at Table 8.
2.75 The Authority has noted that the allocation beyond
6 2 MHz for GSM and 5 MHz for CDMA at
enhanced spectrum usage charge has already F
been implemented. Different licensees are at
different levels of operations in terms of the
quantum of spectrum. Imposition of additional
acquisition fee for the quantum beyond these
thresholds may not be legally feasible in view of the G
fact that higher levels of usage charges have been
agreed to and are being collected by the
Government. Further, the Authority is conscious of
the fact that further penetration of wireless services
is to happen in semi-urban and rural areas where H
210 SUPREME COURT REPORTS [2012] 3 S.C.R.
A 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.
B
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
c 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
D allocating addition;al 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
E 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 a cap on the amount
F of spectrum that can be allocated to any wireless
operator. In any case, the Authority is
recommending a far stricter norm of subscriber
base for allocation of additional spectrum beyond
the initial allotment of spectrum. The additional
G acquisition fee beyond 10 MHz could be decided
either administratively or through an auction
method from amongst the eligible wireless service
providers. In this matter, the Authority has taken
...... note of submissions of a number of stakeholders
H who have cited evidences of the fulfillment of the
CENTRE FOR PUBLIC INTEREST LITIGATION & 211
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
quality of service benchmarks of the existing A
wireless operators at 10 MHz and even below in
almost all the licensed service areas. Such an
approach would also be consistent with the
Recommendation of the Authority in keeping the
door open for new entrant without putting a limit on 8
the number of access service providers.
2.77 The Authority in its recommendation on "Allocation
and pricing of spectrum for 3G and broadband
wireless access services" had recommended
certain reserve price for 5 MHz of spectrum in C
different service areas. The recommended price
are as below:
Service Areas Price (Rs.in million) for
2X5 MHz D
Mumbai, Delhi and Category A 800
Chennai, Kolkatta and Category B 400
Category C 150 E
The Authority recommends that any licensee who seeks
to get additional spectrum beyond 10 MHz in the existing
2G bands i.e. 800,900 and 1800 MHz after reaching the
specified subscriber numbers shall have to pay a onetime F
spectrum charge at the above mentioned rate on prorata ·
basis for allotment of each MHz or part thereof of spectrum
beyond 10 MHz. For one MHz allotment in Mumbai, Delhi
and Category A service areas, the service provider will
have to pay Rs. 160 million as one time spectrum
acquisition charge. G
2. 78 As far as a new entrant is concerned, the question
arises whether there is any need for change in the
pricing methodology for allocation of spectrum in
the 800, 900 and 1800 MHz bands. Keeping in H
212 SUPREME COURT REPORTS [2012] 3 S.C.R.
A view the objective of growth, affordability,
penetration of wireless services in semi-urban and
rural areas, the Authority is not 'in favour of
changing the spectrum fee regi,r{le for a new
entrant. Opportunity for equal competition has
B always been one of the prime principles of the
Authority in suggesting a regulatory. framework in
telecom services. Any differential treatment to a
new entrant vis-a-vis incumbents in the wireless
sector will go against the principle of level playing
field. This is specific and restricted to 2G bands
c 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.
D
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
E 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
F 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
G
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 so as to ensure
efficient utilization of this scarce resource. In the
2G bands (800 MHz/900 MHz/1800 MHz), the
H
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ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
a/location through auction may not be possible as A
the service providers were allocated spectrum at
different times of their license and the amount of
spectrum with them varies from 2X4.4 MHz to
2X10 MHz for GSM technology and 2X2.5 MHz
to 2X5 MHz in CDMA technology. Therefore, to B
decide the cut off after which the spectrum is
auctioned will be difficult and might raise the issue
of level playing field."
(underlining is ours) C
28. The aforesaid recommendations of TRAI were first
considered by an Internal Committee of the DoT constituted vide
letter dated 21.9.2007 under the Chairmanship of Member,
Telecommunication. The report of the Committee was placed
before the Telecom Commission on 10.10.2007. However, the D
four non-permanent members, i.e., Finance Secretary;
Secretary, Department of Industrial Policy and Promotion;
Secretary, Department of Information Technology and
Secretary, Planning Commission were not even informed about
the meeting. In this meeting of the Telecom Commission, which E
was attended by the officials of the DoT only, the report of the
Internal Committee was approved. On 17.10.2007, the Minister
of C&IT accepted the recommendations of the Telecom
Commission and thereby approved the recommendations
made by TRAI. However, neither the Internal Committee of the F
DoT and the Telecom Commission nor the Minister of C&IT
took any action in terms of paragraph 2.40 of the
recommendations wherein it was emphasised that the existing
spectrum allocation criteria, pricing methodology and the
management system suffer from a number of deficiencies and G
the whole issue should be addressed keeping in view issues
linked with spectrum efficiency and its management. The DoT
also did not get in touch with the Ministry of Finance to discuss
and finalise the spectrum pricing formula which had to include
incentive for efficient use of spectrum as well as disincentive H
214 SUPREME COURT REPORTS [2012] 3 S.C.R.
A for sub-optimal usage in terms of the Cabinet decision of 2003.
29. In the meanwhile, on 24.9.2007, Shri A.K. Srivastava,
DOG (AS), DoT prepared a note mentioning therein that as on
that date, 167 applications had been received from 12
companies for 22 service areas and opined that it may be
8
difficult to handle such a large number of applications at any ·
point of time. He suggested that 10.10.2007 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
C . 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.
D 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
Mis. A!rcel Ltd. (respondent No.11) had made similar
E 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 L_icences. Member
(Technology), Telecom Commission and Ex-officio Secretary to
F 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
General of India on the issue of the mechanism to deal with
what he termed as an unprecedented situation created due to
G receipt of large number of applications for grant of UAS
Licence. The statement of case accompanying the letter of
Member(Technology) contained as many as 14 paragraphs.
Paragraph 11 outlined the following four alternatives:
(I) The applications may be processed on first-come-first-
H
CENTRE FOR PUBLIC INTEREST LITIGATION & 215
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
served basis in chronological order of receipt of applications A
, in each service area as per existing procedure. Loi may be
issued simultaneously to applicants (the numbers will vary based
on availability of spectrum to be ascertained from WPC Wing)
who fulfil the eligibility conditions of the existing UASL
Guidelines and are senior most in the queue. The time limit for B
compliance should be 7 days as per the existing provision of
Loi and 15 days for submission of PBG, FBG, entry fee, etc.
as per the existing procedure. However, those who fulfil the
conditions of Loi within stipulated time, their seniority of license/
spectrum will be on the basis of their application date. The c
compliance of eligibility conditions as on the date of issue of
Loi may be accepted. No relaxation of this time limit will be
given and Loi shall stand terminated after the stipulated time
period (however, the applicant may have the right to apply for
new UAS Licence again as and when the window for
0
submission of new UAS Licence is opened again). Subsequent
applications may be considered for issue of Loi if the spectrum
is available.
(II) Lois to all those who applied by 25.9.2007 (date on
which the cut-off date for receipt of applications were made E
public through press) may be issued in each service area as it
is expected that only serious players will deposit the entry fee
and seniority for license/spectrum be based on (i) the date of
appflcatiQn or (ii) the date/time of fulfilment of all Loi conditions.
F
(Ill) DoT may issue Lois to all eligible applications
simultaneously received up to cut-off date. Since Lois will clearly
stipulate that spectrum allocation is subject to availability and
is not guaranteed, the Loi holders are supposed to pay the entry
fee if their business case permits them top wait for spectrum G
allocation subject to availability an initial roll out using wire line
technology.
(IV) Any other better approach which may be legally tenable
and sustainable for issue of new licences.
H
216 SUPREME COURT REPORTS [2012] 3 S.C.R.
A 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
8 (i) To treat their request prior to existing applicants
or
(ii) To treat their request after processing all 575
applications."
c
31. The Law Secretary placed the papers before the
Minister of Law and Justice on 1.11.2007, who recorded the
following note:
D "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."
E 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 Mihisterof C&IT did two things. He approved the
note prepared by Director (AS-1) containing the following
F issues:
(i) Issuing of Lois to new applicants as per the existing
policy,
(ii) · Number of Lois to be issued in each circle,
G
(iii) Approval of draft Loi,
(iv) Considering application of TATAs for dual
technology after the decision of TDSAT on dual
·H technology, and
CENTRE FOR PUBLIC INTEREST LITIGATION & 217
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.)
(v) Authorising Shri R.K. Gupta, ADG (AS-1) for A
signing the Lois on behalf of President of India.
33. While approving the note, the Minister of C&IT on his
own recorded the following - "Loi may be issued to the
applicants received upto 25th Sept. 2007". Simultaneously, he B
sent D.O. No.20/100/2007-AS.I dated 2.11.2007 to the Prime
Minister and criticised the suggestion made by the Law Minister
by describing it as totally out of context. He also gave an
indication of what was to come in the future by mentioning that
the DoT has decided to continue with the existing policy of first- C
come-first-served for processing of applications received up to
25.9.2007 and the procedure for processing the remaining
applications will be decided at a later date, if any spectrum is
left available after processing the applications received up to
25.9.2007. Paragraphs 3 and 4 of the letter of the Minister of
C&IT are extracted below: D
"3. The Department wanted to examine the possibility of
any other procedure in addition to the current procedure
of allotment of Licences to process the huge number of
applications. A few alternative procedures as debated in E
the Department and also opined by few legal experts were
suggested by the Department of Telecom to Ministry of
Law & Justice to examine its legal tenability to avoid future
legal complications, if any. Ministry of Law and Justice,
instead of examining the legal tenability of these alternative F
procedures, suggested referring the matter to empowered
Group of Ministers. Since, generally new major policy
decisions of a; Department or inter-departmental issues
are referred to GOM, and, needless to say that the present
issue relates to procedures, the suggestion of Law Ministry G
is totally out of context.
4. Now, the Department has decided to continue with the
existing policy (first-come-first-served) for processing of
applications received up to 25th September 2007, ! e. the
date when the news-item on announcement of cut-off date H
218 SUPREME COURT REPORTS [2012] 3 S.C.R.
A appeared in the newspapers. The procedure for
processing the remaining applications will. be decided at
a later date, if any spectrum is left available after
processing the applications received up to 25th
September 2007.
B
4. As the Department is not deviating from the existing
procedure, I hope this will satisfy the Industry."
34. In the meanwhile, the Prime Minister who had received
representations from telecom sector companies and had read
C 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:
D "Prime Minister
New Delhi
2 November, 2007
Dear Shri Raja,
E
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
F
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
G !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 ensuring fairness
H
CENTRE FOR PUBLIC INTEREST LITIGATION & 219
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVi, J.]
and transparency and let me know of the position before A
you take any further action in this regard.
With regards,
Yours sincerely,
Sd/- B
(Manmohan Singh)
Shri A. Raja
Minister of Communications and IT
New Delhi.
c
Annexure
1. Enhancement of subscriber linked spectrum
allocation criteria D
In August 2007, the TRAI has recommended interim
enhancement of subscriber linked spectrum allocation
criteria. Service providers have objected to these
recommendations, alleging errors in estimation I E
assumptions as well as due procedure not having been
followed by the TRAI while arriving at the
recommendations.
2. Permission to CDMA service providers to also
provide services on the GSM standard and be F
eligible for spectrum in the GSM service band
Based on media reports, it is understood that the DoT has
allowed 'cross technology' provision of services by CDMA
service providers and three such companies have already
paid the license fee. With the deposit of the fee, they would G
be eligible for GSM spectrum, for which old incumbent
operators have been waiting since last several years. The
Cellular Operators Association of India (COAi), being the
association of GSM service providers, has represented
against this. It is understood that the COAi has also H
220 SUPREME COURT REPORTS [2012] 3 S.C.R.
A approached the TDSAT against this.
3. Processing of a large number of applications
received for fresh licenses against the backdrop of
inadequate spectrum to cater to overall demand
B The DoT has received a large number of applications for
new licenses in various telecom circles. Since spectrum
is very limited, even in the next several years all these
licensees may never be able to get spectrum. The Telecom
Policy that had been approved by the Union Cabinet in
C 1999 specifically stated that new licenses would be given
subject to availability of spectrum.
4. In order that spectrum use efficiency gets
directly linked with correct pricing of spectrum,
D consider (i) introduction of a transparent
methodology of auction, wherever legally and
technically feasible, and (ii) revision of entry
fee, which is currently benchmarked on old
spectrum auction figures
E 5. Early decision on· issues like rural telephony,
infrastructure sharing, 3G, Broadband, Number
Portability and Broadband Wireless Access, on
which the TRAI has already given
recommendations."
F
(emphasis supplied)
35. The Minister of C&IT did not bother to consider the
suggestion made by the Prime Minister, which was consistent
with the Constitutional principle of equality, that Reeping in view
G 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
H
CENTRE FOR PUBLIC INTEREST LITIGATION & 221
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
be unfair, discriminatory, arbitrary and capricious to auction the A
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 8
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 C
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
playing field. D
I would like to bring it to your notice that DoT has
earmarked totally 800 MHz in 900 MHz and 1800 MHz
bands for 2G mobile services. Out of this, so for a
maximum of about 35 to 40 MHz per Circle has been E
allotted to different operators and being used by them. The
remaining 60 to 65 MHz, including spectrum likely to be
vacated by Defence Services, is still available for 2G
services.
Therefore, there is enough scope for allotment of spectrum F
to few new operators even after meeting the requirements
of existing operators and licensees. An increase in number
of operators will certainly bring real competition which will
lead to better services and increased teledensity at lower
tariff. Waiting for spectrum for long after getting licence is G
not unknown to the Industry and even at present Aircel,
Vodafone, Idea and Dishnet are waiting for initial spectrum
in some Circles since December 2006."
H
222 SUPREME COURT REPORTS [2012]' 3 S.C.R.
A 36. On 20.11.2007, the Secretary, DoT had made a
presentation on the spectrum policy to the Cabinet Secretary.
The Finance Secretary, who appears to have witnessed the
presentation, dispatched letter dated 22 .11.2007 to the
Secretary, DoT and expressed his doubt as to how the rate of
B Rs.1600 crores determined in 2001, could be applied without
any indexation for a licence to be given in 2007. He also
emphasized that in view of the financial implications, the Ministry
of Finance should have been consulted before the matter was
finalised at the level of the DoT. Secretary, DoT promptly
c replied to the Finance Secretary by sending letter dated
29.11.2007 in which he mentioned that as per the Cabinet
decision dated 31.10.2003, the DoT had been authorised to
finalise the details of implementation of the recommendations
ofTRAI and in its recommendations dated 28.8.2007, TRAI had
not suggested any change in the entry fee/licence fee.
0
37. In the context of letter dated 22.11.2007 sent by the
Finance Secretary, Member (Finance), DoT submitted note
dated 30.11.2007 suggesting that the issue of revision of rates
should be examined in depth before any final decision is taken
E in the matter. When the note was placed before the Minister of
C & IT, he observed that the matter of entry fee has been
deliberated in the department several times in light of various
guidelines and the TRAI recommendations and accordingly
decision was taken not to revise the entry fee and that the
F Secretary, 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
G 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:
H
. CENTRE FOR PUBLIC INTEREST LITIGATION & 223
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
"1. Issue of Letter of Intent (LOI): DOT follows a policy of A
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.
B
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 C
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 number of UAS Licence, a large
number of LOl's are proposed to be issued simultaneously.
In these circumstances, an applicant who fulfils the D
conditions of LOI first will be granted licence first, although
several applicants will be issued LOI simultaneously. The
same has been concurred by the Solicitor General of
India during the discussions."
E
(underlining is ours)
39. After 12 days, DOG (AS), DoT prepared a note
incorporating therein the changed first-come-first-served policy
to which reference had been made by the Minister of C&IT in
letter dated 26.12.2007 sent to the Prime Minister. On the same F
day the Minister of C&iT approved the change.
40. The meeting of the full Telecom Commission, which
was scheduled to be held on 9.1.2008 to consider two important
issues i.e., performance of telecom sector and pricing of G
spectrum was postponed to 15.1.2008.
41. On 10.1.2008 i.e., after three days of postponement
of the meeting of the Telecom Commission, a press release
H
224 SUPREME COURT REPORTS [2012] 3 S.C.R. .
A was issued by the DoT under the signature of Shri A.K.
Srivastava, DOG (AS), DoT. The same reads as under:
"In the light of Unified Access Services Licence (UASL)
guidelines issued on 14th December 2005 by the
department regarding number of Licenses in a Service
B
Area, a reference was made to TRAI on 13-4-2007. The
TRAI on 28-08-2007 recommended that No cap be placed
on the number of access service providers in any service
area. The government accepted this recommendation of
TRAI. Hon'ble Prime Minister also emphasized on
c increased competition while inaugurating India Telecom
2007. Accordingly, DOT has decided to issue LOI to all
the eligible applicants on the date of application who
applied up-to 25-09-2007.
D UAS license authorises licencee to rollout telecom access
services using any digital technology which includes wire-
line and/or wireless (GSM and/or CDMA) services. They
can also provide Internet Telephony, Internet Services and
Broadband services. UAS licence in broader terms is an
E umbrella licence and does not automatically authorize UAS
licensees usage of spectrum to rollout Mobile (GSM and/
or CDMA) services. For this, UAS licencee has to obtain
another licence, i.e. Wireless Operating Licence which is
granted on first-come-first-served basis subject to
F availability of spectrum in particular service area.
DOT has been implementing a policy of First-cum-First
Served for 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
G who so ever complied with the conditions of LOI first will
be granted UAS licence.
H
CENTRE FOR PUBLIC INTEREST LITIGATION & 225
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
Department of Telecom A
(AS Cell)
10-01-2008"
(underlining is ours) B
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 c
of Lois within the prescribed period. The second press release
is also reproduced below:
"Department of Telecommunications
Press Release D
Date : 10th January 2008
. Sub : UASL applicants to depute their authorised
representative to collect responses of DOT on 10.1.2008.
E
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 F
response(s) of DOT. They are requested to bring the
company's rubber stamp for receiving these documents to
collect letters from DOT in response to their UASL
applications. Only one representative of the Company/
group Company will be allowed. Similarly, the companies G
who have applied for usage of dual technology spectrum
are also requested to collect the DOT's response.
All above are requested to assemble at 3:30 pm on
10.1.2008 at Committee Room, 2nd Floor, Sanchar
H
226 SUPREME COURT REPORTS [2012] 3 S.C.R.
A Bhawan, New Delhi. The companies which fail to report
before 4:30 P.M. on 10.1.2008, the responses of DOT will
be dispatched by post. ·
All eligible LOI holders for UASL may submit
compliance to DOT to the terms of LOls within the
B
prescribed period during the office hours i.e. 9:00 A.M. to
5:30 P.M. on working days.
File No.20-100/2007-AS-I Dated 10.1.2008
(A.K. Srivastava)
c DDG(AS)
Dept. of Telecom
DDG(C&A): The above Press Release may kindly be
uploaded on DOT website immediately."
D
43. All the applicants including those who were not even
eligible for UAS Licence collected their Lois on 10.1.2008. The
acceptance of 120 applications and compliance with the terms
and conditions of the Lois for 78 applications was also received
on the same day.
E
44. Soon after obtaining the Lois, 3 of the successful
applicants offloaded their stakes for thousands of crores in the
name of infusing equity, their details are as under:
(i) Swan Telecom Capital Pvt. Ltd. (now known as
F
Etisalat DB Telecom Pvt. Ltd.) which was
incorporated on 13.7.2006 and got UAS Licence
by paying licence fee of Rs. 1537 crores transferred
its 45% (approximate) equity in favour of Etisalat
Mauritius Limited, a wholly owned subsidiary of
G Emirates Telecommunications Corporation of UAE
for over Rs.3,544 crores.
(ii) Unitech which had obtained licence for Rs.1651
crores transferred its stake 60% equity in favour of
H
CENTRE FOR PUBLIC INTEREST LITIGATION & 227
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
Telenor Asia Pte. Ltd., a part of Telenor Group A
(Norway) in the name of issue of fresh equity shares
for Rs.6120 crores between March, 2009 and
February, 2010.
(iii) Tata Tele Services transferred 27.31 % of equity
8
worth Rs. 12,924 crores in favour of NTI DOCOMO.
(iv) Tata Tele Services (Maharashtra) transferred
20.25% of equity worth Rs. 949 crores in favour of
NTIDOCOMO.
c
45. S. Tel Ltd., who had applied for grant of licence
pursuant to press note dated 24.9.2007, but was ousted from
the zone of consideration because of the cut-off date fixed by
the Minister of C&IT, filed Writ Petition No.636 of 2008 in the
Delhi High Court with the prayer that the first press release 0
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 E
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 F
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 G
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 counter affidavit as
to what is the effect of receipt of large number of H
228 SUPREME COURT REPORTS [2012] 3 S.C.R.
A applications in view of the fact that a recommendation of
the TRAI suggests no cap on the number of access service
providers in any service area. This recommendation was
duly accepted and published in the newspaper. Further as
per the counter affidavit 232 UASL applications were
B received till 25.9.2007 from 22 companies. Assuming there
was increase in the volume of applications, the respondent
has failed to answer the crucial question as to what was
the rationale and basis for fixing 25.9.2007 as the cut-off
date. Even otherwise, admittedly 232 applications were
c made by 25.9.2007 and between 25.9.2007 and
1.10.2007 only 76 were applications were received. It was
only on 1.10.2007 that 267 applications were made. Thus
on 28.09.2007 it cannot be said that large number of
applications were received. Thus taking into consideration
. the opinion of the expert body, which as per the press note
D
of the respondent itself was accepted by the respondent,
· certainly the respondent cannot be allowed to change the
rules of the game after the game had begun, to put it in
the words of the Apex Court especially when the
respondent has failed to give any plausible justification or
E the rationale for fixing the cut-off date by merely a week.
Taking into consideration that on 13.4.2007 the
Government of India had recommended TRAI to furnish its
recommendation in terms of 11 (e) of the TRAI Act, 1997
on the issue as to whether a limit should be put on the
F number of access service providers in each service area.
The TRAI having given its recommendations on 28.8.2007
which were duly accepted by the Government, the
respondent cannot be allowed to arbitrarily change the cut-
off date and that too without any justifiable reasons."
G.
46. The letters patent appeal filed against the order of the
learned Single Judge was dismissed by the Division Bench of
the High Court vide judgment dated 24.11.2009, paragraphs
13 and 14 whereof are reproduced below:
H
CENTRE FOR PUBLIC INTEREST LITIGATION & 229
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
"13. We are unable to agree with the submission of the A
learned Attorney General that the parameters that would
apply to revising a cut-off date that has been earlier fixed
prior to the receipt of the applications would be no different
from fixing a cut-off date in the first place. While the
· decision in D.S. Nakara which has subsequently been B
distinguished in N. Subbarayudu 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 c
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 0
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 E
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 F
labelled arbitrary and irrational.
14. We are not able to appreciate, in the instant case, the
submission of the learned Attorney General that the mere
advancing of the cut-off date would not tantamount to G
changing the rules after the game has begun. In a sense
it does. It makes ineligible for consideration the applicants
who had applied, after 25th September 2007 but on or
before 1st October 2007. Further this ineligibiliti is
announced after the applications have been made. In other H
230 SUPREME COURT REPORTS [2012] 3 S.C.R.
A words, while at the time of making the application there
was no such ineligibility, it is introduced later and that too
for a select category of applicants. This cannot but be a
change in the rule after the gam~ has begun. We do not
think that the decisions relied upon by the learned Attorney
B General contemplate such a situation. On the other hand
the decisions in Monarch Infrastructure (P) Ltd. and K.
Manjushree fully support the Respondent's case for
invalidation of the Appellant's impugned decision revise
the cut-off date from 1st October 2007 to 25th September
c 2007, long after receiving the application from the
Respondent."
47. The Union of India challenged the judgment of the
Division Bench in SLP(C) No.33406/2009. During the
pendency of the special leave petition, some compromise
D appears to have been reached between the writ petitioner and
the authorities and, therefore, an additional affidavit was filed
along with agreed minutes of order before this Court on
12.3.2010. In view of this development, the Court disposed of
the appeal arising out of the special leave petition but
E specifically approved the findings recorded by the High Court
with regard to the cut-off date by making the following
observations:
"Taking the additional affidavit and the suggestions made
F · by the learned Attorney General, this appeal is disposed
of as requiring no further adjudication.
However, we make it clear that the findings recorded by
the High Court with regard to the cut off date is not
interfered with and disturbed by this Court in the present
G case."
GROUNDS OF CHALLENGE
· 48. The petitioners have questioned the grant of UAS
H Licences to the private respondents by contending that the
CENTRE FOR PUBLIC INTEREST LITIGATION & 231
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
procedure adopted by the DoT was arbitrary, illegal and in A
complete violation of Article 14 of the Constitution. They have
relied upon the order passed by the learned Single Judge of
the Delhi High Court as also the 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 B
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 c
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 0
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 E
in 2001 was wholly arbitrary, unconstitutional and contrary to
public interest. Yet another plea of the petitioners is that while
deciding to grant licences, which are bundled with spectrum,
at the price fixed in 2001 the DoT did not bother to consult the
Finance Ministry and, thereby, violated the mandate of the F
decision taken by the Council of Ministers in 2003. The
petitioners have also pleaded that the policy of first-come-first-
served is by itself violative of Article 14 of the Constitution and
in any case distortion thereof by the Minister of C&IT and the
consequential grant of licences is liable to be annulled. Another
ground taken by the petitioners is that even though a number G
of licensees failed to fulfil the roll out obligations and violated
conditions of the licence, the Government of India did not take
any action to cancel the licences.
H
232 SUPREME COURT REPORTS [2012] 3 S.C.R.
A COUNTER AFFIDAVITS OF THE RESPONDENTS
49. Most of the respondents have filed separate but similar
counter affidavits in both the petitions. The main points raised
by the respondents are:
B (i) The petitioners are not entitled to challenge the
recommendations made by TRAI and the policy decisions taken
by the Government for grant of UAS Licences.
(ii) The Court cannot review and nullify the
c recommendations made by TRAI in the matter of allocation of
spectrum in 800, 900 and 1800 MHz bands at the rates fixed
in 2001.
(iii) The report prepared by the CAG cannot be relied upon
for the purpose of recording a finding that the procedure
D adopted for the grant of UAS Licences is contrary to Article 14
of the Constitution. The private respondents have also claimed
that the observations made by the CAG and the conclusions
recorded by him are seriously flawed and are based on totally
unfounded assumptions.
E
· (iv) The UAS Licences were given strictly in accordance
with the modified first-come-first-served policy. That the
respondents were able to fulfil Loi conditions because
newspapers had already published stories about the possible
F grant of licences in the month of January, 2008.
(v) That those who had made applications in 2004 and
2006 cannot be clubbed with those who had applied in the
month of August and September, 2007 because in terms of the
. existing UASL guidelines they were entitled to licences.
G
(vi) That private respondents have made huge investments
for creating infrastructure to provide services in different parts
of the country and if the licences granted to them are cancelled
at this stage, public interest would be adversely affected.
H
CENTRE FOR PUBLIC INTEREST LITIGATION & 233
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
(vii) That the private respondents have been able to secure A'
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.
B
(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 C
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 D
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 E
fulfil the conditions of Loi in terms of the distorted version of
the policy first-come-first-served.
50. The petitioners have filed rejoinder affidavit and
reiterated the assertions made in the main petition that the
grant of UAS Licences is fundamentally flawed and is violative F
of the Constitutional principles. They have also placed on record
report dated 31.1.2011 submitted by the One Man Committee,
(hereinafter referred to as 'One-Man Committee Report'),
comprising Justice Shivaraj V. Patil (former Judge of this Court),
which was constituted by the Government of India vide Office G
Memorandum dated 13.12 .2010 to examine the
appropriateness of the procedure followed by the DoT in
issuance of licences and allocation of spectrum during the
period 2001 to 2009. They have also placed on record
photostat copies of the notings recorded on the files of the DoT. H
234 SUPREME COURT REPORTS [2012] 3 S.C.R.
A ARGUMENTS
51. Shri Prashant Bhushan, learned counsel for the
petitioners in Writ Petition (C) No. 423 of 2010 and Dr.
Subramanian Swamy, who is petitioner-in-person in Writ
Petition (C) No. 1O of 2011 made the following· submissions:
8
(i) The spectrum, which is a national asset, cannot be
, distributed by adopting the policy of first-come-first-served
on the basis of the application received by the DoT without
any advertisement and without holding auction.
c
(ii) The grant of licences bundled with spectrum is ex-facie
arbitrary illegal and violative of Article 14 of the
Constitution.
(iii) The decision of the Minister of C&IT to pre-pone the
D
cut-off date from 1.10.2007 to 25.9.2007, which
eliminated large number of applications, is violative of
Article 14 of the Constitution and the entire exercise
undertaken with reference to this cut-off date has resulted
in discrimination vis-a-vis other eligible applicants.
E
(iv) Once the cut-off date fixed by the Minister of C&IT for
consideration of the applications received in the light of the
earlier press release fixing the last date as 1.10.2007 has
been declared to be arbitrary and unconstitutional by the
F High Court, the consequential actions taken by the DoT on
that basis are liable to be annulled.
(v) The first-come-first-served policy suffers from a
· fundamental flaw inasmuch as there is no defined criterion
for operating that policy. There is no provision for issue of
G advertisement notifying obligations for grant of licence and
allocation of spectrum and any person who makes an
application becomes entitled to get licence and spectrum.
(vi) The first-come-first-served policy was manipulated by
H the Minister of C&IT to favour some of the applicants
CENTRE FOR PUBLIC INTEREST LITIGATION & . 235
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
including those who were not even eligible. Shri Bhushan A
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 B
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 C
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 D
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 for grant of UAS Licences in
2007 on the basis of the entry fee fixed in 2001. Learned E
counsel emphasized that the transfer of equity by three of
the licensees immediately after issue of licences for gain
of many thousand crores shows that if the policy of auction
had been followed, the nation would have been enriched
by many thousand crores. F
(ix) Both, Shri Prashant Bhushan and Dr. Subramanian
Swamy pointed out that although the Prime Minister had
suggested that a fair and transparent method be adopted
for grant of UAS Licences through the process of auction,
the Minister of C&IT casually and arbitrarily brushed aside G
the suggestion and granted licence to the applicants for
extraneous reasons.
(x) Shri Prashant Bhushan also questioned the grant of the
benefit of the policy of dual technology to Tata Teleservices H
236 SUPREME COURT REPORTS [2012] 3 S.C.R.
A Ltd. by contending that this was a result of manipulation
made by the service provider. Dr. Subramanian Swamy
also raised a concern regarding the national security and
pointed out that some of the applicants who have trans-
border connections have received licences and they may .
B ultimately prove to be dangerous for the nation.
52. Shri G.E. Vahanvati, learned Attorney General referred
to NTP 1994 and NTP 1999 and submitted that the policy
decision taken by the Government of India for private sector
participation, which could bring in the funds required for
C expansion of telecommunication services in different parts of
the country, cannot be scrutinized by the Court. He submitted
that in the last more than 20 years, the telecom services have
expanded beyond anybody's expectation because of private
sector participation and it cannot be said that granting UAS
D Licences by charging the entry fee determined at 2001 prices
is unconstitutional. Learned counsel referred to the history of
development in the field of telecommunications and the concept
of spectrum, and submitted that the policy decision taken by
the DoT for migration of CDMA service providers was neither
E illegal nor unconstitutional.
53. Shri Salve, learned senior counsel appearing for
respondent No. 9, pointed out that Tata Teleservices had sent
an application through fax for grant of GSM for the existing
F licences which were issued on 19.10.2007 and no exception
can be taken to this because Reliance Telecom, which had
applied for GSM on 6.2.2006, was given the benefit of migration
to dual 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
G 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
H
CENTRE FOR PUBLIC INTEREST LITIGATION & 237
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
involved in the matter and if the Court comes to the conclusion A ·
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 B
. 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, C
7;.12, 7.29, 7.30, 7.37 and 7.39 of TRAl's recommendations
elated 27.10.2003 and argued that the recommendations made
ih 2007 were nothing but a continuation of the old policy and,
therefore, the petitioners are not entitled to question the method
adopted for grant of UAS Licences pursuant to the 2007
recommendations. Learned senior counsel submitted that the D
policy for grant of UAS Licences and allocation of spectrum
cannot be said to be per se arbitrary because the same was
decided after great deliberati6ns and consideratiori of
international practices. He also relied upon the speech made
by the Prime Minister on 2.11.2007 and submitted that the E
action of the DoT should not be nullified because that will have
a far-reaching adverse impact on the availability of
telecommunication services in the country.
55. Shri Vikas Singh, learned senior counsel appearing F
for respondent no. 10, argued that the recommendations made-
by TRAI in 2007, which were approved by the Minister of C&IT
are in national interest because the same would attract
investment by foreign players and would benefit the people at
large. Learned counsel emphasised that his client has already G
invested Rs. 6,000 crores and it would be totally unjust if the
licence granted in 2008 is cancelled. Shri Vikas Singh also
submitted that after the grant of licences and allocation of
spectrum the people have been hugely benefited inasmuch as
H
238 . SUPREME COURT REPORTS [2012] 3 S.C.R.
A the telecom services have become competitive with the
international market and even cheaper than that.
56. Shri C. S. Vaidyanathan, learned senior counsel
appearing for respondent No. 8, argued that the application
made by his client was pending since June, 2006 and its
8
priority was pushed down due to the application of the distorted
version of the first-come-first-served policy. Shri Vaidyanathan
pointed out that when the Minister of C&IT announced that
applications will not be received after 1.10.2007, there was a
huge rush of applications and a large number of players who
C had no experience in the field of telecom made applications
and got the licences.
57. Dr. Abhishek Manu Singhvi, learned senior counsel
appearing for respondent nos. 11 and 12, argued that his
D clients had made applications much prior to 2007 but they were
unfairly clubbed with those who had applied in 2007 and in this
manner the principle ·of equality was violated. Dr. Singhvi
submitted that if the applications made prior to 2007 had been
processed as per the existing policy, respondent Nos. 11 and
E 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
F 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 TRAl's written submissions to justify why it had not
recommended auction of licences. Learned senior counsel
G 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
H availability of spectrum. Shri Dwivedi also submitted that TRAI
CENTRE FOR PUBLIC INTEREST LITIGATION & 239
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
has already initiated action for cancellation of licences of those A
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.
8
Subramanian Swamy relied upon the following judgements: K.
Manjusree v. State of Andhra Pradesh (2008) 3 SCC 512,
Monarch Infrastructure (P) Ltd. v. Commissioner, Ulhasnagar
Municipal Corpn. (2000) 5 SCC 287, Home Communication
Ltd. and Anr. v. Union of India and Ors. 52 (1993) DLT 168, C
Jamshed Hormusji Wadia v. Board of Trustees, Port of
Mumbai (2004) 3 SCC 214, Chaitanya Kumar v. State of
Kamataka (1986) 2 SCC 594, Shivsagar Tiwari v. Union of
India, (1996) 6 SCC 558, Common Cause, A Registered
Society (Petrol pumps matter) v. Union of India (1996) 6 SCC
530 and Nagar Nigam v. Al Faheem Meat Exports (P) Ltd. D
(2006) 13 SCC 382. Learned Attorney General and learned
counsel appearing for the private respondents relied upon
Delhi Science Forum v. Union of India (1996) 2 SCC 405,
BALCO Employees' Union (Regd.) v. Union of India (2002)
2 SCC 333, Vil/ianur lyarkkai Padukappu Maiyam v. Union E
of India (2009) 7 SCC 561, Ministry of Labour and
Rehabilitation v. Tiffin's Barytes Asbestos & Paints Ltd. (1985)
3 SCC 594, United India Fire and General Insurance. Co. Ltd.
v. K.S. Vishwanathan (1985) 3 SCC 686, State of T.N. v. M.N.
Sundararajan (1980) 4 SCC 592, Sunil Pannalal Banthia v. F
City & Industrial Development Corporation of Maharashtra
Ltd. (2007) 10 SCC 674, Bombay Dyeing & Mfg. Co. Ltd. (3)
v. Bombay Environmental Action Group (2006) 3 SCC 434,
Prem Chand Somchand Shah v. Union of India (1991) 2 SCC
48 and Sanjeev Coke Mfg. Co. v. Bharat Coking Coal Ltd. G
(1983) 1 sec 147.
61. Before dealing with the arguments of the learned
counsel for the parties and adverting to some of the
precedents, we consider it necessary to mention that during the H
240 SUPREME COURT REPORTS [2012] 3 S.C.R.
A course of hearing, Shri Prashant Bhushan and Dr. Subramanian
Swamy heavily relied upon the CAG report as also the One-
Man Committee Report. Learned),ttorney General and learned
. senior counsel appearing for some of the private respondents
also referred to the One-Man Committee Report. However, as
B. the CAG report is being examined by the Public Accounts
Committee and Joint Parliamentary Committee of Parliament
we do not consider it proper to refer to the findings and
conclusions contained therein. Likewise, we do not consider it
necessary to advert to the observations made, and the
c suggestions given by the One-Man Committee because the
Government of India has already taken a decision to segregate
spectrum from licence and allot the same by auction. This is
evident from the following extracts of the press statement dated
29.1.2011 issued by the present Minister of C&IT:
D "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
E 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.
F
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
G
may need to be ensured for the existing licensees who
have so far been allocated only the start up spectrum of
4.4 MHz. It may be recalled that showcause notices have
been issued to certain licensees for cancellation. Only in
respect of the licences that will be found valid after the
H
CENTRE FOR PUBLIC INTEREST LITIGATION & 241
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
process is completed, the additional 1.8 MHz will be A
assigned on their becoming eligible, but the spectrum will
be assigned to them at a price determined under the new
policy.
We need to seriously consider the adoption of an auction 8
process for allocation and pricing of spectrum beyond 6.2
MHz while ensuring that there is adequate competition in
the auction process.
TRAI had made recommendations in May 2010 and
indicated that it would apprise the Government of the C
findings of a study on the question of pricing of 2G
spectrum in future. This is expected shortly. We would
examine their recommendations speedily as soon as they
are received, keeping the perspectives that I have outlined,
while finalizing our new policy. I am confident that we will D
be able to design a policy that ensures that existing licence
holders get the spectrum they need and are entitled to,
while simultaneously, ensuring that the Government also
receives revenues commensurate with the current market
value of spectrum." E
62. We shall now consider the questions enumerated in
the opening paragraph of the judgment.
63. Question No.1:
F
At the outset, we consider it proper to observe that even
though there is no universally accepted definition of natural
resources, they are generally understood as elements having
intrinsic utility to mankind. They may be renewable or non
renewable. They are thought of as the individual elements of G
the natural environment that provide economic and social
services to human society and are considered valuable in their
relatively unmodified, natural, form. A natural resource's value
rests in the amount of the material available and the demand
for it. The latter is determined by its usefulness to production. H
242 SUPREME COURT REPORTS [2012] 3 S.C.R.
A Natural resources belong to the people but the State legally
owns them on behalf of its people and from that point of view
natural resources are considered as national assets, more so
because the State benefits immensely from their value. The
State is empowered to distribute natural resources. However,
B as they constitute public property/national asset, while
distributing natural resources, the State is bound to act in
consonance with the principles of equality and public trust and
ensure that no action is taken which may be detrimental to
ptjblic interest. Like any other State action, constitutionalism
c must be reflected at every stage of the distribution of natural
resources. 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
0
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.
E 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
F sovereignty (of peoples and nations) over (their) natural
resources as asserted in the 17th Session of the United Nations
General Assembly and then affirmed as a customary
international norm by the International Court of Justice in the
case of Democratic Republic of Congo v. Uganda. Common
G Law recognizes States as having the authority to protect natural
resources insofar as the resources are within the interests of
the general public. The State is deemed to have a proprietary
interest in natural resources and must act as guardian and
trustee in relation to the same. Constitutions across the world
H focus on establishing natural resources as owned by, and for
CENTRE FOR PUBLIC INTEREST LITIGATION & 243
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
the benefit of, the country. In most instances where constitutions A
specifically address ownership of natural resources, the
Sovereign State, or, as it is more commonly expressed, 'the
people', is designated as the owner of the natural resource.
65. Spectrum has been internationally accepted as a
B
scarce, finite and renewable natural resource which is
susceptible to degradation in case of inefficient utilisation. It has
a high economic value in the light of the demand for it on
account of the tremendous growth in the telecom sector.
Although it does not belong to a particular State, right of use C
has been granted to States as per international norms.
66. In India, the Courts have given an expansive
interpretation to the concept of natural resources and have from
time to time issued directions, by relying upon the provisions
contained in Articles 38, 39, 48, 48A and 51A(g), for protection D
and proper allocation/distribution of ~atural resources and have
repeatedly insisted on compliance of the constitutional
principles in the process of distribution, transfer and alienation
to private persons. The doctrine of public trust, which was
evolved in Illinois Central Railroad Co. v. People of the State E
of Illinois 146 U.S. 387 (1892), has been held by this Court to
be a part of the Indian jurisprudence in M. C. Mehta v. Kamal
Nath (1997) 1 SCC 388 and has been applied in Jamshed
Horrnusji Wadia v. Board of Trustee, Port of Mumbai (2002)
3 SCC 214, Intellectuals Forum, Tirupathi v. State of AP. F
(2006) 3 SCC 549 and Fomento Resorts and Hotels Limited
v. Minguel Martins (2009) 3 SCC 571. In Jamshed Hormusji
Wadia's case, this Court held that the State's actions and the
actions of its agencies/instrumentalities must be for the public
good, achieving the objects for which they exist and should not G
be arbitrary or capricious. In the field of contracts, the State and
its instrumentalities should design their activities in a manner
which would ensure competition and non-discrimination. They
can augment their resources but the object should be to serve
the public cause and to do public good by resorting to fair and
H
244 SUPREME COURT REPORTS [2012] 3 S.C.R.
A reasonable 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
B
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
c 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
D 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
E the State not to impair such resources, uses or values, even
if private interests are involved. The same obligations apply
to managers of forests, monuments, parks, the public
.domain and other public assets. Professor Joseph L. Sax
in his classic article, "The Public Trust Doctrine in Natural
F Resources Law: Effective Judicial Intervention" (1970),
indicates that the public trust doctrine, of all concepts
known to law, constitutes the best practical and
philosophical premise and legal tool for protecting public
rights and for protecting and managing resources,
ecological values or objects held in trust.
55. The public trust doctrine is a tool for exerting long-
established public rights over short-term public rights and
private gain. Today every person exercising his or her right
to use the air, water, or land and associated natural
H ~cosystems has the obligation to secure for the rest of us
CENTRE FOR PUBLIC INTEREST LITIGATION & 245
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
the right to live or otherwise use that same resource or A
property for the long-term and enjoyment by future
generations. To say it another way, a landowner or lessee
and a water right holder has an obligation to use such
resources in a manner as not to impair or diminish the
people's rights and the people's long-term interest in that B
property or resource, including down slope lands, waters
and resources."
67. In Secretary, Ministry of Information & Broadcasting,
Govt. of India v. Cricket Assn. of Bengal, (1995) 2 SCC 161, C
the Court was dealing with the right of organizers of an event,
such as a sport tournament, to its live audio-visual broadcast,
universally, through an agency of their choice, national or
foreign. In paragraph 78, the Court described the airwaves/
frequencies as public property in the following words:
D
'There is no doubt that since the airwaves/frequencies are
a public property and are also limited, they have to be used
in the best interest of the society and this can be done
either by a central authority by establishing its own
broadcasting network or regulating the grant of licences ~.E
to other agencies, including the private agencies."
68. In Reliance Natural Resources Limited v. Reliance
Industries Limited, (2010) 7 SCC 1, P. Sathasivam J., with
whom Balakrishnan, C.J., agreed, made the following F
observations:
"It must be noted that. the constitutional mandate is that the
natural resources belong to the people of this country. The
nature of the word "vest" must be seen in the context of
the public trust doctrine (PTD). Even though this doctrine G
has been applied in cases dealing with environmental
jurisprudence, it has its broader application."
The Learned Judge then referred to the judgments, In re
Special Reference No. 1 of 2001 (2004) 4 SCC 489, M.C. H-
246 SUPREME COURT REPORTS [2012) 3 S.C.R.
A 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."
B
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
C 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
0 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-a-vis its people and
demands that the people be granted equitable access to
natural resources and/or its products and that they are
E adequately compensated for the transfer of the resource to the
private domain; and second, it regulates the rights and
obligations of the State vis-a-vis private parties seeking to
acquire/use the resource and demands that the procedure
adopted for distribution is just, non-arbitrary and transparent
F and that it does not discriminate between similarly placed
private parties.
70. In Akhil Bharatiya Upbhokta Congress v. State of MP.
(2011) 5 sec 29, this Court examined the legality of the action
taken by the Government of Madhya Pradesh to allot 20 acres
G land to an institute established in the name of Kushabhau
Thakre on the basis of an application made by the Trust. One
of the grounds on which the appellant challenged the allotment
of land was that the State Government had. not adopted any
rational method consistent with the doctrine of equality. The
H . High Court negatived the appellant's challenge. Before this
. CENTRE FOR PUBLIC INTEREST LITIGATION & 247
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
Court, learned senior counsel appearing for the State relied A
upon the judgments in Ugar Sugar Works Ltd. v. Delhi
Administration (2001) 3 SCC 635, State of U.P. v. Choudhary
Rambeer Singh (2008) 5 SCC 550, State of Orissa v.
Gopinath Dash (2005) 13 SCC 495 and Meerut Development
Authority v. Association of Management Studies (2009) 6 B
sec 171 and argued that the Court cannot exercise the power
of judicial review to nullify the policy framed by the State
Government to allot Nazul land without advertisement. This Court
rejected the argument, referred to the judgments in Ramanna
Dayaram Sheffy v. International Airport Authority of India c
(1979) 3 SCC 489, S.G. Jaisinghani v. Union of India AIR
1967 SC 1427, Kasturilal Lakshmi Reddy v. State of J & K
(1980) 4 SCC 1, Common Cause v. Union of India (supra),
Shrilekha Vidyarthy v. State of U.P. (1991) 1 SCC 212, UC
v. Consumer Education and Research Centre (1995) 5 SCC D
482, New India Public School v. HUDA (1996) 5 SCC 510
and held:
"What needs to be emphasised is that the State and/or its
agencies/instrumentalities cannot give largesse to any
person according to the sweet will and whims of the E
political entities and/or officers of the State. Every action/
decision of the State and/or its agencies/instrumentalities
to give largesse or confer benefit must be founded on a
sound, transparent, discernible arid well-defined policy,
which shall be made known to the public by publication in F
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 G
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
H
248 SUPREME COURT REPORTS [2012] 3 S.C.R.
A 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:
8
1
"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
C methods of securing the public interest, when it is
considered necessary to dispose of a property, is to sell
, the property by public auction or by inviting tenders. Though
that is the ordinary rule, it is not an invariable rule. There
may be situations where there are compelling reasons
D necessitating departure from the rule but then the reasons
for the departure must be rational and should not be
suggestive of discrimination. Appearance of public justice
is as important as doing justice. Nothing should be done
which gives an appearance of bias, jobbery C?r nepotism."
E
· 72: 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.
F
· 73. Question No.2:
Although, while making recommendations on 28.8.2007,
TRAI itself had recognised that spectrum was a scarce
G commodity, it made recommendation for allocation of 2G
spec:trum on the basis of 2001 price by invoking the theory of
level playing field. Paragraph 2.40 of the recommendations
dated 28.8.2007 shows that as per TRAl's own assessment the
existing system of spectrum allocation criteria, pricing
H methodology and the management system suffered from
CENTRE FOR PUBLIC INTEREST LITIGATION & 249
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
number of deficiencies and there was an urgent need to A
address the issues linked with spectrum efficiency and its
management and yet it decided to recommend the allocation
of spectrum at the price determined in 2001. All this wa~ done
in the name of growth, affordability, penetration of wireless
services in semi urban and rural areas, etc. Unfortunately, while B
doing so, TRAI completely overlooked that one of the main
objectives of NTP 1999 was that spectrum should be utilised
efficiently, economically, rationally and optimally and there
should be a transparent process of allocation of frequency
' spectrum as also the fact that in terms of the decision taken c
by the Council of Ministers in 2003 to approve the
recommendations of the Group of Ministers, the DoT and
Ministry of Finance were requirec:t to discuss and finalise the
spectrum pricing formula. To say the least, the entire approach
adopted by TRAI was lopsided and contrary to the decision 0
taken by the Council of Ministers and its recommendations
became a handle for the then Minister of C&IT and the officers
of the DoT who virtually gifted away the important national asset
at throw away prices by willfully ignoring the concerns raised
from various quarters including the Prime Minister, Ministry of E
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 F
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 G
assigned with important functions under the 1997 Act, it cannot
make recommendations overlooking the basic constitutional
postulates and established principles and thereby deny people
from participating in the distribution of national wealth and
H
250 SUPREME COURT REPORTS [2012) 3 S.C.R.
A benefit a handful of persons. Therefore, even though the scope
of judicial review in such matters is extremely limited, as
pointed out in Delhi Science Forum v.
Union of India (supra)
and a large number of other judgments relied upon by the
learned° counsel of the respondents, keeping in view the facts
B whi.ch have been brought to the notice of the Court that the
mechanism evolved by TRAI for allocation of spectrum and the
methodology adopted by the then Minister of C&IT and the
officers of DoT for grant of UAS Licences may have caused
huge loss to the nation, we have. no hesitation to record a
c finding that the recommendations made by TRAI were flawed
in many respects and implementation thereof by the DoT
resulted in gross violation of the objective of NPT 1999 and the
decision taken by the Council of Ministers on 31.10.2003.
75. We may also mention that even though in its
D recommendations dated 28.8.2007, TRAI had not specifically
recommended that entry fee be fixed at 2001 rates, but
paragraph 2.73 and other related paragraphs of its
recommendations state that it has decided not to recommend
the standard option for pricing of spectrum in 2G bands keeping
E in view the level playing field for the new entrants. It is
impossible to approve the decision taken by the DoT to act
upon those recommendations. We also consider it necessary
to observe that in today's dynamism and unprecedented growth
of telecom sector, the entry fee determined in 2001 ought to
F have been treated by the TRAI as wholly unrealistic for grant of
licence along with start up spectrum. In our view, the
recommendations made by TRAI in this regard were contrary
to the decision of the Council of Ministers that the DoT shall
discuss the issue of spectrum pricing with the Ministry of
G Finance along with the issue of incentive for efficient use of
spectrum as well as disincentive for sub-optimal usages. Being
an expert body, it was incumbent upon the TRAI to make
suitable recommendations even for the 2G bands especially in
light of the deficiencies of the present system which it had itself
H pointed out. We do not find merit in the reasoning of TRAI that
CENTRE FOR PUBLIC INTEREST LITIGATION & 251
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
the consideration of maintaining a level playing field prevented A
a realistic reassessment of the entry fee.
76. Question Nos.3 and 4:
There is a fundamental flaw in the first-come-first-served
policy inasmuch as it involves an element of pure chance or B
accident. In matters involving award of contracts or grant of
licence or permission to use public property, the invocation of
first-come-first-served policy has inherently dangerous
implications. Any person who has access to the power corridor
at the highest or the lowest level may be able to obtain C
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 D
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 E
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 F
etc., it is the burden of the State to ensure that a non-
discriminatory method is adopted for distribution and alienation,
which would necessarily result in protection of national/public
interest. In our view, a duly publicised auction conducted fairly
and impartially is perhaps the best method for discharging this G
burden and the methods like first-come-first-served when used
for alienation of natural resources/public property are likely to
be misused by unscrupulous people who are only interested in
garnering maximum financial benefit and have no respect for
the constitutional ethos and values. In other words, while H
252 SUPREME COURT REPORTS [2012] 3 S.C.R.
A transferring or alienating the natural resources, the State is duty
bound to adopt the method of auction by giving wide publicity
so that all eiigible persons can participate in the process.
77. The exercise undertaken by the officers of the DoT
between September, 2007 and March 2008, under the
8
leadership of the then Minister of C&IT was wholly arbitrary, i
capricious and contrary to public interest apart from being
violative of the doctrine of equality. The material produced
before the Court shows that the Minister of C&IT wanted to
C favour some companies at the cost of the Public Exchequer and •
for this purpose, he took the following steps:
(i) Soon after his appointment as Minister of C&IT, he
directed that all the applications received for grant of UAS
Licence should be kept pending till the receipt of TRAI
D recommendations.
(ii) The recommendations made -by TRAI on 28.8.2007
were not placed before the full Telecom Commission
which, among others, would have included the Finance
Secretary. The notice of the meeting of the Telecom
E
Commission was not given to any of the non permanent
members despite the fact that the recommendations made
by TRAI for allocation of spectrum in 2G bands had
serious financial implications. This has been established
from the pleadings and the records produced before this
F
Court which show that after issue of licences, 3 applicants
transferred their equities for a total sum of Rs.24,493
crores in favour of foreign companies. Therefore, it was
absolutely necessary for the DoT to take the opinion of the
Finance Ministry as per the requirement of the Government
G of India (Transaction of Business) Rules, 1961.
(iii) The officers of the DoT who attended the meeting of
the Telecom Commission held on 10.10.2007 hardly had
any choice but to approve the recommendations made by
H JRAI. If they had not done so, they would have incurred the
CENTRE FOR PUBLIC INTEREST LITIGATION & 253
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
wrath of the Minister of C&IT. A
(iv) In view of the approval by the Council of Ministers of
the recommendations made by the Group of Ministers in
2003, the DoT had to discuss the issue of spectrum pricing
with the Ministry of Finance. Therefore, the DoT was under
8
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 TRAl'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 C
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 D
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 E
by saying that it will be unfair, discriminatory, arbitrary and
capricious to auction the spectrum to new applicants
because it will not give them level playing field ..
(vi) The Minister C&IT introduced cut off date as 25.9.2007 · F
for consideration of the applications received for grant of
licence despite the fact that only one day prior to this, press
release was issued by the DoT fixing 1.10.2007 as the last
date for receipt of the applications. This arbitrary action
of the Minister of C&IT though appears to be innocuous,
actually benefitted some of the real estate companies who G
did not have any experience in dealing with telecom
services and who had made applications only on
24.9.2007, i.e., one day before the cut off date fixed by the
Minister of C&IT on his own.
H
254 SUPREME COURT REPORTS [2012] 3 S.C.R.
A (vii) The cut off date, i.e. 25.9.2007 decided by the Minister
· of C&IT on 2.11.2007 was not made public till 10.1.2008
and the first-come-first-served policy, which was being
followed since 2003 was changed by him on 7 .1.2008 and
was incorporated in press release dated 10.1.2008. This
B enabled some of the applicants, who had access either
to the Minister or the officers of the DoT to get the demand
drafts, bank guarantee, etc. prepared in advance for
compliance of conditions of the Lois, which was the basis
for determination of seniority for grant of licences and
c allocation of spectrum.
(viii) The meeting of the full Telecom Commission, which
was scheduled to be held on 9.1.2008 to consider issues
relating to grant of licences and pricing of spectrum was
deliberately postponed on 7.1.2008 so that the Secretary,
D Finance and Secretaries of three other important
Departments may not be able to raise objections against
the procedure devised by the DoT for grant of licence and
· allocation of spectrum by applying the principle of level
playing field.
E
(ix) The manner in which the exercise for grant of Lois to
the applicants was conducted on 10.1.2008 leaves no
· room for doubt that every thing was stage 111anaged to
' favour those who were able to know in advance the
F change in the implementation of the first-come-first served
policy. As a result of this, some of the companies which
had submitted applications in 2004 or 2006 were pushed
down in the priority and those who had applied between
August and September 2007 succeeded in getting higher
seniority entitling them to allocation of spectrum on priority
G
basis.
• 78. The argument of Shri Harish Salve, learned senior
counsel, that if the Court finds that the exercise undertaken for
grant of UAS Licences has resulted in violation of the
H institutional integrity, then all the licences granted 2001 onwards
CENTRE FOR PUBLIC INTEREST LITIGATION & 255
ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]
should be cancelled does not deserve acceptance because A
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 B
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 C
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 D
policy framed by the State or its agency/instrumentality and/or
its implementation is contrary to public interest or is violative
of the constitutional principles, it is the duty of the Court to
exercise its jurisdiction in larger public interest and reject the
stock plea of the State that the scope of judicial review should E
not be exceeded beyond the recognised parameters. When
matters like these are brought before the judicial constituent of
the State by public spirited citizens, it becomes the duty of the
Court to exercise its power in larger public interest and ensure
that the institutional integrity is not compromised by those in F
whom the people have reposed trust and who have taken an
oath an to discharge duties in accordance with the Constitution
and the law without fear or favour, affection or ill will and who,
as any other citizen, enjoy fundamental rights and, at the same
time, are bound to perform the duties enumerated in Article G
51A. Reference in this connection can usefully be made to the
judgment of the three Judge Bench headed by Chief Justice
Kapadia in Centre for P.l.L. v. Union of India (2011) 4 SCC
1.
H
256 SUPREME COURT REPORTS, [2012] 3 S.C.R.
A 80. Before concluding, we consider it imperative to
observe that but for the vigilance of some enlightened citizens
who held important constitutional and other positions and
discharged their duties in larger public interest and Non
Governmental Organisations who have been constantly fighting
B 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.
c 81. In the result, the writ petitions are allowed in the
following terms:
(i) The licences granted to the private respondents on or
after 10.1.2008 pursuant to two press releases issued on
D 10.1.2008 and subsequent allocation of spectrum to the
licensees are declared illegal and are quashed.
(ii) The above direction shall become operative after four
months.
E (iii) Keeping in view the decision taken by the Central
Government in 2011, TRAI shall make fresh
recommendations for grant of licence and allocation of
spectrum in 2G band in 22 Service Areas by auction, as
was done for allocation of spectrum in 3G band.
F
(iv) The Central Government shall consider the
recommendations of TRAI and take appropriate decision
within next one month and fresh licences be granted by
auction.
G (v) Respondent Nos.2, 3 and 9 who have been benefited
at the cost of Public Exchequer by a wholly arbitrary and
unconstitutional action taken by the DoT for grant of UAS
Licences and allocation of spectrum in 2G band and who
off-loaded their stakes for many thousand crores in the
H name of fresh infusion of equity or transfer of equity shall
CENTRE FOR PUBLIC INTEREST Lll:IGATION & 257
ORS. v. UNION OF INDJA & ORS. [G.S. SINGHVI, J.]
pay cost of Rs.5 crores each. Respondent Nos. 4, 6, 7 and A
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 B
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 C
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 D
· in this judgment shall not, in any manner, affect'the pending
investigation by the CBI, Directorate of Enforcement and
others agencies or cause prejudice to those who are
facing prosecution in the cases registered by the CBI or
who may face prosecution on the basis of chargesheet(s) E
which may be filed by the CBI in future and the Special
Judge, CBI shall decide the matter uninfluenced by this
judgment. We also make it clear that this judgment shall
not prejudice any person in the action which may be taken
by other investigating agencies under Income Tax Act, F
1961, Prevention of Money Laundering Act, 2002 and
other similar statutes.
D.G. Writ Petitions allowed.
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