Holding

The NIA’s minimum bidding, classification, and capping provisions are valid, non‑arbitrary, and not violative of Article 14; the court cannot interfere with the government’s auction policy.

Summary

The Supreme Court examined challenges to the 2015 Notice Inviting Application (NIA) for spectrum auction, where petitioners alleged that the minimum bidding requirements, classification of bidders and spectrum‑capping provisions violated Article 14 and created a non‑competitive environment. The Court held that the government’s policy decisions, including the 5 MHz minimum quantum and capping rules, were based on intelligible differentia, served the public interest of efficient service delivery, and were not arbitrary or mala‑fide. It further clarified that TRAI’s recommendations under the TRAI Act are not binding on the Central Government, though they must be given due weightage. The concepts of legitimate expectation and judicial review were deemed inapplicable to the auction’s policy framework. Consequently, the petitions were dismissed and the auction was allowed to stand.

Issues considered

The minimum bidding criteria and classification of bidders under the NIA violate Article 14 of the Constitution.
The spectrum‑capping provisions and exclusion of surrendered spectrum are arbitrary and discriminatory.
Whether the concept of legitimate expectation applies to the terms of a spectrum auction.
Whether the Central Government is bound by TRAI’s recommendations under Section 11 of the TRAI Act.
Scope of judicial review over policy decisions in complex fiscal matters such as spectrum auctions.

Legislation cited

Subjects

spectrum auctionArticle 14judicial reviewlegitimate expectationTRAI recommendationscapping ruletelecom policypublic interestnatural resource allocation

Judgment

[2017] 4 S.C.R. 972

A RELIANCE TELECOM LTD. & ANR.

UNION OF INDIA & ANR.
(Transfer Case (Civil) No. 43 of 2015)
B JANUARY 12, 2017
[DIPAK MISRA AND PRAFULLA C. PANT, JJ.)
Telecommunication:
Spectrum auction - For allocation of spectrums in various
C areas - Notice Inviting Application-2015 (NlA) - Terms and
conditions of - Set by Central Government for the auction -
Challenged by participants in the NlA (telecom service providers)
before High Courts - Interim orders by High Court - Supreme Court,
in Special Leave Petition stayed order of High Court and permitted
D the auction to continue - Cases Pending before High Courts
transferred to Supreme Court - Court granted liberty to Central
Government to finalize the auction - Plea inter alia that eligibility
criteria of minimum bidding for different categories of bidders under
different bands attracts the frown of Art. 14 of Constitution and
that principle of capping keeps the petitioners away from bidding
E in respect of a particular quantum and makes the bid non-competitive
- Held: The challenge pertaining to tender conditions formulated
by the Central Government is not tenable as no valid grounds for
interference have been made out - The endeavour of the
Government in the NIA is not based on any classification except
that all service providers must have a minimum of 5 MHz of spectrum
F
in order to deploy mobile technology - However, even if it is assumed
that there is classification, the classification of entities is on the
basis of two sets ofpeople i.e. (1) new entrants including the expiring
licensees and (2) existing licensees both of whom ought to have
minimum 5 MHz so as to enable to deploy on any mobile technology
G - Such classification is based on intelligible differentia having a
nexus with the object sought to be achieved and there is no violation
of Art. 14 - Capping has been kept in vogue to have a bigger field
and it is based on a rational principle to avoid monopoly and to
create a healthy competitive bidding - The decision of Central
Government is based on certain norms and parameters - It is a
H
972
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policy decision which subserves the consumers' interest - Decision A
to conduct the auction cannot be said to be mala fide or based on
extraneous considerations - Constitution of India - Art. 14.
Deeds and Documents:
Notice Inviting Application (NIA) - Interpretation of Held:
NIA being an invitation to offer, the rules of interpretation of B
contracts would apply and not the rules that may be applied in the
case of interpretation of statutes - In case of difference of opinion
in the manner of interpretation, it is the interpretation of the party
who is offering the contract ought to be adopted - Court, by way of
mandamus, cannot require the State to interpret the clause in a given c
way - Court can interpret the clause contrary to the way of
interpretation by the offering party or literal interpretation, only
on the limited grounds ofjudicial review by striking down the clause
as arbitrary - Contract - Interpretation of Statutes.
Legitimate Expectation:
Concept of legitimate expectation has no role to play where
State action is as a public policy or in public interest, unless the
action taken amounts to an abuse of po,/;er.
Judicial Review:
E
Scope of judicial review - In respect of policy decisions in
fiscal matters - Held: The Court cannot get and dwell as an appellate
authority into complex economic issues in exercise of power of
judicial review- In the matters relating to complex auction procedure
having enormous financial ramification, interference by Court can .
lead to· a situation which is not warrantable and may have F
unforeseen adverse impact effecting fiscal imbalance - Interference
in such auction should be only on the ground of stricter scrutiny,
when the decision making process smacks of obnoxious
arbitrariness or any extraneous consideration.
Telecom Regulatory Authority of India Act, 2003: G
s.11 (J)(a) - Recommendations under - By Telecom Regulatory
Authority of India - Whether binding on Central Government -
Held: Recommendations given u/s. 11 (l)(a) are not binding but
deserve to be given due weightage.
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974 SUPREME COURT REPORTS [2017] 4 S.C.R.

A Dismissing the cases, the Court
HELD: 1.1 The question of alteration of bid condition does
not survive, as the petitioners have participated in the auction
and have been successful in some of the areas. The present
petitions have been deliberately kept alive by the telecom service
B providers only to retain their dominant positions to the detriment
of the market and the subscribers. The challenge by the
petitioners pertaining to tender conditions formulated by the
Union of India invoking the power of judicial review is not tenable
as no valid grounds for interference, have been made out. [Para
17) [998-D-F)
c
1.2 As the factual score depicts, the NIA had stipulated
capping and simultaneously allowed certain categories to bid for
a lesser quantum to enhance the existing spectrum with them so
that they can reach a particular level. The reason shown by the
respondents is that a minimum spectrum is determined to enhance
D the efficiency and capability of the service providers so that the
arrangement can be beneficial to the consumers and they can
avail requisite benefit and have better service. The licensees
who do not have the specific quantum can bid for the balance so
that the efficiency of service is enhanced. If a minimum is provided
E for a particular area or zone having regard to the necessity and
the interest of the consumers, it subserves the larger public
interest. The said stipulation might have affected the individual
interest of certain categories of licensees or aspirants but that
cannot weigh over the public interest. [Para 67] [1029-C-F]
F 1.3 The decision taken by the Central Government is based
upon certain norms and parameters. Though criticism has been
advanced that it is perverse and irrational, yet it is a policy decision
which subserves the consumers' interest. It is extremely difficult
to say that the decision to conduct the auction in such a manner
can be considered to be ma/a fide or based on extraneous
G considerations. [Para 70) [1031-G]
1.4 When auction is held in respect of spectrum after taking
into consideration certain range of facts and circumstances which
are founded on economic and social policy factors, it is difficult to
unsettle the NIA and the consequential effect thereof by applying
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RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 975
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the principle of judicial review. The procedure adopted in this A
• kind of auction is neither to be equated nor compared with the
process meant for grant of ordinary largesse. It is because of its
complexity, technical expertise, enormous financial impact and
the larger public interest. [Para 71) [1032-C-D)
1.5 In the present case, certain natural resources have been B
put into auction. In that regard, a decision has been taken. The
condition to put a cap and make a classification not allowing certain
entities to bid is not an arbitrary one as it is based on the
acceptable rationale of serving the cause of public interest. It
allowed new entrants and enabled the existing entities to increase
their cap to make the service more efficient. The Court cannot C
get and dwell as an appellate authority into complex economic
issues on the foundation of competitors advancing the contention
that they were not allowed to bid in certain spheres. As the
stipulation in the tender was reasonable and not based on any
extraneous considerations, the Court cannot interfere in the NIA D
in exercise of the power of judicial review. [Paras 74, 75) [1034-
A; 1035-C-D]
1.6 The Court cannot interfere with the tender conditions
only on the ground that certain amount of spectrum has not been
put to auction. The submission is that whatever has been put to E
auction and is available should have been notionally added so
that the entities which have certain quantum of spectrum in
praesenti could have participated in the auction and put forth their
bids for a higher quantum. If there has been a reduction for a
particular entity because of the terms and conditions of the tender,
it has to accept it, for he cannot agitate a grievance that he could F
have obtained more, had everything been added notionally.
Notionally adding up or not adding up is a matter of policy and
that too a commercial policy and in a commercial transaction, a
decision has to be taken as prudence would command. [Para 75]
[1035-F-G; 1036-A-B) G
1.7 In the matters relating to complex auction procedure
having enormous financial ramification, interference by the Courts
based upon any perception which is thought to be wise or assumed
to be fair can lead to a situation which is not warrantable and may
have unforeseen adverse impact. It may have the effect H
976 SUPREME COURT REPORTS [2017) 4 S.C.R.

A potentiality of creating a situation of fiscal imbalance. Interference
in such auction should be on the ground of stricter scrutiny when
the decision making process commencing from NIA till the end
smacks of obnoxious arbitrariness or any extraneous
consideration which is perceivable. [Para 76) (1036-E-G)
B Tata Cellular v. Union of India (1994) 6 SCC 651 :
(1994) 2 Suppl. SCR 122; Delhi Science Forum and
others v. Union of India and another (1996) 2 SCC
405 : (1996) 2 SCR 767; Raunaq International Ltd. v.
I. V.R. Construction Ltd. and others (1999) l SCC 492 :
[1998) 3 Suppl. SCR 421; Monarch Infrastructure (P)
c Ltd. v. Ulhasnagar Municipal Corpn. and others (2000)
5 SCC 287 : [2000) 3 SCR 1159; Cellular Operators
Association of India & others v. Union of India & others
(2003) 3 SCC 186:(2002] 5 Suppl. SCR 222; Tata Iron
& Steel Co. Ltd. v. Union of India and another (1996) 9
D SCC 709 : [1996] 3 Suppl ..SCR 808; Union of India v.
International Trading Co. and another (2003) 5 SCC
437:[2003) 1 Suppl. SCR 55; Directorate of Education
v. Educomp Datamatics Ltd. and others (2004) 4 SCC
19:(2004] 2 SCR 1010;Global Energy Ltd. and another
v. Adani Exports Ltd. and others (2005) 4 SCC 435 :
E
(2005] 3 SCR 1108;Master Marine Services (P) Ltd. v.
Metcalfe & Hodgkinson (P) Ltd. and another (2005) 6
SCC 138:(2005) 3 SCR 666; Michigan Rubber (India)
Limited v. State of Karnataka and others (2012) 8 SCC
216:[2012) 8 SCR 128; Jagdish Manda/ v. State of
F Orissa and others (2007) 14 SCC 517 : [2006) 10
Suppl. SCR 606j Tejas Constructions & Infrastructure
(P) Ltd. v. Municipal Council, Sendhwa and another
(2012) 6 SCC 464: [2012) 4 SCR 190; Maa Binda
Express Carrier and another v. North-East Frontier
Railway and others (2014) 3 SCC 760:(2013] 12 SCR
G
529; Census Commissioner & Others v. R.
Krishnamurthy (2015) 2 SCC 796:(2014] 11 SCR 463;
Tamil Nadu Generation and Distribution Corporation
Ltd (TANGEDCO) Rep. by its Chairman & Managing

H
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 977
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Director and another etc. v. CSEPDI - Trishe A
Consortium, Rep. by its Managing Director & another
2016 (10) SCALE 69; A/cons Infrastructure Ltd. v.
Nagpur Metro Rail Corporation Ltd. 2016 (8) SCALE
765; Montecarlo Ltd. v. NTPC Ltd. 2016 (10) SCALE
50 - relied on.
B
2. Section 11 of the Telecom Regulatory Authority of India
Act deals with the functions of the authority, that is, TRAI. The
said provision empowers it to make recommendations either suo
motu or on a request from the licensor on certain matters. TRAI
has been conferred with the statutory power to make
recommendations on the terms and conditions of the licence to a C
service provider and the Central Government is bound to seek
the recommendations of TRAI on such terms and conditions at
different stages, but the recommendations of TRAI are not
binding on the Central Government and the final decision on the
terms and conditions of a licence to a service provider rests with D
the Central Government. The legal consequence is that if there
is a difference between TRAI and the Central Government with
regard to a particular term or condition of a licence, as in the
present case, the recommendations of TRAI will not prevail and
instead the decision of the Central Government will be final and E
binding. TRAI, being an expert body, discharges recommendatory
functions under clause (a) of sub-section (1) of Section 11 of the
TRAI Act and discharges regulatory and other functions under
clauses (b), (c) and (ti) of sub-section (1) of Section 11 of the TRAI
Act and it being an expert body, the recommendations of TRAI
under clause (a) of sub-section (1) of Section 11 of the TRAI Act F
have to be given due weightage by the Central Government but
the recommendations of TRAI are not binding on the Central
Government. The regulatory and other functions under clauses
(b), (c) and (d) of sub-section (1) of Section 11 of the TRAI Act
have to be performed independent of the Central Government G
and are binding on the licensee subject only to an appeal in
accordance with the provisions of the TRAI Act. Thus, the
recommendations given by TRAI are not binding but deserve to
be given due weightage. Certain areas have been separated
regard being had to the nature of the language employed in the
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978 SUPREME COURT REPORTS [2017] 4 S.C.R.

A TRAI Act where the authority can act independent of the Central
Government. In the present case, the Central Government had
sought the recommendation and then referred it back. Ultimately,
it formulated the policy for auction of the spectrum. Therefore,
the criticism that is advanced that once there is a reference back,
B the Central Government should have been guided by the
recommendations has no justification inasmuch as the Central
Government has the ultimate authority to take a decision. Of
course, such a decision, especially a decision relating to frame a
policy for NIA has to be in accord with the norms of Article 14 of
the Constitution. [Paras 51, 52] [1021-G-H; 1023-B-H; 1024-A]
c Association of Unified Tele Services Providers and
others v. Union of India and others (2014) 6 SCC 110
: [2014] 9 SCR 780 - relied on.
3.1 The endeavour of the Government contained in the
Notice Inviting application (NIA) for the auction conducted in
D March, 2015 is not based on any classification except that all
service providers must have a minimum of 5 MHz if they want to
deploy any mobile technology benefitting the consumer and even
TRAI concurred with the view that minimum 5 MHz quantum
was the appropriate minimum quantum to be set. Reduction of
E minimum quantum of spectrum to 3 MHz instead of 5 MHz for
new entrants would be contrary to TRAI's own recommendations
on the issue of spectrum auction, wherein TRAI has been
consistently holding that 5 MHz is the minimum amount of
spectrum required to ensure that any technology can be deployed
F with the allocated spectrum. [Para 18) [999-B-D]
3.2 Fragmented spectrum allocation to address the 'present
issues in few service areas will only be a short term solution but
will have long term negative impact for the sector as the objective
is to have broadband solution that offers the most affordable
devices and ecosystem to connect the billion people and as such,
G the minimum quantum of spectrum is prescribed as 5 MHz. After
deliberating on the recommendations of TRAI, the Government
differed with the view ofTRAI and kept the minimum bid quantity
at 5 MHz on the grounds that the present and future technology
scenarios and the need for making the spectrum contiguous would
H only benefit the consumer which is the essential objective of the
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 979
ANR.

National Telecom Policy (NTP); that in the previous three A
auctions, new entrants/licensees whose licences were expiring
were required to bid for minimum 5 MHz spectrum; that there
was no substantial change in the market and eco-system scenario
since the last auction of February, 2014; that there is a need to
induct new technologies to meet the requirements of the ever B
growing demand for data; and the number of mobile users stands
at approximately 960 million consumers whose need has to be
catered keeping in view the development of technology in next
twenty years. Thus, taking a long-term view, the decision of the
Government after giving due weightage to the recommendations
of TRAI is justified. The plea that the auction is non-competitive C
and security driven has no basis. [Para 191 [999-D-H; 1000-Al
3.3 The classification of entities is on the basis of whether
an entity is a new entrant or an existing service provider as the
Government has always been consistent with. the trend that new
entrants would have to bid a minimum of 5 MHz and the existing D
service providers have to 'top up' (capacity enhancement) their
present holding of spectrum to achieve a goal of maximizing
efficiency and avoid any restraint for the consumers and the
service providers. In the NIA for auction of spectrum in 2015,
across all bands, a new entrant is required to bid for a minimum
of 5 MHz and this requirement has always been the same for E
earlier auctions also conducted in 2012, 2013 and 2014. The
minimum bid quantum is reduced only in those cases where 5
MHz is not available in a LSA or contiguous 5 MHz is not
available. An existing licensee has to bid for a minimum of 0.6
MHz of spectrum in order to 'top up' so as to come to the level F
of 5 MHz (as minimum administratively allocated spectrum in
900 MHz/1800 MHz band is 4.4 MHz) and be in a position to
provide services compatible with new technology. Moreover, the
existing licensee, who will be bidding for a minimum of 0.6 MHz
so that he may come to the level of 5 MHz, may also bid for more
than that. The idea would be that he has to bid as a new entrant G
for the next time when his licence would expire and his allocated
4.4 MHz spectrum is put to auction. [Para 20] [1000-A-Ef
3.4 The endeavour of Department of Telecommunications
(DoT) is that everybody should have minimum 5 MHz as less
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980 SUPREME COURT REPORTS [2017) 4 S.C.R.

A than 5 MHz will not be good for the consumer keeping in view
the evolution and innovation and in order to achieve the same,
DoT has to be far-sighted as the spectrum is being allotted for a
period of 20 years. Assuming that there is classification, then,
that is based on an intelligible differentia between two sets of
B people, i.e., (1) new entrants including the expiring licensees
and (2) existing licensees, both of whom ought to have minimum
5 MHz so as to be able to deploy on any mobile technology. An
existing licensee may not require 5 MHz to meet the traffic
requirements and only a fraction of 5 MHz would meet the
requirements, and small chunk addition would improve traffic
C handling capabilities and reduce call drops due to congestion.
Moreover, in case an existing licensee chooses to only retain
what it has in terms of spectrum before, then it will, as aforesaid,
only be able to provide the bare 2G service and no more and,
therefore, he would lose out on his consumers who can change
D to a better service provider in terms of number portability.
Therefore, the classification, if any, contained in the NIA for the
auctions conducted in March, 2015 is based on intelligible
differentia having a nexus with the object sought to be achieved
and there is no violation of Article 14. [Para 211 [1000-E-H; 1001-
A-B)
E 3.5 The argument that the petitioner was 'knocked out' of
availability of only 8.8 MHz in the North East and due to the term
of minimum of 5 MHz for a new entrant including expiring
licensees is incorrect. In the North East, while 8.8 MHz was
available in 900 band, there were other spectrum available, i.e.
F 800 band (13.75 MHz), 900 band (8.8 MHz), 1800 band (8.4 MHz)
and 2100 band (5 MHz) out of which the writ petitioner-Reliance
has won 5 MHz in 800 band and 5 MHz in 1800 band at the auction
as it already had spectrum in 2100 band. The trend of the 2015
auctions has shown that this company has substituted its 900 band
with 1800/800 band in most circles where the bid was lower than
G the 900 band and it has also bid for the 900 band spectrum and
remained unsuccessful, and that cannot form the basis to assert
that there is any discrimination caused or that there is a flaw in
the NIA. That apart, the investment already made in the past 20
years is an investment which will be used even with the 1800/
H 800 band technologies and any future investment according to
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 981
ANR.

the needs of the time will be made by them in their commercial A
wisdom and to say that they were "knocked out of the auction
because of the NIA design" is totally fallacious as they purchased
spectrum in other bands. [Para 22] [1001-E-H; 1002-AJ
4.1 There are various factors that the DoT is required to
take into account while determining the auction structure. B
Ultimately, the DoT should be permitted to determine the auction
structure consistent with the scheme of the TRAI Act (as has
been done in the earlier auctions and the instant one). It cannot
be left to the option of the telecom service providers and their
narrower self interest to determine the structure and timing of C
auctions. Capping has been kept in vogue to have a bigger field
and it is based on a rational principle. For arriving at the cap,
only two parameters are to be seen - (a) the total spectrum
assigned in that service area; and (b) the total spectrum being
put to auction. There is nothing mentioned in the definition as
explained by the notes that the surrendered spectrum is also D
required to be added because there is no definition of a
surrendered spectrum. Even if some capping rule is required to
be altered, the Court would be required to go into the basis why
a capping rule was provided for and why the TRAI and the
Department have consistently followed the capping rule. That is
because no monopoly should be created and a healthy competitive E
bidding should be available. The relief of removal of the cap is
only to enable the petitioners who are 'big players' to serve their
cause but not the public interest and the Government has been
reviewing its policy from time to time. TRAI has made
recommendations regarding compilation of the cap in future, and F
such recommendations are under consideration by the
Government of India. [Para 25) (1003-D-H; 1004-AJ
4.2 The NIA, being an invitation to offer, and Clause 5.3.1
being one of the Clauses thereof, and the said Clause not being
under challenge, any meaning other than the literal meaning of G
the said Clause would have to be by consent of both the parties.
Furthermore, the NIA, being an invitation to offer, the rules of
interpretation of contracts would apply and not the rules that may
be applied in the case of interpretation of statutes. It is not open
to one party to unilaterally, at the stage of NIA, seek an
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982 SUPREME COURT REPORTS [2017) 4 S.C.R.

A interpretation of a Clause in a manner of their choice and if there
is a difference of opinion in the manner of interpretation, it is the
interpretation of the party who is offering the contract that ought
to be adopted. Should there be cause for the Court interpreting
or thereby requiring, through mandamus, the Offering Party (i.e.,
B the State) to interpret the Clause contrary to their way of·
interpretation or literal interpretation, this would only be done
on the very limited grounds of judicial review, in which case, while
a certiorari would issue to strike down the Clause as being
arbitrary (which issue is not put in question before the Court), a
mandamus will not issue to require the State to interpret the
C Clause in a given way and make an offer in accordance with the
interpretation given by the Court, which is what the petitioners
seek. [Para 29] [1004-F-H; 1005-A-B)
4.3 Clause 5.3.1, in 'No uncertain terms', provides for only
two categories of spectrum, namely, (i) spectrum currently held
D by.the operators; and (ii) spectrum put to auction by the Licensor/
Respondent, to be counted/considered while calculating the
Spectrum cap. This being the position under the Clause (both
accepted and understood by all the operators), the contention
that the surrendered spectrum of BSNL/MTNL and not currently
held by the existing operators should have been included
E (whether or not put to auction) is clearly contrary to the
unequivocal terms of Clause 5.3.1. The contention that the
surrendered spectrum (which is neither assigned/held by any
operator nor put to auction) ought to be included for calculating
· the Spectrum cap in the present auction is an effort to include/
F add another category of spectrum (i.e., surrendered spectrum
not put to auction) which is not provided in Clause 5.3.1, and
thereby effectively seek amendment of the Tender/NIA terms
which is totally impermissible in law. [Para 30) [1005-B-D)
4.4 The objective behind Spectrum capping is to ensure
G competition in the market by preventing large/big operators from
acquiring large amount of spectrum, which they may not require
but only hoard to prevent the small operators from effectively
competing in the market, and that is why, TRAI has recommended
on 02.07.2015 that the basic objective of prescribing a spectrum
cap is to prevent a TSP from acquiring large holdings of spectrum
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through auction, M&A or trading, as it may lead to non-level A
playing field thereby disturbing the competition in the market. It
cannot be left to the market forces alone to decide the maximum
spectrum holding as a TSP and, hence, the provision of cap should
continue on the spectrum holding that a TSP may acquire or
otherwise. The argument that the Respondent should have B
notionally included the spectrum surrendered by BSNL/MTNL
would result in creating a situation where though the spectrum
put to auction remains the same (i.e., limited), yet a large/big
player will be able to bid for the entire spectrum (which it
otherwise could not have done due to Clause 5.3.1) thereby
effectively giving a tool to the large/big operators to deprive/ C
starve small operators, who quite avowedly, cannot match the
buying power of larger operators of spectrum. [Para 31) [1005-
E-H; 1006-A]
5. There cannot be any legitimate expectation based on
the terms and conditions relating to NIA more so, in the sphere D
of auction of spectrum. The 2013 auction included the spectrum
allegedly surrendered by BSNL/MTNL in calculating the
Spectrum cap, while it has not been done so in the present auction
(i.e., 2015 auction), and the fact that the surrendered spectrum
was included earlier and not in the present year does not give
rise to legitimate expectation, for it does not bind the State to E
follow the same because the fundamental principles of
maximization of revenue and subserving of the public interest at
large require change. The concept of legitimate expectation has
no role to play where the State action is as a public policy or in
the public interest unless the action taken amounts to an abuse F
of power. The court does not interfere with the discretion of the
public authority which is empowered to take the decisions under
law and the court is expected to apply an objective standard that
leaves to the deciding authority the full range of choice which the
legislature is presumed to have intended. [Para 321 [1006-A-Dl
G
6. The grievance raised by the petitioners is that the design
of the auction skewed price discovery and resulted in artificial
inflation of the price of spectrum. This grievance is to be viewed
in the context in which the policy of auction- of spectrum came to
be implemented. This Court having held that public interest is
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984 SUPREME COURT REPORTS (2017] 4 S.C.R.

A served by maximizing the benefit to the public exchequer, a
challenge premised on the admission that the method adopted
by the State, in fact, maximized the generation of revenue from
the auction of spectrum cannot succeed. [Para 33) [1006-D-F)
Centre for Public Interest Litigation and others v. ·Union
. B of India and others (2012) 3 SCC 1 : [2012) 3 SCR
147; Asia Foundation & Construction Limited v.
Trafalgar House Construction (/)Ltd. And others (1997)
1 SCC 738 : [1996) 10 Suppl. SCR 209 - distinguished.
Reliance Energy-Ltd. and another v. Maharashtra State
c Road Development Corpn. Ltd. and others (2007) 8 SCC
1 : [2007) 9 SCR 853; Natural Resources Allocation,
Jn re, Special Reference No. 1 of 2012 (2012) 10 SCC
1 : [2012) 9 SCR 311; Bharti Airtel Limited v. Union of
India (2015) 12 SCC 1 : [2015) 5 SCR 867; Union of
India and another v. Assn. of Unified Telecom Service
D Providers of India and others (2011) 10 SCC 543 :
[2011) 14 SCR 657; Bannari Amman Sugars Ltd. v.
Commercial Tax Officer and others (2005) 1 SCC 625
: [2004) 6 Suppl. SCR 264 - referred to.
Case Law Reference
E ,
[2007) 9 SCR 853 referred to Para 10
[2014) 9 SCR 780 relied on Para 10
[2012) 9 SCR 311 referred to Para 10
[2012) 3 SCR 147 distinguished Para 14
F
. [1994) 2 Suppl. SCR 122 relied on Para 17
[1996) 2 SCR 767 relied on Para 17
[2015) 5 SCR 867 referred to Para 40

G [2011) 14 SCR 657 referred to Para 40
[1998) 3 Suppl. SCR 421 referred to Para 55
[2000) 3 SCR 1159 relied on Para 56
(2002) 5 Suppl. SCR 222 relied on Para 57
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RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 985
ANR.

(1996) 3 Suppl. SCR 808 relied on Para 57 A
(2003) 1 Suppl. SCR 55 relied on Para 58
(2004) 2 SCR 1010 . relied on Para 59
[2004) 6 Suppl. SCR 264 relied on Para 60
(2005] 3 SCR 1108 referred to Para 61 B
(2005) 3 SCR 666 referred to Para 62

.,I,,
[2012) 8 SCR 128 relied on Para 63
· . ' [2006] 10 Suppl. SCR 606 relied on Para 63
. ' (2012] 4 SCR 190 relied on Para 63
c
[2013) 12 SCR 529 relied on Para 64
[2014) 11 SCR 463 relied on Para 65
2016 (10) SCALE 69 relied on Para 71
D
2016 (8) SCALE 765 relied on Para 72
2016 (10) SCALE 50 relied on Para 73
(1996) 10 Suppl. SCR 209 distinguished Para 75
CIVIL ORIGINAL JURISDICTION: Transfer Case (Civil) No.
43 of 2015. E

Under Article 139 of the Constitution of India
WITH
T. C. (C) Nos. 64 and 65 of 2015.
F
Ranjit Kumar, SG, P. Chidambaram, Dr. A. M. Singhvi, Gopal
Jain, C. A. Sundaram, Ramji Srinivasan, Harish N. Salve, Sr. Advs.,
MaheshAgarwal, Ms. Shally Bhasin, Ms. Sadapurna Mukharjee, Chaitnya
Safaya, Lakshmeesh Karnath (for E. C. Agrawala), Harsh Kaushik,
Abhay Chattopadhyay, Ms. Chinrnayee Chandra, Vidhur Bhatia, Nidhiram
Sharma, Z. L. Ahmad, Gaurav Sharma, Ritin Rai, Ms. Binu Tamta, G
Siddhartha Jha (for D. S. Mahra), Mansoor Ali Shoket, Nitin Kala, Ms.
Vibha Dhawan, Kuna! Singh, Pukhrambam Ramesh Kumar, K.R.
Sasiprabhu, Raghav Shankar, Amit Bansal, Mohit Paul, Tarun Gulati,
Manjul Bajpai, Sparsh Bhargava, Neil Hildreth, Kishore Kuna!, Anupam
Mishra, Advs. for the appearing parties.
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986 SUPREME COURT REPORTS [2017) 4 S.C.R.

A The Judgment of the Court was delivered by
DIPAK MISRA, J. I. The three transferred cases, namely,
Transfer Case (Civil) No. 43 of2015, Transfer Case (Civil) No. 64 of
2015 and Transfer Case (Civil) No. 65 of2015, had their origin in the
High Courts of Delhi, Tripura and Karnataka respectively. The High
B Courts were moved under Article 226 of the Constitution challenging
the terms and conditions ofNotice InvitingApplication-2015 (for short,
'NIA') for allocation of spectrums in various areas. The High C,ourt of
Tripura in W.P.(C) No. 52 of 2015 and W.P.(C) No. 53 of 2015 was
prayed for grant of interim relief which included extension of permission
to the participants in the NIA to be bidded for minimum 4.4 MHz, IN
C 900 MHz band in the North East service area. The High Court, while
dealing with interim prayer, directed as follows:-
"Therefore, at this stage, we feel that only the following order
should be passed: Both the petitioners are permitted to submit 2
applications instead of one. One application may be for 4.4. MHz
D and the other application will be for a minimum of 5 MHz and
may extend up to 8.8, if the petitioners so desire. We have been
informed at the Bar that two applications may not be possible to
be submitted because it is online. We are not sure whether the
same because it may not be possible. Therefore, we direct that it
E is for the petitioners to decide what application they will submit
online but they may also simultaneously submit one application
offline in hard copy with the Secretary, Department of
Telecommunication, Union of India on or before 16th February,
2015. The Union of India may proceed with the assessment of
the applications but no final decision in the matter shall be taken
F without permission of this Court. Furthermore, any preliminary
decision taken shall also be subject to the result of the present
writ petition. Admittedly, the licences of the petitioners are expiring
only in December, 2015, and, therefore, we would like to ensure
that the writ petition is disposed of much earlier."
G 2. The said orders were assailed by the Union of India in S.L.P.
(Civil) Nos. 5735-5736 of2015. This Court issued notice and eventually
on 26.2.2015 directed stay of the order passed by the High Court of
Tripura at Agartala and permitted the auction to continue on the date
fixed, but the same should not be finalized without the leave of the Court.
H The Court further directed that the said condition shall be put forth on
..
RELIANCE TELECOM LTD. & ANR. v. UNION Of INDIA & 987
ANR. [DIPAK MISRA, J.]
...
the website so that all the bidders are aware of the order of this Court A
and no bidder shall claim equity because of his participation or success
in the tendering process.
3. It needs to be stated here that by this time, certain transfer
petitions were allowed. Transfer cases were taken up on 26.3.2015
wherein this Court passed the following order:- B
"Mr. Mukul Rohatgi, learned Attorney Genera!' appearing for the
Union of India, has su.bmitted that there has been auction
commencing 4th March, 2015 and ending 25th March, 2015, in
respect of the bands, namely, 800 MHz, 900 MHz, 1800 MHz and
2100 MHz in respect of all the States and there has been a fierce c
and competitive auction and the entire revenue likely to be
generated is Rs.1. 09 lac crores. Learned Attorney General would
further submit that ifthe order of stay is not modified, the Union
of India will be facing grave fiscal difficulty as there is ample
possibility of collecting at least Rs.28,000 crores by 3 lst March,
2015. It is urged by him that the auction itself would show that D
the "Notice Inviting Tender" has been a workable one and,
therefore, sustainable in law. In this backdrop, submits, Mr. Mukul
Rohatgi, that the interim order passed on the earlier occasion should
be modified granting leave to the Union of India to fin..alize the
auction, subject to the final decision of the special leave petition E
,.. and the transferred cases.
Mr. P. Chidambaram and Mr. Gopal Jain, learned senior counsel
appearing for the contesting respondents, per contra, would contend
that the competitive bidding was not really competitive, but a
compulsive bidding as parties were obliged to bid because of their F
survival. In addition, it is put forth by them that the amount that
has to be thought of being collected by the Union of India, is
factually incorrect, inasmuch as the bidders who are successful
have to deposit the amount within ten days from the completion
of date of auction, that is, 25th March, 2015. Learned senior counsel
would further submit that the entire design of the "Notice Inviting G
.Tender" is gloriously faulty and solely because the auction has
taken place and money is likely to be collected, would not be a
justification for the modification of the interim order.
Having heard learned counsel for the parties, we are inclined to
modify the order to the extent that the Union of India would be at H
988 SUPREME COURT REPORTS [2017] 4 S.C.R.

A liberty to finalize the auction and proceed thereafter, but all the
successful bidders shall be intimated that the said finalization is
subject to the final result of the special leave petition, as well as
the transferred cases."
4. At that juncture, Mr. Mukul Rohatgi, learned Attorney General
B undertook that the competent authority of the Union of India would intimate
the successful bidders to get themselves impleaded as parties.
5. It was observed by the Court that the said impleaded parties
are entitled to file respective affidavits stating their stand and stance in
the said affidavits. On that day itself, the Court disposed of the special
c leave petitions as it was felt that nothing really was to be adjudicated in
them as the whole controversy was to be addressed in the transferred
case. When the matter was heard on the next date, the Court passed
the following order:-
"In course of hearing certain aspects have been highlighted which,
D we think, the competent authority of Union oflndia should put by
way of an affidavit so that while deciding finally, this Court may
take into consideration certain aspects for issuing appropriate
directions or moulding the relief. The affidavit shall cover the
following:-
E (a) After completion of the present auction, what is the quantum
of spectrum available with the Union of India?
(b) What-is the possibility of getting the non-vacating spectrum
from the defence band and within what time?
(c) Whether an auction can be held in respect of the available
F spectrum, regard being had to what has been stated in (a) and (b)
above?
(d) Whether in the auction that is going to be held, the concept of
capping would still remain and, if so, what would be the formula
and how it would be interpreted and applied? While calculating
G the cap, ifthat exercise is undertaken, whether the commercially
available spectrum should be included in the computation of such
caps?
(e) The successful bidders who have got less than five and in
case they fail in the next auction, how they would deal with the
H
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 989
ANR. [DIPAK MISRA, J.]

spectrum available with them? To elaborate, though they can A
surrender or trade the spectrum or share the same as per
guidelines, do they have a choice to hold it back or the Union of
India would take step's in that regard as per law?"
Be it stated, the Union of India filed an affidavit stating the position.
The essence of the said affidavit is that:- B
(a) After completion of the present auction, what is the
quantum of spectrum available with the Union of India?
4. With reference to item (a) above, it is submitted that in the
spectrum bands put to auction namely 800 MHz, 900 MHz, 1800
MHz & 2100 MHz in March 2015, the table below indicates the C
availability of spectrum post auction with the Government of India
for commercial use:-

Band Quantum of Quantum Remaining
(MHz) Spectrum put provisionally quantum of D
on Auction won by bidders spectrum
(MHz) (MHz) (MHz)
800 108.75 86.25 22.5
900 177.8 168.00 9.8
1800 99.2 93.80 5.4
E
2100 85 70.00 15.0
Total 470.75 418.05 52.7

b) What is the possibility of getting the non-vacating
spectrum from the defence band and within wh,at ~me? F
5. With reference to query (b), it is humbly submitted that the
Answering Respondent is making all sincere efforts for getting
the spectrum vacated from Defence and other users. Historically,
all the identified 75 MHz spectrum mobile services in 1800 MHz
band in all 22 service areas was with defence and other users G
prior to 2001 when it was allocated for the first time for commercial
mobile services in India after co-ordination with the then existing
users. Spectrum in 1800 MHz band was coordinated by defence
on a case to case basis either in the entire service area or in parts
of the service area (i.e. District-wise). Based on the coordination
H
990 SUPREME COURT REPORTS [2017] 4 S.C.R.

A received from Defence, spectrum in 1800 MHz band was allotted,
from time to time, for commercial use by Telecom Service
Providers. This spectrum is in spots over the complete 75 MHz.
in January 2015, it has been decided in consultation with the
defence, that, instead of the case by case approach adopted
historically, out ofabove referred 75 MHz, 55 MHz will be allotted
B
to telecom service providers (TSPs) and the rest will be used by
defence. Within the 1800 MHz band, the exact frequencies to be
allotted to TSPs and that to be used by defence have been
earmarked. However, the process of allotting all the frequency
identified to TSPs will require some time. This is because at
c present, there are operational networks of defence in the segment
identified for telecom services in 1800 MHz band. Similarly
frequency spots have been allotted to various TSPs in the segments
identified for use by defence. The discussions have started with
defence for harmonizing the spectrum in 1800 MHz band. TSPs
have also been consulted as they also to shift their networks to
D
new spots. The operational network of the defence is required to
be continued until alternate arrangements are available for
seamless operation of defence networks or else it would
compromise the national security. Therefore, in the humble
submission of the answering respondent, no time frame can be
E put as to when the defence would vacate.
6. Telecommuncation sector's evolution is a continuous process
world-wide. New bands and technologies are being identified for
providing commercial services. For example Wide Band Code
Division Multiple Access (WCDMA) technology, commonly
F known as 3G technology, have been developed and was deployed
in our country in 2100 MHz band. 456 MHz spectrum in this
band was co-ordinated from defence and got released for telecom
commercial services in 2010 and was auctioned. Further, as per
the decision of the Governmerit in January 2015 an additional 85
MHz of spectrum in this band was released by defence and was
G part of the auction conducted in March 2015. It is also submitted
that efforts are being made to get released 15 MHz of spectrum
in each of22 service areas in 2100 MHz band also from Defence.
Although in this case also no t_ime frame can be put as to when it
would be made available but it is expected to be released during
H
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 991
ANR. [DIPAK MISRA, J.]

the process of completion of hannonization of 1800 MHz band A
spectrum. This will make 345 MHz of spectmm available in this
band. Therefore, it is proposed to be included in the next auction.
7. As a part ofidentifying new brands & technologies and releasing
for providing commercial services 880 MHz spectmm in Time
Division Duplex (TDD) mode was also included in 2300 MHz B
band for auction conducted in 2010 and 320 MHz of spectrum in
this band is proposed to be included for the next auction. Similarly
440 MHz spectrum in 2500 MHz band was allocated to BSNL
and MTNL in 2007-08. However 160 MHz spectrum was
surrendered by them. TRAI has been requested to expedite
recommendations for reserve price and associated conditions. A C
total quantum of 600 MHz of spectrum in this band, including that
surrendered by the BSNL/MTNL is available. It is humbly
submitted that channeling plan adopted in India for 2500 MHz
band is not as per standard International Mobile Technology (IMT)
band considering the issues relating to techno-economic feasibility D
and availability of commercial eco-systems. The feasibility of
inclusion of spectrmn in 2500 MHz band in the forthcoming auction
appears to be poor. (All bands other than 2300 MHz and 2500
MHz are in Frequency Duplex Division (FDD) mode).
(c) Whether an auction can be held in respect of the E
available spectrum, regard being had to what has been
stated in (a) and (b) above?
8. With reference to query (c), it is submitted that the next auction
would be held as and when reasonable quantity of spectrum is
available and the answering respondent is making all efforts to F
make available sufficient quantity of spectrum for auction apart
from complying with the statutory process of seeking TRAI's
recommendations, where applicable.
9. In the above context, it is submitted that six access service
licences of private service providers are expiring in 2017-18. The G
details of spectrum wbich will be released by these providers is
as follows:
800 MHz band 20.0 MHz
1800MHzband 22.0MHz
H
992 SUPREME COURT REPORTS [2017) 4 S.C.R.

A It is proposed to include the spectrum in 800 MHz band in the
next auction of spectrum. ·
IO. Further, the Cellular Mobile Service licences ofMahanagar
Telephone Nigam Limited (MTN,L) are expiring in 2017-18 and
holding 12.4 MHz of spectrum 900 MHz band and 4.4 MHz in
B 1800 MHz band. MTNL has represented to the Licensor for
extension of effective date of their licences as MTNL could not
operate license in the initial period due to various reasons including
stay by Telecom Regulatory Authority oflndia (TRAI) in 1997-
98. The representation is under consideration of the Government.
c 11. It is respectfully submitted that. 770 MHz spectrum in 700
MHz band is available. However, the feasibility of its inclusion in
the proposed auction appears to be poor due to techno-economic
feasibility and the current status of commercially available eco-
system.

D 12. In addition, TRAI has been requested on 9'h July, 2015 to
provide recommendations on applicable reserve price and
associated conditions for auction of spectrnm in 700 MHz, 800
MHz, 900 MHz, 1800 MHz and 2100 MHz bands for all the service
areas under the terms of Clause ll(l)(a) ofTRAI Act, 1997, as
amended and expedite the recommendations on applicable reserve
E price for 2300 MHz and 2500 MHz bands for all the service areas.
Presently, the matter is with TRAI and after consideration of the
recommendations of TRAI in respect of the reserve price and
associated terms and conditions, the next auction would be
conducted and the available spectrum will also be included in the
F auction.
13. It is humbly re-iterated that the availability ofspectnun in all
the bands may vary vis-a-vis the quantum of spectrum indicated
above, as a result of harmonization exercise with Defence, taking
into consideration the requirements of Defence and/or the policy
G decisions by the Government on related matters.
(d) Whether in the auction that is going to be held, the
concept of capping would still remain and, if so, what would
its formula and how it would be interpreted and applied?
While calculating the cap, if that exercise is undertaken,
whether the commercially available spectrum should be
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RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 993
ANR. [DIPAK MISRA, J.]

included in the computation of such caps? A
(e) The successful bidders who have got less than five and
in case they fail in the next auction, how they can deal with
the spectrum? To elaborate, though they can surrender or
trade any spectrum or share the same as per guidelines,
they do have a choice to hold it or the Union of India would B
take steps in that regard as per law.
14. The Telecom Regulatory Authority was also consulted with
reference to query (d) and (e) as posed by the Hon'ble Court in
the order dated 14.5.2015. The TRAI had furnished its comments
upon the same vide its letter dated 2"d July 2015. The relevant c
extracts are reproduced below:-·
"1.14 The Authority examined the views of all the TSPs and
the provisions of various NIA issued till date. The Authority is
of the opinion that at present there is no need to modify the
existing spectrum cap (50% of the spectrum assigned in each D
of the 800/900/1800/2100/2300/2500 MHz and 25% of the total
spectrum assigned in all these bands put together in each
service area).
1.15 On the methodology of calculating the spectrum cap, the
Authority is of the opinion that all spectrum assigned to the E
TSPs including any spectrum which was put to an auction but
remains unsold, spectrum which was assigned but subsequently
surrendered by the TSP or taken back by the Licensor and
spectrum put to auction should be counted. However, any
spectrum out of the above will not be taken into calculation, if
the Government assigns it for non-commercial purpose e.g. F
assignment to Defence.
1.16 The Authority is also of the view that the spectrum which
may become available to the WPC/DoT for commercial use
after its reframing from other users such as Defence at
different point of time should not be counted for determining G
the spectrum caps until it is put to auction by the DoT.
1.17 The Authority is also of the view that telecom being an
evolving sector, review of such policy decisions such as spectrum
cap is a continuous process. The Authority may review it at an
H
994 SUPREME COURT REPORTS [2017) 4 S.C.R.

A appropriate time like introduction of new spectrum bands,
.additional spectrum released for commercial purpose or if any
major development takes place.
1.22 The Authority is of the opinion that Licensees should be
able to decide for themselves whether or not there is a business
B case for them to hold on to the spectrum. Moreover, once the
guidelines of the spectrum sharing and spectrum trading are
notified by the Government, the TSPs will have alternate options
to manage their spectrum holding. Therefore, the Authority is
of the opinion that the Government should not take back
spectrum assigned to TSP even ifit is less than 5 MHz in any
c band."
15. The above comments ofTRAI are under consideration of
the answering respondent.
16. In the above context with reference to query (d), it is humbly
D submitted that before the next auction, the answering respondent
will take a considered decision on the comments of TRAI as
stated above with reference to the methodology of calculating
the CAP for future periods.
17. With reference to query (e), it is humbly submitted that as
E already indicated that the successful bidders who l:ave got
less than 5 MHz of spectrum and in case they fail in the next
auction, they can share the spectrum or trade the spectrum,
the guidelines for which are being formulated and likely to be
in place shortly. At present, there is no rule/statute to take
back the spectrum which has been awarded after participating
F in a competitive process and as per commercial decisions of
the bidder taking into consideration the techno-economic
requirements in a service area. Presently, the aforesaid
comments ofTRAI are under consideration of t,he Government
oflndia."
G The said affidavit that was filed meeting the issues framed by the
Court was countered by the petitioners stating, inter alia, that the
respondent No. 1 has, in its affidavit, remained silent on the Chart which
was submitted by the petitioners and by not responding to the chart/table
of the petitioners, the respondent No. 1 has really not met the issue. It is
H put forth that the respondent No. 1 does not dispute the submission of
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 995
ANR. [DIPAK MISRA, J.]

the petitioners that out of the 75 MHz of Spectrum, 55 MHz has been A
earmarked for commercial use and it is also apparent that the respondent
No. 1 has not consulted Telecom Regulatory Authority oflndia (TRAI)
on the availability of spectrum, especially since TRAI's recommendation
dated 15.10.2014 contained a statement on the availability of spectrum
which contradicts the statement made by the respondent No.1 in the B
affidavit.
6. Eventually, the matter was heard at length and learned counsel
for the parties had filed the written notes of submission.
7. At this juncture, it is necessary to state that learned counsel for
the respondent in the transferred cases have separately put forth written c
submissions but we shall enumerate them together as we are disposed
to think that there is commonality of grievance and attack on the Notice
Inviting Application (NIA) is also similar. The submissions, which are
separately set forth qua each transferred case, if required, shall be
adverted to at the appropriate stage.
D
8. Learned counsel appearing for the petitioners have raised various
contentions and for appropriate appreciation, it is necessary to enumerate
them.
9. The minimum bidding criteria of 5 MHz in the spectrum band
of 900 MHz for different categories of bidders as adopted in NIA is E
arbitrary, anti-competitive, onerous and contrary to the TRAI
recommendations dated 15.10.2014. The minimum bidding criteria for
different categories of bidders under different bands, i.e., 800 MHz, 900
MHz, 1800 MHz and 2100 MHz, is discriminatory and runs counter to
the TRAI recommendations dated 15.10.2014. The Department of
Telecommunications (DoT) has not accepted the TRAI recommendations F
dated 15.10.2014 and not allowed the new/expiring licensees in the 900
MHz band to bid for a minimum of 2 x 3.6 MHz in those Licensed
Service Areas (LSAs) where spec,trum put to auction was 10 MHz or
more and 2 x 2.4 MHz in the remaining LSAs. Similarly, in 1800 MHz
band, DoT has not allowed the new/expiring licensees to bid for a 0
minimum of 2 x 0.6 MHz spectrum. This condition that relates to the
eligibility criteria invites the frown of Article 14 of the Constitution.
10. The NIA dated 9. l.2015 suffers from over-classification
between different categories of bidders inasmuch as the minimum bidding
criteria for different classes of bidders, as has been set out in the NIA, H •
996 SUPREME COURT REPORTS [2017] 4 S.C.R.

A has no nexus with the object which the NIA seeks to achieve. The
criteria adopted by the DoT is in stark contrast to the TRAI
recommendations dated 15.10.2014, which recommended that the
minimum quantity that a bidder is required to bid for should be kept as 2
x 3.6 MHZ in the LSA where spectrum availability is 10 MHz or more in
the 900 MHz band; and the minimum quantity may be kept as 2 x 2.4
B MHz in the remaining LSAs which would be applicable for expiring
licen~ees as well as new entrants. Though these recommendations
were reiterated by TRAI in its response dated 24.11.2014 to the back-
refercnce received from DoT on the recommendations ofTRAI dated
15. l 0.2014, yet they were not accepted without any fathomable reason.
C The NIA has fixed different minimum bidding criteria for different
spectrum bands and classified the bidders into "existing licensees",
"expiring licensees" and "new entrants" and fixed different bidding criteria
for each category and such classification does not indicate that there is
any intelligible or discernible basis for the fixation of the criteria and
D there is no nexus between the criteria and the object sought to be achieved
through the auction and, hence, the criteria is a case of "suspect
classification". It is so because no reason or justification has been
furnished in support of the innumerable classes created by the criteria;
and it is a case of classification and micro-classification which will
inevitably favour one or more bidders in certain service areas and
E disfavour other bidders. In this regard, learned counsel for the petitioners
has relied on Reliance Energy Ltd. and another v. Maharashtra State
Road Development Corpn. Ltd. and others 1, Association of Unified
Tele Services Providers and others v. Union of India and other~·2 and
Natural Resources Allocation, In re, Special Reference No. 1 of
2012 3 •
F
11. The auction of spectrum ought not to have been conducted
with inadequate spectrum in a scarcity-driven situation in defiance of
the TRAI recommendations dated 15.10.2014. The Government holds
spectrum in public trust and, hence, cannot hoard spectrum (which is an
inexhaustible resource) depriving the public of its use. It is obligatory for
G the authorities to disclose the quantity ofunutilized spectrum it holds and
why the whole quantity was not put to auction.
1
(2007) s sec 1
2
c2014) 6 sec 110
'(2012) 10 sec 1
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RELIANCE TELECOM LTD. & ANR. v. UN10N OF INDIA & 997
ANR. [DIPAK MISRA, J.]

12. The bidding criteria and the scheme of auction as a whole are A
not consistent with the mandate oflaw. As a result of the flawed approach
of the Government keeping the minimum bidding criteria in the 900 MHz
band as 5 MHz for new entrants/expiring licences, 4.6 MHz of spectrum
in the Bihar service area remained unsold as the existing operator bid
for only 1.6 MHz, whereas the total spectrum available in the area was B
6.2 MHz. Similarly, in the West Bengal service area, 4.4 MHz was the
minimum bidding criteria for new entrants/expiring licensees but the
existing operators could bid for 0.6 MHz of spectrum. In North East
service area also, the total spectrum put up for auction was 8.8 MHz,
but because of the condition of bidding for a minimum of 5 MHz, only
one successful bidder would have been able to win the bid and others C
were bound to be unsuccessful.
13. Ifminimum bidding criteria is different for different categories,
it will create a dent in the level playing field. For example, where the
minimum bid for Bidder Ais 0.6 MHz and the Bidder B, it is 5 MHz and
the block size is 0.2 MHz, Bidder A can enter the arena with funds D
sufficient to bid for 3 blocks (3 x 0.2 MHz), whereas Bidder B can enter
the arena only if he has funds to bid for 25 blocks (25 x 0.2 MHz).
Bidder A can also artificially push up the price per block because he will
have to pay for only 4 blocks. As such, Bidder B will be forced to match
the price of Bidder A or quit the race, which brings out the arbitrariness
and discrimination in the minimum bid criterion as stipulated in the NIA. E
14. Spectrum is a natural resource which is held by the Government
in public trust for the benefit of the people. The Government is obliged
under law to ensure that there is most efficient utilization of the spectrum
available as has been held in Centre/or Public Interest Litigation and
others v. Union of India and others4 • A corollary of this is that the F
Government should disclose the spectrum that is available with it and
that too with specific reference to each service area. Rule ·of'law and
the principle of transparency demand that the Government should make
public the time schedule and the periodicity with which it intends to hold
the auction. As per the spectrum chart for 1800 MHz furnished by the G
petitioners and not objected to by the Government, there was 216.4 MHz
spectrum in the 1800 MHz commercial band which had been unaccounted
for, which is neither lying with the Defence nor with the Telecom
Operators and such an action is contrary to law. DoT itself admitted in
• (2012) 3 sec 1
H
998 SUPREME COURT REPORTS [2017) 4 S.C.R.

A January, 2015 that 55 MHz of spectrum out of total 75 MHz in 1800
MHz band is available for commercial use to the TSPs, but failed to take
any effective measures for releasing the said spectrum despite repeated
requests of the telecom operators.
15. TRAI has requested the information in terms of the proviso to
B Section 11 of the Telecom Regulatory Authority of India Act, 1997 (for
short, "TRAI Act") regarding 'reserve price and associated conditions
for the auction of spectrum', which has not been made available despite
the fact that the proviso to Section 11 mandates supply of information
within seven days. Under the scheme of Section 11 of the TRAl Ad,
certain pa~ameters have to be satisfied by the Government while acting
c on the recommendations ofTRAI, especially keeping in view the first,
third and fifth proviso to Section 11 and Section 11(4) of the TRAL.\d.
16. The aforesaid submissions have been resisted by Mr. Roh:ltgr,
learned Attorney General for India and Mr. Ranjit Kumar, learned Solicit()r
General oflndia appearing for the Union oflndia and their submissions
D are encapsulated to sustainability of the combat.
17. The grievance raised by the petitioners do not survive as they
have participated in the auction and have been successful in some of the
areas and the question of alteration of bid condition does not survive.
The present petitions have been deliberately kept alive by the telecom
E service providers only to retain their dominant positions to the detriment
of the market and the subscribers. The challenge by the petitioners
pertaining to tender conditions formulated by the Union oflndia invoking
the power of judicial review is not tenable as no valid grounds for
interference, as postulated in Tata Cellular v. Union of Jndia 5 and
F Delhi Science Forum and others v. Union of India and another6,
have been made out.
18. The statutory requirement of seeking TRAI's
recommendations and the procedure to be followed is set out in Section
11 of the TRAI Act. The proviso to Section 11 has been interpreted by
G this Court in Association of Unified Tele Services Providers (supra)
wherein it has been held that the recommendations of TRAl are not
binding on the Government. In the case at hand, the Government, after
deliberating on the recommendations of TRAI and sending it back to
TRAI for reconsideration, has chosen not to accept the reconunendations
'(1994)6SCC651
H ' (1996) 2 sec 405
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 999
ANR. [DIPAK MISRA, J.]

of TRAI. Keeping in view the concept of minimum availability of A
spectrum with a bidder and regard being had to allow space to the new
entrants to compete, it is urged that Government has always given due
weightage to the recommendations ofTRAI. Further, the Government
of India does not want to compromise quality to be offered by the service
providers in consumer interest and, therefore, did not accept the B
recommendations ofTRAI. The endeavour of the Government contained ~·
in the NIA for the auction conducted in March, 2015 is not based on any
classification except that all service providers must have a minimum of
5 MHz if they want to deploy any mobile technology benefitting the
consumer and even TRAI concurred with the view that minimum 5
MHz quantum was the appropriate minimum quantum to be set. c
Reduction of minimum quantum cf spectrum to 3 MHz instead of 5
MHz for new entrants would be contrary to TRAI's own
recommendations on the issue of spectrum auction, wherein TRAI has
been consistently holding that 5 MHz is the minimum amount of spectrum
required to ensure that any technology can be deployed with the allocated D
spectrum..
19. Fragmented spectnun allocation to address the present issues
in few service areas will only be a short term solution but will have long
term negative impact for the sector as the objective is to have broadband
solution that offers the most affordable devices and ecosystem to connect ·
the billion people and as such, the minimum quantum of spectrum is E
prescribed as 5 MHz. After deliberating on the recommendations of
TRAI, the Government differed with the view of TRAI and kept the
minimum bid quantity at 5 MHz on the grounds that the present and
future technology scenarios and the need for making the spectrum
contiguous would only benefit the consumer which is the essential F
objective of the National Telecom Policy (NTP); that in the previous
three auctions, new entrants/licensees whose licences were expiring
were required to bid for minimum 5 MHz spectrum; that there was no
substantial change in the market and eco-system scenario since the last
auction of February, 2014; that there is a need to induct new technologies
to meet the requirements of the ever growing demand for data; and the G
number of mobile users stands at approximately 960 million constuners
whose need has to be catered keeping in view the development of
technology in next twenty years. Thus, taking a long-term view, the
decision of the Government after giving due weightage to the
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1000 SUPREME COURT REPORTS [2017] 4 S.C.R.

A recommendations ofTRAI is justified. The plea that the auction is non-
competitive and security driven has no basis.
20. The classification of entities is on the basis of whether an
entity is a new entrant or an existing service provider as the Government
has always been consistent with the trend that new entrants would have
B to bid a minimum of 5 MHz and the existing service providers have to
'top up' (capacity enhancement) their present holding of spectrum to
achieve a goal of maximizing efficiency and avoid any restraint for the
consumers and the service providers. In the NIA for auction of spectrum
in2015, across all bands, anew entrant is required to bid for aminimum
of 5 MHz and this requirement has always been the same for earlier
C auctions also conducted in 2012, 2013 and 2014. The minimum bid
quantum is reduced only in those cases where 5 MHz is not available in
a LSA or contiguous 5 MHz is not available. An existing licensee has to
bid for a minimum of0.6 MHz of spectrum in order to 'top up' so as to
come to the level of 5 MHz (as minimum administratively allocated
D spectrum in 900 MHzJl 800 MHz band is 4.4 MHz) and be in a position
to provide services compatible with new technology. Moreover, the
existing licensee, who will be bidding for a minimum of0.6 MHz so that
he may come to the level of 5 MHz, may also bid for more than that.
The idea would be that he has to bid as a new entrant for the next time
E . when his licence would expire and his allocated 4.4 MHz spectrum is
put to auction.
·21. The endeavour ofDoT is that everybody should have minimum
5 MHz as less than 5 MHz will not be good for the consumer keeping in
view the evolution and innovation and in order.to achieve the same, DoT
has to be far-sighted as the spectrum is being allotted for a period of 20
F years. Assuming that there is classification, then, that is based on an
intelligible differentia between two sets of people, i.e., ( 1) new entrants
including the expiring licensees and (2) existing licensees, both of whom
ought to have minimum 5 MHz so as to be able to deploy on any mobile
technology. An existing licensee may not require 5 MHz to meet the
G traffic requirements and only a fraction of 5 MHz would meet the
requirements, and small chunk addition would improve traffic handling
capabilities and reduce call drops due to congestion. Moreover, in case
an existing licensee chooses to only retain what it has in terms of spectrum
before, then it will, as aforesaid, only be able to provide the bare 2G
service and no more and, therefore, he would lose out on his consumers
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ANR. [DIPAK MISRA, J.]

who can change to a better service provider in terms of number portability. A
Therefore, the classification, if any, contained in the NIA for the auctions
conducted in March, 2015 is based on intelligible differentia hav!ng a
nexus with the object sought to be achieved and there is no violation of
Article 14.
22. There was no spectrum in 900 MHz band prior to the auction B
in March, 2013. The only existing licensees in 900 MHz band were
MTNL/BSNL who did not participate in the auction (but paid the au-::tion
determined price since 2010) and, as such, practically, there was no
existing licensee in Delhi, Mumbai and Kolkata. Therefore, there was
no requirement to deal with existing licensees in 900 MHz band in March,
2013 auction & February 2014 auction. The argument of the petitioners C
that there are many operators across the country who are left with less
than 5 MHz of spectrum and there is no obligation on the part of every
service provider to being forced to purchase or top up to 5 MHz is
unacceptable as it does not take into account why a service provider is
required to have more than 5 MHz, and the fact that with the innovation D
. in technology and the scientific development that may take place in the
next 20 years, if a service provider is satisfied with the technology that it
is presently using and such.service provider does not want to give to its
customers/consumers better services, then he would remain within the
realm of the already allotted spectrum without wanting to top up or go
up to 5 MHz, in which case not only is he likely to suffer but his customers E
are also likely to suffer. The argument that the petitioner was 'knocked
out' ofavailability ofonly 8.8 MHz in the North East and due to the term
of minimum of 5 MHz for a new entrant including expiring licensees is
incorrect. In the North East, while 8.8 MHz was available in 900 band,
there were other spectrum available, i.e., 800 band (13.75 MHz), 900 F
band (8.8 MHz), 1800 band (8.4 MHz) and 2100 band (5 MHz) out of
which the writ petitioner-Reliance has won 5 MHz in 800 band and 5
MHz in 1800 band at the auction as it already had spectrum in 2100
band. The trendofthe 2015 auctions has shown that this company has
substituted its 900 band with 1800/800 band in most circles where the
bid was lower than the 900 band and it has also bid for the 900 band G
spectrum and remained unsuccessful, and that cannot form the basis to ·
assert that there is any discrimination caused or that there is a flaw in
the NIA. That apart, the investment already made in the past 20 years is
an investment which will be used even with the 1800/800 band
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1002 SUPREME COURT REPORTS [2017] 4 S.C.R.

A technologies and any future investment.according to the needs of the
time will be made by them in their commercial wisdom and to say that
they were "knocked out of the auction because of the NIA design" is
totally fallacious as they purchased spectrum in other bands. The
submission that thousands of crores of investment have been made entirely
B overlooking the lakhs of crores revenue generated which is one of the
fundamental purposes of auction especially of spectrum.
23. As regards the submission of the petitioners for moulding of
the relief and for laying down principles for the future, the prayers do
not remotely so indicate and, furthermore, the policy of auction in such
matters is a complex phenomenon, and the Court may not think of laying
C down guidelines for future. The argument that in case of a renewal of a
licenre, the licensee would have the legitimate expectation to be able to
get back what it was surrendering is contradictory, for a renewal and
surrender will not happen simultaneously since these licences are deemed
to have been over by efflux of time and there is no renewal of licence
D because spectrum is required to be purchased in the open market. Hence,
there is no renewal leading to any legitimate expectation.
24. In the auction, the entire available spectrnm for commercial
use in the 800, 900, 1800 and 2100 MHz bandwas put to action and the
spectrum which could not be sold in this auction shall be included in the
E next auction. The submission that the Union of India has flouted the
decision in Centre for Public Interest Litigation (supra) is entirely
unfounded as the grievance raised was that the entire spectrum available
on the cancellation of the licences which were the subject matter of that
PIL were required to be put up for auction and the PIL related to grant
oflicences in the 1800 band category only and the spectrum that would
F have been released consequent upon the cancellation of the licence
was required to be a part of the auction to be held after February 2013
in its totality. The issue of allotment of spectrum in the 900 band was
n ,t the subject matter of consideration of the said writ petition. The
objectives of the present auction are in consonance with the National
G Telecom Policy-2012 (NTP-2012). These objectives are the same as in
the previous auctions conducted in November 2012, March 2'.>13 and
February 2014. The objectives state that the primary objective of the
NTP-2012 is maximizing public good by making available affordable,
reliable and secure telecommunication and broadband services across
the entire country. The main thrust of the Policy is on the multiplier
H
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ANR. [DIPAK MISRA, J.)

effect and transformational impact of such services on the overall A
economy. It recognizes the role of such services in furthering the national
development agenda while enhancing equity and inclusiveness. Availability
of affordable and effective communication for the citizens is at the core
of the vision and goal of the NTP-2012, at the same time as being
investor friendly ~d attracting additional investments. The NTP-2012 B
also recognizes the predominant role of the private sector in this field
and the consequent policy imperative of ensuring continued viability of
service providers in a competitive environment. Pursuant to the NTP-
2012, these principles have guided the decisions needed to strike a balance
between the interest of users/consumers, service providers and
government revenue. Revenue maximization is not the sole objective of C
the Government as alleged by the TSPs. The auction terms have been
structured in a way keeping in mind the public interest and the fact that
the TSPs have to serve the public (consumers) for the years to c:>me,
i.e., the spectrum is allotted in a transparent manner for a period of 20
years.
D
25. There are various factors that the DoT is required to take into
account while determining the auction structure. Ultimately, the DoT
should be permitted to determine the auction structure consistent with
the scheme of the TRAI Act (as has been done in the earlier auctions
and the instant one). It cannot be left to the option of the telecom service
providers and their narrower self interest to determine the structure and E
timing of auctions. Capping has been kept in vogue to have a bigger field
and it is based on a rational principle. For arriving at the cap, only two
parameters are to be seen - (a) the total spectrum assigned in that
service area; and (b) the total spectrum being put to auction. There is
nothing mentioned in the definition as explained by the notes that the f
surrendered spectrum is also required to be added because there is no
definition of a surrendered spectrum. Even if some capping rule is
required to be altered, the Court would be required to go into the basis
why a capping rule was provided for and why the TRAI and the
Department have consistently followed the capping rule not from today
but from 2012 itself. Thai is because no monopoly should be created G
and a healthy competitive bidding should be available. The relief of
removal of the cap is only to enable the petitioners who are 'big players'
to serve their cause but not the public interest and the government has
been reviewing its policy from time to time. TRAI has made
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1004 SUPREME COURT REPORTS [2017) 4 S.C.R.

A recommendations regarding compilation of the cap in future, and such
recommendations are under consideration by the Government of India.
26. It is apt to note here, as has been earlier stated, after 'certain
bi.dders became successful in the auction, their cases were withdrawn
and they were permitted to be imp leaded in these Transfer Cases. They
B have also filed their written notes of submissions. Though separate written
notes have been filed, yet we are inclined to enumerate the contentions
raised in a composite manner.
27. None of the operators have challenged the Spectrnm Cap
Clause [Clause 5.3.1.] in the N1A2015. In the absence of such challenge,
c anything which flows out from that clause including the methodology/
calculation cannot be questioned and/or not open to challenge :ind as a
natural corollary, the arguments pertaining to the clause being arbitrary,
discriminatory or contrary to public policy cannot be raised. Once the
policy itself cannot be faulted, the method of implementation thereof
would not be supervised by the Court and no mandamus can be issued in
D that regard. The methodology of ensuring the capping has to be left to
the State and no direction should be issued as to how the capping is to be
iJ!ipleJ11ented.
28. So far as the interpretation of clause 5.3.1 is concerned, the
said clause, as it stands, is unambiguous and clear, and therefore, the
E said clause ought to be literally interpreted. Furthermore, the NIA,
being an invitation to offer, the rnles of interpretation of contracts would
apply and not the rnles that may be applied in the case of interrretation
of statutes.
29. The NIA, being an invitation to offer, and Clause 5.3.1 being
F one of the Clauses thereof, and the said Clause not being under challenge,
any meaning other than the literal meaning of the said Clause would
have to be by consent of both the parties. It is not open to one party to
unilaterally, at the stage of NIA, seek an interpretation of a Clause in a
manner of their choice and if there is a difference of opinion in the
G manner of interpretation, it is the interpretation of the party who is offering
tlie contract that ought to be adopted. Should there be caus~ for the
Court interpreting or thereby requiring, through mandamus, the Offering
Party (i.e., the State) to interpret the Clause contrary to their way of
interpretation or literal interpretation, this would only be done on the
very limited grounds ofjudicial review, in which case, while a certiorari
H
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ANR. [DIPAK MISRA, J.]

would issue to strike down the Clause as being arbitrary (which issue is A
not put in question before the Court), a mandamus will not issue to require
the State to interpret the Clause in a given way and make an offer in
accordance with the interpretation given by the Court, which is what the
petitioners seek.
30. Clause 5.3.1, in 'No uncertain terms', provides for only two B
categories of spectrum, namely, (i) spectrum currently held by the
operators; and (ii) spectrum put to auction by the Licensor/Respondent,
to be counted/considered while calculating the Spectrum cap. This being
the position under the Clause (both accepted and understood by all the
operators), the contention that the surrendered spectrnm ofBSNL/MTNL
and not currently held by the existing operators should have been included C
(whether or not put to auction) is clearly contrary to the unequivocal
terms of Clause 5.3 .1. The contention that the surrendered spectrum
(which is neither assigned/held by any operator nor put to auction) ought
to be included for calculating the Spectrum cap in the present auction is
an effort to include/add another category of spectrum (i.e., surrendered D
spectrum not put to auction) which is not provided in Clause 5.3.1, and
thereby effectively seek amendment of the Tender/NIA terms which is
totally impermissible in law.
31. The objective behind Spectrum capping is to ensure compedtion ·
in the market by preventing large/big operators from acquiring large E
amount of spectrum, which they may not require but only hoard to prevent
the small operators from effectively competing in the market, and that is
why, TRAI has recommended on 02.07.2015 that the basic objective of
prescribing a spectrum cap is to prevent a TSP from acquiring large
holdings of spectrum through auction, M&A or trading, as it may lead to
non-level playing field thereby disturbing the competition in the muket. F
It cannot be left to the market forces alone to decide the maximum
spectrum holding as a TSP and, hence, the provision of cap should continue
· on the spectrum holding that a TSP may acquire or otherwise. The
argument that the Respondent should have notionally included the
spectrum surrendered by BSNL/MTNL would result in creating a situation G
where though the spectrum put to auction remains the same (i.e., limited),
yet a large/big player will be able to bid for the entire spectrum.(which it
otherwise could not have done due to Clause 5.3.1) thereby effectively
giving a tool to the large/big operators to deprive/starve small open.tors,
who quite avowedly, cannot match the buying power oflarger operators
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1006 SUPREME COURT REPORTS [2017] 4 S.C.R.

A of spectrum.
32. There cannot be any legitimate expectation based on the terms
and conditions relating to NIA more so, in the sphere of auction of
spectrum. The 2013 auction included the spectrum allegedly surrendered
by BSNL/MTNL in calculating the Spectrum cap, while it has 11ot been
8 done so in the present auction (i.e., 2015 auction), and the fact that the
surrendered spectrum was included earlier and not in the present year
does not give rise to legitimate expectation, for it does not bind the State
to follow the same because the fundamental principles of maximization
ofrevenue and subserving of the public interest at large require change.
It is well settled that the concept oflegitimate expectation has no role to
C play where the State action is as a public policy or in the public interest
unless the action taken amounts to an abuse of power. The court does
not interfere with the discretion of the public· authority which is empowered
to take the decisions under law and the court is expected to apply an
objective standard that leaves to the deciding authority the full range of
D choice which the legislature is presumed to have intended.
33. The grievance raised by the petitioners is that the design of
the auction skewed price discovery and .resulted in artificial infiation of
the price of spectrum. This grievance is to be viewed in the context in
which the policy of auction of spectrum came to be implemented. This
E Court having held that public interest is served by maximizing th<:< benefit
to the public exchequer, a challenge premised on the admission that the
method adopted by the State, in fact, maximized the generation of revenue
from the auction of spectrum cannot succeed, Further, the present case
may be usefully contrasted with the Center for Public Interest Litigation
(supra) in which this Court quashed the licences issued to different
F telecom operators on a finding that the policy of 'first come first serve'
(FCFS) was constitutionally suspect for the reason that it failed to
maximize revenue. Additionally, it was found that the procedure for
grant of licences was, in any event, vitiated by arbitrary application of
the FCFS policy and by grant oflicences to ineligible applicants. In such
G circumstances, the requirements of public interest were held to mandate
a declaration that the process as a whole was legally non est. In the
present case, declining to quash the auction exercise as a whole would
occasion no detriment to the public interest since the competing
considerations can be balanced by directing remedial and forward-looking
reliefs, even while preserving past actions. Further, there is neither
H
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 1007
ANR. [DIPAK MISRA, J.)

allegation of any mala fide in the conduct of the auction, nor has it been A
alleged that the policy was structured so as to convey benefit to a
particular player/players over others.
34. Having noted the contentions of the parties, we think it
necessary to refer to the earlier decisions that have been rendered in the
context of spectrum and the principle to be adhered to while disposing it B
by way of granting licence. The litigation relating to spectrum had a
beginning. In Centre/or Public Interest Litigation (supra), be it noted,
the controversy had arisen in a different canvas. But it is necessary to
allude to it. The two-Judge Bench framed five questions:-
"(i) Whether the Government has the right to alienate, transfer or c
distribute natural resources/national assets otherwise than by
following a fair and transparent method consistent with the
fundamentals of the equality clause enshrined in the Constitution?
(ii) Whether the recommendations made by the Telecom
Regulatory Authority of India ("TRAI'') on 28-8-2007 for grant D
ofUnifiedAccess 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 ofTelecommunications
(DoT), were contrary to the decision taken by the Council of
Ministers on 31-10-2003?
E
(iii) Whether the exercise undertaken by 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 mala fides and is contrary to public
interest?
F
(iv) Whether the policy of first-come-first-served followed by DoT
fo!" grant oflicences is ultra vires the provisions of Article !4 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 Communications and
Information Technology"), without consulting TRAI, with a view G
to 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?"
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1008 SUPREME COURT REPORTS [2017] 4 S.C.R.

A · 35. The Court referred to the new economic policy of India that
was announced on 24.fl991 which was aimed 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 opened up to private investment in
B
July 1992 for the services, namely, (a) electronic mail; (b) voicemail; (c)
data services; (d) audio text services; (e) video text services; (j) video
conferencing; (g) radio paging; and (h) cellular mobile telephone. The
Court referred to the National Telecom Policy, 1994, New Telecom Policy,
1999, Establishment of Telecom Regulatory Authority of India, Policy
c on Spectrum Management as enumerated in NTP 1999, the role cfTRAI,
the factual matrix in hand, the stand of the respondent, the manner in
which the allotments were made and, in that context, opined as follows:-
"85. As natural resources are public goods, the doctrine of equality,
which emerges from the concepts of justice and fairness, must
D guide th~ State in determining the actual mechanism for distribution
of natural resources. Jn 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 adequately compensated for the transfer of the resource
E 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 and that it does
not discriminate between similarly placed private parties.
F xxxxxxxxxx

89. In conclusion, we hold that the State is the legal owner of the
natural resources as a trustee of the people and although it is
empowered to distribute the same, the process of distribution must
be guided by the constitutional principles including the do-::trine of
G equality and larger public good."
36. Answering the question nos. 3 and 4, the Court held:-
"9 5. 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
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RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 1009
ANR. [DIPAK MISRA, J.]

all eligible persons get a fair opportunity of competition. To ;:mt it A
differently, the State and its agencies/ instrumentalities must always
adopt a rational method for disposal of public property and no
attempt should be made to scuttle the claim of worthy applicants.
When it comes to alienation of scarce natural resources like
spectrum, etc. it is the burden of the State to ensure that a non-
8
discriminatory method is adopted for distribntion and alienation,
which would necessarily result in protection of national/p~1blic
interest.
96. In our view, a duly publicised auction conducted fairly and ·
impaitially is perhaps the best method for discharging this burden
and the methods like first-come-first-served when used for C
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 fer the
constitutional ethos and values. In other words, while transferring
or alienating the natural resources, the State is duty-bound to adopt D
the method of auction by giving wide publicity so that all eligible
persons can participate in the process.
xxxxxxxxxx
99· In majority of the judgments relied upon by the learned Attorney
General and the learned counsel for the respondents, it has been E
held that the power of judicial review should be exercised with
great care and circumspection and the Court should not ordinarily
interfere with the policy decisions of the Government in financial
matters. There cannot be any quarrel with the proposition that the
Court cannot substitute its opinion for the one formed by the F
experts in the particular field and due respect should be given to
the wisdom of those who are entrusted with the task of framing
the policies. We are also conscious of the fact that the Court
should not interfere with the fiscal policies of the State. However,
when it is clearly demonstrated that the policy framed by the State
or its agency/instrumentality and/or its implementation is contrary G
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 not be exceeded beyond the recognised
parameters. H
1010 SUPREME COURT REPORTS [2017] 4 S.C.R.

A xxxxxxxxxx
101. 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
B who have been constantly fighting for clean governance and
accountability of the constitutional institutions, unsuspecting citizens
and the Nation would never have known how the scarce natural
resource spared by the Army has been grabbed by those who
enjoy money power and who have been able to manipulate the
system.,
c
We are not referring to the directions given therein as we are not
really concerned with the said directions in the present case.
37. After delivery of the said judgment, the President oflndia, on
12.4.2002, made a reference under Article 143(1) of the Constitution,
D which was answered in Natural Resources Allocation, In re, Special
Reference No.J of 2012 (supra). The issue of maintainability of
reference was raised and the Court answered that the reference was
maintainable as long as the lis in 2G case, inter parties, is left unaffected.
On merits, the majority proceeded to hold as follows:-

E "129. Hence, it is manifest that there is no constitutional mandate
in favour of auction under Article 14. The Government has
repeatedly deviated from the course of auction and this Court has
repeatedly upheld such actions. The judiciary tests such deviations
on the limited scope of arbitrariness and fairness under Article 14
and its role is limited to that extent. Essentially, whenever the
F object of policy is anything but revenue maximisation, the executive
is seen to adopt methods other than auction.
130. A fortiori, besides legal logic, mandatory auction may be
contrary to economic logic as well. Different resources may require
different treatment. V~ry often, exploration and exploitation
G contracts are bundled together due to the requirement of heavy
capital in the discovery of natural resources. A concern would
risk undertaking such exploration and incur heavy costs only if it
was assured utilisation of the resource discovered: a prudent
business venture would not like to incur the high costs involved in
exploration activities and then compete for that resource in an
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ANR. [DIPAK MISRA, J.]

open auction. The logic is similar to that applied in patents. Firms A
are given incentives to invest in research and development with
the promise of exclusive access to the market for the sale of that
invention. Such an approach is economically and legally sound
and sometimes necessary to spur research and development.
Similarly, bundling exploration and exploitation contracts may be B
necessary to spur growth in a specific industry.
131. Similar deviation from auction cannot be ruled out when the
object of a State policy is to promote domestic development of an
industry, like in Kasturi Lal case 7, discussed above. However,
these examples are purely illustrative in order to demonstrate that
auction cannot be the sole criterion for alienation of all natural C
resources.
38. Elaborating further, the Court held:-
"146. To summarise in the context of the present Reference, it
needs to be emphasised that this Court cannot conduct a D
comparative study of the various methods of distribution of natural
resources and suggest the most efficacious mode, ifthere is one
universal efficacious method in the first place. It respects the
mandate and wisdom of the executive for such matters. The
methodology pertaining to disposal of natural resources is clearly
an economic policy. It entails intricate economic choices and the E
Court lacks the necessary expertise to make them. As has been
repeatedly said, it cannot, and shall not, be the endeavour of this
Court to evaluate the efficacy of auction vis-a-vis other methods
of disposal of natural resources. The Court cannot mandate one
method to be followed in all facts and circumstances. Therefore, F
auction, an <economic choice of disposal of natural resources, is
not a constitutional mandate. We may, however, hasten to add
that the Court can test the legality and constitutionality of these
methods. When questioned, the courts are entitled to analyse the
legal validity of different means of distribution and give a
constitutional answer as to which methods are ultra vire~ and G
intra vires the provisions of the Constitution. Nevertheless, it cannot
.and will not compare which policy is fairer than the other, bui, if a
policy or Jaw is patently unfair to the extent that it falls foul of the
' (1980) 4 sec 1
H
1012 SUPREME COURT REPORTS [2017] 4 S.C.R.

A fairness requirement of Article 14 of the Constitution, the Court
would not hesitate in striking it down.
147. Finally, market price, in economics, is an index of the value
that a market prescri.bes to a good. However, this valuation is a
function of several dynamic variables: it is a science and not a
B law. Auction is just one of the several price discove1y mechanisms.
Since multiple variables are involved in such valuations, auction
or any other form of competitive bidding, cannot constitute even
an economic mandate, much less a constitutional mandate.
148. In our opinion, auction despite being a more preferable method
c of alienation/allotment of natural resources, cannot be held to be
a constitutional requirement or!imitation for alienation of all natural
resources and therefore, every method other than auction cannot
be struck down as ultra vires the constitutional mandate.
149. Regard being had to the aforesaid precepts, we have opined
D that auction as a mode cannot be conferred the status of a
constitutional principle. Alienation of natural resources is a policy,
decision, and the means adopted for the same are thus, executive
prerogatives. However, when such a policy decision is not backed
by a social or welfare purpose, and precious and scarce natural
resources are alienated for commercial pursuits of profit
E maximising private entrepreneurs, adoption of means ot!ler than
those that are competitive and maximise revenue may be arbitrary
and face the wrath ofArticle 14 of the Constitution. Hence, rather
than prescribing or proscribing a method, we believe, a judicial
scrutiny of methods of disposal of natural resources should depend
F on the facts and circumstances of each case, in consonance with
the principles which we have culled out above. Failing which, the
Court, in exercise of power of judicial review, shall term the
executive action as arbitrary, unfair, unreasonable and capricious
due to its antimony with Article 14 of the Constitution." .

G 39. Be it noted, pursuant to the judgment in 20 case, the Union of
India had taken steps to conduct an auction of 900 MHz and 1800 MHz
insofar as they pertained to certain operators whose licences were coming
to an end in 2014. The licences had been granted in favour of certain
licensees, namely, Vodafone Mobile Service Ltd., Loop Mobi:e India,
Bharti Airtel Ltd. and Idea Cellular Ltd. who had Cellular Mobile
H
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 1013
ANR. [DIPAK MISRA, J.]

Telephone Service licence (CMTS licence) and some had Unified Access A
Service licence (UAS licence) and they approached the Government of
India seeking extension/removal of the licence. They approached the
High Court of Delhi which directed the Government of India to dispose
of the application within a stipulated time frame. Pursuant to the directions
given by the High Court, the applications of the licensees were considered B
and rejected by the Government of India. Aggrieved by the said rejection,
the licensees approached TDSAT, which dismissed the petitions vide
order dated 31.1.2014.
40. After appeals were dismissed, the appellants therein preferred
appeals under Section 18 of the TRAI Act. The grievance related to
seeking of an extension of the period of licence. The Court in Bharti C
Airtel Limited v. Union of India 8, relying on Union of India and
another v. Assn. of Unified Telecom Service Providers of India and
others9, came to hold that it is a settled position of law that a licence
granted,under Section 4(1) of the Telegraph Act such as the one granted
to each of the licensees herein is a contract between the licensor and D
the licensee. Thereafter, the Court posed the question, whether there
was any right of extension of licence granted in favour of the licensee
under the contract. Analysing the terms of the clauses in the contract,
referring to various passages from the 2G case and considering the view
ofTRAI and the pronouncement in Natural Resources Allocation, In
Re (supra), the two-Judge Bench answered thus:- E

"In para 82 of Natural Resources Allocation, In re (supra), this
Cot\ft was categorical that the findings of 2G Case (supra) were
limited to the case of spectrum. Similarly, in para 146, this Court
observed that this Court "respects the mandate and wisdom of
the executive" in the matter of choosing the most suitable mtthod F
of distribution of natural resources. This Court noted that this is
clearly a matter of an economic policy entailing an intricate
economic choice and the Court lacks necessary expertise to make
such choice. In the light of the observation in para 82 that at least
in the matter of disposal of spectrum, auction is the only "permissible G
and intra vires method for disposal". Therefore, the submission of
the licensees is required to be rejected."
41. Having adumbrated to the previous litigations, we shall presently
• (2015) 12SCC 1
'(2011) 10 sec 543
H
1014 SUPREME COURT REPORTS [2017] 4 S.C.R.

A refer to the NIA and deal with the submissions keeping in view the law
in the field. Clause 5.3 of the NIA which deals with spectrum cap, that
is, the quantum of spectrum an operator can hold in a LSA, is extracted
below:-
"5.3 Spectrum Holding Capping Rule
B For the purpose of this Auction the bidding by the bidders for
each of the Service Areas in each of the bands will be restricted
by a Cap which would depend on the Spectrum assigned in the
respective band (1800 MHzl900 MHz! 800 MHz) and also on the
Total Spectrum assigned in all the bands namely 800 MHz! 900
c MHz/ 1800 MHz/ 2.1 GHz/ 2.3 GHz/ 2.5 GHz along with
respective paired frequencies.
5.3.1 Overall Cap
The Overall Cap for each of the Service Areas is calculated as
25% of the Total Spectrum Assigned for Telecom services in above
D mentioned frequency bands (including the Spectrum put for these
auctions).
** For the purpose of arriving at Overall Cap, the Total Spectrum
Assigned in a Service Area is considered as the sum total of the
current holdings of all the Telecom Service Providers across all
E · bands in the respective Service Area PLUS the Spectrum put to
auction in that particular Service Area.
**It may be noted that the Spectrum which is expiring in 2015-16
will not be considered in the Current Holdings. The same spectnun
will only be considered as the Spectrum put to auction. ·
F
5.3.3. Cap in 900 MHz band
The Spectrum Cap for each operator in each of the Service Areas
in 900 MHz band is calculated as 50% of the Total Spectrum
assigned, both uplink and downlink, for Telecom services in 900
MHz band.
G
**For the purpose of arriving at Spectrum Cap in 900 MHz band,
the Total Spectrum Assigned in a Service Area in 900 MHz band
is considered as the sum total of the current holdings of all the
telecom operators in 900 MHz band in the respective Service
Area PLUS the Spectrum put to auction in 900 MHZ band in that
H
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 1015
ANR. [DIPAK MISRA, J.]

particular Service Area. A
••It may be noted that the Spectrum which is expiring in 2015-16
will not be considered in the Current Holdings. The same spectrum
will only be considered as the Spectrum put to auction."
42. The stipulations in the said Clause are criticized by the
petitioners on the ground that it creates different classes of bidders without B
any justification and, in fact, the classification is absolutely unreasonable.
As the Clause reflects, certain conditions have been envisaged by which
three categories of bidders, namely, "existing licensees", "expiring
licensees" and "new entrants" have been introduced. The submission is
that there was no warrant to put a cap and further fix a minimum bidding c
criteria. The argument on behalf of the petitioners is that the above
auction being non-competitive is vitiated. The proponement of the Union
of India is that provisions had been provided by excluding some and
permitting some to top up regard being had to the commercial interest
and keeping in view the interest of the consumers. That apart, it has
been urged that there is room for new entrants who may invest and D
allow better competition and also there would be avoidance of monopoly
by the big players. The thrust of the matter is whether the clause is so
arbitrary and erroneous as to invite the frown of Article 19. To put it
differently, it is to be considered whether the classification is without
any basis and whether the postulate is so unreasonable that a prudent E
sense of commerce will abhor to give it any space.
43. Having adumbrated to the previous litigations, we shall presently
refer to the NIA. Clause 3 of the NIA deals with the eligibility and
conditions. Clause 3.1 provides the eligibility criteria to participate in the
auction and Clause 3.2 provides for associated eligibility conditions.· The F
relevant part of Clause 3.2 is as follows:-
"3.2 Associated Eligibility Conditions
(i) Existing Unified Licence (Access Service)/Exiting UASL/
CMTS/UL licensees shall be treated as 'New Entrant' in those
service area(s) for the frequency bands in which they do not hold G
spectrum at present. In other words, UAS/CMTS/UL(AS)/UL
licensees who hold spectrum only in a particular Service Area are
also allowed to participate in the auction as 'New Entrant' in that
service area for the frequency band in which they do not hold
spectrum at present*. Their eligibility to bid for spectrnm blocks H
1016 SUPREME COURT REPORTS [2017] 4 S.C.R.

A in that particular service area will be that of a new entrant. They
will also need to comply with conditions for spectrum allotment
and other prescribed conditions such as roll out obligations, FBG,
etc.
*for the Purpose, 1800 MHz and 900 MHz Bands are
B considered as some band
(ii) Existing UASL/CMTS/UL(AS)/UL licensees shall be treated
as 'Existing Licensee' in those service areas for the frequency
band(s) in which they already hold spectrum. Their eligibility to
bid for spectrum blocks will be that of an existing operator. For
c the limited purpose of this provision, 900MHz band, 1800 MHz
band will be treated as the same band.
(iii) Bidders whose licences are due for expiry of 2015-16 and
whose spectrum in 900 and 1800 MHz band has been put to auction
will also be treated as 'New Entrants'.
D (iv) Entities (not an existing licensee) will be treated as 'New
Entrants' and will have to obtain a Unified License.
(v) Licensees covered by the note under Clause 1.4 of UAS licence
condition are allowed to bid only for the spectrum band which
they currently hold. For the limited purpose of this provision, 900
E MHz and 1800 MHz will be treated as same band.
(vi) For the purpose of this auction, a cap of 25% of the 'total
spectrum assigned' in 800/900/1800/2100/2300/2500 MHz bands
with applicable paired band put together and 50% within a given
band in each of the access service area shall apply for total
F spectrum holding by each operator. For the purpose of calculation
of the cap in this auction, the spectrum put to auction would be
included in the 'total spectrum assigned'. This cap will be
applicable as on the last date of application for participating in
Auction. Total Spectrum assigned for unpaired and both unlink
and downlink spectrum in case of paired spectrum is taken into
G
account."
44. Clause 3.3 deals with unified licences, Clause 3.4 provides for
associated licences, Clause 3.5 deals with prospective new entrants,
Clause 3.6 speaks of roll out obligations and Clause 3.6.1 provides for
roll out obligations for spectrums in 1800 MHz, 900 MHz and 800 MHz
H
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 1017
ANR. [DIPAK MISRA, J.]

band in service areas other than metro service areas. Clause 4 provides A
for auction details which are categorized into various compartments,
namely, confidentiality and anti-competitive activity, application
requirements, ownership compliance certificate, principal qualification
conditions, earnest money deposit, payment terms and various other
aspects. Clause 5 deals with spectrum in 1800 MHz, 900 MHz am! 800 B
MHz bands - auction rules. Clause 5.1 deals with the conduct of auction
and Clause 5.2 states about overview of the auction stages. Clause 5.3
provides spectrum holding capping rule. Clause 5.3.2 reads as under:-
"3.2 Cap in 1800 MHz band
The spectrum cap for each operator in each of the Service Areas c
in 1800 MH band is calculated as 50% of the total spectrum
assigned, both uplink and downlink, for telecom services in 1800
MHz band.

** For the purpose of arriving at spectrum cap in 1800 MHz
band, the total spectrum assigned in a service area in 800 D
MHz band is considered as the sum total of the current
holdings of all the telecom operators in 1800 MHz band in
the respective service area plus the spectrum put to auc;tion
in· 1800 MHz band in that particular service area.
It maybe noted that the spectrum which is expiring in 2015- E
16 will not be considered in the Current Holdings. The same
spectrum will only be considered as the spectrum put to
auction.
Spectrum cap for each operator in 1800 MHz band on the
maximum spectrum for each of the service area is as given in
F
Table 5-E below:

Table 5-E Cap on Bidding for each Operator for
each Service Area in 1800 MHz band

Total spectrum assigned for both sides of G
spectrum in case of paired spectrum is
taken into account

H
1018 SUPREME COURT REPORTS [2017] 4 S.C.R.

A
Service Area Maximum Cap for ·each
Operator (In MHz)*
Andhra Pradesh 54.60
Bihar 28.55
Gujarat 46.00
B
Harvana 47.10
Himachal Pradesh 43.05
Kamataka 50.60
·-
Kerala 52.45
Kolkata 48.80
c North East 48.80
Odisha 52.50
Punjab 43.45
Raiasthan 46.60
Tamilnadu 65.00
Uttar Pradesh (East) 47.25
D Uttar Pradesh (West) 39.90
*50% of total assigned spectrum and spectrum put for ·auction in
the band in a service area.
It may be noted that for a service area in 1800 MHz band, the
E total of the current holding of spectrum in 1800 MHz band and
·the total spectrum for which the bidder is submitting the bid for a
service area should not exceed the cap which is mentioned in the
Table 5-E above. Total spectrum assigned for both sides of
spectrum in case of paired spectrum is taken into account."
F 45. The principal grievances of the petitioners, as is lucent, are
that the principle of capping adopted by the respondent keeps the
petitioners away from bidding in respect of a particular quantum and
· further it makes the bid non-competitive; that the reduction of overall
spectrum caps despite the available quantum of commercially viable
spectrum amounts to hoarding; that the calculation of overall spectrum
G whicl> has reduced the quantum of spectrum put to auction is erroneous;
that though there is increase in the available spectrum which includes
fresh spectrum and surrendered spectrum by some operators, yet there
has been unjustified reduction in the available spectrum for commercial
allocation instead of increasing proportionately; that some of the
H
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 1019
ANR. [DIPAK MISRA, J.]

petitioner" are debarred from holding what they are holding in praesenti; A
that the recommendation of TRAI should have been given adequate
weightage by the n:spondents with regard to the principle of capping
and availability of spectrum for commercial allocatiop by way of auction;
that the available quantum should have been at least notionally added for
the purpose of determining the cap which has not been done as a B
consequence of which the auction becomes wholly arbitrary; that the
exclusion of the surrendered spectrum from the process of calculation is
irrational and unreasonable and that there is no transparency in the
auction. As noted earlier, on behalf of the respondent-Union of India,
emphasis is laid on providing a cap as that would facilitate availability of
minimum amount of spectrum for ensuring benefit to the consumers and C
also to allow new entrants who may require a .certain minimum amount
of spectrum for establishing a network with good coverage and sufficient
capacity at a reasonable price. It is also put forth-that it is reasonable
that various bands of spectrum are not sold in small quantum so that a
successful bidder has sufficient spectrum for deploying advance D
technology. The principle of top up is allowed so that the.existing licensee
can bid for the same for maximizing its efficiency which would ultimately
benefit the consumers. Giving the examples ofNorth East, it is contended
that only 8.8 MHz spectrum is available and the term of minimum of 5
MHz is stipulated for new entrants including expiring licensees so that
they can top up for efficiency and provide adequate service to the E
consumers. It has also been put forth that where 5 MHz is not available
in the LSA in contiguous space, it has been decided that the minimum
bid must be for 4.4 MHz. To buttress the said submission, example has
been given of West Bengal where 5 MHz is not available in 900 MHz
band and only 4.4 MHz is available in 800 MHz band. Similarly, the said
principle is followed in 800 MHz and 1800 MHz bands. The existing F
licensee has to bid for minimum 0.6 MHz spectrum in order to top up so
as to come to the level of 5 MHz.
46. The interest of the consumer and the maximization of price
has been highlighted. It has also been urged that the petitioners have
participated in the auction and have been successful in certain areas and G
have failed in certain places and the whole intention is to monopolise the
market. It is contended that the limit for acquisition of spectrum is intended
to discourage the hoarding of spectrum and to encourage level playing
fields and to advance healthy competition and keep at bay any kind of
H
1020 SUPREME COURT REPORTS (2017] 4 S.C.R.

A artificial escalation. Commenting on the transfer case of Reliance
Telecom Ltd., it is argued that the- spectrum available for the auction
was 8.8 MHz in the 900 MHz band and the entire 8.8 MHz of spectrum
in 900 MHz has been bid and the successful bidder is Mis. Bharti
Hexacom Ltd. The other petitioner, Mis. Reliance, has been successful
in 5 MHz of spectrum in 800 MHz band in North East area at the end of
B
the auction. As far as 5 MHz in 2100 MHz band is concerned, Mis.
Vodafone Ltd. has become the successful bidder and entered into the
contract.
47. Mr. Rohatgi and Mr. Ranjit Kumar have submitted that there
was free competition and any bidder was permitted to outbid the other
c and when a free competitive market was provided, there is no ground to
attach the auction by calling it unfair or non-transparent. As far as the
exclusion of the spectrum is concerned, it has been set forth that certain
quantum of spectrum has been reserved for the defence. It is also put
forth that subject to process and requirement of harmonization of available
D spectrum, it shall be put to auction in the future auctions. The process of
harmonization, as is known, is quite complex and it is required to be
carried with the defence in order that they may vacate spectrum without
compromising their operational requirements. That apart, there is a
requirement of contiguous chunk without clubbing it with auctioned
spectrum. In any case, the petitioners cannot insist for re-writing the
E terms of the tender conditions and they cannot demand that the whole
thing should be put to auction and no capping rule can be applied.
48. Capping rule is basically a formula which has worked out as
an experimentation, as the completion of the auction as shown. The cap
as compared has the aggregate of total spectrum assigned in the service
F area and the total spectrum being put to auction. If the cap is to be
determined based on the "commercially usable spectrum", as put forth
by the petitioners, as commercially assigned spectrum as postl' lated in
the tender, it would be re-writing the tender conditions. Commenting on
the non-inclusion of spectrum on surrender, it is pointed out that even if
G the said spectrum is actually surrendered, the peti~ioners cannot seek
any relief for the availability of the spectrum and the auction thereof
.would be considered by the Union of India in a different auction for
obtaining maximum revenue regard being had to the public interest.
49. At this juncture, it is necessary to state that as per the affidavit
H filed by the Union of India, after the leave was granted to conduct the
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 1021
ANR. [DIPAK MISRA, J.]

auction, which commenced on 4.3.2015 and continued for 19 days except A
Sundays, 115 rounds were conducted fore-auction of 108.75 MHz of
spectrum in 800 MHz band in 20 LSA, 177 .8 MHz of spectrum in 900
MHz band in 17 LSA, 99.2 MHz spectrum in 1800 MHz band in 15
LSAs and 85 MHz of spectnwi in 2100 MHz band in 17 LSAs. The
estimated result of the auction has been brought by way of tabular chart,
B
which we think it necessary to reproduce:-
Band Quantum of Value of the Quantum Value of tl1e Value of the
(MHz) Spectrum Spectrum put provisionally Spectrum Spectrum
put on on offer at won by provisionally prol'isionally
Auction Reserve Price bidders \\'OU by won by bidders
(MHz) (in Rs. Crore) (MHz) bidders at at Auction c
Reserve Price detennined price
(Jn Rs. Crore) (fu Rs. Crore)
800 108.75 13562.50 86.25 9710.00 17158.79
900 177.8 40223.80 168.00 3i841.00 i2964.54
1800 99.2 8936.20 93.80 8292.40 9636.17 D
2100 85 17555.00 70.00 9620.00 10115.41
Total 470.75 802i7.50 418.05 65463.40 109874.91

50. Having narrated the factual score, the process of NIA, the
grievances articulated and the reply thereto by the Union of India and
the successful bidders who have entered into contract and the result of E
the auction, it is necessitous to recapitulate the parameters for interference
in respect of matters pertaining to decision oflargesse by auction. Let it
be stated at the beginning, as directed in the 2G case, spectrum as a
natural resource has to be put to auction and it has been put to auction.
Prior to referring to certain authorities with regard to the principles laid
F
down by this Court as regards the fundamental principle of holding auction,
we think it apt to deal with the contention pertaining to TRAI's
recommendation and non-acceptance of the same. The Union of India
sent the reference back to the TRAI. The question in this context that
requires to be posed is whether the recommendations ofTRAI are binding
on the Central Government. G
51. Section 11 of the TRAI Act deals with the functions of the
authority, that is, TRAI. The said provision empowers it to make
recommendations either suo motu or on a request from the licensor on
certain matters. The provisos appended to the said Section, being
H
1022 SUPREME COURT REPORTS [2017] 4 S. C.R.

A relevant, are extracted hereunder:-
"Provided that the recommendations of the Authority specified in
clause (a) of this sub-section shall not be binding upon the Central
Government:
Provided further that the Central Government shall seek the
B recommendations of the Authority in respect of matters sriecified
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 recommendations within a period of sixty days
from the date on which that Government sought the
c recommendations:
Provided also that the Authority may request the Central
Government to furnish such information or documents as may be
necessary for the purpose of making recommendations under sub-
clauses (i) and (ii) of clause (a) of this sub-section and that
D Government shall supply such information within a period of seven
days. from receipt of such request:
Provided also that the Central Government may issue a licence to
a service provider if no recommendations are received from the
Authority within the period specified in the second proviso or within
E such period as may be mutually agreed upon between the Central
Government and the Authority:
Provided also that if the Central Government, having considered
that recommendation of the Authority, comes to a prima facie
· conclusion that such recommendation cannot be accepted or needs
F 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, !orward
to the Central Government its recommendation after considering
the reference made by that Government. After receipt of further
recommendation if any, the Central Government shall take a final
G decision."
52. In Association of Unified Telecom Service Providers of
India (supra), the Court has held that notwithstanding sub-section (I) of
Section 4 of the Telegraph Act vesting exclusive privilege in the Central
Government in respect of telecommunication activities and
H
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 1023
ANR. [DIPAK MISRA, J.]

notwithstanding the proviso to sub-section ( 1) of Section 4 of the A
Telegraph Act vesting in the Central Government the power to decide
on the conditions ?f licence including the payment to be paid by the
licensee for the licence, TRAI has been conferred with the statutory
power to make recommendations on the terms and conditions of the
licence to a service provider and the Central Government is bound to B
seek the recommendations of TRAI on such terms and conditions at
different stages, but the recommendations of TRAI are not binding on
the Central Government and the final decision on the terms and condi<ions
of a licence to a service provider rests with the Central Government.
The legal consequence is that if there is a difference between TRAI
and the Central Government with regard to a particular term or condition C
ofa licence, as in the present case, the recommendations ofTRAI will
not prevail and instead the decision of the Central Government will be
final and binding. The Court has further laid down that TRAI, being an
expert body, discharges recommendatory functions under clause (a) of
sub-section(!) of Section 11 of the TRAIAct and discharges regulatory D
and other functions under clauses (b), (c) and (d) of sub-section (1) of
Section 11 of the TRAI Act and it being an expert body, the
recommendations ofTRAI under clause (a) of sub-section (1) of Section
11 of the TRAI Act have to be given due weightage by the Central
Government but the recommendations ofTRAI are not binding on the
Central Government. The Court has further ruled that the regulatory E
and other functions under clauses (b), (c) and (d) of sub-section (1) of
Section 11 of the TRAI Act have to be performed independent of the
Central Government and are binding on the licensee subject only to an
appeal in accordance with the provisions of the TRAl Act. Thus, the
interpretation made in the said case makes it clear that the
F
recommendations given by TRAI are not binding but deserve to be given
due weightage. Certain areas have been separated regard being had to
the nature of the language employed in the TRAIAct where the authority
can act independent of the Central Governinent. We are only concerned
with the part that pertains to recommendation. In the case at hand, the
Central Government had sought the recommendation and then referred G
it back. Ultimately, it formulated the policy for auction of the spectrum.
Therefore, the criticism that is advanced that once there is a reference
back, the Central Government should have been guided by_ the
recommendations has no justification inasmuch as the Central
Government has the ultimate authority to take a decision. O;f co11rse,
H
1024 SUPREME COURT REPORTS [2017] 4 S.C.R.

A such a decision, especially a decision relating to frame a policy for NIA
has to be in accord with the norms of Article 14 of the Constitution.
53. Presently, we shall refer to certain authorities in the field and,
thereafter, adjudge the grievances so eloquently articulated by the learned
counsel for the petitioners.
B 54. In Tata Cellular (supra), a three-Judge Bench, after extensive
consideration of the earlier decisions in the matter ofjudicial review and
its scope of applicability to government contracts and tenders, ruled that
the modem trend points to judicial restraint in administrative action and
the court does not sit as a court of appeal but merely reviews the manner
c in which the decision was made. It further opined that the court does
not have the expertise to correct the administrative decision and if a
review of the administrative decision is permitted, it will be substituting
its own decision without the necessary expertise which itself may be
fallibl.e. The Court further expressed that the terms of the invhation to
tender cannot be open to judicial scrutiny because the invitation to tender
D is in the realm of contract and the Government must be allowed to have
a fair play in the joints as it is a necessary concomitant for an administrative
body functioning in an administrative sphere or quasi-administrative
sphere. It was also observed that the decision must not only be tested
by the application ofWednesbury principle of reasonableness but must
E also be free from arbitrariness and must not be affected by bias or
actuated by mala fides and while quashing decisions, heavy administrative
burden on the administration and increase on expenditure have to be
kept in view.
55. In Raunaq International Ltd. v. I. V.R. Construction Ltd.
F and otlzers 10 , it has been held that the award of a contract, whether it is
by private party or by a public body or the State, is essentially a
commercial transaction and prudent principle of commerce do weigh
while making a commercial decision.
56. In Mo11arch Infrastructure (P) Ltd. v. Ulhasnagar
G Municipal Corpn. and others", this Court was concerned with the
question relating to NIT issued by Ulhasnagar Municipal Corporation
for appointment of agents for collection of octroi and revision of terms
and conditions thereof. The Court held that it cannot say whether the
10
(1999) 1 sec 492
11
(2000) s sec 2s1
H
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 1025
ANR. [DIPAK MISRA, J.]

conditions are better than what were prescribed earlier, for in such A
matters, the authority calling for tenders is the best judge. The Court
declined to restore status quo ante.
57. In Cellular Operators Association of India & Others v.
Union oi India & Others 12 , this Court, after referring to Tata Iron &
Steel Co. Ltd. v. Union of India and another 3, held that where legal B
1

issues are intertwined with those involving determination of policy and a
plethora of technical issues, courts of law have to be very wary and
must exercise their jurisdiction with circumspection for they must not
transgress into the realm of policy-making, unless the policy is inconsistent
with the Constitution and the laws. It has been further ruled that on
matters affecting policy and those that require technical expertise, the c
court should show deference to, and follow the recommendations of the
Committee which is more qualified to address the issues.
58. In Union of India v. International Trading Co. and
another14 , this Court held that non-renewal of permit by the Government
to a private party on the ground of change in its policy cannot be faulted D
if such change is founded on reasonableness and is otherwise not
arbitrary, irrational and perverse. It was observed that if the State acts
within the bounds of reasonableness, it would be legitimate to take into
consideration the national priorities and adopt trade policies and the
ultimate test is whether, on the touchstone of reasonableness, the policy E
decision comes out unscathed. It further ruled that reasonableness of
restriction is to be determined in an objective manner and from the
standpoint of the interests of the general public and not from the
standpoint of the interests of the persons upon whom the restrictions
have been imposed or upon abstract consideration. A restriction cannot
be said to be unreasonable merely because in a given case, it operates F
harshly. In determining whether there is any unfairness involved, the
nature of the right alleged to have been infringed, the underlying purpose
of the restriction imposed, the extent and urgency of the evil sought to
be remedied thereby, the disproportion of the imposition and the prevailing
condition at the relevant time enter into the judicial verdict. The Court G
further held that the reasonableness of the legitimate expectation has to
be determined with respect to the circumstances relating to the trade or
business in question and canalisation of a particular business in favour of
12
(2003) 3 sec 186
1
• (1996) 9 sec 109
' (2003) s sec 431
1
H
1026 SUPREME COURT REPORTS [2017] 4 S.C.R..

A even a specified individual is reasonable where the interests of the country
are concerned or where the business affects the economy of the country.
59. In Directorate of Education v. Educomp Datamatics Ltd.
and others 15 , this Court, applying the principles enunciated in Tata
Cellular (supra) and Monarch Infrastructure (P) Ltd. (supra), held
B that the terms of the invitation to tender are not open to judicial scrutiny,
· the same being in the realm of contract; that the Government must have
a free hand in setting the terms of the tender; that it must have reasonable
play in its joints as a necessary concomitant for an administrative body
in an administrative sphere and the courts would interfere with the
administrative policy decision only if it is arbitrary, discriminatcry, mala
C fide or actuated by bias and the courts cannot strike down the terms of
the tender prescribed by the Government because it feels that some
other terms in the tender would have been fair, wiser or logical. The
courts can interfere only ifthe policy decision is arbitrary, discriminatory
or mala fide.
D 60. In BannariAmman Sugars Ltd. v. Commercial Tax Officer
and others 16 , this Court was concerned with the question relating to
withdrawal of benefits extended to the appellant therein as subsidy and
it was held that while taking policy decision, the Government is not
required to hear the persons who have been granted the benefit which is
E sought to be withdrawn.
61. In Global Energy Ltd. and another v. Adani Exports Ltd.
and others 17 , this Court reiterated the principles that the terms of the
invitation to tender are not open to judicial scrutiny and the courts cannot
whittle down the terms of the tender as they are in the realm of contract
F unless they are whoJly arbitrary, discriminatory or actuated by malice.
62. In Master Marine Services (P) Ltd. v. Metcalfe &
Hodgkinson (P) Ltd. and another18 , the Court, after referring to the
principles stated in Tata Cellular (supra), observed that the government
policy can be changed with changing circumstances and onl~' on the
G ground of change, such policy will not be vitiated and the Government
has discretion to adopt a different policy or alter or change its policy
calculated to serve the public interest and make it more effective as the
" (20J4 J 4 sec 19
" (2005) 1 sec 625
17(2005) 4 sec 435
H
1
' c2oosJ 6 sec 138
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 1027
ANR. [DIPAK MISRA, J.]

choice in the balancing of the pros and cons relevant to the change in A
policy lies with the authority, but change in policy must be in conformity
with Wednesbury reasonableness and free from arbitrariness, irrationality,
bias and malice.
63. In Michigan Rubber (India) Limited v. State of Karnataka
and others 19 , the Court, after referring to Jagdish Manda/ v. State of B
Orissa and others20 and Tejas Constructions & Infrastructure (P)
Ltd. v. Municipal Council, Sendhwa and another2 1, expressed the
view that the basic requirement of Article 14 is fairness in action by the
State, and non-arbitrariness in essence and substance is the heartbeat of
fair play and actions are amenable to judicial review only to the e::.tent
that the State must act validly for a discernible reason and not whimsically C
for any ulterior purpose and if the State acts within the bounds of
reasonableness, it would be legitimate to take into consideration the
national priorities. It further observed that fixation of a value of the
tender is entirely within the purview of the executive and the courts
hardly have any role to play in this process except for striking down D
such action of the executive as is proved to be arbitrary orunreason'lble.
If the Government acts in conformity with certain healthy standards and
norms such as awarding of contracts by inviting tenders, in those
circumstances, the interference by courts is very limited unless the action
of the tendering authority is found to be malicious and a misuse of its
statutory powers and greater latitude is required to be conceded to the E
State authorities in the matter of formulating conditions of a tender
document and awarding a contract. The Court also laid emphasis on
public interest and the prudence in applying the principle of restraint
where the action is fair and reasonable and does not smack of mala fide.
It was also emphasized that the courts cannot interfere with the terms F
of the tender prescribed by the Government simply because it feels that
some other terms in the tender would have been fair, wiser or logical.
64. In Maa Binda Express Carrier and another v. North-East
Frontier Railway and others22 , this Court held that the scope of juc!icial
review in matters relating to award of contracts by the State and its G
instrumentalities is settled by a long line of decisions of this Court which
clearly recognise that the power exercised by the Government and its
"(2012) s sec 216
20
(2001) 14 sec s11
21
(2012) 6 sec 464
22
(2014) 3 sec 760 H
1028 SUPREME COURT REPORTS [2017] 4 S.C.R.

A instrumentalities in regard to allotment of contract is subject to judicial
review at the instance of an aggrieved party, and the submission of a
tender in response to a notice inviting such tenders is no more than
making an offer which the State or its agencies are under no obligation
to accept and, therefore, the bidders participating in the tender process
B cannot insist that their tenders should be accepted simply because a
given tender is the highest or lowest depending upon whether the contract
is for sale of public property or for execution of works on behaif of the
Government. It further ruled that all that the participating bidders are
entitled to is a fair, equal and non-discriminatory treatment in the matter
of evaluation of their tenders and it is well settled that award of a contract
C is essentially a commercial transaction which must be determined on the
basis of considerations that are relevant to such commercial decision
and, hence, the terms subject to which tenders are invited are not open
to jud;cial scrutiny unless it is found that the same have been tailor-made
to benefit any particular tenderer or class of tenderers. The Court further
held that in the matter of award of contracts, the Government and its
D
agencies have to act reasonably and fairly at all points of time and to
that extent, the tenderer has an enforceable right in the court which is
competent to examine whether the aggrieved party has been treated
unfairly or discriminated against to the detriment of public interest.
65. In Census Commissioner & Others v. R. Krishnamurthj-3,
E a three-Judge Bench of this Court, after noting several decisions, held
that it is not within the domain of the courts to embark upon an enquiry
as to whether a particular public policy is wise and acceptable or whether
a better policy could be evolved and the courts can only interfere if the
policy framed is absolutely capricious or not informed by reasons or
F totally arbitrary and founded ipse dixit offending the basic requirement
ofArticle 14 of the Constitution. It further observed that in certain matters,
as often said, there can be opinions but the court is not expected to sit as
an appellate authority on an opinion.
66. The present controversy has to be tested on the touchstone of
G the aforesaid parameters of judicial review. We have enumerated the
submissions advanced by the petitioners, recorded the contentions of
the Union oflndia and stated the proponements of the impleade<l parties
so that the assail and the resistance to the same become clearly evident.
Though the grounds of attack have been stated in a manifold manner,
" (201 s) 2 sec 796
H
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 1029
ANR. [DIPAK MISRA, J.]

yet they are really founded on certain basic assertions, namely, that the A
entire spectrum available has not been put to auction which tantamounts
to hoarding by the Central Government; that an endeavour has been
made by the authorities to keep the real competitors away by providing
a cap and resultantly making the bid non-competitive; that the classification
made in the NIA is hit by unreasonableness with no objective to serve B
because the condition of buying of 5 MHz of spectrum is not applicable
to the existing/non-expiring licensees and providing minimum bidding
option for different categories is wholly discriminatory; and that the
surrendered spectrum or unused spectrum should have been notionally
added so that there would have been fairness in auction, and that would
have met the concept of legitimate expectation. C
67. As the factual score depicts, the NIA had stipulated capping
and simultaneously allowed certain categories to bid for a lesser quantum
to enhance the existing spectrum with them so that they can reach a
particular level. The reason shown by the respondents is that a minimum
spectrum is determined to enhance the efficiency and capability of the D
service providers so that the arrangement can be beneficial to the
consumers and they can avail requisite benefit and have better service.
The licensees who do not have the specific quantum can bid for the
balance so that the efficiency of service is enhanced. If a minimum is
provided for a particular area or zone having regard to the necessity and
the interest of the consumers, we are of the considered opinion that it E
subserves the larger public interest. The said stipulation might have
affected the individual interest of certain categories of licensees or
aspirants but that cannot weigh over the public interest.
68. As far as the classification is concerned, it is noticed that
some bidders have not been allowed to participate in respect of certain F
areas. The argument on behalf of the Central Government is that it has
been done to curtail the monopoly and to encourage a broad based
competition and further to allow certain entities who do not havP. the
adequate spectrum so that there is augmentation of revenue as well as
enhancement of efficiency in providing the service. it is further explained G
that it has been done keeping in view the commercial interest and the
holistic concept of public interest. Learned counsel for the petitioners
would contend that it is demolition and ruination of public trust because
the State holds spectrum in trust and it cannot be allowed to hoard by
adopting such a subterfuge. It is apt to note here that after holding of
H
1030 SUPREME COURT REPORTS [2017] 4 S.C.R.

A the auction, what is available is 52. 7 MHz in varKius bands. Explaining
the same, the Union of India has submitted that historically, all the
identified 7iMHz spectrum for mobile services in 1800 MHz baad in all
22 service areas was with the defence and other users prior to 2001
when it was allocated for the first time for commercial mobile services
in India after co-ordination with the then existing users. The spectrum
B
in 1800 MHz band was coordinated by the defence on a case to case
basis either in the entire service area or in parts of the service area (i.e.,
district-wise). It is further put forth that based on the coordination received
from the Defence, the spectrum in 1800 MHz band was allotted, from
time to time, for commercial use by Telecom Service Providers. In
C January, 2015, a decision was taken in consultation with the defence
that instead of the case by case approach adopted, 55 MHz out of 75
MHz available in spots will be allotted to telecom service providers (TSPs)
and the rest will be used by the defence. Within the 1800 MHz band, the
exact frequencies to be allotted to TSPs and those to be used by the
defence have been earmarked. It is the stand of the Centre.I Government
D
that, the process of allotting all the frequencies identified to TSPs will
require some time since there are operational networks of the defence
in the segment identified for telecom services in 1800 MHz band.
Similarly, frequency spots have been allotted to various TSP.> in the
segments identified for use by the defence. It has been averred that the
E discussions have started with the defence for harmonizing the spectrum
in 1800 MHz band and TSPs have also been consulted as they too have
to shift their networks to new spots. According to the respondent-Union
oflndia, the operational network of the defence is required to be continued
until alternate arrangements are available for seamless operation of
defence networks or else it would compromise the national security and
F
regard being had to the same, no time frame can be set as to when the
said quantum would be available for public auction.
69. Additionally, it is put forth that the evolution of the
telecommunication sector is a continuous process world-wide. New
bands and technologies are being identified for providing coffiIUercial
G services. For example, Wide Band Code Division Multiple Access
(WCDMA) technology, commonly known as 3G technology, has been
developed and was deployed in our country in 2100 MHz band. 465
MHz spectrum in this band was co-ordinated from the defence and got
released for telecom commercial services in 2010 and was auctioned.
H
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 1031
ANR. [DIPAK MISRA, J.]

Further, as per the decision of the Government in January 2015, an A
additional 85 MHz of spectrum in this band was released by the defence
and was part of the auction conducted in March 2015. It is also submitted
that efforts are being made to get 15 MHz of spectrum released in each
of the 22 service areas in 2100 MHz band also from the Defence.
Although in this case also, no time frame can be set as to when it would B
be made available, yet it is expected to be released during the process of
completion of harmonization of 1800 MHz band spectrum and it will
make 345 MHz of spectrum available in this band; and accordingly, there
is a proposal to include the same in the next auction. It is further canvassed
that as a part of identifying new bands and technologies and releasing
for providing commercial services, 880 MHz spectrum in Time Division C
Duplex {TDD) mode was also included in 2300 MHz band for the aui:tion
conducted in 2010 and 320 MHz of spectrum in this band is proposed to
be included for the next auction. Similarly, 440 MHz spectrum in 2500
MHz band was allocated to BSNL and MTNL in 2007-08. However,
160 MHz spectrum was surrendered by them. TRAI has been requested D
to expedite recommendations for reserve price and associated conditions.
A total quantum of 600 MHz of spectrum in this band, including that
swTendered by BSNL/MTNL, is available. It is projected that the
channeling plan adopted in India for 2500 MHz band requires further
development to reach up to the International Mobile Technology (IMT)
band considering the issues relating to techno-economic feasibility and E
availability of commercial eco-systems. That apart, it is also put forth
that efforts are being made to make the spectrum reasonably available
for auction and they will be included in the subsequent auctions. It has
further been highlighted by the learned Attorney General that the
availability of spectrum would be determined after it is harmonized with F
the need of the defence and feasibility of its inclusion due to techno-
economic facets.
70. As we find, the decision taken by the Central Government is
based upon certain norms and parameters. Though criticism has been
advanced that it is perverse and irrational, yet we are disposed to think
that it is a policy decision which subserves the consumers' interest. It is G
extremely difficult to say that the decision to conduct the auction in such
a manner can be considered to be.mala fide or based on ·extraneous
considerations.
71. The grievance that has been stressed upon by the petitioners
H
1032 SUPREME COURT REPORTS [2017] 4 S.C.R.

A is that they had spent quite a sum at the time of grant of initial licence
and they ha? a legitimate expectation to participate in the auction in
every aspect and not to be kept at bay in certain areas for some
unfathomable reason as a consequence of which they have not been
able to get what they earlier had. According to them, the doctrine of
"legitimate expectation" cannot be curtailed in this manner. The aforesaid
B
argument has a basic fallacy. The principle of"legitimate expectation"
can never override public interest and when there is larger public interest,
the question of legitimate expectation does not arise; and in any case, in
the present case, if we allow ourselves to say so, this contention is
absolutely sans merit. We are inclined to think that when auction is held
c in respect of spectrum after taking into consideration certain range of
facts and circumstances which are founded on economic and social
policy factors, it is difficult to unsettle the NIA and the consequential
effect thereof by applying the principle ofjudicial review. The procedure
adopted in this kind of auction is neither to be equated nor compared
D with the process meant for grant of ordinary largesse. It is because of
its complexity, technical expertise, enormous financial impact and the
larger public interest. Recently, in Tamil Nadu Generation and
Distribution Corporation Ltd (TANGEDCO) Rep. by its Chairman
& Managing Director and Anr. etc. v. CSEPDI - Tris/1e Consortium,
Rep. by its Managing Director & Anr. 2 ~, the Court, while discussing
E the role of fiscal evaluation, has observed that:-
"At this juncture we are obliged to say that in a complex fiscal
evaluation the Court has to apply the doctrine of restraint. Several
aspects, clauses, contingencies, etc. have to be factored. These
calculations are best left to experts and those who have knowledge
F and skills in the field. The financial computation involved, the
capacity and efficiency of the bidder and the perception of
feasibility of completion of the project have to be left to the wisdom
of the financial experts and consultants. The courts cannot really
enter into the said realm in exercise of power of judicial review.
We cannot sit in appeal over the financial consultant's assessment.
G Suffice it to.say, it is neither ex facie erroneous nor can we perceive
as flawed for being perverse or absurd.
72. In this context, a passage from A/cons Infrastructure Ltd. v.
Nagpur Metro Rail Corporation Ltd. 25 is worth reproducing:-
" 2016 (I 0) SCALE 69
.H "2016 (8) SCALE 765
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 1033
ANR. [DIPAK MISRA, J.]

"We may add that the owner or the employer of a project, having A
authored the tender documents, is the best person to understand
and appreciate its requirements and interpret its documents. The
constitutional Courts must defer to this understanding and
appreciation of the tender documents, unless there is mala fide or
perversity in the understanding or appreciation or in the application B
of the terms of the tender conditions. It is possible that the owner
or employer of a project may give an interpretation to the tender
documents that is not acceptable to the constitutional Courts but
that by itself is not a reason for interfering with the interpretation
given."
73. The said decision has been concurred with by another two- C
Judge Bench in Montecarlo Ltd. v. NTPC Ltd. 26 stating thus:-
"24. We respectfully concur with the aforesaid statement of law.
w~ have reasons to do so. In the present scenario, tenders are
floated and offers are invited for highly complex technical subjects.
It requires understanding and appreciation of the nature of work D
and the purpose it is going to serve. It is common knowledge in
the competitive commercial field that technical bids pursuant to
th~ notice inviting tenders are scrutinized by the technical experts
and sometimes third party assistance from those unconnected with
the owner's organization is taken. This ensures objectivity. Bidder's E
expertise and technical capability and capacity must be assessed
by the experts. In the matters of financial assessment, consultants
are appointed. It is because to check and ascertain that tech'.lical
ability and the financial feasibility have sanguinity and are workable
and realistic. There is a multi-prong complex approach; highly
technical in nature. The tenders where public largesse is put to F
auction stand on a different compartment. Tender with which we
are concerned, is not comparable to any scheme for allotment.
This arena which we have referred requires technical expertise.
Parameters applied are different. Its aim is to achieve high degree
of perfection in execution and adherence to the time schedule. G
But, that does not mean, these tenders will escape scrutir.y of
judicial review. Exercise of power of judicial review would be
called for if the approach is arbitrary or malafide or procedure
adopted is meant to favour one. The decision making process
26
2016 (10) SCALE 50
H
1034 SUPREME COURT REPORTS [2017) 4 S.C.R.

A should clearly show that the said maladies are kept at hay. But
where a decision is taken that is manifestly in consonance with
the language of the tender document or subserves the ;mrpose
for which the tender is floated, the court should follow the principle
of restraint. Technical evaluation or comparison by the court would
be impermissible. The principle that is applied to scan and
B
understand an ordinary instmment relatable to contract in other
spheres has to be treated differently than interpreting and
appreciating tender documents relating to technical works and
projects requiring special skills. The owner should be allowed to
carry out the purpose and there has to be ailowance of free play
c in the joints."
74. It is necessary to add a clarification. In TANGEDCO (supra),
the question arose with regard to grant of contract of a particular work
and it involved a complex situation. In Montecarlo Ltd. (supra), the
question was relating to technical evaluation and comparison. In the
D present case, we are concerned with putting certain natural resources
into auction. In that regard, a decision has been taken. The grievances
that have been adroitly accentuated are that the entire available spectrum
should have been put to auction; that there should not have been any
cap; that all could have been permitted to bid for everything; and that
apart, the principle oflegitimate expectation ought to have been kept in
E view. The counter argument, as has been placed before us, is founded
on two underlined principles, namely, to hold the auction whic.'1 would
·serve collective consumer interest thereby serving the public interest,
and second, to get the maximum revenue. On one hand, the submission
of the petitioners is that the auction is anti-competitive and on the other,
F the submission of the Central Government is that it is a healthy competition
and avoidance of any kind of monopoly. There is also assurance in the
reply that whatever has been left will be put to auction after getting the
clearance from the defence and further keeping in view the a~pect of
techno-economic and commercial eco-system feasibility. As far as the
allocation to the defence and its need is concerned, it can be said that it
G is always in the realm of public interest and it subserves the interest of
the nation. As far as the economic feasibility is concerned, multifold
economic aspects have to be taken into consideration and as a resultant
effect, as shown during the process of auction, the bids became higher
and higher and there has been real competition whereby the offers have
H
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 1035
ANR. [DIPAK MISRA, J.]

been raised. There is remotely any allegation that attempt has been A
made to scuttle the competition. On the contrary, bidders have been
allowed to bid and enhance their offer as a prudent commercial men
would do. Therefore, it cannot be said that there has been no attempt to
maximize the revenue. It will not be inapposite to note that the bidders
who had preferred writ petitions and special leave petitions after having
B
been successful in certain areas withdrew the petitions and in other
areas where they were not able to bid because of the conditions in the
tender, they have agitated their grievances.
75. We have already discussed that the condition to put a cap and
make a classification not allowing certain entities to bid is not an arbitrary
one as it is based on the acceptable rationale of serving the cause of C
public interest. It allowed new entrants and enabled the existing entities
to increase their cap to make the service more efficient. The Court
cannot get and dwell as an appellate authority into complex economic
issues on the foundation of competitors advancing the contention that
they were not allowed to bid in certain spheres. As the stipulation in the D
tender was reasonable and not based on any extraneous considerations,
the Court cannot interfere in the NIA in exercise of the power of judicial
review. The contention is that the State cannot hoard the spectrum as
per the 2G case. We are disposed to think that in tpe case at hand, it
cannot be said that there has been hoarding. The directions given in the
2G case had been complied with and the auctions have been held E
thereafter from year to year. The feasibility of communication, generation
of revenue and its maximization and subserving of public interest are to
be kept in view. The explanation given by the Union of India for not
putting the entire spectrum to auction is a reasonable one and it is put
forth that an endeavour would be made to put it to auction when it becomes F
available in sufficient quantum. The Court cannot interfere with the
tender conditions only on the ground that certain amount of spectrum
has not been put to auction. The submission is that whatever has been
put to auction and is available should have been notionally added so that
the entities which have certain quantum of spectrnm in praesenti could
have participated in the auction and put forth their bids for a higher G
quantum. This argument may look attractive on a first blush but pales
into insignificance on a studied scrutiny. As is evincible, one of the
petitioners had earlier more than 65 MHz in a band and because of the
limited auction and non-addition ofavailable spectrum on notional basis,
H
1036 SUPREME COURT REPORTS (2017] 4 S.C.R.

A it has obtained less quantum. With this submission, the contention of
legitimate expectation has been associated. We have already repelled
the submission pertaining to legitimate expectation. If there has been a
reduction for a particular entity because of the terms and conditions of
the tender, it has to accept it, for he cannot agitate a grievance that he
could have obtained more had everything been added notionally.
B
Notionally adding up or not adding up, we think, is a matter of policy and
that too a commercial policy and in a commercial transaction, a decision
has to be taken as prudence would command. In this regard, reference
to the decision in Asia Foundation & Construction Ltd. v. Trafalgar
House Construction (I) Ltd. and others 27 would be apt. In the said
c case, the Court referred to the authority in Tata Cellular (supra) and
thereafter opined that though the principle of judicial review cannot tJ<>.
denied so far as exercise of contractual powers of government bodies
are concerned, but it is intended to prevent arbitrariness or favouritism
and it is exercised in the larger public interest or if it is brought to the
notice of the court that in the matter of award of a contract power has
D
been exercised for any collateral purpose. In the instant case, we are
unable to perceive any arbitrariness or favouritism or exercise of power
for any collateral purpose in the NIA. In the absence of the same, to
exercise the power of judicial review is not warranted. In the case at
hand, we think, it is a prndent decision once there is increase ofrevenue
E and expansion of the range of service.
76. It: needs to be stressed that in the matters relating to complex
auction procedure having enormous financial ramification, interference
by the Courts based upon any perception which is thought to be wise or
assumed to be fair can lead to a situation which is not warrantable and
F may have unforeseen adverse impact. It may have the effect potentiality
of creating a situation of fiscal imbalance. In our view, interference in
such auction should be on the ground of stricter scmtiny when the decision
making process commencing from NIA till the end smacks of obnoxious
arbitrariness or any extraneous consideration which is perceivable.
77. In view of the aforesaid analysis, we do not perceive any
G merit in these Transfer Cases and consequently, they are dismissed with
no order as to costs.

Kalpana K. Tripathy Matters dismissed.

21
(1997) 1 sec 738