1996 (2) TMI 548 - SC - Indian Laws

Summary

Issues Involved:
1. Power of the Central Government to grant licenses to non-Government Companies for Telecommunications.
2. Validity of the procedure adopted for granting licenses.
3. Impact on national security and economic interest.
4. Compliance with the Indian Telegraph Act, 1885.
5. Role and necessity of a Telecom Regulatory Authority.

Summary:

1. Power of the Central Government to Grant Licenses:
The petitioners questioned the Central Government's authority to grant licenses to non-Government Companies for establishing and maintaining Telecommunications Systems. The Court held that u/s 4 of the Indian Telegraph Act, 1885, the Central Government has the exclusive privilege to establish, maintain, and work telegraphs, including telephones. The proviso to sub-section (1) of Section 4 allows the Central Government to grant licenses to any person under specified conditions and for payments. The Court affirmed that this power and authority of the Central Government to grant licenses cannot be questioned.

2. Validity of the Procedure Adopted:
The Court examined whether the procedure for granting licenses was reasonable, rational, and in conformity with the prescribed conditions. The Tender Evaluation Committee evaluated all bids and recommended a capping system to prevent monopoly and ensure fair distribution of licenses. The Court found no evidence of bad faith or irrational considerations in the Committee's decision. The Court also noted that the tender documents explicitly allowed the Telecom Authority to restrict the number of service areas for which one company could be licensed.

3. Impact on National Security and Economic Interest:
Petitioners argued that the new Telecom Policy could endanger national security and not serve the economic interest of the nation. The Court held that national policies on economy, finance, communications, trade, and telecommunications are to be decided by Parliament, and courts cannot express opinions on whether such policies should have been adopted. The Court emphasized that the new Telecom Policy was placed before Parliament and is deemed approved.

4. Compliance with the Indian Telegraph Act, 1885:
Petitioners contended that the Central Government should have framed rules u/s 7 of the Act before granting licenses. The Court clarified that the power to grant licenses u/s 4(1) is not contingent upon the framing of rules u/s 7. The Court held that the Central Government could exercise its power to grant licenses even in the absence of such rules, provided the process adhered to well-established principles and norms satisfying Article 14 of the Constitution.

5. Role and Necessity of a Telecom Regulatory Authority:
The Court acknowledged the importance of a Telecom Regulatory Authority to supervise the functioning of the new Telecom Policy. It noted that many countries with privatized telecommunications have established regulatory authorities. The Telecom Regulatory Authority of India Ordinance, 1996, was promulgated to regulate telecommunication services. The Court emphasized the need for an independent regulatory authority with appropriate powers to ensure the policy's successful implementation and safeguard public interest.

Conclusion:
The Court dismissed the writ petitions, affirming the Central Government's power to grant licenses to private companies and the validity of the procedure adopted. It highlighted the necessity of a Telecom Regulatory Authority to oversee the implementation of the new Telecom Policy, ensuring it aligns with national security and economic interests. The Court emphasized that the Central Government and the Telecom Regulatory Authority must act as active trustees for public good.