2010 (12) TMI 1252 - SC - Indian Laws

2G Spectrum Scam - Invocation of Jurisdiction of this Court under Article 136 of the Constitution - Refusal of the Division Bench of the Delhi High Court to entertain the writ petition filed by them for a court monitored investigation by the Central Bureau of Investigation (CBI) or a Special Investigating Team into what has been termed as 2G Spectrum Scam for unearthing the role of respondent No.5-Shri A. Raja the then Union Minister for the Department of Telecommunications (DoT) senior officers of that department middlemen businessmen and others - HELD THAT - The Division Bench of the High Court committed a serious error by dismissing the writ petition at the threshold ignoring that the issues raised by the appellants whose bonafides have not been doubted are of great public importance. We are prima facie satisfied that the allegations contained in the writ petition and the affidavits filed before this Court which are supported not only by the documents produced by them but also the report of the Central Vigilance Commission which was forwarded to the Director CBI on 12.10.2009 and the findings recorded by the CAG in the Performance Audit Report need a thorough and impartial investigation. However at this stage we do not consider it necessary to appoint a Special Team to investigate what the appellants have described as 2G Spectrum Scam because the Government of India has keeping in view the law laid down in Vineet Narain s case and orders passed in other cases agreed for a Court monitored investigation. The reports produced before the Court show that the CBI and the Enforcement Directorate have started investigation in the right direction. Keeping in view the statements made by the learned Solicitor General and the learned senior counsel representing the CBI and with a view to ensure that in a serious matter like this comprehensive and coordinated investigation is conducted by the CBI and the Enforcement Directorate without any hindrance we deem it proper to issue the following directions (i) The CBI shall conduct thorough investigation into various issues highlighted in the report of the Central Vigilance Commission which was forwarded to the Director CBI vide letter dated 12.10.2009 and the report of the CAG who have prima facie found serious irregularities in the grant of licences to 122 applicants majority of whom are said to be ineligible the blatant violation of the terms and conditions of licences and huge loss to the public exchequer running into several thousand crores. The CBI should also probe how licences were granted to large number of ineligible applicants and who was responsible for the same and why the TRAI and the DoT did not take action against those licensees who sold their stakes/equities for many thousand crores and also against those who failed to fulfill rollout obligations and comply with other conditions of licence. (ii) The CBI shall conduct the investigation without being influenced by any functionary agency or instrumentality of the State and irrespective of the position rank or status of the person to be investigated/probed. The progress reports based on the investigations conducted by the CBI and the Enforcement Directorate shall be produced before the Court in sealed envelopes on 10.2.2011. The case be listed for further consideration on 10.2.2011.

Summary

Issues Involved:
1. Refusal of the Division Bench of Delhi High Court to entertain the writ petition.
2. Alleged irregularities in the issuance of 2G Spectrum licenses.
3. Role of various officials and private entities in the 2G Spectrum Scam.
4. Request for a court-monitored investigation by the CBI or a Special Investigating Team.
5. Allegations of financial loss to the public exchequer due to the 2G Spectrum allocation.
6. Compliance with the Telecom Regulatory Authority of India (TRAI) recommendations.
7. Role of the Central Vigilance Commission (CVC) and the Comptroller and Auditor General of India (CAG) reports.
8. Examination of the role of banks in granting loans to the licensees.
9. Coordination between the CBI and the Enforcement Directorate in the investigation.

Detailed Analysis:

Issue 1: Refusal of the Division Bench of Delhi High Court to entertain the writ petition
The Supreme Court noted that the Division Bench of the Delhi High Court committed a serious error by dismissing the writ petition at the threshold. The issues raised by the appellants, whose bona fides were not doubted, were of great public importance. The allegations contained in the writ petition and affidavits, supported by documents and reports from the CVC and CAG, necessitated a thorough and impartial investigation.

Issue 2: Alleged irregularities in the issuance of 2G Spectrum licenses
The background provided detailed the evolution of telecom policies and the alleged irregularities in the issuance of licenses. Key points included the shift from government monopoly to private sector involvement, the introduction of the National Telecom Policy (NTP) in 1994, and subsequent policies and recommendations by TRAI. The judgment highlighted the decision to issue licenses based on 2001 prices, despite the significant increase in the value of spectrum over time, leading to allegations of financial loss to the public exchequer.

Issue 3: Role of various officials and private entities in the 2G Spectrum Scam
The judgment underscored the involvement of the then Union Minister for the Department of Telecommunications (DoT), senior officers, middlemen, and businessmen. The CAG report and other documents suggested serious irregularities, including the arbitrary change of cut-off dates, non-compliance with rollout obligations, and the sale of stakes by licensees for substantial profits soon after obtaining licenses.

Issue 4: Request for a court-monitored investigation by the CBI or a Special Investigating Team
The Supreme Court considered the appellants' request for a court-monitored investigation. The Government of India and the CBI expressed no objection to such monitoring but opposed the appointment of a Special Investigation Team. The Court decided against appointing a Special Team, opting instead for a court-monitored investigation by the CBI and the Enforcement Directorate.

Issue 5: Allegations of financial loss to the public exchequer due to the 2G Spectrum allocation
The appellants argued that the allocation of spectrum at 2001 prices resulted in a significant loss to the public exchequer, estimated by the CAG to be over Rs. 1,76,000 crores. The judgment emphasized that the matter required thorough investigation to determine the actual loss and the beneficiaries of the allocation.

Issue 6: Compliance with the Telecom Regulatory Authority of India (TRAI) recommendations
The judgment detailed the recommendations made by TRAI over the years and the extent to which they were followed or ignored by the DoT. It highlighted instances where the DoT acted contrary to TRAI's recommendations, such as the arbitrary change of cut-off dates and the issuance of licenses to ineligible applicants.

Issue 7: Role of the Central Vigilance Commission (CVC) and the Comptroller and Auditor General of India (CAG) reports
The CVC's inquiry and the CAG's performance audit report were crucial in highlighting the irregularities in the grant of licenses. The judgment stressed the need for these reports to form the basis of a comprehensive investigation by the CBI.

Issue 8: Examination of the role of banks in granting loans to the licensees
The judgment directed the CBI to investigate the allegations of banks granting huge loans to companies that obtained licenses, potentially facilitating their participation in the spectrum allocation process and subsequent profiteering.

Issue 9: Coordination between the CBI and the Enforcement Directorate in the investigation
The Supreme Court directed both the CBI and the Enforcement Directorate to conduct a coordinated investigation, sharing information and ensuring that the investigation was not hampered. The progress reports from both agencies were to be submitted to the Court in sealed envelopes.

Conclusion:
The Supreme Court granted leave and directed a thorough investigation by the CBI, monitored by the Court. The investigation was to cover various issues highlighted in the CVC and CAG reports, focusing on the irregularities in the grant of licenses, the role of officials and private entities, and the financial implications for the public exchequer. The case was listed for further consideration on 10.2.2011, with progress reports from the investigating agencies to be submitted by that date.