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2015 (5) TMI 1179 - SC - Indian LawsGrant of licence and allotment of spectrum - National Telecom Policy-2012 - retrospectivity of the policy - Held that - We assume for the sake of argument that the impugned decision of the Union of India is in fact contrary to the tenor of the policy statement dated 15.02.2012. Even then, in our view, the impugned action cannot be faulted because the policy statement insofar as it seeks to apply only for the allocation of spectrum in future would be contrary to the decision of this Court in 2G case and void to that extent. An analysis of the scheme of Section 11 of the TRAI Act is necessary. Section 11(1)14 imposes two legal obligations on TRAI. Under Sub-section (a) TRAI is obliged to make recommendations with respect to eight matters enumerated therein either suo motu or on a request of the LICENSOR. Under Sub-section (b), TRAI is obliged to discharge various functions numbering nine specified thereunder - We do not propose to examine the submission of learned Solicitor General that the recommendation of TRAI dated 15.10.2014 relied upon by the LICENSEES are primary recommendations, are not final. Even assuming for the sake of arguments that the recommendations of TRAI are final, the Government of India is not bound by the same in view of the first proviso to Section 11(1) of TRAI Act. The obligation of the Government of India arising under the second proviso thereof to seek opinion of TRAI is only to ensure that there is a rational process of decision-making where the factors relevant are examined by an expert body before the Government takes a final decision on any one of the matters enumerated Under Section 11(1)(a). The impugned decision of the Government, which in fact resulted in huge inflow of revenue in the auctions conducted during the pendency of this litigation, cannot be said to be a totally irrational or irrelevant consideration in the context of the spectrum management. In the case in hand, the LICENSEES are not compelled to pay any specific tariffs fixed by the LICENSOR (Union of India), for availing the right to use the spectrum. If the price for securing allocation of spectrum is likely to go up because of the procedure of auctioning to have access to spectrum, it goes up because of the market forces. Because there are people who are willing to acquire such a right paying a higher price on the assessment that they would be able to carry on the business profitably even after paying higher amounts for acquisition of spectrum. The LICENSEES are corporate houses with enormous economic power, which enables them to secure adequate expert advice in the matter of financial planning. We cannot believe that they would make any investment without making a reasonable assessment of the possible return on such investment. There is no compulsion by the State in this regard. This is clearly a matter of an economic policy entailing an intricate economic choice and the Court lacks necessary expertise to make such choice - Therefore, the submission of the LICENSEES is required to be rejected. Petitions and appeals dismissed.
Issues Involved:
1. Right to extension of telecom licenses. 2. Government discretion in license extension. 3. Compliance with constitutional mandates and public policy. 4. Role and recommendations of the Telecom Regulatory Authority of India (TRAI). 5. Auction as a method for allocation of spectrum. Issue-wise Detailed Analysis: 1. Right to Extension of Telecom Licenses: The LICENSEES argued that their licenses, granted under Section 4 of the Indian Telegraph Act, 1885, are contracts that entitle them to an extension rather than a renewal. They contended that the terms of the license grant them a right to have their claim for extension appropriately considered, and the Government's decision to auction the spectrum violates these contractual rights. The Court held that the licenses are indeed contracts between the Government and the LICENSEES. However, the LICENSEES do not have an automatic right to renewal or extension. The contract only provided for the extension of the license at the sole discretion of the LICENSOR, subject to the LICENSEE making an application during the 19th year of the license term. The Court emphasized that the extension is subject to "mutually agreed terms and conditions" and is not an absolute right. 2. Government Discretion in License Extension: The LICENSEES claimed that the Government's decision to auction the spectrum was arbitrary and violated their contractual rights. They argued that the Government must ensure continuity of telecom services and consider the investments made by the LICENSEES. The Court noted that the LICENSOR's discretion is regulated by constitutional mandates and public policy. The Government's decision to auction the spectrum, ensuring that the people are adequately compensated and the process is just, non-arbitrary, and transparent, complies with these mandates. The Court upheld the Government's discretion to refuse extension if it is not in the public interest or does not serve the public good. 3. Compliance with Constitutional Mandates and Public Policy: The LICENSEES argued that the Government's decision to auction the spectrum would promote unhealthy competition and burden consumers with higher tariffs. They also contended that the decision would result in wastage of national resources and financial losses to the LICENSEES. The Court held that the Government's decision to auction the spectrum is in line with the constitutional principles of equality and public trust. The auction process ensures that the spectrum is allocated to those who value it the most and can utilize it efficiently. The Court emphasized that the LICENSOR's obligations under the Constitution and laws take precedence over contractual obligations. 4. Role and Recommendations of the Telecom Regulatory Authority of India (TRAI): The LICENSEES argued that the Government ignored TRAI's recommendations and violated the TRAI Act by not consulting TRAI before deciding to auction the spectrum. The Court examined the scheme of the TRAI Act and noted that while the Government is required to seek TRAI's recommendations, these recommendations are not binding on the Government. The Court held that the Government's decision to auction the spectrum was made after considering TRAI's recommendations and was within its discretion. 5. Auction as a Method for Allocation of Spectrum: The LICENSEES contended that auctioning the spectrum is not the only method for allocating natural resources and that the Government should consider other methods that do not burden consumers. The Court referred to its judgment in the 2G case, which held that auction is the only permissible method for allocating spectrum. The Court reiterated that the Government's decision to auction the spectrum is rational and in line with the constitutional principles of equality and public trust. The Court rejected the LICENSEES' argument that auctioning the spectrum would lead to higher tariffs and emphasized that the Government's policy choices should not be interfered with by the Court. Conclusion: The Supreme Court dismissed the appeals and writ petitions, upholding the Government's decision to auction the spectrum. The Court emphasized that the Government's discretion in extending licenses is regulated by constitutional mandates and public policy, and the auction process ensures just and transparent allocation of spectrum. The Court also clarified that TRAI's recommendations are not binding on the Government, and the decision to auction the spectrum is in line with the principles laid down in the 2G case.
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