2017 (8) TMI 342 - SC - Indian Laws

Application for allocation of spectrums in various areas - auction - grant of interim relief which included extension of permission to the participants in the NIA to be bidded for minimum 4.4 MHz, IN 900 MHz band in the North East service area - Held that - 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 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 of India invoking the power of judicial review is not tenable as no valid grounds for interference The objectives of the present auction are in consonance with the National Telecom Policy-2012 (NTP 2012). These objectives are the same as in the previous auctions conducted in November 2012, March 2013 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 effect and transformational impact of such services on the overall 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 and attracting additional investments. The NTP 2012 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 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 come, i.e., the spectrum is allotted in a transparent manner for a period of 20 years. 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 allegation of any mala fide in the conduct of the auction, nor has it been alleged that the policy was structured so as to convey benefit to a particular player/players over others. In the case at hand, 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, 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. 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 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 of judicial review. The procedure adopted in this 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

Issues Involved:
1. Minimum bidding criteria and its arbitrariness.
2. Classification of bidders and its reasonableness.
3. Hoarding of spectrum and transparency in auction.
4. Compliance with TRAI recommendations.
5. Legitimate expectation of bidders.

Issue-wise Detailed Analysis:

1. Minimum Bidding Criteria and Its Arbitrariness:
The petitioners argued that the minimum bidding criteria of 5 MHz in the 900 MHz band was arbitrary, anti-competitive, and contrary to TRAI recommendations dated 15.10.2014. They contended that the criteria discriminated against different categories of bidders and violated Article 14 of the Constitution. The Court noted that the criteria aimed to ensure that service providers had sufficient spectrum to deploy advanced technologies, which would benefit consumers. The Court found this justification reasonable and not arbitrary.

2. Classification of Bidders and Its Reasonableness:
The petitioners claimed that the classification of bidders into "existing licensees," "expiring licensees," and "new entrants" was unreasonable and lacked intelligible differentia. The Court observed that the classification aimed to prevent monopoly, encourage new entrants, and ensure efficient spectrum utilization. The Court held that the classification had a rational basis and was aligned with public interest, thus not violating Article 14.

3. Hoarding of Spectrum and Transparency in Auction:
The petitioners alleged that the government hoarded spectrum by not auctioning the entire available quantum, which led to non-competitive bidding. The Court noted that certain spectrum was reserved for defense and other essential services, and the process of harmonizing spectrum with the defense was ongoing. The Court found the government's explanation reasonable and held that the decision to auction spectrum in phases was a policy decision aimed at maximizing revenue and ensuring efficient spectrum utilization.

4. Compliance with TRAI Recommendations:
The petitioners argued that the government did not adhere to TRAI's recommendations regarding spectrum auction. The Court referred to Section 11 of the TRAI Act, which states that TRAI's recommendations are not binding on the government but should be given due weightage. The Court held that the government had the ultimate authority to take decisions on spectrum auction, and its decision to deviate from TRAI's recommendations was within its discretion and not arbitrary.

5. Legitimate Expectation of Bidders:
The petitioners claimed that they had a legitimate expectation to participate in the auction without being restricted by the minimum bidding criteria and classification. The Court held that the principle of legitimate expectation could not override public interest. The Court found that the auction conditions were designed to serve the larger public interest by ensuring efficient spectrum utilization and preventing monopoly, which justified the restrictions imposed on bidders.

Conclusion:
The Supreme Court dismissed the petitions, holding that the auction conditions, including the minimum bidding criteria and classification of bidders, were reasonable and aimed at serving the larger public interest. The Court found no arbitrariness or extraneous considerations in the government's policy decisions regarding spectrum auction. The Court emphasized the need for judicial restraint in matters involving complex economic and technical decisions, particularly those related to public resources like spectrum.

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