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TMI Blog2012 (2) TMI 568X X X X Extracts X X X X X X X X Extracts X X X X ..... General of Police, Gujarat, Punjab and C.R.P.F. and Commissioner of Police, Mumbai, P.R. Guha, an eminent Senior Journalist and visiting faculty member of various institutions including IIMs, IITs, FTII, IIFT, Delhi University, Jawaharlal Nehru University and Jamia Milia Islamia University and Admiral R.H. Tahiliyani, former Chief of Naval Staff, former Governor and former Chairman of Transparency International India and the other has been filed by Dr. Subramanian Swami, a political and social activist, are: (i) Whether the Government has the right to alienate, transfer or 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 of Unified Access 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 of Telecommunications (DoT), were contrary to the decision taken by the Council of Ministers on 31.10.2003? (iii) Whether the exercise undertaken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conomic Policy of India was announced on 24.7.1991. It 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 July 1992 for the following services: (a) Electronic Mail; (b) Voice Mail; (c) Data Services; (d) Audio Text Services; (e) Video Text Services; (f) Video Conferencing; (g) Radio Paging; and (h) Cellular Mobile Telephone. In respect of services (a) to (f), the companies registered in India were permitted to operate under a licence on non-exclusive basis. For services covered by (g) and (h) mentioned above, keeping in view the constraints on the number of companies that could be allowed to operate, a policy of selection through a system of tendering was followed for grant of licences. National Telecom Policy 1994 6. National Telecom Policy 1994 (NTP 1994) was announced on 13.5.1994. This was the first major step towards deregulation, liberalization and private sector participation. The objectives of the policy were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... level services capable of meeting the needs of the country's economy by striking a balance between the two; (iii) to encourage development of telecommunication in remote, hilly and tribal areas of the country; (iv) to create a modern and efficient telecommunications infrastructure taking into account the convergence of IT, media, telecom and consumer electronics which will in turn propel India to become an IT superpower;. (v) to convert PCOs wherever justified into Public Teleinfo centres having multimedia capability such as Integrated Services Digital Network (ISDN) services, remote database access, government and community information systems, etc.; (vi) to transform, in a time bound manner, the telecommunications sector in both urban and rural areas into a greater competitive environment providing equal opportunities and level playing field for all players; (vii) to strengthen research and development efforts in the country and provide an impetus to build world class manufacturing capabilities; (viii) to achieve efficiency and transparency in spectrum management; (ix) to protect defence and security interests of the country; and (x) to enable Indian Telecom Companies to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther examined in the light of ITU guidelines. In this regard the following course of action shall be adopted viz.: (a)spectrum usage fee shall be charged; (b)an Inter-Ministerial Group to be called Wireless Planning Coordination Committee, as a part of the Ministry of Communications for periodical review of spectrum availability and broad allocation policy, should be set up; and (c)massive computerization in WPC Wing would be started in the next three months so as to achieve the objective of making all operations completely computerized by the end of the year 2000. (emphasis supplied) Establishment of the Telecommunication Commission (for short, `the Telecom Commission') and the Telecom Regulatory Authority of India. 11. On 11.4.1989, the Council of Ministers passed a resolution and decided to establish the Telecom Commission. The relevant portions of that resolution are extracted below: "CABINET SECRETARIAT New Delhi the 11th April, 1989 RESOLUTION CONSTITUTION OF TELECOM COMMISSION No. 15/1/2/87-Cab. 1. Telecommunication service is an essential infrastructure for national development. It has impact on social and economic activities. Besides, business, industry and admi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tings of the Commission, the decision of the Chairman shall be final, but in financial matters, Member (Finance) of the Commission will have access to Finance Minister. (c) The Chairman may authorise any Member of the Commission to exercise on his behalf, subject to such general or special orders as he may issue from time to time, such of his powers and responsibilities as he may decide. 6. Member Finance The Member of Finance shall exercise powers of the Government of India in financial matters concerning the Department of Telecommunications except in so far as such powers have been, or may in future be conferred on or delegated to the Department. 7. The Commission shall have power to frame its own rules and procedures. The Commission shall meet at such time and places as fixed by the Chairman. 8. The Telecom Commission shall take over all legal and statutory authority vested with the Telecom Board." 12. The Rules of Business for the Telecom Commission were also framed in 1989. In terms of para 2 of the Rules of Business read with item 1 of Annexure `A' appended thereto, all important matters of policy relating to Telecommunications are required to be brought before the Tele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod for providing local and long distance circuits of telecommunication between different service providers; (vii) maintain register of interconnect agreements and of all such other matters as may be provided in the regulations; (viii) keep register maintained under clause (vii) open for inspection to any member of public on payment of such fee and compliance of such other requirement as may be provided in the regulations; (ix) ensure effective compliance of universal service obligations; (c) levy fees and other charges at such rates and in respect of such services as may be determined by regulations; (d) perform such other functions including such administrative and financial functions as may be entrusted to it by the Central Government or as may be necessary to carry out the provisions of this Act: 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 recommendations of the Authority in respect of matters specified in sub-clauses (i) and (ii) of clause (a) of this sub-section in respect of new licence to be issued to a servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions. - The Authority may, for the discharge of its functions under sub-section (1) of section 11, issue such directions from time to time to the service providers, as it may consider necessary: Provided that no direction under sub-section (4) of section 12 or under this section shall be issued except on the matters specified in clause (b) of sub-section (1) of section 11." 14. After its establishment, TRAI made various recommendations either suo motu or on the request of the licensor, i.e., the Central Government or the Telegraph Authority. On a reference made by the Ministry of Communications and Information Technology on four issues including the issues of appropriate level of entry fee, basis of selection of new operators and entry of 4th cellular operator, TRAI made its recommendations, which were communicated to Secretary, DoT vide D.O. No. 250-14/2000-Fin (DF) (Vol. II) dated 23.6.2000. Paragraphs 4.1 to 4.3, 4.5 to 4.6 and 4.11 to 4.15 of that letter are extracted below: "4. For the purposes of clarity each issue on which TRAI's recommendation has been sought has been stated separately and recommendations have been given therefor. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ids" is recommended. It is also recommended that such bids be invited for the entry fee for selection of operations and issuing licenses to them. Although, as recommended earlier in the case of NLDO, TRAI is primarily of the opinion that because of its greater relevance, direct impact on operations and being equitable, revenue sharing is a better basis on which to invite bids for licenses, in the case of CMSPs this choice is not available except in two vacant circles/slots. The 34 incumbent operators have already been given licenses through a process of bidding and it would not be correct to subject them to yet another process of bidding, this time concerning revenue sharing. They have already been asked to pay as license fee, albeit on a provisional basis a fixed amount of the revenue share viz. 15%. It is, therefore, recommended that a fixed percentage of revenue share be paid by all operators as the license fee and this percentage be the same for all the operators barring the exceptions specifically mentioned in the paragraph 5.9 below. 4.12 While, the detailed bid structure can be prepared at the time bids are being called and assistance/advise of experts may be taken in doing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m either for the third or the fourth operator. The financial analysis conducted by the TRAI for the purpose of studying the revenue share which the operators can part with as licence fee assumes entry of the third operator in the sixth year of licence i.e. in the current year and of another i.e. the fourth operator two years later in accordance with NTP 99. The analysis reveals that even if the business in each of these metropolitan areas and circles is required to produce a reasonable IRR say 16-18 % and a decent return on the capital say around 20%, it would still enable the operators to share upto about 25% of the Gross (adjusted) revenue as the licence fee. In the circumstances, it would be reasonable to assume that on purely economic grounds, in most circles there is even at present, a fair case for the entry of the fourth operator. In this context, however, more than the market, the determining factor has to be the availability of a spectrum and its optimal utilisation. Moreover, it is also a matter for careful consideration that even when additional spectrum is released, whether it should be utilised to augment the number of service providers or for improving the quality and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... needs to be regulated separately. Spectrum should be distributed using such a mechanism that it is allocated optimally to the most efficient user." 17. Paragraphs 7.15 to 7.19 of the 2003 recommendations contained various alternatives for deciding the benchmark for the entry fee for Unified Access Licensing Regime. In paragraph 7.30, TRAI laid emphasis on efficient utilization of spectrum by all service providers and indicated that it would make further recommendations on efficient utilization of spectrum, spectrum pricing, availability and spectrum allocation procedure shortly, and the DoT may like to issue spectrum related guidelines based on its recommendations. 18. In the meanwhile, a Group of Ministers was constituted on 10.9.2003 with the approval of the Prime Minister to consider the following matters: i) To recommend how to ensure release of adequate spectrum needed for the growth of the telecom sector; ii) To recommend measures for ensuring adequate resources for the realization of the NTP targets of rural telephony; iii) To resolve issues relating to the enactment of the Convergence Bill; iv) To chart the course to a Universal Licence; v) To review adequacy of steps ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fair and equitable, avoiding monopolistic situation regarding spectrum allotment usage (5) The long term 15-20 years, spectrum requirements along with time frames would also be worked out by Department of Telecom. (6) As per the directions of GoM, a Task Force has been constituted under the chairmanship of Wireless Adviser to the Govt. of India with representatives from Department of Telecom, Ministry of Defence and Ministry of Finance. The terms of reference of the Task Force and the progress of its work so far are given in Annexures II & III.(Page 17-18). 2.4 4 the Term of Reference :- To chart the course to a Universal Licence: 2.4.1 The GoM took note of the exercise that had already been indicated by Telecom Regulatory Authority of India (TRAI), in regard to Unified Licensing Regime in the Telecom Sector Chairman, TRAI and Chairman HDFC were specially invited made presentations before the GoM. 2.4.2 TRAI submitted its recommendations to the Government on this matter on 27.10.2003. TRAI has recommended that the present system of licensing in the Telecom Sector should be replaced by Unified Licensing/Automatic Authorization Regime. The Unified Licensing/Automatic Authorizati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onvergence now allows operators to use their facilities to deliver some services reserved for other operators necessitating a re-look at NTP-94 policy framework. For bringing into effect the regime of Unified Access Service for basic and cellular service licenses and Unified Licensing comprising all telecom services, it would be necessary to enhance the scope of NTP-99 to include these as distinct categories of licenses as pet of NTP-99. 2.4.5 TRAI recommendations on entry fee of WLL(M) based on TDSAT judgement: TRAI has also submitted its recommendations in regard to additional entry fee payable by basic service operators for providing WLL(M) services on which Government had sought its recommendations based on the judgment of TDSAT dated 8/8/03 in the WLL(M) case. TRAI has given detailed reasoning on this matter and has recommended additional entry fee for such of the Basic Service Operators who provide WLL(M) service. The salient features are in Annexure-V (page 22). 2.4.6 Based on the above the GoM has recommended the following course of action (i) The scope of NTP-99 may be enhanced to provide for licensing of Unified Access Service for basic and cellular license services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice area, rollout obligations and performance bank guarantee under UAS Licence was to be the same as the 4th CMTS. 22. Vide letter dated 14.11.2003, the Chairman, TRAI, on his own, made recommendation regarding entry fee to be charged from the new UAS Licensees. On 24.11.2003, the Minister of C& IT' accepted the recommendation that entry fee for new UAS Licensees will be the entry fee of 4th cellular operator and where there is no 4th cellular operator, it will be the entry fee fixed by the Government for the basic operator. A decision was also taken by him in F. No.20-231/2003-BS-III (LOIs for UASL) at 4/N that, "As regards the point raised about the grant of new licences on first-come-first-served basis, the announced guidelines have made it open for new licences to be issued on continuous basis at any time. However, the spectrum is to be allotted subject to availability. This in effect would imply that an applicant who comes first will be granted the spectrum first so it will result in grant of licence on first-come-first-served basis." Although, in terms of the decision taken by the Minister of C& IT', the applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout any restriction on the number of entrants for provision of unified access services in a Service Area." In terms of paragraph 14 of the guidelines, the licensee was required to pay annual licence fee at 10/8/6% of Adjusted Gross Revenue (AGR) for category A/B/C service areas, respectively excluding spectrum charges. This was in addition to the non-refundable entry fee. In terms of paragraph 19 the licensee was required to pay spectrum charges in addition to the licence fee on revenue share basis. However, while calculating AGR for limited purpose of levying spectrum charges, revenue from wireless subscribers was not to be taken into account. 26. After one year and about six months, the DoT vide its letter dated 13.4.2007, requested TRAI to furnish its recommendations under Section 11(1) (a) of the 1997 Act on the issues of limiting the number of access providers in each service area and review of the terms and conditions in the access provider licence mentioned in the letter. Paragraph 2 of that letter is extracted below: "2. Fast changes are happening in the Telecommunication sector. In order to ensure that the policies keep pace with the changes/developments in the Teleco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever to availability of spectrum. There is only one direct cost to the operator for spectrum i.e. spectrum charge in the form of royalty. 2.73 The allocation of spectrum is after the payment of entry fee and grant of license. The entry fee as it exists today is, in fact, a result of the price discovered through a markets based mechanism applicable for the grant of license to the 4th cellular operator. In today's dynamism and unprecedented growth of telecom sector, the entry fee determined then is also not the realistic price for obtaining a license. Perhaps, it needs to be reassessed through a market mechanism. On the other hand spectrum usage charge is in the form of a royalty which is linked to the revenue earned by the operators and to that extent it captures the economic value of the spectrum that is used. Some stakeholders have viewed the charges/fee as a hybrid model of extracting economic rent for the acquisition and also meet the criterion of efficiency in the utilization of this scarce resource. The Authority in the context of 800, 900 and 1800 MHz is conscious of the legacy i.e. prevailing practice and the overriding consideration of level playing field. Though the dual c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed to place a cap on the maximum allocable spectrum at 10 MHz or to impose framework of pricing through additional acquisition fee beyond 10 MHz. The Authority feels it appropriate to go in for additional acquisition fee of spectrum instead of placing a cap on the amount of spectrum that can be allocated to any wireless operator. In any case, the Authority is recommending a far stricter norm of subscriber base for allocation of additional spectrum beyond the initial allotment of spectrum. The additional acquisition fee beyond 10 MHz could be decided either administratively or through an auction method from amongst the eligible wireless service providers. In this matter, the Authority has taken note of submissions of a number of stakeholders who have cited evidences of the fulfillment of the quality of service benchmarks of the existing wireless operators at 10 MHz and even below in almost all the licensed service areas. Such an approach would also be consistent with the Recommendation of the Authority in keeping the door open for new entrant without putting a limit on the number of access service providers. 2.77 The Authority in its recommendation on "Allocation and pricing of sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dband wireless access services" has also favored auction methodology for allocation of spectrum for 3G and BWA services. It is therefore recommended that in future all spectrum excluding the spectrum in 800, 900 and 1800 bands should be auctioned so as to ensure efficient utilization of this scarce resource. In the 2G bands (800 MHz/900 MHz/1800 MHz), the allocation through auction may not be possible as the service providers were allocated spectrum at different times of their license and the amount of spectrum with them varies from 2X4.4 MHz to 2X10 MHz for GSM technology and 2X2.5 MHz to 2X5 MHz in CDMA technology. Therefore, to decide the cut off after which the spectrum is auctioned will be difficult and might raise the issue of level playing field." (underlining is ours) 28. The aforesaid recommendations of TRAI were first considered by an Internal Committee of the DoT constituted vide letter dated 21.9.2007 under the Chairmanship of Member, Telecommunication. The report of the Committee was placed before the Telecom Commission on 10.10.2007. However, the four non-permanent members, i.e., Finance Secretary; Secretary, Department of Industrial Policy and Promotion; Secretary, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... echnology), Telecom Commission and Ex-officio Secretary to Government of India sent a letter dated 26.10.2007 to Secretary, Department of Legal Affairs, Ministry of Law and Justice seeking the opinion of the Attorney General of India/Solicitor General of India on the issue of the mechanism to deal with what he termed as an unprecedented situation created due to receipt of large number of applications for grant of UAS Licence. The statement of case accompanying the letter of Member (Technology) contained as many as 14 paragraphs. Paragraph 11 outlined the following four alternatives: (I) The applications may be processed on first-come-first-served basis in chronological order of receipt of applications in each service area as per existing procedure. LoI may be issued simultaneously to applicants (the numbers will vary based on availability of spectrum to be ascertained from WPC Wing) who fulfil the eligibility conditions of the existing UASL Guidelines and are senior most in the queue. The time limit for compliance should be 7 days as per the existing provision of LoI and 15 days for submission of PBG, FBG, entry fee, etc. as per the existing procedure. However, those who fulfil th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roved the note prepared by Director (AS-1) containing the following issues: (i) Issuing of LoIs to new applicants as per the existing policy, (ii) Number of LoIs to be issued in each circle, (iii) Approval of draft LoI, (iv) Considering application of TATAs for dual technology after the decision of TDSAT on dual technology, and (v) Authorising Shri R.K. Gupta, ADG (AS-1) for signing the LoIs on behalf of President of India. 33. While approving the note, the Minister of C& IT' on his own recorded the following - "LoI may be issued to the applicants received upto 25th Sept. 2007". Simultaneously, he sent D.O. No.20/100/2007-AS.I dated 2.11.2007 to the Prime Minister and criticised the suggestion made by the Law Minister by describing it as totally out of context. He also gave an indication of what was to come in the future by mentioning that the DoT has decided to continue with the existing policy of first-come-first-served for processing of applications received up to 25.9.2007 and the procedure for processing the remaining applications will be decided at a later date, if any spectrum is left available after processing the applications received up to 25.9.2007. Paragraphs 3 and 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to overall demand. Besides these, there are some other issues recommended by TRAI that require early decision. The key issues are summarized in the annexed note. I would request you to give urgent consideration to the issues being raised with a view to ensuring fairness and transparency and let me know of the position before you take any further action in this regard. With regards, Yours sincerely, Sd/- (Manmohan Singh) Shri A. Raja Minister of Communications and IT New Delhi. Annexure 1. Enhancement of subscriber linked spectrum allocation criteria In August 2007, the TRAI has recommended interim enhancement of subscriber linked spectrum allocation criteria. Service providers have objected to these recommendations, alleging errors in estimation / assumptions as well as due procedure not having been followed by the TRAI while arriving at the recommendations. 2. Permission to CDMA service providers to also provide services on the GSM standard and be eligible for spectrum in the GSM service band Based on media reports, it is understood that the DoT has allowed `cross technology' provision of services by CDMA service providers and three such companies have already paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licence holders who are already having spectrum upto 10 MHz per Circle have got it without any spectrum charge. It will be unfair, discriminatory, arbitrary and capricious to auction the spectrum to new applicants as it will not give them level playing field. I would like to bring it to your notice that DoT has earmarked totally 800 MHz in 900 MHz and 1800 MHz bands for 2G mobile services. Out of this, so for a maximum of about 35 to 40 MHz per Circle has been allotted to different operators and being used by them. The remaining 60 to 65 MHz, including spectrum likely to be vacated by Defence Services, is still available for 2G services. Therefore, there is enough scope for allotment of spectrum to few new operators even after meeting the requirements of existing operators and licensees. An increase in number of operators will certainly bring real competition which will lead to better services and increased teledensity at lower tariff. Waiting for spectrum for long after getting licence is not unknown to the Industry and even at present Aircel, Vodafone, Idea and Dishnet are waiting for initial spectrum in some Circles since December 2006." 36. On 20.11.2007, the Secretary, DoT h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t will be granted UAS licence first. This issue never arose in the past as at one point of time only one application was processed and LOI was granted and enough time was given to him for compliance of conditions of LOI. However, since the Government has adopted a policy of "No Cap" on number of UAS Licence, a large number of LOI's are proposed to be issued simultaneously. In these circumstances, an applicant who fulfils the conditions of LOI first will be granted licence first, although several applicants will be issued LOI simultaneously. The same has been concurred by the Solicitor General of India during the discussions." (underlining is ours) 39. After 12 days, DDG (AS), DoT prepared a note incorporating therein the changed first-come-first-served policy to which reference had been made by the Minister of C& IT' in letter dated 26.12.2007 sent to the Prime Minister. On the same day the Minister of C& IT' approved the change. 40. The meeting of the full Telecom Commission, which was scheduled to be held on 9.1.2008 to consider two important issues i.e., performance of telecom sector and pricing of spectrum was postponed to 15.1.2008. 41. On 10.1.2008 i.e., after three days o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted applications to DOT for grant of UAS licences in various service areas on or before 25.9.2007 are requested to depute their Authorised signatory/Company Secretary/ authorised representative with authority letter to collect response(s) of DOT. They are requested to bring the company's rubber stamp for receiving these documents to collect letters from DOT in response to their UASL applications. Only one representative of the Company/group Company will be allowed. Similarly, the companies who have applied for usage of dual technology spectrum are also requested to collect the DOT's response. All above are requested to assemble at 3:30 pm on 10.1.2008 at Committee Room, 2nd Floor, Sanchar Bhawan, New Delhi. The companies which fail to report before 4:30 P.M. on 10.1.2008, the responses of DOT will be dispatched by post. All eligible LOI holders for UASL may submit compliance to DOT to the terms of LOIs within the prescribed period during the office hours i.e. 9:00 A.M. to 5:30 P.M. on working days. File No.20-100/2007-AS-I Dated 10.1.2008 (A.K. Srivastava) DDG(AS) Dept. of Telecom DDG(C&A): The above Press Release may kindly be uploaded on DOT website immediately." 43. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the TRAI in the impugned press note, but acted contrary thereto by amending the cut-off date and thus placed a cap on the number of service providers. The stand taken by respondent and the justification sought to be given for fixing a cut- off date retrospectively is on account of large volume of applications, is without any force in view of the fact that neither any justification was rendered during the course of argument, nor any justification has been rendered in the counter affidavit as to what is the effect of receipt of large number of applications in view of the fact that a recommendation of the TRAI suggests no cap on the number of access service providers in any service area. This recommendation was duly accepted and published in the newspaper. Further as per the counter affidavit 232 UASL applications were received till 25.9.2007 from 22 companies. Assuming there was increase in the volume of applications, the respondent has failed to answer the crucial question as to what was the rationale and basis for fixing 25.9.2007 as the cut-off date. Even otherwise, admittedly 232 applications were made by 25.9.2007 and between 25.9.2007 and 1.10.2007 only 76 were applications we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of the cut-off date earlier fixed was based on some rational basis and was not intended to benefit a few applicants while discriminating against the rest. In the present case, for the reasons pointed out by the learned Single Judge, with which we concur, the Appellant has been unable to show that its decision to revise the cut-off date after receiving the application of the Respondent was based on some rational criteria. It is vulnerable to being labelled arbitrary and irrational. 14. We are not able to appreciate, in the instant case, the submission of the learned Attorney General that the mere advancing of the cut-off date would not tantamount to changing the rules after the game has begun. In a sense it does. It makes ineligible for consideration the applicants who had applied, after 25th September 2007 but on or before 1st October 2007. Further this ineligibility is announced after the applications have been made. In other words, while at the time of making the application there was no such ineligibility, it is introduced later and that too for a select category of applicants. This cannot but be a change in the rule after the game has begun. We do not think that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded that the consideration of large number of ineligible applicants and grant of LoIs and licenses to them is ex facie illegal and arbitrary. The petitioners have also pleaded that the entire method adopted by the DoT for grant of licence is flawed because the recommendations made by TRAI for grant of licences at the entry fee determined in 2001 was wholly arbitrary, unconstitutional and contrary to public interest. Yet another plea of the petitioners is that while deciding to grant licences, which are bundled with spectrum, at the price fixed in 2001 the DoT did not bother to consult the Finance Ministry and, thereby, violated the mandate of the decision taken by the Council of Ministers in 2003. The petitioners have also pleaded that the principle of first-come-first-served is by itself violative of Article 14 of the Constitution and in any case distortion thereof by the Minister of C& IT' and the consequential grant of licences is liable to be annulled. Another ground taken by the petitioners is that even though a number of licensees failed to fulfil the roll out obligations and violated conditions of the licence, the Government of India did not take any action to cancel the lic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available to the petitioners is to approach the TDSAT. (ix) Some of the respondents have also questioned the application of the policy of first-come-first-served by asserting that even though they had applied in 2004 and 2006, and licences had been granted to them before 25.9.2007, the allocation of spectrum was delayed till 2008 and those who had applied in 2007 were placed above them because they could fulfil the conditions of LoI in terms of the distorted version of the policy first-come-first-served. 50. The petitioners have filed rejoinder affidavit and reiterated the assertions made in the main petition that the grant of UAS Licences is fundamentally flawed and is violative of the Constitutional principles. They have also placed on record report dated 31.1.2011 submitted by the One Man Committee, (hereinafter referred to as `One-Man Committee Report'), comprising Justice Shivaraj V. Patil (former Judge of this Court), which was constituted by the Government of India vide Office Memorandum dated 13.12.2010 to examine the appropriateness of the procedure followed by the DoT in issuance of licences and allocation of spectrum during the period 2001 to 2009. They have also place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in 2001. (viii) Shri Bhushan pointed out that the recommendations made by TRAI on 28.8.2007 were contrary to public interest as well as financial interest of the nation because at the time of entry of 4th cellular operator the same TRAI had suggested multi-stage bidding and even for allocation of 3G spectrum the methodology of auction was suggested but, for no ostensible reason, the so-called theory of level playing field was innovated for grant of UAS Licences in 2007 on the basis of the entry fee fixed in 2001. Learned counsel emphasized that the transfer of equity by three of the licensees immediately after issue of licences for gain of many thousand crores shows that if the policy of auction had been followed, the nation would have been enriched by many thousand crores. (ix) Both, Shri Prashant Bhushan and Dr. Subramanian Swamy pointed out that although the Prime Minister had suggested that a fair and transparent method be adopted for grant of UAS Licences through the process of auction, the Minister of C& IT' casually and arbitrarily brushed aside the suggestion and granted licence to the applicants for extraneous reasons. (x) Shri Prashant Bhushan also questioned the gra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 4th cellular operator but, thereafter, no auction was held. He submitted that if the spectrum was allotted free of charge till 2007, there could be no justification for auction of licences or spectrum in 2007. 54. Shri C.A. Sundaram, learned counsel appearing for respondent Nos. 2 and 4, heavily relied on paragraphs 7.2, 7.4, 7.12, 7.29, 7.30, 7.37 and 7.39 of TRAI's recommendations dated 27.10.2003 and argued that the recommendations made in 2007 were nothing but a continuation of the old policy and, therefore, the petitioners are not entitled to question the method adopted for grant of UAS Licences pursuant to the 2007 recommendations. Learned senior counsel submitted that the policy for grant of UAS Licences and allocation of spectrum cannot be said to be per se arbitrary because the same was decided after great deliberations and consideration of international practices. He also relied upon the speech made by the Prime Minister on 2.11.2007 and submitted that the action of the DoT should not be nullified because that will have a far-reaching adverse impact on the availability of telecommunication services in the country. 55. Shri Vikas Singh, learned senior counsel appearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determining availability of spectrum. Shri Dwivedi also submitted that TRAI has already initiated action for cancellation of licences of those respondents who have violated the terms of licence and/or failed to fulfil roll- out obligations. 60. Learned counsel for both the sides relied upon a large number of decisions. Shri Prashant Bhushan and Dr. Subramanian Swamy relied upon the following judgements: K. Manjusree v. State of Andhra Pradesh (2008) 3 SCC 512, Monarch Infrastructure (P) Ltd. v. Commissioner, Ulhasnagar Municipal Corpn. (2000) 5 SCC 287, Home Communication Ltd. and Anr. v. Union of India and Ors. 52 (1993) DLT 168, Jamshed Hormusji Wadia v. Board of Trustees, Port of Mumbai (2004) 3 SCC 214, Chaitanya Kumar v. State of Karnataka (1986) 2 SCC 594, Shivsagar Tiwari v. Union of India, (1996) 6 SCC 558, Common Cause, A Registered Society (Petrol pumps matter) v. Union of India (1996) 6 SCC 530 and Nagar Nigam v. Al Faheem Meat Exports (P) Ltd. (2006) 13 SCC 382. Learned Attorney General and learned counsel appearing for the private respondents relied upon Delhi Science Forum v. Union of India (1996) 2 SCC 405, BALCO Employees' Union (Regd.) v. Union of India (2002) 2 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w policy of pricing would need to be applied to equally to all players. Additionally, assignment of balance of contracted spectrum may need to be ensured for the existing licensees who have so far been allocated only the startup spectrum of 4.4 MHz. It may be recalled that show cause notices have been issued to certain licensees for cancellation. Only in respect of the licences that will be found valid after the process is completed, the additional 1.8 MHz will be assigned on their becoming eligible, but the spectrum will be assigned to them at a price determined under the new policy. We need to seriously consider the adoption of an auction process for allocation and pricing of spectrum beyond 6.2 MHz while ensuring that there is adequate competition in the auction process. TRAI had made recommendations in May 2010 and indicated that it would apprise the Government of the findings of a study on the question of pricing of 2G spectrum in future. This is expected shortly. We would examine their recommendations speedily as soon as they are received, keeping the perspectives that I have outlined, while finalizing our new policy. I am confident that we will be able to design a policy th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nent sovereignty (of peoples and nations) over (their) natural resources as asserted in the 17th Session of the United Nations General Assemble and then affirmed as a customary international norm by the International Court of Justice in the case opposing the Democratic Republic of Congo to Uganda. Common Law recognizes States as having the authority to protect natural resources insofar as the resources are within the interests of the general public. The State is deemed to have a proprietary interest in natural resources and must act as guardian and trustee in relation to the same. Constitutions across the world focus on establishing natural resources as owned by, and for the benefit of, the country. In most instances where constitutions specifically address ownership of natural resources, the Sovereign State, or, as it is more commonly expressed, `the people', is designated as the owner of the natural resource. 65. Spectrum has been internationally accepted as a scarce, finite and renewable natural resource which is susceptible to degradation in case of inefficient utilisation. It has a high economic value in the light of the demand for it on account of the tremendous growth in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s limits and obligations upon government agencies and their administrators on behalf of all the people and especially future generations. For example, renewable and non-renewable resources, associated uses, ecological values or objects in which the public has a special interest (i.e. public lands, waters, etc.) are held subject to the duty of the State not to impair such resources, uses or values, even if private interests are involved. The same obligations apply to managers of forests, monuments, parks, the public domain and other public assets. Professor Joseph L. Sax in his classic article, "The Public Trust Doctrine in Natural Resources Law: Effective Judicial Intervention" (1970), indicates that the public trust doctrine, of all concepts known to law, constitutes the best practical and philosophical premise and legal tool for protecting public rights and for protecting and managing resources, ecological values or objects held in trust. 55. The public trust doctrine is a tool for exerting long-established public rights over short-term public rights and private gain. Today every person exercising his or her right to use the air, water, or land and associated natural ecosystems ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of India, thus it is the solemn duty of the State to protect the national interest and natural resources must always be used in the interests of the country and not private interests. 69. As natural resources are public goods, the doctrine of equality, which emerges from the concepts of justice and fairness, must guide the State in determining the actual mechanism for distribution of natural resources. In this regard, the doctrine of equality has two aspects: first, it regulates the rights and obligations of the State vis-`-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 to the private domain; and second, it regulates the rights and obligations of the State vis-`-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. 70. In Akhil Bharatiya Upbhokta Congress v. State of M.P. (2011) 5 SCC 29, this Court examined the legality of the action taken by the Government of Madhya Pra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... influence the exercise of discretion, if any, conferred upon the particular functionary or officer of the State." 71. In Sachidanand Pandey v. State of West Bengal (1987) 2 SCC 295, the Court referred to some of the precedents and laid down the following propositions: "State-owned or public-owned property is not to be dealt with at the absolute discretion of the executive. Certain precepts and principles have to be observed. Public interest is the paramount consideration. One of the methods of securing the public interest, when it is considered necessary to dispose of a property, is to sell the property by public auction or by inviting tenders. Though that is the ordinary rule, it is not an invariable rule. There may be situations where there are compelling reasons necessitating departure from the rule but then the reasons for the departure must be rational and should not be suggestive of discrimination. Appearance of public justice is as important as doing justice. Nothing should be done which gives an appearance of bias, jobbery or nepotism." 72. In conclusion, we hold that the State is the legal owner of the natural resources ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibution of national wealth, the nation would have been enriched by many thousand crores. 74. While it cannot be denied that TRAI is an expert body assigned with important functions under the 1997 Act, it cannot make recommendations overlooking the basic constitutional postulates and established principles and make recommendations which would deny people from participating in the distribution of national wealth and benefit a handful of persons. Therefore, even though the scope of judicial review in such matters is extremely limited, as pointed out in Delhi Science Forum v. Union of India (supra) and a large number of other judgments relied upon by the learned counsel of the respondents, keeping in view the facts which have been brought to the notice of the Court that the mechanism evolved by TRAI for allocation of spectrum and the methodology adopted by the then Minister of C& IT' and the officers of DoT for grant of UAS Licences may have caused huge loss to the nation, we have no hesitation to record a finding that the recommendations made by TRAI were flawed in many respects and implementation thereof by the DoT resulted in gross violation of the objective of NPT 1999 and the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licence is to be given, the public authority must adopt a transparent and fair method for making selections so that all eligible persons get a fair opportunity of competition. To put it 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-discriminatory method is adopted for distribution and alienation, which would necessarily result in protection of national/public interest. In our view, a duly publicised auction conducted fairly and impartially is perhaps the best method for discharging this burden and the methods like first-come-first-served when used for 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 for the constitutional ethos and values. In other words, while transferring or alienating the natural resources, the State is duty bound to adopt the method of auction by giving wide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of the Finance Ministry. (v) The Minister of C& IT' brushed aside the suggestion made by the Minister of Law and Justice for placing the matter before the Empowered Group of Ministers. Not only this, within few hours of the receipt of the suggestion made by the Prime Minister in his letter dated 2.11.2007 that keeping in view the inadequacy of spectrum, transparency and fairness should be maintained in the matter of allocation thereof, the Minister of C& IT' rejected the same by saying that it will be unfair, discriminatory, arbitrary and capricious to auction the spectrum to new applicants because it will not give them level playing field. (vi) The Minister C& IT' introduced cut off date as 25.9.2007 for consideration of the applications received for grant of licence despite the fact that only one day prior to this, press release was issued by the DoT fixing 1.10.2007 as the last date for receipt of the applications. This arbitrary action of the Minister of C& IT' though appears to be innocuous, actually benefitted some of the real estate companies who did not have any experience in dealing with telecom services and who had made applications only on 24.9.2007, i.e., one day b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt 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 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 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. When matters like these are brought before the judicial constituent of the State by public spirited citizens, it becomes the duty of the Court to exercise its power in larger public interest and ensure that the institutional integrity is not compromised by those in whom the people have reposed trus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation of spectrum in 2G band. We have not imposed cost on the respondents who had submitted their applications in 2004 and 2006 and whose applications were kept pending till 2007.
(vi) Within four months, 50% of the cost shall be deposited with the Supreme Court Legal Services Committee for being used for providing legal aid to poor and indigent litigants. The remaining 50% cost shall be deposited in the funds created for Resettlement and Welfare Schemes of the Ministry of Defence.
(vii) However, it is made clear that the observations made in this judgment shall not, in any manner, affect the pending investigation by the CBI, Directorate of Enforcement and others agencies or cause prejudice to those who are facing prosecution in the cases registered by the CBI or who may face prosecution on the basis of chargesheet (s) which may be filed by the CBI in future and the Special Judge, CBI shall decide the matter uninfluenced by this judgment. We also make it clear that this judgment shall not prejudice any person in the action which may be taken by other investigating agencies under Income Tax Act, 1961, Prevention of Money Laundering Act, 2002 and other similar statutes. X X X X Extracts X X X X X X X X Extracts X X X X
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