CENTRE FOR PUBLIC INTEREST LITIGATION AND OTHERS v. UNION OF INDIA AND OTHERS

26Copy pinpoint26. 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 Telecommunication sector, the government is contemplating to review the following terms and conditions in the Access provider (CMTS/UAS/Basic) license

i. Substantial equity holding by a company I legal H

CENTRE FOR PUBLIC INTEREST LITIGATION & 207 ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.] person in more than one licensee company in the A same service area (clause 1.4 of UASL agreement).

ii. Transfer of licences (clause 6 of the UASL)

iii. Guidelines dated 21.02.2004 on Mergers and B Acquisitions. TRAI in its recommendations dated 30.1.2004 had opined that the guidelines may be reviewed after one year.

iv. Permit service providers to, offer access services ' c using combination of technologies (CDMA, GSM and/or any other) under the same license.

v. Roll-out obligations (Clause 34 of UASL).

vi. Requirement to publish printed telephone · D directory."

27Copy pinpoint27. In furtherance of the aforesaid communication, TRAI made recommendations dated 28.8.2007. The main emphasis of these recommendations was the principles of fair competition, no restriction on the number of access service providers in any service area, need for spectrum management, measures to increase spectrum efficiency, allocation of spectrum and compliance of roll out obligations by the service providers. It was also recommended that in future all spectrum excluding the spectrum in 800, 900 and 1800 MHz bands in 2G services should be auctioned. In paragraphs 2.33, 2.39, · 2.41, 2.54 and 2.63, TRAI repeatedly mentioned about scarce availability of spectrum. Paragraphs 2.37, 2.40, 2.69 and 2.73 to 2. 79 of the TRAl's recommendations dated 28.8.2007 are extracted below:

"2.37 Accordingly, the Authority recommends that no cap be placed on the number of access service providers in any service area. H

208 SUPREME COURT REPORTS [2012) 3 S.C.R.

A 2.40 The present spectrum allocation criteria, pricing methodology and the management system suffer from a number of deficiencies and therefore the Authority recommends that this whole issue is not to be dealt with in piecemeal but should be taken B up as a long term policy issue. There is an urgent need to address the issues linked with spectrum efficiency and its management.

2.69 The Entry fee for acquiring a UASL license enables the licensee to become eligible for spectrum c allocation in certain specified bands without any additional fee for acquisition of spectrum which means that allocation of spectrum follows the grant of license subject however 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 F 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 G 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 resourc~. The H Authority in the context of 800, 900 and 1800 MHz

CENTRE FOR PUBLIC INTEREST LITIGATION & 209 ORS. v. UNION OF !NOIA & ORS. [G.S. SINGHVI, J.]

is conscious of the legacy i.e. prevailing practice A and the overriding consideration of level playing field. Though the dual charge in present form . does not reflect the present value of spectrum it needed to be continued for treating already specified bands for 2G services i.e. 800, 900 and B 1800 MHz. It is in this background that the Authority is not recommending the standard options pricing of spectrum, however, it has elsewhere in the recommendation made a strong case for adopting auction procedure in the c allocation of all other spectrum bands except 800, 900 and 1800 MHz. ·

210 SUPREME COURT REPORTS [2012] 3 S.C.R.

A affordability of services to the common man is the key to further expansion.

2.76 However, the Authority is of the view that the approach needs to be different for allocating and pricing spectrum beyond 10 MHz in these bands i.e. B 800, 900 and 1800 MHz. In this matter, the Authority is guided by the need to ensure sustainable competition in the market keeping in view the fact that there are new entrants whose subscriber acquisition costs will be far higher than c the incumbent wireless operators. Further, the technological progress enables the operators to adopt a number of technological solutions towards improving the efficiency of the radio spectrum assigned to them. A cost- benefit analysis of allocating addition;al spectrum beyond 10 MHz to existing wireless operators and the cost of deploying additional CAPEX towards technical improvements in the networks would show that . there is either a need 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

CENTRE FOR PUBLIC INTEREST LITIGATION & 211 ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.] 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 8 the number of access service providers.

2.77 The Authority in its recommendation on "Allocation and pricing of spectrum for 3G and broadband wireless access services" had recommended certain reserve price for 5 MHz of spectrum in C different service areas. The recommended price are as below:

Service Areas Price (Rs.in million) for 2X5 MHz D Mumbai, Delhi and Category A 800

Chennai, Kolkatta and Category B 400

Category C 150 E The Authority recommends that any licensee who seeks to get additional spectrum beyond 10 MHz in the existing 2G bands i.e. 800,900 and 1800 MHz after reaching the specified subscriber numbers shall have to pay a onetime F spectrum charge at the above mentioned rate on prorata · basis for allotment of each MHz or part thereof of spectrum beyond 10 MHz. For one MHz allotment in Mumbai, Delhi and Category A service areas, the service provider will have to pay Rs. 160 million as one time spectrum acquisition charge. G

2. 78 As far as a new entrant is concerned, the question arises whether there is any need for change in the pricing methodology for allocation of spectrum in the 800, 900 and 1800 MHz bands. Keeping in H

212 SUPREME COURT REPORTS [2012] 3 S.C.R.

A view the objective of growth, affordability, penetration of wireless services in semi-urban and rural areas, the Authority is not 'in favour of changing the spectrum fee regi,r{le for a new entrant. Opportunity for equal competition has B always been one of the prime principles of the Authority in suggesting a regulatory. framework in telecom services. Any differential treatment to a new entrant vis-a-vis incumbents in the wireless sector will go against the principle of level playing field. This is specific and restricted to 2G bands c only i.e. 800, 900 and 1800 MHz. This approach assumes more significance particularly in the context where subscriber acquisition cost for a new entrant is likely to be much higher than for the incumbent wireless operators. D 2.79. In the case of spectrum in bands other than 800, 900 and 1800 MHz i.e. bands that are yet to be allocated, the Authority examined various possible approaches for pricing and has come to the conclusion that it would be appropriate in future for a market based price discovery systems. In response to the consultation paper, a number of stakeholders have also strongly recommended that the allocation of spectrum should be immediately de-linked from the license and the future allocation should be based on auction. The Authority in its recommendation on "Allocation and pricing of spectrum for 3G and broadband 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 H

CENTRE FOR PUBLIC INTEREST LITIGATION & 213 ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.] a/location 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) C

28Copy pinpoint28. 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, Department of Information Technology and Secretary, Planning Commission were not even informed about the meeting. In this meeting of the Telecom Commission, which was attended by the officials of the DoT only, the report of the Internal Committee was approved. On 17.10.2007, the Minister of C&IT accepted the recommendations of the Telecom Commission and thereby approved the recommendations made by TRAI. However, neither the Internal Committee of the F DoT and the Telecom Commission nor the Minister of C&IT took any action in terms of paragraph 2.40 of the recommendations wherein it was emphasised that the existing spectrum allocation criteria, pricing methodology and the management system suffer from a number of deficiencies and G the whole issue should be addressed keeping in view issues linked with spectrum efficiency and its management. The DoT also did not get in touch with the Ministry of Finance to discuss and finalise the spectrum pricing formula which had to include incentive for efficient use of spectrum as well as disincentive H

214 SUPREME COURT REPORTS [2012] 3 S.C.R.

A for sub-optimal usage in terms of the Cabinet decision of 2003.

29Copy pinpoint29. In the meanwhile, on 24.9.2007, Shri A.K. Srivastava, DOG (AS), DoT prepared a note mentioning therein that as on that date, 167 applications had been received from 12 companies for 22 service areas and opined that it may be 8 difficult to handle such a large number of applications at any · point of time. He suggested that 10.10.2007 may be announced as the cut-off date for receipt of new UAS Licence applications. Shri A. Raja who was, at the relevant time, Minister of C&IT did not agree with the suggestion and ordered that C . 1.10.2007 be fixed as the cut-off date for receipt of applications for new UAS Licence. Accordingly, press note dated 24.9.2007 was issued by the DoT stating that no new application for UAS Licence will be accepted after 1.10.2007.

30Copy pinpoint30. It is borne out from the record that Vodafone Essar Spacetel Ltd. (respondent No.12) had made an application for · UAS Licence in 2004 and 3 others, namely, Idea Cellular Ltd. (respondent No.8), Tata Teleservices Ltd. (respondent No.9) and Mis. A!rcel Ltd. (respondent No.11) had made similar E applications in 2006. However, the same were not disposed of by the DoT and they were included in the figure of 167. Between 24.9.2007 and 1.10.2007, over 300 applications were received for grant of UAS L_icences. Member (Technology), Telecom Commission and Ex-officio Secretary to F 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 G 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- H

CENTRE FOR PUBLIC INTEREST LITIGATION & 215 ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.] served basis in chronological order of receipt of applications A , 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 B 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 the conditions of Loi within stipulated time, their seniority of license/ spectrum will be on the basis of their application date. The c compliance of eligibility conditions as on the date of issue of Loi may be accepted. No relaxation of this time limit will be given and Loi shall stand terminated after the stipulated time period (however, the applicant may have the right to apply for new UAS Licence again as and when the window for 0 submission of new UAS Licence is opened again). Subsequent applications may be considered for issue of Loi if the spectrum is available. (II) Lois to all those who applied by 25.9.2007 (date on which the cut-off date for receipt of applications were made E public through press) may be issued in each service area as it is expected that only serious players will deposit the entry fee and seniority for license/spectrum be based on (i) the date of appflcatiQn or (ii) the date/time of fulfilment of all Loi conditions. F (Ill) DoT may issue Lois to all eligible applications simultaneously received up to cut-off date. Since Lois will clearly stipulate that spectrum allocation is subject to availability and is not guaranteed, the Loi holders are supposed to pay the entry fee if their business case permits them top wait for spectrum G allocation subject to availability an initial roll out using wire line technology.

(IV) Any other better approach which may be legally tenable and sustainable for issue of new licences. H

216 SUPREME COURT REPORTS [2012] 3 S.C.R.

A Paragraph 13 of the statement of case is extracted below:

"Issue of Lois to M/s. TATA and others for usage of Dual Technology spectrum based on their applications received after 18.10.2007. Whether 8 (i) To treat their request prior to existing applicants

(ii) To treat their request after processing all 575 applications." c

31Copy pinpoint31. The Law Secretary placed the papers before the Minister of Law and Justice on 1.11.2007, who recorded the following note:

D "I agree. In view of the importance of the case and various options indicated in the statement of the case, it is . necessary that whole issue is first considered by an empowered Group of Ministers and in that process legal opinion of Attorney General can be obtained."

32Copy pinpoint32. When the note of the Law Minister was placed before the Minister of C&IT, he recorded the following note on 2 .11.2007 - "Discuss please". On the same day, i.e., 2.11.2007 the Mihisterof C&IT did two things. He approved the note prepared by Director (AS-1) containing the following F issues:

(i) Issuing of Lois to new applicants as per the existing policy,

(ii) · Number of Lois to be issued in each circle, G (iii) Approval of draft Loi,

(iv) Considering application of TATAs for dual technology after the decision of TDSAT on dual ·H technology, and

CENTRE FOR PUBLIC INTEREST LITIGATION & 217 ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.) (v) Authorising Shri R.K. Gupta, ADG (AS-1) for signing the Lois on behalf of President of India.

33Copy pinpoint33. 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- C 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 of the letter of the Minister of C&IT are extracted below: D

"3. The Department wanted to examine the possibility of any other procedure in addition to the current procedure of allotment of Licences to process the huge number of applications. A few alternative procedures as debated in the Department and also opined by few legal experts were suggested by the Department of Telecom to Ministry of Law & Justice to examine its legal tenability to avoid future legal complications, if any. Ministry of Law and Justice, instead of examining the legal tenability of these alternative procedures, suggested referring the matter to empowered Group of Ministers. Since, generally new major policy decisions of a; Department or inter-departmental issues are referred to GOM, and, needless to say that the present issue relates to procedures, the suggestion of Law Ministry G is totally out of context.

4. Now, the Department has decided to continue with the existing policy (first-come-first-served) for processing of applications received up to 25th September 2007, ! e. the date when the news-item on announcement of cut-off date H

218 SUPREME COURT REPORTS [2012] 3 S.C.R.

A appeared in the newspapers. 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 25th September 2007. B

4. As the Department is not deviating from the existing procedure, I hope this will satisfy the Industry."

34Copy pinpoint34. In the meanwhile, the Prime Minister who had received representations from telecom sector companies and had read C reports appearing in a section of media sent letter dated 2.11.2007 to the Minister of C&IT and suggested that a fair and transparent method should be adopted for grant of fresh licences. That letter reads as under:

D "Prime Minister

New Delhi 2 November, 2007

Dear Shri Raja, E A number of issues relating to allocation of spectrum have been raised by telecom sector companies as well as in sections of the media. Broadly, the issues relate to enhancement of subscriber linked spectrum allocation criteria, permission to CDMA service providers to also F provide services on the GSM standard and be eligible for spectrum in the GSM service band, and the processing of a large number of applications received for fresh licenses against the backdrop of inadequate spectrum to cater to overall demand. Besides these, there are some other G !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 H

CENTRE FOR PUBLIC INTEREST LITIGATION & 219 ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVi, J.] and transparency and let me know of the position before A you take any further action in this regard.

With regards, Yours sincerely, Sd/- B (Manmohan Singh) Shri A. Raja

Minister of Communications and IT

New Delhi. c Annexure

1. Enhancement of subscriber linked spectrum allocation criteria D

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 I E 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 the license fee. With the deposit of the fee, they would be eligible for GSM spectrum, for which old incumbent operators have been waiting since last several years. The Cellular Operators Association of India (COAi), being the association of GSM service providers, has represented against this. It is understood that the COAi has also H

220 SUPREME COURT REPORTS [2012] 3 S.C.R.

A approached the TDSAT against this.

3. Processing of a large number of applications received for fresh licenses against the backdrop of inadequate spectrum to cater to overall demand

B The DoT has received a large number of applications for new licenses in various telecom circles. Since spectrum is very limited, even in the next several years all these licensees may never be able to get spectrum. The Telecom Policy that had been approved by the Union Cabinet in C 1999 specifically stated that new licenses would be given subject to availability of spectrum.

4. In order that spectrum use efficiency gets directly linked with correct pricing of spectrum, D consider (i) introduction of a transparent methodology of auction, wherever legally and technically feasible, and (ii) revision of entry fee, which is currently benchmarked on old spectrum auction figures

E 5. Early decision on· issues like rural telephony, infrastructure sharing, 3G, Broadband, Number Portability and Broadband Wireless Access, on which the TRAI has already given recommendations." F (emphasis supplied)

35Copy pinpoint35. The Minister of C&IT did not bother to consider the suggestion made by the Prime Minister, which was consistent with the Constitutional principle of equality, that Reeping in view G the inadequate availability of spectrum, fairness and transparency should be maintained in the allocation of spectrum, and within few hours of the receipt of the letter from the Prime Minister, he sent a reply wherein he brushed aside the suggestion made by the Prime Minister by saying that it will H

CENTRE FOR PUBLIC INTEREST LITIGATION & 221 ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]

be unfair, discriminatory, arbitrary and capricious to auction the A spectrum to new applicants as it will not give them a level playing field. The relevant portions of paragraph 3 of the Minister's letter are extracted below:

"3. Processing of a large number of applications 8 received for fresh licenses against the backdrop of inadequate spectrum to cater to overall demand

The issue of auction of spectrum was considered by the TRAI and the Telecom Commission and was not recommended as the existing licence holders who are C 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. D

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."

222 SUPREME COURT REPORTS [2012]' 3 S.C.R.

36Copy pinpoint36. On 20.11.2007, the Secretary, DoT had made a presentation on the spectrum policy to the Cabinet Secretary. The Finance Secretary, who appears to have witnessed the presentation, dispatched letter dated 22 .11.2007 to the Secretary, DoT and expressed his doubt as to how the rate of B Rs.1600 crores determined in 2001, could be applied without any indexation for a licence to be given in 2007. He also emphasized that in view of the financial implications, the Ministry of Finance should have been consulted before the matter was finalised at the level of the DoT. Secretary, DoT promptly c replied to the Finance Secretary by sending letter dated 29.11.2007 in which he mentioned that as per the Cabinet decision dated 31.10.2003, the DoT had been authorised to finalise the details of implementation of the recommendations ofTRAI and in its recommendations dated 28.8.2007, TRAI had not suggested any change in the entry fee/licence fee. 0

37Copy pinpoint37. In the context of letter dated 22.11.2007 sent by the Finance Secretary, Member (Finance), DoT submitted note dated 30.11.2007 suggesting that the issue of revision of rates should be examined in depth before any final decision is taken E in the matter. When the note was placed before the Minister of C & IT, he observed that the matter of entry fee has been deliberated in the department several times in light of various guidelines and the TRAI recommendations and accordingly decision was taken not to revise the entry fee and that the F Secretary, DoT had also replied to the Finance Secretary's letter on the above lines.

38Copy pinpoint38. Although, the record produced before this Court does not·show as to when the policy of first-come-first-served was G distorted by the Minister of C&IT, in an apparent bid to show that he had secured the Prime Minister's approval to this act of his, the Minister C&IT sent letter dated 26.12.2007 to the Prime Minister, paragraphs 1 and 2 of which are extracted below:

. CENTRE FOR PUBLIC INTEREST LITIGATION & 223 ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.] "1. Issue of Letter of Intent (LOI): DOT follows a policy of A First-cum-First Served for granting LOI to the applicants for UAS licence, which means, an application received first will be processed first and if found eligible will be granted LOI. B

2. Issue of Licence: The First-cum-First Served policy is also applicable for grant of licence on compliance of LOI conditions. Therefore, any applicant who complies with the conditions of LOI first 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 LOl'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." E (underlining is ours)

39Copy pinpoint39. After 12 days, DOG (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.

40Copy pinpoint40. 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.

41Copy pinpoint41. On 10.1.2008 i.e., after three days of postponement of the meeting of the Telecom Commission, a press release H

224 SUPREME COURT REPORTS [2012] 3 S.C.R. .

A was issued by the DoT under the signature of Shri A.K. Srivastava, DOG (AS), DoT. The same reads as under:

"In the light of Unified Access Services Licence (UASL) guidelines issued on 14th December 2005 by the department regarding number of Licenses in a Service B Area, a reference was made to TRAI on 13-4-2007. The TRAI on 28-08-2007 recommended that No cap be placed on the number of access service providers in any service area. The government accepted this recommendation of TRAI. Hon'ble Prime Minister also emphasized on c increased competition while inaugurating India Telecom

2007. Accordingly, DOT has decided to issue LOI to all the eligible applicants on the date of application who applied up-to 25-09-2007.

D UAS license authorises licencee to rollout telecom access services using any digital technology which includes wire- line and/or wireless (GSM and/or CDMA) services. They can also provide Internet Telephony, Internet Services and Broadband services. UAS licence in broader terms is an umbrella licence and does not automatically authorize UAS licensees usage of spectrum to rollout Mobile (GSM and/ or CDMA) services. For this, UAS licencee has to obtain another licence, i.e. Wireless Operating Licence which is granted on first-come-first-served basis subject to availability of spectrum in particular service area.

DOT has been implementing a policy of First-cum-First Served for grant of UAS licences under which initially an application which is received first will be processed first and thereafter if found eligible will be granted LOI and then who so ever complied with the conditions of LOI first will be granted UAS licence.

CENTRE FOR PUBLIC INTEREST LITIGATION & 225 ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.] Department of Telecom A

(AS Cell)

(underlining is ours) B

42Copy pinpoint42. On the same day, another press release was issued asking all the applicants to assemble at the departmental headquarters within 45 minutes to collect the response(s) of the DoT. They were also asked to submit compliance of the terms c of Lois within the prescribed period. The second press release is also reproduced below:

"Department of Telecommunications

Press Release D

Date : 10th January 2008

. Sub : UASL applicants to depute their authorised representative to collect responses of DOT on 10.1.2008. E The applicant companies who have submitted 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 H

226 SUPREME COURT REPORTS [2012] 3 S.C.R.

A 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 LOls within the B 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) c DDG(AS) Dept. of Telecom DDG(C&A): The above Press Release may kindly be uploaded on DOT website immediately." D

43Copy pinpoint43. All the applicants including those who were not even eligible for UAS Licence collected their Lois on 10.1.2008. The acceptance of 120 applications and compliance with the terms and conditions of the Lois for 78 applications was also received on the same day. E

44Copy pinpoint44. Soon after obtaining the Lois, 3 of the successful applicants offloaded their stakes for thousands of crores in the name of infusing equity, their details are as under:

(i) Swan Telecom Capital Pvt. Ltd. (now known as F Etisalat DB Telecom Pvt. Ltd.) which was incorporated on 13.7.2006 and got UAS Licence by paying licence fee of Rs. 1537 crores transferred its 45% (approximate) equity in favour of Etisalat Mauritius Limited, a wholly owned subsidiary of G Emirates Telecommunications Corporation of UAE for over Rs.3,544 crores.

(ii) Unitech which had obtained licence for Rs.1651 crores transferred its stake 60% equity in favour of H

CENTRE FOR PUBLIC INTEREST LITIGATION & 227 ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.] Telenor Asia Pte. Ltd., a part of Telenor Group A (Norway) in the name of issue of fresh equity shares for Rs.6120 crores between March, 2009 and February, 2010.

(iii) Tata Tele Services transferred 27.31 % of equity 8 worth Rs. 12,924 crores in favour of NTI DOCOMO.

(iv) Tata Tele Services (Maharashtra) transferred 20.25% of equity worth Rs. 949 crores in favour of NTIDOCOMO. c

45Copy pinpoint45. S. Tel Ltd., who had applied for grant of licence pursuant to press note dated 24.9.2007, but was ousted from the zone of consideration because of the cut-off date fixed by the Minister of C&IT, filed Writ Petition No.636 of 2008 in the Delhi High Court with the prayer that the first press release 0 dated 10.1.2008 may be quashed. After hearing the parties, the learned Single Judge vide his order dated 1. 7 .2009 declared that the cut-off date, i.e., 25.9.2007 was totally arbitrary and directed the respondents in the writ petition to consider the offer made by the writ petitioner to pay Rs.17.752 E crores towards additional revenue share over and above the applicable spectrum revenue share. The observations made by the learned Single Judge on the justification of fixing 25.9.2007 as the cut-off date read as under:

"Thus on the one hand the respondent has accepted the recommendation of 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 H

228 SUPREME COURT REPORTS [2012] 3 S.C.R.

A 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 B 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 c made by 25.9.2007 and between 25.9.2007 and 1.10.2007 only 76 were applications were received. It was only on 1.10.2007 that 267 applications were made. Thus on 28.09.2007 it cannot be said that large number of applications were received. Thus taking into consideration . the opinion of the expert body, which as per the press note of the respondent itself was accepted by the respondent, · certainly the respondent cannot be allowed to change the rules of the game after the game had begun, to put it in the words of the Apex Court especially when the respondent has failed to give any plausible justification or the rationale for fixing the cut-off date by merely a week. Taking into consideration that on 13.4.2007 the Government of India had recommended TRAI to furnish its recommendation in terms of 11 (e) of the TRAI Act, 1997 on the issue as to whether a limit should be put on the number of access service providers in each service area. The TRAI having given its recommendations on 28.8.2007 which were duly accepted by the Government, the respondent cannot be allowed to arbitrarily change the cut- off date and that too without any justifiable reasons." G.

46Copy pinpoint46. The letters patent appeal filed against the order of the learned Single Judge was dismissed by the Division Bench of the High Court vide judgment dated 24.11.2009, paragraphs 13 and 14 whereof are reproduced below: H

CENTRE FOR PUBLIC INTEREST LITIGATION & 229 ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]

"13. We are unable to agree with the submission of the learned Attorney General that the parameters that would apply to revising a cut-off date that has been earlier fixed prior to the receipt of the applications would be no different from fixing a cut-off date in the first place. While the · decision in D.S. Nakara which has subsequently been distinguished in N. Subbarayudu is about fixing a cut-off date which might be an exercise in the discretion of the Appellant, those decisions are not helpful in deciding the revision of a cut-off date after applications have been received in terms of the previous cut-off date, is amenable c to judicial review on administrative and constitutional law parameters. We are of the view that the two situations cannot be equated. The Government would have to justify its decision to revise a cut-off date already fixed, after applications have been received from persons acting on 0 the basis of the earlier cut-off date. It would be for the court to be satisfied when a challenge is made, that the decision to revise a cut-off date after receiving applications on 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 ineligibiliti is announced after the applications have been made. In other H

230 SUPREME COURT REPORTS [2012] 3 S.C.R.

A 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 gam~ has begun. We do not think that the decisions relied upon by the learned Attorney B General contemplate such a situation. On the other hand the decisions in Monarch Infrastructure (P) Ltd. and K. Manjushree fully support the Respondent's case for invalidation of the Appellant's impugned decision revise the cut-off date from 1st October 2007 to 25th September c 2007, long after receiving the application from the Respondent."

47Copy pinpoint47. The Union of India challenged the judgment of the Division Bench in SLP(C) No.33406/2009. During the pendency of the special leave petition, some compromise appears to have been reached between the writ petitioner and the authorities and, therefore, an additional affidavit was filed along with agreed minutes of order before this Court on 12.3.2010. In view of this development, the Court disposed of the appeal arising out of the special leave petition but specifically approved the findings recorded by the High Court with regard to the cut-off date by making the following observations:

"Taking the additional affidavit and the suggestions made F · by the learned Attorney General, this appeal is disposed of as requiring no further adjudication.

However, we make it clear that the findings recorded by the High Court with regard to the cut off date is not interfered with and disturbed by this Court in the present G case."

GROUNDS OF CHALLENGE

· 48. The petitioners have questioned the grant of UAS H Licences to the private respondents by contending that the

CENTRE FOR PUBLIC INTEREST LITIGATION & 231 ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]

procedure adopted by the DoT was arbitrary, illegal and in complete violation of Article 14 of the Constitution. They have relied upon the order passed by the learned Single Judge of the Delhi High Court as also the judgment of the Division Bench, which was approved by this Court and pleaded that once the Court has held that the cut-off date, i.e., 25.9.2007 fixed for consideration of the applications was arbitrary and unconstitutional, the entire procedure adopted by the DoT for grant of UAS Licences with the approval of the Minister of C&IT is liable to be declared illegal and quashed. Another plea taken by the petitioners is that the DoT violated the recommendations c made by TRAI that there should be no cap on the number of Access Service Providers in any service area and this was in complete violation of Section 11 (1) of the 1997 Act. The petitioners have relied upon the report of the Comptroller and Auditor General (CAG) and pleaded that the consideration of 0 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 policy 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 licences.

232 SUPREME COURT REPORTS [2012] 3 S.C.R.

A COUNTER AFFIDAVITS OF THE RESPONDENTS

49Copy pinpoint49. Most of the respondents have filed separate but similar counter affidavits in both the petitions. The main points raised by the respondents are: B (i) The petitioners are not entitled to challenge the recommendations made by TRAI and the policy decisions taken by the Government for grant of UAS Licences.

(ii) The Court cannot review and nullify the c recommendations made by TRAI in the matter of allocation of spectrum in 800, 900 and 1800 MHz bands at the rates fixed in 2001.

(iii) The report prepared by the CAG cannot be relied upon for the purpose of recording a finding that the procedure D adopted for the grant of UAS Licences is contrary to Article 14 of the Constitution. The private respondents have also claimed that the observations made by the CAG and the conclusions recorded by him are seriously flawed and are based on totally unfounded assumptions. E · (iv) The UAS Licences were given strictly in accordance with the modified first-come-first-served policy. That the respondents were able to fulfil Loi conditions because newspapers had already published stories about the possible F grant of licences in the month of January, 2008.

(v) That those who had made applications in 2004 and 2006 cannot be clubbed with those who had applied in the month of August and September, 2007 because in terms of the . existing UASL guidelines they were entitled to licences. G (vi) That private respondents have made huge investments for creating infrastructure to provide services in different parts of the country and if the licences granted to them are cancelled at this stage, public interest would be adversely affected. H

CENTRE FOR PUBLIC INTEREST LITIGATION & 233 ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.] (vii) That the private respondents have been able to secure A' foreign direct investment of thousands of crores for providing better telecom services in remote areas of the country and any intervention by the Court would result in depriving the people living in those areas of telecom services. B (viii) The Government and TRAI have already initiated action for levy of penalty/liquidated damages for non- compliance of the roll out obligations and violation of conditions of the license. That the licensees have not violated any conditions of the license and that the notices issued by TRAI C alleging the same have already been challenged before TDSAT and in most cases, interim orders have been passed. That the remedy, if any, 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.

50Copy pinpoint50. 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 G 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 placed on record photostat copies of the notings recorded on the files of the DoT. H

234 SUPREME COURT REPORTS [2012] 3 S.C.R.

A ARGUMENTS

51Copy pinpoint51. Shri Prashant Bhushan, learned counsel for the petitioners in Writ Petition (C) No. 423 of 2010 and Dr. Subramanian Swamy, who is petitioner-in-person in Writ Petition (C) No. 1O of 2011 made the following· submissions: 8 (i) The spectrum, which is a national asset, cannot be , distributed by adopting the policy of first-come-first-served on the basis of the application received by the DoT without any advertisement and without holding auction. c (ii) The grant of licences bundled with spectrum is ex-facie arbitrary illegal and violative of Article 14 of the Constitution.

(iii) The decision of the Minister of C&IT to pre-pone the D cut-off date from 1.10.2007 to 25.9.2007, which eliminated large number of applications, is violative of Article 14 of the Constitution and the entire exercise undertaken with reference to this cut-off date has resulted in discrimination vis-a-vis other eligible applicants. E (iv) Once the cut-off date fixed by the Minister of C&IT for consideration of the applications received in the light of the earlier press release fixing the last date as 1.10.2007 has been declared to be arbitrary and unconstitutional by the F High Court, the consequential actions taken by the DoT on that basis are liable to be annulled.

(v) The first-come-first-served policy suffers from a · fundamental flaw inasmuch as there is no defined criterion for operating that policy. There is no provision for issue of advertisement notifying obligations for grant of licence and allocation of spectrum and any person who makes an application becomes entitled to get licence and spectrum.

(vi) The first-come-first-served policy was manipulated by the Minister of C&IT to favour some of the applicants

CENTRE FOR PUBLIC INTEREST LITIGATION & . 235 ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.] including those who were not even eligible. Shri Bhushan A pointed out that, out of 122 applications, 85 were found to be ineligible and those who could obtain information either from the concerned Minister or the officers of DoT about the change of the criteria for implementing the first-come- first-served policy got advantage and acquired priority over those who had applied earlier.

(vii) The meeting of the Telecom Commission scheduled for 9.1.2008 was deliberately postponed because vide letter dated 22.11.2007 the Finance Secretary had strongly objected to the charging of entry fee fixed 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 D 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 E 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. F

(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 G the suggestion and granted licence to the applicants for extraneous reasons. (x) Shri Prashant Bhushan also questioned the grant of the benefit of the policy of dual technology to Tata Teleservices H

236 SUPREME COURT REPORTS [2012] 3 S.C.R.

A Ltd. by contending that this was a result of manipulation made by the service provider. Dr. Subramanian Swamy also raised a concern regarding the national security and pointed out that some of the applicants who have trans- border connections have received licences and they may . B ultimately prove to be dangerous for the nation.

52Copy pinpoint52. Shri G.E. Vahanvati, learned Attorney General referred to NTP 1994 and NTP 1999 and submitted that the policy decision taken by the Government of India for private sector participation, which could bring in the funds required for C expansion of telecommunication services in different parts of the country, cannot be scrutinized by the Court. He submitted that in the last more than 20 years, the telecom services have expanded beyond anybody's expectation because of private sector participation and it cannot be said that granting UAS D Licences by charging the entry fee determined at 2001 prices is unconstitutional. Learned counsel referred to the history of development in the field of telecommunications and the concept of spectrum, and submitted that the policy decision taken by the DoT for migration of CDMA service providers was neither illegal nor unconstitutional.

53Copy pinpoint53. Shri Salve, learned senior counsel appearing for respondent No. 9, pointed out that Tata Teleservices had sent an application through fax for grant of GSM for the existing licences which were issued on 19.10.2007 and no exception can be taken to this because Reliance Telecom, which had applied for GSM on 6.2.2006, was given the benefit of migration to dual technology on 18.10.2007, i.e. even before the policy was made public. Learned senior counsel argued that the decision not to auction UAS Licences was based on the recommendations of TRAI and as the petitioners have not challenged the recommendations for two years, the exercise undertaken by the DoT for grant of UAS Licences in 2008 and subsequent allotment of spectrum should not be nullified. Shri Salve argued that the question of institutional integrity is H

CENTRE FOR PUBLIC INTEREST LITIGATION & 237 ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.]

involved in the matter and if the Court comes to the conclusion A · that auction is the only method for grant of licences and allocation of spectrum then everything should be annulled right from 2001. Learned senior counsel submitted that multi-stage bidding was done only for the purpose of entry of 4th cellular operator but, thereafter, no auction was held. He submitted that B . if the spectrum was allotted free of charge till 2007, there could be no justification for auction of licences or spectrum in 2007.

54Copy pinpoint54. Shri C.A. Sundaram, learned counsel appearing for respondent Nos. 2 and 4, heavily relied on paragraphs 7.2, 7.4, C 7;.12, 7.29, 7.30, 7.37 and 7.39 of TRAl's recommendations elated 27.10.2003 and argued that the recommendations made ih 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 deliberati6ns and consideratiori 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.

55Copy pinpoint55. Shri Vikas Singh, learned senior counsel appearing for respondent no. 10, argued that the recommendations made- by TRAI in 2007, which were approved by the Minister of C&IT are in national interest because the same would attract investment by foreign players and would benefit the people at large. Learned counsel emphasised that his client has already invested Rs. 6,000 crores and it would be totally unjust if the licence granted in 2008 is cancelled. Shri Vikas Singh also submitted that after the grant of licences and allocation of spectrum the people have been hugely benefited inasmuch as H

238 . SUPREME COURT REPORTS [2012] 3 S.C.R.

A the telecom services have become competitive with the international market and even cheaper than that.

56Copy pinpoint56. Shri C. S. Vaidyanathan, learned senior counsel appearing for respondent No. 8, argued that the application made by his client was pending since June, 2006 and its 8 priority was pushed down due to the application of the distorted version of the first-come-first-served policy. Shri Vaidyanathan pointed out that when the Minister of C&IT announced that applications will not be received after 1.10.2007, there was a huge rush of applications and a large number of players who had no experience in the field of telecom made applications and got the licences.

57Copy pinpoint57. Dr. Abhishek Manu Singhvi, learned senior counsel appearing for respondent nos. 11 and 12, argued that his clients had made applications much prior to 2007 but they were unfairly clubbed with those who had applied in 2007 and in this manner the principle ·of equality was violated. Dr. Singhvi submitted that if the applications made prior to 2007 had been processed as per the existing policy, respondent Nos. 11 and E 12 would have received licences bundled with spectrum without competition/objection from anyone.

58Copy pinpoint58. Shri Dayan Krishnan, learned counsel for respondent No. 6, adopted the arguments of other learned counsel and submitted· that the licences granted in 2007 should not be quashed at this belated stage. '

59Copy pinpoint59. Shri Rakesh Dwivedi, learned senior counsel for TRAI, referred to TRAl's written submissions to justify why it had not recommended auction of licences. Learned senior counsel extensively referred to the recommendations made by TRAI in 2007 and submitted that even though it was specifically suggested that the DoT should take a comprehensive decision on the allocation of spectrum, no effort was made in that direction and the licences were granted without determining availability of spectrum. Shri Dwivedi also submitted that TRAI

CENTRE FOR PUBLIC INTEREST LITIGATION & 239 ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.] 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. 8 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, C Jamshed Hormusji Wadia v. Board of Trustees, Port of Mumbai (2004) 3 SCC 214, Chaitanya Kumar v. State of Kamataka (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. D (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 SCC 333, Vil/ianur lyarkkai Padukappu Maiyam v. Union E of India (2009) 7 SCC 561, Ministry of Labour and Rehabilitation v. Tiffin's Barytes Asbestos & Paints Ltd. (1985) 3 SCC 594, United India Fire and General Insurance. Co. Ltd. v. K.S. Vishwanathan (1985) 3 SCC 686, State of T.N. v. M.N. Sundararajan (1980) 4 SCC 592, Sunil Pannalal Banthia v. F City & Industrial Development Corporation of Maharashtra Ltd. (2007) 10 SCC 674, Bombay Dyeing & Mfg. Co. Ltd. (3) v. Bombay Environmental Action Group (2006) 3 SCC 434, Prem Chand Somchand Shah v. Union of India (1991) 2 SCC 48 and Sanjeev Coke Mfg. Co. v. Bharat Coking Coal Ltd. G (1983) 1 sec 147.

61Copy pinpoint61. Before dealing with the arguments of the learned counsel for the parties and adverting to some of the precedents, we consider it necessary to mention that during the H

240 SUPREME COURT REPORTS [2012] 3 S.C.R.

A course of hearing, Shri Prashant Bhushan and Dr. Subramanian Swamy heavily relied upon the CAG report as also the One- Man Committee Report. Learned),ttorney General and learned . senior counsel appearing for some of the private respondents also referred to the One-Man Committee Report. However, as B. the CAG report is being examined by the Public Accounts Committee and Joint Parliamentary Committee of Parliament we do not consider it proper to refer to the findings and conclusions contained therein. Likewise, we do not consider it necessary to advert to the observations made, and the c suggestions given by the One-Man Committee because the Government of India has already taken a decision to segregate spectrum from licence and allot the same by auction. This is evident from the following extracts of the press statement dated 29.1.2011 issued by the present Minister of C&IT: D "In future, the spectrum will not be bundled with licence. The licence to be issued to telecom operators will be in the nature of 'unified licence' and the licence holder will be free to offer any of the multifarious telecom services. In the event the licence holder would like to offer wireless E services, it will have to obtain spectrum through a market driven process. In future, there will be no concept of contracted spectrum and, therefore, no concept of initial or start-up spectrum. Spectrum will be made available only through market driven process. F While moving towards a new policy dispensation, it is necessary to ensure a level playing field between all players. Hence going forward, any new policy of pricing would need to be applied to equally to all players. Additionally, assignment of balance of contracted spectrum G may need to be ensured for the existing licensees who have so far been allocated only the start up spectrum of 4.4 MHz. It may be recalled that showcause notices have been issued to certain licensees for cancellation. Only in respect of the licences that will be found valid after the H

CENTRE FOR PUBLIC INTEREST LITIGATION & 241 ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.] process is completed, the additional 1.8 MHz will be A 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 8 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 that ensures that existing licence holders get the spectrum they need and are entitled to, while simultaneously, ensuring that the Government also receives revenues commensurate with the current market value of spectrum." E

62Copy pinpoint62. We shall now consider the questions enumerated in the opening paragraph of the judgment.

63Copy pinpoint63. Question No.1: F At the outset, we consider it proper to observe that even though there is no universally accepted definition of natural resources, they are generally understood as elements having intrinsic utility to mankind. They may be renewable or non renewable. They are thought of as the individual elements of G the natural environment that provide economic and social services to human society and are considered valuable in their relatively unmodified, natural, form. A natural resource's value rests in the amount of the material available and the demand for it. The latter is determined by its usefulness to production. H

242 SUPREME COURT REPORTS [2012] 3 S.C.R.

A Natural resources belong to the people but the State legally owns them on behalf of its people and from that point of view natural resources are considered as national assets, more so because the State benefits immensely from their value. The State is empowered to distribute natural resources. However, B as they constitute public property/national asset, while distributing natural resources, the State is bound to act in consonance with the principles of equality and public trust and ensure that no action is taken which may be detrimental to ptjblic interest. Like any other State action, constitutionalism c must be reflected at every stage of the distribution of natural resources. In Article 39(b) of the Constitution it has been provided that the ownership and control of the material resources of the community should be so distributed so as to best sub-serve the common good, but no comprehensive legislation has been enacted to generally define natural 0 resources and a framework for their protection. Of course, environment laws enacted by Parliament and State legislatures deal with specific natural resources, i.e., Forest, Air, Water, Costal Zones, etc.

64Copy pinpoint64. The ownership regime relating to natural resources can also be ascertained from international conventions and customary international law, common law and national constitutions. In international law, it rests upon the concept of sovereignty and seeks to respect the principle of permanent F sovereignty (of peoples and nations) over (their) natural resources as asserted in the 17th Session of the United Nations General Assembly and then affirmed as a customary international norm by the International Court of Justice in the case of Democratic Republic of Congo v. Uganda. Common G 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

CENTRE FOR PUBLIC INTEREST LITIGATION & 243 ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.] 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.

65Copy pinpoint65. Spectrum has been internationally accepted as a B 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 the telecom sector. Although it does not belong to a particular State, right of use has been granted to States as per international norms.

66Copy pinpoint66. In India, the Courts have given an expansive interpretation to the concept of natural resources and have from time to time issued directions, by relying upon the provisions contained in Articles 38, 39, 48, 48A and 51A(g), for protection and proper allocation/distribution of ~atural resources and have repeatedly insisted on compliance of the constitutional principles in the process of distribution, transfer and alienation to private persons. The doctrine of public trust, which was evolved in Illinois Central Railroad Co. v. People of the State E of Illinois 146 U.S. 387 (1892), has been held by this Court to be a part of the Indian jurisprudence in M. C. Mehta v. Kamal Nath (1997) 1 SCC 388 and has been applied in Jamshed Horrnusji Wadia v. Board of Trustee, Port of Mumbai (2002) 3 SCC 214, Intellectuals Forum, Tirupathi v. State of AP. F (2006) 3 SCC 549 and Fomento Resorts and Hotels Limited v. Minguel Martins (2009) 3 SCC 571. In Jamshed Hormusji Wadia's case, this Court held that the State's actions and the actions of its agencies/instrumentalities must be for the public good, achieving the objects for which they exist and should not G be arbitrary or capricious. In the field of contracts, the State and its instrumentalities should design their activities in a manner which would ensure competition and non-discrimination. They can augment their resources but the object should be to serve the public cause and to do public good by resorting to fair and H

244 SUPREME COURT REPORTS [2012] 3 S.C.R.

A reasonable methods. In Fomento Resorts and Hotels Limited case, the Court referred to the article of Prof. Joseph L. Sax and made the following observations:

"53. The public trust doctrine enjoins upon the Government to protect the resources for the enjoyment of the general B public rather than to permit their use for private ownership or commercial purposes. This doctrine puts an implicit embargo on the right of the State to transfer public properties to private party if such transfer affects public interest, mandates affirmative State action for effective c management of natural resources and empowers the citizens to question ineffective management thereof.

54. The heart of the public trust doctrine is that it imposes 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 F 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 H ~cosystems has the obligation to secure for the rest of us

CENTRE FOR PUBLIC INTEREST LITIGATION & 245 ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.] the right to live or otherwise use that same resource or property for the long-term and enjoyment by future generations. To say it another way, a landowner or lessee and a water right holder has an obligation to use such resources in a manner as not to impair or diminish the people's rights and the people's long-term interest in that property or resource, including down slope lands, waters and resources."

67Copy pinpoint67. In Secretary, Ministry of Information & Broadcasting, Govt. of India v. Cricket Assn. of Bengal, (1995) 2 SCC 161, C the Court was dealing with the right of organizers of an event, such as a sport tournament, to its live audio-visual broadcast, universally, through an agency of their choice, national or foreign. In paragraph 78, the Court described the airwaves/ frequencies as public property in the following words: D 'There is no doubt that since the airwaves/frequencies are a public property and are also limited, they have to be used in the best interest of the society and this can be done either by a central authority by establishing its own broadcasting network or regulating the grant of licences ~.E to other agencies, including the private agencies."

68Copy pinpoint68. In Reliance Natural Resources Limited v. Reliance Industries Limited, (2010) 7 SCC 1, P. Sathasivam J., with whom Balakrishnan, C.J., agreed, made the following observations:

"It must be noted that. the constitutional mandate is that the natural resources belong to the people of this country. The nature of the word "vest" must be seen in the context of the public trust doctrine (PTD). Even though this doctrine has been applied in cases dealing with environmental jurisprudence, it has its broader application."

The Learned Judge then referred to the judgments, In re Special Reference No. 1 of 2001 (2004) 4 SCC 489, M.C. H-

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A Mehta v. Kamal Nath (1997) 1 SCC 388 and observed:

"This doctrine is part of Indian law and finds application in the present case as well. It is thus the duty of the Government to provide complete protection to the natural resources as a trustee of the people at large." B The Court also held that natural resources are vested with the Government as a matter of trust in the name of the people of India, thus it is the solemn duty of the State to protect the national interest and natural resources must always be used in C the interests of the country and not private interests.

69Copy pinpoint69. 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 0 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-a-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-a-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.

70Copy pinpoint70. In Akhil Bharatiya Upbhokta Congress v. State of MP. (2011) 5 sec 29, this Court examined the legality of the action taken by the Government of Madhya Pradesh to allot 20 acres land to an institute established in the name of Kushabhau Thakre on the basis of an application made by the Trust. One of the grounds on which the appellant challenged the allotment of land was that the State Government had. not adopted any rational method consistent with the doctrine of equality. The H . High Court negatived the appellant's challenge. Before this

. CENTRE FOR PUBLIC INTEREST LITIGATION & 247 ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.] Court, learned senior counsel appearing for the State relied A upon the judgments in Ugar Sugar Works Ltd. v. Delhi Administration (2001) 3 SCC 635, State of U.P. v. Choudhary Rambeer Singh (2008) 5 SCC 550, State of Orissa v. Gopinath Dash (2005) 13 SCC 495 and Meerut Development Authority v. Association of Management Studies (2009) 6 B sec 171 and argued that the Court cannot exercise the power of judicial review to nullify the policy framed by the State Government to allot Nazul land without advertisement. This Court rejected the argument, referred to the judgments in Ramanna Dayaram Sheffy v. International Airport Authority of India c (1979) 3 SCC 489, S.G. Jaisinghani v. Union of India AIR 1967 SC 1427, Kasturilal Lakshmi Reddy v. State of J & K (1980) 4 SCC 1, Common Cause v. Union of India (supra), Shrilekha Vidyarthy v. State of U.P. (1991) 1 SCC 212, UC v. Consumer Education and Research Centre (1995) 5 SCC D 482, New India Public School v. HUDA (1996) 5 SCC 510 and held: "What needs to be emphasised is that the State and/or its agencies/instrumentalities cannot give largesse to any person according to the sweet will and whims of the political entities and/or officers of the State. Every action/ decision of the State and/or its agencies/instrumentalities to give largesse or confer benefit must be founded on a sound, transparent, discernible arid well-defined policy, which shall be made known to the public by publication in the Official Gazette and other recognised modes of publicity and such policy must be implemented/executed by adopting a non-discriminatory and non-arbitrary method irrespective of the class or category of persons proposed to be benefited by the policy. The distribution of largesse like allotment of land, grant of quota, permit licence, etc. by the State and its agencies/instrumentalities should always be done in .a fair and equitable manner and the .element of favouritism or nepotism shall not influence the H

248 SUPREME COURT REPORTS [2012] 3 S.C.R.

A exercise of discretion, if any, conferred upon the particular functionary or officer of the State."

71Copy pinpoint71. 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: 8 1 "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 C?r nepotism." E · 72: In conclusion, we hold that the State is the legal owner of the natural resources as a trustee of the people and although it is empowered to distribute the same, the process of distribution must be guided by the constitutional principles including the doctrine of 'equality and larger public good. F · 73. Question No.2: Although, while making recommendations on 28.8.2007, TRAI itself had recognised that spectrum was a scarce commodity, it made recommendation for allocation of 2G spec:trum on the basis of 2001 price by invoking the theory of level playing field. Paragraph 2.40 of the recommendations dated 28.8.2007 shows that as per TRAl's own assessment the existing system of spectrum allocation criteria, pricing methodology and the management system suffered from

CENTRE FOR PUBLIC INTEREST LITIGATION & 249 ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.] number of deficiencies and there was an urgent need to address the issues linked with spectrum efficiency and its management and yet it decided to recommend the allocation of spectrum at the price determined in 2001. All this wa~ done in the name of growth, affordability, penetration of wireless services in semi urban and rural areas, etc. Unfortunately, while doing so, TRAI completely overlooked that one of the main objectives of NTP 1999 was that spectrum should be utilised efficiently, economically, rationally and optimally and there should be a transparent process of allocation of frequency ' spectrum as also the fact that in terms of the decision taken c by the Council of Ministers in 2003 to approve the recommendations of the Group of Ministers, the DoT and Ministry of Finance were requirec:t to discuss and finalise the spectrum pricing formula. To say the least, the entire approach adopted by TRAI was lopsided and contrary to the decision 0 taken by the Council of Ministers and its recommendations became a handle for the then Minister of C&IT and the officers of the DoT who virtually gifted away the important national asset at throw away prices by willfully ignoring the concerns raised from various quarters including the Prime Minister, Ministry of E Finance and also some of its own officers. This becomes clear from the fact that soon after obtaining the licences, some of the beneficiaries off-loaded their stakes to others, in the name of transfer of equity or infusion of fresh capital by foreign companies, and thereby made huge profits. We have no doubt that if the method of auction had been adopted for grant of licence which could be the only rational transparent method for distribution 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 thereby deny people from participating in the distribution of national wealth and H

250 SUPREME COURT REPORTS [2012) 3 S.C.R.

A 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 B whi.ch 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 c 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 decision taken by the Council of Ministers on 31.10.2003.

75. We may also mention that even though in its recommendations dated 28.8.2007, TRAI had not specifically recommended that entry fee be fixed at 2001 rates, but paragraph 2.73 and other related paragraphs of its recommendations state that it has decided not to recommend the standard option for pricing of spectrum in 2G bands keeping in view the level playing field for the new entrants. It is impossible to approve the decision taken by the DoT to act upon those recommendations. We also consider it necessary to observe that in today's dynamism and unprecedented growth of telecom sector, the entry fee determined in 2001 ought to have been treated by the TRAI as wholly unrealistic for grant of licence along with start up spectrum. In our view, the recommendations made by TRAI in this regard were contrary to the decision of the Council of Ministers that the DoT shall discuss the issue of spectrum pricing with the Ministry of G Finance along with the issue of incentive for efficient use of spectrum as well as disincentive for sub-optimal usages. Being an expert body, it was incumbent upon the TRAI to make suitable recommendations even for the 2G bands especially in light of the deficiencies of the present system which it had itself H pointed out. We do not find merit in the reasoning of TRAI that

CENTRE FOR PUBLIC INTEREST LITIGATION & 251 ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.] the consideration of maintaining a level playing field prevented A a realistic reassessment of the entry fee.

76. Question Nos.3 and 4:

There is a fundamental flaw in the first-come-first-served policy inasmuch as it involves an element of pure chance or accident. In matters involving award of contracts or grant of licence or permission to use public property, the invocation of first-come-first-served policy has inherently dangerous implications. Any person who has access to the power corridor at the highest or the lowest level may be able to obtain information from the Government files or the files of the agency/ instrumentality of the State that a particular public property or asset is likely to be disposed of or a contract is likely to be awarded or a licence or permission is likely to be given, he would immediately make an application and would become entitled to stand first in the queue at the cost of all others who may have a better claim. This Court has repeatedly held that wherever a contract is to be awarded or a 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 H

252 SUPREME COURT REPORTS [2012] 3 S.C.R.

A transferring or alienating the natural resources, the State is duty bound to adopt the method of auction by giving wide publicity so that all eiigible persons can participate in the process.

77. The exercise undertaken by the officers of the DoT between September, 2007 and March 2008, under the 8 leadership of the then Minister of C&IT was wholly arbitrary, i capricious and contrary to public interest apart from being violative of the doctrine of equality. The material produced before the Court shows that the Minister of C&IT wanted to favour some companies at the cost of the Public Exchequer and • for this purpose, he took the following steps:

(i) Soon after his appointment as Minister of C&IT, he directed that all the applications received for grant of UAS Licence should be kept pending till the receipt of TRAI D recommendations.

(ii) The recommendations made -by TRAI on 28.8.2007 were not placed before the full Telecom Commission which, among others, would have included the Finance Secretary. The notice of the meeting of the Telecom E Commission was not given to any of the non permanent members despite the fact that the recommendations made by TRAI for allocation of spectrum in 2G bands had serious financial implications. This has been established from the pleadings and the records produced before this F Court which show that after issue of licences, 3 applicants transferred their equities for a total sum of Rs.24,493 crores in favour of foreign companies. Therefore, it was absolutely necessary for the DoT to take the opinion of the Finance Ministry as per the requirement of the Government G of India (Transaction of Business) Rules, 1961. (iii) The officers of the DoT who attended the meeting of the Telecom Commission held on 10.10.2007 hardly had any choice but to approve the recommendations made by H JRAI. If they had not done so, they would have incurred the

CENTRE FOR PUBLIC INTEREST LITIGATION & 253 ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.] wrath of the Minister of C&IT. A

(iv) In view of the approval by the Council of Ministers of the recommendations made by the Group of Ministers in 2003, the DoT had to discuss the issue of spectrum pricing with the Ministry of Finance. Therefore, the DoT was under 8 an obligation to involve the Ministry of Finance before any decision could be taken in the context of paragraphs 2.78 and 2.79 of TRAl's recommendations. However, as the Minister of C&IT was very much conscious of the fact that the Secretary, Finance, had objected to the allocation of C 2G spectrum at the rates fixed in 2001, he did not consult the Finance Minister or the officers 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 · F 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 G did not have any experience in dealing with telecom services and who had made applications only on 24.9.2007, i.e., one day before the cut off date fixed by the Minister of C&IT on his own. H

254 SUPREME COURT REPORTS [2012] 3 S.C.R.

A (vii) The cut off date, i.e. 25.9.2007 decided by the Minister · of C&IT on 2.11.2007 was not made public till 10.1.2008 and the first-come-first-served policy, which was being followed since 2003 was changed by him on 7 .1.2008 and was incorporated in press release dated 10.1.2008. This B enabled some of the applicants, who had access either to the Minister or the officers of the DoT to get the demand drafts, bank guarantee, etc. prepared in advance for compliance of conditions of the Lois, which was the basis for determination of seniority for grant of licences and c allocation of spectrum.

(viii) The meeting of the full Telecom Commission, which was scheduled to be held on 9.1.2008 to consider issues relating to grant of licences and pricing of spectrum was deliberately postponed on 7.1.2008 so that the Secretary, D Finance and Secretaries of three other important Departments may not be able to raise objections against the procedure devised by the DoT for grant of licence and · allocation of spectrum by applying the principle of level playing field. E (ix) The manner in which the exercise for grant of Lois to the applicants was conducted on 10.1.2008 leaves no · room for doubt that every thing was stage 111anaged to ' favour those who were able to know in advance the change in the implementation of the first-come-first served policy. As a result of this, some of the companies which had submitted applications in 2004 or 2006 were pushed down in the priority and those who had applied between August and September 2007 succeeded in getting higher seniority entitling them to allocation of spectrum on priority basis.

• 78. The argument of Shri Harish Salve, learned senior counsel, that if the Court finds that the exercise undertaken for grant of UAS Licences has resulted in violation of the institutional integrity, then all the licences granted 2001 onwards

CENTRE FOR PUBLIC INTEREST LITIGATION & 255 ORS. v. UNION OF INDIA & ORS. [G.S. SINGHVI, J.] should be cancelled does not deserve acceptance because those who have got licence between 2001 and 24.9.2007 are not parties to these petitions and legality of the licences granted to them has not been questioned before this Court.

79. In majority of judgments relied upon by learned Attorney B General and learned counsel for the respondents, it has been held that the power of judicial review should be exercised with great care and circumspection and the Court 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 trust and who have taken an oath an to discharge duties in accordance with the Constitution and the law without fear or favour, affection or ill will and who, as any other citizen, enjoy fundamental rights and, at the same time, are bound to perform the duties enumerated in Article G 51A. Reference in this connection can usefully be made to the judgment of the three Judge Bench headed by Chief Justice Kapadia in Centre for P.l.L. v. Union of India (2011) 4 SCC 1. H

256 SUPREME COURT REPORTS, [2012] 3 S.C.R.

A 80. Before concluding, we consider it imperative to observe that but for the vigilance of some enlightened citizens who held important constitutional and other positions and discharged their duties in larger public interest and Non Governmental Organisations who have been constantly fighting B for clean governance and accountability of the constitutional institutions, unsuspecting citizens and the Nation would never have known how the scarce natural resource spared by the Army has been grabbed by those who enjoy money power and who have been able to manipulate the system. c 81. In the result, the writ petitions are allowed in the following terms:

(i) The licences granted to the private respondents on or after 10.1.2008 pursuant to two press releases issued on D 10.1.2008 and subsequent allocation of spectrum to the licensees are declared illegal and are quashed.

(ii) The above direction shall become operative after four months.

E (iii) Keeping in view the decision taken by the Central Government in 2011, TRAI shall make fresh recommendations for grant of licence and allocation of spectrum in 2G band in 22 Service Areas by auction, as was done for allocation of spectrum in 3G band. F (iv) The Central Government shall consider the recommendations of TRAI and take appropriate decision within next one month and fresh licences be granted by auction. G (v) Respondent Nos.2, 3 and 9 who have been benefited at the cost of Public Exchequer by a wholly arbitrary and unconstitutional action taken by the DoT for grant of UAS Licences and allocation of spectrum in 2G band and who off-loaded their stakes for many thousand crores in the H name of fresh infusion of equity or transfer of equity shall

CENTRE FOR PUBLIC INTEREST Lll:IGATION & 257 ORS. v. UNION OF INDJA & ORS. [G.S. SINGHVI, J.] pay cost of Rs.5 crores each. Respondent Nos. 4, 6, 7 and A 10 shall pay cost of Rs.50 lakhs each because they too had been benefited by the wholly arbitrary and unconstitutional exercise undertaken by the DoT for grant of UAS Licences and allocation 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 D · 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) E 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, F 1961, Prevention of Money Laundering Act, 2002 and other similar statutes.

D.G. Writ Petitions allowed.