Writ
petition (Civil) No. 423 of 2010 Centre for Public Interest Litigation and others Vs Union of India
and others and Writ Petition (Civil) No. 10 of 2011 Dr. Subramanian
Swamy Vs Union of India and others – (Division Bench of Justice
GS Singhvi and Justice Asok Kumar Ganguly)
“1. The
important questions which arise for consideration in these petitions ,.......
(i) Whether
the Government has the right to alienate, transfer or distribute natural
resources/national assets otherwise than by following a fair and transparent
method consistent with the fundamentals of the equality clause enshrined in the
Constitution?
(ii)
Whether the recommendations made by the Telecom Regulatory Authority of India
(TRAI) on 28.8.2007 for grant of Unified Access Service Licence (for short ‘UAS
Licence’) with 2G spectrum in 800, 900 and 1800 MHz at the price fixed in 2001,
which were approved by the Department of Telecommunications (DoT), were
contrary to the decision taken by the Council of Ministers on 31.10.2003?
(iii) Whether
the exercise undertaken by the DoT from September 2007 to March 2008 for grant
of UAS Licences to the private respondents in terms of the recommendations made
by TRAI is vitiated due to arbitrariness and malafides and is contrary to
public interest?
(iv) Whether
the principle of first-come-first-served followed by the DoT for grant of
licences is ultra vires the provisions of Article 14 of the
Constitution and whether the said principle was arbitrarily changed by the
Minister of Communications and Information Technology (hereinafter referred to
as ‘the Minister of C&IT’), without consulting TRAI, with a view to favour
some of the applicants?
(v) Whether the
licences granted to ineligible applicants and those who failed to fulfil the
terms and conditions of the licence are liable to be quashed?
...........
58. Question No.1.... even though there is no universally accepted definition
of natural resources, the same can be understood as naturally
occurring elements which have an intrinsic utility. They may be renewable or
non renewable. They are thought of as the individual elements of 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. As the State
in which a natural resource is located benefits immensely from this value,
natural resources are considered national assets. In Article 39(b) of the Constitution it has been provided that the
ownership and control of the natural 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 resources and
framework for their protection. Of course, environment laws have been so
framed that they deal with specific natural resources, i.e., Forest, Air,
Water, Costal Zones, etc.
64.
The doctrine of equality which emerges
from the concepts of justice and fairness guides the State in determining the
actual mechanism of distribution of natural resources. It has two aspects: first,
it regulates the rights and obligations of the State vis-à-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-à-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.
67. 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 spectrum on the basis of 2001 price by invoking the theory of
level playing field. Paragraph 2.40 of recommendations dated 28.8.2007
shows that as per TRAI’s own assessment the existing system of spectrum
allocation criteria, pricing methodology and the management system suffered
from 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 was 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 by the Council of Ministers in 2003 to
approve the recommendations of the Group of Ministers the DoT and Ministry of
Finance were required 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 taken by the Council of Ministers and its
recommendations became a handle for the then the Minister of C&IT and the
officers of the DoT who virtually gifted away the important national asset at
throw away prices. 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.
68. While
it cannot be denied that TRAI is an expert body assigned with important
functions under the 1997 Act, it cannot, while making recommendations, overlook
the basic constitutional postulates and principles and make recommendations
which should deny majority of people from participating in the distribution of
national assets/state property. Therefore, even though the scope of
judicial review in such matters is extremely limited, keeping in view of the
facts which have been brought to the notice of this Court, we have no hesitation to record a finding that the recommendations made
by TRAI were flawed in many respects and implementation thereof by the DoT
resulted in gross violation of the objective of NPT 1999.
69. Question Nos.3 and 4: There is a fundamental flaw in the
principle of first-come-first-served 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 principle has inherently dangerous implications.
Any person who has access to 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 would 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., the
State must always adopt a method of auction by giving wide publicity so that
all eligible persons may participate in the process. Any other
methodology for disposal of public property and natural resources/national
assets is 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.
70. The
exercise undertaken by the officers of the DoT between September, 2007 and
March 2008, under the leadership of the then Minister of C&IT was wholly
arbitrary, 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....
.........
(iv) In view of
the approval by the Council of Ministers of the recommendations made by the Group
of Ministers, the DoT had to discuss the issue of spectrum pricing with the
Ministry of Finance. Therefore, the DoT was bound to involve the Ministry
of Finance before any decision could be taken in the context of
paragraphs 2.78 and 2.79 of TRAI’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 2G spectrum at the rates fixed in
2001, he did not consult the Finance Minister or the officers of the Finance
Ministry.
.........
(vi) 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 principle, which was
being followed since 2003 was changed by him at the last moment through press
release dated 10.1.2008. This enabled some of the applicants, who had
access either to the Minister or the officers of the DoT to get the bank drafts
etc. prepared towards performance guarantee etc. of about 1600 crores.
(vii) 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 managed to favour
those who were able to know in advance change in the implementation of the
first-come-first served principle. 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.
71. 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 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.
72. ..... 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. However, when it is clearly demonstrated
before the Court 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 oath 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 but is bound to perform duties.
73. 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 discharge their duties in
larger public interest and Non Governmental Organisations who have been
constantly fighting for clean governance and accountability of the
constitutional institutions, unsuspecting citizens and the Nation would never
have known how 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.
74. 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
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.
(iii) Within two months, 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.
(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.
(v) Respondent Nos.2, 3 and 9 who were benefited
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 name of fresh infusion of equity or
transfer of equity shall pay cost of Rs.5 crores each. Respondent Nos. 4,
6, 7 and 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.
(vi) 50% of the cost shall be deposited with the
Supreme Court Legal Services Committee for being used for providing legal aid
to indigent litigants. The remaining 50% cost shall be deposited in the
Prime Minister’s Relief Fund.
(vii) However, it is made clear that the observations
and conclusions contained in this order shall not, in any manner, affect the
pending investigation by the CBI, Directorate of Enforcement and others
agencies or prejudice the defence of those who are facing prosecution in the
cases registered by the CBI and the Special Judge, CBI shall decide the matter
uninfluenced by this judgment.”
Please note: The relevance of extracts and emphasis supplied are purely
based on my understanding of the law and its implications. You may refer to the original judgement for a
comprehensive view.
