“Allegation that Chidambaram attempted to hide illegalities in the award of licences is unfounded”

The Supreme Court on Friday held that neither Union Finance Minister P. Chidambaram nor officials of the Ministry of Finance (MoF) had any role to play in fixing the 2G spectrum allocation price.

Dismissing petitions filed by Janata Party president Subramanian Swamy and the Centre for Public Interest Litigation through advocate Prashant Bhushan, a Bench of Justices G.S. Singhvi and K.S. Radhakrishnan pointed out that the Internal Committee of the Department of Telecom (DoT) considered the Telecom Regulatory Authority India’s recommendations and its report was placed before the Telecom Commission on October 10, 2007. The Finance Secretary and other three non-permanent members were not informed of that meeting. It was attended only by DoT officials and the committee’s report was approved by the Commission. Mr. Raja then accepted the Commission’s recommendations.

The Bench pointed out that the DoT, “it may be noted, did not get in touch with the MoF to discuss and finalise the spectrum pricing formula, which had to include incentive for efficient use of spectrum as well as disincentive for sub-optimal usage in terms of the Cabinet decision of 2003.”

The court said these facts would indicate that neither Mr. Chidambaram nor MoF officials had any role in the decisions taken by TRAI (on August 28, 2007), the DoT committee and the Telecom Commission.

It said: “Mr. Chidambaram, it is seen, had no role in the exchange of communications or the expression of opinions of the decisions taken between Mr. Raja and the Prime Minister’s Office, a situation created by Mr. Raja and the officials of the DoT. Neither Mr. Chidambaram nor the officials of the MoF did figure in those communications nor hence has the allegation of involvement of Mr. Chidambaram in the 2G scam to be examined in that background.”

The Bench said, “Mr. Chidambaram, following the views expressed by the Ministry of Finance on January 9, 2008, on his instructions, also sent a note to the Prime Minister on January 15, 2008 on spectrum charges. Noticeably, this letter was sent at a time when the Finance Secretary’s view was rejected by Mr. Raja and the officers of the DoT and that Mr. Raja’s views were not overturned even by the Prime Minister’s Office. Therefore, the allegation that the attempt of Mr. Chidambaram was to hide the illegalities in the award of licences is unfounded. On the other hand, Mr. Chidambaram was advocating the fact that the most important method of allocating the spectrum would be through auction.”

The court pointed out that Mr. Chidambaram also made a reference in the note of the recommendations made in 2003 by TRAI and GoMs and stated that the suggestions did not deal with the need, if any, to revise the entry fee or the rate of revenue share, but dealt with the spectrum charges for 2G.

Tracing the sequence of events, the Bench said: “The Prime Minister, however, vide his letter dated November 2, 2007, had requested Mr. Raja to give urgent consideration to the various issues raised with a view to ensuring fairness and transparency and requested him to inform the Prime Minister of the position before taking any further action. On the same day, Mr. Raja sent a reply to the Prime Minister brushing aside the suggestions made by the Prime Minister pointing out that it would be unfair, discriminatory, arbitrary and capricious to auction the spectrum to new applicants as it would not give them a level playing field.”

The court said: “Mr. Chidambaram met Mr. Raja on January 30, 2008 for discussions on spectrum charges. The meeting was held at a time, it may be noted, when Mr. Raja and DoT officials had brushed aside the views expressed by Dr. D. Subbarao in his letter dated November 22, 2007, the views expressed by the Department of Economic Affairs in the note dated January 3, 2008 and in the absence of any response from the PMO on the note dated January 15, 2008 sent by Mr. Chidambaram. The meeting dated January 30, 2008 and subsequent meetings Mr. Chidambaram had with Mr. Raja on May 29, 2008, June 12, 2008 and with the Prime Minister on July 4, 2008 had to be appreciated in the light of these facts.”

The Bench referred to a communication from the DoT to the MoF, which said: “the DoT is of the view that it is not advisable/ possible to price the start-up allocation of a 4.4 MHz on between the existing operators and the new licensees. This may also trigger litigation. The DoT is agreeable to pricing of spectrum beyond 4.4 MHz. However, they have suggested a differentiated pricing regime.”

The Supreme Court noted that the MoF differed from the DoT’s position and wrote to the latter: “There is no contractual obligation to allot a start-up spectrum of 4.4 MHz to every licensee free of cost. The entire range of the spectrum allotted should be priced. The issue of level-playing field can be addressed by charging this price even on existing operators.” Hence, the Bench rejected the charge that Mr. Chidambaram had a role in fixing the 2G spectrum price or in its allocation.

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