Rather than using the Supreme Court's judgment to improve governance and reduce discretionary powers, the government is making a desperate attempt to restore false prestige by seeking a review of 2G verdict.
The United Progressive Alliance government's petition seeking a review of the Supreme Court judgment cancelling 122 telecom licences makes another desperate bid to protect its discretionary powers in the allocation of scarce natural resources by arguing that auctions cannot be the only method for its allocation.
However, the government's petition, apart from stubbornly repeating old arguments that have been shot down by the courts several times over, goes on to expose a flawed interpretation of the Supreme Court's judicial reasoning.
While the judgment addresses itself specifically to the massive commercial value attached to “scarce” natural resources, the review petition conveniently refuses to acknowledge either scarcity or commercial value while arguing that restricting the allocation of “natural resources” to auction methodology will lead to arbitrary consequences and hurt public interest. Unsurprisingly, the government is unable to explain how.
Despite the government's opposition to auctions, its petition fails to explain why auctions were chosen for spectrum in 1995, 2001 and 2010 and, further, recommended by the TRAI in February 2011. Or how a first come, first served (FCFS) system can work in a situation where demand (in terms of equally placed candidates for the scarce resource) far exceeds supply, or even why the government feels obliged to refuse legitimate revenue from applicants who are willing to pay for spectrum based on their business case. In the 2G scam, scarce spectrum allocated cheap through a FCFS method was monetised through “private” auctions, ensuring gains for individual promoters rather than the people of India.
The petition steers clear of the fact that auctions can be designed for a specific outcome by imposing conditions such as price caps for voice calls and SMSs, or a lower rural tariff. For example, when auctioning toll roads to the highest bidder, the government ensures that pedestrians, cyclists and two-wheelers are allowed free passage. While finding fault with auctions, the government is at a loss to demonstrate what the fault is.
For the government to assume that the judgment bans any alternative methodology to auctions is naive. If the government attempts an auction at a certain reserve price, fails, re-auctions at a lower reserve price and fails again, it must use another methodology. However, the Sachidanand Pandey vs the State of West Bengal case cited by the government itself demands that these circumstances be compelling and documented. Ironically, the petition not just fails to document compelling reasons but ignores the fact that the judgment only relates to those natural resources which are scarce and deliver monetisable commercial value in private hands.
It is equally inexplicable why the government is openly uncaring of the fact that except for auctions, practically all other methodologies — and FCFS or beauty parades in particular — violate Article 14 of the Constitution. In addition, auctions support the policy provisions of the National Telecom Policy 1999 seeking transparent allocation of spectrum; the 10th Five Year Plan linking spectrum pricing to scarcity; the Prime Minister's letter of November 2, 2007 seeking 2G auctions/market-based pricing; Finance Secretary D. Subbarao's attempts to secure auctions/indexation-based pricing for 2G spectrum, and the Group of Ministers (GoM) decision to auction 3G spectrum in 2010.
Despite this, in a laughable attempt to argue against auctions for “scarce” natural resources, the petition quotes cases of award of contracts without auctions for resin tapping in Kashmir, saal (oil) seeds in Madhya Pradesh and “distilleries” (liquor), which hardly qualify as scarce natural resources.
The government is opposed to judicial scrutiny of “government policy.” Can it hope to establish a Minister's illegal decision implemented without the Cabinet, the GoM or the full Telecom Commission's approval after bypassing opposition from the Prime Minister, the Finance Secretary and the Law Minister as government policy?
The government's own claim in its affidavits in the Supreme Court, multiple press releases, interviews and statements is that the former Telecom Minister, A. Raja's decision was based on telecom regulator TRAI's recommendations. Any decision of the government based on TRAI's recommendations is open to full judicial scrutiny under Section 14 of the TRAI Act. So on what grounds can the government claim insulation from judicial scrutiny?
The Supreme Court judgment rightfully categorises auctions as a “methodology.” Decisions of the Cabinet to liberalise a sector, allow or increase foreign direct investment and invite private capital are matters of policy, but its implementation in terms of timing, procedure and terms and conditions are executive decisions. In the telecom sector, the latter falls strictly in the purview of the TRAI Act. The government's decision-making in this respect is curtailed by law under Section 11(1)(a)(i) & (ii), read with the second, fourth and fifth provisos of the TRAI Act. In effect, all procedures like FCFS, beauty parades or auctions qualify for judicial review.
Even if one were to accept the government's fragile claim that FCFS is a policy and not an executive decision, the petition still fails to demonstrate a single public announcement of this so-called policy since the formation of the Unified Access licence regime on October 31, 2003. It is missing in TRAI's October 27, 2003 recommendations, the Cabinet decision of October 31, 2003, the licence guidelines and amendment of the National Telecom Policy 1999 on November 11, 2003 and even revised licence guidelines announced by the UPA government on December 14, 2005. The government is welcome to demonstrate otherwise. Had the FCFS “policy” not been kept a state secret, applicants would have queued up earlier than they did. The truth is that the FCFS process was deviously announced for the very first time by Mr. Raja at 1.47 p.m., less than two hours before executing the 2G scam on January 10, 2008.
Finally, even though rarely used, the powers of the Supreme Court in entering and adjudicating on the government's implementation of policy are indisputable, especially when the implementation is secretive, arbitrary, illegal, malicious, discriminatory and violates multiple provisions of law (in this case the TRAI Act) and Article 14, 19(1)(g) and 21 of the Constitution guaranteeing equal opportunity through transparent procedures for all citizens to access a resource/contract allocated by the government.
The government's tiring correlation of FCFS with public interest in terms of affordability, growth, and teledensity is also unsubstantiated in its petition. How auctions hurt urban or rural teledensity or affordability is not explained. Was the UPA intending to hurt public interest by holding auctions for 3G in 2010? Can it explain how Vodafone continuously cut back tariffs after paying $12 billion to buy out Hutch's stake in Hutch Essar in 2007? Why does higher revenue for the exchequer, which translates into roads, schools, hospitals and welfare schemes for the poorest of the poor, not count as public interest?
One would expect the government to be peeved about the reality of Mr. Raja's FCFS performance, which led to windfall gains for new operators who pocketed 30 per cent of scarce spectrum to serve less than 5 per cent of India's subscriber base. The failure of these firms to roll out telecom networks has forced the government to initiate steps to terminate their licences. Despite this, the government continues to argue that bringing in these companies served public interest, teledensity and affordability.
How does the government hope to justify its obsessive compulsion in ensuring a level-playing field with incumbent operators for seven illegally picked new entrants while totally ignoring the fact that 343 similarly placed applications were denied a fair chance of accessing 2G spectrum? Ludicrously, the government is arguing its right to discriminate in the application of the level-playing field itself.
Unfortunately, the review petition has no substantial counter to offer the Supreme Court on these critical issues despite access to the finest legal brains in the country and within the Cabinet. The Attorney General and other legal luminaries have already argued all these issues and still failed to impress the court.
One would have hoped the government would be mindful, even grateful, for the Supreme Court's restraint in avoiding any adverse observations in its judgment on issues of collective Cabinet responsibility, the Prime Minister's failure to check a Minister, or the Finance Ministry's inability to invoke its powers under the Government of India (Transaction of Business) Rules to stop a Minister from grievously hurting the exchequer and, by consequence, the common man. Instead of implementing the judgment and restoring its lost dignity, the government is provoking the court, increasing uncertainty and wasting time with its attempt at a review. Perhaps, like the election verdict, it is time for the UPA to accept defeat in the 2G matter, gracefully or otherwise.