The exercise undertaken by officials of the Department of Telecommunications between September 2007 and March 2008, under the leadership of the then Minister A. Raja, was wholly arbitrary, capricious and contrary to the public interest, besides being violative of the doctrine of equality, the Supreme Court ruled on Thursday.
After analysing the records, a Bench of Justices G.S. Singhvi and A.K. Ganguly said: “The material produced before the court shows that the Minister [Mr. Raja] wanted to favour some companies at the cost of the public exchequer, and for this purpose, he took the following steps: soon after his appointment as Minister, he directed that all applications received for grant of UAS licence should be kept pending till the receipt of TRAI recommendations; the recommendations made by the TRAI on August 28, 2007 were not placed before the full Telecom Commission which, among others, would have included the Finance Secretary. The notice of meeting of the Telecom 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 the 2G bands (800, 900 and 1800 Mhz) had serious financial implications. (This has been established from the pleadings and the records produced before this court that after issue of licences, three applicants transferred their equities for a total sum of Rs. 24,493 crore in favour of foreign companies).”
Writing the judgment, Justice Singhvi said: “In such matter, it was absolutely necessary for the DoT to take the opinion of the Finance Ministry as per the requirement of the Government of India (Transaction of Business) Rules, 1961. The officers of the DoT who attended the meeting of the Telecom Commission held on October 10, 2007 hardly had any choice but to approve the recommendations made by the TRAI. If they had not done so, they would have incurred the wrath of the Telecom Minister.”
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The Bench pointed out that 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 on the TRAI's recommendations. However, as the Minister [Mr. Raja] 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.”
The Bench said the Minister brushed aside the suggestion made by the Minister of Law and Justice for placing the matter before the empowered Group of Ministers. The suggestion made by the Prime Minister, in his November 2, 2007 letter, that keeping in view the inadequacy of spectrum, transparency and fairness should be maintained in its allocation was rejected by the Minister within minutes, saying it would be unfair, discriminatory, arbitrary and capricious to auction the spectrum to new applicants because it would not give them a level-playing field.
The Bench noted that Mr. Raja simultaneously introduced the cut-off date as September 25, 2007 for consideration of the applications for grant of licences, despite the fact that a day prior to this, the DoT issued a press release fixing October 1, 2007 as the last date for receipt of applications. “This arbitrary action of the Minister [Mr. Raja], though appears to be innocuous, was actually intended to benefit some of the real estate companies which did not have any experience in dealing with telecom services and which had made applications only on September 24, 2007, i.e., one day before the cut-off date was fixed by the Minister on his own.”
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Criticising the first come, first served policy, the Bench said: “In matters involving award of contracts or grant of licence or permission to use public property, the invocation of the principle has inherently dangerous implications. Any person who has access to power corridors at the highest or 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 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 interested only in garnering maximum financial benefit and who have no respect for the constitutional ethos and values.”
Rejecting the Centre's stand that policy decisions could not be a matter of judicial review, the Bench said: “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 the larger public interest and ensure that 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 are bound to perform duties.”
The Bench clarified that it had not imposed costs on the respondents who had submitted their applications in 2004 and 2006 and whose applications were kept pending till 2007. It directed others to deposit, within four months, 50 per cent of the costs with the Supreme Court Legal Services Committee. It would be used for providing legal aid to poor and indigent litigants. The remaining costs should be deposited in funds created for the Resettlement and Welfare Schemes of the Defence Ministry.
The Bench made it clear that the observations made in this judgment should not, in any manner, affect the pending investigation by the CBI, the Directorate of Enforcement and other 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 charge sheet(s) which may be filed by the CBI in future, and the Special Judge, CBI, shall decide the matter uninfluenced by this judgment. We also make it clear that this judgment shall not prejudice any person in the action which may be taken by other investigating agencies under the Income Tax Act, 1961, the Prevention of Money Laundering Act, 2002, and similar statutes.”