Without going into the merits of the decision of the former Communications Minister, the Supreme Court has pointed out that Mr. A. Raja dispatched a letter to Prime Minister Manmohan Singh in which he indicated that the Law Ministry's suggestion to refer the matter to an Empowered Group of Ministers was totally out of context.
A Bench of Justices G.S. Singhvi and A.K. Ganguly pointed out that Mr. Raja, in his reply to the Prime Minister, asserted the first come, first served policy for processing applications received up to September 25, 2007 and said the procedure for processing the remaining applications would be decided at a later stage, if any spectrum was available.
The Bench said: “It appears that even before the D.O. letter sent by respondent No.5 [Mr. Raja] was received in his office, the Prime Minister sent a letter to him drawing his attention to the issues raised by the telecom sector companies and others on the processing of a large number of applications in the backdrop of inadequate spectrum. The Prime Minister's letter was accompanied by a note in which five issues were identified. The same day, respondent No.5 sent another letter to the Prime Minister stating that it will be unfair, discriminatory, arbitrary and capricious to auction the spectrum to new applicants as it will not give them a level playing field.”
Finance Ministry's reservations
The Bench also referred to a November 22, 2007 letter written by the Finance Secretary to the Secretary, Department of Telecommunications, expressing serious reservations about the DoT decision on determination of fee for grant of licences in 2007 at the rate determined in 2001. He emphasised that in view of the financial implications, the Finance Ministry should have been consulted before the decision was finalised, and requested that further action to grant licences be stayed.
However, in reply, the Secretary, DoT, sent D.O. dated November 29, 2007 stating the entry fee was finalised for the UAS regime in 2003 as per a Cabinet decision, and the dual technology licences were issued on TRAI recommendations of August 28, 2007.
Two press releases on the same day
Further, the Bench pointed out how a Telecom Commission meeting was postponed and three days thereafter, a press release was issued by the DoT saying the department had decided to issue Letters of Intent (LoIs) only to those who had applied up to September 25, 2007. It was also indicated that the department had been implementing the policy of first come, first served for grant of UASL, under which an application which is received first will be processed first and thereafter, LoI will be granted to those found eligible and UAS licence will be given to those who comply with LoI conditions first. The same day, the DoT issued another press release at 2.45 p.m. asking all the applicants to assemble at the department headquarters within 45 minutes to collect the DoT response. The eligible LoI holders were also asked to submit compliance with the terms of LoI within the prescribed period. All the applicants, eligible or not, collected their LoIs and acceptance of 120 applications was also received the same day. Compliance with the terms and conditions of LoI was made for 78 applications on January 10, 2008.
Soon after obtaining the licences, Swan Telecom, which had paid a fee of only Rs.1,537 crore, offloaded 45% of its stake to Etisalat for Rs. 4,500 crore. Unitech, which obtained the licence for Rs.1,651 crore, offloaded 60% of its stake to Telenor for Rs. 6,120 crore.
The Bench highlighted these points to show how some of the applicants resorted to manipulation for getting licences and how the DoT exercise for grant of the UASL resulted in a serious financial loss to the exchequer. The court felt the need for a thorough probe into all aspects of the telecom policy.
