VERY IMPORTANT POINT
The State is empowered to distribute natural resources. However, as they constitute public property/national asset, while distributing natural resources, the State is bound to act in consonance with the principles of equality and public trust and ensure that no action is taken which may be detrimental to public interest.
IMPORTANT POINTS
1. TRAI cannot make recommendations overlooking the basic constitutional postulates and established principles and make recommendations which would deny people from participating in the distribution of national wealth and benefit a handful of persons.
2. 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.
3. Court should not interfere with the fiscal policies of the State. However, when it is clearly demonstrated 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.
4. While transferring or alienating the natural resources, State is duty bound to adopt the method of auction by giving wide publicity so that all eligible persons can participate in the process.

Headnote:Constitution of India,1950-Article 14-2G Spectrum Scam-Petition filed by Centre for Public Interest Litigation questioning grant of UAS Licences to private respondents by contending that procedure adopted by DoT was arbitrary, illegal and in complete violation of Article 14 of Constitution- The State is empowered to distribute natural resources- However, as they constitute public property/national asset, while distributing natural resources, the State is bound to act in consonance with the principles of equality and public trust and ensure that no action is taken which may be detrimental to public interest- As natural resources are public goods, the doctrine of equality, which emerges from concepts of justice and fairness, must guide the State in determining the actual mechanism for distribution of natural resources- In this regard, doctrine of equality has two aspects - It regulates the rights and obligations of the State vis-‘-vis its people and demands that 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- It regulates the rights and obligations of State vis-‘-vis private parties seeking to acquire/use the resource and demands that procedure adopted for distribution is just, non-arbitrary and transparent and that it does not discriminate between similarly placed private parties- Petitions allowed (Paras 69, 72,)
        Constitution of India,1950-Article 14-2G Spectrum Scam -Whether the Government has 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-State is the legal owner of the natural resources as a trustee of the people and although it is empowered to distribute the same, the process of distribution must be guided by the constitutional principles including the doctrine of equality and larger public good- The licences granted to 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 declared illegal and quashed-Keeping in view the decision taken by Central Government in 2011, TRAI to 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 –Petitions allowed (Paras 72, 81)
        2G Spectrum Scam-Petition filed by Centre for Public Interest Litigation questioning grant of UAS Licences to private respondents - Whether the recommendations made by TRAI on 28.8.2007 for grant of ‘UAS Licence’ with 2G spectrum in 800, 900 and 1800 MHz at the price fixed in 2001, which were approved by DoT, were contrary to decision taken by Council of Ministers on 31.10.2003?- 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 theory of level playing field- Paragraph 2.40 of the recommendations dated 28.8.2007 showed that as per TRAI’s own assessment existing system of spectrum allocation criteria, pricing methodology and 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- 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- Entire approach adopted by TRAI was lopsided and contrary to decision taken by Council of Ministers and its recommendations became a handle for the then the Minister of C&IT and the officers of DoT who virtually gifted away important national asset at throw away prices - Petitions allowed (Paras 7 to 75)
        Constitution of India,1950-Article 14-2G Spectrum Scam-Petition filed by Centre for Public Interest Litigation questioning grant of UAS Licences to private respondents -Whether the policy of first-come-first-served followed by the DoT for grant of licences was ultra vires the provisions of Article 14 of the Constitution-Held when it comes to alienation of scarce natural resources like spectrum etc., it is the burden of State to ensure that a non-discriminatory method is adopted for distribution and alienation, which would necessarily result in protection of national/public interest- A duly publicised auction conducted fairly and impartially was perhaps the best method for discharging this burden and methods like first-come-first-served when used for alienation of natural resources/public property are 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- While transferring or alienating the natural resources, State is duty bound to adopt the method of auction by giving wide publicity so that all eligible persons can participate in the process- The exercise undertaken by officers of DoT between September, 2007 and March 2008, under the leadership of then Minister of C&IT was wholly arbitrary, capricious and contrary to public interest apart from being violative of doctrine of equality- Petitions allowed (Paras 76, 77)
        2G Spectrum Scam-Petition filed by Centre for Public Interest Litigation questioning grant of UAS Licences to private respondents -Whether the policy 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 said principle was arbitrarily changed by Minister of Communications and Information Technology without consulting TRAI, with a view to favour some of the applicants-Soon after his appointment as Minister of C&IT, he directed that all applications received for grant of UAS Licence should be kept pending till the receipt of TRAI recommendations-Recommendations made by TRAI on 28.8.2007 were not placed before the full Telecom Commission which, among others, would have included the Finance Secretary-As the Minister of C&IT was very much conscious of the fact that Secretary, Finance, had objected to allocation of 2G spectrum at the rates fixed in 2001, he did not consult Finance Minister -Within few hours of receipt of suggestion made by Prime Minister that keeping in view inadequacy of spectrum, transparency and fairness should be maintained in the matter of allocation thereof, the Minister of C&IT rejected the same by saying that it will be unfair, discriminatory, arbitrary and capricious to auction the spectrum to new applicants because it would not give them level playing field- The manner in which the exercise for grant of LoIs to applicants was conducted on 10.1.2008 showed every thing was stage managed to favour those who were able to know in advance the change in the implementation of the first-come-first served policy- 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- The material produced before Court showed that Minister of C&IT wanted to favour some companies at the cost of Public Exchequer- (Para 77)
        Judicial Review-The power of judicial review should be exercised with great care and circumspection and Court should not ordinarily interfere with the policy decisions of Government in financial matters- 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- Court should not interfere with fiscal policies of the State-However, when it is clearly demonstrated that policy framed by 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 Court to exercise its power in larger public interest and ensure that institutional integrity is not compromised by those in whom the people have reposed trust (Para 79)
       Facts of the Case :
        The important questions which arose for consideration in these petitions, one of which had been filed by Centre for Public Interest Litigation were
        (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 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 policy 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 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?
       Findings of the Court :
        A. The State is empowered to distribute natural resources. However, as they constitute public property/national asset, while distributing natural resources, the State is bound to act in consonance with the principles of equality and public trust and ensure that no action is taken which may be detrimental to public interest.As natural resources are public goods, the doctrine of equality, which emerges from concepts of justice and fairness, must guide the State in determining the actual mechanism for distribution of natural resources. In this regard, doctrine of equality has two aspects . It regulates the rights and obligations of the State vis-‘-vis its people and demands that 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. It regulates the rights and obligations of State vis-‘-vis private parties seeking to acquire/use the resource and demands that procedure adopted for distribution is just, non-arbitrary and transparent and that it does not discriminate between similarly placed private parties. State is the legal owner of the natural resources as a trustee of the people and although it is empowered to distribute the same, the process of distribution must be guided by the constitutional principles including the doctrine of equality and larger public good.
        B. Paragraph 2.40 of the recommendations dated 28.8.2007 showed that as per TRAI’s own assessment existing system of spectrum allocation criteria, pricing methodology and 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. Entire approach adopted by TRAI was lopsided and contrary to decision taken by Council of Ministers and its recommendations became a handle for the then the Minister of C&IT and the officers of DoT who virtually gifted away important national asset at throw away prices by willfully ignoring the concerns raised from various quarters including the Prime Minister, Ministry of Finance and also some of its own officers.
        C. A duly publicised auction conducted fairly and impartially was perhaps the best method for discharging this burden and methods like first-come-first-served when used for alienation of natural resources/public property are 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. While transferring or alienating the natural resources, State is duty bound to adopt the method of auction by giving wide publicity so that all eligible persons can participate in the process. The exercise undertaken by officers of DoT between September, 2007 and March 2008, under the leadership of then Minister of C&IT was wholly arbitrary, capricious and contrary to public interest apart from being violative of doctrine of equality. The material produced before Court showed that Minister of C&IT wanted to favour some companies at the cost of Public Exchequer.
        D. The licences granted to 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 were declared illegal and quashed. Keeping in view the decision taken by Central Government in 2011, TRAI directed to 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 .Petitions were allowed.

JUDGMENT

G.S. Singhvi, J.

1. The important questions which arise for consideration in these petitions, one of which has been filed by Centre for Public Interest Litigation, a registered Society formed by Shri V.M. Tarkunde (former Judge of this Court) for taking up causes of public interest and conducting public interest litigation in an organised manner, Lok Satta, a registered Society dedicated to political governance, reforms and fight against corruption, Telecom Watchdog and Common Cause, both Non-Governmental Organisations registered as Societies for taking up issues of public importance and national interest, Sarva Shri J.M. Lingdoh, T.S. Krishnamurthi and N. Gopalasamy, all former Chief Election Commissioners, P. Shanker, former Central Vigilance Commissioner, Julio F. Ribero, former member of the Indian Police Service, who served as Director General of Police, Gujarat, Punjab and C.R.P.F. and Commissioner of Police, Mumbai, P.R. Guha, an eminent Senior Journalist and visiting faculty member of various institutions including IIMs, IITs, FTII, IIFT, Delhi University, Jawaharlal Nehru University and Jamia Milia Islamia University and Admiral R.H. Tahiliyani, former Chief of Naval Staff, former Governor and former Chairman of Transparency International India and the other has been filed by Dr. Subramanian Swami, a political and social activist, are:

(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 policy 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?

2. For detailed examination of the issues raised by the petitioners, it will be useful to briefly notice the history of the growth of telecommunications in the country and the reforms introduced 1984 onwards.

3. In 1839, the first telegraph link was experimented between Calcutta and Diamond Harbour covering 21 miles. In 1851, the telegraph line was opened for traffic, mostly for the official work of the East India Company. In course of time, telegraphy service was made available for public traffic. The Indian Telegraph Act was enacted in 1885. It gave the exclusive privilege of establishing, maintaining and working of “telegraphs” to the Central Government. It also empowered the Government to grant licences on such conditions and in consideration of such payments as it thought fit, to any person to establish, maintain or work a telegraph in any part of India.

4. After independence, Government of India took complete control of the telecom sector and brought it under the Post & Telegraph Department. One major step taken for improving telecommunication services in the country was the establishment of a modern telecommunication manufacturing facility at

Click Here to Read the rest of this document

2012 Supreme(SC) 99

Cases Referred (37)