# OTHERS v. UNION OF INDIA AND OTHERS

- **Citation:** [2012] 3 S.C.R. 147
- **Court:** Supreme Court of India
- **Decided:** 2012-02-02
- **Bench:** G.S. Singhvi, Asok Kumar Ganguly
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/others-v-union-of-india-and-others-28232
- **Pages:** 111

## Headnote

Telecommunications:
2G Spectrum - Allocation of - Under-pricing of spectrum
based on theory of level playing field -
Whether the
recommendations made by the Telecom Regulatory Authority
B
c
of India (TRAI) on 28.8.2007 for grant of Unified Access
Service Licence (UAS Licence) with 2G spectrum in 800, 900 D
and 1800 MHz at the price fixed in 2001 were contrary to the
decision taken by the Council of Ministers on 31.10.2003 and
whether the exercise undertaken by the Department of
Telecommunications (DoT) from September 2007 to March
2008 under the leadership of the then Minister of C&IT for
grant of VAS Licences to the private respondents in terms of E
the recommendations made by TRAI was vitiated due to
arbitrariness and malafides and was contrary to public interest
- Held: While making recommendations on 28.8.2007, TRAI
itself had recognised that spectrum was a scarce commodity
- It, however, completely ignored that spectrum was to be
F
utilised efficiently, economically, rationally and optimally -
The decision of the Council of Ministers in 2003 that the Do T
and the Ministry of Finance should discuss and finalise the
spectrum pricing formula was ignored by TRAI - The entire
approach adopted by TRAI was lopsided and contrary to the G
decision taken by the Council of Ministers and its
recommendations became a handle for the then Minister of
C&IT and the officers of the Do T who virtually gifted away the
important national asset at throw away prices by willfully
147
H
148
SUPREME COURT REPORTS
[2012] 3 S.C.R.
A ignoring the concerns regarding fairness and transparency in
spectrum allocation raised from various quarters including the
Prime Minister, Ministry of Finance and also some of its own
officers - This is also clear from the fact that soon. after
obtaining the licences, some of the beneficiaries off-loaded
B their stakes to others, in the name of transfer of equ/fy or
infusion of fresh capital by foreign companies, and thereby
made huge profits - There was no merit in the reasoning of
TRAI that the consideration of maintaining a level playing field
prevented a realistic reassessment of the entry fee - The
C material produced clearly showed that the then Minister of
C&IT wanted to favour some companies at the cost of Public
Exchequer and took various steps to achieve same - In view
of illegality of entire process, licences and spectrum a/location
quashed - Costs of Rs 5 crores each imposed on parties
0
getting the' most undue benefit - Directions issued for regrant
of licences and a/location spectrum in 2G band in 22 service
areas by auction, as was done for a/location of spectrum in
3G
band
Central
Government
to
consider
recommendations of TRAI and take appropriate decision
within next one month and fresh licences to be granted by
E public auction -
However, licences/spectrum granted
previously through FCFS method i.e. between 2001 and
24.9.2007 not disturbed because said earlier cases were not
questioned before this Court.
F
History of the growth of telecommunications in the country
and the reforms introduced 1984 onwards - Discussed.
New Economic Policy of India as announced on
24.7.1991; National Telecom Policy 1994 and National
G Telecom Policy 1999 - Objectives of - Discussed.
Constitution of India, 1950:
Articles 38, 39, 48, 48A and 51A(g) - Natural resources
- Concept of - Held: Even though there is no universally
H accepted definition of natural resources, they are generally
CENTRE FOR PUBLIC INTEREST LITIGATION &
149
ORS. v. UNION OF INDIA & ORS.
understood as elements having intrinsic utility to mankind -
A
They may be renewable or non-renewable - They are thought
of as the individual elements of the natural environment that
provide economic and social services to human society and
are considered valuable in their relatively unmodified, natural
form - A natural resource's value rests in the amount of the
B
material available and the demand for it - .The latter is
determined by its usefulness to production - Nat

## Text

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[2012] 3 S.C.R. 147
CENTRE FOR PUBLIC INTEREST LITIGATION AND
A
OTHERS
v.
UNION OF INDIA AND OTHERS
(Writ Petition (Civil) No. 423 of 2010)
FEBRUARY 2, 2012
[G.S. SINGHVI AND ASOK KUMAR GANGULY, JJ.]
Telecommunications:
2G Spectrum - Allocation of - Under-pricing of spectrum
based on theory of level playing field -
Whether the
recommendations made by the Telecom Regulatory Authority
B
c
of India (TRAI) on 28.8.2007 for grant of Unified Access
Service Licence (UAS Licence) with 2G spectrum in 800, 900 D
and 1800 MHz at the price fixed in 2001 were contrary to the
decision taken by the Council of Ministers on 31.10.2003 and
whether the exercise undertaken by the Department of
Telecommunications (DoT) from September 2007 to March
2008 under the leadership of the then Minister of C&IT for
grant of VAS Licences to the private respondents in terms of E
the recommendations made by TRAI was vitiated due to
arbitrariness and malafides and was contrary to public interest
- Held: While making recommendations on 28.8.2007, TRAI
itself had recognised that spectrum was a scarce commodity
- It, however, completely ignored that spectrum was to be
F
utilised efficiently, economically, rationally and optimally -
The decision of the Council of Ministers in 2003 that the Do T
and the Ministry of Finance should discuss and finalise the
spectrum pricing formula was ignored by TRAI - The entire
approach adopted by TRAI was lopsided and contrary to the G
decision taken by the Council of Ministers and its
recommendations became a handle for the then Minister of
C&IT and the officers of the Do T who virtually gifted away the
important national asset at throw away prices by willfully
147
H
148
SUPREME COURT REPORTS
[2012] 3 S.C.R.
A ignoring the concerns regarding fairness and transparency in
spectrum allocation raised from various quarters including the
Prime Minister, Ministry of Finance and also some of its own
officers - This is also clear from the fact that soon. after
obtaining the licences, some of the beneficiaries off-loaded
B their stakes to others, in the name of transfer of equ/fy or
infusion of fresh capital by foreign companies, and thereby
made huge profits - There was no merit in the reasoning of
TRAI that the consideration of maintaining a level playing field
prevented a realistic reassessment of the entry fee - The
C material produced clearly showed that the then Minister of
C&IT wanted to favour some companies at the cost of Public
Exchequer and took various steps to achieve same - In view
of illegality of entire process, licences and spectrum a/location
quashed - Costs of Rs 5 crores each imposed on parties
0
getting the' most undue benefit - Directions issued for regrant
of licences and a/location spectrum in 2G band in 22 service
areas by auction, as was done for a/location of spectrum in
3G
band
Central
Government
to
consider
recommendations of TRAI and take appropriate decision
within next one month and fresh licences to be granted by
E public auction -
However, licences/spectrum granted
previously through FCFS method i.e. between 2001 and
24.9.2007 not disturbed because said earlier cases were not
questioned before this Court.
F
History of the growth of telecommunications in the country
and the reforms introduced 1984 onwards - Discussed.
New Economic Policy of India as announced on
24.7.1991; National Telecom Policy 1994 and National
G Telecom Policy 1999 - Objectives of - Discussed.
Constitution of India, 1950:
Articles 38, 39, 48, 48A and 51A(g) - Natural resources
- Concept of - Held: Even though there is no universally
H accepted definition of natural resources, they are generally
CENTRE FOR PUBLIC INTEREST LITIGATION &
149
ORS. v. UNION OF INDIA & ORS.
understood as elements having intrinsic utility to mankind -
A
They may be renewable or non-renewable - They are thought
of as the individual elements of the natural environment that
provide economic and social services to human society and
are considered valuable in their relatively unmodified, natural
form - A natural resource's value rests in the amount of the
B
material available and the demand for it - .The latter is
determined by its usefulness to production - Natural
resources belong to the people but the State legally owns
them on behalf of its people and from that point of view natural
resources are considered as national assets, more so c
because the State benefits immensely from their value - In
India, the Courts have given an expansive interpretation to
the concept of natural resources and have from time to time
issued directions, by relying upon the provisions contained
in Articles 38, 39, 48, 48A and 51A(g), for protection and 0
proper allocation/distribution of natural resources and have
repeatedly insisted on compliance of the constitutional
principles in the process of distribution, transfer and alienation
to private persons.
Article 14 - Doctrine of equality - Distribution of national
E
resources - 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 - Held: The State is the legal
F
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 -
Like any other State action, constitutionalism must be
G
reflected at every stage of the distribution of natural resources
- By virtue of Article 39(b), the ownership and control of the
material resources of the community should be so distributed
so as to best sub-serve the common good - A duly publicised ·
auction conducted fairly and impartially is perhaps the best H
150
SUPREME COURT REPORTS
[2012] 3 S.C.R.
A method for discharging this burden and the methods like firstcome-fi rst-served when used for alienation of natural
resources/public property are likely to be misused by
unscrupulous people who are only interested in Qarnering
maximum financial benefit and have no respect for the
B constitutional ethos and values.
c
Article 14·_ Policy decision - Whether the policy of firstcome-first-served followed by the Do T for grant of licences is
ultra vires the provisions of Article 14 of the Constitution -
Held: There is a fundamental flaw in the first-come-first-served
policy inasmuch as it involves an element of pure chance or
accident - In matters involving award of contracts or grant of
licence or permission to use public property, the invocation
of first-come-first-served policy has inherently dangerous
implications - Wherever a contract is to be awarded or a
D 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.
ADMINISTRATIVE LAW· Judicial review - Scope of -
E Held: The power of judicial review should be exercised with
great care and circumspection and the Court should not
ordinarily interfere with the policy decisions of the Government
in financial matters - There cannot be any quarrel with the
proposition that the Court cannot substitute its opinion for the
F 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 - The Court
should also not interfere with the fiscal policies of the State -
However, when it is clearly demonstrated that the policy
G 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
H not be exceeded beyond the recognised parameters - When
CENTRE FOR PUBLIC INTEREST LITIGATION &
151
ORS. v. UNION OF INDIA & ORS.
matters like these are brought before the judicial constituent
A
of the State by public spirited citizens, it becomes the duty of
the Court to exercise its power in larger public interest and
ensure that the 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
B
Constitution and the law without fear or favour, affection or ill
will and who, as any other citizen, enjoy fundamental rights
and, at the same time, are bound to perform the duties
enumerated in Article 51A.
On 28.8.2007, TRAI made recommendations C
regarding the principles of fair competition, no restriction
on the number of access service providers in any service
area, scarce availability of spectrum, need for spectrum
management, measures to increase spectrum efficiency,
allocation of spectrum and compliance of roll out D
obligations by the service providers. It also
recommended that in future all spectrum excluding the
spectrum in 800, 900 and 1800 MHz banCls in 2G services
should be auctioned.
On 17.10.2007, the Minister of C&IT approved the
recommendations made by TRAI. However, no action was
taken in terms of paragraph 2.40 of the r.ecommendations
wherein it was emphasised that the existing spectrum
,,
allocation criteria, pricing methodology and the
management system suffered from a number of
deficiencies and the whole issue needed to be
addressed keeping in view issues linked with spectrum
efficiency and its management. The DoT also did not get
E
F
in touch with the Ministry of Finance to discuss and
G
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 which required the Department of
Telecom and Ministry of Finance to discuss and agree on
H
152
SUPREME COURT REPORTS
[2012) 3 S.C.R.
A
s~ectrum pricing .. In the meanwhile, on 24.9.2007, the
DoJ prepared a note mentioning therein that as on that
date, 167 applications were received from 12 companies
for 22 service areas and opined that it was difficult to
handle such a large number of applications at any point
B of time.
The Minister of C&IT fixed 1.10.2007 as the cut-off
date for receipt of applications for new UAS Licence.
Accordingly, press note dated 24.9.2007 was issued by
the DoT stating that no new application for UAS Licence
C would be accepted after 1.10.2007. Few companies had
ma~e applications for UAS Licence in 2004 and some had
made similar applications in 2006. However, the same
were not disposed of by the DoT and they were included
in the figure of 167. Between 24.9.2007 and 1.10.2007,
D over 300 applications were received for grant of UAS
Licences. Member (Technology), Telecom Commission
and. Ex-officio Secretary to Government of India sent a
letter dated 26.10.2007 to Secretary, Department of Legal
Affairs, Ministry of Law and Justice seeking the opinion
E of the Attorney General of India/Solicitor General of India
on the issue of the mechanism to deal with what he
termed as an unprecedented situation created due to
receipt of large number of applications for grant of UAS
Licence.
F
"
The Law Secretary placed the papers before the Law
Minister on 1.11.2007 who recorded in the note that the
said .issue required discussion. When the note was
placed before the Minister of C&IT, he on his own
recorded that the Loi may be issued to the applicants
G received upto 25.9.2007. Simultaneously, he sent letter
dated 2.11.2007 to the Prime Minister and criticised the
suggestion made by the Law Minister by describing it as
totally out of context. He also mentioned that the DoT has
decided to continue with the existing policy of first-comeH
CENTRE FOR PUBLIC INTEREST LITIGATION &
153
ORS. v. UNION OF INDIA & ORS.
first-served for processing of applications received up to
A
2.5.9.2007 and the procedure for processing the
remaining applications would be decided at a later date,
if any spectrum is left available after processing the
applications received up to 25.9.2007.
B
The Minister of C&IT did not bother to consider the
suggestion made by the Prime Minister that a fair and
transparent method should be adopted for grant of fresh
licences. The Minister of C&IT sent a reply to the Prime
Minister wherein he brushed aside the suggestion made
C
by the Prime Minister by saying that it was unfair,
discriminatory, arbitrary and capricious to auction the
spectrum to new applicants as it would not give them a
level playing field. On 22.11.2007, the Finance Secretary
dispatched letter to the DoT expressing his doubt as to
how the rate of Rs.1600 crores determined in 2001, could
D
be applied without any indexation for a licence to be
given in 2007. He also emphasized that in view of the
financial implications, the Ministry of Finance should
have been consulted before the matter was finalised at
the level of the DoT.
E
The DoT replied to the Finance Secretary that as per
the Cabinet decision dated 31.10.2003, the DoT had been
authorised to finalise the details of implementation of the
recommendations of TRAI and in its recommendations
F
dated 28.8.2007, TRAI had not suggested any change in
the entry fee/licence fee. In the context of letter dated
22.11.2007 sent. by the Finance Secretary, Member
(Finance), DoT submitted note dated 30.11.2007
suggesting that the issue of revision of rates should be
G
examined in depth before any final decision is taken in
the matter. When the note was placed before the Minister,
he observed that the matter of entry fee was deliberated
in the department several times in light of various
guidelines and the TRAI recommendations and
H
154
SUPREME COURT REPORTS
[2012] 3 S.C.R.
A accordingly decision was taken not to revise the entry
fee. The Minister C&IT sent letter dated 26.12.2007 to the
Prime Minister changing the first come first serve policy.
The letter stated that an applicant who fulfilled the
conditions of LOI first would be granted licence first,
B although several applicants would be issued LOI
simultaneously. After 12 days, the DoT prepared a note
incorporating therein the changed first-come-first-served
policy to which reference was made by the Minister of
C&IT in letter dated 26.12.2007 sent to the Prime Minister.
c On tlile same day the Minister of C&IT approved the
change. The meeting of the full Telecom Commission,
which was scheduled to be held on 9.1.2008 to consider
two important issues i.e., performance of telecom sector
and pricing of spectrum was postponed to 15.1.2008. On
0 10.1.2008 i.e., after three days of postponement of the
meeting of the Telecom Commission, a press release was
issued by the DoT wherein it was stated that DOT has
been implementing a policy of First-cum-First Served for
grant of UAS licences under which initially an application
which is received first will be processed first and
E thereafter if found eligible will be granted LOI and then
who so ever complied with the conditions of LOI first will
be granted UAS licence. On the same day, another press
release was issued asking all the applicants to assemble
at the departmental headquarters within 45 minutes to
F collect the response(s) of the DoT. They were also asked
to submit compliance of the terms of Lois within the
prescribed period.
AU the applicants including those who were not even
G eligible for UAS Licence collected their Lois on 10.1.2008.
The acceptance of 120 applications and compliance with
the terms and conditions of the Lois for 78 applications
was also received on the same day. Soon after obtaining
the Lois, 3 of the successful applicants offloaded their
H stakes for thousands of crores in the name of infusing
CENTRE FOR PUBLIC INTEREST LITIGATION &
155
ORS. v. UNION OF INDIA & ORS.
equity. One of the applicant who had applied for grant of A
licence pursuant to press note dated 24.9.2007, but was
ousted from the zone of consideration because of the
cut-off date fixed by the Minister of C&IT, filed writ petition
in the High Court with the prayer that the first press
release dated 10.1.2008 may be quashed. The High Court
8
declared that the cut-off date, i.e., 25.9.2007 was totally
arbitrary and directed the respondents in the writ petition
to consider the offer made by the writ pe~itioner to pay
Rs.17.752 crores towards additional revenue share over
and above the applicable spectrum revenue share. The
C
decision of the High Court was upheld by the Supreme
Court.
The questions which arose for consideration in these
writ petitions were whether the Government has the right
to alienate, transfer or distribute natural resources/
D
national assets otherwise than by following a fair and
transparent method consistent with the fundamentals of
the equality clause enshrined in the Constitution;
whether the recommendations made by the Telecom
Regulatory Authority of India (TRAI) on 28.8.2007 for grant
E
of Unified Access Service Licence (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; whether
F
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; whether the policy of firstG.
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 policy was arbitrarily
changed by the Minister of Communications and
Information Technology (the Minister of C&IT'), without H
156
SUPREME COURT REPORTS
[2012] 3 S.C.R.
A consulting TRAI, with a view to favour some of the
applicants; and 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.
B
Allowing the writ petitions, the Court
HELD:
1.
The
history of the growth of
telecommunications in the country and the reforms
introduced 19134 onwards. [Para 2] [179-E-F]
C
1.1. 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
0 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,
E maintain or work a telegraph in any part of India. 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 ·
F was the establishment of a modern telecommunication
manufacturing facility at Bangalore under the Public
Sector, in the name of "Indian Telephone Industries Ltd."
The reforms in the telecommunication sector started in
1984 when the Centre for Development of Telematics (CG DoT) was set up for developing indigenous technologies
and permissions were given to the private sector to .
manufacture subscriber-equipment. In 1986, Mahanagar
Telephone Nigam Ltd., (MTNL) and Videsh Sanchar
Nigam Ltd., (VSNL) were set up. The New Economic
H
CENTRE FOR PUBLIC INTEREST LITIGATION &
157
ORS. v. UNION OF INDIA & ORS.
Policy of India was announced on 24.7.1991. It was aimed
A
at meeting India's competitiveness in the global market;
rapid growth of exports, attracting foreign direct
investment; and stimulating domestic investments. With
a view to achieve standards comparable to international
facilities, the sub-sector of Value Added Services was
B
opened up to private investment in July 1992 for the
following services: (a) Electronic Mail; (b) Voice Mail; (c)
Data Services; (d) Audio Text Services; (e) Video Text
Services; (f) Video Conferencing; (g) Radio Paging; and
(h) Cellular Mobile Telephone.In respect of services (a) to c
(f), the companies registered in India were permitted to
operate under a licence on non-exclusive basis. For
services covered by (g) and (h), keeping in view the
constraints on the number of companies that could be
allowed to operate, a policy of selection through a system
0
of tendering was followed for grant of licences. [paras 25] [178-G-H 179-A-G]
1.2. National Telecom Policy 1994
National Telecom Policy 1994 (NTP 1994) was
E
announced on 13.5.1994. This was the first major step
towards deregulation, liberalization and private sector
participation. The objectives of the policy were: (i)
affording telecommunication for all and ensuring the
availability of telephone on demand; (ii) providing certain
F
basic telecom services at affordable and reasonable
prices to all people and covering all villages; (iii) giving
world standard telecom services; addressing consumer
complaints, dispute resolution and public interface to
receive special attention and providing widest G
permissible range of services to meet the customers'
demand and at the same time at a reasonable price; (iv)
creating a major manufacturing base and major export of
telecom equipment having regard to country's size and
development; and (v) protecting the defence and security
H
158
SUPREME COURT REPORTS
[2012] 3 S.C.R.
A interest of the country. In furtherance of NTP 1994,
licences were granted to eight Cellular Mobile Telephone
Service (CMTS) operators, two in each of the four
metropolitan cities of Delhi, Mumbai (Bombay), Kolkata
(Calcutta) and Chennai (Madras). In the second phase, in
B December 1995, after following a competitive bidding
process, 14 CMTS licences were awarded in 18 state
circles, 6 Basic Telephone Services (BTS) licences were
awarded in 6 state circles and paging licences were
awarded in 27 cities and 18 state circles. However, this
c did not yield the intended results apparently because
revenue realised by the cellular and basic operators was
less than the projections and the operators were unable
to arrange finances for their projects. [Paras 6-7] [179-H;
180-A-G]
D
1.3. New Telecom Policy 1999 On the directions of the
Prime
Minister,
a
high
level
Group
on
Telecommunications (GoT) was constituted on 20.11.1998
to review the existing telecom policy and suggest further
reforms. On the basis of the report of the GoT, a draft New
E Telecom Policy 1999 (NTP 1999) was formulated. After its
approval by the Cabinet, NTP 1999 was announced to be
effective from 1.4.1999. NTP 1999 had the following
objectives: (i) to make available affordable and effective
communications for the citizens, considering access to
F telecommunications as utmost important for achievement
of the country's social and economic goals; (ii) to provide
universal service to all uncovered areas including the
rural areas and also provide high level services capable
of meeting the needs of the country's economy by
G striking a balance between the two; (iii) to encourage
development of telecommunication in remote, hilly and
tribal areas of the country; (iv) to create a modern and
efficient telecommunications infrastructure taking into
account the convergence of IT, media, telecom and
H consumer electronics which will in turn propel India to
CENTRE FOR PUBLIC INTEREST LITIGATION &
159
ORS. v. UNION OF INDIA & ORS.
become an IT superpower; (v) to convert PCOs wherever
A
justified into Public Teleinfo centres having multimedia
capability such as Integrated Services Digital NetWork
(ISDN) services, remote database access, government
and community information systems, etc.; (.vi) to
transform,
in
a
time
bound
manner,
the
8
telecommunications sector in both urban and rural areas
into a greater competitive environment providing equal
opportunities and level playing field for all players; (vii)
to strengthen research and development efforts in the
country and provide an impetus to build world class C
manufacturing capabilities; (viii) to achieve efficiency and
transparency in spectrum management; (ix) to protect
defence and security interests of the country; and (x) to
enable Indian Telecom Companies to become truly global
players. NTP 1999 categorized 8 services in the telecom
sector, namely; (i) Cellular Mobile Service Providers
D
(CMSPs), Fixed Service Providers (FSPs) and Cable
Service Providers, collectively referred as 'Access
Providers'; (ii) Radio Paging Service Providers; (iii) Public
Mobile Radio Trunking Service Providers; (iv) National
Long Distance Operators; (v) International Long Distance
E
Operators; (vi) Other Service Providers, (vii) Global Mobile
Personal Communication by Satellite (GMPCS) Service
Providers; (viii) V-SAT based Service Providers. NTP
1999 dealt with, and provided the framework for, all these
categories of telecom service providers. The policy on
F
spectrum management as enumerated in NTP 1999 was
as under: (i) Proliferation of new technologies and the
growing demand for telecommunication services has led
to manifold increase in demand for spectrum and
consequently it is essential that the spectrum is utilized G
efficiently, economically, rationally and optimally. (ii)
There is a need for a transparent process of allocation
of frequency spectrum for use by a service provider and
making it available to various users under specific
conditions. (iii) With the proliferation of new technologies
H
160
SUPREME COURT REPORTS
[2012] 3 S.C.R.
A it is essential to revise the National Frequency Allocation
Plan (NFAP) in its entirety so that it becomes the basis
for development, manufacturing and spectrum utilization
activities in the country amongst all users. NFAP was
under. review and the revised NFAP was to be made
8 public by the end of 1999 detailing information regarding
allocation of frequency bands for various services,
without including security information. (iv) NFAP would
be reviewed no later than every two years and would be
in line with radio regulations of the International
C Telecommunication Union (ITU). (v)Adequate spectrum
is to be made available to meet the growing need of
telecommunication services. Efforts would be made for
relocating frequency bands assigned earlier to defence
and others. Compensation for relocation may be provided
out of spectrum fee and revenue share. (vi) There is a
D need to review the spectrum allocation in a planned
manner so that required frequency bands are available
to the service providers. (vii) There is a need to have a
transparent process of allocation of frequency spectrum
which is effective and efficient and the same would be
E further examined in the light of ITU guidelines. In this
reg a: rd the following course of action shall be adopted
viz.: spectrum usage fee shall be charged; an lnterMiniisterial Group to be called Wireless Planning
Coordination Committee, as a part of the Ministry of
F Communications for periodical review of spectrum
availability and broad allocation policy, should be set up;
and massive computerization in WPC Wing would be
started in the next three months so as to achieve the
objective of making all operations completely
G computerized by the end of the year 2000. [Paras 8-10]
[180-H; 181-A-H; 182-A-H; 183-A-H; 184-A-B]
Establishment of the Telecommunication Commission
and the Telecom Regulatory Authority of India.
H ·
2. On 11.4.1989, the Council of Ministers passed a
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ORS. v. UNION OF INDIA & ORS.
resolution and decided to establish the Telecom
A
Commission. The Rules of Business for the Telecom
Commission were also framed in 1989. In terms of para
2 of the Rules of Business read with item 1 of Annexure
'A' appended thereto, all important matters of policy
relating to Telecommunications are required to be
B
brought before the Telecom Commission. In 1997,
Parliament enacted the Telecom Regulatory Authority of
India Act, 1997 to provide for the establishment of TRAI.
By Act No.2 of 2000, the 1997 Act was amended and
provision was made for establishment of the Telecom c
Disputes Settlement and Appellate Tribunal (TDSAT).
[Paras 11-12] [184-C-D; 187-B-D]
3.1. Question No.1: Even though there is no
universally accepted definition of natural resources, they
are generally understood as elements having intrinsic
D
utility to mankind. They may be renewable or non
renewable. They are thought of as the individual elements
of the natural environment that provide economic and
social services to human society and are considered
valuable in their relatively unmodified, natural form. A
E
natural resource's value rests in the amount of the
material available and the demand for it. The latter is
determined by its usefulness to production. Natural
resources belong to the people but the State legally owns
them on behalf of its people and from that point of view
F ·
natural resources are considered as national assets,
more so because the State benefits immensely from their
value. The State is empowered to distribute natural
resources. However, as they constitute public property/
national asset, while distributing natural resources, the
G ,
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. Likeany other State action, constitutionalism must be reflected
at every stage of the distribution of natural resources. In . H
162
SUPREME COURT REPORTS
[2012] 3 S.C.R.
A Article 39(b) of the Constitution it has been provided that
the ownership and control of the material resources of
the community should be so distributed so as to best
sub-serve the common good, but no comprehensive
legislation has been enacted to generally define natural
B resources and a framework for their protection. Of
course, environment laws enacted by Parliament and
State legislatures deal with specific natural resources, i.e.,
Forest, Air, Water, Costal Zones, etc. The ownership
regime relating to natural resources can also be
c ascertained from international conventions and
customary international law, common law and national
constitutions. In international law, it rests upon the
concept of sovereignty and seeks to respect the principle
of permanent sdvereignty (of peoples and nations) over
0 (their) natural resources as asserted in the 17th Session
of tlhe United Nations General Assembly and then
affirmed as a customary international norm by the
International Court of Justice in the case of Democratic
Republic of Congo v. Uganda. Common Law recognizes
States as having the authority to protect natural
E resources insofar as the resources are within the
interests of the general public. The State is deemed to
have a proprietary interest in natural resources and must
act as guardian and trustee in relation to the same.
Constitutions across the world focus on establishing
F natural resources as owned by and for the benefit of the
country. In most instances where constitutions
specifically address ownership of natural resources, the
Sovereign State, or, as it is more commonly expressed,
'the people', is designated as the owner of the natural
G resource. Spectrum has been internationally accepted as
a scarce, finite and renewable natural resource which is
susceptible to degradation in case of inefficient
utilisation. It has a high economic value in the light of the
demand for it on account of the tremendous growth in
H the telecom sector. Although it does not belong to a
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163
ORS. v. UNION OF INDIA & ORS.
particular State, right of use has been granted to States
A
as per international norms. [Paras 63-65] [241-F-H; 242A-H; 243-A-C]
3.2. In India, the Courts have given an expansive
interpretation to the concept of natural resources and
8
have from time to time issued directions, by relying upon
the provisions contained in Articles 38, 39, 48, 48A and
51A(g), for protection and proper allocation/distribution
of natural resources and have repeatedly insisted on
compliance of the constitutional principles in the process C
of distribution, transfer and alienation to private persons.
As natural resources are public goods, the doctrine of
equality, which emerges from the concepts of justice and
fairness, must guide the State in determining the actual
mechanism for distribution of, natural resources. In this
regard, the doctrine of equality has two aspects: first, it D
regulates the rights and obligations of the State vis-a-vis
its people and demands that the 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; and second, it E
regulates the rights and obligations of the State vis-a-vis
private parties seeking to acquire/use the resource and
demands that the procedure adopted for distribution is
just, non-arbitrary and transparent and that it does not
discriminate between similarly placed private parties.
F
[Paras 66, 69] [243-D-E; 246-D-F]
Secretary, Ministry of Information & Broadcasting, Govt.
of India v. Cricket Assn. of Bengal (1995) 2 SCC 161: 1995
(1) SCR 1036; Reliance Natural Resources Limited v.
G
Reliance Industries Limited (2010) 7 SCC 1: 2010 (5) SCR
704; Re Special Reference No. 1 of 2001 (2004) 4 SCC
489: 2004 (3) SCR 534; MC. Mehta v. Kamal Nath (1997)
1 SCC 388: 1996 (10) Suppl. SCR 12; Akhil Bharatiya
Upbhokta Congress v. State of M.P. (2011) 5 SCC 29: 2011
H
164
SUPREME COURT REPORTS
[2012] 3 S.C.R.
A
(5) SCR 77; Ugar Sugar Works Ltd. v. Delhi Administration
(2001) 3 sec 635: 2001 (2) SCR 630; State of UP. v.
Choudhary Rambeer Singh (2008) 5 SCC 550: 2008 (4) SCR
610; State of Orissa v. Gopinath Dash (2005) 13 SCC 495:
2005 (5 ) Suppl. SCR 699; Meerut Development Authority
B
v. Association of Management Studies (2009) 6 SCC 171:
2009 (6) SCR 663; Ramanna Dayaram Sheffy v.
International Airport Authority of India (1979) 3 SCC 489:
1979 (3) SCR 1014; S.G. Jaisinghani v. Union of India AIR
1967 SC 1427: 1967 SCR 703; Kasturilal Lakshmi Reddy
c v. State of J & K (1980) 4 SCC 1: 1980 (3) SCR 1338;
Common Cause v. Union of India (1996) 6 SCC 530: 1996
(6) Suppl. SCR 719; Shrilekha Vidyarthy v. State of UP.
(1991) 1 sec 212: 1990 (1) Suppl. SCR 625; UC v.
Consumer Education and Research Centre (1995) 5 SCC
0
482: 1995 (1) Suppl. SCR 349; New India Public School v.
HUDA (1996) 5 sec 510: 1996 (3) Suppl. SCR 597;
Sachidanand Pandey v. State of West Bengal (1987) 2 SCC
295: 1987 (2) SCR 223 - relied on.
·
Illinois Central Railroad Co. v. People of the State of
E Illinois 146 U.S. 387 (1892) M.C. Mehta v. Kamal Nath (1997)
1 SCC 388: 1996 (10) Suppl. SCR 12; Jamshed Hormusji
Wadia v. Board of Trustee, Port df Mumbai (2002) 3 SCC
214:; Intellectuals Forum, Tirupathi v. State of A.P. (2006) 3
SCC 549: 2006 (2) SCR 419; Fomento Resorts and Hotels
F
Limited v. Minguel Martins (2009) 3 SCC 571: 2009 (3) SCR
1; P. l.L. v. Union of India (2011) 4 SCC 1: 2011 (4) SCR 445
- referred to.
G
4. Question No.2:
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 the theory of level playing field. Paragraph 2.40
H of the recommendations dated 28.8.2007 shows that as
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ORS. v. UNION OF INDIA & ORS.
B
per TRAl's own assessment the existing system of A
spectrum allocation criteria, pricing methodology and the
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 det~rmined 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 c
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
0
recommendations of the Group of Ministers, the
Department of Telecommunications (DoT) and Ministry of
Finance were required to discuss and finalise the
spectrum pricing formula. The entire approach adopted
by TRAI was lopsided and contrary to the decision ,,taken
by the Council of Ministers and its recommendations
became a handle for the then Minister of C&IT and the
officers of the DoT who virtually gifted away the important
national asset at throw away prices by willfully ignoring
E
F
the concerns raised from various quarters including the
Prime Minister, Ministry of Finance and also some of its
own officers. This becomes clear from the fact that soon
after obtaining the licences, some of the beneficiaries offloaded their stakes to others, in the name of transfer of
equity or infusion of fresh capital by foreign companies,
and thereby made huge profits. If the method of auction
G
had been adopted for grant of licence which could be the
only rational transparent method for distribution of
national wealth, the nation would have been enriched by
many thousand crores. While it cannot be denied that
TRAI is an expert body assigned with important H
166
SUPREME COURT REPORTS
[2012] 3 S.C.R.
A functions under the 1997 Act, it cannot make
recommendations overlooking the basic constitutional
postulates and established principles and thereby deny
people from participating in the distribution of national
wealth and benefit a handful of persons. Therefore, even
B though the scope of judicial review in such matters is
extremely limited, ckeeping in view the facts which have
been brought to the notice of the Court that the
mechanism evolved by TRAI for allocation of spectrum
and the methodology adopted by the then Minister of
c C&IT and the officers of DoT for grant of UAS Licences
may have caused huge loss to the nation, the
recommendations made by TRAI were flawed in many
respects and implementation thereof by the DoT resulted
in gross violation of the objective of NPT 1999 and the
0 decision taken by the Council of Ministers on 31.10.2003.
Even though in its recommendations dated 28.8.2007,
TRAI had not specifically recommended that entry fee be
fixed at 2001 rates, but paragraph 2.73 and other related
paragraphs of its recommendations state that it has
decided not to recommend the standard option for
E pricing of spectrum in 2G bands keeping in view the level
playing field for the new entrants. It is impossible to
approve the decision taken by the DoT to act upon those
recommendations.
In
today's
dynamism
and
unprecedented growth of telecom sector, the entry fee
F determined in 2001 ought to have been treated by the
TRAI as wholly unrealistic for grant of licence along with
start up spectrum. The recommendations made by TRAI
in this regard were contrary to the decision of the Council
of Ministers that the DoT shall discuss the issue of
G spectrum pricing with the Ministry of Finance along with
the issue of incentive for efficient use of spectrum as well
as disincentive for sub-optimal usages. Being an expert
body, it was incumbent upon the TRAI to make suitable
recommendations even for the 2G bands especially in
H light of the deficiencies of the present system which it
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167
ORS. v. UNION OF INDIA & ORS.
had itself pointed out.