# RELIANCE TELECOM LTD. & ANR v. UNION OF INDIA &

- **Citation:** [2017] 4 S.C.R. 972
- **Court:** Supreme Court of India
- **Decided:** 2017-01-12
- **Bench:** Dipak Misra, Prafulla C. Pant
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/reliance-telecom-ltd-anr-v-union-of-india-32113
- **Pages:** 65

## Headnote

Telecommunication:
Spectrum auction - For allocation of spectrums in various
C areas - Notice Inviting Application-2015 (NlA) - Terms and
conditions of - Set by Central Government for the auction -
Challenged by participants in the NlA (telecom service providers)
before High Courts - Interim orders by High Court - Supreme Court,
in Special Leave Petition stayed order of High Court and permitted
D the auction to continue - Cases Pending before High Courts
transferred to Supreme Court - Court granted liberty to Central
Government to finalize the auction - Plea inter alia that eligibility
criteria of minimum bidding for different categories of bidders under
different bands attracts the frown of Art. 14 of Constitution and
E
F
that principle of capping keeps the petitioners away from bidding
in respect of a particular quantum and makes the bid non-competitive
- Held: The challenge pertaining to tender conditions formulated
by the Central Government is not tenable as no valid grounds for
interference have been made out -
The endeavour of the
Government in the NIA is not based on any classification except
that all service providers must have a minimum of 5 MHz of spectrum
in order to deploy mobile technology - However, even if it is assumed
that there is classification, the classification of entities is on the
basis of two sets of people i.e. (1) new entrants including the expiring
licensees and (2) existing licensees both of whom ought to have
minimum 5 MHz so as to enable to deploy on any mobile technology
G - Such classification is based on intelligible differentia having a
nexus with the object sought to be achieved and there is no violation
of Art. 14 - Capping has been kept in vogue to have a bigger field
and it is based on a rational principle to avoid monopoly and to
create a healthy competitive bidding - The decision of Central
Government is based on certain norms and parameters - It is a
H
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policy decision which subserves the consumers' interest - Decision
A
to conduct the auction cannot be said to be mala fide or based on
extraneous considerations - Constitution of India - Art. 14.
Deeds and Documents:
Notice Inviting Application (NIA) - Interpretation of Held:
NIA being an invitation to offer, the rules of interpretation of B
contracts would apply and not the rules that may be applied in the
case of interpretation of statutes - In case of difference of opinion
in the manner of interpretation, it is the interpretation of the party
who is offering the contract ought to be adopted - Court, by way of
mandamus, cannot require the State to interpret the clause in a given c
way - Court can interpret the clause contrary to the way of
interpretation by the offering party or literal interpretation, only
on the limited grounds of judicial review by striking down the clause
as arbitrary - Contract - Interpretation of Statutes.
Legitimate Expectation:
Concept of legitimate expectation has no role to play where
State action is as a public policy or in public interest, unless the
action taken amounts to an abuse of po,/;er.
Judicial Review:
Scope of judicial review - In respect of policy decisions in
E
fiscal matters - Held: The Court cannot get and dwell as an appellate
authority into complex economic issues in exercise of power of
judicial review- In the matters relating to complex auction procedure
having enormous financial ramification, interference by Court can .
lead to· a situation which is not warrantable and may have F
unforeseen adverse impact effecting fiscal imbalance - Interference
in such auction should be only on the ground of stricter scrutiny,
when the decision making process smacks of obnoxious
arbitrariness or any extraneous consideration.
Telecom Regulatory Authority of India Act, 2003:
s.11 (J)(a) - Recommendations under - By Telecom Regulatory
Authority of India - Whether binding on Central Government -
Held: Recommendations given u/s. 11 (l)(a) are not

## Text

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A
B
[2017] 4 S.C.R. 972
RELIANCE TELECOM LTD. & ANR.
UNION OF INDIA & ANR.
(Transfer Case (Civil) No. 43 of 2015)
JANUARY 12, 2017
[DIPAK MISRA AND PRAFULLA C. PANT, JJ.)
Telecommunication:
Spectrum auction - For allocation of spectrums in various
C areas - Notice Inviting Application-2015 (NlA) - Terms and
conditions of - Set by Central Government for the auction -
Challenged by participants in the NlA (telecom service providers)
before High Courts - Interim orders by High Court - Supreme Court,
in Special Leave Petition stayed order of High Court and permitted
D the auction to continue - Cases Pending before High Courts
transferred to Supreme Court - Court granted liberty to Central
Government to finalize the auction - Plea inter alia that eligibility
criteria of minimum bidding for different categories of bidders under
different bands attracts the frown of Art. 14 of Constitution and
E
F
that principle of capping keeps the petitioners away from bidding
in respect of a particular quantum and makes the bid non-competitive
- Held: The challenge pertaining to tender conditions formulated
by the Central Government is not tenable as no valid grounds for
interference have been made out -
The endeavour of the
Government in the NIA is not based on any classification except
that all service providers must have a minimum of 5 MHz of spectrum
in order to deploy mobile technology - However, even if it is assumed
that there is classification, the classification of entities is on the
basis of two sets of people i.e. (1) new entrants including the expiring
licensees and (2) existing licensees both of whom ought to have
minimum 5 MHz so as to enable to deploy on any mobile technology
G - Such classification is based on intelligible differentia having a
nexus with the object sought to be achieved and there is no violation
of Art. 14 - Capping has been kept in vogue to have a bigger field
and it is based on a rational principle to avoid monopoly and to
create a healthy competitive bidding - The decision of Central
Government is based on certain norms and parameters - It is a
H
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policy decision which subserves the consumers' interest - Decision
A
to conduct the auction cannot be said to be mala fide or based on
extraneous considerations - Constitution of India - Art. 14.
Deeds and Documents:
Notice Inviting Application (NIA) - Interpretation of Held:
NIA being an invitation to offer, the rules of interpretation of B
contracts would apply and not the rules that may be applied in the
case of interpretation of statutes - In case of difference of opinion
in the manner of interpretation, it is the interpretation of the party
who is offering the contract ought to be adopted - Court, by way of
mandamus, cannot require the State to interpret the clause in a given c
way - Court can interpret the clause contrary to the way of
interpretation by the offering party or literal interpretation, only
on the limited grounds of judicial review by striking down the clause
as arbitrary - Contract - Interpretation of Statutes.
Legitimate Expectation:
Concept of legitimate expectation has no role to play where
State action is as a public policy or in public interest, unless the
action taken amounts to an abuse of po,/;er.
Judicial Review:
Scope of judicial review - In respect of policy decisions in
E
fiscal matters - Held: The Court cannot get and dwell as an appellate
authority into complex economic issues in exercise of power of
judicial review- In the matters relating to complex auction procedure
having enormous financial ramification, interference by Court can .
lead to· a situation which is not warrantable and may have F
unforeseen adverse impact effecting fiscal imbalance - Interference
in such auction should be only on the ground of stricter scrutiny,
when the decision making process smacks of obnoxious
arbitrariness or any extraneous consideration.
Telecom Regulatory Authority of India Act, 2003:
s.11 (J)(a) - Recommendations under - By Telecom Regulatory
Authority of India - Whether binding on Central Government -
Held: Recommendations given u/s. 11 (l)(a) are not binding but
deserve to be given due weightage.
G
H
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c
SUPREME COURT REPORTS
[2017] 4 S.C.R.
Dismissing the cases, the Court
HELD: 1.1 The question of alteration of bid condition does
not survive, as the petitioners have participated in the auction
and have been successful in some of the areas. The present
petitions have been deliberately kept alive by the telecom service
providers only to retain their dominant positions to the detriment
of the market and the subscribers. The challenge by the
petitioners pertaining to tender conditions formulated by the
Union of India invoking the power of judicial review is not tenable
as no valid grounds for interference, have been made out. [Para
17) [998-D-F)
1.2 As the factual score depicts, the NIA had stipulated
capping and simultaneously allowed certain categories to bid for
a lesser quantum to enhance the existing spectrum with them so
that they can reach a particular level. The reason shown by the
respondents is that a minimum spectrum is determined to enhance
D the efficiency and capability of the service providers so that the
arrangement can be beneficial to the consumers and they can
avail requisite benefit and have better service. The licensees
who do not have the specific quantum can bid for the balance so
that the efficiency of service is enhanced. If a minimum is provided
E for a particular area or zone having regard to the necessity and
the interest of the consumers, it subserves the larger public
interest. The said stipulation might have affected the individual
interest of certain categories of licensees or aspirants but that
cannot weigh over the public interest. [Para 67] [1029-C-F]
F
1.3 The decision taken by the Central Government is based
upon certain norms and parameters. Though criticism has been
advanced that it is perverse and irrational, yet it is a policy decision
which subserves the consumers' interest. It is extremely difficult
to say that the decision to conduct the auction in such a manner
can be considered to be ma/a fide or based on extraneous
G considerations. [Para 70) [1031-G]
H
1.4 When auction is held in respect of spectrum after taking
into consideration certain range of facts and circumstances which
are founded on economic and social policy factors, it is difficult to
unsettle the NIA and the consequential effect thereof by applying
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA &
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ANR.
the principle of judicial review. The procedure adopted in this A
• kind of auction is neither to be equated nor compared with the
process meant for grant of ordinary largesse. It is because of its
complexity, technical expertise, enormous financial impact and
the larger public interest. [Para 71) [1032-C-D)
1.5 In the present case, certain natural resources have been
B
put into auction. In that regard, a decision has been taken. The
condition to put a cap and make a classification not allowing certain
entities to bid is not an arbitrary one as it is based on the
acceptable rationale of serving the cause of public interest. It
allowed new entrants and enabled the existing entities to increase
their cap to make the service more efficient. The Court cannot C
get and dwell as an appellate authority into complex economic
issues on the foundation of competitors advancing the contention
that they were not allowed to bid in certain spheres. As the
stipulation in the tender was reasonable and not based on any
extraneous considerations, the Court cannot interfere in the NIA D
in exercise of the power of judicial review. [Paras 74, 75) [1034A; 1035-C-D]
1.6 The Court cannot interfere with the tender conditions
only on the ground that certain amount of spectrum has not been
put to auction. The submission is that whatever has been put to
auction and is available should have been notionally added so
that the entities which have certain quantum of spectrum in
praesenti could have participated in the auction and put forth their
bids for a higher quantum. If there has been a reduction for a
particular entity because of the terms and conditions of the tender,
it has to accept it, for he cannot agitate a grievance that he could
have obtained more, had everything been added notionally.
Notionally adding up or not adding up is a matter of policy and
that too a commercial policy and in a commercial transaction, a
decision has to be taken as prudence would command. [Para 75]
[1035-F-G; 1036-A-B)
1.7 In the matters relating to complex auction procedure
having enormous financial ramification, interference by the Courts
based upon any perception which is thought to be wise or assumed
E
F
G
to be fair can lead to a situation which is not warrantable and may
have unforeseen adverse impact. It may have the effect H
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SUPREME COURT REPORTS
[2017) 4 S.C.R.
A potentiality of creating a situation of fiscal imbalance. Interference
in such auction should be on the ground of stricter scrutiny when
the decision making process commencing from NIA till the end
smacks of obnoxious arbitrariness or any extraneous
consideration which is perceivable. [Para 76) (1036-E-G)
B
c
D
E
F
G
H
Tata Cellular v. Union of India (1994) 6 SCC 651 :
(1994) 2 Suppl. SCR 122; Delhi Science Forum and
others v. Union of India and another (1996) 2 SCC
405 : (1996) 2 SCR 767; Raunaq International Ltd. v.
I. V.R. Construction Ltd. and others (1999) l SCC 492 :
[1998) 3 Suppl. SCR 421; Monarch Infrastructure (P)
Ltd. v. Ulhasnagar Municipal Corpn. and others (2000)
5 SCC 287 : [2000) 3 SCR 1159; Cellular Operators
Association of India & others v. Union of India & others
(2003) 3 SCC 186:(2002] 5 Suppl. SCR 222; Tata Iron
& Steel Co. Ltd. v. Union of India and another (1996) 9
SCC 709 : [1996] 3 Suppl .. SCR 808; Union of India v.
International Trading Co. and another (2003) 5 SCC
437:[2003) 1 Suppl. SCR 55; Directorate of Education
v. Educomp Datamatics Ltd. and others (2004) 4 SCC
19:(2004] 2 SCR 1010;Global Energy Ltd. and another
v. Adani Exports Ltd. and others (2005) 4 SCC 435 :
(2005] 3 SCR 1108;Master Marine Services (P) Ltd. v.
Metcalfe & Hodgkinson (P) Ltd. and another (2005) 6
SCC 138:(2005) 3 SCR 666; Michigan Rubber (India)
Limited v. State of Karnataka and others (2012) 8 SCC
216:[2012) 8 SCR 128; Jagdish Manda/ v. State of
Orissa and others (2007) 14 SCC 517 : [2006) 10
Suppl. SCR 606j Tejas Constructions & Infrastructure
(P) Ltd. v. Municipal Council, Sendhwa and another
(2012) 6 SCC 464: [2012) 4 SCR 190; Maa Binda
Express Carrier and another v. North-East Frontier
Railway and others (2014) 3 SCC 760:(2013] 12 SCR
529; Census Commissioner & Others
v.
R.
Krishnamurthy (2015) 2 SCC 796:(2014] 11 SCR 463;
Tamil Nadu Generation and Distribution Corporation
Ltd (TANGEDCO) Rep. by its Chairman & Managing
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA &
ANR.
Director and another etc. v. CSEPDI -
Trishe
Consortium, Rep. by its Managing Director & another
2016 (10) SCALE 69; A/cons Infrastructure Ltd. v.
Nagpur Metro Rail Corporation Ltd. 2016 (8) SCALE
765; Montecarlo Ltd. v. NTPC Ltd. 2016 (10) SCALE
50 - relied on.
2. Section 11 of the Telecom Regulatory Authority of India
Act deals with the functions of the authority, that is, TRAI. The
said provision empowers it to make recommendations either suo
motu or on a request from the licensor on certain matters. TRAI
977
A
B
has been conferred with the statutory power to make
recommendations on the terms and conditions of the licence to a
C
service provider and the Central Government is bound to seek
the recommendations of TRAI on such terms and conditions at
different stages, but the recommendations of TRAI are not
binding on the Central Government and the final decision on the
terms and conditions of a licence to a service provider rests with D
the Central Government. The legal consequence is that if there
is a difference between TRAI and the Central Government with
regard to a particular term or condition of a licence, as in the
present case, the recommendations of TRAI will not prevail and
instead the decision of the Central Government will be final and
E
binding. TRAI, being an expert body, discharges recommendatory
functions under clause (a) of sub-section (1) of Section 11 of the
TRAI Act and discharges regulatory and other functions under
clauses (b), (c) and (ti) of sub-section (1) of Section 11 of the TRAI
Act and it being an expert body, the recommendations of TRAI
under clause (a) of sub-section (1) of Section 11 of the TRAI Act
F
have to be given due weightage by the Central Government but
the recommendations of TRAI are not binding on the Central
Government. The regulatory and other functions under clauses
(b), (c) and (d) of sub-section (1) of Section 11 of the TRAI Act
have to be performed independent of the Central Government G
and are binding on the licensee subject only to an appeal in
accordance with the provisions of the TRAI Act. Thus, the
recommendations given by TRAI are not binding but deserve to
be given due weightage. Certain areas have been separated
regard being had to the nature of the language employed in the
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SUPREME COURT REPORTS
[2017] 4 S.C.R.
A TRAI Act where the authority can act independent of the Central
Government. In the present case, the Central Government had
sought the recommendation and then referred it back. Ultimately,
it formulated the policy for auction of the spectrum. Therefore,
the criticism that is advanced that once there is a reference back,
B the Central Government should have been guided by the
recommendations has no justification inasmuch as the Central
Government has the ultimate authority to take a decision. Of
course, such a decision, especially a decision relating to frame a
policy for NIA has to be in accord with the norms of Article 14 of
c
the Constitution. [Paras 51, 52] [1021-G-H; 1023-B-H; 1024-A]
Association of Unified Tele Services Providers and
others v. Union of India and others (2014) 6 SCC 110
: [2014] 9 SCR 780 -
relied on.
3.1 The endeavour of the Government contained in the
Notice Inviting application (NIA) for the auction conducted in
D March, 2015 is not based on any classification except that all
service providers must have a minimum of 5 MHz if they want to
deploy any mobile technology benefitting the consumer and even
TRAI concurred with the view that minimum 5 MHz quantum
was the appropriate minimum quantum to be set. Reduction of
E minimum quantum of spectrum to 3 MHz instead of 5 MHz for
new entrants would be contrary to TRAI's own recommendations
on the issue of spectrum auction, wherein TRAI has been
consistently holding that 5 MHz is the minimum amount of
spectrum required to ensure that any technology can be deployed
F
with the allocated spectrum. [Para 18) [999-B-D]
3.2 Fragmented spectrum allocation to address the 'present
issues in few service areas will only be a short term solution but
will have long term negative impact for the sector as the objective
is to have broadband solution that offers the most affordable
devices and ecosystem to connect the billion people and as such,
G the minimum quantum of spectrum is prescribed as 5 MHz. After
deliberating on the recommendations of TRAI, the Government
differed with the view ofTRAI and kept the minimum bid quantity
at 5 MHz on the grounds that the present and future technology
scenarios and the need for making the spectrum contiguous would
H only benefit the consumer which is the essential objective of the
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA &
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ANR.
National Telecom Policy (NTP); that in the previous three A
auctions, new entrants/licensees whose licences were expiring
were required to bid for minimum 5 MHz spectrum; that there
was no substantial change in the market and eco-system scenario
since the last auction of February, 2014; that there is a need to
induct new technologies to meet the requirements of the ever B
growing demand for data; and the number of mobile users stands
at approximately 960 million consumers whose need has to be
catered keeping in view the development of technology in next
twenty years. Thus, taking a long-term view, the decision of the
Government after giving due weightage to the recommendations
of TRAI is justified. The plea that the auction is non-competitive
C
and security driven has no basis. [Para 191 [999-D-H; 1000-Al
3.3 The classification of entities is on the basis of whether
an entity is a new entrant or an existing service provider as the
Government has always been consistent with. the trend that new
entrants would have to bid a minimum of 5 MHz and the existing D
service providers have to 'top up' (capacity enhancement) their
present holding of spectrum to achieve a goal of maximizing
efficiency and avoid any restraint for the consumers and the
service providers. In the NIA for auction of spectrum in 2015,
across all bands, a new entrant is required to bid for a minimum
of 5 MHz and this requirement has always been the same for
E
earlier auctions also conducted in 2012, 2013 and 2014. The
minimum bid quantum is reduced only in those cases where 5
MHz is not available in a LSA or contiguous 5 MHz is not
available. An existing licensee has to bid for a minimum of 0.6
MHz of spectrum in order to 'top up' so as to come to the level
F
of 5 MHz (as minimum administratively allocated spectrum in
900 MHz/1800 MHz band is 4.4 MHz) and be in a position to
provide services compatible with new technology. Moreover, the
existing licensee, who will be bidding for a minimum of 0.6 MHz
so that he may come to the level of 5 MHz, may also bid for more
than that. The idea would be that he has to bid as a new entrant G
for the next time when his licence would expire and his allocated
4.4 MHz spectrum is put to auction. [Para 20] [1000-A-Ef
3.4 The endeavour of Department of Telecommunications
(DoT) is that everybody should have minimum 5 MHz as less
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[2017) 4 S.C.R.
A than 5 MHz will not be good for the consumer keeping in view
the evolution and innovation and in order to achieve the same,
DoT has to be far-sighted as the spectrum is being allotted for a
period of 20 years. Assuming that there is classification, then,
that is based on an intelligible differentia between two sets of
B people, i.e., (1) new entrants including the expiring licensees
and (2) existing licensees, both of whom ought to have minimum
5 MHz so as to be able to deploy on any mobile technology. An
existing licensee may not require 5 MHz to meet the traffic
requirements and only a fraction of 5 MHz would meet the
requirements, and small chunk addition would improve traffic
C handling capabilities and reduce call drops due to congestion.
Moreover, in case an existing licensee chooses to only retain
what it has in terms of spectrum before, then it will, as aforesaid,
only be able to provide the bare 2G service and no more and,
therefore, he would lose out on his consumers who can change
D to a better service provider in terms of number portability.
Therefore, the classification, if any, contained in the NIA for the
auctions conducted in March, 2015 is based on intelligible
differentia having a nexus with the object sought to be achieved
and there is no violation of Article 14. [Para 211 [1000-E-H; 1001A-B)
E
3.5 The argument that the petitioner was 'knocked out' of
availability of only 8.8 MHz in the North East and due to the term
of minimum of 5 MHz for a new entrant including expiring
licensees is incorrect. In the North East, while 8.8 MHz was
available in 900 band, there were other spectrum available, i.e.
F
800 band (13.75 MHz), 900 band (8.8 MHz), 1800 band (8.4 MHz)
and 2100 band (5 MHz) out of which the writ petitioner-Reliance
has won 5 MHz in 800 band and 5 MHz in 1800 band at the auction
as it already had spectrum in 2100 band. The trend of the 2015
auctions has shown that this company has substituted its 900 band
with 1800/800 band in most circles where the bid was lower than
G the 900 band and it has also bid for the 900 band spectrum and
remained unsuccessful, and that cannot form the basis to assert
that there is any discrimination caused or that there is a flaw in
the NIA. That apart, the investment already made in the past 20
years is an investment which will be used even with the 1800/
H 800 band technologies and any future investment according to
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA &
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the needs of the time will be made by them in their commercial A
wisdom and to say that they were "knocked out of the auction
because of the NIA design" is totally fallacious as they purchased
spectrum in other bands. [Para 22] [1001-E-H; 1002-AJ
4.1 There are various factors that the DoT is required to
take into account while determining the auction structure. B
Ultimately, the DoT should be permitted to determine the auction
structure consistent with the scheme of the TRAI Act (as has
been done in the earlier auctions and the instant one). It cannot
be left to the option of the telecom service providers and their
narrower self interest to determine the structure and timing of C
auctions. Capping has been kept in vogue to have a bigger field
and it is based on a rational principle. For arriving at the cap,
only two parameters are to be seen - (a) the total spectrum
assigned in that service area; and (b) the total spectrum being
put to auction. There is nothing mentioned in the definition as
explained by the notes that the surrendered spectrum is also D
required to be added because there is no definition of a
surrendered spectrum. Even if some capping rule is required to
be altered, the Court would be required to go into the basis why
a capping rule was provided for and why the TRAI and the
Department have consistently followed the capping rule. That is
because no monopoly should be created and a healthy competitive E
bidding should be available. The relief of removal of the cap is
only to enable the petitioners who are 'big players' to serve their
cause but not the public interest and the Government has been
reviewing its policy from time to time. TRAI has made
recommendations regarding compilation of the cap in future, and
F
such recommendations are under consideration by the
Government of India. [Para 25) (1003-D-H; 1004-AJ
4.2 The NIA, being an invitation to offer, and Clause 5.3.1
being one of the Clauses thereof, and the said Clause not being
under challenge, any meaning other than the literal meaning of G
the said Clause would have to be by consent of both the parties.
Furthermore, the NIA, being an invitation to offer, the rules of
interpretation of contracts would apply and not the rules that may
be applied in the case of interpretation of statutes. It is not open
to one party to unilaterally, at the stage of NIA, seek an
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[2017) 4 S.C.R.
A interpretation of a Clause in a manner of their choice and if there
is a difference of opinion in the manner of interpretation, it is the
interpretation of the party who is offering the contract that ought
to be adopted. Should there be cause for the Court interpreting
or thereby requiring, through mandamus, the Offering Party (i.e.,
B the State) to interpret the Clause contrary to their way of·
interpretation or literal interpretation, this would only be done
on the very limited grounds of judicial review, in which case, while
a certiorari would issue to strike down the Clause as being
arbitrary (which issue is not put in question before the Court), a
mandamus will not issue to require the State to interpret the
C Clause in a given way and make an offer in accordance with the
interpretation given by the Court, which is what the petitioners
seek. [Para 29] [1004-F-H; 1005-A-B)
4.3 Clause 5.3.1, in 'No uncertain terms', provides for only
two categories of spectrum, namely, (i) spectrum currently held
D by.the operators; and (ii) spectrum put to auction by the Licensor/
Respondent, to be counted/considered while calculating the
Spectrum cap. This being the position under the Clause (both
accepted and understood by all the operators), the contention
that the surrendered spectrum of BSNL/MTNL and not currently
held by the existing operators should have been included
E
(whether or not put to auction) is clearly contrary to the
unequivocal terms of Clause 5.3.1. The contention that the
surrendered spectrum (which is neither assigned/held by any
operator nor put to auction) ought to be included for calculating
· the Spectrum cap in the present auction is an effort to include/
F
add another category of spectrum (i.e., surrendered spectrum
not put to auction) which is not provided in Clause 5.3.1, and
thereby effectively seek amendment of the Tender/NIA terms
which is totally impermissible in law. [Para 30) [1005-B-D)
4.4 The objective behind Spectrum capping is to ensure
G competition in the market by preventing large/big operators from
acquiring large amount of spectrum, which they may not require
but only hoard to prevent the small operators from effectively
competing in the market, and that is why, TRAI has recommended
on 02.07.2015 that the basic objective of prescribing a spectrum
cap is to prevent a TSP from acquiring large holdings of spectrum
H
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through auction, M&A or trading, as it may lead to non-level A
playing field thereby disturbing the competition in the market. It
cannot be left to the market forces alone to decide the maximum
spectrum holding as a TSP and, hence, the provision of cap should
continue on the spectrum holding that a TSP may acquire or
otherwise. The argument that the Respondent should have B
notionally included the spectrum surrendered by BSNL/MTNL
would result in creating a situation where though the spectrum
put to auction remains the same (i.e., limited), yet a large/big
player will be able to bid for the entire spectrum (which it
otherwise could not have done due to Clause 5.3.1) thereby
effectively giving a tool to the large/big operators to deprive/ C
starve small operators, who quite avowedly, cannot match the
buying power of larger operators of spectrum. [Para 31) [1005E-H; 1006-A]
5. There cannot be any legitimate expectation based on
the terms and conditions relating to NIA more so, in the sphere D
of auction of spectrum. The 2013 auction included the spectrum
allegedly surrendered by BSNL/MTNL in calculating the
Spectrum cap, while it has not been done so in the present auction
(i.e., 2015 auction), and the fact that the surrendered spectrum
was included earlier and not in the present year does not give
rise to legitimate expectation, for it does not bind the State to
E
follow the same because the fundamental principles of
maximization of revenue and subserving of the public interest at
large require change. The concept of legitimate expectation has
no role to play where the State action is as a public policy or in
the public interest unless the action taken amounts to an abuse
F
of power. The court does not interfere with the discretion of the
public authority which is empowered to take the decisions under
law and the court is expected to apply an objective standard that
leaves to the deciding authority the full range of choice which the
legislature is presumed to have intended. [Para 321 [1006-A-Dl
G
6. The grievance raised by the petitioners is that the design
of the auction skewed price discovery and resulted in artificial
inflation of the price of spectrum. This grievance is to be viewed
in the context in which the policy of auction- of spectrum came to
be implemented. This Court having held that public interest is
H
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SUPREME COURT REPORTS
(2017] 4 S.C.R.
A served by maximizing the benefit to the public exchequer, a
challenge premised on the admission that the method adopted
by the State, in fact, maximized the generation of revenue from
the auction of spectrum cannot succeed. [Para 33) [1006-D-F)
. B
c
D
E ,
F
.
G
H
Centre for Public Interest Litigation and others v. ·Union
of India and others (2012) 3 SCC 1 : [2012) 3 SCR
147; Asia Foundation & Construction Limited v.
Trafalgar House Construction (/)Ltd. And others (1997)
1 SCC 738 : [1996) 10 Suppl. SCR 209 - distinguished.
Reliance Energy-Ltd. and another v. Maharashtra State
Road Development Corpn. Ltd. and others (2007) 8 SCC
1 : [2007) 9 SCR 853; Natural Resources Allocation,
Jn re, Special Reference No. 1 of 2012 (2012) 10 SCC
1 : [2012) 9 SCR 311; Bharti Airtel Limited v. Union of
India (2015) 12 SCC 1 : [2015) 5 SCR 867; Union of
India and another v. Assn. of Unified Telecom Service
Providers of India and others (2011) 10 SCC 543 :
[2011) 14 SCR 657; Bannari Amman Sugars Ltd. v.
Commercial Tax Officer and others (2005) 1 SCC 625
: [2004) 6 Suppl. SCR 264 - referred to.
Case Law Reference
[2007) 9 SCR 853
referred to
Para 10
[2014) 9 SCR 780
relied on
Para 10
[2012) 9 SCR 311
referred to
Para 10
[2012) 3 SCR 147
distinguished Para 14
[1994) 2 Suppl. SCR 122
relied on
Para 17
[1996) 2 SCR 767
relied on
Para 17
[2015) 5 SCR 867
referred to
Para 40
[2011) 14 SCR 657
referred to
Para 40
[1998) 3 Suppl. SCR 421
referred to
Para 55
[2000) 3 SCR 1159
relied on
Para 56
(2002) 5 Suppl. SCR 222
relied on
Para 57
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA &
985
ANR.
(1996) 3 Suppl. SCR 808
relied on
Para 57
A
(2003) 1 Suppl. SCR 55
relied on
Para 58
(2004) 2 SCR 1010
. relied on
Para 59
[2004) 6 Suppl. SCR 264
relied on
Para 60
(2005] 3 SCR 1108
referred to
Para 61
B
(2005) 3 SCR 666
referred to
Para 62
[2012) 8 SCR 128
relied on
Para 63
.,I,,
· . ' [2006] 10 Suppl. SCR 606
relied on
Para 63
. ' (2012] 4 SCR 190
relied on
Para 63
c
[2013) 12 SCR 529
relied on
Para 64
[2014) 11 SCR 463
relied on
Para 65
2016 (10) SCALE 69
relied on
Para 71
D
2016 (8) SCALE 765
relied on
Para 72
2016 (10) SCALE 50
relied on
Para 73
(1996) 10 Suppl. SCR 209
distinguished Para 75
CIVIL ORIGINAL JURISDICTION: Transfer Case (Civil) No.
E
43 of 2015.
Under Article 139 of the Constitution of India
WITH
T. C. (C) Nos. 64 and 65 of 2015.
F
Ranjit Kumar, SG, P. Chidambaram, Dr. A. M. Singhvi, Gopal
Jain, C. A. Sundaram, Ramji Srinivasan, Harish N. Salve, Sr. Advs.,
MaheshAgarwal, Ms. Shally Bhasin, Ms. Sadapurna Mukharjee, Chaitnya
Safaya, Lakshmeesh Karnath (for E. C. Agrawala), Harsh Kaushik,
Abhay Chattopadhyay, Ms. Chinrnayee Chandra, Vidhur Bhatia, Nidhiram
Sharma, Z. L. Ahmad, Gaurav Sharma, Ritin Rai, Ms. Binu Tamta,
G
Siddhartha Jha (for D. S. Mahra), Mansoor Ali Shoket, Nitin Kala, Ms.
Vibha Dhawan, Kuna! Singh, Pukhrambam Ramesh Kumar, K.R.
Sasiprabhu, Raghav Shankar, Amit Bansal, Mohit Paul, Tarun Gulati,
Manjul Bajpai, Sparsh Bhargava, Neil Hildreth, Kishore Kuna!, Anupam
Mishra, Advs. for the appearing parties.
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[2017) 4 S.C.R.
A
The Judgment of the Court was delivered by
DIPAK MISRA, J. I. The three transferred cases, namely,
Transfer Case (Civil) No. 43 of2015, Transfer Case (Civil) No. 64 of
2015 and Transfer Case (Civil) No. 65 of2015, had their origin in the
High Courts of Delhi, Tripura and Karnataka respectively. The High
B Courts were moved under Article 226 of the Constitution challenging
the terms and conditions ofNotice InvitingApplication-2015 (for short,
'NIA') for allocation of spectrums in various areas. The High C,ourt of
Tripura in W.P.(C) No. 52 of 2015 and W.P.(C) No. 53 of 2015 was
prayed for grant of interim relief which included extension of permission
to the participants in the NIA to be bidded for minimum 4.4 MHz, IN
C 900 MHz band in the North East service area. The High Court, while
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dealing with interim prayer, directed as follows:-
"Therefore, at this stage, we feel that only the following order
should be passed: Both the petitioners are permitted to submit 2
applications instead of one. One application may be for 4.4. MHz
and the other application will be for a minimum of 5 MHz and
may extend up to 8.8, if the petitioners so desire. We have been
informed at the Bar that two applications may not be possible to
be submitted because it is online. We are not sure whether the
same because it may not be possible. Therefore, we direct that it
is for the petitioners to decide what application they will submit
online but they may also simultaneously submit one application
offline in hard copy with the Secretary, Department of
Telecommunication, Union of India on or before 16th February,
2015. The Union of India may proceed with the assessment of
the applications but no final decision in the matter shall be taken
without permission of this Court. Furthermore, any preliminary
decision taken shall also be subject to the result of the present
writ petition. Admittedly, the licences of the petitioners are expiring
only in December, 2015, and, therefore, we would like to ensure
that the writ petition is disposed of much earlier."
2. The said orders were assailed by the Union of India in S.L.P.
(Civil) Nos. 5735-5736 of2015. This Court issued notice and eventually
on 26.2.2015 directed stay of the order passed by the High Court of
Tripura at Agartala and permitted the auction to continue on the date
fixed, but the same should not be finalized without the leave of the Court.
H The Court further directed that the said condition shall be put forth on
..
RELIANCE TELECOM LTD. & ANR. v. UNION Of INDIA &
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ANR. [DIPAK MISRA, J.]
...
the website so that all the bidders are aware of the order of this Court A
and no bidder shall claim equity because of his participation or success
in the tendering process.
3. It needs to be stated here that by this time, certain transfer
petitions were allowed. Transfer cases were taken up on 26.3.2015
wherein this Court passed the following order:-
B
"Mr. Mukul Rohatgi, learned Attorney Genera!' appearing for the
Union of India, has su.bmitted that there has been auction
commencing 4th March, 2015 and ending 25th March, 2015, in
respect of the bands, namely, 800 MHz, 900 MHz, 1800 MHz and
2100 MHz in respect of all the States and there has been a fierce c
and competitive auction and the entire revenue likely to be
generated is Rs.1. 09 lac crores. Learned Attorney General would
further submit that ifthe order of stay is not modified, the Union
of India will be facing grave fiscal difficulty as there is ample
possibility of collecting at least Rs.28,000 crores by 3 lst March,
2015. It is urged by him that the auction itself would show that D
the "Notice Inviting Tender" has been a workable one and,
therefore, sustainable in law. In this backdrop, submits, Mr. Mukul
Rohatgi, that the interim order passed on the earlier occasion should
be modified granting leave to the Union of India to fin..alize the
auction, subject to the final decision of the special leave petition
E
,.. and the transferred cases.
Mr. P. Chidambaram and Mr. Gopal Jain, learned senior counsel
appearing for the contesting respondents, per contra, would contend
that the competitive bidding was not really competitive, but a
compulsive bidding as parties were obliged to bid because of their
F
survival. In addition, it is put forth by them that the amount that
has to be thought of being collected by the Union of India, is
factually incorrect, inasmuch as the bidders who are successful
have to deposit the amount within ten days from the completion
of date of auction, that is, 25th March, 2015. Learned senior counsel
would further submit that the entire design of the "Notice Inviting G
.Tender" is gloriously faulty and solely because the auction has
taken place and money is likely to be collected, would not be a
justification for the modification of the interim order.
Having heard learned counsel for the parties, we are inclined to
modify the order to the extent that the Union of India would be at H
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[2017] 4 S.C.R.
A
liberty to finalize the auction and proceed thereafter, but all the
successful bidders shall be intimated that the said finalization is
subject to the final result of the special leave petition, as well as
the transferred cases."
4. At that juncture, Mr. Mukul Rohatgi, learned Attorney General
B undertook that the competent authority of the Union of India would intimate
the successful bidders to get themselves impleaded as parties.
5. It was observed by the Court that the said impleaded parties
are entitled to file respective affidavits stating their stand and stance in
the said affidavits. On that day itself, the Court disposed of the special
c leave petitions as it was felt that nothing really was to be adjudicated in
them as the whole controversy was to be addressed in the transferred
case. When the matter was heard on the next date, the Court passed
the following order:-
" In course of hearing certain aspects have been highlighted which,
D
we think, the competent authority of Union oflndia should put by
way of an affidavit so that while deciding finally, this Court may
take into consideration certain aspects for issuing appropriate
directions or moulding the relief. The affidavit shall cover the
following:-
E
(a) After completion of the present auction, what is the quantum
of spectrum available with the Union of India?
(b) What-is the possibility of getting the non-vacating spectrum
from the defence band and within what time?
( c) Whether an auction can be held in respect of the available
F
spectrum, regard being had to what has been stated in (a) and (b)
above?
( d) Whether in the auction that is going to be held, the concept of
capping would still remain and, if so, what would be the formula
and how it would be interpreted and applied? While calculating
G
the cap, ifthat exercise is undertaken, whether the commercially
available spectrum should be included in the computation of such
caps?
H
(e) The successful bidders who have got less than five and in
case they fail in the next auction, how they would deal with the
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA &
989
ANR. [DIPAK MISRA, J.]
spectrum available with them? To elaborate, though they can A
surrender or trade the spectrum or share the same as per
guidelines, do they have a choice to hold it back or the Union of
India would take step's in that regard as per law?"
Be it stated, the Union of India filed an affidavit stating the position.
The essence of the said affidavit is that:-
B
(a) After completion of the present auction, what is the
quantum of spectrum available with the Union of India?
4. With reference to item (a) above, it is submitted that in the
spectrum bands put to auction namely 800 MHz, 900 MHz, 1800
MHz & 2100 MHz in March 2015, the table below indicates the
C
availability of spectrum post auction with the Government of India
for commercial use:-
Band
Quantum of
Quantum
Remaining
(MHz)
Spectrum put
provisionally
quantum of
on Auction
won by bidders
spectrum
(MHz)
(MHz)
(MHz)
800
108.75
86.25
22.5
900
177.8
168.00
9.8
1800
99.2
93.80
5.4
2100
85
70.00
15.0
Total
470.75
418.05
52.7
b) What is the possibility of getting the non-vacating
spectrum from the defence band and within wh,at ~me?
5. With reference to query (b), it is humbly submitted that the
Answering Respondent is making all sincere efforts for getting
the spectrum vacated from Defence and other users. Historically,
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all the identified 75 MHz spectrum mobile services in 1800 MHz
band in all 22 service areas was with defence and other users
G
prior to 2001 when it was allocated for the first time for commercial
mobile services in India after co-ordination with the then existing
users. Spectrum in 1800 MHz band was coordinated by defence
on a case to case basis either in the entire service area or in parts
of the service area (i.e. District-wise). Based on the coordination
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SUPREME COURT REPORTS
[2017] 4 S.C.R.
received from Defence, spectrum in 1800 MHz band was allotted,
from time to time, for commercial use by Telecom Service
Providers.