CENTRE FOR PUBLIC INTEREST LITIGATION V/S UNION OF INDIA & ORS

                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                      WRIT PETITION (C) NO. 382 OF 2014



CENTRE FOR PUBLIC INTEREST LITIGATION           ....PETITIONER(S)        
VERSUS                                                              
UNION OF INDIA & ORS.                                            ....RESPONDENT(S)        


                               J U D G M E N T


A.K. SIKRI, J.

                 The petitioner herein, viz.,  Centre  for  Public  Interest

Litigation, is a society registered under the  Societies  Registration  Act,

1860.   It  claims  that  the  very  purpose  for  which  this  society  was

established was to bring causes to the Superior Courts, which are  of  grave

public importance, by way of public  interest  litigation  in  an  organised

manner.  In the  present  writ  petition  filed  under  Article  32  of  the

Constitution of  India,  the  petitioner  challenges  the  decision  of  the

Government of India, taken sometime in March 2013, allowing voice  telephony

to respondent No. 2 (Reliance Jio Infocomm  Ltd.)  on  payment  of  Rs.1,658

crores entry fee.  Allegation  of  the  petitioner  is  that  the  aforesaid

amount at which the license for voice telephony  is  granted  to  respondent

No. 2 is a pittance inasmuch as in  normal  course  grant  of  this  license

would have fetched a whopping sum of Rs.25000  crores  approximately.   This

insinuation is based upon a draft report  of  the  Comptroller  and  Auditor

General  of  India  (CAG)  which  report  estimated  the  aforesaid  license

fee/entry fee.  It is also alleged that respondent  No.  1,  while  allowing

voice telephony to respondent No. 2, has  not  revised  the  Spectrum  Usage

Charges (SUC) matching with the charges which are paid  by  other  operators

who bought voice telephony.  It is stated in the petition that  whereas  the

other operators pay 3% to 5% revenue annually depending upon quantum of  the

spectrum they hold, respondent No. 2 in contrast would be paying just 1%  of

the revenue.  In this way, alleges the petitioner, an undue favour is  given

to respondent No. 2 by charging abysmally less entry fee and demanding  much

lesser SUC, thereby causing loss of revenue to the Government over 20  years

license period.  It has also resulted in disturbance  in  the  level-playing

field between respondent No. 2 vis-a-vis other  operators.   The  petitioner

has tried to project that unwarranted favouritism  is  shown  to  respondent

No. 2 and the decision making process, in this behalf,  was  also  not  only

faulty but in violation of accepted norms as well.

The factual details leading to the aforesaid allegations are averred in  the

petition which can be summated in the following manner:

       On  25.02.2010,  the  respondent  No.  1   issued   Notice   Inviting

Applications (NIA) for the auction of:

      (i) 3G: Three or 4 blocks each of 5+5 MHz spectrum for 3G services  in

2.1 GHz band at a reserve price of Rs. 3,500 crore for a Pan-India  license,

and

      (ii)  BWA (4G): Two blocks each of 20 MHz spectrum  for  BWA  services

in 2.3 GHz band at a reserve price  of  Rs.  1,750  crore  for  a  Pan-India

license.

      In respect of BWA (4G), as per the NIA conditions, a bidder  could  be

an existing ISP-A licensee or UAS licensee (or obtain any of these  licenses

later if successful in the bid), but  it  can  provide  only  such  services

which are allowed under the license  it  chooses.   For  example,  an  ISP-A

licensee cannot provide  voice  telephony.   In  this  regard,  reliance  is

placed on the following clause of the NIA:

Clause 3.1.2: “Services can  only  be  offered  subject  to  the  terms  and

conditions of the license obtained by the operator.  Award of spectrum  does

not confer a right to provide any telecom services, and these  are  governed

by the terms and conditions of the license obtained by the operator.”

      During May-June 2010 the auctions for 3G and BWA were concluded.   The

3G auction fetched Rs. 16,750.58 crore for 5+5 MHz spectrum in 2100 MHz  (or

2.1 GHz) band.  Thus, per MHz price worked out to be Rs. 1,675 crore.   This

spectrum price bequeathed the rights to provide both data and voice.

      Immediately, after  the  3G  auction,  the  BWA  auction  began  which

fetched Rs. 12,847.77 crore for 20 MHz pan-India license  in  the  2300  MHz

(or 2.3 GHz) band.  This works out to be Rs. 642.39 crore per MHz.

      Infotel Broadband Services Pvt.  Ltd.  (IBSPL)  emerged  as  the  only

company to have acquired pan-India BWA spectrum.  Five other companies  viz.

Bharti Airtel (4 Service Areas), Aircel (8 Sas), Qualcomm (4SAs), Tikona  (5

Sas) and Augere (1 SA) shared the remaining other Pan India slot  (22  Serve

Areas) of BWA spectrum in the country.

It is also averred that IBSPL had an ISP-A license since November  2007  and

had just one subscriber with revenue of Rs. 16.28 lakhs during 2009-10,  and

its authorized share capital was Rs. 3 crore and the  paid  up  capital  was

Rs. 2.51 crore. Infotel Digicomm Pvt. Ltd. (IDPL) held 99.99% share  of  the

IBSPL at the time of submission of application in March  2010  for  the  BWA

auction.

It is alleged in the  petition  that  within  hours  of  completion  of  BWA

auction on 11.06.2010, IBSPL increased the  authorised  share  capital  from

Rs. 3 crore to Rs. 6,000 crore.  On 17.06.2010, the company  authorised  its

Board of Directors to allot 475  crore  equity  share  of  Rs.  10  each  to

Reliance Industries Ltd. (RIL) and 25  crore  equity  share  of  Rs.  10  to

Infotel Digicomm Pvt. Ltd. (IDPL) aggregating to the equity capital  of  Rs.

5,000 crore.  On the same day, the company also decided  to  change  from  a

private company to Public Limited Company (Infotel Broadband Services  Ltd).

 Thus, the company within a week of winning the BWA  spectrum  disposed  off

95% shares to RIL while 5% was retained by IDPL.  Much later in March  2013,

the company was renamed as Reliance Jio Infocomm Pvt. Ltd.  On  that  basis,

some suspicion is nurtured  as  to  how  IBSPL  acquired  BWA  spectrum  and

thereafter stakes in IBSPL came under the control of RIL.   The  said  IBSPL

is now known as Reliance Jio Infocomm Pvt. Ltd.

            However, we may like to add here itself that the auction of  BWA

in  which  IBSPL  turned  out  to  be  successful  bidder   resulting   into

acquisition of Pan-India BWA spectrum in  its  favour  is  not  the  subject

matter of dispute and was never questioned by anybody.  This auction, as  is

clear from the above, was held way back in May-June,  2010.   Though,  there

were other prominent companies  of  repute  who  participated  in  the  said

auction and shared the remaining other Pan-India slot (22 Serve  Areas),  no

competitor  of  IBSPL  challenged  BWA  auction.   The  subject  matter   of

challenge in the instant writ petition is the conversion of BWA spectrum  to

 Unified License (UL) i.e. migration of existing BWA spectrum  to  UL  which

has been done by respondent No.1.

In respect of the aforesaid central issue raised, it is pointed out  by  the

writ petitioner that on 16.04.2012, TRAI submitted  its  recommendations  to

respondent No. 1 on Guidelines for UL and  migration  of  existing  license.

Thereafter, on 02.05.2012, respondent No. 1 sought clarification  from  TRAI

on migration of ISP licensees having BWA spectrum to  UL  regime.   TRAI  in

its response to respondent No. 1 clarified that the spectrum of  3G/BWA  was

liberalized and the operators  can  migrate  to  UAS  license,  which  meant

allowing voice telephony to them as well on such  migration.   According  to

the petitioner, though TRAI had clarified that the spectrum  of  3G/BWA  was

liberalized and operators could migrate to UL, a Committee of Department  of

Telecommunication (DoT) took the view, sometime around May 2012, that  under

ISP licenses, voice telephony cannot be provided.  This view was  reiterated

by the DoT Committee once again in August,  2012.   The  allegation  of  the

petitioner,  however,  is  that  on   25.01.2013   another   Committee   was

constituted under the Chairmanship of Secretary (Telecom), though the  order

in this respect was issued only on 11.02.2013, to go  into  this  issue  and

suggest the way forward.  It is stated that  Secretary  (Telecom)  was  made

Chairman of the Committee even when he was due to  superannuate  two  months

later i.e. in March, 2013.  This Committee  prepared  its  draft  report  on

30.01.2013 as per which the  said  Committee  was  not  ready  to  make  any

recommendations on ISP (holding BWA spectrum) migration to  UASL.   However,

still in its final report given on  13.02.2013,  the  Committee  recommended

that on payment of Rs.1,658 crores, ISP  (holding  BWA  spectrum)  could  be

migrated to UASL, thereby permitting voice telephony.   This  recommendation

was approved by Telecom  Commission  in  its  meeting  on  18.02.2013.   The

official from the Ministry of Finance who also attended this meeting,  while

agreeing  with  the  aforesaid  proposal,  ignored  Finance  Ministry's  own

recommendations on the 2G spectrum issue inasmuch as in the year  2007  when

the then Telecom Minister wanted to award the licenses at  Rs.1,658  crores,

the  then  Finance  Secretary  had  objected  to  it.   After  the   Telecom

Commission approved the  recommendation,  the  same  was  forwarded  to  the

Telecom Minister who gave his final approval  on  05.03.2013.   It  is  this

decision of migration of BWA spectrum given to respondent  No.  2  into  USL

which is termed as totally arbitrary,  illegal,  unfair,  impermissible  and

against the public interest.

It would be pertinent to mention at the outset that in  the  writ  petition,

the  petitioner  has  specifically  accepted  that  it  has  not  made   any

representation to the Government before approaching the Court  in  the  form

of present  writ  petition.   Reason  given  is  that  the  CAG  itself  has

investigated this matter and in its draft report dated 07.11.2013  adversely

commented upon the manner in which the aforesaid  migration  is  allowed  to

respondent No. 2 at the cost of exchequer resulting into  whopping  loss  of

public revenue  thereby  giving  undue  advantage  of  Rs.22,842  crores  to

respondent No. 2.  Thus, heavy reliance is placed on the said CAG report  by

the petitioner in support of its contention and following part of  the  said

report is specifically referred to:

“(x)  It was found that the basis of the decision i.e. payment of entry  fee

of Rs. 1,658 crore by ISP lincensee for a permission to Pan India  provision

of  mobile  voice  services  using  BWA  spectrum  considered  by  the   DoT

Committee, Telecom Commission and the  MOC&IT,  was  primarily  intended  to

fill the gap between the eligibility criterion stipulated for  participation

in the 3G/BWA auction in 2010 as UAS/CMTS licensees had paid  entry  fee  of

Rs. 1,658 crore while ISP licensees had paid only Rs. 30 lakh.

The DoT Committee, Telecom Commission and the  MOC&IT  however  ignored  the

fact that the quantum of entry  fee  i.e.  Rs.  1,658  crore  was  basically

discovered in 2001 through  the  bidding  for  the  4th  Cellular  licenses.

Market conditions since  then  have  changed  drastically,  and  this  price

needed to be modified  to  reflect  the  present  value.   Neither  the  DoT

Committee/TC under the Chairmanship of the  Secretary  DoT  nor  the  MOC&IT

felt the need for revision of the price discovered in 2001 as the entry  fee

for UASL in  2013,  even  when  the  Hon'ble  Supreme  Court  of  India  had

cancelled 122 licenses granted in 2008 on the basis of the  same  entry  fee

stating that it was impossible for them to approve the action of the DoT.

9.  Therefore, by permitting ISPs to provide mobile voice service using  BWA

spectrum won in 2010 auction post-auction, the government  has  brought  ISP

licensees with BWA spectrum at par with UAS/CMTS 3G spectrum winners so  far

as provision of services  are  concerned  –  Voice,  Data,  etc.,  and  post

auction interpretation of such vital nature would appear  to  be  arbitrary,

inconsistent and not appropriate.  Hence, IBSPL, now Reliance Jio  Infocomm,

appeared to have been accorded undue advantage of Rs. 22,842 crore i.e.  the

difference of the proportionate prices for 20 MHz  block  size  in  2.1  GHz

spectrum band (3G spectrum) and 2.3 GHz spectrum band  (BWA  spectrum)  plus

the Net Present Value of the entry fee for UASL at the  end  of  FY  2009-10

(Rs. 20,653 crore plus Rs. 3,847 crore – Rs.  1,658  crore).   Besides,  the

sanctity of the entire auction process has been  rendered  vitiated  due  to

post auction interpretations and interventions after three  years.   It  was

therefore no surprise that Reliance Jio Infocomm was among the  first  group

of companies which applied for UL  immediately  after  introduction  of  the

scheme and obtained the Letter of Intent (LOI).   Had  the  spectrum  blocks

been specified and declared as liberalised spectrum  blocks  i.e.  open  for

all technology/services in the NIA in February  2010,  there  was  no  doubt

that bidders would have taken informed decision for  putting  up  their  bid

and the market discovered price would have been significantly different  for

3G and BWA spectrum.”

Mr. Prashant Bhushan, at the time of arguments, pointed  out  the  aforesaid

procedural  and  other  alleged  irregularities  and  the  comments  of  CAG

thereupon.  He submitted that there was no reason to allow migration of  ISP

(holding BWA spectrum) to UASL.  Instead, according to him, what was  needed

was to hold independent auction  of  voice  telephony.   He  submitted  that

allowing the migration from one  type  of  license  to  another  with  added

benefits was in the teeth of judgment of  this  Court  in  the  Presidential

Reference on the issue of Alienation of Natural  Resources[1]  wherein  this

Court has  held  that  when  “precious  and  scarce  natural  resources  are

alienated   for   commercial   pursuits   of   profit   maximizing   private

entrepreneurs, adoption of means other than those that are  competitive  and

maximize revenue may be arbitrary and face the wrath of Article  14  of  the

Constitution.”

All the three respondents in this petition, namely, Union  of  India  (R-1),

Reliance Jio Infocomm Ltd. (R-2) and TRAI (R-3) have stoutly  contested  the

stand taken by the petitioner in this petition by disputing  the  averments.

Apart from putting stiff resistance to the issues raised in the petition  on

merits, the respondents have even questioned the bonafides of  the  petition

by vehemently arguing that it does not serve any public purpose and  on  the

contrary, the petition is motivated.  In  the  counter  affidavit  filed  on

behalf of the Union of India,  it  is  stated  that  the  writ  petition  is

preferred  on  an  absolutely  erroneous  footing   by   misconstruing   and

misinterpreting the judgment of this Court in  Centre  for  Public  Interest

Litigation v. Union of India[2] (hereinafter referred to as “2G  Case”)  and

also the provisions of the TRAI Act.  It is stated that  entry  fee  of  Rs.

1,658 crore fixed earlier was for UASL along with spectrum bundled with  it,

whereas in the year 2010 for 3G and BWA spectrum, license and spectrum  were

delinked and it was only the spectrum which was  auctioned.   Moreover,  the

amount of Rs. 1,658 crore is not the entry fee as alleged by the  petitioner

but is only  migration  fee.   It  is  further  stated  that  the  aforesaid

decision of allowing migration was taken after it was duly permitted by  the

TRAI and, thus, such a decision was based on  the  economic  policy  of  the

Government with which the Courts normally do not interfere unless  the  same

is found to be arbitrary, malafide  or  contrary  to  the  public  interest,

which is not the case here.  A detailed history from TRAI recommendation  to

the decision taken by the DoT is narrated in the counter affidavit with  the

emphasis that the decision in question was actuated by  valid  economic  and

other relevant considerations.  On that  basis,  respondent  No.  1  insists

that neither the manner of allowing migration was irregular or  illegal  nor

fixation of migration fee of  Rs.  1,658  crore  was  arbitrary  or  against

public interest or prompted to give any undue  favour  to  respondent  No.2.

On the similar lines is the counter  affidavit  filed  by  respondent  No.2,

which has attempted to explain the factual position in much  greater  detail

and reference thereto shall be made at the appropriate stage.

Oral arguments on behalf of Union of India  were  addressed  by  Mr.  Ranjit

Kumar, learned Solicitor General whereas Mr. Harish Salve,  senior  advocate

put up the defence on  behalf  of  respondent  No.2.   Ms.  Niranjana  Singh

appeared for TRAI.  It is not necessary to separately  take  note  of  their

respective arguments as we intend to refer to those submissions  during  our

deliberations on the various facets of the case.

Before we embark on the specific areas of lis which need to be examined,  it

may  be  apposite  to  make  some   introductory   remarks   pertaining   to

Telecommunications sector and the manner in which spectrum is licensed  from

time to time.  To put it pithily, it is well  known  that  Telecommunication

is a sector with  fast  changing  technologies.   Each  technology  has  its

features, compatibility and market adaptability.   Some  technologies  which

are at a horizon today may not be even commercially  successful  as  updated

and other technology become available before commercial deployment  of  that

technology at affordable rates for common man in India.  In the  year  1991,

India had 5 million telephone subscribers.  At the end of  July,  2007  this

number increased to 233 million and as on July, 2015 it has touched  1006.96

million subscribers.  This phenomenal growth has not been  achieved  in  any

country, other than China.  The  primary  reason  for  this  growth  is  the

introduction of mobile services coupled with privatization  of  the  Telecom

sector.   Mobile service in India is dominated by private sector  enterprise

and the Government religiously followed a policy  of  'managed  competition'

by licensing more than one company in Telecom.  This led to  competition  in

the mobile industry, result whereof which not  only  resulted  in  providing

better services but another direct  effect  of  this  competition  is  lower

prices that the Telecom consumer has to pay.  A call charge of  Rs.16/-  per

minute in the year 1998 has come down to  few  paisa  per  minute.   Another

significant development over the years, which is a result  of  technological

development influenced by market  economic  considerations  is  that  though

mobile services started with voice telephony, there is a gradual  growth  in

data telephony. Mobile telephones are not used  only  for  making  telephone

calls. Number of other services are provided by  the  service  providers  on

these phones  which  are  known  as  'smart  phones'.   The  various  policy

decisions are taken at a point of  time  considering  various  technological

options, policy objectives and regulatory framework.

Auction of 3G spectrum & BWA spectrum in the year 2010

It is in this context we have  to  keep  in  mind  that  when  notice  dated

25.02.2010 was issued inviting applications (NIA), though it  was  for  both

3G spectrum as well as BWA spectrum, there is a  significant  difference  in

the characteristics of both the spectrums, namely, 3G on the  one  hand  and

BWA on the other  hand.   It  may  be  mentioned  that  3G  spectrum  is  in

Frequency Division Duplex (FDD) mode whereas the Broadband  Wireless  Access

(BWA) spectrum as per TRAI recommendations as well as Guidelines  issued  by

DoT is in Time Division Duplex (TDD) mode.  Distinct and different  features

of both are highlighted in the following manner:

a.    FDD needs fewer base stations than TDD

       Since  FDD  devices  achieve  desired  cell  edge  rates  at  farther

distances, the number of base stations required to achieve a given  area  of

coverage is reduced.

b.    In a coverage-limited  system  comparison  using  the  same  frequency

band, the TDD system required 31% more base stations than FDD when  using  a

1:1 TDD system and 65% more base stations  when  using  a  2:1  TDD  system.

Higher frequency bands required even more base stations.

c.    FDD incurs lower costs

      Capital expenditure (CAPEX) and  operating  expenditure  (OPEX)  costs

are associated with each base station.  These costs are independent  of  the

type of duplexing technique used (FDD or TDD).   Since  FDD  requires  fewer

base stations  for  the  same  coverage,  it  incurs  lower  deployment  and

operating costs.

d.    FDD/TDD: Basic difference

      FDD is implemented on a paired  spectrum  where  downlink  and  uplink

transmissions are sent on separate frequencies.  This provides  simultaneous

exchange of information and reduces  interference  between  the  uplink  and

downlink.  Therefore FDD is more suitable for  Voice  systems  that  require

continuous duplex working.

      TDD is implemented on an unpaired  spectrum,  implying  the  usage  of

only one frequency for  both  downlink  and  uplink  transmissions.   It  is

suitable for asymmetric transmission  demands  and  in  cases  where  paired

frequency is not available while Voice services are symmetric  transmission.

e.    Efficiency of use:

      FDD has higher  frequency  usage  efficiency.   There  is  wastage  of

spectrum in TDD as it requires more accurate timing & greater guard bands.

f.    Range:

      TDD has a lower range (area covered)  due  to  fact  that  guard  band

timing needs to be met.

g.    Carrier Aggregation:

      With 3G and LTE big advantage is  carrier  aggregation,  which  allows

receiving handsets to make  better  use  of  the  fragmented  bands  that  a

carrier may have, in order to download data faster.  This was not  available

in WiMAX at that time since the complete mobility was not available.

h.    Network Evolution:

      A clear roadmap to move to a new technology was available for  3G  but

it was not there for  broadband  networks  in  terms  of  mobility,  carrier

aggregation, etc.

      These are some of the comparisons of 3G spectrum which  was  based  on

FDD mode and TDD based  digital  Broadband  Wireless  Access  (BWA)  systems

which are drawn by the learned Solicitor General on the basis  of  which  it

is stated that there was distinct  advantage,  clearly  discernible,  of  3G

spectrum over BWA spectrum that was understood by TRAI & DoT and  hence  the

pricing had to  be  differentiated  on  this  basis.   The  only  technology

available at that time  in  2.3  GHz  band  was  WiMax  as  LTE  (Long  Term

Evolution) was not available.  Although in theory any packet  based  network

core can be used for Voice or data still there are  requirements  to  ensure

smooth and contiguous reception of packets which  puts  a  extra  burden  on

allocation of resources.  Moreover, LTE was available  only  post  2012  and

that too VOLTE (Voice over LTE) was experimental technology over  LTE  core.

It will also be pertinent to note some of  the  queries  and  responses  for

auction of 3G and BWA spectrum which were published  by  DoT  on  25.02.2010

i.e. simultaneously with the issuance of NIA, wherein  it  was  specifically

clarified that usage of spectrum including BWA spectrum  is  linked  to  the

license held or to be acquired by the bidder.  It was, thus, envisaged  that

BWA spectrum can be used for all telecom services including voice  telephony

linked to the relevant license, as can be gaged from  some  of  the  queries

and responses thereto which are as under:

“Question 34: Does the BWA license allow use of voice to be offered  by  the

BWA operators? Even in VOIP form?

Answer 34: There is no BWA license.  Service conditions  including  allowing

Internet Telephony will depend on whether the winner  of  the  BWA  spectrum

holds UAS or ISP license.

Question 71: Spectrum usage rights shall be awarded separately for  specific

service areas.  Please clarify.

Answer 71: Spectrum  usage  rights  are  based  on  the  provisions  of  the

applicable license and the licenses are specific to  a  service  area.   The

auction is for the award of spectrum only,  while  award  of  license  is  a

separate process.

Question 72: To which entity BWA license will be given  in  case  a  company

has both 'UAS' & ISP – Category A license?

Answer 72: The successful bidder will be allowed to  determine  the  license

that it wishes to use for award of BWA spectrum.”

Auction for 3G and BWA spectrum was conducted between May  and  June,  2010.

10 bidders participated in 3G spectrum auction and 11  bidders  participated

in BWA spectrum auction.  The results of  BWA  spectrum  were  published  on

12.06.2010.  It is emphasized by the respondents, and to which there  is  no

denial, that this occasion was conducted  over  16  days  and  involved  117

rounds of bidding across service areas.  In the said occasion,  all  the  44

blocks that were put for auction across 22  service  areas  in  the  country

were sold.  Reserve price of BWA  spectrum  was  fixed  at  Rs.1750  crores.

During bidding, highest bid that was given by IBSPL was  Rs.12847.77  crores

for one block of Pan-India BWA  spectrum.   In  this  way,  respondent  No.2

emerged as successful  in  acquiring  various  BWA  frequencies  in  all  22

service areas across the country.  Further, as already noted in the  earlier

part of this judgment, though 11  bidders  had  participated,  none  of  the

other bidders make any complaint about the  fairness,  transparency  and  as

well as about the process of bidding.

In this scenario, insofar as IBSPL  becoming  successful  bidder  cannot  be

questioned at this  stage.   No  doubt,  the  petitioner  has  alleged  that

shortly  after  acquiring  Pan-India  BWA  spectrum,  IBSPL  increased   its

authorized capital from Rs.3 crores to  Rs.6,000  crores  and  question  the

manner in which control of this company is  taken  over  by  RIL.   However,

that cannot be the subject of scrutiny in these proceedings inasmuch  as  it

has no causal connection with the validity of the auction  of  BWA  spectrum

in the year 2000.  We may  stated  that  respondent  No.2  has  specifically

denied such allegations and has endeavor to explain that promoters of  IBSPL

did not derive in unfair gains and also that they did  not  divest  or  sell

their equity to RIL, it is for  our  reasons  recorded  above.   It  is  not

necessary to delve into this aspect any  further  as  that  is  neither  the

subject matter of controversy nor any relief claimed by  the  petitioner  in

this behalf.  If at all, there is a reference to the same by the  petitioner

in the chain of submissions on the central issue  which  pertains  to  post-

auction permission to provide voice services on BWA spectrum.

Migration from BWA to UAS licence

Without much ado, therefore, we would like to address the aforesaid  central

issue that arises for consideration viz. whether a  decision  of  respondent

No.1 allowing the migration from BWA to UAS license was valid and legal  and

whether such a decision has unduly benefited respondent No.2 who is  charged

a  sum  of  Rs.1,658  crores  for  this  purpose,  which  according  to  the

petitioners, is abysmally low.

As  highlighted  above,  there  have  been  technological  developments   in

telecommunication  are  taking  place  at  abnormal  pace.   Various  policy

decision taken at one point  of  time  may,  therefore,  require  a  re-look

necessitating modifications and changes therein and  the  circumstances  may

even mandate change of existing policy altogether by substituting  with  new

policy decision depending upon the such technological  advancements  coupled

by commercial and economic considerations.  It can be supported by the  fact

that first Telecom  Policy  was  announced  in  the  year  1994,  which  was

replaced by revised Policy of 1999 and  thereafter  in  the  year  2004  and

again substituted by Telecom Policy of 2012.

Having regard to such features/developments, in  the  year  2012,  the  TRAI

started exercise of bringing Unified Licensing regime.   On  10.02.2012,  it

issued a consultation paper on Draft Guidelines  for  Unified  License/Class

License and  migration  of  existing  licenses.   It  was  followed  by  the

statement of the Ministry for Telecommunication  and  IT  on  15.02.2012  on

Spectrum  Management  and  Licensing  Framework.   This  statement   broadly

indicated that there would be no more  licenses  linked  with  Spectrum  and

issuance  of  licenses  and  allocation  of  spectrum  will  be   completely

delinked.  Thereafter,  on  16.04.2012,  TRAI  addressed  a  letter  to  the

Secretary, DoT  enclosing  its  recommendations  for  Unified  License/Class

License and migration of existing  licenses.   After  due  deliberations  at

appropriate levels,  the  Government  of  India  issued  on  31.05.2012  the

National Telecom Policy-2012 and  announced  approval  for  introduction  of

Unified Licensing regime.  This was followed by the policy decision  of  DoT

dated 13.03.2013 to allow migration to UL from UASL as well  as  ISP  to  UL

regime.  The detailed background in taking this policy  decision  is  stated

in the counter affidavit filed by  the  Union  of  India  and  the  position

stated therein is not in dispute.  These details are required to  be  noted,

which are as follows:

“1.  The Department of Telecommunications (DoT) vide their D.O.  letter  No.

L- 14047/09/2005-NTG dated May 22,  2006  sought  recommendations  from  the

Telecom  Regulatory  Authority  of  India  (TRAI)  on  the  methodology  for

allotment of spectrum for 3G services and its pricing aspects.

TRAI gave  the  recommendations  on  27th  Sept  2006  after  following  the

procedure of consultation and  conducting  open  house  discussion  to  have

understanding of views of stakeholders.

TRAI while replying to DoT in recommendations said:

“The Authority is committed to the view that  the  consumers  must  get  the

benefit of new technology and variety of services.  It  also  believes  that

the telecom service providers should have the  flexibility  to  choose  from

the range of technologies available and the  regulatory  policies  must  not

restrict the choice of the operator.  Therefore,  the  Authority  considered

it appropriate to offer its recommendations both on  3G  technology  and  on

broadband wireless access (BWA) systems at the same  time.   It  would  also

ensure that the spectrum issues are considered  in  a  holistic  manner  and

piecemeal or ad-hoc solutions do not find place  in  future  planning.   The

Authority has also  made  suggestions  on  the  wider  issue  management  of

spectrum, which is now a scarce resource in the country.  The future  growth

in telecom would largely depend on the way we manage our spectrum.”

While  forwarding  its  recommendations  TRAI,  inter-alia,  considered  the

following:

Band identification for 3G services

Allocation methodology and pricing for 3G spectrum

Band identification, and allocation and pricing of BWA spectrum as  well  as

Spectrum Management

Allocation methodology and pricing for BWA spectrum

Spectrum Pricing

Spectrum for BWA

The DoT examined the recommendations and had referred some of them  back  to

TRAI  as  required  by  TRAI  Act  and  took  final  views  based  on   TRAI

recommendations and DoT's internal discussions.

The TRAI issued another consultation paper “On Allocation  and  Pricing  for

2.3-2.4 GHz, 2.5-2.69 GHz & 3.3-3.6 GHz bands” on 2nd May  2008  and  issued

its recommendations on 11th July, 2008.

The TRAI was clear that spectrum in 2.3-2.4  GHz  band  could  be  used  for

mobile services as mentioned in the preface of these recommendations  itself

which is reproduced as below:

“During the period of September, 2006 to  October,  2007,  there  have  been

significant  changes  in  the  international  scenario.   The  International

Telecommunications Union-Radio (ITU-R) has identified 2.3-2.4 GHz band  also

as IMT (International Mobile Technology) band (spectrum in the band of  2.5-

2.69 GHz band was already identified as IMT-2000 band).  The use of  2.3-2.4

GHz and 2.5-2.69 GHz band offers significant scope for innovation  with  the

potential for induction of  new  technologies,  services,  applications  and

devices.  With  the  availability  of  mobile  services  in  this  band,  it

provides an important opportunity for the introduction  of  next  generation

mobile technologies (BWA).

Even TRAI in  its  recommendations  admit  that  there  could  be  different

technologies by which BWA could be provided and stated that:

“5.12  During the consultation process, the respondents  stated  that  there

are various versions of BWA technology  applications.   The  Authority  also

recognizes that given  the  wide  range  of  possible  technologies,  it  is

essential that any policy concerned with identification  and  allocation  of

spectrum for BWA must be  technology-neutral  and  flexible  to  permit  co-

existence of all types of BWA technologies.....”

“5.72 ….The average price for allocations comes  to  $0.65  (Rs.30)  per  Hz

including South Korea, and $0.08 (Rs.3.75) per Hertz excluding  South  Korea

….”

The final reserve price in NIA as issued by DoT was @Rs.87.5  per  Hz.  (Rs.

1750 crores for 20 MHz) which is much higher than recommended by TRAI.

In view of that Guidelines were followed in allowing Reliance  Jio  Infocomm

RJIO to offer Mobile services  which  has  been  done  after  following  due

process of law by taking TRAI recommendations on the issue  and  considering

the same in DoT and approving Unified License (UL)  guidelines  wherein  ISP

could migrate to UL.

The TRAI recommendations  of  April,  2012  on  UL  had  recommendations  on

Guidelines for UL/Class License and migration of  existing  licenses.   TRAI

recommended that all present licenses be migrated to UL and in  future  only

UL be issued.  TRAI had recommended that  all  existing  Basic/CMSP/UASL/ISP

without spectrum/ISP with spectrum be allowed to  migrate  to  UL.   As  per

this an ISP after  migration  will  have  all  India  UL  after  payment  as

required.

It is pertinent to note that NTP 2012 states that National Telecom Policy  –

2012 recognizes that the evolution from analog  to  digital  technology  has

facilitated the conversion of voice, data and video  to  the  digital  form.

Increasingly, these are now being rendered through single networks  bringing

about a convergence in networks, services and also devices.   Hence,  it  is

now  imperative  to  move  towards  convergence  between  various  services,

networks, platforms, technologies and overcome the existing  segregation  of

licensing, registration and regulatory mechanisms in these areas to  enhance

affordability, increase access, delivery of  multiple  services  and  reduce

cost.

11.  Further, it envisages providing secure, reliable, affordable  and  high

quality  converged  telecommunication  services  anytime,  anywhere  for  an

accelerated inclusive socio-economic development.  One of the objectives  of

the National Telecom Policy-2012 is “Strive  to  create  One  Nation  –  One

License” across services and service areas...”

From the aforesaid, it follows that a  policy  decision  was  taken  by  the

Government not only with regard to introduction of Unified Licensing  regime

but it also including allowing migration to UL from UASL as well as  ISP  to

UL regime.  This meant that those having UAS license  which  permitted  data

services only were allowed to migrate to Unified License  enabling  them  to

provide both data service as well as  voice  telephony.   This  was  a  pure

policy decision after due deliberations by the experts  in  the  fields  and

even TRAI had recommended allowing such migration.

Such a policy  decision,  when  not  found  to  be  arbitrary  or  based  on

irrelevant considerations or mala fide or against any statutory  provisions,

does not call for any interference by the Courts in  exercise  of  power  of

judicial review.  This principle of law  is  ingrained  in  stone  which  is

stated and restated time and again by this Court on numerous occasions.   In

Jal Mahal Resorts (P) Ltd. v.  K.P.  Sharma[3],  the  Court  underlined  the

principle in the following manner:

116. From this, it is clear that  although  the  courts  are  expected  very

often to enter into the technical and administrative aspects of the  matter,

it has its own limitations and in consonance with the theory  and  principle

of separation of powers, reliance at least to some extent to  the  decisions

of the State authorities, specially if it is based on  the  opinion  of  the

experts reflected from the  project  report  prepared  by  the  technocrats,

accepted by the entire hierarchy of the State administration,  acknowledged,

accepted and approved by one Government after the other,  will  have  to  be

given due credence and weightage. In spite of this if the court  chooses  to

overrule the correctness of such administrative decision and merits  of  the

view  of  the  entire  body  including  the  administrative,  technical  and

financial experts by taking  note  of  hair  splitting  submissions  at  the

instance of a PIL petitioner without any evidence in  support  thereof,  the

PIL petitioners shall have to be put to strict proof and cannot  be  allowed

to function as an extraordinary  and  extra-judicial  ombudsmen  questioning

the  entire  exercise  undertaken  by  an  extensive  body   which   include

administrators, technocrats and financial experts. In our  considered  view,

this might lead to a friction if not collision among  the  three  organs  of

the State and would affect the principle  of  governance  ingrained  in  the

theory of separation of powers. In fact, this Court in M.P.  Oil  Extraction

v. State of M.P., (1997) 7 SCC 592 at  p.  611  has  unequivocally  observed

that:

“41.  The power of judicial review of the executive and  legislative  action

must be kept within the bounds of constitutional scheme so  that  there  may

not be any occasion to entertain misgivings about the role of  judiciary  in

outstepping its limit by unwarranted  judicial  activism  being  very  often

talked of in these days. The democratic set-up to which  the  polity  is  so

deeply committed cannot function properly unless each of  the  three  organs

appreciate the need for mutual respect and  supremacy  in  their  respective

fields.”

117. However, we hasten to add and do not wish to be misunderstood so as  to

infer that howsoever gross or abusive may be an administrative action  or  a

decision which is writ large on a particular activity  at  the  instance  of

the State or any other authority connected with it, the Court should  remain

a passive, inactive and a silent spectator. What is sought to be  emphasised

is that there has to be a boundary line or  the  proverbial  “laxman  rekha”

while examining the correctness of an administrative decision taken  by  the

State or a central authority after due deliberation and diligence  which  do

not reflect arbitrariness or illegality in its decision  and  execution.  If

such equilibrium in the matter of governance gets disturbed, development  is

bound to be slowed down and  disturbed  specially  in  an  age  of  economic

liberalisation wherein global  players  are  also  involved  as  per  policy

decision.”

Minimal interference is called for by the Courts, in  exercise  of  judicial

review of a Government policy  when  the  said  policy  is  the  outcome  of

deliberations of the technical experts in the fields inasmuch as Courts  are

not  well-equipped  to  fathom  into  such  domain  which  is  left  to  the

discretion of the execution.  It was beautifully explained by the  Court  in

Narmada Bachao Andolan v. Union of India[4] and reiterated in Federation  of

Railway Officers Assn. v. Union of India[5] in the following words:

“12.  In examining a question of this nature where a policy  is  evolved  by

the Government judicial review thereof is limited.   When  policy  according

to which or the purpose for which discretion is to be exercised  is  clearly

expressed  in  the  statute,  it  cannot  be  said  to  be  an  unrestricted

discretion.  On matters affecting policy and requiring  technical  expertise

the court would leave the matter for decision of those who are qualified  to

address the issues.  Unless the policy or action is  inconsistent  with  the

Constitution and the laws or arbitrary or irrational or abuse of power,  the

court will not interfere with such matters.”

Limits of the judicial review were again reiterated, pointing out  the  same

position by the Courts in England, in the case of G.  Sundarrajan  v.  Union

of India[6] in the following manner:

“15.1.  Lord MacNaughten  in  Vacher  &  Sons  Ltd.  v.  London  Society  of

Compositors (1913 AC 107 : (1911-13) All ER Rep 241 (HL) has stated:

“... Some people may think the policy of the Act unwise and  even  dangerous

to the community. … But a judicial tribunal  has  nothing  to  do  with  the

policy of any Act which it may be called upon to interpret.  That may  be  a

matter for private judgment.  The duty of the court, and its only  duty,  is

to expound the language of the Act in accordance with the settled  rules  of

construction.”

15.2. In Council of Civil Service Unions v. Minister for the  Civil  Service

(1985 AC 374 : (1984) 3 WLR 1174 : (1984) 3 All ER 935  (HL),  it  was  held

that it is not for the courts to determine whether a  particular  policy  or

particular decision taken in fulfilment of that policy are fair.   They  are

concerned only with the manner in which those decisions have been taken,  if

that manner is unfair, the decision will be tainted with what  Lord  Diplock

labels as “procedural impropriety”.

This Court in M.P. Oil Extraction v. State of M.P. (1997)  7  SCC  592  held

that unless the policy framed is  absolutely  capricious,  unreasonable  and

arbitrary and based on mere ipse dixit of  the  executive  authority  or  is

invalid in constitutional or statutory mandate, court's interference is  not

called for.

Reference may also be made of the judgments of  this  Court  in  Ugar  Sugar

Works Ltd. v. Delhi Admn. (2001) 3 SCC 635, Dhampur  Sugar  (Kashipur)  Ltd.

v. State of Uttaranchal (2007) 8 SCC 418 and Delhi Bar  Assn.  v.  Union  of

India (2008) 13 SCC 628.

We are, therefore, firmly of the opinion that  we  cannot  sit  in  judgment

over the decision taken by the Government of India, NPCIL, etc. for  setting

up of KKNPP at Kudankulam in view of the Indo-Russian Agreement.”

When it comes to the judicial review of  economic  policy,  the  Courts  are

more conservative as such economic  policies  are  generally  formulated  by

experts.  Way back in the year 1978, a Bench of seven Judges of  this  Court

in Prag Ice & Oil Mills v. Union of India and Nav Bharat Oil Mills v.  Union

of India[7] carved out this principle in the following terms:

“We have listened to long arguments directed at showing  us  that  producers

and sellers of oil in various parts of the country will suffer so that  they

would give up producing or dealing in mustard oil.  It was urged  that  this

would, quite  naturally,  have  its  repercussions  on  consumers  for  whom

mustard oil will become even more scarce than ever ultimately.   We  do  not

think that it is the function of this Court  or  of  any  court  to  sit  in

judgment over such matters of economic policy as must  necessarily  be  left

to the government of the day to decide.  Many  of  them,  as  a  measure  of

price fixation must necessarily be, are matters of  prediction  of  ultimate

results on which even experts can  seriously  err  and  doubtlessly  differ.

Courts can certainly not be expected to decide them without even the aid  of

experts.”

Taking aid from the aforesaid observations of the  Constitution  Bench,  the

Court reiterated the words  of  caution  in  Peerless  General  Finance  and

Investment Co. Limited v.  Reserve  Bank  of  India[8]  with  the  following

utterance:

“31.  The function of the court is to  see  that  lawful  authority  is  not

abused but  not  to  appropriate  to  itself  the  task  entrusted  to  that

authority.  It is well settled that a public body  invested  with  statutory

powers must take care not to exceed  or  abuse  its  power.   It  must  keep

within the limits of the authority committed to it.  It  must  act  in  good

faith and it  must  act  reasonably.   Courts  are  not  to  interfere  with

economic policy which is the function of experts. It is not the function  of

the courts to sit in judgment over matters of economic policy  and  it  must

necessarily be left to the expert bodies.  In such matters even experts  can

seriously and doubtlessly differ.  Courts cannot be expected to decide  them

without even the aid of experts.”

It cannot be doubted that  the  primary  and  central  purpose  of  judicial

review of the administrative action is to promote good  administration.   It

is to ensure that administrative bodies  act  efficiently  and  honestly  to

promote the public good.  They should operate in a  fair,  transparent,  and

unbiased fashion, keeping in forefront the public interest.  To ensure  that

aforesaid dominant  objectives  are  achieved,  this  Court  has  added  new

dimension  to  the  contours  of  judicial  review  and  it  has   undergone

tremendous change in  recent  years.   The  scope  of  judicial  review  has

expanded radically and it now extends well beyond the  sphere  of  statutory

powers to include diverse  forms  of  'public'  power  in  response  to  the

changing architecture of the Government[9].  Thus,  not  only  has  judicial

review  grown  wider  in  scope;   its   intensity   has   also   increased.

Notwithstanding the same,

“it is, however, central to received perceptions  of  judicial  review  that

courts may not interfere with exercise of  discretion  merely  because  they

disagree with the decision or action in question; instead, courts  intervene

only if some specific fault  can  be  established  –  for  example,  if  the

decision was reached procedurally unfair[10].

The raison d'etre of discretionary power is that it promotes decision  maker

to respond appropriately to the demands of particular situation.   When  the

decision making is policy based judicial approach  to  interfere  with  such

decision making becomes narrower.  In such cases, in the first instance,  it

is to be examined as to whether  policy  in  question  is  contrary  to  any

statutory provisions or is discriminatory/arbitrary or based  on  irrelevant

considerations.  If the particular policy satisfies these parameters and  is

held to be valid, then the only question to be examined  is  as  to  whether

the decision in question is in conformity with the said policy.

Keeping in mind the aforesaid parameters of judicial power, we  now  proceed

to deal with the some specific arguments of the petitioner

      (1)  Whether process of auction should have been resorted to?

The first argument raised by  the  petitioner  is  that  in  the  NIA  dated

25.02.2010, when 3G spectrum and BWA spectrum were  to  be  auctioned  there

was a specific clause that the spectrum shall not be used for  any  activity

other than the activities for which the operators has a  license.   On  that

basis, it was argued that there was no reason to  allow  the  migration  and

for voice telephony there should have been a separate auction.

This submission lacks  substance.   During  the  course  of  arguments,  the

learned Solicitor General successfully demonstrated that what was  auctioned

in 2010 was spectrum, namely, 3G spectrum and BWA spectrum.  Insofar  as  3G

spectrum auction is concerned, it was in blocks of 5 MHz i.e. each block  of

2 x 5 MHz whereas BWA auction was  in  blocks  of  20  MHz.   The  spectrum,

therefore, was of different forms and thus, issuance  of  license  would  be

different from spectrum.  Moreover, NIA  dated  25.02.2010  itself  provided

the eligibility conditions for an entity who could bid for BWA spectrum  and

further stipulation in this behalf was specifically stated as under:

“Successful Bidders in the BWA Auction that currently hold  an  ISP-category

'B' licence shall be required to migrate to an ISP-category 'A' licence,  by

paying the applicable fees/charges for migration, before  they  are  awarded

the BWA Spectrum.  The DoT guidelines stipulate that a  UAS  license  or  an

ISP licence can only be awarded to an Indian Company.   Hence,  any  foreign

applicants will need to form, or acquire, an Indian  company,  to  obtain  a

UAS licence or an ISP-category 'A' licence.  However, they  are  allowed  to

participate in the Auctions directly and apply  for  or  acquire  a  licence

subsequently through an Indian company, where they hold at least 26%  equity

stake.

Services can only be offered subject to the  terms  and  conditions  of  the

licence obtained by the operator.  Award  of  spectrum  does  not  confer  a

right to provide any telecom services, and these are governed by  the  terms

and conditions of the licence obtained by the operator.”

It becomes apparent from the above that  the  spectrum  was  different  from

license inasmuch as award of spectrum did not confer a right to provide  any

telecom services.  Insofar as providing of telecom services  are  concerned,

these were to be governed  by  the  terms  and  conditions  of  the  license

obtained by the operator.  The learned Solicitor General also handed over  a

comparative chart of varying points of view  of  the  different  Departments

when the matter regarding  migration  from  UASL  to  UL  regime  was  being

discussed and contemplated.  A perusal thereof would show that there  was  a

threadbare discussion on the issue wherein pros and  cons  of  migration  of

telecom  licenses  to  UL  regime  were  discussed;  various   apprehensions

expressed were considered; and ultimately consensus  emerged  for  switching

over to this regime.  The discussion reveals that the Committee of  the  DoT

in its comments proceeded on the premise that the BWA spectrum could not  be

used for any other purpose other  than  providing  internet  services.   The

other departments did not share this view. It was ultimately found that  the

view of the Committee was contrary to  the  plain  language  of  the  Notice

Inviting Applications and specifically Q&R which was published  by  the  DoT

itself for the purpose of the auction.   Difference  of  point  of  view  of

different departments shows the process of institutional decision making.

The aforesaid discussion leads us to irresistible conclusion  that  decision

of the Government permitting migration of telecom licenses to UL  regime  is

valid, legal and without any blemish.

(2)  Any undue favour to respondent No.2?

This brings us to another  incidental  aspect,  namely,  whether  respondent

No.2 could be allowed migration from BWA spectrum to Unified  License  (UL).

We may observe at the outset that once a policy decision is taken  to  allow

such a migration to all  those  who  were  holding  BWA  spectrum  and  this

decision was not taken only for  respondent  No.2  individually,  respondent

No.2 also became entitled  to  avail  the  benefit  of  the  said  decision.

However, the allegation of the petitioner is that respondent No.2  has  been

allowed a 'back door' entry to provide voice services.  It  is  in  view  of

such an allegation that we are delving on the aforesaid argument.

Some of the important features and aspects which have to be  kept  in  mind,

in order to deal with the aforesaid argument of the petitioner, needs to  be

noted in the first instance. It is not in dispute that IBSPL,  when  it  bid

for BWA spectrum, was holding ISP category 'A' license.  Further,  in  terms

of 3G or BWA spectrum, the acquirer  thereof  is  eligible  to  provide  any

service using the spectrum during the period of 20 years  during  which  the

acquirer gets the right to use  the  spectrum  under  the  auctioned  terms.

Also, as pointed out above, the license is delinked from the spectrum.   The

IBSPL having acquired the spectrum in the course of bidding, was not  barred

from  obtaining  licenses  for  various  telecom  services  issued  by   the

Government from time to time during the period of 20  years  for  which  BWA

spectrum was given.  Any other license issued by the  Government  from  time

to time, thus, would make such license holder eligible  to  provide  various

services as allowed under these licenses.

In the aforesaid backdrop, when license was delinked from the  spectrum  and

having auctioned spectrum by allowing those who did not possess  license  to

bid, it became necessary for the Government of India  to  come  out  with  a

regime for grant of licenses for  providing  various  telecom  services.   A

policy decision was taken, as discussed in detail above,  for  migration  to

new telecom service license, i.e., Unified License (UL)  for  ISP  licensees

with BWA spectrum.  In its wisdom, this decision  facilitated  those  having

data services to acquire license thereby covering voice-telephony  as  well.

All across the Board holding BWA spectrum became entitled to migrate  to  UL

and, therefore, there is no discrimination on the  part  of  the  government

authorities nor it aims at undue favoritism to respondent  no.  2.    It  is

not in dispute that as per the new policy/regime,  respondent    no.  2  was

eligible to apply for UL from  BWL  spectrum.    Therefore,  it  cannot   be

treated as a case of back door entry of respondent no.2.

(3)  Any loss of public revenue?

The only other issue which needs to be adverted to  at  this  stage  is  the

fixation of  additional  fee  of  Rs.  1,658/-  crores  which  was  paid  by

respondent no. 2 for migration to UL.  The poser is :  Whether  such  a  fee

fixed was abysmally low which had resulted in undue advantage to  respondent

no. 2, thereby causing loss to the public exchequer.

We may keep in mind that while taking this position, namely, respondent  no.

2 is given undue advantage by allowing it to migrate from UAS license to  UL

with payment of so-called meager amount of Rs. 1,658 crores, the  petitioner

rested its case entirely on the draft report of CAG.  This  is  so  accepted

and admitted in writ petition itself.  It is pointed out  that  CAG's  draft

report had put the loss  on  this  account  at  Rs.  22,842  crore   besides

significant  loss  of  revenue  on  Spectrum  Usage  Charges   (SUC).    The

petitioner had put both these benefits at about Rs.  40,000  crore,  out  of

which about Rs.  17,000  crore  was  towards  SUC.   In  its  final  report,

however, the CAG has  revised  the  loss  figure  to  Rs.  3,367.29  crores,

besides SUC on which it reiterated “significant   loss  of  revenue  to  the

government”.

On that basis, submission of the petitioner is that that had there  been  an

independent  auction  of   UL,   the   Government   would   have   generated

substantially higher revenue.  It is also argued  that  granting  of  UL  by

adopting the methodology of conversion from existing UAS to UL,  instead  of

putting it to auction, is also contrary to the judgment  of  this  Court  in

2G2 case.  Though we have already dealt with this aspect  of  the  argument,

we are addressing the issue now in the context of  frontal  attack  made  on

the fixation of fee of Rs. 1,658 crores which  is  charged  from  respondent

no. 2 while allowing the migration from UAS to UL.

In the first instances, we may observe that once the policy decision of  the

Government allowing migration from  BWA  spectrum  to  UL  is  found  to  be

justified in the circumstances already noted  above,  the  argument  of  the

petitioner predicated on the judgment of this Court in  2G2  case  does  not

hold good.  Even otherwise the  decision  in  the  said  case  is  based  on

altogether different backdrop. Judgment in the said case would  reveal  that

in 2001, in order to increase competition from  then  existing  two  private

players plus one PSU player per telecom circle,  the  Government  introduced

the 4th telecom operator in  each  circle.   At  this  time,  there  was  an

auction conducted for grant of licenses and this  license  carried  with  it

4.4 + 4.4 MHz to start up spectrum and an assurance  that  further  spectrum

availability would be given to the  licenses  subject  to  availability  (by

2010 the TRAI had suggested the grant of a minimum spectrum of  6.2  MHZ  to

each licensee as contracted spectrum).  The Government had decided  in  2001

when bids were invited for the 4th license that all future grants should  be

on market price. However, in a departure from this even in year 2007-08  the

then Telecom Minister (following certain processes which  was  found  to  be

flawed) invited applications for license based on a  pre-determined  license

fee.  This license fees was the same as the fee that was  paid  in  2001  by

those who applied for the 4th telecom license.  This Court  found  that  the

manner in which this decision had been arrived at was flawed and smacked  of

arbitrariness.  It  was  also  held  that  this  spectrum  is  an  extremely

valuable natural resource and must only be made available at  market  price.

The Court found that the license itself had  no  value,  in  that  the  real

value was that of the spectrum.

On the other hand, insofar as present  case  is  concerned,  auction  of  3G

spectrum as well as BWL spectrum held in 2010 was not challenged by  anybody

and no fault has even been found in the same.  It is the  spectrum  which  a

vital resource and that was duly auctioned.  The decision now  taken,  which

is the subject matter of  controversy  in  the  present  case,  pertains  to

license, namely, switching over  from  UASL  to  UL,  validity  whereof  has

already been upheld.

Insofar as fee of Rs. 1,658 crores that is charged from respondent no. 2  is

concerned, it was pointed out by the learned counsel for the respondents  at

the Bar that migration/grant  of  unified  license  available  today  is  at

paltry fee of Rs. 15 crores.  As against this, respondent  no.  2  has  paid

Rs. 1,658 crores, much higher than fee fixed.  One cannot lose sight of  the

fact that insofar as auction of BWA spectrum  is  concerned,  it  fetched  a

whopping price of Rs. 12,847.77 crores.   On  the  other  hand,  license  is

acquired separately at a fixed license fee  over  and  above  the  price  of

spectrum which requires a fee of Rs. 15 crores insofar as switch  over  from

UASL to UL is concerned.

The foundation of the  petitioner's  allegation  is  draft  report  of  CAG.

However, that was only a draft report.   Many  queries  and  doubts  in  the

said draft report were addressed and answered by the Government.  The  final

report of CAG is materially different from the  draft  report.   It  appears

that in the draft report, CAG  proceeded  on  the  wrong  premise  that  the

license was also to  be  auctioned.   In  fact,  as  far  as   2G2  case  is

concerned, in that matter licenses along with bundles spectrum were  awarded

at a pre-determined price on a first  come  first  serve  bases  and,  thus,

spectrum was bundled along with the license.  However, in 2010, when 3G  and

BWA spectrum were auctioned, the spectrum were delinked  from  license.   In

this backdrop, when  the  policy  decision  had  now  been  taken  based  on

National Telecom Policy, 2012, whereby migration of UASL licence to  UL  was

permitted, the question of fee that is to be charged is to be  looked  into.

TRAI, in its recommendations, had not prescribed any additional  fee  to  be

charged for migration of ISP operators  with  BWS  spectrum  to  UL  regime.

Instead, it had stated that the BWA spectrum  assignee,  whether  holding  a

UAS license or ISP lincence and the scope for provision  of  services  would

be uniform under the  Unified  License.  It  is  only  entry  fee  which  is

prescribed and that too  Rs.  15  crores.   Notwithstanding  the  same,  the

Government decided to permit migration from ISP licence to UL  license  with

migration fee of Rs. 1,658 crores, calculated as  the  difference  in  entry

fee of UASL and that of ISL license in order  to  provide  a  level  playing

field between the two classes licenses.   The  aforesaid  facts  would  show

that respondent no. 2 has paid spectrum price of Rs.  12,847.77  crores  and

also Rs. 1,658 crores for migration to UL, in addition to entry fee  of  Rs.

15 crores, which is the prescribed fee.  It, therefore, cannot be said  that

the fee of Rs. 1,658 crores charged from respondent no.2 is in any way  less

or that it has caused any wrongful loss to the Government and wrongful  gain

to respondent no. 2 or that the Government  would  have  fetched  much  more

price.

We   have   already   traced   brief   history   of   the   development   in

telecommunication and, in  particular,  that  of  mobile/cellular  services.

Most  significant  development  which  is  pointed  out   is   as   to   how

technological development has led to the growth of data telephony from  mere

voice telephony.  As already stated, number of other services  are  provided

by the service providers on these phones which are known as 'smart  phones'.

  These  services  include  video   streaming,   music   streaming,   social

networking, instant messaging, download and  save,  emails,  playing  online

games, browse/search, banking, bill  payments,  navigation,  e-commerce  and

cloud storage etc.  Even feature films can be downloaded  and  watched.   TV

programmes can be seen.  It serves as camera as well.  Smart Phone  is  able

to serve the purpose of a computer as well to a significant extent.  It  has

become a “miraculous devise” for the consumers which caters to all most  all

necessary and day to day telecom needs.  A peep into  the  graph  growth  of

total global monthly data and voice traffic would reveal that  in  the  year

2007-2008 voice and data traffic was almost equal.  However, by the  end  of

2010, traffic generated from mobile data was twice that for voice.  In  five

years time, the data traffic has gone ahead of voice traffic  by  leaps  and

bounds and it is almost seven times more than voice traffic.  Another  trend

which is visible from  the  available  figures  is  that  whereas  in  voice

traffic growth from 2010-2015 is hardly 1½ times,  it  is  more  than  seven

times insofar as mobile data traffic is concerned.   Between  first  quarter

of 2014 and first quarter of 2015 itself mobile data  traffic  registered  a

growth of 55%.  Future forecast of data traffic is expected @30%  per  year.

In India itself, monthly mobile data consumption is expected to increase  18

fold by the year 2020 over  current  levels.   In  the  aforesaid  scenario,

Telecommunication has emerged  as  a  key  driver  of  economic  and  social

development  in an increasingly  knowledge  intensive  global  scenario,  in

which India needs to play a leadership role.  National  Telecom  Policy-2012

was  designed  to  ensure  that  India  plays  this  role  effectively   and

transforms the socio-economic scenario  through  accelerated  equitable  and

inclusive  economic  growth  by  laying  special   emphasis   on   providing

affordable and  quality  telecommunication  services  in  rural  and  remote

areas.   Thrust  of  this  policy  is  to  underscore  the  imperative  that

sustained adoption of technology would offer viable  options  in  overcoming

developmental  challenges  in  education,  health,  employment   generation,

financial inclusion and much else.

The only purpose of highlighting the  aforesaid  features,  particularly  in

contrasting the growth between voice-telephony and data traffic, is to  show

that main source of revenue for the service providers is from data  services

and not voice-telephony.   In fact,  Mr.  Salve  even  claimed  that  voice-

telephony for mobile companies, insofar as income generation  is  concerned,

does not remain that attractive and in near future, there is  a  possibility

of a situation when voice-telephony services may be provided free of  charge

to those using mobile data services by paying for those  services.   Whether

this happens or not is anybody's guess.  However, what  cannot  be  disputed

is that main source of income for mobile companies is data services and  not

voice telephone services.  This needs to be borne in mind while testing  the

argument of the petitioner.

Much is said on the veracity of CAG draft report  by  respondent  no.  1  as

well as respondent no. 2 in their attempt to show that  the  very  basis  of

making calculation of alleged undue advantage of Rs. 22,842 crores  (in  the

draft report) or  Rs. 3,367.29  crores  (in  the  final  report).   However,

having regard to the aforesaid discussion, it may not be necessary to  delve

into this aspect in much greater details.  It would be suffice to point  out

that the basic error committed by  CAG  was  to  compare  3G  and  BWA  (4G)

spectrum which mistake was realised  in  preparing  the  final  report.   It

appears that these calculations are made by  taking  migration  fee  of  Rs.

1,658 crores which were prevalent in the year 2001  and  on  that  basis  it

arrived at a figure of Rs. 5025.29 crores which, according  to  CAG,  should

have been fixed.  As respondent no. 2 paid a fee  of  Rs.  1,658.57  crores,

according to the CAG it has resulted in the loss  of  Rs.  3,367.29  crores.

However, the aforesaid assumption loses sight  of  the  fundamental  aspect,

namely, in 2001  spectrum  and  license  were  unified  which  was  not  the

position in the year 2010 when the two were segregated.   It  is  stated  at

the cost of repetition that insofar as auction of BWA spectrum is  concerned

the same was auctioned at a price of Rs. 12847.77 crores which is  the  most

material aspect and has been totally glossed over.  We, thus,  do  not  find

any error in the action of the Government in  allowing  the  migration  from

UASL to UL by making respondent no. 2 to pay a sum of Rs.  1,658  crores  in

this behalf.

With this, we address ourselves to the remainder issue, namely, fixation  of

1% AGR as SUC for the use of BWA.  As noticed above, the contention  of  the

petitioner in this behalf is that when the respondent No. 1  allowed  second

respondent-Reliance  Jio  to  offer  voice  telephony  (by  allowing   their

migration to UL regime), first respondent should insist for payment  of  SUC

for  level  playing  field  like  those  offering  voice  telephony  on  BWA

spectrum.   So far as various operators who are offering voice services  are

paying SUC at 3% to 8% depending on the quantum of the spectrum  they  hold.

The  prevailing  slab  rates  are  shown  in  the  rejoinder  filed  by  the

petitioner as under:-

|SUC (as a % of Revenue)                                        |

|Spectrum quantum   |Before               |DoT Order           |

|                   |01.04.2010           |25.02.2010          |

|2x4.4              |2                    |3                   |

|2x6.2              |3                    |4                   |

|2x8                |4                    |5                   |

|2x10               |                     |6                   |

|2x12.5             |5                    |7                   |

|2x15               |6                    |8                   |

The justification/explanation which is given by the Union of India  is  that

it was the TRAI which  submitted  its  recommendation  dated  27.09.2006  on

'Allocation and Pricing of   Spectrum  for  3G  and  BWA  services'  wherein

additional 1% SUC was recommended.

It is also pointed out that TRAI reiterated that SUC be fixed at 1%  AGR  in

its subsequent recommendations dated 11.07.2008 on 'Allocation  and  Pricing

for 2.3-2.4 GHz, 2.5-2.69 GHz & 3.3-3.6 GHz bands'.

The learned Solicitor General argued that after receipt of  the  above  TRAI

recommendations, there were  a  lot  of  deliberations  in  the  Department,

consultations were held with other Ministries i.e., Department  of  Economic

Affairs, Department of  Industrial  Promotion  and  Policy  on  the  various

issues relating of auction of 3G and BWA Spectrum.  The submission  is  that

all aspects, relevant to the issue were thoroughly examined and  deliberated

upon.  It was  noted  that  since  BWA  spectrum  will  be  used  for  rural

development, the SUC is kept at 1% of AGR.  Further, it was also noted  that

since spectrum is being auctioned and  the  price  discovery  is  through  a

market mechanism, the bidders will factor in the  annual  charges  in  their

bids.  Therefore, keeping BWA annual spectrum charge  at  1%  will  have  no

adverse revenue implications.  The aforesaid  is  the  rationale  given  for

fixation of 1% of AGR as SUC.

On going through the records, we find that  the  decision,  namely,  SUC  be

fixed at 1% AGR was based on relevant  considerations.  Not  only  TRAI  had

recommended the aforesaid  charge  to  be  fixed,  there  was  an  in  depth

examination  of  this  recommendation  of  the  TRAI  by  Government  before

accepting the same.  Furthermore, it is also pertinent to note that  on  the

basis of aforesaid decision, specific provisions were  incorporated  in  the

NIA for SUC for BWA spectrum.  Clause 3.5 of the NIA, in this behalf, is  as

under:

|“3.5     |Spectrum usage charges                               |

|         |Licensees using BWA Spectrum need to pay 1% of AGR   |

|         |from services using this spectrum as annual spectrum |

|         |charge irrespective of the licence held by them.     |

|         |Such revenue would be required to be reported        |

|         |separately.”                                         |

The aforesaid discussion, thus, demonstrates  that  the  main  consideration

that prevailed with the Government in keeping the SUC at 1% of AGR was  that

BWA spectrum was to be used for rural development.   It  also  needs  to  be

highlighted that in line with  the  objective  of  rural  development,  more

rural oriented roll out obligations for BWA spectrum in category A, B and  C

service areas, were prescribed, as can seen from the following clauses:

|“3.4.2   |Roll-out obligations for BWA Spectrum                |

|         |Category A, B and C service areas                    |

|         |                                                     |

|         |The licensee to whom the spectrum is assigned shall  |

|         |ensure that at least 50% of the rural SDCAs are      |

|         |covered within five years of the Effective Date using|

|         |the BWA Spectrum.  Coverage of a rural SDCA would    |

|         |mean that at least 90% of the area bounded by the    |

|         |municipal/local body limits should get the required  |

|         |street level coverage.                               |

|         |                                                     |

|         |The Effective Date shall be the later of the date    |

|         |when the right to use awarded spectrum commercially  |

|         |commences and the date when the UAS licence or the   |

|         |ISP category 'A' licence, if and as applicable, is   |

|         |granted to the operator … ...”                       |

Mr. Ranjit Kumar, learned Solicitor General further  demonstrated  that  the

country has been divided into 3 metro service areas,  namely  Delhi,  Mumbai

and Kolkata and 18 Service areas  which  have  been  further  designated  as

category A, B and C.  SDCA stands for Short  Distance  Charging  Area  which

comprises typically of one to two tehsils.  The country has 2647  SDCAs  out

of which 2470 SDCAs has been  designated  as  rural  SDCAs.   All  operators

including M/s Reliance Jio Infocomm Ltd who were  awarded  BWA  Spectrum  in

2010 and whose time period of 5 years for roll-out obligation was  completed

in 2015, have submitted proof of  compliance  of  roll  out  obligations  by

registering with Telecom Enforcement and Resource Monitoring (TERM) Cell  of

Department of Telecom before the due date in all the 22 service areas.   The

date of registering the TERM Cell is taken as  the  date  of  completion  of

roll out obligation on successful testing.  In  this  case,  testing  is  in

progress and is likely to be completed in next few months.   It  was,  thus,

pointed out that less rural coverage is stipulated  for  3G  spectrum  which

factor influenced the policy makers to fix SUC at 1% of AGR.

Apart from the above, there is one more reason not  to  interfere  with  the

aforesaid stipulation of SUC.  The Government has taken  the  position  that

the conditions in the license  granted  to  respondent  No.  2  empower  the

licenser/Government to change the terms of license and, therefore,  whenever

it is felt necessary and expedient in pubic interest, the percentage of  SUC

can be increased.  However, the  matter,  for  increase  of  SUC,  was  even

examined after the recommendation of TRAI in  the  year  2013  that  SUC  be

charged at an average  rate  instead  of  slab  rate  for  various  spectrum

holdings as given in NIA of 2010 and subsequent NIAs of  2012  and  January,

2013.  The Telecom Commission  considered  this  aspect  and  debated  three

options which could be considered for holders of BWA  auction  in  the  year

2010, namely:

|(i)      |SUC be raised to 3%;                                 |

|(ii)     |SUC be kept at 1% and reported separately; or        |

|(iii)    |SUC for standalone BWA be kept at 1%, but if combined|

|         |with spectrum bought in fresh auctions then the      |

|         |charge be the weighted average of acquired spectrum  |

|         |at 3% and BWA at 1%.                                 |

Before taking a final decision as  to  which  option  be  resorted  to,  the

Telecom Commission recommended that a  legal  opinion  be  sought  from  the

learned Attorney General.  Matter was referred to the then Attorney  General

who opined that SUC charge be retained at 1% for BWA operators and  on  that

basis, final decision in this behalf was taken.  It is further  pointed  out

that on the issue of revenue segregation, a committee had been formed  which

has submitted its report.  The report is under  consideration  and  decision

on the report is likely in two months.  After considering the report of  the

committee on the revenue  segregation,  appropriate  action  will  be  taken

whether separate revenue reporting to continue or not or an increase in  SUC

is required for the proper conduct of telegraph as provided in  the  License

Agreement.  The decision on the report is expected in two months.   In  view

of the aforesaid developments, for the time being, we leave  the  matter  to

the Government to take an appropriate decision in this behalf.

We find no merit in this writ petition which is, accordingly, dismissed.

                           .............................................CJI.

                                                               (T.S. THAKUR)

                             .............................................J.

                                                                (A.K. SIKRI)

                             .............................................J.

                                                              (R. BANUMATHI)

NEW DELHI;

APRIL 08, 2016.

-----------------------

[1]   (2012) 10 SCC 1

[2]   (2012) 3 SCC 1

[3]   (2014) 8 SCC 804

[4]   (2000) 10 SCC 664

[5]   (2003) 4 SCC 289

[6]   (2013) 6 SCC 620

[7]   (1978) 3 SCC 459 : AIR 1978 SC 1296 : 1978 Cri LJ 1281

[8]   (1992) 2 SCC 343

[9]       (See : Administrative Law: Text and  Materials  (4th  Edition)  by

Beatson, Matthews, and Elliott)

[10]  Ibid