IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION   

CIVIL APPEAL NO.                OF 2010 (Arising out of SLP (C) No. 24873 OF 2010)

Centre for Public Interest Litigation ……..Appellants  and others   

Versus

The Union of India and others  …….Respondents

O  R  D  E  R

G.S. Singhvi,  J.

1. Leave granted.

2. Feeling aggrieved by refusal of the Division Bench of the Delhi High  

Court  to  entertain  the  writ  petition  filed  by  them for  a  court  monitored  

investigation by the Central Bureau of Investigation (for short, ‘the CBI’) or  

a Special Investigating Team into what has been termed as ‘2G Spectrum  

Scam’ for  unearthing the role  of  respondent  No.5-Shri  A. Raja,  the  then  

Union Minister  for the Department of Telecommunications  (DoT),  senior  

officers  of  that  department,  middlemen,  businessmen  and  others,  the

appellants have invoked the jurisdiction of this Court under Article 136 of  

the Constitution.

3. After issue of notice by this Court on 13.9.2010, the parties have filed  

affidavits  and  large  number  of  documents  including  performance  audit  

report (draft and final) prepared by the Comptroller and Auditor General of  

India (CAG) on the issue of licences and allocation of 2G Spectrum by the  

Department  of  Telecommunications,  Ministry  of  Communications  and  

Information Technology for the period from 2003-04 to 2009-10, which has  

been submitted to the President of India as per the requirement of Article  

151 of the Constitution, a compact disc allegedly containing conversation of  

Ms. Niira Radia with some public representatives, businessmen, journalists  

and alleged middlemen and written submissions.

4. On  29.11.2010,  Shri  K.K.  Venugopal,  learned  senior  counsel  

appearing  for  the  CBI  produced  two  sealed  envelopes  containing  status  

report prepared in relation to Case No.RCDAI 2009 A0045 (2G Spectrum  

case).   

5. On  8.12.2010,  Shri  Harin  P.  Raval,  learned  Additional  Solicitor  

General representing the CBI and the Directorate of Enforcement produced  

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before the Court the report  prepared by the Enforcement Directorate in a  

sealed envelope, which was opened in the Court.  After going through the  

report, the report was placed in the sealed cover and returned to Shri Raval.  

6. For detailed examination of the issues raised by the appellants, it will  

be useful to notice the background in which spectrum licences were given to  

different parties in 2008.  These are:

(i) Till 1994, telecommunication services were absolute monopoly  

of the Government of India.  In November, 1994, the Central Government  

framed  National  Telecom  Policy  (NTP)  permitting  private  sector  

involvement in the telecommunication sector.

(ii) In  the  first  phase,  two  Cellular  Mobile  Telephone  Services  

(CMTS) licenses were awarded in each of the four metro cities i.e. Delhi,  

Mumbai, Kolkata and Chennai to the private entrepreneurs, who satisfied a  

predetermined set of criteria.  The license fee payable by the operators was  

also predetermined and there was no bidding.

(iii) In the second phase, two CMTS licenses were awarded in 18  

telecom circles sometime in December, 1995 through bidding process.

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(iv) In  January,  1995,  tenders  were  invited  for  award  of  Basic  

Service Operator (BSO) licenses for license fee payable over a period of 15  

years.   

(v) In 1997, Parliament enacted the Telecom Regulatory Authority  

of  India  Act  (for  short,  ‘the  Act’)  for  facilitating  establishment  and  

incorporation of Telecom Regulatory Authority of India (TRAI).  Section 11  

of  the  TRAI Act,  which enumerates the  functions  of  Authority,  reads  as  

under: -      

“11. Functions of Authority. –  (1) Notwithstanding anything  contained in the Indian Telegraph Act, 1885 (13 of 1885), the  functions of the Authority shall be to–

(a) make recommendations, either  suo motu or on a request  from the licensor, on the following matters, namely:–

  (i) need  and  timing  for  introduction  of  new  

service provider;

(ii) terms and conditions of license to a service  provider;

(iii) xxx xxx xxx

(iv) measures  to  facilitate  competition  and  promote  efficiency  in  the  operation  of  telecommunication  services  so  as  to  facilitate growth in such services;

(v) xxx xxx xxx

(vi) xxx xxx xxx

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(vii) measures  for  the  development  of  telecommunication  technology  and  any  other matter relatable to telecommunication  industry in general;

(viii) efficient management of available spectrum;   (b) discharge the following functions, namely:–

(i) ensure  compliance  of  terms  and  conditions  of  license;

(ii) notwithstanding  anything  contained  in  the  terms  and  conditions  of  the  license  granted  before  the  commencement  of  the  Telecom  Regulatory  Authority of India (Amendment) Act, 2000, fix the  terms and conditions of inter-connectivity between  the service providers;

(iii) xxx xxx xxx

(iv) regulate arrangement amongst service providers of  sharing  their  revenue  derived  from  providing  telecommunication services;

(v) xxx xxx xxx

(vi) xxx xxx xxx

(vii) xxx xxx xxx

(viii) xxx xxx xxx

(ix) ensure  effective  compliance  of  universal  service  obligations;

 (c) levy fees and other charges at such rates and in respect of  such services as may be determined by regulations;

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(d) perform  such  other  functions  including  such  administrative and financial functions as may be entrusted to it  by the Central Government or as may be necessary to carry out  the provisions of this Act;

Provided  that  the  recommendations  of  the  Authority  specified in clause (a) of this sub-section shall not be binding  upon the Central Government:

Provided further that the Central Government shall seek  the  recommendations  of  the  Authority  in  respect  of  matters  specified in sub-clauses (i)  and (ii)  of clause (a) of this sub- section  in  respect  of  new  license  to  be  issued  to  a  service  provider and the Authority shall forward its recommendations  within  a  period  of  sixty  days  from  the  date  on  which  that  Government sought the recommendations:

Provided also that the Authority may request the Central  Government to furnish such information or documents as may  be necessary for the purpose of making recommendations under  sub-clauses (i) and (ii) of clause (a) of this sub-section and that  Government shall supply such information within a period of  seven days from receipt of such request:

Provided also that the Central Government may issue a  license  to  a  service  provider  if  no  recommendations  are  received from the Authority within the period specified in the  second  proviso  or  within  such  period  as  may  be  mutually  agreed  upon  between  the  Central  Government  and  the  Authority:

Provided  also  that  if  the  Central  Government  having  considered that recommendation of the Authority, comes to a  prima  facie conclusion  that  such  recommendation  cannot  be  accepted  or  needs  modifications,  it  shall  refer  the  recommendation back to the Authority for its reconsideration,  and the  Authority  may,  within  fifteen days  from the date  of  receipt of such reference, forward to the Central Government its  recommendation after considering the reference made by that  

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Government.  After receipt or further recommendation if any,  the Central Government shall take a final decision.

(2) to (3) xxx xxx xxx

(4) The Authority shall ensure transparency while exercising  its powers and discharging its functions.”    

  (vi) On 20.11.1998, Government of India constituted a high level  

group  on  telecom  matters  for  making  recommendations  on  three  major  

issues  including  formulation  of  new  telecom  policy.   The  group  

recommended changes in the existing telecom policy and resolution of the  

problem of the existing operators.  These recommendations were considered  

by the Union Cabinet, which approved the New Telecom Policy, 1999 (NTP  

1999).

(vii) In  July,  1999,  the  Central  Government  decided  to  offer  

migration package to the existing licensees to the revenue sharing regime  

under the new policy.  

(viii) In 1999-2000, the Central Government granted CMTS licenses  

to MTNL and BSNL as third CMTS operator.   

(ix) The CAG in his Report No.6 of 2000 – P&T severely criticized  

the concession granted by the Department of Personnel as also the offer of  

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migration to the existing licensees.  However, no concrete action appears to  

have been taken except that the DoT had made available para-wise reply to  

the CAG.

(x) In  September/October,  2001,  the  Government  accepted  the  

recommendations  of  TRAI  and  17  new  CMTS  licenses  were  issued  to  

private  companies  as  fourth  operator  (one  each  in  4  metro  cities  and  

remaining 13 in other telecom circles).

(xi) On 25.1.2001, DoT issued guidelines for issue of license for  

basic telephone service.

(xii) On  27.10.2003,  TRAI  forwarded  its  recommendations  on  

Unified Licensing Regime.  Paragraphs 7.15 to 7.19 and 7.37 to 7.39 of  

those recommendations are extracted below:

“Recommendations  on  Entry  Fee,  Rollout  obligations  and  Performance Bank Guarantee:

7.15 To decide the benchmark for the entry fee for Unified  Access  Licensing  Regime  three  alternatives  could  be  considered  which  are  discussed  in  the  subsequent  paragraphs.

7.16 The first alternative could be inviting bids from existing  operators  as well  as  from the new prospective  Unified  Access  Licensing  Operators.   This  is  possible  since  additional  spectrum  is  now  being  made  available  by  Ministry  of  Defence  and  the  existing  contractual  

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commitments to existing cellular and WLL players can  easily  be met,  leaving out  a balance for  more players.  The benchmarks fixed through this process will be up-to- date based upon the current market situation and will be  done  through  a  transparent  process.   The  problems  associated with the bidding process are as follows:

i) The  fixing  of  the  benchmarks  through  a  bidding  process  could  be  more  time  consuming  and  hence  delay  the  implementation of Unified Licensing.

ii) While  inviting  bids  the  question  will  be  whether it should be done with spectrum or  without any spectrum, i.e. only for migration  to Unified Licensing Regime.  If the bids are  invited  without  spectrum,  the  new  prospective Unified Licensing operators will  not be able to roll out their wireless services  in the absence of spectrum.  If the separate  bids  are  invited  for  Unified Licensing and  spectrum, the bidding process will  become  even more time consuming and complicated.  In  case  additional  spectrum  is  given  for  Unified  Licensing  operators,  the  existing  operators, while migrating to Unified Access  Licensing  Regime,  may  also  demand  additional  spectrum  which  may  not  be  available  immediately.   This  will  stall  migration  to  the  Unified  Access  Licensing  Regime.

iii) Unless  the  revised  spectrum  pricing  and  allocations guidelines are finalised, there is  no  guarantee  that  the  spectrum  would  be  made available to existing operators willing  to migrate to the Unified Licensing Regime.

Considering all  these problems, the Authority is  of the  opinion  that  the  bidding  process  for  fixing  up  of  the  

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benchmarks for migration to Unified Licensing Regime  may not be preferable.

 7.17 The  second  alternative  could  be  that  basic  service  

operators willing to migrate to Unified Access Licensing  Regime should pay the difference in entry fee of average  of  1st and  2nd cellular  operators  and  entry  fee  paid  by  Basic  Service  Operators.   This  argument  is  not  sustainable due to the following reasons:-

i) CMSPs in pre NTP’99 era before migration did  not pay any license fee (revenue share).

ii) 1st and 2nd CMSPs got  the advantage of early  entry to the market in a duopoly regime.

Some of the operators have said that they are incurring  losses.  In this business losses are incurred initially, e.g.,  Orange, one of the largest mobile operators in U.K., took  almost seven years to break even.  Even in India some of  the  Service  providers  have  started  making  profits.   A  number of studies have shown that even at present tariff  levels the addition of new subscribers is profitable.

7.18 The 3rd alternative  is  that  the  existing entry  fee  of  the  fourth Cellular  Operator  would be the  entry fee in the  new Unified Access Licensing Regime.  BSOs would pay  the difference of the fourth CMSP’s existing entry fee  and the entry fee paid by them.  It may be recalled that,  even in the past, entry to cellular and basic services has  been on fixed fee basis,  e.g., for metros in the case of  cellular and for the second BSO.

7.19 It is recommended that the 3rd alternative as mentioned in  para-7.18 above may be accepted for fixing the entry fee  for  migration  to  Unified  Access  Licensing  regime  for  Basic and Cellular services at the circle level.

xxx xxx xxx xxx xxx xxx

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xxx xxx xxx

Competition

7.37 On the issue of introducing more competition, the TRAI  has  always  been  in  favour  of  open  and  healthy  competition.  In its recommendations on the introduction  of  the  5th and  6th Cellular  Mobile  license,  the  TRAI  opined that

“Induction of additional mobile service providers  in various service areas can be considered if there  is adequate availability of spectrum for the existing  service providers as well as for the new players, if  permitted.”

Taking  cognizance  of  spectrum  availability,  the  TRAI  is  in  favour  of  introducing  more  competition.  However,  we  feel  that  it  in  lieu  of  more  cellular  operators,  it  would  be  more  appropriate  to  have  competition in a Unified Licensing framework which will  be initiated after six months.

Time and need of introduction of more service providers    

7.38 As already mentioned earlier, with the continuing growth  trend,  the  expected  wireless  subscriber  base  by  December,  2005 will  be 100 million.   To achieve 100  million wireless subscribers (cellular & WLL both) the  required investment is of the order of Rs.50,000 crores.  As  brought  out  in  para  6.5  this  highlights  a  need  at  present  itself  for  greater  efforts  by  existing  and  new  service providers to expand the investment and to meet  the  marked  demand  for  telecom  services  and  help  achieve  the  objectives  of  telecom  growth  and  development in the country.

7.39 As  brought  out  in  Para-7.37  above,  the  induction  of  additional  mobile  service  providers  in  various  service  areas can be considered if there is adequate availability of  spectrum.  As the existing players have to improve the  

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efficiency of utilisation of spectrum and if Government  ensures  availability  of  additional  spectrum then  in  the  existing  Licensing  Regime,  they  may  introduce  additional players through a multi-stage bidding process  as was followed for 4th cellular operator.”      

(xiii) The  recommendations  of  the  TRAI  were  considered  by  the  

Group  of  Ministers  (GoM),  which,  in  turn,  recommended  the  following  

course of action:  

“(i) ….The scope of NTP-99 may be enhanced to provide for  licensing  of  Unified  Access  Services  for  basic  and  cellular  licence services and unified Licensing comprising all telecom  services.   Department  of  Telecommunications  may  be  authorised  to  issue  necessary  addendum  to  NTP-99  to  this  effect.

(ii) The  recommendations  of  TRAI  with  regard  to  implementation  of  the  Unified  Access  Licensing  Regime for  basic and cellular services may be accepted.”

(xiv) The  recommendations  of  GoM were  accepted  by  the  Union  

Cabinet  in  its  meeting  held  on  31.10.2003.   Thereafter,  NTP  1999  was  

amended vide office  memorandum dated 11.11.2003.   On the same day,  

guidelines  were  issued  for  Unified  Access  (Basic  and  Cellular)  Services  

License (UASL).   

(xv) On 14.11.2003, TRAI clarified that  the entry fee of  the new  

Unified Licensee would be the entry fee of the 4th cellular operator and in  

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service areas where there is no 4th operator – the entry fee of the existing  

BSO fixed by the Government (based on TRAI’s recommendations).   

(xvi) In  November,  2003,  the  DoT decided  to  accept  and  process  

UASL applications in the same manner as was done in the case of BSO  

applications.

(xvii) On 13.1.2005, TRAI recommended that till Unified Licensing  

comes into effect, the current regime of spectrum pricing will continue and  

the  telecom services  should  not  be  seen  as  a  source  of  revenue  for  the  

Government.  On 14.12.2005, revised UASL guidelines were issued.

(xviii) On  13.4.2007,  a  reference  was  made  to  TRAI  by  the  DoT  

stating that after finalisation of UASL policy, 159 licences had been issued  

for providing Access Services (CMTS/UASL/Basic) in the country and the  

Access  Service  Providers  were  mostly  providing  services  by  using  the  

wireless technology (CDMA/GSM).  It was also indicated that as per the  

existing  policy of  granting license,  there  was increase  in  the  demand on  

spectrum in a substantial manner and the Government was contemplating  

review of its policy.  A suggestion was also made that a limit can be put on  

the number of Access Service Providers in each service area because the  

spectrum  is  a  scarce  resource  and  to  ensure  that  adequate  quantity  of  

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spectrum is available to the licensee to enable them to provide their services  

and to maintain the quality of service.  The issues on which opinion of TRAI  

was  sought  included  transfer  of  licences,  guidelines  dated  21.2.2004  on  

mergers and acquisitions, to permit service providers to offer Access Service  

using combination of technologies (CDMA/GSM/Basic or any other) under  

the same license and rollout obligations.   

(xix) In May, 2007, respondent No.5 took over as Minister for the  

Department of Telecommunications.   

(xx) The  TRAI  submitted  its  recommendations  on  28.8.2007,  

paragraphs 2.37, 2.78 and 2.79 whereof are as under:

“Para 2.37: No cap be placed on the number of access service  providers in any service area.

Para 2.78: “Keeping  in  view  the  objective  of  growth,  affordability, penetration of wireless services in semi-urban and  rural  areas,  the  Authority  is  not  in  favour  of  changing  the  spectrum fee regime for a new entrant.  Opportunity for equal  competition has always been one of the prime principles of the  Authority  in  suggesting  a  regulatory  framework  in  telecom  services.  Any differential treatment to a new entrant vis-à-vis  incumbents in the wireless sector will go against the principle  of playing field.   This  is  specific  and restricted to 2G bands  only i.e. 800, 900 and 1800 MHz.  This approach assumes more  significance  particularly  in  the  context  where  subscriber  acquisition cost for a new entrant is likely to be much higher  than for the incumbent wireless operators.

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Para 2.79 It  is  therefore  recommended  that  in  future  all  spectrum excluding the spectrum in 800, 900 and 1800 bands  should be auctioned so as to ensure efficient utilization of this  scarce  resource.  In  the  2G  bands  (800  MHz/900MHz/1800  MHz), the allocation through auction may not be possible as the  service providers were allocated spectrum at different times of  their license and the amount of spectrum with them varies from  2X4.4 MHz in CDMA technology.  Therefore, to decide the cut  off after which the spectrum is auctioned will be difficult and  might raise the issue of level playing field.”

(xxi) The  recommendations  of  TRAI  were  placed  before  Telecom  

Commission sometime in October, 2007.  However, none of the four non-

permanent members of the Telecom Commission i.e. the Finance Secretary,  

Secretary,  Department  of  Industrial  Policy  and  Promotion,  Secretary,  

Department  of  Information  Technology  and  Secretary,  Planning  

Commission  were  even  informed  about  the  meeting  of  the  Telecom  

Commission.  In that meeting, a committee of 6 officers all belonging to  

DoT was constituted and the committee submitted its report on 10.10.2007  

virtually dittoing the recommendations of the TRAI.   

(xxii) Three  of  the  four  companies,  which  were  providing  CDMA  

based mobile services under UAS licence had applied in 2006 for permission  

to use GSM technology.  At the relevant time, combination of technologies  

(CDMA, GSM and/or any other) was not permitted.  Therefore, the DoT did  

not accept their request.  After receipt of the recommendations of TRAI, a  

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decision was taken by the DoT on 17.10.2007 for use of alternate technology  

albeit without referring the mater to full Telecom Commission.  DoT issued  

press  release  on  19.10.2007 on the  issue  of  use  of  alternate  technology.  

However, a day before that i.e., 18.10.2007, three operators who had applied  

for use of alternate technology were given ‘in principle’ approval for using  

GSM technology.

(xxiii) In the meanwhile, a press note was issued by DoT incorporating  

therein the decision that new applications for UASL will not be accepted  

after 1.10.2007 till further orders.  As on that date, 167 applications had been  

received.   These included the applications which had not been processed  

since  March,  2006.   After  publication  of  the  press  release,  408  more  

applications were received.  Thus, as on 1.10.2007, 575 applications were  

received for UASL in respect of 22 service areas.   

(xxiv) Member (Technology), Telecom Commission sent letter dated  

26.10.2007 to the Secretary, Department of Legal Affairs, Ministry of Law  

and  Justice  for  obtaining  opinion  of  the  learned  Attorney  General  of  

India/Solicitor General of India on the issue of grant of new licences as well  

as  grant  of approval  for use of dual  technology spectrum to the existing  

operators so as to enable the DoT to handle the unprecedented situation in a  

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fair and equitable manner,  which will be equally tenable.  The letter was  

accompanied by a statement of case.

(xxv) The Law Secretary prepared a note on 1.11.2007, which was  

placed before the Law Minister.  The latter opined that keeping in view the  

importance of  the case  and various options indicated in the  statement  of  

case, the whole issue needs to be first considered by an empowered Group of  

Ministers and in that process legal opinion of the Attorney General can be  

obtained.

(xxvi) On  the  next  day  i.e.  2.11.2007,  respondent  No.5  dispatched  

D.O. letter to the Prime Minister in which he indicated that the suggestion of  

the Law Ministry was totally out of context and, at the same time, asserted  

that  the  department  had decided  to  continue with  the  existing policy i.e.  

First-Come-First-Served  for  processing  of  applications  received  up  to  

25.9.2007 and the procedure for processing the remaining applications will  

be decided at the later stage, if any spectrum is available.

(xxvii) It appears that even before the D.O. letter sent by respondent  

No.5  was received in his office, the Prime Minister  sent a letter to him  

drawing his attention to the issues raised by the telecom sector companies  

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and others on the processing of large number of applications in the backdrop  

of inadequate spectrum.  The Prime Minister’s letter was accompanied by a  

note in which five issues were identified.  On the same day, respondent No.5  

sent  another  letter  to  the  Prime  Minister  stating  that  it  will  be  unfair,  

discriminatory,  arbitrary  and  capricious  to  auction  the  spectrum  to  new  

applicants as it will not give them level playing field.   

(xxviii) On 22.11.2007, the Finance Secretary wrote to the Secretary,  

DoT expressing his serious reservation on the decision of the DoT on the  

issue  of  determination  of  fee  for  grant  of  licences  in  2007  at  the  rate  

determined  in  2001.   He  emphasized  that  in  view  of  the  financial  

implications,  the  Ministry  of  Finance  should  have  been consulted  before  

finalizing the decision and requested that further action to implement  the  

licences  may  be  stayed.   In  reply,  the  Secretary  DoT  sent  D.O.  dated  

29.11.2007 stating therein that entry fee was finalised for UAS regime in  

2003 as per the decision of the Cabinet and the dual technology licences  

were issued on TRAI recommendations of 28.8.2007.   

(xxix) On 3.1.2008, a meeting of full Telecom Commission was fixed  

for 9.1.2008 to consider the following issues: -

(i) Performance of telecom sector.

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(ii) Pricing of spectrum.

(iii) Any other item with the permission of Chairman.        

However,  vide  letter  dated  7.1.2008,  Joint  Secretary  (T),  DoT  

informed  the  members  of  the  Commission  that  meeting  scheduled  for  

9.1.2008 has been postponed to 15.1.2008.

(xxx) After three days of postponement of the meeting of Telecom  

Commission,  a press release was issued by DoT that  the department had  

decided to issue Letter of Intents (LOIs) only to those applicants, who had  

applied up to 25.9.2007.  It was also indicated that the department has been  

implementing a policy of First-Come-First-Served for grant of UASL under  

which initially an application which is received first will be processed first  

and thereafter, LOI will be granted to those found eligible and UAS licence  

will be given to those whosoever complies with the conditions of LOI first.  

On the same day, the DoT issued another press release at 2.45 P.M. asking  

all  the  applicants  to  assemble  at  the  departmental  headquarter  within  45  

minutes  to collect  response of DoT.  The eligible LOI holders were also  

asked  to  submit  compliance  of  the  terms  of  LOI  within  the  prescribed  

period.

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(xxxi) All  the  applicants,  eligible  or  not,  collected  their  LOIs  and  

acceptance  of  120  applications  was  also  received  on  the  same  day.  

Compliance  of  the  terms  and  conditions  of  LOI  was  also  made  for  78  

applications on 10.1.2008.    

(xxxii) Soon after obtaining the licences, Swan Telecom which had paid  

licence  fee  of  Rs.1537 crores  only  off  loaded its  45% stake  to  Etisalat  for  

Rs.4,500 crores and Unitech, which obtained licence for Rs.1651 crores  off  

loaded 60% of its stake to Telenor for Rs.6120 crores.

(xxxiii) S. TEL Ltd.,  which had submitted application pursuant  to press  

note  dated  24.9.2007 but  whose  application  was  not  considered  along with  

other applicants in view of the anti-dating of the cut off date, filed Writ Petition  

No. 636/2008 in the Delhi High Court for quashing first press release dated  

10.1.2008. The learned Single Judge referred to the recommendation made by  

the TRAI that there should be no cap on the number of excess service providers  

in any service area and observed that on the one hand, the Government of India  

accepted the recommendation of the TRAI but acted just contrary by amending  

the cut off date and thereby limiting the service providers whose applications  

could be considered for grant of licence.  The learned Single Judge held that  

there was no rational basis for fixing 25.9.2007 as the cut off date and there was  

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no  justification  to  change  the  rules  of  game  after  the  game  had  begun.  

Accordingly,  he  allowed  the  writ  petition  and  directed  the  respondents  to  

consider the application of the writ petitioner for 16 circles.

(xxxiv) L.P.A. No. 388/2009 filed by the Union of India against the order  

of the learned Single Judge was dismissed by the Division Bench and the order  

of the learned Single Judge was upheld.

(xxxv) Special  Leave  Petition  No.  33406/2009  filed  by  the  Union  of  

India, which was converted into C.A. No. 2355/2010 was disposed of by this  

Court on 12.3.2010 after taking into consideration the additional affidavit filed  

by the writ petitioner and suggestion made by the Attorney General.  However,  

the finding recorded by the High Court on the issue of change of cut off date  

was not disturbed.

(xxxvi) On  4.5.2009,  appellant  No.2  –  Telecom  Watchdog  submitted  

detailed representation to the Chief Vigilance Commissioner (CVC) pointing  

out irregularities committed in the grant of UASL.  After 5 days, one Shri A.K.  

Agarwal made a complaint to the CVC to highlight how manipulations were  

made by some of the applicants for getting the licences and how the exercise  

undertaken by the DoT for grant of UASL has resulted in serious financial loss  

to the public exchequer.

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(xxxvii) The  CVC  got  conducted  an  inquiry  under  Section  8(d)  of  the  

Central Vigilance Commission Act, 2003 and noticed some grave irregularities  

in the grant of licences.  On 12.10.2009, a copy of the report prepared on the  

basis of the said inquiry was forwarded by the CVC to the Director, CBI to  

investigate into the matter to establish the criminal conspiracy in the allocation  

of 2G Spectrum under UASL policy of DoT and to bring to book all wrong  

doers.   On  receipt  of  the  aforesaid  communication  from  the  CVC,  CBI  

registered FIR No. RC-DAI-2009-A-0045 dated 21.10.2009 against unknown  

officials of DoT and unknown private persons/companies and others for offence  

under Section 120B IPC read with Section 13(2) and 13(1)(d) of the Prevention  

of Corruption Act, 1988.

Submissions:

7. Shri Prashant Bhusan, learned counsel for the appellants argued that  

the  allocation  of  spectrum on 10.1.2008 has  resulted in  huge loss  to  the  

public  exchequer  and,  therefore,  a  thorough  probe  is  necessary  by  an  

independent  agency so that  all  the persons who may be found guilty are  

brought before law and punished.  Learned counsel extensively referred to  

the documents produced by the parties before the High Court and this Court  

including letter dated 20.11.2009 of the Joint Secretary of Income Tax and  

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the report of the CAG and argued that the Court should direct the CBI to  

conduct investigation on various issues including grant of permission for use  

of  dual/alternate  technology  to  three  operators  a  day  before  the  policy  

decision  was  announced  to  the  public  by  means  of  press  release  dated  

19.10.2007, the change of cut off date from 1.10.2007 to 25.9.2007, issue of  

LOIs by DoT on 10.1.2008, gross violation of the policy of first-come-first-

served, non compliance of the rollout and other obligations by the licensees,  

failure of the TRAI and DoT to ensure that the licensee complied with the  

conditions on which they were permitted to use the spectrum and huge loss  

caused to the public exchequer by manipulative mechanism as also sale of  

equities  by  different  licensees  to  foreign  companies.   Learned  counsel  

referred  to  para  6.31(iv)  of  the  TRAI  recommendation  to  show that  no  

proposal for permission for merger and acquisition could be entertained till  

the fulfillment of rollout obligations but DoT acted contrary to the TRAI  

recommendation without complying with fifth proviso to Section 11 of the  

Act and as a result of that the licensees violated the conditions of licence  

with impunity.  Shri Bhushan submitted that the grant of licences on the  

basis of 2001 price in the garb of implementing the recommendations made  

by TRAI has resulted in loss to the public exchequer to the tune of more  

than Rs.1,76,000 crores.

23

8. Learned counsel  submitted that  since the  spectrum was scarce,  the  

grant of licences on the basis of 2001 price was ex facie contrary to public  

interest and a mala fide action on the part of respondent No.5 and officers of  

DoT who had connived with the private operators and others including those  

in realty and infrastructure sectors for extraneous considerations.  Learned  

counsel emphasized that majority of 122 applicants to whom the licences  

were  granted  were  ineligible  and,  therefore,  the  TRAI has  recommended  

cancellation of their licences.  Shri Bhushan then submitted that the CAG  

has assessed the loss by using different methods and, therefore, the report  

prepared by him should constitute a basis for further investigation.   Learned  

counsel made a pointed reference to the finding recorded by the CAG that  

soon after getting licences for a price of Rs.1600 crores or less, the licensees  

have transferred their stakes to the operators outside the country and made  

profits running into many thousand crores.  Learned counsel submitted that  

the mechanism adopted by the DoT, which was headed by respondent No.5  

at the relevant time to hold meeting of Telecom Commission in October,  

2007 without  informing the non permanent  members (four Secretaries  of  

important Departments of Government) and postponement of the meeting of  

Telecom Commission scheduled for 7.1.2008, issuance of two press releases  

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on 10.1.2008, grant of 45 minutes to the applicants to collect LOIs and the  

very fact that some of the applicants could submit bank drafts of Rs.1600  

crores within few hours shows that everything had been pre-fixed with a  

view  to  favour  some  operators  at  the  cost  of  public  revenue.   Learned  

counsel pointed out that the mechanism of auction adopted for allocation of  

3G  Spectrum  has  yielded  more  than  60,000  crores  and  if  the  same  

methodology was adopted for allocation of 2G Spectrum, the country would  

have  been  richer  by  more  than  a  lac  and  half  crores.   Learned  counsel  

submitted  that  the  investigation  being  conducted  by  the  CBI  should  be  

monitored by the Court by appointing two independent investigators who  

should be persons of unimpeachable integrity and who should be conversant  

with  the  functioning  of  the  CBI.   He lamented that  while  the  CAG has  

submitted the final report within few months from the receipt of relevant  

records from the CBI and the Directorate of Income Tax (Investigation), the  

CBI  has  not  been  able  to  make  any  tangible  progress.   Shri  Prashant  

Bhushan also referred to the reports appearing in a section of media about  

grant of huge loans by public sector and other banks to the applicants to  

facilitate their participation in the allotment of UAS licences and submitted  

that the CBI should be asked to investigate this aspect as well to unearth the  

conspiracy  between  the  companies  engaged  in  realty  and  infrastructure  

25

sectors and the banks which enabled the former to earn huge profits without  

even complying with their obligations under the licence.

9. Shri K.K. Venugopal, learned senior counsel appearing for the CBI  

relied  upon  the  judgments  of  this  Court  in  Bhagwant  Singh  v.  

Commissioner  of  Police (1983)  3  SCC  344,  State  of  West  Bengal  v.  

Sampat Lal (1985) 1 SCC 317, R.S. Sodhi v. State of U.P. (1994) Supp 1  

SCC  143,  Director,  Central  Bureau  of  Investigation  v.  Niyamavedi  

(1995) 3 SCC 601,  Vineet Narain v. Union of India (1996) 2 SCC 199,  

Anukul Chandra Pradhan v. Union of India (1996) 6 SCC 354, Union of  

India v. Sushil Kumar Modi (1997) 4 SCC 770, Superintendent of Police,  

CBI v. Tapan Kumar Singh (2003) 6 SCC 175, M.C. Mehta v. Union of  

India (2007) 1 SCC 110, Divine Retreat Centre v. State of Kerala (2008)  

3  SCC  542,  Dukhishyam  Benupani,  Assistant  Director,  Enforcement  

Directorate (FERA) v. Arun Kumar Bajoria (1998) 1 SCC 52, Janta Dal  

v.  H.S.  Choudhary (1992)  4  SCC  305,  D.  Venkatasubramaniam and  

others  v.  M.K.  Mohan Krishnamachari (2009)  10  SCC 488,  State  of  

Haryana v. Bhajan Lal (1992) Supp 1 SCC 335 and argued that the Court  

should not make any order which may cast any reflection on the ability of  

the  CBI  to  conduct  the  investigation  into  a  case  in  which  allegations  of  

26

corruption  have  been  leveled  against  various  functionaries  of  the  

Government  including  respondent  No.5.   Learned  senior  counsel  

emphasized that  the CBI has always  conducted investigations  objectively  

and, therefore, there is no reason to think that the investigation in the present  

case will not be fair and impartial or that any attempt will be made to shield  

any  one.   Learned  counsel  pointed  out  that  after  registering  the  first  

information  report,  the  CBI  has  conducted  raids,  collected  voluminous  

records  and  copies  of  the  tapped  conversation  of  Ms.  Niira  Radia  and  

examined more than three dozen witnesses.  He submitted that the CBI will  

submit  further  progress  report  to  the  Court  within  8  weeks  and  try  to  

complete the investigation by the end of March, 2011.   

10. Shri Gopal Subramanian, learned Solicitor General argued that UAS  

licences were granted in 2008 on the price fixed in 2001 because the TRAI  

had  recommended  that  the  new  entrant  should  not  be  subjected  to  

discriminatory treatment and there should be level playing field for all the  

applicants.  Learned Solicitor General submitted that the recommendations  

made by the TRAI were approved by the Government and as such the same  

cannot be termed as illegal or arbitrary.  He submitted that the TRAI is an  

expert body established for rapid growth of telecommunication services and  

27

there is no reason to doubt the credibility of the recommendations made by it  

on 28.8.2007 for grant of licences on the principle of first-come-first-served  

basis by treating the 2001 price as the bench-mark.  The learned Solicitor  

General submitted that the loss indicated in the report of CAG is based on  

assumptions  and  at  this  stage  the  Court  may  not  make  the  said  

recommendations as the basis for recording a finding whether or not any loss  

has been caused to the public exchequer and/or magnitude of the loss.  He  

submitted  that  the  Central  Government  has,  after  considering  the  

recommendation made by the TRAI, already initiated action for cancellation  

of  the  licences  of  the  ineligible  applicants  and  also  those  who  failed  to  

comply with the conditions of licence including rollout obligation.

11. Shri Harin P. Raval, learned Additional Solicitor General referred to  

the provisions of the Prevention of Money-Laundering Act, 2002 and the  

Foreign  Exchange  Management  Act,  1999  and  argued  that  soon  after  

receiving complaint, which was forwarded by the Ministry of Finance, the  

Director  General  Income Tax (Investigation)  sought  permission  from the  

Union Home Secretary for putting on surveillance the telephone lines of Ms.  

Niira Radia and her associates and on the basis of the approval granted by  

the latter, telephone lines of Ms. Niira Radia and her associates were put  

28

under surveillance.  He submitted that after completion of the recording, a  

detailed  investigation  is  being  conducted  under  the  supervision  of  the  

Director  General  Income  Tax  (Investigation).   He  invited  the  Court’s  

attention to the report, which was produced in a sealed envelope to show that  

serious efforts are being made by the Department to find out whether there  

has been violation of the provisions contained in the two Acts and loss has  

been  caused  to  the  public  exchequer.   Learned  counsel  assured  that  the  

Department  will  produce  report  on  the  basis  of  further  investigation  

conducted by it.

12. Shri  T.R.  Andhyarujina,  learned  senior  counsel  appearing  for  

respondent No.5 submitted that the report of the CAG is flawed on various  

aspects and the estimation of loss is based on totally unfounded assumptions.  

Learned  counsel  referred  to  various  paragraphs  of  the  CAG  report  and  

emphasized that till the completion of investigation no conclusion should be  

drawn by the Court on the culpability of respondent No.5.  Learned senior  

counsel repeatedly emphasized that his client should not be condemned in  

the  eyes  of  the  public  by  unwarranted  media  publicity  even  before  

completion of the investigation by the CBI and the authorities of the Income  

Tax Department.   

29

13. At this stage, we may mention that during the course of hearing, the  

learned  Solicitor  General  and  Shri  K.K.  Venugopal  stated  that  the  

Government  of  India  and  the  CBI  would  have  no  objection  to  a  Court  

monitored investigation by the CBI, but submitted that there is no reason for  

appointment of a Special Investigation Team.  The learned Solicitor General  

also  stated  that  the  present  incumbent  in  the  office  of  CVC will  recuse  

himself  from the supervision of the investigation being conducted by the  

CBI  in  connection  with  FIR  No.  RC-DAI-2009-A-0045  registered  on  

21.10.2009 or any other FIR, which may be registered in connection with  

grant of UAS licences.   Shri  K.K.Venugopal added that the investigation  

being  conducted  by  the  CBI  can  be  supervised  by  the  two  Vigilance  

Commissioners subject to the limitation contained in proviso to Section 8(1)  

of the Central Vigilance Act.

14. We have considered the respective submissions and carefully scanned the  

record.   We  have  also  gone  through  the  reports  produced  by  Shri  K.K.  

Venugopal and Shri Harin P. Raval.  In our opinion, the Division Bench of the  

High Court  committed a serious error by dismissing the writ  petition at  the  

threshold ignoring that  the  issues raised by the  appellants,  whose bonafides  

have not been doubted, are of great public importance.  We are, prima facie,  

30

satisfied that the allegations contained in the writ  petition and the affidavits  

filed  before  this  Court,  which  are  supported  not  only  by  the  documents  

produced by them, but also the report of the Central Vigilance Commission,  

which  was  forwarded  to  the  Director,  CBI  on  12.10.2009  and the  findings  

recorded by the CAG in the Performance Audit Report, need a thorough and  

impartial investigation.  However, at this stage, we do not consider it necessary  

to appoint a Special Team to investigate what the appellants have described as  

2G Spectrum Scam because the Government of India has, keeping in view the  

law laid down in Vineet Narain’s case and orders passed in other cases, agreed  

for a Court monitored investigation.   The reports produced before the Court  

show that the CBI and the Enforcement Directorate have started investigation  

in the right direction.  At the same time, keeping in view the statements made  

by the learned Solicitor General and the learned senior counsel representing the  

CBI and with a view to ensure that in a serious matter like this, comprehensive  

and coordinated investigation is conducted by the CBI and the Enforcement  

Directorate without any hindrance, we deem it proper to issue the following  

directions:

(i) The  CBI  shall  conduct  thorough  investigation  into  various  issues  

highlighted in the report of the Central Vigilance Commission, which  

was forwarded to the Director, CBI vide letter dated 12.10.2009 and  

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the  report  of  the  CAG,  who  have  prima  facie  found  serious  

irregularities in the grant of licences to 122 applicants,  majority of  

whom are said to be ineligible, the blatant violation of the terms and  

conditions of licences and huge loss to the public exchequer running  

into several thousand crores.  The CBI should also probe how licences  

were granted to large number of ineligible applicants and who was  

responsible for the same and why the TRAI and the DoT did not take  

action against those licensees who sold their stakes/equities for many  

thousand crores and also against  those who failed to fulfill  rollout  

obligations and comply with other conditions of licence.

(ii) The CBI shall conduct the investigation without being influenced by  

any  functionary,  agency  or  instrumentality  of  the  State  and  

irrespective  of  the  position,  rank  or  status  of  the  person  to  be  

investigated/probed.

(iii) The CBI shall, if it has already not registered first information report  

in the context of the  alleged irregularities committed in the grant of  

licences from 2001 to 2006-2007, now register a case and conduct  

thorough investigation with particular emphasis on the loss caused to  

the public exchequer and corresponding gain to the licensees/service  

providers  and  also  on  the  issue  of  allowing  use  of  dual/alternate  

32

technology by some service providers even before the decision was  

made public vide press release dated 19.10.2007.   

(iv) The CBI shall also make investigation into the allegation of grant of  

huge  loans  by  the  public  sector  and  other  banks  to  some  of  the  

companies which have succeeded in obtaining licences in 2008 and  

find out whether the officers of the DoT were signatories to the loan  

agreement executed by the private companies and if so, why and with  

whose permission they did so.

(v) The Directorate of Enforcement / concerned agencies of the Income  

Tax  Department  shall  continue  their  investigation  without  any  

hindrance or interference by any one.

(vi) Both the agencies, i.e., the CBI and the Directorate of Enforcement  

shall  share  information  with  each  other  and  ensure  that  the  

investigation is not hampered in any manner whatsoever.

(vii) The  Director  General,  Income  Tax  (Investigation)  shall,  after  

completion  of  analysis  of  the  transcripts  of  the  recording  made  

pursuant  to  the   approval  accorded  by  the  Home  Secretary,  

Government of India, hand over the same to CBI to facilitate further  

investigation  into  the  FIR  already  registered  or  which  may  be  

registered hereinafter.

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15. The progress reports based on the investigations conducted by the CBI  

and the Enforcement Directorate shall be produced before the Court in sealed  

envelopes on 10.2.2011.

The case be listed for further consideration on 10.2.2011.

………………………….…J. [G.S. Singhvi]

New Delhi; ……………………………..J. December 16, 2010 [Asok Kumar Ganguly]

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