Centre For Public Interest Litigation Vs U.O.I..

Page 1

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

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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

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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.

2) 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:

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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.

3) It is also averred that IBSPL had an ISP-A license since

November 2007 and had just one subscriber with revenue of Rs.

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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.

4) 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.

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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.

5) 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

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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

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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.

6) 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

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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.

(xi) 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

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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.”

7) 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

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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

Resources1 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.”

8) 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 India2 (hereinafter referred 1 (2012) 10 SCC 1 2 (2012) 3 SCC 1

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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,

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which has attempted to explain the factual position in much

greater detail and reference thereto shall be made at the

appropriate stage.

9) 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.

10) 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

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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

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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

11) 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

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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.

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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

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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.

12) 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?

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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.”

13) 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

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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.

14) 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

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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

15) 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.

16) 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

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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.

17) 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

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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.

2. 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.

3. 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

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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.”

4. 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

5. 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.

6. 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.

7. 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:

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“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).

8. 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

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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.

9. 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.

10. 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...”

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

the Government not only with regard to introduction of Unified

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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.

19) 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. Sharma3, 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

3 (2014) 8 SCC 804

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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

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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.”

20) 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 India4 and reiterated in Federation of Railway

Officers Assn. v. Union of India5 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

4 (2000) 10 SCC 664 5 (2003) 4 SCC 289

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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.”

21) 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 India6 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”.

15.3. 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

6 (2013) 6 SCC 620

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in constitutional or statutory mandate, court's interference is not called for.

15.4. 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.

15.5. 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.”

22) 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 India7

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

7 (1978) 3 SCC 459 : AIR 1978 SC 1296 : 1978 Cri LJ 1281

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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.”

23) 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 India8 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.”

24) 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

8 (1992) 2 SCC 343

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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 Government9. 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 unfair10.

25) 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

9 (See : Administrative Law: Text and Materials (4th Edition) by Beatson, Matthews, and Elliott) 10 Ibid

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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.

26) 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?

27) 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.

28) This submission lacks substance. During the course of

arguments, the learned Solicitor General successfully

demonstrated that what was auctioned in 2010 was spectrum,

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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.”

29) It becomes apparent from the above that the spectrum was

different from license inasmuch as award of spectrum did not

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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.

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30) 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?

31) 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.

32) 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

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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.

33) 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

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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?

34) 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.

35) 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

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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”.

36) 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.

37) In the first instances, we may observe that once the policy

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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 4 th 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

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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.

38) 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.

39) 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

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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.

40) 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

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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.

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41) 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

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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.

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42) 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.

43) 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

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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.

44) With this, we address ourselves to the remainder issue, namely,

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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 01.04.2010

DoT Order 25.02.2010

2x4.4 2 3 2x6.2 3 4 2x8

4 5

2x10 6 2x12.5 5 7 2x15 6 8

45) 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

Writ Petition (C) No. 382 of 2014 Page 49 of 55

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BWA services' wherein additional 1% SUC was recommended.

46) 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'.

47) 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.

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Page 51

48) 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.”

49) 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:

Writ Petition (C) No. 382 of 2014 Page 51 of 55

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“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 … ...”

50) 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

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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.

51) 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

Writ Petition (C) No. 382 of 2014 Page 53 of 55

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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%.

52) 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 Writ Petition (C) No. 382 of 2014 Page 54 of 55

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being, we leave the matter to the Government to take an

appropriate decision in this behalf.

53) 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.

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