ALLOCATION OF SPECTRUM & UAS LICENCES CHALLENGED

Readers will recall that in our October-December 2008 issue, we had published a letter addressed by Common Cause in October 2007 to the Chairman, Telecom Commission and Secretary, Department of Telecommunication (DoT), urging him to allocate 2G spectrum through ascending auctions open to all applicants, so that the true economic value of this precious and finite national resource could be realized. The vigilance angle of the exercise being undertaken by DoT was also brought to the notice of the Central Vigilance Commissioner. The DoT, however, proceeded in an arbitrary and non-transparent manner with the grant of United Access Service Licences, with concomitant allocation of spectrum, at prices discovered in 2001, when the telecom market was at a nascent stage. The glaring irregularities committed in the process and the loss occasioned to the exchequer have been highlighted by the Comptroller & Auditor General of India. 

Common Cause has joined hands with Centre for Public Interest Litigation and like-minded eminent citizens and organizations to file a writ petition in the Supreme Court to undo the wrong done by DoT. The petitioners have urged that in the interest of the telecom sector and the national exchequer, the allocation of 2G spectrum made by DoT and the telecom licences issued pursuant to its press releases dated January 10, 2008 be declared as illegal and the spectrum auctioned, as was done in the case of 3G spectrum in 2010.

— Editor

SYNOPSIS

The petitioners are filing the instant writ petition in public interest seeking appropriate writ for cancellation of the entire allocation of 2G spectrum and telecom licences made by the Department of Telecommunications on or after 10th January 2008 pursuant to its 2 press releases dated 10.01.2008. Allocation of precious 2G spectrum and licences carried out by the DoT under its then Minister A. Raja was marred by multiple illegalities, corruption and favouritism. Irregularities and illegalities have also been recorded and commented upon by 2 judgments of Delhi High Court and detailed report of the Comptroller and Auditor General (CAG). According to the judgment of Delhi High Court (which was upheld by this Hon'ble Court) the change in the cut-off date on the basis of which spectrum was allotted was arbitrary and illegal. According to the CAG, 85 of the 122 licences were given to operators who were not even eligible and as many as 343 applications were wrongly not even considered by the DoT. Now, Telecom Regulatory Authority of India (TRAI) has said that 69 of the 122 licences have failed to roll-out their services as mandated by the condition on which they got the telecom licence.

According to the calculations made by the CAG, the said allocation caused a loss of a whopping Rs. 1.76 lakh crores making it the biggest scam in the history of the Indian republic. DoT under its then Minister A. Raja ignored the advice of the Prime Minister, Finance Minister, Law Minister, Finance Secretary, Telecom Secretary, Member (Finance), TRAI and avoided the deliberations of the Cabinet, EGoM or the Telecom Commission and went on to arbitrarily award the precious 2G spectrum (a scarce finite asset) at throwaway prices on a n on-transparent, unfair process designed to benefit a few favoured companies. At the instance of the CVC, CBI registered an FIR against "unknown officers of the DoT" and "private individuals" under the Prevention of Corruption Act and other sections of IPC.

Thus, it is in the fitness of things, and in the interest of the telecom sector and the national exchequer, that the entire allocation of 2G spectrum and telecom licences made by DoT in January 2008 be held to be illegal, licences be cancelled, spectrum be taken back by the Government and then auctioned as was done in 2001 and has been done in 2010. Internationally, in most legal systems, transactions tainted by bribery/corruption or made in violation of established norms and procedures are considered illegal and unenforceable. The same must be held in this case. In addition, punitive damages must be imposed on companies that made false declarations or who violated their undertakings given to the government.

The CAG in the conclusion of its reports has stated the following:

In conclusion, it is observed that despite having themselves sought the opinion of the Ministry of Law and Justice, the Department of Telecommunications decided to ignore the advice received. The concerns of the Ministry of Finance were also not addressed for reasons which are not convincing. In fact, the directions of the Hon'ble Prime Minister evoked a response from the Hon'ble Minister of Communications and Information Technology on the same day. The letter contained assurances with regard to the availability of spectrum for all applicants as also with regard to the strict adherence to the FCFS policy for allocation of spectrum. The assurances, however, were not adhered to. The methodology for allocation of 2G spectrum, a scarce finite national asset and for which there was an unprecedented demand for allocation, was not deliberated upon by the full Telecom Commission. Audit is of the view that such discussion with different stake holders represented in the Telecom Commission would certainly have benefited Department of Telecommunications in arriving at a more credible and transparent procedure for allocation as also for ascertaining the true value of 2G spectrum. The entire implementation process does not withstand the test of scrutiny, and hence, the widely held belief that it has benefitted a few operators and has not been able to maximize generation of revenue from allocation of such a scarce resource. This has now been confirmed in Audit. The role of Telecom Regulatory Authority of India would also appear to have been reduced to that of a hapless spectator as its recommendations were either ignored or applied selectively. The entire process of allocation of 2G spectrum raises serious concern about the systems of governance in the Department of Telecommunications which need to be thoroughly reviewed and revamped. The fact that there has been loss to the national exchequer in the allocation of 2G spectrum cannot be denied. However, the amount of loss could be debated. To ensure that such lapses do not occur in any Ministry or Department of the Government, there is an imperative need to fix responsibility and enforce accountability for the lapses highlighted in the Audit Report.

The show cause notices the DoT is now planning to issue to ineligible allottees of spectrum and licencees and the ones who failed to meet their roll-out obligations, proceed from the erroneous premise that there was nothing irregular per se in the exercise of spectrum and licence allocation. These notices only obfuscate the real issues and divert attention from the massive fraud perpetrated on the nation by the DoT itself.

Petitioners humbly submit that the 2G spectrum and telecom licences were awarded by the DoT in most arbitrary and illegal manner which is a complete violation of rule of law resulting in violation of Article 14 of the Constitution.

Petitioners also humbly submit that the prevailing corruption in the country in high places seriously impairs the right of the people of this country to live in a corruption and criminal free society. This is a violation of Article 21 of the Constitution. The right to life guaranteed to the people of this country also includes in its fold the right to live in a society, which is free from crime and corruption.

Similar Matter Pending

Centre for Public Interest Litigation & Ors. Vs. Union of India & Ors. (SLP (C) 24873/2010) seeks a court-monitored investigation by CBI or an SIT into the 2G spectrum allocation scam. The said petition, pending before this Hon'ble court, raises similar issues and relies upon same documents. The said SLP has been heard by this Hon'ble court at considerable length. The petitioners humbly submit that this writ petition may be taken up along with the above SLP in order to save time of this Hon'ble court and for the sake of convenience.

LIST OF DATES

2007 Process of allotment of precious and scarce national resource Spectrum was initiated by the Department of Telecommunications (DoT). Universal Access Service (UAS) Licences along with 2G Spectrum for telecom services were to be awarded. Senior officials of DoT Mr. D.S. Mathur superannuated and Ms Manju Madhavan retired prematurely, who had argued against the allotment of spectrum on first come first served (FCFS) basis.

25.09.2007 After a few favoured companies had put in their applications (for eg. United Group on 24.09.2007 had put in 22 applications for UAS licenses through 8 companies), Telecom Ministry issued a press note (ante-dated as 24.09.2007) stating that it would not accept applications beyond 01.10.2007. During the next five days, 343 additional applications were received.

01.10.2007 As on this date, i.e. stated cut-off date, DoT receives 575 applications for UAS licences by 46 companies.

19.10.2007 DoT sends out press release announcing change in rollout obligations and M&A norms. TRAI protests, but DoT ignored it.

26.10.2007 DoT asks Law Ministry for its opinion on how to deal with so many (575) applications.

01.11.2007 The Law Ministry replies to the DoT that it should refer the matter to E-GoM. This was not done.

02.11.2007 After a lot of concerns were raised in some quarters, Prime Minister wrote to the Telecom Minister Mr. Raja directing him to ensure that 2G spectrum was allocated in a fair, transparent and efficient manner and also to ensure that licence fee was properly revised. This was not done and many of Prime Minister's demands were rejected by Mr. Raja.

22.11.2007 Secretary, Ministry of Finance wrote to the Secretary, Department of Telecommunications expressing concerns over the procedure adopted for the allocation of 2G spectrum. The letter also stated, "It is not clear how the rate of Rs. 1,600 crore, determined as far back as in 2001, has been spliced for a licence given in 2007 without any indexation, let alone current valuation. Moreover, in view of the financial implications, the Ministry of Finance should be consulted in the matter before you finalize the decision. I request you to kindly review the matter." The demand for the review was rejected.

10.01.2008 DoT issued a controversial press release. It stated that DoT has decided to issue licences on first-come-first-served basis. It stated that those who applied till 25.09.2007 would be given licences. Thus, the last date for submission of the applicants was advanced from 01.10.2007 to 25.09.2007 by an announcement made much after period was over.

Later in the same day DoT at about 2.45 pm posted an announcement on its website that those who apply between 3.30 to 4.30 pm would be issued licences. Those who deposited their fees along with documentation first were favoured in accordance with the controversial `first come first served' system. Thus the favoured few companies had their drafts of hundreds of crores and documentation ready. The DoT awards 122 LOIs to the favoured ones on the same day. Pan-India licenses consisting of 22 Circles were awarded at about Rs. 1,658 crore. FCFS definition changed from the "date of application" to "date of submission of compliance to LOI".

2008 The new UAS licensees sold their licenses at very high premium. Swan Telecom sold 45% of its shares for Rs. 4,200 crores which had obtained the licence for only Rs. 1,537 crores despite not having any assets. Unitech Wireless sold 60% of its stake to Telenor for Rs. 6,200 crores which had obtained the spectrum for Rs. 1,651 crores. Tata Teleservices sold 26% of its share to NTT DoCoMo, Japan for Rs. 13,230 crores. Shyam Telecom also sold majority of its shares to Sisterna.

04.05.2009 A detailed complaint was made by the Petitioner No. 2 to the Central Vigilance Commission (CVC) on the illegalities in the allocation of spectrum to Loop Telecom.

19.05.2009 Another detailed and well-documented complaint was made by Shri Arun Agarwal, an expert in exposing financial scams, was made to CVC, which according to his calculation has cost the country Rs. 50,000 crores. His complaint specifically deals with the case of a company

known as Swan Telecom which had no assets and yet was granted spectrum at throwaway prices. The said complaint inter alia states:

"As for the mystery as to who owns Swan Telecom, which even the Ministry of Company Affairs is not able to solve, the answer is: it is the company/person which bought 992 crore worth of Rs. 1/-, 8% preference shares invested by Reliance Communication in Swan Telecom by paying a hefty premium of Rs. 999 which was overvalued by 99900% is the actual owner of Swan Telecom. The company which bought the investment of Reliance Communication at the fantastic overvalued price is reportedly registered in Mauritius.

The trading of Swan Telecom, by transfer of ownership of the holding company owning 90% of the shares. Tiger Trustee took place on the very day that the other license application of the ADAG group-Reliance Communication- was given the license. The fact that the Swan Telecom with an asset of Rs. 1100 crores in paid up capital was sold for a mere Rs. 4.99 crores on the very the license was granted to Reliance Communication 18/10/07- establishes that the sale was a bribe for giving the license."

2009 Acting on the said complaints, CVC finds a prima facie case and directs the Central Bureau of Investigation (CBI) to investigate the corruption in allocation of 2G spectrum.

01.07.2009 The decision of arbitrary cut-off date was held illegal by a single judge bench of this Hon'be cort in WP (C) 363/2008 vide a judgment delivered on 01.07.2009 that held:

"The respondent cannot be allowed to arbitrarily change the cutoff date and that too without any justifiable reasons…the impugned press release dated 10.01.2008 is quashed."

This decision has been upheld subsequently and as per prevailing position the press release announcing the cut-off date of 25.09.2007 stands quashed.

21.10.2009 CBI after preliminary investigation, registers a case and files an FIR under various sections of the IPC and Prevention of Corruption Act. The case has been registered by CBI vide RC DAI 2009 A 0045 dated 21.10.2009 u/s 120-B of IPC r/w Sec 13(2) r/w Sec 13(1)(d) of Prevention of Corruption Act, 1988 against "unknown officers of the Department of Telecommunications (DoT) and unknown private persons/companies and others".

22.10.2009 In an unprecedented move, CBI raids the offices of DoT.

16.11.2009 CBI sought help from the Directorate General of Income Tax regarding information on Ms. Nira Radia of M/s. Noesis Consultancy and records pertaining to middlemen regarding award of 2G spectrum licences. The letter from CBI to DGIT (Investigations) states that "The allegation being investigated is relating to criminal conspiracy between certain public servants and private persons in grant of UAS Licenses in the year 2007-08.

It has been reliably learnt that certain middlemen including one Ms. Nira Radia of N/s. Noesis Consultancy were actively involved in the above mentioned criminal conspiracy. It is understood that the office of Director General of Investigation, Income Tax keeps information regarding such undesirable contact persons using various methods of surveillance including telephonic surveillance. In case your office is in possession of any information or records pertaining to any middleman including Ms. Nira Radia regarding award of UAS licenses, the same may please be made available to this office for the purpose of investigation."

20.11.2009 Pursuant to the said request, certain information was given by the Income Tax department which clearly shows the serious offences under the Prevention of Corruption Act have been committed. It shows that a large number of corporate players were involved in influencing the policies of Department of Telecommunications using extraneous and illegal means. The information received shows that one middleman Ms. Nira Radia was directly in touch with the Telecom Minister A. Raja (Respondent No. 5). Letter from the DGIT to CBI states:

"On the basis of specific information received from the CBDT; the telephone lines of M/s. Nira Radia and some of her associates were put under observation after obtaining permission from the Home Secretary. Ms. Nira Radia is Chief of M/s. Vaishnavi Corporate Consultants Pvt. Ltd., M/s. Noesis Strategic Consulting Services Pvt. Ltd., Ms. Vitcom and M/s. Neucom Consulting. These companies are involved in consulting in Telecom, Power, Aviation and Infrastructure. These entities not only manage the media but as per conversations, apparently try to influence policy changes and decisions of the various government departments to suit the commercial requirements of their clients.

1. From Conversations it appears that Ms. Nira Radia might have had some role with regards to the award of Telecom licenses. In a conversation she guides a new telecom operator on the need to delay the inflow of funds from the overseas investor and not to give the impression to the government that here has been any `windfall' profit.

2. There are some direct conversations between Ms. Radia and Telecom Minister. In some other conversations Ms. Radia Boasts to have helped some of the telecom operators in their efforts to obtain licenses/spectrum's. Radia has also been in regular touch with Shri Chandolia."

24.11.2009 The Division Bench of the Delhi High Court headed by Hon'ble Chief Justice dismissed the appeal challenging the decision of the single judge and also imposed a cost of Rs. 20,000 on Union of India stating that its actions were tantamount to changing the rules after the game has begun and were arbitrary and irrational.

12.03.2010 Supreme Court refuses to interfere with the judgments of the Delhi High Court declaring the retrospective advancement of the cut-off date as arbitrary and illegal.

May 2010 For the allocation of 3G spectrum, an embarrassed Government constitutes a GoM thereby reducing the DoT under Mr. Raja as a mere implementing body and not a policy making one. A transparent public auction is therefore conducted.

08.11.2010 CAG submits its report finalized. It estimates the loss of Rs. 1.76 crore loss to the exchequer. It directly indicts Mr. A. Raja. It also indicates collusion between DoT officials and industry. The CAG also finds out that out of 122 UAS licenses issued on 10.01.2008, 85 licenses were issued to ineligible companies.

18.11.2010 Trai writes to the DoT stating that 69 licencees out of 122 did not fulfill mandatory rollout obligations.

IN THE SUPREME COURT OF INDIA

(CIVIL ORIGINAL JURISDICTION)

Writ Petition (Civil) No 423 Of 2010

Public Interest Litigation

In the matter of:

Centre for Public Interest Litigation

New Delhi-110001 …Petitioner No. 1

Lok Satta

Hyderabad-500016 …Petitioner No. 2

Telecom Watchdog

Karol Bagh, Delhi-110003 …Petitioner No. 3

Common Cause

Vasant Kunj, New Delhi …Petitioner No. 4

Mr. J M Lyngdoh

Ranga Reddy District, Andhra Pradesh …Petitioner No. 5

Mr. T S Krishnamurthy

Chennai-600018 …Petitioner No. 6

Mr. N Gopalaswami

Chennai-600017 …Petitioner No. 7

Mr. P Shankar

Chennai-600031 …Petitioner No. 8

Mr. Julio F. Ribeiro

Mumbai-400030 …Petitioner No. 9

Mr. Paranjoy Guha Thakurta

Gurgaon-122001 …Petitioner No. 10

Admiral (Retd.) R. H. Tahiliani

Gurgaon-122001 …Petitioner No. 11

Versus

Union of India

New Delhi-110001 … Respondent No. 1

Etisalat DB Telecom Pvt. Ltd.

New Delhi-01 … Respondent No. 2

Unitech Wireless Group

Gurgaon-122002 … Respondent No. 3

Loop Telecom Pvt. Ltd

(Shippingstop DotCom P. Ltd)

New Delhi-110001 … Respondent No. 4

Videocon Telecommunications Ltd.

Gurgaon-122015 … Respondent No. 5

S tel Ltd.

Gurgaon-122001 … Respondent No. 6

Allianz Infratech (P) Ltd

Noida-201301 … Respondent No. 7

Idea Cellular

& Aditya Birla Telecom Ltd.

(Spice Communications Pvt Ltd)

New Delhi-110001 … Respondent No. 8

Tata Teleservices Ltd

New Delhi-110065 … Respondent No. 9

Sistema Shyam Tele Services Ltd

(Shyam Telelink Ltd)

Jaipur-302021 … Respondent No. 10

Dishnet Wireless Ltd & Aircel Ltd

Gurgaon-124002 … Respondent No. 11

Vodafone Essar South Ltd.

& Vodafone Essar Spaectel Ltd.

New Delhi-110020 … Respondent No. 12

TO THE HON'BLE CHIEF JUSTICE OF INDIA AND HIS COMPANION JUDGES OF THE HON'BLE SUPREME COURT OF INDIA

The Humble Petition of the Petitioners above-named

MOST RESPECTFULLY SHOWETH: -

1) That the petitioners are filing the instant writ petition in public interest seeking appropriate writ for cancellation of the entire allocation of 2G spectrum and telecom licences issued by the Department of Telecommunications (hereinafter `DoT') on the basis of 2 press releases issued on 10th January 2008. Allocation of precious 2G spectrum and licences carried out by the DoT under its then Minister A. Raja was marred by multiple illegalities, corruption and favouritism. Irregularities and illegalities have also been recorded and commented upon by 2 detailed judgments of Delhi High Court and detailed report of the Comptroller and Auditor General of India (hereinafter `CAG'). According to the CAG, 85 of the 122 licences were given to companies who were not even eligible and as many as 343 applications were wrongly not even considered by the DoT. Now, Telecom Regulatory Authority of India (hereinafter `TRAI') has recommended that 69 of the 122 licences be cancelled since the licencees have failed to roll-out their services as mandated by the condition on which they got the licences.

2) According to the calculations made by the CAG, the said allocation caused a loss of a whopping Rs. 1.76 lakh crores making it the biggest scam in the history of the Indian republic. DoT under its then Minister A. Raja ignored the advice of the Prime Minister, Finance Minister, Law Minister, Finance Secretary, Telecom Secretary, Member (Finance), TRAI and avoided the deliberations of the Cabinet, EGoM or the Telecom Commission and went on to arbitrarily award the precious 2G spectrum (a scarce finite asset) at throwaway prices in a non-transparent manner, and followed unfair processes designed to benefit a few favoured companies. At the instance of the CVC, CBI registered an FIR against "unknown officers of the DoT" and "private individuals" under the Prevention of Corruption Act and other sections of IPC.

3) Thus, it is in the fitness of things, and in the interest of the telecom sector and the national exchequer, that the allocation of 2G spectrum and telecom licences made by DoT pursuant to its 2 press releases issued on 10.01.2008 be held to be illegal, licences be cancelled, spectrum be taken back by the Government and then auctioned as was done in 2001 and has been done in 2010. Internationally, in most legal systems, transactions tainted by bribery / corruption or made in violation of established norms and procedures are considered illegal and unenforceable. The same must be held in this case. In addition, punitive damages must be imposed on companies that made false declarations or who violated their undertakings given to the government.

The Petitioners

4) Petitioner No. 1, Centre for Public Interest Litigation, is a registered society formed for the purpose of taking up causes of grave public interest and conducting public interest litigation in an organized manner. Its founder President was the late Shri V.M. Tarkunde and its Executive Committee consists of several senior advocates including Shri Fali S. Nariman, Shri Shanti Bhushan, Shri Anil Divan, Shri Rajinder Sachar, Shri Colin Gonsalves among others. CPIL has also filed another PIL regarding 2G spectrum allocation seeking a thorough court-monitored investigation.

5) Petitioner No. 2 is Lok Satta, a registered society dedicated to political and governance reforms and fight against corruption, through its National Coordinator Dr Jayaprakash Narayan. The Lok Satta movement has done pioneering work in the field of election reforms, right to information and anti-corruption campaigns. Its work formed the basis of 2002 landmark judgment of this Hon'ble court mandating certain disclosures by election candidates.

6) Petitioner No. 3 is Telecom Watchdog, a non-governmental organisation registered under the Societies Registration Act, 1860, with the purpose of sincerely working for the noble cause of protecting the national interest, the interest of telecom consumers, and the public at large. It has established its credentials as a genuine public interest organization in several cases filed before the Hon'ble Delhi High Court, Hon'ble Supreme Court, Telecom Tribunal, and the Standing Committees of Parliament, dealing with telecommunication issues based on extensive research. Telecom Watchdog had sent a detailed complaint to CVC regarding 2G spectrum allocation.

7) Petitioner No. 4, Common Cause, is a registered society that was founded in 1980 by late H. D. Shourie for the express purpose of raising common problems of the people and securing their resolution. It has brought before the Hon'ble Supreme Court of India and Hon'ble High Courts various Constitutional and other important issues and has established its reputation as a bona fide public interest organization. Common Cause has raised the issue of arbitrary allotment of 2G spectrum for the past 3 years.

8) Petitioner No. 5, 6 and 7 are Mr. J M Lyngdoh, Mr. T S Krishnamurthy and Mr. N Gopalaswami respectively. All of them are former Chief Election Commissioners (CECs).

9) Petitioner No. 8 is Mr. P Shankar, former Central Vigilance Commissioner.

10) Petitioner No. 9 is Julio F. Ribeiro, a retired IPS officer. He has served as DGP of Gujarat, DGP of Punjab, Commissioner of Police, Mumbai and as DG of CRPF.

11) Petitioner No. 10 is senior journalist Mr. Paranjoy Guha Thakurta. Educated at St. Stephan's college and Delhi School of Economics, he started his career as a journalist in 1977. He has worked in publications such as Business India, Business World, The Telegraph, India Today and The Pioneer. He anchored about 1400 daily discussion programs on CNBC and since 2007 he anchors 2 weekly programs for Lok Sabha Television. He is a visiting faculty member for over a dozen institutions including IIMs, IIT, FTII, IIFT, DU, JNU, JMI. Mr. Thakurta has repeatedly raised the issue of arbitrary allotment of spectrum in different forums.

12) Petitioner No. 11 is Admiral Tahiliani. He is the former Governor and Chief of Naval Staff. He has served for many years as Chairperson of Transparency International India and now serves as its Mentor.

The Respondents

13) Respondent No. 1 is the Union of India through its Secretary, Department of Telecommunications (DoT).

14) Respondent No. 2 to Respondent No. 12 are the beneficiaries of the allotment of the 2G spectrum and/or licences issued by the DoT since January 2008.

The Case in Brief

15) The entire 2G spectrum scam was a multi-stage, well thought out, deliberate act where a criminal conspiracy was hatched between private companies/persons and officials of Department of Telecom (DoT) in order to circumvent an open transparent auction process and choosing first-come-first-served (FCFS) method for awarding licenses bundled with 2G spectrum to favored few by violating several provisions of the law and established rules, deviating from TRAI recommendations, while pretending to follow them. Additionally, established procedure for giving licenses with spectrum since 2003 was also vitiated and manipulated while making public claims that department is following existing precedents of the policy that existed since 2003. The act was carried out by DoT officials in collusion with private enterprises and is matter of the CBI FIR.

16) The modus-operandi of the said scam was:

• Granting 2G spectrum at 2001 prices when it was a nascent market rather than at contemporary market prices in 2008 when there was huge demand and the prices had increased by at least 10 times.

• Inviting companies who were not in the telecom business to put in applications for licences for 2G spectrum.

• Granting licences on "first come first served" basis rather than through a transparent public auction. Even the FCFS method was not properly applied as priority was fixed at the last moment from the date of compliance with LOI conditions rather than the date of receipt of applications. This was purposely done to favour select companies who had advance knowledge of DoT announcements.

• Resorting to the announcement of arbitrary cut-off date (01.10.2007) to stop legitimate applicants from applying, thereby creating sellers (who were not in the telecom business) and buyers (genuine telecom companies who could not apply or were left out due to the manner in which cut-off date was implemented).

• Advancing the cut-off date retrospectively and illegally to award precious 2G spectrum only to a handful of applicants (122 out of 575).

• Cherry-picking and manipulating multiple recommendations of the TRAI to award licences to a favoured few companies in violation of the TRAI Act.

• Further allowing these companies to sell equity or conduct private auctions and garner large sums.

• Ignoring specific directions of the Law Ministry to seek the opinion of the Empowered Group of Ministers (EGoM) in the matter.

• Deliberately ignoring that most of the licencee applicants did not even fulfill the mandatory eligibility criteria.

• Not cancelling the licence of the firms who failed to carry out their mandatory network roll-out obligations.

17) The DoT had in the past followed the policy of FCFC but it had been discontinued due to unavailability of spectrum. Since 2006-07 new licences with spectrum were not allotted and the applications were kept pending by DoT. But after Mr. A Raja took over as the Telecom Minister, process of allotment of precious and scarce national resource Spectrum was initiated in 2007 by the Department of Telecommunications. Universal Access Service (UAS) Licences along with 2G Spectrum for telecom services were sought to be awarded. At that time, the latest recommendation of TRAI was of 28.08.2007 on "Review of license terms and conditions and capping of number of access providers."

18) After a few favoured companies had put in their applications (for eg. Unitech Group on 24.09.2007 had put in 22 applications for UAS licenses through 8 companies), Telecom Ministry issued a press note on 25.09.2007 (ante-dated as 24.09.2007) stating that it would not accept applications beyond 01.10.2007. During the next five days, 343 additional applications were received.

19) As on this date, i.e. stated cut-off date, DoT received 575 applications for UAS licences by 46 companies.

20) DoT on 19.10.2007 issued a press release which clearly deviates from TRAI recommendations regarding roll-out and mergers & acquisitions.

21) The Law Minister wrote to DoT that considering the importance of the issue, it should be referred to an Empowered Group of Minister. This was rejected by the Telecom Minister who stated that the advice of the Law Ministry was `out of context.'

22) After a lot of concerns were raised, the Prime Minister wrote to the Telecom Minister Mr. Raja directing him to ensure that 2G spectrum was allocated in a fair, transparent and efficient manner and also to ensure that licence fee was properly revised and auction is considered. The then Telecom Minister replied on the same day rejecting the suggestions made by the Prime Minister.

23) Secretary, Ministry of Finance on 22.11.2007 wrote to the Department of Telecommunications expressing concerns over the procedure adopted for the allocation of 2G spectrum. The letter also stated, "It is not clear how the rate of Rs. 1,600 crore, determined as far back as in 2001, has been spliced for a license given in 2007 without any indexation, let alone current valuation. Moreover, in view of the financial implications, the Ministry of Finance should be consulted in the matter before you finalize the decision. I request you to kindly review the matter." This demand for the review was rejected

24) On 25.11.2007, Telecom Secretary and Member Finance of the Telecom Commission wrote an internal note indicating that only proper and legally justifiable way of allocating spectrum would be through auctions

25) On 10th January, 2008, DoT issued 2 controversial press releases making major changes in policy implementation regarding spectrum allocation. The first press release stated that DoT has decided to issue licences on first-come-first-served basis. It stated that those who applied till 25.09.2007 would be given licences. Thus, the last date for submission of the applications was advanced from 01.10.2007 to 25.09.2007 by an announcement made much after that period was over. Later in the same day DoT at about 2.45 pm posted an announcement on its website that those who apply between 3.30 to 4.30 pm would be issued licences. Those who deposited their fees along with documentation first were favoured in accordance with the controversial `first come first served' system. Thus the favoured few companies had their drafts of hundreds of crores of rupees and documentation ready. The DoT awarded 122 LOIs to the favoured ones on the same day. Pan-India licenses consisting of 22 Circles were awarded at about Rs 1,658 crore. FCFS definition was changed from the "date of application" to "date of submission of compliance to LOI". In addition, the DoT released 2G start-up spectrum to 22 new licensees on the same day, who were awarded UAS license without spectrum in 2006. (Chairman of TRAI wrote a letter to DoT on 14.01.2008 protesting that TRAI recommendations were not only violated by the DoT and but it violated the provisions of law also.

26) The new UAS licensees sold their licenses at very high premium. Swan Telecom sold 45% of its shares for Rs 4,200 crores which had obtained the licence for only Rs 1,537 crores without having any assets. Unitech Wireless sold 60% of its stake to Telenor for Rs 6,200 crores which had obtained the spectrum for Rs. 1,651 crores. Tata Teleservices sold 26% of its share to NTT DoCoMo, Japan for Rs. 13,230 crores. Shyam Telecom also sold majority of its shares to Sistema.

27) One of the petitioners herein, Telecom Watchdog, also made complaints to various government bodies including the CVC. It specifically highlighted that Essar illegally obtained two UAS licenses for the same service areas across the country. In 2008, it acquired another pan-India UAS license through Loop Telecom Pvt Ltd, whereas it already has 33.01 per cent stake in another operating company Vodafone Essar Ltd. A company cannot even apply for licence if it is already in operation with 10 per cent or more equity stake.

28) A detailed and well-documented complaint was made to CVC by Shri Arun Agarwal, an expert in exposing financial scams, on the 2G spectrum allotment which according to his calculation has cost the country Rs 50,000 crores. His complaint specifically dealt with the case of a company known as Swan Telecom which had no assets and yet was granted spectrum at throwaway prices. The said complaint inter-alia states:

"As for the mystery as to who owns Swan Telecom, which even the Ministry of Company Affairs is not able to solve, the answer is: it is the company/person which bought 992 crore worth of Re 1/-, 8% preference shares invested by Reliance Communication in Swan Telecom by paying a hefty premium of Rs. 999 which was overvalued by 99900% is the actual owner of Swan Telecom. The company which bought the investment of Reliance Communication at the fantastic overvalued price is reportedly registered in Mauritius.

The trading of Swan Telecom, by transfer of ownership of the holding company owning 90% of the shares- Tiger Trustee- took place on the very day that the other license application of the ADAG group-Reliance Communication- was given the license. The fact that the Swan Telecom with an asset of Rs 1100 crores in paid up capital was sold for a mere Rs 4.99 crores on the very day the license was granted to Reliance Communication -18/10/07- establishes that the sale was a bribe for giving the license."

29) The decision to advance the cut-off date post-facto was held to be arbitrary and illegal by a Delhi High Court on 01.07.2009. The Court held: "The respondent cannot be allowed to arbitrarily change the cutoff date and that too without any justifiable reasons…the impugned press release dated 10.01.2008 is quashed." Thus the very basis on which spectrum and licences were allotted was held to be illegal.

30) In October 2009, acting on various complaints, CVC directed the CBI to register a case and investigate the allotment of 2G spectrum. CBI after preliminary investigation, registered a case and filed an FIR on 21.10.2009 under various sections of the IPC and Prevention of Corruption Act. The case has been registered by CBI vide RC DAI 2009 A 0045 dated 21.10.2009 u/s 120-B of IPC r/w Sec 13(2) r/w Sec 13(1)(d) of Prevention of Corruption Act, 1988 against "unknown officers of the Department of Telecommunications (DoT) and unknown private persons/companies and others". In an unprecedented move, CBI raided the offices of Department of Telecom on 22.10.2010.

31) On 16.11.2009, CBI sought help from the Directorate General of Income Tax regarding information on Ms. Nira Radia of M/s Noesis Consultancy and records pertaining to middlemen regarding award of 2G spectrum licences. Pursuant to the said request, certain information was given by the Income Tax department which clearly shows the serious offences under the Prevention of Corruption Act have been committed. It shows that a large number of corporate players were involved in influencing the policies of Department of Telecommunications using extraneous and illegal means. The information received shows that one middleman Ms. Nira Radia was directly in touch with the Telecom Minister A. Raja.

32) The Division Bench of the Delhi High Court headed by Hon'ble Chief Justice on 24.11.2009 dismissed the appeal challenging the decision of the single judge regarding the cut-off date and also imposed a cost of Rs. 20,000 on Union of India stating that its actions were tantamount to changing the rules after the game has begun and were arbitrary and irrational. On 12.03.2010, this Hon'ble court refused to interfere and disturb the findings of the Delhi High Court which held the change in cut-off date to be illegal.

33) CAG submits its final report on the issue of 2G spectrum allocation in November 2010. It estimates the loss of astronomical Rs.1.76 lakh crores to the exchequer. It directly indicts Mr A Raja. It also indicates collusion between DoT officials and industry. The CAG also finds out that out of 122 UAS licenses issued on 10.01.2008, 85 licenses were issued to ineligible companies. The CAG indicts the DoT for subverting all procedures and norms in allocating 2G spectrum. TRAI also writes to DoT on 18.11.2010 stating that 69 out of 122 licences have failed to fulfill their mandatory roll-out obligations.

34) The CAG in the conclusion of its reports has stated the following:

In conclusion, it is observed that despite having themselves sought the opinion of the Ministry of Law and Justice, the Department of Telecommunications decided to ignore the advice received. The concerns of the Ministry of Finance were also not addressed for reasons which are not convincing. In fact, the directions of the Hon'ble Prime Minister evoked a response from the Hon'ble Minister of Communications and Information Technology on the same day. The letter contained assurances with regard to the availability of spectrum for all applicants as also with regard to the strict adherence to the FCFS policy for allocation of spectrum. The assurances, however, were not adhered to. The methodology for allocation of 2G spectrum, a scarce finite national asset and for which there was an unprecedented demand for allocation, was not deliberated upon by the full Telecom Commission. Audit is of the view that such discussion with different stake holders represented in the Telecom Commission would certainly have benefitted Department of Telecommunications in arriving at a more credible and transparent procedure for allocation as also for ascertaining the true value of 2G spectrum. The entire implementation process does not withstand the test of scrutiny, and hence, the widely held belief that it has benefitted a few operators and has not been able to maximise generation of revenue from allocation of such a scarce resource. This has now been confirmed in Audit. The role of Telecom Regulatory Authority of India would also appear to have been reduced to that of a hapless spectator as its recommendations were either ignored or applied selectively. The entire process of allocation of 2G spectrum raises serious concern about the systems of governance in the Department of Telecommunications which need to be thoroughly reviewed and revamped. The fact that there has been loss to the national exchequer in the allocation of 2G spectrum cannot be denied. However, the amount of loss could be debated. To ensure that such lapses do not occur in any Ministry or Department of the Government, there is an imperative need to fix responsibility and enforce accountability for the lapses highlighted in the Audit Report.

35) The show cause notices that the DoT is now planning to issue to ineligible allottees of spectrum and licencees and the ones who failed to meet their roll-out obligations, proceeds from the erroneous premise that there was nothing irregular per se in the exercise of spectrum allocation. These notices only obfuscate the real issues and divert attention from the massive fraud perpetrated on the nation by the DoT itself.

36) Under these circumstances, petitioners humbly submit to this Hon'ble court that the entire process of allotment of spectrum was non-transparent, unfair and tainted with all kinds of violation of rules and procedures. Even according to the CBI FIR crimes under Prevention of Corruption Act were committed during allotment of 2G spectrum and telecom licences. The CAG has computed that the national exchequer suffered a loss of Rs. 1.76 lakh crores. The very basis of the allotment, i.e. the cut-off date, was held to be illegal by the courts. Thus, the allotment of 2G spectrum made pursuant to press releases issued on 10th January 2008 should be cancelled in its entirety and spectrum & licence should be freshly allotted after a transparent auction process. The Government of India should also be directed to recover from the licencees of 2G spectrum the windfall profits they may have received by selling the spectrum, or as equity in companies in which the sole or substantial asset is the spectrum obtained through irregular means.

37) The Government of India or its agencies or public sector companies may be contemplating to allocate, or in the process of allocating other resources in telecom sector in the form of 2G, 3G or WiMax or other licenses without any transparent, fair, or competitive processes. The Government and its agencies and undertakings should be prohibited from issuing any such license or allocate any spectrum or other resources without following transparent, fair, competitive procedures.

38) The Petitioners have not filed any other writ, complaint, suit or claim in any manner regarding the matter of dispute in this Hon'ble court or any other court or tribunal throughout the territory of India.

Grounds

A. That the 2G spectrum and telecom licences were awarded by the DoT in most arbitrary and illegal manner which is a complete violation of rule of law resulting in violation of Article 14 of the Constitution.

B. That the very basis of the entire allocation was the cut-off date which was retrospectively advanced by the DoT. This change in the cut-off date was held to be illegal by 2 detailed judgments of the Delhi High Court (which were not interfered by this Hon'ble Court). Hence the very basis of the spectrum and licence allocation has been held to illegal.

C. That according to the CAG, 85 of the 122 licencees were not even eligible and according to TRAI 69 of 122 licencees have not roll-out their services violating mandatory undertakings.

D. That the arbitrary issuance of licences cost the exchequer a huge sum of Rs. 1.76 lakh crores as per the CAG report and it is essential that this loss is redeemed.

E. That the companies which got the licence out of turn as brought about by the CAG report cannot be the beneficiaries of their own wrong. It is in the fitness of things that the entire spectrum be taken back by the Government and put to auction so that scarce spectrum can be fairly and transparently allocated giving proper revenue to the national exchequer.

F. That the DoT violated the provisions of the TRAI Act by not resending the recommendations back to TRAI before deviating from its crucial recommendations on no cap, roll-out obligations and on mergers & acquisitions.

G. That the prevailing corruption in the country in high places seriously impairs the right of the people of this country to live in a corruption and criminal free society. This is a violation of Article 21 of the Constitution. The right to life guaranteed to the people of this country also includes in its fold the right to live in a society, which is free from crime and corruption.

Prayers

In view of the facts & circumstances stated above, it is most respectfully prayed that this Hon'ble Court in public interest may be pleased to: -

a. Issue an appropriate writ cancelling the entire allocation of 2G spectrum and telecom licences made by DoT on or after 10.01.2008 pursuant to its 2 press releases issued on 10th January 2008.

OR

b. Issue an appropriate writ canceling the allotment of spectrum and telecom licence made by the DoT on or after 10.01.2008 of the 85 licencees who have been found to be ineligible by CAG and of the 69 licencees who have been found not to have been rolled-out their services by TRAI.

c. Direct the Union of India to recover punitive damages from companies that made false claims or declarations in their applications for UAS licences and from those companies which defaulted on their undertakings given to the government.

d. Direct the Union of India to recover windfall profits that may have been obtained through sale of spectrum, or as equity in companies whose sole or substantial asset is the spectrum allocated by the Government.

e. Issue an appropriate writ prohibiting the Union government, or its departments from allocating any other resources or spectrum without following fair, transparent and competitive processes in future.

f. Issue or pass any writ, direction or order, which this Hon'ble court may deem fit and proper under the facts and circumstances of the case.

Petitioners

Through

PRASHANT BHUSHAN

Counsel for the Petitioners

Drawn By: Pranav Sachdeva

Oct - December, 2010