2012 (8) TMI 683 - SC - Indian Laws

Supreme Court affirms Finance Minister's innocence in spectrum pricing and equity dilution allegations

The Supreme Court upheld the Special Judge's decision, dismissing allegations of conspiracy and corruption against the Finance Minister regarding fixing ... Cheating the Government Exchequer by Non- Revision of Entry Fee - Fixing the price of the spectrum licence at 2001 level and permitting two companies ‘Swan’ and ‘Unitech’ which received the licence and to dilute their shares even before roll-out of their services - Shri P. Chidambaram, Finance minister has conspired with Shri A Raja in fixing the price of the spectrum at 2001 level thereby committed the offence of criminal misconduct - causing huge loss to the exchequer - Held that:- The Authority is guided by the need to ensure sustainable competition in the market keeping in view the fact that there are new entrants whose subscriber acquisition costs will be far higher than the incumbent wireless operators - A cost-benefit analysis of allocating additional spectrum beyond 10 MHz to existing wireless operators and and finding it to be appropriate to go in for additional acquisition fee of spectrum instead of placing a cap on the amount of spectrum that can be allocated to any wireless operator - Keeping in view the objective of growth, affordability, penetration of wireless services in semi-urban and rural areas, the Authority is not in favour of changing the spectrum fee regime for a new entrant. The Authority recommends that any licensee who seeks to get additional spectrum beyond 10 MHz in the existing 2G bands i.e. 800,900 and 1800 MHz after reaching the specified subscriber numbers shall have to pay a onetime spectrum charge at the above mentioned rate on prorata basis for allotment of each MHz or part thereof of spectrum beyond 10 MHz. The Internal Committee of DoT considered the above recommendations made by TRAI and its report was placed before the Telecom Commission, but Finance Secretary and other three non-permanent members were not informed of that meeting, but attended only by the officials of DoT and the report of the Internal Committee was approved by the Telecom Commission. Shri A. Raja accepted the recommendations of Telecom Commission, thus did not get in touch with the Ministry of Finance to discuss and finalise the spectrum pricing formula which had to include incentive for efficient use of spectrum as well as disincentive for suboptimal usage in terms of the Cabinet decision of 2003 - Above facts would indicate that neither Shri P. Chidambaram nor the officials of MoF had any role in the various decisions taken by TRAI on 28.8.2007, decision taken by the Internal Committee of DoT and the decision of the Telecom Commission. Shri P. Chidambaram and Shri A. Raja met on 29.5.2008 and 12.6.2008 but the Finance Secretary and Telecom Secretary had already met on 24.4.2008, had agreed that it might not be possible to charge operators already having allocation upto 6.2 MHz and the principle of equity and level playing field would require that the operators who get fresh allotment of Spectrum upto 6.2MHz for GSM too should not be charged for Spectrum upto 6.2 MHz for GSM. Therefore, the allegation that Shri P. Chidambaram had over-ruled his officers’ views and had conspired with Shri A. Raja is without any basis - Criminal conspiracy cannot be inferred on the mere fact that there were official discussions between the officers of the MoF and that of DoT and between two Ministers, which are all recorded - meeting between Shri P. Chidambaram and Shri A. Raja would not by itself be sufficient to infer the existence of a criminal conspiracy so as to indict Shri P. Chidambaram - No materials on record do not show that Shri P. Chidambaram had abused his position as a Minister of Finance or conspired or colluded with A. Raja so as to fix low entry fee by non-visiting spectrum charges fixed in the year 2001 or he had deliberately allowed dilution of equity of the two companies. Issues Involved:1. Conspiracy in fixing the price of the spectrum at 2001 level.2. Obtaining valuable thing or pecuniary advantage by corrupt and illegal means.3. Deliberate allowance of dilution of equity by Swan Telecom Pvt. Ltd. and Unitech Wireless (Tamil Nadu) Ltd.4. Conspiracy in fixing different prices for spectrum bands for unlawful gain.5. Applicability of Section 13(1)(d)(i) to (ii) of the Prevention of Corruption Act (PC Act).Detailed Analysis:1. Conspiracy in Fixing the Price of the Spectrum at 2001 Level:The petitioner alleged that the then Finance Minister conspired with the then Telecom Minister to fix the price of the spectrum at the 2001 level, thereby committing the offence of criminal misconduct. The Special Judge found no substance in these allegations, stating that the Finance Minister had no role in the subversion of the process of issuance of LOI, UAS Licences, and allocation of spectrum in 2007-08. The Supreme Court noted that the Finance Minister had advocated for auctioning spectrum and had sent a note to the Prime Minister emphasizing the need for a transparent method of spectrum allocation. The materials on record did not indicate any conspiracy between the Finance Minister and the Telecom Minister.2. Obtaining Valuable Thing or Pecuniary Advantage by Corrupt and Illegal Means:The petitioner argued that the Finance Minister, by corrupt and illegal means, obtained for himself or for the Telecom Minister any valuable thing or pecuniary advantage. The Special Judge found no evidence to support this claim. The Supreme Court reiterated that there was no material to show that the Finance Minister had abused his position or conspired with the Telecom Minister to fix low entry fees by not revisiting spectrum charges fixed in 2001. The Finance Minister's actions were seen as part of his official duties without any corrupt intent.3. Deliberate Allowance of Dilution of Equity by Swan Telecom Pvt. Ltd. and Unitech Wireless (Tamil Nadu) Ltd.:The petitioner alleged that the Finance Minister deliberately allowed the dilution of equity by Swan Telecom Pvt. Ltd. and Unitech Wireless (Tamil Nadu) Ltd., causing a loss to the public exchequer. The Special Judge found no evidence to support this allegation. The Supreme Court noted that the Finance Minister had taken a stand that the operators who get fresh allotment of spectrum up to 6.2 MHz should not be charged for spectrum up to 6.2 MHz for GSM. This decision was made in consultation with the Telecom Secretary and was not indicative of any collusion or conspiracy.4. Conspiracy in Fixing Different Prices for Spectrum Bands for Unlawful Gain:The petitioner contended that the Finance Minister conspired with the Telecom Minister to fix one price for spectrum between 4.4 MHz and 6.2 MHz and another price for spectrum beyond 6.2 MHz for unlawful gain. The Special Judge found no substance in this claim. The Supreme Court observed that the Finance Minister had consistently advocated for a transparent method of spectrum allocation and had suggested auctioning spectrum beyond 6.2 MHz. The discussions and decisions were part of official duties and did not indicate any conspiracy.5. Applicability of Section 13(1)(d)(i) to (ii) of the PC Act:The petitioner argued that the actions of the Finance Minister fell within the scope of Section 13(1)(d)(i) to (ii) of the PC Act, which deals with criminal misconduct by a public servant. The Special Judge concluded that there was no evidence to support this claim. The Supreme Court agreed, stating that there were no materials to show that the Finance Minister had abused his official position or used corrupt or illegal means for obtaining any pecuniary advantage for himself or any other person, including the Telecom Minister.Conclusion:The Supreme Court upheld the Special Judge's order dated 04.02.2012, rejecting the petitioner's claims. The Court found no evidence of conspiracy, abuse of position, or corrupt practices by the then Finance Minister. The petitions were accordingly dismissed.