TaxTMI 
TaxTMI 
2010 (12) TMI 1252
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....roller and Auditor General of India (CAG) on the issue of licences and allocation of 2G Spectrum by the Department of Telecommunications, Ministry of Communications and Information Technology for the period from 2003-04 to 2009-10, which has been submitted to the President of India as per the requirement of Article 151 of the Constitution, a compact disc allegedly containing conversation of Ms. Niira Radia with some public representatives, businessmen, journalists and alleged middlemen and written submissions. 4. On 29.11.2010, Shri K.K. Venugopal, learned senior counsel appearing for the CBI produced two sealed envelopes containing status report prepared in relation to Case No.RCDAI 2009 A0045 (2G Spectrum case). 5. On 8.12.2010, Shri Harin P. Raval, learned Additional Solicitor General representing the CBI and the Directorate of Enforcement produced before the Court the report prepared by the Enforcement Directorate in a sealed envelope, which was opened in the Court. After going through the report, the report was placed in the sealed cover and returned to Shri Raval. 6. For detailed examination of the issues raised by the appellants, it will be useful to notice the back....
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....ement of the Telecom Regulatory Authority of India (Amendment) Act, 2000, fix the terms and conditions of inter-connectivity between the service providers; (iii) xxx xxx xxx (iv) regulate arrangement amongst service providers of sharing their revenue derived from providing telecommunication services; (v) xxx xxx xxx (vi) xxx xxx xxx (vii) xxx xxx xxx (viii) xxx xxx xxx (ix) ensure effective compliance of universal service obligations; (c) levy fees and other charges at such rates and in respect of such services as may be determined by regulations; (d) perform such other functions including such administrative and financial functions as may be entrusted to it by the Central Government or as may be necessary to carry out the provisions of this Act; Provided that the recommendations of the Authority specified in clause (a) of this sub-section shall not be binding upon the Central Government: Provided further that the Central Government shall seek the recommendations of the Authority in respect of matters specified in sub-clauses (i) and (ii) of clause (a) of this subsection in respect of....
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.... Department of Personnel as also the offer of migration to the existing licensees. However, no concrete action appears to have been taken except that the DoT had made available para-wise reply to the CAG. (x) In September/October, 2001, the Government accepted the recommendations of TRAI and 17 new CMTS licenses were issued to private companies as fourth operator (one each in 4 metro cities and remaining 13 in other telecom circles). (xi) On 25.1.2001, DoT issued guidelines for issue of license for basic telephone service. (xii) On 27.10.2003, TRAI forwarded its recommendations on Unified Licensing Regime. Paragraphs 7.15 to 7.19 and 7.37 to 7.39 of those recommendations are extracted below: "Recommendations on Entry Fee, Rollout obligations and Performance Bank Guarantee: 7.15 To decide the benchmark for the entry fee for Unified Access Licensing Regime three alternatives could be considered which are discussed in the subsequent paragraphs. 7.16 The first alternative could be inviting bids from existing operators as well as from the new prospective Unified Access Licensing Operators. This is possible since additional spectrum i....
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....Orange, one of the largest mobile operators in U.K., took almost seven years to break even. Even in India some of the Service providers have started making profits. A number of studies have shown that even at present tariff levels the addition of new subscribers is profitable. 7.18 The 3rd alternative is that the existing entry fee of the fourth Cellular Operator would be the entry fee in the new Unified Access Licensing Regime. BSOs would pay the difference of the fourth CMSP's existing entry fee and the entry fee paid by them. It may be recalled that, even in the past, entry to cellular and basic services has been on fixed fee basis, e.g., for metros in the case of cellular and for the second BSO. 7.19 It is recommended that the 3rd alternative as mentioned in para-7.18 above may be accepted for fixing the entry fee for migration to Unified Access Licensing regime for Basic and Cellular services at the circle level. xxx xxx xxx xxx xxx xxx xxx xxx xxx Competition 7.37 On the issue of introducing more competition, the TRAI has always been in favour of open and healthy competition. In its recommendations on the introduc....
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....by the Union Cabinet in its meeting held on 31.10.2003. Thereafter, NTP 1999 was amended vide office memorandum dated 11.11.2003. On the same day, guidelines were issued for Unified Access (Basic and Cellular) Services License (UASL). (xv) On 14.11.2003, TRAI clarified that the entry fee of the new Unified Licensee would be the entry fee of the 4th cellular operator and in service areas where there is no 4th operator - the entry fee of the existing BSO fixed by the Government (based on TRAI's recommendations). (xvi) In November, 2003, the DoT decided to accept and process UASL applications in the same manner as was done in the case of BSO applications. (xvii) On 13.1.2005, TRAI recommended that till Unified Licensing comes into effect, the current regime of spectrum pricing will continue and the telecom services should not be seen as a source of revenue for the Government. On 14.12.2005, revised UASL guidelines were issued. (xviii) On 13.4.2007, a reference was made to TRAI by the DoT stating that after finalisation of UASL policy, 159 licences had been issued for providing Access Services (CMTS/UASL/Basic) in the country and the Access Service P....
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.... license and the amount of spectrum with them varies from 2X4.4 MHz in CDMA technology. Therefore, to decide the cut off after which the spectrum is auctioned will be difficult and might raise the issue of level playing field." (xxi) The recommendations of TRAI were placed before Telecom Commission sometime in October, 2007. However, none of the four nonpermanent members of the Telecom Commission i.e. the Finance Secretary, Secretary, Department of Industrial Policy and Promotion, Secretary, Department of Information Technology and Secretary, Planning Commission were even informed about the meeting of the Telecom Commission. In that meeting, a committee of 6 officers all belonging to DoT was constituted and the committee submitted its report on 10.10.2007 virtually dittoing the recommendations of the TRAI. (xxii) Three of the four companies, which were providing CDMA based mobile services under UAS licence had applied in 2006 for permission to use GSM technology. At the relevant time, combination of technologies (CDMA, GSM and/or any other) was not permitted. Therefore, the DoT did not accept their request. After receipt of the recommendations of TRAI, a decision ....
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....ndent No.5 was received in his office, the Prime Minister sent a letter to him drawing his attention to the issues raised by the telecom sector companies and others on the processing of large number of applications in the backdrop of inadequate spectrum. The Prime Minister's letter was accompanied by a note in which five issues were identified. On the same day, respondent No.5 sent another letter to the Prime Minister stating that it will be unfair, discriminatory, arbitrary and capricious to auction the spectrum to new applicants as it will not give them level playing field. (xxviii) On 22.11.2007, the Finance Secretary wrote to the Secretary, DoT expressing his serious reservation on the decision of the DoT on the issue of determination of fee for grant of licences in 2007 at the rate determined in 2001. He emphasized that in view of the financial implications, the Ministry of Finance should have been consulted before finalizing the decision and requested that further action to implement the licences may be stayed. In reply, the Secretary DoT sent D.O. dated 29.11.2007 stating therein that entry fee was finalised for UAS regime in 2003 as per the decision of the Cabinet ....
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.... service providers in any service area and observed that on the one hand, the Government of India accepted the recommendation of the TRAI but acted just contrary by amending the cut off date and thereby limiting the service providers whose applications could be considered for grant of licence. The learned Single Judge held that there was no rational basis for fixing 25.9.2007 as the cut off date and there was no justification to change the rules of game after the game had begun. Accordingly, he allowed the writ petition and directed the respondents to consider the application of the writ petitioner for 16 circles. (xxxiv) L.P.A. No. 388/2009 filed by the Union of India against the order of the learned Single Judge was dismissed by the Division Bench and the order of the learned Single Judge was upheld. (xxxv) Special Leave Petition No. 33406/2009 filed by the Union of India, which was converted into C.A. No. 2355/2010 was disposed of by this Court on 12.3.2010 after taking into consideration the additional affidavit filed by the writ petitioner and suggestion made by the Attorney General. However, the finding recorded by the High Court on the issue of change of cu....
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....lied with the conditions on which they were permitted to use the spectrum and huge loss caused to the public exchequer by manipulative mechanism as also sale of equities by different licensees to foreign companies. Learned counsel referred to para 6.31(iv) of the TRAI recommendation to show that no proposal for permission for merger and acquisition could be entertained till the fulfillment of rollout obligations but DoT acted contrary to the TRAI recommendation without complying with fifth proviso to Section 11 of the Act and as a result of that the licensees violated the conditions of licence with impunity. Shri Bhushan submitted that the grant of licences on the basis of 2001 price in the garb of implementing the recommendations made by TRAI has resulted in loss to the public exchequer to the tune of more than Rs. 1,76,000 crores. 8. Learned counsel submitted that since the spectrum was scarce, the grant of licences on the basis of 2001 price was ex facie contrary to public interest and a mala fide action on the part of respondent No.5 and officers of DoT who had connived with the private operators and others including those in realty and infrastructure sectors for extraneous ....
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....his aspect as well to unearth the conspiracy between the companies engaged in realty and infrastructure sectors and the banks which enabled the former to earn huge profits without even complying with their obligations under the licence. 9. Shri K.K. Venugopal, learned senior counsel appearing for the CBI relied upon the judgments of this Court in Bhagwant Singh v. Commissioner of Police (1983) 3 SCC 344, State of West Bengal v. Sampat Lal (1985) 1 SCC 317, R.S. Sodhi v. State of U.P. (1994) Supp 1 SCC 143, Director, Central Bureau of Investigation v. Niyamavedi (1995) 3 SCC 601, Vineet Narain v. Union of India (1996) 2 SCC 199, Anukul Chandra Pradhan v. Union of India (1996) 6 SCC 354, Union of India v. Sushil Kumar Modi (1997) 4 SCC 770, Superintendent of Police, CBI v. Tapan Kumar Singh (2003) 6 SCC 175, M.C. Mehta v. Union of India (2007) 1 SCC 110, Divine Retreat Centre v. State of Kerala (2008) 3 SCC 542, Dukhishyam Benupani, Assistant Director, Enforcement Directorate (FERA) v. Arun Kumar Bajoria (1998) 1 SCC 52, Janta Dal v. H.S. Choudhary (1992) 4 SCC 305, D. Venkatasubramaniam and others v. M.K. Mohan Krishnamachari (2009) 10 SCC 488, State of Haryana v. Bhajan Lal (199....
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....al referred to the provisions of the Prevention of Money-Laundering Act, 2002 and the Foreign Exchange Management Act, 1999 and argued that soon after receiving complaint, which was forwarded by the Ministry of Finance, the Director General Income Tax (Investigation) sought permission from the Union Home Secretary for putting on surveillance the telephone lines of Ms. Niira Radia and her associates and on the basis of the approval granted by the latter, telephone lines of Ms. Niira Radia and her associates were put under surveillance. He submitted that after completion of the recording, a detailed investigation is being conducted under the supervision of the Director General Income Tax (Investigation). He invited the Court's attention to the report, which was produced in a sealed envelope to show that serious efforts are being made by the Department to find out whether there has been violation of the provisions contained in the two Acts and loss has been caused to the public exchequer. Learned counsel assured that the Department will produce report on the basis of further investigation conducted by it. 12. Shri T.R. Andhyarujina, learned senior counsel appearing for respondent N....
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....cial Team to investigate what the appellants have described as 2G Spectrum Scam because the Government of India has, keeping in view the law laid down in Vineet Narain's case and orders passed in other cases, agreed for a Court monitored investigation. The reports produced before the Court show that the CBI and the Enforcement Directorate have started investigation in the right direction. At the same time, keeping in view the statements made by the learned Solicitor General and the learned senior counsel representing the CBI and with a view to ensure that in a serious matter like this, comprehensive and coordinated investigation is conducted by the CBI and the Enforcement Directorate without any hindrance, we deem it proper to issue the following directions: (i) The CBI shall conduct thorough investigation into various issues highlighted in the report of the Central Vigilance Commission, which was forwarded to the Director, CBI vide letter dated 12.10.2009 and the report of the CAG, who have prima facie found serious irregularities in the grant of licences to 122 applicants, majority of whom are said to be ineligible, the blatant violation of the terms and conditions of li....