W.P.(C) No.363/2008 Page 1 of 22 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) No.363/2008 Judgment delivered on 1st July, 2009 S. TEL LTD. ..... Petitioner Through : Mr. Dayan Krishnan and Mr. Gautam Narayan, Advocate Versus Union of India ..... Respondent Through : Mr. P.P. Malhotra, ASG with Ms. Divya Chaturvedi, Advocate CORAM: HON'BLE MR. JUSTICE G.S.SISTANI 1. Whether reporters of local papers may be allowed to see the Judgment ? Yes 2 To be referred to the Reporter or not? Yes 3 Whether the judgment should be reported in the Digest? Yes G.S. SISTANI, J. : 1. Petitioner seeks quashing of the impugned Press Release dated 10.01.2008 issued by the Respondent to the extent that it deprives the petitioner from being granted Letters of Intent for USA Licences for 16 circles applied for after 25.9.2007 but before the government announcement cut-off date of 1st October, 2007. 2. As per the petition providing of Cellular Mobile Services (Services) was governed by the National Telecom Policy (NTP 1994), which was announced in the year 1994. The services are offered using 2G technologies, namely, Global System for Mobile communications (GSM Services) and Code Division Multiple Access (CDMA Services). GSM Service is being provided since 1994-1995 and CDMA Service is being provided since W.P.(C) No.363/2008 Page 2 of 22 1997-1998. Prior to 1999, all licenses were issued based on the highest bids received from the applications. There was a cap as regards the maximum number of operators which was restricted to two for each service area. The telecom service was liberalized by the National Telecom Policy (NTP 1999), which introduced various changes including the fixed one time entry fee and ongoing revenue sharing for licence, increase the licensees to four operators, which included BSNL as the third operator and the fourth operator was chosen based on highest bids received from applicants. This process was completed in the year 2000. Accordingly, all licensees subsequently migrated from fixed licence fee regime to revenue share regime. From 2003, the service providers were permitted to choose the preferred technology i.e. GSM, CDMA or any other technology, for providing the service under a Composite Unified Access Service Licence and unlimited mobility was permitted for CDMA service as well. However, each of the respective licensees was allowed to provide the service using the chosen technology and not all the technologies. The cap for maximum number of operators was also removed and all aspiring applicants who were willing to pay the entry fee paid by the fourth operator and agreed to abide by revenue share conditions, were made eligible to obtain licences. 3. On 13.04.2007, Government of India, requested the Telecom Regulatory Authority of India (hereinafter referred to as “the TRAI”) to furnish its recommendations in terms of Section 11(1)(a) of the Telecom Regulatory Authority of India Act, 1997. W.P.(C) No.363/2008 Page 3 of 22 The Government sought various recommendations including on the issue whether a limit should be put on the number of access service providers in each service area. 4. On 12.06.2007 a consultation paper was issued by the TRAI in respect of the various issues referred to it in the above mentioned communication dated 13.04.2007. One of the Issues in the said consultation paper was as to whether the number of service providers in each area should be limited. The consultation paper dealt with the issue, namely, “determining a cap on number of access provider in each service area” in Chapter 6 of the said paper. The TRAI also formulated two questions for ready reference: “6.51 The issue for consideration are as follows: Q1. Should there be a limit on number of access service providers in a service area‖ If yes, what should be the basis for deciding the number of operators and how many operators should be permitted to operate in a service area? Q2. Should the issue of deciding the number of operators in each service area be left to the market forces?” 5. In terms of the extant policy the petitioner applied for UASL licences to provide mobile telecom service for 6 circles on 07.07.2007. Date License area / Circles July 7th 2007 (6 circles) All Category „C‟ Circles – Assam, Bihar, Himachal Pradesh, North East, Orissa and Jammu & Kashmir 6. There was no deadline for filing applications to the Government, for UASL, and it was not even contemplated. W.P.(C) No.363/2008 Page 4 of 22 7. The TRAI gave its recommendations in terms of Section 11 of the TRAI Act on 28.08.2007. The recommendation in respect of entry limit in access service provision was dealt with in Chapter 2 of the said report. The TRAI recommendations on this aspect are extracted below:- “2.35 The authority has thus reviewed various arguments and counter arguments evidences cited by the stakeholders representing conflicting view points in this matter. The Authority has extensively surveyed the empirical evidences on its own, through published material and has carefully examined the sector experience and the existing provisions of the license agreement governing access service provision. The Authority has also examined the whole issue from the standpoint of the current and upcoming technological developments. Principle of competition and other vital economic criteria have also guided the Authority in understanding this crucial issue of entry regulation in the access service market. Separately, the Authority has examined issues relating to the utilization of spectrum keeping in view the emerging scenario of spectrum availability, optimum use of spectrum, requirements of market and competition in the market. It is noteworthy these are the guiding principles that have been laid down in NTP, 1999. 2.36 Having considered all the above aspects and considering the implication of having to suggest a framework covering other issues that have been referred by the Government; the Authority is not in favour of suggesting a cap on the number of access service providers in any service area. It is not advisable to exogenously fix the number of access service providers in a market which is in a dynamic setting. 2.37 Accordingly, the Authority recommends that no cap be placed on the number of access service providers in any service area.” 8. It is evident from the recommendations that the TRAI was against any limit on the number of access service providers in any service area. The TRAI also issued a press release No.74 of 2007 whereby the above mentioned recommendations were published and circulated for publication on 29.08.2007. 9. Learned counsel for the petitioner contends that contrary to the recommendations of the expert body i.e. the TRAI, the Government proposed to fix 01.10.2007 as a dead line for W.P.(C) No.363/2008 Page 5 of 22 receiving UASL applications and decided that no further applications would be received from the said date. Accordingly, the press note dated 24.09.1007 was issued. It is further contended that although the deadline was contrary to the existing policy for processing licences and contrary to the advice of the expert Regulatory Authority, namely, the TRAI, the petitioner in compliance with the press note applied for UASL licences in 16 circles to provide mobile telecom service on 28.09.2007. September, 28th 2007 (16 Circles) All Category ‗A‘ and ‗B‘ Circles – Mumbai, Delhi, Kolkata, Andhra Pradesh, Gujarat, Karnataka, Maharashtra, Tamil Nadu, West Bengal, Haryana, Kerala, Madhya Pradesh, Punjab, Rajasthan, Uttar Pradesh East and West 10. It is submitted that the petitioner acted on the promise of the Government and made the necessary application within the stipulated deadline and, thus, a right accrued in favour of the petitioner for being considered for the grant of UASL licences and the petitioner has fulfilled all required criteria. The Department of Telecommunications received the applications of the petitioner without any demur. Meanwhile, the Department of Telecommunications issued a press release dated 19.10.2007, accepting the TRAI recommendation that there should be no cap on the number of access providers in any service areas. 11. Learned counsel for the petitioner contends that the Minister of Communication and Information Technology wrote to the Prime Minister on 02.11.2007 seeking to revise the deadline of W.P.(C) No.363/2008 Page 6 of 22 01.10.2007 fixed by the Government, as per the press note dated 24.09.2007. The Minister indicated that only those applications for UASL that were received prior to 25.09.2007 would be considered. This letter was published in the Economic Times. 12. It is strongly urged before this Court that the aforesaid communication apart from arbitrarily revising the cut off for receiving applications given in the press release of 24.10.2007 also lost sight of the fact that the Government by its press release of 19.10.2007 had reiterated the earlier position of ”no cap of service providers” Thus, the revision of the cut off was not only arbitrary but without application of mind. 13. Learned counsel for the petitioner contends that revision of the deadline has far reaching consequences as similar mobile services are provided by using radio frequency spectrum, which are admittedly a scarce national resource. Spectrum is allocated in 900 MHz and 1800 MHz band for GSM service and in 800 MHz for CDMA service. The licence conditions provided for initial spectrum of 4.4 MHz for GSM service and 2.5 MHz for CDMA service. 14. It is also contended that the service providers are required to pay a percentage of their revenue as Spectrum charges, apart from the licence fees. Thus, the licensee would be entitled to such Spectrum band/capacity as per the technology it opts for providing the service. Accordingly, separate contracts are drawn for spectrum allocation with Wireless Planning and Coordination, which is the concerned authority under W.P.(C) No.363/2008 Page 7 of 22 Department of Telecommunications, in this regard. Any additional Spectrum was subject to prescribed minimum subscribers achieved by the service provider. The basis for determination of prescribed minimum subscribers achieved by the service provider was raised as an issue during late 2007, with a view to regulate and achieved optimum utilization of Spectrum. In the process, TRAI and Telecom Engineering Center under Department of Telecommunications recommended that the service provider must achieve an increase between „ two to six times‟ and „up to eighteen times‟ of the present norms respectively, depending on the service area. As of now, the TRAI‟s recommendations are the accepted norms for allocation of additional Spectrum. At present, it is learnt that, limited spectrum is available for immediate allocation between all the present and new applicant service providers, providing/wanting to provide GSM Service. Hence licenses/allocation of spectrum are being considered on first- come-first-served basis by the Department of Telecommunications. The race for Spectrum are between the existing service providers who are claiming for additional Spectrum for their existing service areas, existing service providers who are awaiting start up Spectrum in service areas for which they have obtained licences, existing CDMA service providers who are wanting to provide GSM Service in their existing service areas, and the new entrant applicants. Therefore, it is crucial for all qualifying applicants to obtain W.P.(C) No.363/2008 Page 8 of 22 Letters of Intent/licences without being discriminated inter se amongst themselves. 15. The petitioner, with a view to establish his bona fide and credibility as regards to his financial and technical capability, made a representation to the Prime Minister on 05.11.2007. The representation was also made on 27.12.2007 to the Minister for Communications. The petitioner was shocked and surprised to see the press note dated 10.01.2007 issued, by virtue of which, the Government arbitrarily decided to issue letters of intent to all eligible applicants who applied upto 25.09.2007. 16. It is submitted that the revision of the deadline for submission of applications to 25.09.2007 is without any basis or rationale inasmuch as the Government had reiterated the extant policy that there would be no cap on the service providers and that the underlying basis of the UASL guidelines was to increase competition. 17. It is stated that the petitioner is a serious contender. Even otherwise, the Department of Telecommunications has no doubt on its financial and technical capability, which is evident from the fact that the Government/Department of Telecommunication, pursuant to its decision to process applications received till 25.09.2007 issued Letters of Intent dated 10.01.2008 for the six circles applied by the petitioner on 07.07.2007. 18. The petitioner vide its letter dated 11.01.2008 represented to the Department of Telecommunication and raised a grievance W.P.(C) No.363/2008 Page 9 of 22 as regards the non-grant of Letters of Intent for 16 circles for which it had applied on 28.09.2007. 19. Learned counsel for the petitioner submits that the preponement and fixation of cut off date of 25.09.2007 is arbitrary and ex facie not based on any rational basis discernible from the impugned press note dated 10.01.2008. While relying upon D.R. Nim Vs. Union of India, reported at AIR 1967 SC 1305, counsel submits that the date of 25.09.2007 has been irrationally picked out of the hat. 20. Learned counsel for the petitioner also relies upon D.S. Nakara Vs. Union of India, reported at 1983 (1) SCC 305, wherein the Apex Court struck down the pension scheme to those who had retired before the cut off date. The Apex Court ruled that “this division which classified pensioners into two classes is not based on any rational principle and if the rational principle is the one of dividing pensioners with a view to give something more to persons otherwise equally placed, it would be discriminatory”. 21. Counsel for the petitioner further placed reliance on B. Prabhakar Rao v. State of A.P. [1985 Supp. SCC 432], where the principles regarding fixation of dates with reference to the same class of employees has been elaborately discussed by the Supreme Court. Attention was invited to page 461: ―Now if all affected employees hit by the reduction of the age of superannuation formed a class and no sooner than the age of superannuation was reduced, it was realized that injustice had been done and it was decided that steps should be taken to undo what hand been done, there was no reason to pick out a class of persons who deserved the same treatment and exclude from the benefits of the beneficent treatment by classifying them as a separate group merely because of the delay in taking the remedial action already W.P.(C) No.363/2008 Page 10 of 22 decided upon. We do not doubt that the Judge‘s friend and counselor, ‗the common man‘, if asked, will unhesitatingly respond that it would be plainly unfair to make any such classification. The commonsense response that may be expected from the common man, untrammeled by legal lore and learning, should always help the Judge in decided question of fairness, arbitrariness, etc. Viewed from whatever angle, to our minds, the action of the Government and the provisions of the legislation were plainly arbitrary and discriminatory. The principle of Nakara clearly applies. The division of government employees into two classes, those who had already attained the age of 55 on February 28, 1983 and August 23, 1984 on the one hand, and the rest on the other and denying the benefit of the higher age of superannuation to the former class is as arbitrary as the division of government employees entitled to pension in the past and in the future into two classes, that is, those that had retired prior to a specified date and those that retired or would retire after the specified date and confining the benefits of the new pension rules to the latter class only‖. 22. Counsel also draws the attention of the Court in the case of All India Reserve Bank Retired Officers Assn. v. Union of India, reported at 1992 Supp (1) SCC 664, wherein the Apex Court upheld the cut-off date on the ground that there was no homogenous group and the two retirement schemes were different. The Court drew a distinction between the continuance of the existing scheme in its liberalized form and the introduction of the new scheme and held that the cut-off date is not violative of Article 14. The following observations of the Court were relied upon: “There is no doubt that whenever any rule or regulation having statutory flavor is made by an authority which is a State within the meaning of Article 12 of the Constitution, the choice of the cut-off date which has necessarily to be introduced to effectuate such benefits is open to scrutiny by the Court and must be supported on the touchstone of Article 14. If the choice of the date results in classification or division of members of a homogeneous group it would be open to the Court to insist that it be shown that the classification is based n an intelligible differentia and on rational consideration which bears a nexus to the purpose and object thereof. The differential treatment accorded to those who retired prior to the specified date and those who retired subsequent thereto must be justified on the touchstone of Article 14, for otherwise it would be offensive to the philosophy of equality enshrined in the Constitution‖. 23. Per contra learned Additional Solicitor General of India has submitted that present petition is based on wrong facts and W.P.(C) No.363/2008 Page 11 of 22 incorrect averments. The petitioner in the garb of the present petition is indirectly trying to seek a writ of Mandamus for Reservation /Allocation of Spectrum for its UAS licences. It is contended that 575 applications for UAS licences, were received till the cut-off date i.e.1.10.2007 from 46 applicant companies in respect of 22 service areas in the country. In view of the volume of applications, competent authority decided to issue letter of intent (LOI) to all eligible applicants for UASL, who applied up to 25.9.2007 (i.e. the date, on which the cut-off date for receipt of applications were made public through press) in each service area, at present on uniform basis. It is next contended that accordingly a press release was issued in this respect on 10.1.2008. As per the decision taken by the competent authority, 16 eligible applicant companies have been issued 121 LOIs out of 232 UASL applications received up to 25.9.2007 from 22 companies. Learned ASG submits that none of the applications received after 25.9.2007 have been considered and all such applications have been kept in abeyance, thus the action on the part of the respondents is uniform and not arbitrary and neither the petitioner has been singled out. Learned counsel contends that the pending UASL applications shall be considered subsequently in terms of the Government policy. In the counter affidavit, the brief chronology of licensing of CMTS /UAS has been given. The relevant portion of which is reproduced below: ―(viii) The number of UASL applications have been increasing and there were already about 5 to 8 licensed Access Service Providers in each service area. The increase in number of applications had W.P.(C) No.363/2008 Page 12 of 22 increased the demand of GSM spectrum in a substantial manner. Therefore, a reference was made to TRAI on 13.4.2007, inter-alia, seeking their recommendations whether to put a limit on the number of access service providers in each service area. TRAI was also requested to give its recommendation on certain other terms and conditions of Access Service Providers licences. The recommendations of TRAI dated 28-8-2007 were received on 29th August, 2007, inter-alia, recommending that no cap be placed on the number of access service providers in any service area. (ix) The TRAI‘s recommendations were examined in DoT and were placed before the Telecom Commission on 10.10.2007. After approval of the Telecom Commission, the matter was considered by the Government and the matter was decided on 17.10.2007. Accordingly Press Release submitted on 18.10.2007 was approved on 19.10.2007 and the Press release was published by PIB on the website and circulated to Press on 19.10.2007 itself announcing the Government decision on TRAI‘s recommendation. TRAI‘s recommendation, inter alia, that there should be no cap on the number of access providers in a service area has been accepted by the Government. (x) It was observed that there has been a spurt in the number of applications received by DOT for grant of USA licenses after receipt of TRAI recommendations including no cap on number of licences in any service area. Therefore, a cut-off date was announced as 1.10.2007 standing that no new USAL application will be received after this cut- off date till further orders. A copy of Press Release dated 24.9.2007 which appeared in press on 25.9.2007, in this regard is enclosed as Annexure R-3. (xi) It is mentioned that 575 applications for UASL licences were received till the cut-off date, i.e. 01-10-2007, from 46 applicant companies in respect of 22 service areas in the country. (xii) it is submitted that 232 UASL applications were received till 25.9.2007 from 22 different companies. (xiii) In view of the volume of applications, competent authority decided to issue Letter of Intents (LOIs) to all eligible applicants for UASL who applied upto 25-9-2007 (i.e. the date on which the cut-off date for receipt of applications were made public through press) in each service area. (xiv) Accordingly a press release was issued in this respect on10- 01-2008. With the appropriate decision by the competent authority, 16 eligible applicant companies have been issued 121 LOIs out of 232 UASL applications received upon 25.09.2007 from 22 different companies. (xv) It is respectfully submitted that Government has not rejected the remaining 343 (=575-232) applications filed within the period of 26.09.2007 and 1.10.2007. Further proceeding of pending UASL shall be considered subsequently in terms of Government policy. 24. Learned counsel for the respondent further submits that as per clause 5.1 of the terms and conditions of the licence, the terms of licence can be modified if in the opinion of the licensor it is W.P.(C) No.363/2008 Page 13 of 22 necessary for expedient to do so in public interest. The parawise reply to the writ petition is reproduced below: “1. The averments made in para 1 need no comment. 2. The averments made in para 2 of the petition are denied and disputed. It is denied that press release dated 10.01.2008 of the DoT is arbitrary, discriminatory, irrational, unfair, unreasonable, incorrect and induced a legitimate expectation devoid of any cogent reasons. Further it is also denied that the said impugned decision is violative of all principles if level playing field, natural justice. It is also denied that the said impugned decision of the DoT is contrary to any representations of the Government. The contents of para 2 of Preliminary Submissions may also be read as part and parcel of reply in respect of para 2 of the petition. 3. The contents in Para 3 are admitted to the extent the averments are part of the record and rest are denied. Further processing on pending UASL applications (received after 25.09.2007) shall be considered subsequently in terms of Government policy. 4. The contents in para 4 are admitted to the extent the averments are part of the record and rest are denied. Further processing of pending UASL applications (received after 25.09.2007) shall be considered subsequently in terms of Government policy. 5. In response to the contents in Para 5(a) to (x), it is submitted that the preliminary submissions and ‗Submissions On Voluntary Offer Of the petitioner for Spectrum Allocation‘ as stated hereinabove be read as reply to this para and further are admitted to the extent the averments are part of the record and rest are denied. 6. That the averments, claims and submission of the petitioner made in the grounds (A to V) in Para 6 are absolutely false, frivolous and denied in its entirety. The petitioner has concealed material facts in this petition. The answering respondent denies all the averments made in the petition except those which are matter of record and specifically admitted herewith as these are factually wrong and misleading. The petitioner herein is trying to create confusion to twist the facts in their interest. It is submitted that Spectrum is to be allocated as per eligibility and laid down policy as amended