RELIANCE TELECOM LTD. & ANR. versus UNION OF INDIA & ANR.
[2017] 4 S.C.R. 972, Supreme Court of India, 2017
Outcome: Dismissed (Dismissed)
Segment: Ratio
A 
B 
[2017] 4 S.C.R. 972 
RELIANCE TELECOM LTD. & ANR. 
UNION OF INDIA & ANR. 
(Transfer Case (Civil) No. 43 of 2015) 
JANUARY 12, 2017 
[DIPAK MISRA AND PRAFULLA C. PANT, JJ.) 
Telecommunication: 
Spectrum auction - For allocation of spectrums in various 
C areas - Notice Inviting Application-2015 (NlA) - Terms and 
conditions of - Set by Central Government for the auction -
Challenged by participants in the NlA (telecom service providers) 
before High Courts - Interim orders by High Court - Supreme Court, 
in Special Leave Petition stayed order of High Court and permitted 
D the auction to continue - Cases Pending before High Courts 
transferred to Supreme Court - Court granted liberty to Central 
Government to finalize the auction - Plea inter alia that eligibility 
criteria of minimum bidding for different categories of bidders under 
different bands attracts the frown of Art. 14 of Constitution and 
E 
F 
that principle of capping keeps the petitioners away from bidding 
in respect of a particular quantum and makes the bid non-competitive 
- Held: The challenge pertaining to tender conditions formulated 
by the Central Government is not tenable as no valid grounds for 
interference have been made out -
The endeavour of the 
Government in the NIA is not based on any classification except 
that all service providers must have a minimum of 5 MHz of spectrum 
in order to deploy mobile technology - However, even if it is assumed 
that there is classification, the
classification of entities is on the 
basis of two sets of people i.e. (1) new entrants including the expiring 
licensees and (2) existing licensees both of whom ought to have 
minimum 5 MHz so as to enable to deploy on any mobile technology 
G - Such classification is based on intelligible differentia having a 
nexus with the object sought to be achieved and there is no violation 
of Art. 14 - Capping has been kept in vogue to have a bigger field 
and it is based on a rational principle to avoid monopoly and to 
create a healthy competitive bidding - The decision of Central 
Government is based on certain norms and parameters - It is a 
H 
972
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 
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ANR. 
policy decision which subserves the consumers' interest - Decision 
A 
to conduct the auction cannot be said to be mala fide or based on 
extraneous considerations - Constitution of India - Art. 14. 
Deeds and Documents: 
Notice Inviting Application (NIA) - Interpretation of Held: 
NIA being an invitation to offer, the rules of interpretation of B 
contracts would apply and not the rules that may be applied in the 
case of interpretation of statutes - In case of difference of opinion 
in the manner of interpretation, it is the interpretation of the party 
who is offering the contract ought to be adopted - Court, by way of 
mandamus, cannot require the State to interpret the clause in a given c 
way - Court can interpret the clause contrary to the way of 
interpretation by the offering party or literal interpretation, only 
on the limited grounds of judicial review by striking down the clause 
as arbitrary - Contract - Interpretation of Statutes. 
Legitimate Expectation: 
Concept of legitimate expectation has no role to play where 
State action is as a public policy or in public interest, unless the 
action taken amounts to an abuse of po,/;er. 
Judicial Review: 
Scope of judicial review - In respect of policy decisions in 
E 
fiscal matters - Held: The Court cannot get and dwell as an appellate 
authority into complex economic issues in exercise of power of 
judicial review- In the matters relating to complex
auction procedure 
having enormous financial ramification, interference by Court can . 
lead to· a situation which is not warrantable and may have F 
unforeseen adverse impact effecting fiscal imbalance - Interference 
in such auction should be only on the ground of stricter scrutiny, 
when the decision making process smacks of obnoxious 
arbitrariness or any extraneous consideration. 
Telecom Regulatory Authority of India Act, 2003: 
s.11 (J)(a) - Recommendations under - By Telecom Regulatory 
Authority of India - Whether binding on Central Government -
Held: Recommendations given u/s. 11 (l)(a) are not binding but 
deserve to be given due weightage. 
G 
H
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B 
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SUPREME COURT REPORTS 
[2017] 4 S.C.R. 
Dismissing the cases, the Court 
HELD: 1.1 The question of alteration of bid condition does 
not survive, as the petitioners have participated in the auction 
and have been successful in some of the areas. The present 
petitions have been deliberately kept alive by the telecom service 
providers only to retain their dominant positions to the detriment 
of the market and the subscribers. The challenge by the 
petitioners pertaining to tender conditions formulated by the 
Union of India invoking the power of judicial review is not tenable 
as no valid grounds for interference, have been made out. [Para 
17) [998-D-F) 
1.2 As the factual score depicts, the NIA had stipulated 
capping and simultaneously allowed certain categories to bid for 
a lesser quantum to enhance the existing spectrum with them so 
that they can reach a particular level. The reason shown by the 
respondents is that a minimum spectrum is determined to enhance 
D the efficiency and capability of the service providers so that the 
arrangement can be beneficial to the consumers and they can 
avail requisite benefit and have better service. The licensees 
who do not have the specific quantum can bid for the balance so 
that the efficiency of service is enhanced. If a minimum is provided 
E for a particular area or zone having regard to the necessity and 
the interest of the consumers, it subserves the larger public 
interest. The said stipulation might have
affected the individual 
interest of certain categories of licensees or aspirants but that 
cannot weigh over the public interest. [Para 67] [1029-C-F] 
F 
1.3 The decision taken by the Central Government is based 
upon certain norms and parameters. Though criticism has been 
advanced that it is perverse and irrational, yet it is a policy decision 
which subserves the consumers' interest. It is extremely difficult 
to say that the decision to conduct the auction in such a manner 
can be considered to be ma/a fide or based on extraneous 
G considerations. [Para 70) [1031-G] 
H 
1.4 When auction is held in respect of spectrum after taking 
into consideration certain range of facts and circumstances which 
are founded on economic and social policy factors, it is difficult to 
unsettle the NIA and the consequential effect thereof by applying
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 
975 
ANR. 
the principle of judicial review. The procedure adopted in this A 
• kind of auction is neither to be equated nor compared with the 
process meant for grant of ordinary largesse. It is because of its 
complexity, technical expertise, enormous financial impact and 
the larger public interest. [Para 71) [1032-C-D) 
1.5 In the present case, certain natural resources have been 
B 
put into auction. In that regard, a decision has been taken. The 
condition to put a cap and make a classification not allowing certain 
entities to bid is not an arbitrary one as it is based on the 
acceptable rationale of serving the cause of public interest. It 
allowed new entrants and enabled the existing entities to increase 
their cap to make the service more efficient. The Court cannot C 
get and dwell as an appellate authority into complex economic 
issues on the foundation of competitors advancing the contention 
that they were not allowed to bid in certain spheres. As the 
stipulation in the tender was reasonable and not based on any 
extraneous considerations, the Court cannot interfere in the NIA D 
in exercise of the power of judicial review. [Paras 74, 75) [1034-
A; 1035-C-D] 
1.6 The Court cannot interfere with the tender conditions 
only on the ground that certain amount of spectrum has not been 
put to auction. The submission is that whatever has been put to 
auction and is available should have been notionally added so
that the entities which have certain quantum of spectrum in 
praesenti could have participated in the auction and put forth their 
bids for a higher quantum. If there has been a reduction for a 
particular entity because of the terms and conditions of the tender, 
it has to accept it, for he cannot agitate a grievance that he could 
have obtained more, had everything been added notionally. 
Notionally adding up or not adding up is a matter of policy and 
that too a commercial policy and in a commercial transaction, a 
decision has to be taken as prudence would command. [Para 75] 
[1035-F-G; 1036-A-B) 
1.7 In the matters relating to complex auction procedure 
having enormous financial ramification, interference by the Courts 
based upon any perception which is thought to be wise or assumed 
E 
F 
G 
to be fair can lead to a situation which is not warrantable and may 
have unforeseen adverse impact. It may have the effect H
976 
SUPREME COURT REPORTS 
[2017) 4 S.C.R. 
A potentiality of creating a situation of fiscal imbalance. Interference 
in such auction should be on the ground of stricter scrutiny when 
the decision making process commencing from NIA till the end 
smacks of obnoxious arbitrariness or any extraneous 
consideration which is perceivable. [Para 76) (1036-E-G) 
B 
c 
D 
E 
F 
G 
H 
Tata Cellular v. Union of India (1994) 6 SCC 651 : 
(1994) 2 Suppl. SCR 122; Delhi Science Forum and 
others v. Union of India and another (1996) 2 SCC 
405 : (1996) 2 SCR 767; Raunaq International Ltd. v. 
I. V.R. Construction Ltd. and others (1999) l SCC 492 : 
[1998) 3 Suppl. SCR 421; Monarch Infrastructure (P) 
Ltd. v. Ulhasnagar Municipal Corpn. and others (2000) 
5 SCC 287 : [2000) 3 SCR 1159; Cellular Operators 
Association of India & others v. Union of India & others 
(2003) 3 SCC 186:(2002] 5 Suppl. SCR 222; Tata Iron 
& Steel Co. Ltd. v. Union of India and another (1996) 9 
SCC 709 : [1996] 3 Suppl .. SCR 808; Union of India v. 
International Trading Co. and another (2003) 5 SCC 
437:[2003) 1 Suppl. SCR 55; Directorate of Education 
v. Educomp Datamatics Ltd. and others (2004) 4 SCC 
19:(2004] 2 SCR 1010;Global Energy Ltd. and another 
v. Adani Exports Ltd. and others (2005) 4 SCC 435 : 
(2005] 3 SCR 1108;Master Marine Services (P) Ltd. v. 
Metcalfe & Hodgkinson (P) Ltd. and another (2005) 6 
SCC 138:(2005) 3 SCR 666; Michigan Rubber (India) 
Limited v. State of Karnataka and others (2012) 8
SCC 
216:[2012) 8 SCR 128; Jagdish Manda/ v. State of 
Orissa and others (2007) 14 SCC 517 : [2006) 10 
Suppl. SCR 606j Tejas Constructions & Infrastructure 
(P) Ltd. v. Municipal Council, Sendhwa and another 
(2012) 6 SCC 464: [2012) 4 SCR 190; Maa Binda 
Express Carrier and another v. North-East Frontier 
Railway and others (2014) 3 SCC 760:(2013] 12 SCR 
529; Census Commissioner & Others 
v. 
R. 
Krishnamurthy (2015) 2 SCC 796:(2014] 11 SCR 463; 
Tamil Nadu Generation and Distribution Corporation 
Ltd (TANGEDCO) Rep. by its Chairman & Managing
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 
ANR. 
Director and another etc. v. CSEPDI -
Trishe 
Consortium, Rep. by its Managing Director & another 
2016 (10) SCALE 69; A/cons Infrastructure Ltd. v. 
Nagpur Metro Rail Corporation Ltd. 2016 (8) SCALE 
765; Montecarlo Ltd. v. NTPC Ltd. 2016 (10) SCALE 
50 - relied on. 
2. Section 11 of the Telecom Regulatory Authority of India 
Act deals with the functions of the authority, that is, TRAI. The 
said provision empowers it to make recommendations either suo 
motu or on a request from the licensor on certain matters. TRAI 
977 
A 
B 
has been conferred with the statutory power to make 
recommendations on the terms and conditions of the licence to a 
C 
service provider and the Central Government is bound to seek 
the recommendations of TRAI on such terms and conditions at 
different stages, but the recommendations of TRAI are not 
binding on the Central Government and the final decision on the 
terms and conditions of a licence to a service provider rests with D 
the Central Government. The legal consequence is that if there 
is a difference between TRAI and the Central Government with 
regard to a particular term or condition of a licence, as in the 
present case, the recommendations of TRAI will not prevail and 
instead the decision of the Central Government will be final and 
E 
binding. TRAI, being an expert body, discharges recommendatory 
functions under clause (a) of sub-section (1) of Section 11 of the 
TRAI Act and
discharges regulatory and other functions under 
clauses (b), (c) and (ti) of sub-section (1) of Section 11 of the TRAI 
Act and it being an expert body, the recommendations of TRAI 
under clause (a) of sub-section (1) of Section 11 of the TRAI Act 
F 
have to be given due weightage by the Central Government but 
the recommendations of TRAI are not binding on the Central 
Government. The regulatory and other functions under clauses 
(b), (c) and (d) of sub-section (1) of Section 11 of the TRAI Act 
have to be performed independent of the Central Government G 
and are binding on the licensee subject only to an appeal in 
accordance with the provisions of the TRAI Act. Thus, the 
recommendations given by TRAI are not binding but deserve to 
be given due weightage. Certain areas have been separated 
regard being had to the nature of the language employed in the 
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SUPREME COURT REPORTS 
[2017] 4 S.C.R. 
A TRAI Act where the authority can act independent of the Central 
Government. In the present case, the Central Government had 
sought the recommendation and then referred it back. Ultimately, 
it formulated the policy for auction of the spectrum. Therefore, 
the criticism that is advanced that once there is a reference back, 
B the Central Government should have been guided by the 
recommendations has no justification inasmuch as the Central 
Government has the ultimate authority to take a decision. Of 
course, such a decision, especially a decision relating to frame a 
policy for NIA has to be in accord with the norms of Article 14 of 
c 
the Constitution. [Paras 51, 52] [1021-G-H; 1023-B-H; 1024-A] 
Association of Unified Tele Services Providers and 
others v. Union of India and others (2014) 6 SCC 110 
: [2014] 9 SCR 780 -
relied on. 
3.1 The endeavour of the Government contained in the 
Notice Inviting application (NIA) for the auction conducted in 
D March, 2015 is not based on any classification except that all 
service providers must have a minimum of 5 MHz if they want to 
deploy any mobile technology benefitting the consumer and even 
TRAI concurred with the view that minimum 5 MHz quantum 
was the appropriate minimum quantum to be set. Reduction of 
E minimum quantum of spectrum to 3 MHz instead of 5 MHz for 
new entrants would be contrary to TRAI's own recommendations 
on the issue of spectrum auction, wherein TRAI has
been 
consistently holding that 5 MHz is the minimum amount of 
spectrum required to ensure that any technology can be deployed 
F 
with the allocated spectrum. [Para 18) [999-B-D] 
3.2 Fragmented spectrum allocation to address the 'present 
issues in few service areas will only be a short term solution but 
will have long term negative impact for the sector as the objective 
is to have broadband solution that offers the most affordable 
devices and ecosystem to connect the billion people and as such, 
G the minimum quantum of spectrum is prescribed as 5 MHz. After 
deliberating on the recommendations of TRAI, the Government 
differed with the view ofTRAI and kept the minimum bid quantity 
at 5 MHz on the grounds that the present and future technology 
scenarios and the need for making the spectrum contiguous would 
H only benefit the consumer which is the essential objective of the
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 
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ANR. 
National Telecom Policy (NTP); that in the previous three A 
auctions, new entrants/licensees whose licences were expiring 
were required to bid for minimum 5 MHz spectrum; that there 
was no substantial change in the market and eco-system scenario 
since the last auction of February, 2014; that there is a need to 
induct new technologies to meet the requirements of the ever B 
growing demand for data; and the number of mobile users stands 
at approximately 960 million consumers whose need has to be 
catered keeping in view the development of technology in next 
twenty years. Thus, taking a long-term view, the decision of the 
Government after giving due weightage to the recommendations 
of TRAI is justified. The plea that the auction is non-competitive 
C 
and security driven has no basis. [Para 191 [999-D-H; 1000-Al 
3.3 The classification of entities is on the basis of whether 
an entity is a new entrant or an existing service provider as the 
Government has always been consistent with. the trend that new 
entrants would have to bid a minimum of 5 MHz and the existing D 
service providers have to 'top up' (capacity enhancement) their 
present holding of spectrum to achieve a goal of maximizing 
efficiency and avoid any restraint for the consumers and the 
service providers. In the NIA for auction of spectrum in 2015, 
across all bands, a new entrant is required to bid for a minimum 
of 5 MHz and this requirement
has always been the same for 
E 
earlier auctions also conducted in 2012, 2013 and 2014. The 
minimum bid quantum is reduced only in those cases where 5 
MHz is not available in a LSA or contiguous 5 MHz is not 
available. An existing licensee has to bid for a minimum of 0.6 
MHz of spectrum in order to 'top up' so as to come to the level 
F 
of 5 MHz (as minimum administratively allocated spectrum in 
900 MHz/1800 MHz band is 4.4 MHz) and be in a position to 
provide services compatible with new technology. Moreover, the 
existing licensee, who will be bidding for a minimum of 0.6 MHz 
so that he may come to the level of 5 MHz, may also bid for more 
than that. The idea would be that he has to bid as a new entrant G 
for the next time when his licence would expire and his allocated 
4.4 MHz spectrum is put to auction. [Para 20] [1000-A-Ef 
3.4 The endeavour of Department of Telecommunications 
(DoT) is that everybody should have minimum 5 MHz as less 
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SUPREME COURT REPORTS 
[2017) 4 S.C.R. 
A than 5 MHz will not be good for the consumer keeping in view 
the evolution and innovation and in order to achieve the same, 
DoT has to be far-sighted as the spectrum is being allotted for a 
period of 20 years. Assuming that there is classification, then, 
that is based on an intelligible differentia between two sets of 
B people, i.e., (1) new entrants including the expiring licensees 
and (2) existing licensees, both of whom ought to have minimum 
5 MHz so as to be able to deploy on any mobile technology. An 
existing licensee may not require 5 MHz to meet the traffic 
requirements and only a fraction of 5 MHz would meet the 
requirements, and small chunk addition would improve traffic 
C handling capabilities and reduce call drops due to congestion. 
Moreover, in case an existing licensee chooses to only retain 
what it has in terms of spectrum before, then it will, as aforesaid, 
only be able to provide the bare 2G service and no more and, 
therefore, he would lose out on his consumers who can change 
D to a better service provider in terms of number portability. 
Therefore, the classification, if any, contained in the NIA for the 
auctions conducted in March, 2015 is based on intelligible 
differentia having a nexus with the object sought to be achieved 
and there is no violation of Article 14. [Para 211 [1000-E-H; 1001-
A-B) 
E 
3.5 The argument that the petitioner was 'knocked out' of 
availability of only 8.8 MHz in
the North East and due to the term 
of minimum of 5 MHz for a new entrant including expiring 
licensees is incorrect. In the North East, while 8.8 MHz was 
available in 900 band, there were other spectrum available, i.e. 
F 
800 band (13.75 MHz), 900 band (8.8 MHz), 1800 band (8.4 MHz) 
and 2100 band (5 MHz) out of which the writ petitioner-Reliance 
has won 5 MHz in 800 band and 5 MHz in 1800 band at the auction 
as it already had spectrum in 2100 band. The trend of the 2015 
auctions has shown that this company has substituted its 900 band 
with 1800/800 band in most circles where the bid was lower than 
G the 900 band and it has also bid for the 900 band spectrum and 
remained unsuccessful, and that cannot form the basis to assert 
that there is any discrimination caused or that there is a flaw in 
the NIA. That apart, the investment already made in the past 20 
years is an investment which will be used even with the 1800/ 
H 800 band technologies and any future investment according to
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 
981 
ANR. 
the needs of the time will be made by them in their commercial A 
wisdom and to say that they were "knocked out of the auction 
because of the NIA design" is totally fallacious as they purchased 
spectrum in other bands. [Para 22] [1001-E-H; 1002-AJ 
4.1 There are various factors that the DoT is required to 
take into account while determining the auction structure. B 
Ultimately, the DoT should be permitted to determine the auction 
structure consistent with the scheme of the TRAI Act (as has 
been done in the earlier auctions and the instant one). It cannot 
be left to the option of the telecom service providers and their 
narrower self interest to determine the structure and timing of C 
auctions. Capping has been kept in vogue to have a bigger field 
and it is based on a rational principle. For arriving at the cap, 
only two parameters are to be seen - (a) the total spectrum 
assigned in that service area; and (b) the total spectrum being 
put to auction. There is nothing mentioned in the definition as 
explained by the notes that the surrendered spectrum is also D 
required to be added because there is no definition of a 
surrendered spectrum. Even if some capping rule is required to 
be altered, the Court would be required to go into the basis why 
a capping rule was provided for and why the TRAI and the 
Department have consistently followed the capping rule. That is 
because no monopoly should be created
and a healthy competitive E 
bidding should be available. The relief of removal of the cap is 
only to enable the petitioners who are 'big players' to serve their 
cause but not the public interest and the Government has been 
reviewing its policy from time to time. TRAI has made 
recommendations regarding compilation of the cap in future, and 
F 
such recommendations are under consideration by the 
Government of India. [Para 25) (1003-D-H; 1004-AJ 
4.2 The NIA, being an invitation to offer, and Clause 5.3.1 
being one of the Clauses thereof, and the said Clause not being 
under challenge, any meaning other than the literal meaning of G 
the said Clause would have to be by consent of both the parties. 
Furthermore, the NIA, being an invitation to offer, the rules of 
interpretation of contracts would apply and not the rules that may 
be applied in the case of interpretation of statutes. It is not open 
to one party to unilaterally, at the stage of NIA, seek an 
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SUPREME COURT REPORTS 
[2017) 4 S.C.R. 
A interpretation of a Clause in a manner of their choice and if there 
is a difference of opinion in the manner of interpretation, it is the 
interpretation of the party who is offering the contract that ought 
to be adopted. Should there be cause for the Court interpreting 
or thereby requiring, through mandamus, the Offering Party (i.e., 
B the State) to interpret the Clause contrary to their way of· 
interpretation or literal interpretation, this would only be done 
on the very limited grounds of judicial review, in which case, while 
a certiorari would issue to strike down the Clause as being 
arbitrary (which issue is not put in question before the Court), a 
mandamus will not issue to require the State to interpret the 
C Clause in a given way and make an offer in accordance with the 
interpretation given by the Court, which is what the petitioners 
seek. [Para 29] [1004-F-H; 1005-A-B) 
4.3 Clause 5.3.1, in 'No uncertain terms', provides for only 
two categories of spectrum, namely, (i) spectrum currently held 
D by.the operators; and (ii) spectrum put to auction by the Licensor/ 
Respondent, to be counted/considered while calculating the 
Spectrum cap. This being the position under the Clause (both 
accepted and understood by all the operators), the contention 
that the surrendered spectrum of BSNL/MTNL and not currently 
held by the existing operators should have been included 
E 
(whether or not put to auction) is clearly
contrary to the 
unequivocal terms of Clause 5.3.1. The contention that the 
surrendered spectrum (which is neither assigned/held by any 
operator nor put to auction) ought to be included for calculating 
· the Spectrum cap in the present auction is an effort to include/ 
F 
add another category of spectrum (i.e., surrendered spectrum 
not put to auction) which is not provided in Clause 5.3.1, and 
thereby effectively seek amendment of the Tender/NIA terms 
which is totally impermissible in law. [Para 30) [1005-B-D) 
4.4 The objective behind Spectrum capping is to ensure 
G competition in the market by preventing large/big operators from 
acquiring large amount of spectrum, which they may not require 
but only hoard to prevent the small operators from effectively 
competing in the market, and that is why, TRAI has recommended 
on 02.07.2015 that the basic objective of prescribing a spectrum 
cap is to prevent a TSP from acquiring large holdings of spectrum 
H
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 
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ANR. 
through auction, M&A or trading, as it may lead to non-level A 
playing field thereby disturbing the competition in the market. It 
cannot be left to the market forces alone to decide the maximum 
spectrum holding as a TSP and, hence, the provision of cap should 
continue on the spectrum holding that a TSP may acquire or 
otherwise. The argument that the Respondent should have B 
notionally included the spectrum surrendered by BSNL/MTNL 
would result in creating a situation where though the spectrum 
put to auction remains the same (i.e., limited), yet a large/big 
player will be able to bid for the entire spectrum (which it 
otherwise could not have done due to Clause 5.3.1) thereby 
effectively giving a tool to the large/big operators to deprive/ C 
starve small operators, who quite avowedly, cannot match the 
buying power of larger operators of spectrum. [Para 31) [1005-
E-H; 1006-A] 
5. There cannot be any legitimate expectation based on 
the terms and conditions relating to NIA more so, in the sphere D 
of auction of spectrum. The 2013 auction included the spectrum 
allegedly surrendered by BSNL/MTNL in calculating the 
Spectrum cap, while it has not been done so in the present auction 
(i.e., 2015 auction), and the fact that the surrendered spectrum 
was included earlier and not in the present year does not give 
rise to legitimate expectation, for it does not bind the State to 
E 
follow the same because the
fundamental principles of 
maximization of revenue and subserving of the public interest at 
large require change. The concept of legitimate expectation has 
no role to play where the State action is as a public policy or in 
the public interest unless the action taken amounts to an abuse 
F 
of power. The court does not interfere with the discretion of the 
public authority which is empowered to take the decisions under 
law and the court is expected to apply an objective standard that 
leaves to the deciding authority the full range of choice which the 
legislature is presumed to have intended. [Para 321 [1006-A-Dl 
G 
6. The grievance raised by the petitioners is that the design 
of the auction skewed price discovery and resulted in artificial 
inflation of the price of spectrum. This grievance is to be viewed 
in the context in which the policy of auction- of spectrum came to 
be implemented. This Court having held that public interest is 
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SUPREME COURT REPORTS 
(2017] 4 S.C.R. 
A served by maximizing the benefit to the public exchequer, a 
challenge premised on the admission that the method adopted 
by the State, in fact, maximized the generation of revenue from 
the auction of spectrum cannot succeed. [Para 33) [1006-D-F) 
. B 
c 
D 
E , 
F 
. 
G 
H 
Centre for Public Interest Litigation and others v. ·Union 
of India and others (2012) 3 SCC 1 : [2012) 3 SCR 
147; Asia Foundation & Construction Limited v. 
Trafalgar House Construction (/)Ltd. And others (1997) 
1 SCC 738 : [1996) 10 Suppl. SCR 209 - distinguished. 
Reliance Energy-Ltd. and another v. Maharashtra State 
Road Development Corpn. Ltd. and others (2007) 8 SCC 
1 : [2007) 9 SCR 853; Natural Resources Allocation, 
Jn re, Special Reference No. 1 of 2012 (2012) 10 SCC 
1 : [2012) 9 SCR 311; Bharti Airtel Limited v. Union of 
India (2015) 12 SCC 1 : [2015) 5 SCR 867; Union of 
India and another v. Assn. of Unified Telecom Service 
Providers of India and others (2011) 10 SCC 543 : 
[2011) 14 SCR 657; Bannari Amman Sugars Ltd. v. 
Commercial Tax Officer and others (2005) 1 SCC 625 
: [2004) 6 Suppl. SCR 264 - referred to. 
Case Law Reference 
[2007) 9 SCR 853 
referred to 
Para 10 
[2014) 9 SCR 780 
relied on 
Para 10 
[2012) 9 SCR 311 
referred to 
Para 10 
[2012) 3 SCR 147 
distinguished Para 14 
[1994) 2 Suppl. SCR 122 
relied on 
Para 17 
[1996) 2 SCR 767 
relied on 
Para 17 
[2015) 5 SCR 867 
referred to 
Para 40 
[2011) 14 SCR 657 
referred
to 
Para 40 
[1998) 3 Suppl. SCR 421 
referred to 
Para 55 
[2000) 3 SCR 1159 
relied on 
Para 56 
(2002) 5 Suppl. SCR 222 
relied on 
Para 57
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 
985 
ANR. 
(1996) 3 Suppl. SCR 808 
relied on 
Para 57 
A 
(2003) 1 Suppl. SCR 55 
relied on 
Para 58 
(2004) 2 SCR 1010 
. relied on 
Para 59 
[2004) 6 Suppl. SCR 264 
relied on 
Para 60 
(2005] 3 SCR 1108 
referred to 
Para 61 
B 
(2005) 3 SCR 666 
referred to 
Para 62 
[2012) 8 SCR 128 
relied on 
Para 63 
.,I,, 
· . ' [2006] 10 Suppl. SCR 606 
relied on 
Para 63 
. ' (2012] 4 SCR 190 
relied on 
Para 63 
c 
[2013) 12 SCR 529 
relied on 
Para 64 
[2014) 11 SCR 463 
relied on 
Para 65 
2016 (10) SCALE 69 
relied on 
Para 71 
D 
2016 (8) SCALE 765 
relied on 
Para 72 
2016 (10) SCALE 50 
relied on 
Para 73 
(1996) 10 Suppl. SCR 209 
distinguished Para 75 
CIVIL ORIGINAL JURISDICTION: Transfer Case (Civil) No. 
E 
43 of 2015. 
Under Article 139 of the Constitution of India 
WITH 
T. C. (C) Nos. 64 and 65 of 2015. 
F 
Ranjit Kumar, SG, P. Chidambaram, Dr. A. M. Singhvi, Gopal 
Jain, C. A. Sundaram, Ramji Srinivasan, Harish N. Salve, Sr. Advs., 
MaheshAgarwal, Ms. Shally Bhasin, Ms. Sadapurna Mukharjee, Chaitnya 
Safaya, Lakshmeesh Karnath (for E. C. Agrawala), Harsh Kaushik, 
Abhay Chattopadhyay, Ms. Chinrnayee Chandra, Vidhur Bhatia, Nidhiram 
Sharma, Z. L. Ahmad, Gaurav Sharma, Ritin Rai, Ms. Binu Tamta, 
G 
Siddhartha Jha (for D. S. Mahra), Mansoor Ali Shoket, Nitin Kala, Ms. 
Vibha Dhawan, Kuna! Singh, Pukhrambam Ramesh Kumar, K.R. 
Sasiprabhu, Raghav Shankar, Amit Bansal, Mohit Paul, Tarun Gulati, 
Manjul Bajpai, Sparsh
Bhargava, Neil Hildreth, Kishore Kuna!, Anupam 
Mishra, Advs. for the appearing parties. 
H
986 
SUPREME COURT REPORTS 
[2017) 4 S.C.R. 
A 
The Judgment of the Court was delivered by 
DIPAK MISRA, J. I. The three transferred cases, namely, 
Transfer Case (Civil) No. 43 of2015, Transfer Case (Civil) No. 64 of 
2015 and Transfer Case (Civil) No. 65 of2015, had their origin in the 
High Courts of Delhi, Tripura and Karnataka respectively. The High 
B Courts were moved under Article 226 of the Constitution challenging 
the terms and conditions ofNotice InvitingApplication-2015 (for short, 
'NIA') for allocation of spectrums in various areas. The High C,ourt of 
Tripura in W.P.(C) No. 52 of 2015 and W.P.(C) No. 53 of 2015 was 
prayed for grant of interim relief which included extension of permission 
to the participants in the NIA to be bidded for minimum 4.4 MHz, IN 
C 900 MHz band in the North East service area. The High Court, while 
D 
E 
F 
G 
dealing with interim prayer, directed as follows:-
"Therefore, at this stage, we feel that only the following order 
should be passed: Both the petitioners are permitted to submit 2 
applications instead of one. One application may be for 4.4. MHz 
and the other application will be for a minimum of 5 MHz and 
may extend up to 8.8, if the petitioners so desire. We have been 
informed at the Bar that two applications may not be possible to 
be submitted because it is online. We are not sure whether the 
same because it may not be possible. Therefore, we direct that it 
is for the petitioners to decide what application they will
submit 
online but they may also simultaneously submit one application 
offline in hard copy with the Secretary, Department of 
Telecommunication, Union of India on or before 16th February, 
2015. The Union of India may proceed with the assessment of 
the applications but no final decision in the matter shall be taken 
without permission of this Court. Furthermore, any preliminary 
decision taken shall also be subject to the result of the present 
writ petition. Admittedly, the licences of the petitioners are expiring 
only in December, 2015, and, therefore, we would like to ensure 
that the writ petition is disposed of much earlier." 
2. The said orders were assailed by the Union of India in S.L.P. 
(Civil) Nos. 5735-5736 of2015. This Court issued notice and eventually 
on 26.2.2015 directed stay of the order passed by the High Court of 
Tripura at Agartala and permitted the auction to continue on the date 
fixed, but the same should not be finalized without the leave of the Court. 
H The Court further directed that the said condition shall be put forth on
.. 
RELIANCE TELECOM LTD. & ANR. v. UNION Of INDIA & 
987 
ANR. [DIPAK MISRA, J.] 
... 
the website so that all the bidders are aware of the order of this Court A 
and no bidder shall claim equity because of his participation or success 
in the tendering process. 
3. It needs to be stated here that by this time, certain transfer 
petitions were allowed. Transfer cases were taken up on 26.3.2015 
wherein this Court passed the following order:-
B 
"Mr. Mukul Rohatgi, learned Attorney Genera!' appearing for the 
Union of India, has su.bmitted that there has been auction 
commencing 4th March, 2015 and ending 25th March, 2015, in 
respect of the bands, namely, 800 MHz, 900 MHz, 1800 MHz and 
2100 MHz in respect of all the States and there has been a fierce c 
and competitive auction and the entire revenue likely to be 
generated is Rs.1. 09 lac crores. Learned Attorney General would 
further submit that ifthe order of stay is not modified, the Union 
of India will be facing grave fiscal difficulty as there is ample 
possibility of collecting at least Rs.28,000 crores by 3 lst March, 
2015. It is urged by him that the auction itself would show that D 
the "Notice Inviting Tender" has been a workable one and, 
therefore, sustainable in law. In this backdrop, submits, Mr. Mukul 
Rohatgi, that the interim order passed on the earlier occasion should 
be modified granting leave to the Union of India to fin..alize the 
auction, subject to the final decision of the special leave
petition 
E 
,.. and the transferred cases. 
Mr. P. Chidambaram and Mr. Gopal Jain, learned senior counsel 
appearing for the contesting respondents, per contra, would contend 
that the competitive bidding was not really competitive, but a 
compulsive bidding as parties were obliged to bid because of their 
F 
survival. In addition, it is put forth by them that the amount that 
has to be thought of being collected by the Union of India, is 
factually incorrect, inasmuch as the bidders who are successful 
have to deposit the amount within ten days from the completion 
of date of auction, that is, 25th March, 2015. Learned senior counsel 
would further submit that the entire design of the "Notice Inviting G 
.Tender" is gloriously faulty and solely because the auction has 
taken place and money is likely to be collected, would not be a 
justification for the modification of the interim order. 
Having heard learned counsel for the parties, we are inclined to 
modify the order to the extent that the Union of India would be at H
988 
SUPREME COURT REPORTS 
[2017] 4 S.C.R. 
A 
liberty to finalize the auction and proceed thereafter, but all the 
successful bidders shall be intimated that the said finalization is 
subject to the final result of the special leave petition, as well as 
the transferred cases." 
4. At that juncture, Mr. Mukul Rohatgi, learned Attorney General 
B undertook that the competent authority of the Union of India would intimate 
the successful bidders to get themselves impleaded as parties. 
5. It was observed by the Court that the said impleaded parties 
are entitled to file respective affidavits stating their stand and stance in 
the said affidavits. On that day itself, the Court disposed of the special 
c leave petitions as it was felt that nothing really was to be adjudicated in 
them as the whole controversy was to be addressed in the transferred 
case. When the matter was heard on the next date, the Court passed 
the following order:-
" In course of hearing certain aspects have been highlighted which, 
D 
we think, the competent authority of Union oflndia should put by 
way of an affidavit so that while deciding finally, this Court may 
take into consideration certain aspects for issuing appropriate 
directions or moulding the relief. The affidavit shall cover the 
following:-
E 
(a) After completion of the present auction, what is the quantum 
of spectrum available with the Union of India? 
(b) What-is the possibility of getting the non-vacating spectrum 
from the defence
band and within what time? 
( c) Whether an auction can be held in respect of the available 
F 
spectrum, regard being had to what has been stated in (a) and (b) 
above? 
( d) Whether in the auction that is going to be held, the concept of 
capping would still remain and, if so, what would be the formula 
and how it would be interpreted and applied? While calculating 
G 
the cap, ifthat exercise is undertaken, whether the commercially 
available spectrum should be included in the computation of such 
caps? 
H 
(e) The successful bidders who have got less than five and in 
case they fail in the next auction, how they would deal with the
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 
989 
ANR. [DIPAK MISRA, J.] 
spectrum available with them? To elaborate, though they can A 
surrender or trade the spectrum or share the same as per 
guidelines, do they have a choice to hold it back or the Union of 
India would take step's in that regard as per law?" 
Be it stated, the Union of India filed an affidavit stating the position. 
The essence of the said affidavit is that:-
B 
(a) After completion of the present auction, what is the 
quantum of spectrum available with the Union of India? 
4. With reference to item (a) above, it is submitted that in the 
spectrum bands put to auction namely 800 MHz, 900 MHz, 1800 
MHz & 2100 MHz in March 2015, the table below indicates the 
C 
availability of spectrum post auction with the Government of India 
for commercial use:-
Band 
Quantum of 
Quantum 
Remaining 
(MHz) 
Spectrum put 
provisionally 
quantum of 
on Auction 
won by bidders 
spectrum 
(MHz) 
(MHz) 
(MHz) 
800 
108.75 
86.25 
22.5 
900 
177.8 
168.00 
9.8 
1800 
99.2 
93.80 
5.4 
2100 
85 
70.00 
15.0 
Total 
470.75 
418.05 
52.7 
b) What is the possibility of getting the non-vacating 
spectrum from the defence band and within wh,at ~me? 
5. With reference to query (b), it is humbly submitted that the 
Answering Respondent is making all sincere efforts for getting 
the spectrum vacated from Defence and other users. Historically, 
D 
E 
F 
all the identified 75 MHz spectrum mobile services in 1800 MHz 
band in all
22 service areas was with defence and other users 
G 
prior to 2001 when it was allocated for the first time for commercial 
mobile services in India after co-ordination with the then existing 
users. Spectrum in 1800 MHz band was coordinated by defence 
on a case to case basis either in the entire service area or in parts 
of the service area (i.e. District-wise). Based on the coordination 
H
990 
A 
B 
c 
D 
E 
F 
G 
H 
SUPREME COURT REPORTS 
[2017] 4 S.C.R. 
received from Defence, spectrum in 1800 MHz band was allotted, 
from time to time, for commercial use by Telecom Service 
Providers. This spectrum is in spots over the complete 75 MHz. 
in January 2015, it has been decided in consultation with the 
defence, that, instead of the case by case approach adopted 
historically, out ofabove referred 75 MHz, 55 MHz will be allotted 
to telecom service providers (TSPs) and the rest will be used by 
defence. Within the 1800 MHz band, the exact frequencies to be 
allotted to TSPs and that to be used by defence have been 
earmarked. However, the process of allotting all the frequency 
identified to TSPs will require some time. This is because at 
present, there are operational networks of defence in the segment 
identified for telecom services in 1800 MHz band. Similarly 
frequency spots have been allotted to various TSPs in the segments 
identified for use by defence. The discussions have started with 
defence for harmonizing the spectrum in 1800 MHz band. TSPs 
have also been consulted as they also to shift their networks to 
new spots. The operational network of the defence is required to 
be continued until alternate arrangements are available for 
seamless operation of defence networks or else it would 
compromise the national security. Therefore, in the humble 
submission of the answering respondent, no time frame can be 
put as to when the defence would vacate.
6. Telecommuncation sector's evolution is a continuous process 
world-wide. New bands and technologies are being identified for 
providing commercial services. For example Wide Band Code 
Division Multiple Access (WCDMA) technology, commonly 
known as 3G technology, have been developed and was deployed 
in our country in 2100 MHz band. 456 MHz spectrum in this 
band was co-ordinated from defence and got released for telecom 
commercial services in 2010 and was auctioned. Further, as per 
the decision of the Governmerit in January 2015 an additional 85 
MHz of spectrum in this band was released by defence and was 
part of the auction conducted in March 2015. It is also submitted 
that efforts are being made to get released 15 MHz of spectrum 
in each of22 service areas in 2100 MHz band also from Defence. 
Although in this case also no t_ime frame can be put as to when it 
would be made available but it is expected to be released during
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 
991 
ANR. [DIPAK MISRA, J.] 
the process of completion of hannonization of 1800 MHz band 
A 
spectrum. This will make 345 MHz of spectmm available in this 
band. Therefore, it is proposed to be included in the next auction. 
7. As a part ofidentifying new brands & technologies and releasing 
for providing commercial services 880 MHz spectmm in Time 
Division Duplex (TDD) mode was also included in 2300 MHz 
B 
band for auction conducted in 2010 and 320 MHz of spectrum in 
this band is proposed to be included for the next auction. Similarly 
440 MHz spectrum in 2500 MHz band was allocated to BSNL 
and MTNL in 2007-08. However 160 MHz spectrum was 
surrendered by them. TRAI has been requested to expedite 
recommendations for reserve price and associated conditions. A C 
total quantum of 600 MHz of spectrum in this band, including that 
surrendered by the BSNL/MTNL is available. It is humbly 
submitted that channeling plan adopted in India for 2500 MHz 
band is not as per standard International Mobile Technology (IMT) 
band considering the issues relating to techno-economic feasibility 
D 
and availability of commercial eco-systems. The feasibility of 
inclusion of spectrmn in 2500 MHz band in the forthcoming auction 
appears to be poor. (All bands other than 2300 MHz and 2500 
MHz are in Frequency Duplex Division (FDD) mode). 
(c) Whether an auction can be held in respect of the E 
available spectrum, regard being had to what
has been 
stated in (a) and (b) above? 
8. With reference to query ( c ), it is submitted that the next auction 
would be held as and when reasonable quantity of spectrum is 
available and the answering respondent is making all efforts to 
F 
make available sufficient quantity of spectrum for auction apart 
from complying with the statutory process of seeking TRAI's 
recommendations, where applicable. 
9. In the above context, it is submitted that six access service 
licences of private service providers are expiring in 2017-18. The 
G 
details of spectrum wbich will be released by these providers is 
as follows: 
800 MHz band 
20.0 MHz 
1800MHzband 22.0MHz 
H
992 
SUPREME COURT REPORTS 
[2017) 4 S.C.R. 
A 
It is proposed to include the spectrum in 800 MHz band in the 
next auction of spectrum. 
· 
IO. Further, the Cellular Mobile Service licences ofMahanagar 
Telephone Nigam Limited (MTN,L) are expiring in 2017-18 and 
holding 12.4 MHz of spectrum 900 MHz band and 4.4 MHz in 
B 
1800 MHz band. MTNL has represented to the Licensor for 
extension of effective date of their licences as MTNL could not 
operate license in the initial period due to various reasons including 
stay by Telecom Regulatory Authority oflndia (TRAI) in 1997-
98. The representation is under consideration of the Government. 
c 
D 
E 
F 
G 
H 
11. It is respectfully submitted that. 770 MHz spectrum in 700 
MHz band is available. However, the feasibility of its inclusion in 
the proposed auction appears to be poor due to techno-economic 
feasibility and the current status of commercially available eco-
system. 
12. In addition, TRAI has been requested on 9'h July, 2015 to 
provide recommendations on applicable reserve price and 
associated conditions for auction of spectrnm in 700 MHz, 800 
MHz, 900 MHz, 1800 MHz and 2100 MHz bands for all the service 
areas under the terms of Clause ll(l)(a) ofTRAI Act, 1997, as 
amended and expedite the recommendations on applicable reserve 
price for 2300 MHz and 2500 MHz bands for all the service areas. 
Presently, the matter is with TRAI and after consideration of the 
recommendations of TRAI in respect of the reserve price
and 
associated terms and conditions, the next auction would be 
conducted and the available spectrum will also be included in the 
auction. 
13. It is humbly re-iterated that the availability ofspectnun in all 
the bands may vary vis-a-vis the quantum of spectrum indicated 
above, as a result of harmonization exercise with Defence, taking 
into consideration the requirements of Defence and/or the policy 
decisions by the Government on related matters. 
(d) Whether in the auction that is going to be held, the 
concept of capping would still remain and, if so, what would 
its formula and how it would be interpreted and applied? 
While calculating the cap, if that exercise is undertaken, 
whether the commercially available spectrum should be
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 
993 
ANR. [DIPAK MISRA, J.] 
included in the computation of such caps? 
A 
(e) The successful bidders who have got less than five and 
in case they fail in the next auction, how they can deal with 
the spectrum? To elaborate, though they can surrender or 
trade any spectrum or share the same as per guidelines, 
they do have a choice to hold it or the Union of India would B 
take steps in that regard as per law. 
14. The Telecom Regulatory Authority was also consulted with 
reference to query (d) and (e) as posed by the Hon'ble Court in 
the order dated 14.5.2015. The TRAI had furnished its comments 
upon the same vide its letter dated 2"d July 2015. The relevant c 
extracts are reproduced below:-· 
"1.14 The Authority examined the views of all the TSPs and 
the provisions of various NIA issued till date. The Authority is 
of the opinion that at present there is no need to modify the 
existing spectrum cap (50% of the spectrum assigned in each D 
of the 800/900/1800/2100/2300/2500 MHz and 25% of the total 
spectrum assigned in all these bands put together in each 
service area). 
1.15 On the methodology of calculating the spectrum cap, the 
Authority is of the opinion that all spectrum assigned to the 
E 
TSPs including any spectrum which was put to an auction but 
remains unsold, spectrum which was assigned but subsequently 
surrendered by the TSP or taken back by the Licensor and 
spectrum put to auction should be counted.
However, any 
spectrum out of the above will not be taken into calculation, if 
the Government assigns it for non-commercial purpose e.g. 
F 
assignment to Defence. 
1.16 The Authority is also of the view that the spectrum which 
may become available to the WPC/DoT for commercial use 
after its reframing from other users such as Defence at 
different point of time should not be counted for determining 
G 
the spectrum caps until it is put to auction by the DoT. 
1.17 The Authority is also of the view that telecom being an 
evolving sector, review of such policy decisions such as spectrum 
cap is a continuous process. The Authority may review it at an 
H
994 
A 
B 
c 
D 
E 
F 
SUPREME COURT REPORTS 
[2017) 4 S.C.R. 
appropriate time like introduction of new spectrum bands, 
.additional spectrum released for commercial purpose or if any 
major development takes place. 
1.22 The Authority is of the opinion that Licensees should be 
able to decide for themselves whether or not there is a business 
case for them to hold on to the spectrum. Moreover, once the 
guidelines of the spectrum sharing and spectrum trading are 
notified by the Government, the TSPs will have alternate options 
to manage their spectrum holding. Therefore, the Authority is 
of the opinion that the Government should not take back 
spectrum assigned to TSP even ifit is less than 5 MHz in any 
band." 
15. The above comments ofTRAI are under consideration of 
the answering respondent. 
16. In the above context with reference to query ( d), it is humbly 
submitted that before the next auction, the answering respondent 
will take a considered decision on the comments of TRAI as 
stated above with reference to the methodology of calculating 
the CAP for future periods. 
17. With reference to query (e), it is humbly submitted that as 
already indicated that the successful bidders who l:ave got 
less than 5 MHz of spectrum and in case they fail in the next 
auction, they can share the spectrum or trade the spectrum, 
the guidelines for which are being formulated and likely to be 
in place shortly. At present, there is no rule/statute to take 
back the spectrum which
has been awarded after participating 
in a competitive process and as per commercial decisions of 
the bidder taking into consideration the techno-economic 
requirements in a service area. Presently, the aforesaid 
comments ofTRAI are under consideration of t,he Government 
oflndia." 
G 
The said affidavit that was filed meeting the issues framed by the 
Court was countered by the petitioners stating, inter alia, that the 
respondent No. 1 has, in its affidavit, remained silent on the Chart which 
was submitted by the petitioners and by not responding to the chart/table 
of the petitioners, the respondent No. 1 has really not met the issue. It is 
H put forth that the respondent No. 1 does not dispute the submission of
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 
995 
ANR. [DIPAK MISRA, J.] 
the petitioners that out of the 75 MHz of Spectrum, 55 MHz has been A 
earmarked for commercial use and it is also apparent that the respondent 
No. 1 has not consulted Telecom Regulatory Authority oflndia (TRAI) 
on the availability of spectrum, especially since TRAI's recommendation 
dated 15.10.2014 contained a statement on the availability of spectrum 
which contradicts the statement made by the respondent No.1 in the 
B 
affidavit. 
6. Eventually, the matter was heard at length and learned counsel 
for the parties had filed the written notes of submission. 
7. At this juncture, it is necessary to state that learned counsel for 
the respondent in the transferred cases have separately put forth written c 
submissions but we shall enumerate them together as we are disposed 
to think that there is commonality of grievance and attack on the Notice 
Inviting Application (NIA) is also similar. The submissions, which are 
separately set forth qua each transferred case, if required, shall be 
adverted to at the appropriate stage. 
8. Learned counsel appearing for the petitioners have raised various 
contentions and for appropriate appreciation, it is necessary to enumerate 
them. 
9. The minimum bidding criteria of 5 MHz in the spectrum band 
D 
of 900 MHz for different categories of bidders as adopted in NIA is 
E 
arbitrary, anti-competitive, onerous and contrary to the TRAI 
recommendations dated
15.10.2014. The minimum bidding criteria for 
different categories of bidders under different bands, i.e., 800 MHz, 900 
MHz, 1800 MHz and 2100 MHz, is discriminatory and runs counter to 
the TRAI recommendations dated 15.10.2014. The Department of 
Telecommunications (DoT) has not accepted the TRAI recommendations 
F 
dated 15.10.2014 and not allowed the new/expiring licensees in the 900 
MHz band to bid for a minimum of 2 x 3.6 MHz in those Licensed 
Service Areas (LSAs) where spec,trum put to auction was 10 MHz or 
more and 2 x 2.4 MHz in the remaining LSAs. Similarly, in 1800 MHz 
band, DoT has not allowed the new/expiring licensees to bid for a 0 
minimum of 2 x 0.6 MHz spectrum. This condition that relates to the 
eligibility criteria invites the frown of Article 14 of the Constitution. 
10. The NIA dated 9. l.2015 suffers from over-classification 
between different categories of bidders inasmuch as the minimum bidding 
criteria for different classes of bidders, as has been set out in the NIA, 
H 
•
996 
SUPREME COURT REPORTS 
[2017] 4 S.C.R. 
A has no nexus with the object which the NIA seeks to achieve. The 
criteria adopted by the DoT is in stark contrast to the TRAI 
recommendations dated 15.10.2014, which recommended that the 
minimum quantity that a bidder is required to bid for should be kept as 2 
x 3 .6 MHZ in the LSA where spectrum availability is 10 MHz or more in 
the 900 MHz band; and the minimum quantity may be kept as 2 x 2.4 
B MHz in the remaining LSAs which would be applicable for expiring 
licen~ees as well as new entrants. 
Though these recommendations 
were reiterated by TRAI in its response dated 24.11.2014 to the back-
refercnce received from DoT on the recommendations ofTRAI dated 
15. l 0.2014, yet they were not accepted without any fathomable reason. 
C The NIA has fixed different minimum bidding criteria for different 
spectrum bands and classified the bidders into "existing licensees", 
"expiring licensees" and "new entrants" and fixed different bidding criteria 
for each category and such classification does not indicate that there is 
any intelligible or discernible basis for the fixation of the criteria and 
D there is no nexus between the criteria and the object sought to be achieved 
through the auction and, hence, the criteria is a case of "suspect 
classification". It is so because no reason or justification has been 
furnished in support of the innumerable classes created by the criteria; 
and it is a case of classification and
micro-classification which will 
E 
F 
G 
H 
inevitably favour one or more bidders in certain service areas and 
disfavour other bidders. In this regard, learned counsel for the petitioners 
has relied on Reliance Energy Ltd. and another v. Maharashtra State 
Road Development Corpn. Ltd. and others1, Association of Unified 
Tele Services Providers and others v. Union of India and other~·
2and 
Natural Resources Allocation, In re, Special Reference No. 1 of 
20123• 
11. The auction of spectrum ought not to have been conducted 
with inadequate spectrum in a scarcity-driven situation in defiance of 
the TRAI recommendations dated 15.10.2014. The Government holds 
spectrum in public trust and, hence, cannot hoard spectrum (which is an 
inexhaustible resource) depriving the public of its use. It is obligatory for 
the authorities to disclose the quantity ofunutilized spectrum it holds and 
why the whole quantity was not put to auction. 
1 (2007) s sec 1 
2 c2014) 6 sec 110 
'(2012) 10 sec 1
RELIANCE TELECOM LTD. & ANR. v. UN10N OF INDIA & 
997 
ANR. [DIPAK MISRA, J.] 
12. The bidding criteria and the scheme of auction as a whole are 
A 
not consistent with the mandate oflaw. As a result of the flawed approach 
of the Government keeping the minimum bidding criteria in the 900 MHz 
band as 5 MHz for new entrants/expiring licences, 4.6 MHz of spectrum 
in the Bihar service area remained unsold as the existing operator bid 
for only 1.6 MHz, whereas the total spectrum available in the area was 
B 
6.2 MHz. Similarly, in the West Bengal service area, 4.4 MHz was the 
minimum bidding criteria for new entrants/expiring licensees but the 
existing operators could bid for 0.6 MHz of spectrum. In North East 
service area also, the total spectrum put up for auction was 8.8 MHz, 
but because of the condition of bidding for a minimum of 5 MHz, only 
one successful bidder would have been able to win the bid and others 
C 
were bound to be unsuccessful. 
13. If minimum bidding criteria is different for different categories, 
it will create a dent in the level playing field. For example, where the 
minimum bid for Bidder Ais 0.6 MHz and the Bidder B, it is 5 MHz and 
the block size is 0.2 MHz, Bidder A can enter the arena with funds 
D 
sufficient to bid for 3 blocks (3 x 0.2 MHz), whereas Bidder B can enter 
the arena only if he has funds to bid for 25 blocks (25 x 0.2 MHz). 
Bidder A can also artificially push up the price per block because he will 
have to pay for only 4
blocks. As such, Bidder B will be forced to match 
the price of Bidder A or quit the race, which brings out the arbitrariness 
and discrimination in the minimum bid criterion as stipulated in the NIA. 
14. Spectrum is a natural resource which is held by the Government 
E 
in public trust for the benefit of the people. The Government is obliged 
under law to ensure that there is most efficient utilization of the spectrum 
available as has been held in Centre/or Public Interest Litigation and 
others v. Union of India and others4• A corollary of this is that the 
F 
Government should disclose the spectrum that is available with it and 
that too with specific reference to each service area. Rule ·of'law and 
the principle of transparency demand that the Government should make 
public the time schedule and the periodicity with which it intends to hold 
the auction. As per the spectrum chart for 1800 MHz furnished by the 
G 
petitioners and not objected to by the Government, there was 216.4 MHz 
spectrum in the 1800 MHz commercial band which had been unaccounted 
for, which is neither lying with the Defence nor with the Telecom 
Operators and such an action is contrary to law. DoT itself admitted in 
• (2012) 3 sec 1 
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998 
SUPREME COURT REPORTS 
[2017) 4 S.C.R. 
A January, 2015 that 55 MHz of spectrum out of total 75 MHz in 1800 
MHz band is available for commercial use to the TSPs, but failed to take 
any effective measures for releasing the said spectrum despite repeated 
requests of the telecom operators. 
B 
c 
15. TRAI has requested the information in terms of the proviso to 
Section 11 of the Telecom Regulatory Authority of India Act, 1997 (for 
short, "TRAI Act") regarding 'reserve price and associated conditions 
for the auction of spectrum', which has not been made available despite 
the fact that the proviso to Section 11 mandates supply of information 
within seven days. 
Under the scheme of Section 11 of the TRAl Ad, 
certain pa~ameters have to be satisfied by the Government while acting 
on the recommendations ofTRAI, especially keeping in view the first, 
third and fifth proviso to Section 11 and Section 11(4) of the TRAL.\d. 
16. The aforesaid submissions have been resisted by Mr. Roh:ltgr, 
learned Attorney General for India and Mr. Ranjit Kumar, learned Solicit()r 
General oflndia appearing for the Union oflndia and their submissions 
D are encapsulated to sustainability of the combat. 
E 
17. The grievance raised by the petitioners do not survive as they 
have participated in the auction and have been successful in some of the 
areas and the question of alteration of bid condition does not survive. 
The present petitions have been deliberately kept alive by the telecom
service providers only to retain their dominant positions to the detriment 
of the market and the subscribers. The challenge by the petitioners 
pertaining to tender conditions formulated by the Union oflndia invoking 
the power of judicial review is not tenable as no valid grounds for 
interference, as postulated in Tata Cellular v. Union of Jndia5 and 
F Delhi Science Forum and others v. Union of India and another6, 
have been made out. 
18. The statutory requirement of seeking TRAI's 
recommendations and the procedure to be followed is set out in Section 
11 of the TRAI Act. The proviso to Section 11 has been interpreted by 
G this Court in Association of Unified Tele Services Providers (supra) 
wherein it has been held that the recommendations of TRAl are not 
binding on the Government. In the case at hand, the Government, after 
deliberating on the recommendations of TRAI and sending it back to 
TRAI for reconsideration, has chosen not to accept the reconunendations 
'(1994)6SCC651 
H 
' (1996) 2 sec 405
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 
999 
ANR. [DIPAK MISRA, J.] 
of TRAI. Keeping in view the concept of minimum availability of A 
spectrum with a bidder and regard being had to allow space to the new 
entrants to compete, it is urged that Government has always given due 
weightage to the recommendations ofTRAI. Further, the Government 
of India does not want to compromise quality to be offered by the service 
providers in consumer interest and, therefore, did not accept the 
B 
recommendations ofTRAI. The endeavour of the Government contained ~· 
in the NIA for the auction conducted in March, 2015 is not based on any 
classification except that all service providers must have a minimum of 
5 MHz if they want to deploy any mobile technology benefitting the 
consumer and even TRAI concurred with the view that minimum 5 
MHz quantum was the appropriate minimum quantum to be set. 
Reduction of minimum quantum cf spectrum to 3 MHz instead of 5 
MHz for new entrants would be contrary to TRAI's own 
recommendations on the issue of spectrum auction, wherein TRAI has 
c 
been consistently holding that 5 MHz is the minimum amount of spectrum 
required to ensure that any technology can be deployed with the allocated D 
spectrum .. 
19. Fragmented spectnun allocation to address the present issues 
in few service areas will only be a short term solution but will have long 
term negative impact for the sector as the objective is to have broadband 
solution that offers the
most affordable devices and ecosystem to connect · 
the billion people and as such, the minimum quantum of spectrum is 
E 
prescribed as 5 MHz. After deliberating on the recommendations of 
TRAI, the Government differed with the view of TRAI and kept the 
minimum bid quantity at 5 MHz on the grounds that the present and 
future technology scenarios and the need for making the spectrum 
contiguous would only benefit the consumer which is the essential 
F 
objective of the National Telecom Policy (NTP); that in the previous 
three auctions, new entrants/licensees whose licences were expiring 
were required to bid for minimum 5 MHz spectrum; that there was no 
substantial change in the market and eco-system scenario since the last 
auction of February, 2014; that there is a need to induct new technologies 
to meet the requirements of the ever growing demand for data; and the 
G 
number of mobile users stands at approximately 960 million constuners 
whose need has to be catered keeping in view the development of 
technology in next twenty years. Thus, taking a long-term view, the 
decision of the Government after giving due weightage to the 
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[2017] 4 S.C.R. 
A recommendations ofTRAI is justified. The plea that the auction is non-
competitive and security driven has no basis. 
B 
20. The classification of entities is on the basis of whether an 
entity is a new entrant or an existing service provider as the Government 
has always been consistent with the trend that new entrants would have 
to bid a minimum of 5 MHz and the existing service providers have to 
'top up' (capacity enhancement) their present holding of spectrum to 
achieve a goal of maximizing efficiency and avoid any restraint for the 
consumers and the service providers. In the NIA for auction of spectrum 
in2015, across all bands, anew entrant is required to bid for aminimum 
of 5 MHz and this requirement has always been the same for earlier 
C auctions also conducted in 2012, 2013 and 2014. The minimum bid 
quantum is reduced only in those cases where 5 MHz is not available in 
a LSA or contiguous 5 MHz is not available. An existing licensee has to 
bid for a minimum of0.6 MHz of spectrum in order to 'top up' so as to 
come to the level of 5 MHz (as minimum administratively allocated 
D spectrum in 900 MHzJl 800 MHz band is 4.4 MHz) and be in a position 
to provide services compatible with new technology. Moreover, the 
existing licensee, who will be bidding for a minimum of0.6 MHz so that 
he may come to the level of 5 MHz, may also bid for more than that. 
The idea would be that he has to bid as a new entrant for the
next time 
E . when his licence would expire and his allocated 4.4 MHz spectrum is 
put to auction. 
F 
· 21. The endeavour ofDoT is that everybody should have minimum 
5 MHz as less than 5 MHz will not be good for the consumer keeping in 
view the evolution and innovation and in order.to achieve the same, DoT 
has to be far-sighted as the spectrum is being allotted for a period of 20 
years. Assuming that there is classification, then, that is based on an 
intelligible differentia between two sets of people, i.e., ( 1) new entrants 
including the expiring licensees and (2) existing licensees, both of whom 
ought to have minimum 5 MHz so as to be able to deploy on any mobile 
technology. An existing licensee may not require 5 MHz to meet the 
G traffic requirements and only a fraction of 5 MHz would meet the 
requirements, and small chunk addition would improve traffic handling 
capabilities and reduce call drops due to congestion. Moreover, in case 
an existing licensee chooses to only retain what it has in terms of spectrum 
before, then it will, as aforesaid, only be able to provide the bare 2G 
service and no more and, therefore, he would lose out on his consumers 
H
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDiA & 
1001 
ANR. [DIPAK MISRA, J.] 
who can change to a better service provider in terms of number portability. 
A 
Therefore, the classification, if any, contained in the NIA for the auctions 
conducted in March, 2015 is based on intelligible differentia hav!ng a 
nexus with the object sought to be achieved and there is no violation of 
Article 14. 
22. There was no spectrum in 900 MHz band prior to the auction 
B 
in March, 2013. The only existing licensees in 900 MHz band were 
MTNL/BSNL who did not participate in the auction (but paid the au-::tion 
determined price since 2010) and, as such, practically, there was no 
existing licensee in Delhi, Mumbai and Kolkata. Therefore, there was 
no requirement to deal with existing licensees in 900 MHz band in March, 
2013 auction & February 2014 auction. The argument of the petitioners 
C 
that there are many operators across the country who are left with less 
than 5 MHz of spectrum and there is no obligation on the part of every 
service provider to being forced to purchase or top up to 5 MHz is 
unacceptable as it does not take into account why a service provider is 
required to have more than 5 MHz, and the fact that with the innovation D 
. in technology and the scientific development that may take place in the 
next 20 years, if a service provider is satisfied with the technology that it 
is presently using and such.service provider does not want to give to its
customers/consumers better services, then he would remain within the 
realm of the already allotted spectrum without wanting to top up or go 
up to 5 MHz, in which case not only is he likely to suffer but his customers 
are also likely to suffer. The argument that the petitioner was 'knocked 
out' ofavailability ofonly 8.8 MHz in the North East and due to the term 
of minimum of 5 MHz for a new entrant including expiring licensees is 
incorrect. In the North East, while 8.8 MHz was available in 900 band, 
there were other spectrum available, i.e., 800 band (13.75 MHz), 900 
band (8.8 MHz), 1800 band (8.4 MHz) and 2100 band (5 MHz) out of 
which the writ petitioner-Reliance has won 5 MHz in 800 band and 5 
MHz in 1800 band at the auction as it already had spectrum in 2100 
band. The trendofthe 2015 auctions has shown that this company has 
substituted its 900 band with 1800/800 band in most circles where the 
E 
F 
bid was lower than the 900 band and it has also bid for the 900 band 
G 
spectrum and remained unsuccessful, and that cannot form the basis to · 
assert that there is any discrimination caused or that there is a flaw in 
the NIA. That apart, the investment already made in the past 20 years is 
an investment which will be used even with the 1800/800 band 
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A technologies and any future investment.according to the needs of the 
time will be made by them in their commercial wisdom and to say that 
they were "knocked out of the auction because of the NIA design" is 
totally fallacious as they purchased spectrum in other bands. The 
submission that thousands of crores of investment have been made entirely 
B overlooking the lakhs of crores revenue generated which is one of the 
fundamental purposes of auction especially of spectrum. 
23. As regards the submission of the petitioners for moulding of 
the relief and for laying down principles for the future, the prayers do 
not remotely so indicate and, furthermore, the policy of auction in such 
matters is a complex phenomenon, and the Court may not think of laying 
C down guidelines for future. The argument that in case of a renewal of a 
licenre, the licensee would have the legitimate expectation to be able to 
get back what it was surrendering is contradictory, for a renewal and 
surrender will not happen simultaneously since these licences are deemed 
to have been over by efflux of time and there is no renewal of licence 
D because spectrum is required to be purchased in the open market. Hence, 
there is no renewal leading to any legitimate expectation. 
24. In the auction, the entire available spectrnm for commercial 
use in the 800, 900, 1800 and 2100 MHz bandwas put to action and the 
spectrum which could not be sold in this
auction shall be included in the 
E next auction. The submission that the Union of India has flouted the 
decision in Centre for Public Interest Litigation (supra) is entirely 
unfounded as the grievance raised was that the entire spectrum available 
on the cancellation of the licences which were the subject matter of that 
PIL were required to be put up for auction and the PIL related to grant 
oflicences in the 1800 band category only and the spectrum that would 
F have been released consequent upon the cancellation of the licence 
was required to be a part of the auction to be held after February 2013 
in its totality. The issue of allotment of spectrum in the 900 band was 
n ,t the subject matter of consideration of the said writ petition. The 
objectives of the present auction are in consonance with the National 
G Telecom Policy-2012 (NTP-2012). These objectives are the same as in 
the previous auctions conducted in November 2012, March 2'.>13 and 
February 2014. The objectives state that the primary objective of the 
NTP-2012 is maximizing public good by making available affordable, 
reliable and secure telecommunication and broadband services across 
the entire country. The main thrust of the Policy is on the multiplier 
H
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1003 
ANR. [DIPAK MISRA, J.) 
effect and transformational impact of such services on the overall A 
economy. It recognizes the role of such services in furthering the national 
development agenda while enhancing equity and inclusiveness. Availability 
of affordable and effective communication for the citizens is at the core 
of the vision and goal of the NTP-2012, at the same time as being 
investor friendly ~d attracting additional investments. The NTP-2012 
B 
also recognizes the predominant role of the private sector in this field 
and the consequent policy imperative of ensuring continued viability of 
service providers in a competitive environment. Pursuant to the NTP-
2012, these principles have guided the decisions needed to strike a balance 
between the interest of users/consumers, service providers and 
government revenue. Revenue maximization is not the sole objective of C 
the Government as alleged by the TSPs. The auction terms have been 
structured in a way keeping in mind the public interest and the fact that 
the TSPs have to serve the public (consumers) for the years to c:>me, 
i.e., the spectrum is allotted in a transparent manner for a period of 20 
years. 
25. There are various factors that the DoT is required to take into 
account while determining the auction structure. Ultimately, the DoT 
should be permitted to determine the auction structure consistent with 
the scheme of the TRAI Act (as has been done
in the earlier auctions 
D 
and the instant one). It cannot be left to the option of the telecom service 
providers and their narrower self interest to determine the structure and 
E 
timing of auctions. Capping has been kept in vogue to have a bigger field 
and it is based on a rational principle. For arriving at the cap, only two 
parameters are to be seen - (a) the total spectrum assigned in that 
service area; and (b) the total spectrum being put to auction. There is 
nothing mentioned in the definition as explained by the notes that the 
f 
surrendered spectrum is also required to be added because there is no 
definition of a surrendered spectrum. Even if some capping rule is 
required to be altered, the Court would be required to go into the basis 
why a capping rule was provided for and why the TRAI and the 
Department have consistently followed the capping rule not from today 
but from 2012 itself. Thai is because no monopoly should be created G 
and a healthy competitive bidding should be available. The relief of 
removal of the cap is only to enable the petitioners who are 'big players' 
to serve their cause but not the public interest and the government has 
been reviewing its policy from time to time. TRAI has made 
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A recommendations regarding compilation of the cap in future, and such 
recommendations are under consideration by the Government of India. 
26. It is apt to note here, as has been earlier stated, after 'certain 
bi.dders became successful in the auction, their cases were withdrawn 
and they were permitted to be imp leaded in these Transfer Cases. They 
B have also filed their written notes of submissions. Though separate written 
notes have been filed, yet we are inclined to enumerate the contentions 
raised in a composite manner. 
27. None of the operators have challenged the Spectrnm Cap 
Clause [Clause 5.3.1.] in the N1A2015. In the absence of such challenge, 
c anything which flows out from that clause including the methodology/ 
calculation cannot be questioned and/or not open to challenge :ind as a 
natural corollary, the arguments pertaining to the clause being arbitrary, 
discriminatory or contrary to public policy cannot be raised. Once the 
policy itself cannot be faulted, the method of implementation thereof 
would not be supervised by the Court and no mandamus can be issued in 
D that regard. The methodology of ensuring the capping has to be left to 
the State and no direction should be issued as to how the capping is to be 
iJ!ipleJ11ented. 
E 
28. So far as the interpretation of clause 5.3.1 is concerned, the 
said clause, as it stands, is unambiguous and clear, and therefore, the 
said clause ought to be literally
interpreted. Furthermore, the NIA, 
being an invitation to offer, the rnles of interpretation of contracts would 
apply and not the rnles that may be applied in the case of interrretation 
of statutes. 
29. The NIA, being an invitation to offer, and Clause 5.3.1 being 
F one of the Clauses thereof, and the said Clause not being under challenge, 
any meaning other than the literal meaning of the said Clause would 
have to be by consent of both the parties. It is not open to one party to 
unilaterally, at the stage of NIA, seek an interpretation of a Clause in a 
manner of their choice and if there is a difference of opinion in the 
G manner of interpretation, it is the interpretation of the party who is offering 
tlie contract that ought to be adopted. Should there be caus~ for the 
Court interpreting or thereby requiring, through mandamus, the Offering 
Party (i.e., the State) to interpret the Clause contrary to their way of 
interpretation or literal interpretation, this would only be done on the 
very limited grounds of judicial review, in which case, while a certiorari 
H
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 
1005 ' · 
ANR. [DIPAK MISRA, J.] 
would issue to strike down the Clause as being arbitrary (which issue is 
A 
not put in question before the Court), a mandamus will not issue to require 
the State to interpret the Clause in a given way and make an offer in 
accordance with the interpretation given by the Court, which is what the 
petitioners seek. 
30. Clause 5.3.1, in 'No uncertain terms', provides for only two 
B 
categories of spectrum, namely, (i) spectrum currently held by the 
operators; and (ii) spectrum put to auction by the Licensor/Respondent, 
to be counted/considered while calculating the Spectrum cap. This being 
the position under the Clause (both accepted and understood by all the 
operators), the contention that the surrendered spectrnm ofBSNL/MTNL 
and not currently held by the existing operators should have been included 
C 
(whether or not put to auction) is clearly contrary to the unequivocal 
terms of Clause 5 .3 .1. The contention that the surrendered spectrum 
(which is neither assigned/held by any operator nor put to auction) ought 
to be included for calculating the Spectrum cap in the present auction is 
an effort to include/add another category of spectrum (i.e., surrendered D 
spectrum not put to auction) which is not provided in Clause 5.3.1, and 
thereby effectively seek amendment of the Tender/NIA terms which is 
totally impermissible in law. 
31. The objective behind Spectrum capping is to
ensure compedtion · 
in the market by preventing large/big operators from acquiring large 
E 
amount of spectrum, which they may not require but only hoard to prevent 
the small operators from effectively competing in the market, and that is 
why, TRAI has recommended on 02.07.2015 that the basic objective of 
prescribing a spectrum cap is to prevent a TSP from acquiring large 
holdings of spectrum through auction, M&A or trading, as it may lead to 
non-level playing field thereby disturbing the competition in the muket. 
F 
It cannot be left to the market forces alone to decide the maximum 
spectrum holding as a TSP and, hence, the provision of cap should continue 
· on the spectrum holding that a TSP may acquire or otherwise. The 
argument that the Respondent should have notionally included the 
spectrum surrendered by BSNL/MTNL would result in creating a situation G 
where though the spectrum put to auction remains the same (i.e., limited), 
yet a large/big player will be able to bid for the entire spectrum.( which it 
otherwise could not have done due to Clause 5.3.1) thereby effectively 
giving a tool to the large/big operators to deprive/starve small open.tors, 
who quite avowedly, cannot match the buying power oflarger operators 
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A of spectrum. 
8 
32. There cannot be any legitimate expectation based on the terms 
and conditions relating to NIA more so, in the sphere of auction of 
spectrum. The 2013 auction included the spectrum allegedly surrendered 
by BSNL/MTNL in calculating the Spectrum cap, while it has 11ot been 
done so in the present auction (i.e., 2015 auction), and the fact that the 
surrendered spectrum was included earlier and not in the present year 
does not give rise to legitimate expectation, for it does not bind the State 
to follow the same because the fundamental principles of maximization 
ofrevenue and subserving of the public interest at large require change. 
It is well settled that the concept oflegitimate expectation has no role to 
C play where the State action is as a public policy or in the public interest 
unless the action taken amounts to an abuse of power. The court does 
not interfere with the discretion of the public· authority which is empowered 
to take the decisions under law and the court is expected to apply an 
objective standard that leaves to the deciding authority the full range of 
D choice which the legislature is presumed to have intended. 
E 
F 
33. The grievance raised by the petitioners is that the design of 
the auction skewed price discovery and .resulted in artificial infiation of 
the price of spectrum. This grievance is to be viewed in the context in 
which the policy of auction of spectrum came to
be implemented. This 
Court having held that public interest is served by maximizing th<:< benefit 
to the public exchequer, a challenge premised on the admission that the 
method adopted by the State, in fact, maximized the generation of revenue 
from the auction of spectrum cannot succeed, Further, the present case 
may be usefully contrasted with the Center for Public Interest Litigation 
(supra) in which this Court quashed the licences issued to different 
telecom operators on a finding that the policy of 'first come first serve' 
(FCFS) was constitutionally suspect for the reason that it failed to 
maximize revenue. Additionally, it was found that the procedure for 
grant of licences was, in any event, vitiated by arbitrary application of 
the FCFS policy and by grant oflicences to ineligible applicants. In such 
G circumstances, the requirements of public interest were held to mandate 
a declaration that the process as a whole was legally non est. In the 
present case, declining to quash the auction exercise as a whole would 
occasion no detriment to the public interest since the competing 
considerations can be balanced by directing remedial and forward-looking 
reliefs, even while preserving past actions. Further, there is neither 
H
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1007 
ANR. [DIPAK MISRA, J.) 
allegation of any mala fide in the conduct of the auction, nor has it been A 
alleged that the policy was structured so as to convey benefit to a 
particular player/players over others. 
34. Having noted the contentions of the parties, we think it 
necessary to refer to the earlier decisions that have been rendered in the 
context of spectrum and the principle to be adhered to while disposing it 
B 
by way of granting licence. The litigation relating to spectrum had a 
beginning. In Centre/or Public Interest Litigation (supra), be it noted, 
the controversy had arisen in a different canvas. But it is necessary to 
allude to it. The two-Judge Bench framed five questions:-
"(i) Whether the Government has the right to alienate, transfer or c 
distribute natural resources/national assets otherwise than by 
following a fair and transparent method consistent with the 
fundamentals of the equality clause enshrined in the Constitution? 
(ii) Whether the recommendations made by the Telecom 
Regulatory Authority of India ("TRAI'') on 28-8-2007 for grant D 
ofUnifiedAccess Service licence (for short "UAS licence") with 
2G Spectrum in 800, 900 and 1800 MHz at the price fixed in 2001, 
which were approved by the Department ofTelecommunications 
(DoT), were contrary to the decision taken by the Council of 
Ministers on 31-10-2003? 
(iii) Whether the exercise undertaken by DoT from September 
2007 to March
2008 for grant of UAS licences to the private 
respondents in terms of the recommendations made by TRAI is 
vitiated due to arbitrariness and mala fides and is contrary to public 
interest? 
E 
F 
(iv) Whether the policy of first-come-first-served followed by DoT 
fo!" grant oflicences is ultra vires the provisions of Article !4 of 
the Constitution and whether the said policy was arbitrarily changed 
by the Minister of Communications and Information Technology 
(hereinafter referred to as "the Minister of Communications and 
Information Technology"), without consulting TRAI, with a view 
G 
to favour some of the applicants? 
( v) Whether the licences granted to ineligible applicants and those 
who failed to fulfil the terms and conditions of the licence are 
liable to be quashed?" 
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c 
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SUPREME COURT REPORTS 
[2017] 4 S.C.R. 
· 35. The Court referred to the new economic policy of India that 
was announced on 24.fl991 which was aimed at meeting India's 
competitiveness in the global market, rapid growth of exports, attracting 
foreign direct investment and stimulating domestic investments. With a 
view to achieve standards comparable to international facilities, the sub-
sector of Value Added Services was opened up to private investment in 
July 1992 for the services, namely, (a) electronic mail; (b) voicemail; (c) 
data services; (d) audio text services; (e) video text services; (j) video 
conferencing; (g) radio paging; and (h) cellular mobile telephone. The 
Court referred to the National Telecom Policy, 1994, New Telecom Policy, 
1999, Establishment of Telecom Regulatory Authority of India, Policy 
on Spectrum Management as enumerated in NTP 1999, the role cfTRAI, 
the factual matrix in hand, the stand of the respondent, the manner in 
which the allotments were made and, in that context, opined as follows:-
"85. As natural resources are public goods, the doctrine of equality, 
which emerges from the concepts of justice and fairness, must 
guide th~ State in determining the actual mechanism for distribution 
of natural resources. Jn this regard, the doctrine of equality has 
two aspects: first, it regulates the rights and obligations of the 
State vis-a-vis its people and demands that the people be granted 
equitable access
to natural resources and/or its products and that 
they are adequately compensated for the transfer of the resource 
to the private domain; and second, it regulates the rights and 
obligations of the State vis-a-vis private parties seeking to acquire/ 
use the resource and demands that the procedure adopted for 
distribution is just, non-arbitrary and transparent and that it does 
not discriminate between similarly placed private parties. 
xxxxxxxxxx 
89. In conclusion, we hold that the State is the legal owner of the 
natural resources as a trustee of the people and although it is 
empowered to distribute the same, the process of distribution must 
be guided by the constitutional principles including the do-::trine of 
equality and larger public good." 
36. Answering the question nos. 3 and 4, the Court held:-
"9 5. This Court has repeatedly held that wherever a contract is to 
be awarded or a licence is to be given, the public authority must 
adopt a transparent and fair method for making selections so that
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 
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ANR. [DIPAK MISRA, J.] 
all eligible persons get a fair opportunity of competition. To ;:mt it 
A 
differently, the State and its agencies/ instrumentalities must always 
adopt a rational method for disposal of public property and no 
attempt should be made to scuttle the claim of worthy applicants. 
When it comes to alienation of scarce natural resources like 
spectrum, etc. it is the burden of the State to ensure that a non-
8 
discriminatory method is adopted for distribntion and alienation, 
which would necessarily result in protection of national/p~1blic 
interest. 
96. In our view, a duly publicised auction conducted fairly and · 
impaitially is perhaps the best method for discharging this burden 
and the methods like first-come-first-served when used for 
C 
alienation of natural resources/public property are likely to be 
misused by unscrupulous people who are only interested in 
garnering maximum financial benefit and have no respect fer the 
constitutional ethos and values. In other words, while transferring 
or alienating the natural resources, the State is duty-bound to adopt 
D 
the method of auction by giving wide publicity so that all eligible 
persons can participate in the process. 
xxxxxxxxxx 
99· In majority of the judgments relied upon by the learned Attorney 
General and the learned counsel for the respondents, it has been 
E 
held that the power of judicial review should be exercised with 
great
care and circumspection and the Court should not ordinarily 
interfere with the policy decisions of the Government in financial 
matters. There cannot be any quarrel with the proposition that the 
Court cannot substitute its opinion for the one formed by the 
F 
experts in the particular field and due respect should be given to 
the wisdom of those who are entrusted with the task of framing 
the policies. We are also conscious of the fact that the Court 
should not interfere with the fiscal policies of the State. However, 
when it is clearly demonstrated that the policy framed by the State 
or its agency/instrumentality and/or its implementation is contrary 
G 
to public interest or is violative of the constitutional principles, it is 
the duty of the Court to exercise its jurisdiction in larger public 
interest and reject the stock plea of the State that the scope of 
judicial review should not be exceeded beyond the recognised 
parameters. 
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SUPREME COURT REPORTS 
[2017] 4 S.C.R. 
xxxxxxxxxx 
101. Before concluding, we consider it imperative to observe that 
but for the vigilance of some enlightened citizens who held 
important constitutional and other positions and discharged their 
duties in larger public interest and non-governmental organisations 
who have been constantly fighting for clean governance and 
accountability of the constitutional institutions, unsuspecting citizens 
and the Nation would never have known how the scarce natural 
resource spared by the Army has been grabbed by those who 
enjoy money power and who have been able to manipulate the 
system., 
We are not referring to the directions given therein as we are not 
really concerned with the said directions in the present case. 
37. After delivery of the said judgment, the President oflndia, on 
12.4.2002, made a reference under Article 143(1) of the Constitution, 
D which was answered in Natural Resources Allocation, In re, Special 
Reference No.J of 2012 (supra). The issue of maintainability of 
reference was raised and the Court answered that the reference was 
maintainable as long as the lis in 2G case, inter parties, is left unaffected. 
On merits, the majority proceeded to hold as follows:-
E 
F 
G 
H 
"129. Hence, it is manifest that there is no constitutional mandate 
in favour of auction under Article 14. The Government has 
repeatedly deviated from the course of auction and this Court has 
repeatedly upheld such
actions. The judiciary tests such deviations 
on the limited scope of arbitrariness and fairness under Article 14 
and its role is limited to that extent. Essentially, whenever the 
object of policy is anything but revenue maximisation, the executive 
is seen to adopt methods other than auction. 
130. A fortiori, besides legal logic, mandatory auction may be 
contrary to economic logic as well. Different resources may require 
different treatment. V~ry often, exploration and exploitation 
contracts are bundled together due to the requirement of heavy 
capital in the discovery of natural resources. A concern would 
risk undertaking such exploration and incur heavy costs only if it 
was assured utilisation of the resource discovered: a prudent 
business venture would not like to incur the high costs involved in 
exploration activities and then compete for that resource in an
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 
1011 
ANR. [DIPAK MISRA, J.] 
open auction. The logic is similar to that applied in patents. Firms A 
are given incentives to invest in research and development with 
the promise of exclusive access to the market for the sale of that 
invention. Such an approach is economically and legally sound 
and sometimes necessary to spur research and development. 
Similarly, bundling exploration and exploitation contracts may be 
B 
necessary to spur growth in a specific industry. 
131. Similar deviation from auction cannot be ruled out when the 
object of a State policy is to promote domestic development of an 
industry, like in Kasturi Lal case7, discussed above. However, 
these examples are purely illustrative in order to demonstrate that 
auction cannot be the sole criterion for alienation of all natural 
C 
resources. 
38. Elaborating further, the Court held:-
"146. To summarise in the context of the present Reference, it 
needs to be emphasised that this Court cannot conduct a D 
comparative study of the various methods of distribution of natural 
resources and suggest the most efficacious mode, ifthere is one 
universal efficacious method in the first place. It respects the 
mandate and wisdom of the executive for such matters. The 
methodology pertaining to disposal of natural resources is clearly 
an economic policy. It entails intricate economic choices and the 
E 
Court lacks the necessary expertise to make them. As has been
repeatedly said, it cannot, and shall not, be the endeavour of this 
Court to evaluate the efficacy of auction vis-a-vis other methods 
of disposal of natural resources. The Court cannot mandate one 
method to be followed in all facts and circumstances. Therefore, 
F 
auction, an <economic choice of disposal of natural resources, is 
not a constitutional mandate. We may, however, hasten to add 
that the Court can test the legality and constitutionality of these 
methods. When questioned, the courts are entitled to analyse the 
legal validity of different means of distribution and give a 
constitutional answer as to which methods are ultra vire~ and 
G 
intra vires the provisions of the Constitution. Nevertheless, it cannot 
.and will not compare which policy is fairer than the other, bui, if a 
policy or Jaw is patently unfair to the extent that it falls foul of the 
' (1980) 4 sec 1 
H
1012 
A 
B 
c 
D 
E 
F 
G 
H 
SUPREME COURT REPORTS 
[2017] 4 S.C.R. 
fairness requirement of Article 14 of the Constitution, the Court 
would not hesitate in striking it down. 
147. Finally, market price, in economics, is an index of the value 
that a market prescri.bes to a good. However, this valuation is a 
function of several dynamic variables: it is a science and not a 
law. Auction is just one of the several price discove1y mechanisms. 
Since multiple variables are involved in such valuations, auction 
or any other form of competitive bidding, cannot constitute even 
an economic mandate, much less a constitutional mandate. 
148. In our opinion, auction despite being a more preferable method 
of alienation/allotment of natural resources, cannot be held to be 
a constitutional requirement or!imitation for alienation of all natural 
resources and therefore, every method other than auction cannot 
be struck down as ultra vires the constitutional mandate. 
149. Regard being had to the aforesaid precepts, we have opined 
that auction as a mode cannot be conferred the status of a 
constitutional principle. Alienation of natural resources is a policy, 
decision, and the means adopted for the same are thus, executive 
prerogatives. However, when such a policy decision is not backed 
by a social or welfare purpose, and precious and scarce natural 
resources are alienated for commercial pursuits of profit 
maximising private entrepreneurs, adoption of means ot!ler than 
those
that are competitive and maximise revenue may be arbitrary 
and face the wrath of Article 14 of the Constitution. Hence, rather 
than prescribing or proscribing a method, we believe, a judicial 
scrutiny of methods of disposal of natural resources should depend 
on the facts and circumstances of each case, in consonance with 
the principles which we have culled out above. Failing which, the 
Court, in exercise of power of judicial review, shall term the 
executive action as arbitrary, unfair, unreasonable and capricious 
due to its antimony with Article 14 of the Constitution." . 
39. Be it noted, pursuant to the judgment in 20 case, the Union of 
India had taken steps to conduct an auction of 900 MHz and 1800 MHz 
insofar as they pertained to certain operators whose licences were coming 
to an end in 2014. The licences had been granted in favour of certain 
licensees, namely, Vodafone Mobile Service Ltd., Loop Mobi:e India, 
Bharti Airtel Ltd. and Idea Cellular Ltd. who had Cellular Mobile
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 
1013 
ANR. [DIPAK MISRA, J.] 
Telephone Service licence (CMTS licence) and some had Unified Access 
A 
Service licence (UAS licence) and they approached the Government of 
India seeking extension/removal of the licence. They approached the 
High Court of Delhi which directed the Government of India to dispose 
of the application within a stipulated time frame. Pursuant to the directions 
given by the High Court, the applications of the licensees were considered 
B 
and rejected by the Government of India. Aggrieved by the said rejection, 
the licensees approached TDSAT, which dismissed the petitions vide 
order dated 31.1.2014. 
40. After appeals were dismissed, the appellants therein preferred 
appeals under Section 18 of the TRAI Act. The grievance related to 
seeking of an extension of the period of licence. The Court in Bharti C 
Airtel Limited v. Union of India8, relying on Union of India and 
another v. Assn. of Unified Telecom Service Providers of India and 
others9, came to hold that it is a settled position of law that a licence 
granted,under Section 4(1) of the Telegraph Act such as the one granted 
to each of the licensees herein is a contract between the licensor and D 
the licensee. Thereafter, the Court posed the question, whether there 
was any right of extension of licence granted in favour of the licensee 
under the contract. Analysing the terms of the clauses in the contract, 
referring to various passages
from the 2G case and considering the view 
ofTRAI and the pronouncement in Natural Resources Allocation, In 
E 
Re (supra), the two-Judge Bench answered thus:-
"In para 82 of Natural Resources Allocation, In re (supra), this 
Cot\ft was categorical that the findings of 2G Case (supra) were 
limited to the case of spectrum. Similarly, in para 146, this Court 
observed that this Court "respects the mandate and wisdom of 
the executive" in the matter of choosing the most suitable mtthod 
F 
of distribution of natural resources. This Court noted that this is 
clearly a matter of an economic policy entailing an intricate 
economic choice and the Court lacks necessary expertise to make 
such choice. In the light of the observation in para 82 that at least 
in the matter of disposal of spectrum, auction is the only "permissible 
G 
and intra vires method for disposal". Therefore, the submission of 
the licensees is required to be rejected." 
41. Having adumbrated to the previous litigations, we shall presently 
• (2015) 12SCC 1 
'(2011) 10 sec 543 
H
1014 
SUPREME COURT REPORTS 
[2017] 4 S.C.R. 
A refer to the NIA and deal with the submissions keeping in view the law 
in the field. Clause 5.3 of the NIA which deals with spectrum cap, that 
is, the quantum of spectrum an operator can hold in a LSA, is extracted 
below:-
B 
c 
"5.3 Spectrum Holding Capping Rule 
For the purpose of this Auction the bidding by the bidders for 
each of the Service Areas in each of the bands will be restricted 
by a Cap which would depend on the Spectrum assigned in the 
respective band (1800 MHzl900 MHz! 800 MHz) and also on the 
Total Spectrum assigned in all the bands namely 800 MHz! 900 
MHz/ 1800 MHz/ 2.1 GHz/ 2.3 GHz/ 2.5 GHz along with 
respective paired frequencies. 
5.3.1 Overall Cap 
The Overall Cap for each of the Service Areas is calculated as 
25% of the Total Spectrum Assigned for Telecom services in above 
D 
mentioned frequency bands (including the Spectrum put for these 
auctions). 
** For the purpose of arriving at Overall Cap, the Total Spectrum 
Assigned in a Service Area is considered as the sum total of the 
current holdings of all the Telecom Service Providers across all 
E · 
bands in the respective Service Area PLUS the Spectrum put to 
auction in that particular Service Area. 
F 
G 
H 
**It may be noted that the Spectrum which is expiring in 2015-16 
will not be considered in the Current Holdings. The same spectnun 
will only be considered as the Spectrum put to auction. · 
5.3.3. Cap in 900 MHz band 
The Spectrum Cap
for each operator in each of the Service Areas 
in 900 MHz band is calculated as 50% of the Total Spectrum 
assigned, both uplink and downlink, for Telecom services in 900 
MHz band. 
**For the purpose of arriving at Spectrum Cap in 900 MHz band, 
the Total Spectrum Assigned in a Service Area in 900 MHz band 
is considered as the sum total of the current holdings of all the 
telecom operators in 900 MHz band in the respective Service 
Area PLUS the Spectrum put to auction in 900 MHZ band in that
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 
1015 
ANR. [DIPAK MISRA, J.] 
particular Service Area. 
A 
••It may be noted that the Spectrum which is expiring in 2015-16 
will not be considered in the Current Holdings. The same spectrum 
will only be considered as the Spectrum put to auction." 
42. The stipulations in the said Clause are criticized by the 
petitioners on the ground that it creates different classes of bidders without B 
any justification and, in fact, the classification is absolutely unreasonable. 
As the Clause reflects, certain conditions have been envisaged by which 
three categories of bidders, namely, "existing licensees", "expiring 
licensees" and "new entrants" have been introduced. The submission is 
that there was no warrant to put a cap and further fix a minimum bidding c 
criteria. The argument on behalf of the petitioners is that the above 
auction being non-competitive is vitiated. The proponement of the Union 
of India is that provisions had been provided by excluding some and 
permitting some to top up regard being had to the commercial interest 
and keeping in view the interest of the consumers. That apart, it has 
been urged that there is room for new entrants who may invest and D 
allow better competition and also there would be avoidance of monopoly 
by the big players. The thrust of the matter is whether the clause is so 
arbitrary and erroneous as to invite the frown of Article 19. To put it 
differently, it is to be considered
whether the classification is without 
any basis and whether the postulate is so unreasonable that a prudent 
E 
sense of commerce will abhor to give it any space. 
43. Having adumbrated to the previous litigations, we shall presently 
refer to the NIA. Clause 3 of the NIA deals with the eligibility and 
conditions. Clause 3.1 provides the eligibility criteria to participate in the 
auction and Clause 3 .2 provides for associated eligibility conditions.· The 
F 
relevant part of Clause 3.2 is as follows:-
"3.2 Associated Eligibility Conditions 
(i) Existing Unified Licence (Access Service)/Exiting UASL/ 
CMTS/UL licensees shall be treated as 'New Entrant' in those 
service area(s) for the frequency bands in which they do not hold G 
spectrum at present. In other words, UAS/CMTS/UL(AS)/UL 
licensees who hold spectrum only in a particular Service Area are 
also allowed to participate in the auction as 'New Entrant' in that 
service area for the frequency band in which they do not hold 
spectrum at present*. Their eligibility to bid for spectrnm blocks H
1016 
SUPREME COURT REPORTS 
[2017] 4 S.C.R. 
A 
in that particular service area will be that of a new entrant. They 
will also need to comply with conditions for spectrum allotment 
and other prescribed conditions such as roll out obligations, FBG, 
etc. 
*for the Purpose, 1800 MHz and 900 MHz Bands are 
B 
considered as some band 
(ii) Existing UASL/CMTS/UL(AS)/UL licensees shall be treated 
as 'Existing Licensee' in those service areas for the frequency 
band(s) in which they already hold spectrum. Their eligibility to 
bid for spectrum blocks will be that of an existing operator. For 
c 
the limited purpose of this provision, 900MHz band, 1800 MHz 
band will be treated as the same band. 
D 
E 
F 
G 
H 
(iii) Bidders whose licences are due for expiry of 2015-16 and 
whose spectrum in 900 and 1800 MHz band has been put to auction 
will also be treated as 'New Entrants'. 
(iv) Entities (not an existing licensee) will be treated as 'New 
Entrants' and will have to obtain a Unified License. 
(v) Licensees covered by the note under Clause 1.4 of UAS licence 
condition are allowed to bid only for the spectrum band which 
they currently hold. For the limited purpose of this provision, 900 
MHz and 1800 MHz will be treated as same band. 
(vi) For the purpose of this auction, a cap of 25% of the 'total 
spectrum assigned' in 800/900/1800/2100/2300/2500 MHz bands 
with applicable paired band put together and 50% within a given 
band in each of the access service area shall apply
for total 
spectrum holding by each operator. For the purpose of calculation 
of the cap in this auction, the spectrum put to auction would be 
included in the 'total spectrum assigned'. This cap will be 
applicable as on the last date of application for participating in 
Auction. Total Spectrum assigned for unpaired and both unlink 
and downlink spectrum in case of paired spectrum is taken into 
account." 
44. Clause 3.3 deals with unified licences, Clause 3.4 provides for 
associated licences, Clause 3.5 deals with prospective new entrants, 
Clause 3.6 speaks of roll out obligations and Clause 3.6.1 provides for 
roll out obligations for spectrums in 1800 MHz, 900 MHz and 800 MHz
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 
1017 
ANR. [DIPAK MISRA, J.] 
band in service areas other than metro service areas. Clause 4 provides 
A 
for auction details which are categorized into various compartments, 
namely, confidentiality and anti-competitive activity, application 
requirements, ownership compliance certificate, principal qualification 
conditions, earnest money deposit, payment terms and various other 
aspects. Clause 5 deals with spectrum in 1800 MHz, 900 MHz am! 800 
B 
MHz bands - auction rules. Clause 5 .1 deals with the conduct of auction 
and Clause 5.2 states about overview of the auction stages. Clause 5.3 
provides spectrum holding capping rule. Clause 5.3.2 reads as under:-
"3.2 Cap in 1800 MHz band 
The spectrum cap for each operator in each of the Service Areas c 
in 1800 MH band is calculated as 50% of the total spectrum 
assigned, both uplink and downlink, for telecom services in 1800 
MHz band. 
** 
For the purpose of arriving at spectrum cap in 1800 MHz 
band, the total spectrum assigned in a service area in 800 
D 
MHz band is considered as the sum total of the current 
holdings of all the telecom operators in 1800 MHz band in 
the respective service area plus the spectrum put to auc;tion 
in· 1800 MHz band in that particular service area. 
It maybe noted that the spectrum which is expiring in 2015-
E 
16 will not be considered in the Current Holdings. The same 
spectrum will only be considered as the spectrum put to 
auction.
Spectrum cap for each operator in 1800 MHz band on the 
maximum spectrum for each of the service area is as given in 
Table 5-E below: 
F 
Table 5-E 
Cap on Bidding for each Operator for 
each Service Area in 1800 MHz band 
Total spectrum assigned for both sides of 
G 
spectrum in case of paired spectrum is 
taken into account 
H
1018 
A 
B 
c 
D 
SUPREME COURT REPORTS 
[2017] 4 S.C.R. 
Service Area 
Maximum Cap for ·each 
Operator (In MHz)* 
Andhra Pradesh 
54.60 
Bihar 
28.55 
Gujarat 
46.00 
Harvana 
47.10 
Himachal Pradesh 
43.05 
Kamataka 
50.60 
·-
Kerala 
52.45 
Kolkata 
48.80 
North East 
48.80 
Odisha 
52.50 
Punjab 
43.45 
Raiasthan 
46.60 
Tamilnadu 
65.00 
Uttar Pradesh (East) 
47.25 
Uttar Pradesh (West) 
39.90 
*50% of total assigned spectrum and spectrum put for ·auction in 
the band in a service area. 
It may be noted that for a service area in 1800 MHz band, the 
E 
total of the current holding of spectrum in 1800 MHz band and 
·the total spectrum for which the bidder is submitting the bid for a 
service area should not exceed the cap which is mentioned in the 
Table 5-E above. Total spectrum assigned for both sides of 
spectrum in case of paired spectrum is taken into account." 
F 
45. The principal grievances of the petitioners, as is lucent, are 
that the principle of capping adopted by the respondent keeps the 
petitioners away from bidding in respect of a particular quantum and 
· further it makes the bid non-competitive; that the reduction of overall 
spectrum caps despite the available quantum of commercially viable 
spectrum amounts to hoarding; that the calculation of overall spectrum 
G whicl> has reduced the quantum of spectrum put to auction is erroneous; 
that though there is increase in the available spectrum which includes 
fresh spectrum and surrendered spectrum by
some operators, yet there 
has been unjustified reduction in the available spectrum for commercial 
allocation instead of increasing proportionately; that some of the 
H
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 
1019 
ANR. [DIPAK MISRA, J.] 
petitioner" are debarred from holding what they are holding in praesenti; A 
that the recommendation of TRAI should have been given adequate 
weightage by the n:spondents with regard to the principle of capping 
and availability of spectrum for commercial allocatiop by way of auction; 
that the available quantum should have been at least notionally added for 
the purpose of determining the cap which has not been done as a B 
consequence of which the auction becomes wholly arbitrary; that the 
exclusion of the surrendered spectrum from the process of calculation is 
irrational and unreasonable and that there is no transparency in the 
auction. As noted earlier, on behalf of the respondent-Union of India, 
emphasis is laid on providing a cap as that would facilitate availability of 
minimum amount of spectrum for ensuring benefit to the consumers and 
C 
also to allow new entrants who may require a .certain minimum amount 
of spectrum for establishing a network with good coverage and sufficient 
capacity at a reasonable price. It is also put forth-that it is reasonable 
that various bands of spectrum are not sold in small quantum so that a 
successful bidder has sufficient spectrum for deploying advance D 
technology. The principle of top up is allowed so that the.existing licensee 
can bid for the same for maximizing its efficiency which would ultimately 
benefit the consumers. Giving the examples
ofNorth East, it is contended 
that only 8.8 MHz spectrum is available and the term of minimum of 5 
MHz is stipulated for new entrants including expiring licensees so that 
they can top up for efficiency and provide adequate service to the 
E 
consumers. It has also been put forth that where 5 MHz is not available 
in the LSA in contiguous space, it has been decided that the minimum 
bid must be for 4.4 MHz. To buttress the said submission, example has 
been given of West Bengal where 5 MHz is not available in 900 MHz 
band and only 4.4 MHz is available in 800 MHz band. Similarly, the said 
principle is followed in 800 MHz and 1800 MHz bands. The existing 
F 
licensee has to bid for minimum 0.6 MHz spectrum in order to top up so 
as to come to the level of 5 MHz. 
46. The interest of the consumer and the maximization of price 
has been highlighted. It has also been urged that the petitioners have 
participated in the auction and have been successful in certain areas and G 
have failed in certain places and the whole intention is to monopolise the 
market. It is contended that the limit for acquisition of spectrum is intended 
to discourage the hoarding of spectrum and to encourage level playing 
fields and to advance healthy competition and keep at bay any kind of 
H
1020 
SUPREME COURT REPORTS 
(2017] 4 S.C.R. 
A artificial escalation. Commenting on the transfer case of Reliance 
Telecom Ltd., it is argued that the- spectrum available for the auction 
was 8.8 MHz in the 900 MHz band and the entire 8.8 MHz of spectrum 
in 900 MHz has been bid and the successful bidder is Mis. Bharti 
Hexacom Ltd. The other petitioner, Mis. Reliance, has been successful 
B 
c 
in 5 MHz of spectrum in 800 MHz band in North East area at the end of 
the auction. As far as 5 MHz in 2100 MHz band is concerned, Mis. 
Vodafone Ltd. has become the successful bidder and entered into the 
contract. 
47. Mr. Rohatgi and Mr. Ranjit Kumar have submitted that there 
was free competition and any bidder was permitted to outbid the other 
and when a free competitive market was provided, there is no ground to 
attach the auction by calling it unfair or non-transparent. As far as the 
exclusion of the spectrum is concerned, it has been set forth that certain 
quantum of spectrum has been reserved for the defence. It is also put 
forth that subject to process and requirement of harmonization of available 
D spectrum, it shall be put to auction in the future auctions. The process of 
harmonization, as is known, is quite complex and it is required to be 
carried with the defence in order that they may vacate spectrum without 
compromising their operational requirements. That apart, there is a 
requirement of contiguous chunk without clubbing it with auctioned 
E 
F 
spectrum.
In any case, the petitioners cannot insist for re-writing the 
terms of the tender conditions and they cannot demand that the whole 
thing should be put to auction and no capping rule can be applied. 
48. Capping rule is basically a formula which has worked out as 
an experimentation, as the completion of the auction as shown. The cap 
as compared has the aggregate of total spectrum assigned in the service 
area and the total spectrum being put to auction. If the cap is to be 
determined based on the "commercially usable spectrum", as put forth 
by the petitioners, as commercially assigned spectrum as postl' lated in 
the tender, it would be re-writing the tender conditions. Commenting on 
the non-inclusion of spectrum on surrender, it is pointed out that even if 
G the said spectrum is actually surrendered, the peti~ioners cannot seek 
any relief for the availability of the spectrum and the auction thereof 
. would be considered by the Union of India in a different auction for 
obtaining maximum revenue regard being had to the public interest. 
49. At this juncture, it is necessary to state that as per the affidavit 
H filed by the Union of India, after the leave was granted to conduct the
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 
1021 
ANR. [DIPAK MISRA, J.] 
auction, which commenced on 4.3.2015 and continued for 19 days except A 
Sundays, 115 rounds were conducted fore-auction of 108.75 MHz of 
spectrum in 800 MHz band in 20 LSA, 177 .8 MHz of spectrum in 900 
MHz band in 17 LSA, 99.2 MHz spectrum in 1800 MHz band in 15 
LSAs and 85 MHz of spectnwi in 2100 MHz band in 17 LSAs. The 
estimated result of the auction has been brought by way of tabular chart, 
which we think it necessary to reproduce:-
B 
Band 
Quantum of 
Value of the 
Quantum 
Value of tl1e 
Value of the 
(MHz) 
Spectrum 
Spectrum put 
provisionally 
Spectrum 
Spectrum 
put on 
on offer at 
won by 
provisionally 
prol'isionally 
Auction 
Reserve Price 
bidders 
\\'OU by 
won by bidders 
(MHz) 
(in Rs. Crore) 
(MHz) 
bidders at 
at Auction 
Reserve Price 
detennined price 
(Jn Rs. Crore) 
(fu Rs. Crore) 
800 
108.75 
13562.50 
86.25 
9710.00 
17158.79 
900 
177.8 
40223.80 
168.00 
3i841.00 
i2964.54 
1800 
99.2 
8936.20 
93.80 
8292.40 
9636.17 
2100 
85 
17555.00 
70.00 
9620.00 
10115.41 
Total 
470.75 
802i7.50 
418.05 
65463.40 
109874.91 
50. Having narrated the factual score, the process of NIA, the 
grievances articulated and the reply thereto by the Union of India and 
c 
D 
the successful bidders who have entered into contract and the result of E 
the auction, it is necessitous to recapitulate the parameters for interference 
in respect of matters pertaining to decision
oflargesse by auction. Let it 
be stated at the beginning, as directed in the 2G case, spectrum as a 
natural resource has to be put to auction and it has been put to auction. 
Prior to referring to certain authorities with regard to the principles laid 
down by this Court as regards the fundamental principle of holding auction, 
we think it apt to deal with the contention pertaining to TRAI's 
recommendation and non-acceptance of the same. The Union of India 
sent the reference back to the TRAI. The question in this context that 
requires to be posed is whether the recommendations ofTRAI are binding 
on the Central Government. 
51. Section 11 of the TRAI Act deals with the functions of the 
authority, that is, TRAI. The said provision empowers it to make 
recommendations either suo motu or on a request from the licensor on 
certain matters. The provisos appended to the said Section, being 
F 
G 
H
1022 
SUPREME COURT REPORTS 
[2017] 4 S. C.R. 
A relevant, are extracted hereunder:-
B 
c 
D 
E 
F 
G 
H 
"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 sriecified 
in sub-clauses (i) and (ii) of clause (a) of this sub-section in respect 
of new licence to be issued to a service provider and the Authority 
shall forward its recommendations within a period of sixty days 
from the date on which that Government sought the 
recommendations: 
Provided also that the Authority may request the Central 
Government to furnish such information or documents as may be 
necessary for the purpose of making recommendations under sub-
clauses (i) and (ii) of clause (a) of this sub-section and that 
Government shall supply such information within a period of seven 
days. from receipt of such request: 
Provided also that the Central Government may issue a licence to 
a service provider if no recommendations are received from the 
Authority within the period specified in the second proviso or within 
such period as may be mutually agreed upon between the Central 
Government and the Authority: 
Provided also that if the Central Government, having considered 
that recommendation of the Authority, comes to a prima facie 
· conclusion that such recommendation cannot be accepted or
needs 
modifications, it shall refer the recommendation back to the 
Authority for its reconsideration, and the Authority may, within 
fifteen days from the date of receipt of such reference, !orward 
to the Central Government its recommendation after considering 
the reference made by that Government. After receipt of further 
recommendation if any, the Central Government shall take a final 
decision." 
52. In Association of Unified Telecom Service Providers of 
India (supra), the Court has held that notwithstanding sub-section (I) of 
Section 4 of the Telegraph Act vesting exclusive privilege in the Central 
Government in respect of telecommunication activities and
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 
1023 
ANR. [DIPAK MISRA, J.] 
notwithstanding the proviso to sub-section ( 1) of Section 4 of the 
A 
Telegraph Act vesting in the Central Government the power to decide 
on the conditions ?f licence including the payment to be paid by the 
licensee for the licence, TRAI has been conferred with the statutory 
power to make recommendations on the terms and conditions of the 
licence to a service provider and the Central Government is bound to 
B 
seek the recommendations of TRAI on such terms and conditions at 
different stages, but the recommendations of TRAI are not binding on 
the Central Government and the final decision on the terms and condi<ions 
of a licence to a service provider rests with the Central Government. 
The legal consequence is that if there is a difference between TRAI 
and the Central Government with regard to a particular term or condition 
C 
ofa licence, as in the present case, the recommendations ofTRAI will 
not prevail and instead the decision of the Central Government will be 
final and binding. The Court has further laid down that TRAI, being an 
expert body, discharges recommendatory functions under clause (a) of 
sub-section(!) of Section 11 of the TRAIAct and discharges regulatory 
D 
and other functions under clauses (b), (c) and (d) of sub-section (1) of 
Section 11 of the TRAI Act and it being an expert body, the 
recommendations ofTRAI under clause (a) of sub-section (1) of Section 
11 of
the TRAI Act have to be given due weightage by the Central 
Government but the recommendations ofTRAI are not binding on the 
Central Government. The Court has further ruled that the regulatory 
E 
and other functions under clauses (b), (c) and (d) of sub-section (1) of 
Section 11 of the TRAI Act have to be performed independent of the 
Central Government and are binding on the licensee subject only to an 
appeal in accordance with the provisions of the TRAl Act. Thus, the 
interpretation made in the said case makes it clear that the 
recommendations given by TRAI are not binding but deserve to be given 
due weightage. Certain areas have been separated regard being had to 
F 
the nature of the language employed in the TRAIAct where the authority 
can act independent of the Central Governinent. We are only concerned 
with the part that pertains to recommendation. In the case at hand, the 
Central Government had sought the recommendation and then referred 
G 
it back. Ultimately, it formulated the policy for auction of the spectrum. 
Therefore, the criticism that is advanced that once there is a reference 
back, the Central Government should have been guided by_ the 
recommendations has no justification inasmuch as the Central 
Government has the ultimate authority to take a decision. O;f co11rse, 
H
1024 
SUPREME COURT REPORTS 
[2017] 4 S.C.R. 
A such a decision, especially a decision relating to frame a policy for NIA 
has to be in accord with the norms of Article 14 of the Constitution. 
B 
c 
53. Presently, we shall refer to certain authorities in the field and, 
thereafter, adjudge the grievances so eloquently articulated by the learned 
counsel for the petitioners. 
54. In Tata Cellular (supra), a three-Judge Bench, after extensive 
consideration of the earlier decisions in the matter of judicial review and 
its scope of applicability to government contracts and tenders, ruled that 
the modem trend points to judicial restraint in administrative action and 
the court does not sit as a court of appeal but merely reviews the manner 
in which the decision was made. It further opined that the court does 
not have the expertise to correct the administrative decision and if a 
review of the administrative decision is permitted, it will be substituting 
its own decision without the necessary expertise which itself may be 
fallibl.e. The Court further expressed that the terms of the invhation to 
tender cannot be open to judicial scrutiny because the invitation to tender 
D is in the realm of contract and the Government must be allowed to have 
a fair play in the joints as it is a necessary concomitant for an administrative 
body functioning in an administrative sphere or quasi-administrative 
sphere. It was also observed that the decision must not only be tested 
by the
application ofWednesbury principle of reasonableness but must 
E also be free from arbitrariness and must not be affected by bias or 
actuated by mala fides and while quashing decisions, heavy administrative 
burden on the administration and increase on expenditure have to be 
kept in view. 
55. In Raunaq International Ltd. v. I. V.R. Construction Ltd. 
F and otlzers10, it has been held that the award of a contract, whether it is 
by private party or by a public body or the State, is essentially a 
commercial transaction and prudent principle of commerce do weigh 
while making a commercial decision. 
56. In Mo11arch Infrastructure (P) Ltd. v. Ulhasnagar 
G Municipal Corpn. and others", this Court was concerned with the 
question relating to NIT issued by Ulhasnagar Municipal Corporation 
for appointment of agents for collection of octroi and revision of terms 
and conditions thereof. The Court held that it cannot say whether the 
10 (1999) 1 sec 492 
H 
11 (2000) s sec 2s1
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 
1025 
ANR. [DIPAK MISRA, J.] 
conditions are better than what were prescribed earlier, for in such A 
matters, the authority calling for tenders is the best judge. The Court 
declined to restore status quo ante. 
57. In Cellular Operators Association of India & Others v. 
Union oi India & Others12 , this Court, after referring to Tata Iron & 
Steel Co. Ltd. v. Union of India and another
13, held that where legal 
B 
issues are intertwined with those involving determination of policy and a 
plethora of technical issues, courts of law have to be very wary and 
must exercise their jurisdiction with circumspection for they must not 
transgress into the realm of policy-making, unless the policy is inconsistent 
with the Constitution and the laws. It has been further ruled that on c 
matters affecting policy and those that require technical expertise, the 
court should show deference to, and follow the recommendations of the 
Committee which is more qualified to address the issues. 
58. In Union of India v. International Trading Co. and 
another14, this Court held that non-renewal of permit by the Government 
to a private party on the ground of change in its policy cannot be faulted D 
if such change is founded on reasonableness and is otherwise not 
arbitrary, irrational and perverse. It was observed that if the State acts 
within the bounds of reasonableness, it would be legitimate to take into 
consideration the national
priorities and adopt trade policies and the 
ultimate test is whether, on the touchstone of reasonableness, the policy 
E 
decision comes out unscathed. It further ruled that reasonableness of 
restriction is to be determined in an objective manner and from the 
standpoint of the interests of the general public and not from the 
standpoint of the interests of the persons upon whom the restrictions 
have been imposed or upon abstract consideration. A restriction cannot 
F 
be said to be unreasonable merely because in a given case, it operates 
harshly. In determining whether there is any unfairness involved, the 
nature of the right alleged to have been infringed, the underlying purpose 
of the restriction imposed, the extent and urgency of the evil sought to 
be remedied thereby, the disproportion of the imposition and the prevailing 
condition at the relevant time enter into the judicial verdict. The Court G 
further held that the reasonableness of the legitimate expectation has to 
be determined with respect to the circumstances relating to the trade or 
business in question and canalisation of a particular business in favour of 
12 (2003) 3 sec 186 
1• (1996) 9 sec 109 
1' (2003) s sec 431 
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SUPREME COURT REPORTS 
[2017] 4 S.C.R .. 
A even a specified individual is reasonable where the interests of the country 
are concerned or where the business affects the economy of the country. 
59. In Directorate of Education v. Educomp Datamatics Ltd. 
and others15, this Court, applying the principles enunciated in Tata 
Cellular (supra) and Monarch Infrastructure (P) Ltd. (supra), held 
B that the terms of the invitation to tender are not open to judicial scrutiny, 
· the same being in the realm of contract; that the Government must have 
a free hand in setting the terms of the tender; that it must have reasonable 
play in its joints as a necessary concomitant for an administrative body 
in an administrative sphere and the courts would interfere with the 
administrative policy decision only if it is arbitrary, discriminatcry, mala 
C fide or actuated by bias and the courts cannot strike down the terms of 
the tender prescribed by the Government because it feels that some 
other terms in the tender would have been fair, wiser or logical. The 
courts can interfere only ifthe policy decision is arbitrary, discriminatory 
or mala fide. 
D 
E 
F 
60. In BannariAmman Sugars Ltd. v. Commercial Tax Officer 
and others16, this Court was concerned with the question relating to 
withdrawal of benefits extended to the appellant therein as subsidy and 
it was held that while taking policy decision, the Government is not 
required to hear the persons who have been granted the
benefit which is 
sought to be withdrawn. 
61. In Global Energy Ltd. and another v. Adani Exports Ltd. 
and others17, this Court reiterated the principles that the terms of the 
invitation to tender are not open to judicial scrutiny and the courts cannot 
whittle down the terms of the tender as they are in the realm of contract 
unless they are whoJly arbitrary, discriminatory or actuated by malice. 
62. In Master Marine Services (P) Ltd. v. Metcalfe & 
Hodgkinson (P) Ltd. and another18, the Court, after referring to the 
principles stated in Tata Cellular (supra), observed that the government 
policy can be changed with changing circumstances and onl~' on the 
G ground of change, such policy will not be vitiated and the Government 
has discretion to adopt a different policy or alter or change its policy 
calculated to serve the public interest and make it more effective as the 
" (20J4 J 4 sec 19 
" (2005) 1 sec 625 
17 (2005) 4 sec 435 
H 
1' c2oosJ 6 sec 138
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 
1027 
ANR. [DIPAK MISRA, J.] 
choice in the balancing of the pros and cons relevant to the change in 
A 
policy lies with the authority, but change in policy must be in conformity 
with Wednesbury reasonableness and free from arbitrariness, irrationality, 
bias and malice. 
63. In Michigan Rubber (India) Limited v. State of Karnataka 
and others19, the Court, after referring to Jagdish Manda/ v. State of B 
Orissa and others20 and Tejas Constructions & Infrastructure (P) 
Ltd. v. Municipal Council, Sendhwa and another2 1, expressed the 
view that the basic requirement of Article 14 is fairness in action by the 
State, and non-arbitrariness in essence and substance is the heartbeat of 
fair play and actions are amenable to judicial review only to the e::.tent 
that the State must act validly for a discernible reason and not whimsically C 
for any ulterior purpose and if the State acts within the bounds of 
reasonableness, it would be legitimate to take into consideration the 
national priorities. It further observed that fixation of a value of the 
tender is entirely within the purview of the executive and the courts 
hardly have any role to play in this process except for striking down 
D 
such action of the executive as is proved to be arbitrary orunreason'lble. 
If the Government acts in conformity with certain healthy standards and 
norms such as awarding of contracts by inviting tenders, in those 
circumstances, the
interference by courts is very limited unless the action 
of the tendering authority is found to be malicious and a misuse of its 
statutory powers and greater latitude is required to be conceded to the 
State authorities in the matter of formulating conditions of a tender 
document and awarding a contract. The Court also laid emphasis on 
public interest and the prudence in applying the principle of restraint 
where the action is fair and reasonable and does not smack of mala fide. 
E 
It was also emphasized that the courts cannot interfere with the terms 
F 
of the tender prescribed by the Government simply because it feels that 
some other terms in the tender would have been fair, wiser or logical. 
64. In Maa Binda Express Carrier and another v. North-East 
Frontier Railway and others22, this Court held that the scope of juc!icial 
review in matters relating to award of contracts by the State and its 
G 
instrumentalities is settled by a long line of decisions of this Court which 
clearly recognise that the power exercised by the Government and its 
"(2012) s sec 216 
20 (2001) 14 sec s11 
21 (2012) 6 sec 464 
22 (2014) 3 sec 760 
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SUPREME COURT REPORTS 
[2017] 4 S.C.R. 
A instrumentalities in regard to allotment of contract is subject to judicial 
review at the instance of an aggrieved party, and the submission of a 
tender in response to a notice inviting such tenders is no more than 
making an offer which the State or its agencies are under no obligation 
to accept and, therefore, the bidders participating in the tender process 
B cannot insist that their tenders should be accepted simply because a 
given tender is the highest or lowest depending upon whether the contract 
is for sale of public property or for execution of works on behaif of the 
Government. It further ruled that all that the participating bidders are 
entitled to is a fair, equal and non-discriminatory treatment in the matter 
of evaluation of their tenders and it is well settled that award of a contract 
C is essentially a commercial transaction which must be determined on the 
basis of considerations that are relevant to such commercial decision 
and, hence, the terms subject to which tenders are invited are not open 
to jud;cial scrutiny unless it is found that the same have been tailor-made 
to benefit any particular tenderer or class of tenderers. The Court further 
held that in the matter of award of contracts, the Government and its 
D 
E 
F 
agencies have to act reasonably and fairly at all points of time and to 
that extent, the tenderer has an enforceable right in the court which is 
competent to examine whether the
aggrieved party has been treated 
unfairly or discriminated against to the detriment of public interest. 
65. In Census Commissioner & Others v. R. Krishnamurthj-3, 
a three-Judge Bench of this Court, after noting several decisions, held 
that it is not within the domain of the courts to embark upon an enquiry 
as to whether a particular public policy is wise and acceptable or whether 
a better policy could be evolved and the courts can only interfere if the 
policy framed is absolutely capricious or not informed by reasons or 
totally arbitrary and founded ipse dixit offending the basic requirement 
of Article 14 of the Constitution. It further observed that in certain matters, 
as often said, there can be opinions but the court is not expected to sit as 
an appellate authority on an opinion. 
66. The present controversy has to be tested on the touchstone of 
G the aforesaid parameters of judicial review. We have enumerated the 
submissions advanced by the petitioners, recorded the contentions of 
the Union oflndia and stated the proponements of the impleade<l parties 
so that the assail and the resistance to the same become clearly evident. 
Though the grounds of attack have been stated in a manifold manner, 
H 
" (201 s) 2 sec 796
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 
1029 
ANR. [DIPAK MISRA, J.] 
yet they are really founded on certain basic assertions, namely, that the 
A 
entire spectrum available has not been put to auction which tantamounts 
to hoarding by the Central Government; that an endeavour has been 
made by the authorities to keep the real competitors away by providing 
a cap and resultantly making the bid non-competitive; that the classification 
made in the NIA is hit by unreasonableness with no objective to serve 
B 
because the condition of buying of 5 MHz of spectrum is not applicable 
to the existing/non-expiring licensees and providing minimum bidding 
option for different categories is wholly discriminatory; and that the 
surrendered spectrum or unused spectrum should have been notionally 
added so that there would have been fairness in auction, and that would 
have met the concept of legitimate expectation. 
C 
67. As the factual score depicts, the NIA had stipulated capping 
and simultaneously allowed certain categories to bid for a lesser quantum 
to enhance the existing spectrum with them so that they can reach a 
particular level. The reason shown by the respondents is that a minimum 
spectrum is determined to enhance the efficiency and capability of the D 
service providers so that the arrangement can be beneficial to the 
consumers and they can avail requisite benefit and have better service. 
The licensees who do not have the specific quantum can bid for the
balance so that the efficiency of service is enhanced. If a minimum is 
provided for a particular area or zone having regard to the necessity and 
the interest of the consumers, we are of the considered opinion that it 
E 
subserves the larger public interest. The said stipulation might have 
affected the individual interest of certain categories of licensees or 
aspirants but that cannot weigh over the public interest. 
F 
68. As far as the classification is concerned, it is noticed that 
some bidders have not been allowed to participate in respect of certain 
areas. The argument on behalf of the Central Government is that it has 
been done to curtail the monopoly and to encourage a broad based 
competition and further to allow certain entities who do not havP. the 
adequate spectrum so that there is augmentation of revenue as well as 
enhancement of efficiency in providing the service. it is further explained 
G 
that it has been done keeping in view the commercial interest and the 
holistic concept of public interest. Learned counsel for the petitioners 
would contend that it is demolition and ruination of public trust because 
the State holds spectrum in trust and it cannot be allowed to hoard by 
adopting such a subterfuge. It is apt to note here that after holding of 
H
1030 
SUPREME COURT REPORTS 
[2017] 4 S.C.R. 
A the auction, what is available is 52. 7 MHz in varKius bands. Explaining 
the same, the Union of India has submitted that historically, all the 
identified 7iMHz spectrum for mobile services in 1800 MHz baad in all 
22 service areas was with the defence and other users prior to 2001 
when it was allocated for the first time for commercial mobile services 
B in India after co-ordination with the then existing users. The spectrum 
in 1800 MHz band was coordinated by the defence on a case to case 
basis either in the entire service area or in parts of the service area (i.e., 
district-wise). It is further put forth that based on the coordination received 
from the Defence, the spectrum in 1800 MHz band was allotted, from 
time to time, for commercial use by Telecom Service Providers. 
In 
C January, 2015, a decision was taken in consultation with the defence 
that instead of the case by case approach adopted, 55 MHz out of 75 
MHz available in spots will be allotted to telecom service providers (TSPs) 
and the rest will be used by the defence. Within the 1800 MHz band, the 
exact frequencies to be allotted to TSPs and those to be used by the 
defence have been earmarked. It is the stand of the Centre.I Government 
D 
E 
F 
that, the process of allotting all the frequencies identified to TSPs will 
require some time since there are operational networks of the defence 
in the segment identified for telecom services in 1800 MHz band.
Similarly, frequency spots have been allotted to various TSP.> in the 
segments identified for use by the defence. It has been averred that the 
discussions have started with the defence for harmonizing the spectrum 
in 1800 MHz band and TSPs have also been consulted as they too have 
to shift their networks to new spots. According to the respondent-Union 
oflndia, the operational network of the defence is required to be continued 
until alternate arrangements are available for seamless operation of 
defence networks or else it would compromise the national security and 
regard being had to the same, no time frame can be set as to when the 
said quantum would be available for public auction. 
69. Additionally, it is put forth that the evolution of the 
telecommunication sector is a continuous process world-wide. New 
bands and technologies are being identified for providing coffiIUercial 
G services. For example, Wide Band Code Division Multiple Access 
(WCDMA) technology, commonly known as 3G technology, has been 
developed and was deployed in our country in 2100 MHz band. 465 
MHz spectrum in this band was co-ordinated from the defence and got 
released for telecom commercial services in 2010 and was auctioned. 
H
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 
1031 
ANR. [DIPAK MISRA, J.] 
Further, as per the decision of the Government in January 2015, an 
A 
additional 85 MHz of spectrum in this band was released by the defence 
and was part of the auction conducted in March 2015. It is also submitted 
that efforts are being made to get 15 MHz of spectrum released in each 
of the 22 service areas in 2100 MHz band also from the Defence. 
Although in this case also, no time frame can be set as to when it would 
B 
be made available, yet it is expected to be released during the process of 
completion of harmonization of 1800 MHz band spectrum and it will 
make 345 MHz of spectrum available in this band; and accordingly, there 
is a proposal to include the same in the next auction. It is further canvassed 
that as a part of identifying new bands and technologies and releasing 
for providing commercial services, 880 MHz spectrum in Time Division 
C 
Duplex {TDD) mode was also included in 2300 MHz band for the aui:tion 
conducted in 2010 and 320 MHz of spectrum in this band is proposed to 
be included for the next auction. Similarly, 440 MHz spectrum in 2500 
MHz band was allocated to BSNL and MTNL in 2007-08. However, 
160 MHz spectrum was surrendered by them. TRAI has been requested D 
to expedite recommendations for reserve price and associated conditions. 
A total quantum of 600 MHz of spectrum in this band, including that 
swTendered by BSNL/MTNL, is available. It is projected that
the 
channeling plan adopted in India for 2500 MHz band requires further 
development to reach up to the International Mobile Technology (IMT) 
band considering the issues relating to techno-economic feasibility and 
E 
availability of commercial eco-systems. That apart, it is also put forth 
that efforts are being made to make the spectrum reasonably available 
for auction and they will be included in the subsequent auctions. It has 
further been highlighted by the learned Attorney General that the 
availability of spectrum would be determined after it is harmonized with 
F 
the need of the defence and feasibility of its inclusion due to techno-
economic facets. 
70. As we find, the decision taken by the Central Government is 
based upon certain norms and parameters. Though criticism has been 
advanced that it is perverse and irrational, yet we are disposed to think 
that it is a policy decision which subserves the consumers' interest. It is 
G 
extremely difficult to say that the decision to conduct the auction in such 
a manner can be considered to be.mala fide or based on ·extraneous 
considerations. 
71. The grievance that has been stressed upon by the petitioners 
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SUPREME COURT REPORTS 
[2017] 4 S.C.R. 
A is that they had spent quite a sum at the time of grant of initial licence 
and they ha? a legitimate expectation to participate in the auction in 
every aspect and not to be kept at bay in certain areas for some 
unfathomable reason as a consequence of which they have not been 
able to get what they earlier had. According to them, the doctrine of 
B 
c 
"legitimate expectation" cannot be curtailed in this manner. The aforesaid 
argument has a basic fallacy. The principle of"legitimate expectation" 
can never override public interest and when there is larger public interest, 
the question of legitimate expectation does not arise; and in any case, in 
the present case, if we allow ourselves to say so, this contention is 
absolutely sans merit. We are inclined to think that when auction is held 
in respect of spectrum after taking into consideration certain range of 
facts and circumstances which are founded on economic and social 
policy factors, it is difficult to unsettle the NIA and the consequential 
effect thereof by applying the principle of judicial review. The procedure 
adopted in this kind of auction is neither to be equated nor compared 
D with the process meant for grant of ordinary largesse. It is because of 
its complexity, technical expertise, enormous financial impact and the 
larger public interest. Recently, in Tamil Nadu Generation and 
Distribution Corporation Ltd (TANGEDCO) Rep. by its Chairman 
& Managing
Director and Anr. etc. v. CSEPDI - Tris/1e Consortium, 
Rep. by its Managing Director & Anr.
2~, the Court, while discussing 
E the role of fiscal evaluation, has observed that:-
F 
G 
.H 
"At this juncture we are obliged to say that in a complex fiscal 
evaluation the Court has to apply the doctrine of restraint. Several 
aspects, clauses, contingencies, etc. have to be factored. These 
calculations are best left to experts and those who have knowledge 
and skills in the field. The financial computation involved, the 
capacity and efficiency of the bidder and the perception of 
feasibility of completion of the project have to be left to the wisdom 
of the financial experts and consultants. The courts cannot really 
enter into the said realm in exercise of power of judicial review. 
We cannot sit in appeal over the financial consultant's assessment. 
Suffice it to.say, it is neither ex facie erroneous nor can we perceive 
as flawed for being perverse or absurd. 
72. In this context, a passage from A/cons Infrastructure Ltd. v. 
Nagpur Metro Rail Corporation Ltd.25 is worth reproducing:-
" 2016 (I 0) SCALE 69 
"2016 (8) SCALE 765
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 
1033 
ANR. [DIPAK MISRA, J.] 
"We may add that the owner or the employer of a project, having A 
authored the tender documents, is the best person to understand 
and appreciate its requirements and interpret its documents. The 
constitutional Courts must defer to this understanding and 
appreciation of the tender documents, unless there is mala fide or 
perversity in the understanding or appreciation or in the application 
B 
of the terms of the tender conditions. It is possible that the owner 
or employer of a project may give an interpretation to the tender 
documents that is not acceptable to the constitutional Courts but 
that by itself is not a reason for interfering with the interpretation 
given." 
73. The said decision has been concurred with by another two-
C 
Judge Bench in Montecarlo Ltd. v. NTPC Ltd. 26 stating thus:-
"24. We respectfully concur with the aforesaid statement of law. 
w~ have reasons to do so. In the present scenario, tenders are 
floated and offers are invited for highly complex technical subjects. 
It requires understanding and appreciation of the nature of work D 
and the purpose it is going to serve. It is common knowledge in 
the competitive commercial field that technical bids pursuant to 
th~ notice inviting tenders are scrutinized by the technical experts 
and sometimes third party assistance from those unconnected with 
the owner's organization is taken. This ensures objectivity. Bidder's
expertise and technical capability and capacity must be assessed 
by the experts. In the matters of financial assessment, consultants 
are appointed. It is because to check and ascertain that tech'.lical 
ability and the financial feasibility have sanguinity and are workable 
and realistic. There is a multi-prong complex approach; highly 
technical in nature. The tenders where public largesse is put to 
auction stand on a different compartment. Tender with which we 
are concerned, is not comparable to any scheme for allotment. 
This arena which we have referred requires technical expertise. 
Parameters applied are different. Its aim is to achieve high degree 
of perfection in execution and adherence to the time schedule. 
But, that does not mean, these tenders will escape scrutir.y of 
judicial review. Exercise of power of judicial review would be 
called for if the approach is arbitrary or malafide or procedure 
adopted is meant to favour one. The decision making process 
26 2016 (10) SCALE 50 
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SUPREME COURT REPORTS 
[2017) 4 S.C.R. 
should clearly show that the said maladies are kept at hay. But 
where a decision is taken that is manifestly in consonance with 
the language of the tender document or subserves the ;mrpose 
for which the tender is floated, the court should follow the principle 
of restraint. Technical evaluation or comparison by the court would 
be impermissible. The principle that is applied to scan and 
understand an ordinary instmment relatable to contract in other 
spheres has to be treated differently than interpreting and 
appreciating tender documents relating to technical works and 
projects requiring special skills. The owner should be allowed to 
carry out the purpose and there has to be ailowance of free play 
in the joints." 
74. It is necessary to add a clarification. In TANGEDCO (supra), 
the question arose with regard to grant of contract of a particular work 
and it involved a complex situation. In Montecarlo Ltd. (supra), the 
question was relating to technical evaluation and comparison. In the 
D present case, we are concerned with putting certain natural resources 
into auction. In that regard, a decision has been taken. The grievances 
that have been adroitly accentuated are that the entire available spectrum 
should have been put to auction; that there should not have been any 
cap; that all could have been permitted to bid for everything; and that 
E 
F 
apart, the principle oflegitimate expectation ought to have
been kept in 
view. The counter argument, as has been placed before us, is founded 
on two underlined principles, namely, to hold the auction whic.'1 would 
·serve collective consumer interest thereby serving the public interest, 
and second, to get the maximum revenue. On one hand, the submission 
of the petitioners is that the auction is anti-competitive and on the other, 
the submission of the Central Government is that it is a healthy competition 
and avoidance of any kind of monopoly. There is also assurance in the 
reply that whatever has been left will be put to auction after getting the 
clearance from the defence and further keeping in view the a~pect of 
techno-economic and commercial eco-system feasibility. As far as the 
allocation to the defence and its need is concerned, it can be said that it 
G is always in the realm of public interest and it subserves the interest of 
the nation. As far as the economic feasibility is concerned, multifold 
economic aspects have to be taken into consideration and as a resultant 
effect, as shown during the process of auction, the bids became higher 
and higher and there has been real competition whereby the offers have 
H
RELIANCE TELECOM LTD. & ANR. v. UNION OF INDIA & 
1035 
ANR. [DIPAK MISRA, J.] 
been raised. There is remotely any allegation that attempt has been 
made to scuttle the competition. On the contrary, bidders have been 
allowed to bid and enhance their offer as a prudent commercial men 
would do. Therefore, it cannot be said that there has been no attempt to 
maximize the revenue. It will not be inapposite to note that the bidders 
who had preferred writ petitions and special leave petitions after having 
been successful in certain areas withdrew the petitions and in other 
areas where they were not able to bid because of the conditions in the 
tender, they have agitated their grievances. 
A 
B 
75. We have already discussed that the condition to put a cap and 
make a classification not allowing certain entities to bid is not an arbitrary 
one as it is based on the acceptable rationale of serving the cause of C 
public interest. It allowed new entrants and enabled the existing entities 
to increase their cap to make the service more efficient. The Court 
cannot get and dwell as an appellate authority into complex economic 
issues on the foundation of competitors advancing the contention that 
they were not allowed to bid in certain spheres. As the stipulation in the 
tender was reasonable and not based on any extraneous considerations, 
the Court cannot interfere in the NIA in exercise of the power of judicial 
review. The contention is that the State cannot hoard the spectrum
as 
per the 2G case. We are disposed to think that in tpe case at hand, it 
cannot be said that there has been hoarding. The directions given in the 
2G case had been complied with and the auctions have been held 
thereafter from year to year. The feasibility of communication, generation 
of revenue and its maximization and subserving of public interest are to 
be kept in view. The explanation given by the Union of India for not 
putting the entire spectrum to auction is a reasonable one and it is put 
forth that an endeavour would be made to put it to auction when it becomes 
available in sufficient quantum. The Court cannot interfere with the 
tender conditions only on the ground that certain amount of spectrum 
has not been put to auction. The submission is that whatever has been 
put to auction and is available should have been notionally added so that 
the entities which have certain quantum of spectrnm in praesenti could 
have participated in the auction and put forth their bids for a higher 
quantum. This argument may look attractive on a first blush but pales 
into insignificance on a studied scrutiny. As is evincible, one of the 
petitioners had earlier more than 65 MHz in a band and because of the 
limited auction and non-addition ofavailable spectrum on notional basis, 
D 
E 
F 
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1036 
A 
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SUPREME COURT REPORTS 
(2017] 4 S.C.R. 
it has obtained less quantum. With this submission, the contention of 
legitimate expectation has been associated. We have already repelled 
the submission pertaining to legitimate expectation. If there has been a 
reduction for a particular entity because of the terms and conditions of 
the tender, it has to accept it, for he cannot agitate a grievance that he 
could have obtained more had everything been added notionally. 
Notionally adding up or not adding up, we think, is a matter of policy and 
that too a commercial policy and in a commercial transaction, a decision 
has to be taken as prudence would command. In this regard, reference 
to the decision in Asia Foundation & Construction Ltd. v. Trafalgar 
House Construction (I) Ltd. and others27 would be apt. In the said 
case, the Court referred to the authority in Tata Cellular (supra) and 
thereafter opined that though the principle of judicial review cannot tJ<>. 
denied so far as exercise of contractual powers of government bodies 
are concerned, but it is intended to prevent arbitrariness or favouritism 
and it is exercised in the larger public interest or if it is brought to the 
notice of the court that in the matter of award of a contract power has 
been exercised for any collateral purpose. In the instant case, we are 
unable to perceive any arbitrariness or favouritism or exercise of power 
for any collateral purpose in the NIA. In the absence of
the same, to 
exercise the power of judicial review is not warranted. In the case at 
hand, we think, it is a prndent decision once there is increase ofrevenue 
and expansion of the range of service. 
76. It: needs to be stressed that in the matters relating to complex 
auction procedure having enormous financial ramification, interference 
by the Courts based upon any perception which is thought to be wise or 
assumed to be fair can lead to a situation which is not warrantable and 
may have unforeseen adverse impact. It may have the effect potentiality 
of creating a situation of fiscal imbalance. In our view, interference in 
such auction should be on the ground of stricter scmtiny when the decision 
making process commencing from NIA till the end smacks of obnoxious 
arbitrariness or any extraneous consideration which is perceivable. 
77. In view of the aforesaid analysis, we do not perceive any 
G 
merit in these Transfer Cases and consequently, they are dismissed with 
no order as to costs. 
Kalpana K. Tripathy 
Matters dismissed. 
21 (1997) 1 sec 738