Case: Delhi Science Fortum and Others Vs. Union of India and Another

In February 1993, the Finance Minister in his Budget speech announced Governments intention to encourageinvolvement and participation in Telecom to supplement efforts of Department of Telecommunications especially in creation of internationally competitive industry. May 13, 1994 National Telecom policy was announced which was placed in the Parliament saying that the aim of the policy was to supplement the effort of the Department of Telecommunications in providing telecommunications services. Later, guidelines for induction ofinto basic telephone services were announced and a Committee was set up to draft the tender documents for basic telephone services under the Chairmanship of G.S.S. Murthy. Ministry of Communications published the Tender Documents for Provision of Telephone Service. It specified and prescribed the terms and conditions for the basic services and it also conceived foreign participation but as a joint venture prescribing a ceiling on total foreign equity so far the Indian Company was concerned was not to exceed 49% of the total equity apart from otherto the notice inviting tenders, tenders were submitted for different circles, but before licences could be granted by the Central Government, writ petitions were filed in different High Courts as well as before this Court. All writ petitions filed before different High Courts were transferred to this Court to be heard together.Telecommunications has been internationally recognized as a public utility of strategic importance. The variety of Telecommunications services that has become available globally in the last decade is remarkable. It is being realized that economy is increasingly related to the way this Telecom infrastructure functions for purpose of processing and transmission of information, which has acquired central stage in the economic world today. The special aspect about Telecommunications is interconnectivity which is known as any to any requirement. Because of the economic growth and commercial changes in different Parts of the world, need formeans that communication systems have to be compatible with each other and have to be actuallyBecause of this, there is a demand even in developing countries to have communication system on international standards. Even after several decades of the invention of the telephone system, in almost all countries Telecommunications was the subject of monopoly supplied with the public network operator normally being the State owned Corporation or Government Department. Then it was not thought due to different considerations that such right could be granted to private sectors denuding the right of the monopoly of the Government to maintain and run the system of Telecommunications. The developed countries first took decision in respect of privatization of Telecom which amounted to giving up the claim of exclusive privilege over such system and this led to the transition from monopoly to a duopoly policy in many countries. India, although a developing country also faced a challenge in this sector. By and large it was realized that this sector needed acceleration because of the adoption of liberalized economic policy for the economic growth of the country. It appears that the policy makers were faced with the implications for public welfareth e sector being capital intensive. How the network is well maintained so as it reaches the largest number of people at a price to be paid by such users which can be held as reasonable? This issue was alsowith the defence and nation al security of the nation. Different committees and bodies constituted from time to time examined the Telecom policy which could be adopted by the nation from different aspects and angles.The counsel appearing in some of the writ petitions questioned the validity and propriety of the new Telecom Policy itself on the ground that it shall endanger The national security of the country, and shall not serve the economic interest of theto them, telecommunication being a sensitive service should always be within the exclusive domain and control of the Central Government and under no situation it should be parted with by way of grant of licences toCompanies and private bodies. The national policies in respect of economy, finance, communications, trade, telecommunications and others have to be decided by the Parliament and the representatives of the people on the floor of the Parliament can challenge and question any such policy ad opted by the ruling Government.

Court's reasoning:
According to us the power and authority of the Central Government to grant licences to private bodies including Companies subject to conditions and considerations for payments cannot be questioned. That right flows from the same(1) of Section 4 which vests that privilege and right in the Central Government. Of course, there can be controversy in respect of the manner in which such right and privilege which has been vested in the Central Government has been parted with in favour of private bodies. It cannot be disputed that in respect of grant of any right or licence by the Central Government or an authority which can be held to be State within the meaning of Article 12 of the Constitution not only the source of the power has to be traced, but it has also to be found that the procedure adopted for such grant was reasonable, rational and inconfirmity with the conditions which had been announced.Statutory authorities have some times used their discretionary power to confer social or economic benefits on a particular section or group of community. The plea raised is that the Act vests power in them to be exercised as they think fit. This is a misconception. Such provisions while vesting powers in authorities including the Central Government also enjoin a fiduciary duty to act with due restrain, to avoid misplaced philanthropy orappears that almost all the countries of the world who have privatized the telecommunications, have constituted Regulatory Authorities under she different enactments. In United Kingdom under the Telecommunications Act, 1984 a Regulatory Authority has been constituted to secure that the telecommunications services are provided throughout the United Kingdom and to supervise the connected issues. Such Authority has to promote the interests of the consumers, purchasers and other users in the United Kingdom (including in particular those who are disabled or of pensionable age) in respect of prices charged for and the quality and variety of, telecommunications services provided. It also maintains and promotes effective competition between persons engaged in commercial activities connected with telecommunications in the United Kingdom. The Authority is also responsible to encourage persons providing telecommunication services and telecommunication apparatus in the United Kingdom to compete effectively in the provision of such services and supply of such apparatus outside the United Kingdom. In United States the Federal Communication Commission created by the Communication Act, 1934 is a primary federal regulator of the communication industry. The Federal Communication Commission is currently organized into six bureaus. As a general rule the operating bureaus a re authorized to enforce existing Commission decisions and policies. Wireless Telecommunication Bureau has the responsibility to supervise all wireless technologies including Cellular services. In Canada the Telecommunication Act which is the primary statute relating to telecommunication came into force in 1993 replacing variety of statutes. It contains different provisions to review the functioning of the telecommunications and vests power in authorities in respect of supervision and implementation of the said policy. In Australia, AUSTEL is responsible for regulation of telecommunication services, equipment and cabling under Telecoms Act, 1991. AUSTEL determines standards relating to network integrity and safety, compliance with recognized international standards andquality of service.In France, General Directorate for Post and Telecommunications, DCPT has the responsibilities of determining and adapting the economic and technical framework for post and telecommunications activities, ensuring the conditions of fair competition among the various competitors in the telecommunications field. There are other supervisory and advisory bodies assisting the regulation of the telecommunications. In Japan the Telecommunications Technology Council has over all responsibility to coordinate the services, with outside administrative bodies and various manufacturers, users, institutes and other organizations in establishing the standards for Japan. Similar is the position in many other countries developed as well asappears that the Telecom Regulatory Authority of India Ordinance, 1996 has been promulgated after the hearing of the writ petitions concluded. From the preamble of the said Ordinance it appears that object thereof is to establish the Telecom Regulatory Authority of India tn regulate the telecommunication services, and for matters connected therewith or incidental thereto. Section 2(i) defines telecommunication service. Chapter II contains provisions in respect of the establishment of the Telecom Regulatory Authority of India and conditions of service in respect of Chairperson and members thereof. The Chairperson shall be a person who is or has been a Judge of the Supreme Court or who is or has been the Chief Justice of a High Court. A Member shall be a person who is holding the post of Secretary or Additional Secretary to the Government of India or to any equivalent post in the Central Government or the State Government for a period of three years. The term of the Chairperson has been fixed at five years from the date on which he enters upon his office. So far the Member is concerned, he has to hold office for a term of five years from the date on which he enters upon his office or until he attains the age of 62 years, whichever is earlier. The other conditions have been prescribed in the said Chapter. Chapter III prescribes the powers and functions of the said Authority. Section 11 opens with aclause saying that notwithstanding anything contained in the Indian Telegraph Act, 1885, t he functions of the Authority shall be as specified in the said Section including to ensure technical compatibility and effectivebetween different service providers, to ensures compliance of licence conditions by all service providers, to facilitate competition and promote efficiency in the operation of telecommunication services, to protect the interest of the consumers of the telecommunication services, to levy fees at such rates and in respect of such services as may be determined by regulations.(2) of Section 11anything contained in the Indian Telegraph Act, 1885, the Authority may, from time to time, by order, notify the rates at which the telecommunication. services within India and outside India shall be provided under this Ordinance including rates at which messages shall be transmitted to any country outside India."(2) of Section 11has also aing effects to saidover anything contained in the Indian Telegraph Act, 1885. In view of the aforesaidthe Authority may from time to time by order notify the rate at which telecommunication services within India and outside India shall be provided.(3) of Section 11 enjoins the Authority not to act against the interest. of the sovereignty, integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality. In view of Section 12 if the Authority considers it expedient so to do, it may by order in writing call upon any service provider at any time to furnish in writing such information or explanation relating to its affairs as the Authority may require. It can also appoint one or more persons to make enquiry in relation to the affairs of any serviceAuthority can also direct any of its officers or employees to inspect the books of accounts or other documents of any service provider. The Authority has been vested with the powers to issue such directions to service providers as it may consider necessary, for proper functioning by the service provider. Section 13 also reiterates the said power of the Authority by saying that for its functions under(1) of Section 11, the Authority can issue such directions from time to time to service provider as it may consider necessary. Chapter IV contains provision to respect of settlement of disputes. Section 29 provides for penalty if any person violates the directions of the Authority and Section 30 prescribes for punishment if the offence is alleged to have been committed by a Company. With the establishment of the Telecom Regulatory Authority of India, it can be said that an independent telecom Regulatory Authority is to supervise the functioning of different Telecom service providers and their activities can be regulated in accordance with the provisions of the said Ordinance.Section V of Tender Documents contains financial Conditions. Clause 2.0 thereofTariff for the SERVICE provided by the LIC ENSEE shall not be more than DOTs Tariff. Tariff is subject to regulation by Telecom Regulatory Authority of India, as and when such an authority is set up by the Government of India."aforesaid condition provides that licensee shall not charge tariff for service more than DOTs tariff and such tariff shall be subject to regulation by Telecom Regulatory Authority of India. This condition shall safeguard the interest of the persons to whom services are provided by thenew Telecom Policy is not only a commercial venture of the Central Government, but the object of the policy is also to improve the service so that the said service should reach the common man and should be within his re ach. The different licensees should not be left to implement the said Telecom Policy according to their perception. It has rightly been urged that while implementing the Telecom Policy the security aspect cannot be overlooked. The existence of a Telecom Regulatory Authority with the appropriate powers is essential for introduction of plurality in the Telecom Sector. The National Telecom Policy is a historic departure from the practice followed during the past century. Since the private sector will have to contribute more to the development of the telecom network than DOT/MTNL in the next few years, the role of an independent Telecom Regulatory Authority with appropriate powers need not be impressed, which can harness the individual appetite for private gains, for social ends.