Recent SC Judgement – Association of Unified Tele Services Providers Vs. Union of Indiar– 17.04.2014 23 APR 2014ADMIN 3 [Civil Appeal No. 4591 of 2014 @ Special Leave Petition (Civil) No.1804 of 2014] [Civil Appeal No. 4592 of 2014 @ Special Leave Petition (Civil) No.2925 of 2014] [Civil Appeal No. 10748 of 2011] [Civil Appeal No. 10749 of 2011] K.S. Radhakrishnan, J. 1. Leave granted. 2. We are in these appeals concerned with the scope and ambit of the powers and duties of the Comptroller and Auditor General of India (CAG), the Telecom Regulatory Authority of India (TRAI) and the Department of Telecommunications (DoT) in relation to the proper computation and quantification of Revenue in determining the licence fee and spectrum charges payable to Union of India under Unified Access Services (UAS) Licences entered into between DoT and the private service providers. 3. We have to examine the above-mentioned issue in the light of the various constitutional, statutory and licensing provisions, bearing in mind the fact that we are dealing with “spectrum”, which is universally treated as a scarce finite and renewable natural resource, the intrinsic utility of that natural resource has been elaborately considered by this Court in Centre for Public Interest Litigation and others v. Union of India and others (2012) 3 SCC 1 and in the Presidential Reference, the opinion of which has been expressed in Natural Resources Allocation, in Re: Special Reference No.1 of 2012 decided on September 27, 2012, reported in (2012) 10 SCC 1. This Court reiterated that the spectrum as a natural resource belongs to the people, though State legally owns it on behalf of its people because State benefits immensely from its value. This Court in Centre for Public Interest Litigation and others (supra) referring to the intrinsic worth of spectrum stated as follows: “75. The State is empowered to distribute natural resources. However, as they constitute public property/national asset, while distributing natural resources the State is bound to act in consonance with the principles of equality and public trust and ensure that no action is taken which may be detrimental to public interest. Like any other State action, constitutionalism must be reflected at every stage of the distribution of natural resources. In Article 39(b) of the Constitution it has been provided that the ownership and control of the material resources of the community should be so distributed so as to best subserve the common good, but no comprehensive legislation has been enacted to generally define natural resources and a framework for their protection. Of course, environment laws enacted by Parliament and State Legislatures deal with specific natural resources i.e. forest, air, water, coastal zones, etc. 76…………………The ownership regime relating to natural resources can also be ascertained from international conventions and customary international law, common law and national constitutions. In international law, it rests upon the concept of sovereignty and seeks to respect the principle of permanent sovereignty (of peoples and nations) over (their) natural resources as asserted in the 17th Session of the United Nations General Assembly and then affirmed as a customary international norm by the International Court of Justice in the case of Democratic Republic of Congo v. Uganda……………. 77. Spectrum has been internationally accepted as a scarce, finite and renewable natural resource which is susceptible to degradation in case of inefficient utilisation. It has a high economic value in the light of the demand for it on account of the tremendous growth in the telecom sector. Although it does not belong to a particular State, right of use has been granted to the States as per international norms. 78. In India, the courts have given an expansive interpretation to the concept of natural resources and have from time to time issued directions, by relying upon the provisions contained in Articles 38, 39, 48, 48-A and 51-A(g) for protection and proper allocation/distribution of natural resources and have repeatedly insisted on compliance with the constitutional principles in the process of distribution, transfer and alienation to private persons. 85. As natural resources are public goods, the doctrine of equality, which emerges from the concepts of justice and fairness, must guide the State in determining the actual mechanism for distribution of natural resources. In this regard, the doctrine of equality has two aspects: first, it regulates the rights and obligations of the State vis-à-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-à-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.” 4. We have indicated, the worth of spectrum to impress upon the fact that the State actions and actions of its agencies/instrumentalities/licensees must be for the public good to achieve the object for which it exits, the object being to serve public good by resorting to fair and reasonable methods. State is also bound to protect the resources for the enjoyment of general public rather than permit their use for purely commercial purposes. Public trust doctrine, it is well established, puts an implicit embargo on the right of the State to transfer public properties to private party if such transfer affects public interest. Further it mandates affirmative State action for effective management of natural resources and empowers the citizens to question ineffective management. 5. UAS license holders have an obligation to use such resources in a manner as not to impair or diminish the people’s right and people’s long term interest in that property or resource. In Secretary, Ministry of Information and Broadcasting, Government of India and others v. Cricket Association of Bengal and others 1995 (2) SCC 161, this Court held “there is no doubt since air waive frequencies are public property and are also limited, they have to be used in the best interest of the society and this can be done either by the Central Authority by establishing its own broadcasting network or regulating the grant of licenses to other agencies, including the private agencies.” In Reliance Natural Resources Limited v. Reliance Industries Limited (2010) 7 SCC 1, this Court held that the constitutional mandate is that the natural resources belong to the people of this country. This Court in several decisions took the view that the natural resources are vested with the Government as a matter of trust to the people of India and it is the solemn duty of the State to protect the national interest and natural resources must always be used in the interest of the country and not in private interest. In short, State is the legal owner of spectrum as a trustee of the people and even though it is empowered to distribute the same, the process of distribution must be guided by constitutional provisions, including the doctrine of equality and larger public good. Bearing in mind the above constitutional principles, we may proceed further. 6. We have the Indian Telegraph Act, 1885 in force, which gives the “exclusive privilege” to the Central Government of establishing, maintaining and working of telegraph to the Central Government and the Government is empowered to give licences on such conditions and in consideration of such payment, as it thinks fit, to any person to establish, maintain or work a telegraph in any part of India. The Indian Wireless Telegraphy Act, 1933, regulates the possession of wireless telegraph apparatus. The National Policy of 1994 was the first major step towards deregularisation, liberalization and private sector participation for providing certain basic telecom services on affordable and reasonable prices to all people covering all villages and also to achieve various other objectives. Following the New Telecom Policy of 1999 (NTP), licenses were granted to various cellular mobile telephone service operators in various cities and circles to make available affordable and effective communication for citizens, considering the fact that access to telecommunication was of utmost importance to achieve the country’s social and economic growth. NTP also attempted to provide universal service to all uncovered areas, including the rural areas and also provided high level services capable of meeting the needs of the country’s economy by striking a balance between the two. The NTP of 1999 specifically refers to spectrum management which highlights the following aspects: “10. The policy on spectrum management as enumerated in NTP, 1999 was as under: (i) Proliferation of new technologies and the growing demand for telecommunication services has led to manifold increase in demand for spectrum and consequently it is essential that the spectrum is utilised efficiently, economically, rationally and optimally. (ii) There is a need for a transparent process of allocation of frequency spectrum for use by a service provider and making it available to various users under specific conditions. (iii) With the proliferation of new technologies it is essential to revise the National Frequency Allocation Plan (NFAP) in its entirety so that it becomes the basis for development, manufacturing and spectrum utilisation activities in the country amongst all users. NFAP was under review and the revised NFAP was to be made public by the end of 1999 detailing information regarding allocation of frequency bands for various services, without including security information. (iv) NFAP would be reviewed no later than every two years and would be in line with the Radio Regulations of the International Telecommunication Union (ITU). (v) Adequate spectrum is to be made available to meet the growing need of telecommunication services. Efforts would be made for relocating frequency bands assigned earlier to defence and others. Compensation for relocation may be provided out of spectrum fee and revenue share. (vi) There is a need to review the spectrum allocation in a planned manner so that required frequency bands are available to the service providers. (vii) There is a need to have a transparent process of allocation of frequency spectrum which is effective and efficient and the same would be further examined in the light of ITU guidelines. In this regard the following course of action shall be adopted viz.: (a) spectrum usage fee shall be charged; (b) an Inter-Ministerial Group to be called the Wireless Planning Coordination Committee, as a part of the Ministry of Communications for periodical review of spectrum availability and broad allocation policy, should be set up; and (c) massive computerisation in WPC wing would be started in the next three months so as to achieve the objective of making all operations completely computerised by the end of the year 2000.” 7. Parliament, in the year 1997, enacted the Telecom Regulatory Authority of India (TRAI) Act to provide for the establishment of TRAI and the Authority has been entrusted with various regulatory functions on unified licensing. The Act and the recommendations made by TRAI emphasized on efficient utilization of spectrum to all the service providers and indicated that it would make further recommendations on efficient utilization of spectrum, spectrum pricing, availability and spectrum allocation procedure, and DoT has to issue spectrum related guidelines, based on its recommendations. 8. Let us now examine the facts which gave rise to these appeals. On 28.01.2010, the TRAI issued a communication to one of the service providers for furnishing books of accounts to the Branch Audit Office of the Director General of Audit, Post and Telecommunication, operative portion of the said communication reads as follows: “In terms of Rule 5 of the Telecom Regulatory Authority of India, Service Providers (Maintenance of Books of Accounts and other Documents) Rule, 2002, every service provider shall produce all such books of accounts and documents referred to in sub rule (1) of rule 3 thereof that has a bearing on the verification of the Revenue, to Telecom Regulatory Authority of India (the authority); (ii) to furnish to the Comptroller and Auditor General of India the statement or information, relating thereto, which the Comptroller and Auditor General of India may require to be produced before him and the Comptroller and Auditor General of India may audit the same in accordance with the provisions of Section 16 of the Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971. 2. The Comptroller and Auditor General of India (through Director General of Audit, Post & Telecommunications) has decided to audit the books of accounts of your company for the period of three years commencing from 2006-2007 onwards to assess the government share out of the revenues carried by your company in terms of the licence agreement with DoT. 3. Therefore in terms of the rule 5 of the TRAI, Service Providers (Maintenance of Books of Accounts and other Documents) Rules, 2002, it is requested that all necessary records/books of accounts circle/area-wise, on the Maintenance of Books of Accounts and other relevant matters during the last week of January, 2010 in the office of DO Audit, P & T, New Delhi, which would facilitate the audit work. 4. It is, therefore, requested that all necessary co-operation may be extended to the Branch Audit Officers and Delhi office of DG Audit P & T for completion of the above audit work besides providing all necessary records/information/ documents required in connection with this audit work. This issues with the approval of the Authority.” 9. The DoT later wrote a communication dated 16.03.2010 to one of the service providers, the subject matter of which reads “Audit and Telecom Service Providers by Comptroller & Auditor General”, the operative portion of the said communication reads as under: “In exercise of power conferred on the Licensor under clause 22.3 of Unified Access Service (UAS) Licence, it is requested to provide the following accounting records, for three years commencing from 2006-07, consisting of books of accounts and other documents for all the services offered under the above referred UAs licences issued to reflect : i) Total cost and breakup of original and current cost i.e. cost after depreciation under separate heads for different category of fixed assets; ii) Cost and breakup of operational expenses; iii) Service wise revenue; iv) Income from other sources; v) Supporting books of accounts other documents a) Fixed assets register b) Stores and spares/Inventory register c) Register showing service-wise particulars of subscribers d) Register showing deposits from customers e) Cash books f) Journals g) Ledger h) Copies of bills and counterfoils of all receipts. 2. The above mentioned information should be sent directly to DDG (Accounts), Department of Telecommunications, Room No.701, Sanchar Bhavan, 20, Ashoka Road, New Delhi – 110001 within 15 days from date of issue of this letter.
Posted on: Tue, 30 Sep 2014 04:43:10 +0000
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