2G Spectrum Scam

Centre for Public Interest Litigation and others v Union of India and others

The petitioners aggrieved by refusal of the Division Bench of the Delhi High Court to entertain the writ petition for a court monitored investigation by the Central Bureau of Investigation ( `the CBI’) or a Special Investigating Team into what has been termed as `2G Spectrum Scam’ for unearthing the role of respondent A. Raja, the then Union Minister for the Department of Telecommunications (DoT), senior officers of that department, middlemen, businessmen and others, had  invoked the jurisdiction of the Supreme Court under Article 136 of the Constitution.

Appellants argued that the allocation of spectrum on 10.1.2008 had resulted in huge loss to the public exchequer and, therefore, a thorough probe was necessary by an independent agency so that all the persons who may be found guilty were brought before law and punished. Appellants argued that the Court should direct the CBI to conduct investigation on various issues including grant of permission for use of dual/alternate technology to three operators a day before the policy decision was announced to the public by means of press release dated 19.10.2007, the change of cut off date from 1.10.2007 to 25.9.2007, issue of LOIs by DoT on 10.1.2008, gross violation of the policy of first-come-first- served, non compliance of the rollout and other obligations by the licensees, failure of the TRAI and DoT to ensure that the licensee complied with the conditions on which they were permitted to use the spectrum and huge loss  caused to the public exchequer by manipulative mechanism as also sale of equities by different licensees to foreign companies.

Appellants submitted that since the spectrum was scarce, the grant of licences on the basis of 2001 price was ex facie contrary to public interest and a mala fide action on the part of respondent A Raja and officers of DoT who had connived with the private operators and others including those in realty and infrastructure sectors for extraneous considerations. It was further submitted that the CAG had assessed the loss by using different methods and, therefore, the report prepared by him should constitute a basis for further investigation. Appellants made a pointed reference to the finding recorded by the CAG that soon after getting licences for a price of Rs.1600 crores or less, the licensees have transferred their stakes to the operators outside the country and made profits running into many thousand crores.

CBI relying  upon the various judgments of the Supreme Court argued that the Court should not make any order which may cast any reflection on the ability of the CBI to conduct the investigation into a case in which allegations of corruption have been leveled against various functionaries of the Government. During the course of hearing, the learned Solicitor General and senior counsel appearing for CBI stated that the Government of India and the CBI  had no objection to a Court monitored investigation by the CBI, but submitted that there was no reason for appointment of a Special Investigation Team. It was further submitted that the investigation being conducted by the CBI can be supervised by the two Vigilance Commissioners subject to the limitation contained in proviso to Section 8(1) of the Central Vigilance Act.

The Supreme Court held that the Division Bench of the High Court committed a serious error by dismissing the writ petition at the threshold ignoring that the issues raised by the appellants. The Supreme Court was, prima facie, satisfied that the allegations contained in the writ petition and the affidavits filed before the Court, needed a thorough and impartial investigation. However it did not consider it necessary to appoint a Special Team to investigate what the appellants had described as 2G Spectrum Scam because the Government of India had, keeping in view the law laid down in Vineet Narain’s case and orders passed in other cases, agreed for a Court monitored investigation.    The Court issued the following directions:

 (i)     The CBI shall conduct thorough investigation into various issues highlighted in the report of the Central Vigilance Commission, which was forwarded to the Director, CBI vide letter dated 12.10.2009 and the report of the CAG, who  have prima facie found serious irregularities in the grant of licences to 122   applicants, majority of whom are said to be ineligible, the blatant violation of  the terms and conditions of licences and huge loss to the public exchequer running into several thousand crores. The CBI should also probe how licences were granted to large number of ineligible applicants and who was responsible for the same and why the TRAI and the DoT did not take action  against those licensees who sold their stakes/equities for many thousand crores and also against those who failed to fulfill rollout obligations and  comply with other conditions of licence.   (ii)    The CBI shall conduct the investigation without being influenced by any  functionary, agency or instrumentality of the State and irrespective of the position, rank or status of the person to be investigated/probed.   (iii)   The CBI shall, if it has already not registered first information report in the  context of the alleged irregularities committed in the grant of licences from  2001 to 2006-2007, now register a case and conduct thorough investigation  with particular emphasis on the loss caused to the public exchequer and  corresponding gain to the licensees/service providers and also on the issue of  allowing use of dual/alternate technology by some service providers even before the decision was made public vide press release dated 19.10.2007.   (iv)    The CBI shall also make investigation into the allegation of grant of huge loans by the public sector and other banks to some of the companies which have succeeded in obtaining licences in 2008 and find out whether the officers  of the DoT were signatories to the loan agreement executed by the private companies and if so, why and with whose permission they did so.   (v)     The Directorate of Enforcement / concerned agencies of the Income Tax   Department shall continue their investigation without any hindrance or interference by any one. (vi)    Both the agencies, i.e., the CBI and the Directorate of Enforcement shall share  information with each other and ensure that the investigation is not hampered           in any manner whatsoever. (vii)   The Director General, Income Tax (Investigation) shall, after completion of analysis of the transcripts of the recording made pursuant to the approval              accorded by the Home Secretary, Government of India, hand over the same to   CBI to facilitate further investigation into the FIR already registered or which   may be registered hereinafter.  The progress reports based on the investigations conducted by the CBI and the Enforcement Directorate were directed to be produced before the Court in sealed envelopes on 10.2.2011