Supreme Court Rejects Reliance, Airtel, Idea Challenge to Spectrum Auction

Supreme Court Thursday dismissed the pleas of three telecom majors - Reliance Communication, Bharti Airtel and Idea Cellular, challenging government's 2015 spectrum auction, saying the decision was taken to maximise revenue and expand the service range.

"In the instant case, we are unable to perceive any arbitrariness or favouritism or exercise of power for any collateral purpose in the Notice Inviting Tender (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 prudent decision once there is increase of revenue and expansion of the range of services," a bench of Justices Dipak Misra and Prafulla C Pant said while dismissing three telcos' pleas which had been transferred to the apex court from the High Courts of Delhi, Tripura and Karnataka.

The apex court, in a 101-page verdict, said in such "complex" matters having "enormous financial ramification", interference by the courts based upon any perception of fairness may create a situation of fiscal imbalance.

It said that interference in such matters should be on the ground of stricter scrutiny when the decision-making process smacked of "obnoxious arbitrariness or any extraneous consideration".

"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 scrutiny when the decision-making process commencing from NIA till the end, smacks of obnoxious arbitrariness or any extraneous consideration which is perceivable," the bench said.

The telcos had contended that the quantum of the spectrum being put up for auction had been arbitrarily capped by the government which was hoarding the airwaves and that the bidding had been made non-competitive.

The apex court rejected the contentions saying "the court cannot interfere with the tender conditions only on the ground that certain amount of spectrum has not been put to auction".

In its judgement upholding the Centre's 2015 spectrum auction process, the apex court said in this case, there was no hoarding of spectrum by the government and that the explanation given for not putting the entire spectrum to auction was a reasonable one.

The government, defending its decision, had said that putting a cap on the spectrum would facilitate availability of minimum amount of spectrum for ensuring benefit to consumers and 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 had also assured that whatever spectrum was left will be put to auction after getting the clearance from the defence and further keeping in view the aspect of techno-economic and commercial eco-system feasibility.

Another grievance raised by the telecom majors was that they had spent quite a sum at the time of grant of initial licence and had a "legitimate expectation" to participate in the auction and not to be kept at bay in certain areas, as a consequence of which they have not been able to get what they earlier had.

The bench rejected this grievance of the companies saying the principle of legitimate expectation cannot override public interest.

"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 absolutely sans merit," it said.

The apex court also said if there has been a reduction for a particular entity because of the terms and conditions of the auction tender, it has to accept it, for it cannot agitate a grievance that it 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," the court said.