Telecommunications is a basic public necessity and falls within the domain of essential civic services which the State is expected to make available to its citizens. Telecommunication, as the term suggests, facilitates the ability of the individual to communicate and hence express. Telecom services make life more wholesome and fulfilling. Thus, through provision of telecom services, the State makes available for its citizen facilities to exercise the right to freedom of speech and expression and the right to life under Article 19 and Article 21 of the Constitution of India respectively. It is in this constitutional background that the State formulates and executes its telecom policy. It is also in this crucible of constitutionality that such policy must be evaluated.

It is a matter of common knowledge that for almost over the last fifty years, all telecommunications services were controlled and provided by the State and regulated by the Indian Telegraph Act ("Act"). No person can set up, own, control or provide telecommunications services, except under a licence issued under the Act.

In May 1994, the Respondent Union of India introduced the National Telecom Policy, which proposed the induction of the private sector in providing basic telecom services. The National Telecom Policy of 1994 ("NTP94") stated that the demand of 10 million additional lines as stipulated by the Eighth Plan could not be met by the Respondent No 1 alone and there was an urgent need to induct the private sector in basic telecom services. This was to provide an additional 2.5 million Direct Exchange Lines ("DELs") in excess of the 7.5 million being installed by the Respondent. It may be noted that the overriding consideration for privatisation was public interest and the necessity to expeditiously make available telecommunications services in the remotest parts of the country at reasonable rates.

Pursuant to the NTP94, the Respondent decided to auction licences for Basic Services, Circle Cellular operators and Metro Cellular Operators. Ultimately, 8 licences came to be awarded to "Basic" operators, 14 licences to Circle Cellular operators and 8 to Metro Cellular Operators. The Operator-licensees have made substantial defaults on their licence payments. The Operator-licensees demanded that the terms and conditions of the licensees be revised and modified as the Operator-licensees had overestimated the market and were suffering losses. The Operator-licensees demanded a "bail out" on the pretext of "financial viability".

Succumbing to the pressure tactics of the powerful lobby of the Operator-licensees, the Respondent announced the National Telecom Policy of 1999 ("NTP99"). The Petitioner understands that under the NTP99, the Respondent has offered the Operator-licensees the option to migrate to the NTP99.

The Petitioner submits that the NTP99 is bad in law in as much as it is contrary to the professed public interest and shall operate to confer huge benefits and largesse to the private operator-licensee at the cost of the national exchequer. The licence fees outstanding by the Basic Operators is Rs 741.07 crores and by the Cellular Providers is 2434.97 crores. The licensee for the Basic Provider for the remaining period of the contract is Rs26,000 crores and by the Circle Cellular Operators will be Rs15,500 crores, for the contract period of 10-15 years. The licensee fee payable by the Metro Operators for the remaining period of 10 years is Rs8,300 crores on the assumption that the network will grow by 25% and the pulse rate by 20% per year. It may be noted that on the plea that the metro service providers were in financial difficulty, they have obtained an increase in their rentals from the TRAI from Rs 165 per month to Rs 600 per month.

The NTP99 departs from the fixed licence fee and provides for a revenue sharing agreement tentatively fixed at 15%. It is submitted that the said policy and the offer made by the Respondent No 1 to the service providers is patently bad in law, arbitrary and goes counter to public interest. It is submitted that the Respondent No 1 has no authority in law to alter the terms and conditions of the licence to the detriment of public interest and that such proposed alteration amounts to the grant of largess to private operators.

It is submitted that the private operators having defaulted in the payment of dues and in the implementation of the terms and conditions of the licence, the Respondent No 1 was bound in law to cancel the licence and throw the grant of licences open to auction, so as to obtain the most competitive bid in public interest.

1. That the instant Writ Petition is being filed by the Petitioner under Article 226 of the Constitution of India in public interest challenging the National Telecommunication Policy 1999 ("NTP99") pursuant to which an offer has been made to the existing Operator-licensees to migrate to the new policy at an approximate loss of Rs 50,000 crores to the public exchequer in terms of licence fees foregone. The Petitioner is a society registered under the Societies Registration Act. It has as its members reputed scientists and technologists who are concerned with the development of science and technology in the interest of the nation. The Late PN Haksar was the president of the Petitioner till his demise. The Petitioner annually publishes alternative economic surveys of India. The Petitioner promotes encourages scientific temper, humanism and the spirit of inquiry . It has acted as a consultant and nodal agency to the Department of Science and Technology for the India Vigyan Jattha, to popular science amongst the common people. The Petitioner society is specially concerned with issues relating to power, telecom and health. The Petitioner society had filed a petition in 1995 in the Supreme Court challenging the tenders sought to be awarded by the Respondent No 1 which ultimately resulted into the decision reported in (1996)2SCC405.
2. That the Respondent No 1 is the principal department of the Government of India responsible for the telecommunications sector of the nation. It is this Ministry which is responsible for the implementation of the Indian Telegraph Act ("Act") under which licensees have been given to the Operator-licensees.
3. That the Respondent No 2 is the association of Operator-licensees in the field of cellular services and is made a party to the petition in a representative capacity.
4. That the Respondent No 3 is the association of Operator-licensees in the field of basic services and is made a party to the petition in a representative capacity.

Brief history

5. In 1992, Respondent No 1 invited tenders for the Metro Circles. The licence fee was fixed at relatively low rates coupled with a revenue sharing arrangement from the 4^th year of the 10-year contract. The fees for the first 3 years (non-revenue sharing years) were Rs 14 crores (Delhi), Rs 24 crores (Mumbai), Rs 10.5 crores (Kolkata) and Rs 7 crore (Chennai). From the 4^th year, the Metro Operator had to pay Rs 6023 per subscriber per year. (List of licensees annexed hereto and marked as Annexure P-1)
6. That in 1994, the National Telecommunications Policy ("NTP94") was announced. A competitor would be allowed to the Respondent No 1 in the basic services. . (The NTP94 is annexed hereto and marked as Annexure P-2)
7. That in June 1995, the second round of bidding took place for Cellular Service Operators and Basic Service Providers.
8. That during the period 1994-1995, Respondent No 1 issued various licensees under the Indian Telegraph Act, 1885 to the Basic Service Providers, Circle Cellular Operators and the Metro-cellular operators. . (The list of Basic and Circle Cellular Operators are annexed hereto and marked as Annexure P-3 Colly)
9. That during 1995-1998, almost all the Operator-licensees committed default in the payment of licence fees. It appears that the Respondent No 2 as also the individual licensees approached Respondent No 1 for a "bail-out" on the alleged ground that they were financially unviable as they had overestimated the market. The said plea was patently false at least in so far as the Metro Operators were concerned as many of them had sold their equity and had made huge windfall profits in off-shore deals. (Matrix indicating the default committed by the Operator-licensees are annexed hereto and marked as Annexure P-4 Colly)
10. That it appears that when the Respondent No 1 attempted to enforce the Bank Guarantees, several Operator-licensees approached the High Court impugning the action of enforcing the guarantees.
11. That in January 1999, succumbing to the pressure of the powerful lobby of Operator-licensees, the Respondent No 1 considered formulating a new Telecommunications Policy to "bail out" the Operator-licensees. Accordingly, Respondent No 1 sought the opinion of the Attorney General on the question of the liability of the existing licensees. The Attorney General opined that the "the licensee had entered into agreements after giving competitive bids and are bound by the terms and conditions of the licence to which they agreed without any reservations. No facts have been pleaded or suggested which would be covered by the force majeure clause (clause 11.1) of the Agreement. The plea of the operators about wrong calculations or projections or the market having taken an adverse turn does not absolve them of their obligations under the existing licence agreements and certainly does not in law entitled them to any extension of the licence period to 15 years ". In his opinion, the Attorney General was at pains to point out that nothing should be done to transmit any signal that licensees can break the licence conditions and then plead for favourable changes on the ground of financial hardships and that government action cannot be perceived as putting a premium on defaulters or favourable defaulters.
12. That on March 27, 1999 the Respondent No 1 announced the details of a New Telecom Policy ("NTP99"). The salient features of the NTP99 were:

• One time entry fee and a revenue sharing arrangement Instead of a fixed license fee arrangement
• The old licensees allowed to migrate to new terms and conditions
• More competition will be allowed: the old condition of NTP94 which allowed a duo-poly for basic services (DoT and one private service provider) and three parties for circle cellular operations (two private parties and third party as DoT) would be relaxed. Henceforth more parties would be allowed to enter and secure licenses subject to the payment of a one-time fee.
• That the time period of licenses issued should be 20 years instead of 10 or 15 years as under the earlier tenders. (A copy of the NTP99 is annexed hereto and marked as Annexure P-5)

1. That in April 1999, the Respondent No 1 made a reference to the Attorney General on the question of the migration of the existing cellular operator to the NTP99.
2. That on June 6, 1999, the Attorney General gave a second opinion completely changing from his earlier stand and opined that the loss to the exchequer was not as much important has ensuring the inflow of foreign exchange.
3. That thereafter in the same month, the Minister for Telecommunications Shri Jagmohan, who was known for his strong opposition to the NTP99 on the ground that it would result in windfall profits to the defaulting licensees at the cost of the exchequer was shifted out of the Ministry.
4. That on July 7, 1999, the Union Cabinet approved the migration to NTP99 of the existing Operator-licensees so that they could also avail of the benefits thereunder such as the:.

• revenue-sharing instead of fixed licence fee
• extension of licence period from 10/15 to 20 years

Further, the Operator-licensees were permitted stagger payment on arrears.

1. The President of India sought certain clarifications on the cabinet decision on migration. His main concerns being that:

• The Ministry had a care-taker status
• The NTP99 had not been considered by the Parliament
• The amount which the Respondent No 1 sought to waive was a part of the budget 1999-2000 which had been approved by the Parliament.

1. That on July 22, 1999, pursuant to the NTP99, Respondent No 1 made an offer to the Cellular and the Basic Operators to migrate to the NTP99. (A copy of the letter dated July 22, 1999, issued by the Respondent No 1 is annexed hereto and marked as Annexure P-6)

12. That the license fees that the private basic service providers have not paid as on 31.03.99 and circle cellular operators have not paid as on 13.05.99 are Rs.741.07 crore and Rs.2434.97 crore respectively. The total amount outstanding as of the dates mentioned is approximately Rs.3200 crore without considering the interest due on these amounts due to delays in payment. Taking into consideration that more payments have fallen due from the above mentioned dates and including interest charges on the outstanding amounts, the total amount due is in the region of Rs.4,000-4,500 crore.
13. That the total license fee for basic services due to the Government for the remaining period of the contract will be Rs.26,000 crore. The amount that will fall due from the circle cellular operators for the remaining period will be Rs.15,500 crore. This is without taking in to consideration the revised duration of the contract -- considering only 15 years for basic service operators and 10 years for cellular operators as the license period envisaged in the original contract. The license fee for the Metro operators for the remaining period of 10 years is about Rs.8300 crore, with the assumption that the network grows at 25% and the pulse rate by 20% per year. (computation of the losses as above is annexed hereto and marked as Annexure P-7Colly)

Submissions on the NTP99

14. That the Petitioner submits that the revised scheme is ultra vires the powers of Respondent No 1 and contrary to public interest. The Petitioner submits that revised scheme is based on the assumption that the licensees are sick and are thus unable to pay their dues.
15. That the Petitioner submits that the Operator-licensees have themselves to blame for the alleged sickness. The Petitioner that the Operator-licensees had entered into the contract and had accepted the licences with their eyes wide open and on business considerations. It is in the very nature of business that calculated risks are taken on projected demand and the Operator-licensees have accepted the licences after having fully considered the financial implications thereof. The process of tendering was a transparent one publicly announced and after full disclosure of the terms and conditions of the licence. The Operator-licensees are bound in law to absorb the losses, if any, arising out of the business arrangement.
16. That the Respondent No 1 is bound in law to terminate the licence as they are3 legally empowered to do and such termination would be in public interest.
17. That the Respondent No 1 is bound in law to offer the licences for re-auction through and equally public and transparent process thus enabling a wider competition so as to secure the best competition.
18. That in any event, it is clear that the Metro Cellular operators suffer no such disability or sickness warranting a migration from the original terms of contract to the NTP99. This is evident from the fact that almost all the Metro Cellular Operators have issued equity at huge premia. The known examples of such sales are by Essar at Rs 3500 crore, by Max at Rs 600 crore. The Petitioner has reason to believe that M/s Bharati Cellular, Usha, Modi and BPL have made similar issue of shares.
19. That further, the argument of having made an incorrect projection of demand cannot hold water for Metro Cellular Operators as they command 50-60% of the subscriber base on payment of very low licence fees.
20. That one of the justifications for the NTP99 has been that licence would be given to new entrants to make the services more competitive. It is submitted that this argument is misplaced for the reason that the amount of spectra available within which such licence may be granted is limited. Hence, this operates as a technological limitation on the power of licensing.
21. That the licenses for basic and cellular services were awarded after an evaluation in which the quantum of license fee was the major criteria for basic services and the sole criteria for cellular service. Therefore, if these parties are no longer willing to pay the license fees, the basis on which the award of contract has been made is rendered infructuous.
22. That the Basic Service Providers were evaluated with additional criteria such as number of Direct Exchange Lines (DELs) that they would install in a given time frame (15% weightage), rural telephony commitments (10% weightage) and indigenous content (3% weightage). Further, they were to provide, after a certain time frame, telephone on demand and a certain quality of service. In the change over scheme proposed, none of the above issues appear to have been addressed, thus affecting the consumer. It might be noted that the objective of the National Telecom Policy 94 as well as the New Telecom Policy 94 as well as the New Telecom Policy 99 have as their avowed objectives rapid telecom penetration, connecting all the villages and world class service, all of which are currently not being addressed in the proposed new scheme.
23. That the Government proposes to have a scheme of revenue sharing with the private operators. However what constitutes revenue or will constitute revenue has not been defined in the revised scheme and has been left for a future interpretation.
24. That the Telecom Regulatory Authority (TRAI) has raised considerably the subscriber rates for services, both for cellular and for basic services, based on argument of high license fees committed by private service providers. In the change over scheme proposed, the subscriber then should not have to pay the high charges fixed on the basis of the earlier license fees. However, in the revised license terms and conditions, which have been negotiated between the Government and the private service providers, this aspect has not been considered at all. Thus, while the private operators have been given benefits, this is not being passed on to the subscribers and will lead to huge windfall profits for operators.
25. That for circle cellular operators who have defaulted, the option to take over may be made to the other cellular operator in the circle or to the Respondent No 1, again on the same terms and conditions. Alternatively, the circles /metros can be re-tendered after valuing the current assets of the operators and including this value in the tender that the successful bidder would have to pay the concerned network owner.
26. That the quanta of license fees have been used by the cellular operators and the basic service operators to ask for a hike in tariffs and rental charges. The TRAI has substantially raised the tariffs based on these arguments. It is surprising that these operators, after having received these benefits, are still clamouring for waivers of license fees, and the Government has made no attempt to negotiate lower rentals and tariffs for the subscribers in the proposed revised scheme leading to a wind-fall profits for the operators.
27. That the argument is being advanced that the bail out of the private operators is a necessity as otherwise the private operators can not be viable as the cellular operators and basic service operators who were given licenses after NTP94 and through two tenders called in 1995 have committed "exorbitant" license fees. However, the Metro operators received their licenses in an earlier tender (1994) at extremely low license fees for the first three years. The following may be noted with regards to Metro operators:

1. It might be noted that the eight Metro operators account for 60% of the annual revenue of about Rs.2,000 crore from all cellular operations.
2. The total license fees payable by the Metro operators for the first three years was as follows:

Delhi Rs. 14 crore

Bombay Rs. 24 crore

Calcutta Rs. 10.5 crore

Chennai Rs. 7 crore

3. These companies have paid only Rs.130 crore till now.
4. From the fourth year, they have to pay Rs.6,023 per subscriber based on the current pulse rate. If there are changes in the pulse rate, the fee per subscriber also changes.
5. Based on this, the Metro operators have argued before TRAI for an increase in monthly rental; TRAI accepted their argument and hiked up the monthly rental to Rs.600 as against Rs. 156 originally.

28. That it might be seen therefore that the Metro cellular operators had not committed high license fees unlike other cellular circle operators and the basic service operators. The license fee of Rs. 6,023 that they had to pay per subscriber from the fourth year onwards has already been covered by increased rental charges. Therefore, there is no justification of changing the terms and conditions of licenses for the Metro operators.
29. That the license agreement of the Metro operators is based on revenue sharing from 4^th year onwards and has already been spelt out in their license agreement: i.e., Rs.6,023 per subscriber from the 4^th year based on a particular pulse rate. This is different from the fixed license fees that all other cellular operators and basic service operators have to pay. By allowing "change over to revenue sharing" for the Metro operators and extending their license by another 10 years, the Government is lowering the share of Government’s revenue to favour the incumbent Metro operators and extending their current monopoly. The total amount that the Metro operators have to pay for the remaining period of the license is about Rs.8,300 crore and this is the amount that the Govt is foregoing in lieu of a revenue sharing of 15% i.e., about Rs. 3,000 crore.
30. That it might be noted that the Metro operators are not sick and have made huge capital gains through sale of equity or through public issues. Thus, there is no justification of clubbing them with other operators who are arguing that they are not viable due to the high license fees that they have committed. Thus Max sold 39% of its stake for a premium of Rs. 600 crore to Hutchinson, a Hong Kong based telecom conglomerate. Similarly, Essar is reported to have sold 49% of its equity in Delhi for a premium of Rs. 3,500 crore. Thus, if the Government’s aim was to rescue the telecom sector, the Metro operators, who are already making a financial killing should not be handed such largesse. In fact, the proposed scheme favours the cash rich Metro operators, who can to take over the license of other cellular operators and become large inter-state monopolies with consequent threat to the subscriber.
31. That the proposed scheme will allow Metro operators huge windfall profits as it reduces the Government’s revenue share from the current value of Rs. 6,023 to a much smaller amount. The real beneficiaries of the NTP99 are thus the Metro Operators because their major financial commitments were to commence from the current year. The Metro operators will not only be able to realise this profit but also bring, in at a premium, equity based on the windfall profits. Thus not only will the proposed scheme help in garnering huge profits for the Metro operators, it will also allow them to make a financial killing on the stock market. As stated above, some of the companies have already sold a part of their equity at premium and realised up to 100 times the face value of the shares. The government rather than rewarding these cash rich defaulters, should have considered cancellation of licenses and issue of new licenses.
32. That the loss to the exchequer due to changes in license terms and conditions will amount to foregoing contracted sum of Rs. 50,000 crore for the next 10/15 years for an ad hoc revenue sharing arrangement.
33. That licenses in the case of basic services, cellular services and Metro cellular services were tendered on terms akin to auction. The terms of the auction for the goods, even of public goods, can not be changed retrospectively.
34. That if the license terms of the contract can not be adhered to then the goods should either be returned or a market value should be put on it. The only way to ascertain market value is to auction the license again. Any other arrangement is completely arbitrary.
35. That the TRAI has been asked to fix a revenue sharing arrangement now. Given that auction of licenses was organised, a revenue sharing arrangement does not reflect what the government might have got if another bidder who had quoted lower license fees but would have paid the same. Thus, any such scheme now is not in consonance with the tender and the license terms and condition of the contract.
36. That the government has argued that as there is now a New Telecom Policy, operators should be allowed to migrate to the same from the old NTP94. However, it might be noted that the National Telecom Policy of 1994 was placed before the Parliament and therefore has the sanction of the Parliament. New Telecom Policy is a cabinet decision and has not been placed before the Parliament. No migration can take place before a formal approval is accorded by the Parliament to the New Telecom Policy.
37. That the Attorney General had initially opined (January 1999) that such a change over was bad in law and should not be done. His opinion was given to the Telecom Working Group headed by Jaswant Singh, which worked out the New Telecom Policy. It is clear that the Telecom Working Group was seized of the matter of defaulting operators and we have grounds to believe that this influenced their policy document. Jagmohan, the then Minister of Communications was shifted from the Communications Ministry as he opposed the changeover. Attorney General’s recent opinion reversed his earlier opinion and justified the changeover "due to the incompatibility of old and new policy". It is clear from this sequence that the entire exercise: the New Policy, shifting of the concerned Minister, change of Attorney General’s opinion, etc., all have been done as a part of scheme to change the license term and conditions. The sequence of dates is also important:

1. 6^th June Attorney General’s opinion
2. 6^th June, Jaswant Singh as the head of the Telecom Working Group forwards the note to PM’s office.
3. Government loses majority on the floor of the house.
4. The New Policy is announced
5. Jagmohan, the Minister for Communication is shifted
6. A new opinion justifying the change over is offered by the Attorney General
7. The cabinet decision to bail out private operators is announced a few days before announcement of elections

38. That the above makes it clear that the change of policy and the change of license terms and conditions have been done in a totally arbitrary manner and is mala fide and a colourable exercise of power.
39. That left with no alternative and in the public interest, the Petitioner approaches this Hon’ble Court, on the following, among other:

15. That the Petitioner states and submits that it has not filed other or similar writ in this Hon’ble Court or in the Hon’ble Supreme Court or in any other High Court for the redressal of its pressing and most urgent concerns.
16. In the circumstances aforesaid, the Petitioner most respectfully prays that this Hon’ble Court:

1. Issue a writ of certiorari or any other appropriate writ, order or direction to quash the Offer dated July 22, 1999 made by the Respondent No 1; and
2. Issue a writ of mandamus or any other appropriate writ, order restraining Respondent No 1 from altering or modifying or varying in any manner the terms and conditions of the licences;
3. Declare that the licences under Section 4 of the Act remain valid and binding and in full force and effect
4. Issue a writ of mandamus or any other appropriate writ, order directing Respondent No 1 to enforce the terms and conditions and to recover the licence fees in accordance with law; and
5. Pass such other or further orders as this Hon’ble Court may deem fit, just and proper in the facts and circumstances of the present case and in the interests of justice.