Under what circumstances can the executive overrule of the judiciary? Obviously, by enacting a law to overturn a court judgment. There are a number of examples of this kind. However, in an unusual - and perhaps unprecedented - move, an Empowered Group of Ministers (EGoM), led by former Finance Minister Palaniappan Chidambaram, has been accused of not adhering to the letter and spirit of a judgment of the Supreme Court, in a series of draft reports prepared in the office of the Comptroller & Auditor General of India, the Constitutional authority that oversees public finances.
The judgment of the Supreme Court delivered in February 2012 cancelled 122 licences issued to private telecom firms for their involvement is what is popularly known as the 2G (second-generation) spectrum scam. Among the licences cancelled were nine licences issued to Idea Cellular Ltd, 21 to Sistema Shyam Teleservices Ltd (SSTL), 21 to Videocon Telecommunication Ltd (VTL) and 22 to Telewings Communication Services Pvt Ltd (TCSPL), a part of the Unitech group.
According to the draft reports of the CAG, in October 2012, the decision of the EGoM - led by Chidambaram and comprising the then Minister for Communications & Information Technology Kapil Sibal, the then Minister for Information & Broadcasting Ambika Soni, the then Defence Minister A K Antony, the then Minister for External Affairs Salman Khurshid, the then Minister of State in the Prime Minister's Office V Narayanasamy, and the then Deputy Chairman of the Planning Commission Montek Singh Ahluwalia - to "set-off" the licence fees paid by these four companies was not only in violation of the orders of the Supreme Court, but various rules and guidelines as well.
The EGoM also over-ruled the specific advice of the then seniormost bureaucrat in the Department of Telecommunications (DoT), R M Chandrashekhar, in the case relating to TCSPL, the Unitech group company, the CAG has pointed out.
In July 2012, Chidambaram was appointed as head of the EGoM on telecom, after the then Agriculture Minister Sharad Pawar declined to head it. The EGoM had to be reconstituted, as Pranab Mukherjee, who was heading it, resigned as Finance Minister to contest the elections for the post of the President of India. Pawar was named as the new chairman of the ministerial panel and a meeting fixed for July 2 that year. But Pawar first postponed the meeting of the EGoM, which had last met on June 5, and then approached the then Prime Minister Manmohan Singh, recusing himself. He reportedly said he did not wish to be dragged into controversies.
The EGoM had to, among other things, decide the minimum or base price for auction of telecom spectrum after the Supreme Court ordered the cancellation of 122 telecom licences issued during the tenure of former Communications Minister A Raja in 2008. The apex court had asked the government to complete the auction of 2G spectrum by 31 August 2012.
At that time, Janata Party president Subramaniam Swamy (who went on to join the Bharatiya Janata Party) had filed a complaint against Chidambaram in the Supreme Court, urging it to make him a co-accused along with Raja in the 2G telecom scam. The apex court asked him to approach the special CBI (Central Bureau of Investigation) court probing the scam, but the special court dismissed his plea. Swamy had alleged that the move to appoint Chidambaram to head the EGoM reflected "the moral bankruptcy of the Manmohan Singh government".
Activist lawyer Prashant Bhushan had said the move indicated the government's lack of ethical values and sensitivity to conflicts of interest, while the then BJP spokesperson Ravi Shankar Prasad (who is now Union Communications Minister) described the decision as a "cruel joke". Taking a dig at the then Home Minister Chidambaram, senior BJP leader Yashwant Sinha remarked: "Now he has been made the kotwal (policeman). It will be fun."
If one is charitable to the ministers of the second United Progressive Alliance government, it can be argued that they were not properly briefed by officials of the DoT. If one is less charitable towards the former Union Ministers, it may be surmised that their actions were tantamount to granting "undue favours" to these four private firms to the extent of nearly Rs 5,500 crore at the cost of the exchequer.
It examines the incomplete nature of information presented to the EGoM, the inconsistency of the decision of the group with the guidelines for issuing UAS (United Access Service) licences, the allegedly forced use of the principle of "equal restitution" and the apparent overruling of the Supreme Court’s orders to provide "undue favours" to these four private firms.
The four companies, VTL, SSTL, Idea Cellular and TCSPL, had placed requests for set-offs between September 2012 and March 2013. It is noteworthy that the UASL licence guidelines clearly, categorically and repeatedly mentions that the entry fee paid by licence holders was "non-refundable". Nevertheless, on 12 October 2012, the DoT clarified through a Notice Inviting Applications (NIA) in response to queries that "if the license was quashed by the Hon’ble Supreme Court for no reason attributable to a licensee, a set-off would be allowed in the principle of equal restitution against the EMD (earnest money deposit) and payment due in the event of spectrum being won in the proposed auction". The total amount of such set off would be limited to the total entry fee paid by the entity for all its quashed licenses. No interest however would be payable on the amount.
The claim they made was that their licences were quashed for "no reason attributable". However, it was clearly up to the government, that is, the DoT, to decide whether these four firms should be reimbursed their licence fees only after a clear and thorough examination was made of any possibilities of criminality, ineligibility and illegality.
At the time the EGoM decided to set off the licence fees, criminal cases against these companies were pending, investigations by the CBI were under progress. It was claimed that some of the firms were not fulfilling certain eligibility criteria. The draft CAG report asks why the DoT did not bother to question the veracity of the companies’ claims and why these unverified reports were forwarded to the EGoM, which ended up taking decisions that resulted in wrongful gains to the companies and an equal amount in the form of losses to the public exchequer.
Earlier, in 2010, the CAG had pointed out that "VTL was from its very inception, ineligible to obtain 2G spectrum licenses." The DoT, however, not only ignored this violation of eligibility norms, but also did not verify the company’s claims that there were no pending investigations, criminal proceedings or allegations of wrongdoing against it. While the EGoM allowed a set-off of Rs 1,506.82 crore to VTL, what was hidden from the group was the fact that the company's review petition had been rejected by the Supreme Court in March 2012.
Similarly, while ineligibility on the part of SSTL was not mentioned in the CAG report, it was not specifically stated that the company was eligible to participate in the allocation of spectrum. In addition, a public interest litigation that was launched questioned the eligibility of SSTL on ground of insufficient net worth even as an examination was under way. Therefore, while SSTL claimed eligibility, there were investigations pending against the company. Still, an amount of Rs 1,626.32 crore was set off for SSTL.
Based on a clarification issued on 12 October 2012, Idea Cellular applied for a set-off of its entry fee of Rs 684.59 crore which was permitted. Unitech group company TCSPL, which was incorporated as a company on 24 February 2012, participated in the 2G spectrum auction held in November 2012 as a "new entrant", and was declared a successful bidder in six service areas. The principal beneficial owners of TCSPL were the Unitech group. A set-off of the entry fee of Rs 1,658.7 crore made by the companies in the Unitech group was adjusted in TCSPL’s payments.
Companies delayed commencement of services.
In its recommendations of July 2011, the Telecom Regulatory Authority of India (TRAI) had confirmed that Uninor (in the Unitech group), VTL and SSTL had failed to meet the roll-out obligations in 22, 21 and 20 service areas respectively within the stipulated period of 52 weeks. These companies had delayed the commencement of services in certain areas, and had in the process been party to active hoarding of scarce natural resources that could have benefited other licensees, the CAG claimed, adding that the delay in meeting roll-out obligations also resulted in loss of revenues for the DoT.
As a draft report of the CAG states:
The aforesaid issues were neither brought before the EGoM in the EGoM note dated 6 October 2012 nor were the same discussed while allowing set-off of entry fee amounting to Rs 1,506.82 crore and Rs 1,626.32 crore to M/s VTM and M/s SSTL respectively.
The minutes of the meeting of 8 October 2012, in which the EGoM had been unable to reach a decision, were circulated on 10 October 2012. Moreover, necessary clarifications were also issued to the telecom firms two days later on 12 October 2012 without the final approval of the EGoM. The group held its final meeting on the issue on 18 October 2012.
As far as the principle of equal restitution is concerned, the draft CAG report mentions that the principle is deemed inapplicable since the telecom service providers had illegally managed to obtain UAS licenses by misrepresenting crucial facts. The Unitech group made substantial windfall gains by off-loading its 67.25 per cent equity stake immediately after obtaining the licences with spectrum. The Supreme Court judgment of February 2012 stated clearly that "these companies have been benefitted (at) the cost of (the) public exchequer…" and hence, "the principle of equal restitution cannot be made applicable..."
A year later, on 15 February 2013, the Supreme Court issued fresh directions that "the issue relating to liability of the licensees, who discontinued their operations between 02.02.2012 and this date shall be decided separately". Thus, at a time when the dispute was sub-judice and pending in the Supreme Court, the set-off of the entry fee by an executive decision based merely on a request from a quashed licensee against whom proceedings in a court of law were under way, did not appear to be in order. The review petitions as well as curative petitions filed by three (out of the four) licensees were also dismissed by the Supreme Court as "devoid of merit". Nonetheless, neither was the Supreme Court approached for a clarification before taking a decision to reimburse the licence fee that involved large sums of public money, nor were the apex court's decisions given due weight, the CAG report has alleged.
The CAG noted that the DoT took a series of hasty decisions and moved paper around in a surreptitious and reckless manner.
The note presented before the EGoM on 8 October 2012 was prepared in the span of less than two days, despite the complicated and multi-layered nature of the case. Additionally, the representations of VTL and SSTL were hastily processed, and little or no attention was paid to the grounds presented by the companies for seeking relief. Not only was the truth behind these claims unverified, companies easily got away with omitting and tweaking facts to their advantage, the CAG has claimed.
A recent (16 September 2015) order of the Telecom Disputes Settlements and Appellate Tribunal (TDSAT) in the case relating to the set off of Loop Telecom’s license fee of Rs 1,454.94 crore, formally confirmed the position adopted by the CAG in its draft reports. Loop's plea for a set off of its licence fee was rejected by the tribunal.
Will the Narendra Modi government now ask its political opponents in the EGoM constituted by its predecessor regime why due attention was not paid to the grounds for rejecting reimbursement or set off of licence fees to four telecom firms in such unseemly haste?
-
Research assistance: Shachi Seth
