Sunil Jain: TDSAT makes a wrong call, again!

RATIONAL EXPECTATIONS

Government policy. These two words seem to have governed most debate in the country over the last week after two Supreme Court judges ruled that the judiciary should not run amok and interfere in government policy. The order was made in the context of various high courts, including the one in Delhi, passing orders in matters traditionally viewed as the domain of the executive such as, for instance, the sealing of illegal premises in the capital. Since the Delhi government had tried to legalise things by rushing through a new master plan, the immediate fear was whether this meant the government would have its way "" fortunately, by the end of the week, a larger Court bench headed by the Chief Justice overruled the earlier order. So, the challenge to the master plan will continue to be heard by the Delhi high court (See "Will Delhi's New Master Plan Stand?" 5/2/07).

While some judges put off hearing cases on government policy matters after the original Court ruling, even the TDSAT, which was hearing the Cellular Operators Association of India (COAI) case against the government on preferential treatment to CDMA-mobile phone firms like Reliance Communications, appeared to be of the same view. While refusing to extend a stay on granting spectrum to firms like Reliance, Justice Arun Kumar said in court he wouldn't interfere in government policy matters. So while the TDSAT will continue to hear the case from the second week of next month, it could be a bit of a fait accompli since, if it does find the government decision was illegal, Reliance will have got its spectrum anyway and may even have begun operations.

Theoretically, it could be argued Reliance and others will have to return spectrum if the policy is found illegal (though the interim order doesn't specifically say so), but similar experiences in the past suggest this won't happen. In 2003, when Reliance Infocomm (as it was then known) began offering full-blown mobile services on its fixed line (limited mobility) licence, the government took no notice of the protests by cellular phone firms. By the time it did, Reliance had built up a very large consumer base, and the government used this to justify the need to legalise its illegal mobile phone services!

Of course, this is not the only similarity. In 2001, too, when the cellular industry first approached the TDSAT, one of the principal grounds for dismissing the appeal against allowing fixed-line firms to offer limited mobility services was "government policy". Faced with this, the cellular industry approached the Supreme Court, where a three-judge bench ruled, in two supporting judgments, that, as a court of original authority, the TDSAT had to look at the complaints of faulty policy making "" indeed, Chief Justice Pattanaik and Justice HK Sema ruled that the TDSAT had an even wider jurisdiction than the Court, which could interfere only on a point of law. The case was sent back to the TDSAT, which had a new bench by then, and, as it happened, ruled against Reliance Info continuing its services in their current form. The government refused to implement the order, but that's another story.

In this case too, the COAI has made serious and similar charges. It said the government had created a brand new category of licence for crossover spectrum (CDMA firms wanting GSM spectrum and GSM firms wanting CDMA spectrum), which is what allowed Reliance to jump over 575 applications (some two years old!) in a queue; indeed, while the government had brought in Reliance by approving an application the firm made in February 2006, the application itself was invalid since the policy then did not allow such crossover spectrum; that this arbitrary and illegal decision had not been approved of by the Cabinet as was the policy in the past (in both 1999 and 2003, when the policy was amended, it had Cabinet sanction); that the government was obligated to go back to Trai since it had accepted just a part of its recommendations; that there were serious level playing field considerations since CDMA-mobile firms could now woo customers with two types of mobile services; that, while the law did not allow one telecom company to hold more than 10 per cent of the equity in another telecom firm to prevent cartelisation, a CDMA-firm like Reliance would now be able to own 100 per cent of two services in the same telecom area ...

These were all very serious charges. Yet, the TDSAT lifted the stay on distributing spectrum within about 30 minutes, instead of hearing detailed arguments on merits. Perhaps things would have been different if the hearing had come up after the Chief Justice made it clear the courts could interfere in government policy.