Explained: 2G spectrum scam

Reading time: 6-8 minutes.

There always comes a time when one has to choose between merely turning the page and closing the book. And when it comes to the chapter of corruption in book of Indian political history, much more than closing of the book needs to be done.

On 11 February, 2020, a controversy hit Maharashtra as the formation of steering committee took place to review issues of concerning the real estate sector, for it included real estate developers Shahid Balwa and Vinod Goenka, who were accused of quid pro quo in the 2G spectrum scam during the tenure of Congress-led UPA. The other members include Urban Development Minister Eknath Shinde, Housing Minister Jitendra Awhad, Naredco president Niranjan Hiranandani, chief secretary, as well as, the municipal commissioners of Mumbai and Thane.

Background

“Abuse is the weakest expression of strength. It is a weakness to destroy what one ought to protect.” has been rightly said by Kingsley Opwami Manuel. Spectrum is a national asset and being a scarce resource, it is the government that allocates frequencies of these electromagnetic waves to telecom companies. Generally, in India, spectrum is allocated through auction or bidding. It was only in 2008 that allocation was done on a first-come-first-serve basis. The companies were asked to apply for the licenses before 1st October, 2007 and it was decided that it would be a spectrum-linked license.

It implied that the company which got the license would get the spectrum for free and didn’t have to pay separately for it. On January 10, 2008, the Department of Telecommunications, under minister A. Raja, arbitrarily changed the cut-off date from 1st October, 2007 to 25th September, 2007 which meant a large number of applications received after 25th September as ineligible. What was worse was that the prices of the spectrum were fixed at the market price discovered way back in 2001.

It was alleged that minister A. Raja advanced the cut-off date to favour firms like Unitech & Swan telecom in return for kickbacks or bribes. Even recommendations of the Telecom Regulatory Authority of India were cherry-picked so as to favour selected players..

How and when it was uncovered

On May 4, 2009, an NGO Telecom Watchdog filed a complaint to the Central Vigilance Commission (CVC) on the illegalities in the spectrum allocation to Loop Telecom. Later on, another complaint was filed to the CVC by Mr. Arun Agarwal, highlighting grant of the spectrum to Swan Telecom at throwaway prices. CVC, after receiving the complaints directed CBI to investigate the irregularities in allocation of 2G spectrum.

On 21st October 2009, CBI registered a case and filed an FIR against unknown officers of DoT and unknown private persons/ companies under various provisions of IPC and Prevention of Corruption Act. It ultimately led to raids, tapping of conversations to find out the involvement of middlemen in the grant of the spectrum to telecom companies. However, the investigation was halted as the FIR mentioned no name.

Meanwhile, in 2010, CAG recognised large scale irregularities in the spectrum allocation, which was later quantified at a loss of Rs. 1.77 lakh crores to the exchequer. Former Janta Party leader Subramanian Swamy filed a petition in the Supreme Court seeking his inclusion as a public prosecutor in the 2G spectrum case. Swamy mentioned in the complaint that A. Raja favoured “ineligible” private companies Swan Telecom Pvt. Ltd. and Unitech Wireless Ltd. in allocating the spectrum. After Swamy’s complaint, the CBI had to reopen the case. On Sept 27, 2010 Enforcement Directorate informed SC of probe against firms suspected to have violated FEMA.

Later, in 2011, Supreme Court issued notice to Centre on the plea seeking cancellation of 2G licenses. Court found prima facie evidence to put on trial all 17 accused, including Raja, on various counts like criminal conspiracy, breach of trust, cheating and forgery. The court declared the allotment of the spectrum as “unconstitutional and arbitrary”. Even former Prime Minister Manmohan Singh admitted that UPA government seemed to have “failed in managing perceptions”.

 Nevertheless, the Special Court on December 21, 2017, acquitted former Telecommunications Minister, A. Raja, Kanimozhi and all others in the cases registered by the CBI and the ED because of lack of evidence. However, it’s not over yet. Supreme Court stated in December 2019 that it will constitute a bench to deal with pleas relating to the 2G spectrum allocation scam case.

Legal principles involved

There were a lot of people involved in the scam and they were different charge-sheets filed against them. All the accused were alleged with different charges.

A.Raja was alleged with Criminal breach of trust by a public servant (section 409), criminal conspiracy (Section 120-B), cheating (Section 420) and forgery (Sections 468 and 471); booked under the Prevention of Corruption Act for accepting illegal gratification.

M. K. Kanimozhi, Shahid Balwa and Vinod Goenka were charged with Criminal conspiracy to cause criminal breach of trust by a public servant and criminal conspiracy (Section 120-B), cheating (Section 420) and forgery (Sections 468 and 471), and booked under the Prevention of Corruption Act. Most of the others accused including Karim Morani, Vikas Saraf, Ravi Ruja, Rajiv Aggarwal, Sharath Shukla, Asif Balwa were also charged with Sec. 120 B (Criminal conspiracy) and Sec420 (cheating). Though all the 18 accused were arrested, they were later bailed and acquitted.

The corporations like Reliance Telecom, Swan Telecom, Unitech Wireless etc. were also charged with cheating and criminal conspiracy along with criminal breach of trust. These companies were also acquitted of any wrong doing in 2017.

A special court set up in this case of CBI v. A. Raja and Others held that: “There is no evidence on the record produced before the Court indicating any criminality in the acts allegedly committed by the accused persons relating to fixation of cut-off date, manipulation of first-come first-served policy, allocation of spectrum to dual technology applicants, ignoring ineligibility of STPL and Unitech group companies, non¬revision of entry fee and transfer of Rs.200 crore to Kalaignar TV (P) Limited as illegal gratification.

The charge sheet of the instant case is based mainly on misreading, selective reading, non¬reading and out of context reading of the official record. Further, it is based on some oral statements made by the witnesses during investigation, which the witnesses have not owned up in the witness-box. Lastly, if statements were made orally by the witnesses, the same were contrary to the official record and thus, not acceptable in law.”

Conclusion

2G Spectrum scam is one of the biggest and largest scams of India. The Special court, though has acquitted all the accused, but the telecom industries still reel under its consequences. The undelivered justice in this case has led to an outcry by the masses as it has affected and continues to affect the customers and investors.

The people feel that grave injustice was done and still hope for the law to take its course. To avoid the possibility of such a tragic incident again, the government has to take proper steps and set reserve prices for spectrum auctions.

Authors: Divanshi Gupta from University Institute of Legal Studies, Panjab University, Chandigarh and Ridhima from Rajiv Gandhi National University Of Law, Punjab.

Editor: Ismat Hena from Faculty of Law, Jamia Millia Islamia.

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