27 December 2017

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Part 1 In depth 2G scam story Facts 2G case CBI vs A Raja and others

Part 1 In depth 2G scam story Facts 2G case CBI vs A Raja and others


FIR registered on 21.10.2009 under sections 120­B IPC read with 13(2) r/w 13(1)(d) of
Prevention of Corruption Act, 1988, (hereinafter to be referred as the “PC Act”) on allegations of criminal conspiracy and criminal misconduct, in respect of allotment of Letters of Intent (LOI), Unified Access Services (UAS) Licences and spectrum by the Department of Telecommunication.

Judgement total pages - 1552

1. CC No: 01/11
2. Case RC No: 45 (A) 2009, CBI, ACB, New Delhi.
3. Title: CBI Vs. (1) A. Raja (A­1);
(2) Siddhartha Behura (A­2);
(3) R. K. Chandolia (A­3);
(4) Shahid Usman Balwa (A­4);
(5) Vinod Goenka (A­5);
(6) M/s Swan Telecom (P) Limited (now
M/s Etisalat DB Telecom (P) Limited)
(7) Sanjay Chandra (A­7);
(8) M/s Unitech Wireless (Tamil Nadu)
Limited (A­8);
(9) Gautam Doshi (A­9);
(10) Surendra Pipara (A­10);
(11) Hari Nair (A­11);
(12) M/s Reliance Telecom Limited (A­12);
(13) Asif Balwa (A­13);
(14) Rajiv Agarwal (A­14);
(15) Karim Morani (A­15);
(16) Sharad Kumar (A­16); and
(17) Kanimozhi Karunanithi (A­17)

A1 means Accused 1, A2 means Accused 2

4. Date of Institution: 02.04.2011
5. Date of Commencement of
Final Arguments: 15.04.2015
6. Date of Conclusion of
Final Arguments: 26.04.2017
7. Date of Reserving Order: 05.12.2017
8. Date of Pronouncement: 21.12.2017

Following allegations were leveled in the FIR: ¬
(a) The entry fee for the new pan India UAS licences in the year 2008 was kept by Department of Telecommunications (DOT) as Rs.1658 Crore, at which price the Cellular Mobile Telephone Service (CMTS) licences were awarded by DOT after auction in the year 2001. These UAS licences, issued in 2008 were issued on first come first served basis without any competitive bidding.

(b) A press release was issued by DOT on 24.9.2007, which appeared in the newspapers on 25.9.2007, mentioning that the new applications for UAS licences will not be
accepted by the DoT after 1.10.2007 till further orders. However, applications received up to 25.09.2007 only were considered, which was also against the recommendations of Telecom Regulatory Authority of India (TRAI) that no cap should be placed on the number of Access Service Providers in any service area.

(c) Even First Come First Served policy was implemented by the DOT in a manner which resulted into wrongful gain to certain companies. Further, there are allegations that the suspect officials of DoT had selectively leaked the information to some of the applicants regarding the date of issuance of letter of intent on 10.01.2008. In the letter
of intent, an arbitrary condition was incorporated that whosoever deposits the fees (as per conditions in Letters of Intent, i.e. LOIs) first, would be the first to get license.
Since some of the applicants, who had this prior information, were ready with the amount and they were able to deposit the fee earlier than others. Thus, favour was allegedly shown to some applicants by way of leaking the information about the date of issuance of letter of intent.

(d) Although, the FDI limit was increased from 49 to 74% in December, 2005, but there was no lock­in period or restriction imposed on sale of equity or issuance of additional equity. As a result of this M/s. Swan Telecom Pvt. Ltd. (A­6), which paid to DOT Rs. 1537 Crore for UAS Licences of 13 circles, offloaded its 45% equity to M/s Etisalat of UAE for Rs. 4200 Crore. Similarly, M/s. Unitech Wireless (Group of 08 companies), which paid to DOT Rs.1658 Crore for UAS Licences of all 22 circles, offloaded its 60% equity to M/s Telenor of Norway for Rs. 6100 Crore. These stakes were sold by the said companies even before the roll out of services by them. The estimated loss to Government by grant of licences to these two companies alone comes to Rs. 7105 Crore. On pro rata basis, the estimated loss for all 122 UAS Licences issued in 2008 was more than Rs. 22000 Crore.

On completion of investigation, CBI filed charge sheet in the Court on 02.04.2011 against twelve accused persons, that is, A­1 to A­12 and a supplementary charge sheet
was filed on 25.04.2011 against five additional accused, that is, A­13 to A­17. Vide order dated 24.05.2011

Two Licences
for Cellular Mobile Telephone Service (CMTS) each in the four Metro Cities were granted to private operators in 1994 itself.

A license is required to be obtained by a company or legal person under Section 4 of Indian Telegraph Act, 1885 for the commission of telephone services in India.

Department of Telecommunications (DOT) has classified whole territory of India into various telecom circles / service area (as of now numbering 22) and has been issuing separate telecom licences for each service area.

The Telecom Regulatory Authority of India (TRAI) Act, 1997 was enacted by Government of India.

The Union Cabinet considered and approved New Telecom Policy, 1999 (NTP­99) effective from 1.4.1999.

NTP­99 has been the bedrock regarding issuance of licences and allocation of spectrum for achieving the objective of availability of affordable and effective communication for the citizens which is at the core of the vision and goal of the telecom policy

In July, 1999 the Government decided in favour of migration of existing licencees to the Revenue Share Regime of NTP 1999.

Accordingly, Government PSUs viz. MTNL and BSNL were also given CMTS Licences as 3rd Cellular / CMTS operators

As per para 26 of the guidelines, the licencees were to be allocated spectrum for
wireless access system in local area on first come first served basis. Based on these guidelines, 25 additional Basic Telephone Service licences were issued in 2001 to Reliance, Tata, HFCL etc.

Based on TRAI’s recommendations and on the basis of competitive bidding process, one CMSP license each in four Metro Cities and in 13 Telecom Circles (17 Licences) were
granted as 4th Cellular Operators in the year 2001. Bids were for upfront entry fees only and annual license fee was to be paid as per specified percentage of Adjusted Gross Revenue (AGR). Spectrum charges were also payable as AGR percentage

On 10.09.2003, a Group of Ministers (GoM) on Telecom matters was constituted by the Government of India

One of the 8 Terms of Reference of GoM was “to chart the course to a Universal

Based on the Cabinet decision, an addendum to NTP­99 was notified on 11.11.2003. Also on 11.11.2003, “Guidelines for Unified Access (Basic & Cellular) Services Licence” were issued by DoT wherein it was decided to move towards a Unified Access Services Licensing regime. The guidelines, inter­alia, stipulated that “With the issue of these
Guidelines, all applications for new Access Services Licence shall be in the category of Unified Access Services Licence.”

The amount of entry fee for all 22 telecom circles / service areas comes at Rs. 1658 crore. This practice was continued by the DOT in the years 2005­06 also

After enhancement of FDI in telecom sector from 49% to 74%, DoT on 14.12.2005 issued Guidelines for Unified Access Services (UAS) licences. These guidelines, inter­alia, stipulated that: ¬ “Licences shall be issued without any restriction on the
number of entrants for provision of Unified Access Services in a Service Area.

With view to check the hoarding of Spectrum and to promote healthy competition in telecom business by telecom companies, a provision under clause 8 was made in UASL
guidelines dated 14.12.2005.

Clause 8 of the said UASL guidelines dated 14.12.2005 provides that “no single company / legal person either directly or through its associates, shall have substantial equity holding in more than one LICENSEE Company in the same service area for the access services namely, Basic, Cellular and Unified Access Service.

Substantial equity herein will mean an equity of 10% or more. A promoter company / legal person cannot have stakes in more than one licensee company for the same service area.

A certificate to this effect shall be provided by the applicant’s Company Secretary
along with applications”.

The guidelines issued for UAS Licences on 14.12.2005 are the extant guidelines for grant of new UAS licence. All UAS licences issued in 2008 are governed by these detailed guidelines.

Since introduction of UAS licensing regime in 2003, 51 new UAS licences were issued till March 2007 based on the policy of continuous award on First Come First Served (FCFS) basis. As per this policy the applications which were received first in Department of Telecommunications were issued Letter of Intent first. The applications received later were not considered till the applications received earlier were decided and allocated
Letter of Intent (LOI). In case approvals for more than one LOI in the same telecom circle was received simultaneously, the earlier applicant was issued LOI first and the latter one was issued LOI at least a day after, in order to maintain the same priority for signing of UAS Licence as well as allocation of spectrum

TRAI provided its recommendations dated 28.08.2007

No cap be placed on the number of access service providers in any service area.

In future all spectrums excluding the spectrum in 800, 900 and 1800 bands (i.e. 2G spectrum) should be auctioned so as to ensure efficient utilization of this scarce resource.

In the 2G bands (800 MHz/900 MHz/1800 MHz), the allocation through auction may not be possible as the service providers were allocated spectrum at different times of their license and the amount of spectrum with them varies from 2X4.4 MHz to 2X10 MHz for GSM technology and 2X2.5 MHz to 2X5 MHz in CDMA technology. Therefore, to decide the cut off after which the spectrum is auctioned will be difficult and might
raise the issue of level playing field

TRAI also observed in its recommendations dated 28.08.2007, in para 2.73, that: –
it has elsewhere in the recommendation made a strong case for adopting auction procedure in the allocation of all other spectrum bands except 800, 900 and 1800 MHz.”

Association of accused and beginning of conspiracy –

It is alleged that in May 2007, accused Andimuthu Raja (A. Raja) (A­1) took over as Minister of Communications & Information Technology (MOC&IT). Accused Ravindra Kumar Chandolia (R K Chandolia) (A­3) also joined as Private Secretary (PS) to MOC&IT at the same time. On 1st January, 2008 accused Siddhartha Behura (A­2) joined Department of Telecommunications in Ministry of Communications & Information Technology as Secretary (Telecom).

Accused Siddhartha Behura and R. K. Chandolia had earlier also worked with accused A. Raja, as Additional Secretary and Private Secretary, respectively, when accused A. Raja was Minister of Environment & Forests, and were acquainted with each other in
such manner.

It is also alleged that accused A. Raja was also already familiar with accused Shahid Balwa (A­4), Vinod Goenka (A­5) and Sanjay Chandra (A­7) in context of various clearances of Ministry of Environment & Forests to various real estate projects of their companies – M/s DB Realty Ltd. and M/s Unitech Ltd. respectively, operating in real estate projects, during the tenure of accused A. Raja as Minister of Environment
& Forests.

Fixation of cut­off date -
It is alleged that receipt of applications for new Unified Access Services Licences (UASL) in DOT, has been a continuous process. The applications had been processed in the order in which these were received.

However, after accused A. Raja took over as MOC&IT in May 2007 and TRAI recommendations dated 28.08.2007 were received, there was a spurt in the number of applications for new UAS Licences.

At this time accused A. Raja entered into a conspiracy with other accused persons & companies with a purpose to issue UAS Licences to M/s Swan Telecom Pvt. Ltd., which had already applied, and companies promoted by M/s Unitech Ltd., which were yet to apply for UAS Licences, by manipulating the priority list on the basis of LOI compliances instead of existing guidelines / practice of deciding applications on the basis of date of application as per availability of spectrum. guidelines / practice of deciding applications on the basis of date of application as per availability of spectrum.

On 24.9.2007, R. K. Chandolia, PS to MOC&IT enquired from the concerned officer of Access services cell as to whether applications of Unitech Ltd. for new UAS Licences had been received and directed that no applications should be accepted after the receipt of applications from M/s Unitech Limited, which were expected to be received on the same day.

When informed that the receipt of applications could not be arbitrarily stopped, DDG (AS­I) was asked to put up a note in this regard. A note dated 24.9.2007 was put up by Access Services cell mentioning that if receipt of applications is to be discontinued,
it needed to be told to the public through press release and proposed 10.10.2007 as the date till which applications may be received, till further orders

It is alleged that in the meantime accused Sanjay Chandra, Managing Director, M/s Unitech Ltd., as authorized by the said company to take care of the telecom affairs, caused to make applications by 8 group companies formulated for this purpose, viz. M/s. Aska Projects Ltd., M/s. Nahan Properties Pvt. Ltd., M/s. Unitech Builders & Estates Pvt. Ltd., M/s. Unitech Infrastructures Pvt. Ltd., M/s. Azare Properties Ltd., M/s. Adonis Projects Pvt. Ltd., M/s. Hudson Properties Ltd., and M/s. Volga Properties Pvt. Ltd. Later, these companies were renamed after these got UAS licences from DOT, as M/s Unitech Wireless group companies. Subsequently, all the said 8 companies were
merged into M/s Unitech Wireless (Tamilnadu) Pvt. Ltd. (A­8) Hereinafter, M/s Unitech Wireless (Tamilnadu) Pvt. Ltd., has been considered as representing all the 8 Unitech group companies later merged into it.

It is alleged that accused A. Raja, in pursuance to the conspiracy and for ensuring better prospects for his favoured companies cut it short and decided the cutoff date to be 01.10.2007. A press release was issued to this effect on 24.09.2007, which appeared in newspapers on 25.9.2007.

It is further alleged that even though this cutoff date of 01.10.2007 had been announced, accused A. Raja, in conspiracy with other accused persons, had already taken a view to keep the cutoff date as 25.09.2007, as earlier conveyed to Access Services cell officer by accused R. K Chandolia. This was also manifest when he approved an amended draft letter to be sent to Ministry of Law & Justice, wherein the alternatives proposed mentioned that applications upto 25.09.2007 would be considered.

Accused A. Raja approved to issue this letter, even though, his attention was drawn by the DOT officers to para 3.1.1 of NTP99 which mandates adequate availability of spectrum for allocating new licences and TRAI’s repeated recommendations about
giving new licences subject to availability of spectrum for existing operators and for new operators. Accused A. Raja, however, decided to send this letter dated 26.10.2007 to
Ministry of Law & Justice for its opinion on the various options indicated for allocation of new licences.

It is alleged that on receiving said reference Ministry of Law & Justice opined vide note dated 01.11.2007 that the matter being very important, needed to be considered by
Empowered Group of Ministers. It is alleged that accused A. Raja, instead of referring this important matter to Empowered Group of Ministers, stuck to this decision on cutoff date, which was decided in conspiracy with other accused persons

In pursuance to the said conspiracy accused A. Raja did not review the availability of spectrum circle wise, despite being so advised by the concerned DOT officers Accused A. Raja instead went ahead to decide the cutoff date as 25.09.2007, in conspiracy with aforesaid accused persons.

The DOT officers, including then Secretary (Telecom), also drew attention of accused A. Raja, vide note dated 25.10.2007, to para 3.1.1 of NTP­99 which requires DOT to seek TRAI recommendations on introduction of new operators in a service area

However, accused A. Raja, in pursuance to the said conspiracy brushed aside the legal position & the mandate of the TRAI on need and timing for introduction of new service providers; and instead arbitrarily decided on 02.11.2007 on file the cutoff date to be 25.9.2007, thereby benefitting M/s Unitech Wireless (Tamilnadu) Pvt.Ltd. and M/s Swan Telecom Pvt. Ltd. for Delhi circle.

In furtherance to the conspiracy, accused A. Raja, later on the same day, i.e. 02.11.2007 itself, wrote a letter to the Hon’ble Prime Minister, misrepresenting the facts & fraudulently justifying his decision regarding the cutoff date of 25.9.2007 on the ground that on this date the announcement of cutoff date appeared in newspapers. He also misled the Hon’ble Prime Minister and incorrectly stated the opinion of the Ministry of Law & Justice to refer the matter to EGOM to be out of context.

It is alleged that accused A. Raja was already in criminal conspiracy with accused Sanjay Chandra, Managing Director of M/s. Unitech Ltd. and accused Shahid Balwa & Vinod Goenka of M/s Swan Telecom Pvt. Ltd. before the publication of cutoff date in newspapers. He knowingly misrepresented the facts and misled the Hon’ble PM, while mentioning that the department was not deviating from the existing procedure in as much as the overriding principle of introducing new cellular operators subject to availability of sufficient spectrum was flouted. He also suppressed the design he already had in mind regarding the manner in which he, in conspiracy with other co­accused
persons, and for benefitting his favoured companies, intended to allocate the licences, which was clearly indicated in various options mentioned in the letter dated 26.10.2007 written to Ministry of Law & Justice.

It is alleged that while this communication from MOC&IT to Hon’ble Prime Minister was in transit, Hon’ble Prime Minister sent a letter to A. Raja on 2.11.2007. This letter
appropriately flagged the issue of “processing of large number of applications received for fresh licences against the back drop of inadequate spectrum to cater to overall demand.” Para 3 of the Annexure to the Hon’ble Prime Minister’s letter also referred
to NTP 99 and mentioned that “since spectrum is very limited even in the next several years all the licencees may never be able to get spectrum.” The suggestion from the high office of Hon’ble Prime Minister, that availability of spectrum had to be assessed before committing to issue licences, and that a licence without requisite spectrum meant nothing to a telecom operator, were, however, brushed aside by the accused A. Raja,
as adherence to these directions would have foiled his design to unduly favour the applicant companies, he was in conspiracy with.

On receipt of this letter dated 02.11.2007 from Hon’ble Prime Minister in late evening, and having been caught on the wrong foot, even before his letter dated 2.11.2007 could
reach PMO, accused A. Raja immediately called accused R. K. Chandolia, his PS at his residence in the night itself.

Accused A. Raja, with the help of co­accused R K Chandolia, and other staff,
drafted a response to the letter of Hon’ble Prime Minister and finalized it on the night of 02.11.2007 itself at his camp office at his residence. This important matter relating to the policy decisions of the Department of Telecommunications, which required a serious consideration by the Department of Telecommunication in terms of the policy issues, was not even dealt with in the files of the department, and was decided by the said accused persons in furtherance to their conspiracy with private persons / companies aforesaid. In his response, accused A. Raja misrepresented, with a dishonest intention, the fact stating that “there was, and is, no single deviation or departure in the rules and procedures contemplated in all the decisions taken by my Ministry and as such full transparency is being maintained by my Ministry and further assure you the same in
future also”

It is further alleged that accused A. Raja, in conspiracy with accused R K Chandolia, decided the cutoff date for consideration of applications to be those received upto
25.09.2007, to wrongly benefit accused

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Wednesday, December 27, 2017

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