Friday, January 28, 2011

FACILITATING HAJI PILGRIMS DOESN'T COME UNDER THE VIOLATION ART.27 OF THE INDIAN CONSTITUTION = COLLECTING TAX FOR PROMOTING A RELIGION

   Reportable

   IN THE SUPREME COURT OF INDIA

   CIVIL APPELLATE JURISDICTION

   Writ Petition (civil) No.1 OF 2007

   Prafull Goradia Petitioner(s)

   VERSUS

   Union of India Respondent(s)

   ORDER

   Heard learned counsel for the parties.

   This Writ Petition under Article 32 of the Constitution had been

initially filed challenging the constitutional validity of the Haj Committee

Act 1959, but thereafter by an amendment application the Haj Committee

Act of 2002 which replaced the 1959 Act, has been challenged.
2

   The ground for challenge is that the said Act is violative of Articles

14, 15, and 27 of the Constitution. The grievance of the petitioner is that he

is a Hindu but he has to pay direct and indirect taxes, part of whose proceeds

go for the purpose of the Haj pilgrimage, which is only done by Muslims.

For the Haj, the Indian Government inter alia grants a subsidy in the air fare

of the pilgrims.

   Particular emphasis has been given by the petitioner to Article 27 of

the Constitution which states:-

   "27. Freedom as to payment of taxes for
   promotion of any particular religion.--No
   person shall be compelled to pay any taxes, the
   proceeds of which are specifically appropriated in
   payment of expenses for the promotion or
   maintenance of any particular religion or religious
   denomination."

The petitioner contends that his fundamental right under Article 27 of the

Constitution is being violated. We have, therefore, to correctly understand

and interpret Article 27.

   There are not many decisions which have given an indepth

interpretation of Article 27. The decision in Commissioner, Hindu

Religious Endowments vs. Sri Lakshmindra Thirtha Swamiar, 1954 (5)

SCR 1005 held (vide page 1045) that since the object of the Madras Hindu
3

Religious and Charitable Endowments Act, 1951 is not to foster or preserve

the Hindu religion but to see that religious trusts and institutions are properly

administered, Article 27 is not attracted. The same view was taken in

Jagannath Ramanuj Das vs. State of Orissa and Anr. 1954(5) SCR

1046. The decision in T.M.A. Pae Foundation vs. State of Karnataka,

AIR 2003 SC 355 (vide paragraph 85) does not really deal with Article 27 at

any depth.

   There can be two views about Article 27. One view can be that

Article 27 is attracted only when the statute by which the tax is levied

specifically states that the proceeds of the tax will be utilized for a particular

religion. The other view can be that Article 27 will be attracted even when

the statute is a general statute, like the Income Tax Act or the Central Excise

Act or the State Sales Tax Acts (which do not specify for what purpose the

proceeds will be utilized) provided that a substantial part of such proceeds

are in fact utilized for a particular religion.

   In our opinion Article 27 will be attracted in both these eventualities.

This is because Article 27 is a provision in the Constitution, and not an

ordinary statute. Principles of interpreting the Constitution are to some

extent different from those of interpreting an ordinary statute vide judgment
4

of Hon'ble Sikri, J. in Kesavanand Bharati vs. State of Kerala, 1973 (4)

SCC 225 (vide para 15). The object of Article 27 is to maintain secularism,

and hence we must construe it from that angle.

   As Lord Wright observed in James vs. Commonwealth of

Australia, (1936) AC 578, a Constitution is not to be interpreted in a narrow

or pedantic manner (followed in re C.P. & Berar Act, AIR 1939 F.C.I.).

This is because a Constitution is a constituent or organic statute, vide

British Coal Corporation vs. The King, AIR 1935 P.C. 158 and

Kesavanand Bharati vs. State of Kerala, 1973 (4) SCC 225 (vide para

506). While a statute must ordinarily be construed as on the day it was

enacted, a Constitution cannot be construed in that manner, for it is intended

to endure for ages to come, as Chief Justice Marshal of the U.S. Supreme

Court observed in McCulloch vs. Maryland, 17 U.S. 316(1819) and by

Mr. Justice Holmes in Missourie vs. Holland, 252 U.S. 416(1920). Hence

a strict construction cannot be given to it.

   In our opinion Article 27 would be violated if a substantial part of the

entire income tax collected in India, or a substantial part of the entire central

excise or the customs duties or sales tax, or a substantial part of any other

tax collected in India, were to be utilized for promotion or maintenance of
5

any particular religion or religious denomination. In other words, suppose

25 per cent of the entire income tax collected in India was utilized for

promoting or maintaining any particular religion or religious denomination,

that, in our opinion, would be violative of Article 27 of the Constitution.

   However, the petitioner has not made any averment in his Writ

Petition that a substantial part of any tax collected in India is utilized for the

purpose of Haj. All that has been said in paragraph 5 (i) and (ii) of the Writ

Petition is :-

   "(i) That the respondent herein has been
   imposing and collecting various kinds of direct and
   indirect taxes from the petitioner and other citizens
   of the country.

   (ii) That a part of the taxes so collected have
   been utilized for various purposes including
   promotion and maintenance of a particular religion
   and religious institutions."

   Thus, it is nowhere mentioned in the Writ Petition as to what

percentage of any particular tax has been utilized for the purpose of the Haj

pilgrimage. The allegation in para 5(ii) of the Writ Petition is very vague.

   In our opinion, if only a relatively small part of any tax collected is

utilized for providing some conveniences or facilities or concessions to any
6

religious denomination, that would not be violative of Article 27 of the

Constitution. It is only when a substantial part of the tax is utilized for any

particular religion that Article 27 would be violated.

   As pointed out in para 8 (iv), (v) and (viii) of the counter affidavit

filed on behalf of the Central Government, the State Government incurs

some expenditure for the Kumbh Mela, the Central Government incurs

expenditure for facilitating Indian citizens to go on pilgrimage to

Mansarover, etc. Similarly in para 8 (vii) of the counter affidavit it is

mentioned that some State Governments provide facilities to Hindu and Sikh

pilgrims to visit Temples and Gurudwaras in Pakistan. These are very small

expenditures in proportion to the entire tax collected.

   Moreover, in para 8(iii) of the counter affidavit the Central

Government has stated that it is not averse to the idea of granting support to

the pilgrimage conducted by any community.

   In our opinion, we must not be too rigid in these matters, and must

give some free play to the joints of the State machinery. A balanced view

has to be taken here, and we cannot say that even if one paisa of
7

Government money is spent for a particular religion there will be violation

of Article 27.

   As observed by Mr. Justice Holmes, the celebrated Judge of the U.S.

Supreme Court in Bain Peanut Co. vs. Pinson, 282 U.S. 499, 501 (1931)

"The interpretation of constitutional principles must not be too literal. We

must remember that the machinery of the government would not work if it

were not allowed a little play in its joints" (see also Missourie, Kansas and

Tennessee Railroad vs. May, 194 U.S. 267 (1904).

   Hence, in our opinion, there is no violation of Article 27 of the

Constitution.

   There is also no violation of Articles 14 and 15 because facilities are

also given, and expenditures incurred, by the Central and State Governments

in India for other religions. Thus there is no discrimination.

   In Transport & Dock Workers Union vs. Mumbai Port Trust,

2010(12) Scale 217 this Court observed that Article 14 cannot be interpreted

in a doctrinaire or dogmatic manner. It is not prudent or pragmatic for the
8

Court to insist on absolute equality when there are diverse situations and

contingencies, as in the present case (vide paragraphs 39 and 43).

   Apart from the above, we have held in Government of Andhra

Pradesh vs. P. Laxmi Devi, AIR 2008 SC 1640 that Court should exercise

great restraint when deciding the constitutionality of a statute, and every

effort should be made to uphold its validity.

   Parliament has the legislative competence to enact the Haj Committee

Act in view of entry 20 to List 1 of the Seventh Schedule to the Constitution

which states : "Pilgrimages to places outside India".

   Thus there is no force in this petition and it is dismissed.

   Before parting with this case we would like to mention that India is a

country of tremendous diversity, which is due to the fact that it is broadly a

country of immigrants (like North America) as explained in detail by us in

Kailas & Others vs. State of Maharashtra, JT 2011 (1) 19. As observed

in paragraph 32 of the said decision, since India is a country of great

diversity, it is absolutely essential if we wish to keep our country united to

have tolerance and equal respect for all communities and sects (see also in
9

this connection the decision in Hinsa Virodhak Sangh vs. Mirzapur Moti

Kuresh Jamaat, AIR 2008 SC 1892 vide paragraphs 41 to 60). It is due to

the wisdom of our founding fathers that we have a Constitution which is

secular in character, and which caters to the tremendous diversity in our

country.

   It may be mentioned that when India became independent in 1947

there were partition riots in many parts of the sub-continent, and a large

number of people were killed, injured and displaced. Religious passions

were inflamed at that time, and when passions are inflamed it is difficult to

keep a cool head. It is the greatness of our founding fathers that under the

leadership of Pandit Jawaharlal Nehru they kept a cool head and decided to

declare India a secular country instead of a Hindu country. This was a very

difficult decision at that time because Pakistan had declared itself an Islamic

State and hence there must have been tremendous pressure on Pandit

Jawaharlal Nehru and our other leaders to declare a Hindu State. It is their

greatness that they resisted this pressure and kept a cool head and rightly

declared India to be a secular state.

   This is why despite all its tremendous diversity India is still united. In

this sub-continent, with all its tremendous diversity (because 92 per cent of
1

the people living in the sub continent are descendants of immigrants) the

only policy which can work and provide for stability and progress is

secularism and giving equal respect to all communities, sects,

denominations, etc.

   .................................J
   [Markandey Katju]

   ..................................J.
   [Gyan Sudha Misra]

New Delhi;
January 28, 2011

2G SPECTRUM SCAM OF A. RAJA. APEX COURT ORDER FOR CBI ENQUIRY

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You are here: LIIofIndia >> Databases >> Supreme Court of India >> 2010 >> [2010] INSC 1093

CENTER FOR PIL & ORS. v. UNION OF INDIA & ORS. [2010] INSC 1093 (16 December 2010)

Judgement CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. OF 2010 (Arising out of SLP (C) No. 24873 OF 2010) Centre for Public Interest Litigation ........Appellants and others Versus The Union of India and others .......Respondents O R D E R G.S. Singhvi, J.1. Leave granted.

2. Feeling aggrieved by refusal of the Division Bench of the Delhi High Court to entertain the writ petition filed by them for a court monitored investigation by the Central Bureau of Investigation (for short, `the CBI') or a Special Investigating Team into what has been termed as `2G Spectrum Scam' for unearthing the role of respondent No.5-Shri A. Raja, the then Union Minister for the Department of Telecommunications (DoT), senior officers of that department, middlemen, businessmen and others, the 2 appellants have invoked the jurisdiction of this Court under Article 136 of the Constitution.

3. After issue of notice by this Court on 13.9.2010, the parties have filed affidavits and large number of documents including performance audit report (draft and final) prepared by the Comptroller and Auditor General of India (CAG) on the issue of licences and allocation of 2G Spectrum by the Department of Telecommunications, Ministry of Communications and Information Technology for the period from 2003-04 to 2009-10, which has been submitted to the President of India as per the requirement of Article 151 of the Constitution, a compact disc allegedly containing conversation of Ms. Niira Radia with some public representatives, businessmen, journalists and alleged middlemen and written submissions.

4. On 29.11.2010, Shri K.K. Venugopal, learned senior counsel appearing for the CBI produced two sealed envelopes containing status report prepared in relation to Case No.RCDAI 2009 A0045 (2G Spectrum case).

5. On 8.12.2010, Shri Harin P. Raval, learned Additional Solicitor General representing the CBI and the Directorate of Enforcement produced 3 before the Court the report prepared by the Enforcement Directorate in a sealed envelope, which was opened in the Court. After going through the report, the report was placed in the sealed cover and returned to Shri Raval.

6. For detailed examination of the issues raised by the appellants, it will be useful to notice the background in which spectrum licences were given to different parties in 2008. These are:
(i) Till 1994, telecommunication services were absolute monopoly of the Government of India. In November, 1994, the Central Government framed National Telecom Policy (NTP) permitting private sector involvement in the telecommunication sector.
(ii) In the first phase, two Cellular Mobile Telephone Services (CMTS) licenses were awarded in each of the four metro cities i.e. Delhi, Mumbai, Kolkata and Chennai to the private entrepreneurs, who satisfied a predetermined set of criteria. The license fee payable by the operators was also predetermined and there was no bidding.
(iii) In the second phase, two CMTS licenses were awarded in 18 telecom circles sometime in December, 1995 through bidding process.
4 (iv) In January, 1995, tenders were invited for award of Basic Service Operator (BSO) licenses for license fee payable over a period of 15 years.
(v) In 1997, Parliament enacted the Telecom Regulatory Authority of India Act (for short, `the Act') for facilitating establishment and incorporation of Telecom Regulatory Authority of India (TRAI). Section 11 of the TRAI Act, which enumerates the functions of Authority, reads as under: - "11. Functions of Authority. - (1) Notwithstanding anything contained in the Indian Telegraph Act, 1885 (13 of 1885), the functions of the Authority shall be to- (a) make recommendations, either suo motu or on a request from the licensor, on the following matters, namely:- (i) need and timing for introduction of new service provider;
(ii) terms and conditions of license to a service provider;
(iii) xxx xxx xxx (iv) measures to facilitate competition and promote efficiency in the operation of telecommunication services so as to facilitate growth in such services;
(v) xxx xxx xxx (vi) xxx xxx xxx 5 (vii) measures for the development of telecommunication technology and any other matter relatable to telecommunication industry in general;
(viii) efficient management of available spectrum;
(b) discharge the following functions, namely:- (i) ensure compliance of terms and conditions of license;
(ii) notwithstanding anything contained in the terms and conditions of the license granted before the commencement of the Telecom Regulatory Authority of India (Amendment) Act, 2000, fix the terms and conditions of inter-connectivity between the service providers;
(iii) xxx xxx xxx (iv) regulate arrangement amongst service providers of sharing their revenue derived from providing telecommunication services;
(v) xxx xxx xxx (vi) xxx xxx xxx (vii) xxx xxx xxx (viii) xxx xxx xxx (ix) ensure effective compliance of universal service obligations;
(c) levy fees and other charges at such rates and in respect of such services as may be determined by regulations;
6 (d) perform such other functions including such administrative and financial functions as may be entrusted to it by the Central Government or as may be necessary to carry out the provisions of this Act;
Provided that the recommendations of the Authority specified in clause (a) of this sub-section shall not be binding upon the Central Government:
Provided further that the Central Government shall seek the recommendations of the Authority in respect of matters specified in sub-clauses (i) and (ii) of clause (a) of this sub- section in respect of new license to be issued to a service provider and the Authority shall forward its recommendations within a period of sixty days from the date on which that Government sought the recommendations:
Provided also that the Authority may request the Central Government to furnish such information or documents as may be necessary for the purpose of making recommendations under sub-clauses (i) and (ii) of clause (a) of this sub-section and that Government shall supply such information within a period of seven days from receipt of such request:
Provided also that the Central Government may issue a license to a service provider if no recommendations are received from the Authority within the period specified in the second proviso or within such period as may be mutually agreed upon between the Central Government and the Authority:
Provided also that if the Central Government having considered that recommendation of the Authority, comes to a prima facie conclusion that such recommendation cannot be accepted or needs modifications, it shall refer the recommendation back to the Authority for its reconsideration, and the Authority may, within fifteen days from the date of receipt of such reference, forward to the Central Government its recommendation after considering the reference made by that 7 Government. After receipt or further recommendation if any, the Central Government shall take a final decision.
(2) to (3) xxx xxx xxx (4) The Authority shall ensure transparency while exercising its powers and discharging its functions."
(vi) On 20.11.1998, Government of India constituted a high level group on telecom matters for making recommendations on three major issues including formulation of new telecom policy. The group recommended changes in the existing telecom policy and resolution of the problem of the existing operators. These recommendations were considered by the Union Cabinet, which approved the New Telecom Policy, 1999 (NTP 1999).
(vii) In July, 1999, the Central Government decided to offer migration package to the existing licensees to the revenue sharing regime under the new policy.
(viii) In 1999-2000, the Central Government granted CMTS licenses to MTNL and BSNL as third CMTS operator.
(ix) The CAG in his Report No.6 of 2000 - P&T severely criticized the concession granted by the Department of Personnel as also the offer of 8 migration to the existing licensees. However, no concrete action appears to have been taken except that the DoT had made available para-wise reply to the CAG.
(x) In September/October, 2001, the Government accepted the recommendations of TRAI and 17 new CMTS licenses were issued to private companies as fourth operator (one each in 4 metro cities and remaining 13 in other telecom circles).
(xi) On 25.1.2001, DoT issued guidelines for issue of license for basic telephone service.
(xii) On 27.10.2003, TRAI forwarded its recommendations on Unified Licensing Regime. Paragraphs 7.15 to 7.19 and 7.37 to 7.39 of those recommendations are extracted below:
"Recommendations on Entry Fee, Rollout obligations and Performance Bank Guarantee:
7.15 To decide the benchmark for the entry fee for Unified Access Licensing Regime three alternatives could be considered which are discussed in the subsequent paragraphs.
7.16 The first alternative could be inviting bids from existing operators as well as from the new prospective Unified Access Licensing Operators. This is possible since additional spectrum is now being made available by Ministry of Defence and the existing contractual 9 commitments to existing cellular and WLL players can easily be met, leaving out a balance for more players.
The benchmarks fixed through this process will be up-to- date based upon the current market situation and will be done through a transparent process. The problems associated with the bidding process are as follows:
i) The fixing of the benchmarks through a bidding process could be more time consuming and hence delay the implementation of Unified Licensing.
ii) While inviting bids the question will be whether it should be done with spectrum or without any spectrum, i.e. only for migration to Unified Licensing Regime. If the bids are invited without spectrum, the new prospective Unified Licensing operators will not be able to roll out their wireless services in the absence of spectrum. If the separate bids are invited for Unified Licensing and spectrum, the bidding process will become even more time consuming and complicated.
In case additional spectrum is given for Unified Licensing operators, the existing operators, while migrating to Unified Access Licensing Regime, may also demand additional spectrum which may not be available immediately. This will stall migration to the Unified Access Licensing Regime.
iii) Unless the revised spectrum pricing and allocations guidelines are finalised, there is no guarantee that the spectrum would be made available to existing operators willing to migrate to the Unified Licensing Regime.
Considering all these problems, the Authority is of the opinion that the bidding process for fixing up of the 10 benchmarks for migration to Unified Licensing Regime may not be preferable.
7.17 The second alternative could be that basic service operators willing to migrate to Unified Access Licensing Regime should pay the difference in entry fee of average of 1st and 2nd cellular operators and entry fee paid by Basic Service Operators. This argument is not sustainable due to the following reasons:- i) CMSPs in pre NTP'99 era before migration did not pay any license fee (revenue share).
ii) 1st and 2nd CMSPs got the advantage of early entry to the market in a duopoly regime.
Some of the operators have said that they are incurring losses. In this business losses are incurred initially, e.g., Orange, one of the largest mobile operators in U.K., took almost seven years to break even. Even in India some of the Service providers have started making profits. A number of studies have shown that even at present tariff levels the addition of new subscribers is profitable.
7.18 The 3rd alternative is that the existing entry fee of the fourth Cellular Operator would be the entry fee in the new Unified Access Licensing Regime. BSOs would pay the difference of the fourth CMSP's existing entry fee and the entry fee paid by them. It may be recalled that, even in the past, entry to cellular and basic services has been on fixed fee basis, e.g., for metros in the case of cellular and for the second BSO.
7.19 It is recommended that the 3rd alternative as mentioned in para-7.18 above may be accepted for fixing the entry fee for migration to Unified Access Licensing regime for Basic and Cellular services at the circle level.
xxx xxx xxx xxx xxx xxx 11 xxx xxx xxx Competition 7.37 On the issue of introducing more competition, the TRAI has always been in favour of open and healthy competition. In its recommendations on the introduction of the 5th and 6th Cellular Mobile license, the TRAI opined that "Induction of additional mobile service providers in various service areas can be considered if there is adequate availability of spectrum for the existing service providers as well as for the new players, if permitted."
Taking cognizance of spectrum availability, the TRAI is in favour of introducing more competition.
However, we feel that it in lieu of more cellular operators, it would be more appropriate to have competition in a Unified Licensing framework which will be initiated after six months.
Time and need of introduction of more service providers 7.38 As already mentioned earlier, with the continuing growth trend, the expected wireless subscriber base by December, 2005 will be 100 million. To achieve 100 million wireless subscribers (cellular & WLL both) the required investment is of the order of Rs.50,000 crores.
As brought out in para 6.5 this highlights a need at present itself for greater efforts by existing and new service providers to expand the investment and to meet the marked demand for telecom services and help achieve the objectives of telecom growth and development in the country.
7.39 As brought out in Para-7.37 above, the induction of additional mobile service providers in various service areas can be considered if there is adequate availability of spectrum. As the existing players have to improve the 12 efficiency of utilisation of spectrum and if Government ensures availability of additional spectrum then in the existing Licensing Regime, they may introduce additional players through a multi-stage bidding process as was followed for 4th cellular operator."
(xiii) The recommendations of the TRAI were considered by the Group of Ministers (GoM), which, in turn, recommended the following course of action:
"(i) ....The scope of NTP-99 may be enhanced to provide for licensing of Unified Access Services for basic and cellular licence services and unified Licensing comprising all telecom services. Department of Telecommunications may be authorised to issue necessary addendum to NTP-99 to this effect.
(ii) The recommendations of TRAI with regard to implementation of the Unified Access Licensing Regime for basic and cellular services may be accepted."
(xiv) The recommendations of GoM were accepted by the Union Cabinet in its meeting held on 31.10.2003. Thereafter, NTP 1999 was amended vide office memorandum dated 11.11.2003. On the same day, guidelines were issued for Unified Access (Basic and Cellular) Services License (UASL).
(xv) On 14.11.2003, TRAI clarified that the entry fee of the new Unified Licensee would be the entry fee of the 4th cellular operator and in 13 service areas where there is no 4th operator - the entry fee of the existing BSO fixed by the Government (based on TRAI's recommendations).
(xvi) In November, 2003, the DoT decided to accept and process UASL applications in the same manner as was done in the case of BSO applications.
(xvii) On 13.1.2005, TRAI recommended that till Unified Licensing comes into effect, the current regime of spectrum pricing will continue and the telecom services should not be seen as a source of revenue for the Government. On 14.12.2005, revised UASL guidelines were issued.
(xviii) On 13.4.2007, a reference was made to TRAI by the DoT stating that after finalisation of UASL policy, 159 licences had been issued for providing Access Services (CMTS/UASL/Basic) in the country and the Access Service Providers were mostly providing services by using the wireless technology (CDMA/GSM). It was also indicated that as per the existing policy of granting license, there was increase in the demand on spectrum in a substantial manner and the Government was contemplating review of its policy. A suggestion was also made that a limit can be put on the number of Access Service Providers in each service area because the spectrum is a scarce resource and to ensure that adequate quantity of 14 spectrum is available to the licensee to enable them to provide their services and to maintain the quality of service. The issues on which opinion of TRAI was sought included transfer of licences, guidelines dated 21.2.2004 on mergers and acquisitions, to permit service providers to offer Access Service using combination of technologies (CDMA/GSM/Basic or any other) under the same license and rollout obligations.
(xix) In May, 2007, respondent No.5 took over as Minister for the Department of Telecommunications.
(xx) The TRAI submitted its recommendations on 28.8.2007, paragraphs 2.37, 2.78 and 2.79 whereof are as under:
"Para 2.37: No cap be placed on the number of access service providers in any service area.
Para 2.78: "Keeping in view the objective of growth, affordability, penetration of wireless services in semi-urban and rural areas, the Authority is not in favour of changing the spectrum fee regime for a new entrant. Opportunity for equal competition has always been one of the prime principles of the Authority in suggesting a regulatory framework in telecom services. Any differential treatment to a new entrant vis-`-vis incumbents in the wireless sector will go against the principle of playing field. This is specific and restricted to 2G bands only i.e. 800, 900 and 1800 MHz. This approach assumes more significance particularly in the context where subscriber acquisition cost for a new entrant is likely to be much higher than for the incumbent wireless operators.
15 Para 2.79 It is therefore recommended that in future all spectrum excluding the spectrum in 800, 900 and 1800 bands should be auctioned so as to ensure efficient utilization of this scarce resource. In the 2G bands (800 MHz/900MHz/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 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."
(xxi) The recommendations of TRAI were placed before Telecom Commission sometime in October, 2007. However, none of the four non- permanent members of the Telecom Commission i.e. the Finance Secretary, Secretary, Department of Industrial Policy and Promotion, Secretary, Department of Information Technology and Secretary, Planning Commission were even informed about the meeting of the Telecom Commission. In that meeting, a committee of 6 officers all belonging to DoT was constituted and the committee submitted its report on 10.10.2007 virtually dittoing the recommendations of the TRAI.
(xxii) Three of the four companies, which were providing CDMA based mobile services under UAS licence had applied in 2006 for permission to use GSM technology. At the relevant time, combination of technologies (CDMA, GSM and/or any other) was not permitted. Therefore, the DoT did not accept their request. After receipt of the recommendations of TRAI, a 16 decision was taken by the DoT on 17.10.2007 for use of alternate technology albeit without referring the mater to full Telecom Commission. DoT issued press release on 19.10.2007 on the issue of use of alternate technology.
However, a day before that i.e., 18.10.2007, three operators who had applied for use of alternate technology were given `in principle' approval for using GSM technology.
(xxiii) In the meanwhile, a press note was issued by DoT incorporating therein the decision that new applications for UASL will not be accepted after 1.10.2007 till further orders. As on that date, 167 applications had been received. These included the applications which had not been processed since March, 2006. After publication of the press release, 408 more applications were received. Thus, as on 1.10.2007, 575 applications were received for UASL in respect of 22 service areas.
(xxiv) Member (Technology), Telecom Commission sent letter dated 26.10.2007 to the Secretary, Department of Legal Affairs, Ministry of Law and Justice for obtaining opinion of the learned Attorney General of India/Solicitor General of India on the issue of grant of new licences as well as grant of approval for use of dual technology spectrum to the existing operators so as to enable the DoT to handle the unprecedented situation in a 17 fair and equitable manner, which will be equally tenable. The letter was accompanied by a statement of case.
(xxv) The Law Secretary prepared a note on 1.11.2007, which was placed before the Law Minister. The latter opined that keeping in view the importance of the case and various options indicated in the statement of case, the whole issue needs to be first considered by an empowered Group of Ministers and in that process legal opinion of the Attorney General can be obtained.
(xxvi) On the next day i.e. 2.11.2007, respondent No.5 dispatched D.O. letter to the Prime Minister in which he indicated that the suggestion of the Law Ministry was totally out of context and, at the same time, asserted that the department had decided to continue with the existing policy i.e.
First-Come-First-Served for processing of applications received up to 25.9.2007 and the procedure for processing the remaining applications will be decided at the later stage, if any spectrum is available.
(xxvii) It appears that even before the D.O. letter sent by respondent No.5 was received in his office, the Prime Minister sent a letter to him drawing his attention to the issues raised by the telecom sector companies 18 and others on the processing of large number of applications in the backdrop of inadequate spectrum. The Prime Minister's letter was accompanied by a note in which five issues were identified. On the same day, respondent No.5 sent another letter to the Prime Minister stating that it will be unfair, discriminatory, arbitrary and capricious to auction the spectrum to new applicants as it will not give them level playing field.
(xxviii) On 22.11.2007, the Finance Secretary wrote to the Secretary, DoT expressing his serious reservation on the decision of the DoT on the issue of determination of fee for grant of licences in 2007 at the rate determined in 2001. He emphasized that in view of the financial implications, the Ministry of Finance should have been consulted before finalizing the decision and requested that further action to implement the licences may be stayed. In reply, the Secretary DoT sent D.O. dated 29.11.2007 stating therein that entry fee was finalised for UAS regime in 2003 as per the decision of the Cabinet and the dual technology licences were issued on TRAI recommendations of 28.8.2007.
(xxix) On 3.1.2008, a meeting of full Telecom Commission was fixed for 9.1.2008 to consider the following issues: - (i) Performance of telecom sector.
19 (ii) Pricing of spectrum.
(iii) Any other item with the permission of Chairman.
However, vide letter dated 7.1.2008, Joint Secretary (T), DoT informed the members of the Commission that meeting scheduled for 9.1.2008 has been postponed to 15.1.2008.
(xxx) After three days of postponement of the meeting of Telecom Commission, a press release was issued by DoT that the department had decided to issue Letter of Intents (LOIs) only to those applicants, who had applied up to 25.9.2007. It was also indicated that the department has been implementing a policy of First-Come-First-Served for grant of UASL under which initially an application which is received first will be processed first and thereafter, LOI will be granted to those found eligible and UAS licence will be given to those whosoever complies with the conditions of LOI first.
On the same day, the DoT issued another press release at 2.45 P.M. asking all the applicants to assemble at the departmental headquarter within 45 minutes to collect response of DoT. The eligible LOI holders were also asked to submit compliance of the terms of LOI within the prescribed period.
20 (xxxi) All the applicants, eligible or not, collected their LOIs and acceptance of 120 applications was also received on the same day.
Compliance of the terms and conditions of LOI was also made for 78 applications on 10.1.2008.
(xxxii) Soon after obtaining the licences, Swan Telecom which had paid licence fee of Rs.1537 crores only off loaded its 45% stake to Etisalat for Rs.4,500 crores and Unitech, which obtained licence for Rs.1651 crores off loaded 60% of its stake to Telenor for Rs.6120 crores.
(xxxiii) S. TEL Ltd., which had submitted application pursuant to press note dated 24.9.2007 but whose application was not considered along with other applicants in view of the anti-dating of the cut off date, filed Writ Petition No. 636/2008 in the Delhi High Court for quashing first press release dated 10.1.2008. The learned Single Judge referred to the recommendation made by the TRAI that there should be no cap on the number of excess service providers in any service area and observed that on the one hand, the Government of India accepted the recommendation of the TRAI but acted just contrary by amending the cut off date and thereby limiting the service providers whose applications could be considered for grant of licence. The learned Single Judge held that there was no rational basis for fixing 25.9.2007 as the cut off date and there was 21 no justification to change the rules of game after the game had begun.
Accordingly, he allowed the writ petition and directed the respondents to consider the application of the writ petitioner for 16 circles.
(xxxiv) L.P.A. No. 388/2009 filed by the Union of India against the order of the learned Single Judge was dismissed by the Division Bench and the order of the learned Single Judge was upheld.
(xxxv) Special Leave Petition No. 33406/2009 filed by the Union of India, which was converted into C.A. No. 2355/2010 was disposed of by this Court on 12.3.2010 after taking into consideration the additional affidavit filed by the writ petitioner and suggestion made by the Attorney General. However, the finding recorded by the High Court on the issue of change of cut off date was not disturbed.
(xxxvi) On 4.5.2009, appellant No.2 - Telecom Watchdog submitted detailed representation to the Chief Vigilance Commissioner (CVC) pointing out irregularities committed in the grant of UASL. After 5 days, one Shri A.K.
Agarwal made a complaint to the CVC to highlight how manipulations were made by some of the applicants for getting the licences and how the exercise undertaken by the DoT for grant of UASL has resulted in serious financial loss to the public exchequer.
22 (xxxvii) The CVC got conducted an inquiry under Section 8(d) of the Central Vigilance Commission Act, 2003 and noticed some grave irregularities in the grant of licences. On 12.10.2009, a copy of the report prepared on the basis of the said inquiry was forwarded by the CVC to the Director, CBI to investigate into the matter to establish the criminal conspiracy in the allocation of 2G Spectrum under UASL policy of DoT and to bring to book all wrong doers. On receipt of the aforesaid communication from the CVC, CBI registered FIR No. RC-DAI-2009-A-0045 dated 21.10.2009 against unknown officials of DoT and unknown private persons/companies and others for offence under Section 120B IPC read with Section 13(2) and 13(1)(d) of the Prevention of Corruption Act, 1988.
Submissions:

7. Shri Prashant Bhusan, learned counsel for the appellants argued that the allocation of spectrum on 10.1.2008 has resulted in huge loss to the public exchequer and, therefore, a thorough probe is necessary by an independent agency so that all the persons who may be found guilty are brought before law and punished. Learned counsel extensively referred to the documents produced by the parties before the High Court and this Court including letter dated 20.11.2009 of the Joint Secretary of Income Tax and 23 the report of the CAG and argued that the Court should direct the CBI to conduct investigation on various issues including grant of permission for use of dual/alternate technology to three operators a day before the policy decision was announced to the public by means of press release dated 19.10.2007, the change of cut off date from 1.10.2007 to 25.9.2007, issue of LOIs by DoT on 10.1.2008, gross violation of the policy of first-come-first- served, non compliance of the rollout and other obligations by the licensees, failure of the TRAI and DoT to ensure that the licensee complied with the conditions on which they were permitted to use the spectrum and huge loss caused to the public exchequer by manipulative mechanism as also sale of equities by different licensees to foreign companies. Learned counsel referred to para 6.31(iv) of the TRAI recommendation to show that no proposal for permission for merger and acquisition could be entertained till the fulfillment of rollout obligations but DoT acted contrary to the TRAI recommendation without complying with fifth proviso to Section 11 of the Act and as a result of that the licensees violated the conditions of licence with impunity. Shri Bhushan submitted that the grant of licences on the basis of 2001 price in the garb of implementing the recommendations made by TRAI has resulted in loss to the public exchequer to the tune of more than Rs.1,76,000 crores.
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8. Learned counsel submitted that since the spectrum was scarce, the grant of licences on the basis of 2001 price was ex facie contrary to public interest and a mala fide action on the part of respondent No.5 and officers of DoT who had connived with the private operators and others including those in realty and infrastructure sectors for extraneous considerations. Learned counsel emphasized that majority of 122 applicants to whom the licences were granted were ineligible and, therefore, the TRAI has recommended cancellation of their licences. Shri Bhushan then submitted that the CAG has assessed the loss by using different methods and, therefore, the report prepared by him should constitute a basis for further investigation. Learned counsel made a pointed reference to the finding recorded by the CAG that soon after getting licences for a price of Rs.1600 crores or less, the licensees have transferred their stakes to the operators outside the country and made profits running into many thousand crores. Learned counsel submitted that the mechanism adopted by the DoT, which was headed by respondent No.5 at the relevant time to hold meeting of Telecom Commission in October, 2007 without informing the non permanent members (four Secretaries of important Departments of Government) and postponement of the meeting of Telecom Commission scheduled for 7.1.2008, issuance of two press releases 25 on 10.1.2008, grant of 45 minutes to the applicants to collect LOIs and the very fact that some of the applicants could submit bank drafts of Rs.1600 crores within few hours shows that everything had been pre-fixed with a view to favour some operators at the cost of public revenue. Learned counsel pointed out that the mechanism of auction adopted for allocation of 3G Spectrum has yielded more than 60,000 crores and if the same methodology was adopted for allocation of 2G Spectrum, the country would have been richer by more than a lac and half crores. Learned counsel submitted that the investigation being conducted by the CBI should be monitored by the Court by appointing two independent investigators who should be persons of unimpeachable integrity and who should be conversant with the functioning of the CBI. He lamented that while the CAG has submitted the final report within few months from the receipt of relevant records from the CBI and the Directorate of Income Tax (Investigation), the CBI has not been able to make any tangible progress. Shri Prashant Bhushan also referred to the reports appearing in a section of media about grant of huge loans by public sector and other banks to the applicants to facilitate their participation in the allotment of UAS licences and submitted that the CBI should be asked to investigate this aspect as well to unearth the conspiracy between the companies engaged in realty and infrastructure 26 sectors and the banks which enabled the former to earn huge profits without even complying with their obligations under the licence.

9. Shri K.K. Venugopal, learned senior counsel appearing for the CBI relied upon the judgments of this Court in Bhagwant Singh v.
Commissioner of Police (1983) 3 SCC 344, State of West Bengal v.
Sampat Lal (1985) 1 SCC 317, R.S. Sodhi v. State of U.P. (1994) Supp 1 SCC 143, Director, Central Bureau of Investigation v. Niyamavedi (1995) 3 SCC 601, Vineet Narain v. Union of India (1996) 2 SCC 199, Anukul Chandra Pradhan v. Union of India (1996) 6 SCC 354, Union of India v. Sushil Kumar Modi (1997) 4 SCC 770, Superintendent of Police, CBI v. Tapan Kumar Singh (2003) 6 SCC 175, M.C. Mehta v. Union of India (2007) 1 SCC 110, Divine Retreat Centre v. State of Kerala (2008) 3 SCC 542, Dukhishyam Benupani, Assistant Director, Enforcement Directorate (FERA) v. Arun Kumar Bajoria (1998) 1 SCC 52, Janta Dal v. H.S. Choudhary (1992) 4 SCC 305, D. Venkatasubramaniam and others v. M.K. Mohan Krishnamachari (2009) 10 SCC 488, State of Haryana v. Bhajan Lal (1992) Supp 1 SCC 335 and argued that the Court should not make any order which may cast any reflection on the ability of the CBI to conduct the investigation into a case in which allegations of 27 corruption have been leveled against various functionaries of the Government including respondent No.5. Learned senior counsel emphasized that the CBI has always conducted investigations objectively and, therefore, there is no reason to think that the investigation in the present case will not be fair and impartial or that any attempt will be made to shield any one. Learned counsel pointed out that after registering the first information report, the CBI has conducted raids, collected voluminous records and copies of the tapped conversation of Ms. Niira Radia and examined more than three dozen witnesses. He submitted that the CBI will submit further progress report to the Court within 8 weeks and try to complete the investigation by the end of March, 2011.

10. Shri Gopal Subramanian, learned Solicitor General argued that UAS licences were granted in 2008 on the price fixed in 2001 because the TRAI had recommended that the new entrant should not be subjected to discriminatory treatment and there should be level playing field for all the applicants. Learned Solicitor General submitted that the recommendations made by the TRAI were approved by the Government and as such the same cannot be termed as illegal or arbitrary. He submitted that the TRAI is an expert body established for rapid growth of telecommunication services and 28 there is no reason to doubt the credibility of the recommendations made by it on 28.8.2007 for grant of licences on the principle of first-come-first-served basis by treating the 2001 price as the bench-mark. The learned Solicitor General submitted that the loss indicated in the report of CAG is based on assumptions and at this stage the Court may not make the said recommendations as the basis for recording a finding whether or not any loss has been caused to the public exchequer and/or magnitude of the loss. He submitted that the Central Government has, after considering the recommendation made by the TRAI, already initiated action for cancellation of the licences of the ineligible applicants and also those who failed to comply with the conditions of licence including rollout obligation.

11. Shri Harin P. Raval, learned Additional Solicitor General referred to the provisions of the Prevention of Money-Laundering Act, 2002 and the Foreign Exchange Management Act, 1999 and argued that soon after receiving complaint, which was forwarded by the Ministry of Finance, the Director General Income Tax (Investigation) sought permission from the Union Home Secretary for putting on surveillance the telephone lines of Ms.
Niira Radia and her associates and on the basis of the approval granted by the latter, telephone lines of Ms. Niira Radia and her associates were put 29 under surveillance. He submitted that after completion of the recording, a detailed investigation is being conducted under the supervision of the Director General Income Tax (Investigation). He invited the Court's attention to the report, which was produced in a sealed envelope to show that serious efforts are being made by the Department to find out whether there has been violation of the provisions contained in the two Acts and loss has been caused to the public exchequer. Learned counsel assured that the Department will produce report on the basis of further investigation conducted by it.

12. Shri T.R. Andhyarujina, learned senior counsel appearing for respondent No.5 submitted that the report of the CAG is flawed on various aspects and the estimation of loss is based on totally unfounded assumptions.
Learned counsel referred to various paragraphs of the CAG report and emphasized that till the completion of investigation no conclusion should be drawn by the Court on the culpability of respondent No.5. Learned senior counsel repeatedly emphasized that his client should not be condemned in the eyes of the public by unwarranted media publicity even before completion of the investigation by the CBI and the authorities of the Income Tax Department.
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13. At this stage, we may mention that during the course of hearing, the learned Solicitor General and Shri K.K. Venugopal stated that the Government of India and the CBI would have no objection to a Court monitored investigation by the CBI, but submitted that there is no reason for appointment of a Special Investigation Team. The learned Solicitor General also stated that the present incumbent in the office of CVC will recuse himself from the supervision of the investigation being conducted by the CBI in connection with FIR No. RC-DAI-2009-A-0045 registered on 21.10.2009 or any other FIR, which may be registered in connection with grant of UAS licences. Shri K.K.Venugopal added that the investigation being conducted by the CBI can be supervised by the two Vigilance Commissioners subject to the limitation contained in proviso to Section 8(1) of the Central Vigilance Act.

14. We have considered the respective submissions and carefully scanned the record. We have also gone through the reports produced by Shri K.K.
Venugopal and Shri Harin P. Raval. In our opinion, the Division Bench of the High Court committed a serious error by dismissing the writ petition at the threshold ignoring that the issues raised by the appellants, whose bonafides have not been doubted, are of great public importance. We are, prima facie, 31 satisfied that the allegations contained in the writ petition and the affidavits filed before this Court, which are supported not only by the documents produced by them, but also the report of the Central Vigilance Commission, which was forwarded to the Director, CBI on 12.10.2009 and the findings recorded by the CAG in the Performance Audit Report, need a thorough and impartial investigation. However, at this stage, we do not consider it necessary to appoint a Special Team to investigate what the appellants have described as 2G Spectrum Scam because the Government of India has, keeping in view the law laid down in Vineet Narain's case and orders passed in other cases, agreed for a Court monitored investigation. The reports produced before the Court show that the CBI and the Enforcement Directorate have started investigation in the right direction. At the same time, keeping in view the statements made by the learned Solicitor General and the learned senior counsel representing the CBI and with a view to ensure that in a serious matter like this, comprehensive and coordinated investigation is conducted by the CBI and the Enforcement Directorate without any hindrance, we deem it proper to issue the following directions:
(i) The CBI shall conduct thorough investigation into various issues highlighted in the report of the Central Vigilance Commission, which was forwarded to the Director, CBI vide letter dated 12.10.2009 and 32 the report of the CAG, who have prima facie found serious irregularities in the grant of licences to 122 applicants, majority of whom are said to be ineligible, the blatant violation of the terms and conditions of licences and huge loss to the public exchequer running into several thousand crores. The CBI should also probe how licences were granted to large number of ineligible applicants and who was responsible for the same and why the TRAI and the DoT did not take action against those licensees who sold their stakes/equities for many thousand crores and also against those who failed to fulfill rollout obligations and comply with other conditions of licence.
(ii) The CBI shall conduct the investigation without being influenced by any functionary, agency or instrumentality of the State and irrespective of the position, rank or status of the person to be investigated/probed.
(iii) The CBI shall, if it has already not registered first information report in the context of the alleged irregularities committed in the grant of licences from 2001 to 2006-2007, now register a case and conduct thorough investigation with particular emphasis on the loss caused to the public exchequer and corresponding gain to the licensees/service providers and also on the issue of allowing use of dual/alternate 33 technology by some service providers even before the decision was made public vide press release dated 19.10.2007.
(iv) The CBI shall also make investigation into the allegation of grant of huge loans by the public sector and other banks to some of the companies which have succeeded in obtaining licences in 2008 and find out whether the officers of the DoT were signatories to the loan agreement executed by the private companies and if so, why and with whose permission they did so.
(v) The Directorate of Enforcement / concerned agencies of the Income Tax Department shall continue their investigation without any hindrance or interference by any one.
(vi) Both the agencies, i.e., the CBI and the Directorate of Enforcement shall share information with each other and ensure that the investigation is not hampered in any manner whatsoever.
(vii) The Director General, Income Tax (Investigation) shall, after completion of analysis of the transcripts of the recording made pursuant to the approval accorded by the Home Secretary, Government of India, hand over the same to CBI to facilitate further investigation into the FIR already registered or which may be registered hereinafter.
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15. The progress reports based on the investigations conducted by the CBI and the Enforcement Directorate shall be produced before the Court in sealed envelopes on 10.2.2011.
The case be listed for further consideration on 10.2.2011.
..................................J.
[G.S. Singhvi] New Delhi; ...................................J.

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CENTRE FOR ENVIORNMENT & FOOD SECURITY v. UNION OF INDIA & ORS. [2010] INSC 1094 (16 December 2010)

Judgement CIVIL ORIGINAL JURISDICTION WRIT PETITION (CIVIL) NO.645 OF 2007 Centre for Environment & Food Security ... Petitioner Versus Union of India & Ors. ... Respondents ORDER The framers of the Constitution, in the Preamble to the Constitution, guaranteed to secure its citizens justice, social, economic and political as well as equality of status and opportunity but the `right to employment' was not incorporated in Part III of the Constitution as a Fundamental Right. By judicial pronouncements, the courts expanded the scope of Article 21 of the Constitution of India and included various facets of life as rights protected under the said Article despite the fact that they had not been incorporated by specific language in Part III by the framers of the Constitution.Judgments of this Court in the cases of Olga Tellis v. Bombay Municipal Corporation [(1985) 3 SCC 545] and Narendra Kumar 2 Chandla v. State of Haryana [(1994) 4 SCC 460] expanded the scope of Article 21 and held that `right to livelihood' is integral part of the `right to life'. Taking cognizance of the stark reality that majority of the Indian population (about 76%) is residing in rural areas and unemployment was the greatest challenge before any State or the Central Government, the Parliament decided to enact a law to provide rural employment to restricted persons as stated in such law.
This resulted in enactment of the National Rural Employment Guarantee Act, 2005 (for short, `the Act'). As per the preamble of the Act, it was an enactment to provide for enhancement of livelihood security of households in the rural areas of the country by providing at least hundred days of guaranteed wage employment in every financial year to every household whose adult members volunteer to do unskilled manual work and for matters connected therewith and incidental thereto. Even the object and reasons of this enactment demonstrate that objective of the legislation is to enhance the livelihood security of the poor households in rural areas and the Government including the State Government was required to prepare a scheme to give effect to the guarantee proposed under the legislation. Another paramount feature of the Act was that if an 3 eligible applicant is not provided work as per the provisions of this legislation within the prescribed time limit, it will be obligatory on the part of the State Government to pay unemployment allowance at the prescribed rate. This Act was to extend to whole of India and was to come into force on such date as the Central Government by notification in the official Gazette may appoint. This Act was later amended by Amending Act 46 of 2009 (w.e.f. October 2, 2009) and titled as `Mahatma Gandhi National Rural Employment Guarantee Act, 2005'.
A Constitution Bench of this court in the case of Secretary, State of Karnataka v. Uma Devi [(2006) 4 SCC 1], while dealing with the question that the persons appointed under the provisions of the Act would be entitled to regular appointment, rejected the claim of the Respondents for regularisation and made certain significant observations which read as under :
"51. The argument that the right to life protected by Article 21 of the Constitution would include the right to employment cannot also be accepted at this juncture. The law is dynamic and our Constitution is a living document. May be at some future point of time, the right to employment can also be brought in under the concept of right to life or even included as a fundamental right. The new statute is perhaps a beginning. As things now stand, the acceptance of such a plea at 4 the instance of the employees before us would lead to the consequence of depriving a large number of other aspirants of an opportunity to compete for the post or employment. Their right to employment, if it is a part of right to life, would stand denuded by the preferring of those who have got in casually or those who have come through the backdoor. The obligation cast on the State under Article 39(a) of the Constitution is to ensure that all citizens equally have the right to adequate means of livelihood. It will be more consistent with that policy if the courts recognise that an appointment to a post in government service or in the service of its instrumentalities, can only be by way of a proper selection in the manner recognised by the relevant legislation in the context of the relevant provisions of the Constitution. In the name of individualising justice, it is also not possible to shut our eyes to the constitutional scheme and the right of the numerous as against the few who are before the court. The directive principles of State policy have also to be reconciled with the rights available to the citizen under Part III of the Constitution and the obligation of the State to one and all and not to a particular group of citizens. We, therefore, overrule the argument based on Article 21 of the Constitution."
Thus, in the present petition, this Court has to examine the relief claimed within the provisions of the Act and the principles of law stated by the Court in the referred judgments.
The present writ petition had been instituted by Centre for Environment and Food Security for issuance of appropriate directions to the respondents (Union of India and all the States were impleaded 5 as respondents) for formation of appropriate schemes and proper utilization of funds allocated for the said purpose and to achieve the object of the Act. The petitioners claimed to have carried out a survey, copy of which is annexed as `Annexure-A' to the Writ Petition showing that neither the schemes framed under the provisions of the Act nor the provisions of the Act are being properly implemented. The funds allocated are also not being properly utilized. In fact, the allegation is that the funds are being siphoned by corrupt officials and officers, thereby, denying lakhs of poor people their fundamental right to livelihood. It was, thus, prayed that the Court should issue appropriate directions to ensure proper and equitable functioning of the Act and the scheme envisaged thereunder. Further, they prayed that social audit of all activities undertaken and executed under the auspices of the Act and the schemes made therein should be conducted properly and the information in this regard should be posted on the website. The Court should also formulate some guidelines for paying the workers their wages in a bid to reduce the exchange of cash to a minimum and to ensure that transfer of funds to the workers is through a safe and easily traceable route. Besides praying for some other reliefs, prayer is also made to order CBI probe 6 or thorough inquiry by a special commission of inquiry appointed by the Court in the scam brought out in the said survey, particularly, with reference to Orissa.
Before, we proceed to examine the response of the respondents and consequential directions that the Court should pass, it will be necessary to examine some of the relevant provisions of the Act. The Act mandates that the Central Council and State Councils should be constituted in terms of Sections 10(1) and 12 of the Act.
Chapters II and III deal with guarantee of employment in rural areas, employment guarantee schemes and unemployment allowances.
Section 3(1) casts an obligation upon the State Government to provide to every household, whose adult members volunteer to do unskilled manual work, employment for not less than one hundred days of such work in a financial year in accordance with the scheme made under the Act in such rural area in the State as may be notified by the Central Government. Section 3(4) further requires that the Central Government or the State Government may within the limits of its economic capacity and development, make provisions for securing work to every adult member of a household under a Scheme for any period beyond the period guaranteed under sub-section (1), as may 7 be expedient. In terms of Section 4, every State Government shall, within one year from the date of commencement of this Act, by notification, make a scheme for complying with the provisions of Section 3. Proviso to this Section requires that until any scheme is notified by the State Government, the Annual Action Plan or Perspective Plan for the Sampoorna Grameen Rozgar Yojna (SGRY) or the National Food for Work Programme (NFFWP) shall be deemed to be the action plan for the scheme. It is obligatory on the part of the State to provide in the scheme the minimum features specified in Schedule I. Section 6 carves out an exception to the provisions of the Minimum Wages Act, 1948 and the Central Government has been empowered to specify, by notification, the wages different than that Act which shall not be at a rate less than Rs.60/- per day.
Section 7 is another important provision of the Act which requires that where an applicant is not given employment within 15 days of the receipt of his application seeking employment, he shall be entitled to receive daily unemployment allowance. This allowance shall cease on attainment of the conditions stated in Section 7(3). Under Section 8(1), obligation is placed on the Programme Officer that if he is not in a position to disburse the unemployment allowance, in time or at all, 8 for any reason beyond his control, he is required to report the matter to District Programme Coordinator and to even display the same on the notice boards. The Legislature, in its wisdom, has opted not to leave the matter at that stage but have made a provision where the State Government, under Section 8(3), is required to take all measures to make the payment of unemployment allowance to the concerned household as expeditiously as possible. Section 9 declares the circumstances where a person would be disentitled to receive unemployment allowance in certain cases. They are very restricted circumstances like where he does not accept the employment provided, does not report for work within fifteen days of being notified by the Programme Officer and continuously remains absent from work without obtaining a permission from the concerned implementing agency for a period of more than one week or remains absent for a total period of more than one week in any month. Thus, the scheme of the Act clearly contemplates a statutory obligation upon the State and the concerned departments to ensure due compliance of the scheme framed and, in absence thereof, to ensure that the provisions of the Act are adhered to. The object of the Act is clear that the Legislature, in unequivocal terms, has expressed its 9 intent to ensure employment and payment of allowances to the respective household and the exception is primarily founded on the unwillingness of the recipient to work.
The functions of the Central Council have been spelt out in Section 11 while that of the State Councils in Section 12(3). It is a statutory obligation on these Councils to advice the Government on all matters concerning the scheme and its implementation in the State including promotion of widest possible dissemination of information about the scheme made under this Act, establishment of central evaluation and monitoring system etc. In other words, this whole machinery has been set up to ensure smooth and effective implementation of the provisions of the Act. Besides constituting these Councils which are expected to function at higher lever, the Legislature has required constitution of bodies and functionaries at the grass root level, i.e. District, intermediary and Gram Panchayat level. In terms of Section 17, the Gram Sabha shall monitor the execution of the work within the Gram Panchayat and there shall be regular social audit of all the projects under the scheme. In terms of Section 19, the State Government is required to make rules and determine appropriate grievance redressal mechanisms at the Block 10 and the District levels for dealing with any complaint by any person in respect of implementation of the scheme. Chapter-V requires establishment of National and State employment Guarantee Funds and Audit. In other words, these funds are to be created for ensuring the effective implementation of the schemes. Under Section 20(2), the Central Government can credit, by way of grants or loans, such sums of money as the Central Government may consider necessary to the National Fund which will be utilized in such manner and subject to conditions, as may be provided by that Government. The intention of the Legislature is that it wants the provisions of the Act to be enforced and fix responsibility on the persons causing impediments in its execution. Those who act contrary to the provisions of the Act are liable to conviction and fine under Section 25 which may extend to Rs.1000/-. The Central Government is further empowered to issued directions under Section 27 of the Act for effective implementation of the provisions of the Act and has powers to examine any complaint regarding issue or improper utilization of funds granted under this Act in respect of any scheme and to take remedial measures and even to stop release of funds to the scheme in such condition. The provisions of this Act have been given precedence and shall prevail 11 notwithstanding anything inconsistent therewith in any other law for the time being in force or even in any instrument having effect by virtue of such law.
The legislative scheme of the Act clearly places the `right to livelihood' at a higher pedestal than a mere legal right. Conjunct reading of the afore referred provisions of the Act demonstrates that the legislature desired to provide minimum one hundred days of employment to one person in the family to ensure that the members of the family do not starve and are able to make their ends meet with reference to the bare minimum requirements for existence. The Act provides constitution of fora and functionaries right from the higher levels in the Central and State Governments to the grass-root levels at Block and Panchayat. The powers of the Central Government are very wide. They have to ensure that there is proper utilisation of funds allocated and in the event of any misappropriation or siphoning of such funds the Central or the State Governments shall not only to examine such complaints but is commanded by law to stop the financing to such scheme and take remedial measures immediately.
Where persons are found contravening the law they are required to be punished in accordance with law. Central and State Governments 12 have been vested with wide powers only with the purpose to ensure that the schemes under the Act are implemented appropriately, effectively and the money in the form of allowances reaches the poorest strata of the society. The ones, irrespective of their stature in the hierarchy of the Government, who are obstructing the implementation of the law needs to be dealt with and punished as per the provisions of the Act.
As already noticed, in the report of the survey conducted by the petitioner, reference to various States has been made with respect to malfunctioning and improper implementation of the schemes framed under the provisions of the Act. Since State of Orissa is accused of maximum violations and complete non-adherence to the law, for the present, we are dealing only with the State of Orissa as a defaulting State while leaving the others. The allegations relate to siphoning of funds, non-framing of guidelines and improper declaration and implementation of the schemes in that State. Instead of referring to the allegations in greater detail it will be appropriate for us to refer to the relevant portions of `Annexure-A' to the Writ Petition which reads as under:
13 "You may have heard about the loopholes and irregularities in implementation of the National Rural Employment Guarantee Act (NREGA), the biggest anti-poverty scheme in the history of India. The State of Orissa, however, does not have any loopholes or irregularities in the implementation of this high-profile rural job scheme. In a random survey conducted in 100 villages of Orissa's 6 districts, we found only blackholes and serious irregularities as the only regular thing in all these villages. Our calculations suggest that about 75 per cent of the NREGA funds spent in Orissa have being siphoned and pocketed by the government officials and this loot has been very participatory and organized.
This survey was conducted during May- June 2007 by Delhi-based Centre for Environment and Food Security (CEFS) to access and evaluate the performance of National Rural Employment Guarantee Scheme (NREGS) in the state of Orissa. The survey was carried out in 100 villages spread over six districts of KBK (Kalahandi-Bolangir- Koraput) region, namely; Bolangir, Nuapada, Kalahandi, Koraput, Nabarangpur and Rayagada.
The findings of CEFS survey are shocking, scandalous and outrageous. The Rural Employment Gurantee Scheme in Orissa has been virtually hijacked by officials responsible for the implementation of this scheme. Our survey findings have revealed that there is participatory loot, plunder and pillage in Orissa's rural job scheme. There is open loot of taxpayers' money, there is plunder of poors' right to guaranteed wage employment for 100 days and there is pillage 14 of every single norm of democratic governance and administrative accountability.
It is shocking to note that we could not find a single case where entries in the job cards are correct and match with the actual number of workdays physically verified with the villagers. Out of the 100 sample villages covered for this survey, 18 villages have not received any job card, 37 villages have not received any job under NREGS even after 16 months of launch of the scheme, 11 villages have received neither job cards nor any job, Job cards of 23 villages were lying with VLWs (Village Level Worker) and JEs (Junior Engineer) for more than 6-8 months against the will of card holders.
In 25 villages, only half, one third or partial wage payments were made. In 20 villages, we found scandalous difference in the number of workdays recorded in the job cards and the number of actual workdays given to the workers. There are 3 villages where no wage payments have been made even after 4-8 months of the works done. We found 6 villages in Kashipur block of Rayagada district where NREGS work was being done without any job cards being issued to the villagers.
As per the NREGA implementation Status Report for the Financial Year 2006-07 (http://nrega.nic.in/state/nregampr.asp), the total number of job cards issued in Orissa was 2593194. Orissa was able to provide 7.99 crore persondays of employment to 13,94,169 households spread over 19 districts of the state. In other words, 13,94,169 families have got an average of 57 days of wage employment. This includes 3.93 crore 15 persondays of employment provided to Adivasis (STs) and 1.89 crore persondays of employment provided to Dalits (SCs). Orissa also claims that 1,54,118/families in the state completed 100 days of wage employment during 2006-07. But, our experience in 100 villages of Orissa suggests that all these claims are bogus and manufactured only in official records in order to siphon NREGS funds.
Our back of the envelope calculations suggests that less than 2 crore persondays of employment has been provided on the ground and more than 6 crore persondays of employment has been provided only in the pages of false job cards and fabricated muster rolls. We could not find a single family in the 100 sample villages who had actually got 100 days of wage employment. We found very few families who had got 40-60 days of wage employment. The rest of the families, if at all they have got any employment, it is mostly between 5 to 21 days. However, online job cards of most of these households have false and fabricated job and wage entries for 108 days, 104 days, 102 days, 100 days, 96 days, 90 days, 84 days, 72 days, 65 days, 60 days, 52 days and so on. This is the way Orissa Government has "successfully" spent Rs.733/- crore and provided about 8 crore persondays of employment.
Our back of the envelope calculations suggest that out of Rs.733 crore spent in Orissa during 2006-7, more than 500 crore has been siphoned and pocketed by the government officials of executing agencies. In other words, less than 25 per cent of the NREGS funds have reached the targeted 16 population and more than 75 per cent have been eaten up by sarkari babus. There are thousands of villages in Orissa where more than 80-90 per cent of NREGS funds have been misappropriated by the executing officials.
According to the Government of Orissa, each of the needy households in 19 districts of the state was given on an average 57 days of wage employment under NREGA during 2006-7. Our calculations suggest that only about 5 days of average employment ahs been given to the needy families in the 19 districts of Orissa where NREGA was implemented during 2006-7. How have we arrived at the figure of 5 days of average employment? It is very simple."
The State of Orissa has filed two different reply affidavits. First affidavit was filed on 10th July, 2009 while the second on 29th April, 2010. In these affidavits, the averments made in the said survey report and the Writ Petition has been denied and it is averred that the schemes are appropriately being implemented. It is stated that it is not correct to say that 25% of the person-days have been provided and 75% of the person-days are only shown in paper is not at all correct, in view of the involvement of Palli Sabha, Gram Sabha, G.P., Block and Zilla Parishad as well as the district administration including Collectors. Further by creating 799 lakhs of person-days assets have been created like tanks, roads, plantations, forestry etc.
17 The allegation with regard to partial wage payment, discrepancy in the number of working days recorded in the job cards vis-`-vis the number of actual work days provided to the workers and further averment with respect to Kasipur block, Raygara district regarding execution of NREGS work without issuing any job-card are stated to be false. It is, however admitted that for the year 2006-07 a sum of Rs. 890 crores was allocated and Rs. 733 crores has been utilized. It is denied that any amount thereof was misappropriated. In the latter affidavit attempt has been made to show as to how the suggestions made by the petitioner in their affidavits in relation to social audit, transparency and grievance redressal and unemployment allowances are to be dealt with. Regarding issuance of guidelines for proper implementation of the schemes it was stated that once the operational guidelines framed by the Central Government are made mandatory, which are to be implemented by the State Government, it would tell upon the federal character of the country and the State Government should have no scope to improve upon the implementation apparatus by infusing some innovations during execution.
18 Affidavits have been filed by the Union of India on three different occasions. Union of India claims to have notified the wage rate in relation to different States and that rate has now been revised to Rs. 100/- for the States who have approached the Ministry of Rural Development for revision of the same. According to Central Government it has been meeting the cost of implementing the Act since its enactment. For strengthening the professional support for transparency and accountability, the limit of administrative expenses has been enhanced from 4% to 6% in March, 2009. Funds released to the State Governments approximately constitute about 70% as wage component and 30% as material component. In the year 2009- 10 Central release accounted for Rs. 33,506 crores out of total available fund of Rs. 49,529 crores. It is stated that the provisions of the Act are being implemented. In the latest affidavit it is averred that amendments have already been made to Schedule I to the Act with regard to social audit to strengthen transparency and accountability.
Instructions are stated to have been issued to the State Government for better implementation of the schemes and efforts are also being made to integrate the Management Information System (MIS) with the Post Office so that the amounts can be directly credited into the 19 Post Office accounts. In another affidavit reference has been made to various provisions of the Act and all that is sought to be reflected therein, is that schemes are operating properly and matters were also discussed in the meetings of the Chief Secretaries and Cabinet Secretaries on 12th April 2008. It is interesting to note that in Annexure R-1 to this affidavit it has been stated that newspaper reports appearing in the Business Standard featuring allegation made by the petitioner NGO were obtained and it was noticed that these were allegations of very serious nature. The matter was taken up with the Chief Secretary of Government of Orissa to constitute a High Level Fact Finding Committee. Director General, National Institute of Rural Development, Hyderabad was to take up evaluation of implementation performance of the schemes. A preliminary report was received from the State Government which contemplated further enquiry at different levels. Some reports were received and the State Government was requested to support its findings by facts and figures. The inquiry report of Fact Finding Committee was forwarded by the State Government on 28th October, 2007 and on 7th December, 2007 the State Government was reminded to indicate issue by issue investigation done which should reflect the status on each issue 20 specifically. The Fact Finding Team's report received from the field was submitted to the State Government but was probably incomplete.
This affidavit was filed in July, 2008 but no details have been furnished as to what transpired during the period 2007-08.
It is clear from the affidavits filed on behalf of the State of Orissa as well as Union of India that the allegations of the petitioner are not without any basis. Extent of their correctness may be a question to be examined separately but the manner in which the affidavits have been filed on behalf of the concerned State as well as the Union of India do not, statistically, deny the allegations as no figures to the contrary have been provided. The inquiry committee which had been appointed for quite some time has failed to submit any final report to the competent authority. The interim report which has been submitted with respect to the `action taken' by the Union of India is again a matter which has been left to imagination of all concerned. It is nowhere stated in these affidavits that whether, even a single officer/official, till today, has been found to be guilty of contravening the provisions of the Act or causing impediments in effective implementation of the schemes. This petition itself has been pending since the year 2007 and the records are available to the 21 respective respondents, still no efforts have been made by the concerned authorities to place on record any reports to show that the averments made by the petitioner NGO in the Writ Petition, and particularly `Annexure-A' to the same, are absolutely incorrect.
To us, from the record available, it appears that all is not well in the State of Orissa with regard to implementation of the schemes framed under the provisions of the Act. In the affidavit filed on behalf of the Union of India as well as the States, the allegations in regard to irregularities, diversion of funds, improper maintenance of records and non-implementation of schemes have been vaguely denied without providing any specific data based explanation in response thereto. The enquiries which were initiated years back have not culminated into any final orders or issuance of directions in regard to proper implementation of the schemes. This clearly shows default on the part of the Union of India as well as the States in discharging their statutory obligation of achieving the public purpose that is sought to be achieved under the provisions of the Act. There seems to be serious irregularities in the effective implementation of such schemes.
A statutory obligation under the provisions of the Act, i.e. right to livelihood which has also been declared by the courts as an integral 22 part of Article 21 of the Constitution is being frustrated by the very functionaries who are responsible for proper and effective implementation of the Act.
To add to all this, we also need to notice that nobody even appeared on behalf of State of Orissa, before the Court on 13th December, 2010, when the case was taken up for hearing. Union of India claims to be releasing funds to the State of Orissa for purposeful implementation of the schemes but has miserably failed to exercise its supervisory and investigative powers including the power to issue directions under different provisions of the Act. From the affidavit filed, it is clear that there is no record to substantiate proper utilization of the released funds and whether or not they have been distributed as per the schemes or even have been diverted towards other expenses of the State. It is expected of the Union of India to create proper check and balances by issuance of directions, framing of rules and issuing guidelines so that there is no contravention of the statutory provisions and the laudable legislative purpose is not defeated by inactions and/or improper actions. Be it the State Government or the Union of India, accountability, transparency and effective implementation of the statutory scheme are the established 23 canons which would govern their action. To implement the legislative intent is the primary duty of all concerned.
In view of the above, we are constrained to observe that the Union of India as well as the State of Orissa, prima facie, have filed to effectively and purposefully implement the provisions of the Act. This has resulted in the deprivation of the entitled class from getting employment and receiving the allowances due to them in terms of the statutory guarantees available to them under the Act.
Thus, we are compelled to issue the following directions for strict compliance by the concerned authorities :

1. The compliance report shall be filed in the form of affidavit which shall be sworn by the Additional Secretary, in-charge for compliance of the provisions of the Act in the Ministry of Rural Development, Government of India, New Delhi and the Chief Secretary, State of Orissa within three weeks from today.

2. The instances and figures referred to in the survey report submitted by the petitioner shall be specifically dealt with in that affidavit.
24
3. The affidavit should be filed positively within the stipulated time directed in this order and further we call upon both the Union of India and the State Government to show cause as to why there should not be a direction to the CBI to investigate this matter in accordance with law.
We also issue the direction that affidavits to be filed by the respective authorities shall, inter alia, but specifically answer the following points :
(a) What is the extent of funds released by the Union of India to the State of Orissa for implementation of the schemes under the provisions of the Act for each of the year between 2006 to 2010? (b) To what extent and for what projects, the released funds have been utilized? Whether state of Orissa has given to the Central Government the requisite certificate of utilization? (c) Findings to be recorded whether any amount earmarked for any of the schemes under NREGA has been diverted to any other Head of Account including revenue account by State of Orissa.
25 (d) How many applicants, of how many households, have been actually employed and have been paid allowances under the provisions of the Act? (e) The figures in terms of the above directions shall be provided for the period from 2006 to 2010.
(f) Whether any social audit of the projects under the Gram Sabha has been conducted in terms of Section 17(2)? If yes, its detailed findings for the above mentioned period.
(g) Whether all the authorities/officers/officials, from the higher levels in the Central Government or State Governments to the grass-root levels at District, intermediary and Panchayats, to ensure effective implementation of the schemes under the Act have been appointed? If no, reasons therefor.
(h) Whether the Union of India or the State Government, in consultation with the Comptroller and Auditor General of India or otherwise, have conducted any general audit of accounts of the schemes at any level in terms of Section 24 of the Act? If the answer is in the affirmative, then details thereof, particularly, 26 the objections, if any, raised by the Auditors; if the answer is in the negative, then reasons therefor.
(i) Whether the Central Government has issued any directions concerning utilization of funds under NREGA while disbursing the amounts to State of Orissa? Whether these have been complied with by State of Orissa? (j) Whether the Central Government has received any complaints about working of the schemes, utilization of funds, providing of employment and payment of allowances under the provisions of the Act? If so, what action has been taken in terms of Section 27(2) of the Act? It should be stated with complete statistics and data.
(k) Whether the Union of India or the State of Orissa have, till date, found even a single official/functionary guilty of contravention in terms of Section 25 of the Act and whether any complaint has been filed in any Court of competent jurisdiction? If so, the result thereof.
(l) The contents and the background of the complaints received and referred in `Annexure-R1' to the affidavit filed by the Union 27 of India should be stated precisely. Why the enquiry reports as referred to in `Annexure-R1' to the Affidavit of the Union of India of July 2008, no final reports have been prepared and submitted before this Court till date. Further, it shall also be stated as to why the findings of the interim reports referred in the said affidavit have not been placed before this Court. A complete summary thereof shall be annexed to the Affidavit.
Stand over for four weeks.
.............................................CJI.
(S.H. Kapadia) ................................................J.
(K.S. Panicker Radhakrishnan) ................................................J.
(Swatanter Kumar) New Delhi;

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Friday, January 28, 2011

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Supreme Court of India

CENTER FOR PIL & ORS. v. UNION OF INDIA & ORS. [2010] INSC 1093 (16 December 2010)

FOOD FOR WORK FOR 100 DAYS IN RURAL AREA OF INDIA

Supreme Court of India

CENTRE FOR ENVIORNMENT & FOOD SECURITY v. UNION OF INDIA & ORS. [2010] INSC 1094 (16 December 2010)