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July 24, 1998


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The case of the expensive guess: Authorities misjudged the demand for cellular phones. The error cost the govt Rs 3.54 billion. Now a petition has put them in the dock.

Priya Ganapati in Bombay

The Delhi high court today issued show-cause notices to the ministries of communications and finance and the chairman of the Telecom Regulatory Authority of India on a public-interest petition seeking penal actions against the authorities concerned for causing losses of more than Rs 3.54 billion to the Department of Telecommunications.

B L Wadhera, a Supreme Court advocate, filed the petition.

Email this story to a friend. He told Rediff "The Comptroller and Auditor General's report for the year ended March 1997 was tabled in the Parliament on June 8, 1998. When this report was made public, a small clipping appeared in the press. I then wrote to the CAG for a copy of the report and went through it. I found it to be pathetic. The Government of India was being looted and manipulated by the cellular operators. I was shocked and my inner conscience was moved. I realised that politicians, multinationals and government officials are manipulating the country. Someone in the country had to stand up. So I filed the petition."

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The petition urged the court to order penal actions against all those who failed to protect the public interest by not incorporating provisions in the licence agreement for charging licence fees if the demand for cellular services turned out to be more than the projections for the first three years.

This unduly benefited private operators in four metros by more than Rs 3.54 billion with consequential loss to DoT, Wadhera pointed out.

The authorities also gave undue benefit of Rs 4.83 billion to operators by not revising the licence fee due to revision of the air time charges to Rs 1.40 per 10 seconds from Rs 1.10, the petition claimed.

A division bench comprising acting Chief Justice Mahinder Narain and Justice S K Mahajan directed the respondents to file their replies within two weeks and adjourned the matter to August 31.

The bench also asked Advocate Rakesh Tiku, who accepted the notice on behalf of the ministries, to place before the court within two weeks the recent order of single judge Justice Usha Mehra on cellular and Internet licences.

Wadhera, however, alleges "This was a different matter. Sometimes lawyers bring up unrelated issues to just delay the case."

Show-cause notices were also issued to former communications minister Sukh Ram, the chairman of the Industrial Credit and Investment Corporation of India, the chief executive of the Cellular Operators Association of India and former member (finance) in DoT R C Rastogi.

But Rastogi is baffled. He told Rediff "I was never the member finance at DoT. My designation was that of a senior deputy director general, finance. I was not concerned with this matter at all while I was at DoT. I don't know why a show-cause notice is being issued to me. But I will reply to it, saying that it is factually incorrect."

When this reporter asked Wadhera's office for a clarification on Rastogi's involvement, an officer said "We called the chairman's office at DoT, which directed us to the finance section. Some official there gave us two to three names. Based on that information, we filed the petition."

When Rediff asked how Rastogi would be extricated from the petition, Wadhera's colleague explained that if Rastogi's claims were true they would "try and see that a fresh show-cause notice is issued to the person concerned".

The judges asked Wadhera to explain why the name of Sukh Ram was included in the respondent list. Wadhera said that the inclusion of his name was important as the loss had occurred during his tenure.

Wadhera also wanted actions against officials for their failure to recover outstanding licence fee of over Rs 6.85 billion from licensees of cellular mobile telephone services in the circles despite reinforced safeguards in the licence agreements and not claiming interest of Rs 507.6 million from the defaulters.

Failure to recover liquidated damages of Rs 330 million because of delay in commissioning the services was also among the charges.

Though the failures have been detected by CAG, the government has neither taken any action, nor is there any likelihood of any action being taken, Wadhera alleged.

Tiku explained to Rediff "The CAG does not take into account ground realities. In retrospect, you may think that certain things have gone wrong but at that time it was the right thing to do."

"The CAG report by itself does not mean anything though the petitioner has relied heavily on it. DoT will soon answer the charges in the report. Also, a public accounts committee will be constituted to look into the matter," Tiku was confident.

Wadhera claims that DoT did not follow the method of charging licence fees on the basis of number of subscribers beyond the minimum amounts in the case of licensing of cellular mobile telephone services which had been done in the case of other value-added services.

This showed that the member (finance) of DoT tripped in the performance of his duties towards the government by getting influenced by the inputs made available to him by one of the private operators who was also a bidder in the case and who had also discussed the matter with the then minister of state for communications (Sukh Ram) on July 16, 1992, Wadhera said.

The DoT, particularly Sukh Ram and Rastogi, were therefore clearly guilty of sacrificing the national interest in their anxiety to protect the interest of the private bidders, the petition has charged.

The decision was therefore not only flawed but also was malafide and against the national interest, Wadhera claimed.

The DoT's fixing of unjustifiable low lump-sum licence fee meant revenue loss of at least Rs 3.54 billion to government during the first three years and corresponding huge financial bonanza to the private cellular mobile telephone operators.

The amount of Rs 3.54 billion got distributed among the eight favoured private licensees in the first three years.

The petitioner wanted the matter to be inquired into by an independent organisation like the Central Bureau of Investigation. He also wanted the CBI to submit periodical progress reports and the final report.


  • Shortchanged!
    The CAG claims the DoT went by estimates quite different from what cellular operators actually earned.

- With additional reports from UNI

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