The government is legally required to place Auditor General’s reports in the Parliament. Yet, somehow, this particular report on the Commonwealth Games, results, managed to miss its tabling deadline. It was to be tabled during the budget session that ended in early August 2009. But, it never happened
The government awarded 122 telecom licenses with 2G spectrum in January 2008 at 2001 rates (Rs 1,685 crore) ignoring the current market value of the spectrum. In February 2007, Hutch sold its 67% equity to Vodafone at Rs 75,000 cr signalling substantial increase in spectrum value. Even if 15% of this is considered to be spectrum value, then it is Rs 11,250 crore per pan-India licenses. However, Raja ignores this price. In November 2007, S-TEL offered Rs 6,000 cr for pan-India license; in December 2007, it increased the offer to Rs 13,752 crore. This was also ignored by Raja.
After obtaining licenses at cheap rates, the private companies sold (diluted) their equities to foreign telecom companies at a very high price. Every company that had pan-India licenses was valued at about Rs 10,000 cr in which it had assets of 2G spectrum (Rs 1,659 cr. Thus, the difference in these figures (Rs 10,000 cr and Rs 1,659 cr) is per pan-India license loss to the Government and gain to private companies.
- Shyam Telecom: Sold 74% to Sistema of Russia (MTS brand)- Unitech: Sold 67% to Telenor of Norway (Uninor brand)- Swan Telecom: Sold DB Group about 45% to Etisalat, UAE (Cheers brand) and 5% to Genex, Chennai- Tata Teleservice: Sold 26% to NTT of Japan (DoCoMo brand)
He played multiple tricks to ensure that the spectrum is allocated to its favourite companies.First, Reliance Communication (Anil Ambani Group) wanted entry into GSM segment as there was not much of demand in CDMA. The company applied for fresh license through Swan, and also applied for dual-technology permission. In October 2007, Mr Raja allowed dual technology. But it appears that Reliance gave away the control of Swan to DB Group (ShahidBalwa), who was close to Mr Raja. The advantage with this company (Swan) was that it had already applied for licenses in March 2007.Second, Essar Group (Ruias brother) also applied for a license under Loop Telecom through her sister Ms KiranKhaitan. Ms Khiatan spent Rs 100,000 to create Loop Telecom and the balance money of Rs 1,700 crore came from Ruias. They could not have applied for license as they already had operation through Vodafone-Essar company in which they had 33% equity stake. This major illegality was ignored by Raja.
Third, he also had old association with the Unitech Group, which had interest in the construction activities. This group under different names applied for Pan-Indian licenses on 24.09.2007.Fourth, Shyam Telecom (Mr Rajiv Malhotra, MD) has very close relationship with Congress because of which Mr Malhotra also had close relationship with Mr Raja. This company applied for 21 licenses on 25.09.2007. These dates 24th (For Unitech) and 25th for Shyam are very important as discussed later.Only Raja knew in advance what he is going to do with the policy. On 25.09.2007 he issued a Press Release (dated 24.09.2007) declaring the cut-off date for receiving applications as 01.10.2007. So, Mr Raja ensured that after his favourite companies have submitted the applications, the window is closed shortly. He opened the window for only five working days. But even during those five days as many as 343 new applications were received. This he did not expect. As on October 1, 2007, the government had 575 pending applications for telecom licenses. So, then Mr Raja sought advice of Ministry of Law. The ministry replied that the matter should be referred to GoM. Mr Raja protested on this. He wrote to Mr PranabMukherjee, and also to the PM. Within his ministry, two senior officers had objected to his approach. Mr Raja waited for their retirement on December 31, 2007. He brought in his favourite officer (Mr Siddhartha Behura as Secretary DoT). Thereafter, he got the PM’s nod on January 3, 2008.
On January 10, 2008, he issued first Press Release on DoT’s web site stating that the applications of only those have been considered who had applied till 25.09.2007. This way he preponed the cut-off date to suit his favourite companies. Thereafter, he put up another Press Release at about 2:45pm on the same day disclosing a list of shortlisted companies and asking them to come between 3:30 to 4:30 PM to collect the LOIs. He also said that whosoever complies with the conditions of LOIs first (that means deposit of Rs 1,658 crore by draft, Bank Guarantees worth several hundred crores separate for each service areas), will be issued spectrum first. So, his friends knew about these conditions. They kept their drafts and guarantees ready one day in advance and were first to comply with LOI condition and were first to get spectrum. This way even the FCFS policy was altered; earlier it used to be date of application and everyone used to be given 15 days time for compliance; Mr Raja even changed the FCFS policy to date of compliance of LOIs. Later, the CAG found that out of 122 licenses, 85 did not meet eligibility criteria.
The first National Telecom Policy was announced by the Government in 1994 (NTP-94) with the objectives of providing telephone on demand, provision of worldclass services at reasonable prices and universal availability of basic telecom services to all villages. NTP-1994 recognized that the required resources for achieving these targets could not be made available only out of Government sources and private investment and involvement of the private sector was required to bridge the large resource gap.
1.2.2 While there were several achievements under the NTP 1994, some of the objectives could not be met. Acknowledging several changes both at the national and global scenario in the telecom sector; a New Telecom Policy- NTP-99 was announced by Government w.e.f. 1st April 1999. Licensing of all telecom services thereafter was to be under the policy framework of NTP-99, which sought to significantly redefine the competitive nature of the industry. The new policy lifted the restrictions on the number of service providers for the Basic Service Providers (BSPs) as well as the Cellular Mobile Service Providers (CMSPs) making it open for participation by all bidders who satisfied the conditions of the DoT. The new policy also required all operators who were under the fixed licence fee regime to migrate to a revenue sharing regime. In the revenue sharing model, the operators were required to pay a percentage of their Adjusted Gross Revenue (AGR) as annual license fee and spectrum usage charge to the Government. The percentage of revenue share depended on the service area* where they offered their services.
1.2.3 The Union Cabinet based on the recommendations of Group of Ministers (GoM) on Telecom matters constituted in September 2003 approved the policy for licensing of Unified Access Services. The GoM had considered the recommendations submitted by Telecom Regulatory Authority of India (TRAI) on 27 October 2003. The policy drew upon NTP-99. Through this approval, Cabinet besides, a number of other related decisions, charted the course to a Universal Licensing Regime. Guidelines for issue of licenses under UAS were issued on 11 November 2003 where after licenses were issued only under UAS.
1.2.4 In April 2007, the DoT sought the opinion of the TRAI on some specific points including that of putting a cap on the number of access service providers in a service area, as radio frequency spectrum required for wireless services was not sufficient to meet the increasing demand from UAS Licensees. TRAI recommended (August 2007) that no cap be placed on the number of access service providers in any service 1 area. the DoT issued 122 new licences to 17 companies in 2008 and spectrum was allotted to all operators except for four in Delhi service area (December 2009).
1.2.5 TRAI in August 2007 also recommended that “a licensee using one technology may be permitted on request, usage of alternative technology and thus allocation of dual spectrum. However, such a licensee must pay the same amount of fee which has been paid by the existing licenses using the alternative technology or which would bepaid by the new licensee going to use that technology”. 35 licenses were permitted to use dual spectrum and allocated spectrum in 2007-08.
The TRAI was set up in March 1997 and its mandate included making recommendations on the following matters:need and timing for introduction of new service providers.terms and conditions of the licences to be given to service providers andefficient management of the available spectrum.TRAI also had to notify the rates at which telecommunication services within India and outside were to be provided under the TRAI Act, through Gazette notifications, from time to time. NTP-99 stipulated that the Government will invariably seek TRAI's recommendations on the number and timing of new licences before taking decision on issue of new licenses. The original Act of 1997 under which it was set up was amended by the TRAI (Amendment) Act 2000. The new Act provided for the establishment of two separate bodies i.e. the Telecom Dispute Settlement and Appellate Tribunal (TDSAT) for dispute settlements between the licensor and licensees, between two or more service providers and between service providers and consumers and TRAI for regulatory functions. Thus, TRAI as a regulator has only an advisory role in the policy matters.
The MoF, right from the year 2003, quoting international practises and scarcity factor had maintained that auction of spectrum and its trading under a regulatory frame-work could induce competition and transparency in the system and would result in most efficient utilisation of spectrum. TRAI in October 2003, while recommending Unified Services Licensing, had also proposed to submit a separate report regarding spectrum allocation and pricing. Based on these inputs, Cabinet, in its decision of 31 October 2003 while charting the course to the UAS and US licencing regime had also approved the following:adequate spectrum would be made available for unimpeded growth of Telecom services for which WPC wing of the DoT and Ministry of Defence(MoD) should coordinate;MoF will provide MoD adequate budget and;The DoT and the MoF would discuss and finalise pricing formula for spectrum including incentive for efficient use and disincentive for sub-optimal usages.
Spectrum pricing issue was to be decided in consultation with MoF. However, when a GoM was constituted in Feb’06, its Terms of Reference (ToR) were modified to keep the issue of spectrum pricing outside its purviewThough MoF insisted for its inclusion in the ToR for the GoM, DoT maintained that 'spectrum pricing was within the normal work carried out by them'. Thus, without MoF getting a chance to contribute to the issue of pricing of spectrum, new licences continued to be issued along with the spectrumIt was also noted that the DoT kept the applications for UAS licence pending since March 2006 on the grounds of non-availability of spectrum, though a decision to get the spectrum vacated from MoD was taken way back in 2003
1. LABEND TERM PROJECT Presented By: Section 19 B GROUP 5
2. FOCUS CWG Scam2 G Scam
3. "If we cannot make India corruption-free, then the vision of making thenation develop by 2020 would remainas a dream." - Dr. A.P.J.Abdul
4. PCA - INTRODUCTION Corruption– Greatest impediments on the way towards progress for a developing country Adversely affects the Economic, Social &Cultural Structure PCA - Came into force on 9th September,1988.
5. SECTION 2: DEFINITIONSPublic DutyIt means a duty that is done for the benefit of the State, the public or the community at a large.State would mean:a) A corporation established by or under a Central, Provincial or State Act.b) An authority or a body owned controlled or aided by the Government Company as defined in Sec. 617 of the Companies Act, 1956.
6. Public Servanta) Any person who is paid by the government or local authority or remunerated by way of fees or commission for the performance of or is in the serviceb) Any Judge or any person authorized by a court of justice to perform any duty, in connection with the administration of justice or any arbitrator
7. CONTD...c) Any person who holds an office result to which he is empowered to prepare, publish maintain or revise an electoral roll or to conduct an election or part of an electiond) Any person who is the president, secretary or other office bearer of a registered co-operative society engaged in agriculture, industry, trade or banking, receiving or having received any financial aid from the Central or State Government or any authority or body owned
8. CONTD…e) Any person who is a chairman, member or employee of any service commission or Board or a member of any selection committee appointed by such Commission or Boardf) Any person who is the Vice-Chancellor or member of any governing body, professor, reader or lecturer of any University and any person whose services have been availed of by a University.g) An office-bearer or an employee of an educational, scientific, social, cultural or other institution receiving or having received any financial assistance from the Central or State government or local or other
9. SECTION 7-16 : OFFENCES & PENALTIES Sec 7: Public servant taking gratification other than legal remuneration in respect of an official act Sec 8: Taking gratification, in order, by corrupt or illegal means, to influence public servant Sec 9: Taking gratification, for exercise of personal influence with public servant Sec 10: Punishment for abetment by public servant of offences defined in section 8 or 9 • Imprisonment (6 months to 5 yrs) • Liable for fine
10. CONTD… Sec 11: Public servant obtaining valuable thing, without consideration from person concerned in proceeding or business transacted by such public servant Sec 12: Punishment for abetment of offences defined in section 7 or 11 • Imprisonment (6 months to 5 yrs) • Liable for fine Sec 13: Criminal misconduct by a public servant • Imprisonment (1 to 7 yrs) • Liable for fine
11. CONTD… Sec 14: Habitual committing of offence under sections 8, 9 and 12 • Imprisonment (2 to 7 yrs) • Liable for fine Sec 15: Punishment for attempt • Imprisonment (Upto 3 yrs) • Liable for fine Sec 16: Matters to be taken into consideration for fixing fine
12. SECTIONS 17-31: INVESTIGATIONSSec 17: Persons Authorized to InvestigateInvestigation shall be done by a police officer notbelow the rank of:a) In case of Delhi, of an Inspector of Police.b) In metropolitan areas, of an Assistant Commissioner of Police.c) Elsewhere, of a Deputy Superintendent of Police or an officer of equivalent rank shall investigate any offence punishable If a police officer no below the rank of an Inspector of Police is authorized by the State Government in this behalf by general or special order, he may investigate such offence without the order of a Metropolitan Magistrate or Magistrate of First class or make arrest
13. COMMON WEALTH GAMES SCAM
14. CWG BACKGROUND International, multi-sport event involving athletes from the Commonwealth of Nations. A sporting competition bringing together the members of the British Empire was first proposed in 1891 First Games were held in 1930 in Canada. Name was changed from British empire games to British Empire and Commonwealth Games in 1954, to British Commonwealth Games in 1970 and assumed the current name of the Commonwealth Games in 1978.
15. CONTD… The Games are overseen by the Commonwealth Games Federation (CGF), which also controls the sporting programme and selects the host cities. A host city is selected for each edition and eighteen cities in seven countries have hosted the event. Although there are 54 members of the Commonwealth of Nations, 71 teams participate in the Commonwealth Games as a number of British overseas territories, Crown dependencies, and island states compete under their own flag.
16. XIX CWG – NEW DELHI The 2010 Commonwealth Games were the nineteenth Commonwealth Games Held between 3 October and 14 October 2010. The largest multi-sport event conducted to date in Delhi and India The opening ceremony took place at the Jawaharlal Nehru Stadium in Delhi. It was the first time that the Commonwealth Games were held in India and the second time it was held in Asia after Kuala Lumpur, Malaysia in 1998. Official Mascot - Shera & Official Song - "Jiyo Utho Bado Jeeto",
17. HOW NEW DELHI GOT IT - BIDDING The two principal bids for the 2010 Commonwealth Games were from Delhi, India and Hamilton, Ontario, Canada. A ballot was held in November 2003 at the CWG Federation General Assembly in Montego Bay, Jamaica. Delhi bid won by a margin of 46 votes to 22, confirming Indias first successful bid for the Games. Indias bid motto was - “New Frontiers and Friendships”. India shifted the balance in its favor in the second round of voting with a promise that it would provide US$100,000 to each participating country, along with air tickets, boarding, lodging and transport. The successful 2003 Afro-Asian Games in Hyderabad showed India had the resources, infrastructure and technical know-how to stage a
18. KEY STAKEHOLDERSi. Commonwealth Games Federation (CGF):ii. Indian Olympic Association (IOA):iii. Organising Committee (OC):iv. Government of Delhi: Delhi Development Authority (DDA) Delhi Policev. Government of India: It is committed to ensure adequate funds for the conduct of the Games to the OC. Ministry of Home Affairs Ministry of External Affairs Ministry of Youth Affairs and Sports Ministry of Commerce and Industry Sports Authority of India
19. BUDGET The initial total budget estimated by the Indian Olympic Association in 2003 for hosting the Games was 1,620 crore (US$328.54 million). In 2010, however, the official total budget soon escalated to an estimated 11,500 crore (US$2.33 billion), a figure which excluded non-sports-related infrastructure development in the city like airports, roads and other structures. This made the 2010 Commonwealth Games the most expensive Commonwealth Games ever, being larger than the previous games in Melbourne 2006.
20. BUSINESS TODAY MAGAZINE ESTIMATED THAT THEGAMES COST 60,000 CRORE (US$12.17 BILLION).
21. COST That is 114 times more than the estimated original price tag of the Games, and four times what the government spends on the National Rural Health Mission every year.
22. Successful in Anger Indias dirt digging holes amongst the out in the in the common people of open man’s pockets India Eight years ago when India won the bet, the official cost estimate was Rs 1,800 crore. Now the official figure is Rs 10,000 crore while it is actually believed to be Rs 60,000 crore plus unofficially generate reductio cash for the increase games & n in in taxes overcome subsidies facing a cash crunch Government officials claim that sponsorships will help ensure record revenues, and at least recover the money spent on the Games (excluding public infrastructure).
23. Sr.no Various Aspects Investment1 Stadium facilities 4,429 crores2 CWG Village 1,038 crores3 Parking facilities 473 crores4 Opening & Closing ceremony 800 crores5 Beautification of Streets 344 crores6 Rent for CWG HQ 175 crores7 Metro expansions 16887 crores8 Airport modernization 5400 crores9 A power plant in Bawana 35000 crores10 Hospitality expenses 1. Travel grant for all athletes 48 crores 2. Free accommodation CWG village & free trip 2225 crores to Taj & luxury Buses & cars11 Others TOTAL 67,089 crores Revenue Model 1. Sponsorship 450 crores 2. Broadcast rights 299.7 crores 3. Licensing 59.99 crores 4. Ticket sales 29.97 crores 893.66 crores (Source: http://www.cpwdcommonwealth.in and www.cwgdelhi2010.org.)
24. GAMES FINISH, INVESTIGATION BEGINS The game proceeded safely with no glitches. India gave her best performance with 101 medals. Next day after the Games, the Indian government formed a special investigation committee.
25. CIVIC BODIES PROBING THE SCAM A panel set up by the government to look into the corruption charges. Headed by former Comptroller and Auditor General, VK Shunglu, it has the mandate to review every transaction The special panel appointed by the government will probe the financial bungling and administrative lapses. The Comptroller and Auditor. General (CAG) is looking into financial misappropriation Enforcement Directorate (ED) is probing the routing of funds, which have been traced to tax havens like Mauritius.
26. CONTD… The Central Bureau of Investigation (CBI) will be examining tenders issued for various Games related projects, which are already under scrutiny after exposes on items being bought at absurdly inflated rates. The Central Vigilance Commission (CVC) is looking into allegations of corruption in all infrastructure projects like the stadia and Games venues.
27. ALLEGATIONS1. It is estimated that the expenditure bills have been inflated by 30% of the actual value of services or commodities procured.2. The Income Tax department is scrutinizing financial documents relating to the broadcast rights for the CWG following charges of tax evasion.3. The Central Vigilance Commission is examining 11 major project tenders which were awarded at artificially hiked rates causing a loss of over Rs.500 crore.4. The Enforcement Directorate is looking into a case of alleged violation for foreign exchange regulations related to the Queen Baton Relay in London.
28. CONTD…5. Emaar-MGF is in the dock for alleged irregularities in the construction of the CWG Village in Delhi. The Rs.183 crore bank guarantee furnished by Commonwealth Games village builder Emaar-MGF was ordered to be confiscated on charges of irregularities. A Rs. 760 crore bail out package given by Delhi Development Authority(DDA) for Emaar-MGF also came under the scanner.6. The CWG Organizing Committee head office being burglarized several times to steal or destruct the data which is being probed.7. CVC has initiated an inquiry into an alleged recruitment scam in the Commonwealth Games Organizing Committee (OC) following complaints that it showed ghost employees on its muster rolls and violated norms while inducting people. A total of 2,100 people were shown as having worked between May 2009 and November 2010 in different capacities and together drew salary running into several crores.
29. CONTD…8. Kalmadi delayed catering contract in CWG which inflated the budget by more than Rs 20 cr.9. The CVC has found alleged financial and administrative irregularities in over 30 Commonwealth Games projects in the national capital and overlays deals by the Organizing Committee for the mega-sporting event.10. CBI registered the fourth FIR in connection with the overlays contracts given out to four firms. The total value of these contracts was over Rs 600 crore.
30. OVERLAY SCAM Rs.3,750. Rs 9.75 lakh each Rs 9,379 Rs 4 lakhBig amount without anyaccount
31. CAG REPORT Kalmadi deliberately delayed CWG contracts. CWG D.G. colluded with vendors & awarded favourable contracts. Collusion between OC officials and vendors. Vendors Colluded to form a cartel Corruption in Marketing
32. EXAMPLES Vendors: Though „Nusli‟ with annual turnover of Rs 418,27cr was eligible for bidding for maximum 3 clusters, but OC allowed them to bid for 7 at the instance of VK Verma, Dir Gen. Reason for this has not been recorded in any of the documents„. Marketing: OCs revenue generation targets were by then far behind schedule and expenditure had already gone up manifold, liability for which was ultimately borne by GoI.
33. LEGAL CASES REGISTERED (EXAMPLE) The CBI registered cases against six officials of CWG Organising Committee and two private firms for extending undue favours while appointing official Master Licensee for merchandising and retailing during the games. Firms involved were : Compact Disc India Limited (CDIL) and its group arm Premier Branch Private Limited (PBPL)
34. EXAMPLE CONTINUED PBPL submitted an offer of Rs 5.20 crore for acquiring all the rights of master licensee for merchandising. Two cheques amounting to Rs 3.5 crore but the same were dishonoured by the bank and as such the OC did not receive any amount from the private company. Accusation that PBPL used CWG brand to earn huge profits, but did not pay anything.
35. LEGAL CASES FILED BY EX- CWG EMPLOYEES (EXAMPLE-1/14) Ex-treasurer M Jayachandran, who is lodged in Tihar jail, has slapped a Rs five-crore defamation suit in the Delhi High Court against the OC for allegedly tarnishing his image. Jayachandran is an accused in the Timing-Scoring- Result (TSR) scam that has led to a loss of over Rs 95 crore to the exchequer. The CBI has accused him of manipulating the minutes of OCs Finance Committee to justify the alleged forgery in the award of TSR contract.
36. IMPACTS OF IRREGULARITIES Socio-Economic Status Organizational Failure Infrastructure Issues
37. SOCIO-ECONOMIC IMPACT Prominent experts called the games a „drain on public funds‟. Nearly 40,000 people were displaced. Accusations of systematic violation of labor laws at construction sites. CNN broadcast showed child labor at such sites.
38. ORGANIZATIONAL FAILURE CVC released a report showing irregularities in 14 CWG projects. Saw extremely poor ticket sales, with all venues half-empty. The CWG projects were to be completed by the end of 2009, which was not really the case.
39. INFRASTRUCTURE ISSUES On 21 September, 2010, a overhead bridge collapsed put the entire event in jeopardy. 4 out of 5 accommodation towers in the Games village were unfinished. Dengue outbreak caused fear in the minds of athletes.
40. THE MURKY DEAL…. The lawn bowling tracks to be used during the Games had been built at around Rs 1.36 crore when it could had been done at just Rs 27 lakh.
41. BROKEN ROADS There were a number of teenagers between the ages of 14 and 16 who worked at these places, obviously lured by an adult salary.
42. DYNAMISM INVOLVEDFrom the perspective of purchasing process, the following control issues are apparent: Improper and inadequate vendor selection and evaluation procedures were followed. Conflict of interest was not disclosed while signing contracts with related parties. Tenders were not given to bidders quoting lowest price of the product. Vendors did not deliver the contracted quality and quantity as per the delivery schedule.
43. DYNAMISM INVOLVED… CONTD Vendor payments were not linked to delivery of products or completion of deliverables. There was no segregation of duties. The same officials authorized the contract and approved payments. Vendors were not penalized for sub-standard quality or late delivery.
44. DYNAMISM INVOLVED… CONTD Purchase contracts signed with varying rates for the same product; Prices over-inflated in some contracts; Contracts given to relatives and friends; Sub-standard products purchased; Vendor payments made without confirming quality and delivery; Payments made to non-existent vendors.
45. DYNAMISM INVOLVED… CONTD An independent evaluation of contracts by risk managers may have prevented misappropriation of funds. A periodic audit by government agencies could have highlighted these issues at an earlier stage Consultants Event Knowledge Services, Fast Track Sales Ltd, Sports Marketing And Management (SMAM) and AM Films are supposed to have received undue benefits Legal Requirements to place report in parliament
46. CONSEQUENCES Bad publicity of the nation. Tarnished image in terms of hygiene. Loss of faith in the system Refusal of athletes to participate in games or withdraw from games. The incomplete work added unnecessary cost burdens
47. EFFECT ON BRAND INDIA Unique opportunity lost Take a look at our neighbors – Beijing Olympics Looting of pride of our nation; leaving us to shambles India‟s position degraded in global list of corruption India perceived as more corrupt after CWG scam – 87th out of 178 countries surveyed A marginal decline in Indias integrity score to 3.3 in 2010 from 3.5 in 2007 and 3.4 in 2008 and 2009
48. SUGGESTIONS The contagious disease of scams demands perfect healing and a thorough clean-up Implementation of The Santhanam Committee recommendations
49.  While nobody will officially say this, we all know why costs have bloated and stadiums are collapsing. Officials and politicians make money on bribes from contractors, who win bids at the “lowest” price and then earn super profits by compromising on quality. Then they make more money citing over-runs and repairs. Material suppliers hoard construction materials and make a killing as we desperately race to the deadline. But nobody will be indicted or arrested or tried. That is the way it works – too many important people are making too much money.
50. 2G SCAM
51. 2G SPECTRUM 122 telecom licenses with 2G spectrum awarded in Jan‟08 at 2001 rates (Rs 1,685 crore) ignoring current market value In Feb‟07, Hutch sold its 67% equity to Vodafone at Rs 75,000 cr signalling substantial increase in spectrum value (Even if 15% of this is considered to be spectrum value, then it is Rs 11,250 cr per pan-India license) Raja ignores this price In Nov‟07, S-TEL offered Rs 6,000 cr for pan-India license; in December 2007, it increased the offer to Rs 13,752 crore This was also ignored by Raja
52.  Private companies sold their equities to foreign telecom companies at very high prices Companies that had pan-India licenses was valued at about Rs 10,000 cr Difference in these figures  Rs 10,000 cr and Rs 1,659 cr is per pan-India license loss to the Government and gain to private companies.
53.  - Shyam Telecom: Sold 74% to Sistema of Russia (MTS brand) - Unitech: Sold 67% to Telenor of Norway (Uninor brand) - Swan Telecom: Sold DB Group about 45% to Etisalat, UAE (Cheers brand) and 5% to Genex, Chennai - Tata Teleservice: Sold 26% to NTT of Japan (DoCoMo brand)
54. ROLE OF THE FORMER TELECOM MINISTER A RAJA INTHE SCAM Ensured that spectrum is allocated to certain companies First, Reliance Communication wanted entry into GSM segment. The company applied for fresh license through Swan, and also applied for dual-technology permission. In October 2007, Mr Raja allowed dual technology. But it appears that Reliance gave away the control of Swan to DB Group (Shahid Balwa), who was close to Mr Raja. The advantage with this company (Swan) was that it had already applied for licenses in March 2007. Second, Essar Group (Ruias brother) also applied for a license under Loop Telecom through her sister Ms Kiran Khaitan. Ms Khiatan spent Rs 100,000 to create Loop Telecom and the balance money of Rs 1,700 crore came from Ruias. They could not have applied for license as they already had operation through Vodafone-Essar company in which they had 33% equity stake. This major illegality was ignored by Raja.
55.  On 25.09.2007 he declared the cut-off date for receiving applications as 01.10.2007 This was to ensure that after his favourite companies have submitted the applications, the window is closed shortly But as on Oct 1, 2007, 575 applications were received Then Mr Raja sought advice of Ministry of Law. The ministry replied that the matter should be referred to GoM. Mr Raja protested on this. He wrote to Mr Pranab Mukherjee and the PM Within his ministry, two senior officers had objected to his approach. Mr Raja waited for their retirement on December 31, 2007 He brought in his favourite officer (Mr Siddhartha Behura as Secretary DoT). Thereafter, he got PM‟s nod on Jan3, 2008.
56.  On January 10, 2008, he issued first Press Release on DoT‟s web site stating that the applications of only those have been considered who had applied till 25.09.2007. This way he preponed the cut-off date to suit his favourite companies. Thereafter, he put up another Press Release at about 2:45pm on the same day disclosing a list of shortlisted companies and asking them to come between 3:30 to 4:30 PM to collect the LOIs. He also said that whosoever complies with the conditions of LOIs first (that means deposit of Rs 1,658 crore by draft, Bank Guarantees worth several hundred crores separate for each service areas), will be issued spectrum first. So, his friends knew about these conditions. They kept their drafts and guarantees ready one day in advance and were first to comply with LOI condition and were first to get spectrum. This way even the FCFS policy was altered; earlier it used to be date of application and everyone used to be given 15 days time for compliance; Mr Raja even changed the FCFS policy to date of compliance of LOIs. Later, the CAG found that out of 122 licenses, 85 did not meet eligibility criteria.
57. OVERVIEW OF POLICIES – NTP-94 OBJECTIVE :  Providing telephone on demand  Provision of world-class services at reasonable prices  Universal availability of basic telecom services to all villages. NTP-1994 recognized that private sector was required to bridge the large resource gap.
58. OVERVIEW OF POLICIES – NTP-99 Licensing of all telecom services thereafter was to be under the policy framework of NTP-99 It lifted restrictions on the number of service providers making it open for participation by all bidders who satisfied the conditions of the DoT Migration from fixed licence fee regime to revenue sharing regime (The percentage of revenue share depended on the service area where they offered their services)
59. OVERVIEW OF POLICIES – LICENSING OF UAS The Union Cabinet approved the policy for licensing of Unified Access Services GoM considered recommendations submitted by TRAI on 27 October 2003. Guidelines for issue of licenses under UAS were issued on 11 November 2003 Now licenses were issued only under UAS
60. OVERVIEW OF POLICIES – APRIL’07 In April 2007, DoT sought the opinion of TRAI on:  Putting a cap on the number of service providers in a service area TRAI recommended (Aug‟07) that no cap be placed DoT issued 122 new licences to 17 companies in 2008 and spectrum was allotted to all operators except for four in Delhi service area (Dec‟09).
61. OVERVIEW OF POLICIES – AUGUST’07 TRAI recommended that “a licensee using one technology may be permitted on request, usage of alternative technology and thus allocation of dual spectrum. However, such a licensee must pay the same amount of fee which has been paid by the existing licenses using the alternative technology or which would be paid by the new licensee going to use that technology” 35 licenses were permitted to use dual spectrum and allocated spectrum in 2007-08
62. ROLE OF TELECOM REGULATORY AUTHORITY OFINDIA (TRAI) Set up in March 1997 Its mandate included making recommendations on the following:  need and timing for introduction of new service providers.  terms and conditions of the licences to be given to service providers and  efficient management of the available spectrum. According to TRAI ACT, 1997 TRAI was to regulate telecom services, Original Act of 1997 was amended by the TRAI (Amendment) Act 2000. The new Act provided for the establishment of two separate bodies  Telecom Dispute Settlement and Appellate Tribunal (TDSAT)  TRAI for regulatory functions. Thus, TRAI as a regulator has only an advisory role in the policy matters.
63. ISSUE OF PRICE DISCOVERY OF SPECTRUM WAS OVERLOOKED TRAI in October 2003, while recommending Unified Services Licensing, had proposed to submit a separate report regarding spectrum allocation and pricing. Based on these inputs, Cabinet, in its decision of 31 October 2003 while charting the course to the UAS and US licencing regime had also approved the following:  adequate spectrum would be made available for unimpeded growth of Telecom services for which WPC wing of the DoT and Ministry of Defence(MoD) should coordinate;  MoF will provide MoD adequate budget  DoT and MoF would finalise pricing formula for spectrum
64.  Spectrum pricing issue was to be decided in consultation with MoF. However, when a GoM was constituted in Feb‟06, its Terms of Reference (ToR) were modified to keep the issue of spectrum pricing outside its purview Though MoF insisted for its inclusion in the ToR for the GoM, DoT maintained that spectrum pricing was within the normal work carried out by them. Thus, without the contribution of MoF, new licences continued to be issued along with the spectrum DoT kept applications for UAS licence pending since Mar‟06 on the grounds of non-availability of spectrum, though a decision to get the spectrum vacated from MoD was taken way back in 2003
65.  Again in Aug‟07, TRAI observed that entry fee as it existed in 2001 was now not a realistic price. It observed that value of spectrum was not correctly reflected and recommended again for de-linking of spectrum from licence. Right from August 2003 MoF had been recommending greater orientation in spectrum allocation, keeping efficiency and optimal utilization considerations in mind, through auction to users, who are willing to pay the maximum fee
66.  Directions of the Union Cabinet (Oct‟03) and absence of requisite clarity in the recommendations of TRAI and decision of the Union Cabinet, prudent principles of governance would have required DoT to engage in further inter-ministerial discussions particularly with the MoF. The fact that this was not done despite repeated advices from MoF does give scope for creation of doubt, on the validity of the decision taken to fix the entry fee for new licenses at 2001 levels
67. TIME LINE May 16, 2007: A Raja Becomes Telecom Minister Aug, 2007: Process of allotment of 2G spectrum for telecom along with Universal Access Service (UAS) Licences initiated by the Department of Telecommunications (DoT) Oct 11, 2007: DoT gets 575 applications for mobile licenses Nov 2, 2007: The Prime Minister writes to Raja directing him to ensure allotment of 2G spectrum in a fair and transparent manner and to ensure that licence fee was properly revised. Raja writes back to the Prime Minister rejecting many of his recommendations Nov 22, 2007: Finance Ministry writes to DoT raising concerns over the procedure adopted by it. Demand for review rejected
68.  Jan 10, 2008: DoT decides to issue licences on first-come-first-serve basis, preponing the cut-off date to September 25, from October 1, 2007. Later on the same day, DoT posted an announcement on its website saying those who apply between 3.30 pm and 4.30 pm would be issued licences in accordance with the said policy May 4, 2009: An NGO Telecom Watchdog files complaint to the Central Vigilance Commission (CVC) on the illegalities in the spectrum allocation to Loop Telecom May 19, 2009: Another complaint was filed to the CVC by Arun Agarwal, highlighting grant of spectrum to Swan Telecom at throwaway prices 2009: CVC directs CBI to investigate these irregularities in allocation of 2G spectrum Oct 21, 2009: Irregularities in spectrum allocation. CBI searches DoT office
69.  Oct 23, 2009: CBI raids DoT offices over spectrum row Nov 16, 2009: CBI seeks details of tapped conversation of corporate lobbyist Niira Radia to find out involvement of middlemen in the grant of spectrum to telecom companies Aug 18, 2010: HC refuses to direct the Prime Minister to decide on a complaint by Janata Party chief Swamy seeking sanction to prosecute Raja for his involvement in 2G scam Sept 13, 2010: SC asks government, Raja to reply within 10 days to three petitions filed by CPIL and others alleging there was aRs 70,000 crore scam in the grant of telecom licences in 2008 Oct 8, 2010: SC asks government to respond to CAG report about the scam
70.  Nov 10, 2010: CAG submits report on 2G spectrum to government stating loss of Rs 1.76 lakh crore to exchequer Nov 11, 2010: DoT files affidavit in SC saying CAG did not have the authority to question the policy decision as per which licence were issued to new players in 2008 Nov 14, 2010: A Raja resigns as Telecom Minister Nov 22, 2010: CBI tells SC it will file charge sheet in the case within three months Nov 25, 2010: SC ticks off CBI for not questioning Raja. Nov 29, 2010: CBI files status report on 2G spectrum scam probe
71.  Nov 30, 2010: SC questions CVC P J Thomas‟s moral right to supervise CBI‟s probe into 2G spectrum scam as he himself was Telecom Secretary at that point of time Dec 1, 2010: Raja questions CAG findings in the SC. Dec 2, 2010: Government places recorded tapes in the SC. Dec 2, 2010: SC comes down heavily on Raja for bypassing and overruling PM‟s advice to defer allocation of 2G spectrum by a few days. Dec 8, 2010: SC asks Centre to consider setting up of a special court to try 2G spectrum scam case
72.  Dec 14, 2010: Another PIL in SC seeking cancellation of new telecom licences and 2G spectrum allocated during Raja‟s tenure. Dec 15, 2010: Swamy files petition in a Delhi court seeking his inclusion as a public prosecutor in 2G spectrum case Dec 16, 2010: SC decides to monitor the CBI inquiry Jan 4, 2011: Swamy moves SC seeking cancellation of 2G spectrum licences Jan 10, 2011: Supreme Court issues notice to Centre on the plea seeking cancellation of 2G licenses. Also issues notices to 11 companies which allegedly did not fulfil the roll-out obligations or were ineligible
73.  Feb 10, 2011: SC asks the CBI to bring under its scanner corporate houses which were beneficiaries of the 2G spectrum. Feb 17, 2011: Raja Sent To Tihar Jail under Judicial Custody Mar 1, 2011: CBI tells SC that 63 persons are under scanner. Mar 14, 2011: The Delhi High Court sets up special court to deal exclusively with 2G cases. Mar 29, 2011: SC permits CBI to file charge sheet on April 2 instead of March 31. Apr 25, 2011: CBI files charge sheet and court issues summons to Kanimozhi, Sharad Kumar and Karim Morani taking cognizance of the charge sheet
74.  May 6, 2011: Kanimozhi and Sharad Kumar appear before court and file bail pleas while Morani sought exemption from appearance on medical ground May 7, 2011: Special CBI Court reserves order on Kanimozhi and Sharad Kumar‟s bail applications Opposes bail plea of Shahid Balwa, Chandolia May 20, 2011: Special CBI Court rejects bail pleas of Kanimozhi and Sharad Kumar and orders their forthwith arrest saying that there was a possibility of witnesses being influenced considering the magnitude of the crime July 25, 2011: Arguments on Charge begins. Raja seeks to make Prime Minister and former finance minister P Chidambaram as
75.  Aug 26, 2011: Special CBI court allows Subramanian Swamy to argue his own case (mainly to address the possible loop holes in CBI investigation of the case) Sept 15, 2011: Swamy pleads before special CBI court that P Chidambaram should be made co-accused Sept 22, 2011: CBI defends Chidambaram in SC, blames DoT for all wrongs. Sept 26, 2011: CBI moves plea for framing fresh charge for criminal breach of trust against Raja, Chandolia and Behura Oct 10, 2011: The Supreme Court reserves order against Subramanian Swamy‟s plea for a probe into Home Minister Chidambaram‟s role in the 2G scam
76.  Nov 3, 2011: Special CBI court dismisses bail pleas of all the 8 applicants (including Kanimozhi) Nov 8, 2011: Special CBI court orders CBI to give copy of file on sale of equity by telecom companies (for investigating P Chidambarams involvement) to Swamy Nov 9, 2011: Delhi HC refuses to grant interim bail to Karim Morani on health grounds wondering Why everybody falls sick once he is in custody? Nov 11, 2011: Trial of the 17 accused begins in Patiala House special CBI court Nov 14, 2011: : UPA govt moves SC seeking to restrain Dr Subramanian Swamy from making public allegations against the UPA leadership Nov 22, 2011: The Special CBI court shifts the trial to the Tihar Jail complex following a Delhi high court order Nov 23, 2011: SC grants bail to 5 corporate executives
77. Procedures Adopted in Issue of UASLicences and Allotment of Spectrum
78. ISSUE OF UAS LICENCES AND ALLOCATION OF 2G SPECTRUM Licences were to be issued on continuous basis without any restriction on the number of entrants in a service area and applications were to be processed within 30 days of submission Gaps in implementation of policy led to a situation, when on the one hand allocation of spectrum was not delinked from licences and on the other hand applications for new licences continued to be received by the DoT without framing guidelines for UASL
79. CONTD... This largely opaque and uncertain delivery system coupled with fast paced growth in the telecom sectorduring the decade led to heavy rush of companies to the sector After issuing 51 new licences under UAS regime since2004, and keeping 53 applications pending from January 2006, DoT sought recommendation from TRAI in April 2007 on the issue of limiting the number of access providers in each service area. TRAI, in its report of 28 August 2007 recommended no cap on the number of licences.
80. CONTD... Despite the TRAIs recommendation, on 24 September 2007 DoT issued a Press Releasestating that applications for issue of licences would be accepted only up to 01.10.2007. This pressnotification signalled the possibility of an impendingcap in the number of licences to be awarded, which led to a sudden spurt in applications Undue Haste in Receiving and Processing Applications
81. APPROVAL OF TELECOM COMMISSION NOT TAKENThe recommendations of the TRAI (2007) were crucial from the perspective of the management of the Telecom sector and spectrum management and yet they were not put up to the full Telecom Commission before the acceptance of the recommendations In view of the unprecedented response from the applicants and the fact that the DoT was not equipped to cope up with the huge demand, they approached Ministry of Law & Justice
82. ADVICE OF THE HONBLE MINISTER OF LAW AND JUSTICE WAS IGNORED BY DOTIt is necessary that the whole issue is first considered by an Empowered Group of Ministers (EGoM) and in that process legal opinion of the Attorney General can be obtained Treated as “out of context” by the MOC&IT and a reference to EGoM was deliberately avoided.
83. CONTD.. The Government of India (Transaction of Business) Rules, 1961 stipulates that when the subject of a case concerns more than onedepartment, no decision be taken or order issued until all such departments haveconcurred, or, failing such concurrence, a decision thereon has been taken by or under the authority of the Cabinet DoT justified its actions on the ground that the reference was made to the Ministry of Law and Justice and that their advice was discussed in the Department and the existing policy for grant of UAS licences was approved by the MoC& IT as any change could have led to litigation and not sustainable under law
84. HONBLE PRIME MINISTERS SUGGESTION TO RECONSIDER THE PRICING WAS IGNOREDPrime Minister wrote to MoC&IT that DoTshould consider• (i) Introduction of a transparent methodology of auction, wherever legally and technically feasible• (ii) Revision of entry fee, which is currently bench marked on an old figureIt will be unfair, discriminatory, arbitrary andcapricious to auction spectrum to newapplicants as it will not give the level playingfield.
85. APPLICANTS SUBMITTED PRE-DATED DEMAND DRAFTS 13 applicants were even ready with Demand Drafts (DDs) drawn on dates prior to the notification of cut off date These applicants had advance information about theissue of this notification by the DoT which enabled themto take appropriate advance action to draw the DDs andprepare other relevant documents for complying with the LoI conditions in spite of the changed time limit for compliance from 15 days to about half a day.
86. DOTS OWN “FCFS” POLICY NOT FOLLOWEDMoC&IT arbitrarily decided to issue Letter of Intents to allapplicants, who had submitted their applications between March 2006 and 25 September 2007 thereby depriving the applicants, who had submitted their applications earlier, of their seniority and resultant claim to get the LoIs first.
87. ISSUE OF LICENSE TO INELIGIBLE APPLICANTS Process followed by the DoT for verification ofapplications for UAS licences for confirming their eligibility lacked due diligence, fairness and transparency leading to grant of licences to applicants who were not eligible. 85 out of 122 licenses issued in 2008 were found to be issued to Companies which did not satisfythe basic eligibility conditions and had suppressed facts, disclosed incomplete information and submitted fictitious documents for getting UAS licenses and thereby access to spectrum.
88. THE ENTIRE PROCESS OF ALLOTMENT OF UASLICENSES IN JANUARY 2008 LACKEDTRANSPARENCY AND APPEARED TO HAVE BEENDONE WITH THE OBJECTIVE OF FAVOURING A FEWFIRMS OVER OTHERS.
89. FINANCIAL IMPACT Whether the entry fee was expected to reflect the value of the spectrum at all?  The 2003 Cabinet decision intended to make the UAS licence only an instrument to enter the business of providing cellular and other telecom services irrespective of the technology used for the purpose  Companies could obtain spectrum of required type by paying its price through auction or any other arrangement decided by an independent regulator to be set up for spectrum pricing and management  Since no price discovery of spectrum was attempted for 2G spectrum separately, the entry fee discovered in 2001 is mainly the price of spectrum that came with UAS licence.
90. UNDER PRICING OF 2G AND CONSEQUENT LOSS UASL applicant had offered higher price  If the price offered by S Tel Ltd which he proposed to revise upwards in case of any counter bids, is used as indicator of market valuation of 6.2 MHz of 2G spectrum at that time, value in respect of all 122 new licences and 35 licences under dual technology after discounting the receivables of the future years work out to ` 65,909 crore as against ` 12,386 crore collected by the DoT. Value based on prices discovered for 3G spectrum  If price is calculated at 3G rates which can also be taken as one of the indicators for assessing the value of 2G spectrum allocated to UAS licensees in 2008, the total difference in value worked out to ` 1,39,652 crore . Sale of equity by UAS licensee firms at higher value  Three companies viz. Swan Telecom, S Tel and Unitech were new entrants in the telecom sector. The fact that these operators could draw huge foreign investments, even before establishing a foothold in the Indian telecom market would suggest that acquiring UASL and with it, allotment of 4.4 MHz of GSM spectrum for roll out, was the main factor which attracted the foreign investment.  A comparison of foreign equity attracted by the new entrants in the Indian telecom market would reveal that the cost of a pan India licence could be a value between ` 7758 crore to ` 9100 crore. However, the DoT issued pan India licences at ` 1658 crore.
91. CONCLUSIONS The entire process of allocation of UAS licences lacked transparency and was undertaken in an arbitrary, unfair and inequitable manner  The DoT did not follow its own guidelines on eligibility conditions, arbitrarily changed the cutoff date for receipt of applications post facto and altered the conditions of the FCFS procedure at crucial junctures without valid reasons, which gave unfair advantage to certain companies over others.  The Department of Telecommunications also did not do the requisite due diligence in the examination of the applications submitted for the UAS licenses, leading to the grant of 85 out of 122 UAS licences to ineligible applicants.  Dual Technology was also introduced by the DoT in October 2007 in a hasty and arbitrary manner and in-principle approval was given to 3 operators on a day prior to the announcement of the policy, which gave the perception of discrimination against other players in the field The entire process of allocation of 2G spectrum raises serious concern about the systems of governance in the Department of Telecommunications which need to be thoroughly reviewed and revamped. To ensure that such lapses do not occur in any Ministry or
92. RIGHT TOINFORMATION ACT, 2005
93. RTI - INTRODUCTION Enacted for citizens to secure access to information under the control of Public Authorities in order to promote transparency and accountability in the working of any public authority. Law was passed by Parliament on 15 June 2005. Came fully into force on 13 October 2005 Failure of “Freedom Of Information Act,2002” – Severe criticism Public Authorities are required to:  Reply within 30 days  Computerize their records  Pro-actively publish certain categories of information
94. SCOPE Act covers the whole of India except Jammu and Kashmir J & K – J & K Right to Information Act Applicable to all constitutional authorities, including the executive, legislature and judiciary; any institution or body established or constituted by an act of Parliament or a state legislature. Private bodies are not within the Acts ambit directly
95. RTI Includes access to information which is held by or under the control of any public authority and includes the right to inspect the work, document, records, taking notes, extracts or certified copies of documents / records and certified samples of the materials and obtaining information which is also stored in electronic form. The Act empowers every citizen to:  Ask any questions from the Government or seek any information.  Take copies of any governmental documents.  Inspect any governmental documents.  Inspect any Governmental works.  Take samples of materials of any Governmental work.
96. PROCESS All authorities covered must appoint their Public Information Officer (PIO). Person must submit a request to the PIO for information in writing. PIOs obligation to provide information to citizens of India who request information. In addition, every public authority is required to designate Assistant Public Information Officers (APIOs) Applicant not required to disclose any information or reasons other than his name and contact particulars to seek the
97. TIME LIMITSThe Act specifies time limits for replying to the request: If the request has been made to the PIO, the reply is to be given within 30 days of receipt. If the request has been made to an APIO, the reply is to be given within 35 days of receipt. If the PIO transfers the request to another public authority, the time allowed to reply is 30 days but computed from the day after it is received by the PIO of the transferee authority. Information concerning corruption and Human Rights violations by scheduled Security agencies (those listed in the Second Schedule to the Act) is to be provided within 45 days but with the prior approval of the Central Information Commission. However, if life or liberty of any person is involved, the PIO is expected to reply within 48 hours.
98. CHARGES Fee for filing request : Rs 10 Rs 2 per page of information Rs 5 for each hour of inspection after the first hour. If applicant is a Below Poverty Card holder, then no fee shall apply.(For Central Depts., Yr: 2006) States Government and High Courts fix their own rules.
99. EXCLUDED AUTHORITIES Central Intelligence and Security agencies specified in the Second Schedule like  Directorate General of Income Tax (Investigation)  RAW  CBI  CID  Directorate of Revenue Intelligence  Central Economic Intelligence Bureau  Narcotics Control Bureau  Aviation Research Centre  Special Frontier Force, BSF, CRPF, ITBP, CISF, NSG  Agencies specified by the State Governments through a Notification will also be excluded.
100. EXCLUDED INFORMATIONThe following is exempt from disclosure (Section: 8) Information, disclosure of which would prejudicially affect the sovereignty and integrity of India, the security, "strategic, scientific or economic" interests of the State, relation with foreign State or lead to incitement of an offense; Information which has been expressly forbidden to be published by any court of law or tribunal or the disclosure of which may constitute contempt of court; Information, the disclosure of which would cause a breach of privilege of Parliament or the State Legislature;
101. CONTD… Information including commercial confidence, trade secrets or intellectual property, the disclosure of which would harm the competitive position of a third party, unless the competent authority is satisfied that larger public interest warrants the disclosure of such information; Information available to a person in his fiduciary relationship, unless the competent authority is satisfied that the larger public interest warrants the disclosure of such information; Information received in confidence from foreign Government; Information, the disclosure of which would endanger the life or physical safety of any person or identify the source of information or assistance given in confidence for law enforcement or security purposes;
102. CONTD… Information which would impede the process of investigation or apprehension or prosecution of offenders; Cabinet papers including records of deliberations of the Council of Ministers, Secretaries and other officers; Information which relates to personal information the disclosure of which has no relationship to any public activity or interest, or which would cause unwarranted invasion of the privacy of the individual (but it is also provided that the information which cannot be denied to the Parliament or a State Legislature shall not be denied by this exemption); Notwithstanding any of the exemptions listed above, a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests. (NB: This provision is qualified by the proviso to sub-section 11(1) of the Act which exempts disclosure of "trade or commercial secrets protected by law" under this clause when read along with 8(1)(d))
103. CASE STUDY: CBSE VS.ADITYA BANDOPADHYAY
104. BRIEF Decided On: 09.08.2011 Appellants: Central Board of Secondary Education and Anr. Vs Respondent: Aditya Bandopadhyay and Ors. Honorable Judges: R.V. Raveendran A.K. Patnaik, JJ.
105. THE CASE Aditya appeared for the Secondary School Examination, 2008 conducted by the CBSE. When he got the mark sheet he was disappointed with his marks. He thought that he had done well in the examination but his answer-books were not properly valued and that improper valuation had resulted in low marks. Therefore he made an application for inspection and re-evaluation of his answer-books.
106. THE CASE… CONTD CBSE rejected the said request. The reasons for rejection were:  Information sought was exempted under Section 8(1)(e) of RTI Act since CBSE shared fiduciary relationship with its evaluators and maintain confidentiality of both manner and method of evaluation.  The Examination Bye-laws of the Board provided that no candidate shall claim or is entitled to re-evaluation of his answers or disclosure or inspection of answer book(s) or other documents.  The larger public interest does not warrant the disclosure of such information sought.
107. ADITYA BANDHOPADHYAY’S PETITION For a declaration that the action of CBSE in excluding the provision of re-evaluation of answer-sheets, in regard to the examinations held by it was illegal, unreasonable and violative of the provisions of the Constitution of India; For a direction to CBSE to appoint an independent examiner for re- evaluating his answer-books and issue a fresh marks card on the basis of re-evaluation; For a direction to CBSE to produce his answer-books in regard to the 2008 Secondary School Examination so that they could be properly reviewed and fresh marks card can be issued with re-evaluation marks; For quashing the communication of CBSE dated 12.7.2008 and for a direction to produce the answer-books into court for inspection by the first Respondent. The Respondent contended that Section 8(1)(e) of Right to Information Act, 2005 (RTI Act for short) relied upon by CBSE was not applicable and relied upon the provisions of the RTI Act to claim inspection.
108. CBSE’S DEFENSECBSE resisted the petition. It contended that as per its Bye- laws, re-evaluation and inspection of answer-books were impermissible and what was permissible was only verification of marks.Bye – Law No. 61. Verification of marks obtained by a Candidate in a subjecti. The verification will be restricted to checking whether all the answers have been evaluated and that there has been no mistake in the totaling of marks for each question in that subject and that the marks have been transferred correctly on the title page of the answer book and to the award list and whether the supplementary answer book(s) attached with the answer book mentioned by the candidate are intact. No revaluation of the answer book or supplementary answer book(s) shall be done.
109. CONTD…ii) Such an application must be made by the candidate within 21 days from the date of the declaration of result for Main Examination and 15 days for Compartment Examination.(iii) All such applications must be accompanied by payment of fee as prescribed by the Board from time to time.(iv) No candidate shall claim, or be entitled to, revaluation of his/her answers or disclosure or inspection of the answer book(s) or other documents.(vi) In no case the verification of marks shall be done in the presence of the candidate or anyone else on his/her behalf, nor will the answer books be shown to him/her or his/her representative.(vii) Verification of marks obtained by a candidate will be done by the officials appointed by or with the approval of the Chairman.(viii) The marks, on verification will be revised upward or downward, as per the actual marks obtained by the candidate in his/her answer book.
110. CONTD…Bye – Law No. 62. Maintenance of Answer BooksThe answer books shall be maintained for a period of three months and shall thereafter be disposed of in the manner as decided by the Chairman from time to time.
111. QUESTIONS TO BE CONSIDERED1) Whether an examinees right to information under the RTI Act includes a right to inspect his evaluated answer books in a public examination or taking certified copies thereof?2) Whether the decisions of this Court in Maharashtra State Board of Secondary Education [MANU/SC/0055/1984 : 1984 (4) SCC 27] and other cases referred to above, in any way affect or interfere with the right of an examinee seeking inspection of his answer books or seeking certified copies thereof?3) Whether an examining body holds the evaluated answer books "in a fiduciary relationship" and consequently has no obligation to give inspection of the evaluated answer books under Section 8(1)(e) of RTI Act?4) If the examinee is entitled to inspection of the evaluated answer books or seek certified copies thereof, whether such right is subject to any limitations, conditions or safeguards?
112. SECTION 2, CLAUSE (F) : INFORMATION"information" means any material in any form, including records, documents, memos, e- mails, opinions, advices, press releases, circulars, orders, logbooks, contracts, rep orts, papers, samples, models, data material held in any electronic form and information relating to any private body which can be accessed by a public authority under any other law for the time being in force;
113. SECTION 2, CLAUSE (H) : PUBLIC AUTHORITY"Public authority" means any authority or body or institution of self-government established or constituted-(a) by or under the Constitution;(b) By any other law made by Parliament;(c) By any other law made by State Legislature;(d) By notification issued or order made by the appropriate Government, and includes any-(i) Body owned, controlled or substantially financed;(ii) Non-Government organization substantially financed, directly or indirectly by funds provided by the appropriate Government;
114. SECTION 2, CLAUSE (I) : RECORD"Record" includes-(a) Any document, manuscript and file;(b) Any microfilm, microfiche and facsimile copy of a document;(c) Any reproduction of image or images embodied in such microfilm (whether enlarged or not); and(d) any other material produced by a computer or any other device;
115. SECTION 2, CLAUSE ( J) : RIGHT TO INFORMATION"Right to information" means the right to information accessible under this Act which is held by or under the control of any public authority and includes the right to-(i) Inspection of work, documents, records;(ii) Taking notes, extracts or certified copies of documents or records;(iii) Taking certified samples of material;(iv) Obtaining information in the form of diskettes, floppies, tapes, video cassettes or in any other electronic mode or through printouts where such information is stored in a computer or in any other device;
116. ANSWER 1)Held: The evaluated answer-book is also an information under the RTI Act. Having regarded to Section 3, the citizens have the right to access to all information held by or under the control of any public authority except those excluded or exempted under the Act. The evaluated answer sheets were not found exempted under Sections 8, 9 & 24.
117. ANSWER 2)Held: The High Court has rightly denied the prayer for re- evaluation of answer-books sought by the candidates in view of the bar contained in the rules and regulations of the examining bodies. The decision of this Court in Maharashtra State Board (supra) and the subsequent decisions following the same, will not affect or interfere with the right of the examinee seeking inspection of answer-books or taking certified copies thereof.
118. ANSWER 3) Blacks Law Dictionary (7th Edition, Page 640) defines fiduciary relationship‟ as:“A relationship in which one person is under a duty to act for the benefit of the other on matters within the scope of the relationship”. Fiduciary relationships - such as trustee-beneficiary, guardian- ward, agent-principal, and attorney-client - require the highest duty of care. Fiduciary relationships usually arise in one of four situations:(i) When one person places trust in the faithful integrity of another, who as a result gains superiority or influence over the first,(ii) When one person assumes control and responsibility over another,(iii) When one person has a duty to act for or give advice to another on matters falling within the scope of the relationship, or
119. Held: It cannot therefore be said that the examining body is in a fiduciary relationship either with reference to the examinee who participates in the examination and whose answer-books are evaluated by the examining body. That an examining body does not hold the evaluated answer-books in a fiduciary relationship. Not being information available to an examining body in its fiduciary relationship, the exemption under Section 8(1)(e) is not available to the examining bodies with reference to evaluated answer-books. As no other exemption under Section 8 is available in respect of evaluated answer books, the examining bodies will have to permit inspection sought by the examinees.
120. ANSWER 4)Held: The right to access information does not extend beyond the period during which the examining body is expected to retain the answer-books. Indiscriminate and impractical demands or directions under RTI Act for disclosure of all and sundry information (unrelated to transparency and accountability in the functioning of public authorities and eradication of corruption) would be counter-productive. The threat of penalties under the RTI Act and the pressure of the authorities under the RTI Act should not lead to employees of a public authorities prioritizing information furnishing, at the cost of their normal and regular duties.
121. JUDGMENT“In view of the foregoing, the order of the High Court directing the examining bodies to permit examinees to have inspection of their answer books is affirmed, subject to the clarifications regarding the scope of the RTI Act and the safeguards and conditions subject to which information should be furnished. The appeals are disposed of accordingly.”