IN THE SUPREME COURT OF INDIA

CIVIL APPEALATE JURISDICTION I.A. No. _______ of 2011 IN CIVIL APPEAL NO. 10660 OF 2010 In the matter of: Centre for Public Interest Litigation & Ors Versus The Union of India & Ors …Respondents …Petitioners

APPLICATION FOR FILING ADDITIONAL DOCUMENTS ON BEHALF OF THE PETITIONERS To The Hon’ble Chief Justice of India and His Hon’ble Companion Justices of the Hon’ble Supreme Court of India The humble application of the petitioners above named most respectfully showeth:

1.

The above civil appeal arises out of a special leave petition seeking court

monitoring of the CBI & ED investigation into the 2G spectrum scam. This Hon’ble court vide order dated 16.12.2010 was pleased to grant leave in the said SLP and had given several directions to the CBI & ED.

2.

That the detailed facts and circumstances pertaining to the instant matter

have been set out in the petition and as such the same are not being repeated herein for the sake of brevity. The petitioners crave liberty to refer to and rely upon the same as when this Application is taken up for hearing.

Interference in the investigation in the case of Loop Telecom - Essar 3. That the CBI has recently filed its third supplementary charge-sheet before

the Special Court, CBI in the matter of Loop Telecom. The CBI has booked the accused under section 120 B (criminal conspiracy) and 420 (cheating) of the IPC.

However, the CBI charge-sheet does not include any charges under the Prevention of Corruption Act and leaves out the role of the public servants. This exclusion has been facilitated by the intervention of the two top most functionaries of the CBI – Director of Prosecution-CBI and Director-CBI, who have apparently overruled the report of the Investigating Officers. There is a possibility of this case being taken away from the Special Judge dealing with 2G cases as case of cheating is triable by a magistrate. Such an event, petitioners submit, would be a complete misreading of this Hon’ble Court’s order designating the Special Court to deal with all 2G cases.

4.

The Investigation Officers dealing in the case had found strong evidences in

the case and had apparently/reportedly proposed charges even under the Prevention of Corruption Act. This was apprised to this Hon’ble Court in the status reports. However, the CBI Director of Prosecution Mr Abdul Aziz overruled the report of the Investigating Officers and said no criminal case is made out in this matter. Giving a clean chit to the companies, he said that this was merely a contractual violation. It is pertinent to mention here that Mr Aziz's son is employed in Essar-Loop group and he reportedly recused himself belatedly from the case. Despite this his opinion was factored in decision making.

5.

The CBI Director Mr A.P. Singh partially differed with the observations of Mr

Aziz and observed that a case of cheating and conspiracy is made out against the companies, their promoters and private people. But, he agreed with Mr Aziz that no case is made out under the Prevention of Corruption Act and against public servants. Mr Singh justified this on the ground that the concerned DoT officers at the time of issuance of LOIs did not know that Loop Telecom was controlled by Essar group through a web of companies.

6.

That Mr A.P. Singh then referred the matter to Attorney General Mr G.E.

Vahanvati for his opinion on the area of disputes. Mr Vahanvati, restricted his opinion only to the dispute, and expressed his opinion in favour of filing the

charge-sheet in the case (Annexure A). To support his argument, he cited relevant paras of the reports prepared by the Investigating Officers, who had traced back the history of Loop Telecom to Essar’s operation way back from 2005 onwards when Loop/Essar took over the operations of BPL in four telecom circles. This acquisition was done with the approval of the DoT. So, the concerned DoT officers had the prior knowledge that Loop was controlled by Essar. Since on the issue of charges under the Prevention of Corruption Act, there was no dispute between Director-CBI and Director of Prosecution-CBI, the issue was not addressed by Mr Vahanvati. But, all these findings of the Investigating Officers, reproduced in the opinion expressed by Mr Vahanvati, contradicts Mr A.P. Singh’s stand that the DoT officers were not aware that Loop was controlled by Essar. Therefore, not charging the accused under the Prevention of Corruption Act ignoring the findings of the Investigating Officers, is unwarranted. This is unacceptable, especially, in a case where the investigations are being monitored by this Hon’ble Court and investigating officers are reporting to the Hon’ble Court.

7.

The interference of an influential Minister in the Government, the Law

Minister Mr Salman Khurshid, is evident. He is publicly giving clean chit to Essar/Loop. A recent opinion by his ministry giving clean chit to Essar Group is attached herewith as Annexure B. It is to be noted that this case is similar to that of Swan-Reliance wherein CBI has already filed charge-sheets against officials of Swan, Reliance and also the public officials. The chargesheet include charges under Prevention of Corruption Act. The above developments are likely to weaken the prosecution case in the matter of Swan-Reliance as well.

SHYAM TELELINK LTD 8. Shyam Telelink Ltd applied for 2G licenses in 21 Circles (Pan India except

Rajasthan Circle) on September 25, 2007, which later became the cut-off date for awarding of 2G UAS licenses. As per the guidelines, for getting these licenses, the applicant company must have net-worth of Rs 1,380 crore and paid-up equity

capital of Rs 138 crore. The company in its application (Annexure-C) had declared the shareholding and networth as follows: Sl. Name of Promoter/ Partner/Shareholder Indian Foreign Equity (%) Networth (Rs crores) as per audited Balance Sheet as at 31.03.2006 1 Shyam Basic Infrastructure Projects Pvt Ltd 2 Joint Stock Financial Corporation (JSFC) Sistema, Russia 3 4 Other foreign shareholding Others including public Foreign Indian 02.527 47.338 0 0 Foreign 10.000 58,956 Indian 40.135 156.58

9.

It is clear from the above table that Shyam Telelink Ltd on its own did not

meet the networth requirement. Its own networth was Rs 156.58 crore whereas the requirement was for Rs 1,380 crore. As per the DoT’s guidelines for issuing licenses, the networth of “only those promoters/shareholders was to be counted who have atleast 10 per cent equity stake or more in the total equity of the applicant company.” For getting all the 21 UAS licenses, Sistema’s equity in the company was declared in haste to be 10 per cent, so that Sistema’s networth is also counted. However, the fact is that as on the date of application, Sistema did not have any stake in the company, and the equity money was also not transferred. This is evident from the announcement made by Shyam Telecom Ltd, another Group company of Shyam Telelink Ltd on the Bombay Stock Exchange (BSE) web site on September 26, 2007 (Annexure-D). According to this announcement, equity investment of 10% was an in-principle decision, and the terms & conditions of this investment was also not finalised. Thus, as on the date of application, Shyam was not eligible to apply for the licenses. The government should have verified this fact and also reconfirmed actual inflow of equity money into Shyam Telelink Ltd. The BSE announcement is reproduced below: Sep 26, 2007 announcement by Shyam Telecom Ltd on BSE web site

Shyam Telecom Ltd has informed BSE that Shyam Basic Infrastructure Projects Pvt Ltd (SBIPL) and Shyam Telelink Ltd (STL), are other Group companies. SBIPL, one of the promoters of STL, presently an unlisted company, on September 25, 2007 has concluded a 10% sale of equity of STL in in-principle for cash consideration of USD 11.4 million (apprx Rs 45 crore). STL has an equity base of Rs 455.95 crore. STL, a Unified Access Telecom Service Provider in Rajasthan, has also applied for Unified Access Service Licenses (UASL) for providing telecom services throughout the country. Sistema will also acquire 51% equity stake in STL subject to FIPB approval and it has a right to increase its equity stake up to 74% in the company. STL, which was earlier a subsidiary of the company, upon restructuring approved by the court, is directly held by SBIPL and other Shyam group companies and public. Further final documentation, terms and conditions would be finalized over the next 10 days.

10.

Shyam Telelink Ltd in its application did not provide a copy of the

shareholders agreement, and in the relevant parts of the format of its application it has stated, “Not Applicable”. This shows that the company actually did not conclude the agreement and no money actually came into Shyam Telelink’s account from Sistema towards the equity. The relevant part of its application is reproduced below: Relevant extracts of application filed by Shyam Telelink Ltd as per format specified in “Annexure-III of DoT’s Guidelines For Unified Access Services Licence No.10-21/2005-BS.I(Vol.II)/49 dated 14th December, 2005” 10. Does Foreign Collaboration has have any objection for Not Applicable possessing of this UAS Licence in the service area applied. If no, then a self certificate to that effect to be provided by the Company Secretary 11. Certified copy of the Agreement between the Indian company Not Applicable and foreign partner(s), if applicable

11.

At serial No. 15 of the application, the company was supposed to provide

the details of Chairman/Directors. Against this requirement, the company gave two names from Sistema to be Director on the Board of the company. They are: (i) Mr

Serdgy Cheremin, and (ii) Mr Igor Garshin. However, the web site of the Ministry of Corporate Affairs reveals a different story. Mr Serdgy Cheremin gave his consent on September 29, 2007 while Mr Igor Garshin gave his consent only on October 23, 2007. The company filed Form 32 for these Directors only on December 13, 2007 (Annexure-E).

12.

Moreover, the investment pattern into the company by Russian company

Sistema and the Russian government also raises doubts about the actual transactions, which need to be investigated by the ED. On 26.9.2007, Sistema inprinciple agreed to buy 10% of the company for $11.4 m (Rs 45 crore) valuing the company at Rs 450 crore. On the contrary, the company paid Rs 1,626.32 crore to get 21 licenses. In addition, the company was already operating in Rajasthan with existing subscriber base. So, the deal was grossly under-valued. The company got the LOI on January 10, 2008. Immediately thereafter, the media reported that on January 18, 2008 Sistema increased its stake from 10% to 51% by paying $46.7 mn (Annexure-F). On 25.3.2011, Federal Agency for State Property Management (Govt of Russia) paid Rs 2,699 crore to get 17.14% of the company (AnnexureG); thus valuing the company at Rs 15,750 crore.

13.

This abnormally high valuation is despite the fact that Trai in its letter dated

November 18, 2010 (Annexure-H) to the DoT had recommended cancellation of license of the company for its failure to rollout services in 10 circles. Even as on date, the company’s performance in seven circles is dismal (see table).

Sistema Shyam performance Spectrum Gross Rev (Rs Cr) Sl Circles 1 Punjab allocated 25-Jul-08 Q2 FY11-12 -

No. of subs (July'11) 162

2 MP 3 HP 4 Orissa 5 Assam 6 NE 7 J&K Total

11-Apr-08 11-Apr-08 29-May-08 03-Apr-08 03-Apr-08 03-Apr-08

0.01 0.01 0.02

642 21 117 98 8 6 1,054

14.

Moreover, a judgment on a petition for the cancellation of all the 122

licenses issued in January 2008 including that of Sistema Shyam is reserved by the Supreme Court of India. Despite these circumstances, the valuation of the company is very high. It appears that Russia based private company (Sistema) picked-up stake majority stake in Shyam Telelink at below cost at a time when there was no risk about the cancellation of time. On the other hand, Russian Government got at very high rates even though the risk for the cancellation of licenses was very high. This needs to be investigated by the Enforcement Directorate.

15.

Russia based Sistema group is promoted by Russian billionaire Mr Vladimir

Yevtushenkov, which has very close relationship with the Russian President Mr Valdimir Putin. He was a part of the delegation when the President Mr Putin visited Indian in January 2007 on a two-day visit (Annexure-I). Because of this relationship, it appears Shyam Sistema has been left out from the investigation.

16.

Moreover, CBI ignores the fact that Shyam Telecom application was made

on 25th September 2007. DoT under accused Mr. Raja made sure that applications received till 25.09.2007 were allotted spectrum. The argument used by DoT was that since the press release announcing the cut-off date, though dated 24.09.2007, was made public only on 25.09.2007, hence 25.09.2007 should be the cut-off date. CBI states that the change in cut-off date from 01.10.2007 to 25.09.2007 was made at the instance of Unitech which applied on 24.09.2007, but ignores the application date of Shyam Telecom whose application was received on what became the new cut-off date.

Allianz Infratech (P) Ltd 17. Allianz Infratech (P) Ltd, which had applied for licenses on September 6,

2007, could obtain licenses in two Circles – Madhya Pradesh (Rs 17.45 crore) and Bihar (Rs 10 crore). Later, on March 17, 2009 it became wholly owned subsidiary of Etisalat DB Telecom Pvt Ltd, which was subsequently de-merged into Telespice Wireless Pvt Ltd. Allianz Infratech was promoted by Mr Ajay Singh and Mr Ashish Deora. Only after this sale, on July 23, 2009 the DoT inserted a clause in licenses to bar sale of equity for 3 years. The relevant part of this letter is reproduced below:DoT’s letter dated July 23, 2009 “1.8: There shall be following conditions for sale of equity of the UAS licensee company: (i) There shall be a Lock-in-period for sale of equity of a person whose share capital is 10% or more in the UAS licensee company on the effective date of UAS licence and whose net-worth has been taken into consideration for determining the eligibility for grant of UAS license, till completion of three years from the effective date of the UAS licence or till fulfilment of all the rollout obligations under clause 34, whichever is earlier. The company has not been investigated by the CBI.

Excess spectrum scam 18. On November 19, 2011, the CBI has also registered another case putting

the loss for irregularities in the grant of Additional 2G Spectrum at Rs 508 crore during the period 2001-2007. The CBI has simply calculated the loss on the basis that the DoT did not increase the spectrum charges rates when the spectrum was proposed to be enhanced from 8 MHz to 10 MHz as shown in the following table: Spectrum 2x4.4/4.5 MHz 2x6.2 MHz 2x8 MHz 2x10 MHz Spectrum usage charges 2% 3% 4%

However, the CBI has not calculated the loss of revenue to the government for giving spectrum to the operators without charging them any Entry Fee. As per the license conditions, the DoT could have allocated a maximum of 2x4.5 MHz spectrum to operators providing services in four Metros and 2x4.4 MHz in the remaining part of the country known as Telecom Circles. There was also a provision in the license agreement that the DoT could allocate additional spectrum of upto 2x1.8 MHz taking it to a “cumulative maximum” spectrum of 2x6.2 MHz. This additional spectrum was subject to “availability, justification and payment of additional license fee”. There was no provision for allocation of any extra spectrum beyond 2x6.2 MHz. 19. However, the DoT without fixing any criteria for justification and without

payment of additional licence fee provided the spectrum of 2x6.2 MHz to different operators. It has been noticed that the DoT has allocated spectrum as high as 2x10 MHz, that too without payment of any extra spectrum fee. TRAI had discovered this illegal practice. In July 2007 it found that the spectrum was being allocated without any extra fee. As by then many operators had already been allocated spectrum of upto 2x10 MHz, it had recommended to the DoT for levying of “spectrum enhancement charges” beyond 2x10 MHz, in future. TRAI had also noticed that the DoT has not even been charging towards the usual “spectrum usage charges” for the portion when spectrum was increased from 2x8 MHz to 2x10 MHz. Therefore, it had recommended that usage charges be levied (one per cent of the Annual Gross Revenue i.e. AGR of the concerned operators) in future, even for this segment of increase. The first violation of excess spectrum took place when Mr Sukh Ram was the telecom minister. Under him, on December 30, 1996, the DoT allotted Bharti Cellular Ltd 1.8 MHz extra spectrum in Delhi without charging them any fee. The estimated total loss on this excess spectrum allocation made so far is Rs 26,448 crore. The detail calculation of this loss is filed herein and marked as Annexure-J.

No progress in the case of Mr Dyanidhi Maran - Maxis

20.

That the CBI had investigated the matter related to corruption and misuse

of official position by Mr Dyanidhi Maran when he was Telecom Minister. Over 4-5 months of investigations, the CBI found the involvement of seven persons/entities. The CBI then filed an FIR on October 9, 2011 and searched the premises of the accused on October 10, 2011. Since then over two months have passed, the CBI is deliberately going slow in the case and has not made any arrests in the case. Petitioners submit that this was the most clear-cut case of corruption and quid pro quo, and is being made weak by the CBI. Chargesheet should have been filed in this case several months back.

21.

That the present Application is being made bona fide and in the interest of

justice.

PRAYER In these circumstances the petitioners pray that your Lordships may be pleased to:
(i)

Permit the petitioners to file the above documents Annexure A to

Annexure J and take the same on record. (ii) Pass other or further orders as may be deemed fit and proper.

AND FOR THIS ACT OF KINDNESS THE APPLICANTS AS IN DUTY BOUND SHALL EVER PRAY. PETITIONERS

FILED ON: 15.12.2011 NEW DELHI

THROUGH: PRASHANT BHUSHAN COUNSEL FOR THE PETITIONERS

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