DELHI SCIENCE FORUM AND ORS. ETC. versus UNION OF INDIA AND ANR.

Citation: [1996] 2 S.C.R. 767 · Decided: 19-02-1996 · Supreme Court of India · Bench: A.M. AHMADI · Disposal: Dismissed
Cited by 9 judgment(s) · see the full citation network in Lexace
Open in Lexace · Ask the AI about this case
Judgment (excerpt)

DELHI SCIENCE FORUM AND ORS. ETC. 
A 
v. 
UNION OF INDIA AND ANR. 
FEBRUARY 19, 1996 
B 
[AM. AHMADI, CJ, N.P. SINGH AND K. VENKATASWAMI, JJ.] 
• 
Indian Telegraph Act, 1885-Section 4-Establishing, maintaining and 
working telegraphs-Telegraphs-Includes telephones & telecommunication 
se1vices-Power of Central Govemment to grant licences in favour of private 
C 
bodies-Fiduciary duty to act with restraint-Tests laid down for exercise of 
statutory discretion Central Govemment expected to put such conditions which 
shall safeguard public interest. 
Administrative Latt--Award of contracts-Judicial Reviett--Scope 
of-Test of reasonable man. 
The present writ petitions and transferred cases have been filed 
questioning the power of the Central Government to grant licences to 
non-Government companies to establish and maintain Telecommunication 
System in the country and the validity of the procedure adopted by the 
Central Government for the said grant. The petitioners questioned the 
validity and propriety of the new Telecom Policy itself on the ground that 
it shall endanger the national security of the country, and shall not serve 
D 
E 
that economic interest of the nation. The petitioners submitted that 
telecommunication being a sensitive service should always be within the 
exclusive domain and control of the Central Government and under no F 
situation it should be parted with by way of grant of licences to non-
Government Companies and private bodies; that Central Government 
which has the exclusive privilege u/s. 4 of the Indian Telegraph Act, 1885 
of establishing, maintaining and working telegraphs which shall include 
telephones, has no authority to part with the said privilege to non-Govern-
G 
ment Companies for the consideration to be paid by them as this amounts 
to an out and out sale of the said privilege; that even though by virtue of 
the proviso to sub section (1) of section 4 the Central Government can 
grant such licences, the power should have been exercised only after 
framing of rules u/s 7 of the Act and that clause (b) of the second proviso 
to sub-section (1) of section 4 shall govern the grant of the licence under H 
767 
768 
SUPREME COURT REPORTS 
[1996] 2 S.C.R. 
A 
the first proviso to sub-section (1) of Section 4 as well because both 
provisos contemplate grant of licence/permit for telegraphs; that the policy 
of capping would not have been applied and no choice should have been 
given to the bidder to select the circles and in respect thereof unilateral 
decision should have been taken by the Central Government; that circle 
B 
'C' and North Eastern Regions had been neglected while implementing the 
National Telecom Policy; that neither there was any justification nor any 
rational basis for debarring the Government Company from ~ubmitting 
their bids; that 
there was non creation of a separate Telephone 
Regulatory Authority and non delegation of the power by the Central 
Government to such Authority to supervise the functioning of the new 
C 
Telecom policy in the country. 
Dismissing the Petitions and Transferred cases, this Court. 
HELD 1.1. The power and authority of the Central Government to 
grant licences to private bodies including Companies subject to conditions 
D and considerations for payments flows from sub-section (1) of Section 4 of 
the Indian Telegraphs Act, 1885 which vests the privilege and right in the 
Central Government. In respect of grant of any right or licence by the 
Central Government or an authority, which can be held to be 'State', within 
the meaning of Article 12 of the Constitution not only the source of the 
E 
power has to be traced, but it has also to be found that the procedure 
adopted for such grant was reasonable, rational and in conformity with the 
conditions which had been announced. Such provisions while vesting 
powers in authorities including the Central Government also enjoin a 
fiduciary duty to act with due restrain, to avoid 'misplaced philanthropy or 
ideology'. (777-F-H, 778-A]. 
F 
1.2. The Central Government while exercising its statutory Power 
under first proviso to Section 4(1) of the Act, of granting licences for 
establishment, maintenance and working of Telecommunications has a 
--
fiduciary duty as well. The new experiment of granting licences to private 
) 
G bodies has to fulfil the tests laid down by courts for exercise of statutory 
L 
discretion. It cannot be exercised in ·a manner which can be held to be 
unlawful an
Excerpt shown. Read the full judgment & AI analysis in Lexace.