Author : Abinaya Raja , Chennai Dr. Ambedkar Government Law College, Pudupakkam
To the point
In 2008, during the rule of Indian National Congress an issue arises regarding the sale of Second Generation (2G) Spectrum Licenses.One of the most significant corruption scandals in India was the 2G spectrum allocation scam of 2008, in which the Comptroller and Auditor General (CAG) estimated that the Indian government incurred a loss of ₹1.76 lakh crore (approximately US$21 billion). It created serious political controversies in India because the main person accused in the scam is A.Raja, Minister of Department of Telecommunication in India. A number of politicians, bureaucrats and executives were alleged to be involved in the scam. The 2G spectrum scam involves the sale of 122 2G spectrum licenses by the Department of Telecommunication (DoT) to telecom companies on the base price (very low price) on the principle of “ first come, first serve” instead of auctioning. The complaints were filed in the Central Vigilance Commission (CVC) regarding the issue of spectrum licences based on the principle that “ first come, first serve” is illegal.The investigation in this case was conducted by the Central Bureau of Investigation (CBI), India’s premier agency for probing complex and high-profile criminal matters. The trials were conducted before The Delhi HIgh Court and The Supreme Court of India. 122 Licenses issued by the Department of Telecommunication in 2007 were cancelled by the Supreme Court of India.In 2017, the court acquitted all individuals charged in the 2G spectrum case, citing insufficient evidence to support the allegations brought against them.
Use of Legal Jargon
An NGO filed a complaint regarding the illegal allocation of 2G Spectrum License to the Central Vigilance Commission (CVC). The case was handed over to the Central Bureau of Investigation (CBI) for further inquiry and prosecution.CBI looked upon the matter and filed a First Information Report (FIR) regarding this incident. In the FIR the accused were charged for many offences including Criminal Conspiracy, Criminal Breach of Trust, Forgery, Cheating on section 120A,405,415,463 of Indian Penal Code, 1860 and under Section 13(1)(d) of Prevention of Corruption Act,1988 for criminal misconduct by public servant.Some of the accused were arrested and kept under judicial custody and remand by CBI for investigation. The Supreme Court cancelled all the 122 licenses issued to ineligible companies in an illegal way. However, all the accused were acquitted due to the prosecution’s inability to substantiate the allegations with sufficient evidence.
The Proof
The 2G spectrum scam was proved by the Comptroller and Auditor General Report.The report showed that licenses were issued at 2001 prices in 2008, ignoring the auction process and market valuations. The Prime Minister and the Ministry of Finance advised the Department of Telecommunications to implement a transparent auction process but this advice was not taken by them . The Department of Telecommunications (DoT), under A. Raja (Minister of DoT at that time), primarily announced that the deadline for the application for 2G Spectrum Licenses is October 1, 2007 but then the DoT suddenly advanced the cut-off date for applications from 1 October, 2007 to 25 September, 2007 without any prior notice.The DoT’s usage of the “first-come, first-serve” principle was not transparent at all but selectively enforced. Evidence showed that some companies were informed in advance about the exact time to submit demand drafts and documentation, giving them an unfair advantage over others. It even favored some ineligible companies under the Unified Access Service License (UASL) guidelines like Swan Telecom, Tata Teleservices and Unitech Wireless etc. These all were found out by the CBI on its investigation.While all the accused were acquitted in 2017, the Delhi High Court in 2024 admitted the CBI’s appeal, emphasizing the necessity to reassess the entire body of evidence.
Abstract
This article explores how the 2G spectrum scam in India exposed serious problems in the way government decisions were made and telecom resources were allocated. It explains how rules meant to ensure fairness were ignored, leading to big financial losses and benefits for a few companies with political connections. By looking at government reports, investigation findings, and court records, the paper shows how key institutions were overlooked and how political influence played a major role. It also discusses how the courts initially let the accused go free in 2017, but a higher court reopened the case in 2024 for a re-examination of evidence.Through this case, the paper argues for stronger regulatory safeguards, more transparent processes. It makes a broader appeal for reforms that can help rebuild public confidence in governance and ensure that national resources are allocated fairly and lawfully.
Case Laws
1.Delhi High Court Judgement (2009)
Shri S. Semmalai addressed Parliament urging the cancellation of the 2G spectrum allocations in light of a Delhi High Court judgment that reversed the cutoff date used by the Department of Telecommunications. This reversal undermined the legitimacy of the first-come-first-served allocation process, which had granted licenses to nine companies within 45 minutes—allegedly ignoring objections from the Telecom Regulatory Authority of India, the Law Ministry, and even a directive from the Prime Minister. Semmalai emphasized that this opaque process led to an estimated loss of ₹1 lakh crore and demanded the resignation of the Telecom Minister and the formation of a Joint Parliamentary Committee. The Delhi High Court’s judgment served as a legal turning point, reinforcing the call for transparency, regulatory compliance, and ministerial accountability in the allocation of public resources.
2.Parliamentary Debate (2010)
The parliamentary debate held in the Lok Sabha focused on the alleged corruption in the allocation of 2G spectrum licenses, which members described as a massive financial scam involving an estimated loss of ₹1 lakh crore. The discussion condemned the undervalued, first-come-first-served allocation of licenses by the Department of Telecommunications under then Minister A. Raja, accusing it of favoring select private entities and bypassing proper procedures. Opposition leaders demanded a high-level probe and the minister’s resignation, citing irregularities, lack of inter-ministerial consultation, and systemic governance failure. The session was marked by intense political exchanges and frequent interruptions, reflecting deep concerns about transparency and accountability in public resource management. As a result A.Raja (then-minister of Department of Telecommunication) resigned from his position.
3.Subramanian Swamy vs. A. Raja (2012)
Subramanian Swamy filed a complaint alleging that P. Chidambaram(then-Finance Minister) conspired with A. Raja in fixing spectrum prices and allowing companies like Swan and Unitech . He argued that the Finance Minister failed to prevent the scam despite knowing the implications and objected to the undervaluation of spectrum.The Supreme Court upheld the Special Judge’s decision that there was no sufficient material to infer a criminal conspiracy or corrupt practices on part of P. Chidambaram. This petition was dismissed by the Court.
4.Loop Telecom And Trading Limited vs Union Of India (2022)
The Supreme Court took up Loop Telecom’s petition seeking a refund of ₹1,454.94 crore, which had been paid as entry fees for 2G spectrum licenses.Loop maintained that the licenses were annulled because of flaws in government policy and not due to any misconduct on its part. However, the Court denied the request, determining that Loop had also played a role in benefiting from the unconstitutional “first-come-first-served” allocation method. The Court underscored that the licenses were cancelled because of a manipulative and biased distribution process that favored certain companies, including Loop. It concluded that parties involved in unlawful arrangements are not entitled to restitution and highlighted that the license terms explicitly stated the entry fee was non-refundable. Consequently, the Supreme Court dismissed Loop Telecom’s petition.
5.Central Bureau of Investigation v. A. Raja & Ors. (2020)
In this case, the Delhi High Court examined procedural challenges posed by multiple accused parties in the 2G spectrum case, questioning whether the CBI’s appeal against their acquittal was legally maintainable.The respondents argued that the CBI had not placed on record the mandatory government sanction under Section 378(2) CrPC or the authorization of the Special Public Prosecutor, rendering the appeal invalid. The Court, however, held that the internal administrative process leading to the decision to appeal—including note sheets, drafts, and approvals—need not be disclosed or form part of the court record. It emphasized that Section 378(2) CrPC only requires that the appeal be presented by a duly authorized Public Prosecutor, not that the procedural steps be judicially scrutinized. The Court found that the appointments of Special Public Prosecutors Sanjeev Bhandari and Sanjay Jain were valid under Section 24(8) CrPC and that the appeal was properly filed. As a result, the petitions disputing the admissibility of the appeal were rejected, allowing the Delhi High Court to proceed with examining the CBI’s case on its substantive merits.
Conclusion
The 2G spectrum case showed how gaps in rules and misuse of power can lead to massive loss of public money. The courts first exposed these issues and pushed for accountability, but later judgments also reminded us that strong proof and proper legal steps are essential for any punishment. Overall, the case teaches us why our systems need more transparency, better checks, and clear laws so public resources are managed fairly and no one misuses their position without consequences.
FAQs
1.What is the 2G spectrum case about?
The case centers on allegations of administrative irregularities in the allocation of telecom licenses in 2008, which allegedly caused significant financial damage to the public exchequer.
2.Why was the case considered a scam?
Licenses were issued on a first-come-first-served basis at 2001 prices in 2008 without transparent auction process, allegedly favoring select companies.
Who were the prominent political figures involved in the case?
A. Raja, (then-Telecom Minister) was the primary accused in the proceedings. In addition, Dr. Subramanian Swamy and others subsequently raised questions regarding the possible involvement of the then Finance Minister.
4.How did the Supreme Court rule in 2012 on the allocation of 2G spectrum licenses?
The Supreme Court cancelled the 122 licenses granted in 2008, calling the process “arbitrary and unconstitutional.”
5.What is Section 378(2) of the CrPC and why is it important?
It governs appeals against acquittals in cases investigated by agencies like the CBI; its interpretation shaped the appellate process here.
