Telecom Operator Continuing Operation Post February 2, 2012, After License Quashing Liable To Pay Reserve Price: Supreme Court

The Telecom Disputes Settlement and Appellate Tribunal, New Delhi, disposed of Telecommunication Petition implementing certain directions of the Court, as per its own interpretation. Aggrieved by such an interpretation, the Union of India, through its Department of Telecommunication (DoT), filed the appeal before the Apex Court.

The Division Bench of Justice Sanjay Kumar and Justice K. Vinod Chandran noted, “This Court also took note of the fact that the licensees, whose licences were quashed more than a year earlier, were still continuing to operate pursuant to the extension orders passed from time to time and, accordingly, issued a direction that such licensees who had continued with their operations after 02.02.2012, irrespective of whether they had participated in the auction conducted in November, 2012, should pay the reserve price fixed for the purpose of that auction. This direction levied a premium upon such licensees who were continuing to garner the benefit of the licences illegally granted to them, which already stood quashed, by requiring them to pay the reserve price fixed for the auction held on 12.11.2012. No doubt, the said reserve price was slashed by 50 per cent while fixing the reserve price for the auction held in March, 2013, but this fact was also within the knowledge of this Court when the order dated 15.02.2013 was passed, as that decision was taken in January, 2013 itself. As the direction of this Court in its order dated 15.02.2013 was binding on the parties thereto and attained finality, it necessarily has to be given effect to fully. The question of diluting the same by reading into it a later date of commencement does not arise and there is no possibility of extending any benefit to the respondent in variance thereof.”

“As rightly pointed out by the TDSAT, inaction and delay were on the part of the DoT itself, as it failed to act upon the order dated 15.02.2013 passed by this Court till 17.11.2014. Having slept over the matter for that length of time, the DoT cannot take advantage of its own lassitude and seek to mulct upon the respondent interest liability for that period”, it added.

Factual Background

The appeal turned upon the judgment of the Apex Court in Centre for Public Interest Litigation and others vs. Union of India and others (2012) and the later orders passed by the Court. By the aforestated judgment, the Court had declared illegal the grant of Unified Access Service licences and allotment of 2G Band Spectrum to various parties, including the respondent, and quashed the same. However, the Court ordered that this direction would become operative only after four months. The Government of India was to consider such recommendations and take an appropriate decision within one month to issue fresh licences. The Court also imposed costs upon the licensees who had benefited at the cost of the public exchequer. Significantly, the respondent was one amongst them and had to pay cost of ₹50 lakh. As the process of the fresh auction could not be concluded within the time frame contemplated by the Court, several applications were filed by the DoT seeking an extension of time. The Court accepted the prayer to the extent of allowing time till January 11, 2013, for conducting and completing the auction, and the existing licensees were held entitled to continue to operate till January 18, 2013. The interlocutory application was kept pending but was adjourned on that date to February 4, 2013 and the existing licensees were allowed to continue with their operations till the next date of hearing. The order passed by the Apex Court in I.A. Nos. 8 and 11 of 2012 on February 15, 2013 formed the basis for the present litigation.

The Apex Court noted that, in the auction conducted on that very day, the respondent had emerged as the only bidder for 800 MHz Band Spectrum in 8 service areas. The Court, accordingly, directed that the respondent would be entitled to continue to operate its services in the service areas for which its bid had been accepted and disposed of its application. Pursuant to the directions of the TDSAT, the DoT issued a revised demand notice calling upon the respondent to deposit ₹106.05233 crore within the time allowed by the TDSAT. The DoT added the caveat that this demand was issued based on the order of the TDSAT and was without prejudice to any legal recourse that the DoT may resort to. The respondent, admittedly, paid this amount.

Pursuant to the directions of the TDSAT, the DoT issued a revised demand notice, calling upon the respondent to deposit ₹106.05233 crore within the time allowed by the TDSAT. The DoT, however, added the caveat that this demand was issued based on the order of the TDSAT and was without prejudice to any legal recourse that the DoT may resort to. The respondent had paid this amount.

Reasoning

On a perusal of the facts of the case, the Bench noted that the existing operators, including the respondent, were given a lease of life, despite their licences being quashed, only to ensure that the general public was not inconvenienced by the disruption of the telecom services that were being provided by them. As per the Bench, the expectation of the Apex Court that the process of a fresh auction would only take four months proved illusory, as the DoT sought extensions time and again. It was noticed that the licensees whose licences already stood quashed were permitted to continue with their operations, only to protect the interest of the only to protect the interest of the general public and not for the benefit of such licensees.

As regards the concluding date, the Bench was in agreement with the TDSAT’s finding that, once the LoI was issued to the respondent on April 30, 2013, stipulating that the 20-year term thereunder commenced from that date, the question of the levy of this liability continuing beyond that date till the issuance of the licence in October, 2013, did not arise.

As per the Bench, this was not a case of a new entrant who had to await the issuance of a licence and who could not have commenced operations on the strength of a LoI. As the respondent was an existing licensee, its continued operations beyond April 30, 2013, were protected by the order of the Apex Court and the clear terms of the LoI, which categorically stated that the 20 year-term commenced from the date of issuance thereof. The Bench stated that TDSAT was correct in permitting the DoT to levy interest only from the expiry of the time stipulated in the show-cause notice dated November 17, 2014.

The Bench thus held that the respondent was liable to pay the reserve price fixed for the auction held in November 2012, from February 2, 2012, till April 30, 2013 in respect of the 8 circles for which its bid was accepted in March, 2013, and from February 2, 2012 till March 23, 2013 for the remaining 13 circles, wherein it continued operations during that period.

“Interest shall be paid by the respondent on the aforestated sums @ SBI’s Prime Lending Rate only from 08.12.2014, being the date of expiry of the 21 days stipulated in the show-cause notice dated 17.11.2014. The amount already paid by the respondent company shall be adjusted against the total amount due in terms of this order and the balance amount shall be paid by the respondent within 3 months from the date of receipt of the demand raised by the Department of Telecommunication, Government of India, pursuant to this order”, the Bench directed.

The Bench thus allowed the appeal.

Cause Title: Union of India v. Sistema Shyam Teleservices Limited (Neutral Citation: 2026 INSC 174)

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