Petition Nos. 329 of 2012, MA No. 214 of 2015 and P. Nos. 435-449, 451-455 of 2012. Case: Loop Telecom Ltd. Vs Union of India and Ors.. TDSAT (Telecom Disputes Settlement & Appellate Tribunal)

Case NumberPetition Nos. 329 of 2012, MA No. 214 of 2015 and P. Nos. 435-449, 451-455 of 2012
CounselFor Appellant: Harish Salve, Meet Malhotra, Sr. Advocates, Shally Bhasin, L. Kamath, Paras Anand, Chaitanaya Safaya, Ravi S.S. Chauhan, Sharath Sampath and Manikya Khanna, Advocates and For Respondents: Pinky Anand, A.S.G., A.P. Sahay, Somya Rathore, Dhruv Tamta and Piyush Beriwal, Advocates
JudgesAftab Alam, J. (Chairperson), Kuldip Singh and B.B. Srivastava, Members
IssueCentral Vigilance Commission Act, 2003 - Section 8(d); Constitution of India - Articles 14, 32; Indian Contract Act, 1872 - Sections 10, 13, 14, 15, 16, 17, 18, 19, 19A, 2, 20, 21, 22, 23, 56, 65, 70, 72; Indian Penal Code 1860, (IPC) - Sections 120B, 420, 468, 471; Indian Telegraph Act, 1885 - Section 4; Indian Trusts Act, 1882 - Section 84; ...
Judgement DateSeptember 16, 2015
CourtTDSAT (Telecom Disputes Settlement & Appellate Tribunal)


Aftab Alam, J. (Chairperson)

The Claim:

  1. The petitioner, Loop Telecom Limited, seeks a direction to the Union of India in the department of Telecom (hereinafter, DoT) to refund1 Rs. 1454.94 crores paid by it as Entry Fee/Licence Fee for the grant of Unified Access Licences (UAS) (and the spectrum that came coupled with the licences) in twenty one (21) service areas. The petitioner's twenty one licences were among the one hundred and twenty (122) licences quashed by the Supreme Court by judgment and order dated 2 February 2012 in Centre of Public Interest Litigation v. Union of India (2012) 3 SCC 1. In addition, it demands Rs. 737.59 crores as interest on the principal amount for the period 10 January 2008 to 31 April 2012, and further interest on the total sum @ 12% from 1 May 2012 till the date of payment. It also seeks a direction for the discharge of the bank guarantees it gave to the DoT in terms of the licence. The bank guarantees submitted by the petitioner expired during the pendency of this petition and by an interim order passed by the Tribunal on 7 February 2014, the petitioner was permitted to not renew the bank guarantees subject, however, to giving an undertaking that depending upon the outcome of this case it would pay the demands raised by the DoT in connection with the 21 licences.

    The background facts:

  2. The facts of the case are simple and can be stated thus. On 6 September 2007 the petitioner applied for UAS licences in twenty one (21) service areas, that is, in all the service areas in the country, excepting Mumbai. Shortly thereafter, the DoT issued a press note on 24 September 2007, announcing the decision that until further orders, new applications for UAS licences would not be accepted after 1 October 2007. Till the date of the press note, 167 applications were received by the government. These included some applications that were submitted in March 2006 but lay unprocessed since then. After publication of the press note, 408 more applications came to be submitted. Thus, by 1 October, government had received 575 applications for UAS licences for the 22 service areas in the country. On 10 January 2008 the DoT issued another press note by which the dead-line for applications for fresh licences was retrospectively advanced to 25 September 2007. The press note further declared that the government was following the policy of first-come-first served under which initially an application that was received first would be processed first and thereafter, the applicant, if found eligible, would be granted Letters of Intent (LoI) and then whosoever complied with the conditions of LoI first would be granted UAS licence. On the same day, at 2.45 pm, another press note was issued asking the applicants, who had submitted their applications on or before 25 September 2007, to come to the DoT head-quarters at 3.30 pm and collect the response(s) of the DoT. The press note further stated that all eligible LoI holders could submit compliance with the terms of LoIs to DoT within the prescribed period during the office hours.

  3. The petitioner collected the LoI as directed in the latter press note and complied with the terms and conditions of the LoI on the following day. On compliance with the terms and conditions of the LoI the petitioner was granted UAS licences in twenty one (21) circles on 3 March 2008, effective from 25 January 2008. It paid the cumulative amount of Rs. 1454.94 crores as Entry Fee/Licence Fee for the twenty one (21) circles.

    Quashing of the licences by the Supreme Court:

  4. Some public spirited people, apart from some government agencies, strongly felt that gross irregularities, amounting to criminality, were committed in grant of UAS licences (and the dispensation of spectrum, along with the licences) under the two press notes issued on 10 January 2008. Hence, writ petitions [Writ petition (C) No. 423 of 2010 and Writ Petition (C) No. 10 of 2012] came to be filed before the Supreme Court for judicial review of the grant of licences under the two press notes. Another case [Civil Appeal No. 10660 of 2010] was separately filed to have the matter of grant of licences investigated by the CBI under court monitoring.

  5. The Supreme Court allowed the writ petitions2 and by judgment and order dated 2 February 2012 (hereinafter referred to as the 2G decision) declared as illegal and quashed all the one hundred and twenty two (122) licenses granted on or after 10 January 2008 pursuant to the two press notes released on 10 January 2008. The one hundred and twenty two (122) licenses quashed by the Supreme Court also included the twenty one (21) UAS licences granted to the petitioner3. Commenting upon the grant of licences through the two press notes issued on 10 January, the Supreme Court observed4:

    "All the applicants including those who were not even eligible for UAS license collected their LoIs on 10.1.2008. The acceptance of 120 applications and compliance with the terms and conditions of the LOIs for 78 applications was also received on the same day. Soon after obtaining the LoIs, 3 of the successful applicants offloaded their stakes for thousands of crores in the name of infusing equity, their details are as under:

    (i) Swan Telecom Capital (P) Ltd. (now known as Etisalat DB Telecom (P) Ltd.) which was incorporated on 13-7-2006 and got UAS licence by paying licence fee of Rs. 1537 crores transferred its 45% owned subsidiary of Emirates Telecommunications Corporation of UAE for over Rs. 3544 crores.

    (ii) Unitech which had obtained licence for Rs. 1651 crores transferred its stake 60% equity in favour of Telenor Asia Pte. Ltd., a part of Telenor Group (Norway) in the name of issue of fresh equity shares for Rs. 6120 crores between March 2009 and February 2010.

    (iii) Tata Teleservices transferred 27.31% of equity worth Rs. 12,924 crores in favour of NTT DOCOMO.

    (iv) Tata Teleservices (Maharashtra) transferred 20.25% of equity worth Rs. 949 crores in favour of NTT DOCOMO."

  6. The Court held that for alienating a valuable and scarce natural resource like spectrum, the State was duty bound to follow the method of auction. The grant of licence, which actually meant allocation of spectrum since it came bundled with the licence, following the policy of first-come-first served was inherently flawed. The recommendation of the Telecom Regulatory Authority in this regard, based on the plea of "level playing field" was wholly misconceived and its implementation by DoT resulted in gross violation of the objective of the National Telecom Police 1999 and the decision taken by the Council of Ministers on 31 October 2003. The Court further held that "its [TRAI's] recommendations became a handle in the hands for the then Minister of Communications and Information Technology and the officers of DoT who virtually gifted away the important national asset at throw away prices by willfully ignoring the concern raised from various quarters including the Prime Minister, Ministry of Finance and also some of its own officers"5. It further held that the grant of licence/allocation of spectrum in 2007 on the price fixed in the year 2001 had caused great loss to the public exchequer and "if the method of auction had been adopted for grant of licence which could be the only rational transparent method for distribution of national wealth, the nation would have been enriched by many thousand crores"6. In regard to the procedure followed by DoT for granting the licences in question, followed by allocation of spectrum the judgment said "The exercise undertaken by the officers of DoT between September 2007 and March 2008, under the leadership of the then Minister of Communications and Information Technology was wholly arbitrary, capricious and contrary to public interest apart from being violative of the doctrine of equality. The material produced before the Court shows that the Minister of Communication and Information Technology wanted to favour some companies at the cost of the public exchequer......"7. The Court then (in paragraph 97 of the judgment) went on to enumerate nine irregular steps taken by the Minister to achieve the purpose.

  7. On the basis the findings arrived at, the Court passed the orders, in paragraph 102 of the judgment, as under:

    "102. In the result, the writ petitions are allowed in the following terms:

    (i) The licences granted to the private respondents on or after 10.1.2008 pursuant to two press releases issued on 10.1.2008 and subsequent allocation of spectrum to the licensees are declared illegal and are quashed.

    (ii) The above direction shall become operative after four months.

    (iii) Keeping in view the decision taken by the Central Government in 2011, TRAI shall make fresh recommendations for grant of licence and allocation of spectrum in 2G band in 22 Service Areas by auction, as was done for allocation of spectrum in 3G band.

    (iv) The Central Government shall consider the recommendations of TRAI and take appropriate decision within next one month and fresh licences be granted by auction.

    (v) Respondent Nos. 2, 3 and 9 who have been benefited at the cost of Public Exchequer by a wholly arbitrary and unconstitutional action taken by the DoT for grant of UAS Licences and allocation of spectrum in 2G band and who offloaded their stakes for many thousand crores in the name of fresh infusion of equity or transfer of equity shall pay cost of Rs. 5 crores each. Respondent Nos. 4, 6, 7 and 10 shall pay cost of Rs. 50 lakhs each because they too had been benefited by the wholly arbitrary and unconstitutional exercise undertaken by the DoT for grant of UAS Licences and allocation of spectrum in 2G band. We have not imposed cost on the respondents who had submitted their applications in 2004 and 2006 and whose applications were kept pending till 2007.

    (vi) Within four months, 50% of the cost shall be deposited with the Supreme Court Legal Services Committee for being used for providing...

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