Petition No. 438 of 2014 and M.A. Nos. 273 of 2014 and 35 of 2015. Case: S. Tel Private Ltd. Vs Union of India. TDSAT (Telecom Disputes Settlement & Appellate Tribunal)

Case NumberPetition No. 438 of 2014 and M.A. Nos. 273 of 2014 and 35 of 2015
CounselFor Appellant: Meet Malhotra, Sr. Advocate, Amit Gupta, Ravi S.S. Chauhan, Anant A. Pavgi and Palak Singh, Advocates and For Respondents: Vikramjit Banerjee, Advocate
JudgesAftab Alam, J. (Chairperson), Kuldip Singh and B.B. Srivastava, Members
IssueConstitution of India - Articles 136, 14; Indian Contract Act, 1872 - Sections 56, 65, 74; Indian Telegraph Act, 1885 - Section 4; Madhya Pradesh Nagar Tatha Gram Nivesh Adhiniyam, 1973 - Sections 23-A(1)(a), 23A; Telecom Regulatory Authority Of India Act, 1997 - Section 11 (e)
Judgement DateJuly 06, 2015
CourtTDSAT (Telecom Disputes Settlement & Appellate Tribunal)


Aftab Alam, J. (Chairperson)

  1. Is the petitioner entitled to get refund of the money that it paid for allocation of 3G spectrums under licences that were later quashed by the judgment of the Supreme Court? This is the question that arises for consideration in this case.

  2. The facts are simple and without any controversy. On 7 July 2007 the petitioner applied for Unified Access Service (UAS) licences in six circles/service areas. Even while the application was pending, the Government issued a press note on 24 September 2007, fixing 1October 2007 as the cut-off date for submission of application for fresh UAS licences. On 28 September 2007 the petitioner made application for UAS licences in sixteen circles in addition to the six circles, for which application was made earlier. On 10 January 2008 another press note was issued by the Government by which the dead-line for applications for fresh licenses was retrospectively advanced to 25 September 2007. On the same day the Government issued another press note through which a number of licences (122 in all) were granted to different applicants whose applications were received on or before 25 September 2007. Under that press note, the petitioner too was granted licences (on the basis of its earlier applications) in six circles namely, Assam, Bihar, Himachal Pradesh, Jammu & Kashmir, North East and Orissa. The petitioner paid Rs. 25.1 Cr. as licence fee for the six licences. Its application submitted on 28 September 2007 was not considered on the pretext that it was submitted beyond the deadline.

  3. Against the denial of licences in the sixteen circles on the ground that the application for those licences was made beyond the cut-off date, the petitioner went to the Delhi High Court in W. P. (C) 363 of 2008, challenging the action of the Government in retrospectively advancing the last date for submission of applications as unjust, unreasonable and arbitrary. The High Court found and held that the Government decision to fix a cut-off date for making application for grant of licence with the view to limit the number of service providers was contrary to the advice tendered by the Telecom Regulatory Authority of India (TRAI) which the Government had purported to accept. It further held that the cut-off date that was initially fixed was retrospectively advanced without any rational basis. The High Court, accordingly, allowed the writ petition by judgment and order dated 1 July 2008 and asked the respondents to consider the petitioner's application submitted on 28 September 2007. The Government challenged the judgment passed by a single judge in an intra-court appeal, which was dismissed by judgment and order dated 24 November 2009. The government then took the matter to the Supreme Court in SLP (C) 33406/2009. Before the Supreme Court the petitioner filed an additional affidavit stating that two and a half years had lapsed since it had filed the application for grant of licences in sixteen circles and in that period the market conditions had also changed primarily because its competitors who were able to get licences in January 2008 had already commenced or were in an advanced stage of commencing services in the service areas in question. Also, the Attorney General representing the Union of India, the appellant, made the statement that application submitted by the petitioner on 28 September 2007 was not rejected but was kept in abeyance and that the Government would consider that application in due course, on first-come-first-served basis as per the prevailing policy and in consultation with TRAI. Taking note of the statements made in the additional affidavit filed by the petitioner and those made by the Attorney General, the Court, by its order dated 12 March 2010, disposed of the appeal as requiring no further adjudication. Nevertheless, it expressly sustained the findings recorded by the Delhi High Court in regard to the change in the cut-off date for submission of applications.

  4. Shortly before the matter relating to the petitioner's application for licences in the sixteen circles was disposed of by the Supreme Court, on 25 February 2010 the government issued Notice Inviting Applications (NIA) for auction of 3G and BWA spectrum. Clause 3.1 of the NIA laid down the eligibility criteria to participate in the auction as under:

    "3.1 Eligibility criteria to participate in the Auctions

    3.1.1 3G Auction

    Any entity:

    (i) that holds a Unified Access Services ("UAS")/Cellular Mobile Telephone Service ("CMTS") licence; or

    (ii) that:

    (a) has previous experience of running 3G telecom services either directly or through a majority-owned subsidiary; and

    (b) gives an undertaking to obtain a UAS licence through a New Entrant Nominee UAS Licensee as per DoT guidelines before starting telecom operations can bid for 3G Spectrum (subject to other provisions of the Notice).

    For the purpose of Clause 3.1.1(ii)(a), a wholly and directly owned company shall also be entitled to use the qualifications of its owner."

  5. The petitioner took part in the auction as a holder of UAS licences in six circles and on 21 May 2010, it was declared as the successful bidder for 3G spectrum in three circles, namely Orissa, Bihar and Himachal Pradesh. On 31 May 2010, the petitioner paid the sum of Rs. 337.67 crores as license/entry fee for 3G spectrum allocated to it in the three circles. On 11 June 2010, the Government issued a Letter of Intent to the petitioner and on 1 September 2010, the Government (the Licensor), made amendments in the UAS licence held by the petitioner by incorporating in it clause 23.7, governing 3G spectrum. A portion of clause 23.7(i), in so far as relevant for the present, is reproduced as below:

    (i)........In case the UAS license is cancelled/terminated/revoked/surrendered for any reason, the spectrum usage rights shall stand withdrawn forthwith. If the validity period of the UAS license agreement expires before the expiry of the right to use the 3G spectrum of 20 years, awarded by means of the said Auction, then the validity of the UAS license for operation of Unified Access Services by using the said 3G spectrum only, shall be extended to make it coterminous with the validity of the right to use the 3G spectrum, without any charges and in such manner as the licensor deems fit...........

  6. Around the time, the government took steps for auction of 3G spectrum, the gross irregularities/culpability in the grant of UAS license on the basis of the two press notes issued on 10 January 2008 were brought to the notice of the Supreme Court in Centre for Public Interest Litigation and Ors. v. Union of India (UOI) and Ors.[WP(C) 423 of 2010].The Supreme Court pronounced its judgment on the matter on 2 February 2012 by which altogether 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 were declared illegal and were quashed. The one hundred and twenty two (122) licenses quashed by the Supreme Court also included the six (6) UAS licences granted to the petitioner for the areas of Orissa, Bihar, Himachal Pradesh, Assam, J&K and North East.

  7. Here it is significant to note that the Supreme Court judgment while taking note of the relevant facts of the case, specially noticed the petitioner's challenge to the press note issued on 10 October 2007 by which the cut-off date for submission of applications was retrospectively advanced and followed the case filed by the petitioner from the stage of the single judge in the High Court right up to the Supreme Court. The relevant passages in the Supreme Court judgment are contained in paragraphs 46 to 49, which are as under:

    "46. S. Tel Ltd., who had applied for grant of licence pursuant to press note dated 24.9.2007, but was ousted from the zone of consideration because of the cut-off date fixed by the Minister of C&IT, filed Writ Petition No. 636 of 2008 in the Delhi High Court with the prayer that the first press release dated 10.1.2008 may be quashed. After hearing the parties, the learned Single Judge vide his order dated 1.7.2009 declared that the cut-off date, i.e., 25.9.2007 was totally arbitrary and directed the Respondents in the writ petition to consider the offer made by the writ Petitioner to pay Rs. 17.752 crores towards additional revenue share over and above the applicable spectrum revenue share.

  8. The observations made by the learned Single Judge on the justification of fixing 25.9.2007 as the cut-off date read as under:

    Thus on the one hand the Respondent has accepted the recommendation of the TRAI in the impugned press note, but acted contrary thereto by amending the cutoff date and thus placed a cap on the number of service providers. The stand taken by Respondent and the justification sought to be given for fixing a cut-off date retrospectively is on account of large volume of applications, is without any force in view of the fact that neither any justification was rendered during the course of argument, nor any justification has been rendered in the counter affidavit as to what is the effect of receipt of large number of applications in view of the fact that a recommendation of the TRAI suggests no cap on the number of access service providers in any service area. This recommendation was duly accepted and published in the newspaper. Further as per the counter affidavit 232 UASL applications were received till 25.9.2007 from 22 companies. Assuming there was increase in the volume of applications, the Respondent has failed to answer the crucial question as to what was the rationale and basis for fixing 25.9.2007 as the cut-off date. Even otherwise, admittedly 232 applications were made by 25.9.2007 and between 25.9.2007 and 1.10.2007 only 76 were applications were received. It was only on 1.10.2007 that 267 applications were made. Thus on 28.09.2007 it cannot be said that large number of applications were received. Thus taking...

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