IDEA CELLULAR LTD. Vs UNION OF INDIA

P.K.Rastogi, Member

By way of the present Petition, the petitioner has challenged the letter of Department of Telecommunications No. 800-14/2010-VAS-III Vol. II dated 20.07.2010 which was issued to all the service providers in Assam and North East Service Areas, where it was decided to extend the security safeguards applicable in J& K service area, issued vide letter dated 20.01.2010 to Assam and North East Telecom Circle Service Areas for a period of six months. We may read the same as below :

“No. 800-14/2010-VAS-III Vol. II Dated 20th July 2010

All Access service providers in Assam and North East Service Areas

Subject : Extension of Pre-paid mobile services in J&K, Assam and North East Service Areas

Kindly refer to this office letter of even no. dated 21.02.2010 vide which the pre paid services were extended for a period of one year beyond 22.02.2010. In this regard, it has been decided to extend the security safeguards applicable in J& K service area, issued vide letter no. 842-1070/2009-AS.IV/63 dated 20.01.2010(copy enclosed) to Assam and North East Telecom Circle Service Areas on experimental basis for a period of six months with immediate effect.

2. Further, it has been decided that prepaid subscribers of Assam service area may be permitted roaming facility in the North East Service area only and vice versa without any restriction with immediate effect for a period of six months on experimental basis. The restriction on roaming of pre paid subscribers of Assam and North East Telecom Circle Service Areas to other service areas in the country (outside Assam and North East Service Area) and vice versa shall continue.

3. Kindly acknowledge the receipt.”

2. The petitioner has prayed for following reliefs:

(A) “Quash and set aside Circular bearing no. 800-14/2010- VAS-III Vol. II dated 20.07.2010 issued by Respondent No.1; (B) Quash and set aside Circular bearing no. 800-14/2011-VAS dated 31.03.2011 except in so far as it makes certificate issued by Village Panchayat Head and Caste and Domicile

Certificates with photograph issued by State Governments acceptable as proof of identity and address and permission for continuation of pre paid mobile services in J&K, Assam & North East service areas till 31.03.2013 and paragraph 6 thereof; (C) Quash and set aside Circular bearing no. 800-14/2011-VAS dated 15.07.2011 in so far as it allows the TERM Cell to treat the subscriber acquired between 20.07.2010 and 31.03.2011 on basis of certificate issued by Village Panchayat Head and Caste and Domicile Certificates with photograph issued by State Governments as non-compliant and authorizes imposition of penalty on the telecom operators; (D) Restrain the Respondent No. 1 from treating the customers acquired by the Petitioners on basis of Voter’s Identity Cards issued prior to 2008 and on basis of Caste and Domicile Certificates issued by Village Panchayat Head and/or equivalent authority as unverified subscribers and imposing penalty on the Petitioners for the same. (E) Restrain the Respondent No. 1 from imposing penalty on the Petitioner by treating the pre-paid subscribers not re-verified prior to 31.03.2011 but allowed recharge beyond 19.01.2011 and/or subscribers not re-verified in accordance with instructions dated 20.07.2010 as unverified subscriber; (F) Restrain the Respondent No. 1 from imposing penalty by multiplying the same by four times; (G) Restrain the Respondent No. 1 from treating a subscriber as un-verified only because the Petitioners had not tagged the subscriber as re-verified in the CD submitted by them to the Term Cells in fact such subscriber had been in fact, re-verified; (H) Quash and set aside the Demand Notices issued by Respondent No. 1/TERM Cells on the basis of the above Circulars and anomalies as set out in prayers (A) to (G) above; (I) Quash and set aside the communication bearing no. TERM.AS/O-32/2011-12 dated 25.05.2011 and TERM.AS/O-32/2011-12 dated 16.06.2011 by which the TERM Cells rejected the representations of the Petitioner No. 3; (J) Restrain the Respondent No. 1 from making frequent changes in the Subscriber Verification guidelines and without consultation with the Petitioners and their Association; (K) Pass an ad-interim ex-parte order staying the operation of the Circulars and the anomalies impugned in prayer (A) to (G) above to the extent that the same have been impugned; (L) Pass an ad-interim ex-parte order restraining the Respondent No. 1/TERM Cells from imposing any penalty on the Petitioner on the basis of the Circulars and the anomalies impugned in prayer (A) to (G) above and/or enforcing the same through any coercive mechanism.

(M) Pass such other and further order(s) in favour of the Petitioners and against the Respondents as may be deemed fit and proper in the facts and circumstances of the case.”

3. Separate petitions are filed by service providers. We are mentioning the reliefs requested in one of such petition as an example. In Petition No. 28 of 2012 (Bharti Hexacom Ltd. Vs UOI), the petitioner prayed for : “(a) Quash and set aside the following Demand Notices : (i) Demand Notice bearing no. TERM/NE-1/CAF- Penalty/2010-11/Aug 2010 to Oct 2010 dated 13.04.2011; (ii) Demand Notice bearing no. TERM/NE-1/CAF- Penalty/2010-11/Novermber-2010 dated 01.06.2011; (iii) Demand Notice bearing no. TERM/NE-1/CAF- Penalty/Vol.III/2011-12/December 2010 to January 2011 dated 29.06.2011; (b) Pass an ad-interim ex-parte order staying the operation of the Demand Notices referred to in prayer (a) above and restraining the Respondent from taking any step seeking recovery of the same against the Petitioner during the pendency of the present petition; (c) Pass an ad-interim ex-parte order restraining the Respondent from taking coercive steps including imposing of penalty on the Petitioner on the basis of the Joint Audit report carried out; (d) Pass a direction directing the respondent to withdraw/recalculate the amounts of penalties to be imposed on the petitioner and give credit/adjustment to the petitioner for the amounts overpaid by it; (e) Pass such other and further order(s) as may be deemed fit and proper in the facts and circumstances of the case.”

4. We have heard this case on the issue of granting of ad-interim relief to the petitioners. Both the parties have been heard extensively.

5. The grievance of the petitioner is that the respondent has issued the circular dated 20.07.2010 wherein the security guidelines applicable to the J & K Area has been made applicable to Assam and North East Service Area without any application of mind and in a casual manner which is evident from : i. Inclusion of Permanent Residency Card issued by J&K Government; ii. Non inclusion of certificate issued by Village Panchayat Head or its equivalent authority; iii. Non inclusion of Caste and Domicile certificates with photograph issued by state governments, and iv. Non-inclusion of Voters Identity Cards issued before 2008.

Although the anomaly of Non-inclusion of certificate issued by Village Panchayat Head or its equivalent authority and Caste and Domicile Certificates with photograph issued by State Governments was partially addressed by subsequent Circular dated 31.03.2011 by making such documents acceptable as proof of identity and address, however, the same was made operational only with “immediate effect” that is leaving an ambiguity during the period 20.07.2010 to 31.03.2011.

6. While restoring the prepaid services by a circular letter dated 20.10.2010 it was directed that re-verification of all the prepaid subscribers should be completed within three months. It was, however, stated that after expiry of the said period no recharge would be allowed for unverified connection.

The first respondent by a circular letter dated 5.1.2011 clarified to DDG TERM Assam that the re-verification prior to recharge is waived off provided that re-verification is completed within 3 months’ of issue of these instructions. The instructions in this regard were issued on 20.10.2010. Therefore, the three months period for the same should commence from 20.10.2010. By a circular letter dated 2.2.2011 the period of completion of re-verification exercise was extended upto 31.3.2011. Only on 31.3.2011 the impugned circular letter was issued whereby an amount of penalty to be imposed was to be multiplied by four, as compared to the rate what was applicable to the rest of the country. Imposition of penalty, however, started from April, 2011 onwards.

7. The Petitioners further challenged the Circular dated 15.07.2011 whereby the Respondent No.1 had taken a decision that while the subscribers acquired on the basis of certificate issued by Village Panchayat Head and Caste and Domicile Certificates with photograph issued by State Governments as Proof of Identity and Address shall not be disconnected, penalty shall be imposed on the Telecom Operators for acquiring such customers on the basis of such documents.

8. The Petitioners also challenged the imposition of penalty on account of purported recharge granted to the pre-paid customers without re-verification.

9. The learned counsel for the respondent argued that under the terms and conditions of the license granted to the petitioners, the respondent has the authority to issue certain directions for which the licensee shall be bound to implement. The terms and conditions of the licence also provide that the licensor can debar usage of mobile terminals in certain areas of the country. Further, it shall be open to the licensor to restrict the licensee company from operating in any sensitive area from the National Security angle. The instructions issued on 20.07.2010 have been issued after consulting all the stake holders and all the concerned security departments.

10. The learned counsel further submitted that there were 23 items which were prescribed by a letter dated 07.10.2009 for the purpose of proof of address and proof of identity, however, for the J & K service area and for Assam and North East Service areas only 16 items were considered suitable for the purpose of proof of address and proof of identity. In fact, 8 items and not two were considered for deletion for this purpose as may be read below :

20.07.2010 Guidelines/Instructions for extension of pre-paid mobile services in J&K, Assam and North East Service Areas extending the security safeguards applicable in J&K Service Area to Assam and North East. Proof of Address / Proof of Identity Sl. Letter dated 20.01.10 / No. 07.10.09 20.07.2010 1 Passport Passport 2 Arms License Arms Licence 3 Driving License Driving License 4 Election Commission Election Commission ID Card ID Card* 5 Ration Card with Ration Card with address address 6 CGHS/ECHS Card CGHS/ECHS Card 7 Certificate of address Discontinued having Photo issue by MP/MLA/Group-A Gazetted Officer letter head 8 Certificate of address Discontinued with photo from Govt. recognized educational institutions (for students only) 9 Certificate of address Discontinued issued Village Panchayat head or its equivalent authority (for rural areas) 10 Water Bill (not older Discontinued than last three months) 11 Telephone Bill for Telephone Bill for Fixed line (not older Fixed line (not older than three months) than three months) 12 Electricity Bill for Discontinued Fixed line (not older than three months) 13 Income Tax Income Tax Assessment Order Assessment Order 14 Vehicle Registration Discontinued Certificate 15 Registered Sale / Discontinued Lease Agreement 16 Address card with Address card with photo issued by photo issued by Deptt. of Posts, Govt. Deptt. of Posts, of India Govt. of India 17 Current passbook of Current passbook of Post Office/ any Post Office/ any Scheduled Bank Scheduled Bank 18 Photo Identity Card Photo Identity Card having address (of having address (of Central Govt. /PSU or Central Govt./PSU or State Govt./PSU only) State Govt./PSU only) 19 Credit Card Statement Credit Card (not older than three Statement (not older months) than three months) 20 Caste and Domicile Discontinued Certificate with Address and photo issued by State Govt. like Assam and other states 21 Pensioner’s Card with Pensioner’s Card Address with Address 22 Freedom Fighter Card Freedom Fighter with address Card with address

23 Kisan Passbook with Kisan Passbook with address address Permanent residency card issued by J&K Government. * Only Voter’s identity cards (issued from 2008), which carry various security features such as hologram etc. are acceptable as proof of identity card address. Therefore, as many as 8 documents were discontinued from the list of proof of identity and address. Further, Voters I-Card issued from 2008 having Hologram only were to be accepted. The Petitioners are contesting only 2 documents. However, for rest 6 documents they are not contesting.

11. On the other hand, the learned counsel for the petitioner contended that the petitioner is not questioning the authority of the licensor to issue any guidelines or any instructions to the licensee in respect of the security aspect. However, what is being questioned is that the orders and instructions of the licensor should not be arbitrary and unreasonable.

12. The petitioner further contends that till 20.07.2010 for the proof of identification and address, certificate of photo identity issued by Village Panchayat Head and Caste and Domicile certificate with photo issued by State Government was being accepted as proof of identification and address. This is not understood as to how the same has been deleted. However, again vide circular dated 31.03.2011, the licensor made these documents acceptable for proof of identification and address. If the proof of identification and address on the basis of photo identity issued by Village Panchayat Head and Caste and Domicile certificate with photo issued by State Government was not posing any security risk till 19.07.2010 and when the same became valid again for the same purpose on 31.03.2011; how could this be a security risk for the period of just 8-9 months.

13. According to the learned counsel, for the interregnum period where the pre-paid connections have been given based on these two documents, the Term Cell of DOT has imposed huge penalty on the petitioners. In fact, by circular dated 31.03.2011, four times penalty is being imposed. The action of the Union of India should be such that there is close nexus between the action taken and the objective to be achieved by the said action. The penalty imposed on the operators should be proportionate and should not be unreasonable and perverse.

14. The learned counsel for the parties although have raised a number of contentious issues, basically the question which would arise for our consideration would be : (i) whether in a case of this nature, the doctrine of eclipse and/or principles analogous thereto shall be applicable; (ii) whether the interregnum period should be treated to be one where subscribers have illegally been given SIM cards; and (iii)

whether the doctrine of proportionality has any application to the facts and circumstances of the present case.

So far as the question of the interregnum period is concerned, prima facie it may give rise to two different situations : (i) The operators had made available prepaid connections relying on the basis of the documents which were not permitted and; (ii) Whether the process of re-verification upto 31.03.2011 were based on the said documents.

15. After hearing both the parties, we are of the view that the licensor has the authority to issue instructions to the licensee as to the manner in which proof of identity and proof of address is to be supplied. However, it cannot be denied that the licensor considered certain documents valid for the proof of identity and proof of address till 19.07.2010 and again considered suitable for the same purpose after 30.03.2010 inspite of special security consideration of North East and Assam Area. It is necessary to examine whether the deletion of certain items as POA and POI were on substantial consideration of security or these were deleted in mechanical manner without due consideration just because these items did not exist for J&K.

16. Another question which arises for consideration in this petition is as to whether the Central Government could have issued directions to the telecom companies from time to time to accept certain kinds of documents which are not relevant for the purpose of verification and re-verification of the customers and exclude the documents which are relevant.

It is contended by learned counsel appearing on behalf of the respondent that exclusion of the aforementioned three documents for the period in question was taken at the highest level, keeping in view the fact that in Jammu & Kashmir, North East and Assam are sensitive areas, the Central Government is entitled to take extra precaution in regard thereto.

It is beyond any doubt or dispute that the petitioners are prima facie bound to pay penalty for non-compliance of the guidelines issued by the Central Government.

At this stage it appears that no cogent reason has been assigned as to why same documents which were treated to be invalid for the purpose of customer verification for the period in question and then again found to be valid.

17. Before us, however, apart from COAI, the concerned operators have also filed petitions questioning the quantum of penalty levied on them. Legality and/or validity of such imposition must be gone into in details at the trial.

From the record it is difficult for us to arrive at even a tentative finding as to whether the penalty levied covers the period after 20.7.2010 or before the said date.

18. In fact, we have been shown in few cases that if POA and POI is considered on the basis of Gram Panchayat and caste certificate, the compliance will be more than 95%. However, we will have to see the factual aspects in each petition for each circle.

19. We are of the view that each petition requires detailed examination after filing of reply by the respondent. However, keeping in view the interest of both the parties into consideration, we are of the opinion that interest of justice will be sub-served if the petitioners are directed to pay the 25% of the penalty imposed by the respondent within a period of one week. This order would, however, be subject to any other or further order which may be passed by the Tribunal.

20. Idea Cellular, Vodafone, Dishnet and Reliance Communication have filed only one petition. The petitions filed by the aforementioned operators shall be confined to the State of Assam only. If the licensees intend to question the penalty imposed by the respondent on them in respect of North-Eastern states, they may file separate petitions.

……………….. (S.B. Sinha) Chairperson

……………….. (P.K.Rastogi) Member /NC/