Union Of India vs Sistema Shyam Teleservices Limited

2026 INSC 174 REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No. 12219 OF 2018

Union of India … Appellant

versus

Sistema Shyam Teleservices Limited … Respondent

JUDGMENT

SANJAY KUMAR, J

1. By order dated 10.05.2018, the Telecom Disputes Settlement and

Appellate Tribunal, New Delhi, disposed of Telecommunication Petition No.

63 of 2016 filed by the respondent, Sistema Shyam Teleservices Limited,

purportedly implementing certain directions of this Court, as per its own

interpretation. Aggrieved by such interpretation, the Union of India through

its Department of Telecommunication (DoT), filed the present appeal. Signature Not Verified Digitally signed by babita pandey Date: 2026.02.20

2. In substance and in effect, this appeal turns upon the judgment dated 17:31:50 IST Reason:

02.02.2012 of this Court in Writ Petition (Civil) Nos. 423 of 2010 and 10 of 1 2011, reported in Centre for Public Interest Litigation and others vs.

Union of India and others1, and the later orders passed by this Court on

applications filed in the context thereof. By the aforestated judgment, this

Court had declared illegal the grant of Unified Access Service licences and

allotment of 2G Band Spectrum to various parties, including the respondent

herein, and quashed the same. However, this Court ordered that this

direction would become operative only after four months. This was not to

benefit the licensees whose licences stood quashed, but in the interest of

the general public who were dependent upon the telecom services offered

by those licensees, so that such services would not be abruptly disrupted.

The intention of this Court was that, during the interval of those four months,

the Telecom Regulatory Authority of India should undertake auction of 2G

Band Spectrum in the 22 service areas, as was done for the allocation of

Spectrum in the 3G Band, and make recommendations for grant of licences.

The Government of India was to consider such recommendations and take

an appropriate decision thereon within one month so as to issue fresh

licences. Further, this Court also imposed costs upon the licensees who had

been benefited at the cost of the public exchequer. Significantly, the

respondent was one amongst them and had to pay costs of ₹50 lakh.

1 (2012) 3 SCC 1

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3. However, as the process of the fresh auction could not be concluded

within the time frame contemplated by this Court, several applications came

to be filed by the DoT itself seeking extension of time. The first such

application was the DoT’s I.A. No. 5 of 2012. However, the prayer made by

the DoT therein was accepted in part and this Court made it clear that the

DoT had to finalize the auction on or before 31.08.2012. The existing

licensees were held entitled to continue to operate till 07.09.2012. Thereafter,

the DoT filed I.A. No. 8 of 2012 seeking further extension of time. It stated

that the auction process would start on or before 12.11.2012 and sought time

to complete the auction process in a further period of 40 days therefrom. This

Court accepted the prayer to the extent of allowing time till 11.01.2013 for

conducting and completing the auction and the existing licensees were held

entitled to continue to operate till 18.01.2013. The I.A. was kept pending and

was taken up again on 14.01.2013. It was, however, adjourned on that date

to 04.02.2013 and the existing licensees were allowed to continue with their

operations till the next date of hearing. The matter was then taken up on

15.02.2013. The order passed by this Court in I.A. Nos. 8 and 11 of 2012 on

15.02.2013 forms the basis for the present litigation. The order reads thus:

‘(i) The entire spectrum released as a result of quashing of the licences on 2.2.2012 should be auctioned without further delay.

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(ii) Since, the issue relating to allotment of spectrum in 900 MHz. band was not subject matter of consideration in Writ Petition Nos.423/2010 and 10/2011, we deem it proper to make it clear that judgment dated 2.2.2012 will have no bearing on the litigation, if any, filed in the matter of allotment/re-allotment of spectrum in 900' MHz, band and the competent judicial/quasi-judicial forum shall be free to adjudicate upon the pending matters or which may be filed hereinafter in relation to the allotment of spectrum in 900 MHz. band and connected issues.

(iii) Such of the licensees, who continued operation after 2.2.2012, whether or not they gave bid in the auction conducted on 12.11.2012 and 14.11.2012, shall pay the reserve price fixed by the Government for the purpose of conducting auction in November 2012.

(iv) The licensees, who did not give bid in the auction conducted on 12.11.2012 and 14.11.2012 or who remained unsuccessful shall forthwith discontinue their operations in the concerned circles/areas and the successful applicants should be allowed to operate in those circles/areas.

(v) The issue relating to liability of the licensees, who discontinued their operations between 02.02.2012 and this date shall be decided separately.’ (emphasis is ours)

4. Pursuant to clause (iii) of the above order dated 15.02.2013, the DoT

issued show-cause notice dated 17.11.2014 to the respondent, followed by

demand notice dated 22.09.2016. By the show-cause notice dated

17.11.2014, the DoT pointed out that the respondent had continued with its

services up to 02.10.2013 in 8 circles and called upon the respondent to

explain why the reserve price of ₹636.90 crore, along with interest thereon,

should not be recovered from it, in terms of the order dated 15.02.2013

passed by this Court. The DoT’s demand notice dated 22.09.2016 quantified

the amount due, along with interest payable thereon, at ₹820.5242 crore and

called upon the respondent to deposit the same within 15 days.

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5. In the meanwhile, the respondent filed I.A. No. 14 of 2013 in W.P. (C).

No. 423 of 2010 before this Court, praying that it should be allowed to

continue with its operations beyond 18.01.2013 till conclusion of the fresh

auction process, allocation of 800 MHz Spectrum and commencement of

operations by the successful bidders. By order dated 11.03.2013, this 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.

This Court, accordingly, directed that the respondent would be entitled to

continue to operate its services in the 8 service areas for which its bid had

been accepted and disposed of its application.

6. Assailing the aforestated show-cause notice dated 17.11.2014 and

demand notice dated 22.09.2016, the respondent filed Telecommunication

Petition No. 63 of 2016 before the Telecom Disputes Settlement and

Appellate Tribunal, New Delhi (hereinafter, referred to as ‘the TDSAT’). Its

prayer therein was to declare and hold both the notices to be illegal and to

quash and set aside the same. Meanwhile, the DoT issued revised demand

notice dated 14.02.2017, whereby the respondent was called upon to pay

₹926.5089 crore (₹584.94 crore towards the reserve price from 02.02.2012

to 02.10.2013 along with ₹341.5689 crore towards the interest thereon from

02.02.2012 to 02.10.2013).

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7. By its order dated 10.05.2018, the TDSAT disposed of the petition with

directions. Therein, the TDSAT took note of the events and developments

since the passing of the judgment dated 02.02.2012 by this Court and opined

that the main issue was as to the ‘starting date’ for raising a demand in terms

of the direction of this Court in its later order dated 15.02.2013. Observing

that the respondent would fall within the ambit thereof and was, therefore,

required to pay the reserve price as per the said order, the TDSAT opined

that this Court had not specified the date from which the reserve price was

to be paid. Based on this understanding, which we find to be wholly

erroneous, the TDSAT opined that the licences and the allocation of

Spectrum to such licensees remained legally operative under the judgment

of this Court till 01.06.2012 initially. Reference was then made by the TDSAT

to the order dated 24.04.2012, whereby this Court had permitted the existing

licensees to continue to operate till 07.09.2012; the order dated 27.08.2012,

granting extension till 18.01.2013; and the order dated 14.01.2013, further

extending the time for licensees to continue with operations till 15.02.2013.

The TDSAT concluded from these orders that the existing licensees were

allowed to continue to operate and, therefore, no charge, in terms of the

reserve price, could be levied upon the respondent by the DoT till the last

extension, i.e., till 15.02.2013.

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8. The TDSAT then considered the order dated 15.02.2013 passed by

this Court. Referring to the affidavit dated 08.01.2013 of R. Chandrashekhar,

Secretary, DoT, which found mention therein, the TDSAT rejected the

argument of the respondent that the DoT was estopped from demanding the

levy from 02.02.2012. Having stated so, the TDSAT, however, opined that as

the existing licensees were permitted to continue with their operations till

15.02.2013 by this Court and it was on that date that the direction was issued

for payment of the reserve price, the effective date for commencement of

such liability would be 15.02.2013. The respondent’s argument that the later

order dated 11.03.2013, passed by this Court upon its I.A. No.14 of 2013,

implied that the respondent was not bound by the condition imposed by the

earlier order dated 15.02.2013 was also rejected by the TDSAT.

9. The TDSAT then considered the question as to what would be the ‘end

date’ for such levy. Noting that the respondent was successful in the auction

held on 11.03.2013 in relation to 8 circles, the TDSAT observed that the DoT

was not entitled to continue to charge the respondent till 02.10.2013, when

it was actually issued a new licence, as the Letter of Intent (LoI) was issued

to the respondent for the 8 circles in question on 30.04.2013 itself. The

TDSAT further noted that the said LoI specifically provided that the effective

date for reckoning the term of 20 years for which the Spectrum had been

7 acquired by the respondent, through such auction, started from the date of

the LOI. The TDSAT, accordingly, concluded that the end date for levy of the

reserve price would be 30.04.2013 and not beyond. For the remaining 13

circles that had been under the operation of the respondent, the TDSAT

observed that the end date would be the date of stopping of operations, i.e.,

23.03.2013. In consequence, the respondent was held liable to pay the

reserve price from 15.02.2013 to 30.04.2013 in respect of 8 circles and from

15.02.2013 to 23.03.2013 for the remaining 13 circles.

10. As regards the interest payable by the respondent, the TDSAT noted

that the revised demand notice dated 14.02.2017 levied interest from

15.02.2013 itself, unlike the earlier demand notice dated 22.09.2016 which

proposed the levy of interest from 17.11.2014, i.e., the date of the DoT’s

show-cause notice. In that regard, the TDSAT noted that the DoT could have

issued the demand at any time after 15.02.2013, but it chose to do so only

in November, 2014, when the show-cause notice came to be issued. Further,

the said notice gave a window of 21 days to explain why the principal and

interest amounts should not be recovered. Therefore, per the TDSAT, the

amount did not become recoverable till 08.12.2014, upon expiry of those 21

days. The TDSAT, accordingly, concluded that interest would be payable only

from that date and not earlier. The DoT was directed to issue a revised

8 demand in accordance with its directions, preferably within four weeks, and

the respondent was given three weeks’ time from the date of issuance of the

revised demand to make the payment. If the respondent failed to make the

payment within that time, the DoT was held entitled to charge interest for the

delayed period. With these directions, the TDSAT disposed of the petition.

11. Pursuant to the directions of the TDSAT, the DoT issued revised

demand notice dated 12.06.2018, 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 dated

10.05.2018 of the TDSAT and was without prejudice to any legal recourse

that the DoT may resort to. The respondent, admittedly, paid this amount.

12. The aforestated sequence of events puts it beyond the pale of doubt

that the existing operators, including the respondent herein, were given a

lease of life, despite their licences being quashed, only to ensure that the

general public was not inconvenienced by disruption of the telecom services

that were being provided by them. However, the expectation of this Court

that the process of a fresh auction would only take four months proved

illusory, as the DoT sought extensions therefor, time and again. In

consequence, the licensees whose licences already stood quashed were

permitted to continue with their operations, only to protect the interest of the

9 general public and not for the benefit of such licensees. However, when this

Court was informed of the fact that an auction had been held in November,

2012, but no bids had been received, and this Court was told that an auction

was proposed to be conducted on 11.03.2013, this Court directed that the

Spectrum released as a result of the quashing of licences on 02.02.2012

should be auctioned without further delay.

13. 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

10 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.

14. In this regard, we may note that the understanding of the TDSAT that

this order did not indicate the ‘starting date’ is factually incorrect. This Court

specifically directed that those licensees who had continued their operations

‘after 02.02.2012’ should pay the reserve price fixed for the auction held in

November, 2012, and it is manifestly clear from the context that such liability

commenced from 02.02.2012 itself. This aspect was, therefore, not open to

interpretation and inquiry, whereby the TDSAT could have applied its own

logic and decided that the commencement date would be 15.02.2013. Had

that been the intention, this Court would have simply said that such liability

would commence from the date of that order. The very fact that this Court

referred to the date ‘02.02.2012’ in the context of the licensees who

continued with their operations, clearly demonstrates that 02.02.2012 was

the commencement date for levy of the liability in terms of that order.

15. As regards the concluding date, we find ourselves in agreement with

the TDSAT’s finding that, once the LoI was issued to the respondent on

30.04.2013, stipulating that the 20 years term thereunder commenced from

11 that date, the question of the levy of this liability continuing beyond that date

till the issuance of the licence in October, 2013, does not arise. The LoI

issued by the DoT in this regard negates the argument to the contrary. More

so, as the order dated 11.03.2013 passed by this Court in I.A. No. 14 of 2013

noted the fact that the respondent had emerged successful in the auction

held for 8 circles and held the respondent entitled to continue operations in

those 8 circles. This was, therefore, not a case of a new entrant who had to

await 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 30.04.2013 were protected by the order dated

11.03.2013 of this Court and the clear terms of the LoI, which categorically

stated that the 20 year-term commenced from the date of issuance thereof.

16. Insofar as the issue of interest is concerned, we find that the TDSAT

was correct in permitting the DoT to levy interest only from the expiry of the

time stipulated in the show-cause notice dated 17.11.2014. 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.

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17. On the above analysis, we hold that the respondent is liable to pay the

reserve price fixed for the auction held in November, 2012, from 02.02.2012

till 30.04.2013 in respect of the 8 circles for which its bid was accepted in

March, 2013, and from 02.02.2012 till 23.03.2013 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 appeal is allowed in the aforestated terms.

Parties shall bear their own costs.

……………………...J [SANJAY KUMAR]

……………..………J [K. VINOD CHANDRAN]

New Delhi;

February 20, 2026.

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