VODAFONE IDEA LTD.GJ Vs UNION OF INDIA

The Petitioner has filed the present petition against the order of the Respondent dated 28.12.2012 wherein the Respondent has levied One Time Spectrum Charges (OTSC) for spectrum held by the incumbent telecom service provider. Further, the Respondent has demanded an amount of Rs.3,599.40 crores from the Petitioner as OTSC by its order dated 08.01.2013.

2. It is seen that by its order dated 28.12.2012 the Respondent has levied OTSC by invoking the power conferred by Section 4 of the Indian Telegraph Act, 1885 for GSM spectrum held in 900 MHz and 1800 MHz by Telecom service providers in terms of the following :- (i) For spectrum holding above 6.2 MHz (GSM) rates applicable for the period 01.07.2008 to 31.12.2012 shall be as per Schedule of rates given in Annexure.

(ii) For spectrum holding above 4.4 MHz (GSM), one time charge shall be effective from 01.01.2013 as per Schedule of rates given in Annexure Licensees may surrender spectrum beyond 4.4 MHz if they do not wish to pay the charge.

(iii) In respect of service areas Delhi, Mumbai, Karnataka and Rajasthan, the rates for 1800 MHz with effect from 01.01.2013 are provisional subject to adjustment against auction determined rate, when available.

3. The Petitioner has challenged the order of the Union of India inter alia on the following grounds :- (i) Imposition of OTSC on the spectrum already allocated to the Petitioner under the existing licence, for which the Petitioner has been paying the agreed amount on revenue sharing basis, is against the agreed terms of the contract and without consent of the contracting party;

(ii) The power under Section 4 of the Indian Telegraph Act cannot be exercised to unilaterally impose OTSC and that too in violation of the terms and conditions of the agreed contract between the parties;

(iii) The revenue sharing model offered by the licensor for charging the spectrum fee from the operators was a result of bilateral concluded contract.

(iv) Unilateral imposition of OTSC retrospectively is violation of the terms of the contract.

4. The Petitioner has further pointed out that the DoT had allocated different quantity of spectrum even beyond 6.2 MHz from time to time without any conditionality. For example, in case of Delhi and Mumbai 1.8 MHz additional spectrum was allotted as early as on 17.7.2002 beyond 6.2 MHz of spectrum. It is only in two circles i.e. in Tamil Nadu and U.P. East Service Area where additional spectrum was allotted on 30.7.2008 and 21.01.2009 wherein there was a condition of pricing as determined by the Government in future for spectrum beyond 6.2 MHz.

5. The matter was taken up for preliminary hearing on 21.01.2013 wherein the arguments of the Petitioner were heard on its interim prayer for staying the operation of the impugned order dated 28.12.2012 and consequent demand note dated 08.01.2013 issued by the DoT. The arguments of the Respondent and the Petitioner were again heard on 23.01.2013 but the same could not be completed and finally the matter was heard on 28.01.2013. As directed by this Tribunal, written submissions were submitted by the Respondent as well as by the Petitioner at the time of hearing.

6. To adjudicate on the issues under consideration, it is necessary to know the terms and conditions on which the additional spectrum beyond 4.4 MHz and beyond 6.2 MHz was allotted to the Petitioner, whether the Union of India has the authority to impose OTSC on the spectrum which had already been allotted to the Petitioner.

7. Initially a cumulative maximum of upto 4.5 MHz was allotted to CDMA operators. Within the same agreement, additional spectrum upto 6.2 MHz could also be made available to the operator subject to certain guidelines like the number of subscribers and traffic and other guidelines as prescribed from time to time.

8. The licensor under Clause 43.5 has the right to modify and amend the procedure of allocation of spectrum including quantum of spectrum at any point of time without assigning any reason. The issue before us for our consideration will be whether the power of licensor to modify the procedure of allocation of spectrum includes the power of licensor to change the price during the validity of the licence.

9. The Respondent has argued that the licensor has the right under Clause 13.2 of the licence agreement to modify any time the terms and conditions of the licence if in the opinion of the authority it is necessary or expedient to do so in the interest of general public or for the proper conduct of telegraph or on security consideration. The Telecom Regulatory Authority of India (TRAI), which is an expert body, has also recommended for charging One Time Spectrum Charges. According to the Respondent, maintaining level playing field among operators is a matter of public interest. Shri Chandhiok, the learned ASG has brought to my notice the order of the Hon. Supreme Court of India dated February 02, 2012 passed in Writ Petition (C) No. 423 of 2010 – Centre for Public Interest Litigation And Ors. Vs. Union of India and Ors. :- “85. As natural resources are public goods, the doctrine of equality, which emerges from the concepts of justice and fairness, must guide the State in determining the actual mechanism for distribution of natural resources. In this regard, the doctrine of equality has two aspects: first, it regulates the rights and obligations of the State vis-a-vis its people and demands that the people be granted equitable access to natural resources and/or its products and that they are adequately compensated for the transfer of the resource to the private domain; and second, it regulates the rights and obligations of the State vis-a-vis private parties seeking to acquire/use the resource and demands that the procedure adopted for distribution is just, non-arbitrary and transparent and that it does not discriminate between similarly placed private parties.”

10. It is seen from the order dated 28.12.2012 that if the operator is holding above 6.2 MHz spectrum, OTSC is being charged from 01.07.2008 onwards.

However, the OTSC is being levied prospectively from 01.01.2013 on holding above 4.4 MHz.

It is not understood on what basis the OTSC is being levied with effect from 01.7.2008 onwards. No document is produced to show the sanctity of the date i.e. 01.07.2008.

11. There are lot of pertinent questions raised in the petitioner regarding facts of allocation of spectrum, terms and conditions of such allocation and substantial question of law about the authority of the DoT to impose such one time spectrum charges.

12. The Respondent has issued a demand notice to the Petitioner on 08.01.2013 and requested the Petitioner to make payment within twenty one days from that day, which will be over by 29.01.2013. Although it is mentioned in the demand letter that if the Petitioner fails to make payment, interest would be charged on monthly compound basis. The Petitioner apprehends that the Respondent may take other coercive action against the Petitioner if the amount is not paid.

13. During the hearing, the Petitioner has submitted that on Writ Petition (Lodging) No.168 of 2013 filed by Idea Cellular Ltd., the Hon. High Court of Judicature at Bombay has passed the following order on 24th January, 2013 :- “2. Prima-facie it appears that the petitioners have Already been granted licences and spectrum for different areas the validity whereof extends from the year 2015 onwards. The main question is whether the respondents are entitled to alter the terms, especially the financial, thereof under section 4 of the Indian Telegraph Act, 1885. Prima-facie it appears that the licences and spectrum having been granted, the respondents are not entitled to increase the financial burden. This of-course is only a prima facie view. 3. There is a demand for an additional amount of about Rs.2200.00 crores payable in installments. The first installment amount of about Rs.727.00 crores is payable on 28.01.2013. The petitioner shave already furnished guarantees in respect of the said licences and spectrum as required of about Rs.7000.00 crores to Rs.12,000.00 crores. 4. In the circumstances, till 01.03.2013, the respondents shall not adopt any coercive action for the alleged non-payment pursuant to the impugned orders.”

14. Mr. Abhishek Singhvi, learned Senior Counsel appearing on behalf of the Petitioner has further stated that the Bombay High Court has passed similar interim order in case of Bharati. Similarly, Aircel, another service operator got stay order from Madras High Court.

15. The Petitioner has raised substantial questions of law and facts in its petition. The Respondent needs to file its reply on the interim prayer made by the Petitioner. Apart from the argument advanced by the parties, it is necessary to get the answers on following questions :- (i) The power of the Union of India to impose OTSC during the currency of the licence agreement for already allotted spectrum;

(ii) CMTS/UASL licence agreement provided for allocation of spectrum upto 6.2 MHz. On what consideration, on what terms and for what period the spectrum was allotted beyond 6.2 MHz;

(iii) Although the spectrum beyond 6.2 MHz was allotted even earlier than 01.7.2008 in many circles, why OTSC with effect from 01.7.2008;

(v) The licence agreement itself provide for allocation of spectrum upto 6.2 MHz; why O.T.S.C. for quantity beyond 4.4 MHz with effect from 01.01.2013.

16. The Respondent is directed to file its reply on interim prayer within two weeks. The Petitioner may file its rejoinder to the said reply within one week thereafter. The matter will be heard on 25.02.2013 on the interim prayer under the heading “For Orders”.

17. Keeping in view the principle of balance of convenience and irreparable injury, by way of an ad-interim order it is hereby directed that no coercive action will be taken by the Respondent till 25.02.2013 for enforcement of its demand raised in its letter dated 08.01.2013.

……………….. (P.K.Rastogi) Member rkc