Bharti Airtel Limited And Anr. vs Union Of India
- Court
- Bombay High Court
2026:BHC-OS:12524-DB
WP1461&2029_13.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO.1461 OF 2013
Bharti Airtel Limited and another … Petitioners
Vs.
Union of India … Respondent
WITH
WRIT PETITION NO.2029 OF 2013
Vodafone Idea Limited … Petitioner
Vs.
Union of India and others … Respondents
---
Mr. Harish Salve, Senior Advocate with Mr. Darius Khambata, Senior Advocate
a/w. Mr. Fereshte Sethna a/w. Ms. Anuradha Dutt, Ms. Suman Yadav, Ms. Nikhita
Suri, Mr. Prakalathan Bathey, Mr. Mohit Tiwari, Ms. Naira Jejeebhoy, Ms. Payal
Nayak, Mr. Gurudas Khurana, Ms. A. Das and Ms. Sushmita Singh Chauhan i/b.
DMD Advocates for Petitioners in WP/1461/2013.
Mr. Aspi Chinoy, Senior Advocate a/w. Ms. Sneha Jaisingh, Ms.Jaidhara Shah
and Mr. Manan Parekh i/b. M/s. Bharucha & Partners for Petitioner in
WP/2029/2013.
Mr. Anil Singh, Additional Solicitor General a/w. Mr. Aditya Thakkar, Mr. Gauraj
Shah, Mr. D. P. Singh, Mr. Adarsh Vyas, Ms. Yugandhara Khanwilkar,
Ms.Simantini Mohite, Ms. Siddha Pamecha, Mr. Krishnakant Deshmukh,
Ms.Rama Gupta, Mr. Chaitanya Chavan i/b. Mr. PSM Tripathi for Respondent -
UOI in both the Petitions.
CORAM : MANISH PITALE &
SHREERAM V. SHIRSAT, JJ.
Reserved on : APRIL 09, 2026
Pronounced on: JUNE 08, 2026
JUDGEMENT : ( Per Justice Manish Pitale )
. The petitioners are cellular mobile service operators, aggrieved by
imposition of one-time spectrum charge in the year 2012 for spectrum
held above 6.2 MHz from the year 2008 onwards. The petitioners claim
that the respondent Union of India has no power to impose such one-
Digitally
signed by
PRIYA KAMBLI
Date:
2026.06.08
17:48:15
+0530
PRIYA 1/68
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time spectrum charge and that too retrospectively. The petitioners
emphasize that neither is such source of power found in the relevant
statutory provision i.e. Section 4 of the Telegraph Act, 1885 nor is it
found in the license agreements for allocation and use of spectrum
executed between the petitioners and the said respondent from time to
time.
2. The petitioners claim that such imposition of one-time spectrum
charge is, therefore, rendered unsustainable. It is relevant to note that in
both the petitions, upon a prima facie view being taken in the matter,
this Court had granted interim relief in favour of the petitioners. Upon
completion of pleadings and submission of written notes of arguments
along with convenience compilation of documents, the petitions are
taken up for final hearing and disposal.
3. Rule. Rule made returnable forthwith and with the consent of the
learned counsel for the parties, the petitions are taken up for final
hearing.
CHRONOLOGY OF EVENTS
4. In the year 1994, the Respondent Union of India, through the
Department of Telecommunications, invited participation of private
sector enterprises in cellular mobile telephone services. In that context,
National Telecom Policy 1994 was formulated and tenders were issued
for awarding licenses to private sector enterprises. Pursuant thereto, the
petitioners participated in the process and license agreements were
executed between the Department of Telecommunications and the
petitioners as the cellular mobile service operators. The clauses of the
license agreements executed between the petitioners and the Department
of Telecommunications were identical and therefore, reference is being
made to license agreement dated 29.11.1994 executed between the
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petitioner Bharti Airtel (petitioner in Writ Petition No.1461 of 2013) and
the Department of Telecommunications. The said license agreement
consisted of 13 clauses and 4 Schedules i.e. Schedules ‘A’ to ‘D’
pertaining to various aspects of providing cellular mobile telephone
services. During the course of discussing the rival submissions,
reference will be made to the relevant clauses of the license agreements
as well as the Schedules. But, it is relevant to note here that clause 13(ii)
reserved a right in the Department of Telecommunications, representing
the Union of India, to modify the terms and conditions of the license
covered under Schedules ‘A’ to ‘D’ if in the opinion of the authority, it
was necessary or expedient to do so in the interest of the general public
or for the proper conduct of telegraphs or for security considerations.
Schedule ‘C’ contained clauses pertaining to license fee, which was
fixed as per clause 19.1 and also the necessity of taking a separate
license as per the Wireless Planning and Co-ordination (WPC) Wing of
the Ministry of Communications under clause 20.1 onwards of Schedule
‘C’. Thus, the petitioners were required to pay a fixed license fee and
also a separate amount towards royalty for use of spectrum as per the
terms and conditions specified by the WPC Wing. It is relevant to note
that the rates were fixed and they were not on revenue share basis.
5. In the year 1999, the respondent framed a new policy i.e. National
Telecom Policy, 1999 (NTP-99). The respondent was required to frame
the said new policy in the year 1999, upon realizing that the objectives
of the Telecom Policy of the year 1994 could not be achieved and that
the exercise of privatization had not achieved entirely satisfactory
results. It was found that despite rolling out of the cellular mobile
networks in Metros and States, the operators, like the petitioners, found
that the actual revenue realized by the projects was far short of the
projections, despite the fact that the operations had just commenced. The
respondent Union of India realized that if necessary steps were not taken
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in the light of the experience under the Telecom Policy of the year 1994,
further development of the sector would also be adversely affected, and
therefore, NTP-99 was formulated. The respondent also realized that
there were far-reaching developments in the telecom, IT, consumer
electronics and media industries worldwide and that, there was a need
for convergence of markets and technologies for realignment of the
industry. In that light, NTP-99 was formulated with specific objectives
enumerated therein, including the objective of achieving efficiency and
transparency in spectrum management, to encourage development of
telecom facilities in remote, hilly and tribal areas of the country, as also
to create a modern and efficient infrastructure for convergence of IT,
media, telecom and consumer electronics for propelling India into
becoming an IT superpower.
6. Under the said NTP-99, the basis of payment of license fee
underwent a radical change and now the license fee was stipulated to be
paid on revenue share basis. The operators like the petitioners would
also have to pay specific amounts for usage of spectrum and this too
would be based on revenue sharing. Apart from this, operators like the
petitioners were required to pay a one-time entry fee. In the light of the
said NTP-99, the respondent Union of India, through the Department of
Telecommunications, offered a migration package to all cellular
operators, including the petitioners. In that light, a communication dated
22.07.1999 was addressed to all cellular operators specifying the cut-off
date of migration to NTP-99 regime as 01.08.1999. It was further
specified that the operators opting for migration would be required to
pay one-time entry fee, being equivalent to the license fee due and
payable by the existing licensees / cellular operators upto 31.07.1999. It
was specified that going forward, license fee would be a percentage of
the gross revenue under the license. The other conditions included the
term of the license being increased to 20 years from the date of the
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license agreement instead of 10 years, as provided earlier and that, upon
migration, the licensees would forego the right of operating in the
regime of limited number of operators as per the existing license and
that the licensees would operate in a multi-poly regime. It was further
specified that upon acceptance of the migration package, all disputes
raised by the licensees against the Union of India would stand
withdrawn.
7. On 23.06.2000, the Telecom Regulatory Authority of India
(TRAI) established under the Telecom Regulatory Authority of India
Act, 1997, sent a communication to the Secretary of Department of
Telecommunications in the context of references pertaining to NTP-99.
In the said communication, the TRAI, inter alia , stated that the revenue
share parted with as license fee represented a payment for frequency
spectrum, which was a highly limited natural resource. The petitioners
emphasized on the said statement and claimed that sharing revenue as
license fee and payment of one-time entry fee for migration to NTP-99,
represented payment towards spectrum, which is a limited natural
resource.
8. On 24.10.2000, TRAI recommended allotment of additional
frequency to existing operators like the petitioners. In this backdrop, the
respondent Union of India, through the Department of
Telecommunications, addressed letters to cellular operators like the
petitioners with regard to amendment of license agreements as a
consequence of migration to the revenue share regime under NTP-99.
Such a communication dated 29.01.2001 was addressed to the petitioner
Bharti Airtel Limited, which specified the nature of amendments in the
license agreements, including the basis of charging license fee,
provisionally fixed at 15% of gross revenue, period of license being
increased to 20 years, sharing of infrastructure in the area of operation
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and other such factors. It was specified in the said communication that
the other terms and conditions of the license agreement would remain
unchanged.
9. Thereupon, the respondent Union of India, through the
Department of Telecommunications, WPC Wing, issued orders dated
22.09.2001, 01.02.2002 and 18.04.2002. The petitioners have relied
upon the contents of these orders. A perusal of the same would show that
allotment of any additional bandwidth beyond 4.4 MHz was to attract
additional license fee and royalty in the form of increased revenue share.
10. On 23.08.2002, the Cellular Operators Association of India
(COAI), of which the petitioners are members, communicated to the
respondent Union of India through the Department of
Telecommunications that its members accepted the spectrum charges on
percentage revenue basis and accordingly necessary action was being
taken to withdraw all legal proceedings instituted in courts and the
Telecom Dispute Settlement and Appellate Tribunal (TDSAT).
Accordingly, all such legal proceedings stood withdrawn. On
29.07.2003, a Committee constituted by the Department of
Telecommunications, for efficient use of spectrum by cellular services,
submitted its report making various observations. It was recommended
that additional spectrum could be allotted even beyond 10 MHz upto 15
MHz. The petitioners emphasize that even this report nowhere
recommended charging any amount towards one-time spectrum charges.
11. On 27.10.2003, the TRAI recommended introduction of Unified
Access Services (UAS) licensing regime. It was observed that migration
to NTP-99 had resulted in huge growth in subscriber base, thereby
resulting in increased income to the Government due to revenue share
paid by the operators like the petitioners as license fee, instead of fixed
annual license fee under the earlier regime. On 11.11.2003, the
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Department of Telecommunications issued guidelines for UAS license.
These guidelines, inter alia , specified that the existing operators, after
migrating to a UAS license, would continue to provide services in
already allocated / contracted spectrum with freedom to use any
technology without restriction and that no additional entry fee would be
charged on the operators for migration to the UAS license. In this
backdrop, the petitioners and other operators entered into license
agreements for various areas in the year 2004-05. Copies of some of
these agreements as samples have been placed on record by the
petitioners. The terms and conditions incorporated in the schedules
annexed to these agreements provide in detail about various matters. The
financial conditions clearly stipulated that no additional entry fee was to
be charged on the operators like the petitioners for migration to the UAS
license and that the license fees would be payable annually @10% of the
Adjusted Gross Revenue (AGR), excluding spectrum charges. It was
specified that separate spectrum charges would be paid by the licensees
like the petitioners. It was also specified that any additional bandwidth
beyond 4.4 MHz, if allotted, would attract additional license fee as
revenue share (typically 1% additional revenue share if bandwidth
allocated was upto 6.2 MHz). One of the conditions reserved the right of
the licensor i.e. the Department of Telecommunications to modify any of
the conditions in the aforementioned three contingencies pertaining to
public interest or interest of the security of the State or for the proper
conduct of telegraphs.
12. On 11.08.2005, a committee under the Chairmanship of the
Wireless Advisor of the WPC Wing of Department of
Telecommunications gave recommendations concerning spectrum
related issues. One of the recommendations, upon which the petitioners
have placed emphasis, records that no additional one-time charge or
entry fee should be taken from the existing service providers like the
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petitioners as it would enable them to roll out their services faster and
also to offer the services at affordable tariffs. It was clarified that such
service providers should be required to pay revenue share for spectrum
charges based on the total spectrum with them. The subsequent
guidelines for UAS license dated 14.12.2005 issued by the Department
of Telecommunications also did not refer to any one-time spectrum
charge and instead provided for levying recurring spectrum charges on
revenue share basis, to be notified separately from time to time, by the
WPC Wing. Thereafter, on 28.08.2007, the TRAI gave its
recommendations on review of license terms and conditions. This
document contained observations to the effect that imposition of an
additional acquisition fee for quantum of spectrum beyond the
thresholds of 6.2 MHz for GSM and 5 MHz for CDMA may not be
legally feasible in view of the higher level of usage charges being
collected by the Government and the necessity of further penetration of
wireless services in semi-urban and rural areas where affordability of
services to the common man was a key to further expansion. It was
further specifically recommended that one-time spectrum charge would
be paid for getting additional spectrum beyond 10 MHz. The petitioners
have placed much emphasis on the said portions of the document as they
admittedly were allocated spectrum only upto 10 MHz. On 19.10.2007,
the respondent Department of Telecommunications issued a press release
in line with the aforementioned recommendations of the TRAI by stating
that a spectrum enhancement charge, in addition to annual spectrum
charges based on revenue share, could be levied at the time of additional
spectrum allotment to the licensees beyond 10 MHz. Thereafter
additional spectrum was allocated to the petitioners for various circles
and copies of the orders have been placed on record.
13. In this backdrop, on 09.07.2008, the respondent Department of
Telecommunications wrote to the TRAI, stating that there was a need for
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collecting one-time spectrum enhancement charges beyond 6.2 MHz. On
16.07.2008, the TRAI sent a communication to the respondent agreeing
with the proposal for enhancement of spectrum usage charges. But, on
the proposal to levy one-time spectrum charge beyond 6.2 MHz, the
TRAI sought clarifications from the respondent. It is relevant to note
that in the meanwhile, the COAI of which the petitioners are members
had challenged the press release dated 19.10.2007, proposing imposition
of spectrum enhancement charge beyond 10 MHz. By order dated
31.03.2009, the TDSAT held against the COAI primarily on the basis
that the operators had no vested right for spectrum beyond 6.2 MHz. The
petitioners claim that the aforesaid observation was made on the basis of
clause 43.5 of UAS license extracted in the order of TDSAT, which was
materially different from the said clause of the migrated licenses issued
to the petitioners. This aspect would be considered in this judgement
while considering the rival submissions. The respondent, in the
meanwhile, appointed a committee under the chairmanship of the then
Additional Secretary of the Department of Telecommunications
Mr.Subodh Kumar, to submit a report regarding allocation of access
spectrum and pricing. The committee in its report, inter alia ,
recommended that an option should be given to the licensees to pay an
upfront charge for spectrum beyond 6.2 MHz from the date they exercise
such an option. It was further recommended that if such an option was
exercised, the annual spectrum usage charges for the spectrum held
should be 3% of AGR instead of the higher rate being levied at that point
in time. The recommendations of this committee have been referred to
and arguments have been addressed by the rival parties, which shall be
dealt with in this judgement.
14. In this backdrop, on 11.05.2010, the TRAI submitted its
recommendations on spectrum management and licensing framework. It
was in these recommendations that for the first time, the TRAI
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recommended one-time spectrum charge on spectrum held beyond 6.2
MHz. According to the petitioners, this recommendation appeared to be
contradictory to the earlier recommendations.
15. It is relevant to note that the respondent specifically relies on
certain communications / orders issued from the year 2008 onwards,
wherein it was indicated that a charge would be levied for grant of
additional spectrum. The petitioners raised objections to the said
recommendations of the TRAI. In the meanwhile, on 25.02.2010, the
respondent issued an order revising the spectrum charges. A bunch of
petitions were filed before the TDSAT challenging the said order. On
01.09.2010, the TDSAT dismissed the petitions, upholding the increased
charges imposed by the respondent. The said order of the TDSAT was
challenged before the Supreme Court and by an order dated 22.10.2010,
the Supreme Court stayed the order of TDSAT subject to certain
conditions.
16. In this backdrop, on 02.02.2012, the Supreme Court passed its
judgement in the case of Centre for Public Interest Litigation and others
Vs. Union of India , (2012) 3 SCC 1 , also known as the 2G Spectrum
case . It is relevant to note here that the said judgement did not deal with
licenses granted prior to 10.01.2008. On 08.11.2012, the Union Cabinet
took a decision directing that one-time charge would be levied upon all
spectrum holdings beyond 4.4 MHz pertaining to existing operators at
2012 auction determined price. It was further directed that a one-time
charge would be levied for spectrum held beyond 6.2 MHz from July
2008 onwards. This was followed by the impugned decision dated
28.12.2012 of the respondent through its Department of
Telecommunications (WPC) Wing, specifying the rates at which the one-
time spectrum charge would be levied for spectrum held above 6.2 MHz
for the period 01.07.2008 to 31.12.2012. The respondent invoked
Section 4 of the Telegraph Act while issuing the said order.
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17. Consequently, the respondent issued demand notices to the
petitioners, specifying the amounts payable by the petitioners towards
one-time spectrum charges.
18. Being aggrieved by the said orders / decisions and the demand
notices, the petitioners filed the present writ petitions before this Court
in January 2013. It is an admitted position that in these petitions, an
interim order has been operating to the effect that no coercive action is
to be taken against the petitioners in pursuance of the impugned orders /
decisions, during the pendency of the petitions.
19. During the pendency of these petitions, on 11.08.2016, a Division
Bench of the Madras High Court upheld the impugned decisions in a
challenge raised by a cellular operator i.e. Aircel. A challenge raised to
the said judgement is pending in the form of C.A.No.2230-2231 of 2017
before the Supreme Court. The respondent heavily relied upon the said
judgement of the Madras High Court. During the pendency of these
petitions, the respondent issued revised demand notices to the
petitioners. Certain orders have been passed by the TDSAT in the
context of the one-time spectrum charges and reference is made to the
orders dated 04.02.2019 and 04.07.2019. Both the orders have been
challenged before the Supreme Court and the challenge is pending. The
pleadings in the present petitions were completed in the meanwhile and
upon filing of convenience compilations of documents, the petitions
were taken up for hearing.
SUBMISSIONS
20. Mr. Haresh Salve, learned senior counsel and Mr. Darius
Khambata, learned senior counsel appeared on behalf of the petitioner -
Bharti Airtel Limited in Writ Petition No.1461 of 2013 and made the
following submissions:
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(a) It was submitted that the impugned decisions and demand
notices issued by the respondent, imposing one-time
spectrum charge, are wholly unsustainable as there is no
source of power with the respondent to levy such charge
and that too, retrospectively for the period from 2008 to
2012. The learned senior counsel referred to the Telecom
Policy of the year 1994 and NTP-99, as also the license
agreements executed and amended subsequently, to
contend that there was no source of power available to the
respondent to have issued the impugned decisions and
demand notices. On this basis, it was contended that the
impugned decisions and demand notices were rendered
unsustainable and that they deserved to be set aside.
(b) It was submitted that in terms of the license issued as per
the Telecom Policy of the year 1994, a fixed license fee
was chargeable under clause 19 of Schedule C to the
license agreement and a separate license was required to be
obtained from the WPC Wing of the respondent for making
payment towards spectrum usage under clause 20 of
Schedule C to the license agreement. This regime
underwent a significant change under NTP-99, wherein the
concept of revenue sharing for payment of license fee was
introduced. It was further submitted that when cellular
operators like the petitioners herein accepted the migration
package under NTP-99, they also paid entry fee equivalent
to license fee due and payable by the existing licensees
upto 31.07.1999. On this basis, it was submitted that
payment of entry fee and license fee, as percentage of gross
revenue from 01.08.1999, was the payment made for
allocation of spectrum. Since there was no dispute about
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the petitioners having paid the said amounts, there was no
question of liability to pay any further amount for
allocation of spectrum.
(c) The learned senior counsel referred to the UAS licence
regime and the specific agreements executed with the
respondents as per the UAS guidelines. Upon referring to
various clauses of the said agreements as also the
amendment in the original license in the light of the
migration package, it was submitted that additional
bandwidth was allotted upon additional license fee being
charged by the respondent as revenue share, thereby
indicating that no further charge could be levied, much less
retrospectively.
(d) Reference was made to clause 5.1 in such agreements,
wherein the respondent, as a licensor, had reserved its right
to modify the terms and conditions of the license only
under three contingencies viz. public interest, interest of
security of the State and proper conduct of telegraphs. In
the present case, there was neither any modification in the
agreements, nor any reference to the aforesaid three
contingencies, while claiming one-time spectrum charge by
the impugned decisions and that too retrospectively.
(e) In this context, the learned senior counsel for the petitioner
referred to a chart filed along with the additional affidavit,
giving details of the spectrum allocated to the aforesaid
petitioner in various circles, to emphasize that such
allocation of spectrum never exceeded 10 MHz. It was also
brought to the notice of this Court that the clauses of UAS
licenses were satisfied, as enhanced revenue share was paid
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on each occasion that the spectrum allocation was increased
upto 10 MHz.
(f) Attention of this Court was specifically invited to clause
18.3 of the UAS license agreement of the year 2005,
wherein it was specified that additional bandwidth would
be allocated, which would attract additional license fee as
revenue share. Reference was also made to clause 43.5
thereof, to contend that although the respondent, as a
licensor, had the right to amend or modify the procedure of
allocation of spectrum, including quantum of spectrum, at
any point in time without assigning any reason, such
modification or amendment would obviously be for the
future and not for a previous period. It was also emphasized
that the aforesaid clause 43.5 did not specify a cap on
allocation of spectrum.
(g) The learned senior counsel then submitted that although the
TRAI, in its recommendation, had indicated that additional
acquisition fee beyond allocation of 6.2 MHz may not be
legally feasible, the recommendations of the Committee
chaired by Mr.Subodh Kumar took a turn around and for
the first time, coined the idea of charging one-time fee for
spectrum allocated beyond 6.2 MHz. It was further
submitted that one-time entry fee cannot be a species of
license fee, as licence fee is charged at the time of grant of
license. It was submitted that the power of respondent
under Section 4 of the Telegraph Act, read with the license
agreements specifically executed between the parties,
would show the basis of charging license fee specifically
agreed upon between the parties and that there was no
question of retrospectively charging one-time spectrum
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charge by the impugned decisions.
(h) It was emphasized that the respondent was unable to justify
the impugned decisions in the reply affidavit filed before
this Court. In this context, reference was made to paragraph
Nos.5 to 9, 14, 15 and 21 of the affidavit-in-reply filed on
behalf of the respondent. It was submitted that reliance on
Section 4 of the Telegraph Act was wholly misplaced and
clauses 23.5 and 43.5 of the license agreement clearly did
not confer power upon the respondent, as the licensor, to
unilaterally impose the one-time spectrum charge
retrospectively from the year 2008. It was emphasized that
clause 23.5 of the license merely recorded that detailed
guidelines for allocation of frequency spectrum and charges
thereof would be separately issued from time to time. This
only indicated that whenever the charges were to be
increased or modified, they would be specified from time to
time and that the said steps were taken by the respondent
periodically, with no dispute that whenever the percentage
of charge under the revenue share regime was
increased/modified, the petitioners abided by the same and
paid the charges. There was no question of imposing one-
time spectrum charge over and above such charges and that
too, retrospectively.
(i) The learned senior counsel for the petitioner relied upon the
judgement of the Supreme Court in the case of Union of
India Vs. Association of Unified Telecom Service Providers
of India , (2011) 10 SCC 543 , to contend that the license
granted under proviso to section 4(1) of the Telegraph Act,
was in the nature of a contract between the licensor i.e.
respondent – Union of India and the licensees i.e. the
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petitioners. The terms and conditions of the license became
part of the contract and therefore, the respondent could levy
any charge only within the four corners of the contract. It
was submitted that the levy of one-time spectrum charge
retrospectively was foreign to the terms of the contract.
(j) In support of the said contention, reliance was also placed
on the judgment of the Supreme Court in the case of Bharti
Airtel Limited Vs. Union of India , (2015) 12 SCC 1 . The
learned senior counsel appearing for the said petitioner
steered clear of the argument regarding Article 14 of the
Constitution of India and arbitrariness, emphasizing that the
terms of contract was the only relevant factor. It was
submitted that none of the three contingencies
contemplated under clause 13(ii) of the original license
agreement of the year 1994 and clause 5.1 of the
subsequent license agreement, was satisfied for the
respondent to claim a right to modify the terms of contract,
quite apart from the fact that there was actually no
modification of the terms of the contract in accordance with
law before the respondent issued the impugned decisions
and demand notices. On this basis, it was submitted that the
petition deserved to be allowed.
(k) The learned senior counsel for the petitioner submitted that
the judgement of the Madras High Court in the case of
Aircel Cellular Ltd. Vs. Union of India , 2016 SCC OnLine
Mad 8463 , upon which respondent has placed much
reliance, wrongly interpreted clause 13(ii) of the license
agreement executed as per the Telecom Policy of the year
1994. It was submitted that the approach adopted by the
Madras High Court, to the effect that any revenue
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generation contemplated by means of one-time spectrum
charge, has to be treated as a step in public interest, was not
borne out from the material on record. It was submitted that
the objectives of NTP-99 as well as the clauses of the
specific terms of the licenses executed after migration to
NTP-99, were ignored by the Madras High Court and much
emphasis was erroneously placed on the meaning of the
term ‘modify’, to reach conclusions in favour of the
respondent. It was submitted that the said judgement is the
subject matter of challenge pending before the Supreme
Court and that therefore, this Court may independently
consider the submissions made on behalf of the petitioner.
(l) On the aspect of maintainability of the petition, the learned
senior counsel for the petitioner submitted that the instant
petition and the companion petition i.e. Writ Petition
No.2029 of 2013, were entertained by this Court since the
year 2013. In the companion petition, on 24.02.2014, a
Division Bench of this Court had specifically considered
and rejected the argument of alternative remedy to
approach TDSAT. On this basis, it was submitted that there
was no question of doubting the maintainability of petition
at this stage of final hearing of the petition.
(m) As regards reliance placed on behalf of the respondent on
the judgement of the Supreme Court in the case of State
Bank of India Vs. Union of India and others , 2026 SCC
OnLine SC 202 , it was submitted that the said judgement
merely reiterated that spectrum was a natural resource held
by the respondent – Union of India in public trust. It was
clarified and reiterated that in the context of spectrum, the
powers and obligations of the licensor i.e. the respondent
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could arise from the license and also, from the statute i.e.
the Telegraph Act and the Constitution of India. It was
submitted that the said judgement, in no manner, laid down
a position of law that would justify the impugned decisions
and demand notices, calling upon the petitioner to deposit
one-time spectrum charge retrospectively.
(n) The learned senior counsel for the petitioner placed
emphasis on the documents on record showing that one-
time spectrum charge, if at all, was contemplated only for
allotment of spectrum beyond 10 MHz, while it was an
admitted position that the petitioner never exceeded 10
MHz when the impugned decisions and demand notices
were issued.
(o) The learned senior counsel appearing for the petitioner
further emphasized that when migration to NTP-99 was
proposed, the respondent itself had specified that
amendments to the existing agreements could be signed by
the licensor and the licensee and it was further submitted
that the TRAI, in its response to the respondent, had
specifically recorded that revenue share parted with as
license fee, represented payment for frequency spectrum,
thereby indicating that payment for the allocated spectrum
was always made from time to time.
(p) As per the amendment in the license agreement of the year
1994, under communication dated 29.01.2001 and as per
the communications and orders dated 22.09.2001,
01.02.2002 and 18.04.2002 issued by the respondents, it
was abundantly clear that allocation of spectrum and
payment of additional revenue share were purely
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contractual terms and that under NTP-99, the emphasis was
not on revenue maximisation, but on efficient utilization of
spectrum with penetration into rural and tribal areas, in
order to provide affordable cellular service to the
population at large. It was submitted that emphasis placed
on the alleged warnings given by respondent in certain
communications that some charge would be levied on
allocation of spectrum, could be of no consequence as
license fee was being charged by enhancement of revenue
share in terms of the amended agreements as well as UAS
licenses issued from time to time.
(q) The learned senior counsel further relied upon judgement
of the Supreme Court in the case of Subodh Kumar Singh
Rathour Vs. Chief Executive Officer and others , 2024 SCC
OnLine SC 1682 , to contend that even if the inter se
relations of parties with the State were governed purely by
contract, the method, motive and decision of the State
would be subject to judicial review on the grounds of
relevance and reasonableness, fair play, natural justice,
equality and non-discrimination. It was held therein that a
writ could be issued where an executive action was not
supported by law.
(r) The learned senior counsel further submitted that even the
Supreme Court, in the case of Natural Resources
Allocation, In Re, Special Reference No.1 of 2012 , (2012)
10 SCC 1 , held that there is no law or logic to support the
proposition that disposal of a natural resource for
commercial use must be for revenue maximisation. In this
context, reference was made to the objectives of NTP-99 to
contend that the respondent cannot be permitted to claim
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that one-time spectrum charge would augment revenue,
which would therefore be in public interest.
(s) The learned senior counsel further placed reliance on
judgment of a Division Bench of this Court in the case of
Musale Constructions, Builders and Contractors, Nagpur
Vs. Vidarbha Irrigation Development Corporation, Nagpur
and another , 2021 (1) Mh.L.J. 355 , to contend that once a
concluded contract was executed between the parties, they
were bound by the same and if the parties were to
alter/modify the terms of contract, it was required to be
done either by express agreement or by necessary
implication. Novation in the contract was required to be
undertaken and no change to the contract could have been
made unilaterally.
(t) Reliance was also placed on the judgment of the Supreme
Court in the case of Sivanandan C.T. and others Vs. High
Court of Kerala and others , (2024) 3 SCC 799 , to
emphasize that the decisions by the respondent as a public
authority, have to be passed on the basis of consistency and
predictability in decision-making, which was absent in the
present case.
(u) On the basis of the aforesaid submissions, both the learned
senior counsel submitted that the petition deserved to be
allowed.
21. Mr. Aspi Chinoy, learned senior counsel appearing for Vodafone
Idea Limited i.e. the petitioner in Writ Petition No.2029 of 2013, made
the following submissions:
(a) The learned senior counsel invited attention of this Court to
Section 4 of the Telegraph Act to submit that the
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respondent, as a licensor, clearly had the authority to
impose terms and conditions at the time of grant of license.
It was submitted that under the said statutory provision, the
respondent had no power to alter the terms and conditions
of the grant, after the license had been granted. The said
statutory provision nowhere stipulates any power in the
respondent as a licensor, to unilaterally change the terms of
the contract, after the license had been granted. On this
basis, it was submitted that only the clauses of the
contract/subject licenses could be considered, while
construing the impugned decisions issued by the
respondent.
(b) It was submitted that the respondent, as a licensor, could
not have unilaterally sought to change the terms of the
contract by imposing one-time spectrum charge without
there being any provision in the contract itself. It was
submitted that under Section 60 of the Contract Act,
novation of the contract must precede the contract-making
process and the parties must be ad idem as regards the
terms and conditions. It was submitted that a definite
consideration was an essential element of a binding
agreement. It was submitted that in the present case, at the
time of grant of license, the terms were clearly fixed as per
the agreement between the parties and yet, the respondent
issued the impugned decisions and demand notices
claiming one-time spectrum charge and that too
retrospectively. In support of the aforesaid contention,
reliance was placed on the judgement of the Supreme Court
in the case of Delhi Development Authority and another Vs.
Joint Action Committee, Allottee of SFS Flats and others ,
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(2008) 2 SCC 672 .
(c) By placing reliance on the judgement of the Supreme Court
in the case of Bharat Sanchar Nigam Limited and another
Vs. BPL Mobile Cellular Limited and others , (2008) 13
SCC 597 , the learned senior counsel submitted that the
respondent was clearly bound by the terms of the contract
i.e. the license and if the same was to be altered/modified, it
was required to be done either by express agreement or by
necessary implication, which would negate the application
of the doctrine of ‘ acceptance sub silentio ’.
(d) It was submitted that the respondent unilaterally issued the
demand notices, without modifying or altering the terms of
the contract. This despite the fact that on earlier occasions,
when the licenses were modified, specific offers were made
on behalf of the respondent, which were accepted by the
petitioners, particularly while migrating to NTP-99. It was
submitted that under Section 4 of the Telegraph Act, since
there is no power with the respondent to suddenly change
the terms of contract and to unilaterally claim one-time
spectrum charge and that too retrospectively, the right of
the petitioners to insist upon the very terms of the contract,
could not be taken away.
(e) In support of the said contention, reliance was placed on
the judgement of the Supreme Court in the case of J. S.
Yadav Vs. State of Uttar Pradesh and another , (2011) 6
SCC 570 . The learned senior counsel further placed
emphasis on the judgement of the Supreme Court in the
case of MGB Gramin Bank Vs. Chakrawarti Singh , (2014)
13 SCC 583 , particularly on the meaning of the word
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‘vested’. It was submitted that if the respondent was
allowed to act in such a manner, without any source of
power being demonstrated, how could business be done by
private entities like the petitioner? It was emphasized that
while paragraph No.28 of the note submitted on behalf of
the respondent referred to Section 4 of the Telegraph Act
and the specific question regarding absence of power raised
on behalf of the petitioners, neither the said note nor the
oral submissions made on behalf of the respondent dealt
with the said question. On this basis, it was submitted that
the petitions deserve to be allowed and the impugned
decisions/demand notices deserve to be quashed.
22. Mr. Anil Singh, learned ASG, while opposing the petitions, made
the following submissions:
(a) It was submitted that in the light of the fact that dispute
raised by the petitioners in these petitions falls within the
domain of TDSAT, the present writ petitions ought not to
be entertained. It was submitted that TDSAT was the
appropriate forum in which the dispute could be decided
and on this short ground, the petitions ought not be
entertained.
(b) It was submitted that one of the grounds taken in the
petitions was that at the relevant time, the TDSAT was not
available and it was perhaps for the said reason that this
Court entertained the petitions. Now, the TDSAT is very
much available and therefore, the petitions ought to be
disposed of on this short ground. It was emphasized that the
disputes raised by the petitioners are based on pure
contractual relationship between the respondent as licensor
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and the petitioners as licensees and that therefore, the writ
petitions do not deserve to be entertained.
(c) The learned ASG copiously referred to the note submitted
on behalf of the respondent and while reading through the
same, he submitted that spectrum being a material resource
of the public, of which the respondent was a trustee, the
amounts to be recovered as one-time spectrum charge were
to be utilized for common good and therefore, no objection
could be raised to the impugned decisions and the
impugned demand notices.
(d) It was emphasized that in repeated communications, the
petitioners were put to notice that they would be required to
pay charge towards allocation of spectrum and therefore,
they cannot claim that they were caught by surprise or that
the charge was being levied retrospectively. It was
submitted that the charge for allocation of spectrum was
clearly different from the charge for its usage. The
documents on record demonstrated that beyond 4.4 MHz,
the petitioners were allocated spectrum virtually free of
charge and that therefore, even in terms of NTP-99, the
petitioners were liable to pay separate charge towards
allocation of spectrum, distinct from the charges that were
being levied for using the spectrum.
(e) It was submitted that the controversy was decided in favour
of the respondent in identical challenges raised before the
Madras High Court in the case of Aircell Cellular Ltd. Vs.
Union of India ( supra ). It was submitted that the Madras
High Court referred to the right reserved with the
respondent as licensor in clause 13(ii) of the license
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agreement to modify the conditions of the license. It was
found that levy of one-time spectrum charge was in public
interest, thereby satisfying one of the contingencies for
modification of the terms and conditions of license.
(f) In this context, reliance was also placed on the judgement
of a Division Bench of this Court in the case of Laya
Binaykumar Pandey Vs. Medical Council of India and
others , 2006 (6) Mh.L.J. 438 , to contend that once a co-
ordinate High Court had taken a view, this Court should
normally adopt the same, unless it is found that the view
cannot be sustained. It was submitted that the view adopted
by the Madras High Court in the case of Aircell Cellular
Ltd. Vs. Union of India ( supra ) was clearly a logical and
reasonable view. Therefore, this Court may not take a
different view in the matter and that the present petitions
may be dismissed on the said ground also.
(g) The learned ASG further submitted that in the aforesaid
recent judgement of the Supreme Court in the case of State
Bank of India Vs. Union of India and others ( supra ), it
was categorically held that spectrum was a valuable natural
resource of which the respondent – Union of India is a
trustee and that therefore, no fault can be found with the
respondent in issuing the impugned decisions and demand
notices. It was emphasized that spectrum was utilized by
the petitioners for commercial gains and having enjoyed the
said spectrum, they cannot be permitted to avoid the
liability of payment of requisite charges.
(h) The learned ASG referred to the original license agreement
executed as per the Telecom Policy of the year 1994, as
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also the amended licence, post acceptance of migration
package by the petitioners as also the UAS agreements
executed from time to time. It was emphasized that clauses
of all the aforesaid documents clearly demonstrated that the
respondent was justified in levying charge for additional
allocation of spectrum, apart from the charges levied for
usage thereof. It was claimed that the respondent – Union
of India had the sole prerogative of fixing the amount of
compensation payable by the petitioners for commercial
usage of spectrum, which is a valuable natural resource.
(i) By referring to the judgement of the Supreme Court in the
case of Bharti Airtel Limited Vs. Union of India ( supra ),
it was emphasized that the obligations of the respondent,
not only flow from the contract between the parties, but
also from the provisions of the statute i.e. the Telegraph Act
and also the Constitution of India. It was emphasized that
as per the said judgement, in the event of any conflict in the
obligations, the role of respondent – Union of India, as a
trustee and custodian of natural resources for the public at
large, would prevail and therefore, the petitions deserve to
be dismissed.
(j) It was emphasized in terms of the aforesaid recent decision
of the Supreme Court in the case of State Bank of India
Vs. Union of India and others ( supra ), that grant of
telecom license, including the right to use spectrum, does
not result in transfer of ownership or proprietorship
interest, rather it is a limited, conditional and revocable
privilege to use spectrum for specified purposes and for a
defined duration.
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(k) Much emphasis was placed on clauses 5.1 and 18.3 of the
UAS licenses, claiming that modification was well within
the power of the respondent – Union of India in public
interest and therefore, within the terms of contract, one-
time spectrum charge could be imposed. Even otherwise,
under Section 4 of the Telegraph Act, the respondent –
Union of India had statutory power to ensure appropriate
charge being levied on the petitioners for utilization of
spectrum, which is a scarce natural resource. The aspect of
public interest and Constitutional goals cannot be ignored
while deciding such a controversy.
(l) It was claimed that in the agreement executed in the years
1994 and 2005, license allocation fee, license usage fee and
spectrum usage fee were charged, but no fees was charged
for spectrum allocation. Therefore, it cannot be said that
this was a case of double charge.
(m) It was submitted that the contention of retrospective charge
is also not sustainable because the petitioners were clearly
put to notice from the year 2007-2008 about spectrum
allocation pricing to be determined by the respondent. Yet,
the petitioners did not surrender the spectrum and they did
not challenge the approach adopted by the respondent while
continuing to exploit the spectrum commercially and that
the impugned decisions manifested only computation of
charge payable, which exercise was undertaken in the year
2012/2013 for the additional spectrum allocated for the
earlier years.
(n) It was claimed that one-time spectrum charge was levied to
make it a level playing field, so that new allottees were not
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put to disadvantage as against the petitioners, who were
players already operating in the sector.
(o) On this basis, it was submitted that the petitions deserved to
be dismissed and that the interim orders ought to be
vacated.
ANALYSIS AND FINDINGS
Maintainability of the Petitions :
23. The learned ASG, at the outset, submitted that the petitions ought
to be disposed of on the ground of availability of alternative remedy of
approaching the TDSAT. We find substance in the contention raised on
behalf of the petitioners that in Writ Petition No.2029 of 2013, a
Division Bench of this Court specifically considered the said submission
and rejected the same while continuing the interim order in favour of the
petitioner. In the said order, the Division Bench of this Court deliberated
on the aspect that power of the respondent under Section 4 of the
Telegraph Act was one of the issues raised on behalf of the petitioner
and that such an issue along with other aspects of the matter deserved to
be considered and determined by this Court exercising writ jurisdiction.
The same reasoning would apply to the companion Writ Petition
No.1461 of 2013. The objection regarding maintainability having been
rejected at the outset when the writ petitions were entertained, is enough
for this Court at this stage, after more than a decade of pendency of these
petitions, to refuse to consider the said objection regarding
maintainability.
24. We also find that the writ petitions were entertained way back in
the year 2013, not merely because the TDSAT was not available. In any
case, we find that the questions raised for consideration on behalf of the
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petitioners concern interpretation of statutory provisions, the effect of
clauses of licenses executed between the parties and such matters
certainly do not require leading of evidence. The issues can certainly be
entertained, considered and decided in writ jurisdiction. Even otherwise,
the rule of relegating a party to an alternative remedy is a self-restraint
exercised by the Writ Court, being a rule of prudence and not a rule of
law. Considering the long pendency of these petitions, and the specific
issues raised on behalf of the rival parties, we do not find any substance
in the contention raised on behalf of the respondent that the writ
petitions ought not to be entertained and that the petitioners ought to be
relegated to the alternative remedy. Even otherwise, the respondent itself
is relying upon a judgement of the Madras High Court rendered in a writ
petition filed by a similarly situated cellular operator like the petitioners
herein. Hence, the objection regarding maintainability raised on behalf
of the petitioners is rejected and this Court is proceeding to consider the
rival submissions on merits.
Spectrum as a Natural Resource :
25. The learned ASG has placed much emphasis on the fact that
spectrum is a scarce natural resource belonging to the people of the
country and that the respondent Union of India acts as a trustee with
regard to the said natural resource. It is claimed that the petitioners
cannot have any proprietary right or vested right in such a natural
resource. It is asserted that this aspect has to be taken into consideration
by the Court while considering the manner in which the relevant
statutory provisions and the clauses of the license agreements are to be
interpreted.
26. The Supreme Court in its judgement in the case of Centre for
Public Interest Litigation and others Vs. Union of India ( supra ), also
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known as the ‘ 2G Spectrum case ’, observed that spectrum has been
internationally accepted as a scarce and finite natural resource, which is
susceptible to degradation in case of inefficient utilization. The high
economic value of the said natural resource was noted in the light of its
demand in the telecom sector. It was also observed that since such
natural resources are public goods, the doctrine of equality, emerging
from the concepts of justice and fairness must guide the State in
determining the actual mechanism for distribution of such natural
resources. It was emphatically held that the State is the legal owner of
the natural resources as a trustee of the people and although it is
empowered to distribute the same, the process of distribution ought to be
guided by constitutional principles including the doctrine of equality and
larger public good. This was reiterated in various judgements. It is
significant to note that in the Constitution Bench judgement in the case
of Natural Resources Allocation, in Re, Special Reference No.1 of
2012 ( supra ), it was authoritatively laid down that although such natural
resources, of which the State acts as a trustee for the people, are to be
dealt with in such a manner that the common good is best subserved,
revenue maximization is not the only way in which the common good
can be subserved. Where revenue maximization is not the object of a
policy of distribution, such considerations can assume secondary
treatment as compared to developmental considerations.
27. In the recent judgement of the Supreme Court in the case of State
Bank of India Vs. Union of India and others (supra) , upon which the
learned ASG placed much emphasis, it was reiterated that spectrum is a
natural resource held by the respondent Union of India in public trust.
But, it was further clarified that when the respondent Union of India
deals with the question of distribution of rights in such natural resources
like spectrum, it is nothing but grant of a conditional privilege of
exploiting spectrum as a natural resource and it does not confer any
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proprietary right in cellular operators like the petitioners herein.
28. Even if the said position of law is applied to the issues raised in
these petitions, we find that once the respondent Union of India through
the Department of Telecommunications executed documents in the form
of licenses in favour of the petitioners, by exercising statutory power
under Section 4 of the Telegraph Act, the respondent Union of India
acting as a trustee of the people, is required to abide by the contractual
terms. It cannot be contended that since spectrum is recognized as a
scarce and finite natural resource, the respondent Union of India would
be entitled to resile from the terms of the contract i.e. the license, or act
in any manner unilaterally and then to justify the same by taking shelter
of the concepts of ‘common good’, ‘public good’, ‘public interest’, etc.
Since spectrum is recognized as a scarce and finite natural resource, it is
all the more reason for the respondent Union of India as a trustee of the
people to ensure that appropriate terms and conditions are incorporated
in the licenses so as to best subserve the common good. This can be
ascertained by the manner in which the respondent Union of India itself
evolved its policies pertaining to the telecom sector, based on
experiences gained after putting into operation such policies from time
to time. In this backdrop, it would be appropriate to refer to the policies
adopted by the respondent Union of India regarding distribution of
spectrum from 1994 onwards.
Telecom Policies of Union of India:
29. Initially, the Union of India exclusively established and
maintained telecommunication services in India. Upon the opening up of
the economy in the year 1991 and a paradigm shift in the approach to
governance, with the gates being opened for participation of the private
sector, particularly in the telecom sector, the Telecom Policy of 1994
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was adopted. Under the said policy, licenses were granted for cellular
mobile telephone services and other such services across various cities
and circles to private operators like the petitioners herein. In that
context, license agreements were executed.
30. A perusal of one such license agreement dated 29.11.1994
executed between the petitioner Bharti Airtel and the respondent Union
of India shows a clear bifurcation between a fixed license fee and a
separate fee determined by the WPC Wing of the Department of
Telecommunications for usage of spectrum. The license was valid for 10
years. Clause 13(ii) reserved the right in the respondent Union of India
to modify the terms and conditions of the license covered under
Schedules A to D in case of three contingencies. Firstly, in the interest of
general public; secondly, for proper conduct of telegraphs and thirdly,
for security considerations. The financial aspect was covered under
Schedule ‘C’ of the license, wherein clause 19 provided for a fixed
annual license fee, which would not include separate license fee charged
by the WPC Wing for using the radio frequencies. Clause 20 pertained to
such separate license to be taken from the WPC Wing permitting
utilization of appropriate radio frequency. Under the said license, a
cumulative maximum of upto 4.5 MHz of spectrum was made available.
Clause 20.4 specified that the license fee and royalty payable for grant of
license would be subject to revision from time to time.
31. It was noticed that under the Telecom Policy of the year 1994, the
cellular service operators like the petitioners were not able to make the
projected financial gains and that, the policy of fixed license fee and
other aspects appeared to be floundering. Litigation was instituted, at the
behest of COAI and in this backdrop, NTP-99 was formulated. Under
the said new policy i.e. NTP-99, there was a major shift from fixed
license fee model to a regime of revenue sharing. The existing operators
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like the petitioners were permitted to shift from the earlier regime to the
regime of revenue sharing. In that context, the respondent Union of India
itself proposed a package for migration of existing licensees like the
petitioners to the NTP-99 regime. As per the said policy and the
migration package, the licensees ready to accept the migration package
were required to pay an entry fee equivalent to the license fee dues
payable by such licensees upto 31.07.1999 and thereupon, acceptance of
the revenue sharing regime. It was clarified that after the terms and
conditions of the package were accepted, appropriate amendments
would be carried out to the existing license agreements. It is pertinent to
note here that during the evolution of the said NTP-99, certain
references were made to the TRAI and in response thereto, on
23.06.2000, the TRAI opined that revenue share parted with as license
fee represented payment for frequency spectrum, which is a highly
limited natural resource. It was stated that such revenue sharing as
license fee ought to be seen a price being paid for the opportunity of
using spectrum in the then prevailing situation of limited competition. It
was not being recommended as a means for raising revenue.
Accordingly, on 29.01.2021, the respondent Union of India addressed a
letter to one of the petitioners i.e. Bharti Airtel Limited, specifying the
manner in which the existing agreement would be amended. It was
specifically stated that with effect from 01.08.1999, the license fee
payable would be equal to a prescribed percentage as share of gross
revenue of the licensee company. Provisionally, the licensor i.e. the
respondent fixed 15% of the gross revenue as license fee. The period of
license was increased to 20 years from its initial date of commencement.
It was also specifically recorded that apart from the amendments
specified, all other terms and conditions of the license agreement would
remain unchanged.
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32. At this stage, it would be appropriate to refer to the objectives and
targets of NTP-99 recorded in the policy document issued by the
respondent Union of India. The relevant portion reads as follows:-
“The objectives of the NTP 1999 are as under:
Access to telecommunications is of utmost importance
for achievement of the country's social and economic
goals. Availability of affordable and effective
communications for the citizens is at the core of the
vision and goal of the telecom policy.
Strive to provide a balance between the provision of
universal service to all uncovered areas, including the
rural areas, and the provision of high-level services
capable of meeting the needs of the country's economy;
Encourage development of telecommunication facilities
in remote, hilly and tribal areas of the country;
Create a modern and efficient telecommunications
infrastructure taking into account the convergence of IT,
media, telecom and consumer electronics and thereby
propel India into becoming an IT superpower;
Convert PCO's, wherever justified, into Public Teleinfo
centres having multimedia capability like ISDN services,
remote database access, government and community
information systems etc.
Transform in a time bound manner, the
telecommunications sector to a greater competitive
environment in both urban and rural areas providing
equal opportunities and level playing field for all players;
Strengthen research and development efforts in the
country and provide an impetus to build world-class
manufacturing capabilities.
Achieve efficiency and transparency in spectrum
management.
Protect defence and security interests of the country.
Enable Indian Telecom Companies to become truly
global players.
In line with the above objectives, the specific targets that
the NTP 1999 seeks to achieve would be:
Make available telephone on demand by the year 2002
and sustain it thereafter so as to achieve a teledensity of 7
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by the year 2005 and 15 by the year 2010
Encourage development of telecom in rural areas making
it more affordable by suit able tariff structure and making
rural communication mandatory for all fixed service
providers.
Increase rural teledensity from the current level of 0.4 to
4 by the year 2010 and provide reliable transmission
media in all rural areas.
Achieve telecom coverage of all villages in the country
and provide reliable media to all exchanges by the year
2002.
Provide Internet access to all district head quarters by the
year 2000.
Provide high speed data and multimedia capability using
technologies including ISDN to all towns with a
population greater than 2 lakh by the year 2002.”
33. A perusal of the above objectives and targets of NTP-99 clearly
shows that the impetus was on efficient utilization of spectrum,
introduction of a multi-poly environment and a concerted effort to
provide universal affordable service to all uncovered areas and rural
areas, including remote, hilly and tribal areas of the country. NTP-99 as
a policy document did not emphasize on revenue maximization as its
objective or target. Instead, the emphasis was on providing universal
service and increasing rural teledensity, so that the net of cellular
services was spread all across the country. The aspect of common good,
public good and public interest needs to be appreciated from the
aforesaid angle while considering the rival submissions. Subsequently,
the telecommunication policy evolved further. But, since in these
petitions we are concerned with the Telecom Policy of 1994 and NTP-
99, this Court has referred to the shift in policy discernible from the
policy document itself.
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License Agreements, Communications and Orders
issued in the light of the Telecom Policies :
34. License agreements were executed in the year 1994 with operators
like the petitioners herein. Copy of one such agreement dated
29.11.1994 executed between the petitioner Bharti Airtel and respondent
Union of India has been placed on record. A perusal of the same shows
that license was granted initially for a period of 10 years, extendable for
one year or more at a time. The license was governed by the provisions
of the Telegraph Act as modified from time to time. There were four
Schedules ‘A’ to ‘D’ annexed to the license agreement, which specified
terms and conditions regarding various aspects of the matter including
area of service, tariff, financial aspects, etc. Clause 13(ii) provided as
follows:-
“13. It is further agreed and declared by the parties that
notwithstanding anything contained hereinbefore, that
(i) …
(ii) The Authority reserves the right to modify at any time
the terms and conditions of the licence covered under Schedules
"A", "B", "C", and "D", annexed hereto, if in the opinion of the
Authority it is necessary or expedient to do so in the interests of
the general public or for the proper conduct of telegraphs or
security consideration.”
35. Clause 19 in Schedule ‘C’ to the license provided for payment of
liecence fees. It was a fixed lumpsum license fee to be charged as per the
formula stated in clause 19 and its various sub-clauses. Clause 19.3
specifically recorded that the annual license fee as prescribed did not
include license fees payable to WPC Wing of the respondent for the use
of radio frequencies, which was required to be paid separately as per
clause 20.
36. As per clause 20.1 of Schedule C to the said license agreement, a
separate license was required to be obtained from the WPC Wing of the
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respondent for permission to utilize radio frequency spectrum. It was
specified under clause 20.3 that cumulative maximum of upto 4.5 MHz
would be made available and under clause 20.4 thereof, license fee and
royalty would have to be paid for grant of license, which would be
subject to revision from time to time. A sample calculation of the license
fee and royalty was given in the said clause itself. Thus, the regime
under the 1994 Telecom Policy pertained to fixed license fee.
37. As noted hereinabove, there was a paradigm shift in NTP-99 to
the revenue share model in the light of the experience of the working of
the Telecom Policy of 1994. In that light, as per communication dated
22.07.1999, issued by the respondent Union of India to all the cellular
operators including the petitioners, a migration package was proposed
for interested licensees in respect of which the cut-off date was fixed as
01.08.1999. A one-time entry fee was specified, which was equivalent to
the license fee dues payable by the existing licensees upto 31.07.1999
and the regime of revenue sharing towards license fee was introduced.
Apart from other conditions, the respondent Union of India imposed a
condition that upon migration to NTP-99, the licensees through their
association would withdraw all pending litigation. As a matter of fact,
such litigation was withdrawn by the COAI as per its communication
dated 23.08.2002, as the cellular operators including the petitioners
accepted the migration package.
38. The TRAI in its aforesaid communication dated 23.06.2000
issued to the Secretary of the Department of Telecommunication of the
respondent made recommendations in respect of NTP-99, including the
multi-poly regime sought to be introduced. The payment of revenue
share as license fee was recorded as payment for spectrum, which was
noted to be a highly limited natural resource. On 29.01.2001, the
respondent issued letters to the cellular operators, including the
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petitioners, for amendment of the existing license agreements. A perusal
of the letter addressed to the petitioner Bharti Airtel shows that
provisionally the respondent as licensor fixed 15% of the gross revenue
as license fee and the period of license was increased to 20 years. The
amendments pertained to sharing of infrastructure by such service
providers like the petitioners with any other service provider in the areas
of operation as also direct inter-connectivity between license providers
with all other such service providers. All other terms and conditions of
the existing license agreements were directed to remain unchanged.
39. On 22.09.2001, the respondent issued an order / communication
addressed to all service providers including the petitioners and their
association (COAI) pertaining to royalty and license fee charges towards
WPC Spectrum usage. It was specifically recorded therein that any
additional bandwidth fee, if allotted, would attract additional royalty and
license fee as revenue share, typically 1% additional revenue share.
These documents also specifically stated that the license fee and royalty
for use of spectrum would be separately payable as per details and
prescription given by the WPC Wing. Thus, revenue share for allotment
of additional bandwidth was recorded to be distinct from the royalty and
license fee for usage of spectrum. This is significant for considering the
rival submissions. On 01.02.2002, the respondent issued further such
order / communication, stating that additional spectrum could be allotted
upon achieving a customer base of 5 lakhs or more in a service area and
that such allocation would be beyond the allocated spectrum of 6.2
MHz. It was also specified that the licensees would pay ‘spectrum
charge’ with effect from 01.08.1999 on revenue share basis at the rate of
2% of adjusted gross revenue (AGR) for spectrum upto 4.4 MHz and 3%
of AGR for spectrum upto 6.2 MHz. It was further specified that for the
additional spectrum of 1.8 MHz if assigned for any one or more places
in a service area, beyond 6.2 MHz, a further additional charge of 1% of
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AGR would be levied, thereby taking the total spectrum charge to be
paid by such operators at 4% of AGR. It was further specified that
spectrum charge of 4% of AGR would also cover allocation of further
spectrum, which may be allocated in future to add upto ‘total spectrum
allocation’ not exceeding 10 MHz in the service area.
40. On 18.04.2002, the respondent issued a further order recording
that migration to revenue sharing concept was basically to simplify the
system by charging for spectrum and it was in no way to link the grant
of frequency spectrum. Thereafter, the said order specified royalty
charges and license fee for usage of the spectrum. The aforementioned
series of orders / communications issued by the respondent demonstrates
that as per the revenue sharing model, ‘spectrum charge’ was
incorporated in the license fee by increasing the percentage of revenue
share at each stage of allocation of spectrum. We find substance in the
contention raised on behalf of the petitioners that the respondent chose
to impose such increased share of revenue as license fee for allocation of
spectrum, and therefore, it cannot be said that additional spectrum upto
10 MHz was allocated to the petitioners without any charge. This is
significant because the respondent has taken a stand that although the
petitioners were making payment of usage charges towards spectrum by
revenue sharing but they were allocated spectrum virtually free of
charge. The aforementioned orders / communications issued by the
respondent itself do not support the stand taken on its behalf in these
petitions.
41. In this backdrop, on 11.11.2003, the respondent issued guidelines
for unified access services license i.e. the UAS license, on the basis of
recommendations made by the TRAI. The said guidelines specifically
recorded that no additional entry fee would be charged to the service
providers like the petitioners for migration to the UAS license. In these
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guidelines also at clause (xvi), the respondent reserved its right to
modify the guidelines in the three above-noted contingencies pertaining
to public interest, interest of national security, consumer interest and for
proper conduct of the telegraph / services. It is interesting to note that as
per an order dated 15.04.2004 issued by the WPC Wing of the
respondent, charges for spectrum even beyond 10 MHz were specified.
It was stated that for additional spectrum of 2.5 MHz beyond 10 MHz,
an additional charge of 1% of AGR would be levied, thereby taking the
total percentage to 5% of AGR. An additional spectrum of 2.5 MHz
beyond 12.5 MHz would attract a further additional charge of 1% of
AGR, taking the total percentage to 6% of AGR. It is significant to note
that this order also used the expression ‘charges for assignment of
additional spectrum’, thereby indicating that this was nothing but a
charge towards allocation of additional spectrum.
42. In this backdrop, in the year 2005, UAS license agreements were
executed. Copy of such license dated 16.03.2005 executed between the
petitioner Bharti Airtel and the respondent Union of India through
Department of Telecommunications has been placed on record. It shows
that the effective date of the license continued to be 29.11.1994 and that
the terms and conditions stood amended and revised as per the schedule
annexed to the license agreement. The relevant clauses of the said
license agreement are required to be perused in the light of the
submissions made on behalf of the rival parties on the most crucial
aspect of the matter pertaining to the entitlement of the respondent
Union of India to claim one-time spectrum charge retrospectively from
the year 2008 for ‘allocation of spectrum’.
43. The relevant clauses read as follows:-
“5.1 The LICENSOR reserves the right to modify at any time
the terms and conditions of the LICENCE, if in the opinion of
the LICENSOR it is necessary or expedient to do so in public
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interest or in the interest of the security of the State or for the
proper conduct of the telegraphs. The decision of the
LICENSOR shall be final and binding in this regard.
xxx xxx xxx xxx
18. FEES PAYABLE:
18.1 Entry Fee:
No additional entry fee shall be charged from CMSPs for
migration to UASL.
18.2 Licence Fees:
The Licensee shall pay Licence fee annually @ 10% of
Adjusted Gross Revenue (AGR) , excluding spectrum charges.
Separate spectrum charges would be required to be paid by the
licensee.
The Licensor reserves the right to modify the above
mentioned Licence Fee at any time during the currency of this
Agreement.
18.3 Radio Spectrum Charges:
18.3.1 In addition to the licence fee as per clause 18.2, the
Licensee shall pay spectrum charges on revenue share basis of
2% of AGR towards WPC Charges covering royalty payment
for the use of cellular spectrum upto 4.4 MHz + 4.4 MHz and
Licence fee for Cellular Mobile handsets & Cellular Mobile
Base Stations and also for possession of wireless telegraphy
equipment as per the details prescribed by Wireless Planning &
Coordination Wing (WPC). Any additional band width, if
allotted subject to availability and justification shall attract
additional Licence fee as revenue share (typically 1%
additional revenue share if Bandwidth allocated is upto 6.2
MHz + 6.2 MHz in place of 4.4 MHz + 4.4 MHz).
18.3.2 Further, royalty for the use of spectrum for point to
point links and access links (other than Cellular Service
Spectrum) shall be separately payable as per the details and
prescription of Wireless Planning & Coordination Wing. The
fee/royalty for the use of spectrum /possession of wireless
telegraphy equipment depends upon various factors such as
frequency, hop and link length, area of operation etc.
Authorization of frequencies for setting up Microwave links by
Cellular Operators and issue of Licences shall be separately
dealt with WPC Wing as per existing rules.
18.3.3 The above spectrum charge is subject to unilateral
review by WPC Wing from time to time which shall be binding
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on the licensee.
xxx xxx xxx xxx
23.5 The frequencies shall be assigned by WPC from the
designated bands prescribed in National Frequency Allocation
Plan - 2002. (NFAP-2002) as amended from time to time.
Based on usage, justification and availability, spectrum may be
considered for assignment, on case by case basis. The
frequencies assigned may not be contiguous and may not be
same in all cases, while efforts would be made to make
available larger chunks to the extent feasible. The detailed
guidelines for allocation of frequency spectrum and charges
thereof etc. would be separately issued from time to time.
xxx xxx xxx xxx
43.1 A separate specific authorization and licence (hereinafter
called WPC licence) shall be required from the WPC wing of
the Department of Telecommunications, Ministry of
Communications & I.T. permitting utilization of appropriate
frequencies / band for the establishment, possession and
operation of Wireless element of the Telecom Service under the
Licence Agreement of Unified Access Service under specified
terms and conditions including payment for said authorization
& WPC licence. Such grant of authorization & WPC licence
will be governed by normal rules, procedures and guidelines
and will be subject to completion of necessary formalities
therein.
xxx xxx xxx xxx
43.5 Subject to availability and as per Guidelines issued from
time to time, the spectrum allocation and frequency bands will
be as follows:
(i) For wireless operations in SUBSCRIBER access
network, the frequencies shall be assigned by WPC wing of the
Department of Telecom from the frequency bands earmarked in
the applicable National Frequency Allocation Plan and in
coordination with various users. Initially a cumulative
maximum of upto 4.4 MHz + 4.4 MHz shall be allocated in the
case of TDMA based systems (@ 200 KHz per carrier or 30
KHz per carrier) or a maximum of 2.5 MHz + 2.5 MHz shall be
allocated in the case of CDMA based systems (@ 1.25 MHz
per carrier), on case by case basis subject to availability. While
efforts would be made to make available larger chunks to the
extent feasible, the frequencies assigned may not be contiguous
and may not be the same in all cases or within the whole
Service Area. For making available appropriate frequency
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spectrum for roll out of services under the licence, the type(s)
of Systems to be deployed are to be indicated.
(ii) The Licensee operating wireless services will continue to
provide such services in already allocated/contracted spectrum.
(iii) In the event, a dedicated carrier for micro-cellular
architecture based system is assigned in 1880-1900 MHz band,
the spectrum not more than 3.75 + 3.75 MHz in respect of
CDMA system or 4.4 + 4.4 MHz in respect of TDMA system
shall be assigned to any new Unified Access Services Licensee.
(iv) The Licensor has right to modify and/or amend the
procedure of allocation of spectrum including quantum of
spectrum at any point of time without assigning any reason.”
44. It is crucial to note that in clause 18.1 of the UAS license, it was
specified that no additional entry fee would be charged from the
operators like the petitioners for migration to UAS license. In clause
18.2, the annual license fee was specified at 10% of the AGR, excluding
spectrum charges. Clause 18.3 specified the payment towards spectrum
charges on revenue share basis and royalty, as prescribed by the WPC
Wing. Clause 18.3.3 specified that the charges for spectrum could be
unilaterally reviewed by WPC Wing from time to time and would be
binding on the licensee. A proper analysis of clause 18.2 pertaining to
license fee as against clause 18.3 pertaining to radio spectrum charges,
shows that the power of unilateral review with the WPC Wing of the
respondent, concerned charges to be specified for use of spectrum. This
is crucial as the respondent seeks to rely upon clause 18.3.3 to claim that
it was entitled to unilaterally impose one-time spectrum charge and that
too, retrospectively from the year 2008 as part of license fee for
‘allocation of spectrum’.
45. We are unable to agree with such an interpretation sought to be
foisted on behalf of the respondent on clause 18.3.3 of the UAS license,
as it ignores the overall scheme under the license as also, the specific
import of clause 18.1, stating that no additional entry fee would be
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charged for migration and clause 18.2, which specifically stipulates the
annual license fee being equivalent to 10% of AGR.
46. We are also unable to agree with the respondent that clause 23.5
could be relied upon to claim that one-time spectrum charge could be
levied retrospectively for allocation of spectrum, for the simple reason
that the terms of the license agreement would have to be modified within
the four corners of the UAS license agreement for bringing about any
such additional levy.
47. Similarly, reliance placed on clause 43.5 of the UAS license
cannot come to the aid of respondent to justify the impugned decisions,
as any modification, if at all, could operate only for the future and not
retrospectively.
48. On 11.08.2005, a Committee constituted under Chairmanship of
Wireless Adviser of the respondent submitted its report, wherein it was
observed as follows:
“No additional one-time charge (entry fee) need be charged
from the existing service providers. This would enable them to
roll out their services faster and also offer the services at
affordable tariffs. However, they should be required to pay the
revenue share for spectrum charges based on the total spectrum
with them for 2G and 3G services.”
49. This was followed by guidelines for UAS licenses issued by the
respondent through the Department of Telecommunications on
14.12.2005. The said document also specified that the licencees shall
pay spectrum charges on revenue sharing basis and there was no
reference to any one-time spectrum charge. The TRAI then made
recommendations on review of license terms and conditions. It was
crucially recorded at paragraph No.2.75 of the said recommendations as
follows:
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“ 2.75 The Authority has noted that the allocation beyond 6.2
MHz for GSM and 5 MHz for CDMA at enhanced spectrum
usage charge has already been implemented. Different licensees
are at different levels of operations in terms of the quantum of
spectrum. Imposition of additional acquisition fee for the
quantum beyond these thresholds may not be legally feasible in
view of the fact that higher levels of usage charges have been
agreed to and are being collected by the Government. Further,
the Authority is conscious of the fact that further penetration of
wireless services is to happen in semi-urban and rural areas
where affordability of services to the common man is the key to
further expansion.
(Emphasis supplied)”
50. It is even more significant to note that in the said
recommendations at paragraph No.6.6, it was recorded as follows:
“ 6.6 Any licensee who seeks to get additional spectrum
beyond 10 MHz in the existing 2G bands i.e. 800, 900 and
1800 MHz after reaching the specified subscriber numbers
shall have to pay a onetime spectrum charge at the above
mentioned rate on prorata basis for allotment of each MHz or
part thereof of spectrum beyond 10 MHz.”
51. The above-quoted portions of the recommendations of the TRAI
clearly show that one-time spectrum charge, if at all, was contemplated
only for allocation of additional spectrum beyond 10 MHz. In other
words, no such one-time spectrum charge was even recommended for
additional spectrum allotted to service providers like the petitioners upto
10 MHz. It is an admitted position that the controversy in the present
petitions is concerned only with the spectrum charges payable for
spectrum upto 10 MHz. The allocation of such additional spectrum
beyond 4.4 MHz upto 10 MHz was made in the terms of the policy of
the respondent itself, by charging additional revenue share by percentage
points from time to time. It appears that despite this position and the
clear recommendations of the TRAI, the respondent contemplated one-
time spectrum charge for additional spectrum beyond 6.2 MHz and in
that context, communications were addressed on behalf of the
respondent to the TRAI such as the one addressed on 09.07.2008.
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52. This was in contradiction to a press release issued by the
respondent itself on 19.10.2007, wherein it was stated that in addition to
annual spectrum charges based on revenue share, a spectrum
enhancement charge may be levied at the time of additional spectrum
allotment to licensees beyond 10 MHz. As a matter of fact, it was
specified that for each additional MHz beyond 10 MHz, a spectrum
enhancement charge at the rate of 16 crores, 8 crores and 3 crores ₹ ₹ ₹
for various categories would be charged. Hence, it appears that the
respondent, for the first time, some time in the year 2008, sent the
communications to the TRAI, expressing its intention to propose one-
time charge for additional spectrum beyond 6.2 MHz.
53. In response, on 16.07.2008, the TRAI sent a communication to
the respondent, seeking clarifications with regard to the ‘suitable one-
time charge’ for additional spectrum beyond 6.2 MHz. It is pertinent to
note that the press release dated 19.10.2007, whereby the respondent
intended to levy spectrum enhancement charge for additional spectrum
allotment beyond 10 MHz, was challenged by COAI by filing petition
before the TDSAT. The said petition was dismissed. The TDSAT, inter
alia , found that the cellular operators/service providers like the
petitioners, did not have vested right in spectrum beyond 6.2 MHz under
the UAS license. It is to be noted that an appeal against the said order of
the TDSAT, is pending before the Supreme Court being Civil Appeal
No.3472 of 2009. We find substance in the contention of the petitioners
that clause 43.5 of the UAS license extracted in the order of the TDSAT
is different from clause 43.5 of the license quoted hereinabove, as the
clause quoted hereinabove does not provide for a maximum cap on
spectrum that may be allotted.
54. It appears that subsequent thereto, another Committee was
constituted by the respondent under the Chairmanship of the then
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Additional Secretary of the Department of Telecommunications. The
report of the said Committee, for the first time, specifically
recommended an upfront charge for spectrum assigned beyond 6.2 MHz.
It was recommended that those licensees, who had obtained additional
spectrum beyond 6.2 MHz, prior to 17.01.2008, should be given an
option of paying an upfront charge for the remaining period of spectrum
assigned from the date when annual spectrum usage rates became
uniform or a subsequent date from which they exercise the option. If
they were to exercise the option, the annual spectrum usage charges
would become 3% of the AGR, instead of higher rate being levied.
55. Apart from the fact that the drift of the said recommendations
appeared to chart a new course, the language used in clause (f) of the
said recommendations shows that if the option of paying upfront charge
was to be exercised, the spectrum usage charges would drop to 3% of
AGR from the higher rate being levied. In any case, the said
recommendations were not clear about the point in time or the period for
which the upfront charge would be levied. It is strange that additional
spectrum was allocated from time to time on revenue sharing basis by
the respondent itself, in terms of the UAS license and subsequently, such
recommendations were being made by the Committee, whose Chairman
was one of the officers of the respondent.
56. It is in this backdrop that on 11.05.2010, the TRAI, for the first
time, recommended levy of one-time charge for spectrum held beyond
6.2 MHz. This was in contrast with its own earlier recommendations.
The petitioners raised objections to the said recommendation of the
TRAI, inter alia , stating that such approach was illogical. At this stage
came the judgement of the Supreme Court in the case of Centre for
Public Interest Litigation and others Vs. Union of India and others ,
(2012) 3 SCC 1 , also known as the 2G spectrum judgement. It is crucial
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to note that while spectrum was recognized as a scarce and limited
natural resource, it was specifically recorded that the licenses issued
between the years 2001 to 2007 were not the subject matter of the said
petition. It is in this backdrop that the impugned decisions were issued
by the respondent – Union of India, through the Department of
Telecommunications, levying one-time charge for spectrum held beyond
6.2 MHz from the year 2008 onwards.
57. This Court has referred to the aforementioned documents,
including licenses, communications, orders, etc., to consider the
approach adopted by the respondent in the process of implementation of
NTP-99, whereby a paradigm shift took place from the regime of fixed
license fees to the revenue share model. The license fee specifically
included revenue share and the documents indeed show that where
additional spectrum beyond 6.2 MHz was allotted from time to time,
additional revenue share was added and charged.
58. In other words, allocation of additional spectrum was on the basis
of consideration in the form of increased revenue share as percentage
points of AGR. The TRAI, in its recommendations, indicated that there
was no question of any spectrum enhancement charge or one-time
spectrum charge being levied, in the light of the aforesaid percentage
point increase of revenue share at every stage of allocation of additional
spectrum to the petitioners and others. As a matter of fact,
recommendation for payment of one-time spectrum charge, if at all, in
terms of the above-quoted paragraph No.6.6 of the recommendations of
the TRAI dated 28.08.2007, show that such a recommendation was only
if the additional spectrum was to be allotted beyond 10 MHz. Therefore,
upto 10 MHz, even the TRAI was of the view that there was no question
of charging any one-time spectrum charge.
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59. Yet, the respondent seems to have changed its tune midway
through the process of implementation of NTP-99, by claiming that one-
time spectrum charge would be levied for additional spectrum beyond
6.2 MHz. Such sudden change in approach cannot be justified. In any
case, it has to be in consonance with the power available to the
respondent either under the statute i.e. Section 4 of the Telegraph Act or
within the clauses of license agreements.
60. At this stage, it would be appropriate to refer to the above-quoted
objectives and targets of NTP-99. The emphasis therein was clearly on
spreading the net of cellular services throughout India with specific
reference to the rural areas to increase rural teledensity and to provide
affordable services in remote, hilly and tribal areas of the country. It was
also meant for efficient utilization of spectrum. Thus, revenue
maximisation was clearly not the objective or target of NTP-99. The
emphasis was clearly on affordable telecommunication services and
cellular service being made available to as many persons as possible, by
spreading the net wide into the rural and tribal areas.
61. It is crucial to understand that the policy decision taken by
respondent, while framing NTP-99 envisaged revenue sharing model to
determine the consideration for grant of license and also, to apply the
model of revenue sharing, even while imposing charges for usage of
spectrum. We are unable to agree with the respondent that the petitioners
were allotted spectrum ‘virtually free of charge’. The aforesaid
documents and the manner in which the objectives and targets of NTP-
99 were sought to be achieved, shows that there was no place for
imposition of one-time spectrum charge by the impugned decisions in
the year 2012, retrospectively for the period beginning in the year 2008.
This brings us to the question of source of power with the respondent to
levy such one-time spectrum charge in a retrospective manner by the
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impugned decisions in the year 2012.
Source Of Power To Levy one-time Spectrum Charge:
62. As noted hereinabove, the petitioners before this Court have
repeatedly questioned the source of power available to the respondent to
impose the impugned decisions for payment of one-time spectrum
charge in the year 2012, retrospectively from the year 2008. The
respondent asserts that it has statutory power to do so under Section 4 of
the Telegraph Act and it is further asserted that certain clauses of the
aforementioned license agreements can be said to be the source of
power.
63. The relevant portion of Section 4 of the Telegraph Act reads as
follows:
“4. Exclusive privilege in respect of telegraphs, and
power to grant licences.- [(1)] Within [India], the Central
Government shall have the exclusive privilege of
establishing, maintaining and working telegraphs:
Provided that the Central Government may grant a
license, on such conditions and in consideration of such
payments as it thinks fit, to any person to establish, maintain,
or work a telegraph within any part of [India]:”
64. A perusal of the above-quoted provision indeed shows that the
respondent - Union of India (Central Government) can issue license on
such conditions and in consideration of such payment as it thinks fit for
establishment, maintenance or working of telegraphs within any part of
India. It is crucial to note that the respondent can grant such license on
conditions and consideration of payments, as it thinks fit. It appeals to
logic that imposition of conditions and determination of consideration of
payments, has to be crystallized at the time of grant of license. After all,
it is only when private operators like the petitioners agree to the
proposed conditions and consideration of payments that a concluded
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contract comes into existence. Certainty of consideration is indeed a
crucial aspect of any such contract/license. If there is uncertainty, it
would be impossible for the parties to the contract to be able to reach a
considered decision as to whether such a contract can to be executed.
65. The Supreme Court, in the case of Delhi Development Authority
and another Vs. Joint Action Committee, Allottee of SFS Flats and
others ( supra ), observed as follows:
“66. The stand taken by DDA itself is that the relationship
between the parties arises out of the contract. The terms
and conditions therefor were, therefore, required to be
complied with by both the parties. Terms and conditions
of the contract can indisputably be altered or modified.
They cannot, however, be done unilaterally unless there
exists any provision either in contract itself or in law.
Novation of contract in terms of Section 60 of the
Contract Act must precede the contract-making process.
The parties thereto must be ad idem so far as the terms
and conditions are concerned. If DDA, a contracting
party, intended to alter or modify the terms of contract, it
was obligatory on its part to bring the same to the notice
of the allottee. Having not done so, it, relying on or on
the basis of the purported office orders which are not
backed by any statute, new terms of contract could ( sic
not be) thrust upon the other party to the contract. The
said purported policy is, therefore, not beyond the pale of
judicial review. In fact, being in the realm of contract, it
cannot be stated to be a policy decision as such.
xxx xxx xxx xxx
80. A definite price is an essential element of binding
agreement. A definite price although need not be stated
in the contract but it must be worked out on some
premise as was laid down in the contract. A contract
cannot be uncertain. It must not be vague. Section 29 of
the Contract Act reads as under:
‘29. Agreements void for uncertainty.- Agreements, the
meaning of which is not certain, or capable of
being made certain, are void.’
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A contract, therefore, must be construed so as to lead to a
conclusion that the parties understood the meaning
thereof. The terms of agreement cannot be vague or
indefinite. No mechanism has been provided for
interpretation of the terms of the contract. When a
contract has been worked out, a fresh liability cannot be
thrust upon a contracting party.
81. It is well settled that a definite price is an essential
element of a binding agreement. Although a definite
price need not be stated in the contract, but assertion
thereof either expressly or impliedly is imperative.”
66. Thus, certainty of consideration or a definite price is clearly an
essential element of a binding contract. Even if a definite price is not
stated in the contract, it must be either expressly or impliedly asserted. If
at all any modification or change is to be made with respect to
consideration, it cannot be done unilaterally, unless the contract provides
for the same and novation of the contract, if any, must precede the
contract-making process. The parties to the contract should be clear and
agreeable to the modification of the terms of contract.
67. On the same lines, the Supreme Court, in the case of Bharat
Sanchar Nigam Limited and another Vs. BPL Mobile Cellular
Limited and others ( supra ), held as follows:-
“51. In the instant case, the resources to be leased out were
subject to agreement. The terms were to be mutually
agreed upon. The terms of contract, in terms of Section 8
of the Contract Act, fructified into a concluded contract.
Once a concluded contract was arrived at, the parties
were bound thereby, If they were to alter or modify the
terms thereof, it was required to be done either by
express agreement or by necessary implication which
would negate the application of the doctrine of
‘ acceptance sub silentio ’. But, there is nothing on record
to show that such a course of action was taken. The
respondents at no point of time were made known either
about the internal circulars or about the letters issued
from time to time not only changing the tariff but also
the basis thereof.”
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68. The said position of law was followed by a Division Bench of this
Court in the case of Musale Constructions, Builders and Contractors,
Nagpur Vs. Vidarbha Irrigation Development Corporation, Nagpur
and another ( supra ). In the said judgement, this Court held as follows:-
“15. The impugned circular by which the revised instructions
are issued cannot be made applicable to the case of the
petitioner, as it would amount to alteration of the terms
of the contract entered into between the petitioner and
the first respondent unilaterally, which is not permissible
in view of the settled legal position. The Hon'ble
Supreme Court in BSNL (supra) found that where the
Department of Telecommunication (DoT) claimed
charges from the mobile companies on the basis of the
internal circular issued, contrary to the contracts entered
into between the parties, held: ‘the circulars having no
statutory force would not govern the terms of the
contract, such circulars cannot ipso facto be given effect
to unless they become part of the contract. Once a
concluded contract was arrived at between the parties
concerned, they were bound thereby. If the parties were
to alter/modify the terms of contract, it was required to
be done either by express agreement or by necessary
implication which would negate the application of the
doctrine of 'acceptance sub silentio'. Any novation in
contract was to be done on the same terms as are
required and entered into a valid and concluded contract
and no change into the contract could have been made
unilaterally. When a contract entered into between the
parties, what is determinative is enforcement of the terms
and conditions to be governed by the contract, subject, of
course, to the application of the statute and statutory
provisions. Promise on the part of the government was
acted upon by the respondents, therefore, the
Government now should not ordinarily be permitted to
take a different stand.’
This Court in C-5 Facility and Security Services, Nagpur
Vs. B.S.N.L. , held that "the parties are bound by the
agreement and the respondents ought not to have
modified part of the terms of the agreement unilaterally,
the reasons assigned by the respondent for issuance of
corrigendum would not be enough to unilaterally modify
the terms and conditions of the agreement, particularly
when petitioner deployed Security Guards exclusively
within the framework of the contract."
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The Hon'ble Apex Court in Suresh Kumar Wadhwa Vs.
State of Madhya Pradesh and others, 2017 MhLJ Online
(S.C.) 120 AIR 2017 SC 5435 , held:-
26. Equally well-settled principle of law relating to
contract is that a party to the contract can insist for
performance of only those terms/conditions, which
are part of the contract. Likewise, a party to the
contract has no right to unilaterally "alter" the
terms and conditions of the contract and nor they
have a right to "add" any additional
terms/conditions in the contract unless both the
parties agree to add/alter any such terms/conditions
in the contract.
27. Similarly, it is also a settled law that if any party
adds any additional terms/conditions in the contract
without the consent of the other contracting party
then such addition is not binding on the other party.
Similarly, a party, who adds any such
term/condition, has no right to insist on the other
party to comply with such additional
terms/conditions and nor such party has a right to
cancel the contract on the ground that the other
party has failed to comply such additional
terms/conditions.”
69. At this stage, it would be appropriate to refer to the position of
law with regard to the contract or licence agreement executed by the
respondent, while exercising power under Section 4 of the Telegraph
Act. In the case of Union of India and another Vs. Association of Unified
Telecom Service Providers of India and others , (2011) 10 SCC 543 , the
Supreme Court observed as follows:
“39. The proviso to sub-section (1) of Section 4 of the
Telegraph Act, however, enables the Central Government
to part with this exclusive privilege in favour of any
other person by granting a licence in his favour on such
conditions and in consideration of such payments as it
thinks fit. As the Central Government owns the exclusive
privilege of carrying on telecommunication activities and
as the Central Government alone has the right to part
with this privilege in favour of any person by granting a
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licence in his favour on such conditions and in
consideration of such terms as it thinks fit, a licence
granted under the proviso to sub-section (1) of Section 4
of the Telegraph Act is in the nature of a contract
between the Central Government and the licensee.
40. A Constitution Bench of this Court in State of Punjab v.
Devans Modern Breweries Ltd. [(2004) 11 SCC 26]
relying on Har Shankar case [(1975) 1 SCC 737] and
Panna Lal v. State of Rajasthan [(1975) 2 SCC 633] has
held in para 121 at p. 106 that issuance of liquor licence
constitutes a contract between the parties. Thus, once a
licence is issued under the proviso to sub-section (1) of
Section 4 of the Telegraph Act, the licence becomes a
contract between the licensor and the licensee.
Consequently, the terms and conditions of the licence
including the definition of adjusted gross revenue in the
licence agreement are part of a contract between the
licensor and the licensee. We have to, however, consider
whether the enactment of the TRAI Act in 1997 has in
any way affected the exclusive privilege of the Central
Government in respect of the telecommunication
activities and altered the contractual nature of the licence
granted to the licensee under the proviso to sub-section
(1) of Section 4 of the Telegraph Act.”
70. This was followed in the judgement of the Supreme Court in the
case of Bharti Airtel Limited Vs. Union of India ( supra ), relevant
portion of which reads as follows:
“32. At the outset, we agree with the licensees that a licence
granted under Section 4 of the Act is a contract between
the Government of India and the licensees.
33. In Union of India v. Assn. of Unified Telecom Service
Providers of India , relying upon an earlier Constitution
Bench judgment of this Court in State of Punjab v.
Devans Modern Breweries Ltd. , which in turn relied
upon two earlier decisions of this Court in Har Shankar
v. Excise and Taxation Commr. and Panna Lal v. State of
Rajasthan , this Court held: ( Assn. of Unified Telecom
Service Providers of India case, SCC p. 564, para 40 )
‘40. … Thus, once a licence is issued under the
proviso to sub-section (1) of Section 4 of
the Telegraph Act, the licence becomes a
contract between the licensor and the
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licensee. Consequently, the terms and
conditions of the licence including the
definition ... are part of a contract between
the licensor and the licensee."
34. Therefore, now it is the settled position of law that a
licence granted under Section 4(1) of the Telegraph
Act such as the one granted to each of the licensees
herein is a contract between the licensor and the
licensee.’
71. The above-quoted position of law makes it abundantly clear that
when the respondent - Union of India (Central Government) exercises its
power under Section 4 of the Telegraph Act and executes a license
agreement in favour of parties like the petitioners herein, such licenses
are nothing but contracts consisting of clauses, terms and conditions that
are binding on the parties to the contract. Such a contract in the form of
license, must have a definite price and clearly discernible consideration
in terms of the position of law noted hereinabove. The terms of contract
are the determining factors and the source of power for the respondent –
Union of India to justify its impugned decisions, must have its source in
the terms of contract. The respondent obviously cannot claim statutory
power under Section 4 of the Telegraph Act to act as per its own whim,
notwithstanding the terms of contract/license executed as per the power
available under the said provision.
72. The respondent claims that the source of power for issuing the
impugned decisions, for retrospective imposition of one-time spectrum
charge, is found in clause 13(ii) of the original license agreement dated
29.11.1994, executed under the Telecom Policy of the year 1994; in
clauses 5.1, 18.3, 23.5 and 43.5 of the UAS license agreement executed
in the year 2005, in the light of NTP-99 and the consequential
acceptance of migration package as well as amendments in the original
license agreement by the petitioner.
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73. The interpretation of the clauses quoted hereinabove, clearly
indicates that the respondent is not justified in finding its source of
power to impose one-time spectrum charge retrospectively in the year
2012, in the aforementioned clauses of the license agreements.
74. Clause 13(ii) of the 1994 agreement and clause 5.1 of 2005
agreement, both reserve the right in the respondent as the licensor, to
modify the terms and conditions of the license in three contingencies i.e.
in public interest, interest of the security of the State or proper conduct
of telegraphs. In the first place, while issuing the impugned decisions,
there is no reference to any of the three contingencies. When this Court
specifically put pointed queries to the learned ASG appearing for the
respondent in this regard, it was claimed that the impugned decisions
were issued in public interest.
75. We have already noted hereinabove that the objectives and targets
of NTP-99 pertained to spreading the net of cellular telecommunication
facility and providing affordable services throughout the country with
specific emphasis on rural areas as well as remote tribal and far-flung
areas. The objectives also included efficient utilization of spectrum.
Revenue maximisation was clearly not an objective or target of NTP-99.
The policy was formulated by the respondent itself and ‘public interest’
or common good would have to be construed in the context of the
objectives and targets of NTP-99. As already noted hereinabove, the
Constitution Bench of the Supreme Court has laid down that the concept
of ‘common good’ has to be interpreted and appreciated in a holistic
manner and that revenue maximisation is not the only way in which the
common good can be subserved. It was held that revenue consideration
may assume secondary position to developmental consideration. Thus,
the argument of ‘public interest’ raised on behalf of the respondent in the
context of NTP-99, does not hold good. In any case, the respondent
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earned far more revenue under the revenue share regime of NTP-99, as
compared to fixed license fee under Telecom Policy of 1994. Revenue
was also augmented by taxes levied on the enhanced earnings of the
cellular operators, due to the large scale increase in the subscriber base.
76. This is quite apart from the fact that in terms of law clarified by
the Supreme Court in the aforementioned judgements pertaining to
certainty of consideration, the respondent cannot be permitted to change
the very consideration of grant of license, after it has been granted and
the parties have proceeded on the basis of such license agreement. The
respondent cannot be permitted to change the contract midway to change
the goal post and then claim that it took the decision in ‘public interest’.
The respondent is bound by the terms and conditions of the contract i.e.
the aforementioned licenses.
77. The respondent did not propose any modification of the terms of
contract and issued the impugned decisions abruptly and unilaterally,
imposing one-time spectrum charge retrospectively from the year 2008
on the petitioners. The consideration for grant of license, as per revenue
sharing regime introduced under NTP-99, and manifested in the
amended license agreements, was specific and as noted hereinabove, at
each stage when additional spectrum was allocated, additional charge as
percentage point of the AGR was imposed and the same was paid by the
petitioners. They also paid charges for usage of such spectrum in terms
of the amended license agreements. In other words, the petitioners had
paid the entire consideration as per the terms and conditions of
contract/licenses and yet, the respondent suddenly chose to impose one-
time spectrum charge and that too, retrospectively.
78. This Court finds substance in the contention raised on behalf of
the petitioners that such decisions taken on whims by the respondent,
which are not justifiable either under the statute or under the terms of
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contract/licenses, cannot be sustained and if held otherwise, it would be
impossible to conduct business. Thus, we find that the respondent has
not been able to identify any source of power to issue the impugned
decisions and the consequent demand notices.
Judicial Review in Contractual Matters
when the State is a Party to Contracts:
79. The Supreme Court, in the case of Subodh Kumar Singh
Rathour Vs. Chief Executive Officer and others ( supra ), referred to
its earlier judgements on the scope of judicial review in contractual
matters when the State is party to the contract and it was held that
although the inter se relation between the parties would certainly be
governed by the terms of contract, yet the decision of the State can be
the subject matter of judicial review, on the grounds of relevance and
reasonableness, fair play, natural justice, equality and non-
discrimination, as held in Mahabir Auto Stores and others Vs. Indian Oil
Corporation and others , (1990) 3 SCC 752 .
80. This becomes relevant in the present case because while issuing a
license purely as a contract under Section 4 of the Telegraph Act, the
State i.e. the respondent - Union of India is after all exercising a
statutory power. Although the learned senior counsel appearing for the
petitioners appeared to be steering clear of the argument pertaining to
arbitrariness on the part of the respondent and violation of Article 14 of
the Constitution of India, this Court is of the opinion that in terms of the
evolution of law with regard to judicial review, even in such contractual
matters, the Court can go into the aspect of the approach adopted by the
State as a party to the contract. This is particularly relevant when the
petitioners in these petitions, are alleging that under the garb of ‘public
interest’, the respondent - Union of India, as a party to the contract, has
acted beyond the terms of contract and that it has not been able to
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identify any source of power to issue the impugned decisions.
81. In this context, in the aforementioned judgement in the case of
Subodh Kumar Singh Rathour Vs. Chief Executive Officer and
others ( supra ), the Supreme Court observed as follows:-
“55. Thereafter, this Court in its decision in M.P. Power
Management Co. Ltd., Jabalpur v. Sky Power Southeast
Solar India Pvt. Ltd. reported in (2023) 2 SCC 703
exhaustively delineated the scope of judicial review of
the courts in contractual disputes concerning public
authorities. The aforesaid decision is in the following
parts:-
[...](i) Scope of Judicial Review in matters pertaining
to Contractual Disputes:-
This Court held that the earlier position of law that
all rights against any action of the State in a non-
statutory contract would be governed by the
contract alone and thus not amenable to the writ
jurisdiction of the courts is no longer a good law in
view of the subsequent rulings. Although writ
jurisdiction is a public law remedy, yet a relief
would still lie under it if it is sought against an
arbitrary action or inaction of the State, even if they
arise from a non-statutory contract. The relevant
observations read as under:—
"53. [..] when the offending party is the State.
In other words, the contention is that the law in
this field has witnessed an evolution and, what is
more, a revolution of sorts and a transformatory
change with a growing realisation of the true
ambit of Article 14 of the Constitution of India.
The State, he points out, cannot play the Dr.
Jekyll and Hyde game anymore. Its nature is cast
in stone. Its character is inflexible. This is
irrespective of the activity it indulges in. It will
continue to be haunted by the mandate of Article
14 to act fairly. There has been a stunning
expansion of the frontiers of the Court's
jurisdiction to strike at State action in matters
arising out of contract, based, undoubtedly, on
the facts of each case. It remains open to the
Court to refuse to reject a case, involving State
action, on the basis that the action is, perse,
arbitrary .
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i. It is, undoubtedly, true that the writ jurisdiction is a
public law remedy. A matter, which lies entirely
within a private realm of affairs of public body,
may not lend itself for being dealt with under the
writ jurisdiction of the Court.
ii. The principle laid down in Bareilly Development
Authority (supra) that in the case of a non statutory
contract the rights are governed only by the terms
of the contract and the decisions, which are
purported to be followed, including Radhakrishna
Agarwal (supra), may not continue to hold good, in
the light of what has been laid down in ABL (supra)
and as followed in the recent judgment in Sudhir
Kumar Singh (supra).
iii. The mere fact that relief is sought under a contract
which is not statutory, Will not entitle the
respondent-State in a case by itself to ward-off
scrutiny of its action or inaction under the contract,
if the complaining party is able to establish that the
action/inaction is, per se, arbitrary."
(Emphasis supplied)”
82. We find that to this limited extent, the aspect of unreasonableness
does come into picture, as the respondent - Union of India, being party
to the contract/license agreement, would have to justify the impugned
decisions within the four corners of terms and conditions of the contract.
Although we are conscious of the fact that the issues raised herein by the
petitioners, do not directly concern arbitrariness in State action, since the
subject contract/license agreements are in exercise of statutory power
under Section 4 of the Telegraph Act and the Supreme Court has held
that a license issued under the said provision is a pure contract, the
respondent, as a party to the contract, would still be required to justify its
action in issuing the impugned decisions. In the aforementioned
judgement in the case of Subodh Kumar Singh Rathour Vs. Chief
Executive Officer and others ( supra ), the Supreme Court further held
as follows:-
“127. The sanctity of contracts is a fundamental principle
that underpins the stability and predictability of legal
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and commercial relationships. When public authorities
enter into contracts, they create legitimate expectations
that the State will honour its obligations. Arbitrary or
unreasonable terminations undermine these
expectations and erode the trust of private players
from the public procurement processes and tenders.
Once a contract is entered, there is a legitimate
expectation, that the obligations arising from the
contract will be honoured and that the rights arising
from it will not be arbitrarily divested except for a
breach or non-compliance of the terms agreed
thereunder. In this regard we may make a reference to
the decision of this Court in Sivanandan C.T. v. High
Court of Kerala reported in (2024) 3 SCC 799
wherein it was held that a promise made by a public
authority will give rise to a legitimate expectation that
it will adhere to its assurances. The relevant portion
reads as under:-
‘18. The basis of the doctrine of legitimate expectation
in public law is founded on the principles of
fairness and non-arbitrariness in Government
dealings with individuals. It recognises that a
public authority's promise or past conduct will
give rise to a legitimate expectation. The doctrine
is premised on the notion that public authorities,
while performing their public duties, ought to
honour their promises or past practices. The
legitimacy of an expectation can be inferred if it is
rooted in law, custom, or established procedure
XXX XXX XXX
45. The underlying basis for the application of the
doctrine of legitimate expectation has expanded
and evolved to include the principles of good
administration. Since citizens repose their trust in
the State, the actions and policies of the State give
rise to legitimate expectations that the State will
adhere to its assurance or past practice by acting
in a consistent, transparent, and predictable
manner. The principles of good administration
require that the decisions of public authorities
must withstand the test of consistency,
transparency, and predictability to avoid being
regarded as arbitrary and therefore violative of
Article 14.’
(Emphasis supplied)”
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83. Thus, the petitioners clearly had a legitimate expectation that the
respondent - Union of India would act within the terms of contract and
that it would not act in a manner not justified within the terms of
contract or a statutory provision, by merely claiming that it was doing so
under the garb of ‘public interest’. Private entities like the petitioners
engage with the Government in contractual matters with such basic
legitimate expectation involving certainty in contractual obligations,
including certainty regarding consideration of contract.
84. We find that in the present case, the impugned decisions have the
effect of placing liability on the petitioners retrospectively for a period
starting from the year 2008, while the decisions were taken in the year
2012. Since we have already found that there was lack of power in the
respondent Union of India either under the Statute or under the terms of
the contract to impose such a retrospective liability, the impugned
decisions become nothing but executive orders without any source of
power, seeking to impose liability retrospectively. It is a settled position
of law, as reiterated by the Supreme Court in the case of Bharat Sanchar
Nigam Limited and others Vs. Tata Communications Limited , 2022 SCC
OnLine SC 1280 that executive orders cannot be made applicable with
retrospective effect. Even the power to make retrospective legislations
can be exercised if the concerned statute provides for such a power. We
find that in the present case, the respondent has not been able to justify
its unilateral action of issuing the impugned decisions within the four
corners of the terms and conditions of the contract / license agreements
or the relevant statutory provision and therefore, the retrospective effect
of the same further demonstrates its illegitimacy, rendering the same
unsustainable and liable to be set aside.
85. The least that private parties like the petitioners expect from the
respondent i.e. the Union of India when such contracts / license
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agreements are executed, is that the State as the contracting party would
act within the terms and conditions of the contract and that there would
be consistency in decision making, demonstrating good administration.
As noted hereinabove, the respondent Union of India acted in terms of
NTP-99, as also the consequent migration package and amendments to
the license agreements with renewed license agreements being executed,
by charging additional percentage points of AGR as consideration for
grant / allocation of spectrum beyond 4.4 MHz / 6.2 MHz. Suddenly it
changed track midway through the working of the contract / license by
claiming that ‘an upfront charge’ or ‘one-time spectrum charge’ was
required to be paid for ‘allocation of additional spectrum’. The TRAI in
its recommendations, noted hereinabove, clearly stated that such one-
time spectrum charge could be levied, if at all, for additional spectrum
beyond 10 MHz, but, after the respondent Union of India kept on
insisting that it was contemplating levying of such charge, the TRAI also
appears to have indicated that such one-time spectrum charge could be
levied. As noted hereinabove, in the interregnum, committees appointed
by the respondent itself, opined that no additional charge could be
levied. As a matter of fact, the UAS license of the year 2005 recorded
that no further entry fee would be charged for existing licensees like the
petitioners. This clearly indicates inconsistency in the conduct of the
respondent, although the terms of the contract / license clearly show that
under the revenue sharing regime implemented as per NTP-99, the
petitioners were indeed charged with and they paid additional amounts
from time to time as percentage points of AGR for assignment /
allocation of spectrum upto 10 MHz. We find substance in the
contention of the petitioners that in such circumstances, the impugned
decisions are clearly rendered unsustainable.
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Judgement of the Madras High Court in the case of
Aircel Cellular Limited Vs. Union of India (s upra )
and Orders passed by the TDSAT :-
86. The respondent has heavily relied upon the judgement of the
Madras High Court in the case of Aircel Cellular Limited Vs. Union of
India ( supra ), to contend that one-time spectrum charge levied on
similarly situated cellular service operators / providers was upheld. In
fact, reliance was placed on the judgement of this Court in the case of
Laya Binaykumar Pandey Vs. Medical Council of India and others
(supra) , to contend that once a co-ordinate Constitutional Court had
taken a view in the matter, this Court ought to follow the same.
87. A perusal of the judgement of this Court in the case of
Laya
Binaykumar Pandey Vs. Medical Council of India and others (supra)
shows that ordinarily such a view taken by a co-ordinate Constitutional
Court should be adopted unless the view is found to be unsustainable.
88. We find that the judgement of the Madras High Court, at best, can
be of persuasive value for this Court. We have already given
hereinabove, detailed reasons as to why we find that the respondent has
failed to justify the impugned decisions and the consequent demand
notices. A perusal of the judgement of the Madras High Court in the case
of Aircel Cellular Limited Vs. Union of India ( supra ) shows that
much reliance has been placed on clause 13(ii) of the license agreement
executed in the year 1994. The Madras High Court found that one of the
contingencies contemplated under clause 13(ii) of the said agreement
pertaining to ‘public interest’ stood satisfied for justifying issuance of
decisions identical to the decisions impugned herein. We find that the
Madras High Court, in its judgement, has reached a conclusion that any
revenue generation contemplated by means of imposition of one-time
spectrum charge has to be construed as a step in ‘public interest’. It is
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further held that the respondent was well within its rights under clause
13(ii) of the said agreement to impose such a levy as a licensor. Before
reaching such a conclusion, the Madras High Court placed much
emphasis on the meaning of the word ‘modify’ by referring to various
judgements and dictionary meanings. We are in respectful disagreement
with the view expressed by the Madras High Court for the reasons
recorded hereinabove and particularly because we find that equating
‘revenue maximization’ to ‘public interest’ in all cases without
exception, is unacceptable. As to what can be said to be the public
interest would depend on the facts and circumstances of each case. We
have also found that the objectives and targets of NTP-99 were specific
and revenue maximization was certainly not covered under the same.
Even otherwise, we have found that before issuing the impugned
decisions, there was no ‘modification’ of the terms and conditions of the
license agreements and this was clearly not a case of novation. The
respondent unilaterally imposed the levy and that too, without any
source of power identifiable in the terms and conditions of the contract
or the relevant statutory provision.
89. The contentions raised before this Court on various aspects of the
matter were not canvassed before the Madras High Court and therefore,
we are unable to agree with the view taken in the said judgement.
90. As regards the orders passed by the TDSAT, we find that the said
orders have taken divergent views, some of which appear to be in favour
of the position canvassed on behalf of the petitioners. But, since such
orders have been challenged before the Supreme Court and the appeals
are pending, not much turns upon the contents of such orders. As a
matter of fact, this Court has independently applied its mind to the rival
contentions raised on behalf of the parties to reach the aforementioned
findings, upon a detailed analysis of the rival submissions.
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CONCLUSION
91. In view of the findings rendered hereinabove, we have come to a
conclusion that the petitioners have been able to make out a case in their
favour seeking quashing and setting aside of the impugned decisions and
consequent demand notices. The respondent has not been able to justify
the said decisions and its action of levying one-time spectrum charge
retrospectively upon the petitioners. As a consequence, the writ petitions
deserve to be allowed in terms of the prayers made therein.
:: ORDER ::
92. Accordingly, the writ petitions are allowed in the following
terms:-
(I) Writ Petition No.1461 of 2013 ( Bharti Airtel Limited and another
Vs. Union of India ) is allowed in terms of prayer clause (a), which reads
as follows:-
“(a) That this Hon’ble Court be pleased to quash and set
aside the Impugned Decisions date 08.11.2012 and
28.12.2012 and the demand notices dated 08.01.2013
and 27.06.2018 issued by the Respondent imposing a
onetime spectrum charge;”
(II) Writ Petition No.2029 of 2013 ( Vodafone Idea Limited Vs. Union
of India and others ) is allowed in terms of prayer clauses (a) and (b),
which read as follows:-
“(a) pass a writ, order or direction to quash and set aside
the Impugned Decisions dated 08.11.2012 and
28.12.2012 imposing a one-time spectrum charge;
(b) pass a writ, order or direction to quash and set aside
the Impugned Demand Note dated 08.01.2013 raised
by the Respondent No.1;”
(III) Consequently, the bank guarantees, if any, given by the petitioners
shall be returned and they would not be required to keep them alive in
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future. Any steps that may have been taken by the respondent in
pursuance of the impugned decisions and demand notices also stand
quashed and set aside.
93. Rule is made absolute in the above terms. Pending applications, if
any, also stand disposed of.
(SHREERAM V. SHIRSAT, J.) (MANISH PITALE, J.)
Priya / Minal
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