The Supreme Court has held that Sistema Shyam Teleservices Limited must pay spectrum-related charges from February 2, 2012, the date on which the Court quashed 2G licences. The Court rejected the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) view that the liability would start only from February 15, 2013.
A Bench of Justice Sanjay Kumar and Justice K. Vinod Chandran allowed the Union Government’s appeal against the TDSAT order dated May 10, 2018. The Bench ruled that when a telecom operator continues operations after its licence is quashed, it must pay for spectrum use from the date of cancellation itself.
Background in the 2G spectrum litigation
The dispute arose from the landmark 2G Spectrum case. In February 2012, the Supreme Court struck down 122 telecom licences, including those held by the respondent, Sistema Shyam Teleservices Limited. The Court found the allocation process illegal and arbitrary.
Even after quashing the licences, the Court allowed operators to continue services for a limited period. It did so to avoid disruption to the public, until fresh auctions could take place.
However, delays by the Department of Telecommunications (DoT) slowed the auction process. Because of repeated extensions, companies (including the respondent) continued commercial operations even though they no longer held valid licences.
DoT demand and TDSAT’s partial acceptance
On February 15, 2013, the Supreme Court directed that operators who continued operations after February 2, 2012 must pay the reserve price fixed for the November 2012 auction.
Based on this direction, the DoT raised a demand of about ₹636 crore, along with interest. The DoT calculated the amount from February 2, 2012.
Sistema Shyam challenged this demand before the TDSAT. The tribunal partly accepted the challenge. It held that liability would start only from February 15, 2013, and not from February 2, 2012.
Supreme Court: liability clearly begins from 02.02.2012
The Supreme Court disagreed with TDSAT on the start date. In a judgment authored by Justice Sanjay Kumar, the Court held that the respondent continued to earn revenue by using spectrum after its licence stood quashed. Because of that continued benefit, the respondent must pay the reserve price for the entire period it kept operating.
The Court recalled that licensees continued operations even more than a year after their licences were quashed. Extension orders enabled this continuation. In that context, the Court had directed that licensees continuing operations after 02.02.2012, even if they did not participate in the November 2012 auction, must pay the reserve price fixed for that auction.
The Court said this direction imposed a premium on operators who kept benefiting from licences that the Court had already set aside.
The Bench also found TDSAT’s reading incorrect. TDSAT said the February 15, 2013 order did not specify a starting date. The Supreme Court held this was factually wrong. It noted that the order expressly linked liability to operators continuing operations after 02.02.2012. The Court said the tribunal could not substitute 15.02.2013 as the commencement date.
Directions on periods and circles
The Supreme Court issued the following directions:
- The respondent must pay the reserve price fixed for the November 2012 auction from 02.02.2012 to 30.04.2013 for the 8 circles where its bid was accepted in March 2013; and
- The respondent must pay the same reserve price from 02.02.2012 to 23.03.2013 for the remaining 13 circles, where it continued operations during that period.
Accordingly, the Court allowed the appeal.
Cause Title: Union of India versus Sistema Shyam Teleservices Limited
Appearance
For Appellant(s):
Mr. Vikramjit Banerjee, A.S.G.; Mr. Nachiketa Joshi, Sr. Adv.; Mr. Apoorva Kurup, Adv.; Mr. Navanjay Mahapatra, Adv.; Mr. Aastha Singh, Adv.; Mr. Abhishek Singh, Adv.; Mr. Amrish Kumar, AOR; Mr. Kartik Dev, Adv.; Ms. Sanjana, Adv.; Mr. Sahil Bhalotia, Adv.; Mr. Rishav Raj, Adv.
For Respondent(s):
Mr. Gopal Jain, Sr. Adv.; Mr. Mansoor Ali Shoket, Adv.; Mr. Nitin Kala, Adv.; Mr. Pukhrambam Ramesh Kumar, AOR; Mr. Kunal Singh, Adv.; Mr. Tannay Jain, Adv.; Ms. Kanishka Rawat, Adv.; Mr. Karun Sharma, Adv.; Ms. Anupama Ngangom, Adv.; Ms. Rajkumari Divyasana, Adv.
