2G Case : Supreme Court Asks Telecom Operator To Pay Spectrum Usage Charges From Date Of Judgment Quashing License

The Supreme Court has held a telecom operator, Sistema Shyam Teleservices Limited, liable to pay the reserve price fixed for the November 2012 spectrum auction from February 2, 2012, the date on which the Court quashed the 2G licences, rejecting the Telecom Disputes Settlement and Appellate Tribunal's (TDSAT) interpretation that the liability arose only from February 15, 2013.

A bench of Justice Sanjay Kumar and Justice K Vinod Chandran allowed the Union Government's appeal challenging the TDSAT order dated May 10, 2018.

The Bench clarified that spectrum usage charges for a telecom operator continuing operations after its licence is quashed are payable from the date of licence cancellation itself, and not from the later date on which the Court formally imposes a levy for such post-quashing use of spectrum.

The dispute traces its origin to the landmark 2G Spectrum case, in which the Supreme Court in February 2012 quashed 122 telecom licences, including those held by the Respondent- Sistema Shyam Teleservices Limited, holding that the allocation process was illegal and arbitrary. While invalidating the licences, the Court permitted the operators to continue services for a limited period to avoid disruption to the public, pending fresh auctions.

However, repeated delays by the Department of Telecommunications (DoT) in conducting auctions resulted in multiple extensions of this temporary framework, allowing companies like Respondent to continue commercial operations despite having no valid licences.

On February 15, 2013, the Supreme Court that operators who continued after February 2, 2012, must pay the reserve price fixed for the November 2012 auction. Acting on this order, the Department of Telecommunications raised a demand of about ₹636 Crore against the Respondent, along with interest, calculated from February 2, 2012.

Respondent challenged this demand before the Telecom Disputes Settlement and Appellate Tribunal. The tribunal partly accepted the challenge, holding that liability could arise only from February 15, 2013, i.e., the date of the charging order, and not from the date of licence cancellation, i.e., February 2, 2012.

Aggrieved by the TDSAT's order, the Union govt. appealed to the Supreme Court.

Disagreeing with the impugned order on the aspect of date of fixation of liability for use of the spectrum beyond the period of cancellation of the license, the judgment authored by Justice Sanjay Kumar, since the Respondent continued to derive revenue from spectrum use after its licence stood quashed, it was liable to pay the reserve price for the entire period of unlawful continuation.

“This Court also took note of the fact that the licensees, whose licences were quashed more than a year earlier, were still continuing to operate pursuant to the extension orders passed from time to time and, accordingly, issued a direction that such licensees who had continued with their operations after 02.02.2012, irrespective of whether they had participated in the auction conducted in November, 2012, should pay the reserve price fixed for the purpose of that auction. This direction levied a premium upon such licensees who were continuing to garner the benefit of the licences illegally granted to them, which already stood quashed, by requiring them to pay the reserve price fixed for the auction held on 12.11.2012.”, the court observed.

“…we may note that the understanding of the TDSAT that this order did not indicate the 'starting date' is factually incorrect. This Court specifically directed that those licensees who had continued their operations 'after 02.02.2012' should pay the reserve price fixed for the auction held in November, 2012, and it is manifestly clear from the context that such liability commenced from 02.02.2012 itself. This aspect was, therefore, not open to interpretation and inquiry, whereby the TDSAT could have applied its own logic and decided that the commencement date would be 15.02.2013. Had that been the intention, this Court would have simply said that such liability would commence from the date of that order. The very fact that this Court referred to the date '02.02.2012' in the context of the licensees who continued with their operations, clearly demonstrates that 02.02.2012 was the commencement date for levy of the liability in terms of that order.”, the court added.

“we hold that the respondent is liable to pay the reserve price fixed for the auction held in November, 2012, from 02.02.2012 till 30.04.2013 in respect of the 8 circles for which its bid was accepted in March, 2013, and from 02.02.2012 till 23.03.2013 for the remaining 13 circles, wherein it continued operations during that period.”, the court ordered.

The appeal was allowed.

Cause Title: Union of India versus Sistema Shyam Teleservices Limited

Citation : 2026 LiveLaw (SC) 184
Click here to download judgment

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.