Supreme Court: In an appeal challenging the order of the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) which interpreted the directions issued by the Supreme Court in Centre for Public Interest Litigation v. Union of India, (2012) 3 SCC 1 (2G spectrum case), particularly on the commencement date, end date and interest liability for payment of the reserve price by the respondent, a Division Bench of Sanjay Kumar* and K. Vinod Chandran, JJ., held that the liability to pay reserve price for post-quashing operations begins from 02 February 2012, i.e., from the date of order in 2G spectrum case and the interest payable from the expiry of the period given in the show-cause notice.
Factual Matrix
The Supreme Court by judgment dated 2 February 2012 in 2G spectrum case (supra), declared the grant of Unified Access Service licences and allocation of 2G spectrum as illegal and quashed the same. The Court, however, postponed the operation of the quashing for 4 months not to benefit the licensee but in the interest of the general public so that telecom services were not abruptly disrupted and fresh auction could be conducted.
Since the auction process was not completed within the contemplated time and extensions were sought by the Department of Telecommunications (DoT), the Supreme Court permitted the existing operators to continue only as an interim measure to protect consumers. Vide order dated 15 February 2013, the Court directed that licensees who had continued operations after 2 February 2012 “shall pay the reserve price fixed by the Government for the purpose of conducting auction in November 2012.”
In the present case, the respondent had continued operations and later emerged successful in the auction held on 11 March 2013 for 800 MHz Band Spectrum in 8 service areas.
The Supreme Court vide order dated 11 March 2013, directed that the respondent would be entitled to continue to operate its services in the 8 service areas for which its bid had been accepted. A Letter of Intent (LoI) was issued to it on 30 April 2013.
A show-cause notice dated 17 November 2014 and subsequent demand notices were issued against them for the payment of reserve price with interest. The respondent challenged these demands before TDSAT.
TDSAT held that the liability to pay the reserve price would commence only from 15 February 2013 and not from 02 February 2012. It also restricted the end date and directed that interest would run only from expiry of the time mentioned in the show-cause notice.
Moot Points
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What is the commencement date for liability to pay the reserve price in terms of the order dated 15 February 2013?
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What is the appropriate end date for levy of such liability in respect of different service areas?
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From which date is interest payable on the reserve price amount?
Court’s Analysis
Nature of continued operations post-quashing
The Court emphasised that the licensees were given “a lease of life” only to protect the general public from disruption of telecom services. The extensions were not meant to benefit licensees whose licences had already been quashed as illegal.
The Court noted that when no bids were received in November 2012, and further auction was contemplated, it issued directions on 15 February 2013 that the entire spectrum “should be auctioned without further delay” and that licensees continuing operations after 2 February 2012 shall pay the reserve price. The direction requiring payment of the reserve price was intended to levy a premium upon those who continued to garner the benefit of licences illegally granted and therefore had to be given full effect.
Commencement date of liability
The Court found the TDSAT’s view “factually incorrect” and noted that the order of 15 February 2013 expressly referred to licensees who had continued operations “after 02 February 2012,” and this made it “manifestly clear” that the liability commenced from that very date.
The Court categorically state that “had that been the intention, this Court would have simply said that such liability would commence from the date of that order.” It was held that since the order referred specifically to 02 February 2012, the commencement date was not open to reinterpretation and therefore, TDSAT erred in holding that liability began on 15 February 2013.
Concluding Date of Liability
With regards to the ‘end date’, the Court agreed with the TDSAT in part. The Court stated that once the LoI was issued on 30 April 2013 for the circles in which the respondent was successful in the auction, and the LoI itself stipulated that the 20-year term would run from that date, the levy could not extend beyond 30 April 2013 for those circles. The Court further stated that for the remaining 13 circles, the liability continued only till the date on which operations actually ceased, i.e., 23 March 2013.
Interest liability
The Court upheld the TDSAT’s view that interest could be charged only from the expiry of the period given in the show-cause notice. The Court asserted the since the DoT had “slept over the matter” for a considerable time after the order dated 15 February 2013, therefore, it could not be allowed to take advantage of its own delay to fasten interest for the earlier period.
Court’s Decision
The Court allowed the appeal and held that —
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The respondent was liable to pay the reserve price from 02 February 2012.
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The liability continues till 30 April 2013 for the 8 circles where its bid was successful, and till 23 March 2013 for the remaining circles where it discontinued operations.
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Interest is payable at SBI’s Prime Lending Rate only from 08 December 2014, i.e., after the expiry of the time given in the show-cause notice.
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The amount already deposited shall be adjusted, and the balance is to be paid within three months of the fresh demand.
[Union of India v. Sistema Shyam Teleservices Ltd., Civil Appeal No. 12219 of 2018, decided on 20-2-2026]
*Judgment by Justice Sanjay Kumar