The Supreme Court has rejected the appeal filed by Loop Telecom and Trading Limited assailing the decision of TDSAT of dismissing their pleas seeking refund of Entry Fee of Rs 1454.94 crores paid for grant of Unified Access Service Licenses.
The three-judge bench of Justice DY Chandrachud, Justice Surya Kant and Justice Vikram Nath denied the claim for refund of ₹1454.94 crores representing the Entry Fee while observing that Loop Telecom was in pari delicto (equal fault) with the Department of Telecom and the then officials of the Union Govt in seeking the benefits of First Come First Serve Policy which exploiting public exchequer to serve a group of private bidding entities.
The Counsel for the Company urged in his submssion that since the licences of the appellant were quashed by the judgment of this Court in CPIL (supra), the appellant is entitled to a refund of its Entry Fee based on civil, contractual and constitutional principles.
The quashing of the licences by this Court amounted to a frustration of each licence, which was in the nature of a contract, in terms of Section 56 of the Indian Contract Act. Consequently, the appellant is entitled to a restitution of the Entry Fee paid in terms of Section 65, as the licences were quashed not on account of the fault of the appellant but due to the culpability of the Union government, he contended.
Citing the well settled principle is that no person can be prejudiced because of an act of a court (actus curiae neminem gravabit), he stated that substratum of TDSAT’s decision which disallowed the claim of the appellant in view of the pending criminal proceedings has been wiped off by the acquittal of the appellant by the Special Judge, CBI.
He further contended that quashing of the licences by Top Court amounted to a frustration of each licence, which was in the nature of a contract, in terms of Section 56 of the Indian Contract Act. In this regard he said that the appellant was entitled to a restitution of the Entry Fee paid in terms of Section 65, as the licences were quashed not on account of the fault of the appellant but due to the culpability of the Union government.
Referring to Union of India Vs. Karam Chand Thapar & Brs. (Coal Sales) Ltd. & Ors, 2004 Latest Caselaw 150 SC , he contended that the proposition that the policy of the Union of India to permit the grant of a set off of the Entry Fee amounted to an admission that a refund of the Entry Fee was payable.
ASG Vikramjeet Banerjee appearing for the Union Govt argued that the Entry Fee paid by the appellant was specifically made non-refundable by the UASL Guidelines which were issued by the DoT on 14 December 2005. It was also ASG's contention that acquittal of the promoters of the appellant in the criminal case had no bearing on the refund of the Entry Fee.
He argued that the judgment of the Special Judge, CBI acquitting the promoters of the appellant was only concerned with the alleged violation of Clause 8 of the UASL Guidelines issued by DoT. He further submitted that the acquittal had no bearing on the findings of this Court in CPIL , according to which UASL and allocation of spectrum was held to be ―stage managed and violative of the principles of public law.
Supreme Court Observation
The CPIL judgment
The Supreme Court in this while quashing Unified Access Service Licenses granted by the Centre had said, "the everything was stage-managed to favour those who were able to know in advance the change in the implementation of the first-come- first served policy."
The Court stated that it is impossible to accept Appellant's submission that fraud in the―First Come First Serve Policy lay alone at Union Government's doorstep and that Appellant was free from taint or wrong doing. The decision in CPIL's Judgement leaves no manner of doubt that appellant was in Pari Delicto along with Union Government.
"The decision of this Court held that the ―First Come First Serve‖ policy was writ large with arbitrariness, and was intended to favour certain specific entities at a grave detriment to the public exchequer. Undoubtedly, the authors of the ―First Come First Serve‖ policy were the official actors comprised within the Union government. But equally, the decision did not exculpate the private business entities who obtained UASLs and became the beneficiaries of their decision. The decision of this Court concludes in no uncertain terms that the then Minister of Communications and Information Technology wanted to favour some companies at the cost of the public exchequer, and that as a matter of fact the entire process was ―stage-managed to favour those who had access to the nitty-gritties of the policy in advance. As a result, the Court found that companies which had submitted applications in 2004 or 2006 were side-lined by favouring those who had applied between August and September 2007 and who ―succeeded in getting higher seniority entitling them to allocation of spectrum on priority basis."
"However, it is evident that all these licensees were complicit in the illegal exercise of obtaining favours for themselves by the indulgence of those in power. That, above all, was the foundation of the decision in CPIL (supra) and the justification for quashing licences and the allocation of the 2G spectrum. This Court then directed the TRAI to frame fresh recommendations for the grant of licences and for the allocation of spectrum in the 2G band in twenty-two service areas by auction, as was done for the allocation of spectrum in the 3G band. Thus, the decision in CPIL (supra) leaves no manner of doubt that the appellant was in pari delicto along with the Union government."
Entry Fee
The Court referred to the TDSAT judgement wherein it was held that Contractual Term stipulating that Entry Fee was non- refundable would not by & in itself preclude claim for refund based on CPIL Judgement.
"There is much to commend in the above line of reasoning of the TDSAT. The Entry Fee, under the terms of the UASL Guidelines and the UASL agreements, was a one-time non-refundable fee. The TDSAT held that the submission of the Union of India would have credence if the licences were terminated for breach or if the licensee were to voluntarily surrender the licence. However, this was a case where the licence was held to be unlawful, due to its grant being in breach of the constitutional mandate under Article 14. All the licences and the allocation of spectrum came to be cancelled by the decision in CPIL (supra) on the ground that the policy and the process followed by the Union government were arbitrary, and unjustified benefits had been granted to the licensees. Thus, the TDSAT held that, strictly speaking, the contractual term stipulating that the Entry Fee was non- refundable would not by and in itself preclude the claim for refund on the basis of the judgment of this Court in CPIL (supra), which held that the entire process leading up to the award of the licences was arbitrary and constitutional. The TDSAT having entered the above finding, for the rest of the discussion, this judgment will also proceed on that premise."
Whether TDSAT had the jurisdiction to entertain the claim for a refund of the Entry Fee referred to section 14(a), 15, 16, 18 of the TRAI Act?
The referred to Union of India v. Telecom Regulatory Authority of India (1998), Cellular Operators Association of India & Ors Vs. Union of India & Ors, 2002 Latest Caselaw 552 SC, Union of India Vs. Tata Teleservices Ltd., 2016 Latest Caselaw 222 SC, Sri Tarsem Singh Vs. Sri Sukhminder Singh, 1998 Latest Caselaw 44 SC an observed that TDSAT has correctly come to cconclusion that Appellant's claim for Refund of Entry Fee could not have been entertained.
"The appellant has argued that if the TDSAT's conclusion on the jurisdiction were to be accepted, it would impinge on the expanse of its jurisdiction and will exclude certain disputes falling within the ambit of public law. However, this argument is not a correct reading of the conclusion that TDSAT has arrived at. De hors the decision in CPIL (supra), the appellant's dispute over the terms of the license with the Union of India (licensor) would fall within the jurisdiction of the TDSAT under Section 14(a)(i), as affirmed by this Court in Tata Teleservices (supra). The respondent's argument that the appellant is no longer a ―licensor‖ after the quashing of the licenses would be a restrictive reading of the jurisdiction of the TDSAT in view of the decision in Tata Teleservices (supra). However, since the policy on the allocation of spectrum and the licences were quashed on the grounds of mala fides and arbitrariness in the Union government's policy, the subsequent enquiry into viability of the refund of the Entry Fee would have to be agitated before the same Court."
"The appellant made no effort to urge during the course of the submissions before the Court in CPIL (supra) that they should be allowed a refund of Entry Fee in the event that the Court were to quash the process and the award of licences. Significantly, the appellant did not seek the permission of this Court at that stage to reserve their liberties of agitating a claim for refund of Entry Fee in separate proceedings. Besides having such a course of action open to them before the judgment was delivered, the appellants had their remedies open in law even after the decision by seeking liberty of adopting independent proceedings for agitating the refund of the Entry Fee. Not having done this at any stage in, or in connection with, the proceedings relating to the decision in CPIL (supra), the appellant cannot be permitted to do so subsequently."
The Court also noted that policy decision adopted by the Union Government cannot be allowed to be questioned at the behest of the appellant who sought a refund simpliciter in proceedings before the TDSAT.
Read Judgement Here:
Share this Document :Picture Source :
