Supreme Court Issues Notice On Centre's Plea Against HC Order Quashing Spectrum Charges On Airtel, Vodafone Idea

The Supreme Court on Friday issued notice on the Union of India's appeal challenging the Bombay High Court's judgment quashing the Department of Telecommunications' (DoT) decision and demand notices imposing one-time spectrum charges (OTSC) on Bharti Airtel and Vodafone Idea. 

The Court held that although spectrum is a scarce natural resource held by the State in public trust, the Government remained bound by the terms of the licence agreements executed under Section 4 of the Telegraph Act and could not unilaterally impose retrospective financial liabilities not contemplated by those contracts.

A bench of Justices B.V. Nagarathna and R. Mahadevan heard the parties and issued notice in the case. 

Opposing the Union's petition,, Senior Advocates Shyam Divan, Mukul Rohatgi and Balbir Singh described the Bombay High Court judgment as well reasoned and submitted that the dispute stemmed from retrospective demands raised years after the licences had been granted.

Taking the Court through the High Court's operative directions, counsels submitted that the judgment had independently examined the issues despite noting that similar matters arising from the Madras High Court were pending before the Supreme Court.

The bench interjected and observed that the source of the Government's power under the Telegraph Act would require consideration. "Look at the source of power, whether at all there is power. It is a matter to be considered.", the court said. 

Responding to the queries, Additional Solicitor General Vikram Banerjee appearing for the Union of India argued that the one-time spectrum charges were imposed pursuant to the Union's statutory powers under Section 4 of the Telegraph Act and not merely under the contractual licence terms.

"It is a privilege... We have the power to do this.", he said. 

He contended that the charges were introduced after the Supreme Court's observations in the 2G spectrum litigation regarding allocation of spectrum below market value.

"We had a judgment of this Court which said we had undervalued spectrum... pursuant to which we came up with this to equalise everything."

Banerjee maintained that the Government was entitled to recover market value for a scarce public resource. "This is public money... We hold this property in public trust.", he submitted. 

The telecom companies however, submitted that the operators had paid the agreed consideration under their licences and that the Government could not subsequently impose fresh financial liabilities decades later.

"One fine day, you suddenly raise a demand of ₹5,000 crores. On what basis?", Rohatgi questioned. 

He argued that retrospective demands undermined commercial certainty. "We can't have... one-time demand impacting things which have been operating since the 1990s.", he said. 

When the ASG sought tagging of the matter with similar pending appeals arising from the Madras High Court, senior counsels appearing for the telecom companies opposed the request, submitting that the telecom operators had already succeeded before the Bombay High Court and there was no justification to defer the effect of that judgment.

After hearing the parties, the Supreme Court issued notice in the Union's appeal and directed the parties to file its replies.