Supreme Court seeks Airtel, Vodafone Idea response on Centre's plea to restore one-time spectrum charges

The Supreme Court on Friday sought responses from Bharti Airtel and Vodafone Idea on a plea by the Central government challenging a Bombay High Court judgment that quashed the retrospective levy of one-time spectrum charges (OTSC) on the telecom companies. [Union of India v. Airtel]

A Bench of Justices BV Nagarathna and R Mahadevan issued notice in the matter.

The dispute dates back to 2012, when the government decided to impose a one-time charge on spectrum held by existing telecom operators. The Department of Telecommunications (DoT) sought to levy OTSC on spectrum held beyond 6.2 MHz between July 1, 2008 and December 31, 2012 at prices determined through the 2012 spectrum auction.

Bharti Airtel and Vodafone Idea challenged the decision, arguing that neither Section 4 of the Indian Telegraph Act, 1885 nor their licence agreements permitted the government to impose such a retrospective financial liability.

On June 8 this year, a Bombay High Court Bench of Justices Manish Pitale and Shreeram V Shirsat accepted the telecom companies' case and quashed the government's decisions and consequential demands.

The High Court held that licences granted under Section 4 of the Telegraph Act were contracts between the government and telecom operators. Therefore, the government could not unilaterally impose an additional retrospective financial liability which was not contemplated under the licences.

It also directed the government to return bank guarantees furnished by the telecom companies in connection with the disputed demands.

During Friday's hearing, Additional Solicitor General (ASG) Vikramjit Banerjee, appearing for the Centre, defended the levy by arguing,

“Spectrum belongs to the people. I hold it in trust. It’s a privilege which is given to them. They are telecom companies. They should give market rate."

The government also opposed the release of bank guarantees furnished in connection with the spectrum dispute, telling the Court that more than ₹3,300 crore was involved.

“This is public money. This is not the government only,” the Court was told.

The telecom companies defended the High Court ruling and stressed the need for certainty in business. It was argued that companies could not be subjected to substantial additional financial demands years after spectrum had been allocated and payments made under the licence regime.

The Centre, however, pointed out that the Madras High Court had reached the opposite conclusion in a similar challenge brought by Aircel and had upheld the OTSC levy.

Appeals against the Madras High Court judgment in Aircel Limited v. Union of India are already pending before the Supreme Court.

The Centre thus urged the Supreme Court to consider the cases together, pointing to the conflicting views taken by the Bombay and Madras High Courts.

The Court has, however, not decided on tagging this appeal with the earlier case. The Bench indicated that a decision on tagging will be taken on the next date of hearing.

Senior Advocates Mukul Rohatgi and Balbir Singh appeared for Vodafone.

Senior Advocate Shyam Divan appeared for Airtel.