Read Judgment: Loop Telecom And Trading Limited V. Union of India And Anr. 

Pankaj Bajpai

New Delhi, March 4, 2022: Observing that the decision of this Court in Centre for Public Interest Litigation v. Union of India, (2012) 3 SCC 1, left no manner of doubt that the telecom licensee (Loop Telecom – Appellant) was among the group of licensees who were found to be complicit in obtaining benefits under the “First Come First Serve” policy of the Union government at the cost of the public exchequer, the Supreme Court has held that the appellant was not entitled to claim a refund of its Entry Fee paid to TRAI for grant of UASL license, even on the principle of restitution embodied in Section 65 of the Indian Contract Act

A Larger Bench of Justice Dr. D.Y Chandrachud, Justice Surya Kant and Justice Vikram Nath observed that the course of action adopted by telecom licensee in fair withdrawing the civil appeals which were instituted against the first order of the TDSAT without obtaining specific liberty or permission to move the TDSAT, and instituting a second round of litigation before the TDSAT, and then obtaining a revival of the first set of civil appeals, is not justified. 

A party must not be allowed to conduct litigation in this manner, and such a course of action is subject to grave abuse since it lays bare an effort at forum-shopping and selectively deciding where and before whom it would pursue its remedies, added the Bench. 

Going by the background of the case, the Appellant applied for the grant of Unified Access Service Licences (UASL) for twenty-one service areas. Since a Letter of Intent was issued, the appellant paid the circle wise Entry Fee of Rs 1.1 crores and furnished a Performance Bank Guarantee and Financial Bank Guarantee for the twenty-one areas. The appellant accordingly entered into UASL agreements for the twenty-one service areas with the TRAI (Respondent). 

The Appellant thereafter instituted first telecom petition before TDSAT claiming a refund of Rs. 1454.94 crores representing the Entry Fee paid by it for 2G licences for twenty-one service areas, since, by the judgment of this Court in CPIL’s Case (Supra), the 2G licences which were granted by the Union of India, including to the appellant, stood quashed. 

The TDSAT however, dismissed the appeal, observing that quashing of the appellant’s licences by this Court in its judgment in CPIL’s Case (Supra) cannot be brought under the Indian Contract Act, since the UASL agreements had not become void u/s 23 & 56 of the Indian Contract Act. The appellant then instituted another petition before the TDSAT raising the issue of a refund of the Entry Fee, on the ground that it had been exonerated by the Special Judge, CBI. The TDSAT however, dismissed the Second Telecom Petition noting that the appellant had made a second attempt for claiming the same relief which had been sought earlier in the First Telecom Petition. 

After considering the submissions, the Larger Bench found that the decision of this Court, in CPIL’s Case (Supra) which was rendered on February 2, 2012, arose from petitions under Article 32 of the Constitution, which questioned the grant of UASLs to the private respondents in those proceedings, on the ground that the procedure which was adopted by Department of Telecom (DoT) was arbitrary, illegal and in violation of Article 14 of the Constitution. 

While dealing with the grounds of challenge, in the course of the judgment, this Court in CPIL’s Case (Supra) underscored that natural resources, such as spectrum, are public goods and the doctrine of equality and public trust must guide the State in determining the actual mechanism for their distribution. Although in the course of its decision, it held that the then Minister for Communications and Information Technology had acted to favour some companies at the cost of the public exchequer, added the Bench. 

Speaking for the Bench, Justice Chandrachud noted that the decision of this Court in CPIL (Supra) 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, added the Bench. 

Justice Chandrachud found that while directing the cancellation of the licences and ordering a fresh auction, this Court in CPIL (Supra) imposed costs of Rs. 5 crores on one set of licensees and Rs 50 lakhs on another set, after assessing their culpability in wrongly benefitting from the “wholly arbitrary” and “unconstitutional exercise” of license and spectrum allocation. 

Therefore, “it would be an improper reading of the judgment to postulate that the decision leaves open a claim for the refund of the Entry Fee. The payment of the Entry Fee was one element in the overall financial conspectus which led to the award of licences. The adjudication before this Court in CPIL (supra) must be construed as a one composite whole from which its parts cannot be separated”, added the Bench. 

The Top Court observed that 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. 

It must be noted that 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”, added the Court. 

Accordingly, the Apex Court dismissed the appeals. 

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