Kiran Raj

The Supreme Court Division Bench of Justice Sanjay Kumar and Justice K. Vinod Chandran determined that a telecom operator, whose unified access service licences were quashed in February 2012 as part of the 2G spectrum cancellation, was obligated to pay the reserve price fixed for the November 2012 spectrum auction from the date of that quashing order itself. Setting aside the appellate tribunal's finding that such payment liability arose only from February 15, 2013, the Court accepted the Union Government's appeal, holding that the operator's continued use of quashed spectrum attracted charges from February 2, 2012, while affirming the tribunal's findings on the applicable end dates and the commencement of interest liability.

The appeal arose from an order of the Telecom Disputes Settlement and Appellate Tribunal (TDSAT), which had interpreted directions issued by the Supreme Court concerning payment of reserve price by telecom licensees whose 2G licences had been quashed. The Union Government, through its Department of Telecommunications (DoT), challenged the tribunal’s interpretation regarding the commencement date of liability and the levy of interest.

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Earlier, the Supreme Court had quashed the grant of Unified Access Service licences and allocation of 2G spectrum, while permitting continued operations for limited periods to avoid disruption of telecom services. Subsequently, by order dated 15.02.2013, the Court directed that licensees who continued operations after 02.02.2012 were required to pay the reserve price fixed for the November 2012 auction.

The DoT issued show-cause and demand notices seeking recovery of reserve price and interest from a telecom operator that had continued operations in several circles. The operator challenged these notices before the TDSAT. The tribunal held that liability commenced from 15.02.2013 and restricted interest liability. Aggrieved by this interpretation, the Union Government filed the present appeal.

On the nature and purpose of the extensions granted to the licensees, the Court observed that "the existing operators, including the respondent herein, were given a lease of life, despite their licences being quashed, only to ensure that the general public was not inconvenienced by disruption of the telecom services that were being provided by them." It noted that the licensees were permitted to continue "only to protect the interest of the general public and not for the benefit of such licensees."

On the direction issued regarding payment of the reserve price, the Court stated that "this Court also took note of the fact that the licensees, whose licences were quashed more than a year earlier, were still continuing to operate pursuant to the extension orders passed from time to time and, accordingly, issued a direction that such licensees who had continued with their operations after 02.02.2012, irrespective of whether they had participated in the auction conducted in November, 2012, should pay the reserve price fixed for the purpose of that auction." It further stated that "this direction levied a premium upon such licensees who were continuing to garner the benefit of the licences illegally granted to them, which already stood quashed, by requiring them to pay the reserve price fixed for the auction held on 12.11.2012."

On the TDSAT's understanding of the commencement date, the Court observed that "the understanding of the TDSAT that this order did not indicate the 'starting date' is factually incorrect." It further stated that "this Court specifically directed that those licensees who had continued their operations 'after 02.02.2012' should pay the reserve price fixed for the auction held in November, 2012, and it is manifestly clear from the context that such liability commenced from 02.02.2012 itself."

The Court recorded that "this aspect was, therefore, not open to interpretation and inquiry, whereby the TDSAT could have applied its own logic and decided that the commencement date would be 15.02.2013." It further stated that "had that been the intention, this Court would have simply said that such liability would commence from the date of that order." The Court additionally stated that "the very fact that this Court referred to the date '02.02.2012' in the context of the licensees who continued with their operations, clearly demonstrates that 02.02.2012 was the commencement date for levy of the liability in terms of that order."

On the binding nature of the February 15, 2013 order, the Court stated that "as the direction of this Court in its order dated 15.02.2013 was binding on the parties thereto and attained finality, it necessarily has to be given effect to fully" and that "the question of diluting the same by reading into it a later date of commencement does not arise."

On the end date for the levy in respect of the eight circles where the operator had successfully bid, the Court stated that "once the LoI was issued to the respondent on 30.04.2013, stipulating that the 20 years term thereunder commenced from that date, the question of the levy of this liability continuing beyond that date till the issuance of the licence in October, 2013, does not arise."

On the question of interest, the Court observed that "inaction and delay were on the part of the DoT itself, as it failed to act upon the order dated 15.02.2013 passed by this Court till 17.11.2014" and that "having slept over the matter for that length of time, the DoT cannot take advantage of its own lassitude and seek to mulct upon the respondent interest liability for that period."

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The Court directed that “the respondent is liable to pay the reserve price fixed for the auction held in November, 2012, from 02.02.2012 till 30.04.2013 in respect of the 8 circles for which its bid was accepted in March, 2013, and from 02.02.2012 till 23.03.2013 for the remaining 13 circles, wherein it continued operations during that period.”

“Interest shall be paid by the respondent on the aforestated sums @ SBI’s Prime Lending Rate only from 08.12.2014, being the date of expiry of the 21 days stipulated in the show-cause notice dated 17.11.2014.”

“The amount already paid by the respondent company shall be adjusted against the total amount due in terms of this order and the balance amount shall be paid by the respondent within 3 months from the date of receipt of the demand raised by the Department of Telecommunication, Government of India, pursuant to this order. The appeal is allowed in the aforestated terms. Parties shall bear their own costs.”

Advocates Representing the Parties

For the Petitioners: Mr. Vikramjit Banerjee, A.S.G. Mr. Nachiketa Joshi, Sr. Adv. Mr. Apoorva Kurup, Adv. Mr. Navanjay Mahapatra, Adv. Mr. Aastha Singh, Adv. Mr. Abhishek Singh, Adv. Mr. Amrish Kumar, AOR Mr. Kartik Dev, Adv. Ms. Sanjana, Adv. Mr. Sahil Bhalotia, Adv. Mr. Rishav Raj, Adv.

For the Respondents: Mr. Gopal Jain, Sr. Adv. Mr. Mansoor Ali Shoket, Adv. Mr. Nitin Kala, Adv. Mr. Pukhrambam Ramesh Kumar, AOR Mr. Kunal Singh, Adv. Mr. Tannay Jain, Adv. Ms. Kanishka Rawat, Adv. Mr. Karun Sharma, Adv. Ms. Anupama Ngangom, Adv. Ms. Rajkumari Divyasana, Adv.

Case Title: Union of India v. Sistema Shyam Teleservices Limited
Neutral Citation: 2026 INSC 174
Case Number: Civil Appeal No. 12219 of 2018
Bench: Justice Sanjay Kumar and Justice K. Vinod Chandran