DISHNET WIRELESS LTD. AND ANR. vs UNION OF INDIA on 21 November 2017

**ORDER**

The petitioner is an access service provider holding spectrum in various frequency bands in various circles across India. The petitioner applied to the respondent/Licensor/DoT for permission to trade its spectrum in 2.3 GHz band in some circles with M/s Airtel. In response to this, DoT asked the petitioner to pay a sum of Rs 1300.12 Cr towards clearance of its demands vide demand notice dated 18-05-2016. Aggrieved by this demand, petitioner filed TP No. 38/2016 on 30-05-2016 with the following prayers:

"(a) Declare that the demand of dues pertaining to bands other than the one with respect to which trading permission is sought is bad in law and cannot be enforced.

(b) Quash and set aside the demand dated 18.5.2016 issued by the respondent, being completely wrong and illegal and against the Spectrum Trading guidelines and clarification dated 12.5.2016.

(c) Recalculate the demand strictly in terms of the clarification issued by respondent dated 12.5.2016 to the trading guidelines."

After hearing the parties on 03-06-2016, this Tribunal passed the following interim order:

".....

*In light of the view taken above, the Tribunal might have set aside the demand and asked the DoT to grant permission to the petitioner for trading the spectrum as applied for on its behalf. However, alive to the financial interests of the State, we do not propose to do so.*

*We may note here that in course of the submissions, Mr. Malhotra stated that the dues of licence fees in the six service areas in question, if determined without adding up any interest on delayed payment, penalties and interest on penalties would not exceed the amount of Rs.172 crores. Mr. Malhotra however, submitted that as against the possible licence fee dues of Rs.172 crores, bank guarantees worth Rs.1100 crores submitted by the petitioner is already in possession of the Government. He further submitted that immediately on grant of permission for trading spectrum, the petitioner will be obliged to pay to the DoT (service tax Rs.525 cr + License fee Rs.280 crores + Spectrum charges Rs.35 crores) in aggregate the sum of Rs.840 crores. Hence, the petitioner need not be saddled with any further liability for grant of permission for trading spectrum.*

*We are unable to accept the submissions made by Mr. Malhotra. In order to safeguard the financial interests of the Government, it is directed that the petitioner must pay the sum of Rs.172 crores as dues of licence fee calculated without adding up interest, penalties and interest on penalties. Besides this payment, the petitioner must also submit bank guarantees of Rs.312 crores to cover the balance of the DoT demand as per the letter dated 30 May 2016.*

*On complying with the aforesaid directions, the DoT is directed to issue permission in accordance with other terms of the Government policy. The aforesaid payment and the submission of the bank guarantee will be without prejudice to the respective cases of the parties before the Supreme Court in the AGR matter."*

The above order was complied with. However, pending adjudication of the petition, petitioner has filed an MA No. 268 of 2017 with the following prayers:

*"Modify the interim order dated 03.06.2016 to the extent as to relieve the petitioner of the requirement of keeping alive the BGs or in the alternative The petition may be taken up for early hearing on actual date."*

In this application, the petitioner has pleaded that he has to bear significantly high extra cost on account of maintaining these BGs for no reason and for no benefit to anyone. In support of his prayer for modifying the interim order, petitioner has cited our order dated 17-05-2017 in TP 20 of 2017. However, TP 26 of 2017 pertains to a case of merger and not the spectrum trading and the issues in this petition need to be examined in light of the spectrum trading guidelines. Petitioner has also advanced some other arguments emanating from the spectrum trading guidelines. We had in fact recorded the submissions made by learned counsel for the petitioner on 15-09-2017, which are also reproduced below:

- (I) *That the dues of licence fee which have been directed to be securitized by bank guarantees are in fact not crystallized dues – they are dues arising out of licence fee payable in the event the DOT succeeds in their appeal in the Hon'ble Supreme Court. As on date, the petitioner having succeeded before this Hon'ble Tribunal, no dues towards AGR are payable and, therefore, the interim order to securitize demands which are not payable or crystallized, is causing great financial hardship to the petitioner.*

- (II) *Without prejudice to the first submission, as aforesaid, the second submission is that if at all the DOT is entitled to securitize the licence fee dues as a sine qua non to grant permission to trade a particular spectrum, the said licence fee would pertain*

*only to the band in which trading has been sought; demands, if any, against licence fee of other bands in respect of which no trading permission is sought, cannot be securitized as a condition precedent to trading in a particular band.*

To the above submissions, respondent has referred to the guidelines on spectrum trading (para 11) which states that "the seller shall clear all its dues prior to concluding any agreement for spectrum." Respondent also submits that the BGs were furnished in compliance with the Tribunal's orders and having enjoyed the fruits from that order, petitioner now wants to withdraw the BGs which is not fair. Petitioner has of course maintained that the dues raised as per impugned demand notice are not "crystalized dues" and are not payable prior to trading of spectrum citing clarifications issued against this guideline and also the undertaking given by DoT to the Apex court on 29-02-2016 that it will continue to raise demands as per its understanding but the same will not be enforced till the final decision on controversy by the Apex court. About the second issue that the securitization of dues should pertain only to the spectrum band proposed for the trading, DoT has stated the obvious that LF/SUC charges are payable on combined AGR and separate calculation is not possible. While noting this argument, we are also informed by the petitioner that it has continued to operate in the circles concerned and that the respondent is anyway secured for the LF/SUC charges levied on combined holding through Financial Bank Guarantee (FBG) as per the license conditions. In such situation, what is the amount payable as per the trading guidelines and whether separate and additional BGs are needed for the demands that have been challenged is the question that will be determined only in final adjudication.

Be that as it may, we note the para 12 of guideline on Trading dated 12-10-2015 which states that "where an issue, pertaining to the spectrum proposed to be transferred is pending adjudication before any court of law, the seller shall ensure that its rights and liabilities are transferred to the buyer as per the procedure prescribed under the law and any such transfer of spectrum will be permitted only after the interest of the Licenser has been secured." Some of the aspects related to "dues" were dealt with in our interim order dated 03-06-2016 and a suitable interim arrangement was made by asking the petitioner to securitize the interest of the respondent/DoT by directing the petitioner to furnish a BG of Rs. 484 Cr against the initial demand of about 1300 Cr by the respondent and directing the respondent to issue permission in accordance with government policy in case the BGs are furnished by the petitioner.

In view of the facts as discussed above, we only observe that this Tribunal had made an equitable arrangement in the interim, pending final adjudication. We find no pressing reason to disturb this equity and therefore are not persuaded to modify or vary our earlier order dated 03-06-2016. However, the issue of continuation of BGs and consequent cost burden on the petitioner does need consideration, especially when the interim arrangement has continued for more than a year. Accordingly, we allow the alternate prayer of the petitioner that this petition may be taken up for early hearing. For that purpose, put up on under the head "Directions" on 24-11-2017 *Ad*

MA 268 of 2017 is allowed in above terms.

..... (S.K. Singh, J) Chairperson

..... (B.B. Srivastava) Member

A circular stamp containing a large, stylized letter 'R' in the center. The stamp is slightly faded and appears to be an official seal or mark.

..... (A.K. Bhargava) Member