By means of this writ petition, the petitioner has challenged the validity and legality of the clause 5.1 and the clause 10(2) (ii) of the license agreement and the circulars dated 24.12.2008 (No.800-52/2008-VAS-III (Part), 23.03.2009 (No.842- 725/2005/157), 08.02.2011 (No.800-20/2010-VAS) issued by the Access Services Cell, Government of India.

2. The petitioner is a limited company incorporated under the Companies Act, 1956 and it provides GSM, Mobile Telephony Broad Band Services in several States, pursuant to the license granted by the respondent No.1, a sample copy of which is available at Annexure-1 to the writ petition. The said license has admittedly been granted under the provisions of Indian Telegraph Act, 1885 and Indian Wireless Telegraphy Act, 1933. Having the license granted in its favour, the petitioner made investment for providing the services in terms of the said license. The respondent No.1 is authorized by Section 4 of the Indian Telegraph Act, 1885 to grant Unified Access Services License in the specified service areas. It is also not in dispute that Section 20A of the Indian Telegraph Act, 1885 provides for levy of penalty for breach conditions of license. For purpose of reference, Section 20A of Indian Telegraph Act, 1885 is reproduced hereunder:

“20A. Breach of condition of License. – If the holder of a license granted under Section 4 contravenes any condition in his license, he shall be punished with fine which may extend to one thousand rupees, and with a further fine which may extend to five hundred rupees for every week during which the breach of the condition continues”

3. It is also not in dispute that at the time of granting license for the North East Circle/Assam Circle on 12.05.2004, the Clause-5.1 of the said license provided as under:

“5.1 The LICENSOR reserves the right to modify at any time the terms and conditions of the LICENSE, if in the opinion of the LICENSOR it is necessary or expedient to do so in public interest or in the interest of security of the State or for proper conduct of the telegraphs. The decision of the LICENSOR shall be final and binding in this regard.”

By virtue of the aforesaid Clause 5.1, the Department of Telecommunications, Government of India kept on issuing circulars/letters unilaterally amending the conditions of license by altering or in essence. Initially, when the license was granted Clause 10(2)(ii) was not there. Later on, on 24.11.2004, Clause 10(2)(ii) was put in the license agreement by way of a circular. The said Clause 10(2)(ii) reads as under:

“The Licensor may also impose a financial penalty not exceeding Rs.50 crores for violation of terms and conditions of license agreement. This penalty is exclusive of Liquidated Damages (LD) as prescribed in this License Agreement.”

After the said Clause 10(2) (ii) was inserted, a circular was issued being the circular dated 22.11.2006 (Annexure-2 of the Writ Petition) for subscriber/customer verification for Plan Across Nation (PAN). In the said circular, minimum penalty of Rs.1000 per violation of subscriber number verification was provided for in case any subscriber number is found working without proper verification. The relevant part of the circular dated 22.11.2006 providing for minimum penalty of Rs.1000 is reproduced below:

“8. After 31st March 2007, if any subscriber number is found working without proper verification, a minimum penalty of Rs.1000 per violation of subscriber number verification shall be levied on the licensee apart from immediate disconnection of the subscriber number by the licensee.”

The aforesaid Circular directed each Licensee to take re-verification of the existing subscribers on priority basis and ensure that such re-verification is completed by March 31, 2007. The letter explained that by re-verification it means that there shall be 100% check of CAF/SAF, documentary proof