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2015 Supreme(Online)(TDSAT) 12
TELECOM DISPUTES SETTLEMENT AND APPELLATE TRIBUNAL
Mr. Aftab Alam, Chairperson, Mr. Kuldip Singh, Member
Association of Unified Telecom Service Providers of India & Others – Appellant
Versus
Union of India & Anr. – Respondent
Petition No.7 of 2003 | Petition No.53 of 2004 | Petition No.81 of 2005 | Petition No.82 of 2005 | Petition No.98 of 2005 | Petition No.48 of 2005 | Petition No.59 of 2005 | Petition No.57 of 2006 | Petition No.102 of 2006
For the Appellants/Petitioners: Mr. Manjul Bajpai, Mr. Shashwat Bajpai, Mr. Meet Malhotra, Mr. Lakshmeesh Kamath, Mr. Mayank Grover, Mr. Ramji Srinivasan, Ms. Manali Singhal, Mr. Santosh Sachin, Mr. Dayan Krishnan, Ms. Gunjan Malaviya, Mr. Amit Gupta, Ms. Sumati Jumrani, Mr. Gopal Jain, Ms. Shally Bhasin, Mr. Kawin Gulati, Mr. Abhiroop Datta, Mr. Percival Billimoria, Mr. U. Hazarika, Mr. Dipankar Gupta
For the Respondents: Mr. P.S. Narasimha, Mr. K. Parameshwar, Mr. Abhay Prakash Sahay, Mr. Chetan Chawla, Mr. Gaurav Sharma, Mr. Dincur Bajaj
The revenue share for telecom licensees must be derived only from licensed activities as per the statutory framework.
Headnote:(A) The Indian Telegraph Act, 1885 - Section 4 - Telecommunication license fee - Revenue sharing regime established under the new National Telecom Policy, which requires licensees to pay a share based on gross revenue earned solely from licensed activities. Court determined that gross revenue must exclude earnings from non-licensed activities such as capital gains and miscellaneous income. (Paras 7, 10, 12, 14)
(B) The Telecom Regulatory Authority of India Act - Commission consultation - The necessity of consulting the Telecom Regulatory Authority of India (TRAI) when determining components of adjusted gross revenue (AGR) was underscored. Issues arose over what constitutes gross revenue concerning licensed telecom activities. (Paras 8, 11)
(C) Each petitioner's revenue obligations are identified, emphasizing that the license fees are strictly related to activities covered by their respective licenses and not others. (Paras 13, 15)
Facts of the case:
The petitioners contested the definition of gross revenue as interpreted by the Department of Telecommunications, arguing for the exclusion of earnings from non-licensed activities. Tribunal previously found under the Act that license fees must derive from licensed activities.
Findings of Court:
License fees must solely reflect revenues derived from licensed telecommunication activities as reaffirmed in the 2006 ruling against the Government's contentions.
Issues: The core issues included defining gross revenue components, the importance of complying with the TRAI's consultative process, and determining applicable deductions from revenue computations.
Ratio Decidendi: The Tribunal affirmed its earlier decision that gross revenue is limited to revenues from licensed activities, rejecting any argument to reintroduce previously ruled out revenue types.
Result: The Tribunal remanded certain aspects back to the TRAI for further recommendations following their established criteria.
| Table of Content |
|---|
| 1. importance of defining gross revenue strictly in licensed activities. (Para 1 , 2 , 3) |
| 2. the necessity for trai consultation in revenue definition. (Para 4 , 5 , 6) |
| 3. overview of conflicting positions regarding revenue streams. (Para 7 , 8 , 9) |
| 4. finality established regarding revenue obligations. (Para 10 , 11 , 12) |
| 5. conclusion of the tribunal affirming earlier judgments. (Para 13 , 14 , 15) |
ORDER
Members of petitioner Associations and other petitioners hold licenses for carrying on different activities in the telecom sector. As per condition of the license granted to them to carry on telecom services, the petitioners are required to pay a share out of the revenue generated by them for such service to the licensor. The relevant clause providing for revenue sharing is the same in all the licenses. Therefore, we have heard the petitions together. The petitioners are aggrieved of the interpretation being put by the licensor Department of Telecommunications (Government of India) on the question as to what constitutes gross revenue or what are the components of gross revenue available with a licensee from which the Government will take its share. Prior to 1999 when the new National Telecom Policy came into force, the Government was charging a fixed license fee from the licensees to whom licenses were issued to carry on telecom services. Under the new Policy the licensor shifted to a revenue sharing regime which means that the licensor shall get a percentage of share of the revenue earned by the licensee.
The petitioners’ case is that the respondent, Union of India, is not entitled to recover its share of licence fee out of the entire revenue accruing to the petitioners. They contend that the respondent cannot claim a share in the revenue accruing to the petitioners (licensees) on account of their nonlicensed activities. By a detailed judgment dated 7th July, 2006, this Tribunal noted that Section 4 of the Telegraph Act, 1885 gives the Central Government, exclusive privilege of establishing, maintaining and working of telegraphs and under the proviso to the said Section the Government has the right to transfer to any person this privilege by way of licence on such conditions as it thinks fit. This Tribunal held that the privilege conferred under Section 4 of the Telegraph Act is confined to “establishing”, “maintaining”, and “working” of telecommunication. The scope of licence does not go beyond the activities mentioned therein and it is only for these activities that the Government can grant a licence to another party. On this basis this Tribunal concluded that sharing of revenue can be only out of the gross revenue derived from the transferred privilege of establishing, maintaining and working of telecommunication which alone are the licensed activities. After coming to this conclusion, this Tribunal noted that under the provisions of The Telecom Regulatory Authority of India Act (hereinafter called “The Act”), the Government is required to seek recommendation of the Telecom Regulatory Authority of India(TRAI) in this connection. This Tribunal found that proper procedure in this behalf had not been followed as relevant material had not been placed before the TRAI to enable it to make its considered recommendations. Therefore, it passed the following order remanding the matter to the TRAI:-
“In view of the fact we have come to the conclusion that there has not been an effective consultation with the TRAI which is mandatory under the TRAI Act, we think we should not further delve into the exercise of finding out which component of the AGR, as defined by the Government in the conditions of licence, deserves to be retained and which component which the petitioners contend is not derived from the licenced revenue of the licensee should be excluded at this stage. We think it more appropriate that the matter should be remanded to the TRAI which is the 3 rd Respondent herein, before whom the Government should produce th
