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2016 Supreme(Online)(TDSAT) 18
TELECOM DISPUTES SETTLEMENT AND APPELLATE TRIBUNAL
Aftab Alam, CJ, Kuldip Singh, J, Bipin Bihari Srivastava, J
Sistema Shyam Teleservices Ltd. – Appellant
Versus
Union of India – Respondent
Telecommunication Petition No.57 of 2015 | Telecommunication Petition No.58 of 2015 | Telecommunication Petition No.59 of 2015 | Telecommunication Petition No.60 of 2015 | Telecommunication Petition No.61 of 2015 | Telecommunication Petition No.62 of 2015 | Telecommunication Petition No.63 of 2015 | Telecommunication Petition No.64 of 2015
For the Appellants/Petitioners: A.S. Chandhiok, Amit Sibal, Mansoor Ali Shoket, Vibha Dhawan, Kunal Singh, N. Suri
For the Respondents: Vikramjit Banerjee, Bharat Sood
The court determined that the terms of the Notice Inviting Applications must be upheld, allowing frequency reconfiguration as per earlier practices and without imposed costs.
Headnote:(A) Telecom Regulatory Authority of India Act - Sections related to spectrum allocation and management - The petitioner sought to have its non-contiguous spectrum blocks made contiguous for efficient use; the Government was directed to allow such exchange of frequencies. (Paras 1, 3, 11)
(B) Contract Law - The terms of the Notice Inviting Applications (NIA) form the basis of the auction contract, and the Government cannot unilaterally alter these terms based on future auction results. (Paras 1, 12, 20)
(C) Administrative Law - The Government's obligation to facilitate spectrum efficiency and its refusal to permit frequency rearrangement must adhere to established contractual terms. (Paras 2, 17, 21)
Facts of the case:
Sistema Shyam Teleservices sought to exchange non-contiguous frequency blocks in 800 MHz band to improve efficiency; the Government argued against it based on previous auction pricing and contractual terms.
Findings of Court:
The court upheld the petition to allow frequency reconfiguration in line with past practices, ordering the Government to direct arrangements without any imposed charges based on market price fluctuations.
Issues: The key issues were whether the Government was contractually obligated to facilitate the contiguity of frequency blocks and whether it could impose charges for frequency swaps not foreseen at the time of spectrum allocation.
Ratio Decidendi: The court found that the Government could not hinder the exchange of frequencies as it was consistent with prior agreements, emphasizing that rights under the NIA should not be modified based on later auction price alterations.
Result: Petitions allowed to allow frequency exchanges.
ORDER
By Aftab Alam, Chairperson – The Petitioner, Sistema Shyam is a telecom service provider. It holds spectrums in 800 MHz in eight service areas. In each of the eight service areas the spectrums held by the petitioner are under 5 MHz and are divided into blocks that are not contiguous but are at different spots in 800 MHz band. The petitioner wants its spectrum blocks in one contiguous series for a better and more efficient use of the spectrums and to that end seeks directions to the Government to (i) give it frequencies (in the Government’s possession) that might be contiguous to some frequencies held by the petitioner in lieu of some other frequency held by the petitioner at a distant spot in the band and (ii) allow it to exchange frequencies with other operators even though the spectrums held by them might not be “liberlised”, having been given to them bundled with their licencesunderthepreviousregime.
The facts of the case are simple and can be stated thus. In the 2G case the Supreme Court made the operative order in paragraph 102 of the judgement that containedinteraliathefollowingdirections:
“102. Intheresult,thewritpetitionsareallowedinthefollowingterms:
(i) The licences granted to the private respondents on or after 10.1.2008 pursuant to two press releases issued on 10.1.2008 and subsequent allocation of spectrum to the licensees are declared illegalandarequashed.
(ii) Theabovedirectionshallbecomeoperativeafterfourmonths.
(iii) Keeping in view the decision taken by the Central Government in 2011, TRAI shall make fresh recommendations for grant of licence and allocation of spectrum in 2G band in 22 Service Areas by auction, as was done for allocation of spectrum in 3G band.
(iv) The Central Government shall consider the recommendations of TRAI and take appropriate decision within next one month andfreshlicencesbegrantedbyauction.
(v) xxxxxxxx (vi) xxxxxxxx (vii) xxxxxxxx” (emphasisadded)
In pursuance of the Court’s direction, TRAI made its Recommendations on Auction of Spectrum on 23.04.2012 suggesting that the reserve price of spectrums in 800 MHz and 900 MHz bands should be two times the reserve price of spectrum 1 (2012)3SCC1 in 1800 MHz. And then, on a back reference made by the Government it gave its responseon10.052012inwhichitmadethefollowingrecommendation:
“In respect of 800 MHz, the amount of spectrum available for auction in some Circles is less than 5 MHz. As such, it is not possible with this spectrum, to offer all services that a truly liberalised spectrum can. Therefore, the Authority would be open to the Government fixing the Reserve price of 800 MHz spectrum at 1.3 times the 1800 MHz reserve price. This is only where 5 MHz spectrum is not being made available. The 1.3 factor is twice the value of the unliberalised spectrum in the 1800 MHz band, established by the experts (combined price of <6.2 MHz and >6.2 MHz in the ration of 6.2:1.8) which bears a ratio of 1.3 to the recommendedreservepriceof1800MHz.”
The Government fixed the reserve price of spectrums in 1800 and 800 MHz bands in light of the recommendations made by TRAI and issued the notice inviting applications (NIA) on 28.09.2012 putting up the spectrums for auction, as directed by the Supreme Court. For this auction spectrum in 800 MHz was available in 21 out of 22 service areas; it was not available in the service area of Rajasthan. Also, in the 21 service areas where spectrum in 800 MHz was offered for sale, it was available in amounts less than 5 MHz and in spectrum blocks that were noncontiguous.
In this auction that took place in November 2012, out of the total of 295 MHz of spectrums in 1800 MHz that were offered for sale, 127.5 MHz was sold out. No bids were received for spectrums in 1800 MHz band in four service areas (Delhi, Mumbai, Karnataka and Rajasthan). Further, no bid at all was received in anyofthe21serviceareasforspectrumsin800MHzband.
After the November 2012 auction that had remained completely unproductive in regard to the spectru
