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2016 Supreme(Online)(TDSAT) 17
TELECOM DISPUTES SETTLEMENT AND APPELLATE TRIBUNAL
Aftab Alam, CJ, Dr. 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:Mr. A.S. Chandhiok, Sr. Advocate, Mr. Amit Sibal, Sr. Advocate, Mr. Mansoor Ali Shoket, Advocate, Mrs. Vibha Dhawan, Advocate, Mr. Kunal Singh, Advocate, Mr. N. Suri, Advocate
For the Respondents:Mr. Vikramjit Banerjee, Advocate, Mr. Bharat Sood, Advocate
The court highlighted that rights arising from auction agreements must be honored, and unilateral changes by the Government diminish contractual integrity.
Headnote:(A) Telecom Regulatory Authority of India Act, 1997 - Spectrum Allocation - Petitioner, a telecom service provider, sought directions to the Government for contiguous spectrum blocks for efficient use - Supreme Court’s judgment in 2G case recognized spectrum allocations need be done via auction - Government's obligation to provide contiguous spectrum not established; hence petition dismissed - Legal principles surrounding spectrum management clarified. (Paras 9-12)
(B) Contract Law - Rights of parties derived from the auction documents - Terms of the NIA constitute binding agreements; unilateral changes or reinterpretations by the Government are impermissible; the obligations arising must be honored. (Paras 34-36)
Facts of the case:
The petitioner sought contiguous spectrum blocks after being allocated fragmented frequency slots post a government auction; previous auctions yielded no bids for certain bands, drawing attention to the need for efficient spectrum management (Paras 2-6).
Findings of Court:
The court found no obligation on the Government to exchange or reconfigure frequencies to ensure contiguity, as prior arrangements were based on auction terms, which detailed non-contiguity (Paras 28-29).
Issues: The primary questions involved whether the Government was obliged to facilitate spectrum contiguity and if the petitioner’s rights had been compromised based on auction terms.
Ratio Decidendi: The court ruled that the terms within the NIA remained binding, disallowing the alteration of rights based on market changes post-auction; rights to spectrum management must adhere strictly to the auction stipulations (Paras 36-37).
Result: Petitions allowed to the extent of recognizing rights to negotiate frequency swaps; no costs awarded.
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 spectrum in
