Telecom Disputes Settlement Tribunal
Bharti Airtel Limited vs Union Of India, Delhi on 21 December, 2021
Author: Shiva Kirti Singh
Bench: Shiva Kirti Singh
TELECOM DISPUTES SETTLEMENT & APPELLATE TRIBUNAL
NEW DELHI
Dated 21st December, 2021
Telecom Petition No.9 of 2017
Bharti Airtel Ltd. & Anr. ......Petitioners
Versus
Union of India ....Respondent
BEFORE:
HON'BLE MR. JUSTICE SHIVA KIRTI SINGH, CHAIRPERSON
HON'BLE MR. SUBODH KUMAR GUPTA, MEMBER
For Petitioner : Mr. Maninder Singh, Sr. Advocate
Mr. Lakshmeesh S. Kamath, Advocate
For Respondent : Mr. Dhruv Tamta, Advocate
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ORDER
By S.K. Singh, Chairperson - Originally this petition was filed on behalf of M/s Bharti Airtel Ltd. alone on 13.02.2017 but soon thereafter, by order dated 29.03.2017, Bharti Hexacom Ltd. was allowed to be impleaded as petitioner No.2 because it is equally affected by the operation of Clause (iii) of the impugned circular; it was a part of the group of companies of the original petitioner and respondent had no objection to the prayer for impleadment. After completion of the pleadings, the petition has been heard on merits and is being disposed of by this judgment and order which was reserved after hearing, on 26.11.2021.
2. For the sake of convenience both the petitioners are included in the expression "the petitioner" in this judgment. The petitioner is a company registered under the Indian Companies Act, a Telecom Operator who has been granted licence by the Union of India and has acquired spectrum in 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz bands from the respondent for operations in various circles. The Department of Telecommunication (DoT) is the Licensor who has granted the telecom licence under Section 4 of the Indian Telegraph Act, 1885. Petitioner is holding administratively allocated spectrum 3 from before in addition to spectrum allocated through the auction process in the year 2010 and 2016.
3. In the petition, the petitioner has disclosed the details of spectrum holding of the petitioner which reveals that the total BWA spectrum held by Bharti Airtel/Bharti Hexacom is 450 MHz. Out of that, for 300 MHz, Spectrum Usage Charge(SUC) is at the rate of 1% and for the balance it is at the rate of 3%, the two different rates fixed respectively under the auctions of 2010 and under subsequent recommendations of TRAI.
4. Besides the above facts, the various recommendations of TRAI in the matter of fixation of SUC, dated 09.09.2013, 23.10.2013 and 27.01.2016 have been brought on record as Annexures P-3, P-4 and P-7. The office orders passed by the Government of India in the same matter, dated 31.10.2014, 05.02.2015 and 12.08.2016 are contained in Annexures P-5, P-6 and P-1, respectively. The petitioner has impugned the office order dated 12.08.2016 (Annexure P-1) to the extent of challenging Clause (iii) thereof. Petitioner's grievance is that while removing the anomaly in the Spectrum Usage Charge(SUC) and trying to make the rate uniform for different operators for removing the requirement of revenue segregation, the respondent has acted arbitrarily and unreasonably in excluding the 4 spectrum in 2300 MHz/2500 MHz bands acquired/allocated prior to 2015-2016 from consideration for determining the floor amount of SUC to be paid by the operators.
5. It is the case of the petitioner that such exclusion is discriminatory and based upon an artificial distinction between the operators who bought 2300 MHz/2500 MHz in the auction of 2016 as against those like petitioner who won the spectrum allocation in the 2010 auction. It is alleged by the petitioner that there is no justifiable reason for such classification/distinction/discrimination and it violates rules of equality as guaranteed by Article 14 of the Constitution of India.
6. After waiting for a reply/short reply for about five weeks, on 21.03.2017 an interim order was passed by this Tribunal in favour of the petitioner. The operation of impugned Clause (iii) of the office order dated 12.08.2016 was stayed with a direction that in the event of petitioner not succeeding, it will pay the impugned amount with interest, as directed by the Tribunal. On 08.08.2017, after permitting filing of rejoinder, on the joint prayer of both the parties a date of hearing was fixed and the interim order has continued so far. 5
7. The short reply/reply of the respondent contains the stand of the respondent as to why the BWA spectrum or the spectrum in 2300 MHz/2500 MHz band acquired in 2010 auction has been excluded and it is confined to Paras 4 and 5 of the reply which are as follows:
"4. That with regard to the specific query put forth by the Learned Tribunal, it is submitted regarding exclusion of spectrum in 2300 MHz acquired in 2010 auction for fixing the floor amount for SUC, it is submitted that the Government has taken a policy decision to protect the revenue earned from SUC in the public interest while considering the following:
(a) The Government is continuously striving to bring the SUC to a simple flat regime from the slab-rate regime practiced earlier which was complex on account of legacy administrative allotment of spectrum. The SUC rates are therefore constantly falling over the years starting from 2014. In order to balance the SUC rate for the administratively allotted spectrum and the auctioned spectrum, weighted average principle is the way forward.
It is relevant to note that graded SUC rate is applicable to spectrum allotted administratively as well as spectrum acquired through auction held in 2012 and 2013, which spread between 3% to 8% based on the spectrum holding and a flat 5% of AGR is applicable for spectrum acquired through auction held in 2014 and 2015. Further it has been reduced to 3% for spectrum acquired through auction 6 held in 2016. Reduction in SUC rate impacts on revenue earned by the Government through SUC.
(b) Petitioner is not the only operator who acquired spectrum in 2300 MHz band in 2010 spectrum auction. This order is equally applicable for all operators and so the loss or gain on account of the floor price will be evenly distributed to all the operators. The petitioner is exaggerating the loss by taking the extreme cases for comparison.
(c) Inclusion of spectrum in 2300 MHz acquired in 2010 auction for fixing the floor amount for SUC would give undue benefit to the petitioner as compared to the other operators who do not have spectrum in 2300 MHz band acquired in 2010 spectrum auction.
5. Therefore, after considering all the aforesaid points, the Department has taken a holistic approach to rationalize the SUC with appropriate floor amount for SUC."
8. In the rejoinder and also during arguments the stand of the petitioner is that although a reply has been filed, it does not answer the issue of discrimination on account of exclusion of 2300 MHz/2500 MHz while determining the floor rate of SUC. It has been further contended that fixation of a floor rate for SUC through a fair method so as to avoid loss of revenue to the Government is not the aim of impugned Clause (iii) rather it is aimed at causing loss to the petitioner by opting for revenue maximization which is not the purpose of allocation of National 7 Resources like spectrum, as held in Re: Presidential Reference No.1 of 2012; (2012) 10 SCC 1.
9. According to learned counsel for the petitioner the classification made through the impugned clause cannot succeed as a valid classification because of lack of differentia and further for lack of a reasonable nexus with the object sought to be achieved.
10. As per submissions advanced on behalf of the petitioner, the classification is unreasonable and therefore, bad for the following reasons:
Being State, the respondent has failed to give any good reasons for excluding only 2300 MHz/2500 MHz spectrum acquired by auction prior to 2015-16 while calculating the floor amount of SUC. On the other hand, all other spectrums whether allocated administratively or through auction have been included for determining the weighted average for determining the floor rate. When 3G spectrum acquired through auction in 2010 has been included for calculating floor rate, there is no reasonable explanation for excluding BWA spectrum acquired by the petitioner in the same auction. The BWA spectrum allotted through auction in 2015-16 is very much included for calculating floor rate of SUC.8
11. On behalf of petitioner it was pointed out that on the subject of SUC, an order of DoT dated 31.10.2014 (Annexure P-5) maintained the rate of SUC for BWA spectrum at the rate of 1% of AGR with a provision for separate reporting of revenue from services using this spectrum. In Para 5 of the said order it was mentioned that the rates of SUC are subject to review by the Government from time to time. Same rate was reiterated in the order of DoT dated 05.02.2015(Annexure P-6). On behalf of the petitioner, it was pointed out that TRAI in its recommendations dated 12.07.2016 (Annexure P-8) in the context of then SUC regime pointed out the various complexities and took note of Government's objective in introducing Weighted Average Method for calculating SUC in vogue since 2014, as a migration path for ultimately arriving at a flat rate. The licensees no doubt accepted the attempt to arrive at a flat rate through Weighted Average Method but it had to be calculated in a legally valid manner. For this purpose, Para 2.1.1 of TRAI recommendations in Annexure P-8 has been highlighted. It reads as follows:
"In response to a query by the DoT, as to whether the rate of 1% of SUC for BWA spectrum band as notified in the NIA of 2010 could be modified, the Ld. Attorney-General has opined that "the contract which emerged after the 2010 auction and which is legally binding on both parties, does not permit the Government to change the SUC for BWA unilaterally." As the Revenue cannot be segregated for each band, there is difficulty in finding a multiplicand for SUC rate for that band. As an alternate solution, the Ld. 9 Attorney General has recommended that the Weighted Average of SUC rates across all spectrum bands, including BWA Spectrum obtained in the 2010 auction, should be employed on an operator-wise basis to calculate the SUC in a legally valid manner."
12. Learned counsel for the petitioner has underscored the opinion of the Attorney General extracted above in Para 2.1.1 of Annexure P-8. According to submissions, the above opinion clarified that the rate of 1% for SUC charges being a part of contract between the parties cannot be changed by the Government unilaterally. Indirectly, as per recommendation of the Attorney General it could be done by opting for a solution to the problem of revenue segregation for different bands, by opting for Weighted Average of SUC rates across all spectrum bands including BWA spectrum obtained in 2010 auction. Learned counsel emphasized that Clause (ii) of the order dated 12.08.2016 (Annexure P-1) includes all spectrum bands without any exception, in conformity with the opinion of the learned Attorney General, to work out reasonable Weighted Average of SUC rates. The interest of revenue is amply protected by the decision for charging SUC as per Weighted Average rate subject to a minimum of 3%.
13. Further submission of learned counsel for the petitioner is that all the good work and reasonable approach as per opinion of the Attorney General shown in 10 determining the Weighted Average of SUC has been thrown to winds by introducing the impugned Clause (iii) wherein a further concept of floor amount of SUC to be paid by the telecom operators has been introduced and in this exercise, the exclusion of spectrum in 2300 MHz/2500 MHz bands acquired/allocated prior to 2015-2016 is without any rationale, contrary to the opinion of learned Attorney General and plainly capricious. Such exercise, as per submissions, is arbitrary, only to harm the petitioner and the sole aim as per reply is to protect interest of revenue but in actual practice, the purpose is revenue maximization. Revenue protection was already achieved by providing a minimum 3% of AGR, much above 1% of AGR being charged earlier from the petitioner; by excluding BWA spectrum of the petitioner acquired in 2010 for petitioner, the rate, as per Chart submitted during arguments, has gone up from 4% to 5% of AGR. But those who were not having such lesser rate of 1% will continue to pay, as per the Chart, only at the rate of 4.5% of AGR.
14. The Chart submitted during the course of arguments on behalf of the petitioner takes up an illustrative case for the purpose of demonstrating the effect of Clause (ii) and Clause (iii) on petitioner vis-à-vis those who did not have BWA spectrum allocated prior to 2015-16. The figures shown in the demonstration Chart were checked by the respondent and admitted to be correct. 11
15. In reply the emphasis is that Weighted Average of SUC rates was agreed upon by all the operators and therefore, when such rate has been worked out through Clauses (ii) and (iii) of order dated 12.08.2016, there is no scope to raise the issue of arbitrariness and unilateral action by the respondent. However, the introduction of impugned Clause (iii) has been defended on the sole ground of protection of revenue interest of the Government and further plea is that petitioner is exaggerating his loss whereas some other similarly situated operators will also be equally affected but have not come forward to raise a grievance. The stand of the respondent is that inclusion of BWA spectrum of petitioner acquired in 2010 auction for fixing the floor amount of SUC would give undue benefit to the petitioner in comparison to other operators who do not have such band at the rate of 1% of AGR.
16. Learned counsel for the respondent has further taken the stand that petitioner has wrongly understood that the impugned Clause (iii) is a case of over- classification. According to him, it is not at all a case of classification but only a case of fixing of a cut-off date for the purpose of including various spectrum bands to work out the floor amount of the SUC payable by the operators. He argued that Weighted Average formula was an accepted exercise for rationalization of SUC 12 rates. He also argued that impugned Clause (iii) is temporary in nature because the rates of SUC are subject to review by the Government from time to time.
17. In his rejoinder arguments, learned counsel for the petitioner emphasized that the objective of policy decision of the Government given in Para 4(a) of the reply of respondent is to arrive at a "simple flat rate regime from the slab-rate practiced earlier........". It was pointed out that a cut-off date for the new rates given as 12.08.2016 (date of Annexure P-1) is understandable and acceptable but another cut-off date for the impugned Clause (iii) is wholly unnecessary, it has no reasonable purpose and it leads to over-classification by excluding petitioner's BWA spectrum in the process of determination of floor amount of SUC to be paid by the operators. On behalf of petitioner, reliance has been placed upon P. Venugopal Vs. Union of India; (2008) 5 SCC 1, in support of the proposition that no artificial classification and especially over-classification is permissible to inflict injury to the petitioner. Para 20 of the judgment in the case of Roop Chand Adlakha & Ors. Vs. Delhi Development Authority; (1989) Supp.(1) SCC 116 was relied upon for the proposition that "to overdo classification is to undo equality". For similar views in respect of equality and classification, reliance has been placed upon R.D. Shetty Vs. International Airport Authority; (1979) 3 SCC 489 and Srilekha Vidyarthi Vs. State of Uttar Pradesh; (1991) 1 SCC 212. 13 Reliance has been placed also upon the case of Jaila Singh Vs. State of Rajasthan; (1976) 1 SCC 602 in respect of oft repeated proposition that the classification must have a nexus with the object sought to be achieved. Paras 113 and 114 of State of Maharashtra Vs. Indian Hotel Restaurant Association; (2013) 8 SCC 519 has been referred to for the proposition that a blatent discrimination cannot be justified on the criteria of reasonable classification under Article 14 of the Constitution of India.
18. Learned counsel for the petitioner referred to and placed reliance upon two judgments of this Tribunal. Case of Reliance Communication Ltd. Vs. Union of India (T.P. No.219 of 2018) has been cited to support the proposition that unilateral amendment of an essential element of contract is not permissible and that revenue maximization does not always mean public interest. Reference was also made to judgment in Vodafone Idea Ltd. Vs. Union of India (T.P.No.19 of 2013) wherein it was held that even if the objective of fixing charges is revenue maximization, it can be done only in a lawful manner and not on the basis of arbitrary assumptions and facts.
19. On the other hand, learned counsel for the Union of India has cited Mohd. Ali Imam & Ors. Vs. State of Bihar; (2020) 5 SCC 685, through its Chief 14 Secretary & Ors. In this case retired employees challenged a cut-off date fixed by the Government of Bihar for extending a beneficial scheme for the employees from a retrospective date when the Cabinet had taken a decision in favour of such a scheme. Those who had retired earlier to the cut-off date wanted to be included but the Court found no illegality in the cut-off from a particular date when the Cabinet had taken a decision in favour of such a scheme. Learned counsel for the respondent has also cited and relied upon judgment of the Apex Court in the case of Ramrao & Ors. Vs. All India Backward Class Bank Employees Welfare Assn. & Ors., (2004) 2 SCC 76. In this case a cut-off date fixed by the concerned bank to promote its employees was found to be valid. It was held that classification on account of such a cut-off date would not amount to creating a class within a class or an artificial classification, so as to offend Article 14. The Apex Court reiterated the settled law that choice of a date as a basis for classification cannot always be declared arbitrary even in absence of any reasons, unless it is shown to be capricious or whimsical in the circumstances.
20. Having considered the relevant case laws and the rival case of the parties noticed above, it is found that the provision in the impugned Clause (iii) suffers from apparent arbitrariness in excluding BWA spectrums acquired/allocated prior to 2015-16, moreso, when in the main exercise of fixing Weighted Average of 15 SUC rates there was no such exclusion and interest of revenue had been protected by providing a minimum rate of 3% of AGR excluding revenues from wireline services. The plea of protection of revenue interest is found to be capricious, unsustainable and assumptive. This had already been achieved by fixing a minimum rate in Clause (ii). The impugned Clause (iii) is based upon a misconception that inclusion of BWA spectrum of the petitioner would give him undue advantage. The undisputed Chart of calculation shows that the petitioner has been subjected to undue loss when compared to others. The plea that the loss is temporary offers no legal protection to the impugned clause. No other entity has been named but even if similar operator was also adversely affected, petitioner will not lose its legal right to challenge a discriminatory provision only because someone else has chosen not to come forward to protest and challenge.
21. The opinion of learned Attorney General which was respected while fixing Weighted Average of SUC rates, has apparently been ignored while creating an exception and further classification through the impugned Clause (iii). It is a case of over-classification for no good reason much less a reason having nexus with any valid and fair objective.
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22. The two judgments relied upon by the learned counsel for the respondent, were in totally different facts and circumstances, one dealing with implementation of a beneficial scheme for retired employees and the other with cut-off date for promotion. These judgments do not help the case of the respondents in the present facts and circumstances where the petitioner has been disadvantageously placed as a separate class without any valid differentia and for no good and relevant objective. Compared to others, the petitioner has been denied a uniform and fair treatment.
23. As a result of the above discussion and finding, the impugned Clause (iiii) of the Office Order dated 12.08.2016 (Annexure P-1) is quashed and set aside. The petition is allowed in the aforesaid terms. However, in the facts of the case there shall be no order as to costs.
..........................J (Shiva Kirti Singh) Chairperson ...............................
(Subodh Kumar Gupta) Member sks