Delhi HC stays Rs 290-cr demand notice on AT&T Global Network Services

Fine was imposed for allegedly providing end-to-end managed data services without obtaining license

The Delhi High Court on Friday stayed a Rs 290 crore penalty imposed by the Department of Telecommunications (DoT) on AT&T Global Network Services India Private Limited for allegedly providing end-to-end managed data services between the years 2002-2005, without obtaining a proper license or paying the necessary license fees.

Senior advocate Rajiv Nayyar, appearing on behalf of AT&T, began Friday’s hearing by highlighting that the April 5 demand notice had been issued to AT&T Global Network Services for alleged unlicensed operations between 2002-2005, when the company itself had been incorporated only in 2005 and had received its license from the DoT in 2006.

The AT&T counsel mentioned that it had been AT&T Communication Services India Private Limited that had been involved in the proceedings from the very beginning, yet the demand had been levied on AT&T Global Network Services which had not been a party to the dispute or been given any opportunity to state its own position. Challenging the penalty, he said that the issue had been pending with the DoT for around 15 years, with the department first sending a show cause notice to AT&T Communication Services and then conducting a hearing in the year 2009.

Nayyar also challenged the validity of the April 5 DoT order, which he claimed was itself bad in law, arbitrary and against the principles of natural justice as it had been passed by a committee comprising of different members, as opposed to the committee that had heard the issue in 2009.

The DoT advocate opposed the AT&T arguments on the grounds of maintainability, claiming that the company was urging technical grounds to avoid paying the demand even after violating Section 20 of the Indian Telegraph Act, 1885. The government counsel added that the company had wrongly approached the high court without first seeking a remedy before the appropriate appellate body, the Telecom Disputes Settlement and Appellate Tribunal.

The DoT advocate also submitted that it was only the Chairman of the committee that had changed since 2009 and that the modification did not affect the validity of the April 5 order directing AT&T Global Network Services to deposit Rs 290 crore for recovery of unpaid license fees, taxes and other levies.

Disagreeing with this defense, Justice Sanjeev Sachdeva questioned the validity of imposing a penalty on a party (AT&T Global Network Services) which had never been served a show cause notice in the first place or given a chance of being heard. “Notice needs to be given to the correct party. The April 5 order is stayed till the next date of hearing,” said Justice Sachdeva while concluding the day’s proceedings. The matter will be heard next on May 19.

AT&T Global Network Services Private Limited and AT&T Communication Services India Private Limited are both subsidiaries of AT&T Global Network Holdings LLC. AT&T Global Network Services has claimed that it is a separate and distinct entity as compared to AT&T Communication Services and should not be imposed the DoT penalty on any proceedings against the latter company.