DoT may issue show-cause with Rs 50-cr penalty on Vodafone

Dept charges Vodafone with violation of licence terms for renting SIM cards

The Department of Telecommunications (DoT) is likely to issue a show-cause notice to Vodafone imposing Rs 50 crore-penalty for alleged violation of licence terms and conditions with regard to renting of SIM cards. The DoT is likely to send the draft show-cause notice for legal vetting once it gets approval from the administrative authority, according to a recent discussion of the DoT.

Earlier, it has issued similar notices to Idea Cellular and Bharti Airtel in this regard. It had given the companies two weeks to reply to the show-cause notices.

Telecom Disputes Settlement and Appellate Tribunal (TDSAT) had, in July 2012, set aside the Rs 50 crore penalty imposed on each Bharti Airtel, Vodafone and Idea Cellular by the government for allegedly issuing bulk SIM cards without proper verification. The Government had, in March this year, decided to file a civil appeal before the Supreme Court against the TDSAT judgment.

The tribunal had asked the DoT that the operators may be served again with a show-cause notice and on consideration of the causes shown by the petitioners, fresh orders may be passed.

A recent DoT discussion has noted that the fresh show-cause notices are prepared following the TDSAT order.

TDSAT also asked DoT to refund the amount deposited by the petitioners at an interest of nine per cent per annum within two weeks. The tribunal had in its earlier orders directed the operators to pay half the amount, Rs 25 crore each.

Vodafone (then Hutch), in 2003, had entered into an agreement with Matrix Cellular that offers telecom solutions to Indians visiting abroad, and had issued 10,000 SIM cards for its own use. But, DoT’s Telecom Enforcement, Resource and Monitoring (TERM) cell had later found that some numbers issued to Matrix by Vodafone were further rented out by the telecom solution provider. DoT had passed an order on October 18, 2011, imposing a penalty of Rs 50 crore on Vodafone.