HC upholds DoT demand to claim revenue from service providers

The Madras High Court today upheld the Department of Telecom's demand to claim a percentage of revenue from service providers, amounting to Rs 3,273 crore.
A division bench comprising Justices Huluvadi G Ramesh and M V Muralidharan dismissed objections by Aircel Cellular Limited (ACL), Aircel Limited (AL) and Dishnet Wireless Limited and upheld DoT's right to 'modify' licence conditions in public interest and seek revenue earned by the service providers from non-telecom activities as well.
The court said it is the exclusive privilege of the Union government to grant licence to carry out telegraph activity.
It said if the Union government thought it fit to impose a one-time spectrum charge on service providers, it cannot be deemed to be against the vested rights of service providers, as no such rights accrue to them on grant of licence.

Originally, ACL and AL were granted licence for Chennai Metro and rest of Tamil Nadu regions for 10 years. With the introduction of National Telecom Policy, 1999, migration package for all existing licensees of cellular and basic telecom services was proposed.
Besides increasing the licence period to 20 years, the policy envisaged payment of one-time entry fee and percentage of gross revenue as licence fee.

This was challenged by the service providers.
They had submitted that gross revenue of the licensee company should be only on activities enumerated in the licence and not on all activities of the licensee company. The share sought by DoT on revenue generated through non-telecom activities was violative of their constitutional rights, they had said.

The bench rejected these submissions and concurred with that of Additional Solicitor General G Rajagopalan, saying the providers had with 'open eyes' accepted the agreement terms which were to their advantage and also further changes like extension of term and change in prescription of licence fee.
"They cannot cry out loud at this point of time pleading denial of rights vested on them under the contract," it said.
After Rajagopalan informed the court that more than Rs 3,273 crore was due to DoT, the judges said DoT should issue a fresh noticewithin a month, quantifying the amount and the companies should pay it within a month thereafter.

The bench referred to various Supreme Court judgments and said the term 'modify' in Clause 13 (ii) of the licence agreement would connote 'addition'.
The bench then dismissed the petitions of the service providers, saying they are bound to pay the amount to DoT.