TDSAT quashes Loop's Rs 2,200 cr claim

Telecom tribunal TDSAT has rejected a petition filed by Loop Telecom seeking a refund of Rs 2,231 crore in licence fee and interest from the government for permits which it lost in 2G spectrum case in 2012.
Citing pending criminal trial against Loop Telecom in connection with the grant of 2G licences, the TDSAT bench headed by Justice Aftab Alam said that the tribunal cannot issue any direction in its favour under Contract Act until the company is relieved from charges that it is facing.
"Moreover, a direction for refund outside the purview of the Contract Act and in exercise of Constitutional powers is clearly beyond the authority of this Tribunal," TDSAT said in an order dated September 18.

It added that to seek refund outside the purview of the contract act Loop Telecom "must approach the Court that quashed its licences, that is, the Supreme Court and seek appropriate reliefs".
Loop Telecom had sought a refund of Rs 1454.94 crore paid by it as an entry fee for telecom licence in 2008. The apex court on February 2, 2012 quashed its 21 licences along with 101 others. The company had demanded Rs 737.59 crore as interest on the principal amount for the period January 10, 2008 to April 31, 2012.
The Telecom Disputes Settlement & Appellate Tribunal rejected Loop Telecom counsel Harish Salve's submission that there is no connection between the Loop's claim for refund before the tribunal and the criminal proceedings being faced by it.

"As pointed out above we see a direct and vital connection between the two. The criminal trial in which the petitioner is one of the accused casts a cloud over its claim for refund and until that cloud is removed the petitioner cannot invoke section 65 of the Contract Act to its aid," the order said.

On argument of Additional Solicitor General Pinky Anand, the tribunal allowed the Department of Telecom to raise demand of Rs 58.70 as liquidated damages over and above claim for pending licensing fees within two months.
"We may note here that towards the end of the hearing of the case it was stated on behalf the Union of India that up to 1 June 2012 it had claim of liquidated damages against the petitioner amounting to Rs 58.7 crore plus the claim for licence fee. The DoT may accordingly raise its demand against the petitioner within two months from today," the order said.

Apart from this, Loop Telecom's investor KHML has already filed international arbitration against Indian government seeking damages of over USD 1 billion for 2G licences.
The firm has filed arbitration under the United Nations Commission on International Trade Law and nominated Singapore based individual Francis Xavier SC as its arbitrator.
The government had decided to adjust the money of telecom operators affected by the apex court order, if they bid in spectrum auctions. This was to address concerns raised by foreign investors impacted by the apex court judgement.
Loop Telecom, however, opted out of auctions and hence could not benefit from the government's decision.