Decided on April 23,2015

Association Of Unified Telecom Service Providers Of India And Ors. Appellant
Union of India And Ors. Respondents


Aftab Alam, J. (Chairperson) - (1.) Introduction
(2.) WHAT would be the licensor's consideration, in terms of percentage share in the licensee's gross revenue for the licence granted under section 4 of the Indian Telegraph Act, 1885? That is the broad question (with a very large number of sub -heads) that arises for consideration in this batch of petitions filed by a number of telecom operators. The past proceedings In order to outline the limits of the controversy as it stands at present, after the litigation has already gone over for more than a decade, it will be useful to have a brief look at how the matter has proceeded since its beginning. The genesis of the dispute lies in the "migration package" offered by the Government to the licensees by its decision dated 22 July 1999 that came into effect from 1 August 1999. The offer allowed the licensee to 'share' with the Government a certain percentage of its revenue annually, in lieu of payment of a fixed amount (determined through auction), as licence fee. All the licensees, without exception, accepted the Government offer . In pursuance of the migration package that introduced the "revenue sharing regime" the licences were amended by incorporating the definition of "Adjusted Gross Revenue" (AGR), a certain percentage of which was annually payable by the licensee as the licence fee. The licensees found that the definition of AGR as inserted in the licences, and especially its application in raising demands for licence fees by the department of telecommunication (DoT), was very expansive. A bunch of petitions thus came to be filed both at the instance of individual licensees/operators and their associations assailing the validity of the definition of AGR and the demands of licence fees raised by the DoT on that basis. According to the licensees, AGR could only relate to the revenue directly derived from telecom operations licenced under section 4 of the Telegraph Act but it was defined in the licences in such inclusive and wide terms that it allowed the licensor/the Government of India to have a share in the licensees' incomes from business activities that were neither covered by nor had any connection with the licence granted under the Telegraph Act; as a matter of fact for carrying on those business activities no licence of any kind was required. It was contended on their behalf that the definition of AGR was, therefore, ultra vires section 4 of the Telegraph Act. Further, section 4 of the Telegraph Act and the definition of AGR given in the licences were in violation of articles 14 and 19(1)(g) of the Constitution of India. The Tribunal upheld the licensees' contention and by judgment and order dated 7 July 2006 observed and held as under: "A careful reading of the Section indicates that the consideration contemplated therein is only for the privilege the Government has i.e. to establishing, maintaining or working of a telegraph and not beyond that. Therefore, if the Central Government thinks it fit to transfer this privilege for a fixed sum of money and the licensee accepts that demand, there can be no further dispute but if Government chooses to take a percentage share of the gross revenue of the licensee as its consideration then it is logical to conclude that such sharing can be only of gross revenue derived from the transferred privilege of establishing, maintaining and working of telecommunication. In our opinion, it would be doing violence to the Section if we are to accept the argument of the learned counsel for the 1st Respondent that words "as it thinks fit" found in the proviso would allow the Government to demand and collect a share of revenue from all the activities of the licensee irrespective of the fact whether such revenue is traceable to the revenue realized from the activities under the licence or not. We will shortly indicate at appropriate place that it was not the thinking of the Government itself at various stages that it wanted to demand a share in the non -licensed activities of the licensee. In our opinion the interpretation given by the learned ASG to the language of proviso to Section 4 of the Telegraph Act is neither contextually correct nor could it be logical/reasonable when considered bearing in mind the rights and obligations of the parties under the National Telecom Policies as also the Migration Package to which reference will be made hereinafter."
(3.) THE Tribunal further observed that in defining what would constitute AGR there was no proper consideration of the recommendations by the Telecom Regulatory Authority of India (TRAI) as required under the provisos to section 11 (1) of the Telecom Regulatory Authority of India Act, 1997, for, the DoT had declined to accept the TRAI recommendations on the basis of a consultation paper submitted by a private (non -statutory) consultant engaged by the Government that was not brought to the notice of TRAI. Accordingly, by its aforementioned judgment the Tribunal remanded the matter to TRAI to consider which specific heads of inflow should or should not form part of AGR and send its conclusions to the Tribunal.;

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