Bombay HC Quashes Retrospective Spectrum Charge On Vodafone Idea And Bharti Airtel; Sets Aside DoT Demands

Mumbai, June 8: The Bombay High Court on Monday set aside the Centre’s decision to levy a one-time spectrum charge on telecom operators Vodafone Idea and Bharti Airtel for spectrum held beyond 6.2 MHz from 2008 onwards, holding that the government had failed to justify the retrospective levy.

A bench of Justices Manish Pitale and Shriram Shirsat allowed petitions filed by Vodafone Idea and Bharti Airtel challenging the Department of Telecommunications’ (DoT) decisions of December 28, 2012 and November 8, 2012, along with demand notices issued to the companies.

Background of the dispute

The dispute dates back to 2012, when the Union Cabinet decided that telecom operators would have to pay a one-time charge for spectrum held beyond 6.2 MHz from July 2008 onwards. Based on this decision, the DoT issued demand notices to telecom companies.

Senior advocate Aspi Chinoy, appearing for Vodafone Idea, and senior advocates Harish Salve and Darius Khambata, appearing for Bharti Airtel, argued that neither Section 4 of the Indian Telegraph Act, 1885, nor the licence agreements empowered the government to impose such a charge retrospectively.

They contended that the telecom operators had already paid licence fees and spectrum usage charges under the revenue-sharing regime introduced through the National Telecom Policy, 1999 (NTP-99).

The Centre, represented by Additional Solicitor General Anil Singh, defended the levy, arguing that spectrum is a scarce natural resource held by the government in public trust and that operators were liable to pay for its allocation. The government also relied on a 2016 Madras High Court judgment that had upheld a similar levy.

High Court ruling

Rejecting the Centre’s stand, the HC held that the government could not unilaterally alter the financial terms of licence agreements after they had been granted.

“The respondent (Union of India) has not been able to justify the said decisions and its action of levying one-time spectrum charge retrospectively upon the petitioners,” the bench observed.

The court noted that under NTP-99, the emphasis was on expanding affordable telecom services, improving rural connectivity and ensuring efficient utilisation of spectrum rather than revenue maximisation. It found that telecom operators had already paid additional revenue share whenever extra spectrum was allotted.

“We are unable to agree with the respondent that the petitioners were allotted spectrum ‘virtually free of charge’,” the court said.

The bench further observed that there was “no place for imposition of one-time spectrum charge” under the framework adopted after NTP-99 and that the government had failed to identify any statutory or contractual source of power to impose the levy retrospectively.

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Directions from the court

Consequently, the court quashed the impugned decisions and demand notices. It also directed that any bank guarantees furnished by the telecom companies be returned and that any steps taken pursuant to the disputed demands would stand cancelled.

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