2G case: A 2015 TDSAT order may support telecom firms’ claim for refund

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New Delhi: A 2015 judgement by the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) backs demands for compensation by companies whose licences were cancelled in 2012 and which were acquitted last week by a special Central Bureau of Investigation (CBI) court in the 2G spectrum allocation case.

In Loop Telecom’s petition, which had sought a refund of the licence fee after the Supreme Court’s 2012 verdict in the 2G case, the telecom tribunal had said the petitioner is liable to get a refund only after it is exonerated of charges in the criminal trial. “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,” TDSAT had said its September 2015 order.

Loop Telecom had approached TDSAT for a refund of almost Rs1,455 crore paid by it as entry fee/licence fee after the Supreme Court quashed its licences.

To be sure, the companies will only be able to claim compensation after the investigating agencies’ appeal of the CBI court judgement in higher courts is dismissed or if the operators are acquitted there as well. CBI is likely to file an appeal in the Delhi high court next month. Telecom minister Manoj Sinha on Thursday said that any action on the government’s part would be based on CBI’s next step.

According to news reports in The Economic Times and the Business Standard, Loop Telecom, Videocon Telecom and S Tel were exploring ways to seek compensation.

Videocon declined to comment on the story. Loop and S Tel spokespersons could not be reached on their mobile phones.

The move came after a CBI court acquitted all 18 individuals, apart from related companies, accused in the case, citing lack of proof of corruption in the 2008 allocation of 2G spectrum licences. “The recent trial court verdict stated that more had been made out of the so-called 2G scam when there was none. Therefore, now there is a substantial case for companies and individuals to seek damages as the licences were cancelled with the stroke of a pen which resulted in loss of business and reputation,” said Manali Singhal, defence counsel in the 2G case in the trial court.

“While upholding that the SC verdict in 2012 is wrong would be extremely difficult, a fair case can still be made out by the operators seeking loss of reputation and business. However a court or the TDSAT may still say that the appeal process is not over and hence there is no absolute finality in terms of exoneration of criminal wrongdoing. The trial court is a fact-finding court which has given a clean chit so the higher court may ordinarily not re-examine the facts again during the appeal process, there is a fair case for operators to claim damages,” Singhal added.

In 2008, during A. Raja’s tenure as telecom minister, licences for 2G spectrum were awarded on a first come, first served basis to operators, at a price discovered in an auction held seven years earlier. Based on a report submitted by the Comptroller and Auditor General of India, which said 2G licences were issued to telecom operators at throwaway prices, causing a presumptive loss of Rs1.76 trillion to the exchequer, the apex court cancelled 122 telecom licences in January 2008, holding that the process of allocation was flawed. The court further directed that spectrum or any natural resource must be auctioned.

Experts said telcos’ chances of succeeding in getting compensation from the government were slim. “First, companies will have to prove that there was loss of business to them. It seems very difficult for them to win a case seeking damages as the SC order of 2012, which found the process of spectrum allocation to be flawed, still stands,” a lawyer said, requesting anonymity.

A telecom expert said firms planning to seek damages after the recent trial court verdict are trying to take a shot in the dark. “It is unlikely that they will be able to get any damages from the government even if the trial court verdict found no evidence to point out any foul play by the accused,” the expert said, also requesting anonymity.