The Bombay High Court has set aside the Central Government’s 2012 decision to levy one-time spectrum charges retrospectively on telecom operators- Bharti Airtel and Vodafone Idea for spectrum held beyond 6.2 MHz from July 2008 onwards, holding that the Union of India lacked the statutory and contractual authority to impose such a liability years after the spectrum had already been allocated.
A Division Bench of Justice Manish Pitale and Justice Shreeram V. Shirsat allowed writ petitions filed by Bharti Airtel and Vodafone Idea challenging the Department of Telecommunications’ decisions dated November 8, 2012 and December 28, 2012, along with consequential demand notices. The Court held that the Government failed to justify the retrospective levy either under Section 4 of the Indian Telegraph Act, 1885 or under the terms of the telecom licences executed with the operators.
The Court noted that India’s telecom licensing regime underwent a significant shift with the introduction of the National Telecom Policy, 1999 (NTP-99), moving from a fixed licence fee model to a revenue-sharing framework. It observed that the policy was aimed at expanding telecom access and improving connectivity, and operators receiving additional spectrum were required to pay higher percentages of Adjusted Gross Revenue (AGR), which constituted the consideration for such allocations.
No Power to Impose Retrospective Spectrum Charge
A central issue before the Court was whether the Government possessed the power to retrospectively impose a one-time spectrum charge in 2012 for spectrum that had already been allocated and utilised since 2008.
Rejecting the Union’s reliance on Section 4 of the Telegraph Act, the Bench held that the provision empowers the Government to grant licences on such conditions and in consideration of such payments as it thinks fit, but those conditions and payments must be crystallised at the time the licence is granted. The provision did not authorise the Government to unilaterally alter consideration years later and impose fresh liabilities retrospectively.
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4. Exclusive privilege in respect of telegraphs, and power to grant licenses.—[(1)] Within 5 [India], the Central Government shall have the exclusive privilege of establishing, maintaining and working telegraphs:
Provided that the Central Government may grant a license, on such conditions and in consideration of such payments as it thinks fit, to any person to establish, maintain or work a telegraph within any part of [India]:
The Court also rejected the argument that telecom operators had received spectrum “virtually free of charge.” It found that the revenue-sharing framework introduced under NTP-99 already constituted consideration for spectrum allocation and use. The Bench observed:
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“We are unable to agree with the respondent that the petitioners were allotted spectrum ‘virtually free of charge’. The aforesaid documents and the manner in which the objectives and targets of NTP-99 were sought to be achieved, shows that there was no place for imposition of one-time spectrum charge by the impugned decisions in the year 2012, retrospectively for the period beginning in the year 2008.”
The Court further held that executive orders cannot ordinarily operate retrospectively unless authorised by law. It found that the Government’s 2012 decisions amounted to executive instructions imposing a financial liability for an earlier period without any statutory or contractual foundation. The Bench stated:
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“The impugned decisions have the effect of placing liability on the petitioners retrospectively for a period starting from the year 2008, while the decisions were taken in the year 2012. Since we have already found that there was lack of power in the respondent Union of India either under the Statute or under the terms of the contract to impose such a retrospective liability, the impugned decisions become nothing but executive orders without any source of power, seeking to impose liability retrospectively.”
Court Finds Government Changed Course Midway
The judgment records that several governmental and TRAI recommendations over the years had accepted the revenue-sharing model as the basis for spectrum allocation. The Court noted that TRAI itself had earlier taken the view that additional spectrum charges beyond existing revenue-sharing obligations were not legally feasible and had indicated that any one-time charge, if at all, could be considered only for spectrum beyond 10 MHz. The petitioners, however, had never exceeded 10 MHz.
The Bench found that the Government had consistently allocated additional spectrum in return for increased revenue-sharing percentages before abruptly changing its position and introducing a one-time spectrum charge. The Court observed:
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“The least that private parties like the petitioners expect from the respondent i.e. the Union of India when such contracts / licence agreements are executed, is that the State as the contracting party would act within the terms and conditions of the contract and that there would be consistency in decision making, demonstrating good administration.”
The Court added that the Government had already charged and received additional revenue share as consideration for allocation of spectrum up to 10 MHz and that the subsequent demand for a one-time spectrum charge was inconsistent with both the contractual framework and earlier policy decisions.
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Concluding that the Union of India had failed to justify the retrospective levy, the Court held:
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“The respondent has not been able to justify the said decisions and its action of levying one-time spectrum charge retrospectively upon the petitioners.”
The Bench accordingly quashed the Government’s decisions dated November 8, 2012 and December 28, 2012 as well as the consequential demand notices issued to Bharti Airtel and Vodafone Idea. It further directed that any bank guarantees furnished by the companies be returned and that any steps taken pursuant to the impugned demands would stand quashed.
Cases Referred
Subodh Kumar Singh Rathour Vs. Chief Executive Officer and others, 2024 SCC OnLine SC 1682
Bharat Sanchar Nigam Limited and others Vs. Tata Communications Limited, 2022 SCC OnLine SC 1280
