Supreme Court trashes Loop’s plea for refund of 2G licence entry fee

NEW DELHI: The Supreme Court on Thursday rejected a petition by Loop Telecom seeking refund of ₹1,400 crore paid as entry fee for acquiring 2G licences for 21 service areas in 2008 after its acquittal in the case by the trial court in December 2017.

A three-judge bench headed by justice Dhananjaya Y Chandrachud said, “The acquittal of the promoters (Essar group) of the appellant (Loop Telecom) of the criminal charges does not efface or obliterate the findings which are contained in the final judgment of this court in Centre for Public Interest Litigation in 2012 (by which 122 2G spectrum licences were cancelled).”

Loop approached the court against an order passed by the telecom dispute settlement appellate tribunal (TDSAT) in 2018 rejecting the company’s request. The company had questioned the decision to refund entry fee to telecom service providers whose spectrum licences stood quashed by the 2012 SC judgment but who were willing to bid afresh in the subsequent transparent auction of 2G licences.

The company further claimed that although it was made an accused in the 2G spectrum scam, the special CBI court on December 21, 2017, acquitted the petitioner of criminal charges. Though an appeal against this decision is still pending before the Delhi high court, the petitioner firm sought the benefit of acquittal to claim refund.

The bench, also comprising justices Surya Kant and Vikram Nath, said, “It is important to note that the criminal trial before the special judge, CBI was limited to the question as to whether the promoters of the appellant had cheated the DoT by providing a false representation of its compliance with Unified Access Service licences (UASL) Guidelines, since it was allegedly being controlled by the Essar group.”

Examining the order of acquittal, the top court held that the prosecution was unable to prove that officers of department of telecommunication (DoT) considered the representation of the appellant (Loop) to be false or that the appellant was engaging in a sham transaction or that the appellant was actually controlled by the Essar group.

“As a beneficiary and confederate of fraud, the appellant cannot be lent the assistance of this court for obtaining the refund of the entry fee,” the bench said, while dismissing Loop’s petition.

The 2012 judgment declared the government policy of first come first serve basis in grant of 2G licences to be illegal. As a consequence, the UASLs were quashed.

The bench said, “The appellant has been the beneficiary of a manifestly arbitrary policy which was adopted by the Union government and which was quashed in the decision of this Court in CPIL. That being the position, the appellant would not be entitled to a refund of the Entry Fee even on the principle of restitution embodied in Section 65 of the Indian Contract Act.”

The court further noted that entry fee was meant to be a one-time, non-refundable payment and after the licences stood cancelled, the appellant would not have a right to appeal for refund of the entry fee. The judgment noted that the top court imposed costs of ₹5 crore on one set of licencees and ₹50 lakh on another set, after assessing their culpability in wrongly benefitting from the wholly arbitrary‖ and unconstitutional exercise of licence and spectrum allocation.

Loop applied for the grant of Unified Access Service Licences for 21 service areas in September 2007. It paid the circle wise entry fee of ₹1.1 crore and the licence agreements came into effect in January 2008. Soon after the judgment in CPIL case, the appellant approached TDSAT for refund of entry fee but the same was rejected in September 2015. The firm approached the Supreme Court but withdrew and later filed a subsequent refund claim before TDSAT after being acquitted by the trial court.

By its judgment of December 11, 2018, TDSAT dismissed the second plea by Loop Telecom noting it to be a second attempt for claiming the same relief which had been earlier rejected.

The court deprecated the conduct of Loop in withdrawing its earlier appeal from the top court and said, “A party must not be allowed to conduct litigation in this manner. Such a course of action is subject to grave abuse since it lays bare an effort at forum-shopping and selectively deciding where and before whom it would pursue its remedies. For the above reasons we are of the view that the TDSAT has correctly come to the conclusion that the claim by the appellant for refund of the Entry Fee could not have been entertained.”

During arguments, Loop presented a report of the Empowered Group of Ministers held on October 18, 2012, which decided to grant a set off of entry fee to Telewings (formerly Uninor), Videocon, Idea Cellular Limited and Sistema Shyam. Telewings, according to the appellant got this benefit despite facing grave criminal charges in the 2G scam case.

The court said that the appellant did not challenge this policy of set off at that stage and nor did it attempt to enter into the fray at that stage when a fresh auction was held. “In these circumstances, the policy decision adopted by the Union government cannot be allowed to be questioned at the behest of the appellant who sought a refund simplicitor in proceedings before the TDSAT.”