# LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA AND ANR

- **Citation:** [2022] 4 S.C.R. 329
- **Court:** Supreme Court of India
- **Decided:** 2022-03-03
- **Case number:** Civil Appeal Nos. 1447-1467 of 2016
- **Bench:** Dr. Dhananjaya Y Chandrachud, Surya Kant, Vikram Nath
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/loop-telecom-and-trading-limited-v-union-of-india-and-anr-36035
- **Pages:** 60

## Headnote

Telecommunication: Contract Act, 1872 - ss.65, 23, 56 -
Unified Access Service Licenses (UASL) - 2G Spectrum - Illegal
Allocation - Claim for Refund of Entry Fee - In the instant case,
the appellant applied for grant of UASL for 21 service areas - In
the meantime, the Court in Centre for Public Interest Litigation v Union
Of India declared the policy of the Union for allocation of 2G
spectrum as illegal holding that such policy was arbitrary in nature
as it provided allocation on the basis of "First Come First Serve"
and therefore opened the door of biasness - On the basis of the
said judgment the appellant sought relief of refund of Entry Fee
before the Telecom Disputes Settlement and Appellate Tribunal
basing the plea that the allocation was in the nature of the contract
and the same has become void in the light of the aforesaid judgment
and hence the appellant is entitled to recourse u/ss.65, 23 &56 of
Contract Act - The Tribunal dismissed the appellant's plea on the
ground that the quashing of the appellant's license in the aforesaid
judgment cannot be equated with the UASL agreement becoming
void within the meaning of s.65 and also that the same has not
become void u/ss.23 and 56 of the Act - The tribunal further held
that since the appellant was at pari delicto hence could not claim
refund of Entry Fee - On appeal, held - The appellant was in pari
delicto with the Department of Telecommunication, the 2G spectrum
allocation exercise of which was held illegal, arbitrary and
constitutionally infirm by the court in the above referred judgment
- Further since the appellant was at fault hence could not claim
recourse to s. 65 of the Act - Also that the appellant was party in
the above referred case and despite knowing the fact that the Court
in such case was to quash the process of allocation and award of
the licenses in which it did not claim refund of Entry Fee and hence
could not be allowed to raise such plea in the present case.
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SUPREME COURT REPORTS
[2022] 4 S.C.R.
Telecom Regulatory Authority of India Act 1997: ss.14, 15,
16, 18 - Telecom Disputes Settlement and Appellate Tribunal -
Jurisdiction - Scope and Extent - The jurisdiction of civil courts
has been ousted by s.15 - s.16 enables the TDSAT to regulate its
own procedure, guided by the principles of natural justice - An
appeal on a substantial question of law lies to Supreme Court under
s.18 of the TRAI Act - TDSAT was a creature of statute and was
empowered to determine its jurisdiction, subject to the constraints
stipulated in the statute - s.14, as such, does not put any constraints
on the jurisdiction of the TDSAT - Telecommunication.
Contract Act, 1872 - ss. 20, 56, 65 - Scope - The expression
"discovered to be void" u/s.20 comprehend a situation in which
parties were suffering from a mistake of fact from the very beginning
but had not realized at the time of entering into the agreement or
signing of the documents that they were suffering from any such
mistake and had therefore acted bona fide while entering into such
agreements - The word "impossible" u/s 56 has to be construed in
its practical sense and not just in its literal sense - s.65 does not
operate in derogation of the maxim in pari delicto potior est conditio
possidentis - The application of s.65 has to be limited to those cases
were the party claiming restitution itself was not in pari delicto.
Dismissing the appeals, the Court
HELD: 1. The decision of this Court in CPIL, which was
rendered on 2 February 2012, arose from petitions under Article
32 of the Constitution. The petitions questioned the grant of
UASLs to the private respondents in those proceedings (which
included the appellant), on the ground that the procedure which
was adopted by DoT was arbitrary, illegal and in violation of Article
14 of the Constitution. This Court held that an auction conducted
after due publicity was perhaps the best method for fulfilling the
constitutional requirement of preserving equity in t

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[2022] 4 S.C.R. 329
329
LOOP TELECOM AND TRADING LIMITED
v.
UNION OF INDIA AND ANR.
(Civil Appeal Nos. 1447-1467 of 2016)
MARCH 03, 2022
[DR. DHANANJAYA Y CHANDRACHUD, SURYA KANT
AND VIKRAM NATH, JJ.]
Telecommunication: Contract Act, 1872 - ss.65, 23, 56 -
Unified Access Service Licenses (UASL) - 2G Spectrum - Illegal
Allocation - Claim for Refund of Entry Fee - In the instant case,
the appellant applied for grant of UASL for 21 service areas - In
the meantime, the Court in Centre for Public Interest Litigation v Union
Of India declared the policy of the Union for allocation of 2G
spectrum as illegal holding that such policy was arbitrary in nature
as it provided allocation on the basis of "First Come First Serve"
and therefore opened the door of biasness - On the basis of the
said judgment the appellant sought relief of refund of Entry Fee
before the Telecom Disputes Settlement and Appellate Tribunal
basing the plea that the allocation was in the nature of the contract
and the same has become void in the light of the aforesaid judgment
and hence the appellant is entitled to recourse u/ss.65, 23 &56 of
Contract Act - The Tribunal dismissed the appellant's plea on the
ground that the quashing of the appellant's license in the aforesaid
judgment cannot be equated with the UASL agreement becoming
void within the meaning of s.65 and also that the same has not
become void u/ss.23 and 56 of the Act - The tribunal further held
that since the appellant was at pari delicto hence could not claim
refund of Entry Fee - On appeal, held - The appellant was in pari
delicto with the Department of Telecommunication, the 2G spectrum
allocation exercise of which was held illegal, arbitrary and
constitutionally infirm by the court in the above referred judgment
- Further since the appellant was at fault hence could not claim
recourse to s. 65 of the Act - Also that the appellant was party in
the above referred case and despite knowing the fact that the Court
in such case was to quash the process of allocation and award of
the licenses in which it did not claim refund of Entry Fee and hence
could not be allowed to raise such plea in the present case.
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SUPREME COURT REPORTS
[2022] 4 S.C.R.
Telecom Regulatory Authority of India Act 1997: ss.14, 15,
16, 18 - Telecom Disputes Settlement and Appellate Tribunal -
Jurisdiction - Scope and Extent - The jurisdiction of civil courts
has been ousted by s.15 - s.16 enables the TDSAT to regulate its
own procedure, guided by the principles of natural justice - An
appeal on a substantial question of law lies to Supreme Court under
s.18 of the TRAI Act - TDSAT was a creature of statute and was
empowered to determine its jurisdiction, subject to the constraints
stipulated in the statute - s.14, as such, does not put any constraints
on the jurisdiction of the TDSAT - Telecommunication.
Contract Act, 1872 - ss. 20, 56, 65 - Scope - The expression
"discovered to be void" u/s.20 comprehend a situation in which
parties were suffering from a mistake of fact from the very beginning
but had not realized at the time of entering into the agreement or
signing of the documents that they were suffering from any such
mistake and had therefore acted bona fide while entering into such
agreements - The word "impossible" u/s 56 has to be construed in
its practical sense and not just in its literal sense - s.65 does not
operate in derogation of the maxim in pari delicto potior est conditio
possidentis - The application of s.65 has to be limited to those cases
were the party claiming restitution itself was not in pari delicto.
Dismissing the appeals, the Court
HELD: 1. The decision of this Court in CPIL, which was
rendered on 2 February 2012, arose from petitions under Article
32 of the Constitution. The petitions questioned the grant of
UASLs to the private respondents in those proceedings (which
included the appellant), on the ground that the procedure which
was adopted by DoT was arbitrary, illegal and in violation of Article
14 of the Constitution. This Court held that an auction conducted
after due publicity was perhaps the best method for fulfilling the
constitutional requirement of preserving equity in the alienation
of natural resources. In the absence of such a mechanism, this
Court held that alienation of natural resources/public property is
likely to be misused by unscrupulous people who are only
interested in garnering maximum financial benefit and have no
respect for constitutional ethos and values. This Court found that
everything was stage-managed to favour of those who were able to
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know in advance the change in the implementation of the first-comefirst served policy. [Paras 12, 15, 17][350-F-G; 352-G-H; 355-F]
2. Reading the judgment in CPIL, it is impossible to accept
the submission that the fraud in the- First Come First Serve policy
lay at the doorstep of the Union government alone and that the
appellant was free from taint or wrong doing. The decision of this
Court held that the - First Come First Serve policy was writ large
with arbitrariness, and was intended to favour certain specific
entities at a grave detriment to the public exchequer. Undoubtedly,
the authors of the First Come First Serve policy were the official
actors comprised within the Union government. But equally, the
decision did not exculpate the private business entities who
obtained UASLs and became the beneficiaries of their decision.
The decision of this Court concludes in no uncertain terms that
the then Minister of Communications and Information Technology
wanted to favour of some companies at the cost of the public
exchequer, and that as a matter of fact the entire process was
 ̄stage-managed to favour those who had access to the nitty-gritties
of the policy in advance. As a result, the Court found that
companies which had submitted applications in 2004 or 2006 were
side-lined by favouring those who had applied between August
and September 2007 and who ̄succeeded in getting higher seniority
entitling them to allocation of spectrum on priority basis. The
beneficiaries of the patently unconstitutional mechanism deployed
for the allocation of spectrum were corporate entities who were
favoured under the ̄First Come First Serve policy. The appellant
is one of them. The distinction made by the judgment of this Court
between the three licensees who were subjected to costs of Rs 5
crores and four licensees, including the appellant, who were
subject to costs of Rs 50 lakhs was because in the case of a former
their stakes had been offloaded ostensibly in the name of a fresh
infusion or transfer of equity. However, it is evident that all these
licensees were complicit in the illegal exercise of obtaining
favours for themselves by the indulgence of those in power. That,
above all, was the foundation of the decision in CPIL and the
justification for quashing licences and the allocation of the 2G
spectrum. This Court then directed the TRAI to frame fresh
recommendations for the grant of licences and for the allocation
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA
AND ANR.
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of spectrum in the 2G band in twenty-two service areas by auction,
as was done for the allocation of spectrum in the 3G band. Thus,
the decision in CPIL leaves no manner of doubt that the appellant
was in pari delicto along with the Union government. [Paras 18,
20][357-A-E, G-H; 358-A-C]
Centre for Public Interest Litigation v. Union of India
(2012) 3 SCC 1 : [2012] 3 SCR 147 - relied on.
3. The appellant made no effort to urge during the course
of the submissions before the Court in CPIL that they should be
allowed a refund of Entry Fee in the event that the Court were to
quash the process and the award of licences. Significantly, the
appellant did not seek the permission of this Court at that stage
to reserve their liberties of agitating a claim for refund of Entry
Fee in separate proceedings. Besides having such a course of
action open to them before the judgment was delivered, the
appellants had their remedies open in law even after the decision
by seeking liberty of adopting independent proceedings for
agitating the refund of the Entry Fee. Not having done this at any
stage in, or in connection with, the proceedings relating to the
decision in CPIL, the appellant cannot be permitted to do so
subsequently. [Para 37][371-E-G]
4. The TRAI Act governs the functioning of the TDSAT.
The jurisdiction of civil courts has been ousted by Section 15.
Section 16 enables the TDSAT to regulate its own procedure,
guided by the principles of natural justice. An appeal on a
substantial question of law lies to this Court under Section 18 of
the TRAI Act. Section 14(a) of the TRAI Act empowers the
TDSAT to adjudicate any dispute: (i)Between a licensor and
licensee; (ii)Between two or more service providers; and
(iii)Between a service provider and a group of consumers. [Paras
26 and 27][361-B-D]
Cellular Operators Association of India v. Union of
India (2003) 3 SCC 186 : [2002] 5 Suppl. SCR 222;
Union of India v. TATA Teleservices (Maharashtra Ltd)
(2007) 7 SCC 517 : [2007] 9 SCR 285 - relied on.
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5. In Tarsem Singh, this Court was confronted with a
contract being void under Section 20 of the Indian Contract Act
as the parties were under a mistake of fact regarding the metric
for assessing the area of land that was the subject of the contract.
This Court, while interpreting the expression discovered to be
void , held that these words comprehend a situation in which
parties were suffering from a mistake of fact from the very
beginning but had not realized at the time of entering into the
agreement or signing of the documents that they were suffering
from any such mistake and had therefore acted bona fide while
entering into such agreements. In determining a claim of
restitution, the claiming party's legal footing in relation to the
illegal act (and in comparison to the defendant) must be
understood. Unless the party claiming restitution participated in
the illegal act involuntarily or the rule of law offers them protection
against the defendant, they would be held to be in pari delicto and
therefore, their claim for restitution will fail. In adjudicating a
claim of restitution under Section 65 of the Indian Contract Act,
the court must determine the illegality which caused the contract
to become void and the role the party claiming restitution has
played in it. If the party claiming restitution was equally or more
responsible for the illegality (in comparison to the defendant),
there shall be no cause for restitution. This has to be determined
on the facts of each individual case. [Paras 43, 48, 52][375-A-C;
378-B-C; 382-E-F]
Tarsem Singh v. Sukhmindar Singh (1998) 3 SCC 471;
Kuju Collieries Ltd. v. Jharkhand Mines Ltd. (1974) 2
SCC 533 : [1975] 1 SCR 703; Inmani Appa Rao v.
Gollapalli Ramalingamurthi [1962] 3 SCR 739;
Narayanamma v. Govindappa 2019 (19) SCC 42;
Satyabrata Ghose v. Mugneeram Bangur & Co. [1954]
SCR 310 - relied on.
6. The appellant was in pari delicto with DoT and the then
officials of the Union government. The appellant was the
beneficiary of the First Come First Serve policy which was
intended to favour a group of private bidding entities at the cost
of the public exchequer. The contention of the appellant that it
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA
AND ANR.
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was exculpated from any wrong doing by the judgment of this
Court in CPIL is patently erroneous. The process leading up to
the award of the UASLs and the allocation of the 2G spectrum
was found to be arbitrary and constitutionally infirm. The need
for an open and transparent bidding process for the allocation of
natural resources was substituted by a process which was
designed to confer unlawful benefits on a group of selected bidders
by which the appellant benefitted. The appellant has tried to
obviate these findings by relying on its acquittal by the Special
Judge, CBI. 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 Clause 8 of the UASL Guidelines, since it
was allegedly being controlled by the Essar group. The Special
Judge, CBI acquitted the promoters of the appellant since the
prosecution was unable to prove that: (i) officers of DoT
considered the representation of the appellant to be false; (ii)
the appellant was engaging in a sham transaction; or (iii) the
appellant was actually controlled by the Essar group. Hence, the
acquittal of the promoters of the appellant of these criminal
charges does not efface or obliterate the findings which are
contained in the final judgment of this Court in CPIL. Hence, 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. In any event, such a course of action before the TDSAT
was clearly in the teeth of the judgment of this Court in CPIL.
[Para 60][387-F-H; 388-A-D]
Union of India v. Telecom Regulatory Authority of India
(1998) 46 DRJ 557; Tarsem Singh v. Sukhminder Singh
1998 (3) SCC 471 : [1998] 1 SCR 456; Vedanta Ltd. v.
The Goa Foundation & Ors. Review Petition (Civil)
Diary No. 18447 of 2020 (9 July 2021); Goa Foundation
v. Sesa Sterlite Limited & Ors. (2018) 4 SCC 218 :
[2018] 2 SCR 361; T P Moideen Koya v. Government
of Kerala (2004) 8 SCC 106 : [2004] 4 Suppl. SCR 904;
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R K Garg v. Union of India (1981) 4 SCC 675 : [1982]
1 SCR 947 - relied on.
S Tel Pvt. Ltd. v. Union of India 2015 SCC OnLine
TDSAT 1 - distinguished.
Union of India v. Karam Chand Thapar and Bros. (Coal
Sales) Ltd. (2004) 3 SCC 504 : [2004] 2 SCR 997;
Union of India v. AUSPI 5 (2011) 10 SCC 534 - referred
to.
Patel v. Mirza [2016] 3 WLR 399; Holman v. Johnson
(1775) 1 Cowp 341, 343; 98 ER 1120, 1121 - referred
to.
R Yashod Vardhan and Chitra Narayan, Pollock &
Mulla The Indian Contract and Specific Relief Acts
Volume I (16th edition, LexisNexis) - referred to.
Case law reference
[2012] 3 SCR 147
relied on
Para 1
[2004] 2 SCR 997
referred to
Para 8 viii
(2011) 10 SCC 534
referred to
Para 8 (xiii) (b)
[2002] 5 Suppl. SCR 222
relied on
Para 28
[2007] 9 SCR 285
relied on
Para 29
[1998] 1 SCR 456
relied on
Para 30
[2018] 2 SCR 361
relied on
Para 33
[2004] 4 Suppl. SCR 904
relied on
Para 33
1954 SCR 310
relied on
Para 42
[1975] 1 SCR 703
relied on
Para 49
[1962] 3 SCR 739
relied on
Para 50
(2019) (19) SCC 42
relied on
Para 51
[1982] 1 SCR 947
relied on
Para 58
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 14471467 of 2016.
From the Judgment and Order dated 16.09.2015 of the Telecom
Disputes Settlement Appellate Tribunal, New Delhi in Petition Nos.329,
435-449 and 451-455 of 2012.
With
Civil Appeal No. 893 of 2019.
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA
AND ANR.
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Dr. Abhishek Manu Singhvi, Huzefa Ahmadi, Sr. Advs., Ms. Parul
Shukla, Amit Bhandari, Prateek Gupta, Ms. Madhavi Agrawal, Ms.
Anwesha Padhi, Advs. for the Appellant.
Vikramjit Banrejee, ASG, Akshay Amritanshu, Nachiketa Joshi,
Apoorv Kurup, T. S. Sabarish, Mohd. Akhil, Gurmeet Singh Makker,
Advs. for the Respondents.
The Judgment of the Court was delivered by
DR. DHANANJAYA Y CHANDRACHUD, J.
A
The Appeals.................................................................3*
B
Submissions of Counsel.................................................7*
C
The CPIL judgment......................................................22*
D
The claim for refund of Entry Fee.................................31*
E
Jurisdiction of TDSAT.................................................34*
F
The claim founded on frustration and restitution.............50*
G
The policy of set off......................................................65*
H
Conclusion...............................................................69*
A The Appeals
1. These appeals under Section 18 of the Telecom Regulatory
Authority of India Act 19971 arise from the judgments dated 16 September
2015 and 11 December 2018 of the Telecom Disputes Settlement and
Appellate Tribunal2. The appellant claimed a refund of Rs 1454.94 crores
representing the Entry Fee (together with interest) paid by it for 2G
licences for twenty-one service areas. By the judgment of this Court in
Centre for Public Interest Litigation v. Union of India3, the 2G
licences which were granted by the Union of India, including to the
appellant, were quashed. The appellant claims to be entitled to the refund
of its Entry Fee on, as it contends, "well settled principles of civil,
contractual and constitutional law".
1 "TRAI Act"
2 "TDSAT"
3 (2012) 3 SCC 1 ("CPIL")
* Pagination is as per the original judgment.
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2. The appellant applied for the grant of Unified Access Service
Licences4 for twenty-one service areas on 3 September 2007. A Letter
of Intent was issued. The appellant paid the circle wise Entry Fee of Rs
1.1 crores and furnished a Performance Bank Guarantee and Financial
Bank Guarantee for the twenty-one areas. The appellant entered into
UASL agreements on 3 March 2008 for the twenty-one service areas
with the respondent, which came into effect from 25 January 2008.
Among the conditions which were stipulated in the UASL agreements,
those governing the duration of the licence and the Entry Fee were in
the following terms:
"3. Duration of License
3.1 This LICENCE shall be valid for a period of 20 years from
the effective date unless revoked earlier for reasons as specified
elsewhere in the document.
[...]
18. FEES PAYABLE
18.1 Entry Fee:
One Time non-refundable Entry Fee of Rs 1.1 crore has been
paid by the LICENSEE prior to signing of this License agreement."
3. On 2 February 2012, this Court by its judgment in CPIL (supra)
declared that the policy of the Union government for allocation of 2G
spectrum on a "First Come First Serve" basis was illegal. As a
consequence, the UASLs which were granted by the Union government
were quashed. On 25 May 2012, the appellant instituted a petition5 before
the TDSAT seeking, among other things, a refund of the Entry Fee of
Rs 1454.94 crores, inclusive of interest. The appellant has stated that on
1 June 2012 it shut down its operations after porting out all its subscribers.
4. By its judgment dated 16 September 2015, the TDSAT dismissed
the First Telecom Petition holding, inter alia, that:
(i)
The quashing of the appellant's licences by this Court in
its judgment in CPIL (supra) cannot be equated with the
UASL agreements becoming void within the meaning of
4 "UASL"
5 Petition No 329 of 2012 ("First Telecom Petition")
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]
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Section 65 of the Indian Contract Act 18726. This Court
quashed the UASLs since it found the Union government's
policy of "First Come First Serve" to be illegal and
arbitrary. Hence, the appellant cannot claim restitution
under Section 65;
(ii)
The quashing of the appellant's licences by this Court in its
judgment in CPIL (supra) cannot be brought under the
Indian Contract Act, since the UASL agreements had not
become void under Sections 23 and 56 of the Indian Contract
Act; and
(iii)
Even assuming that the appellant's UASL agreements
became void under the Indian Contract Act, its claim for
restitution under Section 65 would be governed by the
principle of in pari delicto potio rest condition
defendentis (in equal fault, better is the condition of the
possessor). A refund of the Entry Fee could not be made
until the possibility of the appellant being in pari delicto
was completely effaced. When the TDSAT delivered its
judgment, the appellant was facing trial before the Special
Judge, CBI for charges under Section 120-B and 420 of
the Indian Penal Code 1860 in a case relating to the grant
of UASLs.
By a judgment dated 21 December 2017, the appellant was
acquitted of criminal charges by the Special Judge, CBI. The Central
Bureau of Investigation has filed a petition for leave to appeal against
the order of acquittal, which is presently pending before the Delhi High
Court.
5. Aggrieved by the judgment of the TDSAT dated 16 September
2015, the appellant moved this Court in Civil Appeal Nos 1447-1467 of
2016. On 13 May 2016, the appellant sought liberty of this Court to
withdraw the civil appeals, and to approach this Court once again if it
became so necessary. Leave was accordingly granted by this Court.
6. The appellant then instituted another petition before the TDSAT7
raising the issue of a refund of the Entry Fee, on the ground that it had
6 "Indian Contract Act"
7 Telecom Petition No 63 of 2018 ("Second Telecom Petition")
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been exonerated by the Special Judge, CBI. By its judgment dated 11
December 2018, the TDSAT dismissed the Second Telecom Petition
noting that the appellant had made a second attempt for claiming the
same relief which had been sought earlier in the First Telecom Petition.
It further held that had the TDSAT sought to provide the appellant with
the remedy of approaching it after the conclusion of the trial before the
Special Judge, CBI, it would have indicated it in its judgment. Finally, it
was also noted that this Court, through its order dated 13 May 2016, did
not grant the appellant the leave to approach the TDSAT but only to
approach this Court.
The judgment dated 11 December 2018 has given rise to the filing
of the second set of civil appeals8 by the appellant. The appellant also
moved a Miscellaneous Application9 in Civil Appeal Nos 1447-1467 of
2016 seeking permission for the revival of the earlier civil appeals, which
had been permitted to be withdrawn on 13 May 2016.
7. By an order dated 7 January 2020, the Miscellaneous
Applications seeking the revival of the first set of civil appeals were
allowed, keeping open all the contentions including the contentions of
the respondents based on the earlier order dated 13 May 2016. This
judgment will accordingly govern both, the original set of civil appeals
which stand revived in pursuance of the order dated 7 January 2020 and
the second set of civil appeals.
B Submissions of Counsel
8. Dr A M Singhvi, learned Senior Counsel appearing on behalf of
the appellant, has urged the following submissions:
(i)
Since the licences of the appellant were quashed by the
judgment of this Court in CPIL (supra), the appellant is
entitled to a refund of its Entry Fee based on civil, contractual
and constitutional principles;
(ii)
The appellant paid an Entry Fee of Rs 1454.94 crores for
twenty-one service areas and the licences were valid for a
period of twenty years. The appellant was prevented from
providing services under the licences because:
8 Civil Appeal No 893 of 2019
9 Miscellaneous Application Nos 198-218 of 2019
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]
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(a)
This Court held that respondent's "First Come First
Serve" policy for grant of licences was flawed,
arbitrary and illegal; and
(b)
As a consequence, licences which were granted
under said the policy (including the licences of the
appellant) were quashed;
(iii)
The quashing of the licences by this Court amounted to a
frustration of each licence, which was in the nature of a
contract, in terms of Section 56 of the Indian Contract Act.
Consequently, the appellant is entitled to a restitution of the
Entry Fee paid in terms of Section 65, as the licences were
quashed not on account of the fault of the appellant but due
to the culpability of the Union government;
(iv)
The well settled principle is that no person can be prejudiced
because of an act of a court (actus curiae neminem
gravabit);
(v)
The substratum of TDSAT's decision which disallowed the
claim of the appellant in view of the pending criminal
proceedings has been wiped off by the acquittal of the
appellant by the Special Judge, CBI;
(vi)
The set off policy of the Union government, in terms of
which a set off of the Entry Fee which was paid was granted
only to those entities who participated in the fresh round of
auction which took place after the judgment of this Court in
CPIL (supra), is based on incorrect classification which
lacks intelligible differentia and nexus to its object. Further,
the set off policy suffers from manifest arbitrariness and is
discriminatory. Thus, it should be struck down as being
violative of Article 14 of the Constitution;
(vii)
The set off policy of the Union government allowing the
grant of a set off of the Entry Fee, albeit to certain bidders,
is an admission of a debt that is due and payable:
(a)
On 12 October 2012, the respondent issued "Queries
and Responses to an NIA" and in answer to Query
Number 74 regarding the set off of Entry Fee, it was
stated as follows:
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"A set-off is allowed against the Earnest Money
and the payment due in the event of spectrum
being won in this auction. The total amount of
such set off shall be limited to the total entry fee
paid by the entity for all its licenses which have
been quashed by the Supreme Court. No interest
will be due on this amount."
(b)
The Empowered Group of Ministers10 held a meeting
on 18 October 2012, at which a decision was taken
in the following terms:
"13. The EGoM considered the letter dated
12.10.2012 from the Minister of Information and
Broadcasting regarding set-off of entry fee against
the earnest money and payment due in the event
of spectrum being won and noted that the entry
fee paid by TSPs whose licenses were quashed
was for a period of 20 years. While on one hand,
the TSPs could be expected to have paid a prorata amount for the period of operation of the
license, i.e. 2008-2012, on the other hand, there
could be a claim for refund with interest for the
pro-rata amount for the balance period.
Therefore, the EGoM decided to allow such
TSPs to adjust an amount equivalent to their
full entry fee, without any interest, against
the auction payments, both for participation
and/or final payment on successful
conclusion. It was clarified that the set-off
would be permitted only to the quashed
license holders participating in the auction.
Such set-off would be allowed to the extent
of total entry fee paid for all quashed licenses
on an aggregate basis without consideration
of the expired period of license, only if they
succeed in the auction..."
(emphasis supplied)
10 "EGoM"
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]
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(c)
Pursuant to the above policy of granting a set off,
the Union government has granted a set off of the
Entry Fee to Telewings (formerly Uninor), Videocon,
Idea Cellular Limited and Sistema Shyam. In
particular, a set off has been granted to Telewings
despite there being grave criminal charges against it
including, inter alia, charges under the Prevention
of Corruption Act 1988;
(viii) The proposition that the policy of the Union of India to permit
the grant of a set off of the Entry Fee amounts to an
admission that a refund of the Entry Fee is payable and
due, finds support in the decision of this Court in Union of
India v. Karam Chand Thapar and Bros. (Coal Sales)
Ltd.11;
(ix)
The non-refund of the Entry Fee to the appellant is
discriminatory for the following reasons:
(a)
A set off towards the fee payable for the spectrum
has been permitted to those Telecom Service
Providers12 who participated in and won spectrum in
the subsequent auction after the judgment of this
Court in CPIL (supra);
(b)
The licences of eight TSPs were quashed by this
Court by its judgment in CPIL (supra). There cannot
be any distinction or classification in law between
the said eight TSPs and similar treatment must be
afforded to all. The classification based on their
decision to participate in the subsequent auction for
refund of Entry Fee is discriminatory and has no
nexus with the object sought to be achieved by the
set off policy;
(c)
Out of the eight TSPs, four TSPs participated in the
subsequent auction and were permitted a set off of
their Entry Fee towards payment for the auction
allotted spectrum. Details of the cases where a set
off was granted are:
11 (2004) 3 SCC 504
12 "TSPs"
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The remaining four TSPs, including the appellant, did not
participate in the subsequent auction for spectrum. Their
details are tabulated below:
(d)
TDSAT afforded differential treatment to the
appellant due to the pendency of criminal proceedings
against it. In any event, this ground ceases to exist in
view of the acquittal of the appellant of criminal
charges on 21 December 2017 by the Special Judge,
CBI. Following the appellant's acquittal, there is no
rationale for denying refund of Entry Fee to the
appellant;
(x)
The set off policy penalises a business entity for taking a
commercial decision not to participate in the subsequent
auction. Whether or not an entity should have participated
in the auction of spectrum following the decision of this
Name of Company
Year
of
Auction
Amount set off
Status
in
the
2G
Judgment
M/s Telewings
(formerly Uninor)
(bought Unitech
Licenses)
Nov, 2012
1658.57 Crores
Respondent No 3;
Penalty of Rs 5 Crores
M/s Videocon
Nov, 2012
1506.82 Crores
Respondent No 5;
No Penalty Levied
M/s Idea Cellular
Nov, 2012
684.59 Crores
Respondent No 8;
No Penalty Levied
M/s Sistema Shyam
March, 2013
1626.32 Crores
Respondent No 10;
Penalty
of
Rs
50
Lakhs
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]
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Court in CPIL (supra) was entirely for each of them to
determine and this cannot form the basis for granting or
denying a set off;
(xi)
The non-refund of the Entry Fee to the appellant suffers
from manifest arbitrariness:
(a)
The set off policy creates a separate class between
similarly placed TSPs whose licences were quashed,
on the basis of whether or not a bidder or entity has
chosen to participate in the fresh auction; and
(b)
A business entity may have valid reasons not to
participate in the fresh auction, for which it cannot
be penalized;
(xii)
The appellant ought not to be punished for the wrongdoing
of the respondent:
(a)
In the judgment in CPIL (supra), this Court held that
the "First Come First Serve" policy of the Union
government for the grant of telecom licenses was
flawed, arbitrary and illegal;
(b)
This Court further imposed costs of Rs 5 crores upon
those licence holders before it who had benefitted at
the cost of the public exchequer and had offloaded
their stakes for thousands of crores in name of fresh
infusion of or transfer of equity. On the other hand,
costs of only Rs 50 lakhs were imposed on those
licence holders (including the appellant) who had
allegedly benefited by the wholly arbitrary and
unconstitutional action of the Department of
Telecommunication13 for the grant of UASLs and
the allocation of the 2G spectrum band. Hence, no
role was attributed to the appellant for quashing of
its licenses;
(c)
In any event, the appellant has been acquitted of
criminal charges on 21 December 2017 by the Special
Judge, CBI;
13 "DoT"
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(d)
Even otherwise, the pendency of criminal proceedings
is not an impediment to proceed with civil proceedings;
and
(e)
The respondent has already auctioned spectrum
which was allocated earlier to the appellant for Rs
10,400 crores and has thus benefited twice from the
same spectrum. The respondent cannot be allowed
to unjustly enrich itself by usurping the Entry Fee
paid by the appellant. The principles underlying the
doctrine of unjust enrichment are duly fulfilled in the
present case;
(xiii) The provisions of the Indian Contract Act would be
applicable to the claim of the appellant:
(a)
TDSAT has wrongly held that the licences were
quashed by this Court in the exercise of its
constitutional powers, thereby ousting the provisions
of the Indian Contract Act;
(b)
The licence granted under the proviso to Section 4(1)
of the Indian Telegraph Act 188514 is in the nature of
a contract between the Government and its licensees.
This proposition finds support in the judgment of this
Court in Union of India v. AUSPI15;
(c)
Once the contracts were held to be void and were
quashed in CPIL (supra), the consequences which
are envisaged in the Indian Contract Act must follow.
When a contract is discovered to be void, the benefit/
advantage received by one party under the contract
ought to be returned to the other party;
(d)
The appellant, when it entered into the contract with
the respondent, had no knowledge of the fact that
the "First Come First Serve" policy of the Union
government would be quashed by this Court. The
Union government defended its policy before this
Court, and thus ought to be directed to refund the
Entry Fee;
14 "Telegraph Act"
15 (2011) 10 SCC 534 ("AUSPI")
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]
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(e)
In the absence of any legislative intervention
precluding the grant of the refund, the rights of the
parties would be governed by the law of contract.
Thus, the doctrine of frustration under Section 56
and the principle of restitution under Section 65 of
the Indian Contract Act would stand attracted in the
present case;
(f)
Judicial orders are declaratory and retrospective in
nature. The judgment in CPIL (supra) relates back
to the validity of the licences. The appellant had only
six thousand subscribers before the licences were
quashed and was in the phase of rolling out and
investing capital as a result of which it did not acquire
any substantial benefit;
(g)
Since the licences were provided on a representation
that they would have a tenure of twenty years but
were declared to be void within four years due to the
flawed policy of the Union Government, the appellant
will be entitled to refund of the Entry Fee with interest;
and
(h)
The respondent is estopped from relying upon the
UASL Guidelines and UASL agreements, which
provide that the Entry Fee is non-refundable. This is
because the licences were not quashed either due to
a default on part of the appellant or its withdrawal,
but due to the policy of the Union government being
found to be illegal and arbitrary; and
(xiv) The decisions16 of this Court in the relation to the payment
of Adjusted Gross Revenue17 have no relevance to the
present case.
9. Opposing the submissions which have been urged on behalf of
the appellant, Mr Vikramjit Banerjee, learned Additional Solicitor General,
appearing on behalf of the Union of India has urged the following
submissions:
16 Union of India v. Association of Unified Telecom Service Providers of India and
Ors., (2020) 3 SCC 525; and Union of India v. Association of Unified Telecom
Service Providers of India and Ors., Civil Appeal Nos 6328-6399 of 2015
17 "AGR"
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(i)
The Entry Fee paid by the appellant is specifically made
non-refundable by the UASL Guidelines which were issued
by the DoT on 14 December 2005. Once the Letters of
Intent were issued to the appellant for twenty-one service
areas, the appellant deposited the Entry Fee for each circle
in accordance with the UASL Guidelines on 10 January
2008. The appellant became eligible for the issuance of
UASLs for each of the twenty-one service areas only
thereafter. The UASL agreements which were entered into
between the Union Government and the appellant on 4
March 2008 expressly contemplated that the Entry Fee was
a one-time non-refundable fee. The Entry Fee being nonrefundable in nature, the appellant cannot now seek a refund;
(ii)
The issues which are sought to be raised in the present civil
appeals are squarely governed by the judgment in CPIL
(supra). The judgment of this Court examined the validity
of the licences and spectrum allocation made to the licensees
including the appellant. The judgment in CPIL (supra) found
that the licensees had unfairly gained access to the then
Minister in-charge as well as certain officers of the DoT in
order to gain preferences. This Court found that the grant
of licences was "stage-managed" to favour specific
licensees, including the appellant, as a result of which costs
of Rs 50 lakhs were also imposed on them;
(iii)
While quashing the grant of the licences, the judgment in
CPIL (supra) did not grant any refund of the Entry Fee.
The claim for restitution not having been allowed by this
Court in CPIL (supra), the appellant cannot seek to do so
at this stage;
(iv)
After the judgment in CPIL (supra) quashing the UASLs
granted to the appellant, the appellant has ceased to be a
licensee for the purposes of Section 14(1)(a) of the TRAI
Act, which empowers the TDSAT to adjudicate disputes
between a licensor and a licensee. The TDSAT did not
have jurisdiction under the provisions of Section 14(1)(a).
In any event, the TDSAT by its judgment dated 16
September 2015 rejected the appellant's claim for refund
on the ground that it was incompetent to do so, the licences
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]
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having been quashed by the judgment of this Court. Having
moved this Court in the first set of civil appeals, the appellant
withdrew the civil appeals on 13 May 2016, though with
liberty to move this Court again, if it became so necessary.
Thus, in view of the order dated 13 May 2016, the appellant
could have only moved this Court and not TDSAT. However,
it instituted a Second Telecom Petition before the TDSAT.
The TDSAT by its judgment dated 11 December 2018
rejected the second attempt of the appellant for claiming
the same relief, since this would essentially amount to a
review of the judgment in CPIL (supra). Thus, moving the
Second Telecom Petition was not only contrary to Section
14 of the TRAI Act but also in violation of the text and
spirit of the order dated 13 May 2016 of this Court;
(v)
The decision of the EGoM dated 31 October 2012 granting
set off to those bidders who had participated and were found
to be successful in the fresh round of auctions was a onetime concession offered to TSPs whose licences were
quashed earlier, in order to ensure that telecom services
were provided to consumers in an uninterrupted manner.
The decision in CPIL (supra) did not bar licensees from
participating in the subsequent auction. Since the Entry Fees
paid by licensees covered by the judgment in CPIL (supra)
could not have been refunded, the EGoM decided to adjust
their Entry Fee in the subsequent auction in the event that
they were declared successful. It was believed that this
would encourage the participation of all TSPs in the
subsequent auction and increase the prospects of a higher
price discovery, thereby ultimately benefitting the public
exchequer. This set off policy was uniformly applied to all
licensees covered by the judgment in CPIL (supra),
including the appellant, and thus is not discriminatory. No
TSP covered by the decision in CPIL (supra) was compelled
to participate in the subsequent auction being conducted by
the DoT by the virtue of the set off policy. Rather, the policy
only sought to increase participation in the subsequent
auction by offering a concession in the form of set off of
the previously paid Entry Fee, in case they emerged
successful in the fresh auction.