Loop Telecom And Trade Limited vs. Union Of India & Anr., Civil Appeal No. 1447 ' 1467 Of 2016 (Judgment Dated 03.03.2022)

• Published date: 10 August 2022
• Subject Matter: Litigation, Mediation & Arbitration, Media, Telecoms, IT, Entertainment, Mobile & Cable Communications, Trials & Appeals & Compensation
• Law Firm: Economic Laws Practice
• Author: Abhay Chattopadhyay

Case Summary

1. Loop Telecom and Trade Limited v. Union of India &amp Anr., Civil Appeal No. 1447 - 1467 of 2016 (Judgment dated 03.03.2022)

In this decision, the Hon'ble Supreme Court of India has held a telecom service provider, whose telecommunication licenses had been quashed / cancelled by an earlier decision, could not seek refund of the entry fee paid by it to the Department of Telecommunications for acquisition of such licenses. The Hon'ble Supreme Court of India invoked the principle of in pari delicto potio rest condition defendantis, to hold that the acquisition of the license was pursuant to an illegal policy would result in the party obtaining such licenses being prohibited from seeking the refund of the entry fee paid by it for the same.

2. Question of law before Hon'ble Supreme Court of India:

Whether an erstwhile telecom service provider (TSP), is entitled to the refund of the entry fee paid by it to the Department of Telecommunications (DoT), towards obtaining 2G Unified Access Service Licenses in 21 license service areas (UAS Licenses). These licenses were quashed pursuant to the decision of the Hon'ble Supreme Court of India in Centre for Public Interest Litigation vs. Union of India¹ (CPIL Judgment).

3. Summary:

The Hon'ble Supreme Court of India has held that Loop Telecom and Trading Limited (Appellant) was the beneficiary of the DoT's 'First Come First Serve' policy (FCFS Policy). The CPIL Judgment had categorically found the FCFS Policy to be arbitrary, illegal and which intended to unduly benefit a particular group of private bidding entities (which included the Appellant), at the cost of the public exchequer. As such, the Hon'ble Supreme Court of India held that the principle of in pari delicto potio rest condition defendantis (in equal fault, better is the condition of the possessor) [principle of in pari delicto], would be applicable and the Appellant could not claim a refund of the entry fee paid by it to the DoT.

4. Background Facts
   1. In September 2007, the Appellant had applied to the DoT for grant of UAS Licenses in 21 license service areas (LSA), received a letter of intent in respect thereof, and proceeded to make payment of ₹ 1.1 crore per LSA towards entry fee (which was subsequently revised upwards to ₹ 1454.95 crore for all 21 LSAs).
   2. Thereafter, in March 2008, the Appellant entered into the UAS Licenses with the DoT, which were valid for a period of 20 years.
   3. In February 2012, vide the CPIL Judgment, the Hon'ble Supreme Court of India declared that the FCFS Policy of the DoT for allocation of spectrum was illegal and proceeded to quash the UAS Licenses granted by the DoT thereunder, including those of the Appellant. On 01.06.2012, the Appellant ceased with the provision of telecommunication services after porting out all of its subscribers.
   4. The Appellant instituted a petition² before the Hon'ble Telecom Disputes and Settlement Appellant Tribunal (First Telecom Petition and Hon'ble TDSAT, respectively), seeking refund of the entry fee of ₹ 1454.94 crore paid to...