Section 4 of Telegraph Act not unconstitutional: Madras HC upholds levy of spectrum charges from Aircel [Read Judgment]

When the petitioners have enjoyed the fruits of the extended term by virtue of the migration package, they cannot, at this point of time, claim that the licensor is prohibited from adding anything to the contract, the Bench said.

The Madras High Court has upheld levy of One Time Spectrum Charges made by Department of Telecom on Aircel. The Court also held that the levy of OTSC by the Central Government, in exercise of powers conferred on it by Section 4 (1) of the Telegraph Act r/w Clause 13 (ii) of the Licence Agreement, is justified and enforceable.

Division Bench comprising of Justices Huluvadi G. Ramesh and M.V. Muralidharan also held that service providers, being licensees, have no fundamental right to deal with the spectrum and it is the exclusive privilege of the Central Government and in public interest, if the Central Government thought it fit to levy OTSC, the service providers cannot have any quarrel over the same.

The Court dismissed a batch of petitions filed by Aircel Cellular Limited, Aircel Limited and Dishnet Wireless Limited, challenging the OTSC and the validity of Section 4 of the Telegraph Act.

The Bench observed : “Therefore, on a harmoniouos reading of the said clause 13 (ii) of the licence agreement, what follows is that the licensor reserves the right to modify (inclusive of addition and subtraction) at any time the terms and conditions of licence covered under the schedules in the interests of the general public. When a change by extension/improvement of the term of the licence could be increased to 20 years from 10 years in exercise of power under clause 13 (ii) of the licence agreement, equally so the modification of payment terms by means of addition by way of OTSC is also permissible. When the petitioners have enjoyed the fruits of the extended term by virtue of the migration package, they cannot, at this point of time, claim that the licensor is prohibited from adding anything to the contract.”

The Court further said: “The petitioners have no vested right to carry on telegraph activity, but for the licence, which has been granted by the exclusive privilege holder, viz., the Central Government. Such being the case, if the Central Government though it fit to impose OTSC on the service providers, it cannot be deemed to be against the vested rights of the service providers, as no vested rights accrue to them on the grant of licence to carry on the licensed activities.”

Read the Judgment here.