The Bombay High Court recently invalidated the Central government’s retrospective imposition of a one-time spectrum charge on telecommunications giants Bharti Airtel and Vodafone Idea. This charge pertained to spectrum holdings exceeding 6.2 MHz for the period from July 1, 2008, to December 31, 2012. The case, titled Bharti Airtel, Vodafone Idea v. Union of India & Ors., was presided over by Justices Manish Pitale and Shreeram Shirsat.
The court ruled that the government’s action exceeded its contractual and statutory authority under its role as the licensor. The bench emphasized that the government could not retroactively impose new financial obligations by invoking ‘public interest’ without proper justification. “Airtel and Vodafone have successfully demonstrated their case for overturning the government’s decisions and consequent demand notices,” stated the court. “The Union has failed to substantiate its retrospective levy on the petitioners, warranting the approval of the writ petitions,” the judges added.
In its judgment, the court annulled the Union Cabinet decisions dated November 8 and December 28, 2012, alongside the subsequent demand notices. These notices sought spectrum charges based on 2012 auction prices for spectrum holdings surpassing 6.2 MHz, with retrospective application from July 1, 2008. Furthermore, the court ordered the return of any bank guarantees provided by the telecom operators and nullified all actions taken pursuant to the government’s demands.
The court referenced Section 4 of the Telegraph Act, which authorizes the government to set terms and payments for telecom licenses. However, it clarified that this provision does not permit unilateral changes to financial terms or the imposition of retrospective charges. Following the granting of licenses and the shift to the National Telecom Policy, 1999 (NTP-99) revenue-share model, the arrangement became a contractual agreement with fixed pricing, precluding mid-term changes without mutual consent.
Upon reviewing the 1994 and 2005 Unified Access Service (UAS) licenses, the court acknowledged the government’s right to raise recurring spectrum usage charges but rejected any additional entry fees on migration. Instead, it found that additional spectrum was priced through higher revenue-share slabs up to 10 MHz. The Telecom Regulatory Authority of India (TRAI) had advised that any one-time spectrum charge should apply only to spectrum exceeding 10 MHz, while both Airtel and Vodafone Idea held spectrum up to 10 MHz in the relevant circles.
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The Union government defended its stance by asserting that spectrum is a limited public resource, citing the Madras High Court’s 2016 Aircel ruling supporting a similar levy. Nevertheless, the Bombay High Court countered that the State could not impose new financial burdens retroactively by broadly citing ‘public interest’. The court remarked, “NTP-99 prioritized affordable and widespread access, increased rural tele-density, and efficient spectrum use over revenue collection.”
Senior advocates Harish Salve and Darius Khambata, along with advocates from DMD Advocates, represented Bharti Airtel. Vodafone Idea was represented by Senior Advocate Aspi Chinoy and advocates from Bharucha & Partners. Additional Solicitor General Anil Singh, supported by a team of advocates, represented the Union government.
