TDSAT asked DoT to release bank guarantees worth `2,113.5 crore to Vodafone Idea. The bank guarantees were taken by the government on account of OTSC as a precondition for approving the Vodafone India-Idea Cellular merger
The department of telecommunications (DoT) on Monday moved the Supreme Court against the TDSAT order that asked it to release bank guarantees worth `2,113.5 crore to Vodafone Idea. The bank guarantees were taken by the government on account of one-time spectrum charges (OTSC) as a precondition for approving the Vodafone India-Idea Cellular merger.
A Bench led by Chief Justice Ranjan Gogoi agreed to hear the appeal and tagged it with other similar petitions pending before it. Various petitions on the issue of demanding OTSC and other spectrum-related dues by DoT are pending before it and other high courts.
The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) on January 21 had asked the department to release the BG to Vodafone Idea within two months.
Solicitor general Tushar Mehta told the Bench that the company is bound to clear the dues at the time of merger and also undertake to pay all future dues inclusive of anything remained unpaid of the past period of the outgoing company.
The government told the apex court that it had granted sanction of transfer pursuant to the approval given by the National Company Law Tribunal’s benches in Ahmedabad and Mumbai. However, the sanction was subject to a condition that Idea Cellular (ICL) shall submit a BG of `3,322.44 crore (`2,894.95 crore in respect of ICL + `427.40 crore in respect of erstwhile Spice Communication) towards holding spectrum beyond 4.4 MHz in GSM band as per the Merger and Acquisition Guidelines of 2014, DoT said, adding that the condition were imposed on July 9 last year.
According to the government, the policy was framed in the public and state’s interest as the right of scarce natural resource (spectrum) held by Vodafone is going to transfer to Idea Cellular.
The TDSAT failed to observe that rationale of imposing the conditions at the approval stage was to ensure that the government received the market-determined price of the spectrum at the time of transfer of licences, the appeal stated, adding that the unified licence agreement also provided that all the past dues have to be fully paid till the date of transfer. It said that the 2014 guidelines are in line with the provisions of the licence agreement.
The telecom operator had moved the TDSAT ruling in October to recover bank guarantees worth `3,322.44 crore that was paid ‘under protest’ to get the government’s nod for Vodafone India-Idea Cellular merger. The merged entity had argued that the demand of bank guarantees was “arbitrary, discriminatory, illegal and unenforceable”.