Bombay HC quashes Union Cabinet decisions imposing retrospective spectrum charge on Airtel, Vodafone Idea

Airtel, represented by senior advocates Harish Salve and Darius Khambata, and Vodafone Idea, represented by senior advocate Aspi Chinoy, argued that the Central government had no power under the Telegraph Act or license agreements to impose such charges retrospectively, and that the demand was “unsustainable.”

The court held that the Centre had failed to justify levying the OTSC retrospectively and set aside two Cabinet decisions of November 8 and December 28, 2012, along with the consequent demand notices. It also directed the return of bank guarantees and set aside all measures taken under the notices.

The court held that the Centre “obviously cannot claim statutory power under section 4 of the Telegraph Act to act as per its own whim,” regardless of the terms of the contract or license executed under that provision.

After examining the licenses, the bench found the government could not deviate from contract terms or add new financial burdens by invoking “public interest,” particularly given that the New Telecom Policy (NTP)-1999 emphasised affordable and wide access, not revenue maximisation. The court said public interest would depend on the facts and circumstances of each case.

The bench also found that before issuing the Cabinet decisions, there had been no formal modification of license agreement terms and no novation, meaning no replacement of the original contract with a new one that could have justified the additional charge. The authorities, it observed, had “unilaterally imposed the levy and that too, without any source of power identifiable” in the contract or statutory provisions.