Vodafone Idea Ltd chief executive Akshaya Moondra said in an earnings call with investors last week that a structural change was needed to prevent avoidable litigation.
“We need to make a structural change that the department (income tax) should not really be raising demands in case there is a matter that has been decided favourably by a higher judicial authority. We need to make that representation stronger so that this unnecessary litigation can be avoided,” he said, specifically on the income tax matters, which he noted were not limited to the telecom sector alone.
He said a large part of the amounts under litigation came from income tax matters, and even if some matters are covered by earlier judicial pronouncements by higher authorities, the demands keep on getting raised each year and are taken to the Telecom Disputes Settlement and Appellate Tribunal or TDSAT for settlement.
“Now, definitely, as an industry, we would be representing, and we keep on representing this with the relevant ministries,” he said.
He added the carrier is also engaging with the telecom department on regulatory matters, the most crucial among them being the one-time spectrum charge, which has been under dispute since 2013 when the Department of Telecommunication first raised the demand from telcos to pay up for spectrum allocated to them administratively beyond the 4.4MHz that was bundled with the licences issued prior to the Supreme Court judgement in the 2G scam case in 2012 that mandated auction of airwaves. For Vodafone, the amount is ₹3,599 crore, and for Bharti Airtel Ltd, the amount under dispute is ₹15,178 crore. The matter is pending with Supreme Court.
The bulk of Airtel’s ₹48,407 crore under litigation emanates from regulatory matters such as the revision of spectrum usage charges, alleged violation of quality of service norms related to points of interconnect congestion, mergers of businesses, and acquisition of spectrum outside auctions, among others.
Airtel did not comment on Mint’s queries on whether it will approach the government for a resolution.
A senior executive who declined to be named said the issues would have to be taken up with the department but would require the consensus of all operators, given that Reliance Jio Infocomm Ltd is a new player in the market and was bound to have far fewer matters under litigation.
“The industry will have to come together to seek a solution. The longer the disputes continue, the amounts under dispute only increase. Telcos will have to make provisions for it, which is a drag on their books,” the executive said.
Legal experts said telecom is one of the most litigated sectors and hence has a disproportionate number of cases and amounts under dispute.
“One avenue that could help in preventing or settling disputes would be to develop industry-wide consensus on specific—particularly litigious—issues. However, developing such a consensus may be an uphill task, given the multitude of operators and a history of frequent litigation and disputes among players. In the future, these issues might be resolved faster through the proposed Indian Telecommunication Bill, 2022,” said Shashank Mishra, partner, dispute resolution at Shardul Amarchand Mangaldas & Co.
He added that the bill proposed measures such as allowing licensees to give “voluntary undertakings” to take remedial steps in case of a breach, which will act as bars to future proceedings on an issue. Referring disputes to alternative dispute resolution mechanisms, under section 11 of the proposed bill, such as arbitration and mediation, will help lessen the burden on courts and allow faster resolution of disputes, he said.
He also noted that liberalizing regulations and implementing light-touch regulations in a simple and clear manner would result in less regulatory friction.
Some experts said that a prudent litigation policy, as well as schemes such as Vivaad Se Vishwas, were crucially needed and would work towards culminating long-standing disputes.
“While Vivaad Se Vishwas is an excellent move by the government focusing on early dispute resolution and promoting ease of doing business, the government may consider providing other avenues or schemes which allow for settlement of DoT claims before they go into litigation, non-contractual disputes, etc. Further, the purpose of litigation should not be to extract money from telcos but essentially to ensure that public facility of rural connectivity is promoted and no compromise is made in such progressive work,” said Harsh Walia, partner at Khaitan & Co.
“There are still quite a few high-stake legacy matters yet to attain finality. Some of these matters are long pending show cause notices which can be expeditiously closed at the licensor’s end. Further, structurally we also need to think if we need to go to the Supreme Court for all TDSAT judgments adverse to us, just as a matter of protocol, or it should be an unbiased merit-based decision,” said Vikash Kukreti, partner, Luthra and Luthra Law Offices India.
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Updated: 20 Aug 2023, 11:50 PM IST