The Department of Telecommunications (DoT) has approached the Supreme Court challenging Telecom Disputes Settlement and Appellate Tribunal’s (TDSAT) order pertaining to the release of performance bank guarantees (PBGs) submitted by Unitech Wireless Private Limited at the time of grant of unified access services licence(UASL) in 2008.

The tribunal believes that the PBG is intended only to secure the rollout obligation of the operators and the PBG is to be released upon completion of such rollouts. . However, according to DoT, TDSAT’s judgement of releasing the PBGs before the clearance of all dues by the licensee has serious fiscal consequences. Moreover, the department believes that PBG may be invoked to secure all obligations of a licensee under the licence and not merely to the rollout obligation.

According to the spectrum regulations, in event of termination of the licence, the bank guarantee should be released to the licensee only after ensuring clearance of all dues. The PBG was also to include not only the liquidated damages for non-performance of the rollout obligations but also penalties for violation of any other terms of the UASL.

Earlier in 2010, DoT had imposed liquidated damages on Unitech Wireless for delay in fulfilling 10 per cent of the obligations. As per the rules of the UASL, the telecom companies are required to rollout their networks within one year from the date of allocation of spectrum.

Subsequently, following the cancellation of its licences by the Supreme Court in February 2012, the company had challenged DoT’s imposition before TDSAT. TDSAT then directed DoT to refund the amount deposited by the company including interest payments at the annual rate of 12 per cent. Further, it had asked the return of the PBGs and imposed costs of Rs 25,000 per petition on DoT.