Holding

The appellant was in pari delicto with the Union and therefore not entitled to a refund of the entry fee; the appeals are dismissed.

Summary

Loop Telecom applied for Unified Access Service Licences (UASL) for 2G spectrum and paid a non‑refundable entry fee of Rs 1454.94 crore. The Supreme Court, in Centre for Public Interest Litigation v. Union of India (CPIL), quashed the 2G licences on the ground that the First‑Come‑First‑Serve policy was arbitrary and unconstitutional. Loop then sought a refund of the entry fee before the Telecom Disputes Settlement and Appellate Tribunal (TDSAT), invoking Sections 65, 23 and 56 of the Indian Contract Act, arguing that the licences were void. TDSAT dismissed the claim, holding that the licences did not become void under those sections and that Loop was in pari delicto. On appeal, the Supreme Court affirmed that Loop was complicit in the illegal allocation, was in pari delicto, and therefore could not claim restitution; it also held that TDSAT had jurisdiction and that the set‑off policy could not be challenged. The Court dismissed the appeals, leaving Loop without a refund.

Issues considered

The quashing of 2G licences in CPIL renders the UASL agreements void under Sections 65, 23 and 56 of the Indian Contract Act, permitting a claim for restitution.
Whether Loop Telecom is in pari delicto, thereby barring a claim under Section 65 of the Indian Contract Act.
The jurisdiction of TDSAT to entertain a refund claim for the entry fee.
The validity of the Union government's set‑off policy for the entry fee in the subsequent auction.
The effect of Loop's acquittal in the criminal proceedings on its civil claim for refund.

Legislation cited

Indian Contract Act, 1872s. 20, s. 23, s. 56, s. 65
Indian Telegraph Act, 1885s. 4(1)
Telecom Regulatory Authority of India Act, 1997s. 14, s. 15, s. 16, s. 18

Subjects

2G spectrumUnified Access Service LicenceEntry fee refundIn pari delictoIndian Contract ActRestitutionTDSAT jurisdictionSet‑off policyPublic interest litigationArbitrary allocation

Judgment

[2022] 4 S.C.R. 329 329

LOOP TELECOM AND TRADING LIMITED A
v.
UNION OF INDIA AND ANR.
(Civil Appeal Nos. 1447-1467 of 2016)
MARCH 03, 2022 B
[DR. DHANANJAYA Y CHANDRACHUD, SURYA KANT
AND VIKRAM NATH, JJ.]
Telecommunication: Contract Act, 1872 – ss.65, 23, 56 –
Unified Access Service Licenses (UASL) – 2G Spectrum – Illegal
Allocation – Claim for Refund of Entry Fee – In the instant case, C
the appellant applied for grant of UASL for 21 service areas – In
the meantime, the Court in Centre for Public Interest Litigation v Union
Of India declared the policy of the Union for allocation of 2G
spectrum as illegal holding that such policy was arbitrary in nature
as it provided allocation on the basis of “First Come First Serve”
and therefore opened the door of biasness – On the basis of the D
said judgment the appellant sought relief of refund of Entry Fee
before the Telecom Disputes Settlement and Appellate Tribunal
basing the plea that the allocation was in the nature of the contract
and the same has become void in the light of the aforesaid judgment
and hence the appellant is entitled to recourse u/ss.65, 23 &56 of E
Contract Act – The Tribunal dismissed the appellant’s plea on the
ground that the quashing of the appellant’s license in the aforesaid
judgment cannot be equated with the UASL agreement becoming
void within the meaning of s.65 and also that the same has not
become void u/ss.23 and 56 of the Act – The tribunal further held
that since the appellant was at pari delicto hence could not claim F
refund of Entry Fee – On appeal, held – The appellant was in pari
delicto with the Department of Telecommunication, the 2G spectrum
allocation exercise of which was held illegal, arbitrary and
constitutionally infirm by the court in the above referred judgment
– Further since the appellant was at fault hence could not claim G
recourse to s. 65 of the Act – Also that the appellant was party in
the above referred case and despite knowing the fact that the Court
in such case was to quash the process of allocation and award of
the licenses in which it did not claim refund of Entry Fee and hence
could not be allowed to raise such plea in the present case.
H
329
330 SUPREME COURT REPORTS [2022] 4 S.C.R.

A Telecom Regulatory Authority of India Act 1997: ss.14, 15,
16, 18 – Telecom Disputes Settlement and Appellate Tribunal –
Jurisdiction – Scope and Extent – The jurisdiction of civil courts
has been ousted by s.15 – s.16 enables the TDSAT to regulate its
own procedure, guided by the principles of natural justice – An
appeal on a substantial question of law lies to Supreme Court under
B
s.18 of the TRAI Act – TDSAT was a creature of statute and was
empowered to determine its jurisdiction, subject to the constraints
stipulated in the statute – s.14, as such, does not put any constraints
on the jurisdiction of the TDSAT – Telecommunication.
Contract Act, 1872 – ss. 20, 56, 65 – Scope – The expression
C “discovered to be void” u/s.20 comprehend a situation in which
parties were suffering from a mistake of fact from the very beginning
but had not realized at the time of entering into the agreement or
signing of the documents that they were suffering from any such
mistake and had therefore acted bona fide while entering into such
D agreements – The word “impossible” u/s 56 has to be construed in
its practical sense and not just in its literal sense – s.65 does not
operate in derogation of the maxim in pari delicto potior est conditio
possidentis – The application of s.65 has to be limited to those cases
were the party claiming restitution itself was not in pari delicto.
E Dismissing the appeals, the Court
HELD: 1. The decision of this Court in CPIL, which was
rendered on 2 February 2012, arose from petitions under Article
32 of the Constitution. The petitions questioned the grant of
UASLs to the private respondents in those proceedings (which
F included the appellant), on the ground that the procedure which
was adopted by DoT was arbitrary, illegal and in violation of Article
14 of the Constitution. This Court held that an auction conducted
after due publicity was perhaps the best method for fulfilling the
constitutional requirement of preserving equity in the alienation
of natural resources. In the absence of such a mechanism, this
G Court held that alienation of natural resources/public property is
likely to be misused by unscrupulous people who are only
interested in garnering maximum financial benefit and have no
respect for constitutional ethos and values. This Court found that
everything was stage-managed to favour of those who were able to
H
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA 331
AND ANR.

know in advance the change in the implementation of the first-come- A
first served policy. [Paras 12, 15, 17][350-F-G; 352-G-H; 355-F]
2. Reading the judgment in CPIL, it is impossible to accept
the submission that the fraud in the- First Come First Serve policy
lay at the doorstep of the Union government alone and that the
appellant was free from taint or wrong doing. The decision of this B
Court held that the - First Come First Serve policy was writ large
with arbitrariness, and was intended to favour certain specific
entities at a grave detriment to the public exchequer. Undoubtedly,
the authors of the First Come First Serve policy were the official
actors comprised within the Union government. But equally, the
decision did not exculpate the private business entities who C
obtained UASLs and became the beneficiaries of their decision.
The decision of this Court concludes in no uncertain terms that
the then Minister of Communications and Information Technology
wanted to favour of some companies at the cost of the public
exchequer, and that as a matter of fact the entire process was D
¯stage-managed to favour those who had access to the nitty-gritties
of the policy in advance. As a result, the Court found that
companies which had submitted applications in 2004 or 2006 were
side-lined by favouring those who had applied between August
and September 2007 and who ¯succeeded in getting higher seniority
entitling them to allocation of spectrum on priority basis. The E
beneficiaries of the patently unconstitutional mechanism deployed
for the allocation of spectrum were corporate entities who were
favoured under the ¯First Come First Serve policy. The appellant
is one of them. The distinction made by the judgment of this Court
between the three licensees who were subjected to costs of Rs 5 F
crores and four licensees, including the appellant, who were
subject to costs of Rs 50 lakhs was because in the case of a former
their stakes had been offloaded ostensibly in the name of a fresh
infusion or transfer of equity. However, it is evident that all these
licensees were complicit in the illegal exercise of obtaining
favours for themselves by the indulgence of those in power. That, G
above all, was the foundation of the decision in CPIL and the
justification for quashing licences and the allocation of the 2G
spectrum. This Court then directed the TRAI to frame fresh
recommendations for the grant of licences and for the allocation
H
332 SUPREME COURT REPORTS [2022] 4 S.C.R.

A of spectrum in the 2G band in twenty-two service areas by auction,
as was done for the allocation of spectrum in the 3G band. Thus,
the decision in CPIL leaves no manner of doubt that the appellant
was in pari delicto along with the Union government. [Paras 18,
20][357-A-E, G-H; 358-A-C]
B Centre for Public Interest Litigation v. Union of India
(2012) 3 SCC 1 : [2012] 3 SCR 147 – relied on.
3. The appellant made no effort to urge during the course
of the submissions before the Court in CPIL that they should be
allowed a refund of Entry Fee in the event that the Court were to
C quash the process and the award of licences. Significantly, the
appellant did not seek the permission of this Court at that stage
to reserve their liberties of agitating a claim for refund of Entry
Fee in separate proceedings. Besides having such a course of
action open to them before the judgment was delivered, the
appellants had their remedies open in law even after the decision
D by seeking liberty of adopting independent proceedings for
agitating the refund of the Entry Fee. Not having done this at any
stage in, or in connection with, the proceedings relating to the
decision in CPIL, the appellant cannot be permitted to do so
subsequently. [Para 37][371-E-G]
E 4. The TRAI Act governs the functioning of the TDSAT.
The jurisdiction of civil courts has been ousted by Section 15.
Section 16 enables the TDSAT to regulate its own procedure,
guided by the principles of natural justice. An appeal on a
substantial question of law lies to this Court under Section 18 of
F the TRAI Act. Section 14(a) of the TRAI Act empowers the
TDSAT to adjudicate any dispute: (i)Between a licensor and
licensee; (ii)Between two or more service providers; and
(iii)Between a service provider and a group of consumers. [Paras
26 and 27][361-B-D]

G Cellular Operators Association of India v. Union of
India (2003) 3 SCC 186 : [2002] 5 Suppl. SCR 222;
Union of India v. TATA Teleservices (Maharashtra Ltd)
(2007) 7 SCC 517 : [2007] 9 SCR 285 - relied on.

H
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA 333
AND ANR.

5. In Tarsem Singh, this Court was confronted with a A
contract being void under Section 20 of the Indian Contract Act
as the parties were under a mistake of fact regarding the metric
for assessing the area of land that was the subject of the contract.
This Court, while interpreting the expression discovered to be
void , held that these words comprehend a situation in which
B
parties were suffering from a mistake of fact from the very
beginning but had not realized at the time of entering into the
agreement or signing of the documents that they were suffering
from any such mistake and had therefore acted bona fide while
entering into such agreements. In determining a claim of
restitution, the claiming party’s legal footing in relation to the C
illegal act (and in comparison to the defendant) must be
understood. Unless the party claiming restitution participated in
the illegal act involuntarily or the rule of law offers them protection
against the defendant, they would be held to be in pari delicto and
therefore, their claim for restitution will fail. In adjudicating a
D
claim of restitution under Section 65 of the Indian Contract Act,
the court must determine the illegality which caused the contract
to become void and the role the party claiming restitution has
played in it. If the party claiming restitution was equally or more
responsible for the illegality (in comparison to the defendant),
there shall be no cause for restitution. This has to be determined E
on the facts of each individual case. [Paras 43, 48, 52][375-A-C;
378-B-C; 382-E-F]
Tarsem Singh v. Sukhmindar Singh (1998) 3 SCC 471;
Kuju Collieries Ltd. v. Jharkhand Mines Ltd. (1974) 2
SCC 533 : [1975] 1 SCR 703; Inmani Appa Rao v. F
Gollapalli Ramalingamurthi [1962] 3 SCR 739;
Narayanamma v. Govindappa 2019 (19) SCC 42;
Satyabrata Ghose v. Mugneeram Bangur & Co. [1954]
SCR 310 – relied on.
6. The appellant was in pari delicto with DoT and the then G
officials of the Union government. The appellant was the
beneficiary of the First Come First Serve policy which was
intended to favour a group of private bidding entities at the cost
of the public exchequer. The contention of the appellant that it

H
334 SUPREME COURT REPORTS [2022] 4 S.C.R.

A was exculpated from any wrong doing by the judgment of this
Court in CPIL is patently erroneous. The process leading up to
the award of the UASLs and the allocation of the 2G spectrum
was found to be arbitrary and constitutionally infirm. The need
for an open and transparent bidding process for the allocation of
natural resources was substituted by a process which was
B
designed to confer unlawful benefits on a group of selected bidders
by which the appellant benefitted. The appellant has tried to
obviate these findings by relying on its acquittal by the Special
Judge, CBI. The criminal trial before the Special Judge, CBI
was limited to the question as to whether the promoters of the
C appellant had cheated the DoT by providing a false representation
of its compliance with Clause 8 of the UASL Guidelines, since it
was allegedly being controlled by the Essar group. The Special
Judge, CBI acquitted the promoters of the appellant since the
prosecution was unable to prove that: (i) officers of DoT
D considered the representation of the appellant to be false; (ii)
the appellant was engaging in a sham transaction; or (iii) the
appellant was actually controlled by the Essar group. Hence, the
acquittal of the promoters of the appellant of these criminal
charges does not efface or obliterate the findings which are
contained in the final judgment of this Court in CPIL. Hence, as
E a beneficiary and confederate of fraud, the appellant cannot be
lent the assistance of this Court for obtaining the refund of the
Entry Fee. In any event, such a course of action before the TDSAT
was clearly in the teeth of the judgment of this Court in CPIL.
[Para 60][387-F-H; 388-A-D]
F Union of India v. Telecom Regulatory Authority of India
(1998) 46 DRJ 557; Tarsem Singh v. Sukhminder Singh
1998 (3) SCC 471 : [1998] 1 SCR 456; Vedanta Ltd. v.
The Goa Foundation & Ors. Review Petition (Civil)
Diary No. 18447 of 2020 (9 July 2021); Goa Foundation
G v. Sesa Sterlite Limited & Ors. (2018) 4 SCC 218 :
[2018] 2 SCR 361; T P Moideen Koya v. Government
of Kerala (2004) 8 SCC 106 : [2004] 4 Suppl. SCR 904;

H
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA 335
AND ANR.

R K Garg v. Union of India (1981) 4 SCC 675 : [1982] A
1 SCR 947 – relied on.
S Tel Pvt. Ltd. v. Union of India 2015 SCC OnLine
TDSAT 1 – distinguished.
Union of India v. Karam Chand Thapar and Bros. (Coal
Sales) Ltd. (2004) 3 SCC 504 : [2004] 2 SCR 997; B
Union of India v. AUSPI 5 (2011) 10 SCC 534 – referred
to.
Patel v. Mirza [2016] 3 WLR 399; Holman v. Johnson
(1775) 1 Cowp 341, 343; 98 ER 1120, 1121 – referred
to. C
R Yashod Vardhan and Chitra Narayan, Pollock &
Mulla The Indian Contract and Specific Relief Acts
Volume I (16th edition, LexisNexis) – referred to.
Case law reference
[2012] 3 SCR 147 relied on Para 1 D
[2004] 2 SCR 997 referred to Para 8 viii
(2011) 10 SCC 534 referred to Para 8 (xiii) (b)
[2002] 5 Suppl. SCR 222 relied on Para 28
[2007] 9 SCR 285 relied on Para 29
[1998] 1 SCR 456 relied on Para 30 E
[2018] 2 SCR 361 relied on Para 33
[2004] 4 Suppl. SCR 904 relied on Para 33
1954 SCR 310 relied on Para 42
[1975] 1 SCR 703 relied on Para 49 F
[1962] 3 SCR 739 relied on Para 50
(2019) (19) SCC 42 relied on Para 51
[1982] 1 SCR 947 relied on Para 58
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1447-
1467 of 2016. G
From the Judgment and Order dated 16.09.2015 of the Telecom
Disputes Settlement Appellate Tribunal, New Delhi in Petition Nos.329,
435-449 and 451-455 of 2012.
With
Civil Appeal No. 893 of 2019. H
336 SUPREME COURT REPORTS [2022] 4 S.C.R.

A Dr. Abhishek Manu Singhvi, Huzefa Ahmadi, Sr. Advs., Ms. Parul
Shukla, Amit Bhandari, Prateek Gupta, Ms. Madhavi Agrawal, Ms.
Anwesha Padhi, Advs. for the Appellant.
Vikramjit Banrejee, ASG, Akshay Amritanshu, Nachiketa Joshi,
Apoorv Kurup, T. S. Sabarish, Mohd. Akhil, Gurmeet Singh Makker,
B Advs. for the Respondents.
The Judgment of the Court was delivered by
DR. DHANANJAYA Y CHANDRACHUD, J.
A The Appeals.................................................................3*
C B Submissions of Counsel.................................................7*
C The CPIL judgment......................................................22*
D The claim for refund of Entry Fee.................................31*
E Jurisdiction of TDSAT.................................................34*
D F The claim founded on frustration and restitution.............50*
G The policy of set off......................................................65*
H Conclusion...............................................................69*
A The Appeals
E
1. These appeals under Section 18 of the Telecom Regulatory
Authority of India Act 19971 arise from the judgments dated 16 September
2015 and 11 December 2018 of the Telecom Disputes Settlement and
Appellate Tribunal2. The appellant claimed a refund of Rs 1454.94 crores
representing the Entry Fee (together with interest) paid by it for 2G
F licences for twenty-one service areas. By the judgment of this Court in
Centre for Public Interest Litigation v. Union of India3, the 2G
licences which were granted by the Union of India, including to the
appellant, were quashed. The appellant claims to be entitled to the refund
of its Entry Fee on, as it contends, “well settled principles of civil,
contractual and constitutional law”.
G

1
“TRAI Act”
2
“TDSAT”
3
(2012) 3 SCC 1 (“CPIL”)
H * Pagination is as per the original judgment.
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA 337
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]

2. The appellant applied for the grant of Unified Access Service A
Licences4 for twenty-one service areas on 3 September 2007. A Letter
of Intent was issued. The appellant paid the circle wise Entry Fee of Rs
1.1 crores and furnished a Performance Bank Guarantee and Financial
Bank Guarantee for the twenty-one areas. The appellant entered into
UASL agreements on 3 March 2008 for the twenty-one service areas
B
with the respondent, which came into effect from 25 January 2008.
Among the conditions which were stipulated in the UASL agreements,
those governing the duration of the licence and the Entry Fee were in
the following terms:
“3. Duration of License
C
3.1 This LICENCE shall be valid for a period of 20 years from
the effective date unless revoked earlier for reasons as specified
elsewhere in the document.
[…]
D
18. FEES PAYABLE
18.1 Entry Fee:
One Time non-refundable Entry Fee of Rs 1.1 crore has been
paid by the LICENSEE prior to signing of this License agreement.”
E
3. On 2 February 2012, this Court by its judgment in CPIL (supra)
declared that the policy of the Union government for allocation of 2G
spectrum on a “First Come First Serve” basis was illegal. As a
consequence, the UASLs which were granted by the Union government
were quashed. On 25 May 2012, the appellant instituted a petition5 before
the TDSAT seeking, among other things, a refund of the Entry Fee of F
Rs 1454.94 crores, inclusive of interest. The appellant has stated that on
1 June 2012 it shut down its operations after porting out all its subscribers.
4. By its judgment dated 16 September 2015, the TDSAT dismissed
the First Telecom Petition holding, inter alia, that:
G
(i) The quashing of the appellant’s licences by this Court in
its judgment in CPIL (supra) cannot be equated with the
UASL agreements becoming void within the meaning of
4
“UASL”
5
Petition No 329 of 2012 (“First Telecom Petition”) H
338 SUPREME COURT REPORTS [2022] 4 S.C.R.

A Section 65 of the Indian Contract Act 18726. This Court
quashed the UASLs since it found the Union government’s
policy of “First Come First Serve” to be illegal and
arbitrary. Hence, the appellant cannot claim restitution
under Section 65;
B (ii) The quashing of the appellant’s licences by this Court in its
judgment in CPIL (supra) cannot be brought under the
Indian Contract Act, since the UASL agreements had not
become void under Sections 23 and 56 of the Indian Contract
Act; and
C (iii) Even assuming that the appellant’s UASL agreements
became void under the Indian Contract Act, its claim for
restitution under Section 65 would be governed by the
principle of in pari delicto potio rest condition
defendentis (in equal fault, better is the condition of the
possessor). A refund of the Entry Fee could not be made
D
until the possibility of the appellant being in pari delicto
was completely effaced. When the TDSAT delivered its
judgment, the appellant was facing trial before the Special
Judge, CBI for charges under Section 120-B and 420 of
the Indian Penal Code 1860 in a case relating to the grant
E of UASLs.
By a judgment dated 21 December 2017, the appellant was
acquitted of criminal charges by the Special Judge, CBI. The Central
Bureau of Investigation has filed a petition for leave to appeal against
the order of acquittal, which is presently pending before the Delhi High
F Court.
5. Aggrieved by the judgment of the TDSAT dated 16 September
2015, the appellant moved this Court in Civil Appeal Nos 1447-1467 of
2016. On 13 May 2016, the appellant sought liberty of this Court to
withdraw the civil appeals, and to approach this Court once again if it
G became so necessary. Leave was accordingly granted by this Court.
6. The appellant then instituted another petition before the TDSAT7
raising the issue of a refund of the Entry Fee, on the ground that it had

6
“Indian Contract Act”
7
H Telecom Petition No 63 of 2018 (“Second Telecom Petition”)
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA 339
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]

been exonerated by the Special Judge, CBI. By its judgment dated 11 A
December 2018, the TDSAT dismissed the Second Telecom Petition
noting that the appellant had made a second attempt for claiming the
same relief which had been sought earlier in the First Telecom Petition.
It further held that had the TDSAT sought to provide the appellant with
the remedy of approaching it after the conclusion of the trial before the
B
Special Judge, CBI, it would have indicated it in its judgment. Finally, it
was also noted that this Court, through its order dated 13 May 2016, did
not grant the appellant the leave to approach the TDSAT but only to
approach this Court.
The judgment dated 11 December 2018 has given rise to the filing C
of the second set of civil appeals8 by the appellant. The appellant also
moved a Miscellaneous Application9 in Civil Appeal Nos 1447-1467 of
2016 seeking permission for the revival of the earlier civil appeals, which
had been permitted to be withdrawn on 13 May 2016.
7. By an order dated 7 January 2020, the Miscellaneous D
Applications seeking the revival of the first set of civil appeals were
allowed, keeping open all the contentions including the contentions of
the respondents based on the earlier order dated 13 May 2016. This
judgment will accordingly govern both, the original set of civil appeals
which stand revived in pursuance of the order dated 7 January 2020 and
the second set of civil appeals. E
B Submissions of Counsel
8. Dr A M Singhvi, learned Senior Counsel appearing on behalf of
the appellant, has urged the following submissions:
(i) Since the licences of the appellant were quashed by the F
judgment of this Court in CPIL (supra), the appellant is
entitled to a refund of its Entry Fee based on civil, contractual
and constitutional principles;
(ii) The appellant paid an Entry Fee of Rs 1454.94 crores for
twenty-one service areas and the licences were valid for a G
period of twenty years. The appellant was prevented from
providing services under the licences because:

8
Civil Appeal No 893 of 2019
9
Miscellaneous Application Nos 198-218 of 2019 H
340 SUPREME COURT REPORTS [2022] 4 S.C.R.

A (a) This Court held that respondent’s “First Come First
Serve” policy for grant of licences was flawed,
arbitrary and illegal; and
(b) As a consequence, licences which were granted
under said the policy (including the licences of the
B appellant) were quashed;
(iii) The quashing of the licences by this Court amounted to a
frustration of each licence, which was in the nature of a
contract, in terms of Section 56 of the Indian Contract Act.
Consequently, the appellant is entitled to a restitution of the
C Entry Fee paid in terms of Section 65, as the licences were
quashed not on account of the fault of the appellant but due
to the culpability of the Union government;
(iv) The well settled principle is that no person can be prejudiced
because of an act of a court (actus curiae neminem
D gravabit);
(v) The substratum of TDSAT’s decision which disallowed the
claim of the appellant in view of the pending criminal
proceedings has been wiped off by the acquittal of the
appellant by the Special Judge, CBI;
E (vi) The set off policy of the Union government, in terms of
which a set off of the Entry Fee which was paid was granted
only to those entities who participated in the fresh round of
auction which took place after the judgment of this Court in
CPIL (supra), is based on incorrect classification which
F lacks intelligible differentia and nexus to its object. Further,
the set off policy suffers from manifest arbitrariness and is
discriminatory. Thus, it should be struck down as being
violative of Article 14 of the Constitution;
(vii) The set off policy of the Union government allowing the
grant of a set off of the Entry Fee, albeit to certain bidders,
G
is an admission of a debt that is due and payable:
(a) On 12 October 2012, the respondent issued “Queries
and Responses to an NIA” and in answer to Query
Number 74 regarding the set off of Entry Fee, it was
stated as follows:
H
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA 341
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]

“A set-off is allowed against the Earnest Money A
and the payment due in the event of spectrum
being won in this auction. The total amount of
such set off shall be limited to the total entry fee
paid by the entity for all its licenses which have
been quashed by the Supreme Court. No interest
B
will be due on this amount.”
(b) The Empowered Group of Ministers10 held a meeting
on 18 October 2012, at which a decision was taken
in the following terms:
“13. The EGoM considered the letter dated C
12.10.2012 from the Minister of Information and
Broadcasting regarding set-off of entry fee against
the earnest money and payment due in the event
of spectrum being won and noted that the entry
fee paid by TSPs whose licenses were quashed
was for a period of 20 years. While on one hand, D
the TSPs could be expected to have paid a pro-
rata amount for the period of operation of the
license, i.e. 2008-2012, on the other hand, there
could be a claim for refund with interest for the
pro-rata amount for the balance period. E
Therefore, the EGoM decided to allow such
TSPs to adjust an amount equivalent to their
full entry fee, without any interest, against
the auction payments, both for participation
and/or final payment on successful
conclusion. It was clarified that the set-off F
would be permitted only to the quashed
license holders participating in the auction.
Such set-off would be allowed to the extent
of total entry fee paid for all quashed licenses
on an aggregate basis without consideration G
of the expired period of license, only if they
succeed in the auction…”
(emphasis supplied)

10
“EGoM” H
342 SUPREME COURT REPORTS [2022] 4 S.C.R.

A (c) Pursuant to the above policy of granting a set off,
the Union government has granted a set off of the
Entry Fee to Telewings (formerly Uninor), Videocon,
Idea Cellular Limited and Sistema Shyam. In
particular, a set off has been granted to Telewings
despite there being grave criminal charges against it
B
including, inter alia, charges under the Prevention
of Corruption Act 1988;
(viii) The proposition that the policy of the Union of India to permit
the grant of a set off of the Entry Fee amounts to an
admission that a refund of the Entry Fee is payable and
C due, finds support in the decision of this Court in Union of
India v. Karam Chand Thapar and Bros. (Coal Sales)
Ltd. 11;
(ix) The non-refund of the Entry Fee to the appellant is
discriminatory for the following reasons:
D
(a) A set off towards the fee payable for the spectrum
has been permitted to those Telecom Service
Providers12 who participated in and won spectrum in
the subsequent auction after the judgment of this
Court in CPIL (supra);
E
(b) The licences of eight TSPs were quashed by this
Court by its judgment in CPIL (supra). There cannot
be any distinction or classification in law between
the said eight TSPs and similar treatment must be
afforded to all. The classification based on their
F decision to participate in the subsequent auction for
refund of Entry Fee is discriminatory and has no
nexus with the object sought to be achieved by the
set off policy;
(c) Out of the eight TSPs, four TSPs participated in the
G subsequent auction and were permitted a set off of
their Entry Fee towards payment for the auction
allotted spectrum. Details of the cases where a set
off was granted are:
11
(2004) 3 SCC 504
H 12
“TSPs”
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA 343
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]

Name of Company Year of Amount set off Status in the 2G A
Auction Judgment
M/s Telewings
(formerly Uninor) Respondent No 3;
Nov, 2012 1658.57 Crores
(bought Unitech Penalty of Rs 5 Crores
Licenses)
Respondent No 5;
M/s Videocon Nov, 2012 1506.82 Crores
No Penalty Levied
B
Respondent No 8;
M/s Idea Cellular Nov, 2012 684.59 Crores
No Penalty Levied
Respondent No 10;
M/s Sistema Shyam March, 2013 1626.32 Crores Penalty of Rs 50
Lakhs

The remaining four TSPs, including the appellant, did not
C
participate in the subsequent auction for spectrum. Their
details are tabulated below:

D

E

(d) TDSAT afforded differential treatment to the
appellant due to the pendency of criminal proceedings F
against it. In any event, this ground ceases to exist in
view of the acquittal of the appellant of criminal
charges on 21 December 2017 by the Special Judge,
CBI. Following the appellant’s acquittal, there is no
rationale for denying refund of Entry Fee to the
G
appellant;
(x) The set off policy penalises a business entity for taking a
commercial decision not to participate in the subsequent
auction. Whether or not an entity should have participated
in the auction of spectrum following the decision of this
H
344 SUPREME COURT REPORTS [2022] 4 S.C.R.

A Court in CPIL (supra) was entirely for each of them to
determine and this cannot form the basis for granting or
denying a set off;
(xi) The non-refund of the Entry Fee to the appellant suffers
from manifest arbitrariness:
B (a) The set off policy creates a separate class between
similarly placed TSPs whose licences were quashed,
on the basis of whether or not a bidder or entity has
chosen to participate in the fresh auction; and
(b) A business entity may have valid reasons not to
C participate in the fresh auction, for which it cannot
be penalized;
(xii) The appellant ought not to be punished for the wrongdoing
of the respondent:

D (a) In the judgment in CPIL (supra), this Court held that
the “First Come First Serve” policy of the Union
government for the grant of telecom licenses was
flawed, arbitrary and illegal;
(b) This Court further imposed costs of Rs 5 crores upon
those licence holders before it who had benefitted at
E
the cost of the public exchequer and had offloaded
their stakes for thousands of crores in name of fresh
infusion of or transfer of equity. On the other hand,
costs of only Rs 50 lakhs were imposed on those
licence holders (including the appellant) who had
F allegedly benefited by the wholly arbitrary and
unconstitutional action of the Department of
Telecommunication13 for the grant of UASLs and
the allocation of the 2G spectrum band. Hence, no
role was attributed to the appellant for quashing of
its licenses;
G
(c) In any event, the appellant has been acquitted of
criminal charges on 21 December 2017 by the Special
Judge, CBI;

13
H “DoT”
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA 345
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]

(d) Even otherwise, the pendency of criminal proceedings A
is not an impediment to proceed with civil proceedings;
and
(e) The respondent has already auctioned spectrum
which was allocated earlier to the appellant for Rs
10,400 crores and has thus benefited twice from the B
same spectrum. The respondent cannot be allowed
to unjustly enrich itself by usurping the Entry Fee
paid by the appellant. The principles underlying the
doctrine of unjust enrichment are duly fulfilled in the
present case;
C
(xiii) The provisions of the Indian Contract Act would be
applicable to the claim of the appellant:
(a) TDSAT has wrongly held that the licences were
quashed by this Court in the exercise of its
constitutional powers, thereby ousting the provisions
D
of the Indian Contract Act;
(b) The licence granted under the proviso to Section 4(1)
of the Indian Telegraph Act 188514 is in the nature of
a contract between the Government and its licensees.
This proposition finds support in the judgment of this
Court in Union of India v. AUSPI15; E
(c) Once the contracts were held to be void and were
quashed in CPIL (supra), the consequences which
are envisaged in the Indian Contract Act must follow.
When a contract is discovered to be void, the benefit/
advantage received by one party under the contract F
ought to be returned to the other party;
(d) The appellant, when it entered into the contract with
the respondent, had no knowledge of the fact that
the “First Come First Serve” policy of the Union
government would be quashed by this Court. The G
Union government defended its policy before this
Court, and thus ought to be directed to refund the
Entry Fee;
14
“Telegraph Act”
15
(2011) 10 SCC 534 (“AUSPI”) H
346 SUPREME COURT REPORTS [2022] 4 S.C.R.

A (e) In the absence of any legislative intervention
precluding the grant of the refund, the rights of the
parties would be governed by the law of contract.
Thus, the doctrine of frustration under Section 56
and the principle of restitution under Section 65 of
the Indian Contract Act would stand attracted in the
B
present case;
(f) Judicial orders are declaratory and retrospective in
nature. The judgment in CPIL (supra) relates back
to the validity of the licences. The appellant had only
six thousand subscribers before the licences were
C quashed and was in the phase of rolling out and
investing capital as a result of which it did not acquire
any substantial benefit;
(g) Since the licences were provided on a representation
that they would have a tenure of twenty years but
D were declared to be void within four years due to the
flawed policy of the Union Government, the appellant
will be entitled to refund of the Entry Fee with interest;
and
(h) The respondent is estopped from relying upon the
E UASL Guidelines and UASL agreements, which
provide that the Entry Fee is non-refundable. This is
because the licences were not quashed either due to
a default on part of the appellant or its withdrawal,
but due to the policy of the Union government being
found to be illegal and arbitrary; and
F
(xiv) The decisions16 of this Court in the relation to the payment
of Adjusted Gross Revenue17 have no relevance to the
present case.
9. Opposing the submissions which have been urged on behalf of
the appellant, Mr Vikramjit Banerjee, learned Additional Solicitor General,
G
appearing on behalf of the Union of India has urged the following
submissions:
16
Union of India v. Association of Unified Telecom Service Providers of India and
Ors., (2020) 3 SCC 525; and Union of India v. Association of Unified Telecom
Service Providers of India and Ors., Civil Appeal Nos 6328-6399 of 2015
17
H “AGR”
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA 347
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]

(i) The Entry Fee paid by the appellant is specifically made A
non-refundable by the UASL Guidelines which were issued
by the DoT on 14 December 2005. Once the Letters of
Intent were issued to the appellant for twenty-one service
areas, the appellant deposited the Entry Fee for each circle
in accordance with the UASL Guidelines on 10 January
B
2008. The appellant became eligible for the issuance of
UASLs for each of the twenty-one service areas only
thereafter. The UASL agreements which were entered into
between the Union Government and the appellant on 4
March 2008 expressly contemplated that the Entry Fee was
a one-time non-refundable fee. The Entry Fee being non- C
refundable in nature, the appellant cannot now seek a refund;
(ii) The issues which are sought to be raised in the present civil
appeals are squarely governed by the judgment in CPIL
(supra). The judgment of this Court examined the validity
of the licences and spectrum allocation made to the licensees D
including the appellant. The judgment in CPIL (supra) found
that the licensees had unfairly gained access to the then
Minister in-charge as well as certain officers of the DoT in
order to gain preferences. This Court found that the grant
of licences was “stage-managed” to favour specific
licensees, including the appellant, as a result of which costs E
of Rs 50 lakhs were also imposed on them;
(iii) While quashing the grant of the licences, the judgment in
CPIL (supra) did not grant any refund of the Entry Fee.
The claim for restitution not having been allowed by this
Court in CPIL (supra), the appellant cannot seek to do so F
at this stage;
(iv) After the judgment in CPIL (supra) quashing the UASLs
granted to the appellant, the appellant has ceased to be a
licensee for the purposes of Section 14(1)(a) of the TRAI
Act, which empowers the TDSAT to adjudicate disputes G
between a licensor and a licensee. The TDSAT did not
have jurisdiction under the provisions of Section 14(1)(a).
In any event, the TDSAT by its judgment dated 16
September 2015 rejected the appellant’s claim for refund
on the ground that it was incompetent to do so, the licences H
348 SUPREME COURT REPORTS [2022] 4 S.C.R.

A having been quashed by the judgment of this Court. Having
moved this Court in the first set of civil appeals, the appellant
withdrew the civil appeals on 13 May 2016, though with
liberty to move this Court again, if it became so necessary.
Thus, in view of the order dated 13 May 2016, the appellant
could have only moved this Court and not TDSAT. However,
B
it instituted a Second Telecom Petition before the TDSAT.
The TDSAT by its judgment dated 11 December 2018
rejected the second attempt of the appellant for claiming
the same relief, since this would essentially amount to a
review of the judgment in CPIL (supra). Thus, moving the
C Second Telecom Petition was not only contrary to Section
14 of the TRAI Act but also in violation of the text and
spirit of the order dated 13 May 2016 of this Court;
(v) The decision of the EGoM dated 31 October 2012 granting
set off to those bidders who had participated and were found
D to be successful in the fresh round of auctions was a one-
time concession offered to TSPs whose licences were
quashed earlier, in order to ensure that telecom services
were provided to consumers in an uninterrupted manner.
The decision in CPIL (supra) did not bar licensees from
participating in the subsequent auction. Since the Entry Fees
E paid by licensees covered by the judgment in CPIL (supra)
could not have been refunded, the EGoM decided to adjust
their Entry Fee in the subsequent auction in the event that
they were declared successful. It was believed that this
would encourage the participation of all TSPs in the
F subsequent auction and increase the prospects of a higher
price discovery, thereby ultimately benefitting the public
exchequer. This set off policy was uniformly applied to all
licensees covered by the judgment in CPIL (supra),
including the appellant, and thus is not discriminatory. No
TSP covered by the decision in CPIL (supra) was compelled
G to participate in the subsequent auction being conducted by
the DoT by the virtue of the set off policy. Rather, the policy
only sought to increase participation in the subsequent
auction by offering a concession in the form of set off of
the previously paid Entry Fee, in case they emerged
H successful in the fresh auction. Being a policy decision
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA 349
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]

involving industry specific issues, this Court should be A
circumspect in interfering with this decision of the Union
government;
(vi) The acquittal of the promoters of the appellant in the criminal
case has no bearing on the refund of the Entry Fee. The
judgment of the Special Judge, CBI acquitting the promoters B
of the appellant was only concerned with the alleged
violation of Clause 8 of the UASL Guidelines issued by
DoT. The acquittal has no bearing on the findings of this
Court in CPIL (supra), according to which UASL and
allocation of spectrum was held to be “stage managed”
and violative of the principles of public law. This precludes C
the appellant from claiming any refund or restitution; and
(vii) As a matter of fact, the judgment of this Court in CPIL
(supra) has imposed costs of Rs 50 lakhs on the appellant
for wrongly benefitting from the wholly arbitrary and
unconstitutional exercise of licence and spectrum allocation. D
Consequently, even under the contract law, the appellant is
disentitled from claiming any refund or restitution of the
Entry Fee based on the principle of in pari delicto.
10. In the submissions made in the rejoinder, both Dr A M Singhvi
and Mr Huzefa A Ahmadi, learned Senior Counsel, have submitted that E
the judgment in CPIL (supra) does not expressly or impliedly bar the
refund of Entry Fee. As a matter of fact, the TDSAT held that the
decision of this Court was not conclusive in ruling out a refund. The
judgment in CPIL (supra) was reserved on 17 March 2011 and was
delivered on 2 February 2012, and the quashing of the licences could not
have been contemplated by any of the litigants. Theoretically, even if the F
claim for restitution could have been made before this Court at that
stage, the appellant is not precluded from raising the claim before this
Court in the present proceedings. Further, Sections 14 and 15 of the
TRAI Act confer a plenary remedy before the TDSAT. Hence, the
appellant moved the TDSAT within a few weeks of the judgment in G
CPIL (supra). It was urged that for the principles of constructive res
judicata to apply, the bar must be clearly evident. In a Public Interest
Litigation petition, it would not be appropriate to apply the principles of
constructive res judicata against the respondent (the appellant herein)
save in an exceptional case. Elaborating on the above submissions, Mr.
Huzefa Ahmadi urged that: H
350 SUPREME COURT REPORTS [2022] 4 S.C.R.

A (i) The right to claim restitution would arise only after the
licences were quashed by this Court and hence, the decision
in CPIL (supra) does not operate as constructive res
judicata;
(ii) The relief sought before this Court in the public interest
B petition under Article 32 of the Constitution which led to
the decision in CPIL (supra) was the setting aside of the
auction and damages. This Court did not grant damages
per se while it imposed costs on the licensees. Hence, in
terms of Section 11 of the Civil Procedure Code 1908, the
prayer for damages must be deemed to have been refused;
C and
(iii) The ultimate direction in CPIL (supra) was that its
observations would not apply to other proceedings and
hence, there was no intent to foreclose other rights under
the law.
D
In view of these premises, it has been urged that the petition under
Article 32 which led to the decision in CPIL (supra) did not seek the
forfeiture of the Entry fee and hence, the principles of constructive res
judicata would find no application at all. This Court having imposed
costs of Rs 5 crores on one set of licensees and Rs 50 lakhs on another
E group of licensees (which included the appellant), it would be wholly
disproportionate to forfeit an amount of Rs 1454.94 crores in the absence
of an implied forfeiture in terms of the earlier decision of this Court.
11. The rival submissions will now be analysed.

F C The CPIL judgment
12. The decision of this Court, which was rendered on 2 February
2012, arose from petitions under Article 32 of the Constitution. The
petitions questioned the grant of UASLs to the private respondents in
those proceedings (which included the appellant), on the ground that the
procedure which was adopted by DoT was arbitrary, illegal and in violation
G
of Article 14 of the Constitution. Among the grounds of challenge, it was
urged that:
(i) Since the cut-off of 25 September 2007 fixed for considering
the applications had been held to be arbitrary by the Delhi
High Court (which was approved by this Court), the
H
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA 351
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]

procedure adopted by DoT with the approval of the Minister A
for Communications and Information Technology was liable
to be declared as arbitrary and illegal;
(ii) The DoT had violated the recommendations made by
Telecom Regulatory Authority of India18 that there should
be no cap on the number of access service providers in any B
service area;
(iii) As noted in the report of the Comptroller and Auditor
General, the consideration of a large number of ineligible
applications and the grant of licences to them was illegal
and arbitrary; C
(iv) The method adopted by DoT for grant of licences was
flawed because it was based upon the recommendations
made by TRAI, which were arbitrary and contrary to public
interest, since they recommended the granting of licences
at the entry fees which were determined in 2001; D
(v) While granting licences which were bundled with the
spectrum at a price which was fixed in 2001, the DoT did
not consult the Finance Ministry and violated the decision
taken by the Council of Ministers in 2003;
(vi) The “First Come First Serve” policy violated Article 14, E
and its distortion by the then Minister of Communications
and Information Technology and the consequent grant of
licences was liable to be annulled; and
(vii) The Union government did not take any action to cancel
the licences of a number of licensees who had failed to F
fulfil the roll-out obligations and violated the conditions of
the licences.
13. While dealing with the grounds of challenge, in the course of
the judgment, this Court underscored that natural resources, such as
spectrum, are public goods and the doctrine of equality and public trust G
must guide the State in determining the actual mechanism for their
distribution. After analysing the rationale adopted by TRAI for
recommending the allocation of the 2G spectrum on the basis of 2001
prices, this Court held:
18
“TRAI” H
352 SUPREME COURT REPORTS [2022] 4 S.C.R.

A “91. To say the least, the entire approach adopted by TRAI was
lopsided and contrary to the decision taken by the Council of
Ministers and its recommendations became a handle for the then
Minister of Communications and Information Technology and the
officers of DoT who virtually gifted away the important national
asset at throw-away prices by wilfully ignoring the concerns raised
B
from various quarters including the Prime Minister, Ministry of
Finance and also some of its own officers. This becomes clear
from the fact that soon after obtaining the licences, some of the
beneficiaries offloaded their stakes to others in the name of transfer
of equity or infusion of fresh capital by foreign companies, and
C thereby made huge profits. We have no doubt that if the method
of auction had been adopted for grant of licence which could be
the only rational transparent method for distribution of national
wealth, the nation would have been enriched by many thousand
crores.”
D 14. This Court found a basic flaw in the “First Come First Serve”
policy, holding:
“94. There is a fundamental flaw in the first-come-first-served
policy inasmuch as it involves an element of pure chance or
accident. In matters involving award of contracts or grant of
E licence or permission to use public property, the invocation of first-
come-first-served policy has inherently dangerous implications.
Any person who has access to the power corridor at the highest
or the lowest level may be able to obtain information from the
government files or the files of the agency/instrumentality of the
State that a particular public property or asset is likely to be disposed
F of or a contract is likely to be awarded or a licence or permission
is likely to be given, he would immediately make an application
and would become entitled to stand first in the queue at the cost
of all others who may have a better claim.”
15. This Court held that an auction conducted after due publicity
G was perhaps the best method for fulfilling the constitutional requirement
of preserving equity in the alienation of natural resources. In the absence
of such a mechanism, this Court held that alienation of natural resources/
public property is likely to be misused by unscrupulous people who are
only interested in garnering maximum financial benefit and have no respect
H for constitutional ethos and values.
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA 353
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]

16. In the course of its decision, this Court held, in no uncertain A
terms, that the then Minister for Communications and Information
Technology had acted to favour some companies at the cost of the public
exchequer:
“97. The exercise undertaken by the officers of DoT between
September 2007 and March 2008, under the leadership of the B
then Minister of Communications and Information Technology was
wholly arbitrary, capricious and contrary to public interest apart
from being violative of the doctrine of equality. The material
produced before the Court shows that the Minister of
Communications and Information Technology wanted to favour
some companies at the cost of the public exchequer and for this C
purpose, he took the following steps:
(i) Soon after his appointment as Minister of Communications
and Information Technology, he directed that all the applications
received for grant of UAS licence should be kept pending till the
receipt of the TRAI recommendations. D

(ii) The recommendations made by TRAI on 28-8-2007 were not
placed before the full Telecom Commission which, among others,
would have included the Finance Secretary. The notice of the
meeting of the Telecom Commission was not given to any of the
non-permanent members despite the fact that the recommendations E
made by TRAI for allocation of spectrum in 2G bands had serious
financial implications. This has been established from the pleadings
and the records produced before this Court which show that after
issuance of licences, 3 applicants transferred their equities for a
total sum of Rs 24,493 crores in favour of foreign companies. F
Therefore, it was absolutely necessary for DoT to take the opinion
of the Finance Ministry as per the requirement of the Government
of India (Transaction of Business) Rules, 1961.
(iii) The officers of DoT who attended the meeting of the Telecom
Commission held on 10-10-2007 hardly had any choice but to G
approve the recommendations made by TRAI. If they had not
done so, they would have incurred the wrath of the Minister of
Communications and Information Technology.
(iv) In view of the approval by the Council of Ministers of the
recommendations made by the Group of Ministers in 2003, DoT
H
354 SUPREME COURT REPORTS [2022] 4 S.C.R.

A had to discuss the issue of spectrum pricing with the Ministry of
Finance. Therefore, DoT was under an obligation to involve the
Ministry of Finance before any decision could be taken in the
context of Paras 2.78 and 2.79 of the TRAI’s recommendations.
However, as the Minister of Communications and Information
Technology was very much conscious of the fact that the
B
Secretary, Finance, had objected to the allocation of 2G Spectrum
at the rates fixed in 2001, he did not consult the Finance Minister
or the officers of the Finance Ministry.
(v) The Minister of Communications and Information Technology
brushed aside the suggestion made by the Minister of Law and
C Justice for placing the matter before the Empowered Group of
Ministers. Not only this, within few hours of the receipt of the
suggestion made by the Prime Minister in his letter dated 2-11-
2007 that keeping in view the inadequacy of spectrum,
transparency and fairness should be maintained in the matter of
D allocation thereof, the Minister of Communications and Information
Technology rejected the same by saying that it will be unfair,
discriminatory, arbitrary and capricious to auction the spectrum to
new applicants because it will not give them level playing field.
(vi) The Minister of Communications and Information Technology
E introduced the cut-off date as 25-9-2007 for consideration of the
applications received for grant of licence despite the fact that
only one day prior to this, a press release was issued by DoT
fixing 1-10-2007 as the last date for receipt of the applications.
This arbitrary action of the Minister of Communications and
Information Technology though appears to be innocuous, actually
F benefited some of the real estate companies who did not have
any experience in dealing with telecom services and who had
made applications only on 24-9-2007 i.e. one day before the cut-
off date fixed by the Minister of Communications and Information
Technology on his own.
G (vii) The cut-off date i.e. 25-9-2007 decided by the Minister of
Communications and Information Technology on 2-11-2007 was
not made public till 10-1-2008 and the first-come-first-served policy,
which was being followed since 2003 was changed by him on 7-
1-2008 and was incorporated in press release dated 10-1-2008.
H This enabled some of the applicants, who had access either to the
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA 355
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]

Minister or the officers of DoT to get the demand drafts, bank A
guarantee, etc. prepared in advance for compliance with conditions
of the LoIs, which was the basis for determination of seniority for
grant of licences and allocation of spectrum.
(viii) The meeting of the full Telecom Commission, which was
scheduled to be held on 9-1-2008 to consider issues relating to B
grant of licences and pricing of spectrum was deliberately
postponed on 7-1-2008 so that the Secretary, Finance and
Secretaries of three other important Departments may not be able
to raise objections against the procedure devised by DoT for grant
of licence and allocation of spectrum by applying the principle of
level playing field. C

(ix) The manner in which the exercise for grant of the LoIs to the
applicants was conducted on 10-1-2008 leaves no room for doubt
that everything was stage-managed to favour those who were
able to know in advance the change in the implementation of the
first-come-first-served policy. As a result of this, some of the D
companies which had submitted applications in 2004 or 2006 were
pushed down in the priority and those who had applied between
August and September 2007 succeeded in getting higher seniority
entitling them to allocation of spectrum on priority basis.”
This is a clear indicator of the complicity between the Minister E
and the business entities he was acting to favour on the basis of the
“First Come First Serve” policy.
17. This Court found that “everything was stage-managed to
favour those who were able to know in advance the change in the
implementation of the first-come-first served policy”. It was in the F
backdrop of the above finding, that this Court issued the following
directions:
“102. In the result, the writ petitions are allowed in the following
terms:
G
(i) The licences granted to the private respondents on or after 10-
1-2008 pursuant to two press releases issued on 10-1-2008 and
subsequent allocation of spectrum to the licensees are declared
illegal and are quashed.
(ii) The above direction shall become operative after four months.
H
356 SUPREME COURT REPORTS [2022] 4 S.C.R.

A (iii) Keeping in view the decision taken by the Central Government
in 2011, TRAI shall make fresh recommendations for grant of
licence and allocation of spectrum in 2G band in 22 service areas
by auction, as was done for allocation of spectrum in 3G band.
(iv) The Central Government shall consider the recommendations
B of TRAI and take appropriate decision within next one month and
fresh licences be granted by auction.
(v) Respondents 2, 3 and 9 who have been benefited at the cost
of public exchequer by a wholly arbitrary and unconstitutional
action taken by DoT for grant of UAS licences and allocation of
C spectrum in 2G band and who offloaded their stakes for many
thousand crores in the name of fresh infusion of equity or transfer
of equity shall pay costs of Rs 5 crores each. Respondents 4, 6, 7
and 10 shall pay costs of Rs 50 lakhs each because they too had
been benefited by the wholly arbitrary and unconstitutional exercise
D undertaken by DoT for grant of UAS licences and allocation of
spectrum in 2G band. We have not imposed costs on the
respondents who had submitted their applications in 2004 and 2006
and whose applications were kept pending till 2007.
(vi) Within four months, 50% of the costs shall be deposited with
E the Supreme Court Legal Services Committee for being used for
providing legal aid to poor and indigent litigants. The remaining
50% costs shall be deposited in the funds created for Resettlement
and Welfare Schemes of the Ministry of Defence.
(vii) However, it is made clear that the observations made in this
F judgment shall not, in any manner, affect the pending investigation
by CBI, Directorate of Enforcement and other agencies or cause
prejudice to those who are facing prosecution in the cases
registered by CBI or who may face prosecution on the basis of
charge-sheet(s) which may be filed by CBI in future and the
Special Judge, CBI shall decide the matter uninfluenced by this
G
judgment. We also make it clear that this judgment shall not
prejudice any person in the action which may be taken by other
investigating agencies under the Income Tax Act, 1961, the
Prevention of Money-Laundering Act, 2002 and other similar
statutes.”
H
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA 357
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]

18. Reading the judgment of this Court in CPIL (supra), it is A
impossible to accept the submission which has been urged on behalf of
the appellant that the fraud in the “First Come First Serve” policy lay at
the doorstep of the Union government alone and that the appellant was
free from taint or wrong doing. The decision of this Court held that the
“First Come First Serve” policy was writ large with arbitrariness, and
B
was intended to favour certain specific entities at a grave detriment to
the public exchequer. Undoubtedly, the authors of the “First Come First
Serve” policy were the official actors comprised within the Union
government. But equally, the decision did not exculpate the private
business entities who obtained UASLs and became the beneficiaries of
their decision. The decision of this Court concludes in no uncertain terms C
that the then Minister of Communications and Information Technology
wanted to favour some companies at the cost of the public exchequer,
and that as a matter of fact the entire process was “stage-managed” to
favour those who had access to the nitty-gritties of the policy in advance.
As a result, the Court found that companies which had submitted
D
applications in 2004 or 2006 were side-lined by favouring those who had
applied between August and September 2007 and who “succeeded in
getting higher seniority entitling them to allocation of spectrum on
priority basis”.
19. In the concluding part, the judgment in CPIL (supra) imposed
E
costs of Rs 5 crores each on three licensees on the ground that they had
benefited at the cost of the public exchequer by a “wholly arbitrary
and unconstitutional action” taken by DoT for the grant of licences
and allocation of spectrum, and who had subsequently offloaded their
stakes for many thousand crores in the name of fresh infusion or transfer
of equity. On the other hand, the appellant was amongst the four licensees F
who were directed to pay a cost of Rs 50 lakhs each “because they too
had been benefited by the wholly arbitrary and unconstitutional
exercise undertaken by DoT for grant of UASL and allocation of
spectrum of 2G band”.
20. The beneficiaries of the patently unconstitutional mechanism G
deployed for the allocation of spectrum were corporate entities who
were favoured under the “First Come First Serve” policy. The appellant
is one of them. The distinction made by the judgment of this Court
between the three licensees who were subjected to costs of Rs 5 crores
and four licensees, including the appellant, who were subject to costs of
H
358 SUPREME COURT REPORTS [2022] 4 S.C.R.

A Rs 50 lakhs was because in the case of a former their stakes had been
offloaded ostensibly in the name of a fresh infusion or transfer of equity.
However, it is evident that all these licensees were complicit in the illegal
exercise of obtaining favours for themselves by the indulgence of those
in power. That, above all, was the foundation of the decision in CPIL
(supra)and the justification for quashing licences and the allocation of
B
the 2G spectrum. This Court then directed the TRAI to frame fresh
recommendations for the grant of licences and for the allocation of
spectrum in the 2G band in twenty-two service areas by auction, as was
done for the allocation of spectrum in the 3G band. Thus, the decision in
CPIL (supra) leaves no manner of doubt that the appellant was in pari
C delicto along with the Union government.
D The claim for refund of Entry Fee
21. The nature of the Entry Fee has to be understood from the
UASL Guidelines which were issued by the DoT on 14 December 2005.
Clause 619 of the Guidelines required each applicant seeking a UASL
D for a given service area to deposit a “non-refundable entry fee” in
accordance with Annexure 1, which elucidated the quantum of the fee
which was payable for different service areas. Clause 14 20 indicates
that the Entry Fee was payable in addition to the annual licence fee
which was payable for holding a UASL.
E 22. Letters of Intent were issued to the appellant for providing
unified access service to twenty-one service areas. The appellant
deposited the circle wise Entry Fee, in terms of the UASL Guidelines,
on 10 January 2008 in the amount of Rs 1454.94 crores. It is only upon
the payment of this Entry Fee that the appellant became eligible to be
F issued UASLs in the twenty-one service areas. Clause 18.1 21 of the
UASL agreement acknowledged the payment of a “onetime non-
refundable entry fee” prior to the signing of the agreement. Thus, the
Entry Fee was a onetime non-refundable fee payable. According to the
19
“6 The detail of non-refundable Entry fee, Category of service area, Financial bank
G guarantee, performance bank guarantee, Net worth and Paid up equity capital required
under the Unified Access Services Licence for each service area is as per Annexure-I.
The prescribed paid-up equity capital shall be maintained during currency of the licence.”
20
“14 In addition to the non refundable Entry fee described above, the Licensee shall
also pay Licence fee annually @ 10/8/6% of Adjusted Gross Revenue (AGR) for
category A/B/C service areas respectively excluding spectrum charges.”
21
“18.1 Entry Fee: One Time non-refundable Entry Fee of Rs .1.1 Crore has been paid
H by the LICENSEE prior to signing of this Licence agreement.”
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA 359
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]

Union government, this was payable by an applicant for participating in A
the process of obtaining the UASL and was distinguishable from the
licence fee under Clause 10.122, which was relatable to the actual
operation of the licence.
23. In the course of its judgment dated 16 September 2015, the
TDSAT dealt with the submission of the Union of India that the Entry B
Fee was “non-refundable” in terms of the UASL Guidelines. Dealing
with the submission, the TDSAT observed:
“To us it appears that submissions based on section 4 of the
Telegraph Act or the characterisation of the entry fee in the UASL
guidelines and the licence as “non-refundable” is really begging C
the question. The submissions would have carried weight if the
petitioners’ licences were cancelled or terminated for any violation
of the term of the licences or were surrendered by it by its own
accord. In the facts of the present case the petitioner failed to get
entry into…the exclusive domain reserved by law for the State...”
D
24. There is much to commend in the above line of reasoning of
the TDSAT. The Entry Fee, under the terms of the UASL Guidelines
and the UASL agreements, was a one-time non-refundable fee. The
TDSAT held that the submission of the Union of India would have
credence if the licences were terminated for breach or if the licensee
were to voluntarily surrender the licence. However, this was a case E
where the licence was held to be unlawful, due to its grant being in
breach of the constitutional mandate under Article 14. All the licences
and the allocation of spectrum came to be cancelled by the decision in
CPIL (supra) on the ground that the policy and the process followed by
the Union government were arbitrary, and unjustified benefits had been
F
22
“10.1 The LICENSOR reserves the right to suspend the operation of this LICENCE
in whole or in part, at any time, if, in the opinion of the LICENSOR, it is necessary or
expedient to do so in public interest or in the interest of the security of the State or for
the proper conduct of the TELEGRAPH. Licence Fee payable to the LICENSOR will
not be required to be paid for the period for which the operation of this LICENCE
remains suspended in whole. If situation so warrant, it shall not be necessary for G
Licensor to issue a notice for seeking comments of the LICENSEE for this purpose and
the decision of the Licensor shall be final and binding.
Provided that the LICENSOR shall not be responsible for any damage or loss caused or
arisen out, of aforesaid action. Provided further that the suspension of the licence will
not be a cause or ground for extension of the period of the LICENCE and suspension
period will be taken as period spent.”
H
360 SUPREME COURT REPORTS [2022] 4 S.C.R.

A granted to the licensees. Thus, the TDSAT held that, strictly speaking,
the contractual term stipulating that the Entry Fee was non-refundable
would not by and in itself preclude the claim for refund on the basis of
the judgment of this Court in CPIL (supra), which held that the entire
process leading up to the award of the licences was arbitrary and
constitutional. The TDSAT having entered the above finding, for the
B
rest of the discussion, this judgment will also proceed on that premise.
E Jurisdiction of TDSAT
25. The appellant has objected to TDSAT’s conclusion that the
appellant’s remedy does not fall in the contractual realm between itself
C and the Union of India. Since the public law remedy of restitution was
neither claimed before nor granted by this Court in CPIL (supra), the
TDSAT went into the genesis of the dispute and consequential reliefs
granted by this court. . The TDSAT held that since the challenge was
focused on the arbitrary and mala fide actions that were embodied in
the policy of allotting 2G spectrum licences, the quashing of the licences
D was a necessary consequence of the grant of the licences being vitiated.
Thus, the TDSAT held that “a direction for refund [is] outside the
purview of the Contract Act and an exercise of Constitutional powers
is clearly beyond the authority of this Tribunal [TDSAT] and in that
regard the petitioner must approach the Court that quashed its
E licenses, that is, Supreme Court and seek appropriate reliefs”.
26. This Court will analyse whether the TDSAT had the jurisdiction
to entertain the claim for a refund of the Entry Fee. The TDSAT is an
adjudicatory body constituted under the TRAI Act. Initially, the TRAI
was empowered to regulate the telecom sector in India and adjudicate
F upon disputes. The adjudicatory powers of TRAI, specifically with respect
to issuing directions to DoT, were placed in issue before the Delhi High
Court in Union of India v. Telecom Regulatory Authority of India23.
The Delhi High Court held that TRAI did not possess the authority to
issue directions to DoT. In order to overcome the effect of this position,
the TRAI Act was amended in 2000 and the TDSAT was established.
G TDSAT’s website24 elaborates on the Statement of Objects and Reasons
to the Telecom Regulatory Authority of India (Amendment) Act 2000
and notes:
23
(1998) 46 DRJ 557
24
Available at <https://tdsat.gov.in/admin/introduction/uploads/TDSAT%20INTRO.pdf>
H accessed on 28 February 2022
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA 361
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]

“In order to bring in functional clarity and strengthen the regulatory A
framework and the disputes settlement mechanism in the
telecommunication sector, the TRAI Act of 1997 was amended
in the year 2000 and TDSAT was set up to adjudicate disputes
and dispose of appeals with a view to protect the interests of
service providers and consumers of the telecom sector and to
B
promote and ensure orderly growth of the telecom sector…”
The TRAI Act governs the functioning of the TDSAT. The
jurisdiction of civil courts has been ousted by Section 15. Section 16
enables the TDSAT to regulate its own procedure, guided by the principles
of natural justice. An appeal on a substantial question of law lies to this
Court under Section 18 of the TRAI Act. In the above statutory context, C
the jurisdiction of TDSAT will be evaluated below.
27. Section 14(a)25 of the TRAI Act empowers the TDSAT to
adjudicate any dispute:
(i) Between a licensor and licensee;
D
(ii) Between two or more service providers; and
(iii) Between a service provider and a group of consumers.
28. The scope of the TDSAT’s powers to adjudicate “any dispute”
was interpreted in Cellular Operators Association of India v. Union
of India26 by a three-judge Bench of this Court. The Court held that the E
25
“14. Establishment of Appellate Tribunal.—The Central Government shall, by
notification, establish an Appellate Tribunal to be known as the Telecom Disputes
Settlement and Appellate Tribunal to—
(a) adjudicate any dispute—
(i) between a licensor and a licensee;
(ii) between two or more service providers; F
(iii) between a service provider and a group of consumers:
Provided that nothing in this clause shall apply in respect of matters relating to—
(A) the monopolistic trade practice, restrictive trade practice and unfair trade practice
which are subject to the jurisdiction of the Monopolies and Restrictive Trade Practices
Commission established under sub-section (1) of Section 5 of the Monopolies and
Restrictive Trade Practices Act, 1969 (54 of 1969);
(B) the complaint of an individual consumer maintainable before a Consumer Disputes
G
Redressal Forum or a Consumer Disputes Redressal Commission or the National
Consumer Redressal Commission established under Section 9 of the Consumer Protection
Act, 1986 (68 of 1986);
(C) the dispute between telegraph authority and any other person referred to in sub-
section (1) of Section 7-B of the Indian Telegraph Act, 1885 (13 of 1885);..”
26
(2003) 3 SCC 186 H
362 SUPREME COURT REPORTS [2022] 4 S.C.R.

A powers envisaged by the TRAI Act for the TDSAT are wide and it
would not be appropriate for this Court to impose limitations on them.
Chief Justice G B Pattanaik noted:
“8…Chapter IV containing Section 14 was inserted by an
amendment of the year 2002 and the very Statement of Objects
B and Reasons would indicate that to increase the investors’
confidence and to create a level playing field between the public
and the private operators, suitable amendment in the Telecom
Regulatory Authority of India Act, 1997 was brought about and
under the amendment, a tribunal was constituted called the
Telecom Disputes Settlement and Appellate Tribunal for
C adjudicating the disputes between a licensor and a licensee,
between two or more service providers, between a service provider
and a group of consumers and also to hear and dispose of appeal
against any direction, decision or order of the Authority. The
aforesaid provision was absolutely essential as the organizations
D of the licensor, namely, MTNL and BSNL were also service
providers. That being the object for which an independent tribunal
was constituted, the power of that Tribunal has to be adjudged
from the language conferring that power and it would not be
appropriate to restrict the same on the ground that the decision
which is the subject-matter of challenge before the Tribunal was
E that of an expert body.
[…]
Having regard to the very purpose and object for which the
Appellate Tribunal was constituted and having examined the
F different provisions contained in Chapter IV, more particularly,
the provision dealing with ousting the jurisdiction of the civil court
in relation to any matter which the Appellate Tribunal is empowered
by or under the Act, as contained in Section 15, we have no
hesitation in coming to the conclusion that the power of the
Appellate Tribunal is quite wide, as has been indicated in the statute
G itself and the decisions of this Court dealing with the power of a
court, exercising appellate power or original power, will have no
application for limiting the jurisdiction of the Appellate Tribunal
under the Act. Since the Tribunal is the original authority to
adjudicate any dispute between a licensor and a licensee or
H between two or more service providers or between a service
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA 363
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]

provider and a group of consumers and since the Tribunal has to A
hear and dispose of appeals against the directions, decisions or
order of TRAI, it is difficult for us to import the self-contained
restrictions and limitations of a court under the judge-made law to
which reference has already been made and reliance was placed
by the learned Attorney-General…”
B
Justice S B Sinha, in his concurring opinion, further elaborated on
the jurisprudence surrounding tribunals constituted under regulatory
statutes. The judgment noted that the TDSAT was a creature of statute
and was empowered to determine its jurisdiction, subject to the constraints
stipulated in the statute. The appeal to this Court under Section 18 has
been confined to a “substantial question of law”. Since no such constraints C
have been placed on the jurisdiction of the TDSAT under Section 14, the
jurisdiction of the TDSAT was held to be broader:
“27. TDSAT was required to exercise its jurisdiction in terms of
Section 14-A of the Act. TDSAT itself is an expert body and its
jurisdiction is wide having regard to sub-section (7) of Section 14- D
A thereof. Its jurisdiction extends to examining the legality,
propriety or correctness of a direction/order or decision of the
authority in terms of sub-section (2) of Section 14 as also the
dispute made in an application under sub-section (1) thereof. The
approach of the learned TDSAT, being on the premise that its E
jurisdiction is limited or akin to the power of judicial review is,
therefore, wholly unsustainable. The extent of jurisdiction of a
court or a tribunal depends upon the relevant statute. TDSAT is a
creature of a statute. Its jurisdiction is also conferred by a statute.
The purpose of creation of TDSAT has expressly been stated by
Parliament in the amending Act of 2000. TDSAT, thus, failed to F
take into consideration the amplitude of its jurisdiction and thus
misdirected itself in law…
[…]
29. If a jurisdictional question or the extent thereof is disputed G
before a tribunal, the tribunal must necessarily decide it unless the
statute provides otherwise. (See Judicial Review of Administrative
Law by H.W.R. Wade and C.F. Forsyth, p. 260.) Only when a
question of law or a mixed question of fact and law are decided
by a tribunal, the High Court or the Supreme Court can exercise
its power of judicial review. H
364 SUPREME COURT REPORTS [2022] 4 S.C.R.

A […]
34. Statutory recommendations made by it are normally accepted
by the Central Government, as a result of which the rights and
obligations of the parties may seriously be affected. It was in the
aforementioned premise Parliament thought of creating an
B independent expert tribunal which, if an occasion arises therefor,
may interfere with the finding of fact, finding of law or a mixed
question of law and fact of the authority. Succinctly stated, the
jurisdiction of the Tribunal is not circumscribed in any manner
whatsoever…”
C 29. Section 14 of the TRAI Act has also been interpreted in Union
of India v. TATA Teleservices (Maharashtra Ltd)27 by a two-judge
Bench of this Court. In that case, the respondent had moved the TDSAT
seeking a declaration that the action of the Union of India (the licensor)
in raising a claim and recovering the amount was unlawful. The
respondent also sought a declaration that a set-off made by invoking a
D condition of the licence in respect of the Maharashtra service area was
illegal. The Union of India claimed that it was entitled to make the set-
off and recover damages occasioned by the failure of the respondent to
fulfil its obligations under a letter of intent issued in respect of the
Karnataka Telecom circle. The TDSAT had rejected the claim of the
E Union of India that it was entitled to a legal or equitable set off and held
that it had no jurisdiction to enter a counterclaim at the instance of the
Union of India. In appeal, this Court held that either as a licensor or a
service provider, the Union government could make an application to
TDSAT regarding a dispute between it and the licensee, another service
provider or a group of consumers. This Court noted that there was no
F reason to whittle down the right “of the Union government to move
the Tribunal for adjudication of its claim within the purview of
Section 14(1)”. This Court observed that if the subject matter was
capable of being raised by way of a claim under Section 14 of the TRAI
Act, it would not be logical to exclude the power to raise a counterclaim.
G Having held that the TDSAT had jurisdiction to entertain a counter claim,
the judgment dealt with the submission of the respondent that where a
licence had not actually been issued to a party by the Union government,
the dispute did not fall either under Clause (i) or (ii) of Section 14(a).
The Court held that:
27
H (2007) 7 SCC 517 (“Tata Teleservices”)
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA 365
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]

“19…In other words, a dispute commencing with the acceptance A
of a tender leading to the possible issue of a licence and disputes
arising out of the grant of licence even after the period has expired
would all come within the purview of Section 14(a) of the Act. To
put it differently, Section 14 takes within its sweep disputes
following the issue of a letter of intent, pre-grant of actual licence
B
as also disputes arising out of a licence granted between a quondam
licensee and the licensor.”
The Court observed that though the bid submitted by the respondent
had been accepted by the Union of India and a letter of intent was
issued, the contract ultimately did not come into existence since the
respondent was insisting on certain modifications and the licence was C
not actually granted. The Court held:
“22. We have already indicated that a specialised tribunal has been
constituted for the purpose of dealing with specialised matters
and disputes arising out of licences granted under the Act. We
therefore do not think that there is any reason to restrict the D
jurisdiction of the tribunal so constituted by keeping out of its
purview a person whose offer has been accepted and to whom a
letter of intent is issued by the Government and who had even
accepted that letter of intent. Any breach or alleged breach of
obligation arising after acceptance of the offer made in response E
to a notice inviting tender, would also normally come within the
purview of a dispute that is liable to be settled by the specialised
tribunal.”
This Court also held that there was no reason to restrict the
expression “licensee” appearing in Section 14(a)(i) to exclude a person F
like the respondent to whom a Letter of Intent had been issued, when
the Letter of Intent had been accepted but an attempt had been made to
negotiate certain terms before a formal contract was entered into and
work commenced. The Court held:
“23. We see no reason to restrict the expressions “licensor” or G
“licensee” occurring in Section 14(a)(i) of the Act and to exclude
a person like the respondent who had been given a letter of intent
regarding the Karnataka Circle, who had accepted the letter of
intent but was trying to negotiate some further terms of common
interest before a formal contract was entered into and the work
was to be started. To exclude disputes arising between the H
366 SUPREME COURT REPORTS [2022] 4 S.C.R.

A parties thereafter on the failure of the contract to go
through, does not appear to be warranted or justified
considering the purpose for which TDSAT has been
established and the object sought to be achieved by the
creation of a specialised tribunal.”
(emphasis supplied)
B
30. Relying upon the judgment in Tata Teleservices (supra), the
appellant claims that the refund of the Entry Fee falls within the purview
of Section 14(a)(i) of the TRAI Act. While evaluating the submissions, it
must be noted at the outset, that there is an inconsistency in the line of
submissions urged on behalf of the appellant. The Union of India submitted
C that the Entry Fee which was paid by the appellant was a one-time non-
refundable fee in terms of the UASL Guidelines and the UASL
agreement. The response of the appellant to the above submission is
that the licence was not terminated for a breach on the part of the
appellant, nor did the appellant voluntarily surrender the licence. Hence,
D according to the appellant, the clause in the guidelines and the agreement
precluding refund would not stand attracted. In other words, as a result
of the decision of this Court in CPIL (supra), the entire process leading
up to the award of licence for 2G spectrum was held to be vitiated and
the licences were quashed. The TDSAT has accepted this line of
submission of the appellant and held that the UASL condition in regard
E to the non-refundability of the one-time Entry Fee would not per se
stand attracted where the licence was not terminated for a breach but
was quashed by this Court by the exercise of its jurisdiction under Article
32 for the reason that the entire process was found to be vitiated and
manifestly arbitrary. The basis of the claim which has been raised by the
F appellant for refund is not a dispute over the terms which govern the
relationship between the parties following the issuance of a Letter of
Intent but before the grant of an actual licence, or a dispute arising out
of a licence granted between the licensor or a licensee. As a matter of
fact, it is also important to note that the appellant, as will be analyzed in
greater detail later, has placed reliance on the doctrine that an agreement
G which is void cannot be split up and none of the parties to the agreement
can be permitted to seek part-enforcement of a contract through a court
of law. In support of this proposition, reliance has been placed on the
decision of this Court in Tarsem Singh v. Sukhminder Singh28. A

28
H 1998 (3) SCC 471 (“Tarsem Singh”)
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA 367
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]

two-judge Bench of this Court had held that if an agreement is held to be A
void, then none of the terms, “except in certain known exceptions,
specially where the clause is treated to constitute separate and
independent agreement, severable from the main agreement” can be
enforced separately and independently.
31. The reliance on the principle embodied in Tarsem Singh B
(supra) is a clear indicator that the basis of the claim of the refund does
not emanate from the relationship between the appellant and the
respondent as licensor and licensee. The claim for restitution is based
independently on the ground that upon the decision of this Court in CPIL
(supra) holding the licence to be unlawful, the appellant is entitled to
restoration of the benefit which has been obtained by the Union of India C
under an agreement which is held to be void.
32. Apart from what has been stated above, the earlier analysis
of the decision in CPIL (supra)indicates that when the controversy over
the allocation of 2G spectrum and the licences was the subject matter of
adjudication before this Court, the appellant as well as the Union D
government were defending the allocation of the spectrum and the grant
of 2G licences. The appellant was on notice of the fact that the award of
licences in pursuance of the “First Come First Serve” policy was under
challenge and the main relief which was sought in the proceedings under
Article 32 was for the setting aside of the auction and the award of E
damages. It is in this backdrop, that the conduct of the appellant assumes
significance. The appellant did not, in the course of the adjudication before
this Court, put forth the plea for refund of the Entry Fee in the event that
the allocation of the spectrum or the grant of licences were to stand
vitiated.
F
33. This Court has noticed a rising trend of cases where parties
have attempted to take another bite at the cherry by initiating
proceedings over various forums, particularly to circumvent the
jurisdiction of this Court which is in seisin of the matter. A purportedly
ancillary remedy is urged in another forum as a dilatory tactic or as an
attempt at forum shopping. One of us (Dr Justice D Y Chandrachud), G
speaking for a two-judge Bench of this Court in Vedanta Ltd. v. The
Goa Foundation & Ors.29 had disapproved of such tactics. In that
case, the Court dismissed a review petition against the decision in Goa

29
Review Petition (Civil) Diary No. 18447 of 2020 (9 July 2021) H
368 SUPREME COURT REPORTS [2022] 4 S.C.R.

A Foundation v. Sesa Sterlite Limited & Ors.30 which had analysed
a party’s attempt to pursue litigation before the High Court in spite of
a conclusive decision of this Court which had quashed its mining leases
and directed issuances of fresh leases with fresh environmental
clearances in the State of Goa. In T P Moideen Koya v. Government
of Kerala31, a three-judge Bench of this Court disapproved of the
B
practice of vexatious litigation when the effect of a binding judgement
is sought to be diluted or altered in a manner that deviates from the
procedure for modification. The Court noted:
“13. It is well settled that a decision pronounced by a court of
competent jurisdiction is binding between the parties unless it is
C modified or reversed by adopting a procedure prescribed by law.
It is in the interest of the public at large that finality should attach
to the binding decisions pronounced by a court of competent
jurisdiction and it is also in the public interest that individuals should
not be vexed twice over with the same kind of litigation. While
D hearing a petition under Article 32 it is not permissible for this
Court either to exercise a power of review or some kind of an
appellate jurisdiction over a decision rendered in a matter which
has come to this Court by way of a petition under Article 136 of
the Constitution. The view taken in Bhagubhai Dullabhbhai
Bhandari v. District Magistrate [AIR 1956 SC 585 : 1956 SCR
E 533 : 1956 Cri LJ 1126] that the binding nature of the conviction
recorded by the High Court against which a special leave petition
was filed and was dismissed cannot be assailed in proceedings
taken under Article 32 of the Constitution was approved
in Daryao v. State of U.P. [AIR 1961 SC 1457 : (1962) 1 SCR
F 574] (see para 14 of the Report).”
34. The judgment in CPIL (supra) contains a detailed enumeration
of the facts which were brought to the attention of the Court and all the
submissions which were placed on the record by the contesting parties.
The submissions bear expressly on the lack of transparency and the
G effort on the part of the authorities of the Union government to benefit a
select group of persons/entities who were favoured under the “First
Come First Serve” policy. The decision dwelt on the benefits which the
selected entities have received — both in terms of excluding others as
30
(2018) 4 SCC 218
31
H (2004) 8 SCC 106
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA 369
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]

well as in setting down the financial terms for the award of the licence. A
The determination of the Entry Fee was an integral element of the financial
terms governing the award of the licence and was not a stand-alone
feature which could be isolated from the overall process leading up to
the award of licences. Therefore, the submission of the appellant that
the right to appeal for a refund of the Entry Fee would enure after the
B
decision in CPIL (supra) would be a simplistic understanding of the
process and the ultimate decision of this Court. While directing the
cancellation of the licences and ordering a fresh auction, this Court
imposed costs of Rs 5 crores on one set of licensees and Rs 50 lakhs on
another set, after assessing their culpability in wrongly benefitting from
the “wholly arbitrary” and “unconstitutional exercise” of license and C
spectrum allocation. It would be an improper reading of the judgment to
postulate that the decision leaves open a claim for the refund of the
Entry Fee. The payment of the Entry Fee was one element in the overall
financial conspectus which led to the award of licences. The adjudication
before this Court in CPIL (supra) must be construed as a one composite D
whole from which its parts cannot be separated.
35. The appellant has argued that if the TDSAT’s conclusion on
the jurisdiction were to be accepted, it would impinge on the expanse of
its jurisdiction and will exclude certain disputes falling within the ambit
of public law. However, this argument is not a correct reading of the
E
conclusion that TDSAT has arrived at. De hors the decision in CPIL
(supra), the appellant’s dispute over the terms of the license with the
Union of India (licensor) would fall within the jurisdiction of the TDSAT
under Section 14(a)(i), as affirmed by this Court in Tata Teleservices
(supra). The respondent’s argument that the appellant is no longer a
“licensor” after the quashing of the licenses would be a restrictive reading F
of the jurisdiction of the TDSAT in view of the decision in Tata
Teleservices (supra). However, since the policy on the allocation of
spectrum and the licences were quashed on the grounds of mala fides
and arbitrariness in the Union government’s policy, the subsequent enquiry
into viability of the refund of the Entry Fee would have to be agitated G
before the same Court.
36. Such practice has been previously followed by the TDSAT. In
AUSPI (supra), a two-judge Bench of this Court considered the decision
of the TDSAT on the definition of AGR which was upheld by this Court
in the exercise of its appellate jurisdiction under Section 18 of the TRAI
H
370 SUPREME COURT REPORTS [2022] 4 S.C.R.

A Act. This Court was called upon to decide whether a substantially similar
question can be reagitated before the TDSAT after this Court’s dismissal
of the civil appeal against the TDSAT order holding that AGR will include
only revenue arising from licensed activities and not revenue from
activities outside the licence of the licensee. The Court observed that
the TDSAT had jurisdiction, only after specifically noting the order of
B
this Court granting the Union of India specific liberty to allege the issues
before the TDSAT. This Court noted:
“32. The first substantial question of law which we have to decide
is whether after dismissal of Civil Appeal No. 84 of 2007 of the
Union of India by this Court on 19-1-2007 [Union of India v. Assn.
C of Unified Telecom Service Providers of India, Civil Appeal
No. 84 of 2007 decided on 19-1-2007 (SC)] against the order
dated 7-7-2006 of the Tribunal, the Union of India can reagitate
the question decided in the order dated 7-7-2006 that the adjusted
gross revenue will include only revenue arising from licensed
D activities and not revenue from activities outside the licence of
the licensee.
33. For deciding this question, we must first look at the language
of the order dated 19-1-2007 [Union of India v. Assn. of Unified
Telecom Service Providers of India, Civil Appeal No. 84 of 2007
E decided on 19-1-2007 (SC)] of this Court in Civil Appeal No. 84
of 2007. The order dated 19-1-2007 [Union of India v. Assn. of
Unified Telecom Service Providers of India, Civil Appeal No. 84
of 2007 decided on 19-1-2007 (SC)] is quoted hereinbelow:
“Heard the parties. Pursuant to the direction of TDSAT in the
F impugned order, a fresh recommendation has been made by TRAI.
In view thereof, we see no reasons to interfere. The appeal is
dismissed. The appellant is, however, given liberty to urge the
contentions raised in this petition before TDSAT.”
(emphasis supplied)
G It will be clear from the language of the order dated 19-1-2007
[Union of India v. Assn. of Unified Telecom Service Providers of
India, Civil Appeal No. 84 of 2007 decided on 19-1-2007 (SC)]
that while dismissing the appeal, the Court has given liberty to the
appellant, namely, Union of India, to urge the contentions raised in
Civil Appeal No. 84 of 2007.
H
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA 371
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]

34...Thus, as per the express language of the order dated 19-1- A
2007 [Union of India v. Assn. of Unified Telecom Service Providers
of India, Civil Appeal No. 84 of 2007 decided on 19-1-2007 (SC)]
of this Court in Civil Appeal No. 84 of 2007, the Union of India
could raise each of the grounds extracted above before the
Tribunal. Hence, even if we hold that the order dated 7-7-2006 of
B
the Tribunal got merged with the order dated 19-1-2007 [Union of
India v. Assn. of Unified Telecom Service Providers of India,
Civil Appeal No. 84 of 2007 decided on 19-1-2007 (SC)] of this
Court passed in Civil Appeal No. 84 of 2007, by the express liberty
granted by this Court in the order dated 19-1-2007 [Union of India
v. Assn. of Unified Telecom Service Providers of India, Civil C
Appeal No. 84 of 2007 decided on 19-1-2007 (SC)] , the Union of
India could urge before the Tribunal all the contentions covered
under Grounds 1 to 6 extracted above including the contention
that the definition of adjusted gross revenue as given in the licence
could not be challenged by the licensees before the Tribunal and D
will include all items of revenue mentioned in the definition of
adjusted gross revenue in the licence.”
37. Apart from the above, it must be noted that the appellant made
no effort to urge during the course of the submissions before the Court
in CPIL (supra) that they should be allowed a refund of Entry Fee in the
E
event that the Court were to quash the process and the award of licences.
Significantly, the appellant did not seek the permission of this Court at
that stage to reserve their liberties of agitating a claim for refund of
Entry Fee in separate proceedings. Besides having such a course of
action open to them before the judgment was delivered, the appellants
had their remedies open in law even after the decision by seeking liberty F
of adopting independent proceedings for agitating the refund of the Entry
Fee. Not having done this at any stage in, or in connection with, the
proceedings relating to the decision in CPIL (supra), the appellant cannot
be permitted to do so subsequently.
38. Attempting to get over this hurdle, the appellant urged before G
this Court that what could have been agitated in the course of the
proceedings leading up to the decision in CPIL (supra)can well be agitated
in the present proceedings since the coram in both cases would be the
Supreme Court and the appellant is now in appeal before this Court
against the decision of the TDSAT. Such a course of action would not
H
372 SUPREME COURT REPORTS [2022] 4 S.C.R.

A plainly be open to the appellant since the jurisdiction which has been
invoked presently in the civil appeal is the appellate jurisdiction arising
out of the decision of the TDSAT to reject the claim for refund of the
Entry Fee. The conduct of the appellant indicates that on 13 May 2016,
the appellant sought to withdraw the appeals against the order of the
TDSAT. The Court had recorded – “the appellant prays for liberty to
B
withdraw the present appeals and instead approach this Court once
again if it becomes so necessary”. The appellant ought to have obtained
specific liberty of the Court on 13 May 2016 of pursuing proceedings
before the TDSAT, something which is conspicuous by its absence in
the order which was passed by this Court. Yet, the appellant chose to
C move the TDSAT by filing the Second Telecom Petition. The TDSAT
noted that the petition was a “second attempt” by the Appellant “for
claiming the same relief” which had been sought under the impugned
order of the TDSAT. Thus, when the appellant failed in seeking relief on
11 December 2018, it filed an appeal against the order of TDSAT and
then moved this Court for restoration of the first set of appeals which
D was allowed on 7 January 2020. The course of action which has been
adopted by the appellant is anything but fair — withdrawing the civil
appeals which were instituted against the first order of the TDSAT without
obtaining specific liberty or permission to move the TDSAT, instituting a
second round of litigation before the TDSAT, and then obtaining a revival
E of the first set of civil appeals. A party must not be allowed to conduct
litigation in this manner. Such a course of action is subject to grave
abuse since it lays bare an effort at forum-shopping and selectively
deciding where and before whom it would pursue its remedies. It is in
this backdrop, that the failure of the appellant to be fair with the Court
when it addressed its submissions in the judicial process leading up to
F the decision in CPIL (supra) must be assessed. For the above reasons
we are of the view that the TDSAT has correctly come to the conclusion
that the claim by the appellant for refund of the Entry Fee could not
have been entertained.
F The claim founded on frustration and restitution
G 39. In this section of the judgment, we will analyse the claim of
the appellant that it is entitled to claim a refund of the Entry Fee on an
application of the doctrine of frustration and the principle of restitution.
The appellant has placed reliance on the provisions of Sections 56 and
65 of the Contract Act. The basic postulate of the appellant is that when
H a licence is granted under the proviso to Section (4)(1) of the Telegraph
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA 373
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]

Act, the licence is in the nature of a contract between the government A
and licensee, thus bringing it within the ambit of the Indian Contract Act.
40. In AUSPI (supra), a two-judge Bench of this Court has held:
“39. The proviso to sub-section (1) of Section 4 of the Telegraph
Act, however, enables the Central Government to part with this
exclusive privilege in favour of any other person by granting a B
licence in his favour on such conditions and in consideration of
such payments as it thinks fit. As the Central Government owns
the exclusive privilege of carrying on telecommunication activities
and as the Central Government alone has the right to part with
this privilege in favour of any person by granting a licence in his
C
favour on such conditions and in consideration of such terms as it
thinks fit, a licence granted under the proviso to sub-section (1) of
Section 4 of the Telegraph Act is in the nature of a contract
between the Central Government and the licensee.”
The principle which has been elucidated in the above extract is
that when the Union government parts with the exclusive privilege which D
is conferred upon it by Section 4(1) of the Telegraph Act by granting a
licence, the licence is in the nature of contract between the Union
government and the licensee.
41. It is on the above premise that the appellant seeks to invoke
the application of the doctrine of frustration of contract and of restoration. E
Section 56 of the Indian Contract Act provides as follows:
“56. Agreement to do impossible act.— An agreement to do
an act impossible in itself is void.
Contract to do act afterwards becoming impossible or
unlawful.—A contract to do an act which, after the contract is F
made, becomes impossible, or, by reason of some event which
the promisor could not prevent, unlawful, becomes void when the
act becomes impossible or unlawful.
Compensation for loss through non-performance of act
known to be impossible or unlawful.—Where one person has G
promised to do something which he knew, or, with reasonable
diligence, might have known, and which the promisee did not know,
to be impossible or unlawful, such promisor must make
compensation to such promisee for any loss which such promisee
sustains through the non-performance of the promise.”
H
374 SUPREME COURT REPORTS [2022] 4 S.C.R.

A 42. The doctrine of frustration is elucidated in the three-judge
Bench decision of this Court in Satyabrata Ghose v. Mugneeram
Bangur & Co32. Justice BK Mukherjee, while explaining the doctrine
of frustration, observed:
“10. Although various theories have been propounded by the Judges
B and jurists in England regarding the juridical basis of the doctrine
of frustration, yet the essential idea upon which the doctrine is
based is that of impossibility of performance of the contract; in
fact impossibility and frustration are often used as interchangeable
expressions. The changed circumstances, it is said, make the
performance of the contract impossible and the parties are absolved
C
from the further performance of the contract impossible and the
parties are absolved from the further performance of it as they
did not promise to perform an impossibility…We hold, therefore,
that the doctrine of frustration is really an aspect or part of the
law of discharge of contract by reason of supervening impossibility
D or illegality of the act agreed to be done and hence comes within
the purview of Section 56 of the Indian Contract Act. It would be
incorrect to say that Section 56 of the Contract Act applies only
to cases of physical impossibility and that where this section is not
applicable, recourse can be had to the principles of English law on
the subject of frustration…”
E
Thus, it was held that the applicability of Section 56 of the Indian
Contract Act is not limited to cases of physical impossibility. The Court
also noted that in deciding cases in India, the only test which must apply
“is that of supervening impossibility or illegality of the act agreed
to be contractually done”. Thus, the Court enunciated the doctrine
F
underlying Section 56 by construing the word “impossible” in its practical
sense, not just in its literal sense. Similarly, Section 2033 of the Indian
Contract Act envisages a situation where an agreement is void when
both parties are under a mistake as to a matter of fact.

G
32
1954 SCR 310
33
“20. Agreement void where both parties are under mistake as to matter of
fact.—Where both the parties to an agreement are under a mistake as to a matter of fact
essential to the agreement, the agreement is void.
Explanation.—An erroneous opinion as to the value of the thing which forms the
H subject-matter of the agreement, is not to be deemed a mistake as to a matter of fact.”
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA 375
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]

43. In Tarsem Singh (supra), this Court was confronted with a A
contract being void under Section 20 of the Indian Contract Act as the
parties were under a mistake of fact regarding the metric for assessing
the area of land that was the subject of the contract. This Court, while
interpreting the expression “discovered to be void”, held that these words
comprehend a situation in which parties were suffering from a mistake
B
of fact from the very beginning but had not realized at the time of entering
into the agreement or signing of the documents that they were suffering
from any such mistake and had therefore acted bona fide while entering
into such agreements. The agreement, as the Court held, in that case
was void from its inception and was discovered to be so at a much later
date. C
44. The appellant, besides placing reliance on Tarsem Singh
(supra), has urged that all judicial decisions are retrospective (unless in a
particular case this Court makes its judgment prospective) and hence,
the voidness which attaches to its UASLs would relate back to their
very inception. It is on this basis that the appellant stakes its claim for a D
refund of the Entry Fee based on the principle of restitution.
45. Section 65 of the Indian Contract Act recognizes the principle
of restitution, particularly when a contract is discovered to be or becomes
void. It stipulates thus:
“65. Obligation of person who has received advantage under E
void agreement, or contract that becomes void.—When an
agreement is discovered to be void, or when a contract becomes
void, any person who has received any advantage under such
agreement or contract is bound to restore it, or to make
compensation for it, to the person from whom he received it.” F
46. In Pollock & Mulla’s seminal treatise on the Indian Contract
34
Act , it has been noted that Section 65 does not operate in derogation of
the maxim in pari delicto potior est conditio possidentis:
“Section 65 is not in derogation of the common law maxims ex
dolo malo non oritur actio and in pari delicto potior est G
conditio possidentis; and only those cases as are not covered by
these maxims can attract application of the provision of section

34
R Yashod Vardhan and Chitra Narayan, Pollock & Mulla The Indian Contract and
Specific Relief Acts Volume I (16th edition, LexisNexis) H
376 SUPREME COURT REPORTS [2022] 4 S.C.R.

A 65 on the footing that when an agreement in its inception was not
void and it was not hit by the maxims but is discovered to be void
subsequently, right to restitution of the advantage received under
such agreement is secured on equitable consideration. The section
has been held not to apply where both parties knew of the illegality
at the time the agreement was made, and were in pari delicto.”
B
Thus, the application of Section 65 has to be limited to those cases
were the party claiming restitution itself was not in pari delicto.
47. In The Principles of Law of Restitution35, it has been noted
that all claims for restitution are subject to a defence of illegality. The
C genesis of this defence is in the legal maxim ex turpi causa non oritur
actio (no action can arise from a bad cause). A court will not assist
those who aim to perpetuate illegality. This rule was initially recognized
by the House of Lords in its decision in Holman v. Johnson36. Lord
Mansfield held:
D “The objection, that a contract is immoral or illegal as between
the plaintiff and defendant, sounds at all times very ill in the mouth
of the defendant. It is not for his sake, however, that the objection
is ever allowed; but it is founded in general principles of policy,
which the defendant has the advantage of, contrary to the real
E justice, as between him and the plaintiff, by accident, if I may so.
The principle of public policy is this; ex dolo malo non oritur
actio. No Court will lend its aid to a man who founds his
cause of action upon an immoral or illegal act. If, from the
plaintiff ’s own stating or otherwise, the cause of action
appears to arise ex turpi causa, or the transgression of a
F
positive law of this country, there the Court says he has no
right to be assisted.”
(emphasis supplied)
The Principles of Law of Restitution subsequently notes that in
G pari delicto potior est conditio possidentis is a way of qualifying the
ex turpi causa defence37:

35
Graham Virgo, The Principles of the Law of Restitution (3rd edition, OUP) pg 710
36
(1775) 1 Cowp 341, 343; 98 ER 1120, 1121
37
H Supra at 35, pg 711
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA 377
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]

“This in pari delicto principle enables the court to analyse the A
particular circumstances of the case to determine whether the
claimant is less responsible for the illegality than the defendant,
for then, as between the claimant and the defendant, the just result
is that the claimant should not be denied relief, since the parties
are not in pari delicto. But where the claimant is more
B
responsible for the illegality or the parties are considered
to be equally responsible, the in pari delicto principle applies
and restitution will be denied.”
(emphasis supplied)
Thus, when the party claiming restitution is equally or more
responsible for the illegality of a contract, they are considered in pari C
delicto.
48. In the decision of the UK Supreme Court in Patel v. Mirza38,
Lord Sumption JSC has succinctly explained the nature of the inquiry to
determine whether a party is in pari delicto:
D
“241 To the principle that a person may not rely on his own illegal
act in support of his claim, there are significant exceptions, which
are as old as the principle itself and generally inherent in it. These
are broadly summed up in the proposition that the illegality
principle is available only where the parties were in pari
delicto in relation to the illegal act. This principle must not E
be misunderstood. It does not authorise a general inquiry
into their relative blameworthiness. The question is
whether they were legally on the same footing. The case
law discloses two main categories of case where the law regards
the parties as not being in pari delicto, but both are based on the
same principle. F

242 One comprises cases in which the claimant’s participation in
the illegal act is treated as involuntary: for example, it may have
been brought about by fraud, undue influence or duress on the
part of the defendant who seeks to invoke the defence…
G
243 The other category comprises cases in which the application
of the illegality principle would be inconsistent with the rule of law
which makes the act illegal. The paradigm case is a rule of law
intended to protect persons such as the plaintiff against exploitation

38
[2016] 3 WLR 399 H
378 SUPREME COURT REPORTS [2022] 4 S.C.R.

A by the likes of the defendant. Such a rule will commonly require
the plaintiff to have a remedy notwithstanding that he participated
in its breach…”
(emphasis supplied)
Thus, in determining a claim of restitution, the claiming party’s
B legal footing in relation to the illegal act (and in comparison to the
defendant) must be understood. Unless the party claiming restitution
participated in the illegal act involuntarily or the rule of law offers them
protection against the defendant, they would be held to be in pari delicto
and therefore, their claim for restitution will fail.

C 49. The position is in India is similar to that of the case of Kuju
Collieries Ltd. v. Jharkhand Mines Ltd.39, where a Bench of three
learned judges of this Court relied on a judgment of a five-judge bench
of the then Hyderabad High Court. While construing the provisions of
Section 65, this Court held:
“8. A Full Bench of five Judges of the Hyderabad High Court in
D
Budhulal v. Deccan Banking Company [AIR 1955 Hyd 69 (FB) :
ILR 1955 Hyd 101] speaking through our brother, Jaganmohan
Reddy, J. as he then was, referred with approval to these
observations of the Privy Council. They then went on to refer to
the observations of Pollock and Mulla in their treatise on
E Indian Contract and Specific Relief Acts, 7th Edn. to the effect
that Section 65, Indian Contract Act does not apply to
agreements which are void under Section 24 by reason of an
unlawful consideration or object and there being no other
provision in the Act under which money paid for an unlawful
purpose may be recovered back, an analogy of English Law
F will be the best guide. They then referred to the reasoning
of the learned authors that if the view of the Privy Council is
right namely that “agreements discovered to be void” apply
to all agreements which are ab initio void including
agreements based on unlawful consideration, it follows that
G the person who has paid money or transferred property to
another for an illegal purpose can recover it back from the
transferee under this section even if the illegal purpose is
carried into execution and both the transferor and transferee
are in pari delicto. The Bench then proceeded to observe:
39
H (1974) 2 SCC 533
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA 379
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]

“In our opinion, the view of the learned authors is neither supported A
by any of the subsequent Privy Council decisions nor is it consistent
with the natural meaning to be given to the provisions of Section
65. The section by using the words “when an agreement is
discovered to be void” means nothing more nor less than: when
the plaintiff comes to know or finds out that the agreement is
B
void. The word “discovery” would imply the pre-existence of
something which is subsequently found out and it may be observed
that Section 66, Hyderabad Contract Act makes the knowledge
(Ilm) of the agreement being void as one of the pre-requisites for
restitution and is used in the sense of an agreement being
discovered to be void. If knowledge is an essential requisite even C
an agreement ab initio void can be discovered to be void
subsequently. There may be cases where parties enter into an
agreement honestly thinking that it is a perfectly legal agreement
and where one of them sues the other or wants the other to act on
it, it is then that he may discover it to be void. There is nothing
D
specific in Section 65, Indian Contract Act or its corresponding
section of the Hyderabad Contract Act to make it inapplicable to
such cases.
A person who, however, gives money for an unlawful purpose
knowing it to be so, or in such circumstances that knowledge
of illegality or unlawfulness can as a finding of fact be imputed E
to him, the agreement under which the payment is made
cannot on his part be said to be discovered to be void. The
criticism that if the aforesaid view is right then a person
who has paid money or transferred property to another for
illegal purpose can recover it back from the transferee F
under this section even if the illegal purpose is carried into
execution, notwithstanding the fact that both the transferor
and transferee are in pari delicto, in our view, overlooks
the fact that the courts do not assist a person who comes
with unclean hands. In such cases, the defendant possesses
an advantage over the plaintiff — in pari delicto potior est G
conditio defendentio.
Section 84, Indian Trust Act, however, has made an exception in
a case — where the owner of property transfers it to another for
illegal purpose and such purpose is not carried into execution or
the transferor is not as guilty as the transferee or the effect of H
380 SUPREME COURT REPORTS [2022] 4 S.C.R.

A permitting the transferee to retain the property might be to defeat
the provisions of any law the transferee must hold the property
for the benefit of the transferor.
This specific provision made by the legislature cannot be taken
advantage of in derogation of the principle that Section 65, Contract
B Act, is inapplicable where the object of the agreement was illegal
to the knowledge of both the parties at the time it was made. In
such a case the agreement would be void ab initio and there would
be no room for the subsequent discovery of that fact.”
We consider that this criticism as well as the view taken by
the Bench is justified. It has rightly pointed out that if both
C
the transferor and transferee are in pari delicto the courts
do not assist them.”
(emphasis supplied)
While upholding the view of the Hyderabad High Court, this Court
held “it [the Full Bench of the Hyderabad High Court] has rightly
D
pointed out that if both the transferor and transferee are in pari
delicto the courts do not assist them”.
50. In an earlier decision of this Court in Inmani Appa Rao v.
Gollapalli Ramalingamurthi40, a three-judge Bench held that where
both the parties before the Court are confederates in the fraud, the Court
E must lean in favour of the approach which would be less injurious to
public interest. Justice P B Gajendragadkar (as he then was), speaking
for the Court, held:
“12. Reported decisions bearing on this question show that
consideration of this problem often gives rise to what may be
F described as a battle of legal maxims. The appellants emphasised
that the doctrine which is pre-eminently applicable to the present
case is ex dolo malo non oritur actio or ex turpi causa non oritur
actio. In other words, they contended that the right of action
cannot arise out of fraud or out of transgression of law; and
according to them it is necessary in such a case that possession
G
should rest where it lies in pari delicto potior est conditio possidentis;
where each party is equally in fraud the law favours him who is
actually in possession, or where both parties are equally guilty the
estate will lie where it falls. On the other hand, Respondent 1

40
H (1962) 3 SCR 739 (“Inmani Appa Rao”)
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA 381
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]

argues that the proper maxim to apply is nemo allegans suam A
turpitudinum audiendum est, whoever has first to plead
turpitudinum should fail; that party fails who first has to allege
fraud in which he participated. In other words, the principle invoked
by Respondent 1 is that a man cannot plead his own fraud. In
deciding the question as to which maxim should govern the present
B
case it is necessary to recall what Lord Wright, M.R. observed
about these maxims in Berg v. Sadler and Moore [(1937) 2 KB
158 at p. 62] . Referring to the maxim ex turpi causa non oritur
actio Lord Wright observed that “this maxim, though veiled in the
dignity of learned language, is a statement of a principle of great
importance; but like most maxims it is much too vague and much C
too general to admit of application without a careful consideration
of the circumstances and of the various definite rules which have
been laid down by the authorities”. Therefore, in deciding the
question raised in the present appeal it would be necessary for us
to consider carefully the true scope and effect of the maxims
D
pressed into service by the rival parties, and to enquire which of
the maxims would be relevant and applicable in the circumstances
of the case. It is common ground that the approach of the
Court in determining the present dispute must be
conditioned solely by considerations of public policy. Which
principle would be more conducive to, and more consistent E
with, public interest, that is the crux of the matter. To put it
differently, having regard to the fact that both the parties
before the Court are confederates in the fraud, which
approach would be less injurious to public interest.
Whichever approach is adopted one party would succeed
F
and the other would fail, and so it is necessary to enquire
as to which party’s success would be less injurious to public
interest.”
(emphasis supplied)
51. The principle which was enunciated in the judgment in Inmani G
Appa Rao (supra) has been more recently applied in a decision of a
three-judge Bench of this Court in Narayanamma v. Govindappa41.
The Court held:

41
2019 (19) SCC 42 H
382 SUPREME COURT REPORTS [2022] 4 S.C.R.

A “28. Now, let us apply the other test laid down in Immani Appa
Rao [Immani Appa Rao v. Gollapalli Ramalingamurthi, (1962)
3 SCR 739 : AIR 1962 SC 370] . At the cost of repetition, both the
parties are common participator in the illegality. In such a situation,
the balance of justice would tilt in whose favour is the question.
As held in Immani Appa Rao [Immani Appa Rao v. Gollapalli
B
Ramalingamurthi, (1962) 3 SCR 739 : AIR 1962 SC 370] , if the
decree is granted in favour of the plaintiff on the basis of an illegal
agreement which is hit by a statute, it will be rendering an active
assistance of the court in enforcing an agreement which is contrary
to law. As against this, if the balance is tilted towards the
C defendants, no doubt that they would stand benefited even in spite
of their predecessor-in-title committing an illegality. However, what
the court would be doing is only rendering an assistance which is
purely of a passive character. As held by Gajendragadkar, J.
in Immani Appa Rao [Immani Appa Rao v. Gollapalli
Ramalingamurthi, (1962) 3 SCR 739 : AIR 1962 SC 370] , the
D
first course would be clearly and patently inconsistent with the
public interest whereas, the latter course is lesser injurious to public
interest than the former.”
52. Hence, in adjudicating a claim of restitution under Section 65
of the Indian Contract Act, the court must determine the illegality which
E caused the contract to become void and the role the party claiming
restitution has played in it. If the party claiming restitution was equally or
more responsible for the illegality (in comparison to the defendant), there
shall be no cause for restitution. This has to be determined on the facts
of each individual case.
F 53. The appellant before us has relied upon the decision of TDSAT
in S Tel Pvt. Ltd. v. Union of India42 to establish that the blame for
quashing of the UASLs lies with the Union government alone. The issue
which came up for decision before the TDSAT in that case was whether
the petitioner was entitled to the refund of the money which it paid for
allocation of 3G spectrum under licences which were later quashed by
G the judgment of this Court. In that case, the petitioner had applied for
UASLs in six circles/service areas on 7 July 2007. The Government
issued a press note on 24 September 2007 prescribing a cut-off date of
10 October 2007 for submissions of applications for a fresh UASL. On

H 42
2015 SCC OnLine TDSAT 1 (“S Tel“)
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA 383
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]

28 September 2007, the petitioner applied for UASLs in sixteen circles A
in addition to its earlier application for six circles. On 10 January 2008,
by another press note, the deadline for fresh licences was retrospectively
advanced to 25 September 2007. On the same day, the government
granted licences to 122 applicants, including the petitioner’s previous
application for six circles, whose applications had been received prior to
B
25 September 2007. Against the denial of licences for sixteen circles on
the ground that the application was made beyond the cut-off date, the
petitioner moved the Delhi High Court challenging the action of the
government in retrospectively advancing the last date for submission of
applications as arbitrary. The High Court held that the decision to fix the
cut off-date for making applications, with a view to limit the number of C
service providers was contrary to the decision of the TRAI which the
government had purported to accept. The government was accordingly
directed to consider the petitioner’s application which was submitted on
28 September 2007. The Division Bench having dismissed an intra court
appeal, led to proceedings before this Court. The Attorney General stated
D
that the application submitted by the petitioner was not rejected but was
held in abeyance and it would be considered on a first-come-first-serve
basis in terms of the then prevailing policy in consultation with the TRAI.
This Court disposed of the appeal while sustaining the findings recorded
by the Delhi High Court in regard to the change in the cut-off dates. For
the purpose of the present discussion, it would not be necessary to advert E
to the detailed analysis in the above case, save and except to note that
the petitioner moved the TDSAT claiming a refund of the amount which
it had paid for the 3G spectrum in three service areas. Significantly in
that case, the TDSAT observed:
“In course of hearing of the case we repeatedly asked Mr. Banerjee F
what blame, if any, for the quashing of its licences extends to the
petitioner. Mr. Banerjee was unable to show anything from the
Supreme Court judgment in Centre for Public Interest
Litigation or from the Government records that might show that
the petitioner was in any way responsible for the quashing of its
licences. G
It is thus clear that though the petitioner’s UAS licences were
declared illegal and quashed, that was not due to any fault by the
petitioner but on account of the illegalities committed by the
Government in the issuance of those one hundred and twenty two
(122) licences. While discussing the provisions of clauses 3.6 and H
384 SUPREME COURT REPORTS [2022] 4 S.C.R.

A 3.7 of the NIA it is noted above that those clauses deal with a
situation where the licence is cancelled/terminated at the instance
of the licensor for some fault on the part of the licensee. The
quashing of the petitioner’s licences in the present case thus clearly
does not fall under the two clauses in the NIA. Further, as a result
of the quashing of the petitioner’s licences its contract with the
B
Government relating to 3G spectrum got discharged on account
of frustration, as provided under section 56 of the Contract Act,
leaving it open to the petitioner to seek the relief of restitution in
terms of section 65 of the Contract Act.”
The decision of the TDSAT to allow a refund is thus clearly
C postulated on the principle that the petitioner was not at fault, but the
UASLs were quashed because of the illegalities committed by the
government. Therefore, there is a clear distinction between the facts as
they emerged before the TDSAT in S Tel (supra) and the facts of the
present case.
D 54. In the present case, the appellant has been held to be inpari
delicto. The decision of this Court in CPIL (supra) leaves no manner of
doubt that the appellant was among the group of licensees who were
found to be complicit in obtaining benefits under the “First Come First
Serve” policy of the Union government at the cost of the public exchequer.
In such a situation and following the well-settled principles which have
E been enunciated above, the appellant could not be held entitled to claim
a refund of its Entry Fee.
55. On behalf of the appellant, it is sought to be urged that in the
auction which followed the decision in CPIL (supra), the Union
government granted fresh licences including for the areas which were
F governed by the licences in favour of the appellant at a much higher
value. This argument is completely unacceptable for the simple reason
that if the Union government had held a transparent and objective process
of conducting an auction when the initial licences were granted in favour
of the appellant, a much higher value would have been realized by the
public exchequer. The appellant has been the beneficiary of a manifestly
G
arbitrary policy which was adopted by the Union government and which
was quashed in the decision of this Court in CPIL (supra). That being
the position, the appellant would not be entitled to a refund of the Entry
Fee even on the principle of restitution embodied in Section 65 of the
Indian Contract Act.
H
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA 385
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]

G The policy of set off A
56. According to the appellant, the set off which was granted by
the Union government in pursuance of the decision of the EGoM on 31
October 2012, constitutes an admission of liability. In this backdrop, it
has been submitted that the policy which was adopted by the Union
government by allowing a set off to licensees whose licences have been B
quashed subject to their participating in and being found successful in
the fresh auction, suffers from manifest arbitrariness.
57. By the judgment of this Court in the CPIL (supra), the licensees
whose licences had been quashed were not barred from participating in
the subsequent auction for the grant of fresh licences. On 12 October
2012, the Ministry of Communications and Information Technology issued C
a document titled “Queries and Responses to the NIA for competitive
bids for allocation of spectrum issued by the DoT”. Among the queries,
which were in the nature of Frequently Asked Questions, Query Numbers
74 and 75 and the response were in the following terms:
D

E

F

G

H
386 SUPREME COURT REPORTS [2022] 4 S.C.R.

A

B

(emphasis supplied)
C 58. On 31 October 2012, the Cabinet Secretariat of the Union
government circulated the Minutes of the Meeting of the EGoM held on
18 October 2012. The Minutes contain the rationale for the adoption of
a policy of set off in the following terms:
“13. The EGoM considered the letter dated 12.10.2012 from the
D Minister of Information & Broadcasting regarding set-off of entry
fee against earnest money and payment due in the event of
spectrum being won and noted that the entry fee paid by TSPs
whose licenses were quashed was for a period of 20 years. While
on the one hand, the TSPs could be expected to have paid a pro-
E rata amount for the period of operation of the license, i.e. 2008-
2012, on the other hand, there could be a claim for refund with
interest for the pro-rata amount for the balance period. Therefore,
the EGoM decided to allow such TSPs to adjust an amount
equivalent to their full entry fee, without any interest, against the
auction payments, both for participation and for final payment on
F successful conclusion. It was clarified that the set-off would be
permitted only to the quashed license holders participating in the
auction. Such set off would be allowed to the extent of total entry
fee paid for all quashed licenses on an aggregate basis without
consideration of the expired period of license, only if they succeed
G in the auction. The set off will be permitted against the Earnest
Money Bank Guarantee amount initially and later against the
amount payable for auction price, irrespective of the number of
Local Service Areas (LSAs) in which the holder of quashed license
is successful in the auction and without requiring correlation
between LSAs in which licenses were held earlier and the LSAs
H in which the holder of the quashed licenses is successful.”
LOOP TELECOM AND TRADING LIMITED v. UNION OF INDIA 387
AND ANR. [DR. DHANANJAYA Y CHANDRACHUD, J.]

The Union government has submitted before this Court that the A
set off policy was formulated in order to encourage participation of all
telecom operators in the subsequent auction, increasing the possibility of
higher price discovery to the benefit of the public exchequer. It has been
urged that the set off policy was aimed at the revival of the telecom
industry in a manner which encouraged uninterrupted supply of services.
B
The policy sought to increase participation at a subsequent auction by
offering a concession in the form of a set off of the previously paid
Entry Fee, in case the bidder had emerged successful in the fresh auction.
The appellant did not challenge the policy per se at that stage, nor
did it attempt to enter into the fray at that stage when a fresh auction
C
was held. In these circumstances, the policy decision adopted by the
Union government cannot be allowed to be questioned at the behest of
the appellant who sought a refund simpliciter in proceedings before the
TDSAT. As held by a Constitution Bench in R K Garg v. Union of
India43, a greater free play in the joints must be accorded to decisions of
economic policy where the legislature or the executive is called upon to D
make complex choices which cannot always conform to a straitjacket
or doctrinaire solution.
59. For the above reasons, we do not find any reason to entertain
the challenge to the set off policy at this stage at the behest of the
appellant. E
H Conclusion
60. For the above reasons, we have come to the conclusion that
the appellant was inpari delicto with DoT and the then officials of the
Union government. The appellant was the beneficiary of the “First Come
First Serve” policy which was intended to favour a group of private F
bidding entities at the cost of the public exchequer. The contention of the
appellant that it was exculpated from any wrong doing by the judgment
of this Court in CPIL (supra) is patently erroneous. The process leading
up to the award of the UASLs and the allocation of the 2G spectrum
was found to be arbitrary and constitutionally infirm. The need for an G
open and transparent bidding process for the allocation of natural resources
was substituted by a process which was designed to confer unlawful
benefits on a group of selected bidders by which the appellant benefitted.

43
(1981) 4 SCC 675 H
388 SUPREME COURT REPORTS [2022] 4 S.C.R.

A The appellant has tried to obviate these findings by relying on its acquittal
by the Special Judge, CBI. It is important to note that the criminal trial
before the Special Judge, CBI was limited to the question as to whether
the promoters of the appellant had cheated the DoT by providing a false
representation of its compliance with Clause 8 of the UASL Guidelines,
since it was allegedly being controlled by the Essar group. The Special
B
Judge, CBI acquitted the promoters of the appellant since the prosecution
was unable to prove that: (i) officers of DoT considered the representation
of the appellant to be false; (ii) the appellant was engaging in a sham
transaction; or (iii) the appellant was actually controlled by the Essar
group. Hence, the acquittal of the promoters of the appellant of these
C criminal charges does not efface or obliterate the findings which are
contained in the final judgment of this Court in CPIL (supra). Hence, as
a beneficiary and confederate of fraud, the appellant cannot be lent the
assistance of this Court for obtaining the refund of the Entry Fee. In any
event, such a course of action before the TDSAT was clearly in the
teeth of the judgment of this Court in CPIL (supra).
D
61. For the above reasons, we have come to the conclusion that
there is no merit in the appeals. The appeals are accordingly dismissed.
62. Pending application(s), if any, stand disposed of.

E Devika Gujral Appeals dismissed.
(Assisted by : Mahendra Yadav, LCRA)

F

G

H