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Correspondence Address; 8-5/51 , Paschim Vihar, New Delhl-110 063; e-mail: telecomwatchdo '
The Director Date: July. 25, 2011
Central Bureau of Investigation
Scope Complex
Lodhi Road
New Delhi-II 0003
Kind attn: Mr AP Singh
Complaint against Mr Kapil Sibal, MoC&IT for causing loss to the exchequer
Sir
1. Telecom Watchdog is one of the petitioners in the 2G-spectrum case pending in the
Supreme Court where the Hon' ble Court is monitoring the investigations being carried out by
the CBI, ED and DGIT. The following matter against Mr Kapil Sibal, MoC&IT was raised in
the proceedings of the said case by way of an additional affidavit. But the Hon 'ble court
orally observed that this matter is not related to the 2G-spectrum allocation and therefore
petitioners should avail other legal remedies to get the matter investigated. The Hon'ble court
did not pass any order on that additional affidavit during the hearing on 11.07.2011. Hence,
we are filing this complaint with you.
2. We wish to bring to your kind notice the fact that Mr Sibal , by his noting dated
February 18, 2011, has waived off a penalty on Reliance Group by overruling the officers of
the Department of Telecommunications (DoT). The minister has instead decided to levy a
penalty, which is very nominal. This he did by cleverly converting a "serious willful violation
of license conditions" to a normal violation of "disruption in service". This way the minister
has deliberately favoured Reliance Communication Ltd (RCL) and Reliance Telecom Ltd
(RTL). This decision has not only caused a substantial loss to the government but also set a
wrong precedent that a private company can stop essential services like telecom at its own
will, unilaterally and without any prior notice. As such, this action is also against the national
security, telecom being essential telecommunication services. This act of Mr Sibal, of
supporting a private company for its wrong doing, is unpardonable as the USO Fund services
were meant for only those rural and remote areas where fixed wireless or mobile services
were not being provided by any operator. The detail of the case is as follows:
3. RCL and RTL have been providing telecom services across the country under
Universal Access Service (UAS) licenses granted to them by the DoT. While continuing with
these UAS licenses, the DoT's another arm - Universal Service Obligation (USO) Fund
Administrator - executed another agreement with RCL & RTL for providing telecom
services in the rural & remote areas where the fixed/wireless telephone services had not
reached. Both, UASL and USOF agreements had different level of penalties for delays in the
rollout. However, only UASL had prescribed Rs SO crore (per Service Area) penalty for
serious violations of the license agreements. This penalty of Rs 50 crore was also applicable
to services provided under USOF agreement since the termination/suspension of services was
prohibited. In this regard, the relevant clauses of these license/agreements are reproduced
herein below:
Clause 8.1 Section-VI (Operating Conditions) of USOF Agreement
"The terms and conditions as to prohibition of certain activities of the BSO or CMTS
or UASL agreement, as the case may be, shall be binding mutatis mutandis. "
Clause 12.3 Section-III (General Conditions) of USOF Agreement
Notwithstanding any dispute or claim of the pendency of any arbitration or other
proceedings, the USP shall continue to provide the service for the whole duration of
the Agreement.
Clause of 30.3 of the UAS license
"The Licensee shall ensure continuity of services to its customers unless License is
Terminated or Suspended by the Licensor for any reason whatsoever. "
Clause 10.2 (i) of UAS license
"The Licensor may, without prejudice to any other remedy available for the breach of
any conditions of License, by a written notice of 60 Calendar days from the date of
issue ofsuch notice to the Licensee at its registered office, terminate this License under
any ofthe following circumstances:
If the licensee:
a) fails to perform any obligation(s) under the License including timely payments of
fee and other charges due to the Licensor,'
Clause 10.2 (ii) of UAS license (Part-I General Conditions)
"The Licensor may also impose a financial penalty not exceeding Rs 50 crores for
violation of terms and conditions of licence agreement. This penalty is exclusive of
Liquidated Damages as prescribed under clause 35 ofthis Licence Agreement. "
4. Hence, it is clear that violation (especially deliberate and unilateral serious violations)
of the license agreement by a licensee gives a right to the government to either cancel the
license or impose penalty of Rs 50 crores per circle or both. Only in case where the
government moves to cancel the license, a notice of 60 days has to be given. Since RCL &
RTL discontinued (switched off / closed) the service at various places in rural India
unilaterally, without notice to either the Government or to the subscribers, it was a serious
violation. These places were spread across 13 telecom circles across India, hence Reliance
had violated its 13 license agreements (since there is a separate license agreement for each
circle), and all its 13 licenses were liable for termination and a maximum penalty of Rs 650
crores could and should have been imposed. However, Mr Sibal, for unknown reason, saved
RCL & RTL from this penalty as detailed in the subsequent paragraphs.
5. On December 7, 2010, Reliance wrote a letter stating that it had switched off its
services effective from November 22, 2010. Hence Reliance had simply shut down its
services unilaterally and without any notice. This is a serious violation of license agreement.
6. The USOF cell of the DoT had proposed a penalty against RCL & RTL for "violation
of the terms and conditions of Universal Service Obligation Fund (USOF) agreement and
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UASL agreement by voluntary, unilateral and unauthorized switching-off / closure of
services to subscribers from USOF sites without any notice." A show-cause notice of 15 days
was issued to Reliance which stated that Reliance was in clear violation of the UASL
agreement. USOF cell issued a notice for a penalty of only Rs 50 crore. A copy of the show
cause notice along with its true typed copy is annexed as Annexure A.
7. Reliance neither restored the service nor did it reply to the show-cause notice. It vide
its letter dated January 5, 2011 asked for 6 weeks more time to reply. USOF Administrator
replied that Reliance's request for more time could only be considered if it first restored the
services. Reliance again wrote a letter on January 11 , 2011 requesting for 6 weeks more time
to reply to show-cause notice. It however did not make its intention known whether it intends
to restore services or not. On January 12, 2011 USOF administrator again asked Reliance to
make its stand clear on restoration. Reliance wrote back that it was still internally discussing
the issue and reiterated its demand for more time.
8. Under these circumstances, Director of USOF cell wrote a detailed note
recommending a penalty on Reliance of Rs 50 crores in terms of the show-cause notice that
Reliance did not reply. This note was sent to the Licensing Cell of DoT which approved the
penalty. A copy of the relevant pages of this file is annexed as Annexure B. Then this file
moved up and was approved by all including Advisor Finance and Member Finance on
February 8, 2011. On February 9, 2011 , Telecom Secretary who is also the Chairman of
Telecom Commission, approved the levy of the said penalty of Rs50 crore. A copy of the
relevant page of DoT tile is annexed as Annexur'e C.
9. The file reached the office of the Telecom Minister Mr Sibal on the same day i.e. on
February 9, 2011. Thereafter, on 16.02.2011 , Reliance wrote a letter to Mr Sibal that it had
restored the services. Based on this letter, Mr Sibal on February 18, 20 I I treated this serious
violation by Reliance as a mere "interruption" of services. While rejecting DoT's stand of
levying Rs 50 crore penalty Mr Sibal had stated that UASL agreement clauses should not be
invoked and penalty under USOF agreement for "intelTuption" should be imposed. Mr. Sibal
did not even verify whether services had indeed been restored, This, in effect, reduced the
penalty to a meager amount. A copy of the note ofMr Sibal is annexed as Annexur'e D.
10. It is submitted that "interruption" means a technical fault or other circumstances
beyond the control of the telecom operator that results in disruption of service. However, here
was a case of voluntary, unilateral and unauthorised closure or shutting down of service
permanently. Under the threat of penalty, Reliance, as per Mr Sibal's note, restored the
service on February 16, 2011. The restarting of service by Reliance after three months of
shutting it down cannot be termed as a mitigating circumstances. This would set a dangerous
precedent, as then any operator can simply unilaterally discontinue the service without notice
and restore it subsequently under threat of penalty.
11. Moreover, the action of Mr Sibal in reducing the penalty overruling the unanimous
view of the USOF branch and the entire telecom department, including the Secretary who is
the Chairperson of the Telecom Commission, is arbitrary & illegal, both procedurally as well
as on merits. Why did Mr Sibal not insist on a proper reply to the show-cause notice first?
Why did he call it "interruption" when it was a clear case of closure/discontinuation of
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service? Why did he not wait for a proper verification as to whether Reliance had indeed
restored service in all the clusters where it had switched off? Why did he state that UAS
License agreement is not applicable and department must only proceed under USOF A? Why
did he not send the matter back to the US OF cell and to the Department after receipt of the
letter of Reliance? If there was a legal issue involved, why did he not refer the matter to the
Law Ministry? Why did he not take the advice of telecom regulator Trai which is a statutory
body to protect the interests of consumers? Why did Mr Sibal not impose the penalty of Rs
50 crores per circle and let Reliance challenge it in TDSAT if it felt aggrieved?
12. In reference to the above issue, a renowned journalist has published a series of
articles, copies of which are attached herewith as Annexure E colly. These articles indicate
the fact that in many service areas Reliance did not even commence the services and
defaulted on its rollout obligation. It also establishes the fact that Mr Sibal did not verify
about the fact whether Reliance had really switched-on the services or not.
13. In view of the above, it is clear that Mr Sibal acted in a way that protected the interest
of a corporation that had committed serious violation of the license agreement. Mr Sibal
ignored the fact that his duty is to promote public welfare and safeguard the interests of
consumers who in this case were poor people in the rural and remote parts of India, who
could not have even approached courts against Reliance. Abusing one's official position to
benefit a private party at the cost of exchequer is an offence under the Prevention of
Corruption Act. Therefore, we request you to lodge an FIR against Mr Sibal and get this
matter thoroughly investigated.
Thanking you
Yours sincerely
For Telecom Watchdog
Anil Kumar
Secretary
98-685-11864
Enclosed: As above
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