08 July 2011

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NGO CPIL Filed PIL against Kapil Sibal for favoring Reliance Communications and Reducing Penalty of Rs.650 Crore to only Rs.5 Crore

Know How Penalty of Rs.650 Crore became Penalty of Rs. 5 Crore Only

Centre for Public Interest Litigation (CPIL) has filed the application in the Supreme Court seeking CBI probe against Telecom Minister Kapil Sibal and Attorney General GE Vahanvati. Sibbal allegedly favored Reliance Infocom on the penalty over 2G licences, while Vahanvati bypassed rules to help former minister A Raja respectively.

Attorney General GE Vahanvati allegedly disregarded the Law Ministry in giving opinion to Raja on 2G spectrum when he was Solicitor General in UPA-I government.

The application filed by Centre for Public Interest Litigation (CPIL) alleged Sibal reduced the penalty to Rs. five Crore from Rs650 Crore against RCOM for violations in the Unified Access Service Licence (UASL) agreement.

The application filed in the Court says that Kapil Sibal abused his position as minister to over-rule the unanimous view taken by senior DoT officials including the Telecom Secretary, to benefit a private operator by closing the issue with only a penalty of Rs5 Crore instead of Rs650 Crore.
"This abuse of authority by him to benefit Anil Ambani controlled Reliance Infocomm needs a thorough investigation by the CBI

The application has attached documents to point that DoT officials said that Reliance group pay a penalty of Rs50 crore per circle for "violation of the terms and conditions of Universal Service Obligation Fund (USOF) agreement and UASL agreement by voluntary, unilateral and unauthorized switching-off/closure of services to subscribers from USOF sites without any notice."

The matter is likely to be heard on July 11

Universal Service Obligation Fund (USOF) is a fund used to subsidise rural telephony. Telecom operators can bid for providing this service, and even ask for subsidies.
But RCom bid aggressively for many USOF and later found them unviable and switched off without the USOF Administrator’s permission.

16 May, 2007
Under an agreement RCom had agreed to provide this service from base transceiver stations (BTSs) in 53 clusters (5,118 sites)

7 December 2010 –
RCOMM issued notice to that it was cutting off services with effect from the previous month (from November 22). The notice said that it was switching of all but 46 BTSs, and even these would be terminated in two or three months, and stop paying power and fuel bills to the infrastructure provider, Bharat Sanchar Nigam Ltd (BSNL).

21 December, 2010
USOF issued show cause notice to RCOM.
USOF rejected all the reasons and arguments given by RCOM to stop the service and break the agreement.
“RCL (Reliance Communications) is in clear violation of the licence agreement as well as USOF agreement leading to disruption of continuity of service.
Also there is no provision for USP (universal service provider that is RCom) to unilaterally exit on his own from discharge of its performance obligations and go scot-free without performing.”
The show cause notice proposed fine of Rs. 50 Crore for One Circle.
For 13 Circles it will amount to Rs.650 Crore.

In Following 13 Circles rural telecom operations under USOF were shut by RCOM
1. Andhra Pradesh
2. Bihar
3. Jharkhand
4. Gujarat
5. Karnataka
6. Maharashtra
7. Madhya Pradesh
8. Punjab
9. Rajasthan
10. Tamil Nadu
11. Uttar Pradesh (East)
12. Uttarakhand
13. West Bengal

After this show cause notice by USOF reliance wanted time of six weeks to reply and USOF said first start the services.

USOF administrators said Reliance Should pay fine of Rs.50 Crore per Circle for stopping the services.

Director (Telecom), Advisor (Finance), Member (Finance) and Secretary (Telecom) everyone recommended a fine of Rs.50 Crore for One Circle.

On 2 February, 2011, Director (Telecom) signs an internal order proposing a penalty of Rs. 50 Crore from RCom in one circle.

By 9 February, everyone up the chain, up to the Telecom Secretary, had signed on the internal order endorsing the Rs. 50-crore penalty.

On 16 February, RCom writes to Kapil Sibal.

After that Telecom Minister Kapil Sibal reduced the fine of Rs. 50 Crore per Circle to just few lakh Rupees.

RCOM unilaterally switched off its BTSs but Telecom Minister Kapil Sibal treated this action of RCOM as a mere “interruption” of service and lowered the penalty.

Kapil Sibal did not go for Rs.650 Crore fine and a fine, Penalty was charged based on the number of days of service disruption at Rs. 500 a day.
And in this way the fine of Rs.650 Crore became Rs. 5.49 Crore in 13 circles.

Government do not have money for the subsidies, Government is reducing the subsidies on gas by saying No Money

Then question is Why the Penalties of Rich Companies are reduced by Government?

What is the reason Penalty is reduced?

By doing so Who benefited Government of India Servants or the citizens of India?

Just Think Do Not Ignore

Reality views by sm –

Keyword - News Finance Contract RCOM Kapil Sibal Penalty Rs.650 Crore 5 Crore Penalty Reduced


BK Chowla, July 08, 2011  

What goes aroud, comes around

Kirtivasan Ganesan July 08, 2011  

The unwritten law is TRAI should be consulted before taking drastic steps. Idea was fined for taking up Spice licenses without consulting TRAI. Later the fine was reduced, I think.
If TRAI was consulted it would have saved RIL the fine and would not have dragged Kapil Sibal into controversies.

sm,  July 08, 2011  

BK Chowla,,

sm,  July 08, 2011  

Why to reduce Penalty when government do not have money for poor people of India.

Kirtivasan Ganesan July 08, 2011  

From your blog it is apparent that it is not reduction, but recalculation.
Another thing is poor people should never be treated as beggars. Even Rural employment guarantee scheme gives employment and not money.

sm,  July 08, 2011  

After recalculation if penalty was increased then the we can say KS Increased Penalty.
The reality is the amount was recalculated to reduced the fine amount.
This is where Indian law fails all the laws are full of loopholes to do corruption legally.

Kirtivasan Ganesan July 08, 2011  

I think government spending is the worst enemy of poor.
As an example, to survey the feasibility of a dam 100 kms away from Bhopal, in one day at least four engineers would have taken their taxi reimbursement and allowances and other expenses.
Rs.5000 * 4 in one day.
Consider the number of govt. departments and number of persons all over India. Where is the responsibility? Who works?

SM July 09, 2011  


Deguide July 09, 2011  

I believe Telecom licensing fees needs to be reviewed in terms of volume generation potential. Penalties too has to be re calculated. Telecom has become an FMCG product in an era of consumerism. If an Idli was sold at 50 np now it is Rs 15 per idli whereas from Rs 15 per minute it has come down to 50 np per minute, so it is deflation in telecom.

sm,  July 09, 2011