The Supreme Court would decide if the government can impose 50 per cent penalty on two Tata group telco firms for the delay in payment of their licence fees, based on unilaterally modified terms and conditions of their licence agreements under UASL.

A three-judge bench headed by Chief Justice S H Kapadia today admitted the petition filed by Department of Telcom (DoT), challenging the order of the sectoral tribunal TDSAT, which had set aside the demand note issued by the government.

DoT had asked the two Tata group firms - Tata Tele Services, Maharashtra and Tata Tele Services- to pay Rs 200 crore and Rs 42 crores, respectively.

Passing an order on February 12, 2010, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) had set aside demand notes issued by DoT questioning the validity of the licence agreement, which was unilaterllay modified by it after migration to UASL model.

The TDSAT had held that the licence conditions were not signed by the Tata group firms and that it would become effective only from November 14, 2003 when the amended licence was signed.

The tribunal had further observed that the demands made by DoT were "neither fair, nor reasonable."

"Such a penal provision could not have been invoked in absence of any contract. There was no application of mind," it had said before imposing a charge of Rs 1 lakh.

Challenging it, the DoT said it had the right to modify terms and conditions of the licence agreement in the public interest and TDSAT should look into that area.

"TDSAT failed to appreciate that migration package was accepted by the respondent in pursuance of the same amended licence, executed on July 26, 2001, which will be binding on the parties when the same has been acted upon by the parties," DoT had said in its petition filed by counsel Wasim A Qadri.

It also questioned the TDSAT's jurisdiction.

"It is submitted that TDSAT has been established to adjudicate any dispute between the licensee and licensor. The power of TDSAT is confined to disputes arising out of licence and not as to the licence itself for the simple reason that if there is a dispute as to license, it means the service provider has not yet acquired status of licensee," said DoT.

DoT further submitted, "The tribunal has proceeded on totally wrong and unfounded premises as if the Licensees were not defaulters and the stipulation and conditions in the clause for schedule of payment of the License fee were unreasonable, unjustified and illegal".