Vodafone on Wednesday approached the telecom tribunal TDSAT challenging the Rs 50-crore penalty imposed by the Telecom Department (DoT) for allegedly flouting licence conditions by issuing bulk SIM cards to Matrix Cellular Services.

After a brief hearing, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) reserved its order over the Vodafone's plea.

During the proceedings, counsel appearing for Vodafone contended that DoT has imposed a fine on the company for a seven-year old matter and it had already terminated its agreement with Matrix in 2007.

In 2003, Vodafone (then Hutch) had entered into an agreement with the Matrix Cellular, which offers telecom solutions to Indians visiting abroad, and had issued 10,000 SIM cards for its own use.

Vodafone had also issued 27,000 SIM cards to Matrix to be sold by the telecom solution provider.

Senior advocate Maninder Singh and Navin Chawla appearing for the company said that the penalty should be imposed on Matrix as it had issued SIM cards without proper verification.

TDSAT Chairman Justice S B Sinha was not impressed with this submission and said, "Connections were given by your licensee (Matrix). How can Matrix be penalised".

Moreover, Vodafone further contended that Rs 50 crore penalty was too much. As per the licence condition, DoT can impose a penalty of maximum Rs 10,000 for an unverified customer's form and by that rule that penalty should be not be more than Rs 10 crore.

However, Manisha Dhir, representing DoT opposed it and said that it was not a question of Rs 10 crore or Rs 50 crore but a matter of national security and there was violation of licence conditions by Vodafone.

Vodafone further contended that DoT issued show cause notice to it in December 2008, while it had disconnected connection in 2007 to ensure that there was no misuse.

"For four years no one bothered about the security of the country," said Singh adding that it was finally given orders on penalty recently only.