8/6/2019 Complaint Against Mr Kapil Sibal to CBI

1/4

! ; ! : d ~ ~ s S . 2 s ~ A c t y y A T C H D ' ' ' ' . s t / ~ Regd Office: 305, Lotus Chamber, 2079/38, Nalwa Street, Karol 8agh, New Delhl-110 005 . ' 'fI A ~ ACorrespondenceAddress; 8-5/51 , Paschim Vihar, New Delhl-110 063; e-mail: telecomwatchdo ' ~ I I ' ~ ~ 8 V

The Director Date: July. 25, 2011Central Bureau of InvestigationScope ComplexLodhi RoadNew Delhi-II 0003

Kind attn: Mr AP SinghComplaint against Mr Kapil Sibal, MoC&IT for causing loss to the exchequerSir1. Telecom Watchdog is one of the petitioners in the 2G-spectrum case pending in theSupreme Court where the Hon ' ble Court is monitoring the investigations being carried out bythe CBI, ED and DGIT. The following matter against Mr Kapil Sibal, MoC&IT was raised inthe proceedings of the said case by way of an additional affidavit. But the Hon ble courtorally observed that this matter is not related to the 2G-spectrum allocation and thereforepetitioners should avail other legal remedies to get the matter investigated. The Hon'ble courtdid 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 datedFebruary 18 , 2011, has waived off a penalty on Reliance Group by overruling the officers ofthe Department of Telecommunications (DoT). The minister has instead decided to levy apenalty, which is very nominal. This he did by cleverly converting a "serious willful violationof license conditions" to a normal violation of "disruption in service". This way the ministerhas 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 awrong precedent that a private company can stop essential services like telecom at its ownwill, unilaterally and without any prior notice. As such, this action is also against the nationalsecurity, telecom being essential telecommunication services. This act of Mr Sibal, ofsupporting a private company for its wrong doing, is unpardonable as the USO Fund serviceswere meant for only those rural and remote areas where fixed wireless or mobile serviceswere 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 underUniversal Access Service (UAS) licenses granted to them by the DoT. While continuing withthese UAS licenses, the DoT's another arm - Universal Service Obligation (USO) FundAdministrator - executed another agreement with RCL & RTL for providing telecomservices in the rural & remote areas where the fixed /wireless telephone services had notreached. Both, UASL and USOF agreements had different level of penalties for delays in therollout. However, only UASL had prescribed Rs SO crore (per Service Area) penalty forserious violations of the license agreements. This penalty of Rs 50 crore was also applicableto services provided under USOF agreement since the termination/suspension of services wasprohibited. In this regard, the relevant clauses of these license/agreements are reproducedherein below:

8/6/2019 Complaint Against Mr Kapil Sibal to CBI

2/4

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 shal l 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 of the 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 thelicense or impose penalty of Rs 50 crores per circle or both. Only in case where thegovernment 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 Indiaunilaterally, without notice to either the Government or to the subscribers, it was a seriousviolation. These places were spread across 13 telecom circles across India, hence Reliancehad violated its 13 license agreements (since there is a separate license agreement for eachcircle), and all its 13 licenses were liable for termination and a maximum penalty of Rs 650crores could and should have been imposed. However, Mr Sibal, for unknown reason, savedRCL & 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 itsservices effective from November 22, 2010. Hence Reliance had simply shut down itsservices 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 "violationof the terms and conditions of Universal Service Obligation Fund (USOF) agreement and

~ ~ J

8/6/2019 Complaint Against Mr Kapil Sibal to CBI

3/4

UASL agreement by voluntary, unilateral and unauthorized switching-off / closure ofservices to subscribers from USOF sites without any notice." A show-cause notice of 15 dayswas issued to Reliance which stated that Reliance was in clear violation of the UASLagreement. USOF cell issued a notice for a penalty of only Rs 50 crore. A copy of the showcause 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 videits letter dated January 5, 2011 asked for 6 weeks more time to reply. USOF Administratorreplied that Reliance's request for more time could only be considered if it first restored theservices. Reliance again wrote a letter on January 11 , 2011 requesting for 6 weeks more timeto reply to show-cause notice. It however did not make its intention known whether it intendsto restore services or not. On January 12, 2011 USOF administrator again asked Reliance tomake its stand clear on restoration. Reliance wrote back that it was still internally discussingthe issue and reiterated its demand for more time.8. Under these circumstances, Director of USOF cell wrote a detailed noterecommending a penalty on Reliance of Rs 50 crores in terms of the show-cause notice thatReliance did not reply. This note was sent to the Licensing Cell of DoT which approved thepenalty. A copy of the relevant pages of this file is annexed as Annexure B. Then this filemoved up and was approved by all including Advisor Finance and Member Finance onFebruary 8, 2011. On February 9, 2011 , Telecom Secretary who is also the Chairman ofTelecom Commission, approved the levy of the said penalty of Rs50 crore. A copy of therelevant 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. onFebruary 9, 2011. Thereafter, on 16.02.2011 , Reliance wrote a letter to Mr Sibal that it hadrestored the services. Based on this letter, Mr Sibal on February 18, 20 I I treated this seriousviolation by Reliance as a mere "interruption" of services. While rejecting DoT's stand oflevying Rs 50 crore penalty Mr Sibal had stated that UASL agreement clauses should not beinvoked and penalty under USOF agreement for "intelTuption" should be imposed. Mr. Sibaldid not even verify whether services had indeed been restored , This, in effect, reduced thepenalty 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 circumstancesbeyond the control of the telecom operator that results in disruption of service. However, herewas a case of voluntary, unilateral and unauthorised closure or shutting down of servicepermanently. Under the threat of penalty, Reliance, as per Mr Sibal's note, restored theservice on February 16 , 2011. The restarting of service by Reliance after three months ofshutting it down cannot be termed as a mitigating circumstances . This would set a dangerousprecedent, as then any operator can simply unilaterally discontinue the service without noticeand restore it subsequently under threat of penalty.11. Moreover, the action of Mr Sibal in reducing the penalty overruling the unanimousview of the USOF branch and the entire telecom department, including the Secretary who isthe Chairperson of the Telecom Commission, is arbitrary & illegal, both procedurally as wellas 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

1 1

8/6/2019 Complaint Against Mr Kapil Sibal to CBI

4/4

service? Why did he not wait for a proper verification as to whether Reliance had indeedrestored service in all the clusters where it had switched off? Why did he state that UASLicense agreement is not applicable and department must only proceed under USOF A? Whydid he not send the matter back to the US OF cell and to the Department after receipt of theletter of Reliance? If there was a legal issue involved, why did he not refer the matter to theLaw Ministry? Why did he not take the advice of telecom regulator Trai which is a statutorybody to protect the interests of consumers? Why did Mr Sibal not impose the penalty of Rs50 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 ofarticles, copies of which are attached herewith as Annexure E colly. These articles indicatethe fact that in many service areas Reliance did not even commence the services anddefaulted on its rollout obligation. It also establishes the fact that Mr Sibal did not verifyabout 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 interestof a corporation that had committed serious violation of the license agreement. Mr Sibalignored the fact that his duty is to promote public welfare and safeguard the interests ofconsumers who in this case were poor people in the rural and remote parts of India, whocould not have even approached courts against Reliance. Abusing one's official position tobenefit a private party at the cost of exchequer is an offence under the Prevention ofCorruption Act. Therefore, we request you to lodge an FIR against Mr Sibal and get thismatter thoroughly investigated.Thanking youYours sincerelyFor Telecom Watchdog

Anil KumarSecretary98-685-11864

Enclosed: As above