DoT may withdraw penalty on Loop Telecom

It was one of the companies whose licences were quashed by the Supreme Court on February 2, 2012

The Department of Telecommunications could withdraw a penalty of about Rs 1,000 crore on Loop Telecom for allegedly violating 2G spectrum licence norms by discontinuing operations in 21 circles.

Loop Telecom was one of the companies whose licences were quashed by the Supreme Court on February 2, 2012. Following the order, the company discontinued services from June 1 that year and preferred not to bid in the fresh spectrum auction.

According to sources, a senior advocate has opined that DoT cannot levy the penalty as it would be contempt of court.

The DoT had issued a show-cause notice to Loop Telecom in November 2012 for discontinuing its operations and said it would impose a Rs 1,000 crore penalty for allegedly violating licence norms.

The company approached the SC, which stated that DoT was not entitled to levy damages and penalty on the company for the period after June 1, 2012.

The DoT sought legal opinion on whether to seek a review of the court order or withdraw the penalty.

According to sources, senior advocate P P Rao was of the opinion that DoT cannot levy damages on the company.

"I am of the opinion that Department cannot levy damages and penalty for the period subsequent to June 1, 2012, for the licensee's failure to carry business...It would be contempt of court to take a stand contrary to the court's order," Rao is believed to have said.