TDSAT asks Vodafone to deposit half penalty by DoT

The telecom tribunal TDSAT today directed Vodafone to deposit half of the Rs 50 crore penalty imposed on it by the Telecom Department (DoT) regarding a case of issuing bulk SIM cards without proper verification.

In an interim order, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) asked Vodafone to deposit Rs 25 crore within two weeks observing that company has "prima facie" violated the licence condition when it issued bulk SIM cards to Matrix Cellular Services.

The TDSAT bench headed by its chairman Justice SB Sinha also did not accept the contention of Vodafone that the telecom operator had no knowledge of end users of the 10,000 connections issued to Matrix Cellular.

"Prima-facie, it is difficult to accept the contention that when bulk connections of more than 10,000 connections had been given in favour of Matrix, the SIM Cards could be rented out without the knowledge of the petitioner (Vodafone)," said the tribunal.

It further said: "The petitioner (Vodafone), may therefore deposit a sum of Rs 25 crore, being 50% of the amount within two weeks from date subject to compliance of the aforementioned directions."

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

However, later after an enquiry the Telecom Enforcement, Resource and Monitoring (TERM) cell of the DoT found that some numbers issued to Matrix by Vodafone were further rented out by the telecom solution provider.

Following that DoT passed an order on October 18, 2011, imposing a penalty of Rs 50 crore on Vodafone.

The tribunal further said that "as to whether the stipulations contained in the impugned order are correct or not, may have to be determined at the time of final hearing".

The tribunal also declined to treat Vodafone's matter separately from Airtel and Idea, which have also been imposed a similar penalty of Rs 50 crore for such violation of licence condition. Later, TDSAT asked the companies to pay half the amount as interim measure.