Bombay HC quashed the Centre’s retrospective OTSC demands on Airtel and Vi.
The verdict removes over ₹24,000 crore in liability and uncertainty.
The court said the government lacked legal basis to change licence terms retrospectively.
The Bombay High Court on Monday, June 8, struck down the Centre's one-time spectrum charge (OTSC) demands on telecom operators Bharti Airtel and Vodafone Idea (Vi), quashing a long-running liability, estimated at over ₹24,000 crore.
The court also set aside all consequential actions taken by the government based on the disputed demands, and directed the return of bank guarantees furnished by both operators.
1 June 2026
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"We have come to a conclusion that the petitioners have been able to make out a case in their favour seeking quashing and setting aside of the impugned decisions and consequent demand notices. The respondent has not been able to justify the said decisions and its action of levying one-time spectrum charge retrospectively upon the petitioners," a Division Bench of Justices Manish Pitale and Shreeram V Shirsat said in its order pronounced on June 8, after reserving judgment on April 9, 2026.
Airtel was represented by Senior Advocates Harish Salve and Darius Khambata. Vodafone Idea was represented by Senior Advocate Aspi Chinoy. The Union of India was represented by Additional Solicitor General Anil Singh.
How Spectrum is Governed in India
The dispute revolves around spectrum, the airwaves that enable mobile devices to send and receive signals.
Devices such as phones require signals to connect, and these signals are carried on airwaves sent at designated frequencies to avoid interference. The government owns all publicly available assets within the country, including these airwaves — collectively called the spectrum — subdivided into bands with varying frequencies.
The DoT under the Ministry of Communications regularly holds auctions to allocate spectrum to private players.
How the Dispute Began
The current dispute traces its origins to the telecom licensing regime of the 1990s. Under the National Telecom Policy (NTP) of 1994, private operators such as Airtel and Idea Cellular were granted licences to offer mobile services, paying a fixed licence fee as well as separate charges for the use of spectrum. The policy was overhauled in 1999 after the government found that the original framework had failed to generate expected growth in the sector.
Under NTP-99, operators migrated to a revenue-sharing model, under which licence fees and spectrum-related payments were linked to a share of their revenues. At each stage when additional spectrum was allocated beyond 4.4 MHz, operators were charged additional percentage points of adjusted gross revenue (AGR). Industry bodies accepted this framework, and successive policy documents and committee reports largely favoured recurring spectrum usage charges over upfront one-time levies.
Notably, a committee under the Wireless Adviser of the DoT's WPC Wing had in 2005 specifically recommended that no additional one-time charge need be levied on existing service providers, as it would enable them to roll out services faster and offer affordable tariffs.
The debate shifted in 2008, when the DoT began exploring a one-time charge on spectrum holdings beyond 6.2 MHz. A committee headed by the then Additional Secretary at the DoT, Subodh Kumar, recommended an upfront payment mechanism for excess spectrum.
In 2010, TRAI formally recommended a one-time spectrum charge for holdings above the threshold, a reversal of its own earlier position. The move gained momentum after the Supreme Court's 2012 judgment in the 2G spectrum case intensified scrutiny of spectrum allocation and pricing.
In November 2012, the Union Cabinet approved the levy of one-time spectrum charges on existing operators, including retrospective charges on spectrum held beyond 6.2 MHz from July 2008 onwards. The DoT issued demand notices to Airtel and Vodafone Idea (Vi), prompting them to file writ petitions before the Bombay High Court in January 2013. The court granted interim protection against coercive action, and the matter remained pending for over a decade.
What the Court Ruled
The High Court has now held that the government could not retrospectively alter the financial terms of telecom licences and impose fresh liabilities years after spectrum had already been allocated.
The bench rejected the government's argument that spectrum, being a scarce natural resource held in public trust, justified the levy. While acknowledging that spectrum is indeed a scarce natural resource, the court held that once the government executes licence agreements with operators, it is bound by the contractual terms and cannot unilaterally resile from them by taking shelter under concepts of public interest or common good.
The court also found that TRAI's own recommendations had, as recently as 2007, stated that a one-time spectrum charge — if at all — should apply only to spectrum beyond 10 MHz, not 6.2 MHz. The petitioners had never exceeded 10 MHz at the time the impugned decisions were issued.
The bench found no source of power — either under Section 4 of the Telegraph Act or within the licence agreement clauses — to justify the retrospective imposition.
It held that the government had abruptly and unilaterally issued the impugned decisions without modifying the contract terms, without invoking the three permitted contingencies of public interest, national security, or proper conduct of telegraphs, and without any statutory backing for retrospective effect.
The court also disagreed with a 2016 Madras High Court judgment in the Aircel case, which had upheld a similar levy by equating revenue generation with public interest. The Bombay HC held that revenue maximisation cannot automatically be treated as public interest, and that the objectives of NTP-99 were specifically centred on affordable, widespread connectivity, not revenue maximisation.
What it Means for Airtel and Vi
The verdict could translate into cumulative relief of more than ₹24,000 crore for the two operators by removing the liability and associated uncertainty from their books.
According to Airtel's FY25 annual report, its contingent liability towards OTSC stood at ₹6,600 crore, with total liability including interest of ₹9,954 crore rising to ₹16,500 crore as of March 2025. In 2023, Airtel had disclosed total OTSC dues of ₹15,178 crore to stock exchanges, of which ₹8,500 crore had already been paid.
Vodafone Idea's exposure stood at ₹7,581 crore as per its FY25 annual report.
As for payments already made, the status quo holds for now, remaining issues are to be decided by the Supreme Court.
The broader legal battle over OTSC remains pending before the Supreme Court. The DoT had challenged a July 2019 TDSAT ruling that OTSC could be levied only prospectively and not retrospectively, and that appeal is still pending.
Separately, Aircel's challenge to the 2016 Madras High Court judgment is also pending before the apex court. The DoT can additionally challenge Monday's Bombay HC ruling before the SC, which may have the final say on the matter.
