TDSAT declines relief to Loop on bank guarantee renewal

Telecom tribunal TDSAT has rejected Loop Telecom's application seeking relief against the government's direction of renewal of performance and financial bank guarantees on spectrum in 21 circles.

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The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) also rejected Loop Telecom's plea to restrain the Department of Telecommunications (DoT) from taking any coercive steps as invocation or encashment of guarantees, in case of its non renewal.

" ...the licensee (Loop) and the licensor (DoT) and the bank guarantees being valid till January 9, 2013 only, I am of the  view that Petitioners (Loop) have not made out any case for staying the operations of the  impugned letters... or
issue of mandatory injunction against the Respondent (DoT) for not taking any coercive action against the Petitioner," TDSAT said.

The DoT had issued letters to Loop in November 2012 in some of the circles asking it to renew the financial bank guarantees and performance bank guarantees. It mentioned that the bank guarantees would be invoked in case of Loop's non-compliance.

Loop Telecom had contended before the tribunal that it has already closed its operations following the February 2, 2012 order of the Supreme Court cancelling its licences. Hence, there was no need to fulfil any obligations such
as renewal of bank guarantees arising from the cancelled licenses, the telecom company said.

However, rejecting the application, the tribunal said as per the license clauses "on termination or expiry of the licence, the bank guarantee shall be released to the licencee only after ensuring clearance of old dues which the licencee
is liable to pay to the licensor (DoT).

"In these petitions, the licences have been cancelled by an order of the Supreme Court which can be considered as if the licences are terminated. The validity of the same, it seems, will expire on January 14, 2013," said TDSAT. Loop's guarantees are expiring on January 9, 2013 and it was not legally bound to renew it, the company had contended.