The Attorney General, Mr G.E. Vahanvati, has said that the Communication and IT Minister, Mr Kapil Sibal, cannot be faulted for penalising Reliance Communication as per the terms and conditions of the USO fund agreement.

Questions were raised by lawyers of the Centre for Public Interest Litigation, before the Supreme Court, about Mr Sibal's decision to base the penalty amount on the USO fund agreement instead of Unified Access licence agreement.

Under the USO fund agreement, defaulters are charged Rs 500 for each day of violation while under the licence agreement the penalty amount is much higher at Rs 50 crore per circle.

In the case of RCom, Mr Sibal's decision meant a penalty of around Rs 6 crore compared to Rs 650 crore if the punitive measure was imposed on a circle basis.

“There was a specific provision in the USO fund agreement to deal with the situation at hand and the view that resort to another provision under the UASL agreement would not commensurate is reasonable and justified,” Mr Vahanwati said in his comments sent to the Department of Telecom.

The controversy had arisen because the USO fund administrator had earlier issued a notice to the company in which it was stated that the penalty amount would be Rs 50 crore per circle but then later when the file was put up for approval, the Telecom Minister changed the penalty amount as per the terms of the USO agreement. The DoT then sought the AG's view on the matter.

Reliance Communications and its subsidiary Reliance Telecom had switched off some of their mobile base stations funded by the USO fund.

The company had turned off the base stations on grounds that it was becoming unviable to operate in some areas. But later the operator turned it back on after the Department of Telecom raised concerns.

This caused interruption of mobile services in certain areas during November 2010 to February 2011. RCom and RTL has since paid a penalty of Rs 4.63 crore and Rs 1.07 crore for the disruption.

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