The Supreme Court on Friday admitted an appeal by Bharat Sanchar Nigam Ltd challenging a Telecom Dispute Settlement Appellate Tribunal decision expressing inability to penalise Bharti Telesonics Ltd for allegedly violating conditional clearance for providing national long distance telephone service.

After hearing Attorney General Soli J Sorabjee, who said that this was an important question of law concerning the telecom sector, a bench comprising Justice S Rajendra Babu and Justice G P Mathur admitted the petition.

Sorabjee argued that under the Telecom Regulatory Authority of India Act, TDSAT was empowered to impose penalty upto Rs 200,000 per day on companies violating its orders.

However, the TDSAT said by an order on March 3 this year that it could not take action under Section 20 of the Act empowering it to impose penalty and dismissed the plea of BSNL, saying it was "knocking at the wrong door."

The attorney general said that this question of law relating to power of the authorities under the Trai Act to impose penalty on companies violating their orders was recurring in various occasions and needed a judicial pronouncement.

In January last year, the department of telecom had given conditional clearance to BTSOL to commence services in 11 cities including New Delhi, Chennai and Mumbai but made it clear that it would be entitled to NLD service only on fulfillment of the mandatory conditions.

BSNL said that on January 25 last year, Trai issued a communication implicitly permitting BTSOL to carry default calls and directed that the default traffic should be equally distributed between BSNL and BTSOL in terms of chargeable minutes.

It alleged that despite directions to the contrary by TDSAT, BTSOL not only commenced its service in violation of the conditional clearance issued by DoT and Trai but also proceeded to carry default traffic generated by subscribers of cellular operators.

On the refusal of Trai to intervene in the matter, BSNL approached TDSAT seeking initiation of action against BTSOL and direction to deposit with the registrar of TDSAT the entire revenue generated from January 25 last year by carrying default traffic on its network in violation of the Tribunal orders.

TDSAT, in its March 3, 2003 order, observed in favour of BSNL to the effect that there is merit in its submissions that operation of BTSOL during the pendency of tribunal's interim orders were not in consonance with the conditional clearance given by the central government.

However, the appellate tribunal held that the Section 20 of the Trai Act appeared to be flawed and that it could not take any action against BTSOL.