IN THE SUPREME COURT OF PAKISTAN 
 
(Appellate Jurisdiction) 
 
 
 
 
Present: 
 
Mr. Justice Jawwad S. Khawaja 
 
 
 
Mr. Justice Iqbal Hameedur Rahman 
 
 
 
Mr. Justice Mushir Alam 
 
Civil Petition No. 1545 of 2009. 
(Against the judgment dated 20.7.2009 passed by the 
Islamabad High Court in FAO 7 of 2009) 
 
Pak Telecom Mobile Ltd. 
 
 
 
 
… Petitioner (s) 
VERSUS 
Pakistan Telecommunication Authority, Isl.  
 
…Respondent (s) 
 
For the petitioner (s):  
Mr. Hamid Khan, Sr. ASC 
 
 
 
 
Mr. Waqar Rana, ASC 
 
 
 
 
Mr. M. S. Khattak, AOR 
 
For the respondent (s): 
Mr. M. Akram Sheikh, Sr. ASC 
 
 
 
 
Mr. Khurram Siddiqui, Director (Law) 
 
 
 
 
Mr. Faraz Khan Jadoon, Law Officer 
 
 
 
 
Mr. Khalid Wazir, Asstt. Director, PTA 
 
 
Date of Hearing: 
 
06.02.2014  
 
Judgment  
 
 
Jawwad S. Khawaja, J.  The petitioner in this case is Pakistan Telecom Mobile Ltd. 
which is a Company incorporated under the Companies Ordinance, 1984. It is a wholly 
owned subsidiary of Pakistan Telecommunication Company Ltd. (PTCL). The petitioner 
provides mobile cellular services under the trade name “Ufone”. The respondent is the 
Pakistan Telecommunication Authority (PTA) established under section 3 of the Pakistan 
Telecommunication (Reorganization) Act, 1996 (the Act). The respondent is mandated by 
law inter alia, to issue and administer licenses including those issued to mobile service 
providers.  
2. 
The petitioner is a licensee operating under a license issued by PTA. The license 
granted by PTA to the petitioner is consensual inasmuch as the terms thereof were drawn 
by PTA and agreed upon by the petitioner and PTA. The license is dated August, 1998 
and amongst its various terms and conditions, specifies the charges, fees etc. which the 
petitioner is obliged to pay to PTA. The petitioner being a business organization had 
applied for and obtained a license under the licensing regime which was prevalent in 
1998.  
CP 1545 of 2009. 
2 
3. 
Previous to the petitioner, PTA had issued licenses to three mobile service 
providers namely, Paktel Limited (Paktel), Pak Com Limited (Instaphone) and Pakistan 
Mobile Communication Limited (Mobilink). The petitioner was the fourth company to 
which a license for mobile cellular services was issued. To enable the petitioner and the 
three companies mentioned above, to provide cellular phone services, it was necessary for 
them to be allocated frequency spectrums. After being granted licenses and being 
allocated frequency spectrums, the petitioner and the three other companies commenced 
the provision of mobile phone services to customers in Pakistan. 
4. 
On 27.10.2008 i.e. 10 years after the grant of the above referred license in August, 
1998, the petitioner received a show cause notice from PTA purporting to have been 
issued under section 23 of the Act. The salient features of the show cause notice which are 
relevant for the adjudication of the present case can briefly be set out. It was firstly stated 
therein that under clause 2.4 of the license, it was obligatory on the petitioner as licensee 
to pay charges for the use of the frequency spectrum. It was also stated in the notice that 
under the Pakistan Telecommunication Authority (Functions and Powers) Regulations 
2006, PTA was empowered to charge and levy a fee for allocation and use of the radio 
frequency spectrum including an annual spectrum charge. At this point it is important to 
note that between the date of the license i.e. August, 1998 and the issuance of the show 
cause notice, the petitioner was duly paying all amounts payable by it as licensee without 
there being any demand by PTA for additional sums specified in the show cause notice. 
There was no dispute that the petitioner had omitted or defaulted in making payment of 
any amount due under the license. The show cause notice, however, demanded payment 
of an annual spectrum administrative fee (ASAF). At the time of issuance of the show 
cause notice, an amount of Rs.198,257,314/- was shown and demanded by PTA as 
outstanding ASAF payable by the petitioner. Today the amount is in excess of 
Rs.750,000,000/- (Rupees seventy five crores). In the show cause notice, the petitioner was 
also threatened with cancellation of its license in the event of its failure to make payment 
of the ASAF. The show cause notice was replied to by the petitioner vide letter dated 
3.11.2008. 
5. 
Although the record of the case is extensive, the dispute between the petitioner 
and PTA is relatively straightforward. According to the petitioner, it is not obliged to pay 
CP 1545 of 2009. 
3 
the ASAF demanded by PTA during the existence of its license. The term of the 
petitioner’s license ends in May, 2014. The petitioner’s reply to the show cause notice was 
dealt with by the PTA which passed its order on 26.3.2009 justifying the additional 
demand by way of ASAF. Some relevant aspects of the decision of PTA may now be 
briefly adverted to. It was observed by PTA that the show cause notice had been issued to 
the petitioner because of contravention of clause 2.4 of the conditions of the license. Much 
emphasis was placed on clause 2.4 during arguments. The same is, therefore, reproduced 
as under:- 
“The licensee shall also pay the charges for the use of frequency spectrum 
and fee for the possession of wireless telegraphy apparatus as approved by 
the Board”.                 
6. 
At this juncture, it is important to note that the record as well as the stance 
adopted by PTA is that ASAF could be imposed on the petitioner by virtue of paras 4.4 
and 5.4 of the mobile cellular policy issued by the Federal Government on 28.1.2004 read 
with clause 2.4 of the license. Para 4.4 inter alia, provides for the spectrum administrative 
fee i.e. the ASAF. Para 4.4 in relevant part provides as under:- 
 
 
“Spectrum Administrative fees 
Administrative fees for radio spectrum will be set to recover the cost of 
administration of that spectrum. The total income generated from 
administrative fees for the whole spectrum should recover the reasonable 
operational costs of FAB incurred whilst managing, licensing and policing 
that spectrum”. 
 
 
7. 
Upon a plain reading of the above stipulation of the Mobile Cellular Policy there 
can be no doubt that it provided a new charge by way of ASAF which was in addition to 
the charges which were payable by service providers under their existing licenses. It is 
also abundantly clear that the ASAF envisioned in para 4.4 of the Policy was the 
reasonable operational cost for “managing licensing and policing” and NOT for the “use” of 
the frequency spectrum. We are clear that use of the spectrum is by the licensee and is 
wholly distinct and different from the responsibility of PTA for managing, licensing and 
policing of the spectrum. It is equally clear that the petitioner, since 1998 had been using 
the frequency spectrum as there can be no mobile cellular service without actual use of 
the same. Learned counsel for the petitioner, with justification, asserted that the 
“operational cost” envisaged in the policy was meant to cover the expense incurred by PTA 
CP 1545 of 2009. 
4 
for managing etc. of the frequency spectrum and could very well be imposed through 
new licenses to be issued by PTA pursuant to the policy or even in the case of renewal of 
the petitioner’s license after its expiry. The existing license of the petitioner specifies each 
and every amount due from the petitioner as a licensee and thus includes the charges for 
the use of frequency spectrum in terms of clause 2.4 of the license. If at all there arises any 
issue as to charges for use of the frequency spectrum, it would firstly require the approval 
of FAB which would, in turn, be subject to challenge by a licensee or even by PTA under 
section 22 of the Act. Quite apart from the plain language of the license read in 
juxtaposition with the policy there is also a rational basis for distinguishing between use 
of the frequency spectrum on the one hand and managing, licensing and policing of such 
spectrum on the other. The charges for use of the spectrum are or can be market driven. 
Thus the licenses for use of frequency spectrum can be auctioned where prospective 
bidders can place a market value on the permission for use of the frequency spectrum. 
The ASAF under para 4.4 of the policy, however, is not market driven but is meant to 
recover only the “reasonable operational costs” for managing etc.     
8. 
Para 5.4 of the policy is also relevant in helping us resolve the contention between 
the parties. It clearly specifies that mobile cellular licenses under the policy “will replace the 
existing licenses as soon as possible or at least upon expiry of the current licenses”. Thereafter 
there is a crucial sentence in the Policy stating that “existing operators will be encouraged to 
come under the purview of Mobile Cellular policy even before the expiry of their existing license”. 
It is thus clear from the policy itself that it was not meant to impact existing licensees who 
were merely to be encouraged but would not be obliged to come under the purview of the 
Mobile Cellular policy. This is a rational stipulation which ensures the rules of the game 
are not changed once the game has begun i.e. the license has become operational. 
Licensees entering the cellular market on commercial considerations are entitled to the 
certainty that financial assumptions on the basis of which they got their license remain 
unaltered during the currency of their licenses. 
9. 
Learned counsel for the petitioner pointed out that the three companies namely, 
Paktel, Instaphone and Mobilink did voluntarily agree to the change of their license to 
bring the same in line with the aforesaid policy. The petitioner, however, chose not to opt 
for the policy and instead continued making payments in accordance with its license 
CP 1545 of 2009. 
5 
which did not contain any requirement for paying ASAF. Here we are not required to 
embark on a determination if the ASAF being demanded from the petitioner amounts to a 
“reasonable operational cost” for managing etc. of the spectrum because the ASAF is outside 
the scope of the existing license of the petitioner. The reliance of PTA on the Mobile 
Cellular Policy is itself indicative of the fact that there is no room for ASAF in the 
petitioner’s license. 
10. 
From the contents of the decision of the PTA dated 26.3.2009, it is evident that PTA 
has misconstrued the extent and scope of its regulatory authority. It has proceeded on the 
erroneous assumption firstly, that the Mobile Cellular Policy contain directives and 
secondly, that PTA was obliged to implement such directives of the Federal Government. 
On both counts, the PTA has fallen in error. It is true that under section 8 of the Act, the 
Federal Government may issue policy directives to PTA but section 8 itself stipulates that 
the policy directives cannot be inconsistent with the provisions of the Act. Section 22 of 
the Act provides that PTA “shall have the right to modify the license or its conditions with the 
consent of the licensee”. The only statutory provision which allows modification of a license 
is sub section 2 of section 22 of the Act. This provision also envisages modification of the 
license by agreement between the licensee and PTA. This provision has been examined 
later in this judgment. The PTA, therefore, has proceeded on the premise that it is obliged 
to implement the policy directives which have been issued by the Federal Government by 
means of the Mobile Cellular Policy, 2004. Sub paragraphs viii, ix and x of para 4.1 of the 
decision of the PTA dated 26.3.2009 can specifically be adverted to, to highlight the 
misconception on the part of PTA. For ease of reference, these extracts from the order of 
PTA dated 26.3.2009 are reproduced as under:- 
viii. 
Regarding the licensee’s submission that it has been complying with clause 
2.4 of the licence by regularly paying fees/charges under it, this could be true 
to the extent of making payments but since the payment is not as per our 
demand based on the Federal Government’s directive, we are not taking the 
same as payment of ASAF and, resultantly, compliance of clause 2.4 of the 
licence is not made out.  
ix. 
On January 02, 2006 the matter of payment of ASAF by two mobile 
operators/licencees, including the licensee was referred to the Federal 
Government for clarification vide letter No.15-26-MOB-04/FIN/PTA. 
Clarification regarding Mobilink was also sought as Mobilink’s licence was 
CP 1545 of 2009. 
6 
also not renewed at that time and had the same status as that of the licensee. 
Responding to the said letter, the Federal Government very clearly instructed 
that payment of ASAF is not in any case a new issue and that the Policy 
ensures that the existing as well as new entrants pay the ASAF as laid down 
in clause 4.4 of the Policy. We were further directed by the Federal 
Government vide the said response that PTA may determine the bench mark 
of ASAF as per policy and set ASAF on non-discriminatory basis across the 
board for all cellular operators.  
x. 
It was, therefore, implementation of the above directives of the Federal 
Government regarding payment of ASAF by the licensee that we sought to 
enforce through our letters mentioned in para 1.3 above and subsequently 
through the Notice.” 
 
11. 
It is obvious from the above reproduced portion of the order dated 26.3.2009 that 
PTA has conceived itself as a subordinate department of the Federal Government rather 
than the independent regulator envisaged by sections 3, 4 and 5 of the Act. If section 
5(1)(d) of the Act is read with section 22 thereof, it will become immediately evident that 
the Federal Government has no role in modifying a license issued by PTA or varying any 
condition thereof. This power is vested in PTA and is subject to the constraints of section 
22 of the Act. The rationale for creating PTA as a regulator independent of the Federal 
Government by means of an Act of Parliament is to ensure that the Government has no 
power to interfere in the working of PTA in matters of grant and administration of 
licenses. The Policy directives issued by the Government under section 8 of the Act, 
therefore, cannot have binding affect to compel PTA to modify the terms of an existing 
license.   
12. 
The decision rendered by PTA dated 26.3.2009 was challenged by the petitioner by 
way of appeal before the Islamabad High Court under section 7 of the Act. The appeal 
was dismissed by the High Court and the reason for doing so is contained in para 10 of 
the impugned judgment. The learned Judge-in-Chambers in the High Court agreed with 
learned counsel for the petitioner that PTA did not have the power to amend and enhance 
unilaterally the fees and charges mentioned in the license but, in our opinion, the Court 
fell in error by holding that the distinction between “use” and “administration” is “too 
technical to be accepted”. For ease of reference, para 10 of the impugned judgment is 
reproduced as under:- 
CP 1545 of 2009. 
7 
“I am in agreement with the learned counsel for the appellant that the 
phrase used “from time to time” does not mean that the authority has the 
power to amend and enhance the fees and charges mentioned in the license 
unilaterally without the consent of the licensee and without referring the 
matter to Corporate Law Authority. For example under Clause 2.2 of the 
license, the appellant is liable to pay initial fee of Rs. 50 million. The 
authority has no jurisdiction to modify the license fee unilaterally without 
resorting to the provision of Section 22. Similarly, the rate of annual 
Royalty cannot be changed unilaterally by the authority. The learned 
counsel for the appellant is right in saying that a policy can only be given 
legal effect through an appropriate order or statutory notification. There is 
no cavil with this preposition also that Clause (p) of Section 5(2) is 
prospective in nature and would not apply retrospectively. I am also in 
agreement with the learned counsel for the appellant that terms of a 
concluded contract cannot be changed unilaterally by one of the contracting 
party. However, the difficulty of the appellant is that Clause 2.4 makes the 
licensee liable to pay the charges for the use of Frequency Spectrum but the 
amount of charges has not been mentioned in the said clause nor any 
mechanism has been given to determine the same. I am unable to agree with 
the learned counsel for the appellant that the words “use” and 
“administration” cannot be equated together. The argument is too technical 
to be accepted. The learned counsel for the appellant may be correct in 
saying that the mechanism to determine the liability of the licensee to pay 
Annual Spectrum Administrative Fee was introduced in 2004 policy. But 
the fact of the matter is that the appellant was liable to pay under clause 2.4 
of the license, charges for use of Frequency Spectrum. The liability to pay 
charges for use of frequency spectrum was already there under Clause 2.4 
and the same was not created by the policy. The amount of charges was not 
provided in this clause. The charges payable were as approved by the Board. 
The only thing which policy 2004 in this respect has done is to provide 
mechanism for determination of the amount of the said charges. It cannot, 
therefore, be said that the appellant is not liable to pay the Annual 
Spectrum Administrative Fee (ASAF). One of the arguments of the learned 
counsel for the respondent was that the appellant was allocated a different 
frequency as is established from letter dated 13.5.2004 and the allocation 
can be treated as if the appellant has opted for the new policy. However, I 
am of the opinion that the allocation of frequency in GSM 1800 Band in 
lieu of vacation of 2.4+2.4 MHz of Bandwidth in GSM 900 Band is in 
terms of Clause 5.3 of the license of the appellant. The allocation of the 
frequency does not mean that the appellant has come within the purview of 
the Policy 2004”.   
 
CP 1545 of 2009. 
8 
There are, we say with respect to the learned Judge, inconsistencies in the above extract 
which arise from the untenable observation that the distinction between the “use” of 
frequency spectrum and its “administration” is too technical to be accepted. Far from 
being technical, the distinction is too obvious to be ignored. Furthermore, the financial 
implications of the same are enormous as has been noted above.  
13. 
We are unable to agree with learned counsel for the PTA that it was open to PTA 
to decide on its own to impose an additional charge on the licensee by way of ASAF. 
Clause 2 of the license contains provisions setting out the entire financial obligation of the 
petitioner as a licensee. The frequency spectrum was allocated at the time the license was 
issued to the petitioner in August, 1998. The financial obligations were also put in place at 
the same time. The terms of the license including financial commitments were, therefore, 
well settled in August, 1998. Learned counsel for PTA contended that the ASAF is not a 
tax or a license fee but is an amount charged to recover the administrative expenses of the 
PTA and the Frequency Allocation Board (FAB). According to him, the amount being 
demanded by ASAF was on account of services rendered by PTA and FAB. This 
argument is not legally tenable because the PTA had set out all relevant terms and 
conditions including those relating to services etc. which were to be provided to licensees. 
Furthermore, even after the Frequency Allocation Board was established the terms of the 
license could not have been varied without a statutory provision empowering PTA to 
impose an additional levy by way of ASAF.  
14. 
Learned counsel for the PTA next contended that imposing ASAF on licensees 
other than the petitioner established discrimination and violation of Article 25 of the 
Constitution. This contention is also misconceived because there is no discrimination. The 
petitioner was distinctly placed as the sole licensee which had not opted for bringing its 
existing license into line with the Mobile Cellular Policy. The other service providers who 
held licenses prior to the Mobile Cellular Policy namely, Paktel, Instaphone and Mobilink 
had consciously opted for such change while the petitioner had not done so. In these 
circumstances, it cannot be said that the petitioner was similarly placed to the other 
licensees. In any event since the Policy by itself and without the backing of a statute 
cannot suffice for the purpose of imposing an additional burden on the petitioner as 
CP 1545 of 2009. 
9 
licensee, we do not see how the PTA can demand an additional payment not covered by 
the existing license issued to the petitioner in August, 1998.   
15. 
Since the ASAF is held by us to be distinct from a charge for the use of the 
frequency spectrum and because the ASAF has for the first time been specified by the 
Mobile Cellular Policy in 2004, the same cannot be forced onto an existing licensee who 
chooses to continue operating under an existing license. We may add at this point that 
even if PTA is desirous of making a modification in a license or any condition thereof the 
PTA is obliged to resolve any difference between it and a licensee, through consultation 
and negotiation. Under section 22(2) of the Act, it has been stipulated that “if the licensee 
and [PTA] fail to amicably resolve such difference or dispute, either party may make an application 
to the High Court or Tribunal” to adjudicate the difference/dispute between the parties and 
to settle all matters connected therewith. In the present case there is no question of PTA 
imposing ASAF on the petitioner. But even if PTA were desirous of imposing a user 
charge on the petitioner for the use of frequency spectrum, it would firstly require the 
approval of the FAB and thereafter it would be open to the petitioner to invoke the 
provisions of section 22(2) of the Act.   
16. 
These are the reasons for our short Order dated 6.2.2014 whereby this petition was 
converted into an appeal and allowed.    
 
              
 
Judge 
 
 
 
Judge 
Judge 
ISLAMABAD, the  
6th February, 2014 
 A. Rehman 
 
APPROVED FOR REPORTING.  
