TELECOM DISPUTES SETTLEMENT & APPELLATE TRIBUNAL
NEW DELHI
Dated 11th
February, 2010
Escotel
Mobile Communications Ltd
A-36,
Mohan Co-operative Industrial Estate
Mathura
Road
New
Delhi-110 044 …. Petitioner
Versus
1. Department of Telecommunications
Ministry of Communications
Govt. of India
Sanchar Bhawan
20, Ashoka Road
New Delhi
[through its Director (LF)]
2. Director (LF)
Licensing Finance Cell
Ministry of Communications
Department of Telecommunications
Sanchar Bhawan, 20, Ashoka Road
New Delhi – 110 001
3. Senior Accounts Officer (LF-IV)
Govt. of India
Department of Telecommunications
1300 Sanchar Bhawan, 20, Ashoka Road
New Delhi – 110 001 …. Respondents
BEFORE:
HON’BLE MR. JUSTICE S.B.SINHA, CHAIRPERSON
HON’BLE MR. G. D. GAIHA, MEMBER
|
For
Petitioner |
: |
Mr. Punit D. Tyagi,
Advocate |
|
For
Respondent |
: |
Mr.Kuldip Singh,
Advocate |
O R D E R
S.B. Sinha
This petition raises a short
question.
2. The petitioner was asked to make payment
of the principal amount towards shortfall in payment of licence fee of a sum of
Rs. 4.85 crores on or about 30.5.2002. A
Demand Draft was prepared on the said date.
The said Demand Draft could not be deposited with the respondent as the
representative of the petitioner reached its office beyond the banking
hours. The said Demand Draft, however,
was admittedly deposited and credited in the account of the respondent on
31.5.2002.
Despite the
same, on the premise that the petitioner was in willful default in payment of
license fee for a sum of Rs.4.85 crores, penalty of Rs. 7.31 crores
representing 150% of the shortfall of the licence fee was levied.
3. The respondent contends that as the
provision contained in clause 6.8 is penal in nature, the same would be
attracted automatically in case of default in payment of license fee and in
view of the fact that the payment was not made by the petitioner by 30.5.2002,
the penalty has rightly been imposed, being the genuine pre-estimate to
compensate the loss of the respondent.
4. With a view to appreciate the rival
contentions of the parties, we may notice the admitted fact of the matter.
The
petitioner was granted license to establish, maintain and operate cellular
mobile telephone service in Kerala, Haryana and Uttar Pradesh (West)
Circles. In the year 1999, ‘Migration
Package’ was offered to the petitioner which was accepted by it, pursuant
whereto a deed of amendment to the license was executed by and between the
parties on or about 25.9.2001/18.01.2002.
5. It is accepted that a judgment was
rendered by this Tribunal on 09.04.2002 directing the respondents to modify its
demand, on the basis whereof, higher amount of license fee, interest etc. has
been charged.
An advance
license fee of Rs. 7.71 crores was paid by the petitioner on 15.4.2002 for the
quarter of April – June, 2002.
6. The petitioner has contended which has
neither been denied nor disputed that apart from the said amount, no other
amount was due from it. By reason of a letter
dated 24.4.2002, the petitioner had asked for refund of a sum of Rs.10,63,35,275/-
which became payable in terms of the judgment of this Tribunal. The amount was neither refunded nor adjusted
from the balance amount of the license fee payable by the petitioner.
7. It was on the aforementioned premise that
an offer of the amount of shortfall was made on 30.5.2002. It furthermore stands admitted that
respondent had not preferred any appeal before the Supreme Court of India,
against the judgment of this Tribunal dated 09.04.2002 till that date. The petitioner also did not prefer any
appeal. The respondent preferred an
appeal before the Supreme Court of India against the said judgment only on or
before 04.07.2002.
8. The question as whether the action of the
respondent in charging penal interest @ 150% of the shortfall by reason of the
aforementioned Order dated 3.10.2002, is justified, must be judged in the
aforementioned factual matrix.
9. For the purpose of disposal of this
matter, we may proceed on the basis that clause 3.68 represents a mutually
agreed amount between the parties to pay a pre-determined sum by way of
damages. In a situation of this nature,
it is difficult to appreciate the contention of the respondent that imposition
of penalty would be automatic. Even if
the contention of the respondent is correct, the contracting parties were be at
liberty to waive imposition of penal interest.
Even otherwise the terms of the amended license do not suggest that
clause 3.8 is a ‘sunset’ clause.
10. The specific stand of the respondent, which
we will assume in this matter to be correct that the provisions relating to
levy of penal interest is only contractual in nature and not statutory.
Even in a
situation like the present case, the respondents, being a ‘State’, within the
meaning of Article 12 of the Constitution of India, is expected to act fairly
and reasonably, even in a matter involving contract-qua-contract.
In Dwarkadas Marfatia & Sons. Vs.
Board of Trustees of the Port of Bombay - 1989(3)SCC 293, the Supreme Court of
India observed as under:
“25. Therefore,
Mr.Chinai was right in contending that every action/activity of the Bombay Port
Trust which constituted “State” within Article 12 of the Constitution in
respect of any right conferred or privilege granted by any statute is subject
to Article 14 and must be reasonable and taken only upon lawful and relevant
grounds of public interest. Reliance may
be placed on the observations of this Court in E.P. Royappa v. State of Tamil
Nadu, Maneka Gandhi v. Union of India, R.K. Shetty v. International Airport
Authority of India, Kasturi Lal Lakshmi Reddy v. State of J & K and Ajay
Hasia v. Khalid Mujib Sehravardi. Where
there is arbitrariness in State action.
Article 14 springs in and judicial review strikes such and action
down. Every action of the executive
authority must be subject to rule of law and must be informed by reason. So, whatever be the activity of the public
authority, it should meet the test of Article 14. The observations in paras 101 and 102 of the
Escorts case read properly do no detract from the aforesaid principles.”
While acting in fairness to a party to
the contract, the State is expected to take into consideration the conduct of
the other party thereto.
Admittedly,
the amount of shortfall could be tendered to the respondent within a period of
60 days from the date of expiry of the financial year, i.e., till
30.5.2002. The petitioner prepared the
DD and tendered the same to the respondent within the said period. Tender of the said amount could be effected
till the end of the day, i.e., 12 O’Clock in the night and in any event at any
time before the office hours were over.
Tender of a payment validly made, thus, could not have been refused only
on the premise that banking hours were over.
The
respondent, therefore, could not have taken advantage of its own wrong.
‘Lex non cogit ad impossibilia’ is a well known maxim, which means ‘law does
not presume a thing to be done which is impossible to be performed’.
In Rosali
V. Vs. Taico Bank and Ors. – AIR 2007 SUPREME COURT 998, the Supreme
Court of India held as under:
“(ii) lex non cogit ad impossibilia
(the law does not compel a man to do that what he cannot possibly perform) [See
Ram Chandra Singh (supra) and Board of Control For Cricket in India (supra)]
30. The term "immediately",
therefore, must be construed having regard to the aforementioned principles.
The term has two meanings. One, indicating the relation of cause and effect and
the other, the absence of time between two events. In the former sense, it
means proximately, without intervention of anything, as opposed to
"mediately". In the latter sense, it means instantaneously.
31. The term "immediately", is,
thus, required to be construed as meaning with all reasonable speed,
considering the circumstances of the case. [See Halsbury's Laws of England, 4th
Edition, Vol. 23, para 1618, p. 1178]
32. In a given situation, the term
"immediately" may mean "within reasonable time. Where an act is
to be done within reasonable time, it must be done immediately. [See
Gangavishan Heeralal v. Gopal Digambar Jain and Ors., AIR1980MP119; Keshava S.
Jamkhandi v. Ramachandra S. Jamkhandi, AIR1981 Kar 97 at 101; Ramnarayan v.
State of M.P., AIR 1962 MP 93; R. v. Inspector of Taxes (1971) 3 All ER 394 and
R. v. HU Inspector of Taxes (1972) 1 All ER 545 In Bombay Dyeing (supra), this
Court observed:
In 'The Interpretation
and Application of Statutes', Reed Dickerson, at p.135 discussed the subject
while dealing with the importance of context of the statute in the following
terms:
.....The
essence of the language is to reflect, express, and perhaps even affect the
conceptual matrix of established ideas and values that identifies the culture
to which it belongs. For this reason, language has been called "conceptual
map of human experience.
33. In K.S. Muthu v. T.
Govindarajulu and Anr. 2000(4) SCALE 175 , this Court opined:
“……….In the circumstances
when the Appellant was not in a position to perform the direction given by the
Court in view of the holiday, the Court cannot expect the Appellant to perform
what is impossible....
34. In
Crawford on Statutory Construction at page 539, it is stated:
“271. Miscellaneous
Implied Exceptions from the Requirements of Mandatory Statutes, In General.- Even
where a statute is clearly mandatory or prohibitory, yet, in many instances,
the courts will regard certain conduct beyond the prohibition of the statute
through the use of various devices or principles. Most, if not all of these
devices find their jurisdiction in considerations of justice. It is a well
known fact that often to enforce the law to its letter produces manifest
injustice, for frequently equitable and humane considerations, and other
considerations of a closely related nature, would seem to be of a sufficient
caliber to excuse or justify a technical violation of the law. (Emphasis
supplied)
[See also Dove Investments Pvt. Ltd.
and Ors. v. Gujarat Industrial Inv. Corporation Ltd. and Anr. (2006)2 SCC 619:
AIR2006SC1454 ].
In Aneeta Hadav Vs. Godfather Travels and Tours Pvt Ltd, 2008(3) SCC 703,
one of us opined:-
“17. The
question as to whether a company can be proceeded against when a mandatory
imprisonment is prescribed in law came up for consideration before a
Constitution Bench of this Court in Standard Chartered Bank and Ors. v. Directorate of Enforcement and Ors. [2005]275ITR81(SC)
wherein this Court upon considering a large number of decisions as also the
principle "lex non cogit ad impossibilia" opined:
30. As the company cannot be
sentenced to imprisonment, the court has to resort to punishment of imposition
of fine which is also a prescribed punishment. As per the scheme of various
enactments and also the Indian Penal Code, mandatory custodial sentence is
prescribed for graver offences. If the appellants' plea is accepted, no company
or corporate bodies could be prosecuted for the graver offences whereas they
could be prosecuted for minor offences as the sentence prescribed therein is
custodial sentence or fine. We do not think that the intention of the
legislature is to give complete immunity from prosecution to the corporate
bodies for these grave offences. The offences mentioned under Section 56(1) of the FERA Act, 1973, namely, those
under Section 13; Clause (a) of Sub-section (1) of
Section 18; Section 18A; Clause (a) of Sub-section (1) of
Section 19; Sub-section (2) of Section 44, for which the minimum sentence of six
months' imprisonment is prescribed, are serious offences and if committed would
have serious financial consequences affecting the economy of the country. All
those offences could be committed by company or corporate bodies. We do not
think that the legislative intent is not to prosecute the companies for these
serious offences, if these offences involve the amount or value of more than
Rs. one lakh, and that they could be prosecuted only when the offences involve
an amount or value less than Rs. one lakh.(Emphasis supplied)
Even
otherwise, in a case of this nature, a mandatory provision may also be treated
to be directory.
11. It is furthermore of some significance to notice
that in Francis Bennion’s ‘Statutory Interpretation’ at page 33, the learned
author opined :-
“Where a requirement arises under a statute, the court, charged with the task of enforcing the statute, needs to decide what consequence Parliament intended should follow from failure to implement the requirement. This is an area where legislative drafting has been markedly deficient. Drafters find it easy to use the language of command. They say that a thing ‘shall’ be done. Too often they fail to consider the consequence when it is not done. What is not thought of by the drafter is not expressed in the statute. Yet the courts are forced to reach a decision. It would be draconian to hold that in every case failure to comply with the relevant requirement invalidates the thing done. So the courts’ answer, where the consequences of breach are not spelt out in the statute, has been to devise a distinction between mandatory and directory duties. The distinction is illustrated by Bowen LJ’s dictum concerning an enactment requiring consent to the initiation of legal proceedings. It directs what ought to be done… But it does not oblige the Court to close the gates of mercy upon the applicant, but enables it to stay proceedings until [consent is obtained].” (Underlining is ours for emphasis)
The action on the part of the
respondent, therefore, deserved a strict scrutiny.
Levy of penal interest involves
serious civil consequences. In this
case, a sum of Rs. 7.31 crores has been levied as penalty, practically for no
fault on the part of the petitioner. The
amount if directed to be paid, shall cause immense prejudice and hardship to
the petitioner. We, therefore, are of
the opinion that the impugned demand cannot be sustained. It is set aside accordingly.
12. For the reasons aforementioned, this petition
is allowed. The impugned direction is
set aside, with costs. Counsel’s fee
assessed at Rs.1,00,000 (Rupees One Lakh Only).
……………..... J
(S.B.Sinha)
Chairperson
…………….....
(G. D. Gaiha)
Member