TELECOM DISPUTES
SETTLEMENT & APPELLATE TRIBUNAL
DATED 18TH DECEMBER, 2009
Tata Teleservices (
Ispat House, B G Kher Marg
Worli, Mumbai-400 018 ….Petitioner
Vs.
Union of
Through the Secretary
Department of
Telecommunications
Ministry of Communications
Sanchar Bhawan
20,
New Delhi-110 001
Assistant Director General (LR)
Department of Telecommunications
Ministry of Communications
Sanchar Bhawan
20,
New Delhi-110 001 …Respondents
BEFORE:
HON’BLE MR. JUSTICE S.B.SINHA,
CHAIRPERSON
HON’BLE
MR. G. D. GAIHA, MEMBER
|
For Petitioner |
: |
Mr. Ramji Srinivasan, Senior
Advocate Mr. Mansoor Ali Shoket, Advocate Mr.
Mohit Jolly, Advocate |
|
For
Respondents |
: |
Mr.
Sanjay R. Hegde, Advocate Mr.
A. Rohen Singh, Advocate |
JUDGMENT
S.B. Sinha
The
petitioner is holder of two licenses;
one for providing basic service commonly known as Unified Access Service (UASL)
being dated 14.11.2003 and the second being Internet Service Provider (ISP)
being dated 11.5.2004.
Whereas a substantial sum is required
to be paid towards license fee in respect of UASL, a token sum of Rupee one is
payable towards license fee for ISP license.
2. The
petitioner introduced a service commonly known as Push-To-Talk (PTT)
service. Before, however, introducing
the same on a commercial basis, the petitioner held discussions on 18.5.2004 with
the Members of the Telecom Regulatory Authority of India (Authority). It with its letter dated 26.5.2004 enclosed a
brief write-up, covering technical aspects, network architecture diagram and highlights
of PTT service, some of the relevant portions whereof are as under:-
“Service
description : The service will enable TTSL
subscribers exchange half duplex voice within TTSL coverage areas.
Technology
behind PTT : PTT is based
on Internet Protocol (IP), allowing half duplex voice between compatible terminals / handsets. It is implemented using application servers
in the CDMA 1x network. The servers
handle call set-up signaling for PTT calls, reservation of talk spurts for one
speaker at a time and real time routing of IP packets.”
It
was stated–
(1)
In
simple terms, PTT, combines walkie-talkie or a two-way radio-functionality with
that of a normal mobile phone. However,
it offers more than just a walkie-talkie.
(2)
PTT
on a cellular network is based on half-duplex VoIP over a CDMA 1x or a GPRS
network.
(3)
The
service allows half-duplex or one way voice communication between users. In other words, only one person can talk at a
time, while the other listens.
(4)
Available
commercially in
(5)
Push-to-talk
technology was explained as being one to one communication through touches, i.e.,
when within one group, one speaks and other listens and unless and until, the
person calling, pushing the button switches it off, other cannot speak.
The petitioner also took up the
matter with the respondent in terms of its letter dated 19.1.2005.
3. By
a letter dated 21.4.2005, the petitioner provided detailed explanations with
regard to the authorized features of the said service.
4. According
to the petitioner, the new application is based on internet protocol under the
category of ISP license and its service area being throughout the territories of
By a letter dated 7.2.2005, the
respondent stated as under:-
“With reference to your letter dated 3.2.2005 while
issues raised in this letter are being examined, the undersigned is directed to
inform that:
(i)
No Licensee is
authorized to violate the terms and conditions of any licence on the pretext of
march of technology or otherwise in any manner and provide services and
features which changes the character of services permissible under the licence.
(ii)
This decision has
finality and is not subject to any advisory from other sources.”
5. At
that stage the petitioner, by its letter dated 9.2.2005, stated–
“2. We
reiterate the position explained in our letter dated 03.02.2005 that PTT is yet
another application based on Internet Protocol that is permissible under the
Category ‘A’ ISP License (with Internet Technology). Thus, there is no bypass of ADC.
3. In
order to facilitate our correct understanding of your letter, may we request
you to clarify whether your letter requires us to temporarily suspend offering
PTT services till you are able to take a final view. Should you require us to do so, we will
immediately comply with your direction.
4. TTML
has no intention of being in breach of any of its License conditions, and would
welcome all opportunity to cooperate with the DOT and participate in any
discussions that you may require us to and would appreciate an opportunity of
personal hearing, before you expeditiously take a final decision in the
matter.”
6. By
a letter dated 9.2.2005 the Chairman of the petitioner company also wrote a
demi-official letter to the Hon’ble Minister of Communications and Information
Technology, stating as under:-
“3. The DoT
(Basic Services Section) asked for some information in January 05 on TTML’s PTT
service, which was furnished. While our reply continues to be under the
consideration of the DoT, we have received a letter dated 7.2.2005 (copy
enclosed) indicating that ‘no Licensee is authorized to violate the terms and
conditions of any licence on the pretext of march of technology.’ In TTML’s reply (copy enclosed) to the
letter, we have assured the DoT that we have no intention to breach any
conditions of any licence.
4. At the
cost of repetition, let me assure you Sir, that TTML, which is a Tata Group Company, has absolutely no
intention whatsoever to breach, or to be seen to breach, any law, rule or
conditions of any licence.
5. We
believe that it is in the interest of the Indian consumer to have access to the
latest value adding services that advancements in Internet technology provide,
and our PTT service is one such application that we are extremely proud to have
brought to the Indian market. We
sincerely believe that this service is fully compliant with all conditions in
our licence, and hope that under your forward-looking leadership, such
innovations for the benefit of the Indian customer will be strongly
encouraged.”
7. The
petitioner also explained the technical details of the petitioner’s PTT service
to the Authority on 9.2.2005, whereafter it responded to various querries
raised therein. The attention of the DoT
was also drawn by the petitioner by a letter dated 16.2.2005 that ‘Hutch’ and
other telecom operators were also providing the said service. It was furthermore stated—
“We would like to draw your kind attention to the
correspondence resting with our letter referred above.
While we await reply to our letter under reference, we
reiterate the position explained in our letter dated 03.02.2005 that PTT is yet
another application based on Internet Protocol that is permissible under the
Category ‘A’ ISP Licence (with Internet Telephony). Further “Push to Talk” is an Application,
which enables users to communicate in a half duplex manner only. Thus, there is
no bypass of ADC.
It may not also be out of place to mention that one
GSM operator is offering PTT service in
We would like to reassure you that TTML has no
intention of being in breach of any of its License conditions, and would
welcome all opportunity to cooperate with the DoT and participate in any
discussions that you may require us to and would appreciate an opportunity of
personal hearing, before you expeditiously take a final decision in the
matter.”
8. Only
on 18.2.2005, the respondent asked the petitioner to stop PTT service. Thereafter, a Show Cause Notice was issued on
22.2.2005, the operative portion whereof reads as under:-
“Provision of Push to Talk (PTT) service is not
permitted under the terms and conditions of licensing agreement No. 820-438/2003-LR
dated 11.03.2004. Your action of
providing of PTT service is substantive violation of terms and conditions of
Clause 35 of Schedule C part I of the License agreement.
You have caused by your act or omission the serious
violation of the terms and conditions of clause 35 of Schedule C part I of the
License Agreement by indulging in activities detailed herein above. Therefore, you are hereby given a notice to
show cause why the License Agreement No. 820-438/2003/LR dtd 11.03.2004 should
not be terminated, for default under clause 10.1 and/or action taken as per the
clause 13.8 of Schedule C part I of the License Agreement. Your reply should reach this office within 30
days of the date of issue of this letter.
This is without prejudice to any other action, which may be taken by the
Government.
Please acknowledge the receipt of
this letter.”
9. Cause
thereto was shown by the petitioner on or about 18.3.2005. It is, however, not denied or disputed that
with effect from 22.2.2005 itself, the PTT service was suspended by the
petitioner and it was disconnected with effect from 25.2.2005, which was
communicated to the respondent by a letter dated 28.2.2005. Only on the said date, namely, 28.2.2005, the
respondent by a letter raised the question of security in the following terms:-
“With reference to the subject mentioned above, the
undersigned is directed to forward the note on monitoring of MMS/GRPS traffic
as received from Jt. Director, IB for making necessary arrangements without
fail.
The contents of this letter should not be disclosed to
any unconcerned employees and the confidentiality of this letter should be
maintained in terms of the license agreement.”
10. Although
the petitioner had not charged its subscribers, it without prejudice to its
rights and contentions tendered to BSNL a sum of Rs. 3,86,648/- on the basis of
the record of calls maintained by it.
The respondent, by a letter dated 10.5.2005, asked the petitioner as to
how the lawful inspection/monitoring of service of law-enforcement agency was
ensured. To the same effect another
letter dated 13.5.2005 was issued. By a
letter dated 13.5.2005, the petitioner stated as under:-
“TTSL/TTML has written to you about re-launching of
PTT application under UASL licence and it would ensure that all security
monitoring equipment are installed before providing the services on a
commercial basis and ensure compliance with applicable security provisions for
PTT calls.”
11. It
furthermore provided the detailed architecture on how the requirements of
security agencies were being met in respect of CRI and CCI by a letter dated
31.5.2005. The petitioner also asked as
to whether the said service could be launched through UAS Service, to which,
the respondent agreed by a letter dated 7.7.2005.
A second Show Cause notice was issued
asking the petitioner to show cause as to why a penalty of Rs. 50 crores should
not be levied. By reason of the said
notice a part of the operative portion of the first notice was sought to be
amended, as therein the cause required to be shown in the first Show Cause
Notice, i.e., as to why the license should not be determined, was not
mentioned. The petitioner responded to
the second show cause notice on 17.8.2005.
12. By
reason of the impugned order dated 21.1.2006, a penalty of Rs. 50 crores has
been imposed on the petitioner.
13. It
is on the aforementioned premise, the
petitioner has filed the present petition praying inter alia for the following
relief:-
“Set aside the impugned Order dated 31.1.2006 imposing
a penalty of Rs. 50 crores on the Petitioner alleging violation of the terms
and conditions of its ISP Licence dated 11.3.04.”
14. Learned
Senior Counsel of the petitioner herein, Mr. Ramji Srinivasan, in support of the present petition, raised the
following contentions:-
1. No
amount of penalty having been provided for in the ISP licence, respondent had
no jurisdiction to specify the amount of penalty purported to be relying on or
on the basis of UASL licence under clause 10.2(ii)
2. The power to levy penalty must meet the
requirements of Article 14 of the Constitution of India.
3. While
passing the order imposing penalty of Rs. 50 crores, the respondent did not
take into consideration the objections raised by the petitioner in its reply to
the show cause notice dated 17.08.2005.
4. The DOT in similar situation having not levied
any penalty on one of the service providers, the impugned order is violative of
Art 14 of the Constitution of India.
5. TRAI
having recommended that no penalty need be imposed, the impugned order is
vitiated in law as no due weight thereon was bestowed.
6. A
Committee having been appointed by DOT in regard to quantification of penalty
for violations of terms and conditions of licence agreement, the impugned order
deserves to be reviewed by DOT in the light of the recommendations made by the
said committee.
15. Mr.
Sanjay Hegde, the learned counsel appearing on behalf of the respondent, on the
other hand, would argue :
(i)
The
petitioner has clearly violated the terms of the license and as such, penalty
has rightly been imposed on it.
(ii)
The
petitioner having been put to sufficient notice not only with regard to the
acts of violation but also the amount of penalty proposed to be levied, the
impugned orders are wholly unassailable.
(iii)
The
license granted to a licensee by the Government of India of an ISP must conform
to the provisions of the Indian Telegraphs Act 1885 and the rules framed
thereunder.
16. The
petitioner, admittedly, was granted two licenses – one for providing basic
service and another being an ISP license.
The correspondences exchanged between the parties, as also the materials
brought on record, clearly show that the question as to whether PTT would
conform to the requirements of an ISP license or not was a contentious issue. Our attention has been drawn to a
communication from Motorola, the manufacturer of PTT, dated 2.3.2006 as
contained in Annexure ‘A’ to the rejoinder filed on behalf of the petitioner to
the counter affidavit filed by the respondent, which reads as under:
“RTP/UDP/IP to interface between the handset and the
server for the bearer path, and SIP/UDP/IP for the signalling path. The major advantage of this service is
carrier’s need minimal or no network resources provision in the existing
network. The PTT service is purely a
data service from the signaling to bearer done over the IP data network and the
routing is done over SIP URI in the format SIP 9820434537@ptt.india.com which again
gets translated into IP address of the PTT handset currently held after the
present PPP session or the PDP context, finally the routing happens at the IP
address.”
17. It
may be true that in terms of the license granted to the petitioner, certain
architecture was to be followed and the same in turn was required to conform to
the requirements as contained in Annexure ‘R-1’ to the counter-affidavit. The PTT server, however, provides Internet
Protocol but not the internet itself.
Our attention, however, has been drawn to the following terms of
license:
“Clause
1.12.5 : Terminating the voice communication to Telephone
within
Clause
1.14.3 : Except
whatever is described in conditions 1.14.1 and 1.14.2 herein above, no other
form of Internet Telephony is permitted.”
18. Mr.
Hegde contended that from the aforementioned provisions, it would be evident
that the petitioner was not permitted to be engaged in any other telecom
service and such prohibition being an absolute one, the violation of conditions
of license is evident.
19. The
petitioner, however, is also a UASL licensee.
It is beyond any controversy that PTT service could have been provided
by the petitioner through the said license.
The petitioner, furthermore, has contended that through the PTT license,
no voice communication was to be undertaken but it was a data
communication. It being one way
connectivity, as contra-distinguished from two-way communications, was merely a
half-duplex and not the full-duplex providing equipment. It may be that the data communication is
converted into a voice communication but as contended by the manufacturer, it
was not a voice communication.
20. In
law, existence of mens rea or actus
21. The
petitioner, furthermore, was served with two show cause notices – one asking it
to show cause as to why the license shall not be terminated and penalty be
imposed and the second, as to why only penalty would not be imposed. By reason of the impugned order, penalty has
been imposed. The license was not
terminated. Effect has, thus, been given
to the second show cause notice and not the first one.
22. The
petitioner had shown cause in response to both the notices. Before issuance of the second show cause
notice no opportunity of personal hearing was granted. The conduct of the respondent clearly
establishes that before the penalty was imposed, which would have to be
preceded by determination of the question as to whether the petitioner was
guilty of violation of condition of license, an opportunity of personal hearing
was to be given. Despite the same,
findings of fact were arrived at. The tenor
of the second show cause notice would demonstrate that respondent had proceeded
to determine the issues with a pre-determined mind which would be evident from
the following:
“5. The explanations submitted by TTML were
examined thoroughly and it was reconfirmed that PTT services as offered by TTML
are not covered/permitted under the license for provision of Internet service
(including Internet Telephony). Clause
35 of Schedule C Part II of the license agreement defines service of services
as Internet access /internet content services including internet telephony as
mentioned in Clause 1.14 of the Schedule C.
The clause 1.14 of the Schedule C Part II defines Internet Telephony
as….”
“6.1 As per
Clause 7.5 of Schedule C Part II of the license agreement, the licensee is
required to obtain clearance from WPC Wing of DoT for using radio links in last
mile linkages. M/s TTML did not obtain
the requisite clearance from WPC for providing radio links to the subscribers
for operating PTT services under ISP license thereby violating the Clause 7.5
of Schedule C Part II of the license agreement.”
In
H.L. Trehan v. Union of India, AIR 1989
SC 568, the Supreme Court of India held as under:-
“Even if any hearing was given to the
employees of CORIL after the issuance
of the impugned circular, that would not be any compliance with the rules of natural justice or avoid the
mischief of arbitrariness as contemplated
by Article 14 of the Constitution. The
High Court, in our opinion was
perfectly justified in quashing the impugned circular.”
In
Gullapalli Nageswara Rao v. APSRTC AIR
1959 SC 308, the Supreme Court of India held as under:
“Though the wording of the information
published speaks of the decision of the
Government, the Chief Secretary obviously must have been referring to the contents of the notification
published two days earlier, on
24-12-1957. We cannot from this
publication in the newspapers
come to the conclusion that the Government having finally decided to reject all possible objections,
went through a farce of an enquiry. We therefore hold, for the first two reasons,
that the quasi- judicial enquiry held by
the State Government was vitiated by the violation
of the aforesaid fundamental principles of natural justice.”
In
V.K. Ashokan v. Asstt. Excise Commnr.
& Ors JT 2009(5)SC 121, the
“The submission of Mr. Iyer
that in few of the matters Assistant Commissioner
of Excise had served notices before the recovery proceedings had been initiated cannot be accepted for more
than one reason. Such a notice had been issued only pursuant
to the order passed by the higher
authority, namely, the Commissioner of Excise.
As the higher authority had
already made up his mind and confirmed forfeiture
of the security as also cancellation of license, administrative discipline would require that it is
complied therewith. Issuance of such notices was, therefore, a mere formality.
In K.I. Shephard v. Union of India,[JT 1987(3) SC 600 ; 1987 (4) SCC 431], this Court observed:
“It is common experience that
once a decision has been taken, there is a tendency to uphold it and a
representation may not really
yield any fruitful purpose.”
Secondly, because when an authority
has already made up his mind, the
formality of complying with the principles of natural justice may be held to be a nominal and sham one.
In Rajesh Kumar & Ors. v. Dy. CIT & Ors. [JT 2006 (10) SC 76 ;
2007 (2) SCC 181], this Court held:
“15. Effect of civil consequences arising out of determination of lis under a statute is stated in State of
23. The
respondent, therefore, not only had arrived at finding of facts in regard to
the violation of the conditions of license as a result whereof, the petitioner
was preempted from giving an effective reply.
In
In
Pepsico India Holdings P. Ltd. v.
“Ordinarily, this Court would
not have gone into the findings of the
fact arrived at by the statutory
authorities but was only required to consider
the correctness of judgment of the learned Single Judge as also the Division Bench of the High Court. However, even in a case of this nature, the authorities stuck to their
own stand which is not expected
from a statutory authority.”
24. It
now stands admitted that the ISP license did not contain a clause for
imposition of a penalty of a fixed sum.
It is, therefore, difficult to conceive as on what premise, imposition
of penalty for a sum of Rs. 50 crores was proposed. It is beyond any controversy now that clause
10.2(ii) of the UASL License provided for imposition of penalty to the said
effect, which reads as under:
“10.2(ii). The Licensor
may also impose a financial penalty not exceeding Rs. 50 crores for violation
of terms and conditions of licence agreement.
This penalty is exclusive of Liquidated Damages as prescribed under
clause 35 of this Licence Agreement.”
Besides
the same, liquidated damages were also leviable in terms of clause 35.1 which
reads as under:-
“The time period for provision of the Service
stipulated in this Licence shall be deemed as the essence of the contract and
the service must be brought into commission not later than such specified time
period. No extension in prescribed due
date will be granted. If the Service is
brought into commission after the expiry of the due date of commissioning,
without prior written concurrence of the licensor and is accepted, such
commissioning will entail recovery of Liquidated damages (LD) under this
Condition. Provided further that if the
commissioning of service is effected within 15 calendar days of the expiry of
the due commissioning date then the Licensor shall accept the services without
levy of LD charges.”
25. The
respondent, thus, proceeded on a wrong premise.
If no amount of penalty was specified in terms of the ISP License, the
respondent had no jurisdiction to initiate a proceeding for imposition of
penalty for a sum of Rs.50 crores. The
respondent is a ‘State’ within the meaning of the Article 12 of the
Constitution of India. It must,
therefore, act fairly and reasonably. A
provision for levy of penalty of such a huge amount must meet the requirements of law as provided for in the
Indian Contract Act. The petitioner in
its reply to the second show cause notice clearly stated that so far as the
purported violation of clause 13.8 is concerned, the same was not attracted, inter
alia, having regard to the fact that they had not charged the subscribers at
all and thus, there was no reason to levy any penalty much less an amount as
high as Rs. 50 crores. The petitioner in
its reply furthermore gave the example of Hutch, a GSM operator which had been providing
PTT service from similar lines since May, 2004.
26. It
may be true that GSM Hutch services had been providing the said services on its
UASL license but if the contention of the respondent is correct, insofar as the
same would have given rise to security problems is concerned, both service providers
stood on similar footing. Admittedly,
the respondent had not levied any penalty on the providers of services of
similar nature. The impugned Order,
therefore, attracts the wrath of Article 14 of the Constitution of India.
27. The
petition is, therefore, allowed. The
impugned Order is set aside. However, as
the petitioner itself has offered, a sum of Rs. 3.86 lakhs to BSNL towards the
loss, which might have been incurred towards inter-connection charges, in our
opinion, the petitioner should be directed to pay the said amount to the DoT,
which in our opinion would meet the ends of justice. The respondent must pay and bear the costs of
the petitioner Advocate’s fee assessed at Rs. 50,000/-.
……………..... J
(S.B.Sinha)
Chairperson
…………….....
(G. D. Gaiha)
Member