TELECOM DISPUTES
SETTLEMENT & APPELLATE TRIBUNAL
DATED 19th
NOVEMBER, 2009
1. Cellular
Operators Association of
14, Bhai Veer Singh Marg
2. Bharti
Airtel Ltd.,
Qutub Ambience (at Qutab Minar)
3. Bharti
Hexacom Ltd.
Qutub Ambience (at Qutab Minar)
4. Idea
Cellular Ltd.,
Plot No.18, Sector 11
Gandhinagar,
5. Reliance
Telecom Ltd.
H Block, 1st Floor
Navi Mumbai,
6. Spice
Communication Ltd.
(Earlier Modicom Network Pvt.Ltd.)
60-D, Sainki Farms
7. Vodafone
Essar East Ltd.
(Hutchison Telecom East Ltd.)
Constantia Office Complex, 11
Dr.U.N. Brahamachari
Street
Kolkata 700 017
8. Vodafone
Essar Mobile Services Ltd.
(Earlier Hutchison Essar Mobile Services
Ltd.)
C-48, Okhla Industrial Area Phase II
9. Vodafone Essar Cellular Ltd.
(Earlier BPL Mobile Cellular Ltd.)
1046, Avanashi Road
Coimbatore 641 018
10. Vodafone Essar Gujarat Ltd.
(Earlier Fascel Ltd.)
6th
Floor Sakar II,
Ahmedabad
380 006
11. Vodafone
Essar Ltd.
(Earlier
Hutchison Essar Ltd.)
Ganpatrao
Kadam Marg
Mumbai 400 013
12. Vodafone Essar Digilink Ltd.
(Earlier Aircel Digilink India Limited)
C-48, Okhla Industrial Area Phase II
Vs.
1. Department
of Telecommunications
Ministry of Communications
Sanchar Bhawan
20,
2. Assistant Director General (WR)
Department of Telecommunications
Ministry of Communications
Sanchar Bhawan
20,
BEFORE:
HONBLE
MR. JUSTICE S.B.SINHA,
CHAIRPERSON
HONBLE MR. G. D. GAIHA,
MEMBER
|
For Petitioners |
: |
Mr. C.S.Vaidyanathan, Senior
Advocate Mr.Manjul Bajpai, Mr. Ashish
Yadav, Ms. Devika Bajpai, Advocates |
|
For Respondents |
: |
Mr.Vineet Malhotra, Advocate Mr. K. Singhal, Advocate |
JUDGMENT
S.B. Sinha
The
first petitioner is an association of the cellular operators. Petitioners No. 2
to 12 are cellular operators. Indisputably,
for the purpose of operating their services, the petitioners are required to take licenses from the first
respondent. They have been granted
licenses by the Department of Telecommunications, the respondent no. 1 herein. License fee is levied in terms of the licence
which was earlier payable in quarterly instalments. They are also required to enter into an
agreement with DoT, wherefor Royalty to the Wireless Planning and Coordination
Wing (WPC) is required to be paid. The mode and manner in which the license fees
and royalty etc are to be paid, have been laid down in the agreements entered
into by and between the respondent no. 1 and the respective cellular operators. The petitioners 2 to 12 had been granted
licenses by the respondent no. 1 in the year 1995.
2. The
Central Government framed a National Telecom Policy in the year 1999, pursuant whereto or in furtherance whereof, in stead of
levying fixed charges, charges were to
be levied on revenue sharing basis.
3. The
question which arises for consideration in this petition is as to whether the
respondents can levy penalty upon the
petitioners for the period February, 1999 and December, 2001 on the outstanding
WPC dues. The demand for payment of penalty, it may be
noticed, on royalty was made for the first time in the year 2006. We may furthermore notice hereto below, a copy
of a demand made on M/s Idea Mobile Communications Ltd dated 10.7.2006 which reads
as under :-
As per the reconciled outstanding as on
31.12.2001(with interest) intimated WPC branch, accounts for Haryana, Kerala
and UP(West) service areas have been recalculated and outstanding dues as on
30.06.2006 are as follows.
|
S.No. |
Service Area |
Amount outstanding as on 30.06.06
(Rupees) |
|
1 |
Haryana |
8,12,76,446/- |
|
2 |
Kerala |
11,26,24,684/- |
|
3 |
UP(West) |
16,71,71,193/- |
2. A
detailed report showing calculation of outstanding dues as well as interest
thereon pertaining to above circles are enclosed. It is requested to make payment of the
outstanding dues within 15 days of issue of this letter.
4. We
may furthermore place on record that no
interest or penalty has been charged for the period 1995 to January, 1999. The principal amount has been paid in
2002. A no dues certificate has also
been issued in the year 2003.
5. With
the aforementioned backdrop of events, we may notice some of the conditions contained
in the agreement.
Before us, the parties
referred to the terms and conditions of the agreement which was executed in a
prescribed format on or about 28.12.1995 between respondent no. 1 and M/s
Aircel Digicable (
The said agreement is in
several parts. We are concerned with the
part dealing with the payment of license fees contained in para 19 thereof and
WPC Wings license contained in para 20.
6. Each
of the conditions mentioned deals with a particular subject matter.
In case of over-due payments,
interest shall be charged on the amount due at the prime lending rate as
specified by State Bank of
7. We
may also place on record that the petitioners have furnished bank guarantees in the year 2002 separately
for license fees and WPC Charges. The mode
of grant of license by the WPC Wing is contained in condition-20. We would refer to paras 20.1 & 20.4 of
the said agreement which read as under:-
20.1 A separate
licence shall be required from the WPC Wing of Ministry of Communications,
which will permit utilization of appropriate radio frequency spectrum for the
establishment & operation of the C.M.T.S. under usual terms and conditions
of that licence. Grant of licence will
be governed by normal rules, procedures & guidelines and will be subject to
completion of necessary formalities.
20.4 Licence
fee and Royalty shall have to be paid for grant of licence which shall be
subject to revision from time to time.
8. Interpretation
of the aforementioned provisions calls for our decision, but before adverting
thereto, we may notice some correspondences which have passed between the
parties and some office orders so as to enable us to ascertain the intent and
purpose of the covenants contained in the said agreement. On or about 20.7.1995, Government of India issued an Office Order in
terms whereof the mode of fixation of rate of royalty for GSM Cellular mobile
telephone service was fixed, paragraph 7 whereof reads as under:-
7. Royalty
for the first year may be charged on quarterly basis, the quarter being
January-March, April-June, July-September and October-December.
9. It
is accepted by the parties that whereas license fees are determined on the
basis of competitive biddings and thus varies from area to area, royalty payable
is a fixed and/or uniform amount. We may
also notice that the Government of India by a letter dated 23.8.1996 addressed
to J.T. Mobiles Limited and Another stated that frequency agreement would be
issued on supply of copy of license agreement by DoT. The said letter was issued on or about
12.6.2007 forwarding therewith an agreement which was not to be treated as a
license and informing the addressees that the Ministry had agreed in principle
to grant licenses to them for establishing wireless telegraph
station wherefor license fee of Rs. 1,00,100/- p.a. would be payable and royalty
would payable at Rs. 14,30,400/- p.a.
13. This
agreement as well as any licence issued by WPC Wing, DOT will be without
prejudice to the terms and conditions contained in the letter of agreement
entered into by you with this Department.
10. The respondents
furthermore issued licenses on or about 26.12.2001 which were valid upto
31.12.2001 (co-terminus with DoT license), clauses 4 & 5 whereof read as
under:-
4. Pay to
the Central Government (W.P.C. Wing) such royalty & license fees as
enforced from time to time.
5.(a) Spectrum
charges for Cellular service spectrum shall be paid annually on percentage
revenue share basis of Adjusted Gross Revenue (AGR) covering Royalty payment
for use of cellular spectrum and licence fee for cellular mobile handsets,
cellular base stations and also for possession of wireless telegraphy equipment
vide GOI order No.L-14014/06/2000-NTG Dated 22.9.2001.
(b) Annual
royalty and License Fee for use of spectrum for point to point links and
MW-Access/Mw-Back bone links shall be paid in accordance with the existing
rules (vide Government of India order No.R-110014/4/87-LR dated 20.7.95).
11. Whereas
clause (a) of
It is also not in dispute
that 1995 Order continued upto 2001. An
amendment took place in 2001 as a result whereof certain changes were effected.
A proposal for amendment
was made by the Government of India by its letter dated 25.9.2001 wherein it
was inter alia stated:-
3.5 Any delay
in payment of Licence Fee, or any other dues payable under the LICENCE beyond
the stipulated period will attract interest at a rate which will be 5% above
the Prime Lending Rate (PLR) of State Bank of
12. We
may notice that by reason of such proposal only, the words or any other dues
were inserted. However, we may hasten to
add that even then, two different licenses were to be issued.
Clause 3.8 of the
proposed license was to be in the following terms:-
3.8. In case,
the total amount paid on the self assessment of the LICENSEE as quarterly
Licence Fee for the 4 (four) quarters of the financial year, falls short by
more than 10% of the payable Licence Fee, it shall attract a penalty of 150% of
the entire amount of short payment. This
amount of short payment along with the penalty shall be payable within 15 days
of the date of signing the audit report on the annual accounts, failing which
interest shall be further charged per terms of Condition 3.5. However, if such short payment is made good
within 60 days from the last day of the financial year, no penalty shall be
imposed.
It refers to payment of license fees
on quarterly basis. Clause 3.9 provided
for payment of royalty towards WPC charges, stating-
3.9 The
Fee/royalty payable towards WPC Charges shall be payable at such time(s) and in
such manner as the WPC Wing of the Ministry of Communications may prescribe
from time to time.
13. Clauses
4.1 and 4.2 provide for securitization of the dues. However, for the aforementioned purposes
also, the dues were to be separately securitized and not jointly. It has not been denied or disputed that for
the first time, demand of interest was made by the respondents by a letter
dated 10.7.2000; paras 2 and 3 of which read as under:-
2. It may be
noted that in this context, the Group on Telecom & IT Convergence (GOT-IT)
under the Chairmanship of Honorable Finance Minister has decided that such
operators who are defaulting in the payment of WPC dues may be asked to pay the
pending dues, and adjustments, if required, may be made subsequently.
3. It may
also be pointed out that interest shall be levied on any outstanding dues not
paid in time. Interest at @ 15% shall be
charged on such outstanding WPC dues.
14. Various
other communications also passed between the parties but therein no mention of levy
of penal interest was made. One of the
petitioners, however, sought for clarification, inter alia, with regard to the
levy of the applicability of the penal interest, if any, from which date and
how the same would be computed.
In reply thereto, the
respondents by a letter dated 30.9.2002 stated
as under:-
I am directed to refer to your letter
dated 26th September, 2002 on the subject mentioned above and to say
that the interest amount shall be charged on the actual amount becoming due as
on 1st April 02 after necessary reconciliation/settlement of data
based on the information/documents submitted by the company. It shall however be in the fitness of things
if provisions payment of the huge outstanding amount is made without further
delay to avoid loss of penal interest being accrued day by day.
By another Office Order dated
26.3.2002, the respondent stated as under:-
(E) Penal
interest shall be levied as per the existing practice and procedure in vogue
for delayed receipt of payments as applicable and on the same terms and
conditions contained under main DOT Licence Agreement and;
(F) Financial
settlement/accounting of spectrum charges based on audited AGRs (subject to
physical verification) shall now be undertaken on financial year basis on the
same lines, and procedures/terms and conditions as for the main DOT Licence
Agreement.
3. Accordingly,
the cellular service providers are requested to submit actual AGRs figures for
the period 1.8.1999 to 31.12.2001 and the estimated AGR figures for the current
quarter (1.1.02 to 31.3.02) immediately.
The service providers should make payment of the spectrum charges for
the quarter 1.1.02 to 31.3.02 immediately and the balance for the period 1.8.1999
to 31st March 02, based on the difference between provisional and
actual AGRs.
4. Outstanding
dues (if any) for the period prior to 1.8.1999 based on the Government of India
orders dated 20.7.1995 are also to be settled separately by the 15th
April, 2002 positively, failing which these will invoke penal interest at the
same rate as stipulated in terms and conditions of the revised DOT Licence
Agreement.
15. A
bare perusal of the aforementioned office order would clearly show that the
payments were to be made in terms thereof and the amendment was sought to be made
effective on and from 1st September, 2001. It is also of some interest to note that even
in the demand for some periods interest has been charged @ 17% p.a., whereas
for some other periods, interest at the rate of 15% has been levied.
16. The
stand of the respondent, before adverting to their submissions, as contained in
para 1 under the heading parawise reply may be noticed:-
1. That the contents of para under reply save
and except what is a matter of record are wrong and hence denied. It is denied that the respondents have
wrongly levied interest, as alleged or that the same is unfair, unjust etc., as
alleged. It is not denied that the
demand Notes were issued by the Wireless Finance Branch (WFD), DOT in
2006. The Wireless Planning and
Coordination (WPC) Wing has reconciled the closing balance as on 31.12.2001 for
the licenses issued up to 30.6.2000 taking into account the conditions laid
down for the payment of penal interest in the service licenses for the belated payments. It is submitted that interest on delayed
payment has been charged @ 15% per annum in view of WPC Wing D.O.
no.L-14041/09/99-NTG dated 10.07.2000 for the period 1.7.2000 to 31.3.2002 and
thereafter at the same rate as stipulated in terms and conditions of the
revised DOT Service License Agreement as also WPC Wing order
No.L-14047/07/2002-NTG dated 26.3.2002.
A copy of the above mentioned D.O. dated 10.07.2000 and the order dated
26.03.2002 are annexed herewith as Annexure R-I (colly).
17. We
would assume that the agreement is bilateral in nature and not a statutory one. The agreement contains several
conditions. Each of the conditions
contained in specified paragraphs are separate and distinct.
18. Mr.
Vineet Malhotra, the learned counsel for the respondent, would contend that
clause 19.8 covers both license fees as also WPC Charges. Sustenance for the said contentions has been
sought to be drawn from clause 20.4 of the said agreement submitting that same
talks both of the license fees as also royalty.
19. It is a well-known principle of law that
the chapter-heading can be noticed for the purpose of interpretation of a
document/statute. A document, although should
be read in its entirety so as to ascertain the intention of the maker thereof, but
it is well-settled that contractual obligations providing for levy of interest
or penalty would not be inferred in absence of any express provision contained
therein.
In TATA
Power Co. Ltd. Vs.
123. Chapter
heading, therefore, is a permitted tool of interpretation. It is considered to
be a preamble of that section to which it pertains. It may be taken recourse to
where an ambiguity exists. However, where there does not exist any ambiguity,
it cannot be resorted to. Chapter heading and marginal note, however, can be
resorted to for the purpose of resolving the doubts.
124. It
furthermore appears that there is a drift from the old value in recent times.
125. We may
notice that the English decisions whereupon reliance had been placed by this
Court in various judgments and in particular Chandler v. DPP
(1962) All ER 142 , str considered to be a no longer a good law in the country
of origin, as stated in Bennion on Statutory Interpretation Fifth Edition at
page 748:
Superseded dicta Phillimore LJ referred to a `general
rule of law' to the effect that marginal notes must be disregarded `upon the
principle that those notes are inserted not by Parliament nor under the
authority of Parliament, but by irresponsible persons'. In fact, with
occasional triffling exceptions, the marginal notes in an Act are not inserted
by parliamentary clerks - or even drafters - but are contained either in the
Bill as introduced or in new clauses added by amendment. Furthermore, the
clerks are not `irresponsible persons', but are subject to the authority of
Parliament. Avory J. said that `marginal notes form no part of a statute'. He
added : `They are not voted on or passed by Parliament, but are inserted after
the Bill has become law'. This is not the case however. The entire Act is
passed by Parliament and is entered, or deemed to be entered, in the Parliament
Roll with all non-amendable components included. These components mostly remain
unchanged throughout the passage of the Bill. They are certainly not inserted
after the Bill has become law. Willes J. after asserting that the marginal
notes and other `appendages' are not part of an Act, said of any Act, passed
after the practice of actually engrossing Acts on the Parliament Roll ceased in
1849: `The Act, when passed, must be looked at just as if it were still entered
upon a roll, which it may be again if Parliament should be pleased so to order;
in which case it would be without these appendages....
126. It is, however, evident from the decision of this
Court in Indian Aluminium Company v. Kerala State Electricity Board MANU/SC/0310/1975
: [1976]1SCR70 , that the modern trend is to take into consideration the
marginal note. It could be used, as has been held, in R.S. Joshi, Sales Tax
Officer,
127. In
20. Condition
No. 19 deals with license fee. Condition
No. 19.4 excludes any charges payable to the WPC Wing whether by way of royalty
or license fee. Clause 13 of the
agreement dated 12.6.1995 clearly refers to two different components thereof,
namely, license fee and other charges.
The correspondences passed between the parties as also the Office Orders
issued from time to time clearly go to show that license fee and royalty for
availing the permission of the WPC Wing bear different concepts. Clause 20.4 of the agreement refers to
license fee and royalty payable separately to WPC Wing of the respondent and
thus the same has nothing to do with payment of license fee as provided for in
Condition No. 19 thereof. This aspect of
the matter also becomes clear from the Office Orders dated 20.7.1995, reference
whereof has been made by us heretobefore.
21. For
the purpose of ascertaining the intention of the parties, it is possible to
take into consideration the fact as to how the respondents understood the
same. In our considered view, the very
fact that the respondents talked in different voices at different point of time
and furthermore as they did not levy any interest for a long time, is itself a
pointer to show that no interest or penalty was leviable.
22. Levy
of interest or penalty must be supported by an authority of law. The respondents themselves
quantified/crystalised the amount and/or rates payable towards WPC Charges only
in the year 2002. Any modification or
novation on a contract is permissible when both the parties thereto agree. If no interest or penalty could be levied in
terms of the provisions of the contract, the purported Office Orders, which
have no force of law, would not make a demand of interest enforceable in
law. Having regard to the fact that the
respondents did not initiate any proceeding and no demand was made prior to
2006, even the provisions of the Interest Act, 1998 would not be applicable in
the facts and circumstances of this case.
Even the respondents had not issued any notice directing that payment
should be made on a particular date failing which interest would be
charged. The only communication received
by the petitioner from the respondents was made on 26.3.2002 in terms whereof,
time for making payment was extended till 15.4.2002. It has not been denied or disputed that the
petitioners have made payments prior to the said date. The respondents, therefore, could levy
interest and/or penalty prospectively and not retrospectively. The imposition of penalty @ 150% of the dues,
thus, even if otherwise valid, could have been enforced only with a prospective
effect. Even otherwise, if the demand of
interest is not sustainable, no question of levy of penalty could arise in
respect of the license fee and the WPC Charges.
The demand of interest and penalty, thus, being not authorized under the
contract, must also be, in the facts and circumstances of the case, held to be
without any authority in law.
23. For
the reasons aforementioned, the petition is allowed.
The impugned demands of
penalty are set aside. The respondents
are hereby directed to recalculate the dues of each of the cellular operator
and adjust all excess amount wrongfully charged from the future bills of the
petitioners.
In the facts and
circumstances of this case, the respondent shall pay and also bear the costs
incurred by the petitioners. Counsels
fee assessed at Rs.50, 000/-.
.....,
J
(S.B.Sinha)
Chairperson
.....
(G. D.
Gaiha)
Member