Whether for recovery of damages, a contracting party is required to take recourse to a statute or the contract or have to recourse to damages de’hors the contract, is the question involved herein.
2. The petitioner, a company registered and incorporated under the Indian Companies Act, 1956, is engaged in the business of providing IT and IT enabled Services to its clients both in India and abroad.
The first respondent, in terms of Section 4 of the Indian Telegraph Act, 1885 (‘The Act’), grant registration/licenses to various applicants.
In the year 1999, the Central Government issued a new Telecom Policy, commonly known as NTP 1999.
Clause 1.1 of the said Policy reads as under :-
“1.1 The Government of India (Government) recognizes that provision of world class telecommunications infrastructure and information is the key to rapid economic and social development of the country. It is critical not only for the development of the Information Technology industry, but also has widespread ramifications on the entire economy of the country. It is also anticipated that going forward a major part of the GDP of the country would be contributed by this sector. Accordingly, it is of vital importance to the country that there be a comprehensive and forward looking telecommunications policy which creates an enabling framework for development of this industry.”
3. The new policy framework is provided for in para 3 of the said Policy, inter-alia, in regard to Other Service Providers besides various other telecom services.
We may notice para 3.7 of the said Policy :-
“3.7 For applications like tele-banking, tele-medicine, tele-education, tele-trading, e-commerce, other service providers will be allowed to operate by using infrastructure provided by various access providers. No licence fee will be changed but registration for specific services being offered will be required. These service providers will not infringe on the jurisdiction of other access providers and they will not provide switched telephony.”
4. On a question as to whether for grant of Other Service Providers (OSP) for infrastructure providers, a licence is required or not, the views of the Telecom Regulatory Authority of India (TRAI) were obtained. At the relevant point of time, registration of infrastructure provider used to be granted with Infrastructure Provider Category-I (IP-I) and Infrastructure Provider Category-II (IP-II).
We may notice the relevant portion thereof :-
“INFRASTRUCTURE PROVIDER CATEGORY – I (IP-I)
For IP-I the applicant company is required to be registered only. No licence is issued for IP-I. Companies registered as IP-I can provide assets such as Dark Fibre, Right of Way, Duct space and Tower. This was opened to private sector with effect from 13.08.2000. All Indian registered companies are eligible to apply. There is no restriction on foreign equity and number of entrants. There is no entry fee and no bank guarantee. The applicant company is required to pay Rs.5000/- as processing fee along with the application.”
5. TRAI, in its recommendations, opined that no licence is required to be granted.
Respondent No.1 herein pursuant to or in furtherance of the Telecom Policy, 1999, decided to register the Infrastructure Provider Category I. The petitioner having applied therefor, it was granted a Registration Certificate on or about 02.02.2005, the relevant provisions whereof read thus :-
“Registration Certificate for Infrastructure Provider Category-I (IP-I)
This is to certify that M/s. Computer Sciences Corporation India Pvt. Ltd. with registered office at C-24/25, Sector 58, Noida-201301 is registered as Infrastructure Provider Category I (IP-I) to establish and maintain the assets such as Dark Fibre, Right of Way, Duct Space and Tower for the purpose to grant on teas/rent/sell basis to the licensees of telecom service license under Section 4 of Indian Telegraph Act, 1885 on mutually agreed terms and conditions.
2.0 In no case the company shall work and operate or provide telegraph service including end to end bandwidth as defined in India Telegraph Act, 1885 either to any service provider or any other customer.
5.1 This Registration Certificate shall be New Delhi of as may be fixed by the ‘ARBITRAL TRIBUNAL” anywhere in India.
6.0 The Registered company can provide the infrastructure as stated above to any person. The company shall, in no case, grant in any manner the infrastructure to any erstwhile licensee, whose license is either terminated or suspended or not in operation at given point of time. In the event of any infrastructure allowed beforehand, then the Registered company be obliged to withdraw the grant of infrastructure and to disconnect or sever connectivity immediately without loss of time and further, upon receipt of any reference from the Licensor in this regard, disconnection shall be made effective within an hour of receipt of such reference. On the question of disconnectivity decision of the Director General Telecom shall be final.
7.1 The Registered company make available on demand to the agencies authorized by the Government of India, full access to the network for technical scrutiny or inspection which can be visual inspection or any operational inspection.
7.4 The Government shall have right to take over the equipment and networks of the Registered company or revoke/terminate/ suspend the registration of the company either in part or in whole as per directions, if any, issued in the public interest by the Government in case of emergency or war or low intensity conflict or any other eventuality. Provided any specific orders or direction from the Government issued under such conditions shall be applicable to the Registered company and shall be strictly complied with. Further, the Government reserves the right to keep any area out of the operation zone of the service if implications of security so required.
8.0 Any breach of the above terms will lead to the cancellation of the registration without any further notice.”
6. The petitioner also applied for and was granted a Registration Certificate in relation to its ‘Other Service Provider’ activities namely various call centers located at Sector 58 and Sector 62 at Noida in the state of Uttar Pradesh.
Indisputably, its aforementioned offices were connected by Optical Fibre Cable. The petitioner was also granted registration for setting up international call centers at Noida on or about 06.7.2006. We may notice the relevant portion thereof, which is as under :-
“The above referred request of M/s Computer Science Corporation India Pvt. Ltd. has been registered for setting up Extended International call centres at Noida, U.P. under the Other service Provider (OSP) category as defined in New Telecom Policy ’99 (NTP’99). The details are as per para 2 below. This registration is subject to the OSP terms and conditions. These terms and conditions are also available on the website. ‘www.dot.gov.in/osp/osp.html’.”
7. The other terms and conditions for grant of the said registration have been separately issued, a copy whereof has been placed before us.
We may notice some of the said conditions. Clause 1 provides for definitions. The terms ‘Applications Services’ and ‘Telecom Resource’ have been defined in Clause 1 (a) and 1 (d).
International OSP has been defined in Clause 1(g) to mean :-
“1.(g) ‘International OSP’ means the OSP providing the Application Services within national boundaries.”
8. Chapter II provides for the general terms and conditions for OSP Registration for Domestic or International OSP Centre.
Clauses 5 (i) and 5 (iv) as also Clause 6 thereof read as under :-
“5 (i) The Authority reserves the right to suspend the operation of this Registration at any time, if, in the opinion of the Authority, it is necessary or expedient to do so in public interest or in the interest of the security of the State or for the proper conduct of the Telegraphs. If situation so warrant, it shall not be necessary for the Authority to issue a notice for seeking comments of the OSP for this purpose and the decision of the Authority shall be final and binding.
5.(iv) Breach of non-fulfillment of Registration conditions may come to the notice of the Authority through complaints or as a result of the regular monitoring. Wherever considered appropriate, Authority may conduct an inquiry either suo-moto or on complaint to determine whether there has been any breach in compliance of the terms and conditions of the Registration by the OSP and upon such inquiry the OSP shall extend all reasonable facilities and shall endeavour to remove the hindrance of every type.
6. Actions pursuant to Termination of Registration
(i) If under the Registration Agreement, material event occurs which entitle the Authority to terminate the Registration Agreement, the Authority shall proceed in accordance with the terms and conditions provided in the Agreement.
(ii) On termination or surrender or expiry of the Registration, the Bank Guarantee shall be released to the OSP only after ensuring clearance of all dues, which the OSP is liable to pay to the Authority. In case of failure of the OSP to pay the amounts due to the Authority, the outstanding amounts shall be realized through encashment of the Bank Guarantee without prejudice to any other action(s) for recovery of the amounts due to the Authority without any further communication to the OSP.”
9. Other terms and conditions specific to the Domestic OSP have been provided for in Clauses 3 (1) (2) and (4) thereof read as under :-
“3.(1) Domestic OSP is permitted to terminate PSTN/PLMN connection with outgoing facility on the same EPABX provided that such PSTN/PLMN lines shall be used for making calls through normal NLD network only and in no way directly or indirectly cause bypass of licensed National Long Distance Operator (NLDO) jurisdiction. There shall be a logical partitioning to ensure the separation of these facilities. They may have other connectivity e.g. lease circuit and virtual private network (VPN) at the same centre, however, there shall be any call flow between these PSTN lines and Leased lines.
(2) Interconnectivity of two or more Domestic Centres of the same Company or group of companies is permitted.
(4) The Authority reserves the right to carry out the audit periodically. If the Authority is satisfied that there has been a violation of any of the conditions, it reserves the right to take punitive action including forfeiture of the security deposit and/or the cancellation of the registration.”
10. An inspection of the petitioner’s premise has been carried out.
By reason of a letter dated 03.11.2010, the petitioner was apprised of certain violations by the TERM Cell, Delhi Team inter-alia, stating :-
“M/s. CSC is using the optical fiber to interconnect the OSP centres at Noida under the ambit of registered IP-I Registration No. 85/2005 dated 02.02.2005 IP-I can provide the service to the licensee. License granted by DOT under the Section 4 of TA-1885. OSP is not the licensee under Section of ITA-1885. Hence M/s CSC as an OSP Service provider cannot use the Optical fiber under the IP-I registration.”
11. It was directed :-
“In view of the above, under Chapter VI Point 1(3) of terms and conditions of OSP registration, you are directed :-
• To disconnect the usages of telecom resources from by M/s CSC under the ambit of IP 1 Registration and to migrate to telecom resources from authorized telecom service providers of DoT only within seven days.
• To obtain permission from DoT for using the encryption for more than 40 bits.
• To make a presentation on PPU/variable charge IPLC services taken along with TSP how these services have been commissioned along with the network diagram and devices and how these services fit the license condition within fifteen days. Date of presentation may be decided under consultation with undersigned.
• To surrender OSP registration which are not in operation with the undertaking that the Telecom resources taken for these un-operational locations has been surrendered within seven days.”
12. The petitioner was asked to comply with the said directions issued in the following terms :-
“Send the compliance of the above as per scheduled above and explain within three day from the date of issue of this letter, why the action may not be initiated against you for the violation of the OSP registration terms and conditions. DoT shall not be responsible for any loss occurring to the OSP due to any delay in compliance to these directions.”
13. Inter-alia on the premise that it did not have enough time to respond thereto, the petitioner asked for a week’s time to comply with the said directions on the premise that most of the key people were on leave due to a festival season.
Respondent No.1, by another letter dated 08.11.2010, yet again pointed out the alleged violation of the conditions of registration at the hands of the petitioner, stating :-
“1. The OSP center at C-24/25, Sector 58; A-47, Sector 58, and A-44/45, Sector-62 were interconnected on the optical fiber.
4. As per the IP-1 registration guideline dark fiber can be granted on lease/rent/sale basis to the licensee of Telecom Service licensed under Section 4 of ITA Telegraph Act, 1885, OSP centers are not the licensee under Section 4 of ITA Telegraph Act, 1885. It is only the registration under NTP-99, also mentioned in para one of OSP registration issued for the above mentioned OSP Centers.
5. By providing the energized optical fiber for OSP center M/s CSC has violated the terms and condition of IP-1 registration and acted as illegal UASL/NLD license.”
14. The petitioner by a letter dated 10.11.2010 submitted its response to the said notice and the observations and directions made by it, stating :-
“1. We have initiated design discussions with the authorized telecom service providers to submit the proposal on immediate basis. However, they need to do a feasibility study for all inter building connectivity. We are in continuous follow up with them and work in this regard is in progress.
2. We are receiving these services through Sify Technologies Limited which is an authorized service provider in providing internet services. Although our prime contract is with Global Crossing, Sify Technologies Limited is the Authorised partner of Global Crossing in India and authorized to provide services in India. We are enclosing the declaration letter from Sify duly signed by their authorized signatory.
3. We have initiated action to resolve the issue of using the encryption for more than 40 bits. For this resolution, we have already taken an appointment with Director, Data Services, Sanchar Bhawan on Friday 12th November, 2010.
4. We have discussed and have instructed our service providers to prepare the required presentation to discuss PPU and IPLC for contract centre services. Please let us know the date and time for us to arrange the meeting with the concerned service providers.
5. We are submitting the application for surrendering the OSP registrations which are not in operation. (Copy of application enclosed).
In view of the above technical activities which have some gestation period, we request your respectable office to give requisite time to complete them.”
“1. We have initiated design discussions with the authorized telecom service providers to submit the proposal on immediate basis. However, they need to do a feasibility study for all inter building connectivity. We are in continuous follow up with them and work in this regard is in progress.
5. We are submitting the application for surrendering the OSP registrations which are not in operation. (Copy of application enclosed).”
15. The Government of India, however, by its letter dated 12.11.2010, directed as under :-
“1. To disconnect the usages of telecom resources from by M/s CSC under the ambit of IP 1 Registration and to migrate to telecom resources from authorized telecom service by 15.11.2010 15.00 hrs., failing which OSP registration detailed as below stands suspended with effect from 15.11.2010 17.00 hrs till further orders.
Location of call center OSP registration Date of issue
C-24/25 Sec-58 10-2524(1)/2007-OSP 01/07/2008
A-47, Sec-58, Noida 10-693/2003-OSP 20/01/2004
C-25, Sec-58, Noida 10-346/2002-OSP 10/07/2002
C-29, Sec-58, Noida 10-1286/2006-osp 06/07/2006
A,B and E Block A-44 and 45, Sec-62, Noida 50-VTMD/2007/OSP/
A-44and45,Sec-62,Noida 10-2622/2007-OSP 03/12/2007
C-24/25, Sec-58 10-2524/2007-OSP 21/11/2007
2. To furnish the undertaking clearly stating that the company will deposit the loss occurred to DoT/Government of India due to use of unauthorized telecom resources being used by M/s CSC within seven days as and when intimated by DoT/ Government of India.”
16. Copies of the said letter were forwarded to major operators, which according to the petitioner, was done so as to put the petitioner to distress.
By a letter dated 15.11.2010, the petitioner stated :-
“At the outset, permit us to state and record that we never had nor have the slightest predilection to violate any rules or regulations covering the registration of “OSP” operations run by our company. In that spirit, permit us to take up each of the directions contained in your aforesaid letter.
We hereby undertake to make good any loss caused to the DoT/ Government of India on account of telecom resources as presently configured and used by the company from the date of such use to the date of switch over to resources of a service provider.
In view of our assurances, undertaking and furnishing of information, as set of hereinbefore, we request you not to take any further steps towards suspension of our OSP and this should be communicated to our Service Providers by your goodself’s office.
Any precipitate action at this stage is likely to cause serious prejudice to the company and its employees. We request you to give us sufficient time to resolve the issues raised.”
17. An undertaking was also given by the petitioner to the aforementioned effect in the following terms :-
“We, Computer Sciences Corporation India Private Limited, do hereby undertake to make good any loss caused to the DoT/Government of India on account of telecom resources as presently configured and used by the company from the date of such use to the date of switch over to the resources of a service provider.”
18. By reason of a letter dated 22.11.2010, the prayer of the petitioner for extension of time was allowed. However, by a letter dated 25.11.2010, the loss allegedly suffered by the respondent was estimated at Rs.26,76,19,673/-. It was stated :-
“The recovery of this amount is in addition to any other action that Government may deem fit to take.”
19. The petitioner was asked to pay the aforementioned amount. By reason of a letter dated 26.11.2010, the petitioner asked for a methodology of calculation of the aforementioned amount pursuant whereto the respondent by its letter dated 20.11.2010 stated as under :-
“In this case, the loss calculated is as per prevailing license fee due to be paid to the DoT. The calculation has been done as per the prevailing license condition i.e. licence fee (17% 10%), penalty (150% 50%) and interest monthly compounded (SBIPLR+5%/ SBIPLR+2%). The tariff of the bandwidth has been taken as per prevailing TRAI guidelines. Period has been considered from the date of registration of IP-1 i.e. 02.02.2005 and till 13.12.2010.”
20. The petitioner, however, in terms of its letter dated 29.11.2010 marked “without prejudice” inter-alia stated :-
“We reiterate our commitment to address the situation arising out of use of OFC linking our offices, in a manner which was apparently not permitted. We have, subsequently duly demonstrated our intentions by fully cooperating with your audit team and all the material facts/documents have been shared with them.
The license fee has been computed on the total installed capacity and not on the usage. We have given all the relevant documents and log reports for the last 15 months to your team to demonstrate that the peak usage (as of the current period) is 10% of the total lit capacity. It is a common practice that the total installed capacity is normally decided based on future growth plans and requirement and does not represent the actual usage. Also, in case we had taken the said capacity from a service provider we would have contracted/ paid only for the actual usage and not for the installed capacity. In this connection, we therefore, humbly request to kindly consider only the capacity actually utilized for the purpose of computing the notional loss of LF to the Government. The capacity actually utilized can and is easily worked out and should, in our view, be fairly the figure to be adopted to work out the LF losses to the Government. Using installed capacity figures will, we feel, be incorrect and result in very harsh financial consequences for our company.
We understand that a very steep penalty of 150% has been imposed for the first year, and 50% for the rest of the years. In view of the peculiar facts and circumstances of this case, may we request that penalty be not imposed.
Further, we have observed that an interest amounting to INR Rs.6,04,34,371/- has been levied even on the penalty imposed on us, for the entire duration. Interest on penalty, we understand, would run only from day of default in paying the penalty and not retrospectively. This interest on the penalty amount is, therefore, we believe, been imposed erroneously and needs to be reconsidered.
We have observed that the interest has been computed based on the PLR (with the mark up) and it has been further compounded on monthly basis. Keeping in mind high rate of interest (including the mark up) being charged, compounding the same is causing grave injustice and undue financial hardship to the Company. We, therefore, humbly request your goodself to kindly reconsider the compounding of interest and impose only simple interest.
We assume that the License Fee and the penalty imposed has been based on an assumption of loss which DoT would have suffered had this services were rendered by a Service Provider having a UAS License. We would like to submit here that the entire calculation would require reconsideration as the service could have been provided through a Service Provider having a ISP License as well in which case the rate of calculation could be much less and therefore would request your reconsideration on the methodology adopted here for the calculation.We once again reiterated that we are a law abiding Company and there seems to have been a bonafide mistake for which we have agreed to compensate the Government for the loss of license fee, in a best possible manner. We have duly extended our fullest co-operation during your investigation and our subsequent actions on the issue are the testimony of the fact. The losses were not deliberately caused. We are an Other Service Provider (OSP) and the terms and conditions of a telecom license do not apply in strict terms to an OSP. Therefore, we request that while working out the compensation to Government, thumb rule calculations based on telecom license may be used, but interest and penalty intended to be inflicted may be lower. This needs to be taken into consideration.
After clarity is obtained with regards the calculations, we will take the necessary permission from our corporate office in USA to make the payments of amounts finally settled. While we will endeavour to meet the dateline of December 2, 2010, we may require extension of time. In event of our needing some more time for compliance, we will make a formal request for such, on or before December 2, 2010.”
21. It is on the aforementioned premise, the petitioner filed this petition inter-alia praying for the following reliefs :-
“(a) Direct the DoT to recalculate the said levy of Rs.26,76,19,673/- crores and issue of fresh demand;
(b) Direct DoT not to enforce its said demand of levy of Rs.26,76,19,673/- crores until the final disposal of the present Petition;
(c) Direct DoT not to take any coercive action/steps against the Petitioner in the present matter until the final disposal of the present Petition.”
22. The respondent in its reply inter-alia contended :-
(i) The petitioner, being not a licensee or a service provider, this petition is not maintainable;
(ii) Remedy of the petitioner, if any, is to take recourse to the arbitration agreement entered into by and between the parties hereto;
(iii) The petitioner has caused loss of revenue to the respondent, by resorting to illegal activities by energizing its cable;
(iv) The respondent has suffered a loss which, however, was re-calculated at Rs.17,96,543/- as detailed in Annexure-7 thereto.
23. Mr. Meet Malhotra, the learned Senior Counsel appearing on behalf of the petitioner, would contend :-
(i) Keeping in view the expansive nature of the telecom activities in this country in terms of various statues operating in the field; and in particular, the 1885 Act as also National Telecom Policy,1999, the registration of ISP-I and OSP should be considered to be ‘a licence’ within the meaning of Section 4 of the 1885 Act;
(ii) The Arbitration agreement entered into by and between the parties hereto cannot be resorted to having regard to the jurisdiction of this Tribunal, which is itself an expert body;
(iii) Having regard to the fact that the petitioner has a right of way, the petitioner cannot be said to have committed any error, whatsoever, in taking its cable across the street for connecting its offices and in view of the fact that only provision contained in the Registration Certificate being restriction on sale or lease of the infrastructure to any outsider, the petitioner cannot be said to have committed an illegality;
(iv) In any event, as it had rectified the error on its part, if any, no further action was required to be taken;
(v) In any event, the respondent was entitled to the actual loss suffered by it and not the amount of Rs.17,96,543/- as :-
(a) Even its terms cannot be made applicable to the petitioner;
(b) There was no basis therefor;
(c) The petitioner had not been utilizing its full capacity;
(d) Interest charged at the rate of 5 percent over the bank rate must be held to be penal in nature;
(e) The penalty at the rate of 50 percent over the alleged loss of revenue could not have been imposed.
24. Mr. Ruchir Mishra, the learned counsel appearing on behalf of the respondent, on the other hand, would urge :-
(i) The Registration Certificate has been granted to the petitioner not in terms of the provisions of the 1885 Act, but in terms of the National Telecom Policy, 1999 and, thus, the petitioner being neither a licensee nor a service provider within the meaning of TRAI Act, 1997, this petition is not maintainable.
(ii) The petitioner in its turn, was merely to develop the infrastructure facilities for the licensees and only for that purpose it had been given a right of way.
(iii) The petitioner could not have energized its ‘end to end’ i.e. ‘point to point’ connections connecting all its call centres at Noida and thus, it must be held to have resorted to illegal activities;
(iv) The petitioner’s prayer has been limited to Prayer 1 made in the petition and the amount of damages having been re-calculated, this petition has become infructuous.
(v) The petitioner having been carried out the activities, which could have been carried only by a Unified Access Service Licensee, the
respondent must be held to have suffered damages by way of loss of revenue as a result whereof it also would be entitled to interest on penalty in terms of the said licence.
25. The 1885 Act was enacted, inter-alia to make the law relating to telegraph in India.
The term ‘Telegraph’ has been defined under Section 3 (1) (a) to mean as under :-
“[(1) "telegraph" means any appliance, instrument, material or apparatus used or capable of use for transmission or reception of signs, signals, writing, images and sounds or intelligence of any nature by wire, visual or other electro-magnetic emissions, Radio waves or Hertzian waves, galvanic, electric or magnetic means.
Explanation. – "Radio waves" or "Hertzian waves" means electro-magnetic waves of frequencies lower than 3,000 giga-cycles per second propagated in space without artificial guide;]”
26. Section 4 provides for exclusive privilege in respect of ‘telegraph’ and power to grant licence in the following terms :-
“(1) Within [India], the Central Government shall have exclusive privilege of establishing, maintaining and working telegraphs:
Provided that the Central Government may grant a license, on such conditions and in consideration of such payments as it thinks fit, to any person to establish, maintain or work a telegraph within any part of [India]:
[Provided further that the Central Government may, by rules made under this Act and published in the Official Gazette, permit, subject to such restrictions and conditions as it thinks fit, the establishment, maintenance and working-
(a) of wireless telegraphs on ships within Indian territorial waters [and on aircraft within or above [India], or Indian territorial waters], and
(b) of telegraphs other than wireless telegraphs within any part of [India].”
27. Section 20 occurring in Part IV of the said Act provides for penalties for establishing, maintaining or working unauthorized telegraph, sub-section 1 of which reads as under :-
“If any person establishes, maintains or works a telegraph within [India] in contravention of the provisions of section 4 or otherwise than as permitted by rules made under that section, he shall be punished, if the telegraph is a wireless telegraph, with imprisonment which may extend to three years, or with fine, or with both, and in any other case, with a fine which may extend to one thousand rupees.”
28. Section 20 (A) provides for breach of conditions of licence, in terms whereof, a fine of Rs.1000/- may be levied.
29. This Tribunal, however, has been constituted in terms of the Telecom Regulatory Authority of India Act, 1997.
We may notice certain provisions thereof.
30. The term ‘licencee’ has been defined under Section 2 (e) to mean :-
“2(e). "Licencee" means any person licenced under sub-section (1) of section 4 of the Indian Telegraph Act, 1885 for providing specified public telecommunication services;”
31. The term ‘licensor’ has been defined to mean :-
“2(ea) ‘licensor’ means the Central Government or the telegraph authority who grants a licence under section 4 of the Indian Telegraph Act, 1885 (13 of 1885).”
32. Section 2 (j) defines ‘service provider’ in the following terms :-
“2( j) "service provider" means the Government and includes a licensee;”
33. ‘Telecommunication Service’ has been defined under Section 2 (k) as under :-
“2(k) "telecommunication service" means service of any description (including electronic mail, voice mail, data services, audio tex service, video tex services, radio paging and cellular mobile telephone services) which is made available to users by means of any transmission or reception of signs, signals, writing, images and sounds or intelligence of any nature, by wire, radio, visual or other electro-magnetic means but shall not include broadcasting services.”
34. Section 14 of the Act provides for establishment of an Appellate Tribunal to adjudicate in a dispute – (i) between the licensor and the licensee; (ii) between two or more service providers; and (iii) between a service provider and a group of consumers.
35. We may, for the sake of considering this aspect of the matter, may also consider Sub-section 1 of Section 14-A. It reads as under :-
“The Central Government or a State Government or a local authority or any person may make an application to the Appellate Tribunal for adjudication of any dispute referred to in clause (a) of section 14.”
36. Before, however, the question with regard to maintainability of the petition having regard to the rival contentions made before us by the parties is considered, we may notice that the 1885 Act does not lay down any procedure or grant of licence. The Central Government, devices procedures therefor from time to time.
Constitution of India
37. Telegraph is a Central subject. The said Act has also been saved in terms of Article 372 of the Constitution of India.
By reason of the provisions contained in Article 77 of the Constitution of India, all executive actions of the Government of India are required to be taken in the name of the President.
National Telecom Policy although provides for a goal post, it is not and cannot be said to be an executive action within the meaning of the provisions of the Article 77 of the constitution. No licence can be granted in terms of a policy decision and appropriate decision in that behalf has to be taken by the Executive Government.
Right to carry on any business by the Union of India is provided for in Article 298 of the Constitution of India. It reads as under :-
“298. Power to carry on trade, etc The executive power of the Union and of each State shall extend to the carrying on of any trade or business and to the acquisition, holding and disposal of property and the making of contracts for any purpose:
Provided that (a) the said executive power of the Union shall, in so far as such trade or business or such purpose is not one with respect to which Parliament may make laws, be subject in each State to legislation by the State; and
(b) the said executive power of each State shall, in so far as such trade or business or such purpose is not one with respect to which the State Legislature may make laws, be subject to legislation by Parliament.”
38. Section 4 of the 1885 Act provides for a monopoly in favour of the State. Only by reason of a National Telecom Policy, 1994, the Central Government thought of a duopoly, by reason whereof it had taken a policy decision to grant licence to various private players on the basis of the bids submitted by them in respect of each circle. However, by reason of National Telecom Policy, 1999, the Central Government thought to take recourse to Multipoly. The new policy frame work focuses on creating of environment, which enables continued attraction of investment in the telecom sector and allows creation of communication infrastructure by liberalizing on technological development and towards the said end, it was to look at the Telecom service sector in respect of Cellular Mobile Services, Radio Paging Services, Public Mobile Radio Trunking Services, National Long Distance Operations, International Long Distance Operations, Other Service Providers, Global Mobile Personal Communication by Satellite Service Providers and V-SAT based Service Providers.
From the stage of communication by voice only, the definition of ‘telegraph service’ has been expanded from time to time. The petitioner, we are informed, made investments in India.
The petitioner was granted a Registration Certificate in stead and in place of a licence. The term ‘licence’ as indicated heretobefore, is not defined in the 1885 Act.
The licence granted by way of auction to a highest bidder need not necessarily be statutory in nature. It is a trite law that the words ‘licence’ and ‘permission’ are interchangeable terms. It has been so held in the Modi Rubbers Ltd. Vs. Union of India reported in 2010 (150 ELT page 52) in the following terms :-
“16. The provisions of Sub-section(2) of Section 11, Rule 15, Form ‘F’ as also the dictionary meanings of the word ‘license’, as noticed hereinbefore, in no uncertain terms show that the words ‘license’ and ‘permission’ are inter-changeable.
22. We have arrived at the aforementioned conclusion inasmuch as there does not exist any distinction between license and permission.”
39. We are in the days of convergence.
A mobile telephone may serve different purposes and render different services including a computer, a television as also can be used for communication through voice mail, message service, banking education, health etc.
NTP 1999 itself suggested that the 1885 Act should be substituted by a new Act as it does not and cannot meet all the current situations. Despite such a policy decision taken, the said Act has not been amended.
40. TRAI also, despite being a Regulator not only in respect of telecom service and also broadcasting and cable service, has failed to provide for a regulation in terms whereof both telecom as also broadcasting and cable services can be regulated by a single statute.
The said question came up for consideration before this Tribunal in Star India Pvt. Ltd. Vs. Bharat Sanchar Nigam Ltd. being Petition No. 172 of 2009 wherein applying the principles of ‘purposive construction’, this Tribunal observed that in the changed situation, the term ‘Government as a service provider’ lost its significant meaning and in the event, the Bharat Sanchar Nigam Ltd. has taken over all the functions of the Government as a provider of all telecommunication services.
41. It was noticed that Prasar Bharati constituted under Prasar Bharati Act also questioned the jurisdiction of this Tribunal on the premise that it does not render any telecommunication service and is not a licensee, which contention was rejected by this Tribunal in M/s. Total Telefilms Ltd. vs. Prasar Bharati being Petition No. 183 (C) of 2008 disposed of on 15.12.2008.
In view of the expansive nature of jurisdiction, this Tribunal, having regard to the decision of the Supreme Court of India in Cellular Operators Association of India Vs. Union of India in 2003 (3) SCC page 186 and Union of India Vs. Tata Teleservices (Maharashtra) Ltd. reported in 2007 (7) SCC page 517, observed :-
“A licence granted by the Department of Telecommunication would not be applicable in relation to Broadcasting Services, if the purpose and object of the Act is given liberal meaning, but as noticed heretobefore, permission granted by the Government of India may also be construed to be a license. Such a service even otherwise may not require license under ‘the Telegraph act’.
In Total Telefilm Vs. Prasar Bharti, this Tribunal, as noticed supra, has held that license granted by any other Ministry by way of ‘permission’ would also amount to grant of a license within the meaning of the provisions of Telegraph Act.”
42. This Tribunal also followed its earlier decision in Aircel Digi Link Vs. Union of India reported in 2005 (3) Company Law Journal page 461 to hold that an arbitration proceeding to determine the disputes between the service providers is not maintainable.
43. It is a well settled principle of law that the Court must proceed with the march of time in the matter of interpreting the provisions of a statute. It must march with the scientific and technological development. It may, in some given cases, even take into consideration the development which has taken place in the international field as also the economic policies adopted by the Central Government. NTP 1999, we have noticed heretobefore, is in furtherance of an economic policy. Creation of this Tribunal in the year 2000 upon abolishing the appellate jurisdiction of the High Court and conferring upon it an original jurisdiction, was also to achieve an economic policy, wherefor a specialized expert Tribunal has been created. This Tribunal excludes the jurisdiction of ordinary Civil Courts. As stated heretobefore, even in the arbitration agreement entered into by and between the parties to a contract shall stand superceded.
44. A field, be it legislative or executive, should ordinarily be covered by a statute. Only when a statute does not operate in the field, the Executive Power of the State including Union may extend to the matters with respect to which Parliament has power to make laws i.e. those which are listed in List I and List III of the 7th Schedule of the Constitution of India.
45. A legislative entry, as is well known, should be construed widely. Provision of List I of the Seventh Schedule of the Constitution provides for Posts and Telegraph, Telephones, Wireless, Broadcasting and other like means of communications. The field of telecommunication is, thus, covered by a Central Act.
Interference by the Executive in that field must be held to be prohibited. It is, keeping that in view apart from other Statutes governing the field, the Telegraph Act and the 1997 Act should be construed. They should be read conjointly.
46. We may analyse the provision of Section 4 of the 1885 Act.
By reason of the 1st proviso appended thereto, the Central Government may grant a licence, The format of licence is not prescribed. Such licence may be granted to any person to establish, maintain or work a telegraph. The word ‘telegraph’ has been defined in Section 2 (1) (aa) to mean the appliances, instrument, material or apparatus used, but also capable of being used for transmission and reception of signs, signals either by way of visual or other electromagnetic means, radio waves or Hz waves, galvanic electronic and magnetic means.
47. If a licence can be granted in respect of the equipments, which are capable of being used, should we, by an interpretative process, give it a meaning so as to curtail the jurisdiction of this Tribunal? The answer to the said question should, in my opinion, be rendered in negative. (See G.P. Singh’s principles of interpretation of statutes – page 708, 11th Edition). What is capable of being used, can also be misused. The same, therefore, would attract the provisions of the 1885 Act having regard to the provisions contained in Section 20 and 20-A thereof. We fail to see any reason as to why the word ‘telegraph’ shall be given a narrow meaning, particularly in view of the fact that the equipments and appliances installed by the petitioner would come within the purview of the definition of the said term.
In fact, the respondents themselves in no uncertain terms, invoke with the provisions of the UASL licence on the premise that the conditions of grant have been violated.
It is on the aforementioned backdrop, the terms ‘licensee’ and ‘licensor’, as contained in Section 2 (e) and 2 (aa) of the 1997 Act must be construed.
A licence may be granted for certain purpose, which need not be for providing specified public telecommunication service. But in terms of the provisions of the Indian Telegraph Act, the term ‘licensee’ can be given a broader meaning taking in view the purport and object of Section 14 of the Act.
48. I am of the opinion that the term ‘licensee’ must be considered keeping in view the words “unless the context otherwise requires”.
It is not possible to read the word ‘licensor’ as the Central Government granting licence under Section 4 of the1885 Act and not to give a corresponding meaning to the term ’licensee’ in Section 2(e) thereof, particularly in view of the fact that the term ‘licensor’ has been inserted subsequently.
49. It is from that angle only, the doctrine of ‘mischief rule’ must be invoked, particularly having regard to the expandable definition of the term ‘telegraph’ contained in Section 3 (i) (aa) of the 1885 Act, which has been amended by Act 15 of 1961.
Dot fibres, Dot space and towers are assets, which are necessary to establish and maintain for telegraph service. They may be subject matter of lease, rent and sale to the licensee of the telecommunication service on mutual agreed terms and conditions wherefor no permission was also necessary to be taken from the Central Government.
But, however, what was prohibited is that it shall not be given to any service provider or any other customer. It could not have provided any telegraph service including ‘end to end’ Band-width is not defined in the statute. ‘Telegraph service’ has also not been defined in the 1885. It must, however, be for rendition of a service, which is relatable to the purpose, for which the Central Government exercises its power of exclusive privilege, namely establishing, maintaining and working telegraph.
50. The 1997 Act defines ‘telecommunication service’ and not ‘telegraph service’. It is also wide in terms.
51. Keeping in view the provisions of Sub-Section 2 of Section 2, the word ‘telegraph’, as has been defined in Section 2 (1) (aa), must be read with the definition of the 1997 Act.
52. The Executive Government, while exercising its power under Article 298 of the Constitution of India, may give effect to its policies, but the policy itself cannot substitute an executive act. Even otherwise, if ISP and OSP would not come within the purview of the ‘telegraph services’, TRAI will have no jurisdiction to make any recommendations. If the TRAI would not come within the purview of meaning of the term used in Entry 31 of List 1 of the 7th Schedule of the Constitution of India, contract of any other nature may come within the purview of List III and, thus, the Legislator of State may also exercise its jurisdiction.
53. We may notice the doctrine of ‘source of power’. The Supreme Court of India in Tulsi Ram Patel Vs. Union of India and Others (1985 3 SCC 398) at page 164 of the Paper Book, opined that in invoking a jurisdiction, a source of power must be stressed stating :-
“126. As pointed out earlier, the source of authority of a particular officer to act as a disciplinary authority and to dispense with the inquiry is derived from the service rules while the source of his power to dispense with the disciplinary inquiry is derived from the second proviso to Article 311(2). There cannot be an exercise of a power unless such power exists in law. If such power does not exist in law, the purported exercise of it would be an exercise of non-existent power and would be void. The exercise of a power is, therefore, always referable to the source of such power and must be considered in conjunction with it. The Court’s attention in Challappan case was not drawn to this settled position in law and hence the error committed by it in considering Rule 14 of the Railway Servants Rules by itself and without taking into account the second proviso to Article 311(2). It is also well settled that where a source of power exists, the exercise of such power is referable only to that source and not to some other source under which were the power exercised, the exercise of such power would be invalid and without jurisdiction. Similarly, if a source of power exists by reading together two provisions, whether statutory or constitutional, and the order refers to only one of them, the validity of the order should be upheld by construing it as an order passed under both those provisions. Further, even the mention of a wrong provision or the omission to mention the provision which contains the source of power will not invalidate an order where the source of such power exists. (See Dr. Ram Manohar Lohia v. State of Bihar and Municipal Corporation of the City of Ahmedabad v. Ben Hiraben Manilal). The omission to mention in the impugned orders the relevant clause of the second proviso or the relevant service rule will not, therefore, have the effect of invalidating the orders and the orders must be read as having been made under the applicable clause of the second proviso to Article 311(2) read with the relevant service rule. It may be mentioned that in none of the matters before us has it been contended that the disciplinary authority which passed the impugned order was not competent to do so.”
54. For the reasons aforementioned, it must be held that this Tribunal has the jurisdiction to entertain this petition.
The Impugned Order
55. The question, which survives for consideration, is as to whether the impugned order is sustainable in law.
The petitioner was found to have violated the terms of the Registration Certificate. It was not pointed out, which term has been violated. The consequence of violation of the term of registration is either termination of the certificate or in the event the petitioner is found to have violated the provisions of Indian Telegraph act, to take recourse to thereunder.
On its own showing, the Registration Certificate was not granted in terms of the provisions of the statute nor the licence for wireless and UASL licence was granted to the petitioner. The petitioner, it is not disputed, could achieve the purpose, even assuming it has committed violation by operating through either a UASL licensee or a NLD licensee.
56. Power to claim damages must emanate either from a statute or a contract. In case of breach of the provisions of the contract, damages can be claimed only in terms of Section 73 of the Indian Contract Act. Under Section 73 of the Indian Contract act, the actual damages suffered by a contacting party by a reason of breach of provisions of the contract by the other must be alleged and established. No legal fiction in relation thereto can be raised.
For the purpose of claiming damages, the petitioner could not have been treated to be a UASL licensee. If that be so, the penal provision contained therein could not have been invoked.
57. We have noticed heretobefore that according to the respondents, the petitioner could have provided the telegraph services only as a UASL licensee. It is not the case of the respondent that it had connected the wires to the premises of a 3rd party. It connected the wire only to its own premises.
58. Whether it could do it or not, keeping in view the provisions of the Indian Telegraph Rules need not be gone into at this stage, although according to the petitioner it had a right of way as Mr. Mishra may be right that same was granted to the petitioner for a limited purpose.
A law cannot be substituted by a framework of a policy. A legal fiction, as is well known, can be raised only by reason of a statute or a contract. It cannot be raised unilaterally. Even a legal fiction can be raised and must be given effect to for the purpose for which it had been raised and not beyond the same.
Even otherwise by claiming damages as also a pre-judgment compound interest, the respondent No.1 could not have unjustly enriched itself. (See Dease, Palling, A Pre-judgment compound interest published in 2010 – Law Quarter Review (A pre- page 126 at pages 270-301).
59. A penal clause could be invoked by reason of liquidated damage, although not decisive. So far as the ISP-I is concerned, no revenue was contemplated. Even no Performance Bank Guarantee was to be furnished. ISP-II licence has been discontinued with effect from 14.12.2005.
ISP-I and OSP Licence
Estoppel Issue :
60. The petitioner, however, agreed to make good of the losses suffered by the respondent. Would it attract the principle of ‘Estoppel’, is the question.
An order passed by an administrative body without authority would be a nullity being without jurisdiction. Ordinarily, the procedural rule of the estoppels shall not apply. (See Chief Justice of Andhra Pradesh Vs. Dikshi Kellu 1979 Supreme Court page 193 at 198.
61. The petitioner, however, did not issue its letter dated 10.11.2010 ‘without prejudice’ to its right or ‘under protest’.
62. It unequivocally made a representation that it would make good of the losses f the respondent.
63. On the basis of the representation made by the petitioner, time for compliance of the purported violation was extended.
64. No other or further action was taken. Had the respondent terminated the registration certificate, the petitioner would not have been able to run its international call centres. It would have suffered a huge loss of business as also reputation.
65. The petitioner cannot be permitted to approbate and reprobate at the same time, nor can it be permitted to take advantage of its own wrong.
66. Even in this petition, as has rightly been pointed out by Mr. Mishra, the only prayer made is to direct the respondent to recalculate the quantum of damages suffered by it.
67. It is not, thus, the case of the petitioner that the respondent did not suffer any loss whatsoever.
Question of Damage Issue
68. The same, however, would not mean that the respondent was entitled to the amount claimed.
69. Loss suffered by the respondent, if any, must be a reasonable amount.
70. The amount of damages being not certain, the respondent could not have imposed any penalty nor could it levy any interest by way of damages, for less any penal interest.
71. The respondent could not have, it is trite, unjustly enriched itself.
72. It could not have taken recourse to levy interest on a monthly compounded basis.
73. In a case where damage in terms of Section 73 of the Contract Act is claimed, an endeavour should be made to mitigate the loss.
74. In absence of proof of sufferance of actual pecuniary damages, it shall be entitled to a minimum amount.
75. What should be the reasonable amount of damages?
76. Mr. Malhotra submits that the loss of revenue should be calculated on the NLD basis. I think that the said submission has some justification.
77. It is, however, difficult to accept submission of the learned counsel that no damage at all was payable. It is, furthermore, difficult to accept the submission of Mr. Malhotra that for the said purpose only the utilized portion of business out of the total business, to which it was entitled to carry under the Registration Certificate, should be considered.
78. If the petitioner did not fully utilize its capacity, it may thank itself therefor. The respondent had nothing to do thereabout.
79. Before parting, however, we may notice that by an order dated 03.12.2010, the petitioner was directed to deposit a sum of Rs.14,02,14,415/-. It was without prejudice to its rights and contentions. The said sum may not be directed to be refunded to the petitioner.
80. We, however having regard to the facts and circumstances and particularly in view of the fact that the petitioner had agreed to pay compensation to the respondent with a view to adjust equities between the parties, would not pass any order of interest.
81. However, there cannot be any doubt or dispute that in the event the petitioner is found to have violated the conditions of registration, on which we have not been called upon to express our opinion, may do so.
82. This petition is allowed in part and to the extent mentioned hereinbefore.
83. In the facts and circumstances of this case, the parties shall pay and bear their own costs.