Contractual terms prevail over internal circulars where departmental instructions were not incorporated into the agreement or backed by statutory force.

Internal Department of Telecommunications circulars and office orders could not override concluded contractual tariff and rental terms for leased circuits and interconnection facilities. The Court treated the licence arrangement, read with the Indian Telegraph Act, 1885 and the Indian Contract Act, 1872, as a contractual framework that could be changed only by express incorporation, acceptance, or valid novation; departmental instructions for internal use had no independent binding force. The same principle defeated the claimed minimum guarantee period and enhanced liability for premature surrender of leased data circuits, because the circulars were not shown to form part of the contracts or to impose retrospectively greater liability. The disputed demands were therefore unenforceable.

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Issues: (i) Whether internal Department of Telecommunications circulars and office orders could alter or supersede the contractual tariff and rental terms governing leased circuits and interconnection facilities. (ii) Whether the minimum guarantee period and consequences of premature surrender for leased data circuits could be enforced against the service providers on the basis of internal circulars and the Telegraph Rules.

Issue (i): Whether internal Department of Telecommunications circulars and office orders could alter or supersede the contractual tariff and rental terms governing leased circuits and interconnection facilities.

Analysis: The contractual framework was held to arise from mutually agreed terms under the licence arrangement, read with the statutory setting under the Indian Telegraph Act, 1885 and the Indian Contract Act, 1872. Clause 4.1 was construed as governing the operation and charge of traffic through the resources, not as authorising unilateral alteration of the charges for the resources themselves. The internal circulars were treated as office instructions for departmental use and not as statutory rules having independent binding force on the contracting parties. Even if known in some instances, they could not prevail over the published brochure, the agreed terms, or the concluded contract unless expressly incorporated or accepted by a valid novation.

Conclusion: The internal circulars could not unilaterally revise the contractual basis of charges, and the revised demands on that footing were not enforceable against the respondents.

Issue (ii): Whether the minimum guarantee period and consequences of premature surrender for leased data circuits could be enforced against the service providers on the basis of internal circulars and the Telegraph Rules.

Analysis: The minimum guarantee period was sought to be derived from internal departmental circulars, while the applicable Telegraph Rules were not shown to conclusively govern the particular leased data circuits in the manner asserted. The record did not establish that the relevant circulars had been incorporated into the contracts or that the service providers had accepted them as binding terms. The Court also noted the inconsistency in the departmental stance and the absence of a legal basis to impose the higher liability retrospectively through internal instructions after the contracts had been acted upon.

Conclusion: The minimum guarantee period and enhanced liability for premature surrender were not enforceable against the respondents on the basis asserted by the appellants.

Final Conclusion: The appeals failed because the disputed demands rested on internal circulars that could not override concluded contractual arrangements, and no substantial question of law warranting interference was shown.

Ratio Decidendi: Internal administrative circulars and office instructions, unless made part of the contract or backed by statutory force, cannot unilaterally alter concluded contractual terms or impose additional financial liability on the contracting party.

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