TaxTMI 
TaxTMI 
TaxTMI 
2008 (5) TMI 648
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.... and Appellate Tribunal, New Delhi (TDSAT) on various dates, viz., 1.04.2003, 17.02.2003, 8.09.2003 and 3.03.2006. 4. Before, however, we consider the views taken by the Tribunal, we may notice the facts involved in each of the case separately. Civil Appeal Nos. 6341-42 of 2003 DOT circulated a booklet "commercial information on leased circuits" clearly providing for that the rent and guarantee charges for leased circuits would be on capital cost basis and only after the guarantee period has expired, it would be on capital cost or flat rate whichever is higher. Clause 7.0 of the said booklet provides for rent and guarantee charges to the following effect: "7.0 R & G Charges. R & G charges (per annum) will be levied on percentage basis of the capital-cost for cable/ system. After the expiry of R&G period standard flat rate rental or rental calculated on capital cost basis (whichever is higher) shall be levied. A specific hiring contract will be executed with the Guarantor (Subscriber). In contributory works the installation and maintenance charges are levied on percentage of capital cost of the Apparatus and Plant." "Contribution Works" has been defined in the Posts and Telegr....
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.... basis, it was to be allowed to take the equipment on rent and guarantee basis. The rent and guarantee period was for ten years. Pursuant to and in furtherance of the said lease agreements, the DOT installed the required equipment and raised bills on the capital cost basis of the equipment. One of the sample bills, which had been raised being Bill dated 5.06.1998, is as under: "Government of India Department of Telecommunications Thiruvananthapuram Telecom District Telephone No. Consumer No. Bill No. Page BPL/ Cellular Mobile SVC BILL DATE BPL US West Cellular Communication Services Ltd. 17.7.98 IVth floor, Co-Bank Towers, P.O. Stamp Palayam, TVM DUE DATE 31.7.98 PAY BY DATE RENTAL FROM: 7.2.98 TO: 6.2.99 5.8.98 CALLS FROM: TO: OPENING CLOSING METERED CREDIT DEBIT FREE METER RDG METER RDG CALLS CALLS CALLSCALLS Rent for the 20 pr PCM cable provided RENTAL=1,05,315 For extending one 2 MB stream from Hotel Sibra, MC Road to MC xge METERED CALLS TRUNK CALLS OVERSEAS CALLS PHONO GRAMS Egpt - 61525 Cable - 43790 Rent for end link at TVM. Pl. Note DEBITS TAXES this is due from Feb. 98. Bill is GROSS AMT. raised only now Sd/- 27/7 Payment approved Sd/- L. HERBERT Head ....
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....t Rs. 15,00,000/- per annum as against the said demand of Rs. 5,77,025/-. Questioning the basis for making such demands, a writ petition was filed. However, ultimately the same was withdrawn. Respondents filed an application in terms of Section 14 of the TRAI Act before the TDSAT inter alia on the premise that the flat rate basis purported to be in terms of the internal circulars having no force of law, the same could not have been the basis for making the demands. It, inter alia, prayed for the following reliefs: "(a) Set aside the revised demand raised by the DOT/Respondents on flat rate basis instead of on capital cost basis as originally charged. (b) Direct the respondents to give retrospective effect to Annexure-X i.e. DOT's new Tariff Circular 4/99 dated 13.4.99 so as to make it applicable to leased circuits commissioned under R&G basis prior to 1.4.99 also; (c) Direct the respondents to pay damages for the loss sustained by the petitioner due to wasting of the NOKIA SDH Optimux equipment worth Rs. 30 lacs;" The said applications have been allowed by reason of the impugned orders. Civil Appeal No. 6375 of 2003 The lease agreement in this case allegedl....
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....n their order dated 13th July, 1995, we come to the conclusion that leased circuits for E-mail providers has been charged correctly as per the extant orders. While holding the view, however, we are constrained to take adverse notice of the fact that the respondents R-1 and R-2 did not refer to proper documents and that too even after repeated queries from the Bench." Having found so, however, the members came across two circulars being dated 13.7.1995 and 22.11.1996 and placed the matters for further hearing. Relying on the said circulars, the TRAI held : "After the hearing was over, we came across certain documents filed by the DOT in an earlier petition clearly indicating that value added network licensees, which included E- mail licensees, were to be provided leased circuits. We then decided to call for a rehearing on this issue and placed the documents on record. These documents are of July 13, 1995 and November, 21, 1996 bearing Nos.106-10/94-PHC and 116-4/95-PHC respectively. During the rehearing, the respondents accepted that the charging of double the rental for the leased circuits, provided to the E-mail network licensees, was based on the documents referred to above ....
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....raised by the Respondents in response to the requests received from the Appellants that the initial demands were in conformity with the rates and tariff as indicated in the brochure "Commercial Information on Leased Circuits"." Civil Appeal No. 3448 of 2006 Respondent herein requested DOT to provide land distance lease line on 12.8.1996 for one year. It was also stated that further period of extension will be intimated in advance. On or about 21st September, 1996, a request was made for extension of the said period for one year. Demand was made for one year only by a bill dated 26.11.1996 for Vijaywada to Hyderabad long distant charges and on 24.12.1996 for Vijaywada to Vishakhapatnam. The contract was, thus, concluded. The demands were duly paid by the respondent on 9.1.1997 and 26.12.2005. Various extensions were sought for only after expiry of one year. Those extensions were granted by DOT even on 14.9.1998. The details of infrastructure leased from DOT with their validity were sent. However, some leased lines were surrendered by the first respondent. Indisputably, for the first time on 13.10.1998, the DOT intimated the respondent that the minimum guarantee period was three yea....
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....itions and the responsibilities and obligations of both the contracting parties." (vii) "As a result of what we have discussed above we hold that the action of the Respondent in revising the demands after a period of two years in respect of what were practically existing concluded contracts between the Petitioners and the Respondent was neither legal nor proper. The Respondent would recompute the impugned Demand Notes on the basis of existing concluded contracts at pre-revised rates." 6. On the findings in the said case, the TDSAT in other cases also opined that internal circulars would have no effect on the term of the concluded contract. 7. Indisputably, the matter relating to laying down of the telegraph lines and providing phone connections including mobile is governed by the provisions of the Indian Telegraph Act, 1885. The said Act was enacted to amend the law relating to telegraphs in India. Section 7(2)(ee) thereof reads as under : "(ee) the charges in respect of any application for providing any telegraph line, appliance or apparatus." 8. Indisputably, in exercise of its power conferred upon it under Section 7 of the Indian Telegraph Act, the Central Governme....
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....orce. (2) Where the circuits are provided by utilizing the installations, existing at the time of the application, flat rate of rentals based on radial distance shall be charged for a period of not less than three months (hereinafter referred to in this Part as the minimum guarantee period. XXX XXX XXX 498. Part-time use.--(1) A telephone circuit, if available as spare, may be leased to Newspaper Establishments or News Agencies for part-time use between 7 p.m. and 7 a.m. (2) The charges for the circuit provided for under sub-rule (1) shall be one half of the charges specified in clause (a) of sub-rule (1) of Rule 496. (3) Junction line between Private Exchange or Private Branch Exchanges shall not be leased on part-time basis." 9. DOT had issued a circular letter dated 18.2.1991 stating: "(2) Revision of percentage of rental in Rent and Guarantee cases - Rule 144 of P&T Manual, Vol. XII, Part - I may kindly be referred to wherein rental for cables laid down in rent and guarantee basis to be charged at 18% of the capital cost or at the standard rates applicable to private wire, whichever is higher. The period of guarantee has been mentioned as 10 years. This....
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....ical and with a view to ensure that the department gets a fair minimum return for the capital invested, rent is fixed on capital cost basis. In such cases guarantee is taken from the party that he will retain the facilities for a specified period at a specified rate of rental. In all such cases, standard flat rates are also calculated and whichever rate is higher is quoted to the party unless it is definitely laid down that standard flat rate should be charged." 12. Yet again, an internal circular appears to have been issued on 3.11.1993 wherein it was laid down: "2. The above rate will be applicable only if the circuits provided with the existing long distance system of the equipment. In cases where new construction or installation involved for the whole or part of the circuit (including lead), the rental will be calculated either on special rate into account the cost of construction and other relevant factors, or on flat rate basis as above, whichever is higher." 13. Besides the aforementioned, some commercial information on lease circuits has also been published in terms of Clause 7.0 of the booklet, as noticed hereinbefore. 14. In Swamy's Treatise on Telephone Rules un....
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....88, 24-I/87-PHC (Pt) 8 dated 13.11.1988, 1-2/89-R/pt dated 18.2.1991, 4-11/90-R dated 30.9.1991 and 4-11/90-R dated 1.4.1992 and as the respondents had been paying on the basis thereof, they cannot now be permitted to approbate and reprobate. (ix) In regard to the minimum guarantee period, it was submitted that the agreement refers to the Rules and the circulars. The circular dated 26.11.1988 provides that it would be for a period of three years. The same was, however, later on reduced to one year. But the circular dated 26.11.1998 provides that the minimum period would be for three years. But the same has been related back to 1988. Drawing our attention to the Resolutions dated 26.11.1998, the learned counsel would contend that the respondents were aware of the said circulars and had been acting thereupon. In any event, the contract having been entered into in December 1995, the 1988 circular must be held to have been known to them. Our attention in this behalf has been drawn to the stand of the DOT in response to the legal notice issued by the respondent which is to the following effect : "Hiring of any facility by a customer from the Department of Telecom is basically g....
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....s aware of the commercial conditions of hiring the circuits. Thus, it does not exempt M/s. BPL from the fundamental tariff rules that prescribe a minimum period hire and payment of rent for the unexpired portion." 16. Mr. Shyam Divan, learned senior counsel appearing on behalf of the respondents, on the other hand, would, on the other hand, submit that the parties entered into the agreement having regard to the commercial representations made to them by DOT wherefor a booklet has been issued. It was furthermore submitted that the parties were given options, viz., (i) the licensees could purchase equipments and install the same or take lease of the equipments installed by DOT on (a) flat rate basis; or (b) on capital cost; (ii) the parties have entered into the agreement on the premise that the charges will have to be paid on rent and guarantee basis. The subsequent stand taken by the appellants herein to raise demands on enhanced basis relying on or on the basis of the internal circulars is wholly unsustainable. Strong reliance in this behalf has been placed on Sri Dwarka Nath Tewari and others v. State of Bihar and others [AIR 1959 SC 249], Life Insurance Corporation of India v. ....
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.... the circular letters did not arise at all. 22. For the purpose of determining the questions involved in the present appeals, we may ignore the fact that pursuant to or in furtherance of the negotiations held by and between the parties, the respondents imported equipments but, for one reason or the other, as noticed hereinbefore, the same could not be installed. However, the DOT in its letter dated 30.09.1996 categorically stated that it could put up its own equipments under contribution work basis, which would mean that the charges would be on the basis of capital cost. In view of the aforementioned representations made by the DOT, the respondents had agreed to take the equipment on rent and guarantee basis which was itself calculated on capital costs. 23. We are, furthermore, not concerned with the tariff order issued by TRAI. What, however, may be noticed is that even the tariff order provides for a lower tariff than the agreed rate. It will not be out of place to notice the following chart for the purpose of appreciating as to what was the agreed rate on the rent and guarantee on capital cost basis and what has been demanded: Name of Date POI Date of commission Agr....
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....eprive the petitioners of their rights in the properties aforesaid." In Life Insurance Corporation of India v. Escorts Ltd. and Others [(1986) 1 SCC 264], the case involved the interpretation of Section 29(1) (b) of the Foreign Exchange Regulation Act. It was argued that according to paragraph 24-A.1 of the Exchange Control Manual the same would be binding upon the Reserve Bank of India. Negativing the said contention, this Court observed: "There is no force whatever in this part of the submission. A perusal of the Manual shows that it is a sort of guide book for authorised dealers, money changers etc. and is a compendium or collection of various statutory directions, administrative instructions, advisory opinions, comments, notes, explanations suggestions, etc. For example, paragraph 24-A.l is styled as Introduction to Foreign Investment in India. There is nothing in the whole of the paragraph which even remotely is suggestive of a direction under Section 73(3). Paragraph 24-A.1 itself appears to be in the nature of a comment on Section 29(1)(b), rather than a direction under Section 73(3). Directions under Section 73(3), we notice, are separately issued as circulars on ....
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....e. No mechanism has been provided for interpretation of the terms of the contract. When a contract has been worked out, a fresh liability cannot thrust upon a contracting party." {[See also New India Assurance Company Ltd. v. Nusli Neville Wadia and Anr. [(2007) 14 SCALE 556]}. 25. In view of the aforementioned law laid down by this Court, there cannot be any doubt whatsoever that the circular letters cannot ipso facto be given effect to unless they become part of the contract. We will assume that some of the respondents knew thereabout. We will assume that in one of the meetings, they referred to the said circulars. But, that would not mean that they are bound thereby. Apart from the fact that a finding of fact has been arrived at by the TDSAT that the said circular letters were not within the knowledge of the respondents herein, even assuming that they were so, they would not prevail over the public documents which are the brochures, commercial information and the tariffs. 26. If the parties were ad idem as regards terms of the contract, any change in the tariff could not have been made unilaterally. Any novation in the contract was required to be done on the same terms as are....
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....any consideration for a reciprocal promise which may be offered with a proposal, is an acceptance of the proposal." It provides the acceptance of the proposal by conduct as against other modes of acceptance. It can be divided in two parts - (1) performance of the conditions of a proposal; and (2) acceptance of any consideration for a reciprocal promise which may be offered with a proposal. The latter corresponds to general divisions of proposals into those which offer a promise in exchange for an act or acts and those which offer a promise for exchange for a promise. The bills were raised on the basis of the said premise. They were accepted. The promise on the part of the appellant was acted upon by the respondent. Appellants, thus, now should not ordinarily be permitted to take a different stand. 29. This aspect of the matter was considered in Amrit Banspati Co. Ltd. v. Union of India [AIR 1966 All.104] wherein it was stated : "Section 8 of the Contract Act provides that performance of the conditions of a proposal, or the acceptance of any consideration for a reciprocal promise which may be offered with a proposal is an acceptance of the proposal. The language of the section i....
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....tract Act. It embraces a case to cite an instance of a reward offered for the finder of a lost article. If a person restores found article to the one who offered the reward, without accepting the latter's proposal in any other manner, the act or conduct or restoration itself is considered sufficient acceptance of the proposal to merit the reward. True that it is an ordinary rule of law that an acceptance of an offer made ought to be notified to the person who makes the offer. But since such notification is required for the benefit of the person making the offer the latter may dispense with notice to himself if he deems that course to be desirable. If the person making the offer to another intimates him expressly or impliedly a particular mode of acceptance the offeree can adopt that mode to conclude a binding bargain. If a man writes to another to send him certain goods, then the dispatch of goods would surely amount to acceptance of the offer." In Life Insurance Corporation of India v. Raja Vasireddy Komalavalli Kamba [AIR 1984 SC 1014], this court on acceptance of provisions as envisaged under Section 7 and 8 of the Indian Contract Act, 1872 opined: "Acceptance must be sig....
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....ne of `acceptance sub silentio'. But, there is nothing on record to show that such a course of action was taken. The respondents at no point of time were made known either about the internal circulars or about the letters issued from time to time not only changing the tariff but also the basis thereof. 31. We will assume that the contention of the learned Additional Solicitor General that the internal circulars are issued for their application by the local officers. If they have committed a mistake, the same could be rectified. 32. Indisputably, mistakes can be rectified. Mistake may occur in entering into a contract. In the latter case, the mistake must be made known. If by reason of a rectification of mistake, except in some exceptional cases, as for example, where it is apparent on the face of the record, mistake cannot be rectified unilaterally. The parties who that would suffer civil consequences by reason of such act of rectification of mistake must be given due notice. Principles of natural justice are required to be complied with. The fact that there was no mistake apparent on the face of the records is borne out by the fact that even the officers wanted clarification....
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....publication or promulgation. Where the parent statute prescribes the mode of publication or promulgation that mode must be followed. Where the parent statute is silent, but the subordinate legislation itself prescribes the manner of publication, such a mode of publication may be sufficient, if reasonable. If the subordinate legislation does not prescribe the mode of publication or if the subordinate legislation prescribes a plainly unreasonable mode of publication, it will take effect only when it is published through the customarily recognised official channel, namely, the Official Gazette or some other reasonable mode of publication. There may be subordinate legislation which is concerned with a few individuals or is confined to small local areas. In such cases publication or promulgation by other means may be sufficient." In Ravinder Kumar Sharma v. State of Assam [(1999) 7 SCC 435], this Court stated : "26. Newspaper reports regarding the Central Government decision could not be any basis for the respondents to stop action under the Assam Control Order of 1961. The paper reports do not specifically refer to the Assam Control Order, 1961. In fact, the Government of Assam its....
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....Thiruvananthapuram Kollam November 8. Calicum Kannur November 9. Cochin Kottayam November 10. Cochin Kollam January 1998 11.Cochin Kannur February 12. Cochin Thiruvalla May 1998 13.Cochin Palakkad May 1998 14.Thrissur Kunnamkulam June 1998 15.Thrissur Palakkad June 1998 The leased data circuits taken by the petitioner were between two exchanges of DoT/BSNL at two different cities. Thus, it is difficult to accept the contention that the circuits leased between two exchanges of BSNL located in two different cities were covered within the ambits of "Private Wire" or "Non-exchange Lines" as defined under Indian Telegraph Rules. Consequently the applicability of Rule 434 in the instant is not warranted. 12A. We have taken note of the contention of Respondent No.1 that by its order dated 17th June, 1988 the minimum priod of hire for 2 Mbps lines was 3 years and the hirer was required to pay for the entire period in case of premature surrender. The relevant question is whether this was made known to the petitioner or the petitioner was expected to have a knowledge of this. From the copy of the Order No.4-3....