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2010 (11) TMI 1070
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.... 2003 though it was formally granted the Unified Access Service Licence on 21st September, 2004 with effect from 14th November, 2003. By an addenda dated 28th February, 2006, the agreement was formally amended with retrospective effect from 14th November, 2003. The Agreement deals with local calls, national long distance calls (NLDC) and international long distance calls (ILD). Calls of each trunk group are connected through dedicated ports and are chargeable at rates different from other trunk groups. Hence, depending on the number of calls handled by a particular port, charges are levied by BSNL on Reliance, at the rate of the existing call charges payable for that particular trunk group. 3. On 24th June, 2003, the DoT issued a circular specifying that Calling Line Identification (CLI) cannot be tampered with under any circumstances and also gave directions to service providers on how to prevent such tampering. By its circular dated 28th January, 2004, the above circular of DoT coupled with IUC Regulations dated 29 th October, 2003 issued by Telecom Regulatory Authority of India (TRAI) was made effective. 4. In September, 2004, BSNL received several complaints from its subs....
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....ised by the Vadodra Unit of BSNL for Rs. 6.89 cr. for the said period July, 2004 to September, 2004. In the said bill, the rate applied was Rs. 5.65 per minute. This demand was made on the basis that numerous calls have been detected in the POI with CLI as 281 3041000 which pertained to ISDNB PRI connection given to M/s. Raj Enterprises of Rajkot. According to Reliance, the calls received in its POIs were "grey market" calls. That, they were neither wrongly routed nor their CLIs were tampered. Ultimately, after detailed correspondence between BSNL and Reliance, petition No. 275 of 2009 was filed by Reliance against the above impugned demand. 8. By the impugned judgment, TDSAT has held that the impugned demand of BSNL under clause 6.4.6 of the Interconnect Agreement is penal in nature; that under the said clause unauthorized calls had to be detected by BSNL and that in case of such detection charges were to be levied on such calls at the highest applicable IUC; that BSNL was under an obligation to draw distinction between unauthorized calls and calls without/ modified CLI in the impugned demand which in the present case has not been done; that no opportunity of hearing was given ....
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....y, the amount paid under the said clause cannot be brought under Section 74 of the Contract Act. According to the learned counsel the situation in clause 6.4.6 amounts to an alternative mode of performance of the contract. Lastly, according to the learned counsel where a contract prescribes payment of a sum on default, even if the sum payable may be larger than the actual loss, when the contract is between parties with equal bargaining power, and as long as the sum payable is not extravagant, it should not be characterized as penalty. Similarly, where an agreed sum is payable upon a default if the loss accruing to the claimant from the default in question cannot be accurately or even reasonably be ascertained, then such sum cannot be classified as penalty and once a stipulation is held not to be a penalty, there is no need for actual proof of loss. 10. On interpretation of clause 6.4.6 of the Interconnect Agreement, Shri C.S. Vaidyanathan, learned senior counsel for Reliance and Shri Ramji Srinivasan, learned senior counsel for Tata Teleservices Limited, submitted that there is no dispute between the parties regarding the existence of the grey market and its operations by miscre....
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....interconnection is regulated by TRAI it is not open to BSNL to charge what they like. On the other hand, the TRAI regulations do not provide for quantum of damages or a penalty in case of breach of the interconnection agreement. Therefore, if clause 6.4.6 is attracted before breach, as submitted by learned counsel for BSNL, and if clause 6.4.6 is not compensatory, then the amount demanded is without consideration and would be unconscionable. According to the learned counsel clause 6.4.6 in the Interconnect Agreement confers only a contractual right. BSNL, according to the learned counsel, is neither the sovereign exercising legislative or executive or police powers nor is BSNL a regulator. It is not vested with any powers to impose any penalty for breach of contractual terms nor can BSNL be vested with such powers as BSNL is one of the several operators in the National Telecom Policy of 1994 and 1999. That, DoT or the TRAI may exercise regulatory or police powers imposing a penalty or strict civil liability for violation of any of the terms and conditions of the license when public interest so requires. However, BSNL does not have any statutory, regulatory or police powers to impos....
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.... clause 6.4.6 reasonable or compensatory, if all calls, irrespective of whether they are rightly or wrongly routed, or with CLI or without CLI or disguised CLI are charged at the highest IUC rates. Such a provision, according to the learned counsel, will be ex facie penal in nature. Learned counsel submitted that there is no merit in the contention of BSNL that technology does not enable tracing of every disguised call. According to the learned counsel this argument of lack of technology would be available to BSNL only to the extent that all calls of the offending subscriber, such as Raj Enterprises, may be treated as unauthorized calls. However, beyond that, calls of other subscribers, in respect of whom there is not even a whisper of illegality, cannot be clubbed with the offending calls because that would amount to imposition of penalty. Learned counsel submitted that under the Contract Act no party is entitled to recover punitive damages for any breach of contract. That, in terms of Section 73 of the Act, the party which suffers by any breach of contract is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby....
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....NL is not in a position to prove which precise calls delivered from the said number were, in fact, international calls delivered as local/national calls. However, applying clause 6.4.6 BSNL seeks to charge for not only all calls delivered from said number at the highest possible IUC rates, but, additionally seeks to charge at the highest rate for all calls delivered at the concerned POI for the relevant month as also all calls for the preceding two months from entirely different numbers belonging to other subscribers where there is no allegation whatsoever by BSNL of wrong routing or tampering. In other words, even for numbers and calls with respect to which there is no allegation of breach, wrong routing or tampering, BSNL seeks to charge at the highest IUC rates which bears no nexus whatsoever with the loss or damage suffered by BSNL. It is submitted that to this extent clause 6.4.6 falls foul of section 74 and is therefore unenforceable. Charging for numbers and calls which have no nexus whatsoever with the number identified by BSNL as having been misused is to impose in terrorem penalty upon Reliance bearing no connection with the loss suffered by BSNL on account of alleged wro....
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....ubmitted that clause 6.4.6 was inserted through an Addenda signed on 28.2.2006. The said Addenda was made applicable retrospectively with effect from 14.11.2003 with the exception of applicable IUC charges including ADC and interconnection arrangements made between the parties during the intervening period which included ICU charges. That, the said clause 6.4.6 is covered in the IUC charges which was carved as an exception. Admittedly, at the relevant time, TRAI had prescribed applicable IUC charges whereby depending on the nature of the call (local, national, international) certain identified charges were applicable. The applicable IUC charges did not however contemplate charges for local/national call at the highest available international rate, which the BSNL now seeks to do purportedly by invoking clause 6.4.6. Thus, according to the learned counsel from the express terms of the Addenda itself it is clear that clause 6.4.6 falls within the chapter entitled Interconnection Charges "which is expressly excluded from retrospective operation". Learned counsel submitted that in any event such purported retrospective application of a penal provision such as clause 6.4.6 violates Artic....
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.... 2.5.1 LICENSEE's network shall be capable of transmitting and receiving calling line identification which shall include Access code, Area code and Subscriber number. Chapter 6 Interconnection Charges 6.1 Interconnectivity to DOT Network 6.1.1 Provision of links to interconnect LICENSEE's network with DoT's network will be the responsibility of the LICENSEE as provided under Clause 2.1.2 and 2.1.3. 6.2 Detailed Billing 6.2.1 For every STD/ ISD call originating from the LICENSEE's network and accepted by DoT, a detailed billing and/ or bulk billing record will be generated in the LDCC TAX. For this purpose calling subscriber's identity shall be supplied by the LICENSEE for detailed billing purpose. 6.4 Access Charges 6.4.1 For purposes of calculating the access charge, the point at which the calls are delivered to DoT's network is treated as originating point. The calls will be measured from the point of entry to the destination at the applicable rate of DoT. 6.4.3 The traffic delivered on any DOT LDCC TAX from LICENSEE's LDCC TAX/ SDCC tand....
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....s as described herein which shall append as Addenda to the original agreement and the combined agreement, hereinafter called "AGREEMENT", will become effective from 14th November 2003 except the applicable Interconnection Usage Charges (IUC) including ADC, Interconnection arrangements and associated bill arrangements as prescribed by BSNL Corporate Office, during this intervening period till date of signing of this Addenda. 2. Each party, i.e., BSNL as well as the UASL, does hereby agree to: a) Interconnect its Network to the Network facilities of the other party; and b) Make available to the other party the services, facilities and information as specified in this Interconnect Agreement. c) Provide the other interconnected party with interconnection traffic carriage and fault detection of a technical and operational quality that is equivalent to that which each party provides to itself. 2(2) The UASL shall ensure that its interconnect facilities delivered at each point of interconnection (POI) conform to the applicable quality of service (QOS) standards and technical specifications for interconnection by the relevant delivery date determined pursua....
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....f BSNL are interconnected by the facility of interconnection seeker and where the specified Network-Network Interface Standards are applicable. "PSTN" means Public Switched Telephone Network. "SHORT DISTANCE CHARGING CENTRE (SDCC)": It means a particular Exchange in a Short Distance Charging Area declared as such for the purpose of charging of long distance trunk calls as defined in the National Fundamental Plan. "UNIFIED ACCESS SERVICES": means telecommunication service provided by means of a telecommunication system for the conveyance of messages through the agency of wired or wireless telegraphy. The Unified Access Services refer to transmission of voice or non-voice messages over LICENSEE's Network in real time only. SERVICE does not cover broadcasting of any messages voice or non-voice, however, Cell Broadcast is permitted only to the subscribers of the service. The subscriber (all types, pre-paid as well as post-paid) has to be registered and authenticated at the network point of registration and approved numbering plan shall be applicable. The following abbreviations shall bear the full expression as mentioned below: UASP: UN....
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....therein is to be done as prescribed in relevant tables in Schedule I - Appendix A. The tables for POIs and trunk groups as prescribed for CMTS network shall be applicable for fully Mobile network of UASL. 2.1.15.3 INTERCONNECTIVITY FOR STD/ ISD CALLS 2.1.15.3.1 Interconnectivity for STD/ISD calls shall be between BSNL's LDCC TAX and UASL's LDCC TAX. In case UASL does not have his own TAX in the LDCC, STD/ISD calls from UASL's SDCC Tandem/local exchange in an SDCA in the LDCA shall be handed over to BSNL's LDCC TAX by the UASL. 2.1.15.3.3 For the purpose of Inter circle and International call, the UASL shall handover the call to BSNL at the originating LDCC TAX. 2.1.16 For the purpose of transit calls originated by UASL's subscriber and meant for termination in network of any other service provider, the UASL may transmit such traffic as per rates given in Schedule I, on separate trunk groups at SDCC Tandem for local calls and originating LDCC TAX for intra and inter circle STD calls. However, BSNL reserves the right to amend the rates from time to time and also to selectively withdraw transit facility to other networks. BSNL will also be at liberty to tr....
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....tches, it shall abide by all terms and conditions including MCU based arrangements for the purpose of measurement and billing of interconnect traffic as mutually agreed and thus mentioned in this agreement and that this arrangement will not be a matter of dispute, then BSNL shall provide POIs to UASL in such switches, if otherwise feasible to do so. It is further agreed that in case of any regulatory/ judicial intervention on the above matters, the UASL shall be entitled to and be extended the same relief/ benefit given to any other operator to the extent it is applicable to the UASL under this agreement. 2.9 NETWORK INTEGRITY AND SCREENING 2.9.1 It is the responsibility of the UASL to prevent the transmission of any signaling message across the connecting network, which does not comply with, inter working specification of TEC No.G/PNI-03/01 Sept. 95 or as modified from time to time. Similarly BSNL shall also ensure the same in its network. 2.9.2 Efficient arrangement for screening function shall be established by the UASL at his Gateway exchange or elsewhere in his network to detect sig....
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....CLI from UASL shall be charged at the highest slab i.e. as for ISD Calls. In case such calls are received by BSNL on any trunk group, then all the calls recorded on this trunk group shall be charged at the rates applicable for IUC of incoming ISD calls from the date of provisioning of that POI or for the preceding two months, whichever is less. (c) When CDR based billing is introduced in BSNL's network some of the trunk groups shall be merged. In such cases also, in case unauthorised or Incoming International Call, without CLI call, call with tampered CLI is handed over to BSNL at the merged trunk group, then BSNL shall charge the UASL the highest applicable IUC, as prescribed in clauses 6.4.6(a) above for unauthorised calls & 6.4.6(b) above for incoming International call, without CLI call, call with tampered CLI, for all calls recorded on this merged trunk group from the date of provisioning of that POI or for the preceding two months whichever is less. (d) In addition, BSNL shall also have the right for taking other legal actions including disconnection of POIs or temporary suspension of the interconnection arrangements under misuse. 6.4.7 All the required informati....
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....iting of its failure by the non-breaching Party and the breaching Party has not remedied its failure within twenty (20) Working Days; and the approval of Licensor or TRAI, as the case may be, has been obtained for such termination. In the event, the approval is accorded with conditions, regard being had to the general interest of the customers, the same will be fully complied with before the final act of disconnection of interconnection arrangements becomes effective. Provided, however, in the event no intervention is made by the Regulator/ Licensor during the notice period, the approval shall be deemed to have been accorded. (b) ceases to carry on business. (c) Either Party is unable to discharge its obligation under this agreement. However, in case of Force Majeure procedure as indicated below shall be followed: FORCE MAJEURE Neither party shall be liable for any breach of this Agreement (other than a breach for non payment) caused by an act of God, insurrection or civil disorder, war or military operations, national emergency, fire, flood, lightning, explosion, subsidence, industrial dispute of any kind. The Party affected by such force majeure shall promptly notify ....
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....ificate to circle office BSNL regarding the volume of intra circle, NLD and ILD traffic as per the Appendix-C. Further processing of these bills, for payment to access providers for the traffic terminated in their network, shall be done only on receipt of this certificate from them. In case called upon, the complete record of traffic will be produced by access providers for verification by the technical audit team constituted by BSNL. The procedure for billing and recovery of ADC in respect of inter- circle STD calls from cellular / WLL (M) and outgoing / incoming ISD calls routed through a NLDO or ILDO other than BSNL and intra- circle traffic from cellular/ WLL(M) to fixed networks are enclosed in Appendix-D. 11. The CLI based barring facility has been activated by BSNL at the PoIs wherever technically feasible to ensure that the traffic handed over to BSNL is in the appropriate trunk groups only. Wherever it is technically not feasible to activate CLI based barring, periodic monitoring of the incoming trunk groups shall be done by BSNL to ensure this objective. In case of wrongly routed calls IUC shall be charged as below: (a) Unauthorised calls i.e. calls other than....
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....h originating and terminating) except those originated from fixed networks but including calls terminating in own network in other circles; (b) international long distance calls (both incoming and outgoing) except those originated from fixed networks; and (c) intra circle calls (both originating and terminating) from cellular/ WLL (M) to fixed networks and including calls terminating in own network during the above period are as under: *** *** *** B. Details of Traffic (in Minutes) through M/s Reliance Infocomm Ltd NLDO & ILDO) Call Type . Circle Circle Circle Circle I Inter circle outgoing calls II Inter circle incoming calls III Outgoing ILD calls IV Incoming ILD calls *** *** ....
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....d carrier selection code by the LICENSOR for dynamic selection of carrier for long distance calls. All calls for which dynamic carrier selection code has been dialed shall be routed accordingly subject to technical feasibility. Chapter 6 Interconnection Charges 6.1 Interconnectivity to BSNL Network 6.1.1 Provision of links to interconnect RIL's network with BSNL's network at the technically feasible SDCC Tandem exchange will be the responsibility of the RIL as provided under Clause 2.1.2 and 2.1.3. 6.4 Access Charges 6.4.6 If BSNL detects that Incoming International calls are being handed over or have been made over to BSNL at any other port which is not meant for carrying such calls, BSNL shall be free to charge RIL minimum access charge for Incoming International calls as at clause 6.4.2 above for all the calls recorded on these ports from the date of provisioning of that POI or for the preceding two months whichever is less apart from taking other legal actions including disconnection of POIs or temporary suspension of the Interconnection Agreements. No terminating calls other than International calls shall be accepted from RIL w....
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....vices refer to transmission of voice or non- voice messages over the network of the licensee (Reliance in this case). It, however, does not cover broadcasting of messages. However, the subscriber has to be registered and authenticated at the network point of registration and approved numbering plan shall be applicable. Thus, UASP is the abbreviated term for the expression "Unified Access Service Provider". (f) International Gateway: A Gateway is a network point that acts as an entrance to another network. Conceptually, it is the point of inter-connection (POI), i.e., the point of entry for the international calls to the telecom network of India. A POI is a mutually agreed upon point of demarcation where the Exchange of traffic between the two telecom networks takes place. In the case of international calls traffic, i.e., inter-country telecommunications, the POI is the International Gateway. In this case, we are concerned with the international gateway of BSNL. However, for intra- country calls traffic, every local telecom network provider (Reliance in this case) is supposed to set up a local POI which acts as the entry point for all incoming telecom traffic. The local POI....
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....(Reliance) for detailed billing purpose. (n) Inter-connect Usage Charges (IUC): IUC is payable by UASL (Reliance) to BSNL under the Interconnect Agreement for the calls originating in the network of UASL and which calls are in turn handed over to the network of BSNL. IUC includes termination charge, carriage charge, transit charge and access deficit charge (ADC) as applicable. (o) Access Deficit Charge (ADC): The Access Deficit Charge is an amount given to an operator to compensate for the difference between the actual cost of providing a particular service and the mandated lower tariff for providing the service to a class of subscribers, usually rural. ADC is compensatory in the sense that ADC is meant to subsidize the rural infrastructural projects of BSNL by the private service providers who at the relevant time did not cater to the rural areas. IUC consisted of carriage, termination and access deficit charges (see clause 6.4.1). (iii) Obligations of the UASL Licensees under the Agreement 13. For the sake of easy understanding, we need to discuss the above terms in the Agreement in the light of international call(s) coming to India and not vice-versa. ....
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....er service provider at an interconnection point, i.e., POI. The international calling party's identity is obliterated (i.e. international CLI is wiped out) and the said international call is made to appear as it were from a domestic/ national number. This technique enables evasion of ADC payments at enhanced rates for international calls. Today, all private automated branch exchanges (PBX) are computerized. It is important to note that a Caller ID (CID) is a signal. Most subscribers have a caller ID display unit at their residence to receiver caller ID signals which also indicates the nature of the call - whether it is local/ national or international. As stated, whenever a call for a mobile subscriber comes from outside the mobile network or vice-versa, the call is routed through a special kind of gateway switch which is called as GMSC. It serves as an interconnection between mobile switching centre and PSTN, which is a network. However, it is at the POI (point of interconnection) that the GMSC of the mobile network of UASL gets interconnected to the GMSC of BSNL by a facility of the interconnection seeker (which in this case happens to be Reliance). Broadly speaking, we have ....
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....rnational roaming) have got to be handed over by UASL to BSNL on separate trunk groups at the Gateway TAX of BSNL of that service area. Under clause 2.1.9.2, no by pass of traffic shall be resorted to by any party by delivering the traffic at any POI other than the specified POI and in case unauthorized diversion in routing comes to notice, BSNL shall be free to disconnect that POI in that area. Thus, under the Agreement if UASL like Reliance receives an international call at its exchange, its primary duty will be under the contract to identify it and to forward it to the appropriate trunk group of BSNL. Now, as alleged if the international call(s) falls on the local POI of Reliance, the latter is obliged under the contract to identify the call, whether it is local or national or international, and accordingly forwards it to the appropriate trunk group of BSNL. For the above reasons, it is also stipulated in clause 2.9.1 (which deals with network integrity and screening) that it shall be the duty of the UASL to prevent wrong transmission. In fact, under clauses 2.9.2 and 2.9.3 the establishment of proper screening function at its Gateway shall be the obligation of the UASL so as to....
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....he relevant time and which reduces the cost of providing services which in turn results in destroying the "principle of level playing" which is so important in the regulatory regime because pricing of the services in the international market plays an important role. The above modus operandi enables the defaulting UASL to sell his product (services) abroad at a rate which may be less as compared to the rates charged by BSNL (who is also a Competitor Service Provider). The unauthorized call(s) gets for the defaulting UASL not only more profits by cost reduction, he also gets more business at the rates below the competitive rates. Same is the position in case of masking of international calls as local calls. In this connection, it is important to note that when an international call(s) lands on the local POI of the UASL, the latter knows from the display mechanism at his end (like the subscriber at his end) that call bears the international CLI and that is the reason for masking. Otherwise one needs no masking of the CLI. In both the cases i.e. under clauses 6.4.6(a) and 6.4.6(b) the same economic and financial consequences flows and that is the reason why clause 6.4.6 provides for re....
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.... the integrity of its exchange/POI. It is important to note that each service provider, including BSNL, is a market player/stakeholder. Each UASL is entitled to a level playing field. The nature of the call, be it local or national or international, as indicated by corresponding CLI, is the basis for the levy of IUC (including ADC). If by wrong routing of calls or by masking the cost of providing services is reduced, the concerned operator gets an undue advantage not only in the Indian market over other competing operators but also in the international market. Billing is one of the most vital aspects of this case. With technology, an international call could fall on the local POI but then the concerned operator is responsible for the identity of the call. In the case of calls which are correctly routed, the display screen with the subscriber clearly indicates whether the call bears international or local/national CLI. Similarly, when the Gateway Bypass Scam takes place and the international call(s) lands on the local POI which is not forwarded to the specified trunk group/POI, there is not only bypassing of International Gateway/ POI and National POI but also evasion of duty to mai....