TaxTMI 
TaxTMI 
2016 (8) TMI 1608
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....ime Spectrum Charge (for short 'OTSC'). Since all the matters are intertwined with each other, they are taken up together and disposed of by this common judgment. PRAYER IN W.P. NOS. 585 TO 588 OF 2012: 2. While W.P. Nos. 585 & 587 of 2012 have been filed by the petitioner to declare the first proviso to Section 4 of the Indian Telegraph Act, 1885 as violative of Articles 14 and 19(1)(g) of the Constitution alleging that it confers unguided power upon the Dept. of Telecommunications to claim a revenue share in respect of non-telecom activities carried on by the petitioners; W.P. Nos. 586 & 588 of 2012 have been filed for a declaration that the respondents can only charge License Fee/AGR from the revenue earned from licensed activities. PRAYER IN W.P. NOS. 2165 TO 2167 OF 2013: 3. W.P. Nos. 2165 to 2167 of 2013 have been filed by the petitioners against the demand notice issued by the respondents imposing One Time Spectrum Fee on the petitioners in respect of the licenses issued to them. PRAYER IN W.A. NOS. 1454 & 1455 OF 2014: 4. These writ appeals have been filed by the petitioners in W.P. Nos. 9220 and 9221 of 2014, wherein, the order dated 3rd Oct., 201....
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....as a special case. (iii) In the year 2010, the respondent issued Notice Inviting Applications (for short 'NIA') for the auction of 3G and Broadband Wireless Access (for shore 'BWA') Spectrum. In addition to other conditions, spectrum charge for 3G spectrum was made payable on total AGR of 2G and 3G services and further condition was imposed that in case of group bidding entity being successful in the auction for Tamil Nadu, they shall merge the licenses for Chennai Area and RoTN Area in accordance with the circular dated 15.09.2005. Consequent upon the said condition in the NIA, ACL and AL furnished undertakings. On the appellant being announced as one of the successful bidder in the 3G auction as well as BWA auction, the Department of Telecommunication (for short 'DoT') issued Letter of Intent to AL in respect of TN Area. (iv) Further to the condition imposed in the circular dated 15.9.2005, the Boards of AL and ACL approved the scheme of amalgamation, wherein ACL was to amalgamate with AL. After communications between Aircel and DoT, AL addressed pre-intimation letter to DoT along with relevant undertakings and Board Resolutions in respec....
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....st March, 2013, the Annual License Fee was fixed at 9% of AGR while from 1st April, 2013 onwards, it was fixed at 8% of AGR. (xi) Since there was no positive response from DoT for the merger of the license pertaining to Chennai Area and RoTN Area, AL & ACL approached the Telecom Disputes Settlement & Appellate Tribunal (for short 'TDSAT') for a direction to DoT to transfer ACL's Chennai license to AL by issuing a license for TN merged service area in accordance with the Merger Circular dated 15.9.2005 with a further prayer to restrain DoT from taking any coercive steps till the final disposal of the petition. (xii) DoT, pending the adjudication, vide show cause notice dated 12.10.2012, while alleging violation of Clause 9 and Condition 15.7 of the License Agreement as well as conditions of license amendment regarding transfer/assignment dated 2.6.03, called upon ACL to show cause within 60 days as to why penalty of Rs. 10 Crore should not be imposed and/or the license should not be terminated by invocation of Condition 15.1 of the License. (xiii) TDSAT, while taking cognizance of the above show cause notice issued by DoT, passed an order dated....
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....ilities shall stand transferred to AL's RoTN License. c) The above will be subject to AL clearing all dues in respect of both licenses. d) The above is further subject to clearance of demands to be issued by WPC/WPF wing relating to payment of One Time Spectrum Charges for the spectrum held for the erstwhile two service areas by the licensees and also payment for the spectrum holding of the erstwhile Chennai Area license for extended period from 29.11.2014 to 29.11.2018, as per the decision of the government. e) AL shall furnish unconditional and unequivocal undertaking in the prescribed format to pay all the demand with respect to extension of spectrum for Chennai Area from 2014 to 2018. f) Spectrum Usage Charges in terms of rates applicable at present shall be payable by AL at the rates of slab corresponding to 9.8 MHz from the date of transfer of license. (xix) AL, inter alia responded vide letter dated 25.10.2013 that it was entitled to an unconditional approval and that no new conditions could be imposed once the companies had complied with the circular dated 15.9.05 and the NIA dated 25.2.2010 and that AL was conferred with the....
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....ated above, covers the entire issue. 6. In the backdrop of the facts as narrated above, while direction to maintain status quo as on 5th Nov., 2014 was granted in the writ appeals, further interim directions were issued regarding the compliance of the conditions as mentioned in the order dated 3rd Oct., 2013. Further, this Court had directed the tagging of all the issues covered in the various writ petitions along with the writ appeals for a comprehensive hearing and to give a quietus to the issues and, accordingly, all the writ petitions and writ appeals are heard and disposed of by this common judgment. CONTENTIONS ADVANCED IN W.P. NOS. 2165 TO 2167 OF 2012 7. Mr. Gopal Subramaniam, learned senior counsel appearing for the appellants/petitioners submitted that as per NTP 1994, ACL and AL were granted CMTS licenses dated 30.11.94 and 22.5.98 for Chennai Area and RoTN Area, the license fee was on fixed basis and spectrum fee was charged as per a stipulated formula. However, due to various issues, NTP 1999 was promulgated, which introduced the revenue share concept in respect of payment of licence fee. It is further submitted that NTP 1999 provided for payment of (i) Entry ....
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....ce areas of Tamil Nadu were permitted to apply for issuance of a single license for the Tamil Nadu Service Area in lieu of two licenses without payment of any additional entry fee. Thus, it clear that the appellants/petitioners were not required to pay any additional fee for the purpose of getting the two licenses merged into a single license and, anything to the contrary, would be against the letter issued by the respondent. 12. It is the further submission of the learned senior counsel for the appellants/petitioners that vide NIA dated 25.2.2010, applications were invited for the auctioning of 3G and BWA spectrum. Reliance was placed on Clause 3.5 of the said NIA, wherein 'Spectrum Usage Charges' have been mentioned, wherein it is found that the spectrum usage charge shall be payable by the successful bidders, which is to be calculated as a percentage of the AGR and the said charge will be over and above the spectrum auction price and the applicable licence fees. In the above backdrop, it is submitted by the learned senior counsel, when a spectrum usage charge has been levied by the respondent coupled with the fact that vide letter dated 22.7.99, the respondent having ....
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.... revenue and has further stated that the terms and conditions for the migration to NTP 1999 has to be accepted as a package in its entirety, it is not open to the respondents/DoT to levy OTSC, that too, belatedly, after a period of 13 years from the date of grant of the original license. 16. It is further submitted by the learned senior counsel for the appellants/petitioners that ACL and AL having acted upon the licence entered into between AL and ACL and DoT, more particularly in terms of the migration package offered and licence fee and spectrum charges based on the said licence and having organised their commercial operations accordingly, the arbitrary action of the respondent/DoT in levying OTSC detriment to the interests of the petitioners/appellants is against the well settled principles of Promissory Estoppel. In this regard, reliance was placed on the judgment of the Supreme Court in Jai Narain Parasrampuria-Vs.-Pushpa Devi Saraf & Ors. (2006 (7) SCC 756). 17. Learned senior counsel further placed reliance on the judgment of the Supreme Court in Reliance Energy Ltd.-Vs.-Maharashtra State Road Development Corporation Ltd. (2007 (8) SCC 1) and Vodafone International Hol....
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.... by the learned senior counsel that neither of the categories are met in the impugned order and, therefore, a harmonious reading of clause 14 (ii) would not definitely bring in within its ambit levy of OTSC in public interest. Further, levy of OTSC would be more against the public interest, as the levy being to the tune of over Rs. 1300 Crores, and in no manner envisaged in the license agreement, the service providers having not taken the same into consideration in their financial outlay, would only result in closure of the business of most of the existing operators, thereby destabilising the telecom sector, else, the same has to be passed on to the subscribers, leading to increase in the cost of service in the form of higher tariff and, therefore, would be very much against the avowed policy of the Government in promoting growth through affordable telecom service. 22. Without prejudice to the above contentions, it is further submitted that the rate of OTSC derived for the entire State of Tamil Nadu has been arbitrarily applied to compute OTSC for Chennai Area as well as RoTN Service Area and, thereby, the same overlaps each other creating unjust inflation in both the service ar....
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....ENTIONS ADVANCED IN W.P. NOS. 585 TO 588 OF 2013 25. Mr. Gopal Subramaniam, learned senior counsel, in respect of the above batch of cases by which the petitioners have challenged the validity of proviso to Section 4 of the Telegraph Act, which confers unguided power to DoT to claim a share of revenue even in respect of non-telecom activities, submitted that while the facts, as narrated above, are common, submitted that the Supreme Court, while setting aside the order of the Tribunal, has decided the matter only with reference to the jurisdiction of the Tribunal to decide the validity of the conditions of license and the validity of the definition of 'Adjusted Gross Revenue' and has not gone into the merits of the matter. 26. It is the submission of the learned senior counsel that initially the petitions filed before TDSAT were allowed against which the Government preferred appeal to the Supreme Court. However, the Supreme Court, without going into the matter for the reason that fresh recommendations have been given by TRAI, dismissed the appeal with liberty to raise all contentions in the civil appeal before TDSAT. After hearing the matter, TDSAT, vide order dated 30....
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....ambling and trade in liquor were prohibited. Supreme Court, even in the matter of licensing liquor has held in State of Madhya Pradesh-Vs.-Nandlal Jaiswal (1967 (1) SCR 1) that Article 14 would stand attracted. In the above backdrop of the binding precedents of the Supreme Court, the activity of telecom services carried on by the petitioner cannot be termed to be an obnoxious activity to be excluded the entitlement guaranteed under Article 19(1)(g) of the Constitution. 31. It is the submission of the petitioners that for the grant of largesse by way of grant of telecom licenses, the licensor, viz., the State, could fix a price as it may deem fit, but the same can only be in relation to telecom activities/services and by no stretch of imagination could it be deemed to include any other activities, not related to telecom activities, that are being carried on by the service providers. 32. It is the submission of the learned senior counsel for the petitioners that the Government can only put reasonable restrictions in the levy of fee and any unreasonable restriction in violation of Article 19(1)(g) of the Constitution in relation to the conditions of license, which is ultra vires....
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.... (iii) Mahabir Prasad Santosh Kumar-Vs.-State of U.P. (1970 (1) SCC 764); (iv) Godhra Electricity Co. & Anr.-Vs.-State of Gujarat & Anr. (1975 (1) SCC 199); (v) Indian Aluminium Co.-Vs.-Kerala State Electricity Board (1975 (2) SCC 414); (vi) Tata Cellular-Vs.-Union of India (1994 (6) SCC 651); (vii) Delhi Science Forum & Ors.-Vs.-Union of India (1996 (2) SCC 405); (viii) A.P. Paper Mills Ltd.-Vs.-Government of Andhra Pradesh (2000 (8) SCC 167); (ix) Cellular Operators Association of India & Ors.-Vs.-Union of India & Ors. (2003 (3) SCC 186); (x) Kerala Samsthana Chethu Thozhilai Union-Vs.-State of Kerala (2006 (4) SCC 327); (xi) Hotel & Restaurant Association & anr.-Vs.-Star India (P) Ltd. (2006 (13) SCC 753); (xii) BSNL-Vs.-BPL Mobile Cellular Ltd. (2008 (13) SCC 597); (xiii) Union of India & anr.-Vs.-Association of Unified Telecom Service Providers of India & Ors. (2011 (10) SCC 543); (xiv) Centre for Public Interest Litigation-Vs.-Union of India & Ors. (2012 (3) SCC 1); (xv) Avishek Goenka-Vs.-Union of India (2012 (5) SCC 275); (xvi) Subramanian Swamy-Vs.-A. Raja (....
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....the renewal or transfer of license was at the instance of the appellants as has been held by the learned single Judge and, therefore, no condition can imposed by DoT for granting approval for merger and subsequent grant of license for the merged area. When merger has been made mandatory by the respondent/DoT, any tags/conditions attached for grant of approval of the merger would be bad in law and is liable to be struck down. 40. It is further submitted on behalf of the appellants that on account of the condition in the NIA regarding merger, which is in consonance with the circular dated 15.9.05, merger was contemplated by DoT itself in public interest and in connection therewith the appellants have taken steps for the merger of ACL with AL and all along, the DoT was kept in the loop about the steps being taken by the appellants for merger, it cannot be said that for grant of approval, conditions imposed by DoT ought to be complied with. Learned single Judge has not appreciated this aspect of the matter while dealing with the writ petitions. 41. It is the further submission of the learned senior counsel for the appellants that when condition 9 of the license agreement postulat....
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....hey had not violated any of the guidelines relating to merger. Further TDSAT also observed that the parties were governed by NIA dated 25.2.2010 and further has stated that AL and ACL have complied with the guidelines prescribed in NIA. In the above context, it is the contention of the learned senior counsel for the appellants that though TDSAT has held that the appellants herein have not committed any illegality nor violated the merger guidelines and have complied with all the formalities as laid down in the NIA dated 25.2.2010, wherein merger was one of the condition for participating in the 3G and BWA auction, the stand of DoT that the scheme of amalgamation filed by the appellants before this Court for merger, without its approval, is a violation of condition of license cannot hold water. When merger is condition for participating in the 3G and BWA auction, which condition has been laid down by the DoT itself, and the appellants, in the course of fulfilling its part of NIA for the purpose of participating in the auction, have moved this Court with a scheme of amalgamation and have further kept DoT in the loop by their pre-intimation letter dated 15.7.2010 informing DoT about th....
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...., DoT, for reasons best known to it, has not passed any order inspite of numerous reminders by the appellants, which only shows the callous attitude of DoT to comply with the order passed by TDSAT. However, more curiously, for merging the licenses, which is a condition as imposed by DoT itself vide the circular dated 15.9.05 and NIA dated 25.2.2010, onerous conditions have been imposed by DoT and calling upon the appellants to give an undertaking, which is unsustainable in law. 48. It is the submission of the learned senior counsel that the demand of OTSC having been stayed by this Court vide its order dated 22.06.2012, the action of DoT to demand the said amount by means of an obtaining an undertaking in a matter pertaining to grant of approval of merger, would go against the very spirit of the stay order and would tend to make the order of this Court a nullity, which is impermissible in law and against the judicial dicta laid down by Courts in a catena of cases. 49. It is the further submission of the learned senior counsel that it is well settled law that what cannot be done directly is not permitted to be done obliquely. It is contended that what is prohibited by law cann....
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....ia will not be counted to the extent of such stay for the purpose of encashing PBG/FBG on account of non-payment of the raised dues/demands. In the context of the above letter of DoT, learned senior counsel submits that the appellants also have the benefit of the order of stay passed by this Court insofar as it relates to the demands/dues raised by DoT. Such being the position, what is sauce for the goods should be sauce for the gander as well and similar treatment is to be meted out to the appellants as well. In the above circumstances, when DoT has issued such a communication to Dishnet Wireless Ltd., clarifying that they will not be enforcing the dues/demands which are under orders of stay granted by the Tribunals/Courts, the demand raised on the appellants, having been stayed by this Court, should also not be enforced and, accordingly, the approval for merger as sought for along with the merger of licenses should be granted without insisting on any undertaking insofar as the above demand is concerned. 52. Learned senior counsel further assailed the order of the learned single Judge by submitting that though the prayer as made by the appellants/petitioners therein was a direc....
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.... licenses and not to the licensees, who were granted licenses way back in the year 1994 and 1998. It is further pointed out by the learned senior counsel for the appellants that in para-72 of the above judgment, the Supreme Court has observed that based on the suggestions given by the one-man Committee, the Government of India has taken a decision to segregate spectrum from licence and allot the same by auction in future. Such being the stand of the Government, the imposition of OTSC based on which the present undertaking is sought to be taken from the appellants is not sustainable. 55. Learned senior counsel appearing for the appellants submitted that the reliance placed on the decisions in S.M. Amarchand Sowcar's case (1999 (2) LW 47) and Vishnuvardhan Paper Mills case (W.P. (MD) No. 12507 of 2011 dated 23.11.2011) are not applicable to the facts of the present case. It is contended that those cases relate to matters arising out of the Electricity Act, which is a self-contained statute, wherein powers have been vested with the authority to disconnect any electricity connection relating to a single individual/entity in the event of the individual/entity defaulting payment f....
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....which is the crux of Article 14 of the Constitution and it is therefore the duty of every government instrumentality/public authority to act fairly and reasonably and exercise of power must not be in an arbitrary, unjust or unfair manner and should be in consonance with the Article 14 of the Constitution. It is further submitted that non-arbitrariness is a significant facet of Article 14 and, therefore, it is necessary for DoT to give due weightage to the reasonable and legitimate expectations of the appellants as any unfair action would only amount to an abuse of power. In this regard, reliance is placed on the decision of the Apex Court in Ramana Dayaram Shetty-Vs.-International Airport Authority of India & Ors. (1979 (3) SCC 489). 59. Learned senior counsel for the appellants submitted that on the merger of the two licenses, as per the condition in the license agreement, the effective date would be the later of the dates as mentioned in the license, which would practically be 30.12.2018 as the license for the RoTN Area was dated 22.5.98 and effective date being 31.12.1998. In such a case, on the merger, the license would expire only after 20 years terms on 30.12.2018. The rig....
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....G Household & Healthcare Ltd. (2007 (5) SCC 510); (viii) K.M. Nanavati-Vs.-State of Bombay (AIR 1961 SC 112); (ix) The Aligarh Municipal Board & Ors.-Vs.-Ekka Tonga Mazdoor Union & Ors. (1970 (3) SCC 98); (x) Mottur Hajee Abdul Rahman & Co.-Vs.-Deputy Commercial Tax Officer, Vaniyambadi (1969 (2) MLJ 168); (xi) The Chief Engineer (Distribution), Tamil Nadu Electricity Board-Vs.-M/s. Best Cotton Mills (W.A. No. 1913 of 2011 & M.P. No. 1 of 2011); (xii) Best Cotton Mills-Vs.-The Chief Engineer (Distribution), Tamil Nadu Electricity Board (AIR 2013 Mad 8); (xiii) A.T. Kearney India Pvt. Ltd.-Vs.-Income Tax Officer (W.P. (C) No. 1937/2014); (xiv) Hutchison Telecom East Ltd.-Vs.-Alapan Bandyopadhyay & Anr. (W.P. No. 183/2003); (xv) Kishan R. Bhatijha & anr.-Vs.-The Deputy Director, Enforcement Directorate, Govt. of India & Anr. (1995 (2) CTC 230); (xvi) Delhi Development Authority-Vs.-Skipper Construction Co. & Anr. (1996 (4) SCC 622); (xvii) All Bengal Excise Licensees' Association-Vs.-Raghabendra Singh (2007 (11) SCC 374); (xviii) Anil Ratan Sarkar & Ors.-Vs.-Hirak Ghosh & Ors. (2002....
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....amil Nadu Generation & Energy-Vs.-Sevorit Ltd. (K.A. (MD) No. 246 of 2013 & M.P. No. 1 of 2012); and (xlvi) The Chairman, Tamil Nadu Generation & Distribution Corporation Ltd.-Vs.-T.T. Ltd. (W.A. No. 1652 & 1653 of 2013); 62. Mr. G. Rajagopalan, learned Additional Solicitor General appearing for the respondent/Dot, at the threshold, submitted that the writ petitions in W.P. Nos. 9220 and 9221 of 2014 itself were not maintainable, so also the writ appeals which is an off-shoot of the writ petitions. It is the contention of the learned Addl. Solicitor General that Section 14(a)(i) of the Telecom Regulatory Authority of India Act, 1997 (for short 'TRAI Act') prescribes that in respect of any dispute arising between a licensor and a licensee the same shall be adjudicated upon by the TDSAT. Such being the position, it is the submission of the learned Addl. Solicitor General that without availing the remedy before TDSAT, the petitioners/appellants have approached this Court under Article 226. Further, as against any order passed by TDSAT, the petitioners/appellants have a right of appeal to the Supreme Court under Section 18 of the TRAI Act. Without exhausting the rem....
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....e of telegraphs and no one else has authority over it. Proviso to Section 4(1) of the Telegraph Act further empowers the Central Government to part with the privilege on receipt of such payments as it thinks fit. By virtue of the said power, DoT had entered into license agreements with the appellants and granted them license on certain terms and conditions. 66. Learned Addl. Solicitor General placed reliance on 13 (ii) of the License Agreement dated 30.11.94 entered into with the licensee, wherein the authority has reserved the right to modify at any time the terms and conditions of licence covered under Schedules 'A', 'B', 'C' and 'D' if in the opinion of the authority it is necessary or expedient to do so in the interests of the general public or for the proper conduct of telegraphs or on security consideration. On the basis of the said license, ACL and AL were granted licenses during 1994 and 1998, initially for a period of 10 years on payment of licence fee and entry fee. The licensees, by paying the fee as contemplated in the license agreement, were granted license agreements. 67. After execution of the license agreements, NTP 1999 was int....
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....ntral Government and in public interest, if the Central Government thought it fit to levy OTSC, the appellants cannot have any quarrel over the same. 70. It is further submitted that as early as on 29.1.01, wherein amendment was made to the license agreement on the acceptance of the migration package by the licensees, license fee as a percentage of the share of gross revenue was levied and in the said amendment, clause (4) stipulated that the other terms and conditions of the license agreement would remain unchanged and this was accepted by the licensees. In such a backdrop, it is submitted by the learned Addl. Solicitor General that Clause 13 (ii) of the license agreement dated 30.11.1994 prevails by which unbridled powers have been vested with the Central Government to modify any terms and conditions of the license agreement. 71. Learned Addl. Solicitor General, in fine, submitted that by virtue of the powers vested under Section 4(1) of the Telegraph Act coupled with Clause 13 (ii) of the License Agreement dated 30.11.1994, the Central Government having decided to levy OTSC from the licensees holding over and above 6.2 MHz of spectrum with retrospective effect from 1.7.08 ....
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....or General placed reliance on the judgment of the Supreme Court in Bharti Airtel Ltd.-Vs.-Union of India (2015 (12) SCC 1). 74. Learned Addl. Solicitor General, on the contention of the appellants that DoT cannot enforce revenue sharing on activities of the appellants, insofar as it relates to non-telecom activities, submitted that vide NTP 1999, migration package was offered to the licensees wherein the license period was extended from 10 years to 20 years from the effective date of the licence on the condition and the license fee payable will be a percentage on the Adjusted Gross Revenue of the service provider. The appellants accepted for migration to the revenue share regime. Once the appellants have accepted the migration package and have opted for the revenue share on the adjusted gross revenue, now it is not open for the appellants to contend that DoT is not entitled for the prescribed percentage of share in the revenue on the basis of some of the activities performed by the appellants. It is contended by the learned Addl. Solicitor General that the definition of "Adjusted Gross Revenue" has been defined in amendment to the license agreement dated 25.9.01 at clause 2, whe....
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....ctly, which could not be achieved directly. The said argument is a fallacious argument on account of the fact that imposition of condition for merger could in no way be termed as violating the orders of stay granted by this Court. Further, it is submitted that what DoT is trying to achieve is a balance in the spectrum allocation amongst the various operators to have a level playing field and in furtherance to the same, if conditions, which are in consonance with the license agreement, are imposed, the licensee is bound to abide by the same and cannot come out and contend that since their licenses dates back to 1994 and 1998, they are not entitled for payment of any OTSC. 77. Concluding his submissions, learned Addl. Solicitor General submitted that all the actions taken by the Government are in tune with the license agreement and the powers vested with the Government under Section 4 of the Telegraph Act and there has been no violation, but for violations by the appellants for which action was taken by DoT and, therefore, for the approval sought for by the appellants, conditions imposed by DoT have to be complied with. Further, levies as made in the different writ petitions are a....
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....en the Central Government chooses it can impose conditions for fresh payments. That is not the purport of the said Section and power granted thereunder. Learned senior counsel placed more emphasis on the interpretation of the word "as it thinks fit" by referring to the words of Ruma Pal, J. in the case of State of U.P.-Vs.-Devi Dayal Singh (2000 (3) SCC 5), wherein dealing with the similar words relating to a matter under the Tolls Act, 1851, learned Judge held that it should reference to the meaning of the above words should be taken in relation to the word "toll" and, therefore, the State Government must justify the levy on the public. In this context, learned senior counsel submits that the Central Government cannot levy any charges off hand and it is bound to justify such levy. 81. It is further urged by the learned senior counsel for the appellants/petitioners that even assuming without admitting that the levy of OTSC is sustainable, there is no relevance as to the fixation of date from which OTSC is payable. DoT has not placed any credible material to justify the date of levy of OTSC and in that view of the matter, the arbitrary fixation of date is not sustainable. 82. ....
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....between the parties, is void ab initio and DoT cannot enforce such a levy and a levy, which is void ab initio, cannot form the basis for an undertaking to be given by the appellants for honouring their part of the contract, which has been mandatory by the Government vide its circular dated 15.9.05 and NIA dated 25.2.2010 and, therefore, insistence on the said undertaking is not justified, more so in view of the order of stay of OTSC granted by this Court. Further, the levy of AGR on non-telecom activities is also bad in law as AGR is payable only on the activities, which are covered by the license and for which purpose the license has been issued and any other activity carried on by the petitioners, not covered by the license, which has yielded returns, AGR cannot be enforced on the said returns, which would be highly deplorable and demand of such payment citing license conditions, which do not contemplate such payment could only be termed as colourable exercise of power and high-handedness on the part of DoT. Accordingly, learned senior counsel prayed for allowing the writ petitions and the writ appeals in toto on the above set of facts and contentions. 86. Heard the learned se....
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....rs of India case (supra) has categorically laid down that insofar as interpretation of the terms and conditions of license is concerned, TDSAT is vested with power, but the Tribunal has no jurisdiction to decide upon the validity of the terms and conditions incorporated in the licence of a service provider. It is the submission of the learned senior counsel that since OTSC is not a levy, which finds place in the license agreement, there is no question of interpretation of any of the terms and conditions, as the said levy is a fresh levy and, therefore, it strikes at the root of the validity of the license agreement, in that the moot point to be addressed whether the DoT has power to amend the license agreement by incorporating a new levy, which is not what has been agreed between the parties to the agreement. Learned senior counsel submits that insofar as modification of the terms and conditions of the licence, the TDSAT may have power to adjudicate, but not a fresh levy made invoking clause 13 (ii) of the licence agreement, as the fresh levy is an addition, which is easily distinguishable from modification. 91. In Unified Telecom Service Providers of India case (supra), the Sup....
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....nd Restrictive Trade Practices Commission established under sub-section (1) of section 5 of the Monopolies and Restrictive Trade Practices Act, 1969; (B) the complaint of an individual consumer maintainable before a Consumer Disputes Redressal Forum or a Consumer Disputes Redressal Commission or the National Consumer Redressal Commission established under section 9 of the Consumer Protection Act, 1986; (C) the dispute between telegraph authority and any other person referred to in sub-section (1) of section 7B of the Indian Telegraph Act, 1885; (b) hear and dispose of appeal against any direction, decision or order of the authority under this Act. 94. The other relevant provisions are extracted hereunder:- 15. Civil court not to have jurisdiction-No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act. * * * * * * * * 18. Appeal to Supreme Court.-....
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....e wholly without jurisdiction or the vires of an Act is challenged. 97. In the case of Baburam Prakash Chandra Maheshwari-Vs.-Antarim Zila Parishad (AIR 1969 SC 556) the Supreme Court observed as follows:- "3. It is a well-established proposition of law that when an alternative and equally efficacious remedy is open to a litigant he should be required to pursue that remedy and not to invoke the special jurisdiction of the High Court to issue a prerogative writ. It is true that the existence of a statutory remedy does not affect the jurisdiction of the High Court to issue a writ. But, as observed by this Court in Rashid Ahmed-Vs.-The Municipal Board, Kairana, 1950 SCR 566 : (AIR 1950 SC 163), "the existence of an adequate legal remedy is a thing to be taken into consideration in the matter of granting writs" and where such a remedy exists it will be a sound exercise of discretion to refuse to interfere in a writ petition unless there are good grounds therefor. But it should be remembered that the rule of exhaustion of statutory remedies before a writ is granted is a rule of self-imposed limitation, a rule of policy, and discretion rather than a rule of law and the court ....
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.... that where proceedings are taken before a Tribunal under a provision of law, which is ultra vires, it is open to a party aggrieved thereby to move the High Court under Art. 226 for issuing appropriate writs for quashing them on the ground that they are incompetent, without his being obliged to wait until those proceedings run their full course.--(See the decisions of this Court in Carl Still G.M.B.H.-Vs.-The State Bihar, AIR 1961 SC 1615 and The Bengal Immunity Co. Ltd.-Vs.-The State Bihar, (1955) 2 SCR 603. In the second place, the doctrine has no application in a case where the impugned order has been made in violation of the principles of natural justice (See 1958 SCR 595, 605 : (AIR 1958 SC 86, 93))." 98. In the case of Nivedita Sharma-Vs.-Cellular Operators Association of India (2011 (14) SCC 337), the Apex Court while reiterating its views as expressed in the Whirlpool Corporation's case (supra), wherein it was observed that insofar as the jurisdiction of the High Court under Article 226 or for that matter, the jurisdiction of the Supreme Court under Article 32, is concerned, the provisions of a statute cannot bar or curtail these remedies. However, while exercising t....
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....his Court under Article 226 having not been ousted or curtailed, this Court having granted stay of recovery/demand as made by the DoT in the above batch of writ petitions, relegating the petitioners to approach the Tribunal to have their grievance redressed would be a futile exercise as without vacating the interim orders granted by this Court, any order passed would serve no purpose as has been rightly pointed out by the learned single Judge that any order that may be passed by the Tribunal in conflict with the interim orders passed by this Court would amount to judicial anarchy, which should be avoided. Therefore, with a view to avoid multiplicity of proceedings, instead of relegating the matter back to the Tribunal to decide the issue as raised by the petitioners, it would be more appropriate to exercise the prerogative writ jurisdiction of this Court for deciding the issues as raised by the petitioners/appellants. 103. Accordingly, on the issue of maintainability, this Court holds that the writ petitions, at the instance of the petitioners, in the circumstances of the facts of case, are maintainable and the finding of the learned single Judge warrants no interference. REV....
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....stopped from raising this plea. Learned Addl. Solicitor General also drew the attention of this Court to the decision of the Supreme Court in Association of Unified Telecom Service Providers of India case (supra), wherein the Supreme Court has held that once the licensee had accepted Clause (iii) of the letter dated 22.7.1999 that the licence fee would be a percentage of the gross revenue, which would be the total revenue of the licensee company and had also accepted that the Government would take a final decision with regard to the percentage of revenue share as also the definition of revenue, it is not open to the licensee to question the validity of the definition of adjusted gross revenue in the licence agreement not to include revenue from activities beyond the licence. 106. In a nutshell, the issue that arises for determination in this batch of writ petitions is-- "Whether the first proviso to Section 4 of the Indian Telegraph Act gives unbridled powers to DoT to claim a share of revenue from non-telecom activities vide the definition of 'Adjusted Gross Revenue', forming part of the amended licence agreement in No. 842-2/2000-VAS (Vol. IV) (Part) dated 25.....
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....ourt also further held that once the licensee had accepted that licence fee would be a percentage of the gross revenue, which would be the total revenue of the licensee company and had also accepted that the Government would take a final decision not only with regard to the percentage of revenue share but also the definition of revenue for this purpose, the licensee could not have approached the Tribunal questioning the validity of the definition of adjusted gross revenue in the licence agreement on the ground that adjusted gross revenue cannot include revenue from the activities beyond the licence. For better clarity, the relevant portion of the order is extracted hereinbelow:- "47. A dispute between a licensor and a licensee referred to in Section 14(a)(i) of the TRAI Act, therefore, is a dispute after a person has been granted a license by the Central Government or the Telegraph Authority under sub-section (1) of Section 4 of the Telegraph Act and has become a licensee and not a dispute before a person becomes a licensee under the proviso to sub-section (1) of Section 4 of the Telegraph Act. In other words, the Tribunal can adjudicate the dispute between a licensor and ....
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....age of the gross revenue, which would be the total revenue of the licensee company and has also accepted that the Government would take a final decision not only with regard to the percentage of revenue share, but also with regard to the definition of revenue, is estopped from questioning the definition of adjusted gross revenue on the ground that it includes revenue from activities beyond the licence. The Supreme Court further held, in relation to the wide definition of adjusted gross revenue, if the licensee is really aggrieved that the activities that they undertake are outside the purview of telecom activities, which are outside the terms of licence, it was open to the licensee to transfer the activities to any other person or firm or company. However, the licensee having agreed to the terms regarding payment, which had been decided by the Central Government, which had the rights of exclusive privilege in respect of telecommunication activities, and availed the exclusive privilege to carry on telecommunication activities under the terms of a licence issued by the Central Government, it is not open to the licensees to plead for an alteration of the definition of adjusted gross r....
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....in unambiguous terms, spells out that the Central Government is vested with exclusive privilege of establishing, maintaining and working telegraphs. Proviso to Section 4(1) of the Telegraph Act enables the Central Government to part with this exclusive privilege in favour of any other person by granting a licence in his favour on such conditions and in consideration of such payments as it thinks fit. The above provision of law makes it clear that the Central Government owns the exclusive privilege of carrying on telecommunication activities and it alone has the right to part with its privilege in favour of any other person by grant of a licence on such conditions and in consideration of such payment as it thinks fit. In effect, the licence granted by the Central Government under Section 4 of the Act to any person to carry on telecommunication activity is in the nature of a contract between the licensor and the licensee. 115. In Association of Unified Telecom Service Providers case (supra), the Supreme Court, while placing reliance on the judgment of the Supreme Court in case of State of Orissa-Vs.-Harinarayan Jaiswal (1972 (2) SCC 36), wherein while interpreting the expression "....
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....d hereinbelow for better appreciation:- "2. Definition of Adjusted Gross Revenue: 2.1 Gross Revenue: The Gross Revenue shall be inclusive of installation charges, late fees, sale proceeds of handsets (or any other terminal equipment, etc.), revenue on account of interest, dividend, value added services, supplementary services, access or interconnection charges, roaming charges, revenue from permissible sharing of infrastructure and any other miscellaneous revenue, without any set-off for related item of expense, etc. 2.2 For the purpose of arriving at the "Adjusted Gross Revenue" the following will be excluded from the Gross Revenue: (i) PSTN related Call charges (access charges) actually paid to Bharat Sanchar Nigam Limited (BSNL)/Mahanagar Telephone Nigam Ltd. (MTNL) or other telecom service providers within India (ii) Roaming revenues actually passed on to other telecom service providers, and (iii) Service Tax on provision of service and Sales Tax actually paid to the Government, if gross revenue had included the component of Service Tax/Sales Tax." (Emphasis supplied) 120. It is clear from the above defi....
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....nnot now come before this Court and plead that what is accepted by them is violative of Articles 14 and 19(1)(g) of the Constitution. 123. A contract has to be read in its true spirit and it cannot be sought to be diluted for the purpose of benefit of one of the party. A contract is a culmination of consensus of two minds and is supposed to be executed in its true and right sense without intention to defraud each other. The above migration package dated 25.9.2001 has been accepted by both the licensor and the licensee and after consensus, the contract has been executed, which provides for the licensor to levy licence fee as a percentage of share on the AGR with a clear understanding that any other miscellaneous revenue would also form part of the gross revenue of the licensee and that there would be no set off for related item of expense, etc. The licensee, being a company with legal expertise, would have had occasion to read through the licence agreement before signing and the company, at this point of time, cannot plead ignorance that its understanding was that the share would only be on the revenue that is covered by licensed activities. The purport and language so also the u....
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....s, which would satisfy the legitimate expectation. The usage of the spectrum by the petitioners having been on the premise that they have been paying all the charges as envisaged under the licence agreement as also the further amended migration package, which was on a mutual understanding, the levy of OTSC in an arbitrary and unreasonable manner by DoT is against the constitutional obligations imposed on the Government and against the rule of law as enunciated by the Supreme Court in a catena of decisions. It is further contended on behalf of the petitioners that the Government having enjoyed the benefits of AGR as also the spectrum usage charges, cannot at this point of time, under the guise of power vested under Clause 13 (ii) of the licence agreement impose upon the petitioners an altogether new levy, which was hitherto fore not envisaged under the licence agreement. Such an imposition is per se bad in law and would go against the very spirit of the contract, which has been mutually agreed between the parties. DoT cannot enrich themselves at the cost of the petitioners. 127. It is the further contention of the petitioners that though the date for charging OTSC has been fixed ....
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....of OTSC would further add to the burden of the common man. It is further contended on behalf of the petitioners that when already spectrum usage charges is being levied, levy of OTSC would be nothing but equivalent to double taxation for the same spectrum/allocation. It is further contended that as the name OTSC suggests, it is supposed to be a one time fee. However, it is being charged over a period of time with differential rates over the said period. When differential rates are being charged over a period under the colour of OTSC, the concept of one time charge does not fructify as the name goes, it should be a fixed charge and it cannot vary based on periods. 129. Learned senior counsel for the petitioners placed emphasis on the order of the Supreme Court in Civil Appeal No. 9603 of 2010, wherein the statutory obligation of TDSAT to decide the matter on merits insofar as the validity of the charge fixed was on issue. It is the contention of the learned counsel for the petitioners that the writ petitions are very well maintainable, as the Attorney General, in the said case, has sought time to get instructions with regard to the validity of the charge. However, as per the deci....
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....se (supra) that the Central Government is vested with exclusive privilege to deal with telegraph and power is vested in it to grant licences for establishing, maintaining and working telegraphs on such conditions and in consideration of such payments as it thinks fit to any person, the relevant portion of which has already been quoted above. Therefore, the right of the Government to deal with the said exclusive privilege and to grant licences is not in issue. However, the issue that is sought to be raised by the petitioners is-- "Whether in exercise of powers of exclusive privilege conferred under Section 4(1) of the Telegraph Act, the Central Government is empowered to impose new conditions/payments, in the form of OTSC, unilaterally, on the petitioners, in respect of a concluded contract? 133. For the purpose of imposition of levy of OTSC, DoT relies upon Clause 13 (ii) of the Licence Agreement, which empowers the DoT to "modify" the terms of the licence. For better clarity, the relevant portion of the clause reads as under:- "13. It is further agreed and declared by the parties that notwithstanding anything contained hereinbefore, that * * * * * * *....
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.... said power, while the licensor had granted licence to the licensee initially, at a later point of time, a migration package was also offered wherein the licence fee was modified as a percentage of the share of the AGR of the service provider with a benefit to the service provider wherein the initial term of 10 years of the licence was extended to 20 years from the effective date. The said migration package was accepted by the licensee. The above position is not in dispute. However, pursuant to the judgment in the 2G Spectrum case (supra), the Supreme Court had elaborated on what a natural resource is and its value to the country. The relevant portion of the judgment is extracted hereinbelow:- "74. At the outset, we consider it proper to observe that even though there is no universally accepted definition of natural resources, they are generally understood as elements having intrinsic utility to mankind. They may be renewable or non renewable. They are thought of as the individual elements of the natural environment that provide economic and social services to human society and are considered valuable in their relatively unmodified, natural, form. A natural resource's ....
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.... of the public. While the State is duty bound to protect the natural resource and utilise the same for public good, equally, the alienation of the same through issue of licences to private entities assumes significance as the revenue it generates also invariably goes towards the overall improvement of the country. 139. In the light of the above categorical observations and binding views of the Supreme Court, the emphasis placed on clause 13 (ii) of the licence agreement for the purpose of OTSC by DoT needs to be addressed. 140. The respondent submits that in view of the power vested under clause 13 (ii) of the licence agreement, whereby the Government has been empowered to modify the terms of the agreement in select situations, the Government, pursuant to the above observations of the Supreme Court and its binding nature, thought it fit to levy OTSC. The term "modify", which is the fulcrum on which the lever, viz., OTSC moves, is interpreted by the Government to mean that it has the power to add terms in the licence agreement, while this imposition of levy is being opposed by the petitioners as is against the spirit of the bilateral contract. 141. The meaning of the term "....
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.... scheme of the compromise or an arrangement necessitates a modification under Section 2(29) of the Companies Act (1 of 1956). The modification included additions and omissions. The Court considered that in an inclusive definition the word would not only bear an ordinary, popular and natural sense, but also its extended statutory meaning. Such an expansive definition should be construed as not to cut down the enacting provision of the Act. The Court further considered that in construing such a definition in an enactment that provision would have to be seen along with other provisions found in the legislation connected with it which may throw light upon it and afford an indication that the general words employed in it were not intended to be applied without some limitation. Accordingly in that case considering the inclusive definition of the term modification in Section 2(29) the Court held that it would include additions and omissions holding that when a sponsor was substituted by another creditor the Court construed that as an addition allowing the substitution of the sponsor. 147. On an overall understanding of the meaning attributed to the word "modify" as is available in the ....
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....Central Government, TRAI and the service providers for imposition of OTSC and in tune with the decision of the Supreme Court, OTSC was demanded. 151. In the above context, it is for this Court to ascertain whether the term "modify" as appearing in clause 13 (ii) of the licence agreement connotes "addition". When a word is ambiguous, as could be seen, capable of interpretation in more than one way, a judicial interpretation of the word in the context of the overall provision is what would be more relevant and suitable to address the issue. 152. Cue to the interpretation of the term "modify" in the context of the present licence is evident from the terminology used in Black's Law Dictionary, wherein the term "modify" is defined as "to make somewhat different", "to make small changes by way of improvement, suitability or effectiveness". From an overall reading of the licence agreement in the context of the 2G Spectrum case (supra), the intention of the Government would be and should be to maximise the benefit achieved through the grant of licence in the interest of the general public. The intention is more manifest through the migration package offered by the Government duri....
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....rty alone, though the extent of power to vary is a matter of construction. Unilateral variation, unless permitted by the contract, or by rules, may amount to breach of contract, and entitle the other party to damages or repudiate the contract as the case may be. In the present case, unilateral variation has been permitted under clause 13 (ii) entitling the licensor to modify the terms of the licence agreement. Such being the case, the petitioners having accepted the said clause with open eyes and also further accepted changes made to the contract, including extension of term and change in the prescription of licence fee, cannot, cry out loud at this point of time pleading denial of rights vested on them under the contract. The petitioners have no vested right to carry on telegraph activity, but for the licence, which has been granted by the exclusive privilege holder, viz., the Central Government. Such being the case, if the Central Government though it fit to impose OTSC on the service providers, it cannot be deemed to be against the vested rights of the service providers, as no vested rights accrue to them on the grant of licence to carry on the licensed activities. 156. Furth....
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....retion of the licensor and the licensee cannot have any quarrel on the same as they being party to the licence agreement have agreed for modification of the terms and conditions as is evident from clause 13 (ii) of the licence agreement. 158. For the reasons stated above and the foregoing discussions, this Court holds that the levy of OTSC by the Central Government, in exercise of powers conferred on it by Section 4(1) of the Telegraph Act r/w Clause 13 (ii) of the Licence Agreement, is not arbitrary, and in fact justified and enforceable. MERGER OF LICENCES OF AL & ACL:- 159. The last of the issue relates to the writ appeal, which is against the order passed by the learned single Judge, wherein the learned single Judge had directed the appellants to comply with the conditions imposed by DoT for grant of approval of merger. 160. Initially the licence was granted to two different entities, viz., ACL and AL, though they being group companies, through two separate licences. In terms of the circular dated 15.9.2005, the service providers were offered a option of getting their licences merged into a single licence without payment of any additional entry fee, which the appell....
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....rejudice to their rights, with a further rider that in case of the petitioners succeeding in the petitions where they are protected by orders of stay, the undertaking given in pursuant to the impugned order would stand lapsed automatically. The order of the learned single Judge is quoted hereinbelow for better clarity:- "48. In view of the above, both the writ petitions are disposed of, to the following effect: (i) the petitioners shall, within two weeks from the date of receipt of a copy of this order, comply with the conditions as imposed in the order of the respondent dated 03.10.2013, without prejudice to their rights and contentions in the writ petitions already pending on the file of this Court; (ii) insofar as condition (b) in the impugned order dated 03.10.2013 is concerned, the effective date shall be read as 31.12.1998; (iii) in the event of the petitioners succeeding in the writ petitions W.P. Nos. 585 & 587 of 2012 and 2615 to 2617 of 2013, the undertaking will automatically lapse; (iv) the compliance by the petitioners of conditions (e) and (f) will not preclude the petitioners from taking recourse to legal remedies availabl....
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....s as contained in para 48(i) of the order dated 10 October 2014 in W.P. Nos. 9220 and 9221 of 2014 in view of the payment and undertaking to be given by the petitioners as indicated above. (iv) This interim relief is subject to the outcome of writ petitions and writ appeals and without prejudice to the contentions of both the parties." 163. From the abovesaid order, it is evident that the appellants were directed to comply with the payments as contemplated in the NIA and also to pay AGR as per quantification with further direction to give an undertaking of conditions (c) and (d) (i) to pay the dues in case the pending matters are decided against them. Further, the order of the learned single Judge was also stayed. 164. This Court having held that levy of OTSC is sustainable and DoT can levy the said charge on the service providers, in effect, the stay granted by this Court in the writ petitions automatically gets vacated. In such view of the matter, it is not necessary to decide whether the coercive action of the respondent/DoT in demanding an undertaking is per se contemptuous when those levies are under orders of stay granted by this Court as those orders of stay s....