AIRCEL LTD Vs VODAFONE INDIA LTD.

This petition has been filed as the respondent issued a letter dated 25.10.2012 wherein the petitioner was called upon to pay an amount of Rs. 40 crores plus applicable service tax within a period of 15 days i.e. 9.11.2012. It was also stated that in the event of failure to make such payment, the SMS termination facility of the petitioner may be withdrawn from this date.

2. Accordingly, the respondent has stopped the SMS termination facility in 5 circles. The petitioner has filed the present petition praying, interalia, for the following relief : (a) “declare the demand of Rs. 40,02,77,730/- raised upon the petitioners by the Respondents (on account of unilateral implementation/ imposition of SMS termination charge @ 10 paise per SMS) as arbitrary, illegal, wrong, unilateral and without any basis; and quash/set aside the same”.

The petitioner has also requested for an interim order in terms of: “a) direct the Respondents not to disconnect /withdraw the interconnection for SMS service with the petitioner’s networks, pursuant to its letter dated 25.10.2012 and email dated 21.11.2012, pending adjudication of the instant case; b) direct the respondents to re-connect the SMS service of the petitioners network forthwith in respect of Delhi, Chennai, ROTN & Karnataka circles”

3. Indisputably, there is no written interconnection agreement for SMS termination charges between the parties. However, the SMS are being terminated by both the parties to each other’s network from the beginning and no termination charges are being collected by any party.

4. It is submitted by the petitioner that although the parties were not charging each other for SMS termination on their respect network, the respondent proposed to implement the SMS charges @ 10 p per SMS and further proposed a supplement clause to the existing interconnection agreement between the parties vide its letter dated 25.08.2010 in terms of : “….the parties agree to pay an SMS termination charge of 10 paise/SMS for all SMS originated from either party’s network and terminated on the other party’s network from 1st October 2010.”

The petitioner informed the respondent on 28.09.2010 wherein it disagreed with the proposal and requested the respondent to inform the methodology stating that :

“…the methodology used for arriving at termination cost of @ 10 paise per SMS. This is important because, as you know, we live in the times of a cost based IUC regime, so the costing becomes very relevant…”

The petitioner submitted that the respondent did not answer on this aspect of methodology for arriving at termination cost of @ 10 paise per SMS.

5. It is noticed that respondent had issued a letter dated 25.10.2012 wherein it has raised an invoice for Rs. 40 and odd crores for SMS termination charges and informed the petitioner that in case there is failure of payment, the interconnection of SMS service of the petitioner’s network would be disconnected.

However, vide letter dated 21.11.2012, the respondent has informed the petitioner that as neither the petitioner has responded to its letter dated 25.10.2012 nor made the payment on net basis, the SMS termination facility pursuant to our notice dated 25.10.2012 is being given effect to.

Mr. Meet Malhotra, the learned senior counsel appearing on behalf of the petitioner pointed out that arrangement between the parties has been on bill and keep basis for interconnection of SMS services and the respondent’s unilateral proposal of charging SMS termination @ 10 p per SMS is arbitrary and illogical and is not in the interest of consumers.

6. Mr. Jain appearing on behalf of the respondent has brought to the notice of this Tribunal its order dated 24.09.2012 in Petition No. 130 of 2012, wherein it was observed :

“36. It is seen that no agreement has been executed between the parties for interconnection charges for SMS. The SMS services between the parties are based on unwritten understanding. If one party does not want to continue the arrangement, without charges, we cannot force that party to continue with the arrangement. Therefore, in the present case, it is for the respondent to terminate the existing arrangement, if it so wishes.

39. In a case of this nature the doctrine of restitution shall apply. The Petitioner cannot unjustly enrich itself in terms of the interim order passed by this Tribunal. Such restitution must be based on the materials placed on record. Therefore, we issue directions to restitute the respondent an amount it has suffered loss by way of damages. A direction is issued that the period during which the order of injunction remained operative, the Petitioner shall pay to the Respondent Interconnection Usage charges @ 10paise/SMS on net inflow of traffic.”

7. Mr. Meet Malhotra, however, states that each case is different on facts and circumstance. Therefore, the findings in one particular judgment cannot be applied in other petitions.

8. In this petition, two issues are involved. One relates to the demand of about Rs. 40 crores pertaining to period from April 2011 to September 2012 for SMS termination charges and other issue is for continuation of SMS termination facility between the parties for future.

9. The respondent does not want to continue the service of interconnection between the parties if the petitioner is not ready to pay @ 10 p per SMS. However, the petitioner wants to continue to use the SMS termination facility with the respondent but contends that it has right to continue on “bill and keep” basis.

In its judgment dated 24.09.2012, this Tribunal had already held that if one party does not want to continue the arrangement, without charges, no body can force that party to continue with the arrangement. Therefore, that party can terminate the existing arrangement, if it so wishes.

The respondent wants interconnection charges for SMS termination @ 10 p per SMS. There is a need to examine whether the rate of termination charges demanded by the respondent are in accordance with the regulation, i.e. The Telecommunication Interconnection Usage Charges (2 of 2009) 2009 notified on 9.3.2009 and whether such charges are transparent, reciprocal and non-discriminatory.

10. If the disconnection of the SMSs between the parties are allowed the subscribers of both the parties will suffer. Therefore, keeping in view the interest of both the parties, pending final hearing, it is directed that SMS services of the petitioner shall not be disconnected and wherever disconnection has taken place, the same will be restored immediately subject to the condition that petitioner will start paying 50% of the amount demanded by the respondent @ 10 paise per SMS on net inflow of traffic basis. This amount will be calculated and paid with effect from the date of filing of this petition.

11. This payment will be without prejudice to the rights and contentions of the parties and equities will be adjusted between the parties at the time of final hearing.

12. Reply may be filed within three weeks. Rejoinder thereto, if any, may be filed within two weeks thereafter.

13. Put up the matter for “framing of issues” on 10.01.2013.

……………….. (P.K.Rastogi) Member /NC/