LOOP TELECOM LTD. Vs UNION OF INDIA
- Case No.TELECOM PETITION/472/2011
Ratio decidendi
The rule this decision rests on
The Tribunal holds that the licensor's review of a licensee's financial bank guarantee under clause 21.2 is not, by itself, a basis for refusing return of the guarantee where the licensee's operations and licence validity have been affected by the Supreme Court's direction, and that a licensee's failure to deposit an assessed sum, though it may be a relevant consideration, does not by itself constitute sufficient reason to withhold return of the guarantee. Where the licence is prima facie to remain valid for a fixed period by virtue of a Supreme Court direction, the licensor may be directed to return a proportion (here fifty percent) of the financial bank guarantees for each service area at the present stage, as an order that meets the ends of justice for the time being.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
J U D G E M E N T
The Petitioner is a licensee under the Indian Telegraph Act, 1885.
In this petition, the Petitioner seeks to invoke clause 21.2 of the Conditions of Licence against the Respondent herein praying inter-alia for the following reliefs :- “a) Declare the failure on the part of the respondent in permitting the petitioner to withdraw the financial bank guarantees for all the telecom Service Areas and replace the same with revised financial bank guarantees as violative of Clause 21.2 of the license; b) Direct the respondent to return the financial bank guarantees referred hereinabove.”
2. We may notice the details of the bank guarantees furnished by the Petitioner as contained in the following table :-
S. Service Area Category Date of issuance Amount No. of Bank Guarantee 1 Delhi A 10.01.2008 50 2 Kolkata A 10.01.2008 50 3 Tamil Nadu A 10.01.2008 50 4 Karnataka A 10.01.2008 50 5 Maharashtra A 10.01.2008 50 6 Gujarat A 10.01.2008 50 7 Kerala B 10.01.2008 25 8 Punjab B 10.01.2008 25 9 Andhra Pradesh A 10.01.2008 25 10 Rajasthan B 10.01.2008 25 11 UP (East) B 10.01.2008 25 12 UP (West) B 10.01.2008 25 13 Haryana B 10.01.2008 25 14 Bihar C 10.01.2008 5 15 Madhya Pradesh B 10.01.2008 25 16 West Bengal B 10.01.2008 25
17 Orissa C 10.01.2008 5 18 Jammu & C 10.01.2008 5 Kashmir 19 Himachal C 10.01.2008 5 Pradesh 20 Assam C 10.01.2008 5 21 North East C 10.01.2008 5
3. In terms of clause 21.4 of the said conditions of licence, the Petitioner renewed the said bank guarantees, which is to the following effect :-
LSA (Cat) Bank Initial Expiry date of FBG (Rs. Expiry renewed FBG Cr) date AP („A‟) SBI 09.1.2011 9.1.2012 50 Mumbai („A‟) SBI 09.1.2011 9.1.2012 50 MH („A‟) SBI 09.1.2011 9.1.2012 50 TN („A‟) SBI 09.1.2011 9.1.2012 50 UP (W) („A‟) SBI 09.1.2011 9.1.2012 25 Gujarat („A‟) SBI 09.1.2011 9.1.2012 50 UP (E) („A‟) SBI 09.1.2011 9.1.2012 25 Haryana („B‟) SBI 09.1.2011 9.1.2012 25 Kntk. („A‟) SBI 09.1.2011 9.1.2012 50 Rajas. („B‟) SBI 09.1.2011 9.1.2012 25 Punjab („B‟) SBI 09.1.2011 9.1.2012 25 Kerala (BA‟) SBI 09.1.2011 9.1.2012 25 Delhi („A‟) SBI 09.1.2011 9.1.2012 50 Bihar („C‟) SBI 09.1.2011 9.1.2012 5 MP („B‟) SBI 09.1.2011 9.1.2012 25
The said bank guarantees are, therefore, valid till the respective dates mentioned therein.
4. In this petition, the Petitioner contends that the Respondent was obligated to make review of the quantum of financial bank guarantees furnished by the Petitioner which comes to Rs.540 crores.
5. The only demand, which having been raised by the Respondent being for a sum of Rs.2,07,07,376/- in respect of the licence fees vide its letter dated 07.6.2012, a copy whereof has been handed over to this Tribunal, the Respondent, the petitioner contends, be directed to return the said financial bank guarantees except for such amount which appears to be just and proper to this Tribunal.
6. It is not in dispute that the Petitioner had filed returns on the basis of self assessment for the years 2007-2008 to 2010-2011 for the purpose of payment of AGR. The Respondent has completed the assessment for AGR in respect of the aforementioned period.
7. It is also not in dispute that on the Petitioner’s failure to deposit the said amount, the financial bank guarantee to the extent of Rs.5 crores has been invoked. It is furthermore not in dispute that the Petitioner although has filed return for the assessment year 2011-2012, so far it has not furnished the audited statement of account.
8. Mr. Ruchir Mishra, learned counsel appearing on behalf of the Respondent would contend that keeping in view the fact that the Petitioner is yet to furnish audited statement of account for the Financial Year 2011-2012 and yet to file return for the Financial Year 2012-13, the financial bank guarantees should not be directed to be returned to the Petitioner. We may, at the outset, notice clauses 21.2 and 21.5 of the licence agreement :- "21.2 Financial Bank Guarantee :
The LICENSEE shall submit a Financial Bank Guarantee (FBG), valid for one year, from any Scheduled Bank or Public Financial Institution duly authorised to issue such Bank Guarantee, in the prescribed Proforma annexed. Initially, the financial bank guarantee shall be for an amount of Rs.25 Crores (for Category 'B' service area), which shall be submitted before signing the Licence agreement. Subsequently, the amount of FBG shall be equivalent to the estimated sum payable to license fee for two quarters and other dues not otherwise securitised and any additional amount as deemed fit by the Licensor. The amount of FBG shall be subject to periodic review by the Licensor and shall be renewed from time to time till final clearance of all dues."
21.5 Without prejudice to its rights of any other remedy, LICENSOR may encash Bank Guarantee (FBG as well as PBG) in case of any breach in terms & conditions of the LICENCE by the LICENSEE."
9. The question as regards return of the financial bank guarantees has been considered by this Tribunal in Siestema Shyam Tele Services Ltd. Vs. Union of India – Petition No.5 of 2012 and other connected matters. The said decision of this Tribunal has been considered yet again recently in Petition No.443 of 2011 – Etisalat DB Telecom Pvt. Ltd. Vs. Union of India. In terms of an order dated 06.01.2012, we rejected the interim prayer made by the Petitioner in the following terms :- “4. On a query made by us as to whether the Petitioner has started its services so as to earn revenue, we are informed at the Bar that in 14 out of 21 circles, it has not started operations.
5. Mr. Srinivasan, learned senior counsel would contend that by 15.01.2012, the Petitioner would be able to furnish its return in respect of the circles wherein it has started its operation. If the Petitioner has not filed even the return of its revenue for the purpose of calculating AGR for two quarters, we are of the opinion that the Respondent at this stage cannot be asked to review the Financial Bank Guarantees. Therefore, we are prima-facie of the opinion that no basis has been made out for periodic review of the amount of Financial Bank Guarantee, as prayed for by the Petitioner.
6. Mr. Mishra, learned counsel appearing on behalf of the Respondent, however, would contend that in the event the petitioner files its return on AGR basis by 15.01.2012, Respondent would be able to take appropriate decision, in regard to the amount of Bank Guarantee to be furnished by the Petitioner in terms of Clause 21.2 of the Licence Agreement within a period of three months.”
10. Pursuant to or in furtherance of the said order the bank guarantees had been renewed. It is accepted at the Bar that the Petitioner also, as indicated heretobefore, has filed its returns and the same have been scrutinized. Only pursuant to or in furtherance of the said return, the orders of assessment have been passed.
11. So far as the assessment year 2011-2012 is concerned, the audited statement of account, it is stated, would be filed soon, if not already filed.
According to the Petitioner, however, it has stopped its operations in the licenced areas in terms of the provisions of licence after the Hon’ble Supreme Court of India passed a judgment on 02.02.2012 in Centre for Public Interest Litigation vs. Union of India reported in (2012) 3 SCC 1.
In this case, the Respondent had not issued any direction to the Petitioner herein to continue to operate in terms of the said licence having regard to the operative part of the judgment of the Supreme Court of India. No other or further demand so far has been raised by the Respondent herein.
12. So far as submission of Mr. Ruchir Mishra that the Petitioner failed to deposit the aforementioned sum of Rs.2 crores and odd is concerned, as a result whereof the bank guarantee had to be invoked, in our opinion, may not by itself constitute sufficient reason not to direct the Respondent to return the FBG.
We, however, are of the opinion that as in terms of the direction of the Supreme Court of India the licences issued to the Petitioner prima facie would remain valid till 10.01.2013, the Respondent should be directed to return fifty percent of the bank guarantees for each of the circles at this stage.
We think that this order shall meet the ends of justice for the present.
This petition is allowed in part and to the extent mentioned heretobefore without any order as to costs.
……………… (S.B. Sinha) Chairperson
…………….. (P.K. Rastogi) Member rkc
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