RELIANCE COMMUNICATION LTD Vs UNION OF INDIA

Petitioner is a licensee of the Respondent.

Respondent indisputably had issued circular letters and guidelines directing the licensees to verify the customers’ identity and address proof in the interest of security of nation.

Petitioner is aggrieved by and dissatisfied with the orders dated 9.11.2011 and 17.11.2011 being Annexures P-1 and P-2 appended to the petition passed by the TERM Cell of the Respondent whereby and whereunder penalty has been imposed for alleged violation of the directives issued under the guidelines/ circular letters.

Para 5 of the said orders dated 9.11.2011 and 17.11.2011 read as under :- “5. AND WHEREAS it is observed from the CAF audit report of MP LSA for the period for July 2011 that M/s Reliance Communication Limited has failed to supply CAFs for 157 of subscribers and has failed to comply the essential requirement of subscriber verification like photo on CAF, I.D. proof and address proof in 806. The total numbers of violation are 963. 5. AND WHEREAS it is observed from the CAF audit report of MP LSA for the period for Aug 2011 that M/s Reliance Communication Limited has failed to supply CAFs for 2521 of subscribers and has failed to comply the essential requirement of subscriber verification like photo on CAF, I.D. proof and address proof in 21. The total numbers of violation are 2542.”

Petitioner is said to have entered into an agreement with one M/s Records Data Warehousing Pvt. Ltd. (RDWPL) on or about 28.1.2010 whereby and whereunder the latter was to perform the following jobs:- “SCOPE OF WORK Services to be provided by “RECORDS AND DATA” to RCOM Process Scope Details:-

1. Pre Check and CAF Pickup • Agency Executive to go to the Distributor office & have a Basic Check of the CAF & the Documents attached. o CAF Filled Property. o POA is valid & from approved list. o POI is valid & from approved list. • Agency to create a portal, where details of each & every CAF should be captured. • Portal should have an option to capture CAF accepted & rejected. • Agency to Share CAF Accepted & Rejected details with Circle team /Contact Center. • Agency to provide Retailer wise CAF pendency MIS as & when it is required. • Agency will do this exercise only at distributor towns allocated for the activity. • All accepted CAFs in Pre check, will be picked up by the Agency Executive. • Agency executive to index all the CAFs accepted from all the distributors at a central Place. • All CAFs will be sent to a central Location for upload. • Agency to update CAFs Received date in System.

• Agency will do this exercise only at distributor towns allocated for the activity.

Communication:- • Agency to send Following SMS updated for CAF picked to the RCOM executives (Prescribed by Circle). Retailer wise CAF picked to Area Sales team. Distributor wise CAF Picked to Cluster/Sales/ APl Lead. Retailer/ Distributor wise pendency to Circle Sales/ API Lead. • Circle may change the name of SMS receivers at any given time.

2. CAF Upload:- • All CAFs received at central point of Agency has to be uploaded in icare. • Agency to arrange Connectivity for all kind of data updates. • Agency to create his front end software, for data capturing, based on the verifications built in icare. • Agency must be ready for Bulk Upload & one to one CAF entry in icare.

3. CAF Scrutiny:- • All CAFs should be Scrutinized, on all TRAI parameters. • Scrutiny will be done on the Basis of CAF v/s Physical Documents & CAF v/s Data entered. • Agency must be ready for Bulk Upload & one to one CAF entry in Verify. • Agency to create the front end software for capturing Scrutiny results, in bulk upload system. • Scrutiny should be done on Physical & Data entry basis.

4.CAF Dispatch to Warehouse:-

• All Scrutiny Positive CAFs will be dispatched to a central place for Warehousing & Scanning. • Agency need to update each lot in Verify. • An option of creating Lots for the maximum capacity of 500 is already available in Verify. • Warehouse will also confirm the CAF receipt in Verify. • Verify is ready with this Module.

5. CAF Scanning & Storage:-

All CAFs received at Warehouse will be scanned along for the following documents:- o CAF o POA o POI o Self Declaration (where ever Required) • Each of the Documents will be un stapled & again has to be stapled for storage purpose. • After Scanning file/folder number will be allotted to all the CAFs for storage. • A CD will be burnt of Scanned images of CAFs and sent to the circle commercial team to get it uploaded in OMNIDOC. • Agency to make sure that CAF is preserved for years & will be made available as & when it is required. • Bulk Upload system is already available for this activity.

Scanning Parameters o For all pages:- 150 Dpi, 8-Bit, Grey-Scale, Compression-JPEG File Size :- Approx 300 KB o Output File:- PDF

6. CAF Retrieval & Re-Checking

• Every Month VTM Asks for CAF copies for 0.1% of the active base. • Agency will have to retrieve all the CAFs along with their Documents attached. • Agency will again check the CAFs with Quality parameters before submission of the same. • All this has to be done with in 48 hours of request received from VTM.”

According to the Petitioner, disputes and differences having arisen between the parties to the said agreement; RDWPL filed an application under Section 9 of the Arbitration and Conciliation Act, 1996 before the Court of Civil Judge, Bangalore and obtained an order of injunction to the following effect :- “xxx issuance of notice is dispensed with. Respondent, its agents or anybody else on its behalf is hereby restrained by an order of exparte T.I. from interfering with the Plaintiff’s peaceful possession of the Warehouse where all its materials are placed and the order of T.I., will be in force till next date.”

Petitioner has filed an application for vacation of the said interim order which has been heard, but the learned Judge did not pass any order thereupon within a reasonable time whereupon Petitioner filed a Writ Petition before the Karnataka High Court marked as W.P. No.45085/2011. The said Writ Petition has been disposed of by an order dated 12.12.2011, stating :- “3. Having regard to the nature of relief sought and the grievance made, the only appropriate order that is required to be passed in this case is to direct the Court below to expedite the disposal of the I.A. which is already heard.”

Petitioner filed representations before the DDG (TERM Cell), Madhya Pradesh, Bhopal contending as under :- “6. The RDWPL is duty bound to retrieve the CAFs as and when asked by RCOM and hand it over to RCOM. However, in order to coerce RCOM to pay some money, which is neither due nor related to the present contract. The Directors and officers of RDWPL have entered into a conspiracy and with common intention and object are not retrieving the CAFs and handling it over to RCOM. Object being that RECOM would succumb to the pressure of the huge penalties which can be imposed by TERM Cell and thus will yield to the illegal demands of RDWPL. 7. RDWPL, its directors and senior officers are thus, intentionally willfully and dishonestly holding on the property entrusted to them (CAFs) in violation of the term of an express legal contract with respect to the discharge of the said trust. The above persons have committed offences under Section 406 and 407 IPC and are liable to be prosecuted and punished for the same. I therefore, request you to kindly investigate the matter and take necessary and immediate steps to bring the culprit to books in accordance with law.”

Yet again a representation was made on 28.9.2011 that CAFs which were available with the Petitioner from the given samples would be submitted shortly.

By a letter dated 20.10.2011, the Petitioner informed the concerned TERM Cell that RDWPL had not been releasing its documents which are in their possession. Other and further representations were also made by the Petitioner from time to time.

By a letter dated 28.11.2011, the Petitioner contended that despite the fact that it had all the CAFs but due to certain issues it was unable to produce the same.

The representation of the Petitioner had been rejected by an order dated 14.12.2011.

Before proceeding further in the matter, we may notice the following statements made by the Petitioner in the petition:- “…It is further submitted even where the Petitioner did submit the CAFs to the Respondent, CAFs being scan images were dim and hence were considered as non compliant by the Respondent. On the other hand,

RDWPL refused to supply hard copies of CAFs to the Petitioner despite repetitive requests.

Mr.Navin Chawla, learned counsel appearing on behalf of the Petitioner urged that recovery of the amount of penalty levied by the Respondent be stayed having regard to the fact that it is impossible for the Petitioner to comply with the said order.

Our attention has also been drawn to an e-mail dated 21.10.2011, as far as the same related to the penalty imposed for non-production of the CAFs for the month of July, stating :- “…When we tried speaking/Meeting to Director TERM Cell unluckily we could not succeed due to his non availability.

As regard subjected matter our submission is as below:- 936 CAF’s have been put under various remark’s which are due to submission of scan images of the CAF’s given in sample. As we have already shared with you that our matter with the agency (with whom our CAF’s are stored) is subjudice and is expected to get closed soon. After which we will be in position to retrieve the originals of these CAF’s and produce the same for remark discussions. We have filed a complaint against the agency for not releasing our documents held in their possession. A copy of the complaint is already submitted to your good office.”

Ms.Dhir, learned counsel appearing on behalf of the Respondent, would, however, contend that keeping in view the provisions contained in Clause 41.14 of the conditions of license, the Petitioner could not have outsourced its functions as a licensee.

There cannot be any doubt or dispute that if there is any default on the part of the agent of a licensee, the same would be treated to be the default of the licensee itself but the same would not mean that a licensee cannot get its functions performed by an outside agency and/or through its employees.

According to the Petitioner, the data are stored in the warehouse of the said company.

The scanned copy of the requisite documents have been filed but the same were rejected having been found to be dim and thus illegible.

We are satisfied that prima facie the Petitioner could not comply with its obligations for the months of July and August, 2011, owing to the aforementioned order of injunction dated 17.8.2011.

If owing to an act of the Court, a litigant is unable to perform its contractual obligation, the doctrine Actus Curiae Neminem Gravabit (act of the Court shall prejudice no one) shall apply.

Petitioner has pleaded that it is not in a position to comply with the Respondent’s direction. It furthermore appears that the Petitioner has taken all such steps which could be legally taken for vacation and/or modification of the order of injunction dated 17.8.2011.

Moreover, the agreement having been entered into in January, 2010 and no objection with regard thereto having been taken by the Respondent; we are of the opinion that the Petitioner prima facie has not violated Clause 41.14 of the conditions of the license.

The questions which have been raised by the Petitioner are triable ones.

The balance of convenience, keeping in view the peculiar factual matrix involved in the matter is also in favour of the Petitioner.

Petitioner shall also suffer substantial injury, if it is directed to deposit the amount of penalty imposed on it in the aforementioned facts and circumstances of the case. Furthermore equities between the parties moreover can also be adjusted in future.

Subject to the condition that in the event the order of learned Civil Court dated 17.8.2011 is modified, the Petitioner must produce all the relevant data before the concerned Term Cell within two weeks from the retrieval thereof, we, for the aforementioned reasons pass an order of injunction restraining the Respondents from giving any effect to the impugned orders dated 9.11.2011 and 17.11.2011. The interim prayer made by the Petitioner, is thus, disposed of.

(S.B. Sinha) Chairperson (P.K. Rastogi) Member February 8, 2012 `ns’