RELIANCE COMMUNICATIONS LTD. (MUMBAI) Vs BHARAT SANCHAR NIGAM LIMITED

P.K. Rastogi, Member

The petitioner is an UASL licensee in respect of various circles including Kolkata Circle. It launched a limited mobile service known as WLL (M) describing the same to be a fixed service.

2. A dispute arose as to whether the said service should be treated to be a fixed line service or a mobile service. This Tribunal in Petition No 45 of 2005 found the service to be mobile service. The matter was carried to Supreme Court of India, which upheld the decision of this Tribunal in two judgments (i) Tata Teleservices Ltd. vs. BSNL reported in 2008 (10) SCC 556 and Reliance Infocom Ltd. Vs. BSNL reported in 2008 (10) SCC 535.

3. The respondent issued a bill treating the services rendered by the petitioner as mobile service for the period 14.11.2004 to 26.8.2005. Before the Supreme Court of India however, a further bill was raised for the period 27.8.2005 to 28.02.2006.

4. The Supreme Court of India did not enter into the quantum issue. In relation to the later period, the petitioner filed another petition before this Tribunal, which was marked as Petition No.109 to 2008. By a judgment and order dated 15.4.2010 it was held that the respondent must raise separate bills in relation to the said period.

5. The impugned bills cover not only the period 14.11.2004 to 26.8.2005 but also the period from 01.02.2004 to 13.11.2004.

6. Questioning the correctness of the bills in respect of various circles including the interest levied thereupon purported to be under Clause 7.1 of the Conditions ofLicence, a large number of applications were filed.

We may notice interim order dated 29.09.2010 passed in Petition No.324 of 2010 in relation to Gujarat Circle : “Keeping in view the fact that a fresh demand has been raised in terms of the order of this Tribunal dated 15.04.2010 passed in Petition No.109 of 2008 (Reliance Communications Ltd. Vs. Bharti Sanchar Nigam Ltd.) as also in view of the disputed question involving the period in question as also the contention that the amount of Rs.5 crores to the principal amount and Rs.28 crores would be the amount towards interest, we are of the opinion, interest of justice would be subserved if the petitioner is directed to pay a sum of Rs.5 crores and on such payment being made, no disconnection of POIs in respect of Gujarat Circle shall be made in terms of the impugned demand.”

7. In view of the fact no detailed arguments were advanced before us in regard to payability of the interest in terms of the Clause 7.1 of the Conditions of Licence at this stage vis-à-vis the earlier decisions, the petitioner was directed to pay only the principal amount.

8. Two more petitions were filed, namely Petition No. 86 and 87 of 2011 relating to the U.P. and Orissa respectively wherein arguments were advanced by the respondent specifically that the entire issue is covered by the earlier judgments and, thus, the petitioner is bound to pay interest also. It is in the aforementioned situation, this Tribunal by order dated 11.02.2011 directed :- “However, keeping in view the fact that the order of this Tribunal dated 15.4.2010 is pending before the Supreme Court of India and as it is stated before us that the petitioner has also a counter claim against the respondent which could not be raised because of the non availability of CDR from BSNL, we are of the opinion that the interest of justice would be subserved if in the facts and circumstances of this case and in particular having regard to the fact that some POIs of the petitioner already stand disconnected/might have been disconnected, the respondent is restrained from disconnecting the POIs of the petitioner which have not been disconnected and restore those which have been disconnected on the petitioner’s depositing the entire principal amount and 50% of the amount of interest as per the agreement clearly specifying for the period from 14.11.2004 upto 26.8.2005 and 27.8.2005 upto 28.2.2006, such payment shall be made within one week from the date before the various officers of the respective circles.”

9. However, another petition was filed being Petition No.92/2011 in respect of Himachal Pradesh circle also. A similar order as mentioned at para 8 above was issued.

10. The next petition, which was filed by the petitioner, was in relation to the Rajasthan circle. An interim order passed on 10.02.2011, directing :- “For the reasons stated therein, herein also we direct that the petitioner shall deposit the principal amount and 50% of the amount of interest calculated in terms of the agreement entered into by and between the parties. The said amount should be deposited with the respondent within one week from date. Subject to the aforementioned, the respondent shall not disconnect the BPO/POIs of the petitioner. “

11. The petitioner did not question the said interim orders so far as the principal amount is concerned, but filed two Misc. Applications in Petition No 86 of 2011 and Petition No. 96 of 2011.

12. The interim order dated 11.02.2011 passed in the aforementioned case was clarified/modified to the following extent :- “The interconnect agreement between the petitioner and the respondent provides for payment of interest @ 24% for payment beyond 30 days from due date. There is no mention of compounding monthly or annually in the agreement. Whether amount should be paid after compounding annually has to be examined in details at the time of final hearing. For the purpose of interim order, we are of the opinion that end of justice will be sub-served, if the petitioner pays 50% of the amount of interest calculated at the rate of 24% per annum for the period of delay beyond 30 days. It is also clarified that the principal amount should be paid as demanded.”

13. On the aforementioned backdrop of events, the petitioner filed Petition No.141 of 2011, which originally was in regard to all the circles in question including the Kolkata Circle. The petitioner, however, confined the said case to Kolkata circle, but keeping in view the urgency, prayed for an interim order in respect of all the circlers for which disconnection notices had been issued.

14. It was in the aforementioned situation, the following order was passed :- “Keeping in view the orders passed by this Tribunal in M.A.No.66 of 2011 arising out of Petition No.86 of 2011 and M.A.No.67 of 2011 arising out of Petition No.96 of 2011, it is directed that by way of interim measure the petitioner shall pay the entire amount towards the principal irrespective of the fact that as to whether the same, as per its contention, is barred under the law limitation or not.

The petitioner shall deposit the amount of interest as per direction of this Tribunal in its order dated 1.3.2011 in the aforementioned M.As.

The adjustment in regard to typographical error said to have committed by BSNL shall be considered later. In the event the petitioner deposits the amount as directed within two weeks from date and subject to the condition that the petitioner files appropriate petitions within ten days in relation to the Circles other than the Kolkata Circle, the impugned demands may not be given effect to by way of disconnection of Point of Interconnections.”

15. The petitioner filed a Writ Petition thereagainst before the Delhi High Court, which was not entertained. Liberty, however, was given to mention the matter before this Tribunal.

16. The learned Senior Counsel appearing for the petitioner, in that view of the matter, was permitted but the argument was not only confined to the alleged discrepancies in various orders but also the merit of the matters in great details.

17. According to the learned counsel, the period for which the principal amount should be directed to be paid, is 14.11.2004 to 28.02.2006 and no amount is payable for the period prior to 14.11.2004. The respondent has raised bills for the period from 1st February 2004 to 13th November 2004 also. The same was not payable. Secondly, the 50% of the interest should be directed to be calculated only from the due date i.e. after the bills were raised and not from the original period.

18. Mr. Vaidyanathan, learned senior counsel contended that for the period in question i.e. 01.02.2004 to 13.11.2004, Clause 6.4.6 of the conditions of licence would not be attracted as the discovery of the alleged illegality by the petitioner took place in January, 2005.

19. Indisputably, however, the TRAI made IUC Regulations 2003 which came into force on 01.02.2004. It was valid up to 28.02.2006. In terms of the said Regulations, respondent paid ADC to the petitioner treating the service to be fixed service. The other cellular operators were also entitled to obtain IUC charges both from the petitioner as also the BSNL. However, even in relation to the inter-operators traffic i.e. private operators, which did not pass through the network of the BSNL, ADC was payable to BSNL.

20. The same was, however, the subject matter of an order passed by this Tribunal in COAI Vs. Reliance Communications Ltd. (Petition No.140 of 2005).

21. There exists a small controversy as to whether the petitioner has not furnished the details of its calls. The petitioner contends that it, in fact, has furnished such details. However, there is no controversy that bills can be raised by the BSNL only when the details are furnished.

22. The learned counsel for the respondent was specifically asked to explain about the bills for the period from 1st February 2004 to 13.11.2004. He explained that the bills were raised for the period not in terms of clause 6.4.6 but towards refund of the amount paid by BSNL to the petitioner treating the petitioner’s service as fixed services.

23. The arguments were heard in quite detail.

The learned counsel for petitioner, pointed out that an amount about Rs. 7.00 crore does not pertain to the ADC paid by BSNL to the petitioner. In fact, this should have been only around 7.00 lakhs as per the record of the petitioner. Such erroneous demand and interest on the said amount makes it a huge sum.

24. Mr. Vaidyanathan would urge that a refund cannot be claimed by threatening disconnection. When the judgment of the Supreme Court was passed in the aforementioned matters on 30.4.2008, the amount became payable to the BSNL. In all fairness, the petitioner should have paid the said amount to the respondent on the basis of its own records, as it itself states that some more amount was paid to BSNL believing that its services were mobile services and not fixed services. In that view of the matter, it is also difficult for us to agree with the submissions of Mr. Vaidyanathan that prima facie the said bills are barred by limitation in view of the decision of the Supreme Court of India in 2004 (2) SCC 747.

25. Moreover, the petitioner has not filed the bills issued by the respondent, which would contain the details of the charges. A question arose, as to whether ADC was to be recovered from February, 2004 to October, 2004 amounting to Rs.7 crores. It was accepted that the same requires verification.

26. Mr. Maninder Singh very fairly submitted that as the same requires verification, the said amount may not be directed to be deposited.

27. Therefore, we direct in modification of our order that the petitioner need not deposit the amount of Rs.7 crores for the period February 2004 to October 2004 and also interest on the said amount. However, so far as the rate of interest on the amount of refund for the period prior to 14.11.2004 is concerned, in our opinion the rate of interest should be reasonable, which was for the time being determine @ 12

% p.a without any prejudice to the rights and contentions of the parties purely as an interim measure and subject to the final outcome of these petitions.

The petitioner shall pay to the respondent 50% of the interest calculated on that basis.

28. In our interim order dated 11.02.2011 we had specifically mentioned that the petitioner should pay 50% of the amount of interest calculated @ 24% per annum for the period of delay beyond 30 days. The amount of interest was to be calculated from due date. The learned counsel for the petitioner has raised an issue that the due date should be from the date of the bills raised by the respondent. We are, prima facie of the opinion that when a legitimate demand is made after the final findings, the interest would have to be paid from the date when it became due and the due date here means when the amount became payable, which means when the amount should have been paid at the first instance, had there been no dispute about and the petitioner’s service being mobile ab initio. Therefore, the amount has to be paid from the date it became payable after considering to be mobile as confirmed by the order of this Tribunal as well as Supreme Court This is also without any prejudice to the rights and contentions of the parties and subject to the final outcome of these petitions.

29. The interim order passed by us earlier is modified to the above extent. The petitioner is directed to pay the balance amount in terms of this order within a period of one week.

30. This order shall be without prejudice to the rights and contentions of the parties and shall be subject to any other or further orders which may be passed by the Tribunal.

……………,J (S.B. Sinha) Chairperson

……………… (G.D. Gaiha) Member

……………… (P. K. Rastogi) Member rkc