ORDER
1. This appeal under Section 37 of the Arbitration
& Conciliation Act, 1996 (in short ‘the Act’) is directed
against the order of the learned Single Judge dated
31st May, 2002 thereby disposing an application under
Section 9 of the Act filed by the appellant-Company for
a restraint order/direction on the
respondent-Department of Telecommunications (in short
‘DOT’) from terminating the public switched telephone
network connecting license for U.P. (East and West
circle) allotted to them on 12th December, 1995 pending
arbitration of the disputes/differences which are
stated to have arisen between the parties. However, it
appears that during the course of hearing of the said
application before the learned Single Judge, the
appellant confined his prayer in regard to the
connecting license for U.P. (East) Circle only.
2. The facts and circumstances leading to the
disputes between the parties have been noted in detail
by the learned Single Judge and it is not necessary for
us to repeat the same once over again, except for
taking note of the undisputable facts that the
appellants have committed breach of the terms of the
license by defaulting in making the payment of the
license fee even pursuant to the migration package of
1999 agreed to between the parties. According to the
DoT after adjustment of the amounts received from the
appellant, a sum of Rs. 286.31 crores is due to them
from the appellant including the interest and
liquidated damages. However, after excluding the
interest and liquidation damages, a sum of Rs. 66 crores
is due. The learned Single Judge taking note of the
above factual matrix and with a view to provide interim
protection to the appellant from the resultant
cancellation of their license and on balancing the
equities between the parties worked out an arrangement
and gave the following directions :-
“(i) The petitioner shall pay to
the DoT on or before 15th July 2002 the full
amount of license fee payable up to 31st May
2002 in terms of DoT’s letter dated 17th April
2002, excluding, however, the interest and the
amount payable towards liquidated damages,
after adjusting a sum of Rs. 81.87 Crores,
(Rs. 78.87 + 3 Crores in terms of order dated
24th September 2001), admittedly paid by the
petitioner;
(ii) From 1 June 2002 onwards and
till further orders by the Arbitration, the
petitioner shall pay by the due date of
license fee @ 20% as against current rate of
10% of the gross revenue, payable in terms of
Clause (iii) of the said letter. The excess
amount of 10% shall be adjusted by the DoT
against the pending demand towards interest
and liquidated damage;
(iii) The interim stay order dated
24th September 2001 will continue till the
award is made by the arbitrator, however,
subject to payments in terms of (i) and (ii)
hereinabove by the specified date/within time;
and
(iv) In case of default in any of
the payments, the interim order shall stand
vacated and the respondent-DoT will be free to
enforce its rights under the contract.
3. We have heard Mr. Kapil Sibal, learned senior
advocate representing the appellant licensee and Mr. Kriti
Raval, learned Additional Solicitor General representing
the respondent-DoT. Mr. Sibal, has strongly urged before
us that the conditions imposed by the learned Single
Judge and more particularly the condition No. 1 (supra)
directing the appellant to pay the full amount of license
fee payable up to 31st May, 2002 in terms of the DoT
letter dated 17th April, 2000 is wholly unjustified on
the face of the facts and circumstances of the case and
is also not in consonance with the rights and contractual
obligations of the parties and in any case it will
operate harshly on the appellant because the appellant is
not in a position to arrange for the payment of the
amount as directed. In this connection, the foremost
plea putforth by him is that the learned Single Judge has
erred in ignoring that a large sum of money to the tune
of Rs. 900 crores is due and payable by the respondent-DoT
to the appellant on account of the termination of their
operating licenses for three circles, namely, U.P. (West),
Bihar and Orissa. The basis of this submission is that
in terms of Clause 15.3 of the license agreement, the
respondent DoT is under an obligation to either take over
the assets of the petitioner/appellant itself or get its
payment arranged from any new licensee. The learned
Additional Solicitor General has, however, refuted the
said contention of learned counsel for the appellant and
has urged that the said condition merely confers a right
on the licencing authority but casts no obligation on the
authority for taking over the assets of the licensee. It
is also submitted that the said conditions vests are
enabling provision/power in the licencing authority for
ensuring that the customers do not suffer due to
termination of the license and in any case the two
contentions which have been mentioned in condition 15.3
are not exhaustive and the licencing authority may take
such measure to ensure the continuity of service as are
deemed necessary. Clause 15.3 of the license of
Agreement reads as under :-
“15.3 Whenever the license is
terminated or not extended, the Authority
shall in order to ensure the continuity of
service take such steps as necessary including
the following :-
i) direct the Department or
Telecommunications to take over
or
ii) issue license to another Indian
Company for running the service.
The licensee shall facilitate
taking over by DoT or the new licensee all The
assets as are essential for the continuity of
the service. The licensee shall receive from
DOT or the new licensee as the case may be
reasonable compensation, for the assets made
over based on the current replacement value of
the assets, their future earning capacity, and
such like other relevant factors.”
4. We do not wish to consider the interpretation
of the above clause in depth, lest it may cause prejudice
to either of the parties at the pending proceedings
before the arbitral tribunal, but on a prima facie
consideration of the matter we are not convinced by the
arguments of Mr. Kapil Sibal that it is mandatory for the
Licencing Authority in all eventualities to direct the
respondent DoT to take over all the assets of a licensee
whose license has been terminated or not renewed and to
pay compensation for the assets. On the other hand the
interpretation putforth by learned Additional Solicitor
General appears to be more convincing and it is for the
reasons that the conditions 1 or 2 are not exhaustive but
are some of the steps which may be considered necessary
by the authorities for ensuring the continuity of
service. We are informed that so far as the U.P. (East)
circle is concerned, three other licensees namely
M/s. Aircell Digilink, Bharti Cellular Nigam Ltd and
Escorts Telecommunications Limited are providing service
in the said territory and therefore the continuity of
service is ensured through these licensees. Therefore,
it cannot be argued that any of the two steps envisaged
in Clause 15.3 were pre-eminently required on the part of
the licencing authority. In any case, the claim of the
appellant for reasonable compensation for their assets in
respect of the three territories i.e. U.P. (West), Bihar
and Orissa is pending adjudication before the arbitral
tribunal. We, therefore, see no merit in this contention
of learned counsel for the appellant that no condition
for payment of the due license fee could be imposed by
the learned Single Judge on the face of Clause 15.3 of
the agreement.
5. It was next contended by learned counsel for
the appellant that the appellant had paid a sum of Rs. 100
crores to the respondent on 8.9.2000 which was liable to
be adjusted against the only operating license, namely,
U.P. (East) Circle, but the appellant has wrongly and
arbitrarily adjusted the said amount towards the license
fee payable in respect of all the four licenses and
without complying with the condition putforth by the
appellant that the respondent should facilitate execution
of four tripartite agreements. It is also pointed out
that the respondent even failed to consider the request
of the appellant for adjusting the amount of Rs. 100
crores firstly towards U.P. (West) circle and lastly
towards U.P. (East) circle. In case the respondent had
adjusted the amount of Rs. 100 crores towards the license
fee payable in respect of U.P. (East) Circle, then at
best an amount of Rs. 10 crores approximately would be
due. In this regard, we have been taken through certain
correspondence exchanged between the parties and we on a
consideration of the same are of the view that there is
no escape from the conclusion that the appellant has
defaulted in making the payment of license fee for all
the four licenses and therefore the respondent-DoT was
within its rights to adjust the amount towards the
license fee payable in respect of all the four licenses
because initially the appellant itself indicated that the
amount of Rs. 100 crores was meant to be adjusted qua all
the four licenses, of course, with the condition of the
respondent-DoT executing four tripartite agreements. We
do not see anything wrong on the part of the respondent
in adjusting this amount of Rs. 100 crores towards the
dues in respect of all the four licenses and the
appellant cannot be allowed to take a sumer-salt at this
stage and seek adjustment of Rs. 75 crores towards the
continuing license of U.P. (East) alone.
6. Yet another ground pressed on behalf of the
appellant is that the appellant has been discriminated
against at the hands of the respondent DoT inas much as
the migration package offered to the existing licensees
in terms of the new telecom policy 1999, has not been
equally applied to all the licensees. The appellant has
not been shown any consideration/advantage of the
position that it had opted to pay the license fee in the
first four years instead of 10 years as opted by various
other licensees. It was also pointed out that the
appellant was offered migration to new telecom policy by
means of a letter dated 22.7.99 and required to convey
its acceptance by 28th July, 1999, however, as the
appellant had certain reservations and wanted certain
clarifications/modifications. The appellant conveyed its
final decision on 30.11.99, but the respondent did not
convey its acceptance and the appellant was unduly
required to pay the license fee from 1st August, 1999 to
November, 1999. However, in the cases of other licensees
i.e. Aircell Digilink and Bharti Telecommunications, the
respondent made a departure. We are not impressed with the arguments putforth by learned counsel for the
appellant in this behalf and we are of the view that once
the appellant had accepted the migration package under
the new telecome policy unconditionally they are bound to
give effect to the same and cannot be allowed to raise an
objection in this behalf.
7. Mr. Kapil Sibal, learned counsel for the
appellant lastly urged before us that the condition in
regard to the payment of balance license fee in respect
of the license for U.P. (East) Circle amounting to more
than Rs. 80 crores will operate harshly on the appellant
as it may not be able to arrange this huge amount in
compliance of the said direction and that non-compliance
of the said direction might lead to termination of their
license of U.P. (East) Circle resulting into irreparable
loss and injury to the appellant and harassment and
inconvenience to the customers receiving the appellant’s
service in that circle. Such a situation would not be
conducive or beneficial to the respondent either.
8. We have given our anxious consideration to
this submission and are also mindful of the difficulties
which might be faced by the appellant but it is the
appellant who alone is responsible for creating a
situation in which they are placed today because they had
defaulted in making the payment of the license fee as and
when it become due and has allowed the arrears to be
accumulated thereby entailing interest and liquidated
damages to the tune of more than Rs. 100 crores. The
learned Single Judge has in our opinion taken a
reasonable view of the matter by directing the appellant
only to deposit principal amount of license fee which has
become due uptill 31-5-2002 with the stipulation that the
amount paid by the appellant towards 10% increase of the
gross revenues shall be adjusted by the DOT against their
demand towards interest and liquidated damages amounting
to more that Rupees hundred crores. So far as the
hardship or inconvenience to the customers of U.P. (East)
circle is concerned suffice it would be to notice that as
on date, three other licenses viz. M/s. Aircell Digilink,
Bharti Cellular Nigam Ltd and Escorts Telecommunications
Limited are providing service in this circle and,
therefore, continuity of the service is ensured to the
customers and, therefore, there is no question of any
harassment or inconvenience faced by them.
9. Thus having considered the totality of the
fact and circumstances of the case, we are of the opinion
that conditions imposed by the learned Single Judge
cannot be said to be unjustified or harsh by any
standard, rather the same appear to be eminently
justified. Even otherwise it is well-settled that the
discretion exercised by the learned trial court in the
matter of grant or refusal of an injunction is not to be
lightly interfered in appeal, unless the exercise of such
discretion is shown to be wholly unjust or arbitrary
which position does not exists in the present case. In
the result we find no merits in the present appeal and
the same is accordingly dismissed. The appellant is
allowed two weeks’ time from today to comply with the
order dated 31st May, 2002 passed by the learned Single
Judge.