{"id":149553,"date":"2002-08-26T00:00:00","date_gmt":"2002-08-25T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/koshika-telecom-ltd-vs-union-of-india-uoi-on-26-august-2002-2"},"modified":"2016-10-04T01:25:47","modified_gmt":"2016-10-03T19:55:47","slug":"koshika-telecom-ltd-vs-union-of-india-uoi-on-26-august-2002-2","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/koshika-telecom-ltd-vs-union-of-india-uoi-on-26-august-2002-2","title":{"rendered":"Koshika Telecom Ltd. vs Union Of India (Uoi) on 26 August, 2002"},"content":{"rendered":"
Delhi High Court<\/div>\n
Koshika Telecom Ltd. vs Union Of India (Uoi) on 26 August, 2002<\/div>\n
Equivalent citations: 2003 42 SCL 145 Delhi<\/div>\n
Bench: U Mehra, R Jain<\/div>\n<\/p>\n
<\/pre>\n
ORDER<\/p>\n
 1. This appeal under Section 37 of the Arbitration
\n& Conciliation Act, 1996 (in short ‘the Act’) is directed
\nagainst the order of the learned Single Judge dated
\n31st May, 2002 thereby disposing an application under
\nSection 9 of the Act filed by the appellant-Company for
\na restraint order\/direction on the
\nrespondent-Department of Telecommunications (in short
\n‘DOT’) from terminating the public switched telephone
\nnetwork connecting license for U.P. (East and West
\ncircle) allotted to them on 12th December, 1995 pending
\narbitration of the disputes\/differences which are
\nstated to have arisen between the parties. However, it
\nappears that during the course of hearing of the said
\napplication before the learned Single Judge, the
\nappellant confined his prayer in regard to the
\nconnecting license for U.P. (East) Circle only.\n<\/p>\n
2. The facts and circumstances leading to the
\ndisputes between the parties have been noted in detail
\nby the learned Single Judge and it is not necessary for
\nus to repeat the same once over again, except for
\ntaking note of the undisputable facts that the
\nappellants have committed breach of the terms of the
\nlicense by defaulting in making the payment of the
\nlicense fee even pursuant to the migration package of
\n1999 agreed to between the parties. According to the
\nDoT after adjustment of the amounts received from the
\nappellant, a sum of Rs. 286.31 crores is due to them
\nfrom the appellant including the interest and
\nliquidated damages. However, after excluding the
\ninterest and liquidation damages, a sum of Rs. 66 crores
\nis due. The learned Single Judge taking note of the
\nabove factual matrix and with a view to provide interim
\nprotection to the appellant from the resultant
\ncancellation of their license and on balancing the
\nequities between the parties worked out an arrangement
\nand gave the following directions :-\n<\/p>\n
“(i) The petitioner shall pay to
\nthe DoT on or before 15th July 2002 the full
\namount of license fee payable up to 31st May
\n2002 in terms of DoT’s letter dated 17th April
\n2002, excluding, however, the interest and the
\namount payable towards liquidated damages,
\nafter adjusting a sum of Rs. 81.87 Crores,
\n(Rs. 78.87 + 3 Crores in terms of order dated
\n24th September 2001), admittedly paid by the
\npetitioner;\n<\/p>\n
(ii) From 1 June 2002 onwards and
\ntill further orders by the Arbitration, the
\npetitioner shall pay by the due date of
\nlicense fee @ 20% as against current rate of
\n10% of the gross revenue, payable in terms of
\nClause (iii) of the said letter. The excess
\namount of 10% shall be adjusted by the DoT
\nagainst the pending demand towards interest
\nand liquidated damage;\n<\/p>\n
(iii) The interim stay order dated
\n24th September 2001 will continue till the
\naward is made by the arbitrator, however,
\nsubject to payments in terms of (i) and (ii)
\nhereinabove by the specified date\/within time;
\nand<\/p>\n
(iv) In case of default in any of
\nthe payments, the interim order shall stand
\nvacated and the respondent-DoT will be free to
\nenforce its rights under the contract.\n<\/p>\n
3. We have heard Mr. Kapil Sibal, learned senior
\nadvocate representing the appellant licensee and Mr. Kriti
\nRaval, learned Additional Solicitor General representing
\nthe respondent-DoT. Mr. Sibal, has strongly urged before
\nus that the conditions imposed by the learned Single
\nJudge and more particularly the condition No. 1 (supra)
\ndirecting the appellant to pay the full amount of license
\nfee payable up to 31st May, 2002 in terms of the DoT
\nletter dated 17th April, 2000 is wholly unjustified on
\nthe face of the facts and circumstances of the case and
\nis also not in consonance with the rights and contractual
\nobligations of the parties and in any case it will
\noperate harshly on the appellant because the appellant is
\nnot in a position to arrange for the payment of the
\namount as directed. In this connection, the foremost
\nplea putforth by him is that the learned Single Judge has
\nerred in ignoring that a large sum of money to the tune
\nof Rs. 900 crores is due and payable by the respondent-DoT
\nto the appellant on account of the termination of their
\noperating licenses for three circles, namely, U.P. (West),
\nBihar and Orissa. The basis of this submission is that
\nin terms of Clause 15.3 of the license agreement, the
\nrespondent DoT is under an obligation to either take over
\nthe assets of the petitioner\/appellant itself or get its
\npayment arranged from any new licensee. The learned
\nAdditional Solicitor General has, however, refuted the
\nsaid contention of learned counsel for the appellant and
\nhas urged that the said condition merely confers a right
\non the licencing authority but casts no obligation on the
\nauthority for taking over the assets of the licensee. It
\nis also submitted that the said conditions vests are
\nenabling provision\/power in the licencing authority for
\nensuring that the customers do not suffer due to
\ntermination of the license and in any case the two
\ncontentions which have been mentioned in condition 15.3
\nare not exhaustive and the licencing authority may take
\nsuch measure to ensure the continuity of service as are
\ndeemed necessary. Clause 15.3 of the license of
\nAgreement reads as under :-\n<\/p>\n
“15.3 Whenever the license is
\nterminated or not extended, the Authority
\nshall in order to ensure the continuity of
\nservice take such steps as necessary including
\nthe following :-\n<\/p>\n
i) direct the Department or
\nTelecommunications to take over
\nor\n<\/p>\n
ii) issue license to another Indian
\nCompany for running the service.\n<\/p>\n
The licensee shall facilitate
\ntaking over by DoT or the new licensee all The
\nassets as are essential for the continuity of
\nthe service. The licensee shall receive from
\nDOT or the new licensee as the case may be
\nreasonable compensation, for the assets made
\nover based on the current replacement value of
\nthe assets, their future earning capacity, and
\nsuch like other relevant factors.”\n<\/p>\n
4. We do not wish to consider the interpretation
\nof the above clause in depth, lest it may cause prejudice
\nto either of the parties at the pending proceedings
\nbefore the arbitral tribunal, but on a prima facie
\nconsideration of the matter we are not convinced by the
\narguments of Mr. Kapil Sibal that it is mandatory for the
\nLicencing Authority in all eventualities to direct the
\nrespondent DoT to take over all the assets of a licensee
\nwhose license has been terminated or not renewed and to
\npay compensation for the assets. On the other hand the
\ninterpretation putforth by learned Additional Solicitor
\nGeneral appears to be more convincing and it is for the
\nreasons that the conditions 1 or 2 are not exhaustive but
\nare some of the steps which may be considered necessary
\nby the authorities for ensuring the continuity of
\nservice. We are informed that so far as the U.P. (East)
\ncircle is concerned, three other licensees namely
\nM\/s. Aircell Digilink, Bharti Cellular Nigam Ltd and
\nEscorts Telecommunications Limited are providing service
\nin the said territory and therefore the continuity of
\nservice is ensured through these licensees. Therefore,
\nit cannot be argued that any of the two steps envisaged
\nin Clause 15.3 were pre-eminently required on the part of
\nthe licencing authority. In any case, the claim of the
\nappellant for reasonable compensation for their assets in
\nrespect of the three territories i.e. U.P. (West), Bihar
\nand Orissa is pending adjudication before the arbitral
\ntribunal. We, therefore, see no merit in this contention
\nof learned counsel for the appellant that no condition
\nfor payment of the due license fee could be imposed by
\nthe learned Single Judge on the face of Clause 15.3 of
\nthe agreement.\n<\/p>\n
5. It was next contended by learned counsel for
\nthe appellant that the appellant had paid a sum of Rs. 100
\ncrores to the respondent on 8.9.2000 which was liable to
\nbe adjusted against the only operating license, namely,
\nU.P. (East) Circle, but the appellant has wrongly and
\narbitrarily adjusted the said amount towards the license
\nfee payable in respect of all the four licenses and
\nwithout complying with the condition putforth by the
\nappellant that the respondent should facilitate execution
\nof four tripartite agreements. It is also pointed out
\nthat the respondent even failed to consider the request
\nof the appellant for adjusting the amount of Rs. 100
\ncrores firstly towards U.P. (West) circle and lastly
\ntowards U.P. (East) circle. In case the respondent had
\nadjusted the amount of Rs. 100 crores towards the license
\nfee payable in respect of U.P. (East) Circle, then at
\nbest an amount of Rs. 10 crores approximately would be
\ndue. In this regard, we have been taken through certain
\ncorrespondence exchanged between the parties and we on a
\nconsideration of the same are of the view that there is
\nno escape from the conclusion that the appellant has
\ndefaulted in making the payment of license fee for all
\nthe four licenses and therefore the respondent-DoT was
\nwithin its rights to adjust the amount towards the
\nlicense fee payable in respect of all the four licenses
\nbecause initially the appellant itself indicated that the
\namount of Rs. 100 crores was meant to be adjusted qua all
\nthe four licenses, of course, with the condition of the
\nrespondent-DoT executing four tripartite agreements. We
\ndo not see anything wrong on the part of the respondent
\nin adjusting this amount of Rs. 100 crores towards the
\ndues in respect of all the four licenses and the
\nappellant cannot be allowed to take a sumer-salt at this
\nstage and seek adjustment of Rs. 75 crores towards the
\ncontinuing license of U.P. (East) alone.\n<\/p>\n
6. Yet another ground pressed on behalf of the
\nappellant is that the appellant has been discriminated
\nagainst at the hands of the respondent DoT inas much as
\nthe migration package offered to the existing licensees
\nin terms of the new telecom policy 1999, has not been
\nequally applied to all the licensees. The appellant has
\nnot been shown any consideration\/advantage of the
\nposition that it had opted to pay the license fee in the
\nfirst four years instead of 10 years as opted by various
\nother licensees. It was also pointed out that the
\nappellant was offered migration to new telecom policy by
\nmeans of a letter dated 22.7.99 and required to convey
\nits acceptance by 28th July, 1999, however, as the
\nappellant had certain reservations and wanted certain
\nclarifications\/modifications. The appellant conveyed its
\nfinal decision on 30.11.99, but the respondent did not
\nconvey its acceptance and the appellant was unduly
\nrequired to pay the license fee from 1st August, 1999 to
\nNovember, 1999. However, in the cases of other licensees
\ni.e. Aircell Digilink and Bharti Telecommunications, the
\nrespondent made a departure. We are not impressed with the arguments putforth by learned counsel for the
\nappellant in this behalf and we are of the view that once
\nthe appellant had accepted the migration package under
\nthe new telecome policy unconditionally they are bound to
\ngive effect to the same and cannot be allowed to raise an
\nobjection in this behalf.\n<\/p>\n
7. Mr. Kapil Sibal, learned counsel for the
\nappellant lastly urged before us that the condition in
\nregard to the payment of balance license fee in respect
\nof the license for U.P. (East) Circle amounting to more
\nthan Rs. 80 crores will operate harshly on the appellant
\nas it may not be able to arrange this huge amount in
\ncompliance of the said direction and that non-compliance
\nof the said direction might lead to termination of their
\nlicense of U.P. (East) Circle resulting into irreparable
\nloss and injury to the appellant and harassment and
\ninconvenience to the customers receiving the appellant’s
\nservice in that circle. Such a situation would not be
\nconducive or beneficial to the respondent either.\n<\/p>\n
8. We have given our anxious consideration to
\nthis submission and are also mindful of the difficulties
\nwhich might be faced by the appellant but it is the
\nappellant who alone is responsible for creating a
\nsituation in which they are placed today because they had
\ndefaulted in making the payment of the license fee as and
\nwhen it become due and has allowed the arrears to be
\naccumulated thereby entailing interest and liquidated
\ndamages to the tune of more than Rs. 100 crores. The
\nlearned Single Judge has in our opinion taken a
\nreasonable view of the matter by directing the appellant
\nonly to deposit principal amount of license fee which has
\nbecome due uptill 31-5-2002 with the stipulation that the
\namount paid by the appellant towards 10% increase of the
\ngross revenues shall be adjusted by the DOT against their
\ndemand towards interest and liquidated damages amounting
\nto more that Rupees hundred crores. So far as the
\nhardship or inconvenience to the customers of U.P. (East)
\ncircle is concerned suffice it would be to notice that as
\non date, three other licenses viz. M\/s. Aircell Digilink,
\nBharti Cellular Nigam Ltd and Escorts Telecommunications
\nLimited are providing service in this circle and,
\ntherefore, continuity of the service is ensured to the
\ncustomers and, therefore, there is no question of any
\nharassment or inconvenience faced by them.\n<\/p>\n
9. Thus having considered the totality of the
\nfact and circumstances of the case, we are of the opinion
\nthat conditions imposed by the learned Single Judge
\ncannot be said to be unjustified or harsh by any
\nstandard, rather the same appear to be eminently
\njustified. Even otherwise it is well-settled that the
\ndiscretion exercised by the learned trial court in the
\nmatter of grant or refusal of an injunction is not to be
\nlightly interfered in appeal, unless the exercise of such
\ndiscretion is shown to be wholly unjust or arbitrary
\nwhich position does not exists in the present case. In
\nthe result we find no merits in the present appeal and
\nthe same is accordingly dismissed. The appellant is
\nallowed two weeks’ time from today to comply with the
\norder dated 31st May, 2002 passed by the learned Single
\nJudge.<\/p>\n","protected":false},"excerpt":{"rendered":"
Delhi High Court Koshika Telecom Ltd. vs Union Of India (Uoi) on 26 August, 2002 Equivalent citations: 2003 42 SCL 145 Delhi Bench: U Mehra, R Jain 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 […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[14,8],"tags":[],"class_list":["post-149553","post","type-post","status-publish","format-standard","hentry","category-delhi-high-court","category-high-court"],"yoast_head":"\nKoshika Telecom Ltd. vs Union Of India (Uoi) on 26 August, 2002 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/koshika-telecom-ltd-vs-union-of-india-uoi-on-26-august-2002-2\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Koshika Telecom Ltd. vs Union Of India (Uoi) on 26 August, 2002 - 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