{"id":175414,"date":"1999-03-08T00:00:00","date_gmt":"1999-03-07T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/tata-teleservices-ltd-hughes-vs-union-of-india-on-8-march-1999"},"modified":"2017-08-03T07:38:30","modified_gmt":"2017-08-03T02:08:30","slug":"tata-teleservices-ltd-hughes-vs-union-of-india-on-8-march-1999","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/tata-teleservices-ltd-hughes-vs-union-of-india-on-8-march-1999","title":{"rendered":"Tata Teleservices Ltd., Hughes … vs Union Of India on 8 March, 1999"},"content":{"rendered":"
Delhi High Court<\/div>\n
Tata Teleservices Ltd., Hughes … vs Union Of India on 8 March, 1999<\/div>\n
Equivalent citations: 1999 IIAD Delhi 625, 78 (1999) DLT 572, 1999 (49) DRJ 431<\/div>\n
Author: . M Sharma<\/div>\n
Bench: . M Sharma<\/div>\n<\/p>\n
<\/pre>\n
ORDER<\/p>\n
Dr. M.K. Sharma, J. <\/p>\n
1. These are petitions filed by the petitioners under section 9 of the  Arbitration and Conciliation Act, 1996 seeking for an injunction against  the respondent restraining the respondent from giving effect to the letter  dated 25.1.1999 and also restraining the said respondent from taking any  action for encashing the bank guarantees furnished by the petitioners. All  the petitioners have also sought for ad interim injunctions pending disposal of the petitions. However, the respondent entered appearance and therefore, the respondent has also been heard. As the facts relating to the  present petitions are similar and contentions raised by the counsel appearing for the parties are also similar, therefore, I propose to discuss and  appreciate the contentions of the rival parties and give my decision thereon by this common order.\n<\/p>\n
 O.M.P. 58\/1999:\n<\/p>\n
 Since the petitioner has sought for an ad interim injunction till the  disposal of the petition, I have heard Mr. Arun Jaitley, appearing for the  petitioner as also Mr. Trivedi, Additional Solicitor General appearing for  the respondent.\n<\/p>\n
 The petitioner herein was given a license by the respondent for setting up and operating basic telephone services in the State of Andhra  Pradesh. The said license was valid for a period of 15 years and the license fee payable by the petitioner over a period of 15 years is Rs. 4,200  Crores, of which a sum of Rs.120 Crores is payable for each of the first  five years. The petitioner, it is stated, has paid the first years license  fee and currently the second years license fee is due. The respondent by  letter dated 25.1.1999 called upon the respondent to pay the license fee  which is due and almost informed that if there be any difficulty in paying  the entire amount in lumpsum the petitioner could pay 20% of the license  fee and furnish enhanced bank guarantee for the balance, failing which it  was stated in the said letter that the respondent would take action in  terms of the license agreement and adopt other remedies open to the Licensing Authority. Being aggrieved because of aforesaid proposed action intimated through the said letter the present petition has been filed, contending inter alia, that the petitioner proposes to invoke the arbitration  clause in the agreement.\n<\/p>\n
 O.M.P. 59\/1999:\n<\/p>\n
 2. Since the petitioner has sought for an ad interim injunction till the  disposal of the petition, I have heard Mr. K.K. Venugopal and Mr. Gopal  Subramaniam, Senior Advocates appearing for the petitioner as also Mr.  Trivedi, Additional Solicitor General appearing for the respondent.\n<\/p>\n
 The petitioner herein was given a license by the respondent for setting up and operating basic telephone services in the Maharashtra Telecom  Circles which included Mumbai and Goa. The said license was valid for a  period of 15 years and the license fee payable by the petitioner over a  period of 15 years is Rs.13,909 Crores, of which a sum of Rs. 397.50 Crores  is payable for each of the first five years. The petitioner, it is stated,  has paid the first years license fee and currently the second years license  fee is due. The respondent by letter dated 25.1.1999 called upon the respondent to pay the license fee which is due and almost informed that if  there be any difficulty in paying the entire amount in lumpsum the petitioner could pay 20% of the license fee and furnish enhanced bank guarantee  for the balance, failing which it was stated in the said letter that the  respondent would take action in terms of the license agreement and adopt  other remedies open to the Licensing Authority. Being aggrieved because of  aforesaid proposed action intimated through the said letter the present  petition has been filed, contending inter alia, that the petitioner proposes to invoke the arbitration clause in the agreement.\n<\/p>\n
 O.M.P. 55\/1999:\n<\/p>\n
 3. Since the petitioner has sought for an ad interim injunction till the  disposal of the petition, I have heard Mr. Shanti Bhushan, appearing for  the petitioner as also Mr. Trivedi, Additional Solicitor General appearing  for the respondent.\n<\/p>\n
 The petitioner herein was given a license by the respondent for setting up and operating basic telephone services in the State of. The said  license was valid for a period of 15 years and the license fee payable by  the petitioner over a period of 15 years is Rs. Crores, of which a sum of  Rs. Crores is payable for each of the first five years. The petitioner, it  is stated, has paid the first years license fee and currently the second  years license fee is due. The respondent by letter dated 25.1.1999 called  upon the respondent to pay the license fee which is due and if there be any  difficulty in paying the entire amount in lumpsum the petitioner was directed to pay 20% of the license fee failing which it was stated in the  said letter that the respondent would take action in terms of the license  agreement and adopt other remedies open to the Licensing Authority. Being  aggrieved by the aforesaid letter the present petition has been filed.\n<\/p>\n
 4. Learned counsel appearing for the parties drew my attention to the  terms and conditions of the license agreement. The licenses granted to the  petitioners are for a period of 15 years unless terminated for default or  for insolvency or for convenience or for transfer of the license under the  provisions of the agreement. For the purpose of charging the license fee  for the first year the year is to be reckoned as 12 months beginning with  the effective date. In respect of the licenses the year is reckoned from  October to September and thus the license fee for the second year had  fallen due in the month of October, 1998 which has to be paid in advance in  terms of the agreement. Condition No.14 of the license provides the procedure for termination of the contract. One of the circumstances under which  the license could be terminated is “if the licensee fails to perform any  other obligation under the license including the remittance of timely  payment due to the licensor”. Condition No.16 provides that in the event of  any question, disputes and differences arising under the license and in  connection thereof the same shall be referred to an Arbitral Tribunal  comprising of three arbitrators, one each to be appointed by the licensor  and the licensee and such two arbitrators shall then appoint the third  arbitrator. The license fee is payable in terms of condition No.18 which  provides that the yearly license fee shall have to be paid in advance  through a demand draft drawn. The said condition also provides the licensee  is required to submit financial bank guarantees as also performance bank  guarantees as required under the conditions of the contract.\n<\/p>\n
 5. All the petitioners herein have in terms of the aforesaid condition  furnished the financial bank guarantees as also the performance bank guarantees. It is the common case of the counsel for the petitioners that after  execution of the aforesaid agreement and when the petitioners were taking  necessary steps and working for setting up and operating the basic telephone services in their respective areas the respondent breached the agreement and did not perform its part of the obligations. It is stated that the  petitioners entered into the aforesaid license and agreed to pay the license fee on the clear understanding that there would be duopoly for a  period of 10 years as per the license deed of the petitioners for the  telephone service. My attention was also drawn to clause No.13 of the  license agreement wherein it is stated that the license is issued on nonexclusive basis but the licensor shall issue additional licenses in the  circle\/service area after first 10 years of this license in operation, if  it is considered necessary or desirable. Learned counsel appearing for the  petitioner submitted before me that the said condition clearly stipulates  that the contract agreement envisaged only duopoly for a period of 10  years. It is further submitted that on the aforesaid representation the  petitioners reasonably believed that it would be able to realise adequate  amount of revenue so as to enable them to pay the license fee besides  meeting other costs and earn some reasonable return on their investment but  contrary to the representation as of present the respondent has separately  awarded licenses to approximately 81 internal service providers in the  country and the said licenses have been awarded without any tender and  without charging any license fee for the initial period. It is submitted  that in view of grant of such licenses the business of the petitioners  would be adversely affected and therefore, there would be no possibility of  the petitioners realising adequate amounts of revenue even to meet the cost  and to pay the license fee rather than earning any return on the investment. On behalf of the petitioners it was also submitted that taking note  of the aforesaid subsequent development and realising that the petitioners  have to be protected the Government has been contemplating of bringing in a  new Telecom Policy and in that regard positive steps have been taken by the  respondent and a group has been constituted by the Government of India on  20.11.1998 to propose and, to give recommendations on the new Telecom  Policy. Draft discussion paper for the aforesaid new Telecom Policy has  also been circulated, a copy of which the petitioners have placed on record. Relying on the contents of the said draft discussion papers, counsel  for the petitioner submitted that the respondent has admitted that the  current licensing regime for the basic services with a duopoly structure  with high fixed annual license fee, would have to be replaced by a suitable  policy. Counsel has specifically drawn my attention to the contents in the  said draft discussion papers under the heading ‘Internet Service Providers  Policy and Project viability” to bring home their submission that the  respondent is also conscious of the fact that the basic telephone service  is not viable any more.\n<\/p>\n
 6. The petitioners also submitted that there are several other breaches  committed by the respondent and material deviations have also been committed by the respondent from the original terms of the license. It was also  stated that the respondent has failed to cooperate with the petitioner and  has failed to fulfill its commitments and\/or obligations. It is also submitted that there was a delay of over a year by the respondent to approve and  finalise the Tripartite Agreement between the licensee, financial institutions and the respondent, and in fact the same has not yet been finalised.  It is thus stated that in view of all the aforesaid unforeseen circumstances and development of subsequent events, the petitioners are not  required to pay the license fee for the second year, inasmuch as the breach  is of fundamental nature going to the root of the contract and also because  there is every possibility of restructuring of the payment schedule of the  license fee.\n<\/p>\n
 7. In the light of the aforesaid submissions the counsel submitted that  the disputes have arisen between the parties in respect of the agreement in  respect of which steps are being taken for reference of the disputes to the  arbitrator and in the interim period an injunction is required to be issued  for protecting the interest of the petitioners inasmuch as the respondent  has issued a letter to the petitioners on 25.1.1999 calling upon the petitioners to pay the arrears of license fee for the entire second year or  atleast 20% of the same and for furnishing enhanced bank guarantee for the  balance and further informing the petitioner that in case of failure to do  so action would be taken against them in terms of the license agreement.\n<\/p>\n
 8. Mr. Trivedi, on the other hand appearing for the respondent in all the  matters submitted that the aforesaid group on Telecommunications was constituted only on 20.11.1998 and the task entrusted to the said group is to  propose for a new Telecom Policy and also to give their recommendations  relating to issues of the existing license of basic and cellular service  and suggest appropriate remedial measures within the framework of new  Telecom Policy. It is stated that the said group has circulated the draft  discussion paper sometime in the month of January 1999. He submitted that  thus reliance on the contents of the same by the petitioners is misplaced,  for the license fee for the second year so far basic telephone service is  concerned, fell due sometime in the month of October, 1998. He further  submitted that the petitioners have started objecting to payment of the  license fee sometime only in the month of November, 1998, before which the  license fee for the second year became due. He has categorically stated  that the purpose and object for issuance of the aforesaid letter dated  25.1.1999 was not to terminate or cancel the license of the petitioners for  the present and according to him the aforesaid letter was issued to the  petitioners bringing to their notice the fact of non-payment of the license  fee for the second year and the arrears standing against each of them and  further calling upon them to pay the said arrears either in full or by  making payment of 20% for the present and for the balance amount to submit  enhanced bank guarantees, failing which the bank guarantees furnished by  the petitioners would be encashed. He further submitted that the bank  guarantees furnished by the petitioners are independent agreements which  have nothing to do nor dependant on the disputes in respect of the main  underlying contract. He also drew my attention to the disclaimer as appearing in the draft discussion paper which states that the document of the  draft discussion paper does not purport to be draft policy document of the  Government and the said document explicitly or implicitly does not purport  to be a legal commitment by the Government, and is only meant for inviting  views and suggestions for finalising recommendations on the subject. He  further submitted that neither any case of fraud nor a case of irretrievable injury has been made out by the petitioners and therefore, no injunction could be issued in the present proceedings as against the respondent,  as sought for, which if granted would amount to restraining the respondent  from invoking\/encashing the bank guarantees although no case for the same  is made out.\n<\/p>\n
 9. The license agreement to which reference has been made in the discussion noted above indicates that the license fee for basic telephone service  is to be made by a licensee annually in advance. Going by the aforesaid  provision the license fee for the second year became due so far the petitioners are concerned, sometime in the month of October,1998. The following  table would give a clear picture on the status of the license of the petitioner :\n<\/p>\n
S.N. NAME OF THE    EFFECTIVE      START OF THE   DEMAND OF THE\n     COMPANY        DATE OF        COMMERCIAL     LICENCE FEE\n                    LICENSE        SERVICE AND    FOR THE\n                                   NUMBER OF      PERIOD.\n                                   SUBSCRIBERS\n1.   M\/s. Hughes    30.9.97        30.10.1998     30.9.98 to\n     Ispat Ltd.                    (3816 as on    30.9.99\n                                   31.1.99)\n2.   M\/s. Tata      30.9.98        Not yet        30.9.98 to\n     Teleservices                  started        30.9.99\n3.   M\/s. Essar     30.9.97        Not yet        30.9.98 to\n     Commvision                    started        30.9.99\n\n \n\n<\/pre>\n
 10. The records placed before me definitely indicate that a new Telecom  Policy is under active consideration of the Government of India for which a  group has been constituted which has also circulated discussion papers,  reference to which has also been made by the counsel appearing for the  parties. The license provided to the Internet Service Provider, particularly clause 3.2 thereof provides that the said licensee cannot provide any  telephone service. If however, any of the said licensees unauthorisedly  provides telephone service it may not be possible or feasible for the  Government to detect the same. The petitioners have raised the disputes  with regard to the basic telephone service license agreement contending  that the concept of duopoly structure which existed in the license is  breached by the respondent and gets eroded with the issuance of licenses  under the Internet Service Provider System. Allegations of breach is also  made in respect of delays caused in providing various clearances and permissions. These are disputes which relate to the main agreement between the  petitioners and the respondent in respect of which there is an arbitration  clause and are to be resolved through the process of arbitration by referring the said disputes to the Board of Arbitrators in terms of the arbitration clause. That there could be certain changes in respect of some of the  clauses of the agreement of the petitioners and also possibility of restructuring and re-scheduling of the license fee with the announcement of  the new Telecom Policy is at this stage only a presumption. Records placed  before me indicate that only 9 licensees under Internet Service Provider  Scheme have started operations whereas two petitioners namely – M\/s. Tata  Services and M\/s. Essar Commvision have not yet started commercial service.  So far the other petitioners namely – M\/s. Hughes Ispat Ltd. is concerned  although it has started commercial service with effect from 30.10.1998, the  first ISP license was issued only on 6.11.1998. On the aforesaid facts it  is not possible to hold even prima facie that any of the petitioners have  immediately suffered any heavy loss. These are however, disputes relating  to the main agreement to be decided through the process of arbitration. But  even assuming that such loss has been suffered by the petitioners whether  it could not be recovered or reimbursed from the respondent. Surely the  dues as existing today even if paid could be recovered or reimbursed or  adjusted towards the future dues payable by the petitioners even if at a  later stage it is decided to restructure or remodel the payment schedule of  the license fee. In any case, there cannot be any denial of the fact that  the second year license fee is due and payable by all the petitioners in  the light of the payment schedule prescribed in the license agreement. The  said arrears cannot be refused to be paid only because the petitioners have  raised certain disputes arising out of or relatable to the main license  agreement and also because the petitioners reasonably believe that a new  Telecom Policy is on the anvil. Similar stand was also taken in a case  decided by this Court, which was negatived. Reference is made to the decision of DSS Mobiles Communications Vs. Union of India, (Suit No.1952\/1998  decided by me on 16.12.1998). In the appeal filed against the said judgment  and registered as FAO(OS) No. 336\/1998 the Division Bench of this Court  held that the new Telecom Policy has no relevance nor the fact that the  petitioner allegedly suffered any loss to a case of invocation of Bank  Guarantee. The Special Leave Petition filed against the said Judgment was  also dismissed by the Supreme Court.\n<\/p>\n
 11. The petitioners have furnished bank guarantees in terms of the license  agreement giving a security for due fulfillment of their obligations to pay  the license fee within the stipulated time. The license fee for the second  year although became due in October, 1998 was not paid by the petitioners  and under such circumstances the respondent issued successive letters to  the petitioners bringing to their notice that they are defaulters in respect of payment of the license fee for the second year and extending time  for payment of the same. By the present letter dated 25.1.1999 the respondent similarly informed the petitioners about the arrears standing against  them and directing for payment of the same in the manner stated therein  failing which the petitioners are informed that actions would be taken  against them in accordance with the terms and conditions of the license  agreement i.e. shall take steps for encashing the bank guarantees. Thus an  order if passed by me as sought for by the petitioners seeking ad interim  restraint order would virtually amount to restraining the respondent from  encashing the bank guarantees furnished by them.\n<\/p>\n
 12. The law relating to encashment and\/or enforcement of the bank guarantee is well settled by a long catena of decisions pronounced by Supreme  Court and this court. The principles have been authoritatively laid down  which the court is to apply when a request is made for grant of an injunction restraining encashment of a bank guarantee. In a very recent decision  of the Supreme Court in Dwarikesh Sugar Industries Ltd. Vs. Prem Heavy  Engineering Works (P) Ltd. and Another; reported in 1997(2) Arbitration Law  Reporter page 350 the Supreme Court has summarised the said principle in  paragraph 22. While summarizing the said principle the Supreme Court also  held that in order to make out a case of fraud the petitioner has to establish that the said fraud is an established fraud. In respect of the second  exception to the Rule of granting injunction in case of a bank guarantee it  was stated that resulting irretrievable injury has to be such a circumstance which would make it impossible for the guarantor to reimburse himself if he ultimately succeeds and the same shall have to be decisively  established and it must be proved to the satisfaction of the Court that  there would be no possibility whatsoever of the recovery of the amount from  the beneficiary by way of restitution.\n<\/p>\n
 13. In O.M.P. 59\/1999 although it has been alleged that the proposed  action of the respondent is fraudulent however, the same appears to me to  be bald statement without sufficient pleadings in support of the plea. The  said pleading does not and cannot make out a case of fraud much less an  established fraud. In U.P. State Sugar Corporation Vs. Sumac International  Ltd.,  it was pronounced that the fraud must be of an  egregious nature such as to vitiate the entire underlying transaction. The  Supreme Court quoted with approval the earlier decision of the Supreme  Court in U.P. Cooperative Federation Ltd. Vs. Singh Consultants, (1998) 1  SCC 174 which stated that the Bank which gives the guarantee is not concerned in the least with the relations between the supplier and the customer, nor with the question whether the supplier has performed his contractual obligations or not, nor with the question whether the supplier is in  default or not. In Singh Consultants (supra), the Supreme Court while  explaining the kind of fraud that might absolve a bank from honouring its  guarantee quoted the following passage from the judgment of Bolivinter Oil  SA Vs. Chase Manhatan Bank, (1984) 1 All E.R. 351:-\n<\/p>\n
  “The wholly exceptional case where an injunction may be granted   is where it is proved that the bank knows that any demand for   payment already made or which may thereafter be made will clearly   be fraudulent. But the evidence must be clear both as to the fact   of fraud and as to the bank’s knowledge. It would certainly not   normally be sufficient that this rests on the uncorroborated   statement of the customer, for irreparable damage can be done to   a bank’s credit in the relatively brief time which must elapse   between the granting of such an injunction and an application for   the bank to have it charged.”\n<\/p>\n
 In my considered opinion establishing fraud on the part of the respondent specific pleadings will have to be there to indicate that in fact  fraud had been committed by the respondent which is by nature an established fraud. No such pleading apparently is on record. Whatever pleadings  are on record in respect of fraud, in my considered opinion, the same do  not make out any case of fraud, in any manner. In O.M.P. 58\/1999, the  petitioner has not pleaded fraud specially. In any event allegation of  breach of promises, representations and terms of license cannot make out  any case of fraud.\n<\/p>\n
 In O.M.P. No. 55\/1999 the petitioner neither pleaded fraud. Assumption  and presumption of the petitioners and allegation of breach of contract and  discrimination cannot make out a case of fraud. Therefore, in my considered  opinion none of the petitioners has been able to make out any case of  fraud. It is not a case where the petitioner at any point of time prior to  filing of the present petition, has alleged fraud on the part of the respondent. In my considered opinion no case of fraud is made out not to  speak of established fraud which is necessary to be made out for issue of  an injunction restraining encashment and\/or enforcement of bank guarantee.\n<\/p>\n
 14. On the question of irretrievable injury which is the second exception  of the rule against grant of injunction when unconditional bank guarantees  are sought to be realised, it is held by the Supreme Court in the case of  U.P. Cooperative Federation Limited (supra) that the fraud must be that of  the beneficiary and not the fraud of any one else. In U.P. State Sugar  Corporation (supra) the Supreme Court said that the irretrievable injury  must be of the kind which was the subject matter of decision in ITEK Corporation Case. The Supreme Court in the said case discussed the nature of the  case in ITEK Corporation and observed thus :\n<\/p>\n
  “On the question of irretrievable injury which is the second   exception to the rule against grant of injunctions when unconditional bank guarantees are sought to be realised the court said   in the above case that the irretrievable injury must be of the   kind which was the subject matter of the decision in the Itek   Corporation Case. In that case an exporter in US entered into an   agreement with the Imperial Government of Iran and sought an   order terminating its liability on stand by letters of credit   issued by an American Bank in favour of an Iranian Bank as part   of the contract. The relief was sought on account of the situation created after the Iranian revolution when the American   Government cancelled the export licences in relation to Iran and   the Iranian Government had forcibly taken 52 American citizens as   hostages. The US Government had blocked all Iranian assets under   the jurisdiction of United States and had cancelled the export   contract. The court upheld the contention of the exporter that   any claim for damages against the purchaser if decreed by the   American Courts would not be executable in Iran under these   circumstances and realisation of the bank guarantee\/letter of   credit would cause irreparable harm to the plaintiff. This contention was upheld. To avail of this exception, therefore, exceptional circumstances which make it impossible for the guarantor   to reimburse himself if he ultimately succeeds, will have to be   decisively established. Clearly, a mere apprehension that the   other party will not be able to pay, is not enough. In Itek case   there was a certainty on this issue. Secondly, there was good   reason, in that case for the court to be prima facie satisfied   that the guarantors i.e. the bank and its customer would be found   entitled to receive the amount paid under the guarantee.”\n<\/p>\n
 15. In Hindustan Steel Works Construction Ltd. Vs. Tarapore & Co. & Another; reported in 1996 (5) SCALE 186, it was held by the Supreme Court that a  bank guarantee is an independent and distinct contract between the bank and  the beneficiary and is not qualified by the underlying transaction and the  primary contract between the person at whose instance the bank guarantee is  given and the beneficiary. It was also held in the said case that in the  case of an unconditional bank guarantee the nature of obligation of the  bank is absolute and not dependent upon any dispute or proceeding between  the party at whose instance the bank guarantee is given and the beneficiary.\n<\/p>\n
 16. That there are disputes between the parties or for that matter allegations of breach of the contract and\/or a plea that no amount is due and  payable by the petitioner to the respondent are all matters relating to the  main agreement and have no relation and relevance so far the agreement of  bank guarantees are concerned. That there are serious disputes between the  parties which might even go to the root of the contract and that there are  breaches committed by the beneficiary are not matters which could come  within the ambit of the special equities resulting into irretrievable  injury. In this connection reference may be made to the observation made by  the Supreme Court in paragraph 23 in the decision of the Hindustan Steel  Works Construction Ltd. (supra).:\n<\/p>\n
  “We are, therefore, of the opinion that the correct position of   law is that commitment of banks must be honoured free from interference by the courts and it is only in exceptional cases, that   is to say, in case of fraud or in a case where irretrievable   injustice would be done if bank guarantee is allowed to be encashed, the court should interfere. In this case fraud had not   been pleaded and the relief for injunction was sought by the   contractor\/respondent No.1 on the ground that special equities or   the special circumstances of the case required it. The special   circumstances and\/or special equities which have been pleaded in   this case are that there is a serious dispute on the question as   to who has committed breach of the contract, that the contractor   has a counter claim against the appellant, that the disputes   between the parties have been referred to the arbitrators and   that no amount can be said to be due and payable by the contractor to the appellant till the arbitrators declare their award. In   our opinion, these factors are not sufficient to make this case   an exceptional case justifying interference by restraining the   appellant from enforcing the bank guarantees. The High Court was,   therefore, not right in restraining the appellant from enforcing   the bank guarantees.”\n<\/p>\n
 17. It is true that the petitioners have alleged that fundamental breach  and number of other breaches in the license agreement have been committed  by the Government. It is also pleaded that the respondent has failed to  discharge its obligations under the license agreement. In my considered  opinion the said disputes could be effectively resolved through the process  of arbitration to which resort is being taken by the petitioners. But the  said disputes even assuming going to the root of the contract and serious  in nature do not and cannot be brought into within the concept of special  equities and cannot in my considered opinion amount to a case of irretrievable injury of exceptional nature. Even if the claims of the petitioners  are found to be valid and justified, the petitioners would be entitled to  damages for loss suffered, if any or may be entitled to revised license  fee, the same surely is retrievable or could be reimbursed and thus, the  present cases do not and cannot fall within the ambit of the second exception. Similar factors have been held to be not sufficient to make out an  exceptional case justifying interference in the case of Hindustan Steel  Works Construction Ltd. (supra) when it laid down thus:\n<\/p>\n
  “The special circumstances and\/or special equities which have   been pleaded in this case are that there is a serious dispute on   the question as to who has committed breach of the contract, that   the contractor has a counter claim against the appellant, that   the disputes between the parties have been referred to the arbitrators and that no amount can be said to be due and payable by   the contractor to the appellant till the arbitrators declare   their award. In our opinion, these factors are not sufficient to   make this case an exceptional case justifying interference by   restraining the appellant from enforcing the bank guarantees. The   High Court was, therefore, not right in restraining the appellant   from enforcing the bank guarantees.”\n<\/p>\n
 The said disputes connected with the main underlying contract cannot  have any relevance to the liability of the bank under the guarantee given  by it. The bank guarantees in issue in the present cases are all unconditional bank guarantees and the bank was under an obligation to pay on  demand. The respondent under the impugned letter dated 25.1.1999 has informed the petitioner that it is required to pay the arrears in the manner  prescribed therein, failing which resort shall be taken to get the bank  guarantees encashed.\n<\/p>\n
 18. Considering the entire facts and circumstances as stated above and the  settled position of law in this regard, I am satisfied that the petitioners  have failed to make out any prima facie case for grant of injunction  against the respondent restraining the respondent from realising the arrears and dues towards licence fee by encashing the Bank Guarantees furnished by the petitioners. Thus the request for ad interim injunction in  these cases stands rejected pending disposal of the petition. It is however, made clear that opinions and views expressed herein are my tentative  and prima facie views and shall not be interpreted as my final opinions on  the merits of the disputes.<\/p>\n","protected":false},"excerpt":{"rendered":"
Delhi High Court Tata Teleservices Ltd., Hughes … vs Union Of India on 8 March, 1999 Equivalent citations: 1999 IIAD Delhi 625, 78 (1999) DLT 572, 1999 (49) DRJ 431 Author: . M Sharma Bench: . M Sharma ORDER Dr. M.K. Sharma, J. 1. These are petitions filed by the petitioners under section 9 of […]<\/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-175414","post","type-post","status-publish","format-standard","hentry","category-delhi-high-court","category-high-court"],"yoast_head":"\nTata Teleservices Ltd., Hughes ... vs Union Of India on 8 March, 1999 - 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\/tata-teleservices-ltd-hughes-vs-union-of-india-on-8-march-1999\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Tata Teleservices Ltd., Hughes ... vs Union Of India on 8 March, 1999 - 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