Full Judgment Text
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision : December 21, 2012
+ FAO(OS) 613/2012
UNITECH WIRELESS (TAMIL NADU) PVT. LTD. ..... Appellant
Represented by: Mr.Sandeep Sethi, Sr.Advocate
instructed by Mr.Ashish Dholakia, Mr.Anand Prasad,
Mr.Sitesh Mukherjee, Mr.Ashish Bhan, Ms.Padma Kaul,
Advocates.
versus
VIOM NETWORKS LTD. & ANR. ..... Respondents
Represented by: Mr.N.K.Kaul, Sr.Advocate and
Mr.Arvind Nigam, Sr.Advocate instructed by
Ms.Ruchi Agnihotri Mahajan, Ms.Shreya Sircar and
Mr.Jai Mohan, Advocates.
AND
FAO(OS) 614/2012
TELEWINGS COMMUNICATION SERVICES ..... Appellant
Represented by: Mr.Sandeep Sethi, Sr.Advocate
instructed by Mr.Ashish Dholakia, Mr.Anand Prasad,
Mr.Sitesh Mukherjee, Mr.Ashish Bhan, Ms.Padma Kaul,
Advocates.
versus
VIOM NETWORKS LTD. & ANR. ..... Respondent
Represented by: Mr.N.K.Kaul, Sr.Advocate and
Mr.Arvind Nigam, Sr.Advocate instructed by
Ms.Ruchi Agnihotri Mahajan, Ms.Shreya Sircar and
Mr.Jai Mohan, Advocates.
FAO(OS) 613/2012 & 614/2012 Page 1 of 8
CORAM:
HON'BLE MR. JUSTICE PRADEEP NANDRAJOG
HON'BLE MR. JUSTICE MANMOHAN SINGH
PRADEEP NANDRAJOG, J.
1. Respondent Viom Networks Ltd. filed an application under
Section 9 of the Arbitration and Conciliation Act 1996 impleading
appellants Unitech Wireless (Tamil Nadu) Pvt. Ltd. (hereinafter referred to
as „Unitech‟) and Telewings Communication Services Pvt. Ltd. (hereinafter
referred to as „Telewings‟) as respondents No.1 and 2 respectively, pleading
that Unitech had obtained a license from the Government of India for
Unified Access Services and as per guidelines issued by DoT, Unitech, Tata
Teleservices Ltd. and Viom had entered into an umbrella agreement under
which Viom had to provide passive infrastructure and Tata Teleservices had
to provide infrastructure for transmission. Viom and Unitech executed an
Infrastructure Agreement pertaining to passive telecom facilities and
services, which agreement was amended from time to time. Unitech entered
into a separate Transmission Agreement with Tata Teleservices Ltd.
Services were statedly provided by Viom to Unitech for 13 circles. Terms
of payment were agreed. There was a lock-in period of 7 years for Anchor
Sites and 5 years for Shared Sites. Pleading further that in view of the
decision dated February 02, 2012 passed by the Supreme Court, cancelling
the 2G licenses issued on „First Come First Serve‟ basis and spectrum to be
re-auctioned, the license granted by the Government of India to Unitech was
cancelled and this resulted in an inter-se dispute between the Unitech Group
and the Telenor Group, the shareholders of „Unitech‟. Alleging that about
` 2,000 crores were due to it, Viom pleaded that Unitech was threatening to
transfer all its assets to Telewings for around ` 4,000 crores and in respect of
FAO(OS) 613/2012 & 614/2012 Page 2 of 8
equipment, software and other equipment provided by it prayed for an
interim injunction prohibiting Unitech from transferring its business
operations to Telewings.
2. When the petition came up for hearing, the learned Single
Judge simply adjourned the matter recording that the maintainability of the
petition had to be decided on account of the legal issue : Whether the subject
matter of the dispute was arbitrable or TDSAT had the exclusive jurisdiction
to decide the same. The refusal to grant an ad-interim injunction led Viom
to file an appeal which was disposed of with the observation that the learned
Single Judge, on an application being filed, would decide whether some
interim protection was warranted immediately keeping in view the legal
position that pending determination of a Court having jurisdiction the Court
was not denuded the power to pass interim directions.
3. On an application filed, the learned Single Judge took up for
hearing OMP No.1127/2012 i.e. Viom‟s application under Section 9 of the
Arbitration and Conciliation Act, 1996. Hearing arguments spread over
three days on the subject of maintainability of the petition and the date
December 17, 2012 arriving; leaving only four working days before the
ensuing winter vacations, the learned Single Judge has directed the matter to
be listed for further consideration on January 08, 2013 and by way of an ad-
interim order dated December 17, 2012, has restrained Unitech from selling,
alienating or creating third party rights over its Active Infrastructure
including, but not limited to Microwave/GSM antennae and Base
Transceiver Station (BTS).
4. Now, up in appeal are Unitech and Telewings.
5. Unfortunately for us, the learned Single Judge has not indicated
anything in the order in question as to what was in the mind of the learned
FAO(OS) 613/2012 & 614/2012 Page 3 of 8
Single Judge which propelled the learned Single Judge to issue the ad-
interim direction? What was the pressing and necessitating urgency to pass
the ad-interim order and why the directions could not await till January 08,
2013? Nothing has been stated in the order.
6. The urgency to pass an ad-interim order, as we were informed
by learned Senior counsel, is that six out of the thirteen circles in respect
whereof Unitech had a license from the Government of India have been put
up for auction. Unitech did not participate at the auction of the spectrum.
On January 19, 2013, Unitech would not be able to provide any
telecommunication services under the license it had obtained from the
Government. Telewings had been issued the necessary licenses for these
circles being the highest bidder and between Telewings and Unitech there is
an agreement that the infrastructure created by Unitech would be purchased
by Telewings at an approximate price of ` 4,000/- crores. The fear of Viom
is that if the active infrastructure provided by it to Unitech was sold, a
valuable security available to it would be lost pending arbitration and hence
the need to pass an ad-interim direction.
7. With respect to ad-interim orders, we would like to point out
that when matters are complex and arguments pertaining to either
jurisdiction or grant of interim injunction, as in the instant case, last for three
to four days and with so much work pressure upon Judges requiring some
time to be taken out for other matters as well, there is bound to be a gap
between the date when petitions come up for preliminary hearing and when
decision is pronounced. It cannot be that a Judge leaves all judicial work
and devotes his/her energy to a singular case. We are finding corporates
litigating in Courts as if the Courts are exclusively meant for them. At the
drop of the hat appeals are filed and valuable Court time consumed, when
FAO(OS) 613/2012 & 614/2012 Page 4 of 8
the matter can be resolved from a simple business efficacy point of view.
8. We shall highlight in the instant case, a simple business
efficacy solution to the problem, but would note that briefest possible
reasons are to be recorded while granting or declining ad-interim injunctions
because unless a Judge hears the parties adequately, it may be difficult to
give impromptu opinions, for if they are given, they would not be opinions
but would be guesswork; and surely judicial opinions are not to be
guesswork.
9. Now, we prima-facie do not find any infirmity in the impugned
order inasmuch as surely Unitech cannot transfer any asset belonging to
Viom which it is using under an agreement with Viom.
10. But in the complex world of telecommunications where many
parties pool in their resources and services are made available to consumers
through an integrated system, the systems as a whole is required to be sold
for the reason stripping any part of the system would reduce everything to a
scrap.
11. Our questions to learned senior counsel for the respondent :
What if Unitech transfers to Telewings its assets other than what belongs to
Viom? And what would Viom do with its infrastructure if it does not have a
customer? Were met with the response that Viom would cross the bridge
when it is reached.
12. In other words, Viom was willing to run the risk of its assets
being reduced to scrap, but was satisfied that even those of Unitech and
others could be reduced to scrap.
13. In the OMP filed by Viom there is a very relevant pleading. In
para 80 it is pleaded as under:-
“80. In fact, if the respondent No.1 is acquired as a
„going concern‟ by respondent No.2/Telenor, the
FAO(OS) 613/2012 & 614/2012 Page 5 of 8
respondent No.1 ought to recognize the existing rights of
the petitioner under the existing contracts and further
clarify that these contracts will be honored by the
acquiring entity. However, as of now, there is no clarity
with respect to these contracts. The monetary claims
against the respondent No.1 by the petitioner for all
19771 sites require to be secured, as if it is a pure asset
sale, since Unitech Wireless, i.e. respondent No.1 would
be stripped off its assets.”
14. This is the correct approach to solve a problem. If Viom‟s
infrastructure, which is an integral part of the large infrastructure of Unitech
and in which even Tata Teleservices has contributed by making available
some infrastructure, is transferred i.e. the entire business of Unitech is
transferred to a third party which takes over all the liabilities as well, we see
a positive approach in Viom seeking said commitment.
15. What has happened in the instant case is that at a re-auction of
the spectrum, Telewings has purchased the spectrum in 6 out of the 13
circles, and we are informed that as and when 7 more circles would be
auctioned, Telewings would participate in the auction. The subscriber base
of Unitech is four crore connections, as we were informed. Thus, four crore
consumers would be affected. Well yes! It could be argued that these
consumers of mobile services could shift to an existing service provider.
But why force them to do so if a meaningful solution can be found?
16. There is then, the fear of the unknown. It was urged by learned
senior counsel for Unitech and Telewings that the Unitech Group and the
Telenor Group, the promoters of Unitech, are in serious litigation and they
do not know what possible orders Telenor can obtain against Unitech Group
with respect to Unitech. But, the fear of the unknown should not prevent us
from taking practical decisions by following a course of conduct which best
possibly serves the interest of all.
FAO(OS) 613/2012 & 614/2012 Page 6 of 8
17. If it can be ordered that transfer of assets by Unitech to
Telewings would be upon the express condition that Telewings assumes all
liabilities and responsibilities under the contract between Viom and Unitech
and agrees that under orders of the Court it would be treated that the dues of
Viom would be a charge on the infrastructure provided by Viom, in our
opinion that would more than safeguard the interest of Viom if additionally
we secure Viom by directing that of the approximately ` 4,000 crores to be
paid by Telewings to Unitech, ` 500 crores would be kept aside in an escrow
account and for which an affidavit would be filed in the OMP before the
learned Single Judge.
18. We dispose of the appeals directing setting aside of the
impugned ad-interim order and directing that till the learned Single Judge
decides OMP No.1127/2012, if in the interregnum Unitech were to transfer
its assets to Telewings, the same would be subject to Telewings filing an
affidavit before the learned Single Judge affirming that it assumes all
liabilities and responsibilities under the contract between Viom and Unitech
and agrees that under orders of the Court it would be treated that the dues of
Viom would be a charge on the infrastructure provided by Viom. Unitech
would file an affidavit that as and when it receives approximately ` 4,000
crores from Telewings it would keep aside ` 500 crores in an escrow account
and would do so as and when it receives the money. Telewings shall not
physically remove any equipment provided under its agreement with Viom.
19. We make it clear that our order would also be treated as an ad-
interim order and we expressly make it clear that we have not expressed any
opinion on the merits of the controversy. Whatever facts we have noted and
reflected upon are the minimum to speak the minimum.
20. The appeal stands disposed of, but with an advice. Viom and
FAO(OS) 613/2012 & 614/2012 Page 7 of 8
Telewings should seriously consider what has been pleaded by Viom in para
80 of OMP No.1127/2012.
21. No costs.
(PRADEEP NANDRAJOG)
JUDGE
(MANMOHAN SINGH)
JUDGE
DECEMBER 21, 2012
dk
FAO(OS) 613/2012 & 614/2012 Page 8 of 8