Full Judgment Text
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOs. 6341-6342 OF 2003
Bharat Sanchar Nigam Ltd. & Anr. ...Appellants
Versus
BPL Mobile Cellular Ltd. & Ors. ...Respondents
WITH
CIVIL APPEAL NOs. 6375 of 2003, 1, 537 & 2015 of 2004
and 3448 of 2006
JUDGMENT
S.B. SINHA, J :
1. The core question involved in this appeal is the effect of the
application of internal circulars issued by the Department of
Telecommunications (DOT) in the contracts entered into by and between
the parties hereto in respect of as regards inter-connection links provided
by it.
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2. Civil Appeal Nos. 6341-6342 of 2003, 1 of 2004, 537 of 2004 and
2015 of 2004 involve the question of payment of charges. Civil Appeal
No. 6375 of 2003 involves the question as to the effect of pre-mature
surrender of fifteen leased circuits of 2 MBPS which had been obtained
by BPL from DOT during the period January 1997 to June 1998. Civil
Appeal No. 3448 of 2006 involves a dispute in relation to minimum
guarantee period for 2 MBPS leaded lines.
3. Judgments were delivered by the Telecom Disputes Settlement and
Appellate Tribunal, New Delhi (TDSAT) on various dates, viz.,
1.04.2003, 17.02.2003, 8.09.2003 and 3.03.2006.
4. Before, however, we consider the views taken by the Tribunal, we
may notice the facts involved in each of the case separately.
Civil Appeal Nos. 6341-42 of 2003
DOT circulated a booklet "commercial information on leased
circuits" clearly providing for that the rent and guarantee charges for
leased circuits would be on capital cost basis and only after the guarantee
period has expired, it would be on capital cost or flat rate whichever is
higher. Clause 7.0 of the said booklet provides for rent and guarantee
charges to the following effect:
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"7.0 R & G Charges. R & G charges (per
annum) will be levied on percentage basis of
the capital-cost for cable/ system. After the
expiry of R&G period standard flat rate rental
or rental calculated on capital cost basis
(whichever is higher) shall be levied. A
specific hiring contract will be executed with
the Guarantor (Subscriber).
In contributory works the installation and
maintenance charges are levied on percentage
of capital cost of the Apparatus and Plant."
"Contribution Works" has been defined in the Posts and
Telegraphs Financial Handbook as under:
"(xi) Contribution Works - This term is
applied to works of construction or repair the
cost of which is met, not out of funds of the
Department, but out of funds supplied by
private persons, local bodies, other Government
Departments, etc."
Respondents herein are providers of cellular mobile services.
They did not have the requisite infrastructure. DOT had the requisite
infrastructure to provide interconnecting links/ circuits and other
resources.
Respondents entered into a licence agreement with the
Government of India for operating/ providing cellular services in the
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State of Kerala. Similar agreement were entered into for inter-
connection links in other parts of the country.
Basically we are concerned with Clause 4.1 of the said agreement,
which reads as under:
"The resources required for operation of the
services for extending them over the network
of the DOT and MTNL and any other service
provider licensed by the Authority will be
mutually agreed between the parties and shall
be listed. The resources may refer to include
but not limited to physical junctions, PCM
derived channels, private wires, leased lines,
data circuits, other communication elements.
The Licensee shall apply for and obtain from
the DOT the determined resources. The
operation and charge of the traffic passed
through these resources shall be treated on the
basis of the prevalent rules and the guidelines
of the DOT on the subject."
Allegedly, pursuant to the instructions issued by the DOT, the
respondents imported equipment worth Rs. 30 lakhs. The said
equipments were to be installed. The DOT issued a letter on 2.08.1996
stating that such equipments could be installed and, furthermore,
suggested that the required digital microwave equipment should be
installed on "contribution work" basis. However, it is beyond any cavil
of doubt that owing to resistance to the said move and resorting to strike
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by the employees of DOT, the respondents were not allowed to install the
imported equipments in their premises. It is stated that the said
equipments went waste.
By a letter dated 27.09.1996, the DOT communicated that the
charges for interconnection of cellular mobile telephone network would
be calculated as per standard DOT terms. Although it had earlier been
communicated that the respondent could put up its own equipment under
contribution work basis, it was to be allowed to take the equipment on
rent and guarantee basis. The rent and guarantee period was for ten
years. Pursuant to and in furtherance of the said lease agreements, the
DOT installed the required equipment and raised bills on the capital cost
basis of the equipment. One of the sample bills, which had been raised
being Bill dated 5.06.1998, is as under:
"Government of India
Department of Telecommunications
Thiruvananthapuram Telecom District
Telephone No. Consumer No. Bill No. Page
BPL/ Cellular Mobile SVC
BILL DATE BPL US West Cellular Communication
Services Ltd.
17.7.98 IVth floor, Co-Bank Towers, P.O.
Stamp
Palayam, TVM
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DUE DATE
31.7.98
PAY BY DATE RENTAL FROM: 7.2.98 TO: 6.2.99
5.8.98 CALLS FROM: TO:
OPENING CLOSING METERED CREDIT DEBIT
FREE
METER RDG METER RDG CALLS CALLS CALLS
CALLS
Rent for the 20 pr PCM cable RENTAL 1,05,315
provided
For extending one 2 MB stream
from
Hotel Sibra, MC Road to MC xge
METERED
CALLS
Egpt - 61525 TRUNK CALLS
Cable - 43790 OVERSEAS
CALLS
PHONO GRAMS
Rent for end link at TVM. Pl. Note DEBITS TAXES
this is due from Feb. 98. Bill is GROSS AMT.
raised only now Sd/- 27/7 CREDITS
Payment approved Amount payable 1,05,315
Sd/- on or before
L. HERBERT 5.8.98
Head Network Surcharge 2000
For delayed
payment
Amount payable 1,07,315
if paid on or after
6.8.98
Arrears
Sd/-
ACCOUNTS OFFICER
(TR)"
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Indisputably, the Telecom Regulatory Authority of India (TRAI)
issued a tariff order covering the situations where lease circuits were
required to be provided. In the said tariff order, the tariffs were
applicable with effect from 1.04.1994. Moreover, these rates were
applicable only if the leased circuits are provided through utilization of
spare capacity. It was further held that where lease circuits were not
available, as in the present case, and the leased circuits had to be
installed, the charges would be on rent and guarantee basis. The said
tariff order was to have a prospective operation. As regards the
prevailing tariffs, it was expressly provided that the tariffs specified in
the tariff order would replace the existing tariff from the date of
implementation, which was 1.04.1999. The said tariff order was issued
under Section 11(2) of the TRAI Act, 1997. Indisputably, the amount
charged by the DOT on an annual rental basis for the systems rented out
to the respondents was higher than the rates prescribed in the tariff order.
DOT issued a circular dated 13.04.1999 that the tariff order would
not be applicable to old cases under rent and guarantee basis.
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On or about 7.05.1999, DOT informed the local office that the
charges which should be billed against the respondents should be as per
the standard DOT terms, i.e., either on capital cost basis or flat rate basis,
whichever is higher. It is on the said premise, the bills were raised on
flat rate basis, the effect whereof, as contended by the respondents, is that
they were required to pay annual rent of Rs. 1,62,50,000/- as against the
prevailing annual rent of Rs. 39,87,762/-. Such demands admittedly
were raised only in the State of Kerala and nowhere else in the country.
Such additional demands were raised on the service providers. A large
number of correspondences passed between the parties. However, we
may notice that by a letter dated 19.08.1999, DOT stated that a sum of
Rs.5,77,025/- per annum should be paid by the respondents. A detailed
calculation was also submitted therewith. The said computation was
accepted by the respondents. However, according to the appellant, the
demand was wrongly made at Rs.15,00,000/- per annum as against the
said demand of Rs.5,77,025/-. Questioning the basis for making such
demands, a writ petition was filed. However, ultimately the same was
withdrawn.
Respondents filed an application in terms of Section 14 of the
TRAI Act before the TDSAT inter alia on the premise that the flat rate
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basis purported to be in terms of the internal circulars having no force of
law, the same could not have been the basis for making the demands. It,
inter alia, prayed for the following reliefs:
"(a) Set aside the revised demand raised by
the DOT/Respondents on flat rate basis instead
of on capital cost basis as originally charged.
(b) Direct the respondents to give
retrospective effect to Annexure-X i.e. DOT’s
new Tariff Circular 4/99 dated 13.4.99 so as to
make it applicable to leased circuits
commissioned under R&G basis prior to 1.4.99
also;
(c) Direct the respondents to pay damages
for the loss sustained by the petitioner due to
wasting of the NOKIA SDH Optimux
equipment worth Rs. 30 lacs;"
The said applications have been allowed by reason of the
impugned orders.
Civil Appeal No. 6375 of 2003
The lease agreement in this case allegedly was to be for a
minimum period of three years. The dispute in this case relates to
premature surrender of 15 leased circuits of 2 MBPS which had been
obtained by the respondent from DOT during the period January 1997 to
June 1998. Whereas the contention of the appellant is that the minimum
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period during which such lease agreement has to be entered into is three
years, according to the respondent, such a stipulation was not known to
them till 26.11.1998 and the same was not also indicated in the booklet
of DOT, viz., Commercial Information on ‘Leased Circuits’. It was
furthermore contended that the internal circulars could not have the force
of law.
Civil Appeal Nos. 537 of 2004 and 2015 of 2004
C.G. FAXEMAIL (P) Ltd. is an email provider. For its
commercial services, it had secured leased data circuits. A meeting of
Email Service Operations was held with the Chairman of Telecom
Commission on 29.01.1996 to discuss various issues relating to email
services, the minutes whereof were issued on 02.02.1996. The minutes
relating to the relevant item reads as under:
"Item No. 1
E-Mail service providers are charged two times
the rental of the point-to-point circuit which is
exorbitant. It is not economically viable to
provide the services at such high tariff of the
leased circuits.
Decision
It was informed that a Committee headed by Sr.
DDG(CS) is deliberating the tariff structure for
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CUG networks. The Committee has been asked
to take care of the issue and give an early
recommendation.
Action: Sr.DDG(CS)"
Respondents herein filed applications before TRAI as the rates
which were being charged from them have been doubled, inter alia, on
the premise that they come within the purview of close user group
service. It came to the conclusion that the service provided by the
respondents does not come within the purview of close unit group
service, stating :
"The DOT, vide their letter No.106-10/94-PHC
dated 13.7.1995 had issued an order stating that
the leased lines in respect of the networks set
up by licensees of Value Added Services will
continue to be charged at a rate, which was
double the rate applicable for point to point
leased circuits of all types.
There is no doubt that E-mail services fall
under the category of Value Added Services
and as the rental charge for leased circuits
provided to the network providers of valued
added services had been fixed by the DOT in
their order dated 13th July, 1995, we come to
the conclusion that leased circuits for E-mail
providers has been charged correctly as per the
extant orders.
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While holding the view, however, we are
constrained to take adverse notice of the fact
that the respondents R-1 and R-2 did not refer
to proper documents and that too even after
repeated queries from the Bench."
Having found so, however, the members came across two circulars
being dated 13.7.1995 and 22.11.1996 and placed the matters for further
hearing. Relying on the said circulars, the TRAI held :
"After the hearing was over, we came across
certain documents filed by the DOT in an
earlier petition clearly indicating that value
added network licensees, which included E-
mail licensees, were to be provided leased
circuits. We then decided to call for a
rehearing on this issue and placed the
documents on record. These documents are of
July 13, 1995 and November, 21, 1996 bearing
Nos.106-10/94-PHC and 116-4/95-PHC
respectively. During the rehearing, the
respondents accepted that the charging of
double the rental for the leased circuits,
provided to the E-mail network licensees, was
based on the documents referred to above and
not on the basis of their earlier interpretation of
E-mail as being a CUG network.
The petitioners argued that since the
respondents had, in their rejoinder, interpreted
E-mail as a CUG network, which according to
them was wrong, the respondents cannot be
allowed to claim double rental on grounds of
another order which they failed to refer during
the first hearing. The respondents, however,
argued that even though they had earlier taken
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the stand that E-mail service was to be
categorized a CUG network, they had also
referred to various orders issued by the DOT
and a close reading of the same would bring out
the fact that the multiplication of rentals,
provided for data circuits, had been in existence
from 1989 itself."
It was opined that they fall in the category of Value Added
Service. An appeal was preferred thereagainst before the Tribunal which
has been allowed, opining :
"After going through the pleadings and the
documents produced we have no doubts in our
mind that the Respondents do not have much of
a case. Admittedly under the terms and
conditions of the licences held by them the
Appellants are under an obligation to pay for
the resources admitted as per the rates fixed by
the Respondents. However, in the absence of a
specific contract drawn up between both the
parties to lay down specifically the resources to
be obtained and the precise charges to be paid
by them, one has to rely upon knowledge as
may be available in public domain and on
documents exchanged between the parties, viz.,
requests for making available certain resources
and the demand notes subsequently raised by
the provider of resources. It is an admitted fact,
and it has not been contested by the
Respondents, that the documents relied upon
for charging double the rental were internal
circulars which were not gazetted and hence not
in public domain. The Commercial Information
on Leased Circuits, which was a published
documents of Dot made available to all the
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allottees of leased circuits and hence very much
in public domain, did not contain any provision
under which E-Mail Service Providers were to
be charged double the normal rent. Even if it is
assumed that the Appellants were aware of a
particular circular issued in 1993 it cannot be
stretched to argue that they were aware of all
the internal circulars of DoT on this subject.
We have verified from copies of the demand
notes raised by the Respondents in response to
the requests received from the Appellants that
the initial demands were in conformity with the
rates and tariff as indicated in the brochure
"Commercial Information on Leased Circuits"."
Civil Appeal No. 3448 of 2006
Respondent herein requested DOT to provide land distance lease
line on 12.8.1996 for one year. It was also stated that further period of
extension will be intimated in advance. On or about 21st September,
1996, a request was made for extension of the said period for one year.
Demand was made for one year only by a bill dated 26.11.1996 for
Vijaywada to Hyderabad long distant charges and on 24.12.1996 for
Vijaywada to Vishakhapatnam. The contract was, thus, concluded. The
demands were duly paid by the respondent on 9.1.1997 and 26.12.2005.
Various extensions were sought for only after expiry of one year. Those
extensions were granted by DOT even on 14.9.1998. The details of
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infrastructure leased from DOT with their validity were sent. However,
some leased lines were surrendered by the first respondent. Indisputably,
for the first time on 13.10.1998, the DOT intimated the respondent that
the minimum guarantee period was three years. For the said purpose,
reliance was placed on internal circulars/letters dated 23.6.1995. Bills
were raised only on 20.10.1998.
Civil Appeal No. 1 of 2004
This case also involves the question of payment of charges as in
the case of Civil Appeal No. 6341-42 of 2003. We, therefore, need not
deal with the facts of this case.
5. The main judgment was delivered by the TDSAT in Petition Nos.
13 and 16 of 2001. It was held:
(i) "The main issue agitated before the Tribunal was whether there
were clearly understood contractual terms existing between the
Petitioners and the Respondent for computation and calculation
of annual rents payable by the Petitioners to the Respondent for
facilities availed of by the Petitioners."
(ii) "An appraisal of the averments and arguments preferred by
both the parties does not support the contention of the
Respondents that the Petitioners were fully aware of the
internal circulars and orders of DoT regarding the manner of
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calculation of rental for leased circuits under the Rent and
Guarantee Scheme."
(iii) "The Telecommunication Manual and various other related
office circulars and orders are basically for internal and official
use and unless the relevant contents thereof are specifically
made known to parties through agreements and/or contracts it
cannot be presumed that these are generally known to them. We
have no evidence on record to indicate that the Respondent had
informed the Petitioners in categorical terms that in terms of the
departmental rules and regulations in force, the basis of
calculation of annual rentals on R&G basis would be either
capital cost or flat rate, whichever is higher."
(iv) "If the department itself was oblivious of the procedural rules it
had framed for its own functioning it was somewhat optimistic
to presume at a later stage that the Petitioners knew of them."
(v) "We also see considerable merit in the argument of the
Petitioners that non-statutory office orders and rules cannot be
superimposed on the statutory undertakings given by the
Petitioners as a part of the licensing conditions under the Indian
Telegraph Act and Rules framed thereunder."
(vi) "For the enforcement of such non-statutory office orders and
rules and make these binding, it would be necessary to draw up
specific contracts giving in clear and unambiguous details all
the terms and conditions and the responsibilities and
obligations of both the contracting parties."
(vii) "As a result of what we have discussed above we hold that the
action of the Respondent in revising the demands after a period
of two years in respect of what were practically existing
concluded contracts between the Petitioners and the
Respondent was neither legal nor proper. The Respondent
would recompute the impugned Demand Notes on the basis of
existing concluded contracts at pre-revised rates."
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6. On the findings in the said case, the TDSAT in other cases also
opined that internal circulars would have no effect on the term of the
concluded contract.
7. Indisputably, the matter relating to laying down of the telegraph
lines and providing phone connections including mobile is governed by
the provisions of the Indian Telegraph Act, 1885. The said Act was
enacted to amend the law relating to telegraphs in India.
Section 7(2)(ee) thereof reads as under :
"(ee) the charges in respect of any application
for providing any telegraph line, appliance or
apparatus."
8. Indisputably, in exercise of its power conferred upon it under
Section 7 of the Indian Telegraph Act, the Central Government framed
rules known as the Indian Telegraph Rules. Rule 434 provides for
annual rental charges for private wires and non-exchange lines which
prescribes a minimum period of hire of three years. The relevant portion
of Rule 434 reads as under:
"Section IX.
Charges for Private Wires
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Annual Rental
1.(a) Internal Private Wires .... Rs. 400
(b) External private wires .... Rs. Fifteen
hundred
(with or without relay set) per kilometer
chargeable
distance per annum per
pair.
Provided that in the case of private wires exceeding
five kilometers of chargeable distance, the minimum
period of hire shall be 3 years and the security for the
service shall be regulated under Rule 445 and
obtained from the subscriber before the provision of
the service.
2. Omitted.
3. The chargeable distance of External Private Wires
shall be 1.25 times of the radial distance between the
two points to be connected.
4. Rental for Private Wires given on casual basis for
short periods shall be levied on pro rata basis at one
and a half time the rates of rentals prescribed in Sub-
section 1 above. The minimum period of hire should
be one month."
Section X.
Charges for Non-Exchange Lines
Annual rental
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1. Annual rental per pair .... Rs. Fifteen hundred
per
Kilometer of chargeable
distance.
Provided that in the case of non-exchange lines
exceeding five kilometers of chargeable distance, the
minimum period of hire shall be 3 years and the
security for the service shall be regulated under Rule
445 and obtained from the subscriber before the
provision of the service.
2. Omitted.
3. Omitted.
NOTE 1. - The chargeable distance shall be 1.25
times of the radial distance.
NOTE 2. - The above rentals will apply in case of
Non-Exchange lines or Private wires falling within
the local area of a Telephone system, even if they
exceed sixteen kilometers in length by the shortest
practicable route [see also Rule 494 (1) and the note
thereunder]."
Rules 475-A, 478, 498 of the Indian Telegraph Rule reads as
under:
"475-A : Notice of surrender of leased
Telegraph/ Speech Circuits: Before
surrendering the leased Telegraph/ Speech
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circuits and terminal equipments, the party
concerned shall give notice to the controlling/
billing authority to not less than thirty days.
478. Quoting of rentals.--(1) The rental for
the exclusive use of the circuits shall be quoted
at the rates then in force.
(2) Where the circuits are provided by utilizing
the installations, existing at the time of the
application, flat rate of rentals based on radial
distance shall be charged for a period of not
less than three months (hereinafter referred to
in this Part as the minimum guarantee period.
XXX XXX XXX
498. Part-time use.--(1) A telephone circuit, if
available as spare, may be leased to Newspaper
Establishments or News Agencies for part-time
use between 7 p.m. and 7 a.m.
(2) The charges for the circuit provided for
under sub-rule (1) shall be one half of the
charges specified in clause (a) of sub-rule (1) of
Rule 496.
(3) Junction line between Private Exchange
or Private Branch Exchanges shall not be
leased on part-time basis."
9. DOT had issued a circular letter dated 18.2.1991 stating:
"(2) Revision of percentage of rental in Rent
and Guarantee cases - Rule 144 of P&T
Manual, Vol. XII, Part - I may kindly be
referred to wherein rental for cables laid down
in rent and guarantee basis to be charged at
18% of the capital cost or at the standard rates
applicable to private wire, whichever is higher.
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The period of guarantee has been mentioned as
10 years. This percentage of rental probably
consist of 10% depreciation (considering
recovery of the cost of cable in 10 years), 7%
interest and 1% maintenance. Now Rates
Section increased the rate of interest from 7 to
10% applicable with effect from 1-4-1990. It is
necessary that R & G rental must be revised to
prevent loss of revenue to the Department..."
10. Indisputably, DOT had issued office order bearing No. 1/96 dated
30.01.1996 wherein it was inter alia provided:
"The question of fixing the tariff for 34 Mbps
Data circuits on Digital Media was under
consideration by the Telecom Commission for
some time. It has now been decided to fix the
following tariff for 34 Mbps data circuits on
Digital Media. These tariff will be applicable
for both the national circuits and national leg of
international circuits..."
In the said circular letter, as regards tariff, it was stated:
"IV. These rates will be applicable only if the
circuits are provided with existing assets of the
Department. In cases where new construction
or installation is involved for whole or part of
the circuits the rental will be calculated either
on special rates taking into account the cost of
construction and other relevant factors or on
flat rate basis whichever is higher.
V. The terminal equipment will be on R&G
basis, if provided by the Department.
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VI. The above rates will apply only if the
entire 34 MBs stream is lead into DOT
equipment. If separate streams of 64 KBps/
2MBps/ 8 MBps are taken, the tariff applicable
as for 84 KBps or 2 MBs or 8 MBs as the case
may be for each system will apply."
The said circular letter is not a part of the Telecommunication
Manual which has been used only for official use. A copy corrected upto
April, 1986 is available on records. They are loosely called as Rules
although they do not have any statutory force.
11. Rule 237 of the Telecommunication Manual reads as under:
"237. There may be cases where telephone
facilities are requisitioned and the cost of such
installations is abnormal such as the opening of
a telephone connection for a police station at
the instance of the State Government in a
remote locality, requisition of non-exchange
lines outside the local area, trunk lines, PBX
etc. by the Defence authorities, requisition of
Public Telephones, PBX’s etc. by private bodies
for their own needs etc. In such cases, standard
flat rates may be economical and with a view to
ensure that the department gets a fair minimum
return for the capital invested, rent is fixed on
capital cost basis. In such cases guarantee is
taken from the party that he will retain the
facilities for a specified period at a specified
rate of rental. In all such cases, standard flat
rates are also calculated and whichever rate is
higher is quoted to the party unless it is
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definitely laid down that standard flat rate
should be charged."
12. Yet again, an internal circular appears to have been issued on
3.11.1993 wherein it was laid down:
"2. The above rate will be applicable only if the
circuits provided with the existing long
distance system of the equipment. In cases
where new construction or installation involved
for the whole or part of the circuit (including
lead), the rental will be calculated either on
special rate into account the cost of
construction and other relevant factors, or on
flat rate basis as above, whichever is higher."
13. Besides the aforementioned, some commercial information on
lease circuits has also been published in terms of Clause 7.0 of the
booklet, as noticed hereinbefore.
14. In Swamy’s Treatise on Telephone Rules under the Chapter
Telecommunication Facilities on Rent and Guarantee Basis, it has been
stated:
"The Department is providing certain
telecommunication facilities on the basis of a
minimum period of hire. In respect of certain
facilities provided at the request of the public,
rent is chargeable at special rates. It will be
calculated both at standard rates and on the
basis of the capital cost and higher of these two
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amounts will be charged. Such services will
have to be guaranteed for the minimum periods
at the scale prescribed Rule 206 of Telecom
Manual, Volume XII, Part I (Fourth Edition,
1986)."
15. Mr. Vikas Singh, learned Additional Solicitor General appearing
on behalf of the appellants, would submit
(i) The Rules framed under the Indian Telegraph Act are binding on
the service providers.
(ii) The lease agreement entered into by and between the parties
having categorically provided that circular letters would be
applicable as regards demand of the payment on flat basis being
higher than the rent and guarantee (for short "R & G"), the
impugned judgment is not sustainable.
(iii) From the Minutes dated 2.02.1996, it would appear that the
licensees were aware of the existing circular orders. Furthermore,
although the official books are for internal use, they are available
in the market having been published under the name of Swamy’s
Treatise on Telephone Rules.
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(iv) If under the contract, the BSNL was entitled to charge a higher
amount, the impugned judgment is wholly unsustainable.
(v) The question is not whether the circulars have the statutory force
or not but a perusal of the licence agreement would clearly go to
show that the licensees agreed to pay the tariff as prescribed by
DOT.
(vi) In view of clauses 4.1 and 19.5 of the licence agreement, it must be
held that the prescribed rate and period would mean that as
prescribed by the authorized officer of DOT from time to time.
(vii) The licencees entered into contracts with their eyes wide open and
in that view of the matter as rates have been fixed by the circulars,
the same are only required to be forwarded to the Bill Department
so that they can raise bills in terms thereof.
(viii) In terms of the circulars, revision of rates were to be carried out by
the concerned departments as would appear from the circular
Nos.4-31/86(R(Pt) dated 17.6.1988, 24-I/87-PHC (Pt) 8 dated
13.11.1988, 1-2/89-R/pt dated 18.2.1991, 4-11/90-R dated
30.9.1991 and 4-11/90-R dated 1.4.1992 and as the respondents
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had been paying on the basis thereof, they cannot now be
permitted to approbate and reprobate.
(ix) In regard to the minimum guarantee period, it was submitted that
the agreement refers to the Rules and the circulars.
The circular dated 26.11.1988 provides that it would be for a
period of three years. The same was, however, later on reduced to one
year. But the circular dated 26.11.1998 provides that the minimum
period would be for three years. But the same has been related back to
1988. Drawing our attention to the Resolutions dated 26.11.1998, the
learned counsel would contend that the respondents were aware of the
said circulars and had been acting thereupon. In any event, the contract
having been entered into in December 1995, the 1988 circular must be
held to have been known to them. Our attention in this behalf has been
drawn to the stand of the DOT in response to the legal notice issued by
the respondent which is to the following effect :
"Hiring of any facility by a customer from the
Department of Telecom is basically governed
by certain terms and conditions such as
payment of rent at prescribed rate and hiring
the service/facility for a minimum period. This
is generally known as terms and conditions of
the hiring contract. It may please be noted that
for each and every facility provided by DOT to
a customer, a minimum period of guarantee is
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invariably laid down, the duration of which
ranges from three months to three years in the
case of facilities provided by utilizing existing
assets., i.e., without any new construction. The
minimum period of guarantee thus fixed for 2
Mb circuit is three years. Even as late as on
15.4.1998, DOT has reiterated this position in
its order No.106-7.94-PHC dated 15.4.1998.
There is no order till date amending revising
this provision. Since you had cited DOT’s order
12.10.99, I did go through the same in detail
with a view to find out whether it contained at
least an indirect hint to indicate that there was
no necessity to prescribe a minimum period of
lease line beyond either three months or one
year, as pointed out by you. There are no such
indications in these orders as claimed by you
and resultantly I would like to make it clear in
unequivocal terms and as of date the minimum
period of hire for a 2 Mbps circuit, the
provision of which does not involve new
construction, is three years only and in case the
line is surrendered by the hirer before the
expiry of this minimum period, he is bound to
pay rent for the unexpired minimum period of
hire. Your contention that when the requests
for leasing the lines were made, demand notes
were issued for paying one year’s rental and
M/s BPL cellular was not told at that time that
they should keep these leased lines for a
minimum period of three years also does not
appear to be correct. Normally when a demand
is received for any facility, the terms and
conditions are quoted to the prospective
customer and only after his acceptance of the
same, steps to provide the facilities are taken.
If in any exceptional case this procedure had
not been followed in respect of M/s BPL, it
may be due to the pleading of urgency and
pressure exerted by them on the respective SSA
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Heads for early provision of the facility,
relegating the requirement of observe the
prescribed procedure to a secondary stage and
out of goodwill the SSA Heads might have
obliged. Even in that case, the presumption is
that the hirer is aware of the commercial
conditions of hiring the circuits. Thus, it does
not exempt M/s. BPL from the fundamental
tariff rules that prescribe a minimum period
hire and payment of rent for the unexpired
portion."
16. Mr. Shyam Divan, learned senior counsel appearing on behalf of
the respondents, on the other hand, would, on the other hand, submit that
the parties entered into the agreement having regard to the commercial
representations made to them by DOT wherefor a booklet has been
issued. It was furthermore submitted that the parties were given options,
viz., (i) the licensees could purchase equipments and install the same or
take lease of the equipments installed by DOT on (a) flat rate basis; or (b)
on capital cost; (ii) the parties have entered into the agreement on the
premise that the charges will have to be paid on rent and guarantee basis.
The subsequent stand taken by the appellants herein to raise demands on
enhanced basis relying on or on the basis of the internal circulars is
wholly unsustainable. Strong reliance in this behalf has been placed on
Sri Dwarka Nath Tewari and others v. State of Bihar and others [AIR
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1959 SC 249], Life Insurance Corporation of India v. Escorts Ltd. and
Others [(1986) 1 SCC 264] and Delhi Development Authority and
Another v. Joint Action Committee Allottee of SFS Flats and Others
[(2008) 2 SCC 672].
17. DOT of Government of India had the monopoly of providing
telecommunication services. Indian Telegraph Act was enacted for the
said purpose. The rights and liabilities of the parties have been laid
down under the Act as also the Rules framed thereunder. A contract may
be entered into, subject to the provisions of a statute or the rules framed
thereunder. The contract, itself, may refer to the statutory provisions or
refer the same by way of incorporation by reference.
18. A contract qua contract, however, must be consensual. It must
meet the statutory requirements and reasons under the provisions of the
Indian Contract Act. When a contract is entered into by and between the
parties, what is determinative is enforcement of the terms and conditions
to be governed by the contract, subject, of course, to the application of
the statute and statutory provisions. Whereas a statutory contract would
be governed by a statute, other contracts would not.
19. It is in the aforementioned context, the questions posed herein
before us must be determined.
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20. For the aforementioned purpose, we may begin with the
interpretation of Clause 4.1. We have noticed hereinbefore that two
options were available to the respondents who intended to operate and/
or provide cellular services in the State of Kerala, viz., (i) buying of
equipments and installing them, or (ii) DOT may install the equipments
which may be licensed to the cellular service providers on rent and
guarantee charges. Clause 4.1 of the licence agreement inter alia states
that (i) resources must be identified and (ii) the area of operation should
be mutually agreed to between the parties. It also deals with what would
be included in the said provision. The last part of the said clause speaks
about the operation and charge of the electronic tariff passed through
these resources. It does not cover the charges for resources/ equipments.
It does not take within its umbrage the system itself. The tariffs in regard
to equipments are, therefore, not governed by the said clause. What it
envisages may be call charges being the operation and charge of traffic
passing through the resources.
21. If that be so, the question of raising any demand on the basis of the
circular letters did not arise at all.
22. For the purpose of determining the questions involved in the
present appeals, we may ignore the fact that pursuant to or in furtherance
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of the negotiations held by and between the parties, the respondents
imported equipments but, for one reason or the other, as noticed
hereinbefore, the same could not be installed. However, the DOT in its
letter dated 30.09.1996 categorically stated that it could put up its own
equipments under contribution work basis, which would mean that the
charges would be on the basis of capital cost. In view of the
aforementioned representations made by the DOT, the respondents had
agreed to take the equipment on rent and guarantee basis which was itself
calculated on capital costs.
23. We are, furthermore, not concerned with the tariff order issued by
TRAI. What, however, may be noticed is that even the tariff order
provides for a lower tariff than the agreed rate. It will not be out of place
to notice the following chart for the purpose of appreciating as to what
was the agreed rate on the rent and guarantee on capital cost basis and
what has been demanded:
"Name of Date of Agreed rate Wrongly Revision
POI commissionin (rent & demanded rent as
g guarantee rate (R&G percentage
on capital flat rate of rent on
cost basis) basis) per capital cost
per annum annum (in
(in rupees) rupees)
Cochin 06.12.96 20,53,048 51,00,000 248%
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Trivandrum 07.02.97 1,05,315 15,00,000 1428%
(per 2 MB
stream per
annum)
Calicut 05.08.97 3,97,800 15,00,000 377%
(per 2 MB
stream per
annum)
Thrissur 07.02.97 1,38,700 6,50,000 1081%
(per 2 MB
stream)
Kottayam 06.11.97 5,77,025 15,00,000 260%
(per 2 MB
stream)
Palakkad 01.06.98 1,76,023 15,00,000 852%
(per annum
per 2 MB
stream)
Kannur 16.10.97 1,94,665 15,00,000 769%
(per annum
per stream)
Kollam 31.12.97 1,24,734 15,00,000 1209%
(per annum
per stream)
Alleppy 12.01.99 2,20,452 15,00,000 682%"
(per annum
per stream)
Such a huge difference in the contractual rate and the demand on
the flat rate could be made provided the contract provided therefor. The
difference admittedly was based upon the internal circular letters. They
might have been published by some publisher but indisputably they are
not statutory in nature. They have not been framed under any statute.
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The Indian Telegraph Act or the Rules framed thereunder do not provide
for issuance of such circulars. The circular letters collected at one place
are loosely called rules. They, as noticed hereinbefore, are meant for
office use only. The directions contained in the said circular letters are
relevant for the officers who are authorized not only to grant licences but
also enter into contracts and prepare bills. The circular letters having no
statutory force undoubtedly would not govern the contract. If some
authorities have violated the terms of the said circulars, they might have
committed misconduct, but when a contract is entered into, the parties
shall be bound thereby.
24. In Sri Dwarka Nath Tewari (supra), this Court held:
"9... It is clear, therefore, from the portion of
the preface extracted above, that Article 182 of
the Code has no greater sanction than an
administrative order or rule, and is not based on
any statutory authority or other authority which
could give it the force of law. Naturally,
therefore, the learned Solicitor-General, with
his usual fairness, conceded that the article
relied upon by the respondents as having the
force of law, has no such force, and could not,
therefore, deprive the petitioners of their rights
in the properties aforesaid."
In Life Insurance Corporation of India v. Escorts Ltd. and Others
[(1986) 1 SCC 264], the case involved the interpretation of Section 29(1)
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(b) of the Foreign Exchange Regulation Act. It was argued that
according to paragraph 24-A.1 of the Exchange Control Manual the same
would be binding upon the Reserve Bank of India. Negativing the said
contention, this Court observed:
"There is no force whatever in this part of the
submission. A perusal of the Manual shows that
it is a sort of guide book for authorised dealers,
money changers etc. and is a compendium or
collection of various statutory directions,
administrative instructions, advisory opinions,
comments, notes, explanations suggestions, etc.
For example, paragraph 24-A.l is styled as
Introduction to Foreign Investment in India.
There is nothing in the whole of the paragraph
which even remotely is suggestive of a direction
under Section 73(3). Paragraph 24-A.1 itself
appears to be in the nature of a comment on
Section 29(1)(b), rather than a direction under
Section 73(3). Directions under Section 73(3),
we notice, are separately issued as circulars on
various dates. No Circular has been placed before
us which corresponds to any part of paragraph
24-A.l. We do not have the slightest doubt that
paragraph 24-A.1 is an explanatory Statement of
guideline for the benefit of the authorised
dealers. It is neither a statutory direction nor is it
a mandatory instruction. It reads as if it is in the
nature of and, indeed it is, advice given to
authorised dealers that they should obtain prior
permission of the Reserve Bank of India, so that
there may be no later complications. It is a
helpful suggestion, rather than a mandate..."
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Recently in Delhi Development Authority (supra), this Court held:
"66. The stand taken by DDA itself is that the
relationship between the parties arises out of
the contract. The terms and conditions therefore
were, therefore, required to be complied with
by both the parties. Terms and conditions of the
contract can indisputably be altered or
modified. They cannot, however, be done
unilaterally unless there exists any provision
either in contract itself or in law. Novation of
contract in terms of Section 60 of the Contract
Act must precede the contract making process.
The parties thereto must be ad idem so far as
the terms and conditions are concerned. If
DDA, a contracting party, intended to alter or
modify the terms of contract, it was obligatory
on its part to bring the same to the notice of the
allocate. Having not done so, it, relying on or
on the basis of the purported office orders
which is not backed by any statute, new terms
of contract could not be thrust upon the other
party to the contract. The said purported policy
is, therefore, not beyond the pale of judicial
review. In fact, being in the realm of contract, it
cannot be stated to be a policy decision as such.
80. A definite price is an essential element of
binding agreement. A definite price although
need not be stated in the contract but it must be
worked out on some premise as was laid down
in the contract. A contract cannot be uncertain.
It must not be vague. Section 29 of the Indian
Contract Act reads as under:
Section 29 - Agreements void for uncertainty
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Agreements, the meaning of which is not
certain, or capable of being made certain, are
void.
A contract, therefore, must be construed so as
to lead to a conclusion that the parties
understood the meaning thereof. The terms of
agreement cannot be vague or indefinite. No
mechanism has been provided for interpretation
of the terms of the contract. When a contract
has been worked out, a fresh liability cannot
thrust upon a contracting party."
{[See also New India Assurance Company Ltd. v. Nusli Neville
Wadia and Anr. [(2007) 14 SCALE 556]}.
25. In view of the aforementioned law laid down by this Court, there
cannot be any doubt whatsoever that the circular letters cannot ipso facto
be given effect to unless they become part of the contract. We will
assume that some of the respondents knew thereabout. We will assume
that in one of the meetings, they referred to the said circulars. But, that
would not mean that they are bound thereby. Apart from the fact that a
finding of fact has been arrived at by the TDSAT that the said circular
letters were not within the knowledge of the respondents herein, even
assuming that they were so, they would not prevail over the public
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documents which are the brochures, commercial information and the
tariffs.
26. If the parties were ad idem as regards terms of the contract, any
change in the tariff could not have been made unilaterally. Any novation
in the contract was required to be done on the same terms as are required
for entering into a valid and concluded contract. Such an exercise having
not been resorted to, we are of the opinion that no interference with the
impugned judgment is called for.
27. For invoking clauses 4.1 and 19.5 of the licence agreement, we
may notice that the word ‘prescribed’ is not defined. It has not been
defined even in the Indian Telegraph Act. It has not been defined in the
licence. The said provision unlike clause 18.14 does not use the words
‘from time to time’. A contract entered into by the parties, it will bear a
repetition to state, must be certain. It must conform to the provisions of
the Indian Contract Act. Ordinarily, the word ‘prescribed’ would mean
prescribed by Rules. Section 7(2)(ee) of the Indian Telegraph Act
provides for the Rule making power for the purpose of laying down the
tariff. We may not be understood to be laying down a law that in
absence of any statutory rule framed under the Indian Telegraph Act, no
contract can be entered into. In absence of any statutory Rule governing
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the field, the parties would be at liberty to enter into any contract
containing such terms and conditions as regards the rate or the period
stipulating such terms as the case may be. The matter might have been
different if the parties had entered into an agreement with their eyes wide
open that the circular letter shall form part of the contract. They might
have also been held bound if they accepted the new rates or the periods
either expressly or sub silentio. When on the basis of terms of the
contract, different rates can be prescribed, the same must be expressly
stated. When the word ‘prescribed’ is not defined, the same, in our
opinion, would mean that prescribed in accordance with law and not
otherwise.
The respondent had two options. They were asked to choose one.
Thus, a representation was made that they would be entitled to obtain
lease the equipments (resources) at an R&G basis. Payments have been
made on that basis. The question which would arise for consideration is
as to whether the basis of making a demand itself can be changed. The
answer to the said question, in our opinion, must be rendered in negative.
28. Section 8 of the Indian Contract Act reads as under :
"Section 8. Acceptance by performing
conditions, or receiving consideration--
Performance of the conditions of a proposal, or
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the acceptance of any consideration for a
reciprocal promise which may be offered with a
proposal, is an acceptance of the proposal."
It provides the acceptance of the proposal by conduct as against
other modes of acceptance. It can be divided in two parts - (1)
performance of the conditions of a proposal; and (2) acceptance of any
consideration for a reciprocal promise which may be offered with a
proposal. The latter corresponds to general divisions of proposals into
those which offer a promise in exchange for an act or acts and those
which offer a promise for exchange for a promise. The bills were raised
on the basis of the said premise. They were accepted. The promise on
the part of the appellant was acted upon by the respondent. Appellants,
thus, now should not ordinarily be permitted to take a different stand.
29. This aspect of the matter was considered in Amrit Banspati Co.
Ltd. v. Union of India [AIR 1966 All.104] wherein it was stated :
"Section 8 of the Contract Act provides that
performance of the conditions of a proposal, or
the acceptance of any consideration for a
reciprocal promise which may be offered with a
proposal is an acceptance of the proposal. The
language of the section is rather vague but its
meaning is clear. It is based on the principle
that if an offer is made subject to a condition,
the offence cannot accept the benefit under the
offer without accepting the condition. He
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cannot take the attitude, "I shall accept the
benefit but reject the condition"."
In The Union of India v. Rameshwarlall Bhagchand [AIR 1973
Gauhati 111], it was stated :
"Section 8 provides that performance of the
conditions of a proposal, or the acceptance of
any consideration for a reciprocal promise
which may be offered with a proposal, is an
acceptance of the proposal. According to
Section 2(a) of the Contract Act when one
person signifies to another his willingness to do
or to abstain from doing anything, with a view
to obtaining the assent of that other to such act
or abstinence, he is said to make a proposal;
and Clause (b) of Section 2 states that when the
person to whom the proposal is made signifies
his assent thereto. The proposal is said to be
accepted. A proposal when accepted becomes a
promise. Section 2(f) enacts that promises
which form the consideration or part of the
consideration for each other are called
reciprocal promises."
It was furthermore observed :
"8. Some English decisions were referred to
with approval in the Patna case relied upon by
Shri Dam, I think that those cases have no
bearing on and relevancy to Section 8 of the
Act. It is mentioned on page 59 of the Pollock
and Mulla’s Commentary on the Indian
Contract Act, 8th Edn., that "nothing like the
terms of Section 8 occurs in the original draft of
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the Indian Law Commissioners, nor, so far as
known to us, in any authoritative statement of
English Law" and that the terms of the Section
"appear to have been taken from the draft Civil
Code of New York with slight verbal
alteration". It follows from these excerpts that
the English law has no provision parallel to
Section 8 of the Act and as such recourse to
English decisions for determining the scope of
Section 8 may not be very apposite.
Section 7 and 9 of the Indian Contract Act
describe the various modes in which proposal
may be accepted and if I may say so, Section 8
provides the acceptance of a proposal by
conduct as against other modes of acceptance,
such as verbal or written communication
contemplated by Sections 7 and 9. Therefore,
in a way Section 8 provides undoubtedly a
uniue provision in the Indian Contract Act. It
embraces a case to cite an instance of a reward
offered for the finder of a lost article. If a
person restores found article to the one who
offered the reward, without accepting the
latter’s proposal in any other manner, the act or
conduct or restoration itself is considered
sufficient acceptance of the proposal to merit
the reward. True that it is an ordinary rule of
law that an acceptance of an offer made ought
to be notified to the person who makes the
offer. But since such notification is required
for the benefit of the person making the offer
the latter may dispense with notice to himself if
he deems that course to be desirable. If the
person making the offer to another intimates
him expressly or impliedly a particular mode of
acceptance the offeree can adopt that mode to
conclude a binding bargain. If a man writes to
another to send him certain goods, then the
dispatch of goods would surely amount to
acceptance of the offer."
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In Life Insurance Corporation of India v. Raja Vasireddy
Komalavalli Kamba [AIR 1984 SC 1014], this court on acceptance of
provisions as envisaged under Section 7 and 8 of the Indian Contract
Act, 1872 opined:
"Acceptance must be signified by some act or
acts agreed on by the parties or from which the
law raises a presumption of acceptance."
Chitti on Contract at page 135 talks about the criteria where the
agreement would not be held to be in reply to acts, further agreement is
required. It was stated :
"Even an agreement for sale of land
dealing only with the barest essentials may be
regarded as complete if that was the clear
intention of the parties. Thus in Perry v.
Suffields Ltd. [(1915) 2 Ch.187] an offer to sell
a public-house with vacant possession for
7,000 was accepted without qualification. It
was held that there was a complete contract
even though many important points, e.g. the
date for completion and the question of paying
a deposit, were left open. In another case, a
buyer and seller of corn feed pallets had
reached agreement on the "cardinal terms of the
deal: product, price, quantity, period of
shipment, range of loading ports and governing
contract terms." The agreement was held to
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have contractual force even though the parties
had not yet reached agreement on a number of
other important points, such as the loading port,
the rate of loading and certain payments (other
than the price) which might in certain events
become payable under the contract. And a
publisher’s oral commitment to publish a book
has been held to amount to a binding contract,
even though no details were specified in the
agreement and nothing more precise was said
about the author’s remuneration than that he
was to be paid a royalty to be agreed, or in
default of agreement a fair one. In all these
cases, the courts took the view that the parties
intended to be bound at once in spite of the fact
that further significant terms were to be agreed
later and that even their failure to reach such
agreement would not invalidate the contract
unless without such agreement it was
unworkable or too uncertain to be enforced."
30. In the instant case, the resources to be leased out were subject to
agreement. The terms were to be mutually agreed upon. The terms of
contract, in terms of Section 8 of the Contract Act, fructified into a
concluded contract. Once a concluded contract was arrived at, the parties
were bound thereby. If they were to alter or modify the terms thereof, it
was required to be done either by express agreement or by necessary
implication which would negate the application of the doctrine of
‘acceptance sub silentio’. But, there is nothing on record to show that
such a course of action was taken. The respondents at no point of time
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were made known either about the internal circulars or about the letters
issued from time to time not only changing the tariff but also the basis
thereof.
31. We will assume that the contention of the learned Additional
Solicitor General that the internal circulars are issued for their
application by the local officers. If they have committed a mistake, the
same could be rectified.
32. Indisputably, mistakes can be rectified. Mistake may occur in
entering into a contract. In the latter case, the mistake must be made
known. If by reason of a rectification of mistake, except in some
exceptional cases, as for example, where it is apparent on the face of the
record, mistake cannot be rectified unilaterally. The parties who that
would suffer civil consequences by reason of such act of rectification of
mistake must be given due notice. Principles of natural justice are
required to be complied with. The fact that there was no mistake
apparent on the face of the records is borne out by the fact that even the
officers wanted clarification from higher officers. The mistake, if any,
was sought to be rectified after a long period; at least after a period of
three years. When a mistake is not rectified for a long period, the same,
in law, may not be treated to be one.
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33. Furthermore, what would be the effect of such a mistake must be
determined having regard to the provisions of the Contract Act.
34. It is not a case where the contract is sought to be terminated on the
ground of a mistake. Only a higher rate is sought to be enforced on the
basis of internal circulars.
35. We have noticed hereinbefore the effect of an internal circular.
There is no presumption about their correctness. Presumption of
correctness of documents is provided for in Sections 81 and 84 of the
Indian Evidence Act. Even the contents of a newspaper, as envisaged
under Section 81 of the Indian Evidence Act, would not be presumed to
be correct.
36. Why publications are necessary so as to enable the parties to take
recourse thereto has been considered by this Court in B.K. Srinivasan v.
State of Karnataka [(1987) 1 SCC 658] in the following terms :
"15. There can be no doubt about the
proposition that where a law, whether
parliamentary or subordinate, demands
compliance, those that are governed must be
notified directly and reliably of the law and all
changes and additions made to it by various
processes. Whether law is viewed from the
standpoint of the "conscientious good man"
seeking to abide by the law or from the
standpoint of Justice Holmes’s
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"unconscientious bad man" seeking to avoid
the law, law must be known, that is to say, it
must be so made that it can be known. We
know that delegated or subordinate legislation
is all-pervasive and that there is hardly any
field of activity where governance by delegated
or subordinate legislative powers is not as
important if not more important, than
governance by parliamentary legislation. But
unlike parliamentary legislation which is
publicly made, delegated or subordinate
legislation is often made unobtrusively in the
chambers of a Minister, a Secretary to the
Government or other official dignitary. It is,
therefore, necessary that subordinate
legislation, in order to take effect, must be
published or promulgated in some suitable
manner, whether such publication or
promulgation is prescribed by the parent statute
or not. It will then take effect from the date of
such publication or promulgation. Where the
parent statute prescribes the mode of
publication or promulgation that mode must be
followed. Where the parent statute is silent, but
the subordinate legislation itself prescribes the
manner of publication, such a mode of
publication may be sufficient, if reasonable. If
the subordinate legislation does not prescribe
the mode of publication or if the subordinate
legislation prescribes a plainly unreasonable
mode of publication, it will take effect only
when it is published through the customarily
recognised official channel, namely, the
Official Gazette or some other reasonable mode
of publication. There may be subordinate
legislation which is concerned with a few
individuals or is confined to small local areas.
In such cases publication or promulgation by
other means may be sufficient."
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In Ravinder Kumar Sharma v. State of Assam [(1999) 7 SCC 435],
this Court stated :
"26. Newspaper reports regarding the Central
Government decision could not be any basis for
the respondents to stop action under the Assam
Control Order of 1961. The paper reports do
not specifically refer to the Assam Control
Order, 1961. In fact, the Government of Assam
itself was not prepared to act on the newspaper
reports, as stated in its wireless message.
Section 81 of the Evidence Act was relied upon
for the appellant, in this behalf, to say that the
newspaper reports were evidence and conveyed
the necessary information to one and all
including Respondents 2 and 3. But the
presumption of genuineness attached under
Section 81 to newspaper reports cannot be
treated as proof of the facts stated therein. The
statements of fact in newspapers are merely
hearsay (Laxmi Raj Shetty v. State of T.N.)."
{See also I.T.C. Bhadrachalam Paperboards v. Mandal Revenue
Officer [(1996) 6 SCC 634]}
37. So far as the minimum guaranteed period is concerned, we have
noticed hereinbefore, that the applicability of the Rule is in doubt. Rule
434 provides for charges private and charges for non-exchange lines.
The Tribunal which is an expert body, opined :
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"12. We find grey areas in the submissions
made by both the sides. Firstly, it is not at all
clear whether the lease arrangements entered
into by the petitioner with the respondents were
covered under Rule 434 Section IX or Section
X of Indian Telegraph Act. Rule 434 Section
IX and Section X deal with charges for Private
Wires and Non-Exchange Lines, respectively.
These two terms, viz. "Private Wires" and
"Non-Exchange Lines", have been defined
under the Indian Telegraph Rules as under :
"Rule 2(II) : Private Wires are those
which connect two subscribers through a
departmental exchange system whether a
private relay set is installed at the
exchange or not and are not connected to
the local telephone system and to the
general trunk net work;
*
Rule 2(33a) : Non-exchange lines’ are
those which connect two subscribers
without any departmental exchange
intervening."
From the application forms annexed by the
petitioner to its petition, it may be seen that
what was asked for was Data Circuit. Such
circuits were more in the nature of long-
distance telephone circuits between two cities
as may be evidenced by the following list of
leased lines obtained by the petitioner which
have been listed in the petition :
Lease Circuits Obtained
in
1. Cochin - Thiruvananthapuram January
1997
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2. Cochin - Thiruvananthapuram July 1997
3. Cochin - Calicut January
1997
4. Cochin - Calicut July 1997
5. Cochin - Thrissur February
1997
6. Cochin - Thrissur August 1997
7. Thiruvananthapuram - Kollam November
1997
8. Calicum - Kannur November
1997
9. Cochin - Kottayam November
1997
10. Cochin - Kollam January 1998
11.Cochin - Kannur February
1998
12. Cochin - Thiruvalla May 1998
13.Cochin - Palakkad May 1998
14.Thrissur - Kunnamkulam June 1998
15.Thrissur - Palakkad June 1998
The leased data circuits taken by the petitioner
were between two exchanges of DoT/BSNL at two
different cities. Thus, it is difficult to accept the
contention that the circuits leased between two
exchanges of BSNL located in two different cities
were covered within the ambits of "Private Wire"
or "Non-exchange Lines" as defined under Indian
Telegraph Rules. Consequently the applicability
of Rule 434 in the instant is not warranted.
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12A. We have taken note of the contention of
Respondent No.1 that by its order dated 17th June,
1988 the minimum priod of hire for 2 Mbps lines
was 3 years and the hirer was required to pay for
the entire period in case of premature surrender.
The relevant question is whether this was made
known to the petitioner or the petitioner was
expected to have a knowledge of this. From the
copy of the Order No.4-31/86-R(Pt.) dated 17th
June, 1988 placed on record by Respondent No.1,
it is seen that it is a Circular issued by one Shri
D.V.B. Rao, Assistant Director General (Costing),
Rates Section, Department of Telecommunicatiosn
and addressed to All Heads of Telecom Circles;
All Heads of Metro, Major and Minor Telephone
Districts; General Manager, MTNL, Bombay/New
Delhi. Copies were endorsed to a host of officials,
all belonging to the Department of
Telecommunications. It was, therefore, basically
an office circular for internal use and not a
document released to the general public.
XXX XXX XXX
15. As a result of all that is stated in the earlier
paragraphs we hold that it has not been
conclusively established that the contracts for
leased data circuits between the petitioner and the
respondents were covered under Rule 434 of the
Indian Telegraph Rules and that the minimum
guarantee period and penalties for premature
surrender, as indicated in Rule 434 were applicable
to these contracts. We also hold that the petitioner
had no reason whatsoever for the non-observance
of Rule 475-A of Indian Telegraph Rules in view
of its categorical undertaking to abide by the
provisions of these Rules."
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38. Prima facie, the proviso appended to Section 9 and Section 10
providing for a minimum guaranteed period of three years does not
appear to have any application. The authorities of the DOT also did not
think so. They proceeded on the basis of and having regard to the
phraseology used in Rules 478 and 496 that minimum period is only
three months.
39. Applicability of minimum guaranteed period of three years was
sought to be enforced from a circular letter dated 17.6.1988 only. The
effect of the said circular letter has been discussed hereinbefore.
We have furthermore noticed the vacillating stand taken by the
appellants herein in the case of C.G. Faxemail. They sought to charge
the double of the amount as prescribed in the contract on the basis that
the service which is being provided by them is close user group service.
TRAI held it not to be so. TRAI, as noticed hereinbefore, relied upon
two circulars only, namely 13.7.1985 and 22.11.1996, the latter one
being after the contract was entered into. TDSAT, apart from holding
that the said circular letters are internal documents, did not deal with the
internet service providers.
40. It thereafter relied upon the circular letter dated 15.4.1998 and not
on the circular letter dated 3.6.1995, the former having no application to
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a contract which was entered into prior thereto. Even the said letter
provided for three months minimum guarantee period for long distance
lease lines. Even DOT raised three months demand notice on or about
26.11.1998.
41. Yet again, the DOT in its letter dated 13/14.1.1999 confirmed that
paragraph A of the circular letter dated 26.11.1998 referred to Rule 496.
The parties were not ad idem as to whether these circuits being long
distance lease lines would be governed by which circular. Furthermore,
the authorities of the DOT, assuming that they are applicable, despite the
circular letters, consciously entered into contract for one year’s period on
which the parties had acted thereupon.
42. A finding of fact has been arrived at by TDSAT that the said
circular letters are not applicable. Rule 434 was not applicable. Appeal
to this Court, in terms of Section 18 of the Act is maintainable only on a
substantial question of law.
43. For the reasons aforementioned, we do not find that these appeals
raise any substantial question of law warranting interference. The
appeals are dismissed accordingly. However, in the facts and
circumstances of the case, there shall be no order as to costs.
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.....................................J.
[S.B. Sinha]
..................................
...J.
[Lokeshwar Singh Panta]
New Delhi;
May 14, 2008