Full Judgment Text
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CASE NO.:
Appeal (civil) 5050 of 2002
PETITIONER:
DEPARTMENT OF TELECOMMUNICATION AND ANR.
RESPONDENT:
CELLULAR OPERATORS ASSOCIATION OF INDIA AND ORS.
DATE OF JUDGMENT: 04/03/2003
BENCH:
S. RAJENDRA BABU & DR. AR. LAKSHMANAN
JUDGMENT:
JUDGMENT
2003 (2) SCR 547
The Judgment of the Court was delivered by
RAJENDRA BABU, J. Pursuant to a tender notice issued on 16.1.1995 the
appellants granted licences to various cellular operators on terms and
conditions mentioned therein. The Licence Agreement provided that the
licence has to pay the prescribed fee in advance in terms of Schedule B
thereof and the period of licence was initially for 10 years. The licencee
was obliged to install and run the system within 12 months of the effective
date which is defined in the licence. The Agreement also provided that in
case of failure to pay the licence fee within the prescribed time interest
shall be charged on the amount due at certain rate. The New Telecom Policy
[1999] NTP 99 was introduced thereafter which was known as ’migration
package’ and was offered to various licencees as set out in their letter
dated 22.7.1999 which was accepted unconditionally by the members of
respondent No.l and other licencees on 26.7.1999. In the NTP, under the
migration package it was stated that the effective date is postponed by
about six months for payment of licence fee. Demands were raised on the
basis that modified effective date is applicable only to licence fee and
not to interest that had already accrued. The amounts were also paid by the
cellular operators as demanded. Thereafter several representations were
made stating that the charging of interest is not permissible as license
fee had not become due in view of the notional extension of the effective
date. However, the appellants having stuck to their stand as set out in
their demand, the respondent filed a petition on 26.6.2001 before the
Telecom Disputes Settlement & Appellate Tribunal [hereinafter referred to
as ’the Tribunal’] challenging, inter alia the demand of interest without
making any adjustment on account of notional extension of the effective
date by six months. The Tribunal accepted the stand of the cellular
operators and directed the appellants to modify their demand subject to
certain other incidental directions. This order is in challenge before us.
Schedule B to the License Agreement provides for definition, interpretation
and transitional provisions relating to the conditions. Clause l(j) defines
’effective date’ as under:
"Effective date" is the date by which the licensing agreement comes into
effect and the "effective date" is reckoned with effect from the date the
license agreement is signed after payment of appropriate component of
licence fee.
In the present case, the effective date is 12.12.1995 which stood extended
to 12.6.1996.
The licence fee is due to be paid in a lump sum prior to signing of the
License Agreement for the first year and for the subsequent years it was
payable in quarterly instalments in advance. In NTP-99, the migration
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package provided that the licencee will be required to be paid (1) one time
entry fee and (2) licence fee as a percentage share of gross revenue under
the licence. The entry fee chargeable will be the license fee dues payable
by the existing licencees upto 31.7.1999 duly adjusted consequent upon
notional extension of effective date as per the conditions of the existing
licence. The licence fee as a percentage of gross revenue under the licence
shall be payable with effect from 1.8.1999.
The dispute between the parties is in relation to payment of interest.
While the stand of the appellants is that the relevant clause providing for
the effective date which has been extended notionally for a period of six
months is only for the purpose of payment of licence fee and not in respect
of the interest which had accrued upon the licence fee which was to be paid
under the original licence while it is the stand of the cellular operators
that inasmuch as the effective date for calculation of the outstanding
licence fee has been extended by a period of six months the interest will
have to be calculated not from the original date but from the extended date
and unless licence fee became due the question of payment of interest would
not arise.
The relevant provision of the migration package as set out in the letter
dated 22.7.1999 are as follows.
"(iv)A total of at least 35% of outstanding dues including interest payable
as on 31.7.99 and LD charge in full will have to be paid on or before
15.8.1999. The amount paid, if any, against the earlier demand send under
letter dated 25.1.1999 for paying 20% or more of the outstanding dues, may
be adjusted at licensee’s option. The balance dues will have to be paid on
or before 31.1.2000 alongwith interest calculated upto the actual date of
payment.
(ix) For the purpose of calculation of outstanding licence fee upto
31.7.1999, the effective date of all the licenses of Cellular Telecom
Circle and Basic Telephone Services will be notionally extended by a period
of six months. This date does not apply to metro cellular licences. This is
with the further condition that where extension of effective date has been
given earlier due to whatever circumstances, further extension will be
given after deducting the period of extension already given subject to the
total extension period not exceeding six months. In cases where extension
of period of more than six months has already been given there will be no
further change.
(x) The liquidated damages as per the existing licence agreement shall be
paid latest by 15.8.99.
(xi) The period of licence shall be 20 years starting from the effective
date of the existing license agreement."
The learned counsel on either side have adverted to several decisions but
in our view none of these decisions have a bearing on the issues to be
decided in the present case as they turn upon the language of the License
Agreement and its provisions.
It is no doubt true, as contended for appellants that the effective date is
defined under the original licence under clause l(i) which is to be
reckoned from the date the License Agreement is signed after payment of
appropriate component of licence fee. By reason of NTP-99 and the migration
package the effective date stood extended by a period of six months. That
means the effective date becomes a date which is after six months thereof
thus, there is a substitution of the date of reckoning the licence fee.
Whether it results in reduction of any licence fee payable or not is not
for us to examine in the present proceeding. All that we are concerned in
the present case is whether cellular operators are liable to pay interest
without reference to the extended effective date as demanded by the
appellants. The Department’s stand is that the expression "for the purpose
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of calculation of outstanding licence fee" used in clause (ix) will only
cover licence fee as such and not outstanding interest. But this argument
baffles ail logic. The licence fee becomes due and payable from the
effective date. When the effective date stood postponed by a period of six
months then that is the date from which the licence fee will have to be
reckoned and appropriate calculation made both for purposes of licence fee
and interest. Unless the licence fee becomes due the question of payment of
interest will not arise. However, the learned Additional Solicitior General
submitted that there are two components, namely, the licence fee and
interest which was payable. In respect of one component the effective date
was extended but not in respect of the other. But payment of interest is
dependent upon the licence fee becoming due. Interest is not independent of
the licence fee and when the licence fee had to be paid from a particular
date, the interest would not accrue from a date prior to the licence fee
becoming due for payment. In that view of the matter, we think the view
taken by the Tribunal is correct and no interference is called for.
However, in regard to the relief granted by the Tribunal we think the
direction should be modified. The direction to the authorities will now
read as follows:
We direct the appellants to modify the demand issued to the respondents to
the extent it is found to charge higher amount of licence fee or interest
on the principles set out by us in this order. The excess amount which is
liable to be refunded to the respondents shall be adjusted towards
outstanding or future dues and if still any amount becomes due to them the
same shall be refunded at the relevant bank rates. In other respects the
direction given by the Tribunal stands maintained.
The appeal is thus dismissed subject to the modification made in the course
of this order.