Telecom Disputes Settlement Tribunal
Bpl Mobile Cellular Limited vs Bsnl And Ors. on 1 April, 2003
ORDER
1. These two identical petitions have ben filed by M/s BPL Mobile Cellular Ltd. and M/s Escotel Mobile Communication Ltd. who are licensed by the Department of telecommunications to provide Cellular Mobile Service in Kerala Telecommunications Circle. Their common grievance against the Union of India/BSNL is that inspite of an agreed arrangement for payment of rental on capital cost basis for the facility of "end links" to interconnect their own Mobile Switching Centres with the Exchanges of Bharat Sanchar Nigam Ltd. (BSNL) so that subscribers of both the Service Providers are BSNL could be connected, BSNL had unilaterally revised the terms of payment after some time and demanded additional amounts on much higher flat rate basis which were unjust and unwarranted. Both the petitions have been filed under Section 14 of the Telecommunication Regulatory Authority of India Act, 1997 which provides for a dispute between two service providers to be brought up before the Telecom Disputes Settlement and Appellate Tribunal for consideration.
2. The facts of the case are briefly as under. M/s BPL Cellular Ltd. (Petitioner in Petition No. 13) was granted a licence on 19.12.1995 by Department of Telecommunications to provide Cellular Mobile Telephone Services in Kerala Circle. Similarly M/s Escotel Mobile Communication Ltd. (Petitioner in Petition No. 16) was granted a licence on 12.12.1995 to provide Cellular Mobile Telephone Services in Kerala Circle. Both the licences visualized that the networks of the Petitioners and those of the Respondents (DoT/BSNL) would need to be interlinked on the basis of mutually agreed terms so that the subscribers of both the Petitioners and the Respondents remain connected. The interconnection-seekers themselves supplying the equipments for the interconnectivity under the "Contributory work" basis or the DoT/BSNL providing the same under "Rent and Guarantee" (R&G) basis. The grievance of M/s BPL Mobile Cellular Limited (Petitioner in Petition No. 13/2001) is that inspite of indicating clearly to DoT that they would provide the equipments worth Rs. 30 lakhs in pursuance thereof, the DoT informed them at a late stage that the interconnection facilities would be only on "Rent and Guarantee" basis. Thereafter, DoT started charging the Petitioner rent under Rent and Guarantee scheme on capital cost basis. However, after a period of two years of charging rent on capital cost basis the Petitioner was informed that the charges were to be on flat rate basis at a much higher rate and additional demands, including arrears for the past two years were raised. This according to the Petitioner is not only arbitrary but also a violation of the contractual arrangements entered into by both the parties.
3. M/s Escotel Mobile Communication Limited (Petitioner in Petitioner No. 16/2001) has an identical grievance in the sense that DoT insisted upon providing interconnection links only on Rent and Guarantee basis even though the Petitioner was inclined to opt for the "Contributory work" basis. Here again, after charging rent on capital cost basis for a period of two years the basis was changed to a higher flat rate. Both the Petitioners have claimed that such an unilateral action on the part of the Respondents is both unjust and unwarranted. They have further claimed that DoT had permitted interconnection in all Telecommunication Circles on Contributory work basis without insisting on Rent and Guarantee basis, excepting in Kerala Circle. This action by itself had pushed up their project costs and had also led to non-utilisation of procured imported equipments.
4. It is the case of both the Petitioners that the published information in regard to such charges which is available to general public is contained in a publication called "Commercial Information on Leased Circuits" which was brought out by the Department of Telecommunications in June 1995. Para 7.0 of that publication reads as under:
"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 Guarantors/subscriber.
In contributory works the installation and maintenance charges are levied on percentage of capital cost of the Apparatus and Plants."
5. The contention of the Petitioners, therefore, is that the charges which could be levied on Rent and Guarantee basis (R&G) have to be necessarily calculated on capital cost basis and can be revised to flat rate only after the end of the guarantee period which in the instant cases is for 10 years. Petitioners have further alleged that they were prevented from opting for the Contributory Works scheme by DoT, ostensibly because of the hostile attitude taken by the DoT employees in Kerala Circle. Subsequently when they had no other option but to accept the Rent and Guarantee Scheme of DoT, they were given to understand during their meetings with concerned DoT officials that they would have to pay Rent and Guarantee on capital cost basis, i.e., on the basis of cost of equipments, together with service charges. An amount between 20% to 30% towards service charges was to be computed for a period of ten years and the same was to be paid in equated instalments per annum over a period of ten years. This understanding was confirmed by the information contained in the publication brought out by DoT itself called "Commercial Information on Leased Circuits" which laid down Capital Cost as the basis. Even though there were no specific contractual documents specifying the manner of computation of annual rental amounts to be paid for facilities to be provided, both the Petitioners received annual bills for the first two years which more or less conformed to this pattern of computation of annual rent on capital cost basis for the equipments taken on R&G basis. However, in May 1999 the Department revised the rates drastically upwards and simultaneously advised the Petitioners to pay the arrears for the last two years for which supplementary bills were raised. Several representations in writing and in person were made by the Petitioners against this revision of rate without any avail. Since the authorities threatened to disconnect the interconnection facilities unless at least 30% of the amounts demanded were paid, the Petitioner in Petition No. 13/2001 (M/s BPCL Mobile Cellular Limited) paid an amount of Rs. 23,46,570/- under protest and reserved its rights to challenge the demand.
6. Petitioner in Petition No. 16/2001 (M/s Escotel Mobile Communications Ltd.) decided to challenge the decision of DoT in Kerala High Court in June, 1999. Vide its judgment dated 14th June 1999, the High Court directed the Petitioner to pay 1/3rd amount of the disputed amount charged by the Respondent and stayed the payment of the balance amount.
7. The Petitioner accordingly complied with the directions of the High Court and deposited the amount. Since the officials of DoT raised fresh demands on the same basis again in January 2000, the petitioner approached the Kerala High Court again. The High Court, vide its order dated 18.1.2000 stayed the demand notes. Since the demands persisted, the petitioner filed a series of petitions before the High Court and also invoked its writ jurisdiction. Finally, the High Court vide its Order dated 14th June 2001 noted that the jurisdiction in this respect rested with Telecom Disputes Settlement & Appellate Tribunal and permitted the Petitioner to withdraw the Petitions and move the Tribunal for redressal of its disputes. The High Court also ordered the maintenance of status quo.
An identical judgment was given by the Kerala High Court on the same day in several original petitions and writ applications which had been filed by M/s BPL Cellular Limited against the DoT on the same grounds.
8. Both the Petitioners approached this Tribunal through separate Petitions in July 2001. The Tribunal ordered maintenance of status quo till further orders.
9. 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. The Petitioners averred that the Respondent unilaterally abrogated the contractual arrangements in this respect which were in operation without any dispute for two years and that the Respondent was now claiming the existence of certain non-statutory orders/circulars/instructions in support of such arbitrary action which, in any case, were not made known to the Petitioners at any stage. They also contended that the published information issued by the Department of Telecommunications was clear about the basis of calculation of annual rentals and that while raising the demand notes the Department also continued to charge the annual rentals on Capital Cost basis for a period of two years without any demur. The raising of demand notes and their payments in time constituted a valid contract which could not be unilaterally abrogated.
10. M/s Bharat Sanchar Nigam Limited (BSNL), which has now been vested with the authority and responsibility of running and maintaining all the telecommunication services which were being directly run by DoT, has stressed, on behalf of the respondents in both the cases, that the petitioners were fully aware that as per condition 4.1 of Part-III of the Licence Agreement they were to be charged as per the prevalent rules and guidelines of DoT on the subject. The relevant portion reads as under:-
"Condition 4 : INTERCONNECTION WITH NETWORK OPERATED BY DoT AND MTNL".
The resources required for the operation of services for extending them over the network of the DoT & 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 charges of the traffic passed through these resources shall be treated on the basis of the prevalent rules and guidelines of DoT on the subject."
11. The Respondent has pointed out that the rules and guidelines of DoT are provided in the Telecommunications Manual and that Rule 237 of Chapter VIII of the Telecom Manual Vol. XIX (Part-I) clearly provides that in certain cases charges are liable to be levied on the basis of a flat rate or on the basis of capital cost, whichever is higher. The relevant rules 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 definitely laid down that standard flat rate should be charged."
12. The Respondent has further drawn attention to the relevant circulars and orders of DoT which lay down that rental in such cases shall be calculated on the basis of capital cost or on the basis of flat rate, whichever is higher. Two Circulars - one dated 3.11.1993 and the other dated 30.1.1996 - have been placed on record in this respect. The relevant portion of the Circular dated 3.11.1993 reads as under:
"In cases where new construction or installation is involved for the whole or the part of the circuit (including local lead), 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 as above whichever is higher". This circular lays down the tariffs for 64 kbps and 2 mbps data circuits on digital transmission media. The circular dated 30.1.1996 which lays down the tariffs for provision of 34 mbps circuits contains an identical provision.
The Respondent has claimed that the Petitioners were fully aware of these circulars as well as the provisions in the Telecom Manual and cannot plead ignorance of the same at this stage. Telecom Manual, it has been stated by the Respondent, is a published document available to all and, even though the office circulars of DoT were basically internal documents, the gists of the same were available in a publication entitled "Swamy's Treatise on Telephone Rules".
13. The Respondent has further contended that the interpretation of the term "Contributory Work" made by both the Petitioners in their Petitions is erroneous. It has been submitted that the concept of "Contributory Works" only envisages a situation where the licensee is required to pay for the entire cost of installation of any facility in advance. As against that, the payment on Rent and Guarantee basis envisages payment in instalments spread over an agreed period of time. It is therefore the contention of the Respondent that "Contributory Works" do not imply that the licensee will be allowed to supply its own equipments, even though as a special case in certain circumstances such permission can be granted.
14. Finally, according to the Respondent, the rental charged on the basis of capital cost for two years was an inadvertent error and the subsequent revision of rental on the basis of flat rate was only rectification of that error.
15. During the hearings, the learned Counsel for the Petitioners, Sri C.S. Vaidyanathan, argued that even though there were no specific contracts formally drawn up between the parties, by issuance of the bills for a particular amount for the facilities taken by the Petitioners and on the payment thereof there was complete consensus between the parties regarding the rent payable, translating them into binding contracts between the parties which could not be unilaterally altered by any party. Other points urged by him for consideration were as under:
a) Telecommunication Manual and internal office circulars are basically office documents meant to aid and assist the departmental officials in the discharge of their official functions. These are not priced publications made available to the general public by the Department of Telecommunication and unlike the Indian Telegraph Act and the Rules framed thereunder, these do not have any statutory authority;
b) Indian Telegraph Act, 1885 and Indian telegraph Rules, 1951 which are admittedly applicable to the Petitioners in terms of the licences held by them under the Indian Telegraph Act do not have any provision to charge rental either on the basis of fat rate or capital cost, whichever is higher, for obtaining interconnection facilities of the type obtained by the Petitioners from the Respondent on R&G basis;
c) "Commercial Information on Leased circuits", which was a publication brought out by the Respondent specifically for the information of interested people and parties like the Petitioners, specifically provided that the R&G charges will be on capital cost basis and only after the expiry of the guarantee period the flat rate or capital cost, whichever is higher, would be charged. The Petitioners had no reason to believe that there were internal instructions to the contrary, particularly when for two years the Respondent raised the demands exclusively on capital cost basis;
d) The demands subsequently raised are arbitrary and unjust insofar as there is no nexus between the flat rate and the capital cost. In some cases, the annual charges on flat rate basis are almost 15 times of the charges on capital cost basis. Providing facilities for interconnection on reasonable terms is not an act of charity, but an act of friendly help which is expected from a Public Sector Giant like BSNL; and
e) The judgment and order passed by Telecom Disputes Settlement & Appellate Tribunal (TDSAT) in Petition No. 12/2001 wherein it was held that internal letters/circulars of DoT are not enforceable against private parties until and unless they are made public in accordance with the Indian Telegraph Act is squarely applicable in this case also.
16. An interesting point bought out by the learned counsel of the Petitioners was that in the Telecommunication Tariff order, dated 9.3.1999 issued by the Telecommunication Regulatory Authority of India (TRAI) it has been asserted that R&G Tariff would have to be cost-based and not on arbitrary norms. Accordingly TRAI has laid down that with effect from 1.4.1999 the flat rate chargeable for 2 mbps circuits upto 5 kms. would be Rs. 55,820 per annum. For the corresponding circuit the Respondent is currently charging Rs. 15,00,000/- per annum. Similarly the flat rate now prescribed by TRAI under TTO, 1999 for 34 mbps circuits upto 5 kms. is Rs. 8,93,120/- per annum as against Rs. 51,00,000/- being charged by the Respondent. The Counsel for the Petitioners therefore was of the view that the Respondent was clearly extracting an unjust amount from the Petitioners which had no nexus to the various cost elements. He also drew attention to the fact that the Department of Telecommunications also issued a Tariff Circular No. 41999 dated 13.4.1999 which stipulated that all such interconnection links should be charged on Capital cost basis and not on the flat rate basis. A copy of the said Tariff Circular was also placed on record.
17. Shri Maninder Singh and Shri Ankur Talwar, the learned Counsel for the Respondent reiterated that the licence agreements which were signed by the Petitioners specifically stipulated that for all the resources/facilities taken by them from the Respondent would have to be paid separately as per the prevalent rules, guidelines or rates of DoT and that there were unambiguous existing instructions regarding the rates and terms under which such facilities were made available to the Petitioners. Inadvertent errors which had crept in during the first two years were subsequently rectified and this act of rectification was neither illegal nor unjust. as regards the principles of rent "fixation and the flat rates prescribed in Telecommunication tariff Order (TTO) dated 9.3.1999 the Counsel for the Respondent drew attention to the fact that no retrospective effect, prior to 1.4.1999 had been given to these and that earlier rates, as applicable, were still valid for those cases.
18. 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 calculation of rental for leased circuits under the Rent and Guarantee Scheme. 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. In fact, our attention has been drawn to DoT's Order No. 1-2/89-R/pt. dated 18.2.1991 which states inter alia ".....it has been decided that in respect of all the R&G cases,final rental should normally be quoted before the commissioning of the service. In case where the same could not be done in certain unavoidable circumstances, the rental quoted within one year of commissioning of the service. Necessary hiring contract should be obtained in all cases and this stipulation should be clearly incorporated therein". As already stated, the Department of Telecommunications did not adhere to these stipulations while raising the demands for two years. On the other hand, the raising of demand notes on capital cost basis for two years suggests clearly that there was indeed common understanding in regard to this. 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.
19. 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. 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. DoT's Order dated 18.2.1991 is fairly specific that final rentals have to be quoted before the commissioning of service; the outer limit in the case of unavoidable circumstances is one year from the commissioning of service. The Respondent failed on both counts.
20. We must also record our dismay at the manner in which flat rates for the annual rental under R&G scheme were fixed by the Respondent. It is nobody's case that such rentals should not have any profit or cost plus element. However, the rates fixed by Respondent, when viewed against the rates fixed by TRAI vide Telecommunication Tariff Order dated 9.3.1999, do seem to suggest that these were indeed pegged at a very high level.
21. 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. Excess amounts collected should be refunded to the Petitioners. The Respondent will however have the option to adjust the excess amounts so computed against future rentals. These Petitions are accordingly allowed with costs. Counsel fee Rs. 10,000/- a set.