Madras High Court
Tata Consultancy Services Limited vs Bharat Sanchar Nigam Limited on 28 August, 2017
Author: M.Sundar
Bench: M.Sundar
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 28.08.2017 CORAM THE HONOURABLE MR.JUSTICE M.SUNDAR W.P.No.35091 of 2005 Tata Consultancy Services Limited, Rep. By its Vice President, 17, Cathedral Road, Chennai 86. ... Petitioner Vs. 1.Bharat Sanchar Nigam Limited, Rep. By the Deputy General Manager (LD), Chennai Telephones, 70, Ritherdon Road, Vepery, Chennai 7. 2.Chief Accounts Officer (TR-LD), Bharat Sanchar Nigam Limited, Chennai Telephones, 70, Ritherdon Road, Vepery, Chennai 7. ... Respondents PRAYER: Writ Petition filed under Article 226 of Constitution of India praying to issue Writ of certiorarified mandamus to call for the records of the first respondent in communication CO(LC1)/DC/86/29, dated 17.06.2005 read with the order of the second respondent by communication bearing reference DGM(LD)/AOTR(LD)/TCS/05-06, dated 24.06.2005 and quash the said orders in so far as it effects revision in rental of 6 fibre optical cable facility and seeks to adjust the purported arrears payable upon revision in rent and compensation towards surrender against the amounts due to the petitioner in respect of other facilities, and for a consequential direction to the respondents to refund to the petitioner the sums due in respect of other facilities unconnected with the 6 fibre optical cable facility. For Petitioner : Mr.Yashod Vardhan, SC for Mr.Sundar Narayan For Respondents : Mr.S.Vijayakumar, SCGSC COMMON ORDER
The writ petitioner herein, namely, Tata Consultancy Services Limited is hereinafter referred to as TCS for the sake of brevity. The two respondents herein are collectively referred to as BSNL for the sake of brevity (BSNL stands for Bharat Sanchar Nigam Limited).
2. Subject matter of the writ petition pertains to hiring of 6 Fibre Optical Cable facility between the premises of TCS at Kumaran Nagar, Old Mahabalipuram, Sholinganallur, Chennai, and Perungudi Exchange of BSNL on Rent and Guarantee basis, which is referred to as R&G basis for the sake of brevity.
3. The above said R & G arrangement for 6 Fibre Optical Cables between the above said two terminals of the petitioner and BSNL is hereinafter referred to as said facility for the sake of convenience and clarity.
4. The terms under which the facility was given by BSNL to TCS is recorded in an agreement dated 18.11.1998. It is not in dispute between the parties that this agreement is for a period of 10 years. In other words, it is for the period from 18.11.1998 to 17.11.2008. It is also not in dispute between the parties that the said facility was commissioned/made functional and the service was commenced on and with effect from 01.03.1999.
5. Turning to the terms of the said facility on R&G basis, it is to be noted that the agreed annual rent is Rs.8,02,065/-. There is also a Clause in the agreement dated 18.11.1998 to the effect that R&G terms set out therein will be treated as final subject to only one exception. That one exception is, if it becomes necessary to revise the R&G terms, the same shall be done before the service is provided by preparing a revised or supplementary estimate fully covering the cost of the work. For the sake of convenience, I hereby extract Clause 2 of the agreement dated 18.11.1998, which reads as follows:
2. We understand that the rent and guarantee terms quoted above will be treated as final subject to the condition that in case it become necessary to prepare a revised or supplementary estimate to fully cover the cost of the work before the service is provided the Rent and Guarantee terms are liable to be revised to be taking into account the anticipated revised cost of the work and such revised terms will be binding on us. (underlining made by me to supply emphasis)
6. In the course of this order, one more Clause in the agreement dated 18.11.1998 is relevant, the same is Clause 5 and therefore, I deem it appropriate to refer to Clause 5 also. Clause 5 reads as follows:
5. In case the facility provided is surrendered within the specified guarantee period mentioned in para (1) above, we agree to pay full compensation to your Department according to DOT rules and the terms of the guarantee.
7. It is not in dispute that immediately after the agreement, the annual R&G for the said facility was revised from Rs.8,02,065/- to Rs.9,93,033/- from December, 1998, and this was the bill amount that was being paid by the TCS. On this aspect also, there is no dispute between the parties.
8. When things stood as above, BSNL raised a bill on TCS. This bill is dated 12.08.2004. In this bill, the claim is towards rent for the period from 01.03.1999 to 31.03.2005. To be noted, what has been claimed in the bill is short claim of rent for the aforesaid period, which is Rs.30,28,209/-. As aforesaid, it is not in dispute between the parties that Rs.9,93,033/- has been duly paid and that this aforesaid claim under the head 'short claim of rent' is after giving credit to the annual rent paid by the TCS at the above rate of Rs.9,93,033/- per annum.
9. Mr.R.Yashod Vardhan, learned Senior counsel, for Mr.Sundar Narayan, counsel on record for the petitioner, would draw my attention to the aforesaid bill and say that the annual R&G has been unilaterally raised. After this bill, there has been a series of correspondence between the TCS and BSNL on this unilateral bill. I am not referring to all the communications to avoid this order becoming verbose, more so as I am inclined to dispose of this writ petition on a principle rather than on any numerical calculations and computations.
10. One communication is important and that is letter dated 31.12.2004/01.01.2005, being a letter from BSNL to TCS bearing reference No.DGM(LD)/AOTR(LD)/TCS/04-05. In this letter, the BSNL has clearly set out three reasons which necessitated the enhancement of the annual R&G charges. Therefore, I deem it appropriate to extract the relevant portion of this communication, which reads as follows:
In this regard, the undersigned is directed to indicate that the estimate was revised in view of the following:
i) The road re-instatement charges provided in the estimate got revised as the charges initially taken was for Panchyat roads where it should have been for State Highway Road.
ii) The provisional length of the cable was taken as 10 Kms while preparing the estimate for quoting the provisional rentals. However, the actual length of cable laid is more about 700 mtrs.
iii) There was a huge increase in the labour charges initially envisaged in the original estimate to that of the final one.
11. The aforesaid three reasons speak for themselves. I am not going into the correctness or otherwise of the same as they turn so heavily on facts that the same cannot be done in a writ petition that is being decided on affidavits. I shall test on a demurrer whether the claim is tenable in terms of contract principle.
12. Thereafter also there have been certain communications that have been exchanged between the TCS and BSNL. Ultimately, a communication dated 17.06.2005 bearing reference No.CO(LC.1)/DC/86/29 from BSNL to TCS has been issued and the same is hereinafter referred to as 'first impugned order' for the sake of convenience and clarity.
13. In this first impugned order, BSNL categorically admits that the revision of R&G rental was communicated to TCS after a lapse of six years. However, BSNL has made an attempt to explain the same by stating that this was due to certain unavoidable administrative reasons, which in turn was owing to delay in obtaining necessary approval from the competent authority as per the internal procedure.
14. Mr.S.Vijayakumar, learned standing counsel for BSNL fairly submits that there has been a delay in communicating the revision of R&G rental. However, relying on the first impugned order, it is stated that it is only because of internal procedure.
15. Per contra, Mr.Yashod Vardhan, learned Senior counsel for the petitioner would draw my attention to an office memorandum of BSNL (erstwhile DOT) bearing reference No.1-2/89-R/Pt., dated 18.02.1991, wherein it has been set out that in cases of such nature, the final rental quoted should be communicated within one year of commissioning of services. In this case, commissioning of service was on 01.03.1999 and therefore, upward revision on the annual R&G charges if any ought to have been communicated to TCS on or before 31.03.2000.
16. While not disputing this office memorandum, Mr.S.Vijayakumar, learned standing counsel for the BSNL would draw my attention to another office memorandum dated 15.04.1991, wherein it has been said that the rental shall have to be calculated on capital cost basis.
17. What is the basis on which the rental was hiked is not what I am examining in great detail and considering that this is a writ petition assailing revision of R&G charges post provision of service, that too by a delayed communication contrary to the terms of the agreement 18.11.1998 between the TCS and BSNL and the aforesaid Office Memorandum. However, it was pointed out that 15.04.1991 memorandum pertains to Very High Frequency (VHF) and would not be attracted to the instant case. Be that as it may, the three grounds for upward revision have already been extracted supra from the communication dated 31.12.2004/01.01.2005 of the BSNL.
18. The point is, all the above said three reasons were available even before commissioning of service on 01.03.1999. It is not as if these three reasons surfaced post commissioning. Therefore, there is no valid ground for not communicating the same prior to 01.03.1999. Further, it is not even immediately after 01.03.1999, but there has been admitted delay, lapse of six years, which remains unexplained. To be noted, Office Memorandum alluded to supra says it should be within one year.
19. This takes me to the next aspect of the matter, which turns on Clause 5 of the agreement dated 18.11.1998 between the parties for providing the said facility. Clause 5 has already been extracted supra along with Clause 2. As per Clause 5, if the facility is surrendered within 10 years period, TCS will have to pay full compensation to the BSNL according to the DOT rules and terms of the guarantee. DOT rules are not produced before this Court. To be noted, TCS has written to BSNL on 01.03.2005 stating that they are surrendering said facility with effect from 01.04.2005.
20. Under the circumstances stated supra, BSNL issued one more communication dated 24.06.2005 bearing reference No.DGM(LD)/AOTR(LD)/TCS/05-06, which is hereinafter referred to as 'second impugned order' for the sake of convenience and clarity.
21. In and by the aforesaid second impugned order, BSNL has adjusted the differential R&G annual rent towards the credit of TCS. In other words, the second impugned order is merely a consequential order and therefore, it's fate will depend whether the first impugned order survives or not.
22. Owing to the discussions supra and particularly owing to the reasons of the grounds on which the enhancement has been made by BSNL were available well before the date of commissioning (on a demurrer, assuming the grounds to be correct) and also in the light of the fact that there was admittedly a lapse of six years in communicating the same on the teeth of an office memorandum dated 18.02.1991, I am not inclined to sustain the first impugned order. Even on equity, I am of the view that the first impugned order does not deserve to be sustained. The reason is, admittedly, TCS has paid agreed annual R&G charges of Rs.9,93,033/-. Thereafter, as the hike was unacceptable and illegal qua terms of provision of said facility, TCS has clearly written to the BSNL stating that they are surrendering the said facility with effect from 01.04.2005. When such surrender is made by TCS, they are only if at all liable to pay the compensation, but, there is nothing to show that any compensation has been computed in accordance with the said DOT Rules. This is also only on a demurrer, as even if the DOT Rules provide for compensation, in a case of this nature, where the hike has been communicated after six years, I am of the view that the TCS cannot be liable to pay any compensation. Compensation will arise only when TCS or any other similarly placed access seeker/service seeker surrenders the facility within the stipulated time frame on its own volition and wet owing to any reason attributable to BSNL. In this case, there is a valid reason for TCS to do so and those valid reasons are lapses on the part of the BSNL which have been set out and alluded to supra.
23. Owing to all the points alluded supra, the first impugned order is set aside. As the first impugned order is set aside, the second impugned order being consequential, is also set aside.
24. In other words, both the impugned orders, namely, first impugned order dated 17.06.2005, bearing reference No.CO(LC1)/DC/86/29, and the second impugned order dated 24.06.2005 bearing reference No.DGM(LD)/AOTR(LD)/TCS/05-06, are set aside and the writ petition is allowed.
25. The refund shall be made by the BSNL within a period of three months from the date of receipt of a copy of this order. Though obvious, it is made clear that the period for which TCS has availed the said facility i.e., from 01.03.1999 to the date of surrender being 01.04.2005, TCS is liable to pay at the contracted rate and that amount shall be adjusted while making the refund. No Costs.
28.08.2017 rkm Index: Yes/no To
1.The Deputy General Manager (LD), Bharat Sanchar Nigam Limited, Chennai Telephones, 70, Ritherdon Road, Vepery, Chennai 7.
2.Chief Accounts Officer (TR-LD), Bharat Sanchar Nigam Limited, Chennai Telephones, 70, Ritherdon Road, Vepery, Chennai 7.
M.SUNDAR, J.
Rkm W.P.No.35091 of 2005 28.08.2017