Dismissed
Internet Service Providers Association of India & Ors. v. Union of India
TDSATTELECOM PETITION/119/2006
What the court decided
AI extract
Outcome
Dismissed
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ORDER
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TELECOM DISPUTES SETTLEMENT & APPELLATE TRIBUNAL NEW DELHI
DATED 30th AUGUST, 2007
Petition No.119 of 2006
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Corner of Main Avenue & V.P. Road Santacruz (West) Mumbai – 400 054
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6/7/2018 ORDER through its General Manager 105, Sumer Kendra, P B Marg, Worli Mumbai – 400 018 15. IQARA Telecoms India Pvt. Ltd. through its Manager – Legal 24-C/406, Maintri CHS Bimbisar Nagar, MHADA Complex Off Western Express Highway, Goregaon (E) Mumbai – 400 065 16. VEBTEL Obconic Internet Protocol Pvt. Ltd. through its Manager Director 12 A, Somavarapu Heights Erramanzil Hyderabad – 500 082 17. Tata Internet Services Ltd. through its Company Secretary B/14, Tata Symphony Off. Saki Vihar Road Chandivali, Andheri(E) Mumbai – 400 072 ….Petitioners Versus Union of India through its Secretary Department of Telecommunications Ministry of Communications Sanchar Bhawan 20, Ashoka Road New Delhi – 110 001 ..…Respondent BEFORE: HON’BLE MR. JUSTICE ARUN KUMAR, CHAIRPERSON LT.GEN. D.P. SEHGAL(RETD.), MEMBER For Petitioners : Mr.Ramji Srinivasan, Ms.Mandakini Singh, Advocates For Respondent : None
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ORDER
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ORDER
The Petitioner No.1 is an Association of Internet Service Providers while Petitioners 2 to 13 are its members. The members of the Petitioner Association hold ISP (Internet Service Provider) Licenses issued by the Respondent, Union of India. In 2002, the Government permitted inclusion of Telephony within ISP license. Revised licenses were issued. The license fee remained a nominal amount of Re.1/- because according to Petitioners the Government wanted to encourage the trade. The ISP license for Telephony was a separate license but the license fee was kept the same as in case of ordinary ISP licenses. Schedule B of the ISP License with Internet Telephony provides as under:
“1.1 QUANTUM OF LICENSE FEE AND SCHEDULE OF PAYMENTS”
(i) The license fee is payable by the licensee in consideration for grant of this license, for the complete duration for which this license is granted. This has no relation to the actual start/provision of service by the licensee or any mutual obligations between the licensee and any other service provider/BSNL/MTNL/VSNL/Departments of the Central or State Government/local or statutory bodies.
(ii) The Telecom Authority has decided to waive the License Fee for a period upto 31.10.2003 and a nominal license fee of One Rupee per annum will become payable from 01.11.2003; however, the Telecom Authority reserves the right to review an imposed license fee including Universal Service Obligation (USO) levy anytime during the validity of the license, which decision with its terms and conditions, shall be binding on the licensee.”
In exercise of power under Clause 1.1(ii) of Schedule B of the license, the licensor announced an increase in the license fee for the ISP license holders like petitioners from Re.1/- per annum to a revenue share at license fee of 6% of the Adjusted Gross Revenue (AGR) with effect from 1st January, 2006. The petitioners have challenged this amendment of the licenses. Besides, this the petitioners have challenged the method of computation of AGR by the respondent. Under the amendment to the license, the petitioners are required to pay a share of the AGR to the
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respondent as a condition of grant of license. The following prayers were pressed by the learned counsel for Petitioners:
“(a) declare that the increase of Licensee Fee from One Rupee to an additional 6% of the Adjusted Gross Revenues of the ISP (with Internet Telephony) is illegal, arbitrary, unreasonable, violative of Section 11 of TRAI Act and contrary to Cabinet Decision and wholly without jurisdiction.
(b) alternatively, declare that the Respondents are not entitled to recover License Fee as Revenue Share out of any revenues arising out of non-licensed activities and further declare that the Revenue Share License Fee is exigible only on Adjusted Gross Revenue accruing directly out of the (Internet Telephony) activities/operations licensed under Section 4 of the Indian Telegraph Act, 1885, after adjustment of write-offs and revenues not directly attributable to such licensed activities, including interest income, dividend income, rebates, discounts etc.”
So far as prayer (b) is concerned, this Tribunal has decided the issue in the connected batch of cases vide a separate order passed today in Petition No.7 of 2003. The decision of the Tribunal in the said case will govern prayer (b) of the present petition.
So far as prayer (a) is concerned, the petitioners have challenged the amendment of the license by which license fee of Re.1/- has been enhanced to 6% of the AGR. To sustain the challenge, two grounds were urged. It is submitted that it is a unilateral decision of the Government without giving an opportunity to the affected parties like the petitioners to present their point of view before such an amendment was made. Secondly, it is submitted that the amendment is ultra vires the Telecom Regulatory Authority of India Act (TRAI Act) and as such it is liable to be quashed. So far as point regarding the decision being a unilateral decision of the Government is concerned, attention is invited to the relevant Clause 1.1(ii) of Schedule B of the license which has been quoted herein before. Under this clause the Telecom Authority has reserved the right to review the license fee and the same is ordained to be binding on the licensee. This is a contractual obligation under the license. The license is an admitted
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document accepted by both parties. The petitioners have not shown anything which may suggest that they objected to this condition forming part of the license. Therefore, the decision of the respondent to amend the term relating to license fee cannot be challenged on this ground.
The other point of challenge to the amendment is based on Section 11 of the TRAI Act. Sub-section (1) of Section 11 enumerates the functions of Telecom Regulatory Authority of India. Sub-clause(a)(ii) of sub-Section (1) provides that it will be a function of the Authority to make recommendation either suo motu or on request from the licensor on matters relating to terms and conditions of licenec to a service provider. It is submitted that the recommendations of TRAI were neither made suo motu nor the licensor requested for recommendation on the question of terms and conditions of license to service provider i.e. the petitioners. It is further submitted that seeking recommendation of the Authority was mandatory and in the absence of recommendation the license could not have been granted/amended. This challenge is towards amendment of the license and it is not qua the original license.
The learned counsel for the petitioner argued that amendment of the term of original license regarding license fee is actually to be treated as a case of grant of a new license and, therefore, such a recommendation was necessary. It is submitted that factually neither recommendation was sought nor it was made. In the absence of the recommendations of the Authority the amendment is bad and liable to be quashed. Reference to second proviso to Section 11, sub-section(1) will show that the requirement of seeking or making a recommendation in relation to grant of license is applicable only in case of grant of a new license issued to a service provider. To overcome this hurdle in their way the petitioners have tried to argue that the amendment in original license means it is a case of grant of a new license. We are unable to agree with this submission. Amendment of a term of license cannot be said to be a case of grant of a new license. The power to amend the relevant terms of license is contained in the original license and the respondent in exercise of that power has amended the
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term relating to license fee. This cannot be said to be a case of grant of a new license. Therefore, this argument made on behalf of the petitioner is untenable. When we hold that this is not a case of grant of a new license, the requirement of recommendation of TRAI also goes because as per the proviso this requirement comes into picture only in case of grant of a new license. Therefore, we find no merit in the argument on behalf of the petitioners that the amendment of the term of license regarding license fee is illegal and is liable to be quashed. Prayer (a) is, therefore, rejected.
The petition is disposed of accordingly.
..…………….J (Arun Kumar) Chairperson
…………….. (D.P.Sehgal) Member
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Internet Service Providers' Association of India
C J Online Private Ltd.
DelDSL Internet Pvt. Ltd.
Exatt Technology Pvt. Ltd.
Estel Communication Pvt. Ltd.
Hathway Cable & Datacom Pvt. Ltd.
Arun Kumar
D.P. Sehgal
As recorded by the court registry
A petition before TDSAT in a dispute between a licensor, a licensee or a service provider under the TRAI Act.
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