Partly allowed

Reliance Communication Ltd. v. Bharat Sanchar Nigam Limited

TDSAT24 May 2010TELECOM PETITION/275/2009

Case brief

AI extract

What is this about?

The Appellate Tribunal addressed a dispute over security penalty bills levied on the petitioner for alleged illegal ISD routing and CLI tampering. The court set aside the demand, finding it unsustainable, primarily due to non-compliance with principles of natural justice. The petitioner was granted liberty to demonstrate adherence to DoT circulars.

What did the court decide?

The impugned demand for penal charges was set aside. The petitioner was granted liberty to show strict compliance with DoT circulars prior to disconnection.

Reliance Communication Ltd. vs Bharat Sanchar… — Contract and Commercial Disputes | TDSAT (2010)

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TELECOM DISPUTES SETTLEMENT & APPELLATE TRIBUNAL

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6/7/2018

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TELECOM DISPUTES SETTLEMENT & APPELLATE TRIBUNAL NEW DELHI

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Dated 24^th May, 2010

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Petition No.275 of 2009

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Reliance Communications Limited …Petitioner

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Versus

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Bharat Sanchar Nigam Limited …Respondent

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BEFORE:

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HON’BLE MR. JUSTICE S.B. SINHA, CHAIRPERSON HON’BLE MR. G.D. GAIHA, MEMBER

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For Petitioners : Mr. Ramji Srinivasan, Senior Advocate Ms.Manali Singhal, Advocate Mr.Kshatrshal Raj, Advocate Mr.Santosh Sachin, Advocate

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For Respondent : Mr.Maninder Singh, Senior Advocate Mrs.Pratibha M.Singh, Advocate Mr.Tejveer Singh Bhatia, Advocate Mr.Yoginder Handoo, Advocate

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JUDGMENT

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S.B. Sinha

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The petitioner is a licensee, the license having been granted in terms of the provisions of Section 4 of the Indian Telegraph Act, 1885 (The Act).

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Indisputably, the petitioners have entered into an interconnection agreement with the Department of Telecommunication of the Union of India on Basic Telephone Service (BSO) in respect of Gujarat Circle.

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The respondent was constituted in the year 2000 in terms of the provisions of Bharat Sanchar Nigam Act. It took over the service portion of the Department of Telecommunication.

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The petitioner was offered migration package from basic service to Unified Access Service (UAS), which was accepted by it.

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The respondent on or about 8.10.2004 informed the petitioner that use of telephone number 0281-3041000 was suspected to be interconnected illegally, as the international calls were being displayed with STD/local numbers. Indisputably, prior thereto the Department of Telecommunication had issued a circular letter on or about 24.6.2003 which reads as under :-

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“Sub: Operation of Clandestine/illegal Telecommunications Centres/ Telephone Exchanges.

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From time to time, Vigilance Units of DoT/ BSNL/MTNL/VSNL with the help & assistance of Intelligence Agencies/Law Enforcement Agencies have unearthed operations of clandestine/illegal

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Telecommunications facilities/exchanges. The number of cases detected/unearthed in the recent past have substantially increased. Mostly clandestine illegal exchanges for receiving international calls and distribution to PSTN in India have been found. In the cases detected, it was observed that the miscreants had obtained following types of telecommunications facilities from the authorized service providers:

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(i) For providing international connectivity, International Private Leased Circuits (IPLC), Very Small Aperture Terminal (VSAT), Internet Service Providers – Rate Access (BRA) was used.

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(ii) For connecting to the domestic and, bulk telephone lines/ landlines or Cellular Mobile Telephone Connections, ISDA-BRA/PRI, bulk extension lines of EPABX, DOD junctions/E-IR2 etc. were used.

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Operation of such clandestine/illegal telecommunications facilities has serious implications from National security point of view, besides revenue loss to the Government as well as telecom operators. This is a matter of serious concern and all possible steps need to be taken by all concerned to curb such activities. This issue was also discussed in the meeting chaired by Secretary, Telecom on 26.4.2003, held jointly with Intelligence Agencies and all Cellular Operators.

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With a view to ensure that such activities are stopped forthwith, all the Basic/NLD/ILD Operators are hereby directed to implement the following with immediate effect:

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(i) Utmost vigilance should be exercised in providing bulk telephone connections at a single user as well as for a single location. Provision of 10 or more connections may be taken as bulk connections for this purpose. Special verification of bonafide should be carried out for providing such bulk connections. Information about bulk connections will be forwarded to Sr.DDG (Vig.), DOT as well as all Security agencies on monthly basis.

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(ii) The call detail records for outgoing calls made by the customers should be analyzed for the subscribers making large number of calls day and night and to the various telephone numbers. Normally such numbers do not receive incoming calls. This can be done by running special program for this purpose. The service provider should devise appropriate fraud management and prevention programme and fix threshold levels of average per day usage in minutes of the telephone connection; all telephone connections crossing the threshold of usage should be checked for bonafide use. A record of check must be maintained which may be verified by Licensor anytime. The list/details of suspected subscribers should be informed to the Sr.DDG(Vigilance), DoT, West Block-I, Wing-2, R.K. Puram, New Delhi – 110066, immediately.

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(iii) Active support must be extended by the service providers to the vigilance units of DoT, for detection of such clandestine/illegal telecommunications facilities. For this purpose, names of the Nodal officers & alternate Nodal officers in respect of each licensed service area as communicated to the Intelligence Agencies for monitoring of telecommunications, should also be forwarded to Sr.DDG(Vig). The Vigilance Unit of DoT will contact the Nodal Officer/alternate Nodal Officer, and till the time such

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nomination is received or in case of non-availability of such officer, the DoT vigilance units will contact the Chief Executive Officer of the licensee, for such support/coordination.

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(iv) Calling Line Identification (CLI) shall never be tampered as the same is also required for security purposes and any violation of this amounts to breach of security. CLI Restriction should not be normally provided to the customers. Due verification for the reason of demanding the CLIR must be done before provision of the facility. It shall be the responsibility of the service provider to work out appropriate guidelines to be followed by their staff members to prevent misuse of this facility. This subscribers having CLIR should be listed in a password protected website with their complete address and details so that authorized Government agencies can view or download for detection and investigation of misuse. However, CLIR must not be provided in case of bulk connections, call centres telemarketing services.

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(v) Bulk users premises should be inspected by the services at regular intervals for satisfying themselves about bonafide use of such facilities. A record of such inspection should be maintained and preserved for minimum one year for inspection/verification by the licensing authority or a designated officer of the authority.

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(vi) Leased circuits should also be checked for their bonafide use and to detect any misuse.

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(vii) Subscriber’s details should be available in Director Enquiry (197) unless requested by the subscriber. Otherwise, the unlisted number should be made available on the password protected website to be used by authorized agencies.

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(viii) All the ILD operators should transit the CLI as received from the foreign callers. In case of CLI is not received from the distant end (foreign party) then the ILD operator in the country should introduce his assigned two digit carrier identification code followed by the country code from where the call is received in no case, the call should be offered to BSO/CMTS without any CLI. This is to identify the origin of call and ILD operator handing the call.”

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The petitioner purported to be acting pursuant to or in furtherance of the said circular is said to have taken necessary action against the concerned subscriber by getting it premises raided with the respondent jointly. It also approached the Police Authorities for lodging a First Information Report. According to the petitioner it also sent a representation in regard thereto to the Vigilance Cell of the DoT. An information to the DoT was also communicated that action would be taken to disconnect the connection of the subscriber.

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The petitioner was asked by the respondent herein to take necessary action by lodging a First Information Report on 11.10.2004, pursuant whereto a complaint was sent to the Commissioner of Police, Rajkot for the purpose of registering a FIR and taking necessary action as per law against the subscriber concerned. By reason of a letter dated 13.10.2004, however, the respondent alleged illegal routing of ISD calls and tampering of CLI by the petitioner. It was furthermore alleged that the same was found on analysis of its CDRs. The respondent furthermore claimed that it would be entitled to charge the highest rate of interconnecting ISD calls in terms of its circular letter dated 28.1.2004 i.e. at the rate of Rs.19.50 per minute for all PBSO and POIS of the petitioner.

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By reason of a letter dated 14.10.2004, the petitioner inter-alia contended that the connection in question had been given to M/s. Raj Enterprises having its Office at 301, Yogi Anand, Kasturba Gandhi Road, Rajkot.

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The petitioner by reason thereof sought for certain informations which were allegedly not furnished by the respondent.

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On 15.10.2004, the Vadodra Unit of the respondent issued a bill for a sum of Rs.6.89 Crores to the petitioner by way of assessment of ISD calls in STD POIS for the period July, 2004 and September, 2004. Along with the said bill, three Annexures were enclosed indicating routing of ISD calls in the STD trunk group and PPSO. However, the rate of penalty applied to the said bill was Rs.5.65 per minute and not Rs.19.50 per minute. Allegations were made that no more call with CLI as 0281-3041000 was getting through and on pressing the said call the response which was received was “this number does not exist”.

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According to the respondent therefore, the CIL has been tampered with by the petitioner in violation of the terms and conditions of the agreement.

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It is furthermore not in dispute that the said bill was a provisional one having been drawn up in terms of the letter of the Headquarters of the respondent dated 28.01.2004 for all interconnect calls at PBSO and POIS of the petitioner from July, 2004. The petitioner by its letter dated 20^th November, 2004, however, requested the respondent to withdraw the said bill, furnishing again the name and address of the concerned subscriber. The said letter is said to have not been responded to.

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In continuation of its earlier letter dated 15.10.2004, the respondent again raised a provisional bill of Rs.6.89 crores on or about 10.3.2005 on the premise that numerous calls have been observed in the said PSI with CLI as 02831441000. According to the respondent, CLI had been tampered deliberately by the petitioner. The petitioner responded to the said letter by its letter dated 25.3.2005 giving its clarifications once over again. It was pointed out that owner of the said telephone has been arrested and the matter was pending before the Court. The said bill was contended to be totally invalid and unwarranted.

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The petitioner reiterated its aforementioned stand by its letter dated 19.12.2005 stating–

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“Dear Sir,

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Kindly refer the above-mentioned letters regarding penalty bill of Rs.9,89,68,892/- raised by you for alleged illegal routing of ISD calls through PBSLO POI vide your letter no.ENG/W-21/RTL(Basic)/0405/64 dt. March 18, 2005.

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We have already replied through abovementioned various letters and explained the same in meeting held between BSNL Baroda and RIC on April 01, 2005 that the referred CLI: 0281-3041000 pertained to ISDNB PRI connection given to M/s Raj Enterprise of Rajkot. As you are aware that the owner of Raj Enterprise has since then been arrested by Police and matter is currently in court.

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We would like to reiterate that the bill raised by you is totally invalid and unwarranted and hence may be withdrawn immediately please.”

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On 20.4.2006, a similar request was made by the petitioner. A meeting was also held with the Chief General Manager of Gujarat Area on 17.10.2006 wherein the issue was raised once over again. According to the petitioner, the calls received in the POIS were grey market calls and they were neither wrongly routed nor the CLIS were tampered with. By reason of a letter dated 24.5.2006 the CGM, Gujarat Circle of the respondent, in response to the aforementioned letter dated 20^th April, 2006 of the petitioner, stated as under :-

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“As per guidelines issued by BSNL Corporate office as well as DOT, if any customer is found in involvement for illegal activity like put through illegal ISD calls by passing ILD Operator, then concerned Telecomm Service Operator has to register a FIR against such subscriber under Telegraph Act, 1885. Vadodra, Nadiad, Rajkot and Valsad SSAs have intimated to your office regarding illegal ISD calls received from Reliance Customers who are calling parties as per CLI and called terminated in BSNL network. BSNL have confirmed by dialing called subscriber numbers that these calls were incoming ISD calls from their relatives in aboard, accordingly BSNL office had submitted the lists CLI numbers who are involved to put through illegal ISD calls/gray market ISD calls to your office for taking necessary action against those Reliance customers as per guidelines issued for gray market ISD calls. In response to BSNL office letter, your office had submitted the list of Name of the Parties and addresses who were found to put through ISD Calls as illegal ISD calls/gray market ISD calls.

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In this context, it is requested to furnish the copy of the FIR, registered against such Reliance customers, to the concerned SSA Head with request to settle the bills for illegal routing of ISD calls/

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alleged gray market calls charged by BSNL to M/s. RIL along with submission of undertaking as under. The amount of ADC for illegal ISD calls/gray market calls originated by Reliance customers, which is dues to be given to BSNL, shall be recovered from such Reliance customers and then shall be paid to BSNL.”

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However, by a letter dated 29.05.2007, the respondent contended that the penalty bills were “according to the instructions and guidelines within the purview of Interconnect Agreement”. Request was made for furnishing the copies of CDRs along with the copies thereof and the details of the court cases.

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The respondent sent another letter on or about 05.07.2007 stating:

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“The circuit group observance carried out at all type of POIs of all operators in the field unit across Gujarat, Rajkot, Nadiad, Vadodra and Valsad have observed wrong routing of ISD calls with fake CLI in POI of M/s. RIL. The details of misuse like CDR containing I/C ISD calls with fake CLI, RIL numbers and the written confirmation from subscribers who had received I/C ISD calls with fake CLI were time to time provided to the nominated nodal officer of M/s. RIL.

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It is appreciated that you have promptly cooperated on initiative taken by BSNL for curbing the menace of misuse of BSNL network with RIL numbers in the connectivity provided to RIL for Telecom business.

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It is prime duty and responsibility of licensees operator and BSNL to honor terms and conditions envisaged in the interconnect agreement to ensure security of each other business. It is revenue loss

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due to incoming call traffic through operator whom connectivity is provided by BSNL for clause 2.5.4, 2.5.1 and 6.4.6 (a), (b), (c), (d), which are related with issue.

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There is provision of legal actions including disconnection of POI or temporary suspension of interconnect arrangements under such misuse and violation of agreements.

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In spite of all above provisions, BSNL has taken lenient view and once again requested to pay the bills immediately.”

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In terms of its letter dated 12.7.2007, the petitioner responded to the aforementioned letters of the respondent dated 25.5.2007 and 5.7.2007, contending:-

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“As you have rightly pointed out we have promptly cooperated with BSNL & DOT Vigilance on all such cases. There is no violation of any of the clauses of the interconnect agreement by RCOM in reference to these cases. These cases are of unscrupulous users misusing the resources provided to them for which prompt action has been taken and similar cases exist in BSNL also.

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We are equally concerned about misuse of the services by unscrupulous subscribers for illegal and non-permitted activities such as illegal routing of international calls. We are committed to the suppression of such grey market operations by the unscrupulous subscribers and have been co-operating with BSNL & DOT Vigilance cells across the country and will continue to do so. Being ILD operator, we too are an equally affected party in case the connection is used for illegal traffic distribution.

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We have been cooperating with BSNL in all such cases being reported to us by BSNL as required by the BSNL Hq Circular No.431-2/2004-Regin dated 25.10.2004 wherein in para 3, it has been clearly stated … “which shall then ask M/s. RIL to arrange details of the subscribers and physical location where these telephone have been installed whose CLI has been received in incoming ISD calls. On receipt of these details of the subscribers and physical locations, a BSNL official along with a representative of M/s. RIL shall verify the same and subsequently the local security agencies may be involved to stop such illegal grey market operations….”

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Further the circular clarifies that only in case “the concerned SSA of BSNL, where such incoming ISD calls were received, finds that the telephone number of which CLI has been received do not exist or receives an intimation that M/s. RIL has not conveyed any or proper address of the customer whose CLI was sent, then it shall issue a notice for disconnection under misuse of the POI in addition to raising bill, for arrears of ADC…”

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We have cooperated by giving details of the customer to BSNL and also ensured action by the concerned local security agency i.e. the police in this case by getting raid conducted and filing of FIR. Hence BSNL in line with the instructions nor required to raise the bill.”

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A notice was sent to the petitioner by the respondent on or about 5.3.2008 demanding a sum of Rs.9.17 crores. The petitioner, however, by its letter dated 1.4.2008 protested thereagainst. Another letter was sent on

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22.5.2008 by the petitioner stating that it had complied with the conditions of license as also the respondent’s letter dated 25.10.2004. A request was made to follow the instructions issued therein in regard to the said clause, which according to the petitioner, would make it clear that the allegations made therein that the operator had not been cooperating were not correct as the petitioner had rendered all cooperations in the matter. Respondent issued a notice of disconnection on 2.2.2009.

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We may also notice that a circular letter was issued by the respondent itself on 25.10.2004.

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We must also place on record that the NLD Interconnect Agreement was amended on or about 17.11.2005 by reason whereof Addendum II was inserted. The said agreement came into force from the date of its signing. However, the Basic Service Interconnect agreement was executed on 28.2.2006 which came into force with retrospective from 14.11.2003 excepting the applicable IUC including ADC interconnection agreement and associate billing orders as prescribed by BSNL Corporate Office from the intervening period till the appending of the said addendum.

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Clause 11 of the said addendum reads as under:-

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“11. It is further agreed that any kind of breach of any of the terms of this agreement by the UASL shall entitle BSNL to levy damages on the UASL. Quantum of damages assessed and levied by BSNL shall be final and not challengeable by the UASL.”

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Mr. Ramji Srinivasan, the learned senior counsel appearing on behalf of the petitioner, urged:

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(i) In raising its demand the respondent has acted illegally and without jurisdiction in as much as the petitioner could not have been held liable for violation of the interconnect agreement or the circular letter dated 24.6.2003.

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(ii) The respondent as also the DoT having accepted that there existed grey market operators and the petitioner having agreed for conducting a joint raid at the premises of the operator in question, no penalty or notice for disconnecting the services could have been issued.

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(iii) It is not a case where the petitioner can be said to be guilty of commission of any fraud in treating the ISD calls as local calls.

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(iv) The respondent in its bills having stated that the violation had been found in the NLD agreement, no bill could have been raised in respect of UAS license.

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(v) The NLD agreement having been amended only on 17.11.2005 which contained clause 6.4.6 providing for levy of penalty, the same could not have been applied in respect of a purported default on the part of the petitioner for the months of July, August and September, 2004 and that too in respect of the UAS License.

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(vi) Clause 11 of the addendum in the Basic Service Interconnection Agreement having been amended only on 18.2.2006, the same could not have been given a retrospective effect, particularly in view of the fact that the conditions precedent contained therein are attracted in the instant case.

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(vii) The respondent having raised the bill in the year 2004 without there being any provision in the interconnect agreement as clauses referred to therein namely 2.5.1, 2.5.4 and clause 6.4.6 (a), (b), (c) (d) did not exist in the year 2004.

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(viii) The argument of the respondent that unique specific number was a premier number, is baseless as in Nadiad the number which was said to have been used is 30918363. In any event, the respondent was bound to follow its own circular letter dated 25.10.2004 as in terms thereof the operator would be responsible only in the event, it did not furnish the concerned number or address of his customer to the DoT or the respondent.

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Mr. Maninder Singh, learned senior counsel appearing on behalf of the respondent, on the other hand, would contend:

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(a) The petitioner having resorted to suppressio veri and suggestio falsi in so far as it had all along taken advantage of mentioning of a provision of the NLD license although it was aware that the matter related to UASL license only, is not entitled to any relief.

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(b) The petitioner having filed a Miscellaneous Application in Petition No. 2 of 2008 which having been permitted to be withdrawn with liberty to file a fresh petition, cannot now be permitted to raise new contentions which had not been raised therein.

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(c) The petitioner in the said Miscellaneous Application No. 21/2009 having relied on DoT circular, its conduct must be deprecated, in so far as in this petition it not only did not refer thereto, but in fact when the same was filed by the respondent in its reply, it was termed to be irrelevant in its rejoinder.

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(d) The petitioner has wrongly stated that it had disconnected the offending number after the raid was conducted as would appear from various correspondences as also in the pleadings of the petitioner that “it was only about to do so”.

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(e) The exception contained in clause 6.4.6 inserted by reason of the addendum dated 28.2.2006 applied only to those IUC charges which were applicable at the relevant time and have nothing to do with the case of this nature where the petitioner has been found to be guilty of committing fraud and, thus, liable to pay Access Deficit Charges (ADC) in terms of the said provision.

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(f) The liability of the petitioner in terms of clause 6.4.6 being absolute civil liability, the existence of any ‘mens rea’ on its part, cannot be said to have any application whatsoever.

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(g) The petitioner having failed to discharge its obligations as a licensee in terms of the stipulations as contained in DoT’s circular dated 24.6.2003, no equitable relief should be granted in its favour.

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(h) In terms of the circular letter issued by the DoT, verification/analysis of data, lodging of First Information Report etc. being the sole responsibility of the concerned service provider, the petitioner is not entitled to any relief.

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(i) It is one of those cases like the HCD case where the petitioner had admitted that it had been tampering with the CIL and, thus, the impugned demands are not liable to be interfered with.

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(j) Clauses 2.5.1 and 2.5.4 of the NLD Interconnection Agreement, which have been referred to by the petitioner, are not at all relevant for the purpose of this case.

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The principal questions which arise for our consideration are:-

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(i) Whether the petitioner is liable to pay penal charges in terms of clause 6.4.6 which has been inserted in the UASL license by reason of VIII^th Interconnect Agreement on or about 28.2.2006 and came into force with effect from 14.11.2003?

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(ii) Whether the petitioner has otherwise complied with the terms and conditions of the guidelines issued by the DoT in its circular dated 24.6.2003?

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(iii) Whether in any event the petitioner is entitled to the benefit of the circular letter dated 14.10.2005 issued by the respondent.

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Before adverting to the aforementioned questions, we may notice the conduct of the petitioner.

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The petitioners filed Miscellaneous Application No.21/2009 in the Petition No.2 of 2008 wherein an order or stay was passed. On 07.12.2009, the petitioner was given liberty to file a fresh petition, pursuant whereto or in furtherance whereof the present petition has been filed.

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In response to the reply filed by the respondent herein in the Petition No.2 of 2008, it was stated:

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“5.2 Without prejudice to the above, Petitioners further submit that the provision of details is specifically provided in the Interconnect Agreement signed between the parties on 25.1.2002 and as amended from

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time to time. The relevant clauses of the Interconnect Agreement (6.6.2 & 7.1.1) are reproduced herein below:

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“6.6.2 Detailed billing records for 3 consecutive days once in a year at every location of POI shall be supplied free of charge to the BSO on request. In case additional detailed billing information is required by the BSO, it will pay to BSNL @ Rs.5/- per A4 size page of such record

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In paragraph 22 of the rejoinder affidavit, the petitioner submitted:

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“22.3 Further, the clauses of the license and interconnect agreement which provide for presentation of correct CLI are applicable both to the Petitioners as well as to the Respondents. The relevant clause is reproduced herein below:

¶174

2.5 CALLING LINE PRESENTATION

¶175

2.5.3 No tampering/alteration of CLI of calls handed over at the POI shall be done by either party. Instructions of Licensor in this regard shall be followed by UASL……….”

¶176

In the said Petition No.2 of 2008, the petitioner did not allege non-compliance of the clauses of NLD Interconnect Agreement entered into between the parties herein.

¶177

In fact, the matter pertaining to Petition No.2 of 2008 related to Kerala Circle of the BSO/UASL operations of the petitioner.

¶178

The respondent in its letter dated 15.10.2004 inter alia stated as under:

¶179

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“As per letter No.203-19/2003-regin dated 17^th September, 2003 regarding periodical monitoring of incoming traffic to BSNL from private Operators, CDRs of M/s Reliance Infocomm Ltd. PBSO POIs at Karelibaug, Panigate, Alkapuri, Makarpura AT&T, TAX Padra, Dabhol and Miyagam exchanges in Vadodara SSA were checked and following observations were noticed:

¶184

1. Check of CDRs of M/s. Reliance Infocom Ltd. PBSO POIs indicates that there are numerous calls with CLI as “2813041000”. On tracing out the call, the announcement “This number does not exist” was received on dialing the number. The analysis of observation taken for these calls indicate that CLI has been tampered deliberately by M/s Reliance Infocomm Ltd. which is in complete violation of terms and conditions of interconnect agreement.

¶185

1. The calls with similar CLI have been received from the month of Sep-04. Therefore, as per letter No.208-20/2003-Regin. dated 28/01/04, a provisional bill is raised @ Rs.5.65/- per minute for all incoming calls at all PBSO POI of M/s Reliance from the month of July-04 (Rs.5.65/- is the rate for incoming ISD calls by ILDO to BSNL Level-I TAX). Copy of the bill is enclosed at Annexure-I. The same is required to be paid by 25^th October, 2004.

¶186

1. This notice is served on you to refrain from offering ISD calls on PBSO POI with immediate effect. In case of continuing violation of interconnect agreement shall result in disconnection of POI in Vadodara District without any further notice to you.”

¶187

Therein the term BSO has been used which would mean the Basic Service operator.

¶188

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¶192

The nature of license mentioned therein was UAS License and not the NLD License.

¶193

It is only in the impugned bill dated 02.02.2009 against the relevant column of the NLD, illegal routing has been mentioned.

¶194

We may furthermore notice that in the bill issued on or about 21.3.2005 no interest was added. Yet again in the letter dated 18.03.2005 the respondent mentioned about illegal routing of calls. It is, therefore, evident that the petitioner had all along been aware that the penalty bills raised were for the UAS License and not NLD License. In its letter dated 13.10.2004 illegal routing of ISD calls by the petitioner upon tampering of the CLI was alleged by the respondent. The respondent specified a number from which such calls were being routed through.

¶195

According to the petitioner, the said number belonged to one M/s. Raj Enterprises. It was alleged in the factsheet appended to the said letter that the number in question had been disconnected.

¶196

It may be true that a joint raid was conducted and a First Information Report was lodged, but it must be placed on record that neither in any correspondences nor in the pleadings the petitioner had specifically stated that the said number was disconnected. It appears to have been done as would be evident from our findings hereinafter but we find no reason as to why it was not specifically stated. In the fact sheet, however, the petitioner has contended that it had initiated immediate action to disconnect the ISD and POIS service to M/s. Raj Enterprises, stating:

¶197

“At our end, we have initiated immediate action to disconnect the ISDN PRI services to Raj Enterprises. The restoration of lines could be decided after completion of detailed investigations.”

¶198

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¶199

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¶202

The effect of this contention is that the telephone in question was disconnected as otherwise the matter relating to restoration of lines would not have arisen.

¶203

A detailed First Information Report, however, was lodged. In a letter dated 12.10.2004, it was stated by the respondent:-

¶204

“The SDE, Vigilance, Rajkot in the office of the General Manager, Rajkot Telecom District, on 08/10/2004 telephoned and informed us that the user of the Telephone Number namely : 0281 3041000 was suspected to be engaged in connecting international calls to BSNL subscribers in different cities with CLI (Calling Line Identification) 0281 3041000. The BSNL officer has further in connecting International calls to BSNL subscribers in different cities with CLI (Calling Line Identification) 0281 3041000. The BSNL officer has further informed that a huge incoming call traffic is generated by this Telephone Number. The Telephone Number is used for distribution of international calls to the local/domestic telephone numbers such that they are considered as STD/local calls. Such kind of activities apart from being illegal is directly causing loss of revenue to Telecom Operators. Such kind of activities apart from being illegal is directly causing loss of revenue to Telecom Operators. Such kinds of activities are clearly in violation of the provisions of the Indian Telegraph Act, 1885 and various other provisions of the Indian Penal Code 1860.

¶205

Our enquiry reveals that the Subscriber of this ISDN (PRI) connection is M/s. Raj Enterprise, having its office at 301, Yogi Anand, Kasturba Gandhi Road, Rajkot the Proprietor of the said M/s. Raj Enterprise is one Mr. Rajesh Rasiklal Patel, having residence of 301, Hirabaug Society, Ghatlodia, Ahmedabad 61

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(as per copy of Driving Licence No. GJI/939738/02, submitted to us along with the Customer Application Form No. 11010010086169). It is further observed that the said M/s. Raj Enterprise applied for and was provided ISDN (PRI) connection with 2 E is on 03/09/2004.

¶211

Thereafter the said ISDN (PRI) connection has extensively been used for the period between 03/09/2004 to 08/10/2004.

¶212

On request of the General Manager, BSNL, we had jointly discussions with your good self and as decided, office of the user of telephone number 0281 3041000 (301, Yogi Anand, Kasturba Gandhi Road, Rajkot) was got opened with the help of Police department, on 11/10/2004, in the presence of BSNL, Reliance personnel and representative of Raj Enterprise. At that time it was found that equipment/cables are removed from the office. Also it was noticed that there are two CAT 5 cables extended from Prasham Building, which is opposite to Yogi Anand Building and the ends are kept by coiling in the terrace. The cables length is sufficient to be extended to office of Ms. Raj Enterprise.

¶213

BSNL has informed us that enquiries for various telephone calls made from this 0281 3041000 connection reveals that at the relevant point of time recipients had received international calls. However, the records available in our systems do not indicate about the international incoming traffic being generated through this connection. The facts aforesaid give rise to strong suspicion that the ISDN (PRI) connection question may be used for carrying out illegal exchange operations, which are not only in violation of the provisions of the Indian Telegraph Act but also various further provisions of Indian Penal Code. Such activities, as stated earlier clearly cause huge loss of revenue to International Long Distance Operators and the Government.”

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According to the petitioner, they had disconnected the said number but according to the respondent, no such disconnection had taken place and, in fact, the said number was being used even after lodging of the First Information Report.

¶219

From a perusal of the aforementioned letter it would appear that whereas according to the respondent the CLI had been tampered, but according to the petitioner there was no basis for such allegations.

¶220

However, the disconnection had taken place as on 8.10.2004. In another letter dated 14.10.2004, the petitioner stated:-

¶221

“On the basis of information received from Rajkot BSNL we have already filed an FIR and submitted the same to the Commissioner of Police Rajkot to investigate the case and take appropriate action in accordance with law (copy enclosed for ready reference). The GMTD Rajkot is aware of FIR and action taken against the party.

¶222

Sir, we request you to help us and provide the supporting evidence with respect to termination of ISD Calls through sub. No.0281-3041000, so that the same can be handed over to Police Department. This will not only help Police department to investigate the case, but also save huge loss of revenue loss of revenue to Reliance and BSNL.

¶223

We have already informed Sr. DDG Vigilance BSNL HQ New Delhi about this issue, who had also advised us to file an FIR with Police Department.”

¶224

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¶228

It however, appears that no supporting evidence, as has been sought for by the petitioner, was handed over to it by the respondent.

¶229

We may, however, notice at this stage that the difference of opinion was that technically it was not possible to put a call through from one side although from the other and the recipient of the call may not receive it. On the other hand, the respondent received the answer “the number does not exist”.

¶230

Whereas, according to the respondent, the operator would be able to do so as the same is technically possible but according to the petitioner it would not be.

¶231

Apart from the oral submissions, no such technical evidence has been placed before us. We may furthermore notice that the respondent in its letter dated 20.11.2004 stated as under:

¶232

“In this regard, we have already submitted a clarification as per letter No. RTL/02-C/BRD/298 on October 14, 2004 with the copy of Police Complaint against the owner of CLI 0281-3041000, M/s. Raj Enterprise having its office at 301, Yogi Anand, Kasturba Gandhi Road Rajkot.

¶233

In view of above, we once again request you that the said notice and the said bill may kindly be withdrawn immediately. We will be ready to discuss details with you as and when required in this regard.”

¶234

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It may be true as has been contended by Mr.Maninder Singh that eventually it had not specifically been mentioned that disconnection of the number in question had been effected; but in our view it may not be possible to arrive at the said inference having regard to the overall materials on record. We are, upon reading of the entire factsheet, of the opinion and as noticed heretobefore that the telephone of the concerned operator was disconnected. It is not for us to arrive at a conclusion one way or the otherBe that as it may, in view of the order proposed to be passed by us, this question may not be of much significance for the present.

¶239

It is, however, neither in doubt nor in dispute that during the period for which the bills were raised namely July to September, 2004, there did not exist any provision in the UASL License for levy of penal charges by way of clause 6.4.6. It will bear repetition to state that the said provision was inserted on or about 28.2.2006 with retrospective effect from 14.11.2003. It is on the aforementioned premise we may notice certain provisions of Interconnect Agreement entered into between by the parties on 18^th March, 1997. It provides for payment of excess charges payable by DoT for STD/ISD calls as would appear from clause 6.4.6 thereof.

¶240

Clause 7.3 of the said agreement provides for term of payment. Clause 7.5 provides for the rate of interest in terms whereof; for delay in respect thereof beyond 15 days and up to next 15 days, interest at the rate of 24 percent was to be charged.

¶241

Clause 6.4.6 inserted with the Addenda 6 on 28^th February, 2006. It reads as under: “(a) Unauthorized calls i.e. calls other than specified for that trunk group if detected, for which the applicable IUC is higher than the IUC applicable for calls prescribed in that trunk group, then BSNL shall

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charge the UASL at the highest applicable for such unauthorized calls, for all the calls recorded on this trunk group from the date of provisioning of that POI or for the preceding two months whichever is less. (b) The CLI based barring facility shall be activated at the POIs wherever technically feasible to ensure that the traffic handed over to BSNL is in the appropriate trunk groups only. Wherever it is technically not feasible to activate CLI based barring periodic monitoring of the incoming trunk groups shall be done by BSNL to ensure this objective. The calls received by BSNL without CLI or modified/tampered CLI from UASL shall be charged at the highest slab i.e. as for ISD Calls. In case such calls are received by BSNL on any trunk group, then all the calls recorded on this trunk group shall be charged at the rates applicable for IUC of incoming ISD Calls from the date of provisioning of that POI or for the preceding two months, whichever is less.”

¶247

It would be evident from a perusal of the above clauses that the calls other than the specified trunk group, such unauthorized calls in terms thereof are required to be detected. In the event of such detection, the charges were to be levied at the highest applicable IUC, as applicable for such unauthorized calls, for all the calls recorded on the trunk group from the date of provisioning of that POI or for the preceding two months whichever is less. In the event, however, it was feasible for BSNL to activate CLI based barring, in terms of clause (b) the calls received by the BSNL for CLI or modified/tampered CLI were to be charged at the highest rate i.e. ISD calls.

¶248

In view of the distinction having been made between calls received for wrong trunk group of nonCLI/modified/tampered CLI, it was obligatory on the part of the respondent to specify the same clearly.

¶249

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¶253

It is for the said purpose, the circular letter dated 28^th January, 2004 issued by the respondent would be of some significance as clause 11 thereof would in that event be attracted.

¶254

It reads as under:-

¶255

“The CLI based barring facility shall be activated at the POIs wherever technically feasible to ensure that the traffic handed over to BSNL is in the appropriate trunk groups only. Wherever it is technically not feasible to activate CLI based barring, periodic monitoring of the incoming trunk groups shall be done by BSNL to ensure this objective. The calls received without CLI by BSNL from various operators shall be charged at the highest slab i.e. as for ISD Calls. In case such calls are received by BSNL on a trunk group not meant for such calls then all the traffic received on such trunk group for that month/billing cycle shall be charged at the rates applicable for IUC of incoming ISD Calls.”

¶256

Clause 11 of the said circular has a limited application and by reason thereof sub-clauses(a) and (b) of clause 6.4.6 of the Agreement should not be held to be substituted by clause 11 of the said circular.

¶257

Keeping in view the facts and circumstances of the case, it is also necessary to place on record the circular of the respondent dated 25.10.2004 specifying the procedures which were required to be followed by the operators to tackle the operation of unauthorized diversion or wrong routing of calls.

¶258

It reads as under:

¶259

“ Sub: Continuation of Unauthorized diversion in routing of ILD calls.

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It has been brought to the notice of this office that although M/s Reliance Infocomm Ltd. (RIL) has claimed that tampering of CLI has been stopped w.e.f. 16^th September 2004 but it has been found that international calls have been delivered on local POI of M/s RIL, at trunk group meant for intra circle terminating traffic, at various SDCC tandem exchanges, with CLI of M/s RIL network of other SDCAs which is different from ‘STD Code +3039 xxxx’. This information may be received either from customers or from BSNL staff also.

¶265

These may be instances of either tampering of CLI by the concerned service provider i.e.M/s RIL or due to the illegal telephone exchanges of grey market. Other private service providers may also be transiting and handing over such calls to BSNL at their POIs. In such cases, the CLI reported by the subscriber on receipt of International calls should be analysed, by the concerned SSA of BSNL, by dialing the CLI number and ascertaining whether these numbers exist in the network of M/s RIL or these numbers do not exist.

¶266

In case these numbers do exist then the concerned SSA of BSNL should immediately bring this information to the notice of that SSA of BSNL, where such numbers of M/s RIL are supposed to be located based on the CLI received, which shall then ask M/s RIL to arrange details of the subscribers and physical location where these telephone have been installed whose CLI has been received in incoming ISD calls. On receipt of these details of the subscribers and physical locations, a BSNL official along with a representative of M/s RIL shall verify the same and

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subsequently the local security agencies may be involved to stop such illegal grey market operations as per instructions issued by the O&M Cell of BSNL CO vide letter No.254-1/2003O&M/93 dated 21 July, 2003 regarding operation of clandestine/illegal telecom centres/telephone exchanges/ILD grey market.

¶272

In case M/s RIL do not convey any or proper address of the customer whose CLI was sent then same should be communicated back to the concerned SSA of BSNL where such incoming ISD calls with domestic CLI was received, with a copy to circle office of this SSA of BSNL. In case the concerned SSA of BSNL, where such incoming ISD calls were received, finds that the telephone number of which CLI has been received do not exist or receives an intimation that M/s RIL has not conveyed any or proper address of the customer whose CLI was sent, then it shall issue a notice for disconnection under misuse of the POI in addition to raising bill, for arrears of ADC, for all the calls recorded on this trunk group from the date of provisioning of that POI or for the preceding two months whichever is less, at a rate applicable for incoming International calls, to the concerned telecom service provider who has handed over such calls to BSNL.

¶273

Such instances of issue of disconnection notice and raising of the bills, for arrears of ADC, as detailed above should be consolidated at BSNL Circle office level and then communicated to this office.”

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The respondent, therefore, in terms of the said circular was not only required to ascertain whether the number exists in the network of the operator; in the event the number did not exist in the said network, it was to be asked to provide details of the subscribers and the physical location and the details so furnished were to be verified with the respondent and the representative of the operator.

¶279

Action was to be taken if the operator does not convey telephone number or proper address of the subscriber and if the same is found to be non-existent or otherwise incorrect.

¶280

In the instant case, we have noticed, that some actions had been taken by the petitioner.

¶281

It was, therefore, in our opinion, obligatory on the part of the respondent to comply with the principles of natural justice. We need not dilate further on the said subject as the matter stands covered by the decision of ours in Petition No.111 of 2007 (Tata Teleservices Ltd. Vs. BSNL) disposed of on 11.2.2010.

¶282

It was inter-alia held therein :

¶283

“In this case not only the respondent but also Government of India accepts that there exists a ‘grey market’ which is operated by some miscreants or unscrupulous persons as a result whereof not only the security of the State is at threat, but loss of revenue is also suffered by all private operators including the respondent. The DoT was thus, grappling with a problem of both security of State as also loss of revenue. If a private operator looses revenue, the Government of India also suffers loss. Furthermore, as noticed hereinbefore in the event of non-CLI calls, having regard to the statutory requirements made by TRAI, all parties were to reject the same, there was absolutely no reason as to why the respondent shall stand alone in the matter of implementation thereof. Its request for

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exemption has met with an order of rejection by TRAI as noticed in the respondent’s circular letter dated 20.01.2004.

¶289

Moreover the amount of penalty is not commensurate with the actual damages suffered by the respondent. For the said purpose, we would assume that clause 6.4.6 provides for the machinery to arrive at a pre-estimated damage but it is well known that even damages in terms of Section 74 of the Indian Contract Act must be a reasonable one. It is not necessary to further dilate in this matter as this aspect has been considered by us in the connected matters at some details.”

¶290

This Tribunal even in Petition No.74 of 2005 (COAI & Ors. Vs. Tata Teleservices Ltd. & Ors.) disposed of on 18.03.2010, emphasized the need of compliance with the principles of natural justice.

¶291

It may be true that the conduct of the petitioner is not free from blemish but only on that ground, the petitioner cannot be deprived of an opportunity of hearing in a case of this nature, where a huge amount is sought to be realized by invoking the penalty clause.

¶292

For the foregoing reasons, we are also of the opinion that other contentions raised by the parties hereto need not be gone into. All contentions, save and except, what has been found by us heretobefore shall remain open.

¶293

The impugned demand in our opinion being not sustainable is set aside accordingly. However, we are of the opinion that the amount deposited by the petitioner need not be directed to be refunded. This order is being passed afresh because no prayer in this behalf has been made before us. Secondly because the petitioner filed the aforementioned Misc. Petition which was not maintainable and therefore the petitioner did not deposit any amount

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and thirdly because in the event it would be able to show that it has not committed any breach of the interconnection agreement it would be entitled to refund of the deposited amount with interest.

¶299

Even otherwise, when a demand is made, subject to just exceptions, ordinarily the operators under the interconnection agreement are bound to deposit 50% of the demanded amount besides the admitted amount. Furthermore, we have set aside the demand on the ground of non-compliance of the principle of natural justice and, therefore, we are of the opinion that a conditional order may be passed in a case of this nature.

¶300

The respondent shall be given liberty to the petitioner to show that before disconnecting the number, all actions were taken strictly in terms of the circular letter of the DoT dated 24.6.2003 and its case otherwise comes within the purview of the circular letter issued by the respondent. In the event any occasion arises therefor, the petitioner may ask the respondent to supply the CDRs for the concerned period which may be complied with.

¶301

This petition is allowed in part and with the aforementioned observations and directions.

¶302

In the facts and circumstances of the case, however, there shall be no order to costs.

¶303

….…............J (S.B. Sinha) Chairperson

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