Partly allowed

Vodafone Mobile Service Ltd. v. Union of India

TDSAT17 Nov 2011TELECOM PETITION/442/2011

Case brief

AI extract

What is this about?

The Tribunal addressed a petition challenging a penalty imposed for alleged breach of license conditions due to unauthorized third-party subletting of mobile connections. It directed the petitioner to deposit 50% of the penalty. The 50% deposit was ordered based on Tribunal precedent.

What did the court decide?

Directs the petitioner to deposit a sum of Rs. 25 crores within two weeks.

Vodafone Mobile Service Ltd. vs Union of India — Company and Corporate | TDSAT (2011)

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TELECOM DISPUTES SETTLEMENT & APPELLATE TRIBUNAL NEW DELHI

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DATED: 17^TH NOVEMBER, 2011

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Petition No. 442 of 2011

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M/s. Vodafone Mobile Services Ltd. ……….. Petitioner Vs. Union of India ...…….. Respondent

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BEFORE :

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HON’BLE MR. JUSTICE S.B. SINHA, CHAIRPERSON HON’BLE MR. P.K. RASTOGI, MEMBER

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For Petitioner : Mr. Maninder Singh, Senior Advocate Mr. Navin Chawla, Advocate Mr. Tushar Singh, Advocate For Respondent : Ms. Maneesha Dhir. Advocate Mr. K.P.S. Kohli, Advocate Ms. Poonam Anand, Advocate

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O R D E R

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The petitioner is a licensee of the respondent herein; the licence having been granted in terms of the proviso appended under Section 4 of the Indian Telegraph Act, 1885.

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This petition has been filed by the petitioner herein aggrieved by and dissatisfied with an order dated 01.11.2011 imposing penalty of Rs.50 crores

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on the ground of alleged violation of the terms & conditions of licence dated 30.11.1994 as amended from time to time.

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We, in this petition, are concerned with Clause 5.13, 5.14, 7.1 and 9 of the said agreement, which read thus :-

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“ CLAUSE 5.13

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The complete list of subscribers shall be made available by the licensees on their website(having password controlled access), so that authorized Intelligence Agencies are able to obtain the subscriber list at any time, as per their convenience with the help of the password. The list should be updated on regular basis. Hard copy as and when required by security agencies shall also be furnished. The licensee shall ensure adequate verification of each and every customer before enrolling him as a subscriber; instructions issued by the licensor in this regard from time to time shall be scrupulously followed. The SIM Card used in the User terminal shall be registered against each subscriber for his bonafide use. The licensee shall make it clear to the subscriber that the SIM Card used in the user terminal against him is non-transferable and that he alone will be responsible for proper and bonafide personal use of the service.

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CLAUSE 5.14

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The complete list of subscribers shall be made available by the LICENSEE on their website (having password controlled access), so that authorised Intelligence Agencies are able to obtain the subscriber list at any time, as per their convenience with the help of the password. The list should be updated on

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regular basis. Hard copy as and when required by security agencies shall also be furnished. The LICENSEE shall ensure adequate verification of each and every customer before enrolling him as a subscriber; instructions issued by the licensor in this regard from time to time shall be scrupulously followed. The SIM Card used in the User terminal or handheld subscriber terminal (where SIM card is not used) shall be registered against each subscriber for his bonafide use. The LICENSEE shall make it clear to the subscriber that the SIM card used in the user terminal registered against him is nontransferable and that he alone will be responsible for proper and bonafide personal use of the service.

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CLAUSE 7.1

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It shall be the responsibility of the Licensee to issue or cause to be issued bills to its subscribers for use of the service. The Licensee shall maintain such records so as to produce itemized billing information. The billing system of the licensee shall be able to generate the billing information, in adequate details, to ensure satisfaction to the customer about the genuineness of the bill. The direction of TRAI, from time to time, in this regard shall apply.

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CLAUSE 9

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The LICENSEE shall not, without the prior written consent(can be granted only as described below), of the Licensor, either directly or indirectly, assign or transfer its rights in any manner whatsoever to any other party or enter into any agreement for sub licence and or partnership relating to any subject matter of the LICENCE to any third party either in

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whole or in part. Any violation of this terms shall be construed as a breach of licence Agreement and the licence shall be liable for termination. Provided however, that installation of systems, equipment and network can be given on contract, but providing the SERVICE cannot be given to another party on contract. Provided that the Licensee can always employ or appoint agents or servants.”

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Indisputably, the petitioner herein had entered into two

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agreements/arrangements with M/s. Matrix Cellular Services Pvt. Ltd. One agreement relates to bulk connections of more than 10,000 connections given to MCSPL only for their own use. Another agreement was entered on or about 10.7.2003 for the purpose of acquiring new post paid subscribers by Matrix. Allegedly, at the request of Matrix, 7858 subscribers out of 10,115 were deactivated by the respondent. The petitioner was asked to supply details of the new post paid connections acquired by M/s. Matrix Cellular Services Pvt. Ltd.

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The petitioner is said to have supplied all the informations by an e. mail dated 18.7.2003. Indisputably, the TERM Cell of the respondent, earlier known as VTM Cell, found two telephone numbers which have been given on rental basis by Matrix out of its 10115 connections. The said two numbers were taken by VTM Cell in the name of Harish Kumar in respect whereof Matrix used to raise its own invoices. The petitioner as also the Matrix were asked to supply

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informations with regard thereto. The response of Matrix in that behalf has not been brought on record.

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The impugned order was passed inter-alia on the premise that Matrix had its own tariff plan but the SIM provided on rental basis although they were not authorized to do so.

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Mr. Maninder Singh, learned senior counsel appearing on behalf of the petitioner would contend that from a bare perusal of the impugned order dated 18.10.2011, it would be evident that two telephone connections referred to therein are out of the 10115 connections given in bulk to Matrix and admittedly the informations in regard thereto having been withheld by Matrix, no liability can be fastened on the petitioner.

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Ms. Maneesha Dhir, learned counsel appearing on behalf of the respondent, on the other hand, urged that prima-facie, the petitioner has violated the conditions of licence putting the security of nation in jeopardy and thus, no interim order should be passed in favour of the petitioner.

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Before adverting to the contentions raised by learned counsel for the parties for the purpose of grant of interim relief prayed for by the petitioner, it may be placed on record that the other petitions, which are almost on similar

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terms, had been filed before this Tribunal by M/s. Bharti Airtel Ltd., which was marked as Petition No. 404 of 2011 and M/s. Idea Cellular Ltd. being Petition No. 412 of 2011. In those petitions, this Tribunal directed deposit of 50% of the amount of penalty namely, the sum of Rs.25 crores.

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M/s. Bharti Airtel Ltd. preferred a Writ Petition before the Delhi High Court questioning the legality of said order dated 18.10.2011. The said Writ Petition was marked as W.P. (C) No. 7707 of 2011.

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Vipin Sanghi, J. by reason of a detailed order dated 24.10.2011 dismissed the said Writ Petition, stating :-

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“7. Having heard learned senior counsel for the parties, I am not inclined to interfere with the impugned order which has been passed by the TDSAT in exercise of its discretionary jurisdiction upon a prima facie evaluation of the petitioner’s case. From the impugned order, it is clear that the TDSAT, prima facie, is of the view that the petitioner has breached the license conditions by entering into agreement with the M/s Galaxy Rent A-tel Pvt. Ltd. (GRTPL) and M/s Delhi Super Trade Pvt. Ltd. (Falcon Business Resources Pvt. Ltd (FBRP)), whereunder these entities prescribed their own rates, issued their own application forms etc., details whereof admittedly the petitioner claims not to have been provided to the petitioner. Prima facie, it

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appears that the revenue earned by M/s Galaxy Rent - A-tel Pvt. Ltd. (GRTPL) and M/s Delhi Super Trade Pvt. Ltd (Falcon Business Resources Pvt. Ltd (FBRP)) is substantially in excess of the revenue transmitted to the petitioner by these entities. It remains to be examined whether, in the light of the nature of the arrangement arrived at between the petitioner and these entities, it could be said that the petitioner had merely appointed agents and employees for provision of the service in terms of Clause 6.1 of the license deed.

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8. The reason why the TDSAT has directed deposit of 50% of the penalty is that the respondents in their order did not give any basis for imposing the maximum penalty of Rs.50 Crores. However, from the impugned order it appears that the loss of revenue, if the case of the respondent is accepted, would be to the tune of few crores.

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9. Considering the fact that the loss of revenue claimed by the respondent would be a few crores the interim direction passed by the TDSAT cannot be said to be unreasonable. In Music Broadcast Private Limited, (Delhi) Vs. Union of India and Others, 117 (2005) DLT 315, this Court followed the decision in Surya Dev Rai Vs. Ram Chander Rai, (2003) 6 SCC 675, wherein the Supreme Court has, inter alia, held that:

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“(7) The power to issue a writ of certiorari and the

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supervisory jurisdiction are to be exercised sparingly and only in appropriate cases where the judicial conscience of the High Court dictates it to act lest a gross failure of justice or grave injustice should occasion. Care, caution and circumspection need to be exercised, when any of the above said two jurisdictions is sought to be invoked during the pendency of any suit or proceedings in a subordinate court and the error though calling for correction is yet capable of being corrected at the conclusion of the proceedings in an appeal or revision preferred thereagainst and entertaining a petition invoking certiorari or supervisory jurisdiction of High Court would obstruct the smooth flow and/or early disposal of the suit or proceedings. The High Court may feel inclined to intervene where the error is such, as, if not corrected at that very moment, may become incapable of correction at a later stage and refusal to intervene would result in travesty of justice or where such refusal itself would result in prolonging of the lis.?

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10. Though the respondent in its order dated 19.09.2011 may not have dealt with the submissions of the petitioner by giving detailed reasons, a perusal of the said order shows that the entire basis for imposing penalty has been set out therein. In any event, the petitioner has been heard by the TDSAT and a reasoned order has been passed prima facie holding the petitioner guilty of breach of the license conditions.”

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Mr. Maninder Singh would urge that one of the reasons assigned by us in our order dated 18.10.2011 was that despite the fact that the contract had been terminated by the petitioner in October 2007, new connections have been granted even in the year 2008-2009.

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Like the aforementioned two cases, in this case also the respondent has not only taken into consideration various aspects of the matter but also found :-

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“17. WHEREAS M/s MCSPL was carrying out the entire activities like a Mobile Service Provider with fixation of their own (CAF), Bill & Tariff Plan, Roaming Rates, Support Services, Bill collection, Customer Care, Risk and Credit Management etc. all under the purported agreement with M/s. VEMSL i.e. M/s. VEMSL has passed on the right to provide the telecom service to M/s. MCSPL although MCSPL is not authorized by DoT to do so violating the lIcence Agreement clause which inter-alia states that “The LICENCEE will not assign or transfer its rights in any manner whatsoever under the license to a third party or enter into any agreement for sub-licence and/or partnership relating to any subject matter of the LICENCE to any third party either to whole or in part i.e. no subleasing/partnership/third party interest shall be created”.

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18. WHEREAS M/s MCSPL was directly collecting the money from the customers for post-paid mobile connections as on rental basis against the invoices raised by M/s. MCSPL is more than what M/s. VEMSL is getting from M/s. MCSPL and the money being collected by M/s. MCSPL should have been reflected in the revenue of M/s

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VEMSL which should be taken into consideration for Adjusted Gross Revenue (AGR) purpose which is not happening thereby causing a loss of revenue to the Government of India as in the form of License Fees.

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19. WHEREAS that M/s. VEMSL has violated the DoT instructions in the matter of bulk connections and never checked and inspected the bonafide use of the rented subscribers and were unable to detect the misuse of these mobile members.

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20. WHEREAS as M/s. MCSPL is not a CMTS/UAS licence of the DoT, they are not authorized to publish and have their own tariff plan. Even otherwise the tariff plan of M/s MCSPL is not in accordance with TRAI regulations and orders and do not match with any tariff plan filed by M/s. VESML in the TRAI and M/s VEMSL has created the third party interest by entering into the agreement with M/s MCSPL and violated license condition No.9.”

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We have noticed heretobefore the terms & conditions of licence, from a perusal whereof it would be evident that utmost vigilance was required to be taken with regard to functioning of the bulk telephone connections. The relevant instructions in this respect maybe seen below :-

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“WHEREAS as per DOT instructions/order vide letter No.1-20/2001V.Tech.(Pt.IV) dated 23^rd June 2003 “….Utmost vigilance should be exercised in providing bulk telephone connections for a single user

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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 (Vigilance), DoT as well as all Security Agencies on monthly basis…. Bulk user’s premises should be inspected by the service providers 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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Prima-facie, it is difficult to accept the contention that when bulk connections of more than10,000 connections had been given in favour of Matrix, the SIM Cards could be rented out without the knowledge of the petitioner.

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The question as to whether the stipulations contained in the impugned order are correct or not, may have to be determined at the time of final hearing.

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Prima-facie, however, we are of the opinion that the petitioner has violated the conditions of licence.

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We, therefore, see no reason to deviate from the order passed by us in the case of M/s. Bharti Airtel Ltd. and M/s. Idea Cellular Ltd.

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The petitioner, may, therefore deposit a sum of Rs.25 crores, being 50% of the amount, within two weeks from date subject to compliance of the aforementioned directions.

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………....... (S.B. Sinha) Chairperson

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………………. (P.K. Rastogi) Member

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rkc

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Vodafone Mobile Service Ltd. v. Union of India

Case brief

What is this about?

What did the court decide?

Vodafone Mobile Service Ltd. v. Union of India

Case brief

What is this about?

What did the court decide?

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