Disposed

Videocon Telecommunication Ltd. v. Union of India

TDSAT10 Jan 2011TELECOM PETITION/454/2011

Case brief

AI extract

What is this about?

The Tribunal directed the Union of India to return Performance Bank Guarantees in four service circles where roll-out obligations were completed. It ordered the petitioner to furnish undertakings for further liquidated damages and stipulated conditions for Financial Bank Guarantees renewal.

What did the court decide?

Return of Performance Bank Guarantees in four service circles; petitioner to furnish undertakings for future demands and secure specific amounts against liquidated damages and renew Financial Bank Gua

Videocon Telecommunication Ltd. vs Union of India — Company and Corporate | TDSAT (2011)

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TELECOM DISPUTES SETTLEMENT & APPELLATE TRIBUNAL

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NEW DELHI

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DATED 10^TH JANUARY, 2011

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Petition No.450 of 2011 (M.A. No. 326 of 2011)

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Videocon Telecom	munication Ltd.	…Petitioner
Vs.
Union of India		…Respondent
	Petition No.454 of 2011
Videocon Telecom	munication Ltd.	…Petitioner
Vs.
Union of India		…Respondent
	Petition No.455 of 2011
Videocon Telecom	munication Ltd.	…Petitioner
Vs.
Union of India		…Respondent
	Petition No.456 of 2011
Videocon Telecom	munication Ltd.	…Petitioner
Vs.
Union of India		…Respondent

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Page 1 of 29

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Petition No.457 of 2011

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Videocon Telecom	munication Ltd.	…Petitioner
Vs.
Union of India		…Respondent
	Petition No.458 of 2011
Videocon Telecom	munication Ltd.	…Petitioner
Vs.
Union of India		…Respondent

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Petition No.459 of 2011

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Videocon Telecommunication Ltd.	…Petitioner
Vs.
Union of India	…Respondent

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Petition No.460 of 2011

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Videocon Telecommunication Ltd.	…Petitioner
Vs.
Union of India	…Respondent

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Page 2 of 29

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Petition No.461 of 2011

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Videocon Telecom	munication Ltd.	…Petitioner
Vs.
Union of India		…Respondent
	Petition No.462 of 2011
Videocon Telecom	munication Ltd.	…Petitioner
Vs.
Union of India		…Respondent

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Petition No.463 of 2011

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Videocon Telecom	munication Ltd.	…Petitioner
Vs.
Union of India		…Respondent
	Petition No.464 of 2011
Videocon Telecom	munication Ltd.	…Petitioner
Vs.
Union of India		…Respondent

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Petition No.465 of 2011

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Videocon Telecommunication Ltd. …Petitioner Vs. Union of India …Respondent Petition No.466 of 2011 Videocon Telecommunication Ltd. …Petitioner Vs. Union of India …Respondent Petition No.467 of 2011 Videocon Telecommunication 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, CHAIRPERSON

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For Petitioner	:	Mr. Dayan Krishnan, Advocate Mr. Kirtiman Singh, Advocate
		Mr. Gautam Narayan, Advocate
		Mr. T. Singhdev, Advocate
		Mr. Zartab, Advocate
For Respondent	:	Mr. Ruchir Mishra, Advocate

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ORDER

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The Petitioner herein is a licensee under the Indian Telegraph Act, 1885 (‘The Act’) in respect of 21 license service areas.

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In this petiton, however, this Tribunal is concerned with the service areas of Gujarat, Kerala, Mumbai, UP (W), Rajasthan, Orissa, Maharashtra, Himachal Pradesh, Bihar, Tamil Nadu, Kolkata, Haryana, UP (E), Karnataka, Madhya Pradesh, Assam, Andhra Pradesh, Jammu & Kashmir, North-Easth and West Bengal.

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Indisputably the Petitoner has furnished Performance Bank Guarantees and Financial Bank Guarantees as provided for in Clauses 21.1 and 21.2 of the Unified Access Service Licenses executed between the parties hereto.

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The said Clauses as also Clauses 21.4 and 21.5 read as under:-

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“ 21.1 Performance Bank Guarantee: Performance Bank Guarantee (PBG) in prescribed format shall be submitted for amount equal to Rs.20 crores (for category ‘A’ service area) before signing the Licence Agreement.

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Further on completion of one year from the effective date of licence and after meeting the coverage criteria stipulated for first year, the PBG shall be reduced to Rs.10/5/1 crores for category ‘A’ / ‘B’/ ‘C’ service areas on self-certification provided by the Licensee.

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Further on fulfilling the roll out obligations as stipulated in Clause 34, the balance PBG shall be released on receipt of test certifictes/test certificates issued by TEC in respect of coverage.

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21.2 Financial Bank Guarantee: The Licensee shall submit a Financial Bank Guarantee (FBG), valid for one year, from any Scheduled Bank or Public Financial Institution duly authorized to issue such bank Guarantee, in the prescribed Performa annexed. Initially, the financial bank guarantee shall be for an amount of Rs.50 crore (for category ‘A’ service area) which shall be submitted before signing the Licence agreement. Subsequently, the amount of FBG shall be equivalent to the estimated sum payable equivalent to license fee for two quarters and other dues not otherwise secrutised and any additional amount as deemed fit by the Licensor. The amount of FBG shall be subject to periodic review by the Licensor and shall be renewed from time to time till final clearance of all dues.

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21.4 Initially, the Bank Guarantees shall be valid for a period of one year and shall be renewed from time to time. The Licensee, on its own, shall extend the validity period of the Bank Guarantees for similar terms at least one month prior to date of its expiry without any demand or notice from the Licensor on year to date of its expiry without any demand or notice from the licensor on year to year basis. Any failur to do so, shall amount to violation of the terms of the licence and entitle the licensor to encash the Bank Guarantees and to convert into a cash security without any reference to the Licesee at his risk

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and cost. No interest or compensation whatsoever shall be payable by the licensor on such encashment.

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21.5 Without prejudice to its rights of any other remedy, Licensor may encash Bank Guarantee (FBG as well as PBG) in case of any breach in terms and conditions of the Licence by the Licensee.”

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Some other clauses of the Licence Agreement, which are relevant for our purpose, are delivery of provision of service and delivery of service as contained in Clauses 7 and 8:-

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“7. Provision of Service : The LICENSEE shall be responsible for, and is authorised to own, install, test and commission all the Applicable system for proviidng the Unified Access Services under this Licence agreement.

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8. Delivery of Service: The Licensee shall commission the Applicable Systems within one year from the effective date of the licence. The date of Test Certificate issued by the Authorized Testing Party of the Licensor as specified from time to time shall be reckoned as the date of commissioning the service for the purpose of calculating liquidated damages in terms of Condition 35 of the Licence Agreement. However, the Licensee may start providing service to customers at any time without the need of specific approval of the Licensor.”

¶42

Roll out obligations of the licensee are contained in Clause 34 and the provisions for liquidated damages as contained in Clause 35.

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We may also notice that the term ‘Service’ has been defined in Annexure ‘A’ appended to the said conditions of the licence, being as under:-

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“SERVICE covers collection, carriage, transmission and delivery of voice or non-voice messages over Licensee’s network in licensed service area and inlcudes provision of all types of services except for those requiring a separate licence.”

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The grievance of the petiitoner as raised in this petition related to interpretation and application of Clause 21.1 and Clause 21.2 of the conditons of licence would appear from the following chart:-

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Performance Bank Guarantee

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(A) Circles in which the Petitioner is entitled to releae of the

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Performance Bank Guarantee

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S. No.	Circle/Service Area	Petition No.	Date of communication with complete roll out obligations	Amount o demanded paid (Rs crores)	f LD and .) (in
1.	Gujarat	450/2011	16.8.2011	Demanded Paid Balance	1.35 1.35 0.00
2.	Kerala	462/2011	16.8.2011	Demanded Paid Balance	1.25 1.25 0.00
3.	Maharashtra	463/2011	30.11.2011	Demanded Paid Balance	1.85 1.85 0.00
4.	Tamil Nadu	466/2011	30.11.2011	_Demanded _	1.45

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				Paid 1.45 Balance0.00
5.	Haryana	458/2011	30.11.2011	Demanded 0.25
				Paid 0.15
				Balance0.10
6.	Andhra	465/2011	30.11.2011	Demanded 1.55
	Pradesh			Paid 0.93
				Balance0.62

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(B) Circles in which the petiitoner is entitled to a 50% reduction of the

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performance bank guaratee.

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S. No.	Circle/Service Area	Petition No.	Date of communication with complete roll out obligations	Amount demanded paid (Rs crores)	of LD and .) (in
1.	Himachal Pradesh	454/2011	12.8.2011	Demanded Paid Balance	0.65 0.65 0.00
2.	Orissa	456/2011	24.1.2011	Demanded Paid Balance	2.15 2.15 0.00
3.	Bihar	459/2011	16.8.2011	Demanded Paid Balance	1.35 1.35 0.00
4.	UP(West)	461/2011	12.8.2011 (page 13), 30.12.2010 (page 133) and 16.8.2011 (page 138)	Demanded Paid Balance	0.40 0.40 0.00
5.	Rajasthan	467/2011	08.9.2010 (page 131), 24.1.2011 (page 137) and 16.8.2011 (page 138)	Demanded Paid Balance	0.25 0.25 0.00
6.	Madhya Pradesh	455/2011	12.7.2011 (page 129)	Demanded Paid Balance	0.40 0.24 0.16
7.	West Bengal	457/2011	09.8.2010 (page 141), 24.8.2010 (page 142)	Demanded Paid Balance	3.35 2.01 1.34

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8.	Karnataka	460/2011	08.09.2010	Demanded 1.65
			(page 131)	Paid 0.99 Balance0.66
9.	UP (East)	464/2011	12.8.2010	Demanded 1.95
			(page 130)	Paid 1.17 Balance0.78

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We may notice that whereas so far as Category ‘A’ of the said chart are concerned, the Petitioner in respect of the circles of Gujarat, Madhya Pradesh and Tamil Nadu has paid the entire amount of Liquidated Damages as demanded by the Respondent herein, said to be under protest; in regard to Haryana and Andhra Pradesh, they have filed two petitions before us being Petition No. 84 of 2011 and Petition No. 62 of 2011 respectively and by an Interim Order passed therein, Petitioner was directed to deposit 60% of the demanded amount which has been complied with.

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We may notice that with regard to Haryana circle, the demanded amount was 0.25 crores, out of which the Petitioner has deposited the sum of Rs.0.15 crores where as in respect of the Andhra Pradesh, out of the demanded amount of Rs.1.55 crores, Petitioner has deposited Rs.0.93 crores, leaving a balance of Rs.0.10 and Rs.0.62 crores respectively.

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So far as the circles which come within the purview of the Category ‘B’ of the aforementioned Chart are concerned, the Petitioner

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contends that it has completed its first phase of roll out obligations and the amount demanded had already been paid except in the cases of Madhya Pradesh, West Bengal, Karnataka and UP (E), in respect whereof the Petitioner has filed various petitons before this Tribunal marked as Petition No. 63 of 2011, Petition No. 42 of 2011, Petition No. 64 of 2011 and Petition No. 85 of 2011 and in terms of an Interim Order passed therein the petitoner has in the case of Madhya Pradesh circle deposited a sum of Rs.0.24 crores out of the demanded amount of 0.40 crores, in respect of West Bengal circle, and deposited a sum of Rs.2.01 crores out of the total demanded amount of Rs.3.35 crores.

¶63

So far as Financial Bank Guarantees are concerned, they are also subject matters of various petitions filed before us in respect of 13 circles as would apear from the aforementioned chart.

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It is not in dispute that a similar petition was filed by one Sistema Shyam Teleservices Ltd. against Union of India being Petition No. 314 of 2011, wherein this Tribunal in relation to the Performance Bank Guarantees, opined as under:-

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“The second part of the Performance Bank Guarantees, however, was amended by Respondent in terms of a circular letter dated 10.2.2009; clauses (xi) & (xiii) whereof reads as under:-

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“(xi) Date of registration by TEC/TERM is to be treated as date of meeting the roll-out obligation in case of coverage criterion is met for roll-out obligation on testing.

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(xiii) PBG shall be encashed to the extent of the Liquidated Damages.”

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The Petitioner has furnished 22 Bank Guarantees out of which, two are in respect of Rajasthan circle.

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There exists a dispute as to whether the Petitioner has complied with its roll-out obligations or not. It is, however, accepted that for alleged non-compliance of the said obligations the amount of liquidated damages have been demanded and paid for by the Petitioner in respect of 16 circles out of 21 circles. So far as the remaining five circles are concerned, in petitions filed by the Petitioner herein, by reason of an interim order, 60% of the demanded liquidated damages amount have been directed to be paid. The Petitioner had complied with the said order.

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Mr. Ramji Srinivasan, learned senior counsel appearing on behalf of the Petitioner would contend that the Respondent in terms of Clause 21.1 was obligated to return the Performance Bank Guarantees on the certificate issued by the TEC in respect of coverage which have been complied with.

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Mr.Ruchir Mishra, learned counsel appearing on behalf of the Respondent, however, would submit that he is not in a position to state as to whether the Performance Bank Guarantees are furnished only in respect of the roll out obligations of the licencee or for other purposes also.”

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So far as Financial Bank Guarantees are concerned, it was noticed:-

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“So far as the Financial Bank Guarantees are concerned, Mr.Srinivasan would contend that in terms of Clause 21.2 the same were required to be furnished in respect of the licence fee payable on yearly basis.

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The returns having been filed, the Financial Bank Guarantees were required to be reviewed being an equivalent amount towards the estimated sum payable equivalent to licence fee for two quarters.”

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11. It was directed:-

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“i) The Petitioner shall furnish Bank Guarantees in respect of the circles for which communication have been received with respect to the quantum of the amount for which the Bank Guarantees are to be furnished in terms of Clause 21.2 of condition of licence.

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ii) Those circles which have not yet communicated the quantum of the Bank Guarantees to be furnished by the Petitioner in respect of the licence fee would do so within two weeks from date.

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iii) The Petitioner shall furnish Bank Guarantees within a period of two weeks from the date of receipt of said communication(s).

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iv) The new Bank Guarantee would be furnished in place and in stead of the existing Bank Guarantee.

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v) The Petitioner shall furnish Bank Guarantees in terms of Clause 21.3 of the licence condition within two weeks from the date of intimation of the amount by the WPC Wing of the Respondent for each of the circles.

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vi) Till further orders, the Performance Bank Guarantees furnished by the Petitioner shall remain in force.

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vii) It is made clear that in the event the Petitioner is informed by the Respondent about any specific amount(s) which is not otherwise securitized, the Petitioner would be bound to furnish the Bank Guarantees in relation thereto also.”

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The matter was heard finally and by a judgement and order dated 28.9.2011, the petition was allowed, opining:-

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For the purpose of disposal of this petition, I would assume that the Petitioner has failed to comply with its roll out obligations as envisaged in Clause 34.2. The consequences therefor have been laid down in Clause 35 as also paragraph 13 (xiii) of the aforementioned circular letter dated 10.2.2009.

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The act of the UOI must be kept confined within the purview of Clause 21 so far as the so called roll out obligation of the license as envisaged in Clause 34.1 is concerned, as it has explicitly been said therein that the liability of the licensee in terms thereof is absolute and he is solely responsible for the matters provided for therein.

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The UOI has clearly absolved itself to pay any damages either to the licensee or to the consumers, even if any occasion arises therefor so far as the obligations on the part

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of the licensee are concerned. The provision of the performance bank guarantees clearly show that it could be invoked only when the licensor suffer any damages.

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Even assuming for the sake of argument that a licensor incurs any liability in terms of Clause 31.4, the same has to be demanded.

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A cause of action therefor must arise. A cause of action can arise both before and after the roll out obligations are met.

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If Mr. Mishra’s submissions are to be accepted, no occasion would arise for reduction of the amount of the performance bank guarantee and ultimate release thereof. It cannot, therefore, be given any effect. Performance bank guarantees would, therefore, have to be kept alive for the entire term of the license i.e. 20 years.

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This Tribunal in this case would assume that failure on the part of the licensee to abide by its obligation in Clause 34.1 may entail civil consequences but the amount due therefor were required to be calculated. Such dues, if any, may fall within the purview of the financial bank guarantee as contemplated under Clause 21.2 of the license and not 21.1.

¶96

For the purpose of construing the bank guarantees vis-à-vis the ground realities, this Tribunal may notice the submissions of Mr. Srinivasan that the Petitioner has furnished a total bank guarantee of Rs.256,266,000, although, its total liability for payment of revenue to be covered under the financial bank guarantee would be about Rs.25 crores.

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On a harmonious reading of Clause 34.1 and 21.1, I am of the opinion that interest of justice shall be met if the

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Petitioner is directed to keep the bank guarantee of the 40% of the amount of liquidated damages imposed on it in respect of the aforementioned five circles, namely, Orissa, Kerala, Kolkata, Delhi and Mumbai i.e. for a sum of Rs.0.78 crores, 2.80 crores, 0.46 crores, 1.10 crores and 0.66 crores, respectively, in view of the fact that out of a total amount of Rs.65.3 crores, the Petitioner has already deposited a sum of Rs.59.54 crores in respect of all its licenses.

¶100

So far as the financial bank guarantees are concerned, the interim order dated 9.8.2011, is made absolute. The financial bank guarantees should be reviewed. Periodic review indisputably would not mean downward review but also upward review. In terms of the provisions of the license, the Petitioner is bound to furnish financial bank guarantees, strictly in terms of Clause 21.2 of the license. The Petitioner, thus, has seriously been prejudiced. It had to make arrangement for payment of a large amount to secure the Bank Guarantees.

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The allegation that the Petitioner has been discriminated against also has not been denied or disputed .”

¶102

These petitons involve similar questions.

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Mr. Dayan Krishan and Mr. Navin Chawla, learned counsel appearing on behalf of the Petitioner would contend:-

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(i) Keeping in view the plain language used in Clauses 21.1 and 21.2, there cannot be any doubt or dispute that on

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completion of either first phase or the second phase of the roll out obligations, the licensees would be entitled to reduction of 50% of the bank guarantee, and return thereof respectively.

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(ii) So far as Financial Bank Guarantees are concerned, the same would be required to be renewed only in regard to two quarters of AGR and other dues, if any, which may be communicated to the licensee and in that view of the matter, the Respondent having failed and/or neglected to take any step in that behalf must be directed to perform its contractual obligations.

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Mr. Ruchir Mishra, learned counsel appearing on behalf of the Respondent, on the other hand, would submit:-

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(i) The Petitioner having supplied the details of its roll out obligations only recently and in some cases as late as on 30.11.2011, no verification thereof could be made by the officers of the DoT.

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(ii) The licensing department of the Respondent on receipt of the report from the TERM Cells raises only a provisional demand of ‘Liquidated Damages’ and a final demand would be made only on completion of the verifiction of the

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details furnished by the Petitioner/TERM Cells so far as its compliance of roll out of obligation including rendetion of service as defined in the conditions of the licence by issuing a fresh demand.

¶113

Having regard to this provisons contained in Clause 21.5, the petitoner is bound to renew the Performance Bank Guarantees and also the Financial Bank Guarantees in the manner as stipulated in the Agreement.

¶114

In Siestema Shyam Teleservices Ltd. similar arguments raised on behalf of the Respondent herein, were considered in the following terms:-

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“(a) Concept of review of financial bank guarantee does not mean automatic down-gradation of the amount covered thereby;

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(b) Having regard to the provisions contained in Clause 21.1 of the license, it would be evident that a performance bank guarantee not only covers the coverage aspect of the matter but also the performance of the service providers during its entire tenure of license.

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(c) Performance bank guarantee even otherwise cover other dues of the Respondent inasmuch as it would appear that in respect of the category `C’ circles, although, a bank guarantee has to be furnished only for a sum of Rs.2 crores, the liquidated damages upto Rs.7 crores can be imposed.

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(d) The coverage obligation on the part of the license merely provides that time is the essence of the contract and on failure on the part of the licensee to carry out its roll out obligations it must pay the amount of liquidated damages as provided for in the license.

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(e) The financial bank guarantees had been directed to be kept alive inasmuch as the exact dues payable by the Petitioner are yet to be calculated and the demands in respect thereof have to be raised.

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(f) The impugned orders have been issued only to meet a situation arising by reason of the DoT’s not being able to calculate the actual dues of the Petitioner.”

¶122

Similar contentions, as herein, were raised by Mr. Mishra in that matter also. We may notice the relevant paragraphs of Siestema Shyam Teleservices Ltd. (supra).

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“A bank guarantee is a tripartite contract between the parties thereto as also the bankers. When a performance bank guarantee is furnished the same cannot be invoked in a case where performance by the licensee is not in question.

¶124

By reason of the amendment, in the license, clarifications were sought to be made. Liquidated damages are imposed in terms of a formula provided for in the license itself.

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The maximum amount of liquidated damages can be invoked if the roll out obligations is delayed by 52 weeks to the extent of Rs.7 crores.

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In this case for whatever reasons liquidated damages have been imposed.”

¶128

We have noticed heretobefore that similar contentions raised have been rejected and, thus, the Respondent cannot be permitted to agitate the same once over again.

¶129

Although in the said judgement, Clause 21.5 has not specifically been referred to, a bare perusal of Clause 21 in its entireity would clearly go to show that by reason thereof, a right of encash bank guarantee has been provided, which was otherwise available to it in law. The said clause has to beconstrued harmoniously with the othersub-clauses of Clause 21.

¶130

In view of the plain language used in Clause 21, we do not see any reason as to why the Respondent would not be directed to perform its part of contract as provided for in the second and third paragraphs of Clause 21.1, so far as the Performance Bank Guarantees are concerned.

¶131

In terms of the said provisions, reduction to the extent of 50% of the bank guarantees is to be given on self certification.

¶132

So far as the second phase of the roll out obligation is concerned, the bank guarantees have to be returned on furnishing of certificates by the competent authority.

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¶134

It is true that in respect of some of the circles, namely, Haryana,

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Tamil Nadu, Haryana and Andhra Pradesh, the Petitioner has sent informations only on 30.11.2011 but it appears that the TERM Cell had already issued the requisite informations to the Licensing Cell and as also the Security Wing of the DoT.

¶136

We may notice the folowing chart as submitted by the Petitioner:-

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Performance Bank Guarantee

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(A) Circles in which the Petitioner is entitled to a release of the Performance Bank Guarantee

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S.No.	Circle/Service area	Date of receipt of service test results showing 2nd phase roll out	Due Date of 2nd Phase Roll Out as per DOT	Date of communication of compliance with complete roll out obligations
1.	Gujarat	15 DHQ’s out of 29 DHQ’s between 13.4.2010 & 21.3.2011. TERM Cell Regd. Between 17.2.2010 & 17.01.2011.	08.10.2011	16.8.2011 (page 127)
2.	Kerala	8 DHQ’s out of 15 DHQ’s between 2.2.2010 & 27.4.2011. TERM Cell Regd. Between 16.10.2009 & 29.12.2010.	11.6.2011	16.8.2011 (page 128)
3.	Maharashtra	18 DHQ’s out of 36 DHQ’s between 19.7.2010 &	14.9.2011	30.11.2011

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		15.11.2011. TERM Cell Regd. Between 3.3.2010 & 28.07.2011.
4.	Tamil Nadu	17 DHQ’s out of 33 DHQ’s between 18.12.2009 & 20.10.2011. TERM Cell Regd. Between 14.12.2009 & 16.12.2010.	18.5.2011	30.11.2011
5.	Haryana	11 DHQ’s out of 21 DHQ’s between 14.6.2010 & 24.6.2011. TERM Cell Regd. Between 20.1.2010 & 27.5.2011.	25.12.2011	30.11.2011
6.	Andhra Pradesh	12 DHQ’s out of 23 DHQ’s between 15.12.2009 & 02.5.2011. TERM Cell Regd. Between 30.10.2009 & 14.02.2011.	06.06.2011	30.11.2011

¶142

Similarly in regard to the Category B circles, we may notice the

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following:-

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(A) Circles in which the Petitioner is entitled to a 50% reduction of the

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Performance Bank Guarantee

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S.No.	Circle/Service area	Date of receipt of service test results showing 2nd phase roll out	Due of Phase Out as DOT	Date 2nd Roll per	Date of communication of compliance with complete roll out obligations
1.	Himachal Pradesh	1 DHQ’s out of 12 DHQ’s on 27.7.2010. 5 DHQs TERMCell Regd. On	28.12.	2011	12.8.2010 (page 130)

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		24.11.2011
2.	Orissa	3 DHQ’s out of 30 DHQ’s between 9.9.2010 & 4.11.2010. 12 DHQs TERM Cell Regd. Between 10.2.2011 & 4.3.2011	06.5.2011	24.1.2011 (page 136)
3.	Bihar	2 DHQ’s out of 62 DHQ’s between 06.7.2010 & 2.7.2010. 29 DHQs TERM Cell Regd. Between 9.3.2010 & 27.9.2011.	29.10.2011	16.8.2011 (page 140)
4.	UP (WEST)	4 DHQ’s out of 37 DHQ’s on 05.4.2010. 15 DHQs TERM Cell Regd. Between 15.6.2011 & 06.9.2011.	20.10.2011	12.8.2010 (page 130, 30.12.2010 (page 133) and 16.8.2011 (page 138)
5.	Rajasthan	3 DHQ’s out of 33 DHQ’s between 12.7.2010 & 14.7.2010.	12.1.2012	08.9.2010 (page 131), 24.1.2011 (page 137) and 16.8.2011 (page 138).
6.	Madhya Pradesh	7 DHQ’s out of 68 DHQ’s between 04.3.2010 & 12.7.2010. TERM Cell Regd. Between 30.10.2009 & 14.02.2011.	06.9.2011	12.7.2010 (page 129)
7.	West Bengal	3 DHQ’s TERM Cell Regd. Between 09.8.2010 & 24.8.2010 Total DHQs: 25	09.1.2012	09.08.2010 (page 141) and 24.8.2010 (page 142)
8.	Karnataka	3 DHQ’s out of 29 DHQ’s between 21.12.2009 and 23.12.2009 12 DHQ’s TERM Cell Regd. On 10.3.2011	31.5.2011	08.9.2010 (page 131)

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9.	UP (East)	5 DHQ’s out of 48 DHQ’s between 24.1.2011 and	22.9.2012	12.8.2010 (page 130)
		25.1.2011 19 DHQ’s TERM
		Cell Regd.
		Beetween
		23.8.2011 and
		30.8.2011

¶151

Moreover, the Respondent itself issued a circular letter on or about 29.10.2010, the correctness whereof is neither in doubt nor in dispute.

¶152

It has been stated therein :-

¶153

“4.TERM Cell shall communicate the testing date(s) in writing to Service Provider, at least 10 days in advance for making the necessary test equipment ready on date(s) of testing. If Service Provider is not ready on testing date(s), the date can be extended by 10 more days by DDG (TERM) on written request from Service Provider, after which the registration will be closed and Service Provider will have to again register by paying normal fee. Service provider will make all the resources available for testing.

¶154

5. TERM Cell shall carry out the testing on the above scheduled date as per TSTP mentiond above. It may be ensured by TERM Cells that pre-requisite Checks for Coverge as per Part-i of TSTP are tested and passed, before carrying out coverage tests. Minor deviations in prerequisites can be approved by DDG (TERM) concerned.

¶155

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¶156

6. Date of Registration of the case by TERM Cell is to be treated as date of meeting roll-out obligation, in case test results are found in order in the testing carried out by the TERM Cell.

¶157

9. If test results on examination are found in order, the case shall be approved by the DDG of the concerned TERM cell and Service Test Result will be issued by the respective TEERM Cell as epr Performa, with copy to security and licensing unit of DoT.

¶158

10. If the test results in the testing conducted by the TERM Cell are found to be deficient in meeting the roll out obligation, except for deviations approved, the case shall be rejected by the TERM Cell and the test results still will be given to service providers with a copy to licensing and security of DoT and registration will be closed. The concerned service provider shall re-register the case once again by paying three times the normal test fee.

¶159

11. TERM Cell shall make comprehensive list and recommend the case for isue of Service Test Certifict for particular license area, after TERM Cell has tested, passed and issued requisite number of Service Test results. Service Test Certificate for roll out obligation shall be issued by Security Wing DoT after getting recommendation of TERM Cell. A copy of which will be sent to licensing Wing. DDG (TERM) cell shall send the draft Servie Test Certificate to Secuirty Wing along with other details.”

¶160

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¶161

It is, therefore, idle to contend that for a period of more than two years, so far as the first phase of the roll out obligations on the part of the Petitioner is concerned and for several months in regard to the second phase of its roll out obligations, the Respondent could not complete its verification process.

¶162

This Tribunal in Idea Cellular Ltd. Vs. Union of India has noticed that so far as TERM Cell are concerned, only 10 days’ time is granted for the purpose of making inspection. Roll out obligations on the part of the licensee according to the Respondent being in public interest, it goes without saying that the both parties are bound to act in terms of the license agreement and the circular letters issued by the Central Government. The time frame chalked out by the Respondent itself must necessiarily be adhered to.

¶163

We, therefore, are of the opinion that interest of justice would be sub-served, if the interim relief prayed for by the Petiitoner is disposed of in the following terms:-

¶164

(i) The Respondent shall return the Performance Bank Guarantees in respect of circles of Gujarat, Karnataka, Maharashtra and Tamil Nadu within two weeks from date.

¶165

(ii) The Petitioner shall, however, furnish an undertaking supported by affidavit that in the event any further

¶166

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¶167

demand for liquidated damages is raised, the Petitioner shall securitise the same.

¶168

(iii) So far as circles of Haryana and Andhra Pradesh is concerned, the Petitioner shall furnish bank guarantees to the extent of unpaid amount, i.e., Rs.0.10 crores and Rs.0.62 crores.

¶169

(iv) As regards the circles in regard whereto the liquidated damages claimed by the Respondent is in issue, namely, Madhya Pradesh, West Bengal, Karnataka and U.P., the Petitioner shall furnish two separate bank guarantees, one covering the balance amount of Rs.0.16 crores, Rs.1.34 crores, Rs.0.66 crores and Rs.0.78 crores, and shall also furnsih bank guarantee to the extent of 50% in respect of all the circles which are in Category ‘B’ of the above chart.

¶170

(v) This order shall however, be subject to the undertaking furnished by Petitioner supported by affidavits in respect of each circles separately that in the event any other or further demand is raised by the Respondent, Petitioner shall either deposit the same or secure the same within two weeks from the date of raising of the demand.

¶171

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¶172

So far as Financial Bank Guarantees are concerned, the Petitioner has contended that it has started rendition of services in respect of same circles, namely, Andhra Pradesh, Bihar, Gujarat, Haryana, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Orissa, Rajasthan, UP (E), UP (W) and West Bengal. It has further been stated that the Petitioner had requested the Respondent to comply with the conditions mentioned in Clause 21.2 of the License Agreement by various communications but no response thereto was received.

¶173

By way of example, the Petitioner in the petition has stated that in respect of Tamil Nadu circel, although the Financial Bank Guarantees worth Rs.50.00 crores has been submitted, the same has been revised to Rs.1.32 crores and the revised Bank Guarantee had already been furnished. According to the Petitioner, it has furnished Financial Bank Guarantees to the extent of Rs.556.32 crores and in the event it has to renew the same, it will incur cost of Rs.7,61,75,000/-.

¶174

We, therefore, are of the opinion that the interest of justice would be sub-served if the Petitioner is directed to renew the Financial Bank Guarantees to the extent of 25% of the amount already furnished in respect of the areas in which it had already started rendition of services.

¶175

The Bank Guarantees must be furnished with effect from the date of expiry of the earlier Bank Guarantees.

¶176

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¶177

We have passed this order keeping in view the balance of convenience of both the parties and also the irrepairable injury which the Petitioner may suffer, as it is asked for renewal of the Performance Bank Guarantees as also the Financial Bank Guarantees, deposit of a huge amount by the Petitioner in getting the Bank Guarantees renewed would be necessary.

¶178

With the above mentioned orders, the interim relief prayed for by the Petitioner is disposed of.

¶179

………………. (S.B. Sinha) Chairperson

¶180

…………………. (P.K. Rastogi) Member

¶181

/HKC/

¶182

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Videocon Telecommunication Ltd. v. Union of India

Case brief

What is this about?

What did the court decide?

Videocon Telecommunication Ltd. v. Union of India

Case brief

What is this about?

What did the court decide?

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