The Tribunal dismissed petitions by Reliance Telecom Ltd. challenging penalties for violation of license conditions regarding subscriber verification and sale of pre-activated SIM cards. The court held that facts were indisputable, no separate notice was needed, and the fixed penalty was mandated by the circular.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
TELECOM DISPUTES SETTLEMENT & APPELLATE TRIBUNAL
NEW DELHI
Dated 17th July, 2014
Petition No. 273 of 2012
Reliance Telecom Ltd. … Petitioner Vs. Union of India … Respondent
Petition No. 274 of 2012
Reliance Communications Ltd. … Petitioner Vs. Union of India … Respondent
BEFORE:
HON’BLE MR. JUSTICE AFTAB ALAM, CHAIRPERSON HON’BLE MR. KULDIP SINGH, MEMBER
For Petitioner … Mr. Navin Chawla, Advocate Mr. Pranav Sarthi, Advocate For Respondent … Mr. K.P.S. Kohli, Advocate Mr. Prashant Jain, Advocate for Ms. Maneesha Dhir, Advocate
JUDGMENT
Kuldip Singh: In these petitions, penalties imposed by the respondent – Union
of India, for violation of terms & conditions of license agreement with regard to
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verification of subscribers and failure to comply with clause 41.14 of the same, have been challenged.
As per clause 41.14 [Part VI] of the UAS License Agreement, licensees are required, inter-alia, to do the following:-
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Clause 41.14 of the UAS Licences reads as under :-
“The complete list of subscribers shall be made available by the LICENSEE 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.”
On 31.7.2008, the UAS License was amended to incorporate the following clause
:-
”The Licensor shall have the right to direct the Licensee to warn, penalize or terminate the franchisee or agent or distributor or servant, after considering any report of conduct or antecedents detrimental to the security of the nation. The decision of the Licensor in this regard shall be final and binding and in any case the Licensee shall bear all liabilities in the matter and keep the Licensor indemnified for all claims, cost, charges or damages in this respect.”
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put on Telecom, Enforcement, Resources and Monitoring (TERM) Cells set up under DOT in various license areas.
Subscribers, while subscribing to the services of a licensee, are required to complete a form which is called as the ‘Customer Acquisition Form (CAF)’. The subscribers are also required to submit the proof of identity as well as proof of address, for which certain documents specified by the Department of Telecommunications (DoT) are to be provided. Licensees are also required to follow the guidelines issued in this regard from time to time. To ensure compliance with the instructions in this regard, TERM Cell of the concerned service area conducts monthly audits of the licensees on sample basis. On the total subscriber base of the licensee in that service area, a sample of one percent of the subscribers at random is taken and the licensee is asked to provide copies of the CAF Forms of the subscribers. These copies of CAF forms are checked for compliance with the instructions and guidelines issued from time to time and in cases of non-compliance, the licensees are given a week’s time to discuss the cases and make available the original CAFs. The initial report indicating the findings about compliance/non-compliance is also provided to the licensee. Based on the discussions with the service provider (licensee), the report is finalized and jointly signed by both. Based on this final report, the amounts of penalty are calculated in accordance with the telescopic rates that provide for increasing amounts of penalties for higher percentage of non-compliance. The service provider, if he so desires can make a representation to the Deputy Director General (DDG), TERM whose decision is final.
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a subscriber approaches a service provider or its retailer/ agent for a mobile connection, he is asked to fill the Customer Acquisition Form (CAF) and submit the required documents of identity and address proof as detailed above. The subscriber then chooses a plan as per its requirements and is given a SIM card. Though it is possible to have pre-activated SIM cards which,when inserted in the handset, can immediately be used to make or receive calls,DoT, Vide its letter dated 23.3.2009, issued certain instructions/clarifications to all the CMTS/UASL/Basic Licensees that included a prohibition on the sale of preactivated SIM cards. Clause 8 of this letter relates to Pre-Activated SIM Cards and reads as under :-
“8. Pre-Activated SIM Cards :
Pre-activated SIM Cards are not to be sold in the market. In case preactivated SIM Cards are on sale, highest penalty of Rs.50,000/- shall be levied on each such connection.”
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lacs was imposed on M/s. Reliance Telecom Ltd. (Petition No. 273 of 2012) and Rs.9 lacs on M/s. Reliance Communications Ltd. (Petition No. 274 of 2012). These penalties were imposed for violation of terms & conditions of license agreement with regard to verification of subscribers and failure to comply with clause 41.14 and clause 8 of the instructions issued by DoT in this regard vide letter dated 23.3.2009. The relevant paras of the impugned letters are as under:-
4. AND WHEREAS during the sample check carried out by the licensor to ascertain the status of subscriber verification in compliance to license condition and instruction of licensor issued time to time, it has been noticed that the licensee has failed to comply with the license condition and instruction of licensor issued from time to time.
5. AND WHEREAS it is observed that M/s. Reliance Telecom Limited has failed to comply clause 8 of DoT letter No. 842725/2005/157 dated 23rd March 2009 in 116. It is clear from the report that proper verification has not been carried out by the Service provider at the time of provisioning of service to the subscriber. Hence M/s. Reliance Telecom Limited has violated
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the terms and condition of License Agreement and the instructions issued time to time by licensor on the subject by providing mobile connection without proper verification. The percentage of correct verification of M/s. Reliance Telecom Limited for MP License Service area has been ascertained and financial penalty has been calculated as per clause 8 of DoT letter No.842-725/2005/157 dated 23rd March 2009. The details are enclosed as ‘Annexure’ is E-mailed at the address : [email protected]. “
Mr. KPS Kohli, learned counsel appearing for respondent, however, submitted that on analyzing thescreen shorts of MDNs (Mobile Digital Numbers), it was confirmed that the said SIM Cards were pre-activated and not sold to any genuine subscribers. As per the respondent, most of the MDNs were activated and then switched off and the petitioners were submitting forged and fabricated CAFs against the pre-activated SIM Cards seized from the point of sale during the raid. As per it, perusal of the CAFs revealed that multiple SIM Cards were
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issued to same person and were prepared after the raid was conducted by the respondent. As per the respondent, petitioner also violated clause 3 of the guidelines/circular dated 22.11.2006 issued by respondent, as per which the licensee company’s authorized representative (who is directly accountable to the licensee company) is required to verify that all the documentary requirement has been completed before activating the SIM card.
Mr. Chawla argued that allegation of forgery has only been made in reply and no such ground was taken while imposing the impugned penalties. He relied on Mohinder Singh Gill and Another Vs. The Chief Election Commissioner, New Delhi and Others1 para 8. He further relied on Cellular Operators Association of India & Ors. Vs. Department of Telecommunications & Anr.2 and submitted that onus to prove forgery is on respondent and no penalty can be levied till this onus is discharged.
We are unable to agree with the submission of Mr. Chawla that SIM Cards were activated after receiving CAFs for the simple reason that if that was the case, the SIM Cards would not be lying with the agent of petitioners at the point of sale. From the fact that these SIM cards were lying with the agent at the point of sale and also in activated condition, clearly shows that they were activated
1SCC 1978 (1) 405
2Petition No.252 of 2011
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prior to being sold to customers. We may also see from para 3 of the circular of the DoT dated 22.11.2006 that the licensee company’s authorized representative, who is directly accountable to the licensee company, is required to verify that all documentary requirements have been completed before activating the same. The relevant para is as under:
(Emphasis ours)
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show cause notice was issued before imposing the penalties as per the impugned letters, no opportunity of hearing was granted and no reasons were given while rejecting the appeal preferred by petitioners.
Mr. Kohli, however, submitted that in this case the facts were known to respondent. The procedure for verification of subscribers as well as the penalties for non-compliance and for pre-activated SIM Cards was well known and in the facts of the case and under the circumstances only one conclusion and corresponding penalty was possible. With regard to his submission, Mr. Kohli relied on S. L. Kapoor Vs. Jagmohan & Others3 , para 17 of which is as under :-
“17. Linked with this question is the question whether the failure to observe natural justice does at all matter if the observance of natural justice would have made no difference, the admitted or indisputable facts speaking for themselves. Where on the admitted or indisputable facts only one conclusion is possible and under the law only one penalty is permissible, the court may not issue its writ to compel the observance of natural justice, not because it approves the nonobservance of natural justice but because courts do not issue futile writs. But it will be a pernicious principle to apply in other situations where conclusions are controversial, however, slightly, and penalties are discretionary.”
Keeping in view the facts and circumstances of the present case, we agree with the submission of Mr. Kohli.
3(1980) 4 SCC 379
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In this regard we may refer clause 8 of the DoT circular No.842/725/2005/157 dated 23.3.2009 (para 8 above). The penalty for Preactivated SIM Cards is clearly prescribed as Rs.50,000/- for each such connection.
In view of this, we are not able to agree with the submission of Mr. Chawla.
(Aftab Alam) Chairperson
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….………………..
(Kuldip Singh) Member
rkc
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2 issues framed by the court
Whether penalties for pre-activated SIM cards were validly imposed without issuing a show cause notice.
Whether the appellant need to pay graded penalty or fixed penalty of Rs. 50,000 for each pre-activated SIM.
Colour shows how this judgement treated each authority
Reliance Telecom Ltd.
Union of India
Reliance Communications Ltd.
Aftab Alam
Kuldip Singh
As recorded by the court registry
A petition before TDSAT in a dispute between a licensor, a licensee or a service provider under the TRAI Act.
Judgements on the same questions, provisions and authorities, from every court
