2006 (4) TMI 567 - SC - Companies Law

Summary

Issues Involved:
1. Validity of the revocation of the FM broadcasting license.
2. Compliance with the terms and conditions of the license agreement.
3. Requirement of notice and opportunity of hearing before revocation.
4. Entitlement to pro-rata rebate in license fee.
5. Applicability of the new policy for migration to a revenue-sharing regime.

Issue-wise Detailed Analysis:

1. Validity of the revocation of the FM broadcasting license:
The Union of India challenged the Telecom Disputes Settlement & Appellate Tribunal's decision that the revocation of the Respondent's FM broadcasting license was illegal. The Tribunal found that the revocation was not in accordance with the license agreement, which required a 30-day notice and an opportunity of hearing before revocation. The Supreme Court upheld the Tribunal's decision, emphasizing that the revocation without the required notice was a nullity.

2. Compliance with the terms and conditions of the license agreement:
The license agreement stipulated that the licensees in Mumbai were to co-locate their transmission infrastructure on a common transmitter tower. Due to the default of five successful bidders, the cost for the remaining five licensees doubled. The government allowed these licensees to use interim independent facilities for 24 months. The Respondent paid the license fees and furnished a Bank Guarantee but faced difficulties in co-locating the transmission infrastructure. The Supreme Court noted that the Respondent had complied with the interim guidelines and paid the required fees.

3. Requirement of notice and opportunity of hearing before revocation:
Clause 9 of the license agreement mandated a 30-day notice and a reasonable opportunity of hearing before revocation for breach of terms or default in payment. The Supreme Court held that the letter dated 06.03.2003 was merely a demand and not a notice as it did not state the consequences of non-payment. The Court emphasized that the revocation without the required notice and hearing was invalid.

4. Entitlement to pro-rata rebate in license fee:
The Respondent contended that due to the illegal revocation of the license, they were entitled to a pro-rata rebate in the license fee from 28.05.2003 to 05.07.2003. The Supreme Court agreed with the Tribunal's view that the Respondent should be entitled to the benefit of the change in the license fee policy and any rebate due to the illegal revocation.

5. Applicability of the new policy for migration to a revenue-sharing regime:
The Union of India introduced a new policy allowing existing license holders to migrate from a fixed license fee regime to a revenue-sharing regime. The Tribunal directed that the Respondent should be entitled to this benefit. The Supreme Court upheld this direction, noting that the Respondent had paid the entire license fee for the second year and should be treated similarly to other licensees who were allowed to migrate to the new regime.

Conclusion:
The Supreme Court dismissed the appeal, affirming the Tribunal's judgment that the revocation of the Respondent's license was illegal due to non-compliance with the notice and hearing requirements. The Court also upheld the Tribunal's direction to allow the Respondent to benefit from the new revenue-sharing policy. The appeal was dismissed with no costs.