2020 (10) TMI 1316 - Tri - Insolvency and Bankruptcy

Insinuation of some other network parallel to the network of the applicant - Disaster Management Act - HELD THAT - Since the Respondents though opportunity was given to them, for not having come forward to say what is the material available with them to show that this Applicant company has not provided proper services (technical incapability) to them, we are constrained to restrain these two Respondents not to proceed to have services from other networks at least until the next date of hearing - For having the Respondents cited DM's letter as a cause to avail parallel services, the Applicant is directed to add the respective authority as third Respondent by next date of hearing. The Applicant counsel submits that it is not that other service providers are not able to use the service of this network, any service provider can use the fibre network laid by the Applicant company, if the applicant network is incompatible to the services other service providers intend to provide, then the Respondents have to ascertain incompatibility of the network of the applicant and then ask the applicant to set it right, if not, then only to proceed for parallel services. Bypassing this aspect will be not only the violation of terms and conditions of the agreements but also deprivation of the business of the Applicant Company. List this application on 20.11.2020.

Summary

Issues:
1. Interpretation of "Indefeasible Right to Use (I.RU) Capacity Agreements" in the context of services provided.
2. Dispute resolution mechanism in the agreements and implications of non-compliance.
3. Capital investment by the Applicant in the project and potential losses due to parallel network usage.
4. Effect of ongoing Corporate Insolvency Resolution (CIR) Process on the contractual obligations.
5. Lock-in period clause and its impact on the Respondents.
6. Allegations of technical incapability and financial debts against the Applicant.
7. Restraining the Respondents from seeking services from other networks.
8. Addition of the respective authority as a third Respondent.
9. Conditions for allowing parallel services and the importance of network compatibility.

Analysis:
1. The judgment revolves around the interpretation of the "Indefeasible Right to Use (I.RU) Capacity Agreements" entered into by the Applicant with the Respondents for providing services to end-users in specific areas. The agreements contain clauses for dispute resolution through a Technical Committee to address any grievances related to services provided.

2. The dispute resolution mechanism outlined in the agreements requires the Technical Committee to identify and rectify any problems with the services. Non-compliance with this process may give the Respondents the liberty to seek services from a third party only if the network provided by the Applicant is incompatible.

3. The Applicant highlights the capital-intensive nature of the project and the substantial investment made based on the agreements. Allowing parallel network usage could lead to significant financial losses for the Applicant, especially considering the current utilization of connections and the potential impact on the business.

4. The judgment considers the implications of the ongoing Corporate Insolvency Resolution (CIR) Process on the contractual obligations between the parties. Both the Applicant and the Respondents are engaged in the CIR Process, raising concerns about the potential impact of any interim orders on their respective positions.

5. The existence of a lock-in period clause in the agreements is emphasized, indicating that the Respondents are bound by the terms for a specified duration. This clause restricts the Respondents from seeking services from other providers during the lock-in period.

6. Allegations of technical incapability and financial debts against the Applicant are mentioned, with significant amounts of financial debt and operational debt pending against the company. The potential adverse effects on creditors seeking repayment through the CIR Process are highlighted.

7. To prevent further complications, the judgment restrains the Respondents from proceeding with services from other networks until the next hearing, emphasizing the need for the Respondents to provide material evidence supporting their claims of inadequate services.

8. The directive to add the respective authority as a third Respondent by the next hearing signifies the importance of involving relevant parties in the proceedings to address the issues effectively.

9. The conditions for allowing parallel services are outlined, stressing the importance of network compatibility. The judgment emphasizes that any decision to opt for parallel services must consider the compatibility of the Applicant's network with the services intended to be provided by other service providers, to avoid contractual violations and business deprivation.

Overall, the judgment delves into various legal, contractual, and financial aspects surrounding the agreements between the parties, aiming to resolve the disputes and protect the interests of all involved stakeholders.