2012 (9) TMI 1239 - HC - Indian Laws

Summary

Issues Involved:
1. Jurisdiction of the Arbitrator
2. Merits of the Award on the grounds of public policy and substantive law

Summary:

Issue 1: Jurisdiction of the Arbitrator

The petitioner, Bharti Cellular Limited (BCL), contended that the Telecom Regulatory Authority of India (Amendment) Act, 2000 (TRAI Amendment Act) established the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) with exclusive jurisdiction over disputes between a licensor and licensee, thus rendering the Arbitrator's jurisdiction void. The court examined whether the plea of lack of jurisdiction should have been raised before the Arbitrator u/s 16 of the Arbitration and Conciliation Act, 1996 (the 1996 Act) and whether the amendment to the petition to include this ground could be allowed.

The court held that BCL's failure to raise the jurisdictional objection during the arbitration and the delay in filing the amendment application (seven years after the original petition) constituted a waiver of the right to object under Section 4 of the 1996 Act. The court further clarified that Sections 14, 14M, and 14N of the TRAI Act did not mandate the transfer of pending arbitral proceedings to TDSAT. Therefore, the Arbitrator did not lack inherent jurisdiction to adjudicate the dispute.

Issue 2: Merits of the Award

BCL challenged the Award on the grounds that it was opposed to the public policy of India u/s 34(2)(b)(ii) of the 1996 Act. The Arbitrator had concluded that the Department of Telecommunications (DOT) never agreed to assign the license to Evergrowth Telecom Limited (EGTL) and that the original license agreement between JTM (now BCL) and DOT remained effective. The Arbitrator held that the DOT's letter dated 18th April 1996 was a 'counter offer,' and JTM's subsequent letters were 'further counter offers,' which were not accepted by DOT until 23rd January 1998.

The court found that the Arbitrator had misinterpreted the evidence and read into the DOT's letter conditions that did not exist. The court noted that JTM had consistently assured DOT that EGTL remained a 100% subsidiary and sought approval for changes in equity pattern as per Condition No. 2 of the DOT's letter. The Arbitrator's findings on Issues 1 to 4 were not supported by the evidence, leading to an erroneous decision on the remaining issues.

The court concluded that the Award was patently illegal and opposed to the public policy of India. Consequently, the entire Award was set aside. However, the court did not grant BCL the consequential reliefs of allowing its claims, as that was beyond the court's powers under Section 34 of the 1996 Act. The court left it open for BCL to seek appropriate legal remedies.

Consequential Directions:

The impugned Award dated 20th December 2002 was set aside, and BCL was allowed to pursue appropriate legal remedies. The petition was allowed with costs of Rs. 30,000 to be paid by DOT to BCL within four weeks.