2016 (8) TMI 1608 - HC - Indian Laws

Maintainability of petition - Imposition of share on Adjusted Gross Revenue (AGR) even on income earned in relation to non-telecom activities - levy of One Time Spectrum Charge (OTSC) - Merger of Licenses of Aircel Limited (AL) and Aircel Cellular Limited (ACL) - seeking to declare the first proviso to Section 4 of the Indian Telegraph Act, 1885 as violative of Articles 14 and 19(1)(g) of the Constitution. Whether Section 14 of the TRAI Act bars the jurisdiction of this Court under Article 226 to entertain writ petitions and if so, whether the petitioners/appellants can be relegated to approach the Tribunal under Section 14(a)(i) of the TRAI Act? HELD THAT - While Section 14(1) of the TRAI Act confers power on the Tribunal to adjudicate any dispute between (i) a licensor and a licensee, (ii) between two or more service providers and (iii) between a service provider and a group of consumers, as against any such adjudication, appeal is provided to the Supreme Court under Section 18. Section 15 bars the Civil Courts from entertaining any suit or proceeding in respect of any matter which could be determined by the Tribunal. In effect, the Tribunal is empowered to deal with any dispute as enumerated in Section 14(1) of the TRAI Act. Such being the case, whether in respect of any matter in dispute, is the jurisdiction of this Court under Article 226 of the Constitution ousted? In WHIRLPOOL CORPORATION VERSUS REGISTRAR OF TRADE MARKS, MUMBAI ORS. 1998 (10) TMI 510 - SUPREME COURT , the Supreme Court observed that the power to issue prerogative writs under Article 226 of the Constitution of India is plenary in nature and is not limited by any other provision of the Constitution. In the facts of the particular case, the High Court has a discretion to entertain or not to entertain a writ petition, subject to self-imposed restrictions, one of which is that if an effective and efficacious remedy is available, the High Court would normally refrain to exercise its writ jurisdiction. However, the said alternative remedy cannot be consistently be held as a bar where the writ petition has been filed for the enforcement of any of the fundamental rights or where there has been a violation of the principles of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. In the case of KARTAR SINGH VERSUS STATE OF PUNJAB 1994 (3) TMI 379 - SUPREME COURT , a Constitution Bench of the Supreme Court observed that extraordinary power is given to High Court under Article 226 not only for the purpose of correcting manifest errors but also to exercise the said jurisdiction for the sake of rendering complete justice. The High Court, being the highest court for the purposes of exercising civil, appellate, criminal or constitutional jurisdiction so far as that State is concerned in terms of the framework of the Constitution, the jurisdiction possessed by it before coming into force of the Constitution was preserved by Articles 225 and in terms of Articles 226 and 227, extraordinary jurisdiction was conferred on it so as to ensure that the subordinate authorities do not act against the rule of law, but to see that they function within the framework of law. That jurisdiction of the High Court cannot be taken away by legislation. It is trite law that under Article 226 of the Constitution of India, untrammelled powers and jurisdiction has been vested with the High Court for the purpose of issuance of any writ or order or direction to any person or authority within its territorial jurisdiction for enforcement of any of the fundamental rights or for any other purpose. The legislature has no power to divest the Court of the constituent power engrafted under Article 226. The availability of an alternative remedy is no bar to the maintainability of a writ petition. However, it is trite law that where an alternative efficacious remedy is available under a statute, High Courts normally refrain itself from exercising their jurisdiction under Article 226. However, the above restriction is only self-imposed restriction and the same in no way precludes the jurisdiction of the High Court under Article 226 - the prerogative writ jurisdiction of this Court under Article 226 having not been ousted or curtailed, this Court having granted stay of recovery/demand as made by the DoT in the above batch of writ petitions, relegating the petitioners to approach the Tribunal to have their grievance redressed would be a futile exercise as without vacating the interim orders granted by this Court, any order passed would serve no purpose as has been rightly pointed out by the learned single Judge that any order that may be passed by the Tribunal in conflict with the interim orders passed by this Court would amount to judicial anarchy, which should be avoided. This Court holds that the writ petitions, at the instance of the petitioners, in the circumstances of the facts of case, are maintainable and the finding of the learned single Judge warrants no interference. Revenue Share on Non-Telecom Activities - Whether the first proviso to Section 4 of the Indian Telegraph Act gives unbridled powers to DoT to claim a share of revenue from non-telecom activities vide the definition of 'Adjusted Gross Revenue', forming part of the amended licence agreement in No. 842-2/2000-VAS (Vol. IV) (Part) dated 25.9.01 and whether such a power is violative of Articles 14 and 19(1)(g) of the Constitution? - Whether a writ of declaration can be issued that the respondents can charge only License Fee/AGR (Adjusted Gross Revenue) from revenue earned from licensed activities? - HELD THAT - The Supreme Court, in the decision in Association of Unified Telecom Service Providers of India case 2011 (10) TMI 580 - SUPREME COURT , while deciding the issue as to whether TRAI and the Tribunal had jurisdiction to decide on the validity of the terms and conditions of licence, including the definition of adjusted gross revenue finalised by the Central Government and incorporated in the licence, held that while the Tribunal had no jurisdiction to decide upon the validity of the terms and conditions incorporated in the licence of a service provider, however, will have jurisdiction to decide any dispute between the licensor and the licensee on the interpretation of the terms and conditions of the license. The Supreme Court also further held that once the licensee had accepted that licence fee would be a percentage of the gross revenue, which would be the total revenue of the licensee company and had also accepted that the Government would take a final decision not only with regard to the percentage of revenue share but also the definition of revenue for this purpose, the licensee could not have approached the Tribunal questioning the validity of the definition of adjusted gross revenue in the licence agreement on the ground that adjusted gross revenue cannot include revenue from the activities beyond the licence. From the above decision of the Supreme Court it is abundantly clear that a licensee, having accepted Clause (iii) of the letter dated 22.7.1999, which stipulated that the licence fee would be a percentage of the gross revenue, which would be the total revenue of the licensee company and has also accepted that the Government would take a final decision not only with regard to the percentage of revenue share, but also with regard to the definition of revenue, is estopped from questioning the definition of adjusted gross revenue on the ground that it includes revenue from activities beyond the licence. The Supreme Court further held, in relation to the wide definition of adjusted gross revenue, if the licensee is really aggrieved that the activities that they undertake are outside the purview of telecom activities, which are outside the terms of licence, it was open to the licensee to transfer the activities to any other person or firm or company. The decision by the Supreme Court was on the issue whether the Tribunal had powers to decide on the validity of the terms and conditions, which the Supreme Court negatived and held that the Tribunal has jurisdiction only to interpret the terms and conditions of the licence. The Supreme Court did not go into the question of whether AGR would stand attracted even on revenue generated through non-telecom activities, which are not governed by the licence. On that ground the petitioners are before this Court on the issue as noted above, which is before this Court for consideration. The rule of law as propounded by the Supreme Court on the jurisdiction of the Tribunal is clear. However, in the case on hand, the point that requires consideration is whether Section 4 of the Indian Telegraph Act gives unbridled powers to DoT to claim a share of revenue generated from non-telecom activities on the basis of the definition of Adjusted Gross Revenue , which forms part of the licence agreement and whether such power is violative of Articles 14 and 19(1)(g) of the Constitution. Once a licence is issued under the proviso to sub-section (1) of Section 4 of the Telegraph Act, the licence becomes a contract between the licensor and the licensee and, consequently, the terms and conditions of the licence including the definition of adjusted gross revenue in the licence agreement are part of a contract between the licensor and the licensee - the licence issued under Section 4(1) of the Telegraph Act is a contract between the parties, the issue whether Section 4(1) has given unbridled power to DoT to claim a share of revenue from non-telecom activities as defined in Adjusted Gross Revenue is violative of Articles 14 and 19(1)(g) of the Constitution needs to be answered. As has been held by the Supreme Court in Harinarayan Jaiswal's case 1972 (3) TMI 83 - SUPREME COURT , the Central Government, being the seller has exclusive right to deal with the privileges flowing from Section 4(1) of the Telegraph Act and once the exclusive privilege of the Central Government is conceded, violation of Articles 14 and 19(1)(g) cannot be pressed into service by persons citing fundamental right to trade or carry on business, when such right belongs to the Government and there cannot be any infringement of Article 14, if the Government tries to get the best available price for its valuable rights. The contract executed between the licensor and the licensee above is in the realm of the Government trying to get the best available price for parting with its valuable rights and, therefore, this Court is of the considered view that violation of Articles 14 and 19(1)(g) of the Constitution does not merit acceptance. Accordingly, this Court holds that first proviso to Section 4 of the Indian Telegraph Act is not violative of Articles 14 and 19(1)(g) of the Constitution. The primary question of Section 4(1) of the Telegraph Act having been held to be not violative of Articles 14 and 19(1)(g) of the Constitution, the incidental issue as to grant of declaration that respondents can charge only licence fee/AGR from revenue earned from licensed activities has to necessarily fail - Accordingly, the incidental issue also merits no consideration. Levy of One Time Spectrum Charges (OTSC) - HELD THAT - It is well settled proposition of law, through the decision of the Apex Court in Association of Unified Telecom Service Providers of India case (supra) that the Central Government is vested with exclusive privilege to deal with telegraph and power is vested in it to grant licences for establishing, maintaining and working telegraphs on such conditions and in consideration of such payments as it thinks fit to any person, the relevant portion of which has already been quoted above. Therefore, the right of the Government to deal with the said exclusive privilege and to grant licences is not in issue. The exclusive privilege to deal with telegraphs, more particularly, spectrum, in this case, and grant of licence for establishment and maintaining of telegraphs by private entities, assumes importance. The Central Government being the legal owner of the natural resource, as a trustee of the people, is empowered to distribute the said resource to private entities in the larger interests of the public. While the State is duty bound to protect the natural resource and utilise the same for public good, equally, the alienation of the same through issue of licences to private entities assumes significance as the revenue it generates also invariably goes towards the overall improvement of the country - the emphasis placed on clause 13 (ii) of the licence agreement for the purpose of OTSC by DoT needs to be addressed. On a harmonious reading of the said clause 13 (ii) of the licence agreement, what follows is that the licensor reserves the right to modify (inclusive of addition and subtraction) at any time the terms and conditions of licence covered under the schedules in the interests of the general public. When a change by extension/improvement of the term of the licence could be increased to 20 years from 10 years in exercise of power under clause 13 (ii) of the licence agreement, equally so the modification of payment terms by means of addition by way of OTSC is also permissible. When the petitioners have enjoyed the fruits of the extended term by virtue of the migration package, they cannot, at this point of time, claim that the licensor is prohibited from adding anything to the contract. When the Central Government thought it fit to reject the said recommendation of TRAI with regard to levy of OTSC in the interest of the public at large, it cannot be said to be arbitrary or unreasonable and against the provision of the Telegraph Act and the TRAI Act. Fixing of cut-off date for imposition of levy is within the discretion of the licensor and the licensee cannot have any quarrel on the same as they being party to the licence agreement have agreed for modification of the terms and conditions as is evident from clause 13 (ii) of the licence agreement. This Court holds that the levy of OTSC by the Central Government, in exercise of powers conferred on it by Section 4(1) of the Telegraph Act r/w Clause 13 (ii) of the Licence Agreement, is not arbitrary, and in fact justified and enforceable. Merger of Licenses of Aircel Limited (AL) and Aircel Cellular Limited (ACL) - direction to comply with the conditions imposed by DoT for grant of approval of merger - HELD THAT - The appellants were directed to comply with the payments as contemplated in the NIA and also to pay AGR as per quantification with further direction to give an undertaking of conditions (c) and (d) (i) to pay the dues in case the pending matters are decided against them. Further, the order of the learned single Judge was also stayed - This Court having held that levy of OTSC is sustainable and DoT can levy the said charge on the service providers, in effect, the stay granted by this Court in the writ petitions automatically gets vacated. In such view of the matter, it is not necessary to decide whether the coercive action of the respondent/DoT in demanding an undertaking is per se contemptuous when those levies are under orders of stay granted by this Court as those orders of stay stands automatically vacated in view of the dismissal of the writ petitions. Petitions are dismissed holding that the petitioners are bound to pay the amount, which is due to the department as a share of AGR on the non-telecom activities. It is for the respondent/Department to quantify the share of AGR on non-telecom activities, which remains unpaid, and issue a fresh demand notice within a period of one month from the date of a receipt of a copy of this order. On receipt of such notice, the petitioners shall pay the amount demanded by DoT within a period of one month from the date of receipt of the demand notice - petitions are dismissed sustaining the levy of OTSC made by DoT on the service providers. It is informed by the learned Addl. Solicitor General that an amount to the tune of approximately more than Rs. 3273 Crores is due from the petitioners to the DoT - petition are dismissed and the appellants shall comply with the order passed by the learned single Judge.

Summary

Issues Involved:

1. Revenue Share on Non-Telecom Activities.
2. Levy of One Time Spectrum Charges (OTSC).
3. Merger of Licenses of Aircel Limited (AL) and Aircel Cellular Limited (ACL).

Detailed Analysis:

1. Revenue Share on Non-Telecom Activities:

The petitioners challenged the imposition of revenue share on Adjusted Gross Revenue (AGR) from non-telecom activities, arguing it violates Articles 14 and 19(1)(g) of the Constitution. They contended that the revenue share should only apply to telecom activities as per the license agreement. The court noted that the definition of AGR included all revenue without set-off for related expenses, as per the migration package accepted by the petitioners. The court held that the license agreement, being a contract, was binding, and the petitioners could not selectively accept its terms. The court found no violation of constitutional rights, as the government, holding exclusive privilege over telecom resources, was entitled to seek the best price for its rights.

2. Levy of One Time Spectrum Charges (OTSC):

The petitioners argued against the retrospective imposition of OTSC, claiming it was not part of the original license agreement and violated the principle of legal certainty. They contended that spectrum usage charges were already being paid, and OTSC amounted to double taxation. The court examined the power of the Department of Telecommunications (DoT) under Clause 13(ii) of the license agreement, which allowed modification of terms in public interest. The court interpreted "modify" to include additions, such as OTSC, especially in light of the Supreme Court's observations on spectrum as a scarce resource. The court upheld the levy of OTSC, finding it justified and enforceable under the government's exclusive privilege.

3. Merger of Licenses of AL and ACL:

The appellants challenged the conditions imposed by DoT for approving the merger of licenses, arguing that the conditions were unreasonable and violated the stay orders on OTSC and non-telecom revenue share. The court noted that the merger was mandatory under the NIA and circular, and the conditions imposed by DoT were within its rights under the license agreement. The court found that the stay orders did not preclude DoT from imposing conditions for license transfer. The court directed the appellants to comply with the conditions, including furnishing an undertaking to clear dues, and upheld the single judge's order, allowing DoT to proceed with the merger approval.

Conclusion:

The court dismissed the petitions challenging the revenue share on non-telecom activities and the levy of OTSC, upholding the government's actions as within its contractual and statutory rights. The court also dismissed the appeals against the conditions for the merger of licenses, directing compliance with DoT's requirements. The interim orders were vacated, and the court emphasized the binding nature of the license agreement and the government's exclusive privilege over telecom resources.