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TMI Blog2008 (5) TMI 648X X X X Extracts X X X X X X X X Extracts X X X X ..... January 1997 to June 1998. Civil Appeal No. 3448 of 2006 involves a dispute in relation to minimum guarantee period for 2 MBPS leaded lines. 3. Judgments were delivered by the Telecom Disputes Settlement and Appellate Tribunal, New Delhi (TDSAT) on various dates, viz., 1.04.2003, 17.02.2003, 8.09.2003 and 3.03.2006. 4. Before, however, we consider the views taken by the Tribunal, we may notice the facts involved in each of the case separately. Civil Appeal Nos. 6341-42 of 2003 DOT circulated a booklet commercial information on leased circuits clearly providing for that the rent and guarantee charges for leased circuits would be on capital cost basis and only after the guarantee period has expired, it would be on capital cost or flat rate whichever is higher. Clause 7.0 of the said booklet provides for rent and guarantee charges to the following effect: 7.0 R G Charges. R G charges (per annum) will be levied on percentage basis of the capital-cost for cable/ system. After the expiry of R G period standard flat rate rental or rental calculated on capital cost basis (whichever is higher) shall be levied. A specific hiring contract will be executed with the Guarantor (S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rges for interconnection of cellular mobile telephone network would be calculated as per standard DOT terms. Although it had earlier been communicated that the respondent could put up its own equipment under contribution work basis, it was to be allowed to take the equipment on rent and guarantee basis. The rent and guarantee period was for ten years. Pursuant to and in furtherance of the said lease agreements, the DOT installed the required equipment and raised bills on the capital cost basis of the equipment. One of the sample bills, which had been raised being Bill dated 5.06.1998, is as under: Government of India Department of Telecommunications Thiruvananthapuram Telecom District Telephone No. Consumer No. Bill No. Page BPL/ Cellular Mobile SVC BILL DATE BPL US West Cellular Communication Services Ltd. 17.7.98 IVth floor, Co-Bank Towers, P.O. Stamp Palayam, TVM DUE DATE 31.7.98 PAY BY DATE RENTAL FROM: 7.2.98 TO: 6.2.99 5.8.98 CALLS FROM: TO: OPENING CLOSING METERED CREDIT DEBIT FREE METER RDG METER RDG CALLS CALLS CALLSCALLS Rent for the 20 pr PCM cable provided RENTAL=1,05,315 For extending one 2 MB stream from Hotel Sibra, MC Road to MC xge METERED CAL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DOT stated that a sum of ₹ 5,77,025/- per annum should be paid by the respondents. A detailed calculation was also submitted therewith. The said computation was accepted by the respondents. However, according to the appellant, the demand was wrongly made at ₹ 15,00,000/- per annum as against the said demand of ₹ 5,77,025/-. Questioning the basis for making such demands, a writ petition was filed. However, ultimately the same was withdrawn. Respondents filed an application in terms of Section 14 of the TRAI Act before the TDSAT inter alia on the premise that the flat rate basis purported to be in terms of the internal circulars having no force of law, the same could not have been the basis for making the demands. It, inter alia, prayed for the following reliefs: (a) Set aside the revised demand raised by the DOT/Respondents on flat rate basis instead of on capital cost basis as originally charged. (b) Direct the respondents to give retrospective effect to Annexure-X i.e. DOT's new Tariff Circular 4/99 dated 13.4.99 so as to make it applicable to leased circuits commissioned under R G basis prior to 1.4.99 also; (c) Direct the respondents to pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate applicable for point to point leased circuits of all types. There is no doubt that E-mail services fall under the category of Value Added Services and as the rental charge for leased circuits provided to the network providers of valued added services had been fixed by the DOT in their order dated 13th July, 1995, we come to the conclusion that leased circuits for E-mail providers has been charged correctly as per the extant orders. While holding the view, however, we are constrained to take adverse notice of the fact that the respondents R-1 and R-2 did not refer to proper documents and that too even after repeated queries from the Bench. Having found so, however, the members came across two circulars being dated 13.7.1995 and 22.11.1996 and placed the matters for further hearing. Relying on the said circulars, the TRAI held : After the hearing was over, we came across certain documents filed by the DOT in an earlier petition clearly indicating that value added network licensees, which included E- mail licensees, were to be provided leased circuits. We then decided to call for a rehearing on this issue and placed the documents on record. These documents are of Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were to be charged double the normal rent. Even if it is assumed that the Appellants were aware of a particular circular issued in 1993 it cannot be stretched to argue that they were aware of all the internal circulars of DoT on this subject. We have verified from copies of the demand notes raised by the Respondents in response to the requests received from the Appellants that the initial demands were in conformity with the rates and tariff as indicated in the brochure Commercial Information on Leased Circuits . Civil Appeal No. 3448 of 2006 Respondent herein requested DOT to provide land distance lease line on 12.8.1996 for one year. It was also stated that further period of extension will be intimated in advance. On or about 21st September, 1996, a request was made for extension of the said period for one year. Demand was made for one year only by a bill dated 26.11.1996 for Vijaywada to Hyderabad long distant charges and on 24.12.1996 for Vijaywada to Vishakhapatnam. The contract was, thus, concluded. The demands were duly paid by the respondent on 9.1.1997 and 26.12.2005. Various extensions were sought for only after expiry of one year. Those extensions were granted by D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns under the Indian Telegraph Act and Rules framed thereunder. (vi) For the enforcement of such non-statutory office orders and rules and make these binding, it would be necessary to draw up specific contracts giving in clear and unambiguous details all the terms and conditions and the responsibilities and obligations of both the contracting parties. (vii) As a result of what we have discussed above we hold that the action of the Respondent in revising the demands after a period of two years in respect of what were practically existing concluded contracts between the Petitioners and the Respondent was neither legal nor proper. The Respondent would recompute the impugned Demand Notes on the basis of existing concluded contracts at pre-revised rates. 6. On the findings in the said case, the TDSAT in other cases also opined that internal circulars would have no effect on the term of the concluded contract. 7. Indisputably, the matter relating to laying down of the telegraph lines and providing phone connections including mobile is governed by the provisions of the Indian Telegraph Act, 1885. The said Act was enacted to amend the law relating to telegraphs in India. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Before surrendering the leased Telegraph/ Speech circuits and terminal equipments, the party concerned shall give notice to the controlling/ billing authority to not less than thirty days. 478. Quoting of rentals.--(1) The rental for the exclusive use of the circuits shall be quoted at the rates then in force. (2) Where the circuits are provided by utilizing the installations, existing at the time of the application, flat rate of rentals based on radial distance shall be charged for a period of not less than three months (hereinafter referred to in this Part as the minimum guarantee period. XXX XXX XXX 498. Part-time use.--(1) A telephone circuit, if available as spare, may be leased to Newspaper Establishments or News Agencies for part-time use between 7 p.m. and 7 a.m. (2) The charges for the circuit provided for under sub-rule (1) shall be one half of the charges specified in clause (a) of sub-rule (1) of Rule 496. (3) Junction line between Private Exchange or Private Branch Exchanges shall not be leased on part-time basis. 9. DOT had issued a circular letter dated 18.2.1991 stating: (2) Revision of percentage of rental in Rent and Guarantee cases - Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e station at the instance of the State Government in a remote locality, requisition of non-exchange lines outside the local area, trunk lines, PBX etc. by the Defence authorities, requisition of Public Telephones, PBX's etc. by private bodies for their own needs etc. In such cases, standard flat rates may be economical and with a view to ensure that the department gets a fair minimum return for the capital invested, rent is fixed on capital cost basis. In such cases guarantee is taken from the party that he will retain the facilities for a specified period at a specified rate of rental. In all such cases, standard flat rates are also calculated and whichever rate is higher is quoted to the party unless it is definitely laid down that standard flat rate should be charged. 12. Yet again, an internal circular appears to have been issued on 3.11.1993 wherein it was laid down: 2. The above rate will be applicable only if the circuits provided with the existing long distance system of the equipment. In cases where new construction or installation involved for the whole or part of the circuit (including lead), the rental will be calculated either on special rate into account t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the circulars, the same are only required to be forwarded to the Bill Department so that they can raise bills in terms thereof. (viii) In terms of the circulars, revision of rates were to be carried out by the concerned departments as would appear from the circular Nos.4-31/86(R(Pt) dated 17.6.1988, 24-I/87-PHC (Pt) 8 dated 13.11.1988, 1-2/89-R/pt dated 18.2.1991, 4-11/90-R dated 30.9.1991 and 4-11/90-R dated 1.4.1992 and as the respondents had been paying on the basis thereof, they cannot now be permitted to approbate and reprobate. (ix) In regard to the minimum guarantee period, it was submitted that the agreement refers to the Rules and the circulars. The circular dated 26.11.1988 provides that it would be for a period of three years. The same was, however, later on reduced to one year. But the circular dated 26.11.1998 provides that the minimum period would be for three years. But the same has been related back to 1988. Drawing our attention to the Resolutions dated 26.11.1998, the learned counsel would contend that the respondents were aware of the said circulars and had been acting thereupon. In any event, the contract having been entered into in December 1995, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pleading of urgency and pressure exerted by them on the respective SSA Heads for early provision of the facility, relegating the requirement of observe the prescribed procedure to a secondary stage and out of goodwill the SSA Heads might have obliged. Even in that case, the presumption is that the hirer is aware of the commercial conditions of hiring the circuits. Thus, it does not exempt M/s. BPL from the fundamental tariff rules that prescribe a minimum period hire and payment of rent for the unexpired portion. 16. Mr. Shyam Divan, learned senior counsel appearing on behalf of the respondents, on the other hand, would, on the other hand, submit that the parties entered into the agreement having regard to the commercial representations made to them by DOT wherefor a booklet has been issued. It was furthermore submitted that the parties were given options, viz., (i) the licensees could purchase equipments and install the same or take lease of the equipments installed by DOT on (a) flat rate basis; or (b) on capital cost; (ii) the parties have entered into the agreement on the premise that the charges will have to be paid on rent and guarantee basis. The subsequent stand taken b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not take within its umbrage the system itself. The tariffs in regard to equipments are, therefore, not governed by the said clause. What it envisages may be call charges being the operation and charge of traffic passing through the resources. 21. If that be so, the question of raising any demand on the basis of the circular letters did not arise at all. 22. For the purpose of determining the questions involved in the present appeals, we may ignore the fact that pursuant to or in furtherance of the negotiations held by and between the parties, the respondents imported equipments but, for one reason or the other, as noticed hereinbefore, the same could not be installed. However, the DOT in its letter dated 30.09.1996 categorically stated that it could put up its own equipments under contribution work basis, which would mean that the charges would be on the basis of capital cost. In view of the aforementioned representations made by the DOT, the respondents had agreed to take the equipment on rent and guarantee basis which was itself calculated on capital costs. 23. We are, furthermore, not concerned with the tariff order issued by TRAI. What, however, may be noticed is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d at one place are loosely called rules. They, as noticed hereinbefore, are meant for office use only. The directions contained in the said circular letters are relevant for the officers who are authorized not only to grant licences but also enter into contracts and prepare bills. The circular letters having no statutory force undoubtedly would not govern the contract. If some authorities have violated the terms of the said circulars, they might have committed misconduct, but when a contract is entered into, the parties shall be bound thereby. 24. In Sri Dwarka Nath Tewari (supra), this Court held: 9... It is clear, therefore, from the portion of the preface extracted above, that Article 182 of the Code has no greater sanction than an administrative order or rule, and is not based on any statutory authority or other authority which could give it the force of law. Naturally, therefore, the learned Solicitor-General, with his usual fairness, conceded that the article relied upon by the respondents as having the force of law, has no such force, and could not, therefore, deprive the petitioners of their rights in the properties aforesaid. In Life Insurance Corporation of Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms of contract, it was obligatory on its part to bring the same to the notice of the allocate. Having not done so, it, relying on or on the basis of the purported office orders which is not backed by any statute, new terms of contract could not be thrust upon the other party to the contract. The said purported policy is, therefore, not beyond the pale of judicial review. In fact, being in the realm of contract, it cannot be stated to be a policy decision as such. 80. A definite price is an essential element of binding agreement. A definite price although need not be stated in the contract but it must be worked out on some premise as was laid down in the contract. A contract cannot be uncertain. It must not be vague. Section 29 of the Indian Contract Act reads as under: Section 29 - Agreements void for uncertainty Agreements, the meaning of which is not certain, or capable of being made certain, are void. A contract, therefore, must be construed so as to lead to a conclusion that the parties understood the meaning thereof. The terms of agreement cannot be vague or indefinite. No mechanism has been provided for interpretation of the terms of the contract. When a contract has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tered into an agreement with their eyes wide open that the circular letter shall form part of the contract. They might have also been held bound if they accepted the new rates or the periods either expressly or sub silentio. When on the basis of terms of the contract, different rates can be prescribed, the same must be expressly stated. When the word `prescribed' is not defined, the same, in our opinion, would mean that prescribed in accordance with law and not otherwise. The respondent had two options. They were asked to choose one. Thus, a representation was made that they would be entitled to obtain lease the equipments (resources) at an R G basis. Payments have been made on that basis. The question which would arise for consideration is as to whether the basis of making a demand itself can be changed. The answer to the said question, in our opinion, must be rendered in negative. 28. Section 8 of the Indian Contract Act reads as under : Section 8. Acceptance by performing conditions, or receiving consideration-- Performance of the conditions of a proposal, or the acceptance of any consideration for a reciprocal promise which may be offered with a proposal, is an ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase relied upon by Shri Dam, I think that those cases have no bearing on and relevancy to Section 8 of the Act. It is mentioned on page 59 of the Pollock and Mulla's Commentary on the Indian Contract Act, 8th Edn., that nothing like the terms of Section 8 occurs in the original draft of the Indian Law Commissioners, nor, so far as known to us, in any authoritative statement of English Law and that the terms of the Section appear to have been taken from the draft Civil Code of New York with slight verbal alteration . It follows from these excerpts that the English law has no provision parallel to Section 8 of the Act and as such recourse to English decisions for determining the scope of Section 8 may not be very apposite. Section 7 and 9 of the Indian Contract Act describe the various modes in which proposal may be accepted and if I may say so, Section 8 provides the acceptance of a proposal by conduct as against other modes of acceptance, such as verbal or written communication contemplated by Sections 7 and 9. Therefore, in a way Section 8 provides undoubtedly a uniue provision in the Indian Contract Act. It embraces a case to cite an instance of a reward offered for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her's oral commitment to publish a book has been held to amount to a binding contract, even though no details were specified in the agreement and nothing more precise was said about the author's remuneration than that he was to be paid a royalty to be agreed, or in default of agreement a fair one. In all these cases, the courts took the view that the parties intended to be bound at once in spite of the fact that further significant terms were to be agreed later and that even their failure to reach such agreement would not invalidate the contract unless without such agreement it was unworkable or too uncertain to be enforced. 30. In the instant case, the resources to be leased out were subject to agreement. The terms were to be mutually agreed upon. The terms of contract, in terms of Section 8 of the Contract Act, fructified into a concluded contract. Once a concluded contract was arrived at, the parties were bound thereby. If they were to alter or modify the terms thereof, it was required to be done either by express agreement or by necessary implication which would negate the application of the doctrine of `acceptance sub silentio'. But, there is nothing on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be notified directly and reliably of the law and all changes and additions made to it by various processes. Whether law is viewed from the standpoint of the conscientious good man seeking to abide by the law or from the standpoint of Justice Holmes's unconscientious bad man seeking to avoid the law, law must be known, that is to say, it must be so made that it can be known. We know that delegated or subordinate legislation is all-pervasive and that there is hardly any field of activity where governance by delegated or subordinate legislative powers is not as important if not more important, than governance by parliamentary legislation. But unlike parliamentary legislation which is publicly made, delegated or subordinate legislation is often made unobtrusively in the chambers of a Minister, a Secretary to the Government or other official dignitary. It is, therefore, necessary that subordinate legislation, in order to take effect, must be published or promulgated in some suitable manner, whether such publication or promulgation is prescribed by the parent statute or not. It will then take effect from the date of such publication or promulgation. Where the parent statute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tively. These two terms, viz. Private Wires and Non-Exchange Lines , have been defined under the Indian Telegraph Rules as under : Rule 2(II) : Private Wires are those which connect two subscribers through a departmental exchange system whether a private relay set is installed at the exchange or not and are not connected to the local telephone system and to the general trunk net work; ***************** Rule 2(33a) : Non-exchange lines' are those which connect two subscribers without any departmental exchange intervening. From the application forms annexed by the petitioner to its petition, it may be seen that what was asked for was Data Circuit. Such circuits were more in the nature of longdistance telephone circuits between two cities as may be evidenced by the following list of leased lines obtained by the petitioner which have been listed in the petition : Lease Circuits Obtained in 1. Cochin Thiruvananthapuram January 2. Cochin Thiruvananthapuram July 1997 3. Cochin Calicut January ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a document released to the general public. XXX XXX XXX 15. As a result of all that is stated in the earlier paragraphs we hold that it has not been conclusively established that the contracts for leased data circuits between the petitioner and the respondents were covered under Rule 434 of the Indian Telegraph Rules and that the minimum guarantee period and penalties for premature surrender, as indicated in Rule 434 were applicable to these contracts. We also hold that the petitioner had no reason whatsoever for the non-observance of Rule 475-A of Indian Telegraph Rules in view of its categorical undertaking to abide by the provisions of these Rules. 38. Prima facie, the proviso appended to Section 9 and Section 10 providing for a minimum guaranteed period of three years does not appear to have any application. The authorities of the DOT also did not think so. They proceeded on the basis of and having regard to the phraseology used in Rules 478 and 496 that minimum period is only three months. 39. Applicability of minimum guaranteed period of three years was sought to be enforced from a circular letter dated 17.6.1988 only. The effect of the said circular letter has b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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