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Bharti Cellular Limited v. Union Of India And Others
Factual and Procedural Background
The appellant, a cellular mobile telephone service provider for the Delhi Metro area, entered into a licence agreement with the Union of India. The agreement fixed a lump-sum licence fee for the first three years and, from the fourth year onwards, linked the fee to the number of subscribers, subject to a minimum. Disputes arose over: (a) the date from which the licence period should be reckoned, (b) the method for counting subscribers in the fourth year and beyond, (c) interest and penal interest levied on outstanding amounts, and (d) the impact of revisions in the unit call rate on the per-subscriber licence fee.
The appellant filed a petition under Section 14(a)(i) of the Telecom Regulatory Authority of India Act, 1997 before the Telecom Disputes Settlement & Appellate Tribunal (TDSAT). By order dated 23-5-2003, the Tribunal partly allowed the petition but largely upheld the Union of India’s computation of licence fee and related charges. The present appeal under Section 18 of the TRAI Act challenges the adverse findings of the Tribunal.
Legal Issues Presented
- Whether the methodology adopted by the respondent for arriving at the number of subscribers from the fourth year of the licence agreement was valid.
- Whether the respondent could charge interest on the licence fee payable as demanded in letters dated 10-8-1999 and 6-3-2000.
- Whether the appellant is entitled to the benefit of a reduction in the unit call rate with effect from 1-5-1999 for calculating the per-subscriber licence fee.
- Whether the respondent can levy penal interest on the licence fee from 1-2-2000 till the actual date of payment.
Arguments of the Parties
Appellant's Arguments
- The licence should be deemed operative only from 15-11-1995 (date of commercial launch), not 26-9-1995 (date of interface/service clearance); therefore, all fee computations based on the earlier date are erroneous.
- “Subscribers” should be restricted to currently active, billed connections; counting all IMSI entries in the Home Location Register inflates the figure and the resultant licence fee.
- Charging the entire quarter’s advance payment in June and computing interest/penal interest on that basis is arbitrary and illegal.
- Because the unit call rate was reduced from Rs. 1.40 to Rs. 1.20 on 1-5-1999, the per-subscriber licence fee (Rs. 5 lakh per 100 subscribers) should be proportionately lowered for the period 1-5-1999 to 31-7-1999.
Respondent's Arguments
- The date of interface/service clearance (26-9-1995) marks the commencement of the licence for fee purposes.
- The accepted basis for calculating subscriber numbers is the total IMSI count in the Home Location Register, which was communicated to all operators and accepted by the appellant when it opted for the migration package.
- Interest and penal interest are recoverable under the licence terms for delayed payments; the appellant benefited from the migration package, which preserved the Government’s right to recover dues with interest.
- Clause 19.1(f) limits revisions in the per-subscriber fee to instances of increase in the unit call rate; no downward revision is contemplated.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| City Montessori School v. State of U.P. (2009) 14 SCC 253 | Doctrine of approbate and reprobate; a party cannot accept benefits under an arrangement and later challenge its burdens. | Used to affirm that, after accepting the migration package, the appellant could not reopen pre-migration disputes. |
| New Bihar Biri Leaves Co. v. State of Bihar (1981) 1 SCC 537 | Same doctrine—one who benefits from a transaction cannot later contest its terms. | Reinforced the conclusion that the appellant is estopped from questioning the pre-migration methodology. |
| R.N. Gosain v. Yashpal Dhir (1992) 4 SCC 683; AIR 1993 SC 352 | Doctrine of benefits and burdens; estoppel against inconsistent positions. | Supported the finding that the appellant cannot “accept and reject” the same instrument. |
| Shyam Telelink Ltd. v. Union of India (2010) 10 SCC 165 | Summarises and applies the maxim “qui approbat non reprobat”. | Cited as authoritative exposition that once benefits are accepted with full knowledge, the transaction cannot be challenged. |
Court's Reasoning and Analysis
Issue (i): Subscriber Count Methodology
The Court agreed with the Tribunal that the appellant had unconditionally accepted the migration package dated 22-7-1999, which expressly barred disputes concerning the period up to 31-7-1999. Applying the doctrine that one cannot “approbate and reprobate,” the Court held that the appellant is estopped from challenging the IMSI-based subscriber count for the pre-migration period.
Issue (ii): Interest on Licence Fee up to July 1999
The Tribunal had ruled, and the Supreme Court noted, that while interest could be recovered on unpaid licence fees up to July 1999, the respondent could not demand both the advance quarterly fee (July-September 1999) and revenue-sharing fees for August-September 1999. Neither party appealed this finding, so the Court left it undisturbed.
Issue (iii): Effect of Reduction in Unit Call Rate
Interpreting Clause 19.1(f), the Court affirmed the Tribunal’s view that the clause contemplates upward revisions only. The limiting phrase “revision will be limited to 75% of the overall increase in the unit rate” excludes downward adjustment. Additionally, the issue related to the pre-migration period and was barred by the appellant’s unconditional acceptance of the migration package.
Issue (iv): Penal Interest from 1-2-2000
The Court upheld the Tribunal’s conclusion that the respondent was entitled to charge simple interest on overdue amounts after 1-2-2000 as a condition for keeping the licence alive, instead of terminating it. Such interest was permissible under the licence terms.
Holding and Implications
APPEAL DISMISSED
The Supreme Court found no legal infirmity in the Tribunal’s order and dismissed the appeal without costs. The Tribunal’s directions to recalculate dues and interest up to July 1999 remain operative. The decision reinforces the principle that a licensee who accepts a migration package or settlement cannot later reopen barred disputes, but it does not lay down new substantive law beyond affirming established estoppel doctrines.
T.S Thakur, J.— This appeal under Section 18 of the Telecom Regulatory Authority of India Act, 1997 is directed against an order dated 23-5-2003 passed by the Telecom Disputes Settlement Appellate Tribunal, New Delhi, whereby the Tribunal has dismissed in part the petition filed by the appellant under Section 14(a)(i) of the Act and upheld the computation of licence fee demanded and realised by the respondent Union of India in terms of the licence agreement executed between the parties.
2. The appellant Company holds a licence to provide cellular mobile telephone services for Delhi Metro area. The licence agreement executed between the appellant on the one hand and the Government of India on the other, inter alia, provided for payment of fixed amount towards licence fee for the first three years of the licence period. From the fourth year onwards the licence fee payable was to be on the basis of number of subscribers of the service provider subject to the minimum stipulated in the agreement. Clause 19 of the licence agreement in particular dealt with this aspect and, inter alia, provided that for the first three years a lump sum licence fee shall be chargeable annually and that the year shall be reckoned as the period of twelve months beginning with the date of commissioning of the services or completion of twelve months from the date of the signing of the licence whichever is earlier.
3. The appellant's case before the Tribunal was that although it had a provisional operational clearance from the respondent effective from 29-8-1995 and an interface/service approval from 26-9-1995, it could commence commercial services only from 15-11-1995 meaning thereby the licence agreement should be deemed to have become operative only from 15-11-1995. The respondents, however, treated 26-9-1995 i.e the date when the interface/service clearance was given as the date of commencement of the licence agreement and computed the licence fee dues, interest, penal interest, liquidated damages, etc. with reference to the said date.
4. The appellant also questioned the method of computing the number of subscribers for determining the licence fee payable from the fourth year onwards contending that the term “subscribers” should be understood to be such as have activated cellular mobile telephone connection from the appellant and as are currently activated and used by a person for which bills are issued by the appellant.
5. A few other disputes were also raised by the appellant in the petition filed on its behalf. One of them related to the alleged illegality and arbitrary computation of the advance payment stipulated for the entire quarter as due in the month of June itself and calculation of the interest and penal interest on the overdue amount. One other grievance of the appellant was regarding the unit call rate for the purpose of calculation of the licence fee. It was contended by the appellant that in terms of the licence agreement the rate of Rs. 5 lakhs per 100 subscribers was based on the unit call rate of Rs. 1.10 This rate was revised by the respondent to Rs. 6.023 lakhs per 100 subscribers or part thereof on 30-7-1998 based on the unit call rate of Rs. 1.40 prevalent at that time. The unit call rate was then reduced to Rs. 1.20 from 1-5-1999. The appellant, therefore, claimed that the calculation of the licence fee payable for the period from 1-5-1999 to 31-7-1999 should be on the basis of the then unit call rate prevalent, namely, Rs. 1.20 only.
6. The respondent contested the petition on several grounds giving rise to the following four issues which the Tribunal framed for determination:
(i) Whether the methodology adopted by the respondent for arriving at the number of subscribers from the fourth year of the licence agreement was in order?
(ii) Whether the respondent could charge interest on the licence fee payable by the petitioner as demanded by the respondent in letters dated 10-8-1999 and 6-3-2000?
(iii) Whether the petitioner is entitled to the benefit of reduction in the unit call rate with effect from 1-5-1999 for calculating the per subscriber licence fee?
(iv) Whether the respondent can levy penal interest on the licence fee from 1-2-2000 till the actual date of payment?
7. Insofar as Issue (i) above is concerned, the Tribunal took the view that the respondents had clarified to the appellant and other cellular operators that the basis for calculating the number of subscribers for determining the licence fee shall be the total figure of IMSI in the Home Location Register. The Tribunal found that the representation made on the subject by the appellant-petitioner on 1-4-1999 was rejected by the respondent on 23-4-1999 and the appellant offered a migration package on 22-7-1999 which, inter alia, contained a clause that no dispute relating to the licence agreement for the period up to 31-7-1999 shall be raised at any future date. The appellant gave its unconditional acceptance to the entire migration package on 27-7-1999. Having done so, the appellant was not entitled to raise any issue that related to the pre-migration period.
8. There is, in our opinion, no legal infirmity in the view taken by the Tribunal. Once the appellant-petitioner had specifically and unconditionally agreed to accept the migration package and given up all disputes relating to licence agreement for the period up to 31-7-1999, it was not open to it to turn around and agitate any such dispute after availing of the migration package. A party which has unconditionally accepted the package cannot after such acceptance reject the conditions subject to which the benefits were extended to it under the package. It cannot reject what is inconvenient and onerous while accepting what is beneficial to its interests. The package having been offered subject to the conditions that all disputes relating to the licence agreement for the period ending 31-7-1999 shall stand abandoned by the operators, there was no room for going back on that representation.
9. Relying upon the decision of this Court in City Montessori School v. State of U.P (2009) 14 SCC 253, New Bihar Biri Leaves Co. v. State of Bihar (1981) 1 SCC 537 and R.N Gosain v. Yashpal Dhir (1992) 4 SCC 683, AIR 1993 SC 352, this Court has in Shyam Telelink Ltd. v. Union of India (2010) 10 SCC 165 held that no one can approbate and reprobate and anyone who has accepted with full knowledge or notice of facts, benefits under a transaction which he might have rejected or contested, cannot question the transaction or take up an inconsistent position qua the same. We have said: (Shyam Telelink case (2010) 10 SCC 165)
“23. The maxim qui approbat non reprobat (one who approbates cannot reprobate) is firmly embodied in English common law and often applied by courts in this country. It is akin to the doctrine of benefits and burdens which at its most basic level provides that a person taking advantage under an instrument which both grants a benefit and imposes a burden cannot take the former without complying with the latter. A person cannot approbate and reprobate or accept and reject the same instrument.”
In the light of the above, the view taken by the Tribunal is legally unexceptionable.
10. That brings us to the second issue formulated by the Tribunal for determination. The Tribunal has answered this issue in favour of the appellant holding that while the respondent was entitled to recover licence fee together with interest from the earlier unpaid amounts up to and for the month of July 1999, it was not entitled to recover both advance quarterly licence fee for July-September 1999 and revenue-sharing fees for August 1999 and September 1999 in terms of the migration package. This part of the order of the Tribunal has not been assailed before us by the appellant obviously because the view taken by the Tribunal has gone in its favour and the matter remitted back for reworking the dues along with interest by the end of July 1999, keeping in view the observations made by the Tribunal in para 23 of its order. It is noteworthy that the Government has also not assailed the said part of the order.
11. The third issue which had been taken up by the Tribunal for consideration related to the unit call rate and the effect of any revision in such rates. Condition 19.1(f) which is relevant in this context reads:
“19.1(f) The rate of rupees five lakhs per hundred subscribers or part thereof is based on the unit call rate of Rs. 1.10 Fourth year onwards, as defined in Clause 19.1(d), the rate of rupees five lakhs will be revised based on the unit call rate. The revision will be limited to 75% of the overall increase in the unit rate during the period preceding such revisions.”
12. Relying on the above provisions the Tribunal held that even though there is no specific exclusion of downward revision in the clause extracted above, the limiting of the revision is confined to increase only. The expression “revision will be limited to 75% of the overall increase in the unit rate” appearing in Clause 19.1(f) (supra) is indicative of the fact that revision was envisaged only in the case of increase in the unit call rate and not in the case of fluctuation resulting in a decrease in the said rate. That apart, the Tribunal has rightly held that the appellant-petitioner had not led any evidence before it and that the question regarding unit call rate was raised by it at any stage either before or after the licence was issued for the year 1994 and that the issue relating to the licence agreement could not be agitated being a pre-migration package.
13. That leaves us with Issue 4 formulated by the Tribunal relating to the levy of interest on the licence fee from 1-1-2000 till actual date of payment. The Tribunal has taken the view, and in our opinion rightly so, that the respondents were entitled to recover not only the outstanding licence dues but also interest due on the same for the period of default. The Tribunal has rightly held that to the extent condition stipulated a deadline i.e 31-1-2000 it was open to the respondent to charge simple interest on the overdue amount for keeping the licence valid instead of terminating the same on the ground of default.
14. In the totality of the above circumstances, we see no reason to interfere with the order passed by the Tribunal nor do we see any legal flaw in the directions issued by the Tribunal for reworking the dues along with interest keeping in view the observations made in the order under appeal.
15. There is no merit in this appeal which is hereby dismissed but without any order as to costs.
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