Order
1. The respondents in Civil Appeals Nos. 2306, 2307, 2308 and 4530 of 2010, who are also the appellants in connected Civil Appeals Nos. 2309, 5193 and 5202 of 2010, had approached the High Court of Delhi by filing the writ petitions (out of which the above appeals have arisen) under Article 226 of the Constitution of India seeking interference of the High Court with the action of the Union of India in forfeiting/withholding the reserved licence fee, 50% of which was deposited by the respondents (referred to herein as “the licensees”) as a condition of their bids for obtaining FM Broadcasting licence.
2. According to the licensees, there was a unilateral departure by the Union of India from the terms of the tender document which had surfaced when LOI was issued on 2-8-2000. It is the specific case of the licensees that the said departure became even more apparent from the draft licence agreement which was forwarded to them by the Union. The contention before the High Court was to the effect that in view of the aforesaid unilateral departure, the Union was in breach of the tender conditions. That apart, it was also contended that in the absence of any specific clause in the tender document permitting forfeiture/retention of the licence fee, the action in this regard were totally unjustified. The licensees also contended that the Union was not even justified in forfeiting the earnest money inasmuch as it was the Union which had acted in breach of the Agreement and there was no wilful default on the part of the licensees to act in terms of the offers made by them.
3. The learned Single Judge of the High Court dismissed WP (C) No. 6485 of 2000 the writ petitions filed by the licensees on the ground that the departure from the conditions of the tender document as made in LOI and the draft licence agreement were not of significance. The learned Single Judge also took the view that retention/forfeiture of the amount by the Union would be justified as the action of the licensees in refusing to act in terms of LOI granted to them had occasioned loss to the Union.
4. The licensees carried the matter in appeal before the Division Bench of the High Court. The Division Bench reversed LPA No. 291 of 2008 the view taken by the learned Single Judge, inter alia, on the ground that the departures from the terms of the tender document were major in nature amounting to imposition of new conditions beyond those contemplated in the tender document. The Division Bench of the High Court, on an exhaustive consideration of the relevant clauses of the tender document, also came to the conclusion that there was no power vested in the Union to forfeit/withhold the licence fee. The Division Bench, therefore, directed for refund of the licence fee but without any interest. Insofar as earnest money is concerned, the Division Bench took the view that the forfeiture of the said earnest money was justified.
5. Against the grant of refund of licence fee, the Union has approached this Court by means of Civil Appeals Nos. 2306, 2307, 2308 and 4530 of 2010 whereas against the refusal of interest on the refund and the forfeiture of the earnest money, the licensees have preferred Civil Appeals Nos. 2309, 5193 and 5202 of 2010.
6. We have perused the terms of the tender document, LOI, the First Draft Licence Agreement and the Final Licence Agreement which have been placed on record. A perusal of the terms of NIT and the terms contemplated in the Final Draft Licence Agreement (finalised after negotiations and correspondence by and between the parties) it appears that the Final Licence Agreement embodies terms and conditions which go far beyond what is mentioned in NIT. The Draft Agreement proposed also deals with matters on which NIT is silent. The above would become clear from a recital of the aforesaid differences in a tabular form, which for the sake of convenience, may be set out as under:
Terms in NIT
Terms in Final Licence Agreement
Not provided
Schedule C Article 12 12.1. Termination for default.—The licensor can terminate the licence of the licensee in case of: I. Default in payment of licence fee. II. Breach of any terms and conditions contained in this Agreement. The licensor may, without prejudice to any other remedy for breach of the conditions of the licence give a written notice to the licensee at its registered office 30 days in advance before terminating this licence. In the event of termination/revocation of the licence, licensee will not be eligible to apply directly or indirectly for any FM radio slot on licence, in future.
Section 5 Clause 3 Undertake to set up the infrastructure and commission the service within specified time-limit, failing which my application shall be rejected and advance licence fee shall be forfeited.
Section 6 Clause 1(c) Schedule C Article 4 Prohibition of certain activities 4.1. The licence is non-transferable. The licensee shall not grant a sub-licence or lease the channel/broadcast service in whole or part. 4.2. The licensee shall ensure that no objectionable, obscene,
The licence is non-transferable. The licensee shall not grant a sub-licence. No contractor shall be appointed for performing activities under the licence. Section 6 Clause 1(f) The licensee shall not lease the channel/broadcast in whole or in part.
unauthorised or any other content messages or communication, infringed copyright, intellectual property right and international and domestic broadcasting laws in any form or inconsistent with the laws of India are carried in its broadcast channel. The use of the channel or network for anti-national activities would be construed as an offence punishable under the IPC and applicable laws and will attract immediate termination of the licence. 4.3. The licensee shall not either directly or indirectly assign or transfer its right in any manner whatsoever under this Agreement to any other into any Agreement for sub-licence and/or partnership relating to any subject-matter of the licence to any third party either in whole or in part. Any violation of the terms shall be construed as breach of the Licence Agreement and licence of the licensee shall be terminated immediately. However, the licensee may with prior approval of the licensor enter into an agreement with a third party so as to enable the latter to set up infrastructural and hardware facilities such as tower, transmitter, etc. such permission shall not in any case, be treated as permission to provide the service under the agreement by such third party on behalf of the licensee.
Section 6 1. General (a).—The licence shall be for free to air broadcast of audio on main carrier and data on sub-carriers, both excluding news and current affairs.
Clause 7 of Licence Agreement The licence is for free to air broadcast of audio on main carrier and data on sub-carrier both excluding news and current affairs and any other services which are under jurisdiction of the Department of Telecommunications.
Section 3 Clause 10(c) The successful applicant shall also be required to submit application to WPC Wing of the Ministry of Communications for frequency allocation and SCAFA clearance, within three months from the date of issue of the letter of intent.
Clause 5 of Licence Agreement The licensee shall also abide by all the terms and conditions required for issuance of operational licence by WPC. Schedule C Article 18.3 The licensee shall abide by all the conditions required for the issuance of all the Wireless Operational Licences of the Wireless Planning and Coordination Wing and has to also conform with the technical parameters as laid down in
this agreement. The licensee shall also have all the environmental clearances. The licensee has to also comply with the Electricity Act, Factories Act and other allied Acts. In case of non-compliance with any of the aforesaid requirements, the licensor shall have the right to revoke the licence of the licensee.
Section 3 Clause 8(f) The licence fee has to be paid every year in advance within seven days of the beginning of the year. For the first year, balance of the licence fee will have to be paid within 10 days of WPC's intimation that operational licence is ready to be issued. Failure to do so will result in forfeiture of the amount already deposited. The licence period will be reckoned from the date of the issue of operational licence by WPC, Ministry of Communications.
Schedule B Clause 2 Balance of the licence fee of the first year shall be paid by the licensee within 10 days of the intimation from WPC that the Wireless Operating Licence is ready to be issued and failure to do so will result in forfeiture of the amount already deposited by the licensee and the revocation of this licence; the licensee shall not be entitled to any interest on the advanced licence fee deposited by him.
(emphasis supplied)
7. Clauses 8(f), 10(d) and 12 of the tender document which are relevant to the case may now be set out as under:
“8. (f) The licence fee has to be paid by each licensee every year in advance within seven days of the beginning of the year. For the first year, balance of the licence fee will have to be paid within 10 days of WPC's intimation that operational licence is ready to be issued. Failure to do so will result in forfeiture of amount already deposited. The licence period will be reckoned from the date of issue of operational licence by Wireless Planning and Coordination Wing (WPC), Ministry of Communications.
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10. (d) The successful applicant shall also complete the installation of the broadcast facilities including studios, transmitter infrastructure, etc. and commission the service within 12 months from the date of frequency earmarking by WPC. If the successful applicant fails to do so, the first year licence fee paid by the applicant shall stand forfeited.
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12. Earnest money deposit (EMD).—That the applicant shall enclose with the tender document a crossed a/c payee demand draft, payable at any scheduled bank in New Delhi for the amount defined below. In favour of the Pay and Accounts Officer, Ministry of Information and Broadcasting, Shastri Bhavan, New Delhi, payable at Delhi towards earnest money deposit. The earnest money deposit shall be forfeited in case the applicant does not abide by his offer. No relaxation of any kind on earnest money deposit will be given to any applicant. EMD will be returned to unsuccessful applicants. After payment of licence fee and furnishing of bank guarantee, EMD will be returned to successful applicant.
Category
EMD (Rs) (Lakhs)
A+
2.00
A
1.00
B
0.75
C&D
0.5
(emphasis supplied)
8. We may also take note of another significant fact at this stage. Though an attempt has been made on behalf of the Union to assert that the retention/forfeiture of the licence fee is on account of damages/losses suffered by the Union, there is no pleading whatsoever to the aforesaid effect. In fact neither before the learned Single Judge nor before the Division Bench of the High Court or even before us has the Union even remotely attempted to place relevant materials in this regard to show that the action of the licensees in refusing to act in response to LOI granted to them had occasioned losses/damages for which the Union is liable to be compensated. In the absence of any pleading on the aforesaid score, what was urged before the High Court was primarily a legal question, namely, whether in the absence of any specific clause in NIT, forfeiture was justified. The aforesaid issue had arisen irrespective of the question whether the licensees were justified in refusing to act on the basis of LOIs issued/granted to them. If this was the issue raised we do not see how in the exercise of its writ jurisdiction the High Court should have felt handicapped in answering the same. Viewed in the above light, the objections of the appellant Union regarding the maintainability of the writ petitions before the High Court must necessarily fail.
9. We have already taken the view that the Union had departed from the terms of NIT and had incorporated new/additional terms and conditions in LOI and the draft licence agreements which were finalised by the Union after exchange of correspondence with the licensees. The precise content of the departures made has also been set out above. Inherent in the said finding would be a further determination of the unjustifiability of the action of the Union in forfeiting the licence fee. The Union could not have departed from the terms of NIT unilaterally and on the refusal of the licensees to accept such modified terms and act in terms of LOIs granted to them the Union could not have resorted to the forfeiture as made. This is irrespective of the question of the existence of any enabling provision in NIT for forfeiture of the licence fee.
10. Coming to the aforesaid question of availability of a power to order forfeiture, a reading of the relevant clauses i.e. Clauses 8(f), 10(d) and 12 extracted above would go to show that the Union had not protected/empowered itself to forfeit the licence fee. The forfeiture contemplated by the aforesaid clauses are altogether in different contexts and situations. In the absence of any such power, the forfeiture that has taken place in this case will have to be adjudged as null and void.
11. This would take this Court to the issue with regard to earnest money. The earnest money required to be deposited by the licensees under Clause 12 of NIT can be forfeited only in the event there is default on the part of the licensees or if a licensee is unwilling to act on its offer. The refusal of the licensees in the present case was not on their own volition but was prompted by additions to the terms and conditions of NIT made unilaterally by the Union of India. If that is so, it will be difficult to accept the view of the High Court insofar as forfeiture of earnest money is concerned. The refusal of the licensees to act in furtherance of LOIs granted to them being on account of breach committed by the Union, we are of the view that the forfeiture of the earnest money is also not justified.
12. If the licence fee and the earnest money have been forfeited unjustifiably by the Union, as we are inclined to hold, naturally, the licensees would be entitled to payment of interest. Award of interest is a measure of recompense for delayed payment. Interest also seeks to offset the decline in the value of money with time. Taking into account the totality of the facts and circumstances of the case, we are of the view that interest @ 6% p.a. from the date that the amounts were forfeited by the Union (licence fee and the earnest money) would serve the ends of justice. We, therefore, order accordingly and direct the Union to pay all such amounts along with interest at 6% p.a. within a period of eight weeks.
13. Consequently, and in the light of the above discussions, the civil appeals filed by the Union are dismissed and those filed by the licensees are allowed.