w w w . L a w y e r S e r v i c e s . i n



Bharati Hexacom Limited, represented by Sib Kumar Sarma, Deputy General Manager (Legal & Regulatory) v/s The Union of India, represented by the Secretary to the Ministry of Communications & Information Technology, Department of Telecommunications (Access Services Cell), New Delhi & Others


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    W.P.(C) No. 31 of 2013

    Decided On, 16 May 2017

    At, High Court of Tripura

    By, THE HONOURABLE MR. JUSTICE S. TALAPATRA

    For the Petitioners: Dr. A.K. Saraf, Gopal Jain, Senior Advocates, S. Chetia, R. Nandi, K. Roy, Advocates. For the Respondents: Bidyut Majumder, CGC.



Judgment Text

1. The petitioner is a cellular mobile operator providing GSM, mobile telephony, broadband services in several States pursuant to the license granted by the Ministry of Communications & Information Technology, Department of Telecommunications under the provisions of Indian Telegraph Act, 1885 and Indian Wireless Telegraphy Act, 1933. The petitioner, being the Telecom Service Provider (TSP), has made huge investment for creating facilities to provide the best services in the relevant areas/regions allotted to it. The Union of India under Section 4 of the Indian Telegraph Act, 1985 has exclusive privilege in respect of telegraphs and power to grant licenses. In exercise of those powers, license was granted to the petitioner. The petitioner and the respondents entered into an agreement for Cellular Mobile Telephone Service in the North-East circle. The respondents granted various telecom licenses to the petitioner from time to time under Section 4 of Indian Telegraph Act, 1885, as amended. The Union of India, hereinafter referred to as the „Government of India‟, even though, has exclusive privilege over the telegraph activities prior to 1984, but could not expand the telecom services as expected. Resultantly, by formulating National Telecom Policy, 1984, they decided to invite private sector participation. Pursuant to that policy, the private telecom operators, including the petitioner, were granted licenses. Under the said licenses, the licensees paid license fee on a fixed rate basis. The object of the New Telecom Policy was, to have telecommunication for all and within the reach of all. According to the petitioner, the said policy has the object of ensuring the availability of telephone on demand as early as possible. It was also intended by the policy to achieve universal service covering all villages as early as possible and to provide access to all people for certain basic telecom services at affordable reasonable prices and to provide the world standard telecom services.

2. The petitioner, since has relied heavily on the object and target of the New Telecom Policy, 1999, the relevant part is quoted hereunder from the said New Telecom Policy :

'Access to telecommunications is of utmost importance for achievement of the country's social and economic goals. Availability of affordable and effective communications for the citizens is at the core of the vision and goal of the telecom policy;

Strive to provide a balance between the provision of universal service to all uncovered areas, including the rural areas, and the provision of high-level services capable of meeting the needs of the country's economy;

Encourage development of telecommunication facilities in remote, hilly and tribal areas of the country;

Create a modern and efficient telecommunications infrastructure taking into account the convergence of IT, media, telecom and consumer electronics and thereby propel India into becoming an IT superpower;

Convert PCO's, wherever justified, into Public Teleinfo centres having multimedia capability like ISDN services, remote database access, government and community information systems etc.

Transform in a time bound manner, the telecommunications sector to a greater competitive environment in both urban and rural areas providing equal opportunities and level playing field for all players;

Strengthen research and development efforts in the country and provide an impetus to build world-class manufacturing capabilities.

Achieve efficiency and transparency in spectrum management.

Protect defence and security interests of the country.

Enable Indian Telecom Companies to become truly global players.

In line with the above objectives, the specific targets that the NTP 1999 seeks to achieve would be:

Make available telephone on demand by the year 2002 and sustain it thereafter so as to achieve a teledensity of 7 by the year 2005 and 15 by the year 2010

Encourage development of telecom in rural areas making it more affordable by suitable tariff structure and making rural communication mandatory for all fixed service providers.

Increase rural teledensity from the current level of 0.4 to 4 by the year 2010 and provide reliable transmission media in all rural areas.

Achieve telecom coverage of all villages in the country and provide reliable media to all exchanges by the year 2002.

Provide Internet access to all district head quarters by the year 2000

Provide high speed data and multimedia capability using technologies including ISDN to all towns with a population greater than 2 lakh by the year 2002.'

For purpose of attracting investment in the sector, the New Policy framework provided as under:

'The New Policy framework must focus on creating an environment, which enables continued attraction of investment in the sector and allows creation of communication infrastructure by leveraging on technological development. Towards this end, the New Policy Framework would look at the telecom service sector as follows:

Cellular Mobile Service Providers, Fixed Service Providers and Cable Service Providers, collectively referred to as „Access Providers‟;

Radio Paging Service Providers;

Public Mobile Radio Trunking Service Providers;

National Long Distance Operators;

International long Distance Operators;

Other Service Providers;

Global Mobile Personal Communication by Satellite (GMPCS) Service Providers;

V-SAT based Service Providers.'

3. It has been provided under para No.3.1 of the New Telecom Policy (Annexure-III to the writ petition) that, the Cellular Mobile Service Providers (CMSP) shall be permitted to provide mobile telephony services including permission to carry its own long distance traffic within their service area without seeking an additional license. Direct interconnectivity between licensed CMSPs and any other type of service provider (including another CMSP) in their area of operation including sharing of infrastructure with any other type of service provider shall be permitted. Interconnectivity between service providers in different service areas shall be reviewed in consultation with TRAI and the same would be announced by August 15, 1999 as a part of the structure for opening up national long distance. The CMSP shall be allowed to directly interconnect with the VSNL after opening of national long distance from January 1, 2000. The CMSP shall be free to provide, in its service area of operation, all types of mobile services including voice and non-voice messages, data services and PCOs utilizing any type of network equipment, including circuit and/or packet switches, that meet the relevant International Telecommunication Union (ITU)/Telecommunication Engineering Center (TEC) standards. It has been further provided that:

'CMSP operators would be required to pay a onetime entry fee. The basis for determining the entry fee and the basis for selection of additional operators would be recommended by the TRAI. Apart from the one time entry fee, CMSP operators would also be required to pay license fee based on a revenue share. It is proposed that the appropriate level of entry fee and percentage of revenue share arrangement for different service areas would be recommended by TRAI in a time-bound manner, keeping in view the objectives of the New Telecom Policy.'

4. The New Telecom Policy had ushered in a new regime keeping its eye to provide world class telecommunication infrastructure as the Government of India recognized the key to rapid economic and social development of the country. It is critical not only for the development of the Information Technology Industry, but it has also widespread ramifications on the entire economy of the country. Thus it was anticipated that going forward, a major part of the GDP of the country would be contributed by this sector. Accordingly, a comprehensive and forward looking telecommunication policy which has been referred to as the New Telecom Policy, 1999, is framed which creates an enabling framework for development of this industry. Therefore, this policy also envisaged. In terms of the said New Telecom Policy, 1999, the Government of India in the Ministry of Communications, Department of Telecommunications, by its communication dated 22.07.1999 (Annexure-IV to the writ petition), had proposed the package for migration of existing licensees of Cellular (Metros and Telecom Circles) and Basic Telecom Services to New Telecom Policy-1999 regime. The petitioner was also offered such package for migration from existing license to the New Telecom Policy, 1999 by the said communication dated 22.07.1999. For purpose of reference, the relevant part of the said communication dated 22.07.1999 is extracted hereunder:

Subject:- Proposed Package for Migration of existing licensees of Cellular (Metros and Telecom Circles) and Basic Telecom Services to New Telecom Policy -1999 regime.

Reference: License Agreement No. 842-68(B), 95-VAS dated 1.1.96 for Cellular Mobile Telephone Service in North-East Territorial Telecom Circle.

In accordance with Government approval, the following Package is proposed for migration of the existing Cellular (Metros and Telecom Circles) and Basic Telecom Service Operators to NTP-99 regime.

(i) The cutoff date for change over to NTP-99 regime will be 1.8.1999.

(ii) The licensee will be required to pay one time Entry Fee and License Fee as a percentage share of gross revenue under the license. The Entry Fee chargeable will be the license fee dues payable by existing licensees upto 31.07.1999, calculated upto this date duly adjusted consequent upon notional extension of effective date as in para (ix) below, as per the Conditions of existing license.

(iii) The License fee as a percentage of gross revenue under the license shall be payable w.e.f. 1.8.99. The Government will take a final decision about the quantum of the revenue share to be charged as license fee after obtaining recommendations of the Telecom Regulatory Authority of India (TRAI). In the meanwhile, Government have decided to fix 15% of the gross revenue of the Licensee as provisional license fee. The gross revenue for this purpose would be the total revenue of the Licensee company excluding the PSTN related call charges paid to DOT/MTNL and service tax collected by the licensee on behalf of the government from their subscribers. On receipt of TRAI‟s recommendation and Government‟s final decision, final adjustment of provisional dues will be effected depending upon the percentage of revenue share and the definition of revenue for this purpose as may be finally decided.'

[Emphasis supplied]

5. It is apparent from the said package that from 01.08.1999 the earlier license will not have any effect. In that place the licensee will be required to pay one time entry fee and license fee as a percentage share of gross revenue under the license, and that subsequently has turned to be the bone of the raging controversy. The entry fee chargeable will be the license fee dues payable by existing licensees upto 31.07.1999, calculated upto the date duly adjusted consequent upon notional extension of the effective date as in para (ix) of the said letter dated 22.07.1999 it has been provided that for purpose of calculation of outstanding license fee upto 31.07.1999, the effective date of all the licenses of Cellular Telecom Circles and Basic Telephone Services will be notionally extended by a period of six months. This does not apply to metro cellular licenses. This is with the further condition that where extension of effective date has been given earlier, due to whatever circumstances, further extension will be given after deducting the period of extension already given subject to the total extension period not exceeding six months. In cases where extension of period of more than six months has already been given, there will be no further change. In para (iii) of the said letter dated 22.07.1999, as is evident, it has been categorically provided that, the license fee as a percentage of gross revenue „under the license‟ shall be payable w.e.f. 01.08.1999. The Government will take a final decision about the quantum of the revenue share to be charged as license fee after obtaining recommendations of the Telecom Regulatory Authority of India (TRAI). Initially the Government decided to fix 15% of the gross revenue of the licensee-company as provisional license fee. The gross revenue for the purpose would be the total revenue of the licensee company excluding the PSTN related call charges paid to DoT/MTNL and service tax collected by the licensee on behalf of the Government from their subscribers. However, it has been also clearly declared that, on receipt of TRAI‟s recommendation and Government‟s final decision, final adjustment of provisional dues will be affected depending upon the percentage of revenue share and definition of revenue for this purpose as may be finally decided. The said migration policy was made in terms of clause 3.11 of the New Telecom Policy, 1999.

6. The Government of India, by the letter dated 29.01.2001, has communicated that the License Agreement shall stand substituted and modified w.e.f. 01.08.1999, notwithstanding anything contained in the earlier license agreement. The following were the substitution which are relevant in the context:

'The Licensee shall forego the right of operating in the regime of limited number of operators after 01.08.1999 and shall operate in a multiploy regime, that is to say that the Licensor may issue additional licenses for the Service without any limit in the Service Area where the Licensee Company is providing Cellular Mobile Telephone Service.

With effect from 1.8.1999, the payable License fee shall be equal to a prescribed percentage as share of gross revenue of the Licensee Company. Provisionally the licensor has fixed 15% of the gross revenue as license fee and presently the gross revenue for this purpose shall mean the total revenue of the Licensee Company under the license excluding.

(a) The PSTN related call charges paid to Bharat Sanchar Nigam Limited (BSNL)/MTNL or any other Telecom Service Provider and,

(b) Service tax or charge collected by the Licensee on behalf of the Government from their subscribers.

The Government will take a final decision about the quantum of revenue share, definition of revenue for this purpose, after taking into consideration the recommendations of Telecom Regulatory Authority of India (TRAI), and the same will take effect from 1.8.1999 thereafter final adjustment will be effected accordingly.'

7. Thus the Government of India by its said letter dated 29.01.2001 defines the gross revenue as total revenue of the licensee company under the license, excluding the PSTN related call charges paid to BSNL/MTNL or any other Telecom Service Provider and service tax or charge collected by the licensee on behalf of the Government from their subscribers. But the letter dated 29.01.2001 was superseded by the letter dated 25.09.2001 (Annexure-VI to the writ petition), where it has been provided as under:

(i) Annual License Fee at the rate of 15% of Adjusted Gross Revenue (AGR) shall be payable by you, with effect from 1st August, 1999.

(ii) In addition, the cellular licensees shall pay spectrum charges, with effect from (1.8.1999) the cut-off date of change over to NTP-99 regime on revenue share basis of 2% of AGR towards WPC Charges covering royalty payment for the use of cellular spectrum upto 4.4 MHZ + 4.4 MHz and License fee for Cellular Mobile handsets & Cellular Mobile Base Stations and also for possession of wireless telegraphy equipment as per the details prescribed by Wireless Planning & Coordination Wing (WPC). Any additional band width, if allotted subject to availability and justification shall attract additional License fee as revenue share (typically 1% additional revenue share if Bandwidth allocated is upto 6.2 MHz + 6.2 MHz in place of 4.4 MHz + 4.4 MHz).

Further, royalty for the use of spectrum for point to point links and access links (other than Cellular Service Spectrum) shall be separately payable as per the details and prescription of Wireless Planning & Coordination Wing. The fee/royalty for the use of spectrum/possession of wireless telegraphy equipment depends upon various factors such as frequency, hop and link length, area of operation etc. Authorization of frequencies for setting up Microwave links by Cellular Operators and issue of Licenses shall be separately dealt with WPC Wing as per existing rules.

The above spectrum charge is subject to review by WPC Wing from time to time.

(iii) The terms contained in the following sub-paras (a) to (d) shall be applicable from 25.01.2001 which is the date of issue/announcement of guidelines for issuance of license for Basic services, exclusive of any period during which existing or future Basic service operators may be prohibited to provide the use of hand held set with wireless access system in local area i.e. Short Distance Charging Area (SDCA), commonly known as „Limited Mobility‟. For the period, thus excluded, during which existing or future Basic Service operators are prohibited Limited Mobility. Other terms mentioned, hereinabove, shall be binding.

(a) The annual license fee payable shall be _____ % of Adjusted Gross Revenue (AGR) excluding the spectrum charges, which shall continue to be governed as per para (ii) above.

(b) You are permitted to provide 'Fixed Phones' based on existing GSM cellular network infrastructure in your Licensed Service Area.

(c) Point of inter-connection between the cellular mobile Telephone service network and fixed service providers shall be only with Level-1 Trunk Automatic Exchanges (TAXs) and Tandem exchanges in the Metros.

(d) In respect of the calls generated from Cellular network to fixed service network, 5% will be retained by the cellular operator, in accordance with the decision by TRAI, out of the total charges collected by the cellular operators for the fixed leg of the call.

In that context, the definition of 'adjusted gross revenue' was given at paras 2.1 and 2.2 of the letter dated 25.09.2001, which runs as under:

2.1 Gross Revenue :

The Gross Revenue shall be inclusive of installation charges, late fees, sale proceeds of handsets (or any other terminal equipment etc.) revenue on account of interest, dividend, value added services, supplementary services, access or interconnection charges, roaming charges, revenue from permissible sharing of infrastructure and any other miscellaneous revenue, without any set off for related item of expense, etc.

2.2 For purpose of arriving at the 'Adjusted Gross Revenue' the following will be excluded from the Gross Revenue:

(i) PSTN related Call charges (access charges) actually paid to Bharat Sanchar Nigam Limited (BSNL)/Mahanagar Telephone Nigam Ltd. (MTNL) or other telecom service providers within India.

(ii) Roaming revenue actually passed on to other telecom service providers, and

(iii) Service Tax on provision of service and Sales Tax actually paid to the Government, if gross revenue had included the component of Service Tax/Sales Tax. [Emphasis added]

8. While signing the migration package, the petitioner has averred that they have paid the one-time entry fee in the form of all outstanding dues as on the date of migration on fixed basis alongwith interest etc. At the time of signing the migration package, the petitioner understood that under the proposed revenue share regime, the Government would be entitled to charge a share of revenue only from licensed activity only. Pursuant to the letter dated 25.09.2001, the petitioner individually and at the industry level through the association continued to make representation to DoT to reconsider its stand as far as the definition of gross revenue and adjusted gross revenue for the purpose of license fee. However, there was no response at all in this regard. According to the petitioner, under the migration package, the license fee is based solely on the revenue from licensed activity and not otherwise. Thus, the Government of India does not have a right to claim or demand anything that enlarges the scope in the license which is beyond Section 4 of the Indian Telegraph Act. The definition of „Adjusted Gross Revenue‟ (AGR) as incorporated in the CMTS license agreement for North-East service area is as under:

'The Gross Revenue shall be inclusive of installation charges, late fees, sale proceeds of handsets (or any other terminal equipment etc.), revenue on account of interest, dividend, value added services, supplementary services, access or interconnection charges, roaming charges, revenue from permissible sharing of infrastructure and any other miscellaneous revenue, without any set-off for related item of expense, etc.

For the purpose of arriving at the 'Adjusted Gross Revenue (AGR)' the following shall be excluded from the Gross Revenue to arrive at the AGR:

(i) PSTN related call charges (Access Charges) actually paid to other eligible/entitled telecommunication service providers within India;

(ii) Roaming revenues actually passed on to other eligible/entitled telecommunication service providers and;

(iii) Service Tax on provision of service and Sales Tax actually paid to the Government if gross revenue had included as component of Sales Tax and Service Tax.'

[Emphasis added]

9. In the year 2003, the telecom licensees questioned the validity of the definition of AGR in the license agreement before the Telecom Disputes Settlement and Appellate Tribunal (TDSAT). The licensees contended that the AGR can only be related to the revenue directly arising out of telecom operations licensed under Section 4 of the Act after adjustment of expenses and write offs of revenues directly attributable to the licensed telecom activities. The licensees also raised the contention that several other items like corporate office income, rebate and discounts, sale of fixed assets, interest on inter-corporate loans, income from investments, interest on bank deposits and foreign exchange gain etc. are not to be included in the AGR for the purpose of computation of license fee. The Cellular Operators Association of India (COAI), representing the Telecom Service Providers, including the petitioner, has challenged the legality and validity of the said provision before the TDSAT, which was registered and numbered as Petition No.82/2005. By the judgment and order dated 07.07.2006 delivered in Petition No.82/2005 alongwith others, the TDSAT has held that,

'A careful reading of the Section indicates that the consideration contemplated therein is only for the privilege the Government has i.e. to establishing, maintaining or working of a telegraph and not beyond that. Therefore, if the Central Government thinks it fit to transfer this privilege for a fixed sum of money and the licensee accepts that demand, there can be no further dispute but if the Government chooses to take a percentage share of the gross revenue of the licensee as its consideration then it is logical to conclude that such sharing can be only of gross revenue derived from the transferred privilege of establishing, maintaining and working of telecommunication. In our opinion, it would be doing violence to the Section if we are to accept the argument of the learned counsel for the 1st Respondent that words 'as it thinks fit' found in the proviso would allow the Government to demand and collect a share of revenue from all the activities of the licensee irrespective of the fact whether such revenue is traceable to the revenue realized from the activities under the license or not.'

[Emphasis supplied]

10. Thereafter, the TDSAT directed the TRAI to go into each item/head to comment whether it falls within the purview of AGR. The TRAI submitted the report dated 13.09.2006. On considering various heads of revenue, the TRAI gave detailed reasons with respect to items under particular heads which had to be excluded from the AGR for purpose of calculating the license fee to be paid to the Government. Thereafter, the Government of India had challenged the TDSAT‟s said judgment and order dated 07.07.2006 before the apex court. By the order dated 19.01.2007, the apex court has dismissed the appeal and passed the order, which reads as under :

'Heard the parties.

Pursuant to the direction of the TDSAT in the impugned order, a fresh recommendation has been made by the TRAI. In view thereof, we see no reasons to interfere. The appeal is dismissed. The appellant is, however, given liberty to urge all the contentions raised in this petition before the TDSAT.'

11. On 30.08.2007, the TDSAT disposed of the petition filed by the Cellular Operators Association of India („COAI‟, in short), holding inter alia that,

'We would like to emphasize about a basic factor which has to be always kept in mind while undertaking this exercise. The license uses the works, revenue arising from licensed activity. Therefore, one has to always apply the test whether the revenue sought to be included in AGR arises from licensed activity.'

In terms of the said order dated 30.08.2007 as passed by the TDSAT, the petitioner has been paying the license fee so far.

12. Being aggrieved by that order dated 30.08.2007 passed by the TDSAT, the Government of India has approached the apex court by way of a statutory appeal. Even the COAI has approached the apex court against the said order dated 30.08.2007. During pendency of the appeal, the Government of India on 11.08.2011 has submitted in the apex court that the revenue from non-telecom business, which is entirely different from telecom business of a licensee, is not included in the definition of Gross Revenue. Even, by the understanding of the respondent, the non-telecom licensed revenue is not intended to be part of the gross revenue. Since the order dated 30.08.2007 passed by the TDSAT was confined to the petitions filed before the TDSAT, the petitioner was persuaded to file a petition seeking the same relief, being Petition No.284/2007. By the order dated 07.05.2010, the TDSAT has passed the similar order in favour of the petitioner and granted the relief from the date of filing of the petition by the COAI. Thus, the petitioner was treated at par with the petitioners in Petition No.82/2005.

13. By means of this petition, the petitioner herein has challenged the validity and constitutionality of the definition of the Adjusted Gross Revenue (AGR) as :

(i) the power to grant a license cannot include the power to levy a fee with respect to activities that are unrelated to and bear no nexus with the license; and

(ii) the respondents‟ action of including revenues from non-licensed activities is illegal and is totally arbitrary as it includes items on an accrual/billed basis, but allows deduction on a collected/paid basis.

The definition of AGR incorporated in the cellular licenses issued by the respondents, according to the petitioner, is unfair, unjust, unreasonable, arbitrary and violative of Article 14 of the Constitution as it is beyond the scope of powers vested with the Government of India, Ministry of Telecommunications [Department of Telecommunications] under Section 4 of the Indian Telegraph Act, 1885. By administering and implementing the said definition of AGR, the respondents were perpetuating various other illegalities in the matter of levying and collecting license fee from the petitioner, including revenues unrelated to licensed activities under the license and several items which strictly did not fall under the scope of the license.

14. On 11.10.2011, the apex court set aside the TDSATs judgment only on the question of jurisdiction. The apex court, according to the petitioner, did not get into the merits of the case. The said order was interfered with as the TDSAT has no jurisdiction to go into the validity of the license terms signed by a telecom service provider. Thus, according to the petitioner, the apex court did not go into the merit of the case vis-a-vis the extent of powers of the DoT under Section 4 of the Telegraph Act and the legality and validity of the terms of the license. On 11.10.2011 again, the apex court passed a supplementary order alongwith the main order (Annexure-XI to the writ petition), which reads as under :

'1. We have delivered today the judgment in these cases and while answering the last substantial question of law, we have held that when a particular demand is raised on a licensee, the licensee can challenge the demand before the Tribunal and the Tribunal will have to go into the facts and materials on the basis of which the demand is raised and decide whether the demand is in accordance with the license agreement and in particular the definition of Adjusted Gross Revenue in the license agreement and can also interpret the terms and conditions of the license agreement.

2. It is stated by Mr. C.S. Vaidyanathan, learned senior counsel for some of the licensees that demands have already been raised on them. He submitted that two months‟ time be granted to the licensees to raise their disputes before the Tribunal and in the meanwhile the demands should not be enforced.

3. If the demands have been raised, we grant two months‟ time to the licensees to raise the dispute before the Tribunal against the demands and during this period of two months, the demands will not be enforced.'

15. The petitioner had filed a new petition, being Petition No.284/2007 before the TDSAT, which was only in terms of the said supplementary order dated 11.10.2011. On 15.12.2011 the TDSAT passed an interim order in the following terms (Annexure-XI to the writ petition) :

'.......... In the meantime, in view of the statement made by the learned counsel for the Respondents that Demand in respect of some of the cases may have to be revised, it is expected that the original Demand and/or Revised Demand, if any, may not be enforced without the leave of the Tribunal ..........'

16. The petitioner has categorically stated in para 30 of the writ petition that the proceeding before the Tribunal is confined to whether the demand raised by the DoT is in accordance with the license agreement and the Tribunal can at best interpret the definition as it is. According to the petitioner, the demand of the revenue share on non-telecom activities are outside the purview of the cellular licenses. Should AGR be taken to include revenue earned from non-telecom activities, it is the petitioner‟s case in this writ petition that such inclusion of unrelated non-telecom activities in computation of revenue share by the DoT would be unconstitutional, thereby rendering the very source of power, which is ultra vires the provisions of the Constitution of India.

17. The apex court while disposing the appeal, being Civil Appeal No.5059/2007, has held that the Union of India could raise, inter alia, the contention that the definition of the AGR as given in the license could not be challenged by the licensee before the TDSAT as to the new items of revenue mentioned in the definition of AGR in the license. The apex court has held that the TDSAT has no jurisdiction to decide on the validity of the terms and conditions incorporated in the license of the service providers. But it will have jurisdiction to decide any dispute in regard to licensor and licensee of the interpretation of the terms and conditions of the license. The apex court has further held that the TDSAT has no jurisdiction to decide the validity of definition of AGR in the license agreement and to exclude certain items which has not been included in the definition.

18. The petitioner has asserted that the apex court did not frame any question as to the legality or validity of the definition of the AGR, being violative of Article 14 and Article 19(1)(g) of the Constitution of India nor did the apex court frame a question of law as to whether the terms and conditions of the license were ultra vires Section 4 of the Act. Thus, it can be said that by the order dated 11.10.2011 delivered in Civil Appeal No.5059/2007, the apex court has not decided the issue of the definition of AGR in the license agreement being unconstitutional, as violative of Article 14 and 19(1)(g) of the Constitution. Those questions arose only in view of the decision of the apex court, upholding the lack of jurisdiction of the TDSAT. Thus the petitioner, based on the principle of ubi jus ibi remedium, has challenged the same in this court by filing this writ petition. The petitioner, having referred to the decision of the apex court in Civil Appeal No.5059/2007 [Union of India Vs. AUSPI], has specifically held in terms of the question of law framed that the TDSAT under Section 14 of the TRAI Act, does not have jurisdiction to decide the validity of the licenses granted by the DoT under Section 4 of the Act. Thus, the petitioner has approached for judicial review in respect of limited extent as to whether clause 19 of the license agreement granted to the petitioner in terms of Section 4 of the Indian Telegraph Act, 1885 is ultra vires or not. The petitioner has also disclosed that one of its holding companies, namely Bharti Airtel Limited, has filed similar writ petition in the High Court of Kerala. Similar petitions have been filed by the other telecom operators in the High Court of Madras. In all those cases the petitioners are protected by the interim order from any coercive action to receive license fee in terms of the impugned clause 19 of the agreement. It has been asserted that, despite such protection order, the licensor issued the impugned demand on 08.11.2012 seeking payment of additional license fee against those petitioners.

19. In this context, the main relief of the petitioner as sought in this writ petition is to declare clause 19 of the License Agreement to the extent that it includes the revenue generated by the petitioner from the activities other than the license activities as AGR for purpose of calculation of license fee as ultra vires, being violative of Article 14 and 19(1)(g) of the Constitution of India. Further, in terms of Section 4 of the Indian Telegraph Act, 1885, the license fee ought to have a direct nexus with the services provided under the license agreement as the licensor can only levy license fee/AGR from the revenue earned from the license activities and the revenue realised therefrom. Thereafter, the petitioner has further urged this court to set aside the demand notice dated 18.11.2012 (Annexure-XVI to the writ petition) and the demand notice dated 18.01.2013 (Annexure-XVI to the writ petition), for being arbitrary, illegal and without jurisdiction. Consequential prayer has been made for quashing clause 19 of the License Agreement.

20. Mr. Gopal Jain, learned senior counsel and Dr. A.K. Saraf, learned senior counsel, having appeared for the petitioner, has placed their submissions extensively before this court. On 02.06.2016, Mr. Jain, learned senior counsel has made a statement that against the final order dated 23.04.2015 passed by the TDSAT on various components of the license, the appeal filed by the service providers are pending before the apex court. He has further submitted that the copy of the order dated 11.08.2011 delivered in Civil Appeal No.5059/2007 has been filed to show the stand of the DoT in the apex court. That revenue from non-license activity will not include in the AGR.

21. It has been submitted for the petitioner that under Section 4 of the Indian Telegraph Act, 1985, the Government of India has the exclusive privilege of establishing, maintaining the working of the telegraphs. Under the proviso to Section 4 of the Act, the Government has the right to transfer its privilege by way of licenses on such conditions and for consideration of such payment as it thinks fit. Section 4 of the Telegraph Act, 1885 is reproduced hereunder for purpose of reference :

'4. Exclusive privilege in respect of telegraphs, and power to grant licenses.-

[(1)] Within [India], the Central Government shall have exclusive privilege of establishing, maintaining and working telegraphs:

Provided that the Central Government may grant a license, on such conditions and in consideration of such payments as it thinks fit, to any person to establish, maintain or work a telegraph within any part of [India]:

Provided further that the Central Government may, by rules made under this Act and published in the Official Gazette, permit, subject to such restrictions and conditions as it thinks fit, the establishment, maintenance and working-

(a) of wireless telegraphs on ships within Indian territorial waters [and on aircraft within or above 13[India], or Indian territorial waters], and

(b) of telegraphs other than wireless telegraphs within any part of [India].

Explanation- The payments made for the grant of a license under this sub-section shall include such sum attributable to the Universal Service Obligation as may be determined by the Central Government after considering the recommendations made in this behalf by the Telegraph Regulatory Authority of India established under sub-section (1) of section 3 of the Telegraph Regulatory Authority of India Act, 1997 (24 of 1997).'

[Emphasis added]

The source of power to grant license and to collect license fee is derived by the licensor/respondent from the first proviso to Section 4 of the Indian Telegraph Act, 1885. The provisions for license fee in the proviso must draw its colour from the main section. The main section relates only to establishing, maintaining and working telegraphs and resultantly license fee can be levied only for licensed activities as a percentage of the revenue arising from licensed activities. The license terms introduced by the respondents has to fall within the four corners of the statute. The terms and conditions of the license must have a nexus to the licensed activities. The AGR can only bring within its fold revenue derived from the license activities. It cannot bring within its the revenue derived from the non-licensed activities. For purpose of calculation of license fee inasmuch as the same would not be in conflict of Section 4 of the Indian Telegraph Act, 1885. Hence such action would be wholly unconstitutional. No condition can be introduced causing violation to Section 4 of the Indian Telegraph Act, 1885. The DoT can levy license fee and spectrum usage charge derived from the AGR accruing only from licensed activities and the exclusive privilege of the Government on such payments as it thinks fit, has to be in consonance with Article 14 of the Constitution of India. Clause 19.1 of the license agreement, which seeks to include revenue from non-licensed activities for determination of license fee is beyond the scope and ambit of Section 4 of the Indian Telegraph Act, 1885 inasmuch as Section 4 of the Act has to be subject to the scrutiny of Article 14 and Article 19(1)(g) of the Constitution of India. The respondents, according to the petitioner, cannot charge any price, irrespective of whether it is generated from the license or not. This will defeat the public purpose served by privatization of telecommunication encompassed in Government‟s policy. Further, Section 4 has to be read harmoniously with the Telecom Policy of 1994 and 1999 as well as the migration package which clearly shows that revenue generation was not the primary purpose.

22. In support of their contention, the decision of Bharti Airtel Ltd. Vs. Union of India, reported in (2015) 12 SCC 1 has been relied on by the petitioner, wherein while examining the provision of Section 4 of the Indian Telegraph Act, 1885, the apex court has held as under :

'45. By a statutory declaration made under Section 4 of the Indian Telegraph Act, 1885, it is declared that the Government of India shall have the exclusive 'privilege for establishing, maintaining and working telegraphs' (which includes telephones). The proviso to Section 4 of the said Act authorizes the Government of India to grant license to establish, maintain and work telegraphs (which includes telephones) 'on such conditions and in consideration of such payments' as it thinks fit. Telephones include both wired and wireless telephones like cellular mobile phones, the establishment and working of which necessarily requires access to spectrum which again is controlled by the Government of India as it is already declared to be a natural resource by this Court. It can thus, be seen that no person other than the Government of India has any right to establish, maintain and work telephones. It is the exclusive privilege of the Government of India, which could be permitted to be exercised by others by a grant from the Government of India.

46. In other words, such licenses are in the nature of largesse from the State. No doubt, the authority of the State to distribute such largess is always subject to the condition that the State must comply with the conditions of Article 14 of the Constitution i.e. the distribution must be on the basis of some rational policy. Even the language of the proviso to Section 4 of the Telegraph Act, which stipulates that the grant of license should be 'on such conditions and in consideration of such payments as it thinks fit', must necessarily be understood that the conditions must be rational and the payments forming the consideration for the grant of license must be non-discriminatory …………'.

[Emphasis added]

In the said judgment, an earlier decision of the apex court in Centre for Public Interest Litigation vs. Union of India, reported in (2012) 3 SCC 1, has also been referred to wherein it has been held that the State and its agencies/instrumentalities must always adopt a rational method for disposal of public property and it is the burden of the State to ensure that a non-discriminatory method is adopted for distribution and alienation, which would necessarily result in national/public interest.

23. In Kerala Samsthana Chethu Thozhilali Union vs. State of Kerala, reported in (2006) 4 SCC 327, it has been held that the State while parting with its exclusive privilege or a part thereof, may impose such conditions, but once such terms and conditions are laid down by reason of a statute, the same cannot be deviated from. Thus the license conditions must be for purpose of carrying out the purposes of the Act and not dehors the same. The license conditions cannot be framed to include matters that have not been contemplated under the Act. The power to impose terms and conditions therefore, are subject to the provisions of the Indian Telegraph Act, 1885 and must conform to the legislative policy. The same must not be framed in contravention of the constitutional or statutory scheme. The conditions of the license agreement must be such which would promote the policy or secure the object of the Act. The State has no power and/or jurisdiction to realise license fee from the licensees by including revenue generated from their non-licensed activities in AGR in exercise of its monopoly powers. Such an action will clearly be violative of Section 4 of the Indian Telegraph Act, 1885.

24. According to the petitioner, from the said judgment of the apex court, it would be clear that the revenue generated from non-licensed activities cannot be included in the AGR for the purpose of calculation of license fee inasmuch as the same would be beyond the scope and ambit of Section 4 of the Indian Telegraph Act, 1885 as the same will have no nexus with the license activities. It has been further submitted from the petitioner that clause 19 of the license agreement, which is under challenge in this writ petition is a product of unconscionable bargain. A contract requires both the parties to be a party and have the same bargaining power. In the present case, the Government being in a dominant position imposed terms of the license on the licensees. The licensees had no other choice but to accept the license conditions without negotiations. The petitioner has alleged of „high handedness‟ of the Government while dealing with the license. An unconscionable bargain would therefore be one which is irreconcilable with what is right or reasonable. If a contract or term thereof is unconscionable at the time the contract is made, the court may refuse to enforce the contract or may enforce the remainder of the contract without the unconscionable term or, may so limit the application of any unconscionable term as to avoid unconscionable result.

25. The apex court in Central Inland Water Transport Corporation vs. Brojo Nath Ganguly, reported in (1986) 3 SCC 156, has held as under :

'As seen above, apart from judicial decisions, the United States and the United Kingdom have statutorily recognized, at least in certain areas of the law of contracts, that there can be unreasonableness (or lack of fairness, if one prefers that phrase) in a contract or a clause in a contract where there is inequality of bargaining power between the parties although arising out of circumstances not within their control or as a result of situations not of their creation. Other legal systems also permit judicial review of a contractual transaction entered into in similar circumstances. For example, section 138(2) of the German Civil Code provides that a transaction is void "when a person" exploits "the distressed situation, inexperience, lack of judgmental ability, or grave weakness of will of another to obtain the grant or promise of pecuniary advantages........ which are obviously disproportionate to the performance given in return." The position according to the French law is very much the same.'

It has been further observed in Brojo Nath Ganguly (supra) that, the court will not enforce and will, when called upon to do so, strike down an unfair and unreasonable contract, or an unfair and unreasonable clause in a contract, entered into between the parties who are not equal in bargaining power. It will also apply where a man has no choice, rather no meaningful choice, but to give his assent to a contract or to sign on the dotted line in a prescribed or standard form or to accept a set of rules as part of the contract, however unfair, unreasonable and unconscionable a clause in that contract or form or rules may be.

The apex court in Brojo Nath Ganguly (supra), has further observed as under :

'Should then our courts not advance with the times? Should they still continue to cling to outmoded concepts and outworn ideologies? Should we not adjust our thinking caps to match the fashion of the day? Should all jurisprudential development pass us by, leaving us floundering in the sloughs of nineteenth-century theories? Should the strong be permitted to push the weak to the wall? Should they be allowed to ride roughshod over the weak? Should the courts sit back and watch supinely while the strong trample underfoot the rights of the weak? We have a Constitution for our country. Our judges are bound by their oath to "uphold the Constitution and the laws". The Constitution was enacted to secure to all the citizens of this country social and economic justice. Article 14 of the Constitution guarantees to all persons equality before the law and the equal protection of the laws. The principle deducible from the above discussions on this part of the case is in consonance with right and reason, intended to secure social and economic justice and conforms to the mandate of the great equality clause in Art. 14. This principle is that, the courts will not enforce and will, when called upon to do so, strike down an unfair and unreasonable contract, or an unfair and unreasonable clause in a contract, entered into between parties who are not equal in bargaining power. It is difficult to give an exhaustive list of all bargains of this type. No court can visualize the different situations which can arise in the affairs of men. One can only attempt to give some illustrations. For instance, the above principle will apply where the inequality of bargaining power is the result of the great disparity in the economic strength of the contracting parties. It will apply where the inequality is the result of circumstances, whether of the creation of the parties or not. It will apply to situations in which the weaker party is in a position in which he can obtain goods or services or means of livelihood only upon the terms imposed by the stronger party or go without them. It will also apply where a man has no choice, or rather no meaningful choice, but to give his assent to a contract or to sign on the dotted line in a prescribed or standard form or to accept a set of rules as part of the contract, however unfair, unreasonable and unconscionable a clause in that contract or form or rules may be. This principle, however, will not apply where the bargaining power of the contracting parties is equal or almost equal. This principle may not apply where both parties are businessmen and the contract is a commercial transaction. In today's complex world of giant corporations with their vast infra-structural organizations and with the State through its instrumentalities and agencies entering into almost every branch of industry and commerce, there can be myriad situations which result in unfair and unreasonable bargains between parties possessing wholly disproportionate and unequal bargaining power. These cases can neither be enumerated nor fully illustrated. The court must judge each case on its, own facts and circumstances.'

[Emphasis added]

In the aforesaid case, the apex court has also held as under :

'Contracts in prescribed or standard forms or which embody a set of rules as part of the contract are entered into by the party with superior bargaining power with a large number of persons who have far less bargaining power or no bargaining power at all. Such contracts which affect a large number of persons or a group or groups of persons, if they are unconscionable, unfair and unreasonable, are injurious to the public interest. To say that such a contract is only voidable would be to compel each person with whom the party with superior bargaining power had contracted to go to court to have the contract adjudged voidable. This would only result in multiplicity of litigation which no court should encourage and would also not be in the public Interest. Such a contract or such a clause in a contract ought, therefore, to be adjudged void.'

In Brojo Nath Ganguly (supra), the apex court has further held as under :

'It is thus clear that the principles. governing public policy must be and are capable, on proper occasion, of expansion or modification. Practices which were considered perfectly normal at one time have today become obnoxious and oppressive to public conscience. If there is no head of public policy which covers a case, then the court must in consonance with public conscience and in keeping with public good and public interest declare such practice to be opposed to public policy. Above all, in deciding any case which may not be covered by authority our courts have before them the beacon light of the Preamble to the Constitution. Lacking precedent, the court can always be guided by that light and the principles underlying the Fundamental Rights and the Directive Principles enshrined in our Constitution.'

26. In Hindustan Times vs. State of U.P., reported in (2003) 1 SCC 591, the apex court had occasion to hold that any unjust condition imposed upon by the State will attract the wrath of Article 14 of the Constitution of India as well as Section 23 of the Indian Contract Act. The apex court in the said judgment had observed as under :

'The respondents being a state, cannot in view of the equality doctrine contained in Article 14 of the Constitution of India, resort to the theory of "take it or leave it". The bargaining power of the state and the newspapers in matters of release of advertisements is unequal. Any unjust condition thrust upon the petitioners by the state in such matters, in our considered opinion, would attract the wrath of Article 14 of the Constitution of India as also section 23 of the Indian Contract Act.'

[Emphasis added]

In Hindustan Times (supra), the apex court has further held that the State in all its activities must not act arbitrarily. Equity and good conscience should be at the core of all governmental functions. Every executive action which operates to the prejudice of any person must have the sanction of law and the executive cannot interfere with the rights and liabilities of any person unless the legality thereof is supportable in any court of law.

27. In Balmer Lawrie & Co. Ltd. Vs. Partha Sarathi Sen Roy, reported in (2013) 8 SCC 345, the apex court had occasion to observe as under:

'Where inequality of bargaining power is the result of great disparity between the economic strengths of the contracting parties, the aforesaid principle would automatically apply for the reason that, freedom of contract must be founded on the basis of equality of bargaining power between such contracting parties, and even though ad idem is assumed, applicability of standard form of contract is the rule. Consent or consensus ad idem as regards the weaker party may therefore, be entirely absent. Thus, the existence of equal bargaining power between parties, becomes largely an illusion.'

28. In LIC of India vs. Consumer Education and Research Centre, reported in (1995) 5 SCC 482, the apex court further elaborated the said principle by holding as under :

'It will also apply where a man has no choice, or rather no meaningful choice, but to give his assent to a contract or to sign on the dotted line in a prescribed or standard form or to accept a set of rules as part of the contract, however unfair, unreasonable and unconscionable a clause in that contract or form or rules may be. This principle, however, will not apply where the bargaining power of contracting parties is equal or almost equal. This principle may not apply where both parties are businessmen and the con-tract is a commercial transaction. In today's complex world of giant corporations with their vast infrastructural organizations and with the State through its instrumentalities and agencies entering into almost every branch of industry and commerce, there can be myriad situations which result in unfair and unreasonable bargains between parties possessing , wholly disproportionate and unequal bargaining power. These cases can neither be enumerated nor fully illustrated. The court must judge each case on its own facts and circumstances.'

In LIC of India (supra), the apex court has further held as under:

'It is, therefore, the settled law that if a contract or a clause in a contract is found unreasonable or unfair or irrational one must look to the relative bargaining power of the contracting parties. In dotted line contracts there would be no occasion for a weaker party to bargain or to assume to have equal bargaining power. He has either to accept or leave the services, or goods in terms of the dotted line contract. His option would be either to accept the unreasonable or unfair terms or forego the service forever. With a view to have the services of the goods, the party enters into a contract with unreasonable or unfair terms contained therein and he would be left with no option but to sign the contract.'

[Emphasis added]

Having placed reliance on the aforesaid judgment, the petitioner has stoutly contended that the petitioner being a licensee was in a weaker position and thereby it was compelled to accept the license conditions put in the license agreement, which is manifestly unjust and thereby the aforesaid condition of clause 19.1 of the license agreement is a result of the dominant power of the State and the same being unjust and unreasonable, cannot be given effect to and is liable to be declared ultra vires.

29. The petitioner, thereafter, has contended that on 23.06.2000 the TRAI gave its recommendation in accordance with the migration package as regards the Adjusted Gross Revenue (AGR). The relevant part of it, is as under :

'Adjusted Gross Revenue' for the purpose of levying license fee as a percentage of Revenue Share shall mean the 'Gross Revenue' accruing to the licensee by way of operations of the Cellular Mobile Service mandated under the license (inclusive of revenue on account of value-added services, supplementary services, and the sale of handsets) plus revenue accruing through resellers, franchisees etc. plus any revenue foregone through subsidies on handsets or any other rebates, as reduced by the following items:

(i) Interconnection/Access charges payable to other service providers for carriage of calls;

(ii) Roaming revenues collected on behalf of other Cellular Mobile Service Providers and passed on or liable to be passed on to them;

(iii) Service tax paid or payable;

(iv) Sale of Handsets.'

[Emphasis added]

30. A similar definition was suggested by TRAI in relation to Basic Service Licenses by the recommendation dated 31.08.2000. On 09.10.2000, the Government sent back the recommendation dated 23.06.2000 to TRAI for reconsideration in view of the specific concerns of the DoT. In the explanatory memorandum to the recommendation of TRAI dated 23.06.2000, in Section IV, the TRAI observed that all revenues derived from the facilities created under the license is subject to the revenue share. In the explanatory memorandum it was held as under:

'In view of the above, the definition of Adjusted Gross Revenue has been derived from the definition adopted in the case of GMPCS recommendations. It has been suitably adjusted to the Cellular Mobile Services, and reads as follows:

'Adjusted Gross Revenue for the' for the purpose of levying license fees as a percentage of Revenue Share shall mean the 'Gross Revenue' accruing to the Licensee by way of operations of the Cellular Mobile Service mandated under the license (inclusive of revenue on account of value-added services, supplementary services, and the sale of handsets) plus revenue accruing through resellers, franchises etc., plus any revenue foregone through subsidies on handsets or any other rebates, as reduced by the following items:

(i) Interconnection/Access charges payable to other Service providers for carriage of calls;

(ii) Roaming revenues collected on behalf of other Cellular Mobile Service Providers and passed on or liable to be passed on to them;

(iii) Service tax paid or payable;

(iv) Sale of Handsets.

It is recommended that the above definition be used for applying revenue share percentage to all category of service areas licensed under the CMS license.'

31. The TRAI again reconsidered the different issues referred by DoT and gave its comment on the same by the letter dated 09.10.2000 and sent its recommendation back on 31.10.2000. Insofar as the revenue share definition is concerned wherein the Government proposed to follow the definition of AGR different from the definition recommended by TRAI, the TRAI gave its consent after considering the same, as under :

'DoT has proposed a definition of Adjusted Gross Revenue (AGR) which is different from the definition recommended by the TRAI. In this regard it is observed that the definition of 'adjusted gross revenue' given by the DoT in the case of GMPCS service seeks to include in the 'shareable revenue' a number of items which do not arise from licensed activities e.g. all miscellaneous incomes, including interest, dividends, write backs of earlier years‟ provisions etc. This stand seems to be going beyond the terms of license and, therefore does not appear to be maintainable. On the other hand, the definition proposed by the TRAI which it has been recommending consistently, including in the cases of GMPCS and CMSPs, is clear and precise enough to include all revenues which accrue to the operator from the licensed activities and excludes all items unrelated thereto. Thus, it covers all receipts from provisions of basic services, including supplementary services, value-added services, subsidies on sale of hand-sets etc, while it excludes items like dividend, interest etc. which though constituting 'revenue' cannot be said to represent revenue from the licensed activities. TRAI is, therefore, of the view that the definition of gross revenue as conveyed in its recommendation dated 23.06.2000, is appropriate and should be adopted.'

[Emphasis added]

32. By the letter dated 24.10.2000 addressed to the Government, the TRAI reiterated the definition of the gross revenue as conveyed by the TRAI in its recommendation dated 23.06.2000 as appropriate and should be adopted. In the said letter it was observed as under :

'It has been stated in paragraph 5 of the DoTs letter under reference, that they do not agree with the definition of 'adjusted gross revenue' recommended by TRAI and that they propose to adopt the definition given by them in the case of GMPCS service. However, it has been observed that the definition of 'adjusted gross revenue' given by the DoT in the case of GMPCS service seeks to include in the 'shareable revenue' a number of items which do not arise from licensed activities eg. all miscellaneous incomes, including interest, dividends, write backs of earlier years‟ provisions etc. This stand seems to be outside the license terms and, therefore, not maintainable. On the other hand, the definition proposed by the TRAI which it has been recommending consistently, including in the cases of GMPCS and CMSPs, is clear and precise enough to include all revenues which accrue to the operator from the licensed activities and excludes all items unrelated thereto. Thus, it covers all receipts from provisions of basic services, including supplementary services, value added services, subsidies on sale of hand-sets etc., while it excludes items like dividend, interest etc. which though constituting 'revenue' cannot be said to represent revenue from the licensed activities. We are, therefore, of the view that the definition of gross revenue as conveyed by us in our recommendation dated 23.06.2000, is appropriate and should be adopted.

The TRAI, at the time of giving recommendation on Unified Access Service License on 13.01.2005, had observed as under:

'TRAI has been emphasizing on revised definition of Adjusted Gross Revenue which should not include sale of capital goods, sale of hand sets, dividend and interest earned on various deposits. TRAI reiterates that this revised definition of AGR should be incorporated not only in Unified License but even in existing licenses wherever applicable.'

33. Thus, it appears that the TRAI sent back its recommendations on 09.10.2000. However, before receipt of the recommendation on the reference dated 09.10.2000, on 19.09.2000 itself the DoT issued a letter to the Basic Telecom Operators, including the existing operators who settled under the migration package. It is clear that though the matter was to be referred to the TRAI for reconsideration as per the provision of the TRAI Act, but before the matter was considered by the TRAI and the recommendations were sent, the DoT amended clause 19.1 by including the revenue generated from non-licensed activities in AGR for the purpose of calculation of license fee. As such, the consultation with TRAI was mere a formality and the recommendations of TRAI were not considered by DoT in the expected manner, but in a most arbitrary manner resiled from the commitment and understanding given in the migration package. Such an action of DoT is absolutely illegal, without jurisdiction, arbitrary and violative of Article 14 of the Constitution of India.

34. It has been further submitted from the petitioner that the State must comply with the equality clause while granting exclusive right or privilege. Any provisions of the license agreement which are inconsistent with the fundamental rights granted in Part-III of the Constitution of India are void. The State cannot impose unconstitutional conditions as a part of the contract. Article 14 strikes down arbitrariness in State actions and ensure fairness. Whenever, therefore, there is arbitrariness in the State action whether it is of legislature or of the executive or of an authority under Article 12 and 14 of the Constitution immediately springs into action and strikes down such State action. The concept of reasonableness and non-arbitrariness pervades the entire constitutional scheme and is a golden thread which runs through the whole of the fabric of the Constitution. Exercise of the unbridled and uncanalised discretionary power infringes upon the right of the citizen. Wider the discretion, the greater the chances of abuse. Absolute discretion is destructive of freedom and of liberty. Reference in this connection has been made by the petitioner to the decision of the apex court in Delhi Transport Corporation vs. D.T.C. Mazdoor Congress, reported in 1991 Supp (1) SCC 600. Thus it has been contended that the discretion of the Government to put conditions in the license agreement, 'as it thinks fit', cannot be an arbitrary exercise of power and/or absolute discretionary power and must be subject to the limitations imposed by Section 4 of the Indian Telegraph Act, 1885 and must subserve the public interest as well as the public policy. In the instant case, clause 19.1 of the license agreement, which included the revenue generated from non-licensed activities in AGR for the purpose of determination of the license fee, has no nexus with the object of granting license. Moreover, the license under Section 4 of the Indian Telegraph Act, 1885 and also goes contrary to the migration package offered to the licensees and thereby the said provision of clause 19.1 of the license agreement is liable to be struck down. Even the petitioner has contended that, clause 19.1 of the license agreement is in violation of the package policy as communicated by the Government of India. In the migration package which was offered to the telecom operators and which was approved by the Cabinet, the license fee was to be equal to a prescribed percentage as share of gross revenue of the licensee company. By the letter dated 22.07.1999, while offering the migration package, it was provided that :

'(ii) The licensee will be required to pay one time Entry Fee and License Fee as a percentage share of gross revenue under the license. The Entry Fee chargeable will be the license fee dues payable by existing licensees upto 31.07.1999, calculated upto this date duly adjusted consequent upon notional extension of effective date as in para (ix) below, as per the conditions of existing license.'

35. After acceptance of the said migration package vide letter dated 29.01.2001, the conditions of the license agreement was substituted by the following conditions as regards license fee:

'(ii) License Fee : With effect from 01.08.1999, the payable License fee shall be equal to a prescribed percentage as share of gross revenue of the Licensee Company. Provisionally the licensor has fixed 15% of the gross revenue as license fee and presently the gross revenue for this purpose shall mean the total revenue of the Licensee Company under the license excluding.

(a) The PSTN related cell charges paid to Bharat Sanchar Nigam Limited (BSNL/MTNL or any other Telecom Service Provider) and,

(b) Service Tax or charge collected by the Licensee on behalf of the Government from their subscribers.'

36. According to the petitioner, from reading of the aforesaid two clauses, it would be clear that the license fee was to be equal to a prescribed percentage as share of gross revenue of the licensee company and the gross revenue for the said purpose were to mean 'total revenue of the licensee company under the license'. However, subsequently the Government sought for the opinion of one expert in the Finance which is evident from clause 3.1 of the written submission filed by the Union of India before the TDSAT. The license agreement was amended and it was provided that the license fee @ 15% of the AGR shall be payable by the licensees. The term 'gross revenue' was defined by clause 2.1 of the license agreement as extracted hereinabove. The definition of the „gross revenue‟ as amended by the letter dated 25.09.2001 is absolutely contrary to the one which was given in the migration package, which was approved by the Cabinet. In the migration package it was clearly provided that the license fee would be payable as a percentage share of gross revenue under the license whereas subsequently it was amended to include all revenue whether from the licensed or non-licensed activities. The petitioner has submitted that the DoT, which is one of the wings of the Government cannot put conditions in the license agreement which may override the migration package itself which was approved by the Cabinet. Thus the petitioner has contended that the DoT has put such condition in the license agreement to negate the incentives and/or benefits which the licensee is entitled to in the migration package itself.

37. In State of Bihar vs. Suprabhat Steel Ltd., reported in (1999) 1 SCC 31, while examining the validity of a notification issued to give effect to the Industrial Incentive Policy, the apex court had observed as under :

'We are not persuaded to accept the contention of Mr. Dwivedi that it would be open for the Government to issue a notification in exercise of power under Section 7 of the Bihar Finance Act, which may override the incentive policy itself. In our considered opinion the expression "such conditions and restrictions as it may impose" in sub-section (3) of Section 7 of the Bihar Finance Act will not authorise the State Government to negate the incentives and benefits which any industrial unit would be otherwise entitled to under the general Policy Resolution itself.'

38. Thus, it has been contended that the condition of license as incorporated by the letter dated 25.09.2001 goes contrary to the migration package as approved by the Cabinet. The impugned amendment made in the license agreement to include the revenue generated from non-licensed activities also in AGR for determination of license fee is absolutely illegal and without jurisdiction and thereby liable to be struck down. The petitioner has further contended that the impugned action is contrary to the statement made before the apex court. DoT in its written submission made before the apex court in C.A. No.5059/2007 had clearly mentioned that non-telecom revenue would stand excluded from the purview of the gross revenue. The said statement was also made in the course of hearing and the apex court recorded the same in its order dated 11.08.2011. DoT is therefore bound by the statement made before the apex court and is estopped from taking a contrary stand. In the written submission filed by DoT before the TDSAT, in para 5.3, it has been stated that the said statement was made in relation to the specific case of one M/S Arvind Mills because in the said case the telecom activities were not the main line of the business activity. The petitioner has further submitted that the definition of AGR for the purpose of determination of license fee cannot be different in different cases. The stand of the DoT that the statement made before the apex court that 'revenue from non-telecom business which is entirely different from telecom business is not included in the definition of gross revenue' was made in the context of the case in which the telecom activities were not the main line of business activity, is absolutely untenable, inasmuch as in case of one licensee. Such a classification made for computation of license fee has no reasonable nexus with the object sought to be achieved and is absolutely arbitrary and absurd.

39. According to the petitioner, the judgment of the apex court dated 11.10.2011 passed in C.A. No.5059/2007 (Union of India vs. Association of Unified Telecom Service Providers of India) cannot by any stretch of imagination be said to have decided the issue of AGR in the license agreement, being unconstitutional as violative of Article 14 and 19(1)(g) of the Constitution of India. The apex court has clearly held in the said judgment that TDSAT, under Section 14 of the TRAI Act, does not have the jurisdiction to decide the validity of licenses granted by the DoT under Section 4 of the Indian Telegraph Act, 1885. The petitioner has submitted that a judgment cannot be a precedent on a proposition which it did not decide. It is a precedent which decides the question of law. A decision is an authority for which it is decided and not what can be decided therefrom (Ganapati vs. Waman, reported in AIR 1981 SC 1956). What is binding is the ratio of the decision and not any finding on the facts or the conclusion arrived at or the opinion of the court on any question which was not required to be decided in a particular case (Ranchhoddas vs. Union of India, reported in (1961) 3 SCR 718). It is also contended by the petitioner that a judgment is not to be read as a statute and is an authority for the question of law determined by it as per fact. The judgment of the apex court has to be understood in the light of the facts before the court and no more should be read into it than it actually says. It is neither desirable, nor permissible to pick out a word or sentence from the context of the question under consideration and treat it to be complete law declared by the apex court. Reference has been made to the decision of the apex court in Mehboob Dawood Sheikh vs. State of Maharashtra, reported in (2004) 2 SCC 362. In Association of Unified Telecom Service Providers of India (supra), the apex court was not examining the legality and validity of the AGR in violation of Article 14 and 19(1)(g) of the Constitution and thus the petitioner has contended that the decision of Association of Unified Telecom Service Providers of India (supra) cannot come in the way of the court in deciding the legality and validity of clause 19.1 of the license agreement claimed to be violative of Article 14 and 19(1)(g) of the Constitution.

40. In addition to what has been stated to challenge clause 19.1 of the license agreement, it has been further contended by the petitioner that the said clause is also violative of Section 23 of the Indian Contract Act, 1872 inasmuch as, the license of telecom service which cannot bring in the definition of 'gross revenue', the revenue of the non-telecom activities, which is not part of the license agreement. To buttress such contention, reliance has been placed on Mannalal Khetn & Ors. Vs. Kedar Nath Khetan & Ors., reported in (1977) 2 SCC 424, where the apex court had occasion to hold that, where the contract, express or implied, is expressly or by implication forbidden by statute, no court can give its assistance to give it effect. In Mannalal Khetn (supra), it had been observed by the apex court as under:

'20. It is well established that a contract which involves in its fulfilment the doing of an act prohibited by statute is void. The legal maxim, a pactis privatorum publico juri non derogatur means that private agreements cannot alter the general law. Where a contract, express or implied, is expressly or by implication forbidden by statute, no court can lend its assistance to give it effect. What is done in contravention of the provisions of an Act of the Legislature cannot be made the subject of an action.'

[Emphasis supplied]

41. In M/S M.G. Brothers Lorry Service Vs. M/S Prasad Textiles, reported in (1983) 3 SCC 61, the apex court while observing the provisions of Section 10 of the Carriers Act, 1865 and the condition of the Way Bill, has held as under:

13. In this connection, it appears to us that on the construction of condition 15 of the Way Bill that there was no limitation of liability expressed or intended but what was provided was that no suit shall lie against the firm unless a particular claim was made in a particular manner within a particular time. In this case there was neither any extinguishment of liability or contracting out of liability but only a special period of limitation of notice was provided other than Section 10 of the Carriers Act, 1865.

14. Section 10 of the Carriers Act, as we have noted before, provides that unless notice in writing of the loss or injury has been given to him before the institution of the suit and within six months of the time when the loss or injury first came to the knowledge of the plaintiff no suit shall be instituted. Condition 15 of the Way Bill in the instant case makes it imperative to give notice either within 30 days from the date of the booking or from the date of the arrival of the goods at the destination by the party concerned, to sustain a suit. The date of arrival of the goods at the destination by the party may not be known to the party concerned for long time. No claim can be made without the loss of the goods and therefore 30 days from the date of booking would become irrelevant unless loss or damage, occurs. Therefore, it appears to us that condition 15 of the Way Bill was designed to avoid the liability contemplated under Section 10 of the Carriers Act, 1865 and that too in a situation where the parties had not by express contract limited their liability as contemplated under Section 6 of the Carriers Act. It appears to us, therefore, that the learned Judge of the Andhra Pradesh High Court was right in the view he took. The trial court and the first appellate court had held that condition 15 of the Way Bill was not violative of Section 28 of the Indian Contract Act, That view of the lower courts has not been challenged before the High Court in the second appeal. Before us also that view was not seriously challenged. It also appears to us that neither there is restriction absolutely from enforcing rights by the usual legal proceedings nor limitation of time within which such rights might be enforced in the instant case but condition 15 was only intended to defeat or by-pass the provisions of Section 10 of the Carriers Act. Section 23 of the Indian Contract Act provides that the consideration or object of agreement was lawful, unless, inter-alia, it was of such a nature, that, if permitted, would defeat the provisions of any law. In the instant case, it appears to us that if condition 15 be permitted then it will defeat the provisions of Section 10 of the Carriers Act, even in a case where notice in writing of the loss or injury has been given to him before the institution of the suit and within six months of the time when the loss or injury first came to the knowledge of the plaintiff. Even in a case where the plaintiff was unaware of the arrival of the goods at the destination or was unaware of a loss or damage, the plaintiff would not have any right to institute a suit if no claim was made and could not have been made within 30 days as stipulated in condition 15 of the Way Bill. In that view of the matters, we are of the opinion that condition 15 must be held to be void in view of Section 23 of the Indian Contract Act because its object was to defeat the provisions of Section 10 of the Carriers Act. This conclusion, in our opinion, follows from the construction of the section and condition 15 of the Way Bill.

[Emphasis supplied]

42. The petitioner has thus contended that, it is clear that since clause 19 of the license agreement is absolutely contrary to Section 4 of the Indian Telegraph Act, 1885, inasmuch as it includes revenue generated from non-licensed activities within the definition of AGR for determination of license fee and hence it is beyond the scope of Section 4 of the Indian Telegraph Act. The same is void, ultra vires and hit by section 23 of the Indian Contract Act, 1872. As regards the contention of the respondents that the petitioner having signed the license agreement, cannot raise objection as regards validity of clause 19 of the license agreement at this stage. It has been submitted for the petitioner that the defence of waiver cannot be raised because an agreement to waive an illegality is void on the ground of public policy and would be unenforceable. According to the petitioner, it has been held by the apex court that the plea of waiver cannot be raised because as a result of giving effect to that plea, the court would be enforcing an illegal agreement which would be contrary to the public policy.

43. In Waman Shriniwas Kini Vs. Ratilal Bhagwandas & Co., reported in AIR 1959 SC 689, the apex court has observed as under:

'Assuming that to be so and proceeding on the facts found in this case the plea of waiver cannot be raised because as a result of giving effect to that plea the Court would be enforcing an illegal agreement and thus contravene the statutory provisions of section 15 based on public policy and produce the very result which the statute prohibits and makes illegal.'

In Waman Shriniwas Kini (supra), the apex court has referred to Surajmuli Nargoremull vs. Triton Insurance Co., reported in (1924) LR 52 IA 126, where it has been held as under:

'No Court can enforce as valid that which competent enactments have declared shall not be valid, nor is obedience to such an enactment a thing from which a Court can be dispensed by the consent of the parties, or by a failure to plead or to argue the point at the outset : Nixon v. Albion Marine Insurance Co. : I.L.R. (1867) Ex. 338. The enactment is prohibitory. It is not confined to affording a party a protection of which he may avail himself or not as he pleases. It is not framed solely for the protection of the revenue and to be enforced solely at the instance of the revenue officials, nor is the prohibition limited to cases for which a penalty is exigible".

In Waman Shriniwas Kini (supra), the apex court has further held that:

'.......... the question is not merely of waiver of statutory rights enacted for the benefit of an individual but whether the Court would aid the appellant in enforcing a term of the agreement which s. 15 of the Act declares to be illegal. By enforcing the contract the consequence will be the enforcement of an illegality and infraction of a statutory provision which cannot be condoned by any conduct or agreement of parties.

44. In Corpus Juris Secundum [Vol.92, page 1068], 'waiver' has been defined as under:

'.......... a waiver in derogation of a statutory right is not favoured, and a waiver will be inoperative and void, if it infringes on the rights of others, or would be against public policy or morals ..........'

45. The petitioner has also placed reliance on Bowmakers Ltd. Vs. Barnet Instruments Ltd., reported in (1945) I KB 65, where the law regarding waiver has been considered as under :

'Agreements which seek to waive an illegality are void on grounds of public policy. Whenever an illegality appears, whether from the evidence given by one side or the other, the disclosure is fatal to the case. A stipulation of the strongest form to waive the objection would be tainted with the vice of the original contract and void for the same reasons. Wherever the contamination reaches, it destroys.'

46. In Waman Shriniwas Kini (supra), the apex court has also re-stated the law by observing that, this is a correct statement of law and is supported by high authority. The apex court has quoted the address of Field, J., in Oscanyan v. Winchester Arms Company with approval. The observation of Swayne, J., in Hall v. Coppell reads as under:

"The principle is indispensable to the purity of its administration. It will not enforce what it has forbidden and denounced. The maxim ex dolo malo non oritur actio, is limited by no such qualification. The proposition to the contrary strikes us as hardly worthy of serious refutation. Wherever the illegality appears, whether the evidence comes from one side or the other, the disclosure is fatal to the case. No consent of the defendant can neutralise its effect. A stipulation in the most solemn form, to waive the objection, would be tainted with the vice of the original contract, and void for the same reasons. Wherever the contamination reaches, it destroys".

Waiver is the abandonment of a right which normally everybody is at liberty to waive. A waiver is nothing unless it amounts to a release. It signifies nothing more than an intention not to insist upon the right. It may be deduced from acquiescence or may be implied. Chitty on Contract, 21st Ed., p. 381 : Stack-house v. Barnston : (1805) 10 Ves. 453; 32 E.R. 921. But an agreement to waive an illegality is void on grounds of public policy and would be unenforceable.'

47. It has been finally contended for the petitioner that clause 19.1 of the License Agreement is not only contrary to Section 4 of the Indian Telegraph Act, 1885, but is violative of Article 14 and 19(1)(g) of the Constitution and thereby is liable to be declared ultra vires. It has been urged that a declaration be made that the revenue generated from non-licensed activities cannot be taken into consideration for calculation of license fee payable by a licensee and consequently the impugned demand notices be also set aside and quashed inasmuch as clause 19 of the License Agreement is violative of Section 4 of the Indian Telegraph Act, 1885 and Article 14 and 19(1)(g) of the Constitution of India.

48. Mr. B. Majumder, learned Central Government Counsel appearing for the respondents has emphatically submitted that once the licensee had accepted clause (iii) of the letter dated 22.07.1999 that the license fee would be the 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 the revenue share but also the definition of revenue for this purpose, the licensee could not have expressed its resentment questioning the validity of the Adjusted Gross Revenue (AGR) in the license agreement on the ground that the AGR cannot include the revenue from activities beyond the license. If the wide definition of Adjusted Gross Revenue (AGR) so as to include the revenue beyond the license was in any way going to affect the licensee, it was open for the licensee not to undertake activities for which they do not require license under clause 4 of the Telegraph Act, 1885 and they would have transferred these activities to any other person or firm or company. The incorporation of definition of AGR in the license agreement was part of the terms regarding payment which had been decided by the Government of India as a consideration for parting with its rights of exclusive privilege in respect of telecommunication activities and having accepted the license and availed the exclusive privilege of the Government of India to carry on telecommunication activities, the licensee (the petitioner herein) could not have challenged such definition.

49. Mr. Majumder, learned CGC has relied on long line of decisions viz.

(1) Har Shankar & Ors. Vs. The Deputy Excise & Taxation Commissioner & Ors., reported in (1975) 1 SCC 737;

(2) Government of A.P. Vs. M/s Anabeshahi Wine & Distilleries Pvt. Ltd., reported in (1988) 2 SCC 25;

(3) Assistant Excise Commissioner & Anr. Vs. Isac Peter & Ors., reported in (1994) 4 SCC 104;

(4) State of Orissa & Ors. Vs. Narain Prasad & Ors., reported in (1996) 5 SCC 740;

(5) State of M.P. & Ors. Vs. KCT Drinks Ltd., reported in (2003) 4 SCC 748;

(6) State of Punjab & Anr. Vs. Devans Modern Breweries Ltd. & Ors., reported in (2004) 11 SCC 26;

(7) Shyam Telelink Limited Vs. Union of India, reported in (2010) 10 SCC 165;

(8) Bharati Cellular Limited Vs. Union of India & Ors., reported in (2010) 10 SCC 174.

The purpose of relying those reports is obvious to demonstrate that the apex court had consistently taken a view that once a licensee had accepted the terms and conditions of license he or they cannot question the validity of the terms and question of the license before the court.

50. Mr. Majumder, learned CGC has further submitted that the apex court in Union of India vs. Association of Unified Telecom Service Providers of India, reported in (2011) 10 SCC 543, has also understood and construed the term 'revenue' appearing in the license to include revenue from non-licensed activities also. The apex court has held in Association of Unified Telecom Service Providers of India (supra) as under:

'If the wide definition of Adjusted Gross Revenue so as to include revenue beyond the license was in any way going to affect the licensee, it was open for the licensees not to undertake activities for which they do not require license under clause (4) of the Telegraph Act and transfer these activities to any other person or firm or company. The incorporation of the definition of Adjusted Gross Revenue in the license agreement was part of the terms regarding payment which had been decided upon by the Central Government as a consideration for parting with its rights of exclusive privilege in respect of telecommunication activities and having accepted the license and availed the exclusive privilege of the Central Government to carry on telecommunication activities, the licensees could not have approached the Tribunal for an alteration of the definition of Adjusted Gross Revenue in the license agreement'.

51. Mr. Majudmer, learned CGC has further contended that challenge to clause 19 of the license agreement is designed to frustrate the recovery by the demand notice dated 08.11.2012 (Annexure-XVI to the writ petition) and the demand notice dated 18.01.2013 (Annexure-XVII to the writ petition). The petitioner cannot traverse into the territory beyond what has been provided in the license agreement. According to him, in clause 19 of the License Agreement, the payment of license fee has been quite unambiguously provided. Even the mode of payment has been postulated therein. Mr. Majumder, learned CGC has strongly contested the plea raised by the petitioner that AGR can only bring within its fold revenue earned from the licensed activities. Items such as sale proceeds of handsets (or any other terminal equipment etc.), revenue on account of interest, dividend, value added services, supplementary services, revenue from permissible sharing of infrastructure and any other miscellaneous revenue cannot be included under AGR as they pertain to non-licensed activities. He has also strongly contended that the provisions of the license agreement i.e. clause 19.2 by which the DoT seeks to collect the license fees in respect of revenue from non-licensed activities for any reason cannot be held per se illegal, being violative of Article 14 of the Constitution of India. According to Mr. Majumder, learned CGC, AGR is a consideration factor for parting with the privilege as provided under Section 4 of the Indian Telegraph Act, 1885. Since there is no challenge against Section 4 of the Indian Telegraph Act, 1885, it cannot be held that AGR is contrary to Article 14 of the Constitution of India for parting with the privilege. According to him, the plea as raised by the petitioner that, inclusion of non-telecom revenue within the embrace of AGR would be unlawful and contrary to Section 23 of the Indian Contract Act, 1872, cannot also sustain as when a particular statute provides some power to an authority and the said authority, scrupulously exercised that power, such exercise cannot be held as arbitrary.

52. Mr. Majumder, learned CGC has raised another jurisprudential objection before this court that for availability of the alternative remedy before the TDSAT, this writ petition is not maintainable. However, there is no dispute that the writ petitioner is the licensee and the respondents are the licensor. Section 14 of the Telecom Regulatory Authority of India Act, 1997 („TRAI Act‟ for short) provides for an Appellate Tribunal to adjudicate an dispute between the licensor and the licensee and Section 14A of the said Act provides for an application for settlement of dispute and appeal to the Appellate Tribunal. Section 16 of the TRAI Act has laid down the procedure and power of the Appellate Tribunal and the avenue for carrying out further appeal to the Supreme Court against the order of the Appellate Tribunal under Section 18. Mr. Majumder, learned CGC has referred to Sections 14(M) and 14(N) of the TRAI Act, 1997 (as amended), which read as under:

'14M. Transfer of pending cases:

All applications, pending for adjudication of disputes before the Authority immediately before the date of establishment of the Appellate Tribunal under this Act, shall stand transferred on that date to such Tribunal: PROVIDED that all disputes being adjudicated under the provisions of Chapter IV as it stood immediately before the commencement of the Telecom Regulatory Authority of India (Amendment) Act, 2000, shall continue to be adjudicated by the Authority in accordance with the provisions contained in that Chapter, till the establishment of the Appellate Tribunal under this Act:

PROVIDED FURTHER that all cases referred to in the first proviso shall be transferred by the Authority to the Appellate Tribunal immediately on its establishment under section 14.

14N. Transfer of appeals:

(1) All appeals pending before the High Court immediately before the commencement of the Telecom Regulatory Authority of India (Amendment) Act, 2000, shall stand transferred to the Appellate Tribunal on its establishment under section 14.

(2) Where any appeal stands transferred from the High Court to the Appellate Tribunal under sub-section (1),-

(a) the High Court shall, as soon as may be after such transfer, forward the records of such appeal to the Appellate Tribunal;

(b) the Appellate Tribunal may, on receipt of such records, proceed to deal with such appeal, so far as may be from the stage which was reached before such transfer or from any earlier stage or de novo as to Appellate Tribunal may deem fit.'

Mr. Majudmer, learned CGC, in this context has referred a decision of the Gujarat High Court in Special Civil Application No.9835 of 2016, filed by M/s Infinium (India) Limited against the Department of Telecommunications, Government of India, wherein, by the judgment dated 13.07.2016, it has been held as under :

'3. As it appears from the background referring to the earlier litigation and the specific averment and the order of the Hon'ble Apex Court in group of matters being Civil Appeal No. 5882 of 2015 at Annexure-L where the same Page 1 of 2 HC-NIC Page 1 of 2 Created On Mon May 01 12:54:26 IST 2017 C/SCA/9835/2016 ORDER issue is pending before the Hon'ble Apex Court, this Court would decline to entertain such petition. Learned counsel Shri Pahwa, therefore, submitted that he may move the Hon'ble Apex Court for which some breathing time may be provided and till then the bank guarantee may not be invoked/encashed. He has only requested as and by way of indulgence to allow him some time to approach the Hon'ble Apex Court for appropriate orders.

4. Therefore, in view of the order of the Hon'ble Apex Court at Annexure-L, the respondent Union of India may continue to raise the demand. However, the bank guarantee which is referred to in the petition may not be invoked/encashed for a period of 15 days, i.e., till 27.7.2016, so as to enable the petitioner to approach the Hon'ble Apex Court by appropriate proceedings as may be advised. It is made clear that this arrangement is as and by way of indulgence to enable the party to approach the Hon'ble Apex Court and this Court has not examined the merits, nor has passed any order for any clarification of the order of the Hon'ble Apex Court.

5. It is also clarified and made clear that if the petitioner does not get any order or protection from the Hon'ble Apex Court in the appropriate proceedings, it will be open for the respondent Union of India to proceed further for invocation/encashment of the bank guarantee.

6. In view of the above, learned counsel Shri Pahwa does not press this petition and it accordingly stands disposed of.'

53. Mr. Majumder, learned CGC has submitted that the basic purpose of filing this writ petition is for setting aside the impugned demand notices dated 08.11.2012 and 18.01.2013 respectively (Annexures XVI and XVII to the writ petition). Further, the writ petitioner has urged this court for quashing clause 19 of the License Agreement for being absolutely arbitrary, unlawful, unreasonable and being a product of unbridled discretionary power. He has emphatically mentioned that the writ petitioner has filed a petition before the Telecom Disputes Settlement and Appellate Tribunal („the TDSAT‟ for short), being Petition No.91/2013 against the Union of India, challenging those notices dated 08.11.2012 and 18.01.2013 for the financial year 2006-07 and 2007-08, issued by the respondents. The TDSAT has already disposed of the said petition No.91/2013 by its order dated 23.04.2015 alongwith several other similar matters remanded by the apex court by its order dated 11.10.2011 passed in Civil Appeal No.5059 of 2007 (Union of India & Anr. vs. Association of Unified Telecom Service Providers of India & Ors.), Annexure XI to the writ petition. The Union of India had filed 177 nos. of civil appeals before the apex court, being Civil Appeal Nos.6328 to 6399 of 2015, Civil Appeal Nos.6183 to 6255 and Civil Appeal Nos.8009 to 8017 against the said order dated 23.04.2015 passed by the TDSAT and Civil Appeal Nos.6022 to 6044 of 2016 filed by the Union of India and now all the appeals are pending before the apex court and tagged alongwith Civil Appeal No.5882 of 2015, filed by M/s Vodafone West Limited vs. Union of India, Department of Telecommunications. Thus, according to Mr. Majumder, learned CGC, this writ petition on this point alone, cannot be held maintainable.

54. To advance his rationale further, Mr. Majumder, learned CGC has relied on a decision in Reliance Communications Ltd. & Ors. Vs. The Union of India & Ors. (MAT 204 of 2016, CAN 1368 of 2016 and WP 482 (W) of 2016), where Calcutta High Court has held as under:

51. The object of the legislature in providing for constitution of a Tribunal under Section 14 of the TRAI Act is obviously to encourage resolution of disputes between a licensor and a licensee through adjudication before the Tribunal. The Tribunal is a specialised body and the members thereof have administrative expertise and experience in the field of telecommunication. The Tribunal is presided over by a sitting or retired Judge of the Supreme Court or a sitting or retired Judge of a High Court, one of the highest judicial officers of the country. In consonance with the object of the TRAI Act, in our view, the jurisdiction of the TDSAT should be construed in an expansive rather than in a restricted way.

xxxxx xxxxx xxxxx

53. Since, according to us, the Tribunal is fully competent to entertain and decide the disputes between the parties, we are of the view that the writ court should not exercise its high prerogative writ jurisdiction in the matter. The TRAI Act is a self-contained code intended to deal with all disputes arising out of telecommunication services. The disputes to be dealt with under the TRAI Act are highly technical in nature which a writ court is not well-equipped to handle and this aspect cannot be ignored while defining the jurisdiction of the TDSAT. The TRAI Act itself contains a mechanism for redressal of an aggrieved licensee and the High Court should not entertain a petition under A. 226 of the Constitution. .....

[Emphasis added]

55. In M/s GTL Limited Vs. Ministry of Communications & Anr., the High Court of Delhi has very clearly and precisely held on 10.09.2013 in W.P.(C) No.3130/2013 and C.M. No.5934/2013 as under:

'This petition was filed when Telecom Disputes Settlement Appellate Tribunal (TDSAT) was not functioning. Since TDSAT is now functioning, the petitioner must necessarily ventilate its grievance before the said Tribunal. The writ petition is accordingly dismissed.'

56. Mr. Majumder, learned CGC therefore, has contended that the dispute between the Telecom Service Provider (Licensee) and the Department of Telecommunications (Licensor) is subject to be settled/adjudicated in the judicial body of experts i.e. the Telecom Disputes Settlement and Appellate Tribunal (TDSAT), which is the appropriate forum set up under the TRAI Act, 1997. For this purpose this court therefore cannot acquire the jurisdiction to consider the same under Article 226 of the Constitution of India.

As per Section 4 of the Indian Telegraph Act, 1885, granting a license on such conditions and in consideration of such payment is the „exclusive privilege‟ of the Central Government and the licensee fee or the payment made under the License Agreement is in the nature of price or consideration for parting with the exclusive privilege of the Central Government.

Therefore, the right to levy license fee for non-license activities is the exclusive privilege of the Central Government as it forms part of the licensee‟s gross revenue as per the duly accepted and executed terms (19.1 and 19.2 of the License Agreement) and conditions thereof.

57. Mr. Majumder, learned CGC, having referred to Union of India & Anr. Vs. Association of Unified Telecom Service Providers of India & Ors., reported in (2011) 10 SCC 543, has contended that the Central Government has the exclusive privilege of establishing, maintaining and working telegraphs. This would mean that only the Central Government and no other person has the right to carry on telecommunication activities. The passages as reproduced hereunder, are also referred by Mr. Majumder, learned CGC appearing for the respondents:

48. ...... Once the licensee had accepted clause (iii) of the letter dated 22-7-1999 that the license fee would be a percentage of 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 license agreement on the ground that Adjusted Gross Revenue cannot include revenue from activities beyond the license.

49. If the wide definition of Adjusted Gross Revenue so as to include revenue beyond the license was in any way going to affect the licensee, it was open for the licensees not to undertake activities for which they do not require license under clause (4) of the Telegraph Act and transfer these activities to any other person or firm or company. The incorporation of the definition of Adjusted Gross Revenue in the license agreement was part of the terms regarding payment which had been decided upon by the Central Government as a consideration for parting with its rights of exclusive privilege in respect of telecommunication activities and having accepted the license and availed the exclusive privilege of the Central Government to carry on telecommunication activities, the licensees could not have approached the Tribunal for an alteration of the definition of Adjusted Gross Revenue in the license agreement.

xxxxx xxxxx xxxxx

54. In Union of India v. Tata Teleservices (Mahrashtra) Ltd. (supra) cited by Mr. Srinivasan, a letter of intent was issued to Tata Teleservices and this was accepted by Tata Teleservices but ultimately the contract did not come into being and the license was not actually granted. The Union of India suffered a considerable loss because Tata Teleservices had walked out of the obligation undertaken by the acceptance of the letter of intent. The Additional Solicitor General appearing for the Union of India submitted that such a dispute would also come within the purview of Section 14 of the TRAI Act, going by the definition of licensee and the meaning given to it in the notice inviting tenders. The Tribunal held that expression "licensor" or "licensee" occurring in Section 14 (a)(i) of the TRAI Act would not exclude a person who had been given a letter of intent and who had accepted the letter of intent but was trying to negotiate some further terms of common interest before a formal contract was entered into and the work was to be started. This was thus a case where this Court treated a person who had accepted the letter of intent of the licensor as a licensee, although a formal contract had not entered into. In this case this Court has not held that a licensee could dispute the validity of a term or condition which was incorporated in the license agreement.

[Emphasis added]

58. In State of Orissa & Ors. Vs. Harinarayan Jaiswal & Ors., reported in AIR 1972 SC 1816, the apex court had occasion to observe that the fact that the Government was the seller does not change the legal position once its exclusive right to deal with those privilege is conceded. If the Government is the exclusive owner of those privileges, reliance on Article 19(1)(g) or Article 14 becomes irrelevant. Citizens cannot have any fundamental right to trade or carry on business in the properties or rights belonging to the Government, nor can there be any infringement of Article 14, if the Government tries to get the best available price for its valuable rights.

The position of law, according to Mr. Majumder, learned CGC, has been re-stated in Har Shankar & Ors. Vs. The Deputy Excise & Taxation Commissioner & Ors., reported in AIR 1975 SC 1121 as under:

21. ..... Analysing the situation here, a concluded contract must be held to have come into existence between the parties. The appellants have displayed ingenuity in their search for invalidating circumstances but a writ petition is not an appropriate remedy for impeaching contractual obligations.

22. ..... The writ jurisdiction of High Courts under Article 226 of the Constitution is not intended to facilitate avoidance of obligations voluntarily incurred .....

xxxxx xxxxx xxxxx

56. ..... By 'licence fee' or fixed fee' is meant the price or consideration which the Government charges to the licensees for parting with its privileges and granting them to the licensees. As the State can carry on a trade or business, such a charge is the normal incident of a trading or business transaction.

xxxxx xxxxx xxxxx

58. In the view we have taken, the argument that the Government cannot by contract do what it cannot do under a statute must fail. No statute forbids the Government from trading in its own rights or privileges and the statute under consideration, far from doing so, expressly empowers it by Sections 27 and 34 to grant leases of its rights and to issue the requisite licences, permits or passes on payment of such fees as may be prescribed by the Financial Commissioner.

59. ..... But the 'Licence fee' or 'Fixed fee' in the instant case does not have to conform to the requirement that it must bear a reasonable relationship with the services rendered to the licensees. The amount charged to the licensees is not a fee properly so-called nor indeed a tax but is in the nature of the price of a privilege, which the purchaser has to pay in any trading or business transaction.

[Emphasis added]

59. In Government of Andhra Pradesh Vs. M/s Anabeshahi Wine and Distilleries Pvt. Ltd., reported in AIR 1988 SC 771, the apex court had enunciated the law as under:

'5. ..... It was held that the amounts charged to the licensees are neither in the nature of tax nor excise duty, but constituted the price or consideration which the Government charges to the licensees for parting with its privileges and granting them to the licensees.

..... As observed in Harinarayan Jaiswal's case, "if the Government" is the exclusive owner of those privileges, reliance on Article 19(1)(g) or Article 14 becomes irrelevant. Citizens cannot have any fundamental right to trade or carry on business in the properties or rights belonging to the Government, nor can there be any infringement of Article 14, if the Government tries to get the best available price of its valuable rights. .....

..... What the respondents agreed to pay was the price of a privilege which the State parted with in their favour. They cannot therefore avoid their liability by contending that the payment which they were called upon to make is truly in the nature of excise duty and that no such duty can be imposed on liquor not lifted or purchased by them."

[Emphasis added]

Thus, according to Mr. Majumder, learned CGC, this court shall not exercise its jurisdiction as there is no case as such made out by the writ petitioner, warranting interference of Article 226 of the Constitution of India.

60. Mr. Majumder, learned CGC has referred to Panna Lal & Ors. Vs. State of Rajasthan & Ors., reported in AIR 1975 SC 2008, where it has been, inter alia, observed as under:

'20. The license fee stipulated to be paid by the appellants is the price or consideration or rental which the Government charges from the licensees for parting with its privilege in stipulated lump sum payment and is a normal incident of a trading or business transaction.....

21. The licenses in the present case are contracts between the parties. The licensees voluntarily accepted the contracts. They fully exploited to their advantage the contracts to the exclusion of others. The High Court rightly said that it was not open to the appellants to resile from the contracts on the ground that the terms of payment were onerous .......

[Emphasis added]

61. Mr. Majumder, learned CGC has stoutly defended the action of the respondents, and submitted that the petitioner had entered into a license agreement for cellular mobile telephone service by way of accepting the migration package (Annexure-IV to the writ petition). Clause (iii) of the migration package clearly provides that the gross revenue would be the total revenue of the licensee company. Further in the communication in respect of amendment of the license agreement, it has been clearly stipulated that, the migration to the revenue sharing under the New Telecom Policy-1999 regime, shall stand substituted and modified w.e.f. 01.08.1999, notwithstanding anything contained in the License Agreement, as under:

'(i) The Licensee shall forgo the right of operating in the regime of limited number of operators after 01.08.1999 and shall operate in a multiploy regime, that is to say that the licensor may issue additional licenses for the service without any limit in the Service Area where the Licensee Company is providing Cellular Mobile Telephone Service.

(ii) Licence fee : With effect from 1.8.1999, the payable license fee shall be equal to a prescribed percentage as share of gross revenue of the Licensee Company. Provisionally the licensor has fixed 15% of the gross revenue as licensee fee and presently the gross revenue for this purpose shall mean the total revenue of the Licensee Company under the license excluding,

(a) the PSTN related call charges paid to Bharat Sanchar Nigam Limited (BSNL)/MTNL or any other Telecom Service Provider and,

(b) service tax or charge collected by the Licensee on behalf of the Government from their subscribers.

The Government will take a final decision about the quantum of revenue share, definition of revenue for this purpose, after taking into consideration the recommendations of Telecom Regulatory Authority of India (TRAI), and the same will take effect from 1.8.1999. Thereafter final adjustment will be effected accordingly.'

[Annexure-V to the writ petition]

62. Mr. Majumder, learned CGC has emphatically contended that, once the petitioner as the licensee has accepted the terms and conditions of the license, cannot challenge the vires of its terms and conditions and as per definition of GR/AGR as contained in the license agreement, all the revenues of the licensee from either sources from license activities and/or from business activities, for which no license under Section 4 of the Indian Telegraph Act, 1885 is required, are included in the GR/AGR and only three clear and limited items of deduction as contained in clause 2.2 of the amendment of the license agreement dated 25.09.2001 (Annexure-VI to the writ petition) are allowed for arriving at the amount of AGR and as per clause 2.2 of the license agreement the said deductions are only allowed.

63. In Shyam Teleline Limited Vs. Union of India, reported in (2010) 10 SCC 165, the apex court has observed that the unconditional acceptance of the terms of the package and the benefit which the appellant derived under the same will estop the appellant from challenging the recovery of the dues under the package or the process of its determination. Similarly, in Bharati Cellular Limited Vs. Union of India & Ors., reported in (2010) 10 SCC 174, the apex court has observed as under:

'8. ..... 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 who has unconditionally accepted the package cannot after such acceptance reject the conditions subject to which the benefits were extended to him under the package. It cannot reject what is inconvenient and onerous while accepting what is beneficial to its interests. .....'

[Emphasis added]

64. In Transmission Corporation of Andhra Pradesh Ltd. & Anr. Vs. Sai Renewable Power Pvt. Ltd. & Ors., reported in (2011) 11 SCC 34, the apex court has held that:

'..... Thus, the documents executed by these parties and their conduct of acting upon such agreements over a long period, in our view, bind them to the rights and obligations stated in the contract. The parties can hardly deny the facts as they existed at the relevant time, just because it may not be convenient now to adhere to those terms. Conditions of a contract cannot be altered/avoided on presumptions or assumptions or the parties having a second thought that a term of contract may not be beneficial to them at a subsequent stage. They would have to abide by the existing facts, correctness of which, they can hardly deny. Such conduct, would be hit by allegans contraria non est audiendus. .....'

[Emphasis added]

A similar view had been accepted by the apex court in State of Punjab & Anr. Vs. Devans Modern Breweries Ltd. & Anr., reported in (2004) 11 SCC 26, where it has been stated as under:

'121. The conduct of the respondent licensee in attempting to wriggle out of his contractual obligations is contrary to the clear and unequivocal principle laid down in Har Shankar case. The issuance of liquor licence constitutes a contract between the parties i.e. between Excise Authorities on the one hand and the individual applicant contractor on the other. The respondent having accepted the contracts/licences, having fully exploited the advantage flowing from the contract to the exclusion of others and having reaped rich commercial benefits from that activity, it is not open to the contractor to wriggle out from the contract by challenging, inter alia, any particular condition of that contract/licence. The respondent herein seeks to do exactly that by challenging the condition requiring him to pay import fee. Har Shankar case clearly disentitles the liquor contractor from wriggling out of contractual obligations solemnly undertaken. .....'

[Emphasis added]

65. In New Bihar Biri Leaves Co. & Ors. Vs. State of Bihar & Ors., reported in AIR 1981 SC 679, the apex court while restating the law as to the conditions communicated, appreciated and accepted, had observed that, it is a fundamental principle of general application that if a person of his own accord, accepts a contract on certain terms and works out the contract, he cannot be allowed to adhere to and abide by some of the terms of the contract which proved advantageous to him and repudiate the other terms of the same contract which might be disadvantageous to him. The maxim is qui approbat non reprobat (one who approbates cannot reprobate). This principle, though originally borrowed from Scots Law, is now firmly embodied in English Common Law. According to it, a party to an Instrument or transaction cannot take advantage of one part of a document or transaction and reject the rest. That is to say, no party can accept and reject the same instrument or transaction. The aforesaid inhibitory principle squarely applies to the cases who had by offering highest bids at public auctions or by Tenders, accepted and worked out the contracts in the past but were subsequently resisting the demands or other action, arising out of the clause on the ground that that condition is violative of Articles 19(1)(g) and 14 of the Constitution.

But, the apex court in the said report has observed that, it is true that a person cannot be debarred from enforcing his fundamental rights on the ground of estoppel or waiver. But the said principle which prohibits a party to a transaction from approbating a part of its conditions and reprobating the rest, is different from the doctrine of estoppel or waiver.

66. In the same line, Mr. Majumder, learned CGC has referred a decision of the apex court in R.N. Gosain Vs. Yaspal Dhir, reported in AIR 1993 SC 352, where it has been held as under:

10. Law does not permit a person to both approbate and reprobate. This principle is based on the doctrine of election which postulates that no party can accept and reject the same instrument and that "a person cannot say at one time that a transaction is valid and thereby obtain some advantage, to which he could only be entitled on the footing that it is valid, and then turn round and say it is void for the purpose of securing some other advantage". .....

[Emphasis added]

67. On the point of exercising the jurisdiction for purpose of examining whether a writ petition can be maintained for avoiding a contractual liability by challenging of one of its clause, which was communicated and agreed by a person who has subsequently challenged it, Mr. Majumder, learned CGC has referred a decision of the apex court in State of Haryana & Ors. Vs. Jage Ram & Ors., reported in AIR 1980 SC 2018, where the apex court had occasion to observe as under:

13. ..... They entered into a contract with the State authorities with the full knowledge of conditions which they had to carry out in the conduct of their business, on which they had willingly and voluntarily embarked. The occurrence of a commercial difficulty, inconvenience or hardship in the performance of those conditions, like the sale of liquor being less in summer than in winter, can provide no justification for not complying with the terms of the contract which they had accepted with open eyes. The respondents could not, therefore, invoke the writ jurisdiction of the High Court to avoid the contractual obligations incurred by them voluntarily. On this ground alone, the State is entitled to succeed in this appeal.

Xxxxx xxxxx xxxxx

15. ..... We hold accordingly that the High Court was in error in entertaining the writ petitions for the purpose of examining whether the respondents could avoid their contractual liability by challenging the Rules under which the bids offered by them were accepted and under which they became entitled to conduct their business. .....

[Emphasis added]

68. Now, Mr. Majumder, learned CGC, has in order to rebut the submission made by Dr. Saraf, learned counsel for the petitioner, in respect of „Gross Revenue‟, has relied on Public Service Co. Vs. City & County of Denver, 387 P.2d 33 (Colo.1963), wherein the court has held that, generally the term „gross revenue‟ means gross receipt on a business before deduction for any purpose except those items specifically exempted. The United States Court of Appeal (5th Circuit) in City of Dalas, Texas Vs. Federal Communications Commission, 165 F.3d 341, had observed as under:

'This definition of „gross revenue‟ is also consistent with how the phrase is commonly defined by the courts. For example, in United States v. Reitano, 862 F.2d 982 (2d Cir.1988), the court held that under the gambling laws, gross revenue includes all money coming into the possession of the business, regardless of the source or purpose for which it is used. See also, Veterans Rehabilitation Center, Inc. v. Birrer, 170 Mont. 182, 185, 551 P.2d 1001, 1003 (1976) (noting that 'generally the term „gross revenue‟ means gross receipts of a business before deduction for any purpose except those items specifically exempted)'. Public Service Co. of Colorado v. Denver, 153 Colo. 396, 403, 387 P.2d 33, 36 (1963) (same); Lane Electric Cooperative, Inc. v. Oregon Dept. of Revenue, 307 Ore. 226, 229, 765 P.2d 1237, 1238 (1988) (noting 'the term „all gross revenue‟ is to be construed in the broadest sense, i.e., all money received'). We conclude that normally the phrase „gross revenue‟ unambiguously means all revenues or receipts of a business, without deduction ......'

[Emphasis supplied]

In Hinkle vs. Blinn, 92 Colo.302, 19 P. 2d 1038, it was held as under:

'We conclude that the conduct of the parties before the controversy arose, acting under the contract, is a reliable test of their interpretation of the instrument, and whatever the stress of subsequent disagreement, neither in his own interest may be heard to urge a different construction. North Boulder Farmers' Ditch Co. v. Leggett Ditch and Reservoir Co., 63 Colo. 522, 168 P. 742; New Brantner Ditch Co. v. Kramer, 57 Colo. 218, 141 P. 498; Lovell v. Goss, 45 Colo. 304, 101 P. 72, 22 LRA (N.S.) 1110; Cohen v. Clayton [Coal] Co., 86 Colo. 270, 281 P. 111; Illinois Building Co. v. Patterson, 91 Colo. 391, 15 P.2d 699; Thompson v. Sweet, 91 Colo. 552, 17 P.2d 308; 6 R. C. L. 853. In construing a contract, the court will follow the construction placed upon it by the parties themselves. Buckhord [Plaster] Co. v. Consolidated [Plaster] Co., 47 Colo. 516, 529, 108 P. 27.

[Emphasis supplied]

69. In clause (ii) of the amendment of the License Agreement dated 29.01.2001 (Annexure-V to the writ petition), it has been expressly stated that „gross revenue‟ shall mean the total revenue of the licensee company. Therefore, the writ petitioner from its inception was in complete accord that „gross revenue‟ shall be their total revenue. There is no ambiguity regarding the meaning of „gross revenue‟ as expressly stated in the license agreement and the respondents have further relied upon some decisions to buttress their contentions.

70. In Public Service Company Vs. City and County of Denver, 387 P.2d 33 (Colo.1963), the Supreme Court of Colorado, has observed as under:

'The parties themselves are in accord in construing this release as not covering the demands sued for in this action, and this court cannot put upon it a construction different from that put upon it by the parties themselves.'

71. So far the recommendation of TRAI, Mr. Majumder, learned CGC has stated that the first proviso and fifth proviso of Section 11(1) of the TRAI Act, is not binding upon the Central Government. In Association of Unified Telecom Service Providers of India (supra), it has been held as under:

50. Regarding the recommendations of the TRAI under Section 11(1)(a)(i) of the TRAI Act, we find that the Tribunal in its order dated 07.07.2006 has held that the opinion of the renowned expert in the accountancy that any other definition of Adjusted Gross Revenue would lead to reduction of license fee liability by way of accounting jugglery was not placed before the TRAI and as a result there was no proper and effective consultation with the TRAI and the weightage that was due to the recommendations of the TRAI was not given effect to. In our considered opinion, if the Tribunal found that there was no effective consultation with the TRAI on the opinion of the expert on accountancy, the Tribunal could have at best, if it had the jurisdiction to decide the dispute, directed the TRAI to consider the opinion of the expert on accountancy and send its recommendations to the Central Government and directed the Central Government to consider such fresh recommendations of the TRAI as provided in the provisos to section 11(1) of the TRAI Act. Instead the Tribunal has considered the recommendations of the TRAI and passed the fresh impugned order dated 30.08.2007 contrary to the very provisions of Section 11(1)(a) of the TRAI Act and the provisos thereto. At any rate, as the Central Government has already considered the fresh recommendations of the TRAI and has not accepted the same and is not agreeable to alter the definition of Adjusted Gross Revenue, the decision of the Central Government on the point was final under the first proviso and the fifth proviso to Section 11(1) of the TRAI Act, 1997.

[Emphasis added]

72. For the respondents, it has been quite emphatically stated that the principle of unequal bargain in the present context has no application inasmuch as on the price negotiated and accepted by the licensee, the licensor i.e. the Central Government has parted their exclusive privilege. In support of this contention, Mr. Majumder, learned CGC has relied on a decision of the apex court in Assistant Excise Commissioner & Ors. Vs. Issac Peter & Ors., reported in (1994) 4 SCC 104,

26. ..... In short, the duty to act fairly is sought to be imported into the contract to modify and alter its terms and to create an obligation upon the State which is not there in the contract. We must confess, we are not aware of any such doctrine of fairness or reasonableness, Nor could the learned counsel bring to our notice any decision laying down such a proposition. Doctrine of fairness or the duty to act fairly and reasonably is a doctrine developed in the administrative law field to ensure the rule of law and to prevent failure of justice where the action is administrative in nature. Just as principles of natural justice ensure fair decision where the function is quasi-judicial, the doctrine of fairness is evolved to ensure fair action where the function is administrative. But it can certainly not be invoked to amend, alter or vary the express terms of the contract between the parties. This is so, even if the contract is governed by statutory provisions, i.e., where it is a statutory contract or rather more so.

xxxxx xxxxx xxxxx

We are, therefore, of the opinion that in case of contracts freely entered into with the State, like the present ones, there is no room for invoking the doctrine of fairness and reasonableness against one party to the contract (State), for the purpose of altering or adding to the terms and conditions of the contract, merely because it happens to be the State. In such cases, the mutual rights and liabilities of the parties are governed by the terms of the contracts (which may be statutory in some cases) and the laws relating to contracts. It must be remembered that these contracts are entered into pursuant to public auction, floating of tenders or by negotiation. There is no compulsion on anyone to enter into these contracts. .....'

[Emphasis added]

73. In Transmission Corporation of Andhra Pradesh Ltd. & Anr. Vs. Sai Renewable Power Pvt. Ltd. & Ors. (supra), the apex court had occasion to observe as under:

86. ..... Thus, the documents executed by these parties and their conduct of acting upon such agreements over a long period, in our view, bind them to the rights and obligations stated in the contract. The parties can hardly deny the facts as they existed at the relevant time, just because it may not be convenient now to adhere to those terms. Conditions of a contract cannot be altered/avoided on presumptions or assumptions or the parties having a second thought that a term of contract may not be beneficial to them at a subsequent stage. They would have to abide by the existing facts, correctness of which, they can hardly deny. Such conduct, would be hit by allegans contraria non est audiendus.

xxxxx xxxxx xxxxx

89. ..... To frustrate a contract on the ground of duress or coercion, there has to be definite pleadings which have to be substantiated normally by leading cogent and proper evidence. ......

xxxxx xxxxx xxxxx

92. ..... Firstly, there are no facts on record, much less, supported by any documentary or any other evidence to sustain the plea that the contracts (PPAs) are a result of undue influence or duress by the State or its agencies upon the generators. Secondly, the generators have already taken benefit of that contract which was based on the policy of the State as well as the order of the Regulatory Commission. Having attained those benefits, it will hardly be of any help to the appellants, particularly, in the facts and circumstances of the case, to substantiate, justify or argue the plea of duress.

[Emphasis added]

74. In M/s Radhakrishna Agarwal & Ors. Vs. State of Bihar & Ors., reported in AIR 1977 SC 1496, the apex court had restated the said proposition in the following terms:

10. ..... But, after the State or its agents have entered into the field of ordinary contract, the relations are no longer governed by the constitutional provisions but by the legally valid contract which determines rights and obligations of the parties inter se. No question arises of violation of Article 14 or of any other constitutional provision when the State or its agents, purporting to act within this field, perform any act. In this sphere, they can only claim rights conferred upon them by contract and are bound by the terms of the contract only unless some statute steps in and confers some special statutory power or obligation on the State in the contractual field which is apart from contract.

[Emphasis added]

75. Mr. Majumder, learned CGC has quite distinctly stated that the non-license activities have the casual relation with the license activities. Therefore, the DoT is entitled to levy license fee regarding the non-license activities as well as license activities. The said statement has been recorded in para 22 of the written argument filed after conclusion of the oral argument. But, Mr. Majumder, learned CGC did not explain further how the said casual relationship is established or how such casual relationship can be material within the „gross revenue‟ as provided in the license agreement for parting with the exclusive privilege by the Central Government under Section 4 of the Indian Telegraph Act.

76. Mr. Majumder, learned CGC has reiterated that those who pay the fee must receive the direct benefit of the services rendered for which the fee is being paid and a casual relationship may be enough in this respect and in this regard the respondents have relied on a decision of the apex court in Municipal Corporation of Delhi & Ors. Vs. Mohd. Yasin, reported in AIR 1983 SC 617, where it has been observed as under:

9. What do we learn from these precedents? We learn that there is no generic difference between a tax and a fee, though broadly a tax is a compulsory exaction as part of a common burden, without promise of any special advantages to classes of taxpayers whereas a fee is a payment for services rendered, benefit provided or privilege conferred. Compulsion is not the hall-mark of the distinction between a tax and a fee. That the money collected does not go into a separate fund but goes into the consolidated fund does not also necessarily make a levy a tax. Though a fee must have relation to the services rendered, or the advantages conferred, such relation need not be direct, a mere causal relation may be enough. Further, neither the incidence of the fee nor the service rendered need be uniform. That others besides those paying the fees are also benefited does not detract from the character of the fee. In fact the special benefit or advantage to the payers of the fees may even be secondary as compared with the primary motive of regulation in the public interest. Nor is the Court to assume the role of a cost accountant. It is neither necessary nor expedient to weigh too meticulously the cost of the services rendered etc. against the amount of fees collected so as to evenly balance the two. A broad correlationship is all that is necessary. Quid pro quo in the strict sense is not the one and only true index of a fee; nor is it necessarily absent in a tax.

[Emphasis added]

77. Mr. Majumder, learned CGC did not brood on the broad correlationship, which according to the apex court is all that is necessary. However, further reliance has been placed on The City Corporation of Calicut Vs. Thachambalath Sadasivan & Ors., reported in AIR 1985 SC 756. There the apex court had observed that the traditional concept in a fee of quid pro quo is undergoing a transformation and that though the fee must have relation to the services rendered or the advantages conferred, such relation need not be direct. It has been observed in Thachambalath Sadasivan (supra) as under:

'..... the advantages conferred, such relation need not be direct, a mere casual relation may be enough. It is not necessary to establish that those who pay the fee must receive direct benefit of the services rendered for which the fee is being paid. If one who is liable to pay receives general benefit from the authority levying the fee, the element of service required for collecting fee is satisfied. It is not necessary that the person liable to pay must receive, some special benefit or advantage for payment of the fee.'

[Emphasis added]

78. In this regard the respondents have referred to a letter dated 31.07.1999 by the Cellular Operations Association of India to the Chairman, Telecom Commission, Department of Telecommunication, wherein it has been mentioned that the Government would get entry fee, revenue share, license fee and non-license revenue from the new operators. This letter was, however not part of the reply and it has been submitted at the time of hearing. As such, no serious view can be taken on the basis of the said letter. However, the writ petitioner has immediately raised objection for making reference to the said letter in such manner.

79. While summing up the submissions, Mr. Majumder, learned CGC has submitted that the petitioner had specific knowledge or communication that the license fee would be the revenue generated from the license activities as well from non-license activities. Thus, the challenge must fall through as there is no merit in the contention raised by the writ petitioner.

80. Before we embark on appreciating the basic grounds of the challenge as projected by the writ petitioner and the rejoinder by the respondents in order to repel such grounds, it will be apposite to refer clause (iii) of the communication dated 22.07.1999 (Annexure-IV to the writ petition) and clause (ii) of the communication dated 29.01.2001 (Annexure-V to the writ petition), which provide that for migration to the revenue sharing under the New Telecom Policy-1999 regime w.e.f. 01.08.1999, the payable Licensee Fee shall be equal to a prescribed percentage as share of gross revenue of the Licensee Company. Provisionally the licensor had fixed 15% of the gross revenue as licensee fee. The gross revenue for that purpose shall mean the total revenue of the Licensee Company under the 'license' excluding certain charges, tax etc.

81. It appears that the Central Government (the licensor), in terms thereof had asked for recommendations from the TRAI and the TRAI on due exercise, recommended for modification and incorporation of the definition of Adjusted Gross Revenue (AGR). The TRAI had recommended the following definition for 'Adjusted Gross Revenue' for purpose of revenue share:

‟Adjusted Gross Revenue‟ for purpose of levying license fee as a percentage of revenue share shall mean „Gross Revenue‟ accruing to the licensee by way of operations of Cellular Mobile Service mandated under the license (inclusive of revenue on account of Value Added Services, Supplementary Services and the sale of hand-sets) plus revenue accruing through re-sellers, franchise etc. plus any revenue forgoing through subsidies on handsets or any other rebates as reduced by the following items:

(i) interconnection/excess charges payable to other service providers for carriage of calls;

(ii) roaming revenues collected on behalf of the other cellular mobile service providers and pass all or liable to pass on to them;

(iii) service tax payable; and

(iv) sale of handsets.

82. The TRAI made such recommendation on the basis of their elaborate exercise and consultation with the stake-holders, but the Government has decided to follow their definition of Adjusted Gross Revenue (AGR) for purpose of licence fee, which is, in substance, different from the definition recommended by the TRAI. The TRAI responded to the said development in the following manner in their subsequent recommendation:

'The DoT has proposed a definition of Adjusted Gross Revenue (AGR) which is different from the definition recommended by the TRAI.'

In this regard it is observed that the definition of 'Adjusted Gross Revenue' given by the DoT in the case of GMPCS service seeks to include in the 'shareable revenue' a number of items which do not arise from license activities eg. all miscellaneous incomes including interest, dividends right back of earlier years, provisions etc. This tends to go charge on the revenue beyond the licensed activities. On the other hand, the definition proposed by the TRAI, which has been recommended consistently, is clear and precise to include all revenues which accrue to the operators from the license activities and excludes all items unrelated thereto. Thus it covers all receipts from the basic services including the supplementary services, value added services, subsidies on sale of handsets etc. while it excludes items of dividends, interests etc. which, though apparently constituting revenue, cannot be said to represent revenue from the license activities. The TRAI is, therefore of the view that the definition of the 'Gross Revenue' as conveyed by its recommendation dated 26.06.2000 is appropriate and should be adopted. [Noted from the letter of TRAI addressed to the Secretary (DoT) dated 09.10.2000 in Appendix-7 (para 2.3)]

The TRAI had also recommended that their revised definition of 'AGR' should be incorporated not only in unified license but even in the existing licenses wherever applicable.

83. On the face of the challenge against the definition of 'Gross Revenue' and 'Adjusted Gross Revenue(AGR)' as „interpreted‟ by the Department of Telecommunication (DoT) for levying the license fee, by the Association of Unified Telecom Service Providers of India, the Cellular Operators Association of India and some individual Telecom Service Providers in the TDSAT, by the order dated 07.07.2006, the TRAI was directed to make comprehensive recommendation on individual components of revenue which can be considered as part of AGR. The relevant part of the said order is extracted hereunder:

'In the Migration Package the respondent Government stated that the licensee will be required to pay one time entry fee and an additional licence fee as a percentage share of gross revenue under the licence' (See Clause 2);

Further, it stated that licence fee as a percentage under the licence shall be payable w.e.f. 01.08.1999 (See Clause 3);

It then stated that the Government will take a final decision about the quantum of revenue share to be charged as licence fee after obtaining recommendations of the TRAI (See Clause 3);

It also stated that in the meanwhile Government has decided to fix 15% of the gross revenue of the licensee as provisional licence fee (See Clause 3).

Then it states that 'the gross revenue for this purpose would be the total revenue of the licensee company…….'

From the above clause the petitioners contend that they were given to understand that the percentage share of gross revenue would be from revenue under the licence and what was sought to be fixed as 15% of the gross revenue was only a provisional quantum of revenue share and the word 'total revenue of the licensee company' should be read in the context of the word 'gross revenue under the licence'. Therefore, it is contended that it cannot be said that there was a demand by the Government for a revenue share of the total revenue from all sources of the licensee including revenue from activities outside the licence. Per contra the learned ASG argues that the word 'total revenue of the licensee company' clearly indicates any and every revenue of the licensee company whether it is from licensed activity or not is part of the AGR and this is what was indicated in the Migration Package.

Here again we find it difficult to accept the argument of the learned ASG. If we are to read the word 'total gross revenue of the licensee company' in the context in which it is found in the clauses of the Migration Package, we have no difficulty in accepting the argument of the petitioners that it can only be from the total gross revenue of the licensee company derived from the licensed activity only. Even the use of the word 'total revenue of the licensee company' in Clause 3 of the Migration Package read in isolation would not indicate that it would be the revenue from all sources including revenue from outside the licensed sources. Because if that was the intention of the Government at that stage then there would have been addition of further words like 'from all sources including unlicensed sources' which would have made it explicit. Apart from reading the language of the Migration Package contextually even if we consider it from a common sense point of view, we are of the opinion that we do not think in the Migration Package the Government had indicated that it would be demanding a percentage of share even in the unlicensed activity of the company. We have already noticed Section 4 of the Telegraph Act does not permit such a demand. Accordingly, in this background it should be noticed that the moment the new definition was sought to be introduced in the licence after rejecting the recommendations of the TRAI the licensees represented to the Government which representation of course, was not accepted. In this background, neither the argument of estoppel, acquiescence nor subsequent conduct of obtaining additional licence without demure can be accepted to reject the contention of the petitioners.

[Emphasis supplied]

In the said order dated 07.07.2006, the TDSAT has also observed as under:

'But he hastens to add that the recommendation of TRAI was considered at two stages and the same was considered in the background of the opinion received from an Accounting Expert as also with the observations made by the Comptroller and Auditor General of India and even after given due weightage to the recommendation of the TRAI the Government found it difficult to accept the same, hence it proceeded to introduce the definition clause as found in the licence now.

Under Section 11(1)(a)(ii) TRAI has the duty to make recommendations in regard to terms and conditions of licence to be given to the service provider. Under second proviso to that Section it is mandatory for the Central Government to seek recommendations of the TRAI while incorporating terms and conditions of licence. In the NTP-1999 Government had accepted the creation of a regulatory body (TRAI) and had stated that due weightage would be given to its recommendations. In the Migration Package of 22nd July, 1999 it specifically stated that the quantum of revenue share will be charged after obtaining recommendation of the TRAI. In this context we will have to examine what weightage of the recommendations of the TRAI is entitled to. Under Section 3 of the TRAI Act, it is noticed that the TRAI consists of a Chairman and not more than two whole time Members and not more than two part-time Members to be appointed by the Central Government. The object of creating the TRAI is to regulate the telecommunication services and protect the interests of service providers which includes licensees and consumers of the telecom sector and to permit and ensure orderly growth of the telecom sector and it is not disputed when it seeks to make recommendations it enlists the services of experts in various disciplines connected with the recommendations which obviously includes people well versed in the system of accounting and other matters related with terms and conditions of licence. In preparing its recommendation the TRAI holds consultation with all the stakeholders. In this background it cannot be said that the recommendations of such a body can be rejected without assigning any reasons and by taking into consideration recommendations of other bodies whose recommendation or opinion are not placed before the TRAI for it consideration.

[Emphasis supplied]

84. The TDSAT, thereafter remitted the matter to TRAI with the following observations :

'In view of the fact we have come to the conclusion that there has not been an effective consultation with the TRAI which is mandatory under the TRAI Act, we think we should not further delve into the exercise of finding out which component of the AGR, as defined by the Government in the conditions of licence, deserves to be retained and which component which the petitioners contend is not derived from the licensed revenue of the licensee should be excluded at this stage. We think it more appropriate that the matter should be remanded to the TRAI which is the 3rd Respondent herein, before whom the Government should produce the material relied by it while rejecting TRAI‟s recommendation so that TRAI can consider the same and send its conclusions to this Tribunal and thereafter, this Tribunal will have the benefit of a comprehensive recommendation of the TRAI after considering the materials relied upon by the Government. While forming its conclusions the TRAI shall hear the Government as well as the licensees and consider the materials that may be placed before it by either side. In this process it is not necessary for the TRAI to hold fresh consultative proceedings unless it thinks necessary. During this proceeding before the TRAI the petitioners shall place before it their contentions in regard to the various components of AGR which they have challenged before this Tribunal and the TRAI after hearing the Government on this issue also, send its recommendations to this Tribunal preferably within three months of the receipt of this order.

Further, while considering the issue now remitted to the TRAI, the TRAI will bear in mind our finding in regard to the inclusion in gross revenue of the licensee revenue derived from non-licensed activities. Apart from that finding, any observations made by us in regard to any particular head of revenue will not be taken by the TRAI as a conclusive opinion. The Authority is free to make its recommendations after independent appraisal of the material that is placed before or obtained by it.'

For the reasons stated above, we remand these matters to the TRAI for its consideration to the extent indicated hereinabove. A copy of this order shall be communicated to the TRAI forthwith and there shall be a direction issued to the petitioners and 1st and 2nd Respondents to appear before the TRAI through their representatives and cooperate with the TRAI to comply with this order.

Let these matters be listed for further directions/hearing after the recommendations of the TRAI are received or in the first week of October, 2006, whichever is earlier.' [Emphasis supplied]

85. From the records produced by the respondents under No.F.12-7/2006-LF (photocopies), it has surfaced that in the following manner, the Government of India (Department of Telecommunication) has discarded the recommendation, holding that the idea was not sharing of operational income, but of revenue, hence the items of exclusion were kept to bare minimum. For purpose of reference, the relevant part is extracted hereunder:

'2. The TRAI submitted its recommendations to the TDSAT in the hearing held on 21.09.2006. These were subsequently, as directed by TDSAT, placed on their website. The TDSAT has directed the petitioners to furnish the response within a period of four weeks and thereafter the DOT to file their response in another four weeks time. The case is slated for final hearing on 5.12.2006. Separately the views of Ld. ASG on filing a review petition before the High Courts/Supreme Courts against the TDSAT interim order of placing TRAI recommendation before TDSAT instead of the Govt. is being pursued with the Ld. ASG. His written communication is still awaited, although during the course of discussions held on 5.10.2006 he had stated that we should file an appeal against the TDSAT‟s interim order. Ld. ASG has been kept apprised of the 90 days stipulation on filing of the review petition.

3. Notwithstanding the filing of the review petition, the recommendations of TRAI has been examined. TRAI recommendations and comments against each item are given in paragraph 6 below.

4. The TRAI has applied the following four principles on the AGR issues. These principles are:

(a) Revenue accruing directly or indirectly under the license.

(b) Exclusion of revenue from the non verifiable activities.

(c) Proper audit trail should be available for items which are to be included in AGR, and

(d) Revenue from bundled sale of goods to be part of AGR under certain conditions.

However, there is no consistent application of the above four principles to decide the inclusion and exclusion of the various items, leading to inconsistencies in the items of specific recommendations.

5. While firming up our view, the following factors have been kept in mind.

i. That the definition of Gross Revenue and AGR together with the statements accompanying the License Fee and norms prescribed for preparing the statement are a part of a duly signed Contract between the Licensee and the Licensor.

ii. That in firming up the conditions, due process of consultation with the TRAI, including a back reference together with the reasons for non-accepting those recommendations of TRAI where there was a difference of opinion and thereafter finalizing the definition after due deliberations by the Full Telecom Commission duly taking into account the response of the TRAI was carried out.

iii. Since the idea was to share part of the revenue as LF, a broad definition of Gross Revenue was prescribed with specific provisions of exclusion of clearly defined items. The idea was not sharing of operational income, but of revenue, hence the items of exclusion were kept to the bare minimum.

iv. That due regard is paid to the principle of 'sharing can be only of gross revenue derived from the transferred privilege of establishing maintaining and working of telecommunications' in application of the definition. In case a company whose main line of business activity is non-telecom but has taken a telecom service license under Section 4 of Indian Telegraph Act 1885 only revenue which can be directly or indirectly attributed to the telecom license is subjected to levy of License Fee. It means that in multi business scenario the non-telecom revenue is not taken into consideration for determination of GR/AGR. To give a concrete example in case of M/s Arvind Mills Ltd whose main line of business activity is textile but has taken PMRTS license, only revenue accruing directly or indirectly from PMRTS license is included in GR/AGR and subject License Fee as per extant practice. The revenue from textile business is excluded from the scope of revenue share. Streams of revenue of the Licensee company like interest and dividend etc are apportioned to different business activities including telecom in the ratio of respective revenues from different business activities.'

[Emphasis added]

86. Before we proceed further it would be apposite to refer para 49 of the judgment of the apex court dated 11.10.2011 passed in C.A. No.5059/2007 & Ors. (Union of India & Ors. vs. Association of Unified Telecom Service Providers of India & Ors.), where it has been held that if the wide definition of Adjusted Gross Revenue so as to include revenue beyond the license was in any way going to affect the licensee, it was open for the licensees not to undertake activities for which they do not require license under Section 4 of the Telegraph Act and transfer these activities to any other person or firm or company. The incorporation of the definition of Adjusted Gross Revenue in the license agreement was part of the terms regarding payment which had been decided upon by the Central Government as a consideration for parting with its rights of exclusive privilege in respect of telecommunication activities and having accepted the license and availed the exclusive privilege of the Government of India to carry on telecommunication activities, the licensees could not have approached the Tribunal for an alteration of the definition of Adjusted Gross Revenue in the license agreement.

This court has to be in abreast of the said very significant observation which, in a way, demonstrates the fluidity or non-exactness in respect of sharing of revenue within the meaning of Adjusted Gross Revenue. The apex court has extended its consideration, even suggested that the licensee may also transfer those activities which are beyond the license to any other person to take out the revenue generated from those activities from the embrace of „Adjusted Gross Revenue‟.

87. The questions which are on board for consideration, are broadly as under:

(I) When by a license the clause relating to the revenue sharing has been accepted by the licensee, whether subsequently he can change his position to question the clause on the ground of arbitrariness and reasonableness qua Article 14 of the Constitution of India?

(II) Whether clauses 19.1 and 19.2 of the License Agreement is ultra vires to the provisions of Section 4 of the Indian Telegraph Act, 1885 for its inclusion of the revenue from the non-license activities?

(III) In view of the fact that the petitioner approached TDSAT on the same controversy, whether the jurisdiction of this court is barred in entertaining the same controversy?

(IV) Whether the process of discarding the recommendation of the TRAI is observed in the true spirit of the TRAI Act or the Government of India has taken the advantage of its dominant position?

(V) Whether what had been substituted by the letter dated 25.09.2001 is different from the package for migration of the existing licensees of Cellular (Metros and Telecom Circles) and Basic Telecom Services to New Telecom Policy-1999 regime as introduced by the communication dated 22.07.1999, if so, whether formation of the license agreement can be the basis to understand „the implied condition‟ in the causes 19.1 and 19.2? and

(VI) Whether the statement made by the Government of India in the Department of Telecommunication before the apex court to the effect that the revenue generated from the non-license business of the licensee- company will not be included in the definition of Gross Revenue (GR) for purpose of accounting the Adjusted Gross Revenue (AGR), would estop the respondents from taking an opposite stand in this case?

88. The Government of India in the Ministry of Communications, Department of Telecommunications, by its communication dated 22.07.1999 (Annexure-IV to the writ petition), had proposed that, „in the meanwhile‟ meaning that until the ambit and mode of „sharing‟ of revenue is decided, or until the Government will take a final decision about the quantum of the revenue share to be charged as license fee after obtaining recommendations of the Telecom Regulatory Authority of India (TRAI) interim arrangement as indicated in that letter would continue. It was provided that in the meanwhile, Government have decided to fix 15% of the gross revenue of the licensee as provisional license fee and the gross revenue for this purpose would be the „total revenue‟ of the licensee-company excluding the PSTN related call charges paid to DoT/MTNL and service tax collected by the licensee on behalf of the Government from their subscribers. It was further provided that, on receipt of TRAI‟s recommendation and Government‟s final decision, final adjustment of provisional dues will be effected depending upon the percentage of revenue share and the definition of revenue for this purpose as may be finally decided.

89. By the order dated 29.01.2001 (Annexure-V to the writ petition), the relevant part of which has been already excerpted, the respondent, in respect of the revenue share [to be effective from 01.08.1999], has provided that the payable license fee shall be equal to a prescribed percentage as share of the Gross Revenue of the „licensee-company‟. Provisionally, the licensor has fixed 15% of the Gross Revenue as license fee and presently the Gross Revenue for this purpose shall mean the total revenue of the licensee-company with the exclusion as provided earlier. Subsequently, the letter dated 29.01.2001 was superseded by the letter dated 25.09.2001 (Annexure-VI to the writ petition) and by that letter it has been declared that the Annual License Fee at the rate of 15% of Adjusted Gross Revenue (AGR) shall be payable by licensee with effect from 01.08.1999. In that context, the definition of Adjusted Gross Revenue (AGR) was given in para 2.1 and para 2.2 of the said letter dated 25.09.2001. Adjusted Gross Revenue (AGR) would mean Gross Revenue excluding, (i) PSTN related Call charges (access charges) actually paid to Bharat Sanchar Nigam Limited (BSNL)/Mahanagar Telephone Nigam Ltd. (MTNL) or other telecom service providers within India; (ii) Roaming revenue actually passed on to other telecom service providers; and (iii) Service Tax on provision of service and Sales Tax actually paid to the Government, if gross revenue had included the component of Service Tax/Sales Tax.

90. The petitioner has asserted that Gross Revenue cannot be determined based on the non-license activities. According to the petitioner, the AGR can only be related to the revenue directly arising out of telecom operations licensed under Section 4 of the Act after adjustment of expenses and write offs of revenues directly attributable to the licensing activities. As it has been already noted, the petitioner has succinctly submitted that the apex court has not decided the issue relating to the Adjusted Gross Revenue having regard to the provisions of Section 4 of the Telegraph Act. In the order dated 11.10.2011 (part of Annexure-XI to the writ petition), the apex court has held that, when a particular demand is raised on a licensee, the licensee can challenge the demand before the Tribunal and the Tribunal will have to go into the facts and materials on the basis of which the demand is raised and decide whether the demand is in accordance with the license agreement and in particular the definition of Adjusted Gross Revenue. Further, the petitioner has asserted that, the proceeding before the Tribunal is confined to whether the demand raised by the DoT is in accordance with the license agreement. The petitioner has further averred that, the demand of the revenue share on non-telecom activities are outside the purview of the cellular licenses and as such definition of „Adjusted Gross Revenue‟ as interpreted as implicit in the license agreement, according to the petitioner is arbitrary, oppressive and unconstitutional.

91. By the judgment dated 11.10.2011 passed in C.A. No.5059/2007 & Ors. (Union of India & Anr. Vs. Association of Unified Telecom Service Providers of India & Ors.), the apex court had categorically observed in respect of the order dated 07.07.2006 passed by the TDSAT in Petition No.82/2005 alongwith others (Cellular Operators Association of India & Ors. Vs. Union of India & Anr.), as under:

'Thus, the Tribunal in its order dated 07.07.2006 has not just decided a dispute on the interpretation of Adjusted Gross Revenue in the license, but has decided on the validity of the definition of Adjusted Gross Revenue in the license. As we have already held, the Tribunal had no jurisdiction to decide on the validity of the terms and conditions of the license including the definition of Adjusted Gross Revenue incorporated in the license agreement. Hence, the order dated 07.07.2006 of the Tribunal in so far as it decides that revenue realized by the licensee from activities beyond the license will be excluded from Adjusted Gross Revenue dehors the definition of Adjusted Gross Revenue in the license agreement is without jurisdiction and is a nullity and the principle of res judicata will not apply.'

[Emphasis added]

92. In Association of Unified Telecom Service Providers of India (supra), it has been further observed by the apex court that, Section 14(a)(i) of the TRAI Act provides that the Tribunal can adjudicate any dispute between the licensor and the licensee. Such dispute can be that the computation of Adjusted Gross Revenue made by the licensor and the demand raised on the basis of such computation is not in accordance with the license agreement. The dispute however can be raised by the licensee after the license agreement has been entered into and the appropriate stage when the dispute can be raised is when a particular demand is raised on the licensee by the licensor inasmuch as, from the action of raising the demand the licensor‟s understanding or interpretation of the clauses related to the revenue sharing emerges and that might affect the licensee. When such a dispute is raised against a particular demand, the Tribunal will have to go into the facts and materials on the basis of which the demand is raised and decide whether the demand is in accordance with the license agreement and in particular the definition of Adjusted Gross Revenue in the license agreement and can also interpret the terms and conditions of the license agreement.

Later on, it has been observed as follows:

'We, however, find from the order dated 07.07.2006 that instead of challenging any demands made on them, the licensees have questioned the validity of the definition of Adjusted Gross Revenue in the licenses given to them and the Tribunal has finally decided in its order dated 30.08.2007 as to what items of revenue would be part of Adjusted Gross Revenue and what items of revenue would not be part of Adjusted Gross Revenue without going into the facts and materials relating to the demand on a particular licensee.'

[Emphasis added]

93. From the questions, one question may be considered first, the question is:

'Whether the definition of Adjusted Gross Revenue is ultra vires Section 4 of the Indian Telegraph Act, 1885 for including the revenue from the non-license activities?'

94. So far the other questions are concerned, either would be answered or no answer is at all required as in Association of Unified Telecom Service Providers of India (supra), the apex has categorically stated that, the order dated 07.07.2006 was without jurisdiction and thus is a nullity, the principle of res judicata will not apply. Moreover, on a keen reading of Association of Unified Telecom Service Providers of India (supra), it would be apparent that though a tentative observation has been made in the judgment, the apex court had not considered the constitutionality or vires of clauses 19.1 and 19.2 of the License Agreement, which provides the definition of the Adjusted Gross Revenue for purpose of revenue sharing at the prescribed rate. Hence, according to this court, this writ petition is maintainable.

95. Even in Association of Unified Telecom Service Providers of India (supra), the apex court has specifically observed that, the dispute however can be raised by the licensee after the license agreement is entered into and the appropriate stage when the dispute can be raised is when a particular demand is raised on the licensee by the licensor. But, the apex court in an unambiguous term in respect of which item will be the part of the Adjusted Gross Revenue (AGR) and which item will be excluded therefrom, has observed on laying down the jurisdictional limit of the TDSAT as under:

'Whether the demand is in accordance with the license agreement and in particular the definition of Adjusted Gross Revenue in the license agreement and can also interpret the terms and conditions of the license agreement.'

Therefore, the controversy of that nature is well within the jurisdiction of TDSAT.

96. The other ancillary issue whether the process of discarding the recommendation of the TRAI is sustainable or not, may not be properly considered inasmuch as despite the order dated 27.06.2016, where this court had occasion to direct the respondents to produce the relevant files where the Department of Telecommunication had considered the recommendations by the Telecommunication for Regulatory Authority of India (TRAI) on „gross revenue‟ or „adjusted gross revenue‟ on the next date. But, no such file had been produced. On the final day of hearing, the respondents have produced a para-wise comments signed by one officer of the Department of Telecommunication in lieu of the records so asked for. It would be irrelevant to mention that, after a wide consultative process, TRAI made an elaborate recommendation in respect of Gross Revenue and Adjusted Gross Revenue. The Central Government after recording a note of disagreement, returned the recommendation for reconsideration, but the TRAI refused to reconsider their recommendation and sent their original recommendation back. The similar recommendation was also reiterated in compliance of the order dated 07.07.2006 as referred. For purpose of reference, the summary of the recommendations as culminated from the order dated 07.07.2006, are reproduced hereunder:

Chapter 4: Summary of Recommendations

4.1. Revenue items

4.1.1. Income from Dividend

The Authority recommends that income from dividend even though part of the revenue, cannot be said to represent revenue from the licensed activity and therefore should not be included in the AGR. As dividend income is separately stated in the annual accounts of service providers, there would be no difficulty in verifying its correctness.

(Recommended: Not to be included in AGR)

4.1.2. Income from Interest

The Authority recommends that that interest on refundable deposits be calculated at a rate of SBI‟s term deposit rate for six months‟ deposits. For licence fee payable in first half of the financial year, the prevalent interest rate on 1st April and for payments in second half of the financial year the prevalent interest rate on 1st of October can be made applicable. Any fund raised and income earned on the strength of telecom service viz. linkage with tariff will also have similar treatment for inclusion in AGR. The Authority also recommends that only interest so calculated on the refundable deposits should be added to the AGR instead of entire amount of interest earned.

(Recommended: Only interest calculated on refundable deposits to be added to the AGR)

4.1.3. Capital gains on account of profit on sale of assets and securities

The Authority recommends that revenue on account of sale of immovable property, securities, warrants or debt instruments, other items of fixed assets should not be part of AGR unless there is verifiable data that the receipts have come from „establishing, maintaining and working of telecommunication‟.

4.1.4. Gains from foreign exchange fluctuations

The Authority recommends that any revenue arising out of upward valuation or devaluation on account of fluctuation of foreign exchange should not be part of AGR.

(Recommended: Not to be included in AGR)

4.1.5. Reversal of Provisions and Vendor‟s Credit The Authority recommends that

* Revenue arising out of reversal of provisions like bad debts and taxes should not form part of AGR.

* Revenue arising from reversal of vendors‟ credit should form part of AGR.

(Recommended: Provision Not to be included in AGR, Vendor‟s Credit to be included in AGR)

4.1.6. Income from property rent The Authority recommends that revenue from property rent should be excluded from AGR provided it is clearly established that the property is no where connected to „establishing, maintaining and working of telecommunication‟.

4.1.7. Income from rent/lease of passive infrastructure like towers, dark fibre

The Authority recommends that revenue from rent of towers, dark fibre, should be part of the AGR.

(Recommended: To be included in AGR)

4.1.8. Other income on account of insurance claim, sale of scraps, management consultancy fee, forfeiture earnest money etc and revenue received on behalf of third party.

The Authority recommends that

* Revenue streams like sale of tenders, directories, forms, forfeiture of deposits/earnest money, management fees, consultancy fees, and training charges from the telecom service should form part of the AGR.

* Revenue from sale of fixed assets which is in the nature of capital receipts and insurance claims should not be part of AGR.

* Payments received on behalf of third party should form part of AGR.

* Other items falling under categories of miscellaneous/other income will have to be decided for taking a view regarding its inclusion or exclusion on a case to case basis.

4.1.9. Income from sale of equipment including handsets

The Authority recommends that:

* Revenue from discernible and stand alone sale of handset or telecom equipment which is not bundled with telecom service should be excluded from the AGR.

* Sale of handsets or telecom equipment bundled with telecom service should be part of AGR.

(Recommended: Not to be included in the AGR if discernible and standalone sale of handset or telecom equipment)

4.1.10. Receipt from USO Fund and ADC The Authority recommends that:

* As DoT has already taken a view that receipts from USO will not be part of AGR, the Authority recommends that necessary amendments should also be carried out in the Licence to make it clear that revenues received from USO fund do not form part of AGR. This fund is mainly utilized for the implementation of Government‟s recognised projects and policy inducement.

* Receipts of revenue on account of ADC should be part of AGR. (Recommended: USO not to be included in AGR ADC to be included in AGR) 4.1.11 Inclusion of revenue from one Licensed activity in the revenue of another Licensed activity The Authority in light of the existing provisions of the Licence recommends that revenue from TV uplinking service and internet service should be part of the AGR. (Recommended: To be included in AGR)

Specific Items

4.2.1. Payment for port charges, leased line charges, bandwidth charges, rent for sharing of space, power and any other payments to any other Licensee

The Authority recommends that costs on account of port charges, interconnection setup charges, leased line, sharing of infrastructure, roaming signaling charges should not be deducted from AGR.

(Recommended: To be included in AGR)

4.2.2. Write off of Bad debts or waiver/adjustments/discounts

The Authority recommends that bad debts should not be excluded from the AGR.

(Recommended: To be included in AGR)

4.3. Inclusion of items on accrual basis but exclusion on actual payment basis- IUC and service tax The Authority recommends that:

* Service tax should be shown on accrual basis both for inclusion and exclusion from the gross revenue for the purpose of AGR.

* Interconnection Usage Charge should also be shown on accrual basis both for inclusion and exclusion from the gross revenue for the purpose of AGR.

[Emphasis supplied]

97. The Government of India, notwithstanding their serious reservation about the correctness of the decision of the TDSAT dated 07.07.2006, got these recommendation discarded with concurrence of the Full Telecom Commission. But the minutes of the said Commission has not been produced. The respondents have not shown any reason for such non-acceptance in their reply. But from a copy of the note, which is related to the TRAI recommendations dated 21.09.2006 under F.No.12-7/2006-LF, the foundation for such non-acceptance appears to be „there is no consistent application of four principles to decide the inclusion and exclusion of various items, leading to inconsistencies in the items of specific recommendation‟. This note can be considered as the basis of any decision of the Government of India, but not as the reasons for decision as that part is not available.

98. Pursuant to the package for migration of the existing licensees w.e.f. 01.08.1999 has been effected by the letter dated 22.07.1999 (Annexure-IV to the writ petition) and which provides the formation of the clause for payment of license fees. By way of amendment by the letter dated 25.09.2001 (Annexure-VI to the writ petition) the new license fee has been provided, as reproduced earlier. The core of the amendment is that, the license fee would be @ 15% of the Adjusted Gross Revenue and that shall be payable by the licensee w.e.f. 01.08.1999 [see clause 1] and by para 2.1 of the said letter dated 25.09.2001, the definition of 'Gross Revenue' has been provided. By para 2.2 of the letter dated 25.09.2001 for the purpose of arriving the Adjusted Gross Revenue (AGR) the exclusion from the Gross Revenue has been catalogued. The definition of 'Gross Revenue' and the exclusion for arriving at the 'Adjusted Gross Revenue' have also been reproduced before. These two amended provisions entered as the clause 19.1 and clause 19.2 in the license agreement, have been challenged on the grounds as discussed above. Since the petitioner has challenged the said two clauses in the license agreement, they have also challenged the demand notice dated 08.11.2012 (Annexure-XVI to the writ petition) and the demand notice dated 18.01.2013 (Annexure-XVII to the writ petition), raising demand for `3,27,97,185 for the year 2006-07 and `7,06,52,455 for the year 2007-08 respectively [in the demand notice dated 08.11.2012] and `3,34,70,212 for the year 2006-07 and `7,67,38,856 for the year 2007-08 respectively [in the demand notice dated 17.01.2013]. Be it mention that the interim order staying operation of those demand notices passed by this court in C.M. Appl. No.29/2013, arising out of this writ petition on 01.02.2013, which had been confirmed by the order dated 02.04.2014 on consent is still in force. Hence the respondents could not realise the demand from the writ petitioner.

WHEN BY A LICENSE THE CLAUSE RELATING TO THE REVENUE SHARING HAS BEEN ACCEPTED BY THE LICENSEE, WHETHER SUBSEQUENTLY HE CAN CHANGE HIS POSITION TO QUESTION THE CLAUSE ON THE GROUND OF ARBITRARINESS AND REASONABLENESS QUA ARTICLE 14 OF THE CONSTITUTION OF INDIA?

99. The core issue of the controversy is whether the total revenue of the licensee-company would mean and imply the total revenue of the licensee-company, both from license activities and non-license activities unrelated to the license agreement.

To address this question it would be expedient for this court, if the question No.5 as formulated under paragraph 87, which has laid down, inter alia, that whether the formation of the license agreement can be the basis to understand „the implied condition‟ in the causes 19.1 and 19.2 is taken up simultaneously.

100. The formation is very important for purpose of understanding the true meaning of a clause in the agreement when a particular clause becomes a bone of contention. It is no denying fact that by the letter dated 22.07.1999 the respondents in terms of the New Telecom Policy, 1999 communicated the existing licensees including the petitioner that 'the license fee as a percentage of gross revenue under the license' shall be payable w.e.f. 01.08.1999. However, it was noted that the Government will take a final decision about the quantum of the revenue share to be charged as the license fee after obtaining recommendations of the Telecom Regulatory Authority of India (TRAI). The said interim arrangement was declared as 15% of the gross revenue of the licensee-company. It has been also stated in the same breath that the gross revenue for the purpose would be the total revenue of the licensee-company excluding the PSTN related call charges paid to DoT/MTNL and service tax collected by the licensee on behalf of the Government from their subscribers on receipt of TRAI‟s recommendation and the Government‟s final decision, final adjustment of the provisional dues will be affected depending upon the percentage of revenue share and definition of revenue for this purpose as may be finally decided. This phrase continued in the letter dated 29.01.2001. However, that letter was superseded by the letter dated 25.09.200

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1, where the definition of 'Adjusted Gross Revenue' was provided. It has been stated that the „Gross Revenue‟ shall be inclusive of installation charges, late fees, sale proceeds of handsets or any other terminal equipment etc., revenue on account of interest, dividend, value added services, supplementary services, access or interconnection charges, roaming charges, revenue from permissible sharing of infrastructure and any other miscellaneous revenue, without any set off for related item of expense etc., and thereafter, the „Adjusted Gross Revenue‟ has been meant to be by exclusion of the (i) PSTN related Call charges (access charges) actually paid to Bharat Sanchar Nigam Limited (BSNL)/Mahanagar Telephone Nigam Ltd. (MTNL) or other telecom service providers within India; (ii) Roaming revenue actually passed on to other telecom service providers, and (iii) Service Tax on provision of service and Sales Tax actually paid to the Government, if gross revenue had included the component of Service Tax/Sales Tax. By the definition of „Gross Revenue‟, as it is apparent, some non-license activities have been included. The petitioner had understood that those are bound to be related to the ancillary license activity. But, when the demand raised, the petitioner realised that the respondents have given a meaning of total revenue understanding term gross revenue as provided in para 2.1 of the letter dated 25.09.2001 including the total revenue from the non-licensed activities also as implicit. The petitioner has resented for inclusion of the non-license activities. 101. On the basis of the formation as stated earlier, if the understanding of the „total revenue‟ is gathered it will mean percentage of the gross revenue under the license as stated in the first formation document dated 22.07.1999 (Annexure-IV to the writ petition). But the respondents have read the „total revenue‟ for having the gross revenue by expanding it to all revenue of the licensee-company, whether it is from the license activities or from activities unrelated to the license. 102. This court has given a serious thought over that aspect of the matter. The license agreement can only be binding if the formation, it constitutes the first and final offer in this context, to finalisation of the clause carries the same and definite meaning. There could not be any difficulty in understanding. But the formation document play a very vital role as Chitty examined in „Chitty on Contract‟ (32nd Edition, Volume I), where it has been observed as under: 'Letters of intent- Where commercial parties to a transaction issue or exchange 'letters of intent' on which they act pending the preparation of formal contracts or issue a 'letter of comfort', such letters may, as a matter of construction, be held to bind the parties. The courts will, in particular, be inclined to do so where the parties have acted on the document for a long period of time or have expended considerable sums of money in reliance on it. The fact that the parties envisage that the letter is to be superseded by a later, more formal, contractual document does not, of itself, prevent the letter from taking effect as a contract.' 103. But, the entire process after the said formation till the issuance of the letter dated 25.09.2001 has been done unilaterally after the migration was over. As such, the letter of intent, meaning the letter dated 22.07.1999 since has clearly provided that the license fee as would be gross revenue under the license, the respondents should have not diluted the nature of the license fee unilaterally. In this respect the TRAI‟s recommendation and the assigned purpose by the Government of India as excerpted in the said note No.F.12-7/2006-LF are noteworthy: (ii) That in firming up the conditions, due process of consultation with the TRAI, including a back reference together with the reasons for non-accepting those recommendations of TRAI where there was a difference of opinion and thereafter finalizing the definition after due deliberations by the Full Telecom Commission duly taking into account the response of the TRAI was carried out. (iii) Since the idea was to share part of the revenue as LF, a board definition of Gross Revenue was prescribed with specific provisions of exclusion of clearly defined items. The idea was not sharing of operational income, but of revenue, hence the items of exclusion were kept to the bare minimum. (iv) That due regard is paid to the principle of „sharing can be only of gross revenue derived from the transferred privilege of establishing, maintaining and working of telecommunications‟ in application of the definition. In case a company whose main line of business activity is non-telecom but has taken a telecom service license under Section 4 of Indian Telegraph Act 1885 only revenue which can be directly or indirectly, attributed to the telecom license is subjected to levy of License Fee. It means that in multi business scenario the non-telecom revenue is not taken into consideration for determination of GR/AGR. To give a concrete example in case of M/S Arvind Mills Ltd. whose main line of business activity is textile but has taken PMRTS license, only revenue accruing directly or indirectly from PMRTS license is included in GR/AGR and subject to License Fee as per extant practice. The revenue from textile business is excluded from the scope of revenue share. Streams of revenue of the License company like interest and dividend etc. are apportioned to different business activities including telecom in the ratio of respective revenues from different business activities. (v) These conditions have been applicable from 1.8.99 and have been in place for the past 7 years and were framed in order to keep the process of revenue sharing easy to interpret, easy to verify, comprehensive and to keep the scope for exercise of discretion at minimum level. (vi) Is in conformity with the stand taken by the DOT in the various Affidavits filed before the TDSAT. Though the respondents have argued quite emphatically that the respondents reserved their right to take a final decision and the migration commenced on the basis of such terms and conditions. Later on, by the letter dated 25.09.2001 the respondents communicated their decision on the definition of „Gross Revenue‟ and the „Adjusted Gross Revenue‟. Thus, the petitioner cannot now resile from that condition of the license agreement. In this respect, what is clearly contended that the Government had reserved the right to take a final decision about the quantum of the revenue share to be charged as license fee after obtaining of the recommendation of the Telecom Regulatory Authority of India (TRAI), not on the character of the gross revenue which the letter of intent dated 22.07.1999 had provided that the license fee as a percentage of gross „revenue under the license‟. 104. Whether the respondents can claim that such term is implicit in the license agreement (clause 19.1 and 19.2). Again, the „Chitty on Contract‟ (32nd Edition, Volume I), has examined that aspect of the matter on implication of terms. Chitty has observed in Chapter 14 as under: 'The problem of the implication of terms is one which frequently arises in the law of contract. In certain instances, the parties to a contract may have been content to express only the most important terms of their agreement, leaving the remaining details to be understood. The court will then be asked to imply a term or terms to remedy the deficiency. More often, however, a subsequent disagreement reveals that there are contingencies for which the parties have not provided in their express contract. The question is then whether the court can imply a term to cover the contingency which has unexpectedly emerged. The principles that traditionally govern the implication of terms differ from those which apply to the construction of express terms. Nevertheless, in the modern law, most authoritatively expressed in the judgment of Lord Hoffmann in Att-en of Belize v Belize Telecom Ltd., reported in [2009] UKPC 10 : [2009] 1 w.l.r. 1988, there is said to be a close affinity between the two processes [Luxor (Eastbourne) Ltd. v Cooper : [1941] A.C. 108, 130; Codelfa Construction Pvt. Ltd. v State Railway Authority of New South Wales : (1982) 149 C.L.R. 337, 345; South Australia Asset Management Corp v York Montague : [1977] A.C. 191, 212 ef. Equitable Life Assurance Society v Hyman : [2002] 1 A.C. 408, 458-459] in that, in both cases, the court is seeking to establish what the contract would reasonably have been understood to mean having regard to the commercial purpose of the contract as a whole and the relevant available background of the transaction [Att-en of Belize v Belize Telecom Ltd. : [2009] UKPC 10 : [2009] 1 w.l.r. 1988]. The extent to which the process of implication can be assimilated with the principles applicable to the interpretation of the express terms of a contract is a mater which remains to be definitively resolved.' Belize (supra) is applied regularly as it is recognised as the leading modern authority on the implication of terms into a contract. Cases can be found in which the courts have expressed some uncertainty about the precise scope of the decision and its relationship with earlier decisions. Applying the Belize‟s principle, this court does not have any hesitation to hold that, what is implicit having regard to the nature of the transaction is that the total revenue would only mean the gross revenue under the license and nothing else. 105. This court in order to arrive at this inference, has considered the observation of the apex court in Association of Unified Telecom Service Providers of India (supra), where the apex court has stated clearly and the respondents have agreed to that proposition that the licensee-company is free to transfer the non-license activities to other persons or entity and there is no prohibition in the license agreement if they want to avoid any revenue share from the activities unrelated to the license agreement. This clearly indicates that the revenue from non-license activities was never a consideration for revenue sharing. Thus, this clause appears quite asymmetrical while the Government of India has vouched to follow the uniform policy regarding licensing. But a licensee-company which carries on the licensed activities and activities unrelated to the license, there can be regulatory mechanism in respect of accounting of those activities. It is the stand of the respondents on advice of a financial expert. They have given a concrete meaning implicit in the total revenue that revenues except the exclusion as provided in the definition of „Adjusted Gross Revenue‟ will come under the percentage sharing. 106. This is not only unreasonable but cannot be the basis of a license fee as the apex court in Bharti Airtel Ltd. (supra), has unambiguously observed that, the language of the proviso to Section 4 of the Telegraph Act, which stipulates that the grant of license should be 'on such conditions and in consideration of such payments as it thinks fit', must necessarily be understood that the conditions must be rational and the payment forming the consideration for the grant of license must be non-discriminatory. There is no doubt, the principle of quid pro quo has been considerably diluted in the course of development of law, but the relation with the service has never been severed and as such the definition of the „Gross Revenue‟ is quite arbitrary and exercise of the dominant position. It may not be out of place to record that in the context Har Shankar (supra) may not be very relevant as there is no dispute that the Government of India has charged the „license fee‟, not the price of the privilege inasmuch as the revenue generation is not primary purpose of New Telecom Policy, 1999. Thus the concept of res extra commercium cannot have any application. Hence the definition of the „Gross Revenue‟ as well as the „Adjusted Gross Revenue‟ as the same is dependent on the definition of „Gross Revenue‟ are declared unsustainable as those are in contrast to the formation of the contract. WHETHER CLAUSES 19.1 AND 19.2 OF THE LICENSE AGREEMENT IS ULTRA VIRES TO THE PROVISIONS OF SECTION 4 OF THE INDIAN TELEGRAPH ACT, 1885 FOR ITS INCLUSION OF THE REVENUE FROM THE NON-LICENSE ACTIVITIES? 107. In view of the interpretation of Section 4 of the Telegraph Act, 1885, given by the apex court in Bharti Airtel Ltd. (supra), particularly in respect of the first proviso to Section 4(1), this court is bound to hold that the definition of „Gross Revenue‟ and „Adjusted Gross Revenue‟ are ultra vires to the said proviso to Section 4(1) of the Telegraph Act, 1885, as within the embrace of the gross revenue even the non-license activities have been included contrary to the formation. Where a contract, express or implied, is expressly or by implication forbidden by statute, no court can lend its assistance to give it effect. What is done in contravention of the provisions of an Act of the Legislature cannot be made the subject of an action [see Mannalal Khetn (supra)] IN VIEW OF THE FACT THAT THE PETITIONER APPROACHED TDSAT ON THE SAME CONTROVERSY, WHETHER THE JURISDICTION OF THIS COURT IS BARRED IN ENTERTAINING THE SAME CONTROVERSY? 108. This court has already discussed elaborately the decision of the apex court in Association of Unified Telecom Service Providers of India (supra), where the apex court has stated that the order of the TDSAT dated 07.07.2006 is a nullity. Therefore, there cannot be any question of res judicata or the question of lack of jurisdiction inasmuch as it is apparent on the face of the challenge that the challenge is based on constitutionality or vires of clauses 19.1 and 19.2 of the License Agreement. In this regard what the apex court in Association of Unified Telecom Service Providers of India (supra), has observed may be recalled. The apex court has clearly stated that TDSAT cannot extend its jurisdiction to adjudicate whether any clause of an agreement is unconstitutional or ultra vires. The remedy, therefore, is the judicial review which the petitioner has opted for. Hence this court does not find any legal bar in adjudication of the writ petition and the controversy as projected herein. WHETHER THE PROCESS OF DISCARDING THE RECOMMENDATION OF THE TRAI IS OBSERVED IN THE TRUE SPIRIT OF THE TRAI ACT OR THE GOVERNMENT OF INDIA HAS TAKEN THE ADVANTAGE OF ITS DOMINANT POSITION? 109. True it is that the Government of India has asked for the recommendation of the TRAI in terms of the provisions of Section 11, but it cannot be denied that if it is found by the Central Government after consideration of the recommendation of the TRAI that such recommendation cannot be accepted or needs modification, it may refer the recommendation back to the Authority for its reconsideration, and the Authority may within fifteen days from the date of receipt of such reference, forward to the Central Government its recommendation after considering the reference made by the Government. After receipt of the further recommendation, if any, the Central Government shall take a final decision. The entire process is for having the advice from the expert body. When a recommendation from the expert body is discarded there must be the stronger rational basis, even in terms of the commercial transaction. But only reason that emerges from the said note is the ease of accounting. 110. As earlier observed, the respondents have failed to place the final reasons in this court. It is even though unfortunate, but from the affidavits filed by the respondents this aspect of the matter does not transpire to outweigh the reasoning given by the TRAI. Could the Government treat the recommendation as a scrap of paper and consign it to the waste paper basket? Certainly not. Otherwise also the Government will have to give reasons for not accepting the recommendations of the Authority. Otherwise, the Authority will look absolutely ineffective and its functions can as well be performed by any of the Departments of the Central Government. We have to adopt a constructive and purposeful approach in interpreting the provisions of Section 11 and we cannot accept an argument which strikes at the bottom of very existence of the Authority. It is undeniable that the Authority is an expert body constituted under the Act and it has been held to be so by the judgment of the apex court in the case of Cellular Operators Association of India (supra), where the apex court has observed as under: 'When the Authority makes recommendation it does so only after following the set transparent procedure. Even if nothing has been mentioned as to how the recommendations are to be considered by the Central Government when the Central Government does not accept those recommendations, it has to be seen how the Central Government has considered those recommendations and the reasons therefor not to accept the same with certain modifications.' 111. The respondents, for the reasons best known to them, despite a specific order from this court, failed to produce the relevant file/s, except that note, [which admittedly is „in conformity with the DoT in the various affidavits filed before the TDSAT] to enable this court find out the reasons for discarding the consecutive recommendations as well as the recommendation dated 13.09.2006 in compliance of the order dated 07.07.2006 of the TDSAT passed in Petition No.7/2003. Thus, this court is bound to take an adverse inference that there was no such record of consideration and hence it is to be assumed that those recommendations have been discarded arbitrarily as the action uninformed by the reasons is anathema to Article 14 of the Constitution of India. WHETHER THE PROCESS OF DISCARDING THE RECOMMENDATION OF THE TRAI IS OBSERVED IN THE TRUE SPIRIT OF THE TRAI ACT OR THE GOVERNMENT OF INDIA HAS TAKEN THE ADVANTAGE OF ITS DOMINANT POSITION? 112. In view of what has been observed above, the statement made by the Government of India before the apex court as referred above is only supportive of the reasons provided above for drawing an inference that the Gross Revenue shall not include the non-license business of the licensee-company. Even if we permit the respondents to exert that they can include the revenue from the non-licensed activities for purpose of sharing that would not stand the legal scrutiny and as such that has been rejected by this court. 113. Having observed thus, the writ petition stands allowed with the following observation and directions : (i) The definition of 'Gross Revenue' shall not include the revenue from the activities unrelated to the license of the licensee-company. (ii) In view of this declaration, the Government of India (Department of Telecommunication) shall take a fresh exercise, even they are permitted to reconsider the recommendation of Telecom Regulatory Authority of India (TRAI) dated 13.09.2006 as submitted to the TDSAT. (iii) On such exercise, they shall modify the definition of 'Adjusted Gross Revenue' for purpose of revenue share in conformity to the declaration made above. In the interim, the Government of India is permitted to realise 15% of the gross revenue on the basis of the recommendation made by the TRAI on 13.09.2006 from the petitioner by raising the fresh demand. (iv) The impugned demand notice dated 08.11.2012 (Annexure-XVI to the writ petition) and the demand notice dated 18.01.2013 (Annexure-XVII to the writ petition) in view of the observation made above, are quashed. There shall be no order as to costs.
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