UNION OF INDIA & Anr. v. ASSOCIATION OF UNIFIED TELECOM SERVICE PROVIDERS OF INDIA & Ors.

dated 19.01.2007 that while dismissing the appeal, the · Court gave liberty to the appellant, namely, Union of India, to urge the contentions raised in Civil Appeal No.84 of 2007 before the Tribunal. Hence, even if it is held that the E order dated 07.07.2006 of the Tribunal got merged with the order dated 19.01.2007 of this Court passed in Civil Appeal No.84 of 200.7, by the express liberty granted by this Court in the order dated 19.01.2007, Union of India could urge before the Tribunal all the contentions including the contention that the definition of Adjusted Gross Reven_ue as given in the license could not be challenged by the licensee before the Tribunal and will include all items of revenue mentioned in the definition of Adjusted Gross Revenue in the license. [Paras 25-26) [691-B-D; 693-B] F G

2.1. A bare perusal of sub-section (1) of Section 4 of the Telegraph Act shows that the Central Government has the exclusive privilege of establishing, maintaining and working telegraphs. This would mean that only the H Central Government, and no other person, has the right UNION OF INDIA v. ASSOCIATION OF UNIFIED TELECOM 663 SERVICE PROVIDERS C>F INDIA ·. to carry on telecommunication activities. The proviso to A sub-section (1) of Section 4 of the Telegraph Act, however, enables the Central Government to part with this exclusive privilege in favour of any other person by granting a license in his favour on such conditions and in consideration of such payments as it thinks fit. A B license granted in favour of any person under µroviso to sub-section (1) of Section 4 of the Telegraph Act is in the nature of a contract between the Central Government and the licensee. Consequently, the terms and conditions of the license including the definition of Adjusted Gross c Revenue in the license agreement are part of a contract between the licensor and the licensee. [Paras 28,·29] [697- F-G; 698-D-G-H] State of Orissa and Others v. Harinarayan Jaiswa/ and Others (1972) 2 SCC 36: 1972 (3) SCR 784; Har Shankar & D Ors. v. The Deputy Excise & Taxation Commissioner & Others (1975) 1 SCC 737: 1975 (3) SCR 254; State of Punjab & Anr. v. Devans Modern Breweries Ltd. & Ors. (2004) 11 SCC 26: 2003 (5) Suppl. SCR 930; Panna Lal v. State of Rajasthan (1975) 2 SCC 633: 1976 (1) SCR 219 - relied E on. function to make F

2.2. Section 11 (1 )(a)(ii) of the TRAI Act states that notwithstanding anything contained in the Telegraph Act, the TRAI shall have recommendations, either suo motu or on a request from a licensor on terms an:i conditions of license to a service provider. The first proviso, however, states that the recommendations of the TRAI shall not be binding upon the Central Government. The second, third, fourth and G fifth provisos deal with the procedure that has to be followed by the TRAI and the Central Government with regard to recommendations of the TRAI. At the end .of fifth proviso, it is stated that after receipt of further recommendation, if any, the Central Government shall take the final decision. These provisions in the TRAI Act H 664 SUPREME COURT REPORTS (2011] 14 (ADDL.) S.C.R. A show that notwithstanding sub-section (1) of Section 4 of the Telegraph Act vesting exclusive privilege on the Central Government in respect of telecommunication activities and notwithstanding the proviso to sub-section (1) of Section 4 of the Telegraph Act vesting in the Central B Government the power to decide on the conditions of license including the payment to be paid by the licensee for the license, the TRAI has been conferred with the statutory power to make recommendations on the terms and conditions of the license to a service provider and c the Central .Government was bound to seek the recommendations of the TRAI on such terms and conditions at different stages, but the recommendations of the TRAI are not binding on the Central Government and the final decision on the terms and conditions of a license to a service provider rested with the Central Government. The legal consequence is that if there is a difference between the TRAI and the Central Government with regard to a particular term or condition of a license, as in the present case, the recommendations of the TRAI will not prevail and instead the decision of the Central E Government will be final and binding. [Para 31] [699-E-H; 0 700-A-C]

2.3. In contrast to this recommendatory nature of the functions of the TRAI under clause (a) of sub-section (1) F of Section 11 of the TRAI Act, the functions of the TRAI under clause (b) of sub-section (1) of Sectiqn 11 of the TRAI Act are not recommendatory. This will be clear from the very language of clause (b) of sub-section (1) of Section 11 of the TRAI Act which states that the TRAI G shall discharge the functions enumerated under sub clauses (i), (ii) and (ix) under clause (b) of sub-section (1) of Section 11 of the TRAI Act. Under clause (c) of sub section (.1) of Section 11 of.. the TRAI Act, the TRAI performs the function of levying fees and other charges in respect of different services and under clause (d) of H UNION OF INDIA v. ASSOCIATION OF UNIFIED TELECOM 665 SERVICE PROVIDERS OF INDIA sub-section (1) of Section 11, the Central Government can A entrust to the TRAI other f\Jnctions. These functions of the TRAI under clauses (c) and (d) of sub-section (1) of Section 11 of the TRAI Act are also not recommendatory in nature. That the functions of the TRAI under clause (a) are recommendatory while the fuactions of the TRAI B under clauses (b), (c) and (d) are npt recommendatory will also be clear from the provisos 1st to 5th which refer to the recommendations of the TRAI under clause (a) of sub section (1) of Section 11 of the TRAI Act and not to clauses (b), (c) and (d) of sub-section (1) of Section 11 of c the TRAI Act. The scheme of TRAI Act therefore is that the TRAI being an expert body discharges recommendatory functions under clause (a) of sub section (1) of Section 11 of the TRAI Act and discharges regulatory and other functions under clauses (b), (c) and D · (d) of sub-section (1) of Section 11 of the TRAI Act. TRAI being an expert body, the recommendations of the TRAI under clause (a) of sub-section (1) of Section 11 of the TRAI Act have to be given due weightage by the Central Government but the recommendations of the TRAI are not binding on the Central Government. On the· other E hand, the regulatory and other functions under clauses (b), (c) and (d) of sub-section (1) of Section 11 of the TRAI Act have to be performed independent of the Central Government and are binding on the licensee subject to only appeal in accordance with the provisions of the TRAI Act. [Para 32] [700-D-H; 701:.:A-O] -- F

2.4, A reading of Section 14 (a)(i) of the TRAI Act would. show that the Tribunal has the power to adjudicate any dispute between a licensor and a licensee. A licensor G has been defined under Section 2(ea) of TRAI Act to mean the Central Government or the Telegraph Authority who grants a license under Section 4 of the Telegraph Act and a licensee has been defined in Section 2(e) of the TRAI Act to mean any person licensed under sub-section (1) H 666 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R. A of Section 4 of the Telegraph Act providing spe"cified telecommunication services. The word 'means' in Sections 2(e) and 2(ea) of the TRAI Act indicates that the definitions of licensee and licensor in Sections 2(e) ard 2(ea) of the TRAI Act are exhaustive and therefore would B not have any other meaning. A dispute between a licensor and a licensee referred to in Section 14(a)(i) of the TRAI Act, therefore, is a dispute after a person has been granted a license by the Central Government or the Telegraph Authority under sub-section (1) of Section 4 of c the Telegraph Act and has become a licensee and not a dispute before a person becomes a licensee under the proviso to sub-section (1) of Section 4 of the Telegraph Act. In other words, the Tribunal can adjudicate the dispute between a licensor and a licensee only after a 0 person had entered into a license agreement and become a licensee and the word "any" in Section 14(a) of the TRAI Act cannot widen the jurisdiction of the Tribunal to decide a dispute between a licensor and a person who had not become a licensee. The result is that the Tribunal has no E jurisdiction to decide upon the validity of the terms and conditions incorporated in the license of a service provider, but it will have jurisdiction to decide "any" dispute between the licensor and the licensee on the interpretation of the terms and conditions of the license. [para 33) [701-E-H; 702-A-D] F 'Principles of Statutory Interpretation' 12th Edition - referred to.

2.5. Clause (iii) of the letter dated 22.07.1999 of the G Ministry of Communications to the licensees made it clear that the license fee was payable with effect from 01.08.1999 as a percentage of gross revenue under the license and the gross revenue for this purpose would be total revenue of the licensee company excluding the H PSTN related call charges paid to DOTIMTNL and service UNION OF INDIA v. ASSOCIATION OF UNIFIED TELECOM SERVICE PROVIDERS OF INDIA 667 tax calculated by the licensee on behalf of the A Government from the subscribers. It was also made clear in the said clause (iii) that the Government was to take a final decision after receipt of the TRAl's recommendation on not only the percentage of revenue share but also the definition of revenue, In accordance with this clause (iii) B the Government took the final decision on the definition of Adjusted Gross Revenue and incorporated the same in the license agreement. Once the licensee had accepted clause (iii} of the letter dated 22.07.1999 that the license fee would be a percentage of gross revenue which would c be the total revenue of the licensee company and had also accepted that the Government would take a fin~:il 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 0 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. If th.e wide definition of Adjusted Gross Revenue so as to include E 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 F 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 G 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. [para 34] [702-E-H; 703-A-E] H 668 SUPREME COURT REPORTS [2011} 14 (ADDL.) S.C.R. A

2.5. Regarding the recommendations of the TRAI under Section 11 (1 )(~)(i) of the TRAI Act, the Tribunal in its order dated 01.01:2006 has held that the opinion of the renowned. expert in the accountancy that any other definition of Adjust~d Gross Revenue woul~ lead to B reduction of license f~ 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 th~ weightage that was due to the recommendations of the TRAI was not given effect to. If c 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 D 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 E 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 F 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. Once a licensee has accepted the terms and conditions of a license, he cannot question the validity G of the terms and conditions of the license before the Court. The TRAI and the Tribunal had no jurisdiction to decide on the validity of the definition of Adjusted Gross Revenue in the license agreement and to· exclude certain items of revenue which were included in the definition of H Adjusted Gross Revenue in the license agreement UNION OF INDIA v. ASSOCIATION OF UNIFIED TELECOM 669 SERVICE PROVIDERS OF INDIA between the licensor and the licensee. [Paras 34, 35] [702- A G-H; 703-A-H; 704-A-C]