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                                                         REPORTABLE

                 IN THE SUPREME COURT OF INDIA

                  CIVIL APPELLATE JURISDICTION

                CIVIL APPEAL NOs. 6341-6342 OF 2003

Bharat Sanchar Nigam Ltd. & Anr.                          ...Appellants

                                      Versus

BPL Mobile Cellular Ltd. & Ors.                           ...Respondents

                                 WITH

        CIVIL APPEAL NOs. 6375 of 2003, 1, 537 & 2015 of 2004                          and 3448 of 2006

                           JUDGMENT

S.B. SINHA, J :

1.       The core question involved in this appeal is the effect of the

application of internal circulars issued by the Department of

Telecommunications (DOT) in the contracts entered into by and between

the parties hereto in respect of as regards inter-connection links provided

by it.

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2.    Civil Appeal Nos. 6341-6342 of 2003, 1 of 2004, 537 of 2004 and

2015 of 2004 involve the question of payment of charges. Civil Appeal

No. 6375 of 2003 involves the question as to the effect of pre-mature

surrender of fifteen leased circuits of 2 MBPS which had been obtained

by BPL from DOT during the period January 1997 to June 1998. Civil

Appeal No. 3448 of 2006 involves a dispute in relation to minimum

guarantee period for 2 MBPS leaded lines.

3.    Judgments were delivered by the Telecom Disputes Settlement and

Appellate Tribunal, New Delhi (TDSAT) on various dates, viz.,

1.04.2003, 17.02.2003, 8.09.2003 and 3.03.2006.

4.    Before, however, we consider the views taken by the Tribunal, we

may notice the facts involved in each of the case separately.

Civil Appeal Nos. 6341-42 of 2003

     DOT circulated a booklet "commercial information on leased

circuits" clearly providing for that the rent and guarantee charges for

leased circuits would be on capital cost basis and only after the guarantee

period has expired, it would be on capital cost or flat rate whichever is

higher. Clause 7.0 of the said booklet provides for rent and guarantee

charges to the following effect:

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            "7.0 R & G Charges. R & G charges (per              annum) will be levied on percentage basis of              the capital-cost for cable/ system. After the              expiry of R&G period standard flat rate rental              or rental calculated on capital cost basis              (whichever is higher) shall be levied. A              specific hiring contract will be executed with              the Guarantor (Subscriber).

            In contributory works the installation and              maintenance charges are levied on percentage              of capital cost of the Apparatus and Plant."

     "Contribution Works" has been defined in the Posts and

Telegraphs Financial Handbook as under:

            "(xi) Contribution Works - This term is              applied to works of construction or repair the              cost of which is met, not out of funds of the              Department, but out of funds supplied by              private persons, local bodies, other Government              Departments, etc."

     Respondents herein are providers of cellular mobile services.

They did not have the requisite infrastructure. DOT had the requisite

infrastructure to provide interconnecting links/ circuits and other

resources.

     Respondents    entered   into   a licence agreement with the

Government of India for operating/ providing cellular services in the

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State of Kerala.     Similar agreement were entered into for inter-

connection links in other parts of the country.

     Basically we are concerned with Clause 4.1 of the said agreement,

which reads as under:

            "The resources required for operation of the              services for extending them over the network              of the DOT and MTNL and any other service              provider licensed by the Authority will be              mutually agreed between the parties and shall              be listed. The resources may refer to include              but not limited to physical junctions, PCM              derived channels, private wires, leased lines,              data circuits, other communication elements.              The Licensee shall apply for and obtain from              the DOT the determined resources. The              operation and charge of the traffic passed              through these resources shall be treated on the              basis of the prevalent rules and the guidelines              of the DOT on the subject."

     Allegedly, pursuant to the instructions issued by the DOT, the

respondents imported equipment worth Rs. 30 lakhs.              The said

equipments were to be installed. The DOT issued a letter on 2.08.1996

stating that such equipments could be installed and, furthermore,

suggested that the required digital microwave equipment should be

installed on "contribution work" basis. However, it is beyond any cavil

of doubt that owing to resistance to the said move and resorting to strike

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by the employees of DOT, the respondents were not allowed to install the

imported equipments in their premises.        It is stated that the said

equipments went waste.

     By a letter dated 27.09.1996, the DOT communicated that the

charges for interconnection of cellular mobile telephone network would

be calculated as per standard DOT terms. Although it had earlier been

communicated that the respondent could put up its own equipment under

contribution work basis, it was to be allowed to take the equipment on

rent and guarantee basis. The rent and guarantee period was for ten

years. Pursuant to and in furtherance of the said lease agreements, the

DOT installed the required equipment and raised bills on the capital cost

basis of the equipment. One of the sample bills, which had been raised

being Bill dated 5.06.1998, is as under:

                       "Government of India                   Department of Telecommunications                  Thiruvananthapuram Telecom District

Telephone No.    Consumer No.          Bill No.         Page BPL/ Cellular Mobile SVC

BILL DATE                 BPL US West Cellular Communication Services Ltd. 17.7.98            IVth floor, Co-Bank Towers,                 P.O. Stamp                    Palayam, TVM

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DUE DATE 31.7.98

PAY BY DATE             RENTAL       FROM: 7.2.98     TO: 6.2.99 5.8.98                  CALLS        FROM:            TO:

OPENING    CLOSING METERED     CREDIT  DEBIT FREE METER RDG METER RDG CALLS  CALLS   CALLS CALLS

Rent for the 20 pr PCM cable         RENTAL             1,05,315 provided For extending one 2 MB stream from Hotel Sibra, MC Road to MC xge                                      METERED                                      CALLS Egpt - 61525                         TRUNK CALLS Cable - 43790                        OVERSEAS                                      CALLS                                      PHONO GRAMS Rent for end link at TVM. Pl. Note   DEBITS TAXES this is due from Feb. 98. Bill is    GROSS AMT. raised only now Sd/- 27/7            CREDITS Payment approved                     Amount payable      1,05,315 Sd/-                                 on or before L. HERBERT                           5.8.98 Head Network                         Surcharge           2000                                      For delayed                                      payment                                      Amount payable      1,07,315                                      if paid on or after                                      6.8.98                                      Arrears

                                             Sd/-                                           ACCOUNTS OFFICER (TR)"

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     Indisputably, the Telecom Regulatory Authority of India (TRAI)

issued a tariff order covering the situations where lease circuits were

required to be provided.      In the said tariff order, the tariffs were

applicable with effect from 1.04.1994.        Moreover, these rates were

applicable only if the leased circuits are provided through utilization of

spare capacity. It was further held that where lease circuits were not

available, as in the present case, and the leased circuits had to be

installed, the charges would be on rent and guarantee basis. The said

tariff order was to have a prospective operation.          As regards the

prevailing tariffs, it was expressly provided that the tariffs specified in

the tariff order would replace the existing tariff from the date of

implementation, which was 1.04.1999. The said tariff order was issued

under Section 11(2) of the TRAI Act, 1997. Indisputably, the amount

charged by the DOT on an annual rental basis for the systems rented out

to the respondents was higher than the rates prescribed in the tariff order.

     DOT issued a circular dated 13.04.1999 that the tariff order would

not be applicable to old cases under rent and guarantee basis.

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     On or about 7.05.1999, DOT informed the local office that the

charges which should be billed against the respondents should be as per

the standard DOT terms, i.e., either on capital cost basis or flat rate basis,

whichever is higher. It is on the said premise, the bills were raised on

flat rate basis, the effect whereof, as contended by the respondents, is that

they were required to pay annual rent of Rs. 1,62,50,000/- as against the

prevailing annual rent of Rs. 39,87,762/-. Such demands admittedly

were raised only in the State of Kerala and nowhere else in the country.

Such additional demands were raised on the service providers. A large

number of correspondences passed between the parties. However, we

may notice that by a letter dated 19.08.1999, DOT stated that a sum of

Rs.5,77,025/- per annum should be paid by the respondents. A detailed

calculation was also submitted therewith. The said computation was

accepted by the respondents. However, according to the appellant, the

demand was wrongly made at Rs.15,00,000/- per annum as against the

said demand of Rs.5,77,025/-. Questioning the basis for making such

demands, a writ petition was filed. However, ultimately the same was

withdrawn.

     Respondents filed an application in terms of Section 14 of the

TRAI Act before the TDSAT inter alia on the premise that the flat rate

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basis purported to be in terms of the internal circulars having no force of

law, the same could not have been the basis for making the demands. It,

inter alia, prayed for the following reliefs:

            "(a) Set aside the revised demand raised by              the DOT/Respondents on flat rate basis instead              of on capital cost basis as originally charged.              (b) Direct the respondents to give              retrospective effect to Annexure-X i.e. DOT’s              new Tariff Circular 4/99 dated 13.4.99 so as to              make it applicable to leased circuits              commissioned under R&G basis prior to 1.4.99              also;              (c) Direct the respondents to pay damages              for the loss sustained by the petitioner due to              wasting of the NOKIA SDH Optimux              equipment worth Rs. 30 lacs;"

     The said applications have been allowed by reason of the

impugned orders.

Civil Appeal No. 6375 of 2003

     The lease agreement in this case allegedly was to be for a

minimum period of three years.           The dispute in this case relates to

premature surrender of 15 leased circuits of 2 MBPS which had been

obtained by the respondent from DOT during the period January 1997 to

June 1998. Whereas the contention of the appellant is that the minimum

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period during which such lease agreement has to be entered into is three

years, according to the respondent, such a stipulation was not known to

them till 26.11.1998 and the same was not also indicated in the booklet

of DOT, viz., Commercial Information on ‘Leased Circuits’. It was

furthermore contended that the internal circulars could not have the force

of law.

Civil Appeal Nos. 537 of 2004 and 2015 of 2004

     C.G. FAXEMAIL (P) Ltd. is an email provider.                For its

commercial services, it had secured leased data circuits. A meeting of

Email Service Operations was held with the Chairman of Telecom

Commission on 29.01.1996 to discuss various issues relating to email

services, the minutes whereof were issued on 02.02.1996. The minutes

relating to the relevant item reads as under:

            "Item No. 1

            E-Mail service providers are charged two times              the rental of the point-to-point circuit which is              exorbitant. It is not economically viable to              provide the services at such high tariff of the              leased circuits.

            Decision

            It was informed that a Committee headed by Sr.              DDG(CS) is deliberating the tariff structure for

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             CUG networks. The Committee has been asked               to take care of the issue and give an early               recommendation.

                                        Action: Sr.DDG(CS)"

      Respondents herein filed applications before TRAI as the rates

which were being charged from them have been doubled, inter alia, on

the premise that they come within the purview of close user group

service.   It came to the conclusion that the service provided by the

respondents does not come within the purview of close unit group

service, stating :

             "The DOT, vide their letter No.106-10/94-PHC               dated 13.7.1995 had issued an order stating that               the leased lines in respect of the networks set               up by licensees of Value Added Services will               continue to be charged at a rate, which was               double the rate applicable for point to point               leased circuits of all types.               There is no doubt that E-mail services fall               under the category of Value Added Services               and as the rental charge for leased circuits               provided to the network providers of valued               added services had been fixed by the DOT in               their order dated 13th July, 1995, we come to               the conclusion that leased circuits for E-mail               providers has been charged correctly as per the               extant orders.

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           While holding the view, however, we are             constrained to take adverse notice of the fact             that the respondents R-1 and R-2 did not refer             to proper documents and that too even after             repeated queries from the Bench."

     Having found so, however, the members came across two circulars

being dated 13.7.1995 and 22.11.1996 and placed the matters for further

hearing. Relying on the said circulars, the TRAI held :

           "After the hearing was over, we came across             certain documents filed by the DOT in an             earlier petition clearly indicating that value             added network licensees, which included E-             mail licensees, were to be provided leased             circuits.   We then decided to call for a             rehearing on this issue and placed the             documents on record. These documents are of             July 13, 1995 and November, 21, 1996 bearing             Nos.106-10/94-PHC         and       116-4/95-PHC             respectively.     During the rehearing, the             respondents accepted that the charging of             double the rental for the leased circuits,             provided to the E-mail network licensees, was             based on the documents referred to above and             not on the basis of their earlier interpretation of             E-mail as being a CUG network.             The petitioners argued that since the             respondents had, in their rejoinder, interpreted             E-mail as a CUG network, which according to             them was wrong, the respondents cannot be             allowed to claim double rental on grounds of             another order which they failed to refer during             the first hearing. The respondents, however,             argued that even though they had earlier taken

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           the stand that E-mail service was to be             categorized a CUG network, they had also             referred to various orders issued by the DOT             and a close reading of the same would bring out             the fact that the multiplication of rentals,             provided for data circuits, had been in existence             from 1989 itself."

     It was opined that they fall in the category of Value Added

Service. An appeal was preferred thereagainst before the Tribunal which

has been allowed, opining :

           "After going through the pleadings and the             documents produced we have no doubts in our             mind that the Respondents do not have much of             a case. Admittedly under the terms and             conditions of the licences held by them the             Appellants are under an obligation to pay for             the resources admitted as per the rates fixed by             the Respondents. However, in the absence of a             specific contract drawn up between both the             parties to lay down specifically the resources to             be obtained and the precise charges to be paid             by them, one has to rely upon knowledge as             may be available in public domain and on             documents exchanged between the parties, viz.,             requests for making available certain resources             and the demand notes subsequently raised by             the provider of resources. It is an admitted fact,             and it has not been contested by the             Respondents, that the documents relied upon             for charging double the rental were internal             circulars which were not gazetted and hence not             in public domain. The Commercial Information             on Leased Circuits, which was a published             documents of Dot made available to all the

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           allottees of leased circuits and hence very much             in public domain, did not contain any provision             under which E-Mail Service Providers were to             be charged double the normal rent. Even if it is             assumed that the Appellants were aware of a             particular circular issued in 1993 it cannot be             stretched to argue that they were aware of all             the internal circulars of DoT on this subject.             We have verified from copies of the demand             notes raised by the Respondents in response to             the requests received from the Appellants that             the initial demands were in conformity with the             rates and tariff as indicated in the brochure             "Commercial Information on Leased Circuits"."

Civil Appeal No. 3448 of 2006

     Respondent herein requested DOT to provide land distance lease

line on 12.8.1996 for one year. It was also stated that further period of

extension will be intimated in advance. On or about 21st September,

1996, a request was made for extension of the said period for one year.

Demand was made for one year only by a bill dated 26.11.1996 for

Vijaywada to Hyderabad long distant charges and on 24.12.1996 for

Vijaywada to Vishakhapatnam. The contract was, thus, concluded. The

demands were duly paid by the respondent on 9.1.1997 and 26.12.2005.

Various extensions were sought for only after expiry of one year. Those

extensions were granted by DOT even on 14.9.1998. The details of

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infrastructure leased from DOT with their validity were sent. However,

some leased lines were surrendered by the first respondent. Indisputably,

for the first time on 13.10.1998, the DOT intimated the respondent that

the minimum guarantee period was three years. For the said purpose,

reliance was placed on internal circulars/letters dated 23.6.1995. Bills

were raised only on 20.10.1998.

Civil Appeal No. 1 of 2004

           This case also involves the question of payment of charges as in

the case of Civil Appeal No. 6341-42 of 2003. We, therefore, need not

deal with the facts of this case.

5.          The main judgment was delivered by the TDSAT in Petition Nos.

13 and 16 of 2001. It was held:

    (i)       "The main issue agitated before the Tribunal was whether there                were clearly understood contractual terms existing between the                Petitioners and the Respondent for computation and calculation                of annual rents payable by the Petitioners to the Respondent for                facilities availed of by the Petitioners."

    (ii)      "An appraisal of the averments and arguments preferred by                both the parties does not support the contention of the                Respondents that the Petitioners were fully aware of the                internal circulars and orders of DoT regarding the manner of

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       calculation of rental for leased circuits under the Rent and         Guarantee Scheme." (iii)   "The Telecommunication Manual and various other related         office circulars and orders are basically for internal and official         use and unless the relevant contents thereof are specifically         made known to parties through agreements and/or contracts it         cannot be presumed that these are generally known to them. We         have no evidence on record to indicate that the Respondent had         informed the Petitioners in categorical terms that in terms of the         departmental rules and regulations in force, the basis of         calculation of annual rentals on R&G basis would be either         capital cost or flat rate, whichever is higher." (iv)    "If the department itself was oblivious of the procedural rules it         had framed for its own functioning it was somewhat optimistic         to presume at a later stage that the Petitioners knew of them." (v)     "We also see considerable merit in the argument of the         Petitioners that non-statutory office orders and rules cannot be         superimposed on the statutory undertakings given by the         Petitioners as a part of the licensing conditions under the Indian         Telegraph Act and Rules framed thereunder." (vi)    "For the enforcement of such non-statutory office orders and         rules and make these binding, it would be necessary to draw up         specific contracts giving in clear and unambiguous details all         the terms and conditions and the responsibilities and         obligations of both the contracting parties." (vii) "As a result of what we have discussed above we hold that the       action of the Respondent in revising the demands after a period       of two years in respect of what were practically existing       concluded contracts between the Petitioners and the       Respondent was neither legal nor proper. The Respondent       would recompute the impugned Demand Notes on the basis of       existing concluded contracts at pre-revised rates."

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6.    On the findings in the said case, the TDSAT in other cases also

opined that internal circulars would have no effect on the term of the

concluded contract.

7.    Indisputably, the matter relating to laying down of the telegraph

lines and providing phone connections including mobile is governed by

the provisions of the Indian Telegraph Act, 1885. The said Act was

enacted to amend the law relating to telegraphs in India.

     Section 7(2)(ee) thereof reads as under :

           "(ee) the charges in respect of any application             for providing any telegraph line, appliance or             apparatus."

8.    Indisputably, in exercise of its power conferred upon it under

Section 7 of the Indian Telegraph Act, the Central Government framed

rules known as the Indian Telegraph Rules.        Rule 434 provides for

annual rental charges for private wires and non-exchange lines which

prescribes a minimum period of hire of three years. The relevant portion

of Rule 434 reads as under:

           "Section IX.

           Charges for Private Wires

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Annual Rental

1.(a) Internal Private Wires   ....          Rs. 400

(b) External private wires            ....       Rs. Fifteen hundred  (with or without relay set)                   per kilometer chargeable                                distance per annum per pair.

Provided that in the case of private wires exceeding five kilometers of chargeable distance, the minimum period of hire shall be 3 years and the security for the service shall be regulated under Rule 445 and obtained from the subscriber before the provision of the service.

2. Omitted.

3. The chargeable distance of External Private Wires shall be 1.25 times of the radial distance between the two points to be connected.

4. Rental for Private Wires given on casual basis for short periods shall be levied on pro rata basis at one and a half time the rates of rentals prescribed in Sub- section 1 above. The minimum period of hire should be one month."

Section X.

Charges for Non-Exchange Lines

Annual rental

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             1. Annual rental per pair   ....   Rs. Fifteen hundred               per                                           Kilometer of chargeable               distance.

             Provided that in the case of non-exchange lines               exceeding five kilometers of chargeable distance, the               minimum period of hire shall be 3 years and the               security for the service shall be regulated under Rule               445 and obtained from the subscriber before the               provision of the service.

             2. Omitted.

             3. Omitted.

             NOTE 1. - The chargeable distance shall be 1.25               times of the radial distance.

             NOTE 2. - The above rentals will apply in case of               Non-Exchange lines or Private wires falling within               the local area of a Telephone system, even if they               exceed sixteen kilometers in length by the shortest               practicable route [see also Rule 494 (1) and the note               thereunder]."

        Rules 475-A, 478, 498 of the Indian Telegraph Rule reads as

under:

             "475-A : Notice of surrender of leased               Telegraph/    Speech    Circuits:  Before               surrendering the leased Telegraph/ Speech

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          circuits and terminal equipments, the party            concerned shall give notice to the controlling/            billing authority to not less than thirty days.

          478. Quoting of rentals.--(1) The rental for            the exclusive use of the circuits shall be quoted            at the rates then in force.            (2) Where the circuits are provided by utilizing            the installations, existing at the time of the            application, flat rate of rentals based on radial            distance shall be charged for a period of not            less than three months (hereinafter referred to            in this Part as the minimum guarantee period.              XXX                 XXX                 XXX

          498. Part-time use.--(1) A telephone circuit, if            available as spare, may be leased to Newspaper            Establishments or News Agencies for part-time            use between 7 p.m. and 7 a.m.            (2) The charges for the circuit provided for            under sub-rule (1) shall be one half of the            charges specified in clause (a) of sub-rule (1) of            Rule 496.            (3) Junction line between Private Exchange            or Private Branch Exchanges shall not be            leased on part-time basis."

9.   DOT had issued a circular letter dated 18.2.1991 stating:

          "(2) Revision of percentage of rental in Rent            and Guarantee cases - Rule 144 of P&T            Manual, Vol. XII, Part - I may kindly be            referred to wherein rental for cables laid down            in rent and guarantee basis to be charged at            18% of the capital cost or at the standard rates            applicable to private wire, whichever is higher.

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            The period of guarantee has been mentioned as              10 years. This percentage of rental probably              consist of 10% depreciation (considering              recovery of the cost of cable in 10 years), 7%              interest and 1% maintenance. Now Rates              Section increased the rate of interest from 7 to              10% applicable with effect from 1-4-1990. It is              necessary that R & G rental must be revised to              prevent loss of revenue to the Department..."

10.   Indisputably, DOT had issued office order bearing No. 1/96 dated

30.01.1996 wherein it was inter alia provided:

            "The question of fixing the tariff for 34 Mbps              Data circuits on Digital Media was under              consideration by the Telecom Commission for              some time. It has now been decided to fix the              following tariff for 34 Mbps data circuits on              Digital Media. These tariff will be applicable              for both the national circuits and national leg of              international circuits..."

     In the said circular letter, as regards tariff, it was stated:

            "IV. These rates will be applicable only if the              circuits are provided with existing assets of the              Department. In cases where new construction              or installation is involved for whole or part of              the circuits the rental will be calculated either              on special rates taking into account the cost of              construction and other relevant factors or on              flat rate basis whichever is higher.              V.     The terminal equipment will be on R&G              basis, if provided by the Department.

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           VI. The above rates will apply only if the             entire 34 MBs stream is lead into DOT             equipment. If separate streams of 64 KBps/             2MBps/ 8 MBps are taken, the tariff applicable             as for 84 KBps or 2 MBs or 8 MBs as the case             may be for each system will apply."

     The said circular letter is not a part of the Telecommunication

Manual which has been used only for official use. A copy corrected upto

April, 1986 is available on records. They are loosely called as Rules

although they do not have any statutory force.

11.   Rule 237 of the Telecommunication Manual reads as under:

           "237. There may be cases where telephone             facilities are requisitioned and the cost of such             installations is abnormal such as the opening of             a telephone connection for a police station at             the instance of the State Government in a             remote locality, requisition of non-exchange             lines outside the local area, trunk lines, PBX             etc. by the Defence authorities, requisition of             Public Telephones, PBX’s etc. by private bodies             for their own needs etc. In such cases, standard             flat rates may be economical and with a view to             ensure that the department gets a fair minimum             return for the capital invested, rent is fixed on             capital cost basis. In such cases guarantee is             taken from the party that he will retain the             facilities for a specified period at a specified             rate of rental. In all such cases, standard flat             rates are also calculated and whichever rate is             higher is quoted to the party unless it is

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           definitely laid down that standard flat rate             should be charged."

12.   Yet again, an internal circular appears to have been issued on

3.11.1993 wherein it was laid down:

           "2. The above rate will be applicable only if the             circuits provided with the existing long             distance system of the equipment. In cases             where new construction or installation involved             for the whole or part of the circuit (including             lead), the rental will be calculated either on             special rate into account the cost of             construction and other relevant factors, or on             flat rate basis as above, whichever is higher."

13.   Besides the aforementioned, some commercial information on

lease circuits has also been published in terms of Clause 7.0 of the

booklet, as noticed hereinbefore.

14.   In Swamy’s Treatise on Telephone Rules under the Chapter

Telecommunication Facilities on Rent and Guarantee Basis, it has been

stated:

           "The Department is providing certain             telecommunication facilities on the basis of a             minimum period of hire. In respect of certain             facilities provided at the request of the public,             rent is chargeable at special rates. It will be             calculated both at standard rates and on the             basis of the capital cost and higher of these two

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             amounts will be charged. Such services will               have to be guaranteed for the minimum periods               at the scale prescribed Rule 206 of Telecom               Manual, Volume XII, Part I (Fourth Edition,               1986)."

15.     Mr. Vikas Singh, learned Additional Solicitor General appearing

on behalf of the appellants, would submit

(i)     The Rules framed under the Indian Telegraph Act are binding on

       the service providers.

(ii)    The lease agreement entered into by and between the parties

       having categorically provided that circular letters would be

       applicable as regards demand of the payment on flat basis being

       higher than the rent and guarantee (for short "R & G"), the

       impugned judgment is not sustainable.

(iii)   From the Minutes dated 2.02.1996, it would appear that the

       licensees were aware of the existing circular orders. Furthermore,

       although the official books are for internal use, they are available

       in the market having been published under the name of Swamy’s

       Treatise on Telephone Rules.

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(iv)   If under the contract, the BSNL was entitled to charge a higher

      amount, the impugned judgment is wholly unsustainable.

(v)    The question is not whether the circulars have the statutory force

      or not but a perusal of the licence agreement would clearly go to

      show that the licensees agreed to pay the tariff as prescribed by

      DOT.

(vi)   In view of clauses 4.1 and 19.5 of the licence agreement, it must be

      held that the prescribed rate and period would mean that as

      prescribed by the authorized officer of DOT from time to time.

(vii) The licencees entered into contracts with their eyes wide open and

      in that view of the matter as rates have been fixed by the circulars,

      the same are only required to be forwarded to the Bill Department

      so that they can raise bills in terms thereof.

(viii) In terms of the circulars, revision of rates were to be carried out by

      the concerned departments as would appear from the circular

      Nos.4-31/86(R(Pt) dated 17.6.1988, 24-I/87-PHC (Pt) 8 dated

      13.11.1988, 1-2/89-R/pt dated 18.2.1991, 4-11/90-R dated

      30.9.1991 and 4-11/90-R dated 1.4.1992 and as the respondents

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       had been paying on the basis thereof, they cannot now be

       permitted to approbate and reprobate.

(ix)    In regard to the minimum guarantee period, it was submitted that

       the agreement refers to the Rules and the circulars.

       The circular dated 26.11.1988 provides that it would be for a

period of three years. The same was, however, later on reduced to one

year.    But the circular dated 26.11.1998 provides that the minimum

period would be for three years. But the same has been related back to

1988. Drawing our attention to the Resolutions dated 26.11.1998, the

learned counsel would contend that the respondents were aware of the

said circulars and had been acting thereupon. In any event, the contract

having been entered into in December 1995, the 1988 circular must be

held to have been known to them. Our attention in this behalf has been

drawn to the stand of the DOT in response to the legal notice issued by

the respondent which is to the following effect :

             "Hiring of any facility by a customer from the               Department of Telecom is basically governed               by certain terms and conditions such as               payment of rent at prescribed rate and hiring               the service/facility for a minimum period. This               is generally known as terms and conditions of               the hiring contract. It may please be noted that               for each and every facility provided by DOT to               a customer, a minimum period of guarantee is

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invariably laid down, the duration of which ranges from three months to three years in the case of facilities provided by utilizing existing assets., i.e., without any new construction. The minimum period of guarantee thus fixed for 2 Mb circuit is three years. Even as late as on 15.4.1998, DOT has reiterated this position in its order No.106-7.94-PHC dated 15.4.1998. There is no order till date amending revising this provision. Since you had cited DOT’s order 12.10.99, I did go through the same in detail with a view to find out whether it contained at least an indirect hint to indicate that there was no necessity to prescribe a minimum period of lease line beyond either three months or one year, as pointed out by you. There are no such indications in these orders as claimed by you and resultantly I would like to make it clear in unequivocal terms and as of date the minimum period of hire for a 2 Mbps circuit, the provision of which does not involve new construction, is three years only and in case the line is surrendered by the hirer before the expiry of this minimum period, he is bound to pay rent for the unexpired minimum period of hire. Your contention that when the requests for leasing the lines were made, demand notes were issued for paying one year’s rental and M/s BPL cellular was not told at that time that they should keep these leased lines for a minimum period of three years also does not appear to be correct. Normally when a demand is received for any facility, the terms and conditions are quoted to the prospective customer and only after his acceptance of the same, steps to provide the facilities are taken. If in any exceptional case this procedure had not been followed in respect of M/s BPL, it may be due to the pleading of urgency and pressure exerted by them on the respective SSA

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            Heads for early provision of the facility,              relegating the requirement of observe the              prescribed procedure to a secondary stage and              out of goodwill the SSA Heads might have              obliged. Even in that case, the presumption is              that the hirer is aware of the commercial              conditions of hiring the circuits. Thus, it does              not exempt M/s. BPL from the fundamental              tariff rules that prescribe a minimum period              hire and payment of rent for the unexpired              portion."

16.   Mr. Shyam Divan, learned senior counsel appearing on behalf of

the respondents, on the other hand, would, on the other hand, submit that

the parties entered into the agreement having regard to the commercial

representations made to them by DOT wherefor a booklet has been

issued. It was furthermore submitted that the parties were given options,

viz., (i) the licensees could purchase equipments and install the same or

take lease of the equipments installed by DOT on (a) flat rate basis; or (b)

on capital cost; (ii) the parties have entered into the agreement on the

premise that the charges will have to be paid on rent and guarantee basis.

The subsequent stand taken by the appellants herein to raise demands on

enhanced basis relying on or on the basis of the internal circulars is

wholly unsustainable. Strong reliance in this behalf has been placed on

Sri Dwarka Nath Tewari and others v. State of Bihar and others [AIR

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1959 SC 249], Life Insurance Corporation of India v. Escorts Ltd. and

Others [(1986) 1 SCC 264] and Delhi Development Authority and

Another v. Joint Action Committee Allottee of SFS Flats and Others

[(2008) 2 SCC 672].

17.   DOT of Government of India had the monopoly of providing

telecommunication services. Indian Telegraph Act was enacted for the

said purpose. The rights and liabilities of the parties have been laid

down under the Act as also the Rules framed thereunder. A contract may

be entered into, subject to the provisions of a statute or the rules framed

thereunder. The contract, itself, may refer to the statutory provisions or

refer the same by way of incorporation by reference.

18.   A contract qua contract, however, must be consensual. It must

meet the statutory requirements and reasons under the provisions of the

Indian Contract Act. When a contract is entered into by and between the

parties, what is determinative is enforcement of the terms and conditions

to be governed by the contract, subject, of course, to the application of

the statute and statutory provisions. Whereas a statutory contract would

be governed by a statute, other contracts would not.

19.   It is in the aforementioned context, the questions posed herein

before us must be determined.

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20.    For the aforementioned purpose, we may begin with the

interpretation of Clause 4.1. We have noticed hereinbefore that two

options were available to the respondents who intended to operate and/

or provide cellular services in the State of Kerala, viz., (i) buying of

equipments and installing them, or (ii) DOT may install the equipments

which may be licensed to the cellular service providers on rent and

guarantee charges. Clause 4.1 of the licence agreement inter alia states

that (i) resources must be identified and (ii) the area of operation should

be mutually agreed to between the parties. It also deals with what would

be included in the said provision. The last part of the said clause speaks

about the operation and charge of the electronic tariff passed through

these resources. It does not cover the charges for resources/ equipments.

It does not take within its umbrage the system itself. The tariffs in regard

to equipments are, therefore, not governed by the said clause. What it

envisages may be call charges being the operation and charge of traffic

passing through the resources.

21.    If that be so, the question of raising any demand on the basis of the

circular letters did not arise at all.

22.    For the purpose of determining the questions involved in the

present appeals, we may ignore the fact that pursuant to or in furtherance

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of the negotiations held by and between the parties, the respondents

imported equipments but, for one reason or the other, as noticed

hereinbefore, the same could not be installed. However, the DOT in its

letter dated 30.09.1996 categorically stated that it could put up its own

equipments under contribution work basis, which would mean that the

charges would be on the basis of capital cost.             In view of the

aforementioned representations made by the DOT, the respondents had

agreed to take the equipment on rent and guarantee basis which was itself

calculated on capital costs.

23.   We are, furthermore, not concerned with the tariff order issued by

TRAI. What, however, may be noticed is that even the tariff order

provides for a lower tariff than the agreed rate. It will not be out of place

to notice the following chart for the purpose of appreciating as to what

was the agreed rate on the rent and guarantee on capital cost basis and

what has been demanded:

"Name      of Date       of Agreed rate         Wrongly        Revision POI           commissionin (rent       &        demanded       rent       as               g             guarantee           rate (R&G      percentage                             on capital          flat    rate   of rent on                             cost basis)         basis) per     capital cost                             per annum           annum (in                             (in rupees)         rupees) Cochin        06.12.96      20,53,048           51,00,000      248%

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Trivandrum    07.02.97         1,05,315      15,00,000     1428%                                              (per 2 MB                                              stream per                                              annum) Calicut       05.08.97         3,97,800      15,00,000     377%                                              (per 2 MB                                              stream per                                              annum) Thrissur      07.02.97         1,38,700      6,50,000      1081%                                              (per 2 MB                                              stream) Kottayam      06.11.97         5,77,025      15,00,000     260%                                              (per 2 MB                                              stream) Palakkad      01.06.98         1,76,023      15,00,000     852%                                              (per annum                                              per 2 MB                                              stream) Kannur        16.10.97         1,94,665      15,00,000     769%                                              (per annum                                              per stream) Kollam        31.12.97         1,24,734      15,00,000     1209%                                              (per annum                                              per stream) Alleppy       12.01.99         2,20,452      15,00,000     682%"                                              (per annum                                              per stream)

     Such a huge difference in the contractual rate and the demand on

the flat rate could be made provided the contract provided therefor. The

difference admittedly was based upon the internal circular letters. They

might have been published by some publisher but indisputably they are

not statutory in nature. They have not been framed under any statute.

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The Indian Telegraph Act or the Rules framed thereunder do not provide

for issuance of such circulars. The circular letters collected at one place

are loosely called rules. They, as noticed hereinbefore, are meant for

office use only. The directions contained in the said circular letters are

relevant for the officers who are authorized not only to grant licences but

also enter into contracts and prepare bills. The circular letters having no

statutory force undoubtedly would not govern the contract. If some

authorities have violated the terms of the said circulars, they might have

committed misconduct, but when a contract is entered into, the parties

shall be bound thereby.

24.   In Sri Dwarka Nath Tewari (supra), this Court held:

            "9... It is clear, therefore, from the portion of              the preface extracted above, that Article 182 of              the Code has no greater sanction than an              administrative order or rule, and is not based on              any statutory authority or other authority which              could give it the force of law. Naturally,              therefore, the learned Solicitor-General, with              his usual fairness, conceded that the article              relied upon by the respondents as having the              force of law, has no such force, and could not,              therefore, deprive the petitioners of their rights              in the properties aforesaid."

     In Life Insurance Corporation of India v. Escorts Ltd. and Others

[(1986) 1 SCC 264], the case involved the interpretation of Section 29(1)

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(b) of the Foreign Exchange Regulation Act.            It was argued that

according to paragraph 24-A.1 of the Exchange Control Manual the same

would be binding upon the Reserve Bank of India. Negativing the said

contention, this Court observed:

            "There is no force whatever in this part of the             submission. A perusal of the Manual shows that             it is a sort of guide book for authorised dealers,             money changers etc. and is a compendium or             collection of various statutory directions,             administrative instructions, advisory opinions,             comments, notes, explanations suggestions, etc.             For example, paragraph 24-A.l is styled as             Introduction to Foreign Investment in India.             There is nothing in the whole of the paragraph             which even remotely is suggestive of a direction             under Section 73(3). Paragraph 24-A.1 itself             appears to be in the nature of a comment on             Section 29(1)(b), rather than a direction under             Section 73(3). Directions under Section 73(3),             we notice, are separately issued as circulars on             various dates. No Circular has been placed before             us which corresponds to any part of paragraph             24-A.l. We do not have the slightest doubt that             paragraph 24-A.1 is an explanatory Statement of             guideline for the benefit of the authorised             dealers. It is neither a statutory direction nor is it             a mandatory instruction. It reads as if it is in the             nature of and, indeed it is, advice given to             authorised dealers that they should obtain prior             permission of the Reserve Bank of India, so that             there may be no later complications. It is a             helpful suggestion, rather than a mandate..."

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Recently in Delhi Development Authority (supra), this Court held:

     "66. The stand taken by DDA itself is that the       relationship between the parties arises out of       the contract. The terms and conditions therefore       were, therefore, required to be complied with       by both the parties. Terms and conditions of the       contract can indisputably be altered or       modified. They cannot, however, be done       unilaterally unless there exists any provision       either in contract itself or in law. Novation of       contract in terms of Section 60 of the Contract       Act must precede the contract making process.       The parties thereto must be ad idem so far as       the terms and conditions are concerned. If       DDA, a contracting party, intended to alter or       modify the terms of contract, it was obligatory       on its part to bring the same to the notice of the       allocate. Having not done so, it, relying on or       on the basis of the purported office orders       which is not backed by any statute, new terms       of contract could not be thrust upon the other       party to the contract. The said purported policy       is, therefore, not beyond the pale of judicial       review. In fact, being in the realm of contract, it       cannot be stated to be a policy decision as such.

     80. A definite price is an essential element of       binding agreement. A definite price although       need not be stated in the contract but it must be       worked out on some premise as was laid down       in the contract. A contract cannot be uncertain.       It must not be vague. Section 29 of the Indian       Contract Act reads as under:

     Section 29 - Agreements void for uncertainty

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            Agreements, the meaning of which is not              certain, or capable of being made certain, are              void.

            A contract, therefore, must be construed so as              to lead to a conclusion that the parties              understood the meaning thereof. The terms of              agreement cannot be vague or indefinite. No              mechanism has been provided for interpretation              of the terms of the contract. When a contract              has been worked out, a fresh liability cannot              thrust upon a contracting party."

     {[See also New India Assurance Company Ltd. v. Nusli Neville

Wadia and Anr. [(2007) 14 SCALE 556]}.

25.   In view of the aforementioned law laid down by this Court, there

cannot be any doubt whatsoever that the circular letters cannot ipso facto

be given effect to unless they become part of the contract. We will

assume that some of the respondents knew thereabout. We will assume

that in one of the meetings, they referred to the said circulars. But, that

would not mean that they are bound thereby. Apart from the fact that a

finding of fact has been arrived at by the TDSAT that the said circular

letters were not within the knowledge of the respondents herein, even

assuming that they were so, they would not prevail over the public

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documents which are the brochures, commercial information and the

tariffs.

26.    If the parties were ad idem as regards terms of the contract, any

change in the tariff could not have been made unilaterally. Any novation

in the contract was required to be done on the same terms as are required

for entering into a valid and concluded contract. Such an exercise having

not been resorted to, we are of the opinion that no interference with the

impugned judgment is called for.

27.    For invoking clauses 4.1 and 19.5 of the licence agreement, we

may notice that the word ‘prescribed’ is not defined. It has not been

defined even in the Indian Telegraph Act. It has not been defined in the

licence. The said provision unlike clause 18.14 does not use the words

‘from time to time’. A contract entered into by the parties, it will bear a

repetition to state, must be certain. It must conform to the provisions of

the Indian Contract Act. Ordinarily, the word ‘prescribed’ would mean

prescribed by Rules.     Section 7(2)(ee) of the Indian Telegraph Act

provides for the Rule making power for the purpose of laying down the

tariff. We may not be understood to be laying down a law that in

absence of any statutory rule framed under the Indian Telegraph Act, no

contract can be entered into. In absence of any statutory Rule governing

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the field, the parties would be at liberty to enter into any contract

containing such terms and conditions as regards the rate or the period

stipulating such terms as the case may be. The matter might have been

different if the parties had entered into an agreement with their eyes wide

open that the circular letter shall form part of the contract. They might

have also been held bound if they accepted the new rates or the periods

either expressly or sub silentio. When on the basis of terms of the

contract, different rates can be prescribed, the same must be expressly

stated. When the word ‘prescribed’ is not defined, the same, in our

opinion, would mean that prescribed in accordance with law and not

otherwise.

     The respondent had two options. They were asked to choose one.

Thus, a representation was made that they would be entitled to obtain

lease the equipments (resources) at an R&G basis. Payments have been

made on that basis. The question which would arise for consideration is

as to whether the basis of making a demand itself can be changed. The

answer to the said question, in our opinion, must be rendered in negative.

28.   Section 8 of the Indian Contract Act reads as under :

            "Section 8. Acceptance by performing              conditions, or receiving consideration--              Performance of the conditions of a proposal, or

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            the acceptance of any consideration for a              reciprocal promise which may be offered with a              proposal, is an acceptance of the proposal."

     It provides the acceptance of the proposal by conduct as against

other modes of acceptance.       It can be divided in two parts - (1)

performance of the conditions of a proposal; and (2) acceptance of any

consideration for a reciprocal promise which may be offered with a

proposal. The latter corresponds to general divisions of proposals into

those which offer a promise in exchange for an act or acts and those

which offer a promise for exchange for a promise. The bills were raised

on the basis of the said premise. They were accepted. The promise on

the part of the appellant was acted upon by the respondent. Appellants,

thus, now should not ordinarily be permitted to take a different stand.

29.   This aspect of the matter was considered in Amrit Banspati Co.

Ltd. v. Union of India [AIR 1966 All.104] wherein it was stated :

            "Section 8 of the Contract Act provides that              performance of the conditions of a proposal, or              the acceptance of any consideration for a              reciprocal promise which may be offered with a              proposal is an acceptance of the proposal. The              language of the section is rather vague but its              meaning is clear. It is based on the principle              that if an offer is made subject to a condition,              the offence cannot accept the benefit under the              offer without accepting the condition. He

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            cannot take the attitude, "I shall accept the              benefit but reject the condition"."

     In The Union of India v. Rameshwarlall Bhagchand [AIR 1973

Gauhati 111], it was stated :

            "Section 8 provides that performance of the              conditions of a proposal, or the acceptance of              any consideration for a reciprocal promise              which may be offered with a proposal, is an              acceptance of the proposal. According to              Section 2(a) of the Contract Act when one              person signifies to another his willingness to do              or to abstain from doing anything, with a view              to obtaining the assent of that other to such act              or abstinence, he is said to make a proposal;              and Clause (b) of Section 2 states that when the              person to whom the proposal is made signifies              his assent thereto. The proposal is said to be              accepted. A proposal when accepted becomes a              promise. Section 2(f) enacts that promises              which form the consideration or part of the              consideration for each other are called              reciprocal promises."

     It was furthermore observed :

            "8. Some English decisions were referred to              with approval in the Patna case relied upon by              Shri Dam, I think that those cases have no              bearing on and relevancy to Section 8 of the              Act. It is mentioned on page 59 of the Pollock              and Mulla’s Commentary on the Indian              Contract Act, 8th Edn., that "nothing like the              terms of Section 8 occurs in the original draft of

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the Indian Law Commissioners, nor, so far as known to us, in any authoritative statement of English Law" and that the terms of the Section "appear to have been taken from the draft Civil Code of New York with slight verbal alteration". It follows from these excerpts that the English law has no provision parallel to Section 8 of the Act and as such recourse to English decisions for determining the scope of Section 8 may not be very apposite. Section 7 and 9 of the Indian Contract Act describe the various modes in which proposal may be accepted and if I may say so, Section 8 provides the acceptance of a proposal by conduct as against other modes of acceptance, such as verbal or written communication contemplated by Sections 7 and 9. Therefore, in a way Section 8 provides undoubtedly a uniue provision in the Indian Contract Act. It embraces a case to cite an instance of a reward offered for the finder of a lost article. If a person restores found article to the one who offered the reward, without accepting the latter’s proposal in any other manner, the act or conduct or restoration itself is considered sufficient acceptance of the proposal to merit the reward. True that it is an ordinary rule of law that an acceptance of an offer made ought to be notified to the person who makes the offer. But since such notification is required for the benefit of the person making the offer the latter may dispense with notice to himself if he deems that course to be desirable. If the person making the offer to another intimates him expressly or impliedly a particular mode of acceptance the offeree can adopt that mode to conclude a binding bargain. If a man writes to another to send him certain goods, then the dispatch of goods would surely amount to acceptance of the offer."

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     In Life Insurance Corporation of India v. Raja Vasireddy

Komalavalli Kamba [AIR 1984 SC 1014], this court on acceptance of

provisions as envisaged under Section 7 and 8 of the Indian Contract

Act, 1872 opined:

            "Acceptance must be signified by some act or              acts agreed on by the parties or from which the              law raises a presumption of acceptance."

     Chitti on Contract at page 135 talks about the criteria where the

agreement would not be held to be in reply to acts, further agreement is

required. It was stated :

                   "Even an agreement for sale of land              dealing only with the barest essentials may be              regarded as complete if that was the clear              intention of the parties. Thus in Perry v.              Suffields Ltd. [(1915) 2 Ch.187] an offer to sell              a public-house with vacant possession for              7,000 was accepted without qualification. It              was held that there was a complete contract              even though many important points, e.g. the              date for completion and the question of paying              a deposit, were left open. In another case, a              buyer and seller of corn feed pallets had              reached agreement on the "cardinal terms of the              deal: product, price, quantity, period of              shipment, range of loading ports and governing              contract terms." The agreement was held to

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           have contractual force even though the parties             had not yet reached agreement on a number of             other important points, such as the loading port,             the rate of loading and certain payments (other             than the price) which might in certain events             become payable under the contract. And a             publisher’s oral commitment to publish a book             has been held to amount to a binding contract,             even though no details were specified in the             agreement and nothing more precise was said             about the author’s remuneration than that he             was to be paid a royalty to be agreed, or in             default of agreement a fair one. In all these             cases, the courts took the view that the parties             intended to be bound at once in spite of the fact             that further significant terms were to be agreed             later and that even their failure to reach such             agreement would not invalidate the contract             unless without such agreement it was             unworkable or too uncertain to be enforced."

30.   In the instant case, the resources to be leased out were subject to

agreement. The terms were to be mutually agreed upon. The terms of

contract, in terms of Section 8 of the Contract Act, fructified into a

concluded contract. Once a concluded contract was arrived at, the parties

were bound thereby. If they were to alter or modify the terms thereof, it

was required to be done either by express agreement or by necessary

implication which would negate the application of the doctrine of

‘acceptance sub silentio’. But, there is nothing on record to show that

such a course of action was taken. The respondents at no point of time

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were made known either about the internal circulars or about the letters

issued from time to time not only changing the tariff but also the basis

thereof.

31.   We will assume that the contention of the learned Additional

Solicitor General that the internal circulars are issued for their

application by the local officers. If they have committed a mistake, the

same could be rectified.

32.   Indisputably, mistakes can be rectified. Mistake may occur in

entering into a contract. In the latter case, the mistake must be made

known.     If by reason of a rectification of mistake, except in some

exceptional cases, as for example, where it is apparent on the face of the

record, mistake cannot be rectified unilaterally. The parties who that

would suffer civil consequences by reason of such act of rectification of

mistake must be given due notice.       Principles of natural justice are

required to be complied with.      The fact that there was no mistake

apparent on the face of the records is borne out by the fact that even the

officers wanted clarification from higher officers. The mistake, if any,

was sought to be rectified after a long period; at least after a period of

three years. When a mistake is not rectified for a long period, the same,

in law, may not be treated to be one.

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33.   Furthermore, what would be the effect of such a mistake must be

determined having regard to the provisions of the Contract Act.

34.   It is not a case where the contract is sought to be terminated on the

ground of a mistake. Only a higher rate is sought to be enforced on the

basis of internal circulars.

35.   We have noticed hereinbefore the effect of an internal circular.

There is no presumption about their correctness.           Presumption of

correctness of documents is provided for in Sections 81 and 84 of the

Indian Evidence Act. Even the contents of a newspaper, as envisaged

under Section 81 of the Indian Evidence Act, would not be presumed to

be correct.

36.   Why publications are necessary so as to enable the parties to take

recourse thereto has been considered by this Court in B.K. Srinivasan v.

State of Karnataka [(1987) 1 SCC 658] in the following terms :

             "15. There can be no doubt about the               proposition that where a law, whether               parliamentary or subordinate, demands               compliance, those that are governed must be               notified directly and reliably of the law and all               changes and additions made to it by various               processes. Whether law is viewed from the               standpoint of the "conscientious good man"               seeking to abide by the law or from the               standpoint        of      Justice       Holmes’s

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"unconscientious bad man" seeking to avoid the law, law must be known, that is to say, it must be so made that it can be known. We know that delegated or subordinate legislation is all-pervasive and that there is hardly any field of activity where governance by delegated or subordinate legislative powers is not as important if not more important, than governance by parliamentary legislation. But unlike parliamentary legislation which is publicly made, delegated or subordinate legislation is often made unobtrusively in the chambers of a Minister, a Secretary to the Government or other official dignitary. It is, therefore,      necessary     that   subordinate legislation, in order to take effect, must be published or promulgated in some suitable manner, whether such publication or promulgation is prescribed by the parent statute or not. It will then take effect from the date of such publication or promulgation. Where the parent statute prescribes the mode of publication or promulgation that mode must be followed. Where the parent statute is silent, but the subordinate legislation itself prescribes the manner of publication, such a mode of publication may be sufficient, if reasonable. If the subordinate legislation does not prescribe the mode of publication or if the subordinate legislation prescribes a plainly unreasonable mode of publication, it will take effect only when it is published through the customarily recognised official channel, namely, the Official Gazette or some other reasonable mode of publication. There may be subordinate legislation which is concerned with a few individuals or is confined to small local areas. In such cases publication or promulgation by other means may be sufficient."

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     In Ravinder Kumar Sharma v. State of Assam [(1999) 7 SCC 435],

this Court stated :

            "26. Newspaper reports regarding the Central              Government decision could not be any basis for              the respondents to stop action under the Assam              Control Order of 1961. The paper reports do              not specifically refer to the Assam Control              Order, 1961. In fact, the Government of Assam              itself was not prepared to act on the newspaper              reports, as stated in its wireless message.              Section 81 of the Evidence Act was relied upon              for the appellant, in this behalf, to say that the              newspaper reports were evidence and conveyed              the necessary information to one and all              including Respondents 2 and 3. But the              presumption of genuineness attached under              Section 81 to newspaper reports cannot be              treated as proof of the facts stated therein. The              statements of fact in newspapers are merely              hearsay (Laxmi Raj Shetty v. State of T.N.)."

     {See also I.T.C. Bhadrachalam Paperboards v. Mandal Revenue

Officer [(1996) 6 SCC 634]}

37.   So far as the minimum guaranteed period is concerned, we have

noticed hereinbefore, that the applicability of the Rule is in doubt. Rule

434 provides for charges private and charges for non-exchange lines.

     The Tribunal which is an expert body, opined :

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"12. We find grey areas in the submissions made by both the sides. Firstly, it is not at all clear whether the lease arrangements entered into by the petitioner with the respondents were covered under Rule 434 Section IX or Section X of Indian Telegraph Act. Rule 434 Section IX and Section X deal with charges for Private Wires and Non-Exchange Lines, respectively. These two terms, viz. "Private Wires" and "Non-Exchange Lines", have been defined under the Indian Telegraph Rules as under :       "Rule 2(II) : Private Wires are those       which connect two subscribers through a       departmental exchange system whether a       private relay set is installed at the       exchange or not and are not connected to       the local telephone system and to the       general trunk net work;                  *****************       Rule 2(33a) : Non-exchange lines’ are       those which connect two subscribers       without any departmental exchange       intervening." From the application forms annexed by the petitioner to its petition, it may be seen that what was asked for was Data Circuit. Such circuits were more in the nature of long- distance telephone circuits between two cities as may be evidenced by the following list of leased lines obtained by the petitioner which have been listed in the petition : Lease Circuits                         Obtained in 1. Cochin - Thiruvananthapuram           January 1997

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2. Cochin - Thiruvananthapuram       July 1997 3. Cochin - Calicut                  January 1997 4. Cochin - Calicut                  July 1997 5. Cochin - Thrissur                 February 1997 6. Cochin - Thrissur                 August 1997 7. Thiruvananthapuram - Kollam       November 1997 8. Calicum - Kannur                  November 1997 9. Cochin - Kottayam                 November 1997 10. Cochin - Kollam                  January 1998 11.Cochin - Kannur                   February 1998 12. Cochin - Thiruvalla              May 1998 13.Cochin - Palakkad                 May 1998 14.Thrissur - Kunnamkulam            June 1998 15.Thrissur - Palakkad               June 1998 The leased data circuits taken by the petitioner were between two exchanges of DoT/BSNL at two different cities. Thus, it is difficult to accept the contention that the circuits leased between two exchanges of BSNL located in two different cities were covered within the ambits of "Private Wire" or "Non-exchange Lines" as defined under Indian Telegraph Rules. Consequently the applicability of Rule 434 in the instant is not warranted.

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12A. We have taken note of the contention of Respondent No.1 that by its order dated 17th June, 1988 the minimum priod of hire for 2 Mbps lines was 3 years and the hirer was required to pay for the entire period in case of premature surrender. The relevant question is whether this was made known to the petitioner or the petitioner was expected to have a knowledge of this. From the copy of the Order No.4-31/86-R(Pt.) dated 17th June, 1988 placed on record by Respondent No.1, it is seen that it is a Circular issued by one Shri D.V.B. Rao, Assistant Director General (Costing), Rates Section, Department of Telecommunicatiosn and addressed to All Heads of Telecom Circles; All Heads of Metro, Major and Minor Telephone Districts; General Manager, MTNL, Bombay/New Delhi. Copies were endorsed to a host of officials, all    belonging      to    the    Department    of Telecommunications. It was, therefore, basically an office circular for internal use and not a document released to the general public.    XXX                 XXX                XXX 15. As a result of all that is stated in the earlier paragraphs we hold that it has not been conclusively established that the contracts for leased data circuits between the petitioner and the respondents were covered under Rule 434 of the Indian Telegraph Rules and that the minimum guarantee period and penalties for premature surrender, as indicated in Rule 434 were applicable to these contracts. We also hold that the petitioner had no reason whatsoever for the non-observance of Rule 475-A of Indian Telegraph Rules in view of its categorical undertaking to abide by the provisions of these Rules."

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38.   Prima facie, the proviso appended to Section 9 and Section 10

providing for a minimum guaranteed period of three years does not

appear to have any application. The authorities of the DOT also did not

think so. They proceeded on the basis of and having regard to the

phraseology used in Rules 478 and 496 that minimum period is only

three months.

39.   Applicability of minimum guaranteed period of three years was

sought to be enforced from a circular letter dated 17.6.1988 only. The

effect of the said circular letter has been discussed hereinbefore.

     We have furthermore noticed the vacillating stand taken by the

appellants herein in the case of C.G. Faxemail. They sought to charge

the double of the amount as prescribed in the contract on the basis that

the service which is being provided by them is close user group service.

TRAI held it not to be so. TRAI, as noticed hereinbefore, relied upon

two circulars only, namely 13.7.1985 and 22.11.1996, the latter one

being after the contract was entered into. TDSAT, apart from holding

that the said circular letters are internal documents, did not deal with the

internet service providers.

40.   It thereafter relied upon the circular letter dated 15.4.1998 and not

on the circular letter dated 3.6.1995, the former having no application to

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a contract which was entered into prior thereto. Even the said letter

provided for three months minimum guarantee period for long distance

lease lines. Even DOT raised three months demand notice on or about

26.11.1998.

41.   Yet again, the DOT in its letter dated 13/14.1.1999 confirmed that

paragraph A of the circular letter dated 26.11.1998 referred to Rule 496.

The parties were not ad idem as to whether these circuits being long

distance lease lines would be governed by which circular. Furthermore,

the authorities of the DOT, assuming that they are applicable, despite the

circular letters, consciously entered into contract for one year’s period on

which the parties had acted thereupon.

42.   A finding of fact has been arrived at by TDSAT that the said

circular letters are not applicable. Rule 434 was not applicable. Appeal

to this Court, in terms of Section 18 of the Act is maintainable only on a

substantial question of law.

43.   For the reasons aforementioned, we do not find that these appeals

raise any substantial question of law warranting interference.          The

appeals are dismissed accordingly.          However, in the facts and

circumstances of the case, there shall be no order as to costs.

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                   .....................................J.                     [S.B. Sinha]

                       ..................................                                                      ...J.                     [Lokeshwar Singh Panta]

New Delhi; May 14, 2008