REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICITION

CIVIL APPEAL NO.7236 OF 2003

Shyam Telelink Ltd. now Sistema Shyam Teleservices Ltd. …Appellant

Versus

Union of India …Respondent

J U D G M E N T

T.S. THAKUR, J.

1. This  appeal  under  Section  18(1)  of  the  Telecom  

Regulatory Authority of India Act, 1997 is directed against  

an  order  dated  9th April,  2003  passed  by  the  Telecom  

Dispute Settlement and Appellate Tribunal whereby Petition  

No.24/2001 filed under Section 14(a)(i)  read with Section  

14A(1)  of  the  Telecom Regulatory  Authority  of  India  Act,  

1997 has been dismissed.  The factual matrix giving rise to  

the appeal may be summarised at the outset.

2. The  appellant-Shyam  Telelink  Ltd.  was  granted  a  

licence under the Indian Telecom Act, 1885 on 4th March,  

1998  for  providing  basic  telecom  services  in  Rajasthan  

Circle.  A  licence  agreement  was  executed  between  the  

parties  that,  inter  alia,  required  the  appellant  to  start  

commercial operations within twelve months from the date  

on which the agreement was executed. The appellant’s case  

before the Tribunal so also before us is that, it was ready to  

commence  commercial  operations  in  the  last  week  of  

February  1999  and  had  sought  permission  of  the  

respondents to do so. Permission was, however, denied on  

the ground that certain technical deficiencies remained to be  

removed and certain conditions for the grant of permission  

remained to be fulfilled.  In the meantime the Union of India  

appears  to  have  offered  a  Migration  Package  to  all  the  

Telecom Operators in July 1999. Under this package which  

was  offered  to  the  appellant-Shyam Telelink  Ltd.  on  22nd  

July, 1999 the fixed licence fee was to stand replaced by a  

revenue-sharing  arrangement  w.e.f.  1st August,  1999  

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subject to the stipulation that atleast 35% of all outstanding  

dues including interest  payable as on 31st July,  1999 and  

liquidated  damages in  full  is  paid  by  the  appellant  on  or  

before  15th August,  1999.  Migration  Package  further  

provided  that  the  company  shall  have  to  accept  all  the  

conditions stipulated in the package and that all proceedings  

instituted by the licensee or their  associations against the  

Union of India shall have to be withdrawn.  

3. It  is  not  in  dispute  that  the  appellant  gave  an  

unconditional acceptance to the Migration Package on 22nd  

July, 1999 nor is it disputed that on 10th August, 1999 the  

respondent  advised  the  appellant  that  a  sum  of  

Rs.6,74,90,481/- was payable towards outstanding licence  

fee and interest due thereon apart from a sum of Rs.7.30  

crores  payable  towards  liquidated  damages  that  were  

provisionally  determined.  The  appellant-company  was  

informed that  in  terms of  the  Migration  Package  at  least  

35% of the total licence fee along with interest amounting to  

Rs.6,74,90,481/- had to be paid by it  before 16th August,  

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1999  and  the  balance  dues  covered  by  a  Financial  Bank  

Guarantee  by  the  30th November,  1999.  The  liquidated  

damages payable by the appellant-company were demanded  

in full and had to be paid on or before 16th August, 1999.

4. On receipt of the intimation demanding payment of the  

amounts mentioned above the appellant-company appears  

to have prayed for waiver of the liquidated damages on the  

ground that it could not commence commercial  operations  

by  the  stipulated  date  on  account  of  certain  procedural  

delay. That prayer was upon consideration turned down with  

the result that the appellant paid 35% of the outstanding  

licence fee and interest amounting to Rs.2.36 crores on 16th  

August, 1999. It also paid the full amount of Rs.7.30 crores  

towards  liquidated  damages  as  demanded  by  the  

Government.   

5. Commercial operations in Rajasthan were finally started  

by the appellant-company on 5th June 2000.  In March 2001  

a demand was raised by the respondent for payment of a  

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further amount of Rs.70 lakhs as liquidated damages for the  

delay in the commissioning of the service.  Aggrieved by the  

demand of Rs.8 crores towards liquidated damages out of  

which the appellant had already paid Rs.7.30 crores on 16th  

August,  1999  the  appellant  approached  the  Tribunal  for  

redress. As mentioned earlier the appellant’s case before the  

Tribunal  was  that  it  was  ready  to  commence  commercial  

operations in the last week of February 1999 and had sought  

permission to do so from the respondent which permission  

was  in  an  arbitrary,  illegal  and  discriminatory  manner  

refused  by  the  respondent.  Recovery  of  the  liquidated  

damages  was,  therefore  bad,  argued  the  appellant  who  

demanded  refund  of  the  entire  amount  of  Rs.8  crores  

recovered towards liquidated damages from it.   

6. The  respondent  contested  the  petition  before  the  

Tribunal,  inter  alia,  on  the  ground  that  the  petitioner-

appellant was not entitled to question any demand arising  

out of the agreement executed between the parties after it  

had unconditionally  accepted the Migration Package under  

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which it  agreed to deposit  without demur the outstanding  

licence fee as also the liquidated damages payable under the  

licence agreement.  The respondent  also asserted that the  

appellant  was  not  ready  with  the  commissioning  of  the  

service as was evident from the admissions made in several  

communications sent by it to the respondent. It was further  

pointed  out  by  the  respondent  that  the  computation  of  

actual  liquidated  damages could be undertaken only  after  

the appellant had commenced commercial  operations. The  

actual charges after such computation were according to the  

respondent determined at Rs.29.86 crores but the demand  

was  restricted  to  Rs.8  crores  in  terms  of  the  explicit  

limitation prescribed under the licence. An amount of Rs.7.3  

crores  having  already  been  paid  under  the  Migration  

Package,  a demand for  payment of  Rs.70 lakhs only  was  

raised  by  the  respondent.  It  was  also  asserted  by  the  

respondent that the appellant had not disputed calculation of  

the amount of Rs.7.3 crores as liquidated damages for non-

commissioning  of  the  service  at  the  time  of  Migration  

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Package and paid the same with other dues. Having done  

so,  the  Migration  Package  which  contained  a  specific  

stipulation  that  the  acceptance  of  the  package  “will  be  

deemed as a full and final settlement of all existing disputes  

whatsoever irrespective of whether they are related to the  

present  package  or  not“  could  not  be  questioned  by  the  

petitioner-appellant. The respondent also raised the question  

of limitation and assailed the maintainability of the petition  

on that ground. By its order dated 9th April, 2003 impugned  

in this appeal the Tribunal dismissed the petition filed by the  

appellant  aggrieved  whereof  the  appellant  has  filed  C.A.  

No.7236 of 2003 before this Court.

7. We  have  heard  learned  counsel  for  the  parties  and  

perused  the  record.  A  two-fold  contention  was  urged  in  

support  of  the  appeal  by  counsel  appearing  for  the  

appellant. Firstly, it was contended that the appellant was  

ready to commence commercial operations in February 1999  

i.e. within one year of the date on which the agreement was  

signed between the parties. The fact that the petitioner had  

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applied for the grant of permission to commence commercial  

operations in Jaipur from 3rd February, 1999 was according  

to  the  appellant  sufficient  to  show  its  readiness  to  

commence  such  operations.  There  is,  in  our  opinion,  no  

force in that contention.  It is not disputed that the actual  

operations  started  only  on  5th June,  2000.   The  material  

placed before the Tribunal clearly established that during the  

intervening period the appellant had been informed by the  

respondent  that  clearance  for  commencing  commercial  

operations  could  be  considered  only  after  the  following  

requirements of the licence agreement were complied with:

(a) Payment of next instalment of licence fee due  

on 3.3.1999;

(b) Provision  of  Performance  Bank  Guarantee  

(PBG)  and  enhanced  Financial  Bank  

Guarantee  (FBG)  for  requisite  amount  and  

validity before commencement of succeeding  

year on 3.3.1999;

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(c) Rectification  of  deficiencies  pointed  out  by  

TEC  before  the  commencement  of  

commercial operations;

(d) Submission  of  plan  in  respect  of  providing  

Direct  Exchange  Lines  (DEL-s)  and  Village  

Public Telephones (VPT-s) as per committed  

targets  failing  which  Liquidated  Damages  

(LD-s) are payable; and

(e) Establishment of a separate bank account (an  

escrow account as stipulated under condition  

18.6 of the Licence Agreement).

8. Material  further  established  that  the  deficiencies  

pointed  out  by  the  TEC  could  not  be  rectified  by  M/s  

Qualcomm manufacturer of the equipment purchased by the  

appellant forcing the latter to go for a new set of equipment  

from a new vendor in December 1999 which equipment was  

finally delivered and installed in April 2000.  It was only after  

the  installation  of  the  said  equipment  that  fresh  test  

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certificates were issued by TEC on 1st June, 2000 leading to  

the start of the commercial  operations on 5th June, 2000.  

The  fact  that  the  appellant  was  not  ready  to  commence  

commercial operations in February 1999 is evident from its  

own letter dated 19th July, 1999 in which the appellant had  

clearly admitted that the system was not yet ready for such  

operations  and  that  the  appellant  was  engaged  only  in  

monitoring and testing the credential of the new technology  

and the related software/hardware. It is also evident from  

the letter of the appellant dated 25th August, 1999 that the  

appellant was not in a position to indicate any firm date for a  

formal launch of the service as the system was not yet in a  

position to do so. The relevant part of the letter reads as  

under:

“…………  at  this  stage  we  are  unable  to  indicate any date for formal commissioning of  the  commercial  launch  of  the  service  since  still there are bugs in the system provided by  our supplier.  In any case the testing has to  continue for monitoring the behaviour of the  equipment  even  after  75%  loading  of  the  system  which  is  also  being  followed  by  DoT/MTNL,  while  acceptance  testing  of  the  

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systems. However, we hope to commercialize  the services by middle of December 1999, as  supplier  is  continuously  working  to  resolve  the bugs in the software.”

9. In the light of the above admission which is the best  

evidence  against  the  appellant,  it  is  not  open  to  the  

appellant  to  argue  that  it  was  ready  to  start  commercial  

operations in February 1999. The Tribunal  was, therefore,  

perfectly justified in holding that the commercial operations  

were  started  only  on  5th June,  2000  and  that  for  the  

intervening period such operations could not be commenced  

on account of  deficiencies that  were attributed entirely  to  

the defects in the system which the appellant had installed.  

The Tribunal was also justified in our opinion in holding that  

the  denial  of  permission  to  the  appellant  was  neither  

arbitrary nor mala fide especially when the conditions in the  

licence  agreement  requiring  the  appellant  to  arrange  and  

install  suitable equipment to meet the prevailing technical  

specifications  by  Telecommunication  Engineering  Centre  

were  not  complied  with  nor  were  all  performance  tests  

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required for successful commissioning of the services carried  

out by the Licensor before the services are commissioned for  

public use.  

10. The argument that the respondent has acted arbitrarily  

and  in  a  discriminatory  manner  by  overlooking  similar  

deficiencies in the case of other service providers has also  

been correctly repelled by the Tribunal on the ground that  

the  nature  of  the  deficiencies  found  in  the  case  of  the  

appellant  have  not  been  found  similar  to  those  found  in  

other cases where permission was granted. As a matter of  

fact, the appellant was given an opportunity to implead the  

other  service  providers  so  that  the  allegation  could  be  

examined in detail but the appellant failed to do so nor was  

any  material  placed  on  record  to  show  that  any  

discriminatory treatment was meted out to it.  At any rate so  

long  as  the  conditions  of  the  agreement  entitled  the  

respondents to decline permission to commence commercial  

operations on account of failure on the part of the appellant  

to  comply  with  the  conditions  stipulated  in  the  said  

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agreement, which condition included a defect-free efficient  

system,  the  fact  that  some  other  service  providers  were  

given  permission  in  the  peculiar  facts  of  their  cases  and  

deficiencies allegedly noticed in their system could not make  

out a case for the appellant to question the demand raised  

on the basis of a package which the appellant had accepted  

unconditionally  and  pursuant  to  which  acceptance  a  

substantial  part  of  the  liquidated  damages  amounting  to  

Rs.7.3 crores had been deposited by it without any demur.  

11. The Tribunal has also held and in our view correctly so  

that  the  computation  of  the  liquidated  damages  for  non-

commencing of the services as well as limiting the same to a  

total  amount  of  Rs.8  crores  was  in  conformity  with  the  

licence  conditions  executed  between  the  parties.  There  is  

nothing before us to suggest that any error has crept in the  

computation of liquidated damages nor was any such error  

pointed  out  before  the  Tribunal.  As  a  matter  of  fact,  

according to the respondents the amount of damages works  

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out to Rs.29.86 crores was limited to Rs.8 crores in explicit  

terms of the limitation laid down in the licence agreement.   

12. The factual aspects apart we need to remember that  

the  payment  of  liquidated  damages  was  an  essential  

condition of the Migration Package which was offered to the  

service providers. Unconditional acceptance of the package  

including  the  payment  of  outstanding  licence  fee  with  

interest due thereon and liquidated damages was a specific  

requirement  of  the  Migration  Package  which  was  

unequivocally  accepted  by  the  appellant  in  terms  of  the  

declaration made in the following words:

“.. With reference to the letter No.842- 153/99-VAS  (Vol.V)  (Pt.)  dated  22nd July,  1999 on the subject noted above, I hereby  covey unconditional acceptance on behalf of  the  Licensee  with  regard  to  the  package  proposed  for  migration  of  the  existing  licenses to NTP 1999 Regime on the terms  and conditions in the letter under reference…. ”

13. The  unconditional  acceptance  of  the  terms  of  the  

package and the benefit which the appellant derived under  

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the  same  will  estop  the  appellant  from  challenging  the  

recovery of the dues under the package or the process of its  

determination. No dispute has been raised by the appellant  

and  rightly  so  in  regard  to  the  payment  of  outstanding  

licence fee or the interest due thereon.  The controversy is  

limited to  the computation  of  liquidated  damages of  Rs.8  

crores out of which Rs.7.3 crores was paid by the appellant  

in  the  beginning  without  any  objection  followed  by  a  

payment of Rs.70 lakhs made on 29th May, 2001. Although  

the appellant had sought waiver of the liquidated damages  

yet upon rejection of that request it had made the payment  

of the amount demanded which signified a clear acceptance  

on its part of the obligation to pay. If the appellant proposed  

to continue with its challenge to demand, nothing prevented  

it  from  taking  recourse  to  appropriate  proceedings  and  

taking  the  adjudication  process  to  its  logical  conclusion  

before exercising its option. Far from doing so, the appellant  

gave up the plea of waiver and deposited the amount which  

clearly indicates acceptance on its part of its liability to pay  

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especially when it was only upon such payment that it could  

be permitted to avail of the Migration Package.  Allowing the  

appellant at this stage to question the demand raised under  

the  Migration  Package  would  amount  to  permitting  the  

appellant  to  accept  what  was  favourable  to  it  and  reject  

what  was  not.  The  appellant  cannot  approbate  and  

reprobate.  The maxim qui approbat non reprobat (one who  

approbates cannot reprobate) is firmly embodied in English  

Common Law and often applied by Courts in this country.  It  

is akin to the doctrine of benefits and burdens which at its  

most  basic  level  provides  that  a person taking advantage  

under  an  instrument  which  both  grants  a  benefit  and  

imposes a burden cannot take the former without complying  

with the latter.  A person cannot approbate and reprobate or  

accept and reject the same instrument.  In  Ambu Nair v.  

Kelu  Nair  AIR 1933  PC  167  the  doctrine  was  explained  

thus:   

“Having thus, almost in terms, offered to be  redeemed under the usufructuary mortgage  in  order  to  get  payment  of  the  other  

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mortgage debt, the appellant, Their Lordships  think,  cannot  now turn round and say that  redemption under the usufructuary mortgage  had  been  barred  nearly  seventeen  years  before he so obtained payment. It is a well- accepted principle that a party cannot both  approbate and reprobate. He cannot, to use  the words of Honyman, J. in Smith v. Baker  (1878) LR 8 CP 350 at p. 357  ‘at the same  time blow hot and cold. He cannot say at one  time that the transaction is valid and thereby  obtain  some  advantage  to  which  he  could  only be entitled on the footing that it is valid,  and  at  another  time  say  it  is  void  for  the  purpose  of  securing  some  further  advantage’.”  

14. View taken in the above decision has been reiterated  

by this Court in City Montessori School v. State of Uttar  

Pradesh and Ors. (2009) 14 SCC 253. To  the  same effect  

is the decision of this Court in New Bihar Biri Leaves Co.  

v. State of Bihar 1981 (1) SCC 537 where this Court said :

“It  is  a  fundamental  principle  of  general  application that if a person of his own accord,  accepts  a  contract  on  certain  terms  and  works out the contract, he cannot be allowed  to adhere to and abide by some of the terms  of  the  contract  which proved advantageous  to him and repudiate the other terms of the  same  contract  which  might  be  

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disadvantageous  to  him.  The  maxim is  qui  approbat non reprobat (one who approbates  cannot  reprobate).  This  principle,  though  originally  borrowed from Scots Law, is now  firmly  embodied  in  English  Common  Law.  According to it, a party to an instrument or  transaction  cannot  take  advantage  of  one  part of a document or transaction and reject  the rest. That is to say, no party can accept  and  reject  the  same  instrument  or  transaction  (Per  Scrutton,  L.J.,  Verschures  Creameries  Ltd. v.  Hull  &  Netherlands  Steamship Co.)”

15. The decision of this Court in R.N. Goswain v. Yashpal  

Dhir AIR 1993 SC 352, brings in the doctrine of election in  

support of the very same conclusion in the following words :

“10. Law does not permit a person to both  approbate  and  reprobate.  This  principle  is  based  on  the  doctrine  of  election  which  postulates  that  no  party  can  accept  and  reject  the  same  instrument  and  that  “a  person  cannot  say  at  one  time  that  a  transaction is valid and thereby obtain some  advantage, to which he could only be entitled  on the footing that it is valid, and then turn  round and say it  is void for the purpose of  securing  some  other  advantage”.  [See:  Verschures  Creameries  Ltd. v.  Hull  and  Netherlands Steamship Co. Ltd. (1921) 2 KB  608,  at  p.612,  Scrutton,  L.J.]  According  to  Halsbury’s  Laws  of  England,  4th  Edn.,  Vol.  16,  “after  taking  an  advantage  under  an  order (for example for the payment of costs)  a party may be precluded from saying that it  

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is  invalid and asking to set it  aside”.  (para  1508)”

16. In America Estoppel by acceptance of benefits is one of  

the recognized situations that would prevent a party from  

taking up inconsistent positions qua a contract or transaction  

under which it has benefited.

17. American Jurisprudence, 2nd Edition, Volume 28, pages  

677-680 discusses  ‘Estoppel  by  acceptance of  benefits’  in  

the following passage:

“Estoppel  by  the  acceptance  of  benefits:  Estoppel  is  frequently  based  upon  the  acceptance  and  retention,  by  one  having  knowledge or notice of the facts, of benefits  from  a  transaction,  contract,  instrument,  regulation which he might  have rejected or  contested. This doctrine is obviously a branch  of  the  rule  against  assuming  inconsistent  positions.

As  a  general  principle,  one  who  knowingly  accepts  the  benefits  of  a  contract  or  conveyance is estopped to deny the validity  or binding effect on him of such contract or  conveyance.

This rule has to be applied to do equity and  must not be applied in such a manner as to  

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violate  the  principles  of  right  and  good  conscience.”   

18. For the reasons set out by us hereinabove, we have no  

hesitation in holding that the appellant was not entitled to  

question  the  terms  of  the  Migration  Package  after  

unconditionally accepting and acting upon the same.

19. In the result this appeal fails and is hereby dismissed  

but in the circumstances without any order as to costs.

……………………………J. (MARKANDEY KATJU)

……………………………J. New Delhi (T.S. THAKUR) October 5, 2010

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