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CASE NO.: Appeal (civil)  1033 of 2004

PETITIONER: UNION OF INDIA

RESPONDENT: TATA TELESERVICES (MAHARASHTRA) LTD

DATE OF JUDGMENT: 23/08/2007

BENCH: H.K. SEMA & P.K. BALASUBRAMANYAN

JUDGMENT: J U D G M E N T  

P.K. BALASUBRAMANYAN, J.

1.              This appeal by the Union of India, the respondent in  a proceeding before the Telecom Disputes Settlement &  Appellate Tribunal (for short, \023the TDSAT\024) in a petition filed  by the respondent herein under Section 14 of the Telecom  Regulatory Authority of India Act, 1997 (for short \023the Act\024) is  under Section 18 of the Act.  The respondent approached the  TDSAT  praying for a declaration that the action of the Union  of India in raising a claim and in recovering the amount as per  its demand dated 10.8.1999, was bad in law and be set aside,  for a declaration that the set off made by invoking condition 19  of the licence the respondent had with the appellant in respect  of the Maharashtra Service Area was illegal and unauthorised  and for setting aside the same, for directing the appellant to  refund an amount of Rs.50 crores together with interest from  the date of the purported set off of that amount with the  amounts due to the respondent till the date of refund and for  other consequential and incidental reliefs.  In answer, the  appellant contended that it was entitled to make the set off  and the set off made was authorised and legal and that there  is no reason to interfere with the set off and the respondent  was not entitled to the recovery of Rs.50 crores with interest  thereon.  A claim that the appellant is entitled to recover as  damages from the respondent a sum of Rs.654.25 crores  towards the loss suffered by it on account of the respondent  herein failing to fulfil its obligations under the Letter of Intent  issued to it in respect of the Karnataka Telecom Circle was  also put forward.  The TDSAT upheld the claim of the  respondent, rejected the claim of the appellant that it was  entitled to a legal or equitable set off of the sum of Rs.50  crores and more importantly held that it has no jurisdiction to  entertain a counter claim at the instance of the appellant.  Of  course, it was also pointed out that the counter claim itself  was not properly framed and was somewhat vague.  Thus the  claim of the respondent was accepted and a direction was  issued to the appellant to refund the sum of Rs.50 crores to  the respondent with interest thereon at 17 per cent per annum  from the date the said amount was appropriated by the  appellant till its payment along with costs of the proceedings.   This adjudication of the TDSAT is challenged in this appeal.

2.      Section 18 of the Act provides for an appeal to this  Court from an order or decision of the TDSAT whether in  exercise of its appellate jurisdiction or in exercise of its original

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jurisdiction on one or more of the grounds specified in Section  100 of the Code of Civil Procedure.  The two substantial  questions of law sought to be adjudicated on are (1) whether  the TDSAT was justified in not accepting the plea of set off  raised by the appellant and (2) whether the TDSAT has not  failed to exercise the jurisdiction vested in it by law in  declining to go into the merits of the counter claim made by  the appellant and in rejecting the same as being not  maintainable.

3.              The question whether the plea of set off, whether  legal or equitable is liable to be upheld might depend on our  conclusion on the question whether a counter claim at the  instance of the Union of India in a proceeding initiated before  the TDSAT  by a licensee or service provider, is maintainable.   If we hold that the counter claim is maintainable, necessarily  the same would have to be adjudicated on, on merits and the  result of such an adjudication would have impact on the plea  of set off put forward by the appellant.  Of course, if our  answer to the said question is that the counter claim is not  maintainable, then we have to decide independently whether  the finding entered by the TDSAT  on the plea of set off is  vitiated by a substantial error of law or not.  We will, therefore,  first tackle the question whether the counter claim made by  the Union of India was maintainable.

4.              It may be true that in the prayer portion in the  written statement an order or decree in terms of the counter  claim had not been sought for by the appellant.  But the claim  as made in the written statement relates to the claim based on  the failure of the respondent, after having conveyed its  acceptance of the Letter of Intent to provide service in the  Karnataka Telecom Circle and the damages allegedly suffered  by the appellant as a consequence and the entitlement of the  appellant to reimbursement of the specified sum from the  respondent.  Even if there is some vagueness in the counter  claim, as felt by the TDSAT, we think that the TDSAT might  have directed the appellant before us, to make its counter  claim more specific and in a proper manner.  After all, a defect  of deficiency could be permitted to be cured.   We are,  therefore, not impressed by the argument on behalf of the  respondent before us that the counter claim was rather vague  and the same was rightly rejected for that reason by the  TDSAT.   After all, this vagueness can be directed to be  removed in the interests of justice, if it were to be held that the  counter claim can be maintained by the Union of India.

5.              According to the TDSAT, Section 16 of the Act  prescribes the procedure and powers of the TDSAT.  No right  has been given by that provision to the Union of India to make  a counter claim in a petition filed by a petitioner before the  TDSAT seeking certain amounts as due from the Union of  India as the licensor.   The question is whether this restricted  view taken by the TDSAT is justified on the scheme of the Act.

6.      The Objects and Reasons for enacting the Act and  creating the TDSAT indicate that the TDSAT will consist of a  Chairperson who has been a Judge of the Supreme Court of  India or a Chief Justice of a High Court, and two to four  members who have held the post of Secretary or Additional  Secretary to the Government of India or any equivalent post in  the Central Government or the State Government for a  minimum period of three years.   The powers and functions of  the Authority, as set out in the Objects and Reasons, include  settlement of disputes between service providers.  The

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preamble to the Act indicates that it is an Act to provide for  the establishment of the TDSAT to regulate the  telecommunication service, adjudicate disputes, dispose of  appeals and to protect the interests of service providers and  consumers of the telecom sector, to promote and ensure  orderly growth of the telecom sector and for matters connected  therewith or incidental thereto.  The Act defines \023Licensee\024 as  any person licensed under sub-section (1) of Section 4 of the  Indian Telegraph Act, 1885 (13 of 1885) for providing specified  public telecommunication service.  It defines \023Licensor\024 as  meaning the Central Government or the telegraph authority  who grants a licence under Section 4 of the Indian Telegraph  Act, 1885 (13 of 1885).  A \023service provider\024 is defined as  meaning, the Government as a service provider and it includes  a licensee.  Section 14 of the Act deals with the establishment  of the TDSAT.  It appears to be appropriate to set down the  said Section hereunder: \02314. Establishment of Appellate Tribunal \026  The Central Government shall, by notification,  establish an Appellate Tribunal to be known as  the Telecom Disputes Settlement and Appellate  Tribunal to \026 (a)        adjudicate any dispute \026  (i)  between a lincesor and a licensee;              (ii) between two or more service providers; (iii)between a service provider and a group of  consumers:           Provided that nothing in this clause shall  apply in respect of matters relating to \026

(A)           the monopolistic trade practice, restrictive  trade practice and unfair trade practice which  are subject to the jurisdiction of the  Monopolies and Restrictive Trade Practices  Commission established under sub-section (1)  of Section 5 of the Monopolies and Restrictive  Trade Practices Act, 1969 (54 of 1969);

(B)         the complaint of an individual consumer  maintainable before a Consumer Disputes  Redressal Forum or a Consumer Disputes  Redressal Commission or the National  Consumer Redressal Commission established  under section 9 of the Consumer Protection  Act, 1986 (68 of 1986);

(C)         dispute between telegraph authority and  any other person referred to in sub-section (1)  of section 7B of the Indian Telegraph Act, 1885  (13 of 1885);

(b)   hear and dispose of appeal against any  direction, decision or order of the Authority  under this Act.\024

7.              The Section indicates that the TDSAT has been  constituted to adjudicate on any dispute between a licensor  and a licensee or between two or more service providers.   Though it also includes adjudication on a dispute between a  service provider and a group of consumers, it excludes matters  coming within the jurisdiction of the Monopolies and  Restrictive Trade Practices Commission  established under the  Monopolies and Restrictive Trade Practices Act, 1964, the

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complaint of an individual consumer that is maintainable  before a Consumer Disputes Redressal Forum and a dispute  between a telegraph authority and any person referred to in  Section 7B of the Indian Telegraph Act, 1885.   Section 14A of  the Act provides that the Central Government or a State  Government or a local authority or any person may make an  application to the Appellate Tribunal for adjudication of any  dispute referred to in clause (a) of Section 14.  Section 14A,  therefore, contemplates not only the filing of a claim before the  TDSAT by a licensee or a consumer, but also by the Central  Government or a State Government which could be a licensor  or a service provider.  Section 14B deals with the composition  of TDSAT.  It is to consist of a Chairperson and not more than  two Members to be appointed, by notification, by the Central  Government.  The selection of the Chairperson and Members  of the Appellate Tribunal shall be made by the Central  Government in consultation with the Chief Justice of India.   Section 14C provides the qualification of the Chairperson and  the Members and the Chairperson has either to be a Judge of  the Supreme Court or the Chief Justice of a High Court or a  retired Judge of the Supreme Court of a retired Chief Justice  of the High Court.  A Member has to be one who has held the  post of Secretary to the Government of India or any equivalent  post in the Central Government or the State Government for a  period of not less than two years or a person who is well  versed in the field of \023technology, telecommunication,  industry, commerce or administration.\024  Under Section 14 of  the Act, the jurisdiction of the TDSAT has to be exercised by a  Bench consisting of one member or two members and in case  of difference of opinion between two members, the point of  difference has to be referred to the Chairperson, who shall  decide the point himself and the ultimate decision will be  according to the majority opinion.  Section 15 ousts the  jurisdiction of the Civil Court and it reads thus: \02315. Civil court not to have jurisdiction \026  No civil court shall have jurisdiction to  entertain any suit or proceeding in respect of  any matter which the Appellate Tribunal is  empowered by or under this Act to determine  and no injunction shall be granted by any  court or other authority in respect of any  action taken or to be taken in pursuance of  any power conferred by or under this Act.\024

8.              Section 16 of the Act provides that the TDSAT  shall  not be bound by the procedure laid down in the Code of Civil  Procedure, but will be guided by the principles of natural  justice and subject to the other provisions of the Act have the  power to regulate its own procedure.  It is also to have the  specified powers under the Code of Civil Procedure like  summoning of witnesses, discovery, issue of requisition of any  public record, issue of commission, review of its decisions,  dismissing an application for default or deciding it ex parte, for  restoring an application dismissed for default or setting aside  a decision rendered ex parte and any other matter which may  be prescribed.  Sub-section (3) of Section 16 specifies that  every proceeding before the TDSAT shall be deemed to be a  judicial proceeding in terms of the Indian Penal Code and the  TDSAT shall be deemed to be a civil court for the  purpose of  Section 195 and Chapter XXVI of the Code of Criminal  Procedure.   Section 17 confers right on the parties to legal  representation.  Parties could authorise one or more chartered  accountants, company secretaries, cost accountants or legal  practitioners or any of its officers to represent its case.    Section 18 confers the right of appeal to the Supreme Court on

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a substantial question of law.   Section 19 provides that orders  passed by the TDSAT shall be executable as decrees through  the TDSAT, but it has also the power to transmit any order  made by it to a civil court to execute the order as if it were a  decree made by that court.  Section 20 provides for penalties  for wilful failure to comply with the orders of the TDSAT.    Section 27 of the Act one again indicates that no civil court  has jurisdiction in respect of any matter which the Authority is  empowered by or under the Act to determine.

9.              The conspectus of the provisions of the Act clearly  indicates that disputes between the licensee or licensor,  between two or more service providers which takes in the  Government and includes a licensee and between a service  provider and a group of consumers are within the purview of  the TDSAT.  A plain reading of the relevant provisions of the  Act in the light of the preamble to the Act and the Objects and  Reasons for enacting the Act, indicates that disputes between  the concerned parties, which would involve significant  technical aspects, are to be determined by a specialised  tribunal constituted for that purpose.  There is also an ouster  of jurisdiction of the civil court to entertain any suit or  proceeding in respect of any matter which the TDSAT is  empowered by or under the Act to determine.  The civil court  also has no jurisdiction to grant an injunction in respect of  any action taken or to be taken in pursuance of any power  conferred by or under the Act.  The constitution of the TDSAT  itself indicates that it is chaired by a sitting or retired Judge of  the Supreme Court or sitting or a retired Chief Justice of the  High Court, one of the highest judicial officers in the hierarchy  and the members thereof have to be of the cadre of secretaries  to the Government, obviously well experienced in  administration and administrative matters.   

10.             The Act is seen to be a self contained Code intended  to deal with all disputes arising out of telecommunication  services provided in this country in the light of the National  Telecom Policy, 1994.  This is emphasised by the Objects and  Reasons also.

11.             Normally, when a specialised tribunal is constituted  for dealing with disputes coming under it of a particular  nature taking in serious technical aspects, the attempt must  be to construe the jurisdiction conferred on it in a manner as  not to frustrate the object sought to be achieved by the Act.  In  this context, the ousting of the jurisdiction of the Civil Court  contained in Section 15 and Section 27 of the Act has also to  be kept in mind.  The subject to be dealt with under the Act,  has considerable technical overtones which normally a civil  court, at least as of now, is ill-equipped to handle and this  aspect cannot be ignored while defining the jurisdiction of the  TDSAT.

12.             Section 14A of the Act gives the right to the Central  Government, or to the State Government to approach TDSAT  on its own.  Going by the definitions in the Act, both  Governments could be \021service providers\022.  The Central  Government could also be the licensor.  Thus, either as a  licensor or a service provider, the Central Government could  make an application to TDSAT seeking an adjudication of any  dispute between it and the licensee or between it and another  service provider or between it and a group of consumers.  It  has actually to make its claim in TDSAT.  There is no reason  to whittle down the right given to the Central Government to  approach the TDSAT for an adjudication of its claim which

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comes under Section 14(1) of the Act.   Normally, a right to  make a claim would also include a right to make a cross-claim  or counter claim in the sense that the Central Government  could always make an independent claim on matters covered  under the Act and such a claim will have to be entertained by  the TDSAT.  This the Central Government could do even while  it is defending a claim made against it in TDSAT, by way of a  separate application.  If a subject matter is capable of being  raised before the TDSAT by the Central Government or the  State Government by way of a claim by making an application  under Section 14 of the Act, it would not be logical to hold that  the same claim could not be made by way of a counter claim  when the other side, namely, the licensee or consumers, had  already approached the TDSAT with a claim of their own and  the Central Government is called upon to defend it.  It is,  therefore, not possible to accept an argument that a counter  claim by the Central Government or State Government cannot  be entertained by the TDSAT.  We hold that the TDSAT has  jurisdiction to entertain a counter claim in the light of Section  14(1) and 14A of the Act.   

13.             The thrust of the argument on behalf of the  respondent before us was, in a case where, a licence had not  actually been issued to a party by the Central Government,  the dispute could not be said to be one between a licensor and  a licensee, contemplated by Section 14(a)(i) or (ii) of the Act.  It  is submitted that only on the actual grant of a licence, a  person would become a licensee under the Central  Government and only a dispute arising after the grant of a  licence would come within the purview of the Act.  The  wording of the definition of licensee is emphasised in support.   Considering the purpose for which the Act is brought into  force and the TDSAT is created, we think that there is no  warrant for accepting such a narrow approach or to adopt  such a narrow construction.  It will be appropriate to  understand the scope of Section 14(a)(i) of the Act and for that  matter Section 14(a)(ii) of the Act also, as including those to  whom licenses were intended to be issued and as taking in  also disputes that commence on the tender or offer of a person  being accepted.  In other words, a dispute commencing with  the acceptance of a tender leading to the possible issue of a  licence and disputes arising out of the grant of licence even  after the period has expired would all come within the purview  of Section 14(a) of the Act.  To put it differently, Section 14  takes within its sweep disputes following the issue of a Letter  of Intent pre grant of actual licence as also disputes arising  out of a licence granted between a quondam licensee and the  licensor.   14.             In the case on hand, the Notice Inviting Tender  defined a \021licensee\022 as a registered Indian Company that will be  awarded licence for providing the service.  Now, pursuant to  that invitation, the predecessor of the respondent submitted  its tender and the appellant accepted it.  A Letter of Intent was  also issued.  The respondent accepted and started negotiating  for certain modifications, which apparently the appellant was  willing to consider.  But ultimately, the contract did not come  into being.  The licence was not actually granted.  It is the case  of the appellant that the appellant had suffered considerable  loss because of the respondent walking out of the obligation  undertaken by acceptance of the Letter of Intent.  According to  the learned Additional Solicitor General appearing for the  appellant, such a dispute would also come within the purview  of Section 14 of the Act going by the definition of licensee and  the meaning given to it in the Notice Inviting Tenders.  The  argument of learned Senior Counsel on behalf of the

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respondent is that the expressions \023licensor\024 and \023licensee\024  are defined in the Act and the respondent had not become a  licensee and the appellant had not become a licensor since the  agreement was never entered into between the parties for  providing telecom services in the Karnataka Telecom Circle  and the attempt to rope in an intending licensee to whom a  Letter of Intent has been issued or the entering into a contract  is proposed, cannot be countenanced since the respondent  has not become a licensee within the meaning of the Act and  consequently this was not a dispute that came within the  purview of Section 14(1) of the Act.

15.             We have already indicated that a specialised  tribunal has been constituted for the purpose of dealing with  specialised matters and disputes arising out of licenses  granted under the Act.  We therefore do not think that there is  any reason to restrict the jurisdiction of the tribunal so  constituted by keeping out of its purview a person whose offer  has been accepted and to whom a letter of intent is issued by  the Government and who had even accepted that letter of  intent.  Any breach or alleged breach of obligation arising after  acceptance of the offer made in response to a Notice Inviting  Tender, would also normally come within the purview of a  dispute that is liable to settled by the specialised tribunal.  We  see no reason to restrict the expressions \023licensor\024 or  \023licensee\024 occurring in Section 14(a)(i) of the Act and to  exclude a person like the respondent who had been given a  Letter of Intent regarding the Karnataka Circle, who had  accepted the Letter of Intent but was trying to negotiate some  further terms of common interest before a formal contract was  entered into and the work was to be started.  To exclude  disputes arising between the parties thereafter on the failure  of the contract to go through, does not appear to be warranted  or justified considering the purpose for which the TDSAT has  been established and the object sought to be achieved  by the  creation of a specialised tribunal.  In Cellular Operators  Association of India and others  vs. Union of India and  others [(2003) 3 SCC 186] this Court had occasion to consider  the spread of Sections 14 and 14A of the Act.  This Court held  that the scope of Sections 14 and 14A are very wide and is not  confined by restrictions generally imposed by judge made law  on the tribunal exercising an appellate jurisdiction.  Of course,  their Lordships were considering in particular, the case of  appellate jurisdiction.  But this Court further said that the  tribunal has the power to adjudicate on any dispute but while  answering the dispute, due weight had to be given to the  recommendations of the authority under the Act which  consists of experts.  This decision, though it did not directly  deal with the power of the TDSAT as the original authority but  was dealing with the power of the TDSAT  as an appellate  authority and the power of this Court in appeal, clearly gives  an indication that there is no need to whittle down the scope  of Sections 14 and 14A of the Act.   

16.             It has also to be noted that while prescribing the  procedure under Section 16 of the Act, what is said is that the  TDSAT shall not be bound by the procedure laid down by the  Code of Civil Procedure but it shall be guided by the principles  of natural justice.  It is significant to note that it is not a case  of exclusion of the powers under the Code of Civil Procedure  and conferment of specific powers in terms of sub-section (2)  of that Section.  It is really a right given to the TDSAT even to  go outside the procedural shackles imposed by the Code of  Civil Procedure while dealing with a dispute before it.   Therefore, it will be difficult to keep out the provisions for the

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filing of a counter claim enshrined in Order VIII Rule 6A of the  Code of Civil Procedure which could be applied by the TDSAT.   The sweep of Order VIII Rule 6A of the Code now takes in even  claims independent of the one put forward in the application if  it is one the respondent therein has against the applicant.  On  the whole, we are of the view that the TDSAT was in error in  dismissing the counter claim as not maintainable.

17.             In the light of our finding that the counter claim  was maintainable and it requires to be investigated, we think  that the proper course is to set aside the finding rendered by  the TDSAT on the plea of set off raised by the appellant. This  is in view of the fact that acceptance of the counter claim or  even a part thereof might throw open the question of legal or  equitable set-off, to be considered in the light of the finding on  the counter claim. Therefore, we think this to be an appropriate  case where we should reopen the whole matter without going  into the merits of the contentions of parties on the plea of set  off raised by the appellant and leave the question to be decided  by the TDSAT along with the counter claim that has been  made by the appellant. On taking note of the objection that  the counter claim has not been made specific and has not  been put forward in a proper manner, we are satisfied that it  would be appropriate to direct the appellant to make a proper  counter claim before the TDSAT within three months from  today.  The TDSAT thereafter will give the respondent an  opportunity to file its written statement to the counter claim  and then decide the claim made by the respondent and the  counter claim afresh in accordance with law.

18.             We, thus, allow this appeal and setting aside the  decision of the TDSAT, remand the claim and the counter- claim for a fresh adjudication and disposal in accordance with  law.  We leave the parties to suffer their respective costs in  this Court.