UNION OF INDIA Vs. MILLENIUM DELHI BROADCAST LLP

JUDGEMENT

(1.) In the year 1999, a notice was issued by the Ministry of Information and Broadcasting, on behalf of Government of India inviting tenders for licensing of private F.M. broadcasting services at 40 centres across India. The said notice was issued pursuant to a decision taken by the Ministry of Information and Broadcasting to open Radio Broadcasting in the VHF FM band (87-108 MHz) with the following objectives :-

(2.) On 27/10/2000, the respondent signed an agreement to operationalize F.M. Stations at Delhi and Chennai. The respondent was granted a licence to establish, maintain and operate FM Radio Broadcasting Station within Delhi and Chennai, on a non-exclusive basis, for a period of 10 years . The effective date of the licence period shall be reckoned from the date of issue of the Wireless Operational Licence (for short "WOL") by the WPC. Article 2.1 of Schedule C to the agreement requires the licensee to complete installation of broadcasting facility including studios, transmitter, infrastructure etc. and commission the Applicable System within 12 months from the date of frequency earmarking by WPC. According to Article 2.3 of Schedule C, the licensee was to apply for WOL for frequency allotment and SACFA clearance within three months from the date of issuance of letter of intent. Article 16 of Schedule C refers to Bank Guarantee. This article requires the licensee to furnish a Bank Guarantee which is equivalent to the first year's licence fee. The said bank guarantee is valid for a period of 10 years and has to be issued by a Scheduled Bank in the prescribed form which shall be renewed till the expiry of licence period. Article 14 of Schedule C refers to Dispute Resolution and Jurisdiction. According to the said clause, in case of a dispute or difference arising under this licence, the same shall be referred to the sole arbitration of the Secretary, Department of Legal Affairs or his nominee.

(3.) On 30/10/2000, respondent applied for frequency allocation. On 29/12/2000, the respondent was allocated frequency 94.6 by the WPC. A notice of termination of the agreement was issued by the respondent on 27/8/2002. Thereafter, the respondent preferred an arbitration petition before the High Court of Bombay seeking an injunction restraining the appellants from encashing the Bank Guarantee. The High Court of Bombay passed an interim order dtd. 26/11/2002 in favour of the respondent and directed the appellant to keep the bank guarantee alive.