KOSHIKA TELECOM LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) This appeal under Section 37 of the arbitration & Conciliation Act, 1996 (in short 'the' Act) is directed against the order of the learned Single Judge dated 31st May, 2002 thereby disposing an application under Section 9 of the Act filed by the appellant-Company for a restraint order/direction on the respondent Department of Telecommunications (in short 'DOT') from terminating the public switched telephone network connecting licence for U.P. (East and West circle) alloted to them on 12th December, 1995 pending arbitration of the disputes/differences which are stated to have arisen between the parties. However, it Appears that during the course of hearing of the said application before the learned Single Judge, the appellant confined his prayer in regard to the connecting licence for U.P. (East) Circle only.

(2.) The facts and circumstances leading to the disputes between the parties have been noted in detail by the learned Single Judge and it is not necessary for us to repeat the same once over again, except for taking note of the undisputable facts that the appellants have committed breach of the terms of the from by defaulting in making the payment of the liecence fee even pursuant to the migration package of 1999 agreed to between the parties, according to the DoT after adjustment of the amounts received from the appellant, a sum of Rs.286.31 crores is due to them from the appellant including the interest and liquidated dated damages. However, after excluding the interest and liquidation damages, a sum of Rs.66 crores is duo. The learned Single Judge taking note of the above factual matrix and with a view to provide interim protection to the appellant from the resultant cancellation of their licence and on balancing the equities between the parties worked out an arrangement and gave the following directions :-

(3.) We have heard Mr. Kapil Sibal, learned senior advocate representing the appellant licencee and Mr.Kriti Raval, learned additional Solicitor General representing the repondent-DOT. Mr.Sibal, has strongly urged before us that the conditions imposed by the learned Single Judge and more particularly the condition No.1 (supra) directing the appellant to pay the full amount of licence fee payable upto 31st May, 2002 in terms of the DoT letter dated 17th April, 2000 is wholly unjustified on the face of the facts and circumstances of the case and is also not in consonance with the rights and contractual obligation of the parties and in any case it will operate harshly on the appellant because the appellant is not in a position to arrange for the payment of the amount as directed. In this connection, the foremost plea put for forth by him is that the learned Single Judge has erred in ignoring that a large sum of money to the tune of Rs. 900 crores is due and payable by the respondent-'DOT to the appellant on account of the termination of their operating for three circles, namely, U.P.(West), Bihar and Orissa. The basis of this submission is that in terms of clause 15.3 of the licence agreement, the respondent DoT is under an obligation to either take over the assets of the petitioner/appellant itself or get its payment arranged from any new licencee. The learned Additional Solicitor General has, however, refuted the said contention of learned counsel for the appellant and has urged that the said condition merely confers a right on the licencing authority but casts no obligation on the authority for taking over the assets of the licencee. It is also submitted that the said conditions vests are enabling provision/power in the licencing authority for ensuring that the customers do not suffer due to termination of the licence and in, any case the two contentions which have been mentioned in condition 15.3 are not exhaustive and the licencing authority may take such measure to ensure the continuity of service as are deemed necessary. Clause 15.3 of the Licence of Agreement reads as under :-