ESSEL SHYAM COMMUNICATION LTD. (ESCL) Vs. DEPARTMENT OF

JUDGEMENT

(1.) THE petitioner herein is a VSAT (Very Small Aperture Terminal) Licensee; such license having been granted in terms of the provisio appended to Section 4 of the Indian Telegraph Act, 1885 (The Act) on or about 28.3.1995. Originally the said license was granted in the name of One M/s. Rama Associates Ltd. It was transferred and assigned in favour of the petitioner in terms of a tripartite agreement dated 22.09.1997. The said license provided for payment of license fee to the respondent. The same, however, did not include payment of royalty for use of radio frequency i.e. spectrum charges. The mode of payment of royalty for the radio frequency, however, was changed to the revenue share basis wherefor provisions of license were amended on 23.1.2004. The respondent, however, on the premise that the petitioner has defaulted in payment of royalty not only imposed interest which is penal in nature but also levied penalty of 150 % of the entire amount of short payment taking recourse to the following provisions in the license: - 1.5 Any delay in payment of LICENCE Fee, or any other dues payable under the LICENCE beyond the stipulated period will attract interest at a rate which will be 5 % above the Prime Lending Rate (PLR) of State Bank of India prevalent on the day the payment became due. The nterest shall be reckoned as a full month for the purposes of calculation of interest. 1.8 In case, the total amount paid on the self assessment of the LICENSEE as quarterly LICENCE Fee for the 4 (four) quarters of the financial year, falls short by more than 10 % of the payable LICENCE Fee, it shall attract a penalty of 150 % of the entire amount of short payment. This amount of short payment alongwith the penalty shall be payable within 15 days of the date of signing the audit report on the annual accounts, failing which interest shall be further charged as per terms of Condition 3.5. However, if such short payment is made good within 60 days from the last day of the financial year, no penalty shall be imposed.

(2.) THE validity of the said demand was questioned by the petitioner before this Tribunal which was marked as Petition No. 73 of 2007.The said petition alongwith a few others inter alia being Petition No. 8 of 2003, came to be considered by this Tribunal. By a judgment and order dated 11.2.2010 this Tribunal interpreted the aforementioned clause in the light of various decisions to be a penal one observing: Once the clause in question is held to be a penal in nature, indisputedly the same would not be enforceable; particularly in a case of this nature where some sort of double penalty is sought to be levied. The clause in question, therefore, contains a penal provision. This Tribunal furthermore considered the meaning of the word payable upon posing the question as to whether there was any shortfall in payment of license fee, held: - A huge amount was owing and due from the respondent. A decree was passed by this Tribunal in favour of the petitioner.

(3.) THEY were in possession of huge amount. The said amount was held in trust. In some matters they preferred appeals before the Supreme Court of India. In some matters they did so only after a demand for refund of the said amount was made. In some of the cases, as noticed hereinbefore, adjustments of the amount lying in their hands was sought for. The Supreme Court of India had not stayed the operation on the judgment of this Tribunal. The interim order passed by it was confined to adjustment of the amount. If the respondent was not ready and willing to adjust, the amount, lying in its hands, in view of the interim order passed by Supreme Court of India, should have been refunded in terms of the judgment of this Tribunal. It failed and/or neglected to do so. Adjustment was made at a much later date i.e. after the penalty was levied. The respondent was therefore did not take a fair action, which should have been taken by it, being a State within the meaning of Article 12 of the Constitution of India. It cannot deny level playing field with the private operators. It is of soe significance to notice that interest on penalty has also been charged which clearly demonstrate that the first part of clause 4.8 has been given effect to by the respondent. It is well settled that no damage is payable on damages by way of interest or otherwise in as much as quantum of damages was required to be determined. In regard to VSAT license agreement, it was observed: - The learned counsel in this matter rightly contended that the provisions of the contract would clearly demonstrate that no penalty can be levied for delayed payment of the spectrum charges as the manner in which such payment was to be made is as prescribed by the DoT from time to time. There cannot be any doubt that in view of the Order dated 16.4.2003 passed by the respondent, in case of any delay in payment of spectrum charges only penal interest was to be charged and not any penalty. Clauses 1.8 and 1.9 of the amended license are, therefore, required to be read conjointly. The Order dated 16.4.2003 passed by DoT, together with clauses 1.8 and 1.9 would reveal that only in the event of delay in payment of license fee, the penal clause would be attracted and not otherwise. Spectrum charges, thus, being not license fee within the meaning of the agreement, no penalty @ 150 % of the shortfall could be levied. The respondent has preferred an appeal before the Supreme Court of India against the said judgment and order. A prayer for stay of operation of the said Judgment was made but rejected.