SUPREME COURT OF INDIA
Union of India
Vs
Messrs Millenium Mumbai Broadcast Private Limited
Civil Appeal No. 1150 of 2006
(S. B. Sinha and P. P. Naolekar, JJ)
28.04.2006
S. B. SINHA, J.
1. Union of India is before us aggrieved by and dissatisfied with the judgment
and order of the Telecom Disputes Settlement & Appellate Tribunal, New
Delhi dated 3rd October, 2005 in Petition No.49(C) of 2005, whereby and
whereunder the application filed by the Respondent herein was allowed.
2. The basic fact of the matter is not in dispute. A Notice inviting tender was
issued by the Government of India, Ministry of Information & Broadcasting
in the month of October, 1999 from the companies registered in India for grant
of licence to operate FM broadcasting service at Mumbai. The Respondent herein
was one of the successful bidders along with four others. It is not in dispute
that in terms of the agreement, it was stipulated that holders of 10 licences,
which were planned for the city of Mumbai, would co-locate the transmission
infrastructure on a common transmitter tower, as required in Clause 14 of the
Licence Agreement, as also Article 7.1(i) of the Schedule (C) of the said
Licence Agreement. Pursuant to or in furtherance of the said scheme, the cost
of creating the common infrastructure to transmit from a common transmission
tower was to be shared by the ten licensees in Mumbai. It is admitted that five
licensees who were successful bidders in the auction process defaulted and did
not sign the agreements for grant of licences in Mumbai. Having regard to the
default on the part of the said five bidders, the costs of co-locating on a
common transmission tower for the remaining five licensees was almost doubled.
The Appellant herein, thereafter, issued guidelines permitting the five
licensees in Mumbai to broadcast from interim independent facilities for an
interim period of 24 months, during which period the five licensees were
required to set up a common transmission tower.
3. It is also not in dispute that the said guidelines were followed for two
years only, but, having regard to the difficulties faced by the said five
licensees to co-locate the transmission for broadcasting, they were permitted
to make their own arrangement to enable them to operationalize their individual
interim stations within a period of four months. It stands admitted that the
Respondent herein paid licence fees and also furnished a Bank Guarantee to the
tune of Rs.9.75 crores.
4. After the completion of the term of one year, a reminder was sent to the
Respondent on 6.3.2003 stating:
"It will be recalled that vide letter No.212/216/2001-B(D)/FM dated
31.12.2001 you had been informed that in respect of Mumbai you are permitted to
set up permanent co-located facilities by 29th December, 2003.
The deadline for setting up co-located facilities is approaching. You are
requested to inform this Ministry of the actions that have been taken by you in
setting up the co-located infrastructure in Mumbai and to shift your operation
from the interim set up.
This is also to inform that the license fee for the second year will become due
on 29lh April, 2003."
5. In terms of the said licence, in the event of default on the part of the
licensee to pay the consideration therefor, i.e., furnishing lincence fee
within a period of seven days of the beginning of each year, the Bank Guarantee
furnished could have been encashed. It is furthermore not in dispute that for
the second year of the licence, the Respondent was to pay a sum of 15% more
than the original licence fee. Union of India by a letter dated 2.5.2003
reminded the Respondent as regard payment of licence fee for the second year.
The Respondent herein responded to the said letter stating:
"Our Company is committed to FM Broadcasting and on that basis we would like to reassure you that we are arranging for payment of second year licence fee amounting to Rs.11.2 crores at the earliest.
We should be in a position to deposit the said licence fee amount in full by
May 16, 2003. We are also willing to pay interest for the delay of 9 days.
We request not to encash our bank guarantee during this period i.e. May 17,
2003."
6.However, it stands admitted that the Respondent did not pay the amount of
licence fee by 16.5.2003, but, at the same time, the Appellant also did not
communicate to the Respondent as to whether its request to extend the time for
deposit of the said amount was accepted or not.
7. The Appellant, by an order dated 20.5.2003, revoked the licence stating:
"In continuation of our earlier letter dated 2.5.2003, I am directed to
inform you that you have failed to pay the 2nd year's licence fees within the prescribed
period, your licence stands revoked and therefore you should stop broadcasting
immediately."
8. The Appellant, thereafter, invoked the Bank Guarantee and encashed the same
on 28.5.2003.The Respondent, questioning the validity of the said order of
revocation of licence, filed a writ petition before the Delhi High Court, which
was marked as WP(C)No.4195 of 2003. An interim order was passed by the Delhi
High Court on 2.7.2003 directing the Appellant herein to permit the Respondent
to broadcast until further orders and that from the amount recovered through
invocation of the Bank Guarantee, the Appellant would be permitted to
appropriate the sum towards licence fee for the period of broadcasting as per
the interim orders. The High Court also extended the operation of the interim
order on 3.9.2003, subject to the condition that the Respondent herein deposits
a sum of Rs.l crore. Yet again, by an order dated 15.3.2004, the Respondent
herein was permitted to deposit a sum of Rs.23 lacs by 26.3.2004 and furthermore
furnish a Bank Guarantee for another sum of Rs.23 lacs in favour of the
Appellant herein to the satisfaction of the Joint Registrar of the High Court.
The said direction, indisputably, was issued in the light of the submissions
made by the Appellant herein that out of the total sum of Rs. 11, 21, 50, 000/-
towards the second year's licence fee, a sum of Rs.9.75 crore stood paid (by
invoking the bank Guarantee of the said amount) and another sum of Rs.l crore
had been paid pursuant to the order dated 3.9.2003 passed by the High Court and
as such the balance sum of Rs.46 lacs had become due towards the licence fee
for the second year which expired on 29.4.2004. Despite a demand notice issued
for payment of licence fee for the third year, the same was not done and in
fact, on 20.4.2004, the Respondent herein made a submission before the High
Court that it did not intend to make any broadcast w.e.f. 29lh April, 2004.
9. We may notice that before the High Court, the Appellant herein categorically
stated that in the event the Respondent did not intend to make any broadcast
from 29th April, 2004, no deposit was required to be made. In the interregnum,
the Union of India came up with a new policy.
10.The Respondent filed an application before the Tribunal questioning the
validity or otherwise of the revocation of broadcasting licence by letter dated
20.5.2003, inter alia, contending that the same was in violation of the said
Agreement and was, thus, liable to be set aside. It was furthermore prayed that
the Respondent be declared to be entitled to utilize the licence agreement on
such terms as are applicable to other similarly situated licensees. It was also
contended that as by reason of illegal revocation of licence, the Respondent
could not use thereafter the facilities to broadcast, they are entitled to
pro-rata rebate in licence fee from 28.5.2003 to 5.7.2003.
11. The Appellant herein, on the other hand, contended that as the Respondent
had defaulted in payment of licence fee for the second year as per the terms
and conditions thereof the licence has rightly been revoked.
12. The Tribunal, upon examining the relevant clauses of the licence, opined
that the action on the part of the Appellant revoking the licence of the
Respondent was illegal. It was observed:
"We are informed that during the interregnum the Respondent/ Government
had come out with a new policy which entitles the existing licence holders to
migrate from fixed licence fee regime to revenue sharing regime which the
petitioner submits the other Licensees similarly situated have been permitted.
If that be so, the petitioner shall also be entitled to the said benefit of the
change in licence fee. However, since petitioner's bank guarantee has been
appropriated towards non-payment of licence fee for the period for which the
licence fee was payable, the petitioner shall now on demand from the
respondents furnish a bank guarantee as required under the terms and conditions
of the licence."
13. The licence agreement was entered into on 27.10.2000 between the parties
herein. The said licence had four Schedules. Schedule (C) appended to the said
agreement laid down the terms and conditions of the licence.
Clause 1 of the said agreement reads as under:
"1. Unless otherwise mentioned in the subject of context appearing
hereinafter all the Schedules i.e. A B C & D, annexed hereto including the
tender documents, Letter of Intent and the guidelines issued/or to be issued
from time to time by the licensor and the wireless Operational Licence to be issued
by the Wireless Planning & Coordination Wing in the Ministry of
Communications, Government of India shall form part and parcel of this Licence
Agreement.
"Provided, however, in case of conflict between the corresponding
provisions of the aforesaid schedules and this agreement, the terms set out in
the main body of this Agreement shall prevail. In this Agreement, words and
expressions shall have the same meaning as is respectively assigned to them in
the Schedule A."
Clause 9 of the said Agreement reads as follows:
"The Licensor may at any time revoke the Licence by giving a written
notice of 30 days, to the Licensee after affording a reasonable opportunity of
hearing on the breach of any of the terms and conditions herein contained or in
default of payment of any consideration payable as provided hereunder."
14. We have noticed hereinbefore that Schedule-C relates to terms and
conditions of licence, the relevant clauses whereof are:
1.2 The Licensee shall pay the Licence fee every year in advance within seven
days of the beginning of the year failing which the Licensor reserves the right
to revoke the Licence and encash & forfeit the Bank Guarantee furnished by
the Licensee without giving any notice. This is without any prejudice to any
other action that may be taken by the Licensor under the terms and conditions
of the Licence."
12.1 Termination for default
The Licensor can terminate the Licence of the Licensee in case of:
i) Default in payment of the Licence Fees;
ii) Breach of any terms and conditions contained in this Agreement.
The Licensor may, without prejudice to any other remedy for breach of the
conditions of Licence give a written notice to the Licensee at its registered
office 30 days in advance before terminating this Licence.
In the event of termination/revocation of the licence, the licensee will not be
eligible to apply directly or indirectly for any FM Radio Station licence, in
future.
16.1 A Bank Guarantee, equivalent to the first year Licence Fee valid for 10
years from any Scheduled Bank in the prescribed form shall be submitted along
with this Agreement by the Licensee. The Licensee shall keep the bank guarantee
renewed till the expiry of the licence period.
16.2 The Licensor may encash the bank guarantee without any notice in any of
the following conditions:
i) If the licensee fails to deposit the licence fee within 7 days of the
beginning of the each year.
ii) If the licence stops the service without giving one year's notice under
clause 12.3.
iii) If the licensee is declared or applies for being declared insolvent or
bankrupt."
15.Mr. A. Sharan, learned Additional Solicitor General of India appearing on
behalf of the Appellant submitted that having regard to the provisions
contained in Clause 1.2 and Clause 12.1 of the terms of the licence, it is
evident that the condition precedent for grant of 30 days' notice as also an
opportunity of hearing, were required to be complied with only in the cases of
breach of any of the terms and conditions of agreement and not in relation to the
default in payment of licence fee as Clause 12.1 dealt with different
situation.
16.It was also submitted that the right of the Appellant in terms of Clause 1.2
of the terms of licence contained in Schedule- C thereof provides first to
distinguish the powers of the Appellant, i.e., to revoke the licence and to
encash and forfeit the bank guarantee without giving any notice. According to
the learned Additional Solicitor General that revocation of the licence is
permissible without complying with the principles of natural justice. Clause 9
of the Agreement must be harmoniously read with the conditions of licence and
when so read, the same would show that issuance of 30 days' notice and
affording a reasonable opportunity of hearing relate to breach of any of the
terms and conditions of the licence, but, the said requirements are not to be
complied with in case where the licence is revoked for default in payment of
any consideration payable towards payment of licence fees.
17. It was further submitted that the Tribunal committed a manifest error in so
far as it issued a direction upon the Appellant to issue the said notice.
18. The licence granted in favour of the Respondent is a statutory one. The
terms and conditions thereof are governed by the statutory provisions. It was
initially granted for ten years. Clauses 14 and 15 of the said agreement
provide:
"14. The Licence for four metros (Calcutta/Chennai/Delhi/Mumbai) shall
form consortium and enter into an agreement for using same power transmitter,
utilize common transmitter tower and share certain common facilities as per the
format of agreement enclosed at Annexure II.
15. The Licensee shall own transmitter. Further the Licensee himself will carry
out the broadcast and shall not sub-contract, assign or transfer the licence in
any manner to any third party. In case of such transfer or assignment, the
Licensor shall have the right to revoke the Licence of the Licensee
immediately.
However, the Licensee may with the prior approval of Licensor enter into an
agreement with a third party so as to enable the latter to set up
infrastructural and hardware facilities such as tower, transmitter etc. such
permission shall not in any case be treated as permission to provide the services
under the Agreement by such third party on behalf of the Licensee."
19. It is not in dispute that the said conditions could not be complied with in
view of the relocation of the same power transmitter, utilization of common
transmitter tower and sharing certain common facilities having not been
possible. It was in the aforementioned situation guidelines were issued by the
Appellant herein in deviation of the original terms of the licence that the
Respondent and the licensees similarly situated should make their own
arrangements for broadcasting of the events. Clause 1.2 (sic. proviso to Clause
1) of the agreement provided for the mode and manner as regard construction of
the said agreement in case of any conflict between the corresponding provisions
of the schedule and the body of the agreement.
20. In view of the aforementioned express stipulations contained in the
agreement, it is required to construe Clause 9 of the agreement at the outset
independently. By reason of the said provision revocation of the licence both
for breach of terms and conditions as also for default in payment of any
consideration must precede 30 days' written notice and a reasonable opportunity
of hearing.
21. How the said provision can be given effect to would depend on the construction
of terms and conditions of the licence. By reason of clause 1.2, as contained
in the Schedule-C appended thereto, the licensor had been conferred with a
power to revoke the licence as also encash and forfeit the bank guarantee
without any notice. The expression 'and' occurring in between the words 'right
to revoke the licence' and encash and 'forfeit the bank guarantee' must be read
as two separate clauses. The same cannot be read as conjunctive in view of the
fact that it is admitted that the revocation of licence is not permissible
without service of 30 days' notice. What was, therefore, permissible is that
the licensor in terms of the said condition of licence may encash and forfeit
the bank guarantee furnished by the licensee without giving any notice. The
same would evidently mean that for the purpose of encashment and forfeiture of
the bank guarantee, no separate notice is required to be given in the event any
cause of action arises therefor.
22. Clause 12.1 whereupon the learned Additional Solicitor General placed
strong reliance is not in two parts. It merely provides for two different
situations in terms whereof revocation of licence is permissible. The licensor
by reason thereof is required to give a 30 days' written notice to the licensee
before terminating the licence. The words "without prejudice to any other
remedy for breach of the conditions of the licence" must be read in the
context of other provisions contained therein. Sub-clause (ii) of Clause 12.1,
permits termination/revocation of licence on compliance of the conditions
stipulated therein; but the same would be without prejudice to any other remedy
for breach of the conditions of licence, which in turn would mean that by
reason thereof other remedies available to licensor, if any, are not taken out
from their application.
23. Clause 16.2 plays an important role as it enables the licensor to encash
the bank guarantee without any notice; but even for the said purpose the
conditions precedents mentioned -therein were required to be fulfilled. On a
conjoint reading of the aforementioned provisions, it would, therefore, appear
that whereas for the purpose of revocation of the licence either on the ground
of default on the part of the licensee to pay the consideration in respect of the
licence or for breach of the conditions of licence, 30 days' notice as also an
opportunity of hearing was imperative. However, what could be done without any
notice, it will bear repetition to state, is encashment of bank guarantee.
24. It may be true that the mode and manner of compliance of the principle of
natural justice had not been specifically stated, but the same would not mean
that it was (sic 'not') necessary to be complied with at all.
25. However, the letter dated 06.03.2003 was merely a demand. It was not a
notice in the true sense of the term as consequences for non-payment had not
been stated therein. The said letter was issued only by way of reminder.
26. We have noticed hereinbefore that only because the licensee makes a
default, the same would not mean that the licence should stand revoked without
any further notice. Once it is held upon construction of the relevant
provisions of the conditions of licence as also the terms thereof that 30 days'
notice was required to be given before a licence is revoked, it cannot be said
that the said letter dated 6.3.2003 satisfied the requirements thereof.
27. We may consider the matter from another angle. By reason of the provisions
contained in Clause 12.1 of the terms of the licence, not only the revocation
of licence for breach of any conditions contained in any agreement; but also
prevention thereof on any other ground which would include the default in
payment of licence fee would result in the consequence of debarring the
licensee from applying directly or indirectly for any FM Radio Station in
future. The consequence of the revocation of the said licence, therefore, is
penal in nature. Such penal provision is required to be strictly construed.
28. It is in that view of the matter, before the licensor exercises his right
to revoke the licence, a notice was required to be issued. It having not been
done, the conclusion is irresistible that the purported revocation of licence
was a nullity.
29. It is now a well-settled principle of law that a document must be construed
having regard to the terms and conditions as well as the nature thereof.
{See Pearey Lai v. Rameshwar Das .] and Administrator of the Specified
Undertaking of the Unit Trust of India and another v. Garware Polyester Ltd.
30. We, therefore, with respect, entirely agree with the Tribunal.
31.So far as the contention of the learned Additional Solicitor General that
the direction issued by the Tribunal, as quoted supra, is contrary to Section
14(l)(c) of the Specific Relief Act, 1963, is
concerned, the same is stated to be rejected. The provisions of the Specific
Relief Act would not apply to the contracts, which are governed by the
statutory provisions.
32. It is furthermore not in dispute that the Respondent or the licensees
similarly situated had suffered a huge monetary loss. They made representations
for change of the licence fee structure. Admittedly, responding to the said
representations the Union of India appointed a committee known as 'Dr. Amit
Mitra Committee'. The said committee submitted its report on 18.11.2003
recommending that fee structure applicable to Phase-I licensees be done away
with and in its stead and place a new regime called the 'revenue sharing
regime' be brought in, in terms whereof the licensees would be required to pay
licence fees @ 4% of the revenue generated. In terms of the said policy
decision, all Phase-I licensee would be permitted to migrate to the new revenue
sharing system in Phase- II.
33. The Telecom Regulatory Authority of India released a consultation paper on
or about 14.04.2004 on the basis of the recommendations of the said committee.
34. It is stated that on the relevant date, namely 20.04.2004, none of the
Phase-I licensees in Mumbai had co-located on a common transmission tower nor
had the Appellant granted any extension or assurance that permit the licensees
would be permitted to continue broadcasting from independent individual
station/facilities. Whereas the Respondent herein has expressed its desire not
to make any broadcast on the expiry of the terms of the licence, other
licensees allegedly continued to do the same, although the tenure of licence
expired, it is in that situation, the Respondent took the stand that it should
be treated alike the other four licensees, who are continuing to broadcast
despite the fact that no further extension had been granted even to them by the
Union of India, although they had paid the revenue therefor.
35. Our attention, in this connection, has been drawn to the provisions as
regard migration for Phase-I to Phase-II, as laid down in the policy decision,
which is as under:
"1. Licensees of Phase-I, who have actually operationalized their channels
would be given the option to Migrate to Phase 2 Policy Regime. They will have
to exercise their initial option by the prescribed date to automatically
migrate to Phase 2 Policy regime in accordance with the terms and conditions of
migration or continue under Phase-I or surrender their licences with one
month's notice."
36. This Court at this stage is not concerned with the question as to whether
the Respondent has fulfilled the said conditions or not; but admittedly, the
Tribunal proceeded on the basis that the licence having not been validly
revoked, the same continued to be operative.
37. The Tribunal, in terms of Section 14 of the Telecom
Regulatory Authority of India Act, 1997, has a wide power. The
Respondent in their application, inter alia, prayed for the following reliefs:
"Pass an order directing the TRAI and the respondent to provide an
appropriate migration option to the Petitioner to migrate to new license terms
keeping in mind that the Petitioner has invested large sums of money in the
radio broadcasting business, has paid a sum appx. Rs. 21 crores since 29.4.2002
to the respondent and has not been able to broadcast sicne 29.4.2004 due to the
arbitrary implementation by the respondent of the Cabinet order communicated to
the Petitioner vide guidelines dated 31.12.2001."
38. The Appellate Tribunal only directed the Appellant to treat the Respondent
to be entitled to the benefit of the change in the policy decision as regard
payment of different mode of licence as the other existing licence holders,
indisputably, have been given an option to migrate from the fixed licence fee
regime to the revenue sharing regime.
39. We may, however, notice that indisputably the Respondent had paid the
entire licence fee in respect of the second year. It is interesting to note
that before the Delhi High Court itself, the Appellant raised the following
contention, which was recorded by the High Court in its order dated 12.04.2005:
"Learned counsel for the Respondent on instructions from Shri L.P. Singh,
Assistant Engineer of the respondent states that respondent No.3 is not aware
of the fact that the petitioner had stopped broadcast of his FM Channel and in
these circumstances the notice dated 19.4.04 read with Corrigendum dated
21.4.04 had been issued upon the petitioner raising a demand for the period
subsequent to the cessation of the broadcast by the petitioner. It is submitted
on behalf of the respondent that the petitioner having stopped the broadcast
would not be liable to pay the charges demanded in these communications. In
these circumstances, nothing survives in this application and the same is
accordingly disposed of."
40. Having noticed that the Respondent had complied with its interim order by
depositing the requisite amount, the High Court allowed the Appellant to
withdraw the said sum of Rs.23 lacs and also encash the bank guarantee furnished
by the Appellant for another sum of Rs.23 lacs, the High Court directed:
"...The petitioner shall not be liable for any further amount on account
of the FM Broadcast which is the subject matter of the writ petition."
41. We, therefore, are of the opinion that the Tribunal did not exceed its
jurisdiction in issuing the impugned directions.
42. For the reasons aforementioned, we are of the opinion that no case has been
made out for our interference with the impugned judgment of the Appellate Tribunal.
43. This appeal is dismissed accordingly. No costs.
J