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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 8107 OF 2010

Bharat Sanchar Nigam Limited          ...Appellant (s)

Versus

Vodafone Essar Gujarat Limited       ...Respondent (s)

With Civil Appeal No. 8108 of 2010 Civil Appeal No.1105 of 2013 Civil Appeal No.8269 of 2010

J U D G M E N T

RANJAN GOGOI, J.

CIVIL APPEAL NO.8107 OF 2010

1. The  challenge  in  this  appeal  is  to  a  judgment  dated

11.02.2010 passed by the Telecom Disputes Settlement and

Appellate Tribunal, New Delhi (hereinafter referred to as the

‘Tribunal’) by which the demand raised by the appellant BSNL

on  the  respondent,  Vodafone  Essar  Gujarat  Limited,  for

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alleged tampering with the Caller Line Identification (CLI) has

been set aside by the learned Tribunal. 2. The facts in brief may be noticed at the outset.

In  the  year  1996  the  competent  authority  granted  a

license to one M/s. Fascel Limited (predecessor-in-interest of

the respondent Vodafone) under Section 4(1) of the Telegraph

Act, 1885.  As the successor-in-interest of Fascel Limited, the

respondent entered into an Interconnect Agreement with BSNL

for the purpose of interconnecting its network with the BSNL.

Under the aforesaid Agreement, the respondent was liable to

pay  access  charges  to  BSNL  for  calls  originating  from  its

network and terminating in the BSNL’s network.  Under  the

Agreement  there  was  an  obligation  on  the  part  of  the

respondent to transmit the authentic CLI for the purpose of

levy of charges in terms of Agreement. CLI essentially is the

information  generated  by  the  network  which  identifies  and

forwards the calling number.   It must be mentioned, at this stage, that it is during this

period  of  time  that  the  telecommunication  sector  was

undergoing revolutionary changes and witnessing innovations

to deal with which both the Department of Telecommunication

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(DoT)  and  the  regulatory  body  i.e.  Telecom  Regulatory

Authority of India (TRAI) had issued a series of advisories and

regulatory  measures  some  of  which  are  being  indicated

hereinafter.  3. To  the  issues  arising  in  the  present  case  would  be

relevant  the  circular  dated  23.06.2003  issued  by  the  DoT

specifying that CLI cannot be tampered in any circumstances.

By the same circular the DoT also gave directions to service

providers on how to prevent tampering of  CLI.  The Telecom

Regulatory  Authority  of  India  (TRAI)  had  issued  a  directive

dated  24.11.2003  to  BSNL not to tamper with CLI of any

call; not to offer calls without CLI and also not to accept any

calls  without  CLI.  This  was  followed  by  a  circular  dated

20.01.2004  reiterating  the  above  directions.  In  exercise  of

powers under Section 36 of the TRAI Act, 1997 the Regulatory

Body  also  made  a  set  of  Regulations  known  as  the

Interconnect  Usage  Charge  Regulations,  2003  (IUC

Regulations).  In  terms  of  the  IUC  Regulations,  the  service

providers were to raise bills on the basis of Call Detail Records

(CDR). Under the CDR based platform in place of the earlier

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prevailing system of metered calls in which call  duration in

number  of  minutes  was  multiplied  by  the  pulse  rate  per

minute applicable for the trunk group, under the new regime,

reliance was on the CLI to identify the type of call and apply

the  appropriate  rates/charges.  The  BSNL by  circular  dated

28.01.2004  implemented  the  aforesaid  circular  dated

23.06.2003 of the DOT alongwith IUC the Regulations of 2003.

Clause  11  of  the  aforesaid  circular  which  states  that  calls

received without CLI by BSNL would be charged at the highest

slab i.e. at the rate of ISD calls, being relevant to the issues

arising, may be noticed below :     “The CLI based barring facility shall be activated at the  Pols  wherever  technically  feasible  to  ensure that  the  traffic  handed  over  to  BSNL  is  in  the appropriate  trunk  groups  only.  Wherever  it  is technically  not  feasible  to  activate  CLI  based barring, periodic monitoring of the incoming trunk groups  shall  be  done  by  BSNL  to  ensure  this objective. The calls received without CLI by BSNL from  various  operators  shall  be  charged  at  the highest slab i.e. as for ISD Calls. In case such calls are received by BSNL on a trunk group not meant for such calls then all the traffic received on such trunk group   month/billing cycle shall be charged at  the  rates  applicable  for  IUC  of  incoming  ISD Calls.”  

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4. According  to  the  appellant  BSNL,  monitoring  of  the

incoming  traffic  from  Vodafone’s  network  from  various

exchanges at  Vododara Trunk Automatic  Exchange revealed

that  many  incoming  calls  were  actually  international  calls

which were routed on the BSNL’s network as national calls.

According  to  the  appellant  this  was  done  by  Vodafone  by

tampering with the CLI and thereby violating the terms and

conditions of  the Interconnect Agreement.  On the said facts

relying on the circular dated 28.01.2004 particularly clause 11

thereof,  the  appellant  raised  a  bill  of  Rs.3,54,94,916/-  on

Vodafone  at  the  rate  of  Rs.5.65  per  minute  for  the  period

between July, 2004 to September, 2004. Though the demand

was  reiterated  from time to  time,  issues  did  not  get  forged

until  BSNL  issued  a  disconnection  notice  dated  5.03.2009

prompting the respondent to move the Tribunal  challenging

the  demand  raised  by  the  BSNL.  The  Tribunal,  by  the

impugned judgment, came to the conclusion that the demand

raised by the appellant was illegal and unjustified inasmuch

as  the  Interconnect  Agreement  between the  parties  did  not

carry any stipulation that in the event any invalid or tempered

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CLI  is  transferred  to  the  BSNL  network,  BSNL  would  be

entitled  to  raise  the  demand  at  the  highest  slab  rate.  The

learned Tribunal also held that the IUC Regulations did not

contain any such provision and the same could not have been

so  created  on  the  basis  of  the  unilateral  circular  dated

28.01.2004 (Clause 11).  The Tribunal also held that the BSNL

had  failed  to  establish  that  the  respondent  Vodafone  by

tampering  or  misusing  its  network  could  receive  an

international call and transfer the same to the BSNL’s network

as a local call. Vodafone, it may be noticed, did not have an

International Long Distance Operator (ILDO) Licence.  5. The arguments advanced on behalf of the appellant BSNL

by the learned Solicitor General, in short, is that admittedly

Vodafone had failed to comply with its obligation under the

Interconnect Agreement and had routed international calls as

national  calls  making it  liable to pay damages for  the loss

suffered by BSNL. In this regard the learned Solicitor General

has specifically relied on the averments made in Paragraph 1

of  the Petition filed by the respondent Vodafone before  the

Tribunal to contend that the tempering of CLI on the basis of

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which demand is raised has been admitted by the respondent

Vodafone. Reliance was placed on the decision of this Court in

Bharat  Sanchar  Nigam  Limited Vs. Reliance

Communication Ltd.  1 wherein it was held by this Court that

Clause 6.4.6 of the Interconnect Agreement in the said case,

which  is  similar  to  clause  11  of  the  Circular  dated

28.01.2004, was not  penal  in nature but a pre-estimate of

reasonable compensation and further that it was the duty of

the licensee to maintain the integrity of the exchange/Point of

Interconnect  (POI)  which the respondent Vodafone failed to

honour. 6. In reply,  Shri  Navin Chawla learned counsel  appearing

for  the  respondent  submits  that  Vodafone  was  not  an

International Long Distance Operator (ILDO) and could not, in

any way, deliver ISD Calls to BSNL’s network. Learned counsel

has denied that Para 1 of the petition filed before the Tribunal

can be construed as an admission on the part of the Vodafone

as the averments made therein are merely to the effect that if

any  international  call  has  been  transferred  to  the  BSNL

1 (2011) 1 SCC 394]

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network the same is a handiwork of miscreants. Shri Chawla

has  drawn  the  attention  of  the  court  that  no  specific

allegations  had  been  made  that  Vodafone  was  involved  in

masking  or  altering  CLI.  Learned  counsel  has  further

submitted that BSNL has failed to show how any such calls

could have been generated in the Vodafone’s network for being

transferred  to  the  BSNL’s  network.   The  reliance  placed  in

Bharat Sanchar Nigam Ltd. vs. Reliance Communication

Ltd. (supra) by the learned Solicitor General is sought to be

countered  by  Shri  Chawla  by  contending  that  no  clause

similar to Clause 6.4.6 of the Interconnect Agreement in the

said case exists  in the Interconnect  Agreement between the

parties to the present case. 7. The short  question that  arises for  consideration in the

above premises is whether the appellant BSNL could levy the

highest applicable IUC charges on the basis of Clause 11 of

the  circular  dated  28.01.2004.   One  of  the  recitals  to  the

Interconnect Agreement is to the effect that BSNL reserves the

right to modify the terms and conditions of the agreement, if it

receives a direction from the licensor or any other competent

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authority to that effect. The circular dated 28.01.2004, clearly,

was not pursuant to any direction from the licensor but was

unilaterally  issued  stipulating  that  charges  at  the  highest

applicable rate would be levied for calls coming with invalid

CLI. The circular dated 28.01.2004, being unilateral, does not

become a part of the Interconnect Agreement inasmuch as the

respondent  Vodafone  had  consented  to  be  bound  by  any

additional/fresh terms and conditions only if the same is/are

issued  by  the  competent  authority  or  pursuant  to  the

directions of the competent authority. Admittedly, in the IUC

Regulations there was no stipulation for levying charges in the

manner it  has  been done.  In so far  as the  decision of  this

Court  in  Bharat  Sanchar  Nigam  Ltd.  vs.  Reliance

Communication Ltd. (supra) is  concerned, it  will  suffice to

notice that Clause 6.4.6 of the agreement between the parties

in that case was not existent in the agreement between the

parties to the present case. That apart the licencee in the said

case  Reliance Communication Ltd. (supra) was holding an

ILDO licence unlike the respondent Vodafone in the present

case. On the other hand it appears that the Tribunal correctly

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placed  reliance  on  the  decision  of  this  Court  in  Bharat

Sanchar Nigam Limited. Vs. BPL Mobile Cellular Ltd. &

Ors.2 to hold that circular issued by the DoT does not  ipso

facto become a part of the Agreement.  8. Apart  from the  above  it  has  already been noticed that

before  the  circular  dated  28.01.2004 came to  be  issued by

BSNL, TRAI had issued an directive dated 24.11.2003 and a

circular dated 20.01.2004 to  all operators advising them not

to tamper with CLI of any call and not to offer or accept any

call without CLI. BSNL’s action in receiving calls originating

from the  respondent’s  network without  CLI  and the  further

decision  to  charge  such  calls  at  the  highest  rate  would,

therefore, be clearly against the aforesaid directions of TRAI.

9. Lastly, the appellant BSNL could not also discharge its

burden to show as to how respondent even by tampering with

its network could wrongly receive and route international calls

when it did not have an International Long Distance Operator

Licence.   10. For the aforesaid reasons, we cannot find any fault with

the  conclusions  recorded  by  the  learned  Tribunal  in  the

2 (2008) 13 SCC 597

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impugned  order  under  challenge  in  the  present  case.  The

appeal, therefore, is liable to be dismissed which we hereby do

without, however, any order as to costs.                           

CIVIL APPEAL NO.8108 OF 2010 AND  CIVIL APPEAL NO.1105 OF 2013

11. Both  the  above  mentioned  appeals  having  raised

somewhat similar issues are being answered by the present

common judgment.

12. The appellant – Bharat Sanchar Nigam Ltd. (‘BSNL’ for

short) and the respondent – Bharti Airtel Ltd. entered into an

Interconnect Agreement dated 15.02.2002 that governed two

licenses under the Indian Telegraph Act that were obtained by

the respondent for basic telecom service and mobile telephony

respectively.  In the year, 2004 a Unified License was obtained

and  the  respondent  –  Bharti  Airtel  migrated  to  a  Unified

Access License (UAL).  The core issue pertains to the validity of

two separate demands raised in the two cases by the appellant

– BSNL for  alleged routing non CLI/invalid  CLI calls  to the

BSNL network by the respondent – Bharti Airtel Ltd.  

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13. Before  proceeding  to  deal  with  the  facts  and

circumstances  surrounding  the  demand  raised,  it  will  be

necessary to note Clause 6.4.6 as contained in the Original

Interconnect  Agreement between the parties and, thereafter,

as amended from time to time. While doing so, the details of

certain  other  circulars/communications  etc.  would  also

require  a  specific  notice.   Clause  6.4.6  of  the  Interconnect

Agreement as originally contained in the Agreement is in the

following terms:

“BSNL  will  pay  access  charges  for  STD/ISD calls  originating  in  the  BSNL’s  network  and delivered  to  the  BSO’s  network,  at  the  rate  of Rs.0.84  per  unit  measured  call  at  the  point  of interconnect to the BSO, only in such cases where the BSNL delivers the call in an exchange other than the BSO’s tandem/terminal exchange. However, for STD/ISD calls delivered from BSNL’s TAX to BSO’s main  exchange  serving  multiple  SDCCs,  the latter shall  be  treated  as  the  terminal  exchange  and  no access charges shall be payable by BSNL to BSO.

It is acknowledged that BSNL shall not pay any charges for all types of calls including terminating ISD calls in the following cases.” An  addenda  was  added  to  the  said  clause  of  the

Agreement on 21.07.2004, which is in the following terms:

“Unauthorized calls i.e. calls other than specified for  that  trunk  group  if  detected,  for  which  the applicable IUC is higher than the IUC applicable for calls  prescribed  in  that  trunk  group,  then  BSNL

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shall  charge  the  UASL  the  highest  IUC,  as applicable for unauthorized calls, for all the calls recorded  on  these  ports  from  the  date  of provisioning of that POI or for the preceding two months whichever is less. In addition, BSNL shall also have the right for taking other legal actions including  disconnection  of  POIs  or  temporary suspension  of  the  interconnection  arrangements under misuse.  In case BSNL wishes to disconnect the POI, it shall give a one week notice to UASL. If the unauthorized routing  of  calls  to  BSNL is  not removed within  one  week,  BSNL shall  disconnect the POI.”

Thereafter, with effect from 19.07.2005, Clause 6.4.6 was

further amended in the following terms:

“a.  Unauthorised  calls  i.e.  calls  other  than specified for that trunk group if detected, for which the  applicable  IUC  is  higher  than  the  IUC applicable for calls prescribed in that trunk group, then  BSNL  shall  charge  the  UASL  the  highest applicable IUC, as applicable for such unauthorized calls, for all the calls recorded on this trunk group from the date of  provision of  that POI or for the preceding two months whichever is less.  

b.  The  CLI  based  barring  facility  shall  be activated at the POIs wherever technically feasible to ensure that the traffic handed over to BSNL is in the appropriate trunk groups only. Wherever, it is technically  not  feasible  to  activate  CLI  based barring, periodic monitoring of the incoming trunk groups  shall  be  done  by  BSNL  without  CLI  or modified/tampered CLI from UASL shall be charged at the highest  slab i.e.  as  for STD calls. In case such  calls  are  received  by  BSNL  on  any  trunk group,  then  all  the  calls  recorded  on  this  trunk group shall be charged at the rates applicable for IUC  of  incoming  ISD  calls  from  the  date  of

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provisioning of  that POI or for the preceding two months, whichever is less.

c.  When  CDR  based  billing  is  introduced  in BSNL’s network some of the trunk groups shall be merged. In such cases also, in case unauthorized or incoming international calls, without CLI call, call with tampered CLI is handed over to BSNL at the merged trunk group,  then BSNL shall  charge the UASL the highest applicable IUC, as prescribed in clauses  6.4.6  (a)  above  for  unauthorized  calls  & 6.4.6(b) for incoming international call, without CLI call, call for tampered CLI for all calls recorded on this  merged  trunk  group  from  the  date  of provisioning of  that POI or for the preceding two months whichever is less.   

d. In addition, BSNL shall also have the right for  taking  other  legal  actions  including disconnection of  POIs or temporary suspension of the interconnection arrangements under misuse.”

14.  In  the  discussions  in  connection  with  Civil  Appeal

No.8107 of  2010 (decided by the present  order)  it  has been

noticed that the  Telecom Regulatory Authority of India (TRAI)

vide letter dated 24.11.2003 had advised the appellant – BSNL

not to tamper with the CLI of any call and not to offer or receive

calls  without  CLI.  The  aforesaid  letter  was  followed  by  a

circular dated 20.01.2004 issued to the same effect by TRAI. In

the  said  circular  it  was  specifically  mentioned  that  the

appellant  –  BSNL’s decision to accept calls  without  CLI  and

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charging therefor at  the highest slab was against the TRAI’s

direction.  

15. In the said discussions it has also been noticed that on

28.01.2004,  the  appellant  –BSNL  issued  a  circular  for

implementation  of  the  Telecommunication  Interconnection

Usage  Charge  (IUC)  Regulation,  2003  which,  inter  alia,

contained  Clause  11  dealing  with  charges  leviable  on  calls

received without CLI and also unauthorized calls. The aforesaid

Clause  11  having  already  been  extracted  as  a  part  of  the

discussions in Civil Appeal No. 8107 of 2010 will not require a

repetition.   

16. There is yet another circular dated 13.06.2005 issued by

the  BSNL  which  must  now  be  taken  note  of.   In  the  said

circular, it has been stated that there may be many technical

reasons  for  routing  invalid/incomplete  CLI  calls  such  as,

“transient  faults  in  the  switch,  software  version/signalling

problem,  non-recognition  of  CLI  by  exchanges,  lack  of

capability to analyze all digits by some exchanges” etc. In the

said circular, it was also mentioned that it has been decided

that  where non-CLI calls received at the POI were less than

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0.5% of the total number of calls received, the access provider

would be charged for double the number of such non-CLI calls,

at the highest slab i.e. incoming ISD calls .

17. For the period May,  2003 to June,  2005 a demand of

Rs.59,40,94,834/-  was  raised  by  BSNL  for  invalid  and

incomplete CLI calls handed over by Bharti Airtel to the BSNL

network.   The  respondent-Bharti  Airtel  vide  letter  dated

21.04.2006 claimed that the irregularities as mentioned were

on account of technical faults at the BSNL’s end.  The said

plea was rejected by the BSNL upon due enquiry. Thereafter,

the respondent produced a certificate dated 29.05.2006 issued

by the supplier of its switch box i.e. Siemens offering technical

explanations for non display of CLI in respect of calls with 10

digits to the BSNL network. This was not acceptable to BSNL

who thereafter  issued a  disconnection notice  leading  to  the

proceedings  before  the  Tribunal  wherein  by  order  dated

11.02.2010 the  learned Tribunal  had set  aside the  demand

raised by the appellant-BSNL.

18. The basis on which the Tribunal seems to have answered

the  question  is  that  while  Clause  6.4.6  of  the  Interconnect

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Agreement relating to non-CLI calls came into effect only in

July 2005 (19.07.2005), the demands raised were prior to the

date of coming into effect of the amended Clause 6.4.6.  The

learned Tribunal also concluded that the certificate issued by

Siemens  with  respect  to  the  technical  glitches  was  not

considered by BSNL in proper prospective and further that the

respondent  was  not  given  an  opportunity  to  perform  a

simulation  exercise  to  establish  the  reasons  for  calls  being

handed over to the BSNL network without CLI.   

19. Aggrieved by the aforesaid order, Civil Appeal No.8108 of

2010 has been filed by the appellant-BSNL.

20. We have  considered  the  respective  submissions  of  the

parties.   On behalf  of  the  appellant-BSNL it  is  argued that

though Clause 6.4.6 of the Interconnect Agreement had come

into  force  with  effect  from  19.07.2005,  clause  11  of  the

circular dated 28.01.2004 empowered the BSNL to raise the

demands in question.  It is urged that Clause 11 of the said

circular became effective from 01.05.2003 i.e. date from which

the  IUC  Regulations  became  applicable.  The

respondent-Bharti Airtel, according to the appellant, has also

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not been able to establish its compliance with the stipulation

and  conditions  incorporated  in  the  DoT  circular  dated

24.06.2003.  The  plea  of  technical  glitches  alleged  by  the

respondent-Bharti  Airtel  has  been  contended  to  be  wholly

unsustainable  inasmuch  as  Siemens  is  the  vendor  of  the

service provider (Bharti Airtel) for which reason the certificate

issued is unworthy of credit.   

21. In  reply,  learned  counsel  appearing  for  the

respondent-Bharti Airtel has drawn the attention of the Court

to the finding recorded by the Tribunal that the irregularities

in the 10 digits CLI calls handed over to the BSNL network

was  not  because  of  any  deliberate  violation  or  wrongful

conduct and that such deficiency was on account of technical

glitches in the switch box/gear provided by Siemens. The said

finding is final  and conclusive.   It  is further urged that the

circular dated 28.01.2004 being a unilateral exercise by BSNL

cannot authorize the BSNL to raise the demand in question

particularly when the IUC Regulations, 2003 did not contain a

provision to the said effect empowering the BSNL to so act.

Reference has also been made to the circular of the TRAI dated

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20.1.2004 particularly  in  respect  of  the  fact  that  BSNL’s

decision to accept calls  without CLI and then to charge for

such calls at the highest slab rate was against the direction of

the TRAI.  

22. Having  considered  the  respective  submissions  of  the

parties, we find that the matter lies in a short compass. The

allegation against the respondent operator is with respect to

handing  over  calls  with  invalid  CLI  to  the  BSNL  network.

Clause 6.4.6 of the original Interconnect Agreement between

the parties dealt with the computation of access charges.  The

July, 2004 amendment, prospective in nature, dealt with the

liability  in  case  of  unauthorized  calls  i.e.  calls  other  than

specified  for  a  particular  trunk  group.  The  subsequent

Addenda dated 19.07.2005 dealt with calls without CLI and

the  charges  applicable.  The  recital  to  the  Addenda  clearly

states that it is prospective in operation. If that is so, we do

not see how on the strength of Clause 6.4.6 which came into

effect from 19.07.2005 the demand for the period upto June

2005  could  have  been  raised  by  BSNL.  The  contention  of

BSNL that the said demand would be justified on the strength

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of clause 11 of the circular dated 28.01.2004 also cannot have

our acceptance in view of the fact that we have held the above

issue against the BSNL in Civil Appeal No.8107 of 2010 (BSNL

v.  Vodafone  Essar  Gujarat  Limited),  decided  today.

Furthermore,  the  finding  of  the  Tribunal  that  the  demand

raised by BSNL would not be justified in view of the certificate

issued  by  Siemens,  the  manufacturer  of  the  switchgear

instituted  in  the  Respondent’s  POI,  a  pure  finding  of  fact,

would provide an additional plank for our decision to dismiss

the  present  appeal  filed  by  the  appellant-BSNL,  which  we

hereby do.   

CIVIL APPEAL NO.1105 OF 2013

23. Two bills raised by BSNL against the respondent-Bharti

Airtel in respect of its cellular services form the subject matter

of the present appeal.  The first bill is for the period May, 2003

to January, 2004 and the second bill dated 03.06.2009 is for

the  period February,  2004 to  November,  2004.  The learned

Tribunal  vide  its  judgment  dated 11.02.2010 partly  allowed

the demand for the period 21st July, 2004 to November, 2004

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by holding that for the said period the appellant-BSNL would

be entitled to charge the respondent for double the number of

actual calls which did not have any CLI on the basis of the

circular  of  BSNL  dated  13.06.2005  whereas  for  the  period

May, 2003 to 21st July, 2004 its judgment dated 11.02.2010 in

the case between same parties (subject matter of Civil Appeal

No.8108 of 2010 would govern the issue).

24. Having heard the learned counsel for the parties and on

due consideration, we find that the Tribunal failed to notice

bill  dated 23.07.2008 for  the period May, 2003 to January,

2004 was solely  with  respect  to  calls  with  invalid  CLI.  The

period of demand therefore is before the date of the addendum

to  Clause  6.4.6  i.e.  19.07.2005.   This  issue,  therefore,  will

stand decided  by  the  present  order  insofar  as  Civil  Appeal

No.8108  of  2010  is  concerned.  The  second  bill  dated

30.06.2009  for the period February, 2004 to November, 2004

was  a  consolidated  bill  for  non-CLI  calls  as  well  as  trunk

group  violation.  For  the  latter  violation  the  demand  as

mentioned  in  the  said  bill  is  Rs.76.26  lakhs.  This  later

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demand, in part, appears to be in order in light of the Addenda

to Clause 6.4.6 dated 21.07.2004.   

25. Accordingly, the appeal is allowed to the aforesaid extent,

namely, by holding that the liability for trunk group violation

for  the  period  21.07.2004  to  November,  2004  can  be

legitimately levied on the respondent-Bharti Airtel in terms of

Clause 6.4.6 added in the Interconnect Agreement by Addenda

dated 21.07.2004.  The appellant may work out the precise

quantum of penalty on the aforesaid basis which will be paid

by the respondent.

CIVIL APPEAL NO. 8269 of 2010  

26. The respondent – Tata Teleservices Ltd. had challenged

the  demand  notices  dated  03.09.2006,  23.03.2007  and

09.04.2007 issued by the appellant - BSNL whereby it called

upon the respondent to pay an amount of Rs.10,63,88,772/-

in terms of Clause 6.4.6 of the Interconnect agreement which

is  in  the  same  terms  as  introduced  by  the  addenda  dated

19.07.2005 in the case of Bharti Airtel (supra), details of which

have been noticed herein above in the discussion pertaining to

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the said appeal (Civil Appeal No.8108 of 2010). The demand

notices were issued for the period from May 2003 to May 2004

and  the  irregularity/illegality  alleged  is  transfer  of  non

CLI/wrong CLI calls to the BSNL network.

27. The learned Tribunal  by  its  impugned judgment  dated

11.02.2010 had set aside the demand(s) on the ground that as

Clause  6.4.6  was  added  to  the  Interconnect  agreement

between  the  parties  to  the  present  case  by  the  addendum

dated  01.12.2005  with  effect  from  14.11.2003,  the  same,

therefore, can have no application to the period prior thereto.

It was also held that a comparison of the CDRs of both parties

showed that CLI was available on the CDR of Tata Teleservices

Limited and not with the BSNL. Therefore, the fault lay in the

system  of  B.S.N.L.  for  which  the  respondent  cannot  be

penalized. The Tribunal further held that the Circular dated

13.06.2005,  relied  upon by  BSNL to  support  the  impugned

demand,  details  of  which have  already been noticed  in  the

case of Bharti Airtel (supra), itself provides for due application

of  mind necessitating  an enquiry  as  to  the  reasons for  the

irregularities/shortcomings in the display of the CLI.  No such

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opportunity was afforded to the respondent by BSNL before

resorting to the impugned demand(s).

28. Elaborate  arguments  had  been  advanced  on  behalf  of

both sides, the core of which, insofar as BSNL is concerned, is

that Tata Teleservices Limited having taken the benefit of the

Circular dated 13.06.2005, (made effective from 01.05.2003)

for  the  latter  part  of  the  period involved,  its  liability  would

accrue from the said date and the demand has been worked

out on the basis that 48.9% of the calls are non-CLI calls and

therefore  Clause  6.4.6  would  apply.   It  is  urged  that  the

contention of the Tata Teleservices Limited that the calls are

less than 0.5% is plainly incorrect.

29. In reply, it is urged that Clause 6.4.6 of the Interconnect

agreement,  in  the  form  and  content  in  which  it  has  been

applied to the case of the respondent, was introduced by the

addendum dated 01.12.2005, effective from 14.11.2003. In the

present case, the alleged violation of Clause 6.4.6 is on the

ground of transmitting calls without CLI.  It is urged that upto

the  date  on  which  Clause  6.4.6  came  into  operation  i.e.

14.11.2003, the demand raised on the said basis is without

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any authority.  It is further submitted that the receipt of calls

without CLI having been disapproved/rejected by the TRAI and

there being express directions requiring BSNL to reject such

calls, the appellant cannot take advantage of  its own action

contrary  to  the  directions  of  the  Regulator  i.e.  TRAI.

Furthermore, according to the respondent, the Circular dated

13.06.2005 prohibits BSNL to mechanically apply Clause 6.4.6

and  it  is  only  upon  elimination  of  technical  failures,

incompatibility between exchanges, etc. that Clause 6.4.6 can

be resorted to and that too for the period after 14.11.2003.   

30. In a situation where it is the case of the appellant BSNL

itself that non-CLI calls transmitted by the Tata Teleservices

Limited to the BSNL network was more than 0.5% and hence

Clause  6.4.6  of  the  Interconnect  agreement  would  be

applicable, ex facie, the demand raised for the period from May

2003 to November 2003 would be without any legal authority

inasmuch as Clause 6.4.6 became a part of the Interconnect

agreement between the parties with retrospective effect from

14.11.2003.  

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31. In view of the aforesaid finding recorded by the learned

Tribunal with which this Court is in full agreement, it will not

be necessary to go into any other issue so far as the demand

for the said period is concerned.  For the remaining period i.e.

November,  2003  to  May  2004  during  which  period  Clause

6.4.6 was in force,  the finding of  the learned Tribunal  that

Tata Teleservices Limited should be given an opportunity and

the quantum of loss suffered by B.S.N.L. should be computed

accordingly would, however, require a close look. In  Bharat

Sanchar Nigam Ltd. Vs. Reliance Communication Limited

(supra),  this  Court  has  held that  Clause  6.4.6 prescribes a

pre-estimate  of  reasonable  compensation.   The  premise  on

which the learned Tribunal had held the necessity of affording

an opportunity to Tata Teleservices Limited for determination

of the quantum of loss suffered by BSNL for the period from

November  2003  to  May  2004  proceeded  on  the  basis  that

Clause 6.4.6 is a penal clause. As the said basis stands altered

by the decision of this Court in Bharat Sanchar Nigam Ltd.

vs.  Reliance Communication Limited  (supra), computation

of liability for the period from November 2003 to May 2004,

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during  which  period  Clause  6.4.6  was  in  operation,  must

necessarily be made in accordance with the terms of the said

clause.  The order of  the learned Tribunal, therefore, to the

aforesaid extent, is set aside and the appeal is partly allowed.

The demand raised for the period from May 2003 to November

2003, as held earlier, shall stand set aside while for the period

from  14.11.2003  to  May,  2004  shall  be  determined  in

accordance  with  Clause  6.4.6  of  the  Agreement  as  brought

into effect with retrospective effect from 14.11.2003.  

….……......................,J.                                                  [RANJAN GOGOI]

….……......................,J.                                                       [PRAFULLA C. PANT] NEW DELHI; SEPTEMBER 23, 2016.