2010 JTR(SC) 948
2011 AIR(SC)(Civ) 879 ; 2010 AIR(SCW) 7266 ; 2010 6 AWC 6017 ; 2011 1 BBCJ(SC) 172 ; 2011 2 CivLJ 310 ; 2010 11 JT 153 ; 2010 Supp4 KLT 97 ; 2010 6 LawHerald(SC) 3825 ; 2010 4 RCR(Civ) 850 ; 2010 10 Scale 552 ; 2010 10 SCC 174 ; 2010 4 SCC(Civ) 108 ; 2010 7 SCJ 839 ; 2010 12 SCR 725 ; 2011 1 WLC 53 ; 2010 KHC 4748 ; 2010 7 Supreme 252
2010 (7) Supreme 252
SUPREME COURT OF INDIA
Markandey Katju and T.S. Thakur, JJ.
Bharti Cellular Limited — Appellant
versus
Union of India & Ors. — Respondents
Civil Appeal No.7026 of 2003
Decided on : 5-10-2010
IMPORTANT POINT
Qui approbat non reprobat (one who approbates cannot reprobate).
Act Referred :ESTOPPEL ACT : .
(A) The dispute is adjudicated under the Telecom Regulatory Authority of India Act, 1997, specifically invoking Section 18 read with Section 14 read as Section 14(a)(I), concerning the validity of licence fee computation and recovery by the Union of India against a telecom service provider. The Licence Agreement, governed by clauses on commencement dates, fixed licence fee, subscriber definition under IMSI in the Home Location Register, unit call rate adjustments, and migration provisions, forms the contractual backdrop. The provisions of the Estoppel Act operate to prevent the appellant from inconsistent conduct after unconditionally accepting a migration package, precluding the re-litigation of settled matters relating to the pre-migration period. The temporal interpretation of the licence period, revenue parameters, and the bar on re-opening closed issues are analyzed in light of the statutory and contractual framework.
(B) Key legal principles include: the doctrine of estoppel preventing approbation and reprobation; a party who accepts a benefit under a contract cannot later contest its validity or consistency; the finality of settlement through a migration package; and the permissibility of interest recovery on overdue licence fees subject to agreed deadlines and conditions.
Facts of the case:
The appellant holds a licence for Delhi Metro area cellular services. The Licence Agreement required fixed licence fee payments for the first three years, transitioning to subscriber-based fees from the fourth year, with the unit call rate linked to licence fee per subscriber. Disputes arose regarding the effective commencement date (29 August 1995 vs 26 September 1995), the definition of subscriber, method of subscriber computation, recovery of advance quarterly fees and revenue-sharing fees, Unit Call Rate revision, and interest on overdue amounts. The respondent directed recovery based on its chosen date and methodology, and issued notices for outstanding amounts plus interest. The Tribunal partly dismissed the petition and upheld the computation and recovery, leading to this appeal.
Findings of Court:
The Tribunal determined that the subscriber base for licence fee calculation must be based on IMSI in the Home Location Register. The appellant, having unconditionally accepted the Migration Package and waived disputes for the pre-migration period, was estopped from later challenging those issues. The Tribunal held that interest could be charged on overdue amounts, and that the unit call rate revision clause only permitted upward adjustments. The Tribunals findings on the migration package, estoppel, interest, and unit call rate were legally sound.
Issues:
(i) Whether the respondents methodology for determining the number of subscribers was valid; (ii) Whether interest could be charged on licence fee dues; (iii) Whether the appellant was entitled to a downward revision of the unit call rate; (iv) Whether penal interest could be levied from 1 January 2000 until payment.
Ratio Decidendi:
The appellant, having unconditionally accepted the Migration Package and waived pre-migration disputes, is estopped from re-litigating those issues under the doctrine of approbation. Interest on overdue amounts is recoverable, and the unit call rate clause permits only upward revision. The Tribunals order is legally unexceptionable.
Result:
The appeal is dismissed without costs.
(A) The dispute is adjudicated under the Telecom Regulatory Authority of India Act, 1997, specifically invoking Section 18 read with Section 14 read as Section 14(a)(I), concerning the validity of licence fee computation and recovery by the Union of India against a telecom service provider. The Licence Agreement, governed by clauses on commencement dates, fixed licence fee, subscriber definition under IMSI in the Home Location Register, unit call rate adjustments, and migration provisions, forms the contractual backdrop. The provisions of the Estoppel Act operate to prevent the appellant from inconsistent conduct after unconditionally accepting a migration package, precluding the re-litigation of settled matters relating to the pre-migration period. The temporal interpretation of the licence period, revenue parameters, and the bar on re-opening closed issues are analyzed in light of the statutory and contractual framework.
(B) Key legal principles include: the doctrine of estoppel preventing approbation and reprobation; a party who accepts a benefit under a contract cannot later contest its validity or consistency; the finality of settlement through a migration package; and the permissibility of interest recovery on overdue licence fees subject to agreed deadlines and conditions.
Facts of the case:
The appellant holds a licence for Delhi Metro area cellular services. The Licence Agreement required fixed licence fee payments for the first three years, transitioning to subscriber-based fees from the fourth year, with the unit call rate linked to licence fee per subscriber. Disputes arose regarding the effective commencement date (29 August 1995 vs 26 September 1995), the definition of subscriber, method of subscriber computation, recovery of advance quarterly fees and revenue-sharing fees, Unit Call Rate revision, and interest on overdue amounts. The respondent directed recovery based on its chosen date and methodology, and issued notices for outstanding amounts plus interest. The Tribunal partly dismissed the petition and upheld the computation and recovery, leading to this appeal.
Findings of Court:
The Tribunal determined that the subscriber base for licence fee calculation must be based on IMSI in the Home Location Register. The appellant, having unconditionally accepted the Migration Package and waived disputes for the pre-migration period, was estopped from later challenging those issues. The Tribunal held that interest could be charged on overdue amounts, and that the unit call rate revision clause only permitted upward adjustments. The Tribunals findings on the migration package, estoppel, interest, and unit call rate were legally sound.
Issues:
(i) Whether the respondents methodology for determining the number of subscribers was valid; (ii) Whether interest could be charged on licence fee dues; (iii) Whether the appellant was entitled to a downward revision of the unit call rate; (iv) Whether penal interest could be levied from 1 January 2000 until payment.
Ratio Decidendi:
The appellant, having unconditionally accepted the Migration Package and waived pre-migration disputes, is estopped from re-litigating those issues under the doctrine of approbation. Interest on overdue amounts is recoverable, and the unit call rate clause permits only upward revision. The Tribunals order is legally unexceptionable.
Result:
The appeal is dismissed without costs.
JUDGMENT
T.S. Thakur, J. —
1. This appeal under Section 18 of the Telecom RegulatoryAuthority of India Act, 1997 is directed against an orderdated 23rdMay, 2003 passed by the Telecom DisputesSettlement Appellate Tribunal, New Delhi, whereby theTribunal has dismissed in part the petition filed by theappellant under Section 14 (a)(I) of the Act and upheld thecomputation of licence fee demanded and realized by therespondent-Union of India in terms of the LicenceAgreement executed between the parties.
2. The appellant-company holds a licence to providecellular mobile telephone services for Delhi Metro area.TheLicence Agreement executed between the appellant on theone handandtheGovernment of India ontheother,interalia, provided for payment of fixed amount towards licencefee for the first three years of the licence period. From thefourth year onwards the licence fee payable was to be onthe basis of number of subscribers of the service providersubject to the minimum stipulated in the agreement. Clause19 of the Licence Agreement in particular dealt with thisaspect and, inter alia, provided that for the first three yearsa lump sum licence fee shall be chargeable annually and that the year shallbe reckoned asthe period of twelvemonths beginning with the date of commissioning of the services or completion of twelve months from the date of the signing of the licence whichever is earlier.
3. The appellant’s case before the Tribunal was thatalthough it had a provisional operational clearance from therespondent effective from 29thAugust, 1995 and aninterface/service approval from 26thSeptember, 1995, itcould commence commercial services only from 15thNovember, 1995 meaning thereby the Licence Agreementshould be deemed to have become operative only from 15thNovember, 1995. The respondents, however, treated 26thSeptember 1995 i.e. the date when the interface/serviceclearance was given as the date of commencement of theLicence Agreement and computed the licence fee dues,interest, penal interest, liquidated damages etc. withreference to the said date. The appellant also questioned themethod of computing the number of subscribers fordetermining the licence fee payable from the fourth yearonwards contending that the term “subscribers” should beunderstood to be such as have activated cellular mobiletelephone connection from the appellant and as arecurrently activated and used by a person for which bills areissued by the appellant. A few other disputes were alsoraised by the appellant in the petition filed on its behalf. Oneof them related to the alleged illegality and arbitrarycomputation of the advance payment stipulated for theentire quarter as due in the month of June itself andcalculation of the interest and penal interest on the overdueamount. One other grievance of the appellant was regardingthe Unit Call Rate for the purpose of calculation of thelicence fee.It was contended by the appellant that in termsof the Licence Agreement the rate of Rs.5 lakhs per 100subscribers was based on the Unit Call Rate of Rs.1.10. Thisrate was revised by the respondent to Rs.6.023 lakhs per100 subscribers or part thereof on 30thJuly 1998 based onthe Unit Call Rate of Rs.1.40 prevalent at that time. Unit CallRate was then reduced to Rs.1.20 from 1stMay, 1999. Theappellant, therefore, claimed that the calculation of thelicence fee payable for the period from 1st May, 1999 to 31stJuly, 1999 should be on the basis of the then Unit Call Rateprevalent, namely, Rs.1.20 only.
4. The respondent contested the petition on severalgrounds giving rise to the following four issues which theTribunal framed for determination:
(i) Whether the methodology adopted by the Respondent for arriving at the number of subscribers from the 4th year of the Licence Agreement was in order?
(ii) Whether the Respondent could charge interest on the licence fee payable by the Petitioner as demanded by the Respondentinlettersdated10thAugust 1999and 6th March 2000?
(iii) Whether the Petitioner is entitled to the benefit of reduction in the unit call rate with effect from 1stMay 1999 for calculating the per subscriber licence fee?
(iv)Whether the respondent can levy penal interest on the licence fee from 1st February 2000 till the actual date of payment?
5. In so far as issue No.(i) above is concerned, the Tribunal took the view that the respondents had clarified to the appellant and other cellular operators that the basis for calculating the number of subscribers for determining the licence fee shall be the total figure of IMSI in the Home Location Register. The Tribunal found that the representation made on the subject by the petitioner-appellant on 1stApril, 1999 was rejected by the respondent on 23rdApril, 1999 and the appellant offered a Migration Package on 22ndJuly, 1999 which, inter alia, contained a clause that no dispute relating to the Licence Agreement for the period upto 31stJuly 1999 shall be raised at any future date. The appellant gave its unconditional acceptance to the entire Migration package on 27th July, 1999. Having done so, the appellant was not entitled to raise any issue that related to the pre-migration period.
6. There is, inour opinion,nolegal infirmityin the view taken by the Tribunal. Once the petitioner-appellant had specifically and unconditionally agreed to accept the Migration Package and given up all disputes relating to Licence Agreement for the period upto 31st July 1999, it was not open to it to turn around and agitate any such dispute after availing of the Migration Package. A party who has unconditionally accepted the package cannot after such acceptance reject the conditions subject to which the benefits were extended to him under the package.It cannot reject what is inconvenient and onerous while accepting what is beneficial to its interests. The package having been offered subject to the conditions that all disputes relating to the Licence Agreement for the period ending 31stJuly 1999 shall stand abandoned by the operators there was no room going back on that representation.
7. Relying upon the decision of this Court inCity Montessori Schoolv.State of Uttar Pradesh and Ors.1 2009 (14) SCC 253, New Bihar Biri Leaves Co.v.State of Bihar,2 1981 (1) SCC 537 and R.N. Goswain v. Yashpal Dhir,3 AIR 1993 SC 352,this Court has in Civil Appeal No. 7236 of 2003 - Shyam Telelink now Sistema Shyam Teleservices Ltd. v. Union of India,4 held that no one can approbate and reprobate and anyone who has accepted with full knowledge or notice of facts, benefits under a transaction which he might have rejected or contested, cannot question the transaction or take up an inconsistent position qua the same.We have said:
“The maximqui approbat non reprobat(one who approbates cannot reprobate) is firmly embodied in English Common Law and often applied by Courts in this country. It is akin to the doctrine of benefits and burdens which at its most basic level provides that a person taking advantage under an instrument which bothgrantsa benefit andimposes a burden cannot take the former without complyingwith the latter. A person cannot approbate and reprobate or accept and reject the sameinstrument.”
8. In the light of the above, the view taken by the Tribunal is legally unexceptionable.
9. That brings us to the second issue formulated by the Tribunal for determination. The Tribunal has answered this issue in favour of the appellant holding that while respondent was entitled to recover licence fee together with interest from the earlier unpaid amounts upto and for the month of July 1999, it was not entitled to recover both advance quarterlylicence fee for July-September1999 and revenue-sharing fees for August 1999 and September 1999 in terms of the Migration Package. This part of the order of the Tribunal has not been assailed before us by the appellant obviously because the view taken by the Tribunal has gone in its favour and the matter remitted back for re- working the dues along with interest by the end of July1999, keeping in view the observations made by theTribunal in para 23 of its order. It is noteworthy that theGovernment has also not assailed the said part of the order.
10. The third issue which had been taken up by the Tribunalfor considerationrelatedto the UnitCallRateand the effect of any revision in such rates. Condition 19.1(f) which is relevant in this context reads:
“19.1(f): The rate of Rs.five lakhs per hundred subscribers or part thereof is based on the unit call rate of Rs.1.10. Fourth yearonwards, as defined in clause 19.1(d), therate of Rs.five lakhs will be revised based on the unit call rate. The revision will be limited to 75% of the overall increase in the unit rateduring the period preceding such revisions.”
11. Relying on the above provisions Tribunal held that even though there is no specific exclusion of downward revision in the clause extracted above, the limiting of the revision is confined to increase only. The expression”revision will be limited to 75% of the overall increase in the unit rate” appearingin clause19.1(f)(supra) is indicativeof the fact that revision was envisagedonly in thecase of increase in Unit Call Rate and not in the case of fluctuation resulting in a decrease in the said rate. That apart, the Tribunal has rightly held that the petitioner-appellanthad not led any evidence before it and that the question regarding Unit Call Rate was raised by it at any stage either before or after the licence was issued for the year 1994 and that the issue relating to the Licence Agreement could not be agitated being a pre-migration package.
12. That leaves us with issue no.4 formulated by the Tribunal relating to the levy of interest on the licence fee from 1stJanuary 2000 till actual date of payment. The Tribunalhas taken theview,and in our opinion rightly so, that the respondents were entitled to recover not only the outstanding licence dues but also interest due on the same for the period of default. The Tribunal has rightly held that to the extent condition stipulated a deadline i.e. 31st January, 2000 it was open to the respondent to charge simple interest on the overdue amount for keeping the licence valid instead of terminating the same on the ground of default.
13. In thetotalityoftheabove circumstances, we seeno reason to interfere with the order passed by the Tribunal nor do we see any legal flaw in the directions issued by the Tribunal for re-working the dues along with interest keeping in view the observations made in the order under appeal.
14. There is no merit in this appeal which is hereby dismissed but without any order as to costs.
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