TELECOM DISPUTES SETTLEMENT & APPELLATE TRIBUNAL
TELECOM DISPUTES SETTLEMENT & APPELLATE TRIBUNAL
Dated 3rd May, 2010
Petition No.327 of
Hughes Communications India Limited Petitioner
Department of Telecommunications Respondent
MR. JUSTICE S.B.SINHA, CHAIRPERSON
MR. G. D. GAIHA, MEMBER
Mr. Ramji Srinivasan, Senior Advocate,
Mr. Vinoba Bhoopathy N., Advocate
Mr. Vineet Malhotra, Advocate
Mr. Shanker Chhabra, Advocate
The petitioner was granted a license in terms of Section 4 of Indian Telegraphs Act, 1885 (hereinafter called and referred to for the sake of brevity as The 1885 Act).
filed this petition claiming inter alia the following reliefs:-
Direct the Respondent to forthwith issue No Due Certificate and also grant a NLD Licence immediately and
Pass such further Orders as this Honble Tribunal may deem fit and proper in the facts and circumstances of the case.
basic fact of the matter is not in dispute.
about 3.8.1994, the petitioner was granted a VSAT license. They also possessed all-India ISP License, Category A. By reason of a Press
Release issued by the respondent on or about 10.11.04, all ISPs were allowed to provide VPN services. Licenses for rendering ISP and VPN services were issued by the respondent, the relevant portions of which are as under:-
3.1 Tariff shall be prescribed by TRAI from time to time.
time non-refundable Entry Fee of Rs. 10 crores, Rs.2 crores and Rs. 1 crore for category A,B & C ISPs respectively shall be payable. Bank / Demand Draft in favour of Pay & Accounts Officer(HQrs.) DoT, New Delhi to be submitted before signing of the amendment to the Licence Agreement.
licence fee shall be charged at the rate of 8% of Adjusted Gross Revenue generated under the licence.
Financial Bank Guarantee (FBG) of an amount of Rs.1 crore, Rs. 20 lakhs and Rs. 10 lakh for Category A,B and C ISPs respectively shall also have to be submitted. Subsequently, the amount of FBG shall be equivalent to the estimated sum payable equivalent to licence fees for the two quarters and other dues not otherwise securitized and any additional amount as deemed fit by the licensor.
5. Other Terms and Conditions
shall not engage in reselling Bandwidth directly or indirectly.
shall be permitted to lay optical fibre cable or set up radio links for provision of the services under its licence in its service area.
shall be configured as Closed User Group (CUG) only. ISP shall comply with rules and regulations for CUR networks issued from time to time.
shall carry only the traffic meant for the internal use of CUG and no third party traffic shall be carried on the VPN.
shall not have any connectivity with PSTN/ISDN/PLMN except when the VPN has been set up using internet access dial-up facility to the ISP node. Outward dialing facility from ISP node is not permitted.
shall be free to enter into mutually agreed commercial arrangement with authorized telecom service providers for sharing of infrastructure.
fee in terms of the said guideline was fixed at Rs. 10 crores. The ISP license holders questioned the correctness of and/or the said guideline before this Tribunal. The said petition was marked as Petition No. 7 of 2005.
reason of a judgment and order dated 3.5.2005, this Tribunal held that the said guidelines issued were violative of the provisions of the Telecom Regulatory Authority of India Act, 1997 (hereinafter called and referred to for the sake of brevity as the said Act).
38. That, however, does not conclude the matter as far as present controversy is concerned. Once it is held that end-to-end managed VPN service is not included in ISP licence there could not be two opinions that the case would come within the purview of Section 11(1)(a)(i) and (ii) of the Act and thus it was necessary to meet the mandatory
requirements of the second proviso thereto. It cannot be contended that DoT is not introducing a new service provider. When you allow a distinct service to a service provider which the service provider hitherto could not provide it has to be held that you are introducing a new service provider. The impugned guidelines quite show that a new service provider with different licence fee and entry fee is sought to be introduced. In that view of the matter, guidelines could not have been enforced till the recommendations of the TRAI were obtained and decision taken thereon by the Government.
40. When this petition was filed we heard the arguments on the interim relief sought by the petitioner, but by our order dated 11.2.2005 we declined to grant any interim relief. Once we hold that the mandatory requirements of Section 11 were breached as recommendations of TRAI were not obtained on the extent of disturbance of level playing field and the terms and conditions in regard to entry fee and annual licence fee these could not have been fixed by the Government. It is not necessary for us to go further into the various submissions made by the parties in this regard as once the matter goes to the TRAI a proper procedure will have to be followed by issuance of Consultation Paper, hearing of the parties etc. We believe that four months period will be enough for the Government to take a final decision in the matter. Till then the impugned guidelines will have to be treated as ad-hoc and would acquire final shape only after a final decision of the government after getting recommendations from TRAI. Till then the impugned guidelines dated 16.12.2004 and directive dated 17.1.2005 shall remain in operation.
Tribunal, however, considered the matter relating to grant of the relief till the government came up, with an order on fixation of NLD and Licensee. It was directed :-
41. The question arises now as to how to mould the relief in the present petition till the Government comes up with its order on fixation of entry fee and licence fee. Keeping in view the observations made in the judgment, we order as under:
ISP licensees who wish to provide VPN Services may do so in terms of the guidelines only after paying the requisite entry fee and would pay the annual licence fee as enjoined in the guidelines; subject to adjustment later on in accordance with the final determination of entry fee and licence fee by the government after receipt of recommendations from TRAI. In case after final
determination, petitioners are entitled to refund of excess of the entry fee and licence fee paid, if any, it would be refunded along with interest at prevalent bank rates, for such of the ISPs who do not wish to continue with VPN services. For those ISPs who opt to continue with VPN service, the excess amount so worked out along with interest will be adjusted against the future dues.
contends that pursuant to or in furtherance of the said judgment, the petitioner as a holder of VPN service license paid continuously the license fee which was to be determined by the Union of India and the same had all along been accepted by respondent without any demur whatsoever.
respondent issued a Press Note on 10.11.2005 inter alia stating that:-
line with the above strategy, Govt. have today taken a major decision to remove various steps to further liberalise the NLD and ILD licences so as to facilitate the growth of the IT and IT enabled services in the country. The various changes brought about are as follows:-
a) NLD Service Licence
With a view to promoting growth of ILD and NLD service and also encouraging competition, the Entry Fee for new NLD licence has been reduced from the existing level of Rs.100 crore to Rs. 2.5 crore. Likewise, the Annual licence fee for NLD licences is to be reduced from the existing level of 15% to 6% of AGR w.e.f. 1.1.2006.
Currently, the NLD licences stipulate a mandatory provision of setting up of a point of presence in each long distance charging area. It has been decided that there shall not be any mandatory roll out obligations for future NLD licence and existing licences with immediate effect.
Currently, the networth requirement for NLD licences is Rs. 2500 crore and Paid Up Capital of Rs. 250 crore is required. In order to promote competition and induction of new players, it has been decided to reduce the networth requirement and paid up capital requirement of the applicant company to the level of Rs. 2.5 crore.
service providers cannot access the subscriber directly for provision of leased circuits/closed user groups. In order to facilitate promotion of BPO/KPO industry, it has been decided that NLD service provider can access the subscribers directly for provision of leased circuits/closed user groups i.e. they can provide last mile connectivity.
b) ILD Service Licensee
Entry Fee for ILD be reduced from Rs. 25 crore to Rs. 2.5 crore.
Annual licence fee for ILD licences to be reduced from 15% to 6% of AGR w.e.f. 1.1.2006
No need to have mandatory roll out obligation for ILD service licensees except for having at least one switch in India.
ILD service providers can access the subscriber directly only for provision of leased circuits/closed user groups.
Networth and Paid Up Capital of the applicant company for ILD service licence shall be Rs. 2.5 crore.
c) Requirement of experience in telecom sector for grant of licences
It has been decided that henceforth prior experience in telecom sector will not be a prerequisite for being granted telecom service licences.
d) Provision of Internet telephony, Internet Services and Broadband services by Access Providers
So far, Internet telephony was not permitted in India. It has now been decided that Access service provider can provide Internet telephony, Internet services and Broadband services. If required, access service provider can use the network of NLD/ILD service licensee.
e) IP-II & ISPs with IP-VPN Licences
The Government has decided to do away with IP II and IPVPN licences. Existing IP-II/ IP-VPN licensees will be allowed to migrate to NLD/ILD service licence.
Provisional entry fee of IP-VPN on migration to NLD/ILD to be adjusted in entry fee and dues to the Government by way of licence fee and spectrum charges / or refunded as per TDSAT order.
ISP with Internet telephony (Restricted) to be charged licence fee at 6% of AGR w.e.f. 1.1.2006.
The access providers can provide broadband services including triple play i.e., voice, video & data. ISPs can provide as per terms and conditions of licence only Internet Access/Internet Content Services whereby Internet has been defined as a global information system that is logically linked by a globally unique address based on IP or its subsequent enhancement/upgradation, ISPs cannot provide content services on a managed network (virtual/Real) not derived from Internet.
IP-II licensees not interested in migrating to NLD/ILD shall not be permitted to provide National/International leased line/bandwidth to individual subscribers as per existing IP-II licence guidelines.
IP-VPN licensees not interested in migrating to NLD/ILD shall not be permitted to carry voice traffic over VPN network.
bare perusal of the paras 5 and 6 of Clause E of the said Press Release, it would be evident that only those who were not interested in migration to NLD/ILD were not to be provided the National/International leased lines/VPN to individual subscribers as per the existing ISP license but undoubtedly those who wanted to migrate became entitled to migrate.
respondent thereafter issued guidelines for issuance of license for NLD services, para 1 whereof reads as under:-
supersession of the Guidelines No. 10-5/99-BS.I(Vol.II) for issue of licence for National Long Distance Service, the following are the broad guidelines, incorporating all the amendments till date, for issue of licence for National Long Distance Service(NLD) in India.
said guidelines issued, it appears, were not to be flexible in nature.
petitioner was assured of migration by the DOT in terms of a communication dated 23.12.2005 which reads as under:
you may be aware, in a recent decision Government has decided to do away with and IPVPN licenses. Existing IP-VPN licensees will be allowed to migrate to NLD/ILD service licence. Details of the decision are available on the DoT website www.dot.gov.in NLD/ILD licences are dealt by BS Cell of the Department of Telecom.
view of the above, you may like to take further appropriate action in this regard accordingly under intimation to this office.
thereto or in furtherance thereof, the petitioner by a letter addressed to the DDG BS of the DoT, inter alia, stated as under:-
also refer to the letter # 820-293/05-LR dated 23.12.2005 from the office of the ADG(LR-V) conveying that the government has decided to do away with IP-VPN license and that the existing IP-VPN licensees would be allowed to migrate to NLD/ILD service licenses. A copy of the aforesaid letter is enclosed herewith for your ready reference. As mentioned in the aforesaid letter, we have perused the guidelines available on the website www.dot.gov.in and have noticed that the same are silent about the migration. Further the letter advises HECL to contact the BS cell of DOT.
petitioner furthermore requested :-
also request you to retain Rs. 2.5 crore out of Rs. 10 Cr already paid by HECL to DOT towards entry fee for IP-VPN and refund balanced Rs. 7.5 Crore immediately to HECL.
formal application was submitted by the petitioner for migration to NLD in the format prescribed therefor in terms of the guidelines on or about 6.1.2006. The petitioner contends that it had to file an application for migration in the prescribed format as no other format was prescribed for those who wanted to migrate from ISPs. A separate petition, however, was filed by the petitioner questioning the correctness/legality of certain demands raised by the respondent, inter alia being in respect of the purported wrong calculation of the adjusted gross revenue (AGR) in respect of its VSAT license on 15.2.2006. An order of status-quo was passed therein by this Tribunal on or about 17.2.2006.
thereafter issued a Circular letter dated 21.6.2006 laying down the conditions which would be applicable to ISPs with VPN permission for grant of NLD/ILD license, the relevant para whereof reads as under:-
ISP with VPN permission obtaining NLD licence will be required to pay Rs. 2.5 crore entry fee; however, an ISP with VPN permission obtaining both NLD and ILD licences will be required to pay Rs. 5 crore (2.5 + 2.5) entry fee. Amount of entry fee earlier paid by ISPs for VPN permission shall be provisionally adjusted against the entry fee for NLD/ILD licence being obtained by such ISP licensees, licence fee during the intervening period and other dues payable to the Government. The excess amount so worked out along with interest at prevalent bank rate will be provisionally adjusted against the future dues in accordance with TDSAT judgment dated 3.5.2005 in Petition 7 of 2005.
contends that it has fulfilled all the conditions laid down by the respondent either in its guidelines or the Circular letter dated 21.6.2006. The petitioner furthermore contends that these guidelines and Circulars were exhaustive in nature.
respondent, however, issued a Letter of Intent(LOI) in favour of the petitioner on 29.6.2006. For the first time, in the said LOI, the petitioner was asked to furnish a No Dues Certificate in respect of all payments arising out of the license granted in terms of Section 4 of the 1885 Act to the petitioner company or the promoter/partner thereof or associate/sister concern.
petitioner questioned the correctness thereof inter alia contending that it had already filed Petition No. 67 of 2006 much before issuance of the said LoI with the conditions attached thereto.
According to the petitioner, the disputed claim could not have been termed as dues which would mean dis-owned. The petitioners would contend that having regard to the fact that it had continuously been operating and has been an ISP licensee even while disputing the AGR claims under the VSAT license and furthermore keeping in view the fact that it had all along been paying the requisite license fees even for NLD and/or ILD operations, the question of furnishing of a no dues certificate would not and could not arise.
petitioner by its letter dated 26.9.06 requested the respondent herein to grant a license stating that it had complied with the requirements thereof. The petitioner however submits that despite request it was not granted a no dues certificate by the LF Section.
Tribunal, by a judgment and order dated 7.7.2006, inter alia, held that all items of revenue income of the licensee must form part of the licensed activities alone and thus some of the items which were considered for computing AGR could not be taken into consideration for calculating the AGR being ultra vires the Section 4 of the Act.
petitioner by a letter dated 26.7.2007 sent a reminder to the respondent stating inter alia that the NLD license be issued without any further delay. It was, furthermore, stated:-
further delay will cause us irrevocable and irreparable injury and loss and we shall be constrained to seek appropriate legal remedies without prejudice to any of our rights and contentions.
not in controversy that pursuant to and / or in furtherance of the judgment of this Tribunal dated 7.7.2006, whereby and whereunder the TRAI was asked to consider as to whether certain activities of the licensees came within the purview of the definition of the term licensed activities or not again came for consideration before this Tribunal upon receipt of the recommendations of TRAI in this behalf. This Tribunal by a judgment and order dated 30.8.2007 held that those activities as recommended by TRAI would not come within the purview of the term licensed activities. One of the contentions which however arose for consideration of this Tribunal was as to whether the recommendations of the TRAI to the effect that the judgment should be given only a prospective effect should be accepted or not. This
Tribunal, while rejecting the said recommendations of TRAI, however, opined that relief should be granted in favour of the respective applicants from the date of filing of their respective applications and not prior thereto.
petitioner, however, contends that it had, in the mean while, i.e., on 18.10.2006 and 3.11.2006, had brought to the notice of the respondent that no dues other than the disputed ones were pending. According to the petitioner, those disputed claims having been challenged before this Tribunal, and whereupon, an order of stay had been passed, the respondent was not legally entitled to deny issuance of a no dues certificate in favour of the petitioner having regard to the fact that apart therefrom no other dues were payable by it.
not in controversy that the petitioner on or about 13.11.2007 received an application from the respondent, which reads as under:-
undersigned has been directed to refer to this office letter of even No. dated 7.9.2007 conveying the extension of validity period of LOI upto 4.12.07.
is requested that the outstanding dues of LF/WPC may kindly be cleared and thereafter sign the NLD licence agreement on or before 4.12.07 failing which the LOI would expire and no request for extension would be entertained.
on the aforementioned premise that this petition was filed by the petitioner on or about 17.12.2007 claiming for the reliefs which we have noticed hereinbefore.
respondent in its reply, inter alia, contended that it had preferred an appeal before the Supreme Court of India in terms of Section 18 of the TRAI Act, 1997 against the judgment and order of this Tribunal dated 30.8.2007, wherein an Order stay has been passed.
to the Respondent, having regard to the fact that Supreme Court of India had granted stay of the aforementioned judgment dated 30.8.2007, the directions issued by this Tribunal have become non-operative, and, thus, the Adjusted Gross Revenue as were claimed by it were fully payable. The respondent contends that although the principal amount would be for a sum of about Rs.12.13 crores, out of which a sum of Rs.2.5 crores had been adjusted from the deposit of Rs. 10 crores made by the petitioner towards entry fee for procuring the NLD license, it is bound to pay the rest of the amount with interest stipulated in terms of the original license. It has, furthermore, been contended that in any event, this Tribunal in its judgment dated 30.8.2007 having laid down that the petitioner would be entitled to the reliefs sought for from the date of filing of the petition and the demand made by the respondent being prior thereto, must be held to be payable by it and in that view of the matter, a huge amount is due to the respondent towards AGR, as a result whereof, it is not entitled to obtain a no dues certificate as prayed for or otherwise.
Ramji Srinivasan, the learned Senior Counsel appearing on behalf of the petitioner has raised the following contentions:-
Having regard to the fact that the respondent itself adopted the migration policy in respect whereof the petitioner had no other option but to accept the offer of the respondents, they are estopped and precluded from raising any contention that even for the purpose of migration, a no dues certificate would be necessary.
The petitioner having already filed a petition disputing the claim of the Department of Telecommunication (DoT), it had no authority to ask for a no dues certificate as of the vested legal right of the petitioner would stand defeated. The insistence on the part of the DoT to ask for a no dues certificate on the basis of the order of the status quo passed by this Tribunal on 17.2.2006, must be held to be vitiated in law as the same would amount to overreaching of the court.
The impugned order, for all intent and purport, is a device to get around the order of status quo passed by this Tribunal. The respondent, having accepted the entry fee as also the periodic payment in terms of with the conditions of license prescribed for grant of NLD facilities, the respondent is precluded or estopped by conduct from asking for a no dues certificate.
None of the documents including the guidelines issued or the conditions prescribed, being dated 16.12.2004 and 15.12.2005 having laid down any condition that the petitioner for the purpose of migration to the NLD regime must obtain a no dues certificate which, condition was imposed for the first time in the letter of intent the same must be held to vitiated in law.
Having regard to the fact that the respondent itself in one of its letters directed that the petitioner would be migrated, and the petitioner having opted pursuant to or in furtherance of the said assurance granted by the respondent, the doctrine of promissory estoppel must be held to be directed in the facts and circumstance of this case.
The respondent having not raised any contention that there was any dues other than the disputed amount of AGR, the question of non-issuance of no dues certificate did not and could not arise.
The counter affidavit having been filed on 16.1.2008, on which date also the petitioner did not owe any debt by way of AGR or otherwise, to the respondent, it cannot, relying on or on the basis of a subsequent event, namely grant of the operation of order of stay of this Tribunals judgment dated 30.8.2007, raise a contention that the amount has in fact fallen due.
The petitioner in any event, having furnished a bank guarantee pursuant to the order of this Tribunal, which being sufficient for securing the principal demand of the respondent, it should be held to be entitled to grant of a no dues certificate from the respondent.
It being not a case where the petitioner had applied for grant of a new license and having in fact, applied only for migration and furthermore it having paid the demanded amount of Rs.10 Crores as also having been making the periodical payment for operating of NLD/ILD Licenses, the respondent must be directed not to insist on making payment of the disputed amounts of AGR.
Malhotra, the learned counsel appearing on behalf of the respondent, on the other hand, would contend that the effect of grant of an order of stay passed by the Supreme Court of India being that the judgment and order of the Tribunal dated 30.8.2007, is yet to become inoperative, it must be held that the petitioner was bound to pay the AGR in terms of its demand prior to the date of filing of the application, questions the correctness or otherwise of calculation of AGR, namely as on 15.2.2006 i.e. being the dues in question is for the year 2004-05.
short question which arises for our consideration in this petition is as to whether in the peculiar facts and circumstances of the case, the petitioner was entitled to a no dues certificate from the respondent and/or whether the same was required in law?
basic fact of the matter as noticed hereinbefore, is not in dispute. The petitioner had to migrate to NLD/ILD license from its existing IP/VPN license having regard to the change in the policy decision adopted by the respondent itself.
would be the meaning of the term migration may be noticed.
Dictionary (10th Edition)(at Page 902), the word, Migration, is defined as under:-
from one part of something to another; transfer or cause to transfer from one system to another.
expression, this may mean shifting from one position to the other.
licensee is asked to migrate from one regime to the other, stricto sensu, he would not be a new licensee. It is one thing to say that certain conditions have been prescribed for those who intend to have a new license but it is another thing to say that the same conditions would apply to the licensees who intend to migrate from the other.
petitioner was assured of migration. A promise was made to it. It had altered it position pursuant to or in furtherance of the said promise. It had not only taken requisite steps for the purpose of migration, it stands accepted that it had even paid a sum of Rs. 10 crores by way of entry fee. It has also not been denied or disputed that the petitioner had regularly been paying the requisite license fees, on quarterly basis, which was being accepted by the respondent without any demur whatsoever.
true that in the fundamental sense of term, acceptance of some amount from another by itself may not be sufficient to arrive at a conclusion that a license/permission had been granted in terms of the provisions of Section 4 of the 1885 Act; but in a situation of this nature, it must be held that the respondent was bound to grant the license. Whether the petitioner in the earlier years were paying the correct amount of the AGR as demanded by the respondent was the subject matter of a litigation. The contention of the petitioner that some items of revenue which had wrongly been taken into consideration by the respondent in calculating AGR was found to be correct. This Tribunal, categorically held that the respondent could take into consideration only such items which came within the purview of the licensed activities for the purpose of calculation of AGR. It is only for finding out which of the items, should not be taken into consideration for the purpose of calculation of AGR that this Tribunal has requested TRAI to make its recommendation. TRAI, upon undertaking an elaborate exercise categorised some items of income/revenue earned by the licensee which would not come within the purview of the licensed activities. It may be true that this Tribunal in its discretion, rightly or wrongly, directed that the relief shall be granted on and from the date of filing of the application.
Ramji Srinivasan contends that the same would not mean that thereby the relief which had been claimed in respect of appellant immediately prior to filing of the said petition, shall stand disallowed being a matter of calculation of AGR.
which date the items which were not found to be involving licensing activities for computing AGR has been laid down. Thus, fresh calculations will have to be made from the date of filing of the petition but not prior thereto. However, the matter is pending before the Supreme Court of India. Whether the Supreme Court of India in exercise of its jurisdiction under Section 18 of the TRAI Act, would uphold such findings of this Tribunal is a matter is within its exclusive domain. The question, however, remains as to whether on that ground alone, the respondent can insist on procurement of a no dues certificate from one of its licensees.
between the parties in a lis are required to be determined as on the date on which the petition is filed. There cannot be any doubt whatsoever that in a given case, the Court may, having regard to the provisions akin to Order VII Rule 7 of the Code of Civil Procedure may take into consideration subsequent events and mould reliefs.
this case, such subsequent events pertain to an order passed by the Supreme Court of India only. The order of stay of operation of the judgment or Order of the Tribunal dated 30.8.2007 is interim in nature. No decision, in our opinion, can be said to have been rendered thereby. Furthermore, in this case, an order of status quo had been passed. What was meant by the said term has been stated by the Supreme Court of India in Satyabrata Biswas v. Kalyan Kumar Kisku [1994(2)SCC 266] wherein it was observed:-
In Whartons Law Lexicon, 14th
Edn. at p. 951, status quo has been defined as meaning:
existing state of things at any given date, e.g., Status quo ante bellum, the state of things before the war.
there was an order of status quo which was binding upon the respondent, it could not have imposed any fresh condition for the purpose of grant of license, particularly when no such condition had been attached in all its letters/orders/policy decision. We have taken note of the guidelines issued by the Central Government itself. It is not in controversy that the petitioner has complied with each and every condition laid down in the said guidelines as also the letters issued to it. Only when the letter of intent was issued, another condition was imposed. We would assume that ordinarily it was entitled to do so. However, having regard to the fact that the offer of the petitioner was for migration, in our opinion, it was impermissible for the respondent to lay down any fresh condition and that too at later stage, when the petitioner had altered its position relying on or on behalf of the promises made by the respondent itself.
Supreme Court of India in Southern Petrochemical Industries Co. Ltd. v. Electricity Inspector & ETIO 2007 (5) SCC 447 held as under:-
Promissory estoppel issue
121. The doctrine of promissory estoppel would undoubtedly be applicable where an entrepreneur alters his position pursuant to or in furtherance of the promise made by a State to grant inter alia exemption from payment of taxes or charges on the basis of the current tariff. Such a policy decision on the part of the State shall not only be expressed by reason of notifications issued under the statutory provisions but also under the executive instructions. The appellants had undoubtedly been enjoying the benefit of (sic exemption from) payment of tax in respect of sale/consumption of electrical energy in relation to the cogenerating power plants.
122. Unlike an ordinary estoppel, promissory estoppel gives rise to a cause of action. It indisputably creates a right. It also acts on equity. However, its application against constitutional or statutory provisions is impermissible in law.
It was furthermore observed:
129. We may also notice an interesting observation made by Beg, J. in Madan Mohan Pathak v. Union of India wherein the learned Judge in his concurrent judgment while striking down the Life Insurance Corporation (Modification of Settlement) Act, 1976, opined: (SCC p. 87, para 34)
34. Furthermore, I think that the principle laid down by this Court in Union of India v. Indo-Afghan Agencies Ltd. can also be taken into account in judging the reasonableness of the provision in this case. It was held there (at SCR p. 385):
our jurisprudence the Government is not exempt from liability to carry out the representation made by it as to its future conduct and it cannot on some undefined and undisclosed ground of necessity or expediency fail to carry out the promise solemnly made by it, nor claim to be the judge of its own obligation to the citizen on an ex parte appraisement of the circumstances in which the obligation has arisen.
In that case, equitable principles were invoked against the Government. It is true that, in the instant case, it is a provision of the Act of Parliament and not merely a governmental order whose validity is challenged before us. Nevertheless, we cannot forget that the Act is the result of a proposal made by the Government of the day which, instead of proceeding under Section 11(2) of the Life Insurance Corporation Act, chose to make an Act of Parliament protected by emergency provisions. I think that the prospects held out, the representations made, the conduct of the Government, and equities arising therefrom, may all be taken into consideration for judging whether a particular piece of legislation, initiated by the Government and enacted by Parliament, is reasonable.
We, therefore, are of the opinion that doctrine of promissory estoppel also preserves a right. A right would be preserved when it is not expressly taken away but in fact has expressly been preserved.
In view of the application of doctrine of promissory estoppel in the case of the appellants, their right is not destroyed and in that view of the matter although the scheme under the impugned Act is different from the 1939 Act and the 1962 Act and furthermore in view of the phraseology used in Section 20(1) of the 2003 Act, right of the appellants cannot be said to have been destroyed. The legislature in fact has acknowledged that right to be existing in the appellants.
In this case, the aforementioned decision of the Supreme Court of India is attracted in all fours. In this case, in a pending litigation an offer was made to the petitioner. Pursuant to the said offer the petitioner made its position clear. In fact, the respondent itself in one of its letters categorically stated that the petitioner shall stand migrated to ILD/NLD regime, even for the said purpose, the petitioner had not only paid the entry fee but also had been continuously paying the requisite amount for work as ILD/NLD operator on a regular basis. Such payments had been accepted by the respondent without any demur whatsoever.
The respondent, in our considered opinion, therefore, is bound by its own conduct. The principles of estoppel by conduct in a case of this nature, shall stand attracted. In Supdt.of Taxes Vs. Onkarmal Nathmal Trust 1976(1) SCC 766, the Supreme Court of India held as under:
third contention of the Solicitor-General is that the respondents waived service of a notice within two years of the expiry of the return period by reason of the order of injunction obtained by them. Waiver is either a form of estoppel or an election. The doctrine of estoppel by conduct means that where one by words or conduct wilfully causes another to believe in the existence of certain state of things and induces him to act on that belief, or to alter his own previous position, the former is concluded from averring against the latter a different state of things as existing at that time. The fundamental requirement as to estoppel by conduct is that the estoppel must concern an existing state of facts. There is no common law estoppel founded on a statement of future intention. The doctrine of promissory estoppel is applied to cases where a promiser has been estopped from acting inconsistently with a promise not to enforce an existing legal obligation. This doctrine differs from estoppel properly so called in that the presentation relied upon need not be one of present fact. The second requirement of an estoppel by conduct is that it should be unambiguous. Finally, an estoppel cannot be relied on if the result of giving effect to it would be something that is prohibited by law. Estoppel is only a rule of evidence. One cannot found an action upon estoppel. Estoppel is important as a step towards relief on the hypothesis that the defendant is estopped from denying the truth of something which he has said.
Furthermore, the question as to whether the amount in question is payable or not is itself pending before the Supreme Court of India. The terms payable carries with it a definite meaning. It means owed and required to be paid. It was so held by the Supreme Court of India in State of Kerala v. V.R. Kalliyanikutty - 1999(3) SCC 657 stating as under
8. Looking to the object of Section 71 we have to examine whether time-barred claims of the State Financial Corporation and the banks can be recovered under it. Is the object only speed of recovery or is it also enlargement of the right to recover? The respondent-institutions rely on the words amount due in Section 71 as encompassing time-barred claims also. Now, what is meant by the words amounts due used in Section 71 of the Kerala Revenue Recovery Act as also in the notifications issued under Section 71? Do these words refer to the amounts repayable under the terms of the loan agreements executed between the debtor and the creditor irrespective of whether the claim of the creditor has become time-barred or not? Or do these words refer only to those claims of the creditor which are legally recoverable? An amount due normally refers to an amount which the creditor has a right to recover. Wharton in Law Lexicon defines due as anything owing; that which one contracts to pay to another.
In Blacks Law Dictionary,
6th Edn., at p. 499 the following comment appears against the word due:
word due always imports a fixed and settled obligation or liability; but with reference to the time for its payment there is considerable ambiguity in the use of the term, the precise signification being determined in each case from the context. It may mean that the debt or claim in question is now (presently or immediately) matured and enforceable, or that it matured at sometime in the past and yet remains unsatisfied, or that it is fixed and certain but the day appointed for its payment has not yet arrived. But commonly and in the absence of any qualifying expressions, the word due is restricted to the first of these meanings, the second being expressed by the term overdue and the third by the word payable.
There is no reference in these
definitions to a time-barred debt. In every case the exact meaning of the word due will depend upon the context in which that word appears.
& Customs v. ITC Ltd.,(2007) 1 SCC 6, it is stated:
21. The question as to
non-levy or short-levy of an excise duty would arise only when the levy had been levied in accordance with law. When a duty is levied, it becomes payable which in turn would mean legally recoverable.
There is another aspect of the matter which cannot be lost sight of. Insistence on demanding a no dues certificate for one purpose or the other has been deprecated by the Supreme Court of India recently in National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd 2009 (1) SCC 267 in the following terms:-
49. Obtaining of
undated receipts-in-advance in regard to regular/routine payments by government departments and corporate sector is an accepted practice which has come to stay due to administrative exigencies and accounting necessities. The reason for insisting upon undated voucher/receipt is that as on the date of execution of such voucher/receipt, payment is not made. The payment is made only on a future date long after obtaining the receipt. If the date of execution of the receipt is mentioned in the receipt and the payment is released long thereafter, the receipt acknowledging the amount as having been received on a much earlier date will be absurd and meaningless. Therefore, undated receipts are taken so that it can be used in respect of subsequent payments by incorporating the appropriate date. But many a time, matters are dealt with so casually that the date is not filled even when payment is made. Be that as it may. But what is of some concern is the routine insistence by some government departments, statutory corporations and government companies for issue of undated no-dues certificates or full and final settlements vouchers acknowledging receipt of a sum which is smaller than the claim in full and final settlement of all claims, as a condition precedent for releasing even the admitted dues. Such a procedure requiring the claimant to issue an undated receipt (acknowledging receipt of a sum smaller than his claim) in full and final settlement, as a condition for releasing an admitted lesser amount, is unfair, irregular and illegal and requires to be deprecated.
It is, therefore, evident that the routine demand of a no dues certificate as a condition in a situation of this nature cannot be appreciated.
In any view of the matter, the petitioner was granted interim relief by this Tribunal, in terms whereof the respondent was asked to grant a no dues certificate on the petitioners furnishing a bank guarantee of Rs.12.3 crores. The
respondent moved the Supreme Court of India against the said order. It is true that the operation of the said order was stayed but it is a matter of concern to notice that despite the fact that the order of this Tribunal was stayed by the Supreme Court of India as a result whereof furnishing of bank guarantee by the petitioner also should have been held to be non est in the eyes of law. The respondent for reasons best known to it took steps to encash the said bank guarantee. However, the Supreme Court of India stayed the hands of the respondent from so doing. It, however, remains that a bank guarantee has been furnished. The said bank guarantee covers the principal amount alleged to be the dues. In the event, the Supreme Court of India ultimately hold in the appeals preferred before it against the judgments of this Tribunal dated 30.08.2007 as also the interim order dated 14.02.2008 pass an appropriate order that at least the principal amount of AGR stands secured. In that view of the matter, we are of the opinion that subject to any decision which may be taken by the Supreme Court of India in the matters pending before it, and furthermore, in view of the fact that a few years time has elapsed, interest of justice would be sub-served if the respondent is directed to issue the license without insisting on furnishing of a no dues certificate, subject, however, to the condition that the petitioner shall renew the bank guarantee till the decision of the Supreme Court of India.
With the aforementioned observations and directions, this petition is allowed, with no order as to costs.