Delhi High Court
Bharti Airtel Limited & Ors vs Union Of India on 11 May, 2016
Author: Rajiv Sahai Endlaw
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 11th May, 2016
+ W.P.(C) No.6773/2013 & CM No.14692/2013 (for stay)
BHARTI AIRTEL LIMITED & ORS ..... Petitioners
Through: Mr. Gopal Jain, Sr. Adv. with Mr.
Harsh Kaushik, Mr. Abhay
Chattopadhyay and Ms. Chinmayee
Chandra, Advs.
Versus
UNION OF INDIA .... Respondent
Through: Mr. Gaurav Sarin, Sr. Panel Counsel
with Mr. Vidur Mohan, Ms. Charul
Sarin and Mr. Ajitesh K. Kir, Advs.
CORAM:-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1. The petition (i) impugns the decision dated 26th December, 2012 of
the respondent Department of Telecommunications (DoT) of the Union of
India (UOI) refusing to refund the amount deposited by the petitioner no.1
Bharti Airtel Ltd. (petitioners no.2 and 3 are its shareholders and the word
"petitioner" hereafter will mean Bharti Airtel Ltd. only); ii) seeks a direction
to the respondent UOI to comply with the understanding and obligations
recorded in the petitioner‟s letters dated 1st August, 2001, 6th November,
2012 and 10th December, 2012; iii) seeks mandamus directing the
respondent UOI to refund the sum of Rs.399.92 crores to the petitioner; iv)
W.P.(C) No.6773/2013 Page 1 of 40
seeks mandamus directing the respondent UOI to also pay interest on the
said amount of Rs.399.92 crores i.e. a total sum of Rs.2495.87 crores to the
petitioners with future interest till the date of refund; and, v) alternatively
seeks permission for the petitioner to adjust the amount so refundable by the
respondent in the future licence fee payments due to the respondent UOI
from the petitioner.
2. Notice of the petition was issued and a counter affidavit has been filed
by the respondent UOI and to which a rejoinder has been filed by the
petitioner. The counsels were heard on 8th October, 2015 and 4th November,
2015 when judgment was reserved.
3. It is the case of the petitioner:
(i) that the petitioner was granted a licence dated 26th December,
1995 under Section 4(1)(b) of the Telegraph Act, 1885, to
establish, maintain and work telegraph in the Punjab Telecom
Circle;
(ii) that for reasons attributable to the respondent UOI, the licence
of the petitioner was de-facto suspended from 18th April, 1996
to 10th March, 1998 (though the petitioner has made detailed
W.P.(C) No.6773/2013 Page 2 of 40
pleadings in this regard but the need to refer thereto, for the
reasons hereinafter appearing, for the purpose of the present
petition is not felt);
(iii) that the petitioner thus did not pay the licence fee payable by it
for the period 18th April, 1996 to 10th March, 1998;
(iv) that the respondent UOI however insisted upon payment of
licence fee for the aforesaid period together with interest and
penal interest thereon and upon non payment thereof by the
petitioner, terminated the said licence on 15th July, 1999;
(v) that though the petitioner represented to the respondent UOI to
refer the dispute aforesaid to arbitration in accordance with the
terms therefor in the licence, but to no avail;
(vi) that on the contrary, the respondent UOI, to arm-twist the
petitioner, denied release of eight Basic Service Licences, eight
Cellular Licences and one National Long Distance Licence to
the associate companies of the petitioner;
W.P.(C) No.6773/2013 Page 3 of 40
(vii) that the petitioner was thus constrained to deposit the entire
licence fee along with interest and penal interest for the
aforesaid period with the respondent UOI as "on account
payment", strictly without prejudice to its rights and
contentions and with a clear understanding that in the event of
the dispute being decided in favour of the petitioner, the
respondent UOI will forthwith refund the said amount along
with interest for the period the same was retained by the
respondent UOI; the said understanding is reflected in the letter
dated 1st August, 2001 of the petitioner;
(viii) that in accordance with the aforesaid understanding, a reference
dated 27th September, 2001 was made for arbitration;
(ix) that the petitioner in the said arbitration made a claim for refund
of the amount deposited along with interest at the same rate at
which the respondent UOI had demanded interest;
(x) that the Sole Arbitrator vide arbitral award dated 20th
December, 2002 dismissed the claim of the petitioner;
W.P.(C) No.6773/2013 Page 4 of 40
(xi) that the petitioner filed OMP No.77/2003 under Section 34 of
the Arbitration and Conciliation Act, 1996 (Arbitration Act)
before this Court and which had been allowed vide judgment
dated 14th September, 2012 by setting aside the arbitral award;
(xii) that though the petitioner in the aforesaid OMP No.77/2003
sought the relief of refund of the amount aforesaid deposited by
it with interest but it was held that the Arbitration Act did not
permit the Court to grant the said relief and the petitioner would
have to resort to appropriate legal remedies to seek the refund;
(xiii) that the petitioner accordingly, vide its letters dated 6th
November, 2012 and 10th December, 2012, sought refund of
Rs.399.29 crores out of Rs.485.58 crores deposited as aforesaid
after adjusting the sum of Rs.85.66 crores in a separate matter
being Civil Appeal No.5050/2012;
(xiv) that the respondent is also liable for interest and as on the date
of filing of the petition, a total sum of Rs.2495.87 crores was
due from the respondent UOI;
W.P.(C) No.6773/2013 Page 5 of 40
(xv) that the respondent UOI however vide impugned letter dated
26th December, 2012, without giving any reason, rejected the
demand of the petitioner;
(xvi) that the respondent UOI has filed FAO (OS) No.87/2013
against the judgment dated 14th September, 2012 setting aside
the arbitral award; along with the said appeal, the respondent
sought stay of the judgment dated 14th September, 2012 but
which application was dismissed by the Division Bench vide
order dated 16th July, 2013; and,
(xvii) that the respondent UOI is not entitled to retain the aforesaid
amount and the respondent UOI by retaining the same is acting
unfairly and unjustifiably enriching itself.
4. The respondent UOI has opposed the writ petition by filing a counter
affidavit pleading:
(a) that the challenge to the respondent‟s letter dated 26th
December, 2012 cannot be by way of a writ petition and the
petitioner ought to have raised a dispute in manner provided
under the licence agreement;
W.P.(C) No.6773/2013 Page 6 of 40
(b) that no dispute in respect of the licence agreement lies before
this Court;
(c) that the petition seeking enforcement of letters dated 1 st August,
2010, 6th November, 2012 and 10th December, 2012 written by
the petitioner is misconceived;
(d) that there was no such understanding between the parties as is
pleaded by the petitioner;
(e) that the writ petition to enforce the understanding otherwise
also is not maintainable;
(f) that the writ petition in the garb of various reliefs claimed
therein seeks recovery of money and which cannot be allowed
in a writ petition;
(g) that the reliefs claimed in the writ petition are even otherwise
beyond the terms of the licence which is a contract under
Section 4 under the Telegraph Act;
W.P.(C) No.6773/2013 Page 7 of 40
(h) that the demand of the petitioner to treat the period from 18 th
April, 1996 to 10th March, 1998 as a "blackout period" was an
afterthought;
(i) that this writ petition has been filed under a false belief that the
judgment dated 14th September, 2012 in OMP No.77/2003 is a
money decree in favour of the petitioner;
(j) that in any case the judgment dated 14 th September, 2012 in
OMP No.77/2003 is subject matter of FAO (OS) No.87/2013;
(k) reliance is placed on Suganmal Vs. State of Madhya Pradesh
AIR 1965 SC 1740 and Union of India Vs. M/s Orient
Enterprises (1998) 3 SCC 501 to contend that a writ petition
under Article 226 is not maintainable for refund of monies;
(l) that even if the judgment dated 14th September, 2012 in OMP
No.77/2003 is a money decree, the remedy of the petitioner is
by way of execution;
(m) that in fact the judgment dated 14th December, 2012 supra
refuses refund to the petitioner and the petitioner has not
W.P.(C) No.6773/2013 Page 8 of 40
preferred any appeal thereagainst and cannot agitate the same in
writ jurisdiction;
(n) reliance is placed on Commissioner of Income Tax Vs.
Chhabil Dass Agarwal 2013 (10) SCALE 326 and State of
Haryana Vs. Jage Ram (1980) 3 SCC 599 to contend that writ
remedy is not available when equally efficacious alternate
remedy is available and to facilitate avoidance of obligations
arising out of a contract; and,
(o) that under the licence agreement, the petitioner is bound to pay
the licence fee and cannot avoid the same.
5. Need to refer to the rejoinder filed by the petitioner is not felt.
6. I must record that when this petition came up on 24 th February, 2014,
the counsel for the respondent UOI handed over the copy of the order dated
21st February, 2014 of the Division Bench in FAO (OS) No.87/2013 supra to
the effect that the hearing of this petition be not taken up till the next date of
hearing i.e. 2nd April, 2014 before the Division Bench. However on 8th
October, 2015 and 15th October, 2015 when arguments in this petition were
heard, it was not the argument of the counsel for the respondent that the
W.P.(C) No.6773/2013 Page 9 of 40
aforesaid order dated 21st February, 2014 of the Division Bench has been
extended or that there was any bar to this Court proceeding with the matter.
However verification on the website of this Court shows FAO (OS)
No.87/2013 to be still pending.
7. The senior counsel for the petitioner during the hearing on 8 th
October, 2015, besides apprising me of the facts aforesaid also stated that
the petitioner, to secure the interest of the respondent UOI in the event of
FAO (OS) No.87/2013 being decided in favour of the respondent UOI is
willing to give a bank guarantee in favour of the respondent UOI against the
refund of the amount.
8. Per contra, the counsel for the respondent UOI during the hearing on
4th November, 2015 besides raising the same contentions as contained in its
counter affidavit, contended:
(i) that when the petitioner, in OMP No.77/2003 has not been
found entitled to the relief of refund, it cannot be granted the relief of
refund of the amounts deposited in this writ petition;
(ii) that the amount due to the petitioner has not been determined
anywhere and without determination, no refund can be ordered;
W.P.(C) No.6773/2013 Page 10 of 40
(iii) that the petitioner has the alternative efficacious remedy before
the Telecom Disputes Settlement and Appellate Tribunal (TDSAT)
under the Telecom Regulatory Authority of India Act, 1997 for
seeking the relief of refund and the writ petition is not maintainable
for this reason also;
(iv) that what has been subject matter of arbitration cannot be the
subject matter of writ petition;
(v) that the petitioner has not given any reason for its entitlement to
refund;
(vi) that as per the letter dated 1st August, 2001 of the petitioner
also, the petitioner had deposited the aforesaid amounts with the
respondent "on account and with a clear understanding that in the
event of a final determination that results in a refund to us, the excess
amount paid by us shall be promptly refunded by DoT" and which
final determination has not been done since the matter is pending
adjudication in FAO(OS) No.87/2013;
W.P.(C) No.6773/2013 Page 11 of 40
(vii) that alternatively, the petitioner has to make a claim for refund
of the said amount in accordance with the Arbitration Agreement in
the Licence Agreement;
(viii) that the Supreme Court in Godavari Sugar Mills Ltd. Vs. State
of Maharashtra (2011) 2 SCC 439 and Joshi Technologies
International Inc. Vs. Union of India (2015) 7 SCC 728 has held a
writ petition to be not maintainable in contractual matters, as the
present one is and there is no public law character of the disputes and
the petition does not disclose any exceptional circumstances for
entertaining the writ petition.
9. Per contra, the senior counsel for the petitioner in support of the
proposition:
(A) that State cannot arbitrarily retain money without authority of
law and the Court has inherent power to prevent unjust enrichment
and grant restitution, referred to Shree Baidyanath Ayurved Bhawan
Pvt. Ltd. Vs. State of Bihar (1996) 6 SCC 86, Indian Council for
Enviro-Legal Action Vs. Union of India (2011) 8 SCC 161, Kavita
Tehran Vs. Balsara Hygiene Products Ltd. (1994) 5 SCC 380, South
W.P.(C) No.6773/2013 Page 12 of 40
Eastern Coal Fields Ltd. Vs. State of M.P. (2003) 8 SCC 648 and
State of Gujarat Vs Essar Oil Limited (2012) 3 SCC 522;
(B) that Government cannot renege on its promises or obligations
and can be directed to comply with its promise, relied upon Gujarat
State Financial Corporation Vs. M/s. Lotus Hotels Pvt. Ltd. (1983) 3
SCC 379; Century Spinning & Manufacturing Company Ltd. Vs.
Ulhasnagar Municipal Council (1970) 1 SCC 582 and All India
Employees' State Insurance Corporation Employees' Federation Vs.
Employees' State Insurance Corporation (2011) 14 SCC 599;
(C) that Contractual matters are no bar to a writ petition; a writ
petition for refund of money is maintainable; alternative remedy is no
bar to a writ petition; disputed facts also are not a bar to a writ petition
and principles of res judicata will apply to arbitration proceedings
subsequent to an earlier determination of the issues, relied upon
Union of India Vs. Tantia Construction Private Limited (2011) 5
SCC 697, International Data Processing Company Pvt. Ltd. Vs.
Municipal Corporation of Delhi 96 (2002) DLT 13, ABL
International Ltd. Vs. Export Credit Guarantee Corporation of
W.P.(C) No.6773/2013 Page 13 of 40
India Ltd. (2004) 3 SCC 553, judgment dated 2nd July, 2013 in
W.P.(C) No.2673/2011 titled Piramal Healthcare Limited Vs. Union
of India, Godawari Sugar Mills Ltd. Vs. State of Maharashtra supra
and Whirpool Corporation Vs. Registrar of Trademarks, Mumbai
(1998) 8 SCC 1.
10. I have perused the documents filed with the writ petition and find:
(I) The respondent to have vide order dated 27 th September, 2001
made the following reference to arbitration:
"1. WHEREAS a dispute has arisen between M/s.
Bharti Mobile Limited (earlier name J.T. Mobiles Ltd.,
Licensee and the Licensor i.e. Department of
Telecommunications, Ministry of Communications,
Government of India with regard to payability of licence
fee dues for 18.04.1996 to 10.03.1998 including interest
relating to Licence Agreements No.842-65(A)-VAS dated
26.12.1995
2. AND WHEREAS a decision is taken that the
dispute be referred to the Sole Arbitrator for
determination and adjudication.
3. AND WHEREAS the Condition No.16 Schedule „B‟
Part III of the Licence Agreement dated 26.12.1995 has
provided that any dispute or difference under the said
licence shall be referred to sole arbitration of Director
General Telecom or the person appointed by him.
W.P.(C) No.6773/2013 Page 14 of 40
4. NOW THEREFORE under the powers conferred
under Condition No.16 referred to above, I, Shyamal
Ghosh, Director General, Telecom do hereby nominate
and appoint Mr. Justice M. Jagannatha Rao, as a Sole
Arbitrator for adjudication and determination of the said
dispute.
5. The term of reference for the Arbitrator shall be to
determine the dispute as below:
"Whether the licence fee for the period 18.04.1996
to 10.03.1998 including interest on that sum is payable by
the company on the basis of the facts and circumstances
pleaded by both the parties".
.......
8. This reference shall be governed by the Arbitration
and Conciliation Act, 1996."
(II) The petitioner, as claimant before the Arbitral Tribunal, to have
made the following claims:
"(a) that the amount of licence fee and interest thereon
paid by the Claimant to the Respondent in respect
of the Black Out Period of April 18, 1996 to March
10, 1998 be refunded to the Claimant;
(b) that in any event the penal and other interest
charged by the Respondent and duly paid by the
Claimant in respect of the licence fee for the Black
Out Period of April 18, 1996 to March, 10, 1998
be refunded to the Claimant;
(c) that the Claimant is entitled to pendent lite and
future interest at the prevalent SBI prime lending
rate plus 5% per annum (compounded monthly) on
the amount found and ordered to be refunded in
terms of prayers (a) and/or (b) above till the date
of such refund."
(III) The Arbitral Tribunal to have framed as many as 15 issues and
of which Issues No.9, 11, 12 and 15 were as under:
"(9) Whether the licence fee and interest for the entire
period of 693 days from 18th April,1996 to 10th
March, 1998 or any part thereof was not payable
because the Licence Agreement dated 26th
December, 1995 had become incapable of
performance by Evergrowth during that period
and the amounts were liable to be refunded?
(11) Whether the Claimant is not liable for the licence
fee for the entire period commencing from 18th
April, 1996 to 10th March, 1998 and is entitled to
refund thereof?
(12) Whether the Claimant is not liable to pay interest
on the entire Licence Fee for the period from 18th
April, 1996 to 10th March, 1998?
(15) To what Relief?"
(IV) The Arbitral Tribunal to have in the arbitral award dated 20 th
December, 2002, with respect to Issues No.9, 11, 12 and 15 awarded
as under:
"On Issue 9, I therefore, hold that there is no question
of EGTL having become incapable of operating the
licence as it was not permitted to run the licence at any
stage earlier and that therefore, there is no question of
refunding the licence fee for the 693 days or part
thereof on that ground. I decide the issue 9 in favour of
the respondent and against the claimant.
.............
Issues 11 to 13
The question is broadly in regard to the liability of the
claimant to pay the licence fee and interest for the
period 18.4.96 to 10.3.98. This is divided into various
sub-issues under issues 11 to 13.
Under issue 11, question is about liability to pay
licence fee for the whole period 18.4.96 to 10.3.98.
Under issue 12, liability to pay interest for the same
period (ground J and M in claim).
.........
I, accordingly, hold on issue 11 and 12 that the
claimant was liable to pay the licence fee for the entire
period from 18.4.96 to 10.3.98. (As to whether because
the Department shifted the effective date from 12.12.95
to 11.6.96 and agreed that no licence fee is payable for
that period and the question whether on that ground,
interest was not liable to be paid, - need not be decided
by me, in view of my order dated 21.1.2002).
..........
I decide issues 11 and 12 against the claimant and in
favour of the Respondent. (subject to the reservation as
to the non payability of the interest for 52 days from
18.4.96 to 11.6.97, in case the Telecom Dispute
Settlement and Appellate Tribunal, or on further
appeal, it is decided that since the licence fee was not
payable for the 52 days, interest is not payable).
Issue 15:
In the light of my finding on issues 1 to 14, I hold that
the claim for refund of the amount of Licence fee and
interest paid by claimant to the Department is liable to
be dismissed, (subject one reservation stated below).
Neither on facts, nor in law nor in equity are there any
grounds to direct refund of Licence fee and interest
which had been deposited. This is, however, subject to
my finding on issue 12 and the reservation mentioned
there, namely, that, for the period of 52 days from
18.4.96 to 11.6.97, for reason (b) referred to therein,
(i.e. that interest is not payable for this period because
Licence fee was admittedly not liable to be paid
because of postponement of effective date) if the
Telecom dispute Settlement and Appellate Tribunal or
in any further appeal/further proceedings, the claimant
is finally held not liable to pay the interest for these 52
days, the Department shall refund the same. It will be
for that authority which will finally decide that question
to decide whether claimant is also entitled to any
interest on that sum from the Department."
(V) This Court in judgment dated 14th September, 2012 in OMP
No.77/2003 to have inter alia observed / held as under:
"39.....
Issue No. 9 was decided against BML and in favour of
DOT and it was held that there was no question of
refunding the licence fee for the blackout period. Issue
No. 10 was decided in favour of BML by holding that the
pleas raised in the claim for refund were permissible. On
Issue Nos. 11 to 13 it was held that BML was liable to
pay interest on the licence fee for the blackout period in
terms of Condition 19.8 and that there was no question of
their being equities in favour of BML in that regard.
.........
The amendment application
42. On 27th April 2010 BML filed an application IA No.
5441 of 2010 under Order VI Rule 17 of the Code of Civil
Procedure, 1908 („CPC‟) seeking leave to amend the
main petition (OMP No.77 of 2003) by adding the legal
preliminary grounds of challenge to the impugned Award
as listed in para 14 of the application. The background to
BML seeking to incorporate the said amendments was
that the Telecom Regulatory Authority of India
(Amendment) Act, 2000 („TRAI Amendment Act‟) came
into force with retrospective effect from 24th January
2000. The TRAI Amendment Act inserted Chapter IV in
the Telecom Regulatory Authority of India Act, 1997
(„TRAI Act‟). Under Section 14 of the TRAI Act, as
amended, the Central Government established the
Telecom Disputes Settlement and Appellate Tribunal
(„TDSAT‟) to adjudicate any dispute between a licensor
and a licensee, between two or more service providers
and between a service provider and a group of
consumers. Section 14M of the TRAI Act as amended
provided that all applications pending for adjudication of
disputes before the TRAI immediately before the date of
establishment of the TDSAT shall stand transferred to the
TDSAT immediately on its establishment under Section
14. Under Section 14N (1) of the TRAI Act as amended
all appeals pending before the High Court immediately
before the commencement of the TRAI Amendment Act,
i.e., 24th January 2000, shall stand transferred to the
TDSAT on its establishment under Section 14. Section 15
of the TRAI Act as amended excluded the jurisdiction of a
civil court in respect of any matter which the TDSAT was
empowered to determine.
43. At the hearing on 28th April 2010 learned Senior
counsel for BML informed the Court that he was not
pressing prayer (iii) of the said application for deciding
the preliminary legal objections as a preliminary issue.
Nevertheless he was pressing for the other reliefs
including remand of the present dispute forming subject
matter of the impugned Award to the TDSAT for
adjudication. In the event, the preliminary objection of
the Petitioner was upheld. Notice was issued on the said
application by the Court.
Submissions on the lack of jurisdiction of the Arbitrator
..........
54. This Court is unable to accept the submission that the
grounds „A‟, „E (vii)‟, „F‟ and „R‟ of the petition include
an objection by BML to the impugned Award on the
ground of lack of inherent jurisdiction of the learned
Arbitrator to adjudicate the dispute. The grounds of
challenge to the impugned Award are to be specifically
pleaded with reference to Section 34 of the 1996 Act.
There is nothing in the abovementioned grounds that
even vaguely suggests the ground of lack of inherent
jurisdiction of the learned Arbitrator rendering the
Award liable to be set aside under Section 34 (2) (b) (i)
of the 1996 Act. The broad sweeping plea that the Award
is contrary to the public policy of India and therefore
liable to be set aside under Section 34 (2) (b) (ii) of the
1996 Act cannot also be said to cover a plea as to lack of
inherent jurisdiction. In Oil & Natural Gas Corporation
Ltd. v. Saw Pipes Ltd., the Supreme Court has delineated
the scope of that expression. The lack of inherent
jurisdiction of the Arbitrator to adjudicate the dispute
has to necessarily be pleaded specifically. It has to be
shown to lead to a patent illegality vitiating the impugned
Award.
55. There is another reason why the strict view must be
taken of scope of challenge to the Award under the 1996
Act. If all grounds of challenge are not taken to the
impugned Award at the time of filing of the petition under
Section 34 of the 1996 Act, and are permitted to be raised
at any time, then the legislative intent behind prescribing
a maximum time limit under the proviso to Section 34 (3)
of the 1996 Act would be defeated. ......
.........
56. ......This Court is, therefore, not inclined to
entertain the plea for amendment of the petition to urge
the additional grounds on the ground of lack of
jurisdiction. Accordingly, IA No.5441 of 2010 is
dismissed.
Plea as to lack of inherent jurisdiction of the Arbitrator
57. Notwithstanding the rejection of BML‟s prayer for
amending the petition, since extensive arguments have
been advanced on the inherent lack of jurisdiction of the
learned Arbitrator to decide the subject matter of the
dispute, the Court proceeds to consider the said plea. The
sequence of events shows that BML invoked the
arbitration clause on 8th July 1999. In terms of Section 21
of the 1996 Act the arbitration proceedings commenced
on that date itself. By then Section 14 had not been
inserted in the TRAI Act. Chapter IV which includes
Sections 14 to 20 was introduced by the TRAI
Amendment Act 2000 with effect from 24th January 2000.
If the legislature intended that pending arbitration
proceedings as of 24th January 2000, which would
include the arbitral proceedings in the instant case,
should be transferred to TDSAT, then it ought to have
made a specific provision to that effect.
...........
59. ......None of the above provisions support the
contention of BML that pending arbitral proceedings
could not go on after the establishment of the TDSAT and
that in the present case, the learned Arbitrator lacked
inherent jurisdiction to adjudicate the disputes.
60. Therefore, if the plea of lack of inherent jurisdiction
had been raised by BML before the learned Arbitrator
under Section 16 of the 1996 Act, he would have been
justified in rejecting it. Equally, the plea of lack of
inherent jurisdiction, even if permitted to be raised by
BML at this belated stage on the strength of the decisions
in Harshad Chiman Lal Modi v. DLF Universal Ltd.,
Chief Engineer, Hydel Project v. Ravinder Nath and
Hira Lal Patni v. Sri Kali Nath, cannot succeed for the
reason that the present arbitral proceedings commenced
prior to 24th January 2000. The continuance of the
arbitral proceedings thereafter remained unaffected
under Sections 14, 14M or 14N of the TRAI Act. ..........
..........
61. The Court therefore rejects the contention of BML
that in the present case the learned Arbitrator lacked
inherent subject matter jurisdiction to deal with the
dispute and that the impugned Award should be set aside
on that ground.
Challenge to the Award on merits
.........
73. The central issue referred to the learned Arbitrator
was: "Whether the licence fee for the period 18th April
1996 to 10th March 1998 including interest on that sum is
payable by the company on the basis of the facts and
circumstances pleaded by both the parties." The answer
to the said question depended on the answer to Issues 1
to 4. The answer by the learned Arbitrator to the above
question in the affirmative has largely determined his
answers to the remaining issues. The inevitable
consequence of the decision of this Court that the Award
in respect of Issues 1 to 4 is unsustainable in law, is that
the Award in respect of the remaining issues is also
required to be set aside. Consequently, the entire Award
is liable to be set aside on the ground that it is opposed to
the public policy of India under Section 34 (2) (b) (ii) of
the 1996 Act.
Summary of Conclusions
74. To summarise the conclusions of the Court in this
judgment:
(a) The plea for amendment of the petition to urge the
additional grounds on the ground of lack of jurisdiction
is rejected and IA No.5441 of 2010 is dismissed.
(b) In any event, there is no merit in the contention of
BML that the learned Arbitrator lacked inherent subject
matter jurisdiction to deal with the dispute.
(c) The impugned Award is liable to be set aside on
merits on the ground that it is opposed to the public
policy of India under Section 34 (2) (b) (ii) of the 1996
Act.
Consequential directions
75. Although this Court finds that the impugned Award
cannot be sustained in law on merits and is opposed to
the public policy of India under Section 34 (2) (b) (ii) of
the 1996 Act, it cannot possibly grant BCL the
consequential reliefs of allowing its claims as that is
beyond the scope of the powers of the Court under
Section 34 of the 1996 Act........
........
76. Accordingly, the impugned Award dated 20th
December 2002 is set aside leaving it open to BCL to
resort to appropriate legal remedies as may be available
to it in accordance with law......."
(VI) The respondent along with FAO(OS) No.87/2013 filed CM
No.2445/2013 for stay and which was vide order dated 16 th July, 2013
dismissed as under:
"CM 2445/13 (stay)
Having regard to the circumstances, the rival contentions
and also award made in this case, the Court is of the
opinion that the request for stay of operation of the
impugned order is not warranted."
11. What emerges from the aforesaid is:
(a) that claim for adjudication in the arbitration between the parties
was of the entitlement of the petitioner to refund of the amounts
aforesaid deposited with the respondent UOI towards licence fee for
the period 18th April, 1996 to 10th March, 1998, with interest;
(b) that the Arbitral Tribunal disallowed the aforesaid claim of the
petitioner;
(c) that the petitioner preferred OMP No.77/2003 under Section 34
of the Arbitration Act with respect to the aforesaid arbitral award and
by way of amendment of the said OMP No.77/2003 wanted to take
the ground of the arbitral award not granting its claim being also bad
for the reason of the dispute which had been referred to arbitration
being required to be decided by the TDSAT and not by way of
arbitration but was not allowed to take the said ground after the time
for applying under Section 34 of the Arbitration Act had lapsed;
(d) that however this Court in judgment dated 14th September, 2012
in OMP No.77/2003, even otherwise considered whether the arbitral
award was liable to be set aside on the ground of the disputes subject
matter of arbitration being not arbitrable but found the arbitral award
to be not bad on this count;
(e) that however this Court vide judgment dated 14 th September,
2012 in OMP No.77/2003 otherwise set aside the arbitral award on
merits;
(f) that though the petitioner as a consequence thereof sought a
direction in judgment dated 14th September, 2012 in OMP No.77/2003
for refund of the amount (as was claimed in arbitral proceedings) but
the same was not granted for the reason of being beyond the
competence of the Court exercising jurisdiction under Section 34 of
the Arbitration Act;
(g) that though the respondent in FAO(OS) No.87/2013 preferred
against the judgment aforesaid sought stay of operation of the
judgment dated 14th September, 2012 but the same has not been
granted.
12. The questions which according to me arise for adjudication and on
which outcome of this petition depends are:
(I) Whether there has been adjudication in the arbitral award dated
20th December, 2002 and in the judgment dated 14 th September,
2012 in OMP No.77/2003 preferred thereagainst on the claim
of the petitioner for refund of the licence fee for the period from
18th April, 1996 to 10th March, 1998 and what is the effect
thereof;
(II) What is the effect of the pendency of FAO(OS) No.87/2013
against the judgment dated 14th September, 2012 and of the
dismissal of the application for interim stay filed therein;
(III) If the above two questions were to be answered in favour of the
petitioners, whether in exercise of jurisdiction under Article 226
of the Constitution of India the respondent can be directed to
refund the licence fee for the period from 18th April, 1996 to
10th March, 1998 to the petitioner.
13. Having bestowed consideration, I am of the opinion that the
respondent, after receiving payment of Rs.399.92 crores towards licence fee
for the period 18th April, 1996 to 10th March, 1998 from the petitioner and
which the petitioner was disputing, having referred the said dispute to
arbitration in accordance with the Arbitration Agreement in the licence,
cannot now urge that there has been no determination / adjudication in the
arbitration proceedings of the said entitlement of the petitioner to refund of
the said amount.
14. I also entertain no doubt that the arbitral award unequivocally finds
the petitioner not entitled to refund of the licence fee paid.
15. However, the judgment dated 14th September, 2012 in OMP
No.77/2003 though setting aside the aforesaid arbitral award, does not at the
same time hold the petitioner entitled to refund of the licence fee paid for the
period from 18th April, 1996 to 10th March, 1998. Though the arbitral award
has been set aside, not on any technicalities but "on merits", but giving the
ground of setting aside, of being against the public policy of India and not
the ground of erroneously finding the petitioner to be not entitled to refund
when the petitioner in fact was entitled to refund.
16. I have wondered whether the setting aside under Section 34 of the
Arbitration Act of the arbitral award (not finding petitioner entitled to refund
of licencee fee) amounts to, the petitioner being entitled to refund of the
licence fee for the period from 18th April, 1996 to 10th March, 1998.
17. In my view, once the parties go to arbitration on a question whether
one party is entitled to the monies claimed from the other or not and the
arbitral award not finding that party to be entitled to the monies claimed is
set aside in exercise of powers under Section 34 of the Arbitration Act, the
order of the Court has but to be read as finding the claimant party to be
entitled to the monies claimed unless the arbitral award has been set aside on
technical grounds as enumerated in Section 34(2)(a) or Section 34(2)(b)(i) of
the Arbitration Act. To give any other meaning to the order of the Court in
exercise of power under Section 34 of the Act would severely undermine /
prejudice efficacy of arbitration and would lead to arbitration ceasing to be
an alternative dispute resolution mechanism.
18. It cannot be lost sight of that the Court, in exercise of power under
Section 34 of the Arbitration Act, has not been empowered to set aside an
arbitral award on merits of the claim. The only ground besides the technical
grounds enumerated in Section 34(2)(a) or Section 34(2)(b)(i) on which the
Court has been empowered to set aside an arbitral award, is the ground of
the arbitral award being in conflict with the public policy of India. The
expression "public policy of India" has been held to mean fundamental
policy of Indian law, justice and morality. Once the Court in exercise of
power under Section 34 of the Arbitration Act has set aside an arbitral award
rejecting a monetary claim, on the ground of the same being against the
public policy of India, as the arbitral award in the present case has been set
aside, the necessary corollary and inference, in my opinion is that the Court
finds the award rejecting the monetary claim to be contrary to law and
resultantly finds the monetary claim to have been proved/established. If it
were to be held otherwise, and it were to be held that the order of the Court
means nothing more than setting aside the arbitral award (rejecting the
monetary claim), it would leave the claimant who applied under Section 34
and succeeded therein, inspite thereof, being left high and dry and without a
relief. A litigant litigates not for academic purposes or to score a moral
victory but to secure the relief claimed and benefit therefrom. If such a
litigant who has secured setting aside "on merits" of the arbitral award
(rejecting his monetary claim) is told that he has to start another litigation
either by way of suit or arbitration to secure his monetary claim, people will
hesitate from incorporating arbitration clause in the agreements and / or
from agreeing to arbitration for the fear of not getting effective relief at the
end of the proceedings under the Arbitration Act. Further, it may then be an
unending exercise. Even if such a litigant were to again commence
arbitration (since the arbitration clause in the agreement/contract will
continue to bind and suit would not be maintainable) and in that arbitration
succeeds or fails but Section 34 application is again preferred with respect to
the award and award again set aside, would such litigant then be required to
commence another round, and so on. After all, in the present state of law
with respect to Arbitration Act, particularly Section 34 thereof, it is possible
that the arbitral tribunal (which is not bound by rules of Code of Civil
Procedure, 1908) decides the claim before it on any one reason and the
Court finding that reason to be contrary to public policy of India sets aside
the award; when the parties again go to arbitration, the arbitral tribunal may
again decide, even if for a different reason but the said award will again be
subject to scrutiny under Section 34 of the Act. This way, the lis will never
attain finality.
19. It is for this reason that I say, that the order/judgment dated 14th
September, 2012 of this Court setting aside "on merits" the arbitral award
dated 20th December, 2002 (rejecting the monetary claim of the petitioner)
has to be read as finding the petitioner entitled to the said monetary claim
and the said question having attained finality subject of course to outcome of
FAO(OS) No.87/2013 and does not require any further adjudication in any
other proceeding.
20. However, having said, that I must mention that a Division Bench of
this Court recently in Steel Authority of India Vs. Indian Council of
Arbitration MANU/DE/0745/2016 was concerned with the challenge by
way of writ petition to the appointment of an Arbitrator, after the earlier
arbitral award between the parties was set aside and on the ground that what
had already been the subject matter of arbitration could not again be the
subject matter of arbitration. The challenge was dismissed holding that once
the arbitral award was set aside, the dispute between the parities stood
revived and such a course did not amount to repeated / multiple arbitrations.
Reference, to reach this conclusion was made to Mcdermott International
Inc Vs. Burn Standard Co. Ltd. (2006) 11 SCC 181 observing that in the
event of arbitral award being set aside by the Court under Section 34, the
parties can again invoke arbitration clause on the basis of the same cause of
action and to Section 43(4) of the Arbitration Act providing that "where the
Court orders that an arbitral award be set aside, the period between the
commencement of the arbitration and the date of the order of the Court shall
be excluded in computing the time prescribed by the Limitation Act, 1963
(36 of 1963), for the commencement of the proceeding (including
arbitration) with respect to the dispute so submitted".
21. Another Division Bench of this Court in Nussli Switzerland Vs.
Organizing Committee, Commonwealth Games MANU/DE/2301/2014,
also relying on Section 43(4) of the Arbitration Act held that a party which
has its claim rejected, even if succeeds in the objections to the award, would
at best have the award set aside and the Court has to leave the matter at that
leaving it open to the party concerned to commence fresh proceedings
including arbitration.
22. Though I am bound by the dicta aforesaid of the Division Benches of
this Court but respectfully add that sub-section (4) of Section 43 titled
"Limitations" ought not to be read as a substantive provision governing the
rights of a party to the arbitration and Section 34 proceedings arising
therefrom and requiring them to re-arbitrate. The law/provision relating to
limitation has to be read, in my humble opinion, merely as laying down the
limitation for commencing an action where under the substantive law there
is a right or need to commence such an action and cannot be read as creating
a right or requirement to commence an action or as prescribing the
procedure to be followed i.e. of re-commencing litigation, whether by way
of suit or arbitration when an arbitral award is set aside or as laying down
the law as to the meaning and consequence of an order under Section 34 of
setting aside of the arbitral award. That however still begs the question, why
was Section 43(4) at all incorporated if the order of the Court in exercise of
power under Section 34 of setting aside of an arbitral award were to mean
and read as converse to what the Arbitral Tribunal had found. In my
opinion, Section 43(4) was included in the Act to provide for the
contingency of the arbitral award, under Section 34 being set aside on
technical grounds enumerated in Section 34(2)(a) and Section 34(2)(b)(i)
and without the court dealing with or pronouncing on the merits of the claim
adjudicated by the Arbitral Tribunal. It is for this reason that Section 43(4)
excludes the time mentioned therein in computation of limitation "for the
commencement of the proceedings (including arbitration) with respect to the
dispute" and not "for the commencement of arbitration." If the arbitral
award were to be set aside on the ground under Section 34(2)(a)(ii) or (iv) or
Section 34(2)(b)(i), of the arbitration agreement being not valid or the
arbitral award being with respect to a dispute not falling within the terms of
submission to arbitration or the subject matter of the dispute being not
capable of settlement by arbitration, the question of commencing another
arbitration proceedings on the basis of same arbitration agreement would not
arise and the aggrieved party will have to commence proceedings, say by
way of a suit. However if the setting aside of the arbitral award under
Section 34 is on the grounds enumerated in Clauses (i), (iii), (v) of Sub-
Section (2)(a) thereof i.e. of the party to arbitration proceedings, being under
some incapacity or having not been given proper notice of appointment of
arbitral tribunal or of arbitral proceeding or of the composition of arbitral
tribunal or the procedure adopted by arbitral tribunal being contrary to the
agreement, the aggrieved party will have to commence fresh arbitration
proceeding. However Section 43(4) cannot be read as requiring
commencement of fresh proceeding even where arbitral award is set aside
under Section 34(2)(b)(ii) i.e. on the ground of being in conflict with public
policy of India i.e. of finding the award refusing or granting relief being
contrary to law, if otherwise not required under the law. As aforesaid, a
provision in a statute with respect to limitation cannot be read as creating or
extinguishing (save on ground of limitation) rights or requiring a thing to be
done if not otherwise in law required to be done.
23. The Arbitration Act only amends the law relating to arbitration which
as aforesaid is a dispute resolution mechanism alternative to the Courts. It is
not a substantive law governing the rights of the parties. Per Section 28(a)
thereof, the disputes submitted to arbitration are to be decided in accordance
with the substantive law for the time being in force in India. I have already
hereinabove observed that the expression "public policy of India" in Section
34(2)(b)(ii) has also been held to inter alia mean fundamental policy of
Indian law. Thus if the award is in conflict with public policy of India i.e.
fundamental policy of Indian law, it constitutes a ground for setting aside
thereof, again meaning that the award has to be in accordance with
fundamental policy of Indian law. The rules i) of issue estoppel; ii) of res
judicata and constructive res judicata; and, iii) prohibiting re-litigation, if I
may respectfully say, constitute fundamental policy of Indian law and are
not merely procedural rules. In accordance therewith, a claim which has
been subject matter of arbitration and the arbitral award resulting wherefrom
has been subjected to scrutiny of Court under Section 34 of the Arbitration
Act, cannot again be the subject matter of arbitration or suit or other legal
proceeding unless the arbitral award has been set aside on technical grounds
as aforesaid. In my view the said fundamental policy of Indian law has not
been affected or was intended to be affected by the Arbitration Act.
Applying the said principles to the facts of the present case it has but to be
held that the judgment / order dated 14th September, 2012 of this Court has
to be held to be finding the petitioner entitled to refund and which refund
can be ordered in writ jurisdiction subject of course to outcome of FAO(OS)
No.87/2013 and cannot be now subject matter of fresh arbitration or suit.
24. As far as reliance placed by the Division Benches of this Court on
Mcdermott International Inc. supra is concerned, though I am of the view
that Mcdermott International Inc. cannot be said to be as precedent on the
proposition, the question having not arisen therein for consideration, but my
view, though canvassed by the counsel for the petitioner in Steel Authority
of India supra, did not find favour with the Division Bench.
25. I am further of the opinion as aforesaid, and strongly feel, that to so
leave a party, whose claim has been rejected by the Arbitral Tribunal and
who succeeds in having the arbitral award set aside "on merits" in a petition
under Section 34 of the Arbitration Act, in a lurch would make a mockery of
arbitration, defeating the very purpose thereof as an alternative dispute
resolution process and make the same lengthy and costly. Supreme Court
recently in Lal Shah Baba Dargah Trust Vs. Magnum Developers 2015
SCC Online SC 1319 reiterated Mangin Vs. IRC (1971) 1 ALL ER 179
(PC) laying down that the object of construction of statute being to ascertain
the will of the legislature, it may be presumed that neither injustice nor
absurdity was intended. Similarly, in Jogendra Yadav Vs. State of Bihar
(2015) 9 SCC 244 it has been reiterated that rule of purposive interpretation
requires construction of a statute in such a manner so as to see that the object
of the statute is fulfilled which in turn will lead the beneficiary under the
statutory scheme to fulfill its constitutional obligation. I am however bound
by the judgments earlier mentioned of the Division Bench and have no
option but to follow the same.
26. I thus answer the first of the aforesaid questions by holding that there
has been adjudication in the arbitral award dated 20th December, 2002 and in
the judgment dated 14th September, 2012 in OMP No.77/2003 on the claim
of the petitioner for refund of licence fee but the effect of the judgment dated
14th September, 2012 in OMP No.77/2003 is not of the petitioners being
entitled to the refund of the licence fee for the period from 18 th April, 1996
to 18th March, 1998, howsoever strange the said result may sound.
27. Though the petition is liable to be dismissed for the aforesaid reason
alone but for the sake of completeness, the other questions framed above
may also be answered.
28. The pendency of FAO(OS) No.87/2013 against the judgment dated
14th September, 2012 in OMP No.77/2003 in my view does not act as
automatic stay of the judgment appealed, specially after the application for
interim stay therein has been dismissed.
29. Reference in this regard may also be made to Decore India Pvt. Ltd.
Vs. National Building Construction Corporation Ltd. 142 (2007) DLT 21
where a Division Bench of this Court held that if the execution of the decree
followed by award is to be delayed by treating the pendency of appeal as
automatic stay then the new legislation i.e. Arbitration Act, instead of being
an efficient and speedy remedy would be reduced to a remedy worse than
what we already had that is civil suits and the deep routed procedural delays
till passing of the decree and even thereafter.
30. As far as the third question framed above is concerned, if the question
No.(I) aforesaid were to be answered in favour of the petitioners then
according to me, the respondent could not have been permitted to retain the
monies which would have been due from it by taking technical pleas. I have
in DLF Limited Vs. Punjab National Bank 180 (2011) DLT 435 dealt in
detail on the aspect of the State being required to be a model litigant, not
expected to take technical pleas encouraging litigation. Supreme Court
subsequently also in Punjab State Power Corporation Ltd. Vs. Atma Singh
Grewal MANU/SC/1393/2013 has deprecated the dependency on the part of
the government and the Public Sector Undertakings to file frivolous appeals
and expressed its anguish thereon and reminded the government its policy to
be a responsible litigation. Reference in this regard can also be made to
Special Land Acquisition Officer Vs. Karigowda (2010) 5 SCC 708, Urban
Improvement Trust, Bikaner Vs. Mohan Lal (2010) 1 SCC 512, Vithalbhai
Pvt. Ltd. Vs. Union Bank of India (2005) 4 SCC 315 and Virender Sharma
Vs. Director Enforcement Directorate MANU/DE/0546/2012 (DB).
31. Else, the other contentions of the respondent, of the writ petition being
not maintainable in a contractual matter or for enforcing monetary claim, are
not found to have any merit therein. The said principles are not an absolute
bar to the maintainability of a writ petition and if the answer to the question
No.(I) above had been in favour of the petitioners, the conduct of the
respondent would have been utterly unreasonable and arbitrary and a writ
would have followed, directing the respondent to refund the monies.
32. The petition thus fails and is dismissed; however no costs.
RAJIV SAHAI ENDLAW, J.
MAY 11, 2016
„gsr/bs‟..
