Petition No. 94 of 2012. Case: Reliance Communications Limited Vs S. Tel Pvt. Ltd.. TDSAT (Telecom Disputes Settlement & Appellate Tribunal)

Case NumberPetition No. 94 of 2012
CounselFor Appellant: Chetan Sharma, Sr. Advocate, Lakshmeesh S. Kamath, Sadapurna Mukherjee and Ruchir Bisaria, Advocates for Mahesh Agrawala, Advocate and For Respondents: Dayan Krishnan, Senior Advocate and Amit Gupta, Advocate
JudgesAftab Alam, J. (Chairperson) and Kuldip Singh, Member
IssueIndian Telegraph Act, 1885 - Section 4(ii)
Judgement DateJuly 01, 2015
CourtTDSAT (Telecom Disputes Settlement & Appellate Tribunal)


Aftab Alam, J. (Chairperson)

  1. This petition is filed by the petitioner, Reliance Telecom Limited for recovery of Rs. 23.26 crores from the respondent, S. Tel Private Limited. The dues are in respect of (i) E-1 Capacity Services, (ii) Co-location Services and (iii) Bulk Band-width Services rendered by Reliance to S. Tel and pertain to the period July 2009 to July 2011.

  2. The basic facts of the case are simple and incontrovertible. Reliance holds Unified Access Service (UAS)licence and National Long Distance (NLD) licence granted by the Central Government under section 4(ii) of the Indian Telegraph Act, 1885. At the relevant time S. Tel also held UAS licences granted under section 4(ii) of the Act. It may, however, be stated at the outset that the licences held by S. Tel were part of the 122 licences quashed by the Supreme Court by judgment dated 2 February 2012 in Centre for Public Interest Litigation v. Union of India (2012) 3 SCC 1.

  3. The claim of Reliance, however, relates to the period prior to the quashing of S. Tel's licences and is based on the three agreements executed by the two sides in respect of five (5) telecom circles1 for which S. Tel held the licences. The three agreements are: (i) E-1 Capacity agreement dated 26 august 2009, (ii) Bulk Bandwidth agreement dated 26 august 2009 and (iii) the Term Sheet Re. Co-location Service dated 19 September 2009.

    E-1 Capacity Agreement:

  4. Clause 1.29 of the agreement defined "Service Charges" as under:

    "1.29 "Service Charges" means the service charges/payments which are due and payable by the Customer to Reliance, in connection with provision of Capacity to Customer, as specified in Annexure 2 hereto"

  5. Clause 3 of the agreement contained the Special Terms and Conditions and sub-clauses 1, 2 and 3 of clause 3 provided as under:


    3.1 The Parties hereby agree that Reliance shall provide the Capacity for connecting Shared BTS Sites to the Customer's BSC within each circle which BSC can be either co-located with Reliance BSC Location or can be a stand-alone Customer's BSC, at other location;

    3.2 Reliance undertakes to provide the Capacity from all Shared BTS Sites to the respective Customer's BSC co-located with the Reliance BSC or Customer's BSC at another location than Reliance, as the case may be, as per the terms and conditions specified herein and as per the Acceptance procedure detailed in Annexure 3 to this Agreement;

    3.3 The Service Charges for the provisioning of Capacity are specified in Annexure 2 titled as "Service Charges";

    3.4 xxxxxxxxxx

    3.5 xxxxxxxxxx

    3.6 xxxxxxxxxx

    3.7 xxxxxxxxxx"

  6. The service charges were specified in annexure 2 to the agreement. Clause 2 of the annexure dealt with invoicing and clause 3 with payments which is as under:

    "3. Payment

    3.1 All invoices are due and payable in Indian Rupee (INR) and within fifteen (15) days of date of invoice or by 20th of invoiced month ("Due Date"), whichever is later.

    3.3 Customer shall pay the gross invoiced amount. The settlement of Debit/Credit notes shall be done within fifteen (15) days of raising the same and shall be done independently and not adjusted against the invoice payment. Both Parties shall carry out a reconciliation of invoicing and payment at the end of every quarter for the previous quarter.

    3.4 In case the Due Date is falling on a day which is not a Business Day, then the payment shall be effected by Customer on the immediately succeeding Business Day.

    3.5 In case the Capacity is suspended in accordance with Clause 10.7 of the Agreement, the Customer shall be liable to make payment of Service Charges for the suspension period."

  7. Clause 4 contained provisions regarding payment mode and sub-clauses 3, 4 and 5 stipulated as under:

    "4.3 If there are invoicing discrepancies and the variation is below 5% of the invoice value, then the invoiced Party will pay the billing party's invoice in full on the Due Date. However, the invoiced Party will have the right to consider this discrepancy as a dispute and take it up for discrepancy resolution as per defined process in clause 4.4 to 4.6 herein. The invoiced Party shall be entitled to raise disputes with regard to the non-receipt of credit notes which are due to the invoiced Party. The invoiced Party should communicate the reasons for such discrepancy with supporting/evidence explaining the variations and the other Party shall provide all information as required by the invoiced party. This discrepancy must be communicated by the invoiced Party on or before the Due Date. If there is no communication within the aforesaid period as per the provisions mentioned above, it shall be concluded that there is no discrepancy and the invoice value is due and payable. Should no material discrepancy be found in the invoice, customer shall be liable to pay interest @ 1.5% PM on such amount for which the payment is delayed beyond the original due date of payment.

    4.4 If the discrepancy is greater than the threshold detailed in paragraph 4.3 above, or the invoiced Party decides to treat the discrepancy as a dispute even though within threshold mentioned in paragraph 4.3 above, a request for recalculation together with the supporting evidence of such discrepancy should be sent within ten (10) days of the invoice date from the invoiced Party to the invoicing Party which shall resolve the issue within seven (7) days from such communication. If no resolution is found with the period of seven (7) days then issue shall be referred to the AJWC, which should meet within four (4) Business Days and resolve it within seven (7) days.

    4.5 Based on the outcome of the resolution mentioned in clause 4.4 hereinabove, interest shall be payable by the Party who shall be required to make payment as per the resolution on the outstanding amount specified in the resolution from the Due Date of such payment and until the payment has been made."

    Bulk Band-width agreement:

  8. Clause 1.26 of the agreement defined "Service Charges" in the same way as defined in the E-1 Capacity agreement and clause 1.29 stated that the annexures to the agreement would form part of the agreement. Annexure 2 contained the provisions regarding service charges and invoicing which were, in all material respects the same as the corresponding provisions in E-1 Capacity agreement.

    Term-sheet Re. Co-location Service:

  9. Clause 1 of the agreement contained the "commercial offer", over which the parties had agreed and clause 3.2 stipulated as under:

    "3.2 Rates have been offered for services as listed in Sr. No. 1 of commercial offer above. All incremental services over the offered ones will be charged extra. The rates for the same will be provided on case to case basis."

  10. It is the case of Reliance that it gave services to S. Tel in terms of the agreements and raised invoices for the three services regularly and as provided in the respective agreements but S. Tel was quite irregular in making payments. As a result, the dues against it accumulated to Rs. 23.26 crores till it finally folded up and ceased operations in February 2012.

  11. In paragraph 34 of the petition, the break-up of the total dues is given as under:

  12. However, the break-up of the amount of Rs. 23.26 crores, along with invoices raised by Reliance for the interest payable by S. Tel are enclosed with the Petition as Annexure P-31(Colly) (from pages 318 to 337 of the plea). In this annexure the break-up of Rs. 23.26 crores is shown as under:

  13. S. Tel does not outright deny the claim of Reliance. It does not also deny having executed the E 1 Capacity agreement, the Bulk Bandwidth agreement and the Co-location Term-sheet and having received services...

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