BHARAT SANCHAR NIGAM LIMITEDversusVODAFONE ESSAR GUJARAT LIMITED

                             [2016] 7 S.C.R. 746



A                 BHARAT SANCHAR NIGAM LIMITED
                                      v.
                 VODAFONE ESSAR GUJARAT LIMITED
                       (Civil Appeal No. 8107 of2010)
B                          SEPTEMBER23, 2016
            [RANJAN GOGOi AND PRAFULLA C. PANT, JJ.]
    The Telecommunication Interconnection Usage Charge Regulations,
    2003:
C         Demand raised by BSNLfor alleged tampering with the Caller
    Line Identification (CL!) - Whether BSNL could levy the highest
    applicable !UC charges on the basis of Clause 11 of circular dated
    28.01.2004 - Held: Interconnect agreement between the parties did
    not carry any stipulation that in the event any invalid or tempered
    CLJ is transferred to BSNL network, BSNL would be entitled to raise
D   the demand at the highest slab rate - !UC Regulations did not
    contain any such provision and the same could not have been so
    created on the basis of the unilateral circular dated 28.1.2004 -
    Telecommunications.
            Bharat Sanchar Nigam Limited v. Reliance
E           Communication Ltd. (2011) 1 SCC 394 : 2010 (15)
            SCR 705; Bharat Sanchar Nigam Limited v..BPL Mobile
            Cellular Ltd. & Ors. (2008) 13 597:2008 (8) SCR 729
            - referred to.
                         Case Law Reference
F   ~oio (15) SCR 705                referred to           Paras
    2008 (~) SCR 729                 referred to           Para 7
            CIVIL APPELLATE JURISDICTION: Civil Appeal No. 8107 of
    2010.
G         From the Judgment and Order dated 11 .02 .20 I 0 of the Telecom
    Disputes Settlement and Appellate Tribunal at New Delhi in Petition
    No. 56 of2009
                                  WITH
            C.A. Nos. 8108 and 8269 of2010
H           C. A. No. 1105 of2013.
                                     746 .
BHARAT SANCHAR NIGAM LIMITED v. VODAFONE ESSAR                                747
               GUJARAT LIMITED

      Ranjit Kumar, SG., Ms. Pinky Anand, ASG., Shyam Divan,Ramji             A
Srinivasan, Sr. Advs., Abhishek Kumar, K. Vijay Kumar, Gagan Gupta,
Ms. Maneesha Dhir, Navin Chawla, Aditya V. Singh, Ms. Ruby Singh
Ahuja, Karan Dev Chopra, Harsh Trivedi, Ms. Manik Karanjawala, (For
M/s. Karanjawala & Co.), Advs. for the appearing parties.
      The Juug:nent of the Court was delivered by                              B
      RANJAN GOGOi, J.
      CIVIL APPEAL N0.8107 OF 2010
       I. The challenge in this appeal is to a judgment dated 11.02.2010
passed by the Telecom Disputes Settlement and Appellate Tribunal, New          c
Delhi (hereinafter referred to as the 'Tribunal') by which the demand
raised by the appellant BSNL on the respondent, Vodafone Essar Gujarat
Limited, for alleged tampering with the Caller Line Identification (CU)
has been set aside by the learned Tribunal.
      2. The facts in brief may be noticed at the outset.                      D
       In the year 1996 the competent authority granted a license to one
M/s. Fascel Limited (predecessor-in-interest of the respondent Vodafone)
under Section 4(1) of the Telegraph Act, 1885. As the successor-in-interest
of Fascel Limited, the respondent entered into an Interconnect Agreement
with BSNL forthe purpose of interconnecting its network with the BSNL.
                                                                               E
Under the aforesaid Agreement, the respondent was liable to pay access
charges to BSNL for calls originating from its network and terminating
in the BSNL's network. Under the Agreement there was an obligation
on the part of the responJent to transmit the authentic CLI for the purpose
of levy of charges in terms of Agreement. CLI essentially is the
information generated by the network which identifies and forwards the         F
calling number.
      It must be mentioned, at this stage, that it is during this period of
time that the telecommunication sector was undergoing revolutionary
changes and witnessing innovations to deal with which both the
Department of Telecommunication (DoT) and the regulatory body i.e.             G
Telecom Regulatory Authority of India (TRAI) had issued a series of
advisories anci regulatory measures some of which are being indicated
hereinafter.
      3. To the issues arising in the present case would be relevant the
circular dated 23.06.2003 issued by the DoT specifying that CLI cannot         H
748             SUPREME COURT REPORTS                           [2016] 7 S.C.R.



A     be tampered in any circumstances. By the same circular the DoT also
      gave directions to service providers on how to prevent tampering of
      CLI. The Telecom Regulatory Authority oflndia (TRAI) had issued a
      directive dated 24.11.2003 to BSNL not to tamper with CLI of any
      call; notto offer calls without CLI and also not to accept any calls without
      CL!. This was followed by a circular dated 20.01.2004 reiterating the
B
      above directions. In exercise of powers under Section 36 of the TRAI
      Act, 1997 the Regulatory Body also made a set of Regulations known
      as the Interconnect Usage Charge Regulations, 2003 (!UC Regulations).
      In terms of thC' IL'C Regulations, the service providers were to raise
      bills on the basis of Call Detail Records (CDR). Under the CDR based
c     platform in place of the earlier prevailing system of metered calls in
      which call duration in number of minutes was multiplied by the pulse
      rate per minute applicable for the trunk group, under the new regime,
      reliance was on the CLI to identify the type of call and apply the
      apprOi··<~t~ rates/charges. The BSNL by circular dated 28.01.2004
      implemented the aforesaid circular dated 23.06.2003 of the DOT
D
      alongwith !UC the Regulations of2003. Clause 11 of the aforesaid circular
      which states that calls received without CLI by BSNL would be charged
      at the highest slab i.e. at the rate of ISO calls, being relevant to the
      issues arising, may be noticed below :
            "The CLI based barring facility shall be activated at
E           the Pols wherever technically feasible to ensure that
            the traffic handed over to BSNL is in the appropriate
            trunk groups only. Wherever it is technically not
            feasible to activate CLI based barring, periodic
            monitoring of the incoming trunk groups shall be done
F           by BSNL to ensure this objective. The calls received
            without CLI by BSNL from various operators shall
            be charged at the highest slab i.e. as for ISD Calls. In.
            case such calls are received by BSNL on a trunk group
            not meant for such calls then all the traffic received
            on such trunk group month/billing cycle shall be
G           charged at the rates applicable for rue of incoming
            ISD Calls."
             4. According to the appellant BSNL, monitoring of the incoming
      traffic from Vodafone's network from various exchanges at Yododara
      Trunk Autqrnatic Exchange revealed that many incoming calls were
H
BHARAT SANCHAR NIGAM LIMITED v. VODAFONE ESSAR                                   749
       GUJARAT LIMITED [RANJAN GOGOi, J.]

actually international calls which were routed on the BSNL's network             A
as national calls. According to the appellant this was done by Vodafone
by tampering with the CLI and thereby violating the terms and conditions
of the Interconnect Agreement. On the said facts relying on the circular
dated 28.01.2004 particularly clause 11 thereof, the appellant raised a
bill ofRs.3,54,94,916/- on Vodafone at the rate ofRs.5.65 per minute for
                                                                                 B
the period between July, 2004 to September, 2004. Though the demand
was reiterated from time to time, issues did not get forged until BSNL
issued a disconnection notice dated 5.03.2009 prompting the respondent
to move the Tribunal challenging the demand raised by the BSNL. The
Tribunal, by the impugned judgment, came to the conclusion that the
demand raised by the appellant was illegal and unjustified inasmuch as            c
the Interconnect Agreement between the parties did not carry any
stipulation that in the event any invalid or tempered CLI is transferred to
the BSNL network, BSNL would be entitled to raise the demand at the
highest slab rate. The learned Tribunal also held that the IUC Regulations
did not contain any such provision and the same could not have been so
                                                                                  D
created on the basis of the unilateral circular dated 28.01.2004 (Clause
 11). The Tribunal also held thatthe BSNL had failed to establish thatthe
respondent Vodafone by tampering or misusing its network could receive
an international call and transfer the same to the BSNL's network as a
 local call. Vodafone, it may be no~iced, did not have an International
 Long DJstance Operator (ILDO) Licence.                                           E
       5. The arguments advanced on behalf of the appellant BSNL by
the learned Solicitor General, in short, is that admittedly Vodafone had
failed to comply with its obligation under the Interconnect Agreement
and had routed international calls as national calls making it liable to pay
damages for the loss suffered by BSNL. In this regard the learned                 F
Solicitor General has specifically relied on the averments made in
Paragraph I of the Petition filed by the respondent Vodafone before the
Tribunal to contend that the tempering of CLI on the basis of which
demand is raised has been admitted by the respondent Vodafone.
Reliance was placed on the decision of this Court in Bharat Sancliar
Nigam Limited Vs. Reliance Communication Ltd. 1 wherein it was                    G
held by this Court that Clause 6.4.6 of the Interconnect Agreement in
the said case, which is similar to clause 11 of the Circular dated 28.01.2004,
was not penal in nature but a pre-estimate ofreasonable compensation
and further that it wasJhe duty of the licensee to maintain the integrity
 1
     (2011) 1 sec 3941                                                            H
750            SUPREME COURT REPORTS                            [2016] 7 S.C.R.


A     of the exchange/Point of Interconnect (POI) which the respondent
      Vodafone failed to honour.
             6. In reply, Shri Navin Chawla learned counsel appearing for the
      respondent submits that Vodafone was not an International Long Distance
      Operator (ILDO) and could not, in any way, deliver ISO Calls to BSNL's
B     network. Learned counsel has denied that Para I of the petition filed
      before the Tribunal can be construed as an admission on the part of the
      Vodafone as the averments made therein are merely to the effect that if
      any international call has been transferred to the BSNL network the
      same is a handiwork of miscreants. Shri Chawla has drawn the attention
      of the court that no specific allegations had been made that Vodafone
c     was involved in masking or altering CLI. Learned counsel has further
      submitted that BSNL has failed to show how any such calls could have
      been generated in the Vodafone's network for being transferred to the
      BSNL's network. The reliance placed in Blwrat Sanc/wr Nigam Ltd.
      vs. Reliance Comm1111icatio11 ltd. (supra) by the learned Solicitor
D     General is sought to be countered by Shri Chawla by contending that no
      clause similar to Clause 6.4.6 of the Interconnect Agreement in the said
      case exists in the Interconnect Agreement between the parties to the
      present case.
            7. The short question that arises for consideration in the above
E    premises  is whether the appellant BSNL could levy the highest applicable
     !UC charges on the basis of Clause I I of the circular dated 28.01 .2004.
     One of the recitals to the Interconnect Agreement is to the effect that
     BSNL reserves the right to modify the terms and conditions of the
     agreement, if it receives a direction from the licensor or any other
     competent authority to that effect. The circular dated 28.0 I .2004, clearly,
F was not pursuant to any direction from the licensor but was unilaterally
     issued stipulating that charges at the highest applicable rate would be
  .. levied for calls coming with invalid CLI. The circular dated 28.01.2004,
     being unilateral, does not become a part of the Interconnect Agreement
     inasmuch as the respondent Vodafone had consented to be bound by
G any additional/fresh terms and conditions only if the same is/are issued
     by the competent authority or pursuant to the directions of the competent
     authority. Admittedly, in the IUC Regulations there was no stipulation
     for levying charges in the manner it has been done. In so far as the
     decision of this Court in Bfiar"t S"nc/wr Nigam Ltd. vs. Relimrce
     Communication Ltd. (supra) is concerned, it will suffice to notice that
BHARAT SANCHAR NIGAM LIMITED v. VODAFONE ESSAR                               751
       GUJARAT LIMITED [RANJAN GOGOi, J.]

Clause 6.4.6 of the agreement between the parties in that case was not       A
existent in the agreement between the parties to the present case. That
apart the licencee in the said case Relillnce Communiclltion Ltd. (supra)
was holding an ILDO licence unlike the respondent Vodafone in the
present case. On the other hand it appears that the Tribunal -correctly
placed reliance on the decision of this Court in Bltllrllt Sllnclwr Nigllm
                                                                             B
Limited. Vs. BPL Mobile Cellulllr Ltd. & Ors. 1 to hold that ci1cular
issued by the DoT does not ipso facto become a part of tire Agreement.
       8. Apart from the above it has already been noticed that before
the circular dated 28.01.2004 came to be issued by BSNL, TRAI had
issued an directive dated 24.11.2003 and a circular dated 20.01.2004 to
all operators advising them not to tamper with CLI of any call and not to
                                                                             c
offer or accept any call without CL!. BSNL's action in receiving calls
originating from the respondent's network without CLI and the further
decision to charge such calls at the highest rate would, therefore, be
clearly against the aforesaicl directions of TRAI.
      9. Lastly, the appellant BSNL could not also discharge its burden       D
to show as to how respondent even by tampering with its network could
wrongly receive and route international calls when jt did not have an
International Long Distance Operator Licence.
      I 0. For the aforesaid reasons, we cannot find any fault with the
conclusions recorded by the learned Tribunal in the impugned order under      E
challenge in the present case. The appeal, therefore, is liable to be·
dismissed which we hereby do without, however, any order as to costs.
CIVIL APPEAL N0.8108 OF 2010 AND
CIVIL APPEAL N0.1105 OF 2013
                                                                              F
      11. Both the above mentioned appeals having raised somewhat
similar issues are being answered by the present common judgment.
       12. The appellant-ijhl!iat Sanchar Nigam Ltd. ('BSNL' for short)
and the respondent - Bharti Airtel Ltd. entered into an Interconnect
Agreement dated 15.02.2002 that governed two licenses under the Indian
                                                                              G
Telegraph Act that were obtained by the resp9ndent for basic telecom
service and mobile telephony respectively. In the year, 2004 a Unified
License was obtained and the respondent - Bharti Airtel migrated to a
Unified Access License (UAL). The core issue pertains to the validity
of two separate demands raised in the two cases by the appellant- BSNL
'(2008) 13 sec 597                                                            H
752            SUPREME COURT REPORTS                          [2016] 7 S.C.R.


A     for alleged routing non CU/invalid CLI calls to the BSNL network by
      the respondent - Bharti Airtel Ltd.
             13. Before proceeding to deal with the facts and circumstances
      surrounding the demand raised, it will be necessary to note Clause 6.4.6
      as contained in the Original Interconnect Agreement between the parties
B     and, thereafter, as amended from time to time. While doing so, the details
      of certain other circulars/communications etc. would also require a
      specific notice. Clause 6.4.6 of the Interconnect Agreement as originally
      contained in the Agreement is in the following terms:
            "BSNL will pay access charges for STD/ISD calls
c           originating in the BSNL's network and delivered to
            the BSO's network, at the rate of Rs.0.84 per unit
            measured call at the point of interconnect to the BSO,
            only in such cases where the BSNL delivers the call
            in an exchange other than the BSO's tandem/terminal
            exchange. However, for STD/ISD calls delivered from
D           BSNL's TAX to BSO's main exchange serving
            multiple SDCCs, the latter shall be treated as the
            terminal exchange and no access charges shall be
            payable by BSNL to BSO.
            It is acknowledged that BSNL shall not pay any
E           charges for all types of calls including terminating ISD
            calls in the following cases."
            An addenda was added to the said clause of the Agreement 01
      21.07.2004, which is in the following terms:

F           "Unautltorized calls i.e. calls otlter titan specified for
            tltat trunk group if detected, for wlticlt tlte applicable
            /UC is ltiglter titan tlte /UC applicable for calls
            prescribed in tltat trunk group, tlten BSNL sltall cltarge
            tlte UASL tlte ltigltest /UC, as applicable for
            unautltorized calls, for all tlte calls recorded on tltese
G           ports from tlte date of provisioning of tltat POI or for
            tlte preceding two months wlticltever is less. In addition,
            BSNL sltall also ltave tlte rig/it for taking other legal
            actions including disconnection of POis or temporary
            suspension of tlte, interconnection arrangements under
            misuse. In case BSNL wisltes to disconnect the POI, it
H
BHARAT SANCHAR NJGAM LIMITED v. VODAFONE ESSAR                            753
       GUJARAT LIMITED [RANJAN GOGOi, J.)

      shall give a one week notice lo UASL. If the                        A
      unauthorized routing of calls to BSNL is not removed
      within one week, BSNL shall disconnect lite POI."
     Thereafter, with effect from I 9.07.2005, Clause 6.4.6 was further
amended in the following terms:
                                                                           B
          "a. Unauthorised calls i.e. calls other than specified
      for that trunk group if detected,for which the applicable
      /UC is higher than the /UC applicable for calls
      prescribed in that trunk group, then BSNL shall charge
      the UASL the highest applicable /UC, as applicable for
      such unauthorized calls, for all the calls recorded on               c
      this trunk group from the date of provision of that POI
      or for the preceding two months whichever is less.
          b. The CL/ based barring facility shall be activated
      at the POis wherever technically feasible to ensure that
      the traffic handed over lo BSNL is in tlte appropriate
                                                                           D
      trunk groups only. Wherever, ii is technically not feasible
      to activate CL/ based barring, periodic monitoring of
      the incoming trunk groups shall be done bv BSNL
      wit/tout CL/ or modified/tampered CL/ (rom UASL sltall
      be charged at the highest slab i.e. as for STD calls. In
      case suclt calls are received by BSNL on any trunk                   E
      group, tlten all the calls recorded on this trunk group
      shall be charged at tlte rates applicable for /UC of
      incoming /SD calls (rom the date ofprovisioning ofthat
      POI or for the preceding two molltlts, whicltever is less.
          c. When CDR based billing is introduced in BSNL's                F
      network some of the trunk groups shall be merged. In
      such cases also, in case unauthorized or incoming
      i11ternational_calls, without CL/ call, call with tampered
      CL/ is ltanded over to BSNL at tile merged trunk group,
      then BSNL silall charge tile UASL tlte highest applicable
                                                                           G
      /UC, as prescribed in clauses 6.4.6 (a) above for
      unautilorized calls & 6.4.6(b) for incoming i11ternalional
      call, without CL/ call, call for tampered CL/for all calls
      recorded on this merged trunk group from tlte !fate of
      provisioning ofthat POI or for the preceding two months
      whichever is less.                                                   H
754            SUPREME COURT REPORTS                           [2016] 7 S.C.R.


A               d. In addition, BSNL sliall also liave Ifie rigllt for
            taking oilier legal actions including disconnection of
            POis or temporary suspension of Ifie interconnection
            arrangements under misuse."
              14. Jn the discussions in connection with Civil Appeal No.8107 of
B     20 I 0 (decided by the present order) it has been noticed that the Telecom
      Regulatory Authority of India (TRAI) vide letter dated 24.11.2003 had
      advised the appellant- BSNL not to tamper with the CLI ofany call and
      not. to offer or receive calls without CL!. The aforesaid letter was
      followed by a circular dated 20.01.2004 issued to the same effect by
c     TRAI. In the said circular it was specifically mentioned that the appellant
      - BSNL's decision to accept calls without CLI and charging therefor at
      the highest slab was against the TRAI's direction.
              15. In the said discussions it has also been noticed that on
      28.01.2004, the appellant -BSNL issued a circular for implementation
D     of the Telecommunication Interconnection Usage Charge (IUC)
      Regulation, 2003 which, inter alia, contained Clause 11 dealing with
      charges leviable on calls received without CLI and also unauthorized
      calls. The aforesaid Clause 11 having already been extracted as a part
      of the discussions in Civil Appeal No. 8107 of 2010 will not require. a
      repetition.
E
             16. There is yet another circular dated 13.06.2005 issued by the
      BSNL which must now be taken note of. In the said circular, it has been
      stated that there may be many technical reasons for routing
      invalid/incomplete CLI calls such as, "transient faults in. the switch, ·
      software version/signalling problem, non-recognition of CLI by
F     exchanges, lack of capability to analyze all digits by some exch!l11ges"
      etc. In the said circular, it was also mentioned that it has been decided
      that where non-CU calls received at the POI were less than 0.5% of
      the total number of cat&.received, the access provider would be charged
      for do,uble the nu.nber of such non-CLI calls, at the highest slab i.e.
      incomi1Jg ISD c.1l1s.                              ·
G
             17. For the period May, 2003 to June, 2005 a demand of
      Rs.59,40,94,834.l. was raised by BSNL for invalid and incomplete CLI
      calls handed ove_r by Bharti Afrtel to the BSNL network. The
      respondent-Bharti Airtel vi de letter dated 21 ;04.2006 claimed that the
      irregularities as mentioned were on account of technical faults at the
H
BHARAT SANCHAR NIGAM LIMITED v. VODAFONE ESSAR                               755
       GUJARAT LIMITED [RANJAN GOGOI, J.]

BSNL's end. The said plea was rejected by the BSNL upon due enquiry.         A
Thereafter, the respondent produced a certificate dated 29.05 .2006 issued
by the supplier of its switch box i.e. Siemens offering technical
explanations for non display of CLI in respect of calls with 10 digits to
the BSNL network. This was not acceptable to BSNL who thereafter
issued a disconnection notice leading to the proceedings before the
                                                                              B
Tribunal wherein by order dated 11.02.2010 the learned Tribunal had set
aside the demand raised by the appellant-BSNL.
       18. The basis on which the Tribunal seems to have answered the
question is that while Clause 6.4.6 of the Interconnect Agreement relating
to non-CU calls came into effect only in July 2005 (19.07.2005), the
demands raised were prior to the date of coming into effect of the
                                                                              c
amended Clause 6.4.6. The learned Tribunal also concluded that the
certificate issued by Siemens with respect to the technical glitches was
not considered by BSNL in proper prospective and further that the
respondent was not given an opportunity to perfonn a simulation exercise
to establish the reasons for calls being handed over to the BSNL network      D
without CLI.
      19. Aggrieved by the aforesaid order, Civil Appeal No.8108 of
2010 has been filed by the appellant-BSNL.
       20. We have considered the respective submissions of the parties.
On behalf of the appellant-BSNL it is argued that though Clause 6.4.6 of      E
the Interconnect Agreement had come into force with effect from
19.07.2005, clause 11 of the circular dated 28.01.2004 empowered the
BSNL to raise the demands in question. It is urged that Clause 11 of the
said circular became effective from 01.05.2003 i.e. date from which the
IUC Regulations became applicable. The respondent-Bharti Airtel,              F
according to the appellant, has also not been able to establish its
compliance with the stipulation and cpnditions incorporated in the DoT
circular dated 24.06.2003. The plea of technical glitches alleged by the
respondent-Bharti Airtel has been contended to be wholly unsustainable
inasmuch as Siemens is the vendor of the service provider (Bharti Airtel)
for which reason the certificate issued is unworthy of credit.                G

       21. In reply, learned counsel appearing forthe respondent-Bharti
Airtel has drawn the attention of the Court to the finding recorded by the
Tribunal that the irregularities in the 10 digits CLI calls handed over to
the BSNL network was not because of any deliberate violation or wrongful
                                                                              H
756             SUPREME COURT REPORTS                            [2016] 7 S.C.R.


A     conduct and that such deficiency was on account of technical glitches in
      the switch box/gear provided by Siemens. The said finding is final and
      conclusive. It is further urged that the circular dated 28.01.2004 being a
      unilateral exercise by BSNL cannot authorize the BSNL to raise the
      demand in question particularly when the IUC Regulations, 2003 did not
      contain a provision to the said effect empowering the BSNL to so act.
B
      Reference has also been made to the circularof the TRAl dated 20.1.2004
      particularly in respect of the fact that BSNL's decision to accept calls
      without CL! and then to charge for such calls at the highest slab rate
      was against the direction of the TRAI.
             22. Having considered the respective submissions of the parties,
c     we find that the matter lies in a short compass. The allegation against
      the respondent operator is with respect to handing over calls with invalid
      CLI to the BSNL network. Clause 6.4.6 of the original Interconnect
      Agreement between the parties dealt with the computation of access
      charges. The July, 2004 amendment, prospective in nature, dealt with
D     the liability in case ofunauthorized calls i.e. calls other than specified for
      a particular trunk group. The subsequent Addenda dated 19.07.2005
      dealt with calls without CL! and the charges applicable. The recital to
      theAddenda clearly states that it is pr~spective in operation. If that is so,
      we do not see how on the strength of Clause 6.4.6 which came into
      effect from 19.07.2005 the demand forthe period uptoJune 2005 could
E     have been raised by BSNL. The contention ofBSNL that the said demand
      would be justified on the strength of clause 11 of the circular dated
      28.01.2004 also cannot have our acceptance in view of the fact that we
      have held the above issue against the BSNL in Civil Appeal No.8107 of
      2010 (BSNL v. Vodafone Essar Gujarat Limited), decided today.
F     Furthermore, the finding of the Tribunal that the demand raised by BSNL
      would not be justified in view of the certificate issued by Siemens, the
      manufacturer of the switchgear instituted in the Respondent's POI, a
      pure finding of fact, would provide an additional plank for our decision to
      dismiss the present appeal filed by the appellant-BSNL, which we hereby
      do.
G
      CIVIL APPEAL N0.1105 OF 2013
             23. Two bills raised by BSNL against the respondent-Bharti Airtel
      in respect of its cellular services form the subject matter of the present
      appeal. The first bill is forthe period May, 2003 to January, 2004 and the
H     second bill dated 03.06.2009 is for the period February, 2004 to November,
BHARAT SANCHAR NIGAM LIMITED v. VODAFONE ESSAR                                  757
       GUJARAT LIMITED [RANJAN GOGOi, J.]

2004. The learned Tribunal vide its judgment dated 11.02.2010 partly            A
allowed the demand forthe period 21SIJuly,2004 to November, 2004 by
holding that for the said period the appellant-BSNL would be entitled to
charge the respondent for double the number of actual calls which did
not have any CLI on the basis of the circular ofBSNL dated 13.06.2005
whereas for the period May, 2003 to 21 SI July, 2004 its judgment dated
                                                                                 8
11.02.2010 in the case between same parties (subject matter of Civil
Appeal No.8108 of2010 would govern the issue).
       24. Having heard the learned counsel for the parties and on due
consideration, we find that the Tribunal failed to notice bill dated
23.07.2008 for the period May, 2003 to January, 2004 was solely with
respect to calls with invalid CLI. The period of demand therefore is
                                                                                 c
before the date of the addendum to Clause 6.4.6 i.e. 19.07.2005. This
issue, therefore, will stand decided by the present order insofar as Civil
Appeal No.8108 of20 I 0 is concerned. The second bill dated 30.06.2009
for the period February, 2004 to November, 2004 was a consolidated bill
for non-CL! calls as well as trunk group violation. For the latter violation     D
the demand as mentioned in the said bill is Rs.76.26 lakhs. This later
demand, in part, appears to be in order in light of the Addenda to Clause
6.4.6 dated 21.07 .2004.
       25. Accordingly, the appeal is allowed to the aforesaid extent,
namely, by holding thatthe liability for trunk group violation for the period    E
21.07 .2004 to November, 2004 can be legitimately levied on the
respondent-Bharti Airtel in terms of Clause 6.4.6 added in the
Interconnect Agreement by Addenda dated 21.07 .2004. The appellant
may work out the precise quantum of penalty on the aforesaid basis
which will be paid by the respondent.
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CIVIL APPEAL NO. 8269 of 2010
       26. The respondent - Tata Teleservices Ltd. had challenged the
demand notices dated 03.09.2006, 23.03.2007 and 09.04.2007 issued by
the appellant - BSNL whereby it called upon the respondent to pay an
amount of Rs. I 0,63,88,772/- in terms of Clause 6.4.6 of the Interconnect       G
agreement which is in the same terms as introduced by the addenda
dated 19.07.2005 in the case of Bharti Airtel (supra), details of which
have been noticed herein above in the discussion pertaining to the said
appeal (Civil Appeal No.8108 of20 I 0). The demand notices were issued
for the period from May 2003 to May 2004 and the irregularity/illegality
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758             SUPREME COURT REPORTS                           [2016] 7 S.C.R.



A     alleged is transfer of non CLI/wrong CL! calls to the BSNL network.
             27. The learned Tribunal by its impugned judgment dated
      11.02.2010 had set aside the demand(s) on the ground that as Clause
      6.4.6 was added to the Interconnect agreement between the parties to
      the present case by the addendum dated 01.12.2005 with effect from
B     14.11.2003, the same, therefore, can have no application to the period
      prior thereto. It was also held that a comparison of the CD Rs of both
      parties showed that CL! was available on the CDR of Tata Teleservices
      Limited and not with the BSNL. Therefore, the fault lay in the system of
      B.S.N.L. for which the respondent cannot be penalized. The Tribunal
      further held that the Circular dated 13.06.2005, relied upon by BSNL to
c     support the impugned demand, details of which have already been noticed
      in the case of Bharti Airtel (supra), itself provides for due application of
      mind necessitating an enquiry as to the reasons for the irregularities/
      shortcomings in the display of the CL!. No such opportunity was afforded
      to the respondent by BSNL before resorting to the impugned demand(s).
D            28. Elaborate arguments had been advanced on behalf of both
      sides, the core of which, insofar as BSNL is concerned, is that Tata
      Teleservices Limited having taken the benefit of the Circular dated
      13.06.2005, (made effective from 01.05.2003) for the latter part of the
      period involved, its liability would accrue from the said date and the
E     demand has been worked out on the basis that 48.9% of the calls are
      non-CL! calls and therefore Clause 6.4.6 would apply. It is urged that
      the contention of the Tata Teleservices Limited that the calls are less
      than 0.5% is plainly incorrect.
             29. In reply, it is urged that Clause 6.4.6 of the Interconnect
F     agreement, in the form and content in which it has been applied to the
      case of the respondent, was introduced by the addendum dated
      01.12.2005, effective from 14.11.2003. ln the present case, the alleged
      violation of Clause 6.4.6 is on the ground of transmitting calls without
      CL!. It is urged that upto the date on which Clause 6.4.6 came into
      operation i.e. 14.11.2003, the demand raised on the said basis is without
G     any authority. It is further submitted that the receipt of calls without
      CL! having been disapproved/rejected by the TRAI and there being
      express directions requiring BSNL to reject such calls, the appellant
      cannot take advantage of its own action contrary to the directions of the
      Regulator i.e. TRAI. Furthermore, according to the respondent, the
H     Circular dated 13.06.2005 prohibits BSNL to mechanically apply Clause
BHARAT SANCHAR NIGAM LIMITED v. VODAFONE ESSAR                                  759
       GUJARAT LIMITED [RANJAN GOGOi, J.]

6.4.6 and it is only upon elimination of technical failures, incompatibility    A
between exchanges, etc. that Clause 6.4.6 can be resorted to and that
too for the period after 14.11.2003.
       30. In a situation where it is the case of the appellant BSNL itself
that non-CL! calls transmitted by the Tata Teleservices Limited to the
BSNL network was more than 0.5% and hence Clause 6.4.6 of the                    B
Interconnect agreement would be applicable, exfacie, the demand raised
for the period from May 2003 to November 2003 would be without any
legal authority inasmuch as Clause 6.4.6 became a part of the
Interconnect agreement between the parties with retrospective effect
from 14.11.2003.
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       31. In view of the aforesaid finding recorded by the learned Tribunal
with which this Court is in full agreement, it will not be necessary to go
into any other issue so far as the demand forthe said period is concerned.
For the remaining period i.e. November, 2003 to May 2004 during which
period Clause 6.4.6 was in force, the finding of the learned Tribunal that
Tata Teleservices Limited should be given an opportunity and the quantum         D
of loss suffered by B.S.N.L. should be computed accordingly would,
however, require a close look. In Bharat Sanclwr Nigam Ltd. Vs.
Reliance Communication Limited (supra), this Court has held that
Clause 6.4.6 prescribes a pre-estimate ofreasonable compensation. The
premise on which the learned Tribunal had held the necessity of affording
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an opportunity to Tata Teleservices Limited for determination of the
quantum ofloss suffered by BSNL for the period from November 2003
to May 2004 proceeded on the basis that Clause 6.4.6 is a penal clause.
As the said basis stands altered by the decision of this Court in Bltarat
Sane/tar Nigam Ltd. vs. Reliance Communication Limited (supra),
computation ofliability for the period from November 2003 to May 2004,           F
during which period Clause 6.4.6 was in operation, must necessarily be
made in accordance with the terms of the said clause. The order of the
 learned Tribunal, therefore, to the aforesaid extent, is set aside and the
appeal is partly allowed. The demand raised for the period from May
2003 to November 2003, as held earlier, shall stand set a.tJide while for
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the period from 14.11.2003 to May, 2004 shall be determined in
accordance with Clause 6.4.6 of the Agreement as brought into effect
with retrospective effect from 14.11.2003.
Devika Gujral                                            Appeals disposed of.

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