Holding

Internal DOT circulars, lacking statutory authority and not incorporated into the contract, cannot unilaterally alter the contractual terms, and the doctrine of acceptance sub‑silentio does not apply.

Summary

The Supreme Court examined whether internal circulars issued by the Department of Telecommunications (DOT) could alter the terms of lease contracts between Bharat Sanchar Nigam Ltd. (BSNL) and BPL Mobile Cellular Ltd. concerning inter‑connection links. The parties had entered into licence agreements that specified rent‑and‑guarantee (R&G) charges based on capital cost, with the option of a flat‑rate thereafter. BSNL later demanded higher payments relying on various DOT circulars, which BPL contested as non‑statutory and not part of the contract. The Court held that such circulars, being internal administrative documents without statutory force, cannot unilaterally modify a concluded contract absent express agreement or novation. Consequently, the doctrine of acceptance sub‑silentio was inapplicable and the contractual rates remained enforceable. The appeals were dismissed, leaving the lower Tribunal's orders unchanged.

Issues considered

Whether internal DOT circulars have statutory force to modify the terms of a concluded lease contract.
Whether the doctrine of acceptance sub‑silentio applies to the parties' alleged knowledge of the circulars.
Whether the minimum guarantee period prescribed in the circulars can be enforced absent explicit contractual incorporation.
Whether unilateral alteration of tariff rates by DOT violates the Indian Contract Act and Indian Telegraph Act.

Legislation cited

Indian Contract Act, 1872s. Section 10, s. Section 29, s. Section 60, s. Section 7, s. Section 8, s. Section 9
Indian Telegraph Act, 1885s. Section 10, s. Section 7, s. Section 9

Subjects

contract lawacceptance sub silentiointernal circularstelecom tarifflease agreementminimum guarantee periodIndian Telegraph Actstatutory vs non‑statutory rulesTDSAT

Judgment

[2008] 8 S.C.R. 729

BHARAT SANCHAR NIGAM LTD. & ANR. A
II.
BPL MOBILE CELLULAR LTD. & ORS.
(Civil Appeal Nos. 6341-6342 Of 2003)
MAY 14, 2008
' B
[S.B. SINHA AND LOKESHWAR SINGH PANTA, JJ.)
Contract Act, 1872: S. 8
Agreement between patties and Department of Telecom-
munications - Fructifying into concluded contract - Internal c
circulars issued by the Deparlment of Telecommunications -
Applicability thereof on the contracts - Held: Parties bound
by the concluded contract - Doctrine of 'acceptance sub-si-
lentio' not applicable - Parties not even aware of the circulars
or the letters issued from time to time - Indian Telegraph Act, D
1885, Section 7 - Indian Telegraph Rules, Rules 434, 475A,
478, 494, 496 and 498.
Doctrines:
Doctrine of 'acceptance sub-silentio' - Applicability of.
E
Words & Phrases:
'Prescribed' - Meaning of.
In these appeals arising from the orders of Telecom
Disputes Settlement and Appellate Tribunal (TDSAT), the F
core question involved was the effect of the application
of internal circulars issued by the Department of Telecom-
munications (DOT) in the contracts entered into by and
between the parties as regards the inter-connection links
provided by DOT. G
On behalf of the appellants it was submitted that the
Rules framed under the Indian Telegraph Act are binding
on the service providers; that the lease agreement entered
into by and between the parties having categorically pro-
729 H
I'"

730 SUPREME COURT R!:PORTS [2008] 8 S.C.R.

A vided that circular letters would be applicable as regards
dem.and of the payment on flat basis being higher than
the rent and guarantee (fpr short"R & G''), the impugned
judgment is not sustainable; .that from the Minutes dated
2.02.1996, it. would appear that the licensees were aware
B of the existing circular orders. Furthermore, although the
official books are for internal use, they are available in the
,.
market having been published under the name of Swarny's
·.Treatise on Telephone Rules; that if .under the contract,
the BSNL was entitled to charge a higher amount, the
c impugned judgment is wholly unsustainable; that the
•
question is .•n<>twhet.her the circulars have the statutory
force or nofbut a perusal of the licence agreement would
clearly go tC? show that the licensees agreed to pay the
tariff as prescribed by DOT; i.n view of clauses 4.1 and
19.5 of the licence agreement, it must be held thatthe pre-
0
scribed rate and period would mean that as prescribed
· by the authc)rized officer of DOT. from .time to time; that
the licencees entered into contracts with their eyes wide
open and irf that view of the matter as rates have been
E fixed by the circulars, the same are only required to be ,..
forwarded to the Bill Department so that they can raise
bills in terms thereof; that in terms of th.e circulars, revi-
sion of rates were to be carried out by the co.nce.rned de·
. partments as would appear from the circular Nos.4·31/
86(R(Pt) dated 17.6.1988, 24-1187-PHC (Pt) 8 dated
F 13,11.1988, 1•2/89-Rlptdated 18.2.1991, 4-11190-R dated
30.9.1991 and 4~11/90-R dated 1.4;1992 and as the respon-
dents had been paying on the basis thereof, they cannot
now be permitted to approbate and reprobate; and that
in regard to the minimum guarantee period, it was sub-
G mitted that the agreement .refers to the Rules and the
circulars.
On behalf of the respondents, it was contended that
the parties entered into the agreement having regard· to
H the commercial representations made to them by DOT
BHARAT SANCHAR NIGAM LTD. & ANR. v. BPL 731
MOBILE CELLULAR LTD. & ORS.

wherefor a booklet has been issued. It was furthermore A
submitted that the parties were given options, viz., (i) the
licensees could purchase equipments and install the same
or take lease of the equipments installed by DOT on (a) flat
rate basis; or (b) on capital cost; (ii) the parties have en-
tered into the agreement on the premise that the charges B
will have to be paid on rent and guarantee basis; and that
the subsequent stand taken by the appellants herein to
raise demands on enhanced basis relying on or on the
basis of the internal circulars is wholly unsustainable.
Dismissing the appeals, the Court c
HELD: 1. A contract qua contract, however, must be
consensual. It must meet the statutory requirements and .
reasons under the provisions of the Indian Contract Act.
When a contract is entered into by and between the par- D
ties, what is determinative is enforcement of the terms and
conditions to be governed by the contract, subject, of
course, to the application of the statute and statutory pro-
visions. Whereas a statutory contract would be governed
by a statute, other contracts would not. [Para 18] [757-F,G]
E
2. Two options were available to the respondents
who intended to operate and/ or provide cellular services
in the State of Kerala, viz., (i) buying of equipments and
installing them, or (ii) DOT may install the equipments
which may be licensed to the cellular service providers F
on rent and guarantee charges. Clause 4.1 of the licence
agreement inter alia states that (i) resources must be iden-
tified and (ii) the area of operation should be mutually
agreed to between the parties. It also deals with what
would be included in the said provision. The last part of G
the said clause speaks about the operation and charge
of the electronic tariff passed through these resources. It
does not cover the charges for resources/ equipments. It
does not take within its umbrage the system itself. The
tariffs in regard to equipments are, therefore, not gov-
H
732 SUPREME COURT REPORTS [2008] 8 S. C. R

A erned by the said clause. What it envisages may be call
charges being the operation and charge of traffic pass-
ing through the resources. If that be so, the question of
raising any demand on the basis of the circular letters did
not arise at all. [Para 20,21] [758-A-E]
B 3. Huge difference in the contractual rate and the
demand on the flat rate could be made provided the con-
tract provided therefor. The difference admittedly was '
based upon the internal circular letters. They might have
been published by some publisher but indisputably they
c are not statutory in nature. They have not been framed
under any statute. The Indian Telegraph Act or the Rules
framed thereunder do not provide for issuance of such
circulars. The circular letters collected at one place are
loosely called rules. They are meant for office use only. The
D directions contained in the said circular letters are relevant
>
for the officers who are authorized not Qnly to grant licences
but also enter into contracts and prepare bills. The circular
letters having no statutory force undoubtedly would not
govern the contract. If some authorities have violated the
E terms of the said circulars, they might have committed mis-
conduct, but when a contract is entered into, the parties
shall be bound thereby. [Para 23] [760-B·E]
4. The circular letters cannot ips~:> facto be given ef-
feet to unless they become part of the contract. It is as-
F sumed that some of the respondents knew thereabout,
and that in one of the meetings, they referred to the said
circulars. But, that would not mean that they are bound
thereby. Apart from the fact that a finding of fact has been
arrived at by the TDSAT that the said circular letters were
G not within the knowledge of the respondents, even as-
suming that they were so, they would not prevail over the ~
public documents which are the brochures, commercial
information and the tariffs. [Para 25) [763-A,B,C]
Sri Dwarka Nath Tewari & Ors. Vs. State of Bihar & Ors.,
H
BHARAT SANCHAR NIGAM LTD. &ANR. v. BPL 733
MOBILE CELLULAR LTD. & ORS.

AIR 1959 SC 249; Life Insurance Corporation of India v. Es- A
corts Ltd. and Others (1986) 1 SCC 264; Delhi Development
Authority & Anr. Vs. Joint Action Committee Allottee of SFS
Flats & Ors. (2008) 2 SCC 672 and New India Assurance Com-
pany Ltd. v. Nusli Neville Wadia and Anr. (2007) 14 SCALE
556 - relied on. B
5. If the parties were ad idem as regards terms of the
contract, any change in the tariff could not have been
made unilaterally. Any novation in the contract was re-
quired to be done on the same terms as are required for
entering into a valid and concluded contract. Such an C
exercise having not been resorted to, no interference with
the impugned judgment is called for. [Para 26] [763-D]
6. For invoking clauses 4.1 and 19.5 of the licence
agreement, one may notice that the word 'prescribed' is
0
not defined. It has not been defined even in the Indian
Telegraph Act. It has not been defined in the licence. The
said provision unlike clause 18.14 does not use the words
'from time to time'. A contract entered into by the parties,
must be certain. It must conform to the provisions of the
Indian Contract Act. Ordinarily, the word 'prescribed' E
would mean prescribed by Rules. Section 7(2)(ee) of the
Indian Telegraph Act provides for the Rule making power
for the purpose of laying down the tariff. It should not be
understood that this Court is laying down a law that in
absence of any statutory rule framed under the Indian F
Telegraph Act, no contract can be entered into. In absence
of any statutory Rule governing the field, the parties would
be at liberty to enter into any contract containing such
terms and conditions as regards the rate or the period
stipulating such terms as the case may be. The matter G
might have been different if the parties had entered into
an agreement with their eyes wide open that the circular
letter shall form part of the contract. They might have also
been held bound if they accepted the new rates or the
periods either expressly or sub silentio. When on the H
734 SUPREME COURT REPORTS [2008] 8 S.C.R.

A basis of terms of the contract, different rates can be pre-
scribed, the same must be expressly stated. When the
word 'prescribed' is not defined, the same would mean
that prescribed in accordance with law and not otherwise.
[Para 27] [763E-H, 764-A,B]
B 7. In the instant case, the resources to be leased out
were subject to agreement. The terms were to be mutu-
ally agreed upon. The terms of contract, in terms of Sec-
tion 8 of the Contract Act, fructified into a concluded con-
tract. Once a concluded contract was arrived at, the par-
e ties were bound thereby. If they were to alter or modify
the terms thereof, it was required to be done either by
.J
express agreement or by necessary implication which
would negate the application of the doctrine of 'accep-
tance sub silentio'. But, there is nothing on record to show
D that such a course of action was taken. The respondents
at no point of time were made known either about the in-
ternal circulars or about the letters issued from time to
time not only changing the tariff but also the basis thereof.
[Para 30] [768-8,C,D]
E Amrit Banspati Co. Ltd. v. Union of India AIR 1966 All.104;
The Union of India v. Rameshwarlal/ Bhagchand AIR 1973
Gauhati 111 and Life Insurance Corporation of India v. Raja
Vasireddy Komalavalli Kamba AIR 1984 SC 1014 - referred
to .
..F
Chitti on Contract, page 135 - referred to.
8.1 Indisputably, mistakes can be rectified. Mistake
may occur in entering into a contract. In the latter case,
the mistake must be made known. If by reason of a recti-
G fication of mistake, except in some exceptional cases, as
for example, where it is apparent on the face of the record,
mistake cannot be rectified unilaterally. The parties who
that would suffer civil consequences by reason of such
act of rectification of mistake must be given due notice.
H Principles of natural justice are required to be complied
BHARAT SANCHAR NIGAM LTD. & ANR. v. BPL 735
MOBILE CELLULAR LTD. & ORS.
t·
4 with. The fact that there was no mistake apparent on the A
face of the records is borne out by the fact that even the
officers wanted clarification from higher officers. The mis-
take, if any, was sought to be rectified after a long period;
at least after a period of three years. When a mistake is
not rectified for a long period, the same, in law, may not B
be treated to be one. [Para 32] [768-E-H, 769-A]
>
8.2 Furthermore, what would be the effect of such a
mistake must be determined having regard to the provi-
sions of the Contract Act. It is not a case where the con-
tract is sought to be terminated on the ground of a mis- c
take. Only a higher rate is sought to be enforced on the
basis of internal circulars. [Paras 33, 34] [769-A,B]
8.3 Presumption of correctness of documents is pro-
vided for in Sections 81 and 84 of the Indian Evidence
D
Act. Even the contents of a newspaper, as envisaged
under Section 81 of the Indian Evidence Act, would not
be presumed to be correct. [Para 35] [769-B,C]
9.1 Prima facie, the proviso appended to Section 9
.. and Section 10 providing for a minimum guaranteed pe- E
riod of three years does not appear to have any applica-
tion. The authorities of the DOT also did not think so. They
proceeded on the basis of and having regard to the
phraseology used in Rules 478 and 496 that minimum
period is only three months. Applicability of minimum F
guaranteed period of three years was sought to be en-
forced from a circular letter dated 17.6.1988 only. [Paras
38, 39] [773-F,G]
9.2 Vacillating stand has been taken by the appel-
lants in the case of C.G. Faxemail. They sought to charge G
-;. double of the amount as prescribed in the contract on
the basis that the service which is being provided by them
' is close user group service. TRAI held it not to be so. TRAI,
as noticed hereinbefore, relied upon two circulars only,
namely 13.7.1985 and 22.11.1996, the latter one being af- H
736 SUPREME COURT REPORTS [2008] 8 S.C.R.

1
\j.
A ter the contract was entered into. TDSAT, apart from hold·
ing that the said circular letters are internal documents, did
not deal with the internet service providers. It thereafter
relied upon the circular letter dated 15.4.1998 and not on
the circular letter dated 3.6.1995, the former having no ap-
B plication to a contract which was entered into prior thereto.
Even the said letter provided for three months minimum
guarantee period for long distance lease lines. Even DOT '
raised three months demand notice on or about 26.11.1998.
Yet again, the DOT in its letter dated 13/14.1.1999 confirmed
c that paragraph A of the circular letter dated 26.11.1998 re-
ferred to Rule 496. The parties were not ad idem as to ,,
whether these circuits being long distance lease lines
would be governed by which circular. Furthermore, the
authorities of the DOT, assuming that they are applicable,
despite the circular letters, consciously entered into con-
D
tract for one year's period on which the parties had acted
thereupon. [Paras 39, 40, 41) [774-A-E]
9.3 A finding of fact has been arrived at by TDSAT
that the said circular letters are not applicable. Rule 434
E was not applicable. Appeal to this Court, in terms of Sec- J

tion 18 of the Act is maintainable only on a substantial
question of law. However, these appeals do not raise any
substantial question of law warranting interference. [Paras
42, 43) [774-F,G]
F B.K. Srinivasan v. State of Karnataka (1987) 1 SCC 658;
Ravinder Kumar Sharma v. State of Assam (1999) 7 SCC 435
and /. T. C. Bhadrachalam Paperboards v. Manda/ Revenue
Officer (1996) 6 SCC 634 - referred to.
CIVIL APPELLATE JURISDICTION : Civil Appeal NOs.
G
6341-6342 of 2003 ...
WITH (f
Civil Appeal NOs. 6375 of 2003, 1, 537 & 2015 of 2004 & ,,
3448 of 2006
H
BHARAT SANCHAR NIGAM LTD. & ANR. v. BPL 737
MOBILE CELLULAR LTD. & ORS. [S.B. SINHA, J]

Vikas Singh, ASG, Brijender Chahar, Yoginder Handoo, A
Maninder Singh, Prathibha Singh, Gaurav Sharma, Surbhi
Mehta Sumeet Bhatia, Madhurima tatia, V.K. Verma, Jyoti
Chahar, Madhu Sikri, Samir Sagar Vasishta and Virendra Singh
thakur for the Appellants.
Sunil Gupta, Shyam Divan andA.N. Haksar, Punit D. Tyagi, B
Prantap Kalra, mahesh Agarwal, Rishi Agrawala, Amit Kumar
Sharma, E.C. Agrawala, Manjul Bajpai, Bina Gupta, Ankur
Saigal, Gaurav Singh and Meenakshi Arora for the Respon-
dents.
c
The Judgment of the Court was delivered by
S.B. SINHA, J : 1. The core question involved in this ap-
peal is the effect of the application of internal circulars issued
by the Department of Telecommunications (DOT) in the con-
tracts entered into by and between the parties hereto in respect D
of as regards inter-connection links provided by it.
2. Civil Appeal Nos. 6341-6342 of 2003, 1 of 2004, 537
of 2004 and 2015 of 2004 involve the question of payment of
charges. Civil Appeal No. 6375 of 2003 involves the question E
as to the effect of pre-mature surrender of fifteen leased cir-
cuits of 2 MBPS which had been obtained by BPL from DOT
during the period January 1997 to June 1998. Civil Appeal No.
3448 of 2006 involves a dispute in relation to minimum guaran-
tee period for 2 MBPS leaded lines.
F
3. Judgments were delivered by the Telecom Disputes
Settlement and Appellate Tribunal, New Delhi (TDSAT) on vari-
ous dates, viz., 1.04.2003, 17.02.2003, 8.09.2003 and
. 3.03.2006.

4. Before, however, we consider the views taken by the G
Tribunal, we may notice the facts involved in each of the case
separately.
Civil Appeal Nos. 6341-42 of'2003
DOT circulated a booklet "commercial information on H
738 SUPREME COURT REPORTS [2008] 8 S.C.R.

A leased circuits" clearly providing for that the rent and guar-
antee charges for leased circuits would be on capital cost
basis and only after the guarantee period has expired, it
would be on capital cost or flat rate whichever is higher.
- Clause 7.0 of the said booklet provides for rent and guaran-
8 tee charges to the following effect:
"7.0 R & G Charges. R & G charges (per annum) will be
levied on percentage basis of the capital-cost for cable/
system. After the expiry of R&G period standard flat
rate rental or rental calculated on capital cost basis ,,_
C (whichever is higher) shall be levied. A specific hiring
contract will be executed with the Guarantor
(Subscriber).
In contributory works the installation and maintenance
charges are levied on percentage of capital cost of the
D
Apparatus and Plant."
"Contribution Works" has been defined in the Posts and
Telegraphs Financial Handbook as under:
"(xi) Contribution Works - This term is applied to works
E of construction or repair the cost of which is met, not out
of funds of the Department, but out of funds supplied by
private persons, local bodies, other Government
Departments, etc."

F Respondents herein are providers of cellular mobile ser-
vices. They did not have the requisite infrastructure. DOT had
the requisite infrastructure to provide inte!rconnecting links/
circuits and other resources.
Respondents entered into a licence agreement with the
G Government of India for operating/ providing cellular services
in the State of Kerala. Similar agreement were entered into
for inter-connection links in other parts of the country:
Basically we a.re concerned with Clause 4.1 of the said
H agreement, which reads as under:
BHARAT SANCHAR NIGAM LTD. & ANR. v. BPL 739
MOBILE CELLULAR LTD. & ORS. [S.B. SINHA, J]

"The resources required for operation of the services for A
extending them over the network of the DOT and MTNL
and any other service provider licensed by the Authority
will be mutually agreed between the parties and shall be
listed. The resources may refer to include but not limited
to physical junctions, PCM derived channels, private wires, B
leased lines, data circuits, other communication elements.
The Licensee shall apply for and obtain from the DOT the
determined resources. The operation and charge of the
traffic passed through these resources shall be treated on
the basis of the prevalent rules and the guidelines of the c
DOT on the subject."
Allegedly, pursuant to the instructions issued by the DOT,
the respondents imported equipment worth Rs. 30 lakhs. The
said equipments were to be installed. The DOT issued a
• letter on 2.08.1996 stating that such equipments could be D
installed and, furtrermore, suggested that the required digi-
tal microwave equipment should be installed on "contribu-
tion work" basis. However, it is beyond any cavil of doubt
that owing to resistance to the said move and resorting to
strike by the employees of DOT, the respondents were not E
allowed to install the imported equipments in their premises.
It is stated that the said equipments went waste.
By a letter dated 27.09.1996, the DOT communicated
• that the charges for interconnection of cellular mobile tele-
phone network would be calculated as per standard DOT F
terms. Although it had earlier been communicated that th,e
respondent could put up its own equipment under contribu-
tion work basis, it was to be allowed to take the equipment
on rent and guarantee basis. The rent and guarantee period
was for ten years. ·Pursuant to and in furtherance of the said G
lease agreements, the DOT installed the required equipment
and raised bills on the capital cost basis of the equipment.
One of the sample bills, which had been raised being Bill
dated 5.06.1998, is as under:
740 SUPREME COURT REPORTS (2008] 8 S.C.R.

A "Government of India
Department of Telecommunications
Thiruvananthapuram Telecom District
Telephone No. Consumer No. Bill No. Page
B

BPU Cellular Mobile SVC
BILL DATE BPL US West Cellular Communication
Services Ltd.
c IVth floor, Co-Bank Towers, P.O.
17.7.98
Stamp Palayam, TVM

.D DUE DATE
31.7.98 TO: 6.2.99
PAY BY DATE RENTAL FROM: 7.2.98TO:
CALLS FROM:
5.8.98 FREE
E
OPENING CLOSING METERED CREDIT
METER RDG METER RDG CALLS CALLS
CALLS 1,05,315
Rent for the 20 pr PCM cable ·RENTAL
F provided
For extending one 2 MB stream
from
Hotel Sibra, MC Road to MC xge
METERED
G CALLS
Egpt - 61525 TRUNK CALLS
OVERSEAS
Cable - 43790
CALLS
PHONO GRAMS
H
BHARAT SANCHAR NIGAM LTD. &ANR. v. BPL 741
MOBILE CELLULAR LTD. & ORS. [S.B. SINHA, J]
Rent for end link at TVM. Pl. DEBITS TAXES A
Note this is due from Feb.
GROSS AMT.
98. Bill is raised only now
Sd/- 27/7 CREDITS
Payment approved Amount payable 1,05,315 B
Sd/- on or before
L. HERBERT 5.8.98
Head Network Surcharge For de- 2000
layed payment
c
Amount payable if 1,07,315
paid on or after
6.8.98
Arrears
D
Sd/-
ACCOUNTS OFFICER
(TR)"
E
Indisputably, the Telecom Regulatory Authority of India
(TRAI) issued a tariff order covering the situations where lease
circuits were required to be provided. In the said tariff order,
• the tariffs were applicable with effect from 1.04.1994. More-
over, these rates were applicable only if the leased circuits are F
provided through utilization of spare capacity. It was further held
that where lease circuits were not available, as in the present
case, and the leased circuits had to be installed, the charges
would be on rent and guarantee basis. The said tariff order
was to have a prospective operation. As regards the prevailing G
tariffs, it was expressly provided that the tariffs specified in the
tariff order would replace the existing tariff from the date of imple-
mentation, which was 1.04.1999. The said tariff order was is-
sued under Section 11(2) of the TRAI Act, 1997. Indisputably,
the amount charged by the DOT on an annual rental basis for H
742 SUPREME COURT REPORTS [2008) 8 S.C.R.

A the systems rented out to the respondents was higher than the
rates prescribed in the tariff order.
DOT issued a circular dated 13.04.1999 that the tariff or-
der would not be applicable to old cases under rent and guar-
antee basis.
B
On or about 7.05.1999, DOT informed the local office that
the charges which should be billed against the respondents
should be as per the standard DOT terms, i.e., either on capital
cost basis or flat rate basis, whichever is higher. It is on the
c said premise, the bills were raised on flat rate basis, the effect ....
whereof, as contended by the respondents, is that they were
required to pay annual rent of Rs. 1,62,50,000/- as against the
prevailing annual rent of Rs. 39,87,762/-. Such demands ad-
mittedly were raised only in the State of Kerala and nowhere
D else in the country. Such additional demands were raised on
the service providers. A large number of correspondences
passed between the; parties. However, we may notice that by a
letter dated 19.08.1999, DOT stated that a sum of Rs.5,77,025/
- per annum should be paid by the respondents. A detailed ca I-
E culation wa::; also submitted therewith. The said computation
was accept~ by the respondents. However, according to the
appellant, the demand was wrongly made at Rs.15,00,000/- per
annum as against the said demand of Rs.5,77,025/-. Ques-
tioning the basis for making such demands, a writ petition was
filed. However, ultimately the same was withdrawn.
F
Respondents filed an application in terms of Section 14
of the TRAI Act before the TDSAT inter alia on the premise that
the flat rate basis purported to be in terms of the internal circulars
having no force of law, the same could not have been the basis
G for making the demands. It, inter alia, prayed for the following
reliefs:
"(a) Set aside the revised demand raised by the DOT/
Respondents on flat rate basis instead of on capital cost
basis as originally charged.
H
BHARAT SANCHAR NIGAM LTD. & ANR. v. BPL 743
MOBILE CELLULAR LTD. & ORS. [S.B. SINHA, J]

(b) Direct the respondents to give retrospective effect to A
Annexure-X i.e. DOT's new Tariff Circular 4/99 dated
13.4.99 so as to make it applicable to leased circuits
commissioned under R&G basis prior to 1.4.99 also;
(c) Direct the respondents to pay damages for the loss
sustained by the petitioner due to wasting of the NOKIA B
SDH Optimux equipment worth Rs. 30 lacs;"
The said applications have been allowed by reason of the
impugned orders.
Civil Appeal No. 6375 of 2003 c
The lease agreement in this case allegedly was to be for
a minimum period of three years. The dispute in this case re-
lates to premature surrender of 15 leased circuits of 2 MBPS
which had been obtained by the respondent from DOT during D
the period January 1997 to June 1998. Whereas the conten-
tion of the appellant is that the minimum period during v.thich
such lease agreement has to be entered into is three years,
according to the respondent, such a stipulation was not known
to them till 26.11.1998 and the same was not also indicated in
the booklet of DOT, viz., Commercial Information on 'Leased E
Circuits'. It was furthermore contended that the internal circulars
could not have the force of law.
Civil Appeal Nos. 537 of 2004 and 2015 of 2004
C.G. FAXEMAIL (P) Ltd. is an email provider. For its com- F
mercial services, it had secured leased data circuits. A meet-
ing of Email Service Operations was held with the Chairman of
Telecom Commission on 29.01.1996 to discuss various issues
relating to email services, the minutes whereof were issued on
02.02.1996. The minutes relating to the relevant item reads as G
under:
"Item No. 1
E-Mail service prov'iders are charged two times the rental
of the point-to-point circuit which is exorbitant. It is not H
744 SUPREME COURT REPORTS [2008} 8 S.C.R.

A economically viable to provide the services at such high
tariff of the leased circuits. t-

Decision
'"
It was informed that a Committee headed by Sr. DOG(CS)
B is deliberating the tariff structure for CUG networks. The
Committee has been asked to take care of the issue and
give an early recommendation.
Action: Sr.DDG(CS)"

c Respondents herein filed applications before TRAI as the
rates' which were being charged from them have been doubled,
inter alia, on the premise that they come within the purview of
•
close user group service. It came to the conclusion that the ser- •
vice provided by the respondents does not come within the pur-
D view ofclose unit group service, stating :
"The DOT, v!de their letter No.106-10/94-PHC dated '·
13.7.1995 had issued an order stating that the leased
lines in respect of the networks set up by licensees of
Value Added Services will continue to be charged at a
E rate, which was double the rate applicable for point to
point leased circuits of all types.
There is no doubt that E-mail services fall under the
category of Value Added Services and as the rental charge •
for leased circuits provided to the network providers of
F valued added services had been fixed by the DOT in their "
order dated 13th July, 1995, we come to the conclusion
that leased circuits for E-mail providers has been charged
correctly as per the extant orders.

G While holding the view, however, we are constrained to
take adverse notice of the fact that the respondents R-1
4
and R-2 did not refer to proper documents and that too
even after repeated queries from the Bench."
.. Having found so, however, the members came across two
H circulars being dated 13.7.1995 and 22.11.1996 and placed
BHARAT SANCHAR NIGAM LTD. & ANR. v. BPL 745
MOBILE CELLULAR LTD. & ORS. [S.B. SINHA, J)

the matters for further hearing. Relying on the said circulars, A
the TRAI held :
"After the hearing was over, we came across certain
documents filed by the DOT in an earlier petition clearly
indicating that value added network licensees, which
included E-mail licensees, were to be provided leased B
circuits. We then decided to call for a rehearing on this
issue and placed the documents on record. These
...
documents are of July 13, 1995 and November, 21, 1996
bearing Nos.106-10/94-PHC and 116-4/95-PHC
respectively. During the rehearing, the respondents C
accepted that the charging of double the rental for the
leased circuits, provided to the E-mail network licensees,
was based on the documents referred to above and not
on the basis of their earlier interpretation of E-mail as
being a CUG network. D
..
The petitioners argued that since the respondents had, in
their rejoinder, interpreted E-mail as a CUG network, which
according to them was wrong, the respondents cannot be
allowed to claim double rental on grounds of another order
which they failed to refer during the first hearing. The E
respondents, however, argued that even though they had
earlier taken the stand that E-mail service was to be
categorized a CUG network, they had also referred to
•• various orders issued by the DOT and a close reading of
the same would bring out the fact that the multiplication of F
rentals, provided for data circuits, had been in existence
from 1989 itself."
It was opined that they fall in the category of Value Added
Service. An appeal was preferred thereagainst before the Tri- G
bunal which has been allowed, opining :
"After going through the pleadings and the documents
produced we have no doubts in our mind that the
Respondents do not have much of a case. Admittedly
under the terms and conditions of the licences held by H
746 SUPREME COURT REPORTS [2008] 8 S.C.R.

A them the Appellants are under an obligation to pay for the ·~

resources admitted as per the rates fixed by the
Respondents. However, in the absence of· a specific
contract drawn up between both the parties to lay down
specifically the resources to be obtained and the precise
B charges to be paid by them, one has to rely upon knowledge
as may be available in public domain and on documents
exchanged between the parties, viz., requests for making \
available certain resources and the demand notes 'I'
•.,
subsequently raised by the provider of resources. It is an '
admitted fact, and it has not been contested by the ~
c Respondents, that the documents relied upon for charging
double the rental '"'ere internal circulars which were not
gazetted and hence not in public domain. The Commercial
Information on Leased Circuits, which was a published
documents of Dot made available to all the allottees of
D
leased circuits and hence very much in public domain, did
not contain any provision under which E-Mail Service
~

..
Providers were to be charged double the normal rent.
Even if it is assumed that the Ap1Pellants were aware of a
particular circular issued in 1993 it cannot be stretched to
E argue that they were aware of all the internal circulars of
DoT on this subject. We have verified from copies of the
demand notes raised by the Respondents in response to
the requests received from the Appellants that the initial
demands were in conformity with the rates and tariff as :..
F indicated in the brochure "Commercial Information on '
Leased Circuits"."
Civil Appeal No. 3448 of 2006
Respondent herein requested DOT to provide land dis-
G tance lease line on 12.8.1996 for one year. It was also stated
that further period of extension will be intimated in advance. On ·f-
<
or about 21•1 September, 1996, a request was made for exten-
sion of the said period for one year. Demand was made for
one year only by a bill dated 26.11.1996 for Vijaywada to
H Hyderabad long distant charges and on 24.12.1996 for
BHARAT SANCHAR NIGAM LTD. & ANR. v. BPL 747
MOBILE CELLULAR LTD. & ORS. [S.B. SINHA, J]

Vijaywada to Vishakhapatnam. The contract was, thus, con- A
eluded. The demands were duly paid by the respondent on
9.1.1997 and 26.12.2005. Various extensions were sought for
only after expiry of one year. Those extensions were granted by
DOT even on 14.9.1998. The details of infrastructure leased
from DOT with their validity were sent. However, some leased B
lines were surrendered by the first respondent. Indisputably, for
the first time on 13.10.1998, the DOT intimated the respondent
that the minimum guarantee period was three years. For the
said purpose, reliance was placed on internal circulars/letters
dated 23.6.1995. Bills were raised only on 20.10.1998. C
Civil Appeal No. 1 of 2004
This case also involves the question of payment of charges
as in the case of Civil Appeal No. 6341-42 of 2003. We, there-
fore, need not deal with the facts of this case.
D
, 5. The main judgment was delivered by the TDSAT in Pe-
tition Nos. 13 and 16 of 2001. It was held:
(i) "The main issue agitated before the Tribunal was whether
there were clearfy understood contractual terms existing
between the Petitioners and the Respondent for E
computation and calculation of annual rents payable by
the Petitioners to the Respondent for facilities availed of
by the Petitioners."
(ii) "An appraisal of the averments and arguments preferred F
by both the parties does not support the contention of the
Respondents that the Petitioners were fully aware of the
internal circulars and orders of DoT regarding the manner
of calculation of rental for leased circuits under the Rent
and Guarantee Scheme."
G
(iii) "The Telecommunication Manual and various other
related office circulars and orders are basically for internal
and official use and unless the relevant contents thereof
are specifically made known to parties through agreements
and/or contracts it cannot be presumed that these are H
748 SUPREME COURT REPORTS [2008] 8 S.C.R.

~·
A generally known to them. We have no evidence on record
to indicate that the Respondent had informed the
Petitioners in categorical terms that in terms of the
departmental rules and regulations in force, the basis of
calc1.,1lation of annual rentals on R&G basis would be either
B capital cost or flat rate, whichever is higher."
(iv) "If the department itself was oblivious of the procedural
rules it had framed for its own functioning it was somewhat '
-\
optimistic to presume at a later stage that the Petitioners
knew of them."
c
(v) "We also see considerable merit in the argument of the
Petitioners that non-statutory office orders and rules cannot
be superimposed on the statutory undertakings given by
the Petitioners as a part of the licensing conditions under
the Indian TelegraphAct and Rules framed thereunder."
D
(vi) "For the enforcement of such non-statutory office orders ~

and rules and make these binding, it would be necessary
to draw up specific contracts giving in clear and
unambiguous details all the terms apd conditions and the
E responsibilities and obligations of both the contracting
parties."
(vii) "As a result of what we have discussed above we
hold that the action of the Respondent in revising the
demands after a period of two years in respect of what •"
F were practically existing concluded contracts between the
Petitioners and the Respondent was neither legal nor
proper. The Respondent would recompute the impugned
Demand Notes on the basis of existing concluded
contracts at pre-revised rates."
G
6. On the findings in the said case, the TDSAT in other t·
cases also opined that internal circulars would have no effect
on the term of the concluded contract.
7. Indisputably, the matter relating to laying down of the
H telegraph lines and providing phone connections including mo-
BHARAT SANCHAR NIGAM LTD. & ANR. v. BPL 749
MOBILE CELLULAR LTD. & ORS. [S.B. SINHA, J]

bile is governed by the provisions of the Indian Telegraph Act, A
1885. The said Act was enacted to amend the law relating to
telegraphs in India.
Section 7(2)(ee) thereof reads as under :
"(ee) the chafges in respect of any application for providing B
I
any telegraph line, appliance or apparatus."
> 8. Indisputably, in exercise of its power conferred upon it
under Section 7 of the Indian Telegraph Act, the Central Gov-
ernment framed rules known as the Indian Telegraph Rules. Rule
434 provides for annual rental charges for private wires and c
non-exchange lines which prescribes a minimum period of hire
of three years. The relevant portion of Rule 434 reads as under:
"Section IX.
Charges for Private Wires D
'
Annual Rental
1. (a) Internal Private Wires Rs.400
(b) External private wires Rs, Fifteen hundred
E
(with or without relay set) per kilometer chargeable
distance per annum per pair.
Provided that in the case of private wires exceeding five
\ kilometers of chargeable distance, the minimum period
of hire shall be 3 years and the security for the service F
shall be regulated under Rule 445 and obtained from the
subscriber before the provision of the service.
2. Omitted.
3. The chargeable distance of External Private Wires shall G
-~j
be 1.25 times of the radial distance between the two points
to be connected.
4. Rental for Private Wires given on casual basis for short
periods shall be levied on pro rata basis at one and a half
H
750 SUPREME COURT REPORTS (2008] 8 S.C.R.

A time the rates of rentals prescribed in Sub-section 1 above.
The minimum period of hire should be one month."
Section X.
Charges for Non-Exchange Lines
B Annual rental
I
1. Annual rental per pair Rs. Fifteen hundred per ~
Kilometer of chargeable
distance.
C Provided that in the case of non-exchange line!S exceeding
five kilometers of chargeable distance, the minimum period
of hire shall be 3 years and the security for the service
shall be regulated under Rule 445 and obtained from the
subscriber before the provision of the service.
D
2. Omitted.
3. Omitted.
NOTE 1. - The chargeable distance shall be 1.25 times of
the radial distance.
E
NOTE 2. - The above rentals will apply in case of Non-
Exchange lines or Private wires falling within the local
area of a Telephone system, even if they exceed sixteen
kilometers in length by the shortest practicable route [see
F also Rule 494 (1) and the note thereunder]."
Rules 475-A, 478, 498 of the Indian Telegraph Rule reads
as under:
"475-A : Notice of surrender of leased Telegraph/ Speech
G Circuits: Before surrendering the leased Telegraph/
Speech circuits and terminal equipments, the party
concerned shall give notice to the controlling/ billing
authority to not less than thirty days.
478. Quoting of rentals.-(1) The rental for the exclusive
H use of the circuits shall be quoted at the rate1; then in force.
BHARAT SANCHAR NIGAM LTD. & ANR. v. BPL 751
MOBILE CELLULAR LTD. & ORS. [S.B. SINHA, J]
-
~· (2) Where the circuits are provided by utilizing the installa- ... A
tions, existing at the time of the application, flat rate of rentals
based on radial distance shall be charged for a period of not
less than three months (hereinafter referred to in this Part as
the minimum guarantee period.
xxx xxx xxx B

498. Part-time use.-(1) A telephone circuit, if available
as spare, may be leased to Newspaper Establishments
or News Agencies for part-time use between 7 p.m. and
7 a.m. c
(2) The charges for the circuit provided for under sub-rule
(1) shall be one half of the charges specified in clause (a)
of sub-rule (1) of Rule 496.
(3) Junction line between Private· Exchange or Private D
t Branch Exchanges shall not be leased on part-time basis."
I
9. DOT had issued a circular letter dated 18.2.1991 stat-
ing:
"(2) Revision of percentage of rental in Rent and Guarantee E
cases - Rule 144 of P&T Manual, Vol. XII, Part - I may
kindly be referred to wherein rental for cables laid down in
rent and guarantee basis to be charged at 18% of the
capital cost or at the standard rates applicable to private
wire, whichever is higher. The period of guarantee has
been mentioned as 10 years. This percentage of rental F
probably consist of 10% depreciation (considering
recovery of the cost of cable in 10 years), 7% interest and
1% maintenance. Now Rates Section increased the rate
of interest from 7 to 10% applicable with effect from 1-4-
1990. It is necessary that R & G rental must be revised G
to prevent loss of revenue to the Department. .. "
10. Indisputably, DOT had issued office order bearing No.
1/96 dated 30.01.1996 wherein it was inter alia provided:
"The question of fixing the tariff for 34 Mbps Data circuits H
752 SUPREME COURT REPORTS [2008] 8 S.C.R.

A on Digital Media was under consideration by the Telecom "
Commission for some time. It has now been decided to
fix the following tariff for 34 Mbps data circuits on Digital
Media. These tariff will be applicable for both tine national
circuits and national leg of international circuits ... "
B In the said circu.lar letter, as regards tariff, it was stated: ~
I

"IV. These rates will be applicable only if the circuits are I
provided with existing assets of the Department. In cases -\.
where new construction or installation is involved for whole
c or part of the circuits the rental will be calculated either on
special rates taking into account the cost of construction ;;>:,:;;,

and other relevant factors or on flat rate basis whichever
is higher.

D
V. The terminal equipment will be on R&G basis, if provided
by the Department.
v:. The above rates will apply only if the entire 34 MBs
..,..
stream is lead into DOT equipment. If separate streams
of 64 KBps/ 2MBps/ 8 MBps are taken, the tariff applicable
as for 84 KBps or 2 MBs or 8 MBs as the case may be
E for each system will apply."
The said circular letter is not a part of the Telecommunica-
lion Manual which has been used only for official use. A copy
corrected upto April, 1986 is available on records. They are

-
1
F loosely called as Rules although they do not have any statutory (

force. ;if"1
11. Rule 237 of the Telecommunication Manual reads as
under:
1

G "237. There may be cases where telephone facilities are
requisitioned and the cost of such installations is abnormal
""-
such as the opening of a telephone connection for a police '
station at the instance of the State Government in a remote
locality, requisition of non-exchange lines outside the local
area, trunk lines, PBX etc. by the Defence authorities,
H
BHARAT SANCHAR NIGAM LTD. & ANR. v. BPL 753
MOBILE CELLULAR LTD. & ORS. [S.B. SINHA, J]

requisition of Public Telephones, PBX's etc. by private A
bodies for their own needs etc. In such cases, standard
flat rates may be economical and with a view to ensure
that the department gets a fair minimum return for the
capital invested, rent is fixed on capital cost basis. In such
cases guarantee is taken from the party that he will retain B
the facilities for a specified period at a specified rate of
I rental. In all such cases, standard flat rates are also
'I calculated and whichever. rate is higher is quoted to the
party unless it is definitely laid down that standard flat rate
should be charged." c
12. Yet again, an internal circular appears to have been
issued on 3.11.1993wherein it was laid down:
"2. The above rate will be applicable only if the circuits
provided with the existing long distance system of the D
equipment. In cases where new construction or installation
involved for the whole or part of the c:rcuit (including lead),
the rental will be calculated either on special rate into
account the cost of construction and other relevant factors,
or on flat rate basis as above, whichever is higher."
E
13. Besides the aforementioned, some commercial infor-
mation on lease circuits has also been published in terms of
Clause 7.0 of the booklet, as noticed hereinbefore.
14. In Swamy's Treatise on Telephone Rules under the
Chapter Telecommunication Facilities on Rent and Guarantee F
Basis, it has been stated:
"The Department is providing certain telecommunication
facilities on the basis of a minimum period of hire. In
respect of certain facilities provided at the request of the G
public, rent is chargeable at special rates. It will be
calculated both at standard rates and on the basis of the
capital cost and higher of these two amounts will be
charged. Such services will have to be guaranteed for the
minimum periods at the scale prescribed Rule 206 of H
754 SUPREME COURT REPORTS [2008] 8 S.C.R.

A Telecom Manual, Volume XII, Part I (Fourth Edition, 1986)." -;.

15. Mr. Vikas Singh, learned Additional Solicitor General
appearing on behalf of the appellants, would submit
(i) The Rules framed under the Indian TEilegraph Act are
B binding on the service providers.
(ii) The lease agreement entered into by and between
I
the parties having categorically provided that circular ·~·

letters would be applicable as regards demand of
the payment on flat IJasis being higher than the rent
c and guarantee (for short "R & G"), the impugned
judgment is not sustainable.
(iii) From the Minutes dated 2.02.1996, it would appear
that the licensees were aware of the existing circular
orders. Furthermore, although the official books are
D
for internal use, they are available in the market 1

. having been published under the name of Swamy's \
Treatise on Telephone Rules.
(iv) If under the contract, the BSNL was entitled to charge
E a higher amount, the impugned judgment is wholly
unsustainable.
(v) The question is not whether the circulars have the
statutory force or not but a perusal of the licence
agreement would clearly go to show that the licensees
F agreed to pay the tariff as prescribed by DOT.
I
" ,!,,

(vi) In view of clauses 4.1 and 19.5 of the licence
1··
agreement, it must be held that the~ prescribed rate
and period would mean that as prescribed by the
G authorized officer of DOT from time to time.
(vii) The licencees entered into contraclts with their eyes ~.

wide open and in that view of the matter as rates '
have been fixed by the circulars, the same are only
required to be forwarded to the Bill Department so
H that they can raise bills in terms thereof.
BHARAT SANCHAR NIGAM LTD. & ANR. v. BPL 755
MOBILE CELLULAR LTD. & ORS. [S.B. SINHA, J]

(viii) In terms of the circulars, revision of rates were to be A
carried out by the concerned departments as would
appear from the circular Nos.4-31/86(R(Pt) dated
17.6.1988, 24-1/87-PHC (Pt) 8 dated 13.11.1988, 1-
2/89-R/pt dated 18.2.1991, 4-11/90-R dated
30.9.1991 and 4-11/90-R dated 1.4.1992 and as B
the respondents had been paying on the basis
! thereof, they cannot now be permitted to approbate
;f and reprobate.

(ix) In regard to the minimum guarantee period, it was
submitted that the agreement refers to the Rules and C
the circulars.
The circular dated 26.11.1988 provides that it would be
for a period of three years. The same was, however, later on
reduced to one year. But the circular dated 26.11.1998 pro- D
vides that the minimum period would be for three years. But the
same has been related back to 1988. Drawing our attention to
the Resolutions dated 26.11.1998, the learned counsel would
contend that the respondents were aware of the said circulars
and had been acting thereupon. In any event, the contract hav-
ing been entered into in December 1995, the 1988 circular must E
be held to have been known to them. Our attention in this behalf
has been drawn to the stand of the DOT in response to the legal
notice issued by the respondent which is to the following effect
'\ "Hiring of any facility by a customer from the Department F
of Telecom is basically governed by certain terms and
conditions such as payment of rent at prescribed rate and
hiring the service/facility for a minimum period. This is
generally known as terms and conditions of the hiring
contract. It may please be noted that for each and every G
facility provided by DOT to a customer, a minimum period
of guarantee is invariably laid down, the duration of which
ranges from three months to three years in the case of
facilities provided by utilizing existing assets., i.e., without
any new construction. The minimum period of guarantee H
756 SUPREME COURT REPORTS [2008] 8 S.C.R.

A thus fixed for2 Mb circuit is three years. Even as late as ".
on 15.4.1998, DOT has reiterated this position in its order
No.106-7.94-PHC dated 15.4, 1998. There is no order till
date amending revising this provision. Since you had cited
DOT's order 12.10.99, I did go through the same in detail
B with a view to find olit whether it contain1ed at least an
indirect hint to indicate that there was no necessity to
prescribe a minimum period of lease line beyond either
three months or one year, as pointed out by you. There ""
are no such indications in these orders as claimed by you
c and resultantly I would like to make it clear in unequivocal
terms and as of date the minimum period of hire for a 2
Mbps circuit, the provision of which does not involve new
construction, is three years only and in case the line is
surrendered by the hirer before the expiry of this minimum
period, he is bound to pay rent for the unexpired minimum
o period of hire. Your contention that when the requests for
leasing the lines were made, demand notes were issued
for paying one year's rental and Mis BPL cellular was not
told at that time that they should keep these leased lines
for a minimum period of three years also does not appear
E to be correct. Normally when a demand is received for
any facility; the terms and conditions are quoted to the
prospective customer and only after his acceptance of the
same, steps to provide the facilities are taken. If in any
exceptional case this procedure had not been followed in l
F respect of M/s BPL, it may be due to the pleading of
urgency and pressure exerted by them on the respective
. SSA Heads for early provision of the facility, relegating
the requirement of observe the prescribed procedure to a
secondary stage and out of goodwill the SSA Heads might
G have obliged. Even in that case, the presumption is that
the hirer is aware of the commercial conditions of hiring '(-
the circuits. Thus, it does not exempt M/s. BPL from the
fundamental tariff rules that prescribe a minimum period
hire and payment of rent for the unexpired portion."
H
BHARAT SANCHAR NIGAM LTD. & ANR. v. BPL 757
MOBILE CELLULAR LTD. & ORS. [S.B. SINHA, J)

16. Mr. Shyam Divan, learned senior counsel appearing A
on behalf of the respondents, on the other hand, would, on the
other hand, submit that the parties entered into the agreement
having regard to the commercial representations made to them
by DOT wherefor a booklet has been issued. It was further-
more submitted that the parties were given options, viz., (i) the B
licensees could purchase equipments and install the same or
take lease of the equipments installed by DOT on (a) flat rate
basis; or (b) on capital cost; (ii) the parties have entered into
the agreement on the premise that the charges will have to be
paid on rent and guarantee basis. The subsequent stand taken c
by the appellants herein to raise demands on enhanced basis
relying on or on the basis of the internal circulars is wholly un-
sustainable. Strong reliance in this behalf has been placed on
Sri Dwarka Nath Tewari and others v. State of Bihar and others
[AIR 1959 SC 249), Life Insurance Corporation of India v. Es- D
t corts Ltd. and Others [(1986) 1 SCC 264) and Delhi Develop-
ment Authority and Another v. Joint Action Committee Alfot-
tee of SFS Flats and Others [(2008) 2 SCC 672). ·.
17. DOT of Government of India had the monopoly of pro-
viding telecommunication services. Indian Telegraph Act was E
enacted for the said purpose. The rights and liabilities of the
parties have been laid down under the Act as also the Rules
framed thereunder. A contract may be entered into, subject to
the provisions of a statute or the rules framed thereunder. The
~ contract, itself, may refer to the statutory provisions or refer the F
same by way of incorporation by reference.
18.Acontract qua contract, however, must be consensual.
It must meet the statutory requirements and reasons under the
provisions of the Indian Contract Act. When a contract is en-
tered into by and between the parties, what is determinative is G
.-+- enforcement of the terms and conditions to be governed by the
' contract, subject, of course, to the application of the statute and
statutory provisions. Whereas a statutory contract would be gov-
erned by a statute, other contracts would not.
H
758 SUPREME COURT REPORTS [2008) 8 S.C.R.

A 19. It is in the aforementioned context, the questions posed 'i
herein before us must be determined.
20. For the aforementioned purpose, we may begin with
the interpretation of Clause 4.1. We have noticed hereinbefore
that two options were available to the respondents who intended
8 to operate and/ or provide cellular services in the State of Kera la,
viz., (i) buying of equipments and installing them, or (ii) DOT
may install the equipments which may be licensed to the cellu- )<1
lar service providers on rent and guarantee charges. Clause
4.1 of the licence agreement inter alia states that (i) resources
C must be identified and (ii) the area of operation should be mu-
tually agreed to between the parties. It also deals with what would
be included in the said provision. The last part of the said clause
speaks about the operation and charge of the electronic tariff
passed through these resources. It does not cover the charges
D for resources/ equipments. It does not take within its umbrage
the system itself. The tariffs in regard to equipments are, there- \-
fore, not governed by the said clause. What it envisages may
be call charges being the operation and charge of traffic pass-
ing through the resources.
E 21. If that be so, the question of raisin!l any demand on the
basis of the circular letters did not arise at all.
22. For the purpose of determining the questions involved
in the present appeals, we may ignore the fact that pursuant to
F or in furtherance of the negotiations held by and between the !
parties, the respondents imported equipments but, for one rea-
son or the other, as noticed hereinbefore, the same could not
be installed. However, the DOT in its letter dated 30.09.1996
categorically stated that it could put up its own equipments un-
G der contribution work basis, which would mean that the charges
would be on the basis of capital cost. In view of the aforemen-
tioned representations made by the DOT, the respondents had 1'
agreed to take the equipment on rent and guarantee basis which
was itself calculated on capital costs.
H 23. We are, furthermore, not concerned with the tariff or-
BHARAT SANCHAR NIGAM LTD. & ANR. v. BPL 759
MOBILE CELLULAR LTD. & ORS. [S.B. SINHA, J]
.i(

der issued by TRAI. What, however, may be noticed is that A
even the tariff order provides for a lower tariff than the agreed
rate. It will not be out of place to notice the following chart for the
purpose of appreciating as to what was the agreed rate on the
rent and guarantee on capital cost basis and what has been
demanded: B

"Name of POI Date of com- Agreed rate Wrongly Revision
' missioning (rent & guar- demanded
antee on rate (R&G
rent as
percent-
capital cost flat rate age of
basis) per basis) per rent on c
annum (in annum (in capital
rupees) rupees) cost
Cochin 06.12.96 20,53,048 51,00,000 248%
Trivandrum 07.02.97 1,05,315 15,00,000
I (per 2 MB D
"l stream 1428%
perannum)
Calicut 05.08.97 3,97,800 15,00,000 377%
(per 2 MB
stream per
E
annum)
Thrissur 07.02.97 1,38,700 6,50,000 1081%
(per 2
1 MB
i stream)
Kottayam · 06.11.97 5,77,025 15,00,000 260% F
(per 2 MB
stream)
Palakkad 01.06.98 1,76,023 15,00,000 852%
(per annum
A-
per2 MB G
' stream)
Kannur 16.10.97 1,94,665 15,00,000 769%
(per annum
per stream)
H
760 SUPREME COURT REPORTS [2008] 8 S.C.R.

A Kollam 31.12.97 1,24J34 15,00,000 1209%
(per annum
per
stream)
Alleppy 12.01.99 2,20,452 15,00,000 682%"
s (per annum
per stream)
Such a huge difference in the contractual rate and the de- "I

· mand on the flat rate could be made provided the contract pro-
vided therefor.. The difference admittedlywas based upon the
c internal circular' letters. -They might have. been published by some
publisher but indisputably they are. not statutoey in nature. They
have not been framed underariy statute. The Indian Telegraph
Act or the Rules framed thereunder do not provide for issuance·
of such circulars. The circular letters collected at one place are
0 loosely called-rules. They, as noticed hereinbefore, are meant
for office use only. The directions contained in the said circular ,_
letters are relevant for the officers who are authorized not only
to grant licences but also enter into contracts and prepare bills.
The circular letters having no statutory force undoubtedly would
E not govern the contract. If some c;iuthorities have violated the
terms of the said circulars, they might have committed miscon-
duct, but wheh a contract is entered into, the parties shall be
bound thereby,
24. In SriDwarka Nath Tewari (supra), this Court held: ,!.
'
F "9 ... It is clear, therefore, from the portion of the preface
extracted above, that Article 182 of the Code has no
greater sanction than an. administrative order or rule, and
is not based on any statutory authority or other authority
which could give it the force of law. Naturally, therefore, the
G learned Solicitor-General, with his usual fairness, +.
conceded that the article relied upon by the respondents '
as having the force of law, has no such .force, and could
not, therefore, deprive the petitioners of their rights in the
properties aforesaid."
H
BHARAT SANCHAR NIGAM LTD. &ANR. v. BPL 761
MOBILE CELLULAR LTD. & ORS. [S.B. SINHA, J)

In Life Insurance Corporation of India v. Escorts Ltd. and A
Others [(1986) 1 SCC 264), the case involved the interpreta-
tion of Section 29(1)(b) of the Foreign Exchange Regulation
Act. It was argued that according to paragraph 24-A.1 of the
Exchange Control Manual the same would be binding upon the
Reserve Bank of India. Negativing the said contention, this Court B
observed:
"There is no force whatever in this part of the submission.
A perusal of the Manual shows that it is a sort of guide
book for authorised dealers, money changers etc. and is
a compendium or collection of various statutory directions, C
administrative instructions, advisory opinions, comments,
notes, explanations suggestions, etc .. For example,
paragraph 24-A.I is styled as Introduction to Foreign
Investment in India. There is nothing in the whole of the
I paragraph which even remotely is suggestive of a direction D
i
under Section 73(3). Paragraph 24-A.1 itself appears to
be in the nature of a comment on Section 29(1 )(b), rather
than a direction under Section 73(3). Directions under
Section 73(3), we notice, are separately issued as
circulars on various dates. No Circular has been placed E
before us which corresponds to any part of paragraph 24-
A.I. We do not have the slightest doubt that paragraph 24-
A.1 is an explanatory Statement of guideline for the benefit
. 'I of the authorised dealers. It is neither a statutory direction
nor is it a mandatory instruction. It reads as if it is in the F
nature of and, indeed it is, advice given to authorised
dealers that they should obtain prior permission of the
Reserve Bank of India, so that there may be no later
complications. It is a helpful suggestion, rather than a
mandate ... "
G
>-I
Recently in Delhi Development Authority (supra), this
Court held:
"66. The stand taken by DOA itself is that the relationship
between the parties arises out of the contract. The terms
t-
762 SUPREME COURT REPORTS [2008] 8 S.C.R.

A and conditions therefore were, therefore, required to be "" I-
complied with by both the parties. Terms and conditions
. of the contract can indisputably be altered or modified.
They cannot, however, be done unilaterally unless there
exists any provision either in contract itself or in law.
B Novation of contract in terms of Section 60 of the Contract
Act must precede the contract making process. The parties
thereto must be ad idem so far as the terms and conditions
· are concerned. If DOA, a contracting party, intended to
alter or modify the terms of contract, it was obligatory on
~·
I
c its part to bring the same to the notice of the allocate.
Having not done so, it, relying on or on the basis of the
purported office ord1~rs which is not backed by any statute,
new terms of contract could not be thrust upon the other
party to the contract. The said purported policy is, therefore,
not beyond the pale of judicial review. In fact, being in the
D
realm of contract, it cannot be stated to be a policy decision
~
as such.
80. A definite price is an essential element of binding
agreement. A definite price although need n1;it be stated
E in the contract but it must be worked out on some premise
as was laid down in the contract. A contract cannot be
uncertain. It must not be vague. Section 29 of the Indian
Contract Act reads as under:
Section 29 -Agreements void for uncertainty J

F
Agreements, the meaning of which is not certain, or
capable of being made certain, are void.
A contract, therefore, must be construed so as to lead to
a conclusion that the parties understood the meaning
G thereof. The terms of agreement cannot be vague or
indefinite. No mechanism has been provided for -<..
'
interpretation of the terms of the contract. When a contract
has been worked out, a fresh liability cannot thrust upon a
contracting party."
H
BHARAT SANCHAR NIGAM LTD. & ANR. v. BPL 763
MOBILE CELLULAR LTD. & ORS. [S.B. SINHA; J]

{[See also New India Assurance Company Ltd. v. Nusli A
Neville Wadia and Anr [(2007) 14 SCALE 556]}.
25. In view of the aforementioned law laid down by this
Court, there cannot be any doubt whatsoever that the circular
letters cannot ipso facto be given effect to unless they become
part of the contract. We will assume that some of the respon-
s.
dents knew thereabout. We will assume that in one of the meet-
·r ings, they referred to the said circulars. But, that would not mean
that they are bound thereby. Apart from the fact that a finding of
fact has been arrived at by the TDSAT that the said circular
letters were not within the knowledge of the respondents herein, c
even assuming that they were so, they would not prevail over
the public documents which are the brochures, commercial in-
formation and the tariffs.
26. If the parties were ad idem as regards terms of the
( D
i contract, any change in the tariff could not have been made uni-
laterally. Any novation in the contract was required to be done
on the same terms as are required for entering into a valicj and
concluded contract. Such an exercise having not been resorted
to, we are of the opinion that no interference with the impugned
judgment is called for. E

27. For invoking clauses 4.1 and 19.5 of the licence agree-
ment, we may notice that the word 'prescribed' is not defined. It
J..
i
has not been defined even in the Indian Telegraph Act. It has
not been defined in the licence. The said provision unlike clause F
18.14 does not use the words 'from time to time'. A contract
entered into by the parties, it will bear a repetition to state, must
be certain. It must conform to the provisions of the Indian Cone.
tract Act. Ordinarily, the word 'prescribed' would mean pre-
scribed by Rules. Section 7(2)(ee) of the Indian Telegraph Act
)..
G
I
provides for the Rule making power for the purpose of laying
down the tariff. We may not be understood to be laying down a
law that in absence of any statutory rule framed under the Indian
Telegraph Act, no contract can be entered into. In absence of
any statutory Rule governing the field, the parties would be at
H
764 SUPREME COURT REPORTS [2008] 8 S.C.R.

A liberty to enter into any contract containing such terms and con-
ditions as regards the rate or the period stipulating such terms
as the case may be. The matter might have been different if the
parties had entered into an agreement with their eyes wide open
that the circular letter shall form part of the contract. They might
B have also been held bound if they accepted the new rates or
the periods either expressly or sub silentio. When on the basis '
of terms of the contract, different rates can be prescribed, the '1'
same must be expressly stated. When the word 'prescribed' is
not defined, the same, in our opinion, would mean that pre-
c scribed in accordance with law and not otherwise.
The respondent had two options. They were asked to
choose one. Thus, a representation was made that they would
be entitled to obtain lease the equipments (resources) at an R&G
basis. Payments have been made on that basis. The question
D which would arise for consideration is as to whether the basi$ ~1; '!
\-
making a demand itself can be changed. The answer to the said
question, in our opinion, must be rendered in negative.
28. Section 8 of the Indian Contract Act reads as under:
E "Section 8. Acceptance by performing conditions, or
receiving consideration-Performance of the conditions
of a proposal, or the acceptance of any consideration for
a reciprocal promise which may be offered with a proposal,
is an acceptance of the proposal." )_
\
F It provides the acceptance of the proposal by conduct as
against other modes of acceptance. It can be divided in two
parts - (1) performance of the conditions of a proposal; and (2)
acceptance of any consideration for a reciprocal promise which
may be offered with a proposal. The latter corresponds to gen-
G eral divisions of proposals into those which offer a promise in
.1_
exchange for an act or acts and those which offer a promise for '
exchange for a promise. The bills were raised on the basis of
the said premise. They were accepted. The promise on the
part of the appellant was acted upon by the respondent. Appel-
H lants, thus, now should not ordinarily be permitted to take a dif-
BHARAT SANCHAR NIGAM LTD. & ANR. v. BPL 765
MOBILE CELLULAR LTD. & ORS. [S.B. SINHA, J]

ferent stand. A
29. This aspect of the matter was considered in Amrit
Banspati Co. Ltd. v. Union of India [AIR 1966 All.104] wherein
it was stated :
"Section 8 of the Contract Act provides that performance s
of the conditions of a proposal, or tbe acceptance of any
consideration for a reciprocal promise which may be
offered with a proposal is an acceptance of the proposal.
The language of the section is rather vague but its meaning
is clear. It is based on the principle that if an offer is made c
subject to a condition, the offence cannot accept the benefit
under the offer without accepting the condition. He cannot
take the attitude, "I shall accept the benefit but reject the
condition"."
In Ttre• Union of India v. Rameshwarlal/ Bhagchand [AIR D
1973 Gauhati 111], it was stated:
"Section 8 provides that performanc:e of the conditions of
a proposal, or the acceptance of any consideration for a
reciprocal promise which may be offered with a proposal,
is an acceptance of the proposal. According to Section E
2(a) of the Contract Act when one person signifies to
another his willingness to do or to abstain from doing
anything, with a view to obtaining the assent of that other
..I., to such act or abstinence, he is said to make a proposal;
I
and Clause (b) of Section 2 states that when the person F
to whom the proposal is made signifies his assent thereto.
The proposal is said to be accepted. A proposal when
accepted becomes a promise. Section 2(f) enacts that
promises which form the consideration or part of the
consideration for each other are called reciprocal G
> promises."
'
It was furthermore observed :
"8. Some English decisions were referred to with approval
in the Patna case relied upon by Shri Dam, I think that H
766 SUPREME COURT REPORTS [2008] 8 S.C.R.

A those cases have no bearing on and relevancy to Section
8 of the Act. It is mentioned on page 59 of the Pollock and
Mulla's Commentary on the Indian Contract Act, 81h Edn.,
that"nothing like the terms of Section 8 occurs in the original
draft of the lnaian Law Commissioners, nor, so far as
B known to us, in any authoritative statement of English Law"
and that the terms of the Section "appear to have been
taken from the draft Civil Code of New York with slight
verbal alteration". It follows from these excerpts that the
English law has no provision parallel to Section 8 of the
c Act and as such recourse to English decisions for
determining the scope of Section 8 may not be very
apposite.
Section 7 and 9 of the Indian Contract Act describe the
various modes in which proposal may be accepted and if
D I may say so, Section 8 provides the acceptance of a
proposal by conduct as against other modes of
acceptance, such as verbal or written communication
contemplated by Sections 7 and 9. Therefore, in a way
Section 8 provides undoubtedly a uniue provision in the
E Indian Contract Act. It embraces a case to cite an instance
of a reward offered for the finder of a lost article. If a
person restores found article to the one who offered the
reward, without accepting the latter's proposal in any other
manner, the act or conduct or restoration itself is ,,..._
'
F considered sufficient acceptance of the proposal to merit l

the reward. True that it is an ordinary rule of law that an
acceptance of an offer made ought to be notified to the
person who makes the offer. But since such notification
is required for the benefit of the person making the offer
the latter may dispense with notice to himself if he deems
G
that course to be desirable. If the person making the offer ...(
to another intimates him expressly or impliedly a particular '
mode of acceptance the offeree can adopt that mode to
conclude a binding bargain. If a man writes to another to
send him certain goods, then the dispatch of goods would
H
BHARAT SANCHAR NIGAM LTD. & ANR. v. BPL 767
MOBILE CELLULAR LTD. & ORS. [S.B. SINHA, J)
~·

surely amount to acceptance of the offer." A

In Life Insurance Corporation of India v. Raja Vasireddy
Komalavalfi Kamba [AIR 1984 SC 1014], this court on accep-
tance of provisions as envisaged under Section 7 and 8 of the
Indian Contract Act, 1872 opined:
B
"Acceptance must be signified by some act or acts agreed
i on by the parties or from which the law raises a
T
presumption of acceptance."

Chitti on Contract at page 135 talks about the criteria where
the agreement would not be held to be in reply to acts, further c
agreement is required. It was stated :

"Even an agreement for sale of land dealing only with the
barest essentials may be regarded as complete if that
was the clear intention of the parties. Thus in Perry v.
D
... 1
Suffields Ltd. [(1915) 2 Ch.187) an offer to sell a public-
house with vacant possession for £7,000 was accepted
without qualification. It was held that there was a complete
contract even though many important points, e.g. the date
for completion and the question of paying a deposit, were
E
left open. In another case, a buyer and seller of corn feed
pallets had reached agreement on the "cardinal terms of
the deal: product, price, quantity, period of shipment, range
... of loading ports and governing contract terms." The
agreement was held to have contractual force even though
the parties had not yet reached agreement on a number F
of other important points, such as the loading port, the
rate of loading and certain payments (other than the price)
which might in certain events become payable under the
contract. And a publisher's oral commitment to publish a
book has been held to amount to a binding contract, even G
>i
though no details were specified in the agreement and
nothing more precise was said about the author's
remuneration than that he was to be paid a royalty to be
agreed, or in default of agreement a fair one. In all these
cases, the courts took the view that the parties intended H
768 SUPREME COURT REPORTS [2008] 8 S.C.R.
-~

A to be bound at once in spite of the fact that further significant
terms were to be agreed later and that even their failure
to reach such agreement would not invalidate the contract
unless without such agreement it was unworkable or too
uncertain to be enforced."
B 30. In the instant case, the resources to be leased out were
subject to agreement. The terms were to be mutually agreed ...,..
upon. The terms of contract, in terms of Section 8 of the Con-
tractAct, fructified into a concluded contract. Once a concluded
contract was arrived at, the parties were bound thereby. If they
c were to alter or modify the terms thereof, it was required to be
done either by express agreement or by necessary implication
which would negate the application of the doctrine of 'accep-
tance sub silentio'. But, there is nothing on re,cord to show that
such a course of action was taken. The respondents at no point
\
D of time were made known either about the internal circulars or
about the letters issued from time to time not only changing the
-..
tariff but also the basis thereof.
31. We will assume that the contention of the learned Ad-
ditional Solicitor General that the internal circulars are issued
E for their application by the local officers. If theiy have committed
a mistake, the same could be rectified.
~
32. Indisputably, mistakes can be rectified. Mistake may
.L
occur in entering into a contract. In the latter case, the mistake I

F must be made known. If by reason of a rectification of mistake,
except in some exceptional cases, as for example, where it is
apparent on the face of the record, mistake cannot be rectified
unilaterally. The parties who that would suffer civil consequences
by reason of such act of rectification of mistake must be given
due notice. Principles of natural justice are required to be com-
G .,.(_
plied with. The fact that there was no mistake apparent on the
face of the records is borne out by the fact that even the officers
wanted clarification from higher officers. The mistake, if any,
was sought to be rectified af~er a long period; at least after a
period of three years. When a mistake is not rectified for a long
H
BHARAT SANCHAR NIGAM LTD. & ANR. v. BPL 769
MOBILE CELLULAR LTD. & ORS. [S.B. SINHA, J]

period, the same, in law, may not be treated to be one. A
33. Furthermore, what would be the effect of such a mis-
take must be determined having regard to the provisions of the
Contract Act.
34. It is not a case where the contract is sought to be ter- B
minated on the ground of a mistake. Only a higher rate is sought
to be enforced on the basis of internal circulars.
"T"

35. We have noticed hereinbefore the effect of an internal
circular. There is no presumption about their correctness. Pre-
sumption of correctness of documents is provided for in Sec- c
tions 81 and 84 of the Indian Evidence Act. Even the contents
of a newspaper, as envisaged under Section 81 of the Indian
Evidence Act, would not be presumed to be correct.
36. Why publications are necessary so as to enable the
D
7
parties to take recourse thereto has been considered by this
-+
Court in B.K. Srinivasan v State of Karnataka [(1987) 1 SCC
658] in the following terms :
"15. There can be no doubt about the proposition that where
a law, whether parliamentary or subordinate, demands E
compliance, those that are governed must be notified
directly and reliably of the law and all changes and additions
made to it by various processes. Whether law is viewed
,I. from the standpoint of the "conscientious good man" seeking
to abide by the law or from the standpoint of Justice F
Holmes's "unconscientious bad man" seeking to avoid the
law, law must be known, that is to say, it must be so made
that it can be known. We know that delegated or subordinate
legislation is all-pervasive and that there is hardly any field
of activity where governance by delegated or subordinate G
>t legislative powers is not as important if not more important,
than governance by parliamentary legislation. But unlike
parliamentary legislation which is publicly made, delegated
or subordinate legislation is often made unobtrusively in the
chambers of a Minister, a Secretary to the Government or
H
770· SUPREME COURT REPORTS [2008] 8 S.C.R.

A other official dignitary. It is, therefore, necessary that
subordinate legislation, in order to take effect, must be
published or promulgated in some suitable manner, whether
such publication or promulgation is prescribed by the parent
statute or not. It will then take effect from the date of such
B publication or promulgation. Where the parent statute
prescribes the mode of publication or promulgation that
mode must be followed. Where the parent statute is silent,
but the subordinate legislation itself prescribes the manner
of publication, such a mode of publication may be sufficient,
c if reasonable. If the subordinate legislation does not
prAscribe the mode of publication or if the subordinate
legislation prescribes a plainly unreasonable mode of
publication, it will take effect only when it is published through
the customarily recognised official channel, namely, the
Official Gazette or some other reasonable; mode of
D
publication. There may be subordinate legislation which is
concerned with a few individu6is or is confined to small .
local areas. In such ca~es publication or promulgation by
other means may be sufficient."
E In Ravinder Kumar Sharma v. State of Assam [(1999) 7
SCC 435], this Court stated : .
"26. Newspaper reports regarding the Central Government ·
decision could not be any basis for the respondents to
I
stop action under the Assam Control Order of 1961. The ·"-
\
F paper reports do not specifically refer to the Assam Control
Order, 1961. In fact, the Government of Assam itself was
not prepared to act on the newspaper reports, as stated
in its wireless message. Section 81 of the Evidence Act
was relied upon for the appellant, in this behalf, to say that
G the newspaper reports were evidence and conveyed the ·-
necessary information to one and all including
Respondents 2 and 3. But the presumption of genuineness
attachep under Section 81 to newspaper reports cannot
be treated as proof of the facts stated therein. The·
H statements of fact in newspapers are merely hearsay
BHARAT SANCHAR NIGAM LTD. & ANR. v. BPL 771
MOBILE CELLULAR LTD. & ORS. [S.B. SINHA, J]
...,,
· (Laxmi Raj Sheffy v. State of TN.)." A
{See also I.Tc: Bhadrachalam Paperboards v. Manda/
Revenue Officer [(1996) 6 SCC 634]}
37. So far as the minimum gua"ranteed period is concerned,
we have noticed hereinbefore, that the applicability of the Rule B
is in doubt. Rule 434 provides for charges private and charges.
1 for non-exchange lines.
"'Y'
The Tribunal which is an expert body, opined :
. '

"12. We find grey areas in the submissions made by both c
the sides .. Firstly, it is not at alt clear whether the lease
arrangements entered into by the petitioner with the
respondents were covered under Rule 4_34 Section IX or
Section X of Indian Telegraph Act. Rule 434 Section IX
and Section X deal with charges for Private Wires and
D
I Non-Exchange Lines, respectively. These two terms, viz.
'f "Private Wires" and. "Non-Exchange Lines", have been
defined under the Indian Telegraph Rules as under :
"Rule 2(11) : Private Wires are those which
connect two subscribers through a departmental E
exchange system w~ether a private relay set is
· installed at the exchange or not and are not
connected t9 the local telephone system and to
...\
the general trunk net work;
***************** F

Rule 2(33a) : Non-exchange lines' are those
which connect two subscribers without any
departmental exchange intervening."
From the application forms annexed by the petitioner to its G
.)>..
I petition, it may be seen that what was asked for was Data
Circuit. Such circuits were more. in the nature of long-
distance telephone circuits between two cities as may be
evidenced by the following list of leased lines obtained by
the petitioner which have been listed in the petition : · H
772 SUPREME COURT REPORTS [2008} 8 S.C.R.

A Lease Circuits Obtained in
1. Cochin - Thiruvananthapuram .January 1997
2. Cochin - Thiruvananthapuram July 1997
3. Cochin - Calicut January 1997
B
4. Cochin - Calicut July 1997
5. Cochin - Thrissur February 1997 ...,...

6. Cochin - Thrissur August 1997
c 7. Thiruvananthapuram- Kollam November 1997
8. Calicum - Kannur November 1997
9. Cochin·- Kottayam November 1997

D 10. Cochin - Kollam January 1998
\
11. Cochin - Kannur February 1998 +
12. Cochin-Thiruvalla May 1998
13. Cochin - Palakkad May 1998
E
14, Thrissur- Kunnamkulam June 1998
15. Thrissur - Palakkad June 1998
T~e leased data circuits taken by the petitioner were
)._
between two exchanges of DoT/BSNL at two different 1
F cities. Thus, it is difficult to accept the contention that the
circuits leased between two exchanges of BSNL located
in two different cities were covered within the ambits of
"Private Wire" or "Non-exchange Lines" as defined under
Indian Telegraph Rules. Consequently the applicability of
G Rule 434 in the instant is not warranted.
..J..
I
42A. We have taken note of the contention of Respondent
No.1 that by its order dated 17th June, 1988 the minimum
priod of hire for 2 Mbps lines was 3 years and the hirer
1-1
was required to pay for the entire period in case of
BHARAT SANCHAR NIGAM LTD. & ANR. v. BPL 773
MOBILE CELLULAR LTD. & ORS. [S.8. SINHA, J]

premature surrender. The relevant question is whether A
this was made known to the petitioner or the petitioner
was expected to have a knowledge of this. From the copy
of the Order No.4-31/86-R(Pt.) dated 17th June, 1988
placed on record by Respondent No.1, it is seen that it is
a Circular issued by one Shri D.V.B. Rao, Assistant B
Director General (Costing), Rates Section, Department
T of Telecommunicatiosn and addressed to All Heads of
Telecom Circles; All Heads of Metro, Major and Minor
Telephone Districts; General Manager, MTNL, Bombay/
New Delhi. Copies were endorsed to a host of officials, c
all belonging to the Department of Telecommunications. It
was, therefore, basically an office circular for internal use
and not a document released to the general public.

T
xxx xxx xxx
i D
15. As a result of all that is stated in the earlier paragraphs we
hold that it has not been conclusively established that the
contracts for leased data circuits between the petitioner and
the respondents were covered under Rule 434 of the Indian
Telegraph Rules and that the minimum guarantee period and
penalties for premature surrender, as indicated in Rule 434 E
were applicable to these contracts. We also hold that the
petitioner had no reason whatsoever for the non-observance
.,..I. of Rule 475-A of Indian Telegraph Rules in view of its categorical
' undertaking to abide by the provisions of these Rules."
F
38. Prima facie, the proviso appended to Section 9 and Section
10 providing for a minimum guaranteed period of three years
does not appear to have any application. The authorities of the
DOT also did not think so. They proceeded on the basis of and
having regard to the phraseology used in Rules 478 and 496 G
>I that minimum period is only three months.
39. Applicability of minimum guaranteed period of three
years was sought to be enforced from a circular letter dated
17 .6.1988 only. The effect of the said circular letter has been
discussed hereinbefore. H
774 SUPREME COURT REPORTS [2008] 8 S.C.R.
'

A We have furthermore noticed the vacillating stand' taken
by the appellants herein in the case of C.G. Faxemail. They
sought to charge the daub.le of the amount as prescribed in the
contract on the basis that the. service which is being provided
by them is close user group service. TRAI held it not to be so.
B TRAI, as noticed hereinbefore, relied upon two circulars only,
namely 13.1.1985 and 22.11.1996, the latter one being after
the contract was entered into. TDSAT, apart from holding that T
the said circular letters are internal documents, did not deal with
the internefservice providers.
C 40. It thereafter relied upon the circular letter' dated
15.4.1998 ·and not on the circular letter dated 3.6.1995, the
former havi~g no application .to a contract which was entered
into prior thereto. Even the said letter provided for three mon.ths
minimum guarantee period for long distance lease lin'es. Even
D DOT raised three months demand notice on orabout26.11 :1998.
41. Yet again, the DOT ;nits letter dated 13/14.1.1999
confirmed that paragraph A of the circular letter dated
. 26.11.1998 referred to Rule 496: The parties were not ad idem
as to whether these circuits being Jong distance lease lineswould
E be governed by which circular, Furthermore, the authorities of
the DOT, cissuming that they are applicable, despite the circu-
lar lettersfconsciously entered into contract for one year's pe-
riod on which the parties had acted thereupon. ·
F 42. Afinding of fact has been arrived at by TD SAT that the.
said circular letters are not applicable. Rule 434 was not appli-
cable. Appeal
. to this Court, in terms of Section 18 of the
" ' ' . Act is
maintainable only on·a substantial question of Jaw.
43. For the reasons aforementioned, we do not find that
G these appeals raise any substantial question of law warranting .--'...
interference. The appeals are dismissed :accordingly. How- I

ever, in the facts and circumstances of the case, there shall be
. no order .as to costs.
H G.N. Appeals dismissed