O.M.P./77/2003 of BHARTI MOBILE Vs DEPTT., OF TELECOMMUNICATIONS

IN THE HIGH COURT OF DELHI AT NEW DELHI

OMP No. 77 of 2003 & IA Nos. 3377, 3384, 5441 of 2010

Reserved on: August 3, 2012Decision on: September 14, 2012

BHARTI CELLULAR LIMITED

..... Petitioner

Through: Dr. A.M. Singhvi, Senior Advocatewith Mr. Gopal Jain withMr. Harsh Kaushik, Advocates.versusDEPARTMENT OF TELECOMMUNICAITONS..... RespondentThrough: Mr. Rajeeve Mehra, ASG withMr. Sumeet Pushkarna andMr. Ashish Virmani, Advocates.

CORAM: JUSTICE S. MURALIDHAR

JUDGMENT14.09.2012

1. The Petitioner, Bharti Cellular limited (‘BCL’) [earlier known as BhartiMobile Limited (‘BML’)], has in this petition under Section 34 of theArbitration and Conciliation Act, 1996 (‘the 1996 Act’) challenged anAward dated 20[th]December 2002 passed by the learned sole Arbitrator inthe disputes between the Petitioner and the Respondent Department ofTelecommunications (‘DOT’) arising out of licence agreement dated26[th]December 1995 for provision of Cellular Mobile Telephone Service(‘CMTS’) in various telecom circles including Punjab. By the impugnedAward the learned Arbitrator rejected the claim of BML for refund of theamount of licence fee together with interest paid by it to the DOT subjectto the finding that if the Telecom Disputes Settlement and AppellateTribunal (‘TDSAT’) or in any further appeal/further proceedings, it wasfinally held that BML was not liable to pay interest for the period of 52

days, i.e., from 18[th]April 1996 to 11[th]June 1997 then the DOT wouldrefund the said amount to BML.

Background facts

2. Prior to 29[th]March 2000 BML was known as M/s. JT Mobiles Limited(‘JTM’). The name of JTM was changed to BML by certificate dated29[th]March 2000 issued by the Registrar of Companies (‘ROC’),Karnataka.

3. On 16[th]January 1995, the Government of India through Ministry ofCommunications, DOT issued tender documents for CMTS in varioustelecom circles including Punjab. JTM was provisionally selected forproviding CMTS in the telecom Circles of Punjab, Andhra Pradesh andKarnataka. Since the telecom service areas of Andhra Pradesh andKarnataka were proximate while that of the Punjab Circle was not, it wasdecided to implement the licence agreement for the Punjab Circle by aseparate legal entity. Accordingly, on 5[th]December 1995, resolutionwas passed by the Board of Directors of JTM for implementation of thecellular licence for the Punjab Circle through its wholly owned subsidiaryM/s. Evergrowth Telecom Limited (‘EGTL’).

4. Licence Agreement was entered into between the DOT and JTM on26[th]December 1995 for provision of CMTS in the Punjab Circle. Theeffective date was stipulated as 12[th]December 1995. Board Resolutionwas passed by JTM on 10[th]January 1996 to the effect that CMTS licencefor the Punjab Circle be implemented through EGTL andJTM wouldmaintain in EGTL not less than 20% equity or as agreed by the DOT. On23[rd]January 1996 JTM requested the DOT to permit the implementation

of CMTS in the Punjab Circle through EGTL along with request to

execute fresh licence with EGTL. On 26[th]March 1996 DOT asked JTMinter alia for details of the exact equity structure of EGTL includingcopies of the Memorandum of Association (‘MOA’) and Articles ofAssociation (‘AOA’), certificate of incorporation etc. of EGTL. On 29[th]March 1996 EGTL wrote to the DOT confirming that EGTL was whollyowned subsidiary of JTM and its entire share capital was held by JTM.Copies of the MOA as well as AOA were enclosed. On 15[th]April 1996JTM while confirming the DOT that EGTL was 100% subsidiary ofJTM sought permission to enable EGTL to raise further equity by privateplacements to third parties in future to meet project implementation costs.On the same date, i.e., 15[th]April 1996 JTM informed the DOT that itwould hold not less than 24% equity in EGTL for the initial three years ofthe licence. On 16[th]April 1996 JTM confirmed to the DOT that all foreignpromoters of JTM were in agreement with the proposal of implementingPunjab CMTS licence through EGTL.5. On 18[th]April 1996 the DOT wrote to JTM permitting operation ofCMTS in Punjab Circle. The said letter reads as under:

“This has reference to your letters dated 23[rd]January 1996,20[th]March 1996, 2[nd]April 1996, 15[th]April 1996 and 16[th]April 1996 regarding operation of Cellular Mobile TelephoneService (CMTS) through your 100% owned subsidiary, M/s.EvergrowthTelecomLtd.TheDepartmentofTelecommunications has no objection to this proposal of theoperation of CMTS through M/s. Evergrowth Telecom Ltd.,subject to the conditions outlined below:

(1) M/s. Evergrowth Telecom Ltd remains 100% ownedsubsidiary of M/s. J.T. Mobiles Telecom Ltd;

(2) Any variation in equity pattern and/or expansion in equitybase of M/s. J.T. Mobiles Ltd. and M/s. Evergrowth TelecomLtd will not be undertaken without obtaining permission ofthe Telecom Authority;

(3) Foreign equity in M/s. Evergrowth Telecom Ltd.including the holding through M/s. J.T. Mobiles Ltd. will notexceed 49%;

(4) The proportionate shareholdings of the individual foreignpromoters/partnersofM/.s.J.T.MobilesLtd.,whosenetworthand/orexperiencehavebeentakenintoconsideration for determining the eligibility and grant of thelicence, in the subsidiary company viz., M/s. EvergrowthTelecom Ltd must not go below 10% for at least during theinitial three years period as stipulated in the Tenderconditions;

(5) As in item (4) above, the shareholding of Indianpromoters of M/s. J.T. Mobiles Ltd. in the subsidiarycompany shall not go below 10% during the first three years.

(6) Resolution of the company viz., M/s. J.T. Mobiles Ltdpassed as per the relevant laws/acts on the subject or anyguidelines issued by any statutory authority, confirming theproposal of the operation of CMTS in Punjab through thesubsidiary, i.e., M/s. Evergrowth Telecom Ltd. has beenpassed (copy of the said resolution to be made available tothe Telecom Authority); and

(7) Various actions taken by M/s. J.T. Mobiles Ltd. are inaccordance with the orders of Hon’ble Court where thematters relating to shareholdings and/or partnership in M/s.J.T. Mobiles Ltd are being heard.”

6. On the same date JTM wrote to the DOT, as under:

“We thankfully acknowledge receipt of your letter No. 862-65(A)/95-VASdated18[th]April1996accordingyourapproval for operation of the CMTS licence in Punjab Circlethrough Evergrowth Telecom Limited.As already advised in our letter dated 15[th]April 1996, weconfirm that Evergrowth Telecom Limited is 100%subsidiaryofJTMobilesLimited.However,theimplementation of the licence will require the capital to beexpanded and as mentioned under Item 2 of our referredletter, we will maintain minimum of 24% equity inEvergrowth Telecom Limited which will satisfy conditionNo. 4 and 5 of your letter. Accordingly, you are requested to

amend/modify condition No. 1 and 2 of your letter. You willagree that condition No. 1 cannot be maintained concurrentlywith condition 4 and 5.

We confirm our acceptance to condition No. 3, 4, 5, 6 & 7.”

7. EGTL on its part wrote to the Chairman, Telecom Commission (‘TC’)

on 24[th]April 1996, as under:

“Dear Sir,

With reference to the proposal from JT Mobiles Limited forimplementation of the Punjab CMTS Licence in ourcompany, we wish to confirm the following:

1. We will assume complete and total responsibility inrespect of all the rights, obligations and liabilities arising outof the licence including but not restricted to compliance of allthe terms and conditions of licence.

2. We undertake to provide such documentation as may beconsidered necessary by DOT including but not restricted toproviding financial and performance bank guarantees.

3. We will not dilute the equity held by JT Mobiles Limitedin our company below 24% at any time during the initialthree years period of the licence.

4. The Foreign Equity in our company shall not exceed 49%of the total issued capital including foreign equity heldthrough JT Mobiles Limited.

We are prepared to execute the Tripartite Agreementamongst JT Mobiles, DoT and ourselves as may be requiredin this regard.”

8. On 26[th]April 1996 JTM wrote to the DOT informing it of proposalwhereby it intended to invite Essar Telecom Limited (‘Essar’) and anassociate company of Essar Commvision Limited to contribute 52% in theshare capital of EGTL and JTM continued to hold 24% of the sharecapital in the company. The balance 24% was proposed to be offered toother non-residents. As result the total share holding of EGTL would be

64.25% Indian and 35.75% Foreign. JTM requested the DOT for itsformal approval to finalize the structure and also requested the DOT toassign the Punjab cellular licence to EGTL.

9. On 1[st]May 1996 the DOT wrote to JTM, as under:

“Dear Sir,

Kindly refer your letter dated 26[th]April 1996 regarding shareholding structure of M.s. Evergrowth Telecom Ltd. In thisregard, your kind attention is drawn to letter No. 842-65(A)/95-VAS dated 18[th]April 1996. I have been directed toask you to kindly confirm that you have fulfilled theconditions listed in that letter. You are also requested tosubmit the necessary documents in support of the same.”

10. In response, on 1[st]/2[nd]May 1996 JTM wrote to the DOT, as under:

“Sub: Operation of Cellular Mobile Telephone Services inPunjab Circle.

We refer to your letter 842-65(A)/95-VAS dated 1[st]May1996 and your letter dated 18[th]April 1996. We would like toconfirm the following:

(1) M/s. Evergrowth Telecom Ltd. remains 100% ownedsubsidiary of M/s. JT Mobiles Ltd as on 1[st]May 1996. Inthis respect please find enclosed (i) copy of Form-2 filedwithRegistrarofCompaniesconfirmingthesame(Annexure -1), (ii) Certified true copy of the Boardresolution passed on 4[th]October 1995 giving consent to thecompany to invest in M/s. Evergrowth Telecom Ltd(Anneure-II).

(2)WehavealreadynotifiedtheDepartmentofTelecommunications (DoT) vide our letter dated 26[th]April1996, the proposed structure of share capital of EvergrowthTelecom Limited and confirm that there is no variation inthe equity pattern of JT Mobiles Ltd to the one alreadysubmitted to DoT.

(3) The foreign equity in M/s. Evergrowth Telecom Ltd.including holding through JT Mobiles Ltd will not exceed

49%. As per the present structure, the total foreign equity is35.75% made up as follows:

Foreign equity holding through JT Mobiles Ltd –11.76%

DirectforeignequitythroughNRI/OCBsonrepatriable basis 24.00%(4) The proportionate shareholding of the individual foreignpromoters of JT Mobiles Ltd whose net worth andexperiencehasbeentakenintoconsiderationfordetermining the eligibility and grant of licence in thesubsidiary company M/s. Evergrowth Telecom Ltd willremain at 11.76%.

(5) The shareholding of Indian promoters of JT Mobiles Ltdin M/s. Evergrowth Telecom Ltd will remain at 12.24%.

(6) We attach the certified true copy of the Board resolutionof JT Mobiles Ltd dated 10[th]January 1996 passed as perprovisions of the Companies Act, confirming the proposal ofthe operation of CMTS in Punjab through the subsidiaryM/s. Evergrowth Telecom Ltd. (Annexure III).

(7) We would like to confirm that there are no court ordersissued against JT Mobiles Ltd as of date restricting theoperations of the company in any manner.

Kindly accord us your permission so that we can finalise theabove structure to enable us to implement the Punjab licenceat the earliest.”

11. On 25[th]June 1996 letter of intent (‘LOI’) was issued by EGTL toMotorola for supply of radio equipment and related services. On 19[th]July1996 EGTL wrote to the DOT and sought to lease 2 MB link for cellularnetwork. On 16[th]August 1996 in response to the telephonic conversionwith the Deputy Director General (VAS), DOT, JTM wrote to the DOTconfirming that JTM would be injecting up to Rs. 35 crores of equity inEGTL and that EGTL will remain 100% subsidiary of JTM after thisequity infusion. It was added that “we understand that it is in accordancewith your approval letter dated 18[th]April 1996.”

OMP No. 77 of 2003

12. On 22[nd]August 1996 DOT forwarded to all cellular licencees,including JTM, the proforma draft of the interconnection agreement. On27[th]August 1996 EGTL executed GSM Cellular System EquipmentPurchase agreement with Motorola Inc. On 5[th]September 1996 DeutscheBank wrote to EGTL regarding credit facilities for financial performanceguarantee of Rs. 35 crores to be submitted to the DOT. subscriptionagreement was executed by EGTL and Essar on 5[th]September 1996 forissuance of 98 lakhs convertible debentures of Rs. 100 each at paraggregating to Rs. 98 crores. On 2[nd]October 1996 ‘civil works and siteservices agreement’ was executed between EGTL and Motorola India Ltd.for the CMTS Punjab Circle. On 17[th]October 1996 Supply Contract wasexecuted between EGTL and Nokia for supply of equipment for GSMSwitching System in Punjab.

13. On 23[rd]October 1996, the DOT Punjab Office wrote to the DelhiOffice with copy to EGTL regarding EGTL’s request for inter connectionof Cellular Mobiles Telephone Network (‘CMTN’). On 30[th]October 1996DOT raised demand note on EGTL for payment of Rs. 40 lakhs towardsinterconnection of CMTN. The date for payment was extended from 15[th]November 1996 to 25[th]November 1996. On 22[nd]November 1996 EGTLinformed the DOT that it had made the payment of Rs. 40 lakhs againstthe demand note raised by DOT. On 28[th]November 1996 DOT by way ofan endorsement on copy of EGTL’s letter dated 22[nd]November 1996informed that the work order had been made and was expected to becompleted by 12[th]December 1996. On 29[th]November 1996 EGTL wroteto the DOT about the delay of DOT in providing points to interconnect atLudhiana, Jalandhar and Amritsar for operating CMTS in Punjab Circle.

14. On 5[th]December 1996 JTM wrote the DOT about status of CMTSPunjab Circle and highlighted the delays in providing the facilitiesnecessary for commissioning CMTS in Punjab Circle. JTM sought anextension of the effective date for commissioning the service up to 27[th]March 1997. On 7[th]December 1996 JTM wrote to the DOT regardingissue of guidelines and governing terms and conditions and installation ofhardware inside the premises of DOT.

15. On 10[th]December 1996 DOT informed EGTL that DOT was not in aposition to provide local lead and terminal equipment at Ludhiana,Jalandhar and Amritsar. On 11[th]December 1996 the TC wrote to theDeputy General Manager (SEP), CGMT, Punjab Circle, Ambala statingthat “Further, since the No objection given to M/s. Evergrowth has notbecome effective and it is not being acted upon, accordingly all requestsfor operation of CMTS in Punjab should come from M/s. JT Mobiles Ltd,who is the Licensee company and no correspondence whatsoever shouldbe accepted from M/s. Evergrowth Telecom Ltd. on behalf of JTMobiles.” copy of that letter was also marked to JTM. On 12[th]December 1996 JTM wrote the Chairman, TC requesting for change ofthe effective date of commissioning services and further that the date ofpayment of second instalment of licence fee should also be extended tocoincide with the new effective date. On 31[st]December 1996 the DeputyGeneral Manager (Planning) of the Ambala Circle of DOT wrote toEGTL referring to the letter dated 11[th]December 1996 from DOT ofDelhi and stated that no objection given to EGTL has not becomeeffective and “no correspondence can be accepted from your firm onbehalf of J.T. Mobiles.”

16. On 3[rd]January 1997 JTM wrote to the DOT expressing its surprise

upon receiving the DOT’s letter dated 11[th]December 1996 and once againconfirmed its compliance with the various conditions stipulated in theletter dated 18[th]April 1996. On 4[th]January 1997 by two letters, JTMinformed the DOT that it had complied with the various conditionsstipulated in the letter dated 18[th]April 1996 and that DOT shouldrecognise EGTL as the “legitimate entity to operate the Punjab CMTS andto conduct all the necessary communications and work with the concernedauthorities for the Punjab Cellular Licence”. JTM also pointed out thatEGTL had already undertaken number of actions for implementation ofthe Punjab licence and that Punjab project was far too advanced. Variousfinancial agreements had already been in place between EGTL and thefinancial institutions to commence the implementation of the PunjabCMTS and it was not possible to withdraw these. JTM wrote to the DOTon 7[th]January 1997 stating that the banks were not willing to respondunless EGTL was accepted for operation of the Punjab CMTS.

17. On 10[th]January 1997 JTM wrote to the DOT referring to the earlierletter highlighting the hardships faced by it on account of withdrawal ofthe no objection letter. On 14[th]January 1997 JTM wrote to the DeputyGeneral Manager, DOT, Ambala stating that it had already furnished andcomplied with the various conditions stipulated in the letter dated 18[th]April 1996. On 27[th]January 1997 EGTL was issued certification andpermission by way of two licences permitting it to import equipment forthe CMTS Punjab Circle. On 7[th]February 1997 JTM wrote to theDirector, TC pointing out that various approvals were pending andconsequent delays were being faced in the CMTS Punjab Circle. On 25[th]February 1997 JTM wrote to the Chairman, TC pointing out that by itsletters dated 18[th]and 26[th]April 1996, copies of which were enclosed, ithad confirmed compliance with the conditions required by it in the

approval letter dated 18[th]April 1996 and reconfirmed the letter dated 4[th]January 1997. Since JTM was facing difficulties and delays in obtainingnecessary approvals to effectively implement the project within the time-schedule, DOT was requested to withdraw the said letter dated 11[th]December 1996 to avoid further delays.

18. purchase contract was executed on 13[th]March 1997 between EGTLandHimachalFuturisticCommunicationsLimited[‘HFCL’](International Division) for microwave equipment for CMTS PunjabCircle. On 7[th]April 1997 JTM reiterated to the DOT its compliance withall the conditions stipulated in the no objection letter dated 18[th]April 1996and sought resolution of the disputes at an early date. On 28[th]April 1997JTM wrote to the DOT enclosing copy of an application submitted byJTM to the Secretary for Industrial Approval, Ministry of Industry,Government of India for payment of Technical fee to the ForeignCollaborator.

19. On 12[th]June 1997 the TC wrote to JTM as under:

“Dear Sir(s)

Kindly refer your letter dated 28[th]April 1997 on the abovesubject wherefrom following has been collected and observedfrom the application enclosed with the letter.

(i) The company has changed equity structure of joint venturecompany by increasing equity to 31% held by M/s. UnitedTelecom Group and simultaneously removed M/s. PCIL fromamongst the promoters.

(ii) As per Clause 17 of the Licence Agreement the equityholding of M/s. PCIL an Indian promoter cannot be reducedbelow 10 of total aggregate for period of 3 years fromeffective date.

(iii)Thestatementthatthecompanyhasdecidedtoassign/transfer Punjab Licence to Essar Group is against the

prohibition of assignment or transfer of licence as prescribedper Clause 10 of the Licence Agreement.

(iv) The above is in violation of the express terms andconditions of the licence agreement.

In view of the above, within ten days from the receipt of thisletter, kindly explain that why action for termination oflicence, under Clause 5, may not be taken due to theabovenoted breaches committed by you. In case reply is notreceived within aforesaid 10 days, then it will be presumedand taken that you have nothing to say on the matter.”

20. In reply dated 1[st]July 1997 to the above show-cause notice dated 12[th]June 1997, JTM stated that the notice was based on incorrect facts,surmises and conjectures and there was no breach of licence. On 11[th]August 1997 JTM informed DOT that EGTL had incurred expenditure ofthe amount of Rs. 200 crores for implementation of the licence of CMTSservices in the Punjab Circle. It was stated that the licence fee for the firsttwo quarters for which the DOT had issued notice to JTM and also thefees for third and fourth quarters shall be paid under protest till the issueof effective date of licence was resolved. It also requested the DOT topostpone the effective date from 12[th]December 1995 to the actual date ofthe commencement of services.

21. Meanwhile, Parasrampuria Credit & Investment Ltd (‘PCIL’) filedCivil Writ Petition No. 1345 of 1996 in this Court challenging the letterdated 3[rd]April 1996 of the DOT approving replacement of PCIL withM/s. RK Associates (‘RKA’). The said petition was dismissed by an orderdated 11[th]July 1997. Thereafter, PCIL filed LPA No. 184 of 1997wherein an order was passed by the Division Bench on 22[nd]August 1997staying the operation of the letter dated 18[th]April 1996 issued by the DOTto JTM.

22. On 28[th]August 1997 JTM wrote to DOT seeking permission to EGTLto implement the Punjab CMTS licence. On 4[th]September, 5[th]Decemberand 19[th]December 1997 the DOT issued certification and permission toEGTL for import of equipment for implementation of CMTS for PunjabCircle. On 31[st]December 1997 the DOT wrote to JTM as under:

“Dear Sir,

Kindly refer our letter of even no. dated 12[th]June 1997 videwhich the company was asked to explain the violation ofexpress terms and conditions of licence agreement and thereply to the same furnished by the company vide letter dated1[st]July 1997.

2. The reply furnished by the company has been examined andnot found satisfactory. The stand of the company that M/s.PCIL never acquired or held any shares is in contradiction tothe licence agreement duly executed by the company whereinthe equity of M/s. PCIL is clearly shown as 20%.

3. You are, therefore, required to rectify the default within 30days of receipt of this letter failing which your licence may beterminated in accordance with the clause 6 and condition 15.1Schedule ‘B’ of the licence agreement for breach of clause 17of the licence agreement. This is without prejudice to anyother remedy with the Telecom Authority may resort to underthe licence agreement.

This may be treated as notice of default under clause 6 andcondition 15.1 Schedule ‘B’ of the licence agreement.”

23. On 6[th]January 1998 JTM wrote to the TC stating that PCIL was onlya nominee of RKA and the said arrangement was later terminated by RKApursuant to which there was litigation pending in the Bangalore CivilCourt and Delhi High Court between RKA and PCIL. It was on this scorethat permission was sought by JTM to replace PCIL and RKA and thiswas accepted by the DOT by its letter dated 3[rd]April 1996. Since thelicence did not prohibit increase in equity of any shareholder, the equityof United Telecom Limited (‘UTL’) was increased from 11% to 31%.

Since the shareholding of PCIL in JTM was nil there was no breach oflicence on account of PCIL being replaced with RKA.

24. On 8[th]January 1998 LPA filed by PCIL was dismissed by theDivision Bench of this Court observing that the issues raised in the letterdated 18[th]April 1996 by the DOT and in the letter dated 12[th]June 1997would be decided by the DOT. The interim order dated 22[nd]August 1997was vacated.

25. On 12[th]January 1998 JTM wrote to the DOT reiterating thecompliance of the various conditions as stipulated in the letter dated 18[th]April 1996 and sought to move forward in rolling out services in the Stateof Punjab. On 16[th]January 1998 JTM reiterated the above proposal andenclosed copy of the Board Resolution of JTM dated 12[th]June 1996expressly accepting the terms and conditions indicated in the DOT’s letterdated 18[th]April 1996. On 17[th]January 1998 JTM wrote to DOT enclosingcopy of the order dated 8[th]January 1998 of the High Court and conveyedits “unequivocal acceptance of conditions 1 to 7” of the DOT’s letterdated 18[th]April 1996. It enclosed extracts of the minutes of the meeting ofthe Board of Directors held on 12[th]June 1996. On 19[th]January 1998various clarifications were issued by JTM to the DOT on various issuesrelating to its CMTS licence in the Punjab Circle.

26. On 23[rd]January 1998 JTM passed the requisite resolution acceptingthe conditions in DOT’s letter dated 18[th]April 1996. On the same day itwrote to the DOT enclosing copy of the said resolution and requestedthe DOT to validate the permission to operationalize the implementationof the CMTS Punjab circle through EGTL. JTM had agreed to deposit Rs.5 crores as part payment and pay the balance licence fee due up to the

date on which permission was granted to EGTL. It requested fordeferment of payment of licence fee, waiver of interest and outstandinglicence agreement fee. It also informed the DOT that EGTL issued 98lakhs privately placed optionally fully convertible debentures at parvalue of Rs. 100 each aggregating to Rs. 98 crores to Essar. The saiddebentures were convertible into equity subject to grant of approval fromthe DOT. It was pointed out by JTM that there was no infringement oflicence conditions and there was no change in equity pattern of EGTL.

27. On 10[th]March 1998 DOT wrote to JTM conveying the decisions ofTelecom Authority granting ex-post facto approval for increase in equityof UTL in JTM from 11% to 31% subject to the outcome of the variouscourt cases filed by PCIL. It was stated that in view of the compliancewith the conditions in the letter dated 18[th]April 1996 the operation ofCMTS in Punjab by EGTL was agreed in principal. Relevant to the issueof outstanding licence fee JTM was asked to deposit sum of Rs. 5 croresimmediately, all outstanding up to the second quarter of second year by20[th]March 1998, the outstanding dues of third and fourth quarter ofsecond year by 30[th]June 1998 and the outstanding including thoseaccrued up to 11[th]September 1998 for third year by 12[th]September 1998.The request for waiver of interest would be considered only after paymentof the principal amount by the company. JTM was directed not to ask forany change in the effective date or take legal recourse for waiver of thelicence fee and was asked to withdraw the suit filed by it and EGTL in theDelhi High Court unconditionally.

28. On 2[nd]April 1998 JTM wrote to the Chairman, TC enclosing ademand draft of Rs. 5 crore dated 2[nd]April 1998 towards part payment ofthe second year Punjab Circle licence fee but requested for deferment of

the payment of the outstanding dues for the second year as well as for thedues accrued for the first and second quarters of the third year up to 31[st]March 1999. The third quarter of licence fee for the third year would bepaid as per schedule, and that it would approach the DOT separately forwaiver of interest after payment of licence fee. On 24[th]September 1998 afurther request was made by JTM for change of the effective date to 4[th]November1997andcommercialclearancefortheirnetworkinChandigarh and grant of three to four months to reach financial closureand raise financial bank guarantee. On 13[th]November 1998 JTM interalia requested the DOT to treat the period from 18[th]April 1998 till thedate of commercial clearance was actually granted as ‘black out period’of which no licence fee would be paid.

29. On 22[nd]March 1999 DOT wrote to JTM stating that the company hadnot covered the mandatory 10% DHQs by 12[th]December 1996. It wasrequired to pay liquidated damages (‘LD’) as per Condition 14.2 of thelicence agreement which worked out to Rs. 100 lakhs. The said amountwas asked to be deposited within 15 days. This was followed by letterdated 26[th]March 1999 by TC stating that since JTM had failed to makepayment of licence fee for the period from 12[th]December 1996 to 11[th]March 1999, it should furnish the requisite bank guarantee. JTM wasasked to immediately make payment of the above amounts within 20 daysand furnish the bank guarantee failing which “termination of the licenceshall be initiated without any further correspondence.”

30. JTM filed OMP No. 49 of 1999 under Section 9 of the 1996 Act inwhich an order was passed on 28[th]May 1999, the operative portion ofwhich reads as under:

“I direct the respondent not to terminate the license of thepetitioner and further restrain them from encashing theOMP No. 77 of 2003Page 16 of 46

existing bank guarantee subject, however, to the condition thatthe petitioner deposits with the respondent 20% of the amountdue inclusive of interest as mentioned in the letter dated 25thJanuary, 1999, by means of banker’s cheque / bank draftwithin two weeks from today. The petitioner will also keep theexisting bank guarantee alive till further orders.”

Thereafter, the above petition was dismissed as withdrawn on 8[th]October2001.

31. On 15[th]July 1999, the DOT sent JTM notice terminating the licenceagreement for CMTS Punjab Circle forthwith on the ground that JTM hadfailed to set right the default pointed out in the notice dated 26[th]March1999 within thirty days and further it had failed to comply with thedirections in the order dated 28[th]May 1999 of the High Court. On 29[th]July 1999 EGTL wrote to the DOT seeking migration to New TelecomPolicy 1999 (‘NTP 1999’), withdrawal of termination letters andrestoration of interconnection. It also referred to its earlier request fortreatment of the period of 693 days as ‘blackout’ period. Prior thereto on8[th]July 1999 JTM requested that the disputes be referred to arbitration.

32. As noted earlier the name of JTM was changed to BML by acertificate dated 29[th]March 2000 issued by the ROC, Karnataka.

33. On 19[th]September 2001 the DOT wrote to BML offering modifiedpackage whereby the issue concerning payment of licence fee for theperiod between 18[th]April 1996 and 10[th]March 1998 was proposed to bereferred to an Arbitrator. By letter of the same date BML accepted theabove offer and also paid part payment of Rs. 220 crores. On 21[st]September 2001 it had paid further payment of balance of Rs. 58,48,094by which time it had also paid sum of Rs. 485 crores. Thus alloutstanding amounts had been paid by it by that date. On 22[nd]September

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Page 17 of 46

2001 BML wrote to the Director (VAS-I), DOT confirming compliancewith all the conditions stipulated in the order dated 18[th]April 1996.

34. On 25[th]September 2001 the DOT wrote to BML informing that interms of the unconditional acceptance of the terms and conditions of thepackage and meeting of the milestones of the package, the DOT waswithdrawing the termination order dated 15[th]July 1999. On 27[th]September 2001 the DOT appointed retired judge of the Supreme Courtas sole Arbitrator for determining the following dispute:

“Whether the licence fee for the period 18[th]April 1996 to10[th]March 1998 including interest on that sum is payable bythe company on the basis of the facts and circumstancespleaded by both the parties.”

Proceedings before the Arbitrator

35. Before the learned Arbitrator BML filed its claim on 12[th]November2001 to which the DOT filed its reply on 22[nd]December 2001 and BMLfiled rejoinder thereto on 12[th]January 2002. BML also soughtamendment in the claim during the course of arguments on 6[th]August2002 seeking that grounds L-1 and L-2 be inserted between ground L andM. Ground L-1 in substance was that the licence duty already paid for theperiod after 30[th]April 1997 was liable to be refunded and ground L-2 tothe effect that DOT was bound to mitigate the loss suffered by terminatingthe licence on the ground of alleged non-performance of the contract byBML and when it did not provide services from 12[th]December 1996onwards. BML also contended that the Attorney General for India (‘AG’)had given two separate opinions in which he had found that BML hadsubstantially complied with the conditions stipulated in the NOC. BMLprayed that the DOT should disclose the said opinions of the AG to thelearned Arbitrator.

36. Based on the pleadings of the parties, the learned Arbitrator framedthe following issues:

“(1) Whether the Claimant had, at all material times,intimated the Respondent that the Licence Agreement dated26[th]December 1995 will be implemented by Evergrowth andnot by the Claimant and whether the proposal was acceptedby the Respondent on 18[th]April 1996 or any other date?

(2) Whether the Respondent’s letter dated 18[th]April 1996 isin the nature of counter proposal for implementation of theLicence Agreement by Evergrowth?

(3)Whether the conditions mentioned in the letter of theRespondent dated 18[th]April 1996 were accepted expressly orby conduct, by the Claimant?

(4) Whether there was novation of the Licence Agreementdated 26[th]December 1995 in view of the letter of theRespondent dated 18[th]April 1996, whether Evergrowth wasto implement and operate the Licence Agreement and theClaimant thereby rendered itself incapable of implementingthe Licence Agreement?

4(a) If not, whether there was no impediment to the operationof the Licence Agreement due to the letter dated 18[th]April1996 or due to any subsequent event related thereto?

(5) Alternatively, whether the Respondent had, by its letterdated 18[th]April 1996 and by its conduct clearly representedthat the Agreement dated 26[th]December 1995 could beimplemented by Evergrowth only and the same was actedupon by the Claimant and Evergrowth to their detriment andwhether consequently, the Respondent was estopped fromcontending that the Licence Agreement could not beimplemented by Evergrowth?

(6) Whether the Respondent is estopped from contending thatthe letter dated 18[th]April 1996 did not come into effect asalleged or at all?

(7) Whether the Claimant had legitimate expectation thatthe Licence Agreement dated 26[th]December 1995 could beimplemented by or through Evergrowth?

(8) Whether the letter of the Respondent dated 11[th]December1996, that stated that the letter dated 18[th]April 1996 was

ineffectiveandEvergrowthcouldnotbeallowedtoimplement the Licence Agreement dated 26[th]December1995, is arbitrary, capricious, invalid and violative ofprinciples of natural justice?

(8A) Whether, in view of Clause 14.2, Schedule B, Part III ofthe Licence Agreement, if the Claimant did not provideservices or provide infrastructure at the District Headquartersso as to meet 10% of the demand for period of 20 weeks,making itself liable for damages upto Rs. 100 lakhs, theRespondent (a) had mandatory duly under Clause 14.2 toterminate the licence had no discretion under Clause 15.1 toterminate the licence or not; or (b) had mandatory duty toterminate the licence under Clause 14.2 as measure ofmitigating damages under Section 73 of the Contract Act andtake over the work or hand it over to another Indian companyas per Clause 15.3?

(9) Whether the licence fee and interest for the entire periodof 693 days from 18[th]April 1996 to 10[th]March 1998 or anypart thereof was not payable because the Licence Agreementdated26[th]December1995hadbecomeincapableofperformance by Evergrowth during that period and theamounts were liable to be refunded?

(10) Whether, after the letter of the Respondent dated 19[th]September 2001, the acceptance of the package by theClaimantbylettersdated19[th]September2001,20[th]September 2001 and the Respondent’s letter dated 25[th]September 2001, the Respondent is entitled to raise pleathat the Claimant is estopped from claiming refund in viewof the Claimant’s letters dated 5[th]December 1996, 7[th]November 1996 and 12[th]December 1996?

(11) Whether the Claimant is not liable for the licence fee forthe entire period commencing from 18[th]April 1996 to 10[th]March 1998 and is entitled to refund thereof?

(12) Whether the Claimant is not liable to pay interest on theentire Licence Fee for the period from 18[th]April 1996 to 10[th]March 1998?

(13) Whether, in any event, the Claimant is not liable to pay

(i) Licence fee and interest for the period 12[th]June1996 to 10[th]March 1998 and is entitled to refundthereof? or

(ii) Licence fee and interest for the period 22[nd]August1997 to 8[th]January 1998 and from 8[th]January 1998 to10[th]March 1998 or any part thereof and is entitled torefund thereof?

(14) What is effect of non-filing of opinion of learnedAttorney General?

(15) To What Relief?”

Impugned Award of the Arbitrator

37. Dealing with Issues 1 to 3 together, the learned Arbitrator concludedthat since DOT never agreed for assignment of the licence in favour ofEGTL, it did not permit JTM to implement the contract through EGTL,nor did it permit EGTL to implement the contract in its own right. Therewas no justification whatsoever for JTM to proceed on that assumption. Itwas held that the original contract of the licence between JTM and DOTdated 26[th]December 1995 remained. The learned Arbitrator held that therequest by JTM to the DOT seeking amendment of the licence was its‘offer’, the DOT’s letter dated 18[th]April 1996 was ‘counter offer’ andJTM’s letters dated 18[th]April 1996 and 26[th]April 1996 were ‘furthercounter offers’. DOT by its letter dated 1[st]May 1996 had not acceptedthese ‘further counter offers’ but stuck to its original ‘counter offers’dated 18[th]April 1996. Section 7(2) of the Indian Contract Act, 1872(‘CA’) had no application since the dispute did not concern the ‘form’ ofthe Board Resolution of JTM but its ‘substance’. It was only on 23[rd]January 1998 that all 7 conditions laid down by the DOT on 18[th]April1996 were accepted by the Board of Directors of JTM. Consequently,Issues 1 to 3 were decided against BML and in favour of the DOT.

38. On Issues 4 and 4(a), the learned Arbitrator held that “it is impossibleto conclude that by letter dated 18[th]April 1996 of the Department, therewas ‘novation’ of the Licence Agreement, to the effect that EGTL wasto implement the Licence Agreement dated 26[th]December 1995 in theplace of JTM.” Further, there was no impediment to the operation of thelicence agreement due to the letter dated 18[th]April 1996 of the DOT, andJTM alone was responsible for having allowed EGTL to enter into suchcontracts or commitments with third parties. On Issue No. 5 it was heldthat no plea of estoppel or promissory estoppel could be raised by BML orproved against the DOT. It was held that the DOT had not by its letterdated 18[th]April 1996 or by subsequent conduct represented ‘clearly’ orotherwise (neither expressly nor impliedly) that the agreement dated 26[th]December 1995 could be implemented only by EGTL. Further EGTL andJTM did not act upon such representation and suffer detriment. On IssueNo. 6 it was held that the DOT was not precluded from informing JTMand EGTL that the NOC dated 18[th]April 1996 was not effective and thatthe DOT’s letter dated 11[th]December 1996 was merely clarificationsince the NOC in any case had not become effective.

39. Issue No. 7 was decided by holding that no legitimate expectation inregard to an ‘offer’ or ‘counter offer’ was possible. On Issue Nos. 8 and8A, the learned Arbitrator held that there was no mandatory duty on theDOT to terminate the licence upon the failure of JTM to commission theservice by 12[th]December 1996 by way of mitigating the damages underSection 73 of the CA. Issue No. 9 was decided against BML and in favourof DOT and it was held that there was no question of refunding thelicence fee for the blackout period. Issue No. 10 was decided in favour ofBML by holding that the pleas raised in the claim for refund werepermissible. On Issue Nos. 11 to 13 it was held that BML was liable to

pay interest on the licence fee for the blackout period in terms ofCondition 19.8 and that there was no question of their being equities infavour of BML in that regard.

Present proceedings

40. Aggrieved by the above Award, the present petition was filed by BMLon 17[th]February 2003. On 19[th]February 2003 the following order waspassed by the Court:

“This is petition under Section 34 of the Arbitration &Conciliation Act, 1996. The main grievance of the petitioneris that the learned Arbitrator for the period 18[th]April 1996 to10[th]March 1998 has declined the refund of interest chargedby the respondent at penal rate of 17.5% compoundedmonthly.LearnedseniorcounselsubmittedthattheArbitrator has erred in proceeding on the basis that oncethere was contractual stipulation even in equity such penalrate could be permitted. Counsel places reliance on case ofCentral Bank of India v. Ravindra & Ors. (2002) 1 SCC367. Counsel also raises the contention that the interpretationgiven by the learned Arbitrator to the correspondencebetween the parties regarding the undertaking required fromthePetitionerthatEGTLshallremain100%ownedsubsidiary was unwarranted in as much as the Petitioners hadclearlyspecifiedthatEGTLremainsitsown100%subsidiary.

Notice to the Respondent for 2[nd]April, 2003.

Notice be also issued to the learned Arbitrator for filing ofthe award alongwith its record.”

41. It appears that during the pendency of this petition, BML obtainedphotocopies of three opinions of the AG, dated 30[th]March 2000, 14[th]April 2001 and 29[th]August 2001 pursuant to the order dated 7[th]October2009 of the Central Information Commission (‘CIC’) under the Right toInformationAct,2005(‘RTIAct’).Accordingly,BMLfiledanapplication being IA No. 3377 of 2010 on 15[th]March 2010 seeking to

OMP No. 77 of 2003

Page 23 of 46

place on record such legal opinions and to direct the DOT to place onrecord the file notings pertaining to the case. IA No. 3384 of 2010 wasfiled by the Petitioner seeking to place on record the voluminousdocuments which formed part of the arbitral record. On 17[th]March 2010this Court observed that the said application would be taken up with themain petition for disposal.

The amendment application

42. On 27[th]April 2010 BML filed an application IA No. 5441 of 2010under Order VI Rule 17 of the Code of Civil Procedure, 1908 (‘CPC’)seeking leave to amend the main petition (OMP No. 77 of 2003) byadding the legal preliminary grounds of challenge to the impugned Awardas listed in para 14 of the application. The background to BML seeking toincorporate the said amendments was that the Telecom RegulatoryAuthority of India (Amendment) Act, 2000 (‘TRAI Amendment Act’)came into force with retrospective effect from 24[th]January 2000. TheTRAI Amendment Act inserted Chapter IV in the Telecom RegulatoryAuthority of India Act, 1997 (‘TRAI Act’). Under Section 14 of the TRAIAct, as amended, the Central Government established the TelecomDisputes Settlement and Appellate Tribunal (‘TDSAT’) to adjudicate anydispute between licensor and licensee, between two or more serviceproviders and between service provider and group of consumers.Section 14M of the TRAI Act as amended provided that all applicationspending for adjudication of disputes before the TRAI immediately beforethe date of establishment of the TDSAT shall stand transferred to theTDSAT immediately on its establishment under Section 14. UnderSection 14N (1) of the TRAI Act as amended all appeals pending beforethe High Court immediately before the commencement of the TRAIAmendment Act, i.e., 24[th]January 2000, shall stand transferred to the

TDSAT on its establishment under Section 14. Section 15 of the TRAIAct as amended excluded the jurisdiction of civil court in respect of anymatter which the TDSAT was empowered to determine.

43. At the hearing on 28[th]April 2010 learned Senior counsel for BMLinformed the Court that he was not pressing prayer (iii) of the saidapplication for deciding the preliminary legal objections as preliminaryissue. Nevertheless he was pressing for the other reliefs including remandof the present dispute forming subject matter of the impugned Award tothe TDSAT for adjudication. In the event, the preliminary objection of thePetitioner was upheld. Notice was issued on the said application by theCourt.

Submissions on the lack of jurisdiction of the Arbitrator

44. The first submission by Dr. A.M. Singhvi, learned Senior counsel andMr. Harsh Kaushik, learned counsel appearing for BML pertained to thejurisdiction of the learned Arbitrator. It was submitted that TRAI Actbeing special legislation would prevail over the 1996 Act and therefore,it was only the TDSAT which could adjudicate the subject matter of thearbitral proceedings. Reliance was placed on the decisions in GujaratUrja Vikas Nigam Ltd. v. Essar Power Ltd. (2008) 4 SCC 755(hereinafter referred to as the ‘GUVNL case’), India Trade PromotionOrganization v. International Amusement Limited 142 (2007) DLT 342(DB) and Vinayak Balkrishna Samant v. The Mahanagar TelephoneNigam Limited 1996 (3) BomCR 179. It was submitted that the learnedArbitrator lacked inherent jurisdiction and the TDSAT has the exclusivejurisdiction over the dispute between the parties. Reference was made tothe decision of the Supreme Court in Union of India v. Tata Teleservices(Maharashtra) Ltd. (2007) 7 SCC 517, the decision of the TDSAT inAircel Digilink India Ltd. v. Union of India (2005) 3 Comp LJ 461(TDSAT), the decision dated 22[nd]January 2010 of the TDSAT in M.A.No. 108 of 2009 in Petition No. 172 of 2009 [Star (India) Pvt. Ltd. v.Bharat Sanchar Nigam Ltd.], the decision dated 11[th]February 2010 ofthe TDSAT in Hathway Space Vision v. Vivekanand Rao and thedecision dated 10[th]April 2012 of the TDSAT in Petition No. 75 of 2012(Reliance Infratel Ltd. v. Etisalat DB Telecom Pvt. Ltd., Mumbai).

45. Secondly, it was submitted that under Section 34 (2) (b) (ii) of the1996 Act, an Award can be challenged if it is against the ‘public policy ofIndia’. Relying on the decision in Oil & Natural Gas Corporation Ltd. v.Saw Pipes Ltd. (2003) 5 SCC 705 it is submitted that inasmuch as theimpugned Award was contrary to the provisions of Section 14 (a) (i) ofthe TRAI Act, it was in violation of substantive law in force in India. Itwas also in violation of Section 28 (1) (a) of the 1996 Act. Thirdly, it wassubmitted that under Section 34 (2) (b) (i) of the 1996 Act, the subjectmatter of the dispute was incapable of settlement by arbitration. TheTRAI Amendment Act having come into force with retrospective effectfrom 24[th]January 2000, and the exclusive jurisdiction of the dispute beingwith the TDSAT, the reference of the dispute to arbitration after the saiddate was itself null and void. It was submitted that provisions of Sections4, 8 and 16 (2) of the 1996 Act would not be applicable since theobjections as to the subject matter jurisdiction went to the root of thematter and was different from an objection as to territorial and pecuniaryjurisdiction. Reference was made to the decisions of the Supreme Court inHarshad Chiman Lal Modi v. DLF Universal Ltd. (2005) 7 SCC 791,Chief Engineer, Hydel Project v. Ravinder Nath (2008) 2 SCC 350 andHira Lal Patni v. Sri Kali Nath AIR 1962 SC 199.

46. Fourthly, it was submitted by Dr. Singhvi and Mr. Kaushik that anobjection that judicial forum or Tribunal lacks inherent jurisdiction toadjudicate dispute, can be raised at any stage. party will not beestopped from raising such plea because it had invoked the arbitrationclause and participated in the arbitration proceedings. Reference is madeto the decision in Chiranjilal Shrilal Goenka (Deceased) through LRs v.Jasjit Singh 1993 (2) SCC 507 and the decision of the TDSAT in Star(India) Pvt. Ltd. v. Bharat Sanchar Nigam Ltd. It is submitted thatSection 2 (3) of the 1996 Act also acknowledges that dispute that can bedecided by properly designated Tribunal would not be referred toarbitration. It is submitted that although the grounds urged in the petitionas originally filed covered the objection to the impugned Award on theground of lack of jurisdiction of the learned Arbitrator, the amendmentapplication was filed out of abundant caution. In any event since theobjection as to lack of subject matter jurisdiction went to the root of thematter it could be raised at any stage, even seven years after the filing ofthe main petition.

47. On the issue of jurisdiction, it is submitted by Mr. Rajeeve Mehra,learned Additional Solicitor General (‘ASG’) appearing for the DOT, thatin terms of Section 21 of the 1996 Act the arbitral proceedings weredeemed to have commenced on 8[th]July 1999 when BML sought referenceof the disputes to arbitration. Chapter IV of the TRAI Act, containingSections 14, 14M and 14N, was inserted by the TRAI Amendment Actwith effect from 24[th]January 2000. Prior thereto there was no provisionfor transfer of pending disputes to the TDSAT. It is submitted that underSections 14M and 14N of the TRAI Act only applications pendingadjudication before the TRAI, and all pending appeals before the HighCourt, would stand transferred to the TDSAT. There was no provision for

transferring suits and petitions pending in civil courts or disputes pendingbefore arbitral Tribunals to be transferred to the TDSAT. In respect ofsuch pending disputes the arbitral Tribunal would continue to exercisejurisdiction. He referred to Section 31 of the Recovery of Debts due toBanks and Financial Institutions Act, 1993 (‘DRT Act’) to point out thecontrast and submitted that in the absence of express provisions to thateffect no legislative intent to transfer pending arbitral proceedings to theTDSAT could be inferred. He submitted that even the bar of thejurisdiction of civil courts under Section 15 of the TRAI Act did not coverarbitral proceedings.

48. Mr. Mehra further submitted that the word ‘jurisdiction’ in Section 16(2) of the 1996 Act was comprehensive enough to cover all challenges tojurisdiction including subject matter jurisdiction. Such objection could beraised, if at all, by either party to the arbitral proceedings, before thearbitral Tribunal prior to or at the time of statement of defence beingfiled in the matter and not later. In the present case, much after the TRAIAmendment Act had come into force, BML participated in the arbitrationproceedings without raising any objection as to jurisdiction under Section16 (1) read with Section 16 (2) of the 1996 Act. No such objection wasraised in the present petition when it was filed in 2003. After waiting foror period of seven years, an amendment was sought to be made toincorporate such ground by an application filed in March 2010.

49. The decisions in Kiran Singh v. Chaman Paswan and HarshadChimanlal Modi v. DLF Universal Ltd. were sought to be distinguishedby Mr. Mehra on the ground that they pertained to the provisions of theCPC and that the challenge to jurisdiction in terms of Section 16 of the1996 Act was on higher pedestal than Section 21 of the CPC. Section 16

of the 1996 Act permitted the learned Arbitrator to decide on his ownjurisdiction. If such plea was permitted to be raised at stage long afterthe passing of the Award, it would defeat the very object of expeditiousadjudication of disputes under the 1996 Act. Mr. Mehra further submittedthat challenge to the Award by seeking amendment to the petition underOrder VI Rule 17 CPC could not be permitted long after filing of theexpiry of the maximum permissible statutory period of limitation underthe proviso to Section 34 (3) of the 1996 Act. It was further submitted thatunlike Section 174 of the Electricity Act, 2003 which was non-obstanteclause, Section 14 of the TRAI Act was not and therefore, the decision inthe GUVNL case was distinguishable.

Tenability of the application for amendment

50. The above submissions have been considered. There are two issuesconcerning jurisdiction that arise for consideration in the present case.One is whether the plea as to the learned Arbitrator not having theinherent or subject matter jurisdiction to deal with the dispute ought not tohave been raised by BML before the learned Arbitrator under Section 16of the 1996 Act during the pendency of the arbitral proceedings or eventhereafter in the present petition under Section 34 of the 1996 Act andwhether the belated challenge to the jurisdiction can be permitted to beraised seven years after the filing of the petition. The second issue is thateven if the amendment as sought were to be permitted, whether in fact inthe present case, and in the context of the provisions of the TRAI Act, itcould be said that the learned Arbitrator lacked inherent or subject matterjurisdiction to decide the dispute.

51. There is no dispute that at no stage of the proceedings before thelearned Arbitrator, did BML raise any objection to his jurisdiction by

filing an application under Section 16 of the 1996 Act. Section 14 wasinserted in TRAI Act with effect from 24[th]January 2000. BML itselfbeing licensed telecom operator was aware of the legal positionconcerning the jurisdiction of the TDSAT. It consciously did not raise anysuch objection and participated in the arbitral proceedings without demur.The scheme of the 1996 Act is to facilitate and promote expeditiousresolution of the disputes between the parties. With this object in view,the legislature has minimised judicial intervention in arbitral proceedings.A party to arbitral proceedings is expected to be vigilant and raise allpreliminary objections as to jurisdiction at the first available opportunitybefore the arbitral Tribunal not later than the completion of pleadings.Section 4 of the 1996 Act envisages that waiver is attracted where partyknowing that certain provision of the 1996 Act has not been compliedwith, proceeds with the arbitration without stating its objection. If indeed,as has been urged by BML, Section 2 (3) of the 1996 Act anticipates thearbitral Tribunal lacking jurisdiction to deal with an issue that is withinthe exclusive jurisdiction of the TDSAT, then the failure by BML to raisean objection as to jurisdiction before the learned Arbitrator andparticipating in the arbitral proceedings throughout should be taken to bewaiver by BML of its right to object under Section 4 of the 1996 Act.

52. Under Section 16 (2) of the 1996 Act, the objection as to thejurisdiction of the arbitral Tribunal has to be raised not later than thesubmission of statement of claims, by either party. Such objection can beraised even by party which invokes the arbitration clause and files astatement of claims. The word ‘jurisdiction’ under Section 16 is wideenough to include objections as to the subject matter jurisdiction. Indeed itis not confined to pecuniary or territorial jurisdiction. The failure to raisesuch objection and permit the arbitral proceedings to reach its logical

stand would clearly preclude party from raising such objection at laterstage. Under Section 16 if such an objection is raised and rejected by thearbitral Tribunal the party raising such objection would have to wait tillthe Award is passed, and raise such plea under Section 34 of the 1996Act. In arbitral proceedings under the 1996 Act objections as tojurisdiction have to be raised in the manner provided in the 1996 Act. Inother words it can be done only by way of an application under Section 16and again not later than the filing of the statement of defence. If the saidrequirement is not viewed as being mandatory, and if party is permittedto raise such objection at any time of its choice, it would defeat the objectof the 1996 Act which is to ensure expeditious adjudication of disputes. Inthe present case BML participated in the arbitral proceedings withoutraising any such objection.

53. The Court next examines if BML did raise such an objection in thepresent petition under Section 34 of the 1996 Act when it was first filed. Itwas argued on behalf of BML that in ground ‘A’ of the petition it iscontended that the impugned Award “itself is contrary to and in conflictwith the public policy of India”. In ground ‘E (vii)’ it has been pleadedthat “the impugned Award inter alia ignores the substantive law of Indiaand is violative of, contrary to and in breach of Section 28 of the Act.” Inground ‘F’ again it has been pleaded that the Award is erroneous in lawand opposed to the public policy of India and in ground ‘R’ it has beenpleaded that the impugned Award “contains errors of law apparent on theface of the award” and has been rendered in breach of the contract. It issubmitted that the above pleadings would include plea that the learnedArbitrator lacked inherent jurisdiction to adjudicate the subject matter ofthe dispute and therefore, the amendment sought by way of an applicationwas only out of abundant caution. Reference in this regard was made to

the decisions in Raptakos Brett & Co. Ltd. v. Ganesh Property (1998) 7SCC 184 and Municipal Corporation v. A.P.S. Kushwaha 2010 (1) JLJ331.

54. This Court is unable to accept the submission that the grounds ‘A’, ‘E(vii)’, ‘F’ and ‘R’ of the petition include an objection by BML to theimpugned Award on the ground of lack of inherent jurisdiction of thelearned Arbitrator to adjudicate the dispute. The grounds of challenge tothe impugned Award are to be specifically pleaded with reference toSection 34 of the 1996 Act. There is nothing in the abovementionedgrounds that even vaguely suggests the ground of lack of inherentjurisdiction of the learned Arbitrator rendering the Award liable to be setaside under Section 34 (2) (b) (i) of the 1996 Act. The broad sweepingplea that the Award is contrary to the public policy of India and thereforeliable to be set aside under Section 34 (2) (b) (ii) of the 1996 Act cannotalso be said to cover plea as to lack of inherent jurisdiction. In Oil &Natural Gas Corporation Ltd. v. Saw Pipes Ltd., the Supreme Court hasdelineated the scope of that expression. The lack of inherent jurisdictionof the Arbitrator to adjudicate the dispute has to necessarily be pleadedspecifically. It has to be shown to lead to patent illegality vitiating theimpugned Award.55. There is another reason why the strict view must be taken of scope ofchallenge to the Award under the 1996 Act. If all grounds of challenge arenot taken to the impugned Award at the time of filing of the petition underSection 34 of the 1996 Act, and are permitted to be raised at any time,then the legislative intent behind prescribing maximum time limit underthe proviso to Section 34 (3) of the 1996 Act would be defeated. InKrishna Bhagya Jala Nigam Ltd. v. G. Harischandra Reddy (2007) 2

SCC 720 the Supreme Court did not permit an objection as to thejurisdiction of the learned Arbitrator to be raised at the stage of an appealwhen no such objection was raised during the pendency of the arbitralproceedings. In Gas Authority of India Ltd. v. Keti Construction (I) Ltd.(2007) 5 SCC 38 it was held that where party has received notice and itdoes not raise plea of lack of jurisdiction before the Tribunal “he mustmake out strong case why he did not do so if he chooses to move apetition for setting aside the award under Section 34 (2) (a) (v) of theAct.”

56. In State of Maharashtra v. Hindustan Construction CompanyLimited (2010) 4 SCC 518 the Court did not permit the new grounds bywayofamendmentsince“suchnewgroundscontainingnewmaterial/facts could not have been introduced for the first time in anappeal when admittedly these grounds were not originally raised in thearbitration petition for setting aside the award.” Further, in the presentcase, an amendment has been sought to the petition to include anadditional ground of challenge by an application filed more than sevenyears after the filing of the main petition. Except stating that amendmentis by way of abundant caution, there is no convincing explanation for thedelay in filing the application. This Court is, therefore, not inclined toentertain the plea for amendment of the petition to urge the additionalgrounds on the ground of lack of jurisdiction. Accordingly, IA No. 5441of 2010 is dismissed.

Plea as to lack of inherent jurisdiction of the Arbitrator

57. Notwithstanding the rejection of BML’s prayer for amending thepetition, since extensive arguments have been advanced on the inherentlack of jurisdiction of the learned Arbitrator to decide the subject matter

of the dispute, the Court proceeds to consider the said plea. The sequenceof events shows that BML invoked the arbitration clause on 8[th]July 1999.In terms of Section 21 of the 1996 Act the arbitration proceedingscommenced on that date itself. By then Section 14 had not been insertedin the TRAI Act. Chapter IV which includes Sections 14 to 20 wasintroduced by the TRAI Amendment Act 2000 with effect from 24[th]January 2000. If the legislature intended that pending arbitrationproceedings as of 24[th]January 2000, which would include the arbitralproceedings in the instant case, should be transferred to TDSAT, then itought to have made specific provision to that effect.

58. Sections 14, 14M and 14N of the TRAI Act are silent as to the transferof pending arbitral proceedings to the TDSAT. The said provisions readas under:

“14. Establishment of Appellate Tribunal – The CentralGovernment shall, by notification, establish an AppellateTribunal to be known as the Telecom Disputes Settlement andAppellate Tribunal to –

(a) adjudicate any dispute -

(i) between licensor and licensee;

(ii) between two or more service providers;

(iii) between service provider and group ofconsumers;

Provided that nothing in this clause shall apply inrespect of matters relating to –

(A) the monopolistic trade practice, restrictive tradepractice and unfair trade practice which are subject tothe jurisdiction of the Monopolies and Restrictive TradePractices Commission established under sub-section (1)of section 5 of the Monopolies and Restrictive TradePractices Act, 1969 (54 of 1969);

(B)thecomplaintofanindividualconsumermaintainable before Consumer Disputes RedressalForum or Consumer Disputes Redressal CommissionortheNationalConsumerRedressalCommissionestablished under section 9 of the Consumer ProtectionAct, 1986 (68 of 1986);

(C) dispute between telegraph authority and any otherperson referred to in sub-section (1) of section 7B of theIndian Telegraph Act 1885 (13 of 1885);

(b) hear and dispose of appeal against any direction, decisionor order of the Authority under this Act.

14M. Transfer of pending cases – All applications, pendingfor adjudication of disputes before the Authority immediatelybefore the date of establishment of the Appellate Tribunalunder this Act, shall stand transferred on that date to suchTribunal:

Provided that all disputes being adjudicated under theprovisions of Chapter IV as it stood immediately before thecommencement of the Telecom Regulatory Authority of India(Amendment) Act, 2000, shall continue to be adjudicated bythe Authority in accordance with the provisions, contained inthat Chapter, till the establishment of the Appellate Tribunalunder the said Act;

Provided further that all cases referred to in the first provisoshall be transferred by the Authority to the Appellate Tribunalimmediately on its establishment under Section 14.

14N. Transfer of appeals – (1) All appeals pending before theHigh Court immediately before the commencement of theTelecom Regulatory Authority of India (Amendment) Act,2000, shall stand transferred to the Appellate Tribunal on itsestablishment under section 14.

(2) Where any appeal stands transferred from the High Courtto the Appellate Tribunal under sub-section (1), –

(a) The High Court shall, as soon as may be after suchtransfer, forward the records of such appeal to the AppellateTribunal; and

(b) The Appellate Tribunal may, on receipt of such records,proceed to deal with such appeal, so far as may be from the

stage which was reached before such transfer or from anyearlier stage or de novo as the Appellate Tribunal may deemfit.

15. Civil court not to have jurisdiction – No civil court shallhave jurisdiction to entertain any suit or proceedings in respectof any matter which the Appellate Tribunal is empowered byor under this Act to determine and no injunction shall begranted by any court or other Authority in respect of anyaction taken or to be taken in pursuance of any powerconferred by or under this Act.”

59. Section 14 of the TRAI Act states ‘any dispute’ between licensorand licensee; two or more service providers; and service provider anda group of consumers will be adjudicated exclusively by the TDSAT. Theexpression ‘any dispute’ has to be read along with Sections 14M and 14Nto determine which of such disputes that are pending as on 24[th]January2000 would get transferred to the TDSAT. Section 14M refers to the‘authority’ which under Section 2 (b) is the TRAI. Under Section 14M,cases pending before the TRAI immediately before 24[th]January 2000shall stand transferred to the TDSAT upon its establishment. The provisoto Section 14M states that the disputes which were already beingadjudicated prior to 24[th]January 2000 would continue to be adjudicatedby the TRAI till the TDSAT is actually established, and would betransferred to it immediately upon its establishment. Section 14M doesnot talk of all pending arbitral proceedings. Section 14N deals with casespending before the High Court. Arbitral proceedings are not coveredunder Section 14N of the TRAI Act either. Section 15 states that no civilcourt shall have jurisdiction to entertain any suit or proceeding in respectof any matter which the TDSAT is empowered to determine. The words‘entertain any suit or proceeding’ indicate the prospective nature of thatprovision. None of the above provisions support the contention of BMLthat pending arbitral proceedings could not go on after the establishment

OMP No. 77 of 2003Page 36 of 46

of the TDSAT and that in the present case, the learned Arbitrator lackedinherent jurisdiction to adjudicate the disputes.

60. Therefore, if the plea of lack of inherent jurisdiction had been raisedby BML before the learned Arbitrator under Section 16 of the 1996 Act,he would have been justified in rejecting it. Equally, the plea of lack ofinherent jurisdiction, even if permitted to be raised by BML at this belatedstage on the strength of the decisions in Harshad Chiman Lal Modi v.DLF Universal Ltd., Chief Engineer, Hydel Project v. Ravinder Nathand Hira Lal Patni v. Sri Kali Nath, cannot succeed for the reason thatthe present arbitral proceedings commenced prior to 24[th]January 2000.Thecontinuanceofthearbitralproceedingsthereafterremainedunaffected under Sections 14, 14M or 14N of the TRAI Act. UnlikeSection 174 of the Electricity Act, 2003 which opens with non-obstanteclause, and which was interpreted in the GUVNL case, Section 14 of theTRAI Act does not contain such clause. The decisions of the TDSATcited by BML are distinguishable on facts. None of the cases involved asituation where arbitral proceedings had already commenced prior to theestablishment of the TDSAT.

61. The Court therefore rejects the contention of BML that in the presentcase the learned Arbitrator lacked inherent subject matter jurisdiction todeal with the dispute and that the impugned Award should be set aside onthat ground.

Challenge to the Award on merits

62. The next contention concerns the challenge to the impugned Award onmerits. It was submitted by Dr. Singhvi on behalf of BML that since thelearned Arbitrator has reached the conclusion that could never have been

arrived at on the pleadings and evidence on record, the impugned Awardis perverse and deserves to be set aside. It was further submitted that thefinding of the learned Arbitrator that the NOC dated 18[th]April 1996required the Petitioner to confirm that EGTL would “always” remain a100% subsidiary of BML was erroneous as there was no such requirementin the NOC. The learned Arbitrator had read into the letter dated 18[th]April 1996 stipulation that was non-existent. Further, EGTL remained a100% owned subsidiary of JTM throughout. There was enough evidenceon record to show that BML had unequivocally accepted the conditions ofthe NOC dated 18[th]April 1996. The terming by the learned Arbitrator ofthe NOC dated 18[th]April 1996 as an ‘offer’ and the response thereto byBML as its ‘counter offer’ was erroneous and contrary to the pleadings aswell as the wording of those very documents. BML and EGTL soughtapprovals in their subsequent letters only pursuant to the Condition No. 2of the NOC. It is submitted that JTM never stated that it would maintainonly 12.24% equity. The learned Arbitrator ignored the proportionateforeign equity of BML of 11.76% and therefore, came to wrong finding.In its letter dated 1[st]/2[nd]May 1996 BML had conveyed to DOT itsacceptance of each of the conditions of the letter dated 18[th]April 1996.The letter dated 23[rd]January 1998 was only reiteration of thatacceptance. The wording of BML’s letter dated 1[st]/2[nd]May 1996 and thesubsequent letters dated 3[rd]and 4[th]January 1997 was identical to theresolution letter dated 23[rd]January 1998.

63. The learned ASG appearing for the DOT responded by submitting thatunequivocal acceptance of the seven conditions in the letter dated 18[th]April 1996 was never conveyed by BML earlier to 23[rd]January 1998. Theletter dated 18[th]April 1996 of the DOT was conditional NOC that wasnot complied with by BML during the so-called ‘black out’ period. DOT’s

letter dated 11[th]December 1996 clearly stated that the letter dated 18[th]April 1996 had not become effective. It was not the case of either partythat during the blackout period, the licence granted to BML wassuspended or that BML was incapable of implementing the contract.Without compliance with the conditions in the NOC, the licence could nothave been assigned to EGTL. None of the agreements entered into withthird parties mentioned EGTL as licensee. It is submitted that since thelicence agreement was ‘always in existence’, BML could not avoidpaying the licence fee as well as the agreed interest thereon apart fromother amounts agreed to be paid under the agreement.

64. The Court would like to preface the discussion on merits byrecapitulating the law concerning the scope of interference by the Courtunder Section 34 of the 1996 Act. The legal principles have been settledin Oil & Natural Gas Corporation Ltd. v. Saw Pipes Ltd.The Courtexplained in the said decision what the expression “opposed to the publicpolicy of India” in Section 34 (2) (b) (ii) of the 1996 Act meant. It heldthat an Award “could be set aside if it is patently illegal” and further that“award could also be set aside if it is so unfair and unreasonable that itshocks the conscience of the court. Such award is opposed to publicpolicy and is required to be adjudged void.” The said principles werereiterated in McDermott International Inc. v. Burn Standard Co. Ltd.(2006) 11 SCC 181 and number of subsequent decisions.65. The Arbitrator is mandated by Section 28 (3) of the 1996 Act todecide “in accordance with the terms of the contract” and in terms ofSection 28 (1) to “decide the dispute submitted to arbitration inaccordance with the substantive law for the time being in force in India.”A breach of the above statutory requirement would also invite invalidation

of the Award. To the extent that the requirement of the law even under the1996 Act is that the Arbitrator cannot travel beyond the contract, or readsomething into it which does not exist, it is no different from the legalposition that emanates under the Arbitration Act 1940.

66. In Continental Construction Co. Ltd. v. State of Madhya Pradesh(1988) 3 SCC 82, the Supreme Court observed that an Arbitrator cannotignore the law or misapply it in order to do what he thinks is just andreasonable. In Bharat Coking Coal Ltd. v. M/s. Annapurna ConstructionAIR 2003 SC 3660 the Court explained that “the role of the arbitrator is toarbitrate within the terms of the contract. He has no power apart fromwhat the parties have given him under the contract. If he has travelledbeyond the contract, he would be acting without jurisdiction, whereas ifhe has remained inside the parameters of the contract, his award cannot bequestioned on the ground that it contains an error apparent on the face ofthe record.” In Associated Engineering Co. v. Government of AndhraPradesh AIR 1992 SC 232 the Supreme Court set aside an Award afterfinding that the Arbitrator in that case committed an error “not bymisreading or misconstruing or misunderstanding the contract, but byacting in excess of what was agreed. It was an error going to the root ofhis jurisdiction because he asked himself the wrong question, disregardedthe contract and awarded in excess of his authority.”

67. The decision of the learned Arbitrator on Issues 1 to 4 was central tothe entire Award. perusal of the impugned Award shows that thefinding on those issues has influenced the decision on the remainingissues. To briefly recapitulate, while deciding Issues 1 to 3 together, thelearned Arbitrator held that DOT had never agreed for assignment of thelicence in favour of EGTL and neither permitted JTM to implement the

contract through EGTL or permitted EGTL to implement the contract inits own right. It was further held that the licence agreement dated 26[th]December 1995 between JTM and the DOT remained; the request by JTMto the DOT seeking amendment of the licence was its ‘offer; the DOT’sletter dated 18[th]April 1996 was ‘counter offer’; JTM’s letters dated 18[th]April 1996 and 26[th]April 1996 were ‘further counter offers’; since DOTby its letter dated 1[st]May 1996 had not accepted these ‘further counteroffers’ the NOC dated 18[th]April 1996 did not become effective till 23[rd]January 1998 when all 7 conditions therein were accepted by JTM. OnIssues 4 and 4 (a), the learned Arbitrator held that the NOC did not bringabout novation of the licence agreement dated 26[th]December 1995permitting EGTL to implement it in place of JTM. JTM was responsiblefor having allowed EGTL to enter into contracts or commitments withthird parties.68. There is merit in the submission of the learned counsel for BML thatin arriving at the above conclusions the learned Arbitrator appears to havetravelled beyond the express wording of the agreement reached betweenthe parties and read into the NOC term that was non-existent. It isapparent on reading of the NOC letter dated 18[th]April 1996 thatConditions 1 and 2 therein were mutually inconsistent. While ConditionNo. 1 required JTM to ensure that EGTL remained 100% subsidiary,Condition No. 2 stated that no variation in the equity pattern of EGTL andJTM could be undertaken without permission of the Telecom Authority. Ifpermission was sought under Condition No. 2 and given by the TelecomAuthority, it would obviously result in variation in the equity patternand/or expansion in the equity base of JTM. If Condition No. 1 were tobe rigidly interpreted, then Condition No.2 was plainly inconsistent andunworkable. On the other hand, Condition No.2 itself envisaged that there

was no requirement under Condition No.1 that EGTL would remain a100% subsidiary of JTM “throughout’ or “always.”

69. While the letter dated 18[th]April 1996 of JTM did confirm theacceptance of Condition Nos. 3 to 7 its request for amendment ofConditions 1 and 2 to clarify the possible anomaly cannot be viewed as arefusal, repudiation or non-acceptance by JTM of Conditions 1 and 2. Inany event, with JTM confirming by letter dated 1[st]/2[nd]May 1996 thatEGTL “is 100% subsidiary of JTM”, Condition No. 1 stood satisfied.The letter dated 24[th]April 1996 from EGTL also assured that the equityheld by JTM in EGTL would not be diluted below 24% at any time andforeign equity would not exceed 49% of the total issued capital includingforeign equity held by JTM. In the letter dated 26[th]April 1996 JTMsought approval of the proposal to have Essar contributing 52% in theshare capital of EGTL. The letter dated 1[st]/2[nd]May 1996 unequivocallystates that “EGTL remains 100% owned subsidiary of JTM as of 1[st]May1996”. The words “always” or “throughout” do not occur in ConditionNo. 1 of the NOC dated 18[th]April 1996. As rightly pointed out by BMLthe learned Arbitrator appears to have read such words into the NOCdated 18[th]April 1996 when there was no such condition. In fact ifpermission was granted under Condition No. 2, then clearly ConditionNo. 1 would not be fulfilled. Till such time permission was not grantedunder Condition No. 2, then Condition No. 1 stood fulfilled.

70. The findings of the learned Arbitrator as regards Issues 1 to 3 are notsupported by the evidence on record. The correspondence between theparties, some of which have been referred to in the impugned Award,including the letters dated 26[th]April 1996, 1[st]/2[nd]May 1996, 16[th]August1996 showed that JTM kept assuring the DOT that EGTL remained

100% subsidiary in JTM. It also showed that JTM was, consistent withCondition No. 2, seeking permission of the Telecom Authority forvariation in the equity pattern as proposed. The learned Arbitrator appearsto have overlooked two letters dated 3[rd]January 1997 and 4[th]January1997 written by JTM to DOT. In both letters the seven conditions were setout. Under the column ‘present status’ against DOT Condition No. 1 inboth letters, JTM confirmed that “EGTL remains 100% subsidiary ofJTM”. Against Condition No. 2 it stated that “there has been no variationand or expansion in equity base of JTM. JTM injected Rs. 30 crore asequity capital in EGTL to part finance implementation of the CMTSoperations by EGTL.” The finding that the precise wording of theResolution dated 23[rd]January 1998 did not find mention in the lettersdated 18[th]April 1996 and the letter dated 1[st]/2[nd]May 1996 ignored thefact that JTM was, pursuant to Condition No.2, seeking approval of DOTfor the proposed change in pattern of equity holding in EGTL.71. While ordinarily in exercise of its power under Section 34 of the 1996Act the Court is not expected to re-appreciate the evidence, the instantcase is one where the learned Arbitrator has overlooked materialevidence. The fact that JTM unequivocally accepted the seven conditionsset out in the NOC dated 18[th]April 1996 is evident from the letter of thatdate read with letters dated 1[st]/2[nd]May 1996 and 3[rd]and 4[th]January 1997as well as by its subsequent conduct in seeking permission of the DOT interms of the Condition No. 2. Neither of the parties proceeded on the basisor even contended that the request by JTM to the DOT seekingamendment of the licence was its ‘offer’; that the DOT’s NOC letter dated18[th]April 1996 was ‘counter offer’ and that JTM’s letters dated 18[th]April 1996 and 26[th]April 1996 were ‘further counter offers’. There isforce in the contention of BML that this approach to the evidence has led

to the impugned Award erroneously deciding Issues 1 to 3. Consequently,it is not possible to accept the submission of the learned ASG that theview expressed by the learned Arbitrator on Issues 1 to 3 was plausibleone.

72. Issue No. 4 concerned the novation of the agreement dated 26[th]December 1995. The NOC letter dated 18[th]April 1996 conveyed DOT’sconditional acceptance of the request of JTM to permit EGTL to operatethe licence agreement. The finding of the learned Arbitrator that there wasno novation of the licence agreement was as direct consequence of hisfindings on Issues 1 to 3. Consequently, the Award in respect of Issue 4 isalso required to be set aside.

73. The central issue referred to the learned Arbitrator was: “Whether thelicence fee for the period 18[th]April 1996 to 10[th]March 1998 includinginterest on that sum is payable by the company on the basis of the factsand circumstances pleaded by both the parties.” The answer to the saidquestion depended on the answer to Issues 1 to 4. The answer by thelearned Arbitrator to the above question in the affirmative has largelydeterminedhisanswerstotheremainingissues.Theinevitableconsequence of the decision of this Court that the Award in respect ofIssues 1 to 4 is unsustainable in law, is that the Award in respect of theremaining issues is also required to be set aside. Consequently, the entireAward is liable to be set aside on the ground that it is opposed to thepublic policy of India under Section 34 (2) (b) (ii) of the 1996 Act.

Summary of Conclusions

74. To summarise the conclusions of the Court in this judgment:

(a) The plea for amendment of the petition to urge the additional groundson the ground of lack of jurisdiction is rejected and IA No. 5441 of 2010is dismissed.

(b) In any event, there is no merit in the contention of BML that thelearned Arbitrator lacked inherent subject matter jurisdiction to deal withthe dispute.

(c) The impugned Award is liable to be set aside on merits on the groundthat it is opposed to the public policy of India under Section 34 (2) (b) (ii)of the 1996 Act.

Consequential directions

75. Although this Court finds that the impugned Award cannot besustained in law on merits and is opposed to the public policy of Indiaunder Section 34 (2) (b) (ii) of the 1996 Act, it cannot possibly grant BCLthe consequential reliefs of allowing its claims as that is beyond the scopeof the powers of the Court under Section 34 of the 1996 Act. In thisregard it is useful to recall the following observations of the SupremeCourt in McDermott International Inc. v. Burn Standard Co. Ltd. (at p.

“52. The 1996 Act makes provision for the supervisory role ofcourts, for the review of the arbitral award only to ensurefairness. Intervention of the court is envisaged in fewcircumstances only, like, in case of fraud or bias by thearbitrators, violation of natural justice, etc. The court cannotcorrect errors of the arbitrators. It can only quash the awardleaving the parties free to begin the arbitration again if it isdesired. So, the scheme of the provision aims at keeping thesupervisory role of the court at minimum level and this can bejustified as parties to the agreement make conscious decisionto exclude the court's jurisdiction by opting for arbitration asthey prefer the expediency and finality offered by it.”

76. Accordingly, the impugned Award dated 20[th]December 2002 is setaside leaving it open to BCL to resort to appropriate legal remedies asmay be available to it in accordance with law. The petition is allowed inthe above terms with costs of Rs. 30,000 which will be paid by the DOTto BCL within period of four weeks from today.

SEPTEMBER 14, 2012Rk

S. MURALIDHAR, J.