JUDGMENT:

S.B. SINHA, J

Union of India is before us aggrieved by and dissatisfied with the judgment and order of the Telecom Disputes Settlement & Appellate Tribunal, New Delhi dated 3rd October, 2005 in Petition No.49(C) of 2005, whereby and whereunder the application filed by the Respondent herein was allowed.

The basic fact of the matter is not in dispute. A Notice inviting tender was issued by the Government of India, Ministry of Information & Broadcasting in the month of October, 1999 from the companies registered in India for grant of licence to operate FM broadcasting service at Mumbai. The Respondent herein was one of the successful bidders along with four others. It is not in dispute that in terms of the agreement, it was stipulated that holders of 10 licences, which were planned for the city of Mumbai, would co-locate the transmission infrastructure on a common transmitter tower, as required in Clause 14 of the Licence Agreement, as also Article 7.1(i) of the Schedule (C) of the said Licence Agreement. Pursuant to or in furtherance of the said scheme, the cost of creating the common infrastructure to transmit from a common transmission tower was to be shared by the ten licensees in Mumbai. It is admitted that five licensees who were successful bidders in the auction process defaulted and did not sign the agreements for grant of licences in Mumbai. Having regard to the default on the part of the said five bidders, the costs of co-locating on a common transmission tower for the remaining five licensees was almost doubled.

The Appellant herein, thereafter, issued guidelines permitting the five licensees in Mumbai to broadcast from interim independent facilities for an interim period of 24 months, during which period the five licensees were required to set up a common transmission tower.

It is also not in dispute that the said guidelines were followed for two years only, but, having regard to the difficulties faced by the said five licensees to co-locate the transmission for broadcasting, they were permitted to make their own arrangement to enable them to operationalize their individual interim stations within a period of four months. It stands admitted that the Respondent herein paid licence fees and also furnished a Bank Guarantee to the tune of Rs.9.75 crores.

After the completion of the term of one year, a reminder was sent to the Respondent on 6.3.2003 stating:

"It will be recalled that vide letter No.212/216/2001-B(D)/FM dated 31.12.2001 you had been informed that in respect of Mumbai you are permitted to set up permanent co-located facilities by 29th December, 2003.

The deadline for setting up co-located facilities is approaching. You are requested to inform this Ministry of the actions that have been taken by you in setting up the co-located infrastructure in Mumbai and to shift your operation from the interim set up.

This is also to inform that the license fee for the second year will become due on 29th April, 2003."

In terms of the said licence, in the event of default on the part of the licensee to pay the consideration therefor, i.e., furnishing lincence fee within a period of seven days of the beginning of each year, the Bank Guarantee furnished could have been encashed. It is furthermore not in dispute that for the second year of the licence, the Respondent was to pay a sum of 15% more than the original licence fee. Union of India by a letter dated 2.5.2003

reminded the Respondent as regard payment of licence fee for the second year. The Respondent herein responded to the said letter stating:

"Our Company is committed to FM Broadcasting and on that basis we would like to reassure you that we are arranging for payment of second year licence fee amounting to Rs.11.2 crores at the earliest.

We should be in a position to deposit the said licence fee amount in full by May 16, 2003. We are also willing to pay interest for the delay of 9 days.

We request not to encash our bank guarantee during this period i.e.