JUDGMENT

R.F. Nariman, J.

The present appeal arises out of a dispute under the Telecom Regulatory Authority of India Act, 1997. The relief sought through a petition before the Telecom Disputes Settlement and Appellate Tribunal, New Delhi ["TDSAT"] by the respondent, Tata Communication Ltd. against the appellant, Mahanagar Telephone Nigam Ltd., is for a recovery of a sum of INR 1,10,57,268/- plus interest thereon. The question that arose between the parties is whether the appellant was justified in adjusting this amount from the dues payable to the respondent by deduction from the bills raised by the respondent. Since the Purchase Order dated 01.10.2008 forms the basis for the claim, it is important to set out clauses 4 and 8 of the said Purchase Order as under:

"4. SCOPE OF ORDER

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iv. Termination of the bandwidth on STM-1 would be done at the MTNL sites/locations in Delhi (Kidwai Bhawan and Nehru Place) and Mumbai (Fountain Head & Prabha Devi) respectively as per the requirement with redundancy in last mile connectivity. For this bandwidth termination purpose, optical/electrical converter, cable and any other hardware/software etc. required, if any, would be arranged by the b