1994 Supreme(Cal) 325

High Court Of Calcutta
BHAGAWATI PRASAD BANERJEE, NIKHIL NATH BHATTACHARJEE
UNION OF INDIA - Appellant
Versus
BINANI CONSULTANTS (P) LTD. - Respondent
Appeal 900  Of  1993
Decided On : 09/27/1994

A writ petition challenging the revision of commission rates for operating pay phones by the Central Government through a notification was not maintainable in light of the arbitration clause in the agreement between the parties. The High Court did not have jurisdiction to entertain the writ petition and review the policy decision of the Government.

Headnote:

INDIAN TELEGRAPH ACT, 1885 - SECTION 4(1) - LICENSE - GRANT OF LICENSE TO OPERATE PAY PHONES - REVISION OF COMMISSION RATES - VALIDITY - WRIT PETITION - MAINTAINABILITY - ARBITRATION CLAUSE - APPLICABILITY - JURISDICTION OF WRIT COURT - SCOPE OF JUDICIAL REVIEW.

Fact of the Case:

The writ petitioner entered into an agreement with Calcutta Telephone authorities to act as Operating Agency in respect of pay phones in the city of Calcutta. The terms of the agreement provided for payment of commission to the Operating Agency at the rate of Re. 1/- per unit from the public for the calls made from the Pay-Phones. The Operating Agency was to pay to the Department @ 80 paise per metered call unit in case of pay-phone with STD facility and @ 60 paise per metered call unit in case of pay-phone with only local call facility. However, it was made clear that the aforesaid charges of Re. 1/- per unit are subject to variation from time to time by the Government and in case the Government changes the charges per unit the share of Operating Agency will also be decided by the CTD at the time of revision. Several pay-phones were allotted to the writ petitioner/opposite parties under the agreement. The licence was also granted for this purpose by the appellants allegedly in exercise of the powers conferred under Sub-section 2 of Section 4 of the Indian Telegraph Act, 1885.

Finding of the Court:

The court held that the terms and conditions of the agreement which were supported by grant of licence under the provisions of section 4 (2) of the Indian Telegraph Act, 1885. The rate of commission could not be revised by a notification and/or circular and further held that the lines were to be restored on payment of call charges on the basis of original agreement and also restrained the appellants from reducing the billing period and/or from charging the additional security deposit except in terms of the original agreement. In short, once the rights, duties and obligations of the parties are embodied in a contract entered into by and between the appellants and the writ petitioner/opposite parties, the same could not be altered subsequently by any notification and/or circular.

Issues: 1. Whether the revision of commission rates for operating pay phones by the Central Government through a notification was valid? 2. Whether the writ petition challenging the revision of commission rates was maintainable in light of the arbitration clause in the agreement between the parties? 3. Whether the High Court had jurisdiction to entertain the writ petition and review the policy decision of the Government?

Ratio Decidendi: 1. The court held that the revision of commission rates by the Central Government through a notification was valid. The court reasoned that the terms and conditions of the license granted under Section 4(2) of the Indian Telegraph Act, 1885, which included the rate of commission, could be modified by the Telegraph Authority by giving three months' notice if it was necessary or expedient to do so in the interest of the general public or for the proper operation of pay phones. 2. The court held that the writ petition challenging the revision of commission rates was not maintainable in light of the arbitration clause in the agreement between the parties. The court reasoned that the dispute regarding the revision of commission rates fell within the scope of the arbitration clause and should have been referred to arbitration as provided in the agreement. 3. The court held that the High Court did not have jurisdiction to entertain the writ petition and review the policy decision of the Government. The court reasoned that the revision of commission rates was a policy decision taken by the Government of India in the public interest and for the proper maintenance of the Telephone Authorities. Such a policy decision could not be interfered with by the Court unless it was arbitrary or contrary to public interest.

Final Decision: The court allowed the appeal, set aside the order of the learned Trial Judge, and dismissed the writ application without any order as to costs.