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High Court Of Delhi
S.G STILS PRIVATE LIMITED - Appellant
Versus
UNION OF INDIA - Respondent
Decided On : 11/21/1983
TELEGRAPH - Security deposit - Validity - Amendment to Indian Telegraph Rules, 1983 - Rule 505-B - Imposition of security deposit on existing telex subscribers - Challenge - Validity upheld - Rule held intra vires the Indian Telegraph Act, 1885 - Security deposit held not arbitrary or violative of Article 14 - Rule not retrospective - Demand notices held not bad - Sub-rule (2) of Rule 505-B held violative of principles of natural justice - Requirement of show cause notice imposed.
Fact of the Case:
Petitioners, existing telex subscribers, challenged the validity of a security deposit requirement imposed on them by an amendment to the Indian Telegraph Rules, 1983. They argued that the government could not unilaterally change the terms of the original contract, that the amendment was prospective and could not be applied to existing subscribers, that the imposition of the security deposit was arbitrary and violative of Article 14 of the Constitution, that it was beyond the competence of the rule-making power of the Central Government, and that sub-rule (2) of Rule 505-B introduced by the amendment was arbitrary and violated the principles of natural justice.
Finding of the Court:
The court held that the government could change the terms of the agreement unilaterally, that the amendment was not ultra vires the Indian Telegraph Act, 1885, that the imposition of the security deposit was not arbitrary or violative of Article 14, that the rule was not retrospective, that the demand notices were not bad, and that sub-rule (2) of Rule 505-B was violative of the principles of natural justice.
Issues: 1. Whether the government could unilaterally change the terms of the original contract between the parties. 2. Whether the amendment to Rule 505-B was prospective and could not be applied to existing telex subscribers. 3. Whether the imposition of the security deposit was arbitrary and violative of Article 14 of the Constitution. 4. Whether the imposition of the security was beyond the competence of the rule-making power of the Central Government. 5. Whether sub-rule (2) of Rule 505-B introduced by the amendment was arbitrary and violated the principles of natural justice.
Ratio Decidendi: 1. The government has the monopoly of communication, including telegraph, telephone, telex etc. and can make the service available to citizens by a license on satisfaction of certain conditions. 2. Section 7 (2) (h) of the Indian Telegraph Act, 1885 clearly provides for a security deposit. 3. The security deposit is not a sanction or penalty, but a precautionary or anticipatory measure. 4. The rule was placed before the Parliament and approved, giving it legislative force. 5. The liability is not in the nature of an increase in past charges, but a security deposit that has to be paid only once. 6. Sub-rule (2) of Rule 505-B is violative of the principles of natural justice and must be read to include a requirement of a show cause notice before withdrawal of telex services or removal of telex apparatus.
Final Decision: The writ petition succeeded only to the extent of the requirement of a show cause notice in sub-rule (2) of Rule 505-B. The rest of the contentions were rejected. No orders were passed as to costs.
( 1 ) THE Indian Telegraph Rules were amended on 14-2-1983 requiring payment of security deposit of Rs. 10,000 by the telex subscribers. a new rule was added as 505-A for the new subscribers. Rule 505-B was introduced for imposing security deposit on the existing telex subscribers. In these petitions, filed by the existing telex subscribers, the validity of the said security deposit is challenged.
( 2 ) ORIGINALLY the writ petitions were filed when the demand notices for payment of security deposit were served on the petitioners. The telex subscribers were further warned through the said notices that if they would not deposit the security amount within one month it would be presumed that they were not interested in the telex connections and the telex connections would be disconnected without any further notice But no provision of law enabling such an imposition was stated in the notice. After the admission of the writ petitions the time for payment of the security deposit was extended till the end of September, 1983. When the counter-affidavit was filed, a copy of the amended rules, was. produced by the respondents. The writ petitions were thereafter amended so as to challenge the validity of the rules. As large number of cases were involved the hearing of the writ petitions was expedited. The counsel for the respondents fairly assured that till the judgement was pronounced, no recovery would be made from the. petitioners.
( 3 ) TELEX services are made available to the subscribers under the Indian Telegraph Rules, 1983 framed under the Indian Telegraph Act. Section 7 of the Act empowers the Central Government to frame rules for various purposes. Section 7 (2) (h) is relevant for our immediate purpose. It reads : "7. Power to make rules for the conduct of telegraphs. (1) The Central Government may from time to time, by notification in the Official Gazette, make rules consistent with this Act for the conduct of all or any telegraphs established, maintained or worked by the Government or by persons licensed under this Act. 885 (2) Rules under this section may provide for all or any of the following, among other matters, that is to say :- to (g) the time at which, the manner in which, the conditions under which and the persons by whom the rates, charges and fees "mentioned in this subsection shall be paid and the furnishing of security for the payment of such rates, charges and fees;" The imposition of the security deposit has been challenged on the following grounds : The Government cannot unilaterally change the terms of the original contract between the parties. When the telex connections were given there was no provision tor the security deposit. (ii)The amendment to Rule 505-B is prospective and, therefore, no security deposit can be imposed on the existing telex subscribers. (iii) Imposition of the security deposit is arbitrary and violative of Article 14 of the Constitution. . (iv) The imposition of the security is beyond the competence of the rule-making power of the Central Government. The only sanction provided by the Indian Telegraphs Act, in case of the breach of erms by the subscribers, is disconnection. (v) Sub-rule (2) of Rule 505-B introduced by the amendment is arbitrary and violates the principles of natural justice as it empowers the Department to withdraw telex service and apparatus without any notice. 886
( 4 ) RULE 505-B, as introduced by 1983 amendment, reads: "505 B. Payment of security deposit by existing telex subscribers. ( 1 ) Every subscriber who has a telex connection on the date of commencement of the Indian Telegraph (Second Amendment) Rules, 1983 shall within a period of three months from such commencement deposit a sum of Rs. 10,000 to the Telegraph Authority as security for the said telex connection. (2) If the subscriber fails to deposit the amount specified in sub-rule (1) within the period specified therein, the Telegraph Authority may with- draw the telex service and remove any tele
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