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IN THE HIGH COURT OF DELHI AT NEW DELHI
MANMOHAN SINGH, J.
TOWER VISION INDIA PRIVATE LIMITED - Petitioner
versus
VIDEOCON TELECOMMUNICATIONS LIMITED - Respondent
O.M.P. (I) (COMM.) 105 of 2016, I.A. Nos.4958, 4994, 6254, 8038, 9016 of 2016
Decided On : 14-09-2016
The petitioner, a passive infrastructure provider, filed a petition under Section 9 of the Arbitration & Conciliation Act, 1996 (the Act) seeking various reliefs against the respondent, a telecom operator, including securing certain amounts on the date of filing of written submissions. The respondent raised objections to the maintainability of the petition and also filed a counterclaim for damages. The court examined the maintainability of the petition and held that it had jurisdiction to entertain the petition as the dispute between the parties was not arbitrable under Section 14 of the Telecom Regulatory Authority of India Act, 1997 (TRAI Act). The court also rejected the respondent's objection that the petition was not maintainable due to the existence of a counterclaim. On the merits of the case, the court found that the petitioner was entitled to reasonable compensation for the respondent's early exit from the sites under the Master Service Agreement (MSA) and directed the respondent to deposit a sum of Rs. 9.34 Crore with the Registrar General of the court as security for the period of two years. The court also directed the respondent to deposit a sum of Rs. 32 Crore as security for the unpaid invoices and interest thereon. The court further directed the parties to jointly appoint a Chartered Accountant to identify the figures about the unpaid invoices and directed the respondent to pay the remaining amount, if any, to the petitioner directly. The court dismissed the respondent's application for intervention by the State Bank of India, as the bank was not a party to the arbitration agreement. The court also granted an interim order restraining the respondent from withdrawing a sum of Rs. 41.34 crore from the funds lying in the Escrow account.
Fact of the Case:
The petitioner, a passive infrastructure provider, and the respondent, a telecom operator, entered into a Master Service Agreement (MSA) for the provision of passive infrastructure services. The respondent began defaulting on its monthly payment obligations starting in November 2009. As a result, the petitioner served a termination notice for all sites under service in the Gujarat circle. The respondent subsequently sold its spectrum to Bharti Airtel Ltd. without depositing the claimed amounts with the Registrar General of the court as directed by the court. The petitioner filed a petition under Section 9 of the Arbitration & Conciliation Act, 1996 (the Act) seeking various reliefs against the respondent, including securing certain amounts on the date of filing of written submissions. The respondent raised objections to the maintainability of the petition and also filed a counterclaim for damages.
Finding of the Court:
The court held that it had jurisdiction to entertain the petition as the dispute between the parties was not arbitrable under Section 14 of the Telecom Regulatory Authority of India Act, 1997 (TRAI Act). The court also rejected the respondent's objection that the petition was not maintainable due to the existence of a counterclaim. On the merits of the case, the court found that the petitioner was entitled to reasonable compensation for the respondent's early exit from the sites under the MSA and directed the respondent to deposit a sum of Rs. 9.34 Crore with the Registrar General of the court as security for the period of two years. The court also directed the respondent to deposit a sum of Rs. 32 Crore as security for the unpaid invoices and interest thereon. The court further directed the parties to jointly appoint a Chartered Accountant to identify the figures about the unpaid invoices and directed the respondent to pay the remaining amount, if any, to the petitioner directly. The court dismissed the respondent's application for intervention by the State Bank of India, as the bank was not a party to the arbitration agreement. The court also granted an interim order restraining the respondent from withdrawing a sum of Rs. 41.34 crore from the funds lying in the Escrow account.
Issues: 1. Whether the petition under Section 9 of the Arbitration & Conciliation Act, 1996 (the Act) was maintainable? 2. Whether the petitioner was entitled to reasonable compensation for the respondent's early exit from the sites under the Master Service Agreement (MSA)? 3. Whether the respondent was liable to pay the unpaid invoices and interest thereon?
Ratio Decidendi: 1. The court held that the petition was maintainable as the dispute between the parties was not arbitrable under Section 14 of the Telecom Regulatory Authority of India Act, 1997 (TRAI Act). The court also rejected the respondent's objection that the petition was not maintainable due to the existence of a counterclaim. 2. The court found that the petitioner was entitled to reasonable compensation for the respondent's early exit from the sites under the MSA as the parties had agreed in the MSA that in the event of the respondent's early exit, it would pay an amount as specified in the schedule. 3. The court held that the respondent was liable to pay the unpaid invoices and interest thereon as the respondent had admitted the amount as claimed by the petitioner and had failed to produce any cogent and clear evidence to show that it had paid the amount against the invoices.
Final Decision: The court disposed of the petition and directed the respondent to deposit a sum of Rs. 9.34 Crore as security for the period of two years and a sum of Rs. 32 Crore as security for the unpaid invoices and interest thereon. The court also directed the parties to jointly appoint a Chartered Accountant to identify the figures about the unpaid invoices and directed the respondent to pay the remaining amount, if any, to the petitioner directly. The court dismissed the respondent's application for intervention by the State Bank of India and granted an interim order restraining the respondent from withdrawing a sum of Rs. 41.34 crore from the funds lying in the Escrow account.
MANMOHAN SINGH, J.
1. The petitioner has filed the present petition under Section 9 of the Arbitration & Conciliation Act, 1996 (for short, called “the Act”).
2. The petitioner inter alia has sought the following reliefs against the respondent:-
“(a) Restraining from selling, transferring, alienating, creating any third party interest or otherwise dealing with its spectrum or business in all six of its licensed service areas,
(b) Directing the respondent to require Bharti Airtel Limited to reserve out of the consideration to be paid to the respondent for purchase of the respondent's spectrum in six circles, and hold in trust for the petitioner, the claimed amounts of Rs.113.7 Crore in an interest bearing escrow account to be administered by the Registrar of this Court, or any alternative security; or
(c) Directing the respondent to reserve out of the consideration and hold in trust for the petitioner, immediately upon completion of its proposed transaction with Bharti Airtel Limited, the claimed amount of Rs.113.7 Crore in an interest bearing escrow account to be administered by the Registrar of this Court, or any alternative security; and
(d) Restraining the respondent and its officers, employees or representatives from removing, reclaiming, selling, transferring, alienating, creating any third• party interest or otherwise dealing with its active infrastructure including but not limited to microwave equipments and BTS equipments fixed at the petitioner's sites.”
However, after filing of the petition, by adding the subsequent period till the date of final hearing, the petitioner is seeking the relief to secure the following amount on the date of filing of written submissions:-
Claim
Amount
Overdue Invoices + interest thereon
Rs.52.62 Crore
Settlement waived off amounts
Rs.26.5 Crore
Lock-in liabilities
Rs.46.7 Crore
Total Claims
Rs.125.82 Crore
3. As far as selling and transferring of spectrum is concerned, the same has been sold/transferred to Bharti Airtel Ltd. on 24th May, 2016 after filing the present petition and in breach of the order/direction of the Court issued on 1st April, 2016.
4. The following relevant facts as per petition are mentioned below:-
a) The petitioner has entered into a passive infrastructure sharing agreement with the respondent dated 31st October, 2008 (“MSA”). Under the MSA, the petitioner provides passive infrastructure services to the respondent on two types of telecom sites, i.e. anchor sites (which are built and set up by the petitioner at the specific request of the respondent and at a location chosen by the respondent) and shared sites (which the petitioner has set up for another operator and which are shared by the respondent).
b) Under Clause 4.3.1 read with Schedule 2 of the MSA, the petitioner is entitled to monthly fees consisting of: a) monthly service charges for use of the sites; and b) reimbursements in respect of site rentals, electricity and diesel charges etc. Clause 16.2 of Schedule 2 to the MSA also provides that interest at the rate of 12 % per annum is payable by the respondent on dues remaining pending for more than sixty days.
5. The relevant terms and conditions as well as the clauses of MSA are common in the present case also which are the subject matter of O.M.P. (I) (COMM.) Nos.107/2016, 95/2016 & 186/2016. The same are not being repeated here and the same be read in the present case also.
6. It is alleged by the petitioner that the respondent began defaulting on its monthly payment obligations starting as early as November, 2009. As on 31st December, 2012, the respondent had accumulated outstanding dues of Rs.94.11 Crore. As a good gesture of the petitioner and with the consent, the parties executed a Settlement Agreement on 6th May, 2013 (“Settlement Agreement”) to settle the petitioner’s claims for the aforesaid outstanding amounts.
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