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2015 Supreme(Online)(TDSAT) 17
TELECOM DISPUTES SETTLEMENT AND APPELLATE TRIBUNAL
Aftab Alam, CJ, Kuldip Singh, J
Noida Software Technology Park Ltd. – Appellant
Versus
Ministry of Information & Broadcasting – Respondent
Petition No.439(C) of 2014
For the Appellants/Petitioners: Mr. Vivek Chib, Ms. Ruchira Goel, Mr. Joby Verghese
For the Respondents: Mr. Ruchir Mishra, Mr. Sanjiv K. Saxena, Mr. Ramneek Mishra
The Ministry of Information & Broadcasting must establish a fair policy regarding assignment permissions for both HITS and DTH operators, avoiding arbitrary discrimination.
Headnote:(A) Indian Telegraph Act, 1885 - Section 4 - Assignment of HITS licence - The petitioner sought to assign its licence as collateral for a loan; MoIB denied the request citing lack of policy - The Tribunal found MoIB's refusal unjustified and ordered a reconsideration of the petitioner’s request taking into account relevant considerations. (Paras 1, 2, 19, 28)
(B) Discrimination - The petitioner argued that denying assignment of its licence while allowing DTH operators to do so amounted to hostile discrimination; the Tribunal noted that both systems should be treated equally under the law. (Paras 20, 21)
Facts of the case:
The petitioner, a HITS operator, sought to assign its licence to secure a loan from a bank. The MoIB's refusal was challenged on grounds of discrimination, as DTH operators were allowed similar permissions. (Paras 3-12)
Findings of Court:
The Tribunal found MoIB’s refusal to grant permission for licence assignment baseless and lacking policy justification, directing a fresh consideration of the request. (Paras 27, 28)
Issues: The main issue was whether it was lawful to deny a HITS operator the same assignment rights given to DTH operators. (Paras 19-21)
Ratio Decidendi: The Tribunal ruled that the MoIB must establish a fair policy on assignment permissions for both HITS and DTH operators and cannot arbitrarily discriminate between them. (Paras 20-21)
Result: Petition allowed; MoIB directed to reconsider the request.
ORDER
By Aftab Alam, Chairperson –
The petitioner, Noida Software Technology Part Ltd., is a Head-end-in-the-Sky (HITS) operator under a licence granted by the Union of India under section 4 of the Indian Telegraph Act 1885. A HITS operator, like a direct-to-home operator, a multi-system operator, a local cable operator, is a distributor of a TV channels within the meaning of the broadcasting regulations (vide clause 2(g) of Interconnection Regulations 2004 and clause 2(q) of the Interconnection Regulations 2012).
The petitioner sought a loan of Rs.15 crores from a bank for its working capital. According to the petitioner, the bank agreed to advance the loan, subject to assignment of its HITS licence as a collateral security for the loan. The petitioner sought permission of the Ministry of Information & Broadcasting (MoIB) for assignment of its HITS licence as security for financial assistance vide its letter dated 6 November 2013. In this letter, the petitioner, inter alia, stated that while processing its request for loan, the bank had asked it to keep its HITS licence as a collateral security in favour of the bank for grant of credit which is subject to licensing conditions laid down by MoIB. Along with the request letter it also enclosed an order passed by MoIB on 3 December 2009 by which permission was granted to Direct-to Home (DTH) operators for assignment of their licences for securing credit, subject to certain conditions.
The relevant part of the order is extracted herein below:
“The matter has been examined in the light of the provisions contained in Article 2.2 & 6.4 of the DTH License Agreement and the procedure followed in the Telecom sector. It has now been decided that all DTH Licensee(s) desirous of assigning their License Agreement as security to the banks/financial institutions for receiving financial loan/assistance for the setting up/operation of DTH services shall be required to execute a Tripartite Agreement as per the enclosed Format between the Licensor, the Licensee and the Lenders before grant of permission for assignment of the License Agreement as security to the lenders for receiving financial loan/assistance for the setting up/operation of DTH services. The DTH Licensee will also be required to furnish copies of the respective loan agreements entered into by the Licensee with the respective lenders.”
The MoIB rejected the petitioner’s request by letter dated 3 September 2014. The letter simply states that there is no policy in the ministry to allow HITS service providers to assign their HITS permission to banks for raising loans for their HITS operations and hence, the petitioner’s request cannot be acceded to.
The petitioner has come to the Tribunal challenging the refusal by the MoIB to grant permission to assign its HITS licence/permission to the bank for raising working capital. The case of the petitioner is mainly grounded on the plea of parity with DTH operators and it is contended on its behalf that the stand of the MoIB is adversely discriminating against it.
The petitioner got a licence agreement executed in its favour on 24 January 2003 pursuant to which on 16 April 2003 it was accorded the permission to set up Head-end-in-the-Sky. [The licence agreement, in terms of clause 2(i) was for a period of 10 years from the date of issue of wireless operational licence by WPC. However, it stands renewed upto 30 April 2015 vide renewal certificate dated 6 August 2014]. Article 5 of the terms and conditions of the licence provides for prohibition of certain activities. Article 5.1 makes the licence non- transferable and Article 5.6 stipulates as under:
“ 5.6
The Licensee shall not either directly or indirectly assign or transfer its right in any manner whatsoever under this Agreement to any other party or enter into any Agreement for sub-licence and/or partnership relating to any subject matter of the Licence to any third party either in whole or in part. Any violation of the terms shall be construed
