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2014 Supreme(Online)(TDSAT) 44
TELECOM DISPUTES SETTLEMENT AND APPELLATE TRIBUNAL
MR. KULDIP SINGH, MEMBER, MR. AFTAB ALAM, CHAIRPERSON
Reliance Communications Ltd. – Appellant
Versus
Union of India – Respondent
Petition No. 272 of 2013
For the Appellants/Petitioners: Mr. Navin Chawla, Mr. Pranav Sarthi
For the Respondents: Mr. K.P.S. Kohli, Mr. Prashant Jain, Ms. Maneesha Dhir
Penalty calculation for subscriber verification must consider total subscriber base, not just cases investigated, ensuring fair regulation compliance.
Headnote:(A) Indian Telegraph Act, 1885 - Section 4 - License Agreement - Violation of subscriber verification process leading to penalty imposed on the petitioner. The Tribunal assessed non-compliance percentage incorrectly based on a targeted investigation rather than the total subscriber base, resulting in a reconsideration of penalty calculation. (Paras 8, 9 and 10)
(B) Compliance - The necessity for service providers to ensure verification of subscribers is underscored to maintain security and compliance with license conditions. (Paras 8)
Facts of the case:
The petitioner was levied a penalty for failing to properly verify subscribers, with specific non-compliance of 156 connections identified from a total subscriber base of 30,92,314.
Findings of Court:
The penalty needed to be recalibrated based on the overall subscriber base rather than a subset investigated, with directions issued for penalty recalculation and the return of overpaid amounts with interest.
Issues: The main issue revolved around the proper method for calculating non-compliance when a targeted audit identified specific violations.
Ratio Decidendi: The court ruled that the percentage of non-compliance should be calculated against the entire subscriber base for accurate and fair enforcement of penalties as per regulations. The findings about compliance should focus on maintaining security and regulatory compliance.
Result: The petition is disposed of with revised penalty assessment instructions.
| Table of Content |
|---|
| 1. penalty imposed for subscriber verification failure. (Para 1 , 2 , 3) |
| 2. importance of subscriber verification for national security. (Para 4 , 5) |
| 3. debate on methodology for calculating compliance percentage. (Para 6 , 7 , 8) |
| 4. new directives for penalty calculation. (Para 9) |
| 5. case concluded with directive to recalculate penalty. (Para 10) |
JUDGMENT
Kuldip Singh:
The dispute in the present petition is with regard to penalty imposed on the petitioner for the violation of the terms and conditions of the License Agreement- Verification of subscribers in respect of 156 individual bulk customers detected in the monthly customer data base supplied by petitioner in the month of May, 2013 (for the period ending April, 2013).
2. The petitioner - M/s Reliance Communications Ltd. has been granted Unified Access Services License (UASL) under Section 4 of the Indian Telegraph Act , 1885, for Punjab Service Area.By way of present petition, the petitioner has challenged the imposition of penaltyof Rs. 65,37,000/- levied by the respondent vide its impugned demand letter bearing No. 5-7/TERM Pb/Penalty/2012/RCL/22 dated 10.06.2013 and letter bearing No. 5- 7/TERMMP/2010/Rep-Review/94 dated 11.07.2013 rejecting the representation of the petitioner against imposition of such penalty. The petitioner has further challenged the impugned demand notice dated 20.08.2013 demanding interest of Rs.1,79,233/- from the petitioner.
3. Before going into the facts of the case, we give a brief background of the customer verification process and its objective.
As per clause 41.14 [Part VI] of the UAS License Agreement, licensees are required, inter-alia, to do the following:-
(i) make a complete list of their subscribers available on their website so that the authorized Intelligence Agencies can obtain the same at any time;
(ii) Ensure adequate verification of each and every customer before enrolling it as a subscriber;
(iii) Follow the instructions issued by the licensor in this regard from time to time.
Clause 41.14 of the UAS Licences reads as under :-
“The complete list of subscribers shall be made available by the LICENSEE on their website (having password controlled access), so that authorized Intelligence Agencies are able to obtain the subscriber list at any time, as per their convenience with the help of the password. The list should be updated on regular basis. Hard copy as and when required by security agencies shall also be furnished. The LICENSEE shall ensure adequate verification of each and every customer before enrolling him as a subscriber; instructions issued by the licensor in this regard from time to time shall be scrupulously followed. The SIM Card used in the User terminal shall be registered against each subscriber for his bonafide use. The LICENSEE shall make it clear to the subscriber that the SIM Card used in the user terminal against him is non-transferable and that he alone will be responsible for proper and bonafide personal use of the service.”
On 31.7.2008, the UAS License was amended to incorporate the following clause :-
”The Licensor shall have the right to direct the Licensee to warn, penalize or terminate the franchisee or agent or distributor or servant, after considering any report of conduct or antecedents detrimental to the security of the nation. The decision of the Licensor in this regard shall be final and binding and in any case the Licensee shall bear all liabilities in the matter and keep the Licensor indemnified for all claims, cost, charges or damages in this respect.”
4. Clause 41.14 of the License Agreement is a part of security considerations.
The objective of this clause is that the identity as well as address details of any subscriber subscribing to the services of the licensee company should be readily available in case of need. We may note that in case of a fixed phone service, the premises where the phone is installed is well known in contrast to mobile service where the subscriber can be anywhere.
