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2016 Supreme(Online)(TDSAT) 13
TELECOM DISPUTES SETTLEMENT AND APPELLATE TRIBUNAL
Aftab Alam, CJ, Dr. Kuldip Singh, J, Mr. Bipin Bihari Srivastava, J
Reliance Telecom Ltd. – Appellant
Versus
Union of India – Respondent
Petition No. 158 of 2013
For the Appellants/Petitioners: Mr. Navin Chawla, Mr. Santosh Sachin
For the Respondents: Mr. S.S. Shamshery, Mr. Vikas Malik
Telecom service providers' penalties for CAF violations cannot impose excessive interest pending proper recalculation based on representations and legal guidelines.
Headnote:(A) Indian Telegraph Act, 1885 - Section 4 - Interest on penalties levied for violation of subscriber verification norms - Petitioner, a telecom service provider, challenges imposition of Rs. 9,19,06,263/- interest on delayed payments of penalties imposed for non-compliance with guidelines. Circulars indicated penalties should be recalculated post-judgment. The petitioner acted bona fide, and interest is deemed excessive given the tribunal’s prior judgments. (Paras 18, 27, 32)
(B) Authority to levy penalties - The tribunal recognizes the right of service providers to appeal penalties. Any delay must not incur interest pending resolution of representation since penalties must be based on accurate recalculated demands. Assessment of penalties deemed to be against public policy as held by a High Court. (Paras 25, 29)
Facts of the case:
This petition involves a telecom service provider contesting penalties for not adhering to subscriber verification norms. The penalties and calculations considered extend over several months, and the petitioner urged corrections based on circulars and tribunal judgments.
Findings of Court:
The tribunal concluded interest demanded is unjustified until proper recalculations based on representations were made by the respondent. The petitioner is liable for a minor amount with 9% interest effective from a specific date.
Issues: The tribunal addressed the legality of penalties imposed for CAF violations and the proper authority to recalibrate such penalties. The implications of previous judgments intersecting with the current demands raised crucial questions.
Ratio Decidendi: The tribunal underscored the essential nature of services and the necessity for accurate verification norms while also ascertaining the limits of interest on penalties contingent on revised assessments as discussed in earlier judgments. Such recalibrations must be adhered to before imposing extensive interest rates.
Result: Tribunal refrains from any orders related to penalties until further clarity is obtained on the licensor's rights under public policy, pending resolution of representations on specific demand notices.
ORDER
Kuldip Singh:
The short question that arises for consideration in this petition is in regard to the interest levied on penalties, imposed on the petitioner, for violation of the norms related to verification of Customer Application Forms (CAFs).
The petitioner is a telecom service provider. It has been granted license under section 4 of the Indian Telegraph Act , 1885 to provide mobile telephone services in Madhya Pradesh Telecom Circle.
This Tribunal has examined the customer verification process in detail in its judgment dated July, 2, 2014 in petition no. 48 of 2012. Paras 4 and 5 of this judgment are as under:
5. Department of Telecommunications (DoT)-Union of India has been issuing instructions from time to time for compliance with clause 41.14 of the license. It has also provided for a scheme of financial penalty for violation of terms &conditions of the license agreement in respect of subscriber verification. The Department has also been carrying out the audit of the licensees to ensure their compliance with the instructions issued from time to time. Vide letter dated
01.6.2010 the work relating to imposition of penalty has been de-centralized and put on Telecom, Enforcement, Resources and Monitoring (TERM) Cells set up
under DOT in various license areas.
Subscribers, while subscribing to the services of a licensee, are required to complete a form which is called as the ‘Customer Acquisition Form (CAF)’. The subscribers are also required to submit the proof of identity as well as proof of address, for which certain documents specified by the Department of Telecommunications (DoT) are to be provided. Licensees are also required to follow the guidelines issued in this regard from time to time. To ensure compliance with the instructions in this regard, TERM Cell of the concerned service area conducts monthly audits of the licensees on sample basis. On the total subscriber base of the licensee in that service area, a sample of one percent of the subscribers at random is taken and the licensee is asked to provide copies of the CAF Forms of the subscribers. These copies of CAF forms are checked for compliance with the instructions and guidelines issued from time to time and in cases of non- compliance, the licensees are given a week’s time to discuss the cases and make available the original CAFs. The initial report indicating the findings about compliance/non-compliance is also provided to the licensee. Based on the discussions with the service provider (licensee), the report is finalized and jointly signed by both. Based on this final report, the amounts of penalty are calculated in accordance with the telescopic rate that provide for increasing amounts of penalties for higher percentage of non- compliance. The service provider, if he so desires can make a representation to the Deputy Director General (DDG), TERM whose decision is final.”
The facts of the present case are brief. The respondent imposed penalties on the petitioner for violation of guidelines relating to subscriber verification from time to time. The details of the penalties
