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MANIK KARANJAWALA

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SUPREME COURT OF INDIA

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CASE NO.:

Appeal (civil) 1033 of 2004

PETITIONER:

UNION OF INDIA

RESPONDENT:

TATA TELESERVICES (MAHARASHTRA) LTD

DATE OF JUDGMENT: 23/08/2007

BENCH:

H.K. SEMA & P.K. BALASUBRAMANYAN

JUDGMENT:

J U D G M E N T

P.K. BALASUBRAMANYAN, J.

1. This appeal by the Union of India, the respondent in

a proceeding before the Telecom Disputes Settlement &

Appellate Tribunal (for short, \023the TDSAT\024) in a petition filed

by the respondent herein under Section 14 of the Telecom

Regulatory Authority of India Act, 1997 (for short \023the Act\024) is

under Section 18 of the Act. The respondent approached the

TDSAT praying for a declaration that the action of the Union

of India in raising a claim and in recovering the amount as per

its demand dated 10.8.1999, was bad in law and be set aside,

for a declaration that the set off made by invoking condition 19

of the licence the respondent had with the appellant in respect

of the Maharashtra Service Area was illegal and unauthorised

and for setting aside the same, for directing the appellant to

refund an amount of Rs.50 crores together with interest from

the date of the purported set off of that amount with the

amounts due to the respondent till the date of refund and for

other consequential and incidental reliefs. In answer, the

appellant contended that it was entitled to make the set off

and the set off made was authorised and legal and that there

is no reason to interfere with the set off and the respondent

was not entitled to the recovery of Rs.50 crores with interest

thereon. A claim that the appellant is entitled to recover as

damages from the respondent a sum of Rs.654.25 crores

towards the loss suffered by it on account of the respondent

herein failing to fulfil its obligations under the Letter of Intent

issued to it in respect of the Karnataka Telecom Circle was

also put forward. The TDSAT upheld the claim of the

respondent, rejected the claim of the appellant that it was

entitled to a legal or equitable set off of the sum of Rs.50

crores and more importantly held that it has no jurisdiction to

entertain a counter claim at the instance of the appellant. Of

course, it was also pointed out that the counter claim itself

was not properly framed and was somewhat vague. Thus the

claim of the respondent was accepted and a direction was

issued to the appellant to refund the sum of Rs.50 crores to

the respondent with interest thereon at 17 per cent per annum

from the date the said amount was appropriated by the

appellant till its payment along with costs of the proceedings.

This adjudication of the TDSAT is challenged in this appeal.

2. Section 18 of the Act provides for an appeal to this

Court from an order or decision of the TDSAT whether in

exercise of its appellate jurisdiction or in exercise of its original

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jurisdiction on one or more of the grounds specified in Section

100 of the Code of Civil Procedure. The two substantial

questions of law sought to be adjudicated on are (1) whether

the TDSAT was justified in not accepting the plea of set off

raised by the appellant and (2) whether the TDSAT has not

failed to exercise the jurisdiction vested in it by law in

declining to go into the merits of the counter claim made by

the appellant and in rejecting the same as being not

maintainable.

3. The question whether the plea of set off, whether

legal or equitable is liable to be upheld might depend on our

conclusion on the question whether a counter claim at the

instance of the Union of India in a proceeding initiated before

the TDSAT by a licensee or service provider, is maintainable.

If we hold that the counter claim is maintainable, necessarily

the same would have to be adjudicated on, on merits and the

result of such an adjudication would have impact on the plea

of set off put forwar