Telecommunication: Contract Act, 1872 – ss.65, 23, 56 – Unified Access Service Licenses (UASL) – 2G Spectrum – Illegal Allocation – Claim for Refund of Entry Fee – In the instant case, the appellant applied for grant of UASL for 21 service areas – In the meantime, the Court in Centre for Public Interest Litigation v Union Of India declared the policy of the Union for allocation of 2G spectrum as illegal holding that such policy was arbitrary in nature as it provided allocation on the basis of “First Come First Serve” and therefore opened the door of biasness – On the basis of the said judgment the appellant sought relief of refund of Entry Fee before the Telecom Disputes Settlement and Appellate Tribunal basing the plea that the allocation was in the nature of the contract and the same has become void in the light of the aforesaid judgment and hence the appellant is entitled to recourse u/ss.65, 23 &56 of Contract Act – The Tribunal dismissed the appellant’s plea on the ground that the quashing of the appellant’s license in the aforesaid judgment cannot be equated with the UASL agreement becoming void within the meaning of s.65 and also that the same has not become void u/ss.23 and 56 of the Act – The tribunal further held that since the appellant was at pari delicto hence could not claim refund of Entry Fee – On appeal, held – The appellant was in pari delicto with the Department of Telecommunication, the 2G spectrum allocation exercise of which was held illegal, arbitrary and constitutionally infirm by the court in the above referred judgment – Further since the appellant was at fault hence could not claim recourse to s. 65 of the Act – Also that the appellant was party in the above referred case and despite knowing the fact that the Court in such case was to quash the process of allocation and award of the licenses in which it did not claim refund of Entry Fee and hence could not be allowed to raise such plea in the present case. Telecom Regulatory Authority of India Act 1997: ss.14, 15, 16, 18 – Telecom Disputes Settlement and Appellate Tribunal – Jurisdiction – Scope and Extent – The jurisdiction of civil courts has been ousted by s.15 – s.16 enables the TDSAT to regulate its own procedure, guided by the principles of natural justice – An appeal on a substantial question of law lies to Supreme Court under s.18 of the TRAI Act – TDSAT was a creature of statute and was empowered to determine its jurisdiction, subject to the constraints stipulated in the statute – s.14, as such, does not put any constraints on the jurisdiction of the TDSAT – Telecommunication. Contract Act, 1872 – ss. 20, 56, 65 – Scope – The expression “discovered to be void” u/s.20 comprehend a situation in which parties were suffering from a mistake of fact from the very beginning but had not realized at the time of entering into the agreement or signing of the documents that they were suffering from any such mistake and had therefore acted bona fide while entering into such agreements – The word “impossible” u/s 56 has to be construed in its practical sense and not just in its literal sense – s.65 does not operate in derogation of the maxim in pari delicto potior est conditio possidentis – The application of s.65 has to be limited to those cases were the party claiming restitution itself was not in pari delicto. Dismissing the appeals, the Court
HELD: 1. The decision of this Court in CPIL, which was rendered on 2 February 2012, arose from petitions under Article
32 of the Constitution. The petitions questioned the grant of UASLs to the private respondents in those proceedings (which included the appellant), on the ground that the procedure which was adopted by DoT was arbitrary, illegal and in violation of Article
14 of the Constitution. This Court held that an auction conducted after due publicity was perhaps the best method for fulfilling the constitutional requirement of preserving equity in the alienation of natural resources. In the absence of such a mechanism, this Court held that alienation of natural resources/public property is likely to be misused by unscrupulous people who are only interested in garnering maximum financial benefit and have no respect for constitutional ethos and values. This Court found that everything was stage-managed to favour of those who were able to AND ANR.
know in advance the change in the implementation of the first-comefirst served policy. [Paras 12, 15, 17][350-F-G; 352-G-H; 355-F]
2. Reading the judgment in CPIL, it is impossible to accept the submission that the fraud in the- First Come First Serve policy lay at the doorstep of the Union government alone and that the appellant was free from taint or wrong doing. The decision of this Court held that the - First Come First Serve policy was writ large with arbitrariness, and was intended to favour certain specific entities at a grave detriment to the public exchequer. Undoubtedly, the authors of the First Come First Serve policy were the official actors comprised within the Union government. But equally, the decision did not exculpate the private business entities who obtained UASLs and became the beneficiaries of their decision. The decision of this Court concludes in no uncertain terms that the then Minister of Communications and Information Technology wanted to favour of some companies at the cost of the public exchequer, and that as a matter of fact the entire process was ¯stage-managed to favour those who had access to the nitty-gritties of the policy in advance. As a result, the Court found that companies which had submitted applications in 2004 or 2006 were side-lined by favouring those who had applied between August and September 2007 and who ¯succeeded in getting higher seniority entitling them to allocation of spectrum on priority basis. The beneficiaries of the patently unconstitutional mechanism deployed for the allocation of spectrum were corporate entities who were favoured under the ¯First Come First Serve policy. The appellant is one of them. The distinction made by the judgment of this Court between the three licensees who were subjected to costs of Rs 5 crores and four licensees, including the appellant, who were subject to costs of Rs 50 lakhs was because in the case of a former their stakes had been offloaded ostensibly in the name of a fresh infusion or transfer of equity. However, it is evident that all these licensees were complicit in the illegal exercise of obtaining favours for themselves by the indulgence of those in power. That, above all, was the foundation of the decision in CPIL and the justification for quashing licences and the allocation of the 2G spectrum. This Court then directed the TRAI to frame fresh recommendations for the grant of licences and for the allocation of spectrum in the 2G band in twenty-two service areas by auction, as was done for the allocation of spectrum in the 3G band. Thus, the decision in CPIL leaves no manner of doubt that the appellant was in pari delicto along with the Union government. [Paras 18, 20][357-A-E, G-H; 358-A-C]
Centre for Public Interest Litigation v. Union of India (2012) 3 SCC 1 : [2012] 3 SCR 147 – relied on.
3. The appellant made no effort to urge during the course of the submissions before the Court in CPIL that they should be allowed a refund of Entry Fee in the event that the Court were to quash the process and the award of licences. Significantly, the appellant did not seek the permission of this Court at that stage to reserve their liberties of agitating a claim for refund of Entry Fee in separate proceedings. Besides having such a course of action open to them before the judgment was delivered, the appellants had their remedies open in law even after the decision by seeking liberty of adopting independent proceedings for agitating the refund of the Entry Fee. Not having done this at any stage in, or in connection with, the proceedings relating to the decision in CPIL, the appellant cannot be permitted to do so subsequently. [Para 37][371-E-G]
4. The TRAI Act governs the functioning of the TDSAT. The jurisdiction of civil courts has been ousted by Section 15. Section 16 enables the TDSAT to regulate its own procedure, guided by the principles of natural justice. An appeal on a substantial question of law lies to this Court under Section 18 of the TRAI Act. Section 14(a) of the TRAI Act empowers the TDSAT to adjudicate any dispute: (i)Between a licensor and licensee; (ii)Between two or more service providers; and (iii)Between a service provider and a group of consumers. [Paras
26 and 27][361-B-D]
Cellular Operators Association of India v. Union of India (2003) 3 SCC 186 : [2002] 5 Suppl. SCR 222; Union of India v. TATA Teleservices (Maharashtra Ltd) (2007) 7 SCC 517 : [2007] 9 SCR 285 - relied on. AND ANR.
5. In Tarsem Singh, this Court was confronted with a contract being void under Section 20 of the Indian Contract Act as the parties were under a mistake of fact regarding the metric for assessing the area of land that was the subject of the contract. This Court, while interpreting the expression discovered to be void , held that these words comprehend a situation in which parties were suffering from a mistake of fact from the very beginning but had not realized at the time of entering into the agreement or signing of the documents that they were suffering from any such mistake and had therefore acted bona fide while entering into such agreements. In determining a claim of restitution, the claiming party’s legal footing in relation to the illegal act (and in comparison to the defendant) must be understood. Unless the party claiming restitution participated in the illegal act involuntarily or the rule of law offers them protection against the defendant, they would be held to be in pari delicto and therefore, their claim for restitution will fail. In adjudicating a claim of restitution under Section 65 of the Indian Contract Act, the court must determine the illegality which caused the contract to become void and the role the party claiming restitution has played in it. If the party claiming restitution was equally or more responsible for the illegality (in comparison to the defendant), there shall be no cause for restitution. This has to be determined on the facts of each individual case. [Paras 43, 48, 52][375-A-C; 378-B-C; 382-E-F]
Tarsem Singh v. Sukhmindar Singh (1998) 3 SCC 471; Kuju Collieries Ltd. v. Jharkhand Mines Ltd. (1974) 2 SCC 533 : [1975] 1 SCR 703; Inmani Appa Rao v. Gollapalli Ramalingamurthi [1962] 3 SCR 739;
Narayanamma v. Govindappa 2019 (19) SCC 42;
Satyabrata Ghose v. Mugneeram Bangur & Co. [1954] SCR 310 – relied on.
6. The appellant was in pari delicto with DoT and the then officials of the Union government. The appellant was the beneficiary of the First Come First Serve policy which was intended to favour a group of private bidding entities at the cost of the public exchequer. The contention of the appellant that it was exculpated from any wrong doing by the judgment of this Court in CPIL is patently erroneous. The process leading up to the award of the UASLs and the allocation of the 2G spectrum was found to be arbitrary and constitutionally infirm. The need for an open and transparent bidding process for the allocation of natural resources was substituted by a process which was designed to confer unlawful benefits on a group of selected bidders by which the appellant benefitted. The appellant has tried to obviate these findings by relying on its acquittal by the Special Judge, CBI. The criminal trial before the Special Judge, CBI was limited to the question as to whether the promoters of the appellant had cheated the DoT by providing a false representation of its compliance with Clause 8 of the UASL Guidelines, since it was allegedly being controlled by the Essar group. The Special Judge, CBI acquitted the promoters of the appellant since the prosecution was unable to prove that: (i) officers of DoT considered the representation of the appellant to be false; (ii) the appellant was engaging in a sham transaction; or (iii) the appellant was actually controlled by the Essar group. Hence, the acquittal of the promoters of the appellant of these criminal charges does not efface or obliterate the findings which are contained in the final judgment of this Court in CPIL. Hence, as a beneficiary and confederate of fraud, the appellant cannot be lent the assistance of this Court for obtaining the refund of the Entry Fee. In any event, such a course of action before the TDSAT was clearly in the teeth of the judgment of this Court in CPIL. [Para 60][387-F-H; 388-A-D]
Union of India v. Telecom Regulatory Authority of India (1998) 46 DRJ 557; Tarsem Singh v. Sukhminder Singh 1998 (3) SCC 471 : [1998] 1 SCR 456; Vedanta Ltd. v. The Goa Foundation & Ors. Review Petition (Civil) Diary No. 18447 of 2020 (9 July 2021); Goa Foundation v. Sesa Sterlite Limited & Ors. (2018) 4 SCC 218 : [2018] 2 SCR 361; T P Moideen Koya v. Government of Kerala (2004) 8 SCC 106 : [2004] 4 Suppl. SCR 904; AND ANR.
R K Garg v. Union of India (1981) 4 SCC 675 : [1982]
1 SCR 947 – relied on.
S Tel Pvt. Ltd. v. Union of India 2015 SCC OnLine TDSAT 1 – distinguished.
Union of India v. Karam Chand Thapar and Bros. (Coal Sales) Ltd. (2004) 3 SCC 504 : [2004] 2 SCR 997; Union of India v. AUSPI 5 (2011) 10 SCC 534 – referred to.
Patel v. Mirza [2016] 3 WLR 399; Holman v. Johnson (1775) 1 Cowp 341, 343; 98 ER 1120, 1121 – referred to.
R Yashod Vardhan and Chitra Narayan, Pollock & Mulla The Indian Contract and Specific Relief Acts Volume I (16th edition, LexisNexis) – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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