Refused to refund the excess amounts. -The Union’s argument that there were subsequent defaults or short payments in respect of liability towards later periods, or its objection that the impugned directions could not have been issued in execution proceedings, are insubstantial. As noticed earlier, the bank guarantees for the later periods were furnished by the respondents (to the extent of 774.25 crores).
On a recapitulation of all circumstances, and the various terms of NIA 2013 and
NIA 2015, this court is of the opinion that the order of the TDSAT does not call for any
interference.
The Union nowhere disputes that the respondent licensees’ liability toward
payment of deferred spectrum charges, in May, 2018, was to the tune of 774.25 crores. ₹
The total amount realized upon encashment of the bank guarantees furnished by the
respondents, however, was to the extent of 908.91 crores.
It is also a matter of record ₹ that the respondents furnished another bank guarantee to the tune of 774.25 crores. ₹ There is consequently logic and merit in the contention of RCL/RTL that the Union
unreasonably refused to refund the excess amounts.
The Union’s argument that there were subsequent defaults or short payments in respect of liability towards later periods, or its objection that the impugned directions could not have been issued in execution proceedings, are insubstantial. As noticed earlier, the bank guarantees for the later
periods were furnished by the respondents (to the extent of 774.25 crores).
In these ₹ circumstances, there is no rationale for the Union to resist the demand for refund of
excess amounts. The TDSAT, in the opinion of this court, exercised its discretion, with
respect, circumspectly, because the entire amount of 134.66 crores claimed in the ₹
application was not allowed; rather the direction issued was in respect of 104. 34 ₹
crores.
1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No. 32 OF 2020
(ARISING OUT OF SPECIAL LEAVE PETITION (C) NO. 15972 OF 2019)
UNION OF INDIA ...APPELLANT(S)
VERSUS
RELIANCE COMMUNICATION
LIMITED & ANR. ...RESPONDENT(S)
J U D G M E N T
S. RAVINDRA BHAT, J.
1. Leave granted. With the consent of the learned counsel for the parties, the appeal
was heard finally. The appellant/Union of India (hereafter referred to as “the Union”) is
aggrieved by a direction of the Telecom Disputes Settlement and Appellate Tribunal
(hereafter referred to as “TDSAT” or the “Tribunal”) to return 104.34 crores lying ₹
unadjusted, to the respondents (collectively hereafter referred to as “RCL/RTL”).
2. The facts necessary for this judgment are that the Union had, on 30.01.2013,
published a notice inviting bids (hereafter referred to as “NIA 2013”), for the auction of
spectrum. Sistema Shyam Teleservices Ltd. (hereafter referred to as “Sistema”) was the
successful applicant in respect of the 800 MHz band spectrum for eight circles/regions.
By orders of the court, a Scheme for Amalgamation under the erstwhile Companies Act,
1956 was approved, by virtue of which Sistema merged with RCL. Resultantly, its assets
2
and liabilities, including the spectrum license it had successfully bid for – to NIA 2013
devolved on RCL. The Union approved this transfer on 20.10.2017.
3. The Union invited bids for auction of further spectrum bandwidth in 2015; the
bids of RCL and the second appellant (hereafter “RTL”) were successful in respect of
three kinds of spectrum in several regions/circles; licenses were issued to them. In terms
of NIA 2013, the third instalment of deferred spectrum charges of 281.45 crores fell ₹
due from RCL, which could not be paid by it. This led to the encashment on 11.05.2018,
of bank guarantees furnished, to the extent of 281.45 crores. The total extent of bank ₹
guarantee furnished was 390.41 crores. Contemporaneously, the deferred spectrum ₹
liability under the NIA 2015 @ 492.79 crores became payable on 09.04.2018. The ₹
respondents (RCL and RTL) could not pay these charges. Consequently, the Union encashed 492.79 crores out of the bank guarantees furnished. ₹
4. RCL and RTL apparently along with several other telecom service providers faced
acute economic problems which led to the Union revisiting certain issues and modifying
the payment periods/terms towards deferred spectrum charges, in regard to subsisting
spectrum licenses. Accordingly, letters containing such modified terms were issued on
19.03.2018. These facts, coupled with the other financial problems faced by the
respondents, leading to their adopting a strategic debt restructuring scheme with their
lender banks in accordance with the guidelines issued by the RBI were mentioned by
them; Formation of a joint-lenders forum (JLFs) with the objective of realizing dues
payable by RCL and RTL, (to the tune of 45,000 crores) are cited by the respondents ₹
as reasons for default in fulfilling the commitments under the licenses. It is also stated
that these two respondents eventually decided to exit from the strategic debt
restructuring framework and monetize their assets, including the spectrum licenses.
These circumstances led the respondents (RCL and RTL) to approach TDSAT
complaining of acute financial crunch as well as interim orders made in the course of
litigation with lenders, to seek relief by way of extension of time towards payment of
3
deferred spectrum charges, (under the licenses acquired under the NIA 2013 and NIA
2015). The reliefs claimed in TP 56/2018 and TP 58/2018 were declined by TDSAT.
Consequently, Civil Appeal No.4432-4433/2018 was preferred to this court which was
disposed of by granting time to the respondent licensees till 12.05.2018 for making
payments towards deferred spectrum instalment charges.
5. As narrated previously, these deferred instalment charges could not be made
within the time granted; consequently, the Union encashed bank guarantees to the tune
of 908.91 crores as against the actual amount of 774.25 crores due and payable by ₹ ₹
the respondent licensees. On 13.08.2018, the respondent licensees submitted fresh bank
guarantees for the sum of 774.25 crores towards the next instalments of deferred ₹
spectrum liability. They also urged to release the excess of 134.66 crores encashment ₹
(i.e. the difference between the amount of 908.91 crores against admitted dues of ₹ ₹
774.25 crores). The Union had accepted fresh bank guarantees towards the subsequent
spectrum liability ( 774.25 crores). The Union however, did not refund the excess ₹
sums. As a consequence, the respondents approached the TDSAT in execution
proceedings and sought a direction for the return of 134.66 crores, i.e. the excess ₹
amounts and also the release of the bank guarantee amounting to 108.95 crores. ₹
6. The Union disputed its liability before the TDSAT and relied upon Para 4.5b(x) of
the NIA 2015 and also alleged that default interest was payable and furthermore, that
RCL had defaulted in payment of spectrum instalment to the tune of 795.77 crores in ₹
March-April 2019.
7. The TDSAT, by its impugned order, partly allowed the respondent’s application
after noting the Union’s reservations and objections. The TDSAT observed as follows:
“In our considered view the request of the respondent would amount to a
demand for enhanced bank guarantee for other purposes. This cannot be
achieved through the method of encashment of bank guarantees furnished for
deferred Spectrum Charges.
4
The existing charges against the petitioner have already been taken
note of and an amount of Rs.30.33 crores approx. has been adjusted out of the
encashed amount of Rs.908 crores. The remaining amount of Rs.104.34 crores
is lying and unadjusted amount should be returned to the petitioner without
prejudice to the rights of either of the parties for any other charges which the
petitioner may be found to be liable to pay. Since the petitioner has
reservations against the adjusted amount of Rs.30.33 crores, it may file its
reply by way of rejoinder within three weeks.
Post the matter under the same head on 29.1.2019.”
8. The Union contends that TDSAT’s impugned order is contrary to clause 4.5b(ix)
of NIA 2013 under the corresponding provision, i.e. Clause 4.5b(x) of NIA 2015 as well
as other conditions such as clauses 13.1 and 13.2 of the license agreement. It further
contends that the respondents could not have been granted relief given the fact that they
went into liquidation and were continuously defaulting in spectrum deferred payments;
the Union also cites the default to the extent of 21.53 crores – with overdue interest ₹
amount working out to 27.63 crores as on 03.03.2019. It, therefore, contended that the ₹
question of refund of excess amounts retained could not arise. It was lastly contended
that in any case, these issues could not have been gone in execution proceedings but
were properly the subject matter of substantive proceedings.
9. The respondents argue that the Union’s refusal to refund the money amounts to its
unjust enrichment at their cost. The Union has no right over the excess money directed
to be refunded by the Tribunal. It is submitted that despite the directions of the TDSAT,
the Union has refused to refund the money. It is further submitted that encashment of the
bank guarantees in respect of the subsequent default of the deferred spectrum
instalments for the year 2019 was stayed by the NCLAT (National Company Law
Appellate Tribunal). Thereafter, the moratorium was revived qua the Respondents and
therefore, the appropriate remedy available to the Union was under the IBC (Insolvency
5
and Bankruptcy Code). The Union, it is stated, has already filed its claim before the
resolution professional for the said deferred spectrum instalments for the year 2019.
Therefore, it cannot be permitted to claim adjustment of the unlawfully encashed
amount towards subsequent deferred spectrum liabilities. The respondents also urge that
a subsequent default of the deferred spectrum instalment for the year 2019, is a separate
cause of action and the Union has remedies in law to recover those so called dues. It
cannot arbitrarily and illegally withhold return of excess amount, despite there being a
judicial order to the effect.
10. The facts narrated above show that the respondent-licencees faced financial
constraints; apparently telecom service providers as a class also faced some financial
stress, which triggered the Union to revisit its policy and ultimately modify the terms of
payment of deferred payment charges and consequently, the letter of 19.03.2018.
Despite these, the respondent licensees could not fulfil the conditions of the licenses
held by them (i.e. NIA 2013 and NIA 2015) vis-à-vis payment of deferred spectrum
charges; they approached the TDSAT, but without success. Their appeals to this court
fared better; the time for making payment was extended somewhat. Upon default (in
payment of the charges), the Union invoked guarantees under the sets of licenses. The
respondent licencees pointed out to the Union repeatedly, that despite the furnishing of
requisite guarantees (to the extent of 774.25 crores) later (on 19 ₹
th August, 2018) the excess amounts i.e. amount after adjusting the invoked guarantees towards the deferred charges had to be refunded. The Union did not do so; consequently RCL/RTL
approached TDSAT for a direction in execution proceedings. Their claim was accepted
inasmuch as the impugned direction was issued.
11. On a recapitulation of all circumstances, and the various terms of NIA 2013 and
NIA 2015, this court is of the opinion that the order of the TDSAT does not call for any
interference. The Union nowhere disputes that the respondent licensees’ liability toward
payment of deferred spectrum charges, in May, 2018, was to the tune of 774.25 crores. ₹
6
The total amount realized upon encashment of the bank guarantees furnished by the
respondents, however, was to the extent of 908.91 crores. It is also a matter of record ₹
that the respondents furnished another bank guarantee to the tune of 774.25 crores. ₹
There is consequently logic and merit in the contention of RCL/RTL that the Union
unreasonably refused to refund the excess amounts. The Union’s argument that there
were subsequent defaults or short payments in respect of liability towards later periods,
or its objection that the impugned directions could not have been issued in execution
proceedings, are insubstantial. As noticed earlier, the bank guarantees for the later
periods were furnished by the respondents (to the extent of 774.25 crores). In these ₹
circumstances, there is no rationale for the Union to resist the demand for refund of
excess amounts. The TDSAT, in the opinion of this court, exercised its discretion, with
respect, circumspectly, because the entire amount of 134.66 crores claimed in the ₹
application was not allowed; rather the direction issued was in respect of 104. 34 ₹
crores.
12. In view of the foregoing discussion, it is held that there is no merit in the present
appeal, which is dismissed without costs.
.…....................…….....................J.
[R. F. NARIMAN]
………….......................................J.
[S. RAVINDRA BHAT]
New Delhi,
January 7, 2020.
On a recapitulation of all circumstances, and the various terms of NIA 2013 and
NIA 2015, this court is of the opinion that the order of the TDSAT does not call for any
interference.
The Union nowhere disputes that the respondent licensees’ liability toward
payment of deferred spectrum charges, in May, 2018, was to the tune of 774.25 crores. ₹
The total amount realized upon encashment of the bank guarantees furnished by the
respondents, however, was to the extent of 908.91 crores.
It is also a matter of record ₹ that the respondents furnished another bank guarantee to the tune of 774.25 crores. ₹ There is consequently logic and merit in the contention of RCL/RTL that the Union
unreasonably refused to refund the excess amounts.
The Union’s argument that there were subsequent defaults or short payments in respect of liability towards later periods, or its objection that the impugned directions could not have been issued in execution proceedings, are insubstantial. As noticed earlier, the bank guarantees for the later
periods were furnished by the respondents (to the extent of 774.25 crores).
In these ₹ circumstances, there is no rationale for the Union to resist the demand for refund of
excess amounts. The TDSAT, in the opinion of this court, exercised its discretion, with
respect, circumspectly, because the entire amount of 134.66 crores claimed in the ₹
application was not allowed; rather the direction issued was in respect of 104. 34 ₹
crores.
1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No. 32 OF 2020
(ARISING OUT OF SPECIAL LEAVE PETITION (C) NO. 15972 OF 2019)
UNION OF INDIA ...APPELLANT(S)
VERSUS
RELIANCE COMMUNICATION
LIMITED & ANR. ...RESPONDENT(S)
J U D G M E N T
S. RAVINDRA BHAT, J.
1. Leave granted. With the consent of the learned counsel for the parties, the appeal
was heard finally. The appellant/Union of India (hereafter referred to as “the Union”) is
aggrieved by a direction of the Telecom Disputes Settlement and Appellate Tribunal
(hereafter referred to as “TDSAT” or the “Tribunal”) to return 104.34 crores lying ₹
unadjusted, to the respondents (collectively hereafter referred to as “RCL/RTL”).
2. The facts necessary for this judgment are that the Union had, on 30.01.2013,
published a notice inviting bids (hereafter referred to as “NIA 2013”), for the auction of
spectrum. Sistema Shyam Teleservices Ltd. (hereafter referred to as “Sistema”) was the
successful applicant in respect of the 800 MHz band spectrum for eight circles/regions.
By orders of the court, a Scheme for Amalgamation under the erstwhile Companies Act,
1956 was approved, by virtue of which Sistema merged with RCL. Resultantly, its assets
2
and liabilities, including the spectrum license it had successfully bid for – to NIA 2013
devolved on RCL. The Union approved this transfer on 20.10.2017.
3. The Union invited bids for auction of further spectrum bandwidth in 2015; the
bids of RCL and the second appellant (hereafter “RTL”) were successful in respect of
three kinds of spectrum in several regions/circles; licenses were issued to them. In terms
of NIA 2013, the third instalment of deferred spectrum charges of 281.45 crores fell ₹
due from RCL, which could not be paid by it. This led to the encashment on 11.05.2018,
of bank guarantees furnished, to the extent of 281.45 crores. The total extent of bank ₹
guarantee furnished was 390.41 crores. Contemporaneously, the deferred spectrum ₹
liability under the NIA 2015 @ 492.79 crores became payable on 09.04.2018. The ₹
respondents (RCL and RTL) could not pay these charges. Consequently, the Union encashed 492.79 crores out of the bank guarantees furnished. ₹
4. RCL and RTL apparently along with several other telecom service providers faced
acute economic problems which led to the Union revisiting certain issues and modifying
the payment periods/terms towards deferred spectrum charges, in regard to subsisting
spectrum licenses. Accordingly, letters containing such modified terms were issued on
19.03.2018. These facts, coupled with the other financial problems faced by the
respondents, leading to their adopting a strategic debt restructuring scheme with their
lender banks in accordance with the guidelines issued by the RBI were mentioned by
them; Formation of a joint-lenders forum (JLFs) with the objective of realizing dues
payable by RCL and RTL, (to the tune of 45,000 crores) are cited by the respondents ₹
as reasons for default in fulfilling the commitments under the licenses. It is also stated
that these two respondents eventually decided to exit from the strategic debt
restructuring framework and monetize their assets, including the spectrum licenses.
These circumstances led the respondents (RCL and RTL) to approach TDSAT
complaining of acute financial crunch as well as interim orders made in the course of
litigation with lenders, to seek relief by way of extension of time towards payment of
3
deferred spectrum charges, (under the licenses acquired under the NIA 2013 and NIA
2015). The reliefs claimed in TP 56/2018 and TP 58/2018 were declined by TDSAT.
Consequently, Civil Appeal No.4432-4433/2018 was preferred to this court which was
disposed of by granting time to the respondent licensees till 12.05.2018 for making
payments towards deferred spectrum instalment charges.
5. As narrated previously, these deferred instalment charges could not be made
within the time granted; consequently, the Union encashed bank guarantees to the tune
of 908.91 crores as against the actual amount of 774.25 crores due and payable by ₹ ₹
the respondent licensees. On 13.08.2018, the respondent licensees submitted fresh bank
guarantees for the sum of 774.25 crores towards the next instalments of deferred ₹
spectrum liability. They also urged to release the excess of 134.66 crores encashment ₹
(i.e. the difference between the amount of 908.91 crores against admitted dues of ₹ ₹
774.25 crores). The Union had accepted fresh bank guarantees towards the subsequent
spectrum liability ( 774.25 crores). The Union however, did not refund the excess ₹
sums. As a consequence, the respondents approached the TDSAT in execution
proceedings and sought a direction for the return of 134.66 crores, i.e. the excess ₹
amounts and also the release of the bank guarantee amounting to 108.95 crores. ₹
6. The Union disputed its liability before the TDSAT and relied upon Para 4.5b(x) of
the NIA 2015 and also alleged that default interest was payable and furthermore, that
RCL had defaulted in payment of spectrum instalment to the tune of 795.77 crores in ₹
March-April 2019.
7. The TDSAT, by its impugned order, partly allowed the respondent’s application
after noting the Union’s reservations and objections. The TDSAT observed as follows:
“In our considered view the request of the respondent would amount to a
demand for enhanced bank guarantee for other purposes. This cannot be
achieved through the method of encashment of bank guarantees furnished for
deferred Spectrum Charges.
4
The existing charges against the petitioner have already been taken
note of and an amount of Rs.30.33 crores approx. has been adjusted out of the
encashed amount of Rs.908 crores. The remaining amount of Rs.104.34 crores
is lying and unadjusted amount should be returned to the petitioner without
prejudice to the rights of either of the parties for any other charges which the
petitioner may be found to be liable to pay. Since the petitioner has
reservations against the adjusted amount of Rs.30.33 crores, it may file its
reply by way of rejoinder within three weeks.
Post the matter under the same head on 29.1.2019.”
8. The Union contends that TDSAT’s impugned order is contrary to clause 4.5b(ix)
of NIA 2013 under the corresponding provision, i.e. Clause 4.5b(x) of NIA 2015 as well
as other conditions such as clauses 13.1 and 13.2 of the license agreement. It further
contends that the respondents could not have been granted relief given the fact that they
went into liquidation and were continuously defaulting in spectrum deferred payments;
the Union also cites the default to the extent of 21.53 crores – with overdue interest ₹
amount working out to 27.63 crores as on 03.03.2019. It, therefore, contended that the ₹
question of refund of excess amounts retained could not arise. It was lastly contended
that in any case, these issues could not have been gone in execution proceedings but
were properly the subject matter of substantive proceedings.
9. The respondents argue that the Union’s refusal to refund the money amounts to its
unjust enrichment at their cost. The Union has no right over the excess money directed
to be refunded by the Tribunal. It is submitted that despite the directions of the TDSAT,
the Union has refused to refund the money. It is further submitted that encashment of the
bank guarantees in respect of the subsequent default of the deferred spectrum
instalments for the year 2019 was stayed by the NCLAT (National Company Law
Appellate Tribunal). Thereafter, the moratorium was revived qua the Respondents and
therefore, the appropriate remedy available to the Union was under the IBC (Insolvency
5
and Bankruptcy Code). The Union, it is stated, has already filed its claim before the
resolution professional for the said deferred spectrum instalments for the year 2019.
Therefore, it cannot be permitted to claim adjustment of the unlawfully encashed
amount towards subsequent deferred spectrum liabilities. The respondents also urge that
a subsequent default of the deferred spectrum instalment for the year 2019, is a separate
cause of action and the Union has remedies in law to recover those so called dues. It
cannot arbitrarily and illegally withhold return of excess amount, despite there being a
judicial order to the effect.
10. The facts narrated above show that the respondent-licencees faced financial
constraints; apparently telecom service providers as a class also faced some financial
stress, which triggered the Union to revisit its policy and ultimately modify the terms of
payment of deferred payment charges and consequently, the letter of 19.03.2018.
Despite these, the respondent licensees could not fulfil the conditions of the licenses
held by them (i.e. NIA 2013 and NIA 2015) vis-à-vis payment of deferred spectrum
charges; they approached the TDSAT, but without success. Their appeals to this court
fared better; the time for making payment was extended somewhat. Upon default (in
payment of the charges), the Union invoked guarantees under the sets of licenses. The
respondent licencees pointed out to the Union repeatedly, that despite the furnishing of
requisite guarantees (to the extent of 774.25 crores) later (on 19 ₹
th August, 2018) the excess amounts i.e. amount after adjusting the invoked guarantees towards the deferred charges had to be refunded. The Union did not do so; consequently RCL/RTL
approached TDSAT for a direction in execution proceedings. Their claim was accepted
inasmuch as the impugned direction was issued.
11. On a recapitulation of all circumstances, and the various terms of NIA 2013 and
NIA 2015, this court is of the opinion that the order of the TDSAT does not call for any
interference. The Union nowhere disputes that the respondent licensees’ liability toward
payment of deferred spectrum charges, in May, 2018, was to the tune of 774.25 crores. ₹
6
The total amount realized upon encashment of the bank guarantees furnished by the
respondents, however, was to the extent of 908.91 crores. It is also a matter of record ₹
that the respondents furnished another bank guarantee to the tune of 774.25 crores. ₹
There is consequently logic and merit in the contention of RCL/RTL that the Union
unreasonably refused to refund the excess amounts. The Union’s argument that there
were subsequent defaults or short payments in respect of liability towards later periods,
or its objection that the impugned directions could not have been issued in execution
proceedings, are insubstantial. As noticed earlier, the bank guarantees for the later
periods were furnished by the respondents (to the extent of 774.25 crores). In these ₹
circumstances, there is no rationale for the Union to resist the demand for refund of
excess amounts. The TDSAT, in the opinion of this court, exercised its discretion, with
respect, circumspectly, because the entire amount of 134.66 crores claimed in the ₹
application was not allowed; rather the direction issued was in respect of 104. 34 ₹
crores.
12. In view of the foregoing discussion, it is held that there is no merit in the present
appeal, which is dismissed without costs.
.…....................…….....................J.
[R. F. NARIMAN]
………….......................................J.
[S. RAVINDRA BHAT]
New Delhi,
January 7, 2020.
