Vodafone had failed to comply with its obligation under the Interconnect Agreement and had routed international calls as national calls making it liable to pay damages for the loss suffered by BSNL= the core of which, insofar as BSNL is concerned, is that Tata Teleservices Limited having taken the benefit of the Circular dated 13.06.2005, (made effective from 01.05.2003) for the latter part of the period involved, its liability would accrue from the said date and the demand has been worked out on the basis that 48.9% of the calls are non-CLI calls and therefore Clause 6.4.6 would apply. It is urged that the contention of the Tata Teleservices Limited that the calls are less than 0.5% is plainly incorrect. 29. In reply, it is urged that Clause 6.4.6 of the Interconnect agreement, in the form and content in which it has been applied to the case of the respondent, was introduced by the addendum dated 01.12.2005, effective from 14.11.2003. In the present case, the alleged violation of Clause 6.4.6 is on the ground of transmitting calls without CLI. It is urged that upto the date on which Clause 6.4.6 came into operation i.e. 14.11.2003, the demand raised on the said basis is without any authority. It is further submitted that the receipt of calls without CLI having been disapproved/rejected by the TRAI and there being express directions requiring BSNL to reject such calls, the appellant cannot take advantage of its own action contrary to the directions of the Regulator i.e. TRAI. Furthermore, according to the respondent, the Circular dated 13.06.2005 prohibits BSNL to mechanically apply Clause 6.4.6 and it is only upon elimination of technical failures, incompatibility between exchanges, etc. that Clause 6.4.6 can be resorted to and that too for the period after 14.11.2003. it is the case of the appellant BSNL itself that non-CLI calls transmitted by the Tata Teleservices Limited to the BSNL network was more than 0.5% and hence Clause 6.4.6 of the Interconnect agreement would be applicable, ex facie, the demand raised for the period from May 2003 to November 2003 would be without any legal authority inasmuch as Clause 6.4.6 became a part of the Interconnect agreement between the parties with retrospective effect from 14.11.2003.In view of the aforesaid finding recorded by the learned Tribunal with which this Court is in full agreement, it will not be necessary to go into any other issue so far as the demand for the said period is concerned. For the remaining period i.e. November, 2003 to May 2004 during which period Clause 6.4.6 was in force, the finding of the learned Tribunal that Tata Teleservices Limited should be given an opportunity and the quantum of loss suffered by B.S.N.L. should be computed accordingly would, however, require a close look. In Bharat Sanchar Nigam Ltd. Vs. Reliance Communication Limited (supra), this Court has held that Clause 6.4.6 prescribes a pre-estimate of reasonable compensation. The premise on which the learned Tribunal had held the necessity of affording an opportunity to Tata Teleservices Limited for determination of the quantum of loss suffered by BSNL for the period from November 2003 to May 2004 proceeded on the basis that Clause 6.4.6 is a penal clause As the said basis stands altered by the decision of this Court in Bharat Sanchar Nigam Ltd. vs. Reliance Communication Limited (supra), computation of liability for the period from November 2003 to May 2004, during which period Clause 6.4.6 was in operation, must necessarily be made in accordance with the terms of the said clause. The order of the learned Tribunal, therefore, to the aforesaid extent, is set aside and the appeal is partly allowed. The demand raised for the period from May 2003 to November 2003, as held earlier, shall stand set aside while for the period from 14.11.2003 to May, 2004 shall be determined in accordance with Clause 6.4.6 of the Agreement as brought into effect with retrospective effect from 14.11.2003.

                                 REPORTABLE

                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO. 8107 OF 2010

Bharat Sanchar Nigam Limited                   ...Appellant (s)

                                   Versus
Vodafone Essar Gujarat Limited                ...Respondent (s)
                                    With
                        Civil Appeal No. 8108 of 2010
                        Civil Appeal No.1105 of 2013
                        Civil Appeal No.8269 of 2010

                               J U D G M E N T

RANJAN GOGOI, J.

CIVIL APPEAL NO.8107 OF 2010

The challenge in this appeal is to a judgment  dated  11.02.2010  passed  by
the  Telecom  Disputes  Settlement  and  Appellate   Tribunal,   New   Delhi
(hereinafter referred to as the ‘Tribunal’) by which the  demand  raised  by
the appellant BSNL on the respondent, Vodafone Essar  Gujarat  Limited,  for
alleged tampering with the Caller Line Identification  (CLI)  has  been  set
aside by the learned Tribunal.
The facts in brief may be noticed at the outset.
In the year 1996 the competent authority  granted  a  license  to  one  M/s.
Fascel Limited (predecessor-in-interest of the  respondent  Vodafone)  under
Section 4(1) of the Telegraph Act, 1885.  As  the  successor-in-interest  of
Fascel Limited, the respondent entered into an Interconnect  Agreement  with
BSNL for the purpose of interconnecting its network  with  the  BSNL.  Under
the aforesaid Agreement, the respondent was liable to pay access charges  to
BSNL for calls originating from its network and terminating  in  the  BSNL’s
network. Under the Agreement there was an obligation  on  the  part  of  the
respondent to transmit the authentic CLI for the purpose of levy of  charges
in terms of Agreement. CLI essentially is the information generated  by  the
network which identifies and forwards the calling number.
It must be mentioned, at this stage, that it is during this period  of  time
that the telecommunication sector was undergoing revolutionary  changes  and
witnessing  innovations  to  deal  with  which  both   the   Department   of
Telecommunication (DoT) and the  regulatory  body  i.e.  Telecom  Regulatory
Authority of India (TRAI) had issued a series of advisories  and  regulatory
measures some of which are being indicated hereinafter.
To the issues arising in the present case would  be  relevant  the  circular
dated 23.06.2003 issued by the DoT specifying that CLI  cannot  be  tampered
in any circumstances. By the same circular the DoT also gave  directions  to
service  providers  on  how  to  prevent  tampering  of  CLI.  The   Telecom
Regulatory  Authority  of  India  (TRAI)  had  issued  a   directive   dated
24.11.2003  to  BSNL not to tamper with CLI of any call; not to offer  calls
without CLI and also not to accept any calls without CLI. This was  followed
by  a  circular  dated  20.01.2004  reiterating  the  above  directions.  In
exercise of powers under Section 36 of the TRAI  Act,  1997  the  Regulatory
Body also made a set of Regulations known as the Interconnect  Usage  Charge
Regulations, 2003 (IUC Regulations). In terms of the  IUC  Regulations,  the
service providers were to raise bills on the basis of  Call  Detail  Records
(CDR). Under the CDR based platform  in  place  of  the  earlier  prevailing
system of metered calls in which call duration  in  number  of  minutes  was
multiplied by the pulse rate per minute  applicable  for  the  trunk  group,
under the new regime, reliance was on the CLI to identify the type  of  call
and  apply  the  appropriate  rates/charges.  The  BSNL  by  circular  dated
28.01.2004 implemented the aforesaid circular dated 23.06.2003  of  the  DOT
alongwith IUC the Regulations of 2003. Clause 11 of the  aforesaid  circular
which states that calls received without CLI by BSNL  would  be  charged  at
the highest slab i.e. at the rate  of  ISD  calls,  being  relevant  to  the
issues arising, may be noticed below :
“The CLI based barring facility shall be  activated  at  the  Pols  wherever
technically feasible to ensure that the traffic handed over to  BSNL  is  in
the appropriate trunk groups only. Wherever it is technically  not  feasible
to activate CLI based barring, periodic monitoring  of  the  incoming  trunk
groups shall be done by BSNL to ensure this objective.  The  calls  received
without CLI by BSNL from various operators shall be charged at  the  highest
slab i.e. as for ISD Calls. In case such calls are received  by  BSNL  on  a
trunk group not meant for such calls then all the traffic received  on  such
trunk group   month/billing cycle shall be charged at the  rates  applicable
for IUC of incoming ISD Calls.”


According to the appellant BSNL, monitoring of  the  incoming  traffic  from
Vodafone’s network  from  various  exchanges  at  Vododara  Trunk  Automatic
Exchange revealed that  many  incoming  calls  were  actually  international
calls which were routed on the BSNL’s network as national  calls.  According
to the appellant this was done by Vodafone by tampering  with  the  CLI  and
thereby violating the terms and conditions of  the  Interconnect  Agreement.
On the said facts relying on  the  circular  dated  28.01.2004  particularly
clause 11 thereof, the  appellant  raised  a  bill  of  Rs.3,54,94,916/-  on
Vodafone at the rate of Rs.5.65 per minute  for  the  period  between  July,
2004 to September, 2004. Though the  demand  was  reiterated  from  time  to
time, issues did not get forged until BSNL  issued  a  disconnection  notice
dated 5.03.2009 prompting the respondent to move  the  Tribunal  challenging
the demand raised by the BSNL. The Tribunal, by the impugned judgment,  came
to the conclusion that the demand raised by the appellant  was  illegal  and
unjustified inasmuch as the Interconnect Agreement between the  parties  did
not carry any stipulation that in the event any invalid or tempered  CLI  is
transferred to the BSNL network, BSNL would be entitled to raise the  demand
at the highest slab rate. The  learned  Tribunal  also  held  that  the  IUC
Regulations did not contain any such provision and the same could  not  have
been so created on the basis of the  unilateral  circular  dated  28.01.2004
(Clause 11).  The Tribunal also held that the BSNL had failed  to  establish
that the respondent Vodafone by tampering  or  misusing  its  network  could
receive an international call and transfer the same to  the  BSNL’s  network
as a local call. Vodafone, it may be noticed, did not have an  International
Long Distance Operator (ILDO) Licence.
The arguments advanced on behalf  of  the  appellant  BSNL  by  the  learned
Solicitor General, in short, is  that  admittedly  Vodafone  had  failed  to
comply with its obligation under the Interconnect Agreement and  had  routed
international calls as national calls making it liable to  pay  damages  for
the loss suffered by BSNL. In this regard the learned Solicitor General  has
specifically relied on the averments made in Paragraph  1  of  the  Petition
filed by the respondent Vodafone before the Tribunal  to  contend  that  the
tempering of CLI on the basis of which demand is raised  has  been  admitted
by the respondent Vodafone. Reliance was placed  on  the  decision  of  this
Court in Bharat Sanchar Nigam Limited  Vs.  Reliance  Communication  Ltd.[1]
wherein it was held by this Court that  Clause  6.4.6  of  the  Interconnect
Agreement in the said case, which is similar to clause 11  of  the  Circular
dated 28.01.2004, was not penal in nature but a pre-estimate  of  reasonable
compensation and further that it was the duty of the  licensee  to  maintain
the  integrity  of  the  exchange/Point  of  Interconnect  (POI)  which  the
respondent Vodafone failed to honour.
In reply, Shri Navin Chawla learned counsel  appearing  for  the  respondent
submits that Vodafone  was  not  an  International  Long  Distance  Operator
(ILDO) and could not, in any way,  deliver  ISD  Calls  to  BSNL’s  network.
Learned counsel has denied that Para 1 of  the  petition  filed  before  the
Tribunal can be construed as an admission on the part  of  the  Vodafone  as
the  averments  made  therein  are  merely  to  the  effect  that   if   any
international call has been transferred to the BSNL network the  same  is  a
handiwork of miscreants. Shri Chawla has drawn the attention  of  the  court
that no specific allegations had been made that  Vodafone  was  involved  in
masking or altering CLI. Learned counsel has  further  submitted  that  BSNL
has failed to show how any such calls  could  have  been  generated  in  the
Vodafone’s network  for  being  transferred  to  the  BSNL’s  network.   The
reliance placed in Bharat Sanchar  Nigam  Ltd.  vs.  Reliance  Communication
Ltd. (supra) by the learned Solicitor General is sought to be  countered  by
Shri Chawla by contending that no clause similar  to  Clause  6.4.6  of  the
Interconnect  Agreement  in  the  said  case  exists  in  the   Interconnect
Agreement between the parties to the present case.
The short question that arises for consideration in the  above  premises  is
whether the appellant BSNL could levy the highest applicable IUC charges  on
the basis of Clause 11  of  the  circular  dated  28.01.2004.   One  of  the
recitals to the Interconnect Agreement is to the effect that  BSNL  reserves
the right to modify the  terms  and  conditions  of  the  agreement,  if  it
receives a direction from the licensor or any other competent  authority  to
that effect. The circular dated 28.01.2004, clearly,  was  not  pursuant  to
any direction from the licensor  but  was  unilaterally  issued  stipulating
that charges at the highest  applicable  rate  would  be  levied  for  calls
coming with invalid CLI. The circular dated  28.01.2004,  being  unilateral,
does not become a  part  of  the  Interconnect  Agreement  inasmuch  as  the
respondent Vodafone had consented to be bound by any additional/fresh  terms
and conditions only if the same is/are issued by the competent authority  or
pursuant to the directions of the competent authority.  Admittedly,  in  the
IUC Regulations there was no stipulation for levying charges in  the  manner
it has been done. In so far as the decision of this Court in Bharat  Sanchar
Nigam Ltd. vs. Reliance Communication Ltd. (supra)  is  concerned,  it  will
suffice to notice that Clause 6.4.6 of the agreement between the parties  in
that case was not existent in the  agreement  between  the  parties  to  the
present  case.  That  apart  the  licencee  in  the   said   case   Reliance
Communication  Ltd.  (supra)  was  holding  an  ILDO  licence   unlike   the
respondent Vodafone in the present case. On the other hand it  appears  that
the Tribunal correctly placed reliance on the  decision  of  this  Court  in
Bharat Sanchar Nigam Limited. Vs. BPL Mobile  Cellular  Ltd.  &  Ors.[2]  to
hold that circular issued by the DoT does not ipso facto become  a  part  of
the Agreement.
Apart from the above it has already been noticed that  before  the  circular
dated 28.01.2004 came to be issued by BSNL, TRAI  had  issued  an  directive
dated 24.11.2003 and a circular dated 20.01.2004 to  all operators  advising
them not to tamper with CLI of any call and not to offer or accept any  call
without  CLI.  BSNL’s  action  in  receiving  calls  originating  from   the
respondent’s network without CLI and the further  decision  to  charge  such
calls  at  the  highest  rate  would,  therefore,  be  clearly  against  the
aforesaid directions of TRAI.

Lastly, the appellant BSNL could not also discharge its burden  to  show  as
to how respondent even by tampering with its network could  wrongly  receive
and route international calls when it did not  have  an  International  Long
Distance Operator Licence.
For the aforesaid reasons, we cannot find any  fault  with  the  conclusions
recorded by the learned Tribunal in the impugned order  under  challenge  in
the present case. The appeal, therefore, is liable to be dismissed which  we
hereby    do    without,    however,    any    order    as     to     costs.


CIVIL APPEAL NO.8108 OF 2010 AND
CIVIL APPEAL NO.1105 OF 2013

11.   Both the  above  mentioned  appeals  having  raised  somewhat  similar
issues are being answered by the present common judgment.
12.   The appellant – Bharat Sanchar Nigam Ltd. (‘BSNL’ for short)  and  the
respondent – Bharti Airtel  Ltd.  entered  into  an  Interconnect  Agreement
dated 15.02.2002 that governed two licenses under the Indian  Telegraph  Act
that were obtained by the respondent for basic telecom  service  and  mobile
telephony respectively.  In the year, 2004 a Unified  License  was  obtained
and the respondent – Bharti Airtel migrated  to  a  Unified  Access  License
(UAL).  The core issue pertains to the  validity  of  two  separate  demands
raised in the two cases by the appellant –  BSNL  for  alleged  routing  non
CLI/invalid CLI calls to the BSNL network by the respondent – Bharti  Airtel
Ltd.
13.    Before  proceeding  to  deal  with  the   facts   and   circumstances
surrounding the demand raised, it will be necessary to note Clause 6.4.6  as
contained in the Original Interconnect Agreement between  the  parties  and,
thereafter, as amended from time to time. While doing  so,  the  details  of
certain other circulars/communications etc. would also  require  a  specific
notice.  Clause 6.4.6 of the Interconnect Agreement as originally  contained
in the Agreement is in the following terms:
“BSNL will pay access charges for STD/ISD calls originating  in  the  BSNL’s
network and delivered to the BSO’s network, at the rate of Rs.0.84 per  unit
measured call at the point of interconnect to the BSO, only  in  such  cases
where the BSNL delivers the  call  in  an  exchange  other  than  the  BSO’s
tandem/terminal exchange. However, for STD/ISD calls delivered  from  BSNL’s
TAX to BSO’s main exchange serving  multiple  SDCCs,  the  latter  shall  be
treated as the terminal exchange and no access charges shall be  payable  by
BSNL to BSO.
It is acknowledged that BSNL shall not pay any  charges  for  all  types  of
calls including terminating ISD calls in the following cases.”
An addenda was added to the said clause  of  the  Agreement  on  21.07.2004,
which is in the following terms:
 “Unauthorized calls i.e. calls other than specified for  that  trunk  group
if detected, for which the applicable IUC is higher than the IUC  applicable
for calls prescribed in that trunk group, then BSNL shall  charge  the  UASL
the highest IUC, as applicable for unauthorized calls,  for  all  the  calls
recorded on these ports from the date of provisioning of  that  POI  or  for
the preceding two months whichever is less. In  addition,  BSNL  shall  also
have the right for taking other legal  actions  including  disconnection  of
POIs or temporary  suspension  of  the  interconnection  arrangements  under
misuse. In case BSNL wishes to disconnect the POI, it shall give a one  week
notice to UASL. If the unauthorized routing of calls to BSNL is not  removed
within one week, BSNL shall disconnect the POI.”

Thereafter, with effect from 19.07.2005, Clause 6.4.6  was  further  amended
in the following terms:
“a. Unauthorised calls i.e. calls other than specified for that trunk  group
if detected, for which the applicable IUC is higher than the IUC  applicable
for calls prescribed in that trunk group, then BSNL shall  charge  the  UASL
the highest applicable IUC, as applicable for such unauthorized  calls,  for
all the calls recorded on this trunk group from the  date  of  provision  of
that POI or for the preceding two months whichever is less.
b. The CLI based barring facility shall be activated at  the  POIs  wherever
technically feasible to ensure that the traffic handed over to  BSNL  is  in
the appropriate trunk groups only. Wherever, it is technically not  feasible
to activate CLI based barring, periodic monitoring  of  the  incoming  trunk
groups shall be done by BSNL without CLI or modified/tampered CLI from  UASL
shall be charged at the highest slab i.e. as for STD  calls.  In  case  such
calls are received by BSNL on any trunk group, then all the  calls  recorded
on this trunk group shall be charged at the  rates  applicable  for  IUC  of
incoming ISD calls from the date of provisioning of  that  POI  or  for  the
preceding two months, whichever is less.
c. When CDR based billing is introduced in BSNL’s network some of the  trunk
groups shall be  merged.  In  such  cases  also,  in  case  unauthorized  or
incoming international calls, without CLI call, call with  tampered  CLI  is
handed over to BSNL at the merged trunk group, then BSNL  shall  charge  the
UASL the highest applicable IUC, as prescribed in clauses  6.4.6  (a)  above
for unauthorized calls & 6.4.6(b) for incoming international  call,  without
CLI call, call for tampered CLI for all calls recorded on this merged  trunk
group from the date of provisioning of that POI or  for  the  preceding  two
months whichever is less.
d. In addition, BSNL shall also  have  the  right  for  taking  other  legal
actions including disconnection of  POIs  or  temporary  suspension  of  the
interconnection arrangements under misuse.”

14.    In the discussions in connection with Civil Appeal  No.8107  of  2010
(decided by the  present  order)  it  has  been  noticed  that  the  Telecom
Regulatory Authority of  India  (TRAI)  vide  letter  dated  24.11.2003  had
advised the appellant – BSNL not to tamper with the CLI of any call and  not
to offer or receive calls without CLI. The aforesaid letter was followed  by
a circular dated 20.01.2004 issued to the same effect by TRAI. In  the  said
circular it was specifically mentioned that the appellant – BSNL’s  decision
to accept calls without CLI and charging therefor at the  highest  slab  was
against the TRAI’s direction.
15.   In the said discussions it has also been noticed that  on  28.01.2004,
the  appellant  –BSNL  issued  a  circular   for   implementation   of   the
Telecommunication  Interconnection  Usage  Charge  (IUC)  Regulation,   2003
which, inter alia, contained Clause 11  dealing  with  charges  leviable  on
calls received without  CLI  and  also  unauthorized  calls.  The  aforesaid
Clause 11 having already been extracted as a  part  of  the  discussions  in
Civil Appeal No. 8107 of 2010 will not require a repetition.
16.   There is yet another circular dated  13.06.2005  issued  by  the  BSNL
which must now be taken note of.  In the said circular, it has  been  stated
that there may be many technical reasons for routing invalid/incomplete  CLI
calls such as, “transient faults in the switch, software  version/signalling
problem, non-recognition of CLI by exchanges, lack of capability to  analyze
all digits by some exchanges”  etc.  In  the  said  circular,  it  was  also
mentioned that it has been decided that where non-CLI calls received at  the
POI were less than 0.5% of the total number of calls  received,  the  access
provider would be charged for double the number of such  non-CLI  calls,  at
the highest slab i.e. incoming ISD calls .
17.   For the period May, 2003 to June, 2005 a demand  of  Rs.59,40,94,834/-
was raised by BSNL for invalid and  incomplete  CLI  calls  handed  over  by
Bharti Airtel to  the  BSNL  network.   The  respondent-Bharti  Airtel  vide
letter dated 21.04.2006 claimed that the irregularities  as  mentioned  were
on account of technical faults  at  the  BSNL’s  end.   The  said  plea  was
rejected by the BSNL upon due enquiry. Thereafter, the  respondent  produced
a certificate dated 29.05.2006 issued by the  supplier  of  its  switch  box
i.e. Siemens offering technical explanations  for  non  display  of  CLI  in
respect of  calls  with  10  digits  to  the  BSNL  network.  This  was  not
acceptable to BSNL who thereafter issued a disconnection notice  leading  to
the proceedings before the Tribunal wherein by order  dated  11.02.2010  the
learned Tribunal had set aside the demand raised by the appellant-BSNL.
18.   The basis on which the Tribunal seems to have  answered  the  question
is that while Clause 6.4.6 of the Interconnect Agreement  relating  to  non-
CLI calls came into effect only  in  July  2005  (19.07.2005),  the  demands
raised were prior to the date of coming into effect of  the  amended  Clause
6.4.6.  The learned Tribunal also concluded that the certificate  issued  by
Siemens with respect to the technical glitches was not  considered  by  BSNL
in proper prospective and further that  the  respondent  was  not  given  an
opportunity to perform a simulation exercise to establish  the  reasons  for
calls being handed over to the BSNL network without CLI.
19.   Aggrieved by the aforesaid order, Civil Appeal  No.8108  of  2010  has
been filed by the appellant-BSNL.
20.   We have considered the respective  submissions  of  the  parties.   On
behalf of the appellant-BSNL it is argued that though Clause  6.4.6  of  the
Interconnect Agreement had come into  force  with  effect  from  19.07.2005,
clause 11 of the circular dated 28.01.2004 empowered the BSNL to  raise  the
demands in question.  It is urged  that  Clause  11  of  the  said  circular
became effective from 01.05.2003 i.e. date from which  the  IUC  Regulations
became  applicable.  The  respondent-Bharti   Airtel,   according   to   the
appellant, has also not been able  to  establish  its  compliance  with  the
stipulation  and  conditions  incorporated  in  the   DoT   circular   dated
24.06.2003. The plea of technical glitches alleged by the  respondent-Bharti
Airtel has been contended to be wholly unsustainable inasmuch as Siemens  is
the vendor of the service provider (Bharti  Airtel)  for  which  reason  the
certificate issued is unworthy of credit.
21.   In reply, learned counsel appearing for the  respondent-Bharti  Airtel
has drawn the attention  of  the  Court  to  the  finding  recorded  by  the
Tribunal that the irregularities in the 10 digits CLI calls handed  over  to
the BSNL network was not because of any  deliberate  violation  or  wrongful
conduct and that such deficiency was on account  of  technical  glitches  in
the switch box/gear provided by Siemens.  The  said  finding  is  final  and
conclusive.  It is further urged that the circular dated 28.01.2004 being  a
unilateral exercise by BSNL cannot authorize the BSNL to  raise  the  demand
in question particularly when the IUC Regulations, 2003 did  not  contain  a
provision to the said effect empowering the BSNL to so act.   Reference  has
also been made to the circular of the TRAI dated 20.1.2004  particularly  in
respect of the fact that BSNL’s decision to accept  calls  without  CLI  and
then to charge for such calls at the  highest  slab  rate  was  against  the
direction of the TRAI.
22.   Having considered the respective submissions of the parties,  we  find
that the matter  lies  in  a  short  compass.  The  allegation  against  the
respondent operator is with respect to handing over calls with  invalid  CLI
to the BSNL network. Clause 6.4.6 of  the  original  Interconnect  Agreement
between the parties dealt with  the  computation  of  access  charges.   The
July, 2004 amendment, prospective in nature, dealt  with  the  liability  in
case of unauthorized calls i.e. calls other than specified for a  particular
trunk group. The  subsequent  Addenda  dated  19.07.2005  dealt  with  calls
without CLI and the charges applicable. The recital to the  Addenda  clearly
states that it is prospective in operation. If that is so,  we  do  not  see
how on the strength of Clause 6.4.6 which came into effect  from  19.07.2005
the demand for the period upto June 2005  could have been  raised  by  BSNL.
The contention of BSNL that the  said  demand  would  be  justified  on  the
strength of clause 11 of the circular dated 28.01.2004 also cannot have  our
acceptance in view of the fact that we have held  the  above  issue  against
the BSNL in Civil Appeal No.8107 of 2010 (BSNL  v.  Vodafone  Essar  Gujarat
Limited), decided today.  Furthermore, the finding of the Tribunal that  the
demand raised by BSNL would not be justified  in  view  of  the  certificate
issued by Siemens, the manufacturer of  the  switchgear  instituted  in  the
Respondent’s POI, a pure finding of fact, would provide an additional  plank
for our decision to dismiss the present appeal filed by the  appellant-BSNL,
which we hereby do.

CIVIL APPEAL NO.1105 OF 2013

23.   Two bills raised by  BSNL  against  the  respondent-Bharti  Airtel  in
respect of its cellular services form the  subject  matter  of  the  present
appeal.  The first bill is for the period May, 2003  to  January,  2004  and
the second bill dated  03.06.2009  is  for  the  period  February,  2004  to
November, 2004. The learned Tribunal  vide  its  judgment  dated  11.02.2010
partly allowed the demand for the period 21st July, 2004 to  November,  2004
by holding that for the said period the appellant-BSNL would be entitled  to
charge the respondent for double the number of actual calls  which  did  not
have any CLI on the basis of the circular of BSNL dated  13.06.2005  whereas
for the period May, 2003 to 21st July, 2004 its  judgment  dated  11.02.2010
in the case between same parties (subject matter of Civil Appeal No.8108  of
2010 would govern the issue).
24.    Having  heard  the  learned  counsel  for  the  parties  and  on  due
consideration, we find  that  the  Tribunal  failed  to  notice  bill  dated
23.07.2008 for the period  May,  2003  to  January,  2004  was  solely  with
respect to calls with invalid CLI. The period of demand therefore is  before
the date of the addendum to  Clause  6.4.6  i.e.  19.07.2005.   This  issue,
therefore, will stand decided by the present order insofar as  Civil  Appeal
No.8108 of 2010 is concerned. The second  bill  dated  30.06.2009   for  the
period February, 2004 to November, 2004 was a consolidated bill for  non-CLI
calls as well as trunk group violation. For the latter violation the  demand
as mentioned in the said bill is  Rs.76.26  lakhs.  This  later  demand,  in
part, appears to be in order in light of the Addenda to Clause  6.4.6  dated
21.07.2004.
25.   Accordingly, the appeal is allowed to the  aforesaid  extent,  namely,
by holding that the liability for  trunk  group  violation  for  the  period
21.07.2004 to November, 2004 can be  legitimately levied on the  respondent-
Bharti Airtel in terms of Clause 6.4.6 added in the  Interconnect  Agreement
by Addenda dated  21.07.2004.   The  appellant  may  work  out  the  precise
quantum of penalty on  the  aforesaid  basis  which  will  be  paid  by  the
respondent.

CIVIL APPEAL NO. 8269 of 2010

26.   The respondent – Tata Teleservices  Ltd.  had  challenged  the  demand
notices dated 03.09.2006, 23.03.2007 and 09.04.2007 issued by the  appellant
-  BSNL  whereby  it  called  upon  the  respondent  to  pay  an  amount  of
Rs.10,63,88,772/- in terms of Clause 6.4.6  of  the  Interconnect  agreement
which is in the same terms as introduced by the addenda dated 19.07.2005  in
the case of Bharti Airtel  (supra),  details  of  which  have  been  noticed
herein above in the discussion pertaining to the said appeal  (Civil  Appeal
No.8108 of 2010). The demand notices were issued for  the  period  from  May
2003 to May 2004 and the irregularity/illegality alleged is transfer of  non
CLI/wrong CLI calls to the BSNL network.
27.   The learned Tribunal by its impugned  judgment  dated  11.02.2010  had
set aside the demand(s) on the ground that as Clause 6.4.6 was added to  the
Interconnect agreement between the  parties  to  the  present  case  by  the
addendum dated 01.12.2005 with effect from 14.11.2003, the same,  therefore,
can have no application to the period prior thereto. It was also  held  that
a comparison of the CDRs of both parties showed that CLI  was  available  on
the CDR of Tata Teleservices Limited and not with the BSNL.  Therefore,  the
fault lay in the system of B.S.N.L.  for  which  the  respondent  cannot  be
penalized. The Tribunal further held that  the  Circular  dated  13.06.2005,
relied upon by BSNL to support the impugned demand, details  of  which  have
already been noticed in the case of Bharti Airtel (supra),  itself  provides
for due application of mind necessitating an enquiry as to the  reasons  for
the  irregularities/shortcomings  in  the  display  of  the  CLI.   No  such
opportunity was afforded to the respondent by BSNL before resorting  to  the
impugned demand(s).
28.   Elaborate arguments had been advanced on behalf of   both  sides,  the
core of which, insofar as BSNL  is  concerned,  is  that  Tata  Teleservices
Limited having taken the benefit of the  Circular  dated  13.06.2005,  (made
effective from 01.05.2003) for the latter part of the period  involved,  its
liability would accrue from the said date and the  demand  has  been  worked
out on the basis that 48.9% of the calls are  non-CLI  calls  and  therefore
Clause 6.4.6 would apply.  It is urged  that  the  contention  of  the  Tata
Teleservices  Limited  that  the  calls  are  less  than  0.5%  is   plainly
incorrect.
29.    In  reply,  it  is  urged  that  Clause  6.4.6  of  the  Interconnect
agreement, in the form and content in which it has been applied to the  case
of  the  respondent,  was  introduced  by  the  addendum  dated  01.12.2005,
effective from 14.11.2003. In the present case,  the  alleged  violation  of
Clause 6.4.6 is on the ground of transmitting  calls  without  CLI.   It  is
urged that upto the date on which Clause  6.4.6  came  into  operation  i.e.
14.11.2003, the demand raised on the said basis is  without  any  authority.
It is further submitted that the receipt of calls without  CLI  having  been
disapproved/rejected  by  the  TRAI  and  there  being  express   directions
requiring BSNL to reject such calls, the appellant cannot take advantage  of
its own action contrary to  the  directions  of  the  Regulator  i.e.  TRAI.
Furthermore, according to the  respondent,  the  Circular  dated  13.06.2005
prohibits BSNL to mechanically apply  Clause  6.4.6  and  it  is  only  upon
elimination of technical failures, incompatibility between  exchanges,  etc.
that Clause 6.4.6 can be resorted to and  that  too  for  the  period  after
14.11.2003.
30.   In a situation where it is the case of the appellant BSNL itself  that
non-CLI calls transmitted by the  Tata  Teleservices  Limited  to  the  BSNL
network was more than 0.5%  and  hence  Clause  6.4.6  of  the  Interconnect
agreement would be applicable, ex facie, the demand raised  for  the  period
from May 2003  to  November  2003  would  be  without  any  legal  authority
inasmuch as Clause  6.4.6  became  a  part  of  the  Interconnect  agreement
between the parties with retrospective effect from 14.11.2003.
31.   In view of the aforesaid finding  recorded  by  the  learned  Tribunal
with which this Court is in full agreement, it will not be necessary  to  go
into any other issue so far as the demand for the said period is  concerned.
 For the remaining period i.e. November,  2003  to  May  2004  during  which
period Clause 6.4.6 was in force, the finding of the learned  Tribunal  that
Tata Teleservices Limited should be given an opportunity and the quantum  of
loss suffered by B.S.N.L. should be  computed  accordingly  would,  however,
require  a  close  look.  In  Bharat  Sanchar  Nigam   Ltd.   Vs.   Reliance
Communication Limited  (supra),  this  Court  has  held  that  Clause  6.4.6
prescribes a pre-estimate of reasonable compensation.  The premise on  which
the learned Tribunal had held the necessity of affording an  opportunity  to
Tata Teleservices Limited for determination of the quantum of loss  suffered
by BSNL for the period from November 2003  to  May  2004  proceeded  on  the
basis that Clause 6.4.6 is a penal clause. As the said basis stands  altered
by the decision of this Court in Bharat  Sanchar  Nigam  Ltd.  vs.  Reliance
Communication Limited (supra), computation of liability for the period  from
November 2003  to  May  2004,  during  which  period  Clause  6.4.6  was  in
operation, must necessarily be made in accordance  with  the  terms  of  the
said  clause.   The  order  of  the  learned  Tribunal,  therefore,  to  the
aforesaid extent, is set aside  and  the  appeal  is  partly  allowed.   The
demand raised for the period  from  May  2003  to  November  2003,  as  held
earlier, shall stand set aside while for the period from 14.11.2003 to  May,
2004 shall be determined in accordance with Clause 6.4.6  of  the  Agreement
as brought into effect with retrospective effect from 14.11.2003.

                                               ….……......................,J.
                                                        [RANJAN GOGOI]


                                               ….……......................,J.
                                                        [PRAFULLA C. PANT]
NEW DELHI;
SEPTEMBER 23, 2016.


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[1]    (2011) 1 SCC 394]
[2]    (2008) 13 SCC 597