Case: UNION OF INDIA Vs. RELIANCE COMMUNICATION LIMITED

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 respondents application after noting the Unions 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. 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 TDSATs 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 Unions 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 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. 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 Unions 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.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]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 issued11. 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 recordthat 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 Unions 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.