Arbitration; Bharti Airtel Vs. Union Of India [Delhi High Court, 11-05-2016]

Arbitration and Conciliation Act, 1996 – Section 34 – Contractual Matter – Refund of Monies – Maintainability of a Writ Petition – Once the parties go to arbitration on a question whether one party is entitled to the monies claimed from the other or not and the arbitral award not finding that party to be entitled to the monies claimed is set aside in exercise of powers under Section 34 of the Arbitration Act, the order of the Court has but to be read as finding the claimant party to be entitled to the monies claimed unless the arbitral award has been set aside on technical grounds as enumerated in Section 34(2)(a) or Section 34(2)(b)(i) of the Arbitration Act. To give any other meaning to the order of the Court in exercise of power under Section 34 of the Act would severely undermine / prejudice efficacy of arbitration and would lead to arbitration ceasing to be an alternative dispute resolution mechanism.

Arbitration


IN THE HIGH COURT OF DELHI AT NEW DELHI

CORAM: HON’BLE MR. JUSTICE RAJIV SAHAI ENDLAW

11th May, 2016

W.P.(C) No.6773/2013 & CM No.14692/2013 (for stay)

BHARTI AIRTEL LIMITED & ORS ….. Petitioners Through: Mr. Gopal Jain, Sr. Adv. with Mr. Harsh Kaushik, Mr. Abhay Chattopadhyay and Ms. Chinmayee Chandra, Advs. Versus UNION OF INDIA …. Respondent Through: Mr. Gaurav Sarin, Sr. Panel Counsel with Mr. Vidur Mohan, Ms. Charul Sarin and Mr. Ajitesh K. Kir, Advs.

1. The petition

(i) impugns the decision dated 26th December, 2012 of the respondent Department of Telecommunications (DoT) of the Union of India (UOI) refusing to refund the amount deposited by the petitioner no.1 Bharti Airtel Ltd. (petitioners no.2 and 3 are its shareholders and the word “petitioner” hereafter will mean Bharti Airtel Ltd. only);

ii) seeks a direction to the respondent UOI to comply with the understanding and obligations recorded in the petitioner‟s letters dated 1st August, 2001, 6th November, 2012 and 10th December, 2012;

iii) seeks mandamus directing the respondent UOI to refund the sum of Rs.399.92 crores to the petitioner;

iv) seeks mandamus directing the respondent UOI to also pay interest on the said amount of Rs.399.92 crores i.e. a total sum of Rs.2495.87 crores to the petitioners with future interest till the date of refund; and,

v) alternatively seeks permission for the petitioner to adjust the amount so refundable by the respondent in the future licence fee payments due to the respondent UOI from the petitioner.

2. Notice of the petition was issued and a counter affidavit has been filed by the respondent UOI and to which a rejoinder has been filed by the petitioner. The counsels were heard on 8th October, 2015 and 4th November, 2015 when judgment was reserved.

3. It is the case of the petitioner:-

(i) that the petitioner was granted a licence dated 26th December, 1995 under Section 4(1)(b) of the Telegraph Act, 1885, to establish, maintain and work telegraph in the Punjab Telecom Circle;

(ii) that for reasons attributable to the respondent UOI, the licence of the petitioner was de-facto suspended from 18th April, 1996 to 10th March, 1998 (though the petitioner has made detailed pleadings in this regard but the need to refer thereto, for the reasons hereinafter appearing, for the purpose of the present petition is not felt);

(iii) that the petitioner thus did not pay the licence fee payable by it for the period 18th April, 1996 to 10th March, 1998;

(iv) that the respondent UOI however insisted upon payment of licence fee for the aforesaid period together with interest and penal interest thereon and upon non payment thereof by the petitioner, terminated the said licence on 15th July, 1999;

(v) that though the petitioner represented to the respondent UOI to refer the dispute aforesaid to arbitration in accordance with the terms therefor in the licence, but to no avail;

(vi) that on the contrary, the respondent UOI, to arm-twist the petitioner, denied release of eight Basic Service Licences, eight Cellular Licences and one National Long Distance Licence to the associate companies of the petitioner;

(vii) that the petitioner was thus constrained to deposit the entire licence fee along with interest and penal interest for the aforesaid period with the respondent UOI as “on account payment”, strictly without prejudice to its rights and contentions and with a clear understanding that in the event of the dispute being decided in favour of the petitioner, the respondent UOI will forthwith refund the said amount along with interest for the period the same was retained by the respondent UOI; the said understanding is reflected in the letter dated 1st August, 2001 of the petitioner;

(viii) that in accordance with the aforesaid understanding, a reference dated 27th September, 2001 was made for arbitration;

(ix) that the petitioner in the said arbitration made a claim for refund of the amount deposited along with interest at the same rate at which the respondent UOI had demanded interest;

(x) that the Sole Arbitrator vide arbitral award dated 20th December, 2002 dismissed the claim of the petitioner;

(xi) that the petitioner filed OMP No.77/2003 under Section 34 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) before this Court and which had been allowed vide judgment dated 14th September, 2012 by setting aside the arbitral award;

(xii) that though the petitioner in the aforesaid OMP No.77/2003 sought the relief of refund of the amount aforesaid deposited by it with interest but it was held that the Arbitration Act did not permit the Court to grant the said relief and the petitioner would have to resort to appropriate legal remedies to seek the refund;

(xiii) that the petitioner accordingly, vide its letters dated 6th November, 2012 and 10th December, 2012, sought refund of Rs.399.29 crores out of Rs.485.58 crores deposited as aforesaid after adjusting the sum of Rs.85.66 crores in a separate matter being Civil Appeal No.5050/2012;

(xiv) that the respondent is also liable for interest and as on the date of filing of the petition, a total sum of Rs.2495.87 crores was due from the respondent UOI;

(xv) that the respondent UOI however vide impugned letter dated 26th December, 2012, without giving any reason, rejected the demand of the petitioner;

(xvi) that the respondent UOI has filed FAO (OS) No.87/2013 against the judgment dated 14th September, 2012 setting aside the arbitral award; along with the said appeal, the respondent sought stay of the judgment dated 14th September, 2012 but which application was dismissed by the Division Bench vide order dated 16th July, 2013; and,

(xvii) that the respondent UOI is not entitled to retain the aforesaid amount and the respondent UOI by retaining the same is acting unfairly and unjustifiably enriching itself.

4. The respondent UOI has opposed the writ petition by filing a counter affidavit pleading:-

(a) that the challenge to the respondent‟s letter dated 26th December, 2012 cannot be by way of a writ petition and the petitioner ought to have raised a dispute in manner provided under the licence agreement;

(b) that no dispute in respect of the licence agreement lies before this Court;

(c) that the petition seeking enforcement of letters dated 1 st August, 2010, 6th November, 2012 and 10th December, 2012 written by the petitioner is misconceived;

(d) that there was no such understanding between the parties as is pleaded by the petitioner;

(e) that the writ petition to enforce the understanding otherwise also is not maintainable;

(f) that the writ petition in the garb of various reliefs claimed therein seeks recovery of money and which cannot be allowed in a writ petition;

(g) that the reliefs claimed in the writ petition are even otherwise beyond the terms of the licence which is a contract under Section 4 under the Telegraph Act;

(h) that the demand of the petitioner to treat the period from 18 th April, 1996 to 10th March, 1998 as a “blackout period” was an afterthought;

(i) that this writ petition has been filed under a false belief that the judgment dated 14th September, 2012 in OMP No.77/2003 is a money decree in favour of the petitioner;

(j) that in any case the judgment dated 14 th September, 2012 in OMP No.77/2003 is subject matter of FAO (OS) No.87/2013;

(k) reliance is placed on