UNION OF INDIAversusRELIANCE COMMUNICATION LIMITED & ANR.

                          [2020] 1 S.C.R. 1                              1


                        UNION OF INDIA                                   A
                                  v.
       RELIANCE COMMUNICATION LIMITED & ANR.
                    (Civil Appeal No. 32 of 2020)
                        JANUARY 07, 2020                                 B
       [R. F. NARIMAN AND S. RAVINDRA BHAT, JJ.]
       Telecommunication – Telecom Dispute Settlement – Refund
of the excess amount – Respondents were not able to pay the deferred
spectrum charges to the tune of Rs.774.25 crores – The Union
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encashed bank guarantees to the tune of Rs. 908.91 crores as against
the actual amount of Rs.774.25 crores due and payable by
respondent licensees – Respondents approached TDSAT and sought
a direction for the return of Rs.134.66 crores, i.e. the excess amount
(the difference between the amount of Rs.908.91 crores against
admitted dues of Rs.774.25 crores) – The TDSAT partly allowed the        D
respondents’ application and after adjusting the charge of Rs.30.33
crores against the respondents, the remaining amount of Rs.104.34
crores was directed to be returned – The Union contended that there
were subsequent defaults or short payments in respect of liability
towards later periods – On appeal, held: No interference required
                                                                         E
in the order of the TDSAT – The Union nowhere disputed that the
respondent licensees liability toward payment of deferred spectrum
charges was to the tune of Rs.774.25 crores – The total amount
realised upon encashment of the bank guarantees furnished by the
respondents, however, was to the extent of Rs.908.91 crores –
Further, the respondents had furnished another bank guarantee to         F
the tune of Rs.774.25 crores – There was consequently, logic and
merit in the contention of the respondents that the Union
unreasonably refused to refund the excess amounts – The Union
contention that there were subsequent defaults or short payments
in respect of liability towards later periods was insubstantial, as
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bank guarantee for later periods were furnished (Rs.774.25 crores)
– In the circumstances, there was no rationale for the Union to
resist the demand for refund of the excess amounts – The TDSAT
had exercised its discretion circumspectly, because the entire amount

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2             SUPREME COURT REPORTS                       [2020] 1 S.C.R.


A   of Rs.134.66 crores claimed was not allowed, rather direction was
    issued in respect of Rs.104.34 crores – Therefore, no merit in the
    appeal.
            Dismissing the appeal, the Court
          HELD : 1. On a recapitulation of all circumstances, and the
B   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 Rs. 774.25 crores. The total
C   amount realized upon encashment of the bank guarantees
    furnished by the respondents, however, was to the extent of Rs.
    908.91 crores. It is also a matter of record that the respondents
    furnished another bank guarantee to the tune of Rs. 774.25
    crores. There is consequently logic and merit in the contention
    of RCL/RTL (respondents) that the Union unreasonably refused
D   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
E   later periods were furnished by the respondents (to the extent of
    Rs. 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
    Rs. 134.66 crores claimed in the application was not allowed;
F   rather the direction issued was in respect of Rs. 104. 34 crores.
    [Para 11] [7-A-D]
            CIVIL APPELLATE JURISDICTION : Civil Appeal No. 32 of
    2020.

G         From the Judgment and Order dated 21.12.2018 of the Telecom
    Disputes Settlement & Appellate Tribunal, New Delhi in Telecom Petition
    No. 196 of 2018.
         Sanjay Jain, ASG, Apoorv Kurup, Sachin Sharma, Zoheb Hossain,
    Baibhaw Gahlhot, Dharendra Patel, Padmesh Mishra, Gurmeet Singh
    Makker, Advs. for the Appellant.
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UNION OF INDIA v. RELIANCE COMMUNICATION LIMITED                              3


      Raju Ramachandran, Shyam Divan, Sr. Advs., Mahesh Agarwal,              A
Rishi Agrawala, Ms. Sahlly Bhasin, Prateek Gupta, Ms. Madhavi
Agrawal, Ms. Ambika Mathur, E. C. Agrawala, Advs. for the
Respondents.
      The Judgment of the Court was delivered by
                                                                              B
      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 Rs. 104.34 crores lying            C
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          D
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 and liabilities, including the spectrum     E
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       F
regions/circles; licenses were issued to them. In terms of NIA 2013, the
third instalment of deferred spectrum charges of Rs. 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 Rs. 281.45
crores. The total extent of bank guarantee furnished was Rs. 390.41
crores. Contemporaneously, the deferred spectrum liability under the          G
NIA 2015 @ Rs. 492.79 crores became payable on 09.04.2018. The
respondents (RCL and RTL) could not pay these charges. Consequently,
the Union en-cashed Rs. 492.79 crores out of the bank guarantees
furnished.
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4             SUPREME COURT REPORTS                           [2020] 1 S.C.R.


A           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
B
    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 ¹ 45,000 crores) are cited by the respondents as reasons for
C   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
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    relief by way of extension of time towards payment of 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
E   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 Rs. 908.91 crores as against the actual
F   amount of Rs. 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 Rs. 774.25 crores towards the next instalments of deferred
    spectrum liability. They also urged to release the excess of Rs. 134.66
    crores encashment (i.e. the difference between the amount of Rs. 908.91
    crores against admitted dues of Rs. 774.25 crores). The Union had
G   accepted fresh bank guarantees towards the subsequent spectrum liability
    (Rs. 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 Rs. 134.66 crores,
    i.e. the excess amounts and also the release of the bank guarantee
H   amounting to Rs. 108.95 crores.
UNION OF INDIA v. RELIANCE COMMUNICATION LIMITED                             5
               [S. RAVINDRA BHAT, J.]

      6. The Union disputed its liability before the TDSAT and relied        A
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 Rs. 795.77 crores in March-April
2019.
      7. The TDSAT, by its impugned order, partly allowed the                B
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                C
      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                 D
      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           E
      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.       F
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 ¹
21.53 crores – with overdue interest amount working out to Rs. 27.63         G
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.
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6            SUPREME COURT REPORTS                           [2020] 1 S.C.R.


A           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
B
    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
C   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
D
    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
E   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
F   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 Rs. 774.25 crores)
    later (on 19th August, 2018) the excess amounts i.e. amount after adjusting
G   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.

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UNION OF INDIA v. RELIANCE COMMUNICATION LIMITED                                 7
               [S. RAVINDRA BHAT, J.]

       11. On a recapitulation of all circumstances, and the various terms       A
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 Rs. 774.25 crores.
The total amount realized upon encashment of the bank guarantees
                                                                                 B
furnished by the respondents, however, was to the extent of Rs. 908.91
crores. It is also a matter of record that the respondents furnished another
bank guarantee to the tune of Rs. 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       C
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 Rs. 774.25 crores). In these circumstances,
there is no rationale for the Union to resist the demand for refund of
                                                                                 D
excess amounts. The TDSAT, in the opinion of this court, exercised its
discretion, with respect, circumspectly, because the entire amount of
Rs. 134.66 crores claimed in the application was not allowed; rather the
direction issued was in respect of Rs. 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.                   E


Ankit Gyan                                                   Appeal dismissed.


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