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Bharat Sanchar Nigam Limited v. Vodafone Essar Gujarat Limited

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 8107 of 2010)Decided 23 Sept 2016
Civil Appeal No. 8107 of 2010
Justice Ranjan Gogoi · Justice Prafulla C. Pant

Background

BSNL raised demands against Vodafone, Bharti Airtel, and Tata Teleservices for allegedly routing international calls as cheaper national calls by tampering with or omitting the Caller Line Identification (CLI), based on a unilateral BSNL circular. The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) had set aside or partly set aside these demands, finding the circular was not validly incorporated into the interconnect agreements and that technical glitches, not deliberate tampering, explained some irregularities. BSNL appealed all four TDSAT orders together since they raised overlapping issues.

Decision Breakdown

The Supreme Court held that BSNL's 2004 circular, being a unilateral measure not issued pursuant to any regulatory direction and not part of the TRAI-approved Interconnect Usage Charge Regulations, could not override the operators' interconnect agreements or be used to charge the highest tariff slab retrospectively. The appeal against Vodafone (C.A. 8107/2010) was dismissed in full. The appeal against Bharti Airtel on the first bill (C.A. 8108/2010) was dismissed because the relevant contractual clause was only prospective from July 2005, but the appeal on the second bill (C.A. 1105/2013) was partly allowed for the post-July-2004 period once that clause was in force. The appeal against Tata Teleservices (C.A. 8269/2010) was similarly partly allowed only for the period after the relevant clause took effect (14.11.2003), with the pre-2013 BSNL v. Reliance Communication precedent treating the charge as a pre-estimate of damages rather than a penalty.

Lesson Learnt

A service provider cannot unilaterally alter a contract's financial terms through its own internal circular; charges can only be levied retrospectively against another party if the relevant contractual clause was actually in force during that period, timing of contractual amendments matters as much as the substance of the dispute.

Official source (sci.gov.in)View Judgment (PDF)

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