Department of
Telecommunications Vs. Gujarat Coop.Milk Mkting. Federation Ltd [2010] INSC 777
(24 September 2010)
Judgment
IN THE SUPREME COURT
OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.8249 OF 2010 [Arising out
of SLP [C] No.10600/2007] Department of Telecommunications ... Appellant
Gujarat Co-operative Milk Marketing Federation Ltd. ... Respondent
R.V.RAVEENDRAN, J.
1.
Leave
granted.
2.
The
respondent was the subscriber of telephone bearing No.40193, in Anand Town
installed at the residence of its Managing Director (for convenience we will
also refer to the Managing Director as the `subscriber').
The bi-monthly bills
in regard to the said telephone were usually around Rs.8500. The appellant
served on the respondent the following two bills aggregating to Rs.454,652 :
Bill date Period of
the bill Amount 1.4.1996 16.1.1996 to 15.3.1996 362,723/- 1.6.1996 16.3.1996 to
15.5.1996 91,929/- 2 The huge billing was on account of a large number of
international calls known as `party calls' or `sex talk calls' to number
001-4152-085-234 and several calls to 001-4152-085-220/230/236/239.
3.
The
respondent made a written complaint dated 25.4.1996 after the receipt of the
first bill stating that it had been mischievously and unscrupulously billed for
large number of international calls made from some other numbers, but shown as
having made from its number. It also complained in the said letter that many a
time, when the subscriber lifted the telephone for making calls, he used to
hear some ongoing talk. The Divisional Engineer of the appellant after
verification informed the respondent by letter dated 21.5.1996 that the bills were
correct for the following reasons :
(a) Total line was
underground and no portion of the line was exposed;
(b) Absolute control
to make a call or not to make a call, was with the subscriber as the phone had
dynamic lock facility.
(c) The telephone was
working continuously and there was no complaint of the telephone being out of
order. (Note : If the line is misused externally, the telephone of the
subscriber will be dead with no dial tone).
(d) The bills showed
that the calls were made daily over a long period and not on any particular
single day.
(e) As the telephone
was connected to an electronic exchange, there was no chance of excess
metering.
4.
The
respondent filed an administrative appeal to the General Manager, Kheda Telecom
District, Nandiad. However as the bills amounts were not paid, the telephone
was disconnected on 29.5.1996. A writ petition (SCA No.4188/1996) filed by the
respondent was disposed of by the High Court by order dated 29.7.1997 directing
the General Manager of the appellant to examine the appeal filed by the
respondent in regard to the bills in question and render a reasoned order after
giving a hearing to the respondent. After hearing, the General Manager, Kheda
Telecom District, Nadiad made an order dated 12.2.1998 rejecting the appeal and
confirming the demands under the two bills, for the following reasons: (i) The
subscriber had not made use of the STD/ISD dynamic locking facility which was
available through a sophisticated electronic exchange; (ii) all rooms in the
residence of the subscriber had plug/socket arrangements and all family members
and visitors could use the parallel lines for making ISD calls (in particular
`party line calls') even without the knowledge of the subscriber; (iii) the
possibility of any external misuse was ruled out as the Distribution Point Box
was located within the campus premises of the respondent which was under around
the clock security of the security guards employed by the respondent and no
part of the underground cable was exposed; (iv) significantly during the
disputed period not even a single complaint was booked from the 4 telephone;
and though in the complaint dated 25.4.1996, it was stated for the first time
that many a time when the subscriber lifted the phone to receive the call he
heard someone talking on the line, no such complaint was ever made prior to
25.4.1996 to the department; and (v) the disputed ISD calls were `party line
international sex talk calls' which originated from the subscriber's telephone
and having regard to the fact that these calls were made in between the calls
to other stations in India in such close proximity that there was no chance of
possible misuse by any third party or staff of telecom department.
5.
Feeling
aggrieved, the respondent again approached the High Court by filing another
writ petition (SCA No.1416/1998). The said petition was disposed of on the
ground of availability of alternative remedy of arbitration under section 7B of
the Indian Telegraph Act, 1885 (`Act' for short). The respondent challenged the
said order in a Letters Patent Appeal wherein by order dated 21.10.1989 the
Division Bench directed the dispute to be referred to arbitration. In pursuance
of it, the Central Government in exercise of power under section 7B of the Act appointed
Mr. Vineet Bhatia, Deputy General Manager, Telecom East and Arbitrator for
Ahmedabad Telecom district as Arbitrator for deciding the dispute.
6.
The
Arbitrator after hearing made an award dated 4.5.2000 holding that the bills
were proper and the respondent had to make complete payment of the said bills.
The following summary of the reasoned award is extracted below:
"1. Though
STD/ISD dynamic locking facility for the telephone was available, it was not
used by the subscriber.
2. There was no possibility
of external misuse from distribution point or pillar or from the Main
Distribution Frame, as these were under lock and key or around the clock
supervision.
3. Even though the
subscriber stated that he used to hear some cross talk on the line during the
period of the disputed bill, no complaint was registered with the Telephone
Department. Therefore the said complaint was apparently an afterthought made up
after receiving the first bill for the disputed period.
4. All the rooms in
the house of subscriber had plug and socket arrangement and there were two
telephone instruments in the house and as such calls could be made from
anywhere in the house.
5. The calls
preceding/succeeding the disputed calls were admittedly made by the subscriber.
Hence no misuse by diversion was possible.
6. The disputed calls
were `international party line calls'. For dialing these numbers there was no
need to establish any prior relationship between caller and the called numbers.
As such there was no age/sex bar for dialing these numbers and hence could have
been done by any of the family members of the subscriber. From the school
details of his son, presented by the subscriber vide his letter dated 3.5.2000,
it was clear that his final Pre-Board examinations for X Std. were concluded on
03.02.1996 and the disputed calls started from the very next day. As such, the
possibility of these calls having made by the son of the subscriber cannot also
be ruled out."
7.
The
said award was challenged by the respondent in a writ petition (SCA
No.8734/2000). A learned Single Judge of the High Court allowed the 6 writ
petition with costs of Rs.5000 and quashed the bills dated 1.4.1996 and
1.6.1996 and the consequential demand notice dated 4.5.2000. The last para of
the order of the learned Single Judge extracted below, demonstrates the manner
in which he viewed the entire matter:
"This is a
peculiar case showing the adamant attitude on the part of the respondent
authorities. The bill has been issued in the year 1996 and there were about
three round of litigations. The Arbitrator who was appointed was subordinate to
the General Manager who is bound to be influenced by the decision of the
General Manager or could not have taken a contrary view to the order of his
superior. Therefore, before the argument was started, an opportunity was given
to the counsel for the respondent to reconsider their decision. However the
officer as well as the learned counsel, who is an officer of the Court, has not
accepted the said suggestion. It was also open to the respondent to issue a
revised bill as per the decision of this court or at least average bills for
the last six months. It goes without saying that the adamant attitude of such
litigants increases the unwanted litigation. Therefore, the respondent shall
pay a sum of Rs.5,000/- (Rupees Five Thousand only) by way of costs."
The findings recorded
by the learned Single Judge in support of his order, in brief are:
(i) As the appeal
against the Bills had been decided by the General Manager, Kheda Telecom
District on 12.2.1998 upholding the bills, the Arbitrator should have been a
person higher in rank to the General Manager.
As the Arbitrator was
of a lower rank of a Deputy General Manager, the decision of the Arbitrator was
not valid in law and on this ground alone the writ petition had to be allowed.
(ii) The Arbitrator
had decided the matter on inferences and presumptions without any evidence.
Reference to the existence of parallel telephone lines and subscriber's son
being at home after examinations, to infer that he might 7 have misused the
telephone was a finding which was without basis in the absence of evidence that
the subscriber's son had in fact misused the telephone. Similarly, the
assumption by the Arbitrator that any member of subscriber's family could have
used the phone for making `party line calls' was a casual presumption.
(iii) A complaint
dated 25.4.1996 was made by the subscriber stating that the first bill dated
1.4.1996 was excessive. Even assuming that there was misuse of the phone, in
the house of the subscriber, when the subscriber came to know about the misuse
when the bill was received, he would have restricted or prevented the misuse.
That means the next bill dated 1.6.1996 should have been a normal bill. But the
said bill was also excessive thereby demonstrating that the mischief calls
continued even during the second bill period. This showed that there was a
possibility of someone else misusing the number of the subscriber for making
ISD calls.
(iv) The complaint
dated 25.4.1996 stating that the subscriber sometimes used to hear ongoing
talk, when he lifted the phone for making calls, was not properly considered by
the Arbitrator.
The Letters Patent
Appeal filed by the appellant against the said order of the learned single
Judge, has been dismissed by a Division Bench by a brief non-speaking order
dated 23.1.2007. The said order is challenged in this appeal.
8.
The
scope of interference in writ jurisdiction in regard to Arbitral awards under
section 7B of the Act was considered by this Court in M.L.Jaggi v. Mahanagar
Telephones Nigam Ltd. [1996 (3) SCC 119] :
"It is seen that
under Section 7-B, the award is conclusive when the citizen complains that he
was not correctly put to bill for the calls he had made and disputed the demand
for payment. The statutory remedy opened to him is one provided under Section
7-B of the Act. By necessary implications, when the Arbitrator decides the
dispute under Section 7-B, he is enjoined to give reasons in support of his
decision since it is final and cannot be questioned in a court of law. The only
obvious remedy available to the aggrieved person against the award is judicial
review under Article 226 of the Constitution. If the reasons are not given, it
would be difficult for the High Court to adjudge as to under what circumstances
the Arbitrator came to his conclusion that the amount demanded by the
Department is correct or the amount disputed by the citizen is unjustified.
The reason would
indicate as to how the mind of the Arbitrator was applied to the dispute and
how he arrived at the decision. The High Court, though does not act in
exercising judicial review as a court of appeal but within narrow limits of
judicial review it would consider the correctness and legality of the award. No
doubt, as rightly pointed out by Mr. V.R.Reddy, Additional Solicitor General,
the questions are technical matters. But nonetheless, the reasons in support of
his conclusion should be given."
(emphasis supplied)
Though the learned Single Judge referred to the said decision, he has ignored
the law laid down therein. The learned Single Judge has proceeded as if he was
sitting in appeal over the award of Arbitrator. He also assumed, without any
basis, that the Arbitrator had proceeded on presumptions and inferences, when
in fact it is the learned Single Judge who made assumptions and drew
inferences, not based on evidence. We may briefly refer to them.
9.
The
learned Single Judge held that the Arbitrator had without any evidence assumed
that the son or other family members of subscriber must have used the telephone
available on account of plug/socket arrangement in every room as also an extra
telephone, parallel lines for making the "international party calls".
The basis for the billing is not the said assumption or inference. The basis is
the clear evidence consisting of the records of Telecom and the meters which
showed that the billed calls, that is, the international party line calls, were
regularly being made from the said telephone. The inference drawn by the
Arbitrator that the subscriber's son or other family members must have made the
calls from a parallel line by using the plug and socket facility available in
various rooms, has to be read in the context of the assertion of the subscriber
that he had not made any such party calls. The Arbitrator had three facts
before him : (1) that the department records showing that the disputed
international party calls were made from the telephone in question regularly;
(2) that the subscriber had plug and socket facility in several rooms with an
extra telephone which could be used any time by any one in the house; and (3)
that the subscriber had not made use of the STD/ISD dynamic lock facility,
though available.
Therefore when there
was an assertion by the subscriber that he had not made any such calls, the
Arbitrator merely made an inference from the 10 proved facts that even if the
subscriber had not made the calls, it was possible that his family members
including his son (who had returned home a day prior to the commencement of
`party calls') could have made such calls by using the plugs and sockets
arrangement and parallel lines in several rooms without the knowledge of the
subscriber. The Arbitrator was only dealing with a contention by the subscriber
that he had not made any such calls and giving his reasons for rejecting such a
contention.
10.
The
learned Single Judge next inferred that even if such calls were being made
earlier, after receiving the bill dated 1.4.1996, the subscriber would have
naturally restricted any such calls; and the fact that even after receipt of
the first bill, there were such `party calls' as was evident from the second
bill, made it improbable that the subscriber's phone was used for making such
`party calls' and therefore it had to be inferred that someone else was
mischievously using the said telephone connection for making unauthorised ISD
calls. This inference is also contrary to facts. The first bill dated 1.4.1996
was for the period 16.1.1996 to 15.3.1996. Though the second bill dated
1.6.1996 was subsequent to complaint dated 25.4.1996, the said bill related to
the period 16.3.1996 to 15.5.1996, major portion of which was prior to
25.4.1996. Further, the second bill was only for Rs.91,929/- as against the
first bill for Rs.3,62,723/-. The amount of the second bill and the 11 period
for the second bill demonstrates that after receipt of first bill and
complaint, there was in fact some kind of control and reduction in such phone
calls. Therefore the inference by the learned Single Judge was absolutely
baseless.
11.
The
finding of the learned Single Judge that the Arbitrator had not given
importance to the complaint in the letter dated 25.4.1996 that he had heard
cross talk on the line is also incorrect. The Arbitrator has dealt with this
matter. The simplest explanation is the existence of plug-socket facility and
parallel lines. If the parallel line was being used and the subscriber lifted
the receiver, he would certainly hear the conversation or talk, which was not
from any external source, but from the very same telephone.
12.
The
last assumption by the learned Single Judge was with reference to an affidavit
filed by the Telecom Department in some criminal proceeding against some
departmental employee unconcerned with this case, admitting that its employee
had tampered with the instruments for making international calls, and as a
result the department had to grant rebates to several subscribers. But that cannot
be a ground for granting rebate in this case, as no irregularity was found in
this case. The fact that in some case, 12 some departmental employee had
committed some tampering, is not a ground for inferring that there must have
been tampering in this case. The High Court has inferred that the fault was
with the department because it refused to refer the matter for CBI for
investigation. The learned Single Judge has observed:
"It is also
required to be noted that the petitioner had requested for an investigation
into the matter by Central Bureau of Investigation.
According to the
petitioner, if such an investigation is resorted to, it would unearth the
mischief and it was further stated that the petitioner was ready and wiling to
bear the costs thereof. Even this was not accepted by the respondent authority,
which would indicate that the respondent did not want to go deep into the
matter."
Reference to CBI is
not a condition precedent for raising a bill, merely because the subscriber
demands it.
13.
There
was thus no ground for the High Court to interfere with the findings arrived at
by the Arbitrator in exercising the power of judicial review. By assuming a
non-existing appellate jurisdiction and by making wrong assumptions and drawing
wrong inferences, the learned Single Judge has interfered with a reasoned
arbitral award.
14.
We
may next deal with the conclusion of the learned Single Judge that the award
was invalid because it was made by an Arbitrator who was junior 13 in rank,
when compared to the officer who passed the appellate order dated 12.2.1998. It
is a usual practice for the government departments to have the employees of the
department (high level officers unconnected with the contract) as Arbitrators.
The mere fact that the Arbitrator is of a rank lower than the officer who
rejected the claim of the subscriber would not invalidate the arbitration or
can be a reason for imputing bias to the Arbitrator (see Secretary to Govt.,
Transport Department v. Munuswamy Mudaliar - 1988 (Supp) SCC 651 and Indian Oil
Corporation Ltd. v. Raja Transport (P) Ltd. - 2009 (8) SCC 520). In Indian Oil
Corpn. Ltd. (supra) this court held thus :
"The fact that
the named Arbitrator is an employee of one of the parties is not ipso facto a
ground to raise a presumption of bias or partiality of lack of independence on
his part.
There can however be
a justifiable apprehension about the independence or impartiality of an
Employee-Arbitrator, if such person was the controlling or dealing authority in
regard to the subject contract or if he is a direct subordinate (as contrasted
from an officer of an inferior rank in some other department) to the officer
whose decision is the subject matter of the dispute. Where however the named
Arbitrator though a senior officer of the government/statutory body/government
company, had nothing to do with execution of the subject contract, there can be
no justification for anyone doubting his independence or impartiality, in the
absence of any specific evidence. Therefore, senior officer/s (usually heads of
department or equivalent) of a government/statutory corporation/public sector
undertaking, not associated with the contract, are considered to be independent
and impartial and are not barred from functioning as Arbitrators merely because
their employer is a party to the contract."
(emphasis supplied)
14 In this case, the Arbitrator had neither dealt with the matter at any point
of time nor was he a subordinate of the appellate authority in the concerned
telecom district who decided the matter. The bills related to a telephone
installed at the premises in Anand/Nadiad falling within the jurisdiction of
the General Manager Telecom Kheda Telecom District, Nadiad and the appellate
order dated 12.2.1998 was passed by the General Manager of Kheda Telecom
District, Nadiad. The Arbitrator was working as a Deputy General Manager (T)
East & Arbitrator Ahmedabad Telecom District, not under the General Manager
who passed the appellate order but in a different telecom district. Therefore,
there was no justification for the learned Single Judge to hold that the award
was invalid merely because the Arbitrator was of a rank lower than that of the
officer who passed the appellate order. It should also be noted that the appeal
was decided by the General Manager, Kheda Telecom district in pursuance of a
direction of the High Court. Again in a subsequent proceeding the High court
directed that the matter should be referred to arbitration under section 7B of
the Act and accordingly the dispute was referred to arbitration and the
departmental officer functioning as Arbitrator decided the matter. There is
nothing irregular or erroneous in the said procedure.
15.
The
last para discloses the learned Single Judge had virtually prejudged the matter
and was prejudiced against the appellant. The learned Single Judge allowed himself
to be swayed by the following irrelevant factors in deciding against the
appellant: (i) the respondent had come up before the High Court thrice; and
(ii) the department counsel did not agree with the suggestion of the learned
Single Judge to reconsider the bill amounts by issuing a revised bill on the
basis of the average of the bills for last six months. The learned Single Judge
proceeded on the basis that the attitude of the department was adamant and it
was indulging in unnecessary litigation. The department was simply pursuing a
legitimate claim. The matter had been decided by a statutory Arbitrator.
Therefore if the department decided not to give up or reduce its claim that
cannot be held against the department. The order shows that the learned Single
Judge had tried virtually to force the department to agree for suggestions
which obviously the officers and the counsel for the department could not
agree.
Such attitude on the
part of the High Court requires to be discouraged.
Unfortunately the division
bench did not examine any of these aspects and merely affirmed the decision of
the learned Single Judge.
16.
We
therefore allow this appeal, set aside the order of the learned Single Judge
and the Division Bench and dismiss the writ petition filed by the respondent
challenging the bills.
............................J.
(R V Raveendran)
...........................J.
New
Delhi;
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