Infrastructure Charges Dispute: Legal Analysis

Delve into the legal complexities of a dispute over infrastructure charges between a telecom operator and service providers. The case revolves around the retrospective application of revised rates and the authority of the appellant to levy charges. The court’s legal analysis on the matter provides clarity on the interpretation of circulars, the prospectivity of rate changes, and the implications for service providers. Stay tuned to grasp the nuances of the court’s decision in this intricate legal battle.

Facts

• Bharat Sanchar Nigam Ltd. has filed appeals against the Telecom Disputes Settlement and Appellate Tribunal’s judgment dated 20 August, 2014.
• The tribunal’s order dated 14 October, 2014, rejecting BSNL’s application for clarification regarding the effective date of infrastructure charges is being challenged.
• BSNL’s revised rates, originally proposed in 2009 but made effective from April 1, 2013, were not accepted by the Tribunal.
• The dispute involves charges for infrastructure facilities provided by the appellant to the respondents.
• Charges were increased by a circular dated June 12, 2012, effective from April 1, 2009.
• The respondents hold licenses under the Indian Telegraph Act, 1885, for providing telecom services.
• Interconnection Agreements were made between the respondents and the appellant for connecting their telecom networks.
• New operators need to interconnect with existing networks of incumbent operators to start operations.

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Arguments

• The appellant argues that the retrospective applicability of the circular dated 12 June, 2012 from 1 April, 2009 may not be sustainable but asserts the right to levy charges after notional fixation by an annual increase of 10% starting from 1 April, 2009.
• The appellant further contends that the notional fixation of charges effective from 1 April, 2013 should include a 10% annual increase from 1 April, 2010 onwards, as per the circular dated 12 June, 2012.
• The appellant revised infrastructure charges based on city classification and commercial agreement terms, supported by evidence.
• The Tribunal’s interference with the retrospective application of the circular dated 12 June, 2012, despite upholding the appellant’s competence to set charges, is questioned by the appellant.
• The appellant asserts that even though charges from 1 April, 2009 may not be chargeable due to the Tribunal’s judgment, service providers still need to pay the notional increase of charges at 10% annually from 1 April, 2013.
• The respondents have not challenged the authority of the appellant in revising infrastructure charges for active links leased to telecom operators.
• The circular dated 12 June, 2012 could not be given retrospective effect from April 1, 2009.
• No notional increase of 10% every year can be charged from service providers starting April 1, 2013.
• The Tribunal clarified that there shall be no notional increase of 10% every year as indicated in the circular dated June 12, 2012.
• The rates applicable on April 1, 2009, should be applied starting April 1, 2013 without any notional increase.
• The circular dated June 12, 2012, applicable prospectively from April 1, 2013, should be interpreted purposively.
• The plea for notional increase by 10% every year in revising rates from April 1, 2013, is legally unsustainable.
• Accepting the appellant’s plea would burden service providers financially for a period they did not charge customers.
• The present dispute is regarding infrastructure charges for the limited period of two years from April 1, 2013, to March 31, 2015.

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Analysis

• BSNL is not obligated to provide infrastructure to service providers, who are responsible for arranging their own infrastructure.
• The rates for infrastructure facilities are prescribed by BSNL and can be revised as per city classification and government regulations.
• The retrospective application of revised rates from April 1, 2009, was a point of contention between BSNL and service providers.
• The Tribunal clarified that the revised rates would apply prospectively from April 1, 2013, without any notional increase.
• Infrastructure sharing charges, including building space, tower sharing charges, and duct charges, are to be paid upfront every year.
• The circulars issued by BSNL regarding infrastructure charges have been subject to legal challenges by service providers.
• Interconnect Agreements between BSNL and service providers govern the provision and payment of infrastructure services.
• BSNL’s right to charge for infrastructure facilities and revise rates were upheld by the Tribunal.
• The circulars and regulations concerning infrastructure charges have been revised over the years based on commercial viability and government guidelines.
• Each party, regardless of ownership of a transmission system, may provide accommodation for the other party’s equipment in their premises, subject to availability and feasibility.
• Each party may allow the mounting of antennae for the interconnect link owned by the other party on its transmission towers, if feasible.
• The circular dated 12 June, 2012 cannot be applied retrospectively from 1 April 2009 in revising infrastructure charges.
• The appellant has the authority to fix rates of infrastructure charges, and they can apply notional increases by a certain percentage each year as per the circular from 1 April 2013.
• Service providers are not obligated to pay additional infrastructure charges from previous years but can be subject to notionally increased charges from 1 April 2013.
• The Tribunal’s order on this matter is deemed legally unsustainable and should be set aside.

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Decision

• Appeals partly allowed
• Refunds to be made within four weeks
• Revised rates of infrastructure facilities applicable from 01.04.2013
• Appellant allowed to revise notional rates based on 10% increase every year from 12 June 2012 circular
• Appellant can raise additional demand based on notional increase effective from 1 April 2013
• Consequences as per agreements if service providers fail to pay

Case Title: BHARAT SANCHAR NIGAM LTD. & ETC. ETC. Vs. M/S TATA COMMUNNICATIONS LTD. AND ORS. & ETC. ETC. (2022 INSC 996)

Case Number: C.A. No.-001699-001723 / 2015

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