SC upholds BSNL’s Rs9 cr penalty on RCom

The Supreme Court on Monday upheld the right of Bharat Sanchar Nigam Ltd to impose the maximum penalty on the Anil Dhirubhai Ambani group firm Reliance Communications (RCom) for wrongly routing international calls through the state-run telcecom company's network as local connections by tampering with Calling Line Identification (CLI) numbers.
 
Allowing the BSNL appeal, the Supreme Court ordered RCom to pay at international tariffs the cost of all international calls that were routed through the local loop on call lines in Vadodra, Gujarat in 2004.
 
The three-judge bench headed by Chief Justice S H Kapadia also directed Reliance to pay for even the local calls at international call rates. BSNL had imposed a penalty of Rs9 crore on RCom for passing off international calls as local ones for four months.
 
The bench said that as per BSNL's interconnect agreement with RCom, the state-run firm had the right to levy a penalty on all calls routed by RCom through its network, including local calls, based on the highest call rate slab.
 
The Supreme Court also held that by masking international call as local, RCom had tried to destroy the "principles of level playing field" and BSNL has the right to recover its losses.
 
The apex court also set aside the earlier order of the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) in favour of RCom, saying such violations come under "strict liability", where the PSU can impose penalty on each and every call from their Point of Interconnection (PoI).
 
"We set aside the impugned judgment and remit the matter to TDSAT to decide the matter de novo in accordance with the law laid down," said the bench, which also comprised Justices K S Radhakrishnan and Swatanter Kumar.
 
TDSAT had on May 24, 2010, set aside the bills raised by BSNL and said that clause 6.4.6 of the Interconnect Agreement between RCOM and the PSU was penal in nature, and therefore the PSU cannot impose penalty on all calls routed by RCom through its PoI.
 
TDSAT had further said the amount of penalty was not commensurate to the actual damage.
 
''While categorising damages as 'penal' or 'liquidated damages', one must keep in mind the concept of pricing of these contracts and the level playing field provided to the operators because it is on costing and pricing that the loss to BSNL is measured and therefore, all calls during the relevant period have to be seen,'' the bench observed in its judgement.