Modi Tele moves court against Centre

The Delhi High Court has issued notice to the Centre on a petition filed by Modi Telecommunications seeking setting aside of an arbitral award and refund of Rs 1.41 crore alongwith interest at the rate of 12 per cent per annum. The matter will further come up for hearing in February, 2006.

"The respondent is obliged to refund the amount realised by encashing the bank guarantee and performance guarantee together with interest as well as refund of 10 per cent licence fee paid by the firm at the time of signing of the agreement as advance together with interest," the company said in its petition. The court appointed arbitrator SC Agrawal, in its May 20 order, had rejected the company's claim holding it liable for non-commissioning of radio paging services. Besides, the arbitrator had held that the deductions made by DoT were correct.

The petition had held the Centre's action as legal and had observed that Modi Tele had failed to pay the licence fee as per the terms of the license and the Centre was entitled to invoke the bank guarantees as well as the performance guarantees for recovery.

According to the petition, Modi Telecommunications was awarded license for installation, networking, maintenance and operations of the radio paging services in Rajasthan circle (46 sites in 22 locations) for a period of 10 years.

Under the terms of license and laws governing telecommunications, the company had to get the mandatory approval from Standing Advisory Committee on Frequency Allocations (SACFA), an apex body in the ministry of communications responsible for frequency allocations, coordination of various wireless users in the country, etc, it said.

According to the company, prior to getting of the necessary SACFA clearance, the respondent without taking notice of delays in granting approval had stuck to its demand of license fee 15 per cent for first quarter and remittance of dues alongwith interest.

The illegal act was evident from the fact that the respondent without considering its own faults and delays invoked bank guarantee by addressing a letter to Indusind Bank on March 18, 1997 and terminated its license in February 2000 effective from March, 1997, the petitioner said.

The financial bank guarantees were also encashed in March 2001 and May 2001 after the stay granted by TRAI was vacated, it added.

"The non-commissioning was on account of reasons that were totally within the control of DoT and other government agencies and not on account of any acts of omission or commission on the part of the company," the petition said

According to the company, SACFA approval was not granted till the stipulated date, so the commencement of paging services did not arise at all. Neither a formal letter/notice of termination was given, it said.