The Supreme Court on Monday ordered Reliance Communications to pay at international tariffs, the cost of all international calls that were routed through the local loop on call lines at Vadodra, Gujarat in 2004.
The bench headed by Chief Justice SH Kapadia also directed Reliance to pay for even the local calls at international call rates. The court allowed the appeal of BSNL that had imposed a penalty of R9 crore on Reliance for passing off international calls as local ones for four months.
“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.
The court upheld the sanctity of the penalty clause in the agreement between BSNL and RCom and said: “have held the section represents pre-estimate of reasonable compensation for the loss suffered by BSNL.”
According to BSNL counsel, senior advocate Maninder Singh, BSNL received complaints in October 2004 against Reliance.
The complaints were lodged by subscribers in Gujarat accusing the telecom company of routing international calls through local lines.
Such calls were detected since September 4, 2004 and BSNL decided to charge Rs 5.65 per minute for all the incoming calls at the point of interconnection (POL). The international call rate was to be applicable retrospectively, from July 2004
Reliance advocate C S Vaidyanathan had argued that the routing was being done by one of its subscribers. He contended his client could not be penalised for the wrong committed by an unscrupulous subscriber.
But the Judges justified their ruling saying: “technology, an international call could fall on the local POI but then the concerned operator is responsible for the identity of the call.”