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Petitioner: REDTONE TELECOMMUNICATIONS PAKISTAN (PVT.) LTD. and 3 others VS Respondent: FEDERATION OF PAKISTAN through Secretary and another
Court Name: Sindh High Court Judge(s): Amir Raza Naqvi Title:REDTONE TELECOMMUNICATIONS PAKISTAN (PVT.) LTD. and 3 others vs
FEDERATION OF PAKISTAN through Secretary and another Case No.: Suits Nos.1060 and 1109 of 2014 Date of Judgment:2014-08-30 Reported As: 2016 YLR 345 Result: Application dismissed Judgment ORDER AMER RAZA NAQVI, J.---Through this common order I intend to dispose of C.M.A. No.8565 of 2014 filed in Suit No.1060/2014 and C.M.A. No.8914/14, filed in Suit No.1109/2014. In Suit No.1060/2014 there are four plaintiffs and there is one plaintiff in Suit No.1109/2014. All the plaintiffs in both the suits claim to hold license issued to them under section 21 of the Pakistan Telecommunication (Re- organization) Act, 1996, hereinafter referred as "P.T.A. Act". Plaintiffs have not filed copy of their licenses with the plaint, however, copy of alicense is available, as Annexure "A" to the written statement filed on behalf of defendant in Suit No.1109/2014. Under the License, licensees were required to provide mandatory services of long distance and international public voice telephone services and such other telecommunication services. For such reason perhaps parties have referred the plaintiffs as L.D.Is. It has been mentioned in the memo of plaint that there are total 14 L.D.Is, who have been issued above referred licenses and PTCL is also one of the licensees although not plaintiff in either suit. After the issuance of licenses all the L.D.Is started and continued their business, on 13.08.2012 through a directive International Clearing House (ICH) regime was introduced and as a consequence all the L.D.Is entered into an agreement known as I.C.H agreement. This policy directive dated 13.08.2012 was reviewed and replaced by a new policy issued on 17.06.2014 which changed the I.C.H regime. This policy directive has been challenged in the suits with the prayer that such policy be declared arbitrary, illegal, void ab-initio and unlawful and therefore be set-aside. Through listed applications suspension of impugned policy directive dated 17.06 2014 till disposal of the suit has been sought.
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2. The background of the controversy involved in the suits, is that in 2003 a deregulation policy for telecommunication sector was issued by defendant No.1 in both the suits. Such policy declared its objectives in clause-3 of the Policy, which is as follows:-- (a) Increase service choice for customers of telecommunication services at competitive and affordable rates. (b) Promote infrastructure development, especially infrastructure that will increase teledensity and the spread of telecommunication services in all market segments (including voice, date and cellular etc). (c) Increase private investment in the telecommunication sector and encourage local telecom manufacturing/service industry. (d) Recognizing the challenge to incumbent, minimize exposure to the Government's revenue base in the short term. (e) Accelerate expansion of telecommunication infrastructure to extend telecommunication services to un-served and under-served areas. (1) Liberalize the telecommunication sector by encouraging fair competition amongst service providers. (g) Maintain an effective and well defined regulatory regime that is consistent with international best practices, and; (h) Maintain consistency with Pakistan's IT and Internet promotion policy of low prices for bandwidth to make Internet access affordable. (i) Safeguard Pakistan's national and security interests. 3. It is also provided under clause-4.3 that in pursuance of this policy L.D.I licenses will be issued. The licensees were authorized to provide licensed services andto establish, maintain and operate licensed telecommunication system. It appears that policy referred above amongst others aimed to increase services choice for customer of telecommunication services at competitive and affordable rates. The L.D.Is in pursuance of their licenses are operating in the telecommunication sector. On 13.10.2012 a directive known as policy directive for establishment of international clearing house was issued by defendant No.1. It is mentioned in the first page of such policy that it was observed that L.D.Is. Operators have challenged A.P.C. For U.S.F. As contribution in Courts and a number of cases are pending adjudication and huge amounts in this regard are still pending/payable, therefore, in order to address the concerns of L.D.Is. Operators and P.T.A's. Request to defendant No.1 for amicable resolution of the same, the matter was taken up with all stakeholders and after due consultation with all stakeholders including P.T.A it was agreed unanimously to establish one gateway for termination of international traffic (of telephone services) in the form of International Clearing House Exchange. It appears that there were two main aspects of this policy firstly that all incoming international calls be terminated at one place and for such purpose L.D.I. Operators agreed to form a consortium to be headed/led by Pakistan Telecommunication Corporation Ltd. And such I.C.H. Exchange was established. Secondly certain rates were fixed in respect of access promotion contribution and an arrangement in respect of A.P.C. And U.S.F. Was made. To understand A.P.C. And U.S.F. It is necessary to refer the various clauses pertaining to financial aspect of the telecommunication sector. Section 33-A of P.T.A. Act provides establishment of universal service fund. It consists of grants made by Federal Government and Provincial Governments, prescribed contribution by licensee, sale proceed from auction of the right to use radio spectrum; loans obtained from the Federal Government and grants and endowments received from other agencies. (Section 33-A(4) a to (e). It is provided in Section 33-B that Federal Government shall have the power to administer the USF in such manner as may be prescribed. The policy issued in July, 2013 refers Access Promotion Contribution in clause 4.3, such clause gives purpose of A.P.C. And also provides guidelines in this respect. Access
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Promotion Rules were framed in 2004 and Access Promotion Regulations were also promulgated in 2005. Defendant No.1 also made Universal Services Fund Rules, 2006. Rule-6 of Access Promotion Rules, 2004 provides that authority (defendant No.2) shall maintain a list of approved total accounting rates for different countries. Such rules also provide that authority shall maintain list of approved Total Accounting Rates from time to time. 50% of approved accounting rates would be the approved settlement rates. The A.P.C. Has been defined as amount determined by the authority in accordance with sub-rule (4) of .Rule 8 of Access Promotion Rules, 2004. Other aspect was termination of incoming international calls at one place. 4. I.C.H. Directives dated 13.08.2012 in clause-3(g)&(h) fixed certain rates in respect of approved settlement rates and Access promotion contribution. Under this directives and after execution of I.C.H agreement the telecommunication sector was being run under above arrangement, however, defendant No.1 issued another policy directives on 17.06.2014 through such directive earlier policy directives dated 13.08.2012 referred above was withdrawn, such directive has been impugned in these suits and through listed'applications its operation is sought to be suspended during pendency of these suits. The said impugned directive reads as under:-- (i) Policy Directive for establishment of International Clearing House Exchange for international Incoming Calls, dated 13th August, 2012, issued vide MoIT-letterNo . 9-1 /2002-DT, is hereby withdrawn. (ii) Relevant provisions and powers of PTA under clause 4.3 of the "Deregulation Policy for Telecommunication Sector", 2003 are restored in original, Pakistan Telecommunication Authority (PTA) will have the Authority to determine Approved Settlement Rate (ASR), including APC, as done prior to ICH. (iii) In the spirit of effective competition, the APC component of the ASR regime will be zero rated for the time being. (iv) All ancillary matters pertaining to the discontinuation of the ICH regime will be handled by PTA in consultation with the Ministry of Information Technology. (v) This revised policy will become effective on 1st August 2014 and will remain in force until further review. 5. Mr. Arshad Teyebally, learned counsel for the plaintiffs in Suit No.1060/2014 contended that the policy directives dated 13.08.2012 clearly mentioned that such directive has been issued after consulting all the stakeholders including all the L.D.Is. And therefore, before withdrawing such directive and substituting the same with another one all the stake holders were required to be consulted. He argued that as a result of policy directives all the L.D.Is. Entered into I.C.H. Agreement which agreement has been filed at page-97 of Suit No.1109/2014 and at page-107 of Suit No.1060/2014. Learned counsel submitted that as a result of this agreement all the L.D.Is made arrange-ments for new system and for such purpose huge expenses were incurred by all the L.D.Is. He submitted that in the other litigation in which dispute regarding access promotion contribution is under adjudication and in some other proceedings defendant No.2 supported the version of the plaintiffs and submitted before the Courts and other authorities that I.C.H system is a better system as it provides a better check on the grey trafficking, which are calls being received in Pakistan through a channel other than the one controlled by P.T.A and which causes loss to the exchequer. He submitted that defendants were duty bound to consult the L.D.Is before changing the policy as on the basis of promises made by the defendants in Policy dated 13.08.2012, plaintiffs made huge investments and legitimately expected in view of clause-3(f) of said Policy that before any change in the policy the L.D.Is shall be consulted. He referred a letter dated 16.12.2013 filed at Page-263 of written statement filed by defendant No.2 in Suit No.1060/2014 and argued that the I.C.H. Directive was issued after consultation. He, therefore, argued that in view of the fact that certain financial arrangements were also made and even after litigation between the parties in respect of the
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amount due on account of A.P.C. The amount is being deposited in escrow account, therefore, this policy continues unless all stakeholders are consulted and after meaningful consultation this policy is substituted by another and the policy cannot be changed unilaterally by the defendants. He referred the contents of the impugned directives and contended that such directive does not indicate that any stakeholder was consulted before issuance of such directive. He submitted that impugned directive does not provide that what would happen to the A.P.C. Already paid by the plaintiffs. Learned counsel submitted that in view of the above facts and circumstances the impugned directive is unreasonable, arbitrarily, mala fides and cannot be sustained. He relied upon the theory of promissory estoppel and in support of his contentions he referred PLD 2007 Lahore 61, PLD 1991 SC 14, 1997 SCMR 1804, PLD 2002 SC 208, PLD 2008 SC 476, AIR 1979 SC 621, PLD 1996 Karachi 1, PLD 1959 SC (Pak) 45. 6. Mr. Haider Waheed, learned counsel for the plaintiffs in Suit No.1109/2014 in addition to what was argued by Mr. Arshad Tayebally submitted that I.C.H. Arrangement was made by consent of the parties and could not have been withdrawn unilaterally. Learned counsel submitted that the whole business was closed at the time of I.C.H. Arrangement and fresh arrangements were required to be made and therefore in view of promise made in clause-3(f) of earlier directive, plaintiffs legitimately expected that before withdrawal of such arrangement or directive they should have been consulted. He submitted that I.C.H. Arrangement is easier to maintain, grey trafficking can better be checked by this system and as a result of I.C.H. The distribution and utilization of the revenue is much easier to be collected and distributed. ' He further submitted that I.C.H. System enhanced the revenue and reduced grey trafficking. Per learned -counsel if the system is withdrawn immediately it will cause immeasurable losses to the plaintiffs. He further contended that in case if normal traffic has reduced the reason could be increase in over the top traffic. This term is used for traffic through internet, which is transmitted without the use of telecommunication system, he, therefore, contended that injunction applications should be allowed. Both the learned counsel for the plaintiffs submitted that evidence should be recorded in the suits as they have good prima-facie case and balance of convenience is in their favour, and therefore plaintiffs are entitled for relief claimed in listed applications. 7. On the other hand learned Additional Attorney General appearing for defendant No.1 submitted that the right of formation of any policy vests with the federation. He submitted that theory of promissory estoppel is not applicable in this case. There is some purpose behind the policy and the system of I.C.H. Has failed. He referred various documents particularly available at pages Nos.262 to 266 along with the written statement filed by defendant No.1 and submitted that grey traffic has been increased and there are actions taken by the federation to curb the grey trafficking and even equipment have been seized and trial is pending in this regard. He submitted that every promise does not constitute estoppel. He further submitted that there was no promise that the policy will not be revised or withdrawn. He submitted that no loss would be caused to the plaintiffs as a result of change in policy. According to him stakeholders have no role in the formation of any policy. He submitted that there was failure of the earlier policy and in such a situation Court should not enforce the promise even if that was there. 8. Mr. Babar Sattar, learned counsel for defendant No.2 in both the suits gave historical background and submitted that initially T & T department existed and in1991 Pakistan Telecommunication Corporation was created. In the year 1996 the sector was deregulated and PTCL and PTA were created. He submitted that during this period tremendous changes in technology took place and such changes resulted into change of policy as well. L.D.Is. Were created in 2004 and licenses to L.D.Is. Were issued. He submitted that due to I.C.H. Prices were irrationally increased and as a result grey trafficking also increased. He submitted that defendant No.1 has given monitoring report showing pre I.C.H and post I.C.H traffic trends which are available at Page-62 of written statement
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filed on behalf of defendant No.1. According to learned counsel grey trafficking increased as in the I.C.H regime prices are more than what they should be in present era of (worldwide) changing telecommunication sector. Per learned counsel after enforcement of I.C.H., L.D.Is.Created cartel. He submitted that through impugned policy decision A.P.C. Has been made zero rated and it will have effect of decreasing the prices and as a result grey trafficking will be discouraged as it would not bear much profit keeping in view of the risks to which operators of grey trafficking will be exposed. He submitted that technology is changing rapidly and to cater with the changes new policy is necessary and L.D.Is. Are bound to accept these changes. He submitted that in view of new policy prices would be affordable and consumer shall have increased choices. Hereferred deregulation policy and submitted that in clause-8 at Page-17 of such policy it is mentioned that this policy would be valid for five years from the date of implementation and will be subject to review after this period and the licenses awarded to L.D.I. Operators will be valid for 20 years. He submitted that L.D.I. Licenses were issued in pursuance of such policy and therefore L.D.Is were very well aware that policy can be changed and reviewed after five years, therefore, there is no surprise to the L.D.Is as it is clear from such provision that during the validity of the licenses policy can be changed. He referred section 4 of Telecommunication Act 1996 and submitted that such section describes functions of the authority and under Sections 4 and 5 of the Act defendants can revise and review the policy as it is part of their duties as regulators. Referring Rule 9 of Access Promotion Rules, 2004. He submitted that defendants are required to review the levels of A.P.C. Contribution and A.P.C. For U.S.F. Contribution. He specifically referred Section 4(1)(c)&(d) and submitted that in discharge of such functions it is necessary to revise the policy. In this regal he has also referred regulation No.5 of A.P.C. Regulation, 2005 and submitted that such regulation also requires review of A.P.C.L. Contribution and A.P.C., for U.S.F. Contribution in special circumstances. He argued that in fact the I.C.H regime has not come from defendants Nos.1 and 2 as a matter of fact the policy note available at Page-275 of written statement filed by defendant No.2 makes it clear that the regime of I.C.H. Was in fact proposed by L.D.Is. He submitted that rules and regulations referred by him makes it clear that it was an obligation on P.T.A. To revise the rates after every six months and authority is prevented from discharging this function in view of the I.C.H. Regime as the rates are fixed in such regime, which is in fact contrary to law. He referred clause "c" of earlier policy directive dated 13.08.2012 and submitted that rates were to be approved by Government of Pakistan before conveying the same to the foreign operators through the designated consortium leader. He submitted that through clause-9 of the same directive the rate was freezed and as such regulator was prevented from reviewing the rate after every six months. He referred clause 4.11 of I.C.H Agreement and also clauses 4.9 and 9.1 and submitted that no time period was provided in such clauses, therefore, defendants cannot be restricted from withdrawing or substituting the previous policy with the new one. He submitted that as a result of I.C.H. The profit of L.D.Is. Was enhanced and therefore rates are irrational and such increase has resulted in increased grey trafficking. To support his contention he also referred Annexure "A" to the I.C.H. Agreement and submitted that share of L.D.Is. Was fixed which was in fact against the relevant provisions of law and applicable rules, therefore actual benefit of I.C.H. Regime was for L.D.Is. And it was not for public interest. He submitted that defendants have also international obligations which require the review of the policy. While referring the various documents especially the policy note available at page-275 of written statement filed in suit No.1060/2014, he submitted that the stand of his client was also against the ICH regime. He submitted that the same position can be seen in documents filed at pages-263 to 273 of the same Written statement. He submitted that it is not disputed that there has been proceedings before the competition commission and before the courts of law where the I.C.H. Regime was subject matter and therefore the change in policy is neither sudden nor arbitrary. It was discussed and deliberated, L.D.Is. Have been consulted in the matter but since the impugned
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directive is a policy directive the plaintiffs we not required to be heard formally before issuance of impugned directive. He submitted that since APC was removed in the impugned system it is neither unreasonable nor illegal and burden is on the plaintiffs to show that the impugned system is arbitrary, unreasonable, illegal or mala fide and there is nothing on record to show that there was any violation of law in passing the impugned system. He submitted that the Hon'ble Supreme Court in recent judgments has held that constitution of this country is based on concept of dichotomy of powers between legislature, executive and judiciary. In this respect he referred PLD 2014 SC 1. He also relied on PLD 2013 SC167 while relying 2012 PLC (C.S.) 917 he submitted that the court can neither assume the role of a policy maker and/or that of a law maker he further submitted that so far as the Promissory Estoppel is concerned the claimed promise was neither clear nor unequivocal and therefore the case law relied upon by the plaintiffs in this regard is not applicable. Per learned counsel in this case there was no promise at all as no time frame work was given in the earlier directive. 9. I have heard all the learned counsel appearing in the matter and have gone through the material available on record with their able assistance, while giving background of the case I have mentioned that in the earlier directive dated 13.08.2014 which was withdrawn by the impugned policy directive, it was directed that L.D.I. Operator's consortium running the ICH Exchange would also provide and regularly upgrade international traffic monitoring facility on ICH exchange to enable monitoring of incoming data and voice to curb possibility of grey traffic and prompt collection of APC by the Government of Pakistan. In Clause 3(g)&(h) the shares in the approved settlement rates was fixed and distribution of further amount was provided. It is obvious from the facts and circumstances that distribution of APC and other revenue without any dispute and complication was one of the purpose of the policy which could not be achieved. Moreover, it is obvious that the various rates were fixed which resulted in increased call rates for the consumers at both ends of the calls as when the arrangement is made with operators in foreign countries such considerations are bound to be taken into account. Sections 4 and 5 of PTA Act provides that it is function of defendants to regulate the allocation of revenue. Section 5(2)(p)&(q) makes it very clear. I agree with Mr. Babar Sattar that due to revenue arrangements made as a result of earlier directive, it was not possible o reduce the rates or regulate the same ill exercise of powers under sections 4 and 5 of the PTA Act or at least the purpose of the policy could not be achieved, which is evident from the subsequent events and proceedings at different forums. It is not clear that why in the first place such rates were fixed in the earlier policy. The purpose of curbing the grey trafficking also could not be achieved as there was prima facie evidence of increasing in the grey trafficking although decrease in the normal traffic does not necessarily mean that grey trafficking has increased for the simple reason that increasie in over the top traffic may reduce the traffic subject matter of L.D.Is licensees but there are seizure reports and other material to show that grey trafficking could not be stopped as a result of ICH arrangement. It would be a purely technical aspect that how grey trafficking could be stopped and detailed examination of the system cannot be undertaken by the Court however it is duty of the defendants to take necessary steps to curb this practice such steps may include change in Policy. As mentioned earlier the fixation of rates and distribution which were made part of ICH system could have prevented defendants from exercising their powers under the Act. The share of all the L D.Is is mentioned in Annexure "A" to the ICH Agreement and it has not been explained by any of the party that what would happen in case change in the share prescribed in Annexure "A" becomes necessary in the event of change of share of each LDI in the business of this industry/sector and also in case of new induction in the system. Annexure "A" itself does not show that what is the basis of calculation of Annexure "A". 10. The main arguments of the plaintiffs in support of their contention is based on claimed promise. Both the learned counsel for the plaintiffs in this respect mainly relied upon clause 3(f) of Policy
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directive dated 13.08.2012. Such clause is reproduced for convenience:- (f) Without prejudice to rights of LDI operators under their LDI licenses, all the participating LDI operators shall stay within the arrangement initially for a period mandated by the GoP after due consultation with the stakeholders. ' Both the learned counsel contended that words "All the participants Cooperators shall stay within the arrangement initially for a period mandated by the GoP after due consultation with the stakeholders" mean that policy cannot be changed without consulting LDIs. A plain reading would show that due consultation is referred in respect of staying of an L.D.I within the arrangement, it would mean that in case any LDI wants to leave the system it cannot leave for a specified period which period was to…
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