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Petitioner: PAKCOM LIMITED and others VS Respondent: FEDERATION OF PAKISTAN and others
Court Name: Supreme Court of Pakistan Judge(s): Anwar Zaheer Jamali, Javaid Iqbal, Muhammad Sair Ali Title: PAKCOM LIMITED and others vs FEDERATION OF PAKISTAN and others Case No.: Civil Petitions Nos.662-663 of 2009F.A.O. No,6/2008W.P. No,1298/2008 Date of Judgment:2010-05-27 Reported As: PLD 2011 Supreme Court 44 Result: Petitions dismissed
JUDGMENT
JUDGMENT JAVED IQBAL, J.---The above captioned petitions are directed against judgment dated 13-2-2009 passed by learned single Judge of the Islamabad High Court, Islamabad in chambers whereby F.A.O. Bearing No,6 of 2008 and Constitutional Petition preferred by the petitioners, were dismissed. 2. Precisely stated the facts of the case are that "Messrs Pakcom Private Limited was granted a license under the provisions of Telegraphs Act, 1885 by the Federal Government, to establish, maintain and operate cellular mobile telephone public service and system within the territory of Pakistan on 19-4-1990. The license was to remain valid for a period of 15 years and was renewable subject to satisfactory performance, at the discretion of the Government of Pakistan. Review period of the license for renewal thereof was to commence three years before expiry of the said period of 15 years. The licensee was required to pay royalty at the rate of 4% of gross sales revenues minus Telephone and Telegraph Department call charges and 4% of net profit after tax. In the year, 1996, Pakistan Telecommunication (Re-organization) Act, 1996, was promulgated. On 12-8-1997, the Pakistan Telecommunication Authority, established under the provisions of Pakistan Telecommunication (Reorganization) Act, 1996 revalidated the license dated 19-4-1990. The original license was valid till 18-4-2005. The process for its renewal started and after lengthy correspondence between the petitioner and Pakistan Telecommunication Authority, on 19-4-2005, the petitioners licence was renewed. The payment of fees and other charges required to be paid by the petitioner were provided in paragraph 4.1 of the licence. The Pakistan Telecommunication Authority served a show-cause notice on the petitioner under section 23 of the Pakistan Telecommunication (Re-organization) Act, 1996 hereinafter referred to as 1996 Act, calling upon it, to remedy the contravention mentioned in the notice by paying the amount of 2nd, 3rd and 4th
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instalments, the annual spectrum charges, USF charges, R&D and ALF charges and the numbering charges with late payment charges in accordance with clause 4.2.2. Of the license within 15 days of the issuance of the notice and to show cause and explain in writing within 30 days as to why any of the enforcement orders prescribed in section 23 of the Act, including but not limited to suspending or terminating the licence or imposing additional conditions or appointing an administrator for managing affairs of the Licensee, may not be imposed. The petitioner gave reply to the show- cause notice. The Pakistan Telecommunication Authority on 3-1-2008, passed the following order:- - "The foregoing shows that the licensee has been extended every concession and has been fully accommodated in terms of time, which has been the licensees main concern and request. However, it is observed that our concession, instead of being availed, has been abused every time and the licensee, despite the number of the opportunities given to it, has failed persistently in showing a serious approach towards its obligations under the license and our regulatory directives. Based on the foregoing facts, we are of the considered opinion that the licensees contravention of the terms and conditions of the license regarding its financial obligations, incorporated in the license on the strength of the provisions of the Act, is grave and persistent and we, therefore, terminate its license No, CMT04/ LL&M/ PTA/ 2005 with immediate effect. FAB is accordingly directed to immediately withdraw the frequency spectrum assigned to Messrs Pakcom (Instaphone). The outstanding dues mentioned in para 10, above, shall be recovered under section 30 of the Act for which proceedings shall be initiated forthwith." The petitioner challenged the said order through F.A.O. No,3 of 2008 filed in the Lahore High Court, Rawalpindi Bench Rawalpindi. The appeal was heard by a learned Single Judge of the High Court on 15-1-2008. The parties agreed to the remand of the case to the Authority. Paragraph 3 of the order dated 15-1-2008, is reproduced:-- "In view of concurrence between the parties, above noted, instant appeal is accepted and impugned order dated 3-1-2008, passed by the Pakistan Telecommunication Authority is set aside, with the result that case is remanded to the same Authority for its fresh decision after hearing the parties and the decision so given shall be binding on them. In case the appellant ultimately commits any. Default in compliance of decision, the respondent authority can take punitive action, as per law. Appellant is directed to appear before the respondent authority on 28-1-2008. Parties are left to bear their own costs." After the remand, the Authority decided the matter vide order dated 4-3-2008. It was directed:-- "We therefore, finally direct the licensee this time through this repeated decision of ours to make payment of all outstanding amounts as per the detail given above in accordance with the terms and conditions of the license on or before 21st May, 2008. The licensees failure to make payment on or before the aforementioned date shall not only be in violation of the undertaking given by . It before the High Court dated 15th January, 2008 but shall also be in grave and persistent contravention of the terms and conditions of the license. In case of the licensees failure to make payment on or before the 21st May, 2008, its license No, CMT-04/LL & M/PTA/2005 shall stand terminated under section 23 of the Act and all necessary measures, in this regard, shall be taken accordingly." It is worth mentioning here that on 21-2-2008, the petitioner gave an application under regulation 95 of the Pakistan Telecommunication Authority (Functions and Powers) Regulation 2006, for deferment in payment of license fee and other charges by way of moratorium. In the order dated 4-3-2008, the request for deferment of the payments was also rejected. Through F.A.O. No,6 of 2008, the Appellant challenged the order dated 4-3-2008. Apart from the appeal, the petitioner
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also invoked the constitutional jurisdiction of High Court under Article 199 of the Constitution through Writ Petition No,1298 of 2008 with the following prayer:-- (I) Declare that the Policy, in so far as it (1) purports to apply to renewal of licenses; (2) mandates that the Auction Winning Price shall be charged as the initial License Fee, especially upon renewal of the Original License, and (3) provides for the levy of the Spectrum Administrative Fee in Appendix B thereto is without lawful authority, void ab initio and of no legal effect. Accordingly, this honourable Court may be pleased to declare that the 2004 Regulations, the 2006 Regulations and the License, to the extent that they are based upon, incorporate, further or implement aforesaid aspects of the policy are without lawful authority, void ab initio and of no legal effect. (II) Declare that Pakcom was entitled to renewal of the Original License on the terms and conditions contained therein, and in particular in accordance with Regulations 38(5) and 39(1) of the 2000 Regulations, and Regulation 37(5) of the 2004 Regulations, and any terms of the License inconsistent therewith are without lawful authority, void ab initio and of no legal effect." (III) Declare that the Policy, the 2000 Regulations, the 2004 Regulations and the 2006 Regulations, to the extent that they purport to allow the levy of license fee on any basis other than the cost of regulation incurred by PTA are without lawful authority, void ab initio and of no legal effect. (IV) Declare that the License, to the extent that it imposes the Annual License Fee on the basis of 0.5% of Pakcoms gross annual revenue is without lawful authority, void ab initio and of no legal effect. (V) Declare that PTA and FAB acted unlawfully and without lawful authority by not allocating the frequency guaranteed by the Policy (i,e,10 +10 MHz) to Pakcom. (VI) Direct PTA and FAB to allocate frequencies to Pakcom in the 1800 MHz band, as promised in the policy, in adequate quantity to ensure that there is a level playing field between Pakcom and other operators. (VII) In the alternative to reliefs I, II and III above, to declare that Pakcom is entitled to the same terms and payment period for the payment of the License Fee as granted to Unfone subject to: (a) the grant of reliefs No, IV, V and VI above and VIII below; (b) the calculation of the Initial License Fee on the basis of the frequencies actually granted to Pakcom, and (c) a declaration that the fifteen year period of the License should be deemed to start from the effective date of grant of frequencies to Pakcom in the 1800 MHz band instead of starting from April 2005. (VIII) Permanently restrain the Federal Government and PTA from taking any adverse action whatsoever against Pakcom and/or the Shareholders on the basis of the impugned terms of the Policy and/or the License or any demand made or order passed pursuant thereto. (IX) Grant costs of the case to the petitioners. (X) Grant any other relief deemed appropriate by this honourable Court." 3. F.A.O. No,6 of 2008 and Writ Petition preferred in the Islamabad High Court, Islamabad were dismissed by means of judgment impugned, hence these petitions. 4. Ch. Aitzaz Ahsan, learned Senior Advocate Supreme Court entered appearance on behalf of petitioner and urged with vehemence that the legal and factual aspects of the controversy have not been dilated upon and decided in its true perspective which resulted in serious miscarriage of justice. In order to substantiate the said contention it is argued that various important aspects and relevant record escaped the notice of learned single Judge causing serious prejudice against the petitioner and the controversy in hand could not have been set at naught without a thorough perusal of various documents which was not done. It was next argued that the written submissions filed on behalf of petitioner were not taken into consideration and various points raised in Writ Petition No,1298/2008 were not decided at all. It is submitted that a specific stance was taken in Writ Petition No,1298 of 2008 that the Mobile Cellular Policy, 2004 (hereinafter referred to as the
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Policy), qua charging of the Auction Winning Price as initial license fee and the relevant portion of the licence and regulation issued from time to time by PTA were ultra vires of the Pakistan Telecommunication Authority Act, 1996 and besides that the distinction between "fee" and "tax" was not appreciated by ignoring the fact that a fee entails the elements of quid pro quo and proportionality between the costs incurred and services rendered. It was contended that the license fee sought to be imposed on the Licensee had various components and that the costs of the regularity services provided by PTA were to be recouped through the Annual License Fee and the Spectrum Administration Fee. As such, charging the Auction Winning Price which was US $ 291 million as the Initial License Fee over and above the fees levied to meet the cost of regulation was unjustified and unlawful. It was further argued that the licensee could be charged as price for Radio Frequency Spectrum was in violation of the relevant provisions of the Act which were enacted to re-organize the telecommunication system in Pakistan and to transfer telecommunication services to the private sector and the main object and reason in such enactment was to promote and protect the interest of licensees and consumers of telecommunication services to ensure fair and free competition. It was further argued that the provisions as enumerated in section 12 of the Act were silent regarding fee and thus it could not have been levied. It was also pointed out that nothing had been provided in section 12(3) of the Act that PTA was to generate surplus revenues and to deposit the same in the Federal Consolidated Fund. It was argued that the provisions as envisaged in section 12(3) of the Act had been misconstrued and misinterpreted in the judgment impugned. It was argued with firmness that exorbitant License Fee would create extraordinary burden on the financial resources of Pakcom which would destroy the business of Pakcom. It was also mentioned that the learned single Judge had erred in holding that the license fee was the price for assigning of Radio Frequency Spectrum which eliminated the possibility of any profit to Pakcom. It was contended that the subsequent insertion of subsection (3) in section 22 of the Act made through Pakistan Telecommunication (Re-organization) (Amendment) Act, 2006 could not be made applicable with retrospective effect as it came into being after the issuance of the Policy and renewal of the original license. Ch. Aitzaz Ahsan, learned Senior Advocate Supreme Court on behalf of petitioner while arguing the said point, laid stress that Policy was based on the erroneous assumption that all portions or Sections of the Radio Frequency Spectrum were of the same utility by ignoring the fact that different frequencies or bands in the spectrum had different qualities. It was submitted that there was a qualitative as well as quantitative difference between the frequencies sold at the auction and those allocated to the existing Licensees like Pakcom. Pursuant to the auction, Telenor obtained 27.2. MHz (13.6+13.6 MHz) in the following bands: (1) 902.5-907.3 MHz/1724.9-1733.7 MHz, (2) 947.5-952.3 MHz/1819.91828.7 MHz, while Warid got 27.2 MHz (13.6 + 13.6 MHz) in the following bands: (1) 890-894.8 MHz/1710-1718.8 MHz, (2) 935-939.8 MHz/1805-1813.8 MHz. On the other hand, Pakcom, upon renewal, got 14.76 MHz (7.38 + 7.38 MHz) in the following bands: (1) 824.265831.645, (2) 869.265-876.645 MHz. It was clear that Pakcom not only got a smaller portion of the spectrum (14.76 MHz) than Telenor and Wand (27.2 MHz each), it also got a different and inferior range of frequencies in a different part of the Spectrum. It was contended that Pakcom was severely handicapped as a result, in that the frequencies allocated to it could not support the latest technologies in the field, such as WCDMA/GSM, and could not provide essential services such as international roaming or data or value added services such as broadband data/GPRS or MMS. The same comparison was true between Pakcom and the other operators, such as Mobilink and Ufone. Since it was absolutely clear that Pakcom and the new licensees were differently placed as a matter of law and fact, in terms of the quality and quantity of the Radio Frequency Spectrum .Allocated to them as well as in terms of the process through which they obtained the same, Pakcom could not have been treated at par with the new licensees as regards license fees as the Policy sought to do so. It was discriminatory, hence unlawful. It was well settled that unlawful
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discrimination takes place not only when similarly placed people are treated differently but also when differently placed people are treated alike. Pakcoms case, according to Ch. Aitzaz Ahsan, learned Senior Advocate Supreme Court, fell squarely within the latter principle and there was discrimination in the present case because of lack of classification. It was contended that in fact the Policy was discriminatory and against the Fundamental Rights as envisaged in the Constitution of Islamic Republic of Pakistan. According to learned Advocate Supreme Court U-fone and Mobilink had been given preferential treatment which resulted in an undue economic advantage over Pakcom of US $ 111,213.,421 and US $ 37,843,528 respectively which could not have been achieved by them under normal market conditions. It was contended that the learned single Judge in chambers had not arrived at the correct conclusion while interpreting the terms and conditions of the contract by holding that it was binding and no objection could be raised at belated stage which was not in consonance with record as Pakcom had never accepted the terms of the license without protest and various complaints were made by the Pakcom about certain terms and conditions contrary to law which ought to have been considered by the learned single Judge in chambers which was not done. It was mentioned that an agreement did not become lawful simply for the reason that its terms had been agreed upon and acceptance simpliciter had nothing to do with the legality and validity of the contract. It was also argued that process of auction of the Radio Frequency Spectrum as envisaged in the Information Memorandum is violative of the Policy which should have been taken into consideration by the learned single Judge in chambers while deciding the controversy. It was mentioned time and again that 1800 MHz band had not been available to the Pakcom till date which amounted to sheer discrimination and not in accordance with the guarantee as given in the Policy. In order to substantiate his esteemed views reference has been made to the following authorities:-- Collector of Customs v. Sheikh Spinning Mills, (1999 SCMR 1402), Biafo Industries v. Federation of Pakistan (2000 CLC 170), Master Foam v. Government of Pakistan (PLD 2005 SC 373), Shamroz Khan v. Muhammad Amin (PLD 1978 SC 89), State of Maharashtra v. The Salvation Army, (AIR 1975 SC 846), Government of Pakistan v. Muhammad Ashraf (PLD 1993 SC 176), Elahi Cotton Mills v. Federation of Pakistan (PLD 1997 SC 582) Faridsons Ltd., v. Government of Pakistan (PLD1961 SC 537), Government of Pakistan v. Zamir Ahmad Khan (PLD 1975 SC 667), Gadoon Textile Mills v. WAPDA (1997 SCMR 641), Arshad Mehmood v. Govt. Of Punjab (PLD 2005 SC 193), IA Sherwani v. Government of Pakistan (1991 SCMR 1041), Zaman Cement Company v. C.B.R. (2002 SCMR 312), Collector Customs, Excise and, Sales Tax v. Flying Kraft Paper Mills (1999 SCMR 709), Anoud Power Generation Ltd., v. Federation of Pakistan (PLD 2001 SC 340), Yousuf Ali v. Muhammad Aslam Zia (PLD 1958 SC 104), Muhammad Hussain v. Federation of Pakistan (2003 YLR 2793) and KT Moopil Nair v. State of Kerala (AIR 1961 SC 552). 5. Mr. Muhammad Akram Sheikh, learned Senior Advocate Supreme Court entered appearance on behalf of respondent and strenuously controverted the view point as canvassed at bar by Ch.Aitzaz Ahsan, learned Senior Advocate Supreme Court for the petitioner and supported the judgment impugned for the reasons enumerated therein with the further submission that the main object for invoking the jurisdiction of Lahore High Court and this court is to avoid the payment of heavy dues on one or the other pretext which are outstanding against the petitioner. It is contended that the contract accepted by Pakcom would show that there is no discrimination or preferential treatment to U-fone and Mobilink etc. And the terms and conditions enumerated in the contract were agreed to between the parties and it would be too late in the day to object on any of the terms and conditions enumerated in the contract which are binding in nature and cannot be flouted by exploiting different provisions of law and approaching different forums. It is argued that on 5th October, 2004 an option was given to Pakcom to select between GSM and CDMA and it was clarified and conveyed to Pakcom that pursuant to Mobile Cellular Policy license fee amounting to
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US $ 291 million would be charged. No objection whatsoever was made by the Pakcom and CDMA was opted which was conveyed to the Authority prior to the renewal of the license. It is argued that Pakcom has been using AMPS/DAMPS technology which was old but it was the choice of Pakcom itself knowingly that the said technology was going to be replaced either by GSM or CDMA. It is made clear by Mr. Muhammad Akram Sheikh, Senior Advocate Supreme Court on behalf of respondent that PTA had offered two options i,e, GSM technology with 10+10 MHz frequency or CDMA with 7.38 + 7.38 MHz frequency and CDMA was opted for by the Pakcom and accordingly they were to utilize their old 10+10 MHz frequency until April, 2008 but Pakcom subsequently failed to adopt the new CDMA technology instead of AMPS/DAMPS and according to Mr. Muhammad Akram Sheikh, learned Senior Advocate Supreme Court the question of lesser frequency would have never arisen, had the Pakcom opted for the GSM technology. Mr. Muhammad Akram Sheikh, learned Senior Advocate Supreme Court has also clarified that in fact, if 10+10 frequency is used for CDMA, then it converts it to WCDMA, 3G (Third generation) network, which has not yet been allowed by PTA to be introduced in Pakistan. Interestingly, Mobile and Cellular Policy of 2004 stipulates that 3G technology will be auctioned through bidding in a transparent manner for existing and new operators. It is argued by Mr. Muhammad Akram Sheikh, learned Senior Advocate Supreme Court on behalf of respondent that Pakcom was never interested to continue with its business and always attempted to find out some new investors and besides that at the time of renewal of licence the majority shares in Pakcom were owned by a foreign company known as Millicom. In order to substantiate the said version, correspondence made between the Pakcom and PTA has been referred showing that the Pakcom did not have enough resources to replace the old technology with CDMA which could not be done without more capital, unavailable with Pakcom and in fact the poor financial position of Pakcom remained a hurdle in adopting the new technology i,e, CDMA and no restriction or impediment whatsoever was laid by the PTA or Frequency Allocation Board. It is next contended that according to the PTA Act of 1996 and rules made thereunder the licence is to be renewed according to the terms and conditions prevalent at the time of renewal. In this regard reference has been made to the provisions as enumerated in section 8 of the PTA Act of 1996 and the rules made thereunder. Mr. Muhammad Akram Sheikh, learned Senior Advocate Supreme Court was of the view that renewal of Pakcom was made strictly in accordance with the Policy and hence the question of any discrimination did not arise. Mr. Muhammad Akram Sheikh, learned Senior Advocate Supreme Court has mentioned that an open and transparent process of determination of the license renewal fee through competitive forces in order to facilitate and promote competition between the old and new licensees have been prescribed in the Policy and it was binding for the old licensee to provide services of the same kind at the same time in the Market to the consumers. It is also pointed out that initial license was given to Pakcom without charging any fee and subsequent imposition of License Fee was due to the tremendous growth in the business in telecommunication sector. Mr. Muhammad Akram Sheikh, learned Senior Advocate Supreme Court has also mentioned that Pakcom had never objected to the amount of liability and assured to honour its commitment which could not be done and the PTA was involved in the litigation. Mr. Muhammad Akram Sheikh, learned Senior Advocate Supreme Court has further submitted that the controversy in hand involving various disputed questions of facts could not have been dilated upon and decided in exercise of Constitutional jurisdiction and the Constitutional petition has rightly been dismissed by the learned single Judge in chambers and besides that the petitioner for the redressal of his grievance had also filed a civil suit. It is also mentioned that the Authority after having taken into consideration all legal and factual aspects has dilated upon the controversy on two occasions with diligent application of mind and conclusion as arrived at is strictly in accordance with law and record of the case. It is also argued that in fact a futile attempt has been made to flout the responsibility and liability qua payment of
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amount due against Pakcom. In order to substantiate his view point Mr. Muhammad Akram Sheikh, learned Senior Advocate Supreme Court has referred the cases of Home Comforts v. Rashid Baig (1992 SCMR 1290) Overseas Pakistanis Foundation v. Mukhtar Ali Shah (2007 SCMR 569?, Ghulam Rasool v. Chief Administrative of Auqaf, West Pakistan (PLD 1971 SC 376). 6. We have carefully examined the respective contentions as agitated on behalf of the parties in the light of relevant provisions of law and record of the case. We have minutely perused the judgment impugned. After having scrutinized the entire record we are of the considered opinion that in fact the dispute between the parties mainly revolves…
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