Jaipur Woollen Quality Carpets vs Union of India (UOI) and Others

M.B. Sharma, J.—The petitioner M/S Jaipur Woollen Quality Carpets, a partnership firm, has a telephone connection (No. 44808) and it is aggrieved against the two bills raised by the respondents Nos. 2 and 3 which were received by the petitioner on July 21,1989 for Rs. 20,061/- and the other received on September 21, 1989 for Rs. 30,000/-. The petitioner is also aggrieved against the demand issued by the respondents Nos. 2 and 3 of the additional security of Rs. 25,000/- for restoring the telephone connection which was disconnected for non-payment of the amount.

The case of the petitioner is that prior to the two bills in dispute, more so, immediately preceding the two bills, he used to receive the bills of far lesser amount and the petitioner has given the details in para 5 at page 4 of the writ petition as under:

Date of Bill Amount 21.7.1988 4,884/- 21.9.88 5,739/- 21.11.88 7,312/- 21.1.89 4,065/- 21.3.89 4,717/- 21.5.89 5,710/-

According to the petitioner a perusal of the aforesaid bills and their amount will be show that the amount of bills never exceeded Rs. 8000/- and except the disputed one sit never reached Rs. 20,061/- for two months of Rs. 30,422/- for 21 days, as will appear from the aforesaid two bills in dispute dated July 21, 1989 and September 21, 1989. According to the petitioner after receipt of the two bills he immediately raised the dispute on October 9, 1989 vide Annr. 1 and requested the respondents for investigation of excess metering and did not deposit the amount of bills without decision of the dispute. The telephone was disconnected and when he requested for the re-connection of his telephone, he received a letter that an enquiry has been made and the complaint of the petitioner has been found to be frivolous and there is no error in the bills and the respondents declined to give any relief under letter dated November 2, 1989. He again requested for consideration of the matter sympathetically but to no effect. He therefore made payment of the outstanding bills vide letter dated March 15, 1990 through three cheques and again raised objections. He requested for shifting of his telephone but was informed by the respondents that "no shifting to benormally allowed for three year''s and they also demanded Rs. 25,000/- by way of additional security.

As said earlier, the petitioner has challenged the aforesaid two excess bills as well as demand of additional security. It was contended by the learned Counsel for the petitioner that a perusal of his bimonthly bills in the year immediately preceding the two disputed bills will show that bimonthly bills never exceeded about Rs. 8,000/-but the first of the two bimonthly bills in dispute is for Rs. 20,061/- which is dated July 21, 1989 and the second disputed bill is dated September 21, 1989 for Rs. 30,000/-and as such the increase in the two bills was more than 100% of the bimonthly bills in the year immediately preceding two disputed bills and therefore as per the Rules there should have been investigation/inquiry but the enquiry appears to have been done which is just an eye-wash and in fact no inquiry/investigation has been done. He therefore, contends that rejection of his complaint is arbitrary. It is not disputed on behalf of the respondents that the petitioner did file complaint for excess billing but the representation/complaint in respect of excess billing was only made after two months and 20 days after the receipt of the second disputed bill and the matter was processed for investigation and the same was investigated by the competent authority and the complaint of the petitioner was found to be false and the petitioner was intimated about it. According to the respondents, the petitioner is having STD facility and has used the same as per the meter readings and bills were correctly issued to the petitioner. So far as the demand of additional security in the sum of Rs. 25,000/-is concerned, the case of the respondent is that on earlier occasion also the telephone connection of the petitioner had to be disconnected because of non-payment and looking to the amount of the two disputed bills the additional security was found to be falling short and therefore the petitioner was called upon to pay Rs. 25,000/- so as to cover the amount of atleast one bimonthly bill.

Two questions therefore arise for determination, firstly, whether the representation of the petitioner against the excess billing of two bimonthly bills referred to above was disposed of and proper inquiry/investigations required under the rules/guidelines was made and whether the decision in rejecting his representation is not arbitrary ? and secondly - the demand of additional security in the sum of Rs. 25,000/-is justified or not and whether under the rules it is permissible or not ?

Learned Counsel for the petitioner has referred to the guidelines/instructions issued in the subject "Excess Metering Complaints" issued by the Telephone Revenue department, vide No. 4/59/TR dated April 9, 1986. It will appear from the aforesaid guidelines/instructions that necessity arose on account of severcritism under which the Department had come on account of complaints of alleged excess billing. That apart, the said instructions appear to have been issued after the matter was discussed in the Workshop of Heads of Telecum. Circles and Districts held in Delhi. Thereafter, the matter was considered by Telecom Board and only after the aforesaid exercise and as per the desire by the Telecom Board in supersession of all earlier orders on the subject, fresh instructions/guidelines have been issued as aforesaid. It will appear that para 4 of the aforesaid guidelines/instructions is relevant which reads as under:

Avoiding excess billing complaints.

4.1 In general, excess billing complaints arise from telephones having STD facility. They arise because of

(a) the subscriber, his family, friends and employees having used STD and not being conscious of the extent to which they have used it, or

(b) a fault in the metering circuit, or some transient fault in the system, and

(c) possible deliberate mischief by other subscribers in league with our staff.

4.2 As far as 4.1(a) is concerned, we can convince the subscriber only through suitable observations/discussions.

4.3 ''We have to be vigilant about 4.1 (b) and ensure that as far as possible, metering circuits are tested and kept in proper order.

4.4 in regard to 4.1(c), we must ensure that all possible points at which such mischief can take place are suitably guarded. D.Ps. must be locked. Ascess to unauthorised persons to sensitive areas in the Exchanges should be avoided and in case of any suspicion about a particular member of the staff, suitable action must be taken.

Apart from the aforesaid instructions, it appears that detailed instructions have also been issued in respect of watching the meter readings of various subscribers and action to be taken on them. As per those instructions it was required that (i) meter readings should be taken every fortnight; (ii) all subscribers whose current fortnightly readings show a sudden spurt should be identified, and (iii) in case of such sudden spurts being noticed the telephone line should be placed on observation and responsible staff should be deputed to the subscriber''s premises to check up that there has been no special occasion which might have given rise to such spurts. It was further provided that despite the aforesaid instructions it was noticed that while meter readings are being taken regularly every fortnight, the difference is not being struck and all cases of spurts are not being brought out. It was enjoined that in all cases, the meter readings registers must provide for the difference being noted, and somebody should be held personally responsible to identify and report all cases of spurts to the officer-in-charge. It was further provided that if an excess billing complaint reveals a spurt, which had not been reported, suitable educational and disciplinary notice should be taken of the concerned staff. It was also said in the instructions that as far as possible all telephone lines showing a sudden spurt should be put on observation, and for that purpose immediate steps must be taken to provide suitable observation equipment in all exchanges having STD facilities, so that once a spurt is noticed, the line is actually put on observation. It was also the instruction that in case of sudden spurts being noticed, a suitable officer should be deputed to inspect the installation as well as to ensure that there was no special occasion, which could have given rise to a genuine spurt. The aforesaid instructions are contained in para 5 of the aforesaid Instructions/Guidelines dated April 9, 1986, Para 6 of the aforesaid Instructions provide for "Investigation of an excess billing complaint". As per para 6.4 of the Instructions/Guidelines as aforesaid once the complaint has been received very prompt action must be taken to investigate the same and for this purpose the prescribed officers must call for (a) the record of of fortightly reading in respect of 6 preceding bimonghly periods and for all the available succeeding bimonthly periods; (b) an extract of fault card for the disputed period; (c) spurt report, action taken on the same and the results thereof, which will include (a) observations in the Exchange and (b) any field investigations, if carried out, from the officers-in-charges concerned. As per para 6.5, no field investigation is called for to determine whether there was any occasion for a special spurt after a complaint has been received, and this should have been made, if justified, immediately after the spurt was noticed in the fortnightly readings. Para 6.7 deals with spurt bills which is as under:

It is possible that the excess bill exceeds the previous bi-monthly bills by substantial amounts. In such cases, temporary relief to the subscriber by way of issuing a split bill may be justified. As already prescribed a split bill may be issued if the bi-monthly bill for local call charges exceeds double the maximum amount of the previous 6 bi-monthly bills for local call charges. The split bill for local call charges should be limited to the average of local calls billed in the preceding six bi- monthly period plus 10% thereof and should be issued with a clear statement that this is a purely provisional bill pending further investigation in the excess billing complaint and if after the excess billing compliant and if after investigation the Department comes to the conclusion that the original bill is justified, the subscriber will have to pay the full bill or as may be determined by the competent authority.

A perusal of para 7.2 of the aforesaid instructions/guidelines will show that the department is aware of the fact that the spurts in the reading for any particular period can also be for the reasons unknown or there may be reasonable doubts as to the possible faults on the metering circuit or the subscriber''s equipment or a reasonable doubt exists about the possibility of some mischief, then the competent officer has been empowered to grant suitable relief. It will therefore, be clear that the possibility of spurts in the meter reading cannot be excluded on the ground other than defects in the metering equipment or for more unknown reasons. Therefore, the complaint should not have been dismissed on the ground that metering equipment was not found to be faulty or that there was no fault in the metering equipment. The aforesaid instructions/guidelines have been taken from Swamy''s Treatise on Telephone Rules with Act, Rules, Orders, Digest, Guidelines and Case Law, issued by P. Muthuswamy, Former Director of Accounts and Finance, Madras Telephones.

A similar question arose in the case of Santokh Singh Vs. Divisional Engineer, Telephones, Shillong and Others, A Division Bench of that Court considered the aforesaid guidelines and instructions in detail. The learned Judges posed two questions (i) the problem of excess billing, its causes and remedy available to a subscriber who is a victim of such excess billing and (ii) the power of the Department to disconnect telephones for alleged non-payment of the regular bills which contain charges for excess local calls. The learned Judges perused relevant rules and the instructions/guidelines and in para 12 of the judgment said that:

From a reading of the aforesaid provisions contained in the Manual and the Circular it is clear that the Government is aware of the serious problem of excess billing as also of its causes. It also knows that even if no defect is found in the meter, possibility of false metering cannot be ruled out. In technical terms it is conscious that there may be false metering "due to handling of the subscriber on an engaged switch train up to the Point of outgoing carrier channel relay set on which STD call is in progress". It is aware that in some cases on account of some short circuit in the line or due to faulty operation of the hook switch the subscriber''s line after making a STD call might be held up and all this may result in the meter''s recording local calls enormously in excess of the normal calling rate for local subscribers. It is also the admitted position that excess billing may occur on account of deliberate mischief by some other subscribers in league with the staff of the telephone Department.

The learned Judges referred to the question as to what relief the subscriber is entitled in a situation referred to in para 12 and in para 13 of the judgment said that

As to relief in such situations, the following position emerges from the aforesaid provisions. Immediately on receipt of complaint regarding excess charge for local calls where the calls are found to exceed the highest one obtaining during the six preceding quarters by more than 100% at STD stations, the officer concerned is required to defer enforcement of recovery of the amount of the disputed bill till investigation of the complaint is completed, and a decision as to whether some rebate for the excess charge is justified or not, is taken. There is also provision for cancellation of the disputed bill and preparation of two bills-one to include charges which are correctly payable by the subscriber including local calls, local call charge being computed to be equal to the average number of calls metered during the six bi-monthly periods (one year) immediately preceding the disputed periods plus 10% over the average. Such a bill is called "split bill". Another bill may be prepared for the balance and marked as "part local call bill (disputed)". Though the subscriber is required to pay the first bill but the officers have been directed not to insist on the payment of the second bill till final decision is taken on the compliant lodged by a subscriber after making proper investigation on the lines indicated in the Manual and in the circular.

Coming to the facts of the instant case let us see as to whether the aforesaid guidelines/instructions for investigation/inquiry in respect of representation/complaint for excess billing were followed or not? and also the relief which in such a situation the petitioner is entitled? It will be seen from the facts which have already been stated in the earlier part of this order that there can be no dispute that the excess billing in the two bi-monthly bills was more than 100% over any of the bi- monthly bills during the immediately preceding one year and the highest bill during that period was for Rs. 7,312/- which was dated November 21, 1988 and the bill dated July 21, 1989 was for Rs. 20,061/- and the bill dated September 21, 1989 was for Rs. 30,022/-. What was the reason of this sudden spurt in the two disputed bills? The petitioner had filed a representation on October 9, 1989, no doubt after the receipt of the second disputed bill dated September 21, 1989 and under letter Annr. 3/6 dated November 2, 1989 the petitioner was informed that his complaint has been enquired into and the metering equipments have been examined and no defect was founding in them. The petitioner''s telephone connection was disconnected. The court sent for the file under which the investigation is said to have been made in the complaint of the petitioner. The file only contains 7 sheets. It does not appear from the file that the procedure referred to above in so far as the investigation in the complaint of excess billing was observed. It does not appear that the instructions referred to above were complied with and there is no material that the meter reading of the petitioner was watched and the sudden spurt/spurts were taken note of and the telephone line was ever placed on observations. A reference to the reasons for rejection of the complaint has already been made in the earlier part of this order and at the cost of repetition it may be said that the only ground on which the compliant/representation has been rejected and was not allowed is that no fault was found in the metering equipments and other equipments. This alone, in my opinion, was not sufficient to reject the complaint. It will therefore, be seen that despite the detailed and elaborate procedure provided for safeguards in the matter of excess hilling and the complaints the same was not followed. The investigation in the complaint therefore does not appear to be us was required to be as per the guidelines/instructions and the complaint of the petitioner was arbitrarily rejected. I have already said that sudden spurts can also be for other reasons which have been discussed in the earlier part of this order which are taken note of by the competent authorities. In the case of Santokh Singh (supra) the learned Judges of the Gauhati High Court while holding that action of the department in rejecting the complaint was arbitrary and illegal and was not justified, in para 17, said

In our opinion, unless the Department has got some material with it to show that the petitioner made excessive use of the telephone which might justify the exhorbitant bill, it could not just reject his claim on the ground that the recording of the reading from the meter was correct when it is an admitted position that the meter can record exhorbitantly high number of calls even without the subscriber making any such calls. The rejection of complaint was done in a perfunctory manner. No attempt was made to rule out the possibility of other major causes referred to above including possibility of mischief by its own employees. There is no reference to fortnightly meter readings. In short, nothing had been done except verifying the reading of the meter, comparing it with that shown in the bill. On finding it correct, the complaint was rejected just mechanically without any application of mind whatsoever.

Learned Judges further considered the relief to be granted and said that they would have considered sending the case back for fresh decision and to give suitable rebate to the subscriber, but because they were of the opinion it would have been futile exercise and no material of investigation after lapse of six years could be relevant, they issued directions to the Department to prepare fresh bills for the relevant periods under dispute including local calls. They said that simply by issuing directions that fresh bills should be prepared and the charges should be equal to the average number of local calls charged during the six-bimonthly periods immediately preceding the period to which the first disputed bill relates plus 10% over the average and to grant rebate for calls in excess thereof in all the disputed bills. I have already said that in the present case the complaint of the petitioner against the excess billing in respect of two disputed bills has been rejected arbitrarily without following the procedure provided in the Instructions/guidelines referred to above.

Coming to the question as to whether the additional security could be demanded in the sum of Rs. 25,000/-, learned Counsel for the petitioner contends that the action of the department is arbitrary. The respondents have come out with a case so far as this dispute is concerned that the petitioner is a heavy caller as will appear from the calls recorded fortnightly meter readings and he is using STD facility and it is in order to safe-guard the interest of the department that the additional security was demanded. It is further the case of the respondents that the petitioner was asked to deposit security in the postal certificates and the demand of security has been raised as per rules.

In exercise of the powers conferred by Section 7 of the Indian Telegraph Act, 1885 (XIII of 1885), the Central Government made the Indian Telegraph Rules, 1951 (for short, I.T. Rules), Rule 445 deals with security for charges and it is under chapter XVII. The said Rule 445 of the I.T. Rules reads as under

Security for charges-The Telegraph Authority may, at any time, before or during the period for which a telephone or other like service is provided require a subscriber to deposit as security such amount as it may consider necessary and if the subscriber fails to comply with such demand within such period as it may specify the Telegraph Authority may withdraw the service and remove any telephone or other apparatus belonging to the Telegraph Authority. Where the security deposit is paid, any amount due from the subscriber by way of fee or other charges under these rules may be adjusted against the amounts deposited.

Orders have been issued by the Telecom Board from time to time and one such order is order No. 19 in respect of "Security Deposits" which is available at page 75 of the Swamy''s Treatise on Telephone Rules referred to above. The said order reads as under:

Security Deposits

Security for charges

While providing the telecom services to the public the Department has to take some precautions to safeguard their interests in collecting the entire revenue due from the users. For this purpose, the Department has been vested with the power under the Indian Telegraph Rules, to require any subscriber to deposit as security such amount as it may consider necessary. If the subscriber fails to comply with such demands within the specified period, the services can be withdrawn and the telephone or other apparatus belonging to the Department removed from the subscriber''s premises.

Deposits from defaulters:

Security deposits can be demanded from the existing defaulting subscribers whose financial soundness is considered as unreliable. Such of those subscribers who show dilatariness in the settlement of their bills may also be required to pay security deposits.

Amount of Deposit

The Accounts Officer, Telephone Revenue, would fix the amount of deposit or increase/decrease the deposit in accordance with the guidelines prescribed by the Department Telecom. He would also refund the Security Deposit so collected, if he is satisfied about the paying habits or the financial soundness of the subscriber and if the Security Deposit collected is no longer considered necessary in the event of occasions such as availability or non availability of STD or ISD.

Security Deposit may be collected in Cash or by Demand Draft.

A Bank Guarantee may also be accepted for the purposes Again an order No. 6 on the subject-"initial deposits for temporary/causal Telephone connections" has been issued and the same is available in the aforesaid Swamy''s treatise at page 135 which is as under:

It has been observed that in many cases of temporary or casual telephone connections, the initial deposits obtained from non-Government sub-scribers are inadequate when compared to the heavy bills issued against them. You are requested to ensure that adequate security deposit may be taken in order to safeguard the interest of the Department for possible loss or revenue in the event of non-payment of bills.

Yet another order has been issued in connection with "recovery of security deposit before restoration of telephones disconnected for non-payment of telephone dues". It is order No. 12 and is available at Page 307 of the aforesaid Swamy''s treatise and it reads as under

In a recent case where a question arose as to whether the demand of a security deposit before restoration of a telephone disconnected for non-payment of dues was in order, the Ministry of Law (Department of Legal Affairs) have opined that it is open to the telegraph authority to demand the security deposit at any time and restore the telephone connections which have been disconnected for non-payment of dues on such payment being made. In this connection a copy of each of the following letters is enclosed for information and guidance of all concerned.

A reading of Rule 445 of the IT Rules will go to show that the power is vested in the Telegraph Authority to require a subscriber to deposit security deposit as it may consider necessary, but the purpose of demand of the security deposit is that if as and when any demand is raised and the subscriber fails to comply with the same within such period as may be specified in the demand notice, not only the Telegraph Authority may withdraw the service and remove any telephone or other apparatus which belong to it but any amount due from the subscriber by way of fee or other charges under the rules may be adjusted against the amount of security so deposited. Generally it does not appear to be the practice of the Telegraph Authority except in cases of temporary and casual connections or in cases of re-connection after disconnection on failure to pay the dues and in respect of such subscribers whose conduct appears to the Telegraph Authority that the demand if raised may not be paid, to demand from the subscriber payment of security and the Telegraph Authority only demands security from such of the subscribers who on previous occasions have made default in payment of the demand raised or their conduct is such that the Telegraph Authority is of the opinion that there is apprehension that the demands if raised may not be paid. Therefore, the amount of security deposit even in cases of re-connection after disconnection on failure to deposit the payment must have reasonable connection or nexus with the amount of bi-monthly bills raised immediately before the disconnection. It appears to be the reason in the present case that because two disputed bills dated July 21, 1989 and September 21, 1989 were of Rs. 21,061/- and Rs. 30,422/- respectively, the subscriber (the petitioner herein,) was called upon to deposit Rs. 25,000/- as security and later on was allowed to deposit the aforesaid amount of security in the shape of postal certificates. It will further be seen from the reply filed by the respondents that on earlier occasion also the petitioner deposited two cheques dated November 21, 1987 and January 21, 1989 against the demands raised but the cheques were dishonoured by the Bankers. The respondents have also come out with the case that the petitioner-subscriber is in the habit of making the payment of the bills always after the expiry of due dates.

In my opinion, it cannot be said that the demand of security deposit in the facts and circumstances of the case was arbitrary. A reference to Rule 445 of the IT Rules has already been made in the earlier part of this order, rather the said rule has been extracted and it cannot be disputed that the aforesaid rule vests power in the Telegraph Authority at any time before or during the period for which a telephone or other like service is provided, to require a subscriber to deposit as security such amount as it may consider necessary, but for the reasons stated in the earlier part of this order the amount of security generally, though not exactly, should be nearly about the amount of bi-monthly bills or at any rate the average of two or three bi-monthly bills immediately preceding the demand. In the instant case the petitioner was asked to deposit Rs. 25,000/- by way of additional security, which is about the average of immediately preceding bills. But in the earlier part of this order, I have said that in rejecting the complaint/representation of the petitioner against the excess billing in relation to the disputed two bi-monthly bills the procedure as provided in the above referred to guidelines/instructions has not been followed and therefore the rejection of the complaint is arbitrary and it cannot be said that the demand raised by the two bi-monthly bills was correct and on that basis it cannot be said that the demand of additional security to the extent of Rs. 25,000/- which as said earlier, appears to be the average of two bi-monthly bills in dispute, was justified. The demand of security deposit must have some relation to the two or three immediately preceding bi- monthly bills as the purpose of the security deposit is that the dues of telephone department are safeguarded and the same may be adjusted against the security deposit with the Telegraph Authority. Therefore, for the aforesaid reasons it can also be said that the demand of Rs. 25,000/- does not remain to be justified, but looking to the conduct of the petitioner and the fact that bi-monthly bills even as per the case of the petitioner were upto Rs. 8000/-, it will be just and reasonable to direct the respondents that if they may so like, they may ask the petitioner to furnish security deposit under Rule 445 of the IT Rules to the extent of Rs. 10,000/- in the shape of postal certificate.

The question is about the relief so far as the first controversy, namely the two disputed bills are concerned, there are two options open in this respect and the first is to quash the two bi-monthly disputed bills after quashing Annr. 3 dated November 2, 1989 under which the petitioner was intimated the rejection of his complaint/representation and direct the respondents to issue fresh bills adding 10% in the amount of highest bill for the period of last six bi-monthly bills and the second option is to direct the respondents to prepare split bills, first adding 10% in the amount of any of the six bi- monthly bills immediately preceding the bills in dispute then make a fresh investigation/enquiry in the matter and to decide the representation in accordance with the rules and procedure provided in the guidelines referred to above.

The telephone connection of the petitioner was restored under the orders of this Court and thereafter also bi-monthly bills must have been raised. In my opinion, second option appears to be more reasonable.

Consequently, I allow the writ petition to the extent that the order Annr. 3 dated November,2, 1989 is quashed ad the respondents are directed to make investigation/inquiry in accordance with rules and in the light of the observations made above in the complaint/representation of the petitioner in respect of excess billing in the two disputed bi-monthly bills dated July 21, 1989 and September 21, 1989 for Rs. 21,061/- and Rs. 30,000/- respectively and in the meanwhile to prepare the split bills of Rs. 8,000/- plus 10% i.e. Rs. 8,800/-. The dispute for the remaining amount will be finalised after investigation as aforesaid. The demand of Rs. 25,000/-by way of additional security is quashed and the respondents are directed, if they so like, to raise the demand of Rs. 10,000/- by way of security deposit under Rule 445 of the Indian Telegraph Rules. Any how, after the result of the investigation, they will be free to, either raise or reduce the amount of security deposited costs made easy.