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CONSUMERS ASSOCIATION OF SRI LANKAvsTELECOMMUNICATIONS REGULATORY COMMISSION OF SRILANKA AND OTHERSCOURT OF APPEALIMAM, J.
SRISKANDARAJAH, J.
C. A. 1776/03MARCH 31,
MAY 16,
JUNE 2,15 AND 29 ANDJULY 19, 2005
Writ of Certiorari – Sri Lanka Telecommunications Act, No. 25 of 1991, sections12, 17, 17(5) and 17(7) – Increase of tariffs -Legality-Locus standi to maintainapplication -Necessary parties-Tariff adjustment – Could it be effected from aretrospective date? – Is economic criteria a mandatory requirement in grantingapproval ? – Alternate remedy.
The petitioner, an Association incorporated under the Companies Act whichseeks the welfare of the consumers sought to quash the approval granted bythe Telecommunications Regulatory Commission (TRC) to the Sri LankaTelecom Ltd., the 4th respondent to increase tariff for the year 2003.
On the preliminary objections raised (1) that the petitioners lack locus standii; (2) court cannot consider the correctness of the facts and figures relating tothe tariff revision ; (3) that all necessary parties are not before court; (4) that thepetitioners have an alternative remedy ; and (5) that the 4th respondent is notamenable to writ jurisdiction –
Held:The affidavit filed by the Secretary and some of the members of theAssociation is to the effect that they are unable to maintain a telephonefacility which has become a necessity in the present world because ofever increasing tariffs. It is evident that in the interest of the membersof the Association and in the interest of the public in keeping with theobjects of the Association the petitioner is questioning the legality ofthe tariff increase for the year 2003 approved by the 1 st respondent inconcurrence with the 2nd respondent ; the petitioner is not a busybody.
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Consumers Association of Sri Lanka vs
Telecommunications Regulatory Commission of Sri Lanka and Others
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The Director General, Telecommunication (DGT) is not a necessaryparty. The DGT is a member of the 1 st respondent Commission (TRC)and he functions subject to the general direction and control of theCommission ; he need not individually be made a party.
(Hi) Whether the 4th respondent – Sri Lanka Telecom Ltd., is amenable towrit jurisdiction or not is not a relevant issue. The petitioner is onlychallenging the approval granted by the 1st and 2nd respondents(Minister of Mass Communication).
The publication in the newspapers of the proposed tariff increase isnot a notification under Section 12 for public hearing and the publicationdoes not call for any representations from the public. There was analternate remedy to object to the tariff increase.
Court cannot consider whether it is justifiable to grant a tariff increasein 2003 under the prevailing circumstances, as it is a factualassessment, but court can consider whether the approval granted bythe 1 st and 2nd respondents is ultra vires or not.
Preliminary objections overruled.
Held further:
The final tariff revision approved on 27.07.2003, was in accordancewith clause 18.3 of the shareholder agreement but not in conformitywith the economic criteria laid down in condition 20.1 of the license.
The Minister’s approval in tariff adjustments are related to the relevantyears and such adjustments shall have effect from 1 st January of therelevant year. Any tariff adjustment for the year 2002, should have beeneffected from 1st January, 2002. As the public has to be given priornotice on tariff adjustment it cannot be effective from a retrospectivedate and it has to be effected from a prospective date. Hence anyproposal for a tariff adjustment for the year 2002 should have beenmade before the 1st of January 2002.
The Minister, the 2nd respondent or the 1st respondent (TRC) couldnot have approved the tariff adjustment as it cannot come into operationon the 1st of January of the year 2002 ; any adjustment in tariff after05.08.2002 has to be in accordance with the license conditions 2001and 2002.
Per Sriskandarajah, J.
“The 4th respondent (Sri Lanka Telecom Ltd.) – entitled for tariffadjustment without limitation under the shareholders agreement is
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restricted for the five years commencing from 1998. If it has not utilizedits entitlement within that stipulated period it cannot claim the saidentitlement after the expiration of the said five year period".
The approval for tariff adjustment granted to the 4th respondent by the1st respondent with the concurrence of the 2nd respondent on27.08.2003, contravenes the economic criteria laid down in licencecondition 20.1. Compliance with economic criteria is a mandatoryrequirement in granting approval to tariff adjustments.
APPLICATION for a writ of certiorari
Cases referred to :
Premadasa vs. Wijewardena (1991) 1 Sri LR 333 at 343
Merit vs. Dayananda de Silva (2001) 2 Sri LR at 41-42
Longreve vs Home office – 1996 QB. 623
Peter Jayasekara with P. Liyanaratchi and Kosala Senadheera for petitioner.
Sumathi Dharmawardena, State Counsel for 1st-3rd respondents.
Ronald Perara for 4th respondent.
Cur. adv. vult.
July 25,2005SRISKANDARAJAH, J.
This is an application for a writ of certiorari to quash the approvalgranted by the 1 st and the 2nd Respondents to the 4th Respondent operatorto increase tariff for the year 2003 as stated in P9, P9(a) to (d).
The Petitioner is an Association incorporated under the CompaniesAct, No. 17 of 1982, which seeks the welfare of the consumers. The 1stRespondent is a Statutory Institution vested with regulatory functions toregulate and control the Telecommunications Industry by virtue of powersvested on it by the Sri Lanka Telecommunication Act, No. 25 of 1991 asamended. The 2nd Respondent is the Minister in charge of the Ministry ofMass Media including the Telecommunications Industry and the 1stRespondent functions under the 2nd Respondent’s Ministry.
The 1 st, 2nd, 3rd and 4th Respondents raised the following preliminaryobjections to this application :
(a) The Petitioner has no locus standi to make this Application.
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(b) In terms of Section 22 b of the Telecommunications Act, No. 25 of1991 as amended, the Chief Executive of the 1st RespondentCommission is the Director General Telecommunications and thePetitioner has failed to make the said Director GeneralTelecommunications as a party to this application. Hence anecessary party to this application is not made a party to thisapplication.
I will deal with the above two preliminary objections first.
The Respondents submit that the Petitioner has no standing to makethis application. The Petitioner instituted this proceeding as a corporatebody namely “Consumers Association of Sri Lanka” an Associationincorporated under the Companies Act, No. 17 of 1982 which can sue andbe sued. The Secretary of the Petitioner Association in his counter affidavithas stated that the Petitioner Association is an Association of Consumersof Sri Lanka and it has filed this application of public interest and on behalfof its members. He claimed that the public as well as the members of thePetitioner’s Association are unable to maintain a telephone facility, whichhas become a necessity in the present world, because of the ever-increasing tariffs. The Memorandum of Association of the Petitioner X2has one of its Primary Objects in 3(1) as follows:
‘To secure the maintenance and improvement of the standards ofgoods and services sold to the public and represent and protect the interestof the consumers in all fields in Sri Lanka and abroad including litigationfor their rights.”
The standing rules applicable to applications for prerogative writshave to be considered in the light of the developments taking place in therelevant laws. In Premadasa v Wijeyawardena and others at 343 Thambiah
J.after analyzing the recent statutory and other development that havetaken place in England in regard to standing has observed that:
‘The law as to locus standi to apply for certiorari may be stated asfollows : the writ can be applied for by an aggrieved party who has agrievance or by a member of the public. If the applicant is a member of thepublic he must have sufficient interest to make the application.”
In recent years, the standing of persons who have a particular interestor grievance of their own over and above the rest of the community has
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been progressively widened. In Merit vOayananda de S/Tvs12’ GunawardanaJ. observed:
“I strongly teel thatdenying locus standio an applicant tor judicial
review for no better reason than that his interest or grievance is sharedby many others in common with the applicant is as illogical and irrationalas refusing to treat any one member of the public for a disease whichhas assumed proportions and has affected virtually the entirecommunity”.
On the question of standing of the Petitioner it is necessary to takenote of the fact the affidavit filed by the Secretary and some of the membersof the Association to the effect that they are unable to maintain a telephonefacility, which has become a necessity in the present world, because ofthe ever-increasing tariffs. It is evident that in the interest of the membersof this Association and in the interest of the public in keeping with theobjects of the Association that the Petitioner is questioning the legality ofthe tariff increase for the year 2003 approved by the 1st Respondent inconcurrence with the 2nd Respondent. Hence, the Petitioner Associationcannot be named as a busy body interfering in the function of theGovernment or Institution established by law but they have an interestshared with the members of the public. Therefore, this court holds that thePetitioner has the necessary locus standi to make this application.
The 2nd preliminary objection is that the Director GeneralTelecommunication is a necessary party to this application but he is notmade a party. The Director General is appointed under Section 228 (1) bythe relevant Minister as a staff of the Commission namely ; the ChiefExecutive Officer of the Commission. Subsection (2) of this section provides:
“The Director-General shall, subject to the general direction and controlof the Commission, be charged with the direction of the affairs andtransactions of the Commission, the exercise and performance of itspowers and duties and the administration and control of the employeesof the Commission.”
The Commission consists among others the person holding officeas the Director-General. In this application, the 1st Respondent is theCommission. The Director-General is a member of the Commission andhe functions subject to the general direction and control of the Commission ;hence he need not be individually made a party to this application.
For the above reasons the two preliminary objections raised by theRespondents are overruled by this Court.
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Regulatory Commission of Sri Lanka and Others (Sriskandarajah, J.)
179
The 4th Respondent in addition to the above preliminary objectionsraised several other preliminary objections. Namely, the 4th Respondentis not amenable to writ jurisdiction of this Court, the Petitioner has notavailed itself of the alternate remedy and this Court cannot consider thecorrectness of the facts and figures relating to the fifth tariff revision.
The preliminary objection of the 4th Respondent is that the 4thRespondent is not amenable to writ jurisdiction, for the following reasons.That the 4th Respondent is a Public Limited Liability Company, thetransaction between the Petitioner’s members or the customers and the4th Respondent are contractual in nature and the Petitioner has notdemonstrated or established the existence of a statutory duty on the partof the 4th Respondent in respect of the relief claimed.
Whether the 4th Respondent is amenable to writ jurisdiction or notis not a relevant issue in this application. The Petitioner is only challengingthe approval granted by the 1 st and 2nd Respondents. Their decisions areamenable to writ jurisdiction. The 4th Respondent is made a party to thisapplication as its rights are adversely affected if the relief of the Petitioneris granted and hence 4th Respondent is a necessary party to thisapplication.
The 2nd preliminary objection is that the Petitioner has not availeditself of the alternate remedy by requesting fora hearing under Section 12of the Sri Lanka Telecommunications Act, No. 25 of 1991 as amended.
The publication in the News Papers of the proposed tariff increase isnot a notification under Section 12 of the said Act for public hearing andthe publication marked P 11 does not call for any representation from thepublic. This publication is to fulfil the licence condition that notice of tariffincrease have to be given to the general public. Therefore, this publicationin News Papers cannot be considered as providing the public an opportunityto object to any tariff increase.
On the other hand, the Petitioner on its own motion had made acomplaint and made representations to the 1 st and 2nd Respondent byit’s letter of 20.03.2003 marked P4 with copies to H. E. The President andHon. Prime Minister. In that complaint the Petitioner has expressed itsconcerns of any tariff increase and has requested to give a hearing in theevent SLT has asked for any increase in tariff and if the Commission isconsidering granting the same. However, the Petitioner submitted that nohearing was given to the Petitioner.
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The 4th Respondent submitted that the 1 st Respondent was correctin not holding an inquiry under Section 12. In terms of the ShareholdersAgreement P9 (d) and the Amendments to the Licence P3a, the 1stRespondent is bound to approve tariff revisions submitted prior to 5th August2002. The application for the current tariff revision was submitted by the4th Respondent on 30th July 2002. Hence, the 1 st Respondent has correctlydecided not to hold an inquiry under Section 12.
In these circumstances, the preliminary objection that the Petitionerhad an alternate remedy to object to the tariff increase cannot be accepted.
The 3rd preliminary objection of the 4th Respondent is that this Courtin exercising writ jurisdiction cannot consider the correctness of the factsand figures relating to the fifth tariff revision. The Petitioner even thoughcomplains that there is no justification for the increase in tariff for the year2003 for various reasons, which may involve in complicated question offacts, which this court cannot consider in this application. It has alsosought to quash the approval granted by the 1 st and 2nd Respondents tothe 4th Respondent to increase the tariff for the year 2003 on the basis ofultra vires the powers of the 1st and 2nd Respondent as it violates theconditions of the licence. This Court cannot consider in this application,whether it is justifiable to grant a tariff increase in 2003 under the prevailingcircumstances, as it is a factual assessment but this Court can considerwhether the approval granted by the 1st and 2nd Respondents is ultravires or not.
For the reasons stated above this Court overrules the preliminaryobjections raised by the 4th Respondent.
The Petitioner submitted that the Minister in charge of the subject ofTelecommunications is authorized to issue license to operate aTelecommunication system in Sri Lanka on the recommendation of the1 st Respondent in terms of Section 17 of the Sri Lanka TelecommunicationsAct, No. 25 of 1991 as amended. Section 17 ,5) (c) provides that the licenceshall set out the terms and conditions subject to which the license isbeing granted. The conditions that are to be included in the licence areprovided in Subsection (7) of Section 17. One of the conditions that couldbe included in the licence is provided in Subsection (7) (k) of Section 17,i.e. -conditions specifying acceptable economic criteria in accordancewith which the Commission shall approve tariff adjustments proposed byan operator. The Petitioner submitted that when the first licence was issuedto Sri Lanka Telecom dated 08.08.1991 P2 in condition 20.1 thereof, the
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1st and 2nd Respondents had prescribed that adjustment in tariffs shallbe in accordance with the economic criteria of inflation.
On 5,h August 1997, the Government of Sri Lanka and NTT Companyof Japan entered into an agreement and NTT invested in the 4thRespondent. After the participation by the Japanese investor, the saidlicence had been modified and among other conditions, condition 20.1 ofthe said licence was modified as set out in the schedule to the‘Modifications to the Licence Granted to “Sri Lanka Telecom” dated 5thAugust 1997 P3.
The modification P3 provides as follows in its schedule at paragraph
4(7):
The following shall be inserted as Condition 20.4 of schedule 3
“Conditions 20.1 and 20.2 will not come into force prior to 5th August,2002 and the Operator shall be entitled prior to such date to propose anyadjustment without limitation in tariffs as seen in its commercial judgementsuited best to promote its objects and to fulfil the condition of its licence”
The Petitioner submitted that the above provisions suspended theeconomic criteria which was laid down in Conditions 20.1 and 20.2. ThePetitioner further submitted that since 1998 the 4th Respondent with theapproval of the 1 st and 2nd Respondents had increased tariff four times/. e. in 1998 by 25%, 1999 by 25%, 2000 by 20% and in 2002 by 15%.When the 4th Respondent Company while promoting the initial publicoffer of its shares to the public has stated in newspapers and in theelectronic media that it had earned over Rs. 3 billion as profits for the year2003. The Petitioner submitted that its members came to hear variousnews reports that the 4th Respondent has again applied for a furtherincrease in tariffs for the year 2003 hence the Petitioner association maderepresentations to the 1st Respondent that it was opposing any furthertariff increase by the 4th Respondent. The Petitioner association madethis request trusting that the 1 st Respondent under Section 12 or Section9 of the said Act would consider their presentation. It has also requestedthe 1st Respondent to give the Petitioner Association a hearing in theevent the 4th Respondent has asked for any increase in tariffs and if the1 st Respondent is considering granting the same. This request wasacknowledged by the Director General of the 1 st Respondent Commissionby letter dated 27th March, 2003. A copy of the aforesaid letter of requestof the Petitioner was sent to other authorities and in response to it the
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Petitioner received a letter dated 08.04.2003 P6 from the Co-ordinatingSecretary to the Honourable Minister for Consumers Affairs informing thePetitioner Association that its fears are adequately addressed on thedirections of the Honourable Prime Minister.
The Petitioner submits that due to technological development in theworld and in particular due to the revolution in information technology, theper line operating cost in the international telecommunications industryincluding in the SAARC countries is gradually decreasing at a rate of10% annually. It also submitted the increase in per line usage has alsoincreased approximately by 13% to 15% internationally and in Sri Lanka.These facts contribute for decrease in the tariff. Despite of this on the firstweek of August 2003 the members of the Petitioner Association came toknow that the 1 st and 2nd Respondents had approved the tariff increaserequested for by the 4th Respondent. It subsequently came to know abouta paper publication by the 4th Respondent outlining the increase in tariffsit would levy from 1st September 2003. The Petitioner submits that theincrease in tariff approved in 2003 by the 1 st and 2nd Respondents for the4th Respondent is arbitrary, illegal, capricious, unreasonable, unfair andmala fide.
The 4th Respondent submitted that Sri Lanka is a member of theWorld Trade Organization (WTO) and as a result certain conditions areimposed on Sri Lanka. One of which was to have a cost based tariffstructure for the telecommunications service as the tariff structure prevailingat that time subsidized the tariff for domestic calls through a high tariff forinternational calls. The relevant part of the WTO undertaking is marked4R4; in terms of the said undertaking this Fiespondent was compelled toincrease the tariff for domestic calls while the cost of international callswere reduced. In order to minimize the effoct on the subscriber the tariffincrease was spread over a period and done in stages. Thus, the totaldomestic revenue was planned to be increased in slabs of 25%, 25%,20%, 15% and 15% per year as compared to the previous year over afive-year period starting from 1998. In a similar way the tariff for overseascalls were to be reduced over the same period. However due to delays ingranting approval, the tariff revision due to be effected in 2001 was in facteffected only in 2002 and the tariff revision which was due to be effectedin 2002 was effected in 2003.
The 4th Respondent submitted that the fifth tariff revision that isbeing challenged in this application was made on an application of the4th Respondent to the 1 st Respondent dated 31.07.2002 in terms of thelicense granted to it and the Telecommunications Act, No. 25 of 1991 as
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amended. In terms of Condition 20.4 of Schedule 3 of the license asmodified “Condition 20.1 and 20.2 will not come into force prior to 5thAugust 2002 and the operator shall be entitled prior to such date to proposeany adjustment without any limitation in tariff as seen in its commercialjudgment suited best to promote its objects and to fulfil the condition ofits license”. The 4th Respondent’s position is that it has proposed tariffadjustments on 31.7.2002 /. e. before 5th August, 2002 hence the tariffadjustment is not subject to any limitation. In proof of this application, the4th Respondent did not annex any document but annexed only anacknowledgement by the 1 st Respondent dated 7.8.2002 marked 4R7.The 4th Respondent submitted that for this application of tariff adjustmentthe approval was duly granted by the 1 st Respondent under and in termsof the Act and the license on or about 24.7.2003,4R8. This Respondentfurther submitted that their net profits for the year 2002 was Rs. 2,681million and for the year 2003 was Rs. 2,383 million and this Respondenthas invested over Rs. 40 billion since 1997 for the development oftelecommunication network and for the improvement of the services tosubscribers 4R9 to 4R15.
The 1 st, 2nd and 3rd Respondents submitted that in pursuant to theShareholder’s Agreement dated 5th August, 1997 entered into betweenthe Government of Sri Lanka, Nipon Telephone Corporation of Japan andSri Lanka Telecom Ltd., R 1, Conditions 20.1 (a), 8(b) of the licence of the4th Respondent was temporarily suspended. The governing criteria incase of tariff increase were set out in Clause 18.3 of the Shareholder’sAgreement. Clause 18.3 of the Shareholder’s Agreement mandates theMinister of Post, Telecommunications and Media to approve adjustmentsin the rates and amounts charged in the main tariff items for the year1998 and 1999 by each not less than 25% (including inflation) year 2000by not less than 20% and for years 2001 and 2002 by not less than 15%.On this basis the tariff revisions were determined by the 1 st Respondentin consultation with the Minister. These Respondents further submittedthat 11.5% was the final tariff revision which was approved by the 1stRespondent and communicated to the 4th Respondent on 24.07.2003even though 4th Respondent requested for a 15% tariff increment. Thesaid tariff increase was in respect of rental and installation charges. Thistariff revision is beneficial to the operator and the Telecom industry as awhole and there is no significant disadvantage to a subscriber whoseconsumption is below 200 units, per month. These Respondents admitthat the final tariff revision approved on 27.07.2003 was in accordance
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with Clause 18.3 of the Shareholder’s Agreement and not in conformitywith the economic criteria laid down in Condition 20.1 of the licence.
Clause 18.6 of the Shareholder’s Agreement provides that theprovisions of Clause 18 shall have the same effectiveness as if they werefully set out in the Licence. Clause 18.3 reads as follows :
18.3 Notwithstanding anything contained in the Licence GOSL shallprocure that for each of the five years commencing on 1 st January1998 the Minister of Posts, Telecommunication and the Media(or his successor) shall approve an adjustment in the rates oramounts charged for the Main Tariff items which will have theeffect that the total revenue generated by the SLT from the MainTariff items, based on the number of subscribers, the number ofdomestic calls and the number of connections in the immediatelypreceding year, shall increase
for each of the years 1998 and 1999, by not less than 25%(Including inflation);
for the year 2000, by not less than 20% (Including inflation);
for each of the years 2001 and 2002 by not less than 15%(Including inflation).
provided that:
such adjustment shall have effect from 1 st January in the relevantyear;
By the Modification of Licence P3 dated 5th August 1997 Conditions
and 20.2 of the Licence which stipulates criteria for adjustment inMain Tariff Items were suspended until 5th August 2002. By Clause 18.3of the Shareholder’s Agreement which is made part and parcel of theLicense, a different criteria was introduced for adjustment in the rates oramounts charged for the Main Tariff items for each of the five yearscommencing from 1 st January 1998. It also provides that the Minister ofPosts, Telecommunication and the Media (or his successor) shall approvean adjustment in the rates or amounts charged for the Main Tariff Itemsas per the percentage of increase specified for the each of the five years.Clause 18.3 further provides that such adjustment shall have effect from1 st January in the relevant year. It is evident from these provisions that
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the Conditions 20.1 and 20.2 of the licence is suspended only for fiveyears and the operator was given an opportunity to propose any adjustmentwithout limitation in tariff within that five years. Even if the operator proposesadjustments without limitation at any time within the said five year periodthe Minister shall approve an adjustment subject to the limitation set outof each year in Clause 18.3 of the Share holder’s Agreement. Accordingly,the Minister’s approval in tariff adjustments are related to the relevantyears and such adjustment shall have effect from 1 st January in the relevantyear. Therefore, any tariff adjustment for the year 2002 should have beeneffected from 1 st January 2002. As the public has to be given prior noticeon tariff adjustment it cannot be effected from a retrospective date and ithas to be effected from a prospective date hence any proposal for a tariffadjustment for the year 2002 should have been made before the 1 st ofJanuary, 2002 and approved. The position of the 4th respondent is that hemade a proposal for tariff increase for the year 2002 on 31 st of July 2002.A copy of this proposal is not annexed to the 4th Respondent’s affidavitbut the Counsel admitted that the proposal contains a tariff adjustmentwhich is not in terms of the Condition 20.1 of the Licence. He submittedthat the 4th Respondent is entitled to propose any adjustment withoutlimitation before 5th August, 2002. The approval for tariff adjustment wasgranted by the 1 st Respondent based on two letters of the 4th Respondentdated 31 st July 2002 and 27th January, 2003 Copies of these letters areneither annexed to the affidavit of the 4th Respondent nor to the otherRespondents. Therefore, the Court is not in a position to ascertain whichof these letters contained the actual proposal for a tariff revision. It issignificant for the reason that no unlimited proposal for tariff revision couldbe made after 5th August, 2002. Whatever it may be the approval of theTariff revision was granted by the 1 st Respondent on 24.07.2003 4R8 anddirected to implement this revision after giving 30 days notice to itscustomers. After giving 30 days notice this revision came into effect from1 st September 2003. The approval letter of 4R8 has a caption “Fifth TariffRe-balancing” but it does not refer to the year. The Respondents submittedthat the fifth tariff re-balancing refers to the tariff revision provided for theyear 2002 in Clause 18.3 of the Shareholder’s Agreement. If that positionis correct then the Minister the 2nd Respondent or thelst Respondentcould not have approved this tariff adjustment as it cannot come intooperation on the 1 st of January of that year (2002) as provided by the 1 stproviso to Clause 18.3 of the said agreement and on the other hand it is
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very much after the 5th August, 2002. By this time the suspension on thelicence Condition 20.1 and 20.2 has been lifted and it is in full force.Therefore, any adjustment in tariff after 5th August, 2002 has to be inaccordance with the Licence Condition 20.1 and 20.2. These conditionsprovide:
The operator shall be entitled to propose such adjustments intariffs as seen in its commercial judgment suited best to promoteits objects and to fulfil the conditions of its Licence. Theseadjustments in tariffs shall be in accordance with the followingcriteria:
With respect to Main Tariff Items :
the rate of aggregate increase may be equal to or less than therate of inflation less two (2) percentage points over the periodsince the previous adjustment in Main Tariff Items ;
the rate of aggregate increase shall be determined by calculatingthe percentage increase in total revenue from the Main Tariff Itemswhich would result from the proposed adjustments in tariff to anyitem therein as specified in (iii) below on the assumption that thenumbers of subscribers and the domestic calls and the relevantcomposition thereof (call mix) are held constant;
the operator shall be entitled to propose different rates or amountsfor any item comprised in the main Tariff Items provided that theaggregate increase does not exceed the increase specified inSub-paragraph (i) as calculated in Sub-paragraphs (ii) and (iv)and provided that no item may be increased by more than therate of inflation ;
the rate of inflation specified in Paragraph (i) shall be thepercentage increase in the level of Colombo Cost of Living Indexbetween the last month of publication prior to the date of theproposed adjustment in Main Tariff Items and the month ofpublication of equivalent interval of elapsed time prior to the dateof the previous adjustments in Main Tariff Items, provided that inthe case of the first proposed adjustment, the date on which thislicence enters into force shall be deemed to be the date of theprevious adjustment in Main Tariff Items.
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If the rate of inflation has been negative for any twelve monthsperiod following a change in Main Tariff Items, the Authority mayrequire the operator to propose changes in tariffs such that therate of decrease in Main Tariff Items is equal to or greater thanthe rate of deflection over a period since the previous adjustmentin Main Tariff Items.
In this Condition –
“Main Tariff Items” mean business rentals, domestic rentals andcall charges excluding international call charges.
The Counsel for the Respondents submitted that the approval grantedby the 1 st Respondent by 4R8 is not in conformity with or under Condition20.1 of the Licence but it was granted in lieu of the tariff adjustment the4th Respondent is entitled for the year 2002 during which year the LicenceCondition 20.1 was suspended. The 4th Respondent’s entitlement fortariff adjustment without limitation under the Shareholder’s Agreement isrestricted for the five years commencing from 1998. If it has not utilisedits entitlement within the stipulated period it cannot claim the saidentitlement after the expiration of the said five-year period. For the reasonthat the suspension of licence conditions are lifted after the said fiveyears and the Licence Conditions are in force, they impose limitation ontariff adjustments. The unlimited tariff adjustment for the year 2002 underClause 18.3 should have come into effect from the 1 st January of the year2002 but in any event, it cannot come into effect on 1 st September, 2003as it contravenes Condition 20.1 (the economic criteria) of the licence.As provided by Section 17(7) (k) of the said Act, economic criteria is laiddown in Condition 20.1 and 20.2 of the licence in accordance with theCommission shall approve tariff adjustments proposed by the operator.The approval for tariff adjustment granted to the 4th Respondent by the1 st Respondent with the consultation of the 2nd Respondent on 24.07.20034R8 contravenes the economic criteria laid down in Licence Condition20.1. Compliance of economic criteria is a mandatory requirement ingranting approval to tariff adjustments. Hence the approval granted by4R8 is unlawful.
The Counsel for the Respondents invited the court to take intoconsideration the effect of granting relief to the Petitioner by quashing thetariff increase effected on 1 st September, 2003. Over 870,000 customers
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have paid the revised tariff rates to the 4th Respondent and 4th Respondenthas paid tax to the Government from the amount charged from thecustomers from 1st September, 2003 to date and this will have seriousconsequences. The court also has to take into consideration that thePetitioner has filed this application in October 2003 and sought an interimorder staying the implementation of the increased tariff. In a comparablesituation in an English case, Congreve v Home Officethe Home Officehad issued many thousands of demands and had to undertake a bigoperation to repay money unlawfully received. In this case, the increasein licence fees took effect on a fixed date and it was in no way unlawful fora licence-holder to obtain a licence during the currency of their previouslicence in order to avoid the sharp increase in the licence fees before thatdate at a lower fee. The Home Office had no power to prevent this, butthey tried to enforce a policy of exacting a higher fee by resorting to theirpower to revoke licence. Lord Denning MR said ;
“But when the licensee has done nothing wrong at all, I do not thinkthe Minister can lawfully revoke the licence, at any rate, not withoutoffering him his money back and not even then except for good cause.If he should revoke it without giving reasons, or for no good reasons,the court can set aside his revocation and restore the licence. It wouldbe a misuse of power conferred on him by Parliament; and thesecourts have the authority-and, I would add, the duty-to correct a misuseof power by a Minister of his department, no matter how much he mayresent it or warn us of the consequences if we do.".
For the reasons stated above this Court issues a writ of certiorariquashing the approval of the 1 st Respondent to the 4th Respondent toincrease tariffs by its letter of 24.07.2003 and the Court allows thisapplication without cost.
IMAM, J. -1 agree.
Application allowed.