Delhi High Court Dismisses Reliance Communications' Petition, Upholds Arbitrator's Calculation Of Call Minutes Based on Total Call Seconds

Brief Facts:

Unique Identification Authority of India (UIDAI) issued a Request for Proposal (RFP) for service providers to supply toll-free number services and related services for its contact centers. Reliance Communications' bid was accepted, and a Standard Contract Form was signed after which Reliance Communication began providing services and invoicing UIDAI based on Call Detail Records.

Reliance Communications claimed that UIDAI failed to pay in accordance with the contract terms and made unauthorized deductions from the payable amount. This led to arbitral proceedings and the subsequent award. Reliance Communications challenged the award in the High Court. It disputed the way payments for services rendered were calculated. It argued that according to Clauses 1 and 3.6.2 of the RFP, Reliance Communication should be paid based on the cost per "Connect Minute" for toll-free numbers and associated services, which includes all statutory taxes and incidental expenses. It contended that it should be paid for each minute or part thereof during which a call was connected. For example, if five calls were made with durations of 20, 30, 40, 60, and 60 seconds, Reliance Communications argued that it should be compensated for five full minutes.

The Arbitrator, however, adopted a different billing practice where it sums the total number of seconds of all calls made in a month, divides this total by 60 to get the number of minutes, and then multiplies this quotient by ₹0.65, the contracted rate per minute. Reliance Communication argued that this practice contradicted the terms of the contract and was not in line with the established practice of charging based on a "per second pulse rate" with the pulse rate set at 60 seconds.

Observations by the High Court:

The High Court noted that the court, in exercising its jurisdiction under Section 34, does not interfere with the Arbitral Tribunal's interpretation of contractual covenants unless the interpretation is clearly contrary to the contract itself.

The High Court held that the interpretation advanced by the Arbitrator was the only reasonable one that aligned with the contractual covenants. It noted that not only was it reasonable, but it also adhered to the contractual clauses.

The bench noted that none of the contractual documents, including the LoI, RFP, and the Standard Contract Form, made Reliance Communications entitled to be paid for a whole minute if the call lasted only part of a minute. Therefore, it noted that the arbitrator correctly divided the total number of call seconds by 60 to determine the number of call minutes.

It held that if Reliance Communications' contentions were accepted, it would be entitled to bill for 5 call minutes despite the total call seconds being 210, working out to 3.5 call minutes. This would clearly contradict the formula of ₹0.65 per connect minute provided in the LoI.

The High Court noted that the word "connect" in the formula contained in the LoI was for the rate prescribed is ₹0.65 per connect minute, not ₹0.65 per minute. A "connect minute" can only be that part of the minute during which the connection was active. If the connection lasted for half a minute, billing could not be for one full minute.

Further, the High Court noted that when contractual covenants are unambiguous, there is no need for the arbitral tribunal to consider trade practices. Section 28(3) requires the Arbitral Tribunal to consider the terms of the contract and trade usages, with primary importance given to the contract's terms.

Therefore, the High Court dismissed the petition.

Case Title: Reliance Communications Limited Vs Unique Identification Authority Of India

Case Number: O.M.P. (COMM) 239/2017

Advocate for the Petitioner: Mr. Abhimanyu Mahajan, Ms. Anwesha Padhi, Mr. Vipul Singh, Mr. Sushant Kandwal, Mr. Chaitanya Safaya, Ms. Anubha Goel and Mr. Mayank Joshi

Advocate for the Respondent: Mr. Purushottam Sharma Tripathi, Mr. Amit and Mr. Prakhar Singh

Date of Judgment: 15 July 2024

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