AAMER FAROOQ, C.J. M/s Wi-Tribe (Pvt.) Limited (the Appellant) was granted license by Pakistan Telecommunication Authority (the Respondent) on 01.11.2004 to establish, maintain and operate telecommunication system and operate the telecommunication services in Pakistan. The permission granted 'was subject to the terms of license as well as the relevant law including Pakistan Telecommunication (Re-organization) Act, 1996 and Rules and Regulations framed by the Respondent. Pursuant to the license so granted, the Appellant entered into Tower Sharing Agreement with Towershare Private Limited on 24.03.2016 and subsequently the referred company was acquired by M/s Edotco Towers Pakistan Private Limited. The requisite payments were made for the arrangement by the Appellant by way of payments on behalf of Edotco to the latter's vendors etc. Under the terms of the license, the Appellant was required to pay annual regulatory fee to the Respondent (clause 4.1.2 of the license agreement). The said fee was calculated @ 0.5% of the Appellant's annual gross revenue from the licensed services for the most recently completed financial year of the licensee minus inter-operator payments and related PTA/FAB mandated payments. Appellant made payments towards the annual regulatory fee @0.5% of the amount after deducting payment(s) made to Edotco till 2019. In 2020 such payment was objected to by the Respondent on the basis that the payments made to Edotco cannot be regarded as inter-operator payment as Edotco is not a licensee and such payments do not fall within the service ambit. In this behalf, the Respondent issued a show cause notice to the Appellant on 30.09.2020. The show- cause notice alleged that the Appellant has not provided the Audited Annual Accounts and the Auditor's Certificate which was to be done mandatorily within 120 days of end of the financial year.
On the basis of the annual audited accounts, the obligation of the Appellant is to be worked out for payment of Annual License Fee (ALF), R&D (Research and Development) and Universal Support Fund (USF). The referred notice was responded to by the Appellant on 06.10.2020 and 29.10.2020.
However, not being satisfied with the reply of the Appellant, the Respondent decided the matter against it on 31.10.2022 (the impugned order); hence the appeal.
2. Learned counsel for the Appellant contended, inter alia, that the Appellant was entitled to exclude payments made to Edotco as the same was inter-operator payment and the liability for Annual Regulator Duty and other mandatory charges was to be calculated accordingly. It was submitted that the reports sent up until 2019 were not objected to by the Respondent and the problem arose only after the referred year. It was further submitted that the definition of the concept of inter-operator has not been provided in the license or by the law, hence the Appellant is entitled to exclude the referred payments from its gross annual revenue. It was submitted that it is trite law that what is not prohibited is permitted; in this regard, reliance was placed upon Islamic University Bahawalpur v. Muhammad Hameed Shatti (2004 SCMR 649), Additional Collector Sales Tax v. Messrs Abdullah Sugar Mills Limited (2003 SCMR 1026) and Masud Humayun v.
Federal Public Service Commission (2016 PLC (C.S.) 1091).
3. Learned counsel for the Respondent contended, inter alia, that inter-operator payments mean the payments made to other operators with respect to telecommunication services and not other payments made to another party towards ancillary charges. It was further argued that the Impugned Judgment does not suffer from any infirmity and the appeal is liable to be dismissed.
4. Submissions of the parties have been heard and the documents placed on record examined with their able assistance. The relevant facts necessary for the decision of the instant appeal have already been mentioned hereinabove, hence do not merit reproduction.
5. Appellant is aggrieved of the impugned order on account of the fact that the payments made by it to Edotco have not been subtracted from gross annual revenue for the purpose of working out percentage for payments of mandatory annual fees and other statutory charges as envisaged in the terms of license and by the law; and the calculation thereof is dependent on gross annual revenue minus inter-operator payments. Appellant's version is that payments made by it to Edotco, or on its behalf to its vendors or other parties, tantamount to inter-operator payments and are to be subtracted from the gross annual revenue, whereas the Respondent contends otherwise. It is correct that the word inter-operator is not defined in the license agreement or any other law governing the subject. In Oxford English Dictionary, the word "inter" has been defined as "between"; "among"; the word 'operator" has been defined as "a person who operates or a person who connects lines between two telephones". The general meaning of the word 'inter-operator' would thus mean in between or among two or more operators. Though it is not provided in the license agreement or the definitions under law, the basic concept of inter-operator payments implies payments made by and between two or more operators. It would be otiose to say that all payments made among operators shall qualify to be subtracted and it would be only common sensical to reach such a conclusion. While interpreting contracts (license agreement in the present case), in absence of an exhaustive definition of the term inter-operator in any of the relevant Rules or Regulations, the standard rules or principles applicable to interpretation of such contracts shall be employed. If the concept of inter-operator was to be given the meaning that the Appellant has submitted, the ambit of the term would be left wide open and would then also include payments for purchase of immovable or movable properties or such other considerations flowing between two corporate entities. The ambit of the term inter-operator payments is to be restricted only to instances where payments are made or exchanged between two service providers which are naturally in the same business of telecommunication services and the payments made are in lieu of the referred activity of provision of telecommunication services. In adopting this reasoning, I am fortified by the well-settled principle of bystanders test employed in the interpretation of contracts.
This test is one of the objectivity and held that a contractual term should be understood or interpreted to mean that which a bystander to the contract, when asked about such a term, would ascribe to it. This test of objective interpretation is also referred to as the reasonable man's test where the meaning ascribed to a term will be that which a reasonable man who is not party to the contract would derive from a bare reading of that term. This practice of objective interpretation of a contract is a well established one. In Rainy Sky SA v. Kookmin Bank (2011) 1 WLR 2900, the Supreme Court of United Kingdom, while laying down the correct approach of interpretation of clauses of a contract, stated as follows: "...the ultimate aim of interpreting a provision in a contract, especially a commercial contract, is to determine what the parties meant by the language used, which involves ascertaining what a reasonable person would have understood the parties to have meant. As Lord Hoffman made dear in the first of the principles, he summarized in the Investors Compensation Scheme case (1998) 1 WLR 896, the relevant reasonable person is one who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract".
At paragraph 15, Lord Clarke, stated the core issue of construction/interpretation: "The issue between the parties in this appeal is the role to be played by considerations of business common sense in determining what the parties meant."
At paragraphs 21 & 23, Lord Clarke explained that: "The language used by the parties will often have more than one potential meaning.... the exercise of construction is essentially one unitary exercise in which the court must consider the language used and ascertain what a reasonable person, that is a person who has all the knowledge which would reasonably have been available to the parties in the situation in whet they were at the time of the contract, would have understood the patties to have meant. In doing so, the court must have regard to all the relevant surrounding circumstances. If there are two possible constructions, tile court is entitled to prefer the construction which is consistent with business common sense and to reject the other............... Where the parties have used unambiguous language, the court must apply it."
In Arnold v. Britton (2015) AC 1619, the issue was of true interpretation/construction of a service charge provision in relation to 25 chalet leases. More particularly, how the annual escalator of the service charge aspect of the service charge provision was to operate. Lord Neuberger explained in great detail, under the heading 'Interpretation of Contractual Provisions', at Paragraphs 14 to 23 as follows: "Over the past 45 years, the House of Lords and Supreme Court have discussed the correct approach to be adopted to the interpretation, or construction, of contracts in a number of cases starting with Prenn v. Simmonds [1971] 1 WLR 1381 and culminating in Rainy Sky SA v. Kookmin Bank [2011] 1 WLR 2900.
When interpreting a written contract, the court is concerned to identify the intention of the parties by reference to "what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean"; to quote Lord Hoffmann in Chartbrook Ltd. v. Persimmon Homes Ltd. [2009] AC 1101, pare 14. And it does so by focussing on the meaning of the relevant words, in this case clause 3(2) of each of the 25 leases, in their documentary, factual and commercial context. That meaning has to be assessed in the light of (1) the natural and ordinary meaning of the clause, (ii) any other relevant provisions of the lease, (iii) the overall purpose of the clause and the lease, (iv) the facts and circumstances known or assumed by the parties at the time that the document was executed, and (v) commercial common sense, but (vi) disregarding subjective evidence of any party's intentions. In this connection, see Prenn [1971] 1 WLR 1381, 1384-1386; Reardon Smith Line Ltd v Yngvar Hansen-Tangen (trading as HE Hansen-Talgeh) (1976) 1 WLR 989, 995-997, per Lord Wilberforce; Bank of Credit and Commerce International 54 v. All [2002] 1 AC 251, pare 8, per Lord Bingham of Cornhill; and the survey of more recent authorities in Rainy Sky [2011] 1 WLR 2900, paras 21.30, per Lord Clarke of Stone-cum-Ebony JSC.
For present purposes, I think it is important to emphasize seven factors.
First, the reliance placed in some cases on commercial common sense and surrounding circumstances (eg in Chartbrook [20091 AC 1101, paras 16-26) should not be invoked to undervalue the importance of the language of the provision which is to be construed. The exercise of interpreting a provision involves identifying what the parties meant through the eyes of a reasonable reader, and, save perhaps in a very unusual case, that meaning is most obviously to be gleaned from the language of the prods/on. Unlike commercial common sense and the surrounding circumstances, the parties have control over the language they use in a contract.
And, again save perhaps in a very unusual case, the parties must have been specifically focusing on the issue covered by the provision when agreeing the wording of that provision.
Secondly, when it comes to considering the centrally relevant words to be interpreted, I accept that the less clear they are, or, to put it another way, the worse their drafting, the more ready the court can properly be to depart from their natural meaning. That is simply the obverse of the sensible proposition that the clearer the natural meaning the more difficult it is to justify departing from it. However, that does not justify the court embarking on an exercise of searching for, let alone constructing, drafting infelicities in order to facilitate a departure from the natural meaning.
If there is a specific error in the drafting, it may often have no relevance to the issue of interpretation which the court has to resolve.
The third point I should mention is that commercial common sense is not to be invoked retrospectively. The mere fact that a contractual arrangement, if interpreted according to its natural language, has worked out badly, or even disastrously, for one of the parties is not a reason for departing from the natural language. Commercial common sense is only relevant to the extent of how matters would or could have been perceived by the parties, or by reasonable people in the position of the parties, as at the date that the contract was made. Judicial observations such as those of Lord Reid in Wickman Machine Tools Sales Ltd. v. L Schuler AG [1974] AC 235, 251 and Lord Diplock in Antaios Cia Naviera SA v. Salen Rederierna AS (The Antaios) 9851 AC 191, 201, quoted by Lord Carnwath JSC at para 110, have to be read and applied bearing that important point in mind.
Fourthly, while commercial common sense is a very important factor to take into account when interpreting a contract, a court should be very slow to reject the natural meaning of a provision as correct simply because it appears to be a very imprudent term for one of the parties to have agreed, even ignoring the benefit of wisdom of hindsight. The purpose of interpretation is to identify what the parties have agreed, not what the court thinks that they should have agreed.
Experience shows that it is by no means unknown for people to enter into arrangements which are ill-advised, even ignoring the benefit of wisdom of hindsight, and it is not the function of a court when interpreting an agreement to reeve a party from the consequences of his imprudence or poor advice. Accordingly, when interpreting a contract a judge should avoid re-writing it in an attempt to assist an unwise party or to penalise an astute party.
The fifth point concerns the facts known to the parties. When interpreting a contractual provision, one can only take into account facts or circumstances which existed at the time that the contract was made, and which were known or reasonably available to both parties. Given that a contract is a bilateral, or synallagmatic, arrangement involving both parties, it cannot be right, when interpreting a contractual provision, to take into account a fact or circumstance known only to one of the parties.
Sixthly, in some cases, an event subsequently occurs which was plainly not intended or contemplated by the parties, judging from the language of their contract. In such a case, if it is clear what the parties would have intended, the court will give effect to that intention. An example of such a case is Aberdeen City Council v Stewart Milne Group Ltd 2012 SC (L1K3C) 290, where the court concluded that "any approach" other than that which was adopted "would defeat the parties' clear objectives"; but the conclusion was based on what the parties "had in mind when they entered into" the contract: see paras 21 and 22.
Seventhly, reference was made in argument to service charge clauses being construed "restrictively": I am unconvinced by the notion that service charge clauses are to be subject to any special rule of interpretation. Even if (which it is unnecessary to decide) a landlord may have simpler remedies than a tenant to enforce service charge provisions, that is not relevant to the issue of how one interprets the contractual machinery for assessing the tenant's contribution. The origin of the adverb was in a judgment of Rix LI in McHale v. Earl Cadogan (2010] HLR 412, pars 17.
What he was saying, quite correctly, was that the court should not "bring within the general words of a service charge clause anything which does not dearly belong there": However, that does not help resolve the sort of issue of interpretation raised in this case."
In Wood v. Capita Insurance Services Limited (2017) UKSC 24, the Supreme Court of United Kingdom revisited the earlier case law on the subject and at Paragraphs 10 to 13 observed as follows: "10. The court's task is to ascertain the objective meaning of the language which the parties have chosen to express their agreement. It has long been accepted that this is not a literalist exercise focused solely on a parsing of the wording of the particular clause but that the court must consider the contract as a whole and, depending on the nature, formality and quality of drafting of the contract, give more or less weight to elements of the wider context in reaching its view as to that objective meaning. In Prenn v. Simmonds [1971] 1 WLR 1381, 1383H-1385D and in Reardon Smith Line Ltd v. Yngvar Hansen-Tangen (trading as HE Hansen-Tangen) [1976] 1 WLR 939, 997, Lord Wilberforce affirmed the potential relevance to the task of interpreting the parties' contract of the factual background known to the parties at or before the date of the contract, excluding evidence of the prior negotiations. When in his celebrated judgment in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, 912-913 Lord Hoffmann reformulated the principles of contractual interpretation, some saw his second principle, which allowed consideration of the whole relevant factual background available to the parties at the time of the contract, as signaling a break with the past. But Lord Bingham of Cornhill in an extrajudicial writing. 'A New Thing Under the Sun? The Interpretation of Contracts and the ICS decision" (2008) 12 Edin LR 374, persuasively demonstrated that the idea of the court putting itself in the shoes of the contracting parties had a long pedigree.
11. Lord Clarke elegantly summarised the approach to construction in the Rainy Sky case [2011] 1 WLR 2900, para 21f. In the Arnold case [2015] AC 1619 all of the judgments confirmed the approach in the Rainy Sky case: Lord Neuberger of Abbotsbury PSC, paras 13-14; Lord Hodge 25C, para 76 and Lord Camwath JSC, para 108. Interpretation is, as Lord Clarke JSC stated in the Rainy Sky case (para 21), a unitary exercise; where there are rival meanings, the court can give weight to the implications of rival constructions by reaching a view as to which. construction is more consistent with business common sense. But, in striking a balance between the indications giver by the language and the implications of the competing constructions the court must consider the quality of drafting Can the clause (the Rainy Sky case, para 26, citing Mance LI in Can Insurance Co Ltd. v.
Tai Ping Insurance Co. Ltd. (No 2, (2001) 2 All ER (Comm) 299, pares 13, 16); and it must also be alive to the possibility that one side may have agreed to something which with hindsight did not serve his interest: the Arnold case, paras 20,
77. Similarly, the court must not lose sight of the possibility that a provision may be a negotiated compromise or that the negotiators were not able to agree more precise terms.
12. This unitary exercise involves an iterative process by which each suggested interpretation is checked against the provisions of the contract and its commercial consequences are Investigated: the Arnold, case, pare 77 citing In re Sigma Finance Caron (2010] 1 All ER 571, pare 12, per Lord Mance JSC. To my mind once one has read the language in dispute and the relevant parts of the contract that provide its context, it does not matter whether the more detailed analysis commences with the factual background and the implications of rival constructions or a close examination of the relevant language in the contract, so long as the court balances the indications given by each.
13. Textualism and contextualism are not conflicting paradigms in a battle for exclusive occupation of the field of contractual interpretation, gather, the lawyer and the judge, when interpreting any contract, can use them as tools to ascertain the objective meaning of the language which the parties have chosen to express their-agreement. The extent to which each tool will 'assist the court in its task will vary according to the circumstances of the particular agreement or agreements. Some agreements may be successfully interpreted principally by textual analysis, for example because of their sophistication and complexity and because they have been negotiated and prepared with the assistance of skilled professionals. The correct interpretation of other contracts may be achieved by a greater emphasis on the factual matrix, for example because of their informality, brevity or the absence of skilled professional assistance.
But negotiators of complex formal contracts may often nor achieve a logical and coherent text because of, for example, the conflicting aims of the parties, failures of communication, differing drafting practices, or deadlines which require the parties to compromise in order to reach agreement. There may often therefore be provisions in a detailed professionally drawn contract which lack clarity and the lawyer or, judge in interpreting such provisions may be particularly helped by considering the factual matrix and the purpose of similar provisions in contracts of the same type. The iterative process, of which Lord Mance JSC spoke in Sigma Finance Corpn [2010] 1 All FR 571, para 12, assists the lawyer or judge to ascertain the objective meaning of disputed provisions."
6. On the touchstone of above-cited law, and while employing the 'reasonable man' test of objective interpretation, the term inter-operator charges, as used in the licence agreement, would mean the charges paid by one operator to another towards licensed activity of providing telecommunication services and will not extend to all or any other payments made by one operator to another. I am, therefore, of the view that the Impugned Order does not suffer from any legal or factual infirmity warranting interference in the appeal even though the discussion on the law and facts was not very elaborate.
7. For the above reasons, the instant appeal is without merit and is accordingly dismissed.