MIANGUL HASSAN AURANGZEB, J:- Through the instant appeal under Section 7(1) of the Pakistan Telecommunication (Re-organization) Act, 1996 ("the 1996 Act") the appellant, CM Pak Limited, impugns the order dated 05.11.2018 passed by the respondent, Pakistan Telecommunication Authority ("PTA") whereby the appellant was held liable to pay Universal Service Fund ("USF") contribution amounting to Rs.387,462,464/- and Late Payment Additional Fee ("LPAF") amounting to Rs.176,040,626/- by 31.10.2018.
2. Vide ad-interim order dated 30.11.2018, this Court suspended the operation of the said order dated 05.11.2018 subject to the deposit of Rs.387,462,462/- in the Court. In compliance with the said order, the appellant had deposited the said amount in the Court.
3. The facts essential for the disposal of the instant appeal are that on 07.09.2017, a notice under Section 23(1) of the 1996 Act was issued by PTA to the appellant requiring it to pay Rs.724,270,064/- (including LPAF of Rs.57,763,870/- calculated up to 07.09.2017 at the rate of 2% per month) on account of USF contribution. Furthermore, the appellant was called upon to show cause as to why its licence should not be suspended or terminated or an enforcement order should not be passed against it for violating the directives of PTA on the subject of USF.
4. On 05.09.2018, the appellant submitted a detailed reply to the said show cause notice. The proceedings culminated in the order dated 05.11.2018 which has been assailed in the instant appeal.
5. Learned counsel for the appellant, after narrating the facts leading to the filing of the instant appeal, submitted that show cause notice dated 07.09.2017 was issued by the Director (Law), PTA in exercise of delegated powers of PTA; that the hearing pursuant to the said notice was conducted by PTA and not the Director (Law), PTA; that since the said notice was issued by the Director (Law), PTA, the proceedings should also have been conducted by him and not PTA; that Section 7 of the 1996 Act provides a remedy of an appeal from an order of an officer acting under delegated powers of PTA; that the proceedings conducted by PTA on the basis of the notice issued by the Director (Law), PTA were unlawful; that the provisions of Section 23 of the 1996 Act for the issuance of a show cause notice could only be invoked where a licencee contravened any provision of the 1996 Act or the Rules made thereunder or any term and condition of the licence; that Section 23 ibid could not be invoked where there is an alleged violation of any regulation; that in the show cause notice, it was alleged that the appellant had violated Regulation 23(6) and (7) of the PTA (Functions and Powers) Regulations, 2006 ("the 2006 Regulations"); that during the pendency of the proceedings before PTA, the appellant had paid Rs.279,043,729/-, and therefore it was incumbent on PTA to have issued a fresh show cause notice instead of conducting further proceedings pursuant to the show cause notice dated 07.09.2017; that in terms of clause 4.4 of the appellant's licence, LPAF was payable only in case of late payment of "all fees including initial licence fee;" that there is no provision either in the 1996 Act or the Rules made thereunder or in terms of the licence for payment of LPAF for late payment to USF; that in terms of Section 33A(4)(b) of the 1996 Act, USF shall consist of a prescribed contribution by licencees; that Section 2(m) defines 'prescribed' as prescribed by rules; that now that the Universal Service Fund Rules, 2006 ("the USF Rules") have been made, recourse could not be made to the provisions of the licence for passing an enforcement order against the appellant; that the Federal Government has established the USF Company pursuant to the provisions of the USF Rules; that the said company owed an amount of Rs.666,506,194/- to the appellant for the recovery whereof the appellant has already instituted a civil suit; that due to the said amount owed by the USF Company to the appellant, the appellant deliberately did not pay into USF the amount of Rs.387,462,464/-; that in terms of the law laid down by this Court vide judgment dated 27.02.2018 passed in FAO No.164/2017, PTA could not demand LPAF for delay in the payment of USF; and that the impugned enforcement order is not sustainable in law and is therefore liable to be set-aside. Learned counsel for the appellant prayed for the appeal to be allowed in terms of the relief sought therein.
6. On the other hand, learned counsel for PTA submitted that in terms of Rule 5(3) of the USF Rules, it is the responsibility of PTA to monitor and enforce the obligation of the relevant licencee to make the prescribed contribution in a timely and proper manner; that even though in terms of Section 33A of the 1996 Act, USF is to be established and controlled by the Federal Government, the USF Rules empower PTA to enforce a licencee's obligation to make its contribution to USF; that while determining the quantum of the contribution to be made by the appellant to USF for the year 2016, PTA had deducted Rs.279,043,729/- already contributed by the appellant during the pendency of the proceedings before PTA; that the appellant, in paragraphs 31, 32 and 36 of the appeal, has admitted that the reason why the USF contribution for the year ending on 31.12.2016 amounting to Rs.666,506,194/- was not made because of the litigation pending between the appellant and the USF Company; and that this is a self-created ground on the basis of which the appellant is avoiding to fulfill its obligation of making contribution into USF. Learned counsel for PTA prayed for the appeal to be dismissed.
7. I have heard the contentions of the learned counsel for the contesting parties and have perused the record with their able assistance. The facts leading to the filing of the instant appeal have been set out in sufficient detail in paragraphs 3 to 4 above and need not be recapitulated.
8. Section 33A was inserted in the 1996 Act through the Pakistan Telecommunication (Re- organization) (Amendment) Act, 2006 ("the 2006 Act") which was enacted on 01.03.2006. Section 33A(1) provides that as soon as may be, after the commencement of the 2006 Act, the Federal Government shall, by notification in the official Gazette, establish a fund to be called the Universal Service Fund. In terms of Section 33A(2), sums of money mentioned in Section 33A(4) are to be credited in USF, which is to be controlled by the Federal Government. Section 33A(4)(b) provides that USF shall consist of prescribed contributions by licencees. Section 2(m) defines "prescribed" to mean prescribed by rules made under the 1996 Act. In exercise of the powers conferred by inter alia Section 33A of the 1996 Act, the Federal Government made the USF Rules for administrating and managing USF. The primary purpose of establishing USF was to utilize the amount deposited therein exclusively for providing access to telecommunication services to people in the un-served, under-served, rural and remote areas and other expenditures to be made and incurred by the Federal Government in managing USF. For the better management and administration of USF, the Federal Government, in terms of Rule 10 of the 2006 Rules, incorporated a company limited by guarantee under the provisions of the erstwhile Companies Ordinance, 1984 by the name of USF Company.
9. The appellant has been granted a mobile cellular licence under Section 21 of the 1996 Act. Clause 4.1.2.2 of the said licence obligates the appellant to pay annual USF charges to PTA, and an amount equivalent to 1.5% of the appellant's annual gross revenue from licenced services minus inter- operator and related PTA / Frequency Allocation Board ("FAB") mandated payments. The said clause also provides that the initial licence fee installments, collection charges, penalties imposed by PTA, if any and leased line charges shall not be deducted from the gross revenue. Although not strictly in pari materia to clause 4.1.2.2 ibid, Rule 4(2) of the 2006 Rules obligates every licencee having a licence containing a provision regarding USF contribution shall contribute 1.5% from the date of the grant of such licence, of its annual gross revenues for the most recently completed financial year of the licensed services minus inter-operator and related PTA and FAB mandated payments.
10. It is not disputed that the appellant had been making regular contributions to USF. The present dispute pertains to the non-payment of the USF contribution for the year ending on 31.12.2016. PTA's case is that it had issued letters / notices dated 28.04.2017, 31.05.2017, 15.06.2017, 31.06.2017 and 30.07.2017 requiring the appellant to pay inter alia the USF contribution for year ending on 31.12.2016.
PTA had calculated the amount payable by the appellant in this regard to be Rs.724,270,064/- (including LPAF of Rs.57,763,870/- up to 07.09.2017 at the rate of 2% per month). Continued failure on the appellant's part to pay the said amount caused PTA to issue show cause notice dated 07.09.2017 to the appellant. The appellant, in its reply dated 05.09.2018, took a number of objections to the said notice which would be discussed at a subsequent stage in this judgment. During the proceedings before PTA, the appellant contributed Rs.279,043,729/- to USF. The proceedings conducted by PTA culminated in the order dated 05.11.2018 through which the appellant was held liable to make a USF contribution of Rs.563,503,090/- (i.e. Rs.387,462,464/- as the principal amount and Rs.176,040,626/- as LPAF up to 31.10.2018 at the rate of 2% per month).
11. Section 23 of the 1996 Act provides that where a licencee contravenes any provision of the said Act or the Rules made thereunder or any term or condition of the licence, PTA or any of its officers not below the rank of Director may, by written notice, require the licencee to show cause within thirty days as to why an enforcement order may not be issued. In the case at hand, the show cause notice dated 07.09.2017 was issued by the Director (Law), PTA by exercising the delegated powers of PTA. Section 9 of the 1996 Act empowers PTA, by general or special order, to delegate any of its power, functions or duties as it may deem fit, from time to time, to the Chairman, member or any of its officers subject to such conditions as it may deem fit to impose. It is not the appellant's case that the Director (Law), PTA had not been delegated the power to issue show cause notice. The appellant's view is that since the show cause notice dated 07.09.2017 had been issued by the Director (Law), PTA, the proceedings pursuant to such notice should also have been conducted by him and not PTA. The appellant appears to have lost sight of the fact that in the show cause notice, it is explicitly mentioned that the Director (Law), PTA was issuing the said notice by exercising the delegated powers of PTA and "without prejudice to any action that may be taken by the Authority or warranted under the law." There is no provision in the 1996 Act or the Rules made thereunder preventing PTA from conducting proceedings pursuant to a notice which is issued by an officer exercising the delegated powers of PTA.
12. It is trite to say that by delegating its power, the parent authority does not denude itself of its authority either to revoke the delegation or to exercise its power as a parent authority. In other words, while delegating a power to a subordinate authority, the parent authority does not denude itself to exercise the power. It is only in cases where the delegate has already decided the matter that the delegator cannot revisit the decision of the delegate unless an express power is conferred in this regard. In the case of Haji Muhammad Ismail Vs. Government of the Punjab (1987 MLD 2457), it was held as follows:- "2. As I understand the scope of delegation, it is one of the basic principles that the delegators by delegating their powers do not get denuded of those powers. In the present case, the powers vest in the Provincial Government and if the delegate is not conducting himself to the liking of the Government, it can itself exercise those powers. The powers vested in a delegator by a statute can always be exercised by it unless on being already exercised by the delegatee they stand exhausted."
13. Indeed under Section 7(2) of the 1996 Act, an appeal lies to PTA against any decision or order of any officer of PTA acting under the delegated powers of PTA. In the case at hand, the impugned order / decision dated 05.11.2018 has been passed by PTA and not by any officer of PTA acting under the delegated powers of PTA, and therefore an appeal in terms of Section 7(1) of the said Act against the said order / decision lies to the High Court. Therefore, I do not find any substance in the appellant's contention that since the show cause notice dated 07.09.2017 had been issued by the Director (Law), PTA, it is only he who should have conducted the proceedings pursuant to the said notice or to have taken a decision in the matter.
14. An enforcement order under Section 23 of the 1996 Act can be issued where a licencee contravenes any provision of the said Act or Rules made thereunder or any term of the licence. The allegation in the show cause notice dated 07.09.2017 against the appellant was inter alia that it had contravened clause 4.1.2.2 of the licence, reference to which has been made in paragraph 9 above.
The mere fact that Rule 4(2) of the USF Rules also obligates every licencee to contribute 1.5% of its annual gross revenue to USF or that reference to the said rule had not been made in the show cause notice dated 07.09.2017 would not absolve the appellant to show compliance with clause 4.1.2.2 of the licence. Since the appellant had stopped payment of its required USF contribution for the year ending on 31.12.2016, it had clearly contravened the said clause in its licence, and therefore for such contravention, a show cause notice could be issued to it and if it did not satisfy PTA for such contravention, an enforcement order could be passed against it.
15. In paragraphs 31 and 32 of the instant appeal, the appellant admits to have stopped payment of USF contribution for the year ending on 31.12.2016, but has attempted to justify this by asserting that the appellant had a claim against the USF Company and in this regard it had filed a suit for recovery. I am told that the appellant has filed a suit for recovery of Rs.584 million against the USF Company and the proceedings are at the stage of recording of evidence. It remains to be seen whether such a suit is decreed and to what extent. If at all the appellant is able to secure a decree in its favour, it can surely institute execution proceedings against the defendants in the said suit.
But a claim simpliciter against the USF Company cannot furnish a valid ground for the appellant to avoid its obligation under clause 4.1.2.2 of the licence to make its USF contribution.
16. I also cannot bring myself to agree with the contention of the learned counsel for the appellant that since during the pendency of the proceedings before PTA, an amount of Rs.279,043,729/- had been contributed to USF, it was incumbent on PTA to have issued a fresh show cause notice with respect to the remaining amount which was considered as payable by the appellant as its USF contribution. There is no legal basis for such a contention. Whenever during the pendency of proceedings, a claim is partially satisfied, the proceedings can continue with respect to the remaining amount. The appellant by its act of making a partial contribution to USF cannot expect the clock to be turned back for the initiation of proceedings afresh by the issuance of another show cause notice.
17. Through the impugned order / decision dated 05.11.2018, PTA has also imposed LPAF of Rs.176,040,626/- till 31.10.2018 at the rate of 2% per month. This LPAF has been imposed on the principal amount of Rs.387,462,464/- which was to be contributed by the appellant to USF for the year ending on 31.12.2016. The appellant asserts that since LPAF could only be imposed on the late payment of a `fee' payable under the licence and not the late contribution to USF, the imposition of Rs.176,040,626/- as LPAF on the appellant was not warranted. The appellant relied on this Court's judgment dated 27.02.2018 passed in FAO No.164/2017 titled "National Telecommunication Corporation Vs. Pakistan Telecommunication Authority" wherein this Court, while interpreting the clauses of a licence under question in the said case, held that LPAF could not be imposed on the delay in the contribution to the Research and Development Fund established by the Federal Government. This decision was based on the finding that a `contribution' could not be termed as a `fee' since they have a different nature and scope. This finding was based on the interpretation of clauses 6 and 7 of the licence in question in the said case. Although leave to appeal against the said judgment has been granted by the Hon'ble Supreme Court vide order dated 25.01.2022 in C.P.No.2203/2018, the operation of the said judgment has not been suspended.
18. The question whether LPAF could have been imposed by PTA on the delay in the contribution of USF is to be decided by interpreting the provisions of the licence granted to the appellant. Clause 4.4.1 of the licence obligates the licencee to "pay all annual fees" to PTA within 120 days of the end of the financial year to which such fees relate, whereas clause 4.4.2 provides that the late payment of "all fees including initial licence fee" shall incur an additional fee calculated at the rate of 2% per month on the outstanding amount, for each month or part thereof from the due date until paid.
19. The question whether USF contribution can be regarded as an annual fee is to be decided by reference to the specific clauses of the licence in question in the instant case. The said question stands clarified by clause 4.1.2 of the licence, which reads thus:- "Clause 4.1.2 "The Licencee shall pay the following annual fees to the Authority within 120 days of the close of Financial Year of the Licencee: 4.1.2.1. The Licencee shall pay to the Authority an amount equivalent to 0.5% of the Licencee's annual gross revenue from Licenced Services minus inter-operator payments and related PTA/FAB mandated payments as annual Licence fee. However, initial Licence fee installment, collection charges, penalties imposed by PTA, if any, and leased line charges shall not be deducted from the gross revenue.
4.1.2.2. The Licencee shall pay annual Universal Service Fund charge to the Authority, and amount equivalent to 1.5% of the Licence's annual gross revenue from Licenced Service minus inter- operator and related PTA/FAB mandated payments. However, initial Licence fee installments, collection charges, penalties imposed by PTA, if any and lease line charges shall not be deducted from the gross revenue.
4.1.2.3. The Licencee shall contribute an amount equivalent to 0.5% of the Licencee's annual gross revenue from Licenced Services minus inter-operator payment and related PTA / FAB mandated payments to the Research and Development Fund. However, initial Licence fee installments, collection charges, penalty imposed by PTA, if any, and leased line charges shall not be deducted from the gross revenue."
20. Under the general law, a fee may be treated as a levy different from a tax or duty. Generally, a fee can only be levied for services rendered and cannot be imposed to enhance general revenue.
A fee is meant to defray the cost of particular services rendered to a particular individual, whereas a tax is levied as a part of a common burden for general revenue. In the case at hand, the annual licence fee, contribution to USF and contribution to the Research and Development Fund have been made a part of the licencee's obligation, and it is the terms of the very same licence which impose the burden of LPAF on the delay on the appellant's part to make payment or contribution under all the above mentioned heads.
21. The expression "the licencee shall pay the following annual fees" employed in clause 4.1.2 ibid would mean that (i) annual licence fee of an amount equivalent to 0.5% of the licencee's annual gross revenue from licenced services, (ii) USF contribution of an amount equivalent to 1.5% of the licencee's annual gross revenue from licenced services, and (iii) payment to the Research and Development Fund for an amount equivalent to 0.5% of the licencee's annual gross revenue from licensed services, come within the meaning of "annual fees." This Court will be ignoring the expression "the following annual fees" if it were to hold otherwise. It would also amount to re- writing the terms of the licence and excluding from the meaning of the term "annual fees" a category of a payment obligation which has been explicitly included therein by clause 4.1.2 of the licence. Therefore, it is apt to hold that the terms of the licence bring USF contribution within the rubric of annual fees the non-payment or delay in the payment whereof entails the imposition of LPAF. Consequently, I am of the view that the imposition of LPAF for the delay on the appellant's part to make its USF contribution was lawful.
22. In view of the above, the instant appeal is dismissed with no order as to costs. PTA is at liberty to withdraw the amount of Rs.387,462,464/- deposited in this Court pursuant to the order dated 30.11.2018.