Radio Interference

Music Broadcast Pvt. Ltd. v. Union of India

(29th April, 2009) (Petition No. 73(c)/2008)

Facts
The case concerns the (2) The case of the Petitioner is that
efforts by
petitioner to restrain the respondent license never really went into effect. It
from invoking a bank guarantee states that the grant of licenses issued
submitted by it pursuance to the issuance to it to operate FM radio stations at
of a FM broadcast license in the city of Nagpur and Patna was only a
Pune. The petition praying for the return formality and that the non-
of the bank guarantee made the commencement of broadcasting at the
argument that the conditions for its centers was due to the inordinate
invocation had not been satisfied. delay on the part of the Respondent to
give a wireless operational license.
Issues Besides the contention of the
Petitioner is that the term of the
(1) What are the conditions for the return license was to commence from the
of the Bank Guarantee? date of issuance of the wireless
The tribunal on (2) What is the nature of the Bank operational license from the WPC
Guarantee?
examination of the wing, a license that it never received.

terms of the Bank

Decision
Guarantee held that
(1) The tribunal first into the nature of (3) According to the Respondent, as
it was conditional
the bank guarantee, since, if it, “is per clause 6 of the license Agreement
and could only be conditional, then the conditions must be and clause 2.1 of Article 2 of schedule
invoked by the satisfied before the Bank Guarantee can C of the License Agreement, the
respondent on the be invoked. On the other hand, if it is an licensee is required to complete
unconditional Bank Guarantee, then the installation of infrastructure and
petitioner not paying
party in whose favour the Bank facilities within 12 months from the
the license fees
Guarantee has been executed cannot be date of allocation of frequency by the
stopped from invoking/encashing the WPC, i.e. by 29.12.2001. Immediately
Bank Guarantee.” The tribunal on thereafter, it could have applied for
examination of the terms of the Bank the issue of the wireless operational
Guarantee held that it was conditional license which would have been given
and could only be invoked by the to it and that the non-issue of this
respondent on the petitioner not paying license was only on account of the
the license fees. inaction of the Petitioner.
 Radio Interference

Music Broadcast Pvt. Ltd. v. Union of India

Decision Cont..
(4) Ultimately the tribunal accepts the
arguments of the petitioner and holds
that the petitioner did not default in the
payment of licenese fees, an event for the
invocation of the bank guarantee. The
logic applied by the tribunal was that
since, a wireless operational license was
not issued to the petitioner, it did not
commence services and the license fees
did not become payableand hence it did
not commit a default making the bank
guarantee payable.
enterprises. The decision empasised that
in the era of liberalization there cannot
be any discrimination between private
and state owned enterprises.

Ultimately the
tribunal accepts the
arguments of the
petitioner and
holds that the
petitioner did not
default in the
payment of license
fees, an event for
the invocation of
the bank
guarantee.

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