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Andhra High Court · body

2002 DIGILAW 168 (AP)

Naveen Pulijal v. Hyderabad Telephones, Suryalok Complex, Abids, Hyderabad, rep. , by its General Manager

2002-02-06

V.V.S.RAO

body2002
V. V. S. RAO, J. ( 1 ) THE petitioners, who are wife and husband filed W. P. Nos. 12106 and 12122 of 2000 respectively seeking a declaration that the action of the respondent-Hyderabad Telephones in disconnecting their Telephones bearing Nos. 7564765 and 7631664 respectively, as arbitrary and unconstitutional, and consequently to award compensation of Rs. 1,00,000. 00. Since in both the writ petitions common questions of fact and law are involved, they are disposed of by this common judgment. ( 2 ) W. P. No. 12106 of 2001, is filed by the wife. She was given telephone connection by the respondent bearing Telephone No. 7564765. It was installed in her house on 30-11-1989. She received a bill dated 11-3-2000, for Rs. 1,685. 00, which she paid promptly. However, the respondent, despite her strong protests, disconnected her Telephone on the ground that M/s. Instyle Consumer Leasing Pvt. Ltd. (for short the company ), a company incorporated under the Companies Act, 1956 in which the husband of the petitioner is Managing Director, committed default in payment of rent and other charges in respect of No. 7632643, which was allotted to the company. ( 3 ) SIMILARLY, W. P. No. 12122 of 2000, is filed by the husband. He was given telephone connected by the respondent bearing Telephone No. 7631664. It was installed in his house on 29-6-1976. He received a bill for Rs. 4,443. 00, which he paid promptly. However, the respondent disconnected his telephone on the ground that the company in which he is Managing Director committed default in payment of rent and other charges. ( 4 ) ON behalf of the respondent, the Sub-Divisional Engineer-II, filed counter stating that there are no arrears or dues towards rent, call charges or other charges in respect of Telephone Nos. 7564765 and 7631664, which are standing individually in the names of the petitioner. He however, states that the telephones were disconnected because the subscriber (company), in which one of the petitioner is Managing Director, committed default in payment of telephone bills, and the telephones were disconnected having regard to the power conferred on the respondent by Rule 443 of Indian Telegraph Rules, 1951 (for short the Rules ). ( 5 ) SRI. He however, states that the telephones were disconnected because the subscriber (company), in which one of the petitioner is Managing Director, committed default in payment of telephone bills, and the telephones were disconnected having regard to the power conferred on the respondent by Rule 443 of Indian Telegraph Rules, 1951 (for short the Rules ). ( 5 ) SRI. N. Praveen, the learned counsel appearing on behalf of the petitioners submitted that even if the company, in which one of the petitioners is Managing Director, is in dues, the respondent cannot disconnect the telephones of the petitioners, which are standing individually in their names, and such disconnection is impermissible and is contrary to the mandate of Rule 443 of the Rules. He submits that the petitioners have not committed any default in payment of the telephone bills to the respondent. The company, in which one of the petitioners is Managing Director, has called in question the correctness or otherwise of the bills raised by the respondent, and such disputes are pending adjudication. In support of his contention that the liability of the company in payment of telephone bills in respect of the telephone allotted to it, cannot be fastened to the Directors working therein so as to disconnect their telephones standing in their individual names, the learned counsel placed reliance upon the judgment of this Court in V. V. Rama Rao v. Union of India1. ( 6 ) SRI. M. Ganga Rao, the learned Additional Central Government Standing Counsel, appearing on behalf of the respondent submits that company, in which one of the petitioners, is Managing Director, got allotted telephones one in his name and one in the name of the company, and since the company in which he is Managing Director committed default in payment of telephone bills, the respondent disconnected the telephones of the petitioners, which it is entitled to do so under Rule 443 of the Rules, and therefore, the action of respondent in disconnecting the telephone of the petitioners cannot be faulted. He further submits that the company filed as many as 14 cases questioning the correctness or otherwise of the telephone bills raised by the respondent before the District Consumer Forum, and though the said forum directed the respondent to reconnect the telephone subject to the company paying 30- 40% of the disputed amounts, the company did not pay the amounts. He further submits that the company filed as many as 14 cases questioning the correctness or otherwise of the telephone bills raised by the respondent before the District Consumer Forum, and though the said forum directed the respondent to reconnect the telephone subject to the company paying 30- 40% of the disputed amounts, the company did not pay the amounts. He also submits that there were several arbitration cases at the behest of the company, and in all the cases, the company suffered awards under Section 7-B of the Indian Telegraph Act, 1885. He further submits that there is no evidence to show that the company in which one of the petitioners is Managing Director, is a company incorporated under the Companies Act, 1956. Even otherwise, according to the learned Standing Counsel, the company is only a masquerade, behind which the petitioners are playing an active role. He, therefore, pleaded this Court to apply the principle of "lifting the corporate veil" so as to bring the case of the respondent within the ambit of Rule 443 of the Rules. ( 7 ) THE short question that falls for consideration is in a situation where there are two different subscribers, who are at least legally presumed to be different, whether under such a situation Rule 443 of the Rules empowers the respondent to disconnect the telephones of both the subscribers, even if the default is in respect of only one telephone? ( 8 ) THOUGH the matters came up for final disposal at least on four occasions, they were adjourned at the request of the learned Standing Counsel for the respondent to enable the respondent to produce the file relating to allotment of Telephone No. 7632643. Today when the matter is called, the file relating to Telephone No. 7564765, which is subject-matter of dispute in W. P. No. 12106 of 2000, is only produced, but the file relating to Telephone No. 7631664, which is subject-matter of dispute in W. P. No. 12122 of 2000 is not produced. It is, however, sought to be explained by the learned Standing Counsel that the file relating to the allotment of Telephone to the company has been misplaced as it had been making rounds in connection with the cases pending before the District Consumer Forum as well as before the arbitrator under Section 7-B of the Act. It is, however, sought to be explained by the learned Standing Counsel that the file relating to the allotment of Telephone to the company has been misplaced as it had been making rounds in connection with the cases pending before the District Consumer Forum as well as before the arbitrator under Section 7-B of the Act. He, however, filed a statement giving some details, which in fact, are available in the pleadings in the case. Be that as it may, in the absence of any acceptable material placed by the respondent, this Court has no other option, but to accept the submission of the learned counsel for the petitioners that Telephone No. 7632643 was, in fact, allotted on 22-3-1990 to the company, which is a company incorporated under the provisions of the Companies Act, and which is alleged to have committed default in payment of telephone bills to the tune of more than Rs. 4,00,000. 00 to the respondent, and on that premise, the question needs to be considered. ( 9 ) PART V of the Rules deals with Rules for Telephones. Rule 443 of the Rules reads: ( 10 ) RULE 443 - Default of payment - If, on or before the due date, the rent or other charges in respect of the telephone service provided are not paid by the subscriber in accordance with these Rules, or bye-laws for charges in respect of calls (local and trunk) or phonograms or other dues from the subscriber are not duly paid by him, may be dis-connected without notice. The telephone or telephones or the telex so dis-connected may, if the telegraph authority thinks fit, be restored, if the defaulting subscriber pays the outstanding dues and the reconnection fee together with the rental for such portion of the intervening period (during which the telephone or telex remains dis-connected) as may be prescribed by the telegraph authority from time to time. The subscriber shall pay all the above charges within such period as may be prescribed by the telegraph authority from time to time. ( 11 ) RULE 2 (pp) of the Rules, defines subscriber to mean a person to whom a telephone service has been provided by means of an installation under the Rules or under an agreement. The subscriber shall pay all the above charges within such period as may be prescribed by the telegraph authority from time to time. ( 11 ) RULE 2 (pp) of the Rules, defines subscriber to mean a person to whom a telephone service has been provided by means of an installation under the Rules or under an agreement. Under Rule 443, the telephone of a subscriber (person) may be disconnected without notice if the rent or other charges in respect of the telephone are not paid by the subscriber (person) in accordance with the Rules. The Rule also postulates that any telephone or telephones of the same subscriber (same person) may also be disconnected without notice. The telephones disconnected for default in payment of rent or other charges in respect of one telephone can only be restored if the defaulting subscriber (person) pays the outstanding dues and reconnection fee together with rentals. The crucial word in Rule 443 of the Rules, is the word subscriber . ( 12 ) A person in law can be a subscriber in two capacities. Indeed, under Section 3 (42) of the General Clauses Act, 1847, a person is defined as to include any company or organization or body of individuals whether incorporated or not. The word person generally, unless otherwise excluded, includes both natural persons as well as juristic persons. A subscriber, therefore, can be a natural person like the petitioners herein in their individual capacity, or a juristic person like the company. If for any reason the juristic person (company) fails to comply with Rule 443 of the Rules, the telephone or other telephones of the same juristic person can alone be disconnected under Rule 443, and by no stretch of imagination or by applying the principle of "lifting the corporate veil", the telephone or telephones of natural persons, who are directors and officers of the company cannot be disconnected under Rule 443. ( 13 ) IN a given case, the same directors of a company (juristic person) may also have a telephone jointly by reason of they being partners of a firm, registered under the Indian Partnership Act, 1932, and as rightly contended by the learned Standing Counsel, unlike a company registered under the provisions of the Companies Act, 1956, which is a juristic person, a firm registered under the Partnership Act, has no juristic personality for it is an association of persons, and hence, if a firm commits default in payment of rents and other charges of a telephone, it is permissible for the respondent to disconnect the telephone or telephones of the partners who constitute the firm. In Asst. G. M. , Telecom v. Mahalakshmi L and T Consultancy2, the Court held that a partnership firm and a registered company are two different entities, and the same principle cannot be applied while determining the liability of natural persons, who constitute a firm, or form a registered company. The following observations are apposite:a partnership firm or any other association of individuals which is a company, are legal entities in their own rights, provided they satisfy the required conditions for the said purpose, but they do not move unless such individuals who constitute the association i. e. , the firm or the company, move. It is well settled that inert organs of a Corporation, which is nothing but an association of individuals, pulsate with the heart and soul of those who are managers and operate with the mind of the managers. A partnership, it is well settled, is a compendious name of the individuals who act for each other and who are accountable to each other as well as for the activities of the firm. ( 14 ) THE above decision is an authority for the proposition that if the firm in which the individuals are partners, and if the firm commits default in payment of rents or other charges, then by invocation of Rule 443 of the Rules, it is always open to the respondent to disconnect the individual telephones given to the partners as well. As already pointed out, the same cannot be the case when an incorporated company commits default. This aspect of the matter was considered by this Court in V. V. Rama Rao s case (supra ). As already pointed out, the same cannot be the case when an incorporated company commits default. This aspect of the matter was considered by this Court in V. V. Rama Rao s case (supra ). When a company is a subscriber, its Directors by legal fiction, cannot automatically become subscribers, and if it is to be held that the Directors of such a company automatically become subscribers, then it will have dangerous portents in corporate law. It is well settled that directors and members of company are altogether different from a company as such. ( 15 ) IN V. V. Rama Rao s case, this was brought about very lucidly. A telephone connection given to the petitioner therein as proprietor of a small-scale industry was disconnected on the ground that the three companies in which the petitioner was a director did not pay the telephone bills to the Department. While invalidating the disconnection, this Court observed: Admittedly, the subscriber in respect of 5 telephones viz. , 547206, 547835, 548499, 548525 and 548597 are the three private limited companies of which the petitioner was a Managing Director/director. A sum of Rs. 6,59,502. 00 is due against the said five telephones provided to the said three companies. A Company is a juristic person having a separate legal entity and when it is the subscriber, it liability is not automatically transferred to the Directors. In a Private Limited Company, the liabilities of the share-holders/directors are limited, and as such, they being not the subscriber of the Telephone, a Telephone standing in the name of the share-holder/director cannot be disconnected by invoking Rule 443 on account of any default in respect of the Telephones of which the subscriber is the private limited company. ( 16 ) THE submission of the learned Standing Counsel that the company is in huge arrears to the tune of more than Rupees four lakhs in respect of Telephone No. 763243, and therefore, it resorted to disconnection of the telephones of the petitioners, one of whom is Managing Director of the company, cannot be accepted because there are already arbitration awards in respect of the Telephone allotted to the company, and there are sufficient provisions under the Rules by invocation of which it can recover the amounts due in accordance with law. The action of the respondent in disconnecting the telephones standing in the names of the petitioners in their individual capacity as subscribers, is illegal and violative of the provisions of Rule 443 of the Rules. ( 17 ) IN the result, the both the writ petitions are allowed with no order as to costs.