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PTA has Authority to issue Enforcement Orders and impose Late Payment Additional Fees (LPAF) on Delayed Contributions --- Islamabad High Court, Islamabad

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PTA has Authority to issue Enforcement Orders and impose Late Payment Additional Fees (LPAF) on Delayed Contributions --- Islamabad High Court, Islamabad

Islamabad 26-12-2024: The Islamabad High Court (IHC), in a judgment delivered by Mr. Justice Miangul Hassan Aurangzeb on December 20, 2024, upheld the enforcement order issued by the Pakistan Telecommunication Authority (PTA) against CM Pak Limited (Zong). The Court dismissed the company’s appeal against PTA’s directive to pay Rs. 387,462,464 as Universal Service Fund (USF) contributions and Rs. 176,040,626 as Late Payment Additional Fee (LPAF).

The case stemmed from a show cause notice issued by PTA under Section 23(1) of the Pakistan Telecommunication (Re-organization) Act, 1996, demanding payment of USF contributions and associated late fees. PTA alleged that CM Pak violated Clause 4.1.2.2 of its license, which mandates annual contributions to the USF.

The appellant argued that the notice was invalid because it was issued by PTA’s Director (Law) under delegated powers, while the proceedings were conducted and finalized by PTA itself. Additionally, CM Pak contended that LPAF could not be imposed on late USF contributions, relying on a prior judgment in National Telecommunication Corporation Vs. PTA (FAO No. 164/2017).

The Court held that PTA, as the parent authority, retains jurisdiction even after delegating powers. It can conduct proceedings initiated by delegated officers. There was no legal bar preventing PTA from deciding the matter after the Director (Law) issued the notice.

The Court interpreted Clause 4.1.2 of CM Pak’s license, which categorizes USF contributions as “annual fees.” Therefore, the imposition of LPAF on delayed USF payments was found lawful under Clause 4.4.2 of the license.

CM Pak’s argument that it withheld payment due to a pending claim of Rs. 666 million against the USF Company was dismissed. The Court ruled that pending litigation does not absolve a licensee from its statutory or contractual obligations.

The Court clarified that a fresh show cause notice is unnecessary for unpaid amounts when partial payments are made during proceedings.

Mr. Justice Miangul Hassan Aurangzeb upheld PTA’s imposition of LPAF, distinguishing it from the prior case of National Telecommunication Corporation Vs. PTA, which dealt with a different type of fund (Research and Development Fund).

The Court dismissed the appeal and allowed PTA to withdraw the Rs. 387,462,464 deposited by CM Pak in compliance with interim orders. Mr. Justice Miangul Hassan Aurangzeb remarked that the enforcement order was consistent with the provisions of the law and the terms of the appellant’s license.