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License Agreement for Provision of Internet Service - Government of India and Satyam Infoway Ltd.

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                               GOVERNMENT OF INDIA
                           MINISTRY OF COMMUNICATIONS
                           AND INFORMATION TECHNOLOGY
                               TELECOM COMMISSION

                                LICENCE AGREEMENT

                                FOR PROVISION OF

                                INTERNET SERVICE
                         (Including Internet Telephony)

          NO. 820-49/2002-LR            DATED 1/4/2002
              -------------------------       ---------------------------
                          TOTAL PAGES THIRTY FOUR (34)

       For Satyam Infoway Limited             /s/ Ritu Pande
         /s/ Deepak Maheshwari                    1/4/2002
                1/4/2002                        (Ritu Pande)
         Authorised Signatory            Assistant Director General
                                        Dept. of Telecom, New Delhi


<S>  <C>                                                                     <C>

1.   Licence Agreement                                                        3
2.   Schedule 'A' - Service Area                                              8
3.   Schedule 'B' - Quantum of Licence                                        9
4.   Schedule 'C'

     PART  I     -           DEFINITIONS                                     10

     PART II     -           TERMS AND CONDITIONS

     Cond.         -     Requirement to provide the service                  14
                   -     Security consideration                              15
                   -     Application of the Indian Telegraph Act             17
                   -     Prohibition of certain activities                   18
                   -     Application of the TRAI Act                         19
                   -     Internet Telephony Services                         20
     Cond.       2 -     Acceptance Testing and Quality Assurance            21
      "          3 -     Delivery of the Services                            21
      "          4 -     Compliant Booking and Treatment                     22
      "          5 -     Right to Inspect                                    22
      "          6 -     Force - Majeure                                     22
      "          7 -     Interconnection with other networks                 23
      "          8 -     Requirement of Furnish Information to               24
                         The Licensor / Telecom Authority

      "          9 -     Extension of Licence                                25
      "          10 -    Termination of licence                              25
      "          11 -    Disputes with other parties                         27
      "          12 -    Arbitration of Disputes                             28
      "          13 -    Financial Conditions                                28
      "          14 -    Set Off                                             30
     PART - III  COMPLIANCE STATEMENT                                        31

5.   Schedule 'D' - Proforma for Performance Bank Guarantee                  32


                                LICENCE AGREEMENT

            THIS AGREEMENT made on the 1st day of April 2002 between the
President of India acting through Assistant Director General (LR- ) , Ministry
of Communications, Department of Telecommunications, Sanchar Bhavan, 20, Ashoka
Road, New Delhi-110 001 (hereinafter called the LICENSOR) of the ONE PART


M/s Satyam Infoway Ltd.                                                 a
company registered under the Companies Act 1956 and having its registered office
at 2nd Floor, Mayfair Centre, 1-8-303/36, S.P. Road, Secunderabad - 500003
(hereinafter called the LICENSEE which expression shall unless repugnant to the
context, include its successor in business, administrators, liquidators and
assigns or legal representatives) of the OTHER PART.

            WHEREAS pursuant to the request of the LICENSEE, the LICENSOR has
agreed to grant licence to the LICENSEE on the terms and conditions appearing
hereinafter to establish, maintain and operate Internet Service (hereinafter
called the SERVICE) in the country of India as given in Schedule "A" annexed
hereto and the LICENSEE has agreed to accept the same.


1. In consideration of observance of mutual covenants as well as payment of the
licence fee payable in terms of schedule `B' and due performance of all the
terms and conditions on the part of the LICENSEE, the LICENSOR does, hereby,
grant on non-exclusive basis, licence to establish, maintain and operate Service
in the area given in Schedule "A",on the terms and conditions mentioned in
Schedule "C" annexed hereto.

2. The licence is granted initially for a period of 15 years unless terminated
for default or for insolvency or for convenience or for tranfer of the licence
under the provisions of condition "12" of Part II, Schedule "C". If requested by
LICENSEE, extension of the Licence , unless terminated earlier under condition
"10" of the Schedule "C" Part --II, may be granted by the LICENSOR at suitable
terms and conditions for a period of FIVE YEARS or more at one time. The
decision of the LICENSOR in this respect shall be final. The Licensor may extend
or refuse the extension of the Licence on request of the licensee received
latest by the end of 14TH YEAR from the effective date and in the absence of
such request for extension, the Licence shall automatically be terminated as per
due date.

3. The licence shall be governed by the provisions of the Indian Telegraph Act
1885, Indian Wireless Telegraphy Act 1933 and TRAI Act 1997 as modified from
time to time.


4. Unless otherwise stated or appearing from context, all the schedules annexed
hereto including the certificates given along with application form and Guide
lines on Internet service no.845-51/97-VAS as well as Guidelines for issue of
permission to offer Internet Telephony Services dated 21st March, 2002 will form
part and parcel of this agreement. Provided, however, in case of conflict or
variance on an issue relating to this agreement, the terms set out in the main
body of this agreement read with all the Schedules annexed hereto shall prevail.

5. In this Agreement, words and expressions will have the same meaning as is
respectively assigned to them in Schedule "C".

6. The LICENSOR may at any time revoke the Licence by giving a written notice of
30 days after affording a reasonable opportunity of hearing on the breach of any
of the terms and conditions herein contained or in default of payment of any
consideration payable by the Licensee as provided hereunder.

7.1 The LICENSEE shall clearly indicate the specifications of the SERVICE to the
subscribers at the time of entering into contract with such subscriber.

7.2 In case of any complaint or dispute with regard to the Service from any
subscriber of the service, such complaint or dispute shall be a matter between
such subscriber of the service and the licensee only. The Government/licensor,
DOT, MTNL, VSNL or any other service provider licensed to provide connectable
systems shall not be party to any such complaint/dispute. The licensee shall be
responsible to suitably notify the above to all his subscribers of the service
before registering a request for and provisioning of the service.

7.3 The Licensee shall be solely responsible for installation, networking and
operation of necessary equipment and systems, treatment of subscribers'
complaints, issue of bills to its subscribers, collection of the revenue,
attending to claims and damages arising out of the services provided by him. The
LICENSEE shall make its own arrangements for all infrastructures involved in
providing the SERVICE. Further the Licensee shall clearly display and publicise
major specifications of subscriber terminal equipment at his premises which are
necessary for interworking/interfacing to telephone network.

8. The licensee shall be free to fix his own tariff to be charged from
subscribers. The tariff shall be left open to be decided by market forces.
However, the TRAI (Telecom Regulatory Authority of India) may review and fix a
tariff at any time during the validity of the licence which shall be binding on
the Licensee.

8.1 The licensee shall be responsible to obtain its own IP address and domain
name from the competent authorities. In case the IP addresses are taken from the
Department of Telecommunications, the same are non-portable and have to be
returned to DOT at the termination of connectivity contract.


9. The Performance Bank Guarantee of requisite amount shall be furnished from
time to time by the LICENSEE as required under the terms and conditions of this
Licence Agreement and in the proforma as provided in Schedule `D' annexed

            10. The LICENSEE shall not , without the prior written consent (can
be granted only as described below) of the Licensor, either directly or
indirectly, assign or transfer its rights in any manner whatsoever to any other
party or enter into any agreement for sub-licence and / or partnership relating
to any subject matter of the licence to any third party either in whole or in
part. Any violation of this term shall be construed as a breach of Licence
Agreement and the licence shall be liable for termination. Provided, however,
that installation of systems, equipment and network can be given on contract,
but, providing the SERVICE can not be given to another party on contract.
Provided, further, that the licensee can always employ or appoint agents and

               Provided that the aforesaid written consent permitting transfer
            or assignment will be granted

(i) In accordance with the terms and conditions and procedures described in
Tripartite Agreement if duly executed amongst LICENSOR, LICENSEE and LENDERS.

(ii) Whenever a merger of two licensee or other (Indian) companies is approved
vide High Court but no compromise in competition occurs in the provision of

            11. The LICENSOR reserves the right to, in case of a default of any
of the terms and conditions stipulated in the Licence Agreement, impose any
penalty as it may deem fit under the provisions of this agreement.

             12. Notwithstanding anything contained hereinbefore, it is further
agreed and declared by the parties that:-

            (i) The licence is issued on non-exclusive basis i.e. other vendors
may be granted licence for the same service in the same area at the discretion
of the Licensor. DOT itself or through a designated Public Authority, has the
right to operate the service in any/all service areas.

            (ii) The LICENSOR reserves the right to modify at any time the terms
and conditions of the licence covered under Schedule "A", "B", "C" and "D"
annexed hereto , if, in the opinion of the LICENSOR, it is necessary or
expedient to do so in the interest of the general public or for the proper
conduct of telegraphs or on security consideration, provided further that the
licensor reserves right to review the terms of this agreement based on the
policy of further liberalization whenever articulated in the context of New
Telecom Policy.

         (iii) Notwithstanding anything contained anywhere else in the Licence
Agreement, the LICENSOR's decision shall be final on all matters relating to
this Agreement and application of terms and conditions herein.


            (iv) The LICENSOR reserves the right to take over the entire
services, equipment and networks of the LICENSEE, in part or in whole of the
Service Area, or revoke/terminate/suspend the licence in the interest of
national security or in the event of a national emergency/war or low intensity
conflict or any other eventuality in public interest as declared by the
Government of India. The specific orders or directions from the Government
issued under such conditions shall be applicable to the LICENSEE.

      13. Individuals or groups of organisations both in private and Government
sectors are permitted to deploy, indigenous or imported, encryption equipments
for providing secrecy in transmission up to a level of encryption to be
specified by Telecom Authority. However, if encryption equipments of levels
higher than specified are to be deployed, individuals/groups/organisations shall
obtain Government clearance and shall deposit one set of keys with the Telecom

      14. In supersession of any thing provided elsewhere, the effective date of
this licence shall be 12/11/1998. The licence shall expire on 11/11/2013.

      15. The Licence is granted to the LICENSEE on the condition that any
change in the Indian Partners or their equity participation should be as
stipulated in the Indian Companies Act 1956.

            The LICENSEE shall be responsible to ensure that the total foreign
equity in the LICENSEE Company does not, at any time, exceed 74% of the total
equity, whenever it is likely to set up or has set up International gateways.

            The present Indian & Foreign partners/promoters and their equity
held in the LICENSEE Company as intimated by the company are recorded as

Promoter/partner                    Indian/Foreign                      Equity held in the
                                                                        LICENSEE Company
<S>                                 <C>                                 <C>
                                    As per Annexure 'A' enclosed


      16. All matters relating to this licence will be subject to jurisdiction
of Courts in Delhi/New Delhi only.


17. This license agreement replaces the old ISP license agreement
No 820-49/98-LR dated 12/11/1998, direction No. 820-1/98-LR(Pt.II) dated
6th August, 1999 and Amendments No : 820-1/98-LR dated 10th October, 2001, 5th
November, 2001 and 8th March, 2002 and the old license is hereby cancelled with
effect from today.

            IN WITNESS WHEREOF the parties hereto have caused this Agreement to
be executed through their respective authorised representatives the day and year
first above written.

                  Signed and Delivered for and on behalf of President of India

<S>                                                          <C>
                 Mrs. Ritu Pande                             For Satyam Infoway Limited
            By   _____________________                       /s/ Deepak Maheshwari
                 Assistant Director General(LR    ), DOT     Authorised Signatory

                                                             /s/ Ritu Pande
                                                             (Ritu Pande)
                                                              Assistant Director General
                                                              Dept. of Telecom, New Delhi

                                     Satyam Infoway Ltd.
            Signed on behalf of M/s _____________________________
               Deepak Maheshwari
            By____________________________________, holder of General Power of

                            12 June 2001
            Attorney dated ________________executed in accordance with the
            Resolution No.____________ dated _____________passed by the Board of
            Directors, in the presence of :-


              /s/ [Illegible]

              /s/ [Illegible]


                                   SCHEDULE A

                SERVICE AREA

            The service area under the scope of this licence is
_______________________________________. For the purpose of providing the
service, the licensee may install his equipment anywhere within the service
area. However, the subscribers will be responsible for procurement of Customer
Premises Equipment (CPE). The leased line subscribers of the service shall be
located within the service area. However, this restriction does not apply to
dial up subscribers.



                                  SCHEDULE 'B'


         (i) The licence fee is payable by the licensee in consideration for
grant of this licence, for the complete duration for which this licence is
granted. This has no relation to the actual start/provision of service by the
licensee or any mutual obligations between the licensee and any other service
provider/DOT/MTNL/VSNL/Departments of the Central or State Government/local or
statutory bodies.

         (ii) The Telecom Authority has decided to waive the Licence Fee for a
period up to 31.10.2003 and a nominal licence fee of One Rupee per annum will
become payable from 01.11.2003; however, the Telecom Authority reserves the
right to review an impose license fee including Universal Service Obligation
(USO) levy anytime during the validity of the license, which decision with its
terms and conditions, shall be binding on the license.


                                  SCHEDULE 'C'

                      RELATING TO THE CONDITIONS

            Unless the context otherwise requires, the following expressions
shall have the meaning assigned to them in these conditions:-

            1. APPLICABLE SYSTEMS: The "applicable system" means all the
necessary equipments/systems engineered to provide INTERNET Service as per
operational/technical and quality requirements and other terms and conditions of
the licence agreement and as laid down in the Guidelines for INTERNET Service
No.845-51/97-VAS as well as Guidelines for Issue of permission to offer Internet
Telephony Services dated 21st March, 2002.

            2. BSNL means Bharat Sanchar Nigam Limited.

            3. BSO means Basic Service Operators.

            4. CMSO means Cellular Mobile Service Operators.

            5. CONNECTABLE SYSTEM means a telecommunication system which is
authorised to be run under a licence which can be connected to the applicable

            6. CPE means Customer Premises Equipment.

            7. THE AUDITOR means the Licensee's auditor for the time being
appointed in accordance with the requirements of the Companies Act, 1956.

            8. DIAS: DOT's Gateway Internet Access Services.

            9. DIRECT EXCHANGE LINE (DEL): A telephone connection between the
subscriber's terminal equipment and a local exchange.

            10. DOMAIN NAME: Domain names in India are at present registered by
NCST (National Centre for Software Technology), Mumbai, who allot the same to
legitimate IP address holder on receipt of a written application.

            11. DOT means Department of Telecommunications, India, Government of
India and /or its successors as the Licensor.

            12. EFFECTIVE DATE: The date on which this Licence Agreement is
signed by the parties and if the parties have signed on different dates, the
latter of the two dates.


            13. EMERGENCY means an emergency of any kind, including any
circumstances whatever resulting from major accidents, natural disasters and
incidents involving toxic or radio-active materials.

            14. EMERGENCY SERVICES means in respect of any locality, the
relevant public, police, fire, ambulance and coast guard services for that

            15. ENGINEERING; The technical application of the dimensioning rules
and results thereof in order to provide the specified GRADE OF SERVICE(G.O.S.).

            16. GIAS; VSNL's Gateway Internet Access Services.

            17. INTERNET: Internet is a global information system that:

            * is logically linked together by a globally unique address, based
on Internet Protocol (IP) or its subsequent enhancements/upgradations;

            * is able to support communications using the Transmission Control
Protocol/Internet Protocol (TCP/IP) suite or its subsequent
enhancements/upgradations, and all other IP compatible protocols; and

            18. IP ADDRESSES: Operation of Internet Service requires IP
addresses which is at present a 32 bit binary address. This address is required
for each permanent connection on Internet. Typically, it is required for ports
of routers and other ISP equipment and also for leased line connections to be
provided to end users.

            19. ISP: means Internet Service Provider licensed to provide
Internet Service under this licence.

            20. ISDN means Integrated Service Digital Network.

            21. LICENCE means a licence granted or having effect as if granted
under Section 4 of the Indian Telegraph Act 1885 and Indian Wireless Telegraphy
Act 1933.

            22. LICENSEE: A registered Indian Company that has been awarded
licence for providing the SERVICE.

            23. LICENSOR shall refer to the President of India acting through
any authorised person, who granted Licence under Section 4 of Indian Telegraph
Act 1885 and Indian Wireless Telegraphy Act 1933, unless otherwise specified.

            24. LOCAL AREA: Local Area is the Short Distance Charging Area
(SDCA) of Department of Telecommunication.

25.  MESSAGE means anything falling within Sub Clause/paragraph (3) of Section
3 of the Indian Telegraph Act 1885.


            26. MTNL means Mahanagar Telephone Nigam Limited.

            27. NLDO means National Long Distance Operator.

            28. OPERATOR means any person who is authorised by the LICENSOR to
run a Relevant Connectable System.

            29. PC means Personal Computer.

            30. PLMN means Public Land Mobile Network.

            31. PMRTS means Public Mobile Radio Trunking Service

            32. PSTN means Public Switched Telephone Network.

            33. QoS means Quality of Service.

            34. SERVICE AREA: Separate licences shall be granted to any
applicant company for each service area. For this purpose, the country has been
divided into separate service areas in three categories as indicated below:-

            (i) Category "A" -- This covers the territorial jurisdiction of the
Union of India except specified areas that may be notified to be excluded from
time to time.

            (ii) Category "B" - Any of the 20 Territorial Telecom Circles, four
Metro Telephone Districts of Delhi, Mumbai, Calcutta or Chennai and four major
telephone districts of Ahmedabad, Bangalore, Hyderabad or Pune are Category `B'
service areas.The four Metro Telephone Districts (Delhi, Mumbai, Calcutta &
Chennai) are not part of any Telecom Circle, whereas the four major Telephone
Districts (Ahmedabad, Bangalore, Hyderabad & Pune) are part of respective
Telecom Circles.

            (iii) Category "C" Service Area -- Any Secondary Switching Area
(SSA) of DOT with geographical boundaries as on 1.4.98, will form a separate
category "C" Service Area with the exception that each of the four Metro
Telephone Districts of Delhi, Mumbai, Calcutta & Chennai and of four major
Telephone Districts of Ahmedabad, Bangalore, Hyderabad & Pune of the DOT with
geographical boundaries as on 1.4.98, will form a separate category "B" Service

            Applicants will be required to submit separate application for each
service area. The ISP will be required to set up his nodes i.e., Routes/servers
within the geographical limits of the service area. An applicant company may be
granted any number of licences. Also, there shall be no limit on number of
licences that can be granted in a particular service area. The leased line
subscribers shall be from within the service area. However, the ISP can offer
dial up service from any part of the country.


            Existing E-Mail and VSAT Service Licensees may also obtain separate
ISP Licence for any number of the above mentioned service areas subject to
fulfilment of eligibility criteria.

            35. SERVICES OR SERVICE means Internet Access/content services
including Internet telephony as mentioned in Clause 1.14 of Schedule 'C'

            36. SERVICE PROVIDER means the Government and includes a licensee.

            37. SIP means Session Initiated Protocol.

            38. SUBSCRIBER- Subscriber means any person or legal entity who
avails the service from the licensee.

            39. TELECOM AUTHORITY: The Director General, Telecommunications,
Government of India and includes any officer empowered by him to perform all or
any of the functions of the Telegraph Authority under the Indian Telegraph Act,
1885 or such other authority as may be established by law.

            40. TECHNICAL SPECIFICATIONS: As laid down in the Guidelines for
INTERNET Service No.845-51/97-VAS.

            41. TARIFF: Charges payable by a subscriber for the service

            42. TRAI -- means the Telecom Regulatory Authority of India
established under the TRAI Act, 1997.

            43. VALIDITY OF THE LICENCE: The period for which this licence is

            44. VSNL- means "Videsh Sanchar Nigam Ltd."

            45. ILDO - means International Long Distance Operator.

            46. W.P.C. means Wireless Planning & Co-ordination Wing of the
Ministry of Communications and Information Technology, Department of
Telecommunications, Government of India.


                                  SCHEDULE "C"



      1.1 The LICENSEE shall commission the Applicable Systems within 24 months
from the effective date of the licence and offer the service on demand to its

      1.2 LICENSEE shall be solely responsible for the installation, networking
and operation of necessary equipment and systems, treatment of the subscribers'
complaints, issue of bills to its subscribers, attending to claims and damages
arising out of his operation. The LICENSEE shall make its own arrangements for
all infrastructures involved in providing the SERVICE.

      1.3 For the purpose of providing the SERVICE, the LICENSEE shall install
his own suitable equipment so as to be compatible with the other service
providers' equipment and connect the same DIAS or GIAS or a Gateway owned by a
public/Government organisation for routing International Internet Traffic.
Private ISPs are also allowed to set up International Gateways after obtaining
security clearance/approval from Authority.

      1.3.1. Internet Subscribers can procure their own terminal equipment or
lease the same from the ISP.

      1.4. In the process of operating the SERVICE, the LICENSEE shall be
responsible for:-

         (i) The installation of the Internet Nodes i.e., routers/Servers etc.

         (ii) the proper operation and maintenance of his network

      1.5 If the LICENSEE has, in addition, leased or rented other
telecommunication resources from the DOT/MTNL/VSNL or any other Telecom Service
Provider authorised by the Government of India, purely for the purposes of
providing the service and networking its geographically dispersed equipment,
such resources will be a matter between the ISP and the service provider(s) and
will be subject to tariff as fixed by DOT/MTNL/VSNL/other Telecom Service
Provider from time to time.

      1.6 "WARRANTY AS TO QUALITY":- The LICENSEE shall warrant that SERVICES to
be provided by him shall be of the acceptable grade, consistent with the
established and generally accepted standards.

      1.7 The licensee shall provide to the Telecom Authority, a monthly report
indicating the details of ISP nodes or points of presence with their locations.
In case new nodes are to be installed, one month prior notice is required to be
given to the licensor.

      1.8 The billing disputes or differences, between the LICENSEE and its
subscribers will be settled amongst themselves.

      1.9. MTTR (Mean Time To Restore):

      1.9.1. 90% of faults resulting due to subscribers complaints should be
rectified within 24 hours and 99% within 3 days.

      1.9.2 The Licensee will keep a record of number of faults and
rectification reports in respect of each service area and produce the same to
the Authority as and when required.


      1.10.1 Individuals/Groups/Organisations are permitted to use as
customer encryption up to 40 bit key length in the RSA algorithms or its
equivalent in other algorithms without having to obtain permission. However, if
encryption equipments higher than this limit are to be deployed,
individuals/groups/organisations shall do so with the permission of the Telecom
Authority and deposit the decryption key, split into two parts, with the Telecom

      1.10.2 The LICENSEE shall provide to the LICENSOR, location details of the
equipment provided by ISP. Implementation of any installation of the concerned
equipment and execution of the concerned project shall be taken up only after
the approval by the LICENSOR and locations of these centres shall not be changed
without prior approval of the LICENSOR. This requirement shall be applicable
only to such areas as are sensitive from security point of view, as may be
notified from time to time by the LICENSOR. In the interest of national
security, the ISPs shall block Internet sites and/or individual subscribers,
as identified and directed by the Telecom Authority from time to time.

      1.10.3 Each ISP must maintain a log of all users connected and the service
they are using (mail, telnet, http etc.). The ISPs must also log every outward
login or telnet through their computers. These logs, as well as copies of all
the packets originating from the Customer Premises Equipment (CPE) of the ISP,
must be available in REAL TIME to Telecom Authority. Type of logins, where the
identity of the logged-in user is not known, should not be permitted.

      1.10.4 The LICENSEE shall provide necessary facilities to the Government
to counteract espionage, subversive act, sabotage or any other unlawful
activity. The said


facilities to be provided by the LICENSEE will depend upon the specific
situation at the relevant time. Type and extent of facility(ies) required shall
be at the sole discretion of the Government of India.

    1.10.5 The LICENSEE shall not use any hardware/software which are identified
as unlawful and/or render network security vulnerable. The LICENSEE shall make
available, on demand, to the agencies authorised by the Government of India,
full access to the equipment provided by the ISP for technical scrutiny and
detailed inspection.

    1.10.6 All foreign personnel likely to be deployed by the LICENSEE for
installation, operation and maintenance of the LICENSEE's network shall be
required to obtain security clearance by the Government of India prior to their
deployment. The security clearance will be obtained from the Ministry of Home
Affairs, Government of India.

    1.10.7 Software used by each ISP shall conform to a set of latest
operational requirements which will be periodically published by the Telecom

    1.10.8 LICENSOR shall have the right to take over the SERVICE, equipment and
networks of the LICENSEE either in part or in whole of the Service Area as per
directions if any, issued in the public interest or national security by the
Government in case of emergency or war or low intensity conflict or any other
eventuality. Provided any specific orders or direction from the Government
issued under such conditions shall be applicable to the LICENSEE and shall be
strictly complied with.

   1.10.9 LICENSOR reserves the right to modify these conditions or incorporate
new conditions considered necessary in the interest of national security.

   1.10.10 On Security related issues, an Inter-Ministerial Committee shall be
set up consisting of the representatives of DOT, Cabinet Secretariat, MHA, MOD,
DOE and NIC and representatives from NASSCOM to look into the technical aspects
of monitoring of communications in this sector (including Internet) to enable
the setting up of the monitoring infrastructure (which, in many cases, would
have to be funded by the ISPs). Any condition imposed by this Inter-Ministerial
Committee during the validity of the licence shall be binding on the licensee. MONITORING FACILITIES.


(i) Every international gateway location and/or the ISP node with a
router/switch having a capacity of 2 Mbps or more shall be equipped with a
monitroing Centre at the cost of the ISP. Suitable appropriate monitoring system
is to be set up be ISPs carrying Internet telephony traffic through their
Internet gateways and/or ISP nodes at their own


cost, as per the requirement of the security agencies and the cost of
maintenance of the monitoring equipment and infrastructure at the monitoring
centre located at the premises of the licensee shall be borne by the ISP.

(ii). Office space of 10 feet x 10 feet with adequate uninterrupted power supply
and air-conditioning which will be physically secured and accessible only to the
monitoring agencies will have to be provided by the ISP at each location, free
of cost.

(iii). In-addition to the equipment, one local exclusive telephone line is to be
made available by the ISP at the monitoring centre, the cost to be borne by the

(iv). The cost of maintenance of the equipment and infrastructure mentioned
above at monitoring centre located at the premises of the ISP is to be borne by
the ISP.

(v). Each router/switch of the ISP should be connected by the LAN operating at
the same speed as the router/switch, the monitoring equipment will be connected
to this network.

(vi). For a national ISP or an ISP having multiple nodes/point of presence, if
it is possible to monitor the traffic in all the Routers/switches from a central
location, a central monitoring centre would be acceptable. However, in such a
case, the ISP would, at the outset, be able to demonstrate to the Telecom
Authority that all routers/switches are accessible from the central monitoring
centre. Moreover, the ISPs would have to inform the Telecom Authority of every
change that takes place in their topology/configuration, and demonstrate that
all routers/switches continue to be accessible from the central monitoring
centre. The decision of Telecom Authority will be final on the issue.

THAN 2 Mbps:

      At locations where the ISP node has router/switch with outbound capacity
less than 2 Mbps, the ISPs shall provide (I) a LAN, (ii) office space of 10 feed
by 10 feet and (iii) a local exclusive telephone line, all at the cost of the
ISP. The monitoring equipment will be provided by the monitoring/security

1.10.11 The Internet nodes on places of security importance (as identified by
security agencies from time to time) would be routed through VSNL/BSNL only.
Interconnection of these nodes to other nodes within the country directly is not
permitted. As on date these areas are Punjab, J&K and North Eastern States,
Border areas of Rajasthan, Andaman and Nicobar Island and coastal areas of
Gujarat and Tamil Nadu.


    1.11.1 The LICENSEE shall furnish all necessary means and facilities as
required for the application of provisions of Section 5(2) of the Indian
Telegraph Act, 1885, whenever occasion so demands.


          At present Section 5(2) of Indian Telegraph Act reads as follows:

       "on the occurrence of any public emergency or in the interest of public
safety, the Central Government or a State Government or any officer specially
authorised in their behalf by the Central Government or a State Government may,
if satisfied that it is necessary or expedient to do so in the interests of the
sovereignty and integrity of India, the security of the State, friendly
relations with foreign states or public order or for preventing incitement to
the commission of an offence for reasons to be recorded by order, direct that
any message or class of messages to or from any person or class of persons or
relating to any particular subject, brought for transmission by or transmitted
or received by any telegraph, shall not be transmitted or shall be intercepted
or detained or shall be disclosed to the Government making the order or an
officer thereof mentioned in the order:

              Provided that press messages intended to be published in India ,
or correspondents accredited to the Central Government or a State Government
shall not be intercepted or detained, unless their transmission has been
prohibited under this sub-section."

    1.11.2 The LICENSEE shall frame a set of commercial code that govern
registration, provisioning and tariffication for the services offered to the
public. This should be done before commercial launch of the service and shall be
consistent with the terms and conditions of licence.

    1.11.3 Nothing provided and contained anywhere in this Licence Agreement
shall be deemed to affect adversely anything provided or laid under the
provisions of Indian Telegraphs Act, 1885 or any other law in force, as
enacted/amended from time to time.


1.12.1 The LICENSEE shall not engage provision of any other Telecom SERVICE
unless so licensed.

1.12.2 For the avoidance of doubt, it is, hereby declared that nothing contained
in Condition 1.12.1 above shall preclude the LICENSEE from engaging in
advertising and promotional activities relating to any of the Applicable

1.12.3 Voice communication from anywhere to anywhere by means of dialing a
telephone number (PSTN/ISDN/PLMN) as defined in National Numbering Plan is not
permitted :

1.12.4. Originating the voice communication service from a Telephone in India is
not permitted;

1.12.5. Terminating the voice communication to Telephone within India is not


1.12.6 Establishing connection to any Public Switched Network in India and/or
establishing gateway between Internet & PSTN/ ISDN/PLMN in India, is not

1.12.7 Use of dial up lines with outward dialing facility from nodes is not
permitted ;

1.12.8. Interconnectivity is not permitted between ISPs who are not permitted to
offer Internet Telephony Services.

1.12.9 Obscene material and applicability of Cyber Laws:

              The LICENSEE shall ensure that objectionable, obscene,
unauthorised or any other content, messages or communications infringing
copyright, Intellectual property right and international & domestic cyber laws,
in any form or inconsistent with the laws of India, are not carried in his
network, the ISP should take all necessary measures to prevent it. In
particular, LICENSEE is obliged to provide, without delay, all the tracing
facilities of the nuisance or malicious messages or communications transported
through his equipment and network, to authorised officers of Government of
India/State Government, when such information is required for investigations of
crimes or in the interest of national security. The licence shall be governed by
the provisions of the Information Technology (IT) Act 2000, as modified from
time to time. Any damages arising out of default on the part of licensee in this
respect shall be sole responsibility of the licensee.

      1.12.10 The use of the network for anti-national activities would be
construed as an offence punishable under the Indian Penal Code or other
applicable law. The networks cannot be used in such a manner as to endanger or
make vulnerable a networked infrastructure. Acts such as break-ins or attempted
break-ins of Indian networks shall be regarded as an anti-national act and shall
be dealt with in accordance with the Indian Penal Code. ISPs must ensure that
their services are not used for such purposes.

     1.12.11 In case any confidential information is divulged to the LICENSEE
for proper implementation of the Agreement, it shall be binding on the LICENSEE,
its sub-contractors, agents and servants to maintain its secrecy and


The licence shall be governed by the provisions of the TRAI Act, 1997, as
modified from time to time. The attention of the licensee is specifically drawn
to the following provisions of the TRAI Act 1997 which reads as follows:-

Section 11.(1) Notwithstanding anything contained in the Indian Telegraph Act
1885, the functions of the Authority shall be to --


(a) ensure technical compatibility and effective inter-connection between
different service providers;

(b) protect the interest of the consumers of telecommunication service;

(c) monitor the quality of service and conduct the periodical survey of such
provided by the service providers; inspect the equipment used in the network and
recommend the type of equipment to be used by the service providers

Section 12(1) Where the Authority considers it expedient to do so, it may, by
order in writing,-

call upon any service provider at any time to furnish in writing such
information or explanation relating to its affairs as the Authority may require;
or appoint one or more persons to make an inquiry in relation to the affairs of
any service provider; and

(c) direct any of its officers or employees to inspect the books of account or
other documents of any service provider.


1.14.1 Internet Telephony is a service to process and carry voice signals
offered through public Internet by use of Personal Computer (PC) or IP based
Customer Premises Equipments (CPE) connecting the following:

         (a)  PC to PC; within or outside India
         (b)  PC in India to Telephone outside India
         (c)  IP based H.323/SIP Terminals connected directly to ISP nodes to
similar Terminals; within or outside India.

Internet Telephony is a different service in its scope, nature and kind from
real time vice service as offered by other licensed operators like Bso, CMSO,

Except whatever is described in conditions 1.14.1 and 1.14.2 herein above, no
other form of Internet Telephony is permitted.

1.14.4. Addressing scheme for Internet telephony shall only conform to IP
addressing Scheme of Internet Assigned Number Authority (IANA) exclusive of
National numbering Scheme/plan applicable to subscriber of Basic/cellular
telephone Service.




                 The Acceptance Testing of any interface equipment connected to
the DOT network will be carried out by the Acceptance Testing party of the DOT.
The Acceptance Testing schedule shall be mutually agreed. Adequate time, not
less than 30 days, will be given by the licensee for these tests.


The Telecom Authority shall have right to check and measure the quality of
service provided by the licensee at any time during the currency of the licence.

                 The LICENSEE shall submit to the LICENSOR a half yearly report
on the quality of SERVICE offered to its subscribers indicating the levels of
performance achieved.


3.1 The LICENSEE shall be responsible for installation, testing and
commissioning of all the equipment to provide the services. It will be the
responsibility of the Licensee to obtain IP address, domain name etc. from
competent authority. (In case the IP addresses are taken from the Department of
Telecommunications, the same are non-portable and have to be returned to DOT at
the termination of connectivity contract. ) However, all performance tests
required for successful commissioning of the service may also be carried out by
the LICENSOR, if it so desires, before the services are commissioned for public
use. The LICENSEE shall supply all necessary literature, drawings, installation
materials regarding the equipment installed for commissioning of the services.
The LICENSEE shall supply all the tools, test instruments and other accessories
to the testing party of the LICENSOR for conducting the tests.

3.2 The licensee shall provide service within 18 months from the date of signing
of the licence agreement. Date of commercial launch will be the date on which
full commercial services are provided to the subscribers.

3.3 The list of performance tests will be furnished by the LICENSEE one month
prior to the date of commissioning to the LICENSOR.

3.4 In case the Licensor chooses to conduct performance test, delay caused due
to rectification of deficiencies, if any, in the commissioning/provision of
SERVICES, will be to the account of the LICENSEE.


       3.5 The LICENSEE shall provide the SERVICE in the Service Area to any
individual or legal person including customers located in Rural Belt(s) of the
licensed service area without any discrimination unless directed by the LICENSOR
in writing to so refuse.

      3.6 The LICENSEE indemnifies the LICENSOR against all actions brought
against the LICENSOR for breach of privacy or unauthorised interruption of data
transmitted by the subscribers.


     4.1 The LICENSEE shall be responsive to the complaints lodged by his
subscribers. He shall rectify the defects within the MTTR specified.

     4.2 The LICENSEE shall equip himself with adequate system to deal with the
complaints from his subscribers, test the part of the equipment and external
plant wherever relevant, and take necessary corrective measures to bring the
faulty elements back into satisfactory operation. It shall maintain the history
sheets for each installation, statistics and analysis on the overall maintenance

     4.3 The Licensee shall log all complaints reported by his subscribers
chronologically and with details of action taken on the same.


                 The LICENSOR, or its authorised representative shall have the
right to inspect the internet nodes set up by the Licensee to give service to
his subscribers. The LICENSOR shall, in particular but not limited to, have the
right to have access to leased lines, junctions, terminating interfaces,
hardware/software, memories of semiconductor, magnetic and optional varieties,
wired options, distribution frames, and to enter into dialogue with the system
through Input/output devices or terminals. The LICENSEE will provide the
necessary facilities for for continuous monitoring of the same, if required by
the LICENSOR or its authorised representative(s). The LICENSOR will ordinarily
carry out inspection after reasonable notice except in circumstances where
giving such a notice will defeat the very purpose of the inspection.

            CONDITION  6:  FORCE -- MAJEURE

               If, at any time during the continuance of this licence, the
performance in whole or in part, by either party, of any obligation under it is
prevented or delayed, by reason of war or hostility, acts of the public enemy,
civil commotion, sabotage, fire, flood, Act of State or direction from Statutory
Authority, explosion, epidemic, quarantine restriction, strikes and lockouts (as
are not limited to the establishments and facilities of the LICENSEE), or act of
GOD (each hereinafter referred to as EVENT), provided notice


of happenings of any such EVENT is given by either party to the other, within 21
days from the date of occurrence thereof, neither party shall, by reason of such
EVENT, be entitled to terminate the licence, nor shall either party have any
such claims for damages against the other, in respect of such non-performance or
delay in performance. Provided SERVICE under the licence shall be resumed as
soon as practicable, after such EVENT comes to an end or ceases to exist. The
decision of the LICENSOR as to whether the SERVICE may be so resumed (and the
time frame within which the SERVICE may be resumed) or not, shall be final and
conclusive. However, the Force Majeure events noted above will not in any way
cause extension of the period of Licence and will also not be a ground for
non-payment of Licence fee.


7.1 Direct interconnectivity between two separately licensed ISPs shall be
permitted. ; however, Interconnectivity is not permitted between ISPs who are
permited to offer Internet Telephony Service and the ISPs who are not permitted
to offer Internet Telephony Services. Authorised public/Government organisations
will be allowed to provide INTERNET Gateway access including international
leased circuits directly without going through VSNL Gateways. Private ISPs are
allowed to provide such Gateways after obtaining Security clearances for which
the Interface of Private ISPs shall only be with the Telecom Authority.

7.2 The licensee may obtain the transmission link on lease from DOT, Licensed
Basic Service Operators, Railways, State Electricity Boards, National Power Grid
Corporation or any other operator specially authorised to lease such lines to
the ISPs.The licensee may also establish its own transmission links within its
service area for carrying traffic originated and terminated by his subscribers,
provided that such capacities are not available from any other authorised
agencies and subject to permission of Telecom Authority.

7.3 An ISP may provide Internet Service to any VSAT subscriber (who could be
served by a shared hub commercial service provider or captive private VSAT
network), if the VSAT is located within the service area of the ISP. For this
purpose, a direct interconnection of VSAT or VSAT-hub through leased line
obtained from an authorised provider to the ISP's node/server shall be permitted
only for the flow of Internet traffic. The existing Licence for Closed Users
Group Domestic 64 KBPS Data Network via Insat Satellite System does not grant
long distance carrier rights to the licensee. The ISP shall provide to the
Telecom Authority a monthly statement of VSAT subscribers served with their
locations and details of leased line interconnection with the VSAT hub. The VSAT
hub, however, need not be located in the service area of the ISP.

7.4 Resources required for interconnecting the licensee's network to the network
of upstream internet access provider (DOT/VSNL etc.) or any other service
provider licensed by the Telecom Authority including time frame for provision of
the same, will be mutually agreed between the parties concerned. The resources
may refer to include but not limited to physical junctions, PCM derived
channels, private wires, leased lines,


data circuits and other network elements. The licensee shall apply for and
obtain the network resources from the concerned parties. The tariff of such
network resources is outside the scope of this licence agreement. Licensor will
have no obligation to obtain such resources from other parties

7.5 Interconnectivity Requirements:- Private ISPs shall use IP(Internet
Protocol) in conjunction with Transmission Control Protocol (TCP) and shall meet
the interface requirements of the Internet Access Providers such as
DOT/MTNL/VSNL to whose network, his node is connected. Some of the interfaces
required are given below:-

            Interface Requirements

(i) Subscriber Dial up Access
2 wire access over PSTN for modem interface.
2 wire dial up access on ISDN Basic & Primary rate interfaces.

(ii) Leased Line Interface

64K, N x 64K or 2.048 Mb/s, N x 2.048 Mb/s  Leased lines.
Frame Relay.
G. 703

      Access to internet through authorised Cable Operator shall be permitted
without additional licensing subject to applicable Cable Laws (The Cable
Television Networks (Regulation) Act, 1995) as modified from time to time.

     `Last mile' linkages shall be freely permitted within Local Area either by
fibre optic or radio communication for ISPs. In case of radio links, clearance
from WPC wing of the DOT shall be required to be obtained by the ISPs to avoid
frequency interference.

7.6 QUALITY OF SERVICE: The quality of service (QoS) shall be as prescribed from
time to time by TRAI/Licensor; however,, at present QOS is not prescribed.


     8.1 Subject to Condition 8.2, the LICENSEE shall furnish to the TELECOM
AUTHROITY, in such manner and at such times as the AUTHORITY may require, such
documents, accounts, estimates, returns or other information.


     8.2 The LICENSEE may not be required to procure or furnish a report which
would not normally be available to it unless the TELECOM AUTHORITY considers the
particular report essential to enable it to exercise its functions.

     8.3 Engineering details:

The LICENSEE shall furnish complete technical details including traffic for
proper engineering, planning and dimensioning of the interconnect equipment at
the network -- network interface (NNI).

     8.4 The Licensee shall make available all the billing details of any
subscriber on demand by Telecom Authority for up to one year.

     8.5 The Licensee shall provide to the Licensor on regular basis the volume
of Internet Telephony traffic flowing through his network.


       This licence is valid initially for a period of FIFTEEN YEARS unless
terminated earlier. If requested by the LICENSEE, extension may be granted by
the LICENSOR at suitable terms for a period of five years or more at a time. The
decision of the LICENSOR shall be final in the matter. The LICENSOR shall extend
or refuse extension of the licence on a request received by it. Such request for
extension may be made during 14th year of Licence and in any case before expiry
of 14 years from effective date. If no request for extension is received by
then, the licence shall automatically stand terminated as per due date.

      The licence will ordinarily be renewed on such terms and conditions as may
be determined by the LICENSOR.



     The LICENSOR may, without prejudice to any other remedy for breach of
conditions of licence, by written notice of 30 days, issued to LICENSEE at its
registered office 30 days in advance, terminate this licence in whole or part
under any of the following circumstances:

     (a) if the LICENSEE fails to commission or deliver the SERVICE within the
time period(s) specified in the licence or in any extension thereof, if granted
by the LICENSOR. However, this does not prevent the licensee from commissioning
the service even after scheduled date of commissioning, provided the licence
does not already stand terminated and the Performance Tests are satisfactory.



      (b) if the LICENSEE fails to perform any other obligation(s) under the
Licence including remittance of timely payments of Licence fee due to the
LICENSOR and the LICENSEE does not rectify the failure within a notice period of
30 days or during such further period, as the LICENSOR may authorise in writing
in this regard.

       In the event of such termination of licence, the amount equivalent to
Performance Bank Guarantee (PBG) shall be recovered by encashing the PBG and
money so recovered shall be forfeited. The Licensee shall not be entitled to any
damages or compensation for such termination.


      The LICENSOR may, at any time, terminate the licence without compensation
to him, if the LICENSEE becomes bankrupt or otherwise insolvent or applies for
being adjudicated as insolvent/bankrupt, provided such termination shall not
prejudice or affect any right of action which has accrued or will accrue
thereafter to the LICENSOR. The right of termination will arise on the LICENSEE
being adjudicated or applying for being adjudicated as bankrupt.


      If the LICENSEE desires to surrender the licence, it shall give an advance
notice of 30 days to the Licensor to this effect. If the service is in
operation, the licensee shall also intimate its subscribers of consequential
withdrawal of service by serving a 15 days notice to them. The financial
liability of the licensee company for termination of the licence for convenience
shall be as below:-

       (a) After start of service:- If during the notice period, acceptable
level of service is not delivered to the customer, the licensee shall forfeit
all claims on the Performance Bank Guarantee which shall be encashed and the
amount shall be adjusted towards damages.

       (b) Before start of service:- The licensee can surrender the licence by
paying surrender charges equivalent to 5% of the Performance Bank Guarantee
(PBG) amount i.e. Rs. 10 lakh for category 'A', Rs. 1 lakh for category 'B and
Rs. 15,000 for category 'C' license The PBG shall be returned after the licence
and ensuring clearance all dues as per Clause 10.5.4.



The LICENSEE shall not, in any manner whatsoever, transfer the licensing rights
granted to it, to any other party without written consent of Licensor. Any
violation shall be construed as a breach of licence and the licence shall be
terminated in accordance with the provisions as contained in condition 10.1


10.5.1 In the event of termination of the licence, the LICENSOR may procure upon
such terms and conditions and in such manner as deemed appropriate/fit, the
required resources will make up for those not installed, not delivered or not
brought into commission so as to enable provision of SERVICE and the LICENSEE
shall be liable to the LICENSOR for any excess/extra costs for such corrective
efforts. The criteria for determining the terms and conditions for such
procurement will depend upon the market prices, prevailing at the time of
procurement. The decision of the LICENSOR in this matter shall be final in all

10.5.2 Whenever the licence is terminated or not extended, the LICENSOR may, in
order to ensure the continuity of the SERVICE, take such steps, as are
necessary, including the following:-

(i) permit the Department of Telecommunications/MTNL or its successor to take
over; or

(ii) issue licence to another Indian Company for running the SERVICE. The
LICENSEE shall facilitate taking over by DOT/MTNL or the new LICENSEE all those
assets as are essential for the continuity of the SERVICE.

10.5.3 During the period when a notice for termination of licence is pending,
the Quality of Service to the Subscribers shall be maintained. If the SERVICE
quality is not maintained, (during the notice period), it will be treated as
breach of licence conditions and will be dealt with as such including recovery
of damages.

10.5.4 The Performance Bank Guarantee, if due, shall be returned to the licensee
company 6 months after the termination of the licence and after ensuring
clearance of any dues which the licensee company is liable to pay.


11.1 In the event of any dispute of the LICENSEE with any other service provider
or any party other than licensor due to any reason whatsoever, the dispute will
be sorted out among themselves and LICENSOR will have no liability in any
manner. However, in


case of dispute arising with other parties due to non-observance of rules and
regulations by the LICENSEE as provided in this licence, the LICENSOR will have
full powers to take any action against licensee as is provided in the relevant
clauses of this licence. The LICENSEE undertakes to indemnify LICENSOR in
respect of any action against LICENSOR for acts of commission or omission on the
part of the LICENSEE, its agents and servants.


12.1 In the event of any question, dispute or difference between parties arising
under the licence, or in connection therewith, except as to the matter, the
decision of which is specifically provided under the licence, the same shall be
referred to the sole arbitration of the TELECOM AUTHORITY or in case its
designation has changed or its office is abolished, then, in such case, to the
sole arbitration of the officer for the time being entrusted, whether in
addition to his duties the functions of the TELECOM AUTHORITY or by whatever
designation such officer may be called (hereinafter referred to as the said
officer), and if the TELECOM AUTHORITY or the said officer is unable or
unwilling to act as such, to the sole arbitration, of some other person
appointed by the TELECOM AUTHORITY or the said officer. The arbitration
proceedings shall be in accordance with the Indian Arbitration and Conciliation
Act, 1996 and rules framed thereunder or any modifications or re-enactment
thereof made from time to time.

12.2 There will be no objection to any such appointment that the Arbitrator is a
Government Servant, or he has to deal with the matter to which the licence
relates. The award of the arbitrator shall be final and binding on the parties.
In the event of such Arbitrator, to whom the matter is originally referred,
being transferred or vacating his office, or being unable to act for any reason
whatsoever, in case the Telecom Authority or the said officer was himself acting
as an officer, his successor in office shall act as an Arbitrator or may appoint
some other person to act as an Arbitrator. In case the retiring Arbitrator was a
person appointed by the Telecom Authority or the said officer, a new Arbitrator
shall be appointed in his place by the Telecom Authority or the said officer and
the new Arbitrator shall be entitled to proceed from the stage at which it was
left out by his predecessor.

12.3 The venue of arbitration proceeding shall be the office of TELECOM
AUTHORITY at New Delhi or such other place as the arbitrator may decide.


    13.1 TARIFF: LICENSEE will be free to fix its own tariff to be charged from
subscriber. The tariff shall be left open to be decided by market forces. The
licensee company shall intimate the Telecom Authority, the tariff for the
service to be charged from its subscribers and any changes thereof. However, the
TRAI (Telecom Regulatory


Authority of India) may review and fix a tariff at any time during the validity
of the licence which scale of tariff shall be binding on the Licensee.

Premises Equipment (CPE) at subscriber's premises shall be responsibility of the

to make its own arrangement for all infrastructure involved in providing the
SERVICE. However, the charges for any communication resources required for the
purpose of networking and delivery of Internet Traffic to the upstream network
access provider, i.e., DOT/MTNL/VSNL/ or other licensed service provider on the
request of the LICENSEE will be at the rates fixed by the DOT/MTNL/VSNL or other
licensed service provider from time to time.

13.4 The LICENSEE shall be bound by the terms and conditions of the licence
granted as well as by such regulations and instructions as are issued by the
LICENSOR and/or its successors from time to time.


The LICENSEE shall;

(a) maintain and prepare accounting records, sufficient to show and explain its
transactions in respect of each financial year or part thereof of the LICENCE
during which this Licence is in force, or of such lesser periods as the LICENSOR
may specify, fairly presenting the costs (including capital costs), revenue and
financial position of the LICENSEE's business and including a reasonable
assessment of the assets employed in and liabilities attributable to the
LICENSEE's business.

(b) procure in respect of each of those accounting statements prepared in
respect of a financial year or part thereof of the LICENSEE, a report by the
LICENSEE'S Auditor stating whether in his opinion that statement is adequate for
the purposes of the condition; and

(c) deliver to the LICENSOR a copy of each of the accounting statements not
later than six months after the end of the period to which they relate.

In this condition: the "Auditor" means the LICENSEE's auditor for the time being
appointed in accordance with the requirements of the Companies' Act, 1956.


        A performance bank guarantee of Rs. 2.00 crores for category `A' Service
Area, Rs. 20.00 lakhs for each category `B' Service Area and Rs. 3.00 lakhs for
each category `C'


Service Area valid for two years from any Scheduled Bank in the prescribed form
(Schedule DD' of the draft Licence Agreement) shall be submitted along with the
application for each service area. The licensee will be liable to extend the
validity of Performance Bank Guarantee two months prior to its date of expiry on
its own without demand from the Licensor for a further period of one year on
year to year basis. On any failure to do so which failures shall amount to the
breach of this Licence, the performance bank guarantee will be encashed without
giving any notice. This is without prejudice to any other action that may be
taken under the terms and conditions of the licence.

13.7 LICENSOR, without prejudice to its rights to any other remedies, is free to
encash the Performance Bank Guarantee in part or in full, in case of any breach
of terms and conditions of the licence by the LICENSEE including non-payment of
licence fee etc.

13.8 Breach or non-fulfilment of licence conditions may come to the notice of
the LICENSOR through complaints or as part of regular monitoring. Wherever
considered necessary, LICENSOR will conduct an inquiry to determine whether
there has been any breach of the terms and conditions of the licence. The
LICENSEE will be given an opportunity of hearing before any action adverse to
his interest is taken.

           The LICENSOR shall decide in each case the penalty to be levied for
any breach of the terms and conditions of the License. If the penalty is not
discharged or complied with , the LICENSOR has the right to encash, in part or
in full, the Performance Bank Guarantees.


The LICENSEE shall also separately pay charges for network resources provided to
the Licensee on licensee's request by the Department of Telecommunications
/MTNL/VSNL/other licensed service providers at rates applicable from time to

            CONDITION 14: SET OFF

      Any sum of money due and payable to the LICENSEE under this licence may be
appropriated by the Government or any other person or persons including
contracting through the Government of India and the same may be set off against
any claim of the Government or such other persons, for payment of a sum of money
arising out of this licence or under any other licence made by the LICENSEE with
the Government or such other person or persons including TELECOM AUTHORITY.


                                  SCHEDULE `C'


            This company, hereby, agrees to fully comply with all General,
Technical, Commercial and Financial terms and conditions of the Application
Form, Guidelines and General Information on Internet Services and
amendments/clarifications issued by the Telecom Authority, without any deviation
and reservations.

The company, hereby , agrees and undertakes to fully comply with all terms and
conditions stipulated in this Licence Agreement without any deviation and

Signature of the authorised signatory of the operating company (Licensee).

For and on behalf of M/s  ____________________________________________
                                     (Name of the Company)


                                  SCHEDULE 'D'



The President of  India
Acting through the Telegraph Authority

            In consideration of the President of India acting through the
Telegraph Authority (hereinafter referred to as 'the Authority') having agreed
to grant a licence to M/s................... of ...............(hereinafter
called the 'LICENSEE') to establish, maintain and operate Internet service
(hereinafter called the 'SERVICE') on the terms and conditions contained in the
said Licence, which interalia provides for production of a Bank Guarantee to the
extent of Rs...................... ( .................................. in
words) for the service by way of security for the due observance and performance
of the terms and conditions of the said licence we .......................
(indicate the name and address and other particulars of the bank) (hereinafter
referred to as 'the Bank') at the request of the LICENSEE hereby irrevocably and
unconditionally guarantee to the Authority that the Licensee shall render all
necessary and efficient services which may be require to be rendered by the
LICENSEE in connection with and / or for performance of the said LICENSEE and
further guarantees that the service which shall be provided by the LICENSEE
under the said licence, shall be actually performed in accordance with terms and
conditions of the LICENCE to the satisfaction of the Authority.

2. We, the bank hereby undertake to pay to the Authority an amount not exceeding
Rs. ......................... (Rupees........................................
only) against any loss or damage caused to or suffered or would be caused to or
suffered by the Authority by reason of any breach by the said LICENSEE of any of
the terms and conditions contained in the said licence.

3. We, the bank hereby, in pursuance of the terms of the said licence,
absolutely, irrevocably and unconditionally guarantee as primary oblige and not
merely as surety the payment of an amount of Rs. ..........................
(Rupees...................... only) to the Authority to secure due and faithful
performance by the LICENSEE of all his/their obligations under the said Licence.

4. We, the bank hereby also undertake to pay the amounts due and payable under
this guarantee without any demur, merely on a demand from the Authority stating
that the amount claimed is due by way of loss or damage caused or would be
caused to or suffered by the Authority by reason of breach by the said LICENSEE
of any of the terms or conditions contained in the said Licence or by reason of
the LICENSEE's failure to perform any of its obligations under the said Licence.


          We, the bank, do hereby agree that the decision of the Authority as to
whether the licensee has failed to or neglected to perform or discharge his
duties and obligations as aforesaid and/or whether the service is free from
deficiencies and defects and is in accordance with or not of the terms &
conditions of the said Licence and as to the amount payable to the Authority by
the Bank hereunder shall be final and binding on the Bank.


(a) the Guarantee herein contained shall remain in full force and effect for a
period of two years from the date hereof and that if shall continue to be
enforeable till all the dues of the Authority and by virtue of the said Licence
have been fully paid and its claims satisfied or discharged or till Authority
satisfies that the terms an conditions of the said licence have been fully and
properly carried out by the said LICENSEE and accordingly discharged this

the Authority shall have the fullest liberty without our consent and without
affecting in any manner our obligations hereunder to vary any of the term and
conditions of the said Licence or to extend time of performance of any
obligations by the said LICENSEE from time to time or to postpone for any time
or from time to time any of the powers exercisable by the Authority against the
said LICENSEE and to forbear or to enforce any of the terms and conditions
relating to the said Licence and we shall not be relieved from out liability by
reason of any variation or extension being granted to the said LICENSEE or
forbearance act or omission on the part of the Authority or any indulgence by
the Authority to the said LICENSEE or to give such matter or thing whatsoever
which under the law relating to sureties would but for this provision, have
effect of so relieving us.

Any claim which we have against the LICENSEE shall be subject and subordinate
to the prior payment and performance in full of all the obligations of us
hereunder we will not without prior written consent of the Authority exercise
any legal right or remedy of any kind in respect of any such payment or
performance so long as the obligations of us hereunder remains owing and

This guarantee shall be irrevocable and the obligations of us herein shall not
be conditional of any prior notice by us or by the LICENSEE.


            7. We the BANK undertake not to revoke this Guarantee during its
currency except with the previous consent of the Authority in writing.

            <S>                                           <C>
        for ____________________
                                                               (name of the bank)

            Witness :

            <S>                                        <C>
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