|AIR 2016 SC 2336
|DATE OF JUDGMENT
|11th May 2016
|Supreme Court of India
|Cellular operations Association of India And Others
|Telecom Regulatory Authority of India and Others
|Kurian joseph, Rohinton Fail Nariman
The passage you provided introduces a legal case involving various telecom operators challenging the validity of the Telecom Consumers Protection (Ninth Amendment) Regulations, 2015 (referred to as the “Impugned Regulation”) in the Delhi High Court. The amendment, notified on 16.10.2015 and effective from 1.1.2016, was made by the Telecom Regulatory Authority of India (TRAI) under the powers conferred by Section 36 read with Section 11 of the Telecom Regulatory Authority of India Act, 1997. The key provisions of the Impugned Regulation focus on call drops in cellular mobile telephone services. According to the amendment, originating service providers are required to credit only the calling consumer (not the receiving consumer) with one rupee for each call drop within their network, up to a maximum of three call drops per day. Additionally, the service provider must provide details of the amount credited to the calling consumer within four hours of the call drop through SMS/USSD message. In the case of post-paid consumers, these details are to be provided in the next bill. The background of the case includes references to the Indian Telegraph Act, 1885, licensing agreements, quality of service standards, roll-out obligations, and the challenges faced by telecom operators in setting up mobile towers. The passage also mentions the historical context of TRAI’s concerns about the shortage and distance of mobile towers, the ongoing tussle between cell phone operators and municipal authorities, and the regulatory framework for call drop rates and financial disincentives for non-compliance. The case originated from consumer complaints about the quality of voice calls and the inconvenience caused by call drops. The TRAI issued a consultation paper, and after analyzing stakeholders’ comments and holding discussions, it decided to introduce the Impugned Regulation as a mechanism to compensate consumers for call drops. The compensation involves a notional amount of one rupee credited to the calling consumer for each dropped call, with a limit of three call drops per day. The TRAI justifies this approach as a simple and practical mechanism to address the inconvenience caused by call drops.
FACTS OF THE CASE
The case involves the Telecom Regulatory Authority of India (TRAI) notifying the Telecom Consumers Protection (Ninth Amendment) Regulations, 2015, in 2015, with an effective date of 1st January 2016. According to the amendment, every cellular mobile telephone service provider is required to credit one rupee for each call drop, limited to three call drops per day, to calling consumers within its network. The credited amount must be provided to pre-paid customers within four hours and adjusted in the monthly bill for postpaid customers. The Cellular Operators Association of India (COAI) challenged the validity of the amendment regulation in the Delhi High Court. The court ruled in favor of the regulation, deeming it valid. Dissatisfied with this decision, the COAI appealed to the Hon’ble Supreme Court to challenge the judgment of the Delhi High Court. The case is currently before the Supreme Court for further consideration.
- Whether the Ninth Amendment to the Telecom Consumer Protection Regulations, 2015, exceeds or falls outside the legal authority granted by Section 36 in conjunction with Section 11 of the TRAI Act, 1997.
- Whether the regulations in dispute violate the fundamental rights of the appellants as guaranteed under Article 14 and Article 19(1)(g) of the Constitution?
JUDGMENT OF THE CASE
- The Supreme Court ruled that the specific amendment was beyond the authority granted by Sections 36 and 11 of the TRAI Act. The Court emphasized that TRAI’s crucial power lies in its ability to make regulations, and the amendment was considered to overstep the boundaries set by the original legislation.
- The court indicated that according to the TRAI Act and Rules, the power to make regulations should be exercised consistently with the provisions of the Act. It was specifically noted that the regulation in question did not serve the purpose of ensuring compliance with the terms and conditions of the license, nor did it establish any standards for the quality of services requiring compliance. Consequently, the court concluded that the regulation fell outside the scope of Section 11 of the TRAI Act. In simpler terms, the court found that the regulation did not align with the intended purposes outlined in Section 11 of the TRAI Act and was, therefore, considered to be beyond its legal scope.
- The court further held that since the amendment failed to fulfill the objectives outlined in Section 11 of the act, it also lacked validity under Section 36. Therefore, it was deemed to be ultra vires the act. In simpler terms, the court concluded that because the amendment did not align with the intended purposes of both Section 11 and Section 36 of the act, it was beyond the legal authority granted by the act.
- In addressing the second issue, the Hon’ble Supreme Court concluded that the amendment violated the principles of Article 14 and 19(1)(g) of the Constitution. This decision was based on TRAI’s finding that 36.9% of call drops were due to faults at the consumer’s end. The court observed that imposing strict liability on service providers was erroneous, as it made them responsible for call drops that might not be their fault, while consumers received compensation even when the fault lay with them. Therefore, the court deemed the imposition of strict liability as arbitrary and unreasonable. In simpler terms, the court found that holding service providers strictly liable for call drops, without considering the potential fault on the consumer’s end, was unfair and unreasonable under constitutional principles.
From the above case, it is evident that the powers vested in TRAI are not boundless. The primary objective behind establishing TRAI was to safeguard consumer interests while effectively managing the growth and development of the telecommunications sector for infrastructure development in India. However, the TRAI Act does not explicitly address the resolution of individual consumer complaints and grievances by the Authority. Instead, the Act outlines a procedure to be specified by the Authority and followed by service providers to ensure the best quality of service. Therefore, TRAI can issue guidelines or regulations to protect consumer interests. TRAI itself acknowledged that 36.9% of call drops occur at the consumers’ end. In light of Article 14 of the Constitution, which requires the existence of intelligible differentia, it was argued that the regulation lacked differentiation between faults of service providers and faults of consumers. The imposition of penalties on service providers for faults attributable to consumers was deemed to be inconsistent with Article 14. This lack of differentiation was seen as a violation of the Freedom of Trade under Article 19(1)(g) of the Constitution. In essence, the argument is that the specific regulations were not crafted with due diligence and care, as they failed to distinguish between the responsibilities of service providers and consumers, thereby impacting the constitutional rights of service providers.
From the comprehensive analysis presented in the paper, it can be concluded that the sector-specific regulatory body TRAI (Telecom Regulatory Authority of India) plays a crucial role in the development of the telecom infrastructure in the country. TRAI’s regulations offer numerous advantages to both consumers and service providers by establishing clear guidelines and mechanisms, defining terms and conditions of licenses, and outlining consumer rights. These policies prioritize the protection of consumer interests, ensuring that service providers are liable for delivering high-quality services at affordable prices. TRAI’s recommendations also extend to broader infrastructure development plans, such as advocating for the implementation of a Rural Broadband network through Public-Private Partnership. However, the paper acknowledges instances where regulatory decisions, like the implementation of the New Tariff Order, 2017, have had unintended consequences, harming consumer interests instead of safeguarding them. For example, the New Tariff Order was intended to benefit consumers by allowing them to pay only for the channels they wished to watch. However, it resulted in a 25% increase in cable bills, leading to a significant loss of cable TV subscribers and revenue. Despite such instances, the regulatory body’s overall impact is deemed positive, playing a vital role in controlling free trade practices, ensuring the best interests of stakeholders, and contributing to the development of the country. However, it is acknowledged that regulatory powers must be used judiciously to avoid potential negative consequences. The paper also notes that conflicts may arise between TRAI and other regulatory bodies like the Competition Commission of India (CCI), with TRAI’s jurisdiction taking precedence in certain situations.
Written by Rani Kumari an intern under legal vidhiya.
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