The Kerala High Court while dealing with the plea filed by the All Indian Digital Cable Federation (“AIDCF”) challenging the Telecom Regulatory Authority of India's (TRAI) new Tariff Order, under which broadcasters had increased channel prices for cable TV operators for inclusion in the bouquet from INR 12 to INR 19 per channel, dismissed the Petition and held that there were effective discussions among the stakeholders and the power was exercised by the authority in terms of the powers conferred under Section 11 r/w Sections 36 and 37 of the Telecom Regulatory Authority of India Act, 1997 (hereinafter referred to as the “TRAI Act, 1997”), it cannot be said that there was arbitrariness or illegality or any other legal infirmities on the part of the authority in introducing the 2022 Regulations and the Tariff Order.
Brief Facts:
The Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems) (Fourth Amendment) Regulations, 2022 (hereinafter referred to as the “Interconnect Amendment Regulations, 2022”), and the Telecommunication (Broadcasting and Cable) Services (Eighth) (Addressable Systems) Tariff (Third Amendment) Order (hereinafter referred to as the “Tariff Amendment Order, 2022”) were the Tariff Orders that were challenged by the Petitioner.
It was challenged on the ground of being ultra vires the provisions of the TRAI Act, 1997, and violative of Articles 14 and 19 (1)(g) of the Constitution of India.
Petitioners pointed out that under the 2017 regulatory framework of TRAI, broadcasters were allowed to fix the MRP of a pay channel for consumers. Under the Regulations, every broadcaster was required to declare the uniform MRP of its pay channels on an a-la-carte basis. Every broadcaster was required to enter into written interconnection agreements based on the Reference Interconnection Offer (“RIO”) published by it for providing signals of pay channels to a distributor of television channels. Subsequently, two consultation papers were issued with the purported objective of overhauling the system once again.
After this, the 2020 Regulations and Tariff Order were issued, pursuant to which TRAI stated that channels priced more than INR 12/- shall not be allowed to be included in a bouquet channel. When this was challenged before the Bombay High Court, the Court upheld the order but struck down the 15% ceiling imposed on the discount rate to broadcasters as arbitrary. Although the matter was appealed before the Supreme Court, it was later withdrawn, and the 2020 Regulations were not implemented due to the pending litigation.
On December 23, 2021, a meeting of the broadcasters and representatives of Petitioners was convened by TRAI. It is the case of the Petitioner that the minutes of the said meeting had incorrectly recorded that all stakeholders had agreed that the a-la-carte price ceiling needed to be addressed. It was averred by the Petitioners that it was thereafter that the impugned 2022 Regulations and Tariff Order were issued.
In a gist, Petitioner, which is an apex body with several multi-system operators (“MSOs”), that provide cable services to consumers, had moved an application seeking an urgent hearing following the issuance of disconnection notices by the Indian Broadcasting and Digital Foundation (IBF) on failure to sign new interconnection agreements with revised prices.
Contentions of the Petitioner:
It was contended that the increase in the maximum cap of bouquet channels to INR 19/- was disadvantageous to the distributors. The broadcasters have priced in such a way that consumers prefer to opt for a bouquet instead of opting for a high-priced popular channel on an a-la-carte basis, thereby rendering the a-la-carte choice of consumers meaningless.
It was submitted that the 2022 Regulations and the Tariff Order had led to artificially high and perverse pricing of driver channels; that deep discount on bouquet renders a-la-carte nullified; and that when the above two mischiefs were combined, it meant that the consumer choice was nullified in a situation where the cost of the bouquet would be less than the cost of driver channels in a bouquet. It was also averred that there was a clear lack of transparency on the part of the TRAI in issuing the 2022 Regulations.
Contentions of the Respondents:
It was contended that the Petitioners had no locus standi to challenge the impugned Regulations and the Tariff Order since they were not affected parties.
On behalf of TRAI (Respondent No.1), it was argued that the impugned Regulations were only applicable to the broadcasters, distributors of television channels, and level cable operators, and the Petitioners would not fall within its ambit.
It was pointed out that TRAI is vested with the powers under Section 11 of the Act, 1997 to make recommendations while setting out the regulatory functions and the Act provides for tariff fixation function. It was also submitted that Section 36 of the Act, 1997 confers powers on TRAI to make regulations.
Further, it was submitted that the Regulations and Tariff Order 2022 were thus issued to protect the interest of the service providers and consumers of the telecom sector, which includes the broadcasting sector and cable sector, and to promote and ensure orderly growth of the telecom sector.
It was also argued that the entire consultation process commenced at the behest of the Petitioner and a few other stakeholders, and a consensus on various points was arrived at during the meeting on December 23, 2021, including restoring the MRP ceiling for bouquet inclusion to unamended tariff order level of Rs.19/-.
Moreover, it was alleged that an open, exhaustive, and transparent consultation process was also undertaken by the TRAI before making the Regulations, 2022. It was further contended that the price fixation by TRAI on the MRP of pay channels was the function of the regulator and the court could not deliberate on its correctness. It was pointed out that the Petitioners were only intermediaries and had no say in the pricing of channels and that the amendments had already come into force with effect from February 1, 2023, and all the distributors had already signed the revised agreements, thereby claiming the petitioners are belated.
Furthermore, it was argued that the Petitioners resorted to forum shopping by filing multiple petitions in the High Courts of Punjab and Haryana, Telangana, and Karnataka, apart from the instant court, with no relief having been granted to them from any of the aforementioned jurisdictional courts.
Observation of the Court:
The Court referred to Sections 36 and 37 of the TRAI Act, 1997, and ascertained that the said provisions provided for a clear-cut procedure for making the Regulations and validating the same. The Court found that the Petitioners had no case that the procedure contemplated under the statute had not been followed by TRAI in issuing the Regulations.
The Bench noted that under Section 11 of the Act, the powers and functions of the authority are delineated by the Parliament, and the authority is vested with the power to make the Regulations and publish Tariff Orders to regulate, control, and transmit telecommunication networks. The Court observed that it was while the 2017 Regulations and the Tariff Order were in force, that the 2020 Regulations were introduced with a maximum price cap of Rs.12 for the driver channel and discount rates for bouquet channels, but the same was never put into force, and the 2017 Regulations and Tariff Order were still in force.
It was at that point that based on the representation made by various stakeholders, the Authority convened a meeting of the stakeholders, including the Petitioners, and held discussions with all the stakeholders by constituting a committee. The Court found that the Committee submitted a report and it was based on the same and after arriving at a consensus among all the stakeholders that the 2022 Regulations and the Tariff Order were brought into force by TRAI, The Court also observed that each aspect had been discussed and deliberated upon, with the stakeholders.
It was opined that as the Regulations were legislation empowered under the Act 1997, what had to be looked into by the Court was only whether there were any arbitrariness or illegality or mala fide intentions on the part of the authority in making the Regulations.
It was further observed that when there were effective discussions among the stakeholders and the power was exercised by the authority in terms of the powers conferred under Section 11 r/w Sections 36 and 37 of the Act, 1997, it cannot be said that there was arbitrariness or illegality or any other legal infirmities on the part of the authority in introducing the 2022 Regulations and the Tariff Order.
The High Court held that there could not be said to be any violation of the fundamental rights of the Petitioners in the present case.
It was ruled that the petitioners were, in no way, affected by the pricing of the driver channel and the fixation of the bouquet price by the authority, because it is for the end users to pay the charges so fixed by the authority. The broadcasters as well as the other intermediaries are entitled to get their due share fixed by the authority concerned, and therefore, it can never be said that the Petitioners are aggrieved by the 2022 Regulations and the Tariff Order.
The Bench was also of the opinion that the Petitioners are even stopped from raising a challenge on the pricing, because it was existing from the year 2017 and continuously thereafter for multiple reasons specified above, without any objection from any of the stakeholders, much less the Petitioners. Above all, it held that none of the end users have challenged the amendments in 2022. The Regulations and the Tariff Orders are made by the authority to protect the public interest and regulate and control telecommunication services for the public good.
It was also observed that there was a clear check and balance on TRAI as provided under Section 37 of the Act, 1997, by which every Regulation made under the Act, 1997 is to be laid before each House of Parliament, and the Parliament is vested with the powers to modify the Regulations if required. In such a case, the Court opined that it could "only be legally presumed that the Parliament has also evaluated the pros and cons of the Regulations before publishing it for effective implementation of the regulations".
Finding that the Regulations were issued in the public interest and that the authority was empowered to issue the same, the Court was of the firm view that it need not delve into the reasons for the legislations, as it was not within its domain of expertise. It was also of the view that TRAI had followed the transparency required under the law substantially and effectively by holding discussions with the stakeholders after serving consultation papers with sufficient material on its agenda.
The decision of the Court:
Based on the aforementioned reasons and findings, the Kerala High Court dismissed the petitions.
Case Title: All India Digital Cable Federation & Anr. v. Telecom Regulatory Authority of India & Anr
Coram: Hon’ble Justice Shaji P. Chaly
Case No.: WP(C) NO. 193 OF 2023
Advocate for Petitioner: Advs.Manu Singhvi, Raja Kannan, Kuryan Thomas, Jayant Mehta, Jai Mohan, John Mathai
Advocate for Respondent: Government Pleader
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