# OTHERS v. TELECOM REGULATORY AUTHORITY OF INDIA AND OTHERS

- **Citation:** [2016] 9 S.C.R. 1
- **Court:** Supreme Court of India
- **Decided:** 2016
- **Case number:** Civil Appeal No. 5017of2016
- **Bench:** Kurian Joseph, R. F. Nariman
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/others-v-telecom-regulatory-authority-of-india-and-others-31458
- **Pages:** 67

## Headnote

Telecom Consumers Protection (Ninth Amendment)
Regulations, 2015 - Validity of - As per the amendment of the
Regulations every originating cellular mobile telephone service
provider was made liable to credit the calling consumer with one
rupee for each call drop, upto a maximum three call drops per day
- Validity of the amendment challenged - High Court upheld its
validity - On appeal, held: The amending Regulation is ultra vires
the Telecom Regulatory Authority of India Act, 1997 as it does not
carry out the purpose of the Act - It is violative of the fundamental
rights of the service providers as provided in Art. 14 and 19(1)(g)
of the Constitution - The Regulation is also liable to be struck down
on the ground that it amounts to interference with the licence
conditions of the service providers without authority of law and
also because it completely avoids the adjudicatory process - Telecom
Regulatory Authority of India Act, 1997 - Constitution of India -
Arts. 14 and 19(l)(g) - Quality of Service Regulations, 2009.
Constitution of India:
Arts. 14, 19(1)(g) and 19(6) - Constitutional validity of
Telecom Consumers Protection (Ninth Amendment) Regulations,
2015 - Held: In order to pass Constitutional muster u/Art.14, the
Regulation should not be manifestly arbitrary - So far as
Art.19(1)(g) is concerned, u!Art. 19(6), the State has to conform to
two separate and independent tests i.e. test of 'reasonable restriction'
and test of 'public interest' - The test of reasonable restriction is
distinct from the test of the law being in general public interest - In
the present casij though the Regulation might have been brought in
the interest ojgeneral public, it is manifestly arbitrary and therefore
violative of Art. 14 and is an unreasonable restriction on the
fundamentr:Jl right of the service providers granted u/Art. l 9(1)(g)
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SUPREME COURT REPORTS
[2016] 9 S.C.R.
A and the same has been framed without intelligent care and
deliberation.
Arts.19(l)(g) and 19(6) - A proper balance between the
freedoms guaranteed u/Art. 19(1)(g) and the control permitted u/Art.
19(6) must be struck in all cases before the impugned law can be
B
said to be a reasonable restriction in the public interest.
c
D
Legislation:
Validity of legislation - Held: A statute which is otherwise
invalid as being unreasonable, cannot be saved or held valid by its
being administered in a reasonable manner.
Subordinate Legislation - Validity of - Held: A Regulation
must be consistent with both letter as well as purpose of the parent
Act - A Regulation contrary to the purpose of parent Act could be
ultra vires the Act and hence invalid.
Subordinate Legislation - Constitutionality of - Grounds for
challenging - Held: Subordinate legislation can be challenged on
any of the grounds available for challenge against plenary
legislation.
Subordinate Legislation - Requirement of transparency in -
E Suggestion of the Court to Parliament to frame legislation by which
all subordinate legislation is subject to transparent process - The
transparency will not only reduce arbitrariness in subordinate
legislation making, but would also conduce to openness in
F
governance.
Interpretation of Statutes:
Doctrine of reading down - Applicability of - The doctrine
would apply only when general words used in a statute or regulation
can oe confined in a particular manner so as not to infringe a
constitutional right.
G
Reading down of a provision - Addition of something by the
court to the provision which does not exist, would amount to
legislations by court.
Natural Justice - Ordinarily legislative functions do not
require that natural justice be followed - Natural justice need not
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be followed, except where the statute so provides.
CELLULAR OPERATORS ASSN. OF INDIA v. TELECOM
3
REGULATORY AUTHROITY OF INDIA
Words and Phrases:
A
'Transparency' - Meaning of, in the context of Telecom
Regulatory Authority of India Act, 1997.
Allowing the appeals, the Court
HELD: 1.1 The power t

## Text

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[2016] 9 S.C.R. 1
CELLULAR OPERATORS ASSOCIATION OF INDIA AND
A
OTHERS
v.
TELECOM REGULATORY AUTHORITY OF INDIA AND
OTHERS
(Civil Appeal No. 5017of2016)
MAYll,2016
[KURIAN JOSEPH AND R. F. NARIMAN, JJ,)
Telecom Consumers Protection (Ninth Amendment)
Regulations, 2015 - Validity of - As per the amendment of the
Regulations every originating cellular mobile telephone service
provider was made liable to credit the calling consumer with one
rupee for each call drop, upto a maximum three call drops per day
- Validity of the amendment challenged - High Court upheld its
validity - On appeal, held: The amending Regulation is ultra vires
the Telecom Regulatory Authority of India Act, 1997 as it does not
carry out the purpose of the Act - It is violative of the fundamental
rights of the service providers as provided in Art. 14 and 19(1)(g)
of the Constitution - The Regulation is also liable to be struck down
on the ground that it amounts to interference with the licence
conditions of the service providers without authority of law and
also because it completely avoids the adjudicatory process - Telecom
Regulatory Authority of India Act, 1997 - Constitution of India -
Arts. 14 and 19(l)(g) - Quality of Service Regulations, 2009.
Constitution of India:
Arts. 14, 19(1)(g) and 19(6) - Constitutional validity of
Telecom Consumers Protection (Ninth Amendment) Regulations,
2015 - Held: In order to pass Constitutional muster u/Art.14, the
Regulation should not be manifestly arbitrary - So far as
Art.19(1)(g) is concerned, u!Art. 19(6), the State has to conform to
two separate and independent tests i.e. test of 'reasonable restriction'
and test of 'public interest' - The test of reasonable restriction is
distinct from the test of the law being in general public interest - In
the present casij though the Regulation might have been brought in
the interest ojgeneral public, it is manifestly arbitrary and therefore
violative of Art. 14 and is an unreasonable restriction on the
fundamentr:Jl right of the service providers granted u/Art. l 9(1)(g)
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[2016] 9 S.C.R.
A and the same has been framed without intelligent care and
deliberation.
Arts.19(l)(g) and 19(6) - A proper balance between the
freedoms guaranteed u/Art. 19(1)(g) and the control permitted u/Art.
19(6) must be struck in all cases before the impugned law can be
B
said to be a reasonable restriction in the public interest.
c
D
Legislation:
Validity of legislation - Held: A statute which is otherwise
invalid as being unreasonable, cannot be saved or held valid by its
being administered in a reasonable manner.
Subordinate Legislation - Validity of - Held: A Regulation
must be consistent with both letter as well as purpose of the parent
Act - A Regulation contrary to the purpose of parent Act could be
ultra vires the Act and hence invalid.
Subordinate Legislation - Constitutionality of - Grounds for
challenging - Held: Subordinate legislation can be challenged on
any of the grounds available for challenge against plenary
legislation.
Subordinate Legislation - Requirement of transparency in -
E Suggestion of the Court to Parliament to frame legislation by which
all subordinate legislation is subject to transparent process - The
transparency will not only reduce arbitrariness in subordinate
legislation making, but would also conduce to openness in
F
governance.
Interpretation of Statutes:
Doctrine of reading down - Applicability of - The doctrine
would apply only when general words used in a statute or regulation
can oe confined in a particular manner so as not to infringe a
constitutional right.
G
Reading down of a provision - Addition of something by the
court to the provision which does not exist, would amount to
legislations by court.
Natural Justice - Ordinarily legislative functions do not
require that natural justice be followed - Natural justice need not
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be followed, except where the statute so provides.
CELLULAR OPERATORS ASSN. OF INDIA v. TELECOM
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REGULATORY AUTHROITY OF INDIA
Words and Phrases:
A
'Transparency' - Meaning of, in the context of Telecom
Regulatory Authority of India Act, 1997.
Allowing the appeals, the Court
HELD: 1.1 The power to make the Impugned Regulation
i.e. Telecom Consumers Protection (Ninth Amendment)
Regulations, 2015 is traceable to Section 36(1) of the Telecom
Regulatory Authority of India Act, 1997. Though the Regulation
making power under the said Act is wide and pervasive, and is
not trammeled by the provisions of Section 11, 12(4) and 13, it is
a power that is non-delegable and, therefore, legislative in nature.
The exercise of this power is hedged in with the condition that it
must be exercised consistently with the Act and the Rules
thereunder in order to carry out the p urposes of the Act. Since
the regulation making power has first to be consistent with the
Act, it is necessary that it not be inconsistent with Section 11 of
the Act, and in particular Section ll(l)(b) thereof. This is for the
reason that the functions of the Authority are laid down by this
Section, and that the Impugned Regulation itself refers to Section
ll(l)(b)(i) and (v) as the source of power under which the
impugned Regulation has been framed. [Paras 22, 23] (33-E; 34H; 35-A-C]
.
BSNL v. Telecom Regulatory Authority of India 2013
(12) SCR 999: (2014) 3 SCC 222 - relied on.
1.2 The Impugned Regulation is not referable to Section
ll(l)(b)(i) and (v) of the Act inasmuch as it has not been made to
ensure compliance of the terms and conditions of the licence nor
has it been made to lay down any standard of quality of service
that needs compliance. This being the case, the Impugned
Regulation is tie lwrs Section 11 but cannot ,be said to ·be
inconsistent with Section 11 of the Act. [Para 24] [36-H; 37-A"B]
1.3 Under Section 36, not only does the Authority have to
make regulations consistent with t!te Act and the Rules made
thereunder, but .it also has.to carry out the purposes of the Act,
as can be discerned from the Preamble to the Act. If, far from
carrying out the purposes of the Act, a Regulation is made contrary
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A to such purposes, such Regulation cannot be said to be consistent
with the Act, for it must be consistent with both the letter of the
Act and the purposes for which the Act has been enacted. In
attempting to protect the interest of the consumer of the telecom
sector at the cost of the interest of a service provider who
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complies with the leeway of an average of 2% of call drops per
month given to it by another Regulation, framed under Section
ll(l)(b)(v), the balance that is sought to be achieved by the Act
for the orderly growth of the telecom sector has been violated.
Therefore, the impugned Regulation does not carry out the
purpose of the Act and must be held to be ultra vires the Act on
this score. [Para 24) [37-D-F)
State of Tamil Nadu v. P. Krishnamoorthy 2006 (3) SCR
396 : (2006) 4 sec 517 - relied on.
2.1 One of the tests for challenging the constitutionality of
subordinate legislation is that subordinate legislation should not
D be manifestly arbitrary. Also, it is settled law that subordinate
legislation can be challenged on any of the grounds available for
challenge against plenary legislation. [Para 25] [37-G]
Indian Express Newspapers v. ·Union of India 1985 (2)
SCR 287 : (1985) 1 SCC 641; Khoday Distilleries Ltd.
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v. State of Karnataka 1995 (6) Suppl. SCR 759 : (1996)
10 SCC 304; Sharma Transport v. Government of
Andhra Pradesh 2001 (5) Suppl. SCR 390 : (2002) 2
sec 188 - relied on.
2.2 Thus, under Article 19(6) of the Constitution, the State
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has to conform to two separate and independent tests if it is to
pass constitutional muster - the restriction on the appellants'
fundamental right must first be a reasonable restriction, and
secondly, it should also be in the interest of the general public.
The test of reasonable restriction is. however, a test separate
and distinct from the test of the law being in the interest of the
G general public. [Paras 29, 31) [39-F; 40-D-E]
Rustom Cavasjee Cooper (Banks Nationalisation) v.
Union of India 1970 (3) SCR 530 : (1970) 1 SCC 248
- followed.
Chi11taman Rao v. State of Madhya Pradesh 1950 SCR
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759 - relied on.
CELLULAR OPERATORS ASSN. OF INDIA v. TELECOM
REGULATORY AUTHROITY OF INDIA
2.3 Though TRAI may have brought in the impugned
Regulation in the interest of general 1mblic, yet it is important to
note that, apart from the common good in the form of consumer
interest, the Regulation must also pass a separate and
independent test of not being manifestly arbitrary or unreasonable.
When viewed from the angle of manifest arbitrariness or
reasonable restriction, sounding in Article 14 and Article 19(1)(g)
respectively, the Regulation must, in order to pass constitutional
muster, be as a result of intelligent care and deliberation, that is,
the choice of a course which reason dictates. Any arbitrary
invasion of a fundamental right cannot be said to contain this
quality. A proper balance between the freedoms guaranteed and
the control permitted under Artieie 19(6) must be struck in all
cases before the. impugned law can be said to be a reasonable
restriction in the public interest. [Para 31) [40-E-H)_
Delhi Science Forum v. Union of India 1996 (2) SCR
767 : (1996) 2 sec 405 - referred to.
2.4 According to TRAI, the cause _for caH drops is
twofold - one owing to the fault of the consumer, and the other
owing to the fault of the service provider. The technical paper
dated 13.11.2015 shows that an average of 36.9% can be call
drops owing to the fault of the consumer. If this is so, the
Impugned Regulation's very basis is destroyed: the Regulation
is based on the fact that the service provider is 100% at fault.
This becomes clear from a reading of the text of the said
Regulation together with the Explanatory Memorandum. This
being the case, it is clear that the service provider is made to pay
for call drops that may not be attributable to his fault, and the
consumer receives compensation for a call drop that may be
attributable to the fault of the consumer himself, and that makes
the Impugned Regulation a regulation framed without intelligent
care and deliberation. [Para 32) [41-B-D)
2.5 The impugned Regulation cannot be read down to mean
that it would apply only when the fault is that of the service
provider. The doctrine of reading down would apply only when
general words used in a statute or regulation can be confined in a
particular manner so as not to infringe a constitutional right. The
language of the impugned Regulation is definite and
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unambiguous - every service provider has to credit the account
of the calling consumer by one rupee for every single call drop
which occurs within its network. The Explanatory Memorandum
to the aforesaid Regulation further makes it clear, in paragraph
19 thereof, that the Authority has come to the conclusion that
call drops are instances of deficiency in service delivery on the
part of the service provider. It is thus unambiguously clear that
the impugned Regulation is based on the fact that the service
provider is alone at fault and must pay for that fault. In these
circumstances, to read a proviso into the Regulation that it will
not apply to consumers who are at fault themselves is not to
restrict general words to a particular meaning, but to add
something to the provision which does not exist, which would be
nothing short of the court itself legislating. [Paras 33, 35) (41-E;
43-C-E]
In Re: Hindu Womens Rights. to Property Act, 1937 AIR
1941 FC 72 - relied on.
Delhi Transport Corpn. v. D.T.C. Mazdoor Congress
1990 (1) Suppl. SCR 142 : 1991 Supp (1) sec 600 -
followed.
2.6 The plea that the impugned Regulation would be worked
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in such a manner that the service provider would be liable to pay
only when it is found that it is at fault, again falls foul of
constitutional doctrine. A statute which is otherwise invalid as
being unreasonable cannot be saved by its being administered in
a reasonable manner. [Para 36) (43-F-H]
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Collector of Customs v. Nathe/la Sampathu Chetty
(1962) 3 SCR 786 - relied on.
2.7 The impugned Regulation does not accord with the
Statement of Objects and Reasons of the TRAI Act, 1997. The
policy of the 1997 Act, as amended by the 2000 Act, is to protect
G the interests of service providers and consumers of the telecom
sector together, so that the orderly growth of the telecom sector
is ensured thereby. The orderly growth of the telecom sector
cannot be ensured or promoted by a manifestly arbitrary or
unreasonable regulation which makes a service provider pay a
penalty without it being necessarily at fault. The motive for the
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impugned Regulation may well be to compensate the small
CELLULAR OPERATORS ASSN. OF INDIA v. TELECOM
REGULATORY AUTHROITY OF INDIA
consumers, but that does not make it immune from Article 14
and the twin tests of Article 19(6). The Authority framing the
Regulation must ensure that its means are as pure as its ends -
only then will regulations made by it pass constitutional muster.
[Paras 38, 39] [44-D-E, F-G]
2.8 Profits or losses of the service providers cannot be
relevant for determining whether the Impugned Regulation is
otherwise arbitrary or unreasonable. It is always open to the
Authority, with the vast powers given to it under the TRAI Act,
to ensure, in a reasonable and non-arbitrary manner, that service
providers provide the necessary funds for infrastructure
development and deal with them so as to protect the interest of
the consumer. [Para 40 ] [45-B, D-E]
2.9 It cannot be said that the appellants have approached
the Court in haste. If the appellants had not gone to court when
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they did, the Regulation would have affected their fundamental ·
rights on and from 1.1.2016. Further, they would have been denied
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interim and/or other relief on the ground that they have not moved
the Court without undue delay. [Para 42] [46-D-E]
Prag Ice & Oil Mills v. Union of India 1978 (3) SCR
293 : (1978) 3 sec 459 - distinguished.
2.10 To say that the Impugned Regulation is only an
experimental measure that would last in its present form for six
months is again incorrect. It is only the Explanatory Memorandum
which says that the Authority may review the aforesaid Regulation
after working of the said Regulation after six months, and that
too only if found to be necessary. Obviously, this would not mean
that the aforesaid Regulation would necessarily be reviewed at
all, even after six months. [Para 42] [46-E-G]
2.11 The Quality of Service Regulations and the Consumer
Regulations must be read together as part of a single scheme in
order to test the reasonableness thereof. The countervailing
advantage to service providers by way of the allowance of 2%
average call drops per month, which has been granted under the
2009 Quality of Service Regulations, could not have been ignored
by the Impugned Regulation so as to affect the fundamental rights
of the appellants, and having been so ignored, would render the
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[2016] 9 S.C.R.
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Impugned Regulation manifestly arbitrary and unreasonable. [Para
45) [48-B-C]
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The Lord Krishna Sugar Mills Ltd. and Anr. ll Union of
India and Anr. (1960) 1 SCR 39 - relied on.
2.12 The 2009 Quality of Service Regulation is made under
Section ll(l)(b)(v), which is the very Section which is claimed to
be the source of the impugned Regulation. Both the regulations
deal with the same subject matter - namely, call drops, and both
regulations are made in the interest of the consumer. If an average
of 2% per month is allowable to every service provider for call
drops, and it is the admitted position that all service providers
before the Court, short of Aircel, and that too in a very small way,
have complied with the standard, penalizing a service provider
who complies with another Regulation framed with reference to
the same source of power would itself be manifestly arbitrary and
would render the Regulation to be at odds with both Articles 14
D and 19(l)(g). [Para 43] [47-D-E]
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2.13 A strict penal liability laid down on the erroneous basis
that the fault is entirely with the service provider is manifestly
arbitrary and unreasonable. Also, the payment of such penalty to
a consumer who may himself be at fault, and which gives an
unjustifiable windfall to such consumer, is also manifestly arbitrary
and unreasonable. [Para 46) [48-D-E]
Shree Bhagwati Steel Rolling Mills v. Commissioner of
Central Excise (2016) 3 SCC 643 - relied on.
2.14 The reason given in the Explanatory Memorandum for
compensating the consumer is that the compensation given is
only notional. The very notion that only notional compensation is
awarded, is also entirely without basis. A consumer may well
suffer a call drop after 3 or 4 seconds in a voice call. Whereas the
consumer is charged only 4 or 5 paise for such dropped call, the
service provider has to pay a sum of rupee one to the said
consumer. This cannot be called notional at all. It is also not
clear as to why the Authority decided to limit compensation to
three call drops per day or how it arrived at the figure of Re.1 to
compensate inconvenience caused to the consumer. It is equally
unclear as to why the calling party alone is provided compensation
CELLULAR OPERATORS ASSN. OF INDIA v. TELECOM
REGULATORY AUTHROITY OF INDIA
because, according to the Explanatory Memorandum,
inconvenience is suffered due to the interruption of a call, and
such inconvenience is suffered both by the calling party and the
person who receives the call. The receiving party can legitimately
claim that his inconvenience when a call drops, is as great as that
of the calling party. And the receiving party may need to make
the second call, in which case he receives nothing, and the calling
party receives Re.1 fo1· the additional expense made by the
receiving party. All this betrays a complete lack of intelligent
care and deliberaHon in framing such a regulation by the Authority,
rendering the impugned Regulation manifestly arbitrary and
unreasonable. [Para 49) [49-E-H; 50-A)
DSC-Viacon Ventures Pvt. Ltd. (Now Known as DSC
Ventures Pvt. Ltd) v. Lal Manohar Pandey and Ors.
2015 (10) SCALE 249 - distinguished.
2.15 The technical paper issued by the same Authority on
13.11.2015 i.e. a few days after the impugned Regulation, the
Authority has its~lf recognised that 36.9% of call drops take place
because of the fault at the consumer's end. Instead of having a
relook at the problem in.the light of the said technical paper, the
Authority has g,.one ahead with the impugned Regulation. The
very basis of this statement contained in the Explanatory
Memorandum to the impugned Regulation is found by the selfsame Authority to be incorrect only a few days after publishing
the impugned Regulation. This itself shows the manifest
arbitrariness on the part of the TRAI, which has not bothered to
have a relook into the said problem. [Para 52) [50-F-H]
2.16 Thus, the impugned Regulation is manifestly arbitrary
and therefore violative of Article 14, and is an unreasonable
restriction on the right of the appellants' fundamental right under
Article 19(1)(g}"to carry on business, and is therefore, struck
down as such. [l'ara 52) (50-H; 51-A)
2.17 The impugned Regulation completely avoids the
adjudicatory p_1·ocess, and legislatively lays down a penal
consequence to a service provider for a call drop taking place
without the consumer being able to prove that he is not himself
responsible for such call drop and without proof of any actual
monetary loss. Whereas individual consumers, either before the
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Consumer Forum, or in a dispute as a group with service providers
before the TRAI, would fail in an action to recover compensation
for call drops, yet a statutory penalty is laid down, applicable
legislatively, and without any adjudication. This again makes the
impugned Regulation manifestly arbitrary and unreasonable. [Para
53] [51-C-D]
2.18 When compensation is to be paid to a person who is
affected by breach of a standard of quality required under the
Act, such compensation can only be for actual loss suffered, and
only as a result of fault of the service provider being established
before a quasi judicial Tribunal. This may be notwithstanding the
fact that the service provider otherwise meets the average of
2% call drops per month allowed to him by the 2009 Quality of
Service Regulation. This is for the reason -that once fault and
actual loss suffered are established before a quasi judicial Tribunal,
it would not be open to plead, on the facts of an -individual case,
that an overall standard of performance has been met. For this
reason also, a legislatively pre determined penalty, without fault
or loss being established by evidence before a quasi judicial
authority, and where the cause of a call drop may be because of
the consumer himself, renders the impugned Regulation
manifestly arbitrary and unreasonable. (Para 56) [52-F-H)
3. The licence conditions, which are a contract between the
service providers and consumers, have been amended to the
former's disadvantage by making the service provider pay a
penalty for call drops despite there being no fault which can be
traceable exclusively to the service provider, despite the service
provider maintaining the necessary standard of quality required
of it - namely, adhering to the limit of an average of 2% of call
drops per month. Condition 28 of the licence requires the
licensee to ensure that the quality of service standards, as
prescribed by TRAI, are adhered to, and that the Impugned
G Regulation docs not lay down quality of service standards. This
being so, it is clear that the laying down of a penalty de lrors
condition 28, which also requires establishing of fault of the service
provider when it docs not conform to a quality of service standard
laid down by TRAI, would amount to interference with the licence
conditions of the service providers without authority of law. On
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CELLULAR OPERATORS ASSN. OF INDIA v. TELECOM
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REGULATORY AUTHROITY OF INDIA
this ground also, therefore, the Impugned Regulation deserves
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to be struck down. [Para 62) [54-F-H; 55-A-B)
Union of India v. Assn. of Unified Telecom Service
Providers of India 2011 (14) SCR 657 : (2011)10 SCC
543 - relied on.
4.1
Section 11(4) of the TRAI Act requires that the
Authority shall ensure transparency while exercising its powers
and discharging its functions. "Transparency" has not been
defined anywhere in the Act. However, the definition of
"transparency" as provided in s. 13(4) of the Airports Economic
Regulatory Authority of India Act, 2008 provides a good working
test of 'transparency' referred to in Section 11(4) of the TRAI
Act. [Paras 63, 64] [55-B-C, F-G]
4.2 No doubt in the facts of the present case, the Authority
did hold due consultations with all stakeholders and did allow all
stakeholders to make their submissions to the Authority.
However, no discussion or reasoning dealing with the arguments
put forward by the service providers, that call drops take place
for a variety of reasons, some of which arc beyond the control of
the service provider and are because of the consumer himself.
Consequently, the conclusion that scrv'ice providers are alone to
blame and arc consequently deficient in service when it comes
to call drops is not a conclusion which a reasonable person can
reasonably arrive at. Ordinarily legislative functions do not
require that natural justice be followed. However, it has been
recognised in some of the judgments dealing with this aspect
that natural justice need not be followed except where the statute
so provides. [Para 66) [56-B-D]
Union of India v. Cynamide India Ltd. 1987 (2) SCR
841 : (1987) 2 SCC 720; MR.F. Ltd. v. Inspector Kera/a
Govt. 1998 (2) Suppl. SCR 632 : (1998) 8 SCC 227 -
relied on.
Regina v. North and East Devon Health Authority, Ex
parte Coughlan [2001] QB 213 - referred to.
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4.3 The question of transparency raises a more fundamental
question, namely, that of openness in governance. The Right to
Information Act of 2005 has gone a long way to strengthen
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democracy by requiring that the Government be transparent in
its actions, so that an informed citizenry is able then to contain
corruption, and hold Governments and their instrumentalities
accountable to the people of India.· [Para 69) [57-E-F] ·
Chief Information Commissioner v. State of Manipur
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2011 (13) SCR 505 : (2011) 15 SCC 1; Global Energy
Ltd. v. Central Electricity Regulatory C011!:nission 2009
(9) SCR 22 : (2009) 15 SCC 570 - relie.t on.
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4.4 Thus, subject to certain well defined exceptions, it
would be a healthy functioning of democracy, if all subordinate
legislation were to be "transparent". Parliament should frame a
legislation along the lines of the U.S. Administrative Procedure
Act (with certain well defined exceptions) by which all subordinate
legislation is subject to a transparent process by which due
consultations with all stakeholders are held, and the rule or
regulation making power is exercised after due consideration of
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all stakeholders' submissions, together with an explanatory
memorandum wb!ch broadly takes into account what they have
said and the reaso'iis for agreeing or disagreeing with them. Not
only would such legislation reduce arbitrariness in subordinate
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legislation making, but it would also conduce to openness in
governance. It would also ensure the redressal, partial or
otherwise, of grievances of the concerned stakeholders prior to
the making of subordinate legislation. Thfo would obviate, in
many cases, the need for persons to approach courts to strike
down subordinate legislation on the ground of such legislation
being manifestly arbitrary or unreasonable. [Para 74] [65-B-F)
Case Law Reference
2013 (12) SCR 999
relied on
Para8
2006 (3) SCR 396
relied on
Para 20
1985 (2) SCR 287
relied on
Para25
1995 (6) Suppl. SCR 759
relied on
Para 26
2001 (5) Suppl. SCR 390
relied on
Para27
1970 (3) SCR 530
followed
. '
Para28
1950 SCR 759
relied on
Para29
1996 (2) SCR 767
referred to
Para 31
CELLULAR OPERATORS ASSN. OF INDIA v. TELECOM
REGULATORY AUTHROITY OF INDIA
AIR 1941 FC 72
relied on
Para33
1990 (1) Suppl. SCR 142
followed
Para34
(19~2) 3 SCR 786
relied on
Para 36
197~ (3) SCR 293
distinguished
Para 41
1960 1 SCR 39
relied on
Para 44 ··
(20~6) 3 sec 643
relied on
Para 47
2015 (10) SCALE 249
distinguished
Para 50
2911 (14) SCR 657
relied on
Para 61
(2001) QB 213
referred to
Para 65
1987_ (2) SCR 841
relied on
Para 67
1998 (2) Suppl. SCR 632
relied on
Para 68
2911 (13) SCR 505
relied on
Para 71
2009 (9) SCR 22
relied on
Para 72
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5017
of2016.
From the Judgment and Order dated 29.02.2016 of the High Court
of Delhi at New Delhi in Writ Petition (Civil) No. 11596 of2015
WITH
C. A. No. 5018 of2016.
Kap ii Sibal, Dr. A. M. Singhvi, Gopal Jain, Sr. Advs., Manjul Bajpai,
Mahesh Agarwal, Rishi Agarwal, Ms. Shelly Bhasin, Lakshmeesh
Karnath, Paras Anand, Shashawat Bajwai, Ms. Vasudha Gupta,
Ms. Stephanie Sonwane, Avishkar Singhvi, Anusha, Nidhiram Sharma,
E. C. Agrawala, Advs., for the Appellants.
P. S. Narasimha, ASG, Pinaki Mishra, Sr. Adv., Sanjay Kapur,
Amo) Chandan, Ms. Priyanka Das, Prabhash Kumar, Ajay Sharma, R. S.
Nagar, Vibhu Shankar Mishra, Shadman Ali, K. Permeshwar, R. K.
Rathod, Rajesh Mishra, Rishabh Jain, Ms. Kaanan Gupta, Akash Jindal,
S. S. Rawat, Ms. Sudha Mehra, Ushab Jain, D. S. Mabra, A. Deb Kumar,
Surya Narayana Patro, Vakul Sharma, Vikas Kumar, Manish Paliwal,
Ms. Seema Sharma, Vivek Chib, Asif Ahmed, Ms. Ruchira Goel, Rishab
Kapoor, Vimal Kirti Singh, Siddharth, Ms. Pooja Dhar, Ms. Saumya
Sharma, K. Vaghen, Surya Prakash, V. Shyamohan, Advs., for the
Respondents.
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SUPREME COURT REPORTS
The Judgment of the Court was delivered by
R. F. NARIMAN, J. 1. Leave granted.
(2016] 9 S.C.R.
2. This group of appeals before us is by various telecom operators
who offer telecommunication services to the public generally. Various
writ petitions were filed in the Delhi High Court challenging the validity
of the Telecom Consumers Protection (Ninth Amendment) Regulations,
2015 (hereinafter referred to as the "Impugned Regulation"), notified on
16.10.2015, (to take effect from 1.1.2016), by the Telecom Regulatory
Authority oflndia. The aforesaid amendment was made purportedly in
the exercise of powers conferred by Section 36 read with Section 11 of
the Telecom Regulatory Authority of India Act, 1997. By the aforesaid
amendment, every originating service provider who provides cellular
mobile telephone services is made liable to credit only the calling consumer
(and not the receiving consumer) with one rupee for each call drop (as
defined), which takes place within its network, upto a maximum of three
call drops per day. Further, the service provider is also to provide details
of the amount credited to the calling consumer within four hours of the
occurrence of a call drop either through SMS/USSD message. In the
case of a post paid consumer, such details of amount credited in the
account of the calling consumer were to be provided in the next bill.
3. A brief background is necessary in order to appreciate the
controversy at hand. Under an Act of ancient vintage, namely, the Indian
Telegraph Act, 1885, the Central Government or the Telegraph Authority
is the licensing authority by which persons are licenced under Section
4(1) of the said Act for providing specified public telecommunication
services. Given the fact that it is the Central Government or the Telegraph
Authority who is the licensor in all these cases, the said licensor enters
into what are described as licence agreements for the provision of Unified
Access Services in the specified service areas. Various standard terms
and conditions are laid down in these licences, some of which are
described hereinbelow. Vide clause 2.1, such licences are grailted to
provide telecommunication services, as defined, on a non-exclusive basis
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in designated service areas. It is mandatory that the licensee provides
such services of a good standard, by establishing a state of the art digital
network. Licences are usually given for a period of 20 years at a time
with a 10 year extension if the licensor so deems expedient. Under
clause 5 of the aforesaid licence agreement, the licensor reserves the
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right to modify, at any time, the terms and conditions oflicense, if in its
CELLULAR OPERATORS ASSN. OF INDIA v. TELECOM
REGULATORY AUTHROITY OF INDIA [R. F. NARIMAN, J.]
opinion it is necessary or expedient so to do in public interest, in the
interest of security of the State, or for the proper conduct of telegraphs.
Under condition 28, which is of some relevance to determine the question
involved in these appeals, the licensee shall ensure that the quality of
service standards as prescribed either by the licensor or the Telecom
Regulatory Authority oflndia shall be adhered to. The licensee is made
responsible for maintaining performance and quality of service standards
and is to keep a record of the number of faults and rectification reports
in respect of a particular service which is to be produced before the
licensor/TRAI as and when desired. It is also important that the licensee
be responsive to complaints lodged by its subscribers and rectify the
same. Under clause 34, which deals with roll-out obligations, the licensee
is to ensure that coverage of a district headquarters/town would mean
that at least 90% of the area bounded by municipal limits should get the
required street and in-building coverage. Interestingly, under clause 35,
liquidated damages are also provided for, in case the licensee does not
commission the service within 1 S days of the expiry of the commissioning
date and for certain other delays relatable to commissioning of service.
4. It may also be noted that right from September, 2005, TRAI
has been lamenting the shortage and consequent distance of mobile towers
from each other and both the Government as well as TRAI have been
writing to the Chief Secretaries of various State Governments to grant
timely permissions for establishing telecom towers. In this behalf, we
have been shown guidelines issued by DOT to the Chief Secretaries
dated 1.8.2013. We have also been shown an amendment to the Quality
of Service Regulations dated 21.8.2014 by which TRAI has noticed
practical difficulties that are faced due to various reasons by which cable
breakdowns and indoor faults take place, with the Authority requiring
the striking of a balance between the problems faced by the licensees
and the need to ensure quality of service to customers. We were also
shown a letter from the Ministry of Communications written to Ohief
Ministers of all the States to permit instaHation of towers on Government
buildings. This letter is dated 3.8.2015. Further, there is a constant
tussle between cell phone operators and municipal authorities, landing
cell phone operators in court against municipal authorities, who seek to
restrict the setting up of cell phone towers, given the apprehension that
radiation from these towers has a direct causal link with cancer in human
beings. rt is also important to note that by a Quality of Service Regulation
dated 20.3.2009, issued under Section 11 read with Section 36 of the
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SUPREME COURT REPORTS
[2016] 9 S.C.R.
A · TRAI Act, TRAI has provided, insofar as cellular mobile phone services
are concerned, for a call drop rate of 2% averaged over a period of one
month. It has also provided for financial disincentives in case there is a
failure to meet this parameter by enacting a second amendment to the
Quality of Service Regulations dated 8.11.2012 by which a service
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provider is liable to pay, by way of financial disincentive, an amount not
exceeding Rs.50,000/- per parameter that is contravened as the Authority
may by order direct, and in the case of second or subsequent
contravention, to pay an amount not exceeding Rs.1,00,000/- per
parameter for each such contravention as the Authority may by order
direct. One day before the Impugned Regulation, i.e., on 15.10.2015,
this financial disincentive was raised from Rs.50,000/- to Rs. I ,00,000/-,
and Rs.1,00,000/- to Rs. I ,50,000/- for the second consecutive
contravention, and Rs.2,00,000/- for each subsequent consecutive
contravention.
5. It is in this background that the impugned Ninth Amendment to
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the Telecom Consumers Protection Regulations of2015 was made, on
16.10.2015. The Impugned Regulation reads as under:-
TELECOM CONSUMERS PROTECTION (NINTH
AMENDMENT) REGULATIONS, 2015
(9 OF 2015)
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No. 301/2015-F&EA -- In exercise of the powers conferred by
section 36, read with sub-clauses (i) and (v) of clause (b) of sub-section
(1) of section 11, of the Telecom Regulatory Authority of India Act,
1997 (24 of 1997), the Telecom Regulatory Authority of India hereby
makes the following regulations further to amend the Telecom Consumers
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Protection Regulations, 2012 (2 of2012), namely:-
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I. (I) These regulations may be called the Telecom Consumers
Protection (Ninth Amendment) Regulations, 2015.
(2) They shall come into force from the !st January, 2016.
2. In regulation 2 of the Telecom Consumers Protection Regulations,
2012 (hereinafter referred to as the principal regulations), after clause
(ba), the following clauses shall be inserted, namely:-
CELLULAR OPERATORS ASSN. OF INDIA v. TELECOM
17
REGULATORY AUTHROITY OF INDIA [R. F. NARIMAN, J.]
"(bb)
"call drop" means a voice call which, after being
successfully established, is in term pted prior to
its
norm al
completion; the cause of early termination is within the network of
the service provider;";
(be) "calliug consumer" means a consumer who initiates a
voice call;"'
After Chapter IV of the principal regulations, the following chapter
shall be inse1ted, namely :-
"CHAPTER V"
RELIEF TO CONSUMERS FOR CALL DROPS
16. Measures to provide relief to consumefs.- Every originating
service provider providing Cellular Mobile Telephone Service shall,
for each call drop within its network,
(a)
credit the accountofthe calling consumer by one rupee:
Provided that such credit in the account of the calling
consumer shall be limited to three dropped calls in a day (00:00:00
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hours to 23 :59 :59 hours);
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(b)
provide the calling consumer, through SMS/USSD message,
within four hours of the occurrence of call drop, the details of
amount credited in his account; and
(c)
in case of post-paid consumers, provide the details of the
credit in the next bill."
6. The explanatory memorandum to the aforesaid amendment
makes interesting reading. In the first paragraph of the said memorandum,
the 2009 Quality of Service Regulation referred to hereinabove, granting
an allowance of an average of2% call drops per month, is specifically
referred to. Also, interestingly enough, the service providers have stated
that they are meeting this benchmark completely with one or two minor
exceptions. Despite this, the Authority has embarked on the Impugned
Regulation, stating that consumers, at various fora, have raised the issue
of call drops, complaining that in their experience, the quality of making
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SUPREME COURT REPORTS
[2016) 9 S.C.R.
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voice calls has deteriorated. The Authority responded by issuing a
consultation paper marked "Compensation to the Consumers in the event
of dropped calls" dated 4.9.2015. Stakeholders :ll'ere given till 21.9.2015
to submit their comments in writing with counter comments thereto being
given one week thereafter, i.e., by 28.9.2015. The Authority records
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that written comments were received from 4 industry associations, 11
Cellular Mobile Telephone Service Providers, 2 consumer advocacy
groups, 2 organizations, and 518 individual consumers. 5 counter
comments were also received. The Authority notes that an open house
discussion was held on I .I 0.2015 in New Delhi with the stakeholders.
According to the Authority, consumers wanted relief in the event of
dropped calls under two broad heads - excess charging and
inconvenience caused to them. In paragraphs 6 and 7, the arguments of
service providers have been noted, in which service providers stated
their difficulties in the matter of sealing/closing down existing sites for
· towers by municipal authorities and other related issues together with
spectrum related issues. They specifically informed the Authority that a
large.proportion of call drops are beyond their control. In reply thereto,
consumers spoke of the inconvenience caused to them by.call drops.
Some consumers also contended that the financial disincentive levied
for failing to meet the benchmark for call drop rates should be revised
upwards. (This was in fact done, as we have seen, just one day before
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the Impugned Regulation itself, i.e., on 15.10.2015). The Explanatory
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Memorandum then goes on to state:-
"18. Based on the above, it is clear that while all CMTSPs and
the industry associations have argued that question for
compensation to the consumers on call drops does not arise as it
is neither justifiable nor practicable, most of the consumers and
consumer advocacy groups have insisted that they should be
compensated by the CMTSPs for the inconvenience caused to
them.
19. After a careful analysis. the Authority has come to the
conclusion that call drops are instances of deficiency in service
delivery on part of the CMTSPs which cause inconvenience to
the consumers. and hence it would be appropriate to put in place
a mechanism for compensating the consumers in the event of
dropped calls.