Cable Operators Welfare Association, Represented By Its President Naveen v. D. VS Union of India Represented By Its Secretary, Ministry of Information and Broad Casting
2019-04-09
N.ANIL KUMAR, P.R.RAMACHANDRA MENON
body2019
DigiLaw.ai
JUDGMENT : P.R. Ramachandra Menon, J. Interference declined by the learned Single Judge in the writ petitions filed against some of the provisions of the Telecommunication (Broadcasting and Cable) Services Inter Connection(Addressable Systems)Regulations, 2017, providing for 'revenue sharing' between the Multi System Operator (MSO in short)and Local Cable Operator (LCO in short) and fixing a default revenue sharing ratio of “55:45” in the case of pay channels, if no Model Interconnection Agreement (MIA) is reached in between, thus giving effect to the terms of Standard Interconnection Agreement (SIA) is questioned in these appeals. 2. The challenge against the Regulations is mainly based on the contention that the second respondent/TRAI does not have any power to fix the Tariff as to the revenue sharing between the MSOs and LCOs; more so since the relevant provisions say that it has to be on the basis of mutual agreement. If the parties fail to enter into a mutual agreement, SIA is to be followed, which stipulates the ratio as aforesaid, that is always beneficial to the MSOs who consciously avoid negotiation to arrive at a mutual agreement, as the existing ratio of “12%:88%” stands increased by several folds, thus making the default clause better in terms. By virtue of the default clause, the bargaining power of the LCOs to arrive at a contract on free will as to the revenue sharing is taken away and undue benefits have been conferred upon the MSOs with unconscionable bargaining power. It is also pointed out that the learned Single Judge is not correct in relegating the appellants/petitioners to move the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) for redressal of the grievances, as the constitutional validity of the Regulations cannot be considered or adjudicated by the Tribunal, for want of authority/power/jurisdiction. 3. The pleadings and proceedings are referred to as given in W.A.No.278 of 2019, except where reference is made separately, based on the context. The basic judgment was rendered by the learned single Judge in W.P(C) No.6681 of 2018 (which is under challenge in W.A.No.278 of 2019), which came to be followed in the connected cases, declining interference, in turn, giving rise to the appeals concerned. 4. Heard Mr. M.A. Abdul Hakhim, the learned counsel for the appellants, Mr. Jaishankar V. Nair, the learned Central Government Counsel for Union of India and TRAI and Shri P. Gopinath Menon, the learned Sr.
4. Heard Mr. M.A. Abdul Hakhim, the learned counsel for the appellants, Mr. Jaishankar V. Nair, the learned Central Government Counsel for Union of India and TRAI and Shri P. Gopinath Menon, the learned Sr. Counsel for the Multi System Operator/the third respondent. 5. To understand the scope of the dispute, it may be better to have an idea as to the topography of the field. Earlier, almost upto 1992, the system followed for transmission of signals was 'Analogous system' whereby a bunch of channels were being provided for a lump sum. Later, in the year 2003, the first respondent brought about 'Conditional Access System' (CAS), introducing Set Top Box. By virtue of this, the distribution of 'pay channels' was sought to be governed by a Set Top Box, whereas 'free channels' were available even without a Set Top box. By the passage of time, 'Digital Addressable System' (DAS) was introduced in almost all parts of the country, whereby 'Free to Air' Channels as well as 'Pay Channels' were made available through the Set Top Box. As on date it is stated that a new system is being introduced under the name and style as OTT (Over the Top) where the service is rendered without cable through internet. 'Portability' is also stated as being introduced whereby the customer is stated as the king and option is given to change the service provider, if the service rendered is not of the optimum quality or the customer is having any dissatisfaction either with the quality or rate or with such other service. 6. The appellant Association claims to be representing as many as 62 different Local Cable Operators functioning in the State of Kerala. The said Association filed writ petitions to protect the interest of its members, who were aggrieved of the 'second proviso' to Regulation No.12(3), proviso to Regulation 12(7), Clause 11 providing that billing for subscribers shall be in the name of MSOs and the ratio of 55:45 specified in Clause 12.1 of the SIA ( Standard Interconnection Agreement) in Schedule VI of the Telecommunication (Broadcasting and Cable) Services Inter Connection(Addressable Systems)Regulations, 2017 issued by the second respondent/TRAI, by which a default revenue sharing ratio between the MSOs and LCOs was introduced, in case the parties failed to execute the Model Interconnection Agreement (MIA), in Schedule V of the Regulations, 2017.
The appellants seek to rely on the verdict in Central Inland Water Transport Corporation Limited and another vs. Brojo Nath Ganguly and another [ (1986) 3 SCC 156 ] to contend that there is an unconscionable bargain and hence requires interference. With reference to the provisions of the Indian Contract Act, it is stated as necessary to make equal reciprocal response and the inequality in the bargaining power is cited as a point to be looked into. Further, the decision of the Apex Court in Reliance Energy Ltd and another vs. Maharashtra State Road Development Corporation Ltd and others [ (2007) 8 SCC 1 ] (paragraph 36]is sought to be pressed into service to contend that there is a need for providing level playing field. It is further contended that the State action shall always be transparent and that there cannot be any action like “take or leave”, as held in Hindustan Times and others vs. State of U.P. and another [ (2003) 1 SCC 591 (paragraph 39). The learned counsel for the appellants submits that freedom to contract is a common law civil liberty enjoyed by all persons and hence it cannot be tinkered down, compelling the appellants/LCOs to agree for the revenue sharing ratio of 55:45 (as per the default clause) or to leave the field. Reliance is sought to be placed on paragraph 12 of the decision in M.P. Mathur and others vs. DTC and others [(2006) 13 SCC 706]. 7. The 3rd respondent contends that, as per the law declared by the Supreme Court in Arun Kumar Agrawal vs. Union of India and others (2013) 7 SCC 1 (paragraphs 41, 42 to 49), in matters involving economic business/ commercial interest, it is not for the Court to substitute its views and that these matters are always subject to trial and error method. There cannot be any interference by the Court in subordinate legislation as a matter of course and 'presumption of constitutionality' is always there and it has to be honoured, in view of the law declared by the Apex Court in State of T.N. and another vs. P. Krishnamurthy and others [ (2006) 4 SCC 517 (paragraph 15).
There cannot be any interference by the Court in subordinate legislation as a matter of course and 'presumption of constitutionality' is always there and it has to be honoured, in view of the law declared by the Apex Court in State of T.N. and another vs. P. Krishnamurthy and others [ (2006) 4 SCC 517 (paragraph 15). It is further brought to the notice of this Court that the bargaining power is still with the LCOs, as there are different MSOs available in the same place and LCOs can opt-whose service is to be availed by them. Installation of the relevant Set Top Box may not be a problem for the LCOs as no financial burden is mulcted on them in this regard. It is also stated that there are 6 or 7 MSOs in Kerala and they will effect the supply of signals at the LCO's hub. In some area, one LCO may be giving subscription of two or more/different MSOs. It is also pointed out that the appellants/writ petitioners have not chosen to challenge Section 11 of the TRAI Act, in particular Section (1)(b)(ii) and (iv). 8. The genesis of the case springs up from 25.03.1995 when the Cable Television Networks(Regulation)Act, 1995 was enacted, followed by the Telecom Regulatory Authority of India Act, 1997(TRAI Act for short) which was introduced on 28.03.1997. On 24.01.2000, a proviso was added to Section 2(1)(k) of the TRAI Act, enabling the Central Government to notify other services including the Broadcasting services, to be 'telecommunication service'. By virtue of the very same amendment, Chapter IV was inserted in the TRAI Act for establishment of Telecom Disputes Settlement and Appellate Tribunal (TDSAT for short). 9. On 09.01.2004, a notification was issued by the Central Government bringing the Broadcasting Services also within the purview of the definition of 'Telecommunication Service', by virtue of which, the TRAI Act came to be applicable to the Cable T.V. Operators as well. Shortly thereafter, the Telecommunication (Broadcasting and Cable Services) Interconnection Regulations 2004 were issued by the TRAI on 10.12.2004. A new set of Regulations named as Telecommunication (Broadcasting and Cable Services) Interconnection (Digital Addressable Cable Television Systems) Regulations, 2012 was introduced by the TRAI on 30.04.2012.
Shortly thereafter, the Telecommunication (Broadcasting and Cable Services) Interconnection Regulations 2004 were issued by the TRAI on 10.12.2004. A new set of Regulations named as Telecommunication (Broadcasting and Cable Services) Interconnection (Digital Addressable Cable Television Systems) Regulations, 2012 was introduced by the TRAI on 30.04.2012. A notification was issued by the TRAI, inserting proviso to Clause 5 of the relevant Tariff Order, 2010 by including the default revenue sharing ratio of 55:45 to Free to Air channels and a ratio of 65:35 to the other channels. Though this was included in the Tariff Order, it was not finding a place in the Regulations and hence it was not enforced for the time being. It was much later, in 2016, that the new Regulations were introduced, amending 2012 Regulations and introducing 'SIA' and 'MIA' along with default revenue Sharing ratio of 55:45 (to Free to Air Channels) and 65:35 (to other channels) between the MSOs and LCOs. This made the Local Cable Operators (represented by the appellant)to feel aggrieved, who sought to challenge the same by filing W.P.(C)No.21901 of 2016, virtually challenging the disputed provisions in 2016 Regulations and those in the Tariff Order, 2010. Based on the interim order of status quo, the existing ratio was being maintained, which provided for payment of a sum of Rs.25 to 30/-per cable connection to the MSOs (out of the total collection of Rs.200 to 250/-) by the LCOs from the customers. This virtually amounted to a revenue sharing of 12%:88% between the MSOs and LCOs. 10. While so, the second respondent introduced a new set of Regulations and Tariff Order in the year 2017, repealing the earlier ones. Ext.P6 Regulations of 2017 repealed the earlier 2004 and 2012 Regulations and introduced new 'MIA' and 'SIA' with default revenue sharing ratio of 55:45 between MSOs and LCOs. The appellant was constrained to move this Court again by filing W.P.(C) No.6681 of 2018, challenging the objectionable provisions of the 2017 Regulations/Tariff Order. By virtue of the interim order of status quo, the appellant was enjoying the revenue sharing ratio as it existed earlier. 11.
The appellant was constrained to move this Court again by filing W.P.(C) No.6681 of 2018, challenging the objectionable provisions of the 2017 Regulations/Tariff Order. By virtue of the interim order of status quo, the appellant was enjoying the revenue sharing ratio as it existed earlier. 11. After completion of the pleadings, both the sides were heard in detail and the learned single Judge, placing reliance on the verdict passed by the Apex Court in Star India Private Limited vs. Department of Industrial Policy and Promotion [2018 (14) SCALE 651 (SC)], held that the challenge against the Regulations was not liable to be sustained. However, with regard to the contentions of the writ petitioners that by virtue of the default clause, the cunning MSOs were not turning up to negotiate and to enter into an MIA, but were opting to fall back upon the SIA, which was more beneficial to them, it was held that, it remained to be a matter of dispute which could be adjudicated by the TDSAT. It was accordingly, that the writ petitioners/LCOs were relegated to move the TDSAT, in turn dismissing the writ petitions. Hence these appeals. 12. Mr. Abdul Hakhim, the learned counsel appearing for the appellants vehemently argued that, despite the interim order of 'status quo' passed by the learned single Judge, the third respondent/MSO disconnected the signals, causing much annoyance and anguish to the end customers, besides the huge loss caused to the appellants. The appellants were constrained to file Contempt of Court proceedings against the third respondent. However, in the meanwhile, particularly, the threat to the law and order situation, the threat to the lives and limbs of the petitioners-operators/their management and staff, the appellants were made to yield to the unlawful demands made by the third respondent. They were pressurised to execute Ext.P18 agreement, which allegedly was not executed on free will with consensus ad idem, but on coersion and hence not liable to be acted upon. The connections have been restored, but the appellants have been taken to task and the grievance continues. It is however conceded that the payment as per Ext.P18 is still to be honoured by the appellants. 13. The learned counsel for the appellants submits that Section 14 of the TRAI Act, which confers power upon the TDSAT, does not envisage any power to consider the constitutional vires of the Regulations.
It is however conceded that the payment as per Ext.P18 is still to be honoured by the appellants. 13. The learned counsel for the appellants submits that Section 14 of the TRAI Act, which confers power upon the TDSAT, does not envisage any power to consider the constitutional vires of the Regulations. Though in the opening paragraph of the judgment passed by the learned single Judge, the prayer portion is extracted, we find that it might be a typing error, as what is extracted is the “interim relief” sought for in the writ petition. The main reliefs sought for are in the following terms: “(a) issue a writ of certiorari, such other writ, order or direction setting aside the following provisions in Ext.P6 [the Telecommunication (Broadcasting and Cable)ServicesInter Connection(Addressable systems)Regulations, 2017]: 1. the Second proviso to Regulation 12(3) 2. the proviso to Regulation 12(7) 3. Clause 11 in “Standard Interconnection Agreement” in Schedule VI. 4. the ratio of 55:45 specified in Clause 12.1 in “Standard Interconnection Agreement” in Schedule VI. (b) Declare that following provisions in Ext.P6[the Telecommunication (Broadcasting and Cable) Services Inter Connection (Addressable Systems)Regulations, 2017] are illegal, void and unconstitutional 1. the Second proviso to Regulation 12(3) 2. the proviso to Regulation 12(7) 3. Clause 11 in “Standard Interconnection Agreement” in Schedule VI. 4. the ratio of 55:45 specified in Clause 12.1 in “Standard Interconnection Agreement” in Schedule VI. AND (c) pass such other order as this Hon'ble Court shall deem just.” 14. Coming to the scope and power of the TDSAT, Section 14 of the TRAI Act reads as follows: “14.
Clause 11 in “Standard Interconnection Agreement” in Schedule VI. 4. the ratio of 55:45 specified in Clause 12.1 in “Standard Interconnection Agreement” in Schedule VI. AND (c) pass such other order as this Hon'ble Court shall deem just.” 14. Coming to the scope and power of the TDSAT, Section 14 of the TRAI Act reads as follows: “14. Establishment of Appellate Tribunal:-The Central Government shall, by notification, establish an Appellate Tribunal to be known as the Telecom Disputes Settlement and Appellate Tribunal to - (a) adjudicate any dispute- (i) between a licensor and a licensee; (ii) between two or more service providers; (iii) between a service provider and a group of consumers; Provided that nothing in this clause shall apply in respect of matters relating to - (A) the monopolistic trade practice, restrictive trade practice and unfair trade practice which are subject to the jurisdiction of the Monopolies and Restrictive Trade Practices Commission established under sub-section (1) of Section 5 of the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969).” It is pointed out that the Tribunal is bound to decide the dispute in terms of the Regulations and Tariff Order and that it cannot go beyond the same. 15. In support of the contention raised by the petitioner that the TDSAT does not have the power to adjudicate upon the constitutional validity of the regulations and that the same is maintainable only before this Court under Article 226 of the Constitution of India (and hence that the learned Single Judge was not correct in relegating the petitioner to move the TDSAT), reliance is sought to be placed on the decision in Bharat Sanchar Nigam Limited vs. Telecom Regulatory Authority of India and others [ 2014 (3) SCC 222 ]. The question considered by the Apex Court, as dealt with in paragraph 3 is as follows: “Whether in exercise of the power vested in it under Sec.14(b) of the Act, TDSAT has the jurisdiction to entertain challenge to the regulations framed by the Authority under S.36 of the Act.” 16. This has been adverted to in paragraph 101 as well, observing that the question framed by the Court was whether the TDSAT has the jurisdiction to entertain challenge to the regulations framed by the Authority (TRAI). The said question has been answered by the Apex Court in paragraphs 124 and 125 in the following lines: 124.
This has been adverted to in paragraph 101 as well, observing that the question framed by the Court was whether the TDSAT has the jurisdiction to entertain challenge to the regulations framed by the Authority (TRAI). The said question has been answered by the Apex Court in paragraphs 124 and 125 in the following lines: 124. In the result, the question framed by the Court is answered in the following terms: In exercise of the power vested in it under Section 14(b) of the Act, TDSAT does not have the jurisdiction to entertain the challenge to the regulations framed by the Authority under S.36 of the Act. 125. As a corollary, we hold that the contrary view taken by TDSAT and the Delhi High Court does not represent correct law. At the same time, we make it clear that the aggrieved person shall be free to challenge the validity of the regulations framed under S.36 of the Act by filing appropriate petition before the High Court. From the above, it is quite clear that the petitioner is justified in contending that the power to challenge the Regulations is only vested with this Court. But the pertinent aspect to be considered is whether the learned Single Judge has gone wrong in relegating the petitioner to move the TDSAT in this regard. 17. After referring to the rival contentions and the precedents cited, it has been specifically held by the learned single Judge in paragraph 7, that there cannot be any dispute that the TRAI has power to frame Regulations. It has been further held that the current Regulations are well within the power granted by the Statute and are not ultra vires by virtue of the law declared by the Apex Court in Star India Private Limited vs. Department of Industrial Policy and Promotion [2018 (14) SCALE 651 (SC)]. In the said circumstance, the learned single Judge held that the contentions raised on the basis of legislative competence therefore cannot be considered by the Court, in view of the law declared by the Apex Court.
In the said circumstance, the learned single Judge held that the contentions raised on the basis of legislative competence therefore cannot be considered by the Court, in view of the law declared by the Apex Court. In the next paragraph, the learned single Judge held that in view of the law declared by the Apex court referring to all the relevant provisions in the Statute, the TRAI had power to frame Regulations not only in respect of the means of transmission or the carriage aspect of broadcasting, but also with respect to all the aspects of the industry, since the TRAI was the Industry regulator. 18. The learned Judge made specific reference to paragraphs 30 and 37 of the verdict passed by the Apex Court in Star India Private Limited vs. Department of Industrial Policy and Promotion [2018 (14) SCALE 651 (SC)], which are extracted below, for convenience of reference: “30. We are of the view that the provisions of the TRAI Act have to be viewed in the light of protection of the interests of both service providers and consumers. This being so, it is clear that no constricted meaning can be given to the provisions of this Act. It is important to remember that Under Section 11(1)(a) (iv), one of the functions of the Authority, though recommendatory, is to facilitate competition and promote efficiency in the operation of telecommunication services (which includes broadcasting services) so as to facilitate growth in such services. What is also clear from Section 11(1) (b), is that terms and conditions of interconnectivity between different service providers have to be fixed, which necessarily includes terms that relate not only to carriage simpliciter as submitted by Dr. Singhvi, but to all terms and conditions of interconnectivity between broadcaster, MSO, Cable TV operator and the ultimate consumer, so as to ensure that the object of the Act is carried out, namely, that both broadcasters and consumers get a fair deal. Towards this end, Section 11(2) makes it clear that the Authority may, from time to time, notify the rates at which telecommunication services, including broadcasting services, within India and outside India, shall be provided under this Act. Dr.
Towards this end, Section 11(2) makes it clear that the Authority may, from time to time, notify the rates at which telecommunication services, including broadcasting services, within India and outside India, shall be provided under this Act. Dr. Singhvi argued that the literal language of this Sub-section, which would undoubtedly bring in rates laid down in the Tariff Order, would have to be constricted by the language of the last part of the provision, viz., "including the rates at which messages shall be transmitted to any country outside India". We are afraid that this is against basic canons of construction, as the expression "including" would only refer to a part of what precedes the expression and cannot therefore constrict the part that has gone before. The plain literal language of Section 11(2) makes it clear that rates at which broadcasting services are offered within and outside India can be fixed by TRAI. It is clear therefore that when rates are fixed after several rounds of consultations between various service providers and consumers, looking to the interest of each, it is impossible to say that any broadcaster's rights have been impinged upon. Shri Dwivedi is absolutely right in saying that at no stage is content of a TV channel sought to be regulated, and that pricing relating to TV channels laid down in the Regulation and Tariff Order is a balancing act between the rights of broadcasters and the interests of consumers, which we may hasten to add has not been impugned on the ground that any right or fundamental right is violated, but only on the ground that the Regulation as well as the Tariff Order are outside the "jurisdiction" of TRAI. Dr. Singhvi's argument on this score must therefore fail. xx xx xx xx 37. It can thus be seen that both the Regulation as well as the Tariff Order have been the subject matter of extensive discussions between TRAI, all stake holders and consumers, pursuant to which most of the suggestions given by the broadcasters themselves have been accepted and incorporated into the Regulation and the Tariff Order. The Explanatory Memorandum shows that the focus of the Authority has always been the provision of a level playing field to both broadcaster and subscriber.
The Explanatory Memorandum shows that the focus of the Authority has always been the provision of a level playing field to both broadcaster and subscriber. For example, when high discounts are offered for bouquets that are offered by the broadcasters, the effect is that subscribers are forced to take bouquets only, as the a-la-carte rates of the pay channels that are found in these bouquets are much higher. This results in perverse pricing of bouquets vis-a-vis individual pay channels. In the process, the public ends up paying for unwanted channels, thereby blocking newer and better TV channels and restricting subscribers' choice. It is for this reason that discounts are capped. While doing so, however, full flexibility has been given to broadcasters to declare the prices of their pay channels on an a-la-carte basis. The Authority has shown that it does not encroach upon the freedom of broadcasters to arrange their business as they choose. Also, when such discounts are limited, a subscriber can then be free to choose a-la-carte channels of his choice. Thus, the flexibility of formation of a bouquet, i.e., the choice of channels to be included in the bouquet together with the content of such channels, is not touched by the Authority. It is only efforts aimed at thwarting competition and reducing a-la-carte choice that are, therefore, being interfered with. Equally, when a ceiling of INR 19 on the maximum retail price of pay channels which can be provided as a part of a bouquet is fixed by the Authority, the Authority's focus is to be fair to both the subscribers as well as the broadcasters. INR 19 is an improvement over the erstwhile ceiling of INR 15.12 fixed by the earlier Regulation which nobody has challenged. To maintain the balance between the subscribers' interests and broadcasters' interests, again the Authority makes it clear that broadcasters have complete freedom to price channels which do not form part of any bouquet and are offered only on an a-la-carte basis. As market regulator, the Authority states that the impugned Regulation and Tariff Order are not written in stone but will be reviewed keeping a watch on the developments in the market.
As market regulator, the Authority states that the impugned Regulation and Tariff Order are not written in stone but will be reviewed keeping a watch on the developments in the market. We are, therefore, clearly of the view that the Regulation and the Tariff Order have been made keeping the interests of the stakeholders and the consumers in mind and are intra vires the Regulation power contained in Section 36 of the TRAI Act. Consequently, we agree with the conclusion of the learned Chief Justice and the third learned Judge of the Madras High Court that these writ petitions deserve to be dismissed.” 19. Paragraph 37 of the verdict rendered by the Apex Court specifically refers to the Regulations as well as the Tariff Order. Extensive discussions have been made with regard to the TRAI, the stakeholders and consumers. In paragraph 9, the learned single Judge has observed that fixation of ceiling prices of pay channels by the TRAI as the Market Regulator had been considered in extenso by the Apex Court and it was held that it was well within the power of the TRAI, as provided under Section 36 of the TRAI Act. It was thereafter, that the plea with reference to the loss of bargainig power to the LCOs, by virtue of the 'default clause/fall back clause', giving advantage to the MSOs was adverted to in paragraph 10 and 11; at the same time reiterating in paragraph 11 that the Apex Court in Star India Private Limited vs. Department of Industrial Policy and Promotion [2018 (14) SCALE 651 (SC)] had specifically held that the TRAI had to exercise jurisdiction not only to fix tariff but also to lay down the terms and conditions for providing services and fix norms and the mode and manner in which the consumer would get services. The function discharged by the TRAI(who is the market regulator), issuing Regulations and Tariff Orders, keeping the interest of the stakeholders and consumers in mind, invoking the power under Section 36 of the TRAI Act was adverted to and it was observed that the Regulations issued were quite intra vires.
The function discharged by the TRAI(who is the market regulator), issuing Regulations and Tariff Orders, keeping the interest of the stakeholders and consumers in mind, invoking the power under Section 36 of the TRAI Act was adverted to and it was observed that the Regulations issued were quite intra vires. It was observed by the learned single Judge in paragraph 12, that the essential grievance of the petitioner appeared to be that the MSOs could refuse to enter into a proper negotiation and that in the absence of an agreement between the parties as to revenue sharing, the default ratio would become applicable. It was accordingly held that, in case any individual dispute arose with regard to the refusal of the MSO to hold negotiations or enter into a revenue sharing agreement, only to defeat the rights of the LCO and to make the default revenue sharing ratio applicable, the same would constitute a dispute between the two service providers, which could be considered by the TDSAT in terms of Section 14 of the TRAI Act, 1997. 20. From the above, it is quite clear that the right reserved to the appellant to approach the TDSAT, was not to challenge the vires of the Regulations or the Tariff order, but to raise a challenge against the unlawful designs or callous inaction, if any, on the part of the MSOs in not responding to the call of the LCOs to negotiate and arrive at a mutual settlement/agreement. Since a clear finding was rendered that the challenge as to the vires of Ext.P6 Regulations was not correct or sustainable in view of the law declared by the Apex Court in Star India's case (cited supra), the course pursued by the learned Single Judge cannot be branded as defective in any manner. Then, the question is whether the finding that the issue is covered by the verdict of the Apex Court in Star India's case (cited supra) is correct or not. 21. As put forth by the learned Central Government Counsel appearing for the respondents 1 and 2 and the learned Sr. Counsel appearing for the third respondent/MSO, the channels were being offered as a bouquet earlier, without any regard to the need or desire of the customer, who was paying for channels in which he was having absolutely no interest at all.
Counsel appearing for the third respondent/MSO, the channels were being offered as a bouquet earlier, without any regard to the need or desire of the customer, who was paying for channels in which he was having absolutely no interest at all. By virtue of the change in the concept, starting to treat consumer as the King, the first and second respondents intervened, finding it necessary to provide a level playing field for all the stake holders and to protect minimum returns to the LCOs. 22. On payment of the network fee of Rs.153.40(including GST), a minimum of 100 channels will have to be provided, among which 26 channels of Dooradarshan are definitely to be there. The channels can be opted by the customer and all these 100 channels are 'Free to Air' Channels. Once the above 100 channels are chosen, additional charges have to be paid in respect of the 'Pay Channels' as per the requirement and the stipulations in this regard. All the signals come to the Set Top box in an encrypted form. By virtue of the software provided in the Set Top box, option of the subscriber is identified and entry is provided to the opted channels. 23. It is pointed out that the question of pricing was a subject matter of consideration before the Apex Court in Star India's case. It is true that the case filed before the Supreme Court was by the Broadcaster against an MSO and not between an MSO and LCO. But the power and authority with regard to fixation of Tariff was also a subject matter of consideration and it was in this context as well, that the relevant provisions in the very same Regulations (Ext.P6 Regulations) were considered and discussed by the Apex court, finally declaring the law. This being the position, this Court finds that the power of the TRAI to frame Regulations and to fix the Tariff, being the market Regulator, was asserted by the Apex Court. The TRAI was also conscious to see that, if at all there was any dispute between the Broadcaster and MSOs (as in the case of MSO and LCO), the ultimate sufferer will be the end customer i.e. the general public, if the dispute went on indefinitely and the signals got interrupted.
The TRAI was also conscious to see that, if at all there was any dispute between the Broadcaster and MSOs (as in the case of MSO and LCO), the ultimate sufferer will be the end customer i.e. the general public, if the dispute went on indefinitely and the signals got interrupted. It was in the said context, that the concept of 'Standard Interconnection Agreement' was introduced, with a default revenue sharing ratio clause; at the same time, highlighting the liberty of the parties to enter into a free contract as to the revenue sharing basis. 24. The contention of the appellants that, by virtue of the introduction of the disputed clauses/provisos, the bargaining power of the LCOs is lost, if the MSOs show least interest in executing an MIA and indirectly wants to give life to the 'fall back clause/default clause' (bringing in the SIA), may appear to be attractive at the first sight. This, however, is a matter which could be considered by the Tribunal (TDSAT) in exercise of the power conferred under Section 14 of the Act. The revenue sharing ratio in the case of a particular LCO need not be the same as in the case of others and variation may be necessary, depending upon the various facts and circumstances. The operational cost and profit to be generated in the case of an LCO having 1000 connections may not be the same as in the case of another LCO having 5000 connections. As such, the rate of revenue sharing to be agreed upon between the MSO and LCO may vary. It is stated that the proceedings were finalised by the TRAI after issuing draft Regulations inviting objections, hearing the various stake holders and it was thereafter, that Ext.P6 Regulations/Tariff were finalised. The TRAI being the regulator of the market and an expert body, fixation of the ratio as given in the default clause cannot be subjected to scrutiny by this Court, as the Court cannot be expected to have any expertise in this field, nor is equipped with the data to have had such an analysis. In the said circumstance, we find it difficult to entertain the challenge raised by the appellants. 25.
In the said circumstance, we find it difficult to entertain the challenge raised by the appellants. 25. On going through the verdict passed by the learned single Judge, it is seen that the petitioner was relegated to move the TDSAT, not for challenging the Regulations framed by the Authority, the validity of which was noted as intra vires in view of the declaration of law by the Apex Court in Star India Private Limited vs. Department of Industrial Policy and Promotion [2018 (14) SCALE 651 (SC)]. The purpose of relegation was only with regard to the alleged unconscionable bargain/rationale in fixation of the revenue sharing ratio and also as to the alleged lack of earnest step on the part of the MSOs to negotiate and to arrive at an agreement in terms of the MIA, virtually falling back upon the SIA (providing for ratio of 55:45) by virtue of the default clause. 26. The crucial question to be considered is whether there is any pith or substance in the contentions raised by the appellants that the TRAI does not have any power to fix the rates of revenue sharing between different service providers. According to the petitioners, no such power is conferred under the Statute and this aspect has not been dealt with by the Apex Court in Star India Private Limited vs. Department of Industrial Policy and Promotion [2018 (14) SCALE 651 (SC)] and hence it cannot be said that the issue is covered by the verdict passed by the Apex Court in Star India Private Limited vs. Department of Industrial Policy and Promotion [2018 (14) SCALE 651 (SC)]. 27. Sec.11(1)(b)(ii)& (iv) of the TRAI Act reads as follows: “11. Functions of Authority: (1) Notwithstanding anything contained in the Indian Telegraph Act, 1885 (13 of 1885), the functions of the Authority shall be to: (a) xx xx xx (b) discharge the following functions, namely xx xx xx (ii) notwithstanding anything contained in the terms and conditions of the licence granted before the commencement of the Telecom Regulatory Authority of India (Amendment) Act, 2000, fix the terms and conditions of inter-connectivity between the service providers: xx xx xx (iv) regulate arrangement amongst service providers of sharing their revenue derived from providing telecommunication services.” The term “Service provider” defined under Section 2(j) of the Act, is extracted below: “(j) “Service provider” means the Government as a service provider.
Section 2(j) though states that it means the Government, it is qualified by the following words “the Government as a service provider” and that it includes a licensee. The term “Licensee” is defined under Section 2(1)(e) of the TRAI Act, which says that “Licensee” means any person licensed under sub-section (1) of Section 4 of the Indian Telegraph Act, 1885 (13 of 1885) for providing specified public telecommunication services. Regulation No.2(kk) [2017 Regulations-The Telecommunication (Broadcasting and Cable) Services Inter Connection(Addressable Systems)Regulations, 2017] defines the term “service provider” in a wider sense. As it stands so, it is very much evident that the power to fix the rate, providing a proper revenue sharing is also conferred upon the TRAI, it being a Regulatory Authority and as such, the contention raised by the petitioners does not hold any water at all. 28. The question is whether this issue, as to the power of TRAI to fix the rate of revenue sharing, was also a subject matter of consideration before the Apex Court while rendering the verdict in Star India Private Limited vs. Department of Industrial Policy and Promotion [2018 (14) SCALE 651 (SC)]. The contention of the appellant is that it was not so. The provisions under challenge and the grounds of challenge are seen extracted in 'paragraph 19' of the said verdict. We find it appropriate to extract the said paragraph along with the table given therein for convenience of reference: 19. In the judgment of Sundar, J., in the Division Bench of the Madras High Court, a useful table is set out which not only states the provisions that have been challenged, but the specific ground on which they have been challenged. We, therefore, reproduce this table in our judgment: Provisions of the Interconnection Regulation which Regulate content Sl. No. Provision Ground 1. 6(1) All channels (pay channels and free-to-air channels) to be offered on a-la-carte basis. Impinges upon broadcaster's ability to package a TV channel. No such restriction on broadcaster under Copyright Act. 2. Second proviso to 6(1) -Bouquet of pay channels shall not have free-to-air channels. -HD and SD variant of same channel cannot be in same bouquet. Impinges upon broadcaster's ability to package a TV channel. No such restriction on broadcaster under Copyright Act. 3. Proviso to 7(2)-Bundling of third party channels prohibited. Impinges upon broadcaster's ability to package a TV channel.
Second proviso to 6(1) -Bouquet of pay channels shall not have free-to-air channels. -HD and SD variant of same channel cannot be in same bouquet. Impinges upon broadcaster's ability to package a TV channel. No such restriction on broadcaster under Copyright Act. 3. Proviso to 7(2)-Bundling of third party channels prohibited. Impinges upon broadcaster's ability to package a TV channel. No such restriction on broadcaster under Copyright Act. 4. 7(4)-Broadcaster can offer discounts to distributor not exceeding 15% of MRP. Directly regulates the pricing of a TV channel, thereby also regulating pricing of individual programmes. 5. First proviso to 7(4)-Sum of discount under 7(4) and distribution fee under 7(3) shall not exceed 35% of MRP. Directly regulates the pricing of a TV channel, thereby also regulating pricing of individual programmes. 6. 10(3) r/w 6(1)-Mandatory to enter into agreement with DPO on an a-la-carte basis for pay channels. Impinges upon broadcaster's freedom to offer pay channels only as a part of bouquet and not as a-la-carte. No such restriction on broadcaster under Copyright Act. 7. 11(2)-Deemed extension of geographical territory. Directly impinges the broadcaster's right under 19(2) to designate the geographical territory of exploitation. Provisions of Tariff Order which regulate content Sl. No. Provision Ground 1. 3(1)-All channels to be offered on a-la-carte basis Impinges upon broadcaster's ability to package a TV channel. No such restriction on broadcaster under Copyright Act. 2. 3(2)(b)-Declaration of MRP of a-la-carte channel Impinges upon broadcaster's freedom to offer pay channels only as a part of bouquet and not as a-la-carte. No such restriction on broadcaster under Copyright Act. 3. Second proviso to 3(2) (b)-MRP of all pay channels to be uniform across distribution platforms. Under Section 33A read with Rule 56 of the Copyright Rules, 2013, broadcaster has the right to decide separate MRP for different category of audience. 4. First proviso to 3(3)-Bundling of third party channels prohibited. Impinges upon broadcaster's ability to package a TV channel. For example, third party channels cannot be part of the same bouquet. No such restriction on broadcaster under Copyright Act. 5. Second proviso to 3(3)-MRP of pay channel in bouquet not to exceed INR 19/- Directly regulates the pricing of a TV channel, thereby also regulating pricing of individual programmes. 6. Third proviso to 3(3)-Bouquet price shall not be less than 85% of the sum of a-la-carte prices of individual channels in the bouquet.
5. Second proviso to 3(3)-MRP of pay channel in bouquet not to exceed INR 19/- Directly regulates the pricing of a TV channel, thereby also regulating pricing of individual programmes. 6. Third proviso to 3(3)-Bouquet price shall not be less than 85% of the sum of a-la-carte prices of individual channels in the bouquet. Directly regulates the pricing of a TV channel, thereby also regulating pricing of individual programmes. 7. Fourth proviso to 3(3)-MRP of all bouquets to be uniform across distribution platforms. Under Rule 56 of the Copyright Rules, 2013, broadcaster has the right to decide separate MRP for different category of audience. 8. Fifth proviso to 3(3)-Bouquet of pay channels shall not have free-to-air channels. Impinges upon broadcaster's ability to package a TV channel. No such restriction on broadcaster under Copyright Act. 9. Sixth proviso to 3(3)-HD and SD variant of same channel cannot be in same bouquet. Impinges upon broadcaster's ability to package a TV channel. No such restriction on broadcaster under Copyright Act. 10. 3(4)-Restriction on promotion of bouquets, restriction on time, restriction on frequency. All these restrictions impinge broadcaster's ability to commercially monetize his content. 11. 4(2)-Distributor to offer all channels on a-la-carte basis. Indirectly impinges upon the broadcaster's right to offer his channels to the customers only as a bouquet and not as a-la-carte. 29. Referring to Section 11(b)of the TRAI Act, the contentions raised before the Apex Court were appreciated and a specific finding was rendered (which virtually stands against the case now projected by the appellants)as discernible from paragraph 30 of the judgment(already extracted above). The observation made by the Apex Court, explaining the pivotal role played by the TRAI as the market regulator, is discernible from paragraph 37 of the judgment in Star India's case (cited supra). The Apex Court has observed that, as revealed from the Explanatory Memorandum, the focus of the TRAI has always been to provide a level playing field to both the Broadcaster and Subscriber and it emphasises the reason for capping the discounts. As noted above, the Apex Court has considered the validity of the 2017 Regulations, though in respect of the dispute between the Broadcaster and the Distributor; whereas in the instant case, it is between the Distributor/MSO and the LCOs.
As noted above, the Apex Court has considered the validity of the 2017 Regulations, though in respect of the dispute between the Broadcaster and the Distributor; whereas in the instant case, it is between the Distributor/MSO and the LCOs. It is also evident that the power to fix the rates including as to the 'revenue sharing' (between the parties before the Apex Court), with reference to the provisions in the Regulations, was also a subject matter of consideration before the Apex Court, where the provisions in the relevant Tariff Order have also been adverted to. By virtue of the ruling rendered by the Apex Court, the power and authority of the TRAI in this regard stands affirmed, which cannot be re examined by this Court. As it stands so, this Court holds that the challenge raised by the appellants to the power of the TRAI to fix the ratio on revenue sharing and the challenge raised against the relevant provisions of the Regulations and on such other aspects are not liable to be entertained in these appeals. This Court however holds that, this will not bar the way of the aggrieved parties in challenging the rationality of the extent of revenue sharing and the alleged lapses/default, if any, on the part of the MSOs in refusing to negotiate on the MIA and also as to the alleged attempt to fall back conveniently on the default agreement (SIA) to have ensured minimum 55% of the revenue generated, to be appropriated by the MSOs, leaving only 45% to the LCOs. 30. From the above discussion, this Court does not require any second thought to hold that the question mooted by the appellants with reference to the constitutional validity of the Regulations or as to the sustainability, correctness or otherwise of the 'default revenue sharing ratio' is not liable to be entertained by this Court, in view of the verdict passed by the Apex Court in Star India Private Limited vs. Department of Industrial Policy and Promotion [2018 (14) SCALE 651 (SC)], which completely governs the field. The verdict passed by the learned single Judge is perfectly within the four walls of law and is not assailable under any circumstances. The appeals fail and they are dismissed accordingly.