TRAI Regulations compensating consumer for call dropping, upheld #indianlaws

Delhi High Court has held that the TRAI under the scheme of Act exercises both regulatory and regulation making powers. The Court stated that the regulation of TRAI which prescribes the liability of the Companies to compensate the consumers is limited only to originating calls with a cap of three calls per day per consumer and nominal compensation of one rupee for each call drop and therefore the impugned regulation cannot be struck down on the ground of being manifestly arbitrary.

Present petition challenged the validity of the Telecom Consumer Protection (Ninth Amendment) Regulations, 2015 notified on 16.10.2015 by the Telecom Regulatory Authority of India (‘TRAI’) whereby every originating service provider providing cellular mobile telephone service has been made liable to credit the calling consumer i.e. a consumer who initiates a voice call, by one rupee for each call drop within its network for a maximum of three call drops per day. Further the service provider would also provide the details of the amount credited to the calling consumer within 4 hours of the occurrence of call drop through SMS/USSD message. In case of post paid consumers such details of amount credited in the account of calling consumer would be provided in the next bill.

The amendment was opposed on various grounds like (i) Act not empowering TRAI to impose compensation to consumers; (ii) effect of the impugned regulations would be extraction of a tax/cess/penalty which has no legislative sanction and thus violative of Article 265 of the Constitution of India; (iii) Since Quality of Service Regulations permits 2% of call drops, no element of fault can be attributed to the service providers upto the benchmark of 2%’ (iv) The impugned regulations are patent non-application of mind and consideration of irrelevant material and thus unreasonable, arbitrary and violative of Article 14; (v) Contravenes preamble to the Act which requires the regulator/TRAI to protect the interests of service providers; (vi) impugned regulations inconsistent with the existing Quality of Service Regulations and thus not sustainable under law; (vii) by enforcing the impugned regulations, TRAI cannot make the service providers liable for payment of compensation within the exempted limit of 2% benchmark specified in Quality of Service Regulations; (viii) There being several extraneous factors such as closing down and sealing of sites, spectrum related issues and deployment of additional network capacity by way of augmenting spectrum resources beyond the control of the service providers, they cannot be made liable for every call drop ignoring the fact that Quality of Service Regulations have recognised that 100% coverage is not possible; (ix) Issues relating to interference and unauthorised radios/jammers yet to be resolved by TRAI or Department of Telecom; (x) TRAI after already having amended the Quality of Service Regulations prescribing harsher penalties for failure to adhere to the benchmarks, the impugned regulations providing for compensation to consumers on the very same ground of call drops unwarranted; and other grounds on similar touchstone.

The Court observed that the impugned regulations are in the nature of the subordinate legislation and there is a presumption in favour of constitutionality or validity of a subordinate legislation and the burden is upon him who attacks it to show that it is invalid. However, a piece of subordinate legislation does not carry the same degree of immunity which is enjoyed by a statute passed by a competent Legislature. Subordinate legislation may be questioned on any of the grounds on which plenary legislation is questioned. In addition it may also be questioned on the ground that it does not conform to the statute under which it is made or that it is contrary to some other statute.

As was held in State of T.N. v. P.Krishnamurthy & Ors.(2006) 4 SCC 517, subordinate legislation can be questioned on following parameters:

(a) Lack of legislative competence to make the sub-ordinate legislation.

(b) Violation of Fundamental Rights guaranteed under the Constitution of India.

(d) Failure to conform to the Statute under which it is made or exceeding the limits of authority conferred by the enabling Act.

(e) Repugnancy to the laws of the land, that is, any enactment.

(f) Manifest Arbitrariness/unreasonableness (to an extent where the Court might well say that the legislature never intended to give authority to make such rules).

TRAI under the scheme of Act exercises both regulatory and regulation making powers. The power to regulate and the power to make regulations possessed by the regulator under a statute co-exist and that the regulation making power is in no way limited by the administrative powers.

The impugned regulations were made to ensure quality of services extended to the consumers by the service providers and accordingly they were well within the scope of the regulation making power conferred on TRAI.

The contentions of Petitioners were declined that the obligation to compensate the consumers is relatable to fixation of tariff provided under sub-section (2) of Section 11 of the Act and therefore the same cannot be imposed by way of regulations. The impugned regulations were held to be well within the domain of TRAI under Section 36 of the Act, and hence the contention that the compensation so levied was relatable to tariff, was held to be irrelevant for the purpose of deciding the validity of the impugned regulations. Further, the contention that the compensation provided under the impugned regulations amounts to imposition of penalty was also held to be as liable to be rejected since what is provided under the impugned regulations is only notional compensation to consumers who have suffered as a result of call drop.

The impugned regulations accordingly were held to be well within the scope of the regulation making power on TRAI.

The Court further observed that though delegated legislation can also be challenged as being unreasonable, the unreasonableness is not to be judged on the same standard as unreasonableness of administrative action. The delegated legislation can be struck down unreasonable only if it is manifestly arbitrary or if so unreasonable that Parliament never intended to confer such power on the Regulator. The delegated legislation cannot be challenged on the ground that it does not take into account all relevant factors or that it takes into account irrelevant factors, the only exception being that the delegated legislation must take into account such vital factors that are expressly or impliedly prescribed by the statute.

TRAI had followed transparent and consultative process while making the impugned regulations. It was well clarified that the impugned regulations would apply only to calls which are dropped due to the problem of the originating network and not for the call drops occurring in the network of terminating service provider. It was also held as relevant to note that the impugned regulations does not penalise every call drop but the compensation is limited only to three call drops a day per consumer. Therefore, the contention that 100% performance is demanded under the impugned regulations was held to be factually incorrect.

Even the relevant Technical Paper laid down that due to technological advancement, the issue of call drop can now be addressed by the service providers by adopting various other means for which appropriate steps are required to be taken by the service providers themselves. It was further clarified that TRAI would keep a close watch on the implementation of the impugned regulations and may review the same after six months. Therefore, the impugned regulations cannot be said as suffering from manifest arbitrariness or unreasonableness.

The Court finally concluded that in view of the fact that the liability to compensate the consumers under the impugned regulations is limited only to originating calls with a cap of three calls per day per consumer and nominal compensation of one rupee for each call drop has been prescribed, the impugned regulations cannot be struck down on the ground of they being manifestly arbitrary. The validity of the impugned regulations was accordingly upheld.

[Cellular Operators Association of India and Ors. Vs. TRAI & Ors.]

(Delhi HC, 29.02.2016) – WP(C) No.11596/2015