Kerala HC dismisses AIDCF’s petition against TRAI’s NTO 3.0

The Kerala High Court on Tuesday dismissed the plea filed by All Indian Digital Cable Federation (AIDCF) challenging the Telecom Regulatory Authority of India’s (TRAI) new Tariff Order, under which broadcasters had increased channel prices for cable TV operators for inclusion in bouquet from INR 12 to INR 19 per channel.

AIDCF, which is an apex body with several multi system operators (MSOs), that provide cable services to consumers, had moved an application seeking urgent hearing following the issuance of disconnection notices by the Indian Broadcasting and Digital Foundation (IBF) on failure to sign new interconnection agreements with revised prices.

The Single Judge Bench of Justice Shaji P. Chaly found that AIDCF had failed to establish any illegality, arbitrariness, unbridled exercise of power, mala fides or any other legal infirmities with respect to the New Tariff Order and the 2022 Regulations of TRAI that justified the interference of the Court. It also noted that the impugned Regulations were issued by TRAI for protecting public interest and regulating and controlling the telecommunication services for public good.

The Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems) (Fourth Amendment) Regulations, 2022 (the ‘lnterconnect Amendment Regulations, 2022’), and the Telecommunication (Broadcasting and Cable) Services (Eighth) (Addressable Systems) Tariff (Third Amendment) Order (the ‘Tariff Amendment Order, 2022) were the Tariff Orders that were challenged by the AIDCF. It was challenged on the ground of being ultra vires the provisions of the TRAI Act, 1997, and violative of Articles 14 and 19 (1)(g) of the Constitution of India.

It was pointed out by the petitioners that under the 2017 regulatory framework of TRAI, broadcasters were allowed to fix MRP of a pay channel for consumers. Under the Regulations, every broadcaster was required to declare the uniform MRP of its pay channels on a-la-carte basis. Every broadcaster was required to enter into written interconnection agreements on the basis of the Reference Interconnection Offer (RIO) published by it for providing signals of pay channels to a distributor of television channels. Subsequently, two consultation papers were issued with the “purported objective of overhauling the system once again”.

Thereafter, the 2020 Regulations and Tariff Order were issued, pursuant to which TRAI stated that channels priced more than INR 12/- shall not be allowed to be included in a bouquet channel. When this was challenged before the Bombay High Court, the Court upheld the order, but struck down the 15% ceiling imposed on the discount rate to broadcasters as arbitrary. Although the matter was appealed before the Supreme Court, it was later withdrawn, and the 2020 Regulations were not implemented due to the pending litigation.

On December 23, 2021, a meeting of the broadcasters and representatives of AIDCF was convened by TRAI. It is the case of the petitioner that the minutes of the said meeting had incorrectly recorded that all stakeholders had agreed that the a-la-carte price ceiling needed to be addressed. It was averred by the petitioners that it was thereafter that the impugned 2022 Regulations and Tariff Order were issued.

The petitioners argued that the increase in the maximum cap of bouquet channels to INR 19/- was disadvantageous to the distributors. “The broadcasters have priced in such a way that consumers prefer to opt for a bouquet instead of opting for a high priced popular channel on a a-la-carte basis, thereby rendering a-la-carte choice of consumer meaningless,” the petitioners averred.

It was submitted that 2022 Regulations and the Tariff Order had led to artificially high and perverse pricing of driver channels; that deep discount on bouquet renders a-la-carte nullified; and that when the above two mischiefs were combined, it meant that the consumer choice was nullified in a situation where the cost of the bouquet would be less than the cost of driver channels in a bouquet. It was also averred that there was a clear lack of transparency on the part of the TRAI in issuing the 2022 Regulations.

Arguments Of Respondents
It was argued by the counsels for the respondents that the petitioners had no locus standi to challenge the impugned Regulations and the Tariff Order since they were not affected parties. On behalf of TRAI, it was argued that the impugned Regulations were only applicable to the broadcasters, distributors of television channels and level cable operators, and the petitioners would not fall within its ambit. It was pointed out that TRAI is vested with the powers under Section 11 of the Act, 1997 to make recommendations while setting out the regulatory functions and the Act provides for tariff fixation function. It was also submitted that Section 36 of the Act, 1997 confers powers on TRAI to make regulations.

It was thus argued that the Regulations and Tariff Order 2022 were thus issued in order to protect the interest of the service providers and consumers of the telecom sector, which includes the broadcasting sector and cable sector, and to promote and ensure orderly growth of the telecom sector.

It was averred that the entire consultation process commenced at the behest of the petitioner and few other stakeholders, and a consensus on various points was arrived at during the meeting on December 23, 2021, including restoring the MRP ceiling for bouquet inclusion to unamended tariff order level of Rs.19/-.

It was argued that an open, exhaustive and transparent consultation process was also undertaken by the TRAI prior to making the Regulations, 2022. It was further contended that the price fixation by TRAI on the MRP of pay channels was the function of the regulator and the court could not deliberate on the correctness of it. It was pointed out that the petitioners were only intermediaries and had no say in the pricing of channels and that the amendments had already come into force with effect from February 1, 2023, and all the distributors had already signed the revised agreements, thereby making the claim of the petitioners are belated.

Additionally, it was argued that the petitioners resorting to forum shopping by filing multiple petitions in the High Courts of Punjab and Haryana, Telangana, and Karnataka, apart from the instant court, with no relief having been granted to them from any of the aforementioned jurisdictional courts.

Findings of the Court
The Court perused Sections 36 and 37 of the TRAI Act, 1997, and ascertained that the said provisions provided for a clear cut procedure for making the Regulations and validating the same. The Court found that the petitioners had no case that the procedure contemplated under the statute had not been followed by TRAI in issuing the Regulations.

The Court also noted that under Section 11 of the Act, the powers and functions of the authority are clearly delineated by the Parliament and the authority is vested with the power to make the Regulations and publish Tariff Orders in order to regulate, control and transmit telecommunication network

The Court observed that it was while the 2017 Regulations and the Tariff Order were in force, that the 2020 Regulations were introduced with a maximum price cap of Rs.12 for the driver channel and discount rates for bouquet, but the same was never put into force, and the 2017 Regulations and Tariff Order were still in force. It was at that point that on the basis of the representation made by various stakeholders, the authority convened a meeting of the stakeholders, including the petitioners, and held discussions with all the stakeholders by constituting a committee. “The Committee submitted a report and it was on the basis of the same and after arriving at a consensus between all the stakeholders that the 2022 Regulations and the Tariff Order were brought into force by TRAI,” the Court found.

The Court also observed that each aspect had been discussed and deliberated upon, with the stakeholders. At this juncture, it noted that as the Regulations were a legislation empowered under the Act 1997, what had to be looked into by the Court was only whether there was any arbitrariness or illegality or malafides on the part of the authority in making the Regulations.

“When there was effective discussions among the stakeholders and the power was exercised by the authority in terms of the powers conferred under Section 11 r/w Sections 36 and 37 of the Act, 1997, it cannot be said that there was arbitrariness or illegality or any other legal infirmities on the part of the authority in introducing the 2022 Regulations and the Tariff Order,” the Court observed.
The Court thus held that there could not be said to be any violation of fundamental rights of the petitioners in the present case.

“Moreover, the petitioners are, in no way, affected by the pricing of the driver channel and the fixation of the bouquet price by the authority, because it is for the end users to pay the charges so fixed by the authority. The broadcasters as well as the other intermediaries are entitled to get their due share fixed by the authority concerned, and therefore, it can never be said that the petitioners are aggrieved by the 2022 Regulations and the Tariff Order. I am also of the opinion that the petitioners are even estopped from raising a challenge on the pricing, because it was existing from the year 2017 and continuously thereafter for multiple reasons specified above, without any objection from any of the stakeholders, much less the petitioners. Above all, it is significant to note that none of the end users have challenged the amendments 2022. The Regulations and the Tariff Orders are made by the authority for the purpose of protecting the public interest and regulating and controlling the telecommunication services for public good,” the Court held.
The Court further observed that there was a clear check and balance on TRAI as provided under Section 37 of the Act, 1997, by which every Regulations made under the Act, 1997 is to be laid before each house of Parliament and the Parliament is vested with the powers to modify the Regulations if required. In such a case, the Court opined that it could “only be legally presumed that the Parliament has also evaluated the pros and cons of the Regulations before publishing it for effective implementation of the regulations”.

Finding that the Regulations were issued in public interest, and that the authority was empowered to issue the same, the Court was of the firm view that it need not delve into the reasons for the legislations, as it was not within its domain of expertise. It was also of the view that TRAI had followed the transparency required under law substantially and effectively by holding discussion with the stakeholders after serving consultation papers with sufficient material on its agenda.

“Therefore I am of the view that the petitioners have failed to establish any illegality, arbitrariness, unbridled exercise of power, mala fides or any other legal infirmities of similar nature in the 2022 Regulations and the Tariff Order so as to interfere with the same, exercising the power conferred under Article 226 of the Constitution of India,” the Court held while dismissing the petition. LiveLaw