2016 Supreme(SC) 369

SUPREME COURT OF INDIA
Kurian Joseph, R.F. Nariman, JJ.
Cellular Operators Association of India and Others – Appellants
Versus
Telecom Regulatory Authority of India and Others – Respondents
Civil Appeal No. 5017 of 2016 (Arising out of S.L.P. (Civil) No. 6521 of 2016) With Civil Appeal No. 5018 of 2016 (Arising out of S.L.P. (Civil) No. 6522 of 2016)
Decided On : 11-05-2016

IMPORTANT POINTS
Telecom Consumers Protection Regulations, 2015 (Ninth Amendment) is manifestly arbitrary and unreasonable; hence unconstitutional.
Validity of the subordinate legislation has to be tested on the nature, object and scheme of the enabling Act, as also the area over which power has been delegated.
Impugned Regulation attempting to protect the interest of the consumer of the telecom sector at the cost of the interest of a service provider in violation of the objects of the Act is ultra vires the Act.
Impugned Regulation cannot be read down.
Impugned regulation being unreasonable and hence invalid cannot be saved by its being administered in a reasonable manner.
Impugned regulation held ultra vires Article 14 and 19(1) of the Constitution.
Regulation cannot be held valid for service providers making profit and invalid for those making loss.
Laying down a strict penal liability on erroneous basis that fault is entirely with the service provider and payment of such penalty to a consumer who may himself be at fault, is manifestly arbitrary and unreasonable and at odds with both Articles 14 and 19(1)(g) of the Constitution.
Lack of intelligent care and deliberation in framing the regulation affects its validity.
Impugned Regulation providing legislatively pre determined penalty manifestly is arbitrary and unreasonable.
Parliament exhorted to frame a legislation on the issue of call drop along the lines of the U.S. Administrative Procedure Act.

Headnote:(a) Administration of justice – Judicial review of subordinate legislation – Parameters – Stated in (2006) 4 SCC 517 – Validity of a subordinate legislation – Courts to consider the nature, object and scheme of the enabling Act, as also the area over which power has been delegated under the Act and then decide whether the subordinate legislation conforms to the parent statute. (Para 20)

       (2006) 4 SCC 517 – Relied upon

       (b) Telecom Regulatory Authority of India Act, 1997 – Section 36(1) r/w section 11 – Telecom Consumers Protection Regulations, 2015 (Ninth Amendment) – Vires – Regulation making power u/s 36 wide and pervasive, and not trammeled by section 11, 12(4) and 13 – Power non-delegable and, therefore, legislative in nature – Power must be exercised consistently with the Act and the Rules thereunder – Should not be inconsistent with Section 11, particularly section 11(1)(b) – Impugned Regulation not ensuring compliance of the terms and conditions of the licence nor laying down any standard of quality of service that needs compliance – Hence not referable to Section 11(1)(b)(i) and (v) – It is de hors Section 11 but cannot be said to be inconsistent therewith – Under section 36 regulations, in addition to being consistent with the Act and the Rules, has to carry out the purposes of the Act – Impugned Regulation attempting to protect the interest of the consumer of the telecom sector at the cost of the interest of a service provider – Violating the balance sought to be achieved by the Act for the orderly growth of the telecom sector – Therefore Impugned Regulation held ultra vires the Act. (Para 22, 23, 24)

       (2014) 3 SCC 222 – Relied upon

       © Interpretation of statute – Subordinate legislation – Constitutionality – Can be challenged on any ground available for challenge against plenary legislation including arbitrariness – Manifest arbitrariness – Article 19(1)(g) and 19(6), Constitution of India – Any legislation restricting fundamental rights under Article 19(1)(g) must be reasonable, and in the interest of the general public – Impugned Regulation held manifestly arbitrary and unreasonable restriction on appellants’ fundamental rights to carry on business. (Para 25, 26, 28, 31, 32)

       (1985) 1 SCC 641; (1996) 10 SCC 304; (2002) 2 SCC 188; (1970) 1 SCC 248; 1950 SCR 759 – Relied upon

       (1996) 2 SCC 405 – Referred

       (d) Interpretation of statute – 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 – Impugned Regulation based on the fact that the service provider is alone at fault and must pay for that fault – Suggestion to read a proviso into the Regulation that it will not apply to consumers who are at fault themselves – Will not have effect to restrict general words to a particular meaning – Amount to add something to the provision which does not exist – Would amount to legislation by Court – Not permissible – Impugned Regulation cannot be read down. (Para 36)

       AIR 1941 FC 72; 1991 Supp (1) SCC 600 – Relied upon

       (e) Interpretation of statute – Working out – Suggestion to work out the Regulation in such a manner that the service provider would be liable to pay only when it is found that it is at fault – A statute being invalid being unreasonable cannot be saved by its being administered in a reasonable manner. (Para 36, 37)

       (1962) 3 SCR 786 – Relied upon

       (f) Constitution of India – Article 14 and 19(6) r/w TRAI Act, 1997 (as amended in 2000) – Impugned Regulation – Making a service provider pay a penalty without it being necessarily at fault – Contrary to object of Act 1997 as amended in 2000 to protect interests of service providers and consumers together thereby ensuring orderly growth of the telecom sector – Object of the Regulation to protect small consumer may be true, but the manner must not contravene Articles 14 and 19(6) – Regulation not valid. (Para 38, 39)

       (g) Interpretation of statute – Constitutional validity – Suggestion that Impugned Regulation is valid on the ground that Service providers are making huge profits and they should put in more funds for infra structure development – All service providers are not making profits all the times – At any time some are making profits and some are incurring loss – Regulation cannot be held valid for service providers making profit and invalid for those making loss. (Para 40)

       (1978) 3 SCC 459 – Distinguished

       (h) Telecom Regulatory Authority of India Act, 1997 – Section 11(1)(b)(v) – Call drops – Quality of Service Regulation, 2009 and Telecom Consumers Protection Regulations, 2015 (Ninth Amendment) – Both made under same provision and in the interest of consumers – Former prescribing 2% call drops as permissible limit – Almost all service providers complying – Still the later regulation punished a service provider for call drop – Both regulations have to be read together as part of a single scheme – Laying down a strict penal liability on erroneous basis that fault is entirely with the service provider and payment of such penalty to a consumer who may himself be at fault, held manifestly arbitrary and unreasonable and at odds with both Articles 14 and 19(1)(g) of the Constitution. (Para 43, 45, 46, 48)

       [1960] 1 SCR 39; (2016) 3 SCC 643 – Relied upon

       (i) Call drops – Notional compensation to calling party and not receiving party – No basis for compensation of Re.1 – Also no basis for limiting penalty for 3 call drops per day only – Lack of intelligent care and deliberation in framing the regulation – Impugned Regulation notified on 16.10.2015 – Technical paper dated 13.11.2015 attributing 36.9% call drops to consumers – Still same authority enforcing the regulation wef 1.1.2016 – Secondly while a consumer would fail in claiming compensation for call drop from consumer forum for lack of sufficient data, Impugned regulation imposing statutory penalty – Impugned Regulation held manifestly arbitrary and unreasonable. (Para 49, 52, 53)

       Civil Appeal Nos. 6781-6782 of 2015 – Distinguished

       (j) Call drop – Compensation – Should be for actual loss suffered by consumer for fault of service provider established before a quasi judicial Tribunal – Tribunal may grant relief notwithstanding the service provider meeting the average of 25 call drop – Impugned Regulation providing legislatively pre determined penalty manifestly held arbitrary and unreasonable. (Para 56)

       (k) Call drop – Licence – Clause 28 – Licence is a contract between service provider and consumer – Clause 28 requiring adherence to quality standards by licensee – Quality standards specified by … and not the Impugned regulation – Service providers complying with quality standards of 2% call drop – Still Impugned regulation imposing penalty de hors clause 28 of licence – Impugned regulation liable to be struck down. (Para 62)

       (2011)10 SCC 543 – Relied upon

       Union of India v. Assn. of Unified Telecom Service Providers of India, (2011)10 SCC 543 – Relied upon [Para 61]

       (l) Telecom Regulatory Authority of India Act, 1997 – Section 11(4) – Call drops – Transparency – Authority holding due consultation with stake holders – However arguments put forth not discussed and no reasoning given for prescribing penalty – Subordinate legislation ought to imbibe transparency – Parliament exhorted to frame a legislation on the issue of call drop along the lines of the U.S. Administrative Procedure Act. (Para 66, 74)

       [2001] QB 213 – Relied upon

       (1987) 2 SCC 720; (1998) 8 SCC 227; (2011) 15 SCC 1; (1975) 4 SCC 428 : AIR 1975 SC 865; (1995) 2 SCC 161; (1988) 4 SCC 592; (2004) 2 SCC 476; (2009) 15 SCC 570 – Referred

       Facts of the case:

       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, notified on 16.10.2015, (to take effect from 1.1.2016), by the Telecom Regulatory Authority of India. 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.

       The writ petitions were dismissed.

       Finding of the Court:

       High Court judgment is flawed for several reasons.

       Result: Appeals allowed.