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2014 Supreme(Online)(TDSAT) 109
TELECOM DISPUTES SETTLEMENT AND APPELLATE TRIBUNAL
Aftab Alam, CJ, Kuldip Singh, J
Vodafone Mobile Services Ltd. – Appellant
Versus
Union of India – Respondent
Petition No. 246 of 2013 | Petition No. 198 of 2013 | Petition No. 199 of 2013
For the Appellants/Petitioners:Mr. Meet Malhotra, Sr.Advocate, Mr. Manjul Bajpai, Advocate, Mr. Shashwat Bajpai, Advocate, Mr. Ravi S.S.Chauhan, Advocate, Mr. Prateek Dahiya, Advocate, Ms. Pallak Singh, Advocate, Mr. Anant Ramdhyani, Advocate
For the Respondents:Mr. Sunil Kumar, Sr.Advocate, Mr. Ritin Rai, Advocate, Mr. Abhay Prakash Sahay, Advocate, Mr. Siddhartha Jha, Advocate, Ms. Somya Rathore, Advocate
The imposition of exorbitant penalties for regulatory breaches must adhere to principles of proportionality and reasonableness, particularly when no substantial harm is demonstrated.
Headnote:(A) Telecommunications Act, 1885; Indian Telegraph Act, 1935; National Numbering Plan, 2003; Cellular Mobile Telephone Service License Agreement - Penalty imposed for breach of licensing conditions for providing 'Subscriber Local Dialing' services - Penalty of Rs.650 crores on one petitioner and Rs.100 crores on another without proper basis. (Paras 44-54)
(B) Regulatory Compliance - Service introduced after notifying regulatory authority was claimed to bypass national routing and numbering guidelines, but was found permissible under license terms - The need for operators to comply with licenses, but also the need for proportionality in penalty - Non-compliance while believing it was permitted after approval by authority. (Paras 55-70)
(C) Equity and Proportionality - Penalties failing the proportionality test as the service did not cause significant detriment to competitors and was beneficial to consumers - The Tribunal observes penalties as excessive and unjustified under the circumstances. (Paras 71-79)
ORDER
By Aftab Alam, Chairperson –
Petitions nos.198 and 199 of 2013 are filed by M/s Bharti Airtel Ltd. (Airtel) and petition no.246 of 2013 by M/s Vodafone Mobile Services Ltd. (Vodafone). Both the petitioners challenge the imposition of penalty for introducing, for some time in the past, “Subscriber Local Dialing” , a service that the two petitioners called by different names, e.g., “Optimal Routing Service ”, “Direct Connect Service”, Local Calling Service” etc.
In the case of Airtel (in petition no.198 of 2013), the impugned order is dated 9 July 2013. It is passed (in the name of the President of India) by the Director (AS-IV), Department of Telecommunications, Government of India. It relates to 11 service areas, namely, Delhi, Gujarat, Himachal Pradesh, Haryana, Maharashtra, UP(West), Kerela, Madhya Pradesh, Mumbai, Punjab and Chennai Metro service areas and gives to Airtel the Penalty of Rs.50 Crores (the maximum prescribed under the licence) in each of the eleven (11) circles. In petition no.199 of 2013, the impugned order of the same date relates to the service areas of Andhra Pradesh and Tamil Nadu; for each of the two service areas too Airtel is given the maximum penalty of Rs.50 crores each. Thus, under the two orders, Airtel is faced with the total penalty of Rs.650 crores.
In case of Vodafone, the impugned order is dated 6 August 2013 and it directs Vodafone to pay Rs.100 cores, being the sum of Rs.50 cores, the maximum penalty, for each of the two service areas, namely, Mumbai and Delhi.
The penalties are imposed on the ground that the services were introduced by the petitioners and those were continued in breach of their licence conditions.
THE FACTS: On 19 June 2002, Airtel wrote to the Telecom Regulatory Authority of India (TRAI) that it proposed to introduce in Delhi a value-added service i.e.,
“Subscriber Local Dialing” (SLD) services. The letter elaborated that “the SLD is a feature by which calls made to a Roaming Subscriber, who is visiting Delhi, are routed directly to his mobile instead of travelling via his home network, thereby generating substantial savings for subscribers. The letter claimed that the service would afford the subscriber savings in calling charges from 64% to 72% and in some cases from 57% to 88%. The TRAI responded by its letter of 25 June 2002 and asked Airtel to make a presentation before it that should cover, inter alia , the following issues:
(i) Routing aspect and technical issues related thereto.
(ii) xxxxxxxxx
(iii) License conditions permitting introduction of such service.
(iv) By-pass of NLDO traffic.
(v) Scope of availability of the service to subscribers of other network including PSTN subscribers.
(vi) xxxxxxxxxx
Airtel made a detailed presentation as desired by the TRAI and in respect to the issues on which TRAI had sought clarification, it maintained as under:
“ Re (i) The provision of SLD services was permitted under the license granted to the Petitioner as the same was a GSM service and would cover only calls which would terminate within the Petitioner’s network and the same service area.
Re (ii) xxxxxxxxxx
Re (iii) That the SLD service did not violate the numbering plan as the SLD service only required the addition of the code “#0” to be dialed thereby, allowing for a SLD call to be distinguished and identified vis-à-vis a normal roaming call. Further, that as the SLD service covered only those calls which were handled within the Petitioner’s network, the Petitioner was entitled to have its own numbering scheme;
Re (iv) That SLD services did not lead to a by-passing of NLDO traffic as SLD call was completely local and did not use any long distance connectivity/ service at all;
Re (v) That the SLD service was not discriminatory as the same was available to all the local subscribers of the Petitioner as well as those in-roamers of any other network or service area which logged/ latched onto th e Petitioner’s network.”
Airtel did not receive any further queries or any formal reply fr
