SC upholds cancellation of Digicable, Scod18’s DAS licence by MIB

MUMBAI: The Supreme Court has dismissed the appeals filed by multi system operators (MSOs) Digicable network India and Scod18 Networking against the cancellation of their digital addressable system (DAS) licence by the ministry of information and broadcasting (MIB).

The bench of Justice Abhay Sapre and Justice Indu Malhotra found both Digicable and Scod18’s argument devoid of merit and upheld the MIB’s cancellation orders against the two.

However, the bench noted that the two companies are at liberty to apply for a grant of fresh permission in accordance with law.

Earlier, the division bench of the Bombay High Court had dismissed the appeals filed by the two companies against the MIB’s cancellation orders.

In 2014, the DAS licences of Digicable and Scod18 were cancelled by the MIB due to denial of ‘security clearance” by the ministry of home affairs (MHA).

The order of cancellation of grant of permission was challenged by the two companies before the Bombay High Court. However, the HC dismissed the writ petition and upheld the order of cancellation as being just, legal and proper. The HC orders were challenged in the SC.

Appearing for the Union of India, Additional Solicitor General Pinky Anand filed the copy of the reasons in a sealed cover which was made basis to deny security clearance to the MSOs and which led to cancellation/withdrawal of permission granted to the appellant.

The bench noted that the order of cancellation was passed in conformity with the requirements of Rule 11C of the Rules and hence it was rightly upheld by the High Court in impugned order.

Rule 11C was inserted in the Rules with effect from 28.04.2012. Rule 11C(1) reads as under: “Registration as multisystem operator (1) On being satisfied that the applicant fulfils the eligibility criteria specified under rule 11B and the requirements of rule 11A, the registering authority shall, subject to the terms and conditions specified in rule 11D and the security clearance from the Central Government, issue certificate of registration.”

It further contended that the grant of permission is subject to issue of security clearance from the Central Government to the applicant.

“In this case, admittedly the appellant failed to obtain the security clearance as provided under Rule 11C of the Rules. It was a mandatory requirement as provided under Rule 11C of the Rules. Since the grant of permission was subject to obtaining of the security clearance from the concerned Ministry, the competent authority was justified in cancelling the conditional permission for want of security clearance,” the bench said in its judgement.

The counsel for the two MSOs argued that they were not afforded an opportunity of hearing before cancelling the permission and, therefore, the impugned cancellation order is rendered bad in law having been passed without following the principle of natural justice and fair play.

The bench did not find any merit in this submission. It pointed out that in somewhat similar circumstances, this court in the case of Ex-Armymen’s Protection Services Private Limited vs. Union of India and Others (2014) had laid down that in the situation of national security, a party cannot insist for the strict observance of the principles of natural justice.

“Having perused the note filed by the Union of India, which resulted in cancellation of permission, we are of the considered opinion that in the facts of this case, the appellant was not entitled to claim any prior notice before passing of the cancellation order in question,” the SC order stated.

“In other words, we are of the view that the principles of natural justice were not violated in this case in the light of the law laid down by this Court in the case of Ex-Armymen’s Protection Services Private Limited (supra) inasmuch as the appellant was not entitled to claim any prior notice before cancellation of permission.”