TRAI tariff order case goes to a third judge as Madras HC bench delivers split verdict

MUMBAI: The two-member bench of Madras High Court comprising Chief Justice Indira Banerjee and Justice M Sundar has delivered a split verdict on Star India and Vijay Television’s petitions challenging the Telecom Regulatory Authority of India’s (TRAI) tariff order and interconnection connection.

While Justice Sundar has allowed the two petitions seeking to quash the tariff order and interconnection regulation Chief Justice Indira Banerjee has given the dissenting judgement.

However, the Chief Justice has held that the clause putting a cap of 15% to the discount on the MRP of a bouquet is arbitrary. She said that the said provision is not enforceable.

Since the bench has delivered a split verdict, the matter will be placed before a third Judge. The matter will be placed before the next available Judge in order of seniority for the nomination of the Judge before whom the matter may be placed.

Star and Vijay had pleaded before the Madras High Court for setting aside the tariff order and the interconnection regulation since many provisions of the tariff order and the regulation are unconstitutional and ultra vires the provisions of the TRAI Act, 1997.

The broadcasters had also contended that the issue of channel pricing is beyond the scope of the jurisdiction of TRAI conferred under the TRAI Act, 1997 as the same is protected under the Copyright Act.

The Clauses 2(h), 2(j), 2(mm), 2(pp), 3 and 7 of the Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems) Regulations, 2017 and the Clauses 2(f), 2(h), 2(zg), 2(zh) and 3 of the Telecommunication (Broadcasting and Cable) Services (Eighth) (Addressable Systems) Tariff Order, 2017 were under challenge before the high court.

The TRAI regulation and tariff order mandate that channels when given in bouquets should not be a mix of pay channels and free to air channels. It also stated that the high definition and standard definition formats of the same channel should not be in the same bouquet.

It also mandates that a bouquet of pay channels should not contain any pay channel where the Maximum Retail Price is more than Rs. 19. Furthermore, the MRP of a bouquet should not be more than 85% of the sum of a-la-carte MRP of pay channels constituting bouquet. It also caps the discounts of MRP of a bouquet at 15%.

While ruling in favour of Star and Vijay Justice Sundar noted that the consumers whose interests have been sought to be protected through the regulation have not complained anywhere about exploitation by the broadcasters.

“Owing to the narrative, discussion and all that have been set out supra, those of the impugned provisions in the said regulations and said tariff order which touches upon content of the programmes of broadcasters are liable to be struck down as not in conformity with the parent Act / plenary Act,” Justice Sundar said in his judgement.

While setting aside the provisions challenged by Star and Vijay, Justice Sundar has said retained two clauses. The judge stated that the Clause 11(2) in the regulations as also clause 4(2) in the tariff order will continue to be in the books, but cannot be pressed into service for anything to do with the provisions which we have struck down supra.

“In other words, these provisions, i.e., clause 11(2) in the said Regulations as also clause 4(2) in the said tariff order can be operated if it can be operated for other provisions of the said Regulations and said tariff order, other than those which we have struck down,” he noted.

While dissenting with Justice Sundar, Chief Justice Indira Banerjee stated that the amendment of the Copyright Act in 2012 does not take away the power of TRAI to fix rates of broadcasting services or to regulate the manner of offering service under Section 11 read with Section 36 of the TRAI Act.

By the 2012 Amendment, the parliament amended Section 39A of the Copyright Act to make Sections 30A, 33, 33A, 34, 35 and 35 applicable to broadcast reproduction rights under Section 37.

She also noted that the Broadcast Reproduction Right is not an all-encompassing right that eclipses all other legislations and circumscribes the power of TRAI. The Broadcast Reproduction Right is only a right of the broadcaster under the Copyright Act to protect its broadcast from exploitation by a third party.

The Chief Justice stated that the TRAI has not fixed any upper limit or cap for the broadcasters in pricing their channels. It is open to the broadcasters to declare any particular channel as a pay channel or a free channel. Only when any particular channel is put in a bouquet that it cannot be priced at Rs.19/- per month per subscriber, she noted.

She also added that there is also no compulsion that pay channels should only be offered in bouquets. If the cost of the content of any channel is very high and its content exclusive the writ petitioners are free to declare that particular channel as a pay channel and price the channel at such price as is deemed appropriate.

“Maybe bouquets are popular in the market and attract viewers, who subscribe to such bouquets. It is still open to the writ petitioners to offer bouquets. It can also offer bouquets and some popular channels as pay channels,” the Chief Justice said in her remarks.

She also mentioned that the scope of judicial review of the Regulations and the Tariff Order is limited. The Court does not normally exercise the power of judicial review unless it finds that formation of belief by the statutory authority is vitiated by mala fides, dishonesty or corrupt practice.

Banerjee said that the Regulation or the Tariff Order cannot be set aside unless it is found to be beyond the limits of power conferred upon the authorities by the legislature, or is based on grounds extraneous to the legislation or if there are no grounds at all for passing the impugned Regulations or the impugned Tariff Order or if the grounds are such that no one can reasonably arrive at the opinion or satisfaction required thereunder.

“I am unable to agree with the conclusion of M. Sundar J. that the provisions of the impugned Regulation and the impugned Tariff Order are not in conformity with the TRAI Act,” she stated.

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