New TRAI Regime: Calcutta HC Vacates Stay, Kerala & Madras HCs Dismisses Challenge, Bombay & Telangana HCs Yet To Decide

Last week, it had directed the Additional Solicitor General to explain whether a clause of negotiation between MSOs and LCOs in the Telecom Regulatory Authority of India (TRAI) notification for revenue sharing is illusory or not.

On the hearing that took place on Thursday, Justice Arindam Sinha recorded the submission by Additional Solicitor General that the MSOs and LCOs have the option of either entering into a revenue sharing agreement mutually or go for a TRAI-fixed norm.

"While Schedule V leaves open for negotiation fixation of revenue sharing ratio, also left open to be negotiated and correspondingly agreed is allocation of responsibilities for providing services on the ground to subscribers. It is only when MSO(s) and LCO(s) are unable to agree, on negotiation between themselves, Schedule VI kicks in requiring prescribed revenue sharing ratio and responsibilities regarding performance of functions of said service." the court was told.

The court also said that it had granted stay influenced by the submission that the Kerala High court has also granted interim order of stay had already been passed by a learned Single Judge of Kerala High Court, Ernakulam Bench. "Basis for limiting the order was demonstrated as nonexistent since interim order of Kerala High Court perished with the writ petition as stood dismissed before 29th January, 2019.", the court said.

The court also directed the TRAI to file affidavit confined to demonstrating LCO(s) were allowed to participate in providing their inputs in making of impugned Regulations.

Existence of default clause, by itself, cannot be said to fetter the contracting freedom of the parties to an agreement: Kerala HC

On 14^th January, the Kerala High Court dismissed the challenge against new TRAI regulations. The challenge was essentially against the default clause for revenue sharing which is to be operated in case the MSOs and LCOs concerned cannot reach a negotiated settlement as to the sharing of the revenue generated from subscribers. Rejecting these contentions, Justice Anu Sivaraman said:

"The existence of default clause, by itself, cannot be said to fetter the contracting freedom of the parties to an agreement. It is only in case a negotiated agreement cannot be arrived at, that the default ratio would be applicable. The essential grievance of the petitioner appears to be that the MSO can refuse to enter into a proper negotiation and in the absence of an agreement between the parties as to revenue sharing, the ratio would become applicable. From a consideration of the provisions of the TRAI Act, I find that in case any individual dispute arises with regard to the refusal of MSO to hold negotiations or enter into a revenue sharing agreement only to defeat the rights of the LCO and to make the default revenue sharing ratio applicable, the same would constitute a dispute between two service providers which would be liable to be raised and considered before the Telecom Dispute Settlement and Appellate Tribunal in terms of Section 14 of the TRAI Act, 1997."

Madras HC Upheld TRAI Regulations

The Madras High Court, last week, dismissed a petition challenging TRAI regulations and tariff order relating to fixation of charges for free and pay television channels. A division bench comprising Justices S Manikumar and Subramonium Prasad also upheld the January 31 deadline fixed by the TRAI for the implementation of the order.

"It cannot be said that TRAI has been acting hastily or implementing its directions in a hurried manner, without taking into account the interest of all the participants. It is not for this court to interfere with the deadline, unless it shows that such a decision is completely perverse," the bench had said.

Bombay and Telangana High Courts Yet To Decide

Reportedly, the Telangana High Court has reserved its orders in the petition challenging TRAI Regulations. The Bombay High Court also, reportedly heard a similar petition filed by the Pune Cable Operators' Association last week. The petitioners therein had sought a stay, referring to the Calcutta High Court order. But the bench refused any relief, but asked them to submit a copy of Calcutta High Court's order.

Read Calcutta HC Order

Read Kerala HC Judgment