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Indian Case Summary

Cellular Operators Association … vs Telecom Regulatory Authority Of … on 11 May, 2016 – Case Summary

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In the case of the Cellular Operators Association vs. Telecom Regulatory Authority of India on 11 May 2016, the Supreme Court of India was presented with a significant dispute involving the telecom industry. The case revolved around the Telecom Consumers Protection (Ninth Amendment) Regulations, 2015, which was notified by the Telecom Regulatory Authority of India (TRAI) on 16 October 2015 and came into effect from 1 January 2016.

Facts of the Case

The regulation mandated that every originating service provider offering cellular mobile telephone services was liable to credit the calling consumer (not the receiving consumer) with one rupee for each call drop, which occurs within its network, up to a maximum of three call drops per day. The service provider was also required 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. For post-paid consumers, such details of the amount credited were to be provided in the next bill.

The regulation was challenged by various telecom operators who filed writ petitions in the Delhi High Court, arguing that the regulation was ultra vires the TRAI Act, 1997, and was unreasonable and arbitrary. The Delhi High Court upheld the validity of the regulation, leading to an appeal in the Supreme Court.

Issues Raised

The appellants argued that the regulation was ultra vires Section 36 read with Section 11 of the TRAI Act, 1997, and was manifestly arbitrary and unreasonable, thereby affecting their fundamental rights under Article 14 and Article 19(1)(g) of the Constitution. They also contended that TRAI had no power to interfere with their license conditions, which were contractual agreements between the licensor and the licensee. Furthermore, they argued that TRAI failed to be transparent in its dealings with the stakeholders, as required by Section 11(4) of the TRAI Act.

Court’s Observations and Judgment

The Supreme Court observed that the power vested in TRAI under Section 36(1) to make regulations was wide and pervasive. The court held that the regulation was made to ensure the quality of service extended to the consumer by the service provider, and thus, it fell within Section 36(1) read with Section 11(1)(b)(v). The court further held that the compensation provided under the regulation was not a penalty but a notional compensation to consumers who had suffered as a result of call drops.

The court rejected the contention that the regulation demanded 100% performance, stating that it was factually incorrect and without any basis. The court also noted that the reasons for call drops were network-related, which was not disputed by telecom equipment manufacturers. The court upheld the validity of the regulation, stating that it attempted to balance the interest of consumers with the interest of service providers.

In conclusion, the Supreme Court upheld the regulation, affirming that TRAI had the authority to make such regulations to protect the interests of consumers and ensure the quality of service provided by telecom operators. The court’s decision underscored the importance of consumer rights in the telecom sector and the regulatory role of TRAI in maintaining service standards.