Telecom compensation regulation struck down for ultra vires rulemaking, manifest arbitrariness, and failure of statutory transparency.

Delegated regulation must remain consistent with the enabling Act and its statutory balance. The Supreme Court held that the Telecom Consumers Protection (Ninth Amendment) Regulations, 2015 were ultra vires because they imposed a no-fault compensatory liability for each call drop without grounding that burden in the Telecom Regulatory Authority of India Act, 1997 or the existing quality-of-service framework. The regulation was also manifestly arbitrary and an unreasonable restriction on business, since it assumed every call drop was attributable to the service provider and lacked rational basis for the compensation structure and cap. It further impermissibly altered licence conditions and failed the statutory transparency requirement in the consultation process.

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Issues: (i) Whether the Telecom Consumers Protection (Ninth Amendment) Regulations, 2015 were ultra vires the Telecom Regulatory Authority of India Act, 1997; (ii) whether the impugned regulation was manifestly arbitrary and imposed an unreasonable restriction on the right to carry on business; (iii) whether the impugned regulation unlawfully interfered with licence conditions; and (iv) whether the regulation-making process satisfied the statutory requirement of transparency.

Issue (i): Whether the Telecom Consumers Protection (Ninth Amendment) Regulations, 2015 were ultra vires the Telecom Regulatory Authority of India Act, 1997.

Analysis: The power to frame regulations under Section 36 is wide, but it must be exercised consistently with the Act and to carry out its purposes. The impugned regulation did not lay down any quality standard or enforce any licence term; instead, it imposed a compensatory liability for each call drop notwithstanding the existing 2% call-drop tolerance under the quality-of-service regime. By ignoring the statutory balance between consumer and service-provider interests and by proceeding on a premise that was inconsistent with the Act's purpose, the regulation could not be sustained.

Conclusion: The regulation was held to be ultra vires the Act and invalid.

Issue (ii): Whether the impugned regulation was manifestly arbitrary and imposed an unreasonable restriction on the right to carry on business.

Analysis: Delegated legislation is vulnerable if it is manifestly arbitrary or unreasonable. The impugned regulation proceeded on the assumption that every call drop was attributable to the service provider, although material placed before the Authority itself showed that call drops may arise from consumer-side and other causes. The regulation also prescribed compensation without a rational basis for the amount, the cap of three calls per day, or the choice to compensate only the calling consumer. It disregarded the existing quality-of-service tolerance and imposed liability without proof of fault or actual loss.

Conclusion: The impugned regulation was held to be manifestly arbitrary and to violate Articles 14 and 19(1)(g) of the Constitution.

Issue (iii): Whether the impugned regulation unlawfully interfered with licence conditions.

Analysis: The licence required compliance with prescribed quality-of-service standards, but the impugned regulation did not set such a standard. Instead, it created a monetary consequence detached from the contractual quality clauses and from any established fault-based breach. As framed, it altered the practical incidents of the licence relationship without authority to do so in the manner adopted.

Conclusion: The impugned regulation was held to be impermissible on this ground as well.

Issue (iv): Whether the regulation-making process satisfied the statutory requirement of transparency.

Analysis: Although stakeholders were consulted, the record did not disclose any reasoned response to the core objection that call drops occur for multiple causes, many beyond the service provider's control. The explanation in support of the regulation did not demonstrate an informed, reasoned, and transparent resolution of the significant objections raised in consultation.

Conclusion: The process was held to fall short of the transparency requirement under Section 11(4).

Final Conclusion: The impugned regulation could not be sustained either as a valid exercise of delegated power or as constitutionally reasonable regulatory action, and it was struck down.

Ratio Decidendi: A delegated regulation that imposes consumer compensation on a strict no-fault basis, without rational support in the statutory scheme or a reasoned basis for the liability imposed, is ultra vires the enabling Act and liable to be invalidated for manifest arbitrariness and unreasonableness.

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