Statutory limits on telecom regulation: TRAI could not override licence terms or private contractual rights by subordinate legislation.

TRAI's regulatory powers were held to be confined to the statutory framework and could not be used to override licences issued by the Central Government or alter private contractual rights. Its functions on licensing policy, future licence conditions, revocation, and technology matters remained recommendatory, while regulation of interconnection, revenue sharing, and consumer protection had to operate consistently with the Act, rules, and licence terms. The Court held that the Authority could not convert an advisory function into a binding one by regulation or direction, and had no express power to vary contracts or licence conditions. The impugned regulation, including the overriding clause, was therefore ultra vires and quashed.

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Issues: Whether the Telecom Regulatory Authority of India had power under the governing statute to issue regulations and tariff directions that altered the terms of licences granted by the Central Government or affected private contractual rights, and whether the impugned interconnection and revenue-sharing regulation was within its statutory authority.

Analysis: The statutory scheme distinguished between recommendatory functions towards the Central Government and regulatory powers exercisable only in relation to service providers. The Authority could recommend matters such as licensing policy, terms and conditions of future licences, revocation, and technology matters, but those functions remained advisory. Its power to regulate interconnection, revenue sharing, and consumer protection had to operate within the framework of the Act, the rules, and the licence conditions issued by the Central Government. The Court held that the Authority could not, by regulation or direction, convert a recommendatory function into a binding one, nor could it indirectly override licence terms or private rights when no express power to vary contracts or licences had been conferred. The regulation-making power under the statute was therefore confined to consistent subordinate legislation and could not be used to subvert the legislative scheme.

Conclusion: The Authority had no power to issue regulations overriding licence terms or altering contractual rights, and the impugned regulation, including the overriding clause, was ultra vires and quashed.

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