TaxTMI 
TaxTMI 
2016 (5) TMI 1458
X X X X Extracts X X X X
X X X X Extracts X X X X
....aid amendment, every originating service provider who provides cellular mobile telephone services is made liable to credit only the calling consumer (and not the receiving consumer) with one rupee for each call drop (as defined), which takes place within its network, upto a maximum of three call drops per day. Further, the service provider is also 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. In the case of a post paid consumer, such details of amount credited in the account of the calling consumer were to be provided in the next bill. A brief background is necessary in order to appreciate the controversy at hand. Under an Act of ancient vintage, namely, the Indian Telegraph Act, 1885, the Central Government or the Telegraph Authority is the licensing authority by which persons are licenced under Section 4(1) of the said Act for providing specified public telecommunication services. Given the fact that it is the Central Government or the Telegraph Authority who is the licensor in all these cases, the said licensor enters into what are described as licence agreements for the pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... guidelines issued by DOT to the Chief Secretaries dated 1.8.2013. We have also been shown an amendment to the Quality of Service Regulations dated 21.8.2014 by which TRAI has noticed practical difficulties that are faced due to various reasons by which cable breakdowns and indoor faults take place, with the Authority requiring the striking of a balance between the problems faced by the licensees and the need to ensure quality of service to customers. We were also shown a letter from the Ministry of Communications written to Chief Ministers of all the States to permit installation of towers on Government buildings. This letter is dated 3.8.2015. Further, there is a constant tussle between cell phone operators and municipal authorities, landing cell phone operators in court against municipal authorities, who seek to restrict the setting up of cell phone towers, given the apprehension that radiation from these towers has a direct causal link with cancer in human beings. It is also important to note that by a Quality of Service Regulation dated 20.3.2009, issued under Section 11 read with Section 36 of the TRAI Act, TRAI has provided, insofar as cellular mobile phone services are conc....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... RELIEF TO CONSUMERS FOR CALL DROPS 16. Measures to provide relief to consumers.- Every originating service provider providing Cellular Mobile Telephone Service shall, for each call drop within its network, (a) credit the account of the calling consumer by one rupee: Provided that such credit in the account of the calling consumer shall be limited to three dropped calls in a day (00:00:00 hours to 23:59:59 hours); (b) provide the calling consumer, through SMS/USSD message, within four hours of the occurrence of call drop, the details of amount credited in his account; and (c) in case of post-paid consumers, provide the details of the credit in the next bill." The explanatory memorandum to the aforesaid amendment makes interesting reading. In the first paragraph of the said memorandum, the 2009 Quality of Service Regulation referred to hereinabove, granting an allowance of an average of 2% call drops per month, is specifically referred to. Also, interestingly enough, the service providers have stated that they are meeting this benchmark completely with one or two minor exceptions. Despite this, the Authority has embarked on the Impugned Regula....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to put in place a mechanism for compensating the consumers in the event of dropped calls. The Authority is of the opinion that compensatory mechanism should be kept simple for the ease of consumer understanding and its implementation by the CMTSPs. While one may argue that amount of compensation should be commensurate to the loss/ suffering caused due to an event but in case of a dropped call it is difficult to quantity the loss/suffering/inconvenience caused to the consumers as it may vary from one consumer to another and also in accordance to their situations. Accordingly, the Authority has decided to mandate originating CMTSPs to credit one Rupee for a dropped call to the calling consumers as notional compensation. Similarly, the Authority has decided that such credit in the account of the calling consumer shall be limited to three dropped calls in a day (00:00:00 hours to 23:59:59 hours). The Authority is of the view that such a mandate would compensate the consumers for the inconvenience caused due to interruption in service by way of call drops, to a certain extent. 20. The Authority is also aware that communication to the consumers is important and therefore, the Au....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as. Moreover, with the increase in the usage of 3G networks, the growth rate of mobile towers supporting 2G networks has reduced. This must be addressed. 5.28. The previous sections highlighted some important countermeasures at the TSPs' end. Measures like Dynamic Channel Allocation, multiple call routing and optimized resource management can be employed by the TSP's besides usage of mobile signal boosters through the TSPs at users' buildings or premises. Some prioritization schemes like MBPS, CAC, Guard Channels, Handoff Queuing and Auxiliary Stations essentially need to be incorporated by TSPs to reduce call drops." 8. A Writ Petition, being Writ Petition (Civil) No.11596 of 2015, was filed before the Delhi High Court, together with various other petitions, in which the Ninth Amendment, being the Impugned Amendment to the Regulation pointed out hereinabove, was challenged. By the impugned judgment dated 29.2.2016, the Delhi High Court noticed the various arguments addressed on behalf of the various appellants, together with the reply given by Shri P.S. Narasimha, learned Additional Solicitor General of India appearing on behalf of TRAI. The High Court then went on to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... area, as against compensation provided which specifies an individual standard. On the plea that the difficulties faced by service providers in setting up mobile towers being something beyond their control, the High Court declined to enter into the said controversy since the High Court does not have the expertise to adjudicate on such rival claims. The validity of the Impugned Regulation was upheld and the Writ Petitions were dismissed. 9. At this stage, it would be important to notice the arguments made on behalf of the various appellants before us. We have heard learned senior advocates Shri Kapil Sibal, Dr. Abhishek Manu Singhvi, and Shri Gopal Jain. The arguments that were made by them can fall into four neat logical compartments. First and foremost, they argued that the Ninth Amendment to the Telecom Consumers Protection Regulations, 2015, is ultra vires Section 36 read with Section 11 of the Telecom Regulatory Authority of India Act, 1997. They argued that, in any event, these Regulations, being in the nature of subordinate legislation, were manifestly arbitrary and unreasonable, and therefore affected their fundamental rights under Article 14 and Article 19(1)(g) of the C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nsumer before a Consumer Disputes Redressal Forum would be dismissed on the ground that penal damages cannot be awarded without the establishment of fault in any adjudication for "inconvenience" as opposed to "loss caused". To lay down by way of subordinate legislation, a strict no fault penal liability would go contrary to the scheme of the TRAI Act, particularly when it is contrasted with the Electricity Act, 2003. We were shown Section 57 and certain other Sections of the said Act in which the Central and State Commissions for Electricity, unlike the TRAI, also have adjudicatory functions. If, as a result of the adjudicatory function, compensation for loss is decreed, the Commission under the Electricity Act could do so, but not TRAI, as it has no adjudicatory functions but only recommendatory, administrative, and legislative functions. It was argued by them that Sections 73 and 74 of the Contract Act were also breached as damages by way of penalty, which are not a genuine pre-estimate of loss, have been laid down by the Impugned Regulation, as it is admitted that no loss but only inconvenience has been caused to the consumers. It was further argued, based on the amended Preambl....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and sought to defend the High Court judgment. According to the learned Attorney General, it is first necessary to see the Statement of Objects and Reasons of the Telecom Regulatory Authority of India Act, 1997. Paragraph one of the said statement was referred to in order to emphasize that the National Telecom Policy of 1994 provided for the meeting of customer's demands at a reasonable price, and the promotion of consumer interest by ensuring fair competition. When read in light of the Statement of Objects and Reasons, it is clear that the Impugned Regulation has been made bearing this object in mind. According to the learned Attorney General, Section 36 of the Act has to be read in a wide and expansive manner, as has been done in BSNL's judgment, and when so read, it is clear that the Impugned Regulation conforms to Section 11(1)(b)(i) and (v) and is otherwise not ultra vires the Act. Countering the submission as to arbitrariness and unreasonableness of the Impugned Regulation, he argued that the said Regulation was really framed keeping the small man in mind, and told us that 96% of consumers are pre-paid customers who recharge their account balance for an average of Rs. 10/- at....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce inside buildings with thick walls and/or lifts. In any case, the number of call drops that take place owing to such reasons is itself minimal. According to him, therefore, the Impugned Regulation should be read down so that service providers are made to pay only for faults attributable to them, which would come to a rough figure of 63% of what is charged, for amounts payable to the consumers under the Impugned Regulation. The learned Attorney General has assured us that, in point of fact, the authorities will administer the Impugned Regulation in such a manner that service providers would only be made liable to pay for call drops owing to their own fault. He further argued that three documents, if read together, would make it clear that the Impugned Regulation cannot be said to be manifestly arbitrary or unreasonable, and that the consultation paper dated 4.9.2015, the Impugned Regulation dated 16.10.2015, and the technical paper dated 13.11.2015, should all be read together as being part of one joint exercise to alleviate the small consumers' inconvenience because of call drops. He further went on to argue that it is not correct to say that TRAI has contradicted itself in the t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....DP, thus being amongst the highest contributors in foreign direct investment in this country in the last decade. They have also made the second large private sector investment in infrastructure amounting to Rs. 800,000/- crores despite the return on investment being only 1%. Contrary to what the learned Attorney General had to say, a vast number of towers have been set up - more than two lac sites in the last 15 months alone. When viewed with the gigantic net debt and return on investment, the figure of gross revenue given by the learned Attorney General is said to be a highly misleading figure. Also, the comparison with infrastructure investment in China is wholly misplaced inasmuch as the Chinese Government has unlimited funds to pour into its telecom companies, over 70% of their share capital being held by the Government. Spectrum allocation to Chinese operators is at almost no cost, whereas in India, thousands of crores of rupees have to be spent as spectrum is now auctioned to the highest bidder. Also, the revenue of the top three Chinese telecom operators is more than six times the revenue of the top three Indian operators. In addition, it was argued that the facts and figure....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of India to regulate the telecommunication services, and for matters connected therewith or incidental thereto." Section 11(n) read as under:- Functions of Authority - (1) Notwithstanding anything contained in the Indian Telegraph Act, 1885, the functions of the Authority shall be to - (n) settle disputes between service providers" 19. In 2000, the Act was amended. By the Amended Act, the adjudicatory function of the TRAI was taken away from it and was vested in an Appellate Tribunal. The relevant provisions of the Act as amended in 2000 are as follows:- "Preamble- An Act to provide for the establishment of the Telecom Regulatory Authority of India and the Telecom Disputes Settlement and Appellate Tribunal to regulate the telecommunication services, adjudicate disputes, dispose of appeals and to protect the interests of service providers and consumers of the telecom sector, to promote and ensure orderly growth of the telecom sector and for matters connected therewith or incidental thereto" 11. Functions of Authority. (1) Notwithstanding anything contained in the Indian Telegraph Act, 1885, the functions of the Authority shall be to- &nbs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re a Consumer Disputes Redressal Forum or a Consumer Disputes Redressal Commission or the National Consumer Redressal Commission established under Section 9 of the Consumer Protection Act, 1986 (68 of 1986); (C) the dispute between telegraph authority and any other person referred to in sub-section (1) of Section 7-B of the Indian Telegraph Act, 1885 (13 of 1885); (b) hear and dispose of appeals against any direction, decision or order of the Authority under this Act. 15. Civil Court not to have jurisdiction.-No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act. 25. Power of Central Government to issue directions.-(1) The Central Government may, from time to time, issue to the Authority such directions as it may think necessary in the interest of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... a total period of thirty days which may be comprised in one session or in tow or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation or both Houses agree that the rule or regulation should not be made, the rule or regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or regulation." Parameters of Judicial Review of Subordinate Legislation 20. In State of Tamil Nadu v. P. Krishnamoorthy, (2006) 4 SCC 517, this Court after adverting to the relevant case law on the subject, laid down the parameters of judicial review of subordinate legislation generally thus:- "There is a presumption in favour of constitutionality or validity of a subordinate legislation and the burden is upon him who attacks it to show that it is invalid. It is also well recognised that a subordinate legislation can be challenged under any of the following gro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n either approve, modify or annul the same. Section 36(2), which begins with the words "without prejudice to the generality of the power under sub-section (1)" specifies various topics on which regulations can be made by TRAI. Three of these topics relate to meetings of TRAI, the procedure to be followed at such meetings, the transaction of business at the meetings and the register to be maintained by TRAI. The remaining two topics specified in clauses (e) and (f) of Section 36(2) are directly referable to Sections 11(1)(b)(viii) and 11(1)(c). These are substantive functions of TRAI. However, there is nothing in the language of Section 36(2) from which it can be inferred that the provisions contained therein control the exercise of power by TRAI under Section 36(1) or that Section 36(2) restricts the scope of Section 36(1)... Before parting with this aspect of the matter, we may notice Sections 33 and 37. A reading of the plain language of Section 33 makes it clear that TRAI can, by general or special order, delegate to any member or officer of TRAI or any other person such of its powers and functions under the TRAI Act except the power to settle disputes under Chapter IV or make r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....auses of this licence refer to (i) the power to modify the licence conditions which is contained in clause 5 and (ii) the ensuring by the licensee that the quality of service shall be as prescribed by the licensor or TRAI by clause 28 thereof. Under clause 5, the licensor reserves the right to modify the terms and conditions of the licence if in the opinion of the licensor it is necessary or expedient so to do in public interest or in the interest of security of the State or for the proper conduct of telegraphs. It may be stated that no modification of the licence has in fact been attempted or has taken place in the facts of the present case. Therefore clause 5 need not detain us further. Clause 28 reads as follows: "28. Quality of Performance: 28.1 The LICENSEE shall ensure the Quality of Service (QoS) as prescribed by the LICENSOR or TRAI. The LICENSEE shall adhere to such QoS standards and provide timely information as required therein. 28.2 The LICENSEE shall be responsible for:- i) Maintaining the performance and quality of service standards. ii) Maintaining the MTTR (Mean Time To Restore) within the specified limits of the quality ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e laid down, but standards have to be adhered to by the service providers so as to protect the interests of the consumers. We find that the Impugned Regulation is not referable to Section 11(1)(b)(i) and (v) of the Act inasmuch as it has not been made to ensure compliance of the terms and conditions of the licence nor has it been made to lay down any standard of quality of service that needs compliance. This being the case, the Impugned Regulation is de hors Section 11 but cannot be said to be inconsistent with Section 11 of the Act. This Court has categorically held in the BSNL judgment that the power under Section 36 is not trammeled by Section 11. This being so, the Impugned Regulation cannot be said to be inconsistent with Section 11 of the Act. However, what has also to be seen is whether the said Regulation carries out the purpose of the Act which, as has been pointed out hereinabove, under the amended Preamble to the Act, is to protect the interests of service providers as well as consumers of the telecom sector so as to promote and ensure orderly growth of the telecom sector. Under Section 36, not only does the Authority have to make regulations consistent with the Act and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of Indian Express Newspapers (Bombay) Pvt. Ltd. and Ors. v. Union of India and Ors. [(1985) 1 SCC 641 : 1985 SCC (Tax) 121 : (1985) 2 SCR 287], this Court said that a piece of subordinate legislation does not carry the same degree of immunity which is enjoyed by a statute passed by a competent legislature. A subordinate legislation may be questioned under Article 14 on the ground that it is unreasonable; "unreasonable not in the sense of not being reasonable, but in the sense that it is manifestly arbitrary". Drawing a comparison between the law in England and in India, the Court further observed that in England the Judges would say, "Parliament never intended the authority to make such Rules; they are unreasonable and ultra vires". In India, arbitrariness is not a separate ground since it will come within the embargo of Article 14 of the Constitution. But subordinate legislation must be so arbitrary that it could not be said to be in conformity with the statute or that it offends Article 14 of the Constitution." [para 13] 27. Also, in Sharma Transport v. Government of Andhra Pradesh, (2002) 2 SCC 188, this Court held: "... The tests of arbitrary action applicable to ex....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... v. State of Madhya Pradesh, 1950 SCR 759, as follows:- "The phrase "reasonable restriction" connotes that the limitation imposed on a person in enjoyment of the right should not be arbitrary or of an excessive nature, beyond what is required in the interests of the public. The word "reasonable" implies intelligent care and deliberation, that is, the choice of a course which reason dictates. Legislation which arbitrarily or excessively invades the right cannot be said to contain the quality of reasonableness and unless it strikes a proper balance between the freedom guaranteed in article 19(1)(g) and the social control permitted by clause (6) of article 19, it must be held to be wanting in that quality." [at p.763] 30. It is interesting to note that the original Constitution, while enumerating various rights under Article 19(1), when it referred to the right of freedom of speech in Article 19(1)(a), laid down in Article 19(2) that any law abridging the right to freedom of speech could only pass constitutional muster if it related to any of the subjects laid down in clause (2). What was conspicuous by its absence was the phrase "reasonable restriction", which was only br....
X X X X Extracts X X X X
X X X X Extracts X X X X
....old - one owing to the fault of the consumer, and the other owing to the fault of the service provider. And, for this dichotomy, he has referred to the technical paper dated 13.11.2015, which shows that an average of 36.9% can be call drops owing to the fault of the consumer. If this is so, the Impugned Regulation's very basis is destroyed: the Regulation is based on the fact that the service provider is 100% at fault. This becomes clear from a reading of the text of the said Regulation together with the Explanatory Memorandum set out hereinabove. This being the case, it is clear that the service provider is made to pay for call drops that may not be attributable to his fault, and the consumer receives compensation for a call drop that may be attributable to the fault of the consumer himself, and that makes the Impugned Regulation a regulation framed without intelligent care and deliberation. 33. But it was said that the aforesaid Regulation should be read down to mean that it would apply only when the fault is that of the service provider. We are afraid that such a course is not open to us in law, for it is well settled that the doctrine of reading down would apply only when ge....
X X X X Extracts X X X X
X X X X Extracts X X X X
....J., this Court stated: "It is thus clear that the doctrine of reading down or of recasting the statute can be applied in limited situations. It is essentially used, firstly, for saving a statute from being struck down on account of its unconstitutionality. It is an extension of the principle that when two interpretations are possible - one rendering it constitutional and the other making it unconstitutional, the former should be preferred. The unconstitutionality may spring from either the incompetence of the legislature to enact the statute or from its violation of any of the provisions of the Constitution. The second situation which summons its aid is where the provisions of the statute are vague and ambiguous and it is possible to gather the intentions of the legislature from the object of the statute, the context in which the provision occurs and the purpose for which it is made. However, when the provision is cast in a definite and unambiguous language and its intention is clear, it is not permissible either to mend or bend it even if such recasting is in accord with good reason and conscience. In such circumstances, it is not possible for the court to remake the stat....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the ambit of its operation as reasonably construed. If so judged it passes the test of reasonableness, possibility of the powers conferred being improperly used is no ground for pronouncing the law itself invalid and similarly if the law properly interpreted and tested in the light of the requirements set out in Part III of the Constitution does not pass the test it cannot be pronounced valid merely because it is administered in a manner which might not conflict with the constitutional requirements." [at pp.825 - 826] 37. This statement of the law applies on all fours to the facts of the present case, and is a complete answer to the Attorney General's contention that the Impugned Regulation would be administered so that the service provider would be liable under it only when it is at fault for call drops. 38. The learned Attorney General has argued that the Impugned Regulation accords with the Statement of Objects and Reasons of the TRAI Act, 1997. As has been pointed out by us, the original Act was amended in the year 2000, in which its Preamble was substituted. The substitution indicates that the policy of the 1997 Act, as amended by the 2000 Act, is to protect the interes....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he succeeding year. Is the Impugned Regulation unconstitutional in the first year and constitutional in the succeeding year? Obviously not. Secondly, it is always open to the Authority, with the vast powers given to it under the TRAI Act, to ensure, in a reasonable and non-arbitrary manner, that service providers provide the necessary funds for infrastructure development and deal with them so as to protect the interest of the consumer. Consequently, this submission is also without substance. 41. The learned Attorney General strongly relied upon a passage from a Constitution Bench judgment in Prag Ice & Oil Mills v. Union of India, (1978) 3 SCC 459, to the following effect:- "The Parliament having entrusted the fixation of prices to the expert judgment of the Government, it would be wrong for this Court, as was done by common consent in Premier Automobiles [20 L Ed 2d 312] to examine each and every minute detail pertaining to the Governmental decision. The Government, as was said in Permian Basin Area Rate cases, is entitled to make pragmatic adjustments which may be called for by particular circumstances and the price control can be declared unconstitutional only if it ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... important part of the submissions made on behalf of the appellants. The appellants have strongly contended that a 2% allowance of call drops on the basis of averaging call drops per month has been allowed to them by the Quality of Service Regulations already referred to hereinabove. This would amount to the Authority penalizing the service provider even when it complies with another regulation made under the same source of power, and for this reason alone, the Impugned Regulation must be held to be bad as being manifestly arbitrary. The learned Attorney General refuted this submission in two ways. First, he argued that Quality of Service Regulations and regulations made to benefit consumers must be viewed separately, as they are distinct regulations in parallel streams. He also argued that the 2% average allowance for call drops is different and distinct from paying compensation for call drops inasmuch as, conceivably, in a given set of facts, call drops may take place extensively in a given sector but not in other sectors so that an average of 2% per month is yet maintained, but the service provider would be penalized as it has not been able to maintain a 3% standard laid down qu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s to affect the fundamental rights of the appellants, and having been so ignored, would render the Impugned Regulation manifestly arbitrary and unreasonable. 46. Secondly, no facts have been shown to us which would indicate that a particular area would be filled with call drops thanks to the fault on the part of the service providers in which consumers would be severely inconvenienced. The mere ipse dixit of the learned Attorney General, without any facts being pleaded to this effect, cannot possibly make an unconstitutional regulation constitutional. We, therefore, hold that a strict penal liability laid down on the erroneous basis that the fault is entirely with the service provider is manifestly arbitrary and unreasonable. Also, the payment of such penalty to a consumer who may himself be at fault, and which gives an unjustifiable windfall to such consumer, is also manifestly arbitrary and unreasonable. In the circumstances, it is not necessary to go into the appellants' submissions that call drops take place because of four reasons, three of which are not attributable to the fault of the service provider, which includes sealing and shutting down towers by municipal authoriti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the service provider has to pay a sum of rupee one to the said consumer. This cannot be called notional at all. It is also not clear as to why the Authority decided to limit compensation to three call drops per day or how it arrived at the figure of Re.1 to compensate inconvenience caused to the consumer. It is equally unclear as to why the calling party alone is provided compensation because, according to the Explanatory Memorandum, inconvenience is suffered due to the interruption of a call, and such inconvenience is suffered both by the calling party and the person who receives the call. The receiving party can legitimately claim that his inconvenience when a call drops, is as great as that of the calling party. And the receiving party may need to make the second call, in which case he receives nothing, and the calling party receives Re.1 for the additional expense made by the receiving party. All this betrays a complete lack of intelligent care and deliberation in framing such a regulation by the Authority, rendering the Impugned Regulation manifestly arbitrary and unreasonable. 50. However, the learned Attorney General referred to a recent judgment being DSC-Viacon Ventures....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ticle 19(1)(g) to carry on business, and is therefore struck down as such. 53. Viewed at from a slightly different angle it is clear that if an individual consumer were to go to the consumer forum for compensation for call drops, he would have to prove that the call drop took place due to the fault of the service provider. He would further have to prove that he has suffered a monetary loss for which he has to be compensated, which the Explanatory Memorandum itself says is impossible to compute. Thus, the Impugned Regulation completely avoids the adjudicatory process, and legislatively lays down a penal consequence to a service provider for a call drop taking place without the consumer being able to prove that he is not himself responsible for such call drop and without proof of any actual monetary loss. Whereas individual consumers, either before the Consumer Forum, or in a dispute as a group with service providers before the TRAI, would fail in an action to recover compensation for call drops, yet a statutory penalty is laid down, applicable legislatively, and without any adjudication. This again makes the Impugned Regulation manifestly arbitrary and unreasonable. 54. We hav....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l be paid by the concerned licensee within ninety days of such determination." 56. Obviously, when such compensation is to be paid to a person who is affected by breach of a standard of quality required under the Act, such compensation can only be for actual loss suffered, and only as a result of fault of the service provider being established before a quasi judicial Tribunal. This may be notwithstanding the fact that the service provider otherwise meets the average of 2% call drops per month allowed to him by the 2009 Quality of Service Regulation. This is for the reason that once fault and actual loss suffered are established before a quasi judicial Tribunal, it would not be open to plead, on the facts of an individual case, that an overall standard of performance has been met. For this reason also, a legislatively pre determined penalty, without fault or loss being established by evidence before a quasi judicial authority, and where the cause of a call drop may be because of the consumer himself, renders the Impugned Regulation manifestly arbitrary and unreasonable. Modification of licence condition by Impugned Regulation 57. The appellants have also argued that the Imp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vention of section 3 or section 4, as the case may be, it may pass all or any of the following orders, namely:- (d) direct that the agreements shall stand modified to the extent and in the manner as may be specified in the order by the Commission;." 61. In Union of India v. Assn. of Unified Telecom Service Providers of India, (2011)10 SCC 543, this Court held: "A Constitution Bench of this Court in State of Punjab v. Devans Modern Breweries Ltd. [(2004) 11 SCC 26] relying on Har Shankar case [(1975) 1 SCC 737] and Panna Lal v. State of Rajasthan [(1975) 2 SCC 633] has held in para 121 at p. 106 that issuance of liquor licence constitutes a contract between the parties. Thus, once a licence is issued under the proviso to sub-section (1) of Section 4 of the Telegraph Act, the licence becomes a contract between the licensor and the licensee." (para 40). 62. Having regard to the above, it is clear that the licence conditions, which are a contract between the service providers and consumers, have been amended to the former's disadvantage by making the service provider pay a penalty for call drops despite there being no fault which can be traceable exclusively to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ment, if it is embarked upon it must be carried out properly. To be proper, consultation must be undertaken at a time when proposals are still at a formative stage; it must include sufficient reasons for particular proposals to allow those consulted to give intelligent consideration and an intelligent response; adequate time must be given for this purpose; and the product of consultation must be conscientiously taken into account when the ultimate decision is taken." 66. No doubt in the facts of the present case, the Authority did hold due consultations with all stakeholders and did allow all stakeholders to make their submissions to the Authority. However, we find no discussion or reasoning dealing with the arguments put forward by the service providers, that call drops take place for a variety of reasons, some of which are beyond the control of the service provider and are because of the consumer himself. Consequently, we find that the conclusion that service providers are alone to blame and are consequently deficient in service when it comes to call drops is not a conclusion which a reasonable person can reasonably arrive at. We are cognizant of the fact that ordinarily legis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....blic notice shall be given and objections shall be invited as is usually the case, for example, in the making of municipal bye-laws. But the principle of natural justice, including the right of hearing, cannot be invoked in the making of law either by Parliament or by the State Legislature." [paras 23 - 24] 69. The question of transparency raises a more fundamental question, namely, that of openness in governance. We find that the Right to Information Act of 2005 has gone a long way to strengthen democracy by requiring that the Government be transparent in its actions, so that an informed citizenry is able then to contain corruption, and hold Governments and their instrumentalities accountable to the people of India. The preamble to the said Act, in ringing terms, states:- "WHEREAS the Constitution of India has established democratic Republic; AND WHEREAS democracy requires an informed citizenry and transparency of information which are vital to its functioning and also to contain corruption and to hold Governments and their instrumentalities accountable to the governed; AND WHEREAS revelation of information in actual practice is likely to conflict wit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ning of the governmental process in such a way as to preserve the paramountcy of the democratic ideal. The Preamble would obviously show that the Act is based on the concept of an open society. On the emerging concept of an "open Government", about more than three decades ago, the Constitution Bench of this Court in State of U.P. v. Raj Narain [(1975) 4 SCC 428 : AIR 1975 SC 865] speaking through Mathew, J. held: (SCC p. 453, para 74) "74. ... The people of this country have a right to know every public act, everything that is done in a public way, by their public functionaries. They are entitled to know the particulars of every public transaction in all its bearing.The right to know, which is derived from the concept of freedom of speech, though not absolute, is a factor which should make one wary, when secrecy is claimed for transactions which can, at any rate, have no repercussion on public security. [Ed.: See New York Times Co. v. United States, 29 L Ed 2d 822 : 403 US 713 (1971).] To cover with veil of secrecy, the common routine business, is not in the interest of the public. Such secrecy can seldom be legitimately desired." (AIR p. 884, para 74) (emphasis supplied) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n themselves the responsibility to inform." In People's Union for Civil Liberties v. Union of India [(2004) 2 SCC 476] this Court reiterated, relying on the aforesaid judgments, that right to information is a facet of the right to freedom of "speech and expression" as contained in Article 19(1)(a) of the Constitution of India and also held that right to information is definitely a fundamental right. In coming to this conclusion, this Court traced the origin of the said right from the Universal Declaration of Human Rights, 1948 and also Article 19 of the International Covenant on Civil and Political Rights, which was ratified by India in 1978. This Court also found a similar enunciation of principle in the Declaration of European Convention for the Protection of Human Rights (1950) and found that the spirit of the Universal Declaration of 1948 is echoed in Article 19(1)(a) of the Constitution. (See paras 45, 46 and 47 at pp. 494-95 of the Report.) The exercise of judicial discretion in favour of free speech is not only peculiar to our jurisprudence, the same is a part of the jurisprudence in all the countries which are governed by the rule of law with an independent judiciary. I....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... tenets flowing from due process requirement under Article 21, equal protection clause embodied in Article 14 and fundamental freedoms clause ingrained under Article 19. A modern deliberative democracy cannot function without these attributes." 73. We have been referred to the U.S. Administrative Procedure Act, Section 553 of which states as follows:- 5 USCA § 553 § 553 - Rule making (a)This section applies, according to the provisions thereof, except to the extent that there is involved- (1) a military or foreign affairs function of the United States; or (2) a matter relating to agency management or personnel or to public property, loans, grants, benefits, or contracts. (b)General notice of proposed rule making shall be published in the Federal Register, unless persons subject thereto are named and either personally served or otherwise have actual notice thereof in accordance with law. The notice shall include- (1) a statement of the time, place, and nature of public rule making proceedings; (2) reference to the legal authority under which the rule is proposed; and (3) either the terms or substance of the proposed rule or a descript....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ts received, to explain how the agency resolved the significant problems raised by the comments, and to show how that resolution led the agency to the ultimate rule. The statement must identify what major issues of policy were ventilated and why the agency reacted to them as it did and should enable a reviewing court to ascertain such matters. The statement must respond to the major comments received, explain how they affected the regulation, and, where an old regulation is being replaced, explain why the old regulation is no longer desirable. Agencies have a good deal of discretion in expressing the basis of a rule. The requirement is not to be interpreted over literally, but it should not be stretched into a mandate to refer to all specific issues raised in the comments on the proposed regulations. Although an agency must genuinely consider comments it receives from interested parties, there is no requirement that an agency discuss in great detail all comments, especially those which are frivolous or repetitive. Although the agency need not address every comment received, it must respond in a reasoned manner to those that raise significant problems, to explain how the ag....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... governance. It would also ensure the redressal, partial or otherwise, of grievances of the concerned stakeholders prior to the making of subordinate legislation. This would obviate, in many cases, the need for persons to approach courts to strike down subordinate legislation on the ground of such legislation being manifestly arbitrary or unreasonable. 75. In the present case, we find that the High Court judgment is flawed for several reasons. The judgment is not correct when it says that there can be no dispute that the Impugned Regulation has been made to ensure quality of service extended to consumers by service providers. As has been pointed out hereinabove, the Impugned Regulation does not lay down any quality of service - what it does is to penalise service providers even though they conform to the 2% standard laid down by the Quality of Service Regulations, 2009. In holding that the Impugned Regulation therefore conforms to Section 11(1)(b)(v), the judgment is plainly incorrect. Similarly, the finding that notional compensation is given, and that therefore no penalty is imposed, is also wrong and set aside for the reasons given by us hereinabove. The finding that a transp....