Telecom Disputes Settlement Tribunal
Bharat Sanchar Nigam Limited vs Telecom Regulatory Authority Of India on 13 December, 2004
JUDGMENT
1. For the decision of MA Nos.14 and 151 of 2004, the controversy raised, in brief, in this appeal is against the direction of the regulator, the TRAI constituted under the Telecom Regulatory of India Act, 1997 (for short the "Act") to all the BSOs/CMSPs (Basic Service Operators/Cellular Mobile Service Providers) directing direct connectivity between the service providers. TRAI is of the view that transmitting traffic between service providers in the same service area entailed avoidable transit charges that are eventually passed on to the consumers by the service provider in the form of higher tariff and further that from the traffic engineering point of view this carriage might not be desirable especially where subscribers are likely to grow. According to TRAI, it would not be techno-economically viable for a large amount of traffic transmitting through a route unnecessarily and that "in order to estimate such traffic, data was called for to have a considered justification of direct connectivity between BSNL Cellular and other private CMSPs. From the data obtained, it was observed that the data justifies the direct connectivity amongst the service providers in most of the areas."
2. BSNL has challenged this direction of TRAI in the appeal. BSNL requested TRAI to supply to it the data or the basis on which the TRAI had taken the decision to mandate direct interconnection between the service providers. TRAI is, however, of the view that traffic data on any network is commercially sensitive information and as a matter of policy it is not possible for the TRAI as regulator to share traffic details of other cellular operators with BSNL. TRAI also said that it had concluded that supply of such commercially sensitive information to any of the service providers was not desirable in the context of regulatory practices and principles. TRAI also said that the data was only one of the reasons for directing direct connectivity. It was argued by Mr.Meet Malhotra, learned counsel for TRAI that, apart from the data, there were sufficient grounds for TRAI to have ordered direct connectivity.
3. When the BSNL sought directions of this Tribunal to TRAI to produce the relevant data in question it came with an application (M.A.No.14 of 2004) raising the following pleas:
"Para 2
(v) It is emphasized that normally, in accordance with the regulatory principles and the law of the land, commercially sensitive information of one service provider is not shared with the other service providers. There may be exception to this general rule depending on the peculiar circumstances, for instance, the regulator disclosed some of the data pertaining to traffic and (audited) cost of the Appellant. In this case, the Respondent had taken a specific decision to base the interconnect usage charge and the access deficit charges estimates only on the Appellant data because the Appellant was the predominant operator. Further, this data was used to provide an explanation of the massive access deficit which the other operators are required to pay to Appellant, and for them to appreciate the rationale behind such a decision. This exception to the rule cannot therefore be taken as precedent. The general practice of the Respondent in this regard can be seen from the various Consultation Papers/Orders/Regulations of the Respondent.
(vi) In view of the above, the Respondent is not in a position to pass on the information as desired by the Appellant. Hon'ble TDSAT can be given the information, if it so desires."
4. Before us it was not the case of TRAI that data was obtained only from the appellant BSNL.
5. After we heard the arguments on the issue thus raised, we directed TRAI to produce the File No.1001-13/2003.MN from which the impugned direction emanated. This led the TRAI to file another M.A. No.151 of 2004 raising further the following pleas:
1. ..........As stated by the Authority in its reply and M.A. No.14 of 2004, the Authority is confronted with the peculiar situation wherein the Authority is willing and bound to produce its records for the perusal of the Tribunal; however the Authority is not in a position to have the appellant or its counsel examine the contents of the said file, for three reasons that:-
(i) Under the TRAI Act, the Authority can call for any information from any service provider in relations with its affairs. The Authority can even issue directions to the service provider requiring the service provider to furnish the said information, provided such information is in connection with the matters specified in clause (b) of sub-section (1) of section-11. It has been experience of the Authority that service providers are not readily forthcoming to provide information about their commercial operations which is required by the Authority for the performance of its regulatory functions such as fixation of tariff, interconnection charges etc. If the Authority is now compelled to divulge information of one service provider to its competitor, there is a serious possibility of service providers refusing to furnish commercially sensitive information to the Authority in future, on account of the fact that such information has been forwarded/furnished to its competitor(s). This could seriously undermine regulatory functions of the Authority, as aforesaid.
(ii) Further, nobody can compel a service provider to divulge its commercially sensitive information to a rival/competing service provider. In event that the Authority is forced to divulge commercially sensitive information obtained by it from service providers to the BSNL, it would amount to allowing to be done indirectly, what cannot be done directly. Some of the private cellular operators have already indicated that BSNL is not sharing the traffic data flowing between BSNL cellular and their network.
(iii) An indice as to how and to what extent information is to be made available to the general public (in the interest of transparency) is laid down in the Freedom of Information Act, 2002. Section-8 carves out exceptions to the information which can be sought and obtained by the ordinary citizen. Section 8(1)(e) & (f) reads as under:-
Exemption from disclosure of information ......."(e) minutes or records of advice including legal advice, opinions or recommendations made by any officer of a public authority during the decision making process prior to the executive decision of policy formulation;"
"(f) trade or commercial secrets protected by law or information, the disclosure of which would prejudicially affect the legitimate economic and commercial interests or the competitive position of a public authority; or would cause unfair gain or loss to any person."
Information, specially information relating to commercial interest, on the basis of which any official decision has been taken, is clearly exempted. It would follow that data/information which was one of the basis of issuing its Direction dated 22 July, 2003 cannot, therefore, be made available to the appellant.
(iv) Without prejudice to the aforesaid, it is stated that even if the Authority is to divulge information of other service providers to the appellant, the same can only be done after giving notice to the concerned service provider and obtaining the consent of the said service provider, in writing.
(v) It would be pertinent to point out that TRAI, in exercise of its power under Section 36 of the TRAI Act brought out a Regulation (4 of 2004), Clause 7 of which states:
"The Authority shall ensure the confidentiality of the financial information submitted under various provisions of the Regulation.
Provided that, where the Authority is of the opinion that it is necessary or expedient to disclose the information in public interest, it may, for reasons to be recorded in writing, do so.
Provided further that no information shall be disclosed by the Authority, except after giving the company an opportunity of making such representation in writing, as it may wish to make in that behalf and taking such representation into consideration.
The principle underlying clause 7 of the said Regulation would be applicable to the facts and circumstances of the present case also.
2. Under the facts and circumstances set-forth herein above, it is respectfully stated and reiterated that Authority is obliged to produce its record for the perusal of the Tribunal, but the Authority cannot permit the record to be made available to the appellant, specially without following the process set-out hereinbefore.
Under the facts and circumstances set out herein before, it is respectfully prayed that the Hon'ble Tribunal may be please to:-
(i) permit the Authority to tender the record only for the perusal of the Hon'ble Tribunal; and
(ii) pass any other appropriate orders and directions as this Hon'ble Tribunal deem fit and proper."
6. Since the issue of claim of privilege is substantial, we proceed to examine the matter in somewhat detail.
7. In M.A. No.151/2004 TRAI has made reference to the Regulation 7 of the Reporting System on Accounting Separation Regulation, 2004 (4 of 2004). As the title of the Regulation shows it deals with individual service providers making it obligatory on them to submit financial and non-financial reports on the basis of geographical area of their operations. It is certainly not obligatory on the part of the TRAI to disclose the contents of those reports as the Regulation 7 shows the TRAI has to ensure the confidentiality of the financial information submitted under various provisions of the Regulation. TRAI has leverage to disclose information in public interest and that only after telling the party concerned of its intention to disclose the information. Reliance on this provision by TRAI is not quite helpful in deciding the issue before us. Here the issue is if the reports submitted by service providers under Section 12 of the Act or otherwise are used by the TRAI to the prejudice of other service provider by making an order which adversely affects that service provider, how can TRAI claim confidentiality, is the moot question?
8. Provisions of the Freedom of Information Act, 2002, when it comes into force may apply to this Tribunal. Though the Act has not come into force as yet, we may refer to its provisions as TRAI has relied on clause (f) of Section 8 of this Act. Section 3 of this Act provides that "Subject to the provisions of this Act, all citizens shall have freedom of information" Exemption from disclosure of information is provided in various clauses in Section 8 and clause (f), as stated above, would be relevant and we reproduce the same:-
"trade or commercial secrets protected by law or information, the disclosure of which would prejudicially affect the legitimate economic and commercial interests or the competitive position of a public authority; or would cause unfair gain or loss to any person;"
9. In our view this clause can be trifurcated as under:
(i) trade or commercial secrets protected by law; (ii) information, disclosure of which will prejudicially affect the legitimate economic and commercial interests or the competitive position of a public authority; (iii) information, the disclosure of which would cause unfair gain or the loss to any person.
10. First part is not applicable as no law has been brought to our notice which protects trade or commercial secrets. Second part is also not applicable as TRAI is itself a public authority within the meaning of that Act. It is part three which would apply. Of course person here cannot refer to public authority i.e. TRAI. To withhold the information it has to be shown that BSNL will get unfair gain or any person including the service provider giving information, will suffer loss. Section 9 of the Act specifies the grounds for refusal to access information in circumstances other than those provided in Section 8. That Section is not applicable and it has not been relied upon by TRAI and we need not reproduce the same. Provisions for appeals against the order of rejection of the request for disclosure exist in Section 12. This Act has overriding effect under Section 14 which provides that "the Act shall have effect notwithstanding anything inconsistent therewith contained in the Official Secrets Act, 1923, and any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act".
11. We may in this context examine American Freedom of Information Act which exempts "commercial or financial information" but in our Freedom of Information Act, as noted above, exemption is only if disclosure "would cause unfair gain or loss to any person".
12. American Law exempts from disclosure "trade secrets and commercial or financial information obtained from a person and privileged and confidential." The courts there have considered the question whether information in a particular case is "privileged or confidential" and have prescribed tests. Under these tests "information to be kept confidential must have either (i) impairing government ability to obtain information - necessary information - in the future, or (ii) of causing substantial harm to the competitive position of the person from whom the information was obtained." Rationale behind this test is to "(i) encourage cooperation by those who are not obliged to provide information to the government and (ii) protect the rights of those who must." This standard was laid in the case National Parks and Conservation Association vs. Morton (498 Fed. 2d 765). This standard was, however, somewhat diluted in Critical Mass Energy Project vs. Nuclear Regulation Commission (975 Fed. 2d 87). While the interpretation in the National Park case was "confined to information that persons are required to provide to the government" and now broadened in the Critical Mass case of "information ..... given to the government voluntarily to encompass data of the kind that the provider would not certainly make available public." Writ of Certiorari against the decision in Critical Mass case was dismissed by the U.S. Supreme Court - 507 US 984 (1993).
13. It is one thing where handling of confidential information requires TRAI to balance the concerns of the service provider submitting information and the interest of public in accessing that information. But it is entirely different matter if the information so submitted by service provider becomes the basis, even though partly, for passing an order by TRAI which affects other service provider. In this competitive atmosphere of telecommunication a service provider submitting information is likely to claim confidential treatment of the same. Service provider giving the information, however, must justify why the material warrant confidential treatment. If the information is relevant for the aggrieved service provider to know it is difficult to understand how claim of confidentiality can be upheld. Withholding such information will cause significantly serious harm to the aggrieved party in the conduct of its case. Section 11 (4) of the Act mandates that TRAI shall ensure transparency while exercising its powers and discharging its function. It has been submitted by BSNL that the impugned direction works to its extreme prejudice. TRAI, it appears, does not dispute this except that it justifies the direction.
14. We do not think it is necessary to refer to the provisions of Section 123 and 124 of the Evidence Act in the context of the present case. It is no doubt under those provisions, High Courts have framed rules as to how privileged documents are to be brought to the Court in sealed cover supported by an affidavit by the head of the Department respecting the documents of which privilege is claimed.
15. We would go along with TRAI that in certain cases it is necessary to withhold information being in the nature of a "trade secret or confidential being commercially and financially sensitive" and also "in the interest of competition" as is the law elsewhere. Under Section 12 of the Act, TRAI has been given powers to call for information and conduct investigations etc. It is in the exercise of these powers that TRAI collects information from service providers. It is upto the authority of TRAI to lay down principles where it can withhold information. The basic question, however, is if such information can be withheld when it is relied upon to pass an order to the prejudice of the affected party. But then once the order of TRAI is challenged in appeal before this Tribunal, TRAI is divested of its power to claim of its own to withhold material treating it to be of confidential nature. It will be upto the Tribunal to examine the matter to see if, in the circumstances of the cases, document can be disclosed to the appellant (party appealing against the order of the TRAI). In that situation, TRAI is like a trial court and trial court cannot tell the appellate court that it will claim privilege from showing documents to the opposite party. TRAI can certainly give reasons why it thought it expedient in the first instance not to disclose information which will certainly be given due consideration by the Tribunal to make up its own mind.
16. Now the question arises how this Tribunal will look into the matter of the claim of non-disclosure of material. The Tribunal will look into the question of claim of confidentiality only if the party submitting information or material to TRAI made a request that such information be not disclosed to other service providers. It is not enough that a mere request is made, it should be supported with substantial reasons for withholding materials from inspection by the other party. It should be explained how the disclosure of information would result in substantial competitive harm to the information provider. Each case will have to be examined on the facts of that case. We have to balance the interest in disclosure and the interest in preserving the confidentiality of competitive sensitive material. What we find in the present case is that there is no request from any of the service providers from whom data has been collected for its non-disclosure and as a matter of fact during the course of arguments before us also learned counsel for service providers stated that they had no objections to the data being shown to the BSNL, the appellant.
17. It is very difficult to understand how TRAI can plead that in spite of Section 12 of the Act, it is finding difficulty in getting information from any service provider. Under Section 26 of the Act, members, officers and employers of TRAI are all public servants within the meaning of Section 21 of Indian Penal Code. Chapter X of the Code contains sufficient provisions where lawful authority of the public servants' is breached by anyone. TRAI cannot plead any hardship or show helplessness when any service provider refuses to furnish commercially sensitive information. It is also difficult to appreciate the argument of TRAI that if it is made to disclose information that would amount to doing indirectly what it could not do directly. It is one thing where a service provider asked the other service provider to give information which any service provider declines to give and it is entirely different aspect that TRAI in exercise of Section 12 gathers information for any of its functions. If in exercise of those functions a direction is issued which is prejudicial to a service provider that service provider can certainly ask for the material which formed the basis to issue the direction. It would be at that stage for TRAI to examine if the material so collected from the other service provider is of commercially sensitive nature effecting adversely competition.
18. Accordingly, we reject the claim of TRAI to withhold data on the ground of its being of confidential in nature and we direct that data be disclosed to BSNL, the appellant.