Gujarat High Court
The Cable Operator Association Of ... vs Union Of India on 19 October, 2022
Author: Aravind Kumar
Bench: Aravind Kumar, Ashutosh J. Shastri
C/SCA/1730/2019 ORDER DATED: 19/10/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 1730 of 2019
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THE CABLE OPERATOR ASSOCIATION OF GUJARAT THROUGH
PRESIDENT PRAMOD LAXMIKANT PANDYA
Versus
UNION OF INDIA
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Appearance:
MR PRATIK Y JASANI(5325) for the Petitioner(s) No. 1
MR SIDDHARTH DAVE for MR DEVANG VYAS(2794) for the
Respondent(s) No. 1
NOTICE SERVED BY DS for the Respondent(s) No. 2
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CORAM:HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR
and
HONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI
Date : 19/10/2022
ORAL ORDER
(PER : HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR)
1. In this petition, the vires of Regulation 12(7) of the Telecommunications (Broadcasting and Cable) Services Interconnection (Addressable Systems) Regulation, 2017 has been challenged and declaration is sought that said regulation be declared as bad in law, arbitrary and without jurisdiction and petitioner also has sought for said Regulation being declared as ultra vires of the Constitution.
2. We have heard Shri Pratik Y. Jasani, learned counsel Page 1 of 11 Downloaded on : Sun Dec 25 04:22:45 IST 2022 C/SCA/1730/2019 ORDER DATED: 19/10/2022 appearing for the petitioner and Mr. Siddharth Dave, learned counsel appearing for the respondents.
3. By this petition, as noticed herein-above, the vires of Clause 12(7) of the Regulation is sought to be questioned, which reads as under :-
"12(3).
12. Interconnection Agreement between the Distributor of Television Channel and Local Cable Operators:
(4) XXXXX
(5) XXXXX
(6) XXXXX
(7) The settlement of service charge between local
cable operators and multi-systems operators shall be governed by mutual agreement:
Provided that in case the multi-systems operators and the local cable operator fail to arrive at a mutual agreement for settlement of service charges, then the network capacity fee amount and the distribution fee amount shall be shared in the ratio of 55:45 between multi-system operators and local cable operator."
3.1. The sum and substance of petitioner's grievance is: prior to amendment of Regulation 12(7), service charges paid by the consumers was being settled between Local Cable Operators Page 2 of 11 Downloaded on : Sun Dec 25 04:22:45 IST 2022 C/SCA/1730/2019 ORDER DATED: 19/10/2022 (LCOs) and Multi- System Operator (MSOs) by mutual agreement. However, by insertion of proviso to sub-regulation (7) of Regulation 12 where-under ratio of 55 : 45 has been fixed acts as a cap and thereby it takes away the bargaining power of either of the parties and more particularly, that of petitioner and as such, it is illegal and ultra vires of Articles 19(1)(g) and 21 of the Constitution of India. Hence, petitioner has prayed for said Regulation being quashed.
4. At the outset, it requires to be noticed that Telecom Regulatory Authority of India (for short "TRAI") is a statutory body established under sub-section (1) of Section 3 of the Act, 1997 inter alia to regulate Telecommunication services which include Broadcasting and Cable services. Amongst, other functions entrusted to TRAI, it includes regulation of tariff, interconnection, and quality of service of Broadcasting and Cabel T.V services while protecting the interests of the consumers and provide consumers with adequate choice, affordable tariffs and high quality of service. Interconnection between Broadcasting service providers is a techno commercial arrangement by which service providers connect their Page 3 of 11 Downloaded on : Sun Dec 25 04:22:45 IST 2022 C/SCA/1730/2019 ORDER DATED: 19/10/2022 equipments and networks to the subscribers. Hence, TRAI is required to ensure technical compatibility and effective interconnection between different service providers and fix the terms and conditions of inter-connectivity between the service providers, and regulate arrangement amongst service providers for sharing their revenue derived from providing Broadcasting and Cable T.V services. Hence, from time to time, TRAI notify's regulatory framework, issues directions and orders as applicable to service providers providing Broadcasting services.
5. After introduction of the Addressable System in India to T.V. Industry, a need to have a tariff regulation for addressable system having been felt by the stake holders, resulted in TRAI issuing Telecommunication (Broadcasting and Cable) Services (Fourth) (Addressable Systems) Tariff Order, 2010. In order to implement Digital Addressable Cable T.V. Systems in India, the Central Government issued an ordinance on 25.10.2011 which became an Act on December, 2011, resulting in issuance of Notification dated 11.11.2011, which laid down the road map for implementation in four phases from June 2012 to December 2014. After consultation with all stake holders TRAI came out Page 4 of 11 Downloaded on : Sun Dec 25 04:22:45 IST 2022 C/SCA/1730/2019 ORDER DATED: 19/10/2022 with an amendment tariff order and a new interconnection regulation for digital addressable cable TV system, namely the Telecommunication (Broadcasting and Cable Services) Interconnection (Digital Addressable Cable Television Systems) Regulations, 2012. By this amendment, a proviso under Clause 5 was inserted providing for a fall-back provision that the charges collected from the subscription of channels of basic service tier, free to air channel and bouquet of free to air channels shall be shared in the ratio of 55 : 45 between the MSOs and LCOs respectively. It also provided that revenue sharing MSOc and LCOs in respect of charges collected from subscription of pay channels or bouquet thereof, shall be in the ratio of 65 : 35. This fall-back arrangement did not prohibit LCOs and MSOs to decide the revenue sharing through mutual agreement as provided under sub-regulation (7) of Regulation 12. This insertion of proviso was the subject matter of challenge before various Courts' including the very amendment brought to the Regulation 2017. The Madras High Court and Kerala High Court have upheld the constitutional vires of the said Regulation as not being offending to Articles 19(1)(g) of the Constitution of Page 5 of 11 Downloaded on : Sun Dec 25 04:22:45 IST 2022 C/SCA/1730/2019 ORDER DATED: 19/10/2022 India and ultimately, the Hon'ble Apex Court in the case of Star India Private Limited v. Department of Industrial Policy and Promotion & Ors., in Civil Appeal No. 7326 of 2018 disposed of on 30.10.2018 has upheld the validity of the said Regulations. The amendment brought about, by way of proviso has been, on the basis of consultation with all the stake holders and as such, the contention of the petitioner raised through Mr. Pratik Jasani, learned counsel appearing for the petitioner that it would take away the bargaining power of the LCOs, cannot be accepted. Perusal of said clause would indicate that it is only in the event of mutual negotiation between LCOs and MSOs failing it would give a cause of action for resolution of the dispute by the TRAI and in the event of any such dispute were to arise till resolution of such dispute, the network capacity fee amount and the distribution fee amount requires to be shared between them in the ratio of 55 : 45. This fall-back arrangement cannot be construed as oppressive or taking away the right of LCOs from their bargaining power. In the aforesaid judgment of the Hon'ble Apex Court, it has been observed :
"37. It can thus be seen that both the Regulation as well as the Tariff Order have been the subject matter of Page 6 of 11 Downloaded on : Sun Dec 25 04:22:45 IST 2022 C/SCA/1730/2019 ORDER DATED: 19/10/2022 extensive discussions between TRAI, all stake holders and consumers, pursuant to which most of the suggestions given by the broadcasters themselves have been accepted and incorporated into the Regulation and the Tariff Order. The Explanatory Memorandum shows that the focus of the Authority has always been the provision of a level playing field to both broadcaster and subscriber. For example, when high discounts are offered for bouquets that are offered by the broadcasters, the effect is that subscribers are forced to take bouquets only, as the a-lacarte rates of the pay channels that are found in these bouquets are much higher. This results in perverse pricing of bouquets vis-à-vis individual pay channels. In the process, the public ends up paying for unwanted channels, thereby blocking newer and better TV channels and restricting subscribers choice. It is for this reason that discounts are capped. While doing so, however, full flexibility has been given to broadcasters to declare the prices of their pay channels on an a-la-carte basis. The Authority has shown that it does not encroach upon the freedom of broadcasters to arrange their business as they choose. Also, when such discounts are limited, a subscriber can then be free to choose a-la- carte channels of his choice. Thus, the flexibility of formation of a bouquet, i.e., the choice of channels to be included in the bouquet together with the content of such channels, is not touched by the Authority. It is only efforts aimed at thwarting competition and reducing a-lacarte choice that are, therefore, being interfered with. Equally, when a ceiling of INR 19 on the maximum retail price of pay channels which can be provided as a part of a bouquet is fixed by the Authority, the Authoritys focus is to be fair to both the subscribers as well as the broadcasters. INR 19 is an improvement over the erstwhile ceiling of INR 15.12 fixed by the earlier regulation which nobody has challenged. To maintain the balance between the subscribers interests and broadcasters interests, again the Authority makes it clear that broadcasters have complete freedom to price channels which do not form part of any bouquet and are offered only on an a-lacarte basis. As market regulator, the Authority states that the impugned Page 7 of 11 Downloaded on : Sun Dec 25 04:22:45 IST 2022 C/SCA/1730/2019 ORDER DATED: 19/10/2022 Regulation and Tariff Order are not written in stone but will be reviewed keeping a watch on the developments in the market. We are, therefore, clearly of the view that the Regulation and the Tariff Order have been made keeping the interests of the stakeholders and the consumers in mind and are intra vires the regulation power contained in Section 36 of the TRAI Act. Consequently, we agree with the conclusion of the learned Chief Justice and the third learned Judge of the Madras High Court that these writ petitions deserve to be dismissed.
64. The picture that, therefore, emerges is that copyright is meant to protect the proprietary interest of the owner, which in the present case is a broadcaster, in the work, i.e. the original work, its broadcast and/or its re-broadcast by him. The interest of the end user or consumer is not the focus of the Copyright Act at all. On the other hand, the TRAI Act has to focus on broadcasting services provided by the broadcaster that impact the ultimate consumer. The focus, therefore, of TRAI is that of a regulatory authority, which looks to the interest of both broadcaster and subscriber so as to provide a level playing field for both in which regulations can be laid down which affect the manner and carriage of broadcast to the ultimate consumers. Once the relative scope of both the enactments is understood as above, there can be no difficulty in stating that the two Acts operate in different fields. We do not find on a reading of the impugned Regulation as well as the Tariff Order made that TRAI has transgressed into copyright land. This is for the reason, as has been stated herein-above, that regulations which allegedly impact packaging TV channels, pricing of TV channels and the broadcasters right to arrange his business as he pleases, all have to be viewed with the lens of a regulatory authority, which is to provide a level playing field between broadcaster and subscriber. We have also noted how the broadcaster is free to provide whatever content he chooses for the TV channels that he chooses to transmit to the ultimate consumer. We have also noted how the broadcaster is free to arrange pricing Page 8 of 11 Downloaded on : Sun Dec 25 04:22:45 IST 2022 C/SCA/1730/2019 ORDER DATED: 19/10/2022 of his TV channels so long as they are nondiscriminatory and do not otherwise have the effect of unreasonably restricting the choice of a subscriber to choose bouquet or a-la-carte channels as has been held herein-above. We are satisfied that the impugned Regulation and Tariff Order have been passed by a regulatory authority after applying its mind to the objections of the various stakeholders involved after which the Regulation and Tariff Order have been laid down which have, by and large, been initially acceded to by the broadcasters themselves. In this view of the matter, we are of the view that the Copyright Act will operate within its own sphere, the broadcaster being given full flexibility to either individually or in the form of a society charge royalty or compensation for the three kinds of copyright mentioned hereinabove. TRAI, while exercising its regulatory functions under the TRAI Act, does not at all, in substance, impinge upon any of these rights, but merely acts, as has been stated hereinabove, as a regulator, in the public interest, of broadcasting services provided by broadcasters and availed of by the ultimate consumer."
6. The said fall-back arrangement provided under the amended provision of Regulation 12 would not take away the right of the petitioner and the impugned Regulations do not impose any arbitrary restrictions upon the petitioner in the process of bargaining or at the time of entering into negotiation resulting in agreement being entered into between the parties. The said provision is in consonance with the provisions of the TRAI Act 1997 and in no manner it takes away the right of the petitioner to carry on the profession or business or trade, but on Page 9 of 11 Downloaded on : Sun Dec 25 04:22:45 IST 2022 C/SCA/1730/2019 ORDER DATED: 19/10/2022 the other hand, it would protect the interest of the general public that is the service providers and consumers and the said amendment has taken its birth after extensive deliberations having been held with the stake holders and on being offered opportunity to all including the petitioner herein to submit their views or comments before such amendment was brought in. In fact, the reply statement filed by the respondent would clearly indicate that prior to the introduction of the amendment the authorities had engaged in copious consultations with all stake holders on 04.05.2016, an open house discussion to discuss issues relating to inter-connection with stake holders were held on 13.07.2016 at Delhi, circulation of draft regulations took place on 13.10.2016 which culminated in the proviso to Regulation 12(7) being incorporated by impugned amendment. The very provision itself would provide for settlement of service charges by mutual agreement and such mutual negotiations would be based on such circumstances that may unfold in each case which cannot be put in any straight-jacket formula. In other words, it all depends upon the roles and responsibilities of each of them at different levels.
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C/SCA/1730/2019 ORDER DATED: 19/10/2022 7. In that view of the matter, we do not find any good
ground to entertain this petition and petition is devoid of merits and it is liable to be dismissed and accordingly it stands dismissed. Notice stands discharged.
(ARAVIND KUMAR,CJ) (ASHUTOSH J. SHASTRI, J) phalguni Page 11 of 11 Downloaded on : Sun Dec 25 04:22:45 IST 2022