TMI Blog2016 (5) TMI 1458X X X X Extracts X X X X X X X X Extracts X X X X ..... condition that it must be exercised consistently with the Act and the Rules thereunder in order to carry out the purposes of the Act. Since the regulation making power has first to be consistent with the Act, it is necessary that it not be inconsistent with Section 11 of the Act, and in particular Section 11(1)(b) thereof. This is for the reason that the functions of the Authority are laid down by this Section, and that the Impugned Regulation itself refers to Section 11(1)(b)(i) and (v) as the source of power under which the Impugned Regulation has been framed - 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. Violation of Fundamental Rights - Held that:- One of the tests for challenging the constitutionality of subordinate legislation is that subordinate legislation should not be manifestly arbitrary. Also, it is settled law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Regulation to be at odds with both Articles 14 and 19(1)(g) - it is clear that the Quality of Service Regulations and the Consumer Regulations must be read together as part of a single scheme in order to test the reasonableness thereof. The countervailing advantage to service providers by way of the allowance of 2% average call drops per month, which has been granted under the 2009 Quality of Service Regulations, could not have been ignored by the Impugned Regulation so as to affect the fundamental rights of the appellants, and having been so ignored, would render the Impugned Regulation manifestly arbitrary and unreasonable - 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. 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 provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ginating 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 provision of Unified Acces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T 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 concerned, for a call drop r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res 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 Regulation, stating that consumers, at various fora, have raised the issue of call drop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Authority has decided to mandate that, each originating CMTSP, within four hours of the occurrence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 discuss the validity of the Impugned Regulation under two grounds the ground of being ultra vires the parent Act, and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Constitution. They further went on to state that there was no power in the TRAI to interfere with their licence conditions w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout 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 Preamble to the TRAI Act, that the Impugned Regulation only protects the interest of the consumers of the telecom sector, whereas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent 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 ₹ 10/- at a time. The Impugned Regulation seeks to provide some solace to these persons for dropped calls. He further argued that memb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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 technical paper of 13.11.2015, when compared to the Impugned Regulation, and stated that the Quality of Service Regula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... They have also made the second large private sector investment in infrastructure amounting to ₹ 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 figures reeled out by the learned Attorney General are not based on the record of the case, and, in any case, have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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- (b) discharge the following functions, namely:- (i) ensure compliance of terms and conditions of license; (ii) notwithstanding anything conta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson 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 order, decency or morality. (2) Without prejudice to the foregoing provisions, the Authority shall, in exercise of its powers or the performance of its functions, be bound by such directions on questions of policy as the Central Government may give in writing to it from time to time: Prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 grounds: (a) Lack of legislative competence to make the subordinate legislation. (b) Violation of fundamental rights guaranteed under the Constitution of India. (c) Violation of any provision of the Constitution of India. (d) Failure to conform to the statute under which it is made or exceeding the limits of authority conferred by the enabling Act. (e) Repugnancy to the laws ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 regulations under Section 36. This means that the power to make regulations under Section 36 is non-delegable. The reason for excluding Section 36 from the purview of Section 33 is simple. The power under Section 36 is legislative as opposed to administrative. By virtue of Section 37, the regulations made under the TRAI Act are placed on a par with the rules which can be framed by the Central Government under Section 35 and being in the nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of service. iii) The LICENSEE will keep a record of number of faults and rectification reports in respect of the service, which will be produced before the LICENSOR/TRAI as and when and in whatever form desired. 28.3 The LICENSEE shall be responsive to the complaints lodged by his subscribers. The Licensee shall rectify the anomalies within the MTTR specified and maintain the history sheets for each installation, statistics and analysis on the overall maintenance status. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stent 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 the Rules made thereunder, but it also has to carry out the purposes of the Act, as can be discerned from the Preamble to the Act. If, far from carrying out the purposes of the Act, a Regulation is made contrary to such purposes, such Regulation cannot be said to be consistent with the Act, for it must be consistent with both the letter of the Act and the purposes for which the Act has been enacted. In attempting to protect the interest of the consumer of the telecom sector at the cost of the interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 executive action do not necessarily apply to delegated legislation. In order to strike down a delegated legislation as arbitrary it has to be established that there is manifest arbitrariness. In order to be described as arbitrary, it must be shown that it was not reasonable and manifestly arbitrary. The expression arbitrarily means: in an unreasonable manner, as fixed or done capriciously or at pleasure, without adequate determining principle, not founded in the nature of things, non-rational, not done or acting ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 brought in by the first amendment to the Constitution. 31. Similarly, the first amendment to the Constitution also amended Article 19(6), with which we are directly concerned, to provide for a State monopoly, which would not have to be tested on the ground of reasonable restrictions. Therefore, the first amendment to the Constitution of India has made it clear that reasonable restrictions, added in Article 19(2) and subtracted from Article 19(6) (insofar as State monopolies are concerned), point to the fact that this test is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et 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 general words used in a statute or regulation can be confined in a particular manner so as not to infringe a constitutional right. This was best exemplified in one of the earliest judgments dealing with the doctrine of reading down, namely the judgment of the Federal Court in In Re: Hindu Women's Rights to Property Act, 1937, AIR 1941 FC 72. In that judgment, the word property in Section 3 of the Hindu Women s Rights to Property Act was read down so as not to include agricultural land, which would be outside the central legi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 statute. Its only duty is to strike it down and leave it to the legislature if it so desires, to amend it. What is further, if the remaking of the statute by the courts is to lead to its distortion that course is to be scrupulously avoided. One of the situations further where the doctrine can never be called into play is where the statute requires extensive additions and deletions. Not only it is no part of the court's duty to undertake such exercise, but it is beyond its jurisdiction to do so. [para 255] 35. Applying the aforesaid test ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 interests of service providers and consumers of the telecom sector together, so that the orderly growth of the telecom sector is ensured thereby. We are afraid that the orderly growth of the telecom sector cannot be ensured or promoted by a manifestly arbitrary or unreasonable regulation which makes a service provider pay a penalty without it being necessarily at fault. 39. We were then told that the Impugned Regulation was framed keeping in mind the small consumer, that is, a person who has a pre-paid SIM Card with an average balance of ₹ 10/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 is patently arbitrary, discriminatory or demonstrably irrelevant to the policy which the legislature is free to adopt. The interest of the producer and the investor is only one of the variables in the constitutional calculus of reasonableness and courts ought not to interfere so long as the exercise of Governmental power to fix fair prices is broadly within a zone of reasonableness . If we were to embark upon an examination of the disparate contentions raised before us on behalf of the contending parties, we have no doubt that we shall have exce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 qua deficiency of service in individual towers leading to call drops. However, the persons who suffer in the sector in which call drops are many and frequent would then have no protection. We are afraid neither of these reasons avails the Authority. First and foremost, the 2009 Quality of Service Regulation is made under Section 11(1)(b)(v), which is the very Section which is claimed to be the source of the Impugned Regulation. Secondly, both regulations deal with the same subject matter namely, call drops, and both regulations are made in the interest o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, 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 authorities over upon they have no control, or whether they are attributable to only two causes, as suggested by the Attorney General, being network related causes or user related causes. Equally, it is not necessary to determine finally as to whether the reason for a call drop can technologically be found out and whether it is a network related reason or a user related reason. 47. In Shree Bhagwati Steel Rolling Mills v. Commissioner of Central Excise, (2016) 3 SCC 643, Rules 96 ZO, ZP and ZQ of the Central Excise Rules, 1994, which consisted inter alia of penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 Pvt. Ltd. (Now Known as DSC Ventures Pvt. Ltd) v. Lal Manohar Pandey and Ors., (Civil Appeal Nos. 6781-6782 of 2015, decided on August 27, 2015). He referred to paragraph 21 in order to show that a certain amount of guess work is unavoidable in matters of this nature. 51. The context in which this statement occurs in paragraph 21 is very different from the present context. This Court held that a toll can only be collected for maintaining a road. The patches in which the road is not properly maintained should reduce proportionately the amount of toll that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 have seen that the 2000 Amendment has taken away adjudicatory functions from the TRAI, leaving it with administrative and legislative functions. By Section 14 of the Act, adjudicatory functions have been vested in an Appellate Tribunal, where disputes between a group of consumers and the service providers are to be adjudicated by the Appellate Tribunal. In stark contrast, under the scheme of the Electricity Act, 2003, the Central Electricity Regulatory Commission and the various State Electricity Regulatory Commissions have to discharge legislative, administrativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Impugned Regulation seeks to modify the licence conditions, and the licence conditions being a contract between the service provider and the consumer, such conditions can be modified only where the statute contains language by which an Authority is empowered to disregard an agreement between the parties. It will be seen that Section 11(1)(b)(ii), which has been set out hereinabove, expressly contains such language and therefore states that terms and conditions of interconnectivity between the service providers may be fixed notwithstanding anything contained in the terms and conditions of the licence granted be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties. 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 the service provider, and despite the service provider maintaining the necessary standard of quality required of it namely, adhering to the limit of an average of 2% of call drops per month. We have already seen that condition 28 of the licence requires the licensee to ensure that the quality of service standards, as prescribed by TRAI, are adhered to, and that the Impugned Regulation does not lay down quality of service standards. This being so, it is clear that the laying down of a penalty de hors condition 28, which, as we have seen, also requires establishing of fault of the service provider when it does not conform to a quality of service standard laid down by TRAI, would amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 legislative functions do not require that natural justice be followed. However, it has been recognised in some of the judgments dealing with this aspect that natural justice need not be followed except where the statute so provides. 67. In Union of India v. Cynamide India Ltd., (1987) 2 SCC 720, this Court held: The second observation we wish to make is, legislative action, plenary or subordinate, is not subject to rules of natural justice. In the case of Parliamentary legislation, the proposition is self-evident. In the case of subordinate legislation, it may happen that Parliament may itself provide for a notice and for a hearing - there are several instances of the legislature requiring the subordinate legislating autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id 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 with other public interests including efficient operations of the Governments, optimum use of limited fiscal resources and the preservation of confidentiality of sensitive information; AND WHEREAS it is necessary to harmonise these conflicting interests while preserving the paramountcy of the democratic ideal; Now, THEREFORE, it is expedient to provide for furnishing certain information to citizens who desire to have it. 70. We find that under Section 4(1) every public authority is not only to maintain all its records duly catalogued and indexed but is to publish, within 120 days from the enactment of the said Act, the procedure followed by it in its decision making process, which includes channels of supervision and accountability. Section 4(1)(b)(iii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) Another Constitution Bench in S.P. Gupta v. Union of India [1981 Supp SCC 87 : AIR 1982 SC 149] relying on the ratio in Raj Narain [(1975) 4 SCC 428: AIR 1975 SC 865] held: (S.P. Gupta case [1981 Supp SCC 87 : AIR 1982 SC 149] , SCC p. 275, para 67) 67. The concept of an open Government is the direct emanation from the right to know which seems to be implicit in the right of free speech and expression guaranteed under Article 19(1)(a). Therefore, disclosure of information in regard to the functioning of Government must be the rule and secrecy an exception justified only where the strictest requirement of public interest so demands. The approach of the court must be to attenuate the area of secrecy as much as possible consistently with the requirement of public interest, bearing in mind all the time that di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... niversal 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. In this connection, if we may quote what Lord Acton said in one of his speeches: Everything secret degenerates, even the administration of justice; nothing is safe that does not show how it can bear discussion and publicity. It is, therefore, clear that a society which adopts openness as a value of overarching significance not only permits its citizens a wide range of freedom of expression, it also goes further in actually opening up the deliberative process of the Government itself to the sunlight of public scrutiny. Frankfurter, J. also opined: The ultimate foundation of a free society is the binding tie of cohesive sentiment. Such a sentiment is fostered by all those agencies of the mind and spirit which may serve to gather up the traditions of a people, transmit them from generation to generation, and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erwise 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 description of the subjects and issues involved. Except when notice or hearing is required by statute, this subsection does not apply- (A) to interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice; or (B) when the agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest. (c) After notice required by this section, the agency shall give interested persons an opportunity to participate in the rule making through submission of written data, views, or arguments with or without opportunity for oral presentation. After consideration of the relevant matter presented, the agency shall incorporate in the rules adopted a concise general statement of their basis and pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment 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 agency resolved any significant problems raised by the comments, and to show how that resolution led the agency to the ultimate rule. Conclusory statements will not fulfill the administrative agency s duty to incorporate in adopted rules a concise general statement of their basis and purpose. The agency must articulate a satisfactory explanation for its action, including a rational connection between the facts it found and the choices it made. Under some circumstance, agencies must identify specific studies or data that they rely upon in arriving at their decision to adopt a rule. Regulations which lack a statement of basis and purpose may be upheld if the basis and purpose and obvious. Moreover, the failure of an agency to incorporate the statement does not render a rule ineffective as to parties to litigation who had knowledge of the rule. Despite the statutory language mandating that the statement of basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rms 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 transparent process was followed by TRAI in making the Impugned Regulation is only partly correct. While it is true that all stakeholders were consulted, but unfortunately nothing is disclosed as to why service providers were incorrect when they said that call drops were due to various reasons, some of which cannot be said to be because of the fault of the service provider. Indeed, the Regulation, in assuming that every call drop is a deficiency of service on the part of the service provider, is plainly incorrect. Further, the High Court judgment, when it speaks of the technical paper of 13.11.2015, seems to have mixed it up with the consultation paper dated 4.9.2015 referred to in the Explanatory Memorandum to the Impugned Regulation. The judgment has entirely missed the fact that the technical paper of 13.11.2015 unequivocally states that the causes for call drops are many and are often beyond the control of service providers and a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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