TRAI can enforce telecom regulations by issuing notices, directions without adjudicating disputes: Supreme Court

The Supreme Court has held that the Telecom Regulatory Authority of India's (TRAI) power to issue directions under the TRAI Act to enforce compliance with its regulations does not amount to adjudicating disputes between service providers. [Telecom Regulatory Authority of India v. M/s Polimer Cable Network & Ors.]

In a judgment delivered on July 24, a bench of Justices SVN Bhatti and NV Anjaria allowed TRAI's appeal and set aside the Telecom Disputes Settlement and Appellate Tribunal's (TDSAT) judgment quashing the regulator's direction and show-cause notice issued to Salem-based multi-system operator (MSO).

The Court held that TRAI is empowered to issue directions under the TRAI Act to ensure compliance with its regulations.

"TRAI is authorised to issue directions, and disobedience of directions attracts the penalty stipulated by Section 29," the Court held.

However, the Court drew a clear distinction between TRAI's regulatory functions and TDSAT's adjudicatory jurisdiction.

It clarified that while TRAI may enforce compliance with its regulations, it cannot finally determine the rights and liabilities of parties in a dispute.

“TRAI may record, for the limited purpose of enforcement, a prima facie finding of non-compliance, but it cannot render a final and binding adjudication of the parties’ inter se rights, award damages, quantify arrears, entertain counterclaims or mould reliefs. These functions belong to the TDSAT,” the Court said.

The case arose from a dispute between M/s Polimer Cable Network, a multi-system operator (MSO), and several local cable operators (LCOs) in Tamil Nadu's Salem. The LCOs alleged that the MSO had abruptly disconnected cable television signals they were contracted to receive.

The LCOs approached the Madras High Court, which disposed of the plea by directing TRAI to consider their complaints after hearing both sides.

After hearing the parties, TRAI prima facie found that the MSO had violated the Interconnection Regulations and directed it to restore the cable signals. When the LCOs alleged that the directions had not been complied with, TRAI sought a report from the Salem Police which confirmed the non-compliance.

TRAI thereafter issued a show-cause notice to the MSO. Instead of responding to the notice, the MSO challenged both the direction and the show-cause notice before the TDSAT,

The TDSAT ruled in favour of MSO and quashed the direction and show cause notice.

Aggrieved by the decision, TRAI appealed to the Supreme Court.

The principal question before the Supreme Court was whether by issuing the direction and the subsequent show-cause notice, TRAI had effectively adjudicated the dispute between the MSO and the LCOs.

The Court answered the question in the negative. It held that TDSAT had failed to distinguish between regulatory enforcement and adjudication.

It further went on to explain that TRAI's powers under Sections 11 and 13 of the TRAI Act are regulatory in nature and enable it to issue directions to secure compliance with its regulations.

Merely because TRAI forms a prima facie opinion that its regulations have been violated and issues directions accordingly does not mean it has adjudicated the rights of the parties, the Court added.

"Accordingly, neither the direction nor the show cause notice bears the essential attributes of 'adjudication', and TRAI has not trespassed upon the exclusive adjudicatory jurisdiction of the TDSAT," the Court held.

The Court further clarified that the forum having jurisdiction depends on the true nature of the grievance raised.

"Where the true substance of the grievance is a dispute between two service providers, as distinct from the breach of a regulation, the matter lies before the TDSAT under Sections 14 and 14A," the judgment stated.

Thus, the Court restored TRAI's direction and show-cause notice, holding that they were an exercise of its regulatory powers and did not amount to adjudication of the dispute between the parties.

Senior Advocate Saket Singh with advocates Sanjay Kapur, Surya Prakash, Shubhra Kapur, Shristi Kundu and Anuraj Mishra appeared for TRAI.

Advocate Amitesh Chandra Mishra, with advocates Vishakha Jha, Mrityunjai Singh, Tishya Pandey and Ram Naresh, ACM Legal, appeared for the respondents.

[Read Judgment]