Madras HC split in challenge to TRAI regulations on packaging and pricing of TV channels

The Madras High Court on Friday pronounced a split verdict in the challenge made to the tariff order and interconnection regulations introduced by the Telecom Regulatory Authority of India (TRAI) in 2017. These provisions lay down certain restrictions on the manner in which TV channels are packaged and priced..The verdict comes six months after the Bench of Chief Justice Indira Banerjee and Justice M Sundar reserved orders..The subject matter of the challenge are the Telecommunication (Broadcasting and Cable) Services (Eighth) (Addressable Systems) Tariff Order, 2017 and the Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems) Regulations, 2017 (hereafter ‘impugned provisions’)..These provisions, introduced as draft orders in October 2016, were eventually notified in March 2017 during the pendency of the dispute..The Court was dealing with a challenge brought initially by writ petitioners, Star India and its subsidiary Vijay TV..The All India Digital Cable Federation, Videocon d2h Limited and Indian Broadcasting Foundation later approached the Court as intervenors. While the former two supported TRAI, the third intervenor joined the writ petitioners in their challenge to TRAI’s order and regulations..A host of senior counsel appeared on both sides. P Chidambaram appeared for Star India in its petition, while Abhishek Manu Singhvi and PS Raman represented Vijay TV. Additional Solicitor General G Rajagopalan argued for various Union ministries, while P Wilson appeared for TRAI. Vijay Narayan and ARL Sundaresan represented various intervenors..Following petitions challenging the same, the Madras High Court had initially ordered TRAI to maintain status quo in December 2016. On an appeal preferred by TRAI in January 2017, the Supreme Court modified the Madras High Court order and allowed TRAI to go ahead with the process of notifying the tariff order and regulations..The Supreme Court also directed the Madras High Court to continue hearing the case and dispose the same expeditiously. The case came up before the First Bench after a series of recusals..The broad thrust of the challenge made by the petitioners is that the imposition of the impugned provisions was beyond the jurisdiction of TRAI. Through the Tariff order and consequential regulations, the TRAI encroached upon copyrights and Broadcasting Reproduction Rights (BRR) of the petitioner-broadcasters..To be more specific, the new regulations include preventing broadcasters from offering a mix of pay channels and free to air channels in a bouquet of channels. Another restriction sought to be imposed by TRAI is that high definition and standard definition formats of the same channel should not be in the same bouquet. The impugned provisions also place caps on the MRP of a channel and the maximum discount that can be offered for bouquets of channels..It was contended that TRAI’s jurisdiction to regulate and fix tariff is limited to carriage or ‘means of transmission’. It could not be extended to regulating content, which falls in the domain of copyright law, beyond TRAI’s jurisdiction..On the contrary, the respondents argued that TRAI was well within its jurisdiction to pass the impugned provisions in public interest. Among other contentions, it was submitted that the impugned clauses do not overlap with copyright law or BRR..It was argued that the provisions only cover transmission and not content creation. It was also emphasised that the provisions of the Copyright Act are subject to all other laws in force and therefore, rights, if any under the Copyright Act, are subject to TRAI Act..Objections raised by TRAI that the Madras High Court was barred from hearing the dispute on grounds of territorial jurisdiction, res judicata, and other grounds, were dismissed by both judges of the Bench..However, despite extensive arguments and discussion on the issue, the Bench found itself unable to render a unanimous verdict on whether the TRAI possessed the jurisdiction to impose the impugned provisions..On this aspect, Justice Sundar found that there were provisions in the impugned regulations which touched upon the content of broadcasting, which admittedly lies beyond TRAI’s jurisdiction. He observed,.“…the cost of production or cost of procuring various programmes will vary depending on artist, producer, nature of production and many other determinants. Therefore, TRAI while in one breath says that they are not regulating content, in the same breath compels the broadcaster to sell a channel at a particular price in a bouquet and is placing a cap on the price knowing fully well that the cost of content in many cases can be very high and far above the cap fixed by TRAI..Therefore, interalia, by this very simple illustration and analogy of bouquet of roses, we have no hesitation in coming to the conclusion that the impugned provisions of regulations before us have the effect of impacting and regulating content of broadcasters and as alluded to supra, it is the stated position of TRAI that they do not intend to and cannot regulate content.”.Justice Sundar made these observations in reference to an analogy presented by Senior Advocate P Chidambaram, appearing for Star India while he argued the case for the petitioners. The analogy itself finds mention in the order..“…A bouquet of roses was taken as illustration in the hearing before us. If we consider a bouquet of roses consisting of Red, White, Yellow, Purple, Blue roses and compare each of the shades to one channel of broadcasters, the cost of each shade of rose will be different from the other shades. Assuming that the costs of Red, White, Yellow and Purple roses vary between Re.1.00 and Rs.18.00 per rose, Blue roses may be so exquisite and expensive that it costs Rs.100.00 per rose. In effect, impugned regulations compel TRAI to sell this exquisite, exclusive and highly expensive Blue rose also for Rs.19.00 in the bouquet….…Therefore, by the impugned regulations, TRAI is compelling the broadcasters to sell a channel which costs Rs.100.00 at Rs.19.00 was the response of the learned Senior Counsel. The bouquet of roses analogy appeals to us and it is not unacceptable.”.Justice Sundar ultimately found that the provisions in the tariff order that touch upon the content of TV programmes would not be in conformity of the TRAI Act, and were therefore liable to be struck down..“Owing to the narrative, discussion and all that have been set out supra, those of the impugned provisions in the said regulations and said tariff order which touch upon content of the programmes of broadcasters are liable to be struck down as not in conformity with the parent Act / plenary Act.”.As for other provisions, the judge held,.“…the other impugned provisions, i.e., clause 11(2) in the said Regulations as also clause 4(2) in the said tariff order will continue to be in the books, but cannot be pressed into service for anything to do with the provisions which we have struck down supra. In other words, these provisions, i.e., clause 11(2) in the said Regulations as also clause 4(2) in the said tariff order can be operated if it can be operated for other provisions of the said Regulations and said tariff order, other than those which we have struck down.”.Rendering the dissenting judgment, Chief Justice Indira Banerjee concluded that the powers of TRAI were wide enough to warrant the passing of the impugned provisions. The Chief Justice concluded that neither do these provisions touch upon the content of broadcasting, nor are they liable to be struck down. In the order, she has concluded,.“…I am unable to agree with the conclusion of M.Sundar, J. that the provisions of the impugned Regulation and the impugned Tariff Order are not in conformity with the TRAI Act. In my view the impugned provisions neither touch upon the content of programmes of broadcasters, nor liable to be struck down.”.However, she has held that a 15% cap on discount of the price of bouquet channels is arbitrary and liable to be struck down. On the whole however, she has opined that the petitioners’ challenge to the impugned provisions fail..“However, the clause putting cap of 15% to the discount on the MRP of a bouquet is arbitrary. The said provision is, in my view, not enforceable. In my considered view, the challenge to the impugned Regulation and the impugned Tariff Order fail.”.Given the split verdict, the matter is to be posted before a third judge to decide. The Chief Justice noted that she could not decide the Bench herself, since she has dissented in the matter. The order thus states,.“Since we have not been able to agree, the writ petitions may be placed before a third Judge. Since the Chief Justice has delivered the dissenting judgment, the matter may be placed before the next available Judge in order of seniority for nomination of the Judge before whom the matter may be placed.”.Read the order: