A. Supreme Court quashes TRAI Regulations on call drops

The Hon’ble Supreme Court of India has quashed the Telecom Consumers Protection (Ninth Amendment)
Regulations dated October 16, 2015 (“Regulations”) issued by the Telecom Regulatory Authority of India
(“TRAI”). The Regulations, which prescribed a financial disincentive (Rs. 1 for each call drop limited to a
maximum of three calls per day) to be paid by the Telecom Service Providers (“TSPs”) to their customers
w.e.f. January 1, 2016 had been challenged by the TSPs before the Hon’ble High Court of Delhi on the
grounds of being arbitrary, unreasonable and without basis. The High Court however, upheld the validity of
the Regulations on February 29, 2016 and further stated that since the same had not been stayed by the
court during the proceedings, TRAI was at liberty to take appropriate steps towards its compliance.

B. The TSPs’ arguments before the Supreme Court

Unfazed by the setback before the High Court, the TSPs appealed to the Supreme Court challenging the
lower court’s judgment. The Supreme Court categorized the TSPs’ arguments into the following categories:
(i) That the Regulations were ultra vires Section 36 read with Section 11 of the TRAI Act, 1997 (“Act”);

(ii) That the Regulations, being in the nature of subordinate legislations were manifestly arbitrary and
unreasonable, thereby affecting the fundamental rights of the TSPs under Articles 14 and 19(1)(g) of
the Constitution;

(iii) That TRAI had no power to interfere with the licence conditions which were contract conditions
between the licensor and licensee and thus the penalty not provided by the licence needed to be
struck down; and

(iv) That Section 11(4) of the Act required TRAI to be transparent in its dealings with various stakeholders
– which it had failed to do.

C. Defence of HC Order by TRAI and Consumer Groups

TRAI submitted, inter alia, before the apex court that the Regulations were an experimental measure and
were liable to be revisited in 6 months, and therefore the TSPs had been hasty in their appeal without
allowing the Regulations to work. TRAI submitted that it was possible to arrive at the cause of a call drop
and further possible to isolate the service provider responsible for the same. It was further submitted that
the fault of consumers and the fault of the TSPs were the only two main reasons for call drops. To further
support the arguments put forth on behalf of TRAI, counsel for various consumer groups submitted that the
appeal by TSPs should be dismissed as the focus of TRAI and the Regulations was for the impoverished
consumers in India (such as those relying on Rs. 10 top up recharges). It was urged that the doctrine of
public trust should apply to the Regulations as they were a part of the overall social responsibility of TRAI
towards consumers.
D. The Supreme Court’s Decision
The Supreme Court struck down the Regulations as being arbitrary and ultra vires the Act and, inter alia,
observed that the Regulations sought to protect the interest of the consumer at the expense of the TSP and
that the balance sought to be achieved for the orderly growth of the telecom sector by the Act had been
violated. It was clarified that the Regulations being a subordinate legislation need to pass the test for
arbitrariness and constitutional muster. The court noted that the Regulations seemed to be based on the
fact that the service provider is 100% at fault which was contradictory to the statistic (that 36.9% of call
drops are due to the fault of consumers) provided by TRAI itself. The court determined that in view of the
aforesaid, the TSPs were being made to pay for call drops which were not attributable to their own fault and
the consumer in some cases was receiving compensation for a call drop that was due to the fault of the
consumer itself. The court therefore concluded that the Regulations had been framed without intelligent
care and deliberation. It further dismissed the argument (put forth by TRAI) that the Regulations would be
worked in such a manner so that the TSP would be liable to pay only when it is found at fault as the
Regulations itself were invalid. The court clarified that a legislation or statute which is otherwise invalid
cannot be saved by its being administered in a reasonable manner.

E. Conclusion
One of the most significant aspects of the dispute so far seems to be the failure on the part of TRAI and the
TSPs to find a feasible solution for suffering consumers. Although the Regulations have been quashed by
the Supreme Court, neither TRAI nor the TSPs have shared a “Plan B” to solve the problem of call drops,
which continues unabatedly against the interest of consumers.