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Noida Software Technology Park Ltd. Vs. Ministry of Information and Broadcasting - Court Judgment

LegalCrystal Citation
CourtTelecom Disputes Settlement and Appellate Tribunal TDSAT
Decided On
Case NumberPETITION NO. 148(C) of 2010
Judge
AppellantNoida Software Technology Park Ltd.
RespondentMinistry of Information and Broadcasting
Advocates:For Petitioner: Mr. Mohit Chaddha, Vivek Chib, Kirtiman Singh, Advocates. For Respondent: Ravinder Agarwal, Nitish Gupta, Advocates.
Excerpt:
s.b. sinha the petitioner has filed this petition being aggrieved by and dissatisfied with an order dated 18.02.2009 whereby and whereunder a corrigendum was issued directing it to pay a sum of rs. 10 crores in stead and in place of rs.1 crore by way of modification of para 3 of the letter dated 11.12.2009 as well as paras 5 and 6 of the letter dated 25.02.2010 issued by the respondent herein, whereby and whereunder the petitioner had been asked to furnish a performance bank guarantee for a sum of rs.40 crores. 2. the basic fact of the matter is not in dispute. 3. the petitioner is a company incorporated and registered under the companies act. 4. it had applied for and was granted a licence by the ministry of information and broadcasting purported to be under section 4 of the indian.....
Judgment:

S.B. SINHA

The petitioner has filed this petition being aggrieved by and dissatisfied with an order dated 18.02.2009 whereby and whereunder a corrigendum was issued directing it to pay a sum of Rs. 10 Crores in stead and in place of Rs.1 crore by way of modification of para 3 of the letter dated 11.12.2009 as well as paras 5 and 6 of the letter dated 25.02.2010 issued by the respondent herein, whereby and whereunder the petitioner had been asked to furnish a Performance Bank Guarantee for a sum of Rs.40 crores.

2. The basic fact of the matter is not in dispute.

3. The petitioner is a company incorporated and registered under the Companies Act.

4. It had applied for and was granted a licence by the Ministry of Information and Broadcasting purported to be under Section 4 of the Indian Telegraph Act, 1885 (‘The Act’) to establish, maintain and operate an uplinking hub (Teleport) at Plot No.B-23-25, Pocket-C, Surajpur Industrial Area, Greater Noida in the State of Uttar Pradesh on or about 24.01.2003 for a period of 10 years.

5. The Parliament enacted Cable Television Network (Regulation) Act, 1995 (‘1995 Act’). The said Act was amended by Act No.2 of 2003 on or about 31.12.2002 (although the assent of President of India was received on 31.12.2002) in terms whereof Section 4-A was introduced in the Principal Act.

6. Pursuant thereto, certain consequential changes were made in Sections 9, 11, 16 and 22 of the 1995 Act, providing for transmission of programme by cable operators through “Addressable System”, wherefor the Central Government was to issue a notification indicating the specific area, where the said system was to be introduced. Inter alia on the premise that the petitioner having regard to the said agreement would be entitled to operate as a HITS operator (Head in the Sky), applied for permission therefor, stating :-

“We are a licensed Teleport operator. We have also moved an application for registration under the Cable Television Networks (Regulation) Act, 1995. We have also signed an agreement with the Department of Space, Government of India for the availability of the space segment. We are not sure that being a licensed Teleport and also a registered cable operator do we need a separate permission for setting up HITS. Therefore, without prejudice to our rights we have decided to move the application for the sake of abundant precaution.”

7. Pursuant to or in furtherance of the said request, the respondent by a letter dated 18.02.2003, granted the said permission, stating :-

“................You are permitted to set up Headend in The Sky (HITS) subject to following conditions :

VIII. ...................

VIII. Terms and conditions of the License agreement signed by you for setting up of a teleport for uplinking of TV channel(s) permitted by the Ministry shall be applicable.”

8. In terms of the said permission, the petitioner applied for and was granted the WPC licence by the WPC Wing of the Central Government, the relevant portions whereof read as under :-

“4. Particulars of the licensed stations :

Licence Schedule No. (i) Location of fixed station

(ii) Area of operation of mobile station Call-Sign Category of station Stations with which it is permitted to establish communication

1 2 3 4 5

P-5624/1

P-5624/2

(Aastha Channel) B-23, Pocket C, Surajpur Industrial Area, Gr. Noida (UP) 283059N/773003E

*Aastha International

-do- NST

NST

FX

FX With PAS10 (68.5 Satellite Network

Antenna system Reference of sitting Conditions of sitting

clearance clearance, if any.

(a) Type of Antenna

(b) Height AGL/ K-19012/24(53)/2003-CFA(GKP) dated

above roof top 30.6.2004

*vide permission letter No.L-14038/13/03-IR dated 28.10.2005

Frequency (ies) KHZ/MHZ Class of Bandwidth emmission Radio Power frequency output in watts Hours of operation (IST) Remarks (No. Of channels) In case of multichannel system

I-6002/3777 MHz

PAS-10 (68.5E)

Aastha International

5998/3773 MHz

PAS-10 (68.5E) (Aastha Channel) 4M00G7D

QPSK ¾ FEC

4M00GXD

QPSK

¾ FEC 55.4dBW

55.4 dBW H24

H24 Details as per DL

-do-

No.L-14038/17/2006-IR dated 5.4.2006

9. Indisputably, the Telecom Regulatory Authority of India (TRAI), while considering the manner in which addressable system is to be achieved by its recommendations in regard to the digitalization of Cable Television stated :

“5.8.4 Headend in the Sky (HITS)

Another issue that had come up during the process of consultation is the need for a policy framework for HITS which is an alternative means of delivery. Although one license was issued for HITS this service is not functional. Even so there is need for a clear policy framework for HITS which could be on the lines of the permission already given by the Government to one operator. Operators can then choose whether they would like to use this facility or the conventional one of a terrestrial headend.”

10. The Ministry of Information and Broadcasting, however, by a letter dated 15.5.2007 requested the TRAI to work out a detailed policy frame work required on HIT so as to facilitate it to take a view on the matter.

11. Pursuant to or in furtherance of the said request, the TRAI made recommendations as regards policy framework in terms thereof. The Ministry agreed to grant licence to two companies for providing HITS operation. The services, however, could not be started due to difficulty in getting the contents as well as slow progress in regard to achieving the target of addressability.

12. In its recommendations, the TRAI has referred to the consultation process it had undertaken. An issue relating to framing the guidelines for quality frame work of HIT, Entry Fee and Annual Fee had been raised. It’s recommendations were as under :-

“2.38. In case of DTH license, one time non-refundable entry fee is Rs.10 Crores. On the other hand, MSOs and cable operators are not required to pay any entry fee. The function of HITS operation is similar to a MSO with a difference that instead of sending the signals to the cable operators terrestrially, the signals are reaching the cable operators from satellite. At the same time, DTH and HITS platform are similar as far as technology and area of operation are concerned. Both carry and distribute broadcast television signals by first uplinking from an earth station to a satellite in the sky for downlinking later, and the area of operation in both the cases is countrywide.

2.39 The interests of consumers would be best served if non-serious players were kept out from offering HITS services. The provision of entry fee in the policy is an efficient tool to restrain a non-serious player. It was against this background that the issue of entry fee and its amount for HITS operator were posed for consultation.

2.40 Further, as far as the issue of annual fee is concerned, there is a provision for payment of annual license fee equivalent to 10% of its gross annual revenue in the DTH license. On the other hand, the permission given to two teleport licenses to operate HITS services does not contain any stipulation for payment of annual license fee. The MSOs and cable operators also do not pay any annual fee or revenue sharing basis. This is understandable since unlike DTH which reaches the consumers directly, the MSOs and cable operators have to share the revenues with each other.

2.41 Against this background, the issue raised for consultation was whether the annual fee as a percentage of revenue as in case of DTH operator be charged from the HITS operator as well, or whether the HITS operator should be treated at par with MSOs and cable operators.”

13. In para 2.49, while making analysis of the issue, the TRAI observed :

“2.49 It is advisable and also in consumer’s interest not to have non-serious player in the market when the issue is offering services at all-India level. Since HITS is a pan-India operation, the entry fee is one such measure which will act as a deterrent for a non serious player. The Authority is of the firm view that since HITS operations will be country-wide, there should be an entry fee and the amount of entry fee should be atleast equal to the entry fee of DTH operation which is also an all India operation.

2.51 The Authority is of the view that the entry fee for HITS operation should be Rs.10 crores. However, there should not be any annual fee for HITS operation in order to ensure its financial viability and to ensure that it can compete effectively both with DTH and the terrestrial MSOs. This will lead to quick digitalization of cable services.”

14. The Ministry, however, sent back the reference on certain issues to the TRAI in terms of its letter dated 21.01.2008, whereupon again recommendations were made thereupon by it to the Information and Broadcasting Ministry on or about 05.02.2008.

15. We may notice Clause 3.1 of the said recommendations, which reads as under :-

“3.1 Governments Observation : Since an entry fee of Rs.10 Crores is being taken along with a Bank Guarantee of Rs.40 Crs the apprehension that a fly by night operator will apply gets taken care of. Hence a networth requirement of only Rs.10 Crores instead of 40 Crores may suffice.”

16. So far as the question of applicability of the changes in the terms and conditions of the licence in regard to the existing operators is concerned, it sent different terms and conditions on or about 15.02.2008, the relevant portion whereof reads as under :-

“1. Unless otherwise mentioned in the subject or context appearing hereinafter, the Schedule annexed hereto including the guidelines issued/or to be issued from time to time by the Ministry of Information and Broadcasting and the terms and conditions of the Wireless Operational Licence to be issued by the Wireless Planning and Coordination wing in the Ministry of Communications, Government of India shall form part and parcel of this Licence Agreement. Provided, however, in case of conflict or variance or an issue relating to the same, the terms set out in the main body of this Agreement read with all the Schedules annexed hereto shall prevail.

2. The Licence shall be governed by the provisions of the Indian Telegraph Act, 1885 and Indian Wireless Telegraphy Act, 1933 as modified from time to time and any other Act which may come in to force.”

17. Indisputably, the respondent thereafter issued a guideline on or about 26.11.2009, stating :-

“In pursuance of the Union Cabinet decision on 12th November 2009, whereby Headend-in-the-Sky (HITS) Service has been permitted in India, the guidelines for operating HITS Services in India are being issued as annexure. These guidelines will come into force with immediate effect. A copy of the same is also posted on the website (www.mib.nic.in) of the Ministry for Information of general public and stakeholders.”

18. We may also note the relevant clause of the guidelines for providing the Headend in the Sky (HITS) Broadcasting Services in India :

“INTRODUCTION :

The Ministry of Information and Broadcasting, Government of India has formulated the policy guidelines for grant of Permission to establish and operate “Headend in the Sky (HITS)” broadcasting service from India.

Companies desirous of establishing and operating Headend in the Sky (HITS) Service platform shall be required to obtain Permission from the Ministry of Information and Broadcasting in accordance with the terms and conditions prescribed under these guidelines.

Headend-in-the-Sky (HITS) Broadcasting Service, refers to the multichannel downlinking and distribution of television programme in C-Band or Ku Band, wherein all the pay channels are downlinked at a central facility (Hub/Teleport) and again uplinked to a satellite after encryption of channels. At the cable headend these encrypted pay channels are downlinked using a single satellite antenna, transmodulated and sent to the subscribers by using a land based transmission system comprising of infrastructure of cable/optical fibres network.

After obtaining a HITS license from the Ministry of Information and Broadcasting, the HITS operator can himself contract with different broadcasters for buying the content, aggregating the same at an earth station and then uplinking with his own encryption to a satellite hired by him. The uplinked channels can then be downlinked by the cable operators using a dish antenna for onward distribution through last mile conventional cable network to the TV homes. In this model, the HITS operator works like a conventional MSO, except that virtually the head-end is in the sky, instead of being located on ground.

The HITS operator can also decide to merely provide passive infrastructure facilities like transponder space on satellite, earth station facilities and the provision for simulcrypting/multicrypting of channels suggested by different MSOs with different encryption systems to one or more MSOs or to a consortium of cable operators/ MSOs desirous of uplinking TV channels to his HITS satellite for downlinking and further transmission to the TV homes by the cable operators across the country. The HITS operator in this case need not contract with the broadcasters for content. He only enters into contracts with one or more MSOs or consortium of cable operators desirous of uplinking their aggregated channels from HITS earth station(s) to the HITS satellite.

The HITS operator has the freedom to use his satellite’s transponder capacity both for transmitting his own aggregated content, as well as to provide passive infrastructure to other MSOs for uplinking/downlinking their aggregated content.

The permission of the existing two permission holders who have been given permission to provide HITS services in the year 2003 will continue for the remaining period of permission and operationalisation of HITS services may be done by them as per terms and conditions laid down in these guidelines.

4. NON REFUNDABLE ENTRY FEES AND OTHER FEES

4.1 The applicant will be required to pay a non-refundable entry fee of Rs.10 crores.

4.2 No annual fee will be required to be paid.

4.3 The company/permission holder shall also in addition pay the license fee and royalty for the spectrum used as prescribed by Wireless Planning and Coordination Authority (WPC), under the Department of Telecommunications.

5. BANK GUARANTEE

5.1 The applicant company shall, within one month of the issuance of SACFA clearance by WPC, submit to the Ministry of IandB, a Bank Guarantee from any Scheduled Bank in the format notified, for an amount of Rs.40 crores valid for a period of three years.

5.2 The HITS permission holder should commence uplinking/downlinking operations within a period of one year from the date of issuance of SACFA clearance by the WPC after obtaining Wireless Operational License failing which half of the bank guarantee would be forfeited.

5.3 If the operator does not start the service within two years from the date of issuance of SACFA clearance by the WPC, the full performance bank guarantee will be forfeited and action for revocation of the permission will also be considered on completion of two years from the date of issuance of SACFA clearance by the WPC.

5.4 If the HITS permission holder fulfils the roll out obligation within one year of issuance of SACFA clearance by the WPC, then full amount of performance bank guarantee will be refunded. If the HITS permission holder meets the roll out obligation after one year but within two year of the issuance of SACFA clearance by the WPC, then half of performance bank guarantee will be refunded.

13. PROVISIONS WITH RESPECT TO EXISTING PERMISSION HOLDERS :

13.1 Notwithstanding anything contained in the terms and conditions of permission issued earlier, these Guidelines will also be applicable to the existing permission issued earlier, these Guidelines will also be applicable to the existing permission holders.

13.1.1 The existing permission holders will be allowed to operationalise their services only after they give an undertaking supported by its Board resolution to Ministry of Information and Broadcasting to ensure compliance with all the provisions contained in the Guidelines within a period of three months from the issuance of these Guidelines which period may, at the discretion of the Government, be extended to a maximum of six months.

13.1.2 Existing permission holder will within a period of one month of the issuance of these Guidelines also submit a detailed plan for ensuring compliance to the provisions contained in guidelines. The existing permission holder will also have to deposit the non-refundable entry fee of Rs.10 crores and submit proof of such deposition.

13.1.3 If the compliance to provisions of 13.1.1 and 13.1.2 is not ensured by the existing permission holder within the stipulated time period the permission given earlier shall stand withdrawn.

13.1.4 The period of permission shall be ten years from the date of issuance of permission by Government of India as per para 13.1.1 and 13.1.2.”

19. It is only on the aforementioned premise that Entry Fee of Rs.1 crore was demanded from the petitioner. We would notice the relevant portions of the said letter at an appropriate stage.

20. By reason of the impugned order dated 18.12.2009, a corrigendum was issued, which reads as under :-

“With reference to this Ministry’s letter of even number dated 11th December 2009 seeking compliance of the policy guidelines for Headend-in-the-Sky (HITS) services from the existing HITS permission holders as addressed above, the following changes/ amendments in para ‘3’ of the aforesaid letter 11.12.2009 may kindly be noted :-

In para ‘3’ of the aforementioned letter dated 11th December 2009 in line ’3’ the words “One crore” after the words “The non-refundable entry fee of Rs.” are deleted and substituted by words “Ten Crore”.

Therefore, the HITS permission holders are requested to furnish the compliance report and deposit the necessary non-refundable entry fee of Rs.10 Crore (Rupees Ten Crore only) in terms of Para 13 of the Guidelines for providing HITS Services in the country.”

21. The petitioner made a representation thereagainst before the Secretary, Ministry of Information and Broadcasting on or about 24.12.2009. It, thereafter, also asked for a personal hearing. The respondent in reply thereto by its letter dated 15.01.2010 stated :-

“I am directed to refer to your letter dated 24 December 2010 in response to this Ministry’s letter of even number dated 11 December 2009 on the above subject. The submissions made in the representation are being examined and as requested you are granted an opportunity for hearing before Director (BPandL) on 21st January 2010 at 3.00 p.m. (Room No.553, ‘A’ Wing, Shastri Bhawan). You are also required to bring on the appointed date information/documents on the following points :

(i) Copies of SACFA permission and WOL to operationalise HITS permission.

(ii) Which channels Pay/FTA are being made available as part of HITS services;

(iii) List of MSO’s/LCO’s who are receiving their HITS signals and the dates since when such operators have subscribed.

(iv) Your plan to ensure compliance of the HITS Guidelines within 3 months of the issuance.”

22. On or about 21.01.2010, the petitioner sent a reply to the respondent’s letter dated 15.01.2010, the relevant portion whereof reads as under :-

“We may respectfully submit that HITS is an infrastructure service for the digitalization of cable distribution networks. The roles and responsibilities of the Government and private sector companies such as ours in laying the framework and preparatory infrastructure services are different. Implementation of the CAS regime by the Government will lead to creation of new demand for HITS. Unless the CAS regime is implemented by the Government on a larger scale, there is little point for entrepreneurial energies and resources of companies such as ours, to further invest in additional infrastructure that demands huge recurring expenses such as additional transponder fees etc.

3. In the present case, working on an Anticipatory Logic, we submitted the scheme of HITS as a value added future service for our already licensed and ongoing teleport business which was approved. We are now waiting for the countrywide implementation of the CAS regime for further expanding our HITS related infrastructure to reap the benefits of the opportunity. The documents sought by you are probably based on the presumption that we are already running large scale MSO type HITS services, which is not the case. We are pleased to submit copies of SACFA and WOL clearance already obtained by us.”

23. By reason of an order dated 25.02.2010, the representation of the petitioner was rejected, stating :-

“5. Further since M/s. NSTPL has not rolled out the HITS services as yet, as such it is required to submit the performance Bank Guarantee of Rupees Forty Crores to meet the roll out obligations as per the provisions of Guidelines for HITS Services and the recommendations of TRAI.

6. In view of the above, M/s. NSTPL is informed that :-

(i) It is required to furnish the performance Bank Guarantee of Rs.40 Crores (Rupees Forty Crores) since the HITS Services have not been rolled out by the Company so far;

(ii) It is also required to pay non-refundable entry fee of Rs.10 Crore (Rupees ten Crore) only in terms of Clause 31.1.2 of the Guidelines; and

(iii) It is also required to furnish their compliance plan for Para 1.5 and 1.6 of the guidelines for HITS services relating to cross holding in view of the fact the company is broadcasting company holding permission to downlink the channels.”

24. A review was sought for by the petitioner by a letter dated 08.4.2010.

25. Yet again, recommendations were sought for by the respondent from TRAI by its letter dated 18.3.2010, stating as under :-

“I am now enclosing copy of a letter dated 11.03.2010 received from M/s. Dish TV informing the Ministry of the suspension of the HITS services w.e.f. 30th March, 2010. Also enclosed is a letter dated 03.03.2010 of M/s. Dish TV vide which certain policy issues have also been raised in addition to the tariff issues. It has been requested that existing permission holders be exempted from the requirement to pay entry fee of Rs.10 crore and from meeting the networth criteria. It has also been suggested that the DTH licensees be allowed to provide passive infrastructure services for HITS operations. It is also to mention that M/s. NSTPL has also represented that the existing operators should neither be required to pay the entry fees nor be required to furnish the performance bank guarantee for meeting the roll out obligations.

TRAI is accordingly requested to furnish its recommendations to the Ministry on the policy issues raised by the existing operators and whether any changes are required to be made in the existing Policy for HITS services. TRAI is also requested to expedite action on the Tariff issues raised by M/s. Dish TV in its representations as mentioned above.”

26. Mr. Mohit Chaddha, the learned counsel appearing on behalf of the petitioner, would inter-alia submit :-

(i) The parties hereto having entered into an agreement, which was binding on them, the respondent could not have unilaterally altered the terms and conditions thereof;

(ii) The changes made in terms and conditions, pursuant to the recommendations of TRAI or otherwise, in any event could not have been given a retrospective effect or retroactive operation;

(iii) The jurisdiction of the respondent in terms of the conditions of contract being confined to the public interest or significant reason, no case has been made out to direct the petitioner to pay a sum of Rs.10 crores by way of Entree Fees, particularly having regard to the fact that the petitioner has already entered into the market and furnished the performance bank guarantee to the extent of Rs.40 crores.

(iv) The petitioner having already deposited a sum of Rs.1 crore towards Entry Fees and having made investments pursuant thereto or in furtherance thereof, it could not have been asked to deposit a further sum of Rs.9 crores and/or furnish a performance bank guarantee in view of the fact that there was no compulsion on the

part of the parties to have a roll out programme in terms of the existing licence.

(v) The respondents themselves having laid down the guidelines defining the scope and ambit of HITS services could not have made any alteration thereof at a later stage to the prejudice of the service provider.

(vi) The respondents, themselves, having not made any ground work and having not issued any notification for transmission of signals in addressable system, cannot put the petitioner to any unreasonable condition;

(vii) The petitioner as a holder of licence, being registered as a company, was entitled to ask for investment in the field in future, which would be lost, if any unreasonable condition is imposed at this stage.

(viii) The agreement for imposition of Entry Fees of Rs.10 crores, so far as the petitioner is concerned, is wholly unwarranted as admittedly such a recommendation was made so as to prevent the non-serious players from entering into the field and as it cannot be said that the petitioner is a non-serious player keeping in view the fact that it has made huge investment in the business, the impugned order cannot be sustained.

(ix) The petitioner having altered its position relying on or on the basis of the representation made by the respondent herein, the doctrine of ‘promissory estoppel’ must be held to be applicable.

27. Mr. Ravinder Agarwal, the learned counsel appearing on behalf of the respondent, on the other hand, urged :-

(i) Teleport services and HITS services are entirely different and distinct services;

(ii) The petitioner having applied for and was granted Teleport licence on 24.01.2003 to set up HITS services, for which permission had been granted to it on 16.4.2003, having regard to the fact that no policy for establishing the HITS service was available, the terms and conditions applicable to Teleport services were extended to the HITS service.

(iii) In terms of the 1st proviso appended to Section 4 of the Indian Telegraph Act, 1865, the Central Government having regard to the fact that it has an exclusive privilege in respect thereof and the said privilege having been parted with in favour of the petitioner to establish, maintain and work a telegraph, granted the licence to the petitioner subject to such conditions as it may think fit and payment of such consideration as it may think fit, and in view of the fact that the Government of India has formulated a policy decision, the petitioner cannot be heard to contend that the same is not applicable.

(iv) Introduction of the guidelines and imposition of the Regulations must be held to be in public interest, which entitles the Government to modify the terms and conditions of licence.

(v) The guidelines having been made in terms of the recommendations of TRAI, which is also a Regulatory Body for the broadcasting services in exercise of its statutory power, the impugned order cannot be assailed.

(vi) It is now well settled that the Government has the power to lay down policies with retrospective effect.

(vii) The guidelines issued by the respondent cannot be said to be arbitrary in as much as :-

(a) it has been issued in terms of the proviso to Section 4 of the Act empowering the licensor to lay down the terms and conditions for consideration of grant of licence;

(b) it obtained the recommendations of a expert Body, in terms of the provision of the statute;

(c) the Government must be compensated for parting with a valuable right. In the public interest only, the guidelines will be implemented viz. for the purpose of securing consumer interest and for generating a room for adequate competition and systematic growth of the country;

(viii) The petitioner would be entitled to obtain a benefit thereof at the time of his licence gets extended by 10 years from the date, it is able to secure the WOL licence from the Government;

(ix) In view of the guidelines, the petitioner was obligated to furnish the Performance Bank Guarantee as he has not yet rolled out its services;

(x) The petitioner having not altered its position pursuant to the representation made by the respondent, the doctrine of promissory estoppel would have no application.

Statute :

28. The said Act was enacted in the year 1885. It reads:-

“An Act to amend the law relating to Telegraphs in India

WHEREAS it is expedient to amend the law relating to telegraphs in India; It is hereby enacted as follows:-“

29. Section 4 of the said Act reads as under :-

“4. Exclusive privilege in respect of telegraphs, and power to grant licenses.

(1) Within [India], the Central Government shall have exclusive privilege of establishing, maintaining and working telegraphs:

Provided that the Central Government may grant a license, on such conditions and in consideration of such payments as it thinks fit, to any person to establish, maintain or work a telegraph within any part of [India]:

[Provided further that the Central Government may, by rules made under this Act and published in the Official Gazette, permit, subject to such restrictions and conditions as it thinks fit, the establishment, maintenance and working-

(a) of wireless telegraphs on ships within Indian territorial waters [and on aircraft within or above [India], or Indian territorial waters], and

(b) of telegraphs other than wireless telegraphs within any part of [India].

(2) The Central Government may, by notification in the Official Gazette, delegate to the

telegraph authority all or any of it its powers under the first proviso to sub-section (1).

The exercise by the telegraph authority of any power so delegated shall be subject to such restrictions and conditions as the Central Government may, by the notification, think fit to impose.]”

30. Parliament has also enacted the Telecom Regulatory Authority of India Act, 1997 (‘The 1997 Act’) wherein the telecommunication service was defined as under :-

“2(k) ‘telecommunication services’ means service of any description (including electronic mail, voice mail, data service, audio tex services, video tex services, radio paging, and cellular mobile telephone services) which is made available to users by means of any transmission or reception of signs, signals, writing, images and sounds or intelligence of any nature, by wire, radio, visual or other electro-magnetic mean but shall not include broadcasting services;

{Provided that the Central Government may notify other service to be telecommunication service including broadcasting services.}”

31. The Central Government in exercise of its power conferred upon it under the proviso appended to Section 2 (k) has issued a notification on or about 09.01.2004 whereby and whereunder the broadcasting services and cable services were to be deemed to be telecommunication services. Section 11 of the Act provides for the powers and functions of TRAI.

32. In terms of Sub Clauses (i) and (ii) of Clause (a) of Sub-Section 1 of Section 11, the functions of the TRAI is, inter alia, to make recommendations on (i) need and timing for introduction of new service providers; (ii) terms and conditions of licence to a service provider; and (iii) revocation of licence for non-compliance of terms and conditions of licence.

33. Indisputably, any recommendation made by TRAI, which is an Expert Body, demands a great deal of respect from the Central Government, although the same is not binding on it.

34. Sub clauses (iv), (v) and (viii) of clause (b) of Section 11(1) of the said Act read as under :-

“(iv) regulate arrangement amongst service providers of sharing their revenue derived from providing telecommunication services;

(v) lay down the standards of quality of service to be provided by the service providers and ensure the quality of service and conduct the periodical survey of such service provided by the service providers so as to protect interest of the consumers of telecommunication services;

(viii) keep register maintained under clause (viii) open for inspection to any member of public on payment of such fee and compliance of such other requirement as may be provided in the regulations;”

35. The Parliament also enacted the Cable Television Network (Regulation Act), 1995 to regulate the operation of Cable Television Network in the country and for matters connected therewith and incidental thereto. Sub-Section (1) of Section 4A, was inserted in the year 2002, which reads as under :-

“[1][‘4A. Transmission of programmes through addressable system, etc.—(1) Where the Central Government is satisfied that it is necessary in the public interest to do so, it may, by notification in the Official Gazette, make it obligatory for every cable operator to transmit or retransmit programme of any pay channel through an addressable system with effect from such date as may be specified in the notification and different dates may be specified for different States, cities, towns or areas, as the case may be.”

36. Addressable system has been defined in the Explanation ‘A’ appended to Section 4-A, which reads as under :-

“ [2][‘4A. Transmission of programmes through addressable system, etc.—(1) Where the Central Government is satisfied that it is necessary in the public interest to do so, it may, by notification in the Official Gazette, make it obligatory for every cable operator to transmit or retransmit programme of any pay channel through an addressable system with effect from such date as may be specified in the notification and different dates may be specified for different States, cities, towns or areas, as the case may be.”

37. We may also notice the definition of the following term :-

“ [3][(a) ‘authorised officer’ means, within his local limits of jurisdiction;-

(i) a District Magistrate, or

(ii) a Sub-divisional Magistrate, or

(iii) a Commissioner of Police,

and includes any other officer notified in the Official Gazette, by the Central Government or the State Government, to be an authorised officer for such local limits of jurisdiction as may be determined by that Government;]

(d) ‘company’ means a company as defined in section 3 of the Companies Act, 1956; (1 of 1956).

(e) ‘person’ means—

(i) an individual who is a citizen of India;

(ii) an association of individuals or body of individuals, whether incorporated or not, whose members are citizens of India;

(iii) a company in which not less than fifty-one per cent of the paid-up share capital is held by the citizens of India;

(f) ‘prescribed’ means prescribed by rules made under this Act.”

Conditions of Licence :

38. We may also notice some conditions of licence :

“2.1 The Licence is granted for a period of ten (10) years and reckoned from the date of issue of Wireless Operational Licence by the WPC, unless terminated earlier for default or for insolvency or for convenience or for transfer of the Licence.

6.2 The Licensor reserves the right to modify or incorporate new conditions at any time in the terms and conditions of this Licence which are considered necessary to do so in the public interest or for security considerations and reasons. No fresh document shall be required to be executed in the event of such change.

3. PERIOD OF PERMISSION

3.1 Permission for providing the HITS Service will be valid for a period of Ten years from the date of issue of wireless operational license (WOL) by the Wireless Planning and Coordination Wing of the Ministry of Communications and Information Technology.

3.2 The permission may be terminated earlier as provided in paras 10 and 13.

3.3 The permission granted to the company shall be non-transferable except with specific and prior approval of the Government.

4. NON REFUNDABLE ENTRY FEES AND OTHER FEES

4.1 The applicant will be required to pay a non-refundable entry fee of Rs.10 crores.

4.2 No annual fee will be required to be paid.

4.3 The company/permission holder shall also in addition pay the license fee and royalty for the spectrum used as prescribed by Wireless Planning and Coordination Authority (WPC), under the Department of Telecommunications.

5. BANK GUARANTEE

5.1 The applicant company shall, within one month of the issuance of SACFA clearance by WPC, submit to the Ministry of IandB, a Bank Guarantee from any Scheduled Bank in the format notified, for an amount of Rs.40 crores valid for a period of three years.

5.2 The HITS permission holder should commence uplinking/downlinking operations within a period of one year from the date of issuance of SACFA clearance by the WPC after obtaining Wireless Operational License failing which half of the bank guarantee would be forfeited.

5.3 If the operator does not start the service within two years from the date of issuance of SACFA clearance by the WPC, the full performance bank guarantee will be forfeited and action for revocation of the permission will also be considered on completion of two years from the date of issuance of SACFA clearance by the WPC.

5.4 If the HITS permission holder fulfils the roll out obligation within one year of issuance of SACFA clearance by the WPC, then full amount of performance bank guarantee will be refunded. If the HITS permission holder meets the roll out obligation after one year but within two year of the issuance of SACFA clearance by the WPC, then half of performance bank guarantee will be refunded.

13. PROVISIONS WITH RESPECT TO EXISTING PERMISSION HOLDERS :

13.1 Notwithstanding anything contained in the terms and conditions of permission issued earlier, these Guidelines will also be applicable to the existing permission issued earlier, these Guidelines will also be applicable to the existing permission holders.

13.1.1 The existing permission holders will be allowed to operationalise their services only after they give an undertaking supported by its Board resolution to Ministry of Information and Broadcasting to ensure compliance with all the provisions contained in the Guidelines within a period of three months from the issuance of these Guidelines which period may, at the discretion of the Government, be extended to a maximum of six months.

13.1.2 Existing permission holder will within a period of one month of the issuance of these Guidelines also submit a detailed plan for ensuring compliance to the provisions contained in guidelines. The existing permission holder will also have to deposit the non-refundable entry fee of Rs.10 crores and submit proof of such deposition.

13.1.3 If the compliance to provisions of 13.1.1 and 13.1.2 is not ensured by the existing permission holder within the stipulated time period the permission given earlier shall stand withdrawn.

13.1.4 The period of permission shall be ten years from the date of issuance of permission by Government of India as per para 13.1.1 and 13.1.2.”

The relevant correspondences

39. The petitioner, as noticed heretobefore, applied for grant of licence in terms of Section 4A of the 1995 Act as amended in year 2002 for permission to set up a Headend in the Sky, which reads as under :-

“The Cable Television Networks (Regulation) Amendment Act, 2002 has mandated the transmission of programmes through addressable system for pay channels.

There are probably only two ways of implementing the scheme.

1. Conditional Access System (CAS) at each head end.

2. Under the Headend in the Sky (HITS) concept pay channels are downlinked, decrypted and aggregated at a Teleport where all channels are turned around with common CAS inserted at Master digital headend. The billing is generated through a Subscriber Management System (SMS). HITS provides a platform which benefits all stakeholders, the Government, the consumers, the broadcasters, headend operators (MSO) and Cable operators. A brief presentation on HITS is enclosed for favour of your information.

We are a licensed Teleport operator. We have also moved an application for registration under the Cable Television Networks (Regulation) Act, 1995. We have also signed an agreement with the Department of Space, Government of India for the availability of the space segment. We are not sure that being a licensed Teleport and also a registered cable operator do we need a separate permission for setting up HITS. Therefore, without prejudice to our rights we have decided to wave the application for the sake of abundant precaution.”

40. The permission, so sought for by the petitioner, was granted by the respondent by a letter dated 16.4.2003, the relevant portion whereof reads as under :-

“This is with reference to your letter dated February 18, 2003 on the above subject. In continuation of this Ministry’s letter of even number dated 27.1.2003 whereby permission was conveyed to set up uplinking hub (teleport) at B 23-25, Pocket C, Surajpur Industrial Area, Greater Noida (UP), you are permitted to set up Headend in the Sky (HITS) subject to the following conditions :-

(viii) Terms and conditions of the license agreement signed by you for setting up of a teleport for uplinking of TV channel(s) permitted by this Ministry shall be applicable.”

41. WPC Licence

“4. Particulars of the licensed stations :

Licence Schedule No. (i) Location of fixed station

(ii) Area of operation of mobile station Call-Sign Category of station Stations with which it is permitted to establish communication

1 2 3 4 5

P-5624/1

P-5624/2

(Aastha Channel) B-23, Pocket C, Surajpur Industrial Area, Gr. Noida (UP) 283059N/773003E

*Aastha International

-do- NST

NST

FX

FX With PAS10 (68.5 Satellite Network

Antenna system Reference of sitting Conditions of sitting

clearance clearance, if any.

(c) Type of Antenna

(d) Height AGL/ K-19012/24(53)/2003-CFA(GKP) dated

above roof top 30.6.2004

*vide permission letter No.L-14038/13/03-IR dated 28.10.2005

Frequency (ies) KHZ/MHZ Class of Bandwidth emmission Radio Power frequency output in watts Hours of operation (IST) Remarks (No. Of channels) In case of multichannel system

I-6002/3777 MHz

PAS-10 (68.5E)

Aastha International

5998/3773 MHz

PAS-10 (68.5E) (Aastha Channel) 4M00G7D

QPSK ¾ FEC

4M00GXD

QPSK

¾ FEC 55.4dBW

55.4 dBW H24

H24 Details as per DL

-do-

No.L-14038/17/2006-IR dated 5.4.2006

42. By a letter dated 11.12.2009, the respondent asked the petitioner to furnish detailed plan for ensuring compliance of the provision of the guidelines within one month as per para 13.1.2, stating :-

“3. PERIOD OF PERMISSION

3.1 Permission for providing the HITS Service will be valid for a period of Ten years from the date of issue of wireless operational license (WOL) by the Wireless Planning and Coordination Wing of the Ministry of Communications and Information Technology.

3.2 The permission may be terminated earlier as provided in paras 10 and 13.

3.3 The permission granted to the company shall be non-transferable except with specific and prior approval of the Government.

4. NON REFUNDABLE ENTRY FEES AND OTHER FEES

4.1 The applicant will be required to pay a non-refundable entry fee of Rs.10 crores.

4.2 No annual fee will be required to be paid.

4.3 The company/permission holder shall also in addition pay the license fee and royalty for the spectrum used as prescribed by Wireless Planning and Coordination Authority (WPC), under the Department of Telecommunications.”

“With reference to this Ministry’s letter of even number dated 11th December 2009 seeking compliance of the policy guidelines for Headend-in-the-Sky (HITS) services from the existing HITS permission holders as addressed above, the following changes/ amendments in para ‘3’ of the aforesaid letter 11.12.2009 may kindly be noted :-

In para ‘3’ of the aforementioned letter dated 11th December 2009 in line ’3’ the words “One crore” after the words “The non-refundable entry fee of Rs.” are deleted and substituted by words “Ten Crore”.

Therefore, the HITS permission holders are requested to furnish the compliance report and deposit the necessary non-refundable entry fee of Rs.10 Crore (Rupees Ten Crore only) in terms of Para 13 of the Guidelines for providing HITS Services in the country.”

“I am directed to refer to this Ministry’s letter No.9/2/2005-BPandL Vol.III dated 11.12.2009, and 15.1.2010 and the submissions made by you during the personal hearing dated 21.1.2010 granted by the Ministry on your request dated 24.12.2009.

2. The matter has been examined in the Ministry. It is apparent from the submissions made in M/s. NSTPL’s letter dated 21.1.2010 that the HITS Services have not been operationalized so far by M/s. NSTPL. It has been stated that “unless the CAS regime is implemented by the Government on a larger scale there is little point for entrepreneurial energies and resources of companies such as ours, to further invest in additional infrastructure that demands huge recurring expenses such as additional transponder fees etc.” Vide this Ministry’s letter dated 21.1.2010, the Company was required to submit the list of FTA/Pay channels being made available as part of the HITS services and the list of MSOs/LCOs who are receiving in HITS signals and the dates since when such operators have subscribed. Instead of furnishing the list it has been mentioned that ‘the documents sought by you are probably based on the presumption that we are already running large scale MSO type HITS services which is not the case’. It is therefore apparent from the replies that M/s. NSTPL has neither rolled out the HITS services nor has taken a decision to roll out such services in future.

3. M/s. NSPTL holds permissions under Downlinking Guidelines for five channels namely KBS World, Mana Telugu, NHK World TV, NHK World Premium, and Hope TV. Accordingly M/s. NSTPL is a broadcasting company and cannot retain the permission of HITS services with the present Company as per the Guidelines. The compliance plan furnished by M/s. NSTPL vide letter dated 24.12.2009 does not indicate how it proposes to comply with the requirements of cross holding as mentioned in Paras 1.5 and 1.6 of the HITS guidelines. M/s NSTPL therefore will have to indicate how it plans to ensure compliance of the requirements of cross holding.

4. So far as the submission made that the terms and conditions of the HITS permission granted earlier can not be altered and that M/s NSTPL can not be required to pay entry fee of Rs.10 Crores, it is informed that Clause (ii) of the HITS permission letter dated 16.4.2003 read with Para 5 and Article 2.1 of the license agreement for uplinking Hub (teleport) empowers the Ministry to modify terms and conditions or terminate the license for convenience. The HITS permission was granted under the Guidelines for uplinking approved by the Cabinet and the terms and conditions now stand modified in view of the cabinet decision to notify policy guidelines for HITS services which have also been made applicable to the existing permission holders. Therefore as per Para 13.1.2 of the guidelines for HITS Services, even the existing permission holders are required to deposit the entry Fee of Rs.10 Crore (Rupees Ten Crore) within three months from issuance of the guidelines. Ministry has on 26.11.2009 issued the guidelines for provisioning of HITS services.

5. Further since M/s NSPTL has rolled out the HITS services as yet, as such it is required to submit the performance Bank Guarantee of Rupees Forty Crores to meet the roll out obligations as per the provisions of Guidelines for HITS Services and the recommendations of TRAI.

6. In view of the above, M/s. NSTPL is informed that :-

(i) It is required to furnish the performance Bank Guarantee of Rs.40 Crores (Rupees Forty Crores) since the HITS Services have not been rolled out by the Company so far;

(ii) It is also required to pay non-refundable entry fee of Rs.10 Crore (Rupees Ten Crore) only in terms of clause 31.1.2 of the Guidelines; and

(iii) It is also required to furnish their compliance plan for Para 1.5 and 1.6 of the guidelines for HITS services relating to cross holding in view of the fact that the company is broadcasting company holding permission to downlink the channels.

7. The representations are accordingly decided. It is further intimated that Clause 13.1.2 of the guidelines for HITS service provides 3 months time for ensuring compliance which will expire on 25.2.2010.

8. It is reiterated that HITS permission is liable to be cancelled if M/s. NSTPL fails to ensure compliance of the above in accordance with the provision of the Guidelines.”

Issues

43. This Tribunal, in view of rival contention of the parties, by an order dated 18.8.2010, framed the following issues :-

(i) Whether the terms and conditions, as envisaged under the Teleport License Agreement dated 24.01.2003, would also be applicable in respect of the permission dated 16.4.2003 granted to the Petitioner Company to set up and operate HITS Services?

(ii) If the aforesaid issue is held in the affirmative then, whether the Teleport Licence agreement dated 24.01.2003 and the permission to set up HITS Services dated 16.4.2003, required the petitioner company to obtain a separate WL License from WPC Wing of the Respondent Ministry exclusively for setting up HITS Services?

(iii) Whether under the Teleport License Agreement dated 24.01.2003 and the permission to set up HITS Services dated 16.4.2003 it was mandatory for the Petitioner Company to roll out HITS Services within a stipulated period of time?

(iv) Whether the Petitioner Company had taken necessary regulatory steps to start HITS Services in consonance with the Teleport License Agreement dated 24.01.2003 and also the permission to set up HITS Services dated 16.4.2003?

(v) Whether the Petitioner Company had set up the requisite infrastructure and hired necessary manpower to start HITS Services?

(vi) Whether the Respondent Ministry has delayed in implementing a uniform digitalization and addressability policy?

(vii) Whether the guidelines dated 26.11.2009 can be applied retrospectively to an existing permission holder such as the Petitioner Company herein.

(viii) Whether the Petitioner Company is liable to pay Rs.10 Crore Entry Fee and Rs.40 Crore Performance Bank Guarantee as per the guidelines dated 26.11.2009 to operate HITS Services?

(ix) Whether the Petitioner Company is entitled to relief(s) as prayed for in the petition?

44. Although a large number of issues have been framed, the principal issue is issue No. (vii). If, however, the said issue is answered in the affirmative, Issue No.8 also would stand answered automatically. In the event, the Issue No.1 is answered in the affirmative, the same would have an effect so far as the Issue Nos. 2 to 6 are concerned; there being no doubt or dispute and having regard to the provisions contained in the licence and/or various correspondence that both the parties hereto had not resorted to any roll out policy.

45. The contention of the petitioner is that no roll out policy being contained in the licence agreement dated 24.01.2003, there was no obligation on its part to comply therewith. According to it, it has acquired a status in relation thereto and in fact has established a Teleport (the first in the country) both for up-linking and down-linking, acquiring around 2 acres of land and the cost of the title project being Rs.20 to Rs.50 crores and it having entered into some contracts with some channels for broadcasting Free to Air channels, the impugned conditions must be held to be bad in law.

46. Another question, which would arise for consideration, is that the respondent also having no obligation in relation thereto and furthermore in view of the fact that digitalization is yet to come up, there was nothing wrong to ask for a Performance Guarantee in the nature recommended by TRAI and accepted by the respondent.

Legal Position

47. The legal position in this behalf is, however, well settled.

We may, at the outset, take into consideration three different legal situations :-

(i) Where a licence agreement has been entered into, the parties must be ad idem in regard to novation of contract;

(ii) However, an unilateral act on the part of the licensor would be permissible subject to its being legal and valid, if by reason of any terms of the contract itself such a power has been conferred on the licensor;

(iii) The terms of the licence cannot be given a retrospective effect unless there exist a provision in the contract or in the statute, and in any event, the procedures laid down therein must be complied with.

48. The respondent being a licensor in terms of the provisions contained in the proviso appended to Section 4 of the 1885 Act, may part with its privilege subject to certain terms and conditions and on payment of such consideration as it may think fit and proper.

49. The conditions, which are laid down as conditions of licence, therefore, are required to be implemented. They may acquire a statutory character, if the contract is statutory in nature. But, if it is by way of contract qua contract only, the respondent would have no authority to change the said terms unilaterally. For the said purpose, the parties must be ad idem even in respect thereof. Furthermore, alteration/modification in the terms and conditions ordinarily being subject to public interest or security reasons, the licensor will have the power in relation thereto if the conditions precedent therefor are satisfied.

50. We may notice that the Supreme Court of India in Bharat Sanchar Nigam Ltd. and Another Versus BPL Mobile Cellular Ltd. and Another reported in 2008 13 SCC page 597, opined :-

“43. In view of the aforementioned law laid down by this Court, there cannot be any doubt whatsoever that the circular letters cannot ipso facto be given effect to unless they become part of the contract. We will assume that in one of the meetings, they referred to the said circulars. But, that would not mean that they are bound thereby. Apart from the fact that a finding of fact has been arrived at by TDSAT that the said circular letters were not within the knowledge of the respondents herein, even assuming that they were so, they would not prevail over the public documents which are the brochures, commercial information and the tariffs.

44. If the parties were ad idem as regards terms of the contract, any change in the tariff could not have been made unilaterally. Any novation in the contract was required to be done on the same terms as are required for entering into a valid and concluded contract. Such an exercise having not been resorted to, we are of the opinion that no interference with the impugned judgment is called for.”

51. In relation to a similar licence agreement entered into by and between Union of India through the Department of Telecommunication and various private operators, wherein the agreement contained imposition of penalty to the extent of 150% of the dues, this Tribunal, in Petition No.8 of 2003, BPL Mobile Cellular Limited and Another Vs. Department of Telecommunications and other connected matters decided on 11th February, 2010, opined as under :-

“The respondent being the licensor has, in terms of Section 4 of the Indian Telegraph Act, 1885, a special privilege in the matter of grant of license. The statute contemplates imposition of any term and condition therefor which, it may be assumed, would include a deterrent provision. It is, however, well settled that the State in all its actions, including contractual ones, must act fairly and reasonably. It is also bound to comply with the principles of natural justice.

The action on the part of the State, in imposing penalty of a huge amount, thus, would deserve strict constriction. The respondent as a State, cannot indulge in unjust enrichment in terms of a contract qua contract. Its conduct cannot be arbitrary or capricious. Its conduct even in the matters involving contract qua contract should be just and proper. It should not take undue advantage of its superior position as a licensor.”

52. This Tribunal has considered BSNL (Supra) in Cellular Operators Association of India and Ors. Vs. Department of Telecommunications and Anr. (Petition No.122 of 2007) by an order dated 22nd April, 2010.

53. The Central Government is entitled to ask the TRAI to exercise its functions, which would come within the purview of Section 11 (1) (b) of the Act.

54. The broadcasting and cable services by reason of a legal fiction raised in terms of the aforementioned notification issued on 09.01.2004 by the Central Government, the TRAI would be entitled to perform its functions including such administrative and financial ones as may be entrusted to it by the Central Government or may be necessary to carry out under the provisions of the Act.

55. The field of broadcasting and cable service is regulated. It is governed by a regulation known as Telecommunication (Broadcasting and Cable Services) Interconnection Regulation, 2004, as amended from time to time. The TRAI is entitled to ensure compliance of the conditions laid down not only for non-addressable system but also for addressable system. For the aforementioned purpose, it has made the regulations in regard to the services offered on the Direct to Home platform (DTH) as amended in 2009, being 5th Amendment Regulation dated 17.3.2009; Clause 13.2 (b) whereof reads as under :-

“13.2B Reference Interconnect Offers for addressable systems other than direct to home service.

13.2B.1 Every broadcaster, providing broadcasting services before the date of commencement of the Telecommunication (Broadcasting and Cable Services) Interconnection (Fifth Amendment) Regulation, 2009 (4 of 2009) and continues to provide such services after such commencement shall, within thirty days from the date of such commencement, submit its Reference Interconnect Offer specifying, inter-alia, the technical and commercial terms and conditions including those listed in Schedule III for interconnection with addressable systems other than

(a) cable service in areas notified by the Central Government under sub-section (1) of section 4A of the Cable Television Networks (Regulation) Act, 1995 (7 of 1995);

(b) the direct to home service, to the Authority.

13.2B.2 Every broadcaster, who begins to provide broadcasting services after the date of commencement the Telecommunication (Broadcasting and Cable Services) Interconnection (Fifth Amendment) Regulation, 2009 (4 of 2009) shall, within thirty days of such commencement or before providing such services, whichever is later, submit to the Authority, its Reference Interconnect Offer specifying therein the technical and commercial terms and conditions referred to in sub-regulation 13.2B.1 and publish the same, before or simultaneously with such intimation, on its website.

13.2B.3 The provisions of regulations 13.2A.1, 13.2A.2, 13.2A.4, 13.2A.5, 13.2A.6, 13.2A.7, 13.2A.8, 13.2A.9, 13.2A.10, 13.2A.11, 13.2A.12 and 13.2A.13, relating to Reference Interconnect Offers for direct to home service, shall apply, mutatis mutandis, to such a Reference Interconnect Offer for interconnection with addressable systems other than cable service in areas notified by the Central Government under sub-section (1) of section 4A of the Cable Television Networks (Regulation) Act, 1995 (7 of 1995) and the direct to home service:

Provided that a broadcaster may have different Reference Interconnect Offers for different types of addressable systems.

13.2B.4 Any distributor of TV channels using an addressable system for distribution of TV channels seeking interconnection with a broadcaster in terms of the Reference Interconnect Offer referred to in regulation 13.2B.1 or 13.2B.2, as the case may be, shall ensure that the addressable system being used for distribution of TV channels satisfies the minimum specifications for addressable systems as specified in Schedule IV to these regulations:

Provided that in cases where a broadcaster is of the opinion that the addressable system being used for distribution of TV channels does not satisfy the minimum specifications for addressable systems as specified in Schedule IV to these regulations, upon being informed of such opinion by the broadcaster, the distributor of TV channels shall get the addressable system audited by M/s. Broadcast Engineering Consultants India Ltd., or any other agency as may be notified by the Authority from time to time for the purpose of such audit and obtain a certificate to the effect that the addressable system being used for distribution of TV channels satisfies the minimum specifications for addressable systems as specified in Schedule IV to these regulations:

Provided further that the finding of M/s. Broadcast Engineering Consultants India Ltd., or any other agency notified by the Authority in this regard, as the case may be, based on such audit as referred to in the first proviso, about the addressable system being used for distribution of TV channels satisfying or not satisfying the minimum specifications for addressable systems as specified in Schedule IV to these regulations, shall be final.”.

56. The addressability question, however, has not been addressed by the Government of India and the TRAI seriously up til now. Only recently it has stated that the target would be achieved by December, 2015. It, however, in its accreditation dated 14.9.2005 asked the Government of India to lay down a policy decision.

Policy Frame Work – vis-à-vis Regulation

57. Whether a policy frame work submitted by the TRAI, by reason of its recommendations dated 17.10.2007, would be a regulation within the meaning of the provisions of the TRAI Act, 1997 or the 1995 Act, as amended in the year 2002, is the question.

58. A broad policy frame work stricto sensu may not be a regulation.

59. The question of framing a regulation so as to bind the existing operators for effecting changes in the terms and conditions of the licence already granted to the licensee would arise, provided making of such regulation becomes necessary.

60. The recommendations have been made by the TRAI in terms of Clause (a) of Sub Section 1 of Section 11 and not in terms of Clause (b) of Sub Section 1 of Section 11. The distinction between said two provisions is apparent, one is recommendatory in character and the second is a law.

61. The recommendations made by TRAI and accepted by the respondent, therefore, would in our considered opinion make a lot of difference. If a law is made, public interest would be presumed.

62. As is evident, the ordinary meaning of ‘public interest’ would be

“public interest. 1. The general welfare of the public that warrants recognition and protection.”

63. Public interest, as is well known, is an unruly horse. It does not have any precise definition. {See State of Bihar Vs. Kameshwar Singh – AIR 1952 SC page 252}.

64. In Ashok Kumar Pandey v. State of W.B. , (2004) 3 SCC 349, the Supreme Court of India stated the law thus :

“5. It is necessary to take note of the meaning of the expression “public interest litigation”. In Stroud’s Judicial Dictionary, Vol. 4, 4th Edn., “public interest” is defined thus:

“Public interest.—(1) A matter of public or general interest does not mean that which is interesting as gratifying curiosity or a love of information or amusement; but that in which a class of the community have a pecuniary interest, or some interest by which their legal rights or liabilities are affected.””

65. We may notice that in Shrijee Sales Corporation v. Union of India reported in (1997) 3 SCC 398, the Supreme Court of India stated the law referring to its earlier judgment in Kasinka Trading And Another Vs. Union of India and Anr. reported in (1995) 1 SCC 426 wherein grant of exemption in public interest was held to be essential for the purpose of considering as to whether the doctrine of promissory estoppel would be attracted or not in the following term :-

“In other words, could it be said that an exemption notified without specifying the period within which the exemption would remain in force, would be withdrawn in public interest but not the one in which a period has been so specified? Once public interest is accepted as the superior equity which can override individual equity, the principle should be applicable even in cases where a period has been indicated. The Government is competent to resile from a promise even if there is no manifest public interest involved, provided, of course, no one is put in any adverse situation which cannot be rectified. To adopt the line of reasoning in Emmanuel Avodeji Ajayi v. Briscoe quoted in M.P. Sugar Mills even where there is no such overriding public interest, it may still be within the competence of the Government to resile from the promise on giving reasonable notice which need not be a formal notice, giving the promisee a reasonable notice which need not be a formal notice, giving the promise a reasonable opportunity of resuming his position, provided, of course, it is possible for the promise to restore the status quo ante. If, however, the promise cannot resume his position, the promise would become final and irrevocable.”

Retrospectivity Issue

66. The question of retrospectivity of the subordinate legislation vis-a-vis exemption notification came up for consideration before the Supreme Court of India in Kusumam Hotels Private Ltd. Vs. Kerala State Electricity Board 2008 13 SCC page 215 at page 35 of the Compilation. Kasinka Cable (Supra). It was held :

“36. The law which emerges from the above discussion is that the doctrine of promissory estoppel would not be applicable as no foundational fact therefor has been laid down in a case of this nature. The State, however, would be entitled to alter, amend or rescind its policy decision. Such a policy decision, if taken in public interest, should be given effect to. In certain situations, it may have an impact from a retrospective effect but the same by itself would not be sufficient to be struck down on the ground of unreasonableness if the source of power is referable to a statute or statutory provisions. In our constitutional scheme, however, the statute and/or any direction issued thereunder must be presumed to be prospective unless the retrospectivity is indicated either expressly or by necessary implication. It is a principle of the rule of law. A presumption can be raised that a statute or statutory rule has prospective operation only.”

67. It is significant to notice that the prospectively nature of a statute was considered by the Apex Court in Vice Chancellor M.P. University Vs. Jahan Singh reported in 2007 5 SCC page 77, opining :-

19. The Act does not confer any power on the Executive Council to make a regulation with retrospective effect. The purported regulations, thus, could not have been given retrospective effect or retroactive operation as it is now well settled that in absence of any provision contained in the legislative Act, a delegatee cannot make a delegated legislation with retrospective effect.

20. In Mahabir Vegetable Oils (P) Ltd. v. State of Haryana1 this Court stated: (SCC p. 633, paras 41-43)

“41. We may at this stage consider the effect of omission of the said note. It is beyond any cavil that a subordinate legislation can be given a retrospective effect and retroactive operation, if any power in this behalf is contained in the main Act. The rule-making power is a species of delegated legislation. A delegatee therefore can make rules only within the four corners thereof.

42. It is a fundamental rule of law that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act, or arises by necessary and distinct implication. (See West v. Gwynne2.)

43. A retrospective effect to an amendment by way of a delegated legislation could be given, thus, only after coming into force of sub-section (2-A) of Section 64 of the Act and not prior thereto.”

See also MRF Ltd. v. Asstt. Commr. (Assessment) Sales Tax3.

68. In Delhi Development Authority Vs. Joint Action Committee reported in 2008 (2) SCC 672, the contract of a town planning vis-a-vis transfer of plot and increase of its value with retrospective effect was held to be prospective, stating : -

“80. A definite price is an essential element of binding agreement.

A definite price although need not be stated in the contract but it must be worked out on some premise as was laid down in the contract. A Contract cannot be uncertain. It must not be vague. Section 29 of the Contract Act reads as under :

“29. Agreement void for uncertainty. – Agreements, the meaning of which is not certain, or capable of being made certain, are void.”

A contract, therefore, must be construed so as to lead to a conclusion that the parties understood the meaning thereof. The terms of agreement cannot be vague or indefinite. No mechanism has been provided for interpretation of the terms of the contract. When a contract has been worked out, a fresh liability cannot be thrust upon a contracting party.

81. It is well settled that a definite price is an essential element of a binding agreement. Although a definite price need not be stated in the contact, but assertion thereof either expressly or impliedly is imperative.”

69. It is true, as has been contended by Mr. Agarwal that there are obligations on the part of a licensee in terms of the provisions of the licence. This may be so. However, the policy with regard to roll out programme would be subject to regulation. Any change in the terms and conditions must have a direct nexus with the purpose it seeks to achieve and not subverse the same.

70. Keeping in view the aforementioned legal position, we may analyse the fact situation obtaining in the present case.

Analysis :-

71. The questions, which arise for consideration and as noticed by us hertetobefore being inter-related, we would endeavour to find out a consolidated answer.

72. The agreement dated 24.01.2003 by and between the parties hereto refer to a licence granted to the petitioner under Section 4 of the Indian Telegraph Act. This requires a bit detailed discussion. ‘Telegraph’, as defined in Section 2 (i), has a restricted meaning. The said definition, in our opinion, should be read having regard to the history of the Act. The history of the 1885 Act suggests that the said Act was enacted when wireless telephone services were not in existence. The said term ‘telegraph’ was amended by Act 15 of 1961. It reads thus:

"telegraph" means any appliance, instrument, material or apparatus used or capable of use for transmission or reception of signs, signals, writing, images and sounds or intelligence of any nature by wire, visual or other electro-magnetic emissions, Radio waves or Hertzian waves, galvanic, electric or magnetic means.

It, however, refers to ‘sounds or intelligence’. The term ‘visual’ refers to those two words. However, it can be done through "Radio waves" or "Hertzian waves" which mean electro-magnetic waves of frequencies lower than 3,000 giga-cycles per second propagated in space without artificial guide. The Telegraph Authority is the Director General of Posts and Telegraph and includes any officer empowered by him to perform all or any of the functions of the said authority under the Act. Despite the definition of word “Telegraph” in the broadest possible term, the Act is, in our opinion, may not bring about the term ‘Broadcasting’ within its purview. The Union of India has different Ministries. They work under different Departments. Any order passed by one of the Ministries requires authentication in terms of Clause 3 of Article 77 of the Constitution of India. The Central Government has also made the Rules of Executive Business.

73. The Parliament has also enacted the Telecom Regulatory Authority of India Act for the purpose of regulating the telecommunication services. The word ‘telecommunication’ has not been defined. But ‘telecommunication services’ has been defined in Section 2 (i) (k) of the said Act.

74. Indisputably the Central Government, as indicated heretobefore, issued a notification on or about 09.01.2004 whereby ‘broadcasting services’ and ‘cable services’ have also been brought within the purview of the telecommunication services. For the aforementioned purpose, a legal fiction had to be created.

75. The Parliament, therefore, was aware that technically or otherwise it is not possible to bring in ‘telegraph services’ and broadcasting and cable services having similar nature of services.

76. As a matter of fact, the TRAI, which has also been established under the 1997 Act, made two different categories of interconnection regulations; one concerning the Telecommunication Services and the other; Broadcasting and Cable Services. It has not been denied or disputed that the Broadcasting and Cable Services are under the Ministry of Information and Broadcasting.

77. The Department of Telecommunication (DoT) deals with the ‘Telecommunication Service’ including the spectrum. WPC is a Wing of the Telecommunication Ministry.

78. The Parliament has also enacted the Cable Television Network (Regulations 1995) wherein the term “Cable Services” has been defined to mean transmission of cable or programme including transmission of cable or broadcast any Television service. Section 3 restricts the operation of Cable Television Network except by registration. The Multi System Operator, who runs a Headend in the sky for receipt and transmission of the channels, also require a registration as a cable operator.

79. Section 4-A provides for transmission of programme through addressable system.

80. We have noticed heretobefore the definitions of ‘addressable system’ and ‘Free to Air Channel’ and ‘Pay Channel’ etc. as contained in the statute for the purpose of operating Cable Television Network.

81. Section 10 provides that Cable Television Network should not interfere with the telecommunication system. Section 16 provides for punishment for contravention of provision of the said Act. Telecasting of signals in the broader sense, therefore, stricto sensu do not come within the purview of telecommunication services. It is of some significance to note that Central Government thought of having one Act for convergence of both the systems as far back as in the year 2000, but for one reason or the other, the same has not been brought in as a statute.

82. A distinction has been made by Mr. Agarwal between the terms “Teleport” and “HITS channel”. According to Mr. Agarwal, whereas from a Teleport System, only 15 channels can be transmitted, in a HITS system, 150 channels can be transmitted. While we would assume the same, it in our opinion, is not a matter of great significance.

83. Before us, the learned counsel appearing for the petitioner has placed a chart.

It reads as under :-

“Note on comparison between function and equipment of Teleport and HITS

S.No. Equipment HITS Teleport

1. Antenna Yes Yes

2. RF Equipment Yes Yes

3. MCPC/Headend Chain Yes Yes

4. CAS Yes Optional

5. SMS Yes Optional

6. Downlink Setup Yes Yes

7. Monitoring Setup Yes Yes

S.No. Function HITS Teleport

1. Receive of TV Signal Yes Yes

2. Encoding of Signal Yes Yes

3. Encryption Yes Yes

4. Uplinking of Signal Yes Yes

5. Downlinking of Signal by MSO/LCO Yes Yes

6. Uplink of Pay/FTA Channel Yes Yes

7. Monitoring Yes Yes

There is no dispute with regard thereto.

84. From the aforementioned chart, it would be evident that whereas in teleport CAS system, SMS equipments are optional, in HITS it is mandatory. An operator, however, operating from a HITS platform, would, therefore, require that the aforementioned system is put in place. The petitioner also cannot take any exception thereto. In regard to broadcasting and cable services, the provisions of the Indian Telegraph Act except to some extent have no application in view of the fact that the same are not applicable.

85. We have to consider as to whether the provisions of the said Act can be applied in relation to the broadcasting and cable services. The answer, in our opinion, may not be difficult to find. The 1995 Act, as amended in the year 2002, take care of both addressable system and non-addressable system. The Telecom Regulatory Authority of India Act also said so.

86. Regulations were framed under the 1997 Act. TRAI is an independent Regulator. It is not answerable even to any Ministry when it exercises its jurisdiction under Section 11 of the Act in regard to its functions. With a view to maintain its independence, even its accounts are not audited by the Comptroller and Auditor General with regard thereto. TRAI, indisputably, is a statutory authority. It derives jurisdiction only under the 1997 Act and not under the 1885 Act. The Central Government may also ask it to perform any of the functions not otherwise provided in Section 11 of the Act within the four corners of the provisions of the said Act and not otherwise.

87. TRAI, being not a Department of the Central Government and being an independent Regulator, its actions are only subject to appeal and judicial review. In its decision making process for the purpose of passing any order or direction, it is not answerable to the Government, which represents the popular government.

88. TRAI admittedly, as a statutory authority however, is required to perform its duties within the four corners of the statute.

89. For exercising its power and functions under Section 11 of the Act, it is bound to act in terms of the procedure laid down therein, or not at all. If that be so, it is difficult to agree with the submissions of Mr. Agarwal that Ministry of Information and Broadcasting could confirm the recommendations of TRAI for altering the terms and conditions of licence and laying down of its earlier decisions within the provisions of the Indian Telegraph Act, 1885.

90. It is one thing to say that in the matter of implementation of the Indian Telegraph Act, the Central Government intended to lay down a new policy, but it would be another thing to say that for the said purpose, it could take the recommendations of the TRAI into consideration. The functions of the Authority are two folds (i) to make recommendations; and (ii) discharge certain functions. The regulatory jurisdiction of TRAI in respect of Broadcasting and Cable Services emanated from the aforementioned notification dated 09.01.2004 whereby and whereunder a legal fiction was created. We may refer to Clause (ii) (a) of Sub section 1 and Section 11. If the terms and conditions of the licence to a service provider are to be enforced, the service provider would be governed by the regulations and/or the licence. Any person like the petitioner, who was to obtain a permission to operate on HITS platform, would also be a service provider.

91. It may be true that having regard to the power of a statutory authority and in particular the Government of India as a licensor, the matter requires the recommendation so far as the introduction of new terms and conditions of the licence to a service provider is concerned, which would include an amendment or modification, but the same not being the same that as the TRAI will have jurisdiction to recommend to the Central Government in the matter of issuance of guidelines under the Indian Telegraph Act so as to enable it to do something, which is the sole prerogative of the licensor and not the Central Government under proviso appended to Section 4 of the Indian Telegraph Act.

92. Grant of licence although a privilege, but the same would not mean that the Central Government, at any point of time may impose any condition or ask for any other or further amount of consideration, whatever it pleases. If that be so, the question of taking recourse to Section 11 of the Act would not arise. A ‘State’, as is well known, cannot act arbitrarily or whimsically.

93. It is also trite the Statutory Authority must carry on its functions within its permissible capacity. TRAI’s one of the sources of power is legislative in character. Any regulation made by the TRAI in exercise of its power under Section 11 would be a law within the meaning of Article 13 of the Constitution of India. It shall prevail over a contract. It is not in dispute, as was noticed heretobefore, that the TRAI has already regulated the field of broadcasting and cable services. Such regulations have been framed under the TRAI Act. The regulations may extend to HITS operation. Even the services rendered by a DTH operator, have been brought within the purview of the said regulation. For its operation, only a few equipments are necessary.

94. We, therefore, think that it would be appropriate if the TRAI considers the desirability of making a regulation in relation to the HITS operation. There cannot be any doubt that recourse thereto may be taken keeping in view the ground realities. There cannot also be any doubt that as and when such work is undertaken by the TRAI, it will have the views of all the stakeholders including the petitioner.

95. TRAI in its recommendations dated 17.10.2007 have noticed that the petitioner and Dish TV were the existing operators. We are informed that in view of certain restrictions put on the functionings of HITS operation, Dish TV has suspended its HITS operations. It may not be necessary for us to consider the matter from a larger prospective in view of the fact that the respondent has rejected the representation of the petitioner by an order dated 25.02.2010.

96. It sought for the recommendations of the TRAI by a letter dated 18.3.2010; the relevant portions where of read as under :-

“Please refer to my letter No.9/2/2005-BPandL vol. III dated 10.12.2009 which TRAI was requested to revisit the interconnect regulations, tariff orders and quality of service regulation, etc. in view of the policy guidelines on HITS so that the benefits of the policy can be fully achieved. Subsequently, vide this Ministry’s OM No.8/1/2010/BPandL dated 16.02.2010, copy of a representation dated 1.2.2010 received from M/s. Dish TV on the Tariff issues relating to HITS services needing to be addressed by TRAI was also forwarded to TRAI for appropriate action.

2. I am now enclosing copy of a letter dated 11.03.2010 received from M/s. Dish TV informing the Ministry of the suspension of the HITS services w.e.f. 30th March, 2010. Also enclosed is a letter dated 03.03.2010 of M/s. Dish TV vide which certain policy issues have also been raised in addition to the tariff issues. It has been requested that existing permission holders be exempted from the requirement to pay entry fee of Rs.10 crore and from meeting the networth criteria. It has also been suggested that the DTH licensees be allowed to provide passive infrastructure services for HITS operations. It is also to mention that M/s. NSTPL has also represented that the existing operators should neither be required to pay the entry fees nor be required to furnish the performance bank guarantee for meeting the roll out obligations.

3. TRAI is accordingly requested to furnish its recommendations to the Ministry on the policy issues raised by the existing operators and whether any changes are required to be made in the existing Policy for HITS services. TRAI is also requested to expedite action on the Tariff issues raised by M/s. Dish TV in its representations as mentioned above.”

97. Mr. Agarwal, however, would contend that only because recommendations were sought for from the TRAI, the same would not mean that the order of rejection is not in force. We think it is not. It must have taken recourse to the procedure laid down in Section 11 (1) (a) of the TRAI Act. If it did so, it has option to give finality to the recommendations of the TRAI as also the guidelines issued by it on or about 26.11.2009. The very fact that it has sought for recommendations having regard to the representation of the petitioner, it must be held to have not yet finally decided the payability of Rs.10 crores to the petitioner as also performance guarantee. We may take note of the fact that TRAI has also not framed a tariff rate in regard to the HITS services in place of its Tariff order on or about 21.07.2010.

98. From a recent Press Release, it would appear that the TRAI had set up a goal post for achieving the total addressability by December, 2015.

99. We appreciate the submissions of Mr. Agarwal that through HITS operation, penetration in the rural areas in regard to pay channels would be possible to be implemented earlier by introducing the Voluntary CAS system. We are, however, informed that for hiring a transponder, an operator has to pay 1.2 million dollars per year per transponder in the frequency of 36 MEz.

100. It has been submitted before us by Mr. Chadha that a businessman may not invest so much amount unless there is any regulation governing the field for making the system workable. We may only observe that ground realities cannot be ignored.

101. Before however, the operator is asked to perform and deliver certain results by way of performance, the requirements in respect thereof must clearly be spelt out. There is no doubt that the parties to the agreement do not have roll out obligation. If it is necessary to lay down a roll out obligation on the part of the parties to the licence so as to achieve a desirable result, the same must be left for consideration of the Expert Body – TRAI.

102. No doubt, the TRAI will take a decision upon consideration of the impact at the ground level. If the TRAI intend to lay down a regulation, the matter would be different. Even otherwise, the TRAI while responding to the letter of the 1st respondent dated 18th March, 1995, should consider the matter from all angles and not only from the view point of the technicalities of the Act. It is accepted that the impact of demand would be enormous.

103. It has not been disputed that the petitioner for the purpose of operating on HITS platform would be required to obtain a WPC licence. Respondent No.1 states that the term of 10 years provided for in the permission granted being dated 16.4.2003 and the licence granted on 26.10.2004.

104. We, furthermore, feel that where a licence has been granted to operate in public interest, certain obligations may have to be imposed. This can be achieved by way of a regulation, which will even include the existing licensees. Even otherwise, assuming that no regulation is forthcoming, it may be possible for the Central Government to lay down a nodal procedure, by which the HITS licence would become operable or would be implemented. A licence or permission is granted to achieve a result. The mechanism for achieving such a result having not been laid down in the statute, there is no reason why the same shall not be resorted to when an action, statutory or otherwise is taken. When the parties have a duty to perform under a statute, they should perform the same irrespective of the consequences arising thereunder.

105. We must, however, place on record our agreement to the submissions of Mr. Agarwal that the permission granted to the petitioner dated 16.4.2003 is an independent one. It is true that the terms and conditions of the licence granted to the petitioner on 24.01.2003 are being resorted to, but the same would not be that the consideration fixed on the later would cover consideration for the former also.

106. Exclusive privilege in terms of proviso appended to Section 4 of the Indian Telegraph Act has been mentioned before us repeatedly. If that is sacrosanct, the legal and/or contractual provision would have to be shelved. The respondent could not have laid down a provision that modification of the terms and conditions would be permissible only when it would be in the public interest or for security reasons. It was not necessary for it to lay down any terms and conditions or refer the matter to the TRAI at all. It could have done this at its whims or caprice.

107. The said permission having not granted under any contract being not for any consideration, it shall not be governed by the Indian Contract Act. The impugned demand, therefore, cannot be sustained.

108. Mr. Mohit Chadha would, however rely upon Section 2 (c) and (d) of the Indian Contract Act, which read as under :-

“2. Interpretation-clause.

In this Act the following words and expressions are used in the following senses, unless a contrary intention appears from the context :-

(c) The person making the proposal is called the "promisor and the person accepting the proposal is called the It promisee ":

(d) When, at the desire of the promisor, the promise or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such Act or abstinence or promise is called a consideration for the promise.”

109. Nothing has been brought to our notice to show that by reason of the said provision, the petitioner has been asked to abstain from doing something. Such an act or abstinence of promise being the consideration therefor or the promissor has desired the petitioner to do something. If there was no consideration, Section 25 of the Indian Contract Act would be attracted. A permission to operate on HITS platform need not be for no consideration. The teleport licence granted to the petitioner is different from the HITS licence. The petitioner itself proceeded on the basis that it was required to obtain a licence. The petitioner accepts that for operating on HITS platform, it is required to obtain a WP licence from the WPC Wing of the Department of Telecommunication of the Government of India and clearance from SACFA would be necessary.

110. We, therefore, are of the opinion that the TRAI had enough power in it to take certain decisions in this behalf or to make suitable recommendations to the Government.

111. However, in the facts and circumstances of this case, as the question as to whether the respondent in view of the fact referred the matter again for opinion of TRAI for the purpose of changing the terms and conditions of licence, it may do so only in public interest.

112. This petition is allowed to the extent mentioned heretobefore and with the aforementioned observations and directions. In the facts and circumstances of this case, there shall be no order as to costs.


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