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The Calcutta High Court has already lifted the stay on the operation of new TRAI Rules relating to tariff order and regulatory regime. A question regarding the revenue sharing clause in the rules led to the possible legal hitch. Earlier, the Additional Solicitor General explained the default clause which deals with negotiations between MSOs and LCOs in the Telecom Regulatory Authority of India Rules.
As per Schedule V, the MSOs and LCOs are free to enter a mutually enforceable agreement through negotiations, which includes allocation of revenue and responsibilities in the provision of services to the subscribers. As per Schedule VI, in the event of no such agreement as mentioned in the previous schedule, the MSOs and LCOs have to comply with the rules relating to sharing of revenues and responsibilities in providing services.
Previously, both the Madras High Court and Kerala High Court did not find any demerit in the new rules, and thus dismissed the petitions challenging the rules. The Madras High Court was of the view that the TRAI did not act in a hasty manner and fail in taking the interests of all the stakeholders. Thus, it dismissed the petition challenging the rules pertinent to fixation of charges for free and pay television channels. The bench said that it could not intervene unless the court finds such decision to be unreasonable.
The Kerala High Court too faced similar issues with the new TRAI rules. It is pertinent to note that the court had granted an interim stay order. Nonetheless, it said that the basis for restricting the order was demonstrated as non-existent since the interim order ceased to operate on the dismissal of the writ petition before 29th January 2019. Further, the Court directed the TRAI to file an affidavit and demonstrating LCOs could participate in suggesting the formulation of impugned regulations.
The Kerala High Court said that mere existence of default clause could not curb the contractual freedom of the parties. These words had to be echoed in the courtroom due to a petition filed against the TRAI regulations. Justice Anu Sivaraman said that the contractual freedom of parties remains intact, and the default ration would apply only in the event of the absence of an agreement between the parties. However, the petitioner’s grievance considered two aspects which may be consequential to the operation of the provisions. An agreement between the MSOs and LCOs would exist when they enter into a mutual agreement; however, the application of revenue-ratio stipulated in the rules occurs in the event of no agreement between the parties. The refusal of the MSOs to enter into an agreement may result in the automatic application of the ratio given in the TRAI rules, thereby giving rise to individual disputes between the service providers. This dispute would reach the Telecom Dispute Settlement and Appellate Tribunal under section 14 of the TRAI Act, 1997.
In addition to the above, the Bombay and Telangana High Courts are yet to decide on this matter. Therefore, the latter court has reserved its order in the matter. The Former court heard a similar petition filed by the Pune Cable Operators’ Association, wherein the petitioners sought a stay order citing the Calcutta High Court Order. After refusing to grant any relief, the court asked the petitioner to submit a copy of the Calcutta High Court order.
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