SC: Penalty on call drop levied on telecom service providers is ultra-vires the Constitution

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The Supreme Court has provided a massive relief to the Telecom Service Providers by quashing Telecom Consumers Protection (Ninth Amendment) Regulations, 2015, of the Telecom Regulatory Authority of India (TRAI) which made it mandatory for mobile network companies to compensate subscribers for call drops.

In a  matter where the validity of the Telecom Consumers Protection (Ninth Amendment) Regulations, 2015 was in question, the Court held that the Impugned Regulation is ultra vires the Telecom Regulatory Authority of India Act, 1997 (TRAI Act) and violative of fundamental rights guaranteed under Articles 14 and 19(1)(g) of the Constitution of India.
The bench comprising of Justice Kurian Joseph and Justice Rohinton Nariman termed the TRAI notification as “flawed, unconstitutional, arbitrary and unreasonable”.

The impugned Regulation stated that every originating service provider who provides cellular mobile telephone services is made liable to credit only the calling consumer (and not the receiving consumer) with one rupee for each call drop, which takes place within its network, upto a maximum of three call drops per day.

The Delhi High Court had upheld the said Regulation and held that the Impugned Regulation has attempted to balance the interest of service providers by limiting call drops to be compensated to only three and by limiting compensation to only the calling and not the receiving consumer. The Supreme Court said that the High Court’s order was flawed as the penalty is imposed without any justified reason. The Court opined that the order of the High Court is far from balancing the interest of consumers and service providers, and is manifestly arbitrary, not being based on any factual data or reason. The Supreme Court further stated  that the Regulation, in assuming that every call drop is a deficiency of service on the part of the service provider, is plainly incorrect and hence, unconstitutional.

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