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July 16, 1998


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Wrong, TRAI, wrong, wrong, wrong!

Priya Ganapati in Bombay

Email this story to a friend. Striking down the orders of the Telecom Regulatory Authority of India, the Delhi high court today permitted the Department of Telecommunications to grant licences to private Internet service providers and allowed the Mahanagar Telephone Nigam Limited to enter cellular phone and paging services in Delhi and Bombay.

In a 51-page ruling, Justice Usha Mehra also upheld DoT's decision to revoke the licences of certain parties to operate cellular services, while permitting MTNL to enter the arena.

However, the judge ruled that ''So far as the question whether MTNL is an existing service provider goes, I have left this question open.''

Justice Mehra held that ''the authority (TRAI) fell in error in concluding that the power of the government to grant or amend the licence is subject to the recommendations of the TRAI or that these recommendations are mandatory in nature.''

The court made it clear that the dispute regarding the grant or to amend the licence by the licensor was not a dispute that can be adjudicated by the authority.

Holding TRAI as only a regulatory body, the judge ruled that ''The power to grant licences solely vests with the designated authority (DoT) and not with the regulatory authority.''

The order came on a number of appeals filed by DoT, challenging the TRAI ruling on not allowing MTNL to enter the cellular arena. The authority had even restrained DoT from selling and processing the forms for the private Internet services providers.

However, Justice Mehra had, in an interim order in April, allowed DoT to process and sell application forms.

The high court today made it clear that the dispute regarding granting and amending of licences by the licensor was not a dispute covered under the provisions of Section 14 (2) of the General Clauses Act. "These are not the disputes that can be adjudicated by the authority," the judge said.

S Rajagopal, chairperson and managing director of MTNL, explained to Rediff that "Section 14 gives various powers of adjudication to TRAI. However, these powers are for adjudication between service providers and consumer groups. TRAI has no powers regarding disputes between licencee and licensor. Now, all the ambiguities in the section are removed."

Justice Mehra ruled that ''Having held that the question of grant or amendment of licence by the licensor does not come within the jurisdiction of TRAI, I have no hesitation to hold that the impugned order (of TRAI) suffers from legal infirmities.''

DoT Secretary A V Gokak told Rediff "There was some gray area in the TRAI Act. We just sought interpretation about that. I don't want to make this into a TRAI versus DoT issue. The government is bothered about the telecom sector. We want to accelerate the pace of development there and will take the necessary steps."

He made it clear that "DoT and TRAI are not there to fight with each other. We are there to supplement each other. In the future, whenever necessary, we will definitely work together to strengthen the telecom sector."

But Rajagopal remained a shade less charitable than Gokak. "It is a very good judgement. Our stand and the government's stand has been vindicated. The high court judgement has made it clear that the TRAI has no authority with respect to any disputes between the licencee and the licensor."

He said "Tenders for cell phone services will be opened soon. Now that the court has permitted us to do so, preliminary work will be done and we will evaluate the bids in three months. The entire process should be over by March 1999. MTNL will certainly be getting into the ISP business too. In fact, I am the first person to have applied for it."

Anand Talwai, chief executive, Wipro Infotech Communications Services Division, said, "You have to understand that there will be no licence restrictions in this business. From day one, all our plans have been made taking into account that MTNL would be one of our competitors. But we do not consider them to be a threat as a lot depends on the type and quality of services you provide."

He elaborated "We are ready to get into the business once the licence issue is settled. A lot depends on whether revised forms will be issued and some of the IT Taskforce recommendations regarding the Internet are accepted. Basically, issues of international gateway and use of email licences have to be looked at."

When reached, Justice S S Sodhi, the chairperson of TRAI, refused to comment immediately, asking for time to study the judgement.

Justice Mehra came down heavily on the arguments extended by Senior Counsel K K Venugopal that if the recommendations of TRAI were not treated as mandatory it would violate the country's commitment at the General Agreement on Tariffs and Trade. ''This argument,'' the order said, ''deserves consideration only for rejection.''

Rajagopal agrees fully. "The lawyer was just trying to confuse people. The case is very clear. We are not violating any GATT provision. All the issues raised by the lawyer were extraneous."

Justice Mehra's elaborated "It has to be rejected for two reasons: first, it is not the commitment of the government that the licensing power of the government will be subject to the discretion of the regulatory authority. Secondly, this court is not hearing a complaint under the GATT. This court, for all intent and purpose, has to interpret the TRAI Act, 1997, as it stands."

Even otherwise, the commitment made by the government at GATT fortifies the contention of the attorney general that the government was fully aware while making the commitment that the designated authority, the licensor, was different from the regulatory authority and they are two different legal entities.

"Therefore, reliance by Venugopal on the reference paper to highlight the commitment at GATT or of the terms and conditions of the World Trade Organisation cannot be forced in aid to interpret the TRAI Act,'' the order read.

The judge said that "No doubt India made commitments at GATT, but it cannot be said that simply because the recommendations of the authority have not been considered as a prerequisite or a precondition to the grant of licence by the central government, it has in any way prejudiced the independent statutory status of the authority."

The order said when confronted as to what functions the government would perform if recommendations of TRAI were the prerequisite, Senior Counsel Gopal Subramaniam, appearing with Advocate Rakesh Tikku, in support of the TRAI order, contended that the powers of the government would still survive in as much as it would perform several functions.

The judge considered the functions outlined by Subramaniam as "nothing but clerical in nature" and rejected his submissions.

''This submission clearly shows that the powers of the government to grant licence would now vest with TRAI. Power of the government as licensor will be completely eroded and denuded. It would tantamount to creating monopoly of the TRAI in the grant of licence,'' the order said.

It further said that it would mean that powers to grant licence under Section 4 of the TRAI Act have become redundant, it would now be exercised at the discretion of TRAI, thereby making the Telegraph Act redundant.

- With additional inputs from UNI

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