SUMMARY OF MADRAS HIGH COURT JUDGEMENT DATED 02.03.2018 IN STAR INDIA & ORS vs. DIPP & ORS

SUMMARY OF MADRAS HIGH COURT JUDGEMENT DATED 02.03.2018 IN STAR INDIA & ORS vs. DIPP & ORS

The judgment of the Madras High Court precedes the events that took place in the Hon’ble Supreme Court on the same issue and an update of the same is given in the link provided below-

Hon’ble Supreme Court refers the Challenge to TRAI Regulations & Tariff Order by Broadcasters back to a Senior Judge of the Madras High Court

BRIEF BACKGROUND

The present Petition had been filed before the High Court Of Judicature At Madras that had been reserved on 02.08.2017 and was finally delivered on 02.03.2018 by a Division Bench comprising of Hon’ble Ms.Indira Banerjee, Chief Justice and the Hon’ble Mr. Justice M. Sundar in W.P. Nos.44126 and 44127 of 2016 and W.M.P.Nos.37951 to 37956 of 2016, 5641, 6050 to 6052, 6054 to 6056 and 11131 of 2017.

The Petitioners STAR India Private Limited and Vinay Television Private Limited had filed the aforesaid two Writ Petitions on 23.12.2016 challenging the two consultation Papers issued by the Telecom Regulatory Authority of India namely – titled ‘Consultation on the Draft Telecommunication (Broadcasting and Cable Services) (Eighth) (Addressable Systems) Tariff Order, 2016’ dated 10.10.2016 and is titled ‘Consultation Paper on Draft Telecommunication (Broadcasting and Cable Services) Interconnection (Addressable Systems) Regulations, 2016’ dated 14.10.2016.

That pending the above-said Writ Petitions, the impugned consultation papers were notified on 03.03.2017 by TRAI. Therefore, the Regulations and Tariff Order dated 03.03.2017 took birth as the ‘Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems) Regulations, 2017’ and ‘Telecommunication (Broadcasting and Cable) Services (Eighth) (Addressable Systems) Tariff Order, 2017’ and hence the prayers filed by the Petitioner were accordingly modified by the Petitioners.

CHALLENGE TO IMPUGNED REGULATIONS & TARIFF ORDER
The Writ Petitions challenged the vires of the abovementioned Regulations and the Tariff Order to the extent they have the effect of regulating, determining or otherwise impacting content creation, generation, exploitation, licensing and terms and conditions for exploitation of content and broadcast reproduction rights. The Writ Petitions specifically challenged the following provisions of the Regulations and the Tariff Order:
I. Clauses 2(h), 2(j), 2(mm), 2(pp), 3 and 7 of the Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems) Regulations, 2017;
II. Clauses 2(f), 2(h), 2(zg), 2(zh) and 3 of the Telecommunication (Broadcasting and Cable) Services (Eighth) (Addressable Systems) Tariff Order, 2017.

The Petitioners challenged the vires of seven clauses in said Regulations and Eleven clauses in said Tariff Order (18 clauses in all) that have been enumerated in the form of two separate tabular columns / tables along-with the ground for setting them aside:

Provision of Interconnect Regulations Ground
6(1) All channels (pay channels and free-to-air channels) to be offered on a-la-carte basis. Impinges upon broadcaster’s ability to package a TV channel. No such restriction on broadcaster under Copyright Act.
Second proviso to 6(1) – Bouquet of pay channels shall not have free-to-air channels. – HD and SD variant of same channel cannot be in same bouquet. Impinges upon broadcaster’s ability to package a TV channel. No such restriction on broadcaster under Copyright Act.
Proviso to 7(2) – Bundling of third party channels prohibited.

 

Impinges upon broadcaster’s ability to package a TV channel. No such restriction on broadcaster under Copyright Act.
7(4) – Broadcaster can offer discounts to distributor not exceeding 15% of MRP. Directly regulates the pricing of a TV channel, thereby also regulating pricing of individual programmes.
First proviso to 7(4) – Sum of discount under 7(4) and distribution fee under 7(3) shall not exceed 35% of MRP. Directly regulates the pricing of a TV channel, thereby also regulating pricing of individual programmes.
10(3) r/w 6(1) – Mandatory to enter into agreement with DPO on an a-la-carte basis for pay channels. Impinges upon broadcaster’s freedom to offer pay channels only as a part of bouquet and not as a-la-carte. No such restriction on broadcaster under Copyright Act.
11(2) – Deemed extension of geographical territory.

 

 

Directly impinges the broadcaster’s right under 19(2) to designate the geographical territory of exploitation.
Provisions of Tariff Order Ground
3(1) – All channels to be offered on a-la-carte basis. Impinges upon broadcaster’s ability to package a TV channel.  No such restriction on broadcaster under Copyright Act.
2. 3(2)(b) – Declaration of MRP of a-la-carte channel

 

 

Impinges upon broadcaster’s freedom to offer pay channels only as a part of bouquet and not as a-la-carte. No such restriction on broadcaster under Copyright Act.
Second proviso to 3(2)(b) – MRP of all pay channels to be uniform across distribution platforms. Under Section 33A read with Rule 56 of the

Copyright Rules, 2013, broadcaster has the right to decide separate MRP for different category of audience.

First proviso to 3(3) – Bundling of third party channels prohibited.

 

Impinges upon broadcaster’s ability to package a TV channel. For example, third party channels cannot be part of the same bouquet. No such restriction on broadcaster under Copyright Act.
Second proviso to 3(3) – MRP of pay channel in bouquet not to exceed INR 19/- Directly regulates the pricing of a TV channel,

thereby also regulating pricing of individual

programmes.

Third proviso to 3(3) – Bouquet price shall not be less than 85% of the sum of a-la-carte prices of individual channels in the bouquet. Directly regulates the pricing of a TV channel,

thereby also regulating pricing of individual

programmes.

 

Fourth proviso to 3(3) – MRP of all bouquets to be uniform across distribution platforms.

Fifth proviso to 3(3) – Bouquet

of pay channels shall not have

free-to-air channels.

 

Under Rule 56 of the Copyright Rules, 2013,

broadcaster has the right to decide separate MRP for different category of audience. Impinges upon broadcaster’s ability to package a TV channel. No such restriction on broadcaster under Copyright Act.

Sixth proviso to 3(3) – HD and SD variant of same channel cannot be in same bouquet. Impinges upon broadcaster’s ability to package a TV channel. No such restriction on broadcaster under Copyright Act.
3(4) – Restriction on promotion of bouquets, restriction on time, restriction on frequency. All these restrictions impinge broadcaster’s ability to commercially monetize his content.
4(2) – Distributor to offer all channels on a-la-carte basis.

 

Indirectly impinges upon the broadcaster’s right

to offer his channels to the customers only as a

bouquet and not as a-la-carte.

DISSENTING ORDER PASSED BY THE HON’BLE DIVISION BENCH

The Hon’ble members of the Division Bench held the following-

Issue Hon’ble Ms. Indira Banerjee Hon’ble Mr. Justice M. Sundar
Tariff Order clauses 6(1), second proviso to 6(1), proviso to 7(2), 7(4), first proviso to 7(4) and 10(3) of the said Regulations and clauses 3(1), 3(2)(b), second proviso to 3(2)(b), first proviso to 3(3), second proviso to 3(3), third proviso to 3(3), fourth proviso to 3(3), fifth proviso to 3(3), sixth proviso to 3(3) and 3(4)

 

I am unable to agree with the conclusion of M.Sundar, J. that the provisions of the impugned Regulation and the impugned Tariff Order are not in conformity with the TRAI Act. In my view the impugned provisions neither touch upon the content of programmes of broadcasters, nor liable to be struck

down.

Struck down as not in conformity with the parent act, i.e., TRAI Act.

 

Clause 11(2) in the said Regulations as also Clause 4(2) in the said Tariff Order.

 

No comments Will continue to be in the books, but cannot be pressed into service for anything to do with the provisions which we have struck down supra.
Cap of 15 % to the discount on MRP [Third proviso to 3(3)] The clause putting cap of 15% to the discount on the MRP of a bouquet is arbitrary. Held to be struck down
General Power for Regulation of interconnect agreements between the broadcasters and the distributors or between two service providers and the terms of such agreements Section 11(1) (b) and TRAI can make regulations to regulate the same. Section 11(1) (c) of the TRAI Act enables TRAI to levy fees and other charges in respect of telecommunication services which includes broadcasting services. No specific comment
Cap on Price of a bouquet [Second proviso to 3(3)] Restrictions on the pricing of bouquets are apparently in the interest of the end users. I am unable to agree that by putting a cap on the price of a bouquet, TRAI is regulating content. By putting a cap on the price of a bouquet, TRAI is regulating content.

CONCLUDING REMARKS

Since the Judges have not been able to agree, it was stated by the Hon’ble Chief Justice that the writ petitions may be placed before a third Judge. Since the Chief Justice has delivered the dissenting judgment, the matter may be placed before the next available Judge in order of seniority for nomination of the Judge before whom the matter may be placed.

AUTHOR: SUSHANT CHATURVEDI

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