Notwithstanding existence of the arbitration clause in respect of disputes between IP-I (those who provide infrastructure and services) and Unified Access License Holders, the important issue is whether the remedy to adjudicate is with the arbitral tribunal or before the expert tribunal called TDSAT under the purview of section 14 read with section 15 of the TRAI ActMuch has been said about...
Notwithstanding existence of the arbitration clause in respect of disputes between IP-I (those who provide infrastructure and services) and Unified Access License Holders, the important issue is whether the remedy to adjudicate is with the arbitral tribunal or before the expert tribunal called TDSAT under the purview of section 14 read with section 15 of the TRAI Act
Much has been said about the Arbitration & Conciliation Act, 1996, and its recent amendments. The arbitration clause or parties agreeing for adjudication of disputes by way of appointment of an Arbitrator, being the pre-requisite to invoke arbitration is a known factor. Arbitral Tribunals are the private fora chosen voluntarily by parties to adjudicate their disputes in place of courts. But the real test comes when the parties who are governed by a separate statute and the legislature provide adjudication of their disputes by way of a fora referred under the law. Surely this comes as a clash and the nitty-gritty involved is commonly overlooked for many reasons. This is what was seen recently in the telecom industry.
If any person is to be asked about the telecommunication services, the names of the existing big operators in the field will inevitably come to mind. But behind these telecommunication service providers, there are experts in providing infrastructure who work under licence of the Department of Telecommunication with the registration certificate of Infrastructure Provider Category–I (IP-I). These infrastructure providers not only provide building but most of them provide complete passive telecommunication infrastructure to the telecom operators so that uninterrupted services are provided to customers. From sites to towers, power and fuel, security and such like services to the Unified Access Service Licensee i.e. telecom operators who in turn provide services in various areas/ circles to reach the end users.
A contract which is commonly termed by them as Master Service Agreement (‘MSA’) for infrastructure provisioning & maintenance in such agreements in usual course has an arbitration for adjudication of disputes, if any between the parties. The Telecom Regulatory Authority of India Act (‘TRAI’) was enacted by Parliament in the year 1997. The Act 2 of 2000 led to the constitution of a Tribunal. This Act, was formulated after the Arbitration & Conciliation Act, 1996 came into force.
The important issue is that notwithstanding existence of the arbitration clause in respect of disputes between the IP-I i.e. those who provide infrastructure & services, with the Unified Access License Holders i.e. the telecom operators, whether the remedy to adjudicate is with the Arbitral Tribunal or before the Expert Tribunal called Telecom Disputes Settlement and Appellate Tribunal (‘TDSAT’) under the purview of Section 14 read with Section 15 of the TRAI Act.
In a judgement passed on 10.04.2012 by TDSAT in ‘Reliance Infra Ltd. Vs. ETISALAT-D.B. Telecom Pvt. Ltd.’ it is held that the entity registered with DoT having IP-I licence to provide infrastructure is the service provider within the meaning of TRAI Act and the TDSAT has jurisdiction to adjudicate the disputes arising between service providers notwithstanding the existence of the arbitration clause in a contract between two service providers.
Another view is also given by the Hon’ble Single Bench of the Delhi High Court on 11.11.2013 in dispute between VIOM Ltd. and S.Tel. Pvt. Ltd. where the IP-I licence provider are held to be infrastructure providers and not service providers within the meaning of TRAI Act. Resulting TDSAT not having the jurisdiction over their dispute and in the event of there being any arbitration clause, the remedy of arbitration is not ousted. Despite there being a conflict at the conceiving stage of litigation, the Arbitration Act is being adopted in most of the occasions.
The Telegraph Act came into force in the year 1885 thereby giving privilege and powers to the Central Government. The Part-II of the Act under Section 4, vests the privilege exclusively with the Central Government in respect of telegraph and the power to grant licence. The provisio of Section 4 enables the Central Government to grant licence to any person or establish, maintain or work a telegraph.
The telecommunication services providers hold such licenses granted under Section 4 which are categories as IP-II whereas the infrastructure providers holds IP-I licence. The IP-I licence restrains its holders by way of specific clause that they shall not case work and operate or provide telegraph services, including end-to-end bandwidth as defined in the Indian Telegraph Act either to any service provider or any other customer.
The infrastructure provided by the IP-License holder is passive and not active i.e. they do not provide services to end customers is what is held by the Hon’ble Single Bench. The reasoning lies within the definition provided in the TRAI Act. Section 2(1)(j) of the TRAI Act defines a service provider as meaning “the government as the service provider” and including a Licensee, whereas a Licensee is defined in Section 2(1)(e) as meaning “any person licensed under sub-section (1) of Section 4 of the Indian Telegraph Act”. The ratio is filtered down in respect of IP-I licence holders, when a ‘Licensee’ within a meaning of Section 2(1)(e) of the TRAI Act would accordingly fall under the definition of service provider in Section 2(1)(j) of the Act. But the IP-I licence holders are not permitted to have licence to work a telegraph and are also hit by the restrain clause in their licence. Hence, they are not service provider within the meaning of TRAI Act i.e. what is being observed and the remedy of arbitration is not ousted.
The idea behind the Expert Tribunal TDSAT and the fast track Arbitration with timeline conclusion is more or less same. But the judgement of the Hon’ble High Court seems to have the precedence being passed in 2013 having dealt with the 2012 judgement of TDSAT with reasoning on IP-I holders being that infrastructure provided is passive and not active and are not service providers within the meaning of TRAI Act. Hence, arbitration is being commonly adopted for adjudication of disputes between IP-I licence holders and holders of licence granted by the Central Government under section 4 of the Telegraph Act, 1885.
Disclaimer – The views expressed in this article are the personal views of the author and are purely informative in nature.