Arbitration Barred In Respect Of Matters Within Exclusive Jurisdiction Of TDSAT Under TRAI Act: Kerala High Court

The Kerala High Court recently held that arbitration under the Arbitration and Conciliation Act, 1996 is barred in respect of matters which are within the exclusive jurisdiction of Telecom Disputes Settlement and Appellate Tribunal (TDSAT) under the Telecom Regulatory Authority of India Act, 1997 (TRAI Act).

Justice N. Nagaresh observed that TRAI Act is a special law and would prevail over the Arbitration Act, which is a general law. 

"The Telecom Regulatory Authority of India Act, 1997 being a later statute and having been specially enacted for the Telecom Sector, will certainly prevail over the Arbitration and Conciliation Act, 1996. The Telecom Regulatory Authority of India Act, 1997 was enacted in the year 1997 and the Arbitration and Conciliation Act was enacted in the year 1996. When the Telecom Regulatory Authority of India Act, 1997 was enacted, the Parliament was aware of the remedy of arbitration available under the Arbitration and Conciliation Act, 1996. Even then, the Parliament chose not to exclude the Arbitration and Conciliation Act, 1996 from the ambit of the Act, 1997", it observed. 

It added that TRAI Act is intended to protect the interests of service providers and consumers of the Telecom Sector and to promote and ensure the orderly group of Telecom Sector.

"Speedier adjudication of disputes by a specialized Tribunal having requisite knowledge and expertise of the Sector is necessary for the growth of the Telecom Sector in the long run. The Telecom Regulatory Authority of India Act, 1997 is a complete Code. TDSAT has exclusive jurisdiction to adjudicate any dispute between the parties", it noted. 

The Court was dealing with a petition under Section 11 of the Arbitration Act filed by A. Salim, Managing Director of M/s. Mobile Star Satellite Communication India seeking appointment of an Arbitrator in a dispute with its contracting party- M/S Asianet Satellite Communications Limited. 

The petitioner averred that Asianet violated the terms of agreement and he thus, sent a letter to the company to refer the matter for arbitration. He averred that he had also suggested the name of an arbitrator, however, the respondent did not reply to the notice, pursuant to which he approached the Court seeking to appoint an arbitrator for the dispute. 

The respondent, represented by Advocate Saji Varghese T.G., contended that the petitioner is a Broadcaster and the respondent a Multi System Operator, and that the parties are thus governed by the TRAI Act. He argued that any grievance the petitioner may have against the respondent thus ought to be governed by the said Act. He submitted that the TDSAT, established under Section 14 of the Act, is competent to adjudicate any dispute between a licensor and a licensee, between two or more service providers and between a service provider and a group of consumers. "Dominant public policy demands that all disputes in Telecom Sector which includes broadcasting and cable TV, should be within the exclusive jurisdiction of the TDSAT", he submitted. He further argued that the TRAI Act would prevail over the Arbitration and Conciliation Act. 

The respondents also relied upon the decision of the Delhi High Court in Gaur Distributors v. Hathway Cable and Datacom Limited to buttress their argument that in view of the TRAI Act, resolution of the dispute through proceedings under the Arbitration and Conciliation Act is not permissible.

On the other hand, Senior Advocate M. Ramesh Chander, and Advocates Aneesh Joseph and Dennis Varghese, argued that the respondent had entered into an agreement with the petitioner as per which all disputes and controversies arising out of or in connection with the agreement or for the breach thereof, shall be settled by arbitration in Trivandrum and governed by the Arbitration Act. It was submitted that after entering into such an agreement, the respondent could not now question the arbitrability of the dispute. It was further averred that since the respondent itself had filed complaints under Section 138 of the Negotiable Instruments Act, 1881 against the petitioner, it would indicate that the parties are at liberty to approach competent courts / forums, other than the TDSAT.

The Court perused the Arbitration Agreement, and found that as per Clause 8, the parties had agreed for resolution of any disputes through arbitration.

The Court thereon perused the TRAI Act, 1997, pursuant to the arguments of the respondent, and found that as per the proviso to Section 14 of the Act, nothing in the provision shall apply to matters relating to the Monopolies and Restrictive Trade Practices Act, 1969, the Consumer Protection Act, 1986 and Section 7B of the Indian Telegraph Act, 1885. The proviso however, does not speak of the Arbitration and Conciliation Act, 1996. 

The Court thus found that the Delhi High Court decision aforementioned, and Sections 14 and 15 of the TRAI Act made it clear that TDSAT is empowered to adjudicate any dispute between two or more service providers and arbitration proceedings in such disputes is not permissible.

The Court found in this light that the Arbitration Act being a general provision relating to settlement of disputes by arbitration and having carved out certain matters only as available for determination by arbitration, on the principle of 'generalia specialibus non derogant', what has been provided in the TRAI Act would override the general provisions contained in the Indian Arbitration Act. Accordingly, it found that the matters relating to which there is direction in the TRAI Act cannot be the subject matter of arbitration.

"It is therefore clear that the Special Law i.e., the Telecom Regulatory Authority of India Act, 1997 will prevail over general law i.e., the Arbitration and Conciliation Act, 1996. Therefore, TDSAT has the exclusive jurisdiction to adjudicate upon all disputes that arise between the parties and those specified under the Act", the Court observed. 

The Court thus found the Arbitration request to not be maintainable, and dismissed the same. 

Case Title: A. Salim v. M/S Asianet Satellite Communication Ltd. 

Citation: 2022 LiveLaw (Ker) 633 

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