Telecom Services - Franchisee Agreement, Not Subject To TDSAT Jurisdiction, Delhi High Court Refers Dispute To Arbitration

Facts

The parties entered into a franchise and consultancy agreement on 01.09.2018. Clause 4 of the agreement outlined the obligations of the franchisee, including marketing, promotions, sales, and distribution of internet services, as well as submission of information to government departments and regulatory authorities. Clause 12 provided for resolution of the dispute through arbitration.

A dispute arose between the parties, leading to invocation of arbitration by the petitioner. Upon the failure of the parties to mutually appoint the arbitrator, the petitioner filed an application under Section 11 of the A&C Act.

Submissions by the Parties

The respondent objected to the maintainability of the petition on the following grounds:

• The subject matter of the dispute is non-arbitrable as the petitioner is a service provider registered under the TRAI Act and in terms of Section 14^[1], the exclusive jurisdiction to adjudicate disputes under TRAI Act is with TDSAT, ergo, the dispute is non-arbitrable.

Analysis by the Court

The Court examined the obligations of the franchisee and concluded that the franchisee's role was limited to promoting the petitioner's services, not providing telecommunication services directly. It held that in terms of Section 14, the dispute would be subject to the jurisdiction of TDSAT only when it is between the licensor, licensee, service provider or the group of consumers.

The Court noted that the respondent is a mere franchisee responsible for promotion of services provided by the petitioner, ergo, it does not fall under the definitions of licensee, licensor, service provider, or group of consumers as per the TRAI Act.

The Court held that the reliance placed by the respondent on the judgment of a coordinate bench in Gaur Distributors v. Hathway Cable, ARB.P. 129/2016 is misplaced as in this case, the dispute was a pure telecommunication dispute between two service providers.

Accordingly, the Court dismissed the objections and appointed a sole arbitrator.

Case Title: Fusionnet Web Services v. Yash Fiber Network

Citation: 2024 LiveLaw (Del) 381

Date: 19.03.2024

Counsel for the Petitioner: N/A

Counsel for the Respondent: Mr. Tejvir Bhatia, Mr. Kunal Vats, Advs.

Click Here To Read/Download Order

[1] 14. Establishment of Appellate Tribunal.- The Central Government shall, by notification, establish an Appellate Tribunal to be known as the Telecom Disputes Settlement and Appellate Tribunal to- (a) Adjudicate any dispute— (i) Between a licensor and a licensee; (ii) Between two or more service providers; (iii) Between a service provider and a group of consumers