A bench of Chief Justice G Rohini and Justice Jayant Nath also said it did not appear that the Telecom Regulatory Authority of India (Trai) had considered the objections raised by the cellular operators against the compensatory regulation which mandates them to pay consumers one rupee per call drop experienced on their networks, subject to a cap of Rs. 3 a day.
The bench, however, agreed with Trai that the regulator had the power to make the present regulation, which aimed at compensating consumers for the call drops.
In his response, Additional Solicitor General (ASG) P S Narasimha, appearing for Trai, said a technical consultation paper was sent to all stakeholders, including telecom firms, on the call drops issue and all their representations were considered before the rule was made.
The ASG said the compensatory rule was made due to consumer complaints that call drops were happening more often and added that the call drops amounted to the service providers "breaching" the contract they have with the users.
He also said the rule was formulated in order to ensure that the telcos invested more and to make them fall in line and provide better service to consumers.
Narasimha contended that currently, the telecom firms were not compensating consumers for call drops by taking advantage of Trai's undertaking that it would not take coercive steps against them and said the regulation has to be implemented.
Senior advocate Abhishek Manu Singhvi, appearing for the telecom majors, contended that under the Quality of Service regulations, which are to be adhered to as part of the licence conditions, two per cent of call drops are exempted.
He questioned how they can be penalised Re. 1, when there was a two percent exemption.