High court admits Sun TV's plea on FM auction

Sun and its arms had sought Madras HC's stay on e-auction of first batch of private FM radio phase-III channels

The Madras High Court has admitted a petition by Sun TV Network seeking a stay on auctions of FM radio channels and a direction to the information and broadcasting ministry to allow it to participate in them.

The court ordered the issue of a notice to the ministry granting it four weeks’ time to reply.

Miscellaneous petitions seeking various interim relief have been reserved for order. The company today requested to be allowed to participate in the auction, pending disposal of the order.



Mock auctions for the third phase of private FM radio channels was expected to start on July 23 and the actual auction was likely to begin on July 27, Additional Solicitor-General G Rajagopalan said during his argument on Tuesday.

Sun TV moved the Madras High Court against the Ministry of Information & Broadcasting, asking the Court to stay the e-auction of the first batch of private FM radio phase-III channels and to direct the Ministry to permit the company to migrate to FM phase-III regime by allowing the company to resubmit the application to participate in the auction.



The development comes in the backdrop of the government's decision not to give security clearance to the group's radio channels to participate in the FM radio phase-III auction.

The company in its petition, copy of which is available with Business Standard, said the impugned order is ex-facie illegal, arbitrary, discrimatory, abuse of process of law, ultravires of the Indian Telegraph Act, 1885, unconstitutional, violative of fundamental rights.



Sun TV said the three reasons given for the denial of the security clearance in the impugned order are all three cases which are either in FIR stage or only at the stage of charge sheet. The company is not an accused in any of the three cases. Only a director of the company is allegedly involved in first two cases.

P S Raman, senior counsel appeared for the company argued that the restriction is against the fundamental rights of freedom of expression. He also said that the I&B Ministry has wrongly stated that the alleged illegal telephone exchange has caused a loss of Rs 443 crore to the exchequer, while an affidabvit by the investigation officer before the Madras High Court said that it has caused a loss of Rs 1.78 crore to the exchequer. He added that Dayanidhi Maran is not a shareholder in any of these companies.



During the argument he also mentioned that when Reliance Broadcasting, which is facing various charges including the snoopgate, has been allowed to participate and questioned why Sun Group should not.

Refuting the arguments of the senior counsels, the additional solicitor general said that according to the notice inviting application, the dispute related to the auction could be entertained only in the justification of Delhi. He added if the company had any contention about the security clause in the application format it should not have applied for it, having made the application it cannot question the procedure.

"......the petitioner is not an accused in the said case but one of its Director Mr Kalanithi Maran is an accused. The pendency of the said case cannot be a ground for rejection of the security clearance since, there has been no final conviction. Indeed, it is the case of this petitioner that even if conviction were to result, the same cannot be a ground for security clearance rejection for purposes of owning and operating an FM radio station," said in the petition.

The company also said requirement of security clearance is not a statutory requirement since the licence for operating a FM radio station is granted only under Section 4 of the Indian Telegraph Act, 1885 which statute does not prescribe any such requirement. None of the statutory rules framed under Section 7 of the Act likewise prescribe any such requirement. While being so denying it to participate in the Phase-III auction on the ground of denial of security clearance is beyond the scope of the Act and against the intention of the Legislature.

"... thus the impugned order is ultra vires the Act and Rules as it seeks to impose an arbitrary condition not contemplated by the statute".

The company said the FM station is not permitted to broadcast any of its own news content but can only transmit music and entertainment.

Sun TV has asked the Court to stay for e-auction of the first batch of private FM radio phase-III channels to be held in July 2015 or such other dates by Ministry of Information and Broadcasting pending disposal of the writ petition.

The Company also sought Court's direction the Ministry and Deputy Director (FM) of the Ministry of Information and Broadcasting to permit the company to participate in the forthcoming FM station Phase-III auction.

Sun TV also sought an interim injunction restraining the Ministry from interfering in any manner with the company's broadcasting of FM radio stations in Chennai, Coimbatore and Tirunelveli in the brand name SURYAN FM till the disposal of the main writ petition.

Sun TV and its group companies collectively owns and operate 45 stations across the country.

Earlier the company claimed that absence of Group's FM subsidiaries will mean that a sum of Rs 350 crore that Group allocated for the bidding of fresh licenses will be left idling.