Supreme Court Upholds Cancellation of MSO License Based on Security Concerns: Digi Cable Network vs. Union of India (2019)

Date of the Judgment: January 07, 2019

Citation: Digi Cable Network (India) Pvt. Ltd. vs. Union of India & Ors., Civil Appeal No. 120 of 2019 (Arising out of S.L.P.(C) No. 33244 of 2015)

Judges: Abhay Manohar Sapre, J., Indu Malhotra, J.

Can the government cancel a broadcasting license if it denies security clearance to the operator? The Supreme Court of India addressed this critical question in a case involving a Multi System Operator (MSO) whose license was revoked due to a lack of security clearance. The Court examined whether the cancellation was justified and whether the operator was entitled to a hearing before the cancellation. This judgment clarifies the extent to which national security concerns can override procedural fairness in broadcasting regulations. The judgment was delivered by a two-judge bench comprising Justice Abhay Manohar Sapre and Justice Indu Malhotra, with the majority opinion authored by Justice Abhay Manohar Sapre.

Case Background

The appellant, Digi Cable Network (India) Pvt. Ltd., was granted permission on June 12, 2012, to operate as a Multi System Operator (MSO) in Digital Addressable System (DAS) notified areas under Rule 11C of the Cable Television Network (Amendment) Rules, 2012. This permission was subsequently cancelled on September 3, 2014, by the Government of India. The cancellation was based on the Ministry of Home Affairs’ denial of “security clearance” to the appellant. The Ministry of Home Affairs did not provide a security clearance, which led to the cancellation of the permission initially granted.

Timeline:

Course of Proceedings

Digi Cable Network challenged the cancellation order by filing a writ petition before the High Court of Judicature at Bombay. The High Court dismissed the writ petition, upholding the cancellation order as just and legal. This led the appellant to file a special leave petition in the Supreme Court.

Legal Framework

The case revolves around Rule 11C of the Cable Television Network (Amendment) Rules, 2012. Rule 11C(1) states:

“11C. (1) Registration as multi-system operator–(1) On being satisfied that the applicant fulfils the eligibility criteria specified under rule 11B and the requirements of rule 11A, the registering authority shall, subject to the terms and conditions specified in rule 11D and the security clearance from the Central Government, issue certificate of registration.”

This rule makes it clear that obtaining security clearance from the Central Government is a mandatory condition for the grant of permission to operate as a Multi System Operator (MSO). The grant of permission is conditional upon the security clearance.

Arguments

Appellant’s Arguments:

• The appellant argued that the cancellation of permission was illegal because they were not given an opportunity to be heard before the cancellation order was passed. They contended that the cancellation violated the principles of natural justice and fair play.

Respondent’s Arguments:

• The respondent, the Union of India, argued that the security clearance was a mandatory requirement under Rule 11C of the Cable Television Network (Amendment) Rules, 2012. Since the appellant failed to obtain this clearance, the cancellation of permission was justified.
• The Union of India also submitted a sealed cover containing the reasons for denying security clearance. The respondent relied on the judgment in Ex-Armymen’s Protection Services Private Limited vs. Union of India And Others (2014) 5 SCC 409 to argue that in matters of national security, strict adherence to the principles of natural justice is not required.

Issues Framed by the Supreme Court:

• Whether the High Court was justified in dismissing the appellant’s writ petition and upholding the order dated 03.09.2014 cancelling the permission which was granted to the appellant vide letter dated 12.06.2012.

Treatment of the Issue by the Court:

Authorities

The Supreme Court relied on the following authority:

The Court also considered the following legal provision:

• Rule 11C of the Cable Television Network (Amendment) Rules, 2012, which mandates security clearance for MSO registration.

Judgment

What weighed in the mind of the Court?

The Supreme Court emphasized the importance of national security and the mandatory nature of security clearance as per Rule 11C of the Cable Television Network (Amendment) Rules, 2012. The Court noted that the denial of security clearance by the Ministry of Home Affairs was a valid ground for canceling the permission granted to the appellant. The Court also highlighted that in matters of national security, the principles of natural justice do not require a prior hearing, citing the precedent set in Ex-Armymen’s Protection Services Private Limited vs. Union of India And Others (2014) 5 SCC 409.

The Court considered the note filed by the Union of India and concluded that the appellant was not entitled to any prior notice before the cancellation order. The Court stated, “In other words, we are of the view that the principles of natural justice were not violated in this case in the light of the law laid down by this Court in the case of Ex-Armymen’s Protection Services Private Limited (supra) inasmuch as the appellant was not entitled to claim any prior notice before cancellation of permission.”

The Court further observed, “What is in the interest of national security is not a question of law. It is a matter of policy. It is not for the court to decide whether something is in the interest of the State or not. It should be left to the executive.” The Court also noted, “Thus, in a situation of national security, a party cannot insist for the strict observance of the principles of natural justice.”

Key Takeaways

• Security clearance is a mandatory requirement for obtaining permission to operate as a Multi System Operator (MSO) under Rule 11C of the Cable Television Network (Amendment) Rules, 2012.
• In matters of national security, the principles of natural justice do not necessarily require a prior hearing before taking action.
• The executive branch has the authority to determine what is in the interest of national security, and courts should not interfere with such decisions.
• Denial of security clearance is a valid ground for canceling permission granted to operate as an MSO.

Directions

The Supreme Court allowed the appellant to apply for fresh permission in accordance with law.

Development of Law

The judgment reinforces the principle that national security concerns can override the strict application of natural justice principles. It clarifies that security clearance is a mandatory requirement for MSO registration, and its denial justifies the cancellation of permission. The judgment does not introduce any new legal principle but reiterates the existing position of law in matters of national security as laid down in Ex-Armymen’s Protection Services Private Limited vs. Union of India And Others (2014) 5 SCC 409.

Conclusion

The Supreme Court dismissed the appeal, upholding the High Court’s decision to validate the cancellation of the MSO license. The Court emphasized that security clearance is a mandatory requirement and that in matters of national security, the principles of natural justice do not require a prior hearing. The Court also noted that the executive branch has the authority to determine what is in the interest of national security.