AYESHA A. MALIK J.---This common judgment decides upon the issues raised in the Writ Petitions detailed in Schedule "A" appended with the judgment as all the Petitions raise common questions of law and facts.
2. The Petitioners are all aggrieved by the excessive renewal fees charged by the Respondent Pakistan Electronic Media Regulatory Authority, Islamabad ("PEMRA") for renewal of their respective FM Radio licences. The Petitioners have impugned order dated 3.1.2013 issued by the General Manager (Licensing), PEMRA whereby the quantum of the renewal fees was upheld by Respondent No,1, PEMRA and it was decided that the Petitioners are required to pay the renewal fees as demanded by PEMRA in order to renew their FM Radio Station Licences.
3. The facts of these cases are that the Petitioners are private limited companies engaged in the business of broadcast media which includes establishing, running, operating and maintaining FM Radio Channels. Petitioners Nos,1 and 2 participated in the open bidding for grant of FM Radio Broadcast Station Licences and were granted the said Licence for 10 years on 18.10.2002 to establish and operate a radio station in the name of "Mast FM 103" in Karachi, Lahore, Faisalabad and Multan for Petitioner No,1 and FM Radio Station in the name of "Power FM 99" in Islamabad, Abbottabad and Vehari for Petitioner No,2. The Petitioner No,1 paid Rs,3.5 million for Karachi, Rs,2.5 million for Lahore, Rs,2.00 million for Faisalabad and Rs,1.25 million for Multan whereas Petitioner No,2 paid Rs,2.5 million for Islamabad, Rs,100,000/- each for Abbottabad and Vehari as licence fee in the year 2002.
In July 2010 the Petitioners Nos,1 and 2 applied for renewal of their licences before the end of the stipulated 10 year period and Respondent No,1 provided them with the renewal fees such that an amount of Rs,45.3378 million for Karachi, Rs,57.178 million for Lahore, Rs,32.969 million for Multan and Rs,6.003 million for Faisalabad to Petitioner No,l. Whereas Rs,44.404 million for Islamabad, Rs,10.462 million for Abbotabad and Rs,1.000 million for Vehari to Petitioner No,2 for renewal of their licences.
The Petitioners sought a personal hearing from Respondent No,1 to discuss the quantum of the renewal fees. The hearing was granted and on 3.1.2013, the Petitioners received the decision of Respondent No,1, being the impugned order, whereby they were required to pay the renewal fees as demanded, such that 25% of the renewal fee be paid in two installments within 30 days and 75% to be paid in five equal annual installments each of 15% of the total renewal fee.
4. The same set of facts exist in the other petitions except W.Ps. Nos,12908/2013 and 12909/13. The demand for renewal fee may be seen from the table below:- WP No. FM Station Licence fee Renewal Fee 2446/13 Mast FM 103 Power FM 99Rs.3.5 million for Karachi, Rs.2.5 million for Lahore, Rs.2.00 million for Faisalabad and Rs.1.25 million for Multan (Petitioner No.1)
Rs.2.5 million for Islamabad, Rs. 1.00 million each for Abbottabad and Vehari (Petitioner No,2)Rs.45.378 million for Karachi, Rs.57.178 million for Lahore, Rs.32.969 million for Multan and Rs.6.003 million for Faisalabad (For Petitioner No.1).
Rs.44.404 million for Islamabad, Rs.10.462 million for Abbottabad and Rs.1.000 million Vehari (For Petitioner No.2).
4366/13 HUM FM 106.2 Rs.3.8 million for Karachi, Rs.3 million for Lahore and. Rs.0.575 for Sukkur.Rs.45.378 million for Karachi, Rs.57.178 million for Lahore and Rs.3.893 million for Sukkur.
4367/13 FM 107 Rs.2.549 million 45.378 million.
4368/13 FM 91 Rs.3.850 million for Karachi, Rs.3.3 miVion for Lahore and Rs.2.75 million for Islamabad.Rs.45.378 million: for Karachi, Rs.57.178 million for Lahore and Rs.44.404 million for Islamabad and Rs.1.00 million for Gawadar.
4369/13 FM 89 Rs.2.5 million as licence fee for Islamabad, Rs.3.5- million for Karachi, Rs.3 million for Lahore andRs.45.378 million for Karachi, Rs.57.178 million for Lahore and Rs.44.404 million for Islamabad and Rs.1 million for Faisalabad.Rs.6.603 million for Faisalabad.
4370/13 FM 105 Rs.0.105 million as base price.Rs.6.4 million.
4371/13 FM 96 Rs.0.35 million Rs.45.378 million 29949/14Not mentioned Not mentioned Rs.1.445 million for Sialkot and Rs.65,145 million for Petitioner
5. In W.Ps. Nos,12908/13 and 12909/13, both the Petitioners are aggrieved by orders dated 9.4.2013 issued by PEMRA whereby they cancelled the bid offered by the Petitioner in W.P. No,12908/13 for Islamabad, Lahore and Hassanabdal and PEMRA has forfeited the deposited amounts of the stated Petitioner. Vide the same order PEMRA has cancelled the bid offered by the Petitioner in W.P.
No,12909/13 for Karachi, Murree and Sheikhupura and forfeited the deposited amounts of the stated Petitioner.
6. In W.P. No,29949/14 the Petitioner participated in the open bidding for grant of FM Radio Broadcast Station Licence and was granted five FM Radio Broadcasting Licences for 10 years on 18.2.2002 to establish and operate Radio Stations in Sialkot, Peshawar, Mardan Bannu and Mansehra. On 26.3.2012 the Petitioner requested the Respondents for renewal of its licence for Peshawar. On 23.5.2012 Respondent PEMRA notified that the Petitioner's licence would be considered for renewal. Through letter dated 7.9.2013 PEMRA asked the Petitioner to withdraw one of the five licences on account of the fact that the maximum numbers of licences it can have are four as per rules. On 18.9.2012 the Petitioner explained to PEMRA that the rules came into force in 2009 while the Petitioner was rightfully given five radio broadcasting licences in 2002, therefore, the rules cannot be given retrospective application. On 11.9.2012 the Petitioner received a letter from PEMRA to deposit Rs,1.445 million as renewal fee for licence to establish in Sialkot and also to provide documents showing no foreign funding to be delivered by 18.9.2012. On 3.1.2013 the Respondent conveyed to the Petitioner that the payment amount for Peshawar is Rs,65.145 million. The Petitioner was also directed to intimate which four licences it will have to renew and which one will be withdrawn. Further directed that if the Petitioner failed to comply with the payments the Respondent would hold rebidding. Hence the Petitioners have challenged the vires of Section 14 of the Ordinance.
7. The common grievance of the Petitioners is that they have invested huge amounts of money in their businesses and there is no justifiable reason for demanding such excessive renewal fees as no services are being rendered by PEMRA against the fees imposed. Also there is no connection between the cost of administrating the sector and the renewal fees charged which can justify the excessive renewal fees. Learned counsel for the Petitioners argued that there is no set formula or mathematical calculation on the basis of which the renewal tee is being fixed. It is an arbitrary exercise of power by the regulator without any justification simply to generate revenue. Hence the renewal tee tantamounts to a tax. Learned counsel argued that the FM Radio Broadcast Stations use the air for transmitting FM frequency and that air is not the property of the Government. The Petitioners generate their own frequency and are required to essentially pay for the spectrum and bandwidth allocation. Learned counsel further argued that there is no criteria in the rules setting the parameters on the basis of which the renewal fee can be charged. Since there is no substantive difference in the market area or the way of doing business, there appears to be no justification for increasing the renewal fees one hundred times for larger cities and multiple time for smaller cities. In furtherance of their arguments, the Petitioners. Have challenged the vires of Section 14 of the Pakistan Electronic Media Regulatory Authority Ordinance, 2002 ("Ordinance") being ultritkes to Article 73(3)(a) read with Item No,54 of the Federal Legislative List of the Constitution of Islamic Republic of Pakistan, 1973 ("Constitution 'and also for being in violation of Articles 18, 19 and 19A of the Constitution. The Petitioners have also challenged the process or rebidding for renewal of licences for being arbitrary and discriminatory in violation of Article 25 of the Constitution, In this ratite, it. Is their case that once granted licences in the year 2002, there is he justification or reason to call for bidding for the purposes of renewal of the licences.
8. Report and parawise comments have been filed by the Respondenti. Learned counsel for Respondent PEMRA argued that the contentions of the Petitioners that Section 14 of the Ordinance is ultra vires to Article 73(3)(a) read with Item No,54 of the Federal Legislative List of the Constitution On the touchstone of Articles 18, 19 and 19A of the Constitution is incorrect as 'the Respondent PEMRA is demanding enhanced rates for renewal of licences as compared to licence fee charged over 10 years ago. Learned counsel further argued that such an assertion is vindicated from a bare reading of Paras 11-16 and the Grounds of the petition. Learned counsel stated that the law enunciated by the competent legislature cannot be declared ultra vires of the constitutional provisions merely because the renewal fees demanded from the Petitioners does not suit them.
Learned counsel further stated that the renewal fee has been calculated in accordance with PEMRA laws that is last bid price plus inflation rate. For facilitation of the licence holders for payment of the renewal fees, installments were allowed. Learned counsel argued that the bidding process for renewal of licences is being called arbitrary exercise of power and allegedly based on consideration of revenue collection. However he argued that firstly, the bidding process for grant of licence for the cities is not alien to PEMRA law and is provided in the Ordinance, Rules and Regulations. Secondly the bidding process shuts the door for undue influence and arbitrariness in issuance of such licences and renewal. Thirdly, the grant of radio licence through bidding cannot be compared with TV licences on the touchstone of Article 25 of the Constitution as the two sets of licences are different and in no way belong to same classification. Lastly bidding is always open, excludes arbitrariness and ensures transparency. Learned counsel argued that PEMRA is working within the legal frame enunciated by the legislature and it cannot conceive of any detrimental step or negative action against any of the licensee including the Petitioners.
9. In terms of what has been argued, the issues before the Court are firstly with respect to the vires of Section 14 of the Ordinance and the vires of Pakistan Electronic Media Regulatory Authority (Radio Broadcast Station Operations) Regulations, 2012 ("Regulations"). Secondly the bidding process under Section 19 of the Ordinance with reference to the renewal process and finally the quantum of fees charged for renewal of radio licences.
10. The first issue before the Court is the vires of Section 14 of the Ordinance which is reproduced below:- 14 Fund.- (1) There shall be established a fund to be known as "PEMRA Fund" which shall vest in the Authority and shall be utilized by the Authority to meet charges in connection with its functions including payment of salaries and other remunerations to the Chairman, members, employees, experts and consultants of the Authority.
(2) The Fund shall consist of.-
(i) Seed money by the Federal Government;
(ii) fees for issuance and renewal of licences for establishing and operating broadcast or CTV stations;
(iii) loans obtained with the special or general sanction of the Federal Government;
(iv) foreign aid obtained with sanction of and on such terms and conditions as may be approved by the Federal Government; and
(v) all other sums received by the Authority from any other source.
(3) The Authority may open and operate one or more accounts in local, or foreign currency, in any scheduled bank.
(4) The Authority may invest its funds in such investments as it may, from time to time, determine.
11. The basic argument of the Petitioners is that the impugned renewal fee is a tax and not a fee, therefore is violative of the requirements of Article 73(3)(a) read with Item No,54 of the Constitution.
That Section 14 of the Ordinance is ultra vires to Article 73(3)(a) as it was not passed as a Money Bill within the meaning of Article 73 of the Constitution. It is also their case that the impugned renewal fee has no connection with the cost of regulating the Petitioners under the licence or the Ordinance and that all amounts collected under the garb of licence fee, annual fee and renewal fee are maintained in a Fund created wider Section 14 of the Ordinance which is not maintained as per the requirements of the Constitution. In this regard the argument is that the amounts in the Fund are not made public nor is it subject to the control of the Auditor General of Pakistan as required under Article 169 of the Constitution. It was also argued that all amounts collected under the garb of fees go into the Fund but instead are required to be deposited in the Federal Consolidated Fund as required under Article 78 of the Constitution. Therefore, the impugned renewal fee is a tax and its quantum cannot be justified against the cost of administrating the Petitioners under the Ordinance. The arguments raised by the Petitioners are premised on the ground that the impugned renewal fee is in the nature of a tax because there is no quid pro quo for the fees charged meaning that PEMRA does not provide any service to the Petitioners against the renewal fee. It is the case of the Petitioners that PEMRA merely regulates the content and conduct of the Petitioners and does not provide any service for the purposes of radio broadcasting. It is also their case that fees for services rendered may be imposed under Article 73(3)(a) of the Constitution of Islamic Republic of Pakistan, 1973, however where the fee charged has no correlation to the regulatory cost or when there is no quid pro quo then it is in the nature of a tax and not a fee.
12. Article 73(3)(a) of the Constitution reads as follows: ' A Bill shall not be deemed to be a Money Bill by reason only that it provides:
(a) for the imposition or alteration of any fine or other pecuniary penalty, or for the demand or payment of a licence fee or a fee or charge for any service rendered; or A bare reading of this Article makes it clear that a licence fee or fee is not a tax and that a licence fee is distinct from a fee or a charge for services rendered. Hence it is not necessary that every licence have a quid pro quo. It is also not necessary that the licence fee or renewal fee be passed through a Money Bill. This question was considered by the Indian Supreme Court where similar provisions of the constitution were under discussion. In the case titled Secunderabad Hyderabad Hotel v. Hyderabad Municipal (AIR 1999 SC 635) it was held that: ' It is, by now, well settled that a licence fee may be either regulatory or compensatory. When a fee is charged for rendering specific services a certain element of quid pro quo must be there between the service rendered and the fee charged so that the licence fee is commensurate with the cost of rendering the service although exact arithmetical equivalence is not expected. However, this is not the only kind of fee which can be charged. Licence fees can also be regulatory when the activities for which a licence is given require to be regulated or controlled. The fee which is charged for regulation for such activity would be validly classifiable as a fee and not a tax although no service is rendered. An element of quid pro quo for the levy of such fees is not required although such fees cannot be excessive. It was also held in the case titled A.P. Paper Mills Ltd. v. Govt. Of A.P. And another (2000) 8 Supreme Court Cases 167) that Licence fee can be a regulatory fee and not a fee for any special services rendered. The purpose of the licence is to enable the authorities to supervise, regulate and monitor the activities relating to factories in that case with a view to secure proper enforcement of the provisions of the law. In such cases the element of quid pro quo is not required. Three Judges of the Indian Supreme Court in the case titled Sreenivasa General Traders v.
State of A.P. (1983) 4 SCC 353: (1983) 3 SCR 843) held that: The traditional view that there must be actual quid pro quo for a fee has undergone a sea change. The distinction between a tax and a fee lies primarily in the fact that a tax is levied as part of a common burden, while a fee is for payment of a specific benefit or privilege although the special advantage is secondary to the primary motive of regulation in public interest. If the element of revenue or general purpose of the State predominates, the levy become a tax. In regard to fees there is, and must always be, correlation between the fee collected and the service intended to be rendered. In the case titled Corpn. Of Calcutta v. Liberty Cinema (AIR 1965 SC 1107: (1965) 2 SCR 477) where the matter was again considered by the Indian Supreme Court as under: There is a distinction between the licence fee and fee for services rendered. While former is not intended to be a fee for services rendered, the latter will require an element of quid pro quo.
13. Article 73(3)(a) of the Constitution clearly distinguishes between licence fee and a fee for services rendered which means that a licence fee does not require any quid pro quo but there must be correlation between the fee charged and the cost of administration under the relevant law. Essentially the licence fee must commensurate with the cost of regulating although exact arithmetical equivalence is not expected. The licence confers a right on the licence holder to do something which it otherwise could not do and in this case PEMRA is required to regulate the licence bolder to ensure compliance of the law and the terms of the licence. 'Therefore in terms of the Constitution a licence fee can be regulatory in nature where the regulator imposes a fee for regulating the activities of the licence holder. In such cases there is no quid pro quo. In the instant cases the Petitioners have challenged the impugned renewal fee on the ground that it is excessive and that the excessive quantum cannot be justified as there is no quid pro quo and because the cost of regulating the Petitioners cannot be so high. Further that PEMRA provides no service or facility to the licence holders to justify the excessive demand. In this context, with reference to the vires of Section 14 of the Ordinance the arguments made before this Court are totally misconceived as the Constitution itself draws a distinction between tax an licence fee or a fee charged for services rendered. Furthermore the Petitioners have challenged the renewal fee which is an extension, of the licence fee for a renewal period. The licence fee is a regulatory fee as is the renewal fee. Hence the licence fee and the renewal fee do not need to be passed through a Money Bill nor does it require any quid pro quo. Hence the challenge to the vires of the Section on these grounds has no merit. Furthermore since it is not a tax the licence fee or the renewal fee does not need to go into the Federal Consolidated Fund. So far as the arguments with respect to the requirements of Article 169 of the Constitution are concerned meaning that the Fund under Section 14 should be subjected to the control and monitoring of the Auditor General of Pakistan, there is merit. Article 169 provides that the Auditor General shall in relation to the accounts of any authority or body established by the Federation or a Province perform such functions and exercise such powers as may be determined by or under an Act of Parliament or by an order of the President.
Section 3 of the Ordinance provides for the establishment of the Authority by notification of the Federal Government meaning thereby that it is an Authority established by the Federation.
Therefore the accounts and the Fund of PEMRA have to be maintained in terms of the requirements provided for under Articles 169, 170 and 171 of the Constitution.
14. The next issue is the challenge to the rebidding process for renewal of the licences issued to the Petitioners and.The quantum of the renewal fee determined by PEMRA on the basis of the rebidding process. In order to appreciate the arguments raised the basic scheme of the law must be understood.
Scheme of Law
15. The relevant law is the PEMRA Ordinance. The Ordinance was promulgated to regulate broadcast media in Pakistan. In terms of the preamble, it is the duty of PEMRA to enlarge the choice of information, education and entertainment available to the people through the media. The primary role of PEMRA is to improve access to mass media and ensure accountability, transparency and good governance by optimizing the free flow of information. Section 4 of the Ordinance provides that PEMRA shall be responsible for regulating the establishment and operation of all broadcast media and distribution services in Pakistan. Further that PEMRA shall regulate the distribution of radio channels and that PEMRA can make regulations for carrying out the purposes of the Ordinance. Section 19 of the Ordinance authorizes PEMRA to issue licences for broadcast media and, distribution services through an open and transparent bidding process.
Section 20 of the Ordinance provides for the terms and conditions of the licence and in terms of both Sections 19 and 20 for the purposes of issuance of a licence, PEMRA can charge licence fee and an application process fee. Section 39 of the Ordinance is the rule making section which requires PEMRA to make rules for issuance of licences, its terms and conditions including any fees to be charged in connection with licences and related matters. In terms of Section 39 of the Ordinance, PEMRA issued the Pakistan Electronic Media Regulatory Authority Rules, 2009 ("Rules").
The Rules prescribe the licence criteria and the process for issuance of the licence, its terms and conditions and the terms on which a licence can be renewed. The relevant provisions of the Rules for the purposes of renewal of licences are Rules, 5 and 8 which are reproduced below:
5. Duration and renewal of licences: (1) The licence shall be granted for a period of five, ten or fifteen years subject to payment of fee as set out in Schedule-B.
(2) The licence shall be valid for the term for which it is granted subject to the payment of annual fee or any other charges as set out in the Schedule-B.
(3) The fee relating to the grant of licence, renewal thereof, late payment surcharge and fine, if any, shall be deposited in the account of the Authority.
8. Fees and security deposits: (1) Each successful applicant shall, within time prescribed by the Authority and before the issue of the licence, deposit the applicable licence fee and make a security deposit, if applicable, as set out in the Schedule-B. The security deposit shall be refundable after the expiry of one year of operation of the station to the satisfaction of the Authority.
(2) Every licencee shall follow the specified time line relating to the payment of any dues of the Authority.
' In terms of these Rules PEMRA charges the applicable licence fee, an annual fee and a renewal fee. The process of renewal is provided under Rule 12 of the Rules which is reproduced below:-
12. Renewal of licence on expiry of the licence term: (1) A licencee may, at least six months prior to the expiry of the licence, apply to the Authority for renewal of its licence and the Authority may renew the licence subject to:
(a) satisfactory past performance of the licencee;
(b) the opinion of the concerned Council if the Authority so requires;
(c) payment of the prescribed fee prevalent at the time of renewal and payment of outstanding dues, if any, and
(d) fulfillment of any other terms and conditions as prescribed, or varied in the public interest, by the Authority from time to time.
(2) In case of refusal to renew a licence the Authority shall record reasons in writing.
(3) The Authority may renew a licence for such term as the original term of the licence bringing from the date of expiry of the licence.
16. In terms of Section 4(3) of the Ordinance, PEMRA notified the Regulations on 31.1.2012. The Regulations further detail the processes for grant of licence and its renewal. The relevant provisions of these Regulations are as follows:-
4. Application for grant of a licence: (1) The Authority may invite, by advertising through media; the expression of interest (EOI) or applications from the general public, interested in establishing and operating radio broadcasting stations in any particular category or area of coverage in Pakistan, for award of licences through bidding under Section 19 of the Ordinance.
(2) The application for grant of a licence to establish and operate a radio broadcast station shall be made on the application form specified by the Authority for such purpose from time to time.
(3) The applicant shall indicate the desired category of licence, in terms of the area of coverage from amongst the given category and shall also provide the details of equipment intended to be used.
(4). Each application for grant of a radio broadcast station licence shall be accompanied by such application processing fee (not-refundable) as determined by the Authority from time to time.
(3) The Authority may, where applicable, forward the application to the requeney Allocation Board
(MB) through Pakistan Telecommunication Authority (PTA) for frequency (6 .The application may be proctored however the Kinetic shall be batted only after scrutiny clearance from the Ministy of Interior, allocation of the frequency by FAH' where on compilation of other legal
(7) Base price for the licence shall be determined by the Authoriq.
' The and refusal of licencei (1) The Authority shall process each application and on being satisfied that the applicant(s) fulfills the eligibility criteria and requirements of the Ordinance, rules and regulations may, on receipt of the applicable licence fee and prescribed security deposit, issue licence to the applicant (s).
' Provided that security deposit shall be refundable after one year of satisfactory performance by the licencee and may be forfeited where the licence has failed either to commence its operation within given time or show satisfactory performance for one year: ' Provided further that if at any time it is found that the licencee had provided false or misleading information/ certificate/ documents for issuance of the licence, the licence shall be withdrawn.
(2) The Authority, if satisfied that the applicant is not eligible for grant of licence or the issuance of licence to a particular person is not in the public interest may refuse grant of licence to such 'person by recording reasons in writing.
(3) Any change in the particulars of the applicant provided in the application shall be notified to the Authority without any delay.
(4) The Authority Shall take decision on the application for a licence within one hundred days from receipt of the application subject to fulfillment of all the legal requirements, security clearance from the Ministry of Interior, and frequency allocation by FAB in relevant cases.
' Provided that if more time is consumed in the processing of the application, the same shall not be construed as an expectancy to get a licence merely by reason that the application was not decided within 100 days.
7. Fees and security deposits: (1) The licence fee, annual fee other charges and licence renewal fees payable pursuant to these regulations shall be as determined by the Authority from time to time.
(2) A surcharge at the rate of five percent per month, up to a maximum of fifteen percent, for late payment of annual fee or licence renewal fee as the case may be, shall be payable: ' Provided that without prejudice to the power of the Authority to revoke a licence, if a licencee fails to pay the outstanding dues including surcharge after expiry of three months from the due date, the licence shall be suspended and equipment shall be seized. However, the licence may be reinstated and equipment may be returned on payment of outstanding dues and such fine as the Authority may impose: ' Provided further that if the licencee shows sufficient and reasonable cause, the Chairman may relax the due date by a maximum of seven days in exceptional cases for the reasons to be recorded in writing.
(3) The annual fee payable pursuant to the Ordinance, Rules and Regulations shall include such percentage of the gross advertisement revenue as determined by the Authority from time to time.
9. Renewal of licence on expiry of the licence term: (1) A licencee desirous of getting its licence renewed may, at least six months prior to the expiry of the licence, apply to the Authority for renewal of its licence and the Authority may renew the licence for such terms as deemed appropriate subject to:
(a) Fulfillment of eligibility criteria and other conditions as provided in the Ordinance, rules, regulations or otherwise prevalent at the time of renewal of the licence;
(b) Satisfactory past performance;
(c) Security clearance of the applicant by the Ministry of Interior: ' Provided that if decision of Ministry of Interior regarding security clearance of the applicant is not received within a period of six months or before expiry of the licence, whichever is earlier, subject to fulfillment of other conditions, the licence may be renewed conditionally subject to security clearance by the Ministry of Interior and if the security clearance is refused the licence shall be withdrawn immediately without incurring any liability on part of the Authority.
(4) proof of registration with tax authorities for income tax and sales tax;
(e) the applicant must not be a defaulter of any financial institution, Federal Board of Revenue or any organization/ entity owned or operated by the Government of Pakistan.
(t) payment of renewal fee as applicable at the time of renewal, and
(g) payment of outstanding dues in respect of all licences that are held by the applicant, directly or indirectly.
(2) Licence renewal fee shall be prevailing applicable licence fee for the respective area and category of licence plus rate of inflation calculated as prescribed by the State Bank of Pakistan: ' Provided that if bidding has not been held for such licence, the renewal fee shall be determined by the Authority.
(3) The Authority may decide not to renew a licence beyond the expiry date of the ongoing term after recording reasons in writing.
17. In terms of the Ordinance, PEMRA issues licences for broadcast media through a bidding process as per the terms and conditions provided in Section 20 of the Ordinance. A licence is for five, ten or fifteen years and each successful applicant has to pay a licence fee and an annual renewal fee plus a renewal fee if it wants renewal of the licence. In the cases before the Court all licences have been issued for ten years. The Rules define applicable licence fee to mean the licence fee prescribed by the Authority or where determined through a bidding process. The quantum of the licence fee and the annual renewal fee is provided in terms of Rule 5 in Schedule B of the Ruleds. In terms of Schedule B, licence fee is paid on a base price. The base price for all those cities where TV licenses have been issued is the last applicable fee meaning the last paid licence fee. The quantum of the licence fee is determined on the basis of the type of licence, whether commercial or non-commercial and the area where it operates, whether national provincial or local. Hence the base price is the minimum licence fee which must be paid and which fee will vary as per the size of the city, town or area. A licence is granted on the basis of a bidding process and the applicable licence fee will be the highest bid which cannot be below the base price. In the instant cases the dispute relates to the renewal fee which was determined on the basis of a bidding process. In terms of Rule 5(3) of the Rules PEMRA has to determine the renewal fee.
Regulation 9 of the Regulations provides that the renewal fee shall be the applicable licence fee for the category and the respective area plus the rate of inflation as calculated by State Bank of Pakistan. In terms of what was argued by learned counsel for PEMRA, Mr. Salman Akram Raja, the renewal fee under dispute was determined through a bidding process held in 2012 and all existing licence holders, being the Petitioners in this case, were given the right of first refusal to match the highest bid. He argued that the bidding process was adopted to set the renewal fee because the value of the licence has increased due to the increased market value for bandwidth. As per his contentions market forces determine the value of the bandwidth, hence when the licence period expired the licensees along with others were offered to participate in the bidding process or match the highest bid. He argued that using market forces to set the renewal fee was fair, transparent and as per industry practice. The Petitioners did not participate in the bidding process, hence they were offered the right to match the highest bid. Instead of accepting or rejecting the offer by PEMRA they challenged the renewal process in this Court through these Petitions. As per his arguments the quantum of the fee is high because the Petitioners use radio spectrum which is a scarce and valuable property of the state. The utilization of spectrum is regulated by the International Telecommunication Union ("ITU") and Pakistan is required to follow ITU protocols and standards for spectrum utilization. Hence the renewal fee is totally justified because if the Petitioners want to use a scarce and valuable state resource they have to pay the market value. He further argued that there is no vested right of renewal and the Petitioners are subject to the process adopted by PEMRA to determine renewal fee.
18. So far as the bidding process is concerned, neither the Ordinance nor the Rules or Regulations prescribe for rebidding for the purposes of renewal of the licence. Section 24(5) of the Ordinance provides that PEMRA may renew a licence on such terms and conditions as may be prescribed and in case of refusal to renew a licence, reasons have to be recorded in writing. The process for renewal is given under Rule 12 of the Rules where a licence holder must apply for renewal at least six months prior to the expiry of the licence. Through its application the licence holder, for the purposes of renewal, has to show its performance over the duration of the licence that it has paid the prescribed fee and all other dues and that it has satisfied all terms and conditions prescribed by PEMRA. Rule 12(3) of the Rules prescribes that PEMRA can renew the licence on the same terms as the original licence and in case PEMRA refuses to renew the licence it shall give reasons in writing. Therefore under the Ordinance and the Rules the licence holder has to show satisfactory performance and fulfillment of all terms and conditions prescribed under the licence or by PEMRA in public interest for the purposes of renewal. Regulation 9 of the Regulations further details this process by requiring PEMRA to ensure that the licence holder still meets the eligibility criteria and other conditions for grant of renewal of licence prescribed under the Rules. In addition security clearance is required from the Ministry of Interior from the Tax Authority and that the licence holder is not a defaulter of any financial institution or any government organization. The Regulations reiterate the requirement that all dues and payments must be made in order for the licence to be renewed. Regulation 9(2) of the Regulations specifically provides that if bidding has not been held for such licence, the renewal fee shall be determined by PEMRA meaning thereby that where bidding took place for issuance of the licence, it is not required for renewal of the licence. Therefore in terms of the Rules and Regulations a clear process has been set out for renewal of a radio licence. The prescribed process does not contemplate rebidding for the purposes of determining the renewal fee or for the renewal of the licence. In these circumstances rebidding for renewal purposes tantamounts to issuance of a fresh licence which is clearly contrary to the statutory procedure. Rule 12 of the Rules and Regulation 9 of the Regulations when read together creates a statutory right for the licence holder to have the licence renewed on the terms and conditions provided. Correspondingly PEMRA is obligated to follow the prescribed Rules and Regulations and hence PEMRA cannot go beyond its delegated power and set out a new process to renew a licence.
19. During the course of arguments the emphasis of the counsel for PEMRA was that rebidding for renewal purposes is necessary because the licence holder is allowed to use valuable state property in the form of radio spectrum. Utilization of radio spectrum means that a licence holder must pay the market value of the spectrum and in order to ensure that the market value is determined fairly and through a transparent process PEMRA offered, all radio licences for rebidding.
Hence PEMRA in its wisdom and authority decided to determine the renewal fee through a bidding process. He explained that the electromagnetic spectrum is a unique natural resource, which carries a high value for its utilization and placed reliance on the case titled Pakcom Limited and others v. Federation of Pakistan and others (PLD 2011 SC 44). Hence the justification for the exorbitant renewal fee is spectrum utilization. In this regard, two questions arise. First who regulates spectrum; And second whether PEMRA is authorized to charge radio licence folders renewal fees for spectrum utilization. Radio spectrum has three dimensions which govern its utilization that is time, space and frequency. If two radio signals occupy the same time and space on the same frequency it will create interference and disturbance which will adversely affect the dissemination of information. Radio spectrum uses electromagnetic waves called radio waves which are regulated by the ITU. The ITU determines which parts of the radio spectrum are to be used by different radio transmissions. A band is a small section of the spectrum of radio frequency in which channels are used. ITU has divided radio spectrum into bands extending from Very Low Frequencies (VLF) to Very Ultra, Super and Extremely High Frequencies (EHF) and beyond. The lower frequencies of the radio spectrum are us'ed for "point-to-point" communications and for navigational aids. AM radio is located in the range between 300 and 3,000 kHz, known as the Medium Frequency band (MF). FM radio and VHF television (channels 2-13) are in the Very High Frequency band (VHF) from 30 to 300 MHz. The Ultra High Frequency band (UHF) from 300 to 3,000 MHz, is the location of UHF television (channels 14-51). Still higher frequencies are used for microwave relays and communication satellites. Spectrum allocation of frequency allocation is the division of the electromagnetic spectrum into radio frequencies or bands. Within Pakistan the Frequency Allocation Board ("FAB") allocates frequency to the radio licence. FAB falls under the control of the Pakistan Telecommunication Authority ("PTA") and is the exclusive authority to allocate and assign portions of radio frequency spectrum to radio broadcasting operators. FAB has set out a table of Frequency Allocations showing the allocation of bands to various services. The Board has a National Frequency Management and Monitoring System ("NFM MS") to monitor the frequency spectrtim through its fixed and mobile monitoring stations. Hence it authorizes the use of the frequency and monitors its utilization as per the standards of the ITU.
20. In the instant cases the record shows that FAB allocated the frequency to the Petitioners for the establishment of FM radio broadcasting. In terms of letter dated 2.11.2005 by FAB the Petitioner in W.P. No,2446/2013 was allocated its frequency and the letter clearly stipulates that the frequency allocated is the property of the state. Regulation 4(5) of the Regulations also clearly provides that PEMRA shall forward an application for FM Radio Broadcasting to FAB through the PTA for frequency allocation. Similar letters have been issued to the other Petitioners in the connected writ petitions by FAB. Therefore the spectrum allocation and spectrum utilization is regulated by PTA through FAB.
21. In terms of the Ordinance the mandate of PEMRA is to issue broadcast licences so as to enlarge the choice of information, education and knowledge to the public through the media. PEMRA is the licensing authority which issues broadcast licence and thereafter regulates content and the conduct of media broadcasters. PEMRA is required to ensure the free flow of information and the access to mass media for the general public. Hence in terms of the Ordinance it is not within PEMRA's mandate to regulate or charge for spectrum utilization and frequency allocation. Its function is to provide the free flow of information and to regulate broadcast media licensed under its regime. Even the terms of the licences issued to the Petitioners clearly show that the licence regulates the content and conduct of the Petitioners. The licence provides for the programming mix, the advertising and sponsorship standards and its requirements as well as the technical specifications. In order to ensure that the standards and requirements and content mix is maintained the licence also provides for the terms on which PEMRA can monitor, regulate and investigate the licensee's performance. Hence as per the terms and conditions of the licence PEMRA's role is as content and conduct regulator. It is also noted that the licences provided for the same terms and conditions for renewal as given under the Rules and Regulations. Therefore there appears to be no justification to condition the renewal on a rebidding process and to charge the renewal fee for spectrum utilization or frequency allocation.
22. The manner in which the renewal fee is to be determined is clearly stipulated in the Regulations.
Regulation 9 provides that renewal fee shall be the applicable licence fee plus the rate of inflation calculated by the State Bank of Pakistan. Interestingly the Regulations have been issued by PEMRA yet it has totally ignored the prescribed process. In terms of Regulation 9 of the Regulations, the applicable licence fee is the fee paid by the licensee and in order to meet the increased cost, PEMRA is entitled to the cost of inflation. In these cases, since the licence fee is a regulatory fee, hence its renewal means a continuation of the licence fee plus cost of inflation. In such cases where the licence fee is regulatory, where no service or privilege is granted by the government authority and where the only purpose of the licence is regulatory meaning for enforcement of statutory requirements, then such a fee cannot be excessive. In the instant cases the chart in para 4 clearly evidences how the renewal fee has exceeded the applicable licence fee and in no way justifies the applicable regulatory cost. In the instant Petition Rs,3.5 million plus Rs,2.5 million was the applicable licence fee for Karachi and Lahore whereas the renewal fee is Rs,45 million and Rs,32 million respectively. In the same way for Islamabad it was increased from Rs,2.5 million to Rs,44 million. The proportion of the increase in the renewal fee is the same in the cases of the other Petitioners as depicted in the chart in para 4 of this judgment. In this way the impugned renewal fees are excessive and contrary to the scheme of law.
23. The other issue raised by the Petitioner in W.P. No,29949/14 is that PEMRA be restrained from acting under the Regulations and allow the stated Petitioners to operate five licences whereas Regulation 5(2) of the Regulations provides that a licensee can only operate four licences. The argument is that placing restrictions on the number of total licences is a restriction on the Petitioner's right to do business which is not justifiable. In this regard, it is noted that it is well within the regulatory function of PEMRA to cap the total number of licences for a licence holder as it falls within the mandate to regulate and ensure the free flow of information, enlarge the choice and increase access to mass media at local and community level. Therefore no illegality is made out on these grounds. So far as the Petitioners in W.Ps. Nos,12908/13 and 12909/13 are concerned, they participated in the bidding process for the purposes of renewal. They have impugned letter dated 12.10.2012 wherein PEMRA rejected their demand for the licence fee and security fee to be paid in installments.
24. Therefore for the same reasons enumerated above, these Petitions that is W.Ps. Nos, 12908/13, 12909/13 and W.P. No,29949/14 are dismissed as the rebidding process has been held to be illegal. It is clarified that if the Petitioners were licence holders then they are entitled to renewal in terms of the Ordinance and Rules read with Regulation 9 of the Regulations.
25. Under the circumstances, W.Ps. Nos,2446/13, 4366/13, 4367/13, 4368/13, 4369/13, 4370/13 and 4371/13 are allowed and the rebidding process held in 2012 as well as renewal fees demanded by PEMRA are declared illegal and against the mandate of the law. The impugned orders dated 3.1.2013 in W.P. Nos,2446/13, 4366/13, 4368/13, 4370/13, 4371/13 and dated 15.1.2013 in W.P. No,4369113 are set aside to the extent that the renewal fee shall be determined on the basis of the applicable licence fee plus cost of inflation as determined by State Bank of Pakistan.
Schedule-A Details of Writ Petitions mentioned in 'judgment dated 12.5.2017 passed in W.P. No,2446/2013
(1) W.P. No, 2446/13 Trade Serve International (Pvt.) Ltd etc. v. Pakistan Electronic Media Regulatory Authority etc., (2) W.P. No,4366/13 Shamal Media Services (Pvt) Limited etc. v. Federation of Pakistan etc. (3) W.P. No,4367/13 Syndicate Entertainment (Pvt.)
Limited etc. v. Federation of Pakistan etc. (4) W.P. No,4368/13 Salaar Engineering and Trade Enterprise (Pvt.) Limited, Islamabad etc. v. Federation of Pakistan etc. (5) W.P. No,4369/13 Kohinoor Airwaves (Pvt.) Limited etc. v. Federation of Pakistan etc. (6) W.P. No,4370/13 Future Tech Engineering and Systems (Pvt.) Limited etc. v. Federation of Pakistan etc. (7) W.P. No,4371/13 VectraCom Broadcasting Services (Pvt.) Limited etc. v. Federation of Pakistan etc. (8) W.P.
No,29949/14 Radio Buraq (Pvt) Limited v. Federation of Pakistan etc. (9) W.P. No,12908/13 Con Air Waves (Pvt) Ltd. v. Federation of Pakistan etc. (10) W.P. No,12909/13 Auburn Waves (Pvt.) Ltd. v.
Federation of Pakistan etc.