SYED HASAN AZHAR RIZVI, J. C.M.A. No.6876/2020 under Order XXXIX, Rules 1 and 2 read with Section 151, C.P.C., filed by the plaintiff, seeking to restrain the defendant No.3 from performing any functions as a Third Party Service Provider (TPSP Licensee).
2. Brief facts of the case as narrated in the memo of plaint are that plaintiff is a private limited company incorporated under the Companies Act, 2017. The plaintiff was awarded a 'License to Establish, Maintain and Operate as Third Party Service Provider (TPSP) for financial and applications services in Pakistan. The Information Memorandum was jointly issued by the defendant No.2 and the State Bank of Pakistan in April, 2017. As per Section 2 (xxviii) of the PTA Regulations for Technical Implementation of Mobile Banking, 2016, a TPSP is defined as:- "A Class Applications Service Provider for technical support of mobile banking service, licensed by PTA and authorized by SBP to provide technical services for channeling, routing and switching transactions for branchless/mobile banking only: (Note: TPSP shall be for interoperability purpose within branchless banking domain, whereas Payment System Operators (PSOs) and Payment Service Providers (PSPs) shall provide an electronic platform for clearing processing, routing and switching of electronic transactions under Rules for PSOs and PSPs issued and as amended by Statement Bank of Pakistan from time to time)."
3. It is averred in the plaint that the plaintiff as over the course of the past three years worked consistently towards and invested heavily in developing and testing a viable solution as a Third Party Service Provider in order to bring easily accessible and convenient mobile banking services to hitherto unserved segments of the country's population. This initiative to expand financial inclusion is referred to as the Assan Mobile Account Scheme (AMA Scheme). It is stated that currently the plaintiff is the only TPSP in the country which has successfully established its own independent unified USSD channel platform, which is a requirement of the TPSP License and the Information Memorandum. The plaintiff informed defendant No.2 of completion of deployment of their USSD platform in compliance with Clause 1.4 of the TPSP License and upon the plaintiff's request, the defendant No.2 inspected and approved the plaintiff's technical solution on 09.4.2019. Thereafter, the plaintiff requested for the Commencement Certificate, the defendant No.2 has still not issued the Commencement Certificate to the plaintiff. Such an inordinate, unexplained and inexcusable delay by defendant No.2 has caused detrimental effects for the plaintiff, as it has been unable to offer the Licensed Services as stated in Clause 1 of the TPSP License. It is also averred that the defendant No.2 has exhibited blatant partiality in favour of the defendant No.3 and has in effect hindered and prevented the plaintiff from achieving the same milestones as defendant No.3; assuming without conceding that the defendant No.2 does grant the Commencement Certificate to the plaintiff, the effect of such a grant would be inconsequential, as it would not rectify the uneven playing field created through the mala fide and illegal action of the plaintiff. The preferential treatment in favour of the defendant No.3 and the active discrimination against the plaintiff is in clear violation of the plaintiff's fundamental rights to trade and equality under the law.
This preferential treatment is evidenced by the fact that even though the defendant No.3 has still not met the technical requirements of the TPSP License which mandate the Licensee to establish their own independent USSD channel platform, the defendant No.2 had issued a letter dated 08.6.2020 regarding the 'Readiness for Commercial Launch of AMA Scheme', which certified that the defendant No.3 had 'implemented its USSD platform as per clause 1.4 of its licensed. It is further averred in the plaint that TPSP License and the Information Memorandum contain no such proshsion or reference for issuance of a letter certifying 'Readiness for Commercial Launch'.
Defendant No.2's action of issuing a certificate for 'Readiness for Commercial Launch of AMA Scheme' is an illegal invention to mislead the defendant No.1, the SBP, the Banks/ AFIs, and the Telecom Operators. Further, defendant No.2's actions of granting defendant No.3 a certificate of Readiness for Commercial Launch stating that they have set up their own USSD platform and deliberately not responding to the plaintiff's concerns shows the lack of transparency, discrimination and inconsistency in the decision making process by defendant No.2. These actions contravene the plaintiff's right to equality before the law, both in terms of the privileges conferred and liabilities imposed, as provided under Article 25 of the Constitution of Pakistan, 1973, hence the plaintiff approached this Court by filing the instant suit with the following prayers:- "I. DECLARE the defendant No.2's letter dated 08.06.2020 certifying defendant No.3's 'Readiness for Commercial Launch of AMA Scheme' to be illegal and void ab initio.
II. RESTRAIN the defendant No.3 from offering any Licensed Services until they have met all requirements according to the relevant laws and governing documents.
III. SET ASIDE the Circular No.24 of 2018, dated 18.12.2018.
IV. DIRECT the defendant No.2 to take appropriate penal action against the defendant No.3 for the prima facie violations of the terms of the TPSP License as highlighted in the instant plaint, including cancellation of their TPSP License if appropriate.
V. DECLARE the agreements entered into between defendant No.3 and SCO in AJ&K. and GB to be in violation of the TPSP License and the Information Memorandum and hence illegal and void ab initio.
VI. RESTRAIN the defendants Nos.4-7 from obtaining any Licensed Services from defendant No.3 until they have met all requirements according to the relevant laws and governing documents.
VII. DIRECT the defendant No.2 to issue the Commencement Certificate to the plaintiff in accordance with the law and the terms and conditions of the Information Memorandum and the TPSP License.
VIII. GRANT any other relief deemed appropriate in the facts and circumstances of the suit.
IX. GRANT costs of the suit."
4. I have heard arguments of the learned counsel for the parties on application under Order XXXIX, Rules 1 and 2 read with section 151, C.P.C. and perused the material available on record.
5. Mr. Haider Waheed, learned counsel for the plaintiff, in support of the listed application has argued that the plaintiff's standing to sue arises from the fact that if its competitor i.e. defendant No.3 is allowed to begin commercial operations without establishing its own USSD Gateway as mandatorily required by the TPSP License, then it will capture the market and any resultant First Mover Advantage accruing to defendant No.3 would be based on illegal, mala fide, and unlawful actions. He has contended that the plaintiff's shortcomings, if any, do not mean that defendant No. 3 can be allowed to operate with impunity, especially in light of the instances of mala fides, and ill- intentioned actions already taken by them, including inter alia the 14th August advertisement, the 8th June 2020 letter and the allegations of harassment and pressure as claimed by defendant No.2 in their Contempt Application. He has also contended that the Honourable Court, in the event of the defendant No. 2's deliberate failure or compromised ability to do so, must ensure that defendant No. 3 acts in a fair and transparent manner so that the public interest is not harmed. He has submitted that if defendant No. 3 is allowed to continue flouting legal provisions, then the public at large Will suffer the consequences. The plaintiff's alleged short-comings are outside the scope of the instant suit. The plaintiff is Dominus Litus and hence the suit and the stay application must be confined to the four Comers of the plaint and the plaintiff's arguments. The plaintiff is working towards meeting the legal requirements for being granted a Commencement Certificate, and throughout this entire process has a legitimate right to be treated in accordance with the law, which also encompasses the right that any illegalities or mala fide actions of the defendant in this regard be curtailed and remedied. The plaintiff has alleged mala fides, collusive behaviour/actions, and ill intentions on the part of defendant No.2 and defendant No.3. Hence, the plaintiff has standing to sue and this Court has jurisdiction to take cognizance of the instant suit under Section 9 of C.P.C., which provides that the Civil Courts shall have jurisdiction to entertain any suit in relation to any civil matter except the same is expressly or impliedly barred by the law as the Civil Court has the power to examine the orders passed by an Authority if the action itself was tainted with mala fide. In support of his submission, learned counsel has placed reliance a recent judgment of this Court passed on 30.11.2020 in Suit No.1479 of 2008.
6. Learned counsel for the plaintiff has argued that the letter dated 8 June 2020 is an artificially manufactured and unlawful document which attempted to, in essence, illegally grant defendant No. 3 the authority to begin commercial operations despite them not having fulfilled the necessary requirements. He has further argued that it is not a Commencement Certificate, but the plaintiff apprehends that the reason that such authority was attempted to be granted by way of this letter was to ensure that defendant No.2 has plausible deniability if the matter was ever brought to the attention of the court. He has further argued that the defendant No.2 finding itself under the scrutiny of the this Court and availing the protection offered by the same has itself filed a Contempt Application before this Court, wherein it has stated under oath that the alleged contemnor Viz. CEO of Defendant No.3 is "continuously trying to pressurize and harass the officials of the defendant No.2. He has argued that the defendant No.2 was being influenced by Defendant No.3 to mala fidely give them preferential treatment and excuse their blatant violations of the TPSP License. It was only after the interim order dated 18.08.2020 was granted that defendant No.2 inspected defendant No.3 and found it lacking in the Inspection Report. It must be noted that the findings of the Inspection Report are completely at odds with the statement made by the defendant No. 2 in their letter dated 8th June 2020. He has also stated that the rare fact that a Regulator has come to the Court to claim the protection of the Court shows the extent to which defendant No. 3 is influencing and pressurizing defendant No.2, as apparent from the contempt application. Learned counsel in order to further highlight the preferential treatment afforded to defendant No.3 has drawn the attention of this Court to a letter dated 23.05.2019. As is apparent in Para 3(iii) of this letter, the defendant No.2 had given the unlawful concession of establishing a "USSD Platform including USSD Gateway" within 06 months of the pilot launch. Such a concession is not contemplated within the TPSP licensing regime; the TPSP Licensees including the plaintiff and the Defendant No.3 are required to have already established the USSD Platform and Gateway. This letter also lends credence to the fact that the existence of a USSD Platform including a USSD Gateway is an essential requirement for a TPSP, which fact the defendant No. 3 has attempted to now challenge before the PTA and before this Court. He has stated that the letter dated 20.12.2019, which contains the minutes of the meeting regarding the possibility of a single code for the AMA Scheme, further reiterates not only the claim regarding defendant No.2's preferential treatment, but also the fact that the existence of 'a USSD Gateway is a mandatory requirement under the law. As per Para 4 of this letter, defendant No.2 had suggested that the resources of the plaintiff in terms of its USSD Gateway be shared with defendant No.3. He has referred to emails stating that defendant No. 3 used Ufone's USSD Platform concretely establish that defendant No. 3 did not deploy its own USSD Platform, clearly mentions that the Proof of concept ("POC") conducted by defendant No. 3 was on Ufone's USSD Platform. A scenario where a TPSP conducts its POC on a Telco's USSD Platform has not been envisioned or allowed by the TPSP governing law and documents, but was still malafidely accepted by defendant No.2. He has argued that as per the recommendations of the USSD Committee created by PTA it is apparent from Para-03 that the Telcos do not look favorably upon defendant No. 3 dependence on their USSD Platform. They also fortified the Plaintiff's view that such dependence is against the public interest as it will affect the functioning of the system. He has also argued that the Telcos again reiterated their reservations in another letter dated 29.04.2019 to defendant No. 2. The last bullet point of this letter states as under:- "CMOs also brought to the notice of the Authority that one of the TPSPs has tot deployed any USSD platform and intends to use the platform of the CMOs. Not only is this not acceptable to CMOs because it will entail investment into our platforms at our cost but this model is against license obligations of the TPSP."
7. Learned counsel for the plaintiff has argued that defendant No.3 had submitted that the Telcos' comments on its USSD system are based on their own vested interests, as the Telcos do not want to invest in a USSD Platform and would rather have defendant No. 3 invest in its own USSD Platform.
It is submitted that the concern of the Telcos is not only valid but logical, as it is the TPSP Licensee itself which should be capable of implementing a USSD platform without any third party interference. He has submitted that public interest demands that a TPSP Licensee must be completely capable of operating independently, and should not be, reliant on a Telco's system, otherwise the system can crash and affect the millions of people who will be using this service as part of the AMA Scheme. He has submitted that despite these factors and the concerns given by the Telco's, the defendant No. 2 still chose to issue the letter dated 8 June 2020 certifying defendant No.3's "Readiness for Commercial Launch." He has urged that defendant No.3 had concluded Agreements with SCO, which were in clear contravention to Clauses 1.3.1 and 1.3.2 of the TPSP License, which state that a TPSP cannot operate in AJ&K and GB. He has also urged that the fact that these agreements were signed inherently implies that VRG intended to operate in AJ&K and GB. Moreover, PTA's failure to rectify or penalize this violation of the TPSP license further evidences its male fides. He has urged that despite the plaintiff having sent the letter dated 30.06.2019 outlining in detail defendant No. 2 preferential treatment towards defendant No. 3 and defendant No. 3's violations. He has also urged that all the TPSP License violations which were ignored by PTA at that time were again listed in the PTA Inspection Report which was carried out when this Honorable Court had directed PTA to proceed in accordance with law. He has, therefore, prayed that the injunction application may be granted as prayed for.
8. Mr. Wasif Riaz, learned counsel for the defendant No.2/PTA, at the very outset, has categorically denied that defendant No.2 has given any preferential treatment to defendant No.3. He has argued that defendant No.2 has taken serious notice of activity of defendant No.3 wherein defendant No.3 has claimed commercial operations of Asan Mobile Account in print media. He has drawn attention of this Court to Gause 16 of the license, a commencement inspection is required before issuance of commencement certificate for commercial operations. Therefore, on the advertisement of defendant No.3 dated 14.8.2020 whereby- it claimed to be commercially operational with SCO and Jazz, PTA immediately took actions on the same day by issuing the press release and directed the defendant No.3 to immediately stop any commercial operations. He has contended that defendant No.3 requested the defendant No.2 to expedite commercial arrangements to enable PTA for commencement inspection and subsequent commercial operations of the AMA scheme subject to confirmation of the same. As such, the defendant No.2 has not issued any readiness certificate for readiness of VRG for commercial launch. He has contended that commencement certificate to defendant No.3 will be issued only after fulfilling license conditions and satisfactory commencement inspection as per Clause 16.2 of License dated 20.11.2018. He has further contended that defendant No.2 thoroughly considered the application of the defendant No.3 and conducted. pre-requisite inspections essential for issuance of commencement certificate. He has submitted that inspection makes it evident that defendant No.3 has miserably failed to meet the several codal, technical, regulatory, terms and conditions of License and QoS KPIs parameters required for commencement certificate, therefore, the competent authority has decided not to issue the commencement certificate unless the short-falls are addressed according to law and till such time the defendant No.3 has been directed not to execute or publicize any commercial activities till commencement certificate is issued by the authority.
9. On the other hand, Mr. Ijaz Ahmed Zahid, learned counsel for the defendant No.3, at the very outset, attacked the maintainability of the instant suit as the plaint does not disclose a cause of action, so also barred by law. He has argued that the plaintiff is primarily seeking an injunction that defendant No.3 should be restrained from performing functions as a Third Party Service Provider ("TPSP") until a certificate for commencement of business is issued by defendant No. 2. He has argued that neither defendant No. 2 nor defendant No. 3 has ever stated that defendant No. 3 can commence operate as a TPSP unless a certificate for commencement of business is issued by defendant No. 2. This position was unequivocally stated by defendant Nos,2 and 3 in their respective press releases dated August 14, 2020. As such, no cause of action ever existed in favour of the plaintiff and more so upon the issuance of the aforesaid press releases. Accordingly, plaint is liable to be rejected under clause (a) of Rule 11 of Order VII of the Code of Civil Procedure, 1908. He has urged that even if it is assumed for the sake of argument that plaintiff has any right to question the grant of certificate of commencement of business to defendant No.3, such right will only arise from the fact that plaintiff is also a TPSP licensee. The license rights are entirely and exclusively governed by Pakistan Telecommunication (Re-organization) Act, 1996 (Act XVII of 1996) ("Telecom Act"). Any grievance in respect of any decision of defendant No. 2 can only and exclusively be agitated by way of an appeal under section 7 of the Telecom Act. The suit therefore is barred under section 9 of the Code of Civil Procedure, 1908. Accordingly, the plaint is liable to be rejected under clause (d) of Rule 11 of Order VII of the Code of Civil Procedure, 1908. He has contended that it is an admitted position, which was reiterated by the plaintiff's counsel several times during his submissions, that plaintiff has not fulfilled the conditions for the grant of certificate of commencement of business and has not even filed any application for grant of such certificate. He has contended that on the other hand, defendant No. 3 has satisfied all the conditions for grant of such certificate which is manifested by the fact that State Bank of Pakistan vide letter dated 09.04.2020 it has already issued its authorization of operation for commercial launch to Defendant No. 3 and its request for grant of certificate of commencement of business is pending with defendant No. 2, which is the final step of the process. He has, urged that the sole purpose of filing this suit is to make the matter sub judice and delay the process at defendant No. 2's end so that the plaintiff can gain more time to comply with its obligations before a certificate is granted to defendant No. 3. He has also urged that the plaintiff has purposely twisted the facts in a self- serving manner though the plaint is liable to be rejected purely on legal grounds.
10. Learned counsel for the defendant No.3 has argued that Third Party Service Providers (TPSP) is a traditional mode of providing banking services through various branches. The State Bank of Pakistan introduced branchless banking in 2008 by framing Branchless Banking Regulations, 2008.
In branchless banking, a bank can sign a bilateral agreement with one or more telecom operators for providing banking services without the need to visit a branch, except for some specific purposes like opening an account. He has argued that the Mobile banking is an advance form of branchless banking to widen the services and a mobile phone user can open and manage a bank account with any bank without the need for visiting the bank for any purpose. He has further argued that Mobile banking involves use of two regulated services 1.e, banking and telecommunication, which are regulated by two independent regulators namely State Bank of Pakistan and Pakistan Telecommunication Authority. He has submitted that the interaction between the two services, which is generally referred to as "interoperability" is accordingly governed by a' dual regulatory framework. It is pertinent to mention that licensing of TPSPs is governed by "Class Value Added Services Licensing and Registration Regulations, 2007" framed by defendant No. 2-PTA and a summary of the applicable legal framework is also set out in the Information Memorandum for Third Party Service Providers (TPSPs) Licensing.
11. Learned counsel for the defendant No.3 in order to demonstrate his argument that the current status of the plaintiff and defendant No.3, he has drawn the attention of this Court to a flow chart of TPSP licensing process available at Page No.161 in Part one of Court file. This chart shows an 11-step process. He has submitted that defendant No. 3 has completed 10 steps with the issuance of authorization of operation for commercial launch to defendant No. 3 by State Bank of Pakistan vide letter dated 09.04.2020. However, for the last and final step of issuance of certificate of commencement of business, defendant No. 3's application dated 04.08.2020 is pending with defendant No. 2. He has stated that this has been achieved by defendant No. 3 through hard-work and persistent efforts since grant of license in 2018. He has submitted that on the other hand, plaintiff has not even fulfilled some of the most elementary steps in the process. In this regard, the following are the most significant points:
(i) a licensee is required to maintain a minimum paid-up capital of Rs.200 million as required by Regulation 5 of SBP's Mobile Banking Regulations and Regulation 7 of defendant No. 2/PTAs Mobile Banking Regulations.
Plaintiff's own document available on record shows that its total authorised capital is Rs.
1,000,000/- which is only 0.5% of the required paid-up capital.
(ii) an authorization from SBP is a mandatory requirement for any licensee to commence service under Regulation 3(4) of SBP's Mobile Banking Regulations and Regulation 6(8) of defendant No. 2/PTAs Mobile Banking Regulations and clause 16.1 of the PTA licence.
(iii) Service commencement certificate from defendant No. 2/PTA is a mandatory requirement under clause 16.2 of the PTA licence.
Admittedly, neither the plaintiff has even applied to SBP nor PTA for such authorisation.
12. Therefore, he has submitted that it is manifestly clear that the plaintiff having failed to fulfill the mandatory requirements for commencement of services has filed these proceedings merely to delay the issuance of commencement certificate to defendant No. 3.
13. Learned counsel for the defendant No.3 has next contended that on 14th August, 2020, being the national independence, a large number of corporate organizations published felicitation messages in the press and refers to their achievements. In the same spirit, defendant No. 3 published a felicitation message. He has urged that defendant No. 2/PTA took an exception to this message and issued a press release on the same day stating that defendant No. 3 cannot commence commercial operations until a commencement certificate is issued. Despite 14.08.2020 being a public holiday, defendant No.2 took an unprecedented step and by its email of same day required defendant No. 3 to explain its position by 10 pm the same day. He has submitted that defendant No. 3 responded by its letter dated 14.8.2020 and clarified that it never intended to state that it has commenced provision of its services and will not do so until a commencement certificate is issued. He also submitted that defendant No.3 also issued a clarificatory press release the same day as directed by defendant No.2. He has stated that the present suit was filed on 18.08.2020 when the press release by defendant No.2/PTA as well as the press release by defendant No.3, both dated 14.08.2020 had already clarified the issue beyond any doubt. Both these press releases were available with the plaintiff as is manifested by the fact that copies thereof are enclosed by the plaintiff with the MoP Therefore, there was no cause of action available to the plaintiff for filing the present suit. He has urged that defendant No.2 raised observation in its letter dated 02.10.2020, which is clearly manifest that it was issued after the filing of the suit and during the argument the plaintiff has almost entirely based its case on this letter. He has vehemently urged that it is settled law that the plaintiff has to succeed on the strength of its own case and this letter being a subsequent document cannot form the basis of the plaintiff's case. He has, therefore, argued that defendant No.2 has acted in a vengeful manner in issuing the aforesaid letter.
Admittedly, no injunction was granted by this Hon'ble court against defendant No.2 restraining it from processing the request of defendant. No. 3 for issuance of commencement certificate, but defendant No.2 was misconstruing the interim order and was not processing the request of defendant No. 3 and as such defendant No. 3 sought a direction from this Hon'ble Court requiring defendant No.2 to process its request for commencement certificate, which was issued vide dated 25.09.2020. He has urged that defendant No.2 being annoyed with this fact proceeded to issue its letter dated 02.10.2020 without even giving an opportunity of hearing to defendant No.3. The said letter therefore has no legal effect and cannot be relied upon by the plaintiff.
14. Learned counsel for the defendant No.2 without prejudice to the aforesaid submissions, has submitted that the observations contained in the said letter are factually incorrect and unsustainable and arose purely on account of the fact that defendant No.3 was not given any opportunity of hearing. He has argued that the plaintiff also alleged that defendant No. 2 had suggested that defendant No.3 should use the plaintiff's infrastructure. In this regard he has submitted" that the plaintiff has completely twisted the facts to make this allegation, which is obvious that a bare perusal of paragraph 4 of the said letter will show that SBP and PTA were exploring the possibility of using one code for AMA scheme of the federal government and in that regard this possibility was discussed and this had nothing to do with defendant No.3's services as TPSP. For ready reference, paragraph-04 is reproduced below:- "4. While discussing various other options, DG(CP) and DD(CA) asked the participants to explore an option to make a consortium of TPSPs, whereby resources of DBL in terms of its USSD gateway can be shared to enable a single code for AMA scheme. DBL and VRG agreed to deliberate proposed solution and its viability, and showed their willingness to work together for the modalities and implementation."
15. Learned counsel has urged that the single code, however, was not accepted by the cellular companies as well as the plaintiff as categorically stated by the plaintiff in its letter dated 12.6.2020.
He has submitted that the plaintiff also alleged that a committee formed by defendant No. 2 observed that defendant No. 3 had not installed a USSD Platform. The argument is fallacious for the following reasons:
(i) The committee's terms of reference as set out in Defendant No.2/PTA's letter dated 4-5-2019 did not include the assessm ent of the systems installed by the plaintiff or defendant No.3. Admittedly, the said Committee never inspected defendant No.3's system and hence was in no position to assess the suitability of the same.
(ii) minutes were issued without consulting the committee members and in Particular defendant No. 3 and this fact was acknowledged when defendant No. 3 confronted the concerned member by email of 3-8-2019. The said member of the Committee after receiving defendant No. 3's aforesaid email of 4-3-2019, which Plaintiff deliberately excluded from the trail of emails attached with the plaint, asked PTA to arrange a physical inspection of systems of both TPSPs (i.e. the Plaintiff and Defendant No. 3).
(iii) the said Committee's observation besides being speculative as submitted above, also stood proved wrong when SBP issued its authorization dated 9-4-2020.
16. Learned counsel for the defendant No.3 has submitted that it is also pertinent to mention here that the plaintiff as well as the said Committee have attempted to compare defendant No. 3's system with the system allegedly installed by the plaintiff. This assertion besides being factually incorrect since neither of them have inspected defendant No. 3's system is also legally untenable, for the following reasons:
(i) As submitted above, the licence granted to the Plaintiff as well as Defendant No. 3 is governed by Class Value Added Services Licensing and Registration Regulations, 2007 (Annex Syn-1) framed by Defendant No. 2-PTA. Regulation 3 of the aforesaid Regulations provides as follows: "3. Technology Neutral. All Licenses and Registration Certificates issued under these Regulations shall be technology neutral.
Accordingly, defendant No. 3 has no obligation to install a system that is same the Plaintiff.
(ii) The only obligation of defendant No. 3 under the licence is to ensure that its system meets the Quality of Service ("QoS") Key Performance Indicators (KPIs) specified in Appendix II of the licence.
(iii) It is established on record that Defendant No. 3's system can perform the functions required under the licence from the following facts:
(a) SBP has issued its authorization vide letter dated 9-4-2020 after vigorously testing defendant No. 3's system;
(b) Defendant No. 2 raised only one observation regarding QoS KPIs in its letter dated 2-10-2020 (which is heavily relied upon by the Plaintiff during arguments, though incorrectly) which stated that "QoS KPIs for USSD response time are not met". The aforesaid observation was raised as an afterthought as no such observation was raised during inspection.
Nonetheless, the aforesaid observation is baseless since the QoS KPI specified in Appendix II of the licence is five seconds while defendant No. 3's system is much faster and its response time is one to two seconds as shown by the screen shots of the system provided to defendant No.2.
17. Learned counsel for the defendant No.3 has argued that the plaintiff also alleged that defendant No.2 has unduly favoured defendant No.3 by issuing letter dated 8-6-2020, which amounts to giving a service commencement certificate. This allegation is fallacious on the face of it. He has submitted that a bare perusal of the aforesaid letter dated 8-6-2020 clearly shows that this letter was neither addressed to nor written at the request of defendant No.3. The letter was not even copied to defendant No. 3. This letter at best clarifies to the cellular companies that they can enter into agreements with defendant No. 3, which in any case is a pre-condition for commencement of services by defendant No. 3. He has further argued that neither defendant No. 2 nor defendant No. 3 has ever treated it as a service commencement certificate, which is established from the fact that defendant No.3 applied for a service commencement certificate vide its letter dated 04.08.2020 nearly two months after the said letter. He has submitted that it is pertinent to mention that the said letter was not copied or addressed to the plaintiff either. It appears that the plaintiff procured the copy either unlawfully from the records of defendant No. 2 or any of the cellular companies which may have a vested interest in opposing defendant No. 3 provided the copy of such letter to the plaintiff. The plaintiff has failed to disclose the source of this copy which clearly indicates that this was not obtained lawfully. In support of his submission he has placed reliance on the cases of Mian Sultan Ali Nanghiana v. Mian Nur Husain (PLD 1949 Lahore 301), H.H. Ahmed v. Pakistan through Secretary Ministry of Rehabilitation and Works (PLD 1972 Karachi 366), Syed Mushtaque Hussain Shah v. Riaz Muhammad Hazarvi and another (PLD 1978 Karachi 612), Raees Ghulam Sarwar v. Mansoor Sadiq Zaidi and 4 others (PLD 2008 Karachi 458), Muhammad Azam Khan Niazi v. General Manager SNGPL Islamabad (2019 CLC 1998), Administrator Thal Development v.
Ali Muhammad (2012 SCMR 730), Trustees of the Port of Karachi v. Gujranwala Steel Industries and another (1990 CLC 197) and East and West Steamship Company v. Government of Pakistan and 2 others (PLD 1958 SC 41) Learned counsel for the defendant No.3 prays for rejection of plaint and injunction granted earlier may be vacated.
18. In rebuttal, learned counsel for the plaintiff has submitted that defendant No.3 has argued several technical points in response to the defendant No.2's Inspection Report dated 02.10.2020, which are of a hyper-technical nature and were identified by the respective Regulator who has the relevant technical expertise and infrastructure. As such, he has argued that this Court does not have the jurisdiction, nor does it possess the necessary technical knowledge and expertise, to make any determination based on these technicalities. He has argued that the defendant No.2, being the Regulator, has the right and authority to determine the technicalities of the Inspection Report. Therefore, this Court must confine its jurisdiction to ensure that the defendants are acting in accordance with the law. To support his submission, he has briefly submitted the following points:- i) This Court has not conducted the investigation which led to the inspection report; ii) This Court is neither the Regulator nor the expert in this matter; and iii) All parties have agreed on record that the decision lies with Defendant No.2.
19. He has argued that in such circumstances, the Court should defer to the regulator i.e. defendant No.2. for carrying out an inspection into defendant No.3's claims. He has contended that the precedents opine on the judicial restraint exercised by the Courts in case an investigation or factual inquiry needs to be carried out by the relevant administrative or executive authority. In this regard he placed reliance upon the judgement on the case of A.R. Khan & Sons (Pvt.) Ltd. v.
Federation of Pakistan (2010 CLD 1648 Sindh). Learned counsel for the plaintiff has submitted that in this case, a Division Bench of this Court considered whether a Concession Agreement was violative of the Competition Ordinance. It was contended that PSA Gwadar i.e. the concession holder had a "dominant position" and was abusing it by not allowing the petitioners to provide stevedoring services at Gwadar. The Court opined that such a determination cannot be made by the Court and requires a factual investigation carried out by the Regulator i.e. the Competition Commission. He has also placed reliance on the case of Let-Gen (R) Slahuddin Tirmizi v. Election Commission of Pakistan (PLD 2008 SC 735) and submitted that in this case the Hon'ble Supreme Court addressed a grievance regarding an order passed by the Election Commission of Pakistan which declared a poll invalid, based on a few disruptive incidents which were evidenced by factual reports from the relevant officers. Initially the respondent invoked the jurisdiction of Islamabad High Court against the order of Election Commission of Pakistan and subsequently, the order passed by Election Commission of Pakistan in post remand proceedings was challenged by the petitioner before the Peshawar High Court. It was held that the order was lawfully passed and should not be interfered with by the High Courts. Relevant para of the judgment is reproduced below:- "The scope of judicial review of the High Court under Article 199 of the Constitution in election matter is confined to the extent of an order passed by election authority without lawful authority or it is coram non judice or mala fide and judicial review of the High Court cannot be enlarged to the cases relating to factual inquiry or in cases in which another view of the matter was also possible and if such view would have been taken it would not be illegal or unconstitutional. The High Court is also not supposed to substitute its opinion on the question of fact with the opinion formed by election authority or a Tribunal of competent jurisdiction."
20. Learned counsel for the plaintiff has argued that defendant No.3 has already stated that they are pursuing the technical points with defendant No.2. Hence, the decision rests with defendant No.2 now. However, the High Court must continue supervising the defendant No.2's actions in light of the influence and pressure being exerted on defendant No.2 by defendant No.3 as has been stated by defendant No. 2 in their Contempt Application. He has submitted that the only reason the plaintiff has sought relief from the Court is that the plaintiff seeks to strengthen the regulator's hands with the oversight of this Court. Given the conduct of Defendant No.3 as highlighted in the defendant No.2's Contempt Application, the regulator must be protected against coercion by order of this Court. Moreover, defendant No.3 needs to be restrained in both de jure and de facto form, so that commercial operations are not commenced without the issuance of a commencement certificate and further pressure on PTA is not exerted. He has submitted that this Court must therefore direct that defendant No.3 must not begin any operations without being granted a valid and legally issued Commencement Certificate and until such point, the interim order must be continuing so as to protect defendant No.2 against the alleged pressure and harassment being exerted on it to issue the Commencement Certificate without acting in accordance with law.
21. In response to the arguments of defendant No.3 that the Suit is not maintainable as it had already agreed in its Press Release and an email to defendant No.2 dated 14th August 2020 that it would not begin commercial operations without a Commencement Certificate. The plaintiff has shown that defendant No.3 has a history of ill-intentions and collusive actions with defendant No.2.
Hence, any such promises by defendant No.3 do not hold any value. The High Court's cognizance of this issue is the only reason that defendant No.3 has not taken any further steps to unlawfully advance their agenda. The Suit is hence maintainable and the cause of action was not extinguished by the empty promises or reassurances given by the defendant No.3 and is in fact continuing. He has submitted that defendant No.3 has also argued that the Board Decision of the plaintiff for filing the suit was dated 5th August 2020 while the advertisement was published on 14th August. This is not relevant as the plaintiff's decision to file the suit is not based solely on the 14th August advertisement. The advertisement was only the latest in a long list of mala fide and unlawful actions of the Defendants Nos.2 and 3. He has further submitted that defendant No.3 has argued that since the TPSP License is a technology neutral license, the only thing that matters are the functions and quality of service. This argument for technological neutrality has been drawn from Regulation 3 of the Class Value Added Services Licensing and Registration Regulations, 2007.
However, Technology Neutral does not mean that defendant No.3 can provide services which affect millions of people, without meeting the fundamental requirement of establishing its own USSD Gateway. He has contended that if defendant No.3 does not have its own USSD Gateway then it is not a Third Party Service Provider (TPSP). By its very definition, a TPSP must have its own USSD Gateway, otherwise it is nothing more than a messenger relaying messages to and from the user and the server, while sub-contracting its main function to the Telcos. Learned counsel for the plaintiff in response to the arguments advanced by the learned counsel for the defendant No.3 that the plaintiff does not meet minimum capital requirements as stated in regulation 7 of the Regulations for Technical Implementation of Mobile Banking, 2016. It is reiterated that arguments related to the plaintiffs deficiencies are irrelevant and not within the four corners of this stay application. He for the sake of argument has submitted that even if plaintiff had not met the minimum capital requirements, this information would only be relevant in an independent lis where the plaintiffs application for a Commencement Certificate would be at issue. In the end, learned counsel for the plaintiff has submitted that the case law cited by the learned counsel for the defendant No.3 did not provide conclusive support to their contention regarding the non- maintainability of this suit based on the alternate remedy provided by the PTA Act, 1996 as well as the point regarding the plaintiff's right not being matured enough to ask for relief from this Court.
22. I have given due consideration to the arguments of the learned counsel for the plaintiff, defendants Nos.2 and 3. and the case law cited at the bar.
23. Through the listed application the plaintiff is primarily seeking an injunction that defendant No.3 should be, restrained from performing function as a Third Party Service Provider (TPSP) until a certificate for commencement of business is issued by defendant No.2. Defendant No.3 is the competitor of the plaintiff and if the defendant No.3 is allowed to begin commercial operation without establishing its own, USSD Gateway as mandatorily required by the TPSP license, then it will capture the market as first mover advantage accruing to defendant No.3 would be based on illegal and unlawful action. The plaintiff alleged that defendant No.2 was being influenced by defendant No.3 to malafidely give them preferential treatment and excuse their blatant violations of the TPSP license. Plaintiff further highlights the preferential treatment afforded to defendant No.3 by defendant No.2 as mentioned in letter dated 23.05.2019 thereby given concession of establishing a USSD Platform including USSD Gateway within six months of the pilot launch. The only reason the plaintiff has sought relief from the Court is that the plaintiff seek to strengthen the regulator's hands with the oversight of this Court, as the regulator must be protected against coercion by order of this Court. The commercial operations are not commenced without the issuance of a commencement certificate and further pressure on PTA is not exerted. Additionally, the defendant No.3 despite not having a validly issued commencement certificate released ad advertisement on 14.08.2020 claiming to be Commercially Operational with JAZZ and SCO. Such advertisement is a mala fide and blatantly unlawful attempt to misguide and deceive stakeholders and the general public. It has been alleged that the defendant No.3 appears to be relying on the unlawfully and malafidely issued letter for this claim. But defendant No.3 is not commercially operational as the only way it is allowed to commence operations is being granted a commencement certificate. In response to the above advertisement the defendant No.2 issued a press release which clarified that they have not yet issued a commencement certificate to defendant No.3 and that it has directed defendant No.3 to stop any such commercial operations until such issuance. The defendant No.3 on the same day i.e. 14.08.2020 issued press release wherein it has been clarified that the use of the phrase 'commercially operational' does not violate the terms of the license as it never intended to state that it has commenced provision of its services and will not do so until a commencement certificate is issued.
24. It will be appropriate to reproduce the condition for grant of Service Commencement Certificate, which reads as under:- "16.1. After the issuance of TPSP license, the licensee shall apply to SBP for authorization. The licensee shall also apply to PTA for commencement certificate for commercial launch of services. At, the time of inspection of the telecom system and services established by the licensee, the Authority shall consider the following parameters:- 16.1.1. Provided that separate approval shall be required, in Case of; 16.1.1.1. Each integration / interconnection with new AFIs, telecom operators or TPSPs. However, the licensee shall demonstrate through simulation testing/ mock setup on its network readiness for integration/ interconnection with AFIs and Mobile Operators subject to the condition that their request is under process with the AFIs and Mobile Operators.
16.1.2. Each new type of service provisioning method e.g. IVR, SMS, USSD, WAP, STK and Mobile Application.
16.2. The Licensee shall not provide any Licensed Services, or accept any payment in respect of Licensed Services to be provided by the Licensee, until the Licensee has obtained from the Authority a service commencement certificate evidencing that the Authority is satisfied that the Licensee has established the Licensed System and is able to provide the Licensed Services as per the QoS KPIs set by the Authority, in accordance with the License.
16.3. The Licensee shall give 30 days prior written notice to the Authority of the date on which the Licensee intends to commence providing licensed services. The Licensee shall cooperate with the Authority in its investigation of the Licensed System and the Licensed Services in connection with the issuance by the Authority of a commencement certificate."
25. The plaintiff's counsel during arguments time and again reiterated that plaintiff has neither satisfied the requirements for commencements certificate nor it has applied for the same, which has also been confirmed by the defendant No.2/PTA. Whereas, the defendant No.3 has satisfied all the conditions for grant of such certificate which is manifested by the fact that State Bank of Pakistan vide letter dated 09.4.2020 has already issued its authorization of operation for commercial launch to defendant No.3 and defendant No.3's request for grant of certificate of commencement of business is pending with defendant No.2, which is the final step of the process.
26. Indeed, the plaintiff aggrieved with the Circular No.24 of 2018 issued by SBP, which amended the regulations for Mobile Banking Interoperability. The effect of this amendment was to restrict banks/APIs to only sign with one TPSP, which as, per learned counsel for the plaintiff, goes against the aim and objects of the National Financial Inclusion Strategy 2015 and the World Bank project.
The said Circular amending the Regulation was issued less than one month after the plaintiff received their license, which effectively prevented the plaintiff from signing the necessary agreements with banks/ AFIs. The plaintiff further aggrieved with the letter issued by defendant No.2 in respect of 'Readiness for Commercial Launch of AMA Scheme' thereby requested CMOs to finalize their agreements with TPSPs for commercial operations.
27. It may be noted that the plaintiff through the instant suit besides other prayers also seeking to set aside the Circular No.24 of 2018 dated 18.12.2018. The said circular issued by the State Bank of Pakistan. The plaintiff has neither impleaded State Bank of Pakistan as party nor has set any ground for setting aside the said circular. Additionally, the plaintiff stance is that the defendant No.2 has given preferential treatment to defendant No.3, which is evident by the fact that even though the defendant No.3 has still not met the technical requirements of the TPSP License which mandate the licensee to establish their own independent USSR channel platform, the defendant No.2 had issued a letter dated 08.06.2020 regarding the 'Readiness for Commercial Launch of AMA Scheme'. Record shows that the defendant No.3 has fulfilled the legal requirements for issuance of commencement certificates for launching its services on a commercial basis. The services of the defendant No.3 are regulated by the State Bank of Pakistan and Cellular Mobile Operators, which are regulated by defendant No.2/PTA. The defendant No.3 was granted authorization for electronic payment gateway as a payment system operator and payment service provider by the State Bank of Pakistan. The defendant No.3 was granted the first TPSP License for financial and application services by defendant No.2 in January, 2018, so also authorization as TPSP by the State Bank of Pakistan. The defendant No.3 installed USSD channel platform and gave a successful demonstration of the same to the Minister for Finance, State Bank of Pakistan and defendant No.2/PTA. Further, the defendant No.3 launched pilot project in September 2019 and this pilot project was successfully completed on 31.01.2020. The defendant No.3 has also issued final authorization for commercial launch of services by the State Bank of Pakistan. From the record it is clearly manifest that the defendant No.3 has complied with all requirements of issuance of commencement certificate by defendant No.2. The defendant No.2 has several times inspected the USSD channel platform of the defendant No.3 and has confirmed its satisfaction to the cellular mobile operators. The largest cellular mobile operator has already signed an agreement with the defendant No.3 and the remaining operators are in the final stages of doing so. The other regulator State Bank of Pakistan has also inspected and tested the USSD channel platform of the defendant No.3 multiple times and has issued its final authorization for commercial launch of the services by the defendant No.3.
28. As regards the plaintiff's concern on an advertisement dated 14.08.2020 issued by the defendant No.3 claiming to be, commercially operational with JAZZ and SCO despite not having a validly issued commencement certificate was a mala fide and unlawful attempt to misguide and deceive stakeholder and the general public. It may be noted that 14th August, being the national independence, a large number of corporate organizations published felicitation messages in the press and refer to their achievements, which was also done by the defendant No.3, as stated by the counsel for the defendant No.3. However, the defendant No.2 took an exception to this message and issued press release on the same day that defendant No.3 cannot commence commercial operations until a commencement certificate is issued and required the defendant No.3 to explain its position. The defendant No.3 on the very day issued a press release clarified that it never intended to state that it has commenced provision of its services and will not do so until a commencement certificate is issued. Moreover, counsel for the defendant No.2 categorically stated that they have not given any preferential treatment to defendant No.3 and have also taken serious notice of activity of defendant No.3 wherein it has claimed commercial operations of AMA in print media and based on submissions by defendant No.3 regarding its implementation of USSD platform, requested CMOs to expedite commercial arrangements to enable defendant No.2 for commencement inspection and subsequent commercial operations of the AMA scheme subject to confirmation of the same. As such, the defendant No.2 has not issued any readiness certificate for commercial launch to defendant No.3. Additionally, on the application of the defendant No.3 for issuance of commencement certificate, it has categorically been argued by the counsel for the defendant No.2 that the PTA has thoroughly considered the application of the defendant No.3 and inspection carried out by the PTA for issuance of commencement certificate, however, pursuant to license condition No.16.2 the inspection make it evident that defendant No.3 has failed to meet the requisite codal technical, regulatory, terms and conditions of license and QoS KPIs parameters required for issuance of commencement certificate, as such, the competent authority has decided not to issue the commencement certificate unless the shortfalls are addressed according to law.
Similarly, the counsel for the defendant No.3 unequivocally stated that the letter is not a certificate of commencement of business nor the defendant has ever claimed it to be so. He further stated that defendant No.3 had applied for a certificate of commencement of business to defendant No.2 and a detailed inspection was conducted and now the certificate of commencement is awaited.
He has categorically stated that unless the required condition 16.2 of the license is satisfied and defendant No.2 issues commencement certificate, the defendant No.3 will not commence commercial operations.
29. So far as the contention of defendant No.3 that any decision of defendant No.2 in respect of certificate of commencement of business is appealable under Section 7 of the Telecom Act, therefore, there is no justification left for the pendency of this suit in the presence of an exclusive remedy provided under the Telecom Act and in this regard learned counsel for the defendant No.3 has placed reliance on the cases as referred in the preceding paragraphs. No doubt alternate remedy of an appeal is available to the aggrieved party, which can lies against any decision or order of the authority. Even otherwise, it is a settled law that Section 9 of the Civil Procedure Code provides that the Civil Courts shall have jurisdiction to entertain any suit in relation to any civil matter except when the same is expressly or impliedly barred by the law. The Civil Court to examine the orders passed by an authority will not be ousted if the action itself was tainted with mala fide. A such, this Court has the jurisdiction to examine the orders of an authority is valid or not.
30. The plaintiff has no connection of whatsoever with defendant No.3 or any of its grievances, justified or otherwise, against defendant No.2. Any such actual or perceived grievance cannot in any manner be used as a justification for restraining the defendant from operating its business.
The plaintiff has failed to make out a prima facie case or balance of convenience is also not lies in favour of the plaintiff. Resultantly, the injunction application is dismissed and the interim order passed on 18.08.2020 is hereby recalled.