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INDEPENDENT NEWSPAPERS CORPORATION (PVT) LTD versus FEDERATION OF PAKISTAN

In the context of the fundamental right to "freedom of expression" under Article 19 of the Constitution, Elect Section 23, 39 and the preamble - Regular Purpose of the Constitution of Pakistan, Article 19 Pakistan Electronic Media Regulatory Authority Ordinance, 2002 - The expansion of selection and reform in electronic media Free flow of information in free and healthy competition in electronic media - Rationale for preventing concentration of property circumstances Determine situations in which custody of property is illegal - Use of force under the 39 Electronic Media Regulatory Authority Ordinance, 2002 Rules for achieving regulatory purposes, and limits Formatting - regulatory landscape nature, so the format, rules and limits options, widely noted

PLD 2017 Lahore 289

Before Ayesha A. Malik, Abid Aziz Sheikh and Shahid Karim, JJ

INDEPENDENT NEWSPAPERS CORPORATION (PVT) LTD and others—Petitioners

versus

FEDERATION OF PAKISTAN and others—Respondents

Petition No.25317 of 2016, decided on 28th December, 2016.

Per Ayesha A, Malik, J; Shahid Karim, J, agreeing.

(a) Pakistan Electronic Media Regulatory Authority Ordinance (XIII of 2002)—

—Ss. 23, 39 & Preamble—Constitution of Pakistan, Art.19--Regulatory objective of the Pakistan Electronic Media Regulatory Authority Ordinance, 2002 in the context of the Fundamental Right to “freedom of speech” under Art. 19 of the Constitution—Enlargement of choice and optimization of free flow of infÓrm;ation in the electronic media—Open and healthy competition in the electronic media— Rationale for prevention of undue concentration of ownership— Determination of circumstances in which concentration of ownership undue—Exercise of power under .39 Pakistan Electronic Media Regulatory Authority Ordinance, 2002 to make rules in order to achieve regulatory objectives, and limitations thereto—Nature of the regulatory landscape, contours of the regulation, and limitations to authority to frame rules, extensively explained.

[pp. 300, 301, 303, 311, 312] A, B, C, D, H&l

Pakistan Broadcasters Association and others v. Pakistan Electronic Media Regulatory Authority and others PLD 2016 SC 692; In the Book titled the Judge in Democracy by Professor Aharon Barak; Dr. Raja Aamer Zaman v. Omar Ayub Khan and others 2015 SCMR 1303; Muhammad Nawaz Chandio v. Muhammad Ismail Rahu and others 2016 SCMR 875 and Khawaja Ahmad Hassaan v. Government of Punjab and others 2005 SCMR 186 rel.

(b) Pakistan Electronic Media Regulatory Authority Ordinance (XIII of 2002)—

—S. 23(2) & Preamble—Exclusion of monopolies—Media ownership concentration and exclusion of monopolies—Vertical and horizontal integration of media ownership—Nature of such vertical and horizontal integration—Rationale for regulation of “vertical integrationn of media—Any enterprise or owner who operated publication, distribution or broadcast was a media enterprise—Media enterprise could own more than one company engaged in the media business which would include a group of companies which were engaged in different areas of the media sector—Within electronic media, a media enterprise engaged in broadcast, distribution or publication and could operate another media enterprise engaged in the same line of work being broadcast, distribution or publication which was horizontal integration— Horizontal integration could give rise to oligopoly and in extreme cases monopoly, hence such integration was regulated by capping the number, of licences a media enterprise could own in the same medium bein& broadcast, distribution or publication—Vertical integration, on the

ither hand, was caused when one media enterprise integrated within he electronic media to operate some other media enterprise, so a broadcaster would integrate to operate distribution services or 7ublication or publication would integrate to operate broadcast media— Vertical integration included cross-ownership, that was, when a common entity would operate broadcast media as well as distribution service—Vertical integration was of concern for Pakistan Electronic Media Regulatory Authority (PEMRA) because if a smaller group of owners controlled a large share of the market through broadcast and distribution it would cause concentration of ownership, which in turn meant reduction in diversity and plurality of content and the free flow of infÓrm;ation„ [p, 307] E

(c) Interpretation of statutes—

—Purposive tool of interpretation—Subjective and objective purpose of a statute—While construing law, purposive interpretation was necessary to give the fullest possible meaning to the law which included the subjective and objective purpose of the law—Legislative intent must be seen in the context of the legal system in which the statute operated and must be sensitive to changing environment—Objective purpose of the statute would involve interests, values, objectives and functions which the law sought to protect and its interpretation must reflect the fundamental values and principles which the law-maker wished to preserve—Subjective purpose would be seen in the context of the statute and its purpose and therefore a dynamic purposive interpretation bridged the gap between law and society and could not be insensitive to the technological advancements and changing needs of the public because if the courts were to focus on subjective purpose only it would not manifest the objective of the law and would create stagnation and would be a time-centric interpretation possibly freezing the meaning of the law in one historical moment. [pp. 310. 311] F & G

In the Book titled the Judge in Democracy by Professor Aharon Barak; Dr. Raja Aamer Zaman v. Omar Ayub Khan and others 2015 SCMR 1303 and Muhammad Nawaz Chandio v. Muhammad Ismail Rahu and others 2016 SCMR 875 rel.

(d) Pakistan Electronic Media Regulatory Authority Ordinance (XIII of 2002)—

—Ss. 23, 39 &. 2(1)—Pakistan Electronic Media Regulatory Authority Rules, 2009, Rr. 13(3) & 13(4)—Pakistan Electronic Media Regulatory Authority (Eligibility Criteria and Bidding Procedure for Direct to Home (DTH) Distribution Service Licensing) Regulations, 2016, Regins, 2.11 & 3.23—Constitution of Pakistan, Art. 199—Vires of

Rr. 13(3) & 13(4), Pakistan Electronic Media Regulatory Authority Rules, 2009 and Regins. 2.11 & 2.23 of Pakistan Electronic Media Regulatory Authority (Eligibility, Criteria and Bidding Procedure for Direct to Home (DTH) Distribution Service Licensing) Regulations, 2016—Media ownership concentration and exclusion of monopolies— Legislative intent, nature and scope of S. 23 of the Pakistan Electronic Media Regulatory Authority Ordinance, 2002—Rules/delegated

legislation cannot go beyond the statute—Role of PEMRA as a frontline regulator—Scope—Petitioner challenged the legality of Rr. 13(3) & 13(4) of the Pakistan Electronic Media Regulatory Authority Rules, 2009 and Begins. 2.11 <& 3.23 of the PEMRA (Eligibility Criteria and Bidding Procedure for Direct to Home (DTH) Distribution Service Licensing) Regulations, 2016; on the ground, inter alia, that the same went beyond the scope of S. 23 read with S. 39 of the Pakistan Electronic Media Regulatory Authority Ordinance, 2002— Validity—Impugned Rules and Regulations ousted broadcast media licence owners from owning, controlling or operating distribution service licence and vice versa, meaning thereby that it totally prohibited “vertical integration”—Scope of S.23(2) of the Pakistan Electronic Media Regulatory Authority Ordinance, 2002 was to provide PEMRA with its regulatory objectives so that it could regulate the electronic media and achieve its stated purpose which was diversity and plurality in content—To accomplish said stated purpose, maximum participation of stakeholders was required for grant of a licence—Section 23 of Pakistan Electronic Media Regulatory Authority Ordinance, 2002, did not envision any prohibition on broadcast media operating distribution services or vice versa but to the contrary it required all media enterprises to compete in the media market with each other and with new media entities—Intent of S.23(2) of the Pakistan Electronic Media Regulatory Authority Ordinance, 2002 was for PEMRA to ensure that ownership conglomerates were not fÓrm;ed given that the regulatory objective was to prevent undue concentration of media ownership in a given market—Use of the word uand” in S.23(2) of the Pakistan Electronic Media Regulatory Authority Ordinance, 2002 separated two distinct regulatory objectives being ufair competition and prevention of undue concentration”; and whether the said word uand” was read disjunctively or conjunctively, it would not change the intent of the law— Pakistan Electronic Media Regulatory Authority (PEMRA) was required to regulate vertical integration of all media enterprises so that they did not fÓrm; concentrated ownership and under S.23(2) of the Pakistan Electronic Media Regulatory Authority Ordinance, 2002; Legislature delegated the authority to PEMRA to define the circumstances, which could cause such undue concentration in any market and PEMRA could set out a regulatory environment within which the Legislature’s intent was effectuated—Pakistan Electronic

Media Regulatory Authority, in the present case, defined such circumstances to mean a total restriction on vertical integration between broadcast media and distribution services which restriction was based on the presumption that any vertical integration between broadcast media and distribution services would result in undue concentration of ownership—Section 23(2) of the Pakistan Electronic Media Regulatory Authority Ordinance, 2002 did not mandate such an ouster or restriction and required ownership concentration to be regulated so that it did not become undue, meaning thereby that some element of concentration was permissible—Impugned Rules and Regulations were enacted by PEMRA without setting any standards or thresholds on the basis of which it could measure; monitor or control media ownership—Effect of the impugned Rules and Regulations was that by restricting two specific media enterprises from vertically integrating and allowing other media enterprises to vertically integrate, undue concentration of media ownership was left unregulated because it was seen only in the context of integration between broadcast media and distribution services and not in the context of the relevant market, which was illogical and is not in furtherance of the objectives or purpose of the law—High Court observed that S.23(2) of the Pakistan Electronic Media Regulatory Authority Ordinance, 2002 did not leave it open to PEMRA to set out a new regulatory authority but instead required it to work within the confines of the prescribed objectives and in the present case, PEMRA abdicated from its functions as a regulator and instead transgressed into the domain of the Legislature, which is not permissible—High Court further observed that if the intent of the law was to prohibit vertical integration it would not have required PEMRA to define the circumstances, which created undue concentration of ownership and the Legislature would have prescribed the restriction in the stated section—High Court held that Rr.13(3) & 13(4) of the Pakistan Electronic Media Regulatory Authority Rules, 2009 and Reglns. 2.11 & 3.23 of the PEMRA (Eligibility Criteria and Bidding Procedure for Direct to Home (DTH) Distribution Service Licensing) Regulations, 2016 were enacted without lawful authority and were struck down—Constitutional petition was allowed, accordingly, [pp. 313, 314, 315, 316, 317, 318, 319, 321, 322, 324] J, K, L, M, N, O, P, Q, R, S,U,V,W&X

Pakistan Broadcasters Association and others v. Pakistan Electronic Media Regulatory Authority and others PLD 2016 SC 692; In the Book titled the Judge in Democracy by Professor Aharon Barak; Dr. Raja Aamer Zaman v. Omar Ayub Khan and others 2015 SCMR 1303; Muhammad Nawaz Chandio v. Muhammad Ismail Rahu and others 2016 SCMR 875; Khawaja Ahmad Hassaan v. Government of Punjab and others 2005 SCMR 186; Zarai Taraqiati Bank Limited and others v. Said

Rehman and others 2013 SCMR 642; PLD 2014 SC 389 a Mian Zaiuddin v. Punjab Local Government and others 1985 SCMR 365 rel.

(e) Delegated legislation —

—Framing of rules regulations under a parent statute—Rules and regulations framed under a statute could not transgress the limits set by the statute—Rule-making body /authority could not frame rules which were in conflict with or in derogation of the substantive provisions of the statute under which said Rules were framed and in case of any inconsistency with the parent statute; the excessive rule would be considered illegal if it went beyond its delegated authority—When the Legislature conferred powers on a regulatory authority to frame rules, it was expected that such rules would advance the purpose of the Legislature and not run contrary to it. [p. 3J5J M

(f) Delegation of powers —

Delegated authority was incidental to statutory function and could not run parallel to the statutory function—Regulators drew their authority from Legislation which created it, and limits placed on a regulator were prescribed by law. [pp. 3J9. 320] S & T

(g) Regulatory authority—

—Exercise of powers by a regulatory authority /public regulator— Flexibility and independence of regulatory authorities—Subordinate legislation/rules enacted by a Regulator—Test to determine validity of such subordinate legislation/rules—Whenever there was an element of flexibility, a regulator may run the risk of over stepping its boundary and going beyond the authority delegated to it and therefore it was important to examine the question as to whether the rules and regulations made under a statute were inconsistent with the statute itself and whether such rules and regulations achieved the purpose of the statute—Courts were to ensure that a regulator remained within its regulatory domain and did not attempt to step into the role of the Legislator, [p. 316] O

Khawaja Ahmad Hassaan v. Government of Punjab and others 2005 SCMR 186 rel.

Per Shahid Karim, .1; agreeing with Ayesha A. Malik, J

(h) Pakistan Electronic Media Regulatory Authority Ordinance (XIII of 2002)—

-—Ss. 23 & 39—Pakistan Electronic Media Regulatory Authority Rules, 2009, Rr. 13(3) & 13(4)—Media ownership concentration and

PIJ)

exclusion of monopolies—Exercise of power of Pakistan Electronic Media Regulatory Authority (“PEMRA”) for grant of licence—Concept of “undue concentration of media ownership ” in the context of S. 23 of the Pakistan Electronic Media Regulatory Authority Ordinance, 2002-Limits on the power of PEMRA to shut the door on a whole category of media enterprise—Concept of “ex ante ownership” and “ex-post competition” regulation—Various ways in which Rr. 13(3) & 13(4) of the Pakistan Electronic Media Regulatory Authority Rules, 2009 travel beyond the scope of the statutory domain of the Pakistan Electronic Media Regulatory Authority Ordinance, 2002y discussed. [pp. 324, 325, 326, 327, 328, 329, 330, 332, 335] Y, Z, AA, BB, CC, DD, EE, GG, II, JJ & MM

FCC v. National Citizens Comm, For Broadcasting 436 U.S. 775 (1978) distinguished.

(i) Interpretation of statutes —-

-—Canons of statutory interpretation— “Omitted-Case Canon ”,

explained, [p. 328] FF

Felix Ferankfuther, Some reflection on the Reading of Statutes, 47 Colum, L.Rev. 527, 533 (1947) and Interpretation of Legal Texts by Antonin Scalia and Bryan A. Garner rel.

(j) Rules—

—Framing of Rules—Rules are forged in the furnace of everyday experience—Rules cannot be framed to render a provision of the primary legislation as dormant and redundant, [pp. 329, 333] HH & LL

“The Rule of Law” by Lord Bingham rel.

(k) Constitution of Pakistan—

—Art. 199—Judicial Review of administrative actions—Judicial review of delegated legislation enactment of secondary legislation— Courts had the authority to review subordinate legislation if it was satisfied that in making it, the delegatee acted outwith the legislative powers conferred upon it by Legislature, [p. 332] KK

F. Hohman La Roche and Co v. Secretary to State for Trade and Industry [1975] AC 295; RV Her Majesty’s Treasury, Ex p Smedley [1985] 1 QB 651 (666-667); R (Asif Javed) v. Secretary of State for Home Department [2001] EWCA Civ 789 and Bank Mellat v. Her Majesty's Treasury [2013] UK SC 39 rel.

(l) Constitution of Pakistan—

—Art. 199-—Constitutional jurisdiction of High Court—Judicial

review of administrative actions—Principle of judicial restraint— Exercise of judicial restraint by High Court in its constitutional jurisdiction—Scope—If a case could be decided on either of two grounds, one involving a constitutional question, the other a question of statutory construction or general law, the Court would decide only the latter—Where a statute was susceptible of two constructions, by one of which grave and doubtful constitutional questions arose and by the other of which such questions were avoided, the Court's duty was to adopt the latter. [p. 336] NN

Ashwander v. Tennessee Vally Auth. 297 US 288, 347 (1936) and Attorney Gen. v. Delaware and Hudson Co., 213 US 366 (1909) rel.

Ms. Asma Jahangir assisted by Ms. Noor Ejaz Chaudhary, Hamid Azam Leghari and Ms. Namra Gilani, for Petitioners.

Mirza Nasar Ahmad and Muzammil Akhtar Shabbir, DAGs for the Federation;

Salan Akram Raja assisted by Asad Ladha, Ms IJnsa Manzoor, Bilal Bashir, Nadeem Shehzad Hashmi, along with Wakeel Khan General Manager (Lecensing), PEMRA and Tahir Farooq Tarar, ACM(Legal) PEMRA for Respondents.

Date of hearing: 27th October, 2016.

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