The Telecom Regulatory Authority of India's (Trai) ambitious plan to deploy the world's largest blockchain use-case in the telecom sector to curb the menace of spam messages and calls faces a legal hurdle following protests by telemarketers.

One such telemarketer, Venets Media, has filed a petition in the Delhi High Court, alleging that Trai's move is "detrimental to free, fair commerce & competition, regulatory ethics, and also the arm's length principle". It added that software company Tanla Solutions - an implementing partner of the distributed ledger technology (DLT) for Bharti Airtel, Vodafone Idea and state-run Bharat Sanchar Nigam Ltd - is itself a telemarketer, thus raising conflict of interest issues.

"The regulator has not addressed the concerns of thousands of aggregators, telemarketers, value added service providers, and resellers, in sharing, uploading and getting pre-approved the sensitive and commercially invaluable client data to a platform controlled by a dominant private operator, with similar business interests," the petition said.

The high court on Monday gave Trai time till June 15 to reply.

In response to ET's query, Hyderabad-based Tanla said it was a technology company and not a telemarketer. "Tanla has developed a platform in compliance with TCCCPR 2018 and offered this platform to mobile operators in India, which is managed by the mobile operators."

But Arun Adlakha, advocate for Venets Media, told ET that in 2018, Tanla acquired Karix Mobile, a retail telemarketing company, which provides A2P marketing solutions, including bulk SMS. "Karix is a wholly-owned subsidiary of Tanla and together they control 40% volume of the entire SMS industry. This is what has put the entire industry against Tanla," Adlakha said.

Telemarketers fear Tanla will be able to monitor promotional, transactional and commercial service SMSes that may give it an 'unfair competitive advantage' over smaller firms.

According to the latest Trai data, there are 22,000 registered telemarketers in the country. Around 200 are expected to join the legal battle post-lockdown, Adlakha said.

While the three telcos have subscribed to Tanla's service Trubloq, Reliance Jio's blockchain partner is Tech Mahindra, a pure-play tech companies. IBM is also a partner to Airtel in this initiative. Vodafone Idea, Bharti Airtel, and BSNL did not respond to ET's query.

As per Trai's guidelines, the implementation of DLT to monitor registered commercial SMS traffic will be completed in 10 phases, including registration and verification of header, SMS content template, user consent, user preference and complaints etc.

The first phase of DLT went live on June 1, which mandated registration of principal entities (could be enterprises/individuals who do telemarketing) and header (such as VM-HDFCBANK) on all four telco's portals. Though Trai has not notified the deadline for next phase activation, the entire onboarding process is expected to complete by November.

A blockchain expert at a leading consultancy firm told ET that a DLT is a private blockchain and can be configured the way an owner wishes to, while access to data depends on the contract and which party owns the infrastructure.

"Even if the header and content of an SMS is encrypted, Tanla will know so-and-so users are customers of say HDFC Bank, fly with Vistara, hold a premium credit card, or order food from Swiggy, the list is endless," Adlakha said.

The case comes even as Paytm has dragged telcos to court for not doing enough to control phishing attacks via fraudulent registered telemarketers. The case is listed for June 24.