TELECOM DISPUTES SETTLEMENT & APPELLATE TRIBUNAL
Dated
10th December, 2009
Petition
No.262(C) of 2009
Shree
Communications & Anr. …Petitioners
Versus
Star
Den Media Services Pvt.ltd. ….Respondent
BEFORE:
HON’BLE
MR. JUSTICE S.B.SINHA,
CHAIRPERSON
HON’BLE
MR. G. D. GAIHA, MEMBER
|
For
Petitioners |
: |
Mr.Navin
Chawla, Advocate |
|
For
Respondent |
: |
Mr.Ramji
Srinivasan, Sr. Advocate |
ORDER
By our order dated 03.12.2009, we,
while refusing to grant interim prayer in favour of the petitioners, directed
as under:
“Having
heard the learned counsel for both the parties, we are not inclined to pass any
injunction order at this stage. The
reasons will follow.
However,
this order would not preclude the parties from entering into any agreement
having regard to the facts and circumstances of the case.
Reply
be filed within three weeks. Rejoinder
thereto, be filed within two weeks thereafter.
Let
the matter appear fro further directions on 08.01.2010. However, it is directed that Petitioner No.1
would confine to the town of Ongole only.”
Reasons in support thereof are being assigned now.
The petitioners are Multi-service Operators
(MSOs). The petitioner No.1 entered into
an agreement on or about 16.02.2009 with the respondent herein for transmission
of its signals in the district heardquarter of Prakasham, commonly known as Ongole,
the relevant clauses whereof are as under:
“IV. AREA
‘Area’ shall mean the areas within which the
Affiliate is authorized in terms of this Agreement, to distribute the
Subscribed Channels to the Subscribers through the Distribution System as
detailed in Applicable Annexure B:
The Affiliate cannot extend the Area beyond to that
agreed hereof in writing between the Parties.
Violation of this clause will be a material breach of this Agreement and
the Affiliate shall be deemed to have unauthorized access to the signals of the
Subscribed Channels and STAR DEN shall have the right to terminate the
Agreement and disconnect the signals of the Subscribed Channels to the
Distribution System of the Affiliate, in addition to any other legal or
equitable remedies available to it.
V. TERM:
This Agreement is valid from 10.02.09 to
In case the Affiliate intends to extend the Term of
this Agreement, it shall give STAR DEN a written notice two(2) months prior to
the expiration of the Term, conveying its intention of such extension, upon
which the Parties shall negotiate the terms and conditions and thereafter
execute fresh Subscription Agreement, which shall apply to the term mentioned
therein.
Provided that the new commercial terms shall become
applicable from the date of expiry of the Term of this Agreement. Provided further that if the parties are not
able to arrive at a mutually acceptable new Agreement then either Party may
disconnect retransmission of the signals of the Subscribed Channels at any time
after the expiry of this Agreement after giving notice in pursuance to the
applicable Law. Provided however that in
case of such disconnection, the Affiliate shall be required to pay the Subscription
Fee till the date of declaration.
VI. SUBSCRIPTION
FEE:
Subject to General Terms And Conditions, the
Affiliate shall pay STAR DEN (‘Subscription Fee’) on a monthly or other agreed
basis, equal to the rate per Subscriber (the ‘Rate’) multiplied by the
Subscriber Base set forth in Annexure C hereto.
STAR DEN reserves the right to revise the Rate for the Channels charged
by STAR DEN to the Affiliate subject to the applicable Law. Any change in the Rate communicated to
Affiliate by STAR DEN shall automatically be deemed to be an amendment to
Annexure without the need for an executed amendment to this Agreement.
In the event of any revision in the Rate brought
about by any statutory authority including but not limited to the Telecom
Regulatory Authority of India (‘TRAI’) or any other quasi judicial or judicial
authority, the revised rate shall apply from the date such revision is notified
by such authority, and shall automatically be deemed to be an amendment to
Annexure C without the need for an executed amendment to this Agreement.”
The petitioner No.2, however, requested the
respondent to grant signals in one of the towns of the said district of
Prakasham known as Chirala. He was a new
entrant. One M/s Venktasai Media
Network Pvt. Ltd. is said to be a competitor MSO operating in that area. The petitioner No.2 requested for supply of
signals in July/August 2009 whereupon one Mr.Arvind said to be the Area Sales
Manager of the respondent of the Vijayawada region, allegedly upon negotiation,
asked him to pay three months’ advance for the said purpose. It is stated that he had signed an agreement which
was collected by Shri Arvind promising him to supply a copy thereof at a later
date. However, as in the meantime, the
said M/s Venkatasai Media Network Pvt. Ltd. took over the network of the
competitive MSO who is stated to be the distributor of respondent for its south
region, no formal agreement could be entered into.
However, according to the petitioners the said Shri
Arvind, having regard to the fact that petitioner No.1 had already made the
request for expansion in the town of Chirala asking the respondent to provide
signals therein, the respondent returned the demand drafts to the petitioner
No.2 and asked it to obtain and supply signals to the petitioner No.1. On such representation the petitioner No.1 stated
to have spent a huge amount for laying the optic fibre cable from Ongole to Chirala
for supply of signals to the local cable operators as desired by the petitioner
No.2.
The respondent, however, issued a notice purported
to be in terms of clause 4.1 of the Regulation as also published a public
notice threatening disconnection in the supply of signals, inter alia, on the
premise that the petitioner No.1 has transgressed the area of operation.
The petitioners have filed this petition claiming,
inter alia, the following reliefs:
“a) pass
order(s) setting aside the notice dated 19/10/2009 and the public notice dated
7/11/2009 issued by the respondent threatened to disconnect the signals provided
to Petitioner No.1.
b) pass an
order setting aside the public notice dated
c) in the
alternative pass an order directing the respondent to provide the signals to
petitioner No.2 in terms of the regulations of the TRAI.”
The respondent having served notice, inter alia,
filed documents, copies of the same had been handed over in advance to Mr.Navin
Chawla, learned counsel appearing for the petitioners.
In support of the prayer for interim relief,
Mr.Chawla would submit that the action on the part of the respondent must be
held to be malafide as it issued the said public notice only at the behest of
the said M/s Venkatasai Media Network Pvt. Ltd. It was submitted that the Regulations
prohibited exercise of monopoly by any private MSO, working as a distributor of
a broadcaster. It was pointed out that
Shri Arvind who is an authorized representative of the respondent has the
requisite authority to negotiate on behalf of the respondent and/or extend
assurances that the requests of the petitioners would be acceded to. It was urged that the petitioners have acted on
the basis of the said representation which would not only be evident from the deposit
of three months’ advance by the petitioner No.2 but also from laying down of
optic fibre cable by the petitioner No.1 from Ongole to Chirala which covers a
distance of about 52 kilometers. The
petitioner No.1, it was submitted having regard to the provisions contained in
the Telecommunication (Cable & Broadcasting Services) Regulation 2004, was
entitled to expand from one area to the other and even if it be held that such expansion
was illegal, the respondent may at best ask the petitioner No.1 to pay a higher
fees on the basis of the subscriber base.
Our attention in this behalf has been drawn to an
undated letter addressed to the respondent the relevant portion of which is in
the following terms:
“Minutes of Meeting
The following persons have attended the meeting held
on 5th Aug 09
1.
Mr.Aravind TM Starden Media
Services.
2.
Mr.Subbarao and Mr.Vishwasen
Naidu of Sree Communications Ongole.
Both the parties have agreed to the following terms
and conditions pertaining to Ongole town.
1.
Sree Communications agreed to
make a payment of Rs.172546 (Incl.Taxes) with effect from 1st Aug
09.
2.
Sree Communications agreed to
increase the monthly subscription from
3.
In case the channels are
activated to any other network in Ongole town, Sree communications agreed to
pay the old billing of Rs.150040/- only.
4.
Sree communications shall make
the payment thru DD only.”
It was furthermore contended that the petitioner had
also provided the number of subscribers to the respondent in terms of its
letter dated
Mr.Navin Chawla, learned counsel for the petitioners
would contend:
(i)
That a copy of
the agreement had not been supplied by the respondent to the petitioner and
thus, the question of filing the same did not arise.
(ii)
The petitioners
themselves have raised a contention in the petition that one of the letters of
the respondent may be treated to be under Regulation 4.1 of the Regulations and
thus, the question of any suppression did not arise.
(iii)
Having regard to the provisions contained in the
Regulations, the terms and conditions of the agreement would be sub-servient
thereto.
Mr.Ramji Srinivasan, learned senior counsel
appearing on behalf of the respondent, on the other hand, urged:
(i)
Two different
causes of action having been clubbed together, this petition is not
maintainable;
(ii)
The petitioners
are guilty of suppression of material facts as neither a copy of the agreement
nor a copy of the notice issued by the respondent in terms of Regulation clause
4.1 has been disclosed in the petition;
(iii)
The agreement in
question has disclosed the area of operation on the part of the petitioner
No.1.
Before adverting to the rival contentions of the
parties, we may notice the relevant provisions of The Telecommunication (Broadcasting and Cable
Services) Interconnection Regulation 2004” (hereinafter referred to as the ‘Regulation’) as also the Explanatory Memorandum attached
thereto:
3.2 Every broadcaster shall provide on request signals of its TV
channels on non-discriminatory terms to all distributors of TV channels, which
may include, but be not limited to a cable operator, direct to home operator,
multi system operator, head ends in the sky operator; Multi system operators
shall also on request re-transmit signals received from a broadcaster, on a
non-discriminatory basis to cable operators.
Provided that this provision shall not apply in the
case of a distributor of TV channels having defaulted in payment.
Provided further that any imposition of terms which
are unreasonable shall be deemed to constitute a denial of request.
3.3 A broadcaster or his/her authorised distribution agency would be
free to provide signals of TV channels either directly or through a particular
designated agent or any other intermediary. A broadcaster shall not be held to
be in violation of clauses 3.1 and 3.2 if it is ensured that the signals are
provided through a particular designated agent or any other intermediary and
not directly. Similarly a multi system operator shall not be held to be in
violation of clause 3.1.and 3.2 if it is ensured that signals are provided
through a particular designated agent or any other intermediary and not
directly.
Provided that where the signals are provided through
an agent or intermediary the broadcaster/multi system operator should ensure
that the agent/intermediary acts in a manner that is (a) consistent with the
obligations placed under this regulation and (b) not prejudicial to
competition.
Between Multi System Operator and
Broadcaster
10.2 In non-addressable systems, the subscriber
base agreed upon by the parties at the time of execution of the interconnection
agreement between a multi system operator and a broadcaster shall remain fixed
during the course of the agreement except in exceptional circumstances that
warrant an increase or decrease in the subscriber base. In such an eventuality,
it is for the service provider seeking a change in the subscriber base to
provide reasons and accompanying evidence including localsurvey for the
proposed change.
Provided that this sub-clause shall not
apply to changes in the subscriber base of a multi system operator on account
of any cable operator joining or leaving the multi system operator.
Provided further that any change in the
subscriber base of a multi system operator, which is the basis of payment to a
broadcaster, on account of any cable operator joining or leaving the network of
the multi system operator shall be equal to the subscriber base of the cable
operator, joining or leaving the network.
Explanatory
Note
11. The primary reason for disputes arising on
account of expansion of area is that without addressability, it is impossible
to know the actual subscriber base and area is the basis on which a subscriber
base is arrived at. Any change in area of operation has direct bearing on the
negotiations with respect to subscriber base. However, the expansion of area by
a multi system operator on account of giving feed to a cable operator operating
outside the existing area of operation of the multi system operator can be
taken care of by negotiations based on the Subscriber Line Report (SLR).
Similarly, the expansion of area of operation by a cable operator will also get
reflected through the Subscriber Line Report (SLR).
Recourse to clause 3.2 as a ‘must provide’ clause by
a new entrant and expansion of an area by an existing MSO, in our opinion,
stand on different footings.
The principal contention of the petitioners is that the action on the part of
the respondent is malafide in so far as it sought to advance the interest of
its distributor who is also an MSO. It
is for the aforementioned purpose, our attention has been drawn to the decision
of the Supreme Court of India in Star TV Vs. Sea - 2007(4) SCC 510 wherein the Apex Court held as under-
“15.3 The
difficulty arises when the broadcaster as in the present case appoints or
enters into an agreement with a distributor, who in turn is an MSO and who in
turn has his own business because in such a case such an agent-cum-distributor
is also a competitor of the MSO who seeks signals from the broadcaster. We are
living in a competitive world today. If under the Interconnection Regulations
an MSO is entitled to receive signals directly from a broadcaster, if directed
to approach his competitor MSO then, discrimination comes in. The reason is
obvious. The exclusive agent of a broadcaster has his own subscriber base. His
base is different from another MSO in the same territory. If that another MSO
has to depend on the Feed to be provided by the exclusive agent of the
broadcaster then the very object of the Interconnection Regulation stands
defeated.”;
However,
M/s Venkatasai Media Network Pvt. Ltd. who is said to be competing MSO has not
been impleaded as a party in this petition. It was in our opinion, a necessary
party as any finding on the allegation of malafide should gravely prejudice it.
It
may or may not be true that some steps had been taken by the petitioners
pursuant to or in furtherance to some representation made by Shri Arvind who is
merely a Regional Sales Manager of the respondent. It has, however, not been shown that the said
Shri Arvind had any authority to make that representation on behalf of the
respondent.
Be
that as it may, it is beyond any controversy at this stage that the parties
would be bound by the terms of the agreement.
They clearly show that transgression from the area of operation is not
permissible.
The area of operation of the petitioner was Ongole. We would assume for the sake of argument (although
we have serious reservations on the submissions made by Mr.Navin Chawla that
Regulations permit such expansion of area even without any authority from the
broadcaster) is permissible under the Regulations. Expansion of area of operation, however,
would not mean operating in two different areas situated 52 kilometers away
from each other. Each area of operation
by and large should be a separate compact area.
We, therefore, are of the opinion that the
petitioners have failed to make out a prima facie case. The petitioners are, therefore, not entitled to
an order of injunction for carrying out its operation at Chirala. It may, however, carry out its operation at Ongole.
.……….…J
(S.B.
Sinha)
Chairperson
.…………….
(G.D.
Gaiha)
Member