TELECOM DISPUTES SETTLEMENT &
APPELLATE TRIBUNAL
DATED 13TH
MAY, 2009
Hathway Cable and Datacom Ltd.
… Petitioner
Vs.
Neo Sports Broadcasts Pvt Ltd. …Respondent
BEFORE:
HON’BLE MR.JUSTICE
ARUN KUMAR
CHAIRPERSON
HON'BLE DR. J. S.
SARMA
MEMBER
HON'BLE MR.G. D.
GAIHA MEMBER
|
: |
Mr. Arun Kathpalia, Mr. Nasir Husain, Advocates |
|
|
For
Respondent |
: |
Mr. Jayant Bhushan, Senior Advocate with Mr. Ankit Shah Mr. Nikhil Rohtagi,
Advocates |
ORDER
Vide this
Petition, the Petitioner seeks to impugn the notice dated 28.8.2008 issued to
it by the Respondent as well as the
public issued by the Respondent on 12.9.2008 threatening disconnection of
signals on grounds of non-provision of the details of the subscribers and
non-clearance of its dues towards subscription charges.
2. The
case of the Petitioner, Hathway Cable & Datacom Pvt. Ltd. (Hathway) who claims to be a Multi
System Operator (MSO), is that it had entered into an Agreement with the
Respondent, Neo Sports Broadcast Pvt. Ltd. (NSB) on 12.4.2008 wherein it agreed to pay a subscription amount of
Rs.43,74,985 per month, plus service tax thereon, to the Respondent for the
latter’s signals in the whole territory of India, which included within its
scope all the existing networks of the Petitioner, including Joint Ventures,
Distributors and “Bhaskar all India”. It
is the case of the Petitioner that while it has been receiving feed from the
Respondent, the Respondent failed to raise proper invoices as agreed to between
the two parties, which problem was at the base of the present dispute. It is contended that the Respondent raised a
single consolidated invoice for the month of April, 2008 which was paid by the
Petitioner to avoid any dispute. The
Petitioner requested the Respondent to issue separate invoices and also sent a
list of entities operating in India which are either owned by the Petitioner or
are its Joint Ventures/Subsidiaries.
3. It
is the Petitioner’s case that despite receiving several of the Petitioner’s
e-mails/letters, the Respondent failed to do the needful and instead issued a
public notice dated 9.8.2008 stating that the Petitioner had not cleared its
dues. When the Petitioner approached the
Respondent on 11.8.2008, the Respondent raised the issue that all the
networks/joint ventures of the Petitioner which had an existing subscription
Agreement, as on 12.4.2008, with the Respondent were not to form part of the
Agreement dated 12.4.2008 between the Petitioner and the Respondent. In particular, the issue was with reference
to M/s Gujarat Telelink Pvt. Ltd. (GTPL). The Petitioner’s contention is that this
stand of the Respondent is contrary to the Agreement between the two
parties. Subsequently, the Respondent
issued a notice to the Petitioner on 28.8.2008 under Regulation 4.1 of the
Interconnect Regulations. Vide its
letter dated 8.9.2008, the Petitioner replied to this notice indicating that
the Petitioner was ready and willing to make the outstanding payment in case
separate invoices were issued by the Respondent. The Petitioner states that wherever separate
invoices have been raised in favour of Bhaskar Multinet Ltd. and Gujarat
Telelink Pvt. Ltd, payments have been made in accordance with the invoices
raised.
4. The
Petitioner contends that despite the above correspondence, the Respondent
issued a public notice dated 12.9.2008 alleging failure to provide the details
of subscribers and sending the monthly Subscriber Line Report as well as
non-clearance of dues towards subscription charges. The Petitioner states that it had replied to
this notice on 20.9.2008 requesting for independent invoices. Besides, its contention is that the public
notice was based on wrong facts, with a view to causing wrongful loss to the
Petitioner.
5.
The Prayer of the Petitioner is to declare the notice issued to it dated
28.8.2008 and the Public notice dated 12.9.2008 as illegal; to restrain the
Respondent from switching off the signals; and to direct the Respondent to
raise invoices entity-wise, besides passing such other orders as deemed fit.
6. Countering
the Petition in its Reply, the Respondent stated that initially an Agreement
was signed with the Petitioner on 26.9.2007 for CAS areas but that, in
violation of the same, the Petitioner started distributing the signals in
non-CAS areas. In order to avoid complications, the Respondent signed another
Agreement with the Petitioner on 12.4.2008. Its
contention is that this Agreement was signed on the basis of the
declaration made by the Petitioner with respect to its subscriber base and that
the Respondent was to provide the list within 3 days. It is stated that the Petitioner did not
follow up on this promise despite several reminders and that the list provided
on 30.4.2008 was not proper as it did not mention the name of the networks and
joint ventures along with subscriber base.
It is also contended that the Petitioner wrongly inserted the name of
Gujarat Telelink Pvt. Ltd. (GTPL). The
case of the Respondent is that, as per the understanding on 12.4.2008, the
Petitioner was authorised to distribute the signals of the Respondent through
all such existing networks of the Petitioner which had not signed a separate
Agreement with the Respondent. It is
contended that certain ventures of the Petitioner, including Gujarat Telelink
Pvt. Ltd had signed specific
Agreements with the Respondent prior to 12.4.2008 and therefore could not be
covered by the Agreement between the Respondent and the Petitioner. It is further contended that the Petitioner
had not paid the amounts towards subscription fee besides not giving the
details of the subscription base.
According to the Respondent, the Petitioner made only a small payment in
the month of April, 2008. The
Respondent’s case is also that the Petitioner has been illegally providing the
Respondent’s signals to Hotels and commercial establishments which it is not
authorized.
7. When
the case came up for consideration on 29.9.2008, the Respondent stated that an
amount of Rs. 2,57,37,288 was the amount due from the Petitioner which was why
the public notice was issued. The
Petitioner undertook to make a payment of Rs. 2.50 crore on ad hoc basis, following which the
Respondent was not to act in pursuance of the public notice. Subsequently, on
4.2.2009, the Petitioner was directed to make a further payment of Rs. 1 crore
to the Respondent.
8. Based
on the pleadings, the issues that arise for determination are:
(a)
Whether as per the Agreement
dated 12.4.2008, the Petitioner is required to give the Subscriber details to
the Respondent?
(b)
Whether the Agreement dated 12.4.2008 covers those joint
ventures/networks including Gujarat Telelink Pvt. Ltd?
(c)
Whether the Respondent is required to raise multiple invoices,
entity-wise?
9. The
matter having come up for hearing, we have heard counsels for both the
parties. The learned counsel for
Petitioner, Mr. Arun Kathpalia, pointed out that the Agreement clearly
stipulates that the ‘territory’ would include “All the existing networks of
Hathway (including JVs, Distributors & Bhaskar all India (list in Annexure)”. According to him, nowhere is it stated that
those networks/JVs/Distributors that have earlier signed Agreements with the
Respondent are excluded from the purview of the 12th April
Agreement. His case is that the
Respondent is attempting to create an artificial distinction and pointed out
that on 13.4.2008, i.e. just a day after the Agreement, the Respondent had
reiterated the territory. The counsel
pointed out that the list of existing networks was annexed to the Agreement, as
is evidenced by the fact that it is so stated in the Agreement. In any event, the same list was sent to the
Respondent on 30.4.2008 and the list was never disputed by the Respondent. The list was again sent on 3.6.2008 which was
confirmed by the Respondent on 15/16.7.2008.
However, the Respondent had, in its e-mail dated 15/16.7.2008 questioned
the correctness of the attached list without indicating as to which list it is
referring to.
10. The
case of the counsel for Appellant is that it was only because of the
Indo-Australia Series that, in August, 2008, the Respondent started raising
disputes. His contention is that the
public notice issued on 9.8.2008 included in its ambit networks which had
subsisting Agreements such as Chandigarh, Kanpur, Jhansi, Farukhabad, Mumbra
and Malad. Insofar as GTPL is concerned,
the counsel stated that no subsisting Agreements were renewed by GTPL and that
the letter dated 24.6.2008 is a fabricated document. Referring to the contention of the Respondent
that GTPL is not a joint venture but a subsidiary, he states that the
Respondent had not given any grounds to support this contention. Besides, he
states that a subsidiary could also be a joint venture. His case is also that prior to August, 2008,
this contention was never raised.
11. Arguing
that the Respondent should raise separate invoices network-wise, the counsel
for Petitioner stated that the Respondent itself regained this principle in its
letter dated 5.6.2008 but subsequently did not raise separate invoices only to
harass the Petitioner.
12. Lastly,
referring to the contention of the Respondent that the Petitioner has not
furnished the details of the subscriber base, the counsel stated that the
Agreement was an all- India deal covering all existing networks for a
consolidated sum of Rs.43,74,985 (excluding taxes) and that it was not based on
the negotiated connectivity of each separate independent network, JV or
Distributor. This is evidenced by the
letter dated 5.6.2008 from the Respondent as well as the fact that the first
public notice dated 9.8.2008 made no reference to this ground. He also pointed out that the Agreement
provides that the subscriber base agreed upon by the parties shall remain fixed
during the course of the Agreement except in exceptional circumstances. According to him, there were no such
exceptional circumstances.
13. The
learned senior counsel for Respondent, Mr. Jayant Bhushan argued that the
primary issue to be considered is whether the amount of Rs.43,74,985 was a
fixed amount or whether it was dependent on the number of subscribers. He referred to different provisions of the
Agreement which clearly stipulate that the subscription fee will have to be
based on the subscriber line report (SLR) to be provided. According to him, while the ‘territory’
remained fixed, the subscriber base was not so and that the SLR had to be periodically
provided. He also pointed out that this
aspect was pointed out to the Petitioner vide the Respondent’s letter dated
24.6.2008 but that the Petitioner did not respond to the same. According to the counsel, the original figure
of 1,12,932 subscribers indicated in the Agreement was only an initial
figure. The contention of the counsel is
that the Agreement of 12.4.2008 is a subscriber based contract; the only
non-variable is the subscriber rate of Rs.38.74 per subscriber per month.
14. The
learned counsel stated that prior to the Agreement dated 12.4.2008 with the
Petitioner, the Respondent had existing Agreements with the other entities and
that 4 of 8 such entities have, even subsequent to 12.4.2008, renewed their
Agreements which clearly shows that they were not part of the original
Agreement. As regards GTPL, the
contention of the counsel is that it is neither an existing network nor a
Distributor and admittedly is not part of Bhaskar. Nor is it a joint venture since the
Petitioner admittedly holds 51% share in GTPL.
Besides, he stated that GTPL Mundra has signed a separate Agreement with
the Respondent on 15.6.2008, i.e., after the Agreement of 12.4.2008.
15. The
learned counsel also stated that the Respondent was not obliged to send separate
invoices as there is no contract between the Respondent and the various
entities of the Petitioner. Besides, the
list of networks was not attached at the time of Agreement but was only sent
later.
16. The
counsel for Appellant denied the receipt or even existence of the letter dated
24.6.2008 and pointed out that all other letters with reference to SLR are only
after the first public notice was issued on 9.8.2008. Its case is that the issue about SLR is only
an after-thought. On the GTPL issue, he
states that this issue was raised only after August, 2008.
17. We
have considered the respective contentions. Insofar as the issue whether the
Petitioner is bound to provide the SLR, we find that the Agreement dated
12.4.2008 is a comprehensive Agreement consisting of various clauses. The territory, number of subscribers, the
rate per subscriber per month and the monthly subscription fee are all
indicated in the Annexure ‘A’ to the Agreement.
We notice that there is a specific clause relating to the ‘Subscriber
base and Territory’. The relevant
portions of this clause read as follows:
“It is expressly acknowledged that the
subscriber number/base have been determined and specified in the Annexure-A of
this Agreement solely on the basis of and in reliance upon the representation
and declaration made by the Affiliate of its subscription base at the time of
execution of the Agreement, which is subject to verification by NSB
(Respondent).
The Affiliate (Petitioner) agrees to distribute the service to the
declared number of its subscribers and in case Affiliate is desirous of
providing the Service/Channel to more number of subscribers than declared by
the Affiliate in the Agreement, i.e. if there is any increase in number of its
subscriber’s base, it is obligatory on the part of the Affiliate to intimate
the enhanced subscription base immediately to NSB and pay the subscription fee
on the increased base.
The Affiliate is required to intimate to NSB at the time execution of
this Agreement – the number of subscribers being / to be serviced by it
directly and by its authorized Agents, a list of which is to be attached by the
Affiliate along with their subscriber base.
The Affiliate shall provide Subscriber Line Report (SLR) and / or other
details as required by NSB for verifying the subscriber base of the Affiliate.
The subscriber base agreed upon by the parties at the time of execution
of the Agreement 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,
the party seeking a change in the subscriber base to provide reasons and
available evidence to other party for the proposed change.”
18. As
can be seen from the above, the Agreement is very clear that the initial number
was only tentative and that the Petitioner is obliged to report regularly the
subscriber base through SLR and pay the subscription fee accordingly. The reliance placed upon by the counsel for
Petitioner on the paragraph (the last Para quoted above) providing that the
subscriber base shall remain fixed during the course of the Agreement overlooks
the fact that it comes after all the other paragraphs. In other words, the assumed fixity of the
subscriber base is only in the event that there is no expansion of the same,
and also assumes proper conduct on the part of the Affiliate. It does not in any way obliterate the duty of
the Petitioner to provide the SLR particularly when the first paragraph clearly
states that the subscriber number in Annexure-A to the Agreement is only on the
basis of the declaration made by the Petitioner. We therefore hold that the Petitioner is
liable to supply the SLR to the Respondent every month. We do not agree with the contention of the
Petitioner that the number of 1,12,932 subscribers is fixed through the course
of the entire Agreement. What is fixed
is the ‘territory’ and the rate of Rs. 38.74 per subscriber per month
(exclusive of taxes). The Petitioner is liable to report the subscriber base
and pay at the agreed rate for the entire subscriber base.
19. The
next question is whether GTPL forms part of the agreed list of networks or
whether it is excluded from the list annexed with the Agreement. From the record, we notice that there is no
evidence that the list was annexed with the Agreement at the time of signing of
the Agreement. There are, however,
several letters from the Petitioner enclosing the list which includes 9 units
of GTPL at Ahmedabad, Baroda, Rajkot, Surat, Jamnagar, Gandhidham, Vapi,
Himmatnagar and Abu. The fact that this
list was furnished at least on 30.4.2008 is not denied. Subsequently, on 3.6.2008, the Petitioner
wrote to the Respondent suggesting the distribution of the amount agreed to in
the contract between various entities to which letter there is a reply from the
Respondent on 5.6.2008 that this list was sent to its regions for verification
and also suggesting the distribution of the agreed amount between various
regions. There is also a letter dated
16.7.2008 from the Respondent to the Petitioner enclosing the Headend-wise
breakup which again contains all the 9 units of GTPL. We observe that the difference of opinion
regarding GTPL has surfaced only after 11.8.2008 with the Respondent asking the
Petitioner to increase the subscription fee from Rs. 5.25 crore to Rs. 9 crore
if GTPL were to be included. During the
course of hearing, the counsel for Respondent stated that 4 of the 8 units in
the list furnished by the Petitioner, including GTPL have signed/renewed
Agreement with the Respondent after 12.4.2008.
The Respondent had subsequently filed before us the following Agreements
signed subsequent to 12.4.2008:
(a)
GTPL Mundra signed on 15.6.2008;
(b)
Ice Television Pvt. Ltd signed on 1.10.2008;
(c)
Hathway Bhawani Cabletel & Datacom Ltd, Karjat signed on 8.10.2008;
(d)
Hathway Bhawani Cabletel & Datacom Ltd, Khapoli signed on 8.10.2008;
(e)
Hathway Bhawani Cabletel & Datacom Ltd, Chembur signed on 8.10.2008;
(f)
Hathway Bhawani Cabletel & Datacom Ltd, Mumbra signed on 8.10.2008;
(g)
Sonali Cablevision Pvt. Ltd signed
on 12.12.2008.
20. The
Respondent also furnished the statement of dues from these entities and also
from all 14 units of GTPL. Now the
question is whether the above entities are outside the Agreement dated
12.4.2008. The argument of the counsel
for Petitioner is that the public notice dated 9.8.2008 lists Mumbra as one of
the units proposed to be disconnected, which means that they are admittedly part
of the Agreement dated 12.4.2008. The
Agreements produced by the Respondent are however not denied. In the light of this and having considered
the various aspects, we hold that the entities which have signed separate
Agreement (s) with the Respondent after 12.4.2008 shall not be covered under
the Agreement dated 12.4.2008 from the date of their signing such
Agreement. In respect of GTPL however,
we find that only GTPL Mundra has signed an Agreement on 15.6.2008 and GTPL
Mundra does not form part of the 9 entities of GTPL whose list was furnished by
the Petitioner to the Respondent. The
Respondent has not produced any evidence to the effect that any/all of the
above 9 entities have signed separate Agreement(s) with the Respondent after
12.4.2008. Consequently, we hold that 9
units of GTPL form part of the Agreement dated 12.4.2008.
21. We
now come to the question whether separate invoices should be raised by the
Respondent on each of the entities. The
Agreement is between the Petitioner and the
Respondent and there is no express provision for sending separate
invoices. The clause relating to ‘NSB
obligations’ provides, inter alia, for the following:
“NSB shall raise and dispatch the monthly Invoice, shall issue monthly
Invoices to the Affiliate, however non-receipt of dispatched invoice will not
devoid the obligation of the Affiliate to make payment of Subscription fee as
per the terms of this Agreement”.
22. As
we observed above, the Agreement dated 12.4.2008 is not a standard Agreement
but is a specific Agreement between the two parties. This Agreement does not make any provision
for separate invoices. We therefore hold
that the Respondent is not bound to provide separate invoices to different
entities and that a single invoice to the Affiliate is in order. At the same time, we find that the provision
relating to the invoices, extracted above, does not strictly meet with the
provisions of the Interconnect Regulations which require invoice to be raised
on the Petitioner under proof of service.
We therefore direct that it shall be the responsibility of the
Petitioner to furnish the SLR to the Respondent who shall correspondingly raise
monthly invoices and which amount shall be duly paid by the Petitioner.
23. As
regards the public notice, the Petitioner shall furnish to the Respondent the
subscriber base details within two weeks from the date of this order. As
regards the amount due by the Petitioner to the Respondent, the two parties
shall meet within one week from the date of this order and arrive at the amount
due by the Petitioner to the Respondent on the basis of the above findings.
This exercise shall be completed within three weeks from the date of this
order. The Respondent shall immediately thereupon raise an invoice on the
Petitioner who shall make the payment of the entire sum due within one week
from the date of receipt of the invoice. As regards the future course of
action, both parties shall abide by the directions given above.
24. The
Petition is disposed of accordingly. No
costs.
..……………..J
(Arun Kumar)
Chairperson
…………….....
(J. S. Sarma)
Member
…………….....
(G. D. Gaiha)
Member