TELECOM
DISPUTES SETTLEMENT & APPELLATE TRIBUNAL
NEW DELHI
DATED 15th JANUARY, 2010
Petition No.134(C) of 2008
ESPN Software India Pvt. Ltd. …Petitioner
Vs.
M/s
Sai Darshan Media Pvt. Ltd. …Respondent
BEFORE:
HON’BLE MR.
JUSTICE S.B.SINHA, CHAIRPERSON
HON’BLE
MR.G.D.GAIHA, MEMBER
|
For Petitioner |
: |
Mr.N. Ganpathy, Advocate |
|
For Respondent |
: |
Mr.Yoginder Handoo,
Advocate |
JUDGEMENT
S.B. Sinha
The petitioner is a Broadcaster. The respondent is a Cable Service Operator
and, thus, a MSO. Indisputedly, on or
about 1.1.2006 the parties have entered into an agreement for supply of signals
of the channels of ESPN and Star Sports, being international programming
services at Vishakhapatnam. The said
agreement was valid from 1.1.2006 to 31.12.2006.
The subscription fees payable under
the said agreement were under the said agreement to be in the following terms :
“FEES
: Afflilate Subscription Fees :
Immediately upon execution of this
agreement, based on the subscriber base as represented by the Afflilate,
afflilate shall pay to the Licensor a sum of Rs. 27,12,600/- towards the subscription Fee for the term of
the contract in respect of
ESPN Service
Star
Sports Service
ESPN
Service and Star Sports Service (Bouquet)
The Afflilate has requested for
permission to pay above subscription fee in advance as per Annexure 1ª to the
agreement and the licensor has agreed for the same.
For purposes of this Agreement, the
‘subscription fee’ referred to above shall be equal to the number of
subscribers multiplied by the price per subsciber home.
The licensor reserves its right to
revise the Price per subscriber home from time to time. Upon such revision, the afflilate agrees and
unconditionally undertakes to pay the revised subscription fee pro rata from
the effective date of such revision.
In the event the licensor believes in
its reasonable discretion that the afflilate has under declared its subscriber
base or there has been an increase in the base of the affilate’s subscribers,
the licensor may call for an increase of the affilate subscription fees payable
hereunder. If after a period of seven
days, the affilate fails to pay the increased subscription fees as requested by
the licnesor, the licensor may at its sole discretion, deactivate/disconnect
the service hereunder provided and / or terminate this agreement without
prejudice to its right to claim additional affiliate subscription fee resulting
from such under declaration by the affilate or the increase in its subscriber
base referred above. For avoidance of
doubt, an increase of affiliate’s
subscribers shall include, without limitation, increase of subscriber to which
affilate directly distributes the serivce or an increase of such subsciber to which
the service is distributed by the sub-operators
and sub affiliates / cable opeators listed in Annexure –I and other sub
operators and sub –affiliates / cable
operatators added by the affilate to
its/ his cable network and / or distribution system(s) during the term of the
agreement.
All payments to licensor under this
paragraph shall be net of all taxes and net of any bank or transfer or similar
fees or charges and shall be made in the name of licensor. The amounts contemplated hereinabove shall
be payable by Demand Draft in favor of ESPN Software India Private Limited payable at its regional office or any other
place that may be specified by licensor from time to time.”
2. The monthly payments in terms of the said
agreement as specified in Annexure 1-A
thereto i.e. for a total sum of Rs.
27,12,600/- were payable in 12 monthly instalments.
According to the petitioner, the respondent herein acquired the network
of Adarsh Nagar and Madhurawada and by a letter dated 21.4.2006, it was
communicated to it as under :
“Sub : Settlement and revival of
Adarshnagar & Madhurwada Networks.
This has reference
to the subject captioned above we would like to inform you that we have taken
over the abovementioned networks w.e.f. April 21st 2006.
Since we have taken over, we are in the
process to settle the outstanding pertaining to the above networks and cleared
Rs. 50000/- each for A&M against the actual outstanding of Rs. 97,144/- of
Adarsh Nagar & 144568/- of Madhurawada.
Also please note that we shall clear
the balance outstanding of Rs. 47,144/- and 94,568/- before the month end of
April 2006 and shall start the networks effectively by Ist May 2006 onwards.
Furthermore, we have signed the
upgradation from our end, but shall let you know before 25th April whether
A&M to be billed separately or to be added in Saidarshan Media Network Pvt. Ltd.”
3. According to the petitioner respondent
did not inform it as to whether A&M (said to be a separate legal entity)
was to be billed separately or to be added
in respondent’s network and thus petitoiner had no other option but to
include the bills of A&M also. As
noticed above, the respondent did not contemplate billing of these two networks
upto 25.4.2006. It is however, accepted that
at a later stage i.e. on 29.09.2006, the
respondent asked the petitioner to bill the said A&M network
separately.
4. It furthermore appears that the
subscriber base was increased from 6600 to 8200 on 01.05.2006, and later on from 8200 to 10585 on or about
1.6.2006. The parties yet again on or
about 23.11.2006 agreed that the subsciber base should be increased from 10585
to 11585, as a result whereof, the respondent became liable to pay a sum of Rs.
3,96,786.25 only p.m. Upon completion
of the tenure of the first agreement, the parties entered into a separate
agreement containing almost similar terms.
5. The petitioner being a company
incorporated under the Companies Act, 1956
maintains its books of accounts, said to be in the regular course of
business.
Before
this Tribunal, the said statement of accounts from 01.01.2006 has been filed from
a perusal whereof, it appears that the opening balance as on 1.1.2006 was Rs.
5,37,018/-,. During the period 3.1.2006 to 02.01.2007 the respondent paid a sum of Rs. 38,99,253/- leaving a
balance of Rs. 8,89,403. It furthermore
appears that a cheque for a sum of Rs.
2,00,000/- credited in the earlier
account was not shown in the subsequent account from 01.01.2007. The accounts produced before us show that a
sum of Rs. 31,57,064/- was owing and due from the respondent.
6. We may furthermore, notice that according
to the respondent it had not been availing the services of the channels of the
petitioner with effect from 2.1.2008. It
is also accepted that on or about 24.01.2008, the respondent has also switched
off/ disconnected the signals of the petitioner.
7. We have referred to hereinbefore that a
service contract was entered into on or
about 19.07.2007 which was valid for a period of 12 months i.e. upto 18.07.2008. The subscription fees payable thereunder was
a sum of Rs. 52,43,712/- from which a discount of Rs. 7,79,712/- was given and
thus a total sum of Rs.44,64,000/- was payable in 12 monthly instalments payable
in the manner as specified therein. Other
terms and conditions, however, remained the same, save and except in the
Bouquet of ESPN and Star Sports another channel namely Star Cricket on a la carte
basis was also made available to the
respondent.
The
respondent, however, contends that it was not ready and willing to avail the signals
of Star Cricket and the same was thrust upon it by the petitioner upon creating
undue pressure therefor. According to
the respondent on that ground alone, its representative signed the said
agreement on all copies of the said agreement except page three ‘under protest’.
8. The petitioner has filed this petition
praying, inter alia, for the following reliefs :
“a) the
respondent be directed to pay to the petitioner a sum of Rs. 31,57,064(Rupees
Thirty one lakhs fifty seven thousand sixty four only) alongwith interest @ 12%
annum from the due date till realisation by the petitioner herein.
(b) The
respondent be penalised for violating with impunity the provisions of clauses
4.2 and 4.3 of the Telecommunication (Broadcasting and Cable Services)
Interconnection (3rd Amendment) Regulation, 2006 dated 04.09.2006 and be
imposed a fine of not less than Rs. 1,00,000/- (Rupees one lakh) ;”
9. Before we proceed to consider the
materials brought on record by the parties we may notice that the petitioner
does not press prayer ‘b’ of this petition.
10. The respondent in their written statement
interalia raised a contention that the parties have entered into a settlement in terms whereof upto 30.06.2007, the arrears, as would be evident from the
letter from Sai Darshan Media Network Pvt. Ltd. to the R.D. Network Services
stated to be the distributor of the petitioner, were to be Rs. 10 lakhs as
would appear from the following:
“We hereby thank you for having paid
heed to our repeated requests to your management by finalizing Rs. 10 lakhs as
the full and final payment till June 2007 Invoice (Including June month
invoice)”
11. It is further the case of the respondent
that petitioner is not entitled to the benefit of increase of 4% in the tariff
for two months i.e. Decemeber 2007 and January 2008 in as much as the tariff
order issued by the Telecom Regulatory Authority of India (TRAI) merely created
enabling provisions in terms whereof fresh agreement was required to be entered
into by and between the parties herein.
12. In view of the rival contentions of the
parties, the following issues arise for our consideration :
1.
Whether the respondent had taken over
Adarsh Nagar and Madhurawada Network?
2.
Whether parties have entered into a
settlement in terms whereof the petitoiner agreed to receive a sum of Rs.10
lakhs being the full and final settlement till June 2007?
3.
Whether the respondent was put under
undue pressure to agree to take signals of the channel of the Star Cricket ?
4.
What would be the effect of the respondent’s
entering into the said agreement under protest?
5.
Whether in absence of any agreement,
the petitioner was entitled to increase in the subscription fees to the extent
of 4% in terms of the order of the TRAI dated 4.10.2007 or otherwise?
6.
Whether unitaleral termination of the
contract by the respondent by switiching off signals on 2.01.2008 is legal and
valid?
7.
What relief, if any, to which the
petitioner is entitled to?
Issue No.1
13. The petitioner in support of its case has
examined one Shri S. R. Bhandary whereas the respondent has examind one
Mr. M. Satish Kumar.
The respondent by a letter dated 21.04.2006 addressed to the petitioner
in no uncertain terms stated that they had taken over the networks of
Madhurawada and Adarsh Nagar. The
respondent, however, contends that the said letter was issued by mistake as in
fact only a proposal was being mooted for taking over of the said networks, which did not
furctify. The further case of the
respondent, as would appear from the trend of cross examination of the of the
witness of the petitioner is that Adarsh
Nagar Network being belonging to a
company known as as A & M Entertainment Pvt. Ltd. registered and
incorporated under the Indian Companies Act, 1956; the same neither could have
been taken over nor the bills payable by
it could have been clubbed with those of the respondent.
14. In an issue of this nature, the conduct of
the respondent plays a vital role. The
respondent clearly gave out that it not only had taken over the said Networks and they were to be revived, as
would appear from from the aforementioned letter dated 21.04.2006, but they even
intended to settle the outstanding dues pertaining thereto.
15. It is on account of the said networks,
the respondent has also made part payment
of the dues of the petitioner, namely, a sum of Rs.50,000/- for A&M against
the actual outstandings of Rs.97,144/-
relating to Adarsh Nagar and Rs.1,44,566/-
towards the dues of Madhurawada.
16. The respondent furthermore promised to
clear the balance amount due to the petitioner.
Acording to it, the network effectively started their operation from
01.05.2006 onwards. The respondent did
not stop there. It also in unequivocal
terms stated that they had signed upgradation forms and promised further that the
resondent would be informed as to whether A&M were to be billed separately. The petitioner acted on the said
representation. It, moreover, stands
admitted that only after a period of five months, the respondent categorically
stated that bills for Adarash Nagar should be raised separately.
17. Having considered the evidences brought on
record, we have no doubt that the respondent had taken over the aforementioned
networks. It is one thing to say that a company incorporated
under the Companies Act, 1956 is a
separate entitity but it is another thing to say that the management of the networks run by a company could not be taken over in
law. Nothing has been pointed out
before us that it is impermissible in law to take over the management of a broadcasting
network run by one MSO by another.
18. What was the arrangement by and between the
respondent and the said company is not known. It was for the respondent to
disclose the same being within its special knowledge. The respondent furthermore, save and except
making a bald statement that the said letter was issued by mistake, did not elaborate as to what type
of mistake it was. It is only during the hearing, the learned
counsel for respondent made a feeble attempt to contend that there was a
proposal to take over the networks which did not fructify.
No material was brought on record in support of such a stand. The respondent neither in its reply pleaded the same nor Shri M.
Satish Kumar, the witness examined on
behalf of the respondent made any
statement in this behalf. In fact Mr. M.Satish Kumar did not make any
statement whatsoever in his evidence before this Tribunal with regard thereto.
Issue
No. 1, therefore, is answered in favour of the petitioner and against the
respondent.
Issue No. 2
19. This
brings us to the question as to whether the parties arrived at a settlement with
regard to the arrears. The respondent,
in support of its plea of settlement of the disputes, has produced a letter
dated 30.6.2007 addressed to the distributor of the petitioner. The petitioner does not deny or dispute that
the R.D. Networks Services was its distributor.
It is also not in dispute that the petitioner does not have a local
office at
20. Submission
of Mr. Ganpathy that the distributor of the petitioner had received the letter
but thereby contents thereof had not been admitted, cannot be accepted for more
than one reason. The contents of the
said letter have been proved by Shri M. Satish Kumar. It was, therefore, obligatory on the part of
the petitioner to test the veracity of statement made by Shri Prasad in this
behalf in cross-examination. No question
was put to the said witness in this behalf in the cross-examination at all.
21. It
is now well-known that a statement made by a witness, subject to just exceptions,
if not tested in cross-examination, would be deemed to be admitted.
In S.C. Sarkars’ Commentary on Law
Evidence Page 577, it is stated:
“Needless to say, as it is well settled in law, that
if witness has not been cross-examined on a point stated in the
examination-in-chief, the same remains unchallenged and there is no reason why
it should not be accepted.”
[See
also Dammu Sreenu Vs.State of A.P. – AIR 2009 SC 2532, Pravin Vs.State of
Madhya Pradesh – AIR 2008 SC 1846, Hindustan Steels Ltd. Rourkela Vs. A.K. Roy
& Ors. – AIR 1970 SC 1401]
A
Division Bench of the Madhya Pradesh High Court in Mohd.Naved Vs. Hindustan
Petroleum Corporation & Ors. – 2004(1) MPHT 16, stated the law, thus:
“Needless to say, as it is well settled in law, that
if witness has not been cross-examined on a point stated in the
examination-in-chief, the same remains unchallenged and there is no reason why
it should not be accepted.”
The fact that the said
settlement has been acted upon would also be evident from the fact that the
petitioner accepts that from July, 2007, the number of subscribers was treated
to be 6,500 in stead and place of 11,585.
Mr. Ganpati, to our query, very fairly stated that there is no other
document to show the basis for drastic reduction of the subscriber base.
22. We,
therefore, are of the opinion that the settlement, in fact, was entered into by
and between the parties.
23. The authority of the distributor to enter into such an agreement in the
aforementioned situation must be held to be implied. It was for the petitioner to produce before
this Tribunal the dealership agreement entered into by and between the
petitioner and the said R.D. networks.
Even an authority to enter into a settlement with a defaulting MSO could
be conferred on the distributor by the company even otherwise.
24. Mr.
Handoo’s contention that the statement of account filed by the petitioner, is
not supported by any document, need not
be determined in view of our findings aforementioned. In a situation of this nature, the principles
of ‘estoppel by conduct’ can also be invoked.
The petitioner, thus, having accepted the terms of settlement and having
acted thereupon is estopped and precluded from contending that no settlement
had been arrived at.
25. It,
therefore, can safely be presumed that the reduction of subscriber base took
place in terms of the said settlement and upon further negotiation after the
said letter dated 30.6.2007 was received by the petitioner.
Issue No. 3 and 4
26. Both
the issues being inter-related are taken up for hearing together.
27. The
respondent contends that only a blank form of the agreement was supplied. Our attention in this behalf has been drawn
to the admission of Shri S.R. Bhandari, the witness examined on behalf of the
petitioner. He admitted that the one which
has been filed with the petition contains blanks whereas the other filed with
his affidavit were the filled up one.
28. It
is true that the agreement filed with the petition is the blank format of the
agreement but bears the signatures of the authorized representative of the
petitioners and respondent.
The
respondent’s witness, Shri Satish Kumar, however, did not say that his
signature does not appear in the one which has been filed with the affidavit of
Shri Bhandari. The said witness also
does not say that he was not aware of the contents of the said agreement. The said agreement, indisputably, was acted
upon by the parties. It is also not in
dispute that the respondent had been making payments in terms thereof. The respondent by its letter dated 21.4.2006
also promised to clear off the arrears.
29. We,
therefore, are of the opinion that neither filing of an agreement containing
blanks by itself is sufficient to absolve the respondent from payment of the
contractual dues, nor the purported signing of the agreement under protest is
of any relevance in the facts and circumstances of the present case.
Issue No. 5
30. The
petitioner in its bills for the months of December, 2007 and January, 2008
claimed an increase of 4% over the agreed amount. Such an increase in the subscription fee was
premised on the tariff order issued by the Authority.
31. It
is not in dispute and in fact has been admitted by Mr. Bhandari that no fresh
agreement was entered into by and between the parties in respect of the
increase of the subscription fee by 4%.
The demand for the said increase was made by a letter dated 16.11.2007
which reads as under:-
“16th November, 2007
Ref: 814954
M/s Sai Darshan Media NW P. Ltd.
Mr.P. Srinivasa Rao
9-1-222/1, 2nd Floor
C B M Compound
Visakhapatnam, Visakhapatnam District
Andhra Pradesh -
530003
Sub: Revision of ESPN, STAR Sports
and STAR Cricket Rates.
“This has reference to the Telecommunication
Broadcasting and Cable) Services (Second) Tariff (Eighth Amendment) Order, 2007
(“Tariff Order”) issued by the Hon’ble Telecom Regulatory Authority of India
(TRAI) for non-CAS Areas on October 4, 2007.
As you may be aware the Tariff Order allows an
increase of upto 4% on the current charges/rates of pay channels with effect
from December 1, 2007.
Accordingly, we are also revising our a-la-carte and
bouquet rates and the revised rates are as under:
|
Channel(s) |
Price (per subscriber home per month) (INR) |
|
ESPN |
33.13 |
|
STAR
Sports |
33.13 |
|
STAR
Cricket |
29.12 |
|
ESPN
and STAR Sports Bouquet |
44.17 |
Please note that the above listed rates will be
applicable only with effect from December 1, 2007.
Since the above revision would require a change in the
subscription fee, currently paid by you, we will shortly apprise you of the
revised subscription fee in a separate communication.
Thank you,
Yours truly,
For ESPN Software India Private
Limited
Authorised Signatory”
32. There
is nothing on record to show that the revised subscription fee was communicated
to the respondent separately. The
petitioner had merely sent its invoices for the billing period 19.11.2007 to
18.12.2007, 19.12.2007 to 18.1.2008 and 19.1.2008 to 18.2.2008. Even the said bills did not contain any
bifurcation.
33. It
is true that the agreement contains a clause which has been reproduced
hereinbefore, in terms whereof the licensor
reserved its right to revise the fees.
It may also be that increase of 4% by itself may not be unreasonable. We, however, are at present, advised, keeping
in view the fact that the respondent admittedly had stopped availing the signals
of the channels of the petitioner from 2.1.2008, are of the opinion that it is
not necessary to go into this aspect of the matter in details in view of the
fact that it was obligatory on the part of the petitioner to intimate to the
respondent its intention to increase the subscription fee immediately.
34. This
issue is decided against the petitioner.
Issue No. 6
35. The
respondent being a MSO could have terminated the agreement only in terms of the
Regulations framed by TRAI. As
transmission of signal of a broadcaster is also meant for general public, not
only the MSO/distributor who transmits such signals on behalf of the
broadcaster, is entitled to a notice in terms o f Regulation 4.1 but also the
public would be entitled thereto having regard to Clause 4.3 thereof. It is not the case of the petitioner that
such a notice has been issued or a public notice was published in two
newspapers as provided for in Clause 4.3 of the regulations. We, therefore, are of the opinion that
unilateral termination of the contract by respondent is not valid. However, as the claim of decree for payment of
damages has not been proved, no further deliberation on this issue is
necessary.
Issue No. 7
36. In
view of our findings aforementioned, we are of the opinion that the petitioner
is entitled to recover from the respondent a sum of Rs. 4 lakhs upto 30.6.2007 i.e.
the amount which had not been paid in view of bouncing of the cheque and on and
from 1.7.2007 to 24.1.2008 at the agreed rate of Rs.3,72,000/- per month. The petitioner is also entitled to interest @
12% p.a. from the due dates of payment till the date of filing of this petition. It shall also be entitled to interest at the
rate of 12% p.a. during the pendency of
this petition and future till realisation.
37. The
petitioner shall also be entitled to all costs. Counsel’s fee assessed at Rs. 2 lakhs.
……………J
(S.B. Sinha)
Chairperson
…………….
(G.D. Gaiha)
Member