Allowed

Sea Tv Network Ltd. v. Star India Pvt. Ltd.

TDSAT24 Aug 2005BROADCASTING PETITION/41/2005

Case brief

AI extract

What is this about?

The Telecom Disputes Settlement and Appellate Tribunal held that an MSO qualifies as a service provider and has jurisdiction over disputes under the TRAI Act. The Tribunal ruled that a broadcaster cannot appoint an MSO as an exclusive agent and must supply signals directly on a non-discriminatory basis.

What did the court decide?

Direction issued to the broadcaster to supply signals to the petitioner on reasonable terms within four weeks.

Sea Tv Network Ltd. vs Star India Pvt. Ltd. — Banking and Recovery | TDSAT (2005)

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TELECOM DISPUTES SETTLEMENT & APPELLATE TRIBUNAL NEW DELHI

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DATED 24^TH AUGUST, 2005

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PETITION NO.41(C) OF 2005 (M.A. N.152 of 2005)

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Sea T.V. Network Ltd. Registered Office at 148, Manas Nagar, Shahganj, Agra – 282 010

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… Petitioner

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Star India Pvt. Limited 205, Okhla Industrial Estate, Phase III, New Delhi – 110 020

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And

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Moon Network Pvt. Ltd., 1/47, Hotel East Lite, Delhi Gate, Agra …Respondents

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BEFORE:

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HON’BLE MR. JUSTICE N. SANTOSH HEGDE, CHAIRPERSON

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MR. VINOD VAISH, MEMBER LT. GENERAL D.P. SEHGAL (RETD.), MEMBER

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For Petitioner : Mr. Navin Chawla, Advocate For Respondent No.1 : Mr. Mukul Rohatgi, Senior Advocate (Star India Pvt. Ltd.) with Mr. Gopal Jain, Ms. Kanika Agnihotri, Ms. Simran Brar, Advocates For Respondent No.2 : Mr. Arun Kathpalia with (Moon Network Pvt. Limited) Mr. Susmit Pushkar, Advocates for Bajpai & Co.

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ORDER

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Petitioner in the above petition is a Multi System Operator (MSO) in the cable sector. He sought signals of Star bouquet of TV channels from the 1^st Respondent for distributing among its subscribers in the city of Agra. According to the Petitioner, this request was refused by the 1^st Respondent on the ground that it has appointed 2^nd Respondent, who is also an MSO, as its exclusive agent for the city of Agra, therefore, it (1^st Respondent) cannot directly give its signal to the Petitioner and if the Petitioner so desires, it must approach the 2^nd Respondent for signals. Petitioner contends that the refusal of the 1^st Respondent to give signals of its TV channels directly to the Petitioner is in contravention of the Telecom Regulatory Authority of India Act (“the Act”) and Telecommunication, Broadcasting and Cable Service (Interconnect) Regulation, 2004 (“the Regulation”), which mandates that the broadcasters like the 1^st Respondent must provide on request signals of its TV channels on non-discriminatory terms to all MSOs. Petitioner submits that under the Regulations, there is a mandate that such supply of signals must be without any unreasonable terms. Therefore, Petitioner in this petition has sought for a direction to the 1^st Respondent to supply signals of its bouquet of TV channels directly to the Petitioner on such terms and conditions as are just and reasonable. Petitioner has also asked for damage of Rs.50 lacs from the 1^st Respondent for loss of business due to the arbitrary and unlawful refusal to give signals by the 1^st Respondent.

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The stand of the 1^st and the 2^nd Respondents are rather identical. They have contended that this petition under Section 14 of the TRAI Act is not maintainable because of the exclusionary clause found in proviso (A) to Section 14 of the TRAI Act, which according to them excludes the jurisdiction of this Tribunal because the issues involved in the petition also pertain to certain allegations of

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monopolistic and unfair trade practices and those allegations can only be dealt with by the Commission appointed under the Monopolies and Restrictive Trade Practices Act (“the Commission”) and not by this Tribunal. The Respondent further contends that the dispute is also not maintainable because the Petitioner is not a “service provider” under the TRAI Act. Therefore, the dispute at the instance of a non-service provider is not maintainable under Section 14 of the TRAI Act. It is also contended that the 1^st Respondent has appointed 2^nd Respondent as an exclusive agent for the city of Agra. Therefore, Petitioner can approach the 2^nd Respondent for 1^st Respondent’s signals. It is also further contended that the Petitioner has indulged in piracy of signals of 1^st Respondent, hence it is not entitled to receive any signals.

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Opposing the objections raised by the Respondents in their counter affidavits, Petitioner in its rejoinder has contended that it is not raising an issue as to any monopolistic or restrictive trade practice, but is only seeking to enforce its right vested in it by virtue of the provisions of the TRAI Act and the Regulations, enforcement of which cannot be made by the Commission. Petitioner further contends that it is a service provider under the Act and the Notifications issued thereunder from time to time. Therefore, the contention of the Respondent that it is not a service provider is denied. The Petitioner further contended that under the Regulations it is not open to the 1^st Respondent/Broadcaster to appoint an MSO as an exclusive agent of the broadcaster. On the contrary, there is an obligation on the part of the broadcaster to supply signals to all similarly situated persons in a non-discriminatory manner and on reasonable terms. It is also submitted that the obligation to supply signals is based on the principle of “must provide”. Therefore, 1^st Respondent could not have appointed the 2^nd Respondent/MSO, who is also a competitor of the Petitioner, as an agent and compel the Petitioner to take signals from the 2^nd Respondent. The Petitioner in

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his rejoinder has totally denied that it has indulged in piracy and has contended that this allegation of piracy is an afterthought which is raised to deny the claim of the Respondent.

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Based on the above pleadings of the parties, the following issues arise for our consideration:

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(i) Is the jurisdiction of this Tribunal to adjudicate the dispute raised in this petition ousted because of proviso (A) to Section 14 of the TRAI Act?

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(ii) Is the Petitioner a ‘service provider’ as contemplated under the TRAI Act, Regulations and Notifications issued thereunder?

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(iii) Can a broadcaster, like the Respondent No.1, appoint a MSO, like Respondent No.2, as its exclusive agent to the exclusion of other similarly situated persons in view of the provisions of the TRAI Act and the Regulations made thereunder?

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(iv) Has the Petitioner made out a case on facts for the relief sought for in the Petition?

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We will first take up for consideration the first preliminary objection raised by the Respondent as to the jurisdiction of this Tribunal vis-a vis that of MRTP Commission.

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As noted above, the contention of the Respondent is that the dispute raised in the above Petition does not come under the jurisdiction of this Tribunal because

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of the exclusion of jurisdiction under Proviso (A) to Section 14 of the TRAI Act. It is contended that some aspects of the dispute raised in the petition pertain to monopolies and restrictive trade practices, which subject can only be dealt with by the Commission and not by this Tribunal.

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For deciding this question, we will have to first examine the provisions of the MRPT Act and TRAI Act bearing in mind the objectives of the two enactments.

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The preamble to the MRTP Act shows that it is an Act to provide that the operation of economic system does not result in the concentration of economic power to the common detriment and for the control of monopolies, prohibition of monopolistic and restrictive trade practices and for matters connected therewith or incidental thereto. Thus, it is seen that the MRTP Act is enacted to control economic system, to prevent concentration of economic power and to control monopolistic and restrictive trade practices. Thus, these restrictive trade practices are general in all sectors and not specific to any particular trade or commerce.

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Whereas the preamble to the TRAI Act shows, among others, this Act is enacted to adjudicate disputes, dispose of appeals and to protect the interests of service providers and to promote and ensure orderly growth in three specified sectors only. They are the telecom, broadcasting and cable sectors. From this preamble it is seen that the TRAI Act is a special enactment wherein a provision is made specifically for settlement of disputes between the categories of persons mentioned in Section 14(a)(i), (ii) and (iii) that too only in the limited sectors. Therefore, while MRTP Act in regard to monopoly and restrictive trade practices generally applies in all sectors, TRAI Act is a special Act covering the areas of disputes in the three sectors, referred to hereinabove, that too between the parties mentioned in the TRAI Act.

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Under Section 36 of the TRAI Act, Telecom Regulatory Authority of India is empowered to make regulations consistent with the said Act and rules made thereunder. Under Section 37 of the TRAI Act, the Regulations made by the TRAI have to be placed before the Parliament to seek its approval. Thus, there can be no dispute that the Regulations framed by the TRAI have the force of law having been made through the process of subordinate legislation provided they are consistent with the Act and Rules.

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The relationship of the parties and their commercial interest in the three sectors to which TRAI Act applies, is thus statutorily controlled and any dispute arising in such relationship will be a dispute which will have to be adjudicated under Section 14 of the TRAI Act by this Tribunal so long as it is a dispute between a licensor and a licensee, between two or more service providers, between a service provider and a group of consumers.

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It is no doubt true that proviso (A) to Section 14 of the TRAI Act takes away the jurisdiction of this Tribunal if it involves a complaint as to monopolistic trade practices, restrictive trade practices and unfair trade practices because those are subject to the jurisdiction of the Commission under the MRTP Act. Therefore, a question arises whether dispute that arises in the present petition is a dispute which falls within the complaints referred to in Section 10 of the MRTP Act which empowers the Commission to inquire into monopolistic or restrictive trade practices. Section 10 of the MRTP Act read thus:-

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“10. Inquiry into monopolistic or restrictive trade practices by Commission. - The Commission may inquire into-

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(a) any restrictive trade practice-

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(i) upon receiving a complaint of facts which constitute such practice [from any trade association or from any consumer or a registered consumers’ association, whether such consumer is a member of that consumers’ association or not], or

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(ii) upon a reference made to it by the Central Government or a State Government, or

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(iii) upon an application made to it by the [Director General], or

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(iv) upon its own knowledge or information,

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(b) any monopolistic trade practice, upon a reference made to it by the Central Government [or upon an application made to it by the Director General] or upon its own knowledge or information.” (emphasis supplied)

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From the above it is seen that the Commission can entertain complaints and inquire into said complaint if the complaint constitutes monopolistic or restrictive trade practices or unfair trade practices as defined under the MRTP Act. The said Section also defines the categories of persons or bodies who can make the complaints.

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Whereas as noticed above, under Section 14 of the TRAI Act, this Tribunal has been constituted to adjudicate any dispute:-

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(i) between a licensor and a licensee;

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(ii) between two or more service providers;

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(iii) between a service provider and a group of consumers:

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The petition in hand does not involve any complaint of monopolistic, restrictive or unfair trade practice. What is alleged in the petition is the violation of the various Regulations which control the trade in the cable sector which is involved in the present petition. From the language of Section 10 of the MRTP

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Act, it is crystal clear that the Commission thereunder cannot adjudicate a dispute based on violation of a Regulation made under the TRAI Act. Even if the Regulation incidentally trenches on the subject of monopoly and restrictive trade practices, it cannot be said that the dispute is one which could be adjudicated by the Commission under the MRTP Act. This is also clear from the nature of procedure to be followed by the two forums while entertaining a complaint or a dispute. Under Section 10 of the MRTP Act, the Commission is empowered to inquire into a complaint, while under Section 14 of the TRAI Act, the Tribunal is empowered to adjudicate any dispute. In our opinion there is a vast difference between inquiring into a complaint and adjudicating a dispute. This view of ours is further supported by the fact that under the MRTP Act the Commission is only empowered to grant temporary injunctions during the pendency of the inquiry (see Section 12A) and to award compensation for any loss or damaged caused to the Complainant (see Section 12B), it is not authorized to grant wider reliefs like directions like the one sought in the above petition, which can only be done by the Tribunal which is empowered to adjudicate any dispute and pass such orders thereon as it thinks fit (see Section 14A sub-clause (iv)).

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Therefore, in our opinion, it is very clear that the disputes arising out of the Regulations framed under the TRAI Act cannot be adjudicated upon, and relief granted under the MRTP Act which could only be done by this Tribunal under Section 14 read with Section 14A of the TRAI Act.

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We, however, make it clear that any dispute which is not based on rights and liabilities arising out of TRAI Act or the Regulations made thereunder and pertaining solely to a complaint of monopolistic trade practice, restrictive trade practice and unfair trade practice only cannot be tried by this Tribunal. In such view of the matter, we are of the considered opinion that since the dispute

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involved in the petition is not in the nature of a complaint contemplated under Section 10 of the MRTP Act, this Tribunal is not barred from entertaining the above Petition.

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We will now take up the next question whether Petitioner is a service provider or not?

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Petitioner claims to be an MSO transmitting signals of various broadcasters to the cable operators in the city of Agra. Admittedly, first Respondent is a broadcaster of TV channels. The contention of the Respondent is that Petitioner is not a service provider as contemplated under Section 2(j) of the TRAI Act, therefore, it is not a party contemplated under Section 14 of the TRAI Act, whose dispute can be adjudicated by this Tribunal.

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Section 2(j) of the TRAI Act defines service provider as under:“2(1) In this Act, unless the context otherwise requires,- …..(j) “service provider” means the [Government as a service provider] and includes a licensee;” (emphasis supplied)

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It is based on the plain language of this Section, respondent has raised the above preliminary objection. But what the respondent has failed to notice is the beginning words of the Section 2(1) of the TRAI Act, which reads: “In this Act, unless the context otherwise requires……”. The use of this phraseology, in our opinion, does not limit the definition of service provider only to Government and licensee. In our opinion, the phraseology “In this Act, unless the context otherwise requires” is wide enough to accommodate other categories of persons or parties also as service providers if the context of the Act so requires it to be done. It is so held by the apex Court of this country in a catena of decisions. We may, at this

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juncture, place reliance on a judgment of the apex court in the case of N.K. Jain versus C.K. Shah [(1991) 2 SCC 498] wherein considering an argument requiring a restricted interpretation of a definition clause which starts with the words “unless the context otherwise requires”, it was held thus:-

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“The opening words in Section 2 viz. “In this Act, unless the context otherwise requires” must be examined in the light of the context, the title, the preamble and all the other enacting parts of the statute. Due weight ought to be given to the opening words. The subject matter and the context in which a particular word is used are of great importance and it is axiomatic that the object underlying the Act must always be kept in view in constructing the context in which a particular word is used. So construed there is much in the context to show that the restricted meaning in the definitions should not be applied. It, therefore, follows that the words ‘contribution’, ‘scheme’, ‘fund’ occurring in the said section should in the “context” be otherwise interpreted as to apply to a private scheme also and if there is a default in “contribution” by the exempted establishment, the same amounts to contravention of Section 6 punishable under section 14(1-A)”.

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We may note that almost similar is the view taken by the apex Court in a subsequent judgment in the case of Ramesh Mehta versus Sanwal Chand Singhvi [(2004) 5 Supreme Court Cases 409] wherein the Court held:

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“a definition is not to be read in isolation, it must be read in the context of the phrase which would define it. It should not be vague or ambiguous. The definition of the words must be

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given a meaning application; where context makes definition given in the interpretation clause inapplicable, same meaning cannot be assigned. With a view to make the statute workable the Court may correct errors. Court in suitable cases may add, omit or substitute the words.”

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Bearing in mind the above rule of interpretation accepted by the apex Court if we notice the object of the TRAI Act we see that this Tribunal has been created to adjudicate disputes, dispose of appeals and to protect the interests of the service providers and consumers of three sectors to which this Act applies.

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We have already noticed that the words service provider has been defined to mean Government as a service provider and include licensee unless the context otherwise requires. Therefore, it is our endeavour to examine whether in the context of this Act the definition of service provider would include other than the two categories mentioned in Section 2(j).

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Proviso to Section 2(i)(k) defines telecommunication services. This proviso empowers the Central Government if it so desires to notify other services to be telecommunication service including broadcasting service. In exercise of the said power the Department of Telecommunications (DoT), Ministry of Communications and Information Technology, Government of India, vide notification dated 9th January, 2004 has notified broadcasting and cable services as telecommunication services.

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Section 36 of the TRAI Act provides that TRAI may by notification make regulations consistent with the Act and Rules, in exercise of that powers the TRAI has notified (Telecommunications) (Broadcasting and Cable) Service Interconnection Regulation 2004 on 10.12.2004. In clause 2 (n) of the said

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Regulation service provider has been defined as to mean the Government and include licensee as well as any broadcaster, multi-system operator, cable operator or distributor of channels. Therefore, taking note of the beginning words of the Section 2 of the TRAI Act i.e “in this Act unless the context otherwise requires” and the power of the Government under proviso to Section 1(k) to include other services to be telecommunication service under which power a notification dated 9th January, 2004 has been issued and taking note of the power of the TRAI to make Regulations and the fact that these Regulations have the force of law, and the Regulations so made include a multi-system operator like petitioner or a cable operator as a service provider and bearing in mind the subject matter and the context in which the definition clause has been used in the TRAI Act and the object underlying the Act and principles, as laid down by the apex Court in the cases cited above, we must hold that for the purpose of Section 2(j) of the TRAI Act apart from the Government as a service providers and the licensee, even broadcaster, multi system operator, cable operators or distributors of TV channels will have to be construed to be service providers and if so construed, any dispute between them will be a dispute that has to be settled by this Tribunal under section 14 of the Act. Therefore, the contention of the Respondents that the Petitioner is not a service provider will have to be rejected. In this context, it may be of some use to note the nature of role played by the various players in the cable sector. At the top there is a broadcaster who broadcasts his TV channels through signals. This he can do by either supplying the signals through a designated agent or intermediary or can do the same by directly giving connection to the distributor or MSO who in turn would re-transmit the signals to the cable operators or the consumers, as the case may be. The role of each one of these players is that of providing a service at various levels to the ultimate consumer i.e. the subscriber who ultimately views the programme of the broadcaster. Therefore, even in common parlance all these persons viz. the broadcaster, the

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agent or intermediary, the distributor, the MSO and the cable operators, if they are involved in providing signals to the ultimate susbscriber, will be providing service as contemplated in the objects and provisions of the TRAI Act. For all these reasons, we will have to negate the contention of the Respondent that the petitioner is not a service provider, whose dispute could be entertained by this Tribunal.

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Having thus decided the two preliminary objections, we will consider whether a broadcaster like the 1^st Respondent has an absolute right to appoint a distributor or MSO as its exclusive agent for further transmission of its signals.

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From the case pleaded in the petition, the main contention of the petitioner on this issue is that it is an MSO operating in Agra and its request for supply of signals of the bouquet of 1^st Respondent directly has been refused by the Respondent No.1 on the ground that it has appointed the 2^nd Respondent (another MSO) as its exclusive agent for the territory of Agra, therefore, the petitioner should approach the 2^nd Respondent for receiving the signals of the 1^st Respondent. The petitioner contends that the 2^nd Respondent is a rival MSO operating in the territory of Agra and has its own subscribers, therefore, there is a conflict of interests, hence, business-wise it is not prudent for it to deal with the 2^nd Respondent who can at any given point of time create problems to the petitioner. Therefore, a question arises whether under the Regulations is it open to the 1^st Respondent Broadcaster to appoint an MSO as its exclusive agent, thus compel another MSO to take signals from a competitor.

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To decide this question, we will have to examine the provisions of the TRAI Act and the Regulation. It is already noticed from the Preamble to the Act that it is an Act enacted among other reasons, to protect the interests of service providers and consumers in the cable sector (among other sectors) to which the

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Act is applicable. It is also the object of the Act to promote and ensure orderly growth in these sectors. Section 36 of the Act has empowered the TRAI to make regulations consistent with the Act and the Rules. Invoking this power the TRAI has made the Regulation. It is evident from the said Regulation that there is a hierarchy in the cable sector which is as follows:-

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Broadcasters
Agent or Intermediary
Distributors of TV Channels / Multi System Operators
Cable Operators
Subscribers

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Clause 2(e) of the Regulation defines the broadcaster as follows:-

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(e) “ broadcaster ” means any person including an individual, group of persons, public or body corporate, firm or any organization or body who/which is providing broadcasting service and includes his/her authorized distribution agencies;

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For the purpose of our discussion it would suffice to note from the above definition that the broadcaster is a person providing broadcasting service.

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An agent is defined under the Regulation under Clause 2(b) which is as

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follows:-

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(b) “ agent or intermediary ” means any person including an individual, group of persons, public or body corporate, firm or any organization or body authorized by a broadcaster/ multi system operator to make available TV channel(s), to a distributor of TV channels; (emphasis supplied)

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NB: Reference to an MSO in this definition is as a principal and not as an agent.

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A perusal of the above definition shows that an agent or intermediary is a person who supplies TV channels of a broadcaster or a MSO, to a distributor of TV channels. This indicates that a distributor can not be an agent because he is the one who receives signals from the agent.

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A distributor of TV channels is defined under Regulation 2(j) as follows:-

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(j) “ distributor of TV channels ” means any person including an individual, group of persons, public or body corporate, firm or any organization or body re-transmitting TV channels through electromagnetic waves through cable or through space intended to be received by general public directly or indirectly. The person may include, but is not limited to a cable operator, direct to home operator, multi system operator, head ends in the sky operator; (emphasis supplied)

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This definition shows that any person who is re-transmitting TV channels to general public either directly or indirectly is a distributor and the said definition includes among others an MSO also. Since a distributor as noticed above cannot be an agent and a distributor includes an MSO; by the same logic even a MSO cannot be an agent.

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MSO is defined under Regulation 2(m) as follows:-

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(m) “ multi system operator ” means any person who receives a broadcasting service from a broadcaster and/or their authorized agencies and re-transmits the same to consumers and / or re-transmits the same to one or more cable operators and includes his/ her authorized distribution agencies.

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This definition shows that MSO is a person who is entitled to receive signals directly from a Broadcaster or his authorized agent which indicates like a distributor, an MSO also cannot be an agent but an MSO in turn is permitted to retransmit the signals through his authorized agent. Thus, the definitions of the distributor and MSO show that both of them are placed in the same platform in the hierarchy of players in the cable sector and both can only receive signals of the broadcaster’s channels either directly or through an agent of the broadcaster and they cannot be an authorized agent of the broadcaster. In this background, we will now examine other clauses of the regulation:

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Clause 3.1 of the Regulation reads thus:-

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No broadcaster of TV channels shall engage in any practice or activity or enter into any understanding or arrangement, including exclusive contracts with any distributor of TV channels that prevents any other distributor of TV channels from obtaining such TV channels for distribution. (emphasis supplied)

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This clause makes it mandatory for the broadcaster not to engage in any practice or activity of entering into any understanding or arrangement including exclusive contract with any distributor of the channels. This clause also prevents the broadcaster from engaging in any manner that prevents any other distributor of the TV channels from obtaining such TV channels for distribution. The language of this clause is quite clear and mandatory. Keeping in mind the fact that the definition of distributor includes an MSO it is not open to a Broadcaster to appoint any distributor or MSO, as an exclusive agent and if done it would run counter to the prohibition of exclusivity contemplated in clause 3.1 of the Regulation.

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Clause 3.2 of the Regulation (to the extent required for our purpose) is extracted herein below which reads as follows:-

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“Every broadcaster shall provide on request signals of TV channels on non-discriminatory terms to all distributors of TV channels……” (emphasis supplied)

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This clause mandates that every broadcaster shall provide on request signals of its channels to every distributor (which term includes MSO) on nondiscriminatory terms and not to confine supply of signals to any single distributor. The petitioner has relied upon these clauses to establish its right to get signals directly from the 1^st Respondent.

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Our attention has been drawn by the learned counsel for the petitioner to the Explanatory Memorandum to the Regulation wherein it is recorded that some of the players in the cable sector have become strong because of vertical integration having taken place in this sector consequent to which there are large disparities in the bargaining powers of the various players in the distribution chain. Therefore, with a view to avoid discrimination the Regulation has provided for non-exclusivity of contract which can prevent denial of supply of popular TV channels to a competitor. TRAI by framing the Regulation has also taken note of the ground realities in the cable sector and with a view to prevent unfair practice and to provide non-discriminatory access of TV channels to various distributors/MSOs, cable operators and consumers has made provisions in clauses 3.1 and 3.2 of the Regulation to prohibit exclusiveness in the contract and to have only reasonable terms for supply of TV channels, apart from prohibiting the evil of unfair practice, discrimination etc.

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We are aware of the fact that once the delegated legislation in its text is unambiguous, it is not necessary for us to go into the Explanatory Note but we have referred to Explanatory Note for the limited purpose of noticing the fact that

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TRAI has taken note of the ill effect of vertical integration that has taken place in the field of cable operations, because of which certain arbitrary practices were taking place. Therefore to avoid such practices, Regulations 3.1 and 3.2 have been incorporated.

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Be that as it may, from the definition of the “Agent”, referred to hereinabove, and from the language of clauses 3.1 and 3.2, it is seen that:-

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(i) a distributor or an MSO cannot be an agent much less an exclusive or designated agent;

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(ii) a distributor and an MSO stands on the same platform (footing);

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(iii) an MSO can retransmit signals received by it through an agent, but that agent cannot be a competing cable operator on an exclusive basis.

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Therefore, if Respondent No.2, who is an MSO, is made an exclusive agent of the broadcaster Respondent No.1 and the petitioner is compelled to approach to Respondent No.2 for signals who is a business rival, very object of clauses 3.1 and 3.2 of the Regulation is defeated.

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The learned counsel for the respondent, however, relied on clause 3.3 of the Regulation which reads thus:-

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“A broadcaster or his/her authorized 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 clauses 3.1 and 3.2 if it is ensured that signals are provided through a particular designated agency or any other intermediary and not directly.

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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.”

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From the above it was submitted on behalf of the respondents that in view of the language of clause 3.3 it is clear that the rigor imposed on the broadcaster by clauses 3.1 and 3.2 would not apply and it is open to the broadcaster to appoint any person including an MSO as its exclusive agent, so long as the broadcaster ensures that that agent provides signals to all persons seeking the same in the manner provided therein.

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Regulation 3.3 only lays down that it is open to the broadcaster to supply signals through an agent or intermediary and it is not necessary for it to supply signals directly. It does not state that agent or intermediary can be either a distributor or an MSO. Protection offered to a broadcaster in this Regulation applies only in case of its supplying signals through an authorized agent or intermediary who is permitted to be an agent or an intermediary under the regulation. We have already held that as per the Regulation, a distributor or an MSO cannot be an agent. Therefore, if any one of them is appointed as authorized agent, it will be in violation of the Regulations. Hence Respondent cannot take advantage of Regulation 3.3 for creating an exclusive agency in a distributor or MSO. Under the Regulations an agent can only be one contemplated in the definition of an ‘Agent’ in the Regulation, which does not include either the Distributor or a MSO.

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However, the learned counsel for the Respondent drew our attention to the minutes of the consultative meeting held before finalizing the draft regulations. In

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our opinion, it is doubtful whether any reliance can be placed on the material found in these minutes because they are more in the nature of a debate in a Legislature while discussing a draft Bill. Be that as it may, the learned counsel drew our attention to the comments of the stake holders in regard to the definition in the draft Regulation wherein the stake holders requested that an agent or an intermediary should not be, directly or indirectly, a distributor of TV channel. The TRAI in its response to this suggestion/request of the stake holders has observed thus:-

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“At present this is not the practice – MSOs supply signals and also provide direct connections to subscribers. If this definition is to be amended as proposed it would mean considerable realignment of the business – this should therefore not be done unless this is shown to be absolutely necessary; accordingly this need not be done now. For the present therefore this not being done and if there is enough evidence that this practice is causing problems then this would be considered later. However to address the likely problem it is being provided in clause 3.3 that broadcasters and MSOs will have to ensure that the agent or intermediary acts in a manner that is (a) consistent with the obligations placed under this regulation and (b) not prejudicial to competition. (proviso added to clause 3.3)”

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From the above the learned counsel for the Respondent contended that the request of the stake holders that an agent should not be a distributor or MSO has been rejected by the TRAI. According to the learned counsel for the Respondents, it indicates that the TRAI had borne in mind that at least for the time being an agent could be a distributor or MSO. Therefore, there is no prohibition under the Regulation for the broadcaster to appoint a distributor or an MSO as an exclusive agent for the supply of its TV channels.

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The TRAI’s response to the suggestion of the stake holders, in our opinion, also does not indicate that a distributor or an MSO can be appointed as exclusive designated agent. The agent or intermediary contemplated therein is, as stated above, can be those who are referred to in the definition clause of an ‘Agent’ which we have already held does not include a distributor or an MSO.

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In our opinion, above interpretation, is the only way by which clauses 3.1 and 3.2 on the one hand and clause 3.3 on the other could be harmoniously read and the interpretation sought to be placed by the learned counsel for the Respondent, if accepted, in our opinion, same would make the mandatory provisions of clauses 3.1 and 3.2 otiose.

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In spite of the above conclusion arrived at by us, we will consider the argument of the Respondent from another angle i.e. accepting the argument of the learned counsel for the Respondents that clause 3.3 empowers the broadcaster to appoint distributor/MSO as an exclusive agent, then that would lead to an apparent conflict between the safeguards provided in clauses 3.1 and 3.2 and the language of clause 3.3. In such an event, in our opinion, Rule of Interpretation of a statute requires this forum to adopt a construction on the language of clause 3.3 to bring it in conformity with the clauses 3.1 and 3.2.

¶131

In Tirath Singh vs. Bachittar Singh (AIR 1955 Supreme Court at page 830), the Apex Court held that:

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“Where the language of a statute, in its ordinary meaning and grammatical construction, leads to a manifest contradiction of the apparent purpose of the enactment, or to some inconvenience or absurdity, hardship or injustice, presumably not intended, a construction may be put upon it which modifies the meaning of the words, and even the structure of the sentence.”

¶133

¶134

The apex Court yet again in the case of Bengal Immunity Co. Vs. State of Bihar (AIR 1955 Supreme Court page 661 at para 168) has observed in regard to conflicting provisions on the same Act:

¶135

“(168) I see no force in this contention. It is a cardinal rule of construction that when there are in a Statute two provisions which in conflict with each other such that both of them cannot stand, they should, if possible, be so interpreted that effect can be given to both, and that a construction which renders either of them inoperative and useless should not be adopted except in the last resort. This is what is known as the rule of harmonious construction…..”

¶136

Applying these legal principles of interpretation of Statues, we notice that language of clauses 3.1 and 3.2 have in unambiguous terms imposed certain restrictions on the right of the broadcasters which in turn has created a right in the other players in the field of cable operation. These two regulations clearly prohibit a broadcaster from engaging in any practice or activity or enter into an understanding or arrangement including exclusive contract with any distributor which prevents any other distributor from obtaining such TV channels. Clause 3.1 clearly states that a similarly situated person cannot be deprived of signals of a particular broadcaster by appointing any exclusive agent or intermediary. Clause 3.2 further enhances this right by compelling the broadcaster to provide on request signals of its TV channels on non-discriminatory terms on ‘must provide basis’ to all distributors of TV channel which may include, among others, an MSO. These rights and obligations found in Clauses 3.1 and 3.2 will get obliterated if Regulation 3.3 is understood in the manner it is projected by the learned counsel for the respondents, thus creating a conflict between clauses 3.1 and 3.2 on the one hand and Regulation 3.3 on the other. If that be so, as held by the apex court in the above referred Judgments, we will have to interpret Regulation 3.3 to bring it in conformity with clauses 3.1 and 3.2. Therefore, assuming there is a

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¶138

conflict in the language of clauses 3.1 and 3.2 on the one hand and clause 3.3 on the other hand, then we must read clause 3.3 to mean that the said clause only enables a broadcaster to transmit signals through an agent as defined in the definition clause 2(b) of the Regulation, which definition we have held does not include a distributor or an MSO so far as a broadcaster is concerned and a competing cable operator so far as an MSO is concerned. The words “a particular designated agent” in clause 3.3 denote “Agent” as a person, other than a distributor or an MSO, in regard to a broadcaster and any non-competing cable operator so far as an MSO is concerned that too on a non-exclusive basis. In our opinion, this is the only way to harmoniously construe the language of clauses 3.1, 3.2 and 3.3 of the Regulation. By this construction, the mandatory requirement of clauses 3.1 and 3.2 of the Regulation will be preserved and also make clause 3.3 of the Regulation workable without brining it in conflict with the language and object of clauses 3.1 and 3.2.

¶139

Lastly, we must notice that the learned counsel for the Respondents relied on earlier orders of this Tribunal dated 24^th February, 2005 made in Petition No.11(C) of 2005 between Mewar Channel versus Star India Private Ltd. and Others wherein this Tribunal in one paragraph observed :-

¶140

“there is no bar to the signals being provided to the Petitioner – the cable operator by the 2^nd Respondent-MSO”.

¶141

This observation of this Tribunal in that case cannot be construed as laying down a principle in law after interpreting the various regulations because there is no reference to any of the Regulations to which we have made reference. At best, this could only be construed as something equivalent to an obiter dicta or a passing observation. We also notice in that case, the ultimate case was not decided on the basis of the above observation, hence for the reasons given

¶142

¶143

hereinabove, the above observation of this Tribunal in the Mewar Channel Case will not assist the Respondents in establishing their case.

¶144

Thus, seen from any angle, we are of the opinion that the contention of the Respondents that 1^st Respondent/broadcaster can appoint the second Respondent-MSO as an exclusive agent so as to deprive other MSOs in that area of their right of receiving the signals directly from the broadcaster has to be rejected.

¶145

Having rejected the preliminary objections raised by the respondents and having held that under TRAI Act and Regulations it is not permissible to a Broadcaster to appoint a distributor/MSO as an exclusive agent for further distribution of Broadcaster’s signals, we will now consider the claim of the petitioner for obtaining signals of the 1^st Respondent’s TV channels directly from the 1^st Respondent without the intervention of the 2^nd Respondent.

¶146

The petitioner has contended in the petition that he is an MSO operating in the city of Agra and has all the necessary infrastructure for receiving and retransmitting the signals of broadcasters including that of 1^st Respondent. Petitioner has also contended that it is already receiving the signals of various other broadcasters and it desires to receive the signals as an MSO from the 1^st Respondent for which purpose it has been approaching the 1^st Respondent from as far back as 3^rd November, 2002. Various letters have been produced as annexures to the petition which indicates that the petitioner has been seeking the signals of the 1^st Respondent directly. The petitioner contends that for untenable reasons it has been denied signals by the 1^st Respondent and as per the Regulations he is entitled to get signals directly from the 1^st Respondent.

¶147

¶148

The Respondents in their counter, apart from raising the maintainability of this petition, have also contended that the signals of the 1^st Respondent was denied to the petitioner because 1^st Respondent already has an exclusive agent in Agra in Respondent No.2 and there is no need for any further MSOs for distributing its signals in the city of Agra, 1^st Respondent has however indicated that if the Petitioner so desires to have its signals, same can always be obtained through the 2^nd Respondent. 2^nd Respondent has specifically pleaded as per the counter filed in this Tribunal that one of the reason to refuse the supply of signals to the petitioner was because the petitioner did not give the necessary information sought for by it. Nextly both the respondents have pleaded that the signals are denied to the petitioner also on the ground that petitioner has indulged in piracy and there has been some complaint in regard to the same against the petitioner, which entitled the respondents to deny signals to the petitioner.

¶149

We will take up first the contention of the respondent, that petitioner has been denied signals because of its illegal activity of pirating 1^st Respondent signals.

¶150

The allegation of piracy has been denied by the petitioner in its rejoinder and has contended that some false complaints have been deliberately initiated against the petitioner of piracy so as to make out a ground for denial of signals directly.

¶151

In this background of assertion and denial we will consider the case of the parties as to the piracy. The petitioner sought signals of the 1^st Respondent as per its letter dated 30^th November, 2002 (Annexure P7) which was rejected by the 1^st Respondent on the ground that at present they have commitments for the area of Agra, hence, they were unable to provide petitioner with their services. No allegation of piracy is made at this stage. The correspondence between the

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¶153

petitioner and the 1^st Respondent as also with the 2^nd Respondent continued thereafter, many of which are produced with the petition as annexures which shows that there has been numerous and continuous correspondence between the petitioner and the 1^st Respondent as also with the 2^nd Respondent for supply of 1^st Respondent’s signals to the petitioner. At every stage till 29^th March, 2005 (for nearly 3 years) this allegation of piracy was not the ground for rejection of supply of signals to the petitioner. If what is stated in the letter of 9^th February, 2004 addressed to the 1^st Respondent by the petitioner produced in the petition as Annexure P12 is true then as on that day the 1^st Respondent was inclined to supply the signals to the petitioner and there was no allegation of piracy even on that day. Contents of annexure P12 are supported by the letter of 1^st Respondent dated 27.12.2004 at Annexure-17 and the letter dated 18^th January 2005 of the 1^st Respondent produced in the petition as Annexure P19, even in these letters no allegation of piracy was made, on the contrary an assurance was given to the petitioner by the 1^st Respondent that they were processing petitioner’s application. Even in the letters addressed by the 2^nd Respondent to the petitioner till as late as 14.03.2005, there was no allegation of piracy. We notice that suddenly in the letter dated 29^th March, 2005 produced herein as Annexure P29, for the first time it is mentioned that a complaint has been lodged against the petitioner for offences under Sections 37, 51, 63 & 65 of Copy Right Act 1957, read with Section 40(b), 420 & 120(b) of Indian Penal Code. In this factual background, we find it extremely difficult to accept the plea of the Respondent that the petitioner is being refused signals of the 1^st Respondent because of its illegal activities and the complaint of piracy is an afterthought. Hence, we have to reject this defence of the respondents.

¶154

As noted above, the other ground of rejection of the signals directly to the petitioner by 1^st Respondent is because of the fact that the 1^st Respondent has appointed 2^nd Respondent, as broadcaster’s exclusive agent for city of Agra. We

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¶156

have already held that such an appointment of a distributor/MSO as an exclusive agent of a Broadcaster is impermissible in law. That apart we have also noted that under clauses 3.1 and 3.2, petitioner has a right to receive signals of the broadcaster Respondent No.1 on his asking for the same in a non-discriminatory manner and on a “must provide” basis. Since from the facts pleaded in the pleadings it is clear that apart from piracy the only other ground on which the signals has been refused to the petitioner directly is because of the fact that the 2^nd Respondent has been appointed as an exclusive agent of the 1^st Respondent for the city of Agra which stand is legally impermissible we have to accept the prayer of the petitioner that he is entitled to receive signals directly from Respondent No.1 or through an agent who is not a distributor/MSO of the 1^st Respondent.

¶157

In the above view of the matter, we are of the considered opinion that the petitioner is entitled for a direction from this Tribunal to Respondent No.1 to supply signals of its bouquet of channels by entering into an agreement with the Petitioner on such terms and conditions which are not unreasonable within a reasonable time at an early date, at any rate not later than four weeks from today.

¶158

The second prayer of the petitioner in this petition is for damages/losses caused to the petitioner due to the arbitrary, illegal and unlawful act of the respondents. Petitioner has quantified this damage at Rs.50 lakhs. We are not inclined to accept this prayer of the petitioner because no material has been produced to show how and in what manner this damage has been quantified by the petitioner nor any material has been placed before us to find out if at all any damage has been suffered and if so what is the extent of such damage. Therefore, this plea is rejected.

¶159

¶160

For the reasons stated above, this petition succeeds to the extent stated hereinabove and a direction is issued to the 1^st Respondent as stated hereinabove. Petitioner is entitled to cost of this petition quantified at Rs.10,000/- payable by the 1^st Respondent.

¶161

……………………….J (N. Santosh Hegde) Chairperson

¶162

………………….

¶163

(Vinod Vaish) Member

¶164

………………… (D.P. Sehgal) Member

Sea Tv Network Ltd. v. Star India Pvt. Ltd.

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Sea Tv Network Ltd. v. Star India Pvt. Ltd.

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