Disposed

Hathway Cable and Datacom Ltd. v. Neo Sports Broadcasting Pvt. Ltd.

TDSAT13 May 2009BROADCASTING PETITION/209/2008

Case brief

AI extract

What is this about?

The Tribunal addressed a multi-system operator's dispute over subscription payments and invoice detailing. It held that the subscriber base is not fixed and regular SLR submission is mandatory. It clarified network inclusions and directed procedural compliance for invoice generation.

What did the court decide?

Directed Petitioner to furnish subscriber base details within two weeks and parties to meet to determine dues within three weeks for subsequent invoice generation.

Hathway Cable and Datacom Ltd. vs Neo Sports Broadcasting… — Company and Corporate | TDSAT (2009)

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TELECOM DISPUTES SETTLEMENT & APPELLATE TRIBUNAL

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6/7/2018

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TELECOM DISPUTES SETTLEMENT & APPELLATE TRIBUNAL NEW DELHI

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DATED 13^TH MAY, 2009

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PETITION NO. 209 (C) OF 2008

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Hathway Cable and Datacom Ltd . … Petitioner

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Vs.

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Neo Sports Broadcasts Pvt Ltd . …Respondent

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BEFORE:

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HON’BLE MR.JUSTICE ARUN KUMAR CHAIRPERSON HON'BLE DR. J. S. SARMA MEMBER HON'BLE MR.G. D. GAIHA MEMBER

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For Petitioner : Mr. Arun Kathpalia, Mr. Nasir Husain, Advocates For Respondent : Mr. Jayant Bhushan, Senior Advocate with Mr. Ankit Shah Mr. Nikhil Rohtagi, Advocates

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ORDER

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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.

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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

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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.

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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.

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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.

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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

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Respondent to raise invoices entity-wise, besides passing such other orders as deemed fit.

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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

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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.

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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.

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Based on the pleadings, the issues that arise for determination are:

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(a) Whether as per the Agreement dated 12.4.2008, the Petitioner is required to give the Subscriber details to the Respondent?

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(b) Whether the Agreement dated 12.4.2008 covers those joint ventures/networks including Gujarat Telelink Pvt. Ltd?

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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 12^th 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.

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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.

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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

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separate invoices only to harass the Petitioner.

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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.

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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.

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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.

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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.

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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.

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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:

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“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).

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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.

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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.

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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.”

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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

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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.

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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:

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(a) GTPL Mundra signed on 15.6.2008;

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(b) Ice Television Pvt. Ltd signed on 1.10.2008;

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(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;

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(g) Sonali Cablevision Pvt. Ltd signed on 12.12.2008.

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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.

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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

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Respondent and there is no express provision for sending separate invoices. The clause relating to ‘NSB obligations’ provides, inter alia, for the following:

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“NSB shall raise and dispatch the monthly Invoice, shall issue monthly Invoices to the Affiliate, however nonreceipt of dispatched invoice will not devoid the obligation of the Affiliate to make payment of Subscription fee as per the terms of this Agreement”.

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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.

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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.

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The Petition is disposed of accordingly. No costs.

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..……………..J (Arun Kumar) Chairperson

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……………..... (J. S. Sarma) Member

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……………..... (G. D. Gaiha) Member

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Hathway Cable and Datacom Ltd. v. Neo Sports Broadcasting Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

Hathway Cable and Datacom Ltd. v. Neo Sports Broadcasting Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

All orders in this case

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