Allowed

Indusind Media & Communications Ltd. v. Home Cable Network Pvt. Ltd.

TDSAT28 May 2010BROADCASTING PETITION/132/2009

Case brief

AI extract

What is this about?

The tribunal adjudicated a dispute between two cable operators regarding unpaid feed charges and Set Top Box returns. The court upheld the petition's maintainability, directed the respondent to pay admitted dues plus future costs, and ordered a preliminary decree allowing account production through a commissioner to determine final liability.

What did the court decide?

Preliminary decree allowed; respondent directed to pay admitted amount of Rs. 30,21,883, costs of Rs. 5,00,000 for unreturned STBs, and interest at 18% contractual rate plus pendent lite interest.

Indusind Media & Communications Ltd. vs Home Cable Network… — Company and Corporate | TDSAT (2010)

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TELECOM DISPUTES SETTLEMENT & APPELLATE TRIBUNAL

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TELECOM DISPUTES SETTLEMENT & APPELLATE TRIBUNAL NEW DELHI

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DATED 28^th MAY 2010

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Petition No.132(C) of 2009

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Indusind Media & Communications Ltd. …Petitioner

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Vs.

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Home Cable Network Pvt. Ltd. …Respondent

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BEFORE:

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HON’BLE MR. JUSTICE S.B.SINHA, CHAIRPERSON HON’BLE MR. G. D. GAIHA, MEMBER HON’BLE MR. P.K.RASTOGI, MEMBER

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For Petitioner

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: Mr. Kailash Vasdev, Sr. Advocate with Mr. Sanjay K. Shandilya, Advocate Ms. Ekta Mehta, Advocate

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For Respondent : Mr. Sudhir Nandrajag, Senior Advocate Mr. Gaurang Kanth Mr. Rahul Kumar, Ms. Anjul Singh, Advocates

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JUDGEMENT

S. B. Sinha

The petitioner is a Multi Service Operator. The respondent is also a Multi Service Operator (MSO). The parties hereto are carrying in business in providing Cable Television Services. The petitioner in the usual course of its business also transmits programmes in addressable system. For the said purpose it engages other MSOs in carrying Television Signals to individual subscribers. For the said purpose Set Top Boxes and other allied equipments including signals for the basic service tiers i.e. Free to Air Channels and Pay Channels are provided.

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Indisputably a notification was issued in December 2006 by the Telecom Regulatory Authority of India (TRAI) in terms of Section 13 (1) of the Telecom Regulatory Authority of India Act 1997 (The Act), whereby CAS system was introduced in the city of Delhi. The respondent admittedly was not equipped to provide CAS Services to its customers in terms of the directions issued by TRAI.

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The petitioner was authorized by TRAI to provide signals on request to such cable operators and/or valid to the MSOs. Pursuant to in and furtherance of the aforementioned directions of TRAI parties hereto entered into negotiations and consequently entered into an agreement as on 15^th May 2007. Some of the relevant clauses of the said agreement are as under :-

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IMCL shall provide STBs for the subscribers and cable operators/affiliates of HCNPL

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IMCL will provide Digital feed to HCNPL with encrypted pay channels and Free to Air channels in Digital Mode. The addition or deletion of channels in future shall be intimated to HCNPL.

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HCNPL shall be responsible for collection of pay channel subscription of all the STBs issued to HCNPL or its affiliate cable operators and will pay to IMCL on monthly basis.

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As mutually agreed, 4000 STBs shall be provided to HCNPL on a concessional basis which is 2000 boxes on Rent free basis and 2000 boxes on Rent @ 30/- per month. For all these 4000 boxes, HCNPL shall provide undertaking as prescribed by IMCL on Corporate security and will act as custodian of the same. The boxes shall remain the property of IMCL and shall be returned in case of termination of this Agreement.

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HCNPL has undertaken that instructions received from IMCL through Electronic Mail or through Courier or through FAX or through Speed Post or through Registered Post shall be valid and complied with without delay.

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Clause 6 of the said agreement provided for security deposit. Respondent admittedly deposited a sum of Rs. 2,00000/- by way of security. The respondent in terms of the said agreement was inter alia obligated to :-

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“HCNPL shall indemnify IMCL from all cost, expense and damages by reason of any claim, action or proceedings from any third party or from subscribers for any inconvenience, loss or annoyance caused to them due to any default of HCNPL or due to termination of this Agreement or suspension of the services due to HCNPL’s breach under the Copyright Act, TRAI Regulation and the Cable Television Act rules applicable thereto.

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HCNPL undertakes to deposit the collections received from its affiliates/subscribers to IMCL without delay on monthly basis within a mutually agreed period of time.”

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The parties could terminate the agreement by giving 30 days notice to the other party. Clause 13 of the said agreement further stipulates :-

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“HCNPL shall, within five (5) days of the expiration or termination, as the case may be, of this Agreement in terms of the provisions mentioned herein, hand over to IMCL all properties and assets

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belonging to IMCL which are in the possession of HCNPL. HCNPL shall also be liable to make good all losses or damages caused to such properties and assets belonging to IMCL in the custody of HCNPL within seven (7) days of expiration or termination of this Agreement.”

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Indisputably the petitioner supplied a large number of Set Top Boxes and allied equipments to the respondent from time to time; although the exact number thereof is in dispute.

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In terms of the said agreement, the respondent was required to fill up Set Top Boxes Channel Selection Forms and Subscribers Registration Forms and submit the same to the petitioner. The petitioner contends that by reason of notices dated 26.07.2007 and 19.09.2007, it called upon the respondent to furnish full informations which were required to be given or return the Set Top Boxes stating:-

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“In pursuance of Agreement between us, we issued you Set Top Boxes as per your requisition and subscriber details. It has come to our notice that particulars of some of the subscribers as provided by you are not correct, in this connection, we hereby call upon you to provide us complete and correct details of subscribers and update the records. You are also requested to ensure that no signal other than the signals of IMCL is inserted on our network and it must be ensured that no pay channel is retransmitted in non-encrypted form.

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You are further requested to return our Set Top Boxes immediately to us which have been deactivated in the absence of non submission of subscriber forms by you. Please also ensure that payment of invoices raised by us is made without delay.

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As you are aware that from time to time we have brought to your kind notice the obligations imposed by the Standards of Quality of Service (B&C) Regulations, 2006 and further take this opportunity to call upon you to adhere to the said Regulations which are mandatory.”

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Admittedly, the petitioner did not receive any amount towards feed charges or charges towards rental of the Set Top Boxes, in terms of the said agreement.

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There also exists a dispute in relation to the period of supply of signals by the petitioner to the respondent. Whereas the petitioner contends that signals were supplied for the period January 2007 and April 2009; according to the respondent, signals were supplied only for the period August 2007 and 31^st March 2008. Another controversy between the parties is issuance and service of invoices and notices. We would refer thereto a little later.

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The respondent, however, contends that a large number of Set Top Boxes required repairs, which was the responsibility of the petitioner and which were returned to the petitioner but were not sent back to it after carrying

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out the repairs. It is, furthermore contended that the petitioner in gross violation of the said agreement started sending invoices to the subscribers directly and collected subscription fees from them.

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With regard to the Set Top Boxes, the respondent contends that the petitioner had supplied cheap quality Chinese made product, which were produced in 2003 and reached the market only in 2007. Enormous problems in the functioning of the said Top Boxes were noticed and the respondent at its own cost had to replace 2468 pieces of power adopters costing about Rs. 85/- to Rs. 110/- per piece. According to it, it had also found that 1364 number of remote controllers to be faulty and a considerable time was taken for sending them for repairs, getting them collected and finally sending them back to the subscribers, which have cost it about Rs. 50/- per piece. It is, also stated that till January 2008, 867 STBs were reported faulty, either in respect of the video parameters or distortion of audio which have to be collected from the subscribers’ premises and sent to the petitioner for requisite repairs wherefor also 2 to 3 weeks time had to be spent. The respondent furthermore contends that it started importing the Set Top Boxes for its own use and by April, 2008 it could run an integrated system.

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The respondent has also denied or disputed receipt of the petitioner’s letter dated 8.4.2009. It appears that on or about 4^th October 2007, the petitioner sent its invoices to the respondent for the months of May to September, 2007 as also for the month of January 2008, which again is denied by respondent. The petitioner has also contended that invoices for the months of December 2007 and February 2008 had been sent to the respondent.

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The petitioner claims that a sum of Rs. 92,50,362 was due towards feed charges as also towards rental of the Set Top Boxes.

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In support of their respective cases, whereas the petitioner examined Mr. Anil Malhotra President (Operation), North Zone and Mr. V. B. Sharma, DGM, Finance, the respondent examined its Managing Director Shri Vikky Choudhary. The parties have also placed on record a large number of documents.

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Before however, adverting to the rival contentions of the parties, we, at the outset may notice that the petitioner from the very beginning had been making requests before this Tribunal for direction(s) upon the respondent to return the Set Top Boxes supplied to it.

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On 29^th May, this Tribunal directed the respondent to furnish an inventory of the equipments which were received from the petitioner and had been lying with it. It was furthermore directed that if the same equipments were further distributed, the respondent should keep particulars of the parties to whom the aforementioned equipments had been supplied. It does not appear that the respondent complied with the said orders.

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The question came up for the consideration again on 31^st July and on that date the attention of this Tribunal was drawn to paragraph 11 of the reply of the respondent wherein it was admitted that 4268 STBs were supplied

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which was directed to be returned to the petitioner within 2 weeks. The learned counsel for the respondent also agreed thereto.

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On 28^th August 2009, this Tribunal was informed by the counsel for the respondent that out of 4268 STBs, 3450 have been returned to the petitioner. He had requested for more time to collect the rest STBs and return the same to the petitioner.

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This Tribunal furthermore noticed that the respondent had not supplied the inventory of the Set Top Boxes as directed on 29.05.2009 in relation whereto it was submitted that the same would be done.

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This Tribunal furthermore noticed the submissions of the learned councel of the petitioner to the effect that the respondent did not make any payment from the very beginning, to which the learned counsel for the respondent sought for some time to seek instructions.

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At this stage we may also notice the order sheet dated 20^th October, 2009. This Tribunal, keeping in view the submissions made at the bar directed as under :-

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“Learned counsel for the petitioner submits that order dated 28.8.2009 of this Tribunal has not been complied with. Learned Counsel for the petitioner further submits that the number of Set Top Boxes which have been returned so far is 3679 vis-a-vis 4268 which were given to the respondent at the time

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of commencing the services. The learned counsel for respondent submits that respondent needs some more time to return the Set Top Boxes to the petitioner. However, since more than 2 months have already elapsed after the orders were passed on 31.07.2009 by this Tribunal for returning the Set Top Boxes, the respondent should finally return all the Set Top Boxes within two weeks’ time from now and submit on affidavit, action taken report as per orders of the Tribunal. Learned Counsel for the petitioner submits that many of Boxes returned so far are totally damaged or not possible to be re-used again.”

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A review application was filed thereagainst but nobody appeared to press the same. The petition was dismissed, but the same was restored by an order dated 1^st February, 2010. It is not in dispute that the orders of its Tribunal dated 25.11.2009 so far as direction to make payment of the admitted amount of Rs. 30,21,883 is concerned, were complied with. There is also no compliance by the respondent also of the orders of this Tribunal relating to return of the Set Top Boxes.

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Mr. Kailash Vasdev, the learned senior counsel appearing on behalf of the petitioner would urge :-

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(a) The respondent having admitted receipt of signals was bound to pay for the feed channels as also return the STBs and, thus, this petition should be allowed.

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(b) The respondent having not complied with the various orders of this Tribunal, its defence should be directed to be struck off.

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(c) The respondent having not traversed the allegations made in the petition specifically, the averments made therein should be held to have been admitted.

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(d) The petitioner having supplied the Set Top Boxes to the respondent, it is entitled to a direction for return thereof and/or in the alternative the prices therefor.

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Mr. Sudhir Nandrajog, the learned senior counsel appearing on behalf of the respondent, on the other hand, urged :-

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(i) This petition is not maintainable as Mr. Sandeep Arya who has signed the petition was not authorized therefor by the Board of Directors.

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(ii) The industry of supply of signal in a digital form being a regulated one, the petitioner should have complied with the mandatory provisions contained in the Telecommunication (Broadcasting and Cable Services) Regulations ( The Regulation).

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(iii) The petitioner having neither issued nor served any itemized bill upon the respondent and its case being not that the respondent had collected the subscribers fees from the customers and did not pay the same to the petitioner, no case for passing any order in its favour has been made out.

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(iv) The petitioner having admittedly not taken any step to discontinue the supply of signals despite alleged defaults in making payments by the respondent would clearly go to show that they had not been sending any bill in terms of regulations, as a result whereof, this petition must be held to be not maintainable.

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(v) The petitioner in violation of the provisions of the agreement and/or Regulations having been sending bills to the customers, it must be held that it has also realised the amount in question.

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(vi) As the petitioner has not filed the original agreement, an adverse inference must be drawn against it.

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(vii) The petitioner having not filed the original books of accounts but having merely filed the summary thereof the same can not form the basis for proving it’s claim.

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(viii) The petitioner having admitted that it was in possession of the requisite software not only for ascertaining the number of channels but also the user thereof by all the customers and moreover it having not produced the bills, must be held to have no grievance against the respondent.

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(ix) So far as Set Top Boxes are concerned they had been purchased in 2003, the respondent being entitled to the depreciation in the price thereof, their book value must have become nil by this time.

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(x) The set top boxes actually having not worked, the petitioner is not entitled to the rental charges apart of 2000 STBs for which no rent was to be charged or the price thereof.

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(xi) The respondent by its e-mail dated 1^st July 2008 having categorically disclosed the reasons for not working of the Set Top Boxes, and no response thereto having been made, the petitioner must be held to have made itself disentitled from claiming any charges relying on or on the basis thereof.

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(xii) The evidence adduced by the respondent with regard to adopters, remote controllers and repairs of the STBs in relation to video and audio system, no case has been made out for passing any decree in its favour.

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(xiii) In view of the ‘Receipt Notes’ filed by the respondent, it must be held that all the 4268 Set Top Boxes have been returned.

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(xiv) The petitioner having not discharged its burden of proof as provided for in Sections 101 and 102 of the Evidence Act and in any event the nature of evidence adduced by the respondent being better than that of the petitioner, this Tribunal should hold the petition to be not entitled to any relief.

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(xv) As the petitioner has not proved, as to whether in terms of the Regulations, payment has been made to the broadcasters or to the LCOs, and it having informations in regard to user of Set Top Boxes, the petitioner must be held to have failed to prove its case.

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(xvi) The respondent having admittedly deposited the security amount of Rs. 2,00000, the petitioner could have recovered its dues from the said amount.

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The principal questions, which arise for our consideration are:-

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Whether the petition is maintainable ?

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Whether the respondent having not complied with the directions issued by this Tribunal, has made itself liable for its defence being struck off ?

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Whether the petitioner is entitled to decree for a sum of Rs. about One crore ?

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Whether the petitioner is also entitled to the price of the Set Top Boxes which have not been returned.

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Re : Question – 1

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By reason of a resolution dated 20^th May 2009, the Board of Directors of the petitioner authorized Shri Anil Malhotra, President, Operations, North Zone, Shri Sanjiv Ahuja, Head Legal and Shri Sandeep Arya, Legal Officer of the Company to file or cause to be filed recovery petitions against the defaulters including the respondent. The resolution has been signed by the company secretary. The requisite averments in this behalf has been made in paragraph 1 of the petition. The respondent in paragraph 1 of its reply merely denied passing of such a resolution and put the petitioner to strict proof thereof.

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Indisputably the provisions of the Code of Civil procedure stricto sensu are not applicable in the proceedings before us. The petition was signed by Shri Sandeep Arya and Shri Anil Malhotra has been examined by the

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petitioner as PW1. It is, therefore, evident that the petitioner company is being represented by a competent officer before this Tribunal.

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Shri Anil Malhotra alongwith his evidence by way of affidavit has filed a copy of his resolution dated 20^th May, 2009 which is certified to be a true copy. The same is at serial No. 1 of list of documents. Although the respondent had filed affidavit of its witness much after the cross examination of both PW1 and PW2, RW1 did not traverse the said contention. A company secretary is entitled to certify a copy of the resolution passed by a Board of Directorsto be a true copy. The authority of the company secretary in this behalf is not disputed.

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We having regard to the fact that PW1 Shri Anil Malhotra, who could represent the company has also examined himself in support of the petitioners case, the 1^st issue is answered in the favour of the petitioner.

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Re : Question 2

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Various directions issued by this Tribunal on various days, have not been complied with by the respondent from the very beginning without any rhyme or reason and/or without any sufficient cause by the respondent. Noncompliance of this Tribunal’s order merits a serious view.

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This Tribunal by an order dated 25^th November 2009 in view of the admitted position of the receipt of invoices upto the month of January, 2008 directed the respondent to deposit a sum of Rs. 3,21,883. The said order was

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passed in the presence of the learned counsel for the respondent. No argument was advanced before us by the learned counsel for the respondent that the said amount was not payable. It was also not contended that the respondent is not liable to make payments in terms of the agreement. Only much later namely on 11^th January, 2010 a purported petition for review was filed wherein inter alia it was contended :-

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“That the Respondent has no where admitted in para No. 12 of its reply that it had received any payment from the customers/subscribers. There is no admission on the part of the respondent that any payment was received from the customers for the period August 2007 to January 2008.

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That in para 12 of its reply there is specific denial by the respondent that it had received any invoice from the petitioner upto the period January 2008. The respondent in its reply in para No. 12 has stated “It is denied that on 4^th October 2007 petitioner had sent its invoices to the respondent for the months of May to September 2007 and subsequently invoices upto the month of January 2008”. Therefore the Hon’ble Tribunal has wrongly held that the respondent had admitted that it had received invoices upto January 2008.”

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This Tribunal by its order dated 15^th January, 2010 while dismissing the petition dismissed the review application also. However, the same was restored, and consequently the review application was also restored. However, again neither document pursuant to the said order was filed nor the affidavit of the witness were filed by

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the respondent. Despite the fact that PW1 and PW2 were cross examined and discharged, one weeks’ further time was granted to the respondent as it was stated by the learned counsel that the affidavits could not be filed on his personal ground. Although in view of the conduct of the respondent a serious view of the matter should have been taken but keeping in view the amount involved, we have heard the parties on merit of the matter also.

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We would however, consider the conduct of the parties at an appropriate stage in this judgement. We, therefore, in the facts and circumstances of the case are not inclined to strike off the defence of the respondent.

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Re : Question 3

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It is not in controversy that on or about 23 August 2006, the authority made the aforementioned Regulations. Addressable system has been defined in Regulation 2 (e).

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We may notice the same :-

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“2. Definitions:

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In this regulation, unless the context otherwise requires:-

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(a) “addressable system” means an electronic device or more than one electronic devices put in an integrated system through which signals of television channels can be sent in encrypted or unencrypted

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form, which can be decoded by the device or devices at the premises of the subscriber within limits of the authorization made, on the choice and request of such subscriber, by the service provider to the subscriber;

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CAS area has been defined thus :-

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(g) “CAS Area” means the State(s), City (ies), Town(s) or Area(s), where, in terms of a notification issued under sub-section (1) of section 4A of the Cable Television Networks (Regulation) Act, 1995 (7 of 1995), it is obligatory for every multi system operator / cable operator to transmit or retransmit programmes of any pay channel through an addressable system;

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‘Set Top Box’ has been defined in Regulation 2(q) in the following terms :-

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(q) “set top box” means a device, which is connected to, or is part of a television and which allows a subscriber to receive in unencrypted/descrambled form subscribed pay channels through an addressable system;

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Regulation 2(5) defines ‘subscriber’ to mean :

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(s) “subscriber” means a person who receives the signals of a service provider at a place indicated by him to the service provider without further transmitting it to any other person.

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Petitioner was authorized to supply signals to other MSOs by the Authority. The witness of the respondent has specifically admitted that it did not have the requisite MSO license from the Information & Broadcasting Ministry and furthermore keeping in view the introduction of the digital system in the town of Delhi, the parties have entered into the aforementioned arrangement.

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We may notice that without any pleadings in that behalf, Shri Vicky Choudhary in paragraph 5 of his affidavit stated as under :-

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“I say that the Petitioner approached the deponent because of Respondent existence subscriber base and requested the Respondent to enter into an arrangement with the Petitioner to supply Digital CAS Services through their Digital system and STB. Petitioner through its representative Mr. Anil Malhotra had earlier assured, promised and committed various terms to the Respondent in December 2006, which includes :-

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a) That the Respondent shall be liable for payment from subscriber only when the monthly invoices shall be delivered to the Respondent;

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b) The monthly subscriber invoice shall be delivered to the Respondent on each and every month;

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c) In case the Respondent collects monthly money from the subscriber, then only the Respondent is liable to make the payment to the Petitioner after deducting its commission of 5% plus.

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d) The Set Top Box (STB) shall bear no rental and shall be of good quality and the signals shall be uninterrupted and of good picture quality.

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We may furthermore notice that according to the said witness, alongwith the agreement was signed in May, 2007, the terms of arrangements arrived at by and between the parties were different. According to it good quality STBs were not supplied to the respondent.

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The execution of the agreement dated 15^th May, 2007 is not in dispute. It bears the signature of Shri Chowdhury. Infact apart from him the only other share holder of respondent company is Ms. Upasana Choudhary, his sister. We have noticed heretobefore the relevant terms of the agreement. We have also noticed heretobefore that the execution of the agreement is not in dispute. Thus, any evidence contrary thereto or inconsistent therewith would be inadmissible, in terms of section 91 and 93 of the Indian Evidence Act.

¶194

The respondent himself is a multi system operator. If its contention is correct, it by May 2007 was ready to switch over to the CAS system and, thus, why it had to enter into the said agreement has not been explained. In absence of any such explanation, it must be held that the parties are bound thereby. Even otherwise they would be bound. If the petitioner in complete breach of the agreement and/or in breach of Regulation 5.1 had been sending invoices directly to the subscribers and/or realizing the subscription fee from them; we fail to see any reason as to why no protest thereabout was made at an appropriate stage. A valid contract entered into between the MSOs was

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required to be given effect to. There is absolutely no reason as to why the petitioner, a company and whose Managing Director having taken part in the consultative process of the I&B Ministry and, thus, had knowledge about all the notifications issued by the Ministry or the Regulator, should be absolved from its contractual liabilities on flimsy grounds.

¶200

There cannot be any doubt or dispute that the Regulations would govern the contract between the parties but the same in our opinion does not mean that only because there is some non-compliance, the parties to a valid contract would be absolved from making any payment whatsoever in terms thereof.

¶201

With that backdrop in mind, we may notice Regulation 5.1 whereupon strong reliance has been placed by the learned senior counsel appearing on behalf of the respondent.

¶202

“Subscribers in CAS areas shall generally be billed on monthly basis and the bill should indicate the Service Tax Registration Number, Entertainment Tax Registration number of the MSO or the cable operator, as the case may be, as applicable. The entries in the bills must be itemized to separately indicate price of individual pay channel(s) or bouquet(s) of pay channels and the names of channels in the bouquet, as applicable, charges for basic service tier and the channels comprised therein, charges for set top box, amount of each type of tax levied and the rate thereof. This clause, however, does not

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preclude a cable operator/MSO, from promoting different schemes of payment in which case the bills can be raised at such periodicity as per the scheme opted by the subscriber.”

¶208

We may however, also notice that clause 5.2 of the Regulation mandates payment by the subscribers. Regulation 5.1 as it appears from its plain language is directory in nature. It, otherwise, also cannot be construed in a manner which would defeat the legitimate claim of a party. The regulation is in the nature of ‘Directions’. It although governs the contract, the same would not mean that in the event of even slight non-compliance, the entire contract shall become an un-enforceable one.

¶209

It is also of some significance to notice paragraph 17 of the Explanatory Memorandum appended to the said Regulation which reads as under:-

¶210

“17. Clauses 5.1 to 5.3 have been reworded so as to bring out at one place the billing requirements; in addition, the Service tax and Entertainment tax registration numbers should also be entered in the bill. These clauses have been amended to ensure that the subscriber has only one bill to pay – the arrangements between the MSO and the Cable Operator will be separately determined by the interconnection arrangements. Clause 5.2 also requires subscribers to ensure prompt payment and provides for deterrent to discourage delayed payments.”

¶211

The learned counsel submitted that the onus of proof was on the petitioner. Undoubtedly it was so but we must not also forget that it is now a well settled principle of law that when both parties adduce evidence, the

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question of burden of proof for all intent and purport becomes academic.

¶217

The respondent in reply to the statements made in para 12 of the petition does not state that the contents thereof are not correct. It admitted that the petitioner had activated the services from August, 2007 and continued the same upto January 2008. We may however, notice that the respondent’s witness in his cross examination admitted that the respondent started receiving signals from the petitioner on and from 1.1.2007.

¶218

We have noticed heretobefore that different stands were taken by the respondent from time to time. Whereas in relation to the agreement, it contended that sufficient quantity of STBs were supplied in May, 2007, a different stand had been taken in relation to the receipt of supply of signals. Mr. Choudhary at page 171 stated that they have received some invoices from the broadcaster; although in answer to the question as to whether he has received invoice for pay channels for the period the petitioner had been supplying signals from the petitioner, stated that all payments have been made to the broadcasters when some invoices been received as it had started dealing with them directly.

¶219

On the one hand the respondent contends that the petitioner should have produced books of accounts, to show how much payments it had made to the broadcasters, but itself failed and/or neglected to produce such documents. If it was correct that the respondent had not collected a single penny till June-July 2008 and the

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petitioner have been sending invoices directly to the customers; one would expect that not only the agreement would be terminated but also the respondent having acquired the requisite equipments would not continue to deal with the petitioner.

¶225

It is of some significance to notice that although the respondent has denied the receipt of the notice dated 21.2.2009, it when confronted with its letter, admitted that the same bears his signature but sought to explain the same stating it did not have a copy thereof in his records. The fact remains that the said letter dated 9^th March, 2009 belied his statements made in his affidavit of 10^th March.

¶226

It is also of some significance to notice that RW1 admitted that it had received signals from the petitioner and utilized the STBs given by them atleast for the period for 01.01.2007 to 31.03.2008. If the respondent did not make any collection from its customers, we fail to see any reason why it would receive the Set Top Boxes from the petitioner and that too in such huge quantity.

¶227

It is admitted that the network was being maintained by the respondent and according to the respondent itself, the matter relating to the repairs of STBs etc. was the responsibility of the petitioner. It is, therefore, difficult to agree with the contention of the respondent that the petitioner has started dealing with the customer directly and were realizing the invoiced amounts from them.

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It is in the aforementioned context, the question as to whether the respondent is a defaulter or not must be viewed. We have noticed heretobefore that the respondent have admitted supply of signal by the petitioner from August 2007 to 31.3.2008. The respondent, therefore can not escape its liability for the said period. We have also noticed heretobefore that this Tribunal by an order dated 25^th November 2009 directed the respondent to deposit a sum of Rs. 30,21,883 being the admitted amount. The said order has not been complied with.

¶233

We having heard the learned counsel for the parties do not find any reason to review the said order. We have arrived at the same conclusion upon taking into the consideration the respective cases of the parties and the oral evidence adduced by it.

¶234

It is now a well settled principles of law that having regard to the provisions contained in Section 58 of the Indian Evidence Act that things admitted need not be proved. If the respondent wanted to adduce any evidence for escaping its contractual liability, it was for it to adduce sufficient and cogent evidence therefor. It cannot despite admission rely upon the abstract principle of burden of proof only. The contentions raised by the learned senior counsel is that petitioner having not taken any step to deactivate the connection must be held to have admitted to have not been supplying the signals. We do not agree.

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It also cannot escape its liabilities only because some billing informations were sent to some customers directly. If the petitioner was realizing any amount from the customers directly, the same should have been proved. It is one thing to say that the petitioner had installed a software in its head-end for the purpose of ascertaining the actual numbers of the customers who had opted for certain channels, the number of channels and other details, the same by itself would not mean that the petitioner had been realizing the amount of subscription fee from the customers directly. Moreover, if the respondent’s witness has been able to produce from his custody, the billing informations sent by the petitioner to some customers, it could have also produced those customers as witnesses before this Tribunal.

¶240

Yet again no adverse inference can be drawn only because the original agreement has not been produced. A xerox copy of the agreement has been annexed to the petitioner as also with the affidavit of PW1. The contents thereof are not denied or disputed. The genuineness of the said agreement is not in question. The respondents’ signature thereupon has again not been disputed.

¶241

It is however, true that the petitioner has not filed all the invoices. It is also true that the invoices filed by the petitioner is a sample copy, from a perusal whereof it would appear that the details of the channels etc. had been given.

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We however, cannot appreciate the submission of the learned counsel that it was the only invoice which lacked some other details. It is stated that the franchisee code/name is not there at the relevant column. The name of the franchisee as also the code no. has been mentioned in the said invoice as FR 4511 MN – Home Cable.

¶247

In relation to the said customer which the respondent has been serving the details have been provided for. It is true that the column ‘previous balance’ and the ‘payments received’ column are blank. It was so, because it was for the respondent to realize the amount and it was within the special knowledge as to whether the said customer has made any payments or not. The respondent does not state that the other details contained therein are wrong.

¶248

We may place on record the submission of Mr. Kailash Vasdev that the whole lot of invoices have been brought before this Tribunal but the same being voluminous in nature had been taken back.

¶249

It is true that the respondent’s notice letter dated 4^th October, 2007 addressed to the respondent did not state the amount due. It, however, enclosed invoices for the months of May, 2007 to September 2007 numbering 2131, 2147, 2145, 2146 and 2259 number of invoices.

¶250

The numbers of the invoices varied, presumably because of the number of active STBs. It is however, incorrect to say that the same was not on the letter head of the petitioner. The logo of the petitioner company can be found out on the right side of the said letter head. It was an office copy. It even was needed to be kept on the letter head of the petitioner. As only an office copy of the said letter dated 4^th October, 2007 has been produced, it

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would be too much to expect that the same would also be on the letter head of the petitioner. The said office copy bears the stamp of the respondent and a signature of a person receiving the same. Similarly, we find that on the same date an invoice for the month of October, 2007 was sent to the respondent by another letter of the same date. Invoices for the month of November 2007 had also been sent enclosing therewith 2254 number of invoices. The petitioner also relies upon a letter dated 20^th December, 2007 addressed to RW1, which reads as under :-

¶256

“We regret to express that despite our several meetings on the issue, you have not paid the amount due to us.

¶257

Please note that our requests regarding return of our Set Top Boxes for which you have not provided channel selection forms with requisite papers have not been responded by you till date. In this connection, our letters dated 10/09/2007, 26/07/2007 and 16/06/2007 may please be referred.

¶258

Since a considerable time has passed and you have availed our services and hardware without making payments for the same, we are constrained to issue this demand notice for recovery of our money due to you.

¶259

Enclosed herewith is statement of account wherein details of pay channel subscription and STB Rent are given. Also enclosed is list of Set Top Boxes issued to you against which you have not provided Channel Selection Forms with requisite papers.

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Failure to comply this request shall be viewed seriously and money due along with our hardware shall be recovered through legal recourse which shall be at your own costs and risk.

¶265

The petitioner has also filed a letter dated 4^th January, 2008 which is to the following effect :-

¶266

“Please find herewith the 2259 Nos. of invoice and summary sheet for the month of December’ 2007.

¶267

We request your cooperation to ensure that the bills are handed over to each of our CAS area customers.

¶268

Please acknowledge the same.”

¶269

It is true that the respondent has denied and disputed the receipt of the said letter. The petitioner however, produced certain registration receipts. One of them has been addressed to RW1. Some acknowledgment due cards have also been filed to show the receipt of some letters. One of them which is at page 144 of the paper book bears the same stamp similar to the one which finds place at pages 124, 125 & 126 of the Paper Book. We find that petitioner has also filed several statements of accounts, the correctness whereof has been proved by PW2 Mr. V. B. Sharma.

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It is true that in terms of the provisions of section 34 of Indian Evidence Act, no claim can be proved only on the basis of the books of accounts. The said provisions reads as :-

¶275

“34. Entries in books of account when relevant - Entries in books of account, regularly kept in the course of business, are relevant whenever they refer to a matter into which the Court has to inquire, but such statements shall not alone be sufficient evidence to charge any person with liability.”

¶276

In this case, however the petitioner does not rely upon the books of accounts alone. It principally relies upon the agreement, a large number of documents and in particular the admission of the respondent itself. The agreement in question, it will bear repetition to state, ordinarily should have been acted upon by the contracting parties. It was thus for the respondent to establish as to why it could not do so.

¶277

Reliance has been placed upon Chandradhar Goswami and Others Vs. Gauhati Bank Ltd. 1967 Vol. I SCR 898 : AIR 1967 SC page 1058. It is clearly distinguishable. It was a case where a loan was given to the defendant sought to be proved by the banker only on the basis of the books of accounts. The defendant therein denied and disputed the fact that he had taken any loan. Correctness of the books of accounts were also questioned. It is in the aforementioned situation, the suit was dismissed. The said decision has been distinguished by this Tribunal in a number of decisions.

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The comment of the learned counsel that the petitioner having also not produced its original books of accounts would not be entitled to a decree, in our opinion, cannot be accepted. The accounts maintained by the petitioner as was mentioned by PW2 Mr. V. B. Sharma are in digital form. They, according to Mr. Sharma are maintained in the computers. Mr. Sharma in his cross examination, although accepted that he had not personally gone to serve the invoices and the letters, stated :-

¶283

Q. Do you have any proof that invoices have been received by the respondent ?

¶284

A. Yes in some case.

¶285

The witness is called upon to show those documents.

¶286

The witness points out the pages 124, 125, 126, 128, 129 (PW 1/9 to 1/11).

¶287

Q. Did you personally go to serve the aforementioned invoices ?

¶288

A. No I did not.

¶289

Q. Do you know who have signed on the behalf of the petitioner ?

¶290

A. He is not in service.

¶291

It is incorrect to suggest that these invoices were never issued by the petitioner nor served upon the respondent.

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He furthermore stated :

¶297

The witness is shown page 124 and 146.

¶298

Q. Why in those document the No. of set top box 2131 were shown in the covering letter of invoices when approx 4800 set top boxes have said to been issued by May 2007.

¶299

A. Invoices were sent only for active set top boxes which were bearing pay channels.”

¶300

He furthermore stated :

¶301

Q. Is there any policy decision adopted by the petitioner as to the normal period with in which the set top boxes would be deactivated if no payment is received ?

¶302

A. There is no such policy. Moreover there was no question that the subscriber making directly to us. The payments were to come from LCO or MSO.

¶303

Attention of the witness is drawn to clause 2 and 3 of the invoice at page 129.

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Q. It is not correct to suggest that it is policy of the petitioner company to deactivate the set top box of the subscriber if no payment is made within the due date.

¶309

Vol – Formate of invoice is a standard form.

¶310

It is incorrect to suggest that statement of account is incorrect.

¶311

It is incorrect to suggest that PW1/18 to 1/28 have never been issued by the respondent

¶312

We have gone through the entirety of the cross examination of Mr. V. B. Sharma. We do not find any question having been put to him with regard to correctness or otherwise of the mode or manner in which books of accounts were being maintained.

¶313

We therefore, are of the opinion that it is a fit case where a preliminary decree for accounts should be passed for the period January, 2007 to July 2007 and April 2008 to April 2009. It would be open to the parties to produce their books of accounts and other documents including invoices before the learned commissioner who may be appointed in this behalf. Keeping in view the nature of jurisdiction, this Tribunal possesses, we are entitled to mould the relief.

¶314

Re : Question - 4

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We have noticed heretobefore that with regard to Set Top Boxes various interim orders have been passed by this Tribunal from time to time. The respondent’s had taken various stands from time to time. The respondents witness in an Email dated 1.7.2008 admitted receipt of 5343 Set Top Boxes. RW1 however, in his affidavit stated as under:-

¶320

“I say that the Respondent has returned 4589 number of STBs to the Petitioner from time to time in the month of April, 2009 to June, 2009 by its own private commercial vehicle. I further say that the employees of the Respondent on various occasions personally returned the said STB’s to the authorized person of the Petitioner and the same was received by the Petitioner. I further say that the said STBs were duly received by the Petitioner who has intentionally concealed the said fact in its petition.

¶321

According to it, 4589 STBs were returned. We have noticed heretobefore in an order, this Tribunal has referred to 4795 STBs. The respondent before this Tribunal has also in its reply admitted receipt of 4268 STBs. It appears that according to the respondent, it had returned a large number of STBs which are evidenced by Goods Receipt Notes being Exhibit 1/1 to Exhibit 1/21. The STBs returned according to the respondent before this Tribunal were 3679 STBs. The respondent itself had agreed to bear the costs of the rest STBs. The PW2 has stated that the cost of the STBs was Rs. 2931. PW2 in his evidence stated as under :-

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“I state that the cost of one set top box is approx. Rs. 2,931/- as per the purchase cost of the petitioner.”

¶327

There is no evidence in rebuttal thereof. RW1 in his evidence however, stated that he had imported about 4180 STBs, out of which 3300 and odd had already been installed as on the date of its deposition. According to him the price of the said STBs were about $18 to $28.

¶328

Strong reliance has been placed by the learned counsel on the E-mail dated 1.7.2008. The said E-mail reads as under :-

¶329

“Repeatedly, I have been telling you and your people visiting me that the solutions they have been giving us, are not working accordingly, it always been a trial error method that been suggested. After there have been repeated disruption in your digital feed signal. I had no option left but to energise my own CAS digital signal feed where as a lot of your supplied STB where lying defective with our subscribers, we had to bring back and replace those faulty STBs with our own CAS enabled STBs, and still we are in the process of getting these replaced. As per your record since January 2007 till 31^st January 2008 we were provided 5343 STBs. Kindly check how many of these STBs has been sent back to you during this period of one year for repairs and replacements and how many of these are still lying

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with you. Anyhow I had already given you the details of how many STBs were faulty, how many power adapters were replaced by us for the same and how many STB Remote controllers were repaired and the entire cost borne by us, in case you still decide to charge rent for these STBs then in that case I would like you to adjust all cost towards, repairs, replacements, transportation, etc. on account of this malfunctioning in almost 80% of the STBs supplied by you. Henceforth we should reconcile our statement of accounts accordingly.

¶335

Whereas we had already prepared a complete inventory of the STBs supplied by you, with the complete individual history of its functioning/malfunctioning, repairs and replacement of parts made by us.

¶336

Kindly depute someone from your organization to kindly verify and reconcile this date for the STBs so that we can settle your accounts accordingly.”

¶337

It may be true that the respondent’s case is that it had purchased 2468 power adapters, 1360 remote controls and 867 STBs were otherwise defective. RW1 however, categorically stated that the repair of the STBs was the responsibility of the petitioner. It furthermore stands admitted that a large number of STBs were being returned by the respondent to the petitioner from time to time. No evidence however, has been produced to show how many of them had been returned and how many had been after repair came back to the respondent. The respondent is a

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company. It must be maintaining its books of accounts. It is an Income Tax assesse. It is an old MSO. It is capable of running not only a head end in a non-CAS area but also a head end for a CAS area.

¶343

While it criticized non-production of the documents by the petitioner should not produce the documents itself is the question. How much amount it expended towards purchase of adopters or remote controllers have not been disclosed. Why it had not complied with the order of the Tribunal has also not been explained. It has also not explained the admission made by it before this Tribunal as also the number of Set Top Boxes received by it. It had a contractual obligations. Admittedly it has been using the equipments supplied to it by the petitioner. It was, therefore, for it to file its books of accounts. Therefore, we while directing the respondent to pay the value of the number of Set Top Boxes which are with it namely 5343 – 3679 = 1664.

¶344

However, we would also direct that the depreciated value of the said Set Top Boxes may also be taken into consideration by the learned Commissioner.

¶345

We really are unable to accept that a party to a valid contract would take the services of the other, utilize a large number of set top boxes, would get them repaired at the cost of the petitioner but would refuse to pay the subscription charge and return the same or pay the value thereof. It, even despite the termination of contract would not return the same on its own volition and even for that the court’s intervention would be necessary.

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We, however, must also place on record that the respondent has furnished security to the extent of Rs. 2,00000/- while computing the balance amount payable by the respondent to the petitioner, the learned commissioner shall also take into account the said amount. We, however for the present and on an adhoc basis direct the respondent to pay a sum of Rs. 5,00000/- by way of costs of Set Top Boxes subject of course to the adjustment therefor.

¶351

We have no strong words to deprecate the conduct of the respondents. We have refrained ourselves, as at present advised from initiating any proceeding against the respondent under section 20 of the TRAI Act. Despite existence of good grounds we have not struck off its defence. We have also shown great indulgence to the respondent while passing the decree.

¶352

We, therefore, not only allow interest of the contractual rate of 18% per annum on the sum due, we would also grant pendentelite and future interest @ 12% per annum from the date of filing of this petition till the actual realisation whether in terms of this judgement or in terms of a final decree which will be passed upon receipt of the report of the learned commissioner. We also award costs. Counsel’s fee assessed at Rs. 2,00000.

¶353

For appointment of the commissioner for the aforementioned purposes we will hear the parties.

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This petition is allowed to the aforementioned extent. Let a final decree be drawn up for the sums already awarded to the petitioner including a sum of Rs. 30,21,883/- and a preliminary decree in terms of the directions made hereinbefore. We make it clear that the parties shall be entitled to produce their books of accounts only for the relevant period. However, they shall not adduce any oral evidence except with the leave of this Tribunal. Learned Commissioner is requested to submit a report within a period of 4 months.

……………....., J

(S.B.Sinha)

Chairperson

…………….....

(G. D. Gaiha)

Member