SUN DIRECT TV PVT LTD vs MSM DISCOVERY PVT. LTD. on 1 October 2008

ORDER

This is a peƟƟon filed by Sun Direct TV Pvt. Ltd seeking a direcƟon to the Respondent, MSM Discovery Pvt Ltd, to enter into an interconnecƟon agreement with the PeƟƟoner for interconnecƟon/supply of signals to the PeƟƟoner for their DTH plaƞorm, in accordance with the InterconnecƟon RegulaƟons; to declare that the Respondent has violated the provisions of

the interconnecƟon regulaƟons and penalise them for the same; to award exemplary costs on the Respondent in favour of the PeƟƟoner for non-signing of the agreement and passing such other orders as this Tribunal may deem fit.

2. When the maƩer first came up for direcƟons on 11th April 2008, this Tribunal advised the parƟes to arrive at an amicable seƩlement and, as an interim measure, the Respondent was directed to provide signals of One Alliance (15 channels minus one channel i.e.,Ten Sports, which is no longer in their bouquet) to the PeƟƟoner at the rate of Rs.67 per month per subscriber. The PeƟƟoner however filed a Miscellaneous ApplicaƟon no. 44 of 2008 seeking an amendment of the Order passed on 11.4.08, to allow the PeƟƟoner to choose channels on à la carte basis. By this Tribunal's order dated 8th May 2008, the PeƟƟoner was permiƩed to exercise its choice as per à la carte basis and as desired by the PeƟƟoner, the Respondent was directed to supply the channel SET MAX to the PeƟƟoner on à la carte basis as per rate indicated by them. The maƩer came up for hearing on 1st September 2008 when the counsel for Respondent stated that the Brief Reply filed by them on 8 May 2008 be taken into consideraƟon and that no addiƟonal Reply need be filed by them. The counsel for PeƟƟoner also having stated that there is no need to file a Rejoinder, the arguments of both parƟes were heard on 1st and 3rd September 2008.

3. Briefly, the PeƟƟoner had, in July 2007, sought signals from the Respondent for their DTH plaƞorm. There was some correspondence in July - August 2007, as well as in January 2008, between the Respondent and the PeƟƟoner which however did not reach a conclusion. While things stood thus, the Telecom Regulatory Authority of India (TRAI) noƟfied, on 3.9.2007, the TelecommunicaƟons (BroadcasƟng and Cable Services) InterconnecƟon (fourth amendment) RegulaƟons, 2007, which came into force on 1.12.2007. In February 2008, the PeƟƟoner took up the case with the Respondent to provide the Respondent’s channels along with terms and condiƟons. The Respondent had, in accordance with the interconnecƟon regulaƟons, published

on its website the Reference InterconnecƟon offer (RIO) seƫng out the terms and also lisƟng its channels along with à la carte/bouquet rates of the said channels which are 15 in number. AŌer further correspondence, the Respondent sent to the PeƟƟoner, on 04.04.2008, the proposal along with the draŌ term sheet to which the PeƟƟoner proposed certain amendments. On 05.04.2008, aŌer iniƟally seeking acƟvaƟon of channels and wanƟng to complete the process by 07.04.2008, the PeƟƟoner sought signals of one channel --SET MAX—and for only three months, which was not agreed to by the Respondent. The maƩer not having been resolved between the two parƟes, the PeƟƟoner filed the present peƟƟon before this Tribunal.

4. The case of the PeƟƟoner is that he had been in correspondence with the Respondent since July 2007. Right from the beginning, he had been seeking terms and condiƟons for both bouquet and channels on à la carte basis. The RIO having been published as per the InterconnecƟon RegulaƟons, the Respondent was obliged to follow the provisions of the RIO, which included the price à la carte. The PeƟƟoner contends that right from the beginning, the supply of signals on à la carte basis was a maƩer of specific correspondence. Notwithstanding the passage of long Ɵme as well as the noƟficaƟon of the InterconnecƟon RegulaƟons, the Respondent’s failure to enter into an agreement within the sƟpulated period of 45 days is in violaƟon of regulaƟons 13.2 A.7 (1) of the InterconnecƟon RegulaƟons 2007, and is severely hampering the growth of the PeƟƟoner's DTH plaƞorm besides adversely affecƟng the viewing rights of about 500,000 subscribers.

5. The case of the Respondent is that they had published a Reference Interconnect Offer (hereinaŌer referred to as RIO) on their website and a copy of it was made available to the PeƟƟoner on 29.02.2008. Although regulaƟons require the PeƟƟoner to make a request for signals, no such request was made. His contenƟon is that as per the regulaƟons, the RIO is only a basis for negoƟaƟons, and is not a mandatory document. A SubscripƟon Agreement is a

prerequisite for supply of signals and since there is no agreement, they cannot be expected to supply signals whether on à la carte basis or on bouquet basis. The Respondent contends that the negoƟaƟons with the PeƟƟoner centred round supply of bouquet of channels and not single channels on à la carte basis. The Respondent’s case is that the PeƟƟoner has all along been negoƟaƟng for the enƟre bouquet and not for just one channel. While the PeƟƟoner had agreed even on 05.04.08 to a bouquet, they resiled from the same on the same day and instead sought only one channel, namely SET MAX, that too for a period of only three months, as against the RIO sƟpulaƟon of a five-year period. They also point out that even on the first date of hearing before the Tribunal i.e., on 11.04.08, the PeƟƟoner had agreed to avail of the enƟre bouquet of channels at the bouquet price of Rs. 67 per subscriber per month, which was the basis of the consent order passed by the Tribunal. However, the PeƟƟoner had suddenly changed stance and subsequently sought only one channel -- SET MAX -- in order to avail of the facility of showing IPL matches. The Respondent's contenƟon is that the PeƟƟoner used the IPL matches to sell and promote its own DTH services and that immediately aŌer the IPL matches, the PeƟƟoner increased the channel price from free subscripƟon to Rs. 20 per subscriber per month even though he was receiving the channels at a much lesser price. The Respondent's contenƟon is that this is a deliberate aƩempt by the PeƟƟoner firstly to promote his DTH operaƟons by offering the SET MAX channel free of cost and then 'kill' the channel by pricing it exorbitantly. The counsel for Respondent stated that having enjoyed the benefit of a single channel, the PeƟƟoner is now bound to pay for the enƟre subscriber base of 5 lakh, which is admiƩed by him in his peƟƟon, at the rate of Rs.67 per subscriber per month.

6. The case of the Respondent is that the relief originally sought being for a direcƟon to sign the interconnect agreement qua the channels offered by the Respondent in the RIO, and the word à la carte missing in the enƟre peƟƟon, the PeƟƟoner cannot now seek to avail signals on à la carte basis. He also states that in the absence of pleadings, evidence/material produced by the PeƟƟoner cannot be considered and that the applicaƟon for modificaƟon of their

averments cannot be considered for grant of relief in the main peƟƟon. The Respondent also states that the PeƟƟoner had concealed material facts in his peƟƟon before this Tribunal and cites, in this context, the communicaƟon dated 05.04.08 from the PeƟƟoner to the Respondent. The Respondent pleads that the peƟƟon itself is not maintainable on grounds of non-execuƟon of agreement, on grounds of concealment of material facts before the Tribunal, and on the ground that the PeƟƟoner had approached the Tribunal prior to expiry of the mandatory 45 day period.

7. From the wriƩen as well as oral arguments of both the PeƟƟoner and the Respondent, the following issues arise for consideraƟon: A. whether the peƟƟon is maintainable? B. whether the PeƟƟoner is enƟtled to seek channels on à la carte basis? C. whether the Respondent is right in demanding that the PeƟƟoner should take signals for five years? D. whether the PeƟƟoner is right in declaring sudden and steep drop in the number of subscribers? E. whether the PeƟƟoner is enƟtled to charge Rs. 20 per subscriber per month for the channels SET MAX while taking the same from the Respondent at Rs. 8.50? We now proceed to examine these issues.

8. The Respondent's contenƟon is that the peƟƟon is not maintainable since the PeƟƟoner has not made a formal request which is required as per the RIO. We do not find much support for this contenƟon. It is admiƩed by both parƟes and also supported by evidence on record that the peƟƟon had been seeking signals from July 2007 onwards. In fact, the enƟre process

started even in June 2007, when the PeƟƟoner sought from the Respondent authorisaƟon for the purchase of decoders. Even assuming that the reference date is the date on which the fourth amendment, issued on 03.09.2007, came into force viz., 01.12.2007, it is an admiƩed fact that the request was pending on that date. On 18.2.2008, the PeƟƟoner had once again requested the Respondent for terms and condiƟons for both à la carte as well as bouquet. The peƟƟon having been filed on 10th April 2008, the period of 45 days had definitely expired. We therefore do not agree with the contenƟon of the Respondent that the statutory period of 45 days was not over. Similarly, non-execuƟon of agreement cannot be a ground for quesƟoning the maintainability of the peƟƟon since the request of the PeƟƟoner was itself pending. In the absence of an understanding between the two parƟes, the quesƟon of execuƟon of agreement does not arise. In his reply as well as in the arguments, the Respondent alleged that the PeƟƟoner has deliberately suppressed and concealed relevant correspondence between 04.04.2008 and 09.04.2008 and that the main peƟƟon is silent on this aspect. We find that the PeƟƟoner had filed addiƟonal documents on 17th April 2008 including the e-mails communicated by the Respondent. Considering that the PeƟƟoner had filed these documents suo moto, and before it was pointed out by the Respondent, we do not consider this a material breach. On all counts, therefore, we reject the contenƟon of the Respondent that the peƟƟon is not maintainable.

9. The main contenƟon of the Respondent is that all along, the PeƟƟoner was seeking signals for the enƟre bouquet of channels and that the choice of à la carte was never under consideraƟon. His contenƟon is that it is only on 05.04.08 that the PeƟƟoner made a sudden U- turn and sought signals on à la carte basis for only SET MAX and that too for a period of three months. From the record, we find that right from the beginning the PeƟƟoner was seeking the terms and condiƟons for signals on à la carte basis alongside the terms for bouquet. In fact, the request for à la carte signals dates as far back as 9th July 2007. The Respondent himself had, his

communicaƟon of 16th July 2007, indicated to the PeƟƟoner that they are welcome to pick up signals on à la carte basis at 50% of the declared non-CAS cable rates. From the correspondence, we find that the request for à la carte choice was conƟnuously being made by the PeƟƟoner. The deal sheet sent by the Respondent to the PeƟƟoner on 17th August 2007 clearly gives the à la carte rate opƟon. Besides, the Reference Interconnect Offer also indicates the opƟons of bouquet as well as à la carte. It is true that the communicaƟon sent by the PeƟƟoner to the Respondent in the morning of 5th April 2008, seeking acƟvaƟon of channels and wanƟng to complete the process by 7.4. 2008, does not give the impression of wanƟng only SET MAX channel. However before any acƟon could be taken by the Respondent thereon, the PeƟƟoner had, on the same evening, sent another communicaƟon seeking SET MAX channel only for three months and indicaƟng that this will give Ɵme for both the parƟes for processing the necessary agreement. It cannot therefore be said that the request for SET MAX channel is only an aŌerthought. The request for channels on à la carte basis was being conƟnuously made and this opƟon also figures in the RIO.

10. In this context, it is necessary to recall that this Tribunal had in peƟƟon no.189 (C) of 2006 in the case of Tata sky limited versus Zee Turner Ltd and others had observed as follows: "... if a DTH operator has to take all the channels of every broadcaster it may not be physically possible to do so. Moreover, if every channel has to be taken it means that it will have to be paid for. This will increase the cost for the DTH operator. UlƟmately, the cost will get passed on to the consumer ..." "... it is relevant and important that a DTH operator may not like to take all the channels of a parƟcular broadcaster and exhaust its transponder capacity by taking unwanted channels. AŌer all, the DTH operator is in business and it has to watch its business interests ..." The Telecom Regulatory Authority of India took cognizance of these observaƟons and also pointed out, in their Explanatory Memorandum to the InterconnecƟon RegulaƟons no. 9 Of

2007, that there is also a technical limitaƟon on the number of channels that a DTH operator can carry on its plaƞorm, parƟcularly given that the transponder space is limited. Accordingly, regulaƟon 13.2A.11 of the interconnecƟon regulaƟons no.9 of 2007 reads as follows: "It shall be mandatory on the part of the broadcasters to offer channels on à la carte basis to direct to home operators and such offering of channels on à la carte basis shall not prevent the broadcaster from offering such pay channels in the form of bouquets. ..." It is thus clear that the PeƟƟoner has the right to seek channels of his choice from the Respondent on à la carte basis.

11. In the course of his arguments, the counsel for Respondent contended that the PeƟƟoner had, on 05.04.08, asked for a special deal for SET MAX for three months. According to him, the original request as also the one made in this peƟƟon is for the enƟre bouquet. His contenƟon is that the PeƟƟoner is now estopped from changing his stand and seeking channels on à la carte basis. He also stated that the request for channels on à la carte basis does not form part of the pleadings, and that he should not be permiƩed to travel beyond the pleadings. He drew our aƩenƟon to the judgement of the Hon'ble Supreme Court in Ram Sarup Gupta v. Bishun Narain Inter College and others (1987) 2 SCC 555, wherein it was held that "... it is well seƩled that in the absence of pleading, evidence, if any, produced by the parƟes cannot be considered. It is also equally seƩled that no party should be permiƩed to travel beyond its pleading and that all necessary and material facts should be pleaded by the party in support of the case set up by it. … In order to have a fair trial, it is imperaƟve that the party should seƩle essenƟal material facts so that other party may not be taken by surprise ...". The counsel for PeƟƟoner firstly refuted the fact that the necessary material had not been placed on record. He drew aƩenƟon to the fact that various communicaƟons have already been placed before the Tribunal as part of the original peƟƟon as well as the documents subsequently filed which show that the PeƟƟoner has been seeking signals on à la carte basis. We note the relevance of the

judgement cited by the learned Counsel for Respondent. But it is also perƟnent to note that the Hon’ble Supreme Court also obsered, in the very case cited supra that "... the pleadings however should receive a liberal construcƟon; no pedanƟc approach should be adopted to defeat jusƟce on hairspliƫng technicaliƟes. ...It is not desirable to place undue emphasis on form, instead the success of the pleadings should be considered…… In BhagawaƟ Prasad v. Chandramauli [(1966) 2 SCR 286], a consƟtuƟon bench of this court considering this quesƟon observed: if a plea is not specifically made and yet it is covered by an issue by implicaƟon, and the parƟes knew that the said plea was involved in the trial, then the mere fact that the plea was not expressly taken in the pleadings would not necessarily disenƟtle a party from relying upon it if it is saƟsfactory proved by evidence…”.

12. As already noted by us, there is compelling evidence to show that the PeƟƟoner had all along been asking for a choice on à la carte basis and this formed the subject maƩer of various communicaƟons between the PeƟƟoner and the Respondent. Keeping in view this posiƟon as well as the regulatory provisions, we hold that the PeƟƟoner is enƟtled to channel/s of their choice and accordingly direct that the Respondent should provide the PeƟƟoner with the channels that is/ are sought.

13. In his wriƩen submission, the Respondent had menƟoned that the PeƟƟoner took advantage of receiving the SET MAX channel through the interim order passed by this Tribunal on 8th May 2008 and had issued an adverƟsement offering to show the IPL matches free of cost to its viewers and that the PeƟƟoner only wanted to promote its DTH services on the strength of IPL matches and was effecƟvely making the Respondent to subsidise the PeƟƟoner's acƟviƟes. The counsel for Respondent also stated that the PeƟƟoner was acƟng with mala fide intenƟons. As already noted by us, the request for supply of channels on à la carte basis was being consistently made by the PeƟƟoner and it cannot be said that this opƟon was only an aŌerthought. It is quite possible that the choice of channel made on 05.04.2008, namely SET

MAX, was in the context of IPL matches. But this is a choice that could be rightly exercised by the PeƟƟoner on the basis of the RIO. Likewise, they are free to promote the channel/s in any manner, so long as it is in conformity with the law in force.

14. In the course of arguments, the counsel for Respondent submiƩed that the PeƟƟoner should be directed to avail of signals for a period of five years and not for 3 months, on the ground that the RIO issued as per the interconnecƟon regulaƟons provides only for a five-year agreement. The RIO is no doubt a document that serves as a basis for negoƟaƟon. At the same Ɵme, the offer has been submiƩed to and veƩed by the Regulator. The Counsel for PeƟƟoner also confirms that the PeƟƟoner would be abiding by the sƟpulaƟon in the RIO.

15. During the course of arguments, the counsel for Respondent menƟoned about the sudden and steep drop in the number of subscribers in the period following the IPL matches. The counsel for PeƟƟoner has submiƩed that subscriber base is always verifiable since the DTH plaƞorm is an addressable system and that RegulaƟons cover this situaƟon. We are inclined to agree with this submission of the counsel for PeƟƟoner and direct that the payment will be strictly in accordance with the subscriber base as per the Subscriber Management System.

16. Another submission made by the counsel for Respondent during the course of arguments is that the peƟƟon is receiving the SET MAX channel at Rs. 8.50 per subscriber per month but that he is charging at the rate of Rs.20 per month from a subscriber and in the process profiteering at the expense of Respondent. The counsel for PeƟƟoner points out that he is enƟtled to do so under the regulaƟons and that he will abide by the provisions of the interconnecƟon regulaƟons no.9 of 2007. Clause 13.2A.13 of the telecommunicaƟons (broadcasƟng and cable services) interconnecƟon (fourth Amendment) regulaƟons, 2007 (no.9 of 2007) reads as follows: "... every direct to home operator ... may decide the packaging of the channels from such bouquet or bouquets which may be offered by it to its direct to home subscribers: ...(a) …... (b)

packages the channels comprised in such opted bouquet in a manner resulƟng in different subscriber base for different channels comprised in such opted bouquet, then, the payment, to the broadcaster for such enƟre opted bouquet by the direct to home operator, shall be calculated on the basis of the subscriber base for the channels which has the highest the channels comprised in that bouquet." It is therefore clear that the PeƟƟoner is enƟtled to receive a channel/channels of his choice from the Respondent and posiƟon them in the manner of his choice but at the same Ɵme he is obliged to pay to the broadcaster as per Clause 13.2A.13 of the TelecommunicaƟons (BroadcasƟng And Cable Services) InterconnecƟon (Fourth Amendment) RegulaƟons, 2007.

17. During the course of arguments, the counsel for PeƟƟoner stated that they had been paying to the Respondent at the rate of Rs. 12.50 per subscriber per month whereas the Respondent should have been charging only at the rate of Rs. 8.50 as per the direcƟon dated 16.06.08of TRAI. His contenƟon is that the payment at the rate of Rs. 12.50 was under the interim order of this Tribunal and that the payment made should be adjusted appropriately. It is an admiƩed fact that the RIO originally issued by the Respondent in February 2008 was subsequently amended in June 2008 at the intervenƟon of TRAI. The revised RIO indicates the price of SET MAX channel at Rs. 8.50. It therefore goes without saying that the PeƟƟoner is liable to pay only at the rate of Rs. 8.50 per subscriber per month from the date of receipt of signals for that channel and that addiƟonal payment made, if any, would need to be adjusted from the future bills. The PeƟƟoner shall however pay to the Respondent at the bouquet rate for the period they received the enƟre bouquet i.e. from the date of receipt of the bouquet vide the interim this Tribunal’s Order dated 11th April 2008 Ɵll the date of receipt of the single channel vide this Tribunal’s Order dated 8th May 2008.

18. In conclusion, we hold that the PeƟƟoner is enƟtled to the channel/s of his choice from the Respondent on à la carte basis. We direct the Respondent to supply signals of such channel/s that the PeƟƟoner may desire and at the rates and on terms indicated in the RIO. In the event the PeƟƟoner offers the channel/s received from the Respondent to his subscribers as part of a bouquet, then the payment will be made as per the InterconnecƟon RegulaƟons no. 9 of 2007.

The peƟƟon is accordingly disposed off without costs.

…………………………………….. (Arun Kumar, J)

………………………………… (J. S. Sarma)

…………………………….. (G.D. Gaiha)