S.B. Sinha, Mr. P.K. Rastogi, Member).
Althoughweagree with the draft judgment prepared by Shri. G.D. Gaiha,
Learned Member that the petition should be dismissed albeit without any order
as to costs, we may assign our own reasons therefor.
Petition No. 67 (C) of 2008, 68(C) of 2008, 69(C) of 2008 and 87 (C) of 2008 form one batch of petitions wherein petitioner had interalia prayed for an order of injunction against respondents directing them to restore its signals. On an interim prayer made by petitioner, this Tribunal by an order dated 24.04.01 directed respondent No.1 in each of these petitions to restore supply of signals.
The respondents herein contend that pursuant thereto or in furtherance thereof, supply of signals were restored.
The said order of injunction was prayed for inter alia on the premise that respondent No.1 in these matters for all intent and purport had taken over the network of petitioner.
This Tribunal recorded a prima facie finding that respondents could not have taken recourse thereto without complying with the provisions of Clauses 4.2 and 4.3 of the Telecommunication (Broadcasting and Cable Services) Interconnection Regulations, 2004 as amended from time to time (the Regulations).
The respondent No.1 in each of these petitions purported to be without prejudice to their rights and contentions, issued notices under Regulation 4.2 of the Regulations along with one Ashish Cable on 25.04.2008. They also issued a public notice as envisaged under Clause 4.3 of the Regulations without prejudice to their rights.
Questioning the said notice under Clause 4.2 as also the public notice under Clause 4.3 of the Regulations, the other four petitions namely, Petition Nos. 95 (C) of 2008, 96 (C) of 2008, 97 (C) of 2008 and 98 (C) of 2008 have been filed.
The relationship between the parties started in the year 1996 upon the petitioner’s (which is a Multi Service Operator) appointing respondent No. 1 for four areas of Bombay namely Goregaon, Chembur, Borivilli and Bhendre as its distributor.
Indisputably, an agreement of distributorship was entered into on or about 30.06.1999 between the petitioner and 1st respondent.
Some of the Clauses thereof would be noticed by us in brief a little later. The said agreement records that the petitioner had been carrying on business in cable TV network including supply of programme packages to various cable operators and had established and owned equipments in different locations for providing services to its customers.
The respondent No.1 in these matters had been acting as a distributor of petitioner from before and were aware of the technicalities involved in the business. Having regard to the fact that they had the requisite skill and efficiency to render services as also assisting petitioner in maintenance of its equipments, a fresh distributorship agreement was entered into on the terms and conditions mentioned therein.
Clause 2 of the said agreement stipulates that petitioner had equipped the areas necessary for transmitting signals to direct points as also to the points of the franchisees and moreover installed other assets necessary therefor, besides laying cables outside the headends necessary for rendering services as described in Schedule B thereto. The distributor was to act and render services as envisaged therein in the areas mentioned in Schedule A thereof.
The objectives of petitioner, in terms of the said agreement were laid down in Clause 3, interalia being:
(i) installation of assets,
(ii) ensuring the same to be kept in working condition and properly operated and maintained to provide uninterrupted quality service to the customers
(iii) To carry on business of cable TV network
(iv) To provide trunk lines for delivery of TV channel bouquets and technical staff.
So far as the duties and functions of respondent No.1 in each of these petitions as distributors are concerned, the same were enumerated in Clause 4 of the agreement, including:-
(a) assisting and proper maintenance of the said assets
b) Resolution of technical, commercial and other complaints which may be received from the customers
(c) Sustain market and cater products and services supplied by IMC to existing and new customers in the area as also to maintain and increase IMC’s market share
(d) to see that the customer satisfaction is increased
(e) To assist in maintenance of records of IMC’s assets and all other material goods and items brought in at centre for supplying products and services to customers and to ensure that the same are properly maintained subject to usual wear and tear
(f) Ensure safety and security of IMC
(g) Maintain channel location as may be directed by IMC from time to time and ensure relay and transmission exactly in the form and manner in which it was provided
(h) Nonutilization of bandwidth or cable would be authorised or
permitted without prior approval of IMC and the distributors were to be responsible to ensure compliance of the same.
(i) to cooperate and ensure efficient and competitive provisions of any other value added service which may from time to time be introduced by IMC
(j) Advance petitioner's business in cable television
(k) Protect its interest
(l) Indemnify it for any loss or damages arising out of nonperformance or improper performance of the responsibility undertaken by the distributor.
The petitioner contends that despite expiry of the said agreement, the terms thereof continued. It, however, discovered upon being informed by the customers on the
night of 12/13th April 2008 that a scroll was seen on the screen of their TV sets
“you are now watching Scod18”. Pursuant thereto, an enquiry was made and it
was found that for all intent and purport the networks of the petitioners had
It may be placed on record that so far as the Chembur area is concerned, the node was installed in the premises belonging to first respondent and in other cases the premises had been taken on rent.
The mode and manner in which the signals were being transmitted are from satellite, going through the headend of petitioner.
It had, however, various sub head ends whereat nodes were installed. After the decryption of the signals from the headend, the same used to be transmitted through a cable known as Grand Trunk Line wherefrom it used to be transmitted to the nodes and then to the franchisees and/or the customers.
According to petitioner, respondents removed its nodes and inserted that of Scod18 by taking recourse to flipping of wires.
The petitioners approached this Tribunal on the aforementioned premise and an interim order was passed on 24.04.2008 directing respondent to restore the supply which is said to have been complied with.
The respondents inter alia contend:
1. They were merely money collecting agents and not service providers within the meaning of the Regulations and, thus, these petitions are not maintainable.
2. This tribunal has no jurisdiction.
In the 2nd set of petitions, an interim order was prayed for but the same was refused by an order dated 19.05.2008; wheragainst the petitioner filed a writ petition before the Delhi High Court. An interim order was passed therein on or about 30th May, 2008 staying the notice of termination.
The respondents preferred Letters of Patent Appeal thereagainst, wherein no interim order was passed. By an order dated 15.07.2008, the Delhi High Court directed the parties to approach this Tribunal.
The interim order was extended till 23rdJuly, 2008.
We are, however, informed that the said interim order never came up for hearing before this Tribunal.
Having regard to the question of jurisdiction raised by respondents herein, a preliminary issue was framed which by an order dated 04.05.2010 was directed to be considered with other issues as in respect thereof oral evidences were required to be adduced.
It may, however, be noticed that on a prayer made by petitioner, an Advocate Commissioner was appointed. The learned Advocate Commissioner submitted a report on 06.05.2008 interalia stating that on inspection it was found that respondent concerned had two wires, one of Scod18 and another of petitioner. The correctness of said report of learned Advocate Commissioner has not been questioned. We would refer thereto at an appropriate stage. The respondent by a letter dated 10.06.2008 informed petitioner that in compliance of the order passed by this Tribunal dated 09.05.2008 it had come to know from the cable operators that they had independently terminated the relationship with petitioner and those who were willing to receive the signals of the petitioner had been doing so. One of the respondents furthermore asked petitioner to take back its equipments. The issues were framed on 29.06.2010.
On the aforementioned premise the parties have gone to trial. Evidence
The petitioner in support of its case examined Sanjeev Ahuja, Head (Legal), Mr. Madhav Dattaraya Bedgiri, GM (Operations), and Shri Satheesh Kumar, a vice President of Petitioner Company. Respondent No.1, in each of these cases examined themselves. The parties hereto have also produced and proved a large number of documents.
We may notice some of them.
A Memorandum of Understanding was executed on 02.12.2006. It was signed by Shri Ganesh Naidu, representing respondent No.1 of Petition No 69 (C) of 2008 and 95 (C) of 2008, who is said to have transferred/assigned the network to Shri Johnwin Manavalan, respondent No.4 in Petition No. 87(C) of 2008 and Respondent No.1 in Petition No. 98 (C) of 2008, Jeetendra Ghadigaonkar represents respondent No.1 in Petition Nos. 68 (C) of 2008 and 97(C) of 2008, Shri. Gaurang Kanakia, representing Respondent No.1 in Petition Nos. 87 (C) of 2008.
However, Shri Mehboob Gani, respondent No. 1 in Petition No. 67 (C) of 2008 and 96 (C) of 2008 did not sign this agreement. The petitioners have also brought on record a hareholders Agreement of Scod 18 Network Pvt. Ltd. in which some of the respondents are parties including Shri. Gaurang Kanakia representing M/s Satekrishmani Network, Shri. Jeetendra Ghadigaonkar representing M/s In Cable, Shri. Aashish Shirke representing M/s Ashish Cablenet India Pvt Ltd, Shri. Bhupesh Gupta representing M/s S.S.V Cable Pvt. Ltd and Shri. Mehboob Gani on behalf of M/s City Cable Ltd.
It has also brought on record the Memorandum of Association of Scod 18 Network Pvt. Ltd, wherein Mr. Johnwin Manavalan and Ganesh Naidu have signed and a document showing acquisition of Scod 18 Networking Pvt Ltd by
‘You Telecom India Pvt. Ltd.’ Respondents No. 1 in each of these cases along with Ashish Cable, however, issued common notices under Clauses 4.2 and 4.3 of the Regulations.
The principal questions which arise for consideration of this Tribunal (although a large number of issues have been framed) are: -(a) Whether the respondent No.1 in each of these cases are service providers within the meaning of the provisions of the Regulations?
(b) Whether this Tribunal has any jurisdiction to entertain these petitions?
(c) Whether there existed a binding contract between the parties when the cause of action for filing these petitions arose?
(d) Whether the petitioner has proved its case for grant of decrees for damages?
Submission of Mr. Kailash Vasudev, learned senior counsel appearing on behalf of the petitioner, shortly stated, are: -1. Respondents herein hatched a conspiracy to hijack petitioner’s network by not only floating companies in the name of Respondent Nos. 2 and 3 but also by entering into a transaction with ‘You Telecom’ which was a Mauritius based company as would be evident from preliminary nonbinding term sheet and in that view of the matter, this petition should be allowed.
2. By reason of the aforementioned unlawful acts on the part of respondents, petitioner has suffered damages to the tune of Rs. 225 Crores in respect whereof decrees may be passed by this Tribunal.
3. Parties despite expiry of the distributorship agreements continued their relationship on the same terms and conditions till the same were determined by respondents in terms of the Clause 4.2 and the public notice issued under Clause 4.3 of the Regulations.
4. This Tribunal, in Petition Nos. 122 (C) of 2009, 123 (C) of 2008 and 277 (C) of 2009 inter alia having held that respondents therein, who were local cable operators and against whom petitioner had sought for decrees for recovery of arrears of subscription fee had been receiving signals from M/s Citi Cable, respondent No.1 of Petition Nos. 67 (C) and 96 (C) of 2008, they must be held to be ‘service providers’.
5. The respondents No. 1 in each of the petitions were not only required to perform their duties of collection of subscription fees from the cable operators and/or the customers but also to maintain the equipments, ensure quality of signals, receive and resolve complaints of the customers, ensure the growth of the business of the petitioner etc.
6. The respondent No.1 were not only entitled to broadcast their own 5 channels but by reason of an agreement dated 30.12.2006, they were furthermore permitted to broadcast two local channels of their choice which would clearly go to show that they were service providers.
7. The role of the respondent No. 1 in each of these matters keeping in view the distributorship agreement and in particular the negative covenant contained therein was much more wider and not merely as money collecting agents.
8. The respondent No.1, City Cable in its letter dated 01.03.2007 has described the operators as ‘our’ operators on the premise that the same were the distributor’s operators and not the petitioner’s operator.
9. A MoU was entered into between the parties on or about 03.12.2006 as the CAS was to become operative which referred to Clause 4 (h) of the distributorship agreement wherefrom it would be evident that they have been operating the same independently.
10. Even from the conduct of the parties, it would appear that Respondent No.1 had been receiving signals despite expiry of the agreement.
11. From the notices issued under Clause 4.2 of the Regulations by respondents, as also the public notice issued by all 5 distributors, it would be evident that they also considered it imperative to terminate the agreement by taking recourse to the Regulations. The words ‘without prejudice’ used by them is not decisive.
12. The very fact that enough materials have been brought on record to show that on the night of 12th, 13 April, 2008 a scroll appeared on the TV screen that “you are now watching SCOD 18” read with the report of the learned Advocate Commissioner, it is established that the 1st respondent has been in total control and management of the network.
13.In fact, it would appear from the evidence of PW2 that services of all the employees had also been taken over as they had resigned en masse although at a later point of time, some of them came back. Mr Manindar Singh, learned senior counsel, Mr Naveen Chawla as also by Mr. Tejveer Singh Bhatia, learned counsel on the other hand, interalia submitted: - 1. The distribution agreement dated 30.06.1999 even if read in its entirety would not bring respondent No. 1 within the purview of the definition of ‘distributor of TV channels’ as contained in Clause 2 (j) of the Regulations.
2. Retransmission of signals were to be actually carried out by LCOs and not by respondent No. 1.
3. The petitioner has not been able to prove that any equipment had ever been supplied to respondents.
4. From the evidence of Shri. Madhav Bedgiri it would appear that many LCOs have issued letters for reconnecting the signals of the petitioner which had been complied with.
5. As the Respondent No.1 in each of these matters were not to pay any monthly subscription amount to petitioner for retransmitting its signals, this Tribunal has no jurisdiction as they were to receive only commission for collection of monthly subscription amount.
6. The entire case of petitioner being based on the agreement dated 30.06.1999 and the same having expired by efflux of time, no case has been made out for exercise of its jurisdiction by this Tribunal.
7. Even in terms of the agreement, the respondent No.1 was only to ensure that the signals of petitioner’s network reach the customers and last mile franchisee operators. The witnesses of petitioner have furthermore admitted that the franchisee operators were paying the feed charges to it alone.
8. A new case cannot be permitted to be made out that respondent Nos.1 in these matters were ‘cable operators’ providing their own cable TV services to their subscribers.
9. In any event, petitioner has failed to prove that respondent No.1 in each of these cases was its agent and/or caused any loss or damages to its network.
10. The dispute between the parties is not one between two service providers as the respondent No. 1 is only an agent and not a ‘distributor of TV Channel’.
11. From the evidence adduced by petitioner, it would appear that the equipments used to be issued/supplied by petitioner only on requisition in writing and nothing has been brought on record to show that any equipment was issued to first respondent and in that view of the matter, they cannot be held to be in charge thereof.
12. The Memorandum of Understanding as would appear from the rejoinder filed by petitioner is wholly irrelevant and has no bearing on the fact of the matter.
13. From the evidence brought on record, it is evident that the respondents after the expiry of the agreement had merely been collecting subscription amount from the franchisees and/or the subscribers and thus the respondents cannot be held to be the service providers.
14. The witnesses of the petitioner categorically admitted that the employees who were under the direct control of petitioner and had been the head ends and/or nodes and in that view of the matter respondents cannot be said to be in control thereof.
15. From Clauses ‘m’ and ‘n’ of the 1999 agreement it would appear that the distributors were prohibited from holding out to third parties from committing, undertaking or agreeing in respect of any matter on or on behalf of IMC and thus they are not agents within the meaning of the provisions of Sec 182 of the Indian Contract Act.
A Brief Analysis of Statutes
The question as to whether this Tribunal has any jurisdiction to determine the
issues between the parties must be considered on the basis of the pleadings and
materials brought on record by the parties hereto.
While determining the preliminary issue, this Tribunal in its Order dated
04.05.2010 clearly noticed that the same must be determined on the basis of the
materials brought on record by the parties as also oral evidences adduced by
A question as to whether a Court/Tribunal has jurisdiction on the subject
matter of the dispute must be considered having regard to the pleadings of the
parties as also other evidences where the same is required to be determined with
the merit of the matter.
This Tribunal has been constituted in terms of Sec. 14 of the Telecom Regulatory Authority of India Act, 1997 (‘The Act’). From a perusal of the preamble of the Act it would appear that this Tribunal, interalia is to regulate the telecommunications services, adjudicate disputes, dispose of the appeals and protect the interest of service providers and consumers of the telecom sector and to promote and ensure orderly growth of the matters connected therewith or incidental thereto.
With a view to determine the issue of jurisdiction, we may also notice some provisions of other relevant statutes.
The parties are governed by the provisions of Cable Television Networks Act 1995, Cable Television Network Rules 1994 and the Act.
In terms of the provisions contained in Section 2 (aaa) of 1995 Act, a ‘Cable Operator’ interalia would include a person who controls or is responsible for
management and operation of cable television networks.
It does not speak of a cable service.
‘Cable Television Network’ has been defined in Rule 2 (c) of 1994 Rules as meaning any system which interalia not only is concerned with generation but
also control and distribution of equipment designed to provide cable services for
reception by multiple subscribers.
Rule 2(ee) of the 1994 Rules defines ‘Multi System Operator’ to include ‘its authorized distribution agency by whatever name called’. Section 2 (k) of the Act defines a ‘Telecommunication Service’ to include service of any description specified therein and made available to users by any kind of transmission or reception of signs, sounds or intelligence of any nature. By reason of a notification dated 09.01.2004, the Central Government has included ‘broadcasting and cable services’ to be ‘telecommunications services’ within the meaning of the provisions of this Act.
The definition of ‘cable operator’ under the 1995 Act is same as that is in
the Rules. Such is the case of the definition of the ‘cable service’ and ‘cable
television network’ also.
The Regulator in exercise of its power under 11(1)(b) of the 1997 Act
made the Regulations.
An ‘agent’ or ‘intermediary’ in terms of the Clause 2 (b) of the Regulations
includes a person interalia authorized by a MSO to make available TV channels to
a distributor of TV channels. A distributor of TV channels, in terms of clause 2(J)
would include but not limited to a cable operator, direct to home operator,
multisystem operator, HITS operator and thus, a person who controls or is
responsible for the management of operation of cable television networks may
also come within the purview thereof.
Clause 2(m) of the Regulation defines MSO having the same meaning as Rule 2(ee) of the 1994 Rules.
Thus, a service provider would also come within the meaning of ‘distributor of TV channels’ as contained in Clause 2 (J) of the Regulations. The scenario in the broadcasting and cable services is fast changing one. The nature of business is also changing. The change of scenario in the nature of business demands that a purposive meaning should be assigned to the interpretation clauses vis-Ã -vis the functions of different players in the field. In this case, the Distribution Agreement of 1999 would clearly go to show that Respondent No. 1 in each of the matters had multiple activities.
Their functions were not confined to collection of money alone. It included several other functions e.g. resolution of complaints, upkeep and maintenance of the equipments etc. At least in one of the cases, even the sub‐headend was located in the premises belonging to the distributor.
The MoU to which the respondent No.1 in each of these cases were parties clearly go to show that they had been carrying out their functions in terms of the distribution agreement and only because of the said reason, the said MoU was
From the recitals made in the said MoU, it furthermore appears that the respondent No.1 were said to have been transmitting at least 5 channels and in terms of the MoU they were permitted to use at least two more channels of their choice free of cost.
Moreover, the petitioner alleged which has been found to be correct that respondent No.1 had started making broadcasting services of respondent No.3 having control over two different flipping wires.
Report of the Commissioner
We may, at this juncture, notice the report of the learned Advocate Commissioner, which reads as under:
“7. The details of the inspection are as follow: AT THE OFFICE OF ‘CITY CABLE’, CHEMBUR, MUMBAI
An amplifier (MakeMOTOROLA, Model No.MB
87 SG, Serial Barcode79500529800 K05 NGO2 082500 908) was seen. An ‘input’ cable, stated to be of Induslnd, was pluggedin on the INPORT and three cables were pluggedin
on the OUT PORTS. A free, loose cable, similar to the cable plugged in on the INPORT, was also found besides the amplifier. The ‘free’ cable was that of SCOD 18, I was informed. Mr. D. Bhandarker (representative of the respondent) explained to me that in compliance with this Hon’ble Tribunal’s order dated 24042008, that the SCOD 18 cable was removed and the cable of the petitioner reconnected. The TV receiver installed in the premises showed various channels, including ‘CVO’ and SONY.
The first (CVO), all present agreed, was a “local channel” of the petitioner and its reception clearly showed that petitioners’ signals were available and ‘on’ at the respondents premises at the time of inspection. The Sony channel carried a scroll showing it to be distributed by the petitioner.
Representatives of the petitioner wanted me to trace the signals down to end users. The respondents’ representatives said that was not practical as signals were sent to LCO’s and from there onwards to consumers. No details of the downstream network of the petitioner, such as list of LCO’s or consumers was given in the petition. In any case, downstream verification was neither explicit nor was it possible for practical reasons such as lack of details such as the location of LCO’s and the number and location of individual consumers
etc. I could not, possibly, physically trace the output wires from the premises of the respondent upto endusers.
At ‘In Cable Communication’, Bhandupand ‘Sai Ganesh Enterprises’, Borivali (West), Mumbai.
At both the premises, Nodes were seen. Serial numbers etc. were noted. Fiber optic splicer box of the petitioners’ network was seen, from which signal feed was given to the Node. No other splicer box was seen, from where alternative feed (i.e. of another MSO) could be given to the Node, from within the premises inspected. Television monitors on both premises showed reception of the petitioners’ signal. Petitioners’ representative’s requested for downstream verification. The same was not done for reasons given hereinbefore. Representatives of petitioner themselves stated that it was possible for the respondent to provide SCOD 18 signals to end users (who, according to petitioners’, were their customers; contested by the respondents) by entirely bypassing the inspected premises and injecting the rivals’ feed to the downstream network at some other point. At which place this could or was being done was not pointed out.”
The learned Commissioner inspected the premises of the respondent No.1 at Chembur, Mumbai in presence of D. Bhandarkar, its representative. Shri Bhandarkar represented that in compliance of this Tribunal’s order dated 24.04.2008, the network of the petitioner has been reconnected. The Sony channel as indicated hereto before carried a scroll showing it to be distributed by the petitioner.
The Ld. Commissioner however did not think it necessary to make downstream verification.
So far as the networks of ‘In Cable Communications’ and ‘Sai Ganesh Enterprises’ Borivili are concerned, learned Commissioner did not find any splicer box. (It joins the fibers and is used for physically joining the fibres.) The TV Monitors on both premises showed reception on the petitioner signals. From the report it is evident that the headends were under the control of respondent No.1. At least in one case the control room had two different cables. In other
network the cable could be removed by the respondent No.1 having regard to the knowledge of the learned Commissioners’ visit. For reasons best known to the respondent No.1 of these cases, neither the veracity of the report was challenged nor the aforementioned D Bhandarkar was examined. In terms of the provisions of Order XXVI Rules 9 and 10 of CPC, the report of the learned Commissioner is to be considered as the part of the evidence and record of the case.
If the report of the learned Commissioner is to form part of the record and if respondent No.1 in these matters intended to question the correctness thereof, they should have filed an objection thereto and examined him. They could have and should have examined also its respective authorized representatives.
Report of the Local CommissionerEvidentiary Value of
The representative of the respondent was not required to be summoned by petitioner. He should have been examined by respondent No.1. In any event the report of the local commissioner, having not been questioned, the same must be read as evidence as the identity of the persons concerned and their status has not been denied.
It is, therefore, difficult for us to ignore the said report so as to opine that the network of the petitioner had not been taken over by the first respondent. It would, however, be a different story as to whether the petitioner has been able to prove the requisite consequences therefor.
Meaning of ‘Control’ and ‘Management’
The words ‘control and management’ are wide in nature. It may include
prohibition. P. RamanathaIyers’s Advanced Law Lexicon defines the term ‘Control’ as under:
“The term ‘control’ includes the power to prohibit” “the word ‘control’is synonymous with superintendence, management or authority to direct, restrict or regulate. Control is exercised by a superior authority in exercise of its supervisory power.”
The words ‘Management’ and ‘Control’ sometimes are interchangeable. It
“Management is defined as government, control, superintendence, physical or manual handling or guidance, the act of managing by direction or regulation, or administration; as the management of a family, or of a household, or of servants, or of great enterprises, or of greater affairs.”
“Management means administration, control, etc., and one of the synonyms of “management” is “government” which means control so that under a power to provide for the management of slaughterhouses a city has power to prohibit the operation of slaughterhouses within the city.”
(Advanced Law Lexicon, P. Ramanatha Iyers) In Corpn.ofNagpur Cityv. Ramchandra, (1981) 2 SCC 714, it was held as follows:
“4. It is thus now settled by this Court that the term “control” is of a very wide connotation and amplitude and includes a large variety of powers which are incidental or consequential to achieve the powersvested in the authority concerned.”
In Zee Telefilms Ltd. v. Union of India, (2005) 4 SCC 649, it has been held that :
“230. The word “control” has been defined in Black's Law Dictionary in the following terms:
“Control.—Power or authority to manage, direct, superintend, restrict, regulate, govern, administer, or oversee.” 231. In Bank of New South Wales v. Commonwealth (1948) 76 CLR 1 Dixon, J. observed that the word “control” is an unfortunate word of such
wide and ambiguous import that it has been taken to mean something weaker than “restraint”, something equivalent to “regulation”…”
(See also State of W.B. v. Kesoram Industries Ltd. (2004) 10 SCC 201) In this case, at least on the day on which the learned Commissioner visited the premises in question, the authorized representatives of respondent No.1 in each case were present at the sub head end. It was they who explained the situation as obtaining in the control room to the learned Commissioner. Interpretation Issue
In assigning meaning to a word, one has to consider the rules of interpretation. ‘Cable operator’ as defined in Rule 2(aaa) of 1994 Rules although is not exhaustive, as it uses the words ‘otherwise controls or is responsible for the management of a cable television network’. Thus, a person, who controls or is responsible for the management of a cable TV network would also come within
the purview of the definition of the ‘cable operator’. The same definition is
contained in the Regulations.
If the petitioner is correct in its contention that respondent No.1 was entitled to broadcast 5 channels, the same would indisputably bring it within the purview of the definition of ‘Cable Service’ as contained in Rule 2 (C) of 1994 Rules.
The term ‘distributor of TV channels’ as contained in Sec. 2 (j) contains an expansive definition. It does not limit as to who can be the distributor of TV
channel. The meaning of the term has not been kept confined to any person who
retransmits TV channels to electromagnetic waves.
We may also notice that two different words, ‘distributor of TV channels’ and ‘authorised distribution agencies’ have been used in the Regulations. The Regulator having used two different words, they must be given two different meanings. Authorised distribution agencies thus, would be a person who stricto sensu may not be a ‘distributor of a TV Channel’.
Even otherwise the respondent No.1, in our opinion, would come within the purview of the definition of ‘Cable Operator’. Yet again the definition of the word ‘service provider’ contained in Regulation 2(n) of the Regulations is not an exhaustive one. It must be given a meaning which fits in the changing scenario on the nature of the business.
Precedents on the Point
For the purpose of determining the question as to whether this Tribunal has jurisdiction or not, what is necessary to be considered is as to whether it is possible for us to enter into the merit of the matter.
It is one thing to say that the Tribunal has no jurisdiction over the subject matter of the disputes between the parties at all but it would be another thing to say that upon considering the merit of the matter it is found that no relief can be granted to the petitioner. Mr. Manindar Singh has relied upon decisions of this Tribunal in C.H. Entertainment Pvt. Ltd. v. Connect Broadband Services Limited and Tirupati Tele Services v. ZEE Turner Ltd. The judgments of this Tribunal in the aforementioned cases, in our opinion are not applicable.
We may notice that this Tribunal in Star India v. BSNL has considered both
the aforementioned cases in the following terms:
“26. Reliance, however, has been placed by Mr. Singh on the judgment of this Tribunal in C.H. Entertainment Pvt. Ltd. Vs. Connect Broadband Services Limited – Petition 98(C) of 2007 dated 08.05.2007, wherein it has been held as under:
At the outset, learned senior counsel for the respondent has raised an objection that the nature of dispute raised by the petitioner in this petition does not fall within the ambit of the Telecom Regulatory Authority of India Act and, therefore, this Tribunal has no jurisdiction to deal with this matter. The broad facts necessary to deal with this issue are that the petitioner sold its entire network to the respondent for a consideration. Two agreements were executed between the parties. One of the agreements is regarding the sale of network while the other is distributionship agreement. The agreements are not being disputed by either party. As per clause 2.3.2 of the distributorship agreement, the petitioner has to provide all possible support to the respondent in getting the LCOs listed in Schedule – I of the agreement to enter into direct connection and commercial agreement with the respondent. This clause further provides that the petitioner “shall also make best efforts to help the First Party enroll other LCOs in the Operating Territory in order to expand the total number of subscribers to be covered under the Project.” In the background of this clause it has been stated in the affidavit dated 5.5.07 filed by the respondent before us that all the 41 LCOs who were mentioned in Schedule – I of the agreement have shifted from petitioner to the respondent. They have signed franchisee agreements directly with the respondent. Thus all the erstwhile LCOs of the petitioner have become direct franchisees under the respondent. The petitioner, however, does not accept this. The dispute which now remains between the parties can at best be about the breach of the said two agreements. There is no dispute pertaining to telecom service. Therefore, in our view, this petition is not maintainable in this Tribunal and the same is accordingly dismissed. If the petitioner has any grievance it may approach the appropriate forum in accordance with law.”
This decision has no application to the fact of the present case as the petitioner also is a service provider. If the petitioner being a service provider by reason of a legal fiction raised in this behalf also provides like services, he would also be a MSO and thus, the dispute between the parties would come within the purview of Section 14 of the Act.
27. Reliance has also been placed on M/s Tirupati Tele Services v. ZEE Turner Ltd. Petition No.147(C) of 2008 dated 05.08.2008, wherein this Tribunal has held as under:
“The petitioner is merely a collecting agent for the respondent. Learned counsel for petitioner has drawn our attention to an agreement, copy whereof has been filed on record. The agreement is titled as dealership agreement. Firstly, the agreement is not signed on behalf of the respondent. Learned counsel for the respondent submits that the respondent does not have any agreement with the petitioner even for the dealership. He further submits that wherever respondent has validly executed dealership agreements, the dealer collects payments from cable operators/MSOs and not from subscribers. In reply, counsel for the petitioner submits that the petitioner had executed the agreement and given it to the respondent for signatures.
The petitioner had also furnished a Bank guarantee in pursuance of the agreement. Therefore, the petitioner was not required to do anything more.
Secondly, the portion to which our attention has been drawn is the said agreement does not make out a case that the petitioner is a service provider. The petitioner on its showing is not under business of transmission or retransmission of signals. It is only collecting money on account of subscription fee from the subscriber from the signals supplied by the respondent. A reference to the prayer contained in this petition also shows that the controversy raised in the present petition is in the nature of a civil dispute. Accordingly this petition is not maintainable and is disposed of. The petitioner will be free to pursue
its remedy in accordance with law elsewhere.”
(Underlining is ours)
It is, therefore, evident that the factual matrix involved therein was totally different visÃ vis
the present case.
Reliance placed by Mr Manindar Singh in Tirupati Tele Services (supra) is not apposite. In that case, the respondent was a mere collecting agent and, thus, not a service provider. In this case, however, the functions of the respondent were not of a mere collecting agent.
Interalia on the premise that both the parties thereto were service providers, involved in rendition of Telecommunication Services and another in broadcasting service and despite the fact that no statute deals with convergence, as also having regard to the fact that ‘telecommunications’ service would include ‘broadcasting service’, this Tribunal opined in Star (supra) that it had jurisdiction, holding as under:
“50. Applying the principles of interpretation of a Statute including the principles of purposive interpretation as referred to hereinbefore, we are of the opinion that IUC Regulations govern those cases where only telecom services are being provided by the service providers.
It applies to those who provide services like Basic Operator’s and/or other telecom services. It does not deal with this type of a case where two service providers provide different nature of services in ordinary course of their business. The agreement between them, however, provides for some sort of convergence. IUC has been defined in clause (ix) of Regulation 2 to mean the charge payable by one service provider to one or more service providers for usage of the network elements for origination, transmit and termination of calls. Petitioner has nothing to do therewith.
We therefore, are of the firm opinion that the provisions of the IUC Regulations do not restrict the exercise of jurisdiction of this Tribunal to adjudicate a dispute of the present nature.
We have furthermore noticed that TRAI has framed different nature of regulation in relation to ‘Broadcasting as Cable Services’. The nature of interconnection regulations framed by TRAI clearly suggest that the same would have no application.”
The Supreme Court of India in COAI v. UoI reported in (2003) 3 SCC 186 has held that this Tribunal has wide jurisdiction in the following terms:
“27. TDSAT was required to exercise its jurisdiction in terms of Section 14A
of the Act. TDSAT itself is an expert body and its jurisdiction is wide having regard to subsection (7) of Section 14A thereof. Its jurisdiction extends to examining the legality, propriety or correctness of a direction/order or decision of the authority in terms of subsection (2) of Section 14 as also the dispute made in an application under subsection (1)
thereof. The approach of the learned TDSAT, being on the premise that its jurisdiction is limited or akin to the power of judicial review is, therefore, wholly unsustainable. The extent of jurisdiction of a court or a tribunal depends upon the relevant statute. TDSAT is a creature of a statute. Its jurisdiction is also conferred by a statute. The purpose of reation of TDSAT has expressly been stated by Parliament in the amending Act of 2000.”
Yet again in Hathway Media Vision Pvt Ltd v. Spider Cables, Petition No. 99(C) of 2009 disposed of on 28th May, 2009, this Tribunal opined:
“11. The main issue in this petition is the recovery of dues from the Local Cable Operator by a Multi System Operator. The amount of claim as per the agreement may not be substantial, however, this in any way cannot change the nature of the petition and the petition has to be treated as a recovery petition for outstanding dues between two service providers on account of the signals made available by the petitioner to the respondent for
dissemination of the same to its customers. The fact that both parties are service providers is admitted. A large number of cases before this Tribunal are in the field of broadcasting which belong to the category of recovery of dues. Regulations contain mechanism for recovery of money.”
It was opined that both the parties thereto being service providers, this Tribunal has jurisdiction in the matter. We have noticed heretobefore that at least in three petitions, namely 122 (C), 123 (C) of 2009 and 277(C) of 2007 the respondent No.1 City Cable has been held to be a service provider. The effect of this judgment, however, may be considered keeping in view the fact that respondent No.1 was not a party thereto. Reliance has been placed by respondent No.1 on the evidence of Mr. V.V. Sharma, a witness who examined himself on behalf of the petitioner in the case filed by it against one of the cable operators, which is inadmissible in evidence as a statement made by a person in an earlier proceeding would be a subject matter of contradiction had that witness been examined and not otherwise in terms of Section 145 of Indian Evidence Act. It has also been brought on record that the respondent No.1 has been providing Internet services also which according to the petitioner was only possible if they had been using their cables for supply of signals and/or telecasting the signal.
Yet again in Aircel v. UoI, this Tribunal has opined: -
“21. The principles laid in various decisions of the Supreme Court cited above are quite explicit. TRAI Act is a special law, which will govern, and it overtakes general law, i.e., Arbitration Act, 1996. Also, TRAI Act, being the later Act (TDSAT was constituted by the Amending Act of 2000) has precedence over the earlier Act which is the Arbitration Act, 1996. The principle of generalia specialibus non derogant has been referred to in a
judgment of Supreme Court in Talcher Municipality v. Talcher Regulated Market Committee and Anr. (2004) 6 SCC 178. Consent cannot confer jurisdiction when there is none. Dominant public interest requires that all disputes in telecom sector which includes broadcasting and cable TV should be within the exclusive jurisdiction of TDSAT. In these circumstances, public policy demands that jurisdiction of Tribunal like TDSAT should be exclusive and arbitration agreement not to have any applicability.
22. If we refer to the provisions of the Act, particularly, Section 15, it is quite clear that the only exception is when there is arbitration under Section 7B of the Indian Telegraph Act, 1885, and in no other dispute within the jurisdiction of TDSAT the matter can go to the arbitration. Statute is clear.
By judicial pronouncement no further proviso can be added taking away jurisdiction of TDSAT except MRTP, individual consumer disputes and dispute falling under Section 7B of the Indian Telegraph Act, 1885. Even otherwise jurisdiction of arbitration is barred by necessary implication. Provisions of Section 89 of the Code of Civil Procedure has no application inasmuch as jurisdiction of Civil Court to try any dispute under the Act is barred. A court, therefore, cannot, frame question arising out of the dispute in telecom sector and refer the same to arbitration. Only two other provisions which are to be read along with the Act are those under the Indian Telegraph Act, 1885, and the Indian Wireless Telegraphy Act, 1933. TDSAT will have jurisdiction in respect of any dispute as mentioned in Section 14 of the Act. It will also have the jurisdiction if dispute arises in respect of direct activities in telecom sector i.e. those relating to the telecom services. Dispute between two service providers as landlord and tenant would certainly be outside the ambit of the Act. Those disputes over which TDSAT has no exclusive jurisdiction and where the third party's interest like the consumers is not in issue or where there does not exist any public interest, the domestic forums chosen by the parties by way of an arbitration agreement may be held to be valid.”
We may also notice that the Supreme Court of India, in Shri Balaganesan Metals v. M.N. Shanmugham Chetty, reported in (1987) 2 SCC 707opined that a statute should not be so construed to render any provision otiose. It was further held that:
“The word “any” has the following meaning:
“some; one of many; an indefinite number. One indiscriminately or whatever kind or quantity. Word ‘any’ has a diversity of meaning and may be employed to indicate ‘all’ or ‘every’ as well as ‘some’ or ‘one’ and its meaning in a given statute depends upon the context and the subject matter of the statute.
It is often synonymous with ‘either’, ‘every’ or ‘all’. Its generality may be restricted by the context;” (Black's Law Dictionary, 5th Edn.)”
The word “Any” and “Dispute” are defined in Stroud’s Judicial Dictionary of Words and Phrases, 16th Ed., at pages 135 and 707 as follows: ANY. “Any” is not confined to a plural sense (Eaton v. Lyon, 3 Ves. 694).
“Any” is a word which excludes limitation or qualification (per Fry, L.J., Duck v. Bates, 12 Q.B.D . 79); “As wide as possible” (per Chitty, J., Beckett v. Sutton, 51 L.J. Ch. 433)
DISPUTE. A Clause providing for an arbitration “should any dispute arise”, includes disputes of law as well as of fact (Forwood v. Watney, 49 L.J.Q.B. 447); and also a nonfeasance, e.g. the withholding a
certificate (Re Hohenzollern Co., 54 L.T. 596) Another aspect of the matter must also be considered, namely when a question arises on true interpretation or construction of Regulations, this Tribunal would have jurisdiction.
It was so held recently in Clear Media India Pvt Ltd v. PrasarBharti, being Petition No 174(C) of 2010 disposed of on 21st April, 2011. Jurisdiction Issue The question of jurisdiction keeping in view the factual, legal as well as precedential aspects of the matter may have to be determined.
The respondent No.1 in each of these petitions, in my opinion, would be service providers. Apart from the agreement, the conduct of the parties, the statement of the witnesses as also the report of learned Commissioner point out to the fact that respondent No.1 had been exercising control over the networks and/or are in management thereof.
In the accompanying judgement of the learned member, moreover, the submissions of Mr Bhatia has been noted to the effect that the intervening period in which the signals of SCOD 18 were provided was 13th April and 20th April, 2008. A finding of fact has also been arrived at relying on or on the basis of the said contention being finding No. (iii) that ‘one of the witnesses of petitioner Mr. Santosh Bapu Nawade has categorically affirmed that after one week signals of
petitioner were restored and signals were continuing till date, which also ‘does
not go to prove that the complete network has been taken over by the arrival
MSO as claimed by the petitioner’. The contention of respondent that it was merely a money collecting agent must be in view of the said submission and findings held to be wholly incorrect inasmuch as had it been so, it could not have laid its hand on the network of petitioner so as to take the control therefor at least one week and pursuant to the order of this Tribunal restoring its signals thereafter.
From the accompanying judgement, it would further appear that a finding of fact has been arrived at that ‘petitioner has admitted that the signals were reconnected after about a week and from that day onwards the signals of the petitioner are only being provided to their subscribers, which also proves that the contention of petitioner that it lost its network to its rival is not valid’. This finding also, in my opinion, goes against the contention that the relationship between the parties from 2004 onwards was merely that of a MSO and its money collecting agent.
The question of jurisdiction must be determined having regard to the entire materials placed on record.
The jurisdiction of this Tribunal can be found to be not existing had a finding of fact been arrived at that respondent No.1 in each of these petitions were not service providers, having nothing to do with the control of Headend. But, as noticed hereinbefore, at least in regard to control of the Headend for a period of seven days, not only a contention has been raised on behalf of the first respondent but also a finding of fact has been arrived at.
It is also not the case of the respondents that they were rank trespassers within the meaning of section 441 of the Indian Penal Code and only in that capacity they had taken over control of the Headend of the petitioner for seven days.
The networks must have been taken over for a period of seven days, if not more by the respondent in absence of any other circumstances, purporting to act as a distributor of petitioner. Their relationship as service provider and service provider therefore cannot be denied or disputed.
Moreover, while determining the question of jurisdiction the precedents operating in the field should not be ignored.
A precedent may not appeal the some of us. It may require reconsideration. But it has to be debated at the Bar.
Subsequent benches of this Tribunal are required to assign very strong reasons to say that it has not laid down the correct law earlier. Unanimity in such matter is preferable. The doctrine of ‘Stare decicis’ is required to be followed. Even otherwise, earlier decisions are required to be expressly overruled.
It has to be pointed out where they went wrong. In support of such a decision, sufficient and cogent reasons are to be assigned. Changes in law by way of interpretation of a Statute in some cases have to be brought about by applying the ‘Doctrine of Erosion’ as stated by Breyer J. of the United State Supreme Court.
We were required to enter into a larger debate as regards the jurisdiction of this Tribunal.
A specialized Tribunal is constituted to serve a cause. While deliberating on the applicability or otherwise of a precedent, we have a duty to see that apart from resolution of a dispute in an adversarial system, the interest of the service providers are protected and growth of the Telecom Industry is encouraged.
In that pursuit, law is required to be carefully laid down to bring about certainty and consistency, as far as possible.
It is necessary not only for the purpose of ensuring judicial discipline but also for an orderly growth of the industry as well as economic growth of the country.
If we are wrong, the Superior Courts would correct us but we ourselves should not too frequently unsettle the settled law.
It has been contended that cable operators never received any consideration/payment from the MSO and as in this case petitioner was to pay
commission to respondent No.1 in these matters, they would not be service
Although the first flush this contention appears to be attractive but the said question must be considered having regard to the entirety of the materials
brought on record and not in isolation.
It indeed proves that services were to be rendered by both parties. The respondent No.1 in each of these petitions are experienced business men.
Consideration fixed in terms of the agreement must have been fixed by the
parties having regard to their own business interest in mind.
Not only the MoU but also the conduct of the parties goes to show that the responsibilities and functions of respondent No.1 was not that of a mere money
collecting agent. Had that been so, it could not have rendered any other services
to the petitioner or the subscribers. It could not have telecast its own films. It
would not have any occasion to take over the network of the petitioner.
A contention has also been noticed in the accompanying judgement that
most of the cable operators have rejoined the network of the petitioner which
clearly implies that before rejoining the networks of petitioner, may be for a
limited period, the local cable operators were having supply of signals of the
channels of different broadcasters from a head end which was under the
complete control of the respondent No.1.
Hijacking of the network of the petitioner was the cause of action for the
first set of petitions. If the first set of petitions were maintainable against the
respondent, there is absolutely no reason as to why the second set of petitions
would not be maintainable. The function of respondent No.1 in each of these
matters as service providers will have to be determined having regard to the
factual matrixes involved, the contentions raised and the findings of facts arrived
thereupon. Once the respondents are found to be in control and management of
the networks in question, apart from other findings, by itself would lead to a
conclusion that they were service providers for the purpose of determining the
issues involved herein.
The present petitions pose a difficult question. The operations of the parties are complex in nature. In a case of this nature where the materials brought on record clearly go to show that no party to the lis had brought on record enough materials so as to arrive at a finding with regard to the entire state of affairs before this Tribunal, it is difficult to hold particularly having regard to the conduct of the respondent No.1 that they were not service providers.
On 16.4.2008 the representative of the petitioner called upon the respondent No.1 to maintain continuity of signals, relying on or on the basis of the agreement; in response whereto M/s Citi Cable denied and disputed existence of any such agreement after termination of the arrangement, stating:
“It is not out of context to mention at this juncture that even the operators to whom signals were supplied from your network were fed up with you service as they have also issued notices to us for disconnection of your signals from their networks for the reasons mentioned above. This has put to an end to the harassment caused to the subscribers/consumers.
It is categorically stated that in view of the termination of our arrangement, we are not bound to retransmit your signals. We have made restless endeavor to supply better quality of signal to the consumers so that our consumers may not be affected our of any such disconnection/poor supply of signals. We hereby call upon you withdraw you communication dated 16th April, 2008 and refrain yourself initiating any action against us.
Needless to say, any action, if initiated by you against us, shall be protected at your risks, cost and consequences.”
It has, thus, not been denied that prior to termination of the signals, they had not been taking part in the said function. We, therefore, are of the opinion that this Tribunal can enter into the merit of the matter, having jurisdiction in relation thereto.
The Renewal Issue
It is true that the 1999 Agreement was for a period of 5 years. It is neither denied nor disputed that despite expiry of the agreement by efflux of time, the relationship between them continued. The respondent No.1 in each of these cases has a different story to tell.
The learned counsel appearing on behalf of the respondent however, would rely upon Clause 13 of the agreement to contend that the same was required to be renewed before 90 days of the expiration thereof. The respondent No.1 in each of these petitions were to show that they had been acting as a money collection agent only. If the report of the Local Commissioner is to be given any meaning, evidently they were handling a part of service.
The respondents No.1 had been demanding outstanding amount of commission from time to time. They had thus been performing a part of the function as late as 10th June 2008.
We may notice the same:
“we would also take this as an opportunity to remind you that you have miserably failed to make the payment of our commissions due and payable by you as against our services of collecting subscription fees from the cable operators. We request you to kindly make suitable arrangement to remit the payment of our commission.”
Yet again, the respondent No.1 in each of these matters alleging that petitioner owed more money to them, stated as under:
“2(j) it is respectfully submitted that the answering respondent does not have to pay anything to the petitioner. In fact, it is the petitioner who has failed to make payment of commission/royalty to the answering respondent as per the arrangement between the parties.”
“5 (j)The state that the respondent No.1 does not have to pay anything to the petitioner. In fact, it is the petitioner who has failed to make payment of commission/royalty to the respondent No.1 as per the arrangement between the parties.”
The witness appearing on behalf of the respondent, Shri. Ganesh Naidu stated: “Vol: there is no dispute with regard to payments between IMCL and me. IMCL owes me distributorship commission collection commission.”
The petitioner has also produced a ledger account showing payment of the distribution commission as also receipt of the collections of subscription amounts from respondent No.1. The respondent No.1 merely stated that they owe more amount from the petitioners. No other document has been produced to show that they had entered into any different agreement or a separate oral arrangement.
It is true that the stand taken by respondent No.1 was that it functioned only as a money collecting agent.
Strong reliance has been placed by learned counsel on a letter dated 23.01.2006 which have been issued to all distributors by petitioner asking them to enter into a fresh agreement, a copy whereof was sent to them. It was contended that the same was not done, the agreement must be held to have expired.
It is true that no agreement in writing was entered into thereafter but there is nothing on record to show that after 2006 the parties altered their respective positions. By relying on the said notice, the respondents here impliedly admitted that the terms of the 1999 agreement continued till 2006.
We, therefore, must consider as to whether in view of the conduct of the
parties, the terms of the said agreement continued.
A contract indisputably maybe extended by conduct. A contact may be express or implied.
In Haji Mohd.Ishaq v. Mohd.Iqbal and Mohd. Ali and Co., reported in (1978) 2 SCC 493, the Supreme Court of India held as under:
“7. We agree with the High Court that in view of the pleadings between the parties and the evidence adduced, the finding of the trial court that Rahim acted as the agent of the defendants was not sustainable. We further agree that the contemporaneous letters and telegrams exchanged between the defendants and Rahim in the months of November and December, 1951 did show that the defendants had originally placed orders for the supply of tobacco with Rahim. But even so, the stand of the defendants that the plaintiff had supplied the goods to them on Rahim's account and not on its own was rightly rejected by the High Court. While generally agreeing with it in its approach to the real points at issue in the case, we will very briefly indicate our difference of approach in regard to a few minor matters.”
The learned Judge also refereed with approval from the following passage from Chitty on Contract 23rdEdn., Page 9,10 Para 12 “Express and implied contracts.—Contracts may be either express or implied. The difference is not one of legal effect but simply of the way in which the consent of the parties is manifested. Contracts are express when their terms are stated in words by the parties. They are often said to be implied when their terms are not so stated, as, for example, when a passenger is permitted to board a bus: from the conduct of the parties the law implies a promise by the passenger to pay the fare, and a promise by the operator of the bus to carry him safely to his destination. There may also be an implied contract when the parties make an express contract to last for a fixed term, and continue to act as though the contract still bound them after the term has expired. In such a case the court may infer that the parties have agreed to renew the express contract for another term. Express and implied contracts are both contracts in the true sense of the term, for they both arise from the agreement of the parties, though in one case the agreement is manifested in words and in the other case by conduct. Since, as we have seen, agreement is not a mental state but an act, an inference from conduct, it follows that the distinction between express and implied contracts has very little importance, even if it can be said to exist at all.”
The court examined the conduct of the parties and in Paragraph 9 of the judgment, opined that irrespective of the fact whether one Rahim had acted as plaintiff’s agent or the defendants, what was clear was that the orders placed with him were in fact executed by the plaintiff by supply of goods to the defendant.
The Minnesota Supreme Court addressed the issue as to whether it is proper to imply an extension of a contract in Fischer v. Pinske, reported in 243 N.W.2d 733 (1976).
In that case, plaintiff contracted to represent defendant as its exclusive manufacturer's agent. The employment contract contained an option to renew
the agreement in writing after an initial six‐month trial period. The contract also
required a one year notice of cancellation. The business relationship continued
for two and one‐half years without any written renewal. Defendant then gave
plaintiff thirty days’ notice of its intention to terminate the relationship. Plaintiff
claimed that he was entitled to a one‐year notice as provided in the original
agreement. It was held that because both parties had continued to honor the
terms throughout the course of their dealings for several years, they had waived
the requirement of the contract that a renewal be in writing.
The Negative Covenant
Clause 6 of the agreement dated 30.6.1999 contains a negative covenant. One of the questions which arise for consideration in as to whether the said negative covenant was in force after expiry of the agreement. For the purpose of keeping the negative covenant alive which otherwise takes away the right of the contract, the renewal of the agreement was to be in express terms. The parties did not enter into a fresh agreement and thus in my opinion the negative covenant did not operate after three years from 2004 i.e. after 2007. It is only after the said period the respondent No.1 in each case was entitled to join hands with any MSO, but subject certainly to the condition that it would have run contrary to the interest of the petitioner keeping in view its other duties and functions.
Concealment of fact by the petitioner
Learned counsel for respondent No.1 states that the petitioner should have categorically stated in the petition that the agreement had not been renewed.
The agreement dated 30.6.1999 is not in question. It is also not in question that no renewal thereof took place in writing.
What would be the effect of the conduct of the parties despite non‐renewal
of the agreement in writing is the question.
It is in fact not a material issue for consideration by this Tribunal. If, however, some privileges were to be granted to respondent No.1 as a part of the consideration apart from the commission to be paid on the basis of the collection of the subscription fees from the franchisees and direct subscribers, the same by itself goes to show that the respondent No.1 was not a simplicitor collector of subscription fee. If certain privileges were conferred on respondent No.1, they were equally liable to discharge their duties and functions in terms of the 1999 agreement.
Order II Rule 2 CPC
Mr. Maninder Singh urged that the second set of petitions is barred under Order II Rule 2 of the Code of Civil Procedure. The said provision reads thus:
“Order II 1. Frame of suit Every suit shall as far as practicable be framed so as to afford ground for final decision upon the subjects in dispute and to prevent further litigation concerning them.
2. Suit to include the whole claim .i.
Every suit shall include the whole of the claim which the plaintiff is entitled to make in respect of the cause of action; but a plaintiff may relinquish any portion of his claim in order to bring the suit within the jurisdiction of any Court.
ii. Relinquishment of part of claim. Where a plaintiff omits to sue in respect of, or intentionally relinquishes, any portion of his claim, he shall not afterwards sue in respect
of the portion so omitted or relinquished. iii. Omission to sue for one of several reliefs._ A person entitled to more than one relief in respect of the same cause of action may sue for all or any of such reliefs; but if he omits, except with the leave of the Court, to sue for all
such reliefs, he shall not afterwards sue for any relief so omitted.
A bare perusal of the said provisions would clearly go to show that what is prohibited is that on the same cause of action the plaintiff must make all the claims in one suit failing which the second suit will not be maintainable. The said Rule does not state that a second suit shall not be maintainable even if a subsequent cause of action has arisen. Moreover, it is for the defendant to raise the plea in relation thereto specifically.
These petitions were taken up for hearing consolidatedly. Evidence has been adduced in both the sets of petitions by the petitioner on common points. No objection thereto has been raised.
Recently this Tribunal in Essel Shyam Communication Ltd, New Delhi vs. Department of Telecommunications, Petition No.151 of 2011 disposed of on 04.07.2011 clearly opined that Order II Rule 2 of the Code of Civil Procedure will have no application where the second petition is filed on a subsequent cause of action.
This aspect of the matter has also been dealt with by this Tribunal, albeit, in an interlocutory matter in Television Eighteen India Ltd. v. Starden Media Services Pvt. Ltd. Petition No.222(C) of 2010 decided on May 9th 2011.
So far as the first set of petitions are concerned, the reliefs sought for therein revolved round the prayer for injunction in mandatory form. The cause of action for the second set of petition, however, arose subsequent thereto i.e. when respondent No.1 in each of these cases terminated agreements by issuing notices
under Clause 4.2 of the Regulations and a common public notice under Clause 4.3 thereof.
It was on the aforementioned premise, damages were also prayed for on account of loss sustained by the petitioner in respect of its business and goodwill, contending that the said action on the part of respondent No.1 in each of these
petitions was illegal and arbitrary.
Damages could have been prayed for by petitioner only when the contracts were sought to be terminated, as according to it, prior thereto the agreements subsisted.
The provisions of order II rule 2 of Code of Civil Procedure, therefore, have no application in the instant case.
Non appearance of the respondent No.3
In these cases petitioner has alleged conspiracy amongst respondents with a view to illegally hijack the network of the petitioner.
Constitution of the respondent No.3;, inter se dispute amongst its partners, its agreement with YOU Telecom were pleaded and proved. Respondent No.3 appeared through a common lawyer. However, it did not file any reply. It has not adduced any evidence. Only at a later stage a submission was made that the stand of respondent No.3 is not different from that of respondent No.1.
The respondent No.3 is a company incorporated and registered under the Indian Companies Act, 1956. It is a separate legal entity. It is said to have grown tremendously. It had, thus, its reputation to keep. It was, therefore, necessary for it by appearing before this Court, filing reply and adducing independent evidence to establish that it had expended a lot of money in installation of its own headends, laying of cables, appointing its own staff to commence business and spread its wings. It could have also shown that how the proprietors and/or partners of respondent No.1 concerned in each of these batch of petitions had
contributed for its constitution along with several others.
It has, therefore, in our opinion rightly been submitted that an adverse inference should be drawn against the said respondent. What, however, would be effect thereof may be considered separately. We may, however notice that the Supreme Court of India in Iswar Bhai C. Patel vs. Harihar Behera and Anr. reported in (1999 ) 3 SCC 457 and Vidhya dhar vs. Manikrao and Anr.(1999 ) 3 SCC 573 following a Privy Council decision in Sardar Gurbbaksh Singh vs. Gurdial Singh reported in AIR 1927 PC 230 opined as under:
“18. As early as in 1927, the Privy Council in Sardar Gurbakhsh Singh v. Gurdial Singh took note of a practice prevalent in those days of not examining the parties as a witness in the case and leaving it to the other party to call that party so that the other party may be treated as the witness of the first party. Their Lordships of the Privy Council observed as under:
“Notice has frequently been taken by this Board of this style of procedure. It sometimes takes the form of a manoeuvre under which counsel does not call his own client, who is an essential witness, but endeavours to force the other party to call him, and so suffer the
discomfiture of having him treated as his, the other party's, own witness.
This is thought to be clever, but it is a bad and degrading practice. Lord Atkinson dealt with the subject in Lal Kunwar v. Chiranji Lal2 calling it ‘a vicious practice, unworthy of a hightoned or reputable system of advocacy’.”
19. They further observed as under: “But in any view her nonappearance
as a witness, she being present in court, would be the strongest possible circumstance going to discredit the truth of her case.”
20. Their Lordships also took note of the High Court finding which was to the following effect:
“It is true that she has not gone into the witness box, but she made a full statement before Chaudhri Kesar Ram, and it does not seem likely that her evidence before the Subordinate Judge would have added materially to what she had said in the statement.”
21. They observed:
“Their Lordships disapprove of such reasoning. The true object to be achieved by a court of justice can only be furthered with propriety by the testimony of the party who personally knowing the whole circumstances of the case can dispel the suspicions attaching to it. The story can then be subjected in all its particulars to crossexamination.”
29. Applying the principles stated above to the instant case, it would be found that in the instant case also the appellant had abstained from the witnessbox
and had not made any statement on oath in support of his pleading set out in the written statement. An adverse inference has, therefore, to be drawn against him. Since it was specifically stated by Respondent 2 in his statement on oath that it was at the instance of the appellant that he had issued the cheque on the account of Respondent 1 in Central Bank of India Ltd., Sambalpur Branch and the appellant, admittedly, had encashed that cheque, an inference has to be drawn against the appellant that what he stated in the written statement was not correct. In these circumstances, the High Court was fully justified in decreeing the suit of Respondent 1 in its entirety and passing a decree against the appellant also.”
Quantum of Damages Issue
Let us now consider the quantum of damages said to have been suffered by
petitioner. Whether a case has been made out by the petitioner is the question.
The petitioner has not furnished any particulars with regard to quantum of
damages even in the second set of the petitions.
In absence of any plea with regard to the quantum of damages and/or different heads, the petitioner cannot be permitted to put in evidence any material to establish the purported damages suffered by it. In McDermott International Inc. v. Burn Standard Co. Ltd., reported in (2006) 11 SCC 181, the Apex Court laid down the law thus:
“Method for computation of damages
102. What should, however, be the method of computation of damages is a question which now arises for consideration. Before we advert to the rival contentions of the parties in this behalf, we may notice that in M.N. Gangappa v. Atmakur Nagabhushanam Settyand Co.14 this Court held that the method used for computation of damages will depend upon the facts and circumstances of each case. 102A. In the assessment of damages, the court must consider only strict legal obligations, and not the expectations, however reasonable, of one
contractor that the other will do something that he has assumed no legal obligation to do. (See Lavarack v. Woods of Colchester Ltd.15, All ER p. 690 G.)
109. Sections 55 and 73 of the Indian Contract Act do not lay down the mode and manner as to how and in what manner the computation of damages or compensation has to be made. There is nothing in Indian law to show that any of the formulae adopted in other countries is prohibited in law or the same would be inconsistent with the law prevailing in India.”
In Union of India v. Raman Iron Foundry reported (1974) 2 SCC 231, the
Apex Court permitted recovery of only reasonable compensation holding that:
“Now, it is true that the damages which are claimed are liquidated damages under Clause 14, but so far as the law in India is concerned, there is no qualitative difference in the nature of the claim whether it be for liquidated damages or for unliquidated damages. Section 74 of the Indian Contract Act eliminates the somewhat elaborate refinements made under the English common law in distinguishing between stipulations providing for
payment of liquidated damages and stipulations in the nature of penalty. Under the common law a genuine preestimate of damages by mutual agreement is regarded as a stipulation naming liquidated damages and binding between the parties: a stipulation in a contract in terrorem is a penalty and the Court refuses to enforce it, awarding to the aggrieved party only reasonable compensation. The Indian Legislature has sought to cut across the web of rules and presumptions under the English common law, by enacting a uniform principle applicable to all stipulations naming amounts to be paid in case of breach, and stipulations by way of penalty, and according to this principle, even if there is a stipulation by way of liquidated damages, a party complaining of breach of contract can recover only reasonable compensation for the injury sustained by him, the stipulated amount being merely the outside limit. It, therefore makes no difference in the present case that the claim of the appellant is for liquidated damages. It stands on the same footing as a claim for unliquidated damages.”
In Oil and Natural Gas Corporation Ltd. v. Saw Pipes Ltd., reported in (2003) 5 SCC 705, the Apex Court held as follows:
“64. ….Under Section 73, when a contract has been broken, the party who suffers by such breach is entitled to receive compensation for any loss caused to him which the parties knew when they made the contract to be likely to result from the breach of it.”
In Murlidhar Chiranjilal v. Harishchandra Dwarkadas reported in AIR 1962 SC 366, it was held as follows:
“9. The two principles on which damages in such cases are calculated are wellsettled.
The first is that, as far as possible, he who has proved a breach of a bargain to supply what he contracted to get is to be placed, as far as money can do it, in as good a situation as if the contract had been performed; but this principle is qualified by a second, which imposes on a plaintiff the duty of taking all reasonable steps to mitigate the loss consequent on the breach, and debars him from claiming any part of the damage which is due to his neglect to take such steps: (British Westinghouse Electric and Manufacturing Company Limited v. Underground Electric Railways Company of London1). These two principles also follow from the law as laid down in Section 73 read with the Explanation thereof.” In Supershield Ltd v Siemens Building Technologies Fe Ltd reported in  EWCA Civ 7, the Court of Appeal explained the law thus: “40. The law on remoteness of damage in relation to claims for breach of contract is grounded on the policy that the loss recoverable by the victim should be limited to loss from which the party in breach may reasonably be taken to have assumed a responsibility to protect the victim. It follows that the question of remoteness cannot be isolated from consideration of the purpose of the contract and the scope of the contractual obligation. The underlying policy is implicit in Lord Reid’s speech in C Czarnikow Ltd v Koufos, where he referred to what the parties may be supposed to have contemplated as grounds for the recovery of damages and linked this to the question whether the loss was sufficiently likely to result from the breach to make it proper tohold that loss of that kind should have been in the contract breaker’s contemplation. It has been made more explicit in the decisions of the House of Lords in South Australia Asset Management Corporationv York Montague Ltd (sub nom BanqueBruxelles Lambert SA v Eagle Star Insurance Co Ltd)  AC 191, page 212 and Transfield Shipping.” Again in M. Lachia Setty and Sons Ltd. v. Coffee Board, reported in (1980) 4 SCC 636 the Supreme Court of India, noticing the law in other jurisdictions on the point, held thus:
“14. … In Banco De Portugal v. Waterlowand Sons Ltd.2, Lord Shankey, L.C., quoted with approval the statement of law enunciated in James Finlay and Co.v. N.V. KwikHoo Tong, Handel Maatchappij3, to the effect: “In England the law is that a person is not obliged to minimise damages on behalf of another who has broken a contract if by doing so he would have injured his commercial reputation by getting a bad name in the trade”. In AMERICAN JURISPRUDENCE, 2d, Vol. 22, para 33 at pp. 5556 contains the following
statement of law:
“33. The general doctrine of avoidable consequences applies to the measure of damages in actions for breach of contract. Thus, the damages awarded to the nondefaulting
party to a contract will be determined and measured as though that party had made reasonable efforts to avoid the losses resulting from the default. Some courts have stated this doctrine in terms of a duty owing by the innocent party to the one in default; that is, that the person who is seeking damages for breach of contract has a duty to minimise those
damages. However, on analysis, it is clear that in contract cases as well as generally, there is no duty to minimise damages, because no one has a right of action against the nondefaulting party if he does not reasonably amid certain consequences arising from the default. Such a failure does not make the nondefaulting party liable to suit; it only indicates that the damages actually suffered are greater than the law will compensate. Therefore, in contract actions, the doctrine of avoidable consequences is only a statement about how damages will be measured,” (emphasis supplied) From the above statement of law it will appear clear that the nondefaulting party is not expected to take steps which would injure innocent persons. If so, then steps taken by him in performance or discharge of his statutory duty also cannot be weighed against him. In substance the question in each case would be one of the reasonableness of action taken by the nondefaulting party.”
Lord Bridge of HarwichinRuxley Electronics and Constructions Ltd. v. Forsyth reported in  3 WLR 118, explained the law as follows:
“My Lords, damages for breach of contract must reflect, as accurately as the circumstances allow, the loss which the claimant has sustained because he did not get what he bargained for. There is no question of punishing the contract breaker. Given this basic principle, the court, in assessing the measure of the claimant's loss has ultimately to determine a question of fact, although the law has of course developed detailed criteria which are to be applied in ascertaining the appropriate measure of loss in a wide variety of
commonly occurring situations.
The general principles applicable to the measure of damages for breach of contract are not in doubt. In a very well known passage Parke B. said in Robinson v. Harman (1848) 1 Exch. 850, 855:
"The next question is: what damages is the plaintiff entitled to recover? The rule of the common law is, that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation with respect to damages, as if the contract had been performed."
In British Westinghouse Electric and Manufacturing Co. Ltd. v. Underground Electric Railways Co. of London Ltd.  A.C. 673, 688689, Viscount Haldane L.C. said:
"The quantum of damage is a question of fact, and the only guidance the law can give is to lay down general principles which afford at times but scanty assistance in dealing with particular cases . . . Subject to these observations I think that there are certain broad
principles which are quite well settled. The first is that, as far as possible, he who has proved a breach of a bargain to supply what he contracted to get is to be placed, as far as money can do it, in as good a situation as if the contract had been performed. The fundamental basis is thus compensation for pecuniary loss naturally flowing from
the breach; but this first principle is qualified by a second, which imposes on a plaintiff the duty of taking all reasonable steps to mitigate the loss consequent on the breach . . ."
In A.K.A.S. Jamal v. MoollaDawood, Sons and Co. reported in (1915‐16) 43 IA 6:
“It is undoubted law that a plaintiff who sues for damages owes the duty of taking all reasonable steps to mitigate the loss consequent upon the breach and cannot claim as damages any sum which is due to his own neglect. But the loss to be ascertained is the loss at the date of the breach. If at that date the plaintiff could do something or did something which mitigated the damage, the defendant is entitled to the benefit of it. Staniforth v. Lyall5 is an illustration of this. But the fact that by reason of the loss of the contract which the defendant has failed to perform the plaintiff obtains the benefit of another contract which is of value to him does not entitle the defendant to the benefit of the latter contract: Yates v. Whyte; Bradburn v. Great Western Railway; Jebsen v. East and West India DockCo..”
In Dominion of India v. L. Badu Lalreported in AIR 1962 All 461, the Allahabad High Court held as follows:
“56. In Saunadanappa v. Shivbasawa, ILR 31 Bom 354 at p. 364 it was pointed out that according to Section 73 of the Indian Contract Act a party who complained of a breach of contract was entitled to compensation for any loss or damage caused to him which naturally arose in the usual cour.se of things from the breach or which the parties knew when they made the contract to be likely to result from the breach. It could not be said that the plaintiff in this case did not "naturally" suffer loss of the price which the had paid for the goods on their having been lost to him because of the fault of the defendant.”
We have noticed heretobefore that petitioner had prayed for damages purported to be on the premise that the action on the part of respondent No.1 in issuing the impugned notices was illegal and arbitrary and, thus, it has suffered damages on account of the loss sustained by it to its goodwill and business. An action on the part of the respondent by way of breach of contract ex facie, therefore, was not raised. The damages purported to have been suffered by petitioner had also not been quantified. Damages can be claimed on various heads. It may be general as well as special.
So far as the damages claimed on account of loss of goodwill is concerned, no evidence whatsoever has been adduced. The petitioner only, however, in the affidavit of its witness, Shri Sateesh Kumar for the first time had claimed a huge sum by way of damages by way of loss of business.
Some bald statements have been made in paragraph 35 of Petition No.96 of 2008 in the following terms:
“….35. On account of these motivated actions of all the respondents, a number of customers of the petitioner who had been with the petitioner for number of years have been compelled to consider other alternatives.
This causing immense loss to the reputation and business of the petitioner. The petitioner has already suffered substantial loss because of subscribers/operators considering other alternatives….”
No details of any loss suffered by petitioner have, thus, been pleaded. No basis, therefor, has een laid down. No material has been brought on record by it in support of its claim for damages. The petitioner in its evidence has made an assertion that it has suffered damages to the extent of Rs.225 crores.
Only a consolidated statement has been filed. What would be the basis of assessment of damages in each individual cases has not been mentioned.
Four tabulated statements were placed before the Tribunal by way of Ex.PW(iii)/(ii) at pages 537 to 539. First table contains the informations as to the costs of materials issued to
Four headends situated at Borivali, Chembur, Goregaon and Bhandup till 31.03.2008 amounting to Rs. 2,31,18,184/-, 2,59,89,245/-, 91,01,093/- and Rs. 1,54,85,439/‐respectively.
Second table contained the billing and collection data from Aril, 2007 to March, 2008 and April 208 to June 2010 (i.e period of 27 months) for operator points at Bhandup, Borivali, Chembur, Dahisar, Goregaon and Vashi. Third table contained the data for the same period with respect to the direct points at Borivali, Chembur and Dahisar.
The average loss of revenue was shown as Rs. 1,05,04,564/-. Fourth Table contained data as to the value of four different brands of Set
Top Boxes supplied to the Headends at Bhandup, Chembur, Dahisar, Goregaon and Borivali totalling Rs. 1,24,01,826/-. We may, however, notice the details of losses said to have been suffered by petitioner are as under:
(i) Equipment belonging to the petitioner and forming part of the NetworkRs.
(ii) Petitioner has lost revenue in terms of subscription amounts from operator subscription revenue – Rs.21.67 Crores.
(iii) Petitioner has lost revenue in terms of subscription amounts for direct points –Rs.5.99 Crores.
(iv) Loss from placement charges –Rs.191 Crores.
(v) Petitioner continuing to pay the broadcaster in respect of signals for which the petitioner is not getting any subscription from the customers.
(vi) Petitioner is still paying entertainment tax for its direct subscriber
(vii) Petitioner had to relay part of its Network.
Nature and Proof of Damages
Before, however, we consider the merit of the matter, the provisions of Section 73 of the Indian Contract Act may be noticed. It reads asunder:-
“73.Compensation of loss or damage caused by breach of contract When a contract has been broken, the party who suffers by such breach is entitled to receive, form the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties
knew, when they made the contract, to be likely to result from the breach of it.
Such compensation is not to be given for any remote and indirect loss of damage sustained by reason of the breach.
Compensation for failure to discharge obligation resembling those created by contract : When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract.
Explanation : In estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by nonperformance
of the contract must be taken into account.”
The manner in which the witnesses examined on behalf of petitioner testified before us is difficult to comprehend. When a question was asked to one witness he pleaded ignorance stating that the officers of other department would know thereabout. The witness from the operation department Shri Madhav Betgiri by way of example would say that the details would be with the finance department whereas the Vice President of the Company who was dealing with ‘Finance’ said that the details may be with the operations department.
Mr. Sanjeev Ahuja, the legal head of petitioner in his cross‐examination stated:
“Q: who is maintaining the head end today and as in April, 2008 for the petitioner company?
A: I am not aware of the individual.
Q: was the Headend in April 2008 maintained by the petitioner company?
A: yes. It was maintained by the company." He, in his cross‐examination, admitted that the legal informations received by him were from operation and finance but he even could not remember the names of the persons furnishing the informations to him. Even if he could not
remember whether the same had been given in writing. But according to him the said informations were oral.
His evidence, therefore, even otherwise is a hearsay one. From the statements of Mr. Betgiri in his cross‐examination, it would be evident that he was not aware of the issuance of equipments which were necessary for installation at the headend which according to him are handled by the technical department. Nobody has been examined from the technical
department of petitioners.
Unless the petitioner proved the quantity of the equipments which have been issued to respondent No.1 either installed in the headend or separately i.e. even beyond the point of node and the question of equipments which it had been able to recoup, it cannot be said that it has proved damages sustained by it towards the loss of equipments far less loss of Rs.7.35 crores.
In its evidence the petitioner, sought to establish its claim that respondent No.1 in each of these cases in collusion and in conspiracy with each other as also the promoters of respondents No.2 and 3 had taken over its network completely as a result whereof it went out of business. If that was the position it was certainly entitled to claim damages.
The damages could have been claimed by way of compensation and satisfaction for the injuries sustained by it. Monetary compensation is to be granted to the injured party as if he has not sustained the wrong at the hands of the other party committing breach of contract. In a case involving breach of contract, the party who commits the breach may sue for damages subject, however, to the determination by a Court of law that the other party to the
contract has committed such breach as a result whereof the former becomes entitled to damages. In other words liability of defendant is to be determined first so as to assess what should have been the liability. Section 73 provides for payment of compensation but not for any remote or indirect loss or damages sustained by reason of the breach. The measure of
loss or damage must arise in the usual course of things; such breach which the party knew when they made the contract or likely to result from the said breach. The word ‘loss of business’ is very wide. It was, therefore, necessary for the petitioner to state as to how and in what manner it had suffered losses due to the impugned action on the part of the respondent. Mr. Kailash Vasdev, however, has placed strong reliance on a judgment of
the Supreme Court of India in Macdermott International Inc. vs. Burn Standard Co.
Ltd. (2006) 11 SCC 181 wherein it was opined:
“While claiming damages, the amount, therefore, was not required to be quantified. The quantification of a claim is merely a matter of proof.”
We are afraid that the observations of the Court has been relied upon out of context.
In that case the Court was dealing with the question as to whether any uninvoiced claim could be a subject matter of dispute for the purpose of invocation of the arbitration clause.
While opining that issuance of invoice was not the only way to make a claim which would include overhead costs resulting in decrease in profit or additional management cost claimed for damages having been made even prior to invocation of arbitration, the arbitration clause was held to be attracted. It, therefore, was found to be a dispute in respect whereof the arbitration agreement could be invoked.
The Supreme Court, noticed that respondent never raised any plea before the arbitrator, which should have been done in terms of Section 16 of 1996 Act that the said claim was arbitrary or beyond its authority. Mcdermott International (supra), however, lays down the law as to the method of computation of damages.
The Court referred to its decision in M.N. Gangappa v. Atmakur Nagabhushanam Settty and Co.(1973) 3 SCC 406 to notice that the method used for computation of damages will depend upon the facts and circumstances of each case. The said decision, therefore in our considered opinion has no application. Damages are of different kinds. It can be compensatory; it can be consequential also. Compensatory damages would be payable to the plaintiff for all the natural and direct consequences of the defendant’s wrongful act. The
measure, therefore, must be real and tenable although it may be difficult to fix the
amount with certainty. For the said purpose loss of profit resulting from the
injury may be a relevant factor.
The burden of proof in this behalf was on petitioner. It should have brought on record some materials to prove the period during which it remained out of business, being unable to operate its network. No document has been brought on record to prove the details of the damages suffered by the petitioner. It is difficult also to precisely assess any damages suffered by it for one week.
We may notice the evidence of Mr. Madhav Betgiri in Petition No.67(C) of 2008 in this behalf.
“The petitioner company maintains a line diagram of the cable network. This would show where all the equipments of the petitioner are installed.
The petitioner company does maintain a list of LCOs as also the direct subscribers. The petitioner company also maintain s a record of the equipments purchased by them. This is also in form of invoices, vouchers for payment, delivery challans etc.
The equipments are supplied in the field on the instructions of the distributor.
The Stores Department of the company releases the equipments. The Stores Department will supply equipments only if there is a written instructions.
No written instruction from the respondent No.1 has been filed on record of the present case, however, I can produce the same. It is incorrect to suggest that they have not been produced on record because there is no such document in existence.
Attention of the witness is drawn to pages 684 — 739. These are nonreturnable
gate passes/material issue notes. These bear the signatures of the persons who are taking the delivery of the equipments. The signatures appearing in all these documents are of
the employees of our company.
Attention of the witness is drawn to pages 597 to 683
Q. Is this list compiled on the basis of some other documents?
A. This is the list compiled on the basis of all documents maintained at the company in various Departments.
Q. Who compiled this list?
A. This list is prepared by combined efforts of Finance/Store/Technical Departments of the company. I have not personally compiled.
I have not personally gone to check if these equipments were installed. The petitioner company has separate Technical Department, which assures the installations.”
The use of the word “Our” mentioned in Schedule A of the agreement is of some significance.
By reason of the use of the said word there cannot be any doubt whatsoever that the franchisee as also the direct subscribers were to be transmitted signals by or on behalf of petitioner.
This would also be relevant for the purpose of considering as to whether the terms of the contract continued despite expiry of agreement by efflux of time. It may be noticed that the respondent No.1 in these matters have not denied their functions under of the agreement before the same were terminated. We may notice the claim for damages by petitioner head wise. It is, thus, evident that same equipments belonging to petitioners were with respondent No.1. During pendency of this petition Shri Mehboob Gani, partner of M/s Citi
Cable by a letter dated 25.04.2008 stated as under:
“Without prejudice to the rights and contentions of M/s City Cable before the Hon’ble TDSAT and in compliance with the order dated 24.4.2008 M/s IMCL is requested to visit the premises of M/s City Cable on 26.4.2008 at 11 am for the reconnection of the signals of
IMCL at 701, Krushal Commercial Complex, above Shopper’s Shop, M.G. Road, Chembur, Mumbai40089.” The said letter was also to be treated as a notice under Regulation 4.2 of
What is the status of the respondent is not in question. The definition of an ‘agent or intermediatory’ in terms of the Regulations is different from the definition of an ‘agent’ within the meaning of the provisions of the Indian Contract Act.
Whereas Regulation 2(b) defines ‘agent or inter mediatory’ to mean any person to make available the signals to a distributor of TV channels. The definition of ‘agent’ in terms of the Indian Contract Act as contained in Section 182 thereof is a person employed to do any act for another or to represent another in dealing with their persons.
As by reason of the agreement, respondent No.1 could not have represented the principal apart from being an agent, what was contended was that the respondent No.1 would not be an agent within the meaning of Section 182 of the Indian Contract Act.
In my opinion it may not be necessary to enter into the said controversy as in this case we are concerned only with the question as to whether the restrictive rights and obligations of the parties can be enforced, having regard to the provisions of the statutes to which a reference has been made heretobefore. We may, however, observe that having regard to the conduct of the parties, the respondent No.1 in each of the cases was virtually the alter ego of the principal. Keeping in view the duties and functions as has been observed in the judgment of Mr. Gaiha, learned Member, the respondent No.1 would also be an agent for the purpose of Section 182 of the Indian Contract Act. The petitioner apparently did not respond thereto. Why it did not do so was for it to explain. It could have also shown as to whether any equipment of the petitioner’s had remained in possession of respondent No.1 despite termination of agreement.
We may also notice that Shri Betgiri in his evidence stated:
"In April, 2008 I was acting as the Operational Incharge for Mumbai Cable TV business of the petitioner. As operation incharge, I was responsible for giving better quality service to my own customers and indirect customers i.e. operators and develop the business in my area. About 178 persons were working with me in discharge of my functions.
They were also responsible for the above said functions. These people used to ensure that the quality of signals reaches the end customers.
In April 2008, the petitioner company had 18 headend all across Mumbai. It had only one main control room at Andheri and to cater to local demands of the customers, subcontrol
rooms at these 18 locations. Only free to air channels or encrypted channels and local video Channels were added from these 18 locations. Petitioner had its own staff at these 18 locations. These subcontrol
rooms had one Operational incharge and one Technical
incharge. These were employees of the petitioner company.” It was furthermore stated:
“The equipments are supplied in the field on the instructions of the distributor.
The Stores Department of the company releases the equipments. The Stores Department will supply equipments only if there is a written instructions.
No written instruction from the respondent No.1 has been filed on record of the present case, however, I can produce the same. It is incorrect to suggest that they have not been produced on record because there is no such document in existence.
Attention of the witness is drawn to pages 684 — 739. These are nonreturnable
gate passes/material issue notes. These bear the signatures of the persons who are taking the delivery of the equipments. The signatures appearing in all these documents are of the employees of our company.
Attention of the witness is drawn to pages 684 — 719.
Q. Can you inform the TDSAT where exactly the equipments mentioned in these documents were installed?
A. The equipments issued to the four Headend
as stated above, are placed in the control room at these headend and on the network which is laid to give service to our direct and indirect customers.
I have not personally gone to check if these equipments were installed. The petitioner company has separate Technical Department, which assures the installations.
At Borivali, we had got 18 employees, at Chembur 22, at Goregaon 4, at Bhandup 10 direct employees of the company in April 2008. Vol. Except one all the employees resigned on 12.4.2008
I am not aware if this fact has been mentioned in these proceedings before." The said witness did not produce any written instructions from respondent No.1 issued to the stores department to show that any requisition had been made to it. It had also not been proved as to whether equipments issued had been installed and who was responsible for such installation.
The petitioner, therefore, has not been able to establish as to quality of equipments handed over to respondent No.1 in each case. It should have filed documents to establish the said Clause.
The said witness also stated that a number of employees were posted in each of those four sub‐headends.
We have noticed heretobefore that a voluntary statement was made by Mr. Betgiri that the employees had resigned en masse. No such case was, however, made out either in the pleadings or in the affidavits of witnesses. The said statement, therefore, is not admissible in evidence.
The next head of damages is said to be loss in revenue suffered in terms of the subscription amount from the operators. The petitioner did not furnish the list of its operators which it must have been maintaining. It has also not produced the list of its direct subscribers. It, for
all practical purposes, stands admitted that some of the operators came back to
the network of petitioner. For the purpose of proving the loss by way of revenue, therefore,
petitioner ought to have proved the revenue it used to earn before the so called hijack of its network and thereafter.
The petitioner could have also proved that it having lost a substantial portion of its subscriber base, had brought the same to the notice of the broadcasters claiming down gradation.
Mr. Sateesh Kumar’s answer to a question as to whether any such down gradation was claimed was evasive as he stated that the same was the job of operation.
Mr. Betgiri, on the other hand, when questioned as to the pay outs to various broadcasters answered that the finance department would be able to answer the same.
We may notice the cross‐examination of Mr. Satish Kumar in this behalf.
“CROSS EXAMINATION OF MR. SATHEESH KUMAR ……
It is incorrect to suggest that no loss has been caused to the petitioner company due to actions of Respondent No.1.
It is incorrect to suggest that the statement made in para 4 of my affidavit are false.
Q30: I put to you that the petitioner company had sought downgradation from broadcasters for the area of Mumbai on account of migration of cable operators?
Ans: Seeking down gradation from broadcasters is the duty of operations team.
Q31: As Vice President ( Finance) are you aware of the pay outs to the various broadcasters?
Q32: I put to you that you have got downgradation from broadcasters for the area of Mumbai after April 2008?
Ans: It is a sweeping statement . Can you please be more specific with reference to specific broadcaster?
Q33:Have you got down — gradation from any of the broadcasters in Mumbai after April ,2008?
Ans: Please be specific.
Q34: Have you got down —gradation from Star Den in Mumbai after April, 2008?
Ans: I am not aware of any specific downgradation from Star Den
with reference to this period.
Q35: But you are aware that Star Den has given down gradation for Mumbai after April, 2008?
Ans: I am not aware.
Q36:Did the Petitioner company get any downgradation from Zee Tunner after April, 2008?
Ans: I can't answer this sweeping question. If you have specific data , you can confirm me.
Q37:Did the Petitioner company get any downgradation from MSM after April, 2008?
Ans: I can't answer this question .This is dealt with by the operations team.
It is incorrect to suggest that the statements exhibited as PVVI11/
11 at pages 537539 are false and incorrect." Mr. Betgiri also stated as under:
“I am not aware of the pay outs to the broadcasters. Vol. This is taken care by Finance Department.”
Books of Accounts
The petitioner in support of its contention has relied upon its books of accounts purported to have been maintained in terms of Section 34 of the Indian Evidence Act. What is relevant is not the entries alone, as it was required to prove that they were being maintained in regular course of business. It ought to have proved the primary documents in support thereof. Payment of taxes whether entertainment tax or service tax by itself may not be a sufficient proof of loss of damages.
Moreover, some materials ought to have been brought on record to show that the cable operators (at least some of them) had joined the network of the second or third respondent, as the case may be.
If the cable operators themselves have terminated the contracts for whatever reason it may be, the matter being governed by the Regulations, which provide for no such bar except that the new service provider should see as to whether there was arrears, if any by insisting on production of the last invoices. A petition claiming damage on that account may not be maintainable. So far as the loss of revenue claimed in terms of subscription amount for
direct points is concerned, the legal and factual position remains the same.
So far as loss of placement charges is concerned, no evidence at all has been brought on record as to how much amount was being received by the petitioner before 12th/13thApril 2008 and/or immediately before the termination of contract and the effect thereof.
Loss of placement charges would depend upon various factors namely the decrease in the subscriber base, the migration of LCOs etc. It could have also called upon broadcasters to show the amount of placement charges they used to pay to the petitioner both before and after the relevant period.
So far as the contention that petitioner continued to pay to the broadcaster and/or payment of entertainment tax is concerned neither any amount has been claimed nor any evidence has been brought on record on that account. We, therefore, are of the opinion that the petitioner has not been able to prove any direct loss in terms of Section 73 of the Indian Contract Act or otherwise.
For the reasons aforementioned these petitions are dismissed subject to observations made hereinbefore. But in facts and circumstances of this case there shall be no order as to costs.