Telecom Disputes Settlement Tribunal
Star India Private Limited vs Asianet Satellite Communications ... on 3 March, 2006
ORDER
1. M/s Star India Pvt. Ltd, the petitioner Company and the respondent M/s Asianet Satellite Communications Pvt. Ltd. are companies registered under the Companies Act 1956. They entered into a subscription agreement dated 1.1.2003 for a period of 12 months whereby a package of TV channels belonging to the petitioner company was agreed to be given to the respondent for further distribution. This agreement stipulated a monthly subscription fee of Rs. 83,40,000/- and the number of subscribers indicated against the said subscription fee was 2,78,000. Based on this agreement the respondent started receiving signals from the petitioner. These signals were continued even after the expiry date mentioned in the said written agreement and because the respondent did not pay the subscription fee as demanded by the petitioner, it fell into arrears and according to the petitioner, as on 30th September 2004, the amount due and payable by the respondent was Rs. 8,58,20,295/- .
2. The petition states that the petitioner sent a letter dated 22.5.2003 to the respondent asking it to clear its outstanding amount of Rs. 4,02,47,000/-. The respondent confirmed that the amount due to the petitioner was Rs. 3,22,47,000/- up to April 2003. Thereafter on 15.10.2003 the respondent sent an email to the petitioner stating that the parties had agreed to a reduction of 1,00,000 in the subscriber base and the monthly subscription fees to Rs. 50 lakhs. The petitioner, however replied immediately to the said letter on 17.10.2003, categorically denying that any agreement had been reached between the parties. The petitioner reiterated in its letter that the subscription fee due and payable was Rs. 83,40,000/- per month on a subscriber based of 2,78,000. On 10.11.2003, the petitioner again sent an email to the respondent asking for clearance of the outstanding amount, pointing out that even though the petitioner has assured clearance of 20% of the outstanding payment every month along with the monthly subscription which would come to Rs. 1 crore approximately per month for the previous six months, the respondent had only made payment at an average of Rs. 53 lakhs per month. The respondent was called upon by this communication to clear/settle the outstanding dues by making payments of Rs. 1.50 crore each month. In reply the respondent is stated to have admitted the dues payable to the petitioner. However, it submitted that it had been facing tremendous market problems and would like to arrive at a final settlement with the petitioner in line with the actual market conditions. On 12.11.2003, the petitioner in reply pointed out to the respondent that in spite of clearance of dues to the extent of Rs. 5 crores, there was an outstanding of approximately Rs. 4.5 cores and that it should be cleared by the respondent at the earliest. Thereafter legal notice was sent on 11.12.2003 to the respondent by the petitioner for payment of outstanding sum amounting to Rs. 6,24,77,375/- along with interest @ 18% per annum in terms of the contract/agreement. In the petition it is clarified in the context of this notice that certain payments were made by the respondent thereafter and the total outstanding payable to the petitioner as on 31.12.2003 was Rs. 5,85,28,625/- Vide its reply dated 23.12.2003 the respondent expressed surprise at the legal notice as according to it matters were being mutually discussed, including the correctness and validity of the amount claimed in the said legal notice. It basically gave the response that the petitioner should await the outcome of these discussions. Another legal notice was sent by the petitioner to the respondent on 4.3.2004 for invocation of arbitration clause in the agreement for the purpose of recovering the money due and payable by the respondent to the petitioner. The respondent sent its replies dated 9.3.2004 and 10.3.2004 in which it made certain proposals for revising the subscription base to 1,53,600 and revision of subscription fee between August and December 2003 to Rs. 46.08 lakhs per month and subscription fee of Rs. 41.47 lakhs from January 2004 onwards. (These figures have been taken from Annexure-VIII referred to in para 12 of the petition). The total payment outflow required between March 2004 and December 2004 was indicated to be to the tune of Rs. 8.00 crores for which willingness was indicated to formulate a schedule that would cover liquidation of the entire amount within the next ten months. In the letter of 10th March 2004 it was pointed out by the respondent that the subscriber base had been proposed as 32% of the total connection base of the respondent on the basis of similar percentage having been accepted by the petitioner from other distributors who presently own 2/3rd market of Kerala. The petitioner responded by its email dated 12.3.2004 stating that it had not agreed to the percentage declaration as claimed by the respondent and that it had only agreed to give a discount on number of subscribers who had left the respondent and this was the best offer the petitioner could make. Vide this email the respondent was again requested to settle the outstanding dues. Vide letter of 15.3.2004 the respondent reconfirmed the date for a meeting with the petitioner on 19th March 2004. It replied that the payment schedule could be worked out after determining the quantum of the dues and also the monthly rate to be paid for which discussions had been held for quite some time. As evidence of its genuine interest for reasonable and equitable settlement, the respondent indicated that it is arranging Rs. 50 lakhs by 31.3.2004. In reply dated 16.3.2004 the petitioner asked the respondent to close the matter relating to outstanding dues up to December as per existing contract and on the basis of the discount that the petitioner had offered to the respondent during the discussions. The petitioner also made it clear to the respondent that the latter's offer of Rs. 48.04 lakhs as monthly subscription fee was not acceptable to it. The respondent in its communication dated 22.3.2004 and 23.3.2004 once again called upon the petitioner to reduce the quantum of subscription fee from June 2003 onwards. In these communications the respondent asked for parity from the petitioner vis-à-vis competitors of the respondent in Kerala and again requested for concessions based on that approach. These communications were replied by the petitioner on 23rd March 2004 pointing out that there was a contract between the petitioner and the respondent, the terms of which were quite clear and that the respondent has signed the same and the parties were fully aware of the market dynamics and both the parties had entered into the agreement with eyes open. On 6.8.2004 the respondent is stated to have sent an email to the petitioner enclosing a schedule of payments for settling the dues up to July 2004. According to the petitioner, in the said proposal it is admitted that the amount due as on 31.7.2004 to the petitioner was Rs. 5.41 crores and also a schedule of repayment for settling the dues up to July 2004 was proposed wherein the monthly subscription fees from January to December 2004 was fixed at Rs. 60 lakhs to be paid on a monthly basis of Rs. 35 lakhs. On 9.8.2004 the petitioner sent his reply to the above proposal dated 6.8.2004 stating that the said proposal was not as per the discussion between the parties on 23rd July 2004 and called for a further discussion and sending of a fresh proposal based thereon.
3. It seems that no further progress could be made on the above and based on total amount outstanding of Rs. 8,58,20,295/- as on 30th September 2004, the petitioner has alleged breach on the part of the respondent of the subscriber agreement dated 1.1.2003 based on which it continued to enjoy the benefit of uninterrupted supply of signals of the bouquet of channels of the petitioner.
4. The following prayer has been made in the petition:
(a) direct the Respondent to make payments and settle the outstanding dues of the petitioner of Rs. 8,58,20,295/- towards subscription charges.
(b) Direct that aforesaid amount and all amounts due and payable be paid with interest @ 18% per annum thereon from the date when the amounts become due and payable till date of payment as per clause 9 of the Agreement;
(c) Pass such further and other orders this Hon'ble Court may deem fit and proper in the facts of the case.
5. In its reply the respondent has admitted that it entered into an Agreement dated 1/1/2003 with the Petitioner for receiving the TV signals of the Petitioner the validity of which was for a period of 12 months which ended on 31/12/2003. However, according to the Respondent, the Petitioner could ask for payment of dues based on the said Agreement only for the period limited to the Agreement. For the period beyond 31/12/2003 the Respondent has taken the stand that "it is well within its right to pay only on the basis of its actual subscribers rather than pay on an exaggerated base which the Respondent was coerced into agreeing at the time of time signing of the Agreement dated 1/1/2003".
According to the Respondent, it is not merely an MSO (Multi System Operator) but primarily a Cable Service Provider operating in the state of Kerala with last mile connectivity upto 4.6 lakh houses.
The Respondent has denied that it has admitted to the outstandings as alleged by the Petitioner and has clearly taken the stand that there is no subsisting agreement between the parties after the expiry of the agreement on 31/12/2003. Whatever payments were made were in the nature of ad-hoc payments pending finalization of the terms.
Respondent has further stated that the repeated meetings that were being held by the Senior Vice President (ACS Division) of the Respondent Company and the representatives of the Petitioner went on debating on the issue of reduction of total monthly outflow towards payment to the Petitioner based on the norms applicable to the competitors and on principles of equity and natural justice. It has annexed and marked as Annexure R-5 copies of letters dated 15/10/2003, 17/10/2003, 10/11/2003, 12/11/03 and 13/11/2003 exchanged between the parties.
Respondent denies as incorrect and misleading the assertion that the respondent gave assurance in its response to the various letters from the Petitioners that it shall clear the alleged outstanding amount. In support Annexure IV has been cited to reveal the fact that the alleged outstanding has not only been not accepted but the Respondent has been insisting on reduction in the quantum of outflow and base.
The Respondent admits that a proposal was initiated during the negotiations, and on the strength of the discussions held in the office of Respondent on 23/7/2004 between the representatives of both the parties, only for the purpose of arriving at a solution in spite of it implying a higher obligation on the respondent as compared to its competitors.
It is the stand of the Respondent that "unless the quantum of monthly payout to the Petitioner is assessed based on acceptable norms and parity, it would be impossible to arrive at the quantum of total dues. This has to be equated against the payments already made and then only one can arrive at a decision on the extent of amount due to/from the Petitioner, based on acceptable norms and parity.
Further it is stated by the Respondent that " as on today most of the smaller operators have joined together to form all Kerala Cable Operators Association and their office bearers have filed an affidavit in the Hon'ble Court of Kerala claiming more than eight lakh connections. There are other operators who have not joined the association. It is estimated that Kerala has at present about 1.7 million cable TV homes. During the course of the discussion between the Respondent and the Petitioner, the executives of the Petitioner have admitted that in Kerala other than the Respondent, they realize a revenue of Rs. 28.35 lakhs per month. This brought out the fact that the Respondent's holding is less than one third of the total connections in the State while paying nearly 3 times that of others. Since then the Respondent has been time and again requesting the Petitioner to determine the dues from the Respondent on the basis of parity which would have reduced the payouts of the Respondent substantially. Though there were favourable responses, which are now denied in the present Petition, the Petitioner has partly admitted the need for corrective action and has also made a paltry concession. However, the Petitioner has even after the expiry of the agreement in December 2003 continued to bill on the old norms which are neither agreed nor admitted resulting in the alleged figure of outstanding of Rs. 8.58 crores. Even the documents annexed by the Petitioner reveal that repeated efforts to establish parity with others has not been accepted by the Petitioner. In all the correspondences it has evaded the issue of parity and the absence of a regulator in this area was sought to be exploited. The Respondent has raised this issue with the Regulator of the Industry, viz. TRAI about the need for bringing in norms for determination of pay channel outflow. According to the respondent the viewership of Star bouquet as per TRP ratings is only about 3.67% covering the cities of Kochi and Trivandrum while for the other areas where Asianet is present in Kerala it is only 3.95%. Even the survey conducted by the agency detailed by TRAI found that on the average only less than 50% of the channels are seen by the viewers. So the demand of Rs. 83.40 lakhs per month based on nearly 60% of the subscriber base which is unknown in the industry, which normally adopts 30% and that too for a bouquet which is not popular in Kerala is nothing but perpetuation of injustice".
6. In answer to the contention of the Petitioner that by continuing to receive the said signals the respondent is liable to make payments as per the agreement of 1/1/2003, the Respondent has stated that "it cannot accept the dues built on imaginary billing. Every attempt to settle the issue on a rational, logical basis on principles of equity, justice and parity has been thwarted by the negative attitude of the respondents. It is submitted that claiming of interest without determining the principle is a peculiar accounting practice. Furthermore, to attribute the term 'dilatory' tactics for every genuine action taken by the Respondent including discussions at the highest levels of the two parties is unfair. The earnestness of the persons at the highest level, including those of the petitioner, to settle the issue on parity and principles of natural justice is apparent from the correspondence exchanged in this regard". It has reiterated that "unless the quantum of monthly payout to the Petitioner is assessed based on acceptable norms and parity, it would be impossible to arrive at the quantum of total dues. This has to be equated against the payments already made and then only one can arrive at a decision on the extent of amount due to/from the Petitioner, based on acceptable norms and parity". It has requested that a local Commissioner may be appointed by the Tribunal to go through the books of accounts of the Respondent. In the end it has asked for dismissal of the Petition with costs.
7. We may mention in passing that a question had arisen in the initial stages of hearing whether arbitration proceedings under the Arbitration and Conciliation Act, 1996 (Arbitration Act, 1996) or under Arbitration Act, 1940 are maintainable after the constitution of the Telecom Disputes Settlement & Appellate Tribunal (TDSAT or Appellate Tribunal) under the Telecom Regulatory Authority of India Act, 1997.
The Tribunal had held in its order of 6/1/2005 that in its view arbitration is barred in respect of the matters which are within the exclusive jurisdiction of the TDSAT under the provisions of Telecom Regulatory Authority of India Act, 1997 and it was finally held that arbitration is not permissible under the provisions of the Telecom Regulatory Authority of India Act, 1997.
8. Opportunity was given at their request to the parties to arrive at a settlement during the pendency of the matter before us, however this did not bear any fruit. The parties were called upon to file evidence by way of affidavits and opportunity was given to them to cross-examine the witnesses.
On behalf of the Petitioner, affidavit was filed by Mr V Mohan, Area Sales Manager (Distributor) of the Petitioner Company and on behalf of the Respondent affidavit was filed by Mr Mahesh Kumar, President & CEO of Asiaanet Satellite Communications Pvt Ltd. The witnesses were cross-examined by the respective counsels and their statements recorded on 30/9/2005 and 6/10/2005.
9. We have heard the arguments of the learned counsels. Learned counsel for the Petitioner Shri Rajiv Nayar argued that the respondent had entered into a binding subscription agreement dated 1/1/2003 with the Petitioner. The terms and conditions on which signals were supplied to the Respondent were set out in the Subscription agreement. Clause 4 of the Agreement provides that based on an agreed number of Subscriber base of 2,78,000, Respondent would pay to the petitioner a Subscription Fee of Rs. 83,40,000/- per month in advance as stated in the agreement. Clause IV(A)(iii) provides that in case of increase in number of subscribers, subscription fee would be increased accordingly. Clause IV(A) (i) provides that subscription fee would not be reduced below what was stated in the agreement. The agreement dated 1.1.2003 was signed by the Senior Vice President of the Respondent, who admittedly was present at all discussions and negotiations prior to executing agreement and was also a party to most discussions held prior to executing agreement dated 1.1.2002. The respondents were fully aware of the terms and conditions of the agreement and executed the same with their 'eyes open'. The Respondent curiously has made tall claims of having a cable system of international standard and having invested more than Rs. 300 crores in its business, the Respondent admitted to being the only broadband network in India owning last mile connectivity to nearly 4.65 lakh consumers and also providing signals to few cable operators (with subscriber base of 50,000 connections). The Respondent has been in business for the last 10 years. The Respondent was fully aware of the market conditions at the time of signing the agreement. Moreover, the parties had the benefit of signing contracts i.e. in 2002 and in 2003. Both contracts were negotiated contracts. There was no change in the terms of agreement. The Respondent knew the rates applicable in 2002 and knowingly agreed to the doubling of the subscriber base on the understanding that the subscription fee will be reduced from Rs. 40 to Rs. 30. He further argued that the agreement provides for a mechanism for termination under Clause 13(a) whereby in case of breach of any undertaking or obligation either party can terminate the contract by giving 7 days notice. If the respondents at any point of time felt that they were misled, they could have repudiated the contract either after the execution of the agreement or after the agreement came to an end. On the contrary the respondents elected for the agreement to continue and treated the Agreement as a "holding over agreement" as brought in the pleadings in a Civil Suit filed by the Respondent in Eranakulam. When the signals to the respondent were disconnected and it approached this Tribunal in May 2005 for restoration, the Respondent treated the agreement as subsisting. The principle of section 70 of the Indian Contract Act would not apply to this case as there is a valid and subsisting agreement between the parties and the parties are bound by the terms of the contract. It is evident from the correspondence between the parties that the respondents treated the contract as subsisting. It is a settled position in law that there has to be foundation in pleadings to support arguments in the case. The Respondents have at no stage challenged the Subscription Agreement dated 1.1.2003 and have been continuously receiving the signals. However, when time for payment came the Respondents were unwilling to pay the contractual amount and have raised frivolous pleas only to avoid making payments.
He further argued that it is evident from the correspondence between the parties that there has been admission of contractual liability by the Respondent at various stages and there has never been any plea of fraud and misrepresentation raised by the Respondent. He cited some instances to show that the respondent treated the agreement as subsisting and no plea of fraud, misrepresentation or coercion was ever raised at any of the stages as shown below:
Stage-I Letter dated 22.5.2003 - the petitioner intimated the Respondent that the amount due and payable as on 30.4.2003 was Rs. 4,02,47,000/-. The Respondent agreed to the same. Even as per their books of accounts they admitted liability of Rs. 3,22,47,000/ However no allegation of fraud, misrepresentation or coercion was raised.
Stage-II - Letter dated 15.10.2003 - till September 2003 the respondents admitted liability to pay subscription amount of Rs. 83.4 lacs per month and then stated that they start paying Rs. 50 lacs from October 2003 since they have had a reduction in subscriber base. This was clearly in violation of the terms of the contract, which clearly stipulates that, the Subscription Fee would not be reduced below what was agreed upon Clause IV(A)(i). No case of fraud, misrepresentation or coercion was pleaded. This was only a plea for mercy since the Respondents had lost their subscriber base, they would now pay only Rs. 50 lacs subscription fee per month from October onwards.
Stage-III - Letter dated 13.11.2003 - The Petitioner clearly intimated the respondent that there is an outstanding to the tune of Rs. 4.5 crores, which should be cleared at the earliest. It was stated that after much consideration and thought the parties had mutually agreed upon the current business terms and all losses and gains of subscribers were taken into account. No dispute was raised as to this communication and no reply was given by the respondents.
Stage-IV - Legal notice dated 11.12.2003 - The Petitioner sent a legal notice for recovery stating that the Respondents had availed services of the petitioner and was required to make payment of Rs. 6.24,77,375/- plus interest @ 10% per annum in terms of the agreement. This outstanding amount was as of 1.12.2003. Respondent replied to notice on 23.1.22003, did not deny that payments were due and indicated that the matter was being resolved. It is evident from the said reply that the respondents admitted (i) an agreement between the parties and (ii) the monthly fee fixed on the basis of number of subscribers. Even till December 2003 there is not even a whisper of any fraud or misrepresentation. Only a plea of mercy has been repeatedly raised stating that since the respondents had lost several subscribers, the rate of subscription could be reduced.
Stage-V- The respondents on 6.8.2004 sent a proposal working out the schedule of payments wherein it has clearly admitted the outstanding amount of Rs. 593.40 lacs as on 31.12.2003. Therefore, it is clear that the respondent acknowledged the contractual liability and treated the contract as subsisting. The respondent proposed that the rate for the period 1.1.2004 to 31.12.2004 be fixed @ Rs. 60 lacs per month which necessarily required the consent of both the parties. However, even after calculating the dues at the proposed rate of Rs. 60 lacs per month, the respondent admitted liability of Rs. 541.25 crores as on July 31,2004. However, the petitioner never consented to the proposed rate of Rs. 60 lacs and there was absolutely no novation of the terms of the agreement.
Stage VI - TDSAT interim order of 7.4.2005 - Even in April 2005 the respondents have admitted the liability to pay Rs. 50 lakhs per month. Hence it is evident that the respondents treated the agreement to be subsisting. Till April 2005 respondents did not raise, or allege any fraud having been exercised on them. The only issue taken up was the loss in subscriber base.
According to Shri Rajiv Nayar the respondent has now sought to set up an entirely new and different case, which is not evident from the records of the case and is at complete variance with the pleadings. The Respondent enjoyed uninterrupted signals and made persistent defaults of payment dues and since it does not want to pay the petitioner its rightful due, has come up with a frivolous plea of misrepresentation.
In regard to the various pleas raised by the Respondent in its reply Shri Rajiv Nayar agreed that the fact remains that the Respondent had failed to discharge the Burden of proof. The respondents have failed to show that (i) the agreement is vitiated by fraud (ii) the agreement was foisted on him without any negotiations/deliberations and (iii) that they were forced to sign and the respondent has not pleaded fraud or misrepresentation in its pleadings.
Referring to the stand of the Respondent that there was no agreement for the period starting 1.1.2004, Shri Nayar stated that the fact of the matter was that the Respondent continued to seek the signals of the petitioner since the Star bouquet channels added value to the business of the Respondent and the Respondent has admitted that it had an arrangement with the Petitioner even after the expiry of the written contract dated 1.1.2003. The Respondent has also admitted that the agreement was a hold over agreement. Thus the stand of the Respondent that there was no contract for the period 1.1.2004 is contrary to its own stand.
According to Shri Nayar,the fact that there has been no disparity while charging the respondents is clear from the chart below:
Total Universe of Kerala 15 lakhs Universe of Star India Private Ltd. Reaching to 8.6. lakhs Universe of Asia net 6.86 lakhs Universe of others 1.9 lakhs Asia net is charged at 40% i.e., 2.78 lakhs subscriber base.
Others are charged at 53% i.e., 1,01,307 subscriber base Hence it is apparent that there is no discrimination/disparity while charging the Respondent. In fact Asianet is already being charged at a rate much lower than the other subscribers. Asia net also needs to be charged at 53%, which amounts, to 3.64 lakh subscribers and at Rs. 32.10per subscriber the amount would come to Rs. 1 crore 17 lakhs.
It is on the basis of these figures that the petitioner has submitted the proposal for 2006 agreement and has sought for 1 crore 28 lakhs after factoring in the 10.2% service tax component.
Shri Nayar referred to a chart given in the written submissions filed on behalf of the Respondent at the time of hearing.. The chart shows 8.5 lakhs as the universe of others (i.e. other than M/s Asia Net) and on that basis the respondent has calculated a declared Subscription base of 12.4%, which is incorrect since the said universe is only 1.9 lakhs and on this basis, the declared Subscription base of 1.01 lakhs is approx 53% to 55%. This completely destroys the case of purported misrepresentation made out by the Respondent.
According to Shri Nayar the case of misrepresentation now sought to be introduced is a clear after thought and has been set up by the Respondent for the first time. This is evident from the fact that there is no whisper of misrepresentation in the pleadings i.e. in the reply filed to the Petition. Moreover, it is also well settled that in order to make out a case for misrepresentation a party has to plead full particulars and the case can only be decided on the particulars as laid. Order 6 rule 4 reads as follows:
Particulars to be given where necessary- In all cases in which the party pleading relies on any misrepresentation, fraud, breach of trust, willful default, or undue influence, and in all other cases in which particulars may be necessary beyond such as are exemplified in the forms aforesaid, particulars shall be stated in the pleadings.
In the end Shri Nayar argued that the agreement is clear and there has been no misrepresentation. The agreement clearly sets out the broad parameters of the agreement and the affiliate Subscription fee of Rs. 83.40 lacs which is payable monthly w.e.f 1.1.2003. It is clearly stipulated that the Subscription cannot fall below 83.40 lacs. There is no challenge to the contract. It is a well-settled law that when there is a contract subsisting between the parties the court cannot interfere or rewrite the terms of the contract. When a contract has been reduced to writing, the court must look only to that writing for ascertaining the terms of the agreement between the parties if on a reading of the document as a whole, it can fairly be deduced from the words actually used therein that the parties had agreed on a particular term, there is nothing in law, which prevents them from setting up that term. Further the Respondent has to sign a new agreement for 1.1.06 to 31.12.06 which is mandatory under the Inter Connection Regulation. The Respondent has failed to do so in violation of the directions given in the aforesaid order. Thus the Respondent is not entitled to signals of the Petitioner & the interim order passed by this Hon'ble Tribunal must be vacated as the Respondent cannot indefinitely get signals on the basis of an interim order, that too in a petition filed by the Petitioner.
10. Shri C.A. Sundaram, learned Senior Counsel on behalf of the respondent -presented his arguments by dividing the dispute over three period of time, namely,
(i) 1st January 2003 to 31st December 2003 i.e. the period of the Agreement.
(ii) 1st January 2004 to 9th December 2004 i.e. the period when there was no Agreement but prior to the Interconnection Regulations of 2004.
(iii) 10th December 2004 to -date i.e. when there is no Agreement but Interconnection Regulations, 2004 incorporating the non-discriminatory clause are in effect.
According to him, admittedly the signals were provided voluntarily without protest and without any order of the Court, even after expiry of the Agreement period on 31.12.2003. The Petition itself was presented only on 5th October 2004 and seeks direction for payment of alleged amounts both during and after the Agreement period. The basic questions before this Tribunal would therefore be as to amounts that would be payable by Asianet, for signals received from Star India and the manner of calculation thereof.
He further argued that the Agreement of 2003 did not continue beyond 31.12.2003 as specifically stated in the Agreement. The fact that the Agreement did not continue is also evident from the fact that negotiations were on between the parties and payments were not being made by Asianet as per the old Agreement, but on an adhoc basis. (Ref: Asianet letter dated 15.10.03 vol.II pg.60 and letter of Asianet to TRAI of March 2004 vol II pgs.42-45 etc.) As regards the 3rd period, the principle of parity, non-discrimination and reasonableness as incorporated in the statute (Section 3.2 of Regulations) will determine the subscription fees payable by Asianet.
As regards the 2nd period, Asianet received signals, which were voluntarily given by Star India and since no Agreement covered such period, the principle of Section 70 of the Contract Act would apply i.e. a reasonable compensation for services received, which would be based on market rate which would be the price paid by others for similar services. (Judgments: : : ).
As regards the 1st period, the Contract is vitiated by misrepresentation by Star or in the alternative by a mistake of fact which goes to the root of the contract and hence the contract is void. Since Asianet has received benefit under the void contract, it would be liable to pay Star India for its services which once again brings into play Section 70 of the Contract Act i.e. market rate and the rest thereof would be the same for the 2nd and 3rd period. (Judgement: (1962) SUPP 1 SCR 876 at 912 State v. BK Honda (1964) 2 SCR 859 : (1968) 3 SCR 214). Also, even prior to the contract, the principle of parity was being followed in the industry, as is admitted by Star. Hence. Respondent is to pay for this period also based on parity.
He argued that for determining the monthly "Payout"/"Subscription fee" payable by an MSO/Cable operator to a Broadcaster of channels, there are three relevant factors:
(a) "Universe i.e. the actual total subscribers of an MSO/Cable operator, without under-declaration.
(b) "Declared subscriber base" i.e. the number of subscribers of an MSO/Cable operator who subscribe to a particular channel, arrived at through the percentage of the Universe of an MSO/Cable operator viewing any particular channel For e.g if 10% of Asianet subscribers view Star Channels, then declared subscriber base qua Star would be "Universe x 10/100". So also if 30% of Asianet subscriber's view Surya Channel, then declared subscriber base qua Surya broadcaster would be "Universe x 30/100". This is because all subscribers/Universe do not view every channel and the Universe is spread amongst all channels viewed by the subscriber of an MSO / Cable Operator based upon viewership by subscribers by any given channel.
(c) "Rate" i.e. the amount charged for each subscriber by the broadcaster from the MSO/Cable Operator.
(d) Subscription i.e. 'rate x declared subscriber base'.
He further argued that the vital criteria to be determined would be the declared subscriber base since it is this that would determine the quantum of subscription fee to be paid by a MSO/Cable Operator to the Broadcaster. To determine this is a question of fact based on evidence. In this case, applying principles of parity and price paid by others for receiving signals it can objectively be determined by arriving at (i) the total Universe in Kerala; (ii) Portion of the Universe covered by other MSOs / Cable Operators; (iii) Subscription Fee paid by other MSOs / Cable Operators; (iv) The rate at which Subscription Fee has been paid.
By applying his test the declared subscriber base adopted by Star for others can be arrived at and on such basis applied for Asianet to determine its subscriber base and amounts payable by Asianet.
Illustration: (1) For other MSOs / Cable Operators in Kerala:-
Universe Rate* Subscription Fee Declared Subscriber Base** Declared Subscriber Base as percentage of Universe*** 8.5 lakhs Rs.27/- Rs. 28.35 lakhs per month 1.05 lakhs 12.4% * The rate is taken as Rs. 27/-, being the average rate paid by other MSOs / Cable Operators taking into account the Rural and Urban areas.
** Declared Subscriber Base = Subscription Fee / Rate *** Declared Subscriber Base % = Declared Subscriber Base / Universe x 100 Therefore, percentage of Declared Subscriber Base to be applied for Asianet qua its Universe would be 12.4%. According to him the evidence lead before the Tribunal would show that the declared subscriber base for Asianet would hence be:-
(a) 62,000 if the subscriber base is taken as 5 lakhs as per Asianet's Evidence (5 lakhs x 12.4/100); and
(b) 80,600 if the subscriber base is taken as 6.5 lakhs as per Star's Evidence (6.5 lakhs x 12.4/100).
On the basis of evidence led that the rate is Rs. 30/- for Urban areas and Rs. 12/- for Rural area the subscription fee payable by Asianet is:-
(a) Rs. 15,25,200 (30% x 62,000 x 12) + (70% x 62,000 x 30) This is as per the evidence lead by Asianet that its Universe is 5 lakhs.
(c) Rs. 19,82,760 (30% x 80,600 x 12) + (70% x 80,600 x 30) This is as per the evidence lead by Star that the Universe of Asianet is 6.5 lakhs.
He pointed out that the Petitioner accepted the principle of Parity even before the Regulations of 2004 and that Asianet also sought for parity from Star, on coming to know of the disparity which was accepted in principle by Star. He stated that the total subscribers/cable homes in Kerala were 15 lakhs. Of this, the "Universe" of Asianet was 5 lakhs. Since Asianet is an MSO as also a \cable Operator, it has last mile connectivity and there is no under-declaration. Furthermore, being a public company its accounts are audited and Asianet has on many occasions offered them for inspection to Star.
As per evidence of witness of Star, the Universe of Asianet is 6.5. lakhs and the rest of Kerala had a Universe of 10 lakhs. However, to create a record contrary to the NRS survey and the true position, which became public in June 2004, Star sent a letter dated 23.9.2003 to Asianet stating that total cable homes in Kerala were only 9 lakhs out of which Asianet had 6.5 subscribers and the rest of Kerala only 2.5 lakh subscribers. Asianet immediately refuted the figures in this letter. Star also stated that Rest of Kerala is paying an amount of Rs. 28.35 lakhs for 1.05 lakh subscribers, as against a sum of Rs. 83.40 lakhs being paid by Asianet for 2.78 lakhs subscribers. This wrong assumption of the 2.5 lakh subscriber base for the 'Rest of Kerala' was the basis for arriving at the inflated subscription fee figure demanded from Asianet.
Asianet also wrote on many occasions to Star to verify its audited records for its subscriber base. However, the records have never been inspected by Star.
Furthermore, even as per the statement of the CEO of Star, Star was being paid for only 1/6th of the total cable connections in the country. Although as per the evidence based on TRP ratings of July 2005 indicates only 3% viewership for Star in Kerala even adopting the 1/6th figure given by the CEO of Star, the calculations would show that the subscription fee payable by Asianet is either i. Rs. 20,49,990/- (based on universe of 5 lakhs) or ii. Rs. 26,64,990/- (based on universe of 6.5 lakhs) In the end he stated that the effect of misrepresentation is that the contract is void and that the subscription fee shall be determined by the principles of Section 70 of the Indian Contract Act. In the alternative, there was a mistake as to a vital and essential fact as to the percentage of subscribers viewing Star Channels in Kerala, which would vitiate the contract and once again bring into play the principles of Section 70 of the Indian Contract Act.
In regard to the argument of the Petitioner that at the six crucial stages cited during the arguments, the Respondent did not raise any contention regarding fraud or misrepresentation and that it had admitted its liabilities arising out of the written agreement of 1/1/2003, the stand on behalf of the respondent was given as below:
Stage-I- the confirmation of balance was as on 30th April 2003 i.e. before the misrepresentation first came to light and hence is of no significance.
Stage-II - the letter dated 15/10/2003 was further to the discussions the parties had on all matters including revised terms of business. The correspondence between the parties since June 2003 indicates that the Respondent had written about the misrepresentation and was seeking parity with others and a reduction in the subscription fees. The fall in connections was just one of the reasons for the reduction in the subscription charges.
Stage-III - The letter of 10th November 2003 of the Petitioner stating that there are dues of close to Rs. 5 crores was disputed by the Respondent on 12th November 2003 by stating that the 'dues cannot be looked in isolation' and that the Petitioner may please 'verify the records of the Respondent and arrive at a solution'. The mail of 13th November 2003 from the Petitioners was merely a repetition of the letter of 10th November and hence needed no reply.
Stage IV- In reply to the legal notice dated 11.12.2003, it was stated by the respondent that there was a continuous discussion happening for 'the revision of the agreement and also to determine the correctness and validity of the amounts claimed by the Respondent.
Stage-V - This involved a mere proposal and not an admission of liability. There had been proposals for several amounts ranging from Rs. 41 lacs a month to this proposal of Rs. 60 lacs a month. The figures of Rs. 541 lakhs and Rs. 593 lakhs were based on these proposals. These proposals were never accepted by the Petiioner and cannot be relied upon as an admission.
Stage-VI - The sum of Rs. 50 lakhs agreed to be paid before the TDSAT was only as an interim measure, till decision of the matter on merits, and was not an admission of any liability. The Respondent agreed to pay this interim amount because it did not want its subscribers to suffer due to the disconnection of the signals.
Shri Sundaram argued that it is wholly incorrect to state that the Respondents have sought to set up a new case which is at variance with the pleadings and evidence. The fact of the Petitioners 'having misled and coerced the Respondent' has been mentioned in the Respondent's reply to the Petition, besides in the letters written even prior to the institution of the Petition. Extensive evidence has also been led on this.
On the relevant legal argument Shri Sundaram argued that it is the Petitioner's case, relying on various judgments of the Supreme Court that the parties who plead misrepresentation ought to repudiate the contract upon knowledge of misrepresentation but should they continue to act thereunder they can no longer plead misrepresentation. According to him this would have no application in the instant case due to the following:
(a) Immediately upon becoming aware of the misrepresentation/mistake the Respondent protested thereto and required renegotiation of the terms. It also did not pay the subscription fee amount as provided under the agreement.
(b) The agreement provides that the Petitioner can terminate the agreement should the subscription fee be not paid. Therefore, it was not only the Respondent who could terminate the agreement but also the Petitioner, and admittedly the Petitioner did not terminate the agreement despite non payment of such fee and despite the Respondent raising a protest, the Petitioner continued to provide signals.
(c) Not only did the Petitioner refrain from cutting the signals despite non payment of subscription fee and despite the protest of the Respondent demanding re-fixation of the subscription fee, but it entered into negotiations thereafter and even offered a discount on the subscription fee. It is, therefore, clear that in this case, both the parties continued a process of negotiation for the re-fixation of the contract terms.
(d) The cases dealt with by the Supreme Court are all cases where a party acts under an agreement, takes benefit under an agreement, and thereafter repudiates its own liabilities by claiming misrepresentation. It is in such cases that there is a duty to terminate the agreement by the party claiming misrepresentation. In other words what the Court held was that it is not possible for a party on the one hand to act as though the agreement continues in all terms and derive benefit therefrom and to thereafter seek to resile from its own commitments on the basis of a claim of misrepresentation. That is far different from the facts of this case where the evidence would clearly show that the Respondent never proceeded on the basis that the agreement terms continued but on the contrary, (1) objected to the same owing to discovering the true facts; (2) demanded a re-fixation; and (3) did not pay as per the original terms. All this was done while the agreement period was subsisting. The Petitioner on their part instead of terminating the agreement by holding the Respondent in breach, which the Petitioner would have done if the Respondent had really been in breach, on the contrary (1) continued providing the signals without protest; (2) received the lesser payments made by the Respondent without cutting the signals or terminating the agreement; (3) entered into negotiations for new terms and indeed made offers for changing of the subscription fee through offering discounts.
It was further argued that the Petitioner would never have agreed to any discount or even enter into negotiations or show willingness to consider offers from the Respondent if it was not aware of the basic misrepresentation / mistake made by it to the Respondent.
Shri Sundaram further argued that the terms of the agreement were in fact repudiated when the Respondent protested about the same, did not pay amounts as per the agreement and also insisted on negotiations for re-fixation of such terms of the agreement. It is not required in the given broadcasting field that repudiation should mean that the Respondent should refuse to take signals from the Petitioner since it is accepted in this field that operator has a right to receive signals and also has a right to raise a dispute about the terms at which the signals are being given. In the present case, the Respondent indeed exercised its right to receive the signals and at the same time repudiated the commercial terms of the agreement on becoming aware of the misrepresentation/mistake, refused to pay the money as agreed through such misrepresentation/mistake and demanded re-fixation thereof.
In the end he stated that since the agreement is vitiated by misrepresentation or mistake of essential fact, the entire agreement, including the subscription clause goes and the respondent cannot rely upon the subscription clause in the agreement for purposes of arriving at amounts payable. In such a case, section 70 of the Contract Act will come into play for determining the amount payable for benefits/services received under the void contract, as has been held by the Hon'ble Supreme Court in a catena of cases. This amount would need to be reasonable, as paid by others in the market. In other words, the prevailing market price shall be the amount payable by the respondent. This has been so held by the Hon'ble Supreme Court in the case of Piloo Dinshaw, to 10. It has also been so held by the Calcutta High Court in .
He further stated that after the agreement ended, i.e., after 31.12.2003, the terms of the agreement cannot be said to continue for the subsequent period also. This is because the agreement of 2003, itself contemplates that the agreement shall expire on 31.12.2003, and its terms shall be continued only by executing another agreement in writing and also the correspondence between the parties indicates that the agreement was not continued and there were negotiations for a fresh contract, which however, were not concluded. He argued that even though the agreement did not continue beyond the term fixed for the agreement, the Respondent will be liable to pay for the signals received by it from the Petitioner. The amount payable shall be once again based on the principle incorporated in Section 70 of the Contract Act. Hence, the Respondent will be liable to pay the market rate for this period also, i.e. beyond 31st December, 2003 and till September 2004, which is the period included in the petition filed in October 2004.
He further argued that the Respondent, on the principles of restitution and section 70 of the Contract Act will be liable to pay further amounts, subsequent to filing of the petition i.e., October 2004 and up to date. This again shall be the market rate or the rates paid by other. In fact, it is specifically now incorporated in Regulation 3.2 of the Interconnection Regulations of 2004 (which came into effect from 10.12.2004) that operators shall be treated at par with each other by the broadcasters and provided signals at reasonable conditions and based on parity as incorporated in Regulation 3.2 of the interconnection Regulations, 2004. Section 70 of the Contract Act, also provides that the market price is payable, and on the basis of the evidence led by the parties, from the period of the agreement i.e. January 2003 and up-to-date the respondent is liable to pay either of the following amounts:
(i) Rs. 12,91,500 p.m
(ii) Rs. 16,78,950 p.m
(iii) Rs. 20,49,990 p.m
(iv) Rs. 26,64,990 p.m
11. In the light of the very detailed arguments presented before us, we now propose to draw our conclusions regarding the facts and the approach to be taken for resolving the matter.
11.1 From the copies of correspondence exchanged between the Petitioner and the Respondent (many of the letters cited in their support are common) it is fairly clear that the Respondent has been asking the Petitioner to revise the subscription base and the quantum of monthly payments with retrospective effect (at least from June 2003) even though there was an agreement of 1/1/2003, valid upto 31/12/2003, which clearly stipulated a subscriber base of 2,78,000 and payment of subscription fee of Rs. 83,40,000 monthly. From the agreement copy of which is Annexure I to the petition, the following clauses are also worth taking notice.
III. TERM - This Agreement is for a fixed period of 12 months or on December 31,2003, whichever is earlier, from the date of execution of this Agreement. It is agreed between the Parties hereto that upon the expiry of the above period this Agreement shall come to an end. Thereafter, if the parties agree to extend the term a fresh agreement or addendum to this Agreement shall be executed upon such agreed terms and conditions.
13. Termination - (a) without prejudice to the rights of termination setforth elsewhere in this Agreement either of the Parties may, subject to clause 13(b) below, terminate this Agreement at any time by giving at least seven days prior written notice to the other Party in the event of a breach of any of the undertaking and obligations of such Party under this Agreement, bankruptcy or insolvency of the either Party, breach of any undertaking, representation and warranties given by either Party hereto, which is cured within such seven days period.
(b) Notwithstanding the provisions of clause 13(a) above, the Licensor shall have the right to forthwith terminate this Agreement without notice to the affiliate, upon the occurrence of any of the following:
(i) Non-payment of Subscription Fees.
...
7.1 Entire Understanding - This Agreement contains the entire understanding between the Parties with respect to the subject matter covered....
Thus for the period 1/1/2003 to 31/12/2003 it is absolutely clear that the relationship between the Petitioner and the Respondent was governed by the terms of the above written agreement. Even though the Respondent had started a dialogue with the Petioner and exchanged letters in November 2003 asking for a reduction in the consumer base, we do not find any allegations having been made of fraud/misrepresentation. There is an allegation in the reply of respondent to the petition that he was coerced into signing the agreement but no details in this regard have been added. On the other hand the written statement describes at length the background and status of the Respondent Company giving indication of its experience and strength by stating that "the Respondent Company is a Public Limited Company which commenced its operation in 1993 as a well designed broadband cable network with a view to provide an infrastructural communication facility spread through out the State of Kerala. The cable system is of international standard absorbing advanced technologies and consequently the investment when compared with the network of other cable operators is substantially high. Already the company has invested more than Rs. 300 crores with an underground fiber optic backbone intended to inter connect more of the centres forming an integrated network providing audio-video signals, internet (for which the Respondent has a statewide license) and Voice Over I.P. It has two licensed and approved satellite gateways at Trivandrum and Cochin to provide online connectivity to consumers having internet and voice over IP facility. It is the only broadband network in India owning last mile connectivity to nearly 4.6 lakh consumers. It also provides signals to few cable operators and their subscriber base is about 50000 connections.
11.2 In regard to the period 1/1/2003 to 31/12/2003, there appears to be considerable force in the contention of the Petitioner that an agreement had been signed with open eyes by a senior representative of the Respondent, which is a reputed company and has been in this business for a number of years and under normal circumstances cannot be expected to be misled or coerced into signing just any agreement.
During the period post 31/12/2003, it is a fact that signals have been continued to be provided voluntarily by the Petitioner to the Respondent till the date of filing of the petition and thereafter on terms determined by the interim orders of this Tribunal. It is also a fact that the Respondent has also not asked for stoppage of signals during this period. On the other hand when signals were discontinued by the petitioner during the pendency of this matter before us, sometime in May 2005, the respondent did display a keenness to get the signals restored and sought intervention of this Tribunal for the same.
While it has been strenuously argued on behalf of the petitioner that the respondent has admitted its liabilities for the period after 31.12.2003, we are not convinced in this regard on the basis of the material on record and the evidence produced before us. It is also clear that although the respondent has tried to put across some proposals and has made many attempts to negotiate and settle terms with the petitioner, the latter has not been very forthcoming. On the other hand it has followed a somewhat inflexible approach in regard to the terms. This is abundantly clear from the large number of letters exchanged from which the only common strain emerging from the side of the petitioner is that the subscription fee for the entire period starting from 1.1.2003, including the period beyond 31.12.2003 is to be based in accordance with the terms of the agreement signed on 1.1.2003 even though it is only for the period ending 31.12.2003. It is significant that initially the petitioner did show some degree of accommodation as is brought out in its letter dated 7.7.2003 to the respondent wherein it stated as follows:
Mr S. Rajeev Sr. Vice President (Cable Services) Asianet Satellite Communication Limited 3rd Floor, Karimpanal Acrade, East Fort, THIRUVANATHAPURAM -605023 Kerala Tele: 91-471-2575353.
Dear Mr Rajeev, This has reference to your letter dated 21st June 2003 regarding the up gradation of Subscriber base declaration from the other networks in Kerala to bring them on par with Asiaanet.
Please be assured that we are extremely careful and conscious in giving our service to the cable operators on proper subscriber connectivity in Kerala and also to ensure that there is no disparity in the declaration levels between the service providers.
There may have been many instances that are in your knowledge where we have denied our service to some of the bigger operators as they were not declaring the right connectivity and were resorting to undercutting of prices etc., leading to the decoration of cable business on the ground.
We have analyzed the list of disconnections of your various centers sent by you along with. I about 75-80% of the centers where you have disconnected the subscribers we have not given our service to any independent cable network there. Further the list sent appears to be an old one as many of the subscribers lost during the implementation of Asianet price increase last year should have come back to your fold by now.
Our Kerala team is working very close with the personnel of Asinet across the various centers and our endeavor is to ensure that business is mutually beneficial and there is proper stability on the ground.
Please confirm if we could meet on the 14th/15th July at Trivandrum.
Warm regards, For Star India Pvt Ltd.
Sd/-
Mohammed Mujeebuddin.
(emphasis added by us) 11.3 We have carefully gone through the cross examination of Shri V. Mohan, Area Sales Manager of the Petitioner Company in this regard. In his cross examination dated 30.9.2005 this witness has clearly stated that he was present when the agreement was signed some time in January, 2003 and that the signing of the agreement was preceded by discussions between the parties and that he was present during the discussions. However, no record was maintained of these discussions. He also confirmed that Shri Mahesh Kumar was present during the discussions along with Shri S. Rajeev. The witness has clearly stated that at the relevant time there were 15 lakh cable T.V homes in Kerala based on NRS figures. He admitted that he did not ever inspect or call for subscriber's records of the respondent company even though he admits that during the discussions the respondent company did orally mention to offer its records to prove its subscriber base. Even after receipt of an E-mail dated 12.11.2003 from the respondent offering their records for inspection the witness did not verify the records of the respondent company. The witness has stated that "the actual subscriber base declared to broadcasters by a cable operator is about 35-40% of the real subscriber base of such cable operators." In answer to a question "Mr. Mohan, there are about 1600 other cable operators with whom you have no contract. Are their subscriber base getting feed of Star Channels? The witness stated that " there are cable operators who are not the subscribers of the petitioner but they also get petitioners' signals". It is relevant to take note that the witness answered that the figure of "2.78 lakhs mentioned as number of subscriber base in the said document at Annexure-A is the agreed subscriber base for the purpose of payment of subscription to the petitioner and is not the actual total subscriber base of the respondent" and that "though the subscriber base is 2.78 lakhs as mentioned in Annexure-A the total subscriber base of the respondent at that point of time was about 7 lakhs as per his understanding" and further that "the suggestion that more than 50% of the subscriber base of the respondent live in rural area is not admitted by him. On the contrary he assumes it will be less than 50%. In his opinion a percentage of respondent's subscriber base in the rural area would be about 20-30% only". We reproduce below the following very significant answer given by the witness during cross examination. In his answer to the question -" Mr. Mohan I take it during June / July there was some discussion between Asianet and Star in regard to the subscriber base declared. Are you aware of and present in any of these meetings ?", he stated that " during the discussion with the representatives of the petitioner and the representatives of the respondent in the month of June there was an assurance given by Mr. Mujeebuddin ... that he will bring about a parity in regard to the declaration of payment of subscription between respondent herein and other cable operators in Kerala".
11.4 We are therefore convinced that there does not exist any subsisting agreement between the parties for the period after 31-12-2003. Much has been made of the fact that the Respondents treated it as a holding over agreement as brought out in a Civil Suit filed by the Respondent during this period. Also words have been taken from here and there from the large number of letters to indicate that the Respondent had accepted the liability to pay as per the agreement of 1/1/2003. However it is abundantly clear from this correspondence that the Respondent had kept insisting on reduction in subscriber base and consequent reduction in the monthly subscriber fee and had in fact not entered into any agreement whether written or oral in regard to the commercial terms. Many proposals were given from time to time regarding the commercial terms by the Respondent but these were promptly rejected by the Petitioner.
11.5 It has been the main grievance of the Respondent that in Kerala State while it is being charged a subscription fee of Rs. 83.4 lakhs per month for a declared subscriber base of 2.78 lakhs and a subscriber universe attached to it of 5 lakhs ( disputed by the Petitioner as 6.5 lakhs), the other cable operators are paying Rs. 28 lakhs per month although having a subscriber universe of around 10 lakhs thereby implying that a declared subscriber base of about 1 lakh (about one third that of the Respondent) has been accepted from them. On the principle of parity, according to the Respondent, it should be charged on a declared subscriber base of around 60,000 or at most 81,000, instead of the 2.78 lakhs recorded in the agreement for the period 1//1/2003 to 31/12/2003. It is clear that the Petitioner who is privy to all the relevant information in the above matter, namely the exact amounts being charged and how they are being linked with the subscriber universe and in turn the declared base of subscribers, has for reasons best known to it decided to adopt a rigid and inflexible approach. It did however show willingness to enter into negotiations with the Petitioner, and had also assured the Petitioner in a written communication as well as during the discussions, that it would protect the interests of the Respondent and ensure parity in regard to the terms of payment. However no proposals in this regard have been divulged. Since there is enough material on record to indicate that the principle of parity has not been adhered to by the Petitioner in relation to the Respondent vis-à-vis other Cable operators in Kerala State, we do not find any justification in the claim of the Petitioner that the amount due as on 30/9/2004 from the Respondent to the Petitioner is Rs. 8,58,20,215 towards subscription charges. In fact we find considerable weight in the stand of the Respondent that the quantum of monthly payment needs to be first determined on the principle of parity for the period after 31-12-2003 till such time as the signals are availed by the Respondent and this has to be set off against the amounts already paid.
We have been made aware of the widespread menace of under declaration and the gaps in the regulatory framework which have not specified the interconnection and distribution charges payable to the various tiers in the hierarchy of CableTV distribution starting from the Broadcaster at the apex and going down through the Multi-system Operator and Cable Operator to the consumer. For various reasons the system of linking payments to the actual channels accessed has not been implemented except in a few places like Chennai as such the exact subscriber base of any channel or of the group of channels belonging to a broadcaster cannot be determined in a fool proof manner. The questions which need to be answered in the matter before us are (a) what is the subscriber base of the Petitioner's Channels in the subscriber universe of 10 lakhs to 8.5 lakhs of the other cable operators (i.e., other than the Respondent); (b) If it is assumed that all have been given access to these channels, then the second question would be what proportion the declared subscriber base bears to the subscriber universe. The declared subscriber base of other cable operators presently is 1.01 lakhs. This bears a proportion of 12.5.% to the subscriber universe of the other cable operators if that universe is taken as 8.5 lakhs. If the subscriber universe of the Respondent is taken as 6.5 lakhs then its declared subscriber base of 2.78 lakhs (assumed by the Petitioner based on agreement of 1/1/2003) constitutes about 41%. For bringing about parity Respondent has argued that its declared subscriber base be reduced to 81,000. The Petitioner has disputed this reasoning by stating that the universe of its subscribers in the category of 'other cable operators' is only 2.75 lakhs and not 8.5. lakhs. From the evidence adduced, it appears to us that the figure of 2.75 lakhs has been pitched at a low level and is the root cause for the dispute regarding parity.
We are of the view that Prayer (b) in the petition asking for a direction to the Respondent to pay interest @ 18% per annum on the amount due holds no meaning until and unless the principal amount is correctly worked out, as it could be possible that excess payments may have been made to the Petitioner by the Respondent and the latter may in fact be accordingly entitled to refund of the excess amount paid.
11.6 We have already made it clear that for the period 1/1/2003 to 31/12/2003, we are of the view that the amounts payable would be determined by the terms of the written agreement and we do not accept the argument that the said agreement be treated as void on the ground of any fraud or misrepresentation having been committed.
11.7 For the period after 31/12/2003, there would be a need to determine the amount payable and the agreement which came to an end on 31/12/2003 cannot be the basis for the same.
We are somewhat surprised that the Petitioner did not consider it prudent to accept the proposal of the Respondent, particularly the one made on 6/8/2004 wherein on the basis of an outstanding amount of Rs. 593.40 lakhs as on 31/12/2003, the Respondent proposed that monthly subscription rate for the period 1/1/2004 to 31/12/2004 be fixed at Rs. 60 lakhs per month and a schedule of payments was proposed for clearing the balance outstanding as on 31/7/2004 of Rs. 541.25 lakhs over the period August 2004 to June 30, 2005, apart from payment of current monthly subscription fee at Rs. 60 lakhs per month.
These terms were definitely markedly superior to the ones offered by the Respondent in their letter of 9/3/2004. in which it had been proposed that:
(a) Subscriber base of Asianet be revised to 1,53,600 on the basis of 32% of the Asianet Universe of 4,80,000 which would have translated into a monthly payment of Rs. 44.7 lakhs from January 2004 onwards.
(b) Retrospective application of 1,53,,600 subscriber base from August 2003 translating into subscription fee for August to December 2003 getting fixed at Rs. 46.08 lakhs per month.
(c) A discount of Rs. 6 lakhs per month to the Respondent for the period January to July 2003 for the negative growth of Asianet during 2003.
(d) Total outstanding payment based on above calculation would be Rs. 4.33 crore after including March 2004 billing
(e) Total payment outflow required between March 2004 and December 2004 would be Rs. 8 crore including the outstanding dues. A schedule would be worked out for liquidation of the entire amount over the next 10 months.
Both the proposals i.e those made on 9/3/2004 and 6/8/2004 were rejected by the Petitioner.
On behalf of the Petitioner it was put across to us at the time of arguments that these proposals constituted important admissions of liability on the part of the Respondent and also constitute evidence to show that the earlier contract of 2003 was subsisting. It was also argued before us that the outstanding amounts indicated in these proposals should be treated as admissions regarding the amounts due as on the dates indicated therein. This was particularly stressed at the initial stages of hearing of the petition when the Petitioner sought orders of Tribunal that the Respondent be asked to pay the admitted amounts due if it wants to continue to avail the benefit of the signals.
Learned Counsel for the Respondent strongly contested the above stand. He drew our attention to the ruling of the Allahabad High Court in AIR 1936 Allahabad 157 Shibcharan Das v. Gulabchand Chhotey Lal wherein it was held that:
Where negotiations are being conducted with a view to settlement it should be held that these negotiations are being conducted 'without prejudice.' In such circumstances it is not open for one of the parties to give evidence of an admission made by another. If negotiations are to result in a settlement each side must give away a certain amount. If one of the parties offers to taken something less that what he later claims he is legally entitled to, such offer must not be used against him; otherwise persons could not make offers during negotiations with a view to a settlement.
In view of the above legal position we are unable to accept the contention on behalf of the Petitioner that these proposals constituted commitments about the Respondent's liabilities to the Petitioner.
11.8. We have carefully gone through the large number of cases cited by the Learned Counsel for the Petitioner. We have taken into account the legal position brought out in these rulings namely;
(a) ' a charge of fraud must be substantially proved as laid and that when one kind of fraud is charge, another kind of fraud cannot, upon the failure of proof, be substituted for it.' BN Srivastava v. Mayank Srivastava and Ors.
(b) 'before, however, a court is called upon to examine whether undue influence was exercised or not, it must scrutinize the pleadings to find out that such a case has been made out.' Subhash Chandra Das Mushibv. Ganga Prasad Das Munshib and Ors. .
(c) "First, we do not think that the plaint contains a sufficient allegation of discrimination. It is well known that when improper conduct is alleged it must be set out with all particulars.' Union of India v. Pandurang Kashinath More Learned Counsel for the Petitioner also cited:
(i) 1989 2 SCC 1 ITC Limited v. George Joseph Fernandez wherein it was held "that the court cannot make a contract between the parties and the power ends with the interpretation of the contract between them."
(ii) Vice Chairman & MD, APSIDC Ltd and Anr. v. R.Varaprasad and Ors. 2003 (ii) SCC 562 wherein it was held that 'it is not for the courts to rewrite the terms of the contract, which was clear to the contracting parties'
(iii) Union Territory of Pondicherry v. PV Suresh (1994) 2 SCC 70 where it was held "the court has no jurisdiction to alter the terms or rewrite the contract between the parties"
(iv) Syed Abdul Khader v. Ram Reddy (1979) 2 SCC 601, wherein it was held that "where the terms of the written contract are clear and unambiguous it is impermissible for the court to taken into consideration the other circumstances to determine the intention of the parties 11.9 We have taken these rulings into account while drawing our conclusions in this case. As already mentioned we have taken the view that for the period 1/1/2003 to 31/12/2003 the written agreement between the parties would form the basis of the contractual terms and we reject the arguments on behalf of the Respondent which seek to reopen this contract. As regards the period after 31/12/2003 we reject the arguments on behalf of the Petitioner that the terms of the contract entered into for the period 1/1/2003 to 31/12/2003 would continue to remain applicable. This contract came to an end on 31/12/2003 and has neither been renewed or extended. It is true that the TV signals of the Petitioner company have been delivered lawfully to the Respondent who has availed of the benefit and it was not meant to be given gratuitously and the Petitioner is therefore entitled to compensation. The Respondent has accepted this right of the Petitioner. The question to be decided is the amount of compensation payable and the manner of calculation thereof. It is absolutely clear that it cannot be on the basis of the agreement of 1/1/2003 which has stipulated a subscription amount based on a declared subscriber base of 2,78,000 whereas on the principle of parity M/s Asianet has during the course of arguments indicated calculations to us which would lead to drastic reduction of the figure from 2,78,000 to around 62,000 to 81,000. We are of the view that the burden is on the Petitioner to disclose the subscription amount payable, based on the principle of parity with the other cable operators in Kerala State and on that basis reach an agreement with the Respondent for the period beyond 31/12/2003 and compute the total payable amount by the Petitioner. The past accounts would accordingly need to be reconciled on that basis to determine the amounts to be paid/refunded to either side. We would like to observe that the proposals made in the past by the Respondent and which were rejected by Petitioner at that point of time which we have referred to in our order should not be totally brushed aside and both sides should take these into account for the purpose of reaching an agreement on the amount payable for the period after 31/12/2003.
11.10. We accordingly direct that the parties shall reconcile the accounts for the period 1-1-2003 to 31-12-2003 as per the terms of the written agreement for that period and on such reconciliation if any amount is found due by the Respondent to the Petitioner, the same shall be paid within 30 days. In the case of reconciliation showing excess amount having been paid by the Respondent for the said period, credit shall be given by the Petitioner to the Respondent to be adjusted towards the dues after 31-12-2003 In regard to the period after 31-12-2003 accounts would accordingly need to be reconciled on the basis of reasonable subscriber base as indicated herein above and on that basis the amount payable to anyone of the sides would be determined, and parties will further enter into an agreement for continued supply of signals, as per the Interconnect Regulations and in particular taking into account our observations in regard to the need to ensure that the terms are non-discriminatory, reasonable and fair. We give 30 days time to the parties for this purpose. In this period of 30 days the signals would be continued as before on the existing terms on the basis of which the signals were being given during the pendency of the petition subject to the final reconciliation.. In case agreement is not reached between the parties, the Petitioner would be free to disconnect the signals and the Respondent would be free to approach this Tribunal for any relief that it may be entitled to under the TRAI Act and the related regulations.
11.11 Petition 39(C) of 2004 and MA Nos. 43, 121, 184, 217 & 251 of 2005 are accordingly disposed of with no order as to costs.