Monopolies and Restrictive Trade Practices Commission
Lgm Network vs Star India Pvt. Ltd. And Ors. on 9 May, 2003
Equivalent citations: III(2003)CPJ19(MRTP)
ORDER
C.M. Nayar, J. (Chairman)
1. The petitioner has moved this Commission under Sections 36B(A) and 10A of the Monopolies and Restrictive Trade Practices Act, 1969 (hereinafter referred to as the Act) against the respondents for indulging in the unfair and restrictive trade practices under Section 36A of the Act.
The brief facts of the case are that the petitioner is a registered Cable Television Network under the Cable Television (Regulation) Act, 1995 in the city of Patiala in Punjab State and is being run as partnership firm. It is stated to be carrying on the business of providing multi-services such as providing cable and satellite television signal of Star TV, Sony TV, Zee TV, ESPN channel, Discovery Channel etc., internet services and other emerging technologies and services to the consumers. The respondents 1 to 3 are the companies which are allegedly supplying the 'Pay Channels' on cost to the petitioner. The respondent No. 4 is the distribution agent for respondent No. 2. The respondent No. 5 is the Cable TV Network controlling about 90% viewership of the cable TV in Patiala, State of Punjab. The petitioner has impugned the alleged 'monopolistic trade practice' as well as 'unfair trade practice' as indulged in by the respondents and it is submitted that prima facie case is made out and to establish the same an inquiry may be initiated. The petitioner negotiated the terms and conditions with respondent Nos. 1 to 3 and executed an agreement in respect of the services to be provided. It is next submitted that the petitioner was making payments to the respondents and in this regard some of the receipts and copies of the Demand Drafts have been attached to the complaint. The following amounts were stated to be paid by the petitioner to the respondents :
Cable TV Subscriber Amount (Rs.)
Companys Slab (Rs.)
(a) Star India Pvt. Ltd. 1000 40,000/- p.m.
(b) Set India Ltd. 550 25,000/-
for three months
(c) Zee TV 700 28,000/- p.m.
(d) Ten Sports (DDI) 600 12,000/- p.m.
2. The genesis of the complaint against the respondent is elaborately stated in paragraphs 7, 8, 10, 11 and 12 of the complaint which may be referred to as below :
"7. That above mentioned companies are providing pay channels and since they are the only companies with their specific products they exploit their position and literally blackmail the Cable TV Network operators and charge amounts at their whims and fancies. The respondent Nos. 1 to 3 are the front runners in this regard since they are in a position to block the signal to any Cable TV Network as they have provided them with their Digital receivers, through which they control the availability of signal to them and thus in turn regulate the payments, indirectly.
8. That the respondent Nos. 1 to 3 are using the technology to harass and damage the business interests of the petitioner and thereby favouring the respondent No. 5 by way of blocking the signal to the Cable TV Network of the petitioner since 23.6.2002 by respondent No. 1 and since December, 2001 by respondent Nos. 2 and 3, which has adversely and severely affected the business interests of the petitioner in so far as out of the 700 subscribers that were with the petitioner have now been reduced to 100 only during the blocking of the signals to the Network of the petitioner by the respondents.
10. That as for respondent No. 1, the petitioner was orally informed by its agent at Patiala, that the petitioner should start paying at the slab of 4000 subscribers, up from the present 1000 subscribers. The petitioner requested the agent to either personally survey or appoint a Surveyor to check the subscription of the petitioner, which was 700. But the respondent No. 1 did not accede to the suggestion of the petitioner, which was a genuine offer, and has arbitrarily and unilaterally blocked the signal to the network of the petitioner to pressurize the petitioner to pay more as above.
11. That here it is pertinent to mention that the respondent No. 1 is charging at a slab of 6000 to 7000 from the respondent No. 5, who is controlling the 9% Cable TV Network business in the city of Patiala and is having about 100 operators working under his Network with subscriber base on about 40,000 homes and establishments.
12. That one more interesting aspect of this situation is that till the time the petitioner was getting signal from the respondent Nos. 1 to 3, he was charging Rs. 150-175/- from its subscribers and the respondent No. 5 was also charging the same amount from his subscribers. Since the signal has been blocked to the Network of the petitioner, his subscribers have been forced to shift base to respondent No. 5 and the respondent No. 5 has immediately increased the subscription rates across the Board and is now charging Rs. 200-250/-from its subscribers."
3. The petitioner has next submitted that respondent No. 5 being the largest Network of Cable TV in the city of Patiala in the Punjab State effectively controlling 90% of the Cable TV market in Patiala, is in a position to exercise influence on the Channel networks i.e. Star TV, Set India, ESPN etc. and have actively colluded to oust the petitioner from its business and thereby retaining the monopolistic control of the business of the area. In view of the above averments the petitioner has alleged the following loss and injury due to the conduct of the respondents.
"(a) Loss of goodwill and reputation established by the petitioner during one year of its operation in Patiala, Punjab, which loss alone amounts to Rs. 25,00,000/-.
(b) Loss of subscribers from 700 to 100 subscribers thus leading to the loss of revenue to the petitioner and for under-utilisation of the infrastructure and Network set up by the petitioner which loss can be valued at Rs. 5,00,000/- per month.
(c) The loss of source of livelihood for the partners and families of the petitioners who have invested their life-time savings in this business venture and invested Rs. 25 lakhs for setting up of this Cable TV Network."
4. The petitioner has prayed that the petition may be allowed and necessary directions are issued to the respondents to restore the satellite signal to the Cable TV Network with immediate effect and also compensate for loss and injury suffered by the petitioner from the unfair and restrictive trade practices indulged in by the respondents.
5. The respondents have filed reply affidavits to the main petition as well as to the Interim Application wherein the averments made by the petitioner are denied and a prayer is made for dismissal of the same. The following preliminary objections are raised in reply filed on behalf of respondent No. 1 which may be referred to as below :
(A) The present complaint is liable to be dismissed since the petitioner has not stated the true and correct facts which have compelled the answering respondent to terminate the services of the petitioner. It is stated that the petitioner was as per the agreement executed between the petitioner and the answering respondent required to make payments for availing services of the Star Network on the basis of the actual number of subscribers connected to the Head End of the petitioner. It is submitted that the petitioner has violated the fundamental condition of the contract between the parties and is, therefore, not entitled to any equitable or other relief as is being sought for in the present proceedings. It is stated that answering respondent had time and again called upon the petitioner to disclose the actual subscriber base and not to violate the provisions of the agreement executed between the parties. However, the petitioner has, for his unjust gains and in blatant violation of the agreement, failed to disclose and did not make payments as per the actual number of subscribers.
(B) The petitioner has been supplying cable connection to large area of Patiala whilst declaring the subscriber base of only 1000 (thousand) connections which is a gross under declaration from the actual subscriber base. It is further stated that the petitioner has been unjustly enriching himself by collecting payments from the end user and not passing on the same to the answering respondent in terms of the agreement.
(C) The petitioner has also concealed the fact that the petitioner had taken the services of the respondent No. 1 for a subscriber base of 500 points in the month of August, 2001 for the area specified as Then Village in Patiala but in the month of November, 2001, the petitioner started extending its reach to urban city, Patiala and, therefore, increased its connectivity, and the same was upgraded to 1,000 subscribers. However, thereafter the petitioner has shifted his entire network to Safabadi Gate (which area is in the middle of Patiala) in the month of February, 2000 and started expanding all across Patiala. In view of the same, the answering respondent issued a show cause notice to the petitioner on 20th June, 2002. By the said Show Cause Notice, the answering respondent called upon the petitioner to upgrade the subscriber base and pay as per the actual connectivity. However, since no response was forthcoming, the answering respondent was constrained to deactivate the services to the petitioner. This stated that the petitioner has committed a balatant breach of the agreement and to circumvent the reasons, has concocted the present petition and alleged that the answering respondent has indulged in unfair and restricted trade practice.
(D) The present petition is liable to be dismissed since the agreement between the parties is terminable in nature. It is stated that the petitioner is seeking to by way of the present complaint a redressal of the disputes between the parties which are squarely civil in nature. It is further submitted that the petitioner is trying to secure a relief in the nature of mandatory injunction and that too in the interim stage. It is relevant to state that the same is absolutely contrary to the settled provisions of law and, therefore, this Hon'ble Commission ought not to entertain the same. Moreover, in case the relief as prayed for is granted at the interim stage, it would tantamount to granting the final relief. For this reason alone, the present complaint/petition ought to be dismissed by this Commission.
(E) That the present petition is liable to be dismissed at the very threshold since the Agreement between the parties has an arbitration clause. It is a well settled principle that the sanctity of the arbitration clause between the parties ought to be maintained. Further, Section 8 of the Arbitration and Conciliation Act, 1996 makes it imperative for a judicial authority to refer to the parties to the dispute to the arbitration. The answering respondent is also filing a separate application under Section 8 of the Arbitration and Conciliation Act, 1996 and craves leave to refer to and rely upon the same.
6. The learned Counsel for the respondents have argued that the intention of the petitioner is not a bona fide one and no relief can be granted under the provision of Section 12A of the Act as the injunction sought does not satisfy the tests laid down by the Hon'ble Supreme Court in the judgments reported as II (1999) CPJ 17 (SC)=VI (1999) SLT 602=(1999) 7 SCC 1 in the matter of Colgate Palmolive (India) Ltd. v. Hindustan Lever Ltd., and II (2002) CPJ 11 (SC)=IV (2002) SLT 452=(2002) 6 SCC 600 in the matter of Haridas Exports v. All India Float Glass Manufacturers' Association. Similarly it is next contended that a Court can grant an injunction to prevent a breach from occurring but it cannot grant an injunction under Section 12A of the Act and Order 39 of the Code of Civil Procedure, 1908 to direct the performance of a contract after it had been terminated and no restoration to status quo ante can be granted.
7. We have heard learned Counsel for the parties on the question of grant of Interim Injunction under the provisions of Section 12A of the Act. The short question which has been raised by the applicant/complainant is that respondents 1 to 3 ought not to have terminated the agreements and withdrawn the satellite signals to the Cable TV Network particularly, in view of the fact that they had made payments though the agreements executed between the parties can be termed to have been cancelled by the said respondents. The petitioner/ applicant has contended that the sudden withdrawal of satellite signals has caused immense losses as huge investments have been made for receiving the signals and the action on the part of the respondents has caused loss of reputation and loss of business which cannot be compensated. The main dispute which has risen between the parties is with regard to the number of subscribers. The petitioner is alleged to have concealed the actual number of subscribers. In this view of the matter we adjourned the matters on different dates to resolve the issue and the petitioner has been ready and willing to pay to the respondents on the basis of the number of subscribers which the said respondents may determine on the actual counting of such numbers. The respondents 1 to 3 did not respond to the same and insisted that the contracts having been terminated the petitioner cannot be protected by an order passed under the provisions of the Section 12A of the Act. It is also alleged by the said respondents that a Show Cause Notice was issued to the petitioner for which there has been no response. Further it is contended that the disputes arising in the present proceedings can be dealt with by remedy of arbitration tinder the Arbitration Act, 1996 as the agreements between the parties contain an arbitration clause.
8. There is no doubt that the petitioner is suffering immense hardship which cannot be compensated at a later stage by adequate compensation as his entire business has been ruined by the non-supply of satellite signals by the respondents. The petitioner has also not been granted an adequate opportunity to represent this though the remedy of arbitration is alleged to be available to the parties as contended by the learned Counsel appearing on behalf of the respondents. The connections admittedly were deactivated and the services were withdrawn to the petitioners. We may refer to the judgments as strongly relied upon by the Counsel for the respondents in Colgate Palmolive (India) Ltd. v. Hindustan Lever Ltd. (supra), Paragraphs 3, 4, 5 and 9 may be referred to as below :
"3. While it is true that the conferment of power, under Section 12-A, has very wide ramifications but the Legislature was itself conscious enough to record in the body of the section certain inbuilt requirements to be fulfilled in order to clothe the Commission with the authority and jurisdiction in the matter of grant of an order of injunction and it is on this perspective that Section 12A ought to be noticed at this juncture. Section 12-A reads as below :
'12-A. Power of the Commission to grant temporary injunctions--(1) Where, during an enquiry before the Commission, it is proved, whether by the complainant, Director General, any trader or class of traders of any other person, by affidavit or otherwise, that any undertaking or any person is carrying on, or is about to carry on, any monopolistic or any restrictive or unfair trade practice and such monopolistic or restrictive, or unfair trade practice is likely to affect prejudicially the public interest or the interest of any trader, class of traders or traders generally or of any consumer or consumers generally, the Commission may, for the purposes of staying or preventing the undertaking or, as the case may be, such person from causing such prejudicial effect, by order, grant a temporary injunction restraining such undertaking or person from carrying on any monopolistic or restrictive, or unfair trade practice until the conclusion of such enquiry or until further orders.
(2) The provisions of Rules 2-A to 5 (both inclusive) of Order XXXIX, of the First Schedule to the Code of Civil Procedure, 1908 (5 of 1908), shall, as far as may be, apply to a temporary injunction issued by the Commission under this section, as they apply to temporary injunction issued by a Civil Court, and any reference in any such rule to a suit shall be construed as a reference to any enquiry before the Commission.
Explanation I--For the purposes of this section, any enquiry shall be deemed to have commenced upon the receipt by the Commission of any complaint, reference or, as the case may be, application or upon its own knowledge or information reduced to writing by the Commission.
Explanation II--For the removal of doubts, it is hereby declared that the power of the Commission with respect to temporary injunction includes power to grant a temporary injunction without giving notice to the opposite party.'
4. On a plain reading of the provision the following requirements thus emerge :
(a) Temporary injunction can be granted only during an enquiry.
(b) There must be proof of certain practices mentioned therein to have been carried on or are about to be carried on by the person specified therein.
(c) Such practices are likely to affect prejudicially the public interest and there must be some evidence either by way of an affidavit or otherwise.
5. The situation thus after the incorporation of the Act of 1984 in the statute-book emerges that the Commission's power can be invoked under Section 12A within however such limits and restrictions as noticed above. Be it placed on record, that for an appreciation of the power under Section 12-A and to read the same in its proper perspective, Regulations 76 and 77(2) of the MRTP Regulations, 1991 ought also to be noticed. Regulation 76 provides that an application for grant of temporary injunction ought to be supported by an affidavit stating therein the circumstances under which the trade practice can be ascribed to be prejudicial to the interest of the public, consumer etc. and Regulation 77(2) provides a safeguard to the effect that the Commission before making an order under Section 12-A may direct the Director General of Investigation to make an investigation and submit a report to the Commission and the Commission, upon consideration thereof, may pass appropriate orders in regard thereto.
9. Generally, however, the interlocutory remedy by way of a grant of an order of injunction is intended to preserve and maintain in statute quo the rights of the parties and to protect the plaintiff, being the initiator, of the action against incursion of his rights and for which there is no appropriate compensation being quantified in terms of damages. The basic principle of the grant of an order of injunction is to assess the right and need of the plaintiff as against that of the defendant and it is a duty incumbent on to the law Courts to determine as to where the balance lies."
The considerations for the grant of interlocutory injunction are stated in paragraph 24 which may be stated as below :
"24. We, however, think it fit to note herein below certain specific considerations in the matter of grant of interlocutory injunction the basic being non-expression of opinion as to the merits of the matter by the Court, since the issue of grant of injunction, usually, is at the earliest possible stage so far as the time-frame is concerned. The other considerations which ought to weight with the Court hearing the application or petition for the grant of injunctions are as below :
(i) extent of damages being an adequate remedy;
(ii) protect the plaintiff's interest for violation of his rights though, however, having regard to the injury that may be suffered by the defendants by reason therefor;
(iii) the Court while dealing with the matter ought not to ignore the factum of strength of one party's case being stronger than the other's;
(iv) no fixed rules or notions ought to be had in the matter of grant of injunction but on the facts and circumstances of each case -- the relief being kept flexible;
(v) the issue is to be looked at from the point of view as to whether on refusal of the injunction the plaintiff would suffer irreparable loss and injury keeping in view the strength of the parties' case;
(vi) balance of convenience or inconvenience ought to be considered as an important requirement even if there is a serious question or prima fade case in support of the grant;
(vii) whether the grant or refusal of injunction will adversely affect the interest of the general public which can or cannot be compensated otherwise."
The Supreme Court has referred to the bona fide of the applications under Section 12A of the Act as well as an assignment of proper reasons and justification for the grant of injunction before the matter is investigated and the complaint is officially granted.
9. The other judgment which has been cited by the respondents is of Haridas Exports v. All India Float Glass Manufacturers' Association and Ors. (supra), wherein the Supreme Court vacated the order of injunction passed by the Commission. The relevant para which is cited is paragraph 72 that may be referred to as under :
"72. It is in this context that when we examine the provisions of Section 12-A, we find that the power of the Commission to grant temporary injunction arises only after it is satisfied that a restrictive trade practice or unfair trade practice is being carried on which is likely to affect prejudicially the public interest or the interest of any trader or class of traders etc. It is only with a view to prevent the causing of a prejudicial effect that an interim order can be passed by the Commission under Section 12-A."
10. We are prima facie of the view that the petitioner/applicant has made out a case for grant of interim injunction and restoration of status quo ante with certain modifications at this interlocutory stage as balance of convenience lies in its favour and damages cannot be termed as an adequate remedy. Such power can also be exercised to protect 'public interest' and the interest of traders and to prevent the case of prejudicial effect that an interim order can be passed by the Commission, under Section 12A of the Act as has been held even in the judgments referred to above. The plea that once facility has been withdrawn from the petitioner/ applicant and the agreements are terminated, the status quo ante cannot be restored is without any basis in law. There is no bar on any Court to act in a situation where rights of the parties are to be protected in the interest of justice and balance of convenience particularly, when the respondents have allegedly terminated the agreements and withdrawn the facilities granted to the petitioner/applicant with undue haste and against the interest of the consumers and traders.
11. The other plea as raised by the learned Counsel for the respondents that the remedy of arbitration having been provided in the agreements this Commission ought not to give any relief at this stage to the petitioner/ applicant. This argument is also without force as the respondents did not take effective measures to accept the remedy of arbitration and immediately terminated the agreements and deactivated the satellite signals to the detriment to the right of the petitioner/ applicant. Moreover, it has been clearly held by Supreme Court in the judgment reported as II (2000) CPJ 6 (SC)-IV (2000) SLT 494=(2000) 5 Supreme Court Cases 294 in Skypak Couriers Ltd. v. Tata Chemicals Ltd., that existence of an arbitration clause in the agreement is no bar to entertainment of complaint by the Redressal Agency. Paragraph 2 of the judgment which was rendered to interpret the provisions of the Consumer Protection Act, 1986 may be referred to as below :
"With the industrial revolution and development in the international trade and commerce, there has been a substantial increase of business and trade, which resulted in a variety of consumer goods appearing in the market to cater to the needs of the consumers. The modern methods of advertisement in media, influence the mind of the consumers and not-withstanding the manufacturing defect or imperfection in the quality, a consumer is tempted to purchase the goods. There has been possibility of deficiency in the services rendered. For the welfare of such consumer and to protect the consumers from the exploitation to provide protection of the interest of the consumers, Parliament enacted the Consumer Protection Act, and the Act itself makes provision for the establishment of Commissions for settlement of the consumer disputes and matters connected therewith, The Commissions, under the Act, are quasi-judicial bodies and they are supposed to provide speedy and simple redressal to consumer disputes and for that purpose they have been empowered to give relief of a specified nature and in an appropriate way, to award compensation. On a detailed scrutiny of the different provisions of the Act and bearing in mind the powers conferred on the Commissions, it is indeed difficult to conceive that such Commissions would be authorised to refer the disputes for a consensual adjudication, merely because to arrive at a decision it would be necessary to take evidence in the proceedings. In the absence of any provision in the Act itself authorising the Commission to refer to pending proceeding before it, on receipt of a complaint from a consumer, for being settled through a consensual adjudication, the conclusion is irresistible that the Commissions under the Consumer Protection Act do not have the jurisdiction to refer the dispute for a consensual adjudication and then made the said decision of the so-called consensual Arbitrator, an order of the Commission itself. Even if there exists an arbitration clause in an agreement and a complaint is made by the consumer, in relation to a certain deficiency of service then the existence of an arbitration clause will not be a bar to the entertainment of the complaint by the Redressal Agency, constituted under the Consumer Protection Act, since the remedy provided under the Act is in addition to the provisions of any other law for the time being in force. Now let us see what procedure has been adopted by the Commission."
12. In view of the above reasons we are constrained to grant interim relief and direct the respondents to restore satellite signals to the Cable TB Network of the petitioner/applicant subject to the condition that the said applicant will pay to the respondents the amount or amounts for the use of the service on the basis of actual number of subscribers as verified and determined by the said respondents. The necessary action shall be taken by the parties within four weeks from the date of the order.