Delhi District Court
Having Its Corporate Office At vs One97 Communications Ltd on 3 August, 2022
IN THE COURT OF MS. SHELLY ARORA
ADDITIONAL DISTRICT JUDGE-01, SOUTH EAST DISTRICT,
SAKET COURTS, NEW DELHI
CS DJ 305/2018
ADZ2LEAD Media Private Ltd.
(A company duly incorporated
under the Companies Act, 2013)
Having its registered office at
G-14, 1st Floor, Sector -3
Gautam Buddha Nagar
Noida - 201301
Having its corporate office at
301, Akashdeep Building
Barakhamba Road, New Delhi.
...... Plaintiff
Vs.
One97 communications Ltd.
Having its registered office at :
First Floor, Devika Tower
Nehru Place, New Delhi - 110019.
Also at :
B-121, Sector -5
Noida - 201301
...... Defendant
Date of Institution : 24.02.2018
Date of Arguments : 27.07.2022
Date of Order : 03.08.2022
CS305/2018 ADZ2LEAD Media Pvt. Ltd. Vs. One 97 Communications Ltd. Pg. 1 of 19
ORDER
1 Vide this order, I shall dispose of an application filed under Order XXXVII Rule 3(5) CPC preferred by One 97 Communications Ltd. . (herein after called 'defendant') against ADZ2Lead Media Private Ltd. (herein after called 'plaintiff') seeking permission of the Court to grant leave to defend the suit.
CONTENTIONS OF DEFENDANT IN THE APPLICATION :
2 It is stated that defendant is in the business of providing various services under the brand name Paytm to the customers of different telecom operator including BSNL and Vodafone. It is stated that Value Added Service (VAS) is provided as per the authorisation and provisioning governed by the regulations framed by Telecom Regulatory Authority of India (TRAI) issued from time to time. It is stated that the defendants holds intellectual property rights over the contents provided to the medium of Value Added Services as per which defendant provides Direct to Customer based Wireless Application Protocol Services like video, music, games to the subscriber base of different telecom operators like vodafone and BSNL and it is for the promotion of these services that services of plaintiff were sought considering that plaintiff has tie ups with various publishers and websites like NDTV, Times of India, India Times where defendant's content would be advertised to the subscriber of various telecom service provider would have an option to subscribe to the products through online advertisements links. It is against this subscription of services that defendant agreed to pay CS305/2018 ADZ2LEAD Media Pvt. Ltd. Vs. One 97 Communications Ltd. Pg. 2 of 19 remuneration to the advertiser based on cost per acquisition model. It is pleaded that the plaintiff would display content on the web page of its affiliate online publishers and thus, identity of online publisher was known only to plaintiff and the monthly leads were provided by the plaintiff as per its record, as per which an invoice was raised by plaintiff. It was also pleaded that plaintiff and defendant agreed that defendant would be the final authority in deciding the final billable numbers on the basis of which plaintiff would be remunerated.
2.1 It is pleaded by defendant that payouts to the plaintiff was dependant upon number of genuine and authorised subscriptions that actually happened irrespective of the number of clicks / leads which is called cost per acquisition model (CPA). It is also pleaded that standards of quality were laid down by TRAI which were binding upon defendant. It is stated that several invoices based by plaintiff were admittedly paid by defendant in totality however dispute arose with respect to invoice bearing no. 2017- 18/June/008 dated 05.06.2017 of Rs. 3,21,319/- and invoice bearing no. 00298 dated 31.03.2017 of Rs. 11,82,800.3/-.
2.2 It is pleaded that defendant conducted verification upon receipt of invoices and was shocked to observe various discrepancies in the content of information shared by plaintiff and the actual services rendered by plaintiff when it corroborated from the information received from telecom operators. It is contended that plaintiff malafidely indulged into fake activations CS305/2018 ADZ2LEAD Media Pvt. Ltd. Vs. One 97 Communications Ltd. Pg. 3 of 19 to raise inflated invoices, on account of which telecom service provider imposed penalty upon the defendant. Therefore plaintiff is rather liable to compensate the defendant and also under an obligation to refund the money paid to plaintiff against fake activation, not to mention that it led to loss of business goodwill in the market.
2.3 It is contended that the contract between plaintiff and defendant was of utmost good faith which the plaintiff has blatantly breached. It is stressed that it was for the plaintiff to act in good faith to fairly disclose the actual number of leads that got converted into subscriptions with the defendant to decided the actual billable number. It is stated that the invoices raised by plaintiff are tentative invoices subject to reconciliation by the defendant and therefore these invoices do not confer any right on the plaintiff unless reconciled by the defendant. It is stated that an agreement was executed between plaintiff and defendant to provide Mobile WAP CPA Services which stipulated that final billable quantity would be informed by defendant to plaintiff subject to direction and guidelines of TRAI from time to time. It is also underlined that rights and obligations of the plaintiff were subject to the agreement between plaintiff and telecom service provider for provisioning of Value Added Services and therefore, plaintiff did not have absolute right to receive payment from the defendant unless defendant receive the fees for subscription from telecom service provider. It is stated that service was based on CS305/2018 ADZ2LEAD Media Pvt. Ltd. Vs. One 97 Communications Ltd. Pg. 4 of 19 CPA, thus, unless and until customer actually and legally subscribe, no cost was payable by defendant to plaintiff and as a large number of customers for which invoices were raised, were not acquired and thus plaintiff dishonestly inflated the numbers of leads by indulging in double activation and fraudulent activation. It is stated that the plaintiff has neither filed the proof of number of leads on the basis of which it raised the invoices nor has given any explanation towards the allegations of false and double activations and it is for the plaintiff to show the number of genuine leads which led to authorised activation and thus, invoices being not in accordance with the number of actual leads and there was no obligation upon the defendant to pay the invoices.
2.4 It is stated that the application be allowed and defendant be granted to leave to defend the present suit as defendant has a good prima facie case in its favour and has raised triable issues which need evidence to be led and there is every likelihood that it would succeed if so allowed.
Reply to application by plaintiff 3 In reply to the application, plaintiff has submitted that defendant has no grounds for seeking leave to defend and that no documentary support to prove its contention has been filed.
3.1 It is averred that as per the terms of the agreement, the defendant was to provide the necessary promotional materials CS305/2018 ADZ2LEAD Media Pvt. Ltd. Vs. One 97 Communications Ltd. Pg. 5 of 19 and plaintiff was only to promote the same through Mobile WAP CPA services using its own and sub affiliate sources. The defendant was to provide the volume of leads and the plaintiff was to raise the invoice on the basis of the leads reported by the defendant. It was also agreed that the defendant had to pay the invoices within 30 days of the issuance of the same. The banner provided by the defendant contained the url through which the activation of VAS were recorded when an individual clicks on the banner and land on defendant VAS compaigns product landing page. The same were tracked by the defendant and the plaintiff had no role to play in the same.
3.2 It is averred that agreement between plaintiff and defendant did not contain contingency of any payment being received by the defendant from the Telecom Operators or any third party before making the payment to the plaintiff nor was the agreement between the plaintiff and the defendant subject to any agreement between the defendant and the Telecom Operator Agreement, as is now tried to be alleged by the defendant. It is further stated that the number/volume of leads was provided by defendant to plaintiff and the plaintiff used to simply raise invoices on the basis of leads provided by the defendant on monthly basis. It is further averred that the volume of leads provided by the defendant to the plaintiff was final and the invoices were raised pursuant to the directions/email of the defendant.
CS305/2018 ADZ2LEAD Media Pvt. Ltd. Vs. One 97 Communications Ltd. Pg. 6 of 19 3.3 It is further averred that plaintiff had provided services to the defendant from June 2016 to April 2017. The invoices for all the months were raised on the basis of volume of leads provided by the defendant and plaintiff had no concern with the volumes and that the defendant had cleared all the invoices till February 2017 and had also provided the volume of leads for the month of March 2017.
3.4 It is further pleaded that the volume of leads for the month of April 2017 was also provided by the defendant to the plaintiff vide email dated May 26, 2017 and had thereby any discrepancy, volume of leads for the month of April, 2017 would not have been provided by the defendant to the plaintiff on May 26, 2017. Further, the defendant vide email dated May 23, 2017 requested plaintiff to restart the campaign, which makes it abundantly clear that the applicant/defendant has concocted a story to wriggle out of liability to pay the legitimate dues of the plaintiff which have been illegally withheld. Further the defendant has already deposited the TDS on the March, 2017 invoice and cannot now start to cry foul. It is requested that application be dismissed and suit of plaintiff be decreed.
Written Submissions 4 Written submissions on behalf of defendant as well as plaintiff were filed.
CS305/2018 ADZ2LEAD Media Pvt. Ltd. Vs. One 97 Communications Ltd. Pg. 7 of 19 Written submission of plaintiff 5 It is stated that the plaintiff was merely advertising the Value Added Service being provided by the defendant to the telecom service operator on its own and some affiliate sources. It is stressed that defendant was under an obligation to provide the volume of leads to the plaintiff upon which plaintiff would raise an invoice payable by defendant and thus no volume of leads was ever available with the plaintiff other than one provided by the defendant as the tracking link and the banner was that of the defendant. It is emphasized that the defence sought to be set up by the defendant is absolutely vague with no corroborative evidence. It is stated that the defendant shared the volume of leads after 2-4 days in the end of month so any request for wrong activation made was already deducted from the volume of leads provided by the defendant. It is emphasized that any proof of technical glitch has not been made available by defendant. It is argued that the plaintiff never had any occasion to indulge in any fraudulent activation. It is also stressed that the plaintiff was not any party to the agreement between defendant and telecom service provider and thus, liability of defendant to pay the invoices is irrespective of whether it received the payment from telecom service provider or not. It is argued that the volume of leads was the basis on which bills were raised by plaintiff which was always final, upon which TDS were deposited by defendant without making payment. It is argued that the entire defence of defendant is frivolous and vexatious and does not raise any triable issue. Following cases were relied upon by counsel for plaintiff :
1. Sameer Bhutani & Ors. vs. Kewal krishan Kumar CS305/2018 ADZ2LEAD Media Pvt. Ltd. Vs. One 97 Communications Ltd. Pg. 8 of 19 MANU/DE/0357/2019
2. Versatile commotrade Pvt. Ltd. vs. Balraj and Ors. MANU/DE/0119/2019
3. IDBI Trusteeship Services Ltd. vs. Hubtown Ltd. MANU/SC/1490/2016
4. Raj Narain Vs. HBN Housing fiancne Ltd. MANU/DE/3392/2013
5. TRAI press release no. 50/2013 Rachit Malhotra Vs. One 97 communication Ltd. CS(OS) No. 183/2018 Order dated 30.10.2018
6. Manish Chawla vs. One 97 communications Ltd. CS No. 595/2017 order dated 19.08.2019.
Written submissions on behalf of defendant
6 It is argued that plaintiff has deliberately concealed the fact about blatant breach of terms of agreement due to which plaintiff is not entitled to be remunerated. It is also stated that defendant is not required to file evidence to substantiate defence at the stage of grant of leave to defend. It is emphasized that no right is conferred upon the plaintiff upon raising invoices to claim payment from defendant who is the final authority on the billable numbers. It is stated that the defendant ended up suffering loss on account of breach of contract by plaintiff. It is underlined that plaintiff was paid twice by defendant in respect of several activations due to some technical glitches which defendant came to know in March 2017. It is underlined that the present suit involve issues which need detailed evidence by parties to the suit. It is argued that leave to defend ought to be granted in favour of defendant as triable issues have been CS305/2018 ADZ2LEAD Media Pvt. Ltd. Vs. One 97 Communications Ltd. Pg. 9 of 19 raised which can only be adjudicated only after leading detailed evidence. Following cases have been relied upon :
1. Idbi Trusteeship Services Ltd. v. Hubtown Ltd. (2017) 1 SCC 568
2. Sudin Dilip Talaulikar v. Polycap Wires Private Limited (2019) 7 SCC 577
3. Santosh Kumar v. Bhai Mool Singh AIR 1958 SC 321
4. M/s. Mechelec Engineers & Manufacturers v. M/s. Basic Equipment Corporation (1976) 4 SCC 687
5. Sujata Shetty v. Pushpendra Bansal CA No. 6120 of 2019.
7 Case file perused. Considered.
Findings 8 Order XXXVII R 3(5) CPC mandates defendant to apply on receipt of summons for judgment, by way of affidavit or otherwise, leave to defend such suit which may be granted to him, conditionally or unconditionally. Before proceeding further, the said provision is being reproduced hereunder for ready reference :
"3. Procedure for the appearance of defendant -
(1) ....
(2) ....
(3) ....
(4) ....
(5) The defendant may, at any time within ten days from the service of such summons for judgment, by affidavit or otherwise disclosing such CS305/2018 ADZ2LEAD Media Pvt. Ltd. Vs. One 97 Communications Ltd. Pg. 10 of 19 facts as may be deemed sufficient to entitle him to defend, apply on such summons for leave to defend such suit, and leave to defend may be granted to him unconditionally or upon such terms as may appear to the court or Judge to be just :
Provided that leave to defend shall not be refused unless the court is satisfied that the facts disclosed by the defendant to not indicate that he has a substantial defence to raise or that the defence intended to be put up by the defendant is frivolous or vexatious:
Provided further that, where a part of the amount claimed by the plaintiff is admitted by the defendant to be due from him, leave to defend the suit shall not be granted unless the amount so admitted to be due is deposited by the defendant in court.
(6) At the hearing of such summons for
judgment
(a) If the defendant has not applied for
leave to defend, or if such application has been made and is refused, the plaintiff shall be entitled to judgment forthwith; or
(b) If the defendant is permitted to defend as to the whole or any part of the claim, the court or Judge may direct him to give such security and within such time as may be fixed by the court or Judge and that, on failure to give such security within the time specified by the court or Judge or to carry out such other directions as may have been given by the court or Judge, the plaintiff shall be entitled to judgment forthwith.
8.1 Principles governing grant of leave to defend were enunciated by Hon'ble Supreme Court of India in case of IDBI Trusteeship Services Ltd. Vs. Hubtown Limited Civil Appeal No. 10860 of 2016, decided on November 15, 2016 CS305/2018 ADZ2LEAD Media Pvt. Ltd. Vs. One 97 Communications Ltd. Pg. 11 of 19 relevant excerpts of which are reproduced hereunder:
17.1 If the defendant satisfies the court that he has a substantial defence, that is, a defence that is likely to succeed, the plaintiff is not entitled to leave to sign judgment, and the defendant is entitled to unconditional leave to defend the suit.
17.2 If the defendant raises triable issues indicating that he has a fair or reasonable defence, although not a positively good defence, the plaintiff is not entitled to sign judgment, and the defendant is ordinarily entitled to unconditional leave to defend. 17.3 Even if the defendant raises triable issues, if a doubt is left with the trial Judge about the defendant's good faith, or the genuineness of the triable issues, the trial Judge may impose conditions both as to time or mode of trial as well as payment into court or furnishing security. Care must be taken to see that the object of the provisions to assist expeditious disposal of commercial causes is not defeated. Care must also be taken to see that such triable issues are not shut out by unduly severe orders as to deposit or security. 17.4 If the defendant raises a defence which is plausible but improbable, the trial judge may impose conditions as to time or mode of trial, as well as payment into court or furnishing security. As such a defence does not raise triable issues, conditions as to deposit or security or both can extend to the entire principal sum together with such interest as the court feels the justice of the case requires. 17.5 If the defendant has no substantial defence and/or raises no genuine triable issues, CS305/2018 ADZ2LEAD Media Pvt. Ltd. Vs. One 97 Communications Ltd. Pg. 12 of 19 and the court finds such defence to be frivolous or vexatious, then leave to defend the suit shall not be refused, and the plaintiff is entitled to judgment forthwith.
17.6 If any part of the amount claimed by the plaintiff is admitted by the defendant to be due from him, leave to defend the suit, (even if triable issues or a substantial defence is raised), shall not be granted unless the amount so admitted to be due is deposited by the defendant in court.
8.2 These principles were also relied upon and ratified by hon'ble Supreme Court of India in case of Sudin Dilip Talaulikar Vs. Polycap Wires Pvt. Ltd. & Ors. CA No. 5528 of 2019 decided on July 15, 2019.
8.3 It is not in dispute that plaintiff and defendant engaged with each other in commercial relationship where services of plaintiff were availed to display and advertise the contents of defendant on a source where subscribers had opportunity to exercise option by clicking on the link provided in the said content to subscribe to the paid applications offered by defendant so the job of plaintiff was only to connect the content of defendant with the source. The subscriber has an option to subscribe by clicking on the link provided on the webpage in the content of defendant so the subscriber had interface only with the webpage or content of defendant, with plaintiff only providing the medium between the two.
CS305/2018 ADZ2LEAD Media Pvt. Ltd. Vs. One 97 Communications Ltd. Pg. 13 of 19 8.4 An insight into the business relationship between plaintiff and defendant can be gained by reading the covenants as mentioned in the Agreement entered between plaintiff and defendant which enlist the contractual obligations between the two. There is no dispute with respect to execution of the agreement between plaintiff and defendant. Clause 5 of Terms and Conditions is imperative to be read and understood to comment on the issue at hand which reads as under :
"1..
2..
3..
4..
5. Adz2lead shall invoice Advertiser based on volume of leads reported by Advertiser. Final billable numbers to be reported by Advertiser.
6..
7.. "
It stipulates that the billable numbers are to be reported by defendant. Defendant has not disputed this position rather has used this to state / to claim that the invoice raised by plaintiff remains tentative in nature till confirmed by the defendant and therefore, plaintiff has no absolute right to claim any amount from the defendant till invoice is ratified and confirmed by defendant. Defendant has accused plaintiff of having dishonestly indulged in fraudulent, false and double activations to unjustly enrich itself. There is not even a single document filed by defendant to substantiate or to corroborate the contentions raised. There is nothing to show as to how defendant made verifications, who conducted those verifications and what are the reports of CS305/2018 ADZ2LEAD Media Pvt. Ltd. Vs. One 97 Communications Ltd. Pg. 14 of 19 those verifications from which an inference was drawn against the plaintiff.
8.5 It is admitted that the invoices were cleared for the period from June 2016 till February 2017. Invoice of March 2017 was also raised by plaintiff as per the numbers of leads intimated by defendant which was not cleared. Further defendant was requested to provide the lead for the month of April 2017 which were subsequently provided on 26.05.2017 on the basis of which invoice dated 05.06.2017 was issued but was not cleared. It is with respect to payment of these two invoices that plaintiff has filed the suit. Defendant has not contended that plaintiff was informed or was asked to explain any false or double activation imputed to act of plaintiff prior to issuance of notice for recovery as dated 08.02.2017, subsequent to which legal notice dated 25.12.2017 was issued by plaintiff to defendant asking it to clear the arrears due to plaintiff. Infact there are e-mails dated 04.05.2017, 15.05.2017, 25. 05.2017, 26.05.2017, 29.05.2017, 05.06.2017, 15.06.2017, 05.07.2017, 17.07.2017, 26.07.2017, 02.08.2017. 10.08.2017, 29.08.2017, 26.09.2017, 24.10.2017, 27.10.2017, 30.10.2017, 02.11.2017, 06.11.2017, 07.11.2017 vide which plaintiff repeatedly requested defendant to clear dues against activations of March and April as raised in two invoices to which defendant reverted only vide e-mail dated 06.11.2017 and 08.11.2017 to state that they need to check whether any payment is due or not. On 27.11.2017, plaintiff asked defendant to provide the report as discussed in the meeting, subsequent to which, communication dated 08.11.2017 was sent by defendant to CS305/2018 ADZ2LEAD Media Pvt. Ltd. Vs. One 97 Communications Ltd. Pg. 15 of 19 plaintiff as notice for recovery of 72,63,825/-. 8.6 There is only a bare assertion on the part of defendant to accuse plaintiff of false or double activations without putting in any effort to show how plaintiff could have ever indulged into those activations considering that plaintiff had a fringe role to play in the entire process, with defendant being in control of the content to be displayed or advertised and the number or volume of leads or activations, not just clicks on the part of subscribers. It is admitted by the defendant that it had the final authority to state about the final billable numbers, thus, it was for defendant to ascertain the actual number of activations or subscriptions irrespective of the number of clicks/ leads, therefore it is difficult to accept the contention on the part of defendant that plaintiff indulged in false or double activations while defendant was exercising the control over the actual number of activations or subscriptions. The contention that plaintiff was subject to the regulations formulated by TRAI from time to time and therefore considerations of the work done by plaintiff was dependent upon the agreement between defendant and telecom service providers for provisioning of Value Added Service, holds no merit whatsoever considering that there is a written agreement executed between plaintiff and defendant governing their business relationship and it was for defendant to ensure compliance of the regulations and directions being issued by regulatory authority from time to time.
8.7 Apparently, plaintiff had no role to play in recording CS305/2018 ADZ2LEAD Media Pvt. Ltd. Vs. One 97 Communications Ltd. Pg. 16 of 19 activations or actual subscriptions. There is nothing on record to understand as to how plaintiff which only provided the medium for advertising the content to the base customer could have controlled the genuine activations and it was only for the defendant to decipher as to how many activations actually subsisted and were not withdrawn and had the conscious intent to subscribe to the services offered by defendant and were not just trapped or lured by the link provided in the advertisement.
8.8 Plaintiff raised invoices on the basis of billable numbers provided by defendant and plaintiff was not exercising any control over the volume of leads recorded by defendant. Defendant has only tried to project a frivolous defence without ascribing any reasons or basis to it. Not a single document in support of bare assertion has been filed by defendant to show that it has something to prove against plaintiff. It is clearly written in the agreement executed between plaintiff and defendant that plaintiff raised invoices on the basis of volume of leads reported by defendant. Plaintiff has categorically acted as per the contractual obligation undertaken by it. Defendant has no substantial defence to fall back on, which may merit grant of leave to defend in its favour. It is settled that merely taking a plea without filing particulars or details or specifications, would not make up for a good ground in favour of defendant. Defendant has not filed any verification report on the basis of which it disputed the invoices raised by plaintiff. It is also noted that defendant again placed order with plaintiff in May despite having disputed CS305/2018 ADZ2LEAD Media Pvt. Ltd. Vs. One 97 Communications Ltd. Pg. 17 of 19 volume of leads given by itself for the month of March and April. Defendant has not been able to show that any Penalty was ever levied by TRAI and it was not on account of wrongful or mistaken calculation of actual genuine subscriptions rather a fault on the part of a source which provided the medium of advertisement without having any control over the content of advertisement. Defendant also paid TDS towards invoice raised in March but failed to make the payment to plaintiff without assigning any reason whatsoever for about 9 months when notice for recovery was sent by defendant to plaintiff.
8.9 On the basis of discussion made above, it is held that defendant has no credible defence against plaintiff which may entitle it to any leave to contest the suit of plaintiff. The defence projected on behalf of defendant is rejected as frivolous and moonshine. With the observations made above, application filed by defendant under Order XXXVII R3(5) CPC seeking leave to defend the suit of plaintiff is dismissed.
9 As application seeking leave to defend has been dismissed, plaintiff is entitled to judgment in his favour in terms of Order XXXVII R 3(6)(a) CPC. Suit filed by the plaintiff stands decreed against defendant against defendant for a sum of Rs. 15,04.119.50/.
10 Interest @ 18% per annum has been sought which appears to be exorbitant. Further, no basis has been pleaded on behalf of CS305/2018 ADZ2LEAD Media Pvt. Ltd. Vs. One 97 Communications Ltd. Pg. 18 of 19 plaintiff to claim applicability of this interest rate. There is no mention of internal component in the emails exchanged between the parties. There is also nothing mentioned about any agreed rate of interest in the Business Agreement relied upon by plaintiff. Scales of justice would be balanced if pendentelite interest @ 6% would be granted since date of institution of suit till the date of decree and future interest @ 3% since the date of decree till its realisation against defendant Solar Print Process Pvt. Ltd.
11 In view of the above discussion, suit filed by the plaintiff ADZ2lead Medoa Private Limited thus stands decreed against defendant One 97 Communications Ltd. for a sum of Rs. 15,04.119.50/ alongwith pendentelite interest @ 6% per annum since date of institution of suit till the date of decree and future interest @ 3% since the date of decree till its realisation. Costs of the suit is also allowed in favour of the plaintiff. Decree sheet be prepared in terms thereof.
12 File be consigned to record room.
Announced in the open (SHELLY ARORA)
Court on 03.08.2022 Additional District Judge-01(SE),
Saket Courts, New Delhi.(sm)
CS305/2018 ADZ2LEAD Media Pvt. Ltd. Vs. One 97 Communications Ltd. Pg. 19 of 19