Hathway Media Vision Private Limited Versus M/S. Spider Cables - Court Judgment

1. The present petition is filed by M/s. Hathway Media Vision Private Limited (formerly known as “United Cable Network Private Limited”) against M/s. Spider Cable, a sole proprietary concern represented by Mr. Govind Mehra, a cable TV operator, operating in the vicinity of Worli area within the city of Mumbai, for making payment of the outstanding cable TV feed charges to a tune of Rs. 58,39,732/- by the respondent on account of persistent default, for a considerable period of time. On the said amount petitioner also claims interest amounting to Rs.18,37,452/- @ 18% per annum, which creates an alleged total liability of Rs.76,77,184/- upto Sept, 2005 upon respondent towards petitioner.

2. The petitioner claims to be a Multi System Operator (MSO) and signed an agreement with the respondent on 4.11.1998. Subsequent to this agreement another distribution agreement was also signed between the parties on 29.07.1999. The initial agreement dated 4.11.1998 is for obtaining the signals from the petitioner for performing the cable operations in its network on the basis of the input charges as agreed upon mutually by the parties. This agreement also envisages various other services, which were to be rendered by the respondent to United Cable Network (presently M/s. Hathway Media Vision Pvt. Ltd.) on payment of Rs. 6 lakhs as consideration from the petitioner in the manner as specified in the annexure to the agreement. The distribution agreement dated 29.7.1999 signed between the parties, also mentions that the respondent is one of its cable operators taking feed from the Grant Road head end of Hathway Group and has got approximately 200 primary points. The responsibilities which have been thrust upon by this agreement on the respondent in the capacity of distributor is to liaise with the cable TV operators of the area assigned to them, to provide satisfactory service to the affiliates of the petitioner and, to ensure regular monthly collection of cable TV feed charges. The respondent by this agreement has also to perform the duties of periodically verifying the declaration of cable TV operators of the petitioner. The petitioner, for these acts of the respondent, had agreed to pay 10% as commission after a collection of 80% of the dues for every month from the cable operators. Besides similar other responsibilities, it has been mentioned in the distributorship agreement that the respondent will continue to take the feed exclusively from the Worli head end of the Hathway Group and pay the feed charges to the petitioner as may be applicable from time to time during the course of the agreement. It is also mentioned in the agreement that in case the respondent was to dispose of their primary cable TV points, the petitioner will have the right of first refusal, before it can be disposed of to a third party.

3. When this matter came up for hearing on 7.07.2008 the question of jurisdiction of this Tribunal to hear and decide this case was raised by the counsel for respondent. In response, the counsel for petitioner raised a preliminary objection that the point of jurisdiction has not been pleaded by the respondent in its reply cum counter claim. In response to this objection, it was pleaded by the counsel for respondent that it is settled law that maintainability of petition on the point of inherent lack of jurisdiction of the Courts can be argued even without making a mention of the same in the pleadings and at any stage of proceedings. The counsel for respondent also argued that as per the provision of the The Telecom Regulatory Authority of India Act, 1997 (hereinafter to be referred as TRAI Act, 1997), the disputes covered under the Act are disputes directly relating to telecom services. The counsel for respondent further argued that in the present case the subject matter of TRAI Act,1997 is the terms and conditions of inter-connectivity between two service providers and settlement of dues between them in the realm of a regulated contract. It was also argued that, the instant disputes arise out of general law of contract and do not exclusively involve recognition, observance or enforcement of any special/regulated right or obligation under the TRAI Act, 1997 and, therefore, since the disputes arise in general law of contract, the remedy lies in the Civil Court, even though such a dispute may also constitute a telecom dispute in some manner. In this connection it was also argued that the agreement which is subject matter of dispute between the parties is of 1998 i.e., pre-Regulation stage. Therefore, telecom Regulations do not apply and the matter is purely in the realm of contract and for contractual disputes normal civil courts will have jurisdiction.

4. It was further argued that as per Section 14 of the TRAI Act this Tribunal is empowered to adjudicate any dispute between two or more service providers, however, the word ‘any’ cannot be given such a wide amplitude and meaning so as to cover each and every type of civil dispute between service providers like dispute regarding copyright or trademark or tenancy which have no connection with telecom activity.

5. The counsel for petitioner has vehemently opposed the contention of the counsel for respondent on the ground that the present petition relates to a claim by the petitioner against the respondent on account of signals supplied. The main dispute is regarding recovery of dues by one service provider from the other service provider, on account of supply of signals and, therefore, it falls within the jurisdiction of this Tribunal. The learned counsel for petitioner brought to our notice the preamble of the Act which provides the setting up of the Telecom Regulatory Authority of India and the Telecom Disputes Settlement and Appellate Tribunal to regulate telecommunication services, adjudicate disputes, dispose of appeals and to protect the interest of service providers and consumers of the telecom sector, to promote and ensure orderly growth of telecom sector, and for matters connected therewith or incidental thereto. The main emphasis laid by the learned counsel for petitioner that besides regulating the telecom services (which includes broadcasting services also by a notification dated 9.1.2004 issued by the Govt. of India), this Tribunal has been empowered to settle disputes for matters connected therewith or incidental thereto also in both the sectors. The counsel brought to our notice the judgment of this Tribunal in BPL Communications Ltd. Vs. Mahanagar Telephone Nigam Ltd., in Petition No. 148 of 2005 decided on 19th March, 2005 in which dispute was about charges for the space in a telephone exchange of the MTNL in Mumbai. This Tribunal entertained the dispute and the MTNL was directed not to charge exorbitant amount by way of rental for space for installing the interconnect equipment being used for telecommunication purposes. The learned counsel has drawn the inference from this case that, even the rental of the space occupied by equipment was adjudicated under the Act, which is a matter connected with the regulation of Telecom Services. Besides, the preamble to the Act, Section 14, Section 16 and Section 19 were referred, to emphasize that the amplitude of the power of this Tribunal is very wide and the word ‘any dispute’ means all and every dispute which can be settled by this Tribunal. At this stage we would like to quote Section 14 of the Act as it is the main provision for present purposes.

“Section 14. Establishment of Appellate Tribunal - The Central Government shall, by notification, establish an Appellate Tribunal to be known as the Telecom Disputes Settlement and Appellate Tribunal to –

(a) adjudicate any dispute –

(i) between a licensor and a licensee;

(ii) between two or more service providers;

(iii) between a service provider and a group of consumers;

Provided that nothing in this clause shall apply in respect of matters relating to –

(A) the monopolistic trade practice, restrictive trade practice and unfair trade practice which are subject to the jurisdiction of the Monopolies and Restrictive Trade Practices Commission established under sub-section (1) of section 5 of the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969);

(B) the complaint of an individual consumer maintainable before a Consumer Dispute Redressal Forum or a Consumer Disputes Redressal Commission or the National Consumer Redressal Commission established under section 9 of the Consumer Protection Act, 1986 (68 of 1986);

(C) dispute between telegraph authority and any other person referred to in sub-section (1) of section 7B of the Indian Telegraph Act, 1885 (13 of 1885);

(b) hear and disopose of appeal against any direction, decision or order of the Authority under this Act.

The judgment of the Apex Court in AIR 1994 SC 787 para 4 at page 793 was brought to our notice, in which definition of the word ‘Any’ has been delibrated. The word ‘Any’ dictionarily means one or same or all. In Black’s Law Dictionary, it is explained thus, ‘word “any” has a diversity of meaning and may be employed to indicate “all” or “every” as well as “same” or “one”. In the TRAI Act the word ‘any’ in Section 14 has been used in a wider sense extending from one to all and ipso facto must include each and every dispute relating to telecommunication services between service providers. Of course “any” in the context of this Act cannot be given absurd meaning and one may have to limit its sweep in a given case. But facts of the present case do not warrant any such limitation to be placed on the word “any”.

6. The learned counsel for petitioner argued that barring of the jurisdiction of the Civil Court as per Section 15 of the Act confers a unique status on this Tribunal. Sec. 15 is reproduced as under :

“ Civil Court not to have jurisdiction - No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act.”

The learned counsel for petitioner raised a question as to whether a broadcaster can go to a civil court for any of its claims against a MSO or cable operator irrespective of the amount of claim? The answer is a clear ‘no’. He strongly contended that no Civil Court or arbitrator can adjudicate or entertain any dispute which is in regard to settlement of dues between two service providers in the field of broadcasting.

7. The learned counsel brought to our notice Regulation 3.2, 3.3, 3.6 and 4. In each of these Regulations there is a provision in regard to default in payment of dues not only current but also arrears and non-payment of dues may result in disconnection of signals by following Regulation 4. To emphasize the issue of dues arising out of a relationship between Broadcaster, Multi System Operator/Local Cable Operator, the learned counsel for petitioner argued that the interconnection for transmission of signal is always for a consideration and any dispute about the consideration involved in the process, is well within the purview of this Tribunal. The Regulation 3.2 provides that any MSO may deny signals to a LCO on account of non-payment of dues of the previous MSO and similarly, it can disconnect signals to the LCO after observing the provisions in Regulation 4. In such an event also this Tribunal decides whether any amount is outstanding or not between the parties and, therefore, it has absolute jurisdiction to decide the case relating to recovery of dues.

8. It was also brought to our notice by the learned counsel for petitioner that TDSAT has framed Procedure Rules, 2005 wherein fees has been prescribed for petitions for recovery of money as per the Rule 4(ix). The petitioner’s counsel has submitted that, on all counts, this Tribunal has got undisputed jurisdiction to hear matters relating to recovery of dues.

9. So far as the objection of the learned counsel for petitioner that since the preliminary objection has not been pleaded in the reply, it cannot be entertained now, is concerned, we do not find any force in it. In our view the nature of objection being purely legal which goes to the root of the matter, there is no bar to it being considered at any stage and without being specifically pleaded. However, there is another fact which need to be stated here. The respondent has not only not taken any objection about jurisdiction of the Tribunal, it has filed a counter claim i.e. it has submitted to the jurisdiction of this Tribunal without demur. Therefore, this point need not detail us.

10. After carefully going through the arguments of the learned counsel for appellant and respondent, we are of the view that it is most important to understand the nature and purport of the statutory provisions. The TRAI Act,1997 is a substantive statute and provides mechanism for adjudication of disputes between the service providers. It is evident that the Government intended to bring under one Act, the entire matter relating to telecommunications, which also includes broadcasting, after issuance of the notification dated 9.1.2004. If there was any intention to restrict Section 11 of the TRAI Act, the purpose for which this Act has been enacted shall be defeated. In COAI Vs. UOI, AIR 2003 SC 899, the objective and intent of this Act has been clearly brought out.

“ Having regard to the very purpose and object for which the Appellate Tribunal was constituted and having examined the different provisions contained in Chapter-IV, more particularly the provision dealing with ousting the jurisdiction of Civil Court in relation to any manner which under the Appellate Tribunal is empowered by or under the Act, as contained in Section 15, we have no hesitation in coming to the conclusion that the power of the Appellate Tribunal is quite wide, as has been indicated in the statute itself and the decision of this Court dealing with the power of a Court exercising appellate power or original power, will have no application for limiting the jurisdiction of the Appellate Tribunal under the Act.”…..…. “The learned TDSAT should have borne in mind that its decision on fact and law is final appeal lies to this Court in terms of Section 18 of Act only on substantial question of law. It, therefore, was obliged to determine the questions of law and facts so as to enable this Court to consider the matter if any substantial question of law arises on the face of the judgment.”

11. The main issue in this petition is the recovery of dues from the Local Cable Operator by a Multi System Operator. The amount of claim as per the agreement may not be substantial, however, this in any way cannot change the nature of the petition and the petition has to be treated as a recovery petition for outstanding dues between two service providers on account of the signals made available by the petitioner to the respondent for dissemination of the same to its customers. The fact that both parties are service providers is admitted. A large number of cases before this Tribunal are in the field of broadcasting which belong to the category of recovery of dues. Regulations contain mechanism for recovery of money. Regulation 4.1 and Regulation 4.3 are reproduced below:

“4.1 No broadcaster or multi system operator shall disconnect the TV channel signals to a distributor of TV channels without giving three weeks notice to the distributor clearly giving the reasons for the proposed action.

Provided that a notice would also be required before disconnection of signals to a distributor of TV channels if there was an agreement, written or oral, permitting the distribution of the broadcasting service, which has expired due to efflux of time.

Provided further that no notice would be required if there is no agreement, written or oral, permitting the distribution of the signals.”

“4.3 A broadcaster/multi system operator/distributor of TV channels shall inform the consumers about such dispute to enable them to protect their interests. Accordingly, the notice to disconnect signals shall also be given in two local newspapers out of which at least one notice shall be given in local language in a newspaper which is published in the local language, in case the distributor of TV channels is operating in one district and in two national newspapers in case the distributor of TV channels is providing services in more than one district. The period of three weeks mentioned in sub-clause 4.1 and 4.2 of this regulation shall start from the date of publication of the notice in the newspapers or the date of service of the notice on the service provider, whichever is later.”

We also notice that the disconnection of signals is primarily because of non-payment of the dues or unauthorized cable casting beyond the scope of the agreement between the service providers. The unauthorized cable casting also indirectly generates an outstanding amount because of the increased viewership vis-à-vis the number mentioned in the agreements and, therefore, falls in the category of realization of outstanding dues. The notices under Regulations 4.1 and 4.3 are issued in large number of cases because of alleged outstanding subscription amount. The learned counsel for respondent, has referred to the obligations created for the respondent in the capacity as distributor of the petitioner by virtue of a part of the initial agreement dated 4.11.1998 and subsequent distribution agreement dated 29.07.1999, which is also related to the business of dissemination of signal to the customers of the petitioner including the realization of the dues from the cable operators, verification of the declaration given by the cable TV operators of the petitioner, maintaining a vigil on the quality of service and work as a representative of the petitioner with respect to liaison between the petitioner and its affiliates. On this basis he submits that it is a peculiar contract giving rise to general obligations which can be agitated only before a civil court. We are unable to agree with the learned counsel for respondent. The agreement is composite one and admittedly has telecom disputes within its ambit. It is also admitted that both parties are service providers within the meaning of Section 14 of the TRAI Act. We cannot consider these activities to be outside the scope of the broadcasting sector and, therefore, the claims raised by the petitioner alongwith the counter claims raised by the respondent are well within the scope of adjudication of this Tribunal. We, therefore, uphold that the present petition falls within the ambit of Section 14 of the TRAI Act and, therefore, is to be adjudicated upon by this Tribunal. At this stage we may also deal with another argument advanced by the learned counsel for respondent. It is submitted that Sec. 14 of the Act deals with only parties to dispute and not disputes. This is not correct in view of the fact that Sec. 14 uses the words “any dispute” which means there is reference to parties as well as disputes. This argument is, therefore, liable to be rejected.

12. Before we conclude we would also like to deal with another argument of the learned counsel for respondent. It was argued that the agreements i.e. subject matter of this case are of pre-Regulation stage and, therefore, the Regulations cannot be pressed into service. In our view the dispute has arisen much after the Regulations have come into force and, therefore, the Regulations shall be applicable in this case for dispute resolution between two service providers. This argument, therefore, has no merit.

We reject the preliminary objection raised by the learned counsel for respondent regarding jurisdiction of this Tribunal to try this petition.