DIGICABLE NETWORK INDIA PVTLTD Vs SAI PRASAD MEDIA PVT. LTD.

By Aftab Alam, Chairperson – The petitioner is a Multisystem Operator (MSO) engaged in the transmission of TV signals of different broadcasters. It has filed this petition for recovery of Rs.2,73,39,000/- as dues of channel placement charges from the respondent, Sai Prasad Media Pvt. Ltd., which is a broadcaster, for carrying its channel, namely, News Express on it s digital as well as analogue cable TV networks. The aforesaid amount is claimed along with interest @ 18% per annum from the date the payment was due upto the date of payment.

The claim of the petitioner is based on two Channel Placement Agreements. The first one is in respect of areas as enumerated in the agreement where the petitioner had a digital cable network. This agreement was executed on 16.07.2012. It was for the period 16.07.2012 to 15.07.2013. In the agreement after the initial recitals, in clause (D) it was stipulated as under:

“AND WHEREAS the Operator has agreed and accepted to place above Channel supplied by Broadcaster at the specified frequency on the Cable Network owned by the Operator and operating in the area/s as per Annexure A, on the terms and as are hereinafter mutually agreed to between the Parties, only for the digital platform as agreed upon mutually. Annexure-A referred to in the aforesaid clause is as under: News Express will be retransmitted only by Digital mode/platform for areas mentioned hereunder: 1. Municipal Delhi and New Delhi 2. Uttar Pradesh 3. Rajasthan 4. Madhya Pradesh 5. Chhattisgarh 6. Hyderabad 7. Maharashtra 8. Kolkata

The said News Express channel will be re-transmitted on digital mode/platform in the area mentioned here above. Also the said News Express channel will be re-transmitted on all such headed/centres where Digital mode/platform is used by Digicable in future. The said arrangement is only for the term/period commencing from 16th July, 2012 to 15th July, 2013.” Clause 3 of the agreement dealt with consideration and provided as under: “3. Consideration In consideration and subject to due adherence to the terms and conditions of this Agreement by the Operator, News Express shall pay to Operator a sum of Rs.2.5 crore plus taxes as per applicable (Rupees two crore fifty lakhs only) for the period of 16th of July 2012 to 15th July 2013. The consideration shall be payable on quarterly basis upon receipt of invoice from the Operator. The broadcaster agrees to pay three months (i.e. on quarters placement charges) dues as advance fee.”

The second agreement is for certain areas where the petitioner was doing transmission in analogue mode. This agreement was executed on 09.08.2012 and it was for the period 09.08.2012 to 08.08.2013. In the agreement after the usual recitals, it is stipulated in clause (D) that the petitioner would place the broadcaster’s TV channel, namely, News Express on S-band of its network operating in the areas as shown in Annexure-A. Annexure-A to the agreement reads as under: News Express will be retransmitted only by Analogue mode/platform for areas mentioned hereunder:

1. Madhya Pradesh: a. Indore b. Bhopal c. Jabalpur d. Gwalior e. Burhanpur f. Sagar g. Itarsi h. Vidisha

2. Rajasthan

Jaipur

3. Chhattisgarh a. Raipur b. Bilaspur c. Bhilai d. Korba e. Jagdalpur

The said News Express channel will be re-transmitted on Analogue mode/platform in the area mentioned here above. The said arrangement is only for the term/period commencing from 9th August, 2012 to 8th August, 2013.” Clause 3 of the agreement dealing with consideration provided as under: “3. Consideration

In consideration and subject to due adherence to the terms and conditions of this Agreement by the Operator, News Express shall pay to Operator a sum of Rs.2.30 Crores plus taxes (Rupees two crore thirty lakhs only) for the period of 9th of August, 2012 to 8th August 2013. The consideration shall be payable on quarterly basis upon receipt of invoice from the Operator. The broadcaster agrees to pay three months (i.e. one quarters placement charges) dues as advance fee.”

It is the case of the petitioner that it carried the respondent’s channel both on its digital and analogue networks, following all the terms and conditions stipulated in the agreements and in all the areas mentioned in Annexure-A to the two agreements. It raised invoices from time to time in terms of the agreements which were duly received by the respondent. The respondent, however, defaulted in payments and as a result, the petitioner’s dues against it accumulated to the amount mentioned above. The petitioner sent email reminders and demand notice but as no payments were finally made it was constrained to move the Tribunal for recovery of its dues.

Along with the petition, the petitioner filed copies of the Channel Placement Agreements, invoices, emails, demand notices and receipts of courier showing despatch and delivery and the statements of account showing computation of its dues.

On notice, the respondent appeared and filed its reply. The respondent did not deny the execution of the agreements. However, it was stated on its behalf that from the beginning, the petitioner defaulted in placing the respondent’s channels on its networks and it thus committed violation of the terms of the agreements. In many regions the channel was not seen at all and where it was on the air, the viewing quality was very poor and irregular. Despite the violations of the agreements by the petitioner, the respondent made payments according to the terms of the agreements but when the petitioner did not show the respondent’s channel on the required frequencies in most of the regions and also failed to rectify the faults, despite repeated requests, the respondent had no option but to stop payment of the placement charges for the remaining period. It is further stated in the reply that the respondent’s representative repeatedly requested the petitioner the channel is not being shown properly and in many areas there was complete black out. But despite the requests, the petitioner failed to regularise the retransmission of the channel. It is further stated that the respondent sent a number of emails complaining that the channel is not being shown properly in terms of the agreements and in the regions/areas covered by the two agreements. In support of the averment, copies of a number of emails are also enclosed with the reply affidavit.

The parties adduced evidences in support of their respective cases. The petitioner filed the evidence on affidavit by one Birender Kumar who is the General Manager in the regional office of the petitioner company.

The respondent too filed its evidence on affidavit but despite repeated opportunity, it failed to produce the deponent for cross-examination and as a result, its evidence was struck off the record.

At the time of hearing also, no one appeared on behalf of the respondent and the matter was heard ex parte. We are thus required to examine the claim of the petitioner in light of the evidence adduced on its behalf.

The petitioner examined one Birender Kumar as witness and produced a large number of documents in support of its case. Birender Kumar worked as General Manager in the regional office of the petitioner company. He fully supported the claim of the petitioner. He stated that the respondent had executed two placement agreements with the petitioner, one in regard to the areas where the petitioner operated in the digital mode and the other in regard to certain specified areas where the petitioner made transmissions in analogue mode. He further stated that the petitioner carried the respondent’s channels on its networks – both digital and analogue, and complied with the other terms and conditions of the placement agreements. The respondent, however, defaulted in payments of invoices raised by the petitioner. As a result, the dues accumulated to the sum of Rs.2,73,39,000/-. The respondent failed to clear the dues despite many demands made through emails, letters sent through registered post and demand notices and consequently the petitioner was constrained to initiate the proceedings before the Tribunal for recovery of its dues. The witness identified the placement agreement dated 16.07.2012 relating to the areas under digital transmission and stated that this agreement “pertained to All India network of the petitioner in digital mode”. This agreement was marked as Exhibit P-1. He also identified the placement agreement for analogue transmission dated 09.08.2012 that was marked as Exhibit P-2. He identified the invoices issued under the digital agreement that were marked as Exhibits P-3 to P-6 as also those issued under the analogue agreement which were marked as Exhibits P-9 to P-16. He also identified the statements of account under the analogue agreement which were marked as Exhibit P-8 and P-29 and the statement of account under the digital agreement which was marked as Exhibit P-28. Exhibits P-8 and P-29 show that the petitioner’s dues under the analogue agreement amounted to Rs.63,03,058/- and Exhibit P-28 shows that the petitioner’s dues under the digital agreement amounted to Rs.1,43,40,058/-.

The witness also identified a large number of emails exchanged between the parties in which the petitioner demanded payment of its dues or along with which the petitioner sent to the respondent the statements of accounts showing its dues or in which the petitioner refuted the complaints/allegations made by the respondent that its channels were not being properly carried on the petitioner’s network. These emails were marked as Exhibits P-17, P-18, P-19, P-20, P-24, P-25, P-39, P-40 to P-44, P-45 and P-46. He also identified demand letters sent by registered post and notices sent by speed post. The witness also identified the channel mapping reports maintained by the petitioner for Delhi, Mumbai, Kolkata, Hyderabad, Madhya Pradesh, Chhattisgarh and Jaipur which were marked as Exhibits P-47 to P-53 respectively.

In the affidavit sworn by the witness (which is submitted before the Tribunal in lieu of examination-in-chief), the witness fully supported the case of the petitioner. In his cross-examination, however, one finds reference to another proceedings before the Tribunal from which it would appear that the petitioner was unable to make any transmissions in a number of areas (forming part of the digital placement agreements being the subject matter of the present proceedings) during the period of time that overlaps with the term of the placement agreement.

Having thus come across certain aspects of the case that were not fully discussed in course of the ex parte hearing, it was considered desirable to further hear the matter and Mr. Vibhav Srivastava was requested to assist the Tribunal as amicus curiae. On 21.03.2016, the Tribunal further heard Mr. Diggaj Pathak, counsel for the petitioner and Mr. Srivastava. Mr. Srivastava who seems to have painstakingly gone through the materials on record rendered valuable assistance to the Tribunal.

The relevant facts in regard to the other proceedings are as follows.

The petitioner filed Petition No.820(C) of 2012 seeking to challenge the disconnection notice issued by the broadcaster, India Cast Media Distribution Services for non-payment of monthly subscription dues by the petitioner. In this case, the petitioner took the plea that contrary to its expectations, it had been unable to roll out its operations in a number of areas and hence, it was not in a position to pay the subscription fees at the higher rates as stipulated in its agreement with the broadcaster. It accordingly sought a downgradation. It prayed for a direction to the broadcaster to recast the agreement “on reasonable and non-discriminatory terms” and not to charge the petitioner, subscription fee for locations where it had not commenced its operations and where it had shut its operations in the north, central and western regions of India.

The facts of that case disclose that the petitioner had executed three interconnect agreements (called Term-Sheets) with SUN18 Media Services (predecessor in interest of India Cast) for regions namely, north, central, east and west. Under the three agreements the petitioner got the non-exclusive right to carry and retransmit the broadcaster’s channels through the analogue and all digital cable television networks whether addressable or non-addressable owned and operated by it in its areas of operation on payment of the consolidated fees of Rs.10,61,00,000/- only for each of the three agreements. The three interconnect agreements were for the period 13.07.2010 to 12.07.2013, thus overlapping with the digital placement agreement, that was for the period 09.08.2012 to 08.08.2013.

The petitioner defaulted in payment of the subscription fee and was thus faced with the disconnection notice. It then came to the Tribunal challenging the disconnection notice and seeking reliefs as noted above. On its petition, the Tribunal passed an interim order on 02.01.2013 in which the case of the petitioner is stated in paragraphs 3 and 4 as under.

“3. The Petitioner has filed this petition relating to the territory of North, Central and Western India only, although the notices under 4.1 and 4.3 of the regulation relates to all the territories of North, Central, East and Western India. 4. The Petitioner has submitted that the Petitioner being a new entrant in the cable transmission had agreed to the subscription fees on the basis of roll-out plan which could not be made and it was not able to roll out its network in certain territories of Goa, Gujarat, Uttrakhand and Haryana due to financial constraints and market compulsion. Further it was also constrained to shut its operation in the cities of Delhi, Jodhpur, Varanasi, Mathura, Ghaziabad, Faizabad, Jaunpur, Etah, Latur, Nanded, Jalna and Ambergarh due to financial unviability. The Petitioner has continued to pay the Respondent its subscriber fees up to 12th July, 2012. The Petitioner wrote to Respondent for down gradation due to the reason mentioned above. The Parties came to a mutual settlement and executed the settlement agreement on 16th May, 2012.

From the averments made on behalf of the petitioner in the aforesaid petition, it is evident that the petitioner had to shut down its operations in Delhi, Jodhpur, Varanasi, Mathura, Ghaziabad, Faizabad, Jaunpur, Etah, Latur, Nanded, Jalna and Ambergarh due to financial unviability.

Now, it is to be seen that under the digital placement agreement Delhi is among the list of areas where the petitioner was obliged to carry the channel of the present respondent on its digital network. The other areas under the digital placement agreement include UP and Maharashtra. Varanasi, Mathura, Ghaziabad, Faizabad, Jaunpur and Etah are part of UP; Latur, Nanded, Jalna and Ambergarh are parts of Maharashtra. In these areas the petitioner on his own admission shut down its operations.

Confronted with this situation, Mr. Pathak sought to explain that though in the digital placement agreement dated 16.07.2012 (Exhibit P-1) states are mentioned as a whole, actually the agreement envisaged a much limited area for the transmission of the respondent’s channel in those states. According to Mr. Pathak, the agreement obliged the petitioner to carry and transmit the respondent’s channels only in such areas in those states where it had a digital network.

Mr. Pathak stated that in terms of the notification, the DAS regime was to come in force in Delhi on 11.11.2011 but the DAS regime got actually implemented in Delhi on 01.11.2012. At the material time the petitioner was having DAS transmission in only a small part of Delhi while in the rest of Delhi it had analogue transmission. The statement made in Petition No. 820 (C) of 2012 was in respect of its analogue transmission in Delhi. Mr. Pathak further stated that the towns in UP and Maharashtra mentioned in Petition No.820 (C) of 2012 came under DAS Phase-II that came in force on 01.04.2013. He further stated that in the towns in UP that find mention in Petition No.820 (C) of 2012, the petitioner had analogue transmission and that too was shut down before the execution of the placement agreements with the present respondent and it was thus clear that those towns could not form part of the placement agreements. In support of the submission he referred to Article 1 of the digital placement agreement under the heading “Scope of Work” where it is stated as under: “1. Scope of Work

The operator shall, during the Term of this Agreement, re-transmit/redistribute/ place the Channel in the territory mentioned in Annexure-A where Operator is functioning on digital mode only. The Digicable will be responsible to place the channel only on digital platform where ever the company is running the digital signal and in the duration of the agreement wherever Digicable will expand and launch the digital signals will place News Express channel as agreed upon in SD & HD mode (after the launch). Digicable will carry the said channel in his basic bouquet of channels in Digital mode.” Mr. Pathak’s submissions are based on certain factual assertions and on the plea that since the towns and areas mentioned in the earlier order of the Tribunal had not yet come under the DAS regime at the time of execution of the digital placement agreement the petitioner could not have possibly carried the channel on any digital network in those towns and areas. We find the submissions difficult to accept. First, the factual assertions made in order to qualify and limit the area covered by the digital placement agreement are not borne out from a plain reading of the agreement and are quite extraneous to it.

There is no suggestion in the digital placement agreement that the area envisaged under it was not as per the states enumerated in Annexure-A to it but a much smaller and limited area in those states where the petitioner might have had digital network. Secondly, there can be no presumption that since the towns of UP (as mentioned in the earlier order) were still to come under the Das regime there could be no agreement for transmission of the respondent’s channel in those towns in digital mode. There is no law that prevents digital transmission in areas where the digital regime is yet to be implemented in terms of the notification issued by the Central Government. Further, whether or not in the areas of UP, Delhi and Maharashtra, the petitioner was making digital or analogue transmission during the term of the placement agreements is a pure question of fact and the clarification should have been spelt out in the placement agreements. We may further note that on this point the deposition of the petitioner’s witness is also of no help to the petitioner. The witness, in course of cross-examination was confronted with the order passed by the Tribunal in Petition No.820(C) of 2012 and all that he said in reply is as under: “Q4: Are you aware about litigation between your company and M/s India Cast Media Distribution Pvt. Ltd. in the year 2012 before this Hon’ble Tribunal?

(Ld. Counsel for the Respondent objects that the question does not pertain to the present case and also there is no mention of such things in the affidavit or in the pleadings) A: I am not aware of the details of the matter. (Witness is confronted with para 4 of order dated 2.1.2013 in Petition No.820(C) of 2013 filed before this Hon’ble Tribunal. The order is marked as Mark-X). Q.5 Is it correct that submission made by the petitioner in para 4 of the aforesaid order is stating correct position of facts? A: For this I will have to read complete petition. Q.6. Whether you can deny or admit the submission made in para 4 of the aforesaid order at present? A: For this I will have to read complete petition. Q.7 Is it correct that your company through your counsel submitted before this Tribunal in the aforesaid order that they have shut down their operation in the cities of Delhi, Jodhpur, Varanasi, Mathura, Ghaziabad, Faizabad, Jaunpur, Etah, Latur, Nanded, Jalna and Ambergarh due to financial unviability? A: For this I will have to read complete petition. Q.8 Is it correct that you have closed down your operations in the cities of Delhi, Jodhpur, Varanasi, Mathura, Ghaziabad, Faizabad, Jaunpur, Etah, Latur, Nanded, Jalna and Ambergarh due to financial unviability during the agreement period mentioned in Ex. P-1 and P-2? A: As far as Delhi is concerned, the agreement pertains to carrying the channels of the respondent on the digital platform which had increased during the currency of the agreement. It is correct that during the change in the regime from analog to digital the petitioner had faced some loss of customers. For Jodhpur, I will have to check.

For Varanasi, Mathura, Ghaziabad, Faizabad, Jaunpur, Etah, yes, but it was closed before the agreement was signed and there was no digital head-end.

For Latur, Nanded, Jalna and Ambergarh, I will have to check.”

Thus, on the basis of the materials on record, we find it difficult to hold that the petitioner was able to fully discharge its obligations under the digital placement agreement dated 16.07.2012 for the areas of Delhi, UP and Maharashtra. From the invoices and the statement of account under the digital placement agreement it is not possible to divide the amount of the placement charges and to allow the petitioner’s claim for the rest of the areas. It is, therefore, not possible to allow the petitioner’s claim under the digital placement agreement and the claim in so far it relates to the agreement dated 16.07.2012 must fail.

There is, however, no such infirmity in case of the analogue placement agreement dated 09.08.2012 and the petitioner’s claim under the analogue placement agreement, therefore, must be allowed.

We may note here that Mr. Srivastava pointed out that in one of the emails from the petitioner it was asserted that the respondent’s channel was being carried in S-band even while the petitioner’s own channel mapping report showed the respondent’s channel in Y-band. Mr. Srivastava submitted that though S-band and Y-band were analogous, the assertion that the channel was being carried in S-band as per the placement agreement was incorrect. Mr. Srivastava also pointed out some anomaly in the invoices, in that there was an overlap of 11 days in two invoices raised by the petitioner for the same area. The anomalies pointed out by Mr. Srivastava indeed shows some lack of proper care on the part of the petitioner but that is not fatal to its claim arising from the analogue placement agreement.

The claim of the petitioner is accordingly allowed in the sum of Rs.63,03,058/-. The aforesaid amount will carry interest @ 18% from the date of filing of the petition till the date of realization. The office is directed to make a decree accordingly.

..………………. (Aftab Alam) Chairperson

...……………….. (Kuldip Singh) Member

……………………... (B.B. Srivastava) Member sks