IMCL Vs MSM DISCOVERY INDIA PVT. LTD.

ORDER 1. By our order dated 6.1.2012 we have refused to pass an interim order in mandatory form directing the respondent to enter into a subscription agreement in favour of the petitioner for the town of Pune. Due to paucity of time the reasons in support thereof could not be assigned. We are assigning reasons in support of the said order dated 6.1.2012.

2. The first petitioner is a Multi Service Operator. The second petitioner is a local cable operator. They entered into an agreement on or about 1.3.2011 titled Business and Asset Purchase Agreement, the relevant clauses whereof read as under: “2.1 The Vendor undertakes that it has 1736 (one thousand seven hundred & thirty six) subscribers getting cable television services from the Vendor in Vishrantwadi and adjoining areas as per list annexed herewith (hereinafter “said area”). The Vendor agrees and undertakes that one direct point/subscriber means and includes cable television services provided to single house hold in one building and not two or three connections (as the case may be) in single house hold.” “3.4 With the signing of this agreement the Vendor and/or its agents, managers, heirs, executors, successors permitted assigns affiliates, franchisee shall not do or run cable television business in competition with the purchaser under any name in the said area directly or indirectly.” “5.2 “Areas” (hereinafter “said areas”) shall mean and include all pockets, blocks, phases, enclaves localities as more particularly described in Annexure hereto and shall also mean adjoining areas as described in the annexure. Any change in the name of said area(s) by the Government shall be read accordingly in this agreement.”

3. The said agreement contains an annexure showing the areas of operation as referred to in Clause 5.2 of the agreement. Consideration in respect of the said agreement is stated to be Rs.10,00,000/-. 4. The first petitioner on the premise that it has taken over the network of the second petitioner and having a subscriber base of 400 points contended that it would supply signals of the said network from Mumbai for which admittedly the parties had entered into an agreement. It was stated that the first petitioner was in process of setting up of its own control room in Pune and it would require IRDs therefor. The first respondent, however, by an e-mail dated 14.4.2011 stated that the first petitioner was not authorized to distribute signals of Star Den channels in Pune in terms of the subscription agreement dated 30.6.2010 for Mumbai. The first respondent, therefore, was asked to desist from unauthorisedly redistributing signals of the said channels outside the authorized area. It was furthermore stated that the petitioner in terms of Clause 9 of the Telecommunication (Broad casting and Cable Service) Interconnect Regulations Third Amendment, 2006 was required to provide the complete details of the cable operators who would be getting signals from the first petitioner’s proposed headend.

By a letter dated 25.7.2011 the first petitioner contended that as an ad hoc arrangement in cable signals would be provided from the headend of the second respondent operating from MIDC Barco Headend Mumbai. 5. According to the petitioner there was no response thereto from the respondent’s side. On 5th August, 2011 the respondent No.1 by a communication to the Petitioner No.1 stated: “3. Further, we categorically deny your averment on the non-response on the part of STAR DEN to your above referred e-mail and in this respect; we draw your attention to the E-mail dated 14th April, 2011 written by STAR DEN to you, whethereunder STAR DEN, at the outset, had called upon you to refrain from indulging in unauthorized Cable casting of signals in the area of Pune as you were not authorized to operate beyond the areas of Parts of Andheri East & West, Bandra West, Khar West, Bhandup West, Borivali West, Kandivali West, Goregaon West, Chembur East, Dahisar Kalachowki, Matunga, Nerul, Santa Cruz, East & West and Thane as authorized under the Subscription Agreement dated 27th April, 2011.” ………. “5.Further vide our e-mail dated 29.04.2011, STAR DEN had also called upon you to refrain from cable casting STAR DEN signals beyond the areas authorized under the previous Subscription Agreement signed by you.

However despite your verbal assurances to us (referred in e-mail dated 29.04.2011) to withdraw the signals from the unauthorized areas, you had never complied the same. 6. Further, we are shocked at your unilateral decision of provision/supply of “Incable signals” through your MIDC Headend, Mumbai, to your subscribers in the area of Pune without obtaining prior written permission from Media Pro. Admittedly you have deliberately transgressed the territorial limits authorized under the Agreement dated 27th April 2011 and have been indulging in the piracy of signals in sheer violation of the Contracts executed for supply of signals for MIDC Barco Headend, Mumbai.”

6. The parties appear to have made the objections in providing signals to the petitioner’s network on behalf of the respondents, inter alia, are: 1. There has been an under declaration of the subscriber base. The purported list of the subscribers have been furnished in details which have been placed before this Tribunal as an annexure to the affidavit affirmed by S. Vanjinathan on 9.12.2011. 2. The area of operation specified in the agreement are inhabited by about 5-6 lakhs people and even from the map supplied by the petitioner the same was not verifiable. From the informations received from the Entertainment Tax Department it would appear that names of three LCOs being Amol Khurade, Rajesh Bhalerao and Najism Sheikh had not been mentioned. 7. The petitioner is also guilty of commission of piracy for which a First Information Report was lodged by Media Pro Enterprises Pvt. Ltd. 8. Ms. Vandana Jaisingh, learned counsel appearing on behalf of the petitioner in support of the interim prayer would contend: (a) The petitioner No.1 having been authorized to supply signals to 1636 customers directly the respondents be asked to provide IRD boxes in regard thereto. (b) Even if, it be assumed that the LCOs of the second petitioner comprising 1101 subscribers are also to be supplied signals for the said network, the petitioner is ready and willing to pay therefor also. (c) A joint survey may be conducted by the parties hereto so as to ascertain the universe of the petitioners. (d) It could not be correct to contend that the petitioner is guilty of commission of an act of piracy.

(e) From the invoices issued by the British Broadcasting Corporation, The Sun 18 and ETV it would appear that the petitioners have been retransmitting signals of several broadcasters and there is absolutely no reason as to why they should be denied the benefit of retransmission of supply of the signals of the channels of the respondents. (f) From a notice dated 13.12.2011 issued by the Competition Commission to the petitioner in terms of Section 36(2) of the Competition Act, 2002 directing it to provide details of the informations sought for which would go to show that prima facie, Media Pro Enterprises Pvt. Ltd. are taking recourse to monopoly. 9. Mr. Maninder Singh, learned senior counsel appearing for Media Pro Enterprises Pvt. Ltd. Mr. A.C. Mishra, learned counsel appearing for MSM Discovery and Mr. Ganpathi appearing for ESPN, on the other hand, would contend: 1. Clause 3.2 of the Regulations being an exception to the provisions of the Contract Act the conduct of the signal seekers must be bona fide. 2. From a perusal of the agreement dated 1.3.2011 it would appear that the second petitioner cannot carry out any business in the town of Pune which will be contrary to the interest of the first petitioner and, thus, the prayer made by the petitioners to issue a direction upon the respondent to enter into a subscription agreement with petitioner No.2 cannot be acceded to.

3. The first petitioner, moreover, is not a registered cable operator within the meaning of the provisions of Section 3 of the Cable TV Network, Act, 1995 and the Rules framed thereunder for the town of Pune and, thus, it cannot also be permitted to retransmit signals of the channels of the Respondent. 4. The petitioners on their own showing intended to supply signals of their channels to its subscribers from the Mumbai headend of the petitioner No.1, which amounts to piracy, wherefor a first information report has been lodged on 20.10.2011 by Media Pro Enterprises Pvt. Ltd. 5. The petitioner on a modest estimate would have about 81,000 subscribers in the town of Pune. 6. It is incorrect to contend that the Star Den has any association with ICC Pune and in fact they are on litigating terms. 7. The second petitioner having sold the tangible assets, control room and headend in favour of the first petitioner it cannot be said to be in legal possession thereof. 8. The list of direct subscribers supplied by the petitioner does not contain verifiable addresses.

9. The agreement dated 1.3.2011 having referred to the area of Vishrantwadi and the adjoining areas, the petitioners cannot be supplied signals throughout the length and breadth of the town of Pune particularly when apart from a vague mention of Vishrantwadi Survey No.111 and 112, the area of Vishrantwadi does not find place in Annexure I appended to the said agreement dated 1.3.2011 or the map of Pune.

9. The petitioners in this petition have inter alia prayed for the following reliefs: “b. That the Respondents be directed to execute an Interconnection Agreement with the Petitioner No.2 for the subscription base decided by this Hon’ble Tribunal in the areas of Pune more particularly set out in Annexure 1 of Exhibit-B”

However, it appears that the second petitioner sold its 51%network comprising 1736 direct points/subscribers getting cable TV services from it as also all tangible assets control room, headend attached, tied, placed fixed in the network of the vendor. 10. The said subscribers were said to have been getting services from the second Petitioner in Vishrantwadi and adjoining areas. As noticed heretobefore the area of Vishrantwadi as such does not find place in Annexure 2 of the said agreement dated 1.3.2011.

It is not stated, for reason best known to them that the first petitioner and the second petitioner were to conduct business in partnership. 11. The petitioners envisaged as submitted by Ms. Vandana Jaisingh that a joint venture company will be floated. It is accepted that the second petitioner had about 29 LCOs in its network having 1012 subscribers. It is, therefore, difficult to conceive as to how on the one hand the first petitioner had been making request to the respondent(s) for supply of signals of their respective channels but the petitioner No.2 would continue to supply signals to the customers of 29 LCOs and the first petitioner would do so to the direct customers being 1736 in number. 12. Moreover, whether the first petitioner is guilty of committing the acts of piracy or not has to be determined at the trial. 13. At this stage, therefore, it cannot be said that the petitioners have made out a strong prima facie case and in all probability they would succeed ultimately. It is also doubtful as to whether the request of the first petitioner to supply signals to its network is possible without it being a registered cable operator.

14. To a query made by us as to whether from the same headend signals can be supplied to the direct customers and the LCOs separately, Ms. Vandana Jaisingh on instructions stated that the same is technically feasible which however, was denied and disputed by learned counsel for the respondent. Such a disputed technical issue cannot even prima facie be determined. 15. Prima facie, moreover, it does not appeal to any reason as to how the second petitioner having divested itself of the ownership of the headend control room etc. can continue to carry out its business from the same headend. 16. Prima facie again from a bare perusal of the agreement dated 1.3.2011, it would appear, that the question as to whether the same in the facts and circumstances of this case can be given effect to having regard to the regulatory regime must be considered at the hearing. 17. We, therefore, are of the opinion that the petitioner cannot be said to have made out a strong prima facie case for obtaining supply of signals relying or on the basis of the said agreement dated 1.3.2011 or otherwise as an interim measure.

18. In that view of the matter it is not necessary for us to consider the effect of the notice dated 13.12.2011 issued by the Competition Commission in terms of Section 36 of the Competition Act.

19. However, as directed in our order dated 6.1.2012 the parties may conduct a joint survey either jointly or separately which should be completed within a period of 30 days.

(S.B. Sinha) Chairperson (P.K. Rastogi) Member January 19, 2012 `anu’