LUCKNOW 9 CABLE NETWORK PVT. LTD Vs MSM DISCOVERY INDIA PVT. LTD.

By our order dated 25.05.2011, we, in view of paucity of time and having regard to the urgency of the matter passed an order of injunction in mandatory form, stating, that the reasons therefor would be assigned later.

The said order reads thus:

“In view of the urgency of the matter, we direct that on the petitioner’s depositing a sum of Rs.7.77 lakhs without prejudice to the rights and contentions of the parties till April, 2011 towards the monthly subscription charges and on the petitioner’s undertaking to pay the monthly charges in terms of the agreement dated 19.9.2009, the respondent shall restore the supply of signals of its channels to the petitioner’s network forthwith. The petitioner shall continue to pay the subscription amount of Rs.4,67,705/­ excluding tax.

The detailed reasons shall follow.”

We, now, intend to assign reasons in support of the said order dated 25.05.2011.

The parties hereto on or about 11.01.2010 entered into an agreement for one year in terms whereof a sum of Rs. 3.8 Lacs plus taxes thereon were to be paid. According to the petitioner, a copy of the said agreement had not been supplied which has been annexed by the respondent with its reply, Clause 4 whereof reads as under:

“Term. Subject to the Standard Terms, the term of this agreement shall begin on the Start Date set forth on page 1 hereto and end on the immediately following March 31 (the “Initial Term”). This agreement shall be automatically renewed on the same terms and conditions provided herein for successive years starting on April 1 and ending on March 31 of the following year unless written notice of termination is provided by Distributor to Affiliate the later than March 1. As used herein, “Term” shall mean the Initial Term to it within a renewal thereof.” The petitioner, however, contended that the said agreement expired on 31.03.2010. Admittedly, prior to the said agreement the parties had entered into an agreement with effect from 01.04.2009 for a period of one year in terms whereof IRD boxes of various channels were supplied by respondent in witness whereof, one Sunil Jolly said to be its distributor, put his signature.

The petitioner by a letter dated 25th February 2010 in reply to respondent's letter dated 30 January 2010 having regard to the affiliation agreement for the financial year 2009‐2010 confirmed that it was inclined to execute the said agreement. A Subscriber Line Report was also annexed thereto.

On 26.02.2010, the petitioner asked respondent to do something with regard to entering of other MSOs in its area. The petitioner supplied therewith a copy of the list of the Local Cable Operators. According to it, the negotiations started on 11.03.2010.

A notice, however, was issued by respondent on 13.04.2010 purported to be under the Clause 4.1 of the Telecommunications (Broadcasting And Cable Services) Interconnection Regulations, 2004 (The Regulations) on the premise that no SLR had been furnished. It is, however, not in dispute that no public notice under Clause 4.3 was issued within a reasonable time from the date of issuance of notice under Clause 4.1.

By a letter dated 16.08.2010, the petitioner informed respondent that some of its cable operators had migrated to Den Enjoy Network. The petitioner, therefore, sought for downgradation.

A meeting is said to have been taken place between the parties. According to petitioner, a memorandum of understanding was arrived at, in terms whereof, it was agreed that, the subscription fee were to be increased to Rs. 4,67,705/‐ and petitioner was to be entitled to operate in the entire town of Lucknow.

The petitioner allegedly entered into the said agreement in view of the said understanding and despite the fact that from respondent’s bouquet of channels some broadcasters have moved away.

According to the petitioner, it otherwise would not have agreed to the increase of subscription fees. However, a public notice was issued on 17.02.2011. Disconnection in supply of signals was, however caused only on 12.05.2011.

The petitioner has filed this petition on 18th May 2011 praying interalia for a direction upon respondent to enter into a fresh subscription agreement for the year 2011 on reasonable terms and conditions while considering migration of various cable operators from its network and for an order setting aside the public notice dated 17.02.2011.

In its reply, the respondent interalia contends that petitioner had been supplied with a copy of the agreement from a perusal whereof it would appear that the Indira Nagar was not within its area of operation and as it having been found to be transmitting signals in the said area, apart from the ground of default and non‐renewal of the agreement, is also guilty of acts of piracy.

The affiliation agreement was entered into on or about 1st April 2009.

The fact that it contained the aforementioned Clause (4) in terms whereof the agreement was to be automatically renewed subject of course to the issuance of a notice latest by 1st March is not in dispute. Admittedly the respondent has not issued any such notice.

What would be the effect of the said clause of the agreement has recently been considered by this Tribunal while passing an interim order in Wire And Wireless India Ltd v. MSM Discovery Pvt Ltd, Petition No. 246 (C) of 2011 by an order dated 13th May, 2011 in the following terms:

“Be that as it may, keeping in view the fact that the provisions contained in clause 4 of the aforementioned agreement provided an automatic renewal clause, we are of the view that the petitioner has made out a prima facie case.”

It has also not been disputed that before issuance of the public notice dated 17.02.2011, no fresh notice in terms of Clause 4.1 was issued apart from the one dated 13.04.2010.

The fact that a large number of channels have gone out of the bouquet of respondent has also not been denied or disputed.

Mr. Mishra appearing on behalf of respondent would, however, contend that increase in the subscription fee was effected in view of entry of the ‘Neo’ group of channels in its bouquet. However, no such stand has been taken by respondent in its reply.

Another aspect of the matter must also be taken note of. A crucial letter being dated 03.02.2011 was sent under “Certificate of Posting” only. A not so crucial letter issued a few days prior thereto was sent through speed post. Why such an important letter has been sent under “Certificate of Posting” has not been explained particularly when a threat was given thereby that respondent shall deactivate its services to petitioner’s network unless the requisite steps as specified therein are taken.

Mr Mishra is correct in his contention that in the public notice, ‘Indira Nagar’ has specifically been mentioned as the affected area, so as to convey that the unauthorised cable casting had taken place in the said area.

The said question, vis‐à‐vis the contention raised by petitioner namely some meeting had taken place as a result whereof despite a large number of channels having gone out of the bouquet of respondent and furthermore the downgradation having been sought for, petitioner had agreed to increase the subscription fees from Rs. 3,80,745/‐ to 4,67,705/‐ i.e. being about 20% increase in the subscription fees, was for the reason that it would be able to serve the entire town of Lucknow, is required to be determined by us.

It has not been denied or disputed that a number of channels including Colours, NDTV etc had gone out of the bouquet of respondent. It may be that a couple of new Sports channels, viz Neo Group of Channels have come in its bouquet of Channels.

We, however, fail to understand as to why a definite stand in regard thereto was not taken by respondent in its reply. No such stand has also been taken in any of its communications. The respondent also does not contend as to why despite petitioner’s asking for downgradation, an increase in the subscription fee has been caused.

It may be true that ‘Indira Nagar’ was not within the area of operation of respondent. We, however, are required to examine this question at the final hearing of the matter in the light of the contention which has been raised by the petitioner namely, the requirement for reconciliation of the accounts and various other factors including the question of downgradation sought for by it.

On what basis the rate of subscription fee has gone up is required to be explained by respondent. We have also to bear in mind that rightly or wrongly petitioner has contended that it had not received the copy of the agreement. What would be the outcome of the interpretation of Clause 4 of the new agreement in the light of the contention of petitioner in its petition that the agreement had expired on 31st March 2010 must be considered.

Prima facie respondent was aware of the said clause. If that be so, it was required to issue a notice on or before the 1st March, 2011. Why such a notice had not been served has not been explained. The respondent, like petitioner cannot be heard to say that it was not aware of the provisions of the agreement, the format thereof having been drafted by it and which admittedly bears it’s signature.

If Clause 4 of the said agreement applies, the agreements stood automatically renewed.

The question as to whether in a situation of this nature an order of injunction in mandatory form is to be granted is required to be considered keeping in view the aforementioned question. There cannot be any doubt or dispute that ordinarily a strong prima facie case is required to be established before an order of injunction in mandatory form vis‐à‐vis an order of injunction in prohibitory form is granted. In our opinion, petitioner has been able to establish a strong prima facie case in view of the issues raised by it vis‐à‐vis defences thereto raised by respondent.

The notice issued by respondent under Clause 4.1 of the Regulations dated 13.04.2010 was on the ground that the petitioner has not furnished the SLR. In fact, petitioner had furnished the SLR along with its letter dated 26.02.2010.

Whether the contention of petitioner that thereafter negotiation had taken place on 11.03.2010 is required to be examined in that context at the hearing.

Why a notice had to be issued after 11 months of the issuance of the notice under Regulation 4.1, i.e on 17.02.2011 has not been explained. If petitioner is correct in its contention that the said notice under Clause 4.1 was not acted upon before issuing a public notice under Clause 4.3, whether another notice under Clause 4.1 was required to be issued would also fall for our consideration.

Mr Mishra urged that the term of the agreement has expired. It is not so in view of Clause 4 of the agreement. In the public notice, reasons have been assigned namely not only the non‐renewal of the agreement but also the alleged outstanding and unauthorised transgression of areas.

Moreover, why the letter dated 03.02.2011 was sent under a “Certificate of Posting” has not been explained in view of the fact that the same was a critical one.

In Indian Cablenet Company Ltd. v. Economic Entertainment and Anr., Petition No 146 of 2009 Decided on 21.05.2010, this tribunal has held as under:

“The said letter was allegedly sent under Certificate of Posting. The postal endorsement in the said certificate reads as under :­ “Received a letter ‘under certificate of Posting’ to Indian Cable Net Company Ltd. Address – Plot No. X­4, Salt Lake Electronics Complex,

Block – EP & GP Sector – V, Salt Lake, Kolkata – 700091 from Economic Entertainment Address – 12/10, Goabagan Street, Kolkata – 700006.” We would, however, having regard to the fact that the first respondent did not offer any explanation as to why such an important letter was not sent under Registered cover with Acknowledgement due and/or through courier services, we do not place much reliance thereupon.”

The Delhi High Court also in Tarlok Chand Khanna and Anr v. Raj Kumar Kapoor and Ors reported in ILR 1982 Vol. 1 Del. Page 156 held:

“...It has often been pointed out that though the requirement of the Companies Act is satisfied by posting a communication under certificate of posting, service by this mode is the easiest stand for any one to take at any time and it is not a sheer coincidence that in practically all controversial meetings, the party claiming to have held the meetings and to have notified the others almost always relies on a certificate of posting clearly pointing to the possibility that such meetings are invariably managed rather than held. This is because of the unfortunate circumstance that certificates of posting are readily available. If the meeting of the Board had, therefore, been held, I see no reason why a registered A.D. notice was not sent to Khanna even though that may not be the strict legal requirement. The so­called certificate of posting also does not appear to meet the requirement of law because, in the first instance, there is no averment that the postal covers had been duly posted and the certificate of posting had been duly issued and received. All that has been filed is a photo copy of a list of four names with postal stamp marking. I am not prepared to accept these as sufficient proof of the dispatch of the notices to Khanna and in holding that they have been notified of the meeting of the Board scheduled to be held on March 30, 1978...”

The Supreme Court of India also has deprecated the practice of placing reliance on communications sent under “Certificate of Posting” in State of Maharashtra v. Rashid B. Mulani reported in (2006) 1 SCC 407 in the following terms:

“17. A certificate of posting obtained by a sender is not comparable to a receipt for sending a communication by registered post. When a letter is sent by registered post, a receipt with serial number is issued and a record is maintained by the post office. But when a mere certificate of posting is sought, no record is maintained by the post office either about the receipt of the letter or the certificate issued. The ease with which such certificates can be procured by affixing antedated seal with the connivance of any employee of the post office is a matter of concern. The Department of Posts may have to evolve some procedure whereby a record in regard to the issuance of certificates is regularly maintained showing a serial number, date, sender’s name and addressee’s name to avoid misuse. In the absence of such a record, a certificate of posting may be of very little assistance, where the dispatch of such communications is disputed or denied as in this case. Be that as it may.”

The petitioner has, thus, been able to make out a strong prima facie case. The factors of ‘balance of convenience’ and ‘irreparable injury’ are also in its favour. According to petitioner the LCOs have been migrating to the distributor of the respondent namely Jolly Sky Brothers which is a part of the Den Group of Company.

In the event, an order of injunction in mandatory form is not issued, all other LCOs may shift to the rival MSO of petitioner.

In that event, petitioner would lose its entire business. In a situation of this nature, where respondent can be compensated on monetary terms and its interest can be secured, petitioner cannot be monetarily compensated as it will go out of the business in no time.

The question of ‘balance of convenience’ between the parties is required to be considered in the light of the question of ‘balance of inconvenience’ to the other. The term ‘irreparable loss’ does not mean that in all cases monetary compensation would be sufficient. It means substantive loss. It would include such cases where actual amount of compensation cannot be determined. A person once go out of business may not be able to restart it.

We have noticed heretobefore the conduct of the parties. The respondent had issued notices and taken actions in various phases. In fact, issuance of the crucial letter being dated 03.02.2011 prima facie has not been proved to be served.

These are the reasons which are being assigned in support of our Order dated 25th May, 2011.

……………......J (S.B. Sinha) Chairperson

……………...... (G. D. Gaiha) Member ……………...... (P. K. Rastogi) Member 03.06.2010 //Shree//