MANTHAN BROADBAND SERVICE PVT LTD Vs NAVONEEL NETCOM SERVICE PVT LTD

The Petitioner is a Multi Service Operator.

According to it, the Respondents are a group of cable operators operating in the town of Durgapur in the State of West Bengal.

It is contended that the Petitioner has expended a sum of Rs.2 crores for setting up a Digital Headend and an office at Durgapur in the State of West Bengal.

It had also purchased about 1500 Set Top Boxes.

2. An agreement was entered into by and between the parties hereto on or about 29.12.2008.

3. Petitioner filed a petition on or about 13.01.2012 on the premise that the Respondent intends to shift to the network of some other MSO wherefor a notice dated 09.01.2012 purported to be under Clause 4.2 of the Telecommunication (Broadcasting and Cable Services ) Interconnection Regulations, 2004 (Regulations) has been served. It was furthermore contended that the Respondent is liable to pay a sum of Rs.78,38,142/- towards the subscription fees.

4. Respondent has filed a short reply, wherein it has been contended that the parties met on 07.05.2010, whereat the following decisions were taken :- “1. Technical problems were raised and would be looked into was confirmed by Manthan. 2. STB box to be sold at Rs.600/- per STB was proposed and accepted by Manthan.

3. Monthly feed charges discount was proposed at 10% more on the existing invoice. To this Manthan proposed an additional discount of one month charges. It was finalized that on the existing billing Novoneel will get a total of two month free period. 4. New agreement will be executed in continuation of the present term and same will be for five years.”

5. However, no agreement in terms thereof was executed.

According to the Respondent, the original agreement was only for a period of one year, which having expired; no notice in terms of Clause 4.2 of the Regulations was required to be issued and a public notice published in terms of Clause 4.3 suffice the purpose.

It is now not in controversy that public notices have already been published in two newspapers.

6. In support of the prayer for interim order in mandatory form, Mr. Navin Chawla, learned counsel appearing on behalf of the Petitioner, would urge :- (i) The purported notice under Clause 4.2 and a public notice issued under Clause 4.3 of the Regulations does not contain any reason and thus, the same must be held non-est in the eye of law;

(ii) The agreement between the parties being for an indefinite term, the same could have been terminated only in terms of the provisions of the Regulations as also Clause 17 of the agreement, which having not been complied with, it must be held to be continuing in its operation;

(iii) The agreement contains a negative covenant in terms whereof, the Respondent is prohibited from taking supply of signals from any other MSO and as such, the Petitioner is entitled to an order of injunction in mandatory form as is provided for under Section 42 of The Specific Relief Act, 1963;

(iv) Keeping in view the huge investments made by the Petitioner, it would be impossible for it to recover any damages from the Respondent.

7. Mr. Tejveer Singh Bhatia, learned counsel appearing on behalf of the Respondents, on the other hand, submitted :- (i) A local cable operator cannot be directed to carry on its relationship with the Multi Service Operator in absence of any ‘must carry’ clause in the Regulations;

(ii) The prayer for injunction having been made for enforcing a contract qua contract, no case has been made out by the Petitioner to obtain an equitable relief;

(iii) Petitioner having not entered into any agreement in terms of the minutes of meeting, it cannot now be allowed to contend that it was entitled to supply the signal of the channels to the Respondent for an indefinite period.

8. This matter came up under the heading ‘Preliminary Hearing’ on 31.01.2012. No interim order was passed on that date. Notices were directed to be served upon the Respondent with regard thereto.

On 09.02.2012, Mr. Tejveer Singh Bhatia appeared. It was stated that the Respondent has already stopped taking supply of signals from the network of the Petitioner upon service of notice under Clause 4.2 of the Regulations as also publication of the public notice under Clause 4.3 thereof.

9. A short reply has been filed by the Respondent on 15.02.2012. No rejoinder thereto has yet been filed.

10. The agreement dated 29.12.2008 does not provide for a fixed term.

It reads as under :- “6. Appointment & Grant : The Principal doth hereby appoint the Cable Operator as its agent and doth hereby grant a right of franchise to receive signals through a feeder line for further instant transmission or communication to its subscribers within the territory allotted to the Operator for a term of ……years, commencing from …………to…………….., on the terms conditions and stipulations herein contained.”

The blanks contained in paragraph 6 have not been filled up.

Even the amount of consideration, as contained in Clause 7, contains blanks.

The purported negative covenant, as contained in Clause 12.6 of the agreement, reads as under :- “12.6 During the validity of the agreement, the cable operator shall not transmit either to the subscribers or to any other party, any signal, commercial and/or other information not received through the Principal’s network without the Principal’s prior written consent.”

11. We may furthermore notice Clause 16 (a) of the said agreement :- “16 (a) This agreement shall be terminated by sending a 21 days notice by either party to the other on breach of any of the terms and conditions set out in the agreement.”

12. Signing of the minutes of meeting dated 29.12.2008 by both the parties is not in dispute.

13. Mr. Chawla, however, would submit that the same would go to show that there had been no novation of contract by the parties, and, thus, no deviation from the terms of the original agreement had been carried out.

14. That may be so.

But, what would the effect thereof is a matter which requires consideration at the time of hearing.

If ultimately it is found that the Respondent has a valid cause of action for terminating the agreement as the Petitioner despite the said minutes of meeting did not give the benefit thereof for a long time, it may not be held to be entitled to any equitable relief.

Moreover, as indicated heretobefore, the issue as regards the term of the agreement requires determination. If at the trial it is found that the term of the agreement was for one year which attracted the renewal clause as contained in Clause 8.1 of the Regulations, Mr. Bhatia may be correct in his submission that no notice in terms of Clause 4.2 was required to be served and the commercial terms, by which the parties were governed, could have been brought an end by issuing a public notice in the same manner as laid down under Clause 4.3 of the Regulations.

15. Mr. Chawla may be correct that having regard to the terminology used in Clause 4.2 as also Clause 4.3, some reasons are required to be assigned, but no reason would be required to be assigned, if the case comes within the purview of Clause 8.1 of the Regulations.

16. Moreover, the Tribunal having regard to the statutory right in favour of local cable operator vis-à-vis a Multi Service Operator/a Broadcaster, as contained in Clause 3.2 of the Regulations, may construe the provisions relating to assignment of reasons as contained in Clause 4.1 differently from the reasons contained in the notice as contained in Clause 4.2 having regard to the fact that because the Regulations do not mandate that a LCO must carry the signals of a MSO or the Broadcaster. But, no final opinion in this behalf need be rendered at this stage.

The case issue being the effect of non-assignment of any specific reason in the notices, we are of the opinion that no case for grant of an interim order of injunction has been made out.

17. Mr. Chawla relies upon a decision of this Tribunal in Natraja Communications, Hyderabad Vs. Digi Cable Network (India) Pvt. Ltd. (Petition No. 360(C) of 2010 disposed of on 01.12.2010).

In that case, however, the disconnection was caused by the MSO on the ground that the Petitioner therein had transgressed its area of operation namely Padma Rao Nagar, although the agreement postulated ‘a part of the Hyderabad town’ i.e. without carving out a definite area of operation.

18. We may notice that this Tribunal in Kansan News Pvt. Ltd. Vs. Fastway Transmission Pvt. Ltd (Petition No.119 (C) of 2011 disposed of on 13.04.2011, opined :- “20. We would assume that the termination of contract was malafide, but therefor the petitioner may be held to be entitled to damages and not an order of injunction. This case rests only on issues arising out of a contract qua contract. The matter might have been different if the contract was governed by a statute. The matter might have been different if there was a negative covenant which could have been invoked for the purpose of obtaining an order of injunction.

21. Having regard to the fact that the contract has been terminated in accordance with the law, namely upon service of 30 days notice, we are of the opinion that it is not a fit case where an order of ad-interim injunction can be passed.“

19. This leaves us only with a question as to whether there exists a negative covenant. We, heretobefore, have taken a note of paragraph 12.6 of the agreement. On a plain reading, it does not contain any negative covenant prohibiting the Respondent to migrate to the network of another MSO. It merely postulates that it would not supply signal of its channels to the subscribers or to any other party without the Respondent’s prior consent. If the agreement is not to be specifically enforced, the said provision also cannot be given effect to.

20. Mr. Chawla relies upon a decision of the Supreme Court of India in Gujarat Bottling Co. Ltd. & Ors. Vs. Coca Cola Co. & Ors. (1995) 5 SCC 545, wherein, the Supreme Court itself has laid down the law in the following terms :- “43. The decision whether or not to grant an interlocutory injunction has to be taken at a time when the existence of the legal right assailed by the plaintiff and it’s alleged violation are both contested and uncertain and remain uncertain till they are established at the trial on evidence.”

21. As the negative covenant contained in the said case was explicit and clear whereby the Respondent was prohibited from using its plants for manufacturing, bottling or selling or dealing with or concerning themselves in any manner, whatsoever, with the beverages of any person till 25.01.1996.

Each case, therefore, stands on different footing for the purpose of grant of injunction.

22. For the reasons aforementioned, no case has been made out for grant of interim order of injunction and that too in the mandatory form, having regard to the fact that the Respondent has switched over to the network of another MSO with effect from 02.02.2012.

The existing arrangement having not been continuing, the Respondent cannot now be directed to take signal from the Petitioner’s network only which may lead to another litigation so far as the Respondents are concerned at the hands of the said MSO.

23. For the reasons aforementioned, we are of the opinion that the balance of convenience and irreparable injury lies against the grant of injunction in mandatory form.

24. Moreover the Petitioner, being a Company, must be maintaining its books of accounts. The investment made by it, the losses which may be suffered by it by reason of non-utilisation of such infrastructure, can in our opinion be worked out so as to enable it to claim damages against the Respondents. The prayer for injunction is, therefore, refused.

25. This order, it goes without saying, is without any prejudice to the rights and contentions of the parties and subject to any other or further order that may be passed by this Tribunal. The equities between the parties may also be adjusted.

(S.B. Sinha) Chairperson (P.K. Rastogi) Member rkc