SUN DIRECT TV PVT LTD Vs MSM DISCOVERY PVT. LTD.

This is a pe on filed by Sun Direct TV Pvt. Ltd seeking a direc on to the Respondent, MSM Discovery Pvt Ltd, to enter into an interconnec on agreement with the Pe oner for interconnec on/supply of signals to the Pe oner for their DTH pla orm, in accordance with the Interconnec on Regula ons; to declare that the Respondent has violated the provisions of the interconnec on regula ons and penalise them for the same; to award exemplary costs on the Respondent in favour of the Pe oner for non-signing of the agreement and passing such other orders as this Tribunal may deem fit.

th 2. When the ma er first came up for direc ons on 11 April 2008, this Tribunal advised the par es to arrive at an amicable se lement and, as an interim measure, the Respondent was directed to provide signals of One Alliance (15 channels minus one channel i.e.,Ten Sports, which is no longer in their bouquet) to the Pe oner at the rate of Rs.67 per month per subscriber. The Pe oner however filed a Miscellaneous Applica on no. 44 of 2008 seeking an amendment of the Order passed on 11.4.08, to allow the Pe oner to choose channels on à la th carte basis. By this Tribunal's order dated 8 May 2008, the Pe oner was permi ed to exercise its choice as per à la carte basis and as desired by the Pe oner, the Respondent was directed to supply the channel SET MAX to the Pe oner on à la carte basis as per rate st indicated by them. The ma er came up for hearing on 1 September 2008 when the counsel for Respondent stated that the Brief Reply filed by them on 8 May 2008 be taken into considera on and that no addi onal Reply need be filed by them. The counsel for Pe oner also having stated that there is no need to file a Rejoinder, the arguments of both par es were st rd heard on 1 and 3 September 2008.

3. Briefly, the Pe oner had, in July 2007, sought signals from the Respondent for their DTH pla orm. There was some correspondence in July - August 2007, as well as in January 2008, between the Respondent and the Pe oner which however did not reach a conclusion. While things stood thus, the Telecom Regulatory Authority of India (TRAI) no fied, on 3.9.2007, the Telecommunica ons (Broadcas ng and Cable Services) Interconnec on (fourth amendment) Regula ons, 2007, which came into force on 1.12.2007. In February 2008, the Pe oner took up the case with the Respondent to provide the Respondent’s channels along with terms and condi ons. The Respondent had, in accordance with the interconnec on regula ons, published on its website the Reference Interconnec on offer (RIO) se ng out the terms and also lis ng its channels along with à la carte/bouquet rates of the said channels which are 15 in number. A er further correspondence, the Respondent sent to the Pe oner, on 04.04.2008, the proposal along with the dra term sheet to which the Pe oner proposed certain amendments. On 05.04.2008, a er ini ally seeking ac va on of channels and wan ng to complete the process by 07.04.2008, the Pe oner sought signals of one channel --SET MAX—and for only three months, which was not agreed to by the Respondent. The ma er not having been resolved between the two par es, the Pe oner filed the present pe on before this Tribunal.

4. The case of the Pe oner is that he had been in correspondence with the Respondent since July 2007. Right from the beginning, he had been seeking terms and condi ons for both bouquet and channels on à la carte basis. The RIO having been published as per the Interconnec on Regula ons, the Respondent was obliged to follow the provisions of the RIO, which included the price à la carte. The Pe oner contends that right from the beginning, the supply of signals on à la carte basis was a ma er of specific correspondence. Notwithstanding the passage of long me as well as the no fica on of the Interconnec on Regula ons, the Respondent’s failure to enter into an agreement within the s pulated period of 45 days is in viola on of regula ons 13.2 A.7 (1) of the Interconnec on Regula ons 2007, and is severely hampering the growth of the Pe oner's DTH pla orm besides adversely affec ng the viewing rights of about 500,000 subscribers.

5. The case of the Respondent is that they had published a Reference Interconnect Offer (hereina er referred to as RIO) on their website and a copy of it was made available to the Pe oner on 29.02.2008. Although regula ons require the Pe oner to make a request for signals, no such request was made. His conten on is that as per the regula ons, the RIO is only a basis for nego a ons, and is not a mandatory document. A Subscrip on Agreement is a prerequisite for supply of signals and since there is no agreement, they cannot be expected to supply signals whether on à la carte basis or on bouquet basis. The Respondent contends that the nego a ons with the Pe oner centred round supply of bouquet of channels and not single channels on à la carte basis. The Respondent’s case is that the Pe oner has all along been nego a ng for the en re bouquet and not for just one channel. While the Pe oner had agreed even on 05.04.08 to a bouquet, they resiled from the same on the same day and instead sought only one channel, namely SET MAX, that too for a period of only three months, as against the RIO s pula on of a five-year period. They also point out that even on the first date of hearing before the Tribunal i.e., on 11.04.08, the Pe oner had agreed to avail of the en re bouquet of channels at the bouquet price of Rs. 67 per subscriber per month, which was the basis of the consent order passed by the Tribunal. However, the Pe oner had suddenly changed stance and subsequently sought only one channel -- SET MAX -- in order to avail of the facility of showing IPL matches. The Respondent's conten on is that the Pe oner used the IPL matches to sell and promote its own DTH services and that immediately a er the IPL matches, the Pe oner increased the channel price from free subscrip on to Rs. 20 per subscriber per month even though he was receiving the channels at a much lesser price. The Respondent's conten on is that this is a deliberate a empt by the Pe oner firstly to promote his DTH opera ons by offering the SET MAX channel free of cost and then 'kill' the channel by pricing it exorbitantly. The counsel for Respondent stated that having enjoyed the benefit of a single channel, the Pe oner is now bound to pay for the en re subscriber base of 5 lakh, which is admi ed by him in his pe on, at the rate of Rs.67 per subscriber per month.

6. The case of the Respondent is that the relief originally sought being for a direc on to sign the interconnect agreement qua the channels offered by the Respondent in the RIO, and the word à la carte missing in the en re pe on, the Pe oner cannot now seek to avail signals on à la carte basis. He also states that in the absence of pleadings, evidence/material produced by the Pe oner cannot be considered and that the applica on for modifica on of their averments cannot be considered for grant of relief in the main pe on. The Respondent also states that the Pe oner had concealed material facts in his pe on before this Tribunal and cites, in this context, the communica on dated 05.04.08 from the Pe oner to the Respondent. The Respondent pleads that the pe on itself is not maintainable on grounds of non-execu on of agreement, on grounds of concealment of material facts before the Tribunal, and on the ground that the Pe oner had approached the Tribunal prior to expiry of the mandatory 45 day period.

7. From the wri en as well as oral arguments of both the Pe oner and the Respondent, the following issues arise for considera on:

A. whether the pe on is maintainable?

B. whether the Pe oner is en tled to seek channels on à la carte basis?

C. whether the Respondent is right in demanding that the Pe oner should take signals for five years?

D. whether the Pe oner is right in declaring sudden and steep drop in the number of subscribers?

E. whether the Pe oner is en tled to charge Rs. 20 per subscriber per month for the channels SET MAX while taking the same from the Respondent at Rs. 8.50?

We now proceed to examine these issues.

8. The Respondent's conten on is that the pe on is not maintainable since the Pe oner has not made a formal request which is required as per the RIO. We do not find much support for this conten on. It is admi ed by both par es and also supported by evidence on record that the pe on had been seeking signals from July 2007 onwards. In fact, the en re process started even in June 2007, when the Pe oner sought from the Respondent authorisa on for the purchase of decoders. Even assuming that the reference date is the date on which the fourth amendment, issued on 03.09.2007, came into force viz., 01.12.2007, it is an admi ed fact that the request was pending on that date. On 18.2.2008, the Pe oner had once again requested the Respondent for terms and condi ons for both à la carte as well as bouquet. The th pe on having been filed on 10 April 2008, the period of 45 days had definitely expired. We therefore do not agree with the conten on of the Respondent that the statutory period of 45 days was not over. Similarly, non-execu on of agreement cannot be a ground for ques oning the maintainability of the pe on since the request of the Pe oner was itself pending. In the absence of an understanding between the two par es, the ques on of execu on of agreement does not arise. In his reply as well as in the arguments, the Respondent alleged that the Pe oner has deliberately suppressed and concealed relevant correspondence between 04.04.2008 and 09.04.2008 and that the main pe on is silent on this aspect. We find that the th Pe oner had filed addi onal documents on 17 April 2008 including the e-mails communicated by the Respondent. Considering that the Pe oner had filed these documents suo moto, and before it was pointed out by the Respondent, we do not consider this a material breach. On all counts, therefore, we reject the conten on of the Respondent that the pe on is not maintainable.

9. The main conten on of the Respondent is that all along, the Pe oner was seeking signals for the en re bouquet of channels and that the choice of à la carte was never under considera on. His conten on is that it is only on 05.04.08 that the Pe oner made a sudden U-turn and sought signals on à la carte basis for only SET MAX and that too for a period of three months. From the record, we find that right from the beginning the Pe oner was seeking the terms and condi ons for signals on à la carte basis alongside the terms for bouquet. In fact, the th request for à la carte signals dates as far back as 9 July 2007. The Respondent himself had, his th communica on of 16 July 2007, indicated to the Pe oner that they are welcome to pick up signals on à la carte basis at 50% of the declared non-CAS cable rates. From the correspondence, we find that the request for à la carte choice was con nuously being made by th the Pe oner. The deal sheet sent by the Respondent to the Pe oner on 17 August 2007 clearly gives the à la carte rate op on. Besides, the Reference Interconnect Offer also indicates the op ons of bouquet as well as à la carte. It is true that the communica on sent by the th Pe oner to the Respondent in the morning of 5 April 2008, seeking ac va on of channels and wan ng to complete the process by 7.4. 2008, does not give the impression of wan ng only SET MAX channel. However before any ac on could be taken by the Respondent thereon, the Pe oner had, on the same evening, sent another communica on seeking SET MAX channel only for three months and indica ng that this will give me for both the par es for processing the necessary agreement. It cannot therefore be said that the request for SET MAX channel is only an a erthought. The request for channels on à la carte basis was being con nuously made and this op on also figures in the RIO.

10. In this context, it is necessary to recall that this Tribunal had in pe on no.189 (C) of 2006 in the case of Tata sky limited versus Zee Turner Ltd and others had observed as follows: "... if a DTH operator has to take all the channels of every broadcaster it may not be physically possible to do so. Moreover, if every channel has to be taken it means that it will have to be paid for. This will increase the cost for the DTH operator. Ul mately, the cost will get passed on to the consumer ..." "... it is relevant and important that a DTH operator may not like to take all the channels of a par cular broadcaster and exhaust its transponder capacity by taking unwanted channels. A er all, the DTH operator is in business and it has to watch its business interests ..." The Telecom Regulatory Authority of India took cognizance of these observa ons and also pointed out, in their Explanatory Memorandum to the Interconnec on Regula ons no. 9 Of 2007, that there is also a technical limita on on the number of channels that a DTH operator can carry on its pla orm, par cularly given that the transponder space is limited. Accordingly, regula on 13.2A.11 of the interconnec on regula ons no.9 of 2007 reads as follows: "It shall be mandatory on the part of the broadcasters to offer channels on à la carte basis to direct to home operators and such offering of channels on à la carte basis shall not prevent the broadcaster from offering such pay channels in the form of bouquets. ..." It is thus clear that the Pe oner has the right to seek channels of his choice from the Respondent on à la carte basis.

11. In the course of his arguments, the counsel for Respondent contended that the Pe oner had, on 05.04.08, asked for a special deal for SET MAX for three months. According to him, the original request as also the one made in this pe on is for the en re bouquet. His conten on is that the Pe oner is now estopped from changing his stand and seeking channels on à la carte basis. He also stated that the request for channels on à la carte basis does not form part of the pleadings, and that he should not be permi ed to travel beyond the pleadings. He drew our a en on to the judgement of the Hon'ble Supreme Court in Ram Sarup Gupta v. Bishun Narain Inter College and others (1987) 2 SCC 555, wherein it was held that "... it is well se led that in the absence of pleading, evidence, if any, produced by the par es cannot be considered. It is also equally se led that no party should be permi ed to travel beyond its pleading and that all necessary and material facts should be pleaded by the party in support of the case set up by it. … In order to have a fair trial, it is impera ve that the party should se le essen al material facts so that other party may not be taken by surprise ...".

The counsel for Pe oner firstly refuted the fact that the necessary material had not been placed on record. He drew a en on to the fact that various communica ons have already been placed before the Tribunal as part of the original pe on as well as the documents subsequently filed which show that the Pe oner has been seeking signals on à la carte basis. We note the relevance of the judgement cited by the learned Counsel for Respondent. But it is also per nent to note that the Hon’ble Supreme Court also obsered, in the very case cited supra that "... the pleadings however should receive a liberal construc on; no pedan c approach should be adopted to defeat jus ce on hairspli ng technicali es. ...It is not desirable to place undue emphasis on form, instead the success of the pleadings should be considered…… In Bhagawa Prasad v. Chandramauli [(1966) 2 SCR 286], a cons tu on bench of this court considering this ques on observed: if a plea is not specifically made and yet it is covered by an issue by implica on, and the par es knew that the said plea was involved in the trial, then the mere fact that the plea was not expressly taken in the pleadings would not necessarily disen tle a party from relying upon it if it is sa sfactory proved by evidence…”.

12. As already noted by us, there is compelling evidence to show that the Pe oner had all along been asking for a choice on à la carte basis and this formed the subject ma er of various communica ons between the Pe oner and the Respondent. Keeping in view this posi on as well as the regulatory provisions, we hold that the Pe oner is en tled to channel/s of their choice and accordingly direct that the Respondent should provide the Pe oner with the channels that is/ are sought.

13. In his wri en submission, the Respondent had men oned that the Pe oner took advantage of receiving the SET MAX channel through the interim order passed by this Tribunal th on 8 May 2008 and had issued an adver sement offering to show the IPL matches free of cost to its viewers and that the Pe oner only wanted to promote its DTH services on the strength of IPL matches and was effec vely making the Respondent to subsidise the Pe oner's ac vi es. The counsel for Respondent also stated that the Pe oner was ac ng with mala fide inten ons. As already noted by us, the request for supply of channels on à la carte basis was being consistently made by the Pe oner and it cannot be said that this op on was only an a erthought. It is quite possible that the choice of channel made on 05.04.2008, namely SET

MAX, was in the context of IPL matches. But this is a choice that could be rightly exercised by the Pe oner on the basis of the RIO. Likewise, they are free to promote the channel/s in any manner, so long as it is in conformity with the law in force.

14. In the course of arguments, the counsel for Respondent submi ed that the Pe oner should be directed to avail of signals for a period of five years and not for 3 months, on the ground that the RIO issued as per the interconnec on regula ons provides only for a five-year agreement. The RIO is no doubt a document that serves as a basis for nego a on. At the same me, the offer has been submi ed to and ve ed by the Regulator. The Counsel for Pe oner also confirms that the Pe oner would be abiding by the s pula on in the RIO.

15. During the course of arguments, the counsel for Respondent men oned about the sudden and steep drop in the number of subscribers in the period following the IPL matches. The counsel for Pe oner has submi ed that subscriber base is always verifiable since the DTH pla orm is an addressable system and that Regula ons cover this situa on. We are inclined to agree with this submission of the counsel for Pe oner and direct that the payment will be strictly in accordance with the subscriber base as per the Subscriber Management System.

16. Another submission made by the counsel for Respondent during the course of arguments is that the pe on is receiving the SET MAX channel at Rs. 8.50 per subscriber per month but that he is charging at the rate of Rs.20 per month from a subscriber and in the process profiteering at the expense of Respondent. The counsel for Pe oner points out that he is en tled to do so under the regula ons and that he will abide by the provisions of the interconnec on regula ons no.9 of 2007. Clause 13.2A.13 of the telecommunica ons (broadcas ng and cable services) interconnec on (fourth Amendment) regula ons, 2007 (no.9 of 2007) reads as follows:

"... every direct to home operator ... may decide the packaging of the channels from such bouquet or bouquets which may be offered by it to its direct to home subscribers: ...(a) …... (b)

packages the channels comprised in such opted bouquet in a manner resul ng in different subscriber base for different channels comprised in such opted bouquet, then, the payment, to the broadcaster for such en re opted bouquet by the direct to home operator, shall be calculated on the basis of the subscriber base for the channels which has the highest the channels comprised in that bouquet."

It is therefore clear that the Pe oner is en tled to receive a channel/channels of his choice from the Respondent and posi on them in the manner of his choice but at the same me he is obliged to pay to the broadcaster as per Clause 13.2A.13 of the Telecommunica ons (Broadcas ng And Cable Services) Interconnec on (Fourth Amendment) Regula ons, 2007.

17. During the course of arguments, the counsel for Pe oner stated that they had been paying to the Respondent at the rate of Rs. 12.50 per subscriber per month whereas the Respondent should have been charging only at the rate of Rs. 8.50 as per the direc on dated 16.06.08of TRAI. His conten on is that the payment at the rate of Rs. 12.50 was under the interim order of this Tribunal and that the payment made should be adjusted appropriately. It is an admi ed fact that the RIO originally issued by the Respondent in February 2008 was subsequently amended in June 2008 at the interven on of TRAI. The revised RIO indicates the price of SET MAX channel at Rs. 8.50. It therefore goes without saying that the Pe oner is liable to pay only at the rate of Rs. 8.50 per subscriber per month from the date of receipt of signals for that channel and that addi onal payment made, if any, would need to be adjusted from the future bills. The Pe oner shall however pay to the Respondent at the bouquet rate for the period they received the en re bouquet i.e. from the date of receipt of the bouquet th vide the interim this Tribunal’s Order dated 11 April 2008 ll the date of receipt of the single th channel vide this Tribunal’s Order dated 8 May 2008.

18. In conclusion, we hold that the Pe oner is en tled to the channel/s of his choice from the Respondent on à la carte basis. We direct the Respondent to supply signals of such channel/s that the Pe oner may desire and at the rates and on terms indicated in the RIO. In the event the Pe oner offers the channel/s received from the Respondent to his subscribers as part of a bouquet, then the payment will be made as per the Interconnec on Regula ons no. 9 of 2007.

The pe on is accordingly disposed off without costs.

…………………………………….. (Arun Kumar, J)

………………………………… (J. S. Sarma)

…………………………….. (G.D. Gaiha)