The Ld. Bench of the TDSAT recently passed an Order dated 27.03.2018 in RE: DISCOVERY COMMUNICATIONS INDIA VS. ALL DIGITAL NETWORK INDIA LIMITED (Petition No. 499( C) of 2015 granting a decree to the Petitioner Discovery Communications India against Respondent All Digital Network India Limited. The principles of law of estopple against the Respondent alongwith various provisions of the TRAI Act and its Regulations were matters of arguments between the parties and the Petitioner was successfully able to obtain a claim of monetary decree in favour of the Petitioner. The various contentious issues in the matter are discussed herein below alongwith a brief description of the case.
A petition was filed by Discovery Communications India (hereinafter referred to as the petitioner), against All Digital Network India Limited (hereinafter referred to as the Respondent) seeking recovery of outstanding subscription dues to the tune of Rs. 67, 01, 292/- (Rupees Sixty Seven One Thousand Two Hundred Ninety Two) being the outstanding subscription charges due and payable by the Respondent to the Petitioner along with the interest thereon 18% per annum for the period of delay in making the payments by the Respondent.
Case of the Petitioner:
- A subscription agreement was entered into between parties for the period of 01.04.2014 to 31.03.2015 with the Respondent for the re-transmission of the subscribed Channels of the Petitioner in the agreed territory to the Respondent. The Respondent assured and agreed to pay the Petitioner the fees on a monthly basis, in lieu of the services availed.
- The Petitioner vide letter dt 16.02.2015 reminded the Petitioner to pay the outstanding amount accrued till that date and requested the Respondent for execution of the Fresh Agreement at the earliest.
- Despite continuous follow up by the Petitioner with the Respondent for payment of its legitimate dues and for execution of the fresh Agreement, however the Respondent has deliberately failed and neglected to come forward to execute the Fresh Agreement.
- The Petitioner deactivated signals of its channels to the Respondent’s network on 20.07.2015 post due compliance with the Interconnection Regulations.
- The Respondent vide letter dt 27.06.2015 categorically assured the Petitioner that it not only intends to enter into a fresh agreement but also undertook to clear the entire outstanding subscription dues before 31.07.2015.
- The Petitioner issued a legal Demand Notice dt 19.08.2015 calling upon the Respondent to pay the Petitioner subscription charges due and payable to the Petitioner.
Defence of the Respondents:
- The Respondent submitted that the agreement between the two parties was a Minimum Guarantee Agreement which is prohibited by the Interconnection Regulations under Clause 5(21).
- It was further contented that there was no agreement or understanding between the parties from April 1, 1015 and that the Respondent, under no circumstances is liable to pay for any subscription fees pertaining to any period thereafter.
- The Respondent further submitted that the agreement was void-ab initio being contrary to Clause 3.2 of the Regulations as the same has not been entered into on non-discriminatory basis.
Main Issues between the Parties:
- The main issue between the parties is that the agreement entered into by the two parties is a minimum guaranteed clause and therefore void, is not maintainable.
- Whether the Respondent having admitted the outstanding dues by the contents of its letter dated 27.06.2015 is Estopped from raising a defence of non payment due to illegality of the agreement.
The Ld. TDSAT after considering all facts and evidence came to the conclusion that –
- The parties have entered into a subscription agreement.
- The Respondent has undoubtedly received signals of the Petitioners channel in terms of the agreement till deactivation of signals.
- The Petitioner has duly and timely raised the invoices to the Respondent in terms of the agreement which are supported with proof of delivery.
- The reply of the Respondent in letter dated 27.06.2015 neither denies the execution of agreement, nor rebuts that the Respondent has any liability towards the Petitioner and doesn’t even dispute that invoices have not been received by it.
Hence the Petitioner has been able to discharge the burden of proof towards issuance and communication of invoices and the execution of the agreement.
There was a plea raised by the Respondent that no certificate under 65B of the evidence act has been filed by the Petitioner to supports its invoices to which the Ld. TDSAT decided the question to whether the Indian Evidence Act is applicable to proceedings before this Tribunal. In its judgment dated 27.07.2011, it was spelt out that TDSAT is a court within the meaning of Section 3 of the Evidence Act. However, in the facts of the present case, notwithstanding the large number of orders of this Tribunal insisting on compliance of Section 5B in the given facts, the Ld. TDSAT found no merit in the belated objection raised by the Respondent as they did not raise any such objection during admission and denial of documents and hence, the same were deemed admitted.
Lastly, the defence taken by the Respondent that the agreement between the parties is contrary to Clause 5(21) of the Regulations 2012 which prohibits minimum guarantee agreements was looked into by the Hon’ble TDSAT. The Ld. Counsel for the Petitioner while seriously contesting the arguments of the Respondent relied upon the different portions of the Agreement namely that parties have agreed and acknowledged and chosen for themselves the mechanism of ascertainment and payment of license fee under the Agreement which is a combination of both fixed fee payment and payments made on basis of monthly average subscriber level. The Ld. Counsel for the Petitioner further submitted that there is no element of coercion or demand in the license fees and payment terms as indicated in the schedules and thus, it was on the basis of mutual agreements as both parties found these more beneficial and suited to their interest. Further, the Ld. Counsel for the Petitioner argued that there is no blanket mechanism of fixed fee is suppression of fee as per number of subscribers because in all eventualities, the parties have settled for a methodology based on monthly average subscriber level. The Ld. Counsel for the Petitioner placed its reliance upon a number of judgments of the Hon’ble Supreme Court to submit that the doctrine of election is attracted in this case and since the Respondent chose to accept the agreement and derived benefits thereunder, it cannot be permitted to approbate and reprobate the agreement at the same time. Hence, the Ld. TDSAT held that the respondent is estopped from arguing from arguing what it approbated itself by relying on the Judgment of the Hon’ble Supreme Court titled Cauvery Coffee Traders, Mangalore v. Hornor Resources (Intern) Company Ltd. (2011) 10 SCC 420.
The Petitioner also relied upon a judgment given in the case of M/s Jak Communication vs Star Den Media (Petition No.151(C) of 2010 disposed of by judgment and order dated 4 February 2011) wherein the TDSAT stated-
“27. The validity of the agreement is in question only on the premise that levy of minimum guaranteed amount was forbidden in terms of Regulation 6. Regulation 6, in our opinion, cannot be read in isolation. It has to be read conjointly with Regulation 5.1.
28 .In terms of the provisions of the Indian Contract Act, two persons can enter into an agreement provided the same is lawful. What would render a contract unlawful is stated in Section 23 thereof. It reads as under :-Section 23 – What considerations and objects are lawful and what notThe consideration or object of an agreement is lawful, unless -It is forbidden by law; oris of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent; or involves or implies injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy. In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void.
34.We are of the opinion that the agreement in question per se is not illegal. We do not, however, intend to enter into the question as to the concept of flat fee or fixed fee and minimum fee in the present case being not necessary to do so. The learned counsel for the petitioner, himself submitted that we should ourselves determine a reasonable amount payable to the respondent. In absence of any material placed on record by the parties hereto, we cannot determine any amount which would appear was reasonable.
Thus, the Ld. Bench of the TDSAT consisting of Chairperson Shri SK Singh and Shri AK Bhargava held that the stand of the Respondent that Clause 5(21) is a mandatory provision of law whose violation shall render an agreement void ab innito has no substance.
The Ld. Bench however passed an order for claim of monetary decree in favour of the Petitioner and against the Respondent only till the period of expiry of agreement i.e. 30.06.2015. The Ld. Bench further imposed a cost of Rs. 50, 000 upon the Respondent.
The matter was argued by Ms. Payal Kakra (Managing Partner, K&T Law Offices) and ably supported by the team K&T i.e. Adv. Mr. Ehraz Zafar, Adv. Ms. Vidya Prabhakaran Khurana, Adv. Ms Tanya Gupta, Adv. Mr Sushant Chaturvedi and Adv. Mr Divyam Dhyani.
Article by : Sushant Chaturvedi (Advocate, K&T Law Offices)