TMI Blog2010 (10) TMI 1167X X X X Extracts X X X X X X X X Extracts X X X X ..... tes for R-1. Mr. A.G. Bhambhani with Ms. Nisha Bhambhani, Ms. Sonia Sharma and Mr. Lakshita Sheth, Advocate for Discovery (P). ORDER 1. Writ Petition (C) No.5109 of 2010 under Articles 226 and 227 of the Constitution by the MSM Discovery Private Ltd. ( MSMD ) challenges an interlocutory order dated 27th July 2010 passed by the Telecom Disputes settlement and Appellate Tribunal (`TDSAT ) in Petition No. 220(C) of 2010 filed by Respondent No. 1 Viacom 18 Media Private Ltd. (`Viacom18 ). The TDSAT has, by the impugned interlocutory order, restrained the Petitioner MSMD from representing Viacom18 with any third party until further orders. 2. Writ Petition (C) Nos. 5111 and 5112 of 2010 by Star Den Media Services Private Ltd. (STAR DEN) challenge the order dated 29 th July 2010 passed by the TDSAT declining interim relief to STAR DEN in Petition No. 248(C) of 2010 while granting an interim relief in Petition No. 222(C) of 2010 filed by Television 18 India Ltd. (`TV 18 ) and IBN 18 Broadcast Ltd. ( IBN 18 ) Respondents 1 and 2 respectively. Since both sets of petitions raise similar issues they are disposed of by this common judgment. 3. At the outset, this Court would l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es offered by Direct to Home (DTH) operators like Dish TV and Tata Sky who inter alia had about 70 per cent of the market. 7. It must be mentioned here that under the MOU, MSMD acted as an agent of Viacom18. In its role as an `aggregator , it distributed the channels of broadcasters as part of a distribution platform by creating single or multiple bouquets to MSOs, local cable operators (LCOs)/affiliates/DTH operators for IPTV and other digital distribution networks for ultimate viewership by the consumer. As an `aggregator MSMD had the authority to collect subscription revenues from MSO, LCO, DTH operators for the television signals made available to them by the broadcaster. It is important to note that the signals do not pass through any system of the aggregator and are directly delivered to the MSOs/LCOs/DTH operators through satellite. The case of MSMD is that it has no control over the broadcaster Viacom18‟s signals since Viacom18 uplinks the signals to the satellite directly. The MSOs/LCOs/DTH operators downlink the signal directly and decrypt the signals using Viacom18 s Integrated Receiver Decoders (IRDs). 8. On 14 th July 2010 MSMD issued a cease and desist n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nels of Viacom18 from 1 st April 2009 till 13 th July 2010 and to pay the resultant deficit together with interest at 18% per annum. Another prayer was for permanently restraining MSMD from representing the Petitioner in any manner and directing MSMD to remove the channels of Viacom18 from MSMD s website/brochures/RIOs/bouquets/tiers/ advertisements etc. A prayer was also made to permanently restrain MSMD from directly or indirectly interfering with the distribution and marketing of the said channels of Viacom18 either by Viacom18 itself or its alliance. 12. The interim prayers sought by Viacom18 before the TDSAT included a prayer to restrain the Respondent (MSMD) from representing the Petitioner (Viacom18) after the termination of the MoU on 13.7.2010. 13. On 19 th July 2010, the TDSAT passed the following order: Admit. Mr. Kaushik Mishra, Advocate accepts notice on behalf of the respondent. Reply to the main petition be filed within two weeks and rejoinder thereto, if any, may be filed within two weeks thereafter. Put up the matter for further directions on 19.8.2010. Let the matter appear for hearing on interim relief on 21.7.2010 as it is stated that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CC 603. Submissions of Counsel 18. On behalf of the Petitioner MSMD, it is submitted by Mr. Soli Sorabjee and Mr. Ramji Srinivasan, learned Senior Counsel, that the impugned order of the TDSAT suffers from a patent illegality since it granted interim relief to Viacom18 despite holding that the termination of the MOU, in violation of Clause XX thereof, was illegal. It is submitted that in such circumstances no equitable relief, much less an interim mandatory injunction against MSMD and in favour of Viacom18 could have been granted. Secondly, it is submitted that when MSMD s substantive petition had not yet been considered by the TDSAT, there was no question of hypothesizing whether MSMD could have been granted any interim relief in such petition. Further the TDSAT erred in deciding the said question in the negative, and as a corollary, granting interim relief to Viacom18. It is submitted that the TDSAT committed a jurisdictional error in deciding an issue that did not arise for consideration. Thirdly, it is submitted that since Viacom18 had not made out any prima facie case, no interim relief could have been granted to it. Further on balance of convenience, which was an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relief that Viacom18 may have got by filing a civil suit, was required to be sought by it before the TDSAT. It is pointed out that there were two immediate consequences of the termination of the MOU which had to be tackled by Viacom18. One was the claim by MSMD that the termination was illegal on the basis of which it issued a cease and desist notice to the Sun TV Network after learning that Viacom18 had, on 14 th July 2010 itself, entered into a separate distributorship agreement with NMIL. The second was that despite the termination of the MOU, MSMD was continuing to hold itself out as an agent of Viacom18. It is submitted that irrespective of whether the termination was valid or not, the parties could not be put back to a position as if the MOU had not been terminated. The only remedy available to MSMD, and which proposition had been accepted by the TDSAT, was that it could claim damages for the losses suffered by it. Reliance is placed on the judgments of the Supreme Court in Indian Oil Corporation Ltd. v. Amritsar Gas Service (1991) 1 SCC 533 as well as of this Court in Indian Oil Corporation Ltd. v. Shriram Gas Service 57 (1995) DLT 279 and Rajasthan Breweries Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of Section 14 read with Section 15 of the TRAI Act. Matters relating to consumer disputes under the Consumer Protection Act 1986, a dispute governed by the Monopolies and Restrictive Trade Practices Act, 1969 and the dispute between a telegraph authority and any other person in terms of Section 7B(1) of the Indian Telegraph Act, 1885 are excluded. Section 15 of the TRAI Act is a complete bar on any civil court entertaining any suit or proceeding in respect of any matter which the TDSAT is empowered to determine and no court or other authority can issue any injunction in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act. 23. Under Section 16(1) of the TRAI Act, although the TDSAT is not bound by the procedure laid down under the Code of Civil Procedure, 1908, it is expected to be guided by the principles of natural justice and can also regulate its own procedure. Under Section 16(2), for the purposes of discharging its functions, the TDSAT shall have the same powers as vested in the civil court while trying a civil suit. This includes, under Section 16(2) (f), the power to review its decisions. Under Section 16(2) (g), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned in Section 15 and Section 27 of the Act has also to be kept in mind. The subject to be dealt with under the Act, has considerable technical overtones which normally a civil court, at least as of now, is ill-equipped to handle and this aspect cannot be ignored while defining the jurisdiction of the TDSAT. Viacom s case for a mandatory interim injunction 24. Much of the argument has centered around the legality of the order of the TDSAT granting Viacom a mandatory interim injunction even while finding the termination of the MOU to be illegal. The facts relevant to this point may be briefly recapitulated. 25. Simultaneous with the termination of the MOU by the notice dated 13th July 2010, Viacom18 entered into a separate agreement with NMIL appointing the latter as its aggregator with effect from the afternoon of the same day. As far as Viacom18 was concerned, its break-up with MSMD was irreversible one and it immediately substituted MSMD with NMIL as its agent. In other words the status quo ante the termination was quickly altered with a new player coming into the fray. The reaction of MSMD to this was to assert that the termination was an illegal one. MSMD issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Senior Counsel for the Petitioner that the termination was in the teeth of the Clause XX of the MOU and that since admittedly no prior notice of 90 days was given, the termination was illegal. 29. The facts in Indian Oil Corporation Ltd. v. Amritsar Gas Service were somewhat similar. There the dealership agreement was revocable by either party by giving 30 days prior notice. The agreement was however revoked by the oil company without the 30 days prior notice. Negativing the plea that the dealership could be continued by an interim order, it was explained by the Supreme Court in para 14 as under (SCC @ p. 543): 14.... In such a situation, the Agreement being revokable by either party in accordance with Clause 28 by giving thirty days' notice, the only relief which could be granted was the award of compensation for the period of notice, that is, 30 days. The plaintiff-respondent 1 is, therefore, entitled to compensation being the loss of earnings for the notice period of thirty days instead of restoration of the distributorship. The award has, therefore, to be modified accordingly. The compensation for thirty days notice period from 11.3.1983 is to be calculated on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, the change was already ten days old. As much as restoring the status quo ante 13th July 2010 would create confusion, permitting MSMD to act as an agent of Viacom 18 would equally compound the confusion. The apprehension expressed by Viacom 18 that the MSOs might not know whether they should continue paying MSMD or Sun 18 Media for the signals received from Viacom 18 was not an unfounded one. The question really was of balance of convenience and the TDSAT had to take a call. Two answers were possible in such a situation - One, to determine which is the party who suffered the losses on account of the acts of the other and then finally determine that who should compensate to whom and to what extent. The other approach is whether the balance of convenience lies in favour of one of the parties to restrain the other from continuing to act as its agent. The TDSAT seems to have adopted the second approach while proceeding to expedite the final hearing of the petition. This was a possible view to take. Merely because another view is possible, this Court is not going to interfere with the impugned order of the TDSAT. 34. In the circumstances, it is not possible to hold that the inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondents 1 and 2 for which the exclusive distribution rights were granted to the Petitioner under the said agreement were CNBC Awaaz , CNBC TV 18 , CNN IBN and IBN7 . The Petitioner was the `aggregator and in that capacity entered into subscription agreements with over 5000 local cable operators (LCOs), MSOs, IPTV operators and DTH operators. 38. It is the Petitioner s case that it had the complete freedom to package all channels available on its platform (including the Respondents channels) in its bouquet offering to affiliates/operators so as to maximize the revenue in order to reach all the channels. It is claimed that being aware of the market position, it was left to the best judgment of the Petitioner to offer the channels of the various channel partners including the Respondent Nos. 1 and 2 in the form of other bouquets or on a standalone basis. 39. In terms of the agreement the parties were to sign a Long Form Agreement (LFA) in regard to which e-mails were exchanged between 2008 and 2010. The Petitioner claims that on 30th June 2010, it informed the Respondents by e-mail that it was sending by courier three executed copies of the LFA and requested the Respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15th July 2010 it made a payment of ₹ 2,62,43,619/-, i.e., ₹ 2,91,59,577/- less TDS to the Respondents 1 and 2 in order to continue the harmonious relationship with them. In the meanwhile, the Respondents filed Petition No. 222 (C) of 2010 before the TDSAT for a direction to the Petitioner to provide all data, clear the outstanding amount of ₹ 3,21,63,016/- and for issuing an injunction restraining the Petitioner permanently from representing the Respondents 1 and 2 in any manner on all platforms with effect from 13 th August 2010. The Petitioner claims that it made a further payment of ₹ 34,63,425/- to the Respondents 1 and 2 on 17th July 2010. 42. On 28th July 2010 the Petitioner filed a reply to the Petition No.222(C) of 2010 filed by Respondents 1 and 2. Independent of that, the Petitioner filed a separate Petition No. 248 (C) of 2010 before the TDSAT praying for a direction to declare the purported termination notice dated 13 th July 2010 to be invalid and for an order restraining the Respondents 1, 2 and 3 from interfering with the distribution of the channels of Respondents 1 and 2 by the Petitioner. 43. By the impugned order dated 29th July ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should approach the issue. 46. Relying upon the judgments of the Supreme Court in S.R. Tewari v. District Board, Agra (1964) 3 SCR 55, Executive Committee, U.P. Warehousing Corporation v. Chandra Kiran Tyagi 1969 (2) SCC 838 and Executive Committee of Vaish Degree College, Shamli v. Lakshmi Narain (1976) 2 SCC 58, it was submitted that it is not as if all contracts which are incapable of being specifically enforced, will oust the powers of a civil court to grant interim relief. It was submitted that in each of the aforementioned three cases where there was a termination of a contract of personal service, the courts recognized the power of a labour court to direct the reinstatement of the employee upon finding the termination to be unlawful. It is submitted that by way of an analogy, the TDSAT too had wide powers to mould the interim relief by directing that the termination of the MOU was prima facie invalid and consequently such termination should not be given effect to during the pendency of the petition. 47. Mr. Ganesh submitted that once this Court holds that the basic approach adopted by the TDSAT was erroneous, then after giving some interim protection to the Petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht of the Petitioner. It had only a right to license and sub-license the channels. The Petitioner had no interest in the signals which were the property of the Government of India, or the contents of the signals which were the property of the broadcasters like Respondents 1 and 2. He submitted that given the limited scope of the powers of this Court under Article 226, interference with the impugned order of the TDSAT was not called for unless it was found to be totally perverse or a view which could not possibly be taken in the facts and circumstances of the case. Mr. Nayyar referred to the judgments in Olympus Superstructures Pvt. Ltd. v. Meena Vijay Khetan AIR 1999 SC 2102, Pepsi Foods v. Jai Drinks (P) Ltd. 1996 (36) DRJ 711, Ravissant Pvt. Ltd. v. D.F. Export S.A. 2008 (38) PTC 222 (Del); Star India Ltd. v. Arup Borah 2003 (2) Arb LR 202 (Gau) and Doward, Dickson Co. v. Williams Co. (1890) 6 TLR 316. 51. Appearing for the Respondents 1 and 2 in W.P. (C) 5112 of 2010, Dr. A.M. Singhvi, learned Senior counsel submitted that the relationship between the parties was purely contractual and there was no requirement in any statute which had to be complied with by Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the scope of its powers. First and foremost, the TDSAT was deciding a dispute that arose out of the termination of a contract. The question that arose before it was whether STAR DEN, the Petitioner herein was entitled to an interim relief of staying the effect of the termination of the contract. The TDSAT has taken the view that given the nature of the contract, it is not possible to grant an interim injunction that would have the effect of continuing the contractual relationship between the parties when clearly Respondents 1 and 2 had expressed their intention by way of termination notice dated 13th July 2010 not to continue the contract. Once the contract was terminated, validly or otherwise, there was no question of placing the parties in a position they would have been if the contract was not terminated. The TDSAT has taken a view that the losses suffered by the Petitioner on account of the termination, even if such termination was not valid, were both quantifiable and compensatable. This Court is unable to hold that such decision of the TDSAT is perverse or not capable of being arrived at in the circumstances of the case. 54. The judgments referred to by the learned Seni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the post-contractual period. In that case, Zaheer Khan, a popular cricketer entered into a promotion agreement with Percept. Clause 31(b) of the promotion agreement, which was a negative covenant, provided that prior to the execution of the first negotiation period, Zaheer Khan could not accept any offer for endorsement, promotions, advertising or other affiliation with regard to any products or services and that prior to accepting any offer, he was under an obligation to provide Percept in writing the terms and conditions of such third party and offer it the right to match such third party offer. 57. The Supreme Court explained the law as under (AIR @p. 3437): 57. The legal position with regard to post-contractual covenants or restrictions has been consistent, unchanging and completely settled in our country. The legal position clearly crystallised in our country is that while construing the provisions of Section 27 of the Contract Act, neither the test of reasonableness nor the principle of restraint being partial is applicable, unless it falls within express exception engrafted in Section 27. 58. After surveying the earlier decisions in Niranjan Shankar Goli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensated in monetary terms if they finally succeeded at trial, respondent No. 1 could never be compensated for being forced to enter into a contract with a party he did not desire to deal with, if the trial results in rejection of Percept's claim. (Hindustan Petroleum v. Sriman Narayan AIR 2002 SC 2598). (v) The principles which govern injunctive reliefs in such cases of contracts of a personal or fiduciary nature, such as management and agency contracts for sportsmen or performing artistes, are excellently summarised in a Judgment of the Chancery Division reported in Page Once Records v. Britton (1968) 1 W.L.R. 157. In this case it was held that, although the appellant had established a prima facie case of breach of contract entitling them to damages, it did not follow that entire of them was entitled to the injunction sought; that the totality of the obligations between the parties gave rise to the fiduciary relationship and the injunction would not be granted, first, because the performance of the duties imposed on the appellant could not be enforced at the instance of the defendants and, second, because enforcements of the negative covenants would be tantamount to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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