W.P. (C) Nos. 5109, 5111 and 5112 of 2010 Page 1 of 37 IN THE HIGH COURT OF DELHI AT NEW DELHI W.P.(C) 5109/2010 & CM APPLs 10061-62/2010 Reserved on: 3rd August 2010 Decision on: 11th August 2010 MSM DISCOVERY PRIVATE LIMITED ..... Petitioner Through: Mr. Soli Sorabjee, Mr. Ramji Srinivasan, Senior Advocates with Mr. Gopal Jain, Ms. Smriti Mishra, Mr. Zeyaul Haque, Mr. Kaushik Mishra, Advocates versus VIACOM 18 MEDIA PRIVATE LIMITED AND ORS. ..... Respondents Through: Dr. A.M. Singhvi and Mr. Rajiv Nayyar, Senior Advocates with Mr. Arun Kathpalia, Mr. Ameet Nair, Mr. Rishi Aggarwal, Mr. Harshvardhan Jha, Mr. Akshay Ringe and Mr. Nikhil Rohatgi, Advocates for R-1/Viacom18. Mr. A.G. Bhambhani with Ms. Nisha Bhambhani, Ms. Sonia Sharma and Mr. Lakshita Sheth, Advocate for Discovery (P). W.P.(C) 5111/2010 & CM APPL 10076/2010 STAR DEN MEDIA SERVICES PVT. LTD. ..... Petitioner Through: Mr. S. Ganesh, Senior Advocate with Mr. Prateek Kumar, Mr. Gaurav Juneja and Ms. Mamta Tiwari, Advocates versus TELEVISION EIGHTEEN INDIA LIMITED AND ORS. ..... Respondents Through: Mr. Rajeev Nayyar, Senior Advocate with Mr. Rishi Aggarwal, Mr. Arun Kathpalia, Mr. Ameet Nair, Mr. Harshvardhan Jha, Mr. Akshay Ringe and Mr. Nikhil Rohatgi, Advocates for R-1. Mr. A.G. Bhambhani with Ms. Nisha Bhambhani, Ms. Sonia Sharma and Mr. Lakshita Sheth, Advocate for Discovery (P). W.P.(C) 5112/2010 & CM APPL 10078/2010 STAR DEN MEDIA SERVICES PVT. LTD. ..... Petitioner W.P. (C) Nos. 5109, 5111 and 5112 of 2010 Page 2 of 37 Through: Mr. S. Ganesh, Senior Advocate with Mr. Prateek Kumar, Mr. Gaurav Juneja and Ms. Mamta Tiwari, Advocates versus TELEVISION EIGHTEEN INDIA LIMITED AND ANR. ..... Respondents Through: Dr. A.M. Singhvi, Senior Advocate with Mr. Rishi Aggarwal, Mr. Arun Kathpalia, Mr. Ameet Nair, Mr. Harshvardhan Jha, Mr. Akshay Ringe and Mr. Nikhil Rohatgi, Advocates for R-1. Mr. A.G. Bhambhani with Ms. Nisha Bhambhani, Ms. Sonia Sharma and Mr. Lakshita Sheth, Advocate for Discovery (P). CORAM: JUSTICE S. MURALIDHAR 1. Whether Reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporter or not? 3. Whether the judgment should be reported in Digest? JUDGMENT 11.08.2010 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 29th July W.P. (C) Nos. 5109, 5111 and 5112 of 2010 Page 3 of 37 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 like to observe that this Court‟s power under Articles 226 and 227 of the Constitution to judicially review the order of a tribunal is limited. The power is even more limited in regard to interlocutory orders, like the impugned ones. Unless it is shown that the impugned orders are perverse or suffer from some material irregularity or are in violation of the principles of natural justice, interference would generally not be called for. Facts in W.P. (C) No. 5109 of 2010 by MSMD 4. On 11th February 2009, MSMD and Viacom18 entered into a Memorandum of Understanding (MOU) whereby MSMD was granted exclusive distribution rights of V18 channels, i.e., `MTV‟, `Nick‟, `Vh1‟ and `Colors‟ for a period of three years commencing 1st April 2009 and expiring on 31st March 2012. Inter alia, the MOU was a revenue sharing one where apart from MSMD paying Viacom18 a fixed fee and a minimum guarantee fee, Viacom18 would also have a share in the total revenue of MSMD on the basis of a formula set out in the agreement itself. W.P. (C) Nos. 5109, 5111 and 5112 of 2010 Page 4 of 37 5. Clause XX of the said MOU which is relevant for the present purposes reads as under: “XX. Termination Either Party shall be entitled to terminate this MOU or the long form Agreement on material breach of any term or terms contained in such MOU or the Long Form Agreement. However, no such termination shall be effected unless the aggrieved party submits a 90 day Notice on the other party so alleged to be in breach and offers the latter reasonable opportunity to cure such alleged breach. In the event the material breach is suitably addressed or cured to the satisfaction of both the Parties, no further cause shall sustain of such notice for termination. The consequences of breach, including penalty if any, shall be dealt with in the Long Form Agreement.” 6. On 13th July 2010, Viacom18 terminated the MOU by way of a communication sent to MSMD. Admittedly, this was done without giving 90 days‟ prior notice as envisaged by Clause XX of the MOU. The ostensible reason for Viacom18 to have terminated the agreement was that MSMD had acted in breach of its contractual obligation to place Viacom18‟s channels at prime slots in the bouquet of channels offered by MSMD as an `aggregator‟ to Multi-System Operators (MSOs). Viacom18 alleged that MSMD had been placing the channels of Viacom18‟s rival broadcaster Sony in prime slots in the packages 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 W.P. (C) Nos. 5109, 5111 and 5112 of 2010 Page 5 of 37 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 14th July 2010 MSMD issued a cease and desist notice to Sun TV Network Ltd., which along with Viacom18 had formed a joint venture “Sun 18” which would begin distribution of 33 channels including the four channels of Viacom18 being distributed by MSMD. This arrangement was to take effect from the afternoon of 13th July 2010 itself. On 15th July 2010, MSMD filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996 (`AC Act‟) in the High Court of Bombay praying inter alia for an interim order restraining Viacom18 “from executing any agreements with Multi System Operators, affiliates, cable operators in violation of the Petitioner‟s rights under the MOU and in respect of the four channels viz. Colors, Nick, MTV and Vh1”. The Petitioner‟s case in the Section 9 application was that the termination of W.P. (C) Nos. 5109, 5111 and 5112 of 2010 Page 6 of 37 the MOU brought about by the letter dated 13th July 2010 was illegal and that Viacom18 should be restrained from giving effect to the said communication. 9. On 16th July 2010, when the case was taken up in the High Court of Bombay, Viacom18 informed the High Court that they had already executed an agreement with M/s Network 18 Media Investment Ltd. (NMIL) for the purposes of distributing and marketing of the four channels and that Viacom18 was not “required to enter into any agreement with Multi System Operators, affiliates, cable operators in regard to these four channels in respect of subject matter of the agreement which was entered into with the petitioners being agreement dated 11th February 2009”. Taking note of the above statement made by the Senior counsel for Viacom18, the Bombay High Court declined the interim relief prayed for by MSMD. 10. It is pointed out by Viacom18 that notwithstanding the above order even on 17th July 2010 MSMD was claiming that it had a “water-tight” contract valid till 31st March 2012 and “there is no way the Viacom 18 Channels could walk out of the above agreement”. Proceedings before the TDSAT 11. Meanwhile on 15th July 2010 Viacom18 filed Petition No. 220 (C) of 2010 under Section 14 of the Telecom Regulatory Authority of India Act, 1997 (`TRAI Act‟) before the TDSAT. The main prayer was for the recovery of a sum of Rs.20,90,36,289/- from MSMD along with interest at W.P. (C) Nos. 5109, 5111 and 5112 of 2010 Page 7 of 37 18% per annum and a direction to MSMD to render true and correct account of the revenues generated by it in respect of the distribution of the four channels of Viacom18 from 1st April 2009 till 13th 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 19th 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 in the meanwhile, the respondent shall also file an appropriate petition before us. The petitioner is given liberty to file an additional affidavit in course of the day and serve a copy thereof to the learned counsel for the respondent.” W.P. (C) Nos. 5109, 5111 and 5112 of 2010 Page 8 of 37 14. Pursuant to the permission granted by the TDSAT Viacom18 filed an additional affidavit before the TDSAT on 19th July 2010 in which inter alia it set out the events that took place subsequent to the termination of the MOU on 13th July 2010. It is pointed out that although the TDSAT was informed by MSMD that it would be filing an “appropriate petition”, no such petition was filed even by the time the TDSAT finally heard the prayers for interim relief on 22nd July 2010 and reserved orders. Thereafter the impugned order was passed on 27th July 2010. 15. In the impugned order, the TDSAT proceeded on the basis that the following two facts were not in dispute: (i) That Viacom18 had terminated the contract by issuance of a notice dated 13th July 2010. (ii) The said notice was in violation of the clause XX of the agreement. 16. The TDSAT then discussed the provisions of the Specific Relief Act, 1963 (`SRA‟) and in particular Sections 14(1) (a), 38(2), 41(e) and 42 thereof. It also considered the effect of Sections 201 to 206 of the Indian Contract Act, 1872 (`Contract Act‟). The TDSAT took note of the fact that on 13th July 2010, Viacom18 had entered into an MOU with NMIL and further that the Bombay High Court had declined to grant any interim relief to MSMD in its petition under Section 9 of the AC Act. It then observed that “the doctrine of amity or comity may be held to be applicable.” W.P. (C) Nos. 5109, 5111 and 5112 of 2010 Page 9 of 37 17. The TDSAT concluded that on the basis of the materials placed on record, MSMD would not be entitled to an order of injunction it had sought since it would, in effect, be seeking specific performance of a contract which could not be specifically enforced in view of the bar under Section 41(e) of the SRA. It then concluded that conversely Viacom18 would be entitled to an injunction restraining MSMD from representing others that it is acting on behalf of Viacom18. Since Clause XX of the MOU was not a negative covenant, the exception in Section 42 of the SRA could also not apply in favour of MSMD. The TDSAT also took note of the decision of the Supreme Court in Southern Roadways Ltd. v. S.M. Krishnan (1989) 4 SCC 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 W.P. (C) Nos. 5109, 5111 and 5112 of 2010 Page 10 of 37 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 aspect not considered at all by the TDSAT, interim relief should have been denied to Viacom18. The ostensible reason given by Viacom18 for terminating the contract was that MSMD had not made enough efforts to ensure that favourable slots were given to the four channels of Viacom18 in the bouquet of channels offered to the MSOs by MSMD. 19. It is pointed out that in terms of the Clause 13.2A.11 of the Telecommunications (Broadcasting and Cable Services) Interconnection (Fourth Amendment) Regulation 2007, no agent of such broadcaster can “directly or indirectly, compel any direct to home operator to offer the entire bouquet or bouquets offered by the broadcaster to such operator in any package or scheme being offered by such direct to home operator to its direct to home subscribers.” It is submitted that the positioning of the channels of Viacom18, particularly in Tata Sky or Dish TV, was not within the control of MSMD and, therefore, even otherwise the termination of the MoU was fully unjustified. Relying on the judgment of the Madhya Pradesh High Court in Jabalpur Cable Network Pvt. Ltd. v. ESPN Software India Pvt. Ltd. AIR 1999 MP 271, it is pointed that the peculiar nature of the transactions which formed a chain was such that it would have huge repercussions in the industry. It is pointed out that the Petitioner has already entered into thousands of individual contracts with MSOs all over the country, and in turn there were several tens of W.P. (C) Nos. 5109, 5111 and 5112 of 2010 Page 11 of 37 thousands of LCOs and a greater number of consumers and all of them would be affected. It is submitted that the 90 days‟ notice period was mandatory and based on an understanding that it would take either party at least three months‟ time to make alternative arrangements to cope with the adverse effect of the termination of the MOU. Without prejudice to the pleas taken, it was submitted that Viacom18 should permit the present arrangement to continue at least till the end of 2010. 20. Appearing for Viacom18, it is submitted by Dr. A.M. Singhvi and Mr. Rajiv Nayyar, learned Senior Counsel that it was neither permissible in law nor possible for the TDSAT to put back the parties to a position in which they were prior to the termination of the MOU. It is submitted that in the light of Section 15 of the TRAI Act, it was not possible for the disputes between the parties to be brought before any other forum. Whatever 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 14th 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 W.P. (C) Nos. 5109, 5111 and 5112 of 2010 Page 12 of 37 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. v. Stroh Brewery Company AIR 2000 Delhi 450. On the strength of the decision in Southern Roadways Ltd. v. S.M. Krishnan and the judgment of this Court in Western International University Inc. v. Modi Apollo International Group Pvt. Ltd. [order dated 20th July 2009 in IA No. 7849, 8725 of 2009 in CS (OS) No. 1123 of 2009], it is submitted that a mandatory temporary injunction could be granted to restrain an agent from continuing to hold out as an agent of a party notwithstanding the termination of the contract. 21. This Court has been shown a copy of the public notice issued by Viacom18 subsequent to the order of the TDSAT. The notice states that Sun 18 Media Services would distribute the four channels of Viacom18 and that the TDSAT had restrained MSMD from representing V18 Channels. It was clarified in the public notice that “all distributors of TV channels can pay the outstanding Subscription Fees for the services received by them with respect to V18 Channels till 12th July 2010 to MSMD. With effect from 13th July 2010, the Subscription Fees for the V18 Channels will be payable to SUN 18 Media Services.” It was submitted by Dr. Singhvi, the learned Senior Counsel for Viacom18 that without prejudice to their any other contentions before the TDSAT, in W.P. (C) Nos. 5109, 5111 and 5112 of 2010 Page 13 of 37 order to mitigate any hardship that might be faced by MSMD they were willing to assist MSMD in recovering all dues owed to it from its MSOs up to 12th July 2010. It is, however, submitted that since there is a complete lack of faith and trust between the parties, Viacom18 would not like to have MSMD act as its agent hereafter and, therefore, the offer that they may be permitted to continue to act as an agent of Viacom18 as such till further orders is not acceptable. It was submitted that the damages or losses allegedly suffered by MSMD were capable of being quantified and awarded to it, if MSMD succeeded before the TDSAT. Therefore, the vacating of the interim relief granted by the TDSAT to Viacom 18 at this stage at the instance of MSMD was not called for. TDSAT’s powers 22. The first aspect to be considered is the scope of the powers of the TDSAT to grant interlocutory reliefs. Keeping in view the position of the parties - one as the `aggregator‟ and the other as the `producer‟ of programmes for television, their disputes necessarily have to go only before the TDSAT 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 W.P. (C) Nos. 5109, 5111 and 5112 of 2010 Page 14 of 37 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), it can dismiss an application for default or decide it, ex parte and so on. A reference is made to the above provisions to emphasise that the TDSAT has all the powers as the civil court would have if it were to decide a suit for permanent injunction and an application for interim mandatory injunction. In fact it has powers wider than a civil court does because it is not constrained by having to follow only the CPC provisions. Indeed in Union of India v. Tata Teleservices (Maharashtra) Ltd. (2007) 7 SCC 517 the Supreme court while analyzing the provisions of the TRAI Act observed (SCC @p. 523): “15. The conspectus of the provisions of the Act clearly indicates that disputes between the licensee or licensor, between two or more service providers which takes in the Government and includes a licensee and between a service provider and a group of consumers are within the purview of the TDSAT. A plain reading of the relevant provisions of the Act in the light of the preamble to the Act and the Objects and Reasons for enacting the Act, indicates that disputes between the concerned parties, which would involve significant technical aspects, are W.P. (C) Nos. 5109, 5111 and 5112 of 2010 Page 15 of 37 to be determined by a specialised tribunal constituted for that purpose. There is also an ouster of jurisdiction of the civil court to entertain any suit or proceeding in respect of any matter which the TDSAT is empowered by or under the Act to