IN TI{E I{IGH COURT w.P.(c) s109/2010 OF DELTII AT NEW DEI,HI & CM APPLs 10061-6212010 MSM DISCOVERY PRIVATE LIMITED ..... Petitioner Through: Mr. Soli Sorabjee, Nft. Ramji Srinivasan, Senior Advocates with Mr. Gopal Jain, Ms. Smriti Mishra, Mr. Zeyaul Haque, Mr. Kaushik Mishra, Advocates VETSUS VIACOM 18 MEDIA PRIVATE LIMITE,D AND ORS. ..... Respondents Through: Dr. A.M. Singhvi and Mr. Rajiv Nayyar, Senior Advocates with Mr. Arun Kathpalia, Mr. Ameet Nair, Mr. Rishi Aggarwal, I\4r. Flarshvardhan Jha, Mr. Akshay Ringe and Mr. Nikhil Rohatgi, Advocates for R-l4/iacom18. IVIr. A.G. Bhambhani with Ms. Nisha Bhambhani, Ms. Sonia Shanna and Mr. Lakshita Sheth, Advocate for Discovery (P). w.P.(c) srru20l0 & cM APPL 1007612010 STAR DEN MEDIA SERVICES PVT. LTD. ..... Petitioner Through: Mr. S. Ganesh, Senior Advocate with Mr. Prateek Kumar, ffi. Gaurav June.ja and Ms. Mamta Tiwari. Advocates versus TELEVISION EIGH'IEEN INDIA LIMITED AND ORS. Through: Mr. Rajeev Nayyar, ;;;liH;3:l: with Mr. Rishi Aggarwal, Mr. Arun Kathpalia, Mr. Arneet Nair, Mr. Harshvardhan Jha, Mr. Akshay Ringe and IVIr. 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). Reserved on: 3'd August 2010 \ |\ Decision on: 1lth August 2010 "\7 ..... Petitioner Page 7 ol 37 STAR DEN MEDIA SERVICES PVT. LTD. W.P. (C) Nos. 5709, 5777 and 5772 of 2070 Digitally Signed By:AMULYA Certify that the digital file and physical file have been compared and the digital data is as per the physical file and no page is missing. Signature Not Verified Through: Mr. S. Ganesh, S.enior Advocate with Mr. Prateek Kumar, I\4r. Gaurav Juneja and Ms. Mamta Tiwari, Advocates VETSUS 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. Harshvhrdhan Jha, Mr. Akshay Ringe and \ft. Nikhil Rohatgi, Advocates for R-l. Mr. A.G. Bhambhaniwith Ms. Nisha Bhambhani, Ms. Sonia Sharma and IW. Lakshita Sheth, Advocate for Discovery (P). CORAM: JUSTICE S. MURALIDHAR 1. Whether Reporters of local papers may be allowed to see the judgment? X 2. To be referred to the Reporter or not? r/ 3. Whether the judgment should be reported in Digest? v/ JIJDGMENT 11.08.2010 1. Writ Petition (C) No. 5109 of 2010 under Anicles 226 and227 of the Constitution by the MSM Discovery Private Ltd. ('MSI\D1) challenges an interlocutory order dated 27h July 2010 passed by the Telecom Disputes Settlement and Appellate Tribunal ('TDSAT') in Petition No. 220(C) ot 2010 filed by Respondent No. I Viacom 18 Media Private Ltd. ('Viacoml8'). The TDSAT has, by the impugned interlocutory order, restrained the Petitioner MSMD from representing ViacomlS with any third pat'ry until further orders. 5ll2 of 2010 by Star Den Media challenge the order dated 29th July r D 2. Writ Petition (C) Nos. 51 1 I and Services Private Ltd. (STAR DEN) W.P. (C) Nos. 5709, 5777 and 5772 of 2070 Page 2 of 37 2010 passed by the TDSAT declining interim relief to STAR DEN in t Petition No. 248(C) of 2OI0 while glanting 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 IA.P. (C) No. 5109 of 2010 by MSMD 4. On 1 1 th February 2009 , MSMD and Viacom 1 8 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 I't April 2009 and expiring on 31" March 2012. Inter alia', the MOU was a revenue sharing one.where apart from MSMD paying Viacoml8 a fixed fee and a minimum guarantee fee, Viacoml8 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. 5709, 5777 ond 5772 of 2070 Page 3 of 37 5. Clause XX of the said MOU which is relevant reads as under: for the present purposes "XX. Termination Either Parfy 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 parry 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, Viacoml8 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 Viacoml S to hqve terminated the agreement was that MSMD had acted in breach of its contractual obligation to place Viacoml8's channels at prime slots in the bouquet of channels offered by MSMD as an'aggregator' to Multi-System Operators (MSOs). Viacoml8 alleged that MSMD had been placing the.channels of Viacoml8's rival broadcaster Sony in prime slots in the packages offered by Direct to Home (DTH) operators like Dish TV and Tata Slqy who inter alia had about 70 per cent of the market. 7. It rnust be mentioned here that under the MOU, MSMD acted as an agent of Viacoml8. In its role as an 'aggregator', it distributed the W.P. (C) Nos. 5709, 5777 and 5772 of 2070 Page 4 of 37 channels of broadcasters as part of a distribution platform by single or muttiple bouquets to MSOs, local cable (LCOs)/affiliateslDTH operators for IPTV and other digital distribution networks for ultimate viewership by the consumer. As an 'aggregator' MSMD had the authbrity 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 MSOsILCOs/DTH operators through satellite. The case of MSMD is that it has no control over the broadcaster Viacoml8's signals since ViacomlS uplinks the signals to the satellite directly. The MSOsILCOs/DTH operators downlink the signal directly and decrypt the signals using Viacoml 8'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 Viacoml8 had formed a joint venture "Sun 18" which would begin distribution of 33 channels including th.e four channels of Viacoml8 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 Viacoml8 "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 Vhl". The Petitioner's case in the Section 9 application was that the termination of W.P. (C) Nos. 5709, 5777 and 5772 of 2070 Page 5 of 37 the MOU brought about by the letter dated 13th July 2010 was illegal and that Viacoml8 should be restrained from giving effect to the said bommunication. 9. On 16th July 20L0, when the case was taken up in the High Court of Bombay, ViacomlS informed the High Court that they had already executed an agreement with IWs Network 18 Media Investment Ltd. OfMIL) for the purposes of distributing and marketing of the four channels and that Viacoml8 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 llth February 20Og'. Taking note of the above statement made by the Senior counsel for Viacoml8, the Bombay High Court declined the interim ,.ti"f prayed for by MSMD. 10. It is pointed out by Viacoml8 that notwithstanding the abqve order even on 17th July 2010 MSMD was claiming that it had a "water-tight" contract valid till 31't March 2012 and "there isno way the Viacom 18 Channels could walk out of the above agreement". Proceedings before the TDSAT 11. Meanwhile on 15'h July 2010 Viacoml8 filed Petition No. 220 (C) of z111under Section 14 of the Telecom Regulatory Authority of India Act, IggT ('TRAI Act') before the TDSAT. The main prayer was for the recovery of a sum of Rs.20,90,36,2891- from MSMD along with interest at 1z W.P. (C) Nos. 5709, 5777 and 5772 of 2070 Page 6 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 ViacomlS from l't April 2009 tiil 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 Viacbml8 from MSMD's website/brochures/RlOs/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 Viacoml8 either by Viacoml8 itself or its alliance. 12. The interim prayers sought by Viacoml8 before the TDSAT included a prayer to "restrain the Respondent (MSMD) from representing the Petitioner (Viacom 1 8) after. the termination of the MoU on 13 .7 .2010." 13. On 19th July 20l0,the TDSAT passed the following order: "Admit. Mr. Kaushik Mishra, Advocate accepts notice on behalf or rn. 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 fuither directions on 19.8.2010. Let the matter appear for hearing on interim relief on21.7.2010 as it is stated that in the meanwhile, the respondent shall also file an appropriate petition before us. The petitioner is given liberfy to file an additional affidavit in course of the day and 'serve a copy thereof to the learned counsel for the respondent." Lu/, W.P. (C) Nos. 5709, 5777 and 5112 of 2070 Pdge 7 of 37 14. Pursuant to the permission granted by the TDSAT Viacoml8 filed an additional affidavit before the TDSAT on 19th July 2010 in which inter \\ 1 tt/ alia itset out the events that took place subsequent to the termination of the MOU on 13'h Juty 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 Juty 2010 and reserved orders. Thereafter the impugred order was passed on27th July 2010 15. In the impugred order, the TDSAT proceeded on the basis that the following two facts were not in dispute: (i) That Viacoml8 had terminated the contract by issuance of a notice dated 13th Julv 2010. (iD 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 Sectionq 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, I 872 ('Contract Act'). The TDSAT took note of the fact that on 13th July 2010, Viacoml8 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. 5709, 5777 and 5712 of 2070 Page 8 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 n^tfu 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 al(e) of the SRA. It then concluded that conversely Viacoml8 would be entitled to an injunction restraining MSMD from representing others that it is acting on behalf of Viacoml8. 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 Xlk. Ramji Srinivasan, learned Senior Counsel, that the impugned order of the TDSAT suffers from a patent illegality since it granted interim relief to Viacoml8 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 ViacomlS 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 ered in deciding the said question in the negative, and as a corollary, granting interim relief to Viacoml8. It is submitted that the TDSAT committed a jurisdictional W.P. (C) Nos. 5709, 5777 and 5772 of 2070 Page 9 of 37 error in deciding an issue that did not arise for consideration. Thirdly, it is "A subrnitted that since Viacoml8 had not mide out any prima facie case, t"\ f5 'v / 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 Viacoml8. The ostensible reason given by Viacoml8 for terminating the contract was that MSMD had not made enough efforts to ensure that favourable slots were given to the four channels of ViacomlS in the bouquet of channels offered to the MSOs by MSMD. 19. It is pointed out that in terms of the Clause I3.2A.ll 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 Viacoml8, 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 thg Madhya Pradesh High Court in fabalpur Csble Network Pvt. Ltd. v. ESPN Sofnuare India Pvt. Ltd. AIR 1999 MP 271, it is pointed that the peculiar nature of the hansactions 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. 5709, 5777 and 5772 of 2070 Page 70 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 wasJ , 1U/ mandatory and based on an understanding that it would take either party ^tU- I / 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 submiued that Viacoml8 should permit the present arrangement to continue at least till the end of 2010. 20. Appearing for Viacoml8, it is submitted by Dr. A.M. Singhvi and \zlr. 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 ViacomlS 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 Viacoml8. 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 Viacoml8 had, on 14t\ 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 Viacoml8. 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. 5709, 5777 and 5712 of 2070 Page 77 ol 37 terminated. The only remedy available to MSMD, and which proposition ,. / had been accepted by the TDSAT, was that it could claim damages f"t tftl) L/ losses suffered by it. Reliance is placed on the judgments of the Supreme/ Court rn Indian Oil Corporstion Ltd. v. Amritsar Gos Service (1991) I SCC 533'as well as of this Court in Indian Oil Corporation Ltd. v. Shrirum Gus Service 57 (19.9, DLT 279 and Raiasthan Breweries Ltd. v. Stroh Brewery Company AIR 2000 Delhi 450. On the strength of the decision in SouthErn Roadways Ltd. v. S.M. Krishnan qnd the judgment of this Court in l4/estern Internotional University Inc. v. Modi Apotto International Group Pvt. LtcI. forder dated 20th July 2009 in IA No. 7849, 8725 of 2009 in CS (OS) No. II23 of 20091, 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 Viacoml8 subsequent to the order of the TDSAT. The notice states that Sun 18 Media Services would distribute the four channels of Viacoml8 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 Viacoml8 that without prejudice to their any other contentions before the TDSAT, in W.P. (C) Nos. 5709, 5777 and 5712 of 2010 Page 72 of 37 order to mitigate any hardship that might be faced by MSMD they were wilting to assist MSMD in recovering all dues owed to it from its MSOs /^ up to 12th July 20I0.It is, however, submitted that since there t. I p - ," \,/ complete lack of faith and trust between the parties, Viacoml8 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 Viacoml8 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. 5709, 5777 and 5772 of 2070 Page73of37, action taken or to be taken under this Act." in pursuance of any power conferred by or 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 concetned parties, which would involve significant technical aspects, are tl W.P. (C) Nos. 5709, 5777 and 5772 of 2O7O Page 74 of 37 to be determined by a specialised tribunal constituted for