Case: STAR INDIA(P) LTD Vs. SOCIETY OF CATALYSTS

ordinary business dealings of the Appellants, and the complainant has failed to establish any direct linkage between the increased SMS tariff rates and the prize money so as to show that the prize money was deceptively recovered in the guise of increased SMS rates charged to the participants. 12. Further, since the National Commission failed to conduct any inquiry whatsoever into the breakup of the price of Rs. 2.40 per SMS fixed for the purpose of participation in the HSHS contest, we are of the view that the finding of the National Commission that the SMS service offered by Airtel under the HSHS contest did not constitute a value-added service is liable to be set aside. Indeed, the services¬cum-sponsorship agreement reveals that Airtel was liable to set up the hardware and software required for the HSHS contest at its own cost, which suggests that the services regarding the participation in the HSHS contest through SMSes offered by Airtel constituted a value-added services separate from its ordinary SMS service. It is reasonable to assume that such cost would have been recovered by Airtel, at least in part, through the increased cost of SMSes sent by subscribers participating in the HSHS contest. The direction on Premium Rate Services dated 3.5.2005, issued by TRAI, which was referred to by the Appellants, also states that televoting and participating in quizzes, etc. through SMS constitutes a value added service, and that in most of these cases, the charges for these services are more than the normal tariff rate. The notification is reproduced below: F. No. 305¬8/2004¬QOSTELECOM REGULATORY AUTHORITY OF INDIA A¬2/14,Safdarjung Enclave,New Delhi¬110029Dated : 3 rd May, 2005 To, All Cellular Mobile Service ProvidersAll Unified Access Service Providers Subject : Direction on Premium Rate Services . 1. The Authority has observed that in the last few months, a number of operators and also some independent agencies have started providing value added services like quiz, ringtones, televoting etc. through SMS. In most of these cases, the charges for these services are more than the normal published tariffs. The customers are informed about these value added premium rate services through SMS, advertisements in newspaper or T.V. But in this communication, the cost implication of the service is not intimated. Sometimes the messages are only followed by wordings T&C Apply. 2. In the present multi¬operator multi service scenario, such premium rate services have increased considerably. The service provider is aware of the pulse rate for these services as either the service provider is providing such services or it has an agreement with the provider of such premium services. However, the cost for such premium services is generally known to the customer only after the service has been utilized and the bill is received. This practice of service providers is against the interest of the consumers. 3. In view of the above, in the consumers interest, the Authority in exercise of its power conferred upon it under Section 13 read with Section 11(1) (b)(i) and (v) of the Telecom Regulatory Authority of India Act, 1997 and clause 9 and 11 of the Telecommunication Tariff Order 1999 hereby directs all the Cellular Mobile Service Providers and Unified Access Service Providers to publish in all communications/advertisements relating to premium rate services, the pulse rate/tariff for the service. This issues with the approval of the Authority. (Sudhir Gupta)Advisor (QOS) 13. However, we need not dwell on this issue much longer, since not much turns upon it with regard to the determination of the commission of an unfair trade practice, except to note that the transmission of SMSes for the purpose of the HSHS contest being a value added service, the Appellants had also taken care to comply with the TRAI direction dated 3.5.2005 (supra) which mandated the communication/advertisement of any increase in the cost of cellular services on account of the rendering of such a value¬added service. Thus, even if the SMS charge is taken as the cost of participating in the contest for the purpose of Section 2(1)(r)(3)(a) of the 1986 Act, it cannot be said that the Appellants had wrongfully advertised the charges for the same. 14. Hence, we find that the complainant has clearly failed to discharge the burden to prove that the prize money was paid out of SMS revenue, and its averments on this aspect appear to be based on pure conjecture and surmise. We are of the view that there is no basis to conclude that the prize money for the HSHS contest was paid directly out of the SMS revenue earned by Airtel, or that Airtel and Star India had colluded to increase the SMS rates so as to finance the prize money and share the SMS revenue, and the finding of the commission of an unfair trade practice rendered by the National Commission on this basis is liable to be set aside. 15. With regard to the award of punitive damages made by the National Commission, the same could not have been done in as much as the complainant in the present case had not prayed for punitive damages in the complaint or proved that any actual loss was suffered by consumers (See General Motors (India) Private Limited v. Ashok Ramnik Lal Tolat, (2015) 1 SCC 429 ). However, we need not delve further into this aspect since we have found that there was no unfair trade practice committed by the Appellants in the first place. 16. On an ancillary note, it was briefly contended before us by the learned counsels for the Appellants, as mentioned supra, that the National Commission did not have jurisdiction over the complaint and it should have been referred to the TDSAT. However, this argument was not seriously pressed by either of the parties. Hence, we do not find it relevant to adjudicate upon this issue for the purpose of the present matter. However, the question of law, as regards the maintainability of complaints filed by consumer organisations against telecom service providers before consumer fora may be kept open.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]We hasten to emphasize at this juncture itself that though the complainant had also pleaded violation of Section 2(1)(r)(3)(b) of the 1986 Act in their complaint, there was no express finding rendered on this issue by the National Commission, and subsequently, no contentions were made before us in this respect8.2 In the instant matter, the controversy regarding the commission of an unfair trade practice pertains to the second part of the clause. This is because the Appellants are questioning the conclusion of the National Commission that the amount of prize money paid in the HSHS contest was in fact at least partly covered by the increased SMS tariff rate charged to participate in the contest, and that the Appellants had created a false impression to the contrary, i.e., that participation in the HSHS contest was free of charge. Thus, the primary bone of contention between the parties is the source of the funds out of which the prize money has been paid by Star India9. At the outset, after going through the written submissions of the Appellants before the National Commission, we are compelled to conclude that the National Commission had no basis to hold that the Appellants had admitted that the prize money for the HSHS contest was distributed out of the revenue collected from the SMSes sent in pursuance of the contest. It is true that the Appellants had not specifically denied that the prize money was paid out of the increased SMS charges. However, they had clarified in their submissions that Airtel was merely a sponsor/advertiser of the program, and the commercial arrangement between the parties was that Airtel would pay sponsorship charges, whereas Star India would be independently liable for paying the prize money out of its pocket regardless of the revenue earned by Airtel10. Importantly, we further find that apart from the aforementioned facts, there is no other cogent material on record upon which the National Commission could have placed reliance to render the finding of unfair trade practice under Section 2(1)(r)(3) (a) of the 1986 Act. The National Commission had sought to rely on the newspaper report dated 15.7.2007 published in the Hindustan Times (supra) regarding the amount of revenue and profit earned by the appellants from the HSHS contest. We are of the considered opinion that such reliance was unwarranted, inasmuch as there was absolutely no corroboration for the allegations therein with respect to the number of SMSes received, and the breakup of revenue earned into cost, value addition from service, and profit. Moreover, the survey report on the basis of which these allegations were made was not even produced before the National Commission or before us11. It is further relevant to note that there exists a services¬cum¬ sponsorship agreement between the Appellants, which contains the specific details of the commercial arrangement between them. They did not produce the same before the National Commission, claiming that the said agreement contained a confidentiality clause, and could only be produced in accordance with law if required. The Appellants case is that they would have offered to produce the agreement if the National Commission had given a specific direction to that effect. However, no such direction was rendered at any point during the proceedings before the National Commission. Even the complainant did not, throughout the course of the proceedings, seek a direction to the Appellants to produce the services¬cum¬ sponsorship agreement. Be that as it may, to establish whether there was any substance in the National Commissions conclusion that the prize money was paid out of the revenue earned from Airtels SMS services during the HSHS contest, we deemed it fit to examine the agreement ourselves11.1 Our perusal of the services¬cum¬sponsorship agreement reveals that Airtel had the sole and exclusive right to charge fees or charges towards the services rendered by it to facilitate participation in the HSHS contest, through SMS, telecalling, etc., and thus, Star India had no role in determining the same. Further, Airtel was liable to pay a monthly lumpsum as fees to Star India, irrespective of whether such amount was realized from its subscribers or not. There is no provision in the agreement for revenue-sharing between the parties, or requiring Airtel to finance any part of the prize money paid by Star India towards the HSHS contest11.2 Thus, it is evident that Star India was liable to pay the prize money irrespective of the profits earned by Airtel. It is needless to say that the sponsorship money paid by Airtel would come from various sources of revenue, which includes the money earned from the tariff rates for the HSHS contest. Similarly, Star India may have had many sources of revenue from which the prize money could have been paid. This is a part and parcel of the ordinary business dealings of the Appellants, and the complainant has failed to establish any direct linkage between the increased SMS tariff rates and the prize money so as to show that the prize money was deceptively recovered in the guise of increased SMS rates charged to the participants12. Further, since the National Commission failed to conduct any inquiry whatsoever into the breakup of the price of Rs. 2.40 per SMS fixed for the purpose of participation in the HSHS contest, we are of the view that the finding of the National Commission that the SMS service offered by Airtel under the HSHS contest did not constitute a value-added service is liable to be set aside. Indeed, the services¬cum-sponsorship agreement reveals that Airtel was liable to set up the hardware and software required for the HSHS contest at its own cost, which suggests that the services regarding the participation in the HSHS contest through SMSes offered by Airtel constituted a value-added services separate from its ordinary SMS service. It is reasonable to assume that such cost would have been recovered by Airtel, at least in part, through the increased cost of SMSes sent by subscribers participating in the HSHS contest. The direction on Premium Rate Services dated 3.5.2005, issued by TRAI, which was referred to by the Appellants, also states that televoting and participating in quizzes, etc. through SMS constitutes a value added service, and that in most of these cases, the charges for these services are more than the normal tariff rate13. However, we need not dwell on this issue much longer, since not much turns upon it with regard to the determination of the commission of an unfair trade practice, except to note that the transmission of SMSes for the purpose of the HSHS contest being a value added service, the Appellants had also taken care to comply with the TRAI direction dated 3.5.2005 (supra) which mandated the communication/advertisement of any increase in the cost of cellular services on account of the rendering of such a value¬added service. Thus, even if the SMS charge is taken as the cost of participating in the contest for the purpose of Section 2(1)(r)(3)(a) of the 1986 Act, it cannot be said that the Appellants had wrongfully advertised the charges for the same14. Hence, we find that the complainant has clearly failed to discharge the burden to prove that the prize money was paid out of SMS revenue, and its averments on this aspect appear to be based on pure conjecture and surmise. We are of the view that there is no basis to conclude that the prize money for the HSHS contest was paid directly out of the SMS revenue earned by Airtel, or that Airtel and Star India had colluded to increase the SMS rates so as to finance the prize money and share the SMS revenue, and the finding of the commission of an unfair trade practice rendered by the National Commission on this basis is liable to be set aside15. With regard to the award of punitive damages made by the National Commission, the same could not have been done in as much as the complainant in the present case had not prayed for punitive damages in the complaint or proved that any actual loss was suffered by consumers (See General Motors (India) Private Limited v. Ashok Ramnik Lal Tolat, (2015) 1 SCC 429 ). However, we need not delve further into this aspect since we have found that there was no unfair trade practice committed by the Appellants in the first place16. On an ancillary note, it was briefly contended before us by the learned counsels for the Appellants, as mentioned supra, that the National Commission did not have jurisdiction over the complaint and it should have been referred to the TDSAT. However, this argument was not seriously pressed by either of the parties. Hence, we do not find it relevant to adjudicate upon this issue for the purpose of the present matter. However, the question of law, as regards the maintainability of complaints filed by consumer organisations against telecom service providers before consumer fora may be kept open.