STAR INDIA (P) LTD. versus SOCIETY OF CATALYSTS & ANR.
[2020] 2 S.C.R. 1188, Supreme Court of India, 2020
Outcome: Appeal(s) allowed (Granted)
Segment: Ratio
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STAR INDIA (P) LTD.
v.
SOCIETY OF CATALYSTS & ANR.
(Civil Appeal No. 6597 of 2008)
JANUARY 23, 2020
[MOHAN M. SHANTANAGOUDAR
AND R. SUBHASH REDDY, JJ.]
Consumer Protection Act, 1986 – s.2(1)(r)(3)(a) – Unfair trade
practice – A television channel-Star India (P) Ltd used to broadcast
the programme ‘KBC’ and the programme was sponsored by a
cellular mobile service provider-Airtel – During the telecast of this
programme, a contest ‘HSHS’ contest was conducted, in which the
viewers of programme were invited to participate and viewers who
wished to participate were required to send in the correct answer,
inter alia through SMS services, offered by the cellular mobile service
providers to a specified number – It was alleged that the appellants
had created a false impression in viewers’ minds that participation
in ‘HSHS’ contest was free of cost, whereas the cost of organizing
the contest as well the prize money was reimbursed from the increased
rate of SMS charges and profits were shared by the cellular mobile
service provider with television channel – Hence, they were
committing ‘unfair trade practice’ u/s. 2(1)(r)(3)(a) of Act, 1986 –
The National Commission held that the prize money for the ‘HSHS’
contest was fully or partly covered by the revenue earned from
increased SMS charges, the appellants had committed an unfair
trade practice u/s. 2(1)(r)(3)(a) of the Act, 1986 – On appeal, held:
On perusal of the
services-cum-sponsorship agreement, it reveals
that cellular mobile service provider 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, television channel had no role in
determining the same – Further, cellular mobile service provider
was liable to pay a monthly lump sum as fees to television channel,
irrespective of whether such amount was realized from its subscribers
or not – There was no provision in the agreement for the revenue-
sharing between the parties or requiring the cellular mobile service
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provider to finance any part of the prize money paid by television
channel, towards the ‘HSHS’ contest – Thus, it is evident that
television channel was liable to pay the prize money irrespective of
the profits earned by cellular mobile service provider – There is no
basis to conclude that the prize money for the HSHS contest was
paid directly out of the SMS revenue earned by cellular mobile
service provider or that parties had colluded to increase the SMS
rates so as to finance the prize money and share the SMS revenue –
Thus, finding of the National Commission of as ‘unfair trade practice’
set aside.
Allowing the appeals, the Court
HELD: 1. On perusal of the services-cum-sponsorship
agreement, it reveals that Cellular Mobile Service Provider-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, television
channel-Star India had no role in determining the same. Further,
Cellular Mobile Service Provider was liable to pay a monthly
lumpsum as fees to the television channel, 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 Cellular Mobile Service Provider to finance
any part of the prize money paid by television channel towards
the HSHS contest. [Para 11.1][1198 G-H; 1199 A-B]
2. Thus, it is evident
that television channel India was liable
to pay the prize money irrespective of the profits earned by
Cellular Mobile Service Provider. It is needless to say that the
sponsorship money paid by Cellular Mobile Service Provider
would come from various sources of revenue, which includes the
money earned from the tariff rates for the HSHS contest. Similarly,
television channel 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 participants. Further, since
STAR INDIA (P) LTD. v. SOCIETY OF CATALYSTS & ANR.
[MOHAN M. SHANTANAGOUDAR, J.]
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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, this Court is of the
view that the finding of the National Commission that the SMS
service offered by Cellular Mobile Service Provider 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 Cellular Mobile Service Provider 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
Cellular Mobile Service Provider constituted a value-added
services separate from its ordinary SMS service. It is reasonable
to assume that such cost would have been recovered by Cellular
Mobile Service Provider, 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. [Para 11.2 and 12][1199 B-D;
1199 B-H]
3. Hence, 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. This Court is 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 Cellular
Mobile Service Provider, or that parties 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. [Para 14][1201 D-F]
HMM Ltd. v. Director General, Monopolies & Restrictive Trade
Practices Commission (1998) 6 SCC 485; General Motors
(India) Private Limited v. Ashok Ramnik Lal Tolat (2015) 1
SCC 429 : [2014] 11 SCR 16 - referred to.
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Case Law Reference
(1998) 6 SCC 485
referred to
Para 4
[2014] 11 SCR 16
referred to
Para 15
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6597
of 2008.
From the Judgment and Order dated  11.09.2008 of the National
Consumer Disputes Redressal Commission, New Delhi in Complaint
No. 83 of 2007.
With
Civil Appeal No. 6645 of 2008
Gaurav Pachnanda, Sr. Adv., Ms. Ruby Singh Ahuja, Ms. Swikriti
Singhania, Ms. Kritika Sachdeva, Utarsh Maria, Ashutosh P. Shukla,
Ms. Jyotika Jain, Ms. Ishna Kumar, Ms. Avni Sharma, Mrs. Manik
Karanjawala, Aditya Narain, Ms. Anushree Narain, Arnav Narain,
Ms. Mishra Raj Sekhar, Ms. Amanda Chakravarti, Ms. Subhashree
Mohapatra, Siddharth Raj Agarwal, Dinesh Chander Trehan, Vineet
Kumar, Ms. Astha Tyagi, Advs. for the Appellant.
Ms. Madhumita Bhattacharjee, Ms. Srija Choudhury, Advs. for
the Respondents.
The Judgment of the Court was delivered by
MOHAN M. SHANTANAGOUDAR, J.
1. These appeals arise out of the judgment dated 11.9.2008 of the
National Consumer Disputes Redressal Commission (“National
Commission”) allowing the consumer complaint filed by Respondent No.
1 in both these appeals against the Appellants.
2. The brief facts giving rise to these appeals are as follows:
2.1 Star India (P) Ltd., the Appellant in C.A. No. 6597/2008
(hereinafter “Star India”) used to broadcast the programme ‘Kaun
Banega Crorepati’ (“KBC”) between 22.1.2007 and 19.4.2007.
The programme was sponsored by Bharti Airtel Limited, the
Appellant in C.A. No.
6645/2008 (hereinafter “Airtel”), amongst
others. During the telecast of this programme, a contest called
‘Har Seat Hot Seat’ (“HSHS contest”) was conducted, in which
STAR INDIA (P) LTD. v. SOCIETY OF CATALYSTS & ANR.
[MOHAN M. SHANTANAGOUDAR, J.]
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the viewers of KBC were invited to participate. An objective-
type question with four possible answers was displayed on the
screen during each episode, and viewers who wished to participate
were required to send in the correct answer, inter alia through
SMS services, offered by Airtel, MTNL and BSNL, to a specified
number.
2.2 The winner for each episode was randomly selected out of
the persons who had sent in the correct answers, and awarded a
prize money of Rs. 2 lakhs. There was no entry fee for the HSHS
contest. However, it is not disputed that participants in the HSHS
contest were required to pay Rs. 2.40 per SMS message to Airtel,
which was higher than the normal rate for SMSes. Hence,
Respondent No. 1, which is a consumer society (hereinafter “the
complainant”), filed a complaint before the National Commission
against Star India and Airtel (but not against BSNL and MTNL),
contending that they were committing an ‘unfair trade practice’
within the meaning of Section 2(1)(r)(3)(a) of the Consumer
Protection Act, 1986 (“the 1986 Act”). It was alleged that the
Appellants had created a false impression in viewers’ minds that
participation in the HSHS contest was free of cost, whereas the
cost of organizing the contest as well the prize money was being
reimbursed from the increased rate of SMS charges, and the profits
from these charges were being shared by Airtel with Star India.
2.3 Further, it was alleged that an
unfair trade practice had also
been committed inasmuch as the contest was essentially a lottery
as the questions were simple, and the winners were finally picked
by random selection. The purpose of this contest was to promote
the business interests of the Appellants by increasing the viewership
and Television Rating Points (TRP’s) of the KBC programme,
and thus to command higher advertising charges, and also by
increasing the revenue earned from SMS messages. Hence the
Appellants were culpable for conducting a lottery-like contest to
promote their business interests under Section 2(1)(r)(3)(b) of
the 1986 Act.
2.4 It is relevant to note that the complainant is only a voluntary
consumer organization which has filed this complaint as part of its
objective of furthering the consumer protection movement. It is
not their case that they have participated in the HSHS contest
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and incurred any loss on account thereof. It is further relevant to
note that the complainant’s assertions are solely based on a survey
which it had carried out, in which the majority of participants
apparently stated that they were under the impression that
participation in the HSHS contest was free and the SMS charges
were retained only by the service provider, i.e. Airtel and most of
the viewers felt that the contest was carried out to increase the
popularity of the KBC programme. The conclusions of this survey
were apparently confirmed by a newspaper report dated 15.7.2007
published by the Hindustan Times. As per this newspaper report,
Airtel received 58 million SMS messages, and the revenue earned
from the SMSes was shared by Star India and Airtel.
3. The National Commission in the impugned judgment observed
that though the Appellants had not disclosed the revenue earned from
the HSHS contest on grounds of confidentiality of proprietary information,
it was apparent that they had created an impression that the prize money
was being given free of charge, even though they had not disputed that
the prize money for the HSHS contest was paid out of the money collected
through SMS charges. The Commission relied upon the figures stated in
the newspaper article dated 15.7.2007 (supra), and found that since the
Appellants had not denied that they had received 58 million SMSes, they
would have collected Rs. 13.92 crore from the participants of the HSHS
contest
for such messages, whereas a total sum of only Rs. 1.04 crores
was paid as prize money. Thus, the gross earnings of the Appellants
were disproportionate to the cost of the prizes offered.
3.1 The Commission further found that no viewer could discern
from the on-screen advertisements that the costs of the contest
were being met through the SMS charges, and the Appellants had
clearly not notified viewers about the same. It found a contradiction
between the Appellants’ stances as to whether the HSHS contest
was advertised as ‘free’ or not. It was also observed that the
Appellants had not brought any evidence on record to show that
the transmission of SMS messages for the HSHS contest was a
value added service such that the higher SMS cost was justified,
and hence the same could not be construed as a value added
service. It was presumed by the National Commission that the
special business relationship between Star India and Airtel included
an undisclosed revenue sharing agreement.
STAR INDIA (P) LTD. v. SOCIETY OF CATALYSTS & ANR.
[MOHAN M. SHANTANAGOUDAR, J.]
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3.2 Hence, it was held that since the prize money for the HSHS
contest was fully or partly covered by the revenue earned from
increased SMS charges, the Appellants had committed an unfair
trade practice under Section 2(1)(r)(3)(a) of the 1986 Act. In
light of this finding, the National Commission found it unnecessary
to deal with the complainant’s contention regarding commission
of an unfair trade practice under Section 2(1)(r)(3)(b).
3.3 The National Commission additionally held that the complaint
was maintainable under the 1986 Act and need not have been
preferred before the Telecom Disputes Settlement and Appellate
Tribunal (“TDSAT”) under the Telecom Regulatory Authority of
India Act, 1997 (“TRAI Act”). Further, it was held that the
complaint was not bad for non-joinder of parties as there was
nothing on record to suggest that BSNL and MTNL had also
recovered large amounts from the SMS charges for the HSHS
contest and that the amount so recovered by them was used for
sharing the cost of the prize money.
3.4 Hence, the complaint was accordingly allowed by the National
Commission. Since the complainant is only a consumer
organization, the National Commission observed that there were
no grounds for granting compensation. However, it awarded
punitive damages of Rs. 1 crore under the Proviso to Section
14(1)(d) of the 1986 Act, for which both Appellants were held
jointly and severally liable. The National Commission
also directed
them to pay litigation costs of Rs. 50,000 to the complainant. Hence
these appeals before us.
4. Learned senior counsel for Star India, Shri Gaurav Pachnanda,
submitted that the entire finding of ‘unfair trade practice’ was based on
inferences and speculation, and on reliance on a newspaper report without
corroboration of its contents, which was impermissible. He disputed the
finding of the National Commission that the Appellant had admitted that
the prize money was paid out of the revenue earned from increased
SMS rates. It was stressed that the National Commission had omitted to
inquire into the source of the prize money. It was also stressed that
Airtel had not shared the revenue earned from the increased SMS rates
with Star India at all. The only monetary flow between them was a fixed
periodic lumpsum to be paid by Airtel under the services-cum-sponsorship
agreement between them, which bore no relation to the revenue received
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from the SMSes, and that there was no evidence to suggest that the
SMS revenue was used to pay the prize money. The learned counsel
emphatically argued that the expression “covered by the amount charged
in the transaction as a whole” under Section 2(1)(r)(3)(a) of the 1986
Act only meant direct recovery from the price paid for the transaction,
and not from advertisements or sponsorship, citing the decision of this
Court in HMM Ltd. v. Director General, Monopolies & Restrictive
Trade Practices Commission, (1998) 6 SCC 485.
4.1 It was further submitted that Airtel was entitled to charge a
higher rate for the SMSes sent in pursuance of the HSHS contest,
since the transmission of SMSes to register options in a multiple
choice question game required a special software, the use of which
constituted a value-added service; and that Star India had complied
with the relevant TRAI regulations mandating that such increased
tariff be displayed on the television screen as well as on the KBC
programme website. Therefore, though the participants bore the
cost of sending the SMS messages, they were duly informed of
the same, while participation in the contest itself remained free of
charge. In such circumstances, the National Commission could
not have attributed recovery of prize money to the increased tariff
rate of the SMSes without even inquiring into the breakup of cost,
value addition and profit in the tariff.
4.2 The learned counsel also challenged the award of
damages,
for lack of proof of loss or legal injury to the participants in the
contest, which he submitted was required as per Section 14(1)(d)
of the 1986 Act. Lastly, he argued that “punitive damages” could
not have been awarded without a specific prayer for the same in
the complaint.
5. Learned counsel for Airtel, Shri Aditya Narain, urged that as
far as the commission of an unfair trade practice was concerned, the
only finding rendered by the National Commission was regarding the
creation of a wrongful impression that the contest was conducted free
of charge, which is covered under the second part of Section 2(1)(r)(3)(a)
of the 1986 Act, and that the same was not attracted in the present case.
He took us through the TRAI direction regarding advertisement of
premium rate services, pleading compliance with the same. Finally, he
submitted that the jurisdiction of the consumer fora was ousted by Section
14(a)(iii) read with Section 15 of the TRAI Act, which provide that any
STAR INDIA (P) LTD. v. SOCIETY OF CATALYSTS & ANR.
[MOHAN M. SHANTANAGOUDAR, J.]
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dispute between telecom service providers and “a group of consumers”
have to be referred to the TDSAT, and that the complainant organisation
was essentially nothing but a group of consumers since it was purporting
to represent the interest of consumers at large.
6. Learned Counsel for the complainant, Ms. Madhumita
Bhattacharjee, on the other hand, argued in favour of the decision of the
National Commission, submitting that the Appellants had given the
wrongful impression to consumers that the HSHS contest prize money
was not paid out of the revenue generated from increased SMS tariff
rates. She also averred that the complaint contained a prayer as to punitive
damages, and thus the National Commission had not erred in awarding
punitive damages. Finally, she submitted that the complaint was
maintainable under the 1986 Act since the complainant had filed an
individual complaint under the Act, and not acted on behalf of a group of
consumers, thus attracting the exemption available to individual consumers
under proviso (B) to Section 14 (a)(iii) of the TRAI Act.
7. We have heard all the parties and given due consideration to
the material on record.
8. It is apparent that the crucial question to be determined in the
instant case is whether an unfair trade practice has been committed by
the Appellants in the conduct of the HSHS contest, in terms of Section
2(1)(r)(3) of the 1986 Act. 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 respect. Thus,
the limited question before us is whether an unfair trade practice has
been committed only within the meaning of Clause (a) of Section
2(1)(r)(3). It would be useful to begin by referring to the relevant portion
of the definition of “unfair trade practice” under Section 2(1)(r)(3):
“(r)   ”unfair trade practice” means a trade practice which, for
the purpose of promoting the sale, use or supply of any goods or
for the provision of any service, adopts any unfair method or unfair
or deceptive practice including any of the following practices,
namely;—
…
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(3)   permits—
(a)   the offering of gifts, prizes or other items with the intention
of not providing them as offered or creating impression that
something is being given or offered free of charge when it is fully
or partly covered by the amount charged in the transaction as a
whole;…”
8.1 Evidently, the mischief that the clause seeks to address may
be in two forms: firstly, the offering of gifts, prizes or other items
with the intention of not providing them as offered, and secondly,
the creation of the impression that something (i.e. a gift, prize or
other item) is being given or offered free of charge in spite of the
cost of the item actually being covered either fully or partly by the
amount charged in the relevant transaction, as a whole. This would
be, for example, where the vendor of a good or service deceptively
increases the price of the good or service being sold, and covers
the cost of a prize or gift offered for ‘free’ along with the good or
service through such increased price.
8.2 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 India.
9. 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
STAR INDIA (P) LTD. v. SOCIETY OF CATALYSTS & ANR.
[MOHAN M. SHANTANAGOUDAR, J.]
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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 Airtel.
10. 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 us.
11. 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 Commission’s
conclusion that the prize money was paid out of the revenue earned
from Airtel’s SMS services during the HSHS contest, we deemed it fit
to examine the agreement ourselves.
11.1 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,
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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
contest.
11.2 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 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:
STAR INDIA (P) LTD. v. SOCIETY OF CATALYSTS & ANR.
[MOHAN M. SHANTANAGOUDAR, J.]
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“F. No. 305-8/2004-QOS
TELECOM REGULATORY AUTHORITY OF INDIA
A-2/14, Safdarjung Enclave, New Delhi-110029
Dated : 3rd May, 2005
To,
All Cellular Mobile Service Providers
All 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 consumer’s 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.
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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
STAR INDIA (P) LTD. v. SOCIETY OF CATALYSTS & ANR.
[MOHAN M. SHANTANAGOUDAR, J.]
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SUPREME COURT REPORTS
[2020] 2 S.C.R.
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.
17. Thus, we find that the finding of the commission of an unfair
trade practice under Section 2(1)(r)(3)(a) in the impugned judgement is
bad in law. The appeals are allowed and the impugned judgement is set
aside in the aforesaid terms.
Ankit Gyan
Appeals allowed.