Den Networks Limited vs Skyline Cable Network And Anr

This Petition, under Section 14, read with Section 14A, of the Telecom Regulatory Authority of India Act, 1997, (As Amended Upto date) (hereinafter referred to as “TRAI Act”), has been filed, by Petitioner-Den Networks. Ltd., Through authorized representative - Mr. Siddharth Priya Srivastava, against Skyline Cable Network, Respondent No. 1, and Kerala Communicators Cable Ltd., Respondent No. 2, with a prayer for a decree, jointly and severally, against Respondents, for an amount of Rs. 54,679/-(Rupees Fifty Four Thousand Six Hundred Seventy Nine only), towards outstanding subscription dues, as on 30.04.2020, with a further direction to return a total number of 1025 Set Top Boxes (STBs), in good and working condition, which has been issued to Respondent No. 1 or in lieu thereof, to make the payment of an amount of Rs. 20,48,975/- (Rupees Twenty Lakhs Forty Eight Thousand Nine Hundred Seventy Five Only), @ 1999/- per Set Top Box, with a further mandate to Respondent No. 1, for not receiving Cable TV Signals from Respondent No. 2 or any other MSO, until the Set Top Boxes of Petitioner, are being returned and dues towards subscription amount is being paid.

In brief, the Petition contends that Petitioner is a Company, registered under Indian Companies Act and Mr. Siddharth Priya Srivastava, is the authorized representative, vide Board Resolution, for filing this Petition, for and on behalf of Petitioner Company. This Petitioner Company is carrying on Distributor Platform Operator “DPO” business and it is a Cable Television Service provider, duly registered under the provisions of Cable Television Networks (Regulation) Act, 1995. Respondent No. 1, Skyline Cable Network, is a Local Cable Operator(LCO) for receiving encrypted Cable Signal feeds of Television Channels from the addressable system of the Petitioner to retransmit the same through its Cable Television Network, to the ultimate subscribers. The Respondent No. 1, entered into an interconnect agreement, dated 01.01.2016, with the Petitioner for obtaining Cable Signal Feed from 01.01.2016 onwards. This Interconnect Agreement is Annexure P-1 to the Petition.

Respondent No.2, Kerala Communicators Cable Limited, is also engaged in the business of Cable Television Service Provider, registered under the Cable Television Networks (Regulation) Act, 1995. It is operating in the working area, of the operation of the Petitioner, as well as Respondent No.

As per record of the Petitioner Company, the Interconnect Agreement, Annexure P-1 to Petition, was with issuance of 1025 Set Top Boxes(STBs) to Respondent No. 1, as exclusive property of Petitioner, and issued to Respondent No. 1, LCO, for deployment at subscriber’s house. Each of the Set Top Box was worth Rs. 1999/- and after the cessation of relationship of contractual obligation, in between, Respondent No. 1 was duty bound to return back those Set Top Boxes, or to make payment, in lieu thereof @ Rs. 1999/- per STBs. Based on the Interconnect Agreement, Annexure P-1 to Petition, monthly basis invoices were raised by Petitioner to Respondent No. 1, for the payment of subscription amount collected from the subscriber. Copies of these invoices, are Annexure P-2 to Petition.

The Statement of Account, being maintained in usual course of business by Petitioner is Annexure P-3 to Petition. On several occasions, oral request for clearing outstanding subscription amount dues, was made to Respondent No. 1, but, was of no avail, except to give assurance for future payment. Ultimately, a demand notice, dated 13.05.2020, Annexure P-4 to Petition towards outstanding subscription dues was got issued by Petitioner Company to Respondent No. 1. This too was not complied with. The outstanding subscription dues, as on 30.04.2020 was Rs. 54,679/- (Rupees Fifty Four Thousand Six Hundred Seventy Nine only). Petitioner was entitled for its return of the 1025 STBs, or an amount of Rs. 20,48,975/- (Rupees Twenty Lakhs Forty Eight Thousand Nine Hundred Seventy Five Only), with pendente lite and future interest, @18% per annum, towards those outstanding subscription dues as well as STBs cost.

A cause of action within the territorial jurisdiction of this Tribunal, within the period of limitation had arisen, hence, this Petition with above prayer.

Reply, on behalf of Respondent No. 1, was with this contention that Petitioner is a Cable Television Service Provider, duly registered under the provisions of the Cable Television Networks (Regulation) Act, 1995 and is carrying on the Distribution Platform Operator (DPO) business. Respondent No. 1 is Local Cable Operator, registered under the Cable Television Networks (Regulation) Act, 1995, and is engaged in the business of Cable Services in the District of Ernakulam, Kerala. Respondent No. 1 worked as an LCO of the Petitioner, for many years prior to entering in present agreement. There was an assurance by Petitioner as a promise, that LCOs, the service charges payable to the Petitioner will be 10% less than that of any other competitor MSO, and on this assurance, present Respondent No. 1 alongwith many other LCOs chosen Petitioner, as their MSO, and upon this false promise, Interconnect Agreement was got signed. This was got signed on 01.01.2016, but, Petitioner failed to comply with the terms of the agreement, soon after the date of agreement. They subverted the TRAI guidelines and were not ready to provide the free channel to the subscribers. This was opposed by various LCOs. But, Petitioner disconnected signals in Kerala, without complying the statutory notice of 21 days. This resulted in a massive protest by the LCO, against the Petitioner in the State of Kerala, which lasted for about 10 days. The newspaper report published in the Official website of Mathrubhumi News, dated 06.02.2019 was there. It was Annexure R1 (a) to this reply.

During the persistence of this protest, the Petitioner herein, vide W.P (C) No. 4848/ 2019, sought the intervention of Hon’ble High Court of Kerala, in the subject matter and prayed for direction to the State Police, to provide Police protection to the Petitioner, its staff, employees and properties. The order of Hon’ble High Court of Kerala, dated 15.03.2019 is Annexure R1 (b) to this reply. This protest was later handled by State Authority by including the then District Collector of Ernakulam, Commissioner of Police (Metropolitan), Ernakulam and other authorities for the purpose of settlement of same. As per decisions made on such discussion, it was intimated to the LCOs, including this Respondent, that they were given a chance to discharge itself from being an LCO of the Petitioner, which was agreed by the said MSO as well. Acting upon the same, many LCOs, including the Respondent No. 1, opted to leave the association of the Petitioner, due to failure and neglect on the part of Petitioner in complying with the terms of the Interconnect Agreement.

The Interconnect Agreement stated the ratio of revenue settlement, to be in accordance in the manner prescribed, by TRAI under Clause 4 (VI), but, Petitioner continued to grab an exorbitant amount from the revenue, in the name of various other heads. This left the Respondent in financial constraints, after paying an exorbitant amount from the revenue to the Petitioner. Therefore, it became hard for the Respondent to retain his business, since he was left with no sufficient amount even to pay his employees and to meet other incidental expenses. During the persistence of such a condition, this Respondent was left with no other option, but to migrate from the Petitioner to other MSO, which provide the services at a considerable amount. Thus, when the Respondent was given a chance to migrate, by the Petitioner, this Respondent chose Respondent No. 2 as his MSO and continued in the business for livelihood.

The Respondent procured around 1025 STBs from the Petitioner during the agreement period. These STBs were issued to the Respondent, for deployment at the subscriber’s houses. The Respondent deployed the same at the houses of subscribers on providing Cable connection and all the STBs are still with the subscribers. Thus, no STBs are left with the Respondent that are returnable to the Petitioner. The alleged cost of each STB, worth Rs. 1999/- is denied. Rather, these STBs were sold to the subscriber @ Rs. 1270/-, which is evident from the invoices, annexed by Petitioner as Annexure P 2. These STBs were sold to the subscribers and the same is evidenced from the fact that there were neither rent amount, nor security deposit collected from the subscribers. Thus, the Respondent No. 1 is not liable to return the STBs that are already sold to the subscribers. It was the subscribers, who had purchased STBs by paying value of it to the Petitioner.

Post 2017, a prepaid balance system was implemented by the Petitioner, which mandated the retaining of the credit balance in the accounts of respective LCO. Whenever, an LCO fails to maintain the said credit balance, the Petitioner used to disconnect the signals without serving statutory notice. In fear of such disconnection of signals, which would incur cost to the LCOs, the Respondent used to ensure, maintaining sufficient credit balance. Therefore, it is impossible to allege that the Respondent defaulted in the subscription charges, payable to the Petitioner.

The illegal swapping by Respondent No. 1 to Respondent No. 2 had been specifically denied. Hence, dismissal of Petition was prayed for.

Respondent No. 2 filed its reply through Suresh Kumar PP, authorized representative of Respondent No. 2, with this contention that this entity is a Multi System Operator (MSO), registered under Cable Television Networks (Regulation) Act, 1995 and engaged in the business of Cable Services in the State of Kerala. Petition primarily alleges, that Respondent No. 1, LCO is defaulter of monthly subscription dues and had migrated to Respondent No. 2, without fulfilling the legal mandate of issuing notice, and making payment of outstanding dues, as well as return of STBs, whereas, Respondent No. 2 being of no Privity of Contract with Petitioner and Respondent No. 1, is of no liability towards the alleged misdeed of Respondent No. 1. Being a competitive MSO, Respondent No. 2 is with no liability towards Petitioner. Rather, Respondent No. 1, as LCO entered into an Interconnect Agreement with Respondent No. 2 and developed its relationship as LCO with competitive MSO. There was a declaration of no outstanding dues payable to any other MSO. There was no illegal swapping. The entire contention with regard to STBs, was negated with a prayer for dismissal of this Petition qua Respondent No. 2.

Both of these replies were replicated by way of filing rejoinder cum replication of Petitioner, and contention of Petition was reiterated with negation of contention of reply. Interconnect Agreement was entered, in between, Petitioner and Respondent No. 1. The terms and conditions were written in it. Respondent No. 1 never communicated to the Petitioner about the alleged hardship caused to it; rather, migration to Respondent No. 2 by Respondent No. 1 is undisputed fact. Serving a notice, required as of three weeks prior to this migration, has also not been stated by Respondent No. 1. No objection certificate by Petitioner to Respondent No. 1, was neither pleaded nor proved, whereas, it was mandatory for migrating to other competitive MSO. The Interconnect Agreement is with specific stipulation with regard to ownership of STBs with Petitioner, MSO. The issuance of 1025 STBs for deploying at subscriber’s end is also undisputed fact. The cost has been proved by way of documentary evidence. The sale to subscriber by Respondent No. 1 has been admitted in its reply, whereas, Respondent No. 1 was fully aware of the covenant, with regard to ownership of STBs with Petitioner, MSO. Hence, any act made by Respondent No. 1 against above written covenant is of no avail. Hence, the cause of action had arisen in favour of the Petitioner and it has filed this Petition, wherein, there is no counter claim, no Petition by Respondent. It is merely a concocted story. Hence, prayer is for allowing this Petition.

The very contention of Respondent No. 2 was not with this objection that there was no Privity of Contract, in between, Petitioner and Respondent No. 2, and as per settled proposition of law, Respondent No. 2 is not liable for the misconduct of Respondent No. 1.

On the basis of pleadings of both side, following issues were got framed by Court of Registrar, vide order, dated 03.01.2024 :

Whether there exists any cause of action against the Respondent No.2?

Whether the Petitioner is entitled for recovery of an amount along with interest from Respondents as claimed in the petition?

Whether the Petitioner is entitled for return of 1025 STBs along with all accessories in good working condition from the Respondents or in the alternative an amount of Rs.20,48,975/-towards cost of STBs?

Whether Respondent No.1 has migrated from the network of Petitioner to the network of Respondent No.2 without clearing the outstanding subscription amount and return of STBs in violation of the TRAI Regulations? 16.Petitioner filed its evidence as of Mr Vikas Rawat, an authorized representative of Petitioner and Respondent No. 1 filed evidence by way of affidavit of Mr Ayoob P S, proprietor of Respondent No. 1. Respondent No. 2 filed its affidavit by way of Mr Suresh Kumar PP on record.

Written arguments for and on behalf of Petitioner, Respondent No. 1 and Respondent No. 2 got filed.

Heard arguments at length and gone through materials placed on record. 19.The proceeding before this Tribunal is a civil proceeding, as has been given in the TRAI Act, itself. In a civil proceeding, the preponderance of probabilities is the touchstone for making a decision, as against strict burden of proof, required in criminal proceeding.

Hon’ble Apex Court in Anil Rishi Vs. Gurbaksh Singh – AIR 2006 SC 1971 has propounded that onus to prove a fact is on the person who asserts it. Under Section 102 of The Indian Evidence Act, initial onus is always on the plaintiff to prove his case and if he discharges, the onus shifts to defendant. It has further been propounded in Premlata Vs. Arhant Kumar Jain- AIR 1976 SC 626 that where both parties have already produced whatever evidence they had, the question of burden of proof ceases to have any importance. But while appreciating the question of burden of proof and misplacing the burden of proof on a particular party and recording of findings in a particular way will definitely vitiate the judgment. The old principle propounded by Privy Council in Lakshman Vs. Venkateswarloo – AIR 1949 PC 278 still holds good that burden of proof on the pleadings never shifts, it always remains constant. Factually proving of a case in his favour is cost upon plaintiff when he fulfils, onus shifts over defendants to adduce rebutting evidence to meet the case made out by plaintiff. Onus may again shift to plaintiff. Hon’ble Apex Court in State of J & K Vs Hindustan Forest Co. (2006) 12 SCC 198 has propounded that the plaintiff cannot obviously take advantage of the weakness of defendant. The plaintiff must stand upon evidence adduced by him. Though unlike a criminal case, in civil cases there is no mandate for proving fact beyond reasonable doubt, but even preponderance of probabilities may serve as a good basis of decision, as was propounded in M Krishnan Vs Vijay Singh-2001 CrLJ 4705. Hon’ble Apex Court in Raghvamma Vs. A Cherry Chamma – AIR 1964 SC 136 has propounded that burden and onus of proof are two different things. Burden of proof lies upon a person who has to prove the facts and it never shifts. Onus of proof shifts. Such shifting of onus is a continuous process in evaluation of evidence. 21.Issue No.1- This petition has been filed by petitioner against respondent no. 1 and respondent no. 2, with a prayer for directing respondents, jointly or severally, to clear the outstanding dues payable to petitioner. Thereby, directing to return the STBs or to make the payment in lieu of it, with a further prayer for restrain of respondent no. 2, from supplying signals to respondent no. 1. Joint and sever liability in a contract arises when two or more persons makes a promise jointly to perform some definite work, with a definite object to contract, in a valid agreement made as a contract, in between. But in the present case, admittedly, respondent no. 2 had made no promise, neither to the petitioner, nor to respondent no. 1, with regard to interconnect agreement, annexed as Annexure P-1 to the petition. The claim for outstanding subscription dues, said to have not been paid by respondent no. 1, is against respondent no. 1 only, because it springs out of interconnect agreement executed, in between, petitioner and respondent no. 1, to which respondent no. 2 was not a party. The privity of contract, for the alleged cause of action qua respondent no. 2 is admittedly not there. This Tribunal in many of the previously decided cases, had categorically held that a competitive MSO may not be fastened with any liability for default committed by LCOs, because of the fact of there being no privity of contract, in between. There is no evidence on record for showing the promise, if any, or arising of any liability against respondent no. 2, a competitive MSO, in favour of petitioner in the given facts and circumstances. Hence, this issue is being decided in favour of respondent no. 2. 22.Issue no 2 - As per decision of issue no. 1, because of absence of privity of contract, in between, petitioner and respondent no. 2, no question of liability against respondent no. 2, arises. Hence, in disposal of this issue, the liability, if any, against respondent no. 1 only is to be adjudged. The evidence affidavit, filed for and on behalf of petitioner company, as of Mr. Vikas Rawat is of this fact on oath, that respondent no. 1, LCO, entered into an interconnect agreement, annexed with the petition, and proved as Exhibit PW 1/1, as MSO for having cable signals feed of TV channels from the addressable system of the petitioner to retransmit the same through its cable TV network to the subscribers. Hence, this interconnect agreement, Exhibit P 1, has been duly proved by this witness. In the reply to petition, this fact has not been disputed by the respondent. As per rule of prudence and evidence, facts admitted need not be proved. Admission is the best Evidence for it. Hence, in the reply, execution of this interconnect agreement is undisputed fact. This fact has been admitted by witness of respondent no. 1 too. Hence, exhibit PW 1/1 has been duly proved by petitioner. The issuance of STBs, in the tune of 1025, for installing at subscribers’ end, for enacting the covenant of this interconnect agreement, is also an undisputed fact. Rather, this was admitted to be received by respondent no. 1 and installed at the premises of subscribers. But the contention is otherwise, that these were sold to subscribers and this sale had made the subscribers owner of these STBs. But this can never be accepted by this Tribunal, nor it could be proved by cogent evidence, led by respondent no. 1. Once the agreement, which is in form of written agreement, making it a valid contract, had been admitted to have been executed, in between, then the terms and conditions of it, is to be taken as it is, in between, the lines, unless proved otherwise. And as per interconnect regulations, as well as covenants entered in between, in this proved exhibit PW 1/1, the ownership of STB was to be of MSO and it was to be returned back, the moment relationship ceased. This has been proved by this witness of petitioner that these STBs were delivered by way of challan, and were not returned back by respondent no. 1, who had admittedly, migrated to respondent no. 2. The written agreement is acted upon by way of an inventory list of 1025 STBs, issued by petitioner company, and given to respondent no. 1 and this inventory list has been annexed with petition, as well as proved by this affidavit evidence, and had been marked as exhibit PW 1/2. The invoices said to be raised towards the subscription charges, were annexed with the petition and the same had been annexed with affidavit evidence proved and marked as PW 1/3(colly). This issuance of invoices and payment towards these invoices, had not been negated by respondent no. 1 in its evidence. Rather, the defence of respondent no. 1 is that owing to unrest of the LCOs, in the alleged area of operation, the police and local administrative authorities intervened and got the matter settled, by way of giving an option to leave the relationship with the petitioner by the LCOs and ultimately, these LCOs, including present one, had migrated to respondent no. 2. Hence, this unrest, thereby filing of some Writ Petition, before Writ Court for having police security and some news published in newspaper, is a question of fact, ought to be proved by way of evidence by respondent no. 1. But it had not been proved so, except an affidavit evidence filed in examination in chief, with no opportunity for cross examination for testing its veracity. More so, even if it is being deemed to be proved, it is not of any fact that these invoices have been paid, and there were no outstanding dues, whereas statement of account, maintained in usual course of business by this petitioner company, qua respondent no. 1, having the mention of this subscription dues has been filed on record, as annexure to petition, and it has been proved by way of affidavit evidence, marked as exhibit PW 1/4. There was no request by respondent no. 1 for an opportunity for cross examination of this witness. Rather, an uncontroverted affidavit of this fact that is statement of account, proved as Exhibit PW 1/4, is qua respondent no. 1, having mention of amount alleged outstanding subscription dues, not paid by respondent no. 1. The issuance of those number of STBs were not disputed. Issuing of demand notice, and the notice being annexure to petition, as well as annexure to affidavit evidence, thereby got it proved and exhibited as Exhibit PW 1/5, is also uncontroverted fact. Hence, the outstanding subscription dues to the tune of Rs. 54,679/- till 30.4.2020, against respondent no.1 is fully proved. The issuance of total 1025 STBs and its cost in the tune of Rs. 20,48,975/-, has been proved by way of evidence of this petitioner’s witness. The affidavit, required under section 65B of Indian Evidence Act, 1872, for certification of the electronic evidence, to be placed on record by the petitioner, had also been filed and admitted on record as Exhibit PW 1/7 i.e. Annexure C to rejoinder. Hence, from those documentary evidence, as well uncontroverted fact, proved on evidence, this fact of petition has been duly proved by petitioner. Respondent no. 1, by its evidence of Mr. Ayoob P S, has said on oath that the agreement was admitted to be entered, in between, and this was said to be not followed by petitioner, who failed to comply the terms of the agreement, soon after the date of agreement, because it subverted the TRAI guidelines and were not ready to provide free channels to the subscribers, and when this was opposed by various LCOs in the State of Kerala, the petitioner disconnected the signals, which was provided to LCO throughout Kerala, without complying the statutory notice of 21 days. This resulted in massive protest by LCOs against the petitioner in the State of Kerala, which lasted for about 10 days. The newspaper report, published in the official website of Mathrubhumi, dated 6.2.2019, filed as a proof of it. During the persistence of protest, a Writ Petition was also filed before a Writ Court of Kerala, wherefrom a relief for protection of police was prayed. Hon’ble High of Kerala had taken the cognizance of it. But subsequently, after the intervention by police and district Administration of Ernakulam, settlement occurred. This was proved as Exhibit RW-1/3. And LCO were given option to go away from the petitioner. Hence, this respondent no. 1 migrated to respondent no. 2. Meaning thereby, migration by respondent no. 1 to respondent no. 2 is undisputed fact. But the compliance of a notice of three weeks, statutorily required under interconnect regulations, was not said to be complied with, nor any statement of account, had been filed for proving this fact that before migrating to respondent no. 2, a competitive MSO, outstanding subscription fee was paid. The return of STBs has not been mentioned. Rather, it was said to be sold to subscribers, which is against the covenant of this agreement. This is there in the regulations also, that STBs shall always remain the property of MSO, unless otherwise proved. In present case, the return of STBs to petitioner by Respondent No. 1 is not pleaded. Rather, was said to be sold to subscribers. Hence, the very value of each of STB, proved by petitioner to be of Rs. 1999/-, counting the total amount to Rs. 20,48, 975/-, is not to be taken into account, because of the settled proposition of law with regard to depreciated value of STBs to be awarded for STBs not returned in lieu of STBs. Admittedly, the agreement is of the year 2016 and the petition was filed in the year 2020, after the lapse of 6 years. This electronic item, may not be of any value. Hence, it cannot be said to be in good and working condition for their return. Ultimately, to award the cost, in view of depreciated value of each of STBs, the compensation cost at present time, comes to be Rs. 1500/- per STB, and for all 1025 STBs, it will come to be Rs. 1500*1025= Rs. 15,37,500/- (Rupees Fifteen lakhs thirty seven thousand and five hundred only). Hence, the petitioner is entitled for recovery of outstanding subscription amount in the tune of Rs. 54,679/- from respondent no. 1. Issue no. 2 is being decided in favour of petitioner as against respondent no. 1. 23.Issue No. 3 - In view of the discussion, made above, in disposal of issue no. 2, the return of those 1025 STBs in good and working condition to petitioner by respondent no. 1 is to be awarded. But considering the period of more than six years, and electronic items loosing its worth, the just and reasonableness will require to make the compensation in lieu of those STBs, at the rate of depreciated value of Rs. 1500/- per STB, for all those 1025 STBs, amounting to Rs. 15,37,500/-(Rupees Fifteen lakhs thirty seven thousand and five hundred only), against respondent no. 1. This issue is being decided, accordingly. 24.Issue No. 4 – The burden of proving the fact that Respondent No. 1 migrated to Respondent No.2, after making compliance of payment of outstanding dues, three weeks’ notice, required under clause 6.1 and 6.2 of Interconnect Regulation 2011, and return of STBs 1025 taken by it, was upon respondent no. 1. But, it was not proved by respondent no. 1. Rather, it was proved by petitioner that this was not complied with by respondent no. 1, whereas, migration by respondent no. 1 to respondent no. 2 is undisputed fact, and has been proved by witness of respondent no. 2 too. Hence, this issue no. 4 is being decided in favour of petitioner. 25.On the basis of discussions made above, this petition is liable to be decreed against respondent no. 1, for the prayed relief of payment of outstanding subscription dues in the tune of Rs. 54,679/-, and make payment of the cost of 1025 STBs, at the rate of depreciated value of Rs. 1500/- per STB, by respondent no. 1 to petitioner, and, as is being decided repeatedly by this Tribunal, considering the fiscal scenario and financial position of cable TV network business, interest pendente lite and future, in the form of Simple Interest @ 9% per annum, is being awarded and it is genuine and amenable to present case too. ORDER This petition is being allowed against respondent no. 1, with a direction to respondent no. 1 for making deposit in this Tribunal within two months of judgment : (1) outstanding subscription dues of Rs. 54,679/- (Rupees Fifty Four Thousand Six Hundred Seventy Nine only), as on 30.04.2020 with (2) Rs. 15,37,500/- (Rupees Fifteen lakhs thirty seven thousand and five hundred only), towards depreciate value of 1025 STBs, @ Rs. 1500/- per STB. Total amounting to Rs. 15,92,179/- (Rupees Fifteen lakhs ninety two thousand and one hundred seventy nine only), with a simple interest of 9% p.a for these two items, pendente lite and future, till actual date of payment, from 30.4.2020, for making payment to petitioner, and in case of failure, the same is to be realised in execution process. Formal order / decree be got prepared by office, accordingly. ….......……………… (Justice Ram Krishna Gautam) Member 13.08.2026 /NC/