India Cable Net Company Ltd vs Star India Pvt. Ltd

S.K. Singh, Chairperson

Heard Learned Senior Counsel for the petitioner and Learned Senior Counsel for the respondent on the issue of incentive payable to the petitioner and further interim arrangement in the light of submission on behalf of the petitioner that while respondent is realising subscription dues as per the agreement, it has arbitrarily and in violation of the relevant provisions in the agreement denied petitioner's claim for incentives since February, 2021. According to learned Senior Counsel for the petitioner, while the monthly subscription amount comes to approximately Rs.6 crores, the amount of incentives as per past records prior to February, 2021 is around Rs.50 lakhs per month. Petitioner claims that it will be facing huge financial difficulties in carrying out its business if the respondent is allowed to persist with its new pleas for denying incentive since February, 2021. According to thelearned Senior Counsel for the petitioner, the denial of incentives is arbitrary and contrary to revised Annexure-C/1 as provided in Schedule II of the first Addendum to the Subscription Licence Agreement (Agreement) dated 01.06.2019 which can be seen at pg.190 of the petition. The facts are similar in all the three petitions, but generally reference has been made only to records of B.P. No.574 of 2021.

It is further case of the petitioner that incentive scheme as per Annexure- C/1 requires the petitioner/DPO to maintain the LCN ranks for all the Subscribed Channels on the headends of the DPO (emphasis added) as per the LCN rank as last reported to respondent in April, 2019 and declared in Schedule-IV. Schedule-IV(pg.205) shows, inter alia, LCN rank and petitioner claims to have maintained the said LCN rank for all the Subscribed Channels without any change since much prior to February, 2021 but still the respondent is acting against the petitioner because some vacant LCN rank such as Serial No. 17 has been filled-up with channel of another broadcaster in February, 2021.

On the other hand, learned Senior Counsel for the respondent has submitted that Annexure 'C' at pg.71 of the Agreement has been violated and LCN rank deviation has been reported from the field from February, 2021 because while showing the channels in their particular genre in its Electronic Programme Guide (EPG), the petitioner has left gaps at places whereas Regulation 18(2) of the relevant Regulations of 2017 requires that all the channels must be placed consecutively. According to the respondent, by changing the LCN rank and violating the provisions of Regulation 18(2) relating to EPG the petitioner has become ineligible for claiming incentives. Reliance has been placed upon a letter dated 23.06.2021 sent by the respondent to the petitioner wherein a Chart at pg.339 purports to allege that LCNs of several channels of the respondent have been displaced as per ground verification and for that reason respondent has not issued the incentive eligibility letters. In absence of such letters, according to respondent, petitioner cannot maintain or submit the incentive invoices as done by him for various months since February, 2021.

After hearing learned Senior Counsel for the parties and considering the respondent's objection that no relief can be granted at this stage in respect of incentives and it should be decided only by way of final adjudication, it is deemed necessary and in the interest of justice to indicate only in brief that prima facie petitioner has succeeded in showing that it is continuing with the LCN rank as declared earlier and respondent has no material to show that the same has been displaced except on a vague source described as - "ground verification". Material show that petitioner is maintaining the same LCN and the issue raised by the respondent is on the basis of removal of other channels from other LCN ranks causing blanks which have been filled later by other channels. Prima facie, there is no good reason in terms of the agreement to deny to the petitioner the eligibility for incentives. It is also found on the face of the records that incentive is related only to the provisions in the agreement and not to proper maintenance or non-maintenance of EPG or on alleged violation of a particular regulation relating to EPG. Removal of other channels from some rank in LCN and later filling up such blank does not amount to altering the LCN rank of respondent's channels which have apparently remained unaltered.

In view of aforesaid discussions and considering the direction in the order dated 23.09.2021 wherein parties were required to sit together and settle the issue of incentives one way of the other and further observation that "when the incentive shall be adjusted, will be considered at an appropriate stage", the petitioner deserves further relief. For the present, petitioner may withhold payment of Rs.2.50 crores on account of incentives claimed from February, 2021 onwards (estimated on the basis of Rs.50 lakhs per month). This issue of incentives will be finally heard and decided on the next date so as to cover the other periods also. The permission to withhold the amount of Rs.2.5 crores is only on account and shall not absolve the petitioner from paying the said amount to the respondent if ultimately it is found that petitioner had violated the agreement and disturbed the LCN rankings, as per reliable evidence that may be produced by the respondent.

Since the pleadings are complete, the petition may be listed before the Registrar on 15.12.2021 for passing necessary orders and directions to make the petition ready for hearing for which it shall be listed before the Bench on 09.03.2022.