Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 6
CASE NO.:
Appeal (civil) 7135 of 2003
PETITIONER:
Star India (P) Ltd.
RESPONDENT:
Siti Cable Network Ltd. & Ors.
DATE OF JUDGMENT: 09/09/2003
BENCH:
N.Santosh Hegde & B.P.Singh.
JUDGMENT:
J U D G M E N T
(Arising out of SLP©No.16138 of 2003)
(With C.A.Nos. 7136 and 7137 of 2003 @ SLP©No.16427/03 and
SLP©No. 16438/03)
SANTOSH HEGDE,J.
Heard learned counsel for the parties.
Leave granted.
In this judgment, we will be referring to the parties as
appellants and complainants respectively. The complainants
filed a complaint under Section 10 read with Section 36B of the
Monopolies and Restrictive Trade Practices Act, 1969, (the
Act) before the Monopolies and Restrictive Trade Practices
Commission (the Commission) against the appellants herein
alleging unfair, unethical, restrictive trade practices by the
appellants in not permitting the complainants and their
associates from using the latest technology in
telecommunication known as ’Headend In The Sky’ (HITS)
which would facilitate easy distribution of television channels
through a satellite to various Multiple System Operators
(MSOs) and cable operators from whom the programmes reach
the various television viewers. They contended that the
transmission of television programmes by the said HITS system
which is approved by the Government of India would provide
greater benefit to the public at large. They contended that this
system is superior to the existing terrestrial distribution and is
also economically cheap. They also urged that this system
would ensure generation of higher revenues in terms of higher
entertainment and service tax to the Government by 100 %
declaration. The complainants also alleged that the denial of
such facilities to them by the appellants was with a view to
prevent the introduction of Conditional Access System (CAS)
which the Government of India has decided to introduce
compulsorily in the areas notified by it. They also alleged that
the said denial is with a view to eliminate competition and
secure a total monopoly over the distribution market by unfairly
and illegally promoting its own affiliates, hence, the action of
the appellants was in total violation of the provisions of the Act.
In the said complaint, the complainants also filed an
application under Section 12A of the Act seeking an interim
injunction against the appellants from preventing/obstructing
the complainant in any manner from distributing the signals in
respect of the appellants pay channels to cable
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 6
operators/consumers who are desirous of obtaining
complainants services.
The Commission by the impugned order on 27th of
August, 2003 directed the appellants herein by an interim order
to provide signals in respect of their pay channels to the
complainants including other, cable operators and consumers in
the following terms :
"They shall, therefore, continue to provide
and distribute the signals as an interim measure
which will be subject to further orders till the next
day of hearing. List on 10th September, 2003."
The learned counsel for the appellants contend that the
Commission proceeded to make the impugned order without
granting sufficient opportunity to the appellants to produce
materials before the Commission to oppose the issuance of an
interim order. They also contend that the Commission in the
interim order has not indicated the grounds which persuaded it
to pass the said order which is a basic requirement of law since
the Commission could pass an interim order only on proved
facts.
The appellants further contend that the large number of
legal, technical and factual issues arise for consideration of the
Commission but the Commission has not applied its mind to
any one of those issues while passing the impugned order.
They also contend that by the impugned order the Commission
has changed the status quo which was prevailing on the date of
the said order which status quo was pursuant to certain
agreements and entered into between the parties concerned, the
conditions of which prevented the parties to the agreement from
changing the manner of distribution of the appellants signals
during the currency of the agreement. They also contend that
the permission granted by the Government of India for
uplinking signals to HITS itself is conditioned by requiring the
applicants who wanted to install HITS to obtain prior
permission for turnaround from the owners of the channels by
entering into agreements clearly laying down terms and
conditions permitting such turnaround of the channels. The
appellants contend no such agreements have been entered into
by the complainants and without doing so the said respondents
are trying to take an undue advantage which amounts to misuse
of the appellants proprietary right over the programmes owned
by them. They also contend by using the technology of HITS,
the said respondents are taking over the entire control over the
telecast system which includes distribution to other MSOs. and
cable operators without accounting for the same to the
appellants thereby causing huge financial loss to the appellants.
They also contend that the CAS has not yet been introduced
throughout India except may be in the city of Chennai,
therefore, there was no mortal hurry for the complainants to use
the HITS when the existing terrestrial system could have very
well meet the needs of television viewers in the country.
Therefore, there was neither a prima facie case nor any balance
of convenience or any sort of urgency to make the impugned
interim order in favour of the complainants.
The learned counsel appearing for the complainants
contended that after the decision of the Government of India to
introduce the CAS in India, HITS has become the most efficient
and cost effective system of distribution of television signals
because of which the said complainants have invested crores of
rupees and have installed the said system which is not only
beneficial for efficient distribution of television signals but also
cost effective, benefit of which would go both to the viewers as
well as to the Government. They also contend that they had
initiated negotiations with the appellants long time back and as
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 6
a matter of fact such negotiations have reached a final stage but
with a collateral object of creating a monopoly with its
associates the appellants in the last minute after knowing that
these respondents have invested huge sums of money are
avoiding to enter into contracts which by itself would amount to
a monopolistic and restrictive trade practice and the
Commission was justified in taking cognizance of the
complaint filed by it and also in making the interim order. They
contend that the Commission has heard the parties at length and
perused the record available while making the impugned order
and the said order being only interim in nature, this Court
should not interfere with the same.
We are aware that the order impugned before us is only
an interim order which may or may not be continued beyond
10th of September, 2003. Since the argument advanced on
behalf of the appellants goes to the root of the jurisdiction of
the Commission to grant an interim order, we intend to examine
this question keeping in mind the fact that the impugned order
is only interim in nature. While doing so, we would not like to
pre-empt any argument available to the parties before the
Commission by giving any conclusive finding on the various
points urged before us. We also consider it prudent to make
only such order as is absolutely necessary to protect the interest
of all parties concerned till such time as the Commission takes
up the matter for further consideration.
At the cost of repetition, it is necessary for us to
reproduce some of the arguments of the parties once again.
As stated above, the first contention of the appellants
before us is in regard to the scope of the Commission’s power
under Section 12A of the Act which enables the Commission to
issue interim orders. The appellants contend that the
Commission has a conditional power to grant an interlocutory
order as could be seen from the language of Section 12A of the
Act. In this regard, the appellants place reliance on the
following words in Section 12A of the Act :
"Where, during an inquiry before the
Commission, it is provedâ\200¦â\200¦â\200¦â\200¦by order, grant
a temporary injunction restraining such
undertaking or person from carrying on any
monopolistic or restrictive, or unfair trade practice
until the conclusion of such inquiry or until further
order".
From the said language of Section 12A of the Act, the
appellants contend that the Commission cannot grant an
interlocutory order until the allegations made in the complaint
are proved. It is argued that in the instant case the order of the
Commission does not indicate what is the nature of violation
which is proved even prima facie by the complainant which
calls for the grant of an interim order. It is also submitted that
from the material that was produced by the complainants
themselves, it was clear that negotiations were in progress in
regard to the request of the respondents and there was no
immediate threat to their right to distribute the appellants
programme. That apart there were existing distribution
agreements with various distributors including the respondents
which have not been terminated by either of the parties. In such
a situation the Commission could not have made an order
which had the effect of changing the existing status quo and in
effect altering the terms of the existing agreement that too by an
interim mandatory order.
In support of the above contention the appellants relied
on a judgment of this Court in the case of HariDas Exports vs.
All India Float Glass Manufactures’ Assn. & Ors. (2002 6 SCC
600) wherein this Court while considering the scope of Section
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 6
12A of the Act held that :
"It is while dealing with a complaint relating
to restrictive trade practice that the MRTP
Commission has the jurisdiction to grant
temporary injunction under Section 12-A(1). The
power of the Commission to grant temporary
injunction arises only after it is satisfied that a
restrictive trade practice or unfair trade practice is
being carried on which is likely to affect
prejudicially the public interest or the interest of
trader or class of traders etc. It is only with a view
to prevent the causing of a prejudicial effect that
an interim order can be passed by the Commission
under Section 12-A. It is only on the basis of
proof, and not mere allegation, and on the basis of
an inquiry before the Commission that any trader
or class of traders is carrying on a restrictive trade
practice which is likely to affect prejudicially the
public interest or the interest of any trader, class of
traders or traders generally or of consumers that
the Commission would have jurisdiction to grant a
temporary injunction restraining any undertaking
or person from carrying on any restrictive trade
practice. While the Commission has power to grant
ex parte temporary injunction, but in view of
Explanation II to Section 12-A, whereby the
provisions of Rule 2-A of Order 39 CPC are made
applicable, for the grant of temporary injunction
the Commission normally ought to give notice and
hear the respondents before passing an order of
injunction. What is, however, important is that the
conditions stipulated in Section 12-A(1) have to be
satisfied before an order for injunction can be
passed. In other words, it has to be proved that the
respondents before the Commission are carrying
on or about to carry on a restrictive trade practice
which will be prejudicial to the public interest or to
the interest of traders etc. before an order for
injunction can be issued. It is only if the trade
practice which is being impugned is such that it
would fall within the four corners of Section 2(o),
which defines restrictive trade practice, can the
Commission grant an injunction."
A perusal of the above judgment shows that the power of
the Commission to grant temporary injunction arises only after
it is satisfied that a restrictive trade practice or unfair trade
practice is being carried on. The emphasis on the words
’commission being satisfied’ shows same to be a condition
precedent for grant of an interim order which satisfaction
according to the judgment in Haridas Exports (supra) should be
on proved facts.
From the perusal of the impugned order, we are unable to
come to the conclusion that the Commission has addressed
itself to the various issues which arise for its consideration even
at an interim stage before making the impugned order. As
noticed above, any conclusive opinion expressed by us in this
regard in these appeals is likely to pre-empt the arguments that
may be addressed before the Commission in its future
proceedings, therefore, we do not intend to discuss any further
the correctness or otherwise of those contentions except to state
that there is some justification in the argument addressed on
behalf of the appellants that, as a matter of fact, the
Commission by the impugned order without assigning any
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 6
reason has changed the existing system distribution system
contrary to the principles laid down by this Court in the case of
Haridas Exports (supra).
It is also to be noted that the Commission is yet to decide
the question whether the policy of the Government of India to
introduce CAS has really come into force in this country if so
whether the said CAS requires the distribution only through
HITS or not. Therefore, we are of the opinion, many of the
issues which require a considered finding, even if it is prima
facie, is required to be given by the Commission before making
the impugned order. This is the ratio of the judgment of this
Court in Haridas Exports (supra).
That apart the order of the Commission being appealable
the appellate court has every right to know the reasons and
basis of the impugned order. The order of the Commission
impugned herein having not disclosed any such reasons the
same is liable to be quashed on this preliminary ground alone.
Having come to the said conclusion, we have also given
serious thought to the fact that the Commission has now posted
the matter to 10th September, 2003, hence, whether we should
permit the continuation of the impugned order or not, till such
time as the Commission passes any further order on or after 10th
of September, 2003. Having done so, we are of the opinion that
the impugned order to the extent stated hereinabove, being
contrary to the judgment of this Court in Haridas Exports
(supra), falls outside the scope of Section 12A. Firstly, because
the Commission has not assigned any reason for exercise of its
power under Section 12A of the Act, secondly because there is
no indication in the impugned order that the same is being made
on the basis of proved facts, and thirdly, if so, what is the basis
for such conclusion. Therefore, same being contrary to law in
our opinion inspite of the fact that the matter is listed on 10th
September, 2003, the same has to be quashed.
Therefore, we set aside the impugned order on the above
limited grounds without expressing any conclusive opinion on
the various points raised in these appeals. It will be open to the
parties to raise all these issues before the Commission which
will consider these issues on their merit and decide the
application for injunction filed under Section 12A of the Act or
the main complaint as the case may be in accordance with law.
After the pronouncement of the judgment, today, the
learned counsel appearing for the complainants submitted that
there is every possibility that the appellants herein may stop
distribution of their signals of their programmes because of the
impugned order. We have noted in the impugned order that one
of the arguments of the appellants was that they have continued
to distribute their programmes through terrestrial system
pursuant to the agreement with the various MSO/Cable
Operators which we think should be directed to be continued as
an interim measure because the same is in public interest.
However, we make it clear that none of the complainants,
MSOs and Cable Operators have any right to use the facilities
of HITS for distribution of such signals until further orders
from the Commission. Even the right to receive signals from
the appellants during this interregnum will be subject to terms
and conditions of the agreement that the complainants and their
associates have with the appellants.
The appeals are disposed of accordingly.
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 6
1
1