A competitive MSO bears no liability for an LCO’s defaults absent contractual privity.

Den Networks Limited, a Distributor Platform Operator/MSO, entered into an Interconnect Agreement dated 1 January 2016 with Skyline Cable Network, a Local Cable Operator (LCO), for supply and retransmission of encrypted television signals. Under the arrangement, Den issued 1,025 Set Top Boxes (STBs) to Skyline for deployment at subscribers’ premises, while retaining ownership under the agreement and applicable regulations. Den claimed outstanding subscription dues of ₹54,679 as of 30 April 2020 and sought return of the STBs or their replacement value of ₹20,48,975.

Skyline admitted the agreement, receipt and deployment of the STBs, and its subsequent migration to Kerala Communicators Cable Ltd., but contended that the STBs had been sold to subscribers and that no subscription dues were outstanding. It also alleged that Den had violated regulatory requirements and disconnected signals unlawfully.

Respondent No. 2 denied liability on the ground that it had no privity of contract with Den and had merely entered into a separate arrangement with Skyline.

The Tribunal framed four issues concerning liability of Respondent No. 2, recovery of dues and interest, return or value of the STBs, and migration without clearance of dues, notice and return of STBs.

Whether any cause of action existed against Respondent No. 2, the competing MSO, in the absence of privity of contract with the Petitioner?

Whether the Petitioner was entitled to recover ₹54,679 towards outstanding subscription dues, along with interest, from the Respondents?

Whether the Petitioner was entitled to the return of 1,025 STBs in good and working condition or, alternatively, their monetary value?

Whether Respondent No. 1 migrated from the Petitioner’s network to Respondent No. 2’s network without clearing outstanding dues, giving the required notice and returning the STBs, in violation of the applicable TRAI regulatory framework?

The Tribunal exercised jurisdiction under Sections 14 and 14A of the Telecom Regulatory Authority of India Act, 1997.

Contractual liability and joint-and-several liability arise only where the parties have undertaken a joint promise or are otherwise bound by a valid contractual obligation; a competing MSO cannot be made liable for an LCO’s contractual default in the absence of privity of contract.

The Tribunal relied on the Interconnect Agreement and the applicable Interconnect Regulations, including the requirements under Clauses 6.1 and 6.2 concerning notice and migration, and the rule that STBs remain the property of the MSO unless otherwise established.

In the civil proceeding, facts were to be determined on the preponderance of probabilities. Relying on Anil Rishi v. Gurbaksh Singh, AIR 2006 SC 1971, Premlata v. Arhant Kumar Jain, AIR 1976 SC 626, State of J&K v. Hindustan Forest Co., (2006) 12 SCC 198, M. Krishnan v. Vijay Singh, 2001 Cri LJ 4705, and Raghvamma v. A. Chenchamma, AIR 1964 SC 136, the Tribunal held that the initial burden lies on the party asserting a fact, the legal burden remains constant, and the evidentiary onus may shift during trial.

The Tribunal further applied the principle that admitted facts need not be proved and that an uncontroverted statement of account and documentary evidence may establish the dues.

The Tribunal found that the Interconnect Agreement between Den and Skyline was admitted and duly proved, as was the issuance of 1,025 STBs through the inventory/challan records.

Under the agreement and regulations, ownership remained with Den and Skyline was required to return the STBs upon cessation of the relationship. Skyline’s assertion that the STBs had been sold to subscribers was inconsistent with the contractual terms and was not supported by cogent evidence.

Similarly, Den’s invoices, statement of account and demand notice were proved and remained uncontroverted; Skyline did not produce reliable evidence showing payment or absence of outstanding dues. The Tribunal therefore held Skyline liable for ₹54,679.

Respondent No. 2 was not liable because it was not a party to the Interconnect Agreement and no independent promise or legal obligation in favour of Den was proved against it.

Although Den established its entitlement to the STBs or their value, the Tribunal declined to award the original value of ₹1,999 per STB. Considering the six-year period since issuance and the depreciation and obsolescence of electronic equipment, it assessed the reasonable depreciated value at ₹1,500 per STB, totalling ₹15,37,500 for 1,025 STBs.

Skyline also failed to prove compliance with the required three-week notice, clearance of dues or return of the STBs before migration to Respondent No. 2.

In view of the Tribunal’s established approach in cable television disputes, simple interest at 9% per annum was awarded on the dues and depreciated STB value from 30 April 2020.

Skyline was directed to deposit ₹54,679 towards outstanding subscription dues and ₹15,37,500 towards the depreciated value of 1,025 STBs, aggregating ₹15,92,179, together with simple interest at 9% per annum on both amounts from 30 April 2020 until actual payment. The amount was directed to be deposited before the Tribunal within two months, failing which it would be recoverable through execution proceedings.