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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

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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

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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

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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

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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.

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