Vipul Ganda is an Independent Litigation Counsel with over 14 years of experience and a proven track record in Litigation and Dispute Resolution.
Star India (P) Ltd. Versus Society of Catalysts & Anr.
Court / Forum : Supreme Court of India Citation : Civil Appeal No. 6597 & 6645 of 2008 Coram : Justice Mohan M. Shantanagoudar and Justice R. Subhash Reddy Subject : Unfair Trade Practices under the Consumer Protection Act, 1986 Date of Decision : 2020-01-23
Star India (P) Ltd., the Appellant in C.A. No. 6597/2008 (hereinafter referred to as "Star India”) used to broadcast the programme ‘Kaun Banega Crorepati’ ("KBC”) between 22.1.2007 and 19.4.2007. The programme was sponsored by Bharti Airtel Limited, the Appellant in C.A. No. 6645/2008 (hereinafter referred to a "Airtel”), amongst others. During the telecast of this programme, a contest called ‘Har Seat Hot Seat’ ("HSHS contest”) was conducted, in which the viewers of KBC were invited to participate. An objective type question with four possible answers were displayed on the screen during each episode, and viewers who wished to participate were required to send in the correct answer, inter alia through SMS services, offered by Airtel, MTNL and BSNL, to a specified number.
Participants in the HSHS contest were required to pay Rs. 2.40 per SMS message to Airtel, which was higher than the normal rate for SMSes, which is an undisputed fact.
Hence, Respondent No. 1, which is a consumer society (the "Complainant”), filed a complaint before the National Commission against Star India and Airtel (but not against BSNL and MTNL), contending that they were committing an ‘unfair trade practice’ within the meaning of Section 2(1)(r)(3)(a) of the Consumer Protection Act, 1986 (the "1986 Act”).
It was held by the National Commission that:
Since the prize money for the HSHS contest was fully or partly covered by the revenue earned from increased SMS charges, the Appellants had committed an unfair trade practice under Section 2(1)(r)(3)(a) of the 1986 Act. In light of this finding, the National Commission found it unnecessary to deal with the complainant’s contention regarding commission of an unfair trade practice under Section 2(1)(r)(3)(b).
The complaint was maintainable under the 1986 Act and need not have been preferred before the Telecom Disputes Settlement and Appellate Tribunal ("TDSAT”) under the Telecom Regulatory Authority of India Act, 1997 ("TRAI Act”).
Hence the present Appeal
Whether an unfair trade practice has been committed only within the meaning of Clause (a) of Section 2(1)(r)(3)?
The provision of Clause (a) of Section 2(1)(r)(3) requires the offering of gifts or prizes with the intention of not providing them as offered and the creation of the impression that the gift or prize is being given free of charge in spite of the cost of the item actually being covered either fully or partly by the amount charged in the relevant transaction. The Court accordingly held that since Airtel was merely a sponsor/advertiser and Star India would be independently liable for the prize money out of its pocket, irrespective of the revenue earned by Airtel. Under the agreement between Airtel and Star India, there was no provision for revenue sharing between the parties. Thus, the National Commission had no basis to hold that the Appellants paid the prize money out of the revenue collected from the SMSs and that there was no other cogent material on record to render a finding of unfair trade practice. Therefore, the finding of the National Commission of an unfair trade practice under Section 2(1)(r)(3)(a) in the impugned judgement is bad in law. Accordingly, the Appeal was allowed.
Vipul Ganda is a Delhi based Advocate practicing largely at the Delhi High Court. His practice focus is Dispute Resolution and Litigation and his practice areas include Arbitration, Commercial, Civil, Constitutional, Corporate and Criminal Litigation.