M.B. Shah, J. (President)
1. The Society of Catalysts, a voluntary consumer organisation, has filed this complaint against the alleged unfair trade practices adopted by Opposite Party (OP) No. 1, Star Plus TV and OP No. 2, Bharti Airtel Ltd. (hereafter referred to as Star TV and Airtel respectively). It is stated by the complainant that it is a voluntary consumer association consisting of former IAS officers, IIT alumni, eminent lawyers and other well known persons, registered under the Societies Registration Act, 1860 and has the following objectives:
1. To become a part of the Consumer Protection Movement for safeguarding the rights of consumers.
2. To propagate, process and participate for rights of consumers under the Consumer Protection Act and as such as an NGO.
3. To take up the cases of consumers in various forums including Consumer Courts and bodies like ASCI, MRTP, etc.
4. To liaise with other consumer bodies and Government Departments in furtherance of the aforesaid objectives.
5. To file Public Interest Litigation (PIL) with various Courts for individual consumers.
2. The undisputed facts are that Star TV broadcast a programme by the name of Kaun Banega Crorepati (in short, the KBC) between 22nd January 2007 and 19th April 2007 for the duration of one hour daily, 4 days in a week. The programme was sponsored, among others, by Airtel and carried commercial advertisements at the beginning and end of as well as during each episode of the programme. The prominent film star Shah Rukh Khan, acting as the anchor person, asked a series of questions to the selected contestants of the KBC, one of whom could win up to Rs. 2 crore if he answered all the questions correctly at each round, including the final.
3. It further emerges from the averments of the opposite parties that during the telecast of this programme, there was another contest called the Har Seat Hot Seat (hereafter referred to as the HSHS) in which all TV viewers of the KBC were invited to participate. The HSHS contest consisted of answering an objective type question with four possible answers announced during each episode of the KBC. The participants of the HSHS, who thus had to be naturally viewers of the KBC to know the questions, were required to send the answers by cellular/landline phone of Airtel (or, those of MTNL or BSNL) to a number specified by Airtel, before the correct answer was flashed on the screen. The answers sent on cellular phone had to be through Airtels (or, MTNLs or BSNLs) short messaging service (in short, SMS). The winners among the participants from among those who gave the correct answers to the questions were to be each given a prize of Rs. 2 lakh. Each participant/consumer, who sent the answer using Airtels SMS, was required to pay Rs. 2.40 per message, which was higher than the normal pulse/call rate or text messaging charges. The announcement of the OPs in this regard stated that there was no entry fee for the HSHS contest and the winner for each episode would be selected randomly out of those who sent the correct answers. There were 52 such episodes of the KBC and thus total prize money amounting to Rs. 1.04 crore was paid out by the OPs. It is not denied by the OPs that in all they received 58 million text messages (hereafter, SMSs) and thereby collected Rs. 13.92 crore from the participants of HSHS towards the charges for such messages.
4. It is contended by the complainant that the OPs created an impression in the minds of the viewers of the KBC that the participation in the HSHS contest was free and the prize money was being paid out by the organisers. But in reality the cost of organising the HSHS contest as well as the prize money was built in the cost of the SMS sent or telephone calls made by the participants to the given number of Airtel in answering the questions. The complainant has contended that this was an unfair trade practice as defined under Section 2(1) (r) (3) (a) of the Consumer Protection Act, 1986 (hereinafter referred to as the CP Act).
5. Secondly, it has contended that apart from the aforesaid, the HSHS contest was in reality a lottery because the questions were simple and the winner was to be finally selected from among the participants providing the correct answers by a random selection and that this contest was organised jointly by Star TV and Airtel mainly to further promote their own business interests by improving the viewership of the KBC and enhancing its TRP (Television Rating Point a criterion for indicating the popularity of a television channel or programme and the data are considered very useful for the advertisers) to command higher advertisement charges with the said programme and additional business revenue from the large number of SMSs made by the participants. This, according to the complainant, was also an unfair trade practice under the provisions of Section 2(1) (r) (3) (b) of the CP Act.
WRITTEN VERSION OF AIRTEL
6. Airtel has contended as under:
i) This complaint is not maintainable before a consumer forum because under proviso 4 to Section 14 of the Telecom Regulatory Authority of India Act, 1997 (hereafter referred to as the TRAI Act), the grievances of the complainant can be redressed only by the Telecom Regulatory Authority of India (hereafter referred to as the TRAI).
ii) Airtel admits to charging of Rs. 2.40 per message per participant in the HSHS contest and claims that all the participants were made well aware of the said charges a priori. Airtel has not charged any amount for these SMS in violation of the tariff prescribed by the TRAI because this was a value-added service provided by Airtel for which the TRAI has not prescribed any rates.
iii) Airtel was not the organiser of the programme KBC but merely a sponsor thereof. The entire content of the programme including the questions asked were organised by Star TV alone; and, therefore, no complaint against Airtel is maintainable.
iv) Further, (a) apart from Airtel, there were other sponsors of the programme but they have not been made parties to the complaint and (b) other telephone service providers like BSNL and MTNL, which provided the same service to their respective subscribers, are also not joined as Opposite Parties. Hence, the complaint is not maintainable.
WRITTEN VERSION OF STAR PLUS TV
7. Star Plus TV has also filed its written version contending as under:
i) This Commission has no jurisdiction to entertain and adjudicate on the dispute raised by the complainant. Only the Telecom Disputes Settlement and Appellate Tribunal (hereafter referred to as the TDSAT) would have jurisdiction as provided under the TRAI Act. For this purpose, reliance is placed on Section 14 and Section 27 of the TRAI Act which read as under:
Establishment of Appellate Tribunal. The Central Government shall, by notification, establish an Appellate Tribunal to be known as the Telecom Disputes Settlement and Appellate Tribunal to --
(a) adjudicate any dispute
i) between a licensor and a licensee;
ii) between two or more service providers;
iii) between a service provider and a group of consumers;
Provided that nothing in this clause shall apply in respect of matters relating to --
(A) the monopolistic trade practice, restrictive trade practice and unfair trade practice which are subject to the jurisdiction of the Monopolies and Restrictive Trade Practices Commission established under Sub-section (1) of Section 5 of the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969);
(B) the complaint of an individual consumer maintainable before a Consumer Disputes Redressal Forum or a Consumer Disputes Redressal Commission or the National Consumer Disputes Redressal Commission established under Section 9 of the Consumer Protection Act, 1986 (68 of 1986);
(C) dispute between telegraph authority and any other person referred to in Sub-section (1) of Section 7B of the Indian Telegraph Act 1885 (13 of 1885);
(b) hear and dispose of appeal against any direction, decision or order of the Authority under this Act.
Bar of jurisdiction No Civil Court shall have jurisdiction in respect of any matter which the Authority is empowered by or under this Act to determine.
ii) Regarding the phone/SMS charges, it is pointed out that the contestants of the HSHS segment participated completely voluntarily (motivated by a desire to win the contest) with full knowledge of the pulse rates/costs involved for participation. There was no element of coercion or concealment/deception on the part of Star TV.
iii) (a) The financials and revenue sharing, if any, referred to by the complainant, really fall within the domain of confidential and proprietary information, to be disclosed only in accordance with law, if required; and (b) the alleged sharing of revenue, even if true for the sake of argument, does not detract from the fact that the entry to the contest was in fact free as the contestant did not pay any monies to enter the contest nor is there any illegality involved in it if any alleged revenue sharing has occurred (as admitted by complainant in paragraph 12 of the complaint).
8. In support of its contentions the Complainant has stated in paragraphs 9, 10, 12 and 13 of the complaint, as under:
9) That the general impression given was that as the participation is free, the prize money is being given by the organizers of the contest from out of their pocket. The program mentioned that the SMS would each be charged at Rs 3 but participants in the contest were kept in the dark whether this money was being collected and retained by the service provider (i.e. the company providing him the cellular service) or was being shared with the organizers of the contest i.e. with OP1 and OP2. They therefore rightly accepted the impression given by the organizers (OP1 and OP2) of the contest that the right to participation in the contest to win the prize money was free of charge.
10) That the Complainant Society carried out a sample survey, through personal and telephonic contact and otherwise, and found that the facts are, however, to the contrary. The short sample survey clearly established that all the viewers of the programme who participated in the contest were under the clear impression that the participation is free and that whatever was being paid for the SMS was to cover the costs of their service provider and is to be retained by him. Most of the viewers felt that the contest was carried out to increase the popularity of the programme.
12) That it is clear that the money collected for the SMSs sent for the contest by the participants by the concerned cellular operator was shared by him with OP1 and OP2 also. OP2 is entitled to collect landing charges only; for these special SMSs he got an extra amount as his share. Similarly, OP 1, which is normally not entitled to any amount collected as SMS charge, also received a share of the money collected. While not illegal as per TRAI directives, their non-disclosure to the participants in the contest was clearly motivated to give the impression that the participation was free. It is clear from this that participation in the contest was not free and money was charged for the contest in the transaction as a whole by enhancing the charge for the SMS.
13) That it is also clear that the contest was held not with a view to enrich the viewer but merely to enhance the popularity of the programme, leading to higher TRPs and consequently higher commercial spot and sponsorship rates, and also to directly benefit OP2 by increasing his business by getting more calls.
9. As against this, it has been contended on behalf of OP 1 as under:
Rates for such premium SMSs are higher than those charged for routine use. For such programmes (not limited to KBC), the Service Providers are charging anything between Rs. 2.40 to Rs. 6.00 per SMS, which fact is within the knowledge of TRAI, as the Sectoral Regulator, and which is permissible under the relevant Tariff Orders/Regulations.
As the complainant has failed to produce on record the short sample survey allegedly carried out by it, it has failed to prove that such impression was created. Further, no affidavit in support of such contention has been filed.
10. On the other hand, in its reply to the complaint (written version) Airtel has, inter alia, contended as under:
7. (Preliminary Objections)...the answering respondent was not the organiser of the program called Kaun Banega Crorepati (hereinafter referred to as the said program). It was merely a sponsor of the same and therefore no complaint can lie against the answering respondent....
9. (Para-wise Reply to the complaint)...the contents of paragraph 9 are wrong and are denied. It is vehemently denied that the general impression given was that the participation is free.... Copies of few sample advertisements are annexed hereto and marked as Annexure -- B. It was even otherwise common knowledge that being granted sponsorship rights, the answering respondent would have given sponsorship fee to the Respondent No. 1.... It is vehemently denied that any impression was given by the answering respondent that the right to the participation in the contest to win the prize money was free of charge.... The services provided thru premium SMS are not basic services, but are special services that require specialist vendors, costly software, backend and frontend facilities, exclusive trained manpower, etc....
16. ...It is denied that the holding of the har seat hot seat contest on the said program is an unfair trade practice. It is denied that any impression was given that the participation in the program was free of charge....
11. In context of the contentions of Airtel (OP 2), it is instructive to note those of Star Plus (OP 1) in the latters brief para-wise reply. These are extracted as under:
40. Para 8.... It is correct that there was no entry charge to participate in the contest (in the sense that no fee was payable by the participant). However, the cost of the phone call/SMS had to be borne by the participant.
41. Para 9, 12 and 14...As stated above, it is correct that the contest was free as no consideration was payable to participate in it except the cost of the phone call/SMS, about which the participants were admittedly informed in advance by the answering respondent as per the legal obligation incumbent on it.
A. WHETHER HSHS CONTEST AN UNFAIR TRADE PRACTICE
12. For deciding this controversy, we would first refer to Section 2(1) (r) of the CP Act, which defines unfair trade practice as under:
Unfair trade practice means a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice including any of the following practices, namely:
3) permits --
(a) the offering of gifts, prizes or other items with the intention of not providing them as offered or creating impression that something is being given or offered free of charge when it is fully or partly covered by the amount charged in the transaction as a whole;
(b) the conduct of any contest, lottery, game of chance or skill, for the purpose of promoting, directly or indirectly, the sale, use or supply of any product or any business interest.
Section 2(1)(r)(3)(a) can be divided into two parts, as under:
(i) Offering of gifts, prizes or other items with an intention of not providing them as offered;
(ii) Offering of gifts, prizes by creating impression that something is being given or offered free of charge when it is fully or partly covered by the amount charged in the transaction as a whole.
13. From the aforesaid second part of Section 2(1) (r) (3) (a), it is apparent that if an impression is created that something is being given or offered free of charge when the prize is fully or partly covered by the amount charged in the transaction as a whole, it is an unfair trade practice.
14. In the present case, there is no dispute that the prize of Rs. 2 lakh given to each winner of the HSHS contest was out of the payment collected through charges for calls and SMS. Further, it is not denied that, in all, 58 million SMSs were received and normal charge of an SMS is Re.1/- per SMS or less.
15. That means, in all, for 58 million SMSs, Rs. 13.92 crore were collected (5.8 crore x Rs. 2.40). Out of the aforesaid amount, the prizes given for 52 episodes were @ Rs. 2 lakh per episode. That is, a total sum of Rs. 1.04 crore was distributed as prize money for the HSHS contest, leaving a gross profit of Rs. 12.88 crore. If Re. 1/- is the normal charge per SMS, even then the total amount that would have been collected for 58 million SMSs would be Rs. 5.8 crore, i.e., more than five times the cost of the prizes. Though the OPs have refused to disclose the costs of and revenues earned from conducting the HSHS contest on grounds of confidentiality of proprietary information, it is quite clear that @ Rs. 2.40 per SMS, the gross earning was far in excess of the cost of the prizes offered.
16. However, it is contended that there is nothing on record to establish that OPs 1 and 2 have created an impression that the prizes for the HSHS contest were being offered or given free of charge. In our view, such impression is apparent and no consumer would possibly imagine from the advertisements or on screen displays (OSD) for the HSHS contest that it was out of the funds collected by Airtel through SMS that the prizes were being paid out or, that the cost of either the entire contest or some part thereof was being met. This does not require any further proof because such an impression is apparent. From the deceptive practice of non-disclosure adopted by the Opposite Parties inference can be drawn that without informing the contestants by recovering extra large amount through SMS prizes would be distributed. Nowhere the consumers were informed that the prize would be distributed out of the fund collected from SMS messages.
17. Further, it is seen that though the issues raised in the complaint are entirely about the conduct of the HSHS contest and have nothing to do with the programme KBC on which the HSHS contest took a piggy-ride of sorts, OP. 2 has tried to obfuscate matters by referring to the KBC programme, and not the contest HSHS, when it states that the complaint cannot lie against it because it is merely a sponsor of the KBC. Secondly, the two copies of the newspaper advertisements that OP 2 has produced on record are only about participating in the KBC, not the HSHS. Thirdly, OP No. 1, in its 102-page affidavit in reply to the complaint, has not produced one piece of paper to show what indeed was advertised to inform the participants about the terms and conditions applicable to the HSHS contest. Other than a copy of the rules relating to the HSHS contest, claimed to have been put up on a certain website, there is nothing worthwhile to substantiate its claim that no impression was created that the HSHS contest and the prize money therefor were not entirely free. Further, as would be clear from the extracted portions of their averments, there is clear contradiction between the averred stands of the two OPs on whether the contest HSHS was advertised as free. This lends further credence to the complainants contention that an impression was indeed created as alleged in the complaint.
18. Further, much has been made out by the OPs that the SMS charge @ Rs. 2.40 per text message was justified because of the extra costs of specialist vendors, costly software, backend and frontend facilities, exclusive trained manpower, etc. However, it is nowhere stated explicitly that this was indeed the case with the conduct of the HSHS contest. Both Airtel and Star Plus TV have been in the business of conducting such contests for long in fact, it is an admitted position that the KBC in question was the third avatar of the first KBC. In this set of circumstances, there is no question of value added service by the opposite party.
19. Similarly, it is nowhere shown by Airtel, except as the general proposition extracted from its averment and quoted above, that all, or at least some, of the extra costs on the aforesaid items were actually incurred by it to conduct the HSHS contest per se, which would by itself justify the rate of Rs. 2.40 per SMS message. In fact, the stand is that these are in the nature of confidential proprietary information. Moreover, it is quite clear that while there may have been many sponsors of the programme KBC and Airtel was one of them, in respect of the HSHS contest, announced and conducted in tandem with the KBC, there was a special business relationship between Star Plus TV and Airtel which included, inter alia, some undisclosed arrangement of sharing the net earnings from the SMSs. These facts on record also lead to the conclusion that there is some force in the complainants contention that the HSHS contest was, in fact, an attempt to (at least, indirectly) promote the business interests of both OPs. 1 and 2.
20. Therefore, it is our view that there is nothing on record to establish that either of the OPs made it clear that the prizes for the HSHS contest would be offered to the participants from the funds collected out of the charges for SMSs sent by the participants themselves or that the HSHS contest was being conducted out of other sources of funds or that Airtel would not pay any amount from its collection from SMSs to Star TV or that the HSHS contest was not with a view to promoting the business interests of Star TV and Airtel. Such offering of the gifts/prizes when it is fully or partly covered by the amount charged through SMSs as a whole is an unfair trade practice as the same is not disclosed to the contestants.
21. It is true that participation in the programme by the consumers was voluntary but at the same time it was due to the temptation of getting prize money of Rs. 2 lakhs by sending correct answers through SMS.
22. Further, even if the SMS rates were declared but the prize/gift amount was distributed out of the revenues collected from the SMS charges, it amounts to unfair trade practice as contemplated under Sub-clause (3) of Section 2(1)(r) of the Act.
23. In this view of the matter, it is apparent that Opposite Parties adopted deceptive practice and permitted offering of prizes by suppressing the fact that the prizes would be distributed out of collection of amount through SMS. Normally, contestant would gather impression that prize money of Rs. 2 lakhs is offered free of charge even though it is fully covered by the amount charged in a transaction as a whole. In temptation of getting the prizes, the contestants would not bother to spend small additional amount for sending SMS messages which would result in large profit to the opposite parties. The common consumer is vulnerable to such enticement.
24. In view of the aforesaid finding, we are not discussing the second contention of the complainant that conduct of such a contest was for the purpose of promoting directly or indirectly the business interests of the opposite parties which also amounts to unfair trade practice as defined under Section 2(1)(r)(3).
B. MAINTAINABILITY OF THE COMPLAINT
25. The learned Counsel for the OPs have vigorously contended that the complaint is not maintainable under the CP Act in view of the provisions of Section 14 of the TRAI Act. For this purpose, heavy reliance is placed on Section 14A which, inter alia, provides that only the TDSAT would adjudicate any dispute between a service provider and a group of consumers.
26. It is to be stated that the dispute in the present case is not between a telecommunication (telecom) service provider and a group of consumers qua the services which are required to be rendered by that service provider. The term service provider as defined in Section 2(1)(j) of the TRAI Act means the Government as a service provider and includes a licensee. As provided under Section 2(1)(e) of the said Act, licensee means any person licensed under Sub-section (1) of Section 4 of the Indian Telegraph Act, 1885 for providing specified public telecommunication services.
27. OP No. 2 can be considered to be a licensed Telecommunication (telecom) service provider under the TRAI Act but it is important to distinguish that the dispute does not pertain to the entertainment or telecom services which are provided by Star TV or Airtel. The dispute pertains to unfair trade practice, as contemplated under Section 2 (1) (r) (3) of the CP Act, adopted by OPs No. 1 and 2 in offering prizes for the HSHS contest out of the monies collected from the contestants, without making it known to them. It is to be stated that even the opposite parties specifically averred and emphasized that there is no violation of tariff prescribed by the TRAI. In such set of circumstances, there is no question of approaching the TDSAT. Therefore, it cannot be said that such a dispute can be adjudicated only by the TDSAT.
28. Further, in the present case, the complainant is a Society which is to be considered as an individual who is entitled to file a complaint under the CP Act for protecting the rights of the consumers as a whole and that is specifically provided under the CP Act as well as under the TRAI Act. Under Section 2(1)(b) of the CP Act, a complaint can be filed by any voluntary consumer association registered under the Companies Act or under any other law for the time being in force. It can also be filed by one or more consumers where there are numerous consumers having the same interest. In the present case, numerous consumers have not approached us but a voluntary consumer association has filed this complaint and it is specifically provided under Section 14-B of the TRAI Act that such a complaint is maintainable before the consumer fora.
29. In support of the contention that the complaint is not maintainable before this Commission, learned Counsel for the OPs have relied upon the judgment in the case of Grahak Hitvadhini Sarvajanik Sansthan v. Intermedia Cable Communications Pvt. Ltd., (Revision Petition No. 87 of 2005) decided on 17.11.2006. In that case, it was contended by the consumer organisation on behalf of the cable operators that restricted trade practice was adopted by the service provider and the broadcaster in that the cable operator could not give the cable connection beyond the area which was assigned to the latter, was an is unfair trade practice. That dispute would clearly fall within the ambit of Section 14 of TRAI Act, 1947 and, hence the decision thereon would have no bearing on the issue to be decided in the present case. Similarly, the judgments in the cases of Cellular Operators Association of India v. Union of India and Clariant International Ltd. v. Securities & Exchange Board of India have no bearing on deciding the question of unfair trade practice as envisaged under Section 2(1)(r) particularly, Sub-clause (3) thereof.
C. NON - JOINDER OF PARTIES
30. Learned Counsel for the OPs have further contended that during the HSHS contest, apart from Airtel, SMSs were also sent through BSNL and MTNL; yet they are not joined as Opposite Parties and the complainant deliberately omitted them as Opposite Parties even after this deficiency was pointed out in the reply filed by OP No. 1.
31. In our view, even if BSNL and MTNL have not been joined as Opposite Parties, it cannot be contented that the complaint is not maintainable. It is not denied by either OP that OP No. 2 received 58 million SMSs and collected large amount. With regard to BSNL and MTNL, there is nothing on record to suggest that they too recovered large amounts from the call/SMS charges for the HSHS contest and that they both (or, either) used the said amount or a part thereof for sharing the cost of the prizes. The prizes were distributed from the large amount of Rs. 13.92 crore received by OP No. 2 through SMSs.
32. In view of the foregoing discussion, the complaint is allowed partly. Star Plus TV and Bharti Airtel Ltd. are held to have violated the provisions of Section 2 (1) (r) (3) of the CP Act in conducting the Har Seat Hot Seat contest which was in conjunction with the main television show, Kaun Banega Crorepati and thereby adopted unfair trade practice.
33. From the facts stated above and on the basis of the admitted fact that Opposite Party No. 2, Bharti Airtel Ltd. received 58 million SMS text messages, it goes without saying that this practice resulted in to increase their business. Further, normal charge of the 58 million SMSs would have fetched only a maximum of Rs. 58 million, i.e., Rs. 5.8 crore.
34. As against this, they received a large amount of Rs. 13.92 crore from SMS messages. Further, the excess revenue (Rs. 13.92 crore minus Rs. 5.80 crore) comes to Rs. 8.12 crore. Out of this, they distributed prizes amounting to Rs. 1.04 crore. Still, the surplus revenue comes Rs. 7.08 crore. However, in such a case, there is no question of paying any compensation to the complainant because the complainant is a voluntary consumer organisation which has highlighted the unfair trade practice committed by Star Plus TV and Bharti Airtel Ltd. But, at the same time, in terms of proviso to Section 14(1)(d), this would be a fit case for awarding punitive damages. Considering the large amount of profit earned and the large number of consumers affected, this would be a fit case for imposing punitive damage of Rs. 1 crore which only comes to approximately 14% out of the surplus revenue of Rs. 7.08 crore.
35. In the result, the Star Plus TV and the Bharti Airtel Ltd., Opposite Parties No. 1 and 2, are directed to pay jointly and severally damages of Rs. 1 crore. They are hereby directed to deposit the said sum of Rs. 1 crore with the Registrar of this Commission, who in turn, shall deposit the same to the credit of the Consumer Welfare Fund (Rule 9). The Opposite Parties No. 1 and 2 are also directed to pay Rs. 50,000/- to the Complainant towards litigation costs.
36. We highly appreciate the efforts made by complainant, the Voluntary Consumer Association. We also appreciate the services rendered by Shri Atul Nanda, Amicus Curiae.