MOHAN M.SHANTANAGOUDAR,J. -
(1.)These appeals arise out of the judgment dated 11.9.2008 of the National Consumer Disputes Redressal Commission ("National
Commission") allowing the consumer complaint filed by Respondent
No. 1 in both these appeals against the Appellants.
(2.)The brief facts giving rise to these appeals are as follows:
2.1 Star India (P) Ltd., the Appellant in C.A. No. 6597/2008 (hereinafter "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 "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 objectivetype question with four possible answers was 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.
2.2 The winner for each episode was randomly selected out of the persons who had sent in the correct answers, and awarded a prize money of Rs. 2 lakhs. There was no entry fee for the HSHS contest. However, it is not disputed that 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. Hence, Respondent No. 1, which is a consumer society (hereinafter "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 alleged that the Appellants had created a false impression in viewers' minds that participation in the HSHS contest was free of cost, whereas the cost of organizing the contest as well the prize money was being reimbursed from the increased rate of SMS charges, and the profits from these charges were being shared by Airtel with Star India.
2.3 Further, it was alleged that an unfair trade practice had also been committed inasmuch as the contest was essentially a lottery as the questions were simple, and the winners were finally picked by random selection. The purpose of this contest was to promote the business interests of the Appellants by increasing the viewership and Television Rating Points (TRP's) of the KBC programme, and thus to command higher advertising charges, and also by increasing the revenue earned from SMS messages. Hence the Appellants were culpable for conducting a lotterylike contest to promote their business interests under Section 2(1)(r)(3)(b) of the 1986 Act.
2.4 It is relevant to note that the complainant is only a voluntary consumer organization which has filed this complaint as part of its objective of furthering the consumer protection movement. It is not their case that they have participated in the HSHS contest and incurred any loss on account thereof. It is further relevant to note that the complainant's assertions are solely based on a survey which it had carried out, in which the majority of participants apparently stated that they were under the impression that participation in the HSHS contest was free and the SMS charges were retained only by the service provider, i.e. Airtel and most of the viewers felt that the contest was carried out to increase the popularity of the KBC programme. The conclusions of this survey were apparently confirmed by a newspaper report dated 15.7.2007 published by the Hindustan Times. As per this newspaper report, Airtel received 58 million SMS messages, and the revenue earned from the SMSes was shared by Star India and Airtel.
(3.)The National Commission in the impugned judgment observed that though the Appellants had not disclosed the revenue earned
from the HSHS contest on grounds of confidentiality of proprietary
information, it was apparent that they had created an impression
that the prize money was being given free of charge, even though
they had not disputed that the prize money for the HSHS contest
was paid out of the money collected through SMS charges. The
Commission relied upon the figures stated in the newspaper article
dated 15.7.2007 (supra), and found that since the Appellants had
not denied that they had received 58 million SMSes, they would
have collected Rs. 13.92 crore from the participants of the HSHS
contest for such messages, whereas a total sum of only Rs. 1.04
crores was paid as prize money. Thus, the gross earnings of the
Appellants were disproportionate to the cost of the prizes offered.
3.1 The Commission further found that no viewer could discern from the onscreen advertisements that the costs of the contest were being met through the SMS charges, and the Appellants had clearly not notified viewers about the same. It found a contradiction between the Appellants' stances as to whether the HSHS contest was advertised as 'free' or not. It was also observed that the Appellants had not brought any evidence on record to show that the transmission of SMS messages for the HSHS contest was a value added service such that the higher SMS cost was justified, and hence the same could not be construed as a value added service. It was presumed by the National Commission that the special business relationship between Star India and Airtel included an undisclosed revenue sharing agreement.
3.2 Hence, it was held 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).
3.3 The National Commission additionally held that 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"). Further, it was held that the complaint was not bad for nonjoinder of parties as there was nothing on record to suggest that BSNL and MTNL had also recovered large amounts from the SMS charges for the HSHS contest and that the amount so recovered by them was used for sharing the cost of the prize money.
3.4 Hence, the complaint was accordingly allowed by the National Commission. Since the complainant is only a consumer organization, the National Commission observed that there were no grounds for granting compensation. However, it awarded punitive damages of Rs. 1 crore under the Proviso to Section 14(1)(d) of the 1986 Act, for which both Appellants were held jointly and severally liable. The National Commission also directed them to pay litigation costs of Rs. 50,000 to the complainant. Hence these appeals before us.