Holding

Directing a competing distributor to obtain signals from an exclusive distributor is per se discriminatory under the Interconnection Regulations, and the appeal is dismissed.

Summary

Star India Pvt. Ltd., a broadcaster, entered into an exclusive distribution agreement with Moon Network Pvt. Ltd., a multi‑system operator (MSO), for the Agra territory. Sea TV Network Ltd., another MSO, sought direct signals from Star India but was directed to obtain them from Moon Network, its competitor. Sea TV filed a petition before the Telecom Dispute Settlement and Appellate Tribunal, which held that such a direction was per se discriminatory under the Telecommunication (Broadcasting and Cable Services) Interconnection Regulations, 2004. Star India appealed, arguing that the regulations permit appointment of an exclusive distributor and that the direction did not violate Article 19(1)(g) of the Constitution. The Supreme Court examined the definitions of "agent", "distributor" and the non‑discrimination provisions, concluding that the exclusive distributor could not simultaneously act as a competitor to another MSO without breaching the regulations. Consequently, the Court affirmed the Tribunal's finding and dismissed the appeal.

Issues considered

The direction to a competing MSO to obtain signals from an exclusive distributor violates the non‑discrimination provisions of the Interconnection Regulations.
Whether a distributor can be treated as an "agent" under Regulation 3.3 of the Interconnection Regulations.
Whether an exclusive distribution agreement contravenes Regulations 3.1 and 3.2 which prohibit monopolistic practices.
Whether the arrangement infringes the freedom of trade guaranteed under Article 19(1)(g) of the Constitution.
Whether the relationship between the broadcaster and the exclusive distributor constitutes a principal‑agent relationship.

Legislation cited

Companies Act, 1956
Constitution of Indias. Article 19(1)(g)
Telecommunication (Broadcasting and Cable Services) Interconnection Regulations, 2004s. Regulation 2(b), s. Regulation 3.1, s. Regulation 3.2, s. Regulation 3.3

Subjects

Telecommunication Interconnection Regulationsnon‑discriminationexclusive distributionprincipal‑agent relationshipArticle 19(1)(g)broadcastingMSOvertical integrationcompetitionsignal quality

Judgment

STAR INDIA PVT. LTD. A
v.
SEA T.V. NETWORK LTD. AND ANR.

APRIL 3, 2007

[DR.ARIJITPASAYAT ANDS. H.KAPADIA. JJ.] B

Constitution of India-Article 19(1) (g)-Telecommunication
(Broadcasting and Cable Services) Interconnection Regulations, 2004-
Regulations 2 (b), 2(j), 2(m) & 3-Appointment of a sole and exclusive
Distributor by a broadcaster to transmit its satellite bouquet television C'

- channels in a particular city-Broadcaster directing another competing
distributor to seek signals of its television channels from the sole distributor-
Petition before Telecom Dispute Settlement and Appellate Tribunal filed by
the distributor seeking a direction to the broadcaster to provide its signals
directly was allowed-Correctness of-Held, the object of the Regulations to D
eliminate monopoly will be defeated if a distributor is directed to seek
television signals from its competing distributor-On facts, there is no
principal-agent relationship between the broadcaster and the sole distributor
and hence the direction of the distributor by the broadcaster to obtain
signals from its sole distributor is per se discriminatory.
E
Appellant-company, a broadcaster, entered into a Distribution Agreement
appointing respondent no. 2-company, a Multi-System Operator (MSO), as its
sole and exclusive distributor for transmission of its satellite bouquet television
channels in a particular city. The Agreement stated that respondent no. 2
company will act independently and that the relationship between the parties F
is on principal to principal basis. Respondent no. 1, a competing MSO,
approached the appellant to provide signals of its television channels for
transmission in the same city. The appellant directed respondent no. 1 to receive
the signals from respondent no. 2. Respondent no. 1 filed a petition before
Telecom Dispute Settlement and Appellate Tribunal seeking a direction to
the appellant to provide its television signals directly and not through G
respondent no. 2. The tribunal allowed the petition and held that the direction
by the appellant to a distributor to seek signals from a competing distributor
is per se discriminatory under the Regulations.

691 H
692 SUPREME COURT REPORTS [2007] 4 S.C.R.

A In appeal to this Court, the app~llant contended that under the
Telecommunication (Broadcasting and Cab~!! Services) Interconnection
Regulations, 2004, a broadcaster is not prohibited to appoint a MSO as its
agent on exclusive basis for given territory; that such prohibition would be
hit by Article 19 (1) (g) of the Constitution of India; that the D.istribution
Agreement was in consonance with the Regulations; that the appointment of
B a MSO as an agent per se is not prejudicial to competition and is necessary
to know the ground realities; that the Regulations itself recognizes overlap
functions between the agent and the MSO; that the Tribunal is in error in
holding that a distributor of TV channels cannot be an agent under the
Regulations; that distributors, agents, MSOs and cable operators cannot be
C treated as distinct categories since their different functions overlap each other;
that there is no functional difference between re~transmission of signals and
making available TV channels; that there is hardly any difference in the
quality of signals that can be received by a distributor through Decoders and
through a cable feed; and that the Tribunal is in error in.holding that providing
signals to a distributor through an agent who is also a distributor is per se
D discriminatory.

Dismissing the appeal, the Court

HELD: 1.1. In the case of overlap of functions to be performed by each
entity under the Telecommunication (Broadcasting and Cable Services) ...
E Interconnection Regulations, 2004 like a Distributor, MSO, agent/
intermediary, one has to go by the facts of each case and the terms of
Agreement between the broadcaster and his agent-cum-distributor. In a
competitive world today, if under the Interconnection Regulations, an MSO,
who is entitled to receive signals directly from a broadcaster, if directed to
F approach his competitor MSO, then discrimination comes in. If that another
MSO has.to depend on the Feed to be provided by the exclusive agent of the
broadcaster then the very object of the In~erconnection Regulation stands
defeated. Even technically the quality of signals receivable through the
Decoders is different from the quality of signals receivable through cable feed.
Under the Interconnection Regulations, exclusivity of contracts stands
G eliminated. The object oflnterconnection Regulation is to eliminate monopoly.
If respondent no. 1 carries on business in competition with respondent no. 2
and ifit is to depend on the Feed provided by its competitor and if the quality
of the signals available through that Feed is poorer than the quality of the
signals available through Decoders, then the Tribunal is right in holding that
the above arrangement is per se discriminatory.
H [Para 8) [703-B, E-F; 704-B-C]
STARINDIAPVT.LTD. v. SEAT.V.NETWORKLTD. 693
1.2. Under the Agreement, respondent no. 2 is a distributor of T.V. A
channels and not an agent. In fact, the Agreement indicates that the
relationship between the appellant and respondent no. 2 is not based on
principal-agent relationship. In other words, the appellant has given
distribution rights exclusively to respondent no. 2 for the territory of a city.
When signals are provided through Decoders, the matter comes under the
expression 'make available T.V. channels' in terms of clause 2 (b) of the B
Interconnection Regulations. Clause 2 (b) is applicable because the
broadcaster makes available the T. V. channels to its distributor-respondent
no. 2. On the other hand between respondent no. 2 and respondent no. 1, clause
2 G) would apply because after receiving signals through the cable from the
broadcaster, the distributor respondent no. 2 re-transmits the T.V. channels C
through the Feed to the respondent no. 1. Therefore, there is a vital distinction
between what is received by an agent-cum-distributor from the broadcaster

-- and what is subsequently re-transmitted by that agent-cum-distributor to other
MSOs/Cable Operators like respondent no. 1. Although a broadcaster is free
to appoint its agent, such an agent cannot be a competitor or part of the
network, particularly when under the contract between the broadcaster and D
the designated agent-cum-distributor exclusivity is provided for in the sense
that the signals of the broadcaster shall go through the cable network owned
and operated by such an agent-cum-distributor. (Para 9) [705-A-G)

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5524 of2005.
E
From the Judgment and Order dated 24.08.2005 of Telecom Dispute
Settlement and Appellate Tribunal (TDSAT) in Petition No. 41 (C) of 2005.

Mukul Rohtagi, R.F.Nariman, C.S. Vaidyanathan, K.K. Venugopal, Arun
Jaitely and Shyam Divan, R.N. Karanjawala, Prateek Jalan, Gopal Jain, Ruby F
Singh Ahuja, Nandini Gore, Manu Aggarwal, Manik Karanjawala, Amit Sharma,
Anupam Lal Das, Shibashish Mishra, Indu Malhotra, Vikas Mehta, Arjun
Suresh, Kuna! Tandon, A. Ramesh, Tushar Rao, T.N. Rao, Gaurav Shanna,
Tejveer Singh Bhatia, Yoginder Handoo, Ankur Taiwar, Pratibha M. Singh,
Biswajit Dubey, Maninder Singh, Manu Nair (for Mis. Suresh A. Shrof & Co.),
Nikhil Goel, Sheela Goes, Navin Chawla, Kamini Jaiswal, Rajesh Srivastava, Dr. G
Kailash Chand, Guntur Prabhakar, T. Anamika, P.N. Puri, Narayan K. Sibal,
Gouri Setia, Vikas chandel, Sumit Bhatia, Nitin Aggarwal and Sanjay Kapur for
the appearing parties.

Ravi Shankar Prasad, Indu Malhotra, Arjun Suresh, Kunal Tandon and
H
-i-
694 SUPREME COURT REPORTS [2007) 4 S.C.R.

A Vikas Mehta for the Intervenor. ·~

The Judgment of the Court was delivered by

KAPADIA, J. I. Being aggrieved by the direction issued by the Telecom
Disputes Settlement & Appellate Tribunal on 24.8.2005 ordering Star India
B Pvt. Ltd. appellant herein to supply signals of its bouquet of channels by
entering into an Agreement with Sea T.V. Network Ltd. (respondent No.I
herein) on such terms and conditions which are not unreasonable, Star India
Pvt. Ltd. has come to this Court by way of this civil appeal.
"<'
2. Star India Pvt. Ltd. is a company under the Companies Act, 1956. On
...
c 8.2.2005 Star India Pvt. Ltd. entered into Distributor Agreement with Moon
Network Pvt. Ltd. (respondent No.2). Mis Moon Network Pvt. Ltd_ under the
Agreement was a distributor. Under the said Agreement there was a recital.
Under that recital Star India Pvt. Ltd. had stated that it was an authorized
distributor of the Satellite T. V. channels namely Star Plus, Star Movies, Star
---
World, Star News, Star Gold etc. collectively referred to as New Channels
D
Bouquet. Under the Agreement Moon }Tetwork Pvt. Ltd. a Multi-System
Operator (for short MSO) was engaged in the business of transmission of TV
channels through cables. Under the Agr'eement Moon Network Pvt. Ltd. was _
described as a distributor. Under the said Agreement Star India Pvt. Ltd.
appointed Moon Network Pvt. Ltd. as the distributor on a sole and exclusive
E basis. The distributor was required to distribute the subscribed channels in
the territory of Agra. Moon Network Pvt. Ltd. was thus appointed as the sole
and exclusive distributor of the subscribed channels through the cable
network owned by it and operated by it in the territory of Agra. It is
interesting to note that under the Agreement, Star India Pvt. Ltd. excluded the
distribution of the subscribed channels through DTH, CAS, Broadband or
F
any medium other than through a ground cable network. The said Agreement
came into effect from January l, 2005. The Agreement is valid up to June 30, -'-
2007, unless terminated in accordance therewith. Under the Agreement Moon
Network Pvt. Ltd. could' execute an affiliation agreement directly with its
affiliate(s) in such form and manner to be approved by Star India Pvt. Ltd.
G Under the Agreement Moon Network Pvt. Ltd. could use publicity material
given to it by Star India Pvt. Ltd. Under the Agreement Moon Network Pvt.
.<
Ltd. agreed to employ competent staff t>nd/or independent contractors for the
purpose of the contract. Under the Agreement Moon Network Pvt. Ltd. was
~
recognized by Star India Pvt. Ltd. as a .MSO engaged in the business of
transmission of T.V. channels through ground cables. Under clause 6.3 of that
H
I
~
STAR INDIA PVT. LTD. v. SEA T.V. NETWORK LTD. [KAPADIA,J.] 695

-·<t
Agreement it was clarified that Star India Pvt. Ltd. made no representations A
and/or warranties relating to continuity, content and the reception quality of
the programmes on the subscribed channels and that Star India Pvt. Ltd. will
not be responsible if a Delivery Failure is caused by factors not directly within
the control of Star India Pvt. Ltd. Under the Agreement Star India Pvt. Ltd.
agreed to deliver the "Decoders" to the distributor Moon Network Pvt. Ltd.
However, under the Agreement it was stipulated that Moon Network Pvt. Ltd. B
in turn would not re-sell or act as a dealer in respect of the said Decoders.
Under clause 16 of the Agreement the parties agreed that Moon Network Pvt.
y
Ltd. as a distributor will act as an independent contractor and that the
> Agreement shall not create principal-agent relationship between Star India
Pvt. Ltd. and Moon Network Pvt. Ltd. That, neither party shall hold out to c
the rest of the world any :mch relationship.

3. To sum up, Moon Network Pvt. Ltd. was appointed as an exclusive
agent of Star India Pvt. Ltd. in the territory of Agra. At the same time the
Agreement recognized the status of Moon Network Pvt. Ltd. as an MSO
engaged in the business of transmission of TV channels through ground ]j
cable~. This aspect is important since in the present controversy one of,~e
main issue which arises for determination is the difference between,
''transmission" including re-transmission of signals, on one hand and the
expression "providing TV channels" on the other hand which expression
finds place under the Telecommunication (Broadcasting and Cable Services)
E
Interconnection Regulation, 2004 (hereinafter referred to as Interconnection
Regulation).

4. At this stage we may state that although the above Agreement dated
8.2.2005 remains in force up to 30.6.ioo7 for some unknown reasons Star India
Pvt.Ltd. has entered into a distributor Agreement on 4.1.2006 under which F
Moon Network Pvt. Ltd. are appointed as distributor. In the present case we
.)
are only concerned with the interpretation of the Interconnection Regulation
2004, and therefore, we are not required to go into any other aspect. However,
it is made clear that in such cases the Appellate Tribunal ought to have called
for the Distributor Agreement, if any, and not decide conceptually they do
not go by the facts of the individual cases. In the present case at one stage G
;.... it was argued vehemently by the appellants that Star India Pvt. Ltd. had
entered into an Agreement with Moon Network Pvt. Ltd. and that Moon
. Network Pvt. Ltd. was therefore exclusive agent for the territory of Agra. It
was argued that Star India Pvt. Ltd. was required to appoint an agent in
different territories looking to the economies of scale of operations carried out H
I

696 SUPREME COURT REPORTS [2007] 4 S.C.R.
r>
A by Star India Pvt. Ltd. throughout India. However, when the Court perused
the contents of the Agreement we find that the Agreement is a Distributor
Agreement. As stated above the Agreement expressly stated that Moon
Network Pvt. Ltd. was an independent contractor and that the relationship
between the parties was on principle to principle basis and that there was no
relationship of principal and agent, as contended by the appellants before the
B appellate Tribunal.

5. On behalf of the Star India Pvt. Ltd., Shri Mukul Rohtagi, learned
Senior Counsel submitted that the appellant Star India Pvt. Ltd. is a broadcaster
~
of TV channels and that Moon Network Pvt. Ltd. was an MSO for supply of .....

c TV channels for distribution in the city of Agra. He contended that when Sea
T.V. Network respondent No.I herein approached Star India Pvt. Ltd. for
supply of signals in that territory; Sea T.V. was directed to approach Moon
Network Pvt. Ltd. However, Sea T.V. Network did not agree to take the signals
from Moon Network Pvt. Ltd. since Moon Network Pvt. Ltd. was also a -··
competing MSO. According to the learned counsel under the Interconnection
D Regulation framed by TRAI there was no prohibition on Star India Pvt. Ltd.
in the matter of appointment of any MSO as its agent on exclusive basis for
a given territory. Reliance was placed by learned counsel on Regulation 3.3
....
read with Explanatory Memorandum. He contended further that any such
prohibitio11 would be hit by Article l9(1)(g) of the Constitution. It was further
I
urged that the above Agreement/arrangement was in consonance with the I
E Interconnection Regulation since Star India Pvt. Ltd. was entitled to align its
business in a lawful manner under Article 19(2)(l)(g) of the Constitution. The
learned counsel further submitted that under Regulation 3.3 we get a
clarification of what is implicit in Regulations 3.1 and 3.2, namely that a
broadcaster is entitled to give signals through an agent, who can also be a
F MSO in a vertically integrated industry so as to reduce high distribution
costs. That, a broadcaster can enter into any business arrangement model
~
which protects its financial interest since there was no -prohibition on such
arrangement. According to the learned counsel appointment of an MSO as an
agent per se is not prejudicial to competition and if at all it is prejudicial it
.. G should be established in each case by the complainant. According to the
learned counsel appointment of a MSO as an agent is necessary since he
knows the ground realities. He is not in a position to ascertain the number
of subscribers and that the Interconnection Kegulatio~1s themselves therefore
-
contemplate and permit an overlap between the agent and the MSO. It was
submitted that the cable industry in India has grown in an environment which
.
H has provided inadequate protection to broadcasters. It is, therefore,

' .
STARINDIAPVT. LTD. v. SEA T.V. NETWORK LTD. [KAPADIA, J.] 697

disorganized ultimately having an adverse effect on the consumers. According A
to the learned counsel there is in the Indian market large-scale under declaration
regarding number of ~ubscribers which results in an inequitable sharing of
subscription revenues. According to the learned counsel on a proper
interpretation of the Interconnection Regulation it is clear that a broadcaster
is obliged to provide its signals to all distributors of TV channels on non-
discriminatory basis. But the manner of providing signals has been left to the a
discretion of the broadcaster. According to the learned counsel the
Interconnection Reg~lation for establishing a "must provide" regime under
which every distributor is entitled to the signals of every broadcaster on
account of the heavy distribution costs widespread under-dedaration of
number of subscribers and the fragmented nature of the market the Regulations C
have given the broadcaster the flexibility to decide whether to provide signals
directly or through an agent. According to the learned counsel therefore,
there is. no particular business model prescribed by the said Interconnection
Regulation, and therefore, the Tribunal had fallen in error in holding that a
distributor of TV channels cannot be an agent as provided for in Regulation
3.3. According to the learned counsel there is no such prohibition in the D
definition clauses nor in the pre-clauses of the Interconnection Regulations.
According to the learned counsel the Tribunal has erred in regarding
distributors, agents, MSOs and cable operators as entirely separate and
distinct categories. According to the learned counsel under the said
Interconnection Regulations there is a considerable overlap between each of E
the above categories because each of the above entities is capable of
discharging different functions. The learned counsel, therefore, placed heavy
reliance on the Explanatory Memorandum in support of his contentions
particularly, in respect of his contention that the mode of providing signals
by the broadcasters is left to an individual broadcaster who may provide its
signals directly or through a designated agent/distributor or any other F
intermediary as long as such provision is fixed on non- discriminatory basis.
)
According to the learned counsel the Tribunal has failed to consider the
Explanatory Memorandum and the responses ()f the TRAI to the comments
of the stake holders. According to the learned counsel the Tribunal has failed
to appreciate that the term "Distributor of TV channels" includes all the G
entities involved in reaching the broadcasters signals to the ultimate consumer.
It is urged that the impugned judgment has the effect of restricting the scope
of clause 3.3 on the basis of an erroneous interpretation of the definition of
the word agent in Interconnection Regulation 2(b). According to the learned
counsel the impugned judgment is erroneous since it renders clause 3.3
meaningless since the said interpretation disallows a broadcaster from providing H
698 SUPREME COURT REPORTS [2007] 4 S.C.R.

A signals through an agent. According to the learned counsel clause 3.3 is a
clarification to clauses 3.1 and 3.2 which states that the consumer must have
access to every broadcaster's channel on a non-discriminatory basis, but the
manner of achieving this object has been left to the broadcaster to decide.
According to the learned counsel the definition of the word 'agent' in the
Interconnection Regulations do not provide the manner in which the agent
B would make available the TV channels to the. distributor. According to the
learned counsel the words make available in Regulation 2(b) would include
giving of Decoders and supply of signals throu@cable feed. According to
the learned counsel there is no functional difference between re-transmission
of signals and making available the TV channels. According to the learned
C counsel there is hardly any difference in the quality of signals that can be
received by a distributor through Decoders and through a cable feed. For a
distributor to obtain TV channels through Decoders the distributor must
possess a dish-antena for downloading the signals from the satellite of the
broadcaster and a divider which divides the signals into various channels.
The distributor also requires separate Decoders for each channels with an
D activated viewing card. A distributor who obtains the signals through the
cable amplifies it and distributes it to the other distributors and subscribers
through the ground cable. That, the quality of signals transmitted through the
'-.-
cable is comparable to the quality of signals obtained through the Decoders.
According to the learned counsel a distributor who obtains signals through
E Decoders is required to invest in the infrastructure consisting of Decoders,
dividers, modulators and amplifiers whereas a distributor who obtains signals
through the cable has not to make such investments and at the same time the
same quality of signals can be obtained through the cable feed which requires
investments in amplifiers, splitter and cabling. According to the learned counsel
the interpretation accepted by the Tribunal vide impugned judgment would
F require an MSO to invest huge amounts in the requisite infrastructure and
obtain signals through Decoders, and therefore, the distinction made by the
Tribunal between re-transmission and making available TV signals is not
appropriate since the same definition applies to agents appointed by MSOs.
Accordingly, it was submitted on behalf of the appellant that the Tribunal had
G . erred in holding that providing signals to a distributor through an agent who
• is also a distributor is per se discriminatory. According to the appellants
discrimination in cases of overlap of functions should be established on case
to case basis and if in a given case if it is found that the agent is conducting
itself in a manner prejudicial to competition then clauses 3.4 and 3.6 which
provides for redressal would apply.
H
STARINDIAPVT.LTD. v. SEAT.V.NETWORKLTD. [KAPADIA,J.] 699

6. In order to consider the above arguments we quote hereinbelow the A
relevant provisions of the Interconnection Regulations dated 10.12.2004 :

2. Definitions-In this regulation, unless the context otherwise requires:

(b) 'agent or intermediary' means any person including an individual,
group of persons, public or body corporate, firm or any organisation B
or body authorised by a broadcaster/multi system operator to make
available TV channel(s), to a distributor of TV channels;

(h) 'cable service' m·eans the transmission by cables of programmes
including re-transmission by cables of any broadcast television signals;
(i) 'cable television' network means any system consisting of a set of C
closed transmission paths and associated signal generation, control
and distribution equipment designed to provide cable service for
reception by multiple subscribers;

G) 'distributor of TV' channels means any person including an
individual, group of persons, public or body corporate, firm or any D
organisation or body re-transmitting TV channels through
electromagnetic waves through cable or through space intended to be
received by general public directly or indirectly. The person may
include, but is not limited to a cable operator, direct to home operator,
multi system operator, head ends in the sky operator;
E
(m) 'multi system' operator means any person who receives a
broadcasting service from a broadcaster and/or their authorised
agencies and re-transmits the same to consumers and/or re-transmits
the same to one or more cable operators and includes his/her
authorised distribution agencies.
.
(n) 'service provider' means the Government as a service provider and
F

includes a licensee as well as any broadcaster, multi system operator,
cable operator or distributor of TV channels.

3. General provisions relating to non-discrimination in interconnect
agreements G
3.1 No broadcaster of TV channels shall engage in any practice or
activity or enter into any understanding or arrangement, including
exclusive contracts with any distributor of TV channels that prevents
any other distributor of TV channels from obtaining such TV channels
for distribution. H
+
\
700 SUPREME COURT REPORTS [2007) 4 S.C:R.

A 3.2 Every broadcaster shall provide on request signals of its TV
...
channels on non-discriminatory terms to all distributors of TV channels,
which may include, but be not limited to a cable operator, direct to
home operator, multi system operator, head ends in the sky operator;
multi system operators shall also on request re-transmit signals received
from a broadcaster, on a non-~iscriminatory basis to cable operators.
B
Provided that this provision shall not apply in the case of a distributor
of TV channels having defaulted in payment.

Provided further that any imposition of terms which are unreasonable .._,
shall be deemed to constitute a denial of request.
c 3.3 A broadcaster or his/her authorised distribution agency would be
free to provide signals of TV channels either directly or through a
partieular designated agent or any other intermediary. A broadcaster
shall not be held to be in violation of clauses 3.1 and 3.2 if it is
ensured that the signals are provided through a particular designated
D agent or any other intermediary and not directly ..Similarly a multi
system operator shall not be held to be in violation of clause 3.1.and
3.2 if it is ensured that signals are provided through a particular
designated agent or any other intermediary and not directly.

Provided that where the signals are provided through an agent or
E intermediary the broadcaster/multi system operator should ensure that
the agent/intermediary acts in a manner that is (a) consistent with the
obligations placed under this regulation and (b) not prejudicial to
competition.

ANNEXUREA
F
EXPLANATORY MEMORANDUM

xxxxxxxx xxx xxxx xxx
Discriminatory Access
G
3. In India, competition for delivery of TV channels is not only to be
promoted within the cable industry but also from distributors of TV
channels using other mediums like direct to home (DTH), head ends
in the sky etc. It is important that all these distribution platforms are
promoted so that they provide consumers with choice. It would be
H very important that at this stage vertical integration does not impede
STARINDIAPVT.LTD. v. SEAT.V.NETWORKLTD. [KAPADIA,J.) 701
competition. Vertically integrated broadcaster and distribution network A
operators would, in the absence of strong regulation, have the
tendency to deny popular content to competing networks or to
discriminate against them.

4. One method of checking these practices is to stop at the source any
chance of anti-competitive behaviour by ruling that vertical integration B
will not be allowed. This route could, however, impede investments
and in the long run adversely affect competition. The only DTH
platform today has a degree of vertical integration. There is another
pay DTH platform which is awaiting approval from the Government
that also has a degree of vertical integration. DTH is the platform most C
likely to provide effective competition to cable operators. Restriction
of vertical integration could therefore, lead to a situation where the
DTH roll-out could be affected and hence competition. It is for this
reason that the alternative route has been looked at; controlling anti-
competitive behaviour wherever it manifests itself. These issues are
dealt with in the following paragraphs. D
5. Generally, TV channels are provided to all carriers and platfonns to
increase viewership for the purpose of earning maximum subscription
fee as well as advertisement ·revenue. However, according to some
opinions, if all platfomis carry the same content, it will reduce
competition and there will be no incentive to improve the content. E
Some degree of exclusivity is required to differentiate one platform
from the other.

6. Exclusivity had not been a feature of Indias fragmented cable
television market. However, the roll-out of DTH platfonn has brought
the question of exclusivity and whether it is anti competitive to the F
forefront. Star India Ltd and SET Discovery Ltd do not have commercial
agreements to share their contents with ASC Enterprises on its DTH
platform and at present are exclusively available on the Cable TV
platform. ASC Enterprises claims that the future growth will remain
impacted by the denial of these popular contents. Space TVa joint G
venture of Tatas and Star, is also planning to launch its digital DTH
platform. It has applied for licence to the Government for the same.
The DTH services have to compete with Cable TV. If a popular
content is available on Cable TV and not on the DTH platform, then
it would not be able to effectively give competition to the cable
networks. H
+
\

702 SUPREME COURT REPORTS [2007] 4 S.C.R.

A 'Must provide' through whom?

11. There is high cost involved in the distribution of TV channels if
the market is fragmented. To reduce the distribution costsbroadcasters/
multi system operators should be free to provide access in the manner
they think is beneficial for them. The must provide of signals should
B be seen in the context that each operator shall have the right to obtain
the signals on a non-discriminatory basis; but how these are provided
- directly or through the designated agent/distributoris a decision to
be taken by the broadcasters/multi-system operator. Thus the
broadcaster/multi system operator would have to ensure that the
signals are provided either directly or through a particular designated
c agent/distributor or any other intermediary.

Quality of TV Channel Signals

13. Some cable operators had apprehended that in case TV ch1mnel,
signals are provided through cable and not directly then the quality
D of transmission could deteriorate and accordingly it was suggested
that agents must provide services through IRDs. The Authority through
this regulation has framed the principle of non-discriminatory access,
which also includes non-discriminatory access in terms of quality of
signals. Operators can seek relief if it is found that the quality of their
signals is being tampered with.
E
Safeguards for Broadcasters

14. In this context it must be recognised that certain basic criteria must
be fulfilled before a service provider can invoke this clause. Thus the
service provider should be one who does not have any past dues.
F Similarly, provisions for protection against piracy must be provided.
However, the content provider must establish clearly that there are
reasonable basis for the denial of TV channel signals on the grounds
of piracy.

Discrimination in providing TV channel signals
G
17. In case any distributor of TV channel feels he/she has been
discriminated on terms of getting TV signals compared to a similarly
based distributor of TV channel, then a complaint mu~t. be filed with
the broadcaster or multi system operator, as the case may be. In case
the complainant is not satisfied with the response, he/she may approach
H
STAR INDIA PVT. LTD. v. SEA T.V. NETWORK LTD. [KAPADIA,].] 703

the appropriate forum for relief. A
7. We do not find any merit in the civil appeal for the following reasons:

8. Firstly, we do not find any error in the judgment which has held that
in providing signals to a distributor through an agent who is also in tum a
distributor is per se discriminatory. We agree with the contention of Mr.. B
Rohtagi learned senior counsel that in the case of overlap of functions to be
performed by each entity under the Interconnection Regulations like a'
Distributor, MSO, agent/ intermediary, one has to go by the facts of each case.
and the terms of Agreement between the broadcaster and his agent cum
distributor. Every contract under the Interconnection Regulations has two
aspects. One concerns the commercial side whereas the other concerns the C
technical side. There is no difficulty for the commercial side. If the broadcaster
appoints an agent on the commercial side to collect the statistics of the
number of subscribers or for distribution of Decoders there is no dispute. On
the commercial side when an agent is appointed by the broadcaster that agent
need not be from the Operation Network. Such an agent normally is not a D
technical service provider. The difficulty arises when the broadcaster as in the
present case appoints or enters into an agreement with a distributor, who in
turn is an MSO and who in tum has his own business because in such a case
such an agent-cum-distributor is also a competitor of the MSO who seeks
signals from the broadcaster. We are living in a competitive world today. If
under the Interconnection Regulations an MSO is entitled to receive signals E
directly from a broadcaster, if directed to approach his competitor MSO then
discrimination comes in. The reason is obvious. The exclusive agent of a
broadcaster has his own subscriber base. His base is different from another
MSO in the same territory. If that another MSO has to depend on the Feed
to be provided by the exclusive agent of the broadcaster then the very object F
of the Interconnection Regulation stands defeated. We are satisfied that even
technically the quality of signals receivable through the Decoders is different
from the quality of signals receivable through cable feed. In the present case
the broadcaster has appointed Moon Network as its Distributor for the territory
of Agra. In the present case the Agreement provides that Moon Network Pvt.
Ltd. will operate on principle to principle Q.asis and will not be an agent of G
Star India Pvt. Ltd. (Broadcaster). In that Agreement it is expressly provided
that Moon Network Pvt. Ltd. would not be entitled to use any other medium
except ground cable. Under the Distribution Agreement the Broadcaster has
appointed the Moon Network Pvt. Ltd. as the sole and exclusive distributor
of the subscribed channels. It is important to note that under the H
704 SUPREME COURT REPORTS (2007] 4 S.C.R.

A Interconnection Regulations exclusivity of contracts stands eliminated.
Notwithstanding such regulations the broadcaster in the present case has
appointed Moon Network Pvt. Ltd., who is also an MSO, as the sole and
exclusive distributor of the subscribed channels through the cable network
owned and operated by Moon Network Pvt. Ltd. in the territory of Agra. (See
B clause I. I). This is where the difficulty comes in The object of Interconnection
Regulation is to eliminate monopoly. If Sea T.V. respondent No. I carries on
business in competition with Moon Network Pvt~ Ltd. and if it is to depend
on the Feed provided by its competitor and if the quality of the signals
available through that Feed is poorer than the quality of the signals available
through Decoders, then the Tribunal is right in holding that the above
C arrangement is per se dis.criminatory . .It is important to bear in mind that Sea
T.V. Network and Moon Network Pvt. Ltd. are in turn MSOs. When Moon
Network Pvt. Ltd. is appointed as sole and exclusive distributor with a direction
to distribute the signals through the infrastructure ofM001:1 Network Pvt. Ltd.
then the quality of the signals receivable by Sea T.V. Network may not be the
same as the quality of signals through Decoders. In this connection fudging
D of data (voice and picture) is possible. Even the speed of data-transmission
to Sea T.V. Network could get affected. In such cases it is the subscribers of
Sea T.V. Network who would be adversely affected. The picture quality would
be affected. The reason for this is also obvious. Let us say that Moon
Network Pvt. Ltd. receives about 1000 signals from the broadcaster. Out of ...
E 1000 signals it is open to Moon Network Pvt. Ltd. to distribute the majority
thereof to its. own subscribers and the balance could be transferred through
the cable to Sea T.V. Network. The quality of the signals receivable by Moon
Network Pvt. Ltd. directly from the broadcasters would certainly be better ..
than the quality, speed etc. of the signals receivable by Sea T.V. Network. It
is for this reason that Sea T.V. Network refused to take signals through the
F feed. Therefore apart from competition, the business of Sea T.V. Network to
the above extent is also likely to be affected because of the poor quality of
signals through the feed. In such an event the subscriber base of Sea T.V.
Network would shift and become part of the subscriber base of Moon Network
Pvt. Ltd. in Agra.
G 9. Secondly, keeping in mind what is stated above, we may examine the
scope of the said Interconnection Regulations. There is a basic difference
between making available T.V. channels and re-transmission ofT.V. channels.
We have quoted the definition and provisos from Interconneetion Regulation.
Under clause 2(b) an agent is a person authorized by a broadcaster to make
H
STARINDIAPVT.LTD. v. SEAT.V.NETWORKLTD. [KAPADIA,J.] 705

available T.V. channels to a distributor ofT.V. channels. In that definition we A
have a broadcaster, an agent of the broadcaster and a distributor. Under the

-
Agreement between Star India Pvt. Ltd. and Moon Network Pvt. Ltd. (which
Agreement was not placed before the Tribunal) Moon Network Pvt. Ltd. is
a distributor ofT.V. channels. It is not an agent. In fact, the contract indicates
that the relationship between Star India Pvt. Ltd. and Moon Network Pvt. Ltd.
is not based on principal-agent relationship. In other words the Star India Pvt. B

-
Ltd. has given distribution rights exclusively to Moon Network Pvt. Ltd. for
the territory of Agra. This was never disclosed to the Tribunal. Before the
Tribunal it was argued that Moon Network Pvt. Ltd. was the agent of Star
India Pvt. Ltd. It is for this reason that Sea T.V. Network is asked to approach
Moon Network Pvt. Ltd. as a distributor. It is for this reason that Sea T.V. C
Network is made to depend for the signals on the feed to be provided by
Moon Network Pvt. Ltd. Further under clause 20) the word "distributor" of
TV channels is defined to mean, any person who re-transmits T.V. channe1s
through electromagnetic waves through cable. When signals are provided
through Decoders the matter comes under the expression "make available T.V.
channels" in terms of clause 2(b )of the Interconnection Regulations. Clause D
_,, 2(b) is applicable because the broadcaster makes available the T.V. channels
to its distributor namely Moon Network Pvt. Ltd. On the other hand between
' Moon Network Pvt. Ltd. and Sea T.V. Network clause 20) would apply because
after receiving signals through the cable from the broadcaster the distributor
(Moon Network Pvt. Ltd.) re-transmits the T.V. channels through the Feed to E
Sea T.V. Network. Therefore, there is vital distinction between what is received
by an agent-cum-distributor from the broadcaster and what is subsequently
re-transmitted by that agent-cum- distributor to other MSOs/Cable Operators
like Sea T.V. Network. In our view the Tribunal, has therefore, correctly drawn
a distinction between what is called as "making available of T.V. channels"
and re-transmission of T.V. channels under the above two clauses. Keet>ing F
in mind the above distinction it is clear that although a broadcaster is free
to appoint its agent under the proviso to clause 3.3 such an agent cannot be
a competitor or part of the network, particularly when under the contract
between the broadcaster and the designated agent-cum- distributor exclusivity
is provided for in the sense that the signals of the broadcaster shall go G
through the cable network owned and operated by such an agent-cum-
distributor which in the present case happens to be Moon Network Pvt. Ltd.

10. In the circumstances there is no merit in this civil appeal.

11. Before concluding we may once again reiterate that the Appellate H'
706 SUPREME COURT REPORTS [2007) 4 S.C.R.

A Tribunal in the present case has correctly interpreted the scheme of
Interconnection Regulations. However, in cases of functional overlap we are
of the view that in every ~atter the Tribunal will examine the written contracts
between the parties and ascertain actual prejudice/discrimination and not
decide the matter on conceptual basis. In the present case we insisted on the
appellants for producing the written Agreement with which clarity has emerged.
B But for examination of such contract it would not be proper to decide matters
on per se basis.

12. For the aforestated reasons we find no merit in this civil appeal and
the same is accordingly dismissed with no order as to costs.

c B.S. Appeal dismissed.