Reservedon: 3'''' August2010 Decision on; 11 August 2010 MSM DISCOVERY PRIVATE LIMITED v. VIACOM 18 MEDIA PRIVATE LIMITED & Ors.

of both the Parties, no further cause shall sustain of such notice for termination. The consequences of breach, including penalty if any, shall be dealt with in the Long Form Agreement."

6. On IS^*" July 2010, Viacom18 terminated the MOU by way of a communication sent to MSMD. Admittedly, this was done without giving 90 days' prior notice as envisaged by Clause XX of the MOU. The ostensible reason for Viacom 18 to have terminated the agreement was that MSMD had acted in breach of its contractual obligation to place Viacom18's channels at prime slots in the bouquet of channels offered by MSMD as an 'aggregator' to Multi-SystemOperators (MSOs). ViacomlS alleged that MSMD had been placing the channels of ViacomlS's rival broadcaster Sony in prime slots in the packages offered by Direct to Home (DTH) operatorslike Dish TV and Tata Sky who inter alia had about 70 per cent of the market.

7. It must be mentioned here that under the MOU, MSMD acted as an agent of ViacomlS. In its role as an 'aggregator', it distributed the W.P. (C) Nos. 5109, 5111 and 5112 of 2010 Page4 of 37 channels of broadcasters as part of a distribution platform by creating single or multiple bouquets to MSOs, operators (LCOs)/affiliates/DTHoperators for IPTV and other digital distribution networks for ultimate viewership by the consumer. As an 'aggregator' MSMD had the authority to collect subscription revenues jfrom MSG, LCO, DTH operatorsfor the televisionsignals made availableto them by the broadcaster.It is importantto note that the signals do not pass through any system of the aggregator and are directly delivered to the MSOs/LCOs/DTHoperators through satellite. The case of MSMD is that it has no control over the broadcaster ViacomlS's signals since Viacom 18 uplinks the signals to the satellite directly. The MSOs/LCOs/DTH operators downlink the signal directly and decrypt the signals using Viacom 18' s Integrated Receiver Decoders (IRDs).

8. On July 2010 MSMD issued a cease and desist notice to Sun TV Network Ltd., which along with Viacom18 had formed a joint venture "Sun 18" which would begin distribution of 33 channels including the channels of Viacoml8 being distributed by MSMD. This arrangementwas to take effectfrom the afternoonof 13'^ July 2010 itself. On 15^*^ July 2010, MSMD filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996 ('AC Act') in the High Court of Bombay praying inter alia for an interim order restraining Viacom18 "from executing any agreements with Multi System Operators, affiliates, cable operatorsin violationof the Petitioner'srights under the MOU and in respect of the four channels viz. Colors, Nick, MTV and Vhl". The Petitioner's case in the Section 9 application was that the termination of W.P. {C} Nos. 5109, 5111 and 5112of 2010 the MOU broughtabout by the letterdated 13^*^ July 2010 was illegaland that Viacom 18 should be restrained from giving effect to the said communication.

9. On 16^*^ July 2010, when the case was taken up in the High Court of Bombay, Viacom 18 informed the High Court they had already executed an agreement with M/s Network 18 Media Investment Ltd. (NMIL) for the purposes of distributing and marketing of the four channels and that Viacom 18 was not "required to enter into any agreement with Multi System Operators, affiliates, cable operators in regard to these four channels in respect of subject matter of the agreement which was entered into with the petitionersbeing agreementdated 11^^ February 2009". Taking note of the above statement made by the Senior counsel for Viacom 18, the Bombay High Court declined the interim relief prayed for by MSMD.

10. It is pointed out by Viacom18 that notwithstanding the above order even on 17"^ July 2010 MSMD was claimingthat it had a "water-tighf contract valid till 31®' March 2012 and "there is no way the Viacom 18 Channels could walk out of the above agreement". Proceedings before the TDSAT

11. Meanwhileon 15'^ July 2010 Viacoml8filed PetitionNo. 220 (C) of 2010 under Section 14 of the Telecom Regulatory Authority of India Act, 1997 (TRAI Act') before the TDSAT. The main prayer was for the recovery of a sum of Rs.20,90,36,289/- from MSMD along with interest at W.P. (C) Nos. 5109, 5111 and 5112 of 2010 18% per annum and adirectionto MSMD to render true and correct^'O account of the revenues generated by it in respect of the distribution of the four channelsof Viacom18 from 1®^ April 2009 till 13^ July 2010 and to pay the resultantdeficittogetherwith interestat 18% per annum. Another prayer was for permanentlyrestrainingMSMD "from representingthe Petitioner" in any manner and directingMSMD to remove the channelsof Viacom 18 from MSMD's website/brochures/RIOs/bouquets/tiers/ advertisements etc. A prayer was also made to permanently restrain MSMD from directly or indirectly interfering with the distribution and V marketingof the said channelsof Viacom18 either by Viacom18 itselfor its alliance.

12. The interimprayers sought by Viacom18 before the TDSAT included a prayer to "restrain the Respondent (MSMD) from representing the Petitioner(Viacoml8) afterthe terminationof the MoU on 13.7.2010."

13. On 19^^ July 2010, the TDSATpassedthe followingorder: "Admit. Mr. Kaushik Mishra, Advocate accepts notice on behalf of the respondent. Reply to the main petition be filed within two weeks and rejoinder thereto, if any, may be filed within two weeks thereafter. Put up the matter for fiirther directions on

19.8.2010. Let the matter appear for hearing on interim relief on 21.7.2010 as it is stated that in the meanwhile, the respondent shall also file an appropriate petition before us. The petitioner is given liberty to file an additional affidavit in course of the day and serve a copy thereofto the learnedcounselfor the respondent." W.P. (C) Nos. 5109, 5111 and 5112 of2010

14. Pursuant to the permission granted by the TDSAT Viacom18 filed an additional affidavit before the TDSAT on 19^*^ July 2010 in which inter alia it set out the events that took place subsequent to the termination of the MOU on IS^*" July 2010. It is pointed out that althoughthe TDSAT was informedby MSMD that it would be filing an "appropriatepetition", no such petitionwas filed even by the time the TDSAT finally heard the prayers for interim relief on 22"^^ July 2010 and reserved orders. Thereafterthe impugnedorderwas passedon 27^^ July 2010.

15. In the impugned order, the TDSAT proceededon the basis that the following two facts were not in dispute: (i) That Viacom18 had terminated the contract by issuanceof a noticedated 13'*^ July 2010. (ii) The said notice was in violationof the clause XX of the agreement.

16. The TDSAT then discussed the provisions of the Specific Relief Act, 1963 ('SRA') and in particularSections 14(1) (a), 38(2), 41(e) and 42 thereof It also considered the effect of Sections 201 to 206 of the Indian Contract Act, 1872 (^Contract Act'). The TDSAT took note of the fact that on 13^^ July 2010, Viacom18 had entered into an MOU with NMIL and fiirtherthat the Bombay High Court had declined to grant any interim relief to MSMD in its petition under Section 9 of the AC Act. It then observed that "the doctrine of amity or comity may be held to be applicable." W.P. (C) Nos. 5109, 5111 and5112 of2010 Page8 of37

17. The TDSAT concluded that on the basis of the materials placed on record, MSMD would not be entitled to an order of injunction it had sought since it would, in effect, be seeking specific performanceof a contractwhich could not be specificallyenforcedin view of the bar under Section 41(e) of the SRA. It then concludedthat converselyViacomlS would be entitled to an injunctionrestrainingMSMD from representing others that it is acting on behalf of ViacomlS. Since Clause XX of the MOU was not a negative covenant, the exception in Section 42 of the SRA could also not apply in favour of MSMD. The TDSAT also took V ; note of the decision of the Supreme Court in Southern RoadwaysLtd. v. S.M. Krishnaii (1989) 4 SCC 603. Submissions of Counsel

18. On behalf of the Petitioner MSMD, it is submitted by Mr. Soli Sorabjee and Mr. Ramji Srinivasan, learned Senior Counsel, that the impugned order of the TDSAT suffers from a patent illegalitysince it grantedinterimreliefto ViacomlSdespiteholdingthat the terminationof the MOU, in violation of Clause XX thereof, was illegal. It is submitted that in such circumstances no equitable relief, much less an interim mandatory injunctionagainst MSMD and in favour of ViacomlS could have been granted. Secondly, it is submitted that when MSMD's substantivepetitionhad not yet been consideredby the TDSAT, there was no question of hypothesizingwhether MSMD could have been granted any interim reliefin such petition.Furtherthe TDSAT erred in deciding the said questionin the negative,and as a corollary,grantinginterimrelief to ViacomlS. It is submitted that the TDSAT committed a jurisdictional W.P. (C) Nos. 5109, 5111 and5112 of2010 Page9 of37 error in deciding an issue that did not arise for consideration. Thirdly, it is 'A submitted that since Viacom 18 had not made out any prima facie case, no interim relief could have been granted to it. Further on balance of convenience, which was an aspect not considered at all by the TDSAT, interim relief should have been denied to Viacom 18. The ostensible reason given by Viacom18 for terminatingthe contractwas that MSMD had not made enough efforts to ensure that favourable slots were given to the four channels of Viacom 18 in the bouquet of channels offered to the MSOsbyMSMD.

19. It is pointed out that in terms of the Clause 13.2A.11 of the Telecommunications(Broadcasting and Cable Services) Interconnection (Fourth Amendment)Regulation2007, no agent of such broadcastercan "directlyor indirectly,compel any direct to home operatorto offer the entire bouquetor bouquetsofferedby the broadcasterto such operatorin any package or scheme being offeredby such direct to home operatorto its direct to home subscribers." It is submitted that the positioning of the channels of Viacoml8, particularly in Tata Sky or Dish TV, was not within the control of MSMD and, therefore, even otherwise termination of the MoU was fully unjustified. Relying on the judgment of the Madhya Pradesh High Court in Jabalpur Cable Network Pvt. Ltd. v. ESPN Software India Pvt. Ltd. AIR 1999 MP 271, it is pointedthat the peculiarnature of the transactionswhich formed a chain was such that it would have huge repercussionsin the industry.It is pointed out that the Petitionerhas already entered into thousandsof individualcontractswith MSOs all over the country, and in turn there were several tens of W.P. {C) Nos. 5109, 5111 and 5112 of2010 Page10 of37 thousands of LCOs and a greaternumber of consumersand all of them ^ would be affected. It is submitted that the 90 days' notice period was mandatoryand basedon an understandingthat it wouldtake eitherparty at least three months' time to make alternative arrangements to cope with the adverse effect of the termination of the MOU. Without prejudice to the pleas taken, it was submittedthat Viacom18 should permit the present arrangementto continueat leasttill the end of 2010.

20. Appearingfor ViacomlS,it is submittedby Dr. A.M. Singhviand Mr. Rajiv Nayyar, learned Senior Counsel that it was neither pemiissiblein law nor possible for the TDSAT to put back the parties to a positionin which they were prior to the terminationof the MOU. It is submittedthat in the light of Section 15 of the TRAI Act, it was not possible for the disputes between the parties to be brought before any other forum. Whatever relief that ViacomlS may have got by filing a civil suit, was requiredto be soughtby it before the TDSAT. It is pointedout that there were two immediateconsequencesof the terminationof the MOU which had to be tackled by ViacomlS. One was the claim by MSMD that the terminationwas illegal on the basis of which it issued a cease and desist notice to the Sun TV Network after learningthat ViacomlShad, on 14^'' July 2010 itself, entered into a separate distributorshipagreement with NMTT,. The second was that despitethe terminationof the MOU, MSMD was continuingto hold itselfout as an agent of ViacomlS.It is submitted that irrespectiveof whetherthe terminationwas valid or not, the parties could not be put back to a position as if the MOU had not been W.P. (C) Nos. 5109, 5111 and5112 of2010 Page11 of37 terminated. The only remedy available to MSMD, and which proposition had been acceptedby the TDSAT, was that it could claim damagesfor the losses suffered by it. Reliance is placed on the judgments of the Supreme Court in Indian Oil Corporation Ltd. v. Amritsar Gas Service (1991) 1 see 533 as well as of this Court in Indian Oil Corporation Ltd. v. Shriram Gas Service 57 (1995) DLT 279 and Rajasthan Breweries Ltd. V. Stroh Brewery CompanyAIR 2000 Delhi 450. On the strength of the decision in Southern Roadways Ltd. v. S.M. Krishnan and the judgment of this Court in Western International University Inc. v. Modi Apollo InternationalGroupPvt. Ltd. [orderdated20'^ July 2009 in lA No. 7849, 8725 of 2009 in CS (OS) No. 1123 of 2009], it is submitted that a mandatory temporary injunction could be granted to restrain an agent from continuingto hold out as an agent of a party notwithstandingthe termination of the contract.

21. This Court has been shown a copy of the public notice issued by Viacom18 subsequentto the order of the TDSAT. The notice states that Sun 18 Media Services would distribute the four channels of Viacom 18 and that the TDSAT had restrained MSMD from representing VI8 Channels. It was clarified in the public notice that "all distributors of TV channels can pay the outstanding Subscription Fees for the services received by them with respect to VI8 Channels till 12"^ July 2010 to MSMD. With effect from 13^^ July 2010, the SubscriptionFees for the VI8 Channels will be payable to SUN 18 Media Services." It was submittedby Dr. Singhvi, the learned Senior Counsel for Viacom18 that without prejudice to their any other contentionsbefore the TDSAT, in W.P. (C) Nos. 5109, 5111 and 5112 of2010 Page12 of37 order to mitigate any hardship that might be faced by MSMD tliey were willing to assist MSMD in recovering all dues owed to it from its MSOs • i up to 12^'' July 2010. It is, however, submitted,that since there is a completelack of faith and trust betweenthe parties,ViacomlSwould not like to have MSMD act as its agent hereafter and, therefore, the offer that they may be permittedto continueto act as an agent of ViacomlSas such till further orders is not acceptable. It was submitted that the damages or losses allegedlysufferedby MSMD were capable of being quantifiedand awarded to it, if MSMD succeeded before the TDSAT. Therefore, the vacating of the interim relief grantedby the TDSAT to Viacom 18 at this stage at the instance of MSMD was not called for. TDSAT's powers

22. The first aspect to be consideredis the scope of the powers of the TDSAT to grant interlocutoryreliefs.Keeping in view the positionof the parties - one as the 'aggregator' and the other as the 'producer' of programmes for television, their disputes necessarily have to go only before the TDSAT in terms of Section 14 read with Section 15 of the TRAI Act. Matters relating to consumer disputes under the Consumer Protection Act 1986, a dispute governed by the Monopolies and Restrictive Trade Practices Act, 1969 and the dispute between a telegraph authority and any other person in terms of Section 7B(1) of the Indian Telegraph Act, 1885 are excluded. Section 15 of the TRAI Act is a complete bar on any civil court entertainingany suit or proceeding in respect of any matter which the TDSAT is empoweredto determineand no court or other authority can issue any injunction "in respect of any W.P. (C) Nos. 5109, 5111 and 5112 of2010 Page13 of37 action taken or to be taken in pursuance of any power conferred by or •under this Act."

23. Under Section 16(1) of the TRAI Act, although the TDSAT is not bound by the procedure laid down under the Code of Civil Procedure, 1908, it is expectedto be guided by the principlesof naturaljustice and can also regulateits own procedure.Under Section16(2), for the purposes of discharging its functions, the TDSAT shall have the same powers as vested in the civil court, while trying a civil suit. This includes, under Section 16(2) (f), the power to review its decisions.Under Section 16(2) (g), it can dismiss an applicationfor default or decide it, ex parte and so on. A reference is made to the above provisions to emphasise that the TDSAT has all the powers as the civil court would have if it were to decide a suit for permanent injunction and an application for interim I mandatoryinjunction.In fact it has powers wider than a civil court does because it is not constrained by having to follow only the CPC provisions: Indeed in Union ofIndia v. Tata Teleservices(Maharashtra) Ltd. (2007) 7see 517 the Supremecourt while analyzingthe provisionsof the TRAI Act observed (SCC @p. 523): "15. The conspectus of the provisions of the Act clearly indicates that disputes between the licensee or licensor, between two or more service providers which takes in the Government and includes a licensee and between a service provider and a group of consumersare within the purview of the TDSAT. A plainreadingof the relevantprovisionsof the Act in the lightof the preamble to the Act and the Objects and Reasons for enactingthe Act, indicatesthat disputesbetweenthe concerned parties, which would involve significanttechnical aspects, are M/.P.Vc,) A/OS. 5109, 5111 and5112of2010 Page14 of37 < to be determined by a specialised tribunal constituted for that purpose.There is also an ousterof jurisdictionof the civil court to entertain any suit or proceeding in respect of any matter which the TDSAT is empowered by or under the Act determine. The civil court also has no jurisdiction to grant an • < injunction in respect of any action taken or to be taken in pursuance of any power conferred by or under the Act. The constitution of the TDSAT itself indicates that it is chaired by a sitting or retired Judge of the Supreme Court or sitting or a retired Chief Justice of the High Court, one of the highest judicialofficersin the hierarchyand the membersthereofhave to be of the cadre of secretaries to the Government, obviously well experiencedin administrationand administrativematters." It was further observed (SCC @p.524): "17. Normally, when a specialised tribunal is constituted for dealing with disputes coming under it of a particular nature taking in serious technical aspects, the attempt must be to construe the jurisdiction conferred on it in a manner as not to frustrate the object sought to be achieved by the Act. In this context, the ousting of the jurisdiction of the Civil Court contained in Section 15 and Section 27 of the Act has also to be kept in mind. The subjectto be dealt with under the Act, has considerable technical overtones which normally a civil court, least as of now, is ill-equipped to handle and this aspect cannot be ignored while defining the jurisdiction of the TDSAT." Viacom's case for a mandatory interim injunction

24. Much of the argumenthas centeredaroundthe legality of the order of the TDSAT grantingViacom a mandatoryinterim injunctioneven while findingthe terminationof the MOU to be illegal.The facts relevantto this W.P. (C) Nos. 5109, 5111 and 5112 of2010 PageIS of37 point may be briefly recapitulated.

25. Simultaneous with the termination of the MOU by the notice dated 13"" July 2010, Viacom18 entered into a separate agreementwith NMIL appointingthe latteras its aggregatorwith effectfrom the afternoonof the same day. As far as Viacom18 was concerned, its break-up with MSMD was irreversible one and it immediately substituted MSMD with NMIL as its agent. In other words the status quo ante the terminationwas quickly altered with a new player coming into the fray. The reaction of MSMD to this was to assert that the termination was an illegal one. MSMD issued a cease and desistnoticeto Sun 18 Media Serviceson the next day, i.e. 14"^ July 2010. MSMD evidentlywanted to continuethe situationthat existed prior to the terminationas is plain from the prayers made by it in its Section9 petitionbeforethe BombayHigh Court. That interimreliefwas, however, declined since by then Viacom18 had already entered into an agreement with NMIL. Therefore, when Viacom18 approached the TDSAT it was seeking not only to recover the amounts owed to it from MSMD but also specificallyprayed for a permanentinjunctionto restrain MSMD from continuing to act as its agent. It also prayed for an interim relief to the above effect.

26. The questionwhethera civil court and, in this case, the TDSAT could grant an interimmandatoryinjunctionto restrainan erstwhileagent from performing acts as if the agency continued has to be answered in the affirmative. The basis for this has been explained by the Supreme Court in W.P. (C) Nos. 5109, 5111 and 5112 of2010 Page16 of37 SouthernRoadwaysLtd. v. S.M. Krishnan(supra) in para 13 as underj/^ (SCC@p. 608): "13. Even otherwise, under law revocation of agency by the principal immediatelyterminatesthe agent's actual authorityto act for the principal unless the agent's authorityis coupledwith an interest as envisaged under Section 202 of the Indian Contract Act. When agency is revoked, the agent could claim compensation if his case falls under Section 205 or could exercise a lien on the principal's property under Section 221. The agent's lien on principal's property recognised under Section 221 could be exercised only when there is no agreement inconsistent with the lien. In the present case the terms of the agreement by which the respondent was appointed as agent, expressly authorises the company to occupy the godown upon revocation of agency. Secondly, the lien in any event, in our opinion, cannot be utilised or taken advantage of to interfere with principal's business activities." (emphasis supplied)

27. In the present case, MSMD itself does not dispute the fact that it neither receives nor decrypts signals. It is, for all practical purposes, an 'aggregator' and as long as the MOU with Viacom18 subsisted, it was acting as an agent of Viacom18. The fact of the matter is that with the noticedated 13*'' July 2010 the MOU has been terminated.

28. It was vehemently argued by learned Senior Counsel for the Petitioner that the termination was in the teeth of the Clause XX of the MOU and that since admittedlyno priornoticeof 90 days was given, the termination was illegal. W.P. (C) Nos. 5109, 5111 and 5112 of2010 Page17 of37

29. The facts in Indian Oil CorporationLtd. v. Amritsar Gas Service^j^ 0\ were somewhat similar. There the dealership agreement was revocable by either party by giving 30 days' prior notice. The agreementwas however revokedby the oil companywithoutthe 30 days' prior notice. Negativing the plea that the dealershipcould be continuedby an interimorder, it was explainedby the SupremeCourtin para 14 as under(SCC @ p. 543); "14....Tn such a situation, the Agreement being revokable by either party in accordancewith Clause 28 by giving thirty days' notice, the only relief which could be granted was the award of compensation for the period of notice, that is, 30 days. The plaintiff-respondent 1 is, therefore, entitled compensation being the loss of earnings the notice period of thirty instead of restoration distributorship. The award has, therefore, to be modified accordingly. The compensation for thirty days notice period from 11.3.1983 is to be calculated on the basis of earnings during that period disclosedfrom the records of the Indian Oil CorporationLtd." (emphasissupplied)

30. The learned Senior counsel for the Petitioner sought to distinguish the above judgment in Amritsar Gas Service to say that there was another clause in the dealership agreement which permitted termination at will. However, what is discussed by the Supreme Court in the above passage was the effect of an invahd termination, i.e., the termination without givingthe 30 days' notice.It was clearlystatedthat "the only reliefwhich could be granted was the award of compensationfor the period of notice^ that is, 30 days."

31. The losses if any that might have been sufferedby MSMD as a result W.P. (C) Nos. 5109, 5111 and 5112 of2010 Page18 of37 of the terminationof the MOU by the notice dated 13^*^ July 2010 willj^ have to be determined in the petition filed by MSMD before the TDSAT.

32. It appears to this Court that the losses claimed to be suffered by Viacom18 and likely to be suffered by it if MSMD continued to represent it notwithstandingthe terminationof the MOU were as much quantifiable as the losses claimed to be suffered by MSMD as a result of the illegal termination. The TDSAT could well have refused interim relief Viacom18 on the groundthat the losses,if any, sufferedby it were equally capable of being quantified and compensated. The TDSAT appears to have based its decision to grant interim relief to Viacom 18 essentially on the basis that MSMD did not have a case for grant of an interim mandatoryinjunctionin its favour. While the criticismof that approachby counsel for MSMD may not be wholly unjustified, the question that remains as far as the present proceedingsare considered is whether the impugnedorder of the TDSAT, which is an interlocutoryone, can be said to be untenable in law.

33. This was a situation where two views are possible and the TDSAT has taken one view. Apart from the negative reason given by the TDSAT to supportits conclusion,viz., that MSMD does not have a prima facie case for grant of an interim relief in its favour, there is perhaps a positive reasonwhy an interimorder favouringViacom 18 may be justified.There was every likelihoodof confusionin the market resultingfrom the rather abrupt termination of the MOU, simultaneouswith the entry into the picture of the new aggregator. By the time the TDSAT consideredthe Page19 of37 W.P. (C) Nos. 5109, 5111 and 5112 of2010 situation, the change was already ten days old. As much as restoring the status quo ante 13^^ July 2010 would create confusion,permittingMSMD to act as an agent of Viacom 18 would equally compoundthe confusion. The apprehensionexpressedby Viacom 18 that the MSOs mightnotknow whether they should continue paying MSMD or Sun 18 Media for the signalsreceivedfrom Viacom 18 was not an unfoundedone. The question really was of balance of convenienceand the TDSAT had to take a call. Two answers were possible in such a situation — One, to determine which is the party who sufferedthe losses on account of the acts of the other and then finally determine that who should compensate to whom and to what extent. The other approach is whether the balance of convenience lies in favour of one of the parties to restrain the other from continuingto act as its agent. The TDSAT seems to have adopted the second approach while proceedingto expedite the final hearing of the petition.This was a possibleview to take. Merelybecauseanotherview is possible,this Court is not going to interferewith the impugned order of the TDSAT.

34. In the circumstances, it is not possible to hold that the interlocutory order passed by the TDSAT is one which suffers from any material irregularity calling for interference. W.P. (C) Nos. 5111 and 5112 of 2010

35. The facts in Writ Petition (Civil) 5111 and 5112 of 2010 are that the Star Den Media Services Pvt. Ltd. (^STAR DEN') entered into an W.P. (C) Nos. 5109, 5111 and5112of2010 Page20of37 agreement with the Television Eighteen India Ltd. (TV 18') and IBN 1 BroadcastLtd. (IBN18), Respondents 1 and 2 respectively,on 1'^ April 2008 wherebySTAR DEN was granted"the exclusiveright to licenseand sub-license the Services for distribution on television throughout Territoryto cable operatorsand other operators all forms of regular or scrambled broadcast (encrypted signal), MMDS, master antenna, satellite master antenna, single and multi channel point distribution, direct satellite transmission to operators,(includingDTH), satellite transmission to operators(includingany "Head-End-in-the-Sky"or "HITS" platforms), broadband transmission to a television set such as DSL/ADSL/IPTV, power digital terrestrial television (which, excludes standard terrestrial broadcast television such as DD), closed circuit and high definition " The agreementwas for a period of five years from 1^^ April 2008 to 31®' March 2013. The Petifioner was to pay Network 18 (Collective name for TV 18 and IBN18), a monthly fee equal to 5.25% of the Gross Non Addressable Cable Revenue which was defined in the agreement.

36. The relevant part of Clause 14 of the agreement which dealt with termination reads as under: "14. Termination: Notwithstandinganythingelse containedherein, this Term Sheet may be terminated: (i) by eitherParty by givingnotice in writingto the order of one month of its intention to do so; Provided that if one party commits a material breach of any covenant contained herein and, in the case of a breach capable of W.P. (C) Nos. 5109, 5111 and5112of2010 Page21 of37 being remedied, fails to remedy such breach within 30 days of a notice given to it by the order in this behalf, the party giving notice may terminate or suspend the whole or any part (ii) XXX (iii) XXX (iv) by either Party forthwith on giving 30 days notice in writing if, despite mutual discussions/negotiations, parties ,fail to reach a consensus on any issue on which such consensus is envisaged by any clause of this Term Sheet."

37. The four television channels of the Respondents 1 and 2 for which the exclusive distribution rights were granted to the Petitioner under the said agreement were 'CNBC Awaaz', 'CNBC TV 18', 'CNN IBN' and 'IBN7'. The Petitioner was the 'aggregator' and in that capacity entered into subscriptionagreementswith over 5000 local cableoperators(LCOs), MSOs, IPTV operators and DTH operators.

38. It is the Petitioner's case that it had the complete freedom to package all channels available on its platform (including the Respondents' channels) in its bouquet offering to affiliates/operatorsso as to maximize the revenue in order to reach all the channels. It is claimed that being aware of the market position, it was left to the best judgment of the Petitioner to offer the channels of the various channel partners including the RespondentNos. 1 and 2 in the form of other bouquetsor on a stand alone basis. W.P. (C) Nos. 5109, 5111 and 5112 of2010 Page22of37

39. In ternis of the agreementthe parties were to sign aLong Form^_; Agreement (LFA) in regard to which e-mails were exchanged between 2008 and 2010. The Petitioner claims that on 30"^ June 2010, it informed the Respondentsby e-mail that it was sending by courier three executed copies of the LFA and requested the Respondents to return one countersigned copy to the Petitioner. The said e-mail was sent after a meeting was held on 29^^^ June 2010 between the representativesof the Petitioner and the Respondents 1 and 2. The Petitioner states that instead of returning the countersignedcopy of the LFA, the Respondents 1 and 2 addressedan e-mail dated 5"" July 2010 raisinga whole set of issues. This was respondedto by the Petitioneron 7^^ July 2010. On 13^*^ July 2010, Respondentsissued a terminationnotice on the followinggrounds: "(i) Replacementof Disney Channels with Fox International Channels (hereinafter referred to as "FIC Channels"). (ii) Non-paymentof outstandingsum of Rs.2,91,59,577/-. (iii) Biftircation of revenues. (iv) Non-execution of a Long Form Agreement."

40. The notice called upon the Petitioner to forthwith make payment of Rs. 2,91,59,577/- which were due from the Petitioner to Respondents 1 and 2. Paras 7 and 8 of the said notice read as under: "7) We call upon you to forthwith refrain from acting in furtherance of the Deal Memo and/or representing any association with us post effective date of termination, and ftirther call upon you to come clean up front and provide us with true and correct information, agreements, data, and W.P. (C) Nos. 5109, 5111 and 5112 of2010 Page23of37 subscriber reports pertaining to our Channel. However, do let c\ -- us know if you wish not to avail of the benefit of transition period of 30 days as set out in Paragraph5 above. Pleasenote that any act of interferenceor obstructionby you directly or indirectly in any further distribution of the NetworklS Channels by us to millions of our subscribers across the country shall be dealt with by us strictly at your cost and consequences. 8) If you fail to comply with the aforesaid, we will be compelledto initiate appropriateaction against you and all necessary parties, without any further notice and the same will be entirely at your risk as to costs and consequences arising therefrom, which you may please note."

41. It is statedthat on the same date, i.e., 13'^ July 2010 an announcement was made of the .formation of Sun 18 Media Services, Respondent No. 3 in W.P. (C) 5111 of 2010, which is a joint venture betweenNetwork 18 and Sun Network Group which thus replaced the Petitioner as the authorized distributor for the channels of Respondents 1 and 2. The Petitioner states that on 15^^ July 2010 it made a payment of Rs. 2,62,43,619/-,i.e., Rs.2,91,59,577/-less TDS to the Respondents1 and 2 in order to continue the harmonious relationship with them. In the meanwhile,the Respondentsfded PetitionNo. 222 (C) of 2010 before the TDSAT for a direction to the Petitioner to provide all data, clear the outstanding amount of Rs. 3,21,63,016/-and for issuing an injunction restrainingthe Petitionerpermanentlyfrom representingthe Respondents 1and 2 in any manneron all platformswith effectfrom 13"' August2010. The Petitioner claims that it made a further payment of Rs.34,63,425/- to W.P. (C) Nos. 5109, 5111 and5112 of2010 Page24 of37 the Respondents 1 and 2 on 17"^ July 2010.

42. On 28^^ July 2010 the Petitioner filed a reply to the Petition No. 222(C) of 2010 filed by Respondents 1 and 2. Independent of that, the Petitioner filed a separate PetitionNo. 248 (C) of 2010 before the TDSAT praying for a directionto declare the purportedterminationnotice dated 13"" July 2010 to be invalidand for an order restrainingthe Respondents 1, 2 and 3 from interfering with the distribution of the channels of Respondents 1 and 2 by the Petitioner.

43. By the impugnedorderdated 29"^ July 2010, the TDSAT declinedany interim relief to the Petitioner in its Petition No. 248(C) of 2010 while granting an interim relief in Petition No. 222(C) of 2010 filed by Respondents 1 and 2 restraining the Petitioner from continuing to representRespondents 1 and 2 as an aggregator.Aggrievedby the said orders in the two petitions,the above two petitionshave been filed by the Petitioner. Submissions of Counsel

44. Mr. S. Ganesh, the learned Senior counsel appearing for the Petitioner first submitted that there was a fundamental error in the approach of the TDSAT in the matter. It treated the dispute as a purely civil one arising out of the termination of a contract between two parties whereas given the W.P. (C) Nos. 5109, 5111 and 5112 of2010 Page25 of37 object and purpose of the TRAI Act and the role of the TDSAT as a regulatoras well as an adjudicator,it oughtto have a probableperspective in approaching such disputes. According to him, the TDSAT was not merely to decide whetherthe interim injunctionsought by the party was capable of being granted under the SRA, but it also had to examine the impactthat an invalidterminationof contractwould have not just on the consumers,MSOs, LCOs but on the industry as a whole. The reliefs have to be modeledkeeping in view the peculiarnature of the contractand the ramifications that an illegal termination would have on the entire industry.

45. Mr. Ganesh submitted that the powers of the Tribunal, as contained in Section 16 read with Section 15 of the TRAI Act, were indeed wide and not limited to the powers available to a civil court while deciding civil disputes concerning specific performanceof contracts. In other words, while even procedurallythe TDSAT was not bound by the CPC it was also not requiredto follow the provisionsof the SRA only in determining what relief could be granted either at the interlocutoryor at the final stage in a petition brought before it by a serviceprovider or an aggregatoror a broadcaster or a licensor or a licencee, who are all governed by the TRAI Act. Mr. Ganesh also referred to the judgment in Union of India v. Tata Teleservices(2007) 7SCC 517; the judgmentof the TDSAT dated 22""? January2010 in M.A. No. 108 of 2009 in PetitionNo. 172 of 2009 [Star (India) Pvt. Ltd. v. Bharat Sanchar Nigam Ltd.], to emphasisethat the TDSAT could not be constrained by the provisions of SRA in deciding how it should approach the issue. W.P. (C) Nos. 5109, 5111 and5112of2010 Page26of37

46. Relying upon the judgments of the Supreme Court in S.R. Tewari v. District Board, Agra (1964) 3 SCR 55, Executive Committee, U.P. Warehousing Corporation v. Chandra Kiran Tyagi 1969 (2) SCC 838 and Executive Committee of Vaish Degree College, Shamli v. Lakshmi Narain (1976) 2 SCC 58, it was submittedthat it is not as if all contracts which are incapableof being specificallyenforced,will oustthe powersof a civil court to grant interim relief. It was submitted that in each of the aforementioned three cases where there was a termination of a contract of personal service, the courts recognizedthe power of a labour court to direct the reinstatement of the employee upon finding the termination to be unlawful. It is submitted that by way of an analogy, the TDSAT too had wide powers to mould the interim relief by directing that the termination of the MOU was prima facie invalid and consequently such termination should not be given effect to during the pendency of the petition.

47. Mr.Ganesh submitted that once this Court holds the basic approach adopted by the TDSAT was erroneous,then after giving some interim protection to the Petitioner,the case should be remanded to the TDSAT for a fresh adjudication of the entire matter on merits in a time- bound manner. Mr. Ganesh referred to the four grounds on which the terminationwas effectedand pointedout that they were wholly untenable with reference to what had actually transpired between the parties. He submittedthat it was possible for the TDSAT to have come to a prima facie view that even on merits, the termination was bad. Inasmuch as the. W.P. (C) Nos. 5109, 5111 and5112 of2010 Page27of37 Petitionerhad approachedthe TDSAT even beforethe date on which the ^ terminationwas to take effect, i.e., on 13'*^ August 2010, it was possible for the TDSAT to have permittedthe contractto continuetill such time it decided the petitions finally.

48. Mr. Ganesh pointed out that given the numerous individual contracts exceeding 5000 entered into by the Petitionerwith the MSOs/LCOs, it would not be possible to renegotiatesuch contractswithin a short period of time and it would be impossible to quantify the losses. It would wipe out the Petitioner completely.It would completelydislocate the Petitioner. Given the gravity of the situation,and the repercussionsthe case would generallyhave on the televisionand cable industry the approach of the TDSAT had to be different.

49. Mr. Rajiv Nayyar, learned Senior counsel appearingfor Respondents 1 and 2 in W.P. (C) 5111 of 2010 has referredto the contractenteredinto by the Petitionerwith the DTH operators,which had an in-builtclauseto cover such contingencieswhere the Petitionermay not be able to offer a certain channel or channels as part of its bouquet. He pointed out that as long as the Petitioner had reserved to itself the right to replace the channels being offered by it in a bouquet, it could not claim to be not prepared for a contingency of this sort. There was a similar clause incorporatedby the Petitionerin the contractsentered into by it with the MSOs/LCOs.He pointed out that the actual loss, if any, sufferedby the Petitioner as a result of the renegotiationof its contracts either with the \N.P. {C) Nos. 5109, 5111 and5112of2010 Page28of37 DTH operators or the MSOs or LCOs would be quantifiable and as long as the losses could be quantified, there was no case made out for granting any interim injunction,much less an interimrelief to continuea contract.

50. Mr. Nayyarpointed out that apart from a very limitedright of being an aggregator,there was no enforceableright of the Petitioner.It had only a right to license and sub-license the channels. The Petitioner had no interest in the signals which were the property of the Government of India, or the contents of the signals which were the property of the broadcasters like Respondents 1 and 2. He submitted that given the limited scope of the powers of this Court under Article 226, interference with the impugned order of the TDSAT was not called for unless it was found to be totally perverseor a view which couldnot possiblybe taken in the facts and circumstances of the case. Mr. Nayyar referred to the judgmentsin OlympusSuperstructuresPvt. Ltd. v. Meena Vijay Khetan AIR 1999 SC 2102, Pepsi Foods v. Jai Drinks (P) Ltd. 1996 (36) DRJ 711, Ravissant Pvt. Ltd. v. D.F. Export S.A. 2008 (38) PTC 222 (Del); Star India Ltd. v. Arup Borah 2003 (2) Arb LR 202 (Gau) and Doward, Dickson & Co. v. Williams & Co. (1890) 6 TLR 316.

51. Appearingfor the Respondents1 and 2 in W.P. (C) 5112 of 2010, Dr. A.M. Singhvi, learned Senior counsel submitted that the relationship betweenthe parties was purely contractualand there was no requirement in any statute which had to be complied with by Respondents 1 and 2 beforeterminatingthe contract.He pointedout that the judgmentsreferred W.P. (C) Nos. 5109, 5111 and 5112 of2010 Page29 of37 to by the learned Senior counsel for the Petitioner were in the context of labour disputeswhere the validityof the terminationof the servicesof the employeewas an issue. Thosejudgmentshighlightedthe three exceptions to the rule that a contract of personal service cannot be specifically enforced. Those three exceptions were succinctly summarized in the Executive Committee of Vaish Degree College, Shamli v. Lakshmi Narain in para 18 (SCC @ p.71): \ ; " (i) where a public servant is sought to be removed from service in contravention of the provisions of Article 311 of the Constitution of India; (ii) where a worker is sought to be reinstated on being dismissedunder the Industrial Law; and (iii) where a statutory body acts in breach or violation of the mandatory provisions of a statute." Since the Petitioners' case did not fall in any of the above exceptions, there was no question of any mandatoryrelief being granted. Relying on the judgment in Bharat Petroleum Corporation Ltd. v. M/s Jethanand Thakordas Karachiwala 2000 (1) Bom CR 289, it is submitted that under Section 202 of the Contract Act, the agency can be terminated at any time and that the only relief that could be granted even where the terminationis illegal was to claim damages. No error in the approach of the TDSAT

52. There can be no doubt the TDSAT dons the role of both a regulatorand an adjudicatorand that on a collectivereading of Sections 15 and 16 of the TRAI Act, the powers of the TDSAT while performing W.P. (C) Nos. 5109, 5111 and 5112 of2010 Page30 of37 adjudicatoryrole are indeedwide. While the TDSAT has all the powersof a civil court, it certainly need not be constrained by what a civil court i alone can do. While deciding disputes, it is required to keep in mind the objects and purpose of the TRAI Act and interests of the major players includingthe ultimateconsumers,serviceproviders,the broadcastersand the intermediaries,includingthe aggregatorslike the Petitionerherein.

53. Having observedthis, this Court on an examinationof the impugned order of the TDSAT is unable to come to the conclusion that in passing the impugned order, the TDSAT committed any fundamental error in approachingthe issue. It cannotbe said that by referringto the provisions of the SRA or the Contract Act, the TDSAT limited the scope of its powers. First and foremost,the TDSAT was decidinga disputethat arose out of the termination of a contract. The question that arose before it was whether STAR DEN, the Petitioner herein was entitled to an interim relief of staying the effect of the terminationof the contract. The TDSAT has taken the view that given the nature of the contract, it is not possible to grant an interim injunctionthat would have the effect of continuingthe contractual relationship between the parties when clearly Respondents 1 and 2 had expressedtheir intentionby way of terminationnotice dated 13^^ July 2010 not to continue the contract. Once the contract was terminated, validly or otherwise, there was no question of placmg the parties in a position they would have been if the contract was not terminated. The TDSAT has taken a view that the losses suffered by the Petitioner on account of the termination, even if such termination was not W.P. (C) Nos. 5109, 5111 and5112of2010 Page31 of37 valid, were both quantifiable and compensatable. This Court is unable to hold that such decision of the TDSAT is perverse or not capable of being ' arrived at in the circumstances of the case.

54. The judgments referred to by the learned Senior counsel for the Petitioners are in the context of termination of contract of personal service and do not bear comparison with the case on hand. Even in those cases, a direction to reinstate an employee was not made at an interlocutory stage. Given the circumstances of the case, the TDSAT was not in error in declining to direct, at an interlocutory stage, the continuance of the MOU/Deal Memo that had been terminated. Once it is plain that the losses sufferedby the Petitionerare capable of being quantifiedand that the Petitioner can be compensated for such losses, the denial of any interim relief to it cannot be held to be unjustified. By the same yardstick, as a corollary, if the TDSAT has restrainedthe Petitioner from holding itself out as an aggregatoron behalf of the Respondents1 and 2, such an interim order can also not be said to be perverse calling for interference. Such order cannot be said to be inconsistent with the objects and purpose of the TRAI Act and the role of the TDSAT as a regulator and an adjudicatorin disputesbetweenthe serviceprovidersand broadcasters. Termination clause contains no negative covenant

55. This Court does not view Clause 14 (i) or (iv) to be negative covenants,as urged by the learned Senior counsel for the Petitioners.A negative covenant, as rightly pointed out by Mr. Nayyar, is that which l/l/.P. (C) Nos. 5109, 5111 and 5112 of2010 Page32of37 survives a termination of a contract since it spells out the obligations of either party even beyond the period of a contract. Clauses 14 (i) and (iv) are clauses that come to an end with the termination of the contract. They only talk of the pre-conditionsfor the termination.They are not, in that sense, negative covenants. Therefore, there was no question of seeking enforcement of a negative covenant with reference to Section 42 of the SRA.

56. Even if the pre-condition for termination as envisaged by Clause XX of the MOU between MSMD and Viacom 18 or Clause 14 (i) and (iv) of the Deal Memo between STAR DEN, TV18 and IBN18 are taken to be negativecovenants,that would still not improvethe case of the Petitioners for grant of any interimrelief in their favour. In this connection,reference may be made to the decision of the Supreme Court in Percept D'mark India (Pvt.) Ltd. v. Zaheer Khan AIR 2006 SC 3426, which has dealt with the issue of enforceability, at the interim stage, of a negative covenant during the post-contractualperiod. In that case, Zaheer IChan, a popularcricketerenteredinto a promotionagreementwith Percept.Clause 31(b) of the promotion agreement, which was a negative covenant, providedthat prior to the executionof the first negotiationperiod, Zaheer Khan could not accept any offer for endorsement,promotions, advertising or other affiliation with regard to any products or services and that prior to accepting any offer, he was under an obligation to provide Percept in writingthe terms and conditionsof such thirdparty and offerit the rightto match such third party offer. W.P. (C) Nos. 5109, 5111 and 5112 of2010 Page33of37

57. The SupremeCourt explainedthe law as under (AIR @p. 3437): "57. The legal position with regard to post-contractual covenants or restrictions has been consistent, unchanging and completely settled in our country. The legal position clearly crystallised in our country is that while construing the provisionsof Section27 of the ContractAct, neitherthe test of reasonableness nor the principle of restraint being partial is applicable,unless it falls within express exceptionengraftedin Section 27."

58. After surveyingthe earlier decisionsin Niranjan Shankar Golikari v. Century Spinning and• Manufacturing Co. Ltd. [1967] 2 SCR 378, Gujarat Bottling Co. Ltd. v. Coca Cola Co. AIR 1995 SC 2372 and SuperintendenceCompany of India v. Krishan Murgai (1981) 2 SCC 246, the SupremeCourt concludedthat no case was made out by Percept for compelling Zaheer Khan to appoint Percept as "his agent in perpetuity".It was observed(AIR @p. 3438): "59 In view of the personal nature of the service and relationship between the contracting-parties, a contract of agency/managementsuch as the one entered into between the appellant and respondent No. 1 is incapable of specific performanceand to enforce,the performancethereof would be inequitable. Likewise, grant of injunction restraining first respondent would have the effect of compelling the first respondentto be managed by the appellant, in substance and effect a decree of specific performance of an agreement of fiduciary or personal characteror service, which is dependent on mutual trust,' faith and confidence." W.P. (C) Nos. 5109, 5111 and5112of2010 Page34of37

59. Thereafter, deahng with the propriety of the Single Judge's order granting an injunction in favour of Percept to enforce the negative covenant against Zaheer Khan at the interim stage, the Supreme Court observed in Para 65 as under (AIR @pp. 3438-39): "65. Assuming without admitting that the negative covenant in Clause 31(b) is not void and is enforceable, it was nevertheless inappropriate,if not impermissible,for the single Judge to grant an injunctionto enforce it at the interim stage, for the following reasons: (i) Firstly, grant of this injunction resulted in compelling specificperformanceof a contractof personal, confidentialand fiduciary service, which is barred by Clauses (b) and (d) of Section 14(1) of the Specific ReHef Act, 1963; (ii) Secondly, it is not only barred by Clause (a) of Section 14(1) of the Specific Relief Act, but this Court has consistently held that there shall be no specific performance of contracts for personal services; (iii) Thirdly,this amountedto grantingthe whole or entirerelief which may be claimed at the conclusion of trial, which is impermissible. {Bank of Maharashtra v. Race Shipping AIR 1995 SC1368). (iv) Fourthly, the single Judge's order completely overlooked the principles of balance of convenienceand irreparable injury. Whereas Percept (appellant) could be fully compensated in monetary terms if they finally succeeded at trial, respondent No. 1 could never be compensated for being forced to enter into a contract with a party he did not desire to deal with, if the trial results in rejection of Percept's claim. {Hindustan Petroleum v. Sriman Narayan AIR 2002 SC 2598). W.P. (C) Nos. 5109, 5111 and 5112 of2010 Page35of37 (v) The principleswhich govern injunctivereliefsin such cases of contracts of a personal or fiduciary nature, such as managementand agency contractsfor sportsmenor performing artistes, are excellently summarised in a Judgment of the Chancery Division reported in Page Once Records v. Britton (1968) 1 W.L.R. 157. In this case it was held that, althoughthe appellant had established a prima facie case of breach of contract entitling them to damages, it did not follow that entire of them was entitled to the injunction sought; that the totality of the obligations between the parties gave rise to the fiduciary relationship and the injunction would not be granted, first, because the performanceof the duties imposed on the appellant could not be enforced at the instance of the defendants and, second, because enforcements of the negative covenants would be tantamount to ordering specific performance of this contract of personal services by the appellant on pain of the group remaining idle and it would be wrong to put pressure on the defendants to continue to employ in the fiduciary capacity of a manager and agent someone in whom he had lost confidence." (emphasis supplied)

60. Although it was argued before the TDSAT that the Petitioner's contract with Respondents 1 and 2 was that of an agency coupled with an interest, the learned Senior counsel for the Petitioner before this Court did not pursue that line of argument. Instead, he maintained that this was a principal-to-principalagreement.Be that as it may, even where it is an agency coupled with an interest,if such agency is revoked, as long as the losses and damages suffered by the agent are capable of being quantified, the question of grantingany interim relief to keep the agency alive does not arise. W.P. (C) Nos. 5109, 5111 and 5112 of2010 Page36 of37 Conclusion

61. For the aforementioned reasons, this Court finds no merit in these three writ petitions and they are dismissed as such with costs of Rs. 15,000/- each, which will be paid by the Petitioners to the respective Respondentsin equal shares within two weeks. All pending applications stand disposed of. AUGUST 11, 2010 S. MURALIDHAR, J W.P. (C) Nos. 5109, 5111 and 5112 of 2010 Page37 of37