Exchange of letters for reaching a pact or partial payment doesn't amount to formal agreement: TDSAT

NEW DELHI: Rejecting a petition by Asianet Satellite Communication, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) has noted that a payment made by Sathyadhara Communications "purely as a goodwill gesture and in the hope of reaching an agreement” cannot be taken to mean that the parties had reached any agreement or Satyadhara had given any approval for the same.

Referring to one of the main disputes, which was about placement of certain channels, TDSAT chairman Justice Aftab Alam and member Kuldip Singh said, “The primary reason why broadcasters pay for placement of their channels is to popularise them. Revenue to the broadcasters comes from two streams, which are subscription fees, and advertisements. The channels having more viewership command more subscription fees as well as revenue from advertisements. It is for this reason that when channels are relatively new, broadcasters pay for their placement. Naturally, they want their channels to be placed with existing popular channels of a similar genre. For example, if an entertainment channel is placed near some religious channels, it is not likely to be visible to the viewers looking for an entertainment channel. Even when a viewer is surfing different channels, the channels in earlier slots are more likely to be viewed than those in the later slots. It is for this reason that both the slot and the neighbourhood in which a channel is placed becomes important for a broadcaster.”

The Tribunal said as seen from the facts of this case, this was the major reason why an agreement was not reached between the parties.

The petition had been filed for recovery of a sum of Rs 1.30 crore allegedly payable by Sathyadhara towards balance of carriage fees for the year 2012-13. A further sum of Rs 20.47 lakh had also been claimed as interest at 18 per cent p.a. for the delay in payment of the carriage fees.

Asianet is operating both as a multi system operator (MSO) and a local cable operator (LCO) in Kerala. It distributes signals of various TV channels directly, as well as through other cable operators, to individual subscribers. Satyadhara is a broadcaster, which runs Darshana TV.

A carriage agreement dated 8 August, 2011 was signed between the parties and was valid for one year from 1 September, 2011 to 31 August, 2012. Under this, Asianet was to carry and retransmit signals of Darshana TV. For the carriage of this channel, Sathyadhara was to pay an amount of Rs 60 lakh per year exclusive of taxes for the period of the agreement. This agreement or the payment under it are not in dispute.

The dispute pertains to a period starting from 1 September, 2012 till the disconnection of carriage of signals by Sathyadhara on 20 November, 2013. Asianet has claimed that both parties wanted to continue the agreement even after the expiry on 31 August, 2012.

The Tribunal took note of the exchange of letters between the parties to come to a formal agreement and particularly about the placement of Sathyadhara’s channel but said this did not mean that any agreement had been reached.

TDSAT also rejected the argument by Asianet counsel Shirin Khajuria that a draft agreement sent to Sathyadhara for execution “is tantamount to an oral contract between the parties.”

The Tribunal said that placement of the channel continued to be the main dispute in the letters sent by the two parties.

There were other differences with respect to the payment terms and other clauses of the agreement as well as the period of the agreement, the Tribunal noted. There was no agreement between the parties as the witness admitted Sathyadhara sought payment in instalments and also sought specific placement of its channels in the cable TV network of the petitioner.

There was no acceptance of the offer made by Asianet by Sathyadhara and hence, there no concluded contract. On the contrary, Sathyadhara was willing to enter into agreement subject to Asianet agreeing to certain terms and conditions.

The Tribunal said the law in this regard is very clear and in a fairly recent case, the Supreme Court had held that in the absence of an acceptance of the bid of the plaintiff by a written communication, there is no concluded contract in favour of the plaintiff in relation to the offer made by it.

The Tribunal rejected arguments on the basis of Section 70 of the Indian Contracts Act as the parties were in discussion but could not come to any agreement.

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