Whether the ‘Kaun Banega Crorepati’ (“KBC”) programe was unfair Trade Practice ? No Star India (P) Ltd., the Appellant in C.A. No. 6597/2008 (hereinafter “Star India”) used to broadcast the programme ‘Kaun Banega Crorepati’ (“KBC”) between 22.1.2007 and 19.4.2007. The programme was sponsored by Bharti Airtel Limited, the Appellant in C.A. No. 6645/2008 (hereinafter “Airtel”), amongst others. During the telecast of this programme, a contest called ‘Har Seat Hot Seat’ (“HSHS contest”) was conducted, in which the viewers of KBC were invited to participate. An objective­type question with four possible answers was displayed on the screen during each episode, and viewers who wished to participate were required to send in the correct answer, inter alia through SMS services, offered by Airtel, MTNL and BSNL, to a specified number. The winner for each episode was randomly selected out of the persons who had sent in the correct answers, and awarded a prize money of Rs. 2 lakhs. There was no entry fee for the HSHS contest. However, it is not disputed that participants in the HSHS contest were required to pay Rs. 2.40 per SMS message to Airtel, which was higher than the normal rate for SMSes. Hence, Respondent No. 1, which is a consumer society (hereinafter “the complainant”), filed a complaint before the National Commission against Star India and Airtel (but not against BSNL and MTNL), contending that they were committing an ‘unfair trade practice’ within the meaning of Section 2(1)(r)(3)(a) of the Consumer Protection Act, 1986 (“the 1986 Act”). It was alleged that the Appellants had created a false impression in viewers’ minds that participation in the HSHS contest was free of cost, whereas the cost of organizing the contest as well the prize money was being reimbursed from the increased rate of SMS charges, and the profits from these charges were being shared by Airtel with Star India. Further, it was alleged that an unfair trade practice had also been committed inasmuch as the contest was essentially a lottery as the questions were simple, and the winners were finally picked by random selection. The purpose of this contest was to promote the business interests of the Appellants by increasing the viewership and Television Rating Points (TRP’s) of the KBC programme, and thus to command higher advertising charges, and also by increasing the revenue earned from SMS messages. Hence the Appellants were culpable for conducting a lottery­like contest to promote their business interests under Section 2(1)(r)(3)(b) of the 1986 Act. Apex court held that we find that the complainant has clearly failed to discharge the burden to prove that the prize money was paid out of SMS revenue, and its averments on this aspect appear to be based on pure conjecture and surmise. We are of the view that there is no basis to conclude that the prize money for the HSHS contest was paid directly out of the SMS revenue earned by Airtel, or that Airtel and Star India had colluded to increase the SMS rates so as to finance the prize money and share the SMS revenue, and the finding of the commission of an “unfair trade practice” rendered by the National Commission on this basis is liable to be set aside.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 6597 OF 2008
Star India (P) Ltd. Appellant(s)
VERSUS
Society of Catalysts & Anr. Respondent(s)
WITH
CIVIL APPEAL NO. 6645 OF 2008
J U D G M E N T
MOHAN M. SHANTANAGOUDAR, J.
These appeals arise out of the judgment dated 11.9.2008 of
the National Consumer Disputes Redressal Commission (“National
Commission”) allowing the consumer complaint filed by Respondent
No. 1 in both these appeals against the Appellants.
1

  1. The brief facts giving rise to these appeals are as follows:
    2.1 Star India (P) Ltd., the Appellant in C.A. No. 6597/2008
    (hereinafter “Star India”) used to broadcast the programme ‘Kaun
    Banega Crorepati’ (“KBC”) between 22.1.2007 and 19.4.2007. The
    programme was sponsored by Bharti Airtel Limited, the Appellant in
    C.A. No. 6645/2008 (hereinafter “Airtel”), amongst others. During
    the telecast of this programme, a contest called ‘Har Seat Hot Seat’
    (“HSHS contest”) was conducted, in which the viewers of KBC were
    invited to participate. An objective­type question with four possible
    answers was displayed on the screen during each episode, and
    viewers who wished to participate were required to send in the
    correct answer, inter alia through SMS services, offered by Airtel,
    MTNL and BSNL, to a specified number.
    2.2 The winner for each episode was randomly selected out of the
    persons who had sent in the correct answers, and awarded a prize
    money of Rs. 2 lakhs. There was no entry fee for the HSHS contest.
    However, it is not disputed that participants in the HSHS contest
    were required to pay Rs. 2.40 per SMS message to Airtel, which was
    higher than the normal rate for SMSes. Hence, Respondent No. 1,
    2
    which is a consumer society (hereinafter “the complainant”), filed a
    complaint before the National Commission against Star India and
    Airtel (but not against BSNL and MTNL), contending that they were
    committing an ‘unfair trade practice’ within the meaning of Section
    2(1)(r)(3)(a) of the Consumer Protection Act, 1986 (“the 1986 Act”). It
    was alleged that the Appellants had created a false impression in
    viewers’ minds that participation in the HSHS contest was free of
    cost, whereas the cost of organizing the contest as well the prize
    money was being reimbursed from the increased rate of SMS
    charges, and the profits from these charges were being shared by
    Airtel with Star India.
    2.3 Further, it was alleged that an unfair trade practice had also
    been committed inasmuch as the contest was essentially a lottery
    as the questions were simple, and the winners were finally picked
    by random selection. The purpose of this contest was to promote
    the business interests of the Appellants by increasing the
    viewership and Television Rating Points (TRP’s) of the KBC
    programme, and thus to command higher advertising charges, and
    also by increasing the revenue earned from SMS messages. Hence
    3
    the Appellants were culpable for conducting a lottery­like contest to
    promote their business interests under Section 2(1)(r)(3)(b) of the
    1986 Act.
    2.4 It is relevant to note that the complainant is only a voluntary
    consumer organization which has filed this complaint as part of its
    objective of furthering the consumer protection movement. It is not
    their case that they have participated in the HSHS contest and
    incurred any loss on account thereof. It is further relevant to note
    that the complainant’s assertions are solely based on a survey
    which it had carried out, in which the majority of participants
    apparently stated that they were under the impression that
    participation in the HSHS contest was free and the SMS charges
    were retained only by the service provider, i.e. Airtel and most of the
    viewers felt that the contest was carried out to increase the
    popularity of the KBC programme. The conclusions of this survey
    were apparently confirmed by a newspaper report dated 15.7.2007
    published by the Hindustan Times. As per this newspaper report,
    Airtel received 58 million SMS messages, and the revenue earned
    from the SMSes was shared by Star India and Airtel.
    4
  2. The National Commission in the impugned judgment observed
    that though the Appellants had not disclosed the revenue earned
    from the HSHS contest on grounds of confidentiality of proprietary
    information, it was apparent that they had created an impression
    that the prize money was being given free of charge, even though
    they had not disputed that the prize money for the HSHS contest
    was paid out of the money collected through SMS charges. The
    Commission relied upon the figures stated in the newspaper article
    dated 15.7.2007 (supra), and found that since the Appellants had
    not denied that they had received 58 million SMSes, they would
    have collected Rs. 13.92 crore from the participants of the HSHS
    contest for such messages, whereas a total sum of only Rs. 1.04
    crores was paid as prize money. Thus, the gross earnings of the
    Appellants were disproportionate to the cost of the prizes offered.
    3.1 The Commission further found that no viewer could discern
    from the on­screen advertisements that the costs of the contest
    were being met through the SMS charges, and the Appellants had
    clearly not notified viewers about the same. It found a contradiction
    between the Appellants’ stances as to whether the HSHS contest
    was advertised as ‘free’ or not. It was also observed that the
    5
    Appellants had not brought any evidence on record to show that the
    transmission of SMS messages for the HSHS contest was a value
    added service such that the higher SMS cost was justified, and
    hence the same could not be construed as a value added service. It
    was presumed by the National Commission that the special
    business relationship between Star India and Airtel included an
    undisclosed revenue sharing agreement.
    3.2 Hence, it was held that since the prize money for the HSHS
    contest was fully or partly covered by the revenue earned from
    increased SMS charges, the Appellants had committed an unfair
    trade practice under Section 2(1)(r)(3)(a) of the 1986 Act. In light of
    this finding, the National Commission found it unnecessary to deal
    with the complainant’s contention regarding commission of an
    unfair trade practice under Section 2(1)(r)(3)(b).
    3.3 The National Commission additionally held that the complaint
    was maintainable under the 1986 Act and need not have been
    preferred before the Telecom Disputes Settlement and Appellate
    Tribunal (“TDSAT”) under the Telecom Regulatory Authority of India
    Act, 1997 (“TRAI Act”). Further, it was held that the complaint was
    6
    not bad for non­joinder of parties as there was nothing on record to
    suggest that BSNL and MTNL had also recovered large amounts
    from the SMS charges for the HSHS contest and that the amount so
    recovered by them was used for sharing the cost of the prize money.
    3.4 Hence, the complaint was accordingly allowed by the National
    Commission. Since the complainant is only a consumer
    organization, the National Commission observed that there were no
    grounds for granting compensation. However, it awarded punitive
    damages of Rs. 1 crore under the Proviso to Section 14(1)(d) of the
    1986 Act, for which both Appellants were held jointly and severally
    liable. The National Commission also directed them to pay litigation
    costs of Rs. 50,000 to the complainant. Hence these appeals before
    us.
  3. Learned senior counsel for Star India, Shri Gaurav
    Pachnanda, submitted that the entire finding of ‘unfair trade
    practice’ was based on inferences and speculation, and on reliance
    on a newspaper report without corroboration of its contents, which
    was impermissible. He disputed the finding of the National
    Commission that the Appellant had admitted that the prize money
    7
    was paid out of the revenue earned from increased SMS rates. It
    was stressed that the National Commission had omitted to inquire
    into the source of the prize money. It was also stressed that Airtel
    had not shared the revenue earned from the increased SMS rates
    with Star India at all. The only monetary flow between them was a
    fixed periodic lumpsum to be paid by Airtel under the services­cumsponsorship agreement between them, which bore no relation to the
    revenue received from the SMSes, and that there was no evidence to
    suggest that the SMS revenue was used to pay the prize money. The
    learned counsel emphatically argued that the expression “covered
    by the amount charged in the transaction as a whole” under
    Section 2(1)(r)(3)(a) of the 1986 Act only meant direct recovery from
    the price paid for the transaction, and not from advertisements or
    sponsorship, citing the decision of this Court in HMM Ltd. v.
    Director General, Monopolies & Restrictive Trade Practices
    Commission, (1998) 6 SCC 485.
    4.1 It was further submitted that Airtel was entitled to charge a
    higher rate for the SMSes sent in pursuance of the HSHS contest,
    since the transmission of SMSes to register options in a multiple
    8
    choice question game required a special software, the use of which
    constituted a value­added service; and that Star India had complied
    with the relevant TRAI regulations mandating that such increased
    tariff be displayed on the television screen as well as on the KBC
    programme website. Therefore, though the participants bore the
    cost of sending the SMS messages, they were duly informed of the
    same, while participation in the contest itself remained free of
    charge. In such circumstances, the National Commission could not
    have attributed recovery of prize money to the increased tariff rate
    of the SMSes without even inquiring into the breakup of cost, value
    addition and profit in the tariff.
    4.2 The learned counsel also challenged the award of damages, for
    lack of proof of loss or legal injury to the participants in the contest,
    which he submitted was required as per Section 14(1)(d) of the
    1986 Act. Lastly, he argued that “punitive damages” could not have
    been awarded without a specific prayer for the same in the
    complaint.
  4. Learned counsel for Airtel, Shri Aditya Narain, urged that as
    far as the commission of an unfair trade practice was concerned,
    9
    the only finding rendered by the National Commission was
    regarding the creation of a wrongful impression that the contest
    was conducted free of charge, which is covered under the second
    part of Section 2(1)(r)(3)(a) of the 1986 Act, and that the same was
    not attracted in the present case. He took us through the TRAI
    direction regarding advertisement of premium rate services,
    pleading compliance with the same. Finally, he submitted that the
    jurisdiction of the consumer fora was ousted by Section 14(a)(iii)
    read with Section 15 of the TRAI Act, which provide that any
    dispute between telecom service providers and “a group of
    consumers” have to be referred to the TDSAT, and that the
    complainant organisation was essentially nothing but a group of
    consumers since it was purporting to represent the interest of
    consumers at large.
  5. Learned Counsel for the complainant, Ms. Madhumita
    Bhattacharjee, on the other hand, argued in favour of the decision
    of the National Commission, submitting that the Appellants had
    given the wrongful impression to consumers that the HSHS contest
    prize money was not paid out of the revenue generated from
    10
    increased SMS tariff rates. She also averred that the complaint
    contained a prayer as to punitive damages, and thus the National
    Commission had not erred in awarding punitive damages. Finally,
    she submitted that the complaint was maintainable under the 1986
    Act since the complainant had filed an individual complaint under
    the Act, and not acted on behalf of a group of consumers, thus
    attracting the exemption available to individual consumers under
    proviso (B) to Section 14 (a)(iii) of the TRAI Act.
  6. We have heard all the parties and given due consideration to
    the material on record.
  7. It is apparent that the crucial question to be determined in the
    instant case is whether an unfair trade practice has been
    committed by the Appellants in the conduct of the HSHS contest, in
    terms of Section 2(1)(r)(3) of the 1986 Act. We hasten to emphasize
    at this juncture itself that though the complainant had also pleaded
    violation of Section 2(1)(r)(3)(b) of the 1986 Act in their complaint,
    there was no express finding rendered on this issue by the National
    Commission, and subsequently, no contentions were made before
    us in this respect. Thus, the limited question before us is whether
    11
    an unfair trade practice has been committed only within the
    meaning of Clause (a) of Section 2(1)(r)(3). It would be useful to
    begin by referring to the relevant portion of the definition of “unfair
    trade practice” under Section 2(1)(r)(3):
    “(r) “unfair trade practice” means a trade practice
    which, for the purpose of promoting the sale, use or
    supply of any goods or for the provision of any service,
    adopts any unfair method or unfair or deceptive practice
    including any of the following practices, namely;—

    (3) permits—
    (a) the offering of gifts, prizes or other items with the
    intention of not providing them as offered or creating
    impression that something is being given or offered free
    of charge when it is fully or partly covered by the amount
    charged in the transaction as a whole;…”
    8.1 Evidently, the mischief that the clause seeks to address may
    be in two forms: firstly, the offering of gifts, prizes or other items
    with the intention of not providing them as offered, and secondly,
    the creation of the impression that something (i.e. a gift, prize or
    other item) is being given or offered free of charge in spite of the
    cost of the item actually being covered either fully or partly by the
    amount charged in the relevant transaction, as a whole. This would
    be, for example, where the vendor of a good or service deceptively
    increases the price of the good or service being sold, and covers the
    12
    cost of a prize or gift offered for ‘free’ along with the good or service
    through such increased price.
    8.2 In the instant matter, the controversy regarding the
    commission of an unfair trade practice pertains to the second part
    of the clause. This is because the Appellants are questioning the
    conclusion of the National Commission that the amount of prize
    money paid in the HSHS contest was in fact at least partly covered
    by the increased SMS tariff rate charged to participate in the
    contest, and that the Appellants had created a false impression to
    the contrary, i.e., that participation in the HSHS contest was free of
    charge. Thus, the primary bone of contention between the parties is
    the source of the funds out of which the prize money has been paid
    by Star India.
  8. At the outset, after going through the written submissions of
    the Appellants before the National Commission, we are compelled to
    conclude that the National Commission had no basis to hold that
    the Appellants had admitted that the prize money for the HSHS
    contest was distributed out of the revenue collected from the SMSes
    sent in pursuance of the contest. It is true that the Appellants had
    13
    not specifically denied that the prize money was paid out of the
    increased SMS charges. However, they had clarified in their
    submissions that Airtel was merely a sponsor/advertiser of the
    program, and the commercial arrangement between the parties was
    that Airtel would pay sponsorship charges, whereas Star India
    would be independently liable for paying the prize money out of its
    pocket regardless of the revenue earned by Airtel.
  9. Importantly, we further find that apart from the
    aforementioned facts, there is no other cogent material on record
    upon which the National Commission could have placed reliance to
    render the finding of ‘unfair trade practice’ under Section 2(1)(r)(3)
    (a) of the 1986 Act. The National Commission had sought to rely on
    the newspaper report dated 15.7.2007 published in the Hindustan
    Times (supra) regarding the amount of revenue and profit earned by
    the appellants from the HSHS contest. We are of the considered
    opinion that such reliance was unwarranted, inasmuch as there
    was absolutely no corroboration for the allegations therein with
    respect to the number of SMSes received, and the breakup of
    revenue earned into cost, value addition from service, and profit.
    14
    Moreover, the survey report on the basis of which these allegations
    were made was not even produced before the National Commission
    or before us.
  10. It is further relevant to note that there exists a services­cumsponsorship agreement between the Appellants, which contains the
    specific details of the commercial arrangement between them. They
    did not produce the same before the National Commission, claiming
    that the said agreement contained a confidentiality clause, and
    could only be produced in accordance with law if required. The
    Appellants’ case is that they would have offered to produce the
    agreement if the National Commission had given a specific direction
    to that effect. However, no such direction was rendered at any point
    during the proceedings before the National Commission. Even the
    complainant did not, throughout the course of the proceedings,
    seek a direction to the Appellants to produce the services­cumsponsorship agreement. Be that as it may, to establish whether
    there was any substance in the National Commission’s conclusion
    that the prize money was paid out of the revenue earned from
    15
    Airtel’s SMS services during the HSHS contest, we deemed it fit to
    examine the agreement ourselves.
    11.1 Our perusal of the services­cum­sponsorship agreement
    reveals that Airtel had the sole and exclusive right to charge fees or
    charges towards the services rendered by it to facilitate
    participation in the HSHS contest, through SMS, telecalling, etc.,
    and thus, Star India had no role in determining the same. Further,
    Airtel was liable to pay a monthly lumpsum as fees to Star India,
    irrespective of whether such amount was realized from its
    subscribers or not. There is no provision in the agreement for
    revenue­sharing between the parties, or requiring Airtel to finance
    any part of the prize money paid by Star India towards the HSHS
    contest.
    11.2 Thus, it is evident that Star India was liable to pay the
    prize money irrespective of the profits earned by Airtel. It is
    needless to say that the sponsorship money paid by Airtel would
    come from various sources of revenue, which includes the money
    earned from the tariff rates for the HSHS contest. Similarly, Star
    India may have had many sources of revenue from which the prize
    16
    money could have been paid. This is a part and parcel of the
    ordinary business dealings of the Appellants, and the complainant
    has failed to establish any direct linkage between the increased
    SMS tariff rates and the prize money so as to show that the prize
    money was deceptively recovered in the guise of increased SMS
    rates charged to the participants.
  11. Further, since the National Commission failed to conduct any
    inquiry whatsoever into the breakup of the price of Rs. 2.40 per
    SMS fixed for the purpose of participation in the HSHS contest, we
    are of the view that the finding of the National Commission that the
    SMS service offered by Airtel under the HSHS contest did not
    constitute a value­added service is liable to be set aside. Indeed, the
    services­cum­sponsorship agreement reveals that Airtel was liable
    to set up the hardware and software required for the HSHS contest
    at its own cost, which suggests that the services regarding the
    participation in the HSHS contest through SMSes offered by Airtel
    constituted a value­added services separate from its ordinary SMS
    service. It is reasonable to assume that such cost would have been
    recovered by Airtel, at least in part, through the increased cost of
    SMSes sent by subscribers participating in the HSHS contest. The
    17
    direction on ‘Premium Rate Services’ dated 3.5.2005, issued by
    TRAI, which was referred to by the Appellants, also states that
    televoting and participating in quizzes, etc. through SMS
    constitutes a value added service, and that in most of these cases,
    the charges for these services are more than the normal tariff rate.
    The notification is reproduced below:
    “F. No. 305­8/2004­QOS
    TELECOM REGULATORY AUTHORITY OF INDIA
    A­2/14, Safdarjung Enclave, New Delhi­110029
    Dated : 3rd May, 2005
    To,
    All Cellular Mobile Service Providers
    All Unified Access Service Providers
    Subject : Direction on Premium Rate
    Services.
  12. The Authority has observed that in the last few
    months, a number of operators and also some
    independent agencies have started providing
    value added services like quiz, ringtones,
    televoting etc. through SMS. In most of these
    cases, the charges for these services are more
    than the normal published tariffs. The
    customers are informed about these value added
    premium rate services through SMS,
    advertisements in newspaper or T.V. But in this
    communication, the cost implication of the
    service is not intimated. Sometimes the
    18
    messages are only followed by wordings “T&C
    Apply”.
  13. In the present multi­operator multi service
    scenario, such premium rate services have
    increased considerably. The service provider is
    aware of the pulse rate for these services as
    either the service provider is providing such
    services or it has an agreement with the provider
    of such premium services. However, the cost for
    such premium services is generally known to the
    customer only after the service has been utilized
    and the bill is received. This practice of service
    providers is against the interest of the
    consumers.
  14. In view of the above, in the consumer’s interest,
    the Authority in exercise of its power conferred
    upon it under Section 13 read with Section 11(1)
    (b)(i) and (v) of the Telecom Regulatory Authority
    of India Act, 1997 and clause 9 and 11 of the
    Telecommunication Tariff Order 1999 hereby
    directs all the Cellular Mobile Service Providers
    and Unified Access Service Providers to publish
    in all communications/advertisements relating
    to premium rate services, the pulse rate/tariff
    for the service.
    This issues with the approval of the Authority.
    (Sudhir Gupta)
    Advisor (QOS)”
  15. However, we need not dwell on this issue much longer, since
    not much turns upon it with regard to the determination of the
    commission of an unfair trade practice, except to note that the
    transmission of SMSes for the purpose of the HSHS contest being a
    19
    value added service, the Appellants had also taken care to comply
    with the TRAI direction dated 3.5.2005 (supra) which mandated the
    communication/advertisement of any increase in the cost of cellular
    services on account of the rendering of such a value­added service.
    Thus, even if the SMS charge is taken as the ‘cost’ of participating
    in the contest for the purpose of Section 2(1)(r)(3)(a) of the 1986 Act,
    it cannot be said that the Appellants had wrongfully advertised the
    charges for the same.
  16. Hence, we find that the complainant has clearly failed to
    discharge the burden to prove that the prize money was paid out of
    SMS revenue, and its averments on this aspect appear to be based
    on pure conjecture and surmise. We are of the view that there is no
    basis to conclude that the prize money for the HSHS contest was
    paid directly out of the SMS revenue earned by Airtel, or that Airtel
    and Star India had colluded to increase the SMS rates so as to
    finance the prize money and share the SMS revenue, and the
    finding of the commission of an “unfair trade practice” rendered by
    the National Commission on this basis is liable to be set aside.
    20
  17. With regard to the award of punitive damages made by the
    National Commission, the same could not have been done in as
    much as the complainant in the present case had not prayed for
    punitive damages in the complaint or proved that any actual loss
    was suffered by consumers (See General Motors (India) Private
    Limited v. Ashok Ramnik Lal Tolat, (2015) 1 SCC 429). However,
    we need not delve further into this aspect since we have found that
    there was no unfair trade practice committed by the Appellants in
    the first place.
  18. On an ancillary note, it was briefly contended before us by the
    learned counsels for the Appellants, as mentioned supra, that the
    National Commission did not have jurisdiction over the complaint
    and it should have been referred to the TDSAT. However, this
    argument was not seriously pressed by either of the parties. Hence,
    we do not find it relevant to adjudicate upon this issue for the
    purpose of the present matter. However, the question of law, as
    regards the maintainability of complaints filed by consumer
    organisations against telecom service providers before consumer
    fora may be kept open.
    21
  19. Thus, we find that the finding of the commission of an unfair
    trade practice under Section 2(1)(r)(3)(a) in the impugned judgement
    is bad in law. The appeals are allowed and the impugned judgement
    is set aside in the aforesaid terms.
    …..……………………………………..J.
    (MOHAN M. SHANTANAGOUDAR)
    ….………………………………………J.
    (R. SUBHASH REDDY)
    New Delhi;
    January 23, 2020
    22