Airtel & Star Plus TV directed to pay damages on KBC’s ‘Har Seat Hot Seat’ contest

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI

CONSUMER COMPLAINT NO. 83 OF 2007

Society of Catalysts, N – 130, Panchshila Park, New Delhi – 110 017 Complainant

versus

BEFORE:

Relevant extracts from the ORDER Dated the 11th September, 2008

The Society of Catalysts, a voluntary consumer organisation, has filed this complaint against the alleged unfair trade practices adopted by Opposite Party (OP) No. 1, Star Plus TV and OP No. 2, Bharti Airtel Ltd. (hereafter referred to as ‘Star TV’ and ‘Airtel’ respectively).

The undisputed facts are that Star TV broadcast a programme by the name of “Kaun Banega Crorepati” (in short, the ‘KBC’) between 22nd January 2007 and 19th April 2007 for the duration of one hour daily, 4 days in a week. The programme was sponsored, among others, by Airtel and carried commercial advertisements at the beginning and end of as well as during each episode of the programme. The prominent film star Shah Rukh Khan, acting as the anchor person, asked a series of questions to the selected contestants of the KBC, one of whom could win up to Rs.2 crore if he answered all the questions correctly at each round, including the final.

It further emerges from the averments of the opposite parties that during the telecast of this programme, there was another contest called the “Har Seat Hot Seat” (hereafter referred to as the ‘HSHS’) in which all TV viewers of the KBC were invited to participate. The HSHS contest consisted of answering an objective type question with four possible answers announced during each episode of the KBC. The participants of the HSHS, who thus had to be naturally viewers of the KBC to know the questions, were required to send the answers by cellular/landline phone of Airtel (or, those of MTNL or BSNL) to a number specified by Airtel, before the correct answer was flashed on the screen. The answers sent on cellular phone had to be through Airtel’s (or, MTNL’s or BSNL’s) short messaging service (in short, SMS). The winners among the participants from among those who gave the correct answers to the questions were to be each given a prize of Rs.2 lakh. Each participant/ consumer, who sent the answer using Airtel’s SMS, was required to pay Rs.2.40 per message, which was higher than the normal pulse/call rate or text messaging charges. The announcement of the OPs in this regard stated that there was no entry fee for the HSHS contest and the winner for each episode would be selected randomly out of those who sent the correct answers. There were 52 such episodes of the KBC and thus total prize money amounting to Rs.1.04 crore was paid out by the OPs. It is not denied by the OPs that in all they received 58 million text messages (hereafter, ‘SMS’s’) and thereby collected Rs. 13.92 crore from the participants of HSHS towards the charges for such messages.

It is contended by the complainant that the OPs created an impression in the minds of the viewers of the KBC that the participation in the HSHS contest was “free” and the prize money was being paid out by the organisers. But in reality the cost of organising the HSHS contest as well as the prize money was built in the cost of the SMS sent or telephone calls made by the participants to the given number of Airtel in answering the questions. The complainant has contended that this was an unfair trade practice as defined under section 2(1) (r) (3) (a) of the Consumer Protection Act, 1986 (hereinafter referred to as the CP Act).

Secondly, it has contended that apart from the aforesaid, the HSHS contest was in reality a lottery because the questions were simple and the winner was to be finally selected from among the participants providing the correct answers by a random selection and that this contest was organised jointly by Star TV and Airtel mainly to further promote their own business interests by improving the viewership of the KBC and enhancing its TRP (Television Rating Point – a criterion for indicating the popularity of a television channel or programme and the data are considered very useful for the advertisers) to command higher advertisement charges with the said programme and additional business revenue from the large number of SMS’s made by the participants. This, according to the complainant, was also an unfair trade practice under the provisions of section 2(1) (r) (3) (b) of the CP Act.

FINDINGS

WHETHER ‘HSHS’ CONTEST AN UNFAIR TRADE PRACTICE?

For deciding this controversy, we would first refer to section 2(1) (r) of the CP Act, which defines ‘unfair trade practice’ as under:

“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 :

1) ……………………….

2) …………………………

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;

(b) the conduct of any contest, lottery, game of chance or skill, for the purpose of promoting, directly or indirectly, the sale, use or supply of any product or any business interest.”

Section 2(1) (r) (3) (a) can be divided into two parts, as under:

(i) Offering of gifts, prizes or other items with an intention of not providing them as offered;

Or,

(ii) Offering of gifts, prizes by 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.

From the aforesaid second part of section 2(1) (r) (3) (a), it is apparent that if an impression is created that something is being given or offered free of charge when the prize is fully or partly covered by the amount charged in the transaction as a whole, it is an unfair trade practice.

In the present case, there is no dispute that the prize of Rs.2 lakh given to each winner of the HSHS contest was out of the payment collected through charges for calls and SMS. Further, it is not denied that, in all, 58 million SMS’s were received and normal charge of an SMS is Re.1/- per SMS or less. That means, in all, for 58 million SMS’s, Rs.13.92 crore were collected (5.8 crore x Rs.2.40). Out of the aforesaid amount, the prizes given for 52 episodes were @ Rs. 2 lakh per episode. That is, a total sum of Rs.1.04 crore was distributed as prize money for the HSHS contest, leaving a gross profit of Rs. 12.88 crore. If Re. 1/- is the normal charge per SMS, even then the total amount that would have been collected for 58 million SMS’s would be Rs. 5.8 crore, i.e., more than five times the cost of the prizes. Though the OPs have refused to disclose the costs of and revenues earned from conducting the HSHS contest on grounds of confidentiality of proprietary information, it is quite clear that @ Rs. 2.40 per SMS, the gross earning was far in excess of the cost of the prizes offered.

However, it is contended that there is nothing on record to establish that OPs 1 and 2 have created an impression that the prizes for the HSHS contest were being offered or given free of charge. In our view, such impression is apparent and no consumer would possibly imagine from the advertisements or “on screen displays” (OSD) for the HSHS contest that it was out of the funds collected by Airtel through SMS that the prizes were being paid out or, that the cost of either the entire contest or some part thereof was being met. This does not require any further proof because such an impression is apparent. From the deceptive practice of non-disclosure adopted by the Opposite Parties inference can be drawn that without informing the contestants by recovering extra large amount through SMS prizes would be distributed. Nowhere the consumers were informed that the prize would be distributed out of the fund collected from SMS messages.

Further, it is seen that though the issues raised in the complaint are entirely about the conduct of the HSHS contest and have nothing to do with the programme KBC on which the HSHS contest took a ‘piggy-ride’ of sorts, OP. 2 has tried to obfuscate matters by referring to the KBC programme, and not the contest HSHS, when it states that the complaint cannot lie against it because it is merely a sponsor of the KBC. Secondly, the two copies of the newspaper advertisements that OP 2 has produced on record are only about participating in the KBC, not the HSHS. Thirdly, OP no. 1, in its 102-page affidavit in reply to the complaint, has not produced one piece of paper to show what indeed was advertised to inform the participants about the terms and conditions applicable to the HSHS contest. Other than a copy of the rules relating to the HSHS contest, claimed to have been put up on a certain website, there is nothing worthwhile to substantiate its claim that no impression was created that the HSHS contest and the prize money therefor were not entirely free. Further, as would be clear from the extracted portions of their averments, there is clear contradiction between the averred stands of the two OPs on whether the contest HSHS was advertised as “free”. This lends further credence to the complainant’s contention that an impression was indeed created as alleged in the complaint.

Further, much has been made out by the OPs that the SMS charge @ Rs. 2.40 per text message was justified because of the extra costs of “specialist vendors, costly software, backend and frontend facilities, exclusive trained manpower, etc.” However, it is nowhere stated explicitly that this was indeed the case with the conduct of the HSHS contest. Both Airtel and Star Plus TV have been in the business of conducting such contests for long – in fact, it is an admitted position that the KBC in question was the third ‘avatar’ of the first KBC. In this set of circumstances, there is no question of value added service by the opposite party.

Similarly, it is nowhere shown by Airtel, except as the general proposition extracted from its averment and quoted above, that all, or at least some, of the extra costs on the aforesaid items were actually incurred by it to conduct the HSHS contest per se, which would by itself justify the rate of Rs. 2.40 per SMS message. In fact, the stand is that these are in the nature of confidential proprietary information. Moreover, it is quite clear that while there may have been many sponsors of the programme KBC and Airtel was one of them, in respect of the HSHS contest, announced and conducted in tandem with the KBC, there was a special business relationship between Star Plus TV and Airtel which included, inter alia, some undisclosed arrangement of sharing the net earnings from the SMS’s. These facts on record also lead to the conclusion that there is some force in the complainant’s contention that the HSHS contest was, in fact, an attempt to (at least, indirectly) promote the business interests of both OPs. 1 and 2.

Therefore, it is our view that there is nothing on record to establish that either of the OPs made it clear that the prizes for the HSHS contest would be offered to the participants from the funds collected out of the charges for SMS’s sent by the participants themselves or that the HSHS contest was being conducted out of other sources of funds or that Airtel would not pay any amount from its collection from SMS’s to Star TV or that the HSHS contest was not with a view to promoting the business interests of Star TV and Airtel. Such offering of the gifts/prizes when it is fully or partly covered by the amount charged through SMS’s as a whole is an unfair trade practice as the same is not disclosed to the contestants.

It is true that participation in the programme by the consumers was voluntary but at the same time it was due to the temptation of getting prize money of Rs.2 lakhs by sending correct answers through SMS.

Further, even if the SMS rates were declared but the prize/gift amount was distributed out of the revenues collected from the SMS charges, it amounts to unfair trade practice as contemplated under sub-clause (3) of section 2(1)(r) of the Act.

In this view of the matter, it is apparent that Opposite Parties adopted deceptive practice and permitted offering of prizes by suppressing the fact that the prizes would be distributed out of collection of amount through SMS. Normally, contestant would gather impression that prize money of Rs.2 lakhs is offered free of charge even though it is fully covered by the amount charged in a transaction as a whole. In temptation of getting the prizes, the contestants would not bother to spend small additional amount for sending SMS messages which would result in large profit to the opposite parties. The common consumer is vulnerable to such enticement.

In view of the aforesaid finding, we are not discussing the second contention of the complainant that conduct of such a contest was for the purpose of promoting directly or indirectly the business interests of the opposite parties which also amounts to unfair trade practice as defined under section 2(1)(r)(3).

MAINTAINABILITY OF THE COMPLAINT

The learned counsel for the OPs have vigorously contended that the complaint is not maintainable under the CP Act in view of the provisions of section 14 of the TRAI Act. For this purpose, heavy reliance is placed on section 14A which, inter alia, provides that only the TDSAT would adjudicate any dispute “between a service provider and a group of consumers”.

It is to be stated that the dispute in the present case is not between a telecommunication (telecom) service provider and a group of consumers qua the services which are required to be rendered by that service provider. The term ‘service provider’ as defined in section 2(1)(j) of the TRAI Act means “the Government as a service provider and includes a licensee”. As provided under section 2(1)(e) of the said Act, “licensee” means “any person licensed under sub-section (1) of section 4 of the Indian Telegraph Act, 1885 for providing specified public telecommunication services”.

OP no.2 can be considered to be a licensed Telecommunication (telecom) service provider under the TRAI Act but it is important to distinguish that the dispute does not pertain to the entertainment or telecom services which are provided by Star TV or Airtel. The dispute pertains to unfair trade practice, as contemplated under section 2 (1) (r) (3) of the CP Act, adopted by OPs no.1 and 2 in offering prizes for the HSHS contest out of the monies collected from the contestants, without making it known to them. It is to be stated that even the opposite parties specifically averred and emphasized that there is no violation of tariff prescribed by the TRAI. In such set of circumstances, there is no question of approaching the TDSAT. Therefore, it cannot be said that such a dispute can be adjudicated only by the TDSAT.

Further, in the present case, the complainant is a Society which is to be considered as an individual who is entitled to file a complaint under the CP Act for protecting the rights of the consumers as a whole and that is specifically provided under the CP Act as well as under the TRAI Act. Under section 2(1)(b) of the CP Act, a complaint can be filed by any voluntary consumer association registered under the Companies Act or under any other law for the time being in force. It can also be filed by one or more consumers where there are numerous consumers having the same interest. In the present case, numerous consumers have not approached us but a voluntary consumer association has filed this complaint and it is specifically provided under section 14-B of the TRAI Act that such a complaint is maintainable before the consumer fora.

CONCLUSION

In view of the foregoing discussion, the complaint is allowed partly. Star Plus TV and Bharti Airtel Ltd. are held to have violated the provisions of section 2 (1) (r) (3) of the CP Act in conducting the “Har Seat Hot Seat” contest which was in conjunction with the main television show, “Kaun Banega Crorepati” and thereby adopted unfair trade practice.

From the facts stated above and on the basis of the admitted fact that Opposite Party No.2, Bharti Airtel Ltd. received 58 million SMS text messages, it goes without saying that this practice resulted in to increase their business. Further, normal charge of the 58 million SMSs would have fetched only a maximum of Rs.58 million, i.e., Rs.5.8 crore.

As against this, they received a large amount of Rs.13.92 crore from SMS messages. Further, the excess revenue (Rs.13.92 crore minus Rs.5.80 crore) comes to Rs.8.12 crore. Out of this, they distributed prizes amounting to Rs.1.04 crore. Still, the surplus revenue comes Rs.7.08 crore. However, in such a case, there is no question of paying any compensation to the complainant because the complainant is a voluntary consumer organisation which has highlighted the unfair trade practice committed by Star Plus TV and Bharti Airtel Ltd. But, at the same time, in terms of proviso to section 14(1)(d), this would be a fit case for awarding punitive damages. Considering the large amount of profit earned and the large number of consumers affected, this would be a fit case for imposing punitive damage of Rs.1 crore which only comes to approximately 14% out of the surplus revenue of Rs.7.08 crore.

In the result, the Star Plus TV and the Bharti Airtel Ltd., Opposite Parties No.1 and 2, are directed to pay jointly and severally damages of Rs.1 crore. They are hereby directed to deposit the said sum of Rs.1 crore with the Registrar of this Commission, who in turn, shall deposit the same to the credit of the Consumer Welfare Fund (Rule 9). The Opposite Parties No.1 and 2 are also directed to pay Rs.50,000/- to the Complainant towards litigation costs.

We highly appreciate the efforts made by complainant, the Voluntary Consumer Association. We also appreciate the services rendered by Shri Atul Nanda, Amicus Curiae.