STAR INDIA (P) LTD.versusSOCIETY OF CATALYSTS & ANR.

1188                      [2020]REPORTS
                SUPREME COURT    2 S.C.R. 1188               [2020] 2 S.C.R.


 A                            STAR INDIA (P) LTD.
                                         v.
                       SOCIETY OF CATALYSTS & ANR.
                          (Civil Appeal No. 6597 of 2008)
 B                              JANUARY 23, 2020
                     [MOHAN M. SHANTANAGOUDAR
                       AND R. SUBHASH REDDY, JJ.]
              Consumer Protection Act, 1986 – s.2(1)(r)(3)(a) – Unfair trade
       practice – A television channel-Star India (P) Ltd used to broadcast
 C
       the programme ‘KBC’ and the programme was sponsored by a
       cellular mobile service provider-Airtel – During the telecast of this
       programme, a contest ‘HSHS’ contest was conducted, in which the
       viewers of programme were invited to participate and viewers who
       wished to participate were required to send in the correct answer,
 D     inter alia through SMS services, offered by the cellular mobile service
       providers to a specified number – It was alleged that the appellants
       had created a false impression in viewers’ minds that participation
       in ‘HSHS’ contest was free of cost, whereas the cost of organizing
       the contest as well the prize money was reimbursed from the increased
       rate of SMS charges and profits were shared by the cellular mobile
 E
       service provider with television channel – Hence, they were
       committing ‘unfair trade practice’ u/s. 2(1)(r)(3)(a) of Act, 1986 –
       The National Commission held that 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
 F     trade practice u/s. 2(1)(r)(3)(a) of the Act, 1986 – On appeal, held:
       On perusal of the services-cum-sponsorship agreement, it reveals
       that cellular mobile service provider 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, television channel had no role in
 G
       determining the same – Further, cellular mobile service provider
       was liable to pay a monthly lump sum as fees to television channel,
       irrespective of whether such amount was realized from its subscribers
       or not – There was no provision in the agreement for the revenue-
       sharing between the parties or requiring the cellular mobile service
 H
                                        1188
  STAR INDIA (P) LTD. v. SOCIETY OF CATALYSTS & ANR.                     1189
          [MOHAN M. SHANTANAGOUDAR, J.]

provider to finance any part of the prize money paid by television       A
channel, towards the ‘HSHS’ contest – Thus, it is evident that
television channel was liable to pay the prize money irrespective of
the profits earned by cellular mobile service provider – There is no
basis to conclude that the prize money for the HSHS contest was
paid directly out of the SMS revenue earned by cellular mobile
                                                                         B
service provider or that parties had colluded to increase the SMS
rates so as to finance the prize money and share the SMS revenue –
Thus, finding of the National Commission of as ‘unfair trade practice’
set aside.
      Allowing the appeals, the Court
                                                                         C
      HELD: 1. On perusal of the services-cum-sponsorship
agreement, it reveals that Cellular Mobile Service Provider-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, television
channel-Star India had no role in determining the same. Further,         D
Cellular Mobile Service Provider was liable to pay a monthly
lumpsum as fees to the television channel, irrespective of whether
such amount was realized from its subscribers or not. There is
no provision in the agreement for revenue-sharing between the
parties, or requiring Cellular Mobile Service Provider to finance        E
any part of the prize money paid by television channel towards
the HSHS contest. [Para 11.1][1198 G-H; 1199 A-B]
       2. Thus, it is evident that television channel India was liable
to pay the prize money irrespective of the profits earned by
Cellular Mobile Service Provider. It is needless to say that the         F
sponsorship money paid by Cellular Mobile Service Provider
would come from various sources of revenue, which includes the
money earned from the tariff rates for the HSHS contest. Similarly,
television channel may have had many sources of revenue from
which the prize money could have been paid. This is a part and
parcel of the ordinary business dealings of the Appellants, and          G
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. Further, since
                                                                         H
1190            SUPREME COURT REPORTS                      [2020] 2 S.C.R.


 A     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, this Court is of the
       view that the finding of the National Commission that the SMS
       service offered by Cellular Mobile Service Provider under the
       HSHS contest did not constitute a value-added service is liable
 B
       to be set aside. Indeed, the services-cum-sponsorship agreement
       reveals that Cellular Mobile Service Provider 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
 C     Cellular Mobile Service Provider constituted a value-added
       services separate from its ordinary SMS service. It is reasonable
       to assume that such cost would have been recovered by Cellular
       Mobile Service Provider, at least in part, through the increased
       cost of SMSes sent by subscribers participating in the HSHS
       contest. The direction on ‘Premium Rate Services’ dated
 D
       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. [Para 11.2 and 12][1199 B-D;
 E     1199 B-H]
              3. Hence, 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. This Court is of the view that there
 F     is no basis to conclude that the prize money for the HSHS contest
       was paid directly out of the SMS revenue earned by Cellular
       Mobile Service Provider, or that parties 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
 G     basis is liable to be set aside. [Para 14][1201 D-F]
             HMM Ltd. v. Director General, Monopolies & Restrictive Trade
             Practices Commission (1998) 6 SCC 485; General Motors
             (India) Private Limited v. Ashok Ramnik Lal Tolat (2015) 1
             SCC 429 : [2014] 11 SCR 16 - referred to.
 H
  STAR INDIA (P) LTD. v. SOCIETY OF CATALYSTS & ANR.                       1191
          [MOHAN M. SHANTANAGOUDAR, J.]

                        Case Law Reference                                 A
(1998) 6 SCC 485             referred to              Para 4
[2014] 11 SCR 16             referred to               Para 15
      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6597
of 2008.                                                                   B
      From the Judgment and Order dated 11.09.2008 of the National
Consumer Disputes Redressal Commission, New Delhi in Complaint
No. 83 of 2007.
                                 With
                                                                           C
      Civil Appeal No. 6645 of 2008
      Gaurav Pachnanda, Sr. Adv., Ms. Ruby Singh Ahuja, Ms. Swikriti
Singhania, Ms. Kritika Sachdeva, Utarsh Maria, Ashutosh P. Shukla,
Ms. Jyotika Jain, Ms. Ishna Kumar, Ms. Avni Sharma, Mrs. Manik
Karanjawala, Aditya Narain, Ms. Anushree Narain, Arnav Narain,
                                                                           D
Ms. Mishra Raj Sekhar, Ms. Amanda Chakravarti, Ms. Subhashree
Mohapatra, Siddharth Raj Agarwal, Dinesh Chander Trehan, Vineet
Kumar, Ms. Astha Tyagi, Advs. for the Appellant.
      Ms. Madhumita Bhattacharjee, Ms. Srija Choudhury, Advs. for
the Respondents.
                                                                           E
      The Judgment of the Court was delivered by
      MOHAN M. SHANTANAGOUDAR, J.
       1. 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.       F
1 in both these appeals against the Appellants.
      2. 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
                                                                           G
      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
                                                                           H
1192      SUPREME COURT REPORTS                           [2020] 2 S.C.R.


 A     the viewers of KBC were invited to participate. An objective-
       type 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.
 B
       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,
 C     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’
 D     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
 E     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
 F     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 lottery-like contest to
 G     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
 H     not their case that they have participated in the HSHS contest
  STAR INDIA (P) LTD. v. SOCIETY OF CATALYSTS & ANR.                          1193
          [MOHAN M. SHANTANAGOUDAR, J.]

      and incurred any loss on account thereof. It is further relevant to     A
      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
                                                                              B
      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.                     C
       3. 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        D
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        E
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 on-screen advertisements that the costs of the contest
      were being met through the SMS charges, and the Appellants had          F
      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
      Appellants had not brought any evidence on record to show that
      the transmission of SMS messages for the HSHS contest was a             G
      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.
                                                                              H
1194            SUPREME COURT REPORTS                          [2020] 2 S.C.R.


 A           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
 B
             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
 C           India Act, 1997 (“TRAI Act”). Further, it was held that the
             complaint was not bad for non-joinder 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
 D           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
 E           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.

 F            4. 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 was paid out of the revenue earned from increased
 G     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 services-cum-sponsorship
 H     agreement between them, which bore no relation to the revenue received
  STAR INDIA (P) LTD. v. SOCIETY OF CATALYSTS & ANR.                         1195
          [MOHAN M. SHANTANAGOUDAR, J.]

from the SMSes, and that there was no evidence to suggest that the           A
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
                                                                             B
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
      choice question game required a special software, the use of which     C
      constituted a value-added 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           D
      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.
                                                                             E
      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.                                                         F

       5. Learned counsel for Airtel, Shri Aditya Narain, urged that as
far as the commission of an unfair trade practice was concerned, 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)   G
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      H
1196             SUPREME COURT REPORTS                           [2020] 2 S.C.R.


 A     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.
               6. Learned Counsel for the complainant, Ms. Madhumita
 B     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 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
 C     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.
 D           7. We have heard all the parties and given due consideration to
       the material on record.
              8. 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
 E     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,
 F     the limited question before us is whether 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
 G           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;—
             …
 H
  STAR INDIA (P) LTD. v. SOCIETY OF CATALYSTS & ANR.                           1197
          [MOHAN M. SHANTANAGOUDAR, J.]

      (3) permits—                                                             A
      (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
      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     C
      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 cost of a prize or gift offered for ‘free’ along with the good or
      service through such increased price.                                    D

      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              E
      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         F
      paid by Star India.
       9. 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          G
distributed out of the revenue collected from the SMSes sent in pursuance
of the contest. It is true that the Appellants had 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
                                                                               H
1198            SUPREME COURT REPORTS                           [2020] 2 S.C.R.


 A     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.
               10. Importantly, we further find that apart from the aforementioned
       facts, there is no other cogent material on record upon which the National
 B     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
 C     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. Moreover, the
       survey report on the basis of which these allegations were made was
       not even produced before the National Commission or before us.
 D            11. It is further relevant to note that there exists a services-cum-
       sponsorship 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
 E     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
 F     the services-cum-sponsorship 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 Airtel’s SMS services during the HSHS contest, we deemed it fit
       to examine the agreement ourselves.
 G           11.1 Our perusal of the services-cum-sponsorship 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,
 H
  STAR INDIA (P) LTD. v. SOCIETY OF CATALYSTS & ANR.                         1199
          [MOHAN M. SHANTANAGOUDAR, J.]

      Airtel was liable to pay a monthly lumpsum as fees to Star India,      A
      irrespective of whether such amount was realized from its
      subscribers or not. There is no provision in the agreement for
      revenue-sharing between the parties, or requiring Airtel to finance
      any part of the prize money paid by Star India towards the HSHS
      contest.
                                                                             B
      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              C
      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          D
      rates charged to the participants.
       12. 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        E
offered by Airtel under the HSHS contest did not constitute a value-
added service is liable to be set aside. Indeed, the services-cum-
sponsorship 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 value-added            F
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 direction on ‘Premium Rate
Services’ dated 3.5.2005, issued by TRAI, which was referred to by the       G
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:

                                                                             H
1200      SUPREME COURT REPORTS                          [2020] 2 S.C.R.


 A                     “F. No. 305-8/2004-QOS
       TELECOM REGULATORY AUTHORITY OF INDIA
             A-2/14, Safdarjung Enclave, New Delhi-110029
                                                    Dated : 3rd May, 2005
 B     To,
       All Cellular Mobile Service Providers
       All Unified Access Service Providers
             Subject : Direction on Premium Rate Services.
 C
       1. 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
 D     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 messages are only followed by wordings “T&C
       Apply”.
 E     2. In the present multi-operator 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
 F     only after the service has been utilized and the bill is received.
       This practice of service providers is against the interest of the
       consumers.
       3. In view of the above, in the consumer’s interest, the Authority
       in exercise of its power conferred upon it under Section 13 read
 G     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
 H     to premium rate services, the pulse rate/tariff for the service.
  STAR INDIA (P) LTD. v. SOCIETY OF CATALYSTS & ANR.                            1201
          [MOHAN M. SHANTANAGOUDAR, J.]

      This issues with the approval of the Authority.                           A
                                                     (Sudhir Gupta)
                                                     Advisor (QOS)”
       13. However, we need not dwell on this issue much longer, since
not much turns upon it with regard to the determination of the commission       B
of an unfair trade practice, except to note that the transmission of SMSes
for the purpose of the HSHS contest being a 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 value-added service. Thus, even if the SMS charge is taken as         C
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.
       14. Hence, we find that the complainant has clearly failed to
discharge the burden to prove that the prize money was paid out of SMS          D
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         E
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.
        15. With regard to the award of punitive damages made by the
National Commission, the same could not have been done in as much as            F
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.                                 G
      16. 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   H
1202                SUPREME COURT REPORTS                      [2020] 2 S.C.R.


 A     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.
              17. Thus, we find that the finding of the commission of an unfair
 B     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.


       Ankit Gyan                                                 Appeals allowed.
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