top of page

Consumer Protect Act; Unfair trade practice means direct recovery from the price paid for the transa

STAR INDIA (P) LTD.  v.  SOCIETY OF CATALYSTS & ANR., CIVIL  APPELA NO. 6597 OF 2008 – January 23, 2020.

The bench comprising of Hon’ble Justice Mohan M. Shantanagoudar  and Hon’ble Justice R. Subhash Reddy pronounced the judgment on the appeal against the judgment of the National  Consumer Disputes Redressal Commission.

This case is that Star India (P) Ltd., the appellant broadcasted ‘Kaun Banega Crorepathi’ (“KBC”) which was sponsored by Bharati Airtel Ltd, who’s also an appellant. Also a contest ‘Har Seat hot Seat’ (“HSHS”) was conducted in which viewers were participated by sending SMS to Airtel which was Rs. 2.40 each which was higher than the normal rate. Thus the respondent, a consumer society filed a complaint before the National Commission against Star India and Airtel, contending that they were committing ‘unfair trade practice’ u/s 2(1)(r)(3)(a) of the Consumer Protection Act, 1986. The commission observed that the prize money for HSHS contest was paid by the revenue earned from increased SMS charges which is an unfair trade practice within the meaning of the section. Thus the commission accepted the contentions of the respondent and awarded a punitive damage of Rs.1 Crore u/s 14(1)(d) of the said act. Also the appellants were directed to pay the litigation cost of Rs.50000/- to the complainant. Thus an appeal before this court was filed.

The issue raised before the Court is Whether the complaint made by the consumer organization against telecom service provider for committing an ‘unfair trade practice’ within the meaning of Section 2(1)(r)(3)(a) of the  Consumer Protection Act, 1986 (“the 1986 Act”)is maintainable or not?

The counsel for Star India contended that the judgment of the commission was based on the inferences and speculations of a newspaper report without corroboration of its contents and there was no proper inquiry of the source of prize money. Also the fact of sharing of the increased SMS rates was denied by this counsel. Also the case HMM Ltd. v. Director General, Monopolies & Restrictive Trade Practices Commission, (1998) 6 SCC 485 was referred to cite that the direct recovery from price u/s 2(1)(r)(3)(a) and not from ads or sponsorship. Another contention was that the Airtel was entitled to extra charges as the contest requires special software to accommodate the option of MCQ game and Star India has complied with the relevant TRAI regulations. This was duly informed to the participants. Also the award of damages was also challenged on the ground of lack of proof of loss.

The counsel for Airtel denied the allegation of misguiding the contestants that the contest was free of charge by citing the TRAI direction regarding ads of premium rate services. Also it was contended that there was ouster of jurisdiction by the consumer fora by reading S.14(a)(iii) with S.15 of TRAI Act.

The counsel for the complainant argued supporting the decision of the National Commission. Also it was contended that the complaint was maintained under the act since the complainant has filed an individual complaint under the act and not on behalf of a group of consumers.

The court after thoroughly analyzing the submissions of the parties observed that though the appellants had not specifically denied the prize money was paid out of increased SMS charged, had clarified that Airtel was merely a sponsor. Only the Star India was independently paying the prize money regardless of the revenue earned by Airtel. Also the National Commission has placed reliance merely on the newspaper report of Hindustan Times which is unwarranted as they are no corroboration for the allegations. Also the survey report was not produced before the commission. Also according to the service-cum-sponsorship agreement, Airtel has the sole and exclusive right to charge fees towards its service rendered. Star India has no role in the same and Airtel was liable to pay a monthly lump sum as fees irrespective of whether the amount was realized or not. Similarly Star India was liable to pay the prize money irrespective of the profits earned by Airtel.

Thus the court decided to set aside the order of the National Commission. The service-cum-sponsorship agreement reveals that Airtel was liable to set up the necessary hardware and software for that contest at its own cost. Thus the increased cost would be necessary to meet the expenses. Also even when the SMS charges is considered as the ‘cost’ of participating under the said act it cannot be considered as the wrongful advertising. The court was of the view that the prize money was not paid directly out of SMS revenue and there is no proof that the two appellants had colluded to increase the SMS charges. The conclusion of the commission that there was an unfair trade practice was liable to be set aside. Also the award of punitive damages was not valid as the complainant had not prayed for the same as held in General Motors (India) Private Limited v. Ashok Ramnik Lal Tolat, (2015) 1 SCC 429.

“The Court held that  the finding of the commission of an unfair trade practice under Section 2(1)(r)(3)(a) in the impugned judgment is bad in law.”

The appeals are allowed and the impugned judgment is set aside in the aforesaid terms.




bottom of page