New Delhi: The Supreme Court Thursday set aside a Rs 1 crore penalty imposed on Star India, broadcaster of game show Kaun Banega Crorepati (KBC), and programme sponsor Bharti Airtel Limited.
The penalty dates back to 2008, when the National Consumer Disputes Redressal Commission (NCDRC) ruled against the two companies in a case of “unfair trade practices”.
In a complaint filed in 2007, Society of Catalysts, an agency working in the field of consumer rights, accused Star India and Bharti Airtel of “unfair trade practices” over a contest, ‘Har Seat Hot Seat’, that asked KBC viewers to answer questions by text for a chance to win Rs 2 lakh. The popular show was hosted by actor Shah Rukh Khan at the time.
Under the Consumer Protection Act 1986, an “unfair trade practice” refers to one where unfair or deceptive methods are adopted to promote sale, use or supply of any goods or services. Unfair methods include offering gifts or prizes that appear to be free even though their price is covered by the amount charged in the transaction.
According to Society of Catalysts, ‘Har Seat Hot Seat (HSHS)’ wasn’t a competition, but a lottery, as the questions were easy and the winners finally picked at random.
It also alleged that while the show created an impression that the contest was free of cost, the prize money of Rs 2 lakh was paid out of SMS revenue generated by viewer participation. The profit, it added, was being shared by Airtel and Star India.
The society also cited a survey it had conducted where the majority of participants said they believed the contest was free.
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‘Rs 1 crore prize, Rs 14 crore revenue’
The NCDRC based its order on a report carried by Hindustan Times that claimed Airtel had received 5.8 crore SMSes for the contest.
The forum accordingly calculated that the show would have collected Rs 13.92 crore from participants, of which only Rs 1.04 crore was paid as prize money.
The gross earnings of the two companies were, therefore, found to be disproportionate to the cost of prizes offered.
The NCDRC then awarded “punitive damages” of Rs 1 crore and litigation expense of Rs 50,000 to the society.
Challenging the order in the Supreme Court in 2008, Star TV and Airtel argued that the NCDRC order was based on “inferences and speculation”, and that they had made sure the increased SMS rates applicable for the contest were displayed on the television screen as well as on the KBC website.
Star TV claimed that Airtel had not shared the SMS revenue with it at all, and asserted that the NCDRC should have looked into the break-up of cost, value addition and profit in the tariff before passing the order.
‘No basis’ for NCDRC ruling
Issuing its verdict Thursday, a Supreme Court bench comprising Justice M.M. Shantanagoudar and Justice R. Subhash Reddy held that the NCDRC had “no basis” to reach the conclusion that the SMS revenue was being shared by the two companies.
It accepted the companies’ contentions that Airtel was merely a sponsor of the show and that Star India was to pay the prize money, regardless of the revenue earned by Airtel.
The court also did not find it acceptable that the NCDRC relied on a newspaper report without any corroboration of the claims it made.
The court went through the agreement between Airtel and Star India as well and concluded that it included no provision for revenue-sharing.
Setting aside the order and penalty, the court ruled, “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’… is liable to be set aside.”
(This report has been updated to reflect that it was Shah Rukh Khan who hosted KBC in 2007 and not Amitabh Bachchan.)
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