In August 2007, Society of Catalysts filed a complaint before the National Consumer Dispute Redressal Commission (“NCDRC”) against Star India and Bharti Airtel contending that the contest Kuan Banega Crorepati (“KBC”) and the contest Har Seat Hot Seat was an unfair trade practice under the Consumer Protection Act, 1986.

KBC had a segment meant for the home audience titled as Har Seat Hot Seat in which the home audiences could answer a general knowledge question asked during the show by calling through their MTNL/ BSNL landlines or SMS through their Airtel connection at the applicable tariff. The winner was randomly selected by the computer from amongst the participants with the right answer announced as per the terms and condition was awarded the prize money of Rs. 2,00,000.

The consumer complaint filed before the NCDRC alleging inter alia, that in conducting the Har Seat Hot Seat contest a ‘general Impression’ was given by Star that the participation to the contest was free I.e. the prize money for the contest was being given by Star, whereas in fact the prize money was allegedly being paid out of the collections by Star from the SMS and Calls being made by the participants. It was contended that this practice amounted to an unfair trade practice as per the consumer protection act.

Star on the other hand had contented that no evidence/ documentary proof was produced by the society or sample survey allegedly conducted by them was of no avail. Further,  ​“Sponsorship” of Kaun Banega Crorepati or its Har Seat Hot Seat component is not an “unfair trade practice” within the meaning of Section 2(1)(r)(3)(a) of the Consumer Protection Act, 1986. The Consumer Protection Act does not declare genuine sponsorships as an “unfair trade practice”. It was also contended that Star is the organizer of KBC and Har Seat Hot Seat participation for which is free of charge. Star has not recovered any charge from the participants of KBC or Har Seat Hot Seat.  Merely because prizes are being distributed by Star from sponsorships received from its sponsors, such as Airtel, it does not constitute an unfair trade practice under Section 2(1) (r) (3) (a) or Section 2(1) (r) (3) (b) of the Consumer Protection Act.

In 2008, the NCDRC in its Order held that Star and Airtel did not disclose the source of the prize money and created an apparent impression that the prize money emanated from them whereas in fact the prize money was paid from the collections obtained by Star and Airtel from SMS received from the participants. This practice amounted to an unfair trade practice and accordingly, Star and Airtel were burdened with punitive damages of Rs. 1 crore and legal costs of Rs. 50,000.

Thereafter, Star India and Airtel had filed their respective appeals before the Hon’ble Supreme Court. The Hon’ble Supreme Court had stayed the operation of the Order of NCDRC on 21.11.2008.

On 23.01.2020, the Supreme Court allowed the appeals filed by Star India and Bharti Airtel and set aside the Order of the NCDRC.

A bench of Justices MM Shantanagoudar and R Subhash Reddy said, “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 any actual loss suffered by consumers.”

The plea before the NCDRC had alleged profits from these charges were being shared by Airtel with Star India. The commission said the prize money for the contest was fully or partly covered by revenue earned from SMS charges. Therefore the companies committed “committed an unfair trade practice” and held them jointly liable for punitive damages.

“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,”

Mr. Gaurav Pachnanda, Senior Advocate briefed by Ms. Ruby Singh Ahuja, Senior Partner along with Ms. Swikriti Singhania, Mr. Utkarsh Maria , Ms. Kritika Sachdeva and Mr. Ashutosh P. Shukla from Karanjawala & Co.

Read order here:

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