Contest during KBC show: SC sets aside NCDRC's order on unfair trade practice

The Supreme Court has set aside consumer panel NCDRC's verdict directing Star India (P) Ltd and Bharti Airtel Ltd to pay punitive damages of Rs 1 crore for alleged "unfair trade practice" in a contest telecast during TV programme 'Kaun Banega Crorepati' (KBC).

While allowing the appeals filed by Star India and Airtel challenging the NCDRC's September 2008 verdict, a bench of Justices M M Shantanagoudar and R Subhash Reddy said that finding of the commission of "an unfair trade practice" was "bad in law".

The National Consumer Disputes Redressal Commission (NCDRC) passed the verdict on a plea which had alleged that Star India and Airtel had committed "unfair trade practice" under the Consumer Protection Act, 1986.

It said they were creating a "false impression" in viewers' minds that participation in 'Har Seat Hot Seat' (HSHS) contest, which was telecast during KBC between January 22, 2007 and April 19, 2007, was free of cost.

During the HSHS contest, viewers of KBC were invited to participate and an objective-­type question with four possible answers was displayed on the screen during each episode.

The viewers, who wished to participate, were required to send in the correct answer through SMS services, offered by Airtel, MTNL and BSNL, to a specified number and winner for each episode was randomly selected and awarded a prize money of Rs 2 lakh.

The apex court noted in its verdict that participants in HSHS contest were required to pay Rs 2.40 per SMS to Airtel, which was higher than the normal rate for SMSes.

The plea before NCDRC had alleged that cost of organising the HSHS contest as well as the prize money was being reimbursed from the increased rate of SMS charges and the profits from these charges were being shared by Airtel with Star India.

In its verdict, the NCDRC had held that since the prize money for the HSHS contest was fully or partly covered by revenue earned from increased SMS charges, Star India and Airtel had "committed an unfair trade practice".

The commission had also awarded punitive damages of Rs 1 crore, for which both Star India and Airtel were held jointly and severally liable, and directed them to pay litigation costs of Rs 50,000 to the complainant before it.

Dealing with their appeals, the top court held that there was no basis to conclude that prize money for HSHS contest was paid directly or indirectly out of the SMS revenue earned by Airtel.

"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," the bench said.

Regarding award of punitive damages, the bench said it could not have been done as the complainant before NCDRC had neither prayed for punitive damages in the complaint nor proved that any actual loss was suffered by consumers.