Business Law - Individual Assignment

Submitted to: Submitted by:

Prof. Lionel Aranha Rohit Gupta(Sec A; EPGP-09-151)

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Case Society Of Catalysts vs Star Plus Tv on 11 September, 2008
Parties involved
Society of Catalysts vs 1. Star Plus TV 2. Bharti Airtel Ltd.
BEFORE HONBLE MR. JUSTICE M.B. SHAH, PRESIDENT
HONBLE MRS. RAJYALAKSHMI RAO, MEMBER
HONBLE MR. ANUPAM DASGUPTA, MEMBER
DATE OF JUDGMENT 11-09-2008

Facts

1. Society Of Catalysts, a voluntary consumer organization, filed a complaint against the alleged
unfair trade practices adopted by Star Plus and Bharti Airtel, accusing these companies of
misleading viewers about a contest Har Seat Hot Seat (HSHS) which had been aired directly
following Kaun Banega Crorepati (KBC).
2. In the contest, aired at the end of each episode of KBC, a question was shown and viewers were
asked to send their answers via text messages or phone calls on the Airtel network.
3. A prize of Rs. 200,000 was given to one person (selected by a lucky draw) who provided the
correct answer after each show. Airtel charged Rs. 2.40 per text message, higher than the normal
charge of Rs1.
4. The Commission after going found that they received 58 million text messages and thereby
collected Rs.13.92 crore from participants of HSHS contest. Out of that amount, prices worth of
Rs. 1.04 crore was distributed, leading to a gross profit of Rs. 12.88 crore.
5. The Commission rejected the plea of the companies which contended that they are charging the
participants extra because of additional cost of specialist vendors and expensive software. The
Commission also turned down the plea of the companies to implead other telecom companies
BSNL and MTNL.
6. The NCDRC ruled that, based on the advertisements and onscreen displays for the HSHS contest,
no consumer could have imagined that the prize money and other costs of the contest were being
met through the money charged by Airtel for the text messages.
7. The NCDRC ruled that contestants had been led to believe the prize money was offered free of
charge.
8. In the result, the Star Plus TV and the Bharti Airtel Ltd., Opposite Parties No.1 and 2, are directed
to pay jointly and severally damages of Rs.1 crore. They are hereby directed to deposit the said
sum of Rs.1 crore with the Registrar of this Commission, who in turn, shall deposit the same to
the credit of the Consumer Welfare Fund (Rule 9).
9. The Opposite Parties No.1 and 2 are also directed to pay Rs.50,000/- to the Complainant towards
litigation costs.

Principal of Law dealt

Section 2 (1) (r) (3)

(r) unfair trade practice means a trade practice which, for 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:
(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) the conduct of any contest, lottery, game of chance or skill, for the purpose of promoting, directly or
indirectly, the sale, use or supply of any product or any business interest.

Impact to the business world

The Act had make businesses more liable and thus more accountable to their clients for not
just what they produce, but how they sell it. In short, it revolutionized the business landscape.
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 The state of Tamil Nadu has passed a law The Tamil Nadu Prize Schemes (Prohibition) Act way
back in 1979 which prohibits companies to give any prizes on the sale of products. Contravening
these provisions is made a criminal offense where offenders may be punished with up to three
years of imprisonment.

Further developments

Amendments to Consumer Protection Bill:

Consumer remains the king even after amendments in the Consumer Protection Bill diluting
powers of the Central Consumer Protection Authority in view of opposition from the industry.
The rights of consumers would remain protected with the District Consumer Disputes Redressal
Commission continuing to enjoy the power to direct corrective advertisements along with
supplementary powers, like the authority to declare unfair contracts as void, conferred through the
amendment.
Though the government agreed to withdraw judicial powers from the Authority on the
recommendations of a Parliamentary Committee, the role of the Authority, expected to protect the
rights of consumers as a whole through class action interventions, stand enlarged with the
amendment providing for the additional power of compounding offences and creation of an
investigating wing.
The draft prepared by the legislative department of the law ministry has further introduced
provisions on e-commerce, redefined unfair contract The Bill, which was introduced in
Parliament in August last year before being referred to the Parliamentary Committee, will now be
presented as Consumer Protection Bill, 2016. It retains provisions for product liability and
introduction of mediation in consumer disputes etc.

References to similar cases

Society Of Catalysts vs Vodaphone Essar Mobile Services ... on 16 May, 2008

Vodafone had launched a scheme in which subscribers using talk-time of more than 20 minutes a day
stood a chance to win gold coins every day and a car in a draw.
To become eligible for the scheme, a large number of subscribers made unwanted and unnecessary calls,
the complaint said.

Vodafone said the purpose of the scheme was first for the benefit of its high-end users, second for the
benefit of the subscribers as a whole and third to reward their loyalty and usage and not to promote the
firm's business interest.

Justice Kapoor rejected the firm's plea and observed that if it was for the benefit of high-end users then
every subscriber who had in the past called for more than 20 minutes a day should have been given prizes
and if it was for the general benefit of all subscribers the scheme should have been open to all and not
restricted to those with talk-time of more than 20 minutes a day.

The NGO had conducted a sample survey and found that at least 10 percent of the subscribers were aware
of the scheme and were making unnecessary calls to participate in the contest.

The survey showed more than 40 million subscribers participated in this contest.
"The company is indirectly promoting its business by offering prizes of 10 gold coins a day and one
bumper prize of Maruti SX4 car to its subscribers whose talk-time is more than 20 minutes a day, which
is unfair," said Justice J.D. Kapoor, president of the Delhi State Consumer Commission.

Justice Kapoor, in his order Friday, directed that out of the fine amount Rs.100,000 shall be paid to the
Society of Catalysts, a consumer voluntary organisation which had filed the complaint, and the remaining
shall be deposited in the Delhi State Consumer Welfare Fund (legal aid).
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Case Union Of India & Ors vs M/S. Bhim Sen Walaiti Ram on 29 September, 1969
Before RAMASWAMI, V.; SHAH, J.C.; GROVER, A.N.
RESPONDENT M/S. BHIM SEN WALAITI RAM
PETITIONER UNION OF INDIA & ORS.
DATE OF JUDGMENT 29-09-1969

Facts

1. Highest Bid was given by respondent at an auction for license sale for a country liquor shop in
Delhi, year 1949-50.
2. Under cl. 31 of the conditions of sale for that year, there was no obligation on the Chief
Commissioner was under to grant a license until he was assured of the financial status of the
bidder. Under el. 33 all final bids were made subject to confirmation by the Chief Commissioner
who could reject any bid assigning any reasons. Under cl. 21 of r. 5.34 of the Delhi Liquor
License Rules , a person had to pay one-sixth of the annual fee within seven days of the
auction whom shop had been sold.
3. The Chief Commissioner did not confirm his bid. Reason being the respondent, not having paid
one-sixth of the annual fee as required by the said cl. 21.
4. The new auction for resale shop was sold at a lower price due to which, the respondent was held
liable to pay the difference.
5. It was contended that the respondent was under a legal obligation to pay one-sixth of the annual
fee within seven days of the auction under el. 21 of r. 5.34; due to his default that a resale of the
excise shop was ordered; and under cl. 22 of r. 5.34 the respondent was liable for the
deficiency in price and all expenses of such resale which was caused by his default. From cl. 33
of the conditions of sale, the contract of sale is not complete till it is confirmed by the Chief
Commissioner and till such confirmation the person whose bid has been provisionally accepted is
entitled to withdraw his bid.
6. Hence, the contract of sale was not complete till the bid was confirmed by the Chief
Commissioner and till such confirmation the person whose bid has been provisionally accepted is
entitled to withdraw his bid. When the bid is so withdrawn before the confirmation of the Chief
Commissioner the bidder will not be liable for damages on account of any breach of contract or
for the shortfall on the resale. Reason being: An acceptance of an offer may be either absolute or
conditional. If the acceptance is conditional the offer can be withdrawn at any moment until
absolute.

Principal of Law dealt

The Indian Contract Act, 1872:

5. Revocation of proposals and acceptances
A proposal may be revoked at any time before the communication of its acceptance is complete as against
the proposer, but not afterwards. An acceptance may be revoked at any time before the communication of
the acceptance is complete as against the acceptor, but not afterwards.
6. Revocation how made by the communication of notice of revocation by the proposer to the other party;
7. Acceptance must be absolute
(1) be absolute and unqualified.
(2) be expressed in some usual and reasonable manner, unless the proposal prescribes the manner in
which it is to be accepted. If the proposal prescribes a manner in

Impact to the business world

The Act as enacted originally had 266 Sections, It deals with all aspects of contracts, such as formation,
performance, enforceability of contracts, indemnities and guarantees, bailment and pledge and agency,
among others.
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It had wide scope to safeguard the interest of various parties from the misrepresentation made or fraud
committed, during the course of their business.
Illustrations
(a) A, being B's agent for the sale of goods, induces C to buy them by a misrepresentation, which he was
not authorized by B to make. The contract is voidable, as between B and C, at the option of C.

Further developments

Although one of the oldest laws in India, legal experts note that The Indian Contract Act's relevance has
grown manifold. Below are some of considerations:
Section 73 of The Indian Contract Act provides for compensation for loss or damage caused by
breach of contract, naturally arising in the usual course of things from such breach. However,
remote and indirect loss or damage sustained by reason of the breach is not provided under the
contract law.
Under The Indian Contract Act, a contract without consideration is void subject to certain
exceptions provided in Section 25 of the Act. However, the English law recognises contracts
without consideration in some cases.
Further parties should be free to enter into contracts which also contain the dispute settlement
mechanism, and such contracts should not be treated as "contracts in restraint of legal
proceedings" under Section 28, say many legal experts.
Given the growing number of transactions undertaken online, Indian contract law needs to be
tweaked for concepts relating to offer and acceptance in digital contracts.

References to similar cases

The Municipal Council, ... vs Pasupathi Muthuraja on 24 March, 1967

In a public auction for the Non-Vegetarian Tea Stall near the Karur Municipal Bus Stand for the year
1960-61, by the Commissioner of the Municipality on 15th February, 1960, the respondent (Pasupathi)
was the highest bidder, his bid being a rent of Rs. 276 per mensem. The next bid was Rs. 275 per
mensem.

Before the acceptance of the bid by the Municipal Council, the defendant on 23rd February, 1960 revoked
the bid and requested the Council not to accept his bid. Nevertheless, the Council on 8th March, 1960,
passed a resolution accepting the defendant's bid and on the defendant refusing to execute a rent deed and
pay advance as provided for under the terms of the lease, conducted a re-auction on 22nd April, 1960.
The highest bid at the re-auction was a rent of Rs. 51 per mensem.

The Municipality accepting this bid, has filed the suit against the defendant claiming the difference in
bids for the year as damages.

In the light of the above discussion it is clear that there was no contract in the present case between the
Municipality and the defendant. The Commissioner, who conducted the auction had no authority to enter
into any contract or accept any bid. He had to carry the highest bid to the Council for its consideration and
before the Council by its resolution accepted the bid, the defendant had specifically and in writing
revoked his bid and requested the Council not to confirm the lease.

The offer had been withdrawn before it could be accepted by the Council, the only authority that could
accept the offer. There was nothing to forbid revocation of the bid before its acceptance; Under Section 5
of the Indian Contract Act. In the present case, there has been no acceptance of the offer by the
Municipality before the revocation of the proposal. It follows that there was no contract for the defendant
to be charged with for breach.

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References

Google Images

https://indiankanoon.org/

http://indiatoday.intoday.in/story/Star+Plus+Airtel+penalised+Rs+1+crore+for+KBC/1/15107.html

https://www.vantageasia.com/airtel-star-tv-to-pay-rs10-million-for-unfair-trade/

https://glaws.in/2011/10/11/illegality-of-pepsis-one-crore-jackpot-prize-and-why-this-competition-is-not-
available-in-tamil-nadu/

http://www.business-standard.com/article/opinion/does-the-indian-contract-act-need-a-re-look-
115011100799_1.html

https://en.wikipedia.org/