The Supreme Court has set aside a consumer forum verdict directing former promoters Star India and Bharti Airtel to pay punitive damages of Rs 1 crore for their alleged "unfair trade practice" in a contest telecast during season 3 of popular TV show 'Kaun Banega Crorepati', often referred to as KBC.
While allowing the appeals filed by Star India and Airtel challenging the consumer forum's September 2008 verdict, a Supreme Court bench comprising Justices MM 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 or NCDRC passed its 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 that they were creating a "false impression" in viewers' minds that participation in the 'Har Seat Hot Seat' (Every Seat Hot Seat) contest, which was telecast during KBC between January 22, 2007 and April 19, 2007, was "free of cost".
During the contest, viewers of KBC were invited to participate and an objective, multiple-choice question with four possible answers which 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. The winner for each episode would then be randomly selected and awarded a prize money of Rs 2 lakh.
The Supreme Court noted in its verdict that participants in 'Har Seat Hot Seat' contest were required to pay Rs 2.40 per SMS to Airtel, which was higher than the normal rate for SMSes.
The plea before the consumer forum had alleged that cost of organising the 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 consumer forum had held that since the prize money for the contest was fully or partly covered by revenue earned from increased SMS charges, Star India and Airtel had "committed an unfair trade practice".
The consumer forum 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 Supreme Court held that there was no basis to conclude that the prize money for 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 'Har Seat Hot Seat' 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.