Royal Digital Cable & Communication Pvt Ltd vs Zee Entertainment Enterprise Ltd

Heard learned counsel for the petitioner and learned counsel for the respondent in respect of calculations offered by the parties for the purpose of

assisting the Tribunal in arriving at a reasonable figure or amount which should be directed to be paid by the petitioner by way of interim arrangmeent

so as to avail interim protection against demand of Rs. 70 lakhs and odd made by the respondent as an additional demand for the months of February

2019 to August 2019 on the basis of audit report submitted by the empanelled auditor of 28th August 2019. The rationale for the aforesaid

demand by the respondent appearing from the case of the respondent has been noted in the order passed on 13.11.2019 which should be treated as

a part of the present order so as to avoid repetition of various facts and details.

As noted in the order of 13.11.2019, the petitioner was given an opportunity to counter the calculations of the respondent by submitting its own

calculations keeping in view the figures obtained from the audit report. This was with a view to find out a reasonable amount to be paid to the

respondent only on account subject to adjustment on the basis of final hearing.

The respondent in its affidavit filed on 28.11.2019 has reiterated its earlier stand that its subscriber report submitted earlier should be taken as correct

but has enclosed its calculations as Annexure A-1 without prejudice to its claim that the audit is incorrect. The calculations in Annexure A/1 are

based upon subscriber nos. of CAS because in the audit report itself there is an indication that SMS figures are on the higher side. There is clearly a

case of lack of proper integration in CAS/SMS but that issue does not help in arriving at a reasonable figure for interim arrangement. The figures at

page -9 of 28 in the detailed report of audit given in the form of a table (at page 44 of the petition) for depicting the variance, show the number of

subscribers as per CAS on a given date. On that basis, applying the bouquet rates for bulk of the subscribers and a-la-carte rate for certain

channels which have more subscribers, will lead to an amount of Rs. 7,01,184.00 for the month of August 2019 after deducting 20% in favour of the

petitioner as distribution fee. On that basis, the petitioner has tried to show that the respondent’s demand of Rs. 15 lakhs and odd for that month

is illegal and unreasonable. On a rough calculation, at the rate of Rs. 7 lakhs, the amount for seven months would come to approx. Rs. 49

lakhs. This Tribunal was contemplating to pass an interim order of protection on that basis but again on 17.3.2021, after the hearing on interim

arrangement had concluded, another opportunity was granted to Royal Digital to submit an alternative chart of calculations by taking help of CAS

figures in the audit report.

As per the new calculations submitted on 19.3.2021, according to petitioner, the subscriber base reflected in the CAS would justify a total demand of

Rs. 32 lakhs approximately whereas the petitioner has already paid on the basis of regular subscriber reports, an amount of Rs. 11 lakhs and odd.Â

Hence, according to petitioner, a maximum of Rs. 22,49,452.00 could have been claimed by Zee as an additional demand on the basis of audit.

On the other hand, learned counsel for the Zee has submitted that the audit report does not accept the subscriber’s figures from the CAS to be

correct because according to the report there was clear under-reporting; as noticed at page 40 of the petition the audit team was provided fifteen

videos in which Zee TV and & TV was working (alongwith other zeel channels) on ground but all these channels were not activated as per

CAS and SMS. Hence, according to learned counsel, there was substantial and huge diversion/concealment of data leading to under reporting as

found in respect of all the fifteen videos (samples) and that justifies the estimate of Rs 70 lakhs and odd calculated liberally on bouquet rates.

At the present stage, it would not be proper to arrive at any final conclusion as to what figures on the basis of CAS/SMS or other materials should be

taken for arriving at the actual number of subscribers availing the channels of Zee. Such a task can be and should be undertaken only at the final

stage of hearing. However, at the present stage also it is evident that there is huge fluctuations in the number of subscribers for important

channels even when only the numbers from the CAS are considered. As per latest calculation chart of petitioner wherein it has derived the monthly

average on the basis of figures on 7th, 14th, 21st and 28th of each month, for important and popular channels such as Zee TV, in the month of

February the first number is 1( one) against the fourth number of 4630. Coming to the month of August, while the first figures, second figure and

third figure are above 20000, the fourth figure of 28th January is only 1954. This does not appear justifiable by the trade realities. Hence, the latest

calculation figures also do not help in arriving at an acceptable/reasonable figure. By law of averages, the petitioner should be, at this stage, directed

to pay, without prejudice to its rights, only 50% of the demand made by the Zee. Hence, for interim arrangement, the petitioner is directed to

make a payment of Rs. 35 lakhs only against the additional demand of Rs. 70 lakhs and odd raised on the basis of audit report. Such payment

should be made within six weeks. Half of the amount should be paid within four weeks and balance in 2 weeks thereafter. If this amount is paid

within the time indicated, the interim protection given to the petitioner against audit based demand shall continue until further orders.

Post the matter before the Court of Registrar on 12.4.2021 for passing further orders and directions to make the petition ready for hearing.