ESPN Star Software in its petition said :
The service contract entered into between ESPN and 7star cable network effective from 1 January 2001 up to 30 November 2001 was for a subscriber base of seven thousand and the respondents 7 star cable network were liable to pay a sum of Rs.13,44,000/- The petitioners ESPN claim that 7 Star Cable network have defaulted on the subscription payments for the months of July and August 2001.
ESPN had deactivated the service to 7 star cable network for non payment of subscription fees and under declaring their subscriber base. The petitioners ESPN claim that 7 star cable network are operating in a vast area serving 100,000 homes and 22 hotels and had requested the respondents to upgrade the subscriber base to 20,000 households. However 7 Star Cable Network was unwilling to either negotiate or upgrade the subscriber base.
Additionally, 7 Star Cable Network was even distributing the service to over 1,518 hotel rooms at the same rate applicable to households in reported violation of the service contract signed earlier by the two parties.
.In spite of the deactivation of signals by ESPN on 21 August 2001, 7 Star Cable network was continuing the service by tapping the signals from the Hinduja run INCable network after reportedly making the requisite payment for the service to IN Cable.
7 Star Cable Network has agreed that it was unable to pay ESPN for the months of July/August 2001 due to some financial contingency. Their contention is that after the abrupt and unjustified deactivation by ESPN, it was left with no resort but to approach INCable for supply of the requisite signals for mutually acceptable and legitimate fees as they have contractual obligations with their subscribers, and could not afford to damage their reputation.
7 Star's contention is that ESPN had terminated the agreement between the two parties and had officially written to them regarding termination of the services due to non payment of subscription fees and deactivation of the services for the month of July and August 2001 by 7star.
However, ESPN claims that it has not terminated the agreement but only deactivated the service. ESPN says 7 Star Cable Network is no doubt the affiliate of ESPN in terms of the agreement which was due to expire on 30 November 2001 and was in force when they entered into agreement with INCable for the same service of giving the two sports channels to subscribers.
The two sports channels are being viewed by a large number of subscribers, and the monopoly service of ESPN is distributed through 7 star network. The interest of ordinary citizens who have sought connections and are paying for the services will also have to be considered.
The High Court has decreed as follows:
7 star network will have to deposit within seven days from 31 October 2001 all the arrears due and payable upto the date of termination of services from ESPN that is, 21August 2001, in court. (This has been done by 7 Star, according to promoter Raja).
For the month of August 2001, the arrears would be payable on a pro rata basis for services rendered by ESPN to 7 star cable. ESPN can cut off the signals to hotels and wherever not agreed upon earlier if technically feasible, if they were unable to do so, the court would decide the compensation and relief to be given to ESPN. For the period from 22 August 2001 to 30 November 2001, 7 star cable network will have to furnish a bank guarantee for the same amount which would have been payable had the contract been in force (this too has been done says Raja).
Any lapse or failure on the part of 7 Star to abide with the court orders in a time frame set by the court would result in an order of injunction being passed against the cable operator 7 Star and they would not be permitted to distribute ESPN and Star Sports services, nor could they collect subscription fees from hotels, households, link operators or even from MSOs.
7 Star additionally claims it had made payment for arrears for July and August 2001 by way of a postdated cheque payable in September 2001 which was given to ESPN in the last week of August 2001. This cheque was returned by ESPN, but it claims to have receipts from ESPN stating payments were made.
