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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO. 696 OF 2009.
Prasar Bharati. ..Petitioners.
vs.
B4U Multimidia International Limited. ..Respondents.
....
Mr. Rajiv Sharma, with Mr. S.M. Shah & Ms. J.N. Pardhi, for
Petitioners.
Ms. Alpana Ghone, with Mr. Amit Jamsandekar, i/b. Desai & Diwanji,
for Respondents. ig ....
CORAM :- ANOOP V. MOHTA, J.
RESERVED ON :- 18 September, 2012.
PRONOUNCED ON :- 29 October, 2012.
JUDGMENT :
The Petitioners, the Broadcasting Corporation of India, a Statutory Corporation, incorporated under the Prasar Bharati Broadcasting Corporation of India, have challenged the Award passed by the sole Arbitrator dated 17th December 2008 by invoking section 34 of the Arbitration and Conciliation Act, 1996 (for short 'the Arbitration Act').
2. The Petitioners entered into an agreement with the jmi 1/11 ::: Downloaded on - 09/06/2013 19:19:59 ::: Jmi 2 arbp-696-09 Respondents for supply of block buster Hindi Films or big star cast films for telecast on Doordarshan's National Network (DD-1). As per agreement dated 14th September 2000 (the agreement), the revenue generated shall be shared in the ratio of 50 : 50. By a letter dated 25th September 2000, the Respondents proposed the rates and which were accepted by the Petitioners letter dated 26 th September 2000.
The Respondents did not pay. The Petitioners by their letter dated 23rd January 2000 requested the Respondents to release the payment of Rs.1,14,91,813/-. The Respondents made the part payment only, never provided the details and accounts as per clause. The letter from the Respondents to the Petitioners regarding the change in the name of the Company and revised MOU with Doordarshan proposing revenue sharing in the ratio of 60:40. This was not agreed by Ms. M.
S. Rugmini DDG (Films) (letter dated 22 nd February 2001). In the month of April 2001, the Respondents disputed their liability to pay the dues. The Petitioners by letter dated 12 th June 2001 terminated the agreement called upon to pay the dues of Rs.3,15,56,439/-
together with interest of Rs.20,39,139/- within a period of 30 days.
The same was the counter claim of the Petitioner. The Respondents on the contrary claimed a sum of Rs. 8,40,00,000/- from the jmi 2/11 ::: Downloaded on - 09/06/2013 19:19:59 ::: Jmi 3 arbp-696-09 Petitioners. The same was the claim of the Respondent. By letter dated 21st June 2001, the Respondents invoked the arbitration clause for resolving the dispute. By consent, the Arbitral Tribunal constituted. The parties led evidence. The Arbitrator has passed the restricted award against the Petitioner (original Respondent) and rejected the counter claim.
3. The operative part of the said Award is as under :-
"(a) That the Respondent is ordered and directed to pay to the claimant the sum of Rs.1,70,00,000/- (Rupees One Crore and Seventy Lakhs) with interest thereon at the rate of 12% per annum to be calculated from 21 st December, 2001 till payment or realisation, whichever is earlier;
(b) That the claim of the claimant against the Respondent in excess of Rs.1,70,00,000/- for the principal amount, that is, what is awarded to the claimant as per clause (a) above, is rejected;
(c) That the counter-claim of the Respondent against the claimant is rejected;
(d) That the Respondent is ordered and directed to pay to the claimant costs of arbitration quantified at Rs.3,80,000/- (Rupees Three Lakhs and Eighty Thousand)."
4. The relevant clauses of Agreement dated 14 th September 2000 as read and referred are as follows :-
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"(3) Additionally programmes for film slots on DD1 for at least 15 national holidays such as Holi, Dassera, Diwali, christmas, Independence Day, Republic Day etc. will also be made available to the party of the second part for a period of three years commencing from the date of execution hereof.
(4) The party of the second part fro the above programmes will have the option of one additional Friday slot which option it may exercise within a period of three months from the date of execution hereof.
(7) The party of the first part for the above programmes shall make available at least 1800 seconds of FCT per film on the slot aforesaid which will be marketed by the party of the second part at mutually agreed market competitive rates with intent to maximize revenues. However, the advertisement time will not exceed 25 per cent of the duration of the programme (film).
(10) The net revenues generated after deduction of agency commission from the telecasts of each programme (film) will be shared equally (50:50), between the party of the first part and the party of the second part on net basis, based on the Spot Buy Rates (SBR), to be decided by the party of the first part after consulting the party of the second part.
(14) All payments and accounts consequent to telecast of each programme will be settled within a period of 60 days of telecast of the programme.
(15) The party of the first part declares that a designated agency will file the contract 48 hours before the scheduled telecast of each programme for depositing all dues arising from the telecast of the said programme within the time stipulated aforesaid.
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(18) The Agreement can be terminated by either party with an advance notice of three months."
5 It is always necessary to consider the nature of business / transaction read with the terms and conditions of any commercial documents of the present nature while deciding the dispute arising out of the same. The petitioner, being broadcaster, through its satellite and terrestrial channel agreed to telecast on channel known as DD1, good quality Hindi feature films. The respondent being owner of certain films with exclusive satellite and terrestrial rights in India for programmes therefore entered into the agreement. The terms and conditions so referred and read with the correspondences and agreement between the parties, in the present facts and circumstances, are relevant to adjudicate the dispute so raised.
6 Admittedly, as per the agreement number of films / programmes were to telecast. The respondent made certain payments based upon the same. The Petitioner, received part payment and as there was no further payment while terminating the contract, demanded the balance amount. This itself means, there was no dispute with regard to the nature of business and the basic jmi 5/11 ::: Downloaded on - 09/06/2013 19:19:59 ::: Jmi 6 arbp-696-09 terms and conditions of the contract. Subsequent correspondences read and referred by both parties though are relevant, yet there is no denial to the part payment made by the respondent. The view taken by the learned Arbitrator by overlooking this facet, in my view, goes to the root of the findings given by the learned Arbitrator.
7 Admittedly, the contract was terminated prematurely. The respondent, therefore, claimed a sum of Rs.8,40,00,000 (Rupees eight crores forty lakhs only) from the Petitioner as per the details provided in the Statement of Claim with interest thereon. The Petitioner, apart from resisting the claim, raised the counter claim as the respondents failed to clear the arrears of the amounts due and payable. Both the parties, therefore, are fully aware of their respective obligations about the amount and / or share in the revenue actually generated as per the agreement. I am inclined to observe, therefore, considering the scheme and terms and conditions and nature of business that unless film / films are broadcasted, there is no question of demand of the compensation and for damages as claimed in the present case on the foundation of alleged loss of profit at the rate of Rs.10 lakhs per film, because of such termination.
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8 When we talk about grant of compensation and/or damages
for loss of profit in view of the premature termination of the contract, the basic burden to prove the same lies upon the party one who claims such compensation. In the present case except the calculation placed on record based on the transactions entered into and the amounts received in part, the respondent placed nothing on record to support the claim. The Petitioner never admitted the same.
The learned Arbitrator has accepted the same while arriving at the figure of the amount so granted as if the documents and its contents were admitted. The various aspects which are also required to be considered before granting and/or awarding any compensation, basically when the claim is of loss of profit and/or income. The concept of mitigation of costs, the proof of actual loss and the deduction of necessary expenses and statutory deductions cannot be overlooked. Admittedly, there is nothing on record to show that the parties have agreed and / or accepted this formula for final adjudication of disputes while arriving at any compensation and / or damages. The principle of loss of earning and/or profit itself has various facets. It depends upon the facts and circumstances of each case. This is not the case where the respondent claimant has led any jmi 7/11 ::: Downloaded on - 09/06/2013 19:19:59 ::: Jmi 8 arbp-696-09 evidence and/or put on record any decision to claim the earning of Rs.10 lakhs per film except the material so placed on record based upon the earlier transactions and/or business so done by the parties referring to the agreement between them. The amount so claimed, therefore, in no way can be stated to have any foundation of 10 per cent or 15 per cent loss of profit and/or earning from the settled amount. I am inclined to observe that grant of loss of Rs.10 lakhs per film as awarded is purely based upon the presumption and assumption which is contrary to the terms and conditions together with the nature of business / transaction in question. I am also inclined to observe that there is no question of making any payment basically on the basis of untelecasted films because there was no such obligation and/or liabilities.
9 Another factor in the present case is that the petitioner while terminating the contract demanded balance amount of Rs.1,97,64,600/- stating it to be arrears which respondents failed to pay, in spite of repeated reminders. The clauses so referred above permits the petitioner to take such action in case of defaults in payment. As per the agreement the respondent is bound to make payment subject to furnishing details in time. The respondent failed jmi 8/11 ::: Downloaded on - 09/06/2013 19:19:59 ::: Jmi 9 arbp-696-09 to do that. Therefore, I am inclined to observe in the present case that the petitioners committed no wrong in demanding the arrears while terminating the contract. There is nothing specifically dealt with the aspect of termination of the contract. In the circumstances referred to above, I am inclined to observe that if the termination is valid and legal, there is no question of grant of compensation and/or damages as awarded in the present case. The grant of award, therefore, on this ground also is unacceptable.
10 The petitioner's counter claim was rejected in toto. The respondents case and the reasoning given by the learned Arbitrator for rejecting the counter claim, based upon undisputed position on record that both the parties acted upon agreement and in fact respondent made payment to the petitioner from time to time, cannot be sustained. The petitioner raised counter claim and there was delay in making certain payments and lastly no payments made though demanded from time to time. The dispute and/or nature of share of 50:50 of the net revenue actually generated and/or unwritten and unaccepted agreement with regard to the share in ratio, in no way takes away the right of the petitioner to claim the arrears as per the counter claim raised. I am inclined to observe jmi 9/11 ::: Downloaded on - 09/06/2013 19:19:59 ::: Jmi 10 arbp-696-
09that all these aspects, as they go to the root of the matter, cannot be overlooked while passing the award, looking to the nature of business and the transaction between the parties. The award, therefore, so passed, basically reasoning given in paras 15, 16, 17 need to be interfered with.
11 Section 34 of Arbitration and Conciliation Act, in my view, empowers the Court to remand the matter if case is made out. In the present case, as recorded above, the counter claim of the petitioner, was rejected in toto. The respondents though claimed Rs.8,40,00,000, the Arbitrator restricted it to Rs.1,70,00,000/-
stating to be loss of earning/profit of the respondent in consequence of wrongful and illegal termination of the agreement.
12 However, considering the aspects and the reasoning given above, in my view, the matter required reconsideration on all points.
The Arbitral Tribunal, after giving opportunity to both the parties, to reconsider the matter afresh. I am inclined to observe that the parties by consent and or by filing an application for leading additional and / or more evidence, may take steps to bring on record jmi 10/11 ::: Downloaded on - 09/06/2013 19:19:59 ::: Jmi 11 arbp-696-
09more material and / or documents if any. I am inclined to keep all points open for the parties to re-agitate.
13 As recorded, it is difficult to decide the claim or the counter claim alone. There is no point in referring the matter only on one or two points but the whole matter is required to be referred to the Arbitrator for consideration afresh. The main claim goes so also the grant of interest so awarded. So far as cost is concerned, I am not inclined to interfere with the same.
14 Resultantly Award dated 17th December 2008 is quashed and set aside except the award of cost. Matter is remanded back for rehearing on all points. Parties to take steps. As the matter is old, the matter be expedited. There shall be no order as to costs.
( ANOOP V. MOHTA, J. ) jmi 11/11 ::: Downloaded on - 09/06/2013 19:19:59 :::