Bombay High Court
World Sport Group (India) Pvt. Ltd vs The Board Of Control For Cricket In ... on 20 December, 2010
Bench: S.J. Vazifdar
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO.978 OF 2010
World Sport Group (India) Pvt. Ltd. ]
A company registered under the ]
provisions of the Companies Act, 1956 ]
having its registered office at #4-01, ]
Corinthian, 370, Linking Road, Khar Road, ]
Mumbai-400 052. ] ...Petitioner
Versus
The Board Of Control For Cricket In India, ]
a society registered under the Tamil Nadu
ig ]
Societies Registration Act and having its ]
office at Cricket Center, Wankhede Stadium, ]
Mumbai-400 020. ] ...Respondents
Mr.Aspi Chinoy, Senior Counsel with Mr.Sunip Sen, Mr.Zal Andhyarujina,
Mr.Suhas Tulzapurkar, Mr.Nishad Nadkarni, Mr.Yogesh Chawak,
Mr.Ashutosh Sampat and Mr.Vineet Shrivastava i/b Legasis Partners for
the Petitioner.
Mr.C.A. Sudaram, Senior Counsel with Ms.Aarti Musa, Ms.Akila Kaushik,
Mr.Hetal Thakore i/b M/s.Thakore Jariwalla & Associates for the
Respondents.
CORAM : S.J. VAZIFDAR, J.
DATE : 20TH DECEMBER, 2010.
ORAL JUDGMENT :
1. This is a petition under section 9 of the Arbitration and
Conciliation Act, 1996 for an order restraining the respondents from
creating any third party rights in respect of the rights conferred upon the
petitioner under an agreement dated 25.3.2009 or transferring, alienating or
otherwise affecting any rights granted thereunder. The petitioner has also
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sought an order restraining the respondents from interfering with the
implementation of the operations by the petitioner under the said
agreement.
2. The respondents are a society registered under the Tamil Nadu
Societies Registration Act. The IPL is a sub-committee of the respondents.
One Lalit Modi was at the material time appointed by the respondents as
the Chairman and Commissioner of the IPL. The Respondents own and
control the commercial rights in respect of a cricketing event known as
Indian Premier League (IPL).
3.
In November, 2007, the respondents invited tenders to grant
the media rights in relation to the IPL.
4(A). According to the petitioner, it required a broadcaster with the
right to upload the signals from or to India. The petitioner therefore entered
into a pre-bid arrangement dated 14.4.2008 with MSM Satellite (Singapore)
Pte. Ltd. (hereinafter referred to as MSM). MSM, however, insisted on
acquiring the rights directly from the respondents and not as a sub-licensee
of the petitioner.
(B). The petitioner submitted its bid. The tender was awarded to the
petitioner. The petitioner thereby became entitled to the entire worldwide
media rights in respect of the IPL for a period of ten years from 2008 to
2017.
5. In accordance with the pre-bid agreement that the petitioner
had entered into with MSM, it ensured that the IPL media rights it became
entitled to were distributed between MSM and itself. Accordingly, two
agreements were entered into, both dated 21.1.2008, one between the
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petitioner and the respondents and the other between MSM and the
respondents. A third agreement also dated 21.1.2008 was entered into
between the petitioner and MSM.
6(A). By the agreement between the respondents and MSM, MSM
was granted media rights to the IPL for the Indian sub-continent for the
period 2008-2012.
Under this agreement, a Rights Fee of US $275,400,000
(erroneously stated to be US $275,400,000,000) was payable by MSM to
the respondents in varying installments each year and in accordance with
the provisions of clause 7. Out of this amount, a sum of various amounts
each year aggregating to US $ 46 million was payable contingent upon the
average TAM rating of the season being greater than five GRP.
(B) The agreement between the petitioner and MSM conferred
upon MSM the option to acquire the Indian sub-continent rights for the
period 2013 to 2017 through the petitioner for additional consideration.
7. By the agreement between the petitioner and the respondents,
the petitioner was granted all other IPL media rights i.e. the Indian sub-
continent rights for the period 20013 to 2017 and the rest of the world
rights for the period 2008 to 2017. The agreement also provided that if the
contract between MSM and the respondents was terminated for any
reason, the respondents would negotiate the reversion of the Indian sub-
continent rights for the un-expired part of the period 2008-2012 with the
petitioner in good faith.
Under this agreement, the petitioner was to pay the
respondents, an aggregate Rights Fee of US$642,000,000 comprising:
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- in respect of Rights Period 2008-2012 a sum of US$30,000,000
and
- in respect of the Rights Period 2013-2017, a sum of US$612,000,000.
The amounts were payable in variable instalments each year and in
accordance with the provisions of Clause 7. The petitioner was also to pay
the shortfall, limited to US$ 35 million, on account of the amounts of US$
46 million not being payable under the MSM-respondent agreement on
account of the TAM rating not being met.
8. The first IPL tournament was held in April-May, 2008.
9.
The validity of every agreement hereafter and assertion of the
petitioner in regard thereto is denied by the respondents. The respondents
case is that every agreement referred to hereafter is fraudulent, and was a
result of the collusion between the said former Chairman and
Commissioner of the IPL, Lalit Modi and the petitioner and its associate
company.
It was suggested that this is a peculiar case where the
termination of the agreement between the parties is based on a fraud
alleged by a third party viz. MSM respect of its contract with another party
viz. WSG-Mauritius. This is incorrect. The allegations of impropriety and
fraud have been raised not merely qua the agreement dated 25.3.2009
entered into between MSM and the WSG-Mauritius, but also with respect
to the other agreements entered into between the parties herein and WSG-
Mauritius and MSM. It is not as if the respondents have alleged that there
was a fraud only with respect to the agreement dated 25.3.2009 between
MSM and WSG-Mauritius. The respondents have, in effect, alleged a fraud
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on the part of both WSG-Mauritius and the petitioner in collusion with the
said Lalit Modi in the entire matter. Indeed, it has also been the petitioner's
case that the three agreements are inter-related and part of a composite
arrangement.
10(A). By a letter dated 14.3.2009, the respondents terminated the
agreement dated 21.1.2008 between MSM and themselves.
(B). On 15.3.2009, the petitioner and the respondents entered into
negotiations regarding Indian sub-continent rights for the unexpired period
2009-2012.
11.
An agreement was reached in the early hours of the morning
prior to 3.00 a.m. on 15.3.2009. The petitioner agreed to a termination of
the agreement between the respondents and itself. According to the
petitioner, this was at the instance of the respondents and on the
understanding between the parties that the respondents would
subsequently enter into a similar agreement with it for rest of the worldwide
rights on the same terms. The petitioner's further case is that it
relinquished its India media rights for the period 2013-2017 on the basis
that the respondents would enter into an agreement with its associates
World Sport Group (Mauritius) Limited, (WSG-Mauritius) for the media
rights for the Indian subcontinent for the period 2009-2017 at the enhanced
rate of ` 4791.89 crores in place of the existing ` 3091.60 crores i.e. an
additional consideration of ` 1700.00 crores.
(A). The petitioner, respondents and WSG-Mauritius entered into an
agreement dated 15.3.2008 titled "Deed of Mutually Agreed Termination".
In this agreement, WSG refers to the petitioner and "SONY" to MSM. The
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relevant provisions thereof read as under :-
"2. MUTUALLY AGREED TERMINATION OF
WSG MEDIA RIGHTS AGREEMENT
2.1 The Parties acknowledge and agree that the BCCI
has terminated the BCCI-Sony Agreement (i.e. the
agreement dated 20.1.2008 between the respondent and
MSM) and that given the proximity of the start of the 2009
IPL season, and its obligations to its stakeholders and to
protect the interests of such stakeholders, the BCCI
wishes to execute new media rights agreements for the
period 2009-2017 on an expedited basis.
2.2 In order to facilitate this process, and for good and
valuable consideration, the Parties have mutually agreed
to terminate the WSG Media Rights Agreement (i.e. the
agreement dated 21.1.2008 between the petitioner and the
respondents) and to enter into the New WSG Media
Rights Agreements.
2.3 The Parties shall have no liability to each other
as a result of the mutually agreed termination of the WSG
Media Rights Agreement."
(B). On 15.3.2009, the respondents and WSG-Mauritius entered
into an agreement for the media rights for the Indian subcontinent for the
period 2009-2017.
The Rights Fee was enhanced by ` 1700.00 crores to `
4791.89 crores payable in accordance with the provisions of Clause 7
for the Rights Period commencing on the date of execution of the
Agreement by both parties until 31 December 2017. Under clause 8
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WSG-Mauritius was entitled to insert a maximum of 2,000 seconds of
commercial time.
Clause 13.1 and 13.5 are important and read as under:-
"13. ASSIGNMENT AND SUB-LICENSING
13.1 Licensee shall not assign or purport to assign,
sub-contract or otherwise part with the burden or the
benefit of this Agreement or any part thereof or interest
hereunder to any person without the prior written consent
of Licensor such consent not to be unreasonably withheld
except that Licensee shall be entitled to sub-licence this
Agreement to a sub-licensee ("Sub-Licensee") within 72
hours of signature of this Agreement by both parties
subject to the following terms and conditions:
13.5 The Parties acknowledge and accept that if
Licensee fails to execute an SLA within 72 hours of
execution of this Agreement that this Agreement shall
automatically terminate and all of the terms of clause 11
hereunder (including without limitation all rights granted
hereunder reverting automatically and without formality to
Licensor) and Licensor shall have no liability to Licensee
and Licensee shall have no liability to Licensor as a result
of termination under this clause 13.5 the Parties shall
thereupon mutually release and waive all rights and
obligations to each other under this Agreement."
12. On 15.3.2009, MSM filed Arbitration Petition No.215 of 2009,
challenging the respondents' termination of the agreement dated 21.1.2008
entered into between the respondents and itself. An ex-parte, ad-interim
injunction was passed restraining the respondents from creating any third
party rights till 17.3.2009.
13. At the same time, MSM approached WSG-Mauritius to discuss
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the possibility once again of obtaining the media rights for the Indian
subcontinent. According to the petitioner, it informed WSG-Mauritius that it
was negotiating with other broadcasters for the same but that it was willing
to negotiate with MSM as well.
14. On 16.3.2009, MSM's application for ad-interim reliefs in
Arbitration Petition No.215 of 2009 was heard. The respondents admittedly
informed the Court that they had already approved certain broadcasters.
The reference was obviously to the said agreement dated 15.3.2009
between the respondents and WSG-Mauritius.
15.
It is pertinent to note that the agreements dated 15.3.2009
have also been challenged inter-alia in paragraphs 5 and 18 of the affidavit
in reply. In paragraph 5, it is stated that the respondents' practice in
keeping with prudent management had been to call for tenders while
deciding the award of rights of value. Notwithstanding this practice, the
said Lalit Modi entered into an agreement dated 15.3.2009 in the early
hours of the morning (2:45 AM) with the petitioner's associate/sister
concern WSG- Mauritius. In paragraph 18, the respondents have not
accepted either of the agreements dated 15.3.2009 as genuine. In fact it is
expressly contended that they were entered into in fraudulent
circumstances.
16. I am conscious of the fact that these agreements have been
acted upon thereafter for over a year. However, the fact remains that there
is nothing on record which establishes the respondents having participated
in the formation of the agreement dated 15.3.2009 or the execution thereof.
The mere fact that the respondents were in the picture, would not establish
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the respondents acceptance of the said agreements or even of their having
acquiesced in the same.
17. There are aspects about the agreements dated 15.3.2009
which, if not curious, require an explanation. The MSM-respondent
agreement dated 21.1.2008 was terminated on 14.3.2009. The agreements
dated 15.3.2009 were arrived at at 2:45 AM. The circumstances and the
facts leading to the termination notice dated 14.3.2009 and the execution
of the 15.3.2009 agreements have not been stated. There are certain very
important questions which require an answer in view of the fact that the
new agreements of 15.3.2009, which involved an additional consideration
of `.1700 crores and a grant of the very valuable media rights for the Indian
subcontinent for the period 2009-2013, were entered into within much less
than twenty four hours of the termination of the MSM-respondent
agreement. It is difficult to imagine such contracts having been negotiated,
concluded and drawn up within such a short period of time. The basic
questions that would arise in anyone's mind are obvious. At what time was
the MSM-respondent agreement dated 21.1.2008 terminated by the letter
dated 14.3.2009? At what time did MSM receive the notice of termination?
When was the petitioner informed by the respondent/the said Lalit Modi of
the termination? Was it before or after the termination? Who participated
in the negotiations for the fresh agreements dated 15.3.2009? When did
negotiations take place between the parties? The petition does not suggest
that the respondents/Lalit Modi informed the petitioner/WSG-Mauritius that
it intended terminating the agreement. Presumably, therefore, they were
informed of the termination on 14.3.2009. How then were such complex
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and high-value transactions concluded within just a few hours?
18. I do not suggest that there cannot be a plausible acceptable
answer to these questions. But, they must be answered for in the absence
thereof, it is difficult to accept at the interlocutory stage that there will be
nothing to be said in favour of the respondents at the trial of an action in
appropriate proceedings.
19. There is yet another aspect which has not been satisfactorily
met by the petitioner. While the MSM-respondent agreement of 25.3.2009
provided an enhancement in the rights fee by `.1700 crores, there is no
enhancement of rights fee under the 25.3.2009 agreement between the
petitioner and the respondents. The respondents, in paragraph 8 of the
affidavit in reply made a point of this and also the fact that when the
agreement was entered into, six hundred additional seconds were available
for free commercial time. It was contended, therefore, that the loss of
revenue to the respondents on this count would be enormous.
In the affidavit in rejoinder, the petitioner stated that whilst the
agreement with MSG-Mauritius was a new agreement, the agreement
between the petitioner and the respondents was a continuation of the
earlier existing agreement and was, at the highest, a novation. The
petitioner also denied that the rights fee in the agreement dated 25.3.2009
was enhanced only due to the additional six hundred seconds free
commercial time, or otherwise. Mr.Chinoy had, in fact, submitted that the
agreements dated 15.3.2009 were entered into at the respondents
insistence and on the understanding that the respondents would
subsequently enter into a similar agreement with the petitioner for the rest
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of the world rights on the same terms.
20. Mr.Chinoy admitted that there was nothing in the agreements
which indicated that the agreements dated 15.3.2009 were executed on the
alleged understanding that the respondents would subsequently enter into
a similar agreement with the petitioner for the rest of the world rights on the
same terms. The submission is, in fact, contrary to the express terms of
the tripartite agreement dated 15.3.2009 and in particular clause 2 thereof
which expressly provided that the parties shall have no liability to each
other as a result of the mutually agreed termination of the earlier
agreements dated 21.1.2008. The submission is, therefore, contrary to the
agreement. I can hardly place greater weightage on this alleged oral
understanding than on the express terms of a contract, even assuming that
the same is genuine. This is, therefore, another aspect which raises a
serious question and cannot be answered in the petitioner's favour in an
application for interlocutory reliefs.
21. This brings me to Mr.Chinoy's submission that the respondents
were, at all material times, aware of the agreement dated 25.3.2009.
22. This next stage involves the working of the agreements dated
15.3.2009 even assuming them to be genuine and enforceable.
23. The period of seventy two hours for appointing a broadcaster
under clause 13.5 of the agreement dated 15.3.2009 between the
respondents and WSG-Mauritius would have ended at 3.00 a.m. on
18.3.2009. However, the respondents by a letter dated 17.3.2009 stated
that they understood that WSG-Mauritius was in an advanced stage of
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negotiations with other parties including MSM/Sony for a sub-license of the
television rights in India; that the hearing before this Court had concluded
and that the matter had been reserved for judgment, which was expected
shortly. With a view to ensuring that no prejudice is caused to both the
parties to the legal action and/or the rights under the agreement are not
affected, the respondents agreed to the request of WSG-Mauritius to
extend the seventy two hours period upto 3.00 a.m. on 21.3.2009. It was
clarified that the extension was subject to the orders that would be passed
by this Court and that if the Court granted an injunction, the extension
would not be effective.
24. MSM was one of the parties WSG-Mauritius was negotiating
with. The petitioner's case is that the terms of a new agreement between
WSG-Mauritius and MSM had been finalized on 19.3.2009. It is alleged
that MSM again insisted on a direct contract with the respondents which it
would not have been able to obtain as long as the agreement dated
15.3.2009 between WSG-Mauritius and the respondents subsisted. The
petitioner contends that it was therefore, agreed in principle that WSG-
Mauritius would relinquish its rights/allow them to lapse and ensure that
MSM was granted a license in respect of the media rights for the Indian
subcontinent by the respondents for the period 2009-2017. MSM, in turn,
agreed to pay the respondents an increased amount i.e. ` 1700.00 crores
which WSG-Mauritius had agreed to pay the respondents under the
agreement dated 15.3.2009 between the respondents and WSG-Mauritius.
In addition thereto, MSM agreed to pay WSG-Mauritius in installments, a
"facilitation fee" of ` 450.00 crores, which was subsequently reduced to `
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425/- crores.
25. Mr.Chinoy, the learned Senior Counsel appearing on behalf of
the petitioner stated that the sum of ` 425.00 crores comprised of ` 115.00
crores (equivalent to US $ 25 million) being the option fee payable under
the agreement dated 21.1.2008 between the petitioner and MSM in the
event of MSM exercising the option for the increased term from 2013-2017
for the media rights for the Indian subcontinent, ` 160.00 crores (equivalent
to US $ 35 million) towards the agreed TAM rating incentive under the
agreement dated 21.1.2008 between the respondents and MSM and `
150.00 crores being the consideration for the petitioner and WSG-Mauritius
relinquishing/surrendering the media rights of the Indian subcontinent for a
period 2013-2017.
26. Although it is not relevant in the ultimate analysis, Mr.Chinoy's
break-up of the facilitation fee of ` 425.00 crores is not entirely correct. A
sum of ` 115.00 crores (equivalent to US $ 25 million) is correctly stated to
be the amount that would have been payable by MSM under the
agreement dated 21.1.2008 between the petitioner and MSM if it opted to
acquire the media rights for the Indian subcontinent for the period
2013-2017. There is no quarrel about the amount of ` 150.00 crores which
is a direct consideration for the petitioner/its associate WSG-Mauritius
relinquishing the rights for the period 2013-2017. I would add to this the
sum of ` 160.00 crores (equivalent to US $ 35 million) as being the
payment for the same purpose viz. consideration for the petitioner/its
associate WSG-Mauritius, relinquishing the rights for the period
2013-2017. This is for the obvious reason that in view of the tripartite
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agreement dated 15.3.2009, all rights and liabilities under the agreement
dated 21.1.2008 stood terminated. This would include the right thereunder
to receive the sum of US $ 35 million.
Thus the additional consideration for this alleged oral
agreement was at least `.150.00 crores plus `.160.00 crores aggregating
to `.310.00 crores.
27. There is, however, nothing to indicate that the respondents
were aware of the oral agreement allegedly arrived at on 19.3.2009. There
is, on the other hand, evidence to the contrary. I will be referring in detail to
three e-mail messages dated 23.3.2009 addressed by the said Lalit Modi
to various broadcasters, the petitioner, WSG-Mauritius and MSM. Suffice it
to note at this stage that the first e-mail dated 23.3.2009 expressly stated:-
"Friends
BCCI will close with one rights holder by 8 pm tonight.
The courts have allowed us to do the same with
anyone, any deal. This is for your information.
Warm regards
Lalit Modi
Chairman and Commissioner IPL."
The petitioner's case is that it had already arrived at an
arrangement with MSM on 19.3.2009. If it was so, surely MSM and WSG-
Mauritius / the petitioner would have responded by referring to the same in
such a matter. They did not do so. It is for this reason that it is significant
to note that the e-mail message was addressed to the petitioner/WSG-
Mauritius and MSM. This indicates at the very least that it would be
necessary for the petitioner to establish the alleged oral arrangement
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between MSM and the petitioner/ WSG-Mauritius of 19.3.2009.
28. Mr.Chinoy relied upon a sentence in paragraph 5 of the affidavit
in reply to contend that the respondents were aware that the negotiations
had resulted in a contract between WSG-Mauritius and MSM as the
broadcaster within the extended period i.e. prior to 3.00 a.m. on 24.3.2009.
It is however, appropriate to also read two sentences that precede the
sentence relied upon by Mr. Chinoy and one that follows it. The four
sentences read as under :-
"This agreement with WSGM provided the licensee should
find a broadcaster within 72 hours failing which the rights
would revert back to the BCCI. On the 16th of March, 2009,
the Hon'ble Court was informed by the respondent that
even before MSM had moved the petition for interim relief,
the fresh agreement with WSG Mauritius PTE Ltd. had
been entered into and therefore the petition filed by MSM
had become infructuous. On 22-03-2009, Mr.Lalit K. Modi
informed the IPL Governing Council that MSM had settled
the dispute since they had offered to match the same
amount that was offered by WSGM. The next day,
however, this Hon'ble Court was not informed of such a
settlement and proceeded to give its verdict rejecting the
petition of MSM for interim relief." [emphasis supplied]
The underlined sentence is the one relied upon by Mr.Chinoy to
contend that the respondents were aware of the alleged understanding
arrived at between MSM and WSG-Mauritius. While the assertion may well
be established at the trial in an appropriate action, I do not think that the
pleadings establish the same. The sentence relied upon by Mr.Chinoy
could well refer to a settlement between MSM and the respondents qua
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the respondent's termination of the agreement dated 21.8.2008. The
sentence could well suggest that the said Modi informed the respondents
that MSM had offered an amount equivalent to the offer by WSG-Mauritius
to the respondents in settlement of the dispute relating to the respondents
termination of the agreement dated 21.1.2008. This is also a possible
interpretation of the averments. At this stage, I would not read the
averment to clearly establish the petitioner's contention that the
respondents were aware of, much less accepted the alleged oral
understanding finalized on 19.3.2009.
29.
The respondents were obviously aware of the fact that the
negotiations were in an advanced stage between the petitioner/WSG-
Mauritius and the broadcasters.
This is evident from a letter dated 20.3.2009, which is identical
to the said letter dated 17.3.2009. By the said letter, the respondents
further extended the period under clause 13.1 of the agreement dated
15.3.2009 to 3.00 a.m. on 24.3.2009. In all other respects the letter was
identical to the one dated 17.3.2009.
30. On 23.3.2009, the Court rejected MSM's application for interim
reliefs on the ground that the respondents had already entered into a
contract with WSG-Mauritius, which was not a party to the proceedings.
This would be so, for as on this day the agreement dated 15.3.2009 was in
force, the seventy two hours period having been extended upto 3.00 a.m.
on 24.3.2009.
31. The petitioner's case is that the seventy two hours period
stipulated in clause 13.5 of the agreement dated 15.3.2009 between the
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respondents and WSG-Mauritius was not extended yet again in order to
enable MSM to obtain the media rights for the Indian subcontinent directly
from the respondents in accordance with the alleged understanding
finalized between MSM and WSG-Mauritius on 19.3.2009. This, it is further
contended, was implemented and is evidenced by three agreements dated
25.3.2009.
32. The first agreement dated 25.3.2009 was entered into between
WSG-Mauritius and MSM. WSG-Mauritius is referred to in the agreement
as WSG. The recitals and the relevant provisions of the agreement read
as under :-
"WHEREAS:
(A) WSG, its affiliates and MSM have previously
worked together in connection with the acquisition of
media rights to cricket, including with respect to the Indian
Premier League (the "IPL").
(B) WSG has assisted MSM in finalising the BCCI-
MSM Agreement (as defined below) and in relation to
finalising bids for media rights in connection with the IPL
(collectively, the "Facilitation Services").
(C) In return for performing the Facilitation
Services, MSM has agreed to pay to WSG the Facilitation
Fee (as defined below) and provide the Bank Guarantees
(as defined below) on the terms and conditions hereinafter
set out.
NOW THIS DEED WITNESSETH as follows :-
1. INTERPRETATION
"BCCI-MSM Agreement" means the IPL media rights
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licence agreement, entered into on the same date as this
Deed, between BCCI and MSM;
"Facilitation Fee" means the amount of 4,250,000,000
Indian Rupees, payable in accordance with Clause 3;
"WSG Agreement" means the IPL licence agreement
dated 23 March 2009 between BCCI and WSG; and
3. THE FACILITATION FEE
Payment Terms
In consideration of WSG having provided the Facilitation
Services, MSM hereby irrevocably and unconditionally, in
accordance with the terms and conditions set out below,
covenants and undertakes to pay WSG (or its nominee,
provided always that MSM shall not be obligated to so pay
such nominee if doing so would increase its costs or
liabilities in any form, including without limitation in relation
to Tax or any other taxes, levies, duties, imposts, charges
or contributions) the Facilitation Fee in accordance with the
following schedule:
(a) ...............
to
(j) ...............
5. BCCI TERMINATION NOTICE
5.1 WSG may at any time, without prejudice to any
other rights it may then have against MSM, provide the
BCCI Termination Notice to BCCI; provided that the
following conditions at both (a) and (b) below have been
satisfied:
(a) either:
(i) MSM has failed to pay WSG the Facilitation
Fee in accordance with this Deed and the dates set out in
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Clause 3; or
(ii) MSM has failed to provide the Bank
Guarantees as required under this Deed within the time
frames set out in Clause 4.1,
and such failure is not remedied by MSM (it being agreed
that (as relevant) MSM's payment of the relevant
instalment of the Facilitation Fee or provision of the Bank
Guarantee shall be deemed to be an adequate remedy)
within 14 days of receipt of written notice ("Remedy
Period") by WSG to MSM requiring it to do so ("Notice to
Remedy"); AND
(b) if MSM provides WSG with a written notice at
any time during the Remedy Period that it has paid the
Facilitation Fee and/or the Bank Guarantee (as
appropriate) and that it disputes the Notice to Remedy,
then, WSG shall, prior to providing the BCCI Termination
Notice to BCCI, obtain a declaration from the arbitrator in
accordance with the procedure set out in Clause 9 hereof
(save that the parties irrevocably undertake and warrant
that they shall request that the arbitrator reach his or her
final decision and/or judgment and/or final direction to the
parties as soon as possible but at all times within 30 days
of reference of the matter to such arbitrator) that one of the
failures set out in Clause 5.1(a)(i) and (ii) has occurred.
7.2 WSG hereby represents, warrant and
undertake to MSM that:
(a) ..................
to
(f) ..................
(g) the WSG Agreement has been mutually
terminated by BCCI and World Sport Group (Mauritius)
Limited."
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20 arbp978-10
MSM admittedly paid the petitioner a sum of `.1,25,00,000/-
towards part-payment of the facilitation fee. Clause 9 of the agreement
contains an arbitration agreement.
33. The second agreement dated 25.3.2009 was entered into
between MSM and the respondents in respect of the media rights for the
Indian subcontinent for an increased amount of ` 4791.89 crores for the
period 2009-2016 extendable to 2017. Recital "B" records that the
agreement dated 21.1.2008 entered into between MSM and the
respondents was agreed to be replaced by this agreement. The relevant
provisions of this agreement read as under :-
"Rights Fee means the monetary amount of INR 3949.40
Crores Indian Rupees (39,494,000,000 Indian Rupees),
which amount shall, if the Rights Period is extended
pursuant to Clause 27 of the Agreement, increase to a
total of INR 4791.89 Crores Indian Rupees (47,918,900,00
Indian Rupees) payable in accordance with the provisions
of Clause 7;
Rights Period means the period commencing on the date
of execution of this Agreement by both parties until 31
December 2016, unless otherwise extended in accordance
with Clause 27;
WSG means World Sport Group (Mauritius) Limited, a
company incorporated under the laws of Mauritius
(registered number 017624C1/GBL), with its registered
address at 308 James Court, St Denis Street, Port Louis,
Mauritius;
WSG Agreement means the agreement between WSG
and Licensee entered into on or around the date of this
Agreement;
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21 arbp978-10
WSG/Licensor Agreement means the agreement
between WSG and Licensor entered into on or around the
date of this Agreement; and
WSG Notice means the written notice having a cure
period of not less than 21 days issued to Licensor by WSG
in accordance with the terms of the WSG Agreement
stating that Licensee has failed to make payment or
provide a bank guarantee in accordance with the terms of
the WSG Agreement and providing the details set out in
the WSG Notice form attached to the WSG Agreement.
10.4 Upon receipt of the WSG Notice by Licensor in
accordance with the WSG Agreement, Licensor may
immediately terminate this Agreement (without prejudice
to any other rights or remedies Licensor may have against
Licensee) if Licensee both: (a) fails to provide Licensor
with a Confirmation Notice; and (b) fails to remedy the
breach, within 21 days after receiving written notice from
Licensor calling upon Licensee to remedy such breach
specifying the amount if any to be paid and/or the bank
guarantee, if any, to be provided by Licensee to WSG (it
being agreed that Licensee's (as relevant) payment of
amount then overdue or provision of the bank guarantee
then overdue within such 21 day period shall be deemed
as amounting to adequate remedy). For the purposes of
this Clause 10.4, "Confirmation Notice" shall mean the
notice signed by both WSG and Licensee confirming that
the relevant payment has been made or the bank
guarantee provided by Licensee to WSG."
34. The third agreement also dated 25.3.2009 was entered into
between the petitioner and the respondents in respect of the media rights
for the rest of the world i.e. excluding the Indian subcontinent for the period
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22 arbp978-10
15.3.2009 to the year 2017. This agreement is the subject matter of the
petition which the respondents terminated by their letter dated 28.6.2010
alleging that it was vitiated by fraud. MSM had earlier, by a letter dated
25.6.2010 terminated the agreement dated 25.3.2009 between itself and
WSG-Mauritius on the same grounds. I will refer to these termination letters
later in detail. The relevant provisions of the agreement read as under :-
"1. Definitions and Interpretation
MSM Agreement means the agreement that is entered
into by World Sport Group (Mauritius) Limited and MSM on
the date of the Licensor MSM Agreement;
Rights Fee means the monetary amount of US
$87,200,000 (payable in Indian Rupees using an
exchange rate of 1 US Dollar to INR 40 Rupees) payable
in accordance with the provisions of Clause 7 below;
Rights Period means the period commencing on 15
March 2009 until 31 December 2017 and comprising (i)
Rights Period 2009-2012 (meaning the period
commencing on 15 March 2009 until 31 December 2012,
(ii) Rights Period 2013-2017 (meaning the period
commencing on 1 January 2013 until 31 January 2017);
2. RIGHTS
Grant of Rights
(iii) Licensee further acknowledges and agrees
that:
(a) Licensor shall be free without restriction
throughout the Rights Period to itself transmit, make
available and otherwise exploit, or to authorise any other
persons to so do, any Television Rights and Mobile
Simulcast Rights within the Indian Subcontinent on an
Exclusive basis (or in Licensor's discretion on a non-
This Order is modified/corrected by Speaking to Minutes Order
23 arbp978-10
Exclusive basis), and that during the Rights Period
2009-2016 these rights have been granted to MSM, with
an option to extend the Licensor MSM Agreement to
include Rights Period 2017;
27. LICENSOR MSM AGREEMENT
Expiry of Licensor MSM Agreement in 2016
Termination of Licensor MSM Agreement due to
Breach of MSM Agreement
27.5 Upon receipt of the MSM Notice by Licensor, if MSM
both: (a) fails to provide Licensor with a Confirmation
Notice; and(b) MSM fails to remedy the breach within 21
days after receiving written notice from Licensor calling
upon MSM to remedy such breach specifying the amount
if any to be paid and /or the bank guarantee, if any, to be
provided by Licensee to WSG (it being agreed that
Licensee's (as relevant) payment of amount then overdue
or provision of the bank guarantee then overdue within
such 21 day period shall be deemed as amounting to
adequate remedy), Licensor must (in its discretion) either
(i) immediately terminate the Licensor MSM Agreement
(without prejudice to any other rights or remedies Licensor
may have against MSM); or
(ii) within a further 21 days after the expiry of the cure
period above, pay Licensee the money or provide the bank
guarantee owing to it from MSM that caused Licensee to
issue the MSM Notice.
For the purposes of this Clause 27.5:
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24 arbp978-10
"MSM Notice" shall mean the written notice having a cure
period of not less than 21 days issued to Licensor by
Licensee in accordance with the terms of the MSM
Agreement stating that MSM has failed to make payment
or provide a bank guarantee in accordance with the terms
of the MSM Agreement and providing the details set out in
the MSM Notice form attached at schedule 3 (by way of
example only).
"Confirmation Notice" shall mean the notice signed by
both MSM and Licensee confirming that the relevant
payment has been made or the bank guarantee provided
by MSM to Licensee, the form of which is attached at
Schedule 4 (by way of example only)."
35. The above agreements dated 25.3.2009 were acted upon in the
second and third IPL tournaments held in the years 2009 and 2010.
36. In or about April, 2010, there appear to have been disputes and
differences between the former Chairman of the Governing Council of the
IPL, the said Lalit Modi and other office bearers of the respondents.
According to the respondents, they came to know thereafter through media
reports, about the fraud they now allege about the above agreements of
15.3.2009 and 25.3.2009.
37. By a letter dated 1.5.2010, addressed to MSM, the respondents
stated that it had issued a charge sheet to the said Lalit Modi with regard
to certain transactions finalized by him. One of the transactions, it was
stated, was the agreement between the respondents and MSM. The letter
stated that questions had been raised regarding the transactions including
as to the payment of the facilitation fee to WSG-Mauritius. The
This Order is modified/corrected by Speaking to Minutes Order
25 arbp978-10
respondents requested MSM to furnish the relevant correspondence and
the documents leading to the said agreement.
38. By a further letter dated 30.5.2010 addressed to MSM, the
respondents referred to the agreement dated 25.3.2009 entered into by
them with MSM and stated: "It has come to our attention that you have
entered into an agreement on the same day i.e. 25.3.2009 with M/s.World
Sports Group (M) Ltd. (WSGM) ........................" The letter further stated
that the respondents were not aware of any facilitation services provided by
WSG-Mauritius and that the moneys expended by MSM for the Indian
subcontinent rights i.e. the facilitation fee should rightly be paid to the
respondents alone and to no other party. The respondents therefore,
requested MSM to remit all the amounts due and payable to WSG-
Mauritius to them stating that a favourable decision by MSM in this regard
would help the relations between MSM and BCCI grow stronger in the
years to come.
39. By a letter dated 2.6.2010 addressed to MSM, the respondents
referred to an e-mail message also dated 2.6.2010 sent by MSM to the
respondents and confirmed that the respondents were agreeable and
would fulfill all the requests made by MSM to enable it to pay the balance
amount of facilitation fee of ` 300 crores to the respondents. The
respondents also advised MSM to terminate the facilitation fee contract
dated 25.3.2009 entered into by it with WSG-Mauritius and to initiate
proceedings for recovery of the amounts already paid thereunder i.e.
` 125.00 crores. MSM was requested to meet the respondents officer and
stated that the respondents would take steps to prepare an addendum to
This Order is modified/corrected by Speaking to Minutes Order
26 arbp978-10
the agreement dated 25.3.2009 entered into between MSM and the
respondents "to reflect our agreement on your request".
40. MSM thereafter by a letter dated 25.6.2010 purported to
terminate the agreement dated 25.3.2009 entered into by it with WSG-
Mauritius. It was alleged that the underlying consideration for the
agreement was the representation made by WSG-Mauritius that it had
executed an agreement dated 23.3.2009 with the respondents whereunder
it had been granted unfettered global media rights including the Indian
subcontinent rights implying thereby as a natural corollary that the earlier
media rights agreement dated 15.3.2009 between WSG-Mauritius and the
respondents along with its restrictive conditions had been mutually
terminated and that WSG-Mauritius could thereafter relinquish the media
rights for the Indian subcontinent in favour of MSM for consideration to
enable MSM to enter into a direct agreement with the respondents and that
the said rights were subsisting at the time of the execution of the
agreement dated 25.3.2009 between WSG-Mauritius and MSM and that
WSG-Mauritius had relinquished those rights in favour of the respondents
to enable the respondents and MSM to seek a direct media rights license
agreement for the Indian subcontinent. The letter further stated that MSM
had been recently informed by the respondents that the alleged agreement
between WSG-Mauritius and the respondents dated 23.3.2009 does not
exist and that in terms of clause 13.5 of the agreement dated 15.3.2009,
the rights had automatically reverted to the respondent at 3.00 a.m. on
24.3.2009 and therefore, at the time of the execution of the agreement
dated 25.3.2009, WSG-Mauritius did not have any rights to relinquish
This Order is modified/corrected by Speaking to Minutes Order
27 arbp978-10
and/or to facilitate the procurement of the Indian subcontinent rights for the
IPL from the respondents and thus no facilitation services could have been
provided by WSG-Mauritius. It was alleged that the representations made
by WSG-Mauritius were therefore fraudulent. The letters further stated that
MSM and the respondent had executed an amendment to the agreement
dated 25.3.2009 between the respondents and itself, inter-alia, by deleting
clause 10.4 thereof. MSM, therefore, rescinded the agreement dated
25.3.2009 entered into by them with WSG-Mauritius and demanded the
refund of a sum of ` 125.00 crores with interest at 16% per annum.
41.
The respondents by a letter dated 28.6.2010 purported to
terminate the agreement dated 25.3.2009 between the parties. The
respondents alleged that they were never made aware of the agreement
dated 25.3.2009 entered into between MSM and the petitioner's affiliate
WSG-Mauritius; that the agreement was brought to the notice of the
respondents by MSM only recently and that the amounts due thereunder
viz. ` 425.00 crores were actually amounts due to the respondents. The
letter that in the agreement dated 25.3.2009 between WSG-Mauritius and
MSM, it was falsely represented that there was a license agreement
between the respondents and WSG-Mauritius dated 23.3.2009.The letter
further raised a grievance regarding the onerous terms contained inter-alia
in clause 27.5 of the agreement dated 25.3.2009 between the respondents
and WSG-Mauritius. The letter referred to a suit having been filed by MSM
inter-alia against WSG-Mauritius and the petitioner seeking a refund of the
said sum of ` 125.00 crores. In conclusion the letter stated :-
"Due to the all pervasive fraud that you have perpetrated
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28 arbp978-10
on the BCCI, we hereby rescind the subject agreement
with immediate effect. All the rights purportedly licensed to
you hitherto shall stand vested back with the BCCI and
you cannot deal with these rights in any manner. We
reserve our rights to initiate both civil and criminal
proceedings against you for fraud and wrongful losses at
your costs and consequences".
42. The petitioner by its letter dated 30.6.2010 and by its
advocate's letter dated 1.7.2010, responded to the letter of termination. By
its advocate's letter dated 1.7.2010, the petitioner also invoked the
arbitration clause contained in clause 29.3 and called upon the
43.
respondents to nominate an arbitrator.
There is no dispute that every one of the contracts I have
referred to was executed by the concerned parties. Mr.Sundaram stated
that the respondents have no grievance regarding the agreements dated
21.1.2008. He submitted that even assuming that the agreements dated
15.3.2009 are valid, the three agreements dated 25.3.2009 were entered
into on account of a fraud committed by the petitioner and its associate
company WSG-Mauritius as stated in their letter of termination and as also
stated in MSM's letter dated 25.6.2009 rescinding the agreement dated
25.3.2009 entered into between MSM and WSG-Mauritius. In other words,
according to him, WSG-Mauritius fraudulently represented to MSM that
there was a valid, subsisting and binding agreement between WSG-
Mauritius and the respondent dated 23.3.2009 wherein WSG-Mauritius had
been granted unfettered global media rights including in respect of the
Indian subcontinent implying thereby, it could relinquish the same to enable
MSM to enter into a direct contract with the respondents. Mr.Sundaram
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29 arbp978-10
submitted that as on the date of the agreement, neither WSG-Mauritius nor
the petitioner had any subsisting agreement/contract with the respondents
in respect of the media rights for any territory. Thus neither the petitioner
nor WSG-Mauritius had any right which it was entitled to relinquish. He
stated that there admittedly was no agreement dated 23.3.2009 in
existence. Thus the consideration of ` 425.00 crores was extracted by
WSG-Mauritius and the petitioner on a fraudulent misrepresentation that
there was in existence an agreement between the respondents and WSG-
Mauritius dated 23.3.2009. Mr.Sundaram submitted that the agreements
were entered into fraudulently and in collusion between the chairman of the
IPL sub-committee and the petitioner/ WSG-Mauritius.
44. On the other hand, Mr.Chinoy submitted that the date
23.3.2009 mentioned in the WSG-Mauritius - MSM agreement was a mere
typographical error. Neither MSM nor the respondents were under a
misapprehension at any point of time that there was an agreement dated
23.3.2009 either on account of any representation/misrepresentation to that
effect by the petitioner or WSG-Mauritius or otherwise. He submitted that
undue advantage was being taken by the respondents on account of this
minor typographical error.
He further submitted that the respondents were at all material
times aware of or, in any event, were in a position to ascertain and verify
the contents of the said contracts right from the time they were executed.
45. If the respondents had knowledge of the agreements dated
25.3.2009 between the petitioner and itself and between MSM and itself, it
would follow that they had knowledge of the agreement between MSM and
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30 arbp978-10
WSG-Mauritius of that date and the contents thereof. This is clear from the
terms of these agreements expressly referred to the MSM - WSG-
Mauritius agreement.
(A). Firstly, the agreement dated 25.3.2009 between MSM and the
respondents defined "WSG" agreement to mean the agreement between
WSG-Mauritius and MSM entered into around the date of that agreement
i.e. 25.3.2009. It is nobody's case that there was any other agreement
dated 25.3.2009 between WSG-Mauritius and MSM, which had been
entered into on that day. Thus the reference clearly was to the agreement
dated 25.3.2009 between WSG-Mauritius and MSM. If the respondents
were aware of the agreements between MSM and themselves, they would
thereby have and, in any event, ought to have been aware of or put to
notice that there was an agreement on that very day entered into between
WSG-Mauritius and MSM.
Equally, if not more important, is the fact that the agreement
dated 25.3.2009 between MSM and the respondents expressly defined
WSG notice to be the one to be issued in accordance with the terms of the
agreement between WSG-Mauritius and the respondents of 25.3.2009.
Thus not only was the agreement dated 25.3.2009 between MSM and
WSG-Mauritius referred to generally but an important clause therein was
expressly referred to.
(B). The agreement dated 25.3.2009 between the petitioner and the
respondents is also important in this regard. This agreement defined the
MSM agreement to mean the agreement entered into between WSG-
Mauritius and MSM on the same day. Thus the respondents were even by
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31 arbp978-10
this agreement put to notice of the WSG-Mauritius and MSM agreement.
Clause 27.5 of this agreement leaves little room for doubt that
the respondents were not only in a position to ascertain the existence and
the details of the 25.3.2009 agreement between WSG-Mauritius and MSM
but were in fact fully aware of the same. Clause 27.5 does not merely end
with a reference to the nature of the notice but defined the notice to mean a
written notice in accordance with the terms of the MSM agreement. As I
noted earlier, this agreement also defined MSM agreement to mean the
agreement dated 25.3.2009 between WSG-Mauritius and MSM.
A provision of vital importance in the agreement dated
25.3.2009 between WSG-Mauritius and MSM was thus expressly
incorporated into the agreement between the petitioner and the
respondents. Nothing could be clearer.
46. The suggestion that the references were too complex is difficult
to accept. It is reasonable to presume that parties such as WSG-Mauritius,
the petitioner, MSM and the respondents in matters such as these had
acted with great care and deliberation and in all probability with expert
advise. The agreements have obviously been prepared in great detail and
with considerable care and application of mind. Anyone reading the
agreement would at the very least be put to notice that there was in
existence an agreement between WSG-Mauritius and MSM in or around
the same time and that the same contained a provision for a written notice
as contemplated in the agreement between WSG-Mauritius and MSM. It
would be impossible to believe in that event that the respondents either did
not know about or would have made no enquiry about the MSM - WSG-
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32 arbp978-10
Mauritius agreement of that date.
Had it been established that the respondents' officers had
participated in the formation of the agreements dated 25.3.2009, it would
not have been open to the respondents to say that they were unaware of
the existence or the terms and conditions of the agreement dated
25.3.2009 between MSM and WSG-Mauritius. For the cross-references in
the other two agreements dated 25.3.2009 are clear and it would have
been reasonable to presume that parties such as these were aware of the
terms and conditions of each of the agreements.
47.
The matter, however, does not rest there. The question is
whether the respondents officers, other than the said Lalit Modi had
participated in the formation or the execution of the contracts or had
anything to do with them subsequently or were aware of and had endorsed
the agreements dated 25.3.2009.
48. Mr.Sundaram stated that the agreements dated 25.3.2009 were
entered into collusively between the said Lalit Modi and the petitioner/
WSG-Mauritius. He submitted that the said Lalit Modi was the only person
involved in the matter as is evident from the fact that he is a signatory to all
the agreements. He reiterated what is stated in paragraph 8 of the affidavit
in reply that the respondents came to know these facts only through the
media reports. Thereupon the respondents scrutinized the contracts and
were shocked to notice the provisions thereof especially clauses 10.4 and
27.5. It is averred that all these clauses were unauthorized and came to the
knowledge of the present Honorary Secretary and other office bearers of
the respondents as well as the members of the IPL Governing Council,
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33 arbp978-10
other than the said Lalit Modi only by that time and not earlier. It is averred
in paragraph 9 of the affidavit-in-reply that these contracts were never
placed before and were neither approved nor ratified by the IPL Governing
Council.
49. I am unable to discard this defence without the benefit of further
evidence especially the oral testimony of certain key figures. The fact is
that the said Lalit Modi had signed all the contracts and addressed
correspondence of vital importance pertaining to the controversy. There is
nothing on record which indicates the involvement of the respondents or
any of the members of the IPL sub-committee other than the said Lalit Modi
in the negotiations or formation of the contracts dated 15.3.2009 and
23.3.2009. Nor is there anything of such significance as to establish that
the respondents had notice of these agreements at the material time which
would persuade me to hold at the inter-locutory stage that the case is so
clear as to not require anything more to establish it.
50. Mr.Chinoy relied upon the minutes of a meeting of the IPL's
Governing Council dated 11.8.2009 which were, in fact, annexed by the
respondents to their affidavit in reply. The meeting was chaired by the said
Lalit Modi and was attended by ten other members of the Governing
Council including the President, Honorary Secretary, Honorary Joint
Secretary, Honorary Treasurer of the respondents and the Vice Chairman
and three members of the Governing Council of the IPL. It was also
attended by nine other persons. Item 6 of the minutes of the meeting
pertained to the accounts for the year 2009. Sub-item (f) thereof read:
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34 arbp978-10
"f) - Approval of all vendor contracts for 2009 season".
All contracts entered were approved. (List attached as
Annexure "A", Annexure "C")."
Annexure "C" contained 15 items. Items 14 and 15 thereof read
as under :-
"14. MSM Satellite and BCCI.
15. IPL- BCCI and WSG."
51. Mr.Sundaram submitted that the reference to the agreements
was vague, without any particulars and was in an extremely guarded
manner with a view to conceal the existence of the agreements. He
submitted that agreements as important as these should have been given
prominence in the minutes, whereas they have been mentioned only in the
appendix under the caption of "accounts for the year 2009". In the affidavit
in reply, it is averred that the minutes were prepared by the said Lalit Modi
himself and that the contracts were never placed before the IPL Governing
Council and that none of the members had any occasion to go through the
contracts since they had been filed in the caption "vendor contracts"; that
the media rights license agreements cannot classify as vendor contracts
and that thereby the existence of the contracts was suppressed by the said
Lalit Modi with a view to cheat the respondents and that the contracts were
never approved or ratified by the IPL Governing Council and therefore
cannot be enforced against the respondents.
52. Mr.Sundaram's submissions, at the very least, persuade me to
hold at this stage, that the said minutes are not conclusive of the question.
In fact, the minutes may well support the respondents' case that the
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35 arbp978-10
manner in which agreements such as these have been tucked into a corner
indicate an intention to avoid scrutiny by others. The minutes by
themselves do not conclusively establish the respondents' knowledge of
the agreements. Only oral evidence will give the court or tribunal a clearer
picture.
53. Mr.Chinoy's reliance upon the affidavit of the said Srinivasan in
the infringement suit filed in the Delhi High Court stands on a higher
footing. MSM had filed C.S. (O.S.) No.633 of 2009 against a third party to
restrain it from infringing the rights granted to MSM under the agreement
dated 25.3.2009 entered into by it with the respondents stands on a higher
footing.
In an interim application taken out in that suit, the said N.
Srinivasan, Honorary Secretary of the respondents who had also attended
the meeting of the Governing Council of the IPL held on 11.8.2009 referred
to earlier, filed an affidavit dated 11.4.2009. In paragraphs 2 and 3 thereof,
he stated as under :-
"2. I say that I am aware of the agreement
entered into between the Plaintiff herein and the Board of
Control for Cricket in India dated March 25, 2009 and have
read and perused the contents thereof.
3. I say and confirm that as per the said
agreement, Plaintiff has been granted the sole and
exclusive rights to produce and communicate the public
by way of broadcast, the cinematograph films carrying the
cricket matches to be played as part of the Indian Premier
League cricket tournament. Thus, the Plaintiff is the
exclusive licensee in respect of the rights of reproduction
and communication to the public of the said
cinematograph film works in terms of the said agreement."
The said Srinivasan has filed the affidavit in reply in this
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36 arbp978-10
petition. He is the Honorary Secretary of the respondents. It is not his case
that what he stated in the affidavit, filed in the Delhi High Court, is false or
incorrect. Nor has he stated that he made the statements in that affidavit
without studying the said agreement dated 25.3.2009. I see no reason why
this Court should then presume that the said Srinivasan's affidavit filed in
the Delhi High Court was incorrect.
54. The onus will undoubtedly rest heavily upon the said Srinivasan
at the trial to explain the affidavit. While it would be improper on my part to
speculate upon any explanation that he may offer, I cannot presume that no
explanation is possible. The affidavit was made in respect of an
infringement action and the terms of the agreement dated 25.3.2009 which
fall for consideration in this petition were not relevant to that litigation.
Undoubtedly, the said Srinivasan will have to explain how and when and in
what circumstances he was made aware of the said agreement before he
referred to it in the said affidavit. He must explain the inaction for over a
year thereafter.
55. However, various other facts which I have referred to and which
I will hereafter refer to would lead to the conclusion that the said
Srinivasan's affidavit is but a factor to be weighed in the balance while
deciding the rival claims. Considering the facts of the case and the nature
of the reliefs sought and the consequences of the grant thereof, this
affidavit by itself cannot sustain this petition.
56. In the circumstances, I cannot without anything more, come to
conclusion that the respondents were in fact aware of the agreements
dated 15.3.2009 and 25.3.2009 at all material times.
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37 arbp978-10
57. This brings me to Mr.Chinoy's contention that the reference to
the agreement dated 23.3.2009 in the agreements dated 25.3.2009 is a
mere typographical error which is now sought to be made the basis of an
allegation of fraud. The contention that it was a typographical error had
been taken even earlier in the suit filed by MSM which I will refer to shortly.
Mr.Chinoy submitted that it was nobody's case that there was an
agreement dated 23.3.2009. Neither MSM nor the respondents in the
correspondence and in the press statement referred to any such
agreement. They were aware that there was no agreement dated
23.3.2009 and that it must therefore be presumed that they were also
aware of the fact that the date 23.3.2009 was a mere typographical error.
58. It is difficult to accept this contention at the interlocutory stage.
The reference in the MSM - WSG-Mauritius agreement to an agreement
dated 23.3.2009 cannot be considered to be a typographical error.
59. There is no significance or connection between the date
23.3.2009 and any other document in regard to any of these transactions.
Nor is there any connection between the date 23.3.2009 and any event in
connection with or related to any of these transactions. Prima-facie it
appears that the date was consciously mentioned.
60. This, prima-facie, inference is fortified by three e-mails sent in
quick succession by the said Lalit Modi to various broadcasters including
NDTV, ESPN, SONY and STAR NEWS. It is important, for reasons I will
shortly mention, to note that each of the e-mails was also sent to the
petitioner, WSG-Mauritius and MSM.
61(A). The first e-mail message dated 23.3.2009 which was sent at
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38 arbp978-10
10:13 AM GMT (3:45 p.m. Indian Standard Time) to the various
broadcasters including MSM, reads as under :-
"Friends
BCCI will close with one rights holder by 8 pm tonight.
The courts have allowed us to do the same with
anyone, any deal. This is for your information.
Warm regards
Lalit Modi
Chairman and Commissioner IPL."
(B). I have held earlier that this e-mail militates against the oral
understanding alleged between MSM and WSG-Mauritius/the petitioner on
19.3.2009. This e-mail also indicates that the date 23.3.2009 in the MSM -
WSG-Mauritius agreement was not a typographical error. It states that an
agreement was going to be arrived at that very night by the respondents
with a party.
62(A). The next e-mail message dated 23.3.2009 which was
addressed by the said Lalit Modi at 11:37 AM GMT (5:07 p.m. Indian
Standard Time), reads as under :-
"Subject: Wsg contract.
Dear Friends
As time is of essence and further due to flux of time and as
I have to head to South africa, and England this evening,
you all are aware we have a Global rights agreement with
WSG. We were waiting for he court verdict and were
barred from signing any thing new till the verdict was
pronounced. Now that the verdict has come and we are
free to do what we want - we have just signed a new
agreement with WSG and removed basically any further
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approvals from us. In essence WSG now owns global
rights to IPL for the next 9 years and do not need to come
back to us for any further approvals. They are further free
to either sub license or broadcast the same on any
channel/ channels globally. Or enter into a deal with any
company or investor group globally to exploit the same on
any channel or channels globally. They are further free to
sub license it on any term they think fit as along as it
conforms to our agreement.
If you have any queries please be in touch with WSG.
Warm regards
Lalit Modi
Chairman and commissioner IPL.
Sent from BlackBerry® on Airtel" [emphasis supplied]
(B). This e-mail message is a strong indication that the date
23.3.2009 was not a mere typographical error. It was clearly and expressly
not merely represented, but stated in the e-mail that the respondents had a
global rights agreement with the petitioner and that as the Court verdict
had come in the respondents' favour, the respondents "have just signed a
new agreement with WSG". The language is clear and unequivocal. It is a
representation that an agreement had been "signed" on the very day after
the judgment was pronounced viz. 23.3.2009. The use of the words "just
signed a new agreement" leaves little room for doubt in this regard. This
militates against the theory of a typographical error.
63(A). The third e-mail dated 23.3.2009, which was addressed at
12:01 PM GMT (5:30 p.m. Indian Standard Time) to the said broadcasters,
reads as under :-
"Ajit/Vikram
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As the court verdict has come in favour of BCCI - and
we are free to give our Broadcast rights to anyone
now, We have signed a New Master rights agreement
with WSG. They are now free to broadcast/sell/use
themselves or sub license the same to any
broadcaster in the world.
You are authorised as discussed to transfer all
bookings on IPL live telecast to the channel they ask
without further approval from me. I have also told
them to ensure that whatever commitments were
made to existing sponsors on Sony - that they must
adhere to the same. Vodafone and Pepsi I have
directly spoken to and am asking sundar to liase with
all the rest thru you on other agencies.
As I am leaving the country tonight your main point
person will be Vinu Nair from WSG.
Warm regards
Lalit." [emphasis supplied]
(B) The second sentence of the e-mail message uses the same
expression as in the second e-mail message referred to above viz. that the
respondents had "signed" a new master rights agreement with the
petitioner/ WSG-Mauritius the very day i.e. 23.3.2009. What I said about
the e-mail message dated 23.3.2009 addressed at 11:37 AM GMT applies
to this e-mail message as well.
64. I am therefore unable to accept Mr.Chinoy's contention that the
reference to the date 23.3.2009 is a mere typographical error. Not only
was it not a typographical error, it was a clear representation made by
the said Lalit Modi that the respondents had not merely orally
agreed to but had executed an agreement in writing - "signed a new
master rights agreement with WSG". This representation was reinforced by
the concerned recipients thereof viz. the petitioner and WSG-
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41 arbp978-10
Mauritius not having denied the same.
65. I cannot therefore, rule out the possibility that MSM who was
one of the recipient's of the e-mail message presumed that there was an
agreement dated 23.3.2009 and therefore, accepted the statement in the
agreement dated 25.3.2009 that there was an agreement dated 23.3.2009.
If indeed a new agreement had not been signed on 23.3.2009,
the petitioner/WSG-Mauritius, to whom also the e-mail message was
addressed would have clarified or corrected the same in reply. The fact that
they did not do so, indicates that they allowed the representation to be
made that an agreement had been entered into in their favour with the
respondents on 23.3.2009.
66. Mr.Chinoy placed strong reliance upon a press statement
issued by MSM. He stated that MSM itself could never have been under a
misapprehension about an agreement dated 25.3.2009. He submitted that
this is evidenced by the fact that the detailed press statement refers only to
an agreement dated 15.3.2009 and not to an agreement dated 25.3.2009.
In response to media reports speculating on the alleged
irregularities of the IPL broadcaster rights owned by MSM, MSM issued a
press statement. Paragraphs 2, 4 and 5 under the caption "Quick
Summary" and paragraphs 2 and 5 under the caption "March 2009 -
Renegotiation of IPL Broadcasting Rights" of the press note read as under:-
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42 arbp978-10
"A quick summary
2. MSM immediately initiated legal action
against the BCCI in the Bombay High Court to
stay the termination. However, BCCI had
vested the Indian subcontinent broadcasting
rights with WSG Mauritius, for a nine year
period (2009-2017) under an agreement dated
15 March 2009.
4. MSM's goals in the commercial negotiation
were two-fold: i) to secure the rights that had
been unilaterally terminated and for the entire
9 year period keeping BCCI unaffected by
paying the same amount to BCCI as contracted
by WSG Mauritius, and ii) It was MSM's clear
position that to secure its business interests,
the broadcasting rights agreement should be a
direct contract with the BCCI, rather than as a
sub-license under an agreement with WSG
Mauritius, which had these rights, as per the
agreement with BCCI dated March 15, 2009. To
facilitate MSM's condition for a direct contract
with BCCI, WSG Mauritius agreed to give up its
broadcast rights for the Indian subcontinent in
favour of MSM, thus paving the way for BCCI &
MSM to enter into a contract directly. In
consideration for this, MSM agreed to pay WSG
Mauritius a facilitation fee.
5. MSM wishes to re-emphasize here
that the 'Facilitation Fee' of Rs.425 crores to
WSG Mauritius is for :
a. the original option fee of $25million
(Rs.115 crores approximately) to extend the
rights to years 6 till 10,
b. an additional fee over the 9 years of
the contract of Rs.310 crores. These fees were
to compensate WSG Mauritius for returning its
rights for IPL season 2 - 10 to BCCI in favour of
MSM and were necessary if MSM was to secure
the rights to IPL season 2-10. However, the
potential rating incentive at the end of year 5
of $35 million (Rs.160 crores) under the
agreement dated 21 January 2008 was
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eliminated, and
c. as a consequence of these
commercial negotiations the net incremental
amount attributable to WSG Mauritius giving
up its IPL Indian subcontinent rights is Rs.150
crores.
March 2009 - Renegotiation of IPL
Broadcasting Rights
2. MSM immediately initiated legal
action against the BCCI in the Bombay High
Court to stay the termination. However, BCCI
had vested the Indian subcontinent
broadcasting rights with WSG Mauritius, for a
nine year period (2009-2017) under an
agreement dated 15 March 2009.
5. Intense commercial negotiations
ensued with other broadcasters also
expressing interest making the situation
extremely competitive. After protracted
negotiations between MSM, WSG Mauritius and
BCCI, MSM entered into a renegotiated
agreement on the IPL broadcasting rights with
the BCCI at the same consideration offered by
WSG Mauritius and for the same duration (9
years), in lieu of WSG Mauritius relinquishing
its rights, thereby achieving both its goals."
While this could be a relevant submission qua MSM, it cannot
be conclusive against the respondents. Further, the mere absence of a
reference to the agreement dated 23.3.2009 is not conclusive of the matter.
This was a press statement. I cannot read it as strictly as suggested by
Mr.Chinoy. The press statement did not analyze the rival cases.
67. There admittedly was no agreement in writing entered into
between the petitioner and the respondents or between the respondents
and WSG-Mauritius between 3:00 a.m. on 24.3.2009 i.e. the expiry of the
extended period stipulated under the agreement dated 15.3.2009 and the
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execution of the agreements dated 25.3.2009.
Thus prima-facie, when the agreements dated 25.3.2009 were
entered into, neither the petitioner nor WSG-Mauritius had any right which
they could have surrendered. The petitioner would have to establish its
case of an oral arrangement having been arrived at on 19.3.2009. A relief
of the nature sought in this arbitration petition cannot be granted in such a
case.
68. There is nothing on record which indicates any arrangement
between the respondents and the petitioner or WSG-Mauritius. Nor is there
anything on record that indicates the participation of the respondents in the
formation or the execution of the agreements dated 25.3.3009. In my
opinion, therefore, evidence would be required to establish the petitioner's
case that the agreement was bona-fide and genuinely entered into not
merely with the said Lalit Modi in his personal capacity but as acting with
authority for and on behalf of the respondents.
69. The only piece of evidence which is strongly in favour of the
petitioner is the affidavit filed by said N. Srinivasan in the Delhi High Court.
I will assume that this is a fact which tilts the balance at this stage in favour
of the petitioner as it constitutes an admission by the affiant of his
knowledge of the agreement in April, 2009 when the affidavit was filed.
The agreement was thereafter performed for about a year before being
terminated. However, considering the facts and circumstances of this
case,I am not inclined to grant the nature of the reliefs sought in this
arbitration petition. Let me explain.
70. In view of the affidavit filed by the said N. Srinivasan in Delhi
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High Court, I may have been inclined to grant an injunction if it was merely
a question of preserving the property in dispute, such as in the case of a
suit for specific performance of an agreement to sell property. An injunction
in such a matter however, would not drastically alter the status-quo during
the pendency of the proceedings.
71. However, in the present case, the injunction, if granted, would
virtually amount to granting specific performance with the Court being
unable to restore the status-quo ante in the event of the petitioner being
unable to establish the agreement.
72.
Mr.Chinoy submitted that even accepting the respondents
allegation of fraud to be established, the petitioner would be entitled to
reliefs in view of the Exception to section 19 of the Indian Contract Act,
1872. Sections 17 and 19 of the Indian Contract Act read as under :-
"17. `Fraud' defined.- `Fraud' means and
includes any of the following acts committed by a
party to a contract, or with his connivance, or by his
agent, with intent to deceive another party thereto or
his agent, or to induce him to enter into the contract:-
(1) the suggestion, as a fact, of that which is
not true, by one who does not believe it to be true;
(2) the active concealment of a fact by one
having knowledge or belief of the fact;
(3) a promise made without any intention of
performing it;
(4) any other act fitted to deceive;
(5) any such act or omission as the law
specially declares to be fraudulent.
Explanation.- Mere silence as to facts likely to affect
the willingness of a person to enter into a contract is
not fraud, unless the circumstances of the case are
such that, regard being had to them, it is the duty of
the person keeping silence to speak, or unless his
silence, is, in itself, equivalent to speech.
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.......................
19. Voidability of agreements without free
consent. - When consent to an agreement is caused
by coercion, fraud or misrepresentation, the
agreement is a contract voidable at the option of the
party whose consent was so caused.
A party to contract, whose consent was
caused by fraud or misrepresentation may, if he
thinks fit, insist that the contract shall be performed,
and that he shall be put in the position in which he
would have been if the representations made had
been true.
Exception.- If such consent was caused by
misrepresentation or by silence fraudulent within the
meaning of section 17, the contract, nevertheless, is
not voidable, if the party whose consent was so
caused had the mean of discovering the truth with
ordinary diligence.
Explanation.- A fraud or misrepresentation which did
not cause the consent to a contract of the party on
whom such fraud was practised, or to whom such
misrepresentation was made, does not render a
contract voidable."
73. Mr. Chinoy submitted that it is not the respondents case that
any of the agreements was not available in the respondents records. The
respondents officers were, therefore, at all times in a position to discover
the alleged fraud. In view of the Exception to section 19, therefore, the
contract was, in any event, not voidable.
74. Section 19 would not come to the petitioner's rescue if I were to
assume that there was a fraud and collusion between the said Lalit Modi
and the petitioner/WSG-Mauritius for two reasons.
75. Firstly, the mere fact that a document fraudulently entered into
is placed on the records of an organization would not by itself warrant an
inference that the concerned officers of the organization had the means of
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discovering the truth with ordinary diligence. Organizations, such as the
respondents would understandably have voluminous records. Members of
an organization do not necessarily go through every document in this
voluminous record without any reason and as a matter of course or
practice. They would do so as and when a question arises or the document
is required for a particular purpose. A view to the contrary would enable
officers of organizations to play a fraud upon the organization with ease.
All they would have to do after entering into a fraudulent transaction
collusively with another, is to place the document somewhere in the record
knowing full well that nobody is expected to peruse the records of the
organization. It is not the duty of the officer of an organization to go through
every document in the records of the organization. It must be established in
each case whether the truth could have been discovered with ordinary
diligence. What is ordinary diligence must equally depend on the facts of
each case. The mere placing of a document on record of a company,
society or other such organization does not lead to the conclusion that
every officer thereof had the means of discovering the truth merely by
virtue of the document being on the records.
76. Secondly, it is a moot point whether the Exception to section 19
applies in a case where there is a fraud committed by an officer of an
organization in collusion with a third party. There is authority for the
proposition that the Exception to section 19 is limited to cases where
consent is caused by silence fraudulent within the meaning of section 17.
There is authority for the proposition that the phrase "fraudulent within the
meaning of section 17" in the Exception to section 19 applies to the word
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`silence' exclusively and not to the word `misrepresentation'. It has also
been held that cases of fraud by active misrepresentation as defined in
section 17 clause 2 will not be covered by the Exception.
See for instance AIR 1939 Cal. 473 (DB) John Minas Apcar v.
Louis Caird Malchus, and AIR 1931 Allahabad 154 Niaz Ahmad Khan and
Anr. v. Parsottam Chandra and Anr. (DB).
However, as these authorities were not cited on behalf of the
respondents during the hearing, I do not wish to express a final view on this
aspect of the matter, although I did bring the same to the notice of the
counsel on both sides before pronouncing the judgment. Suffice it to state
that even for this reason, it cannot be said with any degree of certainty that
the petitioner's case would be covered by the Exception to section 19 if the
respondents are able to establish the fraud alleged by them.
77. Mr.Chinoy submitted that in view of the agreement dated
15.3.2009 between MSM and the respondents, the latter gained an amount
of ` 1700.00 crores. This aspect would not determine the outcome of the
petition. Neither party did the other a favour. As Mr. Sundaram rightly
pointed out, the petitioner and WSG-Mauritius were interested in getting
back the media rights for the Indian subcontinent for the unexpired term
under the MSM-respondent agreement dated 21.1.2008 i.e. for the years
2009 to 2012. As he rightly pointed out, the media rights for the Indian
subcontinent are far more valuable than for the rest of the world. For
example, for the period 2013 to 2017, the value for the media rights for the
rest of the world was US $ 62 million, whereas the value for the media
rights for the Indian subcontinent during that period was US $ 551 million. I
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cannot rule out the possibility, therefore, that it is for this reason that the
petitioner and WSG-Mauritius agreed to the termination of the agreements
dated 21.1.2008 in the hope that they would be able to strike a favourable
bargain for the period 2009-2013 for the media rights for the Indian
subcontinent. Under the agreement dated 21.1.2008, the only assurance
was that the respondent would enter into good faith negotiations for the
unexpired term of the MSM-respondent agreement.
78. Moreover, there was an enormous gain in terms of advertising
time on account of additional "Time Out" provided under clause 5.13 of the
agreement dated 25.3.2009 between MSM and the respondents. Clause
5.13 reads as under:-
"Time Out
5.13 Licensor undertakes, represents, warrants and
agrees that:
(a) each innings of each Match shall, in addition
to those breaks included within Matches during the 2008
IPL season and other customary breaks in play, include a
Time Out of at least seven and a half (7 ½ minutes),
subject to and in accordance with the provisions of the
Appendix hereto; and
(b) each such Time Out shall be reflected in the
corresponding Feed, such that (subject to and in
accordance with the provisions of the Appendix hereto
which are hereby agreed by the parties) at least five (5)
minutes of commercial advertising time is made available
to Licensee per each such Time Out (to be exploited as
Licensee in accordance with the terms of this Agreement
(either by itself and/or by selling and/or licensing all and/or
any part thereof to one or more third parties) and Licensee
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shall retain all revenues therefrom without further recourse
to Licensor).
The concept was contemplated even at the time of the
15.3.2009 agreements. There were thus commercial decisions based on
hard bargaining even assuming the 15.3.2009 contracts to be bona-fide.
79. Mr. Chinoy submitted that there was no question of WSG-
Mauritius agreeing or allowing the contract to lapse for want of a
broadcaster. He stated that these are very valuable rights and it is
impossible to even think that WSG-Mauritius would not have been in a
position to get another broadcaster even if MSM had not agreed to a non
direct transaction. He stated that on a balance of probability this was
virtually impossible.
I see the force of this submission. But equally I cannot ignore
the fact that a transaction with a broadcaster had to be concluded within a
very short period of time viz. seventy two hours. Thus, although I do not
rule out the possibility of the parties having agreed not to further extend the
seventy two hour period in order to enable the concerned parties to
structure the entire detail, I am afraid I cannot presume that to be so at this
stage without further evidence.
80. Let me presume that on the basis of the record as it stands at
the interlocutory stage, the scales tilt in the petitioner's favour, even so, I
would refuse interim reliefs.
81. Firstly, it would be clear by now that this is not an open and
shut case. The trial would unfold a clearer picture. The grant of an
injunction would virtually grant the petitioner, specific performance of the
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agreement making restitution difficult in the extreme if not virtually
impossible in the event of the agreement not being ultimately upheld by a
court or arbitral tribunal. On the other hand, the difficulty, if any, in
computing the damages in favour of the petitioner is considerably less. For
instance, the amount that the respondents receive upon the media rights
being auctioned again would itself give an indication of a major head of
damages. Contracts entered into by the licensees in turn would also furnish
such an indication.
82. According to the petitioner, it has granted sub-licenses in
relation to the media rights excluding the territory of the Indian subcontinent
to the third parties listed in Exhibit "M" to the petition. He submitted that a
refusal of an injunction would prejudice the rights of third parties and
expose the petitioner to claims by them.
83. It is not necessary to decide this issue as Mr.Sundaram gave
an undertaking to the court that the respondents would honour all the
contracts entered into by the petitioner with third parties. The undertaking
is accepted.
84. It is clarified that whether the respondents are entitled to permit
or not the petitioner's participation in the fresh tenders is kept open.
85. Mr.Sundaram placed considerable reliance upon the judgment
of a Division Bench of this court dated 17.9.2010 in MSM Satellite
(Singapore) Pte. Ltd. vs. World Sport Group (Mauritius) Ltd., in Appeal
(Lodg.) No.534 of 2010 in Notice of Motion No.1809 of 2010 in Suit No.
1828 of 2010 to contend that the present disputes between the parties
cannot be referred to arbitration.
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86. MSM had filed Suit (Lodg.) No.1092 of 2010 against WSG-
Mauritius, the petitioner and the respondents for a declaration that the
agreement dated 25.3.2009 between WSG-Mauritius and itself was illegal,
null and void; for an injunction restraining the respondents from issuing a
termination notice on the basis of the agreement between the petitioner
and the respondents and for the refund of the sum of `.125 crores being
part-payment towards the facilitation fee of `.425 crores with interest.
MSM also filed Suit No.1828 of 2010 referred to above. In that
suit, WSG-Mauritius had invoked the arbitration clause under the
agreement dated 25.3.2009 between itself and WSG-Mauritius. MSM
sought an injunction restraining WSG-Mauritius from referring the disputes
to arbitration. MSM's Notice of Motion No.1809 of 2010 for an interim
injunction was dismissed by the learned single Judge. It is against that
order that the said Appeal (Lodg) No.534 of 2010 was filed in which the
judgment dated 17.9.2010 was pronounced. The Division Bench allowed
the appeal. WSG-Mauritius was restrained from continuing with the
arbitration proceedings subject to its depositing `.300 crores in this court.
87. Mr.Sundaram placed considerable reliance upon several
observations of the Division Bench, mainly to the effect that the agreement
dated 25.3.2009 between WSG-Mauritius and MSM was not a stand alone
agreement and that the various contracts were inter-connected and inter-
related. He submitted that the Division Bench having held that the disputes
pertain to one of these inter-related contracts ought not to be referred to
arbitration, it follows that the disputes between the parties to this petition
also cannot be referred to arbitration.
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88. Considering the view I have taken on the facts of this case, it is
not necessary to decide the effect of the judgment of the Division Bench in
this matter. The question whether the disputes between the parties in the
present case can or ought to be referred to arbitration is kept open to be
decided in any proceeding that the parties may adopt for enforcing the
arbitration agreement.
89. In the circumstances, the petition is dismissed.
There shall be no order as to costs. The respondents, however,
shall not invite tenders for the said media rights upto and including
17.1.2011.
