Prasar Bharati vs B4U Multimidia International ...
2012 Latest Caselaw 283 Bom

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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

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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

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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

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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

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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

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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

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that 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

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more 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. )

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