Bombay High Court
Chandramohan Naraindas Dhanwani vs Purabi Telefilms on 13 November, 2025
2025:BHC-OS:20879
Neeta Sawant ARBP-283 & 303-2024 FC
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO. 283 OF 2024
Purabi Telefilms .....Petitioner
: Versus :
Chandramohan s/o. Naraindas Dhanwani ....Respondent
WITH
ARBITRATION PETITION NO. 303 OF 2024
Chandramohan Naraindas Dhanwani .....Petitioner
: Versus :
Purabi Telefilms ....Respondent
Mr. Karl Tamboly (Through VC) with Mr. Aurup Dasgupta, Ms.
Drshika Hemnani and Ms. Prapti Bhadra i/b. M/s. Jhangiani Narula &
Associates, for the Petitioner in ARBP-283 of 2024 and for Respondent in
ARBP-303 of 2024.
Mr. Anuj Desai with Mr. Chittesh Dalmia, for the Petitioner in ARBP-
303 of 2024 and for Respondent in ARBP-283 of 2024.
CORAM : SANDEEP V. MARNE, J.
JUDG.RESD. ON : 7 NOVEMBER 2025.
JUDG. PRON. ON : 13 NOVEMBER 2025.
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Neeta Sawant ARBP-283 & 303-2024 FC
JUDGMENT :
1) These are cross petitions filed under the provisions of
Section 34 of the Arbitration and Conciliation Act, 1996 (the
Arbitration Act) challenging the Award of the learned Sole Arbitrator
dated 6th February 2024. By the impugned Award, the learned
Arbitrator has dismissed the Counterclaim filed by Purabi Telefilms
(Purabi) on the ground of the same being barred by limitation.
Accordingly, Purabi Telefilms has filed Arbitration Petition No. 283
of 2024 challenging the Award. While dismissing the Counterclaim,
the Learned Arbitrator has directed both the parties to bear the costs
of the arbitration equally. The Respondent in the Counterclaim is
aggrieved by the direction of the learned Arbitrator to bear the cost of
arbitration equally and has accordingly filed Arbitration Petition
No.303 of 2024.
2) The dispute between the parties relate to three
cinematographic films titled 'Khanjar', 'Woh Jo Hasina' and 'Adalat'.
Mr. Chandramohan N. Dhanwani is the sole proprietor of Tirupati
Creations (both are referred to as Tirupati in the judgment) and claims
to own copyrights in respect of three films. Purabi Telefilms, which is
engaged in the business of acquisition and exploitation of copyrights
in motion pictures in various media, expressed interest in acquiring
rights in respect of the three films. By Deed of Assignment dated 23
July 2008, Tirupati agreed to convey and assign copyrights and
negative rights of the film 'Khanjar' and 'Woh Jo Hasina' in favour of
Purabi Telefilms for a period of 99 years for the territory of entire
world. The agreed consideration between the parties was
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Rs.4,25,000/- for the film 'Khanjar' and Rs. 3,25,000/- for the film
'Woh Jo Hasina' out of which Rs.1,25,000/- for the film 'Khanjar'
and Rs. 75,000/- for the film 'Woh Jo Hasina' was paid in advance
and balance payment was agreed to be made within 30 days from
public notice subject to settlement of objections and settlement of
delivery of Sound and Picture negatives, betacam/digi betacam etc.
Purabi Telefilms paid further amount of Rs.50,000/- to Tirupati on 8
August 2008 thereby leaving balance amount payable in respect of the
two films at Rs.5,00,000/-. Another Deed of Assignment dated 8
August 2008 was executed between Tirupati and Purabi Telefilms in
respect of the film 'Adalat' for agreed consideration of Rs. 40,000 out
of which Rs.10,000/- was paid on signing the Deed of Assignment
and balance payment was agreed to be made within 30 days of public
notice subject to settlement of claims and delivery of negatives etc.
Purabi Telefilms issued public notice dated 12 September 2008 and
received certain objections. On 29 January 2009, Purabi Telefilms
terminated the assignment due to default in delivery of materials and
requested for refund.
3) On 3 March 2009, parties executed Addendum to the first
Deed of Assignment dated 23 July 2008 for films 'Khanjar' and 'Woh
Jo Hasina' under which the total consideration for both the films was
reduced from Rs.7,50,000/- to Rs.6,50,000/- in view of various
objections received. The balance payment was agreed to be paid to
Tirupati on receipt of sound and picture negatives and betacam of
acceptable quality. Parties executed further Addendum to the Deed of
Assignment in relation to films 'Khanjar' and 'Woh Jo Hasina' on 4
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June 2012, under which the consideration payable for both the films
was further reduced to Rs.5,00,000/-. Further payment of
Rs.1,00,000/- was made to the producer of the film at the request of
Tirupati, leaving the balance amount of Rs.1,50,000/- which was
agreed to be paid upon handing over sound and picture negatives of
the film 'Khanjar'. It appears that negatives in respect of the film
'Woh Jo Hasina' were received and the outstanding payment was
only in respect of the film 'Khanjar'.
4) On 29 December 2016, Tirupati Creations terminated the
Deed of Assignment pertaining to the films 'Khanjar' and 'Woh Jo
Hasina'. Purabi Telefilms responded to the notice on 19 January
2017. On 12 December 2018, Tirupati filed Arbitration Application
No.16 of 2019 for appointment of Arbitrator under Section 11 of the
Arbitration Act. By order dated 27 March 2019, this Court appointed
sole Arbitrator with the consent of both the parties. Tirupati filed
Statement of Claim inter alia seeking a declaration of termination of
Deeds of Assignment. Purabi Telefilms filed Written Statement
disputing the Claim and Counterclaim for specific performance of the
Deeds of Assignment. Tirupati withdrew the Claim which was
dismissed on 6 August 2019 as withdrawn and the Counterclaim was
directed to proceed. Tirupati filed Written Statement to the
Counterclaim. Parties led evidence in support of the respective cases.
On 6 February 2024, the learned sole Arbitrator delivered Award
dismissing the Counterclaim filed by Purabi on the ground of the
same being barred by limitation. The learned Arbitrator directed both
the parties to bear the cost of arbitration equally. It appears that
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Purabi had borne the entire cost of arbitration and accordingly the
Arbitrator has directed payment of sum of Rs.4,56,562 being 50%
share of the cost of arbitration by Tirupati to Purabi Telefilms.
5) Purabi Telefilms is aggrieved by the Award dated 6
February 2024 dismissing its Counterclaim and has accordingly filed
Arbitration Petition No.283 of 2024. Tirupati though its proprietor
Mr. Dhanwani is also aggrieved by the impugned Award to the
limited extent of direction by the Arbitrator to bear 50% costs of
arbitration and has accordingly filed Arbitration Petition No. 303 of
2024.
6) Mr. Tamboly, the learned counsel appearing for the
Claimant would submit that the learned Arbitrator has grossly erred
in holding that the Counterclaim filed by Purabi Telefilms is barred by
limitation. He would rely upon the provisions of Article 54 of the
Limitation Act, 1963 and would submit that since no time was agreed
for performance of the contract, the period of limitation would begin
to run from the date of notice and refusal by Purabi Telefilms. The
refusal to perform the contract was communicated by Mr. Dhanwani
to Purabi Telefilms for the first time by issuance of termination notice
dated 29 December 2016. Prior to the issuance of the said notice, Mr.
Dhanwani had not communicated to Purabi Telefilms in any manner
that he was not willing to perform the contract. That therefore the
Counterclaim filed by Purabi Telefilms was perfectly within
limitation. Mr. Tamboly would further submit that under the Deed of
Addendum, the balance payment was required to be made upon
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delivery of negatives of the film. That admittedly negatives of the film
have not been delivered to Purabi Telefilms nor Purabi Telefilms was
communicated refusal by Mr. Dhanwani to handover the negatives.
That therefore Purabi Telefilms was justified in awaiting delivery of
negatives until it was communicated vide termination notice dated 29
December 2016 that Mr. Dhanwani was not willing to perform his
part of contract.
7) Mr. Tamboly would further submit that the deed of
assignment relating to the film 'Adalat' provided for payment of
balance consideration within 30 days. The Addendum dated 3 March
2009 altered the conditions of payment and provided for payment of
balance consideration only on receiving Betacam/Digi Betacam of
acceptable quality of the film 'Adalat' from Tirupati. Ignoring the said
modification of the term of payment, the learned Arbitrator
erroneously referred to the original timeline for payment for the
purpose of holding that failure on the part of Tirupati to perform his
part of obligation under the second Deed read with Addendum
occurred at the end of 30 days of Deed of Addendum i.e. 3 March
2009. That the findings of the learned Arbitrator about liability to
make payment within 30 days of execution of Addendum amounts to
adding terms of contract. Since the Arbitrator has rewritten contract
between the parties, this would be a fit ground for setting aside of
impugned Award.
8) So far as the first Deed of Assignment relating to the
films 'Khanjar' and 'Woh Jo Hasina' is concerned, Mr. Tamboly
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would submit that the learned Arbitrator has erred in invoking the
concept of 'reasonable time' for making balance payment of
consideration, ignoring the position that the balance consideration
was payable only on receipt of negatives in respect of the film
'Khanjar' under the last Addendum dated 4 June 2012. That the
learned Arbitrator has erroneously referred to commercial and market
practice for the purpose of rewriting the terms of contract which
clearly provided for payment of balance amount only on delivery of
negatives of the film 'Khanjar'. That there is no pleading by Tirupati
about existence of any such market practice of delivery of negatives
within reasonable time of execution of an agreement. That since the
finding is based on ipse dixit of the Arbitrator, the Award is liable to
be set aside.
9) Mr. Tamboly would further submit that the learned
Arbitrator erred in entering into merits of the Claim after dismissing
the Counterclaim on the ground of limitation. That even otherwise,
his finding about failure to challenge termination notice is factually
incorrect. The termination notice is challenged by Purabi Telefilms in
Commercial IP Suit No.134 of 2020. In support of his contentions,
Mr. Tamboly has relied upon following judgments :
i. Food Corporation of India vs. Chandu Construction & Anr. 1
ii. PSA Sical Terminals (P) Ltd Vs. Board of Trustees of V.O.
Chidambranar Port Trust Tuticorin & Ors.2
iii. Indian Oil Corporation Limited vs. Shree Ganesh Petroleum
Rajgurunagar3
iv. State of Manipur vs. T.H. Haridas Singh & Anr.4
(2007) 4 SCC 697
(2023) 15 SCC 781
(2022) 4 SCC 363
AIR 2016 MANI 23
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v. Panchanan Dhara & Ors. vs. Monmataha Nath Maity (Dead)
through Lrs & Anr.5
vi. Madina Begum & Anr. vs. Shiv Murti Prasad Pandey & Ors. 6
vii. Rathnavathi & Anr. vs. Kavita Ganashamdas7
viii. Ahmadsahab Abdul Mulla Vs. Bibijan & Ors.8
ix. State of Goa vs. Pravin Enterprises9
10) Per contra, Mr. Desai, the learned counsel appearing for
Tirupati would oppose the Arbitration Petition filed by Purabi
Telefilms submitting that Purabi's Counterclaim has rightly been
dismissed by the learned Arbitrator on the ground of limitation. That
the last Addendum between the parties was executed in the year 2012
after which Purabi did absolutely nothing towards completion of
transaction. That Purabi Telefilms secured negatives/Betacam of the
film from the market and continued exploitation of the films. That its
Counterclaim filed in the year 2019 has rightly been held to be barred
by limitation. That the Award is not so unconscionable which
warrants interference by this Court under the provisions of Section 34
of the Arbitration Act. That the findings recorded by the learned
Arbitrator are plausible and therefore no ground is made out under
Section 34 of the Arbitration Act for interfering in the Award. That
the Arbitrator has merely construed the terms of the contract and
merely because another construction of terms and conditions of
contract is possible, the same cannot be a ground for setting aside the
Award. He would accordingly pray for dismissal of the Arbitration
Petition No. 283 of 2024 filed by Purabi Telefilms.
(2006) 5 SCC 340
(2016) 15 SCC 322
(2015) 5 SCC 223
(2009) 5 SCC 462
(2012) 12 SCC 581
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11) So far as Arbitration Petition No. 303 of 2024 filed by
Tirupati is concerned, Mr. Desai would submit that after dismissal of
the time barred Counterclaim of Purabi Telefilms, Tirupati cannot be
made to bear 50% costs of arbitration. That no reasons are recorded
by the learned Arbitrator as to why it has directed Tirupati to bear
50% costs of arbitration. He would accordingly pray for setting aside
direction for payment of 50% costs of arbitration by Tirupati.
12) I have considered the submissions canvassed by the
learned counsel appearing for the parties and have gone through the
findings recorded by the learned Arbitrator in the impugned Award. I
have also perused the records of the case filed along with both the
Arbitration Petitions.
13) The arbitration was initiated by Tirupati by filing petition
under Section 11 of the Arbitration Act. In its Statement of Claim,
Tirupati claimed sum of Rs.1.25 crores by way of damages and also
sought a declaration that Purabi Telefilms has no rights in respect of
the three films. It also sought a restraint order against Purabi
Telefilms from exploitation of the rights in the three films. Purabi
Telefilms filed Statement of Defense contesting the claim of Tirupati.
Additionally, Purabi Telefilms also filed Counterclaim seeking
specific performance of Deed of Assignment dated 23 July 2008 read
with Addendums dated 3 March 2009 and 4 June 2012 for delivery of
sound and picture negatives in respect of the film 'Khanjar'. Purabi
Telefilms also sought specific performance of the Deed of Assignment
dated 8 August 2008 read with Addendum dated 3 March 2009 in
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respect of the film 'Adalat' by delivery of Betacam/Digi Betacam of
acceptable quality in respect of that film. Purabi Telefilms also sought
amount of Rs.1 lakh from Tirupati towards expenses incurred in
defending title/claim in respect of the film 'Woh Jo Hasina'.
14) After filing of Counterclaim by Purabi Telefilms, Tirupati
withdrew its Claim, which was dismissed as withdrawn by order
dated 6 August 2019. However, the Counterclaim was directed to be
proceeded.
15) Accordingly, the learned Arbitrator was required to
adjudicate only the Counterclaim filed by Purabi Telefilms for specific
performance of the Deeds of Assignment and various Addenda. One
of the defenses raised by Tirupati to oppose Purabi Telefilms'
Counterclaim was limitation. The learned Arbitrator has decided the
aspect of limitation qua the Deeds of Assignment in respect of the
films 'Khanjar'/'Woh Jo Haseena' and 'Adalat' separately.
16) While holding the Counterclaim in respect of the second
Deed of Assignment in respect of the film 'Adalat' dated 8 August
2008 read with Addendum dated 3 March 2009 as barred by
limitation, the learned Arbitrator has recorded following findings in
the Award:
13. In this regard now, I will examine the Claimant's contention that the
Addendum indefinitely extended the Respondent's obligations under the
second Deed. The contents of the Addendum clearly show that the parties
have only varied the amount of consideration payable by the Claimant
and there is no change to the timeline prescribed for the Respondent's
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obligations under the second Deed. In fact, the Addendum contains a
specific clause that except the terms modified by the Addendum, the
remaining provisions of the second Deed would remain unchanged. In
view of this position, I am unable to accept the Claimant's contention that
the Addendum indefinitely extended the timeline for the Respondent's
obligations. In fact, the contents of the Addendum show that the
Respondent had already failed in performance of his obligations and thus,
the Claimant had notice and knowledge of the said failure at that time
itself. Even if it is to be accepted that the Addendum extended the timeline
for the Respondent's obligations, it has to be construed that the
Respondent was required to perform his obligations within 30 days of the
date of the Addendum as per the original timeline prescribed in the second
Deed. Considering the nature of commercial transaction which is
assignment of rights in a film, it is commercially inconceivable and
unacceptable that the intention of the Claimant was to indefinitely extend
the timeline for the counter party's obligations. No prudent business
person/entity would have such an intention while entering into a
commercial contract. Accordingly, I hold that the failure on the part of the
Respondent to perform his obligations under the Second Deed read with
the Addendum occurred at the latest at the end of 30 days from the date of
Addendum i.e. 3rd March 2009. Accordingly, I hold that the claim for
specific performance of the Second Deed filed in the year 2019 is barred
by limitation.
17) The learned Arbitrator has thus held that though
Addendum dated 3 March 2009 varied the amount of consideration
payable by the claimant, there was no change to the timeline
prescribed for Tirupati's obligations under the Deed of Assignment.
He has held that the Addendum did not indefinitely extend the
timeline for the performance of Tirupati's obligations and even if it is
assumed that the Addendum had the effect of extending the timeline,
Tirupati was to perform its obligations within 30 days of execution of
the Addendum. The Arbitrator has accordingly proceeded to hold
that failure on the part of Tirupati to perform his obligations occurred
at the latest at the end of 30 days from the date of Addendum of 3
March 2009.
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18) The above finding recorded by the learned Arbitrator
appear to be contrary to the contractual terms agreed between the
parties. Under clause 4 of the Addendum dated 3 March 2009, parties
had agreed for following timeline for making of payment of balance
consideration:
4. The ASSIGNOR hereby confirms that the ASSIGNEE will be liable to
make a payment of Rs. 40,000/- as full and final payment of the Hindi
film "Adalat" only on receiving Betacam/Digi Betacam of acceptable
quality of the Hindi film "Adalat" from the ASSIGNOR.
19) Thus, there was specific agreement between the parties
for payment of consideration on receipt of Betacam/Digi Betacam of
acceptable quality of the film 'Adalat'. There is no clause in the
Addendum providing for delivery of Betacam/Digi Betacam of the
film by Tirupati within 30 days of execution of the Addendum. The
learned Arbitrator has rewritten the contract between the parties by
adding a covenant therein that the material was required to be
delivered within 30 days of execution of the Addendum. This exercise
of rewriting the terms of the contract is undertaken by the learned
Arbitrator by holding that it was commercially inconceivable and
unacceptable that the intention of the Claimant was to indefinitely
extend the timeline for Tirupati's obligations since the nature of
commercial transaction was for assignment of rights in a film and that
no prudent business person/entity would have such an intention
while entering into a commercial contract. The learned Arbitrator has
thus exceeded his mandate and had travelled beyond the scope of
agreement making its Award susceptible to challenge under Section
34 of the Arbitration Act.
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20) The learned Arbitrator has also ignored Clause-4 of the
Addendum dated 3 March 2009 and has recorded a perverse finding
that there was no change in the timeline prescribed under the original
Deed of Assignment. Ignorance of clause-4 of the Addendum would
also constitute a ground for setting aside the impugned Award. There
is no dispute to the position that Betacam/Digi Betacam of the film
'Adalat' has not been delivered by Tirupati to Purabi Telefilms. Prior
to termination notice dated 29 December 2016, Tirupati never
communicated to Purabi Telefilms in any manner that he was not
willing to hand over Betacam/ DG Betacam of the film 'Adalat'.
Thus, Purabi Telefilms noticed refusal on the part of Tirupati to
perform contract for the first time on 29 December 2016. The
Counterclaim in respect of the film 'Adalat' was thus perfectly within
limitation.
21) So far as the first Deed of Assignment dated 23 July 2008
qua films 'Woh Jo Hasina'' and 'Khanjar' is concerned, the learned
Arbitrator has recorded following findings for holding that the
Counterclaim is barred by limitation:
14. Now I will deal with the point of limitation related to the First Deed. It is
to be noted that unlike the Second Deed of assignment, the schedules to
the First Deed do not contain a specific timeline of 30 days or otherwise.
It is therefore to be considered as to when the Respondent's obligations to
perform its part of the contract arose. In this regard, it is necessary to
consider the nature of the transaction involved. Since the transaction
involves assignment of rights in films, it is evident that the Claimant
intended to utilize the said rights immediately or within a reasonable time.
This is vindicated by the Claimant's conduct of sending notices dated 18 th
September 2008, 18th October, 2008 and 25th October 2008 (marked as
Exhibit C-14, Exhibit C-15 colly, Exhibit C-16 in evidence) in which the
Respondent's failures were set out. It is thus clear that the Claimant itself
expected the Respondent to perform his obligations immediately or within
a reasonable time. The Addendums dated 3 rd March 2009 and 4th June
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2012 narrate various instances of non-performance on the part of the
Respondent. This itself shows that it was the intention of the parties that
obligations of the Respondent were required to be performed within a
reasonable time. In this regard, I may also note that there is another Deed
of Assignment dated 24th July 2008 (marked as Exhibit C-34) produced in
the course of cross-examination of the Claimant's witness. Schedule I to
the said Deed which is in respect of various films provides the timeline for
delivery is not the subject matter of the present claim, I am referring of
material as "on signing of this Deed". Although this Deed is not the
subject matter of the present claim, I am referring to it to derive the usual
timelines in such transactions between the parties. This further shows that
as a commercial and market practice, the obligations regarding delivery of
material was expected to be immediate or within a reasonable time. Even
if the date of the Second Addendum i.e. 4 th June 2012 is to be considered,
that would only mean that the time for performance of the Respondent's
obligations was to be within a reasonable time of the said Addendum.
There is nothing in the two Addendums that indefinitely extends the
timeline for performance of the Respondent's obligations. As I have stated
in the foregoing paragraph, no prudent business entity/person would have
such an intention. The Addendums specifically provide that except the
clauses modified by the Addendum, the remaining provisions of the Deed
would remain unchanged. It is evident that it was the intention of the
parties that the Respondent's obligations under the First Deed read with
the two Addendums was to be discharged at the latest within a reasonable
time of the date of the Second Addendum. Thus, on the Respondent's
failure to discharge its obligations to the satisfaction of the Claimant, the
Claimant naturally had a notice of the said failure. It is to be noted that
the term "notice" used in the second part of Article 54 of the Limitation
Act refers to 'knowledge' by a party and not issuance of a formal written
notice. It cannot be disputed that on the Respondent's failure to discharge
its obligations within a reasonable time from the date of the Second
Addendum, the Claimant naturally had the knowledge of such failure.
Accordingly, I hold that the claim filed in the year 2019 for specific
performance of the First Deed is also barred by limitation.
22) Thus, the learned Arbitrator has held that there was no
specific timeline of 30 days in respect of the Deed of Assignment
dated 23 July 2008. However, he has held that since the transaction
involved assignment of rights in the films and since Purabi Telefilms
intended to utilise the rights immediately/in a reasonable time, the
intention of the parties was to perform their respective obligations
'within a reasonable time'. The Arbitrator took note of some other
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Deed of Assignment in relation to another film which provided for
delivery of material on signing of the Deed. On the basis of that Deed
of Assignment, the learned Arbitrator held that it was the 'industry
practice' to deliver the material within reasonable time. This is how
the learned Arbitrator held that failure of Tirupati to discharge his
obligations had occurred within reasonable time of execution of the
Addendum and this is how the Counterclaim qua the film 'Khanjar' is
also held to be barred by limitation.
23) While recording the above findings in respect of the
Assignment Deed dated 23 July 2008 and Addenda dated 3 March
2009 and 4 June 2012, the learned Arbitrator has not even taken pains
to take into consideration the terms and conditions of the two
Addenda. Under the Addendum dated 3 March 2009, the balance
amount was agreed to be paid on delivery of sound and picture
negatives of acceptable quality of the film 'Khanjar' and Betacam of
acceptable quality of the film 'Woh Jo Hasina'. Clause 4 of the
Addendum dated 3 March 2009 reads thus :
4. The ASSIGNOR further confirms that the ASSIGNEE will be liable to
make a payment of Rs. 3,00,000/- on receipt of Sound & Picture
Negatives of acceptable quality of the Hindi film "Khanjar" & Betacam of
acceptable quality of the Hindi film "Woh Jo Haseena" subject to the No
Objection Certificate as mentioned in clause no.3 herein above.
24) It appears that the digital Betacam of the film 'Woh Jo
Hasina' has been delivered and what remained to be delivered was
only the sound and picture negatives of the film 'Khanjar' in respect
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of which second Addendum dated 4 June 2012 was executed, in
which the timeline for payment was further extended in Clause-4 as
under :
4. The ASSIGNOR hereby confirms that the ASSIGNEE will be liable to
make the balance payment of Rs. 1,50,000/- (Rupees One Lakh Fifty
Thousand) to him only on the ASSIGNOR handing over the Sound &
Picture Negatives of acceptable quality of the film "Khanjar".
The balance payment of Rs. 1,50,000 was thus required to be paid
only against delivery of sound and picture negatives of the film
'Khanjar'.
25) Once the Addenda to the first Deed of Assignment
specifically provided for making of balance payment on delivery of
sound and picture negatives of the film 'Khanjar', the finding of the
learner Arbitrator that delivery of negatives was required to be made
either simultaneously or within reasonable time of execution of Deed
of Assignment, would clearly tantamount to rewriting of contract
between the parties. The learned Arbitrator completely glossed over
the position that Tirupati had consistently failed in his obligation of
delivering the negatives of the film 'Khanjar' right since 23 July 2008
when the original Deed of Assignment was executed. Even after
execution of the first Addendum dated 3 March 2009, he had failed to
deliver the negatives of the film 'Khanjar', which was a reason why
second Addendum dated 4 June 2012 was executed between the
parties. The fact that there was consistent failure on the part of
Tirupati to deliver negatives of the film 'Khanjar' requiring execution
of the two Addenda in 2009 and 2012 which would in fact negate
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existence of any industry practice of delivery of materials
simultaneously with execution of assignment. It is another thing that
Tirupati did not plead existence of any such industry practice. Thus,
the finding recorded by the learned Arbitrator qua the first Deed of
Assignment about failure on the part of Tirupati to discharge its
obligations occurred within reasonable time of execution of the
second Addendum is clearly contrary to the express contract between
the parties.
26) Thus, the findings recorded by the learned Arbitrator qua
both the Deeds of Assignment amount to rewriting the terms of
contract between the parties. It is well settled position of law that the
Arbitrator cannot rewrite the terms of contract as he derives authority
from the contract and cannot act contrary thereto. Reliance in this
regard by Mr. Tamboly on judgments of the Apex Court in Food
Corporation of India (supra), PSA Sical Terminals (supra) and Indian
Oil Corporation Limited (supra) is apposite. Since the learned
Arbitrator has rewritten the terms of contract, the impugned Award is
liable to be set aside. A fundamental error in application of limitation
law by the Arbitrator also constitutes a good ground for interference
under Section 34 of the Arbitration Act as held by the Division Bench
of Manipur High Court in State of Manipur Vs. T.H. Haridas Singh
(supra).
27) In the facts of the present case, Purabi Telefilms did not
have any notice/knowledge of refusal to perform the contract on the
part of Tirupati. There is absolutely no material on record to infer
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Neeta Sawant ARBP-283 & 303-2024 FC
acquisition of knowledge by Purabi Telefilms of refusal by Tirupati to
deliver negatives of the film 'Khanjar' or Betacam of the film 'Adalat'.
In the present case, the time for performance of the contract has been
extended by the parties by execution of various Addenda. Therefore,
the timeline agreed for performance in the Addendum would govern
the contractual relation between them parties. The time to file
Counterclaim started running only when Purabi Telefilms noticed
refusal of performance to deliver the negatives of the film 'Khanjar'
and Betacam of the film 'Adalat' as agreed in the Addenda
28) The learned Arbitrator has also committed a gross error
in entering into the merits of the dispute by holding that Purabi
Telefilms has failed to challenge the termination notice. Once the
Counterclaim is held to be barred by limitation, it was imprudent on
the part of the learned Arbitrator to inquire into the merits of the case.
It is another matter that termination notice is a subject matter of
Commercial IP Suit No.134 of 2020 instituted by Purabi Telefilms
alongwith Goldmines Telefilms Pvt. Ltd. The effect of the prayer in
the said suit on Counterclaim of Purabi Telefilms in arbitration
proceedings is subject matter of merits which can be undergone if and
when fresh arbitration is invoked by the parties under the provisions
of Section 43(4) of the Arbitration Act.
29) I am therefore of the view that the impugned Award is
liable to be set aside as the learned Arbitrator has clearly traveled
beyond the terms of the agreement. He has rewritten the terms of the
contract between the parties by substituting the timeline agreed in the
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Neeta Sawant ARBP-283 & 303-2024 FC
Addenda with the timelines determined by him at his ipse dixit.
Purabi Telefilm has thus made out a case for interference in the
impugned Award in exercise of power under Section 34 of the
Arbitration Act. Therefore, the Award needs to be set aside to the
extent of dismissal of the counterclaim on the ground of limitation.
That part of the Award, which directs sharing of costs of arbitration,
however, deserves to be sustained, for the reasons indicated in the
paragraph to follow.
30) Turning to Arbitration Petition No. 303 of 2024 filed by
Tirupati, the limited challenge therein is to the direction for sharing
the costs of arbitration. The very premise for challenging the direction
for sharing of costs of arbitration was dismissal of the counterclaim by
the learned arbitrator. Now the award is being set aside, that premise
would vanish. It would now be inequitable to make Purabi Telefilms
to bear the entire costs of arbitration when it has succeeded in getting
the Award set aside to the extent of dismissal of its counterclaim. It
may have to initiate another round of arbitration all over again.
Therefore, though the Award, to the extent of dismissal of
counterclaim, is being set aside, the same needs to be upheld qua
direction for sharing of costs of arbitration. The bad part of the award
needs to be severed from the good part as per the judgment of the
Apex Court in in Gayatri Balasamy v. ISG Novasoft Technologies
Ltd.10 Therefore Arbitration Petition No. 303 of 2024 deserves to be
dismissed
2025 SCCOnline SC 986
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Neeta Sawant ARBP-283 & 303-2024 FC
31) Arbitration Petition No. 283 of 2024 accordingly
succeeds. The impugned Award of the learned Arbitrator dated 6
February 2024 is set aside to the limited extent of dismissal of the
Counterclaim filed by Purabi Telefilms. The Award is sustained to the
extent of direction for sharing of costs. Arbitration Petition No. 283 of
2024 is accordingly allowed and Arbitration Petition No. 303 of 2024
is dismissed.
Digitally
signed by [SANDEEP V. MARNE, J.]
NEETA
NEETA SHAILESH
SHAILESH SAWANT
SAWANT Date:
2025.11.13
19:36:43
+0530
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13 NOVEMBER 2025
