Cinevistaas Limited vs Prasar Bharati
2008 Latest Caselaw 1901 Del

     *IN THE HIGH COURT OF DELHI AT NEW DELHI

+                 ARB.A.100/2008


%                                   Date of decision: 24.10.2008


CINEVISTAAS LIMITED                            .......         Petitioner
                         Through: Mr Neeraj Kishan Kaul, Sr Advocate
                                  with Mr P.K. Bansal, Mr Amit Kumar
                                  Singh, Ms Shikha Sarin and Mr Karun
                                  Mehta, Advocates.

                                Versus

PRASAR BHARATI                                   ....... Respondent
                         Through:   Mr Rajeev Sharma and Mr Abhishek
                                    Birthray, Advocates.


CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1.    Whether reporters of Local papers may
      be allowed to see the judgment?       Yes

2.    To be referred to the reporter or not?         Yes

3.    Whether the judgment should be reported        Yes
      in the Digest?


RAJIV SAHAI ENDLAW, J.

1. The petition titled as one under Section 11(6)(c) of the

Arbitration and Conciliation Act, 1996 has been filed on the

averments that the disputes and differences had arisen between the

petitioner and the respondent which were subject matter of

arbitration as per clause 23 of the agreement between the parties

and which is as under:

"23. In the event of any dispute or difference between the parties hereto, such dispute or difference shall be resolved by mutual consultation. If such resolution is not possible then the same shall be referred to the Chief Executive of Prasar Bharati whose decision shall be final."

2. It is further the case in the petition that the respondent Prasar

Bharati vide letter dated 3rd March, 2003 to the petitioner invoked

the aforesaid clause 23 of the agreement between the parties. The

said letter is as under:

"Sub: Notice to invoke clauses 23 of Memorandum of Agreements.

Dear Sir,


     1.     You      as      Producer      for   various   sponsored

serials/programmes including (i) Music Station; (ii) Noorjehan; (iii) Jai Mata Ki and (iv)Kati Patang Hai Life Yaaron signed 4 separate Agreements dated 07.04.1999, 01.09.1999, 07.10.1999 and 27.09.2000 respectively (hereinafter referred to as "the said Agreements") with yourself undertaking to abide by the terms and stipulations therein with relevant clauses 11(ii) 11(iii) stating as follows:

a Clause 11(ii) - The Producer will ensure that its designated advertising agency files the sponsorship etc contract 48 (Forty eight) hours before the scheduled telecast of the concerned episode / part of the serial / programme within 45 (forty five) days counted from the first of the succeeding month following the date of the telecast of the said episode/part of the serial/programme.

c. Clause 11 (iii) - The Producer may file the contract himself by paying all the dues in advance or through a registered/accredited agency specifically designated for this purpose by the Producer. The Producer will obtain the prior approval in writing of DD before making any change of the designated agency.

2. M/s. Fame Communications, your Accredited Advertising Agent, filed contracts on your behalf in respect of the serials/programme aforesaid undertaking to pay to Doordarshan Commercial Service (Prasar Bharati Broadcasting Corporation of India) the bills according to the Rules framed and within the credit period fixed by the Doordarshan Commercial Service in this regard that is within 45 days from the first of the month following the date of telecast of advertisement and also would be liable to pay interest at 18% per annum on all amounts due to it which are not paid within the stipulated period vide Accredited Advertising Agency Agreement.

3. From time to time you telecast the aforesaid serials/programmes. You however failed and neglected

to pay the contractual dues of Prasar Bharati (BCI) albeit repeated requests to do so.

4. In terms of the said Agreements there is now due and payable by you to Prasar Bharati (BCI) a sum of Rs.13,31,44,135/-(Rupees Thirteen crores thirty one lakhs forty four thousand one hundred thirty five only) as on 31.08.2001 inclusive of interests @ 18% p.a. on the principal sum of Rs 11,36,96,005/- (Rs eleven crores thirty six lakhs ninety six thousand and five only). You were also liable to pay further interest on the principal sum of Rs.11,36,96,005/- @ 18% p.a. till payment and realization. There is no disputes whatsoever regarding the above payments.

5. By notice dated 23.11.2001 our Advocate called upon you to pay the sum of Rs.13,31,44,135/- (Rupees thirteen crores thirty one lakhs forty four hundred one hundred thirty five only) with further interest @ 18% p.a. on the principal sum of Rs 11,36,96,005/- (Rupees Eleven Crores thirty six lakhs ninety six thousand and five only) as stated which you failed to do so and instead by your Advocate's letter dated 10.12.2001 raised pleas which were false and untenable in law.

6. Disputes and differences have arisen between Prasar Bharati (BCI) and yourself in connection with the said Agreements, which could not be resolved by mutual consultation, and which in accordance with clause 23 thereof is required to be referred to the Chief Executive Officer of Prasar Bharati (BCI) whose decision shall be final.

7. Accordingly we hereby invoke clause 23 of the said Agreements and refer the dispute and differences arising out of the said Agreements to the Chief Executive Officer of Prasar Bharati (BCI)."

3. The petitioner claims to have written a letter dated 24th

November, 2003 to the Chief Executive Officer aforesaid of the

respondent enclosing its claims/counter claims on the various issues

and denying the claims of the respondent Prasar Bharati against

itself. The petitioner in the said letter also stated that the reference

of disputes to the Chief Executive Officer of the respondent was

misconceived and not maintainable and in the view of the petitioner

the arbitration could not be proceeded with. The petitioner,

however, without prejudice to its said contention further stated that

in the event the Chief Executive Officer of the respondent entertains

the claims of the respondent, then the counter claims raised by the

petitioner in the said letter be also treated to have been referred to

arbitration. The petitioner thereafter as part of member of the Film

Producers Guild of India Limited made several representations to the

respondent Prasar Bharati and the documents filed by the petitioner

show that a sub Committee was also constituted by the respondent

Prasar Bharati to look into the said grievances. The petitioner vide

letter dated 20th January, 2005 to the CEO of the respondent

requested for slotting the programmes of the petitioner on television

pending arbitration proceedings. Another letter dated 24th January,

2005 was sent in this regard. The petitioner was vide letter dated 7 th

March, 2005 of the respondent informed that the sub-committee

constituted by the respondent had reported that there was no merit

in the grievance of the petitioner.

4. The petitioner filed the present petition stating that the

respondent had abandoned the arbitration and the CEO of the

respondent had not taken any further steps whatsoever in the

arbitration.

5. It was further stated that the agent of the petitioner, namely,

M/s Fame Communications, also referred to in the letter dated 3rd

March, 2003 (supra), also had disputes with the respondent and the

respondent had issued a letter dated 3rd March, 2003 to the said

Fame Communications also invoking clause 5 of the Accredited

Agreement between the respondent and the said Fame

Communications and calling upon the Director General of

Doordarshan to appoint a sole arbitrator to resolve the differences

between the respondent and the said M/s Fame Communications. It

is further the case in the petition that Director General of

Doordarshan had appointed the CEO of respondent Prasar Bharati as

the arbitrator for adjudication of the disputes with M/s Fame

Communications; but the said CEO had not acted for about one and a

half year in that arbitration also and had resigned on 12 th August,

2004 without holding even a single meeting/proceeding; that the

respondent had filed a petition under Section 11(6)(c) of the Act

before this court and which was registered as Arbitration Application

203/2004, on the ground that the CEO on account of his duties would

not be able to spare time for arbitration proceedings and seeking

appointment of an arbitrator; that this court had, vide order dated

15th March, 2005, appointed Mr Justice D.P. Wadhwa (Retd) as sole

arbitrator and the said arbitration proceedings are still pending.

6. The petition further stated that the CEO of the respondent had

failed to act in the present case also and had not held even a single

meeting till date and the petitioner had become entitled to approach

this court under Section 11(6)(c) of the Act for the reason of the

person entrusted with a function having failed to perform the same.

The petitioner therefore sought the relief of appointment of Justice

D.P. Wadhwa (Retd) as sole arbitrator in the present case also to

adjudicate upon the disputes between the parties, since Justice D.P.

Wadhwa (Retd) is already seized of disputes between M/s Fame

Communications aforesaid and the respondent.

7. The matter came up first before court on 10th March, 2008,

advance copy of the petition having been given to the respondent.

The counsel for the respondent accepted notice and sought time to

file the counter affidavit. Four weeks' time was granted to the

respondent to file the counter affidavit. However, no counter

affidavit was filed and on 7th May, 2008 when the matter was listed

next, the respondent sought further time to file an affidavit, which

was granted and the matter was adjourned to 22nd August, 2008. No

counter affidavit was filed thereafter also. On 22nd August, 2008, the

counsel for the petitioner sought an adjournment and the case was

thereafter listed on 20th October, 2008. Even by then no

reply/counter affidavit was filed.

8. The counsel for the respondent has argued that the petition

has been filed under Section 11(6)(c) of the Act which can be

invoked only in the event of the person /authority entrusted with the

function of appointment of the arbitrator failing to do so. It is

further argued that on the averments aforesaid in the petition, it is

not the case of the petitioner that any person/body entrusted with

appointment of arbitrator has failed to do so. It is submitted that in

the arbitration agreement between the parties there is a named

arbitrator to whom the disputes have already been referred and thus

the petition under Section 11(6)(c) of the Act is misconceived and is

liable to be dismissed on this ground alone. Per contra, the senior

counsel for the petitioner has argued that the nomenclature of the

petition is irrelevant and as per the contents, the petition is under

Section 14 of the Act for substitution of an arbitrator, on the

appointed arbitrator failing to act. A copy of the order dated 15th

March, 2005 of this court in Prasar Bharati v Fame

Communications (supra) has also been handed over during the

course of hearing and which records that it was the case of the

respondent itself that the same arbitrator i.e., its CEO had failed to

act in that case also and this court had appointed Justice D.P.

Wadhwa (Retd) as the arbitrator. It is submitted that owing to

similarity of disputes in the present case also, prayer has been made

in the application for substitution of the CEO of the respondent as

the arbitrator with justice D.P. Wadhwa (Retd). Reliance has been

placed on The Bombay Metal Works (P) Ltd v Tara Singh & Ors:

2006 (6) AD (Delhi) 45 that mentioning of a wrong provision of law

invoked is not fatal and it is the content of the petition which governs

the grant of the relief. The senior counsel for the petitioner admits

that ideally the petition should have been filed under Section

11(6)(c) read with Section 14 of the Act but contends that non-

mentioning of Section 14 cannot deprive the petitioner of the relief

claimed, if on contents of petition, filed entitled to.

9. The counsel for the respondent has responded to the aforesaid

submissions by urging that the present petition cannot be treated as

one under Section 14 for the reason that the CEO of the respondent

who is the arbitrator and whose mandate is sought to be terminated

is not a party to the present petition; that the present petition does

not contain the necessary ingredients of Section 14 of the Act; that

earlier CEO of the respondent had retired and the petitioner has not

stated having sent any fresh communication to the new CEO of the

respondent to commence arbitration proceedings; that the removal

of the arbitrator under Section 14 is not automatic; that the

arbitrator sought to be removed is a necessary party in a petition

under Section 14 for the reason that the court while removing him as

an arbitrator may make certain observations against him and which

cannot be made without him being a party. Attention in this regard

was also drawn to Sections 13 and 15 of the Act.

10. The respondent having failed to file any reply to the petition in

spite of repeated opportunities, the averments in the petition are to

be believed. In any case, the said averments are supported by copies

of documents and which have not been disputed even during

arguments. What has to be seen is, whether on the basis of the

averments contained in the petition, the petitioner is entitled to the

relief claimed of the appointment of Justice D.P. Wadhwa (Retd) as

the arbitrator, in place of the agreed arbitrator.

11. If the contention of the respondent that the relief under

Section 14 of the Act cannot be granted without the arbitrator whose

mandate is sought to be terminated being a party to the petition is to

be accepted, than the relief sought in the present petition cannot be

granted. However, in my view the arbitrator whose mandate is

sought to be terminated is not necessarily required to be a party in a

petition under Section 14 of the Act, and more so as in the present

case where the arbitrator sought to be removed is the CEO of the

respondent. The counsel for the respondent has urged that the CEO

in his capacity as an arbitrator is different from the CEO in his

capacity as a party to the present proceedings. However, such

arguments cannot be permitted to come in the way of disposal of

such applications which are of a summary nature.

12. The purpose of arbitration is expeditious disposal of disputes.

The Apex court in Shin-Etsu Chemical Co. Ltd v Aksh Optifibre

Ltd & Another AIR 2005 SC 3766 held that the object of arbitration

including international commercial arbitration is expedition. The

object of the Act would be defeated if the international commercial

disputes remain pending in court for months and years before even

commencement of arbitration.

13. The order dated 15th March, 2005 in Prasar Bharati v Fame

Communications itself discloses that even in that case the petition

was preferred under Section 11(6)(c) of the Act, though the relief

claimed was the same as in the present case. The petitioner seems

to have merely copied the petition in those proceedings, while

drafting the present petition. I have called for the file of arbitration

application 203/2004 and find the petition filed by the petitioner to

be more or less on the same lines as the petition filed by the

petitioner in this case. In that petition as well as the order passed

therein also, there is no reference to Section 14 of the Act. The CEO

of respondent was not impleaded as a party in that case also. I find it

extremely unjust to deprive the petitioner of the same relief which

the respondent obtained on the same averments in its petition.

14. When the respondent and its CEO have themselves stated that

in relation to the identical disputes, the CEO was unable to take out

time to act as the arbitrator, substituting the CEO in the present

case also as the arbitrator would not amount to making any adverse

comments against the said CEO, so as to make the petition non-

maintainable in the absence of the said CEO as a party in his own

right thereto. I also do not agree with the contention of the counsel

for the respondent that the petition does not contain the necessary

ingredients for substitution. The petition clearly sets out that the

respondent itself had referred its claims against the petitioner to its

CEO, that the petitioner also made its counter claim before the said

CEO, it is not in dispute that the said CEO has not taken any steps

whatsoever not only in 5 years since his appointment and till the

institution of the petition but also in the last over 6 months since

when the present petition has been pending in this court. The CEO

of the respondent, if intending or willing to act as an arbitrator,

ought to have, at least on receipt of notice of this application, issued

a letter commencing the arbitration proceedings. However, nothing

of this sort was done. I also do not find any merit in the contention

of the respondent that upon every change in the incumbent

occupying the office of the CEO of the respondent, a party to the

arbitration pending before the CEO is to approach the CEO afresh. It

is upon the incumbent occupying the said office from time to time, to

continue with the arbitration proceedings.

15. The counsel for the respondent has also argued that the

petitioner has not sought the relief of terminating the mandate of the

CEO. True, relief in such language has not been claimed but from a

reading of the entire petition it is clear that the petition is for

substituting the said CEO of the respondent as the arbitrator with

Justice D.P. Wadhwa (retd) as the arbitrator. Again, no relief in such

language was claimed by the respondent also in its OMP 203/2004.

16. I, therefore, find that a case under section 14(1) of the Act of

the appointed arbitrator having failed to act without undue delay is

made out. Under Section 15 of the Act, in such an event the

procedure as of the appointment of the arbitrator in the first

instance has to be followed. However, since there is no appointing

authority in the present case, the petitioner was not required to

approach anyone else for appointment of a substitute arbitrator and

the only remedy of the petitioner was to approach the court which

the petitioner has done by way of the present petition.

17. Once having reached the conclusion that the arbitrator is

required to be substituted, I find the request of the petitioner for

appointment of Justice D.P. Wadhwa (Retd) who is already seized of

similar connected disputes as the substitute arbitrator to be

reasonable. Accordingly, the petition is allowed. The mandate of the

CEO of the respondent to act as the arbitrator is terminated. Justice

D.P. Wadhwa (Retd) is appointed as the arbitrator to adjudicate all

the disputes, claims and counter claims between the parties. The

arbitrator to fix his own fee in consultation with the parties. A copy

of this order be forwarded to the appointed arbitrator.

RAJIV SAHAI ENDLAW (JUDGE) October 24, 2008 M