Delhi High Court
Nimbus Communcations Ltd vs Prasar Bharti & Anr on 6 April, 2015
Author: V. Kameswar Rao
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment reserved on March 09, 2015
Judgment delivered on April 06, 2015
+ O.M.P. 60/2015
NIMBUS COMMUNCATIONS LTD
..... Petitioner
Through: Mr.Jayant Bhushan, Sr. Adv.
with Mr.Amol Chitala,
Mr.N.Dube, Mr.Ankur
S.Kulkarni, Mr.Anand
Srivastava, Mr.Shubham
Jaiswal, Advs.
Versus
PRASAR BHARTI & ANR
..... Respondents
Through: Mr.Rajeev Sharma, Adv.
with Ms.Radha Laksmi R.,
Adv. for R1/Prasar Bharti
CORAM:
HON'BLE MR. JUSTICE V.KAMESWAR RAO
V.KAMESWAR RAO, J.
1. The challenge in this petition under Section 34 of the Arbitration
and Conciliation Act, 1996 (Act, in short) is to the interim award dated
September 16, 2014 passed by the Arbitral Tribunal (Tribunal, in short),
by majority (Hon‟ble Mr. Justice S.P.Bharucha, Presiding Arbitrator and
Hon‟ble Mr. Justice B.P. Jeevan Reddy) whereby the Tribunal has
awarded in favour of the respondent No. 1 an amount of
Rs.22,77,67,422/-. By a dissenting order, dated September 18, 2014,
Hon‟ble Mr. Justice V.N.Khare has held that the application for interim
award be taken up for hearing after evidence is led by the parties on a
reasoning that the expression used „adjustment of liabilities cannot be
construed as an admission of claim by the petitioner.
The facts:
2. On November 11, 2005, the Govt. of India had notified guidelines
known as Downlinking Guidelines, which inter alia, provided in para 5.2
thereof, for compulsory sharing of signals of sporting events of national
importance by the rights holders with Prasar Bharti. The said guidelines
also provided that insofar as cricketing events are concerned, all cricket
matches featuring the Indian Team and the Semi-Finals and Finals of
International events would constitute sporting events of national
importance. The downlinking guidelines provided, the revenues
generated by the sharing of signals by the rights holders with Prasar
Bharti would be shared in the ratio of 75:25 between the rights holders
and Prasar Bharti. The guidelines also provided as to who, out of the
rights holders and Prasar Bharti would undertake the marketing of
commercial times associated with telecast. It is noted that the rights
holders had to provide the live signals of sporting events of national
importance to Prasar Bharti without advertisements and Prasar Bharti
had to retransmit the live signals on its terrestrial and DTH networks
(Doordarshan National and DD Direct). During the transmission of the
matches on Doordarshan National, opportunities for airing the
advertisements would arise. Therefore, it was also necessary to provide
as to who would book advertisements. The guidelines provided that the
party that offered to maximise, the revenue would be appointed as the
Revenue Management Company. The appointment was formalized
through a bidding process, whereunder, both parties would give sealed
bids in respect of their estimation of the revenues that could be generated
by way of advertisements to be carried on Doordarshan during the
telecast of the matches. The party which would give the higher
estimation would get the right to book the advertisements and the
revenues so collected would be shared in the ratio of 75:25 as between
the rights holders and Prasar Bharti.
3. On December 5, 2005, the uplinking guidelines were notified. I
note from record, the uplinking guidelines also contained a provision
similar to the one contained in downlinking guidelines insofar as the
sharing of signals of sporting events of national importance were
concerned.
4. The first Cricket Series played after the aforesaid guidelines was
India-England series in February 2006 for which, the petitioner was the
rights holder. By way of bidding process, the petitioner was appointed
as the RMC for the telecast to be made by the respondent No.1, Prasar
Bharti. To secure the rights of both the parties, it was agreed that all
money would be deposited in an Escrow Account and the RMC would
furnish a bank guarantee to the other party-Prasar Bharti for an amount
equal to 25% of the net projected revenue. Petitioner as RMC furnished a
bank guarantee to the respondent No.1 for an amount equal to 25% of
the net projected revenue.
5. In February 2007, the Sports Broadcasting Signals (Mandatory
Sharing with Prasar Bharti) Ordinance, 2007 was promulgated which
was subsequently replaced by the Sports Broadcasting Signals
(Mandatory Sharing with Prasar Bharti) Act, 2007. In terms of Section
1(3), the Act was deemed to have come into force on November 11,
2005, the day on which the downlinking guidelines were notified. The
Act provided the mandatory sharing of live signals of events of national
importance by the content rights owners or holders/Television or Radio
Service Providers with Prasar Bharti to enable it to retransmit such
signals on its terrestrial and DTH networks. The Act, inter alia, provided
that the revenues earned from such sharing of live signals would be
shared in the ratio of 75:25 between the rights holders and Prasar Bharti.
The rules made under the Act of 2007, inter alia, provides for a sealed
bid procedure to be adopted and the party bidding higher shall get the
marketing rights. The party getting marketing rights shall give a bank
guarantee to the other party for an amount equal to the other party‟s
share of guaranteed revenue, which shall be valid for a period of six
months from the first day of the month succeeding the month, in which
the sporting event comes to an end. The rules also contemplate, the
party having marketing rights shall be entitled to obtain all release orders
and payments in its name and all payments shall be received by it only
by way of account payee cheques which shall be deposited in a
designated Escrow Account from which the party shall be at liberty to
make withdrawals after discharging the tax liability. The rules also
contemplate the party having the marketing rights shall submit to the
other party, complete accounts of revenue earnings duly audited by
Chartered Accountant along with all the release orders and shall pay the
entire guaranteed amount as well as any other amount to which the other
party is entitled as per the revenue sharing formula under the Act and
Sub-Rule 3 of Rule 4 within 75 days from the first day of the month
succeeding the month in which the sporting events comes to an end.
6. It may be stated here that between the years 2007 and 2009, the
following seven cricketing events took place:
S.No. Event Shared By
1 India Bangladesh Series 2007 Nimbus Sport
International Pte Ltd.
2 India Australia Cricket Series, 2007 Nimbus Communications
Ltd.
3 India Australia T-20 match played on Nimbus Communications
20.10.2007 Ltd.
4 India Pakistan Cricket Series, 2007 Nimbus Communications
Ltd.
5 India, Bangladesh & Pakistan Series, 2008 Nimbus Sport
International Pte Ltd.
6 India England Series, 2008 Nimbus Communications
Ltd.
7 India Sri Lanka Series, 2009 Nimbus Sport
International Pte Ltd.
In the aforesaid cricketing events, the signals were shared by the
petitioner and the respondent No. 2 with the Prasar Bharti i.e. the
respondent No. 1.
7. It is noted that a formal agreement was entered between the
petitioner and Prasar Bharti (respondent No. 1) with respect to India
Pakistan Series 2007, Sl. No. 4 above, which provided resolution of
disputes by arbitration. As disputes arose between the Prasar Bharti and
the petitioner and the respondent No. 2 herein, clause 13 of the
agreement in respect of India Pakistan Series 2007, was invoked on June
1, 2009 for adjudication of the disputes. It was mutually agreed between
the parties that all disputes arising from the dealings between the parties
concerning the aforesaid seven events be adjudicated by the Tribunal
constituted pursuant to the invocation letter dated June 1, 2009.
Accordingly, as desired by the Tribunal (as submitted by learned counsel
for the respondent No.1), on the first date of hearing, calling upon the
parties to enter into an arbitration agreement for referring the disputes to
the Tribunal, the parties on August 31, 2011, signed an arbitration
agreement, whereby it was consented that all disputes arising out of the
cricketing events mentioned at Sl. Nos. 1 to 7 above between the
petitioner and respondent No. 1 and Nimbus Sports International Pte
Ltd.-respondent No.2 be adjudicated upon in accordance with clause 13
in the agreement dated November 3, 2007 by the Tribunal. Suffice to
state, the agreement also record that, "all contentions of the parties are
left open".
The Disputes:
8. The respondent No.1/Prasar Bharti‟s, the claimant before the
Tribunal, claim in brief was that the petitioner and respondent No. 2
have failed to pay their share of revenues for the respective series
marketed by them. It was the case of the respondent No. 1/Prasar Bharti
that it was at least entitled to the following amounts from the petitioner
and the respondent No.2:-
S.No. Event Due from Nimbus Sports Due from Nimbus Interest Total
International Pte. Ltd. Communications
Rs. Ltd.
1 India 14,16,633 12,11,221 26,27,854
Bangladesh
Cricket
Series 2007
2 India 8,82,50,000 6,48,63,750 15,31,13,750
Australia
Cricket
Series, 2007
3 India 77,50,000 56,96,250 1,34,46,250
Australia
Twenty-20
Cricket
match 2007
4 India, 2,52,50,000 1,55,28,750 4,07,78,750
Bangladesh,
Pakistan
5 India 5,48,25,000 2,87,83.125 8,36,08,125
England
6 India Sri 1,75,50,000 86,99,625 2,62,49,625
Lanka 2008
9. The prayers made in the claim petition by the respondent No. 1 are
reproduced as under:
i. direct respondent no.1 to render audited accounts in
respect of revenue earnings from the following series:
a. India - Australia Cricket Series, played from 29th
September to 27th October, 2007;
b. India - Australia Twenty-20 Cricket Match played
th
on 20 October, 2007.
c. India - England cricket series; played from 14th
November, 2008 to 2nd December, 2008.
ii. direct respondent No.1 to pay Rs. 15,31,13,750/-
(Rs. Fifteen Crore Thirty One Lakh Thirteen Thousand
Seven Hundred & Fifty) for the India-Australia Cricket
Series, 2007 to the claimant which is inclusive of the
principal sum of Rs.8,82,50,000/- (Rs. Eight .Crore Eighty
Two Lakh Fifty Thousand) and interest thereon ^ 18% per
annum for the period 15.1.2008 to 23.1.2012 amounting to
Rs. 6,48,63,750/- (Rs. Six Crore Forty Eight Lakh Sixty
Three Thousand Seven Hundred & Fifty) alongwith
pendente lite and future interest @ 18% per annum till the
date of payment or direct respondent No.1 to pay 25% of the
actual net revenue for the India Australia series, 2007 if the
actual net revenue was in excess of Rs. 36.30 crore
alongwith interest thereon @ 18% per annum w.e.f
15.1.2008 upto the date of payment, direct respondent No.1
to pay Rs. 1,34,46,250/- (Rs. One Crore Thirty Four Lakh
Forty Six Thousand Two Hundred & Fifty) to the claimant
for the India-Australia T-20 match, 2007 which is inclusive
of the principal sum of Rs.77,50,000/- (Rs. Seventy Seven
Lakh Fifty Thousand) and interest thereon @ 18% per
annum for the period 15.1.2008 to 23.1.2012 amounting to
Rs. 56,96,250/- (Rs. Fifty Six Lakh Ninety Six Thousand
Two Hundred & Fifty) alongwith pendente lite and future
interest @ 18% per annum till the date of payment
or
direct respondent No.1 to pay 25% of the actual net revenue
for the India Australia T-20 match, 2007 if the actual net
revenue was in excess of Rs. 3.10 crore alongwith interest
thereon @ 18% per annum w.e.f 15.1.2008 upto the date of
payment.
iv. direct respondent No.1 to pay Rs. 8,36,08,125/- (Rs.
Eight Crore Thirty Six Lakh Eight Thousand One Hundred
& Twenty Five) for the India-England Cricket Series, 2008
to the claimant which is inclusive of the principal sum of
Rs.5,48,25,000/- (Rs. Five Crore Forty Eight Lakh Twenty
Five Thousand) and interest thereon @ 18% per annum for
the period 16.3.2009 to 23.1.2012 amounting to Rs.
2,87,83,125/- (Rs Two Crore Eighty Seven Lakh Eighty
Three Thousand One Hundred &Twenty. Five) alongwith
pendente lite and future interest @ 18% per annum till the
date of payment:
or
direct respondent No.1 to pay 25% of the actual net revenue
for the India England series, 2008 if the actual net revenue
was in excess of Rs. 22.05 crore, alongwith interest thereon
@ 18% per annum w.e.f 16.3.2009 upto the date of payment
vi. direct respondent no.2 to render audited accounts in
respect of revenue earnings from the following series:
a. India - Bangladesh - Pakistan Triangular Cricket series
played in June, 2008
b. India-Sri Lanka Cricket Series, 2009 played in January-
February, 2009.
vii. direct respondent No.2 to pay Rs. 26,27,854/- (Rs.
Twenty Six Lakli Twenty Seven Thousand Eight Hundred &
Fifty Four) to the claimant for the India Bangladesh series,
2007 which is inclusive of the principal amount of Rs
14,16,633/- (Rs. Fourteen Lakh Sixteen Thousand Six
Hundred &Thirty Three) and interest thereon @ 18% per
annum for the period 14.8.2007 to 23.1.2012 amounting to
Rs.12,11,221/- (Rs. Twelve Lakh Eleven Thousand Two
Hundred & Twenty One) alongwith pendente lite and future
interest @ 18% per annum till the date of payment;
vii. direct respondent No.2 to pay Rs. 4,07,78,750/-
(Four Crore Seven Lakh Seventy Eight Thousand Seven
Hundred &Fifty) for the India-Bangladesh-Pakistan Cricket
Series, 2008 to the claimant which is inclusive of the
principal sum of Rs.2,52,50,000/- (Rs. Two Crore Fifty Two
Lakh Fifty Thousand) and interest thereon (g 18% per
annum for Ihe period 13.9.2008 to 23.1.2012 amounting to
Rs. 1,55,28,750/- (Rs. One Crore Fifty Five Lakh Twenty
Eight Thousand Seven Hundred & Fifty) alongwith
pendente lite and future interest 18% per annum till the date
of payment
Or
direct respondent No.2 to pay 25% of the actual net revenue
for the India-Bangladesh-Pakistan Cricket Series, 2008 if
the actual net revenue was in excess of principal sum of Rs.
10.10 crore alongwith interest thereon @18% per annum
w.e.f 13.9.2008 upto the date of payment.
viii. direct respondent No.2 to pay Rs.2,62,49,625/- (Two
Crore Sixty Two Lakh Forty Nine Thousand Six Hundred &
Twenty Five) for the India-Sri Lanka series, 2009 to the
claimant which is inclusive of the principal sum of Rs.
1,75,50,000/- (Rs, One Crore Seventy Five Lakh Fifty
Thousand) and interest thereon @ 18% per annum for the
period 14.5.2009 to 23.1.2012 amounting to Rs.86,99,625/-
(Rs. Eighty Six Lakh Ninety Nine Thousand Six Hundred &
Twenty Five) alongwith pendente lite and future interest @
18% per annum till the date of payment
Or
direct respondent No.2 to pay 25% of the actual net revenue
collections for the India-Sri Lanka series, 2009 if the actual
net revenue was in excess of the principal sum of Rs. 7,02
crore alongwith interest thereon @ 18% per annum w.e.f
14.5.2009 upto the date of payment.
ix. Costs of the proceedings be awarded to the
claimant;
x. such other order be passed as deemed fit in the
circumstances of the case".
10. The petitioner/respondent No.2‟s case in the reply to the claim
petition was that the sums claimed by the respondent No. 1 have already
been adjusted against the amounts due to the petitioner. It was the case
of the petitioner that the respondent No. 1 had booked advertisements,
time totalling to 16,549 extra seconds but it accounted only for 30,000
seconds and had paid to the petitioner only Rs.60,93,75,000 towards
75% of the value of the 30,000 seconds. The value of the additional time
consumed by the respondent No. 1 of 16,549 seconds and 75% thereof
being 19,86,82,487/- is required to be paid by the respondent No. 1. In
fact, the reliefs prayed for in the counter claim by the petitioner were as
under:
(a) Be it declared that the adjustments made: by the
Respondent No.1 vide its letter, as recorded In its
Advocate's letter dated 24.10.2008 and as recorded in its
Advocate's letter dated 16-05-2009 addressed to the
Claimant-Exhibit-AN to the Statement of Claim
appearing on page 325 is valid and binding upon the
claimant and the claimant be directed to record such
adjustments in its books of accounts.
(b) For an award that adjustment of a sum of
Rs.4,12,62,500/- originally owned by the respondent No.
2 to the claimant is validly adjusted against the amount of
Rs.7,66,06,626/- owed by the claimant to respondent No.
1.
(c) For an award that the Claimant is liable to pay to the
Respondent No.l a sum Rs.21,19,81,626/- as per
particulars is annexed herewith.
(d) For an award that the adjustment of a sum of
Rs.13,53,75,000/- claimed by the claimant from the
respondent No. 1 against the sum of Rs.21,19,81,626/-
owed by the claimant to the respondent No. 1 is valid and
binding upon the claimant.
(e) For an award directing the claimant to pay to the
respondent No. 1 a sum of Rs.3,53,44,126/- as per
particulars is annexed herewith;
(f) For costs;
(g) For such other and further reliefs as the nature and
circumstances of the case may require.
11. The basis for the aforesaid counterclaim of the petitioner as stated
by the petitioner in its notice dated May 16, 2009, got issued through its
lawyers, was that an amount of Rs.1,32,99,139/- was due to the
petitioner by the respondent No. 1 in respect of India-England 2006
Cricket Series. In relation to India-Pakistan November-December 2007
Series, the petitioner had demanded a sum of Rs.19,86,82,847/- which
amount as on the date of notice was said to be Rs.21,19,81,626/-. In
respect of India-Australia October 2007 Series and India-England
November-December 2008 Series, a sum of Rs.13,53,75,000/- was
claimed by the respondent No. 1/Prasar Bharti and on adjustment of the
claim of the respondent No. 1/Prasar Bharti against the petitioner‟s claim
of Rs.21,19,81,626, an amount of Rs.7,66,06,626/- was due on that date.
That apart, it was the case of the petitioner that it was nominated by the
Nimbus Sports International Singapore to be a Revenue Management
Company in respect of India-Bangladesh May 2007 Series, India-
Pakistan-Bangladesh June 2008 Cricket Series, and India-Sri Lanka
January-February 2009 Series. After adjusting a sum of Rs.15,37,500/-;
the net amount claimed by the respondent No.1/Prasar Bharti was Rs.
4,12,62,500/- from Nimbus Sports International Singapore and the
petitioner has procured from Nimbus Sports International Singapore-
respondent No.2 their mandate to adjust the amount of Rs. 4,12,62,500/-
owed by it to the respondent No. 1/Prasar Bharti, against the amount of
Rs.7,66,06,626/- owed by Prasar Bharti to the petitioner and after
adjustment, the net amount payable by Prasar Bharti/respondent No. 1 to
the petitioner was Rs.3,53,44,126/-.
Proceedings before the Tribunal:
12. It is noted that the Tribunal vide its order dated October 5, 2012
had directed disclosure of Revenue Generation Statements. The
petitioner furnished Revenue Generation Statements on July 11, 2013.
Based on these statements, the respondent No. 1 filed an application
under Section 17 of the Act before the Tribunal on July 15, 2013, inter
alia, contending that as per the petitioner‟s own showing, the petitioner
and the respondent No. 2‟s actual revenues were much less than
estimated revenue for all but one series. Even though, the respondent
No. 1/Prasar Bharti disputed the correctness but still it was its case that
one were to go by the same, the petitioner and the respondent No. 2 are
liable to pay the following admitted amount:-
Series (A) Bid of the Entitlement Net Revenue 25% of the Amount due to
Respondents of the claimant Earned as Net Revenue the claimant as
(B) As per Bid Per the Earned per the figures
(25%) of (B) Respondents (E) provided by the
(C) (D) Respondents
(F)
India 38,40,00,000 9,60,00,000 30,17,22,477 7,54,30,619.00 9,60,00,000
Australia 2007
India Bangla Pak 10,10,00,000 2,52,50,000 9,12,51,122 2,28,12780.50 2,52,50,000
India England 2,20,50,000, 5,48,25,000 13,21,76,437 3,30,44,109.25 5,48,25,000
India Sri Lanka 7,02,00,000 1,75,50,000 20,67,69,688 5,16,92,422.00 5,16,92,422
Total 57,72,50,000 19,36,25,000 73,19,19,724 18,29,79,930.80 22,77,67,422
It accordingly made the following prayers:-
(a) direct the respondents to deposit an amount of Rs.
22,77,67,422/- alongwith appropriate interest and/or furnish
a Bank Guarantee for the said, amount so as to secure the
amount in dispute;
(b) secure the amount of Rs. 22,77,67,422/- alongwith
appropriate interest in such other mariner is this Hon'ble
Tribunal may deem fit; and
(c) pass such other order as deemed fit in the circumstances
of the case.
13. Suffice to state, the petitioner and the respondent No. 2 had
opposed the application and sought the dismissal of the same.
14. It may be noted here that the respondent No. 1/Prasar Bharti had
also filed an application on September 13, 2013 for making an interim
award in the sum of Rs.22,77,67,422/-. In reply, the petitioner had
denied that it had made any admission as alleged by the respondent No.
1/Prasar Bharti. Both the applications were initially heard on November
11, 2013 when Mr.Rajeev Sharma, learned counsel for the respondent
No. 1 had concluded his submissions. On the request of the learned
Senior Counsel for the petitioner and the respondent No. 2, the matter
was adjourned to February 3, 2014. On that date, the petitioner filed two
applications; one for adjourning the matter and the other for allowing
inspection and discovery of a number of documents. The Tribunal
adjourned the matter to March 8, 2014 by directing the respondent No. 1
to give inspection of the documents required by the petitioner. On that
day, it was reported by the learned counsel for the petitioner and the
respondent No. 2 herein that the inspection was incomplete in certain
particulars. The matter was accordingly adjourned to May 2, 2014 on
which date, the counsel for the petitioner and the respondent No. 2 came
forward with fresh objections stating that inspection was not fully
granted, that the copies of the documents required, were not given. The
Tribunal thought it fit not to postpone the hearing of the respondent No.
1‟s application awaiting the result of the inspection and discoveries
sought by the petitioner and respondent No. 2. The reasoning given by
the Tribunal was admittedly inspection and discovery of the several
documents asked for by the petitioner and respondent No. 2 were either
to substantiate their claim/counterclaim or with a view to enable them to
increase the amount claimed by them by way of counterclaim and
because those claims were yet to be established at the trial. It may be
pointed out here that the Tribunal had heard the arguments of the learned
Senior Counsel for the petitioner and the respondent No. 2 on the
respondent No.1‟s application. The application under Section 17 dated
July 15, 2003 was decided on May 06, 2014 by the Tribunal (as per
majority) whereby it directed the petitioner and the respondent No. 2 to
furnish a bank guarantee in a sum of Rs.20 Crores in favour of the
respondent No. 1 within three weeks‟ from that date. The bank
guarantee was to be obtained from a nationalized bank in India and was
to be unconditional, payable on demand by the respondent No. 1 without
demur or objection. The said bank guarantee was to be kept alive by the
petitioner and the respondent No. 2 pending arbitral proceedings. At the
same time, the respondent No. 1 was to invoke the bank guarantee,
subject only to the orders of the Tribunal. It may be noted here that the
other application for interim award filed on September 13, 2013 was
kept pending awaiting the compliance of the order dated May 6, 2014.
15. Hon‟ble Mr. Justice V.N.Khare had given a dissenting order
whereby he was of the view that the respondent No. 1 herein, the
claimant before the Tribunal owed certain amounts to the petitioner and
the respondent No. 2 for which they have filed a counter claim.
According to him, the counter claim by the petitioner and the respondent
No. 2 was in the nature of set off, the amount due to them, being an
accounting adjustment which only could be done after looking into the
evidence led by the parties.
16. Justice V.N. Khare was of the view that the petitioner and the
respondent No. 2 in order to substantiate their case has prayed for
production and inspection of the documents by the respondent No. 1,
which has been allowed by the Tribunal and since the production and
inspection of the documents was not complete, the consideration of the
applications on merit be deferred and be taken after the evidence is led
by the parties. The order dated May 6, 2014 was challenged by the
petitioner herein in Arb. Appeal No. 15/2014 before this Court. The
initial hearing in Arb. Appeal No. 15/2014 was held on July 4, 2014
when notice was issued for July 7, 2014. On July 7, 2014, time was
sought by the learned counsel for the respondent No. 1/Prasar Bharti
which request was acceded to and the matter was posted for August 26,
2014. On August 26, 2014, further time was sought by the learned
counsel for the respondent No.1. On the said date, it was clarified by the
Court that there is no stay in the case and the Tribunal may continue with
the proceedings. Accordingly, the Tribunal heard the application dated
September 13, 2013 on September 12, 2014 and vide the order dated
September 16, 2014 (as per majority) was of the view that it was a fit
case where an interim award should be made. However, with a view to
provide a final chance to the petitioner and the respondent No. 2 to show
their bona fides, it was directed that they may deposit with the
respondent No. 1 an amount of Rs.22 Crores on or before November 1,
2014 through a bank demand draft from a nationalized bank in India.
The learned Tribunal also observed that in case the petitioner and the
respondent No. 2 failed to make such deposit, an interim award would
follow awarding a sum of Rs. 22,77,67,422/- in favour of the respondent
No.1. Justice V.N. Khare in his disserting order was of the view that the
petitioner and the respondent No.2 in their reply have used the
expression "adjustment of liabilities". The said expression cannot be
construed as admission of claim by them. In law, the admission must be
an equivocal and without reservation. The expression „adjustment‟ does
not amount to admission and in his view the consideration of the
application need to be deferred. I may state here that the learned Senior
Counsel for the petitioner and the respondent No. 2 had argued before
the Tribunal on September 12, 2014, only one aspect that when there is a
counter claim, no decree should follow in favour of the respondent No.1
even if the respondent No.1‟s claim is admitted by the petitioner and the
respondent No.2. In that regard, he had cited three judgments.
17. The order dated September 16, 2014 was also challenged by the
petitioner before this Court vide Arb. Appeal No. 30/2014. The learned
Single Judge directed the Arb. Appeal No. 30/2014 be listed along with
Arb. Appeal No. 15/2014
18. That on December 11, 2014, Tribunal, has by referring to its
earlier order dated September 16, 2014 and noting the failure of the
petitioner and the respondent No. 2 to deposit the sum of Rs.22 Crores
gave a declaration that the interim award has come into effect and issues
to be determined are the interest on the amount awarded by the interim
award and the counter claim of the petitioner and respondent No.2. It is
pursuant thereto, the present petition has been filed challenging the
interim award dated September 16, 2014.
The submissions:
19. Mr.Jayant Bhushan, learned Senior Counsel appearing for the
petitioner would submit that the petitioner had never acknowledged its
liability towards the respondent No. 1 nor admitted the claim of the
respondent No. 1 and the conclusion of the Tribunal is not tenable. He
would refer to the legal notice dated May 16, 2009 to contend that the
claim of the respondent No.1 against six matches need to be adjusted
against the money owed by the respondent No. 1 to the petitioner against
India-Pakistan Series 2007 for which the respondent No. 1 was the RMC
and also the money owed by the respondent No. 2 to the respondent No.
1/Prasar Bharti and on such adjustments, the respondent No. 1 rather
owes the petitioner an amount of Rs.3,53,44,126/-. The notice only
stated that liability was discharged by way of an adjustment. He would
also state that a reading of averments in paragraphs 36, 37, 61, 69, 78 of
the claim petition and paragraphs 27, 28, 47, 48, 54 and 61 of the
defence statement would show that the petitioner had specifically denied
the claims. He would also state that the claim of the respondent No. 1 in
its application for interim award was also denied by the petitioner in its
reply. He would rely upon the following judgments in support of his
contention that there was no unequivocal and/or absolute and/or
unconditional admission by the petitioner to the claims made by the
respondent No. 1:
(i) Valliamma Champaka Pillai Vs. Sivathanu Pillai and Ors.,
(1979) 4 SCC 429
(ii) Himani Alloys Ltd. Vs. Tata Steel Ltd., (2011) 15 SCC 273
(iii) Western Coalfields Ltd. Vs. Swati Industries, AIR 2003 Bom
20. Learned Senior Counsel also contends that the impugned order
could not have been passed without considering the counter claim of the
petitioner. According to him, it was the case of the petitioner that the
respondent No. 1 was the RMC for India-Pakistan Series 2007 and had
booked advertisements for 16,549 extra seconds over and above the
contractual time of 30000 seconds and the petitioner is entitled to the
revenue for those extra seconds. According to him, on the face of the
counter claim, the interim award overlooking the counter claim in a
piecemeal by accepting the version of the respondent No. 1, is not
tenable. He would rely upon the judgment of the Supreme Court in the
case of K.V. George Vs. Secretary to the Govt., Water and Power
Department, Trivandrum and Anr. (1989) 4 SC 595.
21. It was also his contention that the interim award is bad as the same
was passed without considering the issue of limitation specifically raised
by the petitioner. According to him, the issue of limitation was a
substantive issue having a bearing on the maintainability of the claims
and could not have been overlooked. He would also state that the
interim award passed on the ground of non-compliance of the interim
order is also bad in law. In that regard, he would reiterate that interim
award is in the nature of a final award, to the extent of the claims made
by the respondent No. 1 and such award ought to have been passed after
adjudicating the claims of the parties in accordance with the law on the
basis of the material available on record. He would also state that the
interim award passed on a speculation that the petitioner does not have
sufficient assets, is bad in law. He states that on May 2, 2014 while
hearing the application for interim order, the Tribunal, for the first time,
had asked the counsel for the petitioner about the assets of the petitioner
company. The counsel for the petitioner company sought time to seek
instructions. However, without providing an opportunity to furnish
details of assets of petitioner, the Tribunal passed the interim order.
Subsequently, on the same ground, interim award came to be passed. In
the last, it was his submission that the award is against the principles of
natural justice inasmuch as the petitioner had filed an application for
inspection of discovery of documents, to be furnished by the respondent
No.1. However, the inspection of the documents was not complete which
was noted by the Tribunal in its order dated March 8, 2014. By the said
order, the Tribunal directed the parties to file applications for the
discovery of documents and posted the matter for hearing the said
applications on May 02, 2014. Surprisingly, on May 2, 2014, the
Tribunal observed that it was not necessary to adjudicate the applications
for discovery of documents at that stage, and proceeded with the hearing
and passed the interim order and ultimately, for non-compliance of the
interim order, interim award came to be passed in favour of the
respondent No. 1.
22. It was his submission that the interim award need to be set aside to
enable the Tribunal to decide the respective claims and counter claim of
the parties together.
23. On the other hand, Mr.Rajeev Sharma, learned counsel for the
respondent No. 1 would justify the interim award dated September 16,
2014 (as per the majority), which according to him, was passed because
of unequivocal admissions in the pleadings. In this regard, he has drawn
my attention to averments made in paragraphs 24, 28, 36, 49, 60, 61, 63,
71 of the claim petition and paragraphs 23, 27, 38, 48, 50 and 56 of the
reply to the claim petition to highlight the admissions of the petitioner
and the respondent No. 2, which relates to the amounts payable for the
India-Australia ODI Series 2007, India-Australia T-20 Matches 2007,
India-England Series 2008, India- Bangladesh-Pakistan Triangular Series
June 2008 and India-Sri Lanka Cricket Series 2009. He would also refer
to the letter dated April 2, 2008 and its Annexure-I with regard to the
India-Australia Series 2007 to show that as per the petitioner itself,
respondent No. 1/Prasar Bharti‟s share of 25% of Net Projected Revenue
was Rs.9,00,84,643/- which along with notice dated May 16, 2009 is an
acknowledgement of the subsisting liability. He would state that the
mandate to adjust the amounts due from the petitioner to the respondent
No. 1/Prasar Bharti was unequivocal admission of its liability. He would
deny the counter claim of the petitioner with regard to the extra seconds
having not paid by the respondent No. 1/Prasar Bharti as fictional.
According to him, 75% of the revenue realized from the sale of
commercial time had already been paid to the petitioner and the amount
of Rs.60,93,75000/- is not limited to 75% of the 30,000 seconds. He
would state, till such time, the counter claim of the petitioner is
adjudicated, it is still a claim. In any case, it is his case that the counter
claim of the petitioner has not been admitted unlike the claims of the
respondent No. 1 by the petitioner and the respondent No.2.
24. On limitation, it is his submission that no such objection was
raised at the time of hearing. According to him, the same is clear from
the fact, even the dissenting order of Justice V.N.Khare dated September
18, 2014 does not refer to the point of limitation. According to him, the
only point urged before the Tribunal was, even if the claims have been
admitted by the petitioner, no decree should follow, since there is a
counter claim. He would state that even in the petition before this Court,
it is not averred that the issue of limitation was pressed at the time of
hearing and the same was ignored. The only reference to the limitation
in the petition is in the ground, in paragraph 3.20, which also does not
state, the issue was pressed at the time of hearing.
25. Even on merits, it is his submission that the dealings between the
parties took place between the years 2007-09, the arbitration was
invoked by the respondent No. 1 in June, 2009; statement of claim filed
in January 2012, which is within limitation period. According to him,
even if the limitation is accounted from the date of adjustment was
conveyed i.e. May 16, 2009, the claim is within limitation. He would
state that explanation to Section 18 of the Limitation Act provides that
an acknowledgement can be coupled with a refusal to pay or claim for
set off.
26. It is his case that the pendency of the counter claim was no bar to
the passing of an interim award to the extent the claim was admitted.
According to him, a counter claim is nothing but a cross suit. A Court,
in its discretion, can order it to be tried separately. So, can the Tribunal.
According to him, the claim was admitted and counter claim was
disputed. He would state, any view contrary, would reduce the
provisions of Order 12 Rule 6 CPC a dead letter inasmuch all one has to
do to avoid a decree on admission, is only prefer a counter claim. He
would state that the judgment of the Supreme Court in K.V.George
(supra) is not an authority for proposition that an interim award cannot
be made on the basis of an admission on account of a pendency of a
counter claim. It is his submission that the petitioner, all throughout, had
avoided to discharge its liability towards the respondent No. 1 on one
pretext or the other. The initial order to give a bank guarantee was not
complied with by the petitioner. Even the impugned order dated
September 16, 2014, directs the petitioner to deposit the amount of Rs.22
Crores on or before November 1, 2014 which was also not complied
with. He would also state that between the period 2007-2009, the
petitioner neither opened an Escrow Account; nor gave bank guarantee
for 25% nor paid any amount for the Series/events where the petitioner
and the respondent No. 2 were the RMC, despite the Act and the Rules
stipulated so. He has relied upon the following judgments in support of
his case and would seek the dismissal of the petition:-
(i) State of Maharashtra Vs. Ramdas Shrinivas Nayak, (1982) 2
SCC 463
(ii) Union of India Vs. Karam Chand Thappar and Bros. (Coal
Sales) Ltd., (2004) 3 SCC 504
(iii) Numero Uno International Ltd. Vs. Prasar Bharti, FAO
(OS) 507/2007
(iv) Nagindas Ramdas Vs. Dalpatram Ichharam (1974) 1 SCC
(v) Mcdermott International Vs. Burn Standard Co. Ltd., (2006)
11 SCC 181
(vi) Shikharchand Vs. M/s. Bari Bai and Ors., AIR 1974 MP 75
(vii) Iron & Hardware (India) Co. Vs. Firm Shamlal & Bros,
AIR 1954 Bombay 423
(viii) Jabed Sheikh Vs. Taher Malik, 45 CWN 519
(ix) Gammon India Ltd. Vs. Sankaranarayanan Construction,
OMP No. 628/2008 (Madras High Court)
27. Mr.Jayant Bhushan, learned Senior Counsel for the petitioner, in
his rejoinder to the submissions made by Mr.Rajeev Sharma would state
that the interim award can only be passed when there is no counter claim
by the other party. In other words, according to him, if there are claims
by one party and no counter claim by the other to the extent the claims
are admitted by the other party, the interim award can be passed.
According to him, the judgment of the Supreme Court in K.V.George
(supra) is exactly on this proposition where the claim was adjudicated
overlooking the counter claims and the Supreme Court has held that the
High Court could not have done it. He would state that even if there
were admissions, interim award could not be passed in view of the
counter claim. He would lay stress on the fact that the claims made by
the respondent No. 1 were beyond the period of three years. He would
refer to Section 18 of the Limitation Act to contend, there was no
acknowledgement of debt/liability. He states, that, even assuming there
was an acknowledgment of liability, still, the claims need to be within
limitation w.e.f. April 2, 2008. He reiterated his submission on extra air
time to contend that the petitioner was entitled to revenue for 16549
extra seconds which amounts to Rs. 19,86,82,487/-.
28. On the other hand, Mr.Rajeev Sharma would reiterate that even
the letter to set off dated May 16, 2009 is an acknowledgement and the
time would get extended in terms of Explanation to Section 18 of the
Limitation Act. He would refer to the order dated September 16, 2014 to
highlight, the limited submission made by the learned Senior Counsel for
the petitioner.
29. Both the parties have filed their respective written submissions.
30. Having heard the learned counsel for the parties and considered
the written submissions made by them, the first and foremost point need
to be decided is whether, there was an unequivocal admission on the part
of the petitioner and the respondent No. 2 of their liability towards
respondent No. 1. In this regard, it is relevant to refer to the averments
made in the claim petition and the corresponding reply of the petitioner
and the respondent No. 2 before the Arbitral Tribunal. I reproduce the
relevant paragraphs to appreciate the respective stand of the parties:
Series Averments in the claim Reply to claim
India Australia 24. That in September-October, 2007 an India- Reply to para 24 (Not replied).
Cricket Series, Australia series, was scheduled to be played in.
2007 India. The said series comprised of seven ODI's Reply to para 27:
(Refer to letter and one T-20 match. Nimbus Communications 22.With reference to paragraph 27,
dated Ltd. was the rights holder in respect of the said this respondent repeats and reiterates
02.04.2008) series. Meetings took place on September 17, 18, the reply to paragraph 26 and the
19 & 20, 2007 between the officials of the contents of the record of discussions
claimant and respondent no. 1 for finalising are evident from the documents
arrangements for the sharing of the signals of the except that it was not binding upon the
matches by respondent No. 1 with the claimant respondent No. 2.
and marketing of commercial time associated
with such telecasts.
XXX
28. Thereafter by way of a bidding process held Reply to para 28:
on 20.9.2007, Respondent No. 1 was appointed 23. The contents of paragraphs 28
as the Revenue Management Company for the and 29 do not call for any comments
ODI matches since it had offered a net projected from this Respondent.
revenue of Rs. 35.30 crore as
against the offer of Rs. 35 crore made by the
claimant for the ODI's. The bids submitted by the
parties for the ODI's are annexed as
ANNEXURE-G. A separate meeting for
appointing the RMC for the T.20 match was held
on 19.10.2007. Respondent No.1 was appointed
as the RMC since it had offered Rs. 3.10 crore
for the T-20 match as against the offer of Rs. 2.8
crore by the claimant. The bids submitted by the
parties for the T-20 match are annexed as
ANNEXURE-H.
XXXX Reply to para 36:
36. In response to the letter dated 31.3.2008, 27. With reference to paragraph 36, it is denied
respondent No.1 sent a letter dated 2.4.2008 that the 1st Respondent's plea that its auditors had
along with which it forwarded an unaudited refused to conduct the audit till the signed
revenue generation statement on the specious agreement was shown to them was a specious
plea that "our auditors have refused to conduct plea. As a matter of fact and, practice and order
an audit, till we share with them the signed requirement, the auditors always require a signed
agreement between PB/Nimbus for this event". agreement before they can conduct an audit. In
As per the said statement also an amount of the instant case Prasar Bharati failed and neglected to sign
Rs.8,23,24,643/- was payable to the claimant for the agreement and as such the auditors did not
the ODI series and an amount of Rs.77,50,000/- proceed with their task of conducting the audit.
was payable for the T-20 match. Thus the total There are no payments due from the Respondents
amount payable as per respondent No.1 itself towards the Claimant and all payments have
was Rs.9,00,74,643/-. A copy of the letter dated already been, made by the Respondents. No claim
2.4.2008 sent by respondent No.1 is annexed as can now subsist from the Claimants against the
ANNEXURE-R. Respondent.
37. Thereafter by a letter dated 26.6.2008 the Reply to paragraph 37:
claimant called upon respondent No.1 to at least 28. With reference to paragraph 37, it is denied
pay the amount, which as per its own unaudited that a sum of Rs.9,00,74,643/- was due or payable
statement was due to the claimant. A copy of the from the Respondent No.1 to the Claimant,
letter dated 26.6.2008 is annexexd as The letters of demand notwithstanding it is
ANNEXURE-S. Thereafter a reminder dated submitted that the Claimant's share would have
18.7.2008 was sent to respondent No.1, whereby become due after the audit process was completed
it was called upon t pay Rs.9,00,74,643/- and to and this could not be carried out since there was
provide an audited statement of account. A copy no signed agreement: In the circumstances
of the letter dated 18.7.2008 is annexed as there is no question of making any payment of the
ANNEXURE-T. Subsequently by a letter dated amount demanded.
16.10.2008 respondent No.1 was again called
upon to pay Rs.9,00,74,643/-, i.e. the amount,
which admittedly was due from it to the claimant
as per its own unaudited revenue generation
statement. A copy of the letter dated 16.10.2008
is annexed as ANNEXURE-U. However, no
response was given by respondent No.1 to the
claimant's said letter.
India Bangladesh 49. That an India-Bangladesh-Pakistan cricket Reply to paragraphs 49 to 52 and 51-52
Pakistan, 2008 series was scheduled to be played in Bangladesh, 38. The contents of paragraphs 49 to 52 are
Cricket Series in June, 2008. The said series comprised of four substantially correct and contents of paragraph
GDI's, of which three ODI's (two ODI's featuring 51 and 52 are matters of record and do not call
India and the final) were sporting events of for any comments from this respondent.
national importance. Respondent No. 2, Nimbus
Sports International Pte Ltd. was the rights
holder in respect of the said series. By a bidding
process held on 21.5.2008, it was decided that
respondent No. 1 would market the air time
associated with the event, since it had offered net
projected revenue of Rs. 10.10 crore as against
the offer of Rs. 4,0 crore made by the claimant.
Accordingly Respondent No. 2 was appointed as
the Revenue Management Company. The bid
documents for the India- Bangladesh-Pakistan
cricket series are annexed as ANNEXURE-X.
associated with the event, since it, had offered
net projected revenue of Rs. 81.25 crore as
against the offer of Rs. 75.60 crore net made by
respondent No. 1. A formal agreement dated
3.11.2007 was executed between the parties.
XXX
60. That in the absence of the furnishing of a Reply to paragraph 60
revenue generation statement by the respondent With reference to paragraph 60, the claimant would
No. 2, it is not possible for the claimant to give Have become entitled to its share of revenue
an exact estimate of the amount due to it. The only upon signing of the agreement acceptable to
claimant was entitled to 25% of the actual both the parties. In the circumstances the claim
revenue or 25% of the net projected revenue, is vague and lacks material particulars. The
whichever was higher. claimant has also made an attempt to specify its
claim dispute, having knowledge of the
advertisers' telecast on its own channel. It is
estopped from making any claim on this basis.
61. However, what can be stated with certainty is Reply to para 61
that if the revenue earned was less than the net- 48. With reference to paragraph 61, the contents
projected revenue of Rs. 10.10 crore of which thereof are denied as speculative
Rs.2,52,50,000/- constituted the guaranteed
revenue share of the claimant, the claimant was
at least entitled to that amount or 25% of the
actual revenue, if actual revenue exceeded Rs.
10.10 crore, The requisite amount was payable
to the claimant on or before 13.9.2008 but has
not been paid till date. The claimant is also
entitled to interest @ 18% per annum on the
amount due to it w.e.f. 13th September, 2008.
India England 63. That an India-England cricket series was Reply to paras 63 to 65
Series, 2008 scheduled to be played in November-December, 50. With reference to paragraphs 63 to 65, the
2008. Respondent No. 1, Nimbus same are matters of record and do not call for
Communications Ltd. was the rights holder in any specific response except that the respondent
respect of the said series. The said series No. 1 is not bound to sign any agreement as
comprised of seven ODI's. By the bidding proposed since the terms proposed were not
process held on 27.10.2008, it was decided that acceptable to it.
respondent No. 1 would market the air
time associated with the event, since it had
offered net projected revenue of Rs. 22.05 crore
as against the offer of
Rs.6.80 crore made by Prasar Bharati.
Accordingly Respondent No. 1 was appointed as
the Revenue Management Company. The bid
documents are annexed as ANNEXURE-AD.
India Sri Lanka 71. That an India-Sri Lanka cricket series was Reply to paras 71 and 72
Series, 2009 scheduled to be played in Sri Lanka in January- 56. With reference to paragraph 71 and 72, the
February, 2009. contents are matters of record and are not in
Respondent No. 2, Nimbus Sports International dispute.
Pte Ltd,, was the rights holder in respect of the
said series. The said series comprised of five
ODI's & one T-20, out of which an arrangement
under the Act was made for the four ODI's & the
T-20 match (one ODI not being telecast on
account of the demise of Mr. R. Venkataraman,
former President of India). By the bidding
process held on 27.1.2009, it was decided that
respondent No. 2 would market the air time
associated with the event, since it had offered net
projected revenue of Rs. 7.02 crore as against
the offer of Rs. 4.0 crore made by the claimant.
Accordingly Respondent No.2 was appointed as
the Revenue Management Company. The bid
documents are annexed as ANNEXURE-AH.
31. It may be noted here, vide letter dated April 2, 2008 the petitioner
in its communication to the respondent No. 1 has shown the sharable
revenue computation for the India Australia Series 2007 in terms of
Annexure I. The Annexure I depicts an amount of Rs.8,23,24,643/-, the
share of the respondent No. 1/Prasar Bharti i.e. 25% of the Net Projected
Revenue for the seven ODIs played in that series and Rs.77,50,000/- for
the T-20 matches. In fact, respondent No.1/Prasar Bharti, vide its letter
dated June 26, 2008 had called upon the petitioner to deposit the said
amount.
32. Also for India Pakistan Bangladesh Triangular Series, 2008, the
petitioner had bid for appointment as a Revenue Management Company
on the projected net revenue of Rs.10.10 Crores against which, the
respondent No.1/Prasar Bharti‟s share is of at least 25% i.e.
Rs.2,52,50,000/-.
33. That apart, I note, in the legal notice dated May 16, 2009, the
petitioner had acknowledged the respondent No.1‟s claim of
Rs.13,53,75,000/- and also the amount of Rs.4,12,62,500/- owed by
Nimbus Sports International Singapore to the respondent No. 1/Prasar
Bharti. Even though, in the said letter, the petitioner mentioned about
adjustment of the amount payable against the amount payable to the
petitioner on account of India Pakistan Cricket Series, 2007, the
respondent No. 1 has denied such a claim. In this regard, I may point out
the response of the respondent No. 1/Prasar Bharti in its letter dated June
24, 2009 addressed to the lawyers of the petitioner, wherein, it has taken
the following stand:
"Your letter also wrongly mentions that a sum of
Rs.13,53,75,000/- is due from your client to Prasar
Bharti for the India Australia, 2007 Series comprising 7
ODIs, India Australia, 2007 T-20 match and the India
England, 2008 Series. The correct amount is
Rs.15,08,25,000/-. The said amount has not been paid
despite numerous reminders.
In addition, Nimbus Sports International,
Singapore owes to my client a sum of Rs.4,42,16,633 for
the India in Bangladesh Series, 2007 India Bangladesh
Pakistan Series, 2008 and the India in Sri Lanka Series,
2009. The said sums are covered by separate
agreements between Prasar Bharati and Nimbus Sports
International, Singapore and have not been paid despite
numerous reminders.
With a view to avoid paying the legitimate dues of
Prasar Bharati, which are held in trust by it, your client
has raised false disputes regarding the India Pakistan
and India England Series and come up with false and
untenable claims. Whatever be the claims, your client
has no right to withhold amounts collected for and on
behalf of Prasar Bharti and due to it, nor has it the right
to adjust the amounts collected for an on behalf of
Prasar Bharati by Nimbus Sports International,
Singapore and payable by Nimbus Sports International
Singapore to Prasar Bharati. The alleged mandate by
Nimbus Sports International, Singapore in favour of
your client is illegal, of no avail and indicative of the
criminal conspiracy between your client and Nimbus
Sports International Singapore to misappropriate
amounts held in trust for and on behalf of Prasar
Bharati.
In the circumstances, we hereby call upon your
client to pay to Prasar Bharti the aforesaid sum of
Rs.15,08,25,000/- alongwith interest thereon @ 18% per
annum in terms of my client's letters dated May 26,
2009 (bearing Nos. 2/41/2007-PX, 2/41/2007-PX &
2/20/2008-PX) within fifteen days of the receipt of this
notice, failing which we shall be constrained to initiate
appropriate criminal and civil proceedings against your
client and all persons in charge of and in control of its
affairs".
34. That apart, from the pleadings of the parties before the Tribunal ,
it is noted, the petitioner has not denied the offer of net projected
revenues, for the India England Series 2008, and India Sri Lanka Series,
2009, which would entail Prasar Bharti/respondent No. 1 a revenue of at
least 25% of the projected revenues.
35. In the application filed under Section 17 of the Act, the respondent
No. 1/Prasar Bharti, has stated that the amounts due to it is as per the
figures provided for by the petitioner and the respondent No. 2. In reply
to para 11 of the application, on a stand of the respondent No. 1 for a
claim of Rs.22,77,67,422/-, the petitioner has stated as under:
"11. The respondent No. 1 is, therefore, entitled to receive
the said sum of Rs. 19,86,82,487/- with interest thereon at
such rate as this Tribunal may grant from the date on which
the claimant paid to the respondent No. 1 the sum of Rs.
60,93,75,000/-. It is further submitted that the claimant has
filed audited revenue statement on or about 22.07.2013 in
this proceeding in an attempt to show that the shareable
revenue generated on the telecast of the India Pakistan 2007
Cricket Series was Rs.83,10,74,358/-. The said certification
is far from accurate and it has suppressed additional time
sold by the claimant such special properties and standard
commercial elements such as Aston Bands, Action Reply
Bugs, Third Umpire Lights, On Air Graphics, Two Super
(All pull through) per Over, End of Match packages etc.
contemplated in Clause 10 of the agreement for revenue
management dated 3.11.2007 between the claimant and
respondent No. 1. It is denied that the respondents were
liable to pay a sum of Rs.19,36,25,000/- or any part thereof
or that it raised false claim of Rs.21 Crores as alleged or at
all. It is vehemently denied that the respondent is making
any fraudulent claim in relation to the Indi Pakistan Series
as alleged or at all".
36. There is no whisper in reply to para 11 that the amount of
Rs.22,77,67,422/- was not payable to the respondent No. 1/Prasar Bharti
against the four series/events. I note, the petitioner had raised the issue
of India Pakistan Series 2007 in reply to this para, the same shall be
subject to the determination by the Tribunal.
37. Suffice to state, from a reading of the letters/legal notice, the
pleadings referred to above, the petitioner claims to have adjusted the
amounts payable by it against the revenue it has to get for the India
Pakistan Series 2007. The petitioner and respondent No. 2 admit their
liability to that extent by giving credit to the respondent No. 1. In other
words, the admission is implicit in the very stand of the petitioner. On
admissions, an interim award can be passed as admissions are best proof
of facts admitted. It has been held in Nagindas Ramdas's case (supra)
as under:
Admissions if true and clear, are by far the best
proof of the facts admitted. Admissions in pleadings or
judicial admissions, admissible under Section 58 of the
Evidence Act, made by the parties or their agents at or
before the hearing of the case, stand on a higher footing
than evidentiary admissions. The former class of
admissions are fully binding on the party that makes
them and constitute a waiver of proof. They by
themselves can be made the foundation of the rights of
the parties. On the other hand, evidentiary admissions
which are receivable at the trial as evidence, are by
themselves, not conclusive. They can be shown to be
wrong".
38. The question which is required to be answered is whether the
amount of Rs.22,77,67,422/- can be a subject matter of an interim award
when a counter claim has been filed by the petitioner. The issue is no
more res-integra having been decided by a Division Bench of this Court
in the case of Numero Uno International Ltd. (supra) wherein the
Division Bench on an identical issue on more or less identical facts was
of the following view:-
"6.What then remains to be examined is whether the
pendency of a counter claim made by the appellant before
the arbitrator was sufficient to dis-entitle the respondent
Prasar Bharti from claiming even the admitted amount
due from the appellant by way of an interim award in its
favour. According to Mr.Jaitley, since the claim made by
the respondent and the counter claim of the appellant
were eventually to result in a net amount which one or
the other party would be required to pay, the payment of
any amount which the appellant may have admitted to be
due and payable out of the claim made by the respondent
would not meet the ends of justice nor was any such
payment otherwise necessary. We do not however think
so. The legal position as regards the nature of a set off
and counter claim was examined in Canara Bank's case
(supra) and summarised thus:
"34. The following things are in common in set off
and counter claim:
(1) None should exceed the pecuniary limits of the
jurisdiction of the Court;
(2) Both are pleaded in the written statement, if the
law governing the Court permits such plea
being raised by the defendant in the written
statement;
(3) The plaintiff is expected to file a written
statement in answer to a claim for set off or to
a counter claim;
(4) Even if permitted to be raised, the Court may in
appropriate cases direct for set off or counter
claim being tried separately;
(5) A defendant cannot be compelled to plead a set
off nor a counter claim; he may as well
maintain an independent action for enforcing
the claim forming subject matter of set off or
counter claim;
(6) Both are liable to payment of court fee under
Sch. 1 Art. 1 of Court-fees Act, 1870;
(7) Dismissal of suit or its withdrawal would not
debar a set off or counter claim being tried,
may be followed by a decree against the
plaintiff."
7. In the light of the above, there is no gainsaying
that the making of a counter claim is tantamounting to
institution of an independent suit for the adjudication of
the claim of the defendant. Not only court fee is payable
on the counter claim but the counter claim remains
unaffected by the claim is a suit in itself. So also the court
has always the power to direct a set off or counter claim
being tried separately from the original suit. Such being
the legal nature and character of a counter claim, its
pendency does not denude the arbitrator of the power to
make an interim award in the original suit/claim if such
an interim award is otherwise justified. What is
significant is that the legality of an interim award may be
tested by reference to the material on which it is based
rather than the areas of dispute that may still call for
adjudication between the parties. If an interim award on
the basis of material available on record is not justified,
the Court may set aside the same under Section 34 of the
Act. No interference with an interim award would,
however, be permissible only because the defendant has
made a counter claim or because some areas of dispute
independent of the area covered by the interim award
remains to be resolved."
39. It may be noted here that the judgment of Division Bench of this
Court in Numero Uno International Ltd. (supra), has been followed by
a Single Judge of the High Court of Madras in Gammon India Ltd.
(supra).
40. Insofar as the judgment of the Supreme Court in K.V. George
(supra), on which reliance has been placed by Mr.Jayant Bhushan, is
concerned, I note the said judgment is distinguishable on facts. In K.V.
George (supra), the Supreme Court was considering a case where the
appellant before the Supreme Court, a contractor entered into an contract
with respondent on April 22, 1978 in connection with a construction of
an embankment across Musaliyar Podom between chainage 2573.5 M
to 2827 M of E.B. Main canal of Kallada Irrigation Project. Under the
contract-agreement, the work was to the completed by March 30, 1980
i.e. two years from the date of selection notice which was dated March
30, 1978. The appellant having failed to complete the work as per the
terms of the contract, the respondent by a notice dated April 26, 1980
cancelled the contract at his risk and cost. Consequent there-to the
appellant filed a claim being Arbitration Case No.132/1980 before the
named Arbitrator claiming enhancement of rates in respect of the earth
work involved in the contract. He also claimed interest on delayed
payment and costs. The second respondent i.e. respondent, No. 2-
Superintendent Engineer (KIP Circle), filed a defence statement denying
its liability for enhancement of rates. It was their case that the extra and
excess items were covered by the supplemental agreement. The
department has also alleged, the delay was attributable to the contractor.
A counter claim was made by the Superintending Engineer
(K.I.P.Circle), for Rs.28,84,000/-. The Arbitrator by his order dated
January 22, 1981 made an award in regard to claim No. 1 directing the
respondents to pay 35% increase in the agreed rate for the item of Earth
work excavation and filling for forming the compacted embankment
with earth from barrow area. Claim No. 1 was thus allowed. Claim Nos.
2 and 3 regarding interest were disallowed. As regards counter-claim
Nos. 1 and 2, it was ordered that those issues will be considered
separately and no award was made. The appellant thereafter filed O.P.
(Arb.) No. 81 of 1981 in the court of Sub-Judge, Trivandrum under
section 14 of the Arbitration Act for making the award a rule of the
court. On objections being raised by the respondents, the Court of the
Sub-Judge after hearing the parties by order dated August 18, 1981
remitted the reference to the Arbitrator for fresh consideration on the
ground that the Arbitrator did not consider the counter claims made by
the respondents. The appellant thereafter filed an application in the court
of Sub-Judge praying that the order dated August 18, 1981 may be
reviewed. In the, meantime, the appellant filed another Arbitration Case
No.276/1980 before the same Arbitrator in respect of the wrongful
termination of the contract and also raised 13 items of claims therein.
The Arbitrator after going through the objections of the respondents
made an award on October 29, 1981 whereby he ordered that the re-
arrangement of the work should not be at the risk and cost of the
appellant. As regards claim No. 2, he ordered 30% increase in rates (as
per original and supplemental agreement) for all items of work carried
out by the appellant except on items covered by Award No. 132 of 1980
dated January 22, 1981. Claim Nos. 3 and 5 were rejected. As regards
claim No. 4 an increase of 20% in the agreed rates for these items was
allowed. Claim No. 11 regarding interest was disallowed. It was also
stated in the award, inter alia, that the claimant shall be entitled to the
refund of the security amount as well as refund of the retention amounts,
the claimant shall be entitled to his final bill in terms of the Award, the
counter claim for recovery of costs of rearrangement of work and also
the counter claims filed by the respondent dated April 8, 1981 were
declined. The appellant filed O.P. (Arb) No. 296 of 1981 for making the
second award a rule of the court. A statement of defence was filed by the
respondents. The respondents raised a plea of res judicata. The Sub-
Judge, vide order dated March 18, 1982 made the award the Rule of the
Court, dismissing the plea of res-judicata raised by the respondents. The
respondents filed two appeals before the High Court at Ernakulam,
which held that the Arbitrator could not review its order on the facts of
the present case, so allowed one appeal. Insofar as the other appeal is
concerned, the same was allowed holding that the principles of
constructive res judicata would apply to the arbitration case. The
question which fell for consideration before the Supreme Court was
whether the Sub Judge could have remanded the case back to the
Arbitrator insofar as the first case is concerned. The Supreme Court was
of the view that the Arbitrator, without considering the counter claims
and keeping the same for subsequent consideration made an award. It
held that the award made by the Arbitrator is not sustainable in law. It
upheld the order of the High Court whereby the High Court held that the
Arbitrator misconducted himself and had set aside the proceedings by
directing the Arbitrator to dispose of the reference in accordance with the
law, considering the claim of the contractor and the counter claim of the
respondents.
41. It is clear from the above, in K.V. George (supra), the claim of the
petitioner allowed by the Arbitrator was for enhancement of rates which
claim was denied by the department. Some counterclaims were made by
the department. The claim allowed, was not on an admission by the
department. Unlike in K.V. George (supra), where there was no
admission of liability, in the case in hand there were admissions of
liability by the petitioner herein and on admissions, the interim award is
justified.
42. It is a settled position of law that a judgment is only an authority
for what it actually decides in particular facts.
43. Insofar as the reliance placed by Mr.Bhushan on the case of
Himani Alloys Ltd. (supra) is concerned, the Supreme Court was
dealing with a case wherein a suit was filed by the respondent TISCO
against the appellant for recovery of sum of Rs.2,02,72,505/40 in regard
to supply of steel. The respondent filed an application praying for a
decree upon admission for Rs.74,57,074/50 alleging that the appellant
has admitted the liability for such sum. The said application was resisted
by the appellant contending that there was no such admission and was
only a tentative agreement to have the accounts verified and not a final
settlement or admission of liability. The Supreme Court in para No.9 was
of the view that a judgment can be given on an admission but the
admission should be categorical. The Supreme Court was also of the
view that Order 12 Rule 6 being an enabling provision the power of the
Court is discretionary. The Supreme Court further observed that on
examination of facts and circumstances the Court has to exercise its
judicial discretion keeping in mind that a judgment on admission is a
judgment without trial which permanently denies any remedy to the
defendant by way of an appeal on merits. The Supreme Court in the
facts has held that the Minutes of Meeting on which reliance was placed
by the TISCO could not be termed as an admission for the purpose of
Order 12 Rule 6 CPC. The facts in the said case are different from the
facts in the case in hand. Hence, the said judgment is distinguishable. In
this case the pleadings and the communications/correspondence are clear
and have been dealt with above and on the basis of which this Court has
held that the petitioner and the respondent No.2 have accepted their
liability towards the respondent No.1.
44. Insofar as the judgment of Bombay High Court in the case of
Western Coalfields Ltd. (supra) is concerned, the said case has been
decided keeping in view the fact situation. The Court on a reading of the
pleadings has come to a finding that the admissions made by the
defendant are not absolute but were conditional and it has been
specifically stated that in terms of another contract the said amount is
already appropriated. Unlike in Western Coal Fields Ltd's case (supra),
in the case in hand the liability towards the respondent No.1 is not
disputed even though plea of set off was taken, which was disputed by
the respondent No.1, as such a plea need to be decided and till such time
it is decided it would, remain a claim and not a debt, for the respondent
No. 1 to be pecuniarily liable. Even though Mr. Rajeev Sharma has
made submissions on the merit of the counter claim of the petitioner, I
refrain from saying anything as the same needs to be decided by the
Tribunal. That would not stop the entitlement of the respondent No.1 to
get money on the basis of admissions with regard to 4 series/events. As
held by the Division Bench of this Court in Numero Uno International
Ltd.'s case (supra), if a liability is admitted the amount can be awarded
by the Arbitrator, which has been done in the present case.
45. Insofar as the submission of Mr.Jayant Bhushan, learned Senior
Counsel for the petitioner, on limitation is concerned, on a reading of the
impugned award it is seen and noted that no such plea was urged before
the Tribunal. The only submission advanced by the learned Senior
Counsel for the petitioner before the Tribunal was that the interim
award/decree cannot be granted in view of the counterclaim. In the
absence of any submission on limitation, there was no occasion for the
Tribunal to consider and decide the issue of limitation. There is no
jurisdictional error.
46. The submission of Mr.Jayant Bhushan that the legal notice dated
May 16, 2009 cannot be construed as an acknowledgement of existing
liability as the liability was discharged by way of an adjustment by
relying on the judgment of the Supreme Court in Valliama Champaka
Pillai's case (supra) is concerned, the same also need to be rejected in
view of my conclusion above that till such time, the claim of the
petitioner with regard to India Pakistan Series 2007 is decided, it would
remain a claim and would not fructify as a "liability" to be adjusted.
47. In Valliama Champaka Pillai's case (supra), the Supreme Court
was dealing with a case where the release deed executed by the original
mortgagee referred to a past liability. The deed also recorded that the
payment has been made. It was in that context, the Supreme Court held
that it does not amount to a subsisting liability.
48. Insofar as the submission of Mr.Jayant Bhushan that the limitation
had started running on April 02, 2008 and the reference having been
made to the Arbitral Tribunal on August 31, 2011 the claims were barred
by time, is concerned, this submission of Mr.Jayant Bhushan also need
to be rejected for the reason that vide letter dated April 02, 2008 the
petitioner had acknowledged the liability of the petitioner and the
respondent No.2 towards the respondent No.1/Prasar Bharti with regard
to India Australia Series 2007 only. Vide notice dated May 16, 2009 the
acknowledgment of liability was with regard to most of the matches
played between the years 2007-2009 and included the India Australia
Series, 2007 as well. I agree with the submission of Mr.Rajeev Sharma,
learned counsel for the respondent No. 1 who had placed reliance on
Explanation to Section 18 of the Limitation Act which stipulates that for
the purpose of the said Section, acknowledgment may be sufficient if it
is coupled with a claim to set off. The letter dated May 16, 2009 is an
acknowledgement of liability with a stand of adjustment and the
invocation of arbitration clause was vide letter dated June 1, 2009, the
agreement executed between the parties to refer to the disputes to the
Arbitral Tribunal was on August 31, 2011 and the claims having been
filed in January 2012, the claims would be within time.
49. Insofar as the submission of Mr. Jayant Bhushan that the interim
award was passed only because the petitioner had not complied with the
interim order is concerned, I do not see anything illegal. The Tribunal
has granted the interim award after noting the non compliance of first
interim order dated May 6, 2014 to furnish a bank guarantee; failure to
deposit an amount of Rs.22 Crores on or before November 1, 2014, and
also failure to state clearly whether they possess any assets within India.
In fact I note, despite order dated October 31, 2014 in Arb. Appeal
No.30/2014, the petitioner neither in that appeal nor even in this petition
has filed details of its unencumbered assets located in this country. In the
given circumstances, as it is a settled law, a decree on admission under
Order 12 Rule 6 C.P.C. is a discretionary relief and the Tribunal having
exercised the discretion by way of an interim award, the same cannot be
interfered with.
50. Insofar as, the submissions of Mr. Jayant Bhushan that the
Tribunal without allowing the petitioner to complete the inspection of
the documents and adjudicating the application for discovery of
documents had proceeded with the hearing and passed an interim
order/interim award in favour of the respondent No.1 is concerned, the
inspection of the documents sought for by the petitioner and respondent
No.2 were with regard to India Pakistan Series 2007 and the said
documents have no concern with the application for interim award filed
by the respondent No.1 with regard to other four series/events. The
Tribunal was justified to hold that the inspection and discovery of the
documents asked for by the petitioner and the respondent No.2 was
either to substantiate their claim/counter claim or with a view to enable
them to increase the amount claimed by them by way of counter claim
and the said documents are yet to be established at trial. Meaningfully
read, the application for inspection and discovery of documents had no
effect/bearing on the application for interim award. No prejudice was
caused to the petitioner. There was no violation of principle of natural
justice as alleged by Mr. Bhushan. This objection also need to be
rejected. No submission has been made on the competency of the
Tribunal to pass an interim award.
51. In view of above discussion and keeping in view the position of
law that passing of an interim award based on admissions is matter of
discretion and this Court while exercising power under Section 34 of the
Act, would not like to interfere with the impugned interim award dated
September 16, 2014. The petition is accordingly dismissed with no order
as to costs.
(V.KAMESWAR RAO)
JUDGE
APRIL 06, 2015
akb
