[Cites 9, Cited by 0]
Madras High Court
M/S.Mediaone Global Entertainment ... vs M/S.Vishnu Associates on 28 November, 2025
Author: N. Anand Venkatesh
Bench: N. Anand Venkatesh
Arb O.P(COM.DIV.) No. 34 of
2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 25-11-2025
DATE OF DECISION : 28-11-2025
CORAM
THE HONOURABLE MR JUSTICE N. ANAND VENKATESH
Arb O.P(COM.DIV.) No. 34 of 2021
M/s.Mediaone Global Entertainment Limited
Having its registered office at
Flat No.32, 1st Floor, Mataji Complex,
Wallace lane, Mount Road, Chennai 600 002
Tamil Nadu Represented by its Director
Petitioner
Vs
1. M/s.Vishnu Associates
Represented by its Managing Director
Mr.M.S.Sreekanth
A registered partnership firm having
registered office at Theatre Gurushree
P.B.No.27, Bangalore-Mysore Road
Mandya 571 401, Karnataka
2. Eros International Media Ltd.,
Rep.by its Directors
No.201, Kailash Plaza
1
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Arb O.P(COM.DIV.) No. 34 of
2021
Opp Laxmi Industrial Estate
Off Andheri Link Road, Andheri (W)
Mumbai 400 053, Maharashtra and
commercial office at
901/902, Supreme Chambers
Off Veera Desai Road, Mumbai 400 053
3. Dr.J.Muralimanohar
Director, Media One Global Enterainment
Letd.,
No.59, Vijayaraghava Road, T.Nagar,
Chennai 600 017
(The Respondents 2 and 3 not necessary
party in this petition, hence we dispense
with the notice for respondents 2 and 3)
Respondent(s)
PRAYER
To set aside the Arbitral Award dated 30.09.2020 passed by the Learned Sole
Arbitrator in the Arbitral proceedings between the petitioner and the respondent
and consequently dismiss the claim of the respondent. SV.Rs.1,23,04,231/-
CF.Rs.100000
For Petitioner : Mr.T.Saikrishnan
For Respondent : Mr.Avinash Wadhwani
ORDER
This original petition has been filed under Section 34 of the Arbitration
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Arb O.P(COM.DIV.) No. 34 of
and Conciliation Act, 1996 (for brevity, hereinafter referred to as “the Act”)
against the award passed by the sole Arbitrator dated 30.09.2020 in favour of
the first respondent/claimant, who will be hereinafter referred to as the
respondent in this order.
2. The respondent entered into a distribution agreement dated 09.05.2012
with Eros International Media Limited, for theatrical distribution of the Tamil
and Telugu versions of the film “Maatran” in Karnataka. As per the agreement,
the respondent is required to pay a sum of Rs.4 Crores to the said Eros
International Media Limited and out of which, Rs.2 Crores was paid and the
balance of Rs.2 Crores was payable three days prior to the release of the film.
Due to widespread civil unrest on account of the cauvery water dispute, the
Tamil films were prevented from being released in Karnataka. Since the film
was not able to be released, the respondent invoked the force majeure clause
and sought for the refund of the amount of Rs.2 Crores. The petitioner, through
its Director, Dr.J.Murali Manohar intervened and persuaded the respondent to
release the Telugu version and assured compensation for any shortfall through a
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guarantee deed dated 11.10.2012. Relying on the said guarantee, the respondent
released the Telugu version. Unfortunately, the film was a flop and as a result,
the respondent suffered a net loss of Rs.1,24,29,432/-. When the amount was
demanded, the petitioner failed to honour the guarantee. It is under these
circumstances, the arbitration clause was invoked and the sole Arbitrator was
appointed by this Court by an order dated 04.09.2015 made in O.P.No.450 of
2015.
3. The respondent filed the claim petition as against the petitioner, who
was the second respondent, the said Eros International Media Limited, who was
the first respondent and also Dr.J.Murali Manohar, who was the Director of the
petitioner company. The respondent sought for an award against all of them
jointly and severally for Rs.1,24,29,432/- together with interest @ 18% per
annum from 31.12.2012 till the date of actual realization.
4. The said Eros International Media Limited filed a counter statement
and also made a counter claim against the respondent demanding for a sum of
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Rs.3,20,80,000/- along with interest @ 18% per annum.
5. The petitioner and the Director of the petitioner company also filed a
reply statement and they denied their liabilities and also took a stand that the so
called guarantee deed is not enforceable and it does not form part of the
distribution agreement dated 09.05.2012, which was not signed by the
petitioner. Apart from that, the guarantee was also not signed by the principal
debtor. Even otherwise, the respondent had proceeded to release the Tamil
version of the film also and therefore, the guarantee itself stood lapsed.
Accordingly, the petitioner sought for the rejection of the claim.
6. The sole Arbitrator, on considering the pleadings, framed the following
issues:-
“(1) Whether the Distribution Agreement dated
09.05.2012 contemplates a minimum guarantee of Rs.4 Crores
payable by the Claimant to the 1st Respondent for the
distribution and release of the film ‘Maatraan/Brothers’ and
whether such amount is paid?
(2) Whether the Claimant has invoked force majeure
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clause of the Agreement and sought refund of the amount of
Rs.2 Crores which was paid under the Agreement?
(3) Whether the Claimant has proved that there was
recognition between the Claimant and the Respondents under
which the Claimant was guaranteed a minimum profit of Rs.2
Crores in the event of releasing the subject matter films?
(4) Whether the Respondents 2 and 3 did execute the
Guarantee Deed dated 11.10.2012 to encourage Claimant to
continue to distribute and release the subject matter of the film
after the re-negotiation?
(5) Whether the Guarantee Deed dated 11.10.2012
stipulates that the Respondents 2 and 3 shall compensate the
st
Claimant of the 1 Respondent if the Claimant is unable to
recoup the sum of Rs.2 Crores?
(6) Whether the Guarantee Deed dated 11.10.2012 had
elapsed by the release of subject matter of the film in Tamil
language?
(7) Whether the Claimant is a registered Partnership firm
to maintain the present claims against the Respondents?
(8) Whether the Claimant is entitled to maintain two
independent cause of actions against two different parties under
different Agreements before this Tribunal?
(9) Whether the Claimant had committed breach of
contract under Clause 5.2 of the Distribution Agreement dated
09.05.2012 and whether the Claimant is liable to pay a sum of
Rs.4 Crores to the 1st Respondent as minimum guarantee
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before the release of the subject matter film?
(10) Whether the Respondents are jointly and severally
liable to pay the Claimant a sum of Rs.1,24,29,432/- with
interest @ 18% p.a from 31.12.2012 till the date of realization?
(11) Whether the 1st Respondent is entitled to the counter
claim sum of Rs.3,20,80,000/- from the claimant on account of
breach of contractual obligations?
(12) Whether the Parties are entitled to any reliefs?”
7. The respondent examined CW1 and marked Exhibits C1 to C28. On
the side of the petitioner and other respondents before the sole Arbitrator,
Exhibits R1 to R7 were marked.
8. The sole Arbitrator, on considering the facts and circumstances of the
case and on appreciation of evidence, passed the award dated 30.09.2020 in the
following terms:-
“In the result an Award is passed:
nd
i) directing the 2 Respondent to pay to the claimant a
sum of Rs.1,23,04,231/- within three months from the date of
Award failing which, directed to pay the said sum with interest at
12% per annum from the date of award till the date of payment.
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st
ii) the 1 respondent is not entitled to any counter claim
and the counter claim is rejected.
iii) Parties are to bear their own costs.”
9. Aggrieved by the above award, the present original petition has been
filed before this Court.
10. The learned counsel for petitioner broadly raised the following
grounds:-
(a) The petitioner was not a party to the distribution agreement dated
09.05.2012, which alone provided for an arbitration clause and therefore that
agreement was not binding on the petitioner.
(b) The principal debtor, namely, Eros International Media Limited was
not a signatory to the alleged guarantee deed dated 11.10.2012 and the principal
debtor took a very specific stand by denying the execution of the guarantee deed
by the petitioner. Thus, the guarantee deed, which must consist of three parties,
namely, the surety, principal debtor and creditor, was actually signed only by the
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petitioner and therefore the said guarantee deed, which was issued by means of
a comfort letter, cannot be invoked against the petitioner.
(c) The guarantee deed confines itself only to the release of the Telugu
version of the film and whereas, the Tamil version of the film was also released
and hence, the guarantee deed lapsed.
(d) The liability of the guarantor is only co-extensive to that of the
principal debtor and since the mandate under Section 126 of the Contract Act
was not complied with, the guarantee deed cannot be put against the petitioner
and
(e) there was no material available for the sole Arbitrator to quantify the
total loss sustained by the respondent and hence the quantification of the
amount of loss by the sole Arbitrator suffers from perversity and patent
illegality.
11. Per contra, the learned counsel for respondent submitted that the
guarantee deed executed by the petitioner was an absolute and unconditional
guarantee, which made reference to the distribution agreement dated
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09.05.2012. It was further submitted that the release of the Tamil version of the
film was pursuant to the email dated 14.10.2012, which makes it clear that all
the centres where the film was to be released will be with the petitioner and
therefore, the petitioner cannot wriggle out by stating that the guarantee deed
confines itself only to the release of the Telugu version. There was sufficient
material before the sole Arbitrator by means of Exhibits C19 & C20 to quantify
the loss sustained by the respondent. The grounds raised by the petitioner do not
make out a case to hold that the award suffers from perversity and patent
illegality and that none of the contingencies available under Section 34 of the
Act has been satisfied. Accordingly, the learned counsel sought for the
dismissal of this petition.
12. This Court carefully considered the submissions made on either side
and the materials available on record. This Court also carefully went through the
award passed by the sole Arbitrator.
13. The present petition confines itself only to the liability imposed
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against the petitioner under the guarantee deed dated 11.10.2012 and therefore,
it will suffice to take note of the findings of the sole Arbitrator with respect to
issue Nos.4, 5, 6, 8 & 10.
14. It is not in dispute that the respondent and Eros International Media
Limited entered into a distribution agreement dated 09.05.2012. The said
company had produced the film titled “Maatraan” and was the sole and
exclusive owner of the copyright of the film, which was planned to be released
in the Tamil and Telugu versions. The respondent approached the said Eros
International Media Limited for assigning all the theatrical exhibition rights of
the film in Tamil and Telugu languages in Karnataka State. Clause 5.2 of the
agreement stipulates that the respondent has to pay to the said Eros International
Media Limited a sum of Rs.4 Crores towards non-refundable minimum
guarantee and out of that amount, the respondent had paid Rs.2 Crores. The
balance of Rs.2 Crores was payable three days prior to the release of the film.
The understanding between the parties is that whatever revenue is collected by
exhibition/distribution of the film in the territory of Karnataka, the respondent
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will be entitled to recover the minimum guarantee amount and thereafter,
recover the publicity expenses not exceeding Rs.25 lakhs and the printing cost
to the maximum of Rs.15 lakhs and another 10% on the above amount towards
distribution margin. After deducting these amounts, the residue of the revenue,
if any, will be shared by the parties in the ratio of 50 : 50.
15. There was unrest in Karnataka due to the cauvery water dispute and
therefore the respondent was not in a position to release the film in Karnataka.
In view of the same, the respondent, through an email dated 09.10.2012,
informed his predicament and sought to invoke the force majeure clause
provided under clause 1.4 of the agreement.
16. At this juncture, the petitioner got into the scene and negotiated and a
guarantee deed dated 11.10.2012 was executed in favour of the respondent. In
the guarantee deed, the petitioner makes a specific reference to the distribution
agreement executed on 09.05.2012 by M/s Eros International Media Limited
and thereafter gives a guarantee that the respondent had already paid a sum of
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Rs.2 Crores towards the minimum guarantee amount and in the event the
respondent is unable to recoup this amount, the petitioner will compensate to
the extent of Rs.2 Crores on behalf of M/s Eros International Media Limited
along with the proportionate distribution cost incurred by the respondent within
ninety days.
17. The petitioner is not denying the execution of this guarantee deed and
what is sought to be raised as a ground by the petitioner is that it is an
independent contract between the petitioner and the respondent, since the
principal debtor, namely, Eros International Media Limited was not a party to
the agreement and therefore the distribution agreement dated 09.05.2012 cannot
be read into this agreement and the arbitration clause cannot be invoked against
the petitioner.
18. It is too late in the day for the petitioner to wriggle out of the
guarantee deed executed on 11.10.2012, which the petitioner would want to call
as a comfort letter. The sole Arbitrator placed reliance upon Exhibit C8, which
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was a reply dated 12.02.2013 sent by the petitioner to the respondent, wherein
the petitioner has admitted about the difficulty faced by the respondent to
release the film in Karnataka and at that juncture, the petitioner undertook to
mediate the dispute and permitted the respondent to release the Telugu version
of the film and towards that, the guarantee deed dated 11.10.2012 was executed.
19. The sole Arbitrator has also taken into consideration Exhibit C22 and
Exhibit C4, which establish the fact that the petitioner is the contract holder for
the release of the Tamil and Telugu versions of the film “Maatraan” in the
Karnataka territory.
20. The sole Arbitrator has also taken into consideration the fact that it is
the petitioner who instructed the technology personnel to upload the Telugu and
Tamil versions of “Maatraan” in the State of Karnataka. Considering all these
aspects, the sole Arbitrator came to a conclusion that the petitioner and its
Director did execute the guarantee deed dated 11.10.2012, which was acted
upon by the respondent to continue to distribute and release the movie after
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renegotiations and that the petitioner and its Director agreed to compensate the
respondent, if in the event of the respondent not being able to recoup the sum of
Rs.2 Crores after the release of the film. Insofar as the stand taken by the
petitioner that the guarantee deed lapsed after the release of the Tamil version of
the film, the sole Arbitrator came to a conclusion that it was the
petitioner/contract holder who instructed the technology personnel to upload the
Telugu and Tamil versions of the film “Maatraan” in the State of Karnataka and
nothing was provided in the guarantee deed that it will lapse if the Tamil version
is also released. Under such circumstances, this stand was also rejected by the
sole Arbitrator.
21. None of the above findings of the sole Arbitrator suffers from any
perversity or patent illegality. Such findings were rendered based on the
possible view taken by the sole Arbitrator, on a careful reading of the guarantee
deed dated 11.10.2012 along with the letter dated 12.02.2013 (Exhibit C8) and
Exhibit C22 dated 18.10.2012.
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22. Insofar as the ground raised by the learned counsel for petitioner that
the petitioner is not a signatory to the distribution agreement and therefore, the
same will not bind him, the sole Arbitrator, apart from referring to the guarantee
deed dated 11.10.2012, has also taken note of the application filed by the
petitioner in A.No.5919 of 2013 under Section 8 of the Act, in the suit filed by
the respondent before this Court in C.S.No.413 of 2013. In the affidavit filed in
support of this application, the petitioner has placed specific reliance upon the
distribution agreement dated 09.05.2012 and took a stand that the suit is not
maintainable and that the dispute can be resolved only through arbitration. This
vital fact was taken into consideration by the sole Arbitrator while dealing with
the issue No.8.
23. The respondent had initially filed the suit before this Court for
recovery of the amount and the same was resisted by the petitioner and others
by filing an application under Section 8 of the Act by showing the arbitration
clause. When the respondent invoked the arbitration clause, the petitioner
company comes up with a case that they are not party to the distribution
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agreement dated 09.05.2012 and that the same cannot be invoked against them.
The petitioner cannot be permitted to approbate and reprobate in this manner,
and the sole Arbitrator has come to the right conclusion that the guarantee deed
executed by the petitioner was in continuation of the distribution agreement
dated 09.05.2012, which is apparent both from the guarantee deed as well as the
stand taken by the petitioner in the application filed before this Court under
Section 8 of the Act. Therefore, the arbitration clause in the distribution
agreement is very much binding on the petitioner.
24. The next ground taken by the learned counsel for petitioner to the
effect that the mandate under Section 126 of the Contract Act has not been
satisfied and therefore the petitioner is not liable, is unsustainable.
25. Section 126 of the Contract Act defines a “contract of guarantee” as
one in which the promisor promises to perform the promise to a third person or
to discharge the liability of a third person, in case of the latter’s default. It
specifically provides that a guarantee need not be in writing and it may also be
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oral. It may be only written or only oral or partly in writing and partly oral.
Useful reference can be made to the judgment of the Apex Court in the case of
Punjab National Bank v. Bikram Cotton Mills and another, reported in AIR
1970 SC 1973.
26. A guarantee is a promise to answer for the payment of some debt or
the performance of some duty, in case of failure of another party, who is in the
first instance, liable to such payment or performance duty. Guarantee is an
accessory contract by which the promisor undertakes to/answerable to the
promisee for the debt, default etc., to another person, whose primary liability to
the promise must exist.
27. The learned counsel for petitioner relied upon the judgment in the
case of Ramachandra B.Loyalka v. Shapporji N.Bhownagree, reported in 1940
ILR 552 and also the judgment in K.V.Periyamianna Marakkayar and Sons v.
Banians & Co., reported in 1926 LW 432 to contend that Section 126 of the
Contract Act refers to the contract of guarantee and speaks of three persons with
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reference to that contract. Unless this requirement is satisfied, the liability
cannot be fastened against the guarantor.
28. There is no dispute on the proposition of law that has been brought
out in the above judgments. In the case on hand, the sole Arbitrator has found
that the petitioner had in fact mediated between the respondent and the said
Eros International Media Limited for the release of the film. The same is
evident from Exhibit C8. This mediation could not have taken place without the
knowledge of Eros International Media Limited and there was no requirement
for the petitioner to come into the scene and take over the liability, which was
originally cast upon the Eros International Media Limited. Thus, even as per the
judgments relied upon by the learned counsel for petitioner, the agreement
between Eros International Media Limited and the petitioner is implied. Section
145 provides that in every contract of guarantee, there is an implied promise by
the principal debtor to indemnify the surety. The same has been properly
appreciated by the sole Arbitrator and findings have been rendered.
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29. In the case on hand, the petitioner makes a specific reference in the
guarantee deed dated 11.10.2012 about the distribution agreement dated
09.05.2012 and talks about the obligation of Eros International Media Limited
and undertakes to take over that obligation and in no uncertain terms undertakes
to compensate the respondent to the extent of Rs.2 Crores, if the respondent is
not able to recoup the said amount which was paid by him to Eros International
Media Limited towards the minimum guarantee.
30. The sole Arbitrator has taken into consideration this aspect and has
concluded that the petitioner did stand as a guarantor. This finding of the sole
Arbitrator is a possible view, in the light of Exhibits C3 & C7 and this Court
cannot sit on an appeal over such a view taken by the sole Arbitrator.
31. Insofar as the ground taken by the petitioner to the effect that the
guarantee lapsed after the respondent released the Tamil version of the film, is
also not sustainable, since the sole Arbitrator has taken into consideration
Exhibit C22 and given a specific finding in this regard while dealing with issue
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Nos.4, 5 & 6. Such a finding does not suffer from any perversity or patent
illegality.
32. The last ground pertains to the quantum that was determined by the
sole Arbitrator. The learned counsel for petitioner brought to the notice of this
Court the answers that were given by CW1 during cross examination and
submitted that the documents produced by the respondent are self serving
documents, which do not establish the so called loss sustained by the
respondent.
33. The sole Arbitrator dealt with this issue in issue No.10. It is the case
of the respondent that they could not recoup Rs.2 Crores and therefore they
have to be compensated under the guarantee deed. The sole Arbitrator took into
consideration the letter dated 25.01.2013 marked as Exhibit C7, which was
addressed by the respondent to the Director of the petitioner company stating
that the respondent was not able to recoup the amount after releasing the film.
This letter was annexed with the statement of account. The statement of account
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was also marked as Exhibit C12.
34. Subsequently, Exhibits C19 & C20 came to be marked, which are the
bills supporting the account statement and the letters regarding the account
statement. This was taken into account by the sole Arbitrator and the sole
Arbitrator has quantified the total amount payable as Rs.1,23,04,231/- along
with interest @ 12% per annum from the date of award till the date of payment.
The sole Arbitrator had taken into consideration the box office collection,
distribution commissions and expenses filed by way of Exhibits C12, C19 &
C20. It was also noticed that these figures were not seriously challenged in the
cross examination or the petitioner was not able to bring any contra evidence.
The amount that was quantified by the sole Arbitrator was based on appreciation
of evidence. This Court cannot sit on appeal against such a finding rendered by
the sole Arbitrator.
35. In the upshot, this Court does not find any perversity or patent
illegality in the award passed by the sole Arbitrator and none of the grounds
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provided under Section 34 of the Act has been satisfied by the petitioner. Hence,
the present petition lacks merit and the same is hereby dismissed with costs of
Rs.1,50,000/- payable by the petitioner to the respondent.
28-11-2025
Index:Yes/No
Speaking/Non-speaking order
Internet:Yes
Neutral Citation:Yes/No
ss
N.ANAND
VENKATESH J.
ss
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Arb O.P(COM.DIV.) No. 34 of
Order in Arb
of 2021
28-11-2025
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