The High Court of Delhi recently comprising of a bench of Justice C. Hari Shankar held that a contract, in order to be legal, valid, and binding among the parties thereto, was not required, necessarily, to be signed by all parties. This is an agreed principle but a contract consensus ad idem, regarding the terms of the contract should always exist between the parties. (Mx Media And Entertainment Pte. Ltd. v. M/S. Contagious Online Media Networks Private Limited)
Facts of the case
The petitioner is incorporated and located in Singapore and is engaged with the functioning of “MX Player” that produces and develops audio-visual content whereas since sometimes earlier programs of the respondent were being distributed and shown on the petitioner’s Platform.
On 24th February 2020, the respondent, under the brand name “The Viral Fever (TVF)” confirmed that it would provide six shows to be hosted on the petitioner’s Platform in 2020-2021. However, this agreement could not be signed since owing to the COVID-2019 pandemic, the petitioner was not in a position to countersign the Agreement and send it back. Hence, the respondent contended that there was no concluded contract, inter alia for the reason that the Agreement was never signed by the petitioner whereas the petitioner opposed this.
Additionally, certain amendments to the agreement were suggested through emails. The petitioner forwarded an amendment to the Agreement which provided for adjustment against the consideration stipulated in the Agreement and the respondent agreed to review the suggested amendment, pointed out that the FE copy of the Agreement was still awaited. Later, the petitioner acknowledged the receipt of confirmation, from the respondent, regarding the adjustment of US $ 1,10,000.
Thus, it was established that instead of counter-signing the original Agreement, forwarded by the petitioner to the respondent on 18th March 2020, the petitioner proposed as many as three “First Amendments” to the original Agreement which was emphasized by the respondents in an email dated 9th December 2020.
Later the respondent pointed out that, as “there was no visibility on timelines for execution of the principal agreement from MX’s end”, the agreement “could not be concluded between the parties” to which the contend that the “principal understanding, as recorded in the Agreement dated March 18, 2020” stood “concluded”, and that it was only on the basis of such “concluded” understanding that the petitioner had paid an advance of US $ 2,00,000 to the respondent on 23rd April, 2020.
Issue before the Court
Whether there was consensus ad idem at all in the first place for MXP to claim the existence of an agreement between the parties.
Contention of the parties
MX Player alleged that they had an agreement with TVF in March 2020 regarding the exclusive rights of the above-mentioned shows. MX Player claimed that they had acquired exclusive rights to broadcasting the 3 shows on their platform through the March 2020 agreement.
It was an undisputed fact between both parties that they had entered into an agreement regarding the 3 shows in March 2020. MX player had also paid a sum of $310000 as an advance.
It was alleged by MX Player that TVF even after one year after the agreement TVF was not ready to give exclusive rights to MX Player. TVF was trying to give the rights of broadcasting the 3 shows to some other platforms. Thus MX Player pleaded for interim relief for the exclusive rights of the 3 shows. MX Player also demanded that TVF should refund the advance amount with 18% interest.
On the other hand, TVF contented that they did not have any concluded contract with MX player. The advocate on behalf of TVF submitted that it is true that TVF and MX player had an agreement in March 2020. Consequent to the agreement, TVF forwarded a signed contract to MX Player. But till today the signed contract was not sent back with a signature by MX Player.
Even after repeated requests by TVF to send back the dully signed contract, MX Player did not send it. Instead of sending back the signed contract, MX Player kept suggesting amendments to the original contract. TVF showed a positive response to the amendments too. But MX Player was not willing to abide by the covenants of the contract as originally forwarded by TVF.
Thus TVF claimed that as there was no concluded contract between them and MX Player, there was no point in issuing an interim injunction order nor they were liable to pay the extra 18% interest on the refund payment.
Courts Observation & Judgment
The HC observed that on 18 March 2020, TVF had forwarded a signed contract to MXP, however, till date MXP had not condescended to return the said contract, duly signed.
The HC referred to the chain of emails exchanged between the parties, it noted that MXP was unwilling to abide by the covenants contained in the original agreement. It agreed to the contentions that despite repeated requests by TVF made in several e-mails, to send back the Agreement, duly signed, MXP had not done so.
Justice Hari Shankar stated, "In my view, the petitioner (MXP) is, for reasons unknown, seeking to breathe life into a dead body." "As a general proposition of law, it cannot be gainsaid that a contract, even if not signed by both parties, may be enforceable, provided consensus ad idem, regarding the terms of the contract, exists, and the parties have acted in accordance with the contract, thereby evincing the intent to be bound by the covenants thereof."
The Court added that "Neither of these requirements is, unfortunately for the petitioner, met in the present case. Clearly, there is no consensus ad idem between the petitioner and the respondent. Nor can it be said that the petitioner and the respondent had acted on the basis of the contract."
Justice Shankar concluded "No concluded or enforceable contract with the petitioner has ever come into being, none of the reliefs in this petition, under Section 9 of the Arbitration Act, can be granted to the petitioner. It is obviously open to the respondent to contract with any other party, for broadcasting of its programs."
The HC clarified that the parties would be at liberty to seek resolution of their disputes by arbitration and, in such event, the Arbitral Tribunal would not be bound by the findings, on merits, contained in this judgment.
Thus, the court held that since the contract was not legally binding thus, none of the reliefs under the Arbitration Act can be granted to the petitioner, and hence the appeal is dismissed.
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