IN THE HIGH COURT OF KERALA AT ERNAKULAM
Arb.A.No. 51 of 2009()
1. M/S. C SAT CABLE VISION,
... Petitioner
Vs
1. M/S. ASIANET SATELLITE COMMUNICATION
... Respondent
For Petitioner :SRI.DINESH R.SHENOY
For Respondent :SRI.SAJI VARGHESE
The Hon'ble MR. Justice P.R.RAMAN
The Hon'ble MR. Justice P.R.RAMACHANDRA MENON
Dated :08/12/2009
O R D E R
P.R. RAMAN & P.R. RAMACHANDRA MENON, JJ.
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ARBITRATION APPEAL NO. 51 OF 2009
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Dated this the 8th December, 2009
J U D G M E N T
P.R. Raman, J:
Appellant is aggrieved by the order passed by the District
Court in O.P.(Arbitration )No.112 of 2009 filed by the respondent
herein. The respondent herein approached the court below under
Section 9 of the Arbitration and Conciliation Act 1996 claiming
certain interim reliefs. According to them, they are in the field of
distribution of Cable T.V. programmes and also providing cable
network services in the State of Kerala. They have got their own
established network and cable channels and are providing
superior quality signal and services. The appellant herein had
approached them with a proposal for setting up of joint venture
business in Cherai in Ernakulam district and some adjoining areas
with the intention of providing the subscribers with better and
quality telecast of cable TV programmes. They reached a
Memorandum Of Understanding for entering into the joint
venture. The respondent paid a sum of Rs. Five lakhs as
advance. The appellant, on the other hand, given an
undertaking stating the total number of active customers, the
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monthly revenue and monthly profits of his existing business. He
also undertook that the network generates a monthly profit of
Rs.4,31,000/- and that the total value of the business owned by
him at the time of execution of the agreement was Rs. 80 lakhs.
60% of the value was agreed to be purchased by the respondent
herein and they executed a joint agreement and a further
amount of Rs. 19 lakhs was paid by the respondent herein.
Thus a total of Rs.24 lakhs had been paid by the respondent.
There are other conditions also between the parties. It was
contended that though the income generated from the joint
venture was agreed to be shared between the parties in the ratio
of 60:40, no amount had been paid to the respondent herein.
The rest of the contentions are not relevant at this stage.
2. The appellant herein admitted the joint agreement
entered into between the parties, but contended that they had
large business in Ernakulam district, specified area in Cherai
having 1485 direct connections and 12,000 link connections at
the time of signing the Memorandum Of Understanding and
joint venture agreement. It was contended by the appellant
herein that after the agreement, the respondent deliberately
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3
with an intent to catch the entire business run by the appellant
herein, given the connections at the specified area of the
appellant. Contrary to the various conditions mentioned in the
joint venture agreement, they also gave thousands of link
connections in the specified area, as a result of which the
appellant had to suffer loss of about Rs.3 lakhs till 14.11.2008 for
non payment of subscription amount by the subscribers, since
the respondent’s agents are collecting subscriptions by giving
direct connections in the specified area of the appellant. It was
also stated that a notice was issued on 06.12.2008 stating that
due to the breach of conditions of agreement by the respondent,
the appellant had suffered a loss of Rs. 8 lakhs till 06.12.2008
and that they are rescinding the agreement dated 29.09.2008.
3. The court below marked Exts. P1 to P4 and Exts. R1 to
R5 for the limited purpose of disposal of the petition. The interim
direction sought for was to direct the appellant to furnish
security for Rs.34,34,400/-. Necessary issues were framed
including whether the respondent was entitled to get an
injunction order restraining the appellant herein from collecting
the amount from the Cable T.V. subscribers of the joint venture.
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The court below, after consideration of the plea raised between
the parties and also referring to the documents produced,
passed an interim order, by which the appellant was directed to
furnish bank guarantee for Rs.10 lakhs in the name of the
District Court for a period of two years and also to deposit 25%
of the gross total income of the business every month before the
District Court towards share of the respondent herein without fail
and appointed the appellant as the Receiver. The appellant was
also directed to submit the monthly account before the District
Court . It was also made clear that in case of failure to comply
with the directions issued as aforesaid, the direction to appoint
him as Receiver will be terminated and an official receiver will be
appointed to manage the business.
4. Thus it can be seen that the Court, with a view to watch
the conduct of the parties and having been prima facie satisfied,
thought it fit to appoint the appellant herein as the Receiver with
liability to account, directed the appellant to furnish bank
guarantee for Rs. 10 lakhs and to deposit 25% of the gross
total income of the business every month.
5. Adv. Mr. Dinesh R. Shenoy, the learned Counsel for the
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appellant submitted that the directions to furnish bank guarantee
works out much hardship to him and that instead of furnishing
bank guarantee for Rs.10 lakhs, he prayed that, it may be
modified so as to enable him to furnish it by way of immovable
property. Incidentally, he has also requested that some
modification in respect of the direction to deposit 25% of the
total income may also be made.
6. The learned Counsel appearing for the respondent
submitted that the appellant had disposed of more than 11 items
of property and therefore substituting the security by way of
immovable property will not instill any confidence. He also
prays that if he is appointed as the Receiver, he is prepared to
comply with the above conditions.
7. We are not proposing to go into the rival claims made by
the parties as they are matters for adjudication by appropriate
forum in accordance with the arbitration clause contained in the
agreement. The limited question for consideration is as to
whether the conditions imposed are onerous and any
modification is necessary to reduce the hardship, if any, in
enforcing the conditions. We find that the direction to furnish
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security for Rs.10 lakhs by way of bank guarantee may cause
undue hardship to the appellant. Rather, it will be sufficient, if
the same is reduced to Rs. Five lakhs and for the balance amount
of Rs. Five lakhs, to furnish security by way of immovable
property. But we do not propose to make any variation
regarding the deposit of 25% of the total income, at this stage.
However, since the appellant is appointed as the Receiver, he is
bound to account the income generated from the business. If the
disputes are not finally settled within another period of six
months, it will be open to him to convince the Court that the
direction to deposit 25% of the total income in the factual
situation requires some modification. In that event, the court
will consider such request and pass appropriate orders, after
hearing both the parties. With regard to the direction to the
appellant to furnish bank guarantee for Rs.10 lakhs, we modify
the same by directing to furnish Bank guarantee for an amount
of Rs. Five lakhs and to deposit the bank guarantee before the
court below. The appellant shall furnish security for the balance
amount by way of immovable property. For that purpose, a list
of items of immovable property along with the title documents
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be furnished before the court below with notice to the
respondent herein. In such an event, the court below, after
hearing the parties, will accept such of those properties as are
found to be under the legal ownership of the appellant and are
found to be sufficient to discharge his liability of furnishing
security to the satisfaction of Rs.5 lakhs. The order passed by
the court below is modified to the above extent.
In view of pendency of the matter before this court, the
time for compliance, as stipulated in the order of the court below,
is extended by two weeks from today.
P.R. RAMAN,
JUDGE.
P.R. RAMACHANDRA MENON,
JUDGE.
lk