1 arbp276.07.sxw
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO. 276 OF 2007
Radha Krshna Films Ltd.
A Company registered under the Provisions
of the Companies Act, 1956,
having its registered office at
Kamala Cottage, 6, Juhu Tara Road,
Mumbai-400 049. ....Petitioner.
Vs.
1
Jyoti Film Distributors Pvt. Ltd.,
A company registered under the
provisions of the Companies Act,
1956, having its registered office
at Kamala Cottage, 6, Juhu Tara Road,
Mumbai-400 049.
2 Motion Pictures Association,
52/55, Mangal Market,
Bhagirath Palace, Chandni Chowk,
Delhi-110 006. ....Respondents.
Mr. Nikhil Sakhardande with Mr. Pratik Pawar i/by M/s. AZB &
Partners for the Petitioner.
Ms. Neeta Jain i/by Mr. Vikash Kumar for Respondent No.1.
None for Respondent No.2.
CORAM : ANOOP V. MOHTA, J.
JUDGMENT RESERVED ON : 21st APRIL, 2011.
JUDGMENT PRONOUNCED ON : 5th MAY, 2011.
JUDGMENT:-
The Petitioner (Original Respondent) has challenged award
::: Downloaded on – 09/06/2013 17:15:12 :::
2 arbp276.07.sxw
dated 05/01/2007 passed by the Joint Tribunal of the Film Makers
Combine (for short, FMC) and the Motion Pictures Association (for
short, MPA). The basic directions as per the award are as under:-
“Awarded that Rs.2,50,000/- be paid by the Defendants,
M/s. Radha Krshna Films Ltd., Mumbai in clear violationof their own agreement by disposing H.V. Rights prior to six
months & for retaining 10 prints of the Distributor, M/s.
Jyoti Film Distributors Pvt. Ltd. without payment of any
consideration amount.
The said amount of Rs.2,50,000/- shall be paid to the
Distributors i.e. M/s. Jyoti Film Distributors Pvt. Ltd.
Delhi within 30 days from the date of communication of
decision failing which, the awarded amount will carry an
interest @18% per annum till the date of making the final
amount.”
The relevant facts are-
2 On 18/12/2003, both the parties filed a form with the MPA
seeking registration of a motion picture “Woh Tera Naam Tha” (the
“Film”).
3 On 07/01/2004, the Petitioner and Respondent No.1 enter into
an Agreement of License for distribution of the Film. (The
Agreement). An affidavit filed on behalf of the Petitioner, declaring
::: Downloaded on – 09/06/2013 17:15:12 :::
3 arbp276.07.sxw
inter alia that the Video, Cable TV and TV rights of the Film have not
been sold or parted with by the Petitioner. Clause (iv) of the Affidavit
stated that the Petitioner would not give out the Film for telecast
through television for a period of five years.
Two letters from the Petitioner to Respondent No.1 informing
that Clause (iv) of the Affidavit was incorporated at the request of
Respondent No.1, to meet the MPA requirements at Delhi and shall
not be binding on the Petitioner, and they shall be free to telecast the
Film on satellite television after six months of the release of the Film.
The letters was signed as being ‘Agreed And Confirmed The Above’ by
Respondent No.1.
4 On 28/01/2004, a Power of Attorney executed by the Petitioner
in favour of Respondent No.1 for the purposes of protecting the
copyrights of the Film in the specified territory. The date of release of
the Film was 30/01/2004.
5 On 05/02/2004, an agreement between the Petitioner and Mr.
Sanjay Jumani proprietor of M/s. Sunstone Entertainment
(“Sunstone”) whereby Petitioner granted various copyrights in respect
of all countries in the world excluding India, Nepal, Bhutan and
::: Downloaded on – 09/06/2013 17:15:12 :::
4 arbp276.07.sxw
Sikkim. A declaration was made by the Petitioner accordingly.
Unfortunately, the film was flopped in the box office.
6 On 12/02/2004, a letter from Respondent No.1 to the Petitioner
with the details of the investment in the Film to the tune of Rs.
44,92,045 and that Respondent No.1 had recovered only about Rs.
15,00,000/-. Respondent No.1 requested the Petitioner to
‘sympathetically consider’ sharing the deficit/loss.
7 On 18/02/2004 and 21/02/2004, two letters from Respondent
No.1 to the Petitioner with railway receipt showing dispatch of two
lots of five prints of the Film, and requested the Petitioner to receive
the prints.
8 On 11/03/2004, a letter from MPA to Respondent No.1
registering the Film in their name as per the Producers’ Distributors”
Certificate dated 18th December, 2003.
9 On 16/03/2004, a letter by Respondent No.1 to the Petitioner
giving the details of the investments and the losses allegedly suffered
in the distribution of the Film and requested the Petitioner to share
::: Downloaded on – 09/06/2013 17:15:12 :::
5 arbp276.07.sxw
the alleged loss ‘on humanitarian grounds’ to the extent of
Rs.22,60,000/-. Respondent No.1 stated that the Film be telecasted
on Satellite Channels prior to the six months and such revenues be
shared with Respondent No.1 to minimize Respondent No. 1’s loss.
10 On 18/03/2004, an agreement between the Petitioner and
Sunstone. Sunstone was granted the license of the copyright in
respect of the Home Video rights of the Film by the Petitioner within
India, Nepal, Sikkim and Bhutan. There was no assignment of the TV
or satellite rights of the Film by the Petitioner, which was amended on
19/03/2004 to include Bangladesh.
11 On 18/05/2004, a letter from Respondent No.1 claiming a loss
of Rs.25,74,753.40 allegedly recoverable from the Petitioner as an un-
recouped investment on the Film.
12 On 08/06/2004, a fax from the Petitioner to Respondent No.1
stating that the Petitioner is in the process of assigning the satellite
rights of the Film. The Petitioner, accordingly, sought permission
under Article 31 of the Agreement.
::: Downloaded on – 09/06/2013 17:15:12 :::
6 arbp276.07.sxw
13 On 11/06/2004, a letter from Respondent No.1 about their
consent for the pre-mature release of the Film and the release of its
VCD.
14 The alleged losses of Rs.25,39,041.40 were again claimed from
the Petitioner.
15 On 20/07/2004, 18/08/2004 and 17/09/2004, letters from
Respondent No.1 to the Petitioner. Respondent No.1 threatened, in
case the amount so demanded not paid within fifteen days, the matter
would be referred to the MPA for the realization of the alleged dues.
16 On 20/09/2004, the claims made by Respondent No.1 before
the Acquiring Sub Committee of the MPA giving details pertaining to
the losses allegedly suffered in distribution of the Film. Respondent
No.1 requested the MPA to issue an interim circular of caution against
the Petitioner in view of the alleged claims of Respondent No.1.
17 On 23/09/2004, a letter from the Petitioner in response to
Respondent No.1’s letter dated 18th August, 2004. The Petitioner
denied all the claims made by Respondent No.1 and also the liability,
::: Downloaded on – 09/06/2013 17:15:12 :::
7 arbp276.07.sxw
by referring to various provisions of the Agreement.
18 On 06/10/2004, Respondent No.1 denied the contents of the
Petitioner’s letter and stated that they filed a complaint with the MPA
and requested the Petitioner to submit their reply to the Association.
19 On 08/10/2004, an agreement between the Petitioner and
Sunstone, whereby the rights in the Film that were previously granted
to Sunstone were subsequently relinquished by Sunstone in favour of
the Petitioner.
20 On 02/11/2004, an interim Circular issued by the Acquiring
Sub. Committee of the MPA to the members of MPA stating that
Respondent No.1 had raised a claim amounting to Rs.25,22,091.40
with interest @ 24% per annum, plus claim fee and circulation
charges of Rs.5,300/- against the Petitioner and two of its directors-
Mr. V.P. Singhania and Mr. P.R. Jain (“Directors”).
21 On 04/11/2004, a letter that the Agreement was not that of
partnership and Respondent No.1 was not liable for all costs and
expenses in relation to the distribution of the Film.
::: Downloaded on – 09/06/2013 17:15:12 :::
8 arbp276.07.sxw
The Petitioner entered into an agreement for granting the TVB
rights of the Film with M/s. SET India Pvt. Ltd.
22 Respondent No.1 stated that since the matter is subject to
arbitration, all the claims would be decided by the Arbitral Tribunal.
23 On 14/12/2004, a letter from MPA to the Petitioner informing
them about circular dated 2nd November, 2004 and the claims of
Respondent No.1.
24 On 10/01/2005, a letter from the Advocates for the Petitioners
to MPA in response to the latter’s letter dated 14th December, 2004.
The claims made by Respondent No.1 were denied and it was
reiterated that the Agreement was not a partnership and that the
Petitioner is not liable for any loss suffered by Respondent No.1.
25 On 13/01/2005, a letter from MPA to Respondent No.1 referring
to the 10th January, 2005 letter and the Agreement and solicited
comments of Respondent No.1 in this regard.
26 On 19/01/2005, Respondent No.1 stated that as the matter was
::: Downloaded on - 09/06/2013 17:15:12 :::
9 arbp276.07.sxw
before the Joint Arbitral Tribunal as per the terms of the Agreement
(Article 32 of the Agreement) all claims be taken up before them.
27 On 19/01/2005, Respondent No.1 sent a letter to MPA for
placing the matter before the Joint Tribunal, as the claimants
application was already sent to the Producers by letter dated
06/10/2004. On 29/01/2005, the first telecast of the Film took place.
28 On 31/01/2005, the Petitioner and Respondent No.1 agreed for
the arbitration before the Tribunal.
A letter from the Petitioners to Respondent No.1 giving a
parawise reply to Respondent No.1’s letter dated 19th January, 2005.
The authority of MPA to issue the abovementioned circular was also
challenged.
29 On 31/01/2005, before the Joint Tribunal of FMC and MPA,
both the parties in writing agreed to submit for the
reference/adjudication of the dispute of the Film (Woh Tera Naam
Tha) in terms of clause 9 of the Arbitration Agreement as recorded in
the Producers’ Distributors’ Certificate for registration of the Film.
The time was sought by the Petitioner’s advocate and it was
::: Downloaded on – 09/06/2013 17:15:12 :::
10 arbp276.07.sxw
accordingly adjourned also.
30 On 03/02/2005, a letter of the Advocates for the Petitioners to
Film Maker’s Combine placing on record the Petitioner’s reply dated 1st
February, 2005 (above) along with an application of the Directors
dated 2nd February, 2005 filed under Section 16 of the Arbitration and
Conciliation Act, 1996, praying that there was no arbitrable dispute
between the Petitioner and Respondent No.1 and alternatively
challenging the jurisdiction of the Tribunal.
31 On 17/02/2005, a letter from Respondent No.1 stating that
submissions were made to the wrong tribunal.
32 On 01/03/2005, a letter from the MPA to the Petitioner referring
to the premature telecast of the Film and stating that action as a gross
violation of the undertaking contained in the acquiring form dated
18th December, 2003 and the Affidavit.
33 On 02/03/2005, the Petitioner’s reply to Respondent No.1’s
statement of claim before Tribunal denying all claims made by
Respondent No.1 by stating the material terms of the Agreement.
::: Downloaded on – 09/06/2013 17:15:12 :::
11 arbp276.07.sxw
The Directors file an application under Section 16 of the
Arbitration and Conciliation Act, 1996 (for short the Arbitration Act)
before the Tribunal stating that there is no arbitrable dispute and
alternatively challenged the Tribunal’s jurisdiction to entertain the
claim of Respondent No.1.
34 On 02/03/2005, affidavit of reply filed by Respondent No.1. On
10/03/2005, letter from the Petitioner to the MPA in reply to its letter
dated 1st March, 2005.
35 On 14/03/2005, the Petitioner by its letter informed Respondent
No.1 that the ten prints were sent out of their own will without being
called upon to do so by the Petitioner and that the Petitioner could
only remit Rs.20,000/- from the sale of two of the ten prints on
account of Respondent No.1. The Petitioner reiterated that the said
prints were lying with the Petitioner on Respondent No.1’s account.
36 Respondent No.1 inter alia called upon the Petitioner to make
payments in respect of the ‘un-recouped investment’, which was
denied again on 08/04/2005.
::: Downloaded on – 09/06/2013 17:15:12 :::
12 arbp276.07.sxw
37 On 07/05/2005, based upon the written joint agreement dated
22/04/2005, the matter was adjourned for filing documents
pertaining to Cable, Video and Satellite rights including Home Video
Rights.
38 On 11/05/2005 a letter from the Petitioner whereby they agreed
to pay Rs.20,000/- for two prints referring to stock of 10 prints held-
up by them.
39 On 17/08/2005 and 19/11/2005, it was again adjourned for
clarification from the Petitioner and the same was again signed and
recorded jointly.
40 On 20/12/2005, a letter from Respondent No.1 to the Petitioner
forwarding to them the business statement for the Month of
November, 2005.
41 On 28/03/2006, affidavit filed by Mr. P.R. Jain before the
Tribunal seeking dismissal of Respondent No.1’s claim.
42 On 05/01/2007, the Petitioner placed its submissions on record
::: Downloaded on - 09/06/2013 17:15:12 :::
13 arbp276.07.sxw
before the Tribunal. The Tribunal passed the impugned award,
awarding Respondent No.1 a sum of Rs.2,50,000/-. Hence this
Petition.
THE JOINT TRIBUNAL HAS JURISDICTION
43 The Clause 32 and 33 of the agreement between the parties
dated 7th January, 2004, with regard to the Arbitration is as under:-
32. It is agreed between the parties hereto that any
dispute/s arising out of this LICENSE it shall be
referred to the Joint Arbitration of the PRODUCERSAssociation and Distributors Association, and their
decision shall be binding on both the parties.
33. It is agreed between the parties hereto that the
appropriate Associations and Courts in Mumbai shall
have the jurisdiction to entertain and try any suit ormatter in dispute between them relating to or arising
from this LICENSE.”
44 The parties even otherwise agreed and appeared before the Joint
Tribunal and submitted to its jurisdiction for all the purposes.
45 In view of this, I am not inclined to accept the case of the
Petitioner that the Joint Tribunal has no jurisdiction to decide the
issue. In view of above clauses and conduct of the parties itself, this
court has a jurisdiction to entertain the present petition and the Joint
::: Downloaded on – 09/06/2013 17:15:12 :::
14 arbp276.07.sxw
Arbitral Tribunal has jurisdiction to decide the dispute arising out of
the agreement, apart from the signed documents from time to time by
the parties before the joint Tribunal.
UNREASONED AWARD- UNSUSTAINABLE
46 The purpose of recording above events is to emphasis that, for
want of details and disputed facts in the award passed by the Arbitral
Tribunal, and as submissions are made by the counsel for the
Petitioner, the award is liable to be interfered with, also for want of
specific reasoning with regard to the lump sum amount, as awarded.
It is unclear, how this amount is arrived at, and under which clause of
the agreement, specially when the Petitioner has denied every demand
so raised by Respondent No.1, from its inception stating it to be
beyond any agreement/contract. No amount can be awarded in
commercial contract, unless agreed otherwise, on the basis of
“sympathetic consideration” or on assumption and presumption.
47 From the material, as well as, correspondences as exchanged
and as events show that there were settlement between the parties
based upon which 10 prints were with the Petitioner but the finding is
given, without referring to the said settlement, against the Petitioner
by the Arbitral Tribunal. It is not made clear that on what basis the
::: Downloaded on – 09/06/2013 17:15:12 :::
15 arbp276.07.sxw
composite award of Rs.2,50,000/- was passed against the Petitioner
referring it to be in violation of the agreement of H.V. rights prior to
six months and for retaining 10 prints of the Distributor. There were
no details whatsoever provided on record by Respondent No.1 before
claiming such amount. The Arbitrator also failed to provide any
actual supporting details/accounts for assessing such amount.
48 It is necessary for the Arbitral Tribunal, though constituted
under the respective terms and conditions of the Associations and/or
practice and usage to provide details while granting/awarding the
amount against any party, basically when such award is not final,
unless it has gone through the procedure as contemplated under
Sections 34 and/or 37 of the Arbitration Act. Normally, as per the
agreement and the procedure so adopted by the parties and as per the
practice and usage, award may be unreasoned but there is no such
procedure and/or rules pointed out and/or adopted by the parties.
Therefore, the Joint Arbitral Tribunal is bound to provide and give
reasons while passing the award.
49 In a case like this, where various detailed facts are denied and
because of alleged losses suffered, though not part of any terms and
::: Downloaded on – 09/06/2013 17:15:12 :::
16 arbp276.07.sxw
conditions, it is essential for the parties, to place on record the
material, as well as, for the Joint Arbitral Tribunal to assess and
analyse the material and pass detailed reasoned order of awarding
monetary compensation and/or award against any party.
THE QUANTUM OF DAMAGES = PROVED OR UNDISPUTED
EVIDENCE
50 The Arbitral Tribunal is bound by the terms and conditions
between the parties and the substantive and the procedural law.
Though the Civil Procedure Code and the Evidence Act are not
applicable, yet the principle of natural justice, equity and fair-play do
apply even in such proceedings as, by the award the Tribunal decides
the rights for and against the parties. I have already observed in
Indian Oil Corporation Ltd. Mumbai Vs. M/s. Kadbrotee
Engineering Industries, Navi Mumbai 1 that-
“12. In view of Section 19 of the Act and the provisions of the
Code of Civil Procedure, and/or the Evidence Act, are not
strictly applicable, still the basic requirement of proof of
documents, as it goes to the root of the matter, just cannotbe overlooked specially when the parties nowhere agreed to
follow such procedure while leading the evidence. The
Arbitrator, therefore, need to consider the basic principle of
awarding the damages or compensation as provided under
the Contract Act.
51 In the judgment Anindya Mukherjee Vs. Clean Coats Private
1 2011(2) Mh.L.J. 659
::: Downloaded on – 09/06/2013 17:15:12 :::
17 arbp276.07.sxw
Limited, 1 I have observed that:-
“18 The Arbitrator needs to consider the basic
laws while assessing and granting any kind of
damages/ compensation. The Apex Court in theSTATE OF RAJASTHAN & ANR. VS. FERRO
CONCRETE CONSTRUCTION PRIVATE LIMITED,
(2009) 12 SCC 1, has observed in paragraph No.
55 as under:-
“55. While the quantum of evidence required to
accept a claim may be a matter within the
exclusive jurisdiction of the arbitrator to decide, ifthere was no evidence at all and if the arbitrator
makes an award of the amount claimed in the
claim statement, merely on the basis of the claim
statement without anything more, it has to be heldthat the award on that account would be invalid.
Suffice it to say that the entire award under this
head is wholly illegal and beyond the jurisdiction of
the arbitrator, and wholly unsustainable.”
THE SPECIALISED ARBITRAL TRIBUNAL= REASONED
AWARD
52 It is important to note that , when the parties agreed to settle
the disputes through a specialized Arbitral Tribunal, based upon their
agreements and adopt its practice and procedures, it is necessary for
such specialized Arbitral Tribunal to give sufficient reasons while
passing any awards unless agreed otherwise. The relevant
trade/commerce laws though are relevant, apart from practices and
usages, yet for a proper adjudication of such disputes the basic
principle of natural justice and fair-play definitely play important role
1 2011(1) Mh.L.J. 573
::: Downloaded on – 09/06/2013 17:15:12 :::
18 arbp276.07.sxw
in such matters. All this is not because the specialized Tribunal has
taken decision which is final and binding between the parties, but it is
necessary for proper appreciation of the decision so taken, as such
award is enforceable subject to the provisions of Arbitration Act.
53 The expertized/special Arbitral Tribunal, just cannot expect that
the decision so given by the expert or specialized mind, but not
reflected through sufficient reasons, that itself is sufficient for the
Court not to interfere with the order.
54 The Court under Section 34 of the Act, even otherwise, bound to
see and record the reasoning in case of commercial matters and/or
any such general matters to maintain or to modify or to set aside the
award, within the framework of law and the record.
55 In view of this and as there are no reasons given to the rival
contentions raised by the parties and how the amount so claimed falls
within the framework of the agreement between the parties and it is
within the scope of reference.
56 Therefore, in view of the above facts and circumstances as
already recorded and as there are no supportive reasoning reflected
::: Downloaded on – 09/06/2013 17:15:13 :::
19 arbp276.07.sxw
in the short award though passed by the specialized Joint Arbitral
Tribunal, in my view, is liable to be interfered with for want of
reasons. The award of the Joint Arbitral Tribunal is in violation, the
contract terms and as it is beyond the power, authority and
jurisdiction. (Oil and Natural Gas Corporation Vs. Wig Brothers
Builders and Engineers Private Limited) 1
57 I am inclined to interfere with the order. However, I am
remanding the matter back to the Joint Arbitral Tribunal for re-
hearing and to pass reasoned award in accordance with law.
THE RESULT
58 Resultantly, the Petition is allowed. The impugned award dated
5th January 2007, is quashed and set aside. However, the liberty is
granted to the parties to appear before the Joint Arbitral Tribunal
within 4 weeks for the directions. The Joint Arbitral Tribunal to pass
award within 4 months, after hearing both the parties.
59 The Petition is allowed in terms of prayer clause (a), with the
above directions. No order as to costs.
(ANOOP V. MOHTA, J.)
1 (2010) 13 S.C.C. 317
::: Downloaded on – 09/06/2013 17:15:13 :::