1 arbp214-11 vai IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION PETITION NO.214 OF 2011 Ramesh Mankani ....Petitioner V/s. M/s.Kartik Trading Pvt. Ltd. & Anr. ....Respondents Mr.Venkatesh Dhond with Mr.Ashish Kamat i/b Ranjit & Co. for the Petitioner. Mr.Nikhil Sakhardande with Ms.Deepti Panda and Mr.Hetal Thakore i/b Thakore Jariwalla & Associates for Respondent No.1. Mr.Anil Menon i/b M/s.Anil Menon & Associates for Respondent No.2. CORAM : S.J. VAZIFDAR, J. DATE : 15TH APRIL, 2011. P.C. :- 1. This is a petition under section 9 of the Arbitration and Conciliation Act, 1996. 2. With the consent of the parties, the petition is disposed of finally by this order. 3. The petitioner and respondent No.1 had entered into an agreement dated 10.11.2006 titled “Deed of Assignment”. The petitioner assigned to respondent No.1 copyrights of the programme consisting of two Hindi films. Clauses 4, 9 and 13 of the Deed of Assignment read as under :- “4. Based on the representations and warrantees and the declarations made by the ASSIGNOR in respect of 2 arbp214-11 the said PROGRAMME, the ASSIGNOR hereby assigns and the ASSIGNEE hereby accepts the assignment of exclusive, irrevocable commercial, non-commercial rights, for the territory and period mentioned in the annexed Schedule-I & II of the said PROGRAMME and these rights shall belong to the ASSIGEE, and the ASSIGNEE shall be entitled to exploit the said rights upon the signing of this Deed and / or further transfer, assign and/or convey the same or any part thereof in favour of any third party or concern without any consent from or intimation to the ASSIGNOR. 9. In consideration of the said assignment in favour of the ASSIGNEE by the ASSIGNOR in the manner aforesaid and subject to the ASSIGNOR fulfilling its objections set out herein, the ASSIGNEE agrees to pay to the ASSIGNOR the sum indicated in the annexed Schedule-I & II in the manner mentioned therein. The said sum shall constitute the complete, full and final consideration for the rights assigned hereunder and other presents and obligations of the ASSIGNOR under this Deed. The consideration amount shall be inclusive of all taxes, duties and levies. The tax will be deducted at source from the consideration, as and when applicable. 13. As mentioned in Schedule-I & II, the ASSIGNEE shall make the balance payment to the ASSIGNOR after receipt of Betacam/Digi Betacam of acceptable quality, Censor Certificate and link documents/NOC etc. in respect of the said film. Alternatively, if the ASSIGNOR fails to handover to the ASSIGNEE, any of these requirements, then in such event the ASSIGNOR shall return the entire amount to ASSIGNEE received by him from the ASSIGNEE and the said Deed shall stand cancelled.” Clauses 23 and 24 contain the arbitration agreement. The present petition is concerned with the film “Ek Ladka Ek Ladki”. Under Schedule II, the total cost of the said film is stated to be Rs.8,75,000/- and the terms of payment are as under :- “TERMS OF PAYMENT (a) Rs.2,00,000/- on signing of this Deed ; (b) Balance Payment on (i) delivery of acceptable 3 arbp214-11 quality of Betacam / Digi Betacam of acceptable quality of the films, (ii) getting objections, if any, in respect of films settled and (iii) receipt of censor certificate, link documents etc.” 4. The balance amount of Rs.6,75,000/- is admittedly not paid by respondent No.1 to the petitioner. The petitioner states that respondent No.1 never took the tapes although the same were offered by it to the petitioner immediately, falsely contending that they were not of the requisite quality. The first respondent however contends that the main reason for its not paying the balance consideration was that the petitioner had failed to settle the objections as required by the Terms of Payment set out above. 5(A). A firm M/s.G7 Movies issued a public notice stating that they had acquired certain rights inter-alia in respect of the said movie from the petitioner and invited claims and objections in that regard. (B). Respondent No.1 by a letter dated 20.4.2010 addressed to the said M/s.G7 Movies alleged that it was holding the sole and exclusive rights for the entire work of the said film having acquired the same from the petitioner for a period of five years and three months. The rights, it was stated, commenced from 1.9.2010. The letter recorded that as per the telephonic conversations M/s.G7 Movies had stated that they had not entered into any agreement for the film with the petitioner. M/s.G7 Movies was further requested to take note of the assignment and not to deal with the said film in any manner. (C). By a letter dated 20.4.2010 addressed to the petitioner, respondent No.1 referred to the above facts and invoked the arbitration 4 arbp214-11 agreement. That the invocation is not in accordance with the arbitration clause is another matter. (D). By a letter dated 7.5.2010 addressed to respondent No.2 Multi Screen Media Pvt. Ltd. (MSM), the petitioner’s advocates referred to a public notice issued by respondent No.2 stating that it was acquiring the rights inter-alia of the said film. The notice admitted the execution of the said Deed of Assignment dated 10.11.2006 but alleged that respondent No.1 had failed to pay the balance amount of Rs.6,75,000/-, which was a condition precedent for vesting the rights in respect of the film in respondent No.1. The letter further stated that the petitioner had addressed a letter to respondent No.1 calling upon it to make payment of the balance amount, failing which the assignment would stand terminated forthwith and revoked. Respondent No.2 was therefore called upon to refrain from entering into the agreement with respondent No.1. 6. By a letter dated 7.5.2010, the petitioner called upon respondent No.1 to pay the balance amount within forty eight hours, failing which the agreement would stand terminated forthwith and that the part payment of Rs.2,00,000/- would be forfeited. 7. Nothing further however, was done by the petitioner. By a letter dated 18.10.2010 addressed to the petitioner’s advocate, respondent No.1 referred inter-alia to the earlier correspondence and stated that in answer to the public notices issued by it, an objection was received from one Neptune Enterprises that they were holding the negative rights of the film. A copy thereof was forwarded to the petitioner under cover of a letter dated 2.12.2006. Respondent No.1 stated that the full payment had been made 5 arbp214-11 in respect of one of the films, but that the balance payment in respect of the said film was withheld in view of the objection not being settled. The letter also referred to the public notice issued by M/s.G7 Movies. Accordingly, it was contended that respondent No.1 was within its rights to withhold the balance amount in respect of the film till the objections were sorted out. 8(A). By a letter dated 29.5.2010, the petitioner’s advocate stated that he could not reply to the first respondent’s letter dated 18.5.2010, as he was out of town and that a reply would be sent in the course of the following week. (B). A detailed reply was ultimately sent only on 25.8.2010. It was contended that the assignment of the film was subject to the petitioner receiving the full payment ; that the petitioner was ready and willing to give respondent No.1 acceptable quality of cassettes and the censor certificate and other documents but that respondent No.1 failed and neglected to make payment of the balance amount. The petitioner terminated the Deed of Assignment. It is pertinent to note that the petitioner did not deny the objection raised by Neptune Enterprises and only contended that the same was not tenable. 9. Further correspondence ensued between the parties in the course of which the rival contentions were reiterated. It is pertinent to note that the agreement was ultimately terminated only by a said letter dated 25.8.2010. The present petition was only filed on 9.2.2011. Moreover, the letter of termination dated 25.8.2010 was addressed also in reply to the first respondent’s letter dated 18.5.2010 i.e. after a delay of more than 6 arbp214-11 three months. 10. It is during this time that further third party rights were created in favour of respondent No.2. By an agreement dated 4.6.2010 respondent No.2 acquired a five year licence from 4.6.2010 to 30.9.2017 to telecast twenty nine full length Hindi feature films including the said film from M/s.Goldmines Telefilms Pvt. Ltd. Prior thereto on 25.11.2006 respondent No.1 had assigned its rights in respect of the said films to M/s.Goldmines Telefilms Pvt.Ltd. Thus third party rights had been created first by respondent No.1 in favour of M/s.Goldmines Telefilms Pvt. Ltd. by the said assignment dated 25.11.2006 and thereafter by M/s.Goldmines Telefilms Pvt.Ltd. in favour of respondent No.2 by the said agreement dated 4.6.2010. 11. It is difficult to hold at this stage that the assignments were mala-fide or illegal. Although respondent No.2 had been put to notice about the petitioner’s alleged rights, the fact remains that the petitioner did nothing in the matter after the letter dated 7.5.2010. Moreover, respondent No.2 acquired these rights from M/s.Goldmines Telefilms Pvt. Ltd. M/s.Goldmines Telefilms Pvt. Ltd has not been impleaded in this petition. This is another reason why no interim reliefs ought to be granted. In view thereof, it is not necessary for me to consider whether interim reliefs can be granted against a third party especially in a petition under section 9 of the Arbitration and Conciliation Act, 1996. 12. Prima-facie, the assignment of rights in respect of the said film by the said Deed of Assignment dated 10.11.2006 is complete. In other words, the assignment was not dependant upon the payment of the 7 arbp214-11 amounts, if any, due thereunder. Clause 4 does not make the assignment subject to payment. It is in fact to the contrary. It specifically provides that respondent No.1 “shall be entitled to exploit the said rights upon the signing of this Deed.” Clause 4 also permits respondent No.1 to further assign any part thereof in favour of any third party without any consent from or intimation to the petitioner. This right is also not dependant upon or subject to the payment of the balance consideration. If the assignment was subject to payment of the balance amount such rights would never have been conferred prior to the payment thereof. 13. Clause 5 also militates against the assignment being subject to the payment of the balance consideration. This is clear from the words of clause 5 : “the rights conveyed and transferred”. 14. The doubt, if any, is removed by clause 9 which provides that the payment of the balance consideration would constitute the complete, full and final consideration for the rights “assigned hereunder”. If the assignment was subject to the payment thereof, the clause would have been worded entirely differently. The expression “for the rights assigned hereunder” would never have been used. It would instead have provided “for the rights agreed to be assigned hereunder”. 15. Lastly, there is not a whisper in the Deed of Assignment to the effect that the assignment is conditional upon the receipt of the balance consideration. 16. This assumes greater importance qua third parties who were entitled to proceed on the basis of the Deed of Assignment. Moreover, the assignment in favour of M/s.Goldmines Telefilms Pvt. Ltd. has not even 8 arbp214-11 been challenged. In the circumstances, no reliefs can in any event be granted against respondent No.2 who acquired its rights from M/s.Goldmines Telefilms Pvt. Ltd. 17. The fact that respondent No.1 by its advocates letter dated 9.12.2010 agreed to pay the balance amount does not militate against its contention regarding the quality of the cassettes and the objections raised by the third parties. 18. The arbitration petition is therefore dismissed. There shall be no order as to costs.