IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION PETITION NO.169 OF 2009. ARBITRATION PETITION NO.169 OF 2009. ARBITRATION PETITION NO.169 OF 2009. Zee Entertainment Enterprises Ltd. ..Petitioners versus K SERA SERA Productions Ltd. ..Respondents Mr. Virendra Tuljapurkar, Senior Counsel i/b. Desai Desai & Co. for the petitioner Mr.Ravi Kadam, Advocate General with Birendra Saraf i/b. M/s. Ranjit & Co. for the respondents CORAM : R.Y.GANOO, J. CORAM : R.Y.GANOO, J. CORAM : R.Y.GANOO, J. DATED : 20th March, 2009. DATED : 20th March, 2009. DATED : 20th March, 2009. P.C. 1. Affidavit in reply appears to have been filed in the office. Original is not on record. Hence copy of the same was made available to the Court. Parties have thereafter exchanged rejoinder and sur rejoinder. Application is heard finally. 2. I have heard learned Senior Counsels appearing on both the sides. The petitioners had entered into an agreement with the respondents on 29.6.2007 (for short said agreement) by which the respondents had agreed to assign the rights in regard to the film by name "Ek the Power One" -2- (hereafter referred to as the said film). The agreement dated 29.6.2007 was provided to cover all kinds of obligations for both the sides and in particular Clause 16 dealt with termination, refund and lien. 3. The petitioners have now come out with the contention that the respondents have committed breach of the said agreement and therefore the petitioners are entitled to relief in terms of damages and for refund of Rs.4 Crores which were paid to the respondents as per said agreement. 4. By way of interim relief the petitioners have sought reliefs in the nature of appointment of Court Receiver in regard to the said film, and injunction so as to see that the said film is not exploited or exhibited and for further Order of injunction restraining the respondents from releasing certain four films to which reference is found in clause 17 of the said agreement. 5. In the course of arguments advanced by counsels on both the sides it is seen that the respondents had created right in favour of the IDBI in nature of a charge and had borrowed certain -3- monies. Said IDBI was in turn authorised to transfer the exhibiting rights in regard to the said film to third person and the Court is informed that by agreement dated 12.3.2009 between the IDBI and the said third person by name M/s. Vintage FZE (India) Pvt. Ltd the rights in respect of the said film are transferred. In the meantime three persons had put in their claim over the prints while the prints were lying with the laboratory. Today the Court is informed that the claim of M/s.T.A.Shah has been released and Counsel for the petitioners has not made further clarification as regards the other two claims. The Counsel for the respondents could not tell the court as to where the prints are. 6. It is required to be mentioned that between the petitioners and the respondent certain correspondence ensued and the details of the same are as under. 7. The print delivery date was 31.8.2007 as per the terms of the said agreement. The grace period was upto 31.10.2007. The petitioner had in terms of clause 16 option to get out of the agreement or to retain the transfer and option of -4- relinquishment was required to be exercised within 15 days from the grace period i.e. on or before 15.11.2007. Record shows that no letter was addressed by the petitioners to the respondents within 15 days i.e. before 15.11.2007 thereby indicating their intention to relinquish. Thereafter by letter dated 1.11.2008 respondents showed willingness to deliver prints upon receipt of the balance of the consideration as Rs.4 Crores were already received by the respondents. The petitioners by their letter dated 13.11.2008 again suggested to the respondents that they are willing to go ahead with the transaction. The respondents by further letter dated 21.11.2008 clarified certain matters. Thereafter by letter dated 10.12.1987 the respondents again showed willingness to deliver the prints on receipt of monies. It is at this stage the petitioners came out with the stand that they would like to terminate the agreement and they demanded return of Rs.4 Crores. This was done by letter dated 9.1.2009. Thereafter the petitioners entered into correspondence dated 27.2.2009 so as to suggest that Arbitrator should be appointed for the dispute which has arisen between the parties. -5- 8. The Counsel for the petitioners had contended that considering the facts as a whole there has been breach on the part of the respondents in the matter of performing of the said agreement and therefore the petitioners are entitled to be secured in regard to Rs.4 crores along with interest. This was sought to be pressed by placing before the Court the conduct of the respondent in as much as the respondents did not disclose to the petitioners the earlier agreement entered into with IDBI before entering into said agreement. The petitioners claim that it is only when the petitioners realised that the respondents are unable to fulfil their commitment in the agreement it had no option but to go in for arbitration to claim various reliefs and were compelled to file this petition. Counsel for the respondents contended that the petitioners had to take the decision about relinquishing the rights within fifteen days from 31.10.2007 and that not having been done, the petitioners can’t apply for Receiver as well as injunction so as to stop the release of the film. Counsel for the respondents had also submitted that now that IDBI had taken away the prints after agreement has entered into with third party, Respondents are not holding print -6- and there is no question of now respondents being stopped from releasing the film and other reliefs as sought for. 9. Counsel for the respondents contended that till 10.12.2008 respondents were willing to perform their part of the contract may be beyond the stipulated dated of 31.8.2007 and it is only thereafter i.e. in January 2009 petitioners took the decision of terminating the agreement and therefore respondents now can’t be put to terms so far as depositing Rs.4 Crores in the Court as respondents were all along ready and willing to perform their part of the contract. According to learned Counsel for the respondents the petitioners are not entitled to any relief much less relief directing these respondents to deposit monies in the Court and the question of attaching the properties of respondents does not arise. 10. I have considered the rival contentions and the provisions of Clause 16 of the said agreement which relates to the termination. On reading Clause 16(1) it is clear that if at all the petitioners wanted to get out of the suit agreement the petitioners should have issued the notice of -7- relinquishment on or before 15.11.2007. The petitioners did not issue such a notice and even showed willingness to go ahead with said agreement till December 2007. Now that third party rights are already created, may be behind the back of the petitioners, it will not be possible to grant reliefs in the nature of Receiver or injunction restraining the exhibiting of the film. 11. The correspondence disclosed above between the parties till 9.1.2009 clearly indicates that parties were willing to go ahead with the transaction and it is only on 9.1.2009 the petitioners took the decision of terminating the said agreement and they expected the respondents to repay for Rs.4 Crores and the interest thereon. 12. Keeping in view the factual aspect, as of today the case of the petitioners would get restricted to breach of the contract in regard to the said agreement and whether respondents have committed breach of the said agreement will have to be decided. 13. The next question is whether today the respondents could be directed to deposit the sum of -8- Rs.4 Crores and the interest thereon to secure the interest of the petitioners. In my view, the answer to this question is in the negative because there is nothing on record to show that the respondent would avoid payment of amount of Rs. 4 crores and interest thereon in the event of claim based against them in arbitration is granted. In my view, at this stage there is no question of passing order in the nature of attachment before the Judgement. Considering the relevant dates it appears that the petitioners and the respondents wanted to go ahead with the transaction. However, at one point of time i.e. in January 2009 when the petitioners realised that the matter has gone out of the hands of the respondents in as much as the respondents by their letter dated 10.12.2008 indicated to the petitioners about their monetary liability qua IDBI, the petitioners thought that no purpose would be served in continuing with the said agreement and therefore took the decision to terminate the agreement by letter dated 9.1.2009 was taken. There has been delay on the part of the petitioners in coming to the conclusion as regards termination of the said agreement. In fact, it is was open for the petitioners to get out of the agreement way back in the first two weeks of -9- November 2007 upon respondents not delivering prints by 31.10.2007. They waited for another one and half year and terminated the agreement in January 2009. In my view, no case is made out for the grant of relief under Section 9 of the Arbitration and Conciliation Act, 1996 and as such the application under Section 9 is required to be rejected. Hence the Order. ORDER ORDER ORDER Application is rejected. In the facts and circumstances of the case there shall be no order as to costs. (R.Y.Ganoo, J.) (R.Y.Ganoo, J.) (R.Y.Ganoo, J.)