Page 1 of 53 OMP No. 182/2005, 183/2005 & 184/2005 IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of decision : October 3, 2008 OMP NO. 182 of 2005 # M/s Shin Satellite Public Company Limited ......... PETITIONER ! Through: Mr. Sanjay Jain Sr. Advocate with Mr.D.Singh Advocate for Petitioner Versus $ M/s Jain Studios Limited ......... RESPONDENT Through: Mr. K.N.Bhatt Sr. Advocate with Mr. Vijay Gupta,Mrs. Geeta Goel and Mr. Ashish Gupta Advocates for the Respondent OMP NO. 183 of 2005 # M/s Shin Satellite Public Company Limited ......... PETITIONER ! Through: Mr. Sanjay Jain Sr. Advocate with Mr.D.Singh Advocate for Petitioner Versus $ M/s Jain Studios Limited ......... RESPONDENT Through: Mr. K.N.Bhatt Sr. Advocate with Mr. Vijay Gupta,Mrs. Geeta Goel and Mr. Ashish Gupta Advocates for the Respondent OMP NO. 184 of 2005 # M/s Shin Satellite Public Company Limited ......... PETITIONER ! Through: Mr. Sanjay Jain Sr. Advocate with Mr.D.Singh Advocate for Petitioner Versus $ M/s Jain Studios Limited ......... RESPONDENT Page 2 of 53 OMP No. 182/2005, 183/2005 & 184/2005 Through: Mr. K.N.Bhatt Sr. Advocate with Mr. Vijay Gupta,Mrs. Geeta Goel and Mr. Ashish Gupta Advocates for the Respondent CORAM :- * HON'BLE MR. JUSTICE ANIL KUMAR 1. Whether reporters of Local papers may be allowed YES to see the judgment? 2. To be referred to the reporter or not ? NO 3. Whether the judgment should be reported NO in the Digest? ANIL KUMAR, J. 1. This order will dispose of three petitions filed by the petitioner being OMP No. 182 of 2005, OMP No. 183 of 2005 and OMP No. 184 of 2005, under Section 9 of the Arbitration and Conciliation Act seeking appointment of receiver in respect of the respondent‟s moveable and immovable properties situated in New Delhi or elsewhere in India and an injunction against the respondent from selling, alienating, transferring possession, creating any third-party right/claim/interest and/or creating charge or dealing with in any manner whatsoever all the movable and immovable properties and in case the respondent does not comply with the orders which may be passed for appointment of receiver, to attach all the properties of the respondent. The petitioner has also prayed for a direction to the respondent to disclose his movable and immovable, tangible and Page 3 of 53 OMP No. 182/2005, 183/2005 & 184/2005 intangible assets including any encumbrance thereon and for a direction to the respondent to deposit with the Court all such sums received by the respondent from its businesses pending disposal of the arbitral proceedings. 2. The petitioner is a company registered under the laws of Thailand having its principal office in Thailand. The petitioner is engaged in the business of providing transponder services under the concessions granted by the Government of Thailand. The Petitioner has a satellite, “THAICOM 3”, which is operating in the Geo-Stationary Orbit and the transponder services are provided particularly for the purposes of broadcasting, internet and telecommunication to various firms and companies worldwide. The Petitioner is also stated to have a well-equipped teleport up-linking station to provide up-linking services to the customers and a satellite station to monitor and control its satellite in the Orbit. 3. The Respondent is a public limited company incorporated under the Companies Act, 1956 having its registered office in New Delhi and is in the business of broadcasting and other telecom services like internet services. It also owns the cable TV known as “Jain TV”. Page 4 of 53 OMP No. 182/2005, 183/2005 & 184/2005 4. The petitioner and the respondent entered into 3 agreements- (i) Internet Service Agreement No. SA-INT/09509-2000-4 dated 12th January, 2001 (IS Agreement) (ii) Transponder Service Agreement No. SA-FC-09508-99-1 dated 10th August, 1999 which agreement was amended vide Amendment Agreement No. A1-SA-FC/09508-99-1 dated 14th July, 2000 and again amended vide Amendment Agreement No. A2-SA-FC/09508-99-1, dated 16th January, 2002 (TS Agreement-I) (iii) Transponder Service Agreement No. SA-FC/09501- 2001-1 dated 5th January, 2001 which agreement was later on amended, the amended agreement No. being A1-SA-FC/09501-2001- 1, dated 16th January, 2002 (TS Agreement-II). 5. Under the IS Agreement, which was valid up to 24th January, 2004, the respondent had hired the services of the petitioner for the purpose of accessing the internet backbone by utilizing part of the transponder capacity and connectivity to the Global Internet Backbone of THAICOM-3 Satellite for a period of three years. As per the clause 3 of the IS agreement service fee was payable @ US$ 3900/Mbps and US$ 4200/Mbps with a minimum commitment of 20 Mbps per month and less than 20 Mbps respectively. 6. Under the TS Agreement-I, which was valid up to 18th September, 2002, the respondent had availed the transponder Page 5 of 53 OMP No. 182/2005, 183/2005 & 184/2005 services of the petitioner for the purposes of television/broadcasting application. As per clause 5.1.1 read with Appendix-A of the said agreement service fee was payable on a monthly basis in advance before the due date @ US$ 58,333 for using 18MHz. 7. Under the TS Agreement-II, which was valid up to 14th January, 2004, the respondent had hired the services of the petitioner for the purpose of transmitting one digital television channel through non-preemptible unprotected extended C-Band regional Beam Transponder of THAICOM-3 Satellite. As per clause 5 read with Appendix-A of the said agreement the quarterly service fee payable was US$ 196,875 and US$ 370 000 per annum for using 4.5 MHz and 9 MHz respectively. 8. The petitioner contended that despite using the services under the agreements, the respondent never paid the service fee as had been agreed and kept on promising to pay the amounts which became due under the terms of the agreements time and again. The petitioner has filed three different applications seeking appointment of receiver and injunction in respect of the properties of the respondent as the respondent failed to pay the amounts due to the petitioner in respect of above mentioned three agreements. Page 6 of 53 OMP No. 182/2005, 183/2005 & 184/2005 9. It is averred by the petitioner that after repeated communications regarding the non-payment of dues by the respondent, a meeting was held at the office of the petitioner on 17th September, 2001 where the President of the respondent company lamented about his poor financial condition. The petitioner made a proposal to the respondent during the meeting which the President of the respondent company agreed to discuss with his associates and revert by 21st September, 2001. However the President of the respondent intimated the President of the Petitioner, by communication dated 19th September, 2001, about the problems confronting the respondent on account of non-availability of the support of Banks and Financial Institutions and requested the petitioner to restructure the payment schedule and proposed to review the situation on 2nd October, 2001. Since the petitioner had already extended several relaxations and could not suffer any further loss on account of the respondent, by an e-mail dated 21st September, 2001, the petitioner reminded the President of the respondent that he was to revert by 21st September, 2001 on the proposal made by the petitioner and warned that they may have to suspend its services to the respondent in case no response is received from the respondent by 5.00 pm on 21st September, 2001. Page 7 of 53 OMP No. 182/2005, 183/2005 & 184/2005 10. The president of the Respondent vide his fax dated 21st September, 2001 agreed that a monthly payment of US$ 58333 would be made starting from the month of October 2001 till the month of December 2001 which would be revised to US$ 100000 per month thereafter. It was stated by the petitioner that the respondent again sent an e-mail dated 23rd January, 2002 acknowledging the payment scheduled agreed between them on 17th September, 2001. However in the said e-mail the respondent also expressed its inability to make payment of US$ 100000 per month with effect from January 2002. It is asserted by the petitioner that the President of the respondent had intimated to the Chief Financial Officer of the petitioner by communication dated 9th July, 2002 that the petitioner was rightly interested in recovery of all its outstanding dues and referring to the last visit of the President of the respondent, it was reiterated that the respondent would start clearing the dues on regular basis and would also reduce its transponder utilization by going digital and efforts would be made to increase the utilization of its teleport by up-linking more THAICOM-3 customers and will use the proceeds to clear backlog of petitioner‟s payment. 11. Since the respondent failed to make the payments, the petitioner by a letter dated 11th July, 2002 communicated to the respondent that the outstanding dues of the respondent in respect of Page 8 of 53 OMP No. 182/2005, 183/2005 & 184/2005 all the three agreements aggregated to US$ 571215.75 and that if the same was not paid by 12.00 clock (Bangkok time) on Friday, 12th July, 2002 the petitioner would be left with no alternative but to suspend the services of the respondent. Since the payment was not made within the stipulated time, the petitioner by a letter dated 17th July, 2002 terminated all the three agreements entered with the respondents and intimated that the outstanding dues on account of all the three services amounted to US$ 729,870.25 on the said date. 12. Petitioner has alleged that despite the termination of all the agreements the respondent illegally continued up-linking its signal to the petitioner‟s satellite forcing the petitioner to file a petition under Section 9 of the Arbitration and Conciliation Act, 1996 being OMP NO.102/2003 seeking restraint against the respondent from transmitting any signal to any transponder of THAICOM-3 Satellite. During the course of hearing of the said petition, the learned counsel for the respondent made a statement on instructions from the General Manager (Commercial) of the respondent that the respondent is no longer using the transponders of the petitioner and shall not use the same in future. In view of the above-said statement of the learned counsel for the respondent, the petition was disposed of. Page 9 of 53 OMP No. 182/2005, 183/2005 & 184/2005 13. The petitioner has contended that the respondent has failed to pay the amounts, which had become due from respondent, despite several notices being sent by the petitioner to the respondent. In the circumstances, the petitioner has also claimed late payment charges on the outstanding dues from 17th July, 2002 @ 1.5% per month as per clause 3 of all the three agreements. The petitioner has also claimed that the respondent is also liable to pay 50% of the unpaid service fees as per clause 14.2 of the TS Agreement-II. It is further asserted by the petitioner that as per the terms of the three agreements, since there is a breach on the part of the respondent, the respondent is also liable to pay other damages incurred by the petitioner. 14. On the failure of the respondent to pay the dues, a notice under Section 434 of the Companies Act, 1956 was also given by the petitioner, dated 7th June, 2004 calling upon the respondent to pay US$ 213,182.30 due under the IS Agreement, US$ 443,382.50 due under the TS agreement-I and US$ 71,640.62 under the TS Agreement-II. 15. The petitioner has averred that a very cryptic reply was received to the said notice stating that no amount is due from respondent to the petitioner and therefore, the petitioner was forced to invoke the Page 10 of 53 OMP No. 182/2005, 183/2005 & 184/2005 arbitration clauses in the respective agreements (clause 14 of IS Agreement, clause 23 of TS Agreement-I and clause 22 of the TS Agreement-II) vide letters dated 9th September, 2004. 16. An Arbitral Tribunal comprising of the Former Chief Justice of India, Mr. Justice R. S. Pathak (Retd.), Former Chief Justice Mr. Justice M.L. Pandse (Retd.) and Hon‟ble Mr. Justice Sat Pal Arora (Retd.) has been constituted to resolve the disputes between the parties arising out of the IS Agreement and the preliminary hearing took place on 30th April, 2005 in London. Another Arbitral Tribunal comprising of Former Chief Justice of India Mr. Justice R.S. Pathak (Rtd.), the Presiding Arbitrator/Chairman, Former Chief Justice Mr. M.L.Pendse (Rtd.) and Mr. Justice Sat Pal Arora (Retd.) was constituted to resolve the disputes arising out of the TS Agreement-II and the hearing was fixed for the 5th and 6th February, 2005 in Singapore. 17. The petitioner has further averred that the respondent admitted his precarious financial position by their letter dated 2nd February, 2005 and showed unwillingness to attend the arbitration proceedings in Singapore. It is further averred that during the preliminary meeting on 5th February, 2005 the Tribunal had asked the petitioner to bear the entire expenses of the said meeting and directed the respondent to Page 11 of 53 OMP No. 182/2005, 183/2005 & 184/2005 reimburse 50% of the total expenses incurred by the petitioner towards the said meeting. Even though the petitioner had called upon the respondent by letter dated 21st March, 2005 to pay a sum of Rs. 1, 26,369.66, being half of the amount of Rs. 2, 52,739.33, which is the total expenses incurred by the petitioner in arranging the preliminary meeting in Singapore, the respondent has failed to pay the said amount. 18. As far as the TS Agreement-I is concerned it is averred that though the petitioner had served upon the respondent a notice of demand for arbitration vide letter dated 9th September, 2004 and intimated the respondent about its intention to nominate the former Judge, Bombay High Court and the former Chief Justice, Karnataka High Court Mr. Justice M.L. Pendse as their arbitrator, the respondent has refused to appoint an arbitrator. It is submitted that since the respondent failed to appoint its arbitrator, the petitioner filed an Arbitration Application No. 1/2005 in the Hon‟ble Supreme Court of India under Section 11(6) of the Arbitration and Conciliation Act, 1996 and that the same was allowed by the Supreme Court of India on 31st January, 2006. 19. Petitioner's plea is that the respondent never had any intention whatsoever from the commencement of services under the three Page 12 of 53 OMP No. 182/2005, 183/2005 & 184/2005 agreements to pay the outstanding dues. The petitioner has further contended that he has a claim of US$ 351831.77 under the IS Agreement; US$1378141.40 under the TS Agreement-I and US$ 243676.56 under the TS Agreement-II till 28th February, 2005 and that the respondent is also liable to pay 18% interest per annum on the outstanding bills from 1st March, 2005. The petitioner has asserted that they seriously apprehend that the respondent in order to defeat and defraud the petitioner will sell, transfer, dispose of or create third-party rights in respect of its properties situated at New Delhi or elsewhere in India thereby making the arbitration awards which will be passed in favor of petitioner non-executable and they will become paper decrees. The petitioner also contended that there are serious disputes between the respondent and the other creditors and in the circumstances the respondent may even go in liquidation. 20. In the circumstances, the petitioner has prayed for appointment of court receiver since the respondent‟s financial position is precarious and the respondent is likely to sell, dispose of its properties. The petitioner has also prayed that the respondent be restrained from selling, assigning and entering, transferring possession, letting out, creating third-party rights or creating charge or dealing in any manner with movable and immovable properties in New Delhi or elsewhere in India. Page 13 of 53 OMP No. 182/2005, 183/2005 & 184/2005 21. The petitioner has also prayed that the respondent be directed to deposit US$ 351831.77 in OMP No. 182 of 2005; US$1378141.40 in OMP No. 183 of 2005 and US$ 243676.56 in OMP No. 184 of 2005 along with interest @ 18% per annum from 1st March, 2005 till the date of realization or to furnish security to the satisfaction of the Court for the above said amounts. In the circumstances, petitioner has also prayed that grave and irreparable loss, harm and injury will be caused to the petitioner in case the reliefs as prayed by the petitioner are not granted and the loss which will be caused to the petitioner cannot be compensated in terms of money and therefore, it is averred that the balance of convenience is in favor of petitioner. 22. The petitions are contested by the respondent contending, inter alia, that the grant of an order of injunction, attachment or appointment of a receiver is not justified on the basis of averments made in the petition. Relying on Section 2 (2) of the Arbitration and Conciliation Act, 1996, it was contended that the Courts at Delhi has no jurisdiction to entertain the petitions - OMP No. 182 of 2005 and OMP No. 184 of 2005, as the place of arbitration in the above mentioned cases is at London and Singapore respectively and an application under Section 9 of the Arbitration and Conciliation Act can be made only if the place of arbitration is in India. The respondent Page 14 of 53 OMP No. 182/2005, 183/2005 & 184/2005 also pleaded that principle governing the grant of any interim protection under the English Law has to be resorted to as the parties agreed in the contract that the arbitration will be subject to English Laws and, therefore, Indian Law has no applicability to the present dispute. In OMP No. 183 of 2005 the respondent contended that the arbitration clause contained in TS Agreement I is invalid as it ousts the jurisdiction of Indian Courts to the challenge of any award. The respondent has also contested the petitions on the ground that the petitioner has not exhausted his remedy under Section 17 of the Act and has wrongly and maliciously chosen to file the present petitions. The respondent also contended that the disputes referred for arbitration are without any merit and the respondent has filed a counter claim and is hopeful of succeeding in its counter claim. 23. The respondent also pleaded that petitioner is trying to frame the respondent for the second time as earlier also OMP No.102/2003 was filed and considering the facts and circumstances there are no fresh circumstances warranting any petition under Section 9 of the Act. It was contended on behalf of the respondent that it is a widely held public listed company with over 10000 shareholders, listed in 7 stock exchanges including the National and Bombay Stock Exchanges and it has over 150 employees and a dealer network of over 1000 entrepreneurs. Relying on its audited balance sheet, it is stated that Page 15 of 53 OMP No. 182/2005, 183/2005 & 184/2005 its sales are over 44 crores whereas the current liabilities of the company are merely 9 crores and the company had declared operating profits as on 31st March, 2005 of 1.26 crore and holds investments of around 3.6 crore. 24. The respondent further contended that the petitioner has not been able to make out a prima facie case against respondent and the alleged apprehension shown by the petitioner about the respondent‟s selling or disposing of all properties are baseless and irresponsible. It was stated that the allegation made by the petitioner are factually incorrect and no basis for the allegations have been disclosed. In the circumstances the respondent stated that the balance of convenience is in favor of respondent. It was also contended that the respondent has not used the service as envisaged under TS Agreement-II and that the petitioner had failed to deliver the commercially acceptable quality of service as promised under the IS Agreement and TS Agreement-I and that the petitioner has failed to adduce any evidence to substantiate their claims under the said agreements. It is also contended that the petitioner has claimed US$ 343676 as outstanding dues under the TS Agreement-II in the arbitral proceedings in Singapore, whereas, in OMP No.184 of 2005 the amount claimed is US$ 243676 and that the inconsistency reflects lack of bona fide on behalf of the petitioner. Page 16 of 53 OMP No. 182/2005, 183/2005 & 184/2005 25. The respondent has further averred that as per the terms of the agreements, the place for arbitration in respect of disputes arising out of IS Agreement is London; in respect of TS Agreement-I, it is New Delhi and in respect of TS Agreement-II it is Singapore. The respondent has pleaded that it has all along been requesting the petitioner to have all the disputes arising out of the three agreements to be settled by the same set of arbitrators in India, as the three agreements relate to identical transactions with no major difference as far as dispute resolution is concerned. In the circumstances it is alleged that due to the unreasonable attitude adopted by the petitioner, the same arbitrators and their lawyers travel to Singapore and come back and then again travel to London and this involves enormous expenditure which is avoidable and unnecessary. It is contended that this unreasonable attitude of the petitioner is a relevant consideration for refusing any assistance in the form of injunction to the petitioner. 26. The petitions were filed by the petitioner in May, 2005 and by an ex-parte order dated 23rd May, 2005 the respondent was restrained from selling, alienating or parting with possession of his moveable as well as immoveable properties. The petitioner filed rejoinder denying the allegations made by the respondent and contended that the ex Page 17 of 53 OMP No. 182/2005, 183/2005 & 184/2005 parte order dated 23rd May, 2005 restraining the respondent from selling, alienating or parting with possession of the moveable and immovable properties belonging the respondent is liable to be confirmed. Relying on Section 9, it was contended that it is applicable to international arbitrations and the arbitrations held outside India and therefore, it has been contended that the Court in India has jurisdiction. Refuting the alleged counter claim, it is contended that counter claim is being raised for the first time in the present proceedings and the respondent has not acted in the letter and spirit of the agreement and has even failed to pay the arbitration expenses. 27. I have heard the learned counsel for the parties in detail on two occasions. The counsel for the petitioner had also sought time once to take instructions regarding giving up the prayers regarding appointment of receiver and attachment of all the properties of the respondent. Thereafter an additional affidavit of the authorized representative of the respondent company dated 6th September, 2005 was filed deposing that the TDS liability of the respondent company as on 20.12.2004 was Rs.16,07,887/- as per the Income Tax department and part of the dues had been cleared and after adjustment of the amount to be refunded the liability is Rs.8,21,224/- only. It was also stated that the market capitalization of the respondent company is Rs.32.53 crores as on 5th August, 2005. A copy of the certificate of the Page 18 of 53 OMP No. 182/2005, 183/2005 & 184/2005 Chartered Accountant has also been filed showing the status of assets and liabilities. 28. During the arguments by the parties, another additional affidavit was filed by the authorized representative of the respondent dated 2nd November, 2007 contending that the respondent company has made payments of not less than US$ 1.4 million (Rs.6.5 crores at the prevailing currency exchange rates) to the petitioner in the course of its business for using his services. A certificate of Chartered Accountant in this regard was also filed by the respondent. The respondent disclosed its networth at Rs.36.40 crores as on 31st March, 2007 and its assets as per the audited balance sheet of Rs.63.72 crores on the said date. The respondent also disclosed that it is listed on National Stock Exchange and Bombay Stock Exchange and five other stock exchanges in India and its market capitalization as on 9th October, 2007 was Rs.30.28 crores. The respondent also disclosed its profit