VPH IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION PETITION NO. 161 OF 2008 Out of Home Media (I) P. Ltd. Petitioner Vs. Fun Multiplex Pvt. Ltd. Respondent Mr. T. N. Subramanian, Sr. Advocate with Mrs. P. S. Priya advocate for the petitioner. Mr. Janak Dwarkadas, Sr. Advocate i/b N. S. Fadia for the respondent. *** CORAM : D.G. KARNIK, J. DATE : APRIL 2, 2008 P.C. : 1. By this petition under section 9 of the Arbitration and Conciliation Act 1996 (for short the "Arbitration Act"), the petitioner seeks an injunction restraining the respondent from removing 131 plasma or LCD screens installations from the different multiplex premises and seeks further injunction restraining the respondent from signing or entering into agreement for installation of any plasma or LCD screens or media screens at the Multiplexes conducted by the respondent. - 2 - 2. The facts giving rise to the dispute between the parties, are that the respondent runs or manages several Multiplex Cinema Theatres all over India. In the multiplexes there are certain common areas wherein persons other than cinema viewers have an access. By an agreement dated 8th of January 2007 the respondent granted to the petitioner sole and exclusive right to display advertisements and content in such common areas by installing plasma/LCD screens. The petitioner agreed to affix minimum of 80 such screens at different locations in different multiplexes, managed by the respondent. The petitioner agreed to pay to the respondent certain charges per screen installed by it. 3. It appears that dispute arose between the parties on account of non reimbursement of service tax by the petitioner. Under the agreement, taxes are to be paid by the petitioner. Though the petitioner claimed that it was was willing to pay the service tax, the respondent had not registered itself under the Service Tax Law under an appropriate category and therefore, the service tax was not being reimbursed. On account of the non-payment of service tax the respondent, by an advocate’s notice dated 11th of March 2008, terminated the agreement dated 8th of January 2007. By the said - 3 - letter, respondent also called upon the petitioner to remove all the installations of plasma/LCD screens and threatened that in case of failure, the respondent would remove the said screens. The petitioner has therefore, approached this Court for the relief of injunction. 4. At the outset, Mr. Dwarkadas, learned senior advocate for the respondent submitted that the petitioner is not willing to refer the dispute to arbitration in accordance with the agreement and has not taken any steps for reference of the dispute to arbitration. In the circumstances, no relief should be granted to him under section 9 of the Arbitration Act. Learned counsel countering the submission stated that the petitioner is and was always willing to refer the dispute to the arbitration. He submitted that within four days hereafter the applicant would nominate his arbitrator and communicate the nomination to the respondent and the respondent may nominate his arbitrator, so that Arbitration Tribunal can be constituted. Counsel for the petitioner further submitted that in cas the petitioner did not nominate the arbitrator within four days, injunction may automatically be vacated. In view of this, the first grievance does not survive. - 4 - 5. Mr. Dwarkadas, further submitted that the agreement has been validly terminated on account of its breach by the petitioner and therefore, no injunction can be granted. He submitted that grant of injunction would amount to grant of specific performance of the agreement, which was not specifically enforceble, as damages was an adequate remedy. Hence, the injunction should be refused. 6. Clause 8.1 of the agreement states that if the petitioner failed to make payment of compensation in the manner provided in Article III, respondent shall give notice to the petitioner calling upon to make payment of the compensation in the manner provided in Article III within 30 days of the date of the notice and if the petitioner failed to make the payment within 30 days of receipt of such notice, it would be lawful for the respondent to charge interest at the rate of 12% p.a., or at its sole and absolute option to terminate the agreement. The agreement thus contemplates issuance of a demand notice of 30 days before termination. There is no evidence that the demand notice in accordance with Clause 8.1 of the agreement was issued, prior to the purported termination. In the circumstances, prima- - 5 - facie the termination is invalid and a case is made out for grant of injunction. 7. As regards the contention that the agreement is incapable of specific performance that is a matter to be decided by the arbitral tribunal. Whether damages would be an adequate remedy, is a matter to be decided by the arbitrator tribunal. It would be inappropriate to give any finding, even prima-facie, at this stage on that issue without any material in that regard available to the Court. 8. At this stage, learned counsel for the respondent submitted that respondent had already entered into contract with Laksha Digital Media Pvt. Ltd. on 25th of March 2008, and hence there is no injunction relating to the contract with Laksha Diginal Media Pvt. Ltd. can be granted. In the circumstances, the relief relating to prayer clause (a) would not operate in respect of the contract which has already been entered into prior to passing of this order. With this clarification, I pass following order. _O_R_D_E_R_ - 6 - (i) Petition is allowed in terms of prayer clauses (a) and (b), subject to condition that this injunction would not operate in respect of contract dated 25th of March 2008, already entered into by the respondent prior to grant of this relief. (ii) This interim relief would operate for a period of 12 weeks. During that period the petitioner shall be at liberty to move the arbitral tribunal for appropriate relief under section 17 of the Arbitration Act. It is clarified that arbitral tribunal is free to decide the matter without being in any way influenced by any of the observations, herein contained. Sd/- (D.G. KARNIK, J.)