TMI Blog2012 (2) TMI 624X X X X Extracts X X X X X X X X Extracts X X X X ..... glish. Clause 6 of the agreement sets out a Media Rights Fee payable to the First Respondent by the Second Respondent, while clause 7 spells out the installments for making payment. HELD THAT:- We are of the view that the learned Single Judge was justified in calling upon the First Respondent to furnish security in respect of the claim of the Petitioner in the amount of ₹ 305 Crores. Having regard to the provisions of Order 38, Rule 5, it would, however, be appropriate to direct the First Respondent to furnish security. Also, for the ends of justice could be met by a direction to the effect that the First Respondent shall within a period of two weeks from today furnish solvent security in the form of a bank guarantee of a nationalised bank in the amount of ₹ 305 Crores to the satisfaction of the Prothonotary and Senior Master. Order 38, Rule 5 C.P.C. cannot be read into the said provision as it is nor can power of the Court in passing an order of interim measure under section 9(ii)(b) be made subject to the stringent provision of Order 38, Rule 5. The power of the Court in passing the protection order to secure the amount in dispute in the arbitration before or d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es for every match, be it a one day international, a test match or a 20/20 international match. The payment terms inter alia stipulated as follows : Licensee specifically acknowledges that Licensor is in negotiations with the ICC and the Cricket Boards of various countries to finalise the Future Tours Programme ( FTP ) for all bilateral cricket tours by the Indian National Team from April 2010 onwards and changes are likely to take place in the above schedule of Matches. To the extent any series or Match/ Matches is/are either increased or reduced in any year during the Rights Period, the Rights Fee payable will be pro rata increased for the extra series or Match/Matches, as the case may be, or decreased to the extent of the series or Match/Matches reduced, as the case may be, based on the Per Match Value stated above for all the series or Matches as included in the schedule below or New series scheduled by Licensor. It being understood and agreed by licensee that if Licensor decides to schedule a Tri series the amount paid per match will remain as per the Per match Value defined above. ( 4. ) Under clause 7.2 the rights fee was to be paid by the licensee, the First Respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , broadcast rights for the territory to the events taking place during the term subject to the conditions set out in the agreement. The broadcast rights granted to the Second Respondent comprised solely of the exclusive right to broadcast the event in the territory by means of television rights with a commentary in English. Clause 6 of the agreement sets out a Media Rights Fee payable to the First Respondent by the Second Respondent, while clause 7 spells out the installments for making payment. ( 7. ) There is no dispute about the fact that payments which were due and payable by the First Respondent to the Petitioner in 2010 11 in respect of the series against Australia and New Zealand were duly paid. The schedule of matches for 2011 12 included a series each against England and West Indies. For the series against England an amount of ₹ 103.40 Crores was due and payable towards the second installment on 29 December 2011, which has not been paid. In respect of the series against West Indies, an amount of ₹ 63.78 Crores was due and payable on 6 October 2011 towards the first installment and an amount of ₹ 137.87 Crores was due and payable against the second inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard therein, the respondents shall deposit all monies which they have already received from the advertisers as consideration for broadcast of advertisements on the television channel/s owned and operated by the respondents in relation to the 2011 cricket series under the MRLA in this Court. (ii) Pending the hearing and final disposal of the arbitration proceedings and the implementation of the award therein, the respondents shall call upon the advertisers, listed in Exhibit T to the petition to deposit the amount owed by them to the respondents or either one of them towards consideration for broadcast of advertisements on the television channel/s owned and operated by the respondents in relation to the 2011 cricket series under the MRLA in this Court. (iii) The respondents shall disclose the amounts already received and/or receivable from each of the advertisers listed in Exhibit T to the petition, towards consideration for broadcast of advertisements on the television channel/s owned and operated by the respondents in relation to the 2011 cricket series. (iv) The 1st respondent shall, within four weeks from today, furnish security by depositing in this Court, a sum of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that the broadcast business which is being conducted by the Second Respondent is the business of the First Respondent; (vi) The Petitioner is no longer secured by the bank guarantees because the banks have refused to pay; (vii) There is an admission of liability contained in the balance sheet of the First Respondent as of 31 March 2010; (viii) The Second Respondent being a wholly owned subsidiary of the First Respondent, the shareholding of the Second Respondent constitutes a valuable asset of the First Respondent. In that view of the matter, the Second Respondent being a separate entity would make no difference. On these findings, the learned Single Judge directed the Respondents to deposit all amounts which may have been received from the advertisers and which may be received hereafter in Court to secure the claim in arbitration. The First Respondent has been directed to furnish security in the amount of ₹ 305 Crores by a deposit in Court. The learned Single Judge has clarified that the order would operate only to the extent of an aggregate amount of ₹ 305 Crores. Moreover, if the First Respondent complies with the direction to furnish security in the amount of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07 7 SCC 125. (ii) The entire basis on which relief has been sought under Section 9(ii)(b) as spelt out in paragraph 9 of the arbitration petition is on the hypothesis that the First Respondent may secrete monies receivable from the advertisers in order to obstruct or delay the execution of the dues of the petitioner. The First Respondent, it has been urged, has stated on an affidavit and reiterates before the Court that no amount is due and receivable from advertisers by the First Respondent and hence the basis on which relief has been sought under Section 9 is not existent. Except for this circumstance, no case has been made out for the grant of any order on principles analogous to those set out in Order 38 Rule 5; and (iii)The First Respondent has a substantial defence to urge as against the claim of the Petitioner on the following grounds : (a) The scheme of payment in the Media Rights Licensing Agreement contemplated that a series between India and Pakistan would be held in 2011 12 which did not take place; (b) In breach of the representations and warranties made by the petitioner to the First Respondent in clause 9 of the agreement the best possible team was not s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arty to apply to the Court either before or during the arbitral proceedings or at any time after the making of an award but before it is enforced in accordance with Section 36. Clause (ii) enables a party to seek an interim measure of protection in respect of the following matters : (a) the preservation, interim custody or sale of any goods which are the subject matter of the arbitration agreement; (b) securing the amount in dispute in the arbitration; (c) the detention, preservation or inspection of any property or thing which is the subject matter of the dispute in arbitration, or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorising any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence; (d) interim injunction or the appointment of a receiver; (e) such other interim measure of protection as may appear to the Court to be just and convenient, and the Court shall have the same power for making orders as it has for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue before the Court was whether the power exercisable by the Court under Section 9(ii)(b) of passing an interim measure for securing the amount in dispute in the arbitration was restricted by the conditions of attachment before judgment as prescribed under Order 38 Rule 5. Mr. Justice R.M. Lodha (as the Learned Judge then was) speaking for the Division Bench held that as a principle of law a special provision of the nature embodied in Section 9(ii)(b) cannot be restricted by importing the provisions of Order 38 Rule 5. The Division Bench held that though the power under Section 9(ii)(b) has not been made subject to the stringent provisions of Order 38 Rule 5, the exercise of the power is guided by the paramount consideration that the claimant who obtains an award in his favour before the arbitrator ultimately is able to derive the fruits of the adjudication in executing the award. The Division Bench held as follows : The order under section 9(ii)(b) is in the nature of interim protection order. In a special provision of the nature like section 9(ii)(b), we are afraid, exercise of power cannot be restricted by importing the provisions of Order 38, Rule 5 of the Code of Civil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The party seeking protection order under section 9(ii)(b) ordinarily must place some material before the Court, besides the merits of the claim that order under section 9(ii)(b) is eminently needed to be passed as there is likelihood or an attempt to defeat the Award, though as indicated above, the provisions of Order 38, Rule 5 C.P.C. are not required to be satisfied. The statutory discretion given to the Court under section 9(ii)(b) must be exercised judicially in accordance with established legal principles and having regard only to relevant considerations. In our view, this is the proper approach for consideration of the application for interim relief under section 9(ii)(b) and we hold that the provisions of Order 38, Rule 5 of the Code of Civil Procedure cannot be read as it is and imported in section 9 of the Act of 1996. We also hod without hesitation that the Court is competent to pass an appropriate protection order of interim measure as provided under section 9(ii)(b) outside the provisions of Order 38, Rule 5 Code of Civil Procedure. Each case under section 9(ii)(b) of the Act of 1996 has to be considered in its own facts and circumstances and on the principles of equi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sider it fit to enquire into the issue of the balance of convenience. Before the Supreme Court it was urged on behalf of the appellant that Section 9 was independent of Order 39 of the Code of Civil Procedure 1908 and the exercise of the power was not subject to the provisions contained in the Specific Relief Act. The Supreme Court dealt with the submission in the following terms : The grant of an interim prohibitory injunction or an interim mandatory injunction are governed by well known rules and it is difficult to imagine that the legislature while enacting Section 9 of the Act intended to make a provision which was de hors the accepted principles that governed the grant of an interim injunction. Same is the position regarding the appointment of a receiver since the Section itself brings in, the concept of 'just and convenient' while speaking of passing any interim measure of protection. The concluding words of the Section, and the court shall have the same power for making orders as it has for the purpose and in relation to any proceedings before it also suggest that the normal rules that govern the court in the grant of interim orders is not sought to be jettison ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eparable injury in deciding whether it would be just and convenient to grant an order of injunction. Section 9, specifically provides in sub clause (d) of clause (ii) for the grant of an interim injunction or the appointment of a receiver. As regards sub clause (b) of clause (ii) the interim measure of protection is to secure the amount in dispute in the arbitration. The underlying object of Order 38 Rule 5 is to confer upon the Court an enabling power to require a defendant to provide security of an extent and value as may be sufficient to satisfy the decree that may be passed in favour of the plaintiff. The exercise of the power to order that security should be furnished is, however, pre conditioned by the requirement of the satisfaction of the Court that the defendant is about to alienate the property or remove it beyond the limits of the Court with an intent to obstruct or delay execution of the decree that may be passed against him. In view of the decisions of the Supreme Court both in Arvind Constructions and Adhunik Steels, it would not be possible to subscribe to the position that the power to grant an interim measure of protection under Section 9(ii)(b) is completely indep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 9 requiring the respondent to furnish security and the basic consideration is that the Court should be satisfied that the furnishing of security is essential to safeguard the interest of the petitioner. ( 24. ) A close reading of the judgment of the Supreme Court in Adhunik Steels would indicate that while the Court held that the basic principles governing the grant of interim injunction would stand attracted to a petition under Section 9, the Court was of the view that the power under Section 9 is not totally independent of those principles. In other words, the power which is exercised by the Court under Section 9 is guided by the underlying principles which govern the exercise of an analogous power in the Code of Civil Procedure 1908. The exercise of the power under Section 9 cannot be totally independent of those principles. At the same time, the Court when it decides a petition under Section 9 must have due regard to the underlying purpose of the conferment of the power upon the Court which is to promote the efficacy of arbitration as a form of dispute resolution. Just as on the one hand the exercise of the power under Section 9 cannot be carried out in an unchart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject to the ICC future tours programmes commitments, the Petitioner shall procure the strongest possible Indian player representation in each bilateral BCCI event and use its best endeavours to procure the strongest possible international player representation in such events. Prima facie, the contractual stipulation does not and cannot be read to interfere with the selection of the Indian Cricket Team. The presence or absence of a particular player or of players cannot furnish the First Respondent a reason not to pay its dues. The defence which is now sought to be raised appears to be a feeble attempt not to comply with the contractual obligation to pay. The addendum to the original agreement dated 22 August 2011 similarly stipulated that the value of a bank guarantee provided by the licensee would stand reduced at the commencement of each year of the rights period or after written confirmation from the licensor of the cancellation of any matches whichever was later. The Indo Pak series was proposed to be held in March 2012. The termination in the present case took place on 12 December 2011, prima facie, prior to the date on which a reduction in the value of the bank guarantee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel appearing on behalf of the Second Respondent has stated before the Court that at present 89% of the share holding of the Second Respondent is held by the First Respondent directly or directly. The averments in the petition are to the effect that since 2005, the First Respondent has entirely invested into Indian cricket / BCCI events; the broadcast business is almost completely dependent on media rights from BCCI; the most valuable asset of the business of the Second Respondent is the Media Rights Licensing Agreement and if the termination were not to be stayed, it would result in the closure of the business of the Second Respondent. The First Respondent has also stated that the entire business of its fully owned subsidiary, the Second Respondent, would be destroyed if the termination were allowed to stand. Hence, in the account of the business by the First Respondent itself, it is evident prima facie that the media rights from BCCI constitute the fulcrum of the business. The termination of that business, even according to the First Respondent, would lead to the closure of the Second Respondent, its subsidiary. The shareholding of the First Respondent in the Second Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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