The petitioner had filed an arbitration case before the Delhi High Court praying for an injunction restraining order to be passed from delivering content to platforms other than the petitioner’s and direct the respondent to refund the advance consideration amount paid in regards to the agreement.
Issue Before the Court
- Whether a contract is necessary to be signed by both parties to be valid and legally binding?
- Is the right to air programs substitutable to any third party?
Facts of the case
The case was based on an agreement that includes delivering programs, i.e., three shows on the petitioner’s platform. On 18th March 2020, an agreement took place between the petitioner and the respondent during the uncertain time of the Covid pandemic and it was duly signed by the respondent only. However, the petitioner paid the advance consideration amount as stated in the agreement. Also, the petitioner suggested several amendments and proposals. The petitioner on 19th January 2021 contended that the principal understanding as per the agreement stood concluded and for this claim, the petitioner relied on the paid advance consideration amount and communication between both the parties regarding the timelines and schedules of delivering the programs through email on 17th July 2020. Moreover, denying the existence of any concluded contract between the parties the respondent pointed out that the terms of the agreement kept being negotiated and the petitioner did not forward back any signed agreement to the petitioner. Respondent thus denied any obligation to the petitioner and chose to walk away from the deal and return the paid amount to the petitioner.
Arguments by the Petitioner
1. The respondent’s contention that there was no valid contract between the parties was not correct and the petitioner relied on emails by the respondents to the petitioner that confirms the understanding between the parties regarding the broadcast of the programs on the petitioner’s platform.
2. The inability to sign the principal agreement dated 18th March 2020 was due to circumstances beyond control.
3. The petitioner and respondent performed activities following the terms of the Agreement and such performances make the contract concluded and legally binding. The performances as argued in the court are-
- The respondent raised the invoice after signing the agreement adhering to which the petitioner paid advance consideration of US $2,00,000 to the respondent.
- Respondent agreed to the adjustments proposed by the Petitioner.
- The respondent through emails had logged the shows with the petitioner’s platform. Thus, the contractual right was enforceable in the favour of the petitioner.
- The discussion between the parties regarding the amendment of the agreement indicated the existence of a concluded contract.
- As submitted by Mr Sibal, learned counsel of the petitioner, a contract to be legal and valid needs to be required to be signed by all the parties. The learned counsel relied on the judgment of the Queens Division Bench of High Court of U.K. in Reveille Independent LLC v. Anotech International (UK) Limited.
4. In regards to Section 9 of the Arbitration and Conciliation Act, 1996, an arbitrable dispute arises between the parties for interim protection as the content of the program to be aired by the respondent is not substitutable and the right to air if granted to a third party then it will cause an irreparable loss to the petitioner.
5. According to Section 14 (d) of the Specific Relief Act the contract which in its nature determinable is excluded from the scope of enforcement.
Arguments by the Respondent
- Despite repeated emails asking for the signing of the agreement, the contract was not signed back and returned to the respondent.
- The communication exchanged through emails indicated that there was an unwillingness on the part of the petitioner to abide by the covenants of the contract originally forwarded by the respondent. Moreover, the petitioner proposed various amendments and conveyed a desire to alter various aspects. Thus, considering the covenants of the Agreement, no consensus ad idem was there between the parties.
- The respondent raised an invoice after signing the agreements and the invoice remained unpaid. The learned counsel adhered to the principle that a party in breach of a contract cannot seek any specific performance.
- A contract that contains the “termination for default” clause is “in its nature determinable” as per Section 14 (d) of the Specific Relief Act, 1963 and accordingly, not enforceable. Also, the counsel adhered to Section 41 (d) of the same Act which prohibits the court from granting an injunction to enforcement of such contract.
- The agreement dated 18th March 2020 was signed by the respondent and at any point in time the countersigned agreement was not forwarded by the petitioner. Therefore, considering the absence of a duly signed contract by both parties, no contract was enforceable in law and there was no concluded contract.
- The petitioner suggested three changes to the original agreement and the respondent did not show any interest in agreeing to those amendments.
- The agreement was not executed as per the terms and a 30% minimum guarantee has not been paid till the filing date of the case. Thus, the interim protection by the court cannot be granted.
- It was clear from the emails that the petitioner at one point felt no possibility of travelling the contractual path further with the respondent since the petitioner proposed many amendments and the respondent was not amenable to agree to those changes. Hence the decision to walk away from the agreement was one of the alternatives consciously proposed by the petitioner only. The respondent thus exercised the option of walking away from the agreement and returning the deposited amount in this regard to the agreement.
- The legal position is against the petitioner.
There was no concluded and enforceable contract with the petitioner and hence no relief was granted to the petitioner. The respondent can contract with any other party to broadcast their programs. The parties are at liberty to seek a resolution by arbitration and the Arbitral Tribunal would not be bound by this judgment.
Click here to read the judgment.
Libertatem.in is now on Telegram. Follow us for regular legal updates and judgment from courts. Follow us on Google News, Instagram, LinkedIn, Facebook & Twitter. You can subscribe to our Weekly Email Updates. You can also contribute stories like this and help us spread awareness for a better society. Submit Your Post Now.