TELECOM DISPUTES SETTLEMENT
& APPELLATE TRIBUNAL
Dated 27th
July, 2010
Petition
No.220(C) of 2010
Viacom 18 Media Private Ltd., Mumbai …Petitioner
Vs.
MSM Discovery Pvt. Ltd., Mumbai …Respondent
BEFORE:
HON’BLE MR. JUSTICE S.B.SINHA, CHAIRPERSON
HON’BLE MR. G. D. GAIHA, MEMBER
HON’BLE MR. P.K. RASTOGI, MEMBER
|
For Petitioner |
: |
Mr.Mukul
Rohtagi, Sr.Advocate Mr.Arun
Kathpalia, Advocate Mr.
Navin Chawla, Advocate Mr.Ameet
Naik, Advocate Mr. Rishi Agrawala, Advocate Mr.Nikhil Rohtagi, Advocate |
|
For Respondent |
: |
Mr.Ramji
Srinivasan, Sr.Advocate Mr.Gopal
Jain, Advocate Mr.Kaushik
Mishra, Advocate Mr.Zeyaul
Haque, Advocate Mr.Ankur Sood, Advocate |
ORDER
This case
raises an interesting question in regard to jurisdiction of this Tribunal to
grant an order of injunction in the peculiar facts and circumstances of this
case.
The
petitioner is a broadcaster. The
respondent is an aggregator of channels.
The parties hereto had entered into an agreement in respect of the
distribution of the television channels, namely, MTV, Colors and (hereinafter
called for the sake of brevity “the channels”)
with the respondents herein.
Prior thereto also the respondents had been distributing the channels of
some of the channels of the petitioner.
We are
really not concerned therewith.
The parties
for the aforementioned purpose entered into a Memorandum of Understanding on or
about 11.02.2009. The tenure of the
agreement was three years. The parties
had mutually agreed upon, inter alia, for transmission of existing channels in
the entire
In terms of
the said agreement the petitioner was to receive a sum of Rs.125 crores within
the aforementioned period in the following terms:-
“(a) Year 1-
INR 36,00,00,00/- (Rupees Thirty
Six Crores Only)
(b) Year
2- INR 42,00,00.000/- (Rupees Forty Two
Crores Only)
(c) Year 3- INR 47,00,00,000/- (Rupees Forty Seven Crores only)”
“VII. Overflow and Revenue Share for Digital
Platform
MSMD acknowledges that the amounts mentioned in VI.(2)
above are minimum payments to Viocom 18 and MSMD shall use reasonable
commercial endeavour to achieve higher revenue for the V18 Channels from the Digital Platforms that carry the V18 Channels.
The percentage of the additional revenue MSMD shall share with Viacom 18 in excess of the MG
for the V18 Channels carried on
Digital Platforms (hereinafter referred to as the "Overflow") will be
as follows:
I. Overflow
In case the collected revenue (other than for the
purposes of MG and Fixed Fee) for the V18 Channels from Digital Platform of MSMD exceeds INR 195,00,00,000/-
(Rupees One Hundred Ninety Five Crores Only) for the Term, then MSMD shall pay Viacom 18, 70% of such excess revenue within 60 days from expiry of the Term.
II. Revenue Share
Viacom 18's share
of the total revenue of
MSMD from the Digital Platform shall be computed as per the following formula in each of the given scenarios:
(1) revenue would be shared amongst the channels in
all the TOA bouquets based on their percentage allocation
which shall be in the ratio of
their a-la- carte pricing for DTH platform
as specified in Annexure-A hereto. "Rate of the Channel as specified in
Annexure-A divided by the summation of the ala carte rates of all the TOA
Channels multiplied by 100". This shall be applicable only in cases wherein agreements with
such digital platforms have
been entered into or renewed post execution of this MOU.
Illustration: If a distributor operating a Digital Platform
subscribes for all the TOA channels wherein Rs.83.49/- is the summation of the
a la carte DTH prices of all the TOA Channels, then the
total of the Base Tariff of the V18 Channels MTV, Nick, Vhl and Colors shall be Rs.19.27 and the percentage Share of
the V18 Channels as per the formula would be (Rs.19.27/Rs.83.49)*100=23.08%
(2) For Digital Platforms with whom MSMD has
subsisting agreements as on the date of execution of these presents, the introduction of the New Channel shall form a separate and distinct subject matter
of commercial understanding to be
entered into with such platforms by way
of an
Addendum to existing agreements
and any revenue arising as a result thereof shall
be allocated to Viacom 18
completely. For Existing Channels on
such Digital Platforms, the
revenue sharing shall continue to be in terms of the proportion that the
summation of a la carte rates of such Existing Channels bears to the summation of the ala carte rates of all the TOA Channels excluding the New Channel.
(3) For Digital
Platform that avail some but not
all of the TOA Channels as a
'bundle'/'tiers' comprising of some of the V18 Channels and/or where such
TOA channels form part of different 'tiers' on the Digital
Platform, the revenue sharing shall be in terms of the proportion that the summation of the a la carte rates of the
V18 Channels bears to the summation of the ala carte rates of the TOA
Channels comprising the respective
'bundle'/'tiers'.
Illustration: In the event four of the TOA Channels
being SET, MAX, MTV and Colors are offered to subscriber and a ‘bundle’ by a
DTH Operator, by applying the formula the percentage allocation for the V18
Channels being MTV and Colors of the Revenue from the DTH Operator shall be
42.18%.
(4) In the
event a Digital Platform avails the V18 Channels on a la carte, the revenue
arising therefrom shall be the product of the subscriber base of that
particular channel(s) and the corresponding respective a la carte rate(s) of
such channel(s) charged by MSMD.”
“IX. Packaging of the V18 Channels
1. The V18 Channels shall be part of the existing
Bouquet-2 of MSMD subject to
regulatory mandates. Viacom 18 is assured that any addition of new
channels and deletion of
existing channels from the TOA bouquets of MSMD shall not adversely affect
Viacom 18's share of potentia1 revenue vis-ŕ-vis
scenario if such change in the TOA bouquets would not have happened.
In the event there is any such material adverse effect on
the allocated revenue to Viacom 18 the
same shall be duly addressed by the parties through a mutually consultative process
of review.
2. MSMD in
their negotiation with any
distributors of channels operating in DTH
or any other Digital Platforms for the TOA Channels shall use reasonable efforts to optimize the reach for the V18 Channels. MSMD shall
subject to regulatory mandates expend reasonable efforts to ensure that(a)
Existing Channels shall not be placed in a tier which shall be less beneficial than their current tiers; and (b) New
Channel shall not be placed in tiers other
than those where other channels in same language and genre are placed.”
The said
agreement contains a ‘termination’ clause being XX thereof, which reads as
under:
“XX Termination
Either
Party shall be entitled to terminate this MOU or the long form Agreement on
material breach of any term or terms contained in such MOU or the Long Form
Agreement. However, no such termination
shall be effected unless the aggrieved party submits a 90 day notice upon the
other party so alleged to be in breach and offers the latter reasonable
opportunity to cure such alleged breach.
In the event the material breach is suitably addressed or cured to the
satisfaction of both the Parties, no further cause shall sustain of such notice
for termination. The consequences of
breach, including penalty, if any, shall be dealt with in the Long Form
Agreement.”
Inter alia,
on the premise that the respondent in breach of the said MoU in terms whereof
the petitioner’s channels were to be placed at prime channels, the petitioner
found that the respondent had been putting its rival broadcaster, namely; Sony,
at prime channels, particularly, in those which were displayed by Dish TV and
Tata Sky to the DTH Operators which, inter alia, has captured about 70% of the
market. By way of example, it was stated
that whereas in the case of Dish TV, out of 10 different packs, the Sony channel
was placed in 9 at the top of them; the petitioner was placed in the prime
channels only in 4. Similarly, in the
case of Tata Sky; whereas Sony channel was placed in 5 out of 7 channels, the
petitioner had been placed on only 3.
The
petitioner terminated the said contract by a notice dated 13.06.2010, para 9
whereof reads as under:-
“9) In these circumstances, without prejudice
to the contents of all aforesaid paragraphs, and assuming that the MOU is not
vitiated and avoided as set out therein, we hereby terminate the MOU with
immediate effect and call upon you to forthwith refrain from acting in
furtherance of the MOU or representing any association with Viacom18 and/or
Colors. This termination has resulted entirely
due to your breaches, wrongful acts of omissions and commission and your
fraudulent acts, which really constitute a repudiation of the MOU by you. Your own acts/conduct rendered it impossible
for you to render your services to us properly in terms of the MOU. We also call upon you to forthwith make
payment of Rs.20,34,61,982/- (Rupees Twenty crores thirty four lacs sixty one
thousand nine hundred and eighty two only) due from MSMD towards Fixed Fee and
Minimum Guarantee for the period until the date of this termination letter. We also call upon you to render true and
faithful accounts in respect of the distribution on the digital platform and
forthwith pay to us the amount due to us on ascertainment. Your actions, inactions and conduct as stated
herein above have resulted in substantial damage to us to the tune of
approximately Rs.127 crores for various reasons including without limitation
due to unfavourable tiering for Viacom 18 Channels and loss due to disruption
of business.”
This
petition came for preliminary hearing on 19.07.2010 whence an interim order was
prayed for. The matter was adjourned to
21.07.2010 with a view to give an opportunity to the respondent to file an
appropriate petition, as was submitted before us, as we were given to
understand that the respondent had filed application under Section 9 of the
Arbitration & Conciliation Act, 1996 before the Bombay High Court, wherein,
it prayed for an order of injunction but the same was declined and thus, the
same shall be withdrawn and the appropriate petition will be filed before this
Tribunal.
We also
granted permission to the petitioner herein to file an additional
affidavit. Pursuant to the leave so
granted in favour of the petitioner a voluminous additional affidavit has been
filed. The respondent also has filed a
very detailed reply to the petition as also to the said additional affidavit.
Before
however, we advert to the said contentions raised in the pleadings of the
parties, we may notice two of the interim prayers made by the petitioner in
this petition:-
“a) restrain the Respondent from directly or
indirectly interfering with the distribution and marketing of the said Channels
of the Petitioner either by Petitioner itself or in alliance and direct the
Respondent to make all regulatory filing within 7 days of 13.7.2010 reflecting
the terms of the MoU and deleting the Petitioner's channel from the
Respondent's bouquets;
(d) restrain
the Respondent from representing the petitioner
after the termination of the MoU on 13.7.2010.”
The
contentions of the petitioner in support of the prayer for interim relief are:
(a) Admittedly, the
respondent while placing the petitioner’s channel has been offering the same @
Rs.4/- per channel in place of Rs.20/- for analog mode and Rs.10/- for transmission
thereof on DTH platform.
(b) The respondent
had been placing the channels of the petitioner at a far more disadvantageous
position than its rival broadcaster, namely, Sony, as a result whereof the
petitioner had been suffering losses not only in terms of the number of
viewership but also in terms of its reputation and revenue.
(c) The action on
the part of the respondent is malafide in as much as it had incorrectly been
pleading its helplessness in placing the Colors channel of the petitioner in
the prime time and prime position although its affiliates were bound to give
effect to the said MoU as would appear from the Reference Interconnection Offer
(RIO) given by the petitioner itself.
(d) In any event,
even if the plea of the respondent that it was in a helpless situation as according
to which it was the affiliates alone who can deal therewith, the petitioner
does not intend to deal with such a distributor.
(e) The Managing
Director of the respondent in an interview in March, 2010 having clearly stated
that the Colors channel belonging to the petitioner was at Number 1 whereas the
Sony is only amongst the top, have been taking actions to the contrary.
(f) The petitioner having
entered into a new contract with a third party granting the right of
distributorship of the channel in its favour, it will suffer an irreparable
injury if an injunction as sought for is not granted.
(g) The respondent
itself having issued a notice to the new distributor, namely, SUN TV Networks
Ltd., to the effect that it should not deal with it its LCOs, cannot now be
heard to say that it was not aware of the effect of the said termination of contract.
(h) The petitioner
having been denied an order of injunction by the Bombay High Court cannot now
be permitted to resist the prayer for injunction made by the petitioner.
(i) The respondent
is guilty of commission of fraud in as much as it had been showing a low
subscriber base of its LCOs to the petitioner whereas the affiliation agreement
entered into by and between them and respondent shows a higher figure, and,
thus, it must be held to have committed fraud on the petitioner.
(j) Having regard
to the provisions contained in Section
201, 205 and 206 of the Indian Contract Act, 1872, the respondent being only
entitled to damages even if no notice of 90 days have been served on it.
(k) The respondent
having engineered a Press Report that this Tribunal had refused to grant an
injunction in favour of the petitioner must be held to be guilty of contempt of
court.
Mr.Ramji
Srinivasan, the learned senior counsel appearing on behalf of the respondent,
on the other hand, would contend:
A. This petition
having been filed in anticipation of an original petition which the respondent
intends to file before this Tribunal, no order of injunction should be granted
in its favour.
B. No foundational
fact having been pleaded for obtaining a discretionary or equitable relief by
way of injunction, no order of injunction should be passed in its favour,
particularly, in view of the fact that the petitioner has not approached this
Tribunal with clean hands.
C. The petitioner
having not served a notice of 90 days must be held to be in breach of contract and
as the same amounts to a negative covenant, the action on the part of the
petitioner must be held to be illegal and, thus, this Tribunal should not come
to the aid of the petitioner.
D. The petitioner
itself being in breach of contract, cannot be permitted to take advantage of
its own wrong, particularly, when it was aware of the consequence of
non-service of a prior notice of 90 days.
E. The parties having
arrived at a consensus that 90 days’ notice would be served, keeping in view
the fact that the respondent had entered into back to back contracts with several
LCOs and with full knowledge that the dues of the petitioner are to be paid only
after 60 days, which period was necessary for the respondent to realize the
bills from the LCOs and pay the amount in question to the petitioner, the said
period must be held to have been fixed by way of business efficacy.
F. The petitioner
having not disclosed various E-mails before this Tribunal whereby it intended
to have a higher revenue share only, no injunction should be granted in its
favour.
G. The petitioner
having not taken any steps for a period of 15 months is not entitled to an
equitable relief.
H. The petitioner
having not raised any grievance with regard to the binding nature of the
contract and furthermore the same having worked out as a result whereof the
petitioner has been benefited itself, it should not be permitted to turn around
and question the conduct of the respondent.
I. The only
deficiency in service, if any, on the part of the respondent having been
pointed out only in relation to the Dish TV and Tata Sky and there being other
operators in the field, namely, Airtel, Big TV, SUN TV and Videocon who carry
the channels of the petitioner as per the agreement, it must be held that there
is no merit in this petition.
J. From the
records of the case, it would appear that the petitioner has become No.1 only
after the respondent became its distributor; as prior thereto, the petitioner
was required to pay a huge carriage fee to the operators, the petitioner should
not reap the benefit of the hard work done by the respondent.
K. The additional
affidavit which has been filed by the petitioner being only for the purpose of
grant of interim relief, the same should not be treated to be a part of the
pleadings and from the documents appended thereto the petitioner cannot be
permitted to make out the new case.
L. Keeping in view
of the fact that after working out of the contract the market is assured, the
petitioner should not be allowed to go back from the contract.
M. The allegations
made on the respondent with regard to commission of fraud by showing less
subscriber base of the LCOs is of no consequence as the respondent pays a fixed
fee to the petitioner.
The core
question which arises for consideration in this petition is as to whether the
petitioner was bound to serve 90 days notice and what would be consequence of
failure on its part to do so?
The
jurisdiction of a court of law to pass an order of injunction is limited.
We may, at
the outset notice that the respondent has filed an application before the
Bombay High Court purported to be under Section 9 of the Arbitration & Conciliation
Act. Evidently, however, no order of
injunction has been passed in its favour.
The relationship between the parties is not in dispute. The fact that they had entered into a
Memorandum of Understanding (MoU) is also not in dispute. Certain other events are also admitted,
namely:-
(i) The petitioner
has terminated the contract by issuance of a notice dated 13.07.2010.
(ii) The said notice
is in violation of Clause XX of the Agreement.
So far as
the performance of the contract is concerned, as noticed hereinbefore, both
parties are trading charges against each other.
Whereas according to the petitioner, the respondent is guilty of serious
breaches of contract by not putting its channel in No.1 position vis-ŕ-vis its
rival broadcaster, namely, SonyTV, it is also guilty of malafide act as also
commission of fraud on the part of the respondent.
The
respondent, on the other hand, contends that the petitioner having taken
advantage of the performance on the part of the respondent as a result whereof
the Colors channel of the petitioner had gone up in its ratings, it is not
entitled to an order of injunction.
The parties
are fighting litigations before different courts of law. The respondent, as indicated hereinbefore,
intended to file a petition before this Tribunal but it has not done so
far. No order of injunction, as noticed
hereinbefore, has been passed in its favour.
We, for the
purpose of disposal of the matter, would proceed on the premise that the
respondent had done its best to perform its part of the contract but for one
reason or the other it could not achieve the desired result. It is not in dispute and as has been pointed
out by Mr.Mukul Rohtagi, the learned senior counsel appearing on behalf of the
petitioner that from the chart filed by the petitioner in the mater of
placement of channel is far below the Sony so far as the Dish TV and Tata Sky
are concerned.
The
respondent in its e-mail dated 17.05.2010 for all intent and purport expressed
its helplessness stating as under:
“A. Placement
of Colors on Tata Sky and Dish TV
In
terms of the relevant TRAI regulations, we as aggregators do not have the right
to determine the tiering and packaging of a channel which is the sole
prerogative of the distributor, who cannot be forced to accede to any
particular demand in respect thereof.
You have had an experience where despite payment of huge carriage fees
you were able to place Colors only on the ‘add-on’ tier of Tata Sky. Further even under the new Competition Act,
any attempt by us to force an unwilling or reluctant distributor to package our
channels only in a manner as determined by us will be treated as
anti-competitive and lead to sanctions being imposed on MSMD.
We
have been able to negotiate placement of Colors in the Super Hit Pack on Tata
Sky and in Platinum Pack on Dish TV. It
is noteworthy that we have been successful in continuously receiving the
subscription revenues without any corresponding outgo in the form of carriage
fees. I’m sure you will agree with me
that Colors’ marquee position among Hindi GECs also owes much to the reach it
has achieved thanks to the unstinting efforts of MSMD’s distribution team and
the inherent strengths of the OneAlliance’s diverse bouquet of channels and its
countrywide network.
The
very fact that we have been fulfilling all our business and commercial
obligations under the MOU underlines our deep understanding and mastery of the
unique features of the distribution business in India, dealing as we do with
thousands of analogue operators, hundreds of digital operators and across
diverse analogue and digital platforms, which is unlike any other in the
world. You are welcome to share with us
any practical suggestions regarding the distribution of Viacom 18 channels but
we would rather that you refrained from giving us gratuitous advice on the
formulation of our deals. We know how to conduct our business.”
We have
also noticed heretobefore that the Chief Executive Officer of the respondent in
a Press interview has stated that the Colors channel is No.1 in the
market. It, however, again is not denied
or disputed that the respondent had been charging only Rs.4 per subscriber per
month as against the rate fixed by the Telecom Regulatory Authority of India (TRAI)
for non-CAS area i.e. for analog mode @ Rs.20/- per month whereas from DTH platform
@ Rs.10 per month as would appear from the respondent’s own document being
Anneuxre-2 to the Email dated 16.06.2010, which reads as under:
“Annexure 2
Proposal for Viacom 18 channel – “COLORS”
Premises:
·
·
DTH
We need not
go into the question as to whether the respondents had been showing lesser
number of subscribers from some of its
local cable operator as for example, Big 10 Enterprise; as it appears that the
number of subscribers has been shown to be 421 but from the affiliation
agreement annexed by the petitioner to its Additional Affidavit, it appears
that the agreed subscriber base was 1093.
We need not
also enter into that controversy for the present in view of the fact that
according to the respondent variation in the subscriber base is wholly
immaterial as respondent has been paying a fixed fee to the petitioner.
We must,
however, notice that on 17.08.2010 the petitioner has not only terminated the
contract, it entered into a MoU with one Networks 18 Media & Investment
Ltd. The respondent had in its
application under Section 9 of the Arbitration & Conciliation Act before
the Bombay High Court made endeavours to obtain an order of injunction against
it. It did not succeed. The doctrine of ‘Amity’ or ‘Comity’ may be
held to be applicable.
From a
letter dated 15.07.2010 addressed by the aforementioned Networks 18 to the
petitioner herein, it would appear that it therewith annexed a copy of the
notice issued by M/s Anil Menon & Associates, Advocates, dated 14.07.2010,
wherein it was stated:
“8. In the circumstances, we are instructed to
call upon you which we hereby do and put you to notice that our clients will
take all such actions at law as they may be advised in the matter to protect
their rights. In the meantime we call
upon you to immediately cease and desist from taking any steps to distribute
the aforementioned Viacom 18 channels including but not limited to entering
into any agreements with Cable Operators, Multi System Operators, DTH
Operators, Affiliates or any other third party in order to distribute the
signals of the said Viacom 18 channels or otherwise act against the interests
of our clients failing which our clients will adopt such legal proceedings as
they may be advised, which shall be entirely at your risk as to costs and
consequences.”
An
interesting question which arises for our consideration is as to what would be
the effect of not giving 90 days notice.
The
contract in question is not governed by any statute. The respondent does not say that it, in terms
of any Parliamentary Act and/or any other subordinate legislation including any
Regulations framed by the TRAI, was entitled to a notice.
The legal
rights claimed by the parties, thus, arise under contract qua contract. The provisions contained in a contract so far
their specific performance is concerned, are governed by the provisions of
Specific Reliefs Act, 1963.
Section
14(1)(a) of the Act states that a contract for the non-performance for which
compensation in money is an adequate
relief cannot not be specifically enforced.
Section
41(e) of the Specific Relief Act provides that an injunction cannot be granted
to prevent the breach of the contract, the performance of which would not be
specifically enforced.
It is true
that orders of injunctions, apart from the provisions contained in Order 39
Rules 1 & 2 of the Code of Civil Procedure can also be granted under the
inherent power of the court.
Sub-section
(2) of Section 38 of the said Act clearly states that the matters relating to
the grant of perpetual injunction would be governed by Chapter-II of the Act
which as noticed hereinbefore contained in Section 14 of the Act.
If neither
any temporary injunction can be granted nor a perpetual injunction can be
granted, the question which would arise for consideration is whether it is a
case of this nature an order of temporary injunction should be granted in
favour of the petitioner. While
examining the said question we are not oblivious of the fact that the legal
position which we had taken into consideration hereinbefore would stricto sensu apply in the event the
respondent approached this court and applied for an order of injunction. Would that mean that in a situation of this
nature where petitioner steeks to obtain an order of injunction restraining the
respondent from representing to others that it is acting on behalf of the
petitioner, will be justified in taking account the aforementioned provsions of
the Specific Relief Act?
We are of
the opinion that if on the materials placed on record, the respondent was not
entitled to an order of injunction, we fail to see any reason as to why the same
legal provisions cannot be taken aid of for the purpose of granting an order of
injunction in favour of the petitioner herein.
We say so, because the contract in question can either be specifically
enforced or there is a legal bar.
There is
another aspect of the matter which is neither in doubt nor in dispute. The respondent is a distributor of the
petitioner. It for all intent and
purport and in fact is an agent of the petitioner. A principal having regard to the provisions
contained in Section 201 of the Indian Contract Act may terminate the agency at
any point of time.
It is not a
case where the respondent claims any interest in the property which would mean
that the right of the petitioner in its business of broadcasting as envisaged
under Section 202 thereof.
Moreover,
Section 206 of the Indian Contract Act provides that reasonable notice must be
given of such revocation as otherwise the damage thereby resulting to the
principal or the agent, as the case may be, must be made good to the one by the
other.
The clause providing
for termination of contract as contained in para XX of the MoU, as indicated
hereinbefore by itself is not a negative covenant. If the said provision is not a negative
covenant, the exception contained in Section 42 of the Specific Relief Act
would also not apply in favour of the respondent.
The only
point which survives for consideration is as to whether assuming that the
petitioner is guilty of suppression of material facts would it be entitled to
any equitable relief?
There is
nothing on record to show that the petitioner is guilty of suppression of a fact
which is material for the purpose of grant of refusal to grant an equitable
limit. Moreover, suppression of some
fact by itself may not be sufficient to deny plaintiff a relief of grant of
injunction. We may notice the following
passage from the SPRY on Equitable Remedies (5th Edition):-
“Sometimes
over-simplified or misleading statements of equitable principles of this nature
do not cause mischief. Judges who are
experienced in exercising equitable discretions may have no difficulty in
granting relief in appropriate circumstances where, for example, the hardship
that will thereby be caused to the defendant is sufficiently offset by the
inconvenience or detriment that would be suffered by the plaintiff if he were
left without an equitable remedy. But
nonetheless it is found that a statement that has been extrapolated from an
equity judgement, and is then construed out its context, give rise to use of
the maxim, he who comes to equity must approach the court with clean
hands. This is doubtless a maxim which
is both striking and succinct and which may be found to be of value for many
explanatory or justificatory purposes.
But when its content is examined it is seen specific performance is
sought, relief should in the particular circumstances be refused. So it has been established that even a
plaintiff who has been guilty of fraud, which is hardly consistent with clean
hands, may under some circumstances obtain equitable relief, such as where, for
example, the fraud has been waived by the other party and there is no
additional consideration that renders the grant of that relief unjust. Again, it has been laid down that the
absence of clean hands is of no account “unless the depravity, the dirt in
question sued for”. When such
exceptions or qualifications are examined it becomes clear that the maxim that
predicates a requirement of clean hands does not set out a rule that is either
precise or capable of satisfactory operation.
Rather in order to establish whether equitable relief should be refused
through dishonesty or on a cognate ground it is necessary to examine precisely
the rules and practices which have been established and followed by courts or
equity and which are generally referable to such established considerations as
fraud, misrepresentation, illegality or unfairness. “
Keeping in
view the legal position as noticed hereinbefore, in our opinion, there cannot
be any doubt or dispute that the respondent in the event of a success can be
adequately compensated on monetary terms.
Furthermore, in a situation of this nature, if it is not entitled to
obtain a decree for specific performance of contract, we fail to understand how
a court of equity in a situation of this nature allow the respondent to operate
under a contract which has been terminated validly or invalidly for a period of
90 days from the date of termination of contract. We have no doubt in our mind that the parties
were in ad idem while arriving at the
said contract viz. that the period of 90 days should be a reasonable one,
keeping in view of the fact that the parties are required to wind up their
business, realize their dues from the other parties with which it had entered
into contracts and/or arrangements but as noticed hereinbefore the provisions
of both Specific Relief Act as also the Indian Contract Act must be held to
have taken into consideration the hardships of a party who would be deprived
from the benefit of a notice specified in terms of a contract. We have no doubt in our mind that the parties
entered into a contract keeping in view their respective interests as also the
business efficacy. But a litigation
starts only because one party is aggrieved by the act of the other.
Keeping in
view the fact that the petitioner has been able to show that the respondent has
not been able to place its channel at No.1 at least so far as transmission of
signals made on DTH platform by Tata Sky and Dish TV is concerned and
furthermore it had expressed its helplessness to do so, it was a pointer to the
fact that it had not been able to achieve the desired result. If by reason thereof the petitioner has lost
faith and confidence in the respondent, prima
facie, we are of the opinion that a court of law shall not thrust an
unwilling principal on an agent, particularly, when in terms of the provisions
of the Indian Contract Act the latter would have a legal remedy to pursue,
namely, to sue it for damages.
We may
furthermore notice that the Supreme court in Southern Roadways Ltd. Vs. S.M.
Krishnan - 1989(4) SCC 603, held as under:
“13. Even otherwise, under law revocation of
agency by the principal immediately terminates the agent’s actual authority to
act for the principal unless the agent’s authority is coupled with an interest
as envisaged under Section 202 of the Indian Contract Act. When agency is revoked, the agent could claim
compensation if his case falls under Section 205 or could exercise a lien on
the principal’s property under Section 221.
The agent’s lien on principal’s property recognized under Section 221
could be exercised only when there is no agreement inconsistent with the
lien. In the present case the terms of
the agreement by which the respondent was appointed as agent, expressly
authorizes the company to occupy the godown upon revocation of agency. Secondly, the lien in any event, in our
opinion, cannot be utilized or taken advantage of to interfere with principal’s
business activities.
It was furthermore observed:
18. The crux of the matter is that an agent
holds the principal’s property only on behalf of the principal. He acquires no interest for himself in such
property. He cannot deny principal’s
title to property. Nor he can convert it
into any other kind or use. His
possession is the possession of the principal for all purposes. As the Kerala High Court in narayani Amma v.
Bhaskaran Pillai observed:(AIR p.217 para 6)
“The agent has no possession of his own. What is called a caretaker’s possession is
the possession of the principal.”
We,
however, are of the opinion that the submission of Mr.Rohtagi that the
petitioner has engineered a newspaper report in regard to an order of this
Tribunal may not be correct.
For the
views we have taken, we are of the opinion that other contentions raised by the
parties need not be gone into as we are satisfied al beit prima facie that
the respondent cannot in law be permitted to carry out its business in terms of
the contract.
Keeping,
thus, in view of the fact that the petitioner has raised a triable issue, and
having established a prima facie case, in the fact and circumstance of this
case and for the reasons assigned heretobefore, we are of the opinion that the
balance of convenience as also the irreparable injury also lie in favour of the
petitioner. Not only law is in favour of
the petitioner, it would suffer substantial loss as also a third party if the
respondent is allowed to perform the contract despite its termination. Balance of convenience doctrine should also
be considered having regard to the legal position as also the fact that a third
party has derived a legal right to carry out its business.
For the
reasons aforementioned, the respondent is hereby restrained from representing
the petitioner with any third party untill further orders.
We may not
be taken to have entered into the respective rights of the parties under the
contract as we have taken a prima facie view of the matter.
In the facts
and circumstances of this, however, there shall be no order as to costs.
…………….....J
(S.B. Sinha)
Chairperson
…………….....
(G. D. Gaiha)
Member
…………….....
(P.K. Rastogi)
Member
/SKS/