2011 (11) TMI 799 - HC - Indian Laws

Summary

Issues Involved:
1. Validity and enforceability of the Memorandum of Agreement (MOA) and subsequent Addendums.
2. Breach of contract and obligations under the MOA.
3. Right of first refusal under Clause 21 of the MOA.
4. Interim relief and injunction under Section 17 of the Arbitration and Conciliation Act, 1996.
5. Specific performance and negative covenants under the Specific Relief Act, 1963 (SRA).
6. Jurisdiction and powers of the Arbitral Tribunal.

Detailed Analysis:

1. Validity and Enforceability of the MOA and Subsequent Addendums:
The MOA was initially for five years starting from 1st August 2001 and envisaged the formation of a joint venture company (JVCO) subject to achieving certain revenue projections. The First and Second Addendums amended the MOA, with the Second Addendum extending the agreement until 31st March 2011. The court held that the MOA and Addendums came to an end by efflux of time on 31st March 2011, and there was no implied continuation of the contract thereafter.

2. Breach of Contract and Obligations under the MOA:
The Appellant argued that the Respondent breached the MOA by failing to fulfill its commitments under the Consent Terms. However, the court noted that the Appellant did not make payments from October 2010 onwards and that the MOA and Addendums had expired by 31st March 2011. The Respondent's failure to withdraw signals immediately did not imply consent to extend the MOA.

3. Right of First Refusal under Clause 21 of the MOA:
Clause 21 provided the Appellant with the right of first refusal for any new business or channels launched by the Respondent. The court found that since the MOA had expired, the right of first refusal could not be enforced. The Appellant's claim that the MOA was automatically extended was rejected.

4. Interim Relief and Injunction under Section 17 of the Arbitration and Conciliation Act, 1996:
The Arbitral Tribunal rejected the Appellant's application for interim relief under Section 17, noting that the balance of convenience was not in favor of the Appellant and that any injury to the Appellant could be compensated with damages. The court upheld this decision, agreeing that the Appellant did not meet the conditions for an interim injunction.

5. Specific Performance and Negative Covenants under the Specific Relief Act, 1963 (SRA):
The court emphasized that the relief of an injunction to enforce a negative covenant under Section 42 SRA is discretionary and contingent upon the contract subsisting and the injunction seeker performing their obligations. The court found that the MOA had expired and the Appellant had not fulfilled its payment obligations. Therefore, the conditions for enforcing a negative covenant were not met.

6. Jurisdiction and Powers of the Arbitral Tribunal:
The court noted that its powers under Section 37 of the Arbitration and Conciliation Act to interfere with an order passed by the Arbitral Tribunal are limited. The court found no error or perversity in the Arbitral Tribunal's decision and upheld the Tribunal's conclusion that the balance of convenience did not lie with the Appellant.

Conclusion:
The court dismissed the Appellant's Arbitration Appeal No. 14 of 2011 and OMP No. 809 of 2011, finding no valid grounds for interference with the Arbitral Tribunal's order. The court also imposed costs of Rs. 20,000 on the Appellant, to be paid to the Respondent within two weeks. The court reiterated that its order represents a prima facie view and that the Arbitral Tribunal should form an independent view in the final Award.