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2016 (4) TMI 1445 - HC - Indian LawsValidity of interim award - interim award does not contain reasons - nature of default award for non-compliance with the orders passed on the application under Section 17 - plea of equitable set of raised by Nimbus India not addressed - Nimbus India s application for inspection was still pending - the issue of limitation not adjudicated - Invocation of doctrine of equitable set off. HELD THAT - An adjudication has to have three necessary elements namely a hearing; recording of conclusion based on material available; and reasons in support of the conclusions - all three elements are satisfied in the instant case. It is not a case where Nimbus India was not given a hearing. Recording of conclusion based on evidence - HELD THAT - A definite conclusion recorded by the Arbitral Tribunal in its order dated May 06 2014 to the effect that the material on record and the letters of Nimbus India and Nimbus Singapore themselves establish the claim of Prasar Bharati that the amount of Rs. 22, 77, 67, 422/- was due to it. Before recording the said conclusion the Tribunal had set out the respective stands of the parties. The order spanning 6 pages records the respective submissions in the first three pages a brief capturing the important letters containing the admissions followed by the conclusion. To invoke the doctrine of equitable set off the cross demands should arise from the same transaction or should be so connected that they can be looked upon as part of the same transaction. Admittedly in this case there were four different series and it cannot be said that cross demands arise out of the same transaction. The said demands were not so connected that they could be looked upon as part of one transaction. Further the accounting between Prasar Bharati was independent with Nimbus Singapore and with Nimbus India. The claim of Nimbus India was that Nimbus Singapore had assigned the debts and the claims to it and thus with respect to the transactions between Prasar Bharati and Nimbus Singapore vis-a-vis those between Prasar Bharati and Nimbus India the question of inter-se equitable set off would inherently not arise. Further Nimbus India could not raise for purposes of its counter claim any issue concerning India-England 2006 Series because the transaction between the said parties was not a subject matter of the arbitration proceedings - Just because Nimbus India in its letter dated May 16 2009 sought to make adjustments by clubbing together all the series would not make them so inter-connected. Set off is like a cross suit or cross action. It is well settled that even a counter claim can be ordered to be tried by way of a separate suit. Its hearing can also be deferred. Pendency of a counter claim does not bar the Tribunal from making an interim award to the extent of admissions - It is well settled that in the case of breach of contract pecuniary liability arises only after adjudication. Prior to that there is no liability and no obligation to pay. A decree on admissions is to be passed if it is impossible for the party making the admission to succeed in the face thereof. In this case the admissions made are judicial admissions which cannot even be retracted. Time limitation - HELD THAT - The set off was claimed on May 16 2009. The arbitration agreement between the parties is dated August 31 2011. There is no scope to argue that the claim was barred by limitation. We must frown upon the attitude of Nimbus India and Nimbus Singapore who are in utter breach of their respective obligations to secure the amounts by furnishing bank guarantees and to execute formal agreements. The two did not furnish the bank guarantee or deposit the amount directed by the Arbitral Tribunal nor complied with similar directions passed in the appeal. Whereas Nimbus Singapore has no asset in India the assets of Nimbus India also appear to be nil. That is the reason why order dated October 31 2014 passed by the learned Single Judge in AA No. 30/2014 requiring Nimbus India to file an affidavit detailing its assets located in India was not complied with. The appeal is accordingly dismissed imposing cost in sum of Rs. 50, 000/- against Nimbus India and in favour of Prasar Bharati.
Issues Involved:
1. Compliance with the Sports Broadcasting Signals (Mandatory Sharing with Prasar Bharati) Act, 2007 and associated rules. 2. Obligations and breaches by Nimbus India and Nimbus Singapore regarding bank guarantees and contracts. 3. Financial claims and counterclaims between Prasar Bharati and Nimbus entities. 4. Arbitration and interim award issues, including inspection of records and equitable set-off. 5. Limitation period for claims. Detailed Analysis: 1. Compliance with the Sports Broadcasting Signals (Mandatory Sharing with Prasar Bharati) Act, 2007 and associated rules: The Act mandated content rights owners to share live broadcasting signals with Prasar Bharati without advertisements, enabling re-transmission on Prasar Bharati’s networks. The revenue sharing terms were specified, with a 75:25 ratio for television and 50:50 for radio. The associated rules required a sealed bid procedure for marketing commercial time, with the higher bidder entitled to marketing rights and obligations to provide a bank guarantee and audited accounts. 2. Obligations and breaches by Nimbus India and Nimbus Singapore regarding bank guarantees and contracts: Nimbus India and Nimbus Singapore, the highest bidders for several cricket series, failed to comply with the obligation to provide bank guarantees and execute contracts, unlike Prasar Bharati, which fulfilled its obligations. This non-compliance resulted in the jural relationship being governed solely by the Act and the Rules, without any arbitration clause, except for the India-Pakistan 2007 Series, where a contract with an arbitration clause was executed. 3. Financial claims and counterclaims between Prasar Bharati and Nimbus entities: Prasar Bharati claimed amounts based on admitted liabilities for various series, with Nimbus entities owing Rs. 22,77,67,422/-. Nimbus India raised counterclaims, including adjustments for previous series and alleged dues, but failed to provide clear particulars or evidence for these claims. The Arbitral Tribunal directed Nimbus India to furnish a bank guarantee, which was not complied with, leading to an interim award. 4. Arbitration and interim award issues, including inspection of records and equitable set-off: The Tribunal addressed Prasar Bharati’s claims and Nimbus India’s counterclaims, noting admissions of liability by Nimbus entities. Despite opportunities, Nimbus India did not secure the amount or comply with inspection requirements. The Tribunal passed an interim award based on admitted amounts, dismissing the plea of equitable set-off as the claims did not arise from the same transaction and required separate adjudication. 5. Limitation period for claims: The Tribunal and the Court found no issue with the limitation period, as the dealings occurred from 2007 to 2009, and the arbitration agreement was entered into in 2011. The purported adjustments and admissions of liability extended the limitation period, making the claims timely. Conclusion: The Court dismissed Nimbus India’s appeal, affirming the interim award and highlighting the entities' breaches of obligations, lack of compliance with Tribunal directions, and the untenable nature of their counterclaims. Costs were imposed on Nimbus India in favor of Prasar Bharati.
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