The court emphasized the need for a full opportunity to establish contentions and refrained from enforcing the negative covenant at the interlocutory stage.

S. J. Vazifdar, J.

( 1 ) THIS is an Appeal against the order of the learned Single Judge rejecting the appellant/plaintiffs application under section 9 of the Arbitration and Conciliation Act, 1996.

( 2 ) AN agreement dated 21. 6. 2001 was entered into between the Appellant/petitioner and the Respondent. The Respondent granted and assigned to the Appellant the sole and exclusive right to market not less than 350 episodes of a Television Serial "chithi" to be telecast over "sun-TV" from Monday to Friday at 3. 30 p. m. Under clause 11 of the agreement, the consideration payable by the Appellant was rs. 1,40,000/- net, per episode, as the cost of production per episode. This amount was to be reduced in the event of the telecast fee being reduced. The Appellant was also to pay the respondent an advance of Rs. 1,00,00,000/ -. There is a detailed mode of payment and for recouping this advance of Rs. 1,00,00,000/ -. Clauses (a), (b) and (c) of Part-B of the agreement which; falls for consideration grants a right of premption in respect of the marketing rights of other programmes produced by the Respondent and reads as under :

" (B) FIRST RIGHT OF REFUSAL BY the PRODUCER TO UTV IN consideration OF UTV MARKETING the SAID PROGRAMME a) In consideration of UTV marketing the said Programme as mentioned in point (A) above, the Producer hereby confers on utv the first right of refusal to market any other Programme of any nature whatsoever either directly or indirectly produced by the Producer. b) In respect of all the programmes, the Producer shall make an offer to UTV to exclusively market the respective programmes and give utv fifteen days time to respond to the same. c) In case UTV refuses to market the same or does not respond within fifteen days of receipt of the offer from the Producer, the Producer shall be allowed to market the same through any other entity. However, the terms and conditions of the offer to such entities should not be more attractive than those offered to UTV. "

( 3 ) ADMITTEDLY, this contract was in subsistance upto 21. 1. 2005.

( 4 )

(A ). Pursuant to Part-B of the said agreement, correspondence ensued between the parties and, ultimately, by a letter dated 10. 1. 2005 i. e. during the subsistance of the agreement the Respondent informed the Appellant that it had decided to offer its forthcoming, Serial "chelvi" on the terms and conditions mentioned therein viz. an advance of rs. 2,25,00,000/- payable in one instalment (interest free) to be adjusted at the end of the programme. The slot fee was to be as per channel's requirement with service tax. The production cost of rs. 3,00,000/- per episode was payable sixty days from the date of the telecast.

(B ). The flppellant responded by its letter dated 12. 10. 2005 offering an advance of Rs. 3,00,00,000/- payable in one instalment (interest free ). However, the Appellant required that an amount of rs. 2,00,00,000/- of the advance to be adjusted from episode - 1 for the first year and the balance rs. 1,00,00,000/- at the end of the programme. The slot fee was also as per channel's requirement with service tax. The production cost offer was rs. 3,20,000/- per episode.

( 5 ) MR. KADAM firstly submitted that by the letter dated 12. 10. 2005 the Appellant validly exercised its right of pre-emption confirmed upon it by Part-B of the said agreement. He submitted that, in fact, the appellant's offer was better than what was stipulated in the Respondent's letter of offer dated 10. 1. 2005. Mr. Kadam's submission to this effect is not without substance in the sense that in the ultimate analysis the amount actually paid by the flppellant to the Respondent would be more if its offer of 12. 1. 2005 were accepted. It is however a moot point whether merely because the counteroffer is in the ultimate analysis financially higher, the same constitutes the exercise of the right of pre-emption in accordance with the contractual provision. For instance, though in the ultimate analysi