Interim measures under Section 9 can protect investment rights when there is prima facie evidence of a breach of contract, requiring careful preservation of the subject matter before arbitration.

JUDGMENT:

SOMASEKHAR SUNDARESAN, J.

Context and Factual Background:

1. This Petition is filed under Section 9 of the Arbitration and Conciliation Act, 1996 (“the Act”) seeking urgent interlocutory intervention in connection with an Investment and Assignment of Rights Agreement dated April 24, 2025 (“Agreement”) entered between the parties.

2. Under the Agreement, the Petitioner, M/s Global Impex (“Global Impex”) has agreed to provide the Respondent, Sipping Tea Cinemas LLP (“Sipping Tea”) with an investment of Rs.5 crores to finance a movie tentatively titled Charak on the terms and conditions set out in the Agreement. The Petitioner essentially seeks intervention of this Court, by pointing to the blatant disregard of the terms of the Agreement on the part of Sipping Tea, which would, in turn, contend that it is Global Impex that has not been ready and willing to perform under the Agreement, and that the the Agreement does not document an assignment of rights in the movie but is merely an agreement to assign rights in future.

The Agreement:

3. A brief overview of the terms and conditions set out in the Agreement would be necessary. Suffice it to say that such review of the terms of the Agreement is purely prima facie in nature, bearing in mind the jurisdiction of this Court under Section 9 of the Act i.e. to examine broadly what the bargain between party is and to see what appropriate protective measures to preserve the subject matter of the arbitration agreement would meet the ends of justice.

4. Towards this end, a broad overview of the agreement would be appropriate. The recitals in the Agreement contemplate an investment being made by Global Impex in Charak and towards this end, potential collections and anticipated revenues from the exploitation of the movie has been referred to. In order to secure the investment made by Global Impex in Charak, Sipping Tea has agreed to provide a lien or mortgage or a charge over various rights emanating from the movie and to assign the same to Global Impex.

5. Clause 2.1 of the Agreement provides that Sipping Tea “hereby agrees to assign” in favour of Global Impex, the various rights to the movie including Foreign Rights, OTT Rights, Satellite Rights, Music Rights, Theatrical Rights and any other rights (“Subject Rights”) to the exclusion of any third party as also to the exclusion of Sipping Tea itself in the “Territory”. The term “Territory” is agreed between the parties to be the entire universe, including any metaverse or virtual worlds. The various rights that are comprised in the aforesaid definition of “Subject Rights” are referred to in multiple places in the Agreement.

6. Under Clause 2.1.1, a sum of Rs.5 crores was to be transferred by Global Impex to Sipping Tea in the following timeline: (i) Rs.1.5 crores on signing; (ii) Rs.1.5 crores before April 30, 2025 (after the account details referred to in Clause 4.1.7 are intimated to Global Impex); and (iii) Rs.2 crores by May 9, 2025 (after a public notice of Global Impex’s interests in the Subject Rights as envisaged in Clause 8.4 of the Agreement is published).

7. Clause 2.1.2 of the Agreement, which provides for the term of the assignment, entails the assignment being valid until the entire consideration of the movie is received from all sources, including the Subject Rights. In other words, once the entire consideration is received, the assignment would come to an end. Clause 2.1.3 provides for ter