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Andhra Pradesh High Court
STRACON INDIA LIMITED - Appellant
Versus
UTV SOFTWARE COMMUNICATION LIMITED - RESPONDENT
Decided On: 08-29-01
The main legal point established in the judgment is that the arbitration clause in the original agreement remains enforceable despite subsequent agreements, and disputes should be referred to arbitration as per Section 11 of the Indian Arbitration and Reconciliation Act, 1996.
Headnote:
Arbitration - Agreement - Indian Arbitration and Reconciliation Act, 1996 - Section 11 - 25/3/98, 5/12/98, 6/2/99, 12/3/99 - The court discussed the interpretation and application of the arbitration clause in the agreements dated 25/3/98, 5/12/98, 6/2/99, and 12/3/99. The key legal provisions of Section 11 of the Indian Arbitration and Reconciliation Act, 1996 were analyzed to determine the jurisdiction of the Arbitrator and the enforceability of the arbitration clause in the subsequent agreements.
Fact of the Case:
The petitioner sought the appointment of an Arbitrator based on the agreement dated 25/3/98, but the respondent resisted, citing subsequent agreements dated 5/12/98, 6/2/99, and 12/3/99, which did not contain an arbitration clause. The respondent argued that the disputes were settled by the agreement dated 5/12/98 and that the arbitration clause in the original agreement was no longer enforceable.
Finding of the Court:
The court found that the subsequent agreements did not supersede the original agreement dated 25/3/98 and that the arbitration clause remained in force. The court held that the disputes and the jurisdiction of the Arbitrator should be referred to arbitration as per Section 11 of the Act.
Issues: The issues revolved around the enforceability of the arbitration clause in subsequent agreements, the settlement of disputes, and the jurisdiction of the Arbitrator.
Ratio Decidendi: The court ruled that the arbitration clause in the original agreement remained in force and that the disputes should be referred to arbitration as per Section 11 of the Act. The subsequent agreements did not nullify the arbitration clause in the original agreement.
Final Decision: The court allowed the petition, dismissed the objections, and appointed an Arbitrator to arbitrate the differences and disputes arising from the petitioner's letter dated 21/9/1999.
( 1 ) THROUGH this application under Section 11 of the arbitration Act the petitioner has sought the appointment of the Arbitrator on the basis of the agreement dated 25/3/98. Clause 18 of the said agreement provides as under :-
"any dispute arising out of this Agreement will be subject to Indian Arbitration and reconciliation Act, 1996. "
( 2 ) HOWEVER subsequent to this agreement the parties also entered into other agreements which are dated 5/12/98, 6/2/99 and 12/3/99. The agreement dated 5/12/98 refers to the governance of the relationship of the parties as per the terms of the agreement dated 25/3/98. Clause 5 specifically provides that both the parties shall continue to be the members of the consortium and will actively participate in the consortium as per agreement dated 25/3/98 and will be governed by the provisions of the said agreement.
( 3 ) HOWEVER, the respondent while resisting the application relied upon the last agreements dated 5/12/1998 and 6/2/1999 executed between the parties. The agreement dated 6/2/99 is more or less modification of some of the terms of the second agreement dated 5/12/98 with regard to the transfer of rights. The parties entered into this agreement for forfeiture of rights of UTV in Doordarshan Sports consortium granted by agreement dated 24/3/98 and 25/3/98 for a period of 12 months starting from 1/1/1999. One of the conditions of such forfeiture was that UTV shall transfer the rights arising out of License Agreement dated 9/9/1998 and such transfer of rights was to be communicated to Doordarshan because UTV placed these rights as part of their commitment to Doordarshan arising out of the agreement dated 24/3/98. Clause 6 of the agreement dated 6/2/1999 is of considerable significance. It reads thus: "upon signature of WT as "consenting party" to this Agreement, ST and UTV shall inform Doordarshan through a letter Jointly signed informing Doordarshan that UTV has transferred it s material obligations and rewards as per proviso of the Agreement of 24/3/1998 to ST, and upon payment is the sole owner of all rights covered under the Agreement of 9/9/1998 for the entire period of the said Agreement. "
( 4 ) THE agreement dated 6/2/99 shows that Clause 1 of the agreement dated 5/12/1998 alone was modified.
( 5 ) MAIN thrust of arguments of Mr. Vaidyanathan, learned counsel for the respondent was that since agreement dated 5/12/1998 and for that purpose agreement dated 6/12/1999 or 12/3/1999 did not contain the arbitration clause, the instant petition is not maintainable. Apart from this, other contentions raised by Mr. Vaidyanathan put briefly are as under:
" (I) That the disputes and differences in respect of which the petitioner seeks reference to arbitration which have been detailed in letter dated 15/11/1999, are those that were already settled by way of agreement dated 5/12/1998 whereby UTV agreed to give up its right under the agreement dated 25/3/1998 for the period upto December 1999 in favour of the stracon for consideration of rs. 3,88,40,206. 00. (ii) That the agreement dated 5/12/1998 is between the Stracon and UTV and not between other members of the alliance. Following clauses demonstrate this positions " (c) UTV is now desirous of reviewing their future relationship and participation in the past and future events, which in essence, negates participation of UTV in all the past events and forfeits its future participation in favour of stracon and Stracon having agreed to such review conditional upon the sports Consortium Agreement with DD dated 24/3/1998 remaining intact, the parties have arrived at a consensus of such understanding which the parties wish to bring down in writing. (1) In consideration to UTV forfeiting its right of participation in future events as specified in clause 2 hereunder, Stracon shall pay - to UTV an amount of Rs. 3,88,40,206. 35 (Rs. three crores eightyeight lac s fortythousand two hundred six and paise thirtyfive only) which shall be secured by
