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2016 Supreme(Del) 1651
IN THE HIGH COURT OF DELHI AT NEW DELHI
PRADEEP NANDRAJOG AND MUKTA GUPTA, JJ.
NIMBUS COMMUNICATIONS LTD. - Appellant
versus
PRASAR BHARTI & ANR. – Respondents
FAO(OS) 369/2015
Decided On : 05-04-2016
Mr. Arvind Nigam, Sr. Advocate instructed by Mr. Amol Chitale, Advocate with Mr. Shubham Jaiswal and Mr. Nirnimesh Dube, Advocates
Mr. Rajeev Sharma, Advocate with Mr. Sahil Bhalaik, Advocate
The main legal point established in the judgment is the enforceability of obligations under the Sports Broadcasting Signals (Mandatory Sharing with Prasar Bharati) Act, 2007, and the validity of the arbitration agreement in resolving disputes related to the Act.
Headnote:
Sports Broadcasting Signals - Mandatory Sharing with Prasar Bharati - Sports Broadcasting Signals (Mandatory Sharing with Prasar Bharati) Act, 2007, Section 1(3), Section 3(1), Section 3(2) - The court discussed the provisions of the Sports Broadcasting Signals (Mandatory Sharing with Prasar Bharati) Act, 2007, particularly focusing on the obligations of content rights owners and television or radio broadcasting service providers to share live broadcasting signals with Prasar Bharati and the revenue sharing ratios. The interpretation of these provisions influenced the court's decision in determining the liabilities of the parties involved.
Fact of the Case:
The dispute arose from the failure of Nimbus India and Nimbus Singapore to fulfill their obligations under the Sports Broadcasting Signals (Mandatory Sharing with Prasar Bharati) Act, 2007, regarding sharing live broadcasting signals and revenue sharing with Prasar Bharati. Prasar Bharati claimed the admitted amount payable and interest on outstanding amounts.
Finding of the Court:
The court found that Nimbus India and Nimbus Singapore failed to fulfill their obligations and raised disputes concerning payments, while Prasar Bharati abided by the terms of the bid. The court also noted that the arbitration agreement covered the disputes related to various cricket series.
Issues: The main issues included the failure of Nimbus India and Nimbus Singapore to fulfill their obligations, the disputes raised by the parties regarding payments, and the applicability of the arbitration agreement to the disputes.
Ratio Decidendi: The court held that Nimbus India and Nimbus Singapore were liable to pay the admitted amount to Prasar Bharati, and their claims for adjustments and set-offs were not tenable. The court also emphasized that the arbitration agreement covered the disputes related to the cricket series.
Final Decision: The court dismissed the appeal, upholding the interim award and imposing costs against Nimbus India in favor of Prasar Bharati.
PRADEEP NANDRAJOG, J.
1. The Sports Broadcasting Signals (Mandatory Sharing with Prasar Bharati) Act, 2007 (hereinafter referred to as the said Act) was deemed to have come into force with effect from November 11, 2005, as per Sub-Section (3) of Section 1 of the said Act. As per sub-Section (1) of Section 3 of the Act, no content rights owner or holder and no television or radio broadcasting service provider could carry a live television broadcast on any cable or Direct-to-Home network or radio commentary broadcasting in India of sporting events of national importance, unless it simultaneously shared the live broadcasting signal, without its advertisements, with Prasar Bharati to enable Prasar Bharati to re-transmit the same on its terrestrial networks and Direct-to-Home networks in such manner and on such terms and conditions as may be specified. As per sub-Section (2) of Section 3, the terms and conditions under sub-Section (1) of Section 3 were to provide that the advertisement revenue sharing between the content rights owner or holder and Prasar Bharati shall be in the ratio of not less than 75 : 25 in case of television coverage and 50 : 50 in case of radio coverage.
2. In exercise of the power conferred by Section 7 of the Act, the Sports Broadcasting Signals (Mandatory Sharing with Prasar Bharati) Rules 2007 were promulgated. Rule 4 whereof required a sealed bid procedure to be adopted inter-se the rights owner or holder and Prasar Bharati concerning marketing of commercial time generated by the re-transmission on the Prasar Bharati’s channel. Needless to state the higher bidder was entitled to undertake the marketing of commercial time. The bid amount was the minimum guaranteed amount. The party obtaining the marketing rights was to give a bank guarantee to the other party for an amount equal to the other party’s share of guaranteed revenue. The said party was to receive all payments from third parties which was to be deposited in a designated escrow account. The said party was obliged to submit to the other party accounts of revenue earnings, duly audited by a chartered accountant, and with 75 days of the sporting event coming to an end was to pay the minimum guaranteed amount along with, if payable, further sum; depending upon the revenue generated.
3. Nimbus Communications Ltd.(hereinafter referred to as Nimbus India) is a company registered in India under the Companies Act, 1956. Nimbus Sports International PTE Ltd. Singapore (hereinafter referred to as the Nimbus Singapore) is a company registered as per laws in Singapore.
4. Whereas Nimbus India was the highest bidder for the India-Australia Cricket Series including a T-20 match played on October 20, 2007 as also India-England Series 2008, Nimbus Singapore was the highest bidder for the India-Bangladesh Series 2007, the India-Bangladesh-Pakistan Series 2008 and the India-Sri Lanka Series 2009. Prasar Bharati was the highest bidder for only one series, being India-Pakistan Cricket Series 2007 wherein the other bidder was Nimbus India. Thus, Prasar Bharati became the accounting party only pertaining to one series and that too to Nimbus India.
5. Whereas Prasar Bharati abided by the terms of the bid, which had to be in terms of Rule 4 of the Sports Broadcasting Signals (Mandatory Sharing with Prasar Bharati) Rules, 2007, and furnished a bank guarantee equivalent to the bid amount to Nimbus India, Nimbus Singapore and Nimbus India failed to apply with said obligation. Further, whereas Prasar Bharati duly executed a contract concerning the India-Pakistan 2007 Cricket Series with Nimbus India, which had an arbitration clause, Nimbus India and Nimbus Singapore neither gave bank guarantees nor executed any contract and the result was the jural relationship between the parties concerning said sporting event being in terms of the Act and the Rules framed thereunde
