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2003 DIGILAW 188 (DEL)

PRASAR BHARTI v. STRACON (INDIA) LIMITED

2003-02-21

body2003
S. K. AGARWAL, J. ( 1 ) PETITIONER Prasar-Bharti has filed this petition under section 9 of the Arbitration and Conciliation Act, 1996 (for short the act ) for interim directions, restraining respondents, Stracon (India) Ltd. and Transworld International (for short twi ), from marketing in India, either themselves or through their agent or assignee, clippings and highlights of BCCI cricket matches (India Vs. West Indies Series from 9th Oct. , 2002 to 24th Nov. , 2002 ). The controversy is focused around the construction and interpretation of agreement dated 19. 2. 2000 between the Prasar Bharti and BCCI (hereinafter REFERRED TO as "the Agreement" ). ( 2 ) IT may be noted here, that Modi Entertainment Limited (hereinafter REFERRED TO MEL) had also filed a suit No. 1687/2002 against the respondents, ESPN Software (India) Ltd. , Star Television Network and the petitioner, for similar relief, along with I. A. No. 9615/2002, for interim relief. While issuing notice by order 11. 10. 2002, contesting defendants were restrained from telecasting the highlights of said cricketing events, till the next date of hearing. However, the Division Bench of this Court, by order dated 17. 10. 2002 in FAO. (OS ). 329/2002, stayed the operation of that order, observing that there was serious challenge to the locus standi of MEL to file the suit. The respondents were directed to execute a bank guarantee of a nationalized bank, equivalent to 50 per cent of the amount generated by telecast of highlights during that period. The appeal was disposed of by order dated 21. 10. 2002, directing final disposal of the I. A. No. 9615/ 2002 irrespective of any observation made by Division Bench in their order dated 17. 10. 2002. The present petition was filed by Prasar Bharti after the disposal of the appeal. ( 3 ) FACTS in brief are, that by a broadcasting licence agreement dated 25. 9. 1999 the Board of Control for Cricket in India (for short bcci ) granted to Prasar Bharti the petitioner, exclusive and full rights for production and broadcasting of the Cricketing Events to be conducted by BCCI in the territory of Union of India, from 1st January, 2000 to 30th September, 2004. After acquiring these rights the petitioner invited bids (hereinafter REFERRED TO as "the Bid") for marketing of airtime in India and abroad of the Cricketing Events. After acquiring these rights the petitioner invited bids (hereinafter REFERRED TO as "the Bid") for marketing of airtime in India and abroad of the Cricketing Events. In response to the same, respondent TWI-Stracon submitted its Bid Offer (hereinafter, REFERRED TO as "the Bid Offer) for exclusive global marketing rights of such Cricketing Events. Petitioner-Prasar Bharti accepted their Bid Offer for marketing rights in terms of acceptance letter dated 4th February, 2000 (with exception of radio rights within the United Kingdom) for outside Union of India. In pursuance of the letter of acceptance, respondent TWI. Stracon submitted the bank guarantee and on 19. 2. 2000 executed the agreement in dispute. Thereafter, petitioner through the distribution agreement appointed Modi Entertainment Limited as its distributor of two digital satellite encrypted channels, namely DD Sports and DD News, including BCCI cricket events. ( 4 ) IN the first week of October 2002, respondents published advertisements, proposing to telecast highlights of cricket matches of India-West Indies Series on Star sports channel from 8. 30 pm to 10. 00 pm and on ESPN channel from 11. 30 pm to 1. 00 am. Noticing these advertisements, petitioner informed the respondents that they did not have any right to telecast the "highlights". Attention of the respondents was invited to the proviso to Clauses 7 of the BCCI agreement dated 25. 9. 1999 which prohibits the petitioner to sub-let or lease the "signals" of BCCI cricket events, in Indian territory to any Third party/other channels/networks, except for natural over spill; and that under clause 19. 1. of the Agreement in dispute, the respondents were notified of the terms and conditions of the BCCI agreement and they undertook to abide by the terms of this agreement. ( 5 ) IT is pleaded that certain disputes between the petitioner and the respondents, arising out of the Agreement dated 19. 2. 2000, have already been REFERRED TO the sole arbitration of Mr. Justice A. S. Anand, retired Chief Justice of India; and that the petitioners would take steps to refer to arbitration the respondents claim to broadcast highlights of the BCCI Cricket events, in India; that the final India-West Indies cricket test was slated to start from 30. 10. 2. 2000, have already been REFERRED TO the sole arbitration of Mr. Justice A. S. Anand, retired Chief Justice of India; and that the petitioners would take steps to refer to arbitration the respondents claim to broadcast highlights of the BCCI Cricket events, in India; that the final India-West Indies cricket test was slated to start from 30. 10. 2002 and marketing of clippings and highlights of the said series by the respondents would be in violation of the agreement, which is likely to cause irreparable loss and injury to the petitioner, as the advertisements that would normally come to the petitioner, when the highlights are shown would go to the respondents; that the marketing of highlights and clippings by the respondents themselves or through their agents and assignees, not only adversely affects the advertisement revenue of the petitioner, but also the subscription base. ( 6 ) RESPONDENTS have filed a reply, inter alia, disputing the interpretation and construction being placed by the petitioner on the various clauses of the Agreement in question. It is also pleaded that the petition has been filed with a view to defeat respondents plea regarding locus standi of MEL to file the suit for declaration and injunction challenging the proposed telecast of highlights of cricket matches of India-West Indies matches on Star Sports and ESPN channels. ( 7 ) I have heard the learned counsel for the parties and have been taken through the record. ( 8 ) LEARNED counsel for the petitioner referring to the various clauses of the BCCI Agreement dated 25. 9. 1999 argued that petitioner invited bids for marketing of airtime in India and abroad of the cricketing events, on the terms and conditions contained therein. The respondents Bid Offer for exclusive marketing rights outside Union of India was accepted. The intention and main object of the agreement dated 19. 2. 2000 is only to provide marketing rights of the cricketing events to the respondents for outside India. Clauses 2 and 3 of the agreement define and grant Rights to the respondents in clear and specific words; clause 5 is captioned as "prasar Bharti s rights" and in Clause 5. 1 the words "subject to TWI. 2. 2000 is only to provide marketing rights of the cricketing events to the respondents for outside India. Clauses 2 and 3 of the agreement define and grant Rights to the respondents in clear and specific words; clause 5 is captioned as "prasar Bharti s rights" and in Clause 5. 1 the words "subject to TWI. STRACON non exclusive highlights and clipping rights within India" are either to be harmonized with the main intent and object of the Agreement or in the alternative these words are to be ignored, as per the settled principles for interpretation of deeds and contracts. ( 9 ) LEARNED counsel for the respondents on the other hand argued that terms of the said Agreement are unambiguous; clause 2 is general, as it states "on the terms and conditions hereinafter"; clause 3 lists out specific rights granted to the respondents; clauses 3. 1 and 3. 2 have specific territorial restrictions, viz. "outside territory of India"; clause 3. 3 has no territorial restrictions and states "all territories"; clauses 3. 4 to 3. 7 are territory neutral and the words in Clause 5. 1, "subject to TWI Stracon non-exclusive highlights and dipping rights within India" show beyond doubt that the respondents have exclusive rights to show the highlights and dippings of the cricket events in India. ( 10 ) LEARNED counsel also argued that even if any Clause of the Agreement is ambiguous (without prejudice to the respondents contention that there is no ambiguity in the contract), the Clauses should be interpreted in a manner protecting respondents rights of showing clippings and highlights of the BCCI Cricketing Events in India provided by clause 3. 3 and reiterated by clause 5. 1. Supporting this submission, learned counsel argued that the cardinal principles of interpretation are (i) to construe them according to their natural meaning if the words used are plain and unambiguous and not to bend its language in order to give effect to an interpretation sought to be given by a party; (ii) to adopt an interpretation that gives effect to the entire contract and not the interpretation that seeks to make any part of the contract redundant or meaningless; and (iii) to construe the deed in favour of the grantee if the same is defective. Reliance was placed on the observations made in Purnanathachi Vs. Reliance was placed on the observations made in Purnanathachi Vs. T. S. Gopateswami Odayar and others (AIR 1936 Privy Council 281); M. Arul Jothi and Anr. Vs. Lajja Bal (Deceased) and Anr. 2000 (3) SCC 723 ; LIC of India and Anr. Vs. Dharam Vir Anand (1998) 7 SCC 348 ; J. K. Cotton Spinning and Weaving Mills Co. Ltd. Vs. State of Uttar Pradesh and Others ( AIR 1961 SC 1170 ); The Central Bank of India Ltd. , Amritsar Vs. The Hartford Fire Insurance Co. Ltd. ( AIR 1965 SC 1288 ); and Delhi Development Authority Vs. Durga Chand Kaushish (1973) 2 SCC 825 . ( 11 ) THE question which first requires consideration is whether the clauses of the Agreement dated 19. 2. 2000 between Prasar Bharti and the respondents are unambiguous or is there any inconsistency requiring interpretation? At the outset, it is useful to recall that Rules of construction laid down by the Supreme Court in Ram Kishori Lal and Anr. Vs. Kamal Narain ( AIR 1963 SC 890 ), which read as under: "the golden rule of construction, it has been said, is to ascertain the intention of the parties to the instrument after considering all the words in their ordinary natural sense. To ascertain this intention, the Court has to consider relevant portion of the document as a whole and also take into account the circumstances under which the particular words were used. . . " it was further held: "it is clear, however, that an attempt should always be made to read the two parts of the document harmoniously, if possible; it is only when this is not. possible e. g. , where an absolute title is given in clear and unambiguous terms and the later provisions trench on the same, that the later provisions have to be held to be void. " ( 12 ) NOW it is necessary to refer to the relevant clauses of the Agreement in dispute. possible e. g. , where an absolute title is given in clear and unambiguous terms and the later provisions trench on the same, that the later provisions have to be held to be void. " ( 12 ) NOW it is necessary to refer to the relevant clauses of the Agreement in dispute. Introductory recital clauses of the Agreement read as under: "whereas" (1) By a Broadcasting Licence Agreement dated 25th September, 1999 made by and between BCCI and Prasar Bharti (hereafter "bcci Agreement"), Prasar Bharti has obtained inter alia exclusive and full rights for the production and broadcasting of the Cricketing Events starting from 1st January, 2000 to 30th September, 2004 (hereinafter "term") conducted by BCCI in the territory of Union of India upon the terms and conditions contained therein. (2) Pursuant to the BCCI Agreement, Prasar Bharti invited bids (hereafter the "bid") for the marketing of airtime in India and abroad of the Cricketing Events on the terms and conditions contained therein and the same is annexed hereto as Annexure A. (3) Pursuant to the Bid, TWI. STRACON had submitted its offer (hereinafter "bid Offer") for exclusive global marketing rights to such Cricketing Events. (4) Prasar Bharti accepted the Bid Offer by its acceptance letter dated 4th February, 2000 for global marketing including radio rights for all territories outside Union of India (with exception of radio rights within the United Kingdom) in respect of the Cricketing events to be conducted by BCCI in India for the consideration and on the terms and conditions contained therein. The said acceptance letter is annexed hereto as Annexure B. (5) In terms of the aforesaid acceptance letter, the parties hereto are entering into this Agreement to reduce the terms and conditions in writing as hereinafter contained. " ( 13 ) THE perusal of the above clauses clearly show: (a) that petitioner by a broadcasting licence agreement dated 25th September, 1999 with BCCI obtained exclusive and full rights for production and broadcasting of the cricketing events conducted by BCCI in the territory of Union of India; (b) pursuant to this Agreement petitioner invited bids for marketing of the airtime in India and abroad (global); (c) the respondent-TWI-STRACON submitted Bid Offer for exclusive global marketing rights; (d) petitioner accepted the Bid Offer vide letter dated 4. 2. 2. 2000 only for global marketing rights, including radio rights for "all territories outside Union of India" with the exception of radio rights within the United Kingdom; and (e) In terms of the acceptance letter dated 4. 2. 2000 parties entered into the Agreement in dispute and reduced the terms and conditions into writing. ( 14 ) AFTER above-noted recitals, relevant operative clauses of the Agreement in dispute are as follows: 2. GRANT OF RIGHTS pursuant to TWI-STRACON submitting the Bank Guarantee and subject to the provisions hereof, Prasar Bharti hereby grants upto TWI-STRACON the sole and exclusive global marketing rights including radio rights for all territories outside Union of India (with exception of radio rights within UK and also excluding internet rights) (hereinafter "rights") in respect of Cricketing events conducted by BCCI in India during the Term, on the terms and conditions contained hereinafter. 3. RIGHTS the rights (hereinafter called "the Rights") granted by Prasar Bharti to TWI-STRACON hereunder are as follows: 3. 1 Exclusive rights for marketing live/ delayed television signal for all territories outside the Union of India for all forms of television including terrestrial broadcast, pay per view, cable and satellite (free to air and subscription ). 3. 2 Exclusive rights for marketing radio rights for all forms of radio signals outside the territories of Union of India excluding the territories of the United Kingdom. 3. 3 Rights of marketing clippings and highlights of the matches in all territories. 3. 4 to 3. 7 xxxx (Emphasis supplied) 4. CRICKETING EVENTS (a) and (b) xxxxxx ( 15 ) CLAUSE 2 is captioned as "grant OF RIGHTS". By this clause petitioner granted sole and exclusive global marketing Rights, including radio rights for "all territories outside Union of India" to the respondents, (with the exception of radio rights within United Kingdom and also excluding internet rights) in respect of the cricketing events conducted by BCCI in India. Clause 3 specifies the Rights granted to the respondent. Clause 3. 1 provides for marketing of live/delayed television signals "for all territories outside Union of India". Clause 3. 2 provides for marketing of radio rights for "outside territories of Union of India", (excluding territory of United Kingdom ). Clause 3. 3 provides for marketing of clippings and highlights "in all territories". In clauses 3. 4 to 3. 7 there is no specific mention of territories. Clause 2 defines the Rights. Clause 3. 2 provides for marketing of radio rights for "outside territories of Union of India", (excluding territory of United Kingdom ). Clause 3. 3 provides for marketing of clippings and highlights "in all territories". In clauses 3. 4 to 3. 7 there is no specific mention of territories. Clause 2 defines the Rights. It grants sole and exclusive global marketing rights for the BCCI cricketing events, for all territories outside Union of India with the exception of radio rights in U. K. This Clause provides the main object of the agreement. Clause 3 only details the rights flowing from Clause 2, therefore, these two Clauses are to be read together. Considering all the words in their ordinary and natural sense, it is apparent that Clause 2 of the Agreement is the source of the Rights granted to the respondents. Clause 3 is like a stream flowing from clause 2, which has to be subservient to the source. Clause 3 does not define the Rights, it only specifies the Rights. The argument that by clause 3. 3, respondents have been given the marketing rights of clippings and highlights; that the words used therein have no territorial qualification, therefore, the respondents have a right of marketing the highlights and the clippings in India cannot be accepted, as the same would be in breach of the fundamental term i. e. Clause 2 of the agreement. In view of the same, the interpretation suggested by learned counsel for the respondents has to be rejected. ( 16 ) THE above conclusion finds full support from the proviso to Clause 7 of the BCCI agreement dated 25. 9. 1999 read with Clause 19. 1 of the Agreement in dispute. Through clause 19. 1 respondents were notified of the terms and conditions of the BCCI agreement, and the respondents undertook not to commit or cause to be committed, directly or indirectly, any breach of terms of the BCCI agreement insofar as they relate to the exercise of their Rights. Under provisio to clause 7 of the BCCI Agreement, petitioner undertook not to assign, sub-let or lease, distribution or marketing of signals in Indian territory to any Third party/ other channels/ Networks, except for natural over spill. The proviso to Clause 7 of BCCI agreement reads as under: "7. Under provisio to clause 7 of the BCCI Agreement, petitioner undertook not to assign, sub-let or lease, distribution or marketing of signals in Indian territory to any Third party/ other channels/ Networks, except for natural over spill. The proviso to Clause 7 of BCCI agreement reads as under: "7. xxxxxxxxx provided however, Prasar Bharti shall not assign, sub-let, or lease, distribution or marketing of the signals in Indian territory to any Third Party/other channels/ Networks, except for natural overspill. " ( 17 ) MERE reading of the above makes it apparent that the petitioners are prohibited to assign, sub-let or lease, distribution or marketing of signals in India, to any Third Party. The respondents are bound by their undertaking vide clause 19. 1 of the agreement. They cannot be heard saying that they were not aware of the same or are not bound by it. In reply, the learned counsel for the respondents argued that what is prohibited under the proviso to Clause 7 is the marketing of the "signals" to the third party in India and that "highlights and clippings" are not signals but "programming" based on such signals; it was argued that highlights would be of 60 minutes per match; the total match footage to air is about six hours duration in a day and that remaining time of the "highlights" would be analysis of the match by an expert panel. I am unable to agree. Main portion of Clause 7 uses the words "programming". The term "programming" is not defined but it cannot be disputed that highlights are generated from "signals". The "signals cannot be read as live signals being generated from the venue of the match. There is a problem in accepting this interpretation, as under the pretext of showing the highlights, one may show most of the match. This would be against the main purpose and intent of the Agreement. The clauses cannot be construed so as to defeat the main object and intent of the Agreement, envisaged by Clause 2, i. e. grant of sole and exclusive global marketing Rights, including radio rights for "all territories outside Union of India" to the respondents. What cannot be done directly, cannot be permitted to be done indirectly. Learned counsel also argued that if "signals" are interpreted to include "programming" then petitioner-Prasar Bharti, would have been prohibited from granting exclusive marketing and distribution rights to MEL. What cannot be done directly, cannot be permitted to be done indirectly. Learned counsel also argued that if "signals" are interpreted to include "programming" then petitioner-Prasar Bharti, would have been prohibited from granting exclusive marketing and distribution rights to MEL. This cannot be of any help to the respondents. It is nobody s case that BCCI has taken any objection to petitioner s agreement with MEL and the same is not an issue in this case. ( 18 ) THE stage is reached to consider Clause 5 of the Agreement in dispute, which is the most contentious clause. It reads as under: "5. PRASAR BHARTI s RIGHTS: 5. 1 PRASAR BHARTI retains and shall have all television and radio rights within India and all radio rights within the UK in relation to the Cricketing Events subject to TWI-Stracon non-exclusive highlights and dipping rights within India. 5. 2 xxxxxxx" ( 19 ) THE words in Clause 5. 1, "subject to TWI. Stracon s non-exclusive highlights and clipping rights within India" are negatively worded. The phrase protects the rights of the respondents to show highlights and clipping in India, but it does not grant any right to the respondents. In my considered view these words are clearly inconsistent with the rights granted by Clause 2 of the Agreement. The above-noted phrase in Clause 5. 1 of the Agreement cannot be read in harmony with the other clauses in the Agreement. The question which remains to be answered is as to what rule is to be applied in such a situation? ( 20 ) THERE can be no dispute about the principles laid down by the various decisions cited by the learned counsel for the respondents. Each case depends upon its own facts. Rules of construction of documents are guidelines and not the Rules of law. In this regard, Odgers Construction of Deeds and Statutes, Vth Edition at P. 28 reads: "the decisions of the courts, extending over many years, have often been crystallized into body of Rules deduced from decisions. It must be noticed that these rules are in no way rules of law. . . . ". Here the phrase in Clause 5. 1, "subject to TWI. Stracon s non-exclusive highlights and clipping rights within India", runs counter to the main object and intent of the Agreement. It must be noticed that these rules are in no way rules of law. . . . ". Here the phrase in Clause 5. 1, "subject to TWI. Stracon s non-exclusive highlights and clipping rights within India", runs counter to the main object and intent of the Agreement. In my view, in the peculiar facts and circumstances of this case, it would be more appropriate to reject the repugnant words and to apply the main purpose rule . The "main purpose rule" was summarized by Lord Halsbury in Glynn Vs. Margetson and Co. {[1893] A. C. 351 at p. 357, as follows: "looking at the whole of the instrument, and seeing what one must regard as its main purpose, one must reject words, indeed whole provisions, if they are inconsistent with what one assumes to be the main purpose of the contract. " ( 21 ) THE above principle was approved and applied in Suisse Atlantique Societe Vs. N. V. Rotterdamsche [1966] 2 W. L. R. 944. Applying the above principles to the facts of this case, as found above, the words "subject to TWI Stracon s non-exclusive highlights and clipping Fights within India", in Clause 5. 1 of the Agreement, cannot be read in harmony with Clause 2 of the Agreement, which provides the main object of the Agreement, and, therefore, they are to be ignored and rejected. ( 22 ) LEARNED counsel for the respondents also argued that post-contractual conduct of the petitioner shows acquiescence by the petitioner; that after signing of the Agreement, highlights and clippings of the matches (India Vs. Zimbabwe, October-December 2000; India Vs. Australia, February-April 2001; and India Vs. England, December 2001 to January 2002), were telecast by the respondents on Channel NOW, beamed through ASIASAT, which is available in India and that no such dispute was raised by the petitioner earlier. This again does not help the respondents. Admittedly, respondents did not show highlights of the above BCCI cricket events on any of the main channels in India. If the respondents were sure of their rights to show highlights and clippings granted under the Agreement in dispute, nothing prevented them from sho. wing the clippings and highlights of the said cricketing events on the main channels in India, during that period. This conduct rather goes against them. If the respondents were sure of their rights to show highlights and clippings granted under the Agreement in dispute, nothing prevented them from sho. wing the clippings and highlights of the said cricketing events on the main channels in India, during that period. This conduct rather goes against them. ( 23 ) TO conclude, the respondents Bid Offer for exclusive marketing rights outside Union of India, of the BCCI organized cricketing events was accepted. By Clause 2 of the Agreement, the rights were granted to the respondents. Clause 2 provides the main object of the Agreement. Clause 3 further specifies the rights flowing from Clause 2. These two clauses are to be read together. This view finds support from the Proviso to Clause 7 of the BCCI Agreement when read with Clause 19. 1 of the Agreement in dispute. If the interpretation contended by the respondents is accepted, it would be in breach of the undertaking given by them vide Clause 19. 1 as the highlights and clippings can be generated only from the signals. Further admittedly respondents did not telecast the highlights or clippings of cricketing events organized by BCCI between October 2000 and January 2002 of Cricketing events on any of the main channels in India. Thus, petitioners have succeeded in making out that they have a prima facie case; that the balance of convenience lies in their favour, and that they would suffer irreparable loss and injury if interlocutory injunction is not granted, as per law laid down by Supreme Court in several authoritative pronouncements. In case the respondents ultimately succeed, they can be suitably compensated. ( 24 ) FOR the foregoing reasons, petition is allowed and respondents are restrained from marketing in India, either themselves or through their agent or assignee, clippings and highlights of BCCI cricket matches in India, pending adjudication of their rights by the competent authority. It is, however, clarified that any observation made herein would not affect the case of the parties on merits, during adjudication by the Competent Authority. ( 25 ) PETITION stands disposed of.