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2012 DIGILAW 943 (CAL)

Sourav Ganguly v. Mahuaa Media Pvt. Ltd.

2012-10-11

SANJIB BANERJEE

body2012
JUDGMENT : Sanjib Banerjee, J. The Court : AP No.480 of 2012 is a petition under Section 9 of the Arbitration and Conciliation Act, 1996. GA No.1989 of 2012 is the respondent's application for vacating the subsisting interim order. GA No.2168 of 2012 is an application by the petitioner for steps being taken against the deponent of an affidavit affirmed on behalf of the respondent. 2. The petitioner moved the petition under Section 9 of the 1996 Act ex parte on the ground that if notice was served, the meagre assets of the respondent could be alienated with a view to avoid payment to the petitioner. Upon noticing the claim of the petitioner to be in excess of Rs. 30 crore, an ex parte order was passed on June 26, 2012 in terms of prayer (g) of the petition, limited only to the Salt Lake property described under the second head in paragraph 30 of the petition. The injunction restraining the respondent and its men and agents from disposing of or selling or transferring or encumbering or letting out or charging or alienating or dealing with the Salt Lake property continues. 3. On July 5, 2012 when the matter was next taken up, the respondent was not represented despite deemed service. The order recorded that the directors of the respondent had also been served by electronic mail or, at least, had been informed of the proceedings and of the order passed on this petition on June 26, 2012. Directions for filing affidavits were issued on July 5, 2012 and, on the further prayer of the petitioner, the order of injunction was extended to cover a Delhi property at Friends Colony. A Special Officer was also appointed on July 5, 2012 to report on the position of occupation at both the Salt Lake property and the Friends Colony property. 4. Shortly upon the vacating application being filed, the parties agreed to the personnel of the arbitrator and the reference has commenced. The respondent says that in the respondent agreeing to fast-track the reference, it is evident that the respondent does not seek to delay the adjudication of the disputes between the parties. 4. Shortly upon the vacating application being filed, the parties agreed to the personnel of the arbitrator and the reference has commenced. The respondent says that in the respondent agreeing to fast-track the reference, it is evident that the respondent does not seek to delay the adjudication of the disputes between the parties. The respondent suggests that given the usual time taken for the arbitral tribunal to be constituted on a request under Section 11 of the 1996 Act, after the adjudicatory part of the matter is completed, such fact should weigh with the Court in considering whether the conduct of the respondent is such that it intends to defraud the petitioner. 5. The respondent asserts that an order in the nature of attachment before judgment is regarded as an unusual order and may be passed only upon exceptional grounds being cited. The respondent insists that there is no material in the petition on the basis of which the authority under Order 38, Rule 5 of the Code may be invoked or exercised and the crucial element of mens rea on the part of the respondent has not been made out in the petition. The respondent claims that though Section 9 of the 1996 Act apparently allows such interim orders to be passed as the Court may deem proper in the circumstances, an order in the nature of attachment before judgment may only be passed upon compliance with the provisions of Order 38, Rule 5 of the Code. The respondent has carried several authorities in support of its contention that in considering a prayer for an order in the nature of attachment before judgment sought under Section 9 of the 1996 Act the relevant considerations as applicable to Order 38, Rule 5 of the Code would apply. There are judgments of this Court in such regard that the respondent relies on which are reported at AIR 2010 Cal 166 and AIR 2011 Cal 37 . There are judgments of this Court in such regard that the respondent relies on which are reported at AIR 2010 Cal 166 and AIR 2011 Cal 37 . In the second of the judgments, a Division Bench of this Court emphasised on the expression "and the Court shall have the same power for making orders as it has for the purpose, and in relation to any proceedings before it" appearing at the end of Section 9 of the 1996 Act to infer therefrom that the general principles as recognised in the Civil Procedure Code had to be applied even to a case for interim measures under Section 9 of the 1996 Act. The Division Bench held that a petitioner invoking Section 9 of the 1996 Act to seek an order in the nature of attachment before judgment had to show, prima facie, that the claim was bona fide and valid; and also satisfy the Court that the respondent was about to remove or dispose of the whole or part of the respondent's property with the intention of obstructing or delaying the execution of any decree that may be passed against the respondent. 6. The respondent has referred to a judgment reported at AIR 2007 SC 2144 where, at paragraph 15 of the report, it was observed that the exercise of the power under Section 9 of the 1996 Act "must be based on well recognised principles governing grounds of interim injunctions and other orders of interim protection or the appointment of a receiver." A judgment of the Madras High Court reported at 123 Comp Cas 533 has been referred to by the respondent for the recognition that the powers and restrictions under the Civil Procedure Code would apply to proceedings under Section 9 of the 1996 Act. 7. The respondent has next proceeded to discredit the case run by the petitioner and has referred to several authorities in support of the proposition that vague allegations of impecunosity or the mechanical assertion of the wording of Order 38, Rule 5 of the Code should not result in a drastic order of attachment before judgment being passed. The judgments referred to in such context are the ones reported at AIR 2004 Cal 58 ; AIR 2009 Cal 260 ; (2008)2 SCC 302 ; AIR 2002 Bom 203 ; AIR 1992 Mad 293 and AIR 1985 Kant 282. 8. The judgments referred to in such context are the ones reported at AIR 2004 Cal 58 ; AIR 2009 Cal 260 ; (2008)2 SCC 302 ; AIR 2002 Bom 203 ; AIR 1992 Mad 293 and AIR 1985 Kant 282. 8. The respondent asserts that the mere failure on the part of a party to pay is not good ground for an extraordinary order in the nature of attachment before judgment being passed. The respondent refers to the principle embodied in Order 38, Rule 5 of the Code and says that the conduct of the party must be such that the manifest intention to deceive or dodge the claim should be apparent before such a drastic order in slapped on such party. The respondent says that merely because the respondent has reduced its operations in Calcutta or the respondent has discontinued its television entertainment channel would not be enough for an unsecured creditor to be elevated to the class of a secured creditor. 9. The facts relating to the matter must now be seen to the extent necessary for the present assessment. The petitioner was an international cricketer of repute and continues to be a celebrity in this country. The petitioner entered into an agreement for hosting a programme on the respondent's television channel against an assured fee. It is the petitioner's case that the agreement obliged the respondent to pay the petitioner a sum of Rs. 34 crore for the three-year period, irrespective of whether the programme was carried by the respondent, subject to the petitioner being available therefor. The petitioner says that the agreement not only bound the petitioner to the programme, it also shut out other lucrative avenues open to the petitioner. On the basis of the affidavit filed by the respondent, it is not in great dispute that only a sum of Rs. 4 crore was paid to the petitioner against an assured and promised amount of Rs. 8 crore due for the first year that the programme was aired on the respondent's channel. The channel has closed down and the programme has been discontinued and, prima facie, it appears that the respondent is obliged to pay the assured remuneration of the petitioner for the second and third years, but it is doubtful whether such remuneration is payable at the end of the first year itself. The channel has closed down and the programme has been discontinued and, prima facie, it appears that the respondent is obliged to pay the assured remuneration of the petitioner for the second and third years, but it is doubtful whether such remuneration is payable at the end of the first year itself. It is, however, unnecessary to pronounce any conclusive finding on the rights and obligations of the parties under the agreement since that is within the exclusive domain of the arbitrator. Suffice it to say that a near unimpeachable claim in money of value not less than Rs. 4 crore and probably closer to Rs. 34 crore has been established by the petitioner. That is a necessary first step for obtaining an order in the nature of attachment before judgment. 10. Fundamentally, a claimant can seek such an extraordinary and drastic order that impedes the respondent's use of one or more assets not forming part of the agreement upon an unimpeachable liquidated claim being demonstrated and upon it being established that the respondent was taking steps to improperly deny the realisation of the claim. 11. The petitioner has referred to three judgments in support of his contention that a broader view of the matter must now be taken in the present day and age since claims do not get resolved or adjudicated upon within any reasonable time of their institution. In the first of the judgments relied upon by the petitioner, reported at 2010 (2) CHN 203 , inter alia, the following passage from the report has been relied on: "24. Two aspects need to be seriously considered. At the time that the Civil Procedure Code came to be made suits would not take years or decades to be brought to trial as is usually the case these days. The strength of the principle that an apparently good claim would not justify an order for attachment to be made before final judgment is rendered, needs to be seen with reference to the time and place in which such principle was born. The second aspect is that even without a defendant attempting to defraud its creditors or the plaintiff, the vicissitudes of the commercial market may leave the defendant with little to offer as judgment-debtor upon the decree being made. The second aspect is that even without a defendant attempting to defraud its creditors or the plaintiff, the vicissitudes of the commercial market may leave the defendant with little to offer as judgment-debtor upon the decree being made. The sheer passage of time between the institution of an action and the trial thereof that has now come to be accepted as par for the course may make the claim irrelevant or even the claimant disinterested. That would result in an erosion of the confidence in the system and lead suitors to undesirable quarters for more effective results. But this may not be the ideal action for such considerations to have a bearing." 12. The petitioner also refers to a recent, and yet unreported, judgment of a Division Bench of this Court rendered on July 10, 2012 in APO No.32 of 2012, APO No.33 of 2012 and APO No.77 of 2012 where the Court observed as follows: "If we proceed having a strict interpretation of law we would have to allow the cross-objection. Can we be a mere onlooker when the Church property was virtually under the control of the Court? Our conscience prick to notice the sorry state of affairs as depicted above. In 2012 the Courts, in our view, must strive to find out ways and means to do substantial justice instead of going into the niceties of law and extent support to those who wish to take shelter under the flaws of the law and remains scot free despite wrong being committed." 13. The third judgment carried by the petitioner on this aspect is the one reported at (2008) 2 SCC 724 where the observations at paragraphs 12 and 13 of the report indicate that if there is a huge sum which is claimed and is, prima facie, established the plaintiff would be "entitled to secure his interest keeping in view the amount involved in the suit." 14. There is no doubt that there is a substantial sum which is due from the respondent to the petitioner. It is also evident from the report of the Special Officer that there is almost no commercial activity or any work at all in the Salt Lake office of the respondent. It is also the respondent's contention that the Friends Colony office that used to be registered office of the respondent company is no longer with the respondent. It is also evident from the report of the Special Officer that there is almost no commercial activity or any work at all in the Salt Lake office of the respondent. It is also the respondent's contention that the Friends Colony office that used to be registered office of the respondent company is no longer with the respondent. The earlier orders passed herein record the difficulty in effecting service on the respondent and the affidavits of service filed by the petitioner also reveal the manner of functioning of the respondent. It also appears from the correspondence exchanged between the parties and particularly, the letters addressed by the petitioner to the respondent, that even the guests who have been invited and who attended the programmes on the petitioner's request have not been paid the travel expenses, leave aside the honorarium. Certain prizes announced to participants in the programmes have also not been paid. 15. It is also the admitted position that some of the key functionaries of the respondent company have been arrested. The petitioner has also referred to several creditors of the respondent company having instituted proceedings against the respondent. 16. The two channels aired by the respondent have been closed down. There is hardly any functioning at the offices of the respondent in Calcutta. An affidavit has been filed in a rather cavalier manner on behalf of the respondent where an officer who was not associated with the respondent at the time that the agreement was executed between the parties has made statements as to what transpired at that time and has verified the statements to be true to his knowledge. 17. There is a justifiable apprehension, in the circumstances, as to whether the petitioner will be entitled to realise the money upon the arbitral reference being concluded, particularly, since there does not appear to be any defence at all to the substantial money claim of the petitioner. 18. The respondent says that some of the properties over which the subsisting orders operate do not belong to the respondent. To such extent, the orders may not be effective but the respondent is not prejudiced if there are orders that operate on properties which are not owned by the respondent. 18. The respondent says that some of the properties over which the subsisting orders operate do not belong to the respondent. To such extent, the orders may not be effective but the respondent is not prejudiced if there are orders that operate on properties which are not owned by the respondent. The conduct of the respondent does not inspire any confidence and it is just and expedient that the subsisting orders continue till the respondent is able to deposit at least a sum of Rs. 20 crore in aid of the petitioner's claim in the reference. 19. AP No. 480 of 2012 is allowed by confirming the subsisting orders. 20. GA No. 1989 of 2012, which is the respondent's application for vacating the orders, is dismissed. 21. GA No. 2168 of 2012, which is an application by the petitioner for taking steps against the deponent of an affidavit affirmed on behalf of the respondent, is disposed of without any order but by reminding the concerned officer to be more careful before affirming further affidavits. 22. The petitioner will also be entitled to costs assessed at 1500 GM for the present proceedings which may be claimed in the arbitral reference. Urgent certified photocopies of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.