Case Note & Summary
The petitioner, Zee Entertainment Enterprises Limited, filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 challenging an arbitral award dated 21st October, 2011. The dispute arose from an agreement dated 15th November, 2006 between the petitioner and the respondent, Klassic Studios & Films Pvt. Ltd., for the production of a television serial initially titled 'Ghar .... Saath Zindagi Bhar Ka' later changed to 'Maayka .... Sath Zindagi Bhar Ka'. The consideration was Rs. 4,70,000/- per episode. By June 2007, 93 episodes were produced. On 13th June, 2007, the respondent requested an increase in consideration to Rs. 5,70,000/- per episode, which was refused. On 19th June, 2007, the petitioner terminated the agreement. The respondent accepted termination on 22nd June, 2007 under protest and reserved the right to claim damages. After failed mediation by the Association of Motion Pictures and TV Programme Producers, the respondent invoked arbitration. The arbitrator allowed part of the respondent's claims, awarding Rs. 1,17,50,000/- as loss of profit for 50 episodes, Rs. 1,00,000/- for loss of reputation, and Rs. 1,00,000/- for mental agony, with interest at 12% per annum. The petitioner challenged the award on grounds of patent illegality and being against public policy. The court held that the arbitrator's findings were based on evidence and not perverse, and the quantum of damages was not so unreasonable as to warrant interference under Section 34. The petition was dismissed, and the award was upheld.
Headnote
A) Arbitration - Challenge to Arbitral Award - Section 34 of Arbitration and Conciliation Act, 1996 - Scope of Interference - The court considered the limited grounds for setting aside an arbitral award under Section 34, including patent illegality and conflict with public policy. The court held that the arbitrator's findings on breach of contract and quantum of damages were based on evidence and not perverse, thus not warranting interference. (Paras 1-21) B) Contract Law - Breach of Contract - Termination of Production Agreement - The dispute arose from termination of an agreement for production of a television serial. The arbitrator found that the petitioner's termination was wrongful and awarded damages. The court upheld the finding, noting that the respondent had accepted termination under protest and claimed damages. (Paras 3-6) C) Damages - Quantum of Damages - Loss of Profit - The arbitrator awarded Rs. 1,17,50,000/- as loss of profit for 50 episodes. The court held that the quantum was based on the arbitrator's assessment of evidence and was not so unreasonable as to be set aside under Section 34. (Paras 10-15)
Issue of Consideration
Whether the arbitral award dated 21st October, 2011 is liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996 on grounds of patent illegality or being against public policy.
Final Decision
The petition is dismissed. The arbitral award dated 21st October, 2011 is upheld.
Law Points
- Section 34 of Arbitration and Conciliation Act
- 1996
- Scope of interference with arbitral award
- Patent illegality
- Public policy
- Breach of contract
- Quantum of damages
