w w w . L a w y e r S e r v i c e s . i n

Kumar Mangat Pathak v/s Cinema Capital Venture Fund, Through Urmila Gupta & Others

Company & Directors' Information:- L & T CAPITAL COMPANY LIMITED [Active] CIN = U67190MH2000PLC125653

Company & Directors' Information:- B. P. CAPITAL LIMITED [Active] CIN = L74899DL1994PLC057572

Company & Directors' Information:- B. P. CAPITAL LIMITED [Active] CIN = L74899HR1994PLC072042

Company & Directors' Information:- H AND W CAPITAL PRIVATE LIMITED [Active] CIN = U67120DL1998PTC092955

Company & Directors' Information:- K M CAPITAL LIMITED [Active] CIN = L65910DL1992PLC048421

Company & Directors' Information:- R. L. CAPITAL PRIVATE LIMITED [Active] CIN = U17120MH1992PTC066895

Company & Directors' Information:- A. K. CAPITAL CORPORATION PRIVATE LIMITED [Active] CIN = U65993MH2006PTC165749

Company & Directors' Information:- P H CAPITAL LIMITED [Active] CIN = L74140MH1973PLC016436

Company & Directors' Information:- I B CAPITAL PRIVATE LIMITED [Active] CIN = U65993GJ2011PTC065780

Company & Directors' Information:- URMILA AND COMPANY LIMITED [Active] CIN = U99999MH1972PLC016089

Company & Directors' Information:- I 5 CAPITAL PRIVATE LIMITED [Active] CIN = U65990TN2015PTC101551

Company & Directors' Information:- S E R CAPITAL PRIVATE LIMITED [Active] CIN = U65921MH1998PTC116812

Company & Directors' Information:- P. R. KUMAR CAPITAL PRIVATE LIMITED [Active] CIN = U74899DL1985PTC022120

Company & Directors' Information:- P. K. A. CAPITAL PRIVATE LIMITED [Active] CIN = U74899DL1995PTC074137

Company & Directors' Information:- R S N CAPITAL PRIVATE LIMITED [Strike Off] CIN = U65924HR2012PTC045875

Company & Directors' Information:- A J CAPITAL LIMITED [Active] CIN = U74899DL1995PLC072149

Company & Directors' Information:- B B VENTURE PRIVATE LIMITED [Active] CIN = U52209CT2008PTC020645

Company & Directors' Information:- CAPITAL LTD [Active] CIN = U65993WB1956PLC001592

Company & Directors' Information:- A TO Z VENTURE CAPITAL LIMITED [Active] CIN = U74899DL1995PLC074063

Company & Directors' Information:- PATHAK CORPORATION PRIVATE LIMITED [Active] CIN = U74110MH2008PTC182357

Company & Directors' Information:- T AND T CAPITAL PRIVATE LIMITED [Active] CIN = U67120TG2020PTC142533

Company & Directors' Information:- S A R VENTURE PRIVATE LIMITED [Active] CIN = U70102DL2015PTC275704

Company & Directors' Information:- D-CINEMA INDIA PRIVATE LIMITED [Active] CIN = U74999TN2020PTC137840

Company & Directors' Information:- M R CAPITAL PRIVATE LIMITED [Active] CIN = U65921DL1996PTC075492

Company & Directors' Information:- CINEMA COMPANY INDIA PRIVATE LIMITED [Strike Off] CIN = U74999MH2014PTC255501

Company & Directors' Information:- M G M CAPITAL LIMITED [Strike Off] CIN = U67120RJ1995PLC009482

Company & Directors' Information:- J L CAPITAL PRIVATE LIMITED [Strike Off] CIN = U67120DL1996PTC079840

Company & Directors' Information:- KUMAR CAPITAL LTD. [Strike Off] CIN = U67120UP1995PLC018227

Company & Directors' Information:- N J VENTURE PRIVATE LIMITED [Strike Off] CIN = U70101MH2008PTC186387

Company & Directors' Information:- CINEMA LIMITED [Dissolved] CIN = U99999MH1954PLC009319

    Comm Arbitration Petition No. 542 of 2017 with Notice of Motion No. 812 of 2018 with Chamber Summons No. 497 of 2018 in Comm Execution Application No. 827 of 2018

    Decided On, 18 July 2018

    At, High Court of Judicature at Bombay


    For the Petitioner: Swapnil Bangur, S. Hajea, i/b H & M Legal Associates, Advocates. For the Respondents: Aditya Mehta, Ravi Suryavanshi & Shrikant Deshpande, i/b Naik Naik & Company, Advocates.

Judgment Text

Oral Judgment:

1. The Petition is placed before me since AK Menon J, to whose bench these matters are ordinarily assigned, is unable to take it. There is on board a Commercial Execution Application No. 827 of 2018, a Chamber Summons by the Respondent to the Arbitration (the Award Debtor; 'Pathak'), his Chamber Summons No. 497 of 2018 to raise an attachment, and his Petition under Section 34 of Arbitration and Conciliation Act 1996 as amended ('the Arbitration Act'). There is also the Pathak’s Notice of Motion No. 812 of 2018 for stay of execution of the Award. Since I am hearing the Petition under Section 34, this order will dispose of the Motion for stay and the Chamber Summons for raising attachment as well.

2. The challenge is to an Award dated 15th June 2017.

3. It is clear from the Petition that no part of the challenge falls under Section 34(2)(a) or Section 34(2)(b)(i) of the Arbitration Act. The challenge is mounted under Section 24(2)(b)(ii), ostensibly on the ground that the Award is in conflict with the public policy of India.

4. For the Petitioner, Pathak, Mr Bangur has before him a formidable task. He must first identify with precision what dimension of public policy it is that he says has been breached by the impugned Award. Even given the inherently flexible - even amorphous - contours of the expression, ‘public policy’ is not infinitely elastic. It has defined limits. Mr Bangur must, in the presentation of his arguments, be careful not to attempt to convert this challenge Petition into a First Appeal; for if there is one thing that a Section 34 Petition is not and can never be, it is in a First Appeal. Indeed, relatively recent law makes Mr Bangur’s task more arduous. The Supreme Court considered the sweep of this head of public policy in elaborate detail in Associate Builders v Delhi Development Authority ((2015) 3 SCC 49; followed in Sutlej Construction Limited v Union Territory of Chandigarh, (2018) 1 SCC 718).

5. I have chosen to start with this rather than with the merits of either the Award or the Petition itself because I am of the firm belief that any assessment of the submissions must fall within these defined parameters. There can be no straying beyond. There is a tendency now, one that I believe must be curbed most emphatically, to treat every arbitral tribunal as a lower division court and to pursue challenge petitions to arbitral awards as if those were orders or decrees of courts lower in echelon. That approach completely eviscerates the Arbitration Act, its primary intent and its overriding purpose. I have repeatedly made it clear to Mr Bangur that I will not consider his submissions on the basis of what his client believes is desirable. He must be able to show that the Award - or the crucial portions of it - are so thoroughly implausible that no decision making authority could ever have arrived at the conclusion that the learned sole Arbitrator did. Any challenge under Section 34’s public policy provisions must be mounted not on the basis of what the Arbitrator might have done, could have done or even ideally or preferably should have done. It must be framed as, and only as, a challenge that the Tribunal could not possibly have decided as it did without being completely unreasonable and unfair.

6. Returning to the decision of the Supreme Court in Associate Builders, paragraphs 17 to 19 and 29 to 33 furnish us the necessary guidance. Paragraph 17 itself makes it clear that it is only on the public policy ground of challenge that the merits of the Arbitral Award can be legitimately examined - but even this is not uncontrolled or unrestricted. This examination is trammelled by specified circumstances. The Supreme Court considered at some length the law in this regard from paragraphs 18 to 26 and then proceeded to hold as follows in paragraphs 27 to 29 and 31 to 33:

Fundamental Policy of Indian Law

27. Coming to each of the heads contained in the Saw Pipes (2003) 5 SCC 705) judgment, we will first deal with the head 'fundamental policy of Indian Law'. It has already been seen from the Renusagar (Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC644) judgment that violation of the Foreign Exchange Act and disregarding orders of superior courts in India would be regarded as being contrary to the fundamental policy of Indian law. To this it could be added that the binding effect of the judgment of a superior court being disregarded would be equally violative of the fundamental policy of Indian law.

28. In a recent judgment, ONGC Ltd. v. Western Geco International Ltd. (2014) 9 SCC 263:(2014) 5 SCC (Civ) 12, this Court added three other distinct and fundamental juristic principles which must be understood as a part and parcel of the fundamental policy of Indian law. The Court held: (SCC pp.278-80, paras 35 & 38-40)

'35. What then would constitute the 'fundamental policy of Indian law' is the question. The decision in ONGC (2003) 5 SCC 705 does not elaborate that aspect. Even so, the expression must, in our opinion, include all such fundamental principles as providing a basis for administration of justice and enforcement of law in this country. Without meaning to exhaustively enumerate the purport of the expression ‘fundamental policy of Indian law’, we may refer to three distinct and fundamental juristic principles that must necessarily be understood as a part and parcel of the fundamental policy of Indian law. The first and foremost is the principle that in every determination whether by a court or other authority that affects the rights of a citizen or leads to any civil consequences, the court or authority concerned is bound to adopt what is in legal parlance called a 'judicial approach' in the matter. The duty to adopt a judicial approach arises from the very nature of the power exercised by the court or the authority does not have to be separately or additionally enjoined upon the fora concerned. What must be remembered is that the importance of a judicial approach in judicial and quasi-judicial determination lies in the fact that so long as the court, tribunal or the authority exercising powers that affect the rights or obligations of the parties before them shows fidelity to judicial approach, they cannot act in an arbitrary, capricious or whimsical manner. Judicial approach ensures that the authority acts bona fide and deals with the subject in a fair, reasonable and objective manner and that its decision is not actuated by any extraneous consideration. Judicial approach in that sense acts as a check against flaws and faults that can render the decision of a court, tribunal or authority vulnerable to challenge.

* * *

38. Equally important and indeed fundamental to the policy of Indian law is the principle that a court and so also a quasijudicial authority must, while determining the rights and obligations of parties before it, do so in accordance with the principles of natural justice. Besides the celebrated audi alteram partem rule one of the facets of the principles of natural justice is that the court/authority deciding the matter must apply its mind to the attendant facts and circumstances while taking a view one way or the other. Non-application of mind is a defect that is fatal to any adjudication. Application of mind is best demonstrated by disclosure of the mind and disclosure of mind is best done by recording reasons in support of the decision which the court or authority is taking. The requirement that an adjudicatory authority must apply its mind is, in that view, so deeply embedded in our jurisprudence that it can be described as a fundamental policy of Indian law.

39. No less important is the principle now recognised as a salutary juristic fundamental in administrative law that a decision which is perverse or so irrational that no reasonable person would have arrived at the same will not be sustained in a court of law. Perversity or irrationality of decisions is tested on the touchstone of Wednesbury Associated Provincial Picture Houses Ltd v. Wednesbury Corpn., (1948) 1 KB 223:(1947)2 All ER 680 (CA) principle of reasonableness. Decisions that fall short of the standards of reasonableness are open to challenge in a court of law often in writ jurisdiction of the superior courts but no less in statutory processes wherever the same are available.

40. It is neither necessary nor proper for us to attempt an exhaustive enumeration of what would constitute the fundamental policy of Indian law nor is it possible to place the expression in the straitjacket of a definition. What is important in the context of the case at hand is that if on facts proved before them the arbitrators fail to draw an inference which ought to have been drawn or if they have drawn an inference which is on the face of it, untenable resulting in miscarriage of justice, the adjudication even when made by an Arbitral Tribunal that enjoys considerable latitude and play at the joints in making awards will be open to challenge and may be cast away or modified depending upon whether the offending part is or is not severable from the rest.'

29. It is clear that the juristic principle of a 'judicial approach' demands that a decision be fair, reasonable and objective. On the obverse side, anything arbitrary and whimsical would obviously not be a determination which would either be fair, reasonable or objective.

* * *

31. The third juristic principle is that a decision which is perverse or so irrational that no reasonable person would have arrived at the same is important and requires some degree of explanation. It is settled law that where:

(i) a finding is based on no evidence, or

(ii) an arbitral tribunal takes into account something irrelevant to the decision which it arrives at; or

(iii) ignores vital evidence in arriving at its decision,

such decision would necessarily be perverse.

32. A good working test of perversity is contained in two judgments. In Excise and Taxation Officer-cum- Assessing Authority v. Gopi Nath and Sons 1992 Supp (2) SCC 312, it was held:(SCC p. 317, para 7)

'7. … It is, no doubt, true that if a finding of fact is arrived at by ignoring or excluding relevant material or by taking into consideration irrelevant material or if the finding so outrageously defies logic as to suffer from the vice of irrationality incurring the blame of being perverse, then, the finding is rendered infirm in law.'

In Kuldeep Singh v. Commr. of Police (1999) 2 SCC 10:1999 SCC (L & S) 429, it was held:(SCC p.14, para 10)

'10. A broad distinction has, therefore, to be maintained between the decisions which are perverse and those which are not. If a decision is arrived at on no evidence or evidence which is thoroughly unreliable and no reasonable person would act upon it, the order would be perverse. But if there is some evidence on record which is acceptable and which could be relied upon, howsoever compendious it may be, the conclusions would not be treated as perverse and the findings would not be interfered with.'

33. It must clearly be understood that when a court is applying the 'public policy' test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. Thus an award based on little evidence or on evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score Very often an arbitrator is a lay person not necessarily trained in law. Lord Mansfield, a famous English Judge, once advised a high military officer in Jamaica who needed to act as a Judge as follows: 'General, you have a sound head, and a good heart; take courage and you will do very well, in your occupation, in a court of equity. My advice is, to make your decrees as your head and your heart dictate, to hear both sides patiently, to decide with firmness in the best manner you can; but be careful not to assign your reasons, since your determination may be substantially right, although your reasons may be very bad, or essentially wrong'. Once it is found that the arbitrators approach is not arbitrary or capricious, then he is the last word on facts. In P.R. Shah, Shares and Stock Brokers (P) Ltd. v. B.H.H. Securities (P) Ltd. (2012) 1 SCC 594:(2012) 1 SCC (Civ) 342, this Court held:(SCC pp.601-02, para 21)

'21. A court does not sit in appeal over the award of an Arbitral Tribunal by reassessing or reappreciating the evidence. An award can be challenged only under the grounds mentioned in Section 34(2) of the Act. The Arbitral Tribunal has examined the facts and held that both the second Respondent and the Appellant are liable. The case as put forward by the first Respondent has been accepted. Even the minority view was that the second Respondent was liable as claimed by the first Respondent, but the Appellant was not liable only on the ground that the arbitrators appointed by the Stock Exchange under Byelaw 248, in a claim against a non-member, had no jurisdiction to decide a claim against another member. The finding of the majority is that the Appellant did the transaction in the name of the second Respondent and is therefore, liable along with the second Respondent. Therefore, in the absence of any ground Under Section 34(2) of the Act, it is not possible to re-examine the facts to find out whether a different decision can be arrived at.'

(Emphasis added)

7. For completeness I will also, and in fairness to Mr Bangur extract paragraphs 36, 42 and 45 of the judgment:


36. The third ground of public policy is, if an award is against justice or morality. These are two different concepts in law. An award can be said to be against justice only when it shocks the conscience of the court. An illustration of this can be given. A claimant is content with restricting his claim, let us say to Rs. 30 lakhs in a statement of claim before the arbitrator and at no point does he seek to claim anything more. The arbitral award ultimately awards him 45 lakhs without any acceptable reason or justification. Obviously, this would shock the conscience of the court and the arbitral award would be liable to be set aside on the ground that it is contrary to 'justice'.

42. In the 1996 Act, this principle is substituted by the 'patent illegality' principle which, in turn, contains three subheads-

42.1. (a) A contravention of the substantive law of India would result in the death knell of an arbitral award. This must be understood in the sense that such illegality must go to the root of the matter and cannot be of a trivial nature. This again is a really a contravention of Section 28(1)(a) of the Act, which reads as under:

'28. Rules applicable to substance of dispute.- (1) Where the place of arbitration is situated in India,-

(a) in an arbitration other than an international commercial arbitration, the arbitral tribunal shall decide the dispute submitted to arbitration in accordance with the substantive law for the time being in force in India;

42.2 (b) A contravention of the Arbitration Act itself would be regarded as a patent illegality - for example if an arbitrator gives no reasons for an award in contravention of Section 31(3) of the Act, such award will be liable to be set aside.

42.3(c) Equally, the third sub-head of patent illegality is really a contravention of Section 28(3) of the Arbitration Act, which reads as under:

'28. Rules applicable to substance of dispute.-

(1)-(2) ***

(3) In all cases, the arbitral tribunal shall decide in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction.'

This last contravention must be understood with a caveat. An arbitral tribunal must decide in accordance with the terms of the contract, but if an arbitrator construes a term of the contract in a reasonable manner, it will not mean that the award can be set aside on this ground. Construction of the terms of a contract is primarily for an arbitrator to decide unless the arbitrator construes the contract in such a way that it could be said to be something that no fair minded or reasonable person could do.

45. In Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram Saran (2012) 5 SCC 306, the Court held:(SCC pp. 320-21, paras 43-45)

'43. In any case, assuming that Clause 9.3 was capable of two interpretations, the view taken by the arbitrator was clearly a possible if not a plausible one. It is not possible to say that the arbitrator had travelled outside his jurisdiction, or that the view taken by him was against the terms of contract. That being the position, the High Court had no reason to interfere with the award and substitute its view in place of the interpretation accepted by the arbitrator.

44. The legal position in this behalf has been summarised in para 18 of the judgment of this Court in SAIL v. Gupta Brother Steel Tubes Ltd (2009) 10 SCC 63:(2009) 4 SCC (Civ) 16. and which has been referred to above. Similar view has been taken later in Sumitomo Heavy Industries Ltd. v. ONGC Ltd (2010) 11 SCC 296:(2020) 4 SCC (Civ) 459. to which one of us (Gokhale, J.) was a party. The observations in para 43 thereof are instructive in this behalf.

45. This para 43 reads as follows: (Sumitomo case, SCC p. 313)

‘43. ... The umpire has considered the fact situation and placed a construction on the clauses of the agreement which according to him was the correct one. One may at the highest say that one would have preferred another construction of Clause 17.3 but that cannot make the award in any way perverse. Nor can one substitute one’s own view in such a situation, in place of the one taken by the umpire, which would amount to sitting in appeal. As held by this Court in Kwality Mfg. Corporation v. Central Warehousing Corporation (2009) 5 SCC 142: (2009) 2 SCC (Civ) 406 the Court while considering challenge to arbitral award does not sit in appeal over the findings and decision of the arbitrator, which is what the High Court has practically done in this matter. The umpire is legitimately entitled to take the view which he holds to be the correct one after considering the material before him and after interpreting the provisions of the agreement. If he does so, the decision of the umpire has to be accepted as final and binding.’ '

(Emphasis added)

8. We are not of course concerned with the broader issue such as morality or interest of India. Strictly, we are not even concerned with the lexical approach to a challenge on the ground that it is ‘contrary to justice’ because that again speaks to an Award being so thoroughly egregious that no Court could possibly countenance it. Paragraph 36 of the Associate Builder gives us an example of the kind of case that would fall within this consideration.

9. This leaves to Mr Bangur only the ground of patent illegality that the Supreme Court discussed from paragraph 40 onwards. There is no allegation, and rightly so, of fraud or corruption. Here, too, there is no challenge on the ground of violation of the substantive law of India or of the Arbitration Act. This leaves only the ground under Section 28(3), mentioned in paragraph 42.3(c) of Associate Builders. In my understanding of it, this mean an illegality that is so plain and so evident on the face of it that it is one that 'he who runs can read.' It must be an illegality that requires no great tortuous or intricate explanation or convoluted reasoning. This is an illegality that must go to the root of the matter. It is not a triviality. Paragraph 42.3 puts the matter beyond all controversy. Should it be found that the Tribunal’s construction is reasonable, there is no room for interference. The last sentence of this paragraph tells us everything that we need to know and it should be our guiding principal. At the cost of repetition, and for added emphasis, I reproduce it again.

Construction of the terms of a contract is primarily for an arbitrator to decide unless the arbitrator construes the contract in such a way that it could be said to be something that no fare-minded or reasonable person could do.

10.With this I turn to the challenges in the Petition. The principal ground, so far as I can tell, is that the learned Arbitrator closed arguments and reserved the matters for orders on 17th February 2016 but rendered the Award on 15th June 2017. I do not think this in itself furnishes a ground for interference as being contrary to public policy and that, as we have seen is the only statutory provision under which the Petition is mounted. Although this seems to be a principal ground of challenge, I have allowed Mr Bangur to address me on certain other grounds as well. I have considered the ones he placed.

11. The parties had between them a Film Production Agreement dated 5th May 2009 ('FPA'). The Claimant - also the Respondent to the present Section 34 Petition - Cinema Capital Venture Fund ('CCVF') was a venture fund. Pathak is the sole proprietor of Big Screen Entertainment and is a film producer. The Award sets out some of the correspondence by e-mail prior to the contract. At the very head, it notes that CCVF was even then incorporating a private limited company named Kinesis Films Private Limited ('Kinesis') as a film investor. A tripartite agreement was then contemplated and the FPA provided for this. Kinesis was to be a transferee of CCVF’s rights.

12.The Award then sets out various clauses of the Agreement. I do not think it is necessary at this stage to get into the question of film casting. CCVF was required to bring in capital. There were other mutual obligations as well. Clause 14 of the FPA allowed reciprocal termination rights and the first of the sub-clauses allowed for termination for cause if the other party breached the agreement and failed to cure such breach within 15 days of CCVF requiring the cure. There is an extended discussion about the correspondence and the disputes between the parties but there seems to be no dispute that CCVF did part with an amount of Rs.4.5 crores to Pathak over a period of time. Passing quickly over some of the intervening events, Pathak claimed until as late as 27th June 2010 that CCVF was in breach of its obligations and did not release an additional Rs.9.5 crores at the very least. Further correspondence ensued. Ultimately, through his Advocates’ notices dated 7th April 2010 and 10th/11th May 2010, Pathak purported to terminate the FPA inter alia on the ground that Kinesis/CCVF had not fulfilled its obligations under that Agreement. The film in question was ultimately released on 15th October 2010 under the title Aakrosh. Contrary to previous discussions perhaps this set out to be a serious film rather than one lighter in tone (described as 'an action comedy'). Aakrosh received only an Adult or A certification from the Film Certification Board. Pathak of course contends that the commercial failure of the film is almost entirely due to CCVF/Kinesis’ failure to put additional money into the project as, according to him, the FPA required it to do.

13. The learned sole Arbitrator was appointed after an application was made to Court under Section 11 of the Arbitration Act. Once he entered on the reference, CCVF filed its statement of claim seeking a refund of its advance of Rs.4.5 crores with interest at 18% aggregating to Rs.5,80,51,232.88. There was a further claim for loss of interest. Pathak replied, disputing his liability. He also filed a Counter Claim in which he said that the disbursement of timely cash flow was critical to the FPA. CCVF/Kinesis paid no more than two instalments. This forced Pathak to seek funding elsewhere. The total project cost increased and the film itself made far less than its production cost, returning an upfront project loss of Rs.8,04,09,128/-.

14.The learned sole Arbitrator framed points for determination on 10th July 2012 in these terms.

35. The parties produced several documents in their respective support on record. On the basis of the pleading, the following Issues/Points for determination were framed on 10th July 2012:

(1) Whether the Claimant and the Respondent complied with all the terms and conditions of FPA?

(2) Who is in breach of the terms and conditions of FPA?

(3) Whether the FPA Contract was wrongfully terminated by the Respondent?

(4) Whether forfeiture of Rs.4.5 crores by the Respondent unlawful and whether the Claimant is entitled for refund of the said amount along with interest till realization of the said amount?

(5) Whether Claimant proves that there were breach of terms and conditions of the FPA on the part of the Respondent because of which the Respondent was not entitled to payment of the balance amount under the FPA?

(6) Whether the Respondent proves that the budget of the said film was overrun and hence the Claimant was liable to pay the overrun amount?

(7) Whether the Claimant is entitled to claim a sum of Rs.1,87,71,780.82 by way of loss of interest on the undisbursed amount of Rs.11.5 crores?

(8) Whether the Claimant is entitled for amount of Rs.3.0 crores with interest as per their 45% share under the said FPA Agreement after termination of the said FPA Agreement?

(9) Whether the Claimant proves that during the period of the entire project the Claimant was ready and willing to pay the amount they were required to pay under the FPA?

(10) Whether the Respondent is entitled to counter claim of Rs.1,68,68,140/-? From what date and at what interest?

(11) Whether the Claimant is entitled for any Award?

(12) What Award, and what interest, if any, on the awarded amount?

(13) Order as to costs?

15. The learned sole Arbitrator considered each of these and then made the following operative Award.

Thus the Tribunal makes the following order:

(a) The Respondent shall pay to the Claimant the sum of Rs.4.5 cores together with simple interest at the rate of 18% per annum on the amounts advanced from time to time computed at Rs.1,30,51,232.88 up to 24th September 2014.

(b) The entire amount of Rs.5,80,51,232.88 shall continue to carry simple interest at the rate of 18% from 24th September 2014 up to the date of the Award and thereafter until payment or realization thereof.

74. Issue No.13:

Order as to costs?

75. The Respondent shall pay to the Claimant a sum of Rs.20,000/- (Rupees Twenty Lakhs only) as costs of the proceedings.

16. Before the learned sole Arbitrator both sides led evidence, both oral and documentary. Witnesses were cross-examined.

17. In paragraph 55 of the Award, the learned sole Arbitrator arrived at what is, in my view, a determination of the single central issue in this dispute. He said:

55. In the view of the Tribunal, it was the Respondent who failed to comply with all the terms and conditions of the FPA and the Respondent is in breach of the following terms and conditions of the FPA dated 5th May 2009 as under:

(a) Failure to give the detailed production schedule for the film as required under Clause 1.1.9 of the FPA.

(b) Failure to provide the first draft of the script with Hindi dialogues as required under Clause 2.1 of the FPA.

(c) Failure to ensure to get 'U' certificate or at least 'U/A' certificate for the film as required under Clause 2.1 read with Clause 11.2 of the FPA.

(d) Failure to complete the final cut of the film not later than March 2010 with three months’ grace period as required under Clause 2.4 of the FPA.

(e) Failure to get a female actor from amongst Kareena Kapoor or Priyanka Chopra or Katrina Kaif as required under Clause 3.6 of the FPA.

(f) Failure to prepare and finalise the budget 15 days prior to the commencement of the principal photography as required under Clause 4.1 of the FPA.

56. In the view of the Tribunal, the Respondent is in breach of the aforesaid terms and conditions of the Film Production Agreement dated 5th May 2009 [Exhibit C- 9] as seen from the material on record. Hence, Issue Nos. 1 and 2 are answered accordingly.

(Emphasis added)

18.Now it is abundantly clear from paragraphs 55 and 56 that these are findings of fact. Unless, therefore, these are shown to be perverse, or to fall within the parameters of paragraph 42 of Associate Builders, there can be no interference. Issues Nos. 1 and 2 lay at the core of the dispute. The learned sole Arbitrator thus proceeded to hold that the FPA contract was wrongfully terminated.

19.I come now to Issue No.8, considered in paragraphs 66 and 67, as this is the target of much of Mr Bangur’s ire. Let me first reproduce those paragraphs in full.

66. Issue No.8:

Whether the Claimant is entitled for amount of Rs.3.0 crores along with interest as per their 45% share under the said FPA Agreement after termination of the said FPA Agreement?

67. The Claimant has not placed any material on record in support of this claim. There is no material on the basis of which it can be said that the Claimant is entitled to an amount of Rs.3 crores along with interest as per his 45% share in FPA even after termination of the FPA. In view of the evidence of Mr Mohit Mehra in paragraph 61 of this Affidavit that the Claimant is not aware of the revenue generated by the said film and the rates associated therewith, there is no other evidence saying that the film 'Aakrosh' had generated to show that Rs.3.00 crores was the revenue generated and that the Claimant is entitled to its share of 45% thereupon. This claim must fail for lack of evidence. Hence, this Issue is answered against the Claimant and the claim is rejected.

20.I must confess that I am wholly unable to understand why from Pathak there should be about, this finding quite, so much sound and fury - and all of it signifying nothing; because it is on this issue that the Claimant CCVF has failed utterly. What Mr Bangur strives long and hard to do is to say that the very framing of the issue shows that CCVF was a 45% partner, and if that be so, there is no question of it not bringing in to the project the additional funds required or if it being entitled to any refund of the amounts that it did contribute. This is like saying that although Pathak may have been found to be in breach of his contractual obligation, this was inconsequential. If CCVF was under the contract to be a 45% partners, then it had to infuse the full

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amount of capital the contract demanded of it, irrespective of whether Pathak himself was in breach of his contractual obligations. Viewed like this, the formulation is entirely untenable. The claim by CCVF was nothing more than a claim in damages and it was found to be without substance. I do not see how that can furnish to Pathak a ground of challenge under the patent illegality dimension of the public policy head of challenge. 21. The argument seems to want to hold the framing of an issue or a point for determination as an admission against the Arbitrator, saying that once he framed an issue thus, he could not find against Pathak. It is the argument that is perverse, not the arbitral finding. 22.The finding on facts and evidence by the learned sole Arbitrator is that it was Pathak who was in breach of his obligations, and not CCVF. It is on that basis that the Award has taken the form that it has. This puts us completely out of the frame of Associate Builder because this approach cannot possibly be said to be perverse or to be so implausible or so unreasonable, of the standard of Wednesbury unreasonableness, that would warrant interference by this Court. 23.Pathak made a Counter Claim of Rs.1,68,68,140/-. This is prayer (d) at page 422 of his Counter Claim. Exhibit 'B' is at page 426. It is an unsigned and unverified statement. Pathak himself gave evidence and has filed an Affidavit in lieu of examination-in-chief from page 547 onwards. He did not depose to the correctness of Exhibit 'B' to his Counter Claim. He did not even say that it was correct. He only said that all expenses were accounted for. That is not the same thing as attesting to the correctness of particulars of claim in a Counter Claim for a defined amount with interest. The sole Arbitrator dealt with this in paragraphs 70 and 71: 70. Issue No. 10: Whether the Respondent is entitled to counter claim of Rs.1,68,68,140/-? From what date and at what interest? 71. The Respondent is not entitled to the counter-claim of Rs.1,68,68,140/-. There is no basis for this claim whatsoever and this counter claim is hereby rejected. 24.Mr Bangur complains that too little was said of his Counter Claim. He submits that there should have been more elaborate reasoning. I disagree. Perhaps even the three lines that the learned sole Arbitrator devoted to this claim were two lines too many. This claim was entirely without basis. There is not even a clear pleading on it. There is no evidence on it. This is, in substance, Pathak saying 'I may have been found in breach of my obligations under the contract, and my termination may have been found wrongful, and I can show none of that to be perverse or contrary to public policy, and though I have no pleadings and no evidence, I am yet entitled to claim from CCVF the losses the film suffered; and the learned Sole Arbitrator must give reasons why this Counter Claim is rejected.' The submission is wholly misconceived. That counter claim had to meet only one fate. It did. 25. In my view, there is absolutely no substance to this Petition. It is dismissed. There will be no order as to costs. Consequently Notice of Motion No.812 of 2018 and Chamber Summons No. 497 of 2018 stands dismissed. The Commercial Execution Application No. 827 of 2018 may proceed. 26. Mr Bangur seeks a stay of the operation of this order. Stay granted for a period of two weeks from today.