Phantom Studios India Private Limited vs Allu Mantena Media Ventures Llp

CNR No : HCBM020168842026

2026:BHC-OS:23734
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AGK
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMM ARBITRATION PETITION (L) NO.16884 OF 2026
Phantom Studios India Pvt. Ltd.
… Petitioner
Vs.
1. Allu Mantena Media Ventures LLP
2. Madhu Mantena
3. Big Bang Media Pvt. Ltd. (UK)
ATUL
GANESH
KULKARNI
4. Big Bang Mediaverse Pvt. Ltd.
5. Mad Man Pictures Pvt. Ltd.
Digitally signed by
ATUL GANESH
KULKARNI
Date: 2026.11.03
11:32:23 +0530
6. Big Bang Media Pvt. Ltd. (India)
7. Aravind Babu Allu
8. Prime Focus Technologies Ltd.
9. DNEG India Media Service Ltd.
10. Namit Malhotra
11. Collective Artists Network India
Pvt. Ltd.
… Respondents
Mr. Sharan Jagtiani, Senior Advocate with Ms. Naira
Jeejeebhoy, Ms. Samridhi Lodha, Ms. Shweta Jaydev,
Mr. Jai Sanyal, and Mr. Keshav Thakkar i/by M/s.
Rashmikant & Partners for the Petitioner.
Mr. Ashish Kamat, Senior Advocate with Mr. Anand
Mohan, and Ms. Nirali Atha i/by Dua Associates for
Respondent Nos.1, 2, 4, and 5.
Mr. Hiren Kamod with Mr. Ameet Naik, Ms. Madhu
Gododia, Mr. Vivek Dwivedi, Mr. Aryan Garg Ms.
Sakshi Dube, & Ms. Khushi Agarwal i/by Anand and
Naik for Respondent Nos.8 and 9.
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Mr. Rashmin Khandekar with Ms. Gauri Joshi i/by
Ganesh & Co., for Respondent No.11.
CORAM : AMIT BORKAR, J.
RESERVED ON : OCTOBER 28, 2026.
PRONOUNCED ON : NOVEMBER 3, 2026
JUDGMENT:
1. The present Petition is filed under Section 9 of the
Arbitration and Conciliation Act, 1996 (the “Arbitration Act”),
seeking urgent interim relief in relation to the Assignment
Agreement dated 19 April 2024. Under this Agreement,
Respondent No. 8 acquired the intellectual property rights in
“Project Ramayana” from Respondent No. 1. The Petitioner was
made a signatory to the Agreement and was required to follow
Clause 5 thereof. This clause restricts the parties from producing,
developing, releasing, exploiting, marketing or advertising any
work relating to Ramayana or using any of its main characters,
including “Hanuman”, until Diwali 2027.
2. The Petitioner submits that, while it has continued to follow
the restrictions imposed under the Assignment Agreement,
Respondent Nos. 2 and 4, through Respondent No. 11, are
producing and marketing a film tentatively titled “Chiranjeevi
Hanuman: The Eternal”. The said film is based on the character of
Hanuman and is proposed to be released in or around September
2026. Respondent No. 2 is stated to be the single largest
shareholder of Respondent No. 11 and to have considerable
influence over its functioning. According to the Petitioner,
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Respondent No. 11, though not a signatory to the Assignment
Agreement, is an Affiliate and is under the Control of Respondent
Nos. 2 and 4, as these expressions are defined in the Assignment
Agreement. The Petitioner contends that Respondent Nos. 2 and 4
cannot avoid their obligations under the Agreement by carrying
out the disputed activities through Respondent No. 11. The
Petitioner submits that notices were issued to the Respondents
calling upon them to stop taking any steps in relation to the
Subject Film and to clarify whether any waiver or consent had
been sought or obtained under the Assignment Agreement.
However, no satisfactory reply was received. According to the
Petitioner, unless immediate interim protection is granted, its
rights under the Agreement would be seriously affected. This is
because the Petitioner is prevented from commercially exploiting a
similar opportunity relating to the character of Hanuman, while
the Respondents are proceeding with the Subject Film. The
Petitioner seeks an order restraining the Respondents from taking
any steps towards the creation, production, distribution,
exploitation, marketing or advertising of the Subject Film. It seeks
to restrain them from granting any waiver of the restrictions under
the Assignment Agreement without its consent.
3. The facts which have led to the filing of the present Petition,
as stated by the Petitioner, are as follows. On 17 May 2022, a
Share Subscription-cum-Share Purchase-cum-Shareholder
Agreement was executed between Respondent No. 11 and Nepean
Capital. Under this Agreement, Nepean Capital acquired 27.18%
shareholding in Respondent No. 11. It was acknowledged that
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Respondent No. 2 was one of the key shareholders of Respondent
No. 11. Thereafter, on 26 February 2024, a meeting of the Board of
the Petitioner was held. The Petitioner contends that no resolution
authorising execution of the Assignment Agreement dated 19 April
2024 was passed at that meeting. This, according to the Petitioner,
is clear from the Minutes Book, though a resolution of the Board
was relied upon for executing the Assignment Agreement.
Subsequently, on 19 April 2024, the Assignment Agreement was
executed between the Petitioner and the Respondents. Under this
Agreement, the Petitioner and Respondent Nos. 1 to 7 agreed to
follow the restrictions contained in the negative covenants under
Clause 5. These restrictions prevented them from exploiting
“Ramayana” and any of its main characters until Diwali 2027.
4. On 19 June 2024, Respondent No. 4 made a declaration
under Section 90(1) of the Companies Act, 2013, stating that its
entire shareholding in Respondent No. 11 was beneficially held by
Respondent No. 2. However, the shareholding details of
Respondent No. 11 as on 23 September 2024 showed Respondent
No. 4 as its single largest shareholder. Thereafter, on 17 October
2024, a share buy-back agreement was executed. Under this
Agreement, the Petitioner purchased the shareholding of
Respondent No. 4, which was an entity of Respondent No. 2,
thereby facilitating the exit of Respondent No. 2 from the
Petitioner. The Petitioner states that on 9 April 2026, it came to
know that Respondent No. 11, which according to it was an
Affiliate and an entity under the Control of Respondent No. 2, was
producing and marketing a film titled “Chiranjeevi Hanuman: The
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Eternal” (hereinafter referred to as the “Subject Film”). The
Petitioner addressed a letter to Respondent Nos. 1, 2 and 5,
alleging that the production and marketing of the Subject Film
amounted to a breach of the Assignment Agreement. By the said
letter, the Petitioner called upon them to ensure that no steps were
taken in relation to the Subject Film.
5. On 27 April 2026, Respondent Nos. 1, 2, 4 and 5, through
their Advocates, denied that they had any Control over Respondent
No. 11. At the same time, they alleged that the Petitioner had
committed a breach of the Assignment Agreement in relation to
“Valmiki Ramayana”. The Petitioner disputes this allegation and
states that the production or making of “Valmiki Ramayana” has no
connection whatsoever with it. Thereafter, on 4 May 2026, the
Advocates for the Petitioner issued a notice to all the Respondents.
In the said notice, the Petitioner again pointed out that Respondent
Nos. 2 and 4, acting through Respondent No. 11, were carrying on
activities contrary to the Assignment Agreement. The Petitioner
called upon the Respondents to confirm whether any waiver of the
restrictions under the Agreement had been sought or obtained in
relation to the Subject Film.
6. Mr. Jagtiani, learned Senior Advocate appearing for the
Petitioner, submits that under the Assignment Agreement dated 19
April 2024, Respondent No. 1, Allu Mantena Media Ventures LLP
(the Assignor), assigned the rights in Project Ramayana to
Respondent No. 8, Prime Focus Technologies Limited (the
Assignee). Respondent Nos. 2 to 7 were made parties to the
Agreement as Confirming Parties. They include Madhu Mantena
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(MM), Aravind Babu Allu (Allu) and certain corporate entities.
Phantom was separately named as a party to the Agreement. He
submits that Clause 1.18 of the Assignment Agreement identifies
the script and other material relating to “Ramayana” which was
originally assigned to MM and thereafter to Respondent No. 1. The
said work was written by Shridhar Raghavan, was tentatively
intended to star Ranbir Kapoor and Yash, and was to be directed
by Nitesh Tiwari. He points out that Clause 1.22 excludes the
public-domain epics from the expression “Underlying Works”.
According to him, at the time of execution of the Assignment
Agreement, Respondent No. 4, Big Bang Mediaverse Pvt. Ltd., held
the majority shareholding in Phantom. Its nominee signed the
Agreement on behalf of Phantom, though there was no Board
resolution authorising such signing. Phantom had no independent
rights in Project Ramayana and was not paid any separate
consideration under the Agreement. Its connection with the
transaction was only because it belonged to the group controlled
by MM. This, according to the Petitioner, is important for
understanding the meaning of the defined class of parties and the
effect of MM subsequently ceasing to exercise Control over
Phantom.
7. Mr. Jagtiani submits that Clause 1.5 defines the persons and
entities who are covered by the restrictions under the Assignment
Agreement. This definition has to be read along with Clause 1.1,
which defines an “Affiliate”. Under Clause 1.1, an entity becomes
an Affiliate if it is under the direct or indirect Control of another
entity or is under common Control with it. In the case of an
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individual, the definition takes into account the specified
relationship. According to him, Phantom was originally included in
the restricted class because Respondent No. 4 held the majority of
its shares. He relies upon Clause 1.9, which explains the meaning
of “Control”. Under this clause, Control includes holding majority
voting rights or share capital, having the right to appoint or
remove all or a majority of the directors, or having “the power to
direct or cause the direction of the management, and exercise
significant influence on the management or policies” of an entity.
Such Control may be exercised directly or indirectly through
ownership, voting rights, contractual rights or in any other
manner.
8. Mr. Jagtiani then explains the different parts of Clause 1.5,
which defines the expression “Assignor Parties” under six separate
categories. According to him, the persons and entities falling under
each category on 19 April 2024, the date of execution of the
Assignment Agreement, are as follows:
(a) The first category covers any person or entity which is
an Affiliate of the Assignor. The Petitioner does not rely upon
this category.
(b) The second category covers the promoters,
shareholders, directors and partners of the Assignor.
According to the Petitioner, MM, who is Confirming Party No.
1, and Allu, who is Confirming Party No. 4, fall within this
category as they were partners of the Assignor.
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(c) The third category covers the promoters, directors and
partners of the Affiliates of the Assignor, as well as any entity
under the Control of such persons or their relatives. This part
of the clause contains the following clarification:
“The end and intent is to ensure that this restriction applies
to MM / Allu and to the entities in which they hold Control
directly or indirectly.”
According to the Petitioner, this shows that the purpose was
to cover MM and Allu and every entity which was directly or
indirectly under their Control. This would include the
Confirming Parties and Phantom.
(d) The fourth category covers any entity in which MM,
Allu, their Affiliates or their relatives have Control. The
Petitioner submits that Confirming Party Nos. 2, 3, 5 and 6
fall within this category as they were controlled by MM.
Phantom falls within this category because it was controlled
by Confirming Party No. 3 and indirectly by MM.
(e) The fifth category covers any entity which is an
Affiliate of Confirming Party Nos. 2, 3, 5 and 6. According to
the Petitioner, Confirming Party Nos. 2, 3, 4 and 6 fall within
this category because they were under the common Control
of MM. Phantom falls within it because it was controlled by
Confirming Party No. 3.
(f) The sixth category covers the promoters, directors and
partners of Confirming Party Nos. 2, 3, 5 and 6, their
Affiliates and any entity under the Control of such persons or
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their relatives. The Petitioner submits that Phantom falls
within this category as it was an Affiliate of Confirming Party
No. 3.
9. Mr. Jagtiani submits that Recital G and Clause 5 of the
Assignment Agreement prohibit the persons and entities covered
by the Agreement, until Diwali 2027, from producing, developing,
exploiting or promoting any work relating to Ramayana. They are
prohibited from producing or exploiting any work in which Ram,
Sita, Lakshman, Raavan or Hanuman is shown as a lead or key
character. However, Clause 5.1(ii) provides a qualification to this
restriction. The restriction relating to these characters would not
apply where their story or role does not form a significant or
substantial part of the work. He submits that under the Shares
Buyback Agreement dated 17 October 2024, Phantom bought back
the entire shareholding of Respondent No. 4. As a result, MM
ceased to exercise Control over Phantom. According to the
Petitioner, once this relationship of Control came to an end,
Phantom ceased to fall within the class of “Assignor Parties” and
the restrictions under the Assignment Agreement could no longer
continue to apply to it.
10. Mr. Jagtiani submits that the express purpose behind Clause
1.5 is very important for deciding whether Phantom continues to
remain bound by the restrictions. According to him, the argument
that Phantom would remain bound unless it was separately and
released does not take into account the qualification contained in
Clause 1.5(c). The said clause explains the purpose for which the
restricted class was created. It states as follows:
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“The end and intent is to ensure that this restriction applies
to MM / Allu and to the entities in which they hold Control
directly or indirectly.”
11. He submits that these words show that the restriction was
intended to apply to MM, Allu and the entities under their direct
or indirect Control.
12. He submits that Clause 1.5(c) does not prescribe any
prohibited activity. The words used in this clause must be
understood with reference to Clause 5, which sets out the
restrictions. The same understanding is supported by Recital G and
Clause 8.6(b), which connects the consideration paid under the
Assignment Agreement with the holdback and negative covenants.
In these circumstances, the objection raised by Respondent Nos. 1,
4 and 5 that the Petitioner is trying to introduce an intention
which is not found in the Agreement is incorrect. According to the
Petitioner, the intention on which it relies is stated in Clause
1.5(c).
13. Mr. Jagtiani submits that merely because these words appear
in the definition clause, their importance cannot be ignored. The
words “the end and intent” and “this restriction” have to be given
their proper meaning. In support of this submission, he relies upon
Anglo Continental Educational Group (GB) Ltd. v. Capital Homes
(Southern) Ltd., (2009) EWCA Civ 218. In that decision, the Court
recognised that defined expressions in an agreement have to be
read with the operative provisions in which they are used. It
recognised that a definition may take into account changes which
occur during the period of the agreement. He relies upon Burford
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UK Properties Ltd. v. Forte Hotels (UK) Ltd., (2003) EWCA Civ
1800, where the Court held that a definition must be read along
with its qualifications and the overall scheme of the contract.
Applying these principles, he submits that Clause 1.5(c) explains
the persons and entities to whom the restrictions under Clause 5
would apply. If this clause is treated as merely identifying certain
parties, the words “this restriction” and the purpose stated therein
would have no meaning.
14. He submits that reading all these clauses together gives
effect to the commercial purpose of the Agreement. The purpose
was to prevent MM and Allu from continuing to exploit the
assigned works through entities which were under their Control.
He relies upon Nabha Power Ltd. v. Punjab State Power
Corporation Ltd., (2018) 11 SCC 508, where the Supreme Court
held that the intention of the parties must be understood from the
express terms of the contract and that one clause should not be
interpreted in a manner which makes another clause meaningless.
He relies upon Bangalore Electricity Supply Co. Ltd. v. E.S. Solar
Power (P) Ltd., (2021) 6 SCC 718, where the Supreme Court
heldthat even when the Court is considering the meaning of a
particular clause, it must examine the object of the contract and
read the agreement as a whole. On the basis of these decisions, he
submits that Clause 1.5(c) must be read along with Clause 5,
Recital G and Clause 8.6(b). Such an interpretation would give
proper effect to both the words “this restriction” and the stated
“end and intent” of the Agreement.
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15. Mr. Jagtiani submits that even if another reasonable
interpretation of the Agreement is possible, the Court should
prefer the interpretation which makes commercial sense. In this
regard, he relies upon Rainy Sky SA v. Kookmin Bank, (2011)
UKSC 50. The same approach, according to him, was recognised
by the Supreme Court in Haris Marine Products v. Export Credit
Guarantee Corporation (ECGC) Ltd., 2022 SCC OnLine SC 509. In
that decision, the Supreme Court emphasised that the words of a
contract must be understood in their documentary, factual and
commercial background. He submits that the interpretation put
forward by the Petitioner is consistent with these principles.
Phantom was originally included in the restricted class because it
was under the Control of MM's group. Once that relationship of
Control came to an end, the restriction ought not to continue
against Phantom. According to him, this is consistent with the
commercial purpose stated in the Assignment Agreement.
16. Mr. Jagtiani submits that the relationship between MM and
the corporate entities which were joined as Confirming Parties
supports the interpretation put forward by the Petitioner.
According to him, Respondent Nos. 3 to 6 were under the direct or
indirect influence or Control of MM. Phantom originally became
part of this group through Respondent No. 4. He submits that the
shareholding of Respondent No. 4 in Collective, which is now
27.737%, cannot be considered only by looking at the percentage
of shares held. The rights attached to that shareholding,
particularly the rights relating to the management and functioning
of the Board, must be considered. He submits that these rights are
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heldin the subsequent submissions. He submits that the fact that
Phantom has been separately named in the Assignment Agreement
does not mean that the restriction imposed upon it is independent
of the relationship of Control.
17. According to Mr. Jagtiani, the Confirming Parties have been
separately named in the Assignment Agreement, but they
nevertheless fall within the wider definition of “Assignor Parties”.
In the same manner, the separate mention of Phantom only
records its inclusion in the transaction at the time of execution. It
does not mean that the qualification governing the wider class of
Assignor Parties would cease to apply to it. He submits that the
references to Phantom in Recital G and Clauses 5.1, 5.2 and 8.6(b)
only show that an entity may fall under more than one description
in the Agreement. Such references do not create a separate and
unconditional restriction upon Phantom, independent of the
definition contained in Clause 1.5.
18. Mr. Jagtiani then relies upon Clauses 8.1 and 8.6(b) to
explain the payment arrangement under the Assignment
Agreement. Clause 8.1 provides for payment of consideration to
the Assignor. Clause 8.6(b) records that the consideration was
adequate “for the holdback/negative covenants and the non-
compete restrictions on the Assignor and/or Confirming Parties
and/or Assignor Parties and/or Phantom under clause 5 of this
Agreement”. According to him, the consideration was paid as a
group payment. This explains why no separate consideration was
paid to Phantom when it was part of the group controlled by MM.
He submits that if Phantom's separate mention in the Agreement is
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treated as placing it outside the definition of “Assignor Parties”
under Clause 1.5, there would have been no occasion to record the
adequacy of consideration on its behalf under Clause 8.6(b). The
acknowledgment in respect of Phantom was made because, at that
time, it formed part of the MM and Assignor group, though it was
separately named as a party to the Agreement.
19. He submits that if the parties intended Phantom to remain
bound by the restrictions independently of its relationship with
MM or the Assignor group, a separate payment would have been
made to it under the Assignment Agreement. However, no such
separate payment was provided. According to the Petitioner, this
payment arrangement is consistent with the express purpose stated
in Clause 1.5(c), namely, to restrict MM, Allu and the entities
under their Control. Mr. Jagtiani submits that Clause 1.5 refers to
entities in which the specified persons “have Control” and entities
which are their Affiliates. When this language is read with the
express purpose of the clause, it shows that the definition is based
upon the relationship of Control and is capable of changing if that
relationship changes during the period of the Agreement. Phantom
was covered by the restrictions when the Assignment Agreement
was executed because it was then under the Control of MM's
group. However, after Respondent No. 4's entire shareholding in
Phantom was bought back under the Shares Buyback Agreement,
the relationship of Control came to an end. Consequently, the
restriction against Phantom came to an end, or at least ought to be
treated as having come to an end for future activities. He submits
that prayer (c-1) does not seek to cancel the assignment or take
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away any rights which have accrued to any party. It only seeks a
declaration and consequential protection giving effect to the
purpose and meaning of the Agreement.
20. Mr. Jagtiani submits that the objections raised in paragraphs
2.3 and 4.4 of the Additional Reply are based on an incorrect
understanding of the pleadings filed by the Petitioner. He points
out that paragraphs 13 and 16 to 21 of the Petition had referred to
the original relationship of Control, the assurance given by MM
regarding compensation and his subsequent exit. Similarly,
paragraphs 28 and 30 to 31 had dealt with the continued
operation of the negative covenant and the prejudice suffered by
the Petitioner. The correspondence exchanged before filing the
present Petition had sought release from the restrictions and
payment of compensation. He submits that the amendments now
sought are based on facts and grounds which were pleaded. They
do not amount to withdrawing or changing any admission made
by the Petitioner.
21. Mr. Jagtiani submits that Respondent No. 11 has admitted
that Respondent No. 4 holds 27.737% of its shares and that two
out of its four directors are nominees of Respondent Nos. 2 and 4.
He relies upon Clause 13.6 of the Share Subscription-cum-Share
Purchase-cum-Shareholder Agreement (SSPA), under which each
director has one vote and a decision of the Board requires a simple
majority of the directors present and voting. According to him,
since Respondent No. 4 has two nominee directors on a Board
consisting of four directors, MM and Respondent No. 4 can prevent
the required majority from being formed and can thereby block a
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Board decision. He submits that these voting and nomination
rights, when considered along with MM's beneficial ownership,
show that he has the power to influence the management and
exercise significant influence over the policies of Collective.
Therefore, according to the Petitioner, Collective falls within the
definition of Control under Clause 1.9(ii) and is covered by
Clauses 1.5(c), (d) and (e). He points out that the Petitioner has
relied upon MM's description as a “key shareholder” of Collective,
the consequence provided in the Agreement in the event of MM
ceasing to exercise Control over Respondent No. 4, and the
description appearing in the financial statements and beneficial
ownership declaration. According to him, all these documents
support the Petitioner's case regarding the nature and extent of
MM's Control over Collective.
22. In support of his submission that Control need not always
arise from majority shareholding, Mr. Jagtiani relies upon
Amazon.com NV Investment Holdings LLC v. Competition
Commission of India, (2026) 7 SCC 80. The Supreme Court heldin
that case, while considering the law relating to merger control,
that the power to influence the management and commercial
decisions of an enterprise may arise from rights given under
shareholders' agreements and other governance documents, even
where the person does not hold majority shares. He submits that
the same principle is relevant while considering the meaning of
Control under Clause 1.9 of the Assignment Agreement. In the
present case, the rights to nominate directors under the SSPA, the
provision treating MM's cessation of Control over Respondent No.
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4 as an event of default while he continued to be a shareholder of
Collective, and the entries in the financial statements and
beneficial ownership declaration must all be considered together.
According to him, these documents, along with the composition of
the Board and the voting arrangement, establish that MM exercises
Control over Collective within the meaning of the Assignment
Agreement.
23. Mr. Jagtiani submits that the fact that Collective has not been
separately named in the Assignment Agreement does not mean
that it falls outside the definition of “Assignor Parties”. In this
regard, he relies upon Rakesh S. Kathotia v. Milton Global Ltd.,
2014 SCC OnLine Bom 1119. In that case, the Division Bench of
this Court gave effect to contractual definitions which extended
beyond the persons and entities named in the agreement. The
definitions covered their relatives and entities which were directly
or indirectly under their Control. The Court read those definitions
along with the other provisions of the agreement, under which the
signatories had agreed to bind the wider group of persons and
entities. Applying the same principle to the present case, Mr.
Jagtiani submits that Clause 1.5 extends the definition of “Assignor
Parties” to entities which fall within the specified relationships of
Control. Clause 5.2 records that the persons and entities covered
by that definition have agreed to be bound by the restrictions.
According to him, the shareholding and management rights
referred to establish that Collective falls within this defined class.
Therefore, merely because Collective has not been separately
named as a signatory to the Agreement, it cannot claim that the
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restrictions do not apply to it.
24. Mr. Jagtiani points out that Collective is admittedly
producing a film titled “Chiranjeevi Hanuman: The Eternal”, which
is based upon and centred around the character of Hanuman.
25. He submits that Respondent Nos. 8 and 9 have stated that
they have “no grievance against that film, whether under contract
or otherwise”. At the same time, they oppose the relief sought by
Phantom to carry on its independent activities and reserve their
right to initiate enforcement proceedings against it. According to
the Petitioner, this difference in their stand is significant. The
Subject Film is being produced through an entity which, according
to the Petitioner, continues to have a connection with MM's group.
On the other hand, Phantom has ceased to be part of that group
after the buy-back of Respondent No. 4's shareholding.
26. Mr. Jagtiani points out that the notice dated 4 May 2026
called upon the Respondents to state whether any waiver had been
sought or obtained in respect of the Subject Film. However, the
reply filed by Respondent Nos. 8 and 9 after the amendments were
made only states that they have no grievance against the film. It
does not answer whether any waiver or consent was sought or
obtained. According to the Petitioner, when this reply is considered
along with the corporate relationship pleaded between the
Respondents and the earlier demands made against Phantom, it
supports the Petitioner's allegation that the restrictions are being
enforced selectively and in a concerted manner. This allegation has
been raised in paragraphs 7A and 33A of the Petition.
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27. Mr. Jagtiani submits that if the Subject Film is covered by
Clause 5, the statement made by the Assignee that it has no
grievance against the film must be treated as a conscious decision
on its part. According to him, the statement amounts to an
informed election by the Assignee and has been made on oath. He
submits that although Respondent Nos. 8 and 9 rely upon Clause
17.5, which deals with forbearance and waiver, that provision may
not prevent the Court from considering the effect of such an
unequivocal statement. In this regard, he relies upon Tele2
International Card Company SA v. Post Office Ltd., (2009) EWCA
Civ 9, paragraphs 53 to 57 and 115(ii), wherein the Court
recognised that the existence of a non-waiver clause does not
necessarily prevent a party from making an unequivocal election as
to the exercise of its contractual rights.
28. He submits that Respondent Nos. 1, 4, 5 and 11 have taken
the stand that the right to enforce the negative covenant under
Clause 5 belongs only to the Assignee. According to him, if this
contention is accepted, these Respondents cannot claim any
independent right under Clause 5 to prevent Phantom from
carrying on its activities. They cannot, on the one hand, contend
that only the Assignee has the right to enforce the restrictions and,
on the other hand, themselves issue demands calling upon
Phantom to stop its activities.
29. In support of the contention that a party can claim relief on
an alternative basis arising from the case pleaded by the opposite
party, Mr. Jagtiani relies upon Srinivas Ram Kumar (Firm) v.
Mahabir Prasad, 1951 SCC 136. In that case, the Supreme Court
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recognised that a plaintiff may put forward alternative claims and
may obtain relief on a case which is admitted and relied upon by
the defendant, provided that doing so does not cause surprise or
injustice. The plaintiff in that case had claimed specific
performance on the basis that the money paid was towards the
purchase price. However, the defendants themselves contended
that the amount was given as a loan. The Supreme Court
permitted recovery of the amount on the basis of the defendants'
own case. Relying upon this decision, Mr. Jagtiani submits that the
Petitioner is entitled to rely upon the alternative interpretation
arising from the Respondents' own pleadings without giving up its
primary case.
30. Applying this principle, Mr. Jagtiani submits that Respondent
Nos. 1, 4, 5 and 11 have contended that the negative covenant is
intended only for the benefit of the Assignee and that it does not
create any independent right of enforcement between the parties
who are subject to the restrictions. If this interpretation is
accepted, these Respondents cannot themselves claim any
independent right under Clause 5 to prevent Phantom from
carrying on its activities. Therefore, even on the interpretation put
forward by these Respondents, they have no independent
contractual right to restrain Phantom.
31. Mr. Jagtiani submits that prayer (c-2) seeks disclosure of the
payments made and the amounts which are still payable under the
Assignment Agreement. The purpose of seeking this disclosure is to
ascertain the financial position relating to the compensation
arrangement pleaded by the Petitioner. According to him, this
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prayer does not seek any direction against Respondent Nos. 8 and
9 to make payment to Phantom or to deposit any amount in Court.
He submits that MM had subsequently given an oral assurance that
an amount of Rs. 9 crore would be paid to Phantom as
compensation for agreeing to become a party to the Assignment
Agreement and remaining bound by the restrictions. It was agreed
that this amount would later be calculated on a proportionate
basis once the Petitioner was released from the negative covenant.
According to the Petitioner, this oral arrangement was pleaded in
the Petition and was referred to in the correspondence dated 9
April 2026. Mr. Jagtiani submits that this was a separate personal
assurance given by MM regarding compensation for Phantom's
inclusion in the Agreement and the restrictions imposed upon it. It
was not intended to alter the rights assigned under the Assignment
Agreement or the payment obligations of the Assignee.
32. Mr. Jagtiani submits that the reliance placed by the
Respondents upon Clause 17.2 of the Assignment Agreement is
misplaced. According to him, the entire-agreement provision
contained in that clause is limited to the subject matter of the
Assignment Agreement. The requirement of a written and signed
document applies to any change in the terms of that Agreement.
However, the oral arrangement relied upon by the Petitioner is a
separate undertaking given by MM to pay compensation to
Phantom out of the consideration which was to come to his group
or to him. It does not change the assignment of rights, the
payment obligations of the Assignee or the negative covenant. The
undertaking for compensation operates separately and alongside
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the written Agreement. It does not amount to a variation of its
terms and, according to the Petitioner, is not covered by either part
of Clause 17.2. In support of this submission, Mr. Jagtiani relies
upon the decision of this Court in P.B. Bhat v. V.R. Thakkar, AIR
1972 Bom 365. In that case, this Court held that even where a
signed document uses expressions such as “subject to a written
contract” or similar words, the Court must examine the actual
intention of the parties. It must consider whether there is reliable
evidence to show that the parties intended to create a binding
contractual obligation even before a formal document was
executed. Relying upon this decision, Mr. Jagtiani submits that the
oral assurance given by MM deserves to be considered on the basis
of the pleadings and the correspondence relied upon by the
Petitioner.
33. Mr. Jagtiani submits that the other objections raised by the
Respondents do not justify refusal of interim protection. Phantom
had denied, in its reply given at the relevant time, the allegations
relating to its involvement in “Valmiki Ramayan”. He submits that
the objection regarding delay is without any basis. The Amended
Petition has disclosed that settlement discussions were taking place
between the parties during the relevant period. Therefore, the
period relied upon by the Respondents to allege delay cannot be
considered without taking into account these discussions.
According to him, the Petitioner was not sitting idle during this
period, but was attempting to resolve the dispute with the
Respondents.
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34. Mr. Jagtiani submits that Phantom has been offered a script
based on Hanuman and wishes to proceed with its development
and production. However, because of the restrictions under the
Assignment Agreement, it is unable to pursue that opportunity.
According to him, every month that passes under the restriction
reduces the remaining commercial period available before Diwali
2027. Any compensation awarded at a later stage for the period
during which Phantom was restrained would not restore the
opportunity which it may lose in the meantime. The commercial
opportunity to develop and exploit the proposed work may no
longer remain available by the time the dispute is finally decided.
He submits that prayer (c-1) is necessary to protect Phantom's
future commercial opportunity, while the claim for compensation
relates to the loss suffered during the period of restraint. The two
claims relate to different periods and different forms of prejudice
and would not amount to double recovery.
35. Mr. Jagtiani submits that Section 9(1)(ii)(e) of the
Arbitration Act empowers the Court to grant appropriate interim
protection. According to him, prayer (c-1) seeks to protect
Phantom's independent business activities until the rights of the
parties are decided in arbitration. He relies upon Southern
Roadways Ltd. v. S.M. Krishnan, (1989) 4 SCC 603. In that case,
the Supreme Court restored a temporary injunction restraining a
former agent from interfering with the business of the principal.
The Court held that after termination of the agency, the former
agent had no continuing right to obstruct the principal's business
activities. Mr. Jagtiani submits that this decision recognises that an
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injunction can be granted to protect business activities against
interference where no subsisting contractual right exists to justify
such interference. He submits that, in the present case, the
Petitioner's claim for protection is supported by the express
undertaking contained in Clause 5.4 of the Shares Buyback
Agreement, subject to Clause 7.27 thereof. This undertaking,
according to him, supports the claim against Respondent No. 4 and
its officers and Affiliates.
36. He relies upon the more recent decision of this Court in
Shailesh R. Gandhi v. Late Ramchandra R. Gandhi, 2026 SCC
OnLine Bom 6944. In that case, this Court granted interim
protection under Section 9 against interference with the
petitioners' continued exercise of disputed business rights,
including their use of the “Vadilal” brand, pending arbitration. The
Court heldthat, while considering irreparable injury, the Court
must examine whether the relief which may be granted at a later
stage would be sufficient to restore the affected party to the
position in which it was before the injury occurred. Relying upon
this decision, Mr. Jagtiani submits that the loss of a commercial
opportunity which cannot be restored later is a relevant
consideration while deciding an application for interim protection.
37. Mr. Jagtiani submits that the contractual interpretation
heldabove, together with the conduct of the Respondents,
establishes a prima facie case for granting interim protection.
According to him, every period during which Phantom remains
restrained reduces its opportunity to develop and exploit the
proposed Hanuman project within the remaining period up to
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Diwali 2027. A later arbitral award cannot restore the commercial
opportunity which may be lost during this period. He submits that
prayer (c-1) would preserve Phantom's right to pursue its proposed
project and would not prevent the Subject Film from being
produced or released. Therefore, according to him, the balance of
convenience is in favour of granting protection to Phantom until
the Arbitral Tribunal decides the rights of the parties. In view of
these submissions, the Petitioner seeks relief in terms of prayer (c-
1), principally against Respondent Nos. 8 and 9, along with
disclosure of the payments under prayer (c-2). In the alternative,
Mr. Jagtiani submits that this Court may grant such interim
protection as it considers appropriate to ensure that Phantom is
not prevented from carrying on its independent activities while the
Subject Film is allowed to proceed.
38. The Petitioner submits that, to the best of its knowledge and
belief, Respondent Nos. 8 to 10 have not taken any steps, either
before or after filing of the present Petition, to prevent Respondent
Nos. 1 to 6 from acting through Respondent No. 11 in breach of
the Assignment Agreement. At the same time, Respondent Nos. 1
to 10 have not taken any formal steps to release the Petitioner
from the restrictions imposed under the Agreement. According to
the Petitioner, the Assignor no longer has any connection with it
and there is no reason why the Petitioner should continue to
remain bound by the non-compete restrictions. The Petitioner
particularly relies upon Clause 1.5(c) of the Assignment
Agreement, which states:
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“The end and intent is to ensure that this restriction applies
to MM/Allu and to the entities in which they hold Control
directly or indirectly”.
39. According to the Petitioner, this provision makes it clear that
the restrictions were intended to apply to MM, Allu and the
entities under their direct or indirect Control. The Petitioner
submits that after Respondent No. 4 and MM exited from the
Petitioner in 2024, there was no justification for continuing to bind
the Petitioner to the Assignment Agreement. At the time of such
exit, the Petitioner was assured that necessary steps would be
taken to release it from the Agreement. However, no such release
has been given till date. On the other hand, the Respondents are
proceeding with the production of a film based on Hanuman
through Respondent No. 11, despite the restrictions contained in
the Assignment Agreement. The Petitioner alleges that the
Respondents are acting together to prevent it from producing films
based on Hanuman, while themselves proceeding with a similar
project through Respondent No. 11. According to the Petitioner,
this conduct is causing loss to its business and giving the
Respondents an unfair commercial advantage. Therefore, without
giving up its earlier claims, the Petitioner submits that if this Court
is not inclined to restrain the Respondents from acting in breach of
the Assignment Agreement, it should at least protect the Petitioner
from interference with its independent business activities. The
Petitioner accordingly seeks an order restraining the Respondents
from interfering with or obstructing its right to produce, develop,
create, release, exhibit, transmit, exploit, market, publicise,
announce, promote or advertise any work, including a work in
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which Hanuman is shown as the lead or key character. The
Petitioner seeks protection for carrying out any other activity
referred to in Clause 5 of the Assignment Agreement or otherwise
in relation to such works.
40. The Petitioner submits that Mr. Mantena had assured it that
it would be financially compensated for the period during which it
remained bound by the restrictions. According to the Petitioner,
Mr. Mantena had agreed to pay an amount of Rs. 9 crore for its
agreeing to remain under the restrictions and not challenge its
inclusion in the Assignment Agreement. Thereafter, when Mr.
Mantena's company exited from the Petitioner, the Petitioner was
assured that it would be released from the Assignment Agreement
and that compensation would be paid on a proportionate basis for
the period during which the restrictions had operated. However,
no amount has been paid to the Petitioner till date, though the
restrictions have affected the conduct of its business. The
Petitioner points out that under the Assignment Agreement,
additional amounts may become payable by the Assignee to the
Assignor from time to time. In these circumstances, the Petitioner
submits that the Respondents should be directed to disclose all
payments made or payable to the Assignor under the Assignment
Agreement. It seeks a direction that such amounts be deposited
before this Court until the promised amount of Rs. 9 crore, or such
other amount as this Court considers appropriate, is properly
secured.
41. Mr. Ashish Kamat, learned Senior Advocate appearing for
Respondent Nos. 1, 2, 4 and 5, submits that the amendment
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application seeks to introduce an entirely new case which was
never part of the original Petition. According to him, the new case
is contrary to the stand taken by the Petitioner in the original
Petition on important aspects. The original Petition was filed
seeking to restrain an alleged breach of the negative covenant
contained in Clause 5 of the Assignment Agreement on the ground
that Respondent No. 11 was producing and proposing to release a
film tentatively titled “Chiranjeevi Hanuman: The Eternal” (the
“Subject Film”). The Petitioner's own case, though denied by the
Respondents, was that it “has continued to abide by the terms of
the Assignment Agreement and continues to do so to date”.
However, by way of the proposed amendments, the Petitioner is
now seeking to introduce an altogether different case in the name
of an alternative prayer. It seeks to restrain the Respondents from
“interfering with or obstructing” its own production and
commercial exploitation of works in which Hanuman is shown as
the lead or key character. According to Mr. Kamat, this new relief
has no connection with the original dispute raised in the Section 9
Petition. He submits that the Petitioner is now seeking to free from
the very restriction which it had earlier approached this Court to
enforce against the Respondents. Such a change in its case is
wholly impermissible.
42. Mr. Kamat submits that the amendment application seeks
several reliefs which are completely unrelated to the original
subject matter of the Petition. These include a direction to disclose
on oath the payments made and payable under the Assignment
Agreement, a direction to Respondent Nos. 8 and 9 to deposit
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money in Court towards the alleged amount of Rs. 9,00,00,000/-,
and a restraint against Respondent Nos. 2 and 4 from exercising
their shareholding and management rights in Respondent No. 11.
He points out that Respondent No. 11 is not a party to the
Assignment Agreement. The Petitioner has accepted this position
by stating that “The parties hereto are all parties to the Assignment
Agreement except for Respondent No. 11”. The allegation that
Respondent No. 11 is an Affiliate of the other Respondents or is
carrying on activities through them is denied. In this regard, he
relies upon paragraphs 4(iv), 13 and 14 of the earlier Reply. He
submits that the amendment application confirms the
contradictory stands pointed out in paragraphs 4(vi) and 10 of the
Reply. On the one hand, the Petitioner seeks to deny that it is
bound by the Contract or claims that it ought not to remain a party
to it. On the other hand, it seeks to enforce the same Contract
against the Respondents. According to Mr. Kamat, the Petitioner
cannot be permitted to take such mutually contradictory positions.
43. Mr. Kamat submits that the proposed paragraphs 7A and
33A, the proposed addition to paragraph 8 and the proposed
prayer (c-1) would, in effect, require this Court to rewrite the
Assignment Agreement. The Court has no power to alter the terms
of a contract in this manner. He submits that such relief is, in any
event, beyond the scope of jurisdiction under Section 9 of the
Arbitration Act. According to him, the Petitioner is asking the
Court to release it from a contract which continues to bind it and
to declare, in effect, that it is either not a party to the Agreement
or is not bound by certain obligations contained therein. Such a
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declaration or alteration of the contractual relationship between
the parties cannot be granted in the present proceedings.
44. He submits that the Petitioner is attempting to claim that it is
not a party to the Assignment Agreement, or that it is not bound
by certain selected obligations, even though the Agreement makes
it a party and signatory. The record establishes its participation in
the Agreement. Indeed, the Petitioner's status as a party to the
Agreement is the very basis on which it originally filed the Section
9 Petition. The Petitioner has admitted that it “continues as one of
the signatories to the Assignment Agreement”. According to Mr.
Kamat, describing the Petitioner's continued status as a party as
wrongful has no basis in law and is, in any event, denied. He
submits that no Court can rewrite a contract by changing the
parties to it or prevent one contracting party from enforcing the
contract against another. Such relief cannot be introduced by way
of amendment and cannot, in any event, be granted in a Petition
under Section 9 of the Arbitration Act. The Petitioner has failed to
establish any of the requirements necessary for obtaining such
relief. He submits that a Petition originally filed with a specific
prayer to restrain the Respondents from carrying out certain
activities cannot later be converted into a Petition seeking a
general exemption for the Petitioner from complying with its own
contractual obligations. This cannot be permitted merely by
describing the new relief as a prayer restraining the Respondents
from asserting their rights in respect of a possible future claim
which does not form part of the original Petition.
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45. Mr. Kamat submits that the proposed paragraphs 7B and 33B
and the proposed prayers (c-2) and (c-3) are based upon an
alleged oral assurance. According to him, such an assurance is
contrary to the express terms of the Assignment Agreement, is
denied and cannot be examined in proceedings under Section 9 of
the Arbitration Act. He relies upon Clause 17.2 of the Assignment
Agreement, which provides that the Agreement “constitutes the
entire Agreement between the Parties in relation to its subject
matter”. It provides that “No change, modification, or termination
of any of the terms, provisions, or conditions of this Agreement
shall be effective unless made in writing and signed or initialed by
the Parties”. He submits that in view of these express terms, the
Petitioner cannot rely upon an alleged oral promise either for
obtaining release from the Assignment Agreement or for claiming
any additional payment outside the Agreement. Such an oral
assurance cannot be relied upon to introduce new facts or seek
additional reliefs by way of amendment. He relies upon Clause 8.6
of the Assignment Agreement, which records that the
consideration paid to the Assignor is “comprehensive, adequate
and sufficient consideration to compensate for”, among other
things, “the holdback/ negative covenants and the non-compete
restrictions on the Assignor and/or Confirming Parties and/or
Assignor Parties and/or Phantom under clause 5”. According to
him, the Agreement makes it clear that the consideration paid
covers the restrictions imposed under Clause 5. Therefore, the
Petitioner's claim for separate or proportionate payment is directly
contrary to the terms of the Agreement, which the Petitioner has
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willingly signed. In this regard, he relies upon paragraphs 7, 21, 22
and 30 of the earlier Reply. He points out that Clause 8.8 records
that the consideration received by Respondent No. 2 under
Assignment 1 is adequate for undertaking the present assignment
and complying with the non-compete restrictions. It provides that
no other amount would be payable to him. In these circumstances,
according to Mr. Kamat, there is no contractual or other basis for
the alleged promise to pay an additional amount of Rs.
9,00,00,000/-.
46. Mr. Kamat submits that the alleged oral assurance is denied
and is not supported by any document or correspondence prepared
at the relevant time. According to him, the claim is based entirely
upon what the Petitioner states, without any independent
supporting material. He submits that even otherwise, deciding
whether such an oral assurance was given would require evidence
to be recorded and the matter to be tried. Such an enquiry cannot
be undertaken while deciding an interim application under Section
9 of the Arbitration Act. He submits that the Petitioner's
explanation regarding how and why it became a party to the
Assignment Agreement and why it continues to remain a party has
changed from time to time. According to him, these changing
versions show that the Petition and the amendment application
have not been filed bona fide. They make the Petitioner's present
explanation regarding its inclusion in the Assignment Agreement
unreliable and lacking in credibility. In support of his submissions,
Mr. Kamat relies upon the decisions of the Supreme Court in Alopi
Parshad & Sons Limited vs. Union of India, 1960 SCC OnLine SC
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13 : AIR 1960 SC 588 and Annaya Kocha Shetty (Dead) through
LRs vs. Laxmibai Narayan Satose, since deceased through LRs &
Others, 2025 SCC OnLine SC 758.
47. Mr. Hiren Kamod, learned Advocate appearing for
Respondent Nos. 8 and 9, submits that the Petitioner has filed the
present Petition by claiming that it has a right to approach this
Court because it is a signatory and a party to the Assignment
Agreement. The Petitioner has admitted in the Petition that it
“continues as one of the signatories to the Assignment Agreement”
and that it “has continued to abide by the terms of the Assignment
Agreement and continues to do so to date”. Thus, according to
him, there is no dispute that the Assignment Agreement is still in
existence and is binding upon the Petitioner. In fact, the original
Petition was filed on this very basis. The Petitioner sought to
restrain the alleged breach of Clause 5 by Respondent No. 11
through the production and release of the film “Chiranjeevi
Hanuman”. For this purpose, the Petitioner relied upon various
clauses and definitions contained in the Assignment Agreement.
Therefore, the entire case in the original Petition proceeds on the
footing that the Petitioner is a signatory and a party to the
Agreement, is bound by its terms and, on that basis, is entitled to
seek enforcement of the contractual restrictions against the
Respondents.
48. Mr. Kamod submits that the case which the Petitioner now
seeks to introduce by way of amendments is directly contrary to
the admissions made in the original Petition. These admissions
themselves make the so-called alternative case untenable.
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According to him, the Petitioner is now seeking to be released from
the very restriction which it had earlier approached this Court to
enforce against the Respondents. It seeks an order restraining the
Respondents from “interfering with or obstructing” its own
production and commercial exploitation of works in which
Hanuman is shown as the lead or key character. However, the
Assignment Agreement prohibits the Petitioner from carrying on
such activities. Therefore, the new relief sought is contrary to the
Petitioner's own admitted case and the obligations which it has
accepted under the Agreement. He submits that Respondent Nos. 8
and 9 have made their position clear. They have no contractual
relationship with Respondent No. 11, they have no shareholding,
interest or involvement in the film “Chiranjeevi Hanuman” being
produced by Respondent No. 11, and they have no objection or
grievance against the making or release of the said film, whether
under the Assignment Agreement or otherwise. In these
circumstances, according to Mr. Kamod, no relief can be claimed
against Respondent Nos. 8 and 9 on the basis of the alleged
activities of Respondent No. 11.
REASONS AND FINDINGS:
49. I have considered the submissions made by the learned
Advocates appearing for the Petitioner and the contesting
Respondents. At present, I am required to decide only prayer
clauses (c-1) and (c-2). The Petitioner has not pressed any relief
against Respondent No. 11.
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50. By order dated 7th October 2026, the Petitioner was
permitted to amend the Petition. However, while allowing the
amendment, it was made clear that its effect would be considered
at the time of final disposal of the Petition under Section 9 of the
Arbitration and Conciliation Act, 1996. Therefore, merely because
the amendments were allowed, it cannot be said that the Petitioner
has become entitled to the additional reliefs claimed by it. The
Court still has to examine whether the Petitioner has any legal
right to claim those reliefs and whether the material placed before
the Court is sufficient for granting such interim protection.
51. By prayer clause (c-1), the Petitioner wants an order
preventing the remaining Respondents from interfering with its
activities of producing, developing, creating, releasing, exhibiting,
transmitting, exploiting, marketing, publicising, announcing,
promoting or advertising any work. This includes any work in
which Hanuman is shown as the lead or key character. Thus, the
Petitioner is not asking for permission only in respect of one
particular film or one particular business opportunity. It wants
freedom to carry out all such activities even though Clause 5 of the
Assignment Agreement places restrictions upon it.
52. By prayer clause (c-2), the Petitioner wants the Respondents
to disclose on oath all payments made and all amounts which are
still payable under the Assignment Agreement. The Petitioner says
that this information is necessary because Respondent No. 2 had
orally promised to pay Rs.9,00,00,000/- to it. According to the
Petitioner, this amount was to be paid out of the consideration
which Respondent No. 1 was receiving under the Assignment
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Agreement.
53. Though both these prayers arise from the Assignment
Agreement, they deal with different matters. Prayer clause (c-1)
concerns the continuation of the restriction under Clause 5 against
the Petitioner. Prayer clause (c-2) concerns the payments made or
still payable under the Assignment Agreement and the alleged
promise to pay money to the Petitioner. The Petitioner may feel
that the arrangement has become unfair to it. However, that
feeling alone cannot be a ground for granting either prayer. The
Court has to first examine what the parties have agreed in the
written Agreement and what rights the Petitioner can claim under
those terms.
The relevant terms of the Assignment Agreement:
54. Before considering the arguments of both sides, it is
necessary to look at the relevant terms of the Assignment
Agreement. This Agreement was executed on 19th April 2024. In
the Agreement, the Petitioner is separately described as a party
and is identified as the Sixth Part. Thus, the Petitioner is not
merely mentioned in some recital or referred to as a company
having some connection with the transaction. It has been included
as one of the parties to the Agreement. The recital at paragraph G
of the Agreement records that the Assignor was assigning the
rights relating to Project Ramayana in favour of the Assignee. It
states:
"MM, the Confirming Parties, the Assignor Parties and
Phantom explicitly confirm the above assignment and agree
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to be bound by the holdback/negative covenants and the
non-compete restrictions contained under this Agreement."
55. These words show that the Petitioner, which is described as
Phantom, has been included along with the other persons who
have agreed to follow the negative covenants and non-compete
restrictions under the Agreement.
56. Clause 5.1 states that the restrictions will apply from the
date of execution of the Agreement until Diwali 2027. While
stating who will be bound by these restrictions, the clause includes
the Petitioner by using the following words:
"the Assignor and / or Assignor Parties and / or the
Confirming Parties and / or Phantom"
57. Thus, the persons covered by this clause cannot carry out the
activities prohibited under it, either directly or indirectly, by
themselves or through any third party.
58. Clause 5.1(ii), in particular, places restrictions on
production, development, creation, release, exhibition,
transmission or exploitation of works in which Ram, Sita,
Lakshman, Raavan or Hanuman are shown as lead or key
characters, subject to the exceptions mentioned in that clause.
Therefore, the restriction against the Petitioner does not arise only
because it has some connection with Respondent No. 2. The
Petitioner has been named in the main clause which imposes the
restriction. Clause 5.2 records that the Assignor, the Confirming
Parties, the Assignor Parties and Phantom have agreed to remain
bound by the negative covenants and non-compete restrictions
under Clause 5. It states that these restrictions will continue to
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bind them even if the Agreement is later assigned by the Assignee.
Clause 5.3 provides for release from the restrictions in a particular
situation. It deals with a situation where the Assignee completely
abandons or shelves the production of the films. In such a case, the
Assignor is to be released from the holdback and negative
covenants on the Long Stop Date or on receiving the specified
written notice, whichever is earlier.
59. The important thing to notice is that the Agreement provides
for a particular situation in which the restrictions can come to an
end. But it does not say that Phantom will be released from the
restrictions if Respondent No. 2 or Respondent No. 4 stops holding
shares in Phantom.
60. I have considered the Petitioner's reliance upon Clause
1.5(c), which forms part of the definition of "Assignor Parties". This
clause does contain the words relied upon by the Petitioner
regarding the intention to apply the restriction to Mr. Mantena, Mr.
Allu and the entities in which they hold Control. However, Clause
1.5 mainly explains what is meant by the expression "Assignor
Parties". It does not say that Phantom will stop being bound by
Clause 5 whenever there is a change in its shareholding. There is a
difference between an entity being covered under the definition of
"Assignor Parties" and Phantom being separately named as a party
bound by Clauses 5.1 and 5.2. Both expressions have been used in
the Agreement. Therefore, they cannot be treated as having the
same meaning, particularly when Phantom has been separately
mentioned in the clauses which impose the restrictions. If the
intention of the parties was that Phantom would remain under the
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restriction only so long as Respondent No. 2 or Respondent No. 4
continued to hold shares in it or exercise Control over it, the
Agreement could have stated so. It could have provided that the
restriction against Phantom would end when those persons or their
entities stopped having shareholding or Control over it. However,
no such condition is mentioned in Clause 5.1 or Clause 5.2. On the
contrary, Clause 5.1 fixes the period of restriction up to Diwali
2027. Clause 5.2 again says that Phantom has agreed to remain
bound by the restrictions. Clause 5.3 provides for one particular
situation in which the restrictions may come to an end if the
Assignee abandons or shelves the films. All these clauses have to
be read together. The words in Clause 1.5(c) cannot be read in
such a way that the separate and clear mention of Phantom in
Clauses 5.1 and 5.2 becomes meaningless.
61. There is one more clause which is required to be considered.
Clause 17.2 has the heading "Entire Agreement and Amendment".
It provides that the Agreement, along with the documents referred
to in it, contains the entire understanding between the parties
regarding the subject matter. It states:
"No change, modification, or termination of any of the terms,
provisions, or conditions of this Agreement shall be effective
unless made in writing and signed or initialed by the Parties."
62. This clause is important. It says that the terms of the
Agreement cannot be changed or brought to an end only because
one party claims that some oral understanding had taken place
later. The parties themselves have agreed that any change or
termination must be in writing and must be signed or initialled by
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them.
Principles governing interpretation of the Agreement:
63. The law regarding interpretation of contracts is well settled.
The Court has to find out what the parties have written in the
Agreement and what meaning a reasonable person would
understand from those words. While doing so, the circumstances
in which the Agreement was made can be considered. But the
Court cannot change the terms agreed between the parties only
because some other arrangement may appear to be more fair or
reasonable.
64. In Alopi Parshad & Sons Ltd. , the Supreme Court, in
paragraph 21, while considering Section 56 of the Indian Contract
Act, observed:
"The Indian Contract Act does not enable a party to a
contract to ignore the express covenants thereof, and to
claim payment of consideration for performance of the
contract at rates different from the stipulated rates, on some
vague plea of equity."
65. In paragraph 22, the Supreme Court held:
"There is no general liberty reserved to the courts to absolve
a party from liability to perform his part of the contract,
merely because on account of an uncontemplated turn of
events, the performance of the contract may become
onerous."
66. These observations are relevant to the present case. The
Petitioner says that after Respondent No. 2 and Respondent No. 4
left its shareholding, there is no reason to continue the restriction
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against it. However, only because a condition in the Agreement has
become difficult or is causing business difficulty to one party, the
Court cannot remove that condition from the Agreement.
67. The principle stated in Alopi Parshad requires consideration
of Section 56 of the Indian Contract Act. This section deals with a
contract which becomes impossible or unlawful to perform. In the
present case, there is no material to show that the Petitioner has
become legally or physically unable to follow Clause 5. It may have
lost a business opportunity. It may feel that the restriction is
affecting its business. But these circumstances do not mean that
following the Agreement has become impossible or unlawful.
68. In Annaya Kocha Shetty (Dead) through LRs , the Supreme
Court explained the principles for interpreting documents in
paragraph 17. It held:
"17.1 The contract is first constructed in its plain, ordinary
and literal meaning. This is known as the literal rule of
construction.
17.2 If there is an absurdity created by literally reading the
contract, a shift from literal rule may be allowed. This
construction is generally called the golden rule of
construction.
17.3 Lastly, the contract may be purposively constructed in
light of its object and context to determine the purpose of the
contract. This approach must be used cautiously."
69. In paragraph 18, the Supreme Court observed that generally
the construction of a deed is a question of law. However, when
there is some ambiguity, its meaning may involve both questions of
fact and law.
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70. These principles show that the Court must first read the
actual words used in the Agreement and understand their ordinary
meaning. If reading those words literally results in an absurd
situation, another reasonable meaning may be considered. The
purpose of the Agreement and the circumstances in which it was
made can be looked into. But the purpose cannot be used to
remove words which the parties have included in the Agreement.
71. In Bangalore Electricity Supply Co. Ltd , the Supreme Court,
in paragraph 16, referred to the principles stated by Lord
Hoffmann in Investors Compensation Scheme Ltd. v. West
Bromwich Building Society . The principle is that the meaning of a
document has to be understood in the way in which a reasonable
person, having the relevant background knowledge available to
the parties, would understand it.
72. The Supreme Court observed in paragraph 17:
"The duty of the court is not to delve deep into the intricacies
of human mind to explore the undisclosed intention, but
only to take the meaning of words used i.e. to say expressed
intentions."
73. Therefore, the Court cannot decide the present dispute by
trying to find out what Respondent No. 2 may have privately
thought or intended when the Agreement was signed. The Court
has to see the intention which is shown by the words used in the
Agreement and the relevant circumstances.
74. In Haris Marine Products , the Supreme Court considered the
principle of business common sense while interpreting commercial
agreements. In paragraph 15, it referred to the decision in Rainy
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Sky SA v. Kookmin Bank and quoted the following principle:
"If there are two possible constructions, the court is entitled
to prefer the construction which is consistent with business
common sense and to reject the other."
75. In paragraph 16, while referring to Arnold v. Britton , the
Court considered that the meaning of a clause has to be
understood by looking at its natural and ordinary meaning, the
other relevant clauses, the purpose of the clause, the circumstances
known to the parties when the document was signed and the
common business understanding.
76. In paragraph 17 of Haris Marine Products , the Supreme
Court referred to Wood v. Capita Insurance Services Ltd . and
observed that reading the actual words of the Agreement and
considering the circumstances around it are not two opposite
methods. Both are required to understand the real meaning of the
words used by the parties. The Court recognised that where a
commercial contract has been carefully prepared with professional
assistance, greater importance can be given to the actual words
used in it.
77. These judgments do not allow the Court to change the terms
of a contract merely because one party later feels that the
arrangement has become disadvantageous. The entire Agreement
has to be read together. All its clauses have to be considered. One
sentence cannot be taken separately while ignoring the other
provisions.
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78. The two English decisions placed on record support the same
view. In Burford UK Properties Ltd , paragraph 19, the Court
emphasised that the meaning of a particular provision has to be
understood by reading it along with the entire agreement, the
relevant definitions and the other connected provisions. In Anglo
Continental Educational Group (GB) Ltd , paragraph 13, the Court
observed that where the words can have more than one meaning,
the meaning which makes the Agreement workable and gives
effect to what the parties were likely to have agreed should be
preferred over a meaning which is unlikely.
79. Applying these principles to the present Agreement, the
mention of the Petitioner in Clause 5 cannot be ignored. The
Petitioner has been named in Clauses 5.1 and 5.2. Clause 1.5(c)
does not say that the restriction against the Petitioner will continue
only so long as Respondent No. 2 or Respondent No. 4 holds
shares in it. If the Petitioner's interpretation is accepted, the Court
will have to add a condition to the Agreement which the parties
have not written. This cannot be done only because the Petitioner
now feels that the restriction should not continue against it.
Consideration of prayer clause (c-1)
80. Coming to prayer clause (c-1), the first reason given by the
Petitioner is that Respondent No. 2 and Respondent No. 4 have
stopped holding shares in it. This fact is supported by the Buyback
Agreement dated 17th October 2024. Under that Agreement,
Respondent No. 4 agreed to sell its shares in the Petitioner and the
Petitioner agreed to buy back those shares. After completion of the
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buyback, Respondent No. 4 would no longer have any right,
interest or claim in those shares.
81. I am not ignoring this change in the shareholding of the
Petitioner. It is certainly an important fact. The Petitioner may have
a genuine grievance that after the buyback, the reason for
including it in the Assignment Agreement no longer exists.
However, only because the shareholding arrangement has ended, it
cannot be said that the separate contractual obligation accepted by
the Petitioner on 19th April 2024 has ended. The Buyback
Agreement deals with the purchase of shares held by Respondent
No. 4 in the Petitioner. It sets out the terms and conditions of that
transaction. But it does not say that the Petitioner is being
removed from the Assignment Agreement dated 19th April 2024. It
does not say that the restrictions under Clause 5 will end after the
buyback is completed. The Petitioner has not produced any written
amendment to the Assignment Agreement, signed by the
concerned parties, showing that it has been released from Clause
5. Therefore, merely because the buyback has been completed, it
cannot be presumed that the separate negative covenant has
ended. Both are different transactions. Their effect has to be
understood from the terms agreed in each transaction.
82. It is true that the Petitioner says that, when Respondent No.
2 and his entity were leaving its shareholding, there was an
understanding that the Petitioner would be removed from the
Assignment Agreement. It says that Respondent No. 2 had
promised to pay compensation on a pro-rata basis until the
Petitioner was formally released from the Agreement. This
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submission is important and requires consideration. However,
Respondent Nos. 1, 2, 4 and 5 have denied that any such
understanding was reached. Their letter dated 27th April 2026
states that no assurance to pay Rs.9,00,00,000/- was ever given. It
states that there was no intention to make any separate payment
to the Petitioner and that the consideration under the Assignment
Agreement was payable only to the Assignor. These Respondents
have denied that there was any understanding to remove the
Petitioner from the Assignment Agreement after the buyback.
83. The Petitioner has relied upon its letters dated 9th April
2026 and 14th April 2026 and the other correspondence
exchanged between the parties. These letters contain the
Petitioner's version about the oral assurances which are said to
have been given. But merely because the Petitioner has repeated
its allegation in its letters or notices, it cannot be treated as proof
that the assurance was given. The other side has denied it. No
written agreement or signed amendment prepared at the relevant
time has been produced to show that the Petitioner was promised
release from the Assignment Agreement. The Petitioner has
objected that it was made a party to the Assignment Agreement
without proper approval of its Board. In this regard, Respondent
Nos. 1, 2, 4 and 5 rely upon a certified true extract of the Board
Resolution dated 26th February 2024. This extract records that the
proposed Assignment Agreement was approved and that authority
was given to Mr. Kamlakar Kesarkar and/or Mr. Sushil Garud to
execute the necessary documents. On the other hand, the minutes
of the Board meeting dated 26th February 2024 produced by the
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Petitioner do not contain any corresponding resolution approving
the Assignment Agreement. Thus, the parties are relying upon two
different sets of documents. Respondent Nos. 1, 2, 4 and 5 say that
the certified extract correctly records the resolution passed by the
Board and that Mr. Sheetal Talwar had taken part in the
negotiations. The Petitioner disputes the authority of the persons
who signed the Agreement. It denies that Mr. Sheetal Talwar had
negotiated the Agreement on its behalf.
84. These documents therefore raise a dispute which requires
proper examination. At this stage, on the basis of the documents
placed before the Court, it is not possible to hold that the certified
extract is false or that the Petitioner's allegation about absence of
authority is proved. At the same time, merely because a certified
extract has been produced, the Petitioner's objection cannot be
rejected without examining the actual minute book and the
surrounding circumstances. However, the dispute about the
authority of the Board does not by prove that the Petitioner is
entitled to produce works in breach of Clause 5. The Petitioner had
approached this Court on the basis that it was a party to the
Assignment Agreement and that it continued to follow the
restrictions under Clause 5. Its original case was based upon the
obligations of the other parties under the same clause. The
alternative case raised by it can be considered. But even for that
purpose, the Petitioner must show some legal ground for being
released from the obligation which it had accepted under the
Agreement.
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85. In this connection, the objection raised by Respondent Nos. 8
and 9 requires consideration. According to them, the Petitioner
had originally approached the Court by accepting that the
Assignment Agreement was binding upon it. The Petitioner had
stated that it continued to follow Clause 5 and had asked the Court
to prevent the other parties from acting contrary to that clause.
But by making prayer clause (c-1), the Petitioner now wants
permission to carry out the very activities which are prohibited
under the same clause.
86. I am unable to accept that an alternative prayer must be
rejected only because it is different from the main prayer originally
made by a party. A party can put forward an alternative case. The
Court has to examine the legal basis of that case. However, the fact
that the Petitioner had repeatedly treated the Assignment
Agreement as binding upon it is certainly relevant. This fact has to
be considered while deciding whether the Petitioner has now
shown any prima facie right to get released from the same
Agreement.
87. The Petitioner has argued that Clause 5 puts restrictions
upon all the parties and that it cannot be expected to follow the
restriction when the other parties are themselves allegedly acting
contrary to the same clause. This submission has some force when
looked at from the point of view of fairness. If an agreement places
obligations upon several parties and one party acts against the
agreed terms, the affected party may certainly have a right to
complain and seek proper relief. However, the question is whether
a breach of the Agreement by one party will release the remaining
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parties from their own obligations. There is no such provision in
the Assignment Agreement. It does not say that if any party
breaches Clause 5, the restriction against Phantom will end. Each
party has accepted its own obligation under that clause. Therefore,
an alleged breach by one party does not by end the obligation of
another party. Therefore, even if it is assumed for the purpose of
considering this argument that some other party has acted
contrary to Clause 5, the Petitioner cannot say that the restriction
against it has ended only on that ground. If the Petitioner is able to
prove such breach, it may have some remedy in law. But that is a
separate issue. Such remedy cannot be treated as giving the
Petitioner a right to stop following its own undertaking under the
same Agreement.
88. The Petitioner has relied upon the fact that it has been
offered an opportunity to make a film based on Hanuman.
According to the Petitioner, because of Clause 5, it is unable to
accept that opportunity and will suffer serious business loss if it is
not allowed to proceed.
89. The other Respondents have disputed the details of this
alleged offer. From the material placed before the Court, no
document has been produced showing when the offer was made,
what its actual terms were, what rights were offered, what the
commercial arrangement was or who made the offer. I am not
holding that no such offer was made. But merely because the
Petitioner has stated about the offer, the Court cannot assume that
the entire business arrangement has been established.
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90. When a party has agreed to a negative covenant, it cannot
obtain an order permitting it to carry out the very activity which it
had agreed not to undertake, only because a new business
opportunity has become available later. Before granting such relief,
the Court has to be satisfied that the restriction has legally come to
an end or that there is some clear legal reason to suspend it.
91. In the present case, the restriction is for a fixed period and is
stated to continue until Diwali 2027. The change in shareholding
relied upon by the Petitioner is not mentioned in the Agreement as
an event which will end the restriction. No written release or
signed amendment has been produced. The alleged oral assurance
has been seriously denied by the other side. In these
circumstances, the Petitioner has not shown a sufficiently clear
right for obtaining the protection claimed under prayer clause (c-
1).
92. The argument that no separate consideration was paid to the
Petitioner requires consideration. Clause 8.1 provides for payment
of Rs.60,00,00,000/- by the Assignee to the Assignor for
assignment of the Assigned Rights and for accepting the negative
covenant under Clause 5, along with the other promises under the
Agreement. Clause 8.2 provides for payment of the remaining
consideration according to Schedule F. It provides for a guarantee
by DNEG India if the Assignee fails to make payment. Further, an
additional payment is provided on the basis of revenues exceeding
the specified limit, subject to the maximum amount agreed
between the parties. Clause 8.6 states that the consideration paid
to the Assignor is complete, adequate and sufficient for the
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assignment and for the negative covenants imposed under Clause
5. It refers to the restrictions imposed upon the Assignor, the
Assignor Parties, the Confirming Parties and Phantom. Therefore,
the written Agreement shows that the consideration payable to the
Assignor takes into account the restriction accepted by the
Petitioner.
93. I am not ignoring the fact that no separate amount has been
mentioned as payable directly to the Petitioner. The Petitioner may
therefore feel that it has accepted restrictions upon its business
without receiving any separate payment. But merely because no
separate amount has been kept aside for payment to the Petitioner,
it cannot be said that the negative covenant accepted by it in the
written Agreement has no effect.
94. Whether Respondent No. 2 had separately promised to give
some part of the consideration to the Petitioner and whether that
promise can be enforced is a different question. The Respondents
have denied giving any such promise. This issue will require
evidence and proper consideration. Even if it is assumed that some
separate promise was made, it does not mean that the written
negative covenant has ended. At the most, the alleged promise
may give rise to a separate claim against the person who is said to
have made it. But without a written amendment, such promise
cannot release the Petitioner from an Agreement signed by several
parties. This difference between the two claims must be kept in
mind. The Petitioner is making two separate claims. First, it says
that it should receive compensation for the period during which it
remained under the restriction. Secondly, it says that it should now
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be permitted to carry out the activities prohibited under Clause 5.
The first claim is based upon the alleged promise to pay money.
The second claim concerns whether the written Agreement and its
restriction should continue. The alleged promise of compensation
cannot by decide whether the restriction under the Agreement has
ended.
95. The Petitioner relies upon the changed position after
Respondent No. 2 and Respondent No. 4 stopped holding shares in
it. This change has taken place and there is no dispute about it.
However, a change in the surrounding circumstances cannot by be
treated as a change in the written Agreement. Clause 17.2 says
that any change or termination must be in writing and signed or
initialled by the parties. No such document has been produced
before the Court.
96. In this connection, the principle laid down in Alopi Parshad
applies. A party cannot be released from an express condition of
the Agreement merely because following it has become more
difficult or less beneficial than what was expected. The Petitioner
has not shown that following the restriction has become impossible
or unlawful. Its complaint is that the restriction is causing
difficulty to its business after Respondent No. 4 left its
shareholding. This fact alone is not sufficient for granting prayer
clause (c-1).
97. I am therefore unable to accept the Petitioner's argument
that the words used in Clause 1.5(c) release it from Clause 5.
When Clause 1.5(c), Clauses 5.1, 5.2 and 5.3 and Clause 17.2 are
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read together, there is no provision in the Agreement stating that
Phantom will be released from the restriction after Respondent No.
2 or Respondent No. 4 leaves its shareholding. If prayer clause (c-
1) is granted, the Petitioner will in effect be permitted to ignore
Clause 5 for the remaining period. This will bring about a major
change in the written Agreement between the parties. It will not
merely protect some existing right of the Petitioner. It will give the
Petitioner a right which is not provided under the present
Agreement. The power under Section 9 cannot be used to make
such a change only because the Petitioner now feels that the
agreed terms are unfair to it.
98. The balance of convenience does not support the relief in the
wide form in which it is claimed. If the Petitioner is allowed to
produce and commercially exploit works in which Hanuman is
shown as the lead or key character, it will be exercising a right
which is restricted under the Agreement. If it is later found that
the Petitioner had no such right, the consequences may not be easy
to undo. On the other hand, the Petitioner has not produced any
written release or shown any clear condition in the Agreement
under which the restriction has come to an end. The alleged
business opportunity and the loss claimed by the Petitioner may be
relevant when its claim for compensation is considered, if that
claim is established. But at present, the alleged promise to release
the Petitioner and pay compensation has been denied by the other
side. No signed amendment has been produced. Therefore, the
Petitioner has not shown a sufficiently strong prima facie right for
granting an interim order under prayer clause (c-1).
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99. For these reasons, prayer clause (c-1) cannot be granted.
Consideration of prayer clause (c-2):
100. I now come to prayer clause (c-2). By this prayer, the
Petitioner wants a direction requiring all the Respondents to
disclose on oath the payments which have been made and the
amounts which are still due and payable under the Assignment
Agreement.
101. According to the Petitioner, such disclosure is necessary
because Respondent No. 2 had promised to pay Rs.9,00,00,000/-
out of his share in the consideration payable under the Assignment
Agreement. The Petitioner says that some more amounts may
become payable to the Assignor in future and that payment of such
amounts is guaranteed by DNEG India. Therefore, the Petitioner
wants to know what amounts have been paid and what amounts
are still payable, so that its alleged claim for money can be
protected.
102. For considering this argument, it is necessary to look at the
payment terms of the Agreement. Clause 8.1 provides for payment
of Rs.60,00,00,000/- by the Assignee to the Assignor. Out of this
amount, Rs.20,00,00,000/- was payable when the Agreement was
executed and the remaining Rs.40,00,00,000/- was payable
according to the payment schedule given in Schedule F. Clause 8.2
provides that DNEG India will guarantee payment of the
consideration if the Assignee commits default, subject to the notice
and opportunity to correct the default as provided in that clause.
Clause 8.2 provides for an additional payment calculated at 2.5
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per cent of the specified revenues exceeding Rs.2,000 crores per
film. However, the total additional payment cannot exceed
Rs.50,00,00,000/- for both films together. Thus, the Agreement
provides that some amount may become payable depending upon
the revenue earned from exploitation of the films. But the main
question is who is entitled to receive these amounts. The
consideration under Clause 8.1 is payable to the Assignor. The
additional payment based on revenue under Clause 8.2 is payable
to the Assignor. The guarantee given by DNEG India is for securing
payment of the consideration to the Assignor. There is no provision
in this clause stating that DNEG India has guaranteed payment of
any separate amount to the Petitioner.
103. The Petitioner is not shown as the person entitled to receive
the consideration under Clause 8.1. No separate part of the
amount of Rs.60,00,00,000/- has been kept aside for payment to
it. There is no provision in Clause 8.2 or Schedule F stating that
any instalment will be directly paid to the Petitioner. The payment
schedule only mentions the dates and amounts payable to the
Assignor. It does not provide for any separate payment to
Phantom.
104. The Petitioner's claim of Rs.9,00,00,000/- is based upon the
alleged oral assurance given by Respondent No. 2. According to
the Petitioner, this amount was to be paid out of the consideration
received by the Assignor. But the written Agreement does not state
that Respondent No. 2 will receive any particular share of the
consideration. It does not state that any part of the amount
payable to the Assignor will be kept for the benefit of the
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Petitioner.
105. This difference is important. Merely because the Assignee
has paid or may still have to pay certain amounts to the Assignor, it
cannot be assumed that Respondent No. 2 has personally received
any particular amount. It cannot be assumed from such payment
alone that Respondent No. 2 has become liable to pay
Rs.9,00,00,000/- to the Petitioner. The Petitioner has not produced
any document showing how the consideration received by the
Assignor has been divided or what amount, if any, has come to the
share of Respondent No. 2. It has not pointed out any clause in the
Assignment Agreement which requires the Assignee or DNEG India
to pay any part of the consideration directly to the Petitioner.
106. The Respondents have denied the alleged oral promise. Their
letter dated 27th April 2026 states that there was never any
intention to make a separate payment to the Petitioner and that
the entire consideration was payable to the Assignor. They have
relied upon Clause 8.6 and argued that the consideration payable
to the Assignor was meant to cover the negative covenants,
including the restriction accepted by the Petitioner.
107. The Petitioner does not accept this explanation. It says that
Respondent No. 2 had personally assured it about the payment and
that it continued to follow Clause 5 because of that assurance.
However, as discussed, the other side has denied the alleged
promise. No document prepared at the relevant time has been
produced which records such promise in writing.
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108. I find that merely because some amount may become
payable under Clause 8.2, the Petitioner does not become entitled
to receive information about every payment made or to be made
under the Assignment Agreement. The Petitioner must first show
how such information is necessary for protecting a legal right
which it has been able to establish, at least prima facie.
109. The prayer under Clause (c-2) is very wide. The Petitioner is
asking for disclosure of all payments made and all amounts which
are still due and payable under the Assignment Agreement. It has
not restricted the prayer to any particular instalment, any
identified default in payment or any particular amount which is
directly connected with its alleged claim of Rs.9,00,00,000/-. The
Petitioner has not pointed out any particular instalment which was
payable to the Assignor but has not been paid by the Assignee. It
has not shown that the procedure given under Clause 8.2 for
invoking the guarantee of DNEG India has been followed by the
Assignor or that any amount has become payable by DNEG India
to the Petitioner. The guarantee under Clause 8.2 is meant to
secure payment to the Assignor. It does not cover the alleged
personal promise of Respondent No. 2 to pay compensation to the
Petitioner. Therefore, merely because DNEG India has given a
guarantee under the Assignment Agreement, the Petitioner does
not get any right to ask DNEG India to disclose or secure any
amount for its benefit.
110. I have considered whether the payments can be ordered to
be disclosed as a simple interim measure, even without directing
deposit of any money. In my view, disclosure under Section 9
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cannot be ordered merely because a party has asked for it. There
must be a clear connection between the information sought and
the interim protection which the Petitioner is legally entitled to
receive. Otherwise, it would mean allowing a general enquiry into
the financial transactions of the other parties without first finding
a sufficient legal basis for the Petitioner's claim.
111. In the present case, the Petitioner wants information about
the financial transactions under an Agreement in which the main
consideration is payable to the Assignor. Its alleged right to receive
money is based upon a separate oral assurance which the other
side has denied. Information about the payments made by the
Assignee to the Assignor may show whether the payment schedule
under the Assignment Agreement has been followed. But such
information will not prove that Respondent No. 2 had promised to
pay Rs.9,00,00,000/- to the Petitioner. Even if it is found that all
payments under the payment schedule have been made, the
Petitioner will still have to prove that the alleged oral promise was
given. In the same way, if any instalment remains unpaid to the
Assignor, that fact will not establish any liability of the Assignee or
DNEG India towards the Petitioner. Therefore, the disclosure
sought by the Petitioner does not directly answer the main
question on which its monetary claim is based.
112. Clause 8.6 requires consideration. It states that the
consideration payable to the Assignor is complete and sufficient
and covers the holdback and negative covenants imposed upon the
Petitioner. This clause does not prove that any separate amount
was paid to the Petitioner. But it shows that, according to the
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written Agreement, the consideration payable to the Assignor was
intended to cover the restrictions imposed under Clause 5,
including those accepted by Phantom. The Petitioner cannot ignore
this clause while asking the Court to examine the payment
arrangements under the same Agreement.
113. I have not overlooked the Petitioner's argument that it has
not received any separate consideration and that the entire
amount is payable to the Assignor. However, this fact alone does
not establish that the Petitioner is entitled to receive general
disclosure of all amounts paid or payable under the Agreement.
The alleged liability of Respondent No. 2 has to be established
separately. It cannot be assumed merely from the payment
arrangement between the Assignee and the Assignor.
114. The nature of the power under Section 9 has to be
considered. This provision is meant for granting interim protection
in relation to disputes which are to be decided in arbitration. It
does not give a party a general right to examine all financial
transactions of the other parties. Such information can be directed
to be disclosed only when it is shown that the information is
directly necessary for protecting a legal claim which has been
sufficiently established.
115. In the present case, no sufficient material has been produced
to show that the amounts payable to the Assignor are being held
on behalf of the Petitioner or that the Petitioner has any existing
right over those amounts under the written Agreement. Merely
because Respondent No. 2 is a partner or is otherwise connected
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with the Assignor, it cannot be said that every amount payable to
the Assignor is his personal money or belongs to the Petitioner.
116. I am therefore of the view that the disclosure sought under
prayer clause (c-2) has not been shown to be necessary for
protecting the Petitioner's alleged monetary claim. If the prayer is
granted, it would result in a general enquiry into the payments
made and the amounts still payable under the Assignment
Agreement. However, the Petitioner has not shown any sufficient
connection between the information sought and its separate claim
of Rs.9,00,00,000/-.
117. For these reasons, prayer clause (c-2) cannot be granted.
118. The findings recorded above are only for deciding the
interim reliefs claimed under Section 9 of the Arbitration and
Conciliation Act, 1996. The prayers are rejected on the basis of the
present terms of the Agreement and the material available before
the Court. The alleged separate monetary promise of Respondent
No. 2 and the Petitioner's claim arising from it are not being
treated as proved merely because they have been stated in the
Petition. The respective rights and arguments of the parties in the
arbitration proceedings will remain open for consideration and
decision in accordance with law.
(AMIT BORKAR, J.)
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