Bombay High Court
Dollar Industries Limited vs Royal Multisport Private Limited on 22 March, 2024
Author: Bharati Dangre
Bench: Bharati Dangre
2024:BHC-OS:4972
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMMERCIAL ARBITRATION PETITION (L) NO.8902 OF 2024
Dollar Industries Limited .. Petitioner
Versus
Royal Multisport Private Limited .. Respondent
...
Mr.Vishal Kanade with Mr.Ravitej Chilumari, Mr.Shounak
Mitra, Ms.Aafreen Noor and Mr.Aditya A. Sarkar i/b Khaitan &
Co. for the Petitioner.
Mr.Rohan P. Shah with Srisabari Rajan, Manish Rastogi and
Shwetank Nigam i/b Deep Roy for the Respondent.
...
CORAM: BHARATI DANGRE, J.
DATED : 22nd MARCH, 2023 P.C:-
1. The Dollar Industries Limited (hereinafter referred to as, "Dollar"), a company incorporated and registered under the Companies Act in Kolkata, West Bengal, claims to be the leading brand in the hosiery sector and a leader in textile exports.
It entered into an agreement dated 11/04/2022, being captioned as 'Sponsorship Agreement', in terms whereof, it M.M.Salgaonkar ::: Uploaded on - 23/03/2024 ::: Downloaded on - 02/04/2024 11:09:30 ::: 2/12 27 carbpl-8902-24.odt was conferred with sponsorship rights as 'Principal Sponsor' in the category of 'Hosiery Partner owning the top right chest position' within India.
The Agreement was entered with 'Royal Multisport Private Limited', another company having its registered offce in Andheri (E), Mumbai and the owner of the franchisee popularly known as 'Rajasthan Royals', which is one of the teams participating in the Indian Premier Legague (hereinafter referred to as "IPL"), organised by the Board of Control for Cricket in India (BCCI).
2. The rights conferred on Dollar under the agreement included the sponsorship rights and the additional rights mentioned in the agreement and the sponsorship right, was comprised in Logo Exposure, Television Visible Branding, In- Stadia Activations and TV Visible Activations.
The TV Visible Branding also cover, (a) right to have Commercial Logo listed on two LED premier board for all designated RR home games; (b) right to have the Commercial Logo listed on Big LED walls for three overs for all designated RR home games, subject to BCCI/IPL regulations; (c) right to Commercial Logo on giant screen for all designated RR home games for four over; (d) right to have the Commercial Logo M.M.Salgaonkar ::: Uploaded on - 23/03/2024 ::: Downloaded on - 02/04/2024 11:09:30 ::: 3/12 27 carbpl-8902-24.odt displayed on toss mats, and (e) right to have the Commercial Logo on the man of the match highlight reels etc.
3. The 'Term' in the Sponsorship Agreement was set out as under :-
"The term of this Agreement shall be from a period from the February 28,2022 ("Effective Date") of this agreement until December 31,2024 ("End Date") ("Term") unless terminated earlier according to provisions of this Agreement. The Parties agree that during term, 6the period stating from December 01,2023 to December 31, 2023 ("Review Period") the parties shall evaluate and consider whether they shall continue during the agreement for the remaining Term. During the Review Period, if the parties mutually agree to continue with the arrangement, then the Agreement will continue till the end Date, or else the Agreement shall stand terminated on December 31,2023."
4. In consideration of the rights conferred on Dollar under the said Agreement, Dollar is required to make payment of an agreed consideration of INR 26,40,00,000/- (Indian Rupees Twenty Six Crores Forty Lakhs Only), which includes an amount of INR 8, 00,00,000/- (Indian rupees eight Crores Only) for IPL season 15 ("Consideration 1"); INR 8,80,00,000/- (Indian Rupees eight Crores Eighty Lakhs Only) for IPL Season 16 ("Consideration ") and INR 9,60,00,000/- (Indian Rupees Nine Crores Sixty Lakhs Only) for IPL Season 17 ("Consideration 3").
5. The parties are bound by an Arbitration Agreement M.M.Salgaonkar ::: Uploaded on - 23/03/2024 ::: Downloaded on - 02/04/2024 11:09:30 ::: 4/12 27 carbpl-8902-24.odt contained in Clause 12.9 of the said Agreement dated 11 April 2022.
6. Dollar has acted as the Principal Sponsor in terms of the said agreement during the period IPL Season 15 and IPL Season 16. During the aforesaid periods, Dollar has duly performed and fulflled all its reciprocal promises under the said agreement, without any default.
Both, Dollar and Royal Multisport Private Limited have mutually benefted from the said Agreement for season 15 and 16 of the IPL and as per Dollar, it has successfully performed its reciprocal promises and having made payment of the aggregate consideration in respect of the IPL season 15 and season 16 respectively and was hopeful that it would be continued as the Principal Sponser and avail the rights even during the IPL Season 17 and it was very much interested in continuation of the same as the franchisee team of Royal Multisport Private Limited, carrying substantial commercial benefts with huge international exposure, and considering the past relationship, it was hopeful about the future assocation.
7. It is the specifc case of Dollar, presented through the learned counsel Mr.Vishal Kanade that it did not receive any warning or intimation or any notice, indicating that there is M.M.Salgaonkar ::: Uploaded on - 23/03/2024 ::: Downloaded on - 02/04/2024 11:09:30 ::: 5/12 27 carbpl-8902-24.odt any likelihood of discontinuation of the agreement and in fact the course of conduct of the parties, including the discussions held between them in December 2023 led it to believe that the arrangement is continued and this was evidenced by the discussion, as regards the jersey of the team in the month of December 2023 and this led Dollar to an inference that it is the mutual intention of the parties to continue with the arrangement.
8. For garnering such an impression, Mr.Kanade has relied upon a communication dated 24/02/2024 from Dollar, when it expressed its astonishment that the Logo is not featuring in the practice jersey of 'Rajasthan Royals' and it indicated that there was a discussion of possible shoot options and activation plans and there was discussion with the team members in early December, when it was agreed that this year the jercey remains the same.
It is the submission of Mr.Kanade that at no point of time, it was indicated that the agreement,which was subjected to review at the end of December 2023, has in fact resulted in its discontinuation and Mr.Kanade has relied upon the averments in his additional affdavit dated 19/03/2024, where in support of paragraph Nos.10 and 11 of the pleadings in the M.M.Salgaonkar ::: Uploaded on - 23/03/2024 ::: Downloaded on - 02/04/2024 11:09:30 ::: 6/12 27 carbpl-8902-24.odt Petition, it is also stated as under :-
"4. .........It is stated that in course of the discussions between the parties in early December 2023, the Respondent's representatives Mr. Vaibhav had informed the Petitioner's representative Mr. Supriyi that the jersey would remain the same as it was during IPL season 16. this would further be evident from the social media postings both pictures and videos made by the Respondent starting from December 2023 till February 2024 in the Facebook page of "Rajasthan Royals"
which clearly demonstrates that the agreement dated 11 April 2022 is continuing for the remaining term with the Petitioner as a sponsorer. The Petitioner had fles the instant petition in haste and as such inadvertently could not annex certain documents as exhibits with thew petition which clearly demonstrates the above fact thatv Respondent's team Rajasthan Royals would continue with the petitioner as their sponsorer, and their logo would be depicted on the top right chest position of Rajasthan Royal's clothing"
9. Alongwith the affdavit, certain photographs prior to 31/12/2023 and, thereafter, are also annexed with the presence of the mark Dollar on the jersey of the team that has been selected for the next IPL and based on this, Mr.Kanade wants me to draw an inference that mutual understanding between the parties is loud and clear, i.e. the Respondent shall go with Dollar as the Principal Sponsor even for this IPL. Therefore, Mr.Kanade, would press for the reliefs in Section 9 Petition, pending the arbitration proceedings, seeking restraint order against the Respondent from acting on the basis of Electronic Mail/Notice dated 29/02/2024, thereby indicating that the agreement has concluded.
M.M.Salgaonkar
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10. Mr.Kanade is opposed by the learned counsel Mr.Rohan Shah, who represents 'Royal Multisport Private Limited' and he would make it clear that as per the 'Term" in the Sponsorship Agreement, the agreement was entered for the period commencing from 28/02/2022, 'the effective date' and its 'end date' was agreed to be 31/12/2024. However, it was open for the agreement to be terminated before the 'end date'. Mr.Shah would lay his emphasis upon the 'review period' in the clause, which contemplated that between the period starting from 01/12/2023 and 31/12/2023, it was open for the parties to evaluate and consider whether they shall continue during the arrangement for the remaining term and this period, which according to him, is the review period, only when the parties mutually agree, that they shall continue with the arrangement terms, it is only then the Sponsorship Agreement will continue till the 'end date' i.e. 31/12/2024 or else the agreement shall stand terminated on 31/12/2023.
11. In the light of this, Mr. Shah has relied upon the communication dated 29/02/2024, which reads to the following effect :-
"Dear Shantanu, We have received three mails from you which contain false and erroneous information and we deny all of it. The emails M.M.Salgaonkar ::: Uploaded on - 23/03/2024 ::: Downloaded on - 02/04/2024 11:09:30 ::: 8/12 27 carbpl-8902-24.odt have some different elements of communications, so I want to be clear that the Sponsorship Agreement has concluded, as we discussed on our call. We look forward to exploring future opportunities with yourself.
Regards, Alok"
Mr.Shah has also invited my attention to the response of Dollar to this E-mail and it is his submission that the correspondence at the end of Dollar commenced only after it engaged with a new Sponsorer on 13/02/2024 and then Dollar started indulging in request for coming back on the old terms, but it was not possible to indulge it, since a new Sponsorer was already appointed. According to him, the contract is determinable and, hence, no relief of specifc performance can be granted, as the relief is nothing but seeking mandatory injunction against the Respondent and reinstatement of Dollar in the Sponsorship Agreement, on the terms and conditions set out therein, whereas at its end, the Sponsorship Agreement is concluded, though the option of exploiting future opportunities is kept open.
12. On hearing the learned counsel appearing for the respective parties and on perusal of the Sponsorship Agreement, the essence of which lies in Clause 3, which has set out the period of its validity/term.
M.M.Salgaonkar
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In terms thereof, the continuation of the arrangement between the parties is assured for a period of frst two years. However, its further continuation for a period of one year is dependent upon the evaluation and consideration, which is permitted at the end of each of the party to the agreement, so as to assess whether they intend to continue the arrangement for the remaining term beyond 01/12/2023 for the balance period i.e. upto 31/12/2024. If during the review period, the parties 'mutually agree' to continue with the arrangement, then it shall continue till the next date or else the agreement shall stand terminated on 31/12/2023.
The essence of continuation beyond 31/12/2023 is the mutual understanding i.e. the parties must be ad idem that the Sponsorship Agreement shall continue.
13. When I looked at the correspondence placed on record, as exchanged between the parties, I fnd it amiss. The E-mail dated 28/02/2024 from Dollar addressed to Alok from Rajasthan Royals, makes it speak at all, when on behind of Dollar, Shantanu Banerjee writes as under :-
"After I have written a mail to Jake and after calls to both of you, you called today to tell me that we will not be able to come back to the jersey chest in this year IPL. Reasons being unknown, you mentioned that it seems quite unlikely you will agree to our proposal of being a principal sponsor of RR for M.M.Salgaonkar ::: Uploaded on - 23/03/2024 ::: Downloaded on - 02/04/2024 11:09:30 ::: 10/12 27 carbpl-8902-24.odt the 3rd year according to your contract.
Yes we had approached you with the request of reducing our fees, but when it is not acceptable, you could have communicated in a sophisticated manner and not remove our logo from the jersey, when on the call you repeated that you value the partnership.
I have told you and put it on record that we will abide by the fxed amount as in the contract for this year and request you to co0nsider our positioning. As in my earlier mail, I had stated how important this category of athleisure is for our company in which RR players feature and the entire marketing plans for the frst quarter which is the beginning of the fnancial year goes haywire.
You had told me that you will speak to Jake about this and am sure you could ask the new sponsor if at all you have signed up to be on hold, as our past two years have been great and mutually we respect the betterment we both have done towards each other. As a standing partner with RR franchisee, you can fnd out means on how we could be completing this 3 rd year of our contract and hence go ahead with renewing our ties from 2025 season. Kindly introspect, the damages we will be facing as a brand and I have cited good enough reasons why we signed up RR in 2022 when we had other possible teams which had approached us then."
14. Further it is made clear by Dollar that the Respondent can fnd out means on how they would be completing the third year of contract and go ahead, with renewing the ties from 2025 season. It is thus evident that knowing very weel that the contract is not mutually extended, Dollar has put all possibilities before the Respondent, including a concession that it shall abide by the fxed amount, as in the contract and these talks/communications is put to rest by putting the fnal nail in coffn, when the Respondent informed Shantanu M.M.Salgaonkar ::: Uploaded on - 23/03/2024 ::: Downloaded on - 02/04/2024 11:09:30 ::: 11/12 27 carbpl-8902-24.odt Banerjee from Dollar that they had received the E-mails,but which contain false and erroneous information and, hence they were denied. It was made clear that the Sponsorship Agreement is concluded, as discussed on the call. Despite this, Dollar responded, expecting a positive reply and to some extent, putting blame at the other end.
From reading of the aforesaid, one thing is evident that the compliance of clause 3 of the Sponsorship Agreement , which provided a window to extend the agreement beyond the 'review period', only if there was a mutual agreement between the parties and, since, it is conspicuously absent, one party cannot force itself upon the other and this is not permissible mode of continuing the agreement beyond 31/12/2023.
As far as the social media post/images upon which Mr.Kanade has relied upon where players are shown with jerseys, showing the logo Dollar, it is clarifed by the Respondent in its affdavit placed on record that these are the images of previous seasons, as the players were not available for photo-shoot for the new IPL season and they would become available only after 14/03/2024 and that is why the new logo of NEOM of the new Sponsorer is to be found on the social media post from early March, 2024.
M.M.Salgaonkar
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It not uncommon as a matter of practice that various franchisee carry images of their jerseys of the previous season till the fresh round of publicity of the new year starts.
15. Since I do not fnd any prima facie case in favour of Dollar to grant the relief of injunction thereby restraning the Respondent and/or its men, servants, agents from acting in furtherance of the notice dated 29/02/2024 and permitting Dollar to continue to enjoy all rights, benefts and privileges as a Principal Sponsor, as per the Sponsorship Agreement dated 11/04/2022, the Petition deserve a dismissal.
Needless to state that any grievance or claim in compensation for the alleged loss that the Dollar has against the Respondent, can be pursued in arbitration proceedings, which are contemplated as per Clause 12.9 of the Sponsorship Agreement.
Finding no merit and substance in the Petition, the same is dismissed.
( SMT. BHARATI DANGRE, J.) M.M.Salgaonkar ::: Uploaded on - 23/03/2024 ::: Downloaded on - 02/04/2024 11:09:30 :::