Delhi High Court: Contract is legally not enforceable in the absence of consensus ad idem between parties

Delhi High Court: Contract is legally not enforceable in the absence of consensus ad idem between parties

The Delhi High Court (HC) on 5 April 2021, in the case titled MX Media & Entertainment P. Ltd. (Petitioner) v. M/s Contagious Online Media Networks Pvt. Ltd. (Respondent) refused to grant interim relief to the petitioner.

The HC single-judge Justice C Hari Shankar rejected the digital media platform MX Player's (MXP) plea for seeking restraint of YouTube channel – TVF from selling, licensing, exploiting, or assigning rights against three shows developed by TVF namely- Immature Season 2, Aspirants Season 1, and Flames Season 3 to any other market player.

The petitioner was claiming exclusive rights on the said shows alleging that it signed an agreement in March 2020, wherein TVF's parent company, Contagious Online Media Network Private Ltd, was paid a sum of $ 310,000 as advance consideration.

The petitioners sought directions from the Court that TVF should be restrained from alienating its assets until the disposal of arbitration on the dispute.

It was contended by the respondent that the main agreement has not been signed by MXP, despite repeated requests by TVF. MXP kept on delaying the singing of the agreement on the ground that the Singapore office of its parent company, MX Media and Entertainment Pvt. Ltd. - where the company is located and incorporated - was shut due to Covid-19.

The HC observed that on 18 March 2020, TVF had forwarded a signed contract to MXP, however, till date MXP had not condescended to return the said contract, duly signed.

The Court inquired- whether there was consensus ad idem at all in the first place for MXP to claim the existence of an agreement between the parties.

The HC referred to the chain of emails exchanged between the parties, it noted that MXP was unwilling to abide by the covenants contained in the original agreement. It agreed to the contentions that despite repeated requests by TVF made in several e-mails, to send back the Agreement, duly signed, MXP had not done so.

Justice Hari Shankar stated, "In my view, the petitioner (MXP) is, for reasons unknown, seeking to breathe life into a dead body." "As a general proposition of law, it cannot be gainsaid that a contract, even if not signed by both parties, may be enforceable, provided consensus ad idem, regarding the terms of the contract, exists, and the parties have acted in accordance with the contract, thereby evincing the intent to be bound by the covenants thereof."

The Court added that "Neither of these requirements is, unfortunately for the petitioner, met in the present case. Clearly, there is no consensus ad idem between the petitioner and the respondent. Nor can it be said that the petitioner and the respondent had acted on the basis of the contract."

Justice Shankar concluded "No concluded or enforceable contract with the petitioner has ever come into being, none of the reliefs in this petition, under Section 9 of the Arbitration Act, can be granted to the petitioner. It is obviously open to the respondent to contract with any other party, for broadcasting of its programs."

The HC clarified that the parties would be at liberty to seek resolution of their disputes by arbitration and, in such event, the Arbitral Tribunal would not be bound by the findings, on merits, contained in this judgment.