For, legally binding contracts, want of consensus regarding the Agreement is more important than want of signatures: High Court of Delhi
A contract, in order to be legal, valid, and binding among the parties thereto, was not required, necessarily, to be signed by all parties. This is an agreed principle but a contract consensus ad idem, regarding the terms of the contract should always exist between the parties. This auspicious judgment was passed by the High Court of Delhi in the matter of MX MEDIA AND ENTERTAINMENT PTE. LTD. V. M/S. CONTAGIOUS ONLINE MEDIA NETWORKS PRIVATE LIMITED [O.M.P.(I) (COMM.) 106/2021, I.A. 4338 of 2021 & 4448 of 2021] by Honourable Justice C. Hari Shankar.
The petitioner is incorporated and located in Singapore and is engaged with the functioning of “MX Player” that produces and develops audio-visual content whereas since sometimes earlier programs of the respondent were being distributed and shown on the petitioner’s Platform. On 24th February 2020, the respondent, under the brand name “The Viral Fever (TVF)” confirmed that it would provide six shows to be hosted on the petitioner’s Platform in 2020-2021. However, this agreement could not be signed since owing to the COVID-2019 pandemic, the petitioner was not in a position to countersign the Agreement and send it back. Hence, the respondent contended that there was no concluded contract, inter alia for the reason that the Agreement was never signed by the petitioner whereas the petitioner opposed this.
Additionally, certain amendments to the agreement were suggested through emails. The petitioner forwarded an amendment to the Agreement which provided for adjustment against the consideration stipulated in the Agreement and the respondent agreed to review the suggested amendment, pointed out that the FE copy of the Agreement was still awaited. Later, the petitioner acknowledged the receipt of confirmation, from the respondent, regarding the adjustment of US $ 1,10,000.
Thus, it was established that instead of counter-signing the original Agreement, forwarded by the petitioner to the respondent on 18th March 2020, the petitioner proposed as many as three “First Amendments” to the original Agreement which was emphasized by the respondents in an email dated 9th December 2020.
Later the respondent pointed out that, as “there was no visibility on timelines for execution of the principal agreement from MX’s end”, the agreement “could not be concluded between the parties” to which the contend that the “principal understanding, as recorded in the Agreement dated March 18, 2020” stood “concluded”, and that it was only on the basis of such “concluded” understanding that the petitioner had paid an advance of US $ 2,00,000 to the respondent on 23rd April, 2020.
In light of these facts the Court observed that, “The discussion, between the petitioner and the respondent, for amendment of the Agreement indicated that there was, in existence, a concluded contract, as there could be no question of any Agreement/addendum to an unconcluded or non-existent contract. The mere fact that alternative options were being explored, between the petitioner and the respondent, did not indicate that the petitioner in any manner repudiated the contract dated 18th March 2020. Rather, by suggesting alternatives, the petitioner was accommodating the difficulties expressed by the respondent.”
However, the Court observed that “A cohesive and conjoint reading of the e-mails exchanged between the petitioner and the respondent clearly indicate that the petitioner was unwilling to abide by the covenants contained in the Agreement dated 18th March 2020, as signed by the respondent and forwarded to the petitioner. Also, the petitioner started to propose changes in the “the overall construct of the arrangement”.” Thus, “By no stretch of imagination can it be said, therefore, that there was consensus ad idem between the parties, at any stage of the proceedings, starting 18th March 2020, regarding the covenants of the Agreement executed. That being so, in the absence of any contract duly signed by both parties, no concluded contract enforceable in law could be said to have come into being.”
The Court emphasized that “The issue is not one of want of signatures of both parties, but want of consensus regarding the Agreement. As a general proposition of law, it cannot be gainsaid that the 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”
Thus, the court held that since the contract was not legally binding thus, none of the reliefs under the Arbitration Act can be granted to the petitioner, and hence the appeal is dismissed.