Kerala Court Refuses To Refer Nivin Pauly's Firm-Magic Frames Dispute Over Two Films To Arbitration

A Munsiff Court at Ernakulam has refused to refer to arbitration a dispute over accounts relating to the films “Ramachandra Boss & Co” and “Malayali From India” between actor Nivin Pauly's production house, Pauly Junior Pictures LLP, and film production company Magic Frames.

The court held that the arbitration clause relied on by Magic Frames was not mandatory and did not cover all the disputes raised in the suit.

Additional Munsiff Nanda Krishna M passed the order while dismissing an application filed by Magic Frames and its proprietor, Listin Stephen, seeking reference of the dispute to arbitration.

Examining the dispute resolution clause in a supplementary agreement relating to the film “Ramachandra Boss & Co.," the Court observed:

“It is clear from the provision that the mandate for amicable resolution of disputes through mutual consultation has been incorporated in the clause using the word "shall" while the word "may" is used for referring the dispute to arbitration if the dispute is not settled mutually.”

Pauly Junior Pictures LLP and Nivin Pauly have filed a suit seeking rendition of accounts. They alleged that Magic Frames failed to share financial details relating to the films “Ramachandra Boss & Co” and “Malayali From India”. The suit also includes allegations regarding the retention of security cheques and defamatory statements allegedly made by Stephen.

Magic Frames and Stephen sought reference of the dispute to arbitration on the basis of a supplementary agreement dated August 22, 2023. Pauly Junior Pictures LLP and Pauly opposed the plea, contending that the suit included disputes beyond “Ramachandra Boss & Co”.

The Court noted that the applicants had produced only a photocopy of the agreement and not the original or a certified copy.

Referring to Wellington Associates Ltd v. Kirit Mehta, the Court held that the use of the word “may” made the arbitration clause an enabling provision requiring fresh consent.

The Court ruled, “the words "may be referred" used in clause 5, read with clause 4, lead me to the conclusion that clause 5 is not a firm or mandatory arbitration clause and in my view, it postulates a fresh agreement between the parties that they will to go to arbitration.”

The court also found that the suit included disputes relating to another film as well as allegations of defamation.

Referring to Vidya Drolia v. Durga Trading Corpn., the Court observed:

“Arbitration clause in Exhibit A2 supplementary agreement would not cover the disputes involved in the suit including the allegation as to defamation and reliefs sought over the same. Therefore, it cannot be said that the disputes involved in the present suit is arbitrable.”

The application was dismissed.

For Applicants: Advocates Shameem Ahamed, Ahamed Iqbal and T.V Sreejith

For Respondents: Advocates Sukesh Roy and Meera Menon