In December 2023, the Supreme Court of India in Cox & Kings Limited v SAP India Private Limited (2024) 4 SCC 1 confirmed that the ‘single economic entity’ or ‘group of companies’ doctrine formed part of Indian law (in contrast to the law in England and in Singapore). In an order handed down on 27 May 2024, Justice Pratibha M. Singh of the Delhi High Court applied the single economic entity doctrine in making an interim injunctive order to preserve the proceeds of a prospective asset sale.
The order was made in favour of Culver Max Entertainment Pvt Ltd (“Culver Max”)against the MX Media Group. The MX Media Group comprises MX Media Co Ltd (a company incorporated in the British Virgin Islands), and MX Media & Entertainment Pte Ltd and MXP Media India Ltd (subsidiaries of MX Media Co Ltd, incorporated in Singapore and India respectively). MX Media & Entertainment owns and operates a platform called “MX Player” that offers content such as movies, television shows, music and web series to its consumers.
Culver Max, formerly known as Sony Pictures Networks India Private Limited, operates television channels and owns the platform “SonyLIV”. Culver Max and MX Media & Entertainment entered into a Distribution Agreement in 2021, which was subject to an arbitration agreement, by which Culver Max granted distribution rights of its copyrighted content to MX Media & Entertainment, in return for a fee. A dispute arose when MX Media & Entertainment defaulted in making timely payments to Culver Max, in relation to which a liability of INR 312.5 million (£2.93 million) was admitted by the MX Media Group.
The urgency for preserving the admitted amount resulted from a winding up order made against MX Media & Entertainment by the Singapore High Court. Subsequently, this winding up order was stayed by the Singapore High Court to allow MX Media & Entertainment to explore the sale of the assets of its business.
Culver Max sought interim relief under section 9 of the Arbitration and Conciliation Act 1996 before the Delhi High Court against the MX Media Group of companies. Culver Max relied on the single economic entity doctrine laid down by the Supreme Court in Cox & Kings Limited, pursuing preservation of the admitted outstanding amount on the ground that in the event of dissipation of MX Media & Entertainment’s assets, Culver Max would have no recourse to recover the admitted dues. The invocation of this principle against entities not formally party to an arbitration agreement is a unique feature of India’s arbitration jurisprudence in recent years, which has evolved further since the Supreme Court’s judgment in Cox and Kings Limited.
The Delhi High Court took the view that there exists a distinct possibility of MX Media & Entertainment executing a transaction for the takeover of its assets by a third party, which would jeopardise Culver Max’s claim of £2.93 million and accordingly made the order against MX Media & Entertainment, as well as against MXP Media India Ltd, its Indian sister company. It directed that if any sale of MX Media & Entertainment assets takes place, the equivalent of £2.93 million must be retained in the bank accounts of MX Media & Entertainment and MXP Media India, until further orders of the Court.
Culver Max was represented by Gaurav Pachnanda SA, along with Ruby Singh Ahuja, Vishal Gehrana, Ishan Gaur, Simranjeet, Megha Dugar, Advocates from Karanjawala & Co. and Threcy Joboy Lawrence, Advocate.
