In Absence Of Consensus Ad Idem, No Contract Is Legally Enforceable: Delhi High Court Reiterates

  • Pankaj Bajpai
  • 02:34 PM, 06 Apr 2021

The Delhi High Court has recently observed that a contract has enforceability if there is consensus ad idem between parties, the absence of which makes it legally untenable.

A Single Bench of Justice C Hari Shankar ruled that from a bare reading of the correspondence between the parties, no relief can be granted to the petitioner, in exercise of the jurisdiction vested in this Court by Section 9 of the Arbitration & Conciliation Act, 1996 (“Act”).

The troika of a prima facie case, balance of convenience, and irreparable loss, it is trite, apply as much to Section 9 of the 1996 Act, as to Order XXXIX of the Code of Civil Procedure, 1908, apart from the issue of whether grant of interim protection would be “just and convenient”.

The Court noted that as far back as on 18th March, 2020, the respondent forwarded, to the petitioner, the contract signed by the respondent. But, till date, the petitioner never condescended to return the said contract, duly signed.

A cohesive and conjoint reading of the emails 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. The respondent repeatedly requested the petitioner by emails dated to send back the Agreement, duly signed. The petitioner however, did not do so.

The Court noted that petitioner, instead, required the respondent vide email to communicate the schedule of the programs to be aired on the petitioner’s website. Even when the respondent communicated the said schedule, the petitioner did not forward the signed Agreement to the respondent. Rather, the petitioner started to propose changes in the “the overall construct of the arrangement”.

Therefore, 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. Thus, in the absence of any contract duly signed by both parties, no concluded contract enforceable in law can be said to have existed. 

The submission of the counsel that the law does not require a contract to be enforceable to be signed by both parties, has no application in the facts of the present case. 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 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. Neither of these requirements is, unfortunately for the petitioner, met in the present case. 

The Court clears that 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.

In the present case, the suggested contract, as signed by the petitioner and forwarded to the respondent, was never countersigned by the respondent. Rather, the petitioner proposed three different amendments, at one point of time, after the other, to the respondent, none of which were accepted by the respondent. There has been no consensus ad idem on the Agreement, either as originally signed by the respondent or in any of its amended avatars. 

The Court therefore concluded that as 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 1996 Act, can be granted to the petitioner. 

Case Title: MX Media & Entertainment Vs Contagious Online Media Networks Pvt Ltd [O.M.P.(I) (COMM.) 106/2021]