Picture Financiers vs Minnal and Others

Ramaprasada Rao, J.—The Plaintiff is an advertising company and is engaged by others for the purpose of publicity. In connection with the

picture known as Thazhamboo, admittedly produced by Defendants 2 to 5, the Plaintiff''s case is that he made such advertisements as instructed

by the second Defendant in July, 1965 and also pursuant to instructions regarding the said publicity given to him mostly by the third Defendant on

behalf of Defendants 2 to 5 at the outset, and then by the first Defendant directly, as by then the first Defendant became the financier of the said

picture and secured what is commonly known as the world rights over the said picture, pursuant to the financing agreement between himself and

Defendants 2 to 5. The Plaintiff claims that he has made several advertisemests in several dailies and prominent journals and in connection thereto,

he would state, that Defendants 1 and 2 jointly and severally promised to pay for such services done by him. According to him the necessary

particulars were furnished to the Defendants from time to time and the first Defendant knew about such publicity made by the Plaintiff and his

specific case is that the first Defendant, while entering into the financing agreement with the second Defendant, has undertaken to meet all the

outstanding claims including the expenses relatable to the publicity of the picture. It is claimed that the first Defendant paid to the Plaintiff by cheque

two sums of Rs. 2,000 each, on 12th October 1965 and 22nd October 1965 and after having appropriated the said amounts, a sum of Rs.

10,970.70 is due by the Defendants both under the express contract as pleaded above and in law u/s 70 of the Contract Act.

The first Defendant denied that he gave any such instructions to the Plaintiff in the matter of publicity of the picture Thazhamboo. He no doubt

admits that he was the financier of the said picture and Exhibit B-4, the finance agreement does not refer to any clause or stipulation where-under

he has to pay the publicity charges to be incurred by the producer of the picture, as such financier. He would state that the sums of Rs. 2,000 paid

by him on two occasions were made as financier and under instructions from the producers and that did not, in any way, reflect upon any

obligation undertaken by him to pay the publicity charges as claimed by the Plaintiff.

The other Defendants filed written statements denying liability and denying any privity of contract as between themselves and the Plaintiff in the

matter of the publicity expenses which is the subject-matter of the suit. The 5th Defendant inter alia would aver in his written statement that under a

supplementary agreement, dated 19th October 1965, it was the first Defendant, who was to incur such publicity expenses and debit the same to

the second Defendant''s accounts as financier.

On these pleadings, the learned Second Assistant City Civil Judge, Madras, learned the following issues:

Was there privity of contract between the Plaintiff and the first Defendant?

Did the first Defendant give any instructions for the publicity of the picture?

Did the Plaintiff demand at any time any amount from the 1st Defendant?

Are the Defendants 2 to 5 liable to pay any amount to the Plaintiff and was there privity of contract between them?

Has the Plaintiff any cause of action against the Defendants?

What is the amount, if any, due to the Plaintiff and from which Defendant?

He considered issues 1 to 5 together and held that all the Defendants were liable to pay the publicity charges incurred and as claimed by the

Plaintiff. Inter alia, he would make the first Defendant liable after accepting the evidence of P.Ws. 2 to 5, as also the evidence of the Plaintiff

himself. According to the learned Judge, the Defendants ought to have known about the publicity made and the effect caused by and lo be effected

by the Plaintiff and that it was so done though not under instructions in writing by the first Defendant, but on his oral instructions and that, in any

event, the course of conduct and events that happened did satisfactorily establish that it was only at the instance of the first Defendant that the

publicity was made. It was pursuant to this conclusion which he reached on an over all appreciation of the oral and documentary evidence in this

case, that he decreed the suit against all the Defendants.

Defendants 2 to 5 having suffered the decree are not before us and they have not filed any appeal against the judgment of the Court below. The

first Defendant, however, has preferred this appeal.

The main contentions of Mr. N.C. Raghavachari, learned Counsel for the Appellant are, that there was no privity of contract as between himself

and the Plaintiff at any material point of time or in the course of the effecting of the advertisements, as claimed by the Plaintiff and that any payments

made by him and as reflected in the accounts of the Plaintiff were only in the capacity as financiar and that even u/s 70 of the Contract Act, the first

Defendant ought not to be made liable for the charges of publicity in question on the ground that the first Defendant had the benefit of such

advertisements. It is argued that all advertisements were pre-release advertisements and any such publicity is normally undertaken by the producer

in his own interest and that the financier had nothing to do with it at that stage, and unless the Plaintiff is able to establish a sufficient nexus as

between the advertisement and the so called benefit which the first Defendant is stated to have secured by reason thereof, the principle u/s 70 of

the Contract Act also would not apply.

Mr. Rattan, on the other hand, relies upon Exhibit A-3 and A-13, the former being a copy of the letter said to have been written by the Plaintiff

to the first Defendant stating that they have reserved space for press publicity in the areas detailed therein, under instructions from him. Exhibit A-

13 is a follow up in the sense, that it is a statement of account relating to the actual expenses said to have been incurred by the Plaintiff in effecting

such publicity as agreed to or suggested by the first Defendant. Relying upon these two documents, Mr. Rattan argues that there is the necessary

implication of the first Respondent''s liability and that it could be spelt from correspondence and that the said implied contract would throw a legal

obligation on the part of the first Defendant to pay all such expenses connected with press publicity for the picture in question. He would also add

that P.Ws. 2 to 5, who were examined in the case, consistently spoke to the fact that they either by themselves or at the instance of the producers,

approached the first Defendant from time to time for instructions regarding publicity and that by itself proves a course of conduct as between the

Defendants on the one hand and the Plaintiff on the other, which course of conduct speaks of a course of events from which a reasonable inference

could be drawn that it was the first Defendant, who undertook to pay for all the publicity expenses spent or incurred upon by the Plaintiff in

connection with the pre-release advertisement of the picture in question. Regarding the application of Section 70 of the Contract Act, the learned

Counsel would contend that the first Defendant, in any event, did have the benefit of such publicity since under Exhibit B-4, he was to be a

distributor for the territories of North Arcot, South Arcot and Chingleput, which though a post-release event, is a Material factor to be taken into

consideration to measure the benefit which the first Defendant should be deemed to have secured by reason of the pre-release advertisement. In

this sense, it is said that there is sufficient nexus as between the Plaintiff''s activity such as the publicity and the resultant benefit thereof to the first

Defendant and that therefore, Section 70 of the Contract Act would make the first Defendant legally liable to the said claim like the other

Defendants.

We shall first take up the contentions of Mr. Rattan. Exhibit A-3 is a copy of the letter said to have been written by the Plaintiff on the 15th

October 1965, to the first Defendant which reads as follows:

Sir,

Reference: Picture-Thazhamboo

Under instructions from you, we have reserved the space for Press Publicity for the above picture in the following area ...

This is, therefore, the sheet anchor of the Plaintiff''s claim and, it is not surprising that the learned Counsel solely relies upon this document and

Exhibit A-13, which followed the same, wherein the details of the expenses incurred by the Plaintiff have been set out. These two important letters

are said to have been sent by ordinary post to the first Defendant It is not in dispute that excepting for the production of the copies of these letters,

Exhibits A-3 and A-13, the receipt of which were denied by the first Defendant, the Plaintiff has not ventured to let in any additional evidence to

show that these letters were sent in any additional evidence to show that these there was this lacuna in the matter of the proof of the copies of these

letters which were denied by the first Defendant, there is yet another clinching circumstance which prompts us to cast a shadow of doubt on the

acceptance of these exhibits as reflecting the correct state of affairs. When the first Defendant was in the box, one would normally expect, that in

the light of the disadvantage with which the Plaintiff was suffering from such as the proof of service of such letters, he should have confronted this

letter to the first Defendant and should have made a bare suggestion atleast. But, the learned Counsel for the Plaintiff, who appeared in the trial

Court, after having elucidated from the first Defendant that he never bad any correspondence with the newspaper owners, did not proceed further

and expressly put to the first Defendant these Exhibits, viz. A-3 and A-13, said to have been sent by the Plaintiff by ordinary post to him. When an

attempt is made by a litigant in a Court of law to establish a contract by correspondence, or the creation of a legal obligation by exchange of

letters, then he ought to be more careful and more precautious to pin-point the sheet-anchor of his case and establish it in a manner known to law.

When the first Defendant was in the box, he totally denied the receipt of any letters from the Plaintiff and even then, no attempt has been made by

the Plaintiff''s Counsel to confront the first Defendant with Exhibits A-3 and A-13. We may also add that even at the stage of appeal, Exhibits A-3

and A-13 have not been typed for purposes of perusal by us. We have looked into the originals so as to appreciate the arguments of the learned

Counsel for the Appellant. All these circumstances put together compel us to hold that there is not enough legal proof for service of these exhibits

A-3 and A 13 on the first Defendant. Only if such proof is available an inference is possible about the forging of an implied contract as between the

Plaintiff and the first Defendant in the matter of the payment of publicity charges, in connection with the film, by the first Defendant himself

irrespective of the other Defendants. That is not available in this case.

Strong reliance, however, was placed on the oral evidence in this case, again for the purpose of stretching a contract by necessary implications

as between the Plaintiff and the first Defendant in the matter of the payment of the publicity charges. He would refer to the oral evidence of P.Ws.

2, 3, 4 and 5 and contend that there is enough material for this Court to accept the finding of the Court below that it was the first Defendant, who is

mainly responsible to bear the publicity charges. We shall consider the oral evidence of the above witnesses.

P.W. 2 is the proprietor of the journal called Naradar. He claims friendship with both the Plaintiff and the first Defendant. He proved Exhibit

A-4, which we shall presently refer to. He says that he contacted the first Defendant and the producer for getting advertisement in his journal.

According to him, the first Defendant confirmed that Rs. 100 was allotted for the purpose of advertisement of the picture in one page of his journal

and that he told him that he could contact P.W. 1, the Plaintiff, and get the advertisement matter from him. He does not know personally about the

first Defendant''s rights in the picture. It is, however, common ground that in the journal Naradar, an advertisement appeared. Exhibit A-4 is a

letter written by P.W. 2 to the Plaintiff. He says that he contacted the first Defendant and got sanction for Rs. 200 and that the first Defendant was

kind enough to tell him that he would instruct the Plaintiff by phone. When the first Defendant was in the box, he admitted that P.W. 2 did phone to

him to use his good offices for giving his advertisement and that he directed him to contact the producer. P.W. 2 rang up again the first Defendant.

He seems to have said that he was successful in persuading the producers to increase the advertisement allocation. In so far as this charge

connected with the advertisement is concerned, there is, according to as, some evidence to show that P.W. 2 did contact the first Defendant and

that the first Defendant took some steps towards effecting of the advertisement in the journal Naradar belonging to P.W. 2. We may at once state

that the advertisement published in Naradar by the Plaintiff was not even referred to in Exhibits A-3 to A-13. Therefore, the resultant

advertisement in Naradar by P.W. 2 is a result of an independent bargain in which the first Defendant did have some important part to play. We

are not, therefore, impressed with the arguments of the learned Counsel for the Appellant that even as regards the payment of the sum of Rs. 200

in connection with the advertisement charges payable to Naradar the first Defendant can claim ignorance or deny liability.

Mr. Rattan, thereafter referred to the evidence of P.Ws. 3, 4 and 5. P.W. 3 is the representative of the journal called Screen. Excepting to

state that he was authorised by the first Defendant to take the blocks in connection with the advertisement in his journal, this witness does not help

the Plaintiff. When the first Defendant was in the box he stated that he had nothing to say against P.Ws. 3 and 4. The fact, however, remains that

no advertisement was made in the journal Screen in connection with this firm. Even so, P.W. 4 would speak to an interview between himself and

the first Defendant in connection with the advertisement in his journal Thirai Needhi. Excepting for the fact that he claims to have met the first

Defendant and that he promised that he would telephone the Plaintiff and that he would live an order, which is not an important matter either, there

also, the advertisement did not apparently fructify and did not appear in his journal.

P.W. 5 is the chief representative of the journal Pesum Padam. He approached the producer first, who in turn, directed him to approach the

financier. When he met the first Defendant, he in turn, telephoned the producer and gave instructions through phone to deliver all the materials to

him. He admits in cross-eramination that there is no record to show that the first Defendant promised to pay the bill. Like the in fructuous meetings

of P.Ws. 3 and 4, even the so called meeting of P.W. 5 with the first Defendant did not fructify and the advertisement did not appear in Pesum

Padam either.

What is sought to be made out by Mr. Rattan is that such course events and contacts said to have been made by P.Ws. 2, 3, 4 and 5 are

enough to draw a reasonable inference that it was the first Defendant, who was at the helm of affairs not only as financier, but also in all mattes

connected with the publicity of the film and in that context the first Defendant cannot escape liability for all such advertisement even though they

were prerelease advertisements made in connection with the picture Thazhamboo for which he was admittedly the financier.

This is an extreme contention. As we said earlier, if a person intends to rest on the shoulders of another a legal obligation to suffer a liability in

the shape of payments of money, then it is necessary for him to adduce before a Court of law such evidence which could be accepted and

acceptable and cannot by such evidence as was left in this case, claim that an enforceable contractual relationship has been established by him

compelling the first Defendant to shoulder the responsibility of paying the advertisement charges for all the publicity made by the Plaintiff as

disclosed in Exhibit A-13. We are unable to agree with the learned trial Judge that the oral evidence let in by the Plaintiff in this case, besides

himself, is enough for us to draw a legitimate inference that the first Defendant undertook to pay all the publicity expenses connected with the

picture in question.

We have also the conduct of the Plaintiff which touches upon this particular aspect. He issued bills, Exhibits A-1, A-2, A-5 and A-f which

contained the expenses incurred by him in connection with the advertisement of the picture Thazhamboo. All these bills were raised as against the

second Defendant firm, as producers. No reference whatsoever has been made in these bills to the first Defendant as financier. A clumsy attempt,

however, has been made in Exhibit A-18, which is the account book maintained by the Plaintiff to make it appear that the accounts stood not only

in the name of the producer, the second Defendant, but also in the name of the first Defendant. We characterise the entry as clumsy because, on a

perusal of the original we are satisfied that the expression Through Messrs. Picture Financiers was inter-polated at a later stage. We may also refer

to the two entries in the account books, which show that a sum of Rs. 2,000 was paid on 3ach occasion by the first Defendant himself. It is not

unusual or abnormal to expect the financier to pay the creditors of his borrowers as and when instructed by his borrower and within the limits of

the finance agreement. The mere fret that the Plaintiff in this account books, or to be more specific in the entries marked as Exhibits B-1 and B-2,

the Plaintiff says Through Balamurugan Films account by cheque received through M/s. Picture Financiers, Madras-10 against advertisement

cannot improve matters at all. It may be true that the cheque was sent by the first Defendant. But, that by itself cannot be the basis for drawing an

irresistable conclusion that the first Defendant undertook at all times to pay for ail the advertisement charges incurred by the first Defendant as

publicity agent of the producer. If at all, we are of the view that if payments of Rs. 2,000 each were made by the first Defendant, it was

presumably in discharge of his obligations which he undertook in Exhibit B-4, as a financier.

.16 The next contention of Mr. Raghavachari is that the learned Judge was wrong in assuming that the first Defendant had the benefit of this

advertisement within the meaning of Section 70 of the Contract Act and this by itself is sufficient to make him liable for the suit claim. Section 70 of

the Contract Act runs thus:

Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person

enjoys the benefit thereof the latter is bound to make compensation to the former in respect of or to restore, the thing so done or delivered.

The section itself contemplates three limbs for its application. A person should have done something lawfully for another, or delivered anything

to him. Secondly, such activity was not intended to be done gratuitously and thirdly the other person did enjoy the benefit thereof. If these three

primodial requirements of the section are satisfied by acceptable evidence, then the other person who shall be deemed to have enjoyed the benefit

by the activity of the first person shall compensate the latter or restore the thing done or delivered to him.

The terms of Section 70 are no doubt unquestionably wide. But the principle contained therein has to be cautiously invoked by exercising

judicious care and judicial discretion. The effect of the section is to create a quasiconstructual relationship between two persons, who did not

actually forge a contract in the popular sense either expressly or by necessary implications as between themselves, Further, if the work done or

article delivered voluntarily, but without any particular design or motive behind it, but gratuitously, then the person benefited from it is the other

person referred to in the section itself.

We shall precisely consider in the instant case whether the first Defendant can be said to be a person directly benefited or whether he had the

option to refuse or reject the said benefit. Before we do so, we shall refer to certain decided cases of our Court and that of the Supreme Court

which throw considerable light on the subject under discussion.

In State of West Bengal Vs. B.K. Mondal and Sons, Gajendragadkar J., as he then was speaking for the Beach stated as follows:

Section 70 is not intended to entertain claims for compensation made by persons who officiously interfere with the affairs of another or who impose

on others services not desired by them. Section 70 deals with cases where a person does a thing for another not intending to act gratuitously and

the other enjoys it. It is thus clear that when a thing is delivered or done by one person it must be open to the other person to reject it...It would

thus be noticed that this requirement affords sufficient and effective safeguard against spurious claims based on unauthorized acts.

South Indian Railway Company Ltd. Vs. The Municipal Council, Madura, leach C.J. and Lakshmana Rao J. stated the condition for the

applicability of Section 70 in these words.

Section 70 can only have application where there is direct benefit to the person for whom the work is done. Where the benefit of the

accommodation works made by the railway company was enjoyed by the owners and occupiers of the buildings in the locality the works cannot

be said to have been done for the benefit of the municipality so as to attract the provisions of Section 70 merely because the municipality indirectly

receives a benefit as it recovers taxes from the owners and occupiers of buildings in the locality.

Their Lordships continued and said that it would be doing violence to the section to say that in these circumstances the work was done for the

benefit of the municipality. With great respect, we adopt the language of the learned Chief Justice and would add that in the instant case, on the

only ground that as financier the first Defendant would ultimately be in a position to collect all the advantages of exploitation, it would be doing

violence to the section if we say that by reason of the pre-release advertisement he is deemed to have been benefited by the same within the

meaning of Section 70 of the Contract Act.

The Supreme Court again in Mulamchand Vs. State of Madhya Pradesh, touched upon the nature of evidence that has to be let in by a person

who claims compensation u/s 70 of the Contract Act After stating the three conditions which we have already referred to, which are essential to

bring any subject u/s 70 of the Act. The Supreme Court said that if these conditions are satisfied Section 70 imposes upon the latter person, the

liability to make compensation to the former in respect of or restore the thing so done or delivered. The important point to notice is that in a case

falling u/s 70, the person another cannot sue for the specific performance of the doing something for another or delivering something for contract,

nor ask for damages for the breach of the contract for the simple reason that there is no contract between him and the other person for whom he

does something or for whom he delivers something. So, where a claim for compensation is made by one person on the other u/s 70 it is not on the

basis of any subsisting contract between the parties, but on a different kind of obligation, the juristic basis of which, is based on a quasi-contract or

restitution. The Supreme Court further stated that in the case before them, it was manifest that the Appellant would have been entitled to

compensation u/s 70 of the Indian Contract Act, if he had adduced evidence in support of his claim. It is well established that a person who seeks

restitution has a duty to account to the Defendant for what he has received in the transaction from which his right to restitution arises. The standard

or the measure of the evidence which has to be let in such cases for which compensation or restitution is claimed has been very clearly set out by

the Supreme Court as above. In the instant case, such evidence which ought to be clinching is conspicuously absent.

Again in In Re: The Katni Cement and Industrial Co. Ltd., a Division Bench of the Bombay High Court said that the basis of compensation u/s

70 is not be same as of contractual right. The basis of the compensation should be in proportion to the benefit enjoyed by the party for whom

anything is done or to whom anything delivered and appropriate compensation has to be awarded mainly from that aspect.

It is no doubt true that Defendants 2 to 5 did have the benefit of the advertisement as producers. They have to suffer the consequences and

probably for this reason they are not before us, since they have taken the judgment and decree of the lower Court without demur.

So far as the first Defendant is concerned, it is for consideration whether he wanted to have these pre-release advertisements. The Plaintiff''s

attempt to advertisement be because of his contracts with Defendants 2 to 5 as mainly alleged by him in Paragraph 3 of the plaint. He would make

a complete volte face of his case when he was in the witness box. He would first say.

We made these advertisements for D2 at the direction of D. 1. We believed the promise by D. 1 and hence spent for the advertisement. D. 2 has

nothing to do with these advertisements, i.e. except faking first to D. 1 and introducing us to D.1 regarding the instructions for making these

advertisements.

As we said alread, in the pleading he would begin by saying that it was the second Defendant who instructed him in July, 1965 to publicize the

release of the picture. Later, he would add hesitantly that instructor''s regarding the publicity were given to the Plaintiff mostly by the third

Defendant on behalf of Defendants 2 to 5 at the outset and then by the first Defendant directly etc. In the light of these confiding evidence we

respectfully adopt the language used by the Supreme Court that the activities of the Plaintiff in the matter of the publicity in question was officious

interference by him without the other desiring about it.

Excepting for the advertisement made in Naradar, as spoken to by P.W. 2, there is nothing to show that the first Defendant expressed any

wish or desire for such fabulous advertisements made by the Plaintiff. We are unable to see any direct benefit which the first Defendant should be

deemed to have secured by reason of the prerelease publicity. He was only a financier at that time. The benefit to the first Defendant ought not to

be judged on nice considerations as to what may be fair or proper. The act of publicity by the Plaintiff should be integrally connected with the

benefit alleged to the first Defendant. The nexus between the act and such benefit should not only be demonstrable but should be proved to be

objective and not merely based on slender subjective considerations. As a financier he might have paid the advertisement company on some

occasions. But that does not mean that he has taken the obligation to pay for all such advertisements made by that firm in relation to the picture he

was financing That would lead to extravagant results. All artists, studio owners, director, technicians and may, everyone connected with the

production can look upon the financier and his resources as the ultimate repository from which they could draw money after they expend on their

own whims and without the financier knowing about it or without the financier desiring to expend such amounts.

We are satisfied that in the instant case having regard to the circumstances existing the amounts which the Plaintiff incurred for advertising this

picture in the journal Naradar, as spoken to by P.W. 2, as payable by the 1st Defendant. We are unable to agree with Mr. Rattan that in the other

cases, the nexus between the activity of the Plaintiff and the benefit said to have been secured by the first Respondent has been established beyond

reasonable doubt. The appeal is, therefore, allowed substantially, excepting for a sum of Rs. 200 which relates to the charges incurred by the

Plaintiff fox having advertised the film in the journal Naradar. There will be no order (sic) to costs either here or in the lower Court.