Sandeep Kapoor vs Anuj Sharma

V.k. Jain, J.—The parties to the suit entered into a Memorandum of Understanding (MoU) dated 18th December, 2007, whereby the Plaintiff agreed to invest 30%-50% of the budget of a film which was to be produced by the Defendant. The Defendant was required to complete the film and release it by October, 2008, after the Plaintiff had invested the agreed amount entirely. It was further agreed between the parties that the realization of the movie shall be distributed in the following manner:

10 (a) First, the first party shall be reimbursed to the tune of the amount they invested, which referred in para 1 here-in-above.

(b) The remaining amount of the will be reimbursed to the second party, hereinabove.

(c) After the disbursement of the investments to the first and the second party hereinabove, the remaining profit amount will be share equally in the ratio of 50:50 i.e. the first party shall be entitled to 50% of profit and the second party shall be entitled for 50% of profit.

(d) The overflow revenue generated by the feature film shall also be divided in the same ratio referred in above.

(e) In case of loss, due to any reason whatsoever or in the event of the said feature film being shelved or not being completed by the second party after the complete payment has been made by the first party for whatever reasons, the same will be exclusively borne by the second party and the first party shall not be liable for the same. The second party shall compensate the first party with the entire amount of the investment made by the first party, referred in para 1 hereinabove, along with simple interest @ 12%.

The case of the Plaintiff is that he was informed by the Defendant that the budget for the movie was about Rs 4-4.5 crore and he paid a sum of Rs. 1,32,00,000/- to the Defendant on different dates. Since the Defendant failed to complete the film by October, 2008, the Plaintiff asked him to refund the money invested by him. The Defendant having failed to pay the amount invested by the Plaintiff, the suit for recovery of Rs. 1,32,00,000/- has been filed by him.

The Defendant has contested the suit, though he has admitted the MoU dated 18th December, 2007. This is also the case of the Defendant that initially a MoU was entered into between the parties on 4th July, 2007 which was followed by the MoU dated 18th December, 2007. It is alleged in the Written Statement that the film was about 60% complete and the Plaintiff had failed to adhere to the terms of the MoU since he was aware that the cost of the project was going to be much above Rs. 10 crore and did not invest 30-50% of the budget of the film in terms of the MoUs dated 4th July, 2007 and 18th December, 2007. It is also alleged in para 8 of the Written Statement that till 31st December, 2008 the Plaintiff had only invested a sum of Rs. 1,03,70,880/- on various dates though he was required to invest about 30-50% of the estimated budget of about Rs. 12 crore.

As noted earlier, the Plaintiff had agreed to invest about 30-50% of the budget of the film, which the Defendant had agreed to produce. The percentage of investment agreed to be made by the Plaintiff is same in the MoU dated 4th July, 2007 as well in the MoU dated 18th December, 2007. As per MoU dated 4th July, 2007 the Defendant was required to complete the film by February, 2008 whereas as per the MoU dated 18th December, 2008 he was required to complete the film by October, 2008. Though the MoU dated 4th July, 2007 stands superseded by the MoU dated 18th December, 2007, there is No. such term in the MoU dated 4th July, 2007 which can be said to be favourable to the Defendant. The obligations of the Plaintiff are identical under both the MoUs. Both the MoUs are silent with respect to the budget estimated by the parties at the time these documents were executed. The case of the Plaintiff is that the budget of the film was estimated to be Rs. 4-4.5 crore whereas the case of the Defendant is that it was estimated to be more than Rs. 10 crore and could go up to Rs. 12 crore. At this stage, it is not possible for the Court to take a final view in this regard. But, what is important is that though the Defendant had agreed to complete the film by October, 2008, there is No. communication from him to the Plaintiff at any time prior to 31st October, 2008 claiming that he had not invested his share in terms of the MoU or that the amount invested by him was less than what he ought to have invested. It was vide letter dated 20th February, 2009, the Defendant for the first time wrote to the Plaintiff alleging that he had not invested even 10% of the total cost of the film though he was supposed to invest 30-50% of the total cost. The Plaintiff on the other hand sent a legal notice to the Defendant on 28th February, 2009 alleging therein that the budget of the movie as told by him was about Rs. 4-4.5 crore. Since the Defendant knew that he was required to complete the film by October, 2008, he would, in the event of breach of his contractual obligation by the Plaintiff, have written to him prior to October, 2008 alleging that he had failed to perform his part of the contract by not investing 30-50% of the estimated budget of the film. Prima facie, it is somewhat difficult to accept that the Plaintiff had failed to perform his part of the contract which led to the Defendant suffering damages. In any case, No. counter claim has been filed by the Defendant against the Plaintiff.

The film in question has been completed during pendency of the suit. Vide consent letter dated 24th December, 2010, the Defendant was permitted to negotiate the sale of the film and execute sale documents subject to condition that he will obtain a pay order of Rs. 1,32,00,000/- in the name of Registrar General of this Court and deposit the same in the Court. The amount of Rs. 1,32,00,000/- has since been deposited by the Defendant and the film has been released.

In the facts and circumstances of the case, including the fact that No. counter claim has been filed by the Defendant, I see No. reason why the Plaintiff should not be allowed to use at least that much amount which the Defendant admits having been invested by the Plaintiff, subject, of course, to conditions which would ensure restitution of the aforesaid amount to the Defendant in the event of the suit being dismissed on merits. The Defendant has already sold the film and thus enjoyed the fruits of the production. There is No. good reason for not allowing the Plaintiff to use at least the admitted amount during pendency of the suit.

It was contended by the learned Counsel for the Defendant that two other suits have been got filed by the Plaintiff against the Defendant in respect of parts of the amount of Rs. 1,03,70,880/- invested by the Plaintiff and in the event of those suits being decreed the Defendant may have to pay the decreetal amounts of those suits to the Plaintiff in those suits. As noted earlier, this is Defendant''s own case in the Written Statement that it was the Plaintiff, who had invested Rs. 1,03,70,880/-. In view of this admission, the Defendant cannot deny the contribution of the Plaintiff to the extent of the aforesaid amount.

For the reasons given in the preceding paragraphs, it is directed that out of amount of Rs. 1,32,00,000/- lying in this Court, a sum of Rs. 1,03,70,880/- be released to the Plaintiff on his furnishing surety bond of the same amount to the satisfaction of the concerned Joint Registrar. The surety, irrespective of whether he is Plaintiff himself or some other person who agrees to furnish surety bond for him, must own an immovable property valued at more than Rs. 1 crore and should have a clear title to the property. The surety bond should contain an undertaking not to sell, transfer, assign, mortgage or otherwise part with the possession of the aforesaid property during subsistence of the surety bond. The application stands disposed of in terms of this order.

CS(OS) No. 1394/2009 & IA No. 9709/2009 (u/O 39 Rule 1&2 Code of Civil Procedure), IA No. 13037/2009 (u/O 39 Rule 4 Code of Civil Procedure), IA No. 4469/2011 (u/O 39 Rule 2A Code of Civil Procedure) & IA No. 6318/2011 (u/O 39 Rule 2A Code of Civil Procedure)

List on the date already fixed.