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Judgment
V.M. Kanade, J.—Leave under Rule 147 of the High Court (Original Side) Rules is granted to the plaintiff to take out a notice of motion in terms of draft notice of motion handed in. Plaintiffs to get the suit and notice of motion numbered.
By consent of parties, notice of motion is taken up for hearing. Heard the learned Counsel for the plaintiffs and for defendant Nos. 1 and 2.
Plaintiff is a Company incorporated under the Companies Act and is carrying on business of trading in various feature films. Defendant No. 1 is the producer of feature film titled "God Tusi Great Ho". Defendant No. 2 is a Laboratory which has processed the said film and has custody of the negatives of the said film. Defendant No. 3 is a Company to whom the defendant No. 1 is alleged to have sold certain rights in the said film.
Brief facts are as under:
It is the case of the plaintiff that defendant No. 1 assigned broadcasting rights of the said film by an agreement of assignment dated 16/2/2007. In the said agreement, it was provided that the plaintiff would pay to the defendants certain amounts as per the schedule annexed to the said agreement. It is the case of the plaintiff that on execution of the said agreement, an amount of Rs 1 crore was paid on 16/2/2007. Further sum of Rs 2 crores was payable on 10/3/2007, subject to the plaintiff not receiving any claim, objection from any third party after publication of notice in the Trade Magazines. An amount of Rs 50 lakhs was to be paid on 25/4/2007 and an amount of Rs 3.50 crores was to be paid 7 days prior to the theatrical release of the film in India. Plaintiff issued a public notice on 2/3/2007 as contemplated in the said schedule of the agreement of assignment and it is alleged that on 5/3/2007 plaintiff received an objection from the Super Cassettes Industries Ltd., stating therein that the plaintiff only had right to broadcast "full length" film. Plaintiff conveyed the objection to the defendants on 15/3/2007 and called upon them to obtain a letter of withdrawal of objection from the Super Cassettes Industries Ltd. It is the case of the plaintiff that since the objection was not withdrawn by defendant No. 1, the said amount which was due and payable on 10/3/2007 did not become due and payable. It is further case of the plaintiff that there was a modification in the agreement dated 16/2/2007 and pursuant to the said agreement, an amount of Rs 2 crores was paid by the plaintiff, though it was not due and further amount of Rs 50 lakhs which was to be paid on 25/4/2007, would be paid alongwith the last installment of Rs 3.50 crores. According to the plaintiff, in view of the modification to the said agreement, the plaintiff paid to defendant No. 1 a sum of Rs 2 crores on 22/5/2007. Thereafter, the plaintiff called upon defendant No. 1 to remove the objection of Super Cassettes Industries Ltd. Thereafter it is alleged that on 31/7/2008, the plaintiff received a letter dated 29/7/2008, terminating the agreement dated 16/2/2007 on the ground of failure to remit Rs 50 lakhs as per the rate fixed in the schedule. Thereafter, the present suit is filed by the plaintiff.
After the notice of motion was taken out by the plaintiff and served on defendant No. 1, a statement was made by the learned Counsel appearing on behalf of the defendants that third party rights have been created in favour of Eros Multimedia Pvt. Ltd. Plaintiff, therefore, sought permission to add the said Eros Multimedia Pvt. Ltd. as defendant No. 3. Leave to amend was granted. Accordingly, Eros Multimedia Pvt. Ltd. is added as defendant No. 3. Subsequently, amendments were made in the plaint.
The learned Counsel appearing on behalf of the plaintiff submitted that by deed of assignment dated 16/2/2007 the rights in respect of broadcasting and satellite were assigned to the plaintiff. He submitted that the said assignment had become complete and was irrevocable. He then submitted that the plaintiff was ready and willing to make payment as per schedule fixed in the said agreement. It is submitted that after having paid the initial payment of Rs 1 crore, the plaintiff was ready and willing to pay the second installment of Rs 2 crores, after it had become due and payable. He submitted that since the objection was raised by the Super Cassette Industries Ltd., an obligation was cast on defendant No. 1 to remove the said objection and, only on removal of the said objection, the said amount of Rs 2 crores had become payable. He submitted that the said objection was not removed and, therefore, no default was committed by the plaintiff in making payment as per the schedule. He submitted that there was an oral modification to the said agreement and though an amount of Rs 2 crores was not due and payable, plaintiff agreed to pay the said amount and it was so paid on 22/5/2007. Thirdly, he submitted that in view of Clause 7(d) & (e) of the said agreement, rights as mentioned in the said clauses were affected by virtue of the letter which was written by the Super Cassettes Industries Ltd who had claimed to have audio and music rights of the said film. He submitted that, therefore, rights of the plaintiff were clearly in jeopardy by the objection raised by the Super Cassettes Industries Ltd. and, therefore, the said amount of Rs 2 crores did not become due and payable. He further submitted that since the said amount did not become due and payable, the subsequent installment of Rs 50 lakhs also was to be paid after the objection was removed. He submitted that the plaintiff was willing to deposit an amount of Rs 4 crores which was the 3rd and 4th installment in the payment schedule. He, therefore, submitted that the defendants had no right to terminate the said agreement since the assignment had become complete and the plaintiff was ready and willing to deposit the entire installments.
The learned Counsel appearing on behalf of the plaintiff invited my attention to the various correspondence between the parties and further submitted that under Sections 18 and 19 of the Copyright Act, 1957, the said amount had become due and payable. He further submitted that the assignment in favour of defendant No. 2 did not appear to be a genuine assignment. He invited my attention to the agreement executed between defendant No. 1 and defendant No. 3 and submitted that no amount had been paid by defendant No. 3 to defendant No. 1 and certain amounts were adjusted. He submitted that from the tenor of the agreement, it would be seen that it was not a regular agreement of assignment of copyright and it was a got up document to defeat the rights of the plaintiff. He, therefore, submitted that the rights of the plaintiff may be protected by suitable interim order in terms of the reliefs claimed by the plaintiff in the notice of motion.
The learned Counsel appearing on behalf of defendant No. 1, firstly submitted that in terms of the agreement dated 16/2/2007, it was abundantly clear that the assignment was made subject to payment of installments by the plaintiff. He submitted that it was specifically mentioned in the agreement that time was essence of the contract. He further submitted that in Clause 30 of the said agreement, it was specifically laid down that modifications in the said agreement should be made only after it was reduced in writing. He also invited my attention to Clause 31 and Clause 32 in respect of waiver of any terms and conditions of the said agreement. He submitted that there was a clear breach committed by the plaintiff in making payment as per the schedule and, therefore, defendants were justified in terminating the agreement. He further submitted that theory of modification of the agreement, as was averred in para 15 of the plaint, was an attempt to come out of the conditions imposed on the plaintiff in the agreement. He submitted, therefore, that no case is made out for grant of any interim relief.
In order to appreciate the rival contentions, it is necessary to consider the relevant provisions of the Copyright Act, 1957. Section 18 of the Copyright Act lays down the conditions of assignment. Proviso to Section 18 Sub-clause (1) in clear terms states that the assignment should be made subject to certain limitations imposed in the agreement. Section 18 reads as under:
Assignment of copyright.-(1) The owner of the copyright in an existing work or the prospective owner of the copyright in a future work may assign to any person the copyright either wholly or partially and either generally or subject to limitations and either for the whole term of the copyright or any part thereof:
Provided that in the case of the assignment of copyright in any future work, the assignment shall take effect only when the work comes into existence.
(2) ...
(3) ...
From Sub-section (1) of Section 18, it is abundantly clear that the owner of the copyright would assign his rights subject to limitations. From the aforesaid provision, it is clear that the parties had right to assign the copyright and impose certain conditions before the assignment could be complete. The submission made by the learned Counsel appearing on behalf of the plaintiff that the agreement dated 16/2/2007 amounted to complete assignment cannot be accepted. Perusal of the various clauses in the said agreement itself indicate that one of the primary conditions for the assignment to become operational was the payment of installments as per the schedule fixed by the parties. Clause 5 of the said agreement reads as under:
In consideration for both the films total price of Rs 10,00,00,000/- (Rupees Ten Crore inclusive of all levies payable and stamp duty) payable as mentioned in the Schedule hereunder by the Assignees to the Assignors the Assignors hereby subject to timely payment of the consideration assign and transfer to the Assignees sole and exclusively said rights as mentioned above and on the aforesaid representations and declarations and believing the same to be true the Assignees hereby take assignment of the Said Rights in and to the Said Films for the contracted territory/territories and for the said period as mentioned in the schedule hereunder written.
Clause 7, 12 and 19 of of the said agreement read as under:
The Assignors (subject to the agreed payment as recorded in this agreement) further agree and covenant with the Assignees that:
a) ...
b) ...
c) ...
d) Assignee shall also be entitled to use the clip rights to ideate, create, publish, host and distribute mobile which includes logos, Wall papers, WAF Games, MMS content relating scenes, songs and story, dialogues etc. of the assigned Films for the purpose of promotion of the films.
e) The Assignees shall have full, complete and unrestricted rights to make and publish artistic and literary works of all kinds representing any of the characters and/or scenes in the said Films and to advertise, publicize and to promote the exhibition of the Said Films, and shall have the right to use clips/scenes/ or any extract of the Said Films to promote the channel on which the Said Films are exhibited in the Territory by any means, or media, it deems appropriate, or otherwise in relation to the Said Rights.
f) ...
Assignors shall not grant or sell to any other party the rights Assigned under this Agreement till commencement of the period of Assignees. (i.e. During Assignees Hold Back Period) provided there is no default on the part of the Assignees.
As long as moneys payable to the Assignors under this agreement remain payable and are paid by the Assignees to the assignors for whatsoever and of whomsoever cause then the assignors hereby irrevocable and unconditionally agree that they shall not distribute....
In the Schedule of the said agreement it is stated as under:
MODE OF PAYMENT FOR FILM GOD TUSSI GREAT HO
...
(PAYMENT BEING ESSENCE OF THE CONTRACT)
In view of these clauses in the agreement, the intention of the parties clearly was to ensure that the payment should be made on time and as long as the payment is not made, the assignment would not be complete. The first submission made by the learned Counsel appearing on behalf of the plaintiff, therefore, cannot be accepted.
The second submission made by the learned Counsel appearing on behalf of the plaintiff was that the amount of Rs 2 crores did not become due and payable on 10/3/2007 on account of the objection raised by the Super Cassettes Industries Ltd. The schedule in respect of the payment mentions that the said amount of Rs 2 crores was to be paid on 10/3/2007. The said amount was to be paid subject to any objection being received from any third party. In the present case, the objection was received by the plaintiff from the Super Cassettes Industries Ltd. The third installment of Rs 50 lakhs was due and payable on 5/4/2007. Perusal of the schedule discloses that this amount of Rs 50 lakhs was not to be paid, subject to any condition being put. It was clearly mentioned that the said amount was to be paid on 5/4/2007. Without going into the merits of the rival claims in respect of the payment of Rs 2 crores, the fact remains that Rs 50 lakhs was not paid on 5/4/2007. In my view, therefore, there was a clear breach on the part of the plaintiff in not paying the said amount as per the schedule fixed by the parties. The contention was raised by the learned Counsel appearing on behalf of the plaintiff that there was a modification in the agreement as averred by the plaintiff in para 15 of the plaint and, therefore though the amount of Rs 2 crores as not due, it was paid on 22/5/2007. Alternatively, it was argued that if the said modification is not accepted by the Court then, in that event, an amount of Rs 50 lakhs should be treated as being paid by the plaintiff. This submission also cannot be accepted. Clause 30 of the agreement clearly stipulates that any modification in any of the clauses of the agreement had to be reduced in writing. Clause 30 the agreement reads as under:
The invalidity of any of the provisions of the assignment shall not invalidate this assignment in its entirety and any amendment, modification or alternation thereof shall be valid and binding only if reduced into writing and executed by both the parties. The parties agree to substitute in good faith any such portions or parts hereof by more relevant and valid provisions, if the Assignees at any time so deem fit but the same shall be in writing.
Perusal of the said clause clearly reveals that the modification, if made by the parties, ought to have been reduced in writing. It is an admitted position that the alleged modification was not reduced in writing and, therefore, it is not possible to accept the submission made by the learned Counsel for the plaintiff that there was a modification to the agreement in question.
Perusal of para 15 of the plaint also reveals that the averment in respect of the alleged modification is very vague and no particulars have been given about the date or time when the parties had agreed to modify the said agreement. An attempt appears to have been made by the plaintiff to circumvent the breach which was committed by the plaintiff in payment of the said amount of Rs 2 crores in time. In my view, therefore, this submission made by the learned Counsel appearing on behalf of the plaintiff also cannot be accepted.
It is an admitted position that payment as per schedule was an essence of the contract and the plaintiff having committed the default in making payment as per schedule, defendant No. 1 was entitled to terminate the agreement dated 16/2/2007.
Under the circumstances, the plaintiff, in my view, has not made out any prima facie case for grant of any interim relief. The learned Counsel appearing on behalf of defendant No. 1, on instructions, submits that defendant No. 1 is willing to deposit the entire amount which has been received by defendant No. 1 in this Court within a period of one week. No case is made out by the plaintiff for grant of any interim order as prayed by the plaintiff in the notice of motion. Defendant No. 1 is directed to deposit the entire amount received by them in this Court within one week from today. If the said amount is deposited, plaintiff would be entitled to withdraw this amount without prejudice to their rights and contentions.
Notice of Motion is accordingly dismissed. Under the circumstances, there shall be no order as to costs.