IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 05.05.2011 CORAM THE HONOURABLE MRS.JUSTICE R.BANUMATHI AND THE HONOURABLE MR.JUSTICE V.PERIYA KARUPPIAH O.S.A.No.328 of 2007 Sheila Cine Arts rep.by its Partnership Mrs.Sheela Sivagnanam No.121-B, V.P.Dasarathan Street, Saligramam, Madras-600 093. ... Appellant / Plaintiff ..Vs.. 1. Gemini Pictures Circuits Private Limited, 2, Vembuliamman Koil Street, Virugambakkam, Chennai -600 092. 2. Indian Bank, 8, Arunachalam Road, Saligramam, Madras-600 093. ... Respondents/Defendants Appeal filed under Order XXXVI Rule 9 of O.S. Rules read with Clause 15 of the Letters Patent Appeal against the Judgment and decree dated 18.06.2007 made in C.S.No.986 of 1998. For Appellant : Mr.Sivaraman for Mr.C.A.Diwakar For Respondent-1 : Mr.A.V.K.Ezhilmani for Mrs.R.Maheswsari For Respondent-2 : Mr.M.Vijayan for M/s.King and Patridge https://hcservices.ecourts.gov.in/hcservices/ JUDGMENT V.PERIYA KARUPPIAH.,J This appeal is directed against the Judgment and decree passed by the learned single Judge in C.S.No.986 of 1998 dated 18.06.2007. 2. The appellant is the plaintiff in the suit. The plaintiff has filed the suit for recovery of Rs.92 lakhs by way of damages from the 1st defendant with interest at 18% per annum from the date of plaint till the date of realisation. 3. The brief facts of the case of the plaintiff / appellant is as follows: 3(i) The plaintiff is a partnership firm with an objective of production and distribution of cine films and other related activities. The Plaintiff approached the second defendant – Indian Bank for financial assistance for production of a film titled 'Manasu'. A financial assistance of Rs.25 lakhs was sanctioned on 29.09.1995, upon plaintiff furnishing immovable property valued at over Rs.50 lakhs as collateral security, apart from the negative rights being held by 2nd defendant. The plaintiff entered into a Laboratory Contract dated 30.09.1995 with the first defendant for processing the said film. Under the contract, The Producer of the film agreed to entrust all jobs, like processing of negatives, positives including making of all rushes and release prints and editing. The Agreement further provided that during the period of lease, after release of the film, the Negative Right Holder or the Pproducer shall not remove the negatives so long as the negatives are in good condition. Thus, the laboratory is responsible for the safe keeping of negatives and positives. The production of the film was commenced on 06.10.1995 and the shooting was completed in September 1996. There was delay in completion in the shooting of the film due to labour problem. 3(ii) One of the song sequences which was shot at Shimla was destroyed due to the negligent processing done by the 1st defendant. So, as a part of compensation, the 1st defendant provided four air tickets to Rajasthan for re-shooting of the song sequence. Then, the 1st defendant processed the film and the first copy was made ready on 02.10.1996. In the meantime, the plaintiff entered into Distribution Agreements for 9 territories including the rights for Malaysia and Singapore. Distributors agreed to pay a sum of Rs.49.15 lakhs to plaintiff, who received an advance of Rs.16.15 lakhs from the distributors. The second defendant also indicated that they will give a No Objection Certificate for the release of the film and thus made the plaintiff to obtain the Censor Certificate, which was obtained on 20.08.1997. Somewhere https://hcservices.ecourts.gov.in/hcservices/ else in September 1998, the plaintiff was informed by its foreign distributor that a VCD of the film 'Manasu' was found in the Singapore Market, upon which a complaint was lodged by the plaintiff on 29.09.1998 with the first defendant. It is due to the illegal and criminal activity of the 1st defendant's employees, the entire prospect of the film 'Manasu' was ruined as copies were allowed to have been taken from the laboratory of the 1st defendant. A complaint dated 15.10.1998 was lodged with the Tamil Producers Council for piracy. First Information Report was also registered in Crime No.813 of 1988 under Section 51 of I.P.C. read with Section 63 of Copy Right Act. The 1st defendant, who began to release the magnitude of the racket, refused to accept its responsibility. North Arcot Distributor had also informed the plaintiff that the film was illegally telecasted by the Cable T.V.Operators in Vellore. Had the 2nd defendant been diligent, this entire episode of piracy would have been avoided. Therefore, the plaintiff claims damages to the tune of Rs.92 lakhs from the 1st defendant. 4. The first respondent / first defendant has filed written statement denying the allegation that one of the song sequences shot at Shimla was destroyed due to the negligent processing. If only the shooting took place in a desired weather condition, the same would have given a quality output. It was a mistake of the plaintiff, for which the 1st defendant is not liable to compensate. The first copy of the film was made ready in September 1996 and that was given to plaintiff for censor purpose. The second copy was made ready only on 29.09.1998 for use of special projection by the plaintiff and the same was delivered to the plaintiff on the day itself. Therefore, the averment that the first copy was suffering from quality and so there was a necessity for making second copy is untrue. There were litigation filed against the plaintiff by various persons including O.S.5943, 5793, 6082 of 1997 and various claims were raised by Music Director Gangai Amaran, M/s.Rajasekar, Gijira and others and also a complaint was given by Mr.T.Gopi, a Production Assistant with Film Employees' Federation of South India (FEFSI). This defendant also got a claim for the laboratory charges. Though the picture was ready on 07.10.1996, the plaintiff was unable to release the same for want of money and only after a year, censor certificate could be obtained. Even for the circulation of VCDs of the film in the market, there was no allegation made by the plaintiff against this defendant. If at all there was a leak of the copy, it could be only in the hands of the plaintiff and not at the laboratory, which is fighting against the video piracy. So, the suit is liable to be dismissed. 5. On the pleadings raised by both parties, the learned https://hcservices.ecourts.gov.in/hcservices/ single Judge framed the following issues and had commenced the trial :- (1) Whether there is negligence and carelessness on the part of the first defendant as alleged in the plaint ? (2) Whether the first defendant is vicariously liable for damages or compensation as claimed in the suit ? (3) To what extent the first defendant is liable to pay ? (4) To what relief the plaintiff is entitled? 6. In the course of trial, one Mr.S.Sivaraman, Partner of the plaintiff firm, was examined as PW.1 and Exs.P1 to P21 were marked on the side of the plaintiff. The first defendant examined one Mohanasundaran, Manager of Gemini Colour Lab, as DW.1 and marked Exs.D1 to D3 on the side of the defendants. No evidence adduced by the second defendant. 7. The learned single Judge had dealt with issue Nos.1 and 2 and had come to a conclusion that there was no proof or evidence of pirating of the film and there is no negligence on the part of the first defendant and therefore the liability of the first defendant cannot be fixed in favour of the plaintiff. Similarly Issue Nos.3 and 4 were also decided against the plaintiff. Aggrieved by the said dismissal of the suit against the plaintiff, the present appeal has been preferred by the plaintiff. The learned single Judge had given a liberty to file an application for withdrawal of the amount deposited to the credit of the suit and the suit would be decided on merits. The said circumstance also to be considered only in this appeal. 8. Heard Mr.Sivaraman, learned counsel appearing for the appellant / plaintiff, Mr.A.V.K.Ezhilmani, learned counsel appearing for the first respondent / first defendant, and Mr.M.Vijayan, learned counsel for the second respondent / second defendant. 9. The learned counsel for the appellant / plaintiff would submit in his argument that the plaintiff has filed the suit for recovery of damages from the first respondent / first defendant. The plaintiff is the producer of the Tamil Film 'Manasu'. He would further submit that the first respondent / first defendant is the custodian of negatives and positives of the said film in accordance with clause-3 of the agreement produced as Ex.P3 and the first defendant is fully responsible for the safe custody of the negatives and positives for life. He would also submit that the processing work of the film 'Manasu' was entrusted to the first defendant under the said contract dated 30.09.1995 (Ex.P3). https://hcservices.ecourts.gov.in/hcservices/ He would further submit that the second respondent / second defendant financed a sum of Rs.25 lakhs and the negative rights of the film was pledged with it as security and apart from that a collateral security was created with the immovable property worth Rs.55 lakhs. He would further submit that the production of the said film commenced in the year 1996 and the first respondent provided cameras and operators of the cameras for shooting the film and one of the song sequences was taken at Shimla and the said film was not processed by the first respondent and it became waste due to the negligence of the first respondent. He would also submit that the plaintiff has to once again shoot the same sequence of the song at Rajasthan instead of Shimla and to which the first defendant had provided four air tickets only, even though he is liable for the entire damages. He would further submit that the plaintiff had entered into agreement with various distributors all over the State for distribution of the film, which was under production of the plaintiff, namely, 'Manasu' for different amounts and are produced as Exs.P5 to P12. The said sum would be around Rs.49.15 lakhs and the plaintiff had also received a sum of Rs.16.15 lakhs as advance from the distributors. He would further submit that the remaining territories of the State of Tamil Nadu and Pondicherry except covered under Exs.P5 to P12 would also fetch another sum of Rs.30 lakhs if the film is released in those areas. He would further submit that the film 'Manasu' was completed and censor certificate was also obtained on 20.08.1997 produced as Ex.P13 and the plaintiff could not release the said film immediately due to some financial hick-ups in film industry. However, during the last week of September 1998, a foreign distributor of the plaintiff reported that VCDs of the film 'Manasu' were available for sale in Singapore Market and further the film was screened through cable networks in Vellore and North Arcot District. He would further submit that due to such availability of the VCDs and screening of the film in cable networks, the distributors refused to pay the amounts and took delivery of the film 'Manasu'. Therefore, the plaintiff complained to the Producers' Council and as per their advice, the plaintiff gave a complaint to the police also and the Police registered a complaint in Crime No.813 of 1998 on Thousand Lights Police Station (Ex.P16). The police have arrested the employees of the first respondent / first defendant, namely, M.Deenadayalan, G.Elumalai and Raja and they were subsequently detained under Goondas Act. The case was investigated further and a charge sheet was filed against them along with other accused. He would further submit that the first respondent also took action against those three persons and dismissed them from their service and it had also published in a Tamil Daily dated 25.11.1998 (Ex.P17) in respect of the said video piracy. https://hcservices.ecourts.gov.in/hcservices/ 10. He would also submit that the first respondent / first defendant had also admitted in the written statement about the illegal piracy done by its employees, but had stated that it was done with the collusion of four more persons from the Producer's side. He would also submit that such plea has not been established by pointing out the persons who indulged in piracy on the side of the plaintiff. There was no mention about the employees of the plaintiff in the criminal case nor any other reference made by the first defendant. He would further submit that the prints were only available with the first defendant's laboratory and if any projection of the film, it would be done only inside the premises of first defendant's laboratory theatre and any print going out of the premises of the first defendant would be only through issuing a gate pass by the first defendant and therefore there could not be any collusive act of the plaintiff's men with the first defendant's employees. He would also submit that the criminal case filed against the employees of the first defendant has ended in honourable acquittal, since the benefit of doubt alone was the criteria for the said acquittal and the said acquittal will not in any way bind the Civil Court to follow the reasons relied upon by the Criminal Court. He would further submit that the judgment of the Criminal Court was delivered only after the filing of the suit and the proof beyond reasonable doubt is not necessary for the purpose of establishing the civil wrong of the employees, whereas the criminal intention is required for ending on conviction before the Criminal Court. Therefore, he would submit that the evidence produced by the plaintiff by examining PW.1 coupled with admission of the first defendant with its employees involved in the piracy of the film 'Manasu' would suffice to hold the first defendant to answer the negligent act of its employees and the damages suffered by the act of first defendant's employees have to be made good by the first defendant under vicarious liability. He would further submit that the negligence in processing the negative prints taken at Shimla is also an admitted fact and the plaintiff has to be made good by the first defendant for that negligent act of its employees. The fact that the first defendant was in custody of the negative prints of the film 'Manasu' to the exclusion of others and VCDs of the film 'Manasu' was black-marked through piracy would itself be sufficient to fasten the liability against the first respondent / first defendant. The damages sustained by the plaintiff would be the value of the agreements entered into between the plaintiff and the distributors produced in Ex.P5 to Ex.P12 and the similar proportionate income derived from the remaining parts of the State of Tamil Nadu where there were no distribution agreements entered into by the plaintiff. The damages sustained for the negligent processing of the film taken at Shimla would also to be paid by the first defendant. The estimate of the damage at Rs.92,00,000/- https://hcservices.ecourts.gov.in/hcservices/ by the plaintiff is more reasonable and payable to the plaintiff by the first defendant. He would further submit that during the pendency of the trial, the Hon'ble Division Bench of this Court had ordered for the appointment of Commissioner for releasing and running the film and to deposit the income to the credit of the suit and accordingly the Hon'ble Division Bench had appointed a Commissioner and ordered the release and running of the film and it earned a sum of Rs.9,85,000/- and it was promptly deposited before the Court by the learned Commissioner. The said order was passed by the Hon'ble Division Bench in order to mitigate the damages suffered by the plaintiff by the act of the first defendant. He would also submit that the suit amount may be ordered to be paid by the first defendant less the said sum of Rs.9,85,000/- deposited to the credit of the suit. The learned single Judge did not consider these circumstances, but dismissed the suit, which is not sustainable. Therefore, he would request the Court to interfere with the judgment of the learned single Judge in dismissing the suit and to allow the appeal thereby to decree the suit as prayed for. 11. The learned counsel for the first respondent / first defendant would submit in his argument that the damages claimed by the plaintiff at Rs.92,00,000/- is not sustainable and it is excessive. He would also submit that the plaintiff who has filed the suit for damages has to prove everything including the quantum of damages. He would further submit that the first defendant was very much against the piracy and he would very much taking care of the anti-piracy policy and therefore it had dismissed its employees immediately on complaint registered against them and it would not amount to admission that its employees had committed the offence of piracy of the suit film 'Manasu' and had caused damages. He would also submit that the picture 'Manasu' was taken at 35 mm size and one copy was given to censor committee for issuing censor certificate and therefore there is a possibility of leakage from the plaintiff side also. He would further submit that the employees of the first defendant were acquitted in the Criminal Case filed against them and therefore they cannot be made liable to pay the damages so as to invoke vicarious liability against the first defendant for the suit claim. He would further submit that the alleged confession given by one of the accused will not in any way helpful to the plaintiff since any one of the employees of the first defendant did not give confession to the police regarding the crime said to have been committed by them. He would also submit that the said confession is not admissible in law as per Section 25 of the Indian Evidence Act and therefore there cannot be any merit attached to the said document, produced as Ex.P15. He would also submit that the confession was not relied upon by the learned single Judge and therefore the case of https://hcservices.ecourts.gov.in/hcservices/ the plaintiff was also not believed. He would further submit that the negligence as well as damages stated to have been sustained by the plaintiff were not proved before the learned single Judge on production of necessary materials. He would further submit that there is no documentary proof for the alleged wrong processing of prints by the first defendant's men in respect of shooting held at Shimla and the first defendant never agreed or bought any ticket for the plaintiff nor any promise has been made to reimburse the said amount in favour of the plaintiff. He would once again submit that the Criminal Court had acquitted the employees of the first defendant and others and therefore there is no stigma against the employees of the first defendant and no damages can be claimed against the first defendant. The claim for damages said to have been sustained by the plaintiff was not at all spoken to by examining the distributors who entered into various agreements in Ex.P5 to Ex.P12 and the presumption of income from the remaining districts of Tamil Nadu cannot also be sustained and the plaintiff has miserably failed to quantify or prove the quantum of damages sustained by him. The absence of the negligence of the first defendant's employees and the proof of damages had rightly won the conscience of the learned single Judge and accordingly, the suit was dismissed against the defendants and there is no merit in the appeal and therefore, the appeal has to be dismissed accordingly with costs. 12. The learned counsel for the second respondent would submit in his argument that the second respondent has lent money to the plaintiff for shooting the film 'Manasu' and the Hon'ble Division Bench of this Court had directed to release and screen the film and collect the income derived by the film and accordingly Commissioner had released and collected the income and deposit the income of Rs.9,85,000/- and it is pending to the credit of the suit. He would further submit that the loan amount payable by the plaintiff in favour of the second defendant has to be paid to the second defendant by the plaintiff and till then the said film 'Manasu' as well as the income derived by the said film, which is in Court deposit to the credit of the suit are liable to be under the lien in favour of the second defendant and the said amount accrued to the credit of the suit may be permitted to be withdrawn by the second defendant. He would further submit that the second defendant / second respondent may be permitted to proceed against the plaintiff for the remaining payment and therefore the suit filed by the plaintiff has to be dismissed and therefore there is no necessity of allowing this appeal and the appeal may also be dismissed. 13. Considering the submissions made by all the three sides, this Court is inclined to frame the following points for disposal https://hcservices.ecourts.gov.in/hcservices/ of the appeal:- 1) Whether the employees of the first defendant were negligent by indulging in video piracy of the film 'Manasu' and the employees of the first defendant were negligent in processing the film song shot at Shimla and the first defendant is, therefore, vicariously liable to make good the loss of the plaintiff? 2) If so, whether the negligence of the employees of first defendant caused loss to the plaintiff and what would be the quantum of the said damages ? 3) Whether the judgment and decree passed by the learned single Judge is liable to be interfered ? 4) Whether the appeal is allowable ? 14. Point No. 1: The plaintiff is a partnership firm, who is dealing in films productions and one such film was 'Manasu' produced by the plaintiff, after getting financial assistance of Rs.25 lakhs sanctioned by the second defendant on 29.09.1995. Indisputably the facts are that the plaintiff had produced the said film after entering into a laboratory contract with the first defendant for providing films, processing them and to keep them in custody for generating positives and also to keep both negatives and positives in custody and to produce them whenever it is required by the plaintiff. The contract is entered into between the plaintiff and the first defendant is an admitted one and is produced as Ex.P3. In pursuance of the said contract Ex.P3, the plaintiff and the first defendant are under the obligation to fulfil the terms and conditions mentioned therein. Accordingly, the first defendant would provide raw film for the shooting along with the cameras and camera men to operate the said cameras and to process the said film which were used by the plaintiff for shooting the film. In terms of the said contract (Ex.P3), the plaintiff had completed the film and the film got ready for release. According to the said contract, the negatives and the positives shall be kept in safe custody by the first defendant and they have to be produced to the plaintiff whenever it is required for obtaining censor certificate or to use for premier shows after following necessary procedures. Whenever the release has been announced the copies as ordered by the plaintiff shall be handed over to the distributors concerned, who entered into agreements with the plaintiff. https://hcservices.ecourts.gov.in/hcservices/ 15. In the course of shooting of the said film 'Manasu', a song sequence was shot at Shimla and on process, the said song sequence had become waste due to the negligence of the first defendant's men at the laboratory and therefore the plaintiff had asked the first defendant to make good the loss and therefore the first defendant is said to have accepted to pay compensation for the loss to the alleged negligent processing of the film in its laboratory. The further case of the plaintiff would be that the first defendant had offered four air tickets to go to Rajasthan to shoot a song sequence in substitute of earlier shooting at Shimla and to promise to pay the compensation at the end of the settlement. Apart from that the plaintiff had complained that three employees of the first defendant had clandestinely indulged in video piracy in respect