1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL JURISDICTION NOTICE OF MOTION NO. 4635 OF 2007 IN SUIT NO. 3361 OF 2007 Reasonable Advertising Pvt. Ltd. .... Plaintiff. V/s. Vidisha Productions (P) Ltd. & Anr. .... Defendants. ....... Mr. A.A. Joshi with Mr. P.R. Kadam i/b. T.S. Patwardhan & P.R. Kadam for the Plaintiff. Mr. H.N. Thakore with Ms. Jyoti Ghag i/b. M/s. Thakore Jariwala & Associates for Defendants 1 and 2. Mr. Rahul Chitnis i/b. Mr. K.R. Sekhawat for Defendant 3. ........ CORAM : DR. D.Y. CHANDRACHUD, J. 31ST JANUARY 2008. P.C. :- The motion for interim relief arises in a suit where the Plaintiff has sought a declaration that an agreement dated 14th September 2007, entered into by the Plaintiff with the First and Second Defendants in 2 respect of the rights to a Hindi film is valid and subsisting and that the First and Second Defendants have no right, title and interest to assign the rights to any third party. Consequential reliefs have been sought for the First and Second Defendants to hand over physical possession of the negatives of the film. A permanent injunction has been sought. 2. When the motion came up for hearing on 11th December 2007, the Court was informed that on 26th September 2007, copyrights in respect of the film which forms the subject matter of the agreement with the Plaintiff had been assigned. Accordingly, the Third Defendant which claims under an assignment from the First Defendant has been brought on the record. The plaint has been amended to seek a declaration that the assignment in favour of the Third Defendant is not valid and has no effect in relation to the rights which have been created in favour of the Plaintiff. 3. Briefly stated the dispute relates to the copyrights in respect of a Hindi Cinematograph film which is entitled “Panga Naa Lo”. A 3 Memorandum of Understanding was entered into between the Plaintiff and the First Defendant under which the copyrights as prescribed in clause 1 of the agreement in respect of the aforesaid film were assigned to the Plaintiff at and for a consideration of Rs.20 lakhs. The agreement prescribes that an amount of Rs.1 lakh was paid on the execution of the M.O.U. while the balance was to be paid after the issuance of a public notice inviting claims and against the delivery of negatives and related material. Following the M.O.U. dated 18th June 2007, an agreement dated 14th September 2007 was arrived at between the parties. The agreement records the payment of the full consideration of Rs.20 lakhs. Clause 10 of the agreement prescribes that the Assignor agrees to give delivery of the negatives in accordance with the conditions laid down in Clause 12 of the agreement. The agreement dated 14th September 2007 inter-alia contains an annexure defining the prior rights which had been created in respect of the film and defines the extent of those rights. At Serial (1) of the Annexure is a description of the prior rights created in favour of the Third Defendant under an agreement dated 8th February 2007 in respect of Video 4 Copyrights and Cable T.V. Rights for a period of 11 years. Certain other rights have also been disclosed in the agreement. At this stage, it would be necessary to record the submission which has been urged on behalf of the Plaintiff by Counsel, to the effect that the Plaintiff does not claim any right, title or interest in respect of the prior rights which are disclosed in the Annexure to the agreement dated 14th September 2007. 4. The case of the Plaintiff is that it had while executing the agreement dated 14th September 2007 kept ready the balance payment of Rs.19 lakhs (after deducting the T.D.S.) and the First Defendant was called upon to collect the cheque. However, it has been stated that the First Defendant was not willing to perform its part of the contract by effecting delivery of negatives. The Plaintiff claims to have sent an E- mail on 22nd September 2007, followed by a letter dated 15th October 2007. While the receipt of the E-mail is disputed, the First and Second Defendants do not dispute receipt of the letter dated 15th October 2007. The letter records that the First Defendant was informed through E-mail that the balance payment was ready and requesting the First Defendant 5 to deliver the negatives. No reply was furnished to the aforesaid letter. Eventually, the suit came to be instituted. 5. A submission was made before the Court on 11th December 2007 on behalf of the First Defendant that the copyrights in respect of the film were assigned on 26th September 2007 to a third party which is now impleaded as the Third Defendant. The First and the Second Defendants as well as the Third Defendant have filed replies to the motion. By consent, the Notice of Motion has been taken up for hearing and final disposal. 6. The gist of the defence is that the First and the Second Defendants were indebted to the Third Defendant, in pursuance of an agreement dated 22nd February 2007, in the amount of Rs.10 lakhs and to secure the aforesaid payment, there was a pledge in respect of the film in dispute. The case of the First Defendant is that in order to secure the release of the rights which had been created in favour of the Third Defendant, the First Defendant entered into an agreement of 6 assignment dated 27th September 2007. A similar affidavit is filed by the Third Defendant. 7. At the hearing of the Notice of Motion, the principal issue which has fallen for the consideration of the Court is as to whether there was, prima facie, a bona-fide and genuine prior agreement between the First and the Third Defendants in respect of the assignment of copyrights in the suit film. Certain facets of the case have been emphasized in the submission of the Plaintiff and have a bearing on the issue. The first point to be noted is that the agreement dated 14th September 2007 between the Plaintiff and the First Defendant does mention the existence of certain rights which were created in respect of the suit film in favour of the Third Defendant under an agreement dated 8th February 2007 which was to remain in operation for a period of 11 years. The rights which were created in favour of certain other third parties were also reflected therein. The Plaintiff has no objection to the rights which are reflected in the annexure to their agreement. The agreement would, prima facie indicate that the First Defendant had 7 made a disclosure of such rights as were in existence on the date when the agreement was executed with the Plaintiff. There is no reference therein to the rights which the First Defendant now claims to have assigned. There is no disclosure in the agreement of the alleged rights created under the document dated 22nd February 2007. Secondly, the documents which have been produced on record by the Defendants contain prima facie a series of glaring inconsistencies. The first document dated 22nd February 2007, which is styled as a mortgage/sale of copyrights agreement contains the following stipulation in clause 3 :- “ In consideration of the aforesaid transfer of ownership and copyright of the said picture for 90 days, Assignee will pay as loan a sum of Rs.10,00,000/- (Rupees Ten Lakhs Only) @ 24% p.a. interest thereon for the period of 90 days, i.e. from 22.02.2007 to 22.05.2007.” The second agreement dated 27th September 2007 on the other hand contains the following provision in clause 6 :- “ The both above parties have been entered and executed an Agreement for Mortgage/Sale of Copyright of the said film on 22nd February 2007, for Rs.25,00,000/- only with accrued 8 interest thereon. Now as per above MOU, both parties have arrived at mutual understanding that Rs.20,00,000/- is hereby adjusted towards the Total Consideration of Agreement for Negative Rights/Assignment which is to be executed within 7 days after this MOU by this given NOC letter dated 2/7/2007 automatically gets cancelled.” 8. Thus, a reading of the first agreement would show that the amount which is alleged to be owed to the Third Defendant is Rs.10 lakhs. The interest payable thereon for a period of 90 days is computed at Rs.60,000/- in clause 6. On the other hand, in the subsequent document, the amount that is owed is stated to be Rs.25 lakhs. This prima-facie does not square up with the earlier transaction. Significantly, nothing is reflected as having been paid under the agreement dated 27th September 2007 since clause 6 only speaks of an adjustment of the outstanding amount. The agreement dated 27th September 2007 is on a stamp paper of Rs.100/-. The attention of the Court has been drawn on the other hand to the fact that the Third Defendant had prepared a draft of a possible agreement to settle the dispute with the Plaintiff, a copy of which is annexed to the reply filed by the Third Defendant. The draft of the document has been duly 9 stamped in the amount of Rs.5750/-. This is an additional consideration which has been pressed in support of the submission that the agreement dated 27th September 2007 is not a genuine and authentic document and that the document of 22nd February 2007 and the later document were only prepared to defeat the claim. At the hearing of the Motion, it was urged in defence that the Plaintiff did not have the funds necessary to pay the balance of the dues under the agreement. On the other hand, the case of the Plaintiff is that the First Defendant was not in a position to hand over the negatives of the film and that the Plaintiff had arranged the requisite funds. An Affidavit in rejoinder has been filed by the Plaintiff. The Plaintiff has relied upon a certificate of its banker dated 30th January 2008 stating that at the material time on 14th September 2007, the Plaintiff had a drawing power of Rs.3.81 crores under a financial arrangement with the bankers of which an amount of Rs.2.89 crores had been drawn, leaving sufficient funds to meet the outstanding payment under the agreement with the First Defendant. 9. One other facet of the matter which may need to be noticed is 10 that in an affidavit dated 31st January 2008 of the Second Defendant, an effort has been made to demonstrate that the First Defendant had received valuable consideration from the Third Defendant. The annexure to the affidavit shows an alleged payment of an amount of Rs.15 lakhs on 8th February 2007 and a further amount of Rs.25 lakhs on 22nd February 2007. The amounts which have been disclosed in the affidavit, which has been filed during the course of the hearing is not consistent with the case which has been made out before the Court earlier on the basis of the alleged documents to which a reference has already been made hereinabove. 10. In these circumstances, a prima facie case has been made out by the Plaintiff, to the effect that a valid and binding agreement was entered into between the Plaintiff on the one hand and the First and Second Defendants on the other for the assignment of the copyrights in respect of the suit film save and except for those in respect of which third party rights were disclosed in the agreement as having been created earlier. Prima-facie, there is merit in the submission that the 11 alleged agreements dated 22nd February 2007 and 27th September 2007 have been prepared with a view to defeat the entitlement of the Plaintiff. The Plaintiff is, therefore, entitled to injunctive relief. The Notice of Motion is accordingly made absolute in terms of prayer clause (a) save and except for the third party rights which are disclosed in clause 5 read with Schedule B to the agreement dated 14th September 2007. The order of injunction shall not operate as any restraint in respect of any of the third party rights which have been thus disclosed in the agreement. 11. The Motion is accordingly made absolute in the aforesaid terms. ------