FAO (OS) No.81/2002 Page 1 of 26 * HIGH COURT OF DELHI : NEW DELHI + FAO (OS) No.81/2002 Reserved on : 5th August, 2008 % Decided on: 23rd October, 2008 M/s INTERNATIONAL FILM DISTRIBUTORS ...Appellant Through : Mr. D.S. Narula, Adv. with Mr. A.S. Narula,Adv. Versus SHRI RISHI RAJ ....Respondent Through : Mr. Harish Malhotra, Sr. Adv. with Mr. Vipul Gupta, Adv. Coram: HON'BLE MR. JUSTICE A.K. SIKRI HON'BLE MR. JUSTICE MANMOHAN SINGH 1. Whether the Reporters of local papers may be allowed to see the judgment? 2. To be referred to Reporter or not? 3. Whether the judgment should be reported Yes in the Digest? MANMOHAN SINGH, J. 1. This appeal is directed against the order dated 18th January, 2002 passed by the learned Single Judge of this Court whereby the appellant‟s (hereinafter referred to as „defendant‟) application under Order 7 Rule 10 of the CPC being I.A. No. 8262/2000 seeking return of the plaint to the respondent (hereinafter referred to as „plaintiff”) to be presented in the court having proper jurisdiction was dismissed and plaintiff‟s application under Order 39 Rule 1 and 2 of the Code of Civil Procedure, 1908 being I.A. No. 7236/2000 seeking injunction FAO (OS) No.81/2002 Page 2 of 26 restraining the Defendant, its employees, agents and representatives from in any manner interfering in the negative rights, sole and exclusive commercial and non-commercial video rights in all formats, including CVD, DVD, satellite and television rights (both terrestrial and extra- terrestrial), cable T.V. rights, pay T.V. rights and the available theatrical rights for all India and overseas territories i.e. the entire world including India, in picture „KOHINOOR‟ till the disposal of the suit has been allowed. 2. Brief facts relevant for deciding this appeal are that the plaintiff is carrying on the business of film distribution, exhibition and exploitation of cinematographic films and is also dealing in satellite right and negative rights of cinematograph films. 3. A cinematographic film „KOHINOOR‟ was produced by M/s Republic Films Corporation, whose producer was later declared as insolvent and all assets of the said producer were taken over by the Official Assignee of Bombay High Court and thus the entire negative right of the picture „KOHINOOR‟ including the negative rights, sole and exclusive commercial and non-commercial video rights in all formats including CVD, DVD, satellite and television rights (both terrestrial and extra terrestrial), cable TV, Pay TV rights and the available theatrical rights for All India and overseas territories i.e. the entire world including India allegedly vest with the Official Assignee of the Bombay High Court. 4. One M/s A.G. Exports who were already enjoying the rights of the above said movie made an offer of Rs. 75,000/- on 1st June, 2000 FAO (OS) No.81/2002 Page 3 of 26 to the Official Assignee for acquiring the sole and exclusive rights for further 10 years from 1st January, 2000. 5. The Official Assignee made a similar offer to various people including the plaintiff vide letter dated 27th July, 2000 whereby it was made clear that the distribution rights of the said picture are perpetually held by M/s Seth & Sayyed for U.P., Delhi, East Punjab, CPCI, Nizam Circuit under agreement dated 24th August, 1962, thus, only the other rights were available with the Official Assignee for sale. 6. It was submitted that at the first instance, the plaintiff in response to the said letter, made an offer vide his letter dated 26th August, 2000 to purchase the said rights for Rs.2 lakhs and deposited a banker‟s cheque for Rs.50,000/- which was duly acknowledged by the Official Assignee on 29th August, 2000. The plaintiff by offering the highest bid of Rs. 14,10,000/- on 30th August, 2000 got the said rights and an agreement dated 20th December, 2000 was executed by the Official Assignee in favour of the Plaintiff. 7. It was alleged that in view of the agreement dated 20th December, 2000, the plaintiff has been granted negative rights, sole and exclusive commercial and non-commercial video rights in all formats, including CVD, DVD, satellite and television rights (both terrestrial and extra terrestrial), cable TV rights, Pay TV rights and the available theatrical rights of the said picture Kohinoor for all India and overseas territories i.e. the entire world including India, for ten years commencing on 1st January, 2000 on „as is where is‟ basis irrespective of the condition of the negative subject to existing valid rights, liens, FAO (OS) No.81/2002 Page 4 of 26 charges etc if any of any party and all encumbrances and adverse claims if any. It is averred in the plaint that after grant of the said rights, it is the plaintiff who is now entitled to deal with the said picture Kohinoor in respect of the said rights and nobody else can interfere in the said rights. 8. It was stated that before the said agreement could be executed, the plaintiff received a letter dated 10th October, 2000 from the defendant stating that they have also certain rights in the said film, but along the said letter the defendant did not enclose a copy of any agreement in regard to their alleged rights. In reply to the abovesaid letter dated 27th October, 2000 was written by the plaintiff to the defendant alleging that the defendant has no right nor the defendant‟s name ever appeared in the notice of auction along with other right holders and called upon the defendant to produce a copy of the agreement so that the same could be verified. 9. In response to the said letter the defendant furnished a photo copy of agreement alleged to have been signed by the defendant with the producer and asserted that they were holding rights for overseas excluding India, Burma, Pakistan, Ceylon, Aden, Continent of Africa, Complete Middle East, West Indies, Fiji UK, and Greece and has alleged that there is an agreement dated 13th October, 1961 with M/s. Republic Films Corporation. 10. It was further alleged that the said rights of the claim by the defendants were never disclosed by the official was not at any point of time and the plaintiff have no information in this regard and even if it is FAO (OS) No.81/2002 Page 5 of 26 presumed that the defendant has any right then it is only theatrical distribution rights for certain overseas countries. When the said agreement dated 13th October, 1961 was executed there was no satellite rights or video rights, video rights came in vogue in 1970s while the satellite rights came in vogue in 1990s and thus the defendant cannot allege that they are holding the said video rights and satellite rights and in fact the defendant has no right to interfere in the negative rights, sole and exclusive commercial and non-commercial Video rights in all formats including CVD, DVD, satellite and television rights (both terrestrial and extra terrestrial), cable TV rights, Pay TV rights and the available theatrical rights for All India and overseas territories i.e. the entire world including India, but despite that the defendant has been interfering in the said rights of the plaintiff by illegally writing letters to Zee TV, Sony TV and other satellite channels as a result of which the plaintiff has not been able to enjoy such rights. It would be pertinent to note that even as per allegation, though it is not recorded by the Official Assignee the defendant has only theatrical distribution right over certain overseas countries and thus the defendant cannot allege having any right in satellite channels. Lastly it was alleged that defendant has no authority to interfere in the said right as it would mean that the plaintiff has paid the money and got nothing. 11. The defendant filed the written statement raising various pleas, inter-alia, that this Court has no territorial jurisdiction to entertain and try the suit, the suit does not disclose any cause of action etc. Defendant averred in the written statement that the rights acquired by FAO (OS) No.81/2002 Page 6 of 26 the plaintiff from the Official Assignee, High Court of Bombay under agreement dated 20th December 2000 are clearly subject to the existing rights of various parties. 12. The Defendant also filed an application under Order 7 Rule 10 of CPC for return of the plaint for presentation before appropriate courts on the grounds that this court does not have the territorial jurisdiction and submitted that plaintiff is claiming the alleged rights in respect of picture under agreement dated 20th December, 2000 which provides that only the Courts in Bombay will have the jurisdiction to entertain the matter. 13. It was alleged by the defendant that he is carrying on business of exploitation, exhibition and distribution of Hindi feature film throughout the world and by two agreements dated 13th October 1961 and 9th October 1963 the producer of the feature film Kohinoor granted to the defendants the sole, exclusive and proprietary copyrights for exploitation, distribution and exhibition of commercial as well as non-commercial rights in respect of the said feature film Kohinoor in 35mm as well as reduced size and sizes including the rights of Television and all other rights attached to that exploitation, exhibition and distribution for the territories i.e. complete world excluding India, Burma, Pakistan, Ceylon,Aden, continent of Africa, complete Middle East, West Indies, Fiji, UK and Greece (hereinafter called the contracted territories) against the consideration paid to the producer and, therefore, the defendant has absolute rights in their favour. 14. It was alleged by the defendant that the producer of the said FAO (OS) No.81/2002 Page 7 of 26 film has subsequently become insolvent and all his rights and properties have been vested in the Official Assignee of the High Court of Bombay. The Official Assignee, High Court of Bombay had invited claims and the defendant by letter dated 11th October 2000 informed about his right in respect of the said film to the Official Assignee who has not responded to the said letter and the defendant was under the impression that the Official Assignee is deemed to have accepted the contents of the said letter. 15. However, the defendant further alleges that the Official Assignee, High Court of Bombay has entered into an agreement with the plaintiff in respect of the said film but the said assignment is subject to the right already created in favour of the existing parties and in view of the said contention the Official Assignee and the plaintiff has accepted the said rights of the defendant, therefore, now the plaintiff is estopped from challenging the said rights of the defendant which is barred by law as the plaintiff was aware about the claim of the defendant. That the defendant was not aware about the infringement of copyright of the said film by M/s. A.G. Exports, therefore, the defendant did not take any action in the matter. 16. We have perused the rival submissions of the parties, pleadings and documents. Now, we shall deal with the submissions made by learned counsel for the parties. 17. The main questions for determination are regarding the question of territorial jurisdiction of this Hon‟ble court and as to whether the defendants‟ right in the picture Kohinoor includes only FAO (OS) No.81/2002 Page 8 of 26 copyrights of exploitation, distribution and exhibition and does not include the video rights in all formats including CVD, DVD, Satellite and Television rights (both terrestrial and extra terrestrial) Cable TV and Pay TV rights and theatrical rights and whether the plaintiff is entitled for injunction as prayed for on the basis of the rights taken over from the Official Assignee of the Bombay High Court. We feel that the main controversy between the parties centers around the territorial jurisdiction of this Court to entertain and try the present suit in this court or not and in view of the rights, if available whether the plaintiff is entitled for injunction as prayed for on the basis of these rights, as claimed. 18. First, we will consider the question of territorial jurisdiction raised by the defendant in the matter. The plaintiff has invoked the jurisdiction of this Court as per Para 15 of the plaint which is reproduced herein-below for the sake of convenience:- “That the cause of action arose at Delhi as the plaintiff enjoys the rights of film Kohinoor at Delhi. The defendant has advanced the threat to interfere in the right of the plaintiff at Delhi, therefore, this Hon‟ble court has the jurisdiction to try and adjudicate upon the present suit.” 19. The learned single Judge while deciding the question of jurisdiction has observed as under:- “The jurisdiction of the court does not depend upon the defence taken by the defendant and it is the allegation made in the plaint which decide the forum as was held in the case of P.M.Diesel Ltd vs. Patel Field Marshal, reported in AIR 1998 Delhi 225. In view of the nature of statement made in the plaint read with the documents placed on record, I am of prima FAO (OS) No.81/2002 Page 9 of 26 facie opinion that this Hon‟ble court has the jurisdiction to try this suit. This, however, is my tentative view at this stage only for the purpose of deciding of issue of grant of interim injunction. The right, which is claimed by the plaintiff pursuant to agreement with the Official Assignee dated 20th December 2000 could be prima facie established by the plaintiff in Delhi. The plaintiff has also claimed injunction regarding threatened breach of its rights at Delhi and, therefore, prima facie it cannot be said that this Hon‟ble court does not have the territorial jurisdiction.” 20. Since the matter pertains to the infringement of copyright also, therefore, it is necessary to refer to Section 62(2) of the Copyright Act, which reads as under:- “Section 62(2):- for the purpose of sub-section (1), a “district court having jurisdiction” shall, notwithstanding anything contained in the Code of Civil Procedure, 1908 (5 of 1908), or any other law for the time being in force, include a district court within the local limits of whose jurisdiction, at the suit or other proceeding or, where there are more than one such persons, any of them actually and voluntarily resides or carries on business or personally works for gain.” 21. This provision of Copyright Act shows that the jurisdiction for the purpose of Section 62 is an additional ground to invoke the jurisdiction as prescribed under Section 20 of the Code of Civil Procedure, 1908. In Exphar S.A. vs. Eupharma Laboratories 2004 SC 251 at Paras 13 & 15 it was observed as under:- Para 13. Even if the jurisdiction of the Court were restricted in the manner construed by the Division Bench, it is evident not only from the cause title but also from the body of the plaint that the appellant No.2 carries on business within the jurisdiction of the Delhi High Court. The appellant No.2 is certainly "a person instituting the suit". The Division Bench went beyond the express words of the statute and negatived the jurisdiction of the Court because it found that the appellant No.2 had not claimed ownership of the copyright of the trademark FAO (OS) No.81/2002 Page 10 of 26 infringement of which was claimed in the suit. The appellant No.2 may not be entitled to the relief claimed in the suit but that is no reason for holding that it was not a person who had instituted the suit within the meaning of Section 62(2) of the Act. Para 14. Furthermore, the appellants' plaint said that the 'cease and desist' notice was sent to the appellant No.2 at its office in New Delhi and in that notice it was alleged that the appellant NO.2 had infringed the copyright of the respondent No.2 to the trademark 'Maloxine'. Now a cease and desist notice means that the recipient is alleged to have infringed the rights of the sender of the notice to the copyright and as a result of such alleged infringement the recipient is liable to institution of civil and/or criminal proceedings. It is a threat. The plaint says that this threat was received within the jurisdiction of the High Court a fact which was sufficient to invoke the jurisdiction of that Court. 22. In Tata Iron & Steel Co. Ltd. V. Mahavir Steels & Ors.; 47(1992) DLT 412 it was observed in paras 11&13 as under : “11. The question regarding jurisdiction can only be gone into after the evidence of the parties is recorded in the case. Even in the Punjab case the suit was not thrown out at the threshold under Order 7 Rule 11 CPC but only after the parties were given an opportunity to lead evidence. The plaint in the present suit categorically states that the defendant no.1 was selling the channels of defendant no.2 under the offending trade mark which is deceptively similar to that of the plaintiff. On these averments the Court must assume jurisdiction and proceed with the suit to determine the question relating to the confirmation/vacation of the stay order at this stage.” 23. This aspect has been decided by Justice Badar Durez Ahmed in Pfizer Products Inc. Vs Rajesh Chopra & Ors, 2006(32) PTC 301(Delhi) wherein it was observed as under :- “12. The other aspect of the matter is that a threat of selling the offending goods in Delhi would FAO (OS) No.81/2002 Page 11 of 26 in itself confer jurisdiction in the courts in Delhi to entertain a suit claiming an injunction in respect thereof. Whether the threat perception is justified or not is another matter which has to be considered and decided upon in the application filed by the plaintiff under Order 39 Rules 1 and 2 or on merits when the suit is taken up for disposal. Insofar as Order 7 Rule 10 is concerned, assuming that whatever is stated in the plaint is correct, one would have to also assume that the threat or the intention of the defendants to sell and offer for sale the offending goods in Delhi is also correct. Therefore, if the threat exists then this court would certainly have jurisdiction to entertain the present suit.” 24. In LG Corporation & Anr. Vs Intermarket Electroplasters(P) Ltd. and Anr.; 2006 (32) PTC 429, following observations were made in para 7 :- “7. ……The question as to whether the Court has territorial jurisdiction to entertain a suit or not has to be arrived at on the basis of averments made in the plaint, that truth or otherwise thereof being immaterial as it cannot be gone into at this stage…..” 25. In the present case it is an undisputed fact that the plaintiff is residing and carrying on business within the territory of this Hon‟ble court. The allegation made in the plaint is also that the defendant has advanced threat to interfere in the rights of the plaintiff at Delhi. Further the suit is also for the infringement of copyright. In view of the specific averments made in the plaint, we hold that the finding of the learned single Judge is correct that this Hon‟ble court has got the territorial jurisdiction to try the suit. In these circumstances the plea taken by the defendant in the appeal as well as the application has no force, untenable and is hereby rejected. 26. As regards the next controversy in this appeal is concerned, FAO (OS) No.81/2002 Page 12 of 26 the submission of the defendant is that on 30th October 1961 M/s. Republic Film Corporation, Bombay, Producer of the picture Kohinoor executed the film distribution agreement in favour of the appellant thereby assigning distribution, exhibition and exploitation rights of the said picture including Television rights mentioned in the agreement for the territories i.e. complete world excluding India, Burma, Pakistan, Ceylon, Aden, continents of Africa, complete S.U. Sunny, Middle East, Complete Far East, West Indies, Fiji, UK and Greece. 27. Apart from the aforesaid as per clause (1) of the agreement the producer also assigned the sole and exclusive and perpetual copyrights of exploitation, distribution and exhibition commercial as well as non-commercial in respect of the said picture Kohinoor in 35 mm as well as in reduced size or sizes including the right of television and all other rights attached to such distribution, exploitation and exhibition of the said picture for a consideration of Rs.10,000/-. The price include price of copyright and prints and publicity material. As per clause (5) further rights are granted in favour of the appellant by virtue of the said agreement and the same are reproduced herein-below:- “The Assignor hereby agree and undertake that the said picture shall not be exhibited or distributed commercially, non-commercially or in any other manner in the contracted territory either by themselves, their servants or agents or otherwise and hereby agree to indemnify and keep indemnified the Assignees against such unauthorized distribution or exploitation of the said picture in the contracted territory. Any breach in this connection will make the Assignors liable to damages which in no case shall be less than the amount of the said price.” FAO (OS) No.81/2002 Page 13 of 26 28. Learned Senior counsel for the plaintiff has argued that the said two agreements are false, fabricated, manipulated and arranged documents. He also argued that the defendant was fully aware about the assignment in favour of the plaintiff before the official assignee and Bombay High Court. Learned counsel has further argued that the appellant did not take any action against M/s. A.G. Exports who was exploiting the picture at earlier point of time but now the defendant is trying to interfere in the same when the plaintiff has purchased the rights and cooked up the pleas in order to blackmail the plaintiff and to extract money for which the defendant has no right. 29. We have perused the pleadings and find that the plaint is silent about the alleged averment of the false and fabrication of the said agreements. The said plea was taken by the plaintiff first time in the replication. Rather in Para 10 of the plaint the plaintiff has stated the different facts,the relevant portion of Para 10 of the plaint is reproduced below:- “10. That even if it is presumed that the defendant has any right then it is only theatrical distribution rights for certain overseas countries. When the said agreement dated 13th October, 1961 was executed there was no satellite rights or video rights came in vogue in 1990s and thus the defendant cannot allege that they are holding the said video rights and satellite rights and in fact the defendant has no right to interfere in the negative rights, sole and exclusive commercial and non-commercial Video rights in all formats, including CVD, DVD, satellite and television rights (both terrestrial and extra terrestrial), cable TV rights, Pay TV rights and the available theatrical rights for All India and overseas territories i.e. the entire wourld including India, but despite that the defendant has been interfering in the said rights of the plaintiff by illegally writing letters to Zee TV, FAO (OS) No.81/2002 Page 14 of 26 Sony TV and other satellite channels as a result of which the plaintiff has not been able to enjoy such rights…..” 30. As regard the second submission of the learned counsel of the plaintiff that the defendant did not raise any objection when the picture was being exploited by M/s. A.G. Exports, the defendant has made the submissions in the written statement that the defendant was not aware about the same otherwise action would have been taken against the said firm. 31. Next submission of the plaintiff relates to the knowledge about the assignment of the film Kohinoor through official assignee and later on said assignment being confirmed by the Bombay High Court, the justification given by the defendant is that the defendant had written various letters to official assignee about the earlier rights in its favour and further the assignment in favour of the plaintiff was subject to