IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO. 3651 OF 2007 NOTICE OF MOTION NO. 3651 OF 2007 NOTICE OF MOTION NO. 3651 OF 2007 IN IN IN SUIT NO. 2124 OF 2007 SUIT NO. 2124 OF 2007 SUIT NO. 2124 OF 2007 Music Choice India Private Limited ...Plaintiff vs. Phonographic Performance Limited ...Defendant Mr.Janak Dwarkadas with Mr.G. Gokhale, Mr.V. Desai, Rahul Kadam and Ms.S. Uraizee i/b. Mr.H.W. Kane for the Plaintiff. Dr.V.V. Tulzapurkar i/b. M/s.Bilawala & Co. for the Defendant. CORAM : V.M. KANADE, J. CORAM : V.M. KANADE, J. CORAM : V.M. KANADE, J. DATED : SEPTEMBER 4, 2008 DATED : SEPTEMBER 4, 2008 DATED : SEPTEMBER 4, 2008 P.C. :- P.C. :- P.C. :- 1. Heard the learned Counsel for the plaintiff and the learned Counsel for the defendant. 2. It is the case of the plaintiff that it proposes to launch a 24 hour music channel (hereinafter referred as "a channel in India"), playing only music embodied in sound recordings accompanied by static graphic displayed on the screen. The plaintiff proposes to broadcast the music via local operators of Satellite, Cable and Internet platforms (hereinafter referred to as "platform - 2 - service providers"). The platform service providers will pay to the plaintiff a fixed fee each month based on the number of subscribers. The subscribers will pay a monthly subscription fee to the platform service providers. The channels on which the said music would be broadcasted will not display or broadcast any advertisement. The plaintiff intends to launch its product/service vide a DTH Satellite platform with Tata Sky. 3. The plaintiff is expected to get the licence from the owner of Copyright in the sound recording before broadcasting the music on the channel. The defendant is the assignee of such rights of several original owners, the record publishing company. The defendant informed the plaintiff that they would charge royalty based on certain percentage of the end user price and were willing to issue licence to the plaintiff and the royalty fee calculated at 30% of the end user price for the first year. The plaintiff felt that the price charged by the defendant is unreasonable. Under the Copyright Act, when a person is unable to obtain a - 3 - compulsory licence to have broadcast sound recording, he can make an application under Section 31(1)(b) of the Copyright Act which is a direction to grant the plaintiff a compulsory licence. It is the case of the plaintiff that though such an application has been made by the plaintiff under Section 31(1)(b) of the Copyright Act, the statutory board has not yet decided the said application. The plaintiff has, therefore, filed the suit. 4. It is submitted by Mr.Dwarkadas, learned Counsel for the plaintiff that number of suits were filed by broadcasters in respect of such rights for compulsory licence where no decision was taken by the statutory board. He invited my attention to an order passed by the learned Single Judge of this Court when the learned Single Judge was pleased to direct that the plaintiff should pay to the defendant subject to further orders passed in a suit or by the Copyright board. A particular amount which the plaintiff was willing to pay with an undertaking that the plaintiff would pay the balance amount, if any, to the defendant upon an order - 4 - being passed by the statutory board. 5. The learned Counsel for the defendant, on the other hand, submitted that the suit is not maintainable since an application was filed by the plaintiff under Section 31(1)(b) and was pending before the statutory board. He submitted that the jurisdiction of this Court was, therefore, disputed and no interim order be passed in favour of the plaintiff. In view of the said submission, the following preliminary issue has been framed by this Court by order dated 4th August, 2008. "Whether this Court has jurisdiction to try and decide the suit pertaining to the fixation of royalty by the statutory board under section 31 of the Copyright Act?" The matter was thereafter kept today for consideration of ad-interim relief. 6. The learned Senior Counsel, Shri Tulzapurkar, - 5 - for the defendant submitted that they have received an offer from the third party and he had agreed to pay at the rate of 35%. The petitioner has annexed the copy of the letter and the correspondence between the said two companies. 7. The learned Counsel appearing on behalf of the plaintiff, on the other hand, submitted that the said offer is bogus and fictitious. He invited my attention to the various discrepancies and on that, it is submitted that the document is got up document. 8. In that preliminary issue which has been framed, the application filed by the plaintiff before the statutory board is pending. The plaintiff is willing to give an undertaking that whatever is the difference between the price offered by the plaintiff and the price fixed by the statutory board, would be paid by him and the said payment would be secured by giving a Bank Guarantee in respect of the difference between the price offered by the plaintiff and the price demanded by the defendant. In this case, the plaintiff has offered 7% - 6 - and the defendants have demanded 30%. 9. The learned Counsel for the defendant, therefore, submitted that he is willing to give Bank Guarantee for the balance 23% which would be renewed after every three months till the decision is taken by the board. 10. In my view, the said statement will have to be accepted since no prejudice would be caused to the defendant if the price fixed by the statutory board exceeds the price offered by the plaintiff, the said difference would be secured by the Bank Guarantee given by the defendant. It is an admitted position that the statutory board does not hold its meeting on a regular basis and the date of hearing of the application filed by the plaintiff under Section 31(1)(b) has been fixed. Under these circumstances, the aforesaid arrangement would meet the ends of justice. Accordingly, the following order is passed :- (a) The plaintiff shall pay to the defendant - 7 - subject to further orders to be passed in this suit or by the Copyright Board, an amount equal to 7% of the prorated gross revenue earned by the Plaintiff by broadcasting the works in the repertoire of the defendant. The said payment will be made on quarterly basis within 15 days from the end of each quarter, along with the report showing the number of subscribers and revenue earned by the plaintiff per subscriber. (b) Before the commencement of the broadcast, the plaintiff shall pay to the defendant an amount equal to 7% of the prorated projected gross revenue for the first quarter as an ad-hoc advance. The said advance will be adjusted at the end of the first quarter. Before the second and each subsequent quarter, the plaintiff shall pay an advance equal to previous quarter’s amount calculated on actual basis after such adjustment and the process will be followed every quarter. - 8 - (c) Before the commencement of broadcast, the plaintiff shall furnish Bank Guarantee to the defendant in the amount equivalent to 23% of prorated projected gross revenue for the first quarter, on an ad-hoc basis. Before beginning of the second quarter the plaintiff shall furnish Bank Guarantee to the defendant in the amount equal to 23% of prorated gross revenue earned by the plaintiff by broadcasting the works in the repertoire of the defendant during the first quarter. However, if the Bank Guarantee given in the beginning is for amount higher than 23% of actual prorated gross revenue then the excess amount of guarantee will be adjusted against Bank Guarantees for subsequent quarters. Similar Bank Guarantees will be given by the plaintiff to the defendant within 15 days from the end of each quarter for the amount equal to 23% of prorated gross revenue earned by the plaintiff by broadcasting the works in the repertoire of the defendant during the previous quarter. All such Bank Guarantees will be - 9 - continued and will be kept in force until the further orders are passed in this suit or by the Copyright Board. 10. S.O. to 7th October, 2008 for hearing of preliminary issue framed. 11. At this stage, learned Counsel for the defendant seeks four weeks time to challenge the said order. Order, accordingly, is stayed for a period of four weeks from today. (V.M. KANADE, J.) (V.M. KANADE, J.) (V.M. KANADE, J.)