Super Cassettes Industries Ltd. vs People Infocom Pvt. Ltd. and Another

Swatanter Kumar, J.—By this order, I would dispose of is 7119/2005 filed in the present suit under Order 39 Rules 1 and 2 read with

Section 151 of the Code of the Civil Procedure.

The plaintiff is a company incorporated under the provisions of the Companies Act, 1956. Defendant No. 2 is the producer of the picture titled

as ''Aashiq Banaya Aaapne'' and as such was the owner of the copyright in various works including literary, dramatic and musical works of the

picture. Defendant No. 2 entered into an assignment deed dated 24th June, 2005 with the plaintiff and agreed to assign the literary, dramatic and

musical works of the picture including sound recording to the plaintiff. According to the plaintiff as per the terms of the agreement and particularly

in terms of clause 2(a), defendant No. 2 had completely assigned to the plaintiff the right to reproduce the work in any material form including

storing of the same by any electronic means. The rights assigned to the plaintiff also included creating and publishing wall-paper, themes, ringtones,

embedded tones, ringback tones, videos, games, animations, applications or any type of content from any part of the movie including dialogues of

the movie. Subsequently on 18th August, 2005, defendant No. 2 entered into an agreement with defendant No. 1 for transfer of telecom rights in

that movie. As defendant No. 2 was under some bonafide mistake about the exact nature of the rights assigned in the earlier deed of assignment to

the plaintiff and the rights sought to be assigned under the second agreement were similar to the rights already assigned to the plaintiff under the first

agreement, defendant No. 2 vide letter dated 31st August, 2005 wrote to defendant No. 1 informing that the agreement was ineffective and also

returned the amount of Rs. One lac paid by defendant No. 1 to defendant No. 2 and the agreement between the defendants came to an end.

However, defendant No. 1 continued with the activities under the agreement and according to the plaintiff, it amounted to infringement of the

copyright which has duly been assigned to the plaintiff. The warnings issued by the plaintiff to defendant No. 1 were ignored by the said defendant

and it continued to infringe the copyright of the plaintiff. On 8th September, 2005 when the defendant did not stop its infringing activities and in fact

the plaintiff discovered that defendant No. 1 was using its copyrighted material on its website, then the present suit was filed invoking the

jurisdiction of the court in terms of Section 62(2) of the Copyright Act, 1957. Along with the suit the plaintiff filed an application praying for grant

of ad interim ex parte injunction against the defendants for restraining them and their directors etc. from producing, reproducing or making available

to the public by any means whatsoever the copyrighted material of the plaintiff under the deed of assignment. Ad interim ex parte injunction was

granted to the plaintiff vide order dated 9th September, 2005. The order reads as under:

...I have heard the learned Counsel for the plaintiff. After perusing the plaint, documents and the fact that there is an assignment deed in favor of the

plaintiff in relation to all copy rights with regard to the film, I am of the considered view that the plaintiff has been able to make out a prima facie

case for grant of ad interim ex parte injunction. Consequently, the defendants its directors, officers, servants, agents and representatives, group

companies, subsidiaries, and all others acting for or on its behalf are hereby restrained from producing, reproducing or making available to the

public by any means whatsoever the copyrighted material of the plaintiff under the Deed. Compliance of provisions of Order 39 Rule 3 CPC be

made within three days.

The defendants contested the suit as well as the application for injunction. In fact, it was argued on behalf of defendant No. 1 that the

continuation of the injunction was causing serious prejudice and irreparable loss to the defendant whose business has practically come to an end

and the injunction order granted by the court should be vacated. Though no written statement has been filed on behalf of the defendants till today,

reply to the injunction application was filed on behalf of defendant No. 1. It was stated that the present suit was nothing but a counter blast and a

vindictive reaction to the proceedings (Suit No. 1797/2005 ) initiated by one People Interactive India Pvt. Ltd., predecessor of the defendant in

the Bombay High Court. The kind of defense raised by this defendant in that case is that it had a prior agreement over the copyrights of the films

and the agreement was of the similar kind as in the present case and the High Court had granted an injunction on the prayer of the plaintiff therein

and even on appeal, the order was not disturbed. It is further stated that the same modus operandi had been adopted by the plaintiff herein in the

Bombay High Court with the producers of the four films. The defendant states that in the proceedings before the Bombay High Court, the plaintiff

further pressurised the producers and, in fact, wrote a letter dated 25th June, 2005 requiring defendant No. 2 to terminate the agreement dated 8th

March, 2005. It is stated by the defendant that the plaintiff has preferred the present proceedings with a view to prove its dominance and create

monopoly in the industry. It is stated that the telecom rights of the picture ''Aashiq Banaya Aapne'' are excluded from the agreement of defendant

No. 2 with the plaintiff and thus they could rightly be given to defendant No. 1, which have been given. The producer confirmed to the employees

of defendant No. 1 that with the exception of rights relating to the music of the film, it had not granted telecom rights to any other person and based

on this representation, the parties had entered into an agreement, the termination of which, as alleged by defendant No. 2, was illegal. Under clause

21 of the said agreement, the benefits have to continue to defendant No. 1 for a period of 5 years and can be terminated only if the party commits

material breach and the defaulter does not remedy such breach within 30 days after receipt of notice. Defendant No. 1 claims to have incurred an

expenditure of Rs. 10 lakhs in furtherance to the agreement and had also made an advance payment of Rs. 1 lakh by cheque dated 18th August,

2005 to the producer for exploiting the telecom rights. In these circumstances, it is stated that the injunction application, filed by the plaintiff,

deserves to be dismissed.

The main emphasis of the arguments raised on behalf of defendant No. 1 is that the agreement in favor of the plaintiff by defendant No. 2 is an

after-thought and result of a pressure asserted by the plaintiff upon defendant No. 2. The said agreement, in fact, is stated to be antedated and

mala Fidel executed to frustrate the rights of the defendant. It is also contended that, like before the Bombay High Court, the plaintiff has even

made misrepresentations before this Court.

There is no dispute to the fact that defendant No. 2 had produced the film ''Aashiq Banaya Aapne'' and all the copyrights, including the telecom

rights, were vested with defendant No. 2. It is evident from the records produced that the Assignment Deed dated 24th June, 2005 was executed

between the Super Cassettes Industries Ltd. and the producer of the film. In terms of this Assignment Deed, the producers, being the author and

absolute owners of the copyright, which, at that time, was stated to be free from all encumbrances, had decided to assign certain rights to the

Super Cassettes Industries Ltd. In the recitals of the said Assignment Deed, it was stated that the producers were desirous of and had agreed to

transfer and assign the rights mentioned thereafter in the said work exclusively to the company for the entire world and for full term of copyrights,

subject to their terms and conditions. This recital of the Assignment Deed shows that rights assigned under the agreement were of a wide nature. It

is on 18th August, 2005 that according to the plaintiff, defendant No. 2 had entered into an agreement with defendant No. 1 for transfer of the

telecom rights in the movie. Clauses 1, 2 and 3 of the said agreement reads as under:

(1) The Producers hereby grant Mauj Exclusive worldwide Telecom Rights for the Film. Telecom Rights for the purpose herein means-all rights in

connection with and in relation to landline, satellite telephony, wireless telecom instruments and cellular phone handsets, all applications and

software programs for such instruments/handsets, including but not limited to true tone, right back ring tone, themes, screen savers, wall papers,

color logos, games, SMS, MMS, mobile video clips, video and IVRs that are presently available and any other right that may become available in

future. Telecom Rights shall also include rights connected with telecom original equipment manufacturer, and telecom service operator.

(2) Mauj will have Exclusive Worldwide Telecom Rights to promote and distribute the Film by enabling the download of the content through the

following distribution channels including but not limited to those mentioned below (hereinafter referred as Content Dealers).

(a) Mobile service providers such as Hutch, Idea, BSNL, MTNL, Airtel and Reliance.

(b) Handsets manufacturers such as Nokia and Motorola.

(c) Internet Portals and Websites such as Shaadi.com, Mauj.com Fropper.com

(d) Content and application providers such as Indiatimes , Rediff and On mobile .

(3) Mauj shall exclusively develop and market Content, in any of the formats listed below but no limited to or any derivatives thereof;

(a) Wallpapers

(b) Themes

(c) Operator logos

(d) Real tones

(e) True tones

(f) Games

(g) Colour logos

(h) Animated wallpapers

(i) Caller back tones

(j) Video (60 seconds)

(k) Voice Promos

(l) SMS contest

(m) Mobile applications/programs

As the rights assigned under the agreement were similar, defendant No. 2 Realizing its mistake vide letter dated 31st August, 2005 informed

defendant No. 1 that the agreement was ineffective and also returned the amount of Rs. 1 lakh which was given at the time of signing of the

agreement. Despite such cancellation, defendant No. 1 continued to infringe the copyrights which were assigned to the plaintiff completely and

unequivocally. As such, the plaintiff issued warnings to defendant No. 1 which were of no consequence, thus compelling the plaintiff to file the

present suit for injunction.

The basic argument raised is that the agreement dated 24.6.2005 executed between defendant No. 2 and plaintiff is a sham transaction and is

intended to adversely affect the right of defendant No. 1. This stand of defendant No. 1 is not corroborated by defendant No. 2 who is practically

supporting the case of the plaintiff. It is stated that a sum of Rs. 11 lacs was received at the time of signing of the agreement dated 24.6.2005 and

the plaintiff has exploited the rights under the said agreement. The agreement dated 24.6.2005 was executed between the plaintiff and defendant

No. 2 wherein defendant No. 2, as producer, had claimed to be the owner of copyrights free from all encumbrances of the various works including

literary, dramatic, musical and artistic work, sound recordings/records and cinematograph film etc. in the film ''Aashiq Banaya Aapne'' and had

agreed to transfer and assign the rights mentioned in the said agreement exclusively to the plaintiff. Under clause 2 of the said agreement, it was

specifically stated by the parties that in consideration of the sum hereinafter paid/or agreed to be paid the producers as beneficial owners hereby

assign copyright wholly and without any limitation in favor of the company with exclusive rights to do or authorise the doing of any of the acts in

respect of the works or substantial part thereof. Amongst others, in respect of the rights of the plaintiff to do and exploit the assignment rights, the

following clauses were specifically added:

(a) In the case of a literary, dramatic or musical work. - To reproduce the work in any material form including the storing of it in any medium by

electronic means; to issue copies of the work to the public; to perform the work in public, or communicate it to the public; to make any

cinematograph film or sound recording in respect of the work; to make or authorise making of Ringtones in Monophonic and/or polyphonic or in

any other format known now or may be invented later, to make any translation and any adaptation of the work and to do in relation to a translation

or any adaptation of the work, any of the acts specified in relation to the work as stated above and the right to make or authorise the making of

any version(s) including the right to perform, broadcast, communicate and/or transmit the above work.

(b) In the case of an artistic work. To reproduce the work in any material form including depiction in three dimensions of a two dimensional work

or in two dimensions of a three dimensional work; to communicate the work and to issue copies of the work to the public; to include the work in

any cinematograph film; to make any adaptation of the work and to do in relation to any adaptation of the work any of the acts specified in relation

to the works as stated above together with any other work.

(c) In case of a sound recording. - To make any other sound recordings embodying it either alone or together with any other work; to sell or give

on hire, or offer for sale or hire, any copy of the sound recording/record regardless of whether such copy has been sold or given on hire on earlier

occasions; to communicate the sound recording to the public, the right to make or authorise the making of any Version of the said work including

that of the musical, literary and dramatic works embodied in the Sound Recordings and the right to perform, broadcast, communicate and/or

transmit them including through internet broad brand or through any known or future devices.

In addition to above the Producers also assign the exclusive copyright in respect of all the Audio Visual songs of the said film in favor of Company

and exclusively authorise the Company to make Audio Visual songs, part scene/s, clippings and dialogues of the said film of short duration etc. in

any Video format (known now or invented any any later time) and to insert, exhibit, broadcast, communicate and/or perform them to public, to

distribute, sell or give on hire or offer for sale or hire any copy of the Video comprising above in any manner whatsoever. The Producers agree to

provide necessary software at their own expense for the above purposes to the Company failing which the Company shall have the right to obtain

the same from any available source. The aforesaid assignment is for the entire world and the said rights will extend in favor of the company all over

the world for a perpetual period or for the entire term of copyright, whichever is more.

The Producers further agree and ensures the Company that the Producers will neither assign the copyright in respect of any Audio Visual song(s)

of the said film in any Video format separately in favor of any person nor will authorise any person or party to make, publish, broadcast,

communicate and/or perform in public and Audio Visual songs etc. of the said film either alone or in combination in any other Video format. The

Producers further confirm that the video copyright assignee or licensee of the above film shall be authorised to release the said film (with Audio

Visual songs) in Video format in full length only.

It is also agreed by the Producers that provisions of Section 19(4) of the Copyright Act shall have no application/effect on the terms of this deed.

Not withstanding anything mentioned elsewhere in this agreement, the Producer also assigns, specifically for mobile, telephony and gaming devices,

the right to exploit any part of the said movie or its derivates with any entity it deems fit. The rights include creating and publishing wallpapers,

themes, ringtones, embedded tones, ringback tones, videos, games, animations, applications or any type of content from any part of the movie

including dialogues of the movie.

Vide agreement dated 18th August, 2005, an agreement was entered into between defendant Nos. 1 and 2 in relation to telecom rights in the

mobile space and it was stated that the producers and defendant no. 1 have agreed to enter into an agreement for the purposes of promoting the

film whose rights are owned by the producers by developing the content which will include but is not limited to graphics such as wall papers,

screen savers, themes, colour logos etc. and exclusive rights in relation to the items specified in clause 3 of the said agreement were vested and

given to defendant No. 1. According to the defendant No. 2, vide its letter 31st August, 2005, it had revoked the agreement and had returned the

money received by it at the time of signing of the agreement. There is no Explanation on record as to what steps defendant No. 1 has taken in

regard to the transaction in question after the agreement was cancelled by defendant No. 2 in terms of its afore-stated letter. Once the very

authority that vested rights in defendant No. 1 to exploit rights even in relation to telecom rights has been withdrawn and cancelled and the

complete assignment of all rights is vested in the plaintiff in terms of agreement dated 24.6.2005, there can hardly be any doubt as to how

defendant No. 1 can continue with this activity. There is nothing on record to show that the agreement dated 24.6.2005 is a fabricated document

or is a sham transaction. At this stage, the court is concerned with the prima facie case and is not expected to record findings which would be

conclusive.

During the course of hearing, the counsel appearing for the plaintiff had filed an additional affidavit showing exploitation of the rights under the

agreement dated 24.6.2005. A detailed statement giving channel-wise break up of the film ''Aashiq Banaya Aapne'' was filed which included

copies of E-mails, copies of printouts from the websites of India times and Rediff respectively, copy of system generated report dated 3rd August,

2005 and also various other documents showing that the plaintiff had exploited its assigned rights in relation to the film in question for a period prior

to 18.8.2005, the date of agreement between the defendants.

Another argument which was addressed on behalf of the defendant No. 1 was that the agreement dated 24th June, 2005 is an audio

assignment deed and thus complete rights had not been assigned to the plaintiff. This again was not factually correct as on that very day, another

agreement was also signed between the plaintiff and defendant No. 2 in relation to cinematograph and video rights to the plaintiff. It has also come

on record that the payment of Rs. 11 lacs was given by the plaintiff to defendant No. 2 and which had duly been received though at a subsequent

stage. The reliance placed upon the order of the Bombay High Court in the case of People Interactive India Pvt. Ltd. (''Mauj'') v. Varma

Corporation Ltd. and Ors. (Suit No. 1797/2005) is hardly of any help to the defendant No. 1 in the present case. In that case, the court, on the

material before it, had recorded a finding that the agreement was ante-dated. In the present case, there is no indication much less any reliable

evidence to even suggest that the agreement dated 24th June, 2005 has been ante-dated or is a sham transaction. The agreements executed

between the plaintiff and defendant No. 2 show that complete rights had been assigned to the plaintiff and thus the songs which obviously are an

integral part of the film itself would also vest in the plaintiff unless there was a specific exclusion clause or defendant No. 2 had reserved its rights to

assign the songs or the telecom rights. The agreement dated 24.6.2005 does not show any such exception. The termination of the agreement dated

18th August, 2005 vide letter dated 31st August, 2005 is a complete transaction between the parties to the agreement and as such rejecting the

plea of the plaintiff for injunction would impliedly have the effect of reviving the agreement between defendant No. 1 and defendant No. 2 which,

as stated, stands terminated. Prima facie, it is difficult for the court to hold that the agreement dated 24th June, 2005 is not a genuine agreement or

has been ante-dated, particularly when the reason for withdrawing rights from defendant No. 1 was the agreement dated 24th June, 2005 which

fact was mentioned in the letter dated 31st August, 2005, wherein the amount of Rs. 1 lac was also returned, and the receipt of this letter is not

disputed by defendant No. 1. The entire matter is in the realm of contract between the parties and once the agreement dated 18th August, 2005 is

rendered ineffective and inconsequential and there being no order of any court of competent jurisdiction even protecting the rights available to

defendant No. 1 under the said agreement, the rights of the plaintiff under the agreement dated 24.6.2005 cannot be put under restrictions or

limitations.

Reliance was also placed on an agreement dated 10.3.2005 executed between the parties wherein the earlier agreements entered into with

defendant No. 1 by the other party were terminated in terms of Clause 8.3 of that agreement by giving 30 days notice. This has been filed on

record to show that termination of the agreement dated 18.8.2005 by the letter dated 31st August, 2005 is a known concept in film trade and that

is the precise reason why defendant No. 1 has not challenged the said action of defendant No. 2 till date. The court is required to consider prima

facie case, balance of convenience and irreparable loss to other parties to the suit while deciding an application for grant of an injunction unlike a

mandamus which is a strict legal remedy in law. Injunction is solely an equitable concept. The court has to consider the existence of a prima facie

case and as already discussed, the plaintiff has been able to establish a prima facie case entirely based on a written contract dated 24.6.2005

between the parties. The rights of the defendant No. 1 were derived from the agreement dated 18th August, 2005 which according to defendant

No. 2 has already been terminated. The plaintiff would suffer an irreparable loss if the injunction prayed for is not granted as it is difficult to

compute the exact loss which the plaintiff would suffer if defendant No. 1 is not restrained from infringing the rights of the plaintiff in terms of the

agreement dated 24.6.2005. Equitable considerations would tilt in favor of the plaintiff inasmuch as the plaintiff has paid a sum of Rs. 11 lacs to

defendant No. 2 and has placed at least prima facie evidence to show that the plaintiff has exploited the rights under the said agreement for all this

time. It would be further in the interest of justice that the rights and obligations of the parties are not interjected by assignment or further assignment

to the third parties and by continued acts on the part of defendant No. 1 which are in violation to the rights granted to the plaintiff in terms of the

agreement dated 24.6.2005.

In view of the above discussion, is No. 7119/2005 of the plaintiff is allowed. The interim protection granted to the plaintiff in terms of order

dated 9.9.2005 is confirmed during the pendency of the suit. Parties are left to bear their own costs.