R.V. MEDIA SOLUTIONS V. MR. M.S. SHRAVANAN PROPRIETOR

Pronounced on : 27.10.2021

FACTS

The case revolves around the Tamil movie titled ‘Imaikka Nodigal’. The facts of the case are that on 7.01.2017, M/s. Cameo Films (the second defendant in the case) signed a Royalty Minimum Guarantee Agreement with the proprietor, Mr. Sri Green Productions according to which the 2nd defendant granted the commercial and theatrical exhibition copyrights of the movie, for a perpetual period, for the regions of Tamil Nadu, Chittor and Pondicherry. Furthermore, the 2nd defendant also granted the dubbing rights and entire worldwide right of exploitation of the film. In turn, on 03.03.2017, the first defendant assigned the exploitation rights to distribute, exhibit and exploit the movie in the NSC (North and South Arcot and Chengaplet) region to the plaintiff for a consideration of Rs.4,25,00,000. The plaintiff paid Rs. 4,00,00,000 to the first defendant who promised to ready and censor the movie for release before 30.04.2017. The 1st defendant agreed to receive the remaining Rs. 25,00,000 on the eve of release of the movie.

However, on the eve of the movie release, the plaintiff filed for declaration and injunction because the second defendant failed to provide the film for release by the promised time. On 05.03.2018, plaintiff filed a complaint before the MSE council asking the first defendant to return the money advanced with interest. No settlement was reached. Furthermore, the second defendant (producer) had advertised that the film would be released worldwide in August, 2018. Since the plaintiff couldn’t have released the movie in the NSC region, hence in apprehension of losses from the worldwide release, he issued a cease and desist notice to the defendants on 7.08.2018 in order to stop them from releasing the film before delivering the prints to the plaintiff for the NSC region.

After receiving the notice, the second defendant replied through his counsel on 11.08.2018 and informed that the original agreement dated 07.01.2017 between both the defendants had been mutually canceled by the two as the first defendant (producer) failed to pay the agreed consideration of Rs. 16,50,00,000 as per the decided schedule. Since time was of essence to the contract, they entered into a cancelation agreement on 17.04.2017.

In the suit, the plaintiff contended that after assigning him the first defendant cannot cancel the agreement dated 07.01.2017 without the plaintiff’s permission. The alleged cancellation deed dated 17.04.2017 is a collusive document to defeat the plaintiff’s interest.

In his written statement, the 2nd defendant denies any liability to the plaintiff and contends that the agreement dated 07.01.2017 got cancelled due to the personal problems and financial crisis of the 1st defendant. As per the cancellation agreement dated 17.04.2017, the money advanced returned to the first defendant. The second defendant further claimed that the plaintiff’s allegation of copyright infringement is misconceived as the second defendant himself didn’t acquire the copyrights of the film (because the first defendant wasn’t authorized to enter into any such agreement due to non-fulfillment of the consideration). Furthermore, the producer claims that the deal between the plaintiff and distributor was simply a loan transaction and it won’t have any binding on him as the agreement didn’t happen with his consent. The second defendant further found it unbelievable that the plaintiff entered into the agreement of 03.03.2017 without enquiring about it from him. After the cancellation of the agreement dated 07.01.2017, the producer entered into minimum guarantee distribution agreements with third parties. The first defendant admits his liability to pay Rs. 3,40,00,000 to the plaintiff and is willing to settle. The 2nd defendant claims that since he wasn’t of privy to the contract between the 1st defendant and the plaintiff, the latter can’t claim copyright over his movie or seek lien over it.

ISSUES

  1. Whether the Agreement dated 03.03.2017 entered between the plaintiff and the first defendant is in regard to assignment of copyright of the feature film “Imaikka Nodigal” or only a financial agreement?
  2. Whether the Agreement entered between the first and the second defendant dated 07.01.2017 is valid and enforceable?
  3. Whether the cancellation Agreement dated 17.04.2017 entered between the defendants bristles with fraud or collusion?
  4. Whether the plaintiff is entitled for the declaration of the copyright as prayed for?
  5. Whether the plaintiff is entitled for the relief of permanent injunction as prayed?
  6. Whether the Agreement entered between the plaintiff and the first defendant bind the second defendant?
  7. Whether the plaintiff is entitled for the alternate relief of return of money with interest?
  8. To what other relief the plaintiff is entitled?

REASONING

Issue 1

After analyzing the document dated 03.03.2017, the court contended that the agreement was not a financial one. The court noticed the absence of any clause elaborating upon the repayment of money, either with or without interest, which is an essential condition for any financial agreement. The court held that the agreement was related to the right of distribution and exploitation of the movie ‘Immaika Nodigal’. The reciprocation for the consideration of Rs. 4,25,00,000 was the theatrical exploitation right within the ‘NSC’ area, beside the 10% of distribution commission which, as per the agreement, the 1st defendant had agreed to pay the plaintiff for his services.

In the complaint, it’s stated that as per the agreement dated 07.01.2017, the copyrights granted by the 2nd defendant in favor of the first defendant were perpetual in nature, hence, on 03.03.2017, the 1st defendant was authorized to assign the copyrights in favor of the plaintiff. Therefore, cancellation of the agreement dated 07.01.2017 will not affect the rights granted in favor of the plaintiff. On the basis of this argument, plaintiff’s counsel stated that the agreement dated 07.01.2017 doesn’t make the assignment of copyright subject to payment of consideration of Rs. 16,50,00,000 by the 1st defendant to the 2nd. Therefore, the alleged cancellation of the assignment of copyright is a collusive act between the 1st and the 2nd defendants. The court concluded that in order to answer the 1st issue, it is essential to determine whether, on 03.03.2017, the 1st defendant had any existing right to assign, partially or wholly, the copyright for the production of the movie ‘Immaika Nodigal’.

After analyzing the agreement dated 07.01.2017 the court noticed that the first defendant wasn’t authorized to hire any sub-distributor or assign the copyrights on outright lease basis or on fixed hire basis without the prior written consent of the producer.

The court observed that when the plaintiff entered into an agreement with the 1st defendant, prior consent of the producer wasn’t obtained. There was a further lack of evidence to show that the producer had any knowledge of the transactions that took place between the plaintiff and the 1st defendant. Given the lack of any written consent, the agreement dated 03.03.2017 was held to be a defective agreement. Hence, the agreement dated 03.03.2017 didn’t convey absolute assignment of copyright to the plaintiff.

Furthermore, the agreement also stated that both the parties have agreed on the essentiality of time for the purpose of the contract, and in case of failure or delay in payment by the 1st defendant, the agreement will be terminated and the producer would refund the advance amount received from the distributor, without any interest or compensation, after the film’s general release. The court observed that the plaintiff’s claim of the cancellation deed being a collusive agreement between both the defendants didn’t carry any substance since the parties had decided to cancel the agreement by mutual consent.

Issues 2 & 3

The plaintiff’s counsel contended that the deed of cancellation was a collusive agreement as the defendants haven’t produced a proof for the refund of the advance money. Furthermore, it was contended by the plaintiff that under the deed of cancellation, the first defendant had declared that, he has not parted with the rights of the cancelled agreement or made any lien, charge or raised any loans, from anyone and anything made known, it will cleared by him immediately. Given the agreement of 03.03.2017, the declaration is a false one and in suppression of the stated agreement.

In response to the plaintiff’s arguments, the defendants’ counsel submitted that in fact the money advanced by the 1st defendant to the 2nd defendant under their agreement of 07.01.2017 was s repaid not directly but by undertaking to discharge the loans of the first defendant. Hence, the plaintiff’s contentions over the money advance are baseless. Furthermore, the 1st defendant’s counsel claimed that, after deducting Rs. 60,000, the plaintiff paid Rs. 3,40,00,000 to the first defendant as financial assistance only, which the 1st defendant is ready to repay. Therefore, the 1st defendant didn’t suppress anything and the copyright dispute suit framed by the plaintiff was ill-conceived. The 2nd defendant’s counsel further claimed that any agreement that took place between the 1st defendant and the plaintiff isn’t established in law since t happened without the producer’s consent. Furthermore, clearing any charge or finance borrowed against the film was the 1st defendant’s duty and the second defendant cannot be held responsible for any transaction to which he is not privy.

As per the above arguments, the court held the cancellation deed to be legitimate, the financial transactions that took place between both the defendants were valid and that they didn’t indicate any collusive conduct. It was further held that any suppression or misrepresentation to be attributed, it is towards the first defendant alone. Therefore, issues 2 and 3 were held against the plaintiff.

Issue 4 & 5

The court observed that the plaintiff’s action of approaching the MSE facilitation Council for refund of the money advanced, along with interest, is a clear indication that the plaintiff understood that, after a delay in release, seeking a refund of the money advanced was his sole remedy, for which only the 1st defendant was liable. The 1st defendant’s argument, that the agreement dated 03.03.2017 wasn’t for the creation of any assignment of copyright, was found by the court to be untrue, as the defendant’s argument was contrary to the written terms of the agreement. However, since the agreement was defective in nature (for want of prior consent from the producer), the plaintiff was left with no cause of action for seeking declaratory relief regarding the copyright or injunction. Only the alternate relief of recovery of money alone survives. Accordingly, the issues 4 and 5 were answered in negative.

Issue 6 & 7

The court observed that for want of privity of contract, the 2nd defendant cannot be held responsible for the conduct of the 1st defendant. Furthermore, the agreement dated 03.03.2017 couldn’t bind the 2nd defendant as it took place without his knowledge or consent. The 1st admits that, he received Rs.3,40,00,000 on 03.03.2017 and denied the receipt of Rs.4,00,00,000 as claimed by the plaintiff. The plaintiff further claimed 36% interest from the date of plaint, till realization citing trade practice. The court observed that there’s a lack of evidence contrary to the admission of the first defendant and that even if the alleged trade practice was true, it was against the public policy and legislation (Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003). Therefore, the court held that the plaintiff was entitled for the alternate relief of refund of Rs. 3,40,00,000 against the 1st defendant and was further entitled for 12 % interest on the stated amount of Rs.3,40,00,000 from the date of plaint (24.08.2018) till the date of realization.

JUDGEMENT

The court decreed the Suit against the 1st defendant for recovery of Rs.3,40,00,000/- with 12% from the date of plaint (24.08.2018) till the date of realization. The suit as against the 2nd defendant was dismissed by the court.

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Submitted by:

Shreeda Shukla

Intern CIPRA.

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