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Section 17 in the Copyright Act, 1957
Section 2(d) in the Copyright Act, 1957
Section 19 in the Copyright Act, 1957
Section 16 in the Copyright Act, 1957
Section 62 in the Copyright Act, 1957

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Madras High Court
Sree Gokulam Chit And Finance ... vs M/S.Johny Sagariga Cinema Square on 21 December, 2010
       

  

  

 
 
 IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 21-12-2010
CORAM:
THE HONOURABLE MR. JUSTICE V. RAMASUBRAMANIAN
O.A.No.1225 of 2010 to 1227 of 2010
 in C.S.No.956 of 2010

Sree Gokulam Chit and Finance Company (P) Ltd.,
Represented by its Director, Operations,
Mr.V.C.Praveen having its Office
at No.66, Arcot Road, Kodambakkam,
Chennai-600 024.					.. Plaintiff 

vs.

1.

M/s.Johny Sagariga Cinema Square, Proprietary concern, Represented by Mr.Johny Thomas, Having its Office at Rajaji Road, Ernakulam, Kerala.

2.K.I.Siddique

3.Mr.Ramesh Babu, Ekaveera Creations, Mathura Apartments, III Floor, 1/7, Masilamani Street, T.Nagar, Chennai-600 017.

(Amended as per order of Court in A.No.6791/2010 dated 1.12.2010)

4.Prasad Film Laboratory, Represented by its Manager, No.58, Arunachalam Road, Saligramam, Chennai-600 093.

5.Gemini Industries and Imaging Private Ltd., Represented by its General Manager, Mr.Ramkumar, No.28, Bangaru Colony, West K.K.Nagar, Chennai-600 078.

6.Sakthi Chidambaram, Cinema Paradise, No.108, Duraiarasan Street, First Floor, Saligramam, Chennai-600 093.

(impleaded as per common order of Court in A.Nos.6792 to 6795 of 2010 dated 1.12.2010) .. Defendants For Plaintiff : Mr.T.V.Ramanujun, Senior Counsel for Mr.T.V.Krishnamachari.

For First Defendant : Ms.P.Meghana Nair For Second Defendant : Mr.P.S.Raman, Senior Counsel for Mr.S.Elambharathi For Third Defendant : Mr.V.Raghavachari For Fourth Defendant : Mr.R.Sargunaraj COMMON ORDER Pending suit for a declaration that the plaintiff is the absolute owner of the copyrights in the Malayalam Cinematographic Film "Body Guard", under an Agreement dated 22.1.2010 and for consequential reliefs of permanent injunction as well as for recovery of a sum of Rs.1,88,58,187/-, the plaintiff has come up with 3 applications, in O.A. Nos.1225, 1226 and 1227 of 2010, praying inter alia for (i) an interim injunction restraining the defendants 2 and 3 from in any way dealing with the negative and positive prints of the remake Tamil version of the aforesaid Malayalam feature film titled "Kavalan" from the fourth defendant (ii) an interim injunction restraining the fourth defendant from in any way parting with the negative and positive prints of the aforesaid film to defendants 2 and 3 and (iii) an interim injunction restraining the defendants 2 and 3 from in any way releasing or causing to release for exhibition, the Tamil film "Kavalan".

2. I have heard Mr.T.V.Ramanujun, learned Senior Counsel for the plaintiff, Ms.P.Meghana Nair, learned counsel for the first defendant, Mr.P.S.Raman, learned Senior Counsel for the second defendant, Mr.V.Raghavachari, learned counsel for the third defendant and Mr.R.Sargunaraj, learned counsel for the fourth defendant.

3. In brief, the plaint proceeds on the following lines:-

(a) The first defendant is the Producer and the second defendant is the Director of the Malayalam feature film titled "Body Guard". As a Producer, the first defendant is the absolute owner of the copyrights in the story, script, sound track and music. The first defendant is also the owner of the literary, dramatical and musical works of the said film.

(b) The Malayalam film which was due to be released on 23.1.2010 was stuck due to a financial crisis and hence the first defendant approached the plaintiff for advancing a sum of Rs.4,20,33,700/-, with an offer to assign the copyrights in the film. The plaintiff agreed and an Agreement was entered into on 22.1.2010 and a sum of Rs.3,90,00,000/- was paid to the first defendant, to enable him to release the film in Malayalam, after settling all his financial commitments.

(c) The first defendant executed 4 promissory notes, all dated 22.1.2010, with the first 3 pro-notes for a sum of Rs.1 crore each and the 4th pro-note for a sum of Rs.90 lakhs. Under the Agreement, the copyrights including the rights of remaking, dubbing and world satellite rights as well as video rights were assigned by the first defendant in favour of the plaintiff.

(d) The first defendant also put the fifth defendant on notice of the assignment of those rights in favour of the plaintiff, by a letter dated 21.1.2010. The fifth defendant claimed that a sum of Rs.30 lakhs was due to them by the first defendant. Therefore, the plaintiff made payment of the said amount to the fifth defendant and the same was acknowledged by them by letter dated 2.4.2010.

(e) Towards repayment of the amount borrowed, the first defendant made payments. After adjusting those payments, a sum of Rs.1,88,58,157/- was due and payable as on the date of the plaint.

(f) However, the plaintiff came to know that disputes between the first and second defendant had arisen, leading to civil and criminal cases. It was understood that in those cases, the second defendant was claiming rights over the story, screen play and dialogue of the aforesaid film. It was also understood that the second defendant fabricated certain documents and created false evidence against the first defendant.

(g) While the first defendant filed a criminal complaint against the second defendant, the second defendant filed a civil suit on the file of the District Munsif Court, Ernakulam on the basis of documents ante dated, created and fabricated. The second defendant has claimed that he has assigned the rights to remake the film in Tamil, to the third defendant.

(h) The District Munsif Court, Ernakulam, had no jurisdiction to entertain the suit, since under Section 62 of the Copyright Act, 1957, it is only the District Court, which has jurisdiction.

(i) Since the defendants 2 and 3 started producing the remake of the film in Tamil with the title "Kavalan", in violation of the copyrights that the plaintiff has by virtue of the assignment made by the first defendant, the plaintiff had filed the above suit for the reliefs indicated in the first paragraph of this order.

4. The common affidavit filed in support of the applications for injunction, proceeds on the same lines as the plaint. Therefore, it is not necessary to repeat them.

5. The first defendant has filed a common counter affidavit to the applications for injunction. He has stated therein that he produced the Malayalam feature film titled "Body Guard" by engaging the services of the first defendant on a remuneration of Rs.40 lakhs; that the only Agreement entered into between the first and second defendants was a project report dated 4.12.2008, filed with the Kerala Film Producers' Association; that the production commenced on 12.12.2008 and was completed after more than 120 days with an exposure of more than 1 lakh feet of film, as against the Agreement to complete it in 45 days with an exposure of 50,000 feet of film; that due to the delay in the completion of the film and the negligence on the part of the second defendant, a huge financial burden fell upon the first defendant, in spite of which, the second defendant not only collected his entire remuneration of Rs.40 lakhs, but also collected an additional remuneration of Rs.10 lakhs; that therefore the first defendant was forced to borrow Rs.3,90,00,000/- from the plaintiff under an Agreement dated 22.1.2010; that in lieu of the loan, the first defendant assigned the remaking and dubbing rights of the film in all other Indian languages, to the plaintiff, as a security; that it is only after this that the first defendant was able to release the film on 23.1.2010, but the film did not achieve the desired success at the box office; that the second defendant thereafter agreed to help the first defendant and also issued 3 cheques for a total amount of Rs.50 lakhs, on 4.3.2010 after taking the signatures of the first defendant on blank signed non-judicial stamp papers and blank signed letter heads; that those cheques bounced and returned on 5.3.2010; that thereafter, the second defendant merely remitted Rs.1,50,000/- into the bank account of the first defendant on 13.3.2010, but did not return the blank signed non-judicial stamp papers and blank signed letter heads; that due to the failure of the Malayalam film at the box office, the first defendant was not able to repay the loan to the plaintiff; that when the first defendant started looking for parties interested in buying the remaining rights of the film, he came to know from the Tamil Film Industry that the Malayalam film was being remade into Tamil, on the basis of the sale of the rights by the second defendant to the third defendant; that when the first defendant confronted the second defendant, he produced a copy of an alleged letter dated 12.3.2010 written by the first defendant, giving the entire rights for the remake of the film to the second defendant; that the said letter is a forged and fabricated document; that therefore the first defendant filed a criminal complaint and the same was registered in Crime No.370 of 2010, in pursuance of a direction issued by the XI Metropolitan Magistrate, Saidapet; that the first defendant thereafter filed a suit for bare injunction in O.S.No.729 of 2010 on the file of the District Munsif Court, Ernakulam and obtained an interim order of injunction, on the basis of forged documents viz., an Agreement dated 23.6.2009 and the letter of undertaking dated 12.3.2010; that the order of the District Munsif Court, granting an injunction in favour of the second defendant is under challenge by the first defendant in CMA No.92 of 2010 on the file of the District Court, Ernakulam; that once the dues of the plaintiff are settled, the copyrights in the film, including the rights for its remake would revert to the first defendant; that since defendants 2, 3 and 6 are not possessed of sufficient means, the copyrights of the film that the first defendant holds will get defeated if the film is released; that the monetary value of the copyright that the first defendant has over the Tamil remake of the film is estimated at Rs.5 crores; and that therefore, the rights of the first defendant are to be safeguarded.

6. The story scripted in the counter affidavit filed by the second defendant proceeds on the following lines:-

(a) that he conceived and developed a theme for the Malayalam movie titled "Body Guard" and wrote the story, screen play and dialogue and also directed the film, on terms and conditions mutually agreed, orally;

(b) that the terms and conditions were later reduced into writing in the form of an Agreement dated 23.6.2009, under which the right of exploitation of the story, screen play and dialogues of the film in any other language was conferred on him;

(c) that by a letter dated 12.12.2009, the first defendant himself expressed a desire to remake the film in Tamil along with the second defendant, but the second defendant did not agree to the same;

(d) that even when the film was being made in Malayalam, there were reports in the press that it will be made in Tamil by the second defendant;

(e) that on 10.7.2009, the second defendant entered into an Agreement with the third defendant, indicating that the copyright vested in the second defendant and a sum of Rs.5 lakhs was received under the Agreement as advance;

(f) that in March 2010, the first defendant sought a loan of Rs.50 lakhs from the second defendant and hence the second defendant issued 3 cheques;

(g) that since the funds in the bank were insufficient, the second defendant paid Rs.25 lakhs by way of cash on 6.3.2010, a sum of Rs.9,50,000/- by way of cash cheque on 6.3.2010, Rs.14 lakhs by way of cash on 12.3.2010 and Rs.1,50,000/- by way of RTGS transfer;

(h) that the above payments were acknowledged by a letter dated 13.3.2010 by the first defendant;

(i) that by a letter of undertaking dated 12.3.2010, the first defendant confirmed that the second defendant had the right to sell and the right to remake the film into Tamil or any other language;

(j) that the shooting of the Tamil film commenced in April 2010;

(k) that at that time, the first defendant threatened to obstruct the production of the film and hence a suit in O.S.No.729 of 2010 was filed on the file of the District Munsif Court, Ernakulam;

(l) that by an order dated 30.10.2010, the Munsif Court made the injunction earlier granted, absolute and the Appellate Court did not grant stay of the order of injunction;

(m) that the plaintiff ought to have done due diligence before allegedly advancing money to the first defendant, especially when a news item was published in the leading Malayalam Daily "Malayala Manorama" on 20.1.2010 itself that the second defendant was to make the film in Tamil;

(n) that having recovered part of the money advanced, the plaintiff cannot lay his claim on copyright; and

(o) that the plaintiff could only be taken to be a financier who lent money for the production of the Malayalam film and hence cannot claim any right other than those in the Malayalam feature film.

7. The third defendant has filed a counter, mostly on the same lines as found in the counter affidavit of the second defendant. In addition, the third defendant has relied upon Section 18(2) of the Copyright Act. He has also claimed that he had so far spent more than Rs.30 crores for the production and Rs.2 crores towards publicity. The main thrust of the third defendant in his counter is that the Agreement between the plaintiff and the first defendant is only that of an Agreement relating to a loan transaction and not relating to assignment of copyrights.

8. The plaintiff has filed a set of about 9 documents. The first defendant has filed a set of 15 documents, the second defendant has filed a set of 12 documents and the third defendant has filed 3 documents.

9. As seen from the reliefs sought for in the suit, the plaintiff has not only sought for injunctive reliefs on the ground that he holds assignment of the copyrights, but has also sought for a money decree. The money decree sought for by the plaintiff is not towards damages for infringement of copyright. But it is for recovery of money advanced under an Agreement dated 22.1.2010. This is why a fundamental issue is raised as to whether the Agreement dated 22.1.2010 entered into between the plaintiff and the first defendant, could be construed as an Agreement of assignment of copyright or could be taken only as a mere document evidencing a loan transaction and creating a charge on the property rights of the first defendant.

10. The issue raised is of great significance, since the consequences that would flow out of my finding on the above issue one way, would be different from those flowing out of my finding the other way. If I find that the Agreement dated 22.1.2010 filed as plaint document No.1 is an Agreement of assignment of copyrights, the plaintiff would be entitled to protection in terms of the provisions of the Copyright Act, 1957. On the other hand, if I find that the said Agreement merely relates to a loan transaction, the question of infringement of copyright may not arise. Therefore, my first endeavour is to find out what that Agreement stands for.

11. The preamble to the said Agreement states that the first defendant is the Producer and the exclusive copyright holder of the film and that the first defendant approached the plaintiff for a loan of Rs.3.90 crores. Clause 2 of the Agreement states that the plaintiff agreed to finance a sum of Rs.3.90 crores to enable the first defendant to settle the account of the financiers and others in order to facilitate the release of the film and that the first defendant agreed to repay the amount with interest at 36% per annum on demand.

12. Clause 3 of the Agreement which forms the lifeline of the contract, reads as follows:-

"In order to facilitate the repayment and secure the interest of the Party of the SECOND PART, the Party of the FIRST PART agree that:

(i) The entire collection from the theatres, in Kerala, other part of India and Abroad will be paid to the Party of the SECOND PART directly, for which necessary instruction will be given by the Party of the FIRST PART to the concerned party.

(ii) The remake, dubbing rights of the aforesaid movie in all Indian languages is exclusively assigned to the Party of the SECOND PART.

(iii) Whole world satellite right, negative right and Video rights of the film exclusively assigned to the Party of the SECOND PART.

(iv) The assignor grants the sole, absolute, exclusive and irrevocable negative rights, and all other rights of exploitation of the here in above captioned film for the territory of Entire World for a perpetual period.

13. Clause 4 of the Agreement reads as follows:-

"The Party of the FIRST PART hereby declare and confirm that the above rights assigned in favour of the Party of the SECOND PART shall be Operative immediately on signing this agreement and it will continue till the entire amount is repaid by the Party of the FIRST PART."

14. From the extracted portions of Clause 3 and 4, it is clear (i) that the assignment of the copyrights, if it could be called an assignment, was made to facilitate the repayment and secure the interest of the plaintiff and (ii) that the rights so created would continue only till the repayment of the entire amount by the first defendant to the plaintiff. Therefore, prima facie, the transaction between the plaintiff and the first defendant appears only to be a loan agreement, backed by the security of the right to remake the film and a charge on the right of remake.

15. The above view is also strengthened by (i) the 4 promissory notes executed by the first defendant in favour of the plaintiff and filed as plaint document No.2 series (ii) the repayment of a part of the principal and interest, by the first defendant to the plaintiff, resulting in the claim of the plaintiff upon the first defendant getting reduced to Rs.1,88,58,157/- (iii) the statement of accounts sent by the plaintiff to the first defendant on 29.6.2010 filed as plaint document No.6, demanding a sum of Rs.1,69,76,272/- towards the balance due under the loan transaction and (iv) the statement of accounts as on 30.11.2010 filed as plaint document No.9, indicating the balance due.

16. The fact that the transaction between the plaintiff and the first defendant was only a loan transaction, backed up by a security, is further strengthened by the statement made by the first defendant in para-5 of his common counter affidavit. It reads as follows:-

"I humbly submit the first defendant burdened with such a heavy financial exposure was forced to borrow a sum of Rs.3,90,00,000/- from the plaintiff under an agreement dated 22.1.2010. In lieu of the loan, the first defendant had assigned the remaking and dubbing rights of the film "Body Guard" into all other Indian languages to the plaintiff, as a security."

17. Now let us have a look at what constitutes "assignment" and the mode of assignment. Under Section 18(1) of the Copyright Act, 1957, the owner of the copyright in an existing work may assign the copyright either wholly or partially and either generally or subject to limitations, to any person. Under sub section (2) of Section 18, such assignee should be treated as "the owner of the copyright" for the purposes of the Act, in respect of the rights so assigned.

18. Section 19 which prescribes the mode of assignment, lays down the following:-

(a) that the assignment, to be valid, should be in writing, signed by the assignor or his duly authorised agent;

(b) that the assignment should identify (i) the work (ii) the rights assigned (iii) the duration of assignment and (iv) the territorial extent of the assignment;

(c) that the assignment should also specify the amount of royalty payable to the author during the currency of the assignment;

(d) that if the assignee does not exercise the rights assigned to him under any of the other sub sections of Section 9, within one year, the assignment would be deemed to lapse after the expiry of the period;

(e) that if the period of assignment is not specified, it shall be 5 years; and

(f) that if the territorial extent of assignment is not specified, it should be presumed to extend within India.

19. A careful reading of Sections 18 and 19 would show that the purpose of assignment is actually to enable the assignee to exploit the rights that the owner of the copyright has in (i) the literary, dramatic or musical work (ii) the computer programme (iii) the artistic work (iv) the cinematograph film or (v) the sound recording. An assignment serves two purposes. For the assignee, it confers the right of exploitation for a specified period in a specified territory. For the assignor, it confers the right to receive royalty. An agreement, the sole purpose of which was just to prevent others from exploiting the copyrights of the owner and to enable the assignee to get back his loan, cannot be an agreement of assignment. In an agreement of assignment, the only right that the assignee has is the right of exploitation. The only right that the assignor has is to receive royalty. If the assignor does not exploit his rights during the period of assignment, not only would the assignment lapse on the expiry of the term, but also the money paid to the assignor would never get repaid. In other words, the rights conferred by an agreement of assignment on the assignee flow only one way. While after the expiry of the period of assignment, the copyrights flow back to the assignor, the royalty paid to the assignor never gets repaid to the assignee.

20. If we analyse the pleadings and the documents on the basis of the above principles, it would be clear that plaint document No.1 cannot be construed as a deed of assignment, inasmuch as the amount of Rs.3.90 crores paid by the plaintiff to the first defendant, if construed as royalty, would never be liable to be refunded to the plaintiff, irrespective of whether they exploit such rights during the currency of the agreement of assignment or not. The date of plaint document No.1 is 22.1.2010. Therefore, if the agreement is construed as an assignment, the plaintiff would be entitled to exercise the copyrights, till 21.1.2011, by virtue of sub section (4) of Section 19. Alternatively, the right of exploitation would be available for 5 years (until 21.1.2015) in terms of sub section (5) of Section 19. But the availability of such rights depend solely upon the question whether the amount paid under the Agreement was refundable or not. Since the amount of Rs.3.90 crores paid under plaint document No.1, has been made refundable and also since part of the said amount has already been refunded by the first defendant to the plaintiff and the plaintiff has chosen to claim the balance amount, the document cannot at all be construed as a deed of assignment of copyright.

21. Once plaint document No.1 is construed to be not a deed of assignment of copyright, no action for infringement would lie at the instance of the plaintiff. If there was no assignment of copyright, the copyright would continue to vest with its owner. Therefore, the next question is as to who is the owner of the copyright.

22. Section 17 declares that the author of a work shall be the first owner of the copyright therein. The expression "author", in relation to a cinematograph film or sound recording, is defined under Section 2(d)(v) to mean the producer. Therefore, as the Producer of the Malayalam feature film "Body Guard", the first defendant claims to be its "author" within the meaning of Section 2(d)(v) of the Act. Consequently, he claims to be the first owner in respect thereof, in terms of Section 17.

23. But proviso (b) under Section 17 carves out an exception. It reads as follows:-

"subject to the provisions of clause (a), in the case of a photograph taken, or a painting or portrait drawn, or an engraving or a cinematograph film made, for valuable consideration, at the instance of any person, such person shall, in the absence of any agreement to the contrary, be the first owner of the copyright therein."

24. It is interesting to note that Section 2(d)(v) actually does not synchronise well with Section 17 and the proviso (b) thereunder. Section 2(d) -

(i) makes the author of a literary or dramatic work, as the author within the meaning of the Act, under clause (i);

(ii) makes the composer of a musical work, its author within the meaning of the Act, under clause (ii);

(iii) makes the artist of an artistic work, other than a photograph, its author, within the meaning of the Act, under clause (iii);

(iv) makes the photographer as the author of the photograph taken by him under clause (iv); and

(v) makes the creator of a computer generated literary, dramatic, musical or artistic work, its author, within the meaning of the Act, under clause (vi).

25. In other words, clauses (i), (ii), (iii), (iv) and (vi) of sub section (d) of Section 2 make the creator, the author of his creation, if such creation is a literary or dramatic work or a musical work or an artistic work or a photograph or a computer generated literary, dramatic, musical or artistic work.

26. In deviation from the prescriptions contained in clauses (i), (ii), (iii), (iv) and (vi) of sub section (d) of Section 2, clause (v) makes the Producer, the author of a cinematograph film or sound recording. Section 2(d)(v) does not make either the Director or the screen play and dialogue writer of a cinematograph film, its author, despite the fact that they are the creators of the film.

27. Thus, Section 2(d) clearly maintains a distinction between (i) the creators of a literary or dramatic or musical work or an artistic work or a photograph or a computer generated literary, dramatic, musical or artistic work on the one hand and (ii) the creator of a cinematograph film or a sound recordist. In respect of the former categories, the creators are recognised as its authors, but in respect of the latter, the Producer is recognised as its author under Section 2(d).

28. In contrast, proviso (a) to Section 17 makes the Producer (or the employer), the first owner of a literary, dramatic or artistic work, if it was made by its creator, in the course of his employment with such Producer (or employer), unless they have an agreement to the contrary. Similarly, proviso (b) also makes the Producer (or the person at whose instance the work was created), the first owner of a photograph, painting or cinematograph film, if it was created by the creator for valuable consideration, at the instance of such Producer, unless there is an agreement to the contrary.

29. Unfortunately, the distinction maintained in Section 2(d) between a literary/dramatic work/musical work/artistic work/photograph or a computer generated literary, dramatic, musical or artistic work on the one hand and a cinematograph film and sound recording on the other hand, is not carried to its logical end in the provisos to Section 17. There appears to be a legislative mix up. Once the term "author" is defined by section 2(d) (v) to mean only the "producer" in so far as a cinematographic film is concerned and once it is declared by section 17 that such author (namely the producer) is the first owner of the copyright in the film, there was no necessity to state in proviso (b) of section 17 that in the absence of an agreement to the contrary, the producer will be the first owner. In respect of all works of art or music other than cinematographic film, the first ownership vests in the creator. But when they are created by the author while under a contract of employment with someone else, the first ownership vests in such person who happens to be the employer. In order to make this shift in ownership (from the author to the employer) very clear, the provisos under section 17 are inserted. But in the case of a cinematographic film, the ownership does not shift in the first instance at all, in view of the fact that the producer himself is recognised as the author. In fact, Section 2(uu) of the Act, defines the term "Producer" in relation to a cinematograph film, to mean a person who takes the initiative and responsibility for making the work. Such a person, despite not being the creator, is already recognised by Section 2(d)(v) to be its author. Omitting to take note of this, proviso (b) under Section 17 creates a confusion in so far as cinematographic film is concerned, providing a hunting ground for legal pundits.

30. Be that as it may, taking advantage of the phrase "in the absence of any agreement to the contrary" appearing in proviso (b) to Section 17, it is contended by the defendants 2 and 3 that by virtue of an agreement dated 23.6.2009, the Producer of the film viz., the first defendant gave up his first ownership to the Director of the film viz., the second defendant, in so far as the right of remaking the film in all other languages was concerned. But this agreement dated 23.6.2009, allegedly entered into between the first defendant and the second defendant (filed as document No.3 both by the first and second defendants), is assailed by the first defendant as a forged and fabricated document. Whether it is so, is a question that could be decided only at the time of trial, especially in view of the allegation made by the first defendant that his signatures were obtained in blank stamp paper and letter heads.

31. Though the truth and validity of the agreement dated 23-6-2009 are to be decided only at the time of trial, there are certain circumstances creating a suspicion about the conduct of the second defendant. I am conscious of the fact that the dispute that I have been called upon to decide, is only between the plaintiff and the defendants and not between the first defendant and the second defendant. But, the question whether the agreement dated 23.6.2009 is a forged and fabricated document or not, would arise for consideration, at least for the limited purpose of finding out whether the charge created by the first defendant in favour of the plaintiff under the Agreement dated 22.1.2010 (plaint document No.1), is valid or not. If the alleged agreement dated 23.6.2009 between the first defendant and the second defendant is true and binding on the first defendant, then the charge created by the first defendant in favour of the plaintiff on 22.1.2010, would be of no avail, since the first defendant would have had no rights as on 22.1.2010, to create a charge in favour of the plaintiff. On the contrary, if the agreement dated 23.6.2009 set up by the second defendant is ultimately found to be a forged and fabricated document, then the charge created by the first defendant in favour of the plaintiff on 22.1.2010, would be a valid one. Therefore it is necessary to examine the lis between the first defendant and the second defendant, to a limited extent, to find out if the charge created in favour of the plaintiff under the agreement dated 22.1.2010, is valid or not.

32. It is the claim of the second defendant in his counter affidavit that he retained the rights to remake the film in Tamil, by entering into an agreement dated 23.6.2009 with the first defendant. The Malayalam film was released on 23-1-2010. After 2 months of its release, the second defendant is said to have lent a huge amount of Rs.50 lakhs on 4.3.2010 to the first defendant by way of cheques. These cheques got bounced on 5.3.2010 for insufficiency of funds. According to the first defendant, the remuneration received by the second defendant from the first defendant for writing and directing the Malayalam film itself was only Rs.50 lakhs. This claim made by the first defendant is not refuted by the second defendant. A person who received Rs.50 lakhs as remuneration for writing and directing the Malayalam film, had no reason to give back the same amount of money to the very same Producer, after two months of the release of the Malayalam film, especially by way of a loan, without even taking any promissory note. While the first defendant has claimed that while issuing cheques for Rs.50 lakhs on 4-3-2010, the second defendant obtained his signatures in blank stamp paper and letterheads, the second defendant has simply denied the same without specifically stating whether he received any acknowledgement on 4-3-2010 from the first defendant for the same. 33. Interestingly, the second defendant has made no whisper about this payment in his entire plaint before the Munsif Court, Ernakulam in O.S.No.729 of 2010 filed as first defendant's document No.10 herein. It was the first defendant who made a mention about this payment in his written statement in that suit. This written statement is filed before me as first defendant's document no.11. Therefore, the background in which this payment was made especially in cash, raises doubts. To prove that he made cash payments, the second defendant relies upon a Letter of Acknowledgement dated 13-3-2010 purportedly executed by the first defendant, filed as second defendant's documents No.7. But this Letter of Acknowledgment does not state that the amount was paid as a loan by the second defendant to the first defendant. The purpose of payment is not indicated in this document.

34. Interestingly, the second defendant also relies upon a Letter of Understanding purportedly executed by the first defendant on 12-3-2010, just one day before the aforesaid letter of acknowledgment dated 13-3-2010. In the said Letter of Understanding dated 12-3-2010 filed as second defendant's document No.6, the first defendant is stated to have agreed that the story rights of the film was only with the second defendant and that the second defendant has the complete rights to remake the film in any other language. If there was already an agreement dated 23-6-2009 (second defendant's document No.3) between the first and second defendants, by which the second defendant retained the rights of remaking the film in other languages, there was no occasion or necessity for a Letter of Understanding, to be executed on 12-3-2010 after a gap of 9 months, especially when the first defendant was at the mercy of the second defendant borrowing money from him on 4-3-2010. What is intriguing is the fact that the cash payments of Rs.25 lakhs, Rs.9.50 lakhs and Rs.14 lakhs (totalling to Rs.48.50 lakhs) claimed to have been made on 6-3-2010 and 12-3-2010, are not even mentioned in the Letter of Understanding dated 12-3-2010. The Letter of Acknowledgement does not state that these payments were by way of loan.

35. The case of the first defendant is that while issuing cheques dated 4-3-2010 for RS.50 lakhs, the second defendant got his signatures in blank stamp paper and blank letter heads. Though the second defendant denies this allegation, he has not stated whether any promissory notes or bonds were obtained from the first defendant while giving a loan of Rs.50 lakhs on 4-3-2010. It is only on 13-3-2010 that the second defendant obtained a Letter of Acknowledgement for this payment. But this letter also does not indicate the nature of this transaction. The second defendant does not state anywhere, whether he obtained any document from the first defendant as evidence of the loan transaction, either on the date of payments by cheques namely, 4-3-2010 or on the date of payment by cash on 6-3-2010 and 12-3-2010. Assuming that a cash payment of Rs.25 lakhs and Rs.9.50 lakhs were made on 6-3-2010 and a cash payment of Rs.14 lakhs was made on 12-3-2010, it is not reflected in the Letter of Understanding dated 12-3-2010. The only acknowledgment relied upon by the second defendant dated 13-3-2010 also does not record it as a loan transaction. It does not even spell out the nature of the monetary transaction. Therefore the case of the first defendant that the second defendant obtained his signatures in blank stamp paper and letter heads, appears to be more probable.

36. We can look at it from another angle. Today the only proof that the second defendant has, to show that the first defendant borrowed Rs.50 lakhs from him, is the admission made by the first defendant himself. The cheque payments made on 4-3-2010 are not evidenced by any receipt or promissory note. The cash payments made on 6-3-2010 and 12-3-2010 are not evidenced by any document, except, the Letter of Acknowledgement dated 13-3-2010. That letter also does not describe it as a loan. It is baffling as to why the huge payments made on 6-3-2010 and 12-3-2010 are not reflected in a contemporaneous document dated 12-3-2010. The cumulative effect of all the above, probablises the case of the first defendant that the second defendant obtained his signatures in blank stamp paper and letter heads.

37. Before holding that the case of the first defendant is more probable than that of the second defendant, I have to take note of and deal with another contention, viz., the validity and binding nature of an interim order of injunction granted by the District Munsif Court, Ernakulam, in favour of the second defendant.

38. As a measure of retaliation to the criminal complaint lodged by the first defendant against the second defendant in Crl. M.P.No.677 of 2010 on the file of the XI Metropolitan Magistrate, Saidapet, the second defendant filed a suit in O.S.No.729 of 2010 on the file of the District Munsif Court, Ernakulam. The copy of the plaint, the copy of the written statement, the copy of the counter affidavit in the application for interim injunction, the copy of the reply affidavit and the order passed by the learned Munsif in I.A.No.4226 of 2010 in O.S.No.729 of 2010 are filed by the first defendant as document Nos.10, 11, 12, 13 and 14.

39. It is seen from the copy of the plaint in the aforesaid suit that the relief sought for by the second defendant was for "a decree of permanent prohibitory injunction restraining the defendant, his men, agents or anybody claiming under him from interfering with the plaintiff's ownership, user and remake of the script including the story, screen play and dialogues of the Malayalam movie "Body Guard" to any other Indian and international languages". The averments contained in para-2 of the plaint, proceed wholly on the basis that the second defendant was the author of the story, screen play and dialogues of the Malayalam feature film and that the artistic work in the film was the hard and earnest efforts of the second defendant for more than a year.

40. A meaningful reading of the plaint discloses clearly that the suit is one based upon the copyright that the second defendant claimed in the cinematograph film. This is clear in the context of Section 14(1)(d) of the Copyright Act, 1957, which reads as follows:-

"14. Meaning of Copyright  (1) For the purposes of this Act, "copyright" means the exclusive right, subject to the provisions of this Act, to do or authorise the doing of any of the following acts in respect of a work or any substantial part thereof, namely;-

.. .. .. ..

(d) In the case of a cinematograph film -

(i) to make a copy of the film, including a photograph of any image forming part thereof;

(ii) to sell or give on hire, or offer for sale or hire, any copy of the film, regardless of whether such copy has been sold or given on hire on earlier occasions;

(iii) to communicate the film to the public."

41. Therefore, in the light of Section 14(1)(d), it is clear that the suit filed by the second defendant against the first defendant was one for infringement of copyright, irrespective of whether he has carefully chosen not to use the expression "copyright" in his plaint or not. Moreover, Section 16 of the Act, makes it clear that no person shall be entitled to copyright or any other similar right in any work, otherwise than under and in accordance with the provisions of the Copyright Act, 1957. Section 16 reads as follows:-

"16. No copyright except as provided in this Act  No person shall be entitled to copyright or any similar right in any work, whether published or unpublished, otherwise than under and in accordance with the provisions of this Act or of any other law for the time being in force, but nothing in this Section shall be construed as abrogating any right or jurisdiction to restrain a breach of trust or confidence."

The suit filed by the second defendant on the file of the District Munsif Court, Ernakulam, does not fall under the category of either (i) a suit to restrain a breach of trust or (ii) a suit to restrain a breach of confidence, so as to fall within the exception carved out of Section 16. It was a suit for assertion of a right in a work, which the second defendant himself called as artistic work in para-2 of his plaint. It was a suit for injuncting the first defendant from interfering with the second defendant's right to make the film into other languages. Therefore, the suit was clearly one for infringement of copyright, which cannot be exercised otherwise than under and in accordance with the provisions of the Act, in view of the mandate of Section 16.

42. If it is a suit for infringement of copyright or for any other remedies by way of injunction, damages, accounts and otherwise {as provided in Section 55(1)}, such a suit shall be instituted only in the District Court having jurisdiction, by virtue of Section 62(1) of the Act. Sub section (2) of Section 62 contains a non abstante clause, with regard to the provisions contained in the Code of Civil Procedure as well as any other law for the time being in force. Therefore, the District Munsif Court, Ernakulam did not have jurisdiction to entertain the suit and hence the findings recorded in the interim order passed by the said Court, cannot persuade me to adopt a similar view, on the question as to the truth and validity of the agreement dated 23.6.2009, set up by the second defendant.

43. The view that I have taken, is also fortified by the decision of Sengottuvelan, J., in Everest Pictures Circuit vs. S.Karuppannan {AIR 1982 Mad. 244}. It was held in the said case that a Civil Court may grant the relief of declaration, as to who is entitled to the copyright, but further reliefs with reference to injunction, accounting etc., can only be granted under Section 62 of the Act, by the District Court having jurisdiction. Therefore, the objection raised by the second defendant about the binding nature of the order of injunction granted by the Munsif Court, Ernakulam, cannot be sustained.

44. Once it is found that the case pleaded by the first defendant is more probable than the case pleaded by the second defendant, at least prima facie, the necessary corollary of such a finding would be that the charge created by the first defendant in favour of the plaintiff under the agreement dated 22.1.2010 is true and valid. If it is true and valid, then the question is about the protection that the plaintiff is entitled to, in respect of the monies due to them.

45. A charge created on a property would always attach to the property. The charge created by the first defendant in favour of the plaintiff under the agreement dated 22.1.2010 (plaint document No.1), is not only on the entire collection from the theatres in Kerala in respect of the Malayalam feature film under clause 3(i), but is also in respect of the right to remake the film in all Indian languages under clause 3(ii). By remaking the Malayalam film into Tamil, the defendants 2, 3 and 6 have acted detrimental to the charge that the plaintiff has on the rights created by plaint document No.1, to remake the film in Tamil.

46. As pointed out by Hidayatullah, C.J., in his majority opinion in the 11 member Bench decision of the Supreme Court in Madhav Rao Scindia Bahadur vs. Union of India {1971 (1) SCC 85}, popularly known as the Privy Purse case, "a charge does not give rise to a right in rem under the general law relating to transfer of property, but the right is more than a mere personal obligation, for it is a jus ad rem a right to payment out of the property specified". The Constitution Bench proceeded to state in para-122 that "a charge gives a right to payment out of a specific fund or property and a right to prior payment, but does not create a right in rem in the fund or the property" and that "a charge gives rise to a right to receive payment out of a specified fund or property in preference over others".

47. Therefore, there are two alternatives available before Court viz., (i) to permit the release of the feature film in Tamil, with a direction to deposit the collections into Court to the extent of the suit claim or (ii) to direct the respondents to furnish security for the suit claim. The second alternative appears to be a more acceptable one in the facts and circumstances of the case.

48. But before proceeding to pass orders, I have to deal with one objection raised by Mr.V.Raghavachari, learned counsel appearing for the third defendant, in the course of his arguments. It was his contention that the agreement between the plaintiff and the first defendant dated 22.1.2010 itself was a fabricated one. Apart from the fact that such a contention was not raised in the counter in precise terms, the contention raised in the course of arguments, was only an inferential innovation spun out of the circumstances, by the counsel while on feet. According to the learned counsel, the Lab letter relied upon by the plaintiff (filed as plaint document No.3), is dated 22.1.2010. It refers to a letter received by Gemini Colour Laboratory, the fifth defendant herein, from the first defendant on 21.1.2010, in which, the first defendant had already claimed to have entered into an agreement with the plaintiff. But the agreement was only dated 22.1.2010. Therefore, the learned counsel for the third defendant contended that plaint document No.1 is a fabricated one.

49. But the said contention, though attractive, is without substance. The payments recorded in the agreement dated 22.1.2010 are confirmed by the statement of account issued by the Catholic Syrian Bank, Kodambakkam Branch, filed as plaint document No.17. There are two payments made by way of cheques bearing Nos.149203 and 149205 for a total amount of Rs.3.90 crores. These payments were also backed up by 4 promissory notes, filed as plaint document No.2 series. The first defendant admits the receipt of the money and the execution of the agreement dated 22.1.2010. A part of the money has also been repaid, on account of which the claim made by the plaintiff has come down to Rs.1,88,58,187/-. In such circumstances, the agreement between the plaintiff and the first defendant cannot be just pooh-poohed.

50. Yet another contention was raised that the liability to pay money to the plaintiff, was only that of the first defendant and hence the plaintiff could have nothing to do with the release of the picture. This is true to some extent. This is why the relief prayed for by the plaintiff in paragraph-26 (e) of the plaint, is only for recovery of money from the first defendant. Though all other prayers relate to infringement of copyright and they may not be sustainable in view of my finding that plaint document No.1 cannot be construed as a deed of assignment of copyright, the plaintiff has a charge over the right to remake the film in Tamil, in view of my finding on the nature of the agreement dated 22.1.2010. Therefore, the plaintiff has a right to priority of payment over the others, from out of the feature film in Tamil.

51. In view of the above, I am of the considered opinion that the defendants should be directed to furnish security to the extent of the suit claim viz., a sum of Rs.1,88,58,187/-. The plaintiff not only has a prima facie case, but also balance of convenience in their favour. It is clear from the pleadings that as on date, the third defendant claims a right to make the film in Tamil and the second defendant claims a right to remake the film in all other languages. Once the film is released in Tamil, the third defendant would go out of the picture and the plaintiff may not be able to proceed against him, for enforcing the charge, in the event of the plaintiff succeeding in getting a decree for enforcement of the charge. Similarly, the enforcement of the charge against the second defendant would be a moot question, unless he remakes the film in any language other than Malayalam and Tamil. Therefore, the balance of convenience is only in favour of the plaintiff and unless the release of the feature film in Tamil is made subject to the defendants offering security, for the suit claim, the charge that they have will dissipate. This is in view of the fact that the third defendant has claimed in his counter that he had already spent more than Rs.30 crores for the production of the picture in Tamil. Therefore, allowing him to release the picture, would take care of his interests. At the same time, directing him to furnish security for the suit claim, would take care of the interests of the plaintiff also. As a matter of fact, granting an order of injunction would jeopardise the interests of the defendants and the refusal to grant an order of injunction would jeopardise the interests of the plaintiff. But an order to furnish security for the suit claim, as a condition for the release of the film would balance the interests of all the parties

52. Therefore, the prayers for interim orders of injunction made in A.Nos.1225 to 1227 of 2010 are rejected. However, the applications are disposed of with a direction to the defendants to furnish security for the suit claim before the actual release of the feature film in Tamil. The applications are disposed of accordingly and there will be no order as to costs.


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Index    : Yes.
Internet : Yes.
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					V. RAMASUBRAMANIAN, J.

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					Common Order 
					in O.A.No.1225 
					of 2010 to 1227 of 2010 
					in C.S.No.956 of 2010




















							21-12-2010