NARENDRA HIRAWAT AND CO. vs. SHOLAY MEDIA ENTERTAINMENT PVT. LTD.

REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO(S).1867­1868 OF 2022 (Arising out of Special Leave Petition  (C) No(s).14124­14125/2021) NARENDRA HIRAWAT AND CO.            ......Appellant(s)                                 VERSUS SHOLAY MEDIA ENTERTAINMENT PVT.  LTD. & ANR.   ......Respondent(s) WITH CIVIL APPEAL NO(S).1869­1870 OF 2022 (Arising out of Special Leave Petition (C) No(s).14316­14317/2021) O R D E R Leave granted.  In connection with a suit for injunction and other reliefs filed by the   appellants,   the   learned   Single   Judge   of   the   High   Court   of Judicature   at   Bombay   granted   an   order   of   interim   injunction, th delivered on 9   March, 2020 which was challenged in appeals filed before the Division Bench of the High Court. The appeals have been allowed and   the   order  of   interim   injunction  granted   by  the  Single Signature Not Verified Judge has been reversed by the Appellate Bench. Questioning the Digitally signed by Rajni Mukhi Date: 2022.03.22 16:58:09 IST Reason: legality of the said order of the Division Bench, these appeals by way 1 of special leave petitions have been filed. As these appeals have been filed   against   an   interim   order,   we   are   giving   only   skeleton   facts relevant for the purpose of present appeals.  On 09.09.2015, two agreements were entered into between the appellant namely, Narendra Hirawat and Company (for short ‘NHC’) and respondent no.1, namely Sholay Media Entertainment Pvt. Ltd. (for short ‘SME’) for the rights of films “Sholay and Sholay 3D” for the period from 01.04.2016 to 31.03.2022 for an amount of Rs.20 crores. The second agreement of the same date was executed for the rights of the same films “Sholay and Sholay 3D” for the period from 01.04.2022 to 31.03.2027 for an amount of Rs.5 crores. This was in regard to the first set of appeals (hereinafter referred to as “Sholay appeal”). In the second set of appeals, similar agreements were executed on the same date between the NHC and respondent no.1 therein i.e., Generation Three Entertainment Pvt. Ltd. (hereinafter referred to ‘G3’). These were with regard to the rights of the 32 films given in favour of NHC for a similar   length   of   period.   The   facts   in   both   these   sets   of   appeals, though may not be identical but are very similar. For convenience we shall deal with the facts of the first set of appeals, which we shall henceforth refer to as “Sholay appeal”.   After the aforesaid agreements were executed, on 12.07.2016 two 2 addenda were executed in the license agreements dated 09.09.2015. These addenda stipulated that on an additional amount of Rs.1.75 crores to be paid by NHC, the NHC would have the rights for unlimited runs of the film and the period was also extended from 31.03.2027 to 30.09.2027.   There   were   certain   disputes   with   regard   to   the mechanism arrived at in relation to payments of amounts and burden of tax, which got amicably settled between the appellant­NHC and respondent   no.1   ­SME.   In   between   on   16.05.2018,   a   sub­license agreement   was   executed   between   the   appellant   ­   NHC   and   the respondent no.2 namely, Goldmines Telefilms Pvt. Ltd. for rights of the said film in favour of the respondent no.2, which was for the period of 15.11.2021 to 14.11.2026.  As already mentioned, since there were certain disputes between NHC and respondent no.1 ­ SME, there were dialogues between the parties and ultimately a memorandum of settlement was arrived at between  the  two  parties   on  05.11.2018.   Finally,  on  03.12.2018, a Deed of Settlement was executed between the NHC and the SME ­ respondent no.1 in which the main stipulation was that NHC was to pay a further sum of Rs.8.71 crores in four tranches of Rs.1.25 crores, Rs.2.46 crores, Rs.2.50 crores and Rs.2.50 crores and instead of the period which earlier was till 30.09.2027, the same was extended by 3 further one year, up to 30.09.2028.  Ultimately, the final dispute which has now culminated in these proceedings   is   allegedly   for   non­compliance   of   the   final   Deed   of Settlement dated 03.12.2018, as according to the respondent no.1 the payments have not been made in terms of Deed of Settlement. Stand of  NHC,   however,   is   that  substantial   payments   have   already  been made,   and   what   has   not   been   paid   was   because   of   certain   non­ compliances on the part of the respondent no.1. It is stated that NHC has always been ready and willing to make the payment. However, on the ground of alleged non­compliance of the terms of the Deed of Settlement dated 03.12.2018, a termination notice was issued by the respondent no.1 on 18.06.2019.  The respondent no.2, by notice dated 26.08.2019, terminated the sub­license agreement dated 16.05.2018 which was entered into with NHC, and demanded refund of over Rs.11 crores from NHC. With regard to the termination notice dated 18.06.2019 issued by respondent no.1, NHC filed a commercial suit on 30.08.2019. Reliefs claimed included prayer for declaration that the plaintiff is the sole and exclusive licensee in respect of the suit films for all territories, further declaration that the termination letter was illegal, bad in law, null and void and unenforceable, permanent injunction restraining the 4 defendants from enjoying the licensed rights and damages. Temporary injunction was also asked for. By order dated 09.03.2020, the learned Single Judge of the High Court (before whom the commercial suit was filed) granted   interim   injunction   in   favour   of   NHC,   restraining  the respondents from disturbing the enjoyment of license rights of the appellant in the suit films and also restrained the respondent no.1 ­ SME from acting on the termination notice. Respondents no.1 & 2 were   also   restrained   from   acting   on   the   agreement   executed   on 24.10.2019 which, after the filing of the suit, was entered into between respondents no.1 and 2, awarding rights of the film Sholay and Sholay 3D in the first set of appeals and 32 films in the second set of appeals in favour of respondent no.2. An intra­court appeal was filed assailing the order of the learned Single Judge before the Division Bench of the High Court, which has been allowed in favour of the respondents and, hence, these appeals before this Court.  Mr. Mukul Rohatgi and Dr. A.M. Singhvi, learned senior counsel along with Mr. Ankur Saigal, learned counsel have appeared for the NHC in both sets of appeals. Mr. Neeraj Kishan Kaul, Mr. Siddharth Bhatnagar and Mr. C.U. Singh, learned senior counsel along with Mr. R.P. Gupta and Ms. Pooja Dhar, learned counsel have represented the respondents in both sets of appeals. We have heard them at length 5 and perused the records.  The  facts  as   narrated   above  are  not disputed  by  the   learned counsel for the parties. From the above facts, what can be culled out is that though there were certain disputes with regard to the payments and other clauses of the initial agreements as well as the addenda, but after the execution of the Deed of Settlement on 03.12.2018, all prior disputes   had   been   ironed   out   and   what   was   now   required   was compliance of the said deed. This deed provided that NHC was to pay a sum of Rs.8.71 crores to the respondent no.1 in four tranches and the   period   of   license   was   to   be   extended   for   one   year   i.e.   up   to 30.09.2028 (instead of 30.09.2027 as earlier). Learned Single Judge had considered all the aspects of the matter and held that the balance of   convenience   was   in   favour   of   NHC   and   thereafter   granted   the injunction in favour of the appellant. On the aspect of prima­facie case, the Single Judge found the payment obligation were by and large met by the plaintiff (appellant before us). Argument was advanced before the learned Single Judge on the basis of Section 14(d) of the Specific Relief Act 1963 by the defendants. It was contended that the subject   contracts   were   determinable   and   hence   no   specific performance   thereof   could   be   granted.   The   learned   Single   Judge, however,   found   that   this   was   not   a   clause   which   contemplated 6 unilateral determination but the right to determine was subject to the other party committing breach of the agreement. As a condition for granting interim relief, direction was given to the plaintiff to deposit the entire balance amount of Rs.3.25 crore as per the settlement deed. Such deposit was to be made in Court and we are apprised by learned counsel   for   the   plaintiff   that   this   part   of   the   direction   has   been complied with. The Division Bench has, in appeal, reconsidered the entire case and decided in favour of the respondents. It has been, inter­alia, held by the Division Bench in the judgment under appeal:­ “62. The impugned order has brought about a highly inequitable situation. A Plaintiff, who was not ready and   willing   having   consistently   breached   essential terms   of   the   Agreements,   who   was   admittedly   in arrears on the date of the suit, who is yet to establish its rights at the final trial; is permitted by through a mandatory   interim   injunction   to   exploit   all   rights under the terminated Agreement. The true owners of the licensed material are prevented from monetizing their property rights. The Goldmines Telefims, which has   paid   money   to   both,   Plaintiff   and   Licensor Appellants, is deprived of exploiting the licenses. No extraordinary   situation   existed   for   such   a   drastic interim order. 63. Therefore,   to   recapitulate,   as   per   the   true construction of the contract between parties, Plaintiff has   failed   to   establish   that   Plaintiff   was   and   has always been ready and willing to perform an essential part of the terms of the contract. No  prima facie  case, much less a high   prima facie   case, is established by Plaintiff.   No   extraordinary   circumstances   exist   to grant a mandatory injunction again akin to the stay of 7 the termination six months after the termination was effected and third party rights were created. Since the basic essential terms of the contract and documents on   the   record   itself   have   been   overlooked   while passing   the   impugned   order,   the   grant   of   an injunction will have to be set aside, even though these appeals are appeals on principle.  64. As a result,  these four Commercial Appeal, are allowed. The common impugned order 9 March 2020 passed by the learned Single Judge in Notice of Motion No.2591/2019 in Commercial IP Suit No.1387/2019 and Notice of Motion No.2607/2019 in Commercial IP Suit No.1469/2019 is set aside. Considering the facts and circumstances, no order as to costs.” As we have noticed above, the entire case falls around the Deed of Settlement executed on 03.12.2018. What is not disputed is that out of the   four  payments   which  were   to  be   made  by  NHC   to the respondent no.1, the first and the second payments were made by the appellant ­ NHC either simultaneously on the issuance of the invoice by respondent no.1 or after the invoice had been issued. However, after the first two payments were made, the respondent no.1 issued a third   invoice   for   an   amount   of   Rs.1.75   crores   (although   the   third installment was to be of Rs.2.50 crores) only on 03.06.2019 and after the invoice was issued, the payment of the entire amount of Rs.1.75 crores was made by NHC on 10.06.2019. It is the case of NHC that thereafter NHC had been asking the respondent no.1 for issuance of the invoices for the balance amount so as to enable NHC to make the 8 balance payment out of Rs.8.71 crores as agreed under the Deed of Settlement but since the invoices were not issued (as the same were required for payment of GST), no further payment was made by the appellant  ­ NHC.  According  to NHC,  on  every  occasion earlier the payments were made by NHC only after the invoices were issued by the respondent no.1 – SME, which included the GST amount and the last   payment   could   not   be   made   because   of   non   issuance   of   the invoice by the respondent no.1 – SME.  The contention of the learned counsel for the respondent no.1 is that   the   requirement   of   issuance   of   invoices   was   not   a   condition precedent   to   the   payments   to   be   made   in   terms   of   the   Deed   of Settlement dated 03.12.2018, whereas the NHC asserts that in terms of clause 4 of the Deed of Settlement, respondent no.1 was to issue the invoices  against each tranche  of payment stating  the amount, including the GST, after which the appellant­ NHC was to make the payment.   The   entire   controversy   in   the   present   case   would   hinge around this provision as to whether NHC did not pay the amount in terms of the Deed of Settlement because of non­issuance of invoices by the respondent no.1 or otherwise.  In the facts of the present case, what we notice is that prior to the execution of the Deed of Settlement, NHC had already paid an 9 amount  over   Rs.20   crores   in   terms   of   the   initial   agreement   dated 09.09.2015. Then as per the Deed of Settlement also, Rs.5.46 crores had already been paid. What we also notice is that from the record it is clear, and not disputed by the respondents, that every payment that was made by NHC, was against the invoices which were issued by the respondent no.1.  The only reason given by the learned counsel for the respondent no.1 for not issuing the invoices with regard to the balance amount was that the liability of payment of GST would accrue immediately on issuance of the invoices, even if NHC did not pay the money. We cannot accept this form of justification as for all previous payments, invoices had been issued by the respondent no.1 – SME.    At this stage, we would not like to give final verdict with regard the interpretation of the various clauses of the Deed of Settlement, including clause 4 relating to issuance of invoices, as the same would be a matter to be considered first in the suit proceedings. However, considering   the   conduct   of   the   parties,   specially   the   fact   that   the invoices   were   issued   by   the   respondent   no.   1   before   each   of   the payments were made  by the appellant – NHC, and only fraction of the total payment remained to be paid, which also the  learned  Single Judge, while issuing injunction in favour of NHC directed them to 10 deposit in court, in pursuance of which Rs.3.5 crores has already been deposited by NHC in the High Court and also considering the other attending factors and circumstances, we are of the opinion that the injunction order granted by the Trial Court in favour of the appellant cannot be faulted.  Even otherwise, we are of the opinion that interference by the Division Bench of the High Court in appeal against the order of the learned   Single   Judge   granting   the   injunction   was   not   justified specially when the injunction order passed could not, in our opinion, be said to be perverse or unjustified in law. Several authorities were cited on behalf of the learned counsel for the parties outlining the principles for granting interim injunction. In   Wander Ltd. and Anr. vs. Antox India P. Ltd. [1990 (supp) SCC 727] , it had been held:­ “14.The appeals before the Division Bench were against the exercise of discretion by the Single Judge. In such appeals, the appellate court will not interfere with the exercise of discretion of the court of first instance and substitute its own discretion except where the discretion has been shown to   have   been   exercised   arbitrarily,   or   capriciously   or perversely   or   where   the   court   had   ignored   the   settled principles of law regulating grant or refusal of interlocutory injunctions. An appeal against exercise of discretion is said to   be   an   appeal   on   principle.   Appellate   court   will   not reassess   the   material   and   seek   to   reach   a   conclusion different from the one reached by the court below if the one reached   by   that   court   was   reasonably   possible   on   the material.   The   appellate   court   would   normally   not   be justified in interfering with the exercise of discretion under appeal solely on the ground that if it had considered the 11

In the case of  Shah Babulal Khimji Vs. Jayaben D. Kania and Anr. [(1981) 4 SCC 8] , a three Judge Bench of this Court had opined that  Section   104   read   with   Order   43   Rule   1   of   the   Code   of   Civil Procedure, 1908 applied to a Letters Patent appeal as well. In  Dorab Cawasji Warden Vs. Coomi Sorab Warden and Ors. [(1990) 2 SCC 117]  grant of mandatory injunction at the interim stage has been left to the sound judicial discretion of the Court.  Metro Marins and Anr. Vs. Bonus Watch Co. (P) Ltd. and Ors. [(2004) 7 SCC 478]   also follows the principles laid down in the case of  Dorab Cawasji Warden (supra). But these two authorities dealt with the question of grant of 12 interim injunction in relation to disputes arising out of transfer of immovable property. Applicability of Rules 1 and 2 of Order 39 of the Code   on   the   question   of   granting   interim   injunction   has   been reconfirmed by a Coordinate Bench of this Court in  Best Seller Retail (India) Private Ltd. Vs. Aditya Birla Nuvo Ltd. and Ors. [(2012) 6 SCC 792]. In Colgate Palmolive (India) Ltd. Vs. Hindustan Lever Ltd.   [(1999)   7   SCC   1] ,   the   principles   guiding   grant   of   interim injunction have been summarized as:­

13 ( vi ) balance of convenience or inconvenience ought to be considered as an important requirement even if there is a serious question or prima facie case in support of the grant; ( vii ) whether the grant or refusal of injunction will adversely   affect   the   interest   of   the   general   public which can or cannot be compensated otherwise.” In our opinion, however, each individual case is to be decided on its own facts and in the present case, in view of the facts as narrated above, equity is in favour of NHC. It has made substantial payments and the balance, which is little more than 10% of the total amount, has   already   been   deposited   in   the   High   Court   in   terms   of   the injunction   order   of   the   Single   Judge.   As   regards   the   claim   of  the respondent no.2, what is noteworthy is that initially the sub­license agreement   was   executed   between   NHC   and   respondent   no.   2   on 16.05.2018. After the dispute arose, the termination notice was issued by the respondent no.1 on 18.06.2019. The suit had been filed by NHC on 29.08.2019 and it was only then, on 24.10.2019 that the respondent no.2 entered into a fresh agreement with respondent no.1 with regard to the same films being Sholay and Sholay 3D in the first set   of   appeals   and   32   other   films   in   the   second   set   of   appeals. Considering   the   aforesaid   facts   and   keeping   in   view   that   the agreements between respondents no.1 and 2 were entered into during the pendency of the civil suit, of which the respondent no.2 would also 14 be well aware of, we are of the opinion that respondent no.2 would also be governed by the injunction order granted by the Single Judge of the High Court. Since the facts of both sets of appeals are on the same lines, with slight differences of certain dates and some amounts to be paid, and there being no other material difference, both sets of appeals would be governed by this order.  Accordingly, as we are of the firm view that the appellant has made out a prima facie case for grant of injunction and also that the balance of convenience is in favour of the appellant – NHC, hence we allow these appeals. The Single Judge’s order was founded on sound reasoning and we find no fault in exercise of discretion by the Single Judge in granting the order of injunction. We, thus, set aside the order passed by the Division Bench of the High Court and restore the order of the learned Single Judge. The learned Single Judge, however, is requested to expedite the hearing of the suit and decide the same as expeditiously as possible, preferably within one year, in accordance with law and without being influenced by any observations made by the Single Judge while granting the injunction order or by the Division Bench of the High Court passed in appeal, as well as by this Court. The parties shall not seek any unnecessary adjournment in the High 15 Court.  There shall be no order as to costs. ………………………………,J. (VINEET SARAN) ………………………………,J. (ANIRUDDHA BOSE) NEW DELHI;  MARCH 07, 2022.  16 ITEM NO.42 Court 9 (Video Conferencing) SECTION IX S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS Petition(s) for Special Leave to Appeal (C) No(s).14124-14125/2021 (Arising out of impugned final judgment and order dated 26-08-2021 in CAL No.8026/2020 26-08-2021 in CAL No. 9909/2020 passed by the High Court Of Judicature At Bombay) NARENDRA HIRAWAT AND CO. Petitioner(s) VERSUS SHOLAY MEDIA ENTERTAINMENT PVT. LTD. & ANR. Respondent(s) (List on 07.03.2022 as a first case after fresh matter IA No. 124327/2021 - APPLICATION FOR PERMISSION IA No. 114326/2021 - EXEMPTION FROM FILING C/C OF THE IMPUGNED JUDGMENT, IA No.122789/2021 - PERMISSION TO FILE ADDITIONAL DOCUMENTS/FACTS/ANNEXURES, IA No.121256/2021 - PERMISSION TO FILE ADDITIONAL DOCUMENTS/FACTS/ANNEXURES, IA No.118654/2021 - PERMISSION TO FILE ADDITIONAL DOCUMENTS/FACTS/ANNEXURES) WITH SLP(C) No. 14316-14317/2021 (IX) (IA No.124314/2021 - APPLICATION FOR PERMISSION IA No. 115227/2021 - EXEMPTION FROM FILING C/C OF THE IMPUGNED JUDGMENT, IA No.122766/2021 - PERMISSION TO FILE ADDITIONAL DOCUMENTS/FACTS/ANNEXURES) Date : 07-03-2022 These matters were called on for hearing today. CORAM : HON'BLE MR. JUSTICE VINEET SARAN HON'BLE MR. JUSTICE ANIRUDDHA BOSE For Petitioner(s) Mr. Mukul Rohatgi, Sr. Adv. SLP(C) 14124-25/21 Mr. Mahesh Agarwal, Adv. Mr. Ankur Saigal, Adv. Mr. Anirudh Bhatia, Adv. Ms. Deepshikha Mishra, Adv. Mr. E. C. Agrawala, AOR SLP(C) 14316-17/21 Dr. A.M. Singhvi, Sr. Adv. Mr. Mahesh Agarwal, Adv. Mr. Ankur Saigal, Adv. Mr. Anirudh Bhatia, Adv. Ms. Deepshikha Mishra, Adv. Mr. E. C. Agrawala, AOR For Respondent(s) Mr. Neeraj Kishan Kaul, Sr. Adv. 17 Mr. Siddharth Bhatnagar, Sr. Adv. Mr. Mehul M. Gupta, Adv. Ms. Shreya Parikh, Adv. Mr. Archit Jayakar, Adv. Ms. Divya Tyagi, Adv. Mr. R. P. Gupta, AOR Mr. Chander Uday Singh, Sr. Adv. Mr. Aurup Dasgupta, Adv. Mr. Rohan Thawani, Adv. Ms. Pooja Dhar, AOR Ms. Gunjan Ahuja, Adv. UPON hearing the counsel the Court made the following O R D E R Leave granted. The appeals are allowed in terms of the signed reportable order. Pending application(s), if any, stands disposed of accordingly. (ARJUN BISHT) (RAM SUBHAG SINGH) (ASHWANI THAKUR) (COURT MASTER (SH) (BRANCH OFFICER) AR-CUM-PS (Signed reportable order is placed on the file) 18