Full Judgment Text
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision : 27.01.2010
+ IA No. 9558/2009 in CS (OS) 1216/2007
THE INDIAN PERFORMING RIGHT SOCIETY LTD & ANR. ..... Plaintiffs
Through: Mr.Sudhir Chandra Aggarwal, Sr. Advocates with
Mr. Himanshu Bagai, Advocate for Pliantiff No.1
Mr. Jagdish Sagar and Ms. Geetanjali Vishvanathan, Advocates
for Plaintiff No.2.
versus
MR. PUNIT GOENKA AND ANR. ..... Defendants
Through: Mr. V.P. Singh Sr. Advocate and Mr. Maninder Singh, Sr. Advocate
along with Ms. Pratibha M. Singh, Mr. Sudeep Chatterjee and Mr. Nikhil Mehra,
Advocates.
+ IA No. 9551/2009 in CS (OS) 1356/2007
THE INDIAN PERFORMING RIGHT SOCIETY LTD & ANR. ..... Plaintiffs
Through: Mr.Sudhir Chandra Aggarwal, Sr. Advocates with
Mr. Himanshu Bagai, Advocate for Pliantiff No.1
Mr. Jagdish Sagar and Ms. Geetanjali Vishvanathan, Advocates
for Plaintiff No.2.
versus
MR. LAXMI NARAIN GOEL AND ANR ..... Defendants
Through: Mr. V.P. Singh Sr. Advocate and Mr. Maninder Singh, Sr. advocate
along with Ms. Pratibha M. Singh, Mr. Sudeep Chatterjee and Mr. Nikhil Mehra,
Advocates.
CORAM:
MR. JUSTICE S. RAVINDRA BHAT
1. Whether the Reporters of local papers Yes.
may be allowed to see the judgment?
IA 9558/09 in CS(OS) 1216/07 & IA 9551/09 I CS (OS) 1356/07 Page 1
2. To be referred to Reporter or not? Yes.
3. Whether the judgment should be Yes.
reported in the Digest?
MR. JUSTICE S.RAVINDRA BHAT
%
1. The plaintiffs in both the suits, CS(OS) 1216/07 and CS(OS) 1356/207 are
common; the first plaintiff is the Indian Performing Arts Society (hereafter “IPRS”) a
company limited by guarantee, incorporated to protect and safeguard its members’ rights.
Its members are comprised of authors, composers and publishers of musical or literary
works. The IPRS says that it is also committed to protect the rights of other overseas
Sister societies, which are copyright owners in their literary and musical works. The
IPRS claims to be the sole national copyright society of composers, authors and
publishers of literary and musical works, from India, and other countries. IPRS also says
that it was “re-registered” as a copyright society, in terms of Section 33 (3) of the
Copyright Act, 1957 (“the Act”) after its amendment in 1994, and relies on a certificate
th
of registration, to such effect, dated 27 March, 1996.
2. It is stated that members of IPRS, comprising of authors, composers and
publishers of Indian literary and musical works, have executed assignment deeds, in
respect of their public performing rights, and rights to communicate their works to the
public, under the Act, as well as works which they might produce in the future. The IPRS
therefore claims to be owner of such rights.
3. The second defendant, (hereafter called PPRS) claims to be a society engaged in
copyright business of licensing rights in respect of sound recordings, of its members; it
too avers to being a copyright society under Section 33 of the Act, in respect of sound
recording rights under the Act, of its members. PPRS states that it has the right to issue
licenses in respect of sound recording and performance rights in relation to such sound
recording, of its members, in India. It is alleged that the PPRS membership consists of
IA 9558/09 in CS(OS) 1216/07 & IA 9551/09 I CS (OS) 1356/07 Page 2
some of the best known sound recording companies, in India, and abroad, and therefore,
it has the exclusive right to administer one of the most extensive repertoire of musical
works.
4. The plaintiffs say that though both are copyright societies, under Section 33 of the
Act, the IPRS is authorised to administer rights of authors, composers, etc. in respect of
underlying works and compositions, that are embodied in musical and literary works, that
may (or may not) be embodied in sound recordings; the PPRS has exclusive rights to
administer copyrights in relation to sound recordings. It is contended that licenses
obtained from one plaintiff is not sufficient, if the public performance right license (in
relation to sound recordings) is not secured from the other, having regard to the nature of
copyrights, which are a bundle of separate, and concurrent rights.
5. It is contended that the first defendant is executive director of the second
defendant (hereafter collectively referred to as “ZEE”). Zee was incorporated in 1992 as a
broadcaster, and as on the date of filing of the suits, it has several channels, including
those beaming regional language programmes, as well as those dealing with news, and
general entertainment, such as music, films, etc. The predecessors of ZEE, i.e. Zee
Telefilms Ltd., say the plaintiffs, had acquired license from them, in 2005, which expired
in October, 2006, for performance and broadcasting rights in respect of sound recordings,
to be used in their programmes. This, they allege, constitute its acknowledgement of the
plaintiffs’ copyrights. It is alleged, in these circumstances, that the use of such sound
recordings in ZEE’s programmes – by ZEE Entertainment Ltd., led to filing of a suit, CS
(OS) 1216/2007, in which an interim order was made. As an interim measure, parties
agreed that the plaintiffs would be paid some amounts, in return for which the defendants
were permitted to use their sound recordings in the entertainment programme HERO
HONDA SA RE GA MA PA. In the subsequent suit, it is alleged that the second
defendant, ZEE NEWS LTD., (also part of the ZEE group) is indulging in copyright
violation by unauthorized usage of the plaintiffs’ sound recordings, which also violates
IPRS’s rights.
IA 9558/09 in CS(OS) 1216/07 & IA 9551/09 I CS (OS) 1356/07 Page 3
6. In the second suit, CS (OS) 1356/2007, this Court made an interim order, on
31.07.2007, to the following effect:
7. It is alleged, in the applications for decree on admission, by the plaintiffs- that
though the defendants had contested their (the plaintiffs’) copyright and the claim for
injunction and damages, subsequently, on 05.03.2009, they entered into agreements,
which admitted the plaintiffs’ right to demand license fee. The defendants rely on the
IA 9558/09 in CS(OS) 1216/07 & IA 9551/09 I CS (OS) 1356/07 Page 4
following terms of the agreement:
The following further terms are also relied on:
IA 9558/09 in CS(OS) 1216/07 & IA 9551/09 I CS (OS) 1356/07 Page 5
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8. The plaintiffs also rely on another agreement, dated 8 April, 2009, (hereafter “the
April Agreement”) which, they say, further re-iterated the terms of settlement. They rely
on the following terms of the April agreement:
It is submitted that Zee is bound by the terms of the above agreements, which amount to
an unequivocal admission of liability. The plaintiffs say that the two agreements admitted
their respective copyrights, and further obligated the defendants to license the works
which they intended to broadcast, or publicly perform. The parties’ understanding was
also that a joint application for recording compromise and drawing a decree would be
moved before this Court; yet the defendants kept postponing doing so. In the meanwhile,
say the plaintiffs, the defendants partly performed the agreements, by payments, agreed
th
to be made in terms thereof; a letter dated 29 July, 2009, (in answer to IPRS and PPRS’
letters of 21.07.2009) is referred to, enclosing a sum of Rs. 50 lakh, evidencing bona
fides to perform the agreement (to license the plaintiff’s works, thus further
acknowledging their copyrights).
9. It is urged by the plaintiffs, in addition to the above, that the defendants are now
seeking to resile from the binding terms, which not only obligate them to pay license fee,
in clear terms, but also estop them from questioning the plaintiffs’ rights as lawful
IA 9558/09 in CS(OS) 1216/07 & IA 9551/09 I CS (OS) 1356/07 Page 6
copyright proprietors of the sound recording right owners, and the underlying rights
towards literary and song rights of the authors, etc. Learned senior counsel submits that
having regard to the circumstance that the agreements – which are the best evidence of
the transaction, and are not disputed documents; clearly state that Rs. 1 crore was paid
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towards ZEE’s liability, and further the letter dated 29 July, 2009, mentioned about
payment of Rs. 50 lakh, there are sufficient materials enabling the Court to conclude
existence of a lawful settlement, which amounts to admission, and direct the suits to be
decreed, under provisions of Order 12, Rule 6, Code of Civil Procedure (CPC). Learned
senior counsel for the plaintiffs relies on the decision of the Supreme Court, reported as
Charanjit Lal Mehra v. Kamal Saroj Mahajan , (2005) 11 SCC 279 to say that Order 12
Rule 6 CPC is enacted for the purpose of and in order to expedite the trials if there is any
admission on behalf of the defendants or an admission can be inferred from the facts and
circumstances of the case without any dispute. In such a case, the Court, in order to
expedite and dispose of the matter such admission can act upon the admission and make
such decree as is feasible.
10. ZEE’s stand is that the Agreements, relied on by the plaintiffs, and the letters
annexed to the application, are not sufficient for the Court to infer an unqualified
admission, since it did not agree to sign the application for having any compromise
recorded, and that there are disputed elements in the whole transaction. It is submitted
that ZEE had not admitted to the copyright ownership by the two plaintiffs, as is evident
from the written statements filed in the two suits. ZEE argues that on account of interim
orders made in the two proceedings, it paid amounts towards license fee, but without
prejudice to its contentions and submissions on the merits. In this background, when the
two agreements were executed, they were premised upon two representations, i.e. that the
plaintiffs had exclusive rights to what they claimed, and that they were copyright
societies, which meant that the fees collected by them would be strictly dealt with, and
disbursed in accordance with law.
IA 9558/09 in CS(OS) 1216/07 & IA 9551/09 I CS (OS) 1356/07 Page 7
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11. It is submitted that even though ZEE’s letters of 29 July, do show that the
agreements were indeed executed, its position nevertheless was that on the basis of
further oral discussion, there was a need to re-negotiate the terms. ZEE argues that these
show that the Agreements were not a concluded contract, but required further action to be
taken by the parties. At best, says ZEE, the documents amount to an intention to enter
into an executory contract, the performance of which depended on further action by the
parties.
12. ZEE submits that in any event, further debate or speculation by the plaintiffs or
any contention on their part about alleged admission, is of no avail, since it (the ZEE
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Group) rescinded the said Agreements, relied upon by them, in a letter written on 3
November, 2009. Extracts of the said letter read as follows:
It further stated that:
“ Further, the Board was made aware that when there is a live performance of a
song on television, no payment is required to be made to PPL, which is only the
owner of the sound recordings. Most of the programmes broadcast on the Zee
group’s various channels fall under this category. These programmes include Sa
Re Ga Ma Pa and other reality shows where the participants sing the songs to a
live orchestra. In such shows, there is minimal/ no usage of sound recordings,
which is the only work administered by PPL. Yet in the purported Agreements you
have claimed ownership over such works and an amount in respect of the use of
such works by the Zee Group, which constitutes a misrepresentation of fact and a
misrepresentation of the legal position on your part.”
IA 9558/09 in CS(OS) 1216/07 & IA 9551/09 I CS (OS) 1356/07 Page 8
Based on these contentions, ZEE communicated its decision to rescind the contract,
claiming that it was “void ab initio” , in these terms:
13. ZEE argues, in addition to the submission that in fact there is no enforceable
agreement constituting admission and that the scheme of Sections 33 and 34 of the Act is
such that copyright and performing rights societies, are to exclusively engage in licensing
and administering works for which they are set up. They cannot own copyrights, as is
being claimed by the IPRS and PPRS. They cannot also, says ZEE, assign the proceeds of
any license fees received by them, or any of them, or even a part thereof, to any
individual or other entity, as the scheme of the Rules framed under the Act indicates that
management of funds is exclusively to be by the societies, and for the benefit of the
IA 9558/09 in CS(OS) 1216/07 & IA 9551/09 I CS (OS) 1356/07 Page 9
copyright proprietors. ZEE relies on the following provisions of the Rules, extracted
below:
“14H Conditions subject to which a copyright society may issue licences,
collect fees and distribute such fees. — . (1) A copyright society may issue
licences and collect fees in accordance with its Scheme of Tariff in relation
to only such works as it has been authorised to administer in writing by the
owners of rights and for the period for which it has been so authorised.
(2) The distribution of fees collected shall be subject to a deduction not
exceeding fifteen per cent of the collection on account of administrative
expenses incurred by the copyright society.
14-I. Procedure for obtaining approval of owners of rights for collection
and
distribution of fees, etc. — Every copyright society shall maintain the
following registers
at its registered or administrative office :
(i) A register of owners of copyright and other rights to be called the
“Register of Owners” in respect of which the copyright society has been
authorised by the owners to issue or grant licences. The register shall
contain the names of the owners, their addresses, the nature of rights
authorised to be administered by the copyright society, date of publication
of the work, the date on which the copyright society becomes entitled to and
the duration of such right.
(ii) A register to be called the “Register of Agreements” containing a copy
of every agreement entered into by the copyright society with the owners
for the purpose.
(iii) A register to be called the “Register of Fees” containing particulars of
fees and mentioning the name of persons or organisations from whom the
fees have been realised, the amount so realised and the date of realisation.
(iv) A register to be called the “Disbursement Register” containing details
of
disbursements made to each owner of copyright, category-wise, mentioning
the name of the owner, nature of his copyright and the date and amount of
disbursement made to him.
14J. Tariff Scheme. — As soon as may be, but in no case later than three
months from the date on which a copyright society has become entitled to
commence its copyright business, it shall frame a scheme of tariff to be
called the “Tariff Scheme” setting out the nature and quantum of fees or
royalties which it proposes to collect in respect of such copyright or other
rights administered by it.
14K. Distribution Scheme. — (1) As soon as may be, but in no case later
than three months from the date on which a copyright society has become
IA 9558/09 in CS(OS) 1216/07 & IA 9551/09 I CS (OS) 1356/07 Page 10
entitled to commence its copyright business, it shall frame a scheme to be
called the “Distribution Scheme” setting out the procedure for collection
and distribution of the fees or royalties specified in the Tariff Scheme
among the owners of copyright or other rights whose names are borne on
its Register of Owners [maintained under clause (i) of rule 14-I for the
approval of such owners.
(2) Any distribution under the Distribution Scheme shall, as far as possible,
be in proportion to the income of the copyright society from actual use of
the work or works of each owner of rights.”
14. ZEE lastly argues that the conditions, in the agreement dated 05.03.2009, enable
the plaintiffs to divert the amounts received as license fee, entirely or substantially, to a
third party, which is contrary to the Act and Rules. Since the plaintiffs are created solely
for the benefit of copyright owners and cannot even spend more than 15% of the receipts
for administering and enforcing such rights, enabling provisions in agreements, which
can authorize diversion of entire license fees received from some parties, is contrary to
law, and contrary to public policy. The following stipulation in the said agreement of
05.03.2009 is relied on:
It is, therefore, submitted that there is no material on the record, establishing an
unambiguous or clear admission, which is a pre-requisite, if the Court has to exercise its
powers of rendering summary judgment, under Order 12, Rule 6, CPC. ZEE therefore,
urges that the applications moved by the plaintiffs, have to be rejected.
IA 9558/09 in CS(OS) 1216/07 & IA 9551/09 I CS (OS) 1356/07 Page 11
15. The suits seek permanent injunction against ZEE restraining it from broadcasting,
or publicly performing the sound recordings, in which the plaintiffs claim copyrights.
This Court had granted ex-parte relief. During the pendency of both the suits, the parties
entered into two agreements, dated 05.03.2009 and 08.04.2009. In those agreements, the
effect of which, facially, is that ZEE agreed to secure licenses from the plaintiffs; the
consideration too was indicated, and some amount was even paid. The plaintiffs later felt
that ZEE was not fulfilling its part of the bargain; it therefore wrote to the latter, on
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21.07.2009. ZEE, in its reply dated 29 July, 2009 mentioned about the need to re-
negotiate the whole agreement, and alluded to some conversation with the plaintiffs. It
also enclosed a sum of Rs. 50 lakhs. The plaintiffs’ position about an unambiguous and
clear admission would be justified, if the facts were to be only thus far, and no further,
since the stipulations mention about the defendant’s wishing to license the works and
sound recordings, of which the plaintiffs have rights to administer copyrights. ZEE,
however, now says that it intimated to the plaintiffs about rescission of the said two
contracts; it also avers that the plaintiffs’ stipulation in the March Agreement with the
defendant, which states that the license fee for usage of copyrighted works could be paid
to Select Media Holdings Ltd., said to be the plaintiff societies’ subsidiary, is contrary to
the mandate for which the plaintiffs have been constituted in the first place. The
argument here is that copyright societies’ mandate is only to administer the rights of their
members; they cannot carry on any business activity, and are entrusted with the
responsibility of managing the monies received, which are to be passed on to authors, and
copyright owners.
16. The Code of Civil Procedure, designed over a century ago, has been subjected to
major amendments over the years. Yet, in certain essentials, it continues unchanged. The
law relating to admissions, and decrees or orders that can be made on the basis of
admissions of one or other of the parties stems from Order 12, Rule 6, which enables
courts to render summary judgments, based on admissions in pleadings “or otherwise”.
The ruling in Uttam Singh Duggal v. Union Bank of India, AIR 2000 SC 2740,
sufficiently clarifies the parameters within which courts are to exercise their powers. It is
IA 9558/09 in CS(OS) 1216/07 & IA 9551/09 I CS (OS) 1356/07 Page 12
now established that to qualify for an order or decree which concludes one or another
issue, in a suit, the averment should be unconditional and unambiguous. Raj Kumar
Chawla v. Lucas Indian Services, 129 (2006) DLT 755, of the Division Bench states that
there cannot be an inferential admission – it has to be unambiguous. In other words, the
Court should not deduce an admission, as the result of an interpretive exercise.
17. The Court’s approach while considering whether any averment, or omission to
traverse any material allegation amounts to an admission cannot be subjective or one
side. It has to necessarily, take into consideration the implications which may arise from a
party urging one contention or another, on the basis of what is on record. The reason for
this is obvious. A plaintiff, in order to be non-suited, should have disclosed materials, or
pleaded something that would render the whole claim untenable either in the facts or in
law. Similarly, the defendants’ pleas should be clear and unambiguous. If these well
settled approaches are ignored, there is a possibility of the litigant being denied a fair
trial.
18. The plaintiffs’ perspective about the defendants’ admissions, thus is
understandable. The two agreements do reveal that ZEE agreed to pay license fee, in
return for permission to publicly perform the underlying works and sound recordings, as
well as broadcast them. It is also a matter of the record that the agreements, and the letter
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dated 29 July, 2009 record that ZEE paid the amounts indicated, towards its obligations.
Yet, the same letter also alludes to the terms requiring to be re-negotiated, and some re-
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thinking on ZEE’s part. The latter also relies on a letter dated 3 November, 2009, by
which it sought to put an end to the two agreements, on various allegations. The plaintiffs
do not deny having received the said letter, which was approved by ZEE’s Board of
Directors. In these proceedings, the Court cannot enter into the issue as to the legality of
such a position, and decide whether the rescission of contract, put forward is sound or
justified. That would be a matter of further inquiry. All that the Court can do is to decide
whether taken together, the materials indicate unambiguous or unqualified admissions
which enable it to draw a decree to such extent. The other aspect which cannot be
IA 9558/09 in CS(OS) 1216/07 & IA 9551/09 I CS (OS) 1356/07 Page 13
ignored, at this stage is that ZEE disputes the agreements, as void and containing
stipulations which are contrary to law. This contention pertains to the payments (made by
ZEE) to be received by the plaintiffs’ subsidiary. As to the status of such subsidiary is not
known; what the defendant here urges is that diverting such payments is contrary to
provisions of the Copyright Act. Again, the correctness of such plea cannot be examined
here; all that can be commented is that the argument is not insubstantial. It would be
relevant here to recollect that even a decree – based on consent or agreement can be
successfully challenged as void, if the underlying contract is vitiated by any factors
known in law; in Union Carbide Corporation v. Union of India, 1991 (4) SCC 584, the
Supreme Court, quoting an older English authority which stated that according greater
sanctity to a court order than the void contract on which it is based, would amount to
“giving the branch an existence which is independent of the tree”, held that:
“It is, indeed, trite proposition that a contract whose object is opposed to
public policy is invalid and it is not any the less so by reason alone of the
fact that the unlawful terms are embodied in a consensual decree. In State
of Punjab v. Amar Singh ((1974) 2 SCC 70), this Court said :
"After all, by consent or agreement, parties cannot achieve what is
contrary to law and a decree merely based on such agreement
cannot furnish a judicial amulet against statutory violation .... The
true rule is that 'the contract of the parties is not the less a contract,
and subject to the incidents of a contract, because there is
superadded the command of the Judge'."
19. In view of the above discussion, it is held that the plaintiffs’ contention that the
materials on record reveal clear admissions by the defendants, cannot be accepted. IA
9557/2009; IA 9558/2009 are therefore dismissed. IA 14866/2009 filed by the defendant
therefore succeeds. IA 9551/2009 (in Suit No. 1356/2007) is, for the same reasons,
dismissed. In IA 9550/2009, the plaintiffs have requested for replacement of their
Constituted Attorney.
IA 9558/09 in CS(OS) 1216/07 & IA 9551/09 I CS (OS) 1356/07 Page 14
20. There is no opposition to the request; the Court is also of the opinion that the same
requires to be allowed, in the interests of justice. IA 9550/2009 (in Suit No. 1356/2007) is
allowed, subject to just exceptions.
21. All the applications are disposed in the manner indicated above.
CS (OS) 1216/2007, CS (OS) 1356/2007
th
List on 16 April, 2010 before Joint Registrar for further proceedings.
(S.RAVINDRA BHAT)
JUDGE
JANUARY 27, 2010
IA 9558/09 in CS(OS) 1216/07 & IA 9551/09 I CS (OS) 1356/07 Page 15
Date of decision : 27.01.2010
+ IA No. 9558/2009 in CS (OS) 1216/2007
THE INDIAN PERFORMING RIGHT SOCIETY LTD & ANR. ..... Plaintiffs
Through: Mr.Sudhir Chandra Aggarwal, Sr. Advocates with
Mr. Himanshu Bagai, Advocate for Pliantiff No.1
Mr. Jagdish Sagar and Ms. Geetanjali Vishvanathan, Advocates
for Plaintiff No.2.
versus
MR. PUNIT GOENKA AND ANR. ..... Defendants
Through: Mr. V.P. Singh Sr. Advocate and Mr. Maninder Singh, Sr. Advocate
along with Ms. Pratibha M. Singh, Mr. Sudeep Chatterjee and Mr. Nikhil Mehra,
Advocates.
+ IA No. 9551/2009 in CS (OS) 1356/2007
THE INDIAN PERFORMING RIGHT SOCIETY LTD & ANR. ..... Plaintiffs
Through: Mr.Sudhir Chandra Aggarwal, Sr. Advocates with
Mr. Himanshu Bagai, Advocate for Pliantiff No.1
Mr. Jagdish Sagar and Ms. Geetanjali Vishvanathan, Advocates
for Plaintiff No.2.
versus
MR. LAXMI NARAIN GOEL AND ANR ..... Defendants
Through: Mr. V.P. Singh Sr. Advocate and Mr. Maninder Singh, Sr. advocate
along with Ms. Pratibha M. Singh, Mr. Sudeep Chatterjee and Mr. Nikhil Mehra,
Advocates.
CORAM:
MR. JUSTICE S. RAVINDRA BHAT
1. Whether the Reporters of local papers Yes.
may be allowed to see the judgment?
IA 9558/09 in CS(OS) 1216/07 & IA 9551/09 I CS (OS) 1356/07 Page 1
2. To be referred to Reporter or not? Yes.
3. Whether the judgment should be Yes.
reported in the Digest?
MR. JUSTICE S.RAVINDRA BHAT
%
1. The plaintiffs in both the suits, CS(OS) 1216/07 and CS(OS) 1356/207 are
common; the first plaintiff is the Indian Performing Arts Society (hereafter “IPRS”) a
company limited by guarantee, incorporated to protect and safeguard its members’ rights.
Its members are comprised of authors, composers and publishers of musical or literary
works. The IPRS says that it is also committed to protect the rights of other overseas
Sister societies, which are copyright owners in their literary and musical works. The
IPRS claims to be the sole national copyright society of composers, authors and
publishers of literary and musical works, from India, and other countries. IPRS also says
that it was “re-registered” as a copyright society, in terms of Section 33 (3) of the
Copyright Act, 1957 (“the Act”) after its amendment in 1994, and relies on a certificate
th
of registration, to such effect, dated 27 March, 1996.
2. It is stated that members of IPRS, comprising of authors, composers and
publishers of Indian literary and musical works, have executed assignment deeds, in
respect of their public performing rights, and rights to communicate their works to the
public, under the Act, as well as works which they might produce in the future. The IPRS
therefore claims to be owner of such rights.
3. The second defendant, (hereafter called PPRS) claims to be a society engaged in
copyright business of licensing rights in respect of sound recordings, of its members; it
too avers to being a copyright society under Section 33 of the Act, in respect of sound
recording rights under the Act, of its members. PPRS states that it has the right to issue
licenses in respect of sound recording and performance rights in relation to such sound
recording, of its members, in India. It is alleged that the PPRS membership consists of
IA 9558/09 in CS(OS) 1216/07 & IA 9551/09 I CS (OS) 1356/07 Page 2
some of the best known sound recording companies, in India, and abroad, and therefore,
it has the exclusive right to administer one of the most extensive repertoire of musical
works.
4. The plaintiffs say that though both are copyright societies, under Section 33 of the
Act, the IPRS is authorised to administer rights of authors, composers, etc. in respect of
underlying works and compositions, that are embodied in musical and literary works, that
may (or may not) be embodied in sound recordings; the PPRS has exclusive rights to
administer copyrights in relation to sound recordings. It is contended that licenses
obtained from one plaintiff is not sufficient, if the public performance right license (in
relation to sound recordings) is not secured from the other, having regard to the nature of
copyrights, which are a bundle of separate, and concurrent rights.
5. It is contended that the first defendant is executive director of the second
defendant (hereafter collectively referred to as “ZEE”). Zee was incorporated in 1992 as a
broadcaster, and as on the date of filing of the suits, it has several channels, including
those beaming regional language programmes, as well as those dealing with news, and
general entertainment, such as music, films, etc. The predecessors of ZEE, i.e. Zee
Telefilms Ltd., say the plaintiffs, had acquired license from them, in 2005, which expired
in October, 2006, for performance and broadcasting rights in respect of sound recordings,
to be used in their programmes. This, they allege, constitute its acknowledgement of the
plaintiffs’ copyrights. It is alleged, in these circumstances, that the use of such sound
recordings in ZEE’s programmes – by ZEE Entertainment Ltd., led to filing of a suit, CS
(OS) 1216/2007, in which an interim order was made. As an interim measure, parties
agreed that the plaintiffs would be paid some amounts, in return for which the defendants
were permitted to use their sound recordings in the entertainment programme HERO
HONDA SA RE GA MA PA. In the subsequent suit, it is alleged that the second
defendant, ZEE NEWS LTD., (also part of the ZEE group) is indulging in copyright
violation by unauthorized usage of the plaintiffs’ sound recordings, which also violates
IPRS’s rights.
IA 9558/09 in CS(OS) 1216/07 & IA 9551/09 I CS (OS) 1356/07 Page 3
6. In the second suit, CS (OS) 1356/2007, this Court made an interim order, on
31.07.2007, to the following effect:
7. It is alleged, in the applications for decree on admission, by the plaintiffs- that
though the defendants had contested their (the plaintiffs’) copyright and the claim for
injunction and damages, subsequently, on 05.03.2009, they entered into agreements,
which admitted the plaintiffs’ right to demand license fee. The defendants rely on the
IA 9558/09 in CS(OS) 1216/07 & IA 9551/09 I CS (OS) 1356/07 Page 4
following terms of the agreement:
The following further terms are also relied on:
IA 9558/09 in CS(OS) 1216/07 & IA 9551/09 I CS (OS) 1356/07 Page 5
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8. The plaintiffs also rely on another agreement, dated 8 April, 2009, (hereafter “the
April Agreement”) which, they say, further re-iterated the terms of settlement. They rely
on the following terms of the April agreement:
It is submitted that Zee is bound by the terms of the above agreements, which amount to
an unequivocal admission of liability. The plaintiffs say that the two agreements admitted
their respective copyrights, and further obligated the defendants to license the works
which they intended to broadcast, or publicly perform. The parties’ understanding was
also that a joint application for recording compromise and drawing a decree would be
moved before this Court; yet the defendants kept postponing doing so. In the meanwhile,
say the plaintiffs, the defendants partly performed the agreements, by payments, agreed
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to be made in terms thereof; a letter dated 29 July, 2009, (in answer to IPRS and PPRS’
letters of 21.07.2009) is referred to, enclosing a sum of Rs. 50 lakh, evidencing bona
fides to perform the agreement (to license the plaintiff’s works, thus further
acknowledging their copyrights).
9. It is urged by the plaintiffs, in addition to the above, that the defendants are now
seeking to resile from the binding terms, which not only obligate them to pay license fee,
in clear terms, but also estop them from questioning the plaintiffs’ rights as lawful
IA 9558/09 in CS(OS) 1216/07 & IA 9551/09 I CS (OS) 1356/07 Page 6
copyright proprietors of the sound recording right owners, and the underlying rights
towards literary and song rights of the authors, etc. Learned senior counsel submits that
having regard to the circumstance that the agreements – which are the best evidence of
the transaction, and are not disputed documents; clearly state that Rs. 1 crore was paid
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towards ZEE’s liability, and further the letter dated 29 July, 2009, mentioned about
payment of Rs. 50 lakh, there are sufficient materials enabling the Court to conclude
existence of a lawful settlement, which amounts to admission, and direct the suits to be
decreed, under provisions of Order 12, Rule 6, Code of Civil Procedure (CPC). Learned
senior counsel for the plaintiffs relies on the decision of the Supreme Court, reported as
Charanjit Lal Mehra v. Kamal Saroj Mahajan , (2005) 11 SCC 279 to say that Order 12
Rule 6 CPC is enacted for the purpose of and in order to expedite the trials if there is any
admission on behalf of the defendants or an admission can be inferred from the facts and
circumstances of the case without any dispute. In such a case, the Court, in order to
expedite and dispose of the matter such admission can act upon the admission and make
such decree as is feasible.
10. ZEE’s stand is that the Agreements, relied on by the plaintiffs, and the letters
annexed to the application, are not sufficient for the Court to infer an unqualified
admission, since it did not agree to sign the application for having any compromise
recorded, and that there are disputed elements in the whole transaction. It is submitted
that ZEE had not admitted to the copyright ownership by the two plaintiffs, as is evident
from the written statements filed in the two suits. ZEE argues that on account of interim
orders made in the two proceedings, it paid amounts towards license fee, but without
prejudice to its contentions and submissions on the merits. In this background, when the
two agreements were executed, they were premised upon two representations, i.e. that the
plaintiffs had exclusive rights to what they claimed, and that they were copyright
societies, which meant that the fees collected by them would be strictly dealt with, and
disbursed in accordance with law.
IA 9558/09 in CS(OS) 1216/07 & IA 9551/09 I CS (OS) 1356/07 Page 7
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11. It is submitted that even though ZEE’s letters of 29 July, do show that the
agreements were indeed executed, its position nevertheless was that on the basis of
further oral discussion, there was a need to re-negotiate the terms. ZEE argues that these
show that the Agreements were not a concluded contract, but required further action to be
taken by the parties. At best, says ZEE, the documents amount to an intention to enter
into an executory contract, the performance of which depended on further action by the
parties.
12. ZEE submits that in any event, further debate or speculation by the plaintiffs or
any contention on their part about alleged admission, is of no avail, since it (the ZEE
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Group) rescinded the said Agreements, relied upon by them, in a letter written on 3
November, 2009. Extracts of the said letter read as follows:
It further stated that:
“ Further, the Board was made aware that when there is a live performance of a
song on television, no payment is required to be made to PPL, which is only the
owner of the sound recordings. Most of the programmes broadcast on the Zee
group’s various channels fall under this category. These programmes include Sa
Re Ga Ma Pa and other reality shows where the participants sing the songs to a
live orchestra. In such shows, there is minimal/ no usage of sound recordings,
which is the only work administered by PPL. Yet in the purported Agreements you
have claimed ownership over such works and an amount in respect of the use of
such works by the Zee Group, which constitutes a misrepresentation of fact and a
misrepresentation of the legal position on your part.”
IA 9558/09 in CS(OS) 1216/07 & IA 9551/09 I CS (OS) 1356/07 Page 8
Based on these contentions, ZEE communicated its decision to rescind the contract,
claiming that it was “void ab initio” , in these terms:
13. ZEE argues, in addition to the submission that in fact there is no enforceable
agreement constituting admission and that the scheme of Sections 33 and 34 of the Act is
such that copyright and performing rights societies, are to exclusively engage in licensing
and administering works for which they are set up. They cannot own copyrights, as is
being claimed by the IPRS and PPRS. They cannot also, says ZEE, assign the proceeds of
any license fees received by them, or any of them, or even a part thereof, to any
individual or other entity, as the scheme of the Rules framed under the Act indicates that
management of funds is exclusively to be by the societies, and for the benefit of the
IA 9558/09 in CS(OS) 1216/07 & IA 9551/09 I CS (OS) 1356/07 Page 9
copyright proprietors. ZEE relies on the following provisions of the Rules, extracted
below:
“14H Conditions subject to which a copyright society may issue licences,
collect fees and distribute such fees. — . (1) A copyright society may issue
licences and collect fees in accordance with its Scheme of Tariff in relation
to only such works as it has been authorised to administer in writing by the
owners of rights and for the period for which it has been so authorised.
(2) The distribution of fees collected shall be subject to a deduction not
exceeding fifteen per cent of the collection on account of administrative
expenses incurred by the copyright society.
14-I. Procedure for obtaining approval of owners of rights for collection
and
distribution of fees, etc. — Every copyright society shall maintain the
following registers
at its registered or administrative office :
(i) A register of owners of copyright and other rights to be called the
“Register of Owners” in respect of which the copyright society has been
authorised by the owners to issue or grant licences. The register shall
contain the names of the owners, their addresses, the nature of rights
authorised to be administered by the copyright society, date of publication
of the work, the date on which the copyright society becomes entitled to and
the duration of such right.
(ii) A register to be called the “Register of Agreements” containing a copy
of every agreement entered into by the copyright society with the owners
for the purpose.
(iii) A register to be called the “Register of Fees” containing particulars of
fees and mentioning the name of persons or organisations from whom the
fees have been realised, the amount so realised and the date of realisation.
(iv) A register to be called the “Disbursement Register” containing details
of
disbursements made to each owner of copyright, category-wise, mentioning
the name of the owner, nature of his copyright and the date and amount of
disbursement made to him.
14J. Tariff Scheme. — As soon as may be, but in no case later than three
months from the date on which a copyright society has become entitled to
commence its copyright business, it shall frame a scheme of tariff to be
called the “Tariff Scheme” setting out the nature and quantum of fees or
royalties which it proposes to collect in respect of such copyright or other
rights administered by it.
14K. Distribution Scheme. — (1) As soon as may be, but in no case later
than three months from the date on which a copyright society has become
IA 9558/09 in CS(OS) 1216/07 & IA 9551/09 I CS (OS) 1356/07 Page 10
entitled to commence its copyright business, it shall frame a scheme to be
called the “Distribution Scheme” setting out the procedure for collection
and distribution of the fees or royalties specified in the Tariff Scheme
among the owners of copyright or other rights whose names are borne on
its Register of Owners [maintained under clause (i) of rule 14-I for the
approval of such owners.
(2) Any distribution under the Distribution Scheme shall, as far as possible,
be in proportion to the income of the copyright society from actual use of
the work or works of each owner of rights.”
14. ZEE lastly argues that the conditions, in the agreement dated 05.03.2009, enable
the plaintiffs to divert the amounts received as license fee, entirely or substantially, to a
third party, which is contrary to the Act and Rules. Since the plaintiffs are created solely
for the benefit of copyright owners and cannot even spend more than 15% of the receipts
for administering and enforcing such rights, enabling provisions in agreements, which
can authorize diversion of entire license fees received from some parties, is contrary to
law, and contrary to public policy. The following stipulation in the said agreement of
05.03.2009 is relied on:
It is, therefore, submitted that there is no material on the record, establishing an
unambiguous or clear admission, which is a pre-requisite, if the Court has to exercise its
powers of rendering summary judgment, under Order 12, Rule 6, CPC. ZEE therefore,
urges that the applications moved by the plaintiffs, have to be rejected.
IA 9558/09 in CS(OS) 1216/07 & IA 9551/09 I CS (OS) 1356/07 Page 11
15. The suits seek permanent injunction against ZEE restraining it from broadcasting,
or publicly performing the sound recordings, in which the plaintiffs claim copyrights.
This Court had granted ex-parte relief. During the pendency of both the suits, the parties
entered into two agreements, dated 05.03.2009 and 08.04.2009. In those agreements, the
effect of which, facially, is that ZEE agreed to secure licenses from the plaintiffs; the
consideration too was indicated, and some amount was even paid. The plaintiffs later felt
that ZEE was not fulfilling its part of the bargain; it therefore wrote to the latter, on
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21.07.2009. ZEE, in its reply dated 29 July, 2009 mentioned about the need to re-
negotiate the whole agreement, and alluded to some conversation with the plaintiffs. It
also enclosed a sum of Rs. 50 lakhs. The plaintiffs’ position about an unambiguous and
clear admission would be justified, if the facts were to be only thus far, and no further,
since the stipulations mention about the defendant’s wishing to license the works and
sound recordings, of which the plaintiffs have rights to administer copyrights. ZEE,
however, now says that it intimated to the plaintiffs about rescission of the said two
contracts; it also avers that the plaintiffs’ stipulation in the March Agreement with the
defendant, which states that the license fee for usage of copyrighted works could be paid
to Select Media Holdings Ltd., said to be the plaintiff societies’ subsidiary, is contrary to
the mandate for which the plaintiffs have been constituted in the first place. The
argument here is that copyright societies’ mandate is only to administer the rights of their
members; they cannot carry on any business activity, and are entrusted with the
responsibility of managing the monies received, which are to be passed on to authors, and
copyright owners.
16. The Code of Civil Procedure, designed over a century ago, has been subjected to
major amendments over the years. Yet, in certain essentials, it continues unchanged. The
law relating to admissions, and decrees or orders that can be made on the basis of
admissions of one or other of the parties stems from Order 12, Rule 6, which enables
courts to render summary judgments, based on admissions in pleadings “or otherwise”.
The ruling in Uttam Singh Duggal v. Union Bank of India, AIR 2000 SC 2740,
sufficiently clarifies the parameters within which courts are to exercise their powers. It is
IA 9558/09 in CS(OS) 1216/07 & IA 9551/09 I CS (OS) 1356/07 Page 12
now established that to qualify for an order or decree which concludes one or another
issue, in a suit, the averment should be unconditional and unambiguous. Raj Kumar
Chawla v. Lucas Indian Services, 129 (2006) DLT 755, of the Division Bench states that
there cannot be an inferential admission – it has to be unambiguous. In other words, the
Court should not deduce an admission, as the result of an interpretive exercise.
17. The Court’s approach while considering whether any averment, or omission to
traverse any material allegation amounts to an admission cannot be subjective or one
side. It has to necessarily, take into consideration the implications which may arise from a
party urging one contention or another, on the basis of what is on record. The reason for
this is obvious. A plaintiff, in order to be non-suited, should have disclosed materials, or
pleaded something that would render the whole claim untenable either in the facts or in
law. Similarly, the defendants’ pleas should be clear and unambiguous. If these well
settled approaches are ignored, there is a possibility of the litigant being denied a fair
trial.
18. The plaintiffs’ perspective about the defendants’ admissions, thus is
understandable. The two agreements do reveal that ZEE agreed to pay license fee, in
return for permission to publicly perform the underlying works and sound recordings, as
well as broadcast them. It is also a matter of the record that the agreements, and the letter
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dated 29 July, 2009 record that ZEE paid the amounts indicated, towards its obligations.
Yet, the same letter also alludes to the terms requiring to be re-negotiated, and some re-
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thinking on ZEE’s part. The latter also relies on a letter dated 3 November, 2009, by
which it sought to put an end to the two agreements, on various allegations. The plaintiffs
do not deny having received the said letter, which was approved by ZEE’s Board of
Directors. In these proceedings, the Court cannot enter into the issue as to the legality of
such a position, and decide whether the rescission of contract, put forward is sound or
justified. That would be a matter of further inquiry. All that the Court can do is to decide
whether taken together, the materials indicate unambiguous or unqualified admissions
which enable it to draw a decree to such extent. The other aspect which cannot be
IA 9558/09 in CS(OS) 1216/07 & IA 9551/09 I CS (OS) 1356/07 Page 13
ignored, at this stage is that ZEE disputes the agreements, as void and containing
stipulations which are contrary to law. This contention pertains to the payments (made by
ZEE) to be received by the plaintiffs’ subsidiary. As to the status of such subsidiary is not
known; what the defendant here urges is that diverting such payments is contrary to
provisions of the Copyright Act. Again, the correctness of such plea cannot be examined
here; all that can be commented is that the argument is not insubstantial. It would be
relevant here to recollect that even a decree – based on consent or agreement can be
successfully challenged as void, if the underlying contract is vitiated by any factors
known in law; in Union Carbide Corporation v. Union of India, 1991 (4) SCC 584, the
Supreme Court, quoting an older English authority which stated that according greater
sanctity to a court order than the void contract on which it is based, would amount to
“giving the branch an existence which is independent of the tree”, held that:
“It is, indeed, trite proposition that a contract whose object is opposed to
public policy is invalid and it is not any the less so by reason alone of the
fact that the unlawful terms are embodied in a consensual decree. In State
of Punjab v. Amar Singh ((1974) 2 SCC 70), this Court said :
"After all, by consent or agreement, parties cannot achieve what is
contrary to law and a decree merely based on such agreement
cannot furnish a judicial amulet against statutory violation .... The
true rule is that 'the contract of the parties is not the less a contract,
and subject to the incidents of a contract, because there is
superadded the command of the Judge'."
19. In view of the above discussion, it is held that the plaintiffs’ contention that the
materials on record reveal clear admissions by the defendants, cannot be accepted. IA
9557/2009; IA 9558/2009 are therefore dismissed. IA 14866/2009 filed by the defendant
therefore succeeds. IA 9551/2009 (in Suit No. 1356/2007) is, for the same reasons,
dismissed. In IA 9550/2009, the plaintiffs have requested for replacement of their
Constituted Attorney.
IA 9558/09 in CS(OS) 1216/07 & IA 9551/09 I CS (OS) 1356/07 Page 14
20. There is no opposition to the request; the Court is also of the opinion that the same
requires to be allowed, in the interests of justice. IA 9550/2009 (in Suit No. 1356/2007) is
allowed, subject to just exceptions.
21. All the applications are disposed in the manner indicated above.
CS (OS) 1216/2007, CS (OS) 1356/2007
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List on 16 April, 2010 before Joint Registrar for further proceedings.
(S.RAVINDRA BHAT)
JUDGE
JANUARY 27, 2010
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