Full Judgment Text
2013:BHC-OS:4014-DB
krs 1/16 app122.13
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL NO.122 OF 2013
In
NOTICE OF MOTION (L) NO.1108 OF 2012
In
SUIT NO.883 OF 2012
Radio One Limited
(formerly known as Radio Mid-day
(West) India Ltd. : Appellant
(Orig.Defendant)
V/s.
Phonographic Performance Ltd. : Respondent
(Orig.Plaintiff)
.....
With
NOTICE OF MOTION NO.460 OF 2013
In
APPEAL NO.122 OF 2013
In
NOTICE OF MOTION (L) NO.1108 OF 2012
In
SUIT NO.883 OF 2012
Radio One Limited : Applicant
(Orig.Defendant)
In the Matter Between
Radio One Limited
(formerly known as Radio Mid-day
(West) India Ltd. : Appellant
V/s.
Phonographic Performance Ltd. : Respondent
….
With
CROSS OBJECTIONS NO.10 OF 2012
In
APPEAL NO.122 OF 2013
In
NOTICE OF MOTION (L) NO.1108 OF 2012
In
SUIT NO.883 OF 2012
Phonographic Performance Limited : Appellant
(Orig.Plaintiff)
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krs 2/16 app122.13
V/s.
Radio One Limited
Formerly Radio Mid-day West (India) Ltd. : Respondent
(Orig.Defendant)
….
With
NOTICE OF MOTION NO.2190 OF 2012
In
CROSS OBJECTIONS NO.10 OF 2012
In
APPEAL NO.122 OF 2013
In
NOTICE OF MOTION (L) NO.1108 OF 2012
In
SUIT NO.883 OF 2012
Phonographic Performance Limited : Applicant
(Orig.Plaintiff)
In the matter between
Phonographic Performance Limited : Appellant
(Orig.Plaintiff)
V/s.
Radio One Limited
Formerly Radio Mid-day West (India) Ltd. : Respondent
(Orig.Defendant)
…
Mr.Venkatesh Dhond, Senior Advocate, with Mr.Madhur R. Baya and
Mr.Abhileen Chaturvedi for the Appellant in Appeal No.122 of 2013 and
Respondent in Cross Objections No.10 of 2012.
Mr.N.H.Seervai, Senior Advocate, with Ms Gulnar Mistri i/b. Ms Madhavi
Deshpande Ravuri, Mr.Vinayak Shete and Mr.Manish Upadhye for the
Respondent in Appeal No.122 of 2013 and Appellant in Cross Objections No.10
of 2012.
.....
CORAM : DR.D.Y.CHANDRACHUD &
A.A. SAYED, JJ.
DATE : 02 APRIL 2013.
ORAL JUDGEMENT (Per Dr.Chandrachud,J.)
The appeal before the Court arises from an order of a learned Single
Judge dated 9 May 2012. The appeal is by the original Defendant. The Plaintiff
has filed cross-objections. For convenience of reference, it would be appropriate
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to refer to the parties by their appellations in the suit.
2. In 2011, Radio One Limited, the Defendant, secured a licence for an FM
Radio station in Mumbai. The Plaintiff, Phonographic Performance Ltd.,
apprehending that the Defendant would exploit the sound recordings in the
1
repertoire of the Plaintiff filed a suit for an injunction which is pending on the
2
Original Side of this Court. A Notice of Motion was filed in the suit.
3. On 1 March 2002, citing the tariff of the Plaintiff as excessive, the
Defendant approached the Copyright Board for grant of a compulsory licence
under Section 31(1)(b) of the Copyright Act, 1957. The Copyright Board
disposed of the complaint on 19 November 2002 by which the rate of royalty was
fixed at Rs.661/- per needle hour of broadcasting. Statutory appeals were filed
before this Court both by the Plaintiff and by the Defendant against the order of
the Copyright Board. On 10 December 2003, the parties arrived at an interim
consensual arrangement in the Notice of Motion which was to remain effective
pending the hearing and final disposal of the appeals before this Court. On 13
April 2004 this Court disposed of the appeals by setting aside the order of the
Copyright Board dated 19 November 2002. Special Leave Petitions were filed
against the order of this Court. Since the interim arrangement recorded in the
Consent Terms came to an end, a Motion was filed by the Plaintiff in the suit
before this Court. By an order dated 21 July 2005, this Court made a previous
order dated 8 August 2002 operative against the Defendant. Under the order,
the Defendant was to deposit an ad hoc advance amount every month until the
1 Suit No.3752 of 2001
2 Notice of Motion No.2846 of 2003
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final orders in the suit and/or the decision of the Board; the amount of the
advance was to be adjusted against the dues of the Plaintiff and a guarantee
was to be furnished and kept alive pending the hearing and final disposal of the
suit or till further orders.
4. By an order dated 16 May 2008, the Supreme Court set aside the order of
the Copyright Board dated 19 November 2002 and remanded the matter to the
Board for re-consideration.
5. Upon remand, the Copyright Board by an order dated 25 August 2010,
granted a compulsory licence, subject to terms and conditions, to the Defendant
under Section 31(1)(b). In pursuance of the order of the Copyright Board, a
licence was issued to the Defendant which, inter alia, provided for the payment
of compensation to the Plaintiff computed at the rate of 2% of the net advertising
revenue of the Bombay FM Radio Station. Under the terms of the compulsory
licence, the Defendant was to issue a Bank guarantee which had to be revised
within two weeks of the close of every quarter to such sums as it was liable to
pay as compensation for that quarter. Both the order of the Copyright Board and
the licence that was granted to the Defendant specifically provided that the
Plaintiff would be at liberty to cancel the licence without notice and to recover the
remaining dues if the Defendant failed to revise the quantum of the Bank
guarantee.
6. Under the terms of the licence, the Defendant was obliged to submit a
revised Bank guarantee within two weeks from the end of the quarter for the
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period from October and December 2010. This the Defendant failed to do. On
27 January 2012 the Defendant had instituted its own suit against the Plaintiff to
this proceeding claiming certain purported adjustments against fee that they
were liable to pay under the voluntary licence entered into by the Defendant with
the Plaintiff for six FM Radio Stations outside Mumbai. The Defendant disclosed
in the suit, its net advertising earnings and the amount of compensation payable
under the compulsory licence.
7. The Plaintiff by a communication dated 29 March 2012 terminated the
compulsory licence granted to the Defendant on the ground of breach. The case
of the Plaintiff is that despite the receipt of the notice of termination on 30 March
2012, the Defendant continued to unauthorisedly broadcast the sound
recordings in the repertoire of the Plaintiff thereby infringing the copyright of the
Plaintiff. The Plaintiff has instituted a suit seeking a permanent injunction against
the Defendant, rendition of accounts and damages for infringement of copyright.
8. On an application for an ad-interim relief the learned Single Judge, by an
order dated 16 April 2012, noted that the Defendant had submitted a Bank
Guarantee only in the amount of Rs.10,000/- by a covering letter dated 23
September 2010. The learned Judge held that a revised Bank guarantee should
have been submitted every quarter commencing from October to December
2010 and it was on account of a breach of the obligation to submit a Bank
guarantee for that quarter and for consecutive five quarters that the termination
had been effected. The learned Single Judge observed that in these
circumstances it is not open to the Defendant to raise the claim in the suit by the
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Plaintiff by relying upon some amount which was stated to be subject to
adjustment in the suit that has been instituted by the Defendant against the
Plaintiff. The finding of the learned Single Judge was as follows:-
“The revised bank guarantee should have been
submitted for every quarter starting from October 2010
to December 2010. It is that breach and for the
consecutive five quarters for which the bank guarantee
was not revised, that the termination has been effected.
It is in such circumstances that I am of the view that the
defendant Radio One Station cannot raise a claim in
this suit by relying on some amounts which are stated
to be lying or adjusted or claimed in the suit that is
instituted by Radio One Limited against the society.
That suit may refer to amount stated to be lying with the
society on the basis that Radio One Station has not
bifurcated any such payment station-wise. It may be
something that is claimed as consolidated figure qua all
stations. However, by institution of such a suit itself
and without anything more, it will not be possible for
Radio One Station to resist the prayer for interim
injunction made in the society's suit.”
At that stage, a statement was made on behalf of the Defendant that an amount
of Rs.5,00,000/- would be deposited in Court within a period of two weeks. The
learned Judge allowed that request and directed that for a period of two weeks,
the broadcast by the Defendant would continue but without prejudice to the
rights and contentions of the parties.
9. Subsequently, in the impugned order of the learned Single Judge dated 9
May 2012, the Court has come to the conclusion that: (i) The Defendant was
liable to make the payment to the Plaintiff in terms of the licence that was issued
in accordance with the order of the Copyright Board; (ii) The terms of the licence
contemplated that the Plaintiff could terminate the licence if the Bank Guarantee
was not revised; (iii) From the statement of account which was furnished by the
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Defendant together with its affidavit, it was apparent that no assertion had been
made by the Defendant nor had any Bank guarantee as revised been furnished;
(iv) Once the licence was cancelled, it was prima facie undisputed that the
repertoire of the Plaintiff cannot be utilised by the radio station of the Defendant.
On these facts, the learned Single Judge held that any payment which was
made in the past and based on which some adjustment was claimed could not
form the basis on which the action of the Plaintiff could be resisted. The learned
Single Judge noted that it was incumbent on the Defendant to demonstrate how
it had abided by the terms and conditions of the licence which prima facie had
not been proved.
10. Despite these findings, the learned Single Judge directed that if the
Defendant deposits a sum of Rs.6,50,000/- in addition to the sum of
Rs.5,00,000/- already deposited, it can continue to broadcast the sound
recordings from the repertoire of the Plaintiff and that it should abide by the
terms and conditions of the licence issued in its favour by the Copyright Board.
The learned Judge, however, directed that if there is a failure on the part of the
Defendant to effect payment as directed, an ad-interim injunction in terms of
prayer clause (a) of the Motion would follow.
11. On behalf of the Plaintiff, it has been submitted that the order of the
learned Single Judge allowing the Defendant to broadcast songs from the
repertoire of the Plaintiff subject to the payment of a total sum of Rs.11.50 lakhs
amounts to the grant of a compulsory interim licence, something which even the
Copyright Board has been held by the Supreme Court not to have jurisdiction to
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grant in the judgement in Super Cassettes Industries Ltd . v. Music
3
Broadcast Pvt. Ltd . Similarly, reliance has been placed on a judgement of a
Division Bench of this Court in Music Choice India Private Limited v.
4
Phonographic Performance Limited where it has been held that exclusive
jurisdiction to grant a licence under Section 31(1)(b) is of the Copyright Board.
Moreover, it has been urged that both the order of the Copyright Board as well
as the terms of the licence confer upon the Plaintiff the power to terminate the
licence for a breach of the obligation to submit a revised Bank guarantee. In the
present case, it has been submitted that there was admittedly a failure on the
part of the Defendant to submit a revised Bank guarantee and no payment was
made between 2009 and 2012 when the order of the learned Single Judge was
passed. On the other hand, on behalf of the Defendant, it has been urged that
the Defendant seeks to claim an adjustment in respect of an excess amount paid
to the Plaintiff by way of a set-off and that after the order of the learned Single
Judge, payment has been made to the Plaintiff which has however not been
accepted. Moreover, it has been submitted that as a result of the amendment
which has been brought about by the Copyright (Amendment) Act, 2012 , Section
31D has been inserted under which a provision has been made for the grant of a
statutory licence for broadcasting of literary and musical works and sound
recordings, subject to payment at such rate that may be fixed by the Copyright
Board.
12. The rival submissions now fall for consideration. The entitlement, prima
facie, which the Defendant claims to broadcast songs from the repertoire of the
3 AIR 2012 SC 2144
4 Appeal No.150 of 2009 decided on 22 January 2010
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Plaintiff traces itself to the compulsory licence that was granted in pursuance of
the order of the Copyright Board dated 25 August 2010. The Copyright Board
stipulated the conditions subject to which the licence was to be granted, these
being as follows:-
“(a) 2% of net advertisement earnings of each FM
radio station accruing from the radio business only for
that radio station shall be set apart by each complainant
for pro rata distribution of compensation to all music
providers including the respondent herein in proportion
to the music provided by the respective music providers
and broadcast by the complainant. Complainant shall
be deemed to be a music provider for the music
provided by it or received by it free of cost and
broadcast. For arriving at “net advertisement earnings”,
all Government and municipal taxes paid, if any, and
commission paid towards the procurement of such
advertisements to the extent of 15% of such
advertisement earnings shall be excluded;
(b) Complainants shall furnish within a week of grant
of licence by the Registrar of Copyrights a bank
guarantee for Rs.10,000 in favour of the respondent for
each radio station. However, the sum of such bank
guarantee shall be revised within two weeks after the
close of every quarter of the year to such sum for which
complainant was liable for payment of compensation for
that quarter. Quarter of a year means a period of three
months ending on the last day of March, June,
September and December of the relevant year;
(c ) If the complainant fails to revise the bank guarantee
in terms of clause (b), respondent shall be at liberty to
cancel the licence without giving any notice and recover
the remaining dues from the available bank guarantee;
(d) Payment of compensation by the complainant to
th
the respondent for a month shall be made by 7 day of
the month following the month to which payment relates.
Complainant shall also furnish alongwith the payment
the date wise details of the periods for which the music
relating to the respondent and all other music providers
has been used for the month. However, payment for the
period beginning with the grant of licence and ending on
th th
30 September, 2010 shall be made in lump sum by 7
October, 2010;
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th
(e) For any delayed payment for a month beyond 7
of the following month, interest at the rate of 1% per
month or a part of month shall be payable;
(f) In case payment is not made by the complainant
for a radio station for consecutive two months,
respondent herein shall be entitled to cancel the licence
by giving notice of one month and recover the remaining
dues from the bank guarantee;
(g) A complainant may for one or more radio stations,
by giving notice of one month and after making payment
of all sums due, cancel the licence;
(h) The validity of the licence granted by the Registrar
th
of Copyright shall come to end on 30 September,
2020.”
The compulsory licence that was granted to the Defendant on 16 September
2010 incorporates the conditions which were prescribed by the Copyright Board.
Under the terms of the licence, the Defendant was to furnish initially a Bank
guarantee for Rs.10,000/- in favour of the Plaintiff for each Radio Station. The
amount of the Bank guarantee was to be revised within two weeks after close of
every quarter to such sum for which the Defendant was required to make
payment of compensation for that quarter. Compensation was payable at the
rate of 2% of the net advertisement earnings for each FM Radio Station accruing
from the radio business. The licence was terminable and an express provision
was introduced into the licence, following the order of the Copyright Board, to the
effect that if the licensee fails to revise the Bank guarantee as required, the
Plaintiff would be at liberty to cancel the licence without notice and to recover the
remaining dues from the available bank guarantee. Moreover, payment of
compensation was liable to be made by the Defendant to the Plaintiff by the
seventh day of the month following the month to which the payment relates. The
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Defendant was also to furnish together with the payment datewise details of the
periods for which the music relating to the Plaintiff has been used for the
month.
13. There is no dispute before the Court about the factual position, as there
was none before the learned Single Judge, that a revised bank guarantee was
never furnished. Moreover, no payment whatsoever was effected by the
Defendant to the Plaintiff between 2009 and 2012. This is evident from the chart
that was annexed by the Defendant to its affidavit-in-reply dated 7 May 2012.
The contention of the Defendant, however, was that there was an understanding
between the parties that in the event the final order of the Copyright Board
prescribes a lower rate of royalty than the interim rate that was paid by the
Defendant, the Plaintiff would be required to adjust the future amount of royalty
payable by the Defendant from the account already in possession of the Plaintiff
in the form of excess royalty payments. Now prima facie, any such
understanding would have to be premised on the basis of some material on
record which is conspicuous by its absence. As a matter of fact, the letter of the
Defendant's Advocate dated 8 May 2012 contains a fair admission that there is
no document formally recording the alleged understanding and arrangement. In
its rejoinder before the learned Single Judge, the Plaintiff while adverting to the
statement of account furnished by the Defendant noted that the account made it
abundantly clear that no payment was made from the financial year 2009-10
onwards and that the Defendant had admitted to having stopped making
payment even prior to the order of the Copyright Board dated 25 August 2010.
There has been no traverse to this averment on the part of the Defendant. The
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earlier order of the learned Single Judge dated 16 April 2012 held that it was
not open to the Defendant to claim an adjustment in the present suit. There is
no challenge to that order by the Defendant. Moreover, it could never have been
open to the Defendant to make unilateral adjustments.
14. On these facts, prima facie, the learned Single Judge has justifiably come
to the conclusion that in breach of the obligation that was cast upon the
Defendant by the terms of the compulsory licence, the Defendant failed to revise
the quantum of Bank guarantee for every quarter commencing from September
to December 2010 and, as a matter of fact, for five quarters thereafter. The
authority of the Defendant to broadcast songs from the repertoire of the Plaintiff
traces its origin exclusively to the grant of the compulsory licence which was
terminable for breach of the obligation to furnish a Bank guarantee. The licence
has been terminated for breach. The ad-interim finding of the learned Single
Judge that there was a breach on the part of the Defendant is borne out by the
record and does not fall for interference in appeal. The contention of the
Defendant is that on 3 September 2010, 23 September 2010 and 7 October
2010 the Defendant had sought a refund of the security deposit of Rs.86 lakhs
and its bona fides, it is urged, could appear from this demand. The submission
cannot be accepted for the simple reason that so long as the compulsory licence
that was issued under section 31(1)(b) held the field, the Defendant was obliged
to comply with the terms of the licence. Upon its failure to do so, the Plaintiff
terminated the licence in accordance with the terms and conditions governing
the licence. Once the licence has been terminated, any broadcasting of songs
from the repertoire of the Plaintiff would constitute an infringement of the
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copyright. The Plaintiff has made out a strong prima facie case for grant of an
injunction. The balance of convenience would weigh in favour of injuncting
against an infringement of its copyright.
15. The learned Single Judge, in our view, was in error, having correctly come
to the conclusion that there was a breach on the part of the Defendant in
complying with the terms of the licence, in directing that subject to a deposit of
Rs.11.50 lakhs, the Defendant would be entitled to the benefit of the
broadcasting of songs from the repertoire of the Plaintiff on the terms and
conditions as set out in the compulsory licence. Once prima facie a breach has
been established and the termination follows the breach, it would be wholly
inappropriate to direct that the Defendant may nonetheless continue to
broadcast songs from the repertoire of the Plaintiff on the terms governing the
compulsory licence. The licence was terminable and has been terminated for
breach.
16. In Super Cassettes Industries Ltd . (supra), the Supreme Court has held
that even the Copyright Board does not possess the power under Section 31(1)
(b) to grant an interim compulsory licence. The judgement of a Division Bench of
this Court in Music Choice India Private Limited (supra) similarly emphasises
that exclusive jurisdiction to grant a licence is vested with the Copyright Board.
This is a case where the Defendant has prima facie been guilty of a persistent
breach of its obligation under the terms of the compulsory licence. The
operative order of the learned Single Judge in substance grants a compulsory
licence to the Defendant, in a suit instituted by the Plaintiff, a consequence
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which ought not to ensue at least on facts as found by the learned Single Judge.
The Plaintiff has made out a strong prima facie case. The balance of
convenience must necessarily weigh in favour of the Plaintiff since, to allow the
Defendant to broadcast songs on the basis of the terms of the compulsory
licence which has been validly terminated would amount to an infringement of
the copyright of the Plaintiff. Moreover, admittedly the Plaintiff does not
command a monopoly in respect of the entire market. The grant of an injunction
may at worst be a matter of inconvenience but would not result in the closing
down of the business of the Defendant.
17. Section 31D has been introduced into the Copyright Act, 1957 by the
Copyright (Amendment) Act, 2012. Under sub-section (1) of Section 31D as
now introduced, any broadcasting organisation desirous of communicating to the
public by way of a broadcast or by way of performance of a literary or musical
work and sound recording which has already been published may do so subject
to the provisions of the section. Under sub-section (2) of Section 31D, the
broadcasting organisation is required to pay to the owner of rights in each work
royalties in the manner and at the rate fixed by the Copyright Board. Sub-
section (8) of Section 31D stipulates that nothing in this section shall affect the
operation of any licence issued or any agreement entered into before the
commencement of the Copyright (Amendment) Act, 2012. We need to only
clarify that the grant of an ad-interim injunction in terms of prayer clause (a) of
the Motion shall not preclude the Defendant from seeking recourse to the
remedies, if any, that may be available under Section 31D. We express no
opinion in that regard.
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18. For these reasons, while we affirm the finding of the learned Single
Judge, that there was a breach by the Defendant of the terms of the compulsory
licence granted under Section 31(1)(b) of the Copyright Act, 1957 and that
licence was prima facie validly terminated on that ground, we are of the view that
the learned Single Judge was in error in allowing the Defendant the continued
use of the repertoire of the songs of the Plaintiff, subject to the deposit of an
amount of Rs.11.50 lakhs. In consequence, we set aside the operative direction
contained in paragraphs 9 and 10 of the impugned order of the learned Single
Judge allowing the Defendant to broadcast sound recordings from the repertoire
of the Plaintiff subject to the deposit of an amount of Rs.11.50 lakhs. For the
reasons indicated earlier, we grant an ad-interim order in terms of prayer clause
(a) of the Notice of Motion. We also clarify by way of abundant caution that this
order shall not come in the way of the final disposal of the Notice of Motion on
merits.
19. The appeal filed by the Defendant, Appeal no.122 of 2013, shall
accordingly stand dismissed. Cross-Objections no.10 of 2012 of the Plaintiff
shall accordingly stand allowed in the terms indicated above. There shall be no
order as to costs.
20. In view of the disposal of the appeal and the cross-objections, the Notices
of Motion in the appeal and the cross-objections do not survive and are
accordingly disposed of.
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21. A stay of the operation of this order is sought by the learned Counsel for
the Defendant. The Defendant, prima facie, has been in persistent breach and
default of the terms of the licence. The licence, prima facie, has been validly
terminated. Any such order as sought by the Defendant would constitute an
infringement of copyright. Hence, stay is refused.
(Dr. D.Y.Chandrachud, J.)
(A.A. Sayed, J.)
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL NO.122 OF 2013
In
NOTICE OF MOTION (L) NO.1108 OF 2012
In
SUIT NO.883 OF 2012
Radio One Limited
(formerly known as Radio Mid-day
(West) India Ltd. : Appellant
(Orig.Defendant)
V/s.
Phonographic Performance Ltd. : Respondent
(Orig.Plaintiff)
.....
With
NOTICE OF MOTION NO.460 OF 2013
In
APPEAL NO.122 OF 2013
In
NOTICE OF MOTION (L) NO.1108 OF 2012
In
SUIT NO.883 OF 2012
Radio One Limited : Applicant
(Orig.Defendant)
In the Matter Between
Radio One Limited
(formerly known as Radio Mid-day
(West) India Ltd. : Appellant
V/s.
Phonographic Performance Ltd. : Respondent
….
With
CROSS OBJECTIONS NO.10 OF 2012
In
APPEAL NO.122 OF 2013
In
NOTICE OF MOTION (L) NO.1108 OF 2012
In
SUIT NO.883 OF 2012
Phonographic Performance Limited : Appellant
(Orig.Plaintiff)
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V/s.
Radio One Limited
Formerly Radio Mid-day West (India) Ltd. : Respondent
(Orig.Defendant)
….
With
NOTICE OF MOTION NO.2190 OF 2012
In
CROSS OBJECTIONS NO.10 OF 2012
In
APPEAL NO.122 OF 2013
In
NOTICE OF MOTION (L) NO.1108 OF 2012
In
SUIT NO.883 OF 2012
Phonographic Performance Limited : Applicant
(Orig.Plaintiff)
In the matter between
Phonographic Performance Limited : Appellant
(Orig.Plaintiff)
V/s.
Radio One Limited
Formerly Radio Mid-day West (India) Ltd. : Respondent
(Orig.Defendant)
…
Mr.Venkatesh Dhond, Senior Advocate, with Mr.Madhur R. Baya and
Mr.Abhileen Chaturvedi for the Appellant in Appeal No.122 of 2013 and
Respondent in Cross Objections No.10 of 2012.
Mr.N.H.Seervai, Senior Advocate, with Ms Gulnar Mistri i/b. Ms Madhavi
Deshpande Ravuri, Mr.Vinayak Shete and Mr.Manish Upadhye for the
Respondent in Appeal No.122 of 2013 and Appellant in Cross Objections No.10
of 2012.
.....
CORAM : DR.D.Y.CHANDRACHUD &
A.A. SAYED, JJ.
DATE : 02 APRIL 2013.
ORAL JUDGEMENT (Per Dr.Chandrachud,J.)
The appeal before the Court arises from an order of a learned Single
Judge dated 9 May 2012. The appeal is by the original Defendant. The Plaintiff
has filed cross-objections. For convenience of reference, it would be appropriate
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to refer to the parties by their appellations in the suit.
2. In 2011, Radio One Limited, the Defendant, secured a licence for an FM
Radio station in Mumbai. The Plaintiff, Phonographic Performance Ltd.,
apprehending that the Defendant would exploit the sound recordings in the
1
repertoire of the Plaintiff filed a suit for an injunction which is pending on the
2
Original Side of this Court. A Notice of Motion was filed in the suit.
3. On 1 March 2002, citing the tariff of the Plaintiff as excessive, the
Defendant approached the Copyright Board for grant of a compulsory licence
under Section 31(1)(b) of the Copyright Act, 1957. The Copyright Board
disposed of the complaint on 19 November 2002 by which the rate of royalty was
fixed at Rs.661/- per needle hour of broadcasting. Statutory appeals were filed
before this Court both by the Plaintiff and by the Defendant against the order of
the Copyright Board. On 10 December 2003, the parties arrived at an interim
consensual arrangement in the Notice of Motion which was to remain effective
pending the hearing and final disposal of the appeals before this Court. On 13
April 2004 this Court disposed of the appeals by setting aside the order of the
Copyright Board dated 19 November 2002. Special Leave Petitions were filed
against the order of this Court. Since the interim arrangement recorded in the
Consent Terms came to an end, a Motion was filed by the Plaintiff in the suit
before this Court. By an order dated 21 July 2005, this Court made a previous
order dated 8 August 2002 operative against the Defendant. Under the order,
the Defendant was to deposit an ad hoc advance amount every month until the
1 Suit No.3752 of 2001
2 Notice of Motion No.2846 of 2003
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final orders in the suit and/or the decision of the Board; the amount of the
advance was to be adjusted against the dues of the Plaintiff and a guarantee
was to be furnished and kept alive pending the hearing and final disposal of the
suit or till further orders.
4. By an order dated 16 May 2008, the Supreme Court set aside the order of
the Copyright Board dated 19 November 2002 and remanded the matter to the
Board for re-consideration.
5. Upon remand, the Copyright Board by an order dated 25 August 2010,
granted a compulsory licence, subject to terms and conditions, to the Defendant
under Section 31(1)(b). In pursuance of the order of the Copyright Board, a
licence was issued to the Defendant which, inter alia, provided for the payment
of compensation to the Plaintiff computed at the rate of 2% of the net advertising
revenue of the Bombay FM Radio Station. Under the terms of the compulsory
licence, the Defendant was to issue a Bank guarantee which had to be revised
within two weeks of the close of every quarter to such sums as it was liable to
pay as compensation for that quarter. Both the order of the Copyright Board and
the licence that was granted to the Defendant specifically provided that the
Plaintiff would be at liberty to cancel the licence without notice and to recover the
remaining dues if the Defendant failed to revise the quantum of the Bank
guarantee.
6. Under the terms of the licence, the Defendant was obliged to submit a
revised Bank guarantee within two weeks from the end of the quarter for the
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period from October and December 2010. This the Defendant failed to do. On
27 January 2012 the Defendant had instituted its own suit against the Plaintiff to
this proceeding claiming certain purported adjustments against fee that they
were liable to pay under the voluntary licence entered into by the Defendant with
the Plaintiff for six FM Radio Stations outside Mumbai. The Defendant disclosed
in the suit, its net advertising earnings and the amount of compensation payable
under the compulsory licence.
7. The Plaintiff by a communication dated 29 March 2012 terminated the
compulsory licence granted to the Defendant on the ground of breach. The case
of the Plaintiff is that despite the receipt of the notice of termination on 30 March
2012, the Defendant continued to unauthorisedly broadcast the sound
recordings in the repertoire of the Plaintiff thereby infringing the copyright of the
Plaintiff. The Plaintiff has instituted a suit seeking a permanent injunction against
the Defendant, rendition of accounts and damages for infringement of copyright.
8. On an application for an ad-interim relief the learned Single Judge, by an
order dated 16 April 2012, noted that the Defendant had submitted a Bank
Guarantee only in the amount of Rs.10,000/- by a covering letter dated 23
September 2010. The learned Judge held that a revised Bank guarantee should
have been submitted every quarter commencing from October to December
2010 and it was on account of a breach of the obligation to submit a Bank
guarantee for that quarter and for consecutive five quarters that the termination
had been effected. The learned Single Judge observed that in these
circumstances it is not open to the Defendant to raise the claim in the suit by the
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Plaintiff by relying upon some amount which was stated to be subject to
adjustment in the suit that has been instituted by the Defendant against the
Plaintiff. The finding of the learned Single Judge was as follows:-
“The revised bank guarantee should have been
submitted for every quarter starting from October 2010
to December 2010. It is that breach and for the
consecutive five quarters for which the bank guarantee
was not revised, that the termination has been effected.
It is in such circumstances that I am of the view that the
defendant Radio One Station cannot raise a claim in
this suit by relying on some amounts which are stated
to be lying or adjusted or claimed in the suit that is
instituted by Radio One Limited against the society.
That suit may refer to amount stated to be lying with the
society on the basis that Radio One Station has not
bifurcated any such payment station-wise. It may be
something that is claimed as consolidated figure qua all
stations. However, by institution of such a suit itself
and without anything more, it will not be possible for
Radio One Station to resist the prayer for interim
injunction made in the society's suit.”
At that stage, a statement was made on behalf of the Defendant that an amount
of Rs.5,00,000/- would be deposited in Court within a period of two weeks. The
learned Judge allowed that request and directed that for a period of two weeks,
the broadcast by the Defendant would continue but without prejudice to the
rights and contentions of the parties.
9. Subsequently, in the impugned order of the learned Single Judge dated 9
May 2012, the Court has come to the conclusion that: (i) The Defendant was
liable to make the payment to the Plaintiff in terms of the licence that was issued
in accordance with the order of the Copyright Board; (ii) The terms of the licence
contemplated that the Plaintiff could terminate the licence if the Bank Guarantee
was not revised; (iii) From the statement of account which was furnished by the
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Defendant together with its affidavit, it was apparent that no assertion had been
made by the Defendant nor had any Bank guarantee as revised been furnished;
(iv) Once the licence was cancelled, it was prima facie undisputed that the
repertoire of the Plaintiff cannot be utilised by the radio station of the Defendant.
On these facts, the learned Single Judge held that any payment which was
made in the past and based on which some adjustment was claimed could not
form the basis on which the action of the Plaintiff could be resisted. The learned
Single Judge noted that it was incumbent on the Defendant to demonstrate how
it had abided by the terms and conditions of the licence which prima facie had
not been proved.
10. Despite these findings, the learned Single Judge directed that if the
Defendant deposits a sum of Rs.6,50,000/- in addition to the sum of
Rs.5,00,000/- already deposited, it can continue to broadcast the sound
recordings from the repertoire of the Plaintiff and that it should abide by the
terms and conditions of the licence issued in its favour by the Copyright Board.
The learned Judge, however, directed that if there is a failure on the part of the
Defendant to effect payment as directed, an ad-interim injunction in terms of
prayer clause (a) of the Motion would follow.
11. On behalf of the Plaintiff, it has been submitted that the order of the
learned Single Judge allowing the Defendant to broadcast songs from the
repertoire of the Plaintiff subject to the payment of a total sum of Rs.11.50 lakhs
amounts to the grant of a compulsory interim licence, something which even the
Copyright Board has been held by the Supreme Court not to have jurisdiction to
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grant in the judgement in Super Cassettes Industries Ltd . v. Music
3
Broadcast Pvt. Ltd . Similarly, reliance has been placed on a judgement of a
Division Bench of this Court in Music Choice India Private Limited v.
4
Phonographic Performance Limited where it has been held that exclusive
jurisdiction to grant a licence under Section 31(1)(b) is of the Copyright Board.
Moreover, it has been urged that both the order of the Copyright Board as well
as the terms of the licence confer upon the Plaintiff the power to terminate the
licence for a breach of the obligation to submit a revised Bank guarantee. In the
present case, it has been submitted that there was admittedly a failure on the
part of the Defendant to submit a revised Bank guarantee and no payment was
made between 2009 and 2012 when the order of the learned Single Judge was
passed. On the other hand, on behalf of the Defendant, it has been urged that
the Defendant seeks to claim an adjustment in respect of an excess amount paid
to the Plaintiff by way of a set-off and that after the order of the learned Single
Judge, payment has been made to the Plaintiff which has however not been
accepted. Moreover, it has been submitted that as a result of the amendment
which has been brought about by the Copyright (Amendment) Act, 2012 , Section
31D has been inserted under which a provision has been made for the grant of a
statutory licence for broadcasting of literary and musical works and sound
recordings, subject to payment at such rate that may be fixed by the Copyright
Board.
12. The rival submissions now fall for consideration. The entitlement, prima
facie, which the Defendant claims to broadcast songs from the repertoire of the
3 AIR 2012 SC 2144
4 Appeal No.150 of 2009 decided on 22 January 2010
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Plaintiff traces itself to the compulsory licence that was granted in pursuance of
the order of the Copyright Board dated 25 August 2010. The Copyright Board
stipulated the conditions subject to which the licence was to be granted, these
being as follows:-
“(a) 2% of net advertisement earnings of each FM
radio station accruing from the radio business only for
that radio station shall be set apart by each complainant
for pro rata distribution of compensation to all music
providers including the respondent herein in proportion
to the music provided by the respective music providers
and broadcast by the complainant. Complainant shall
be deemed to be a music provider for the music
provided by it or received by it free of cost and
broadcast. For arriving at “net advertisement earnings”,
all Government and municipal taxes paid, if any, and
commission paid towards the procurement of such
advertisements to the extent of 15% of such
advertisement earnings shall be excluded;
(b) Complainants shall furnish within a week of grant
of licence by the Registrar of Copyrights a bank
guarantee for Rs.10,000 in favour of the respondent for
each radio station. However, the sum of such bank
guarantee shall be revised within two weeks after the
close of every quarter of the year to such sum for which
complainant was liable for payment of compensation for
that quarter. Quarter of a year means a period of three
months ending on the last day of March, June,
September and December of the relevant year;
(c ) If the complainant fails to revise the bank guarantee
in terms of clause (b), respondent shall be at liberty to
cancel the licence without giving any notice and recover
the remaining dues from the available bank guarantee;
(d) Payment of compensation by the complainant to
th
the respondent for a month shall be made by 7 day of
the month following the month to which payment relates.
Complainant shall also furnish alongwith the payment
the date wise details of the periods for which the music
relating to the respondent and all other music providers
has been used for the month. However, payment for the
period beginning with the grant of licence and ending on
th th
30 September, 2010 shall be made in lump sum by 7
October, 2010;
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th
(e) For any delayed payment for a month beyond 7
of the following month, interest at the rate of 1% per
month or a part of month shall be payable;
(f) In case payment is not made by the complainant
for a radio station for consecutive two months,
respondent herein shall be entitled to cancel the licence
by giving notice of one month and recover the remaining
dues from the bank guarantee;
(g) A complainant may for one or more radio stations,
by giving notice of one month and after making payment
of all sums due, cancel the licence;
(h) The validity of the licence granted by the Registrar
th
of Copyright shall come to end on 30 September,
2020.”
The compulsory licence that was granted to the Defendant on 16 September
2010 incorporates the conditions which were prescribed by the Copyright Board.
Under the terms of the licence, the Defendant was to furnish initially a Bank
guarantee for Rs.10,000/- in favour of the Plaintiff for each Radio Station. The
amount of the Bank guarantee was to be revised within two weeks after close of
every quarter to such sum for which the Defendant was required to make
payment of compensation for that quarter. Compensation was payable at the
rate of 2% of the net advertisement earnings for each FM Radio Station accruing
from the radio business. The licence was terminable and an express provision
was introduced into the licence, following the order of the Copyright Board, to the
effect that if the licensee fails to revise the Bank guarantee as required, the
Plaintiff would be at liberty to cancel the licence without notice and to recover the
remaining dues from the available bank guarantee. Moreover, payment of
compensation was liable to be made by the Defendant to the Plaintiff by the
seventh day of the month following the month to which the payment relates. The
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Defendant was also to furnish together with the payment datewise details of the
periods for which the music relating to the Plaintiff has been used for the
month.
13. There is no dispute before the Court about the factual position, as there
was none before the learned Single Judge, that a revised bank guarantee was
never furnished. Moreover, no payment whatsoever was effected by the
Defendant to the Plaintiff between 2009 and 2012. This is evident from the chart
that was annexed by the Defendant to its affidavit-in-reply dated 7 May 2012.
The contention of the Defendant, however, was that there was an understanding
between the parties that in the event the final order of the Copyright Board
prescribes a lower rate of royalty than the interim rate that was paid by the
Defendant, the Plaintiff would be required to adjust the future amount of royalty
payable by the Defendant from the account already in possession of the Plaintiff
in the form of excess royalty payments. Now prima facie, any such
understanding would have to be premised on the basis of some material on
record which is conspicuous by its absence. As a matter of fact, the letter of the
Defendant's Advocate dated 8 May 2012 contains a fair admission that there is
no document formally recording the alleged understanding and arrangement. In
its rejoinder before the learned Single Judge, the Plaintiff while adverting to the
statement of account furnished by the Defendant noted that the account made it
abundantly clear that no payment was made from the financial year 2009-10
onwards and that the Defendant had admitted to having stopped making
payment even prior to the order of the Copyright Board dated 25 August 2010.
There has been no traverse to this averment on the part of the Defendant. The
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earlier order of the learned Single Judge dated 16 April 2012 held that it was
not open to the Defendant to claim an adjustment in the present suit. There is
no challenge to that order by the Defendant. Moreover, it could never have been
open to the Defendant to make unilateral adjustments.
14. On these facts, prima facie, the learned Single Judge has justifiably come
to the conclusion that in breach of the obligation that was cast upon the
Defendant by the terms of the compulsory licence, the Defendant failed to revise
the quantum of Bank guarantee for every quarter commencing from September
to December 2010 and, as a matter of fact, for five quarters thereafter. The
authority of the Defendant to broadcast songs from the repertoire of the Plaintiff
traces its origin exclusively to the grant of the compulsory licence which was
terminable for breach of the obligation to furnish a Bank guarantee. The licence
has been terminated for breach. The ad-interim finding of the learned Single
Judge that there was a breach on the part of the Defendant is borne out by the
record and does not fall for interference in appeal. The contention of the
Defendant is that on 3 September 2010, 23 September 2010 and 7 October
2010 the Defendant had sought a refund of the security deposit of Rs.86 lakhs
and its bona fides, it is urged, could appear from this demand. The submission
cannot be accepted for the simple reason that so long as the compulsory licence
that was issued under section 31(1)(b) held the field, the Defendant was obliged
to comply with the terms of the licence. Upon its failure to do so, the Plaintiff
terminated the licence in accordance with the terms and conditions governing
the licence. Once the licence has been terminated, any broadcasting of songs
from the repertoire of the Plaintiff would constitute an infringement of the
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copyright. The Plaintiff has made out a strong prima facie case for grant of an
injunction. The balance of convenience would weigh in favour of injuncting
against an infringement of its copyright.
15. The learned Single Judge, in our view, was in error, having correctly come
to the conclusion that there was a breach on the part of the Defendant in
complying with the terms of the licence, in directing that subject to a deposit of
Rs.11.50 lakhs, the Defendant would be entitled to the benefit of the
broadcasting of songs from the repertoire of the Plaintiff on the terms and
conditions as set out in the compulsory licence. Once prima facie a breach has
been established and the termination follows the breach, it would be wholly
inappropriate to direct that the Defendant may nonetheless continue to
broadcast songs from the repertoire of the Plaintiff on the terms governing the
compulsory licence. The licence was terminable and has been terminated for
breach.
16. In Super Cassettes Industries Ltd . (supra), the Supreme Court has held
that even the Copyright Board does not possess the power under Section 31(1)
(b) to grant an interim compulsory licence. The judgement of a Division Bench of
this Court in Music Choice India Private Limited (supra) similarly emphasises
that exclusive jurisdiction to grant a licence is vested with the Copyright Board.
This is a case where the Defendant has prima facie been guilty of a persistent
breach of its obligation under the terms of the compulsory licence. The
operative order of the learned Single Judge in substance grants a compulsory
licence to the Defendant, in a suit instituted by the Plaintiff, a consequence
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which ought not to ensue at least on facts as found by the learned Single Judge.
The Plaintiff has made out a strong prima facie case. The balance of
convenience must necessarily weigh in favour of the Plaintiff since, to allow the
Defendant to broadcast songs on the basis of the terms of the compulsory
licence which has been validly terminated would amount to an infringement of
the copyright of the Plaintiff. Moreover, admittedly the Plaintiff does not
command a monopoly in respect of the entire market. The grant of an injunction
may at worst be a matter of inconvenience but would not result in the closing
down of the business of the Defendant.
17. Section 31D has been introduced into the Copyright Act, 1957 by the
Copyright (Amendment) Act, 2012. Under sub-section (1) of Section 31D as
now introduced, any broadcasting organisation desirous of communicating to the
public by way of a broadcast or by way of performance of a literary or musical
work and sound recording which has already been published may do so subject
to the provisions of the section. Under sub-section (2) of Section 31D, the
broadcasting organisation is required to pay to the owner of rights in each work
royalties in the manner and at the rate fixed by the Copyright Board. Sub-
section (8) of Section 31D stipulates that nothing in this section shall affect the
operation of any licence issued or any agreement entered into before the
commencement of the Copyright (Amendment) Act, 2012. We need to only
clarify that the grant of an ad-interim injunction in terms of prayer clause (a) of
the Motion shall not preclude the Defendant from seeking recourse to the
remedies, if any, that may be available under Section 31D. We express no
opinion in that regard.
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18. For these reasons, while we affirm the finding of the learned Single
Judge, that there was a breach by the Defendant of the terms of the compulsory
licence granted under Section 31(1)(b) of the Copyright Act, 1957 and that
licence was prima facie validly terminated on that ground, we are of the view that
the learned Single Judge was in error in allowing the Defendant the continued
use of the repertoire of the songs of the Plaintiff, subject to the deposit of an
amount of Rs.11.50 lakhs. In consequence, we set aside the operative direction
contained in paragraphs 9 and 10 of the impugned order of the learned Single
Judge allowing the Defendant to broadcast sound recordings from the repertoire
of the Plaintiff subject to the deposit of an amount of Rs.11.50 lakhs. For the
reasons indicated earlier, we grant an ad-interim order in terms of prayer clause
(a) of the Notice of Motion. We also clarify by way of abundant caution that this
order shall not come in the way of the final disposal of the Notice of Motion on
merits.
19. The appeal filed by the Defendant, Appeal no.122 of 2013, shall
accordingly stand dismissed. Cross-Objections no.10 of 2012 of the Plaintiff
shall accordingly stand allowed in the terms indicated above. There shall be no
order as to costs.
20. In view of the disposal of the appeal and the cross-objections, the Notices
of Motion in the appeal and the cross-objections do not survive and are
accordingly disposed of.
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21. A stay of the operation of this order is sought by the learned Counsel for
the Defendant. The Defendant, prima facie, has been in persistent breach and
default of the terms of the licence. The licence, prima facie, has been validly
terminated. Any such order as sought by the Defendant would constitute an
infringement of copyright. Hence, stay is refused.
(Dr. D.Y.Chandrachud, J.)
(A.A. Sayed, J.)
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