Bombay High Court
Mad Man Film Ventures Private Limited vs Super Cassettes Industries Private ... on 6 December, 2023
Author: R.I. Chagla
Bench: R.I. Chagla
915-ia-2803-2023.doc
JSN
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
INTERIM APPLICATION NO.2803 OF 2023
IN
COM IPR SUIT NO.204 OF 2023
Mad Man Film Ventures Private Ltd. ...Applicant /
Plaintiff
Versus
Super Cassettes Industries Pvt. Ltd. ...Defendant
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Mr. Darius Khambata, Senior Advocate, a/w Mr. Rohaan Cama,
Pheroze Mehta, Janaki Gavde, Neha Sonawane & Aagam
Mehta, i/b. Rashmikant & Partners, for Applicant/Plaintiff.
Mr. Aspi Chinoy, Senior Advocate, a/w Mr. Harsh Kaushik, Ms.
Geetanjali Visvanathan, Ms. Zahra Padamsee, Mr. Kyle Curry,
Ms. Rajvi Mehta, i/b. Vashi & Vashi, for Defendant No.1 in
IA-2803/2023 and Applicant in Interim Application No. (L)-
24815/2023.
Mr. Prateek Seksaria, Senior Advocate, Krushi N. Barfiwala,
Gayatri Mohite, Rudra Deosthali, for Defendant No.3.
Mr. Ashwin Bhadang, Ravindra Suryawanshi, Tanvi
Nandgaonkar, Krunal Mehta, Archis Bhatt, i/b. Bar & Brief
Attorneys, for Defendant No.6.
Mr. Harsh Kaushik, a/w Mr. Vinay Nair, i/b. Arun Panicker, for
Defendant No.2.
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CORAM : R.I. CHAGLA J
Reserved on : 10TH NOVEMBER, 2023
Pronounced on : 6TH DECEMBER, 2023.
ORDER:
1. The Applicant / Plaintiff at this stage is only seeking a
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relief in terms of prayer Clause (d) of the Interim Application qua
Defendant No.1 T-Series (Super Cassettes Industries Pvt. Ltd.) and /
or Defendant No.3 - RBEP ( RBEP Entertainment Pvt. Ltd.). The relief
sought is limited to 50 films out of the 59 films. This includes the
films set out under the head "Batch of 7+2 films" at Exhibit A at page
137 of the Plaint filed in the above Suit, dehors the termination of
the Long Form Agreement ("LFA") on the assumption that, the LFA
subsists.
2. Further, the Applicant / Plaintiff has proceeded on the
premise that the findings in the Order dated 5th June, 2023 passed
by the learned Single Judge of this Court in Interim Application (L)
No.19872 of 2022 in COMIP No.464 of 2022 (filed by T-Series) and
Interim Application (L) No.21759 of 2022 in COMIP No.457 of 2022
(filed by the Hungama Digital Media Entertainment Pvt. Ltd.)
("Hungama") are undisturbed. The Applicant / Plaintiff has made
submissions without prejudice to its rights and contentions in
Commercial Appeal (L) No.21477 of 2023 pending before this Court
challenging the order dated 5th June, 2023. The Applicant / Plaintiff
has further stated that the Order dated 5th June, 2023 has neither
considered the present Interim Application nor disposed of the same
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as clarified by Order dated 14th June, 2023.
3. Mr. Khambata, the learned Senior Counsel appearing for
the Applicant / Plaintiff has referred to the LFA which was entered
into between RBEP, T-Series and Hungama, whereby it is agreed that
that RBEP assign Audio Rights, Mobile and Digital Rights and
Publishing Rights in the Back Catalogue and the Fresh Catalogue i.e.
in the Reliance Music Catalogue (defined later) and T-Series would
exploit these rights for an agreed marketing overhead and share the
revenue with RBEP and Hungama. He has referred to the terms of
the LFA and in particular definition of 'Back Catalogue' in Clause
1.1(iv). 'Back Catalogue' is defined as the existing music titles of
RBEP or any other subsidiary, sister concern or affiliate of RBEP. This
comprised more than 200 titles set out in Annexure A to the LFA. He
has also referred to definition of 'Fresh Catalogue' in Clause 1.1(v).
'Fresh Catalogue' is defined as (i) all the unreleased future music
titles acquired / produced by RBEP or any other subsidiary, sister
concern or affiliate of RBEP, either singly or jointly and includes, with
the consent of the co-owner thereof, and (ii) all unreleased future
music titles jointly acquired / produced by RBEP or any other
subsidiary, sister concern or affiliate to RBEP. Further, in Clause 2(ii)
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and 2(iv) read with Clause 2(v) (vi), the parties have agreed that
ownership in Copyright and Revenue share in the Reliance Music
Catalogue i.e. Back Catalogue and Fresh Catalogue was to be divided
as follows:- RBEP - 40%, T-Series - 40% and Hungama - 20%.
4. Mr. Khambata has then referred to the definition of
'Revenues' in Clause 1.1(x) which is defined "as the net revenue after
reducing therefrom all pre-approved direct costs incurred in earning
such revenues". Further, "it is clarified that revenue would include
income tax deducted at source but shall not include the withholding
taxes from any overseas revenue which cannot be covered under dual
taxation treaties". He has then referred to the other clauses of the
LFA including Clause 2(iii) and (iv), wherein T-Series has 100%
exploitation rights and it was incumbent upon T-Series to forward the
statement of accounts "showing details of exploitation of music rights
and revenue received" in a timely manner and remit revenue to all
the parties in the above ratio as and when due. Further, in Clause 1.2
of the LFA, the parties agreed that time shall be of the essence for the
purpose of the performance of the parties obligations under the LFA.
5. Mr. Khambata has submitted that the LFA is the umbrella
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or parent agreement under which music rights in the entire Reliance
Music Catalogue (i.e. the Back and Fresh Catalogues) are governed.
For the assignment of rights to titles under the Fresh Catalogue, the
LFA provided in Clause 2(v) for a format to create assignment
agreements therein specifying that "Parties shall enter into the
assignment agreement in the format provided in Annexure 'B' to this
agreement (LFA) for each title from the Fresh Catalogue with the
consideration amount and the publicity and promotion amount for
each individual title".
6. Mr. Khambata has thereafter referred to separate Music
Assignment Agreements ("MAAs") which were entered into between
RBEP, T-Series and Hungama for 35 titles of the Fresh Catalogue. He
has submitted that the performance of these MAAs is inextricably
interlinked with the LFA and they form a composite agreement. He
has submitted that the accounting in respect of LFA / MAAs has been
done in a composite manner and there were some common payments
like marketing overheads and recoupments. All of the 35 MAAs
contain a clause specifically referring to the LFA which accords
primacy to the LFA in the event of conflict between the LFA and the
respective MAAs. Additionally, the revenue division in each of the 35
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MAAs follows the revenue division in the LFA. He has relied upon
one such MAA dated 16th May, 2012 for the film "SOOPER SE
OOPER".
7. Mr. Khamata has placed reliance upon the decision of the
Supreme Court in Chloro Controls India Vs. Seven Trent Water
Purification INC1. He has submitted that the Supreme Court whilst
setting out the law on composite transaction or multiple agreements
has held that when certain subsidiary agreements are ancillary and
relatable to the parent / mother agreements and such agreements are
intrinsically intermingled such that only a composite performance of
the same shall discharge the parties of their obligations or
performances, a reference to any one of them must necessarily
include the other. He has submitted that the above ratio is applicable
to the present case as the LFA is an umbrella or principal agreement
and the MAAs have been executed in accordance with, under and
subsequent to the LFA which sets out the scheme of the MAAs
Specifically Clause 2(v) which stipulates that parties to the LFA are to
enter into assignment agreement in the format provided in Annexure
B of the LFA with respect to Fresh Catalogue Films.
1 INC (2013) 1 SCC 641.
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8. Mr. Khambata has referred to the subject 50 films
pertinent to the present Interim Application and which comprises of
35 MAAs films (part of Fresh Catalogue) as well as 15 films (forming
part of Back Catalogue) which have been set out in Annexure 1 to the
written submission of the Applicant / Plaintiff. He has submitted that
it has been observed in the order dated 5th October, 2023 passed by
this Court that 50 films are covered under the LFA.
9. Mr. Khambata has submitted that clause 2(iv)(c) of the
LFA expressly provides that T- Series shall furnish a statement of
account to RBEP and Hungama "showing details of exploitation of
music rights and revenues received" from the exploitation of the
Reliance Music Catalogue to RBEP and Hungama. He has submitted
that the word 'show' has been defined in the Black's Law Dictionary,
(8th Edition Pg. 1413) as "To make apparent or clear by evidence: to
prove." The word "showing" has been defined as "the act or an
instance of establishing through evidence and argument proof (a
prima facie showing)".
10. Mr. Khambata has submitted that whilst interpreting
commercial contracts, the Courts have adopted and applied well
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settled principles of interpretation. These contracts are to be
interpreted in such a manner as to give efficacy to the contract
rather than to invalidate it. He has relied upon the decision in the
case of Union of India V. D.N. Revri & Co. 2. He has also submitted
that the commercial contract must be construed reasonably and in
such a manner so that it is made workable. In that context he has
relied upon the decision of the Supreme Court in the case of
Administrator of Specified Undertaking V. Garware Polyester 3. Mr.
Khambata has submitted that statement of account showing details of
exploitation referred in Clause 2(iv) cannot merely be summary
sheets of purported exploitation and revenue earned, prepared
unilaterally by T-Series as they have been providing. Mere summary
sheets, without supporting verifiable documents, are meaningless
documents which do not conform to the requisite good faith standard
expressly provided in the LFA and cannot be said to be reflective of
the intention of the parties. This particularly so when the Joint
Venture was formed for the very purpose of exploitation of the
copyright. It must necessarily include the necessary supporting
documents evidencing the exploitation and revenues earned from
such exploitation i.e. invoices, agreements etc. Such an interpretation
2 1976 4 SCC 147, Paragraph 7.
3 2005 (10) SCC 682 Paragraph 29.
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alone makes Clause 2(iv) (c) workable and efficacious.
11. Mr. Khambata has referred to Clause 8 of the LFA
which sets out the covenant of good faith and under which the
parties have agreed that they shall at all times act in good faith in
discharge of their obligations. He has relied upon the decisions of the
England and Wales High Court in Yam Seng Pte Ltd. Vs. International
Trade Corporation Ltd.4, wherein that Court held that information
disclosures to be obligations of good faith in commercial contracts
such as Joint Venture Agreements, franchise agreements, long term
distributorship agreements, etc. where the relationship between the
parties resemble those of partnership, trusteeship or other fiduciary
relationship. It has been held that "in some contractual contexts the
relevant background expectations may extend further to an
expectation that the parties will share information relevant to the
performance of the contract such that a deliberate omission to
disclosure such information may amount to bad faith....". He has also
relied upon US jurisprudence which observes same standard of good
faith obligations for Joint Ventures. He has in this context relied upon
the decision of the Court of Appeals (D.C. Circuit) in Wiliam G. Libby
4 (2013) EWHC 111 (QB) Paragraphs 141 and 142.
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V. L.J. Corporation5, wherein the Court held that Joint Ventures give
rise to certain reasonably well-defined duties and obligations but
specifically where one of the members acts as "captain" or "manager"
of the venture, the necessity for a full disclosure becomes more acute
and rests more heavily on him.
12. Mr. Khambata has submitted that under the LFA,
the parties had agreed to act in utmost good faith at all times and
thus the LFA was covered by principles of good faith which would
mean full disclosure by the party discharging any obligation under
the LFA i.e. by T-Series. He has submitted that the T-Series being in
full control of exploitation, without disclosing underlying documents
or agreements, there is no other way for the other parties to verify
whether the revenue received by them is fair or accurate. Thus, the T-
Series was obliged to make full disclosure to the other parties whilst
discharging its obligations under the LFA.
13. Mr. Khambata has thereafter referred to the right
of RBEP to assign its rights under the LFA / MAAs to the Applicant /
Plaintiff. He has in this context relied upon the decision of the
5 (247 F.2d 78 Paragraphs 5 and 6.
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Supreme Court in Khardah Co. Ltd V. Raymon Co. India Pvt. Ltd. 6.
The Supreme Court has laid down that rights under the contract (as
opposed to obligations) are assignable without the consent of the
other parties to the contract. He has submitted that under the LFA,
the RBEP / Phantom have rights remaining under the LFA, including
inter alia the right to receive its share of revenue as well as the
statement of accounts with details showing exploitation and revenue
earned, such as underlying invoices, agreements etc. from T-Series,
all of which it was entitled to assign. There were no outstanding
obligations of RBEP / Phantom under the LFA. Thus, no permission
or consent from other parties to the LFA would be necessary prior to
assigning its rights to the Applicant / Plaintiff, since RBEP's
performance under the LFA was complete and it had no obligations
outstanding.
14. Mr. Khambata has thereafter referred to the
Business Transfer Agreement dated 16th April, 2015 where all rights
of RBEP were transferred to Phantom and that the Applicant /
Plaintiff and RBEP were 50% shareholders each in Phantom prior to
the Consent Terms dated 6th December, 2021. Thereafter, the
6 1963 3 SCR 183.
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Applicant / Plaintiff has transferred its 50% shareholding in Phantom
to an associate entity of RBEP. Under the Consent Terms dated 6th
December, 2021 executed between RBEP / Phantom and the
Applicant, RBEP / Phantom have assigned all their rights, interests,
benefits and remedies under the MAAs set out in Schedule 10 thereto
to the Applicant / Plaintiff. In this context he has referred to Clause
42 of the Consent Terms. Further, Clause 46 of the Consent Terms
provided that all the rights of RBEP and / or Phantom under the
MAAs stood finally and completely transferred / vested in the
Applicant / Plaintiff and that no further deed of document was
required to be executed to give effect to the same. Pursuant to
Clauses 42 and 46 of the Consent Terms, Clause 47 of the Consent
Terms provided that the Applicant / Plaintiff alone would have the
right to collect any revenue generated under these MAAs from the
date of the Consent Order, that is to say that from the date of the
Consent Terms, the Applicant / Plaintiff was the entity that had to
carry out the process of collection of revenue generated. However,
the Applicant / Plaintiff was under an obligation to pay RBEP 50% of
the net income or revenue recovered under the MAAs after deducting
all the third party expenditure that the Applicant / Plaintiff would
have incurred towards recovering such revenue.
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15. Mr. Khambata has referred to the Deed Recording
the Assignment for Actionable Claim and other Rights dated 6th
December, 2021 which was entered into between the Applicant,
RBEP and Phantom for giving effect to the Assignments of the
Musical Rights as per Clause 44 of the Consent Terms. Further, for
the purpose of vesting of the said rights in favour of the Applicant /
Plaintiff, the Power of Attorney was executed by RBEP / Phantom in
favour of the Applicant / Plaintiff, Santosh Shah, Kamlakar Kesarkar
and Sushil Garud, (representatives of the Applicant / Plaintiff).
16. Mr. Khambata has submitted that the Consent
Terms are required to be read in a manner to give effect to the
intention of the parties and while the Consent Terms do not
specifically refer to the LFA, they refer to Audio / music rights under
the MAA's for specified films in Schedule 10. He has referred to the
films described in schedule 10 of the LFA which are bifurcated into
15 Films / Titles which form part of the Back Catalogue and 35 Films
/ Titles forming part of the Fresh Catalogue of the LFA. In so far as
the 9 Films / Titles of schedule 10 are concerned, in view of findings
in order dated 5th June, 2023, presently no reliefs have been sought
in respect of these Films / Titles. He has submitted that at the present
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ad-interim stage, relief is only being sought with respect to the
remaining 50 films under Schedule 10 as set out in Annexure 1 of the
Written Submissions.
17. Mr. Khambata has thereafter submitted that it was
a common understanding between the parties that the Applicant /
Plaintiff and Kamlakar Kesarkar acting under the Power of Attorney
would be entitled to collect the entire revenue (from 2016) and
accordingly T Series has furnished purported summary of accounts to
Kamlakar Kesarkar. Even on 21st May, 2022, T-Series forwarded an
alleged reconciliation of accounts between T-Series, RBEP and
Phantom, from 2016 to Kamlakar Kesarkar. This was also the
understanding of the RBEP as reflected from the submissions to this
Court at the hearing on 25th October, 2023. It was their
understanding that the Applicant / Plaintiff had been assigned the
right to recover and collect revenue under LFA and MAAs even for
the period prior to the Consent Terms. Thus, the applicant / Plaintiff
had stepped into the shoes of RBEP entitling it to all rights
whatsoever available to RBEP, both prior to and after the execution of
the Consent Terms.
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18. Mr. Khambata has thereafter submitted that the
Power of Attorney executed by RBEP in favour of Kamlakar Kesarkar
conferred wide powers upon him including empowering him to seek
statements of accounts as well as recover amounts due under the LFA
/ MAAs. He has submitted that these powers have been in no way
restricted by the order dated 5th June, 2023 passed by the learned
Single Judge of this Court in Interim Application (L) No.19872 of
2022. He has submitted that the observations in the said Order dated
5th June, 2023 on the Power of Attorney are limited to the power to
terminate the LFA / MAAs. It has been held that the Power of
Attorney has no such power.
19. Mr. Khambata has referred to paragraph 36, 38
and 42 of the said order dated 5th June, 2023, wherein this Court
opined that the aspect of the matter raises a shadow of doubt on the
authority of Kamlakar Kesarkar terminating the LFA and the
assignment agreements, purportedly acting under the special power
of attorney on behalf of RBEP. This in itself helps T-Series, the
Plaintiff therein in demonstrating a strong prima facie case in its
favour. Further, it is held that the Power of Attorney executed in
favour of Kamlakar Kesarkar indicates an authority given to him to
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undertake actions of recoveries of amounts allegedly due from T-
Series under the individual assignment agreements.
20. Mr. Khambata has thereafter submitted that T-
Series has been in constant failure to fulfill its obligation under
Clause 2(iv) (c) of the LFA to disclose underlying documents /
materials / evidence of the commercial exploitation, revenue
received and make timely payment of verifiable revenue share to the
counter parties to the LFA. He has placed reliance upon
correspondence from 2017 till 2022 to show that the T-Series failed
to furnish statement of accounts from March, 2016. This was despite
RBEP by itself and through its Constituted Attorney repeatedly calling
upon T-Series to do so. This has also been confirmed by RBEP in their
Affidavit dated 5th September, 2023 filed before this Court in the
present Interim Application.
21. Mr. Khambata has submitted that the purported
statement of accounts upto 31st March, 2022 furnished by T-Series
on 9th May, 2022 are merely summary sheets, without any
supporting material. This in fact constitutes an admission that a sum
of Rs.1,17,65,142/- was admittedly due and payable to RBEP from
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April, 2016 till March, 2022 and that no revenue was in fact paid by
T-Series since April, 2016. He has submitted that the purported
statement of accounts provided by T-Series is patently false and this is
apparent from the publicity available from YouTube views and the
derivative calculations based thereon upto March, 2022. The
Applicant / Plaintiff believes that T-Series for the period from April,
2016 to March, 2022 for the subject 59 films has earned more than
Rs.200 Crores (approximately) from exploitation of music rights in
the films forming the subject matter of the LFA and MAAs of which
40% share of RBEP / Applicant would be around Rs.80 Crores
(approximately). As compared to this, T-Series in the summary sheets
provided on 9th May, 2022 and its email dated 31st May, 2022,
claims to have earned total revenue from the Fresh Catelogue and
Back Catelogue for the period 1st April, 2016 to 11th March, 2022
less than Rs. 20 Crores. He has accordingly submitted that there is a
vast difference in the revenues that T-Series purports to have earned
through exploitation (as set out in the summary sheets) and revenues
which the Applicant / Plaintiff believes has been earned by T-Series
from exploitation of the rights under the LFA. It is, therefore,
necessary that T-Series provide the underlying materials / evidence
with the statement of accounts of exploitation / revenue i.e.
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verifiable details in compliance with its own obligations qua revenue
disclosures under the LFA and MAAs. He has accordingly submitted
that the relief sought for in the Interim Application be granted.
22. Mr. Prateek Sakseria, the learned Senior Counsel
for the Defendant Nos.3 - RBEP has supported the submissions of Mr.
Khambata and has placed reliance upon the additional Affidavit
dated 25th October, 2023 filed on behalf of RBEP, wherein reference
has been made to an email dated 11th July, 2023 addressed by RBEP
to T-Series seeking information in respect of songs under the Back
Catalogue for the period 5th December, 2009 i.e. date of execution of
LFA to the present date. In this context he has placed reliance upon
Paragraph 6 of the additional Affidavit wherein the various
information sought for has been set out. He has submitted that
inspite of calling for such information from T-Series, T-Series in its
Reply has only stated that the information sought for covered
confidential and commercially sensitive business information of T-
Series as it pertains to T-Series entire repertoire copyright works. He
has joined the submissions of Mr. Khambata that T-Series is avoiding
disclosure of the underlying material which forms the basis for the
revenue earned through exploitation as set out in summary sheets
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unilaterally prepared by T-Series. He has also relied upon the relevant
clauses of the LFA as aforementioned which provides for T-Series
obligations which must be performed in good faith and showing
details of exploitation of music rights and revenue receipts which
would include commercial arrangements with third party entities
along with the supporting documents.
23. Mr. Sakseria has submitted that RBEP has not
waived its rights for seeking the requisite disclosures from T-Series as
contended on behalf of T-Series. He has submitted that even if it is
presumed that RBEP failed to demand the requisite disclosures from
T-Series for a considerable period of time, the same does not amount
to a waiver of RBEP's rights in light of Clause 12 of the LFA. This
explicitly provides that any delay on the part of RBEP to exercise any
of its rights under the LFA does not amount to a waiver.
24. Mr. Aspi Chinoy the learned Senior Counsel
appearing for the Defendant No.1 T-Series has submitted that the
Applicant / Plaintiff is admittedly not a party to the LFA. The
Applicant / Plaintiff is seeking relief which is restricted to prayer
Clauses d(i) to d(iii) of the Interim Application at this stage solely by
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placing reliance upon Clauses 40 to 46 of the Consent Order dated
8th December, 2021 / Consent Terms dated 6th December, 2021 in
respect of music of the subject films set out in schedule 10 thereto.
25. Mr. Chinoy has submitted that MAAs have not
been amended to reflect the Plaintiff's name / rights. The same are
stated to be effectuated by execution of the Special Power of
Attorneys dated 6th December, 2021 executed by RBEP in favour of
the Plaintiff and Kamlakar Kesarkar. Mr. Chinoy has submitted that
the Plaintiff's application / claim for interim reliefs in terms of
prayers d(i) to d(iii) of the Interim Application based on Power of
Attorney dated 6th December, 2021 and Clause 2(iv) (c) of the LFA,
is not maintainable and is required to be rejected having regard to
the order passed by this Court dated 5th June, 2023 allowing the T-
Series' Interim Application (L) No.19872 of 2022 to which the
Plaintiff herein was a party. He has submitted that by the said
judgment and order dated 5th June, 2023 it has inter alia been held
that the said Power of Attorney dated 6th October, 2021 which had
been executed in favour of Kamlakar Kesarkar and also in favour of
the Plaintiff herein pursuant to the Consent Order dated 6th /8th
December, 2021, was restricted to recovering amounts only under the
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separate MAAs and that it did not permit or authorise the Plaintiff /
Kamlakar Kesarkar to exercise any rights under the LFA. It was inter
alia on the basis of the these findings that this Court has issued
interim order dated 5th June, 2023 restraining the Defendants
therein from acting on behalf of Defendant No.2 on the purported
termination of the LFA under Clause 6 thereof, by letter dated 27th
April, 2021.
26. Mr. Chinoy has submitted that the learned Single Judge
has arrived at a finding in the Order dated 5th June, 2023 that
Power of Attorney dated 6th December, 2021 did not authorise the
Plaintiff / Kamlakar Kesarkar to execute any rights qua the LFA and
accordingly did not authorise them to act under Clause 6 to
terminate the LFA, necessarily posits that the Plaintiff / Kamlakar
Kesarkar cannot exercise rights under any other Clause of the LFA,
including requiring detailed Statement of Accounts under Clause
2(iv) (c) of the LFA.
27. Mr. Chinoy has submitted that the Plaintiff has wrongly
interpreted the letter dated 16th June, 2022 addressed by RBEP by
stating that under the Power of Attorney Kamlakar Kesarkar was
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authorised to act under the LFA, whereas from a plain reading of the
letter dated 16th June, 2022, Kamlakar Kesarkar under the Power of
Attorney was authorised to act only with respect to recoveries under
the MAAs. This has been expressly held by the learned Single Judge
by Order dated 5th June, 2023 and it is now not open for the Plaintiff
to interpret the said letter dated 16th June, 2022 in the manner in
which they have done.
28. Mr. Chinoy without prejudice to the aforementioned
submissions, has submitted that the relief sought for in prayer Clause
d(i) to d(iii) of the Interim Application i.e. for disclosure of
supporting material, including agreements between Defendant No.1
and third parties in respect of the subject films / music, invoices,
bank statements of utilization by third parties, is contrary to the
terms of the LFA and mutual conduct by Defendant No.1 - T-Series
and Defendant No.3 - RBEP thereunder for the past 14 years i.e.
from 2009 to 2023. He has submitted that the LFA is a carefully
drafted Commercial Contract and the language / terms of Clause
2(iv) (c) require T-Series to furnish the detailed statement of
accounts of exploitation of music rights and revenue received, but
does not require T-Series to provide RBEP with any such supporting
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material.
29. Mr. Chinoy has submitted that it is relevant to note
that from 2009 till 2023 T-Series has been furnishing to RBEP, the
"statement of accounts showing details of exploitation of music rights
and revenue received", but has never provided any supporting
material, third party agreements, invoices etc. Further, Defendant
No.3 has never asked T-Series to provide any such "supporting
material", or made any grievance regarding the non providing of any
supporting material. It is only the Plaintiff claiming rights under the
Consent Terms / Order and Power of Attorney of December, 2021
have for the first time in 2022 - 2023 asked to disclose and furnish
"supporting material" for the statement of accounts furnished by
Defendant No.1 showing details of exploitation of music rights and
revenues received. He has submitted that the Plaintiff who is not
even a party to the LFA cannot seek after 14 years to read into the
LFA additional requirements of furnishing such "supportings", which
requirements is not found in the express terms of the LFA.
30. Mr. Chinoy has submitted that it is well settled that the
parties subsequent mutual conduct after the execution of an
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agreement, is the best guide to the interpretation of the terms of the
Agreement. He has placed reliance upon decision of the Supreme
Court in Godhra Electricity Vs. State7, in this context. Having regard
to the conduct of the RBEP as well as T-Series and Hungama over the
past 14 years i.e. after execution of the LFA, it is not open for the
Plaintiff to seek to re-interpret Clauses 2(iv) (c) by reading into it an
obligation to furnish the supporting materials.
31. Accordingly, there is no merit in the relief sought for in
the Interim Application i.e. prayers d(i) to d(iii) which has been
pressed at the present stage and no relief be granted in respect
thereof.
32. Having considered the rival submissions, in my
view it is relevant to refer to the decision of the learned Single Judge
dated 5th June, 2023 passed in Interim Application (L) No.19872 of
2022 in Commercial IPR Suit No.464 of 2022 where Super Cassettes
Industries Ltd referred to herein as T-Series was the Plaintiff. In the
said Order, this Court had examined the provisions of the LFA as well
as MAAs and Power of Attorney dated 6th December, 2021 executed
7 (1975) 1 SCC 116.
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by RBEP in favour of Kamlakar Kesarkar and also in favour of the
Plaintiff and upon which, the learned Single Judge had arrived at a
prima facie conclusion that the Power of Attorney did not authorise
Kamlakar Kesarkar to terminate the LFA and assignment agreement.
It is relevant to reproduce Paragraph 36 of the said Order which
reads thus:-
36. This Court is of the opinion that even though
defendant No.1 claims to have subsequently ratified
the actions of defendant No.2 and copy of the
special power of attorney was indeed subsequently
made available to the plaintiff, the effect of the same
appears to be diluted by the stand taken on behalf of
defendant No.1 that the special power of attorney
did not authorize defendant No.2 to terminate the
LFA and the assignment deeds. In this regard,
attention of this Court was also invited to letter
dated 16.06.2022, addressed by defendant No.1 to
defendant Nos.2 and 5, inter alia, stating that under
the special power of attorney, defendant No.2 was
authorized to act with respect to recoveries under
the music assignment agreements only and that the
constituted attorney was not given any power with
respect to the substantive agreement and /or the
understanding governing the relation between the
parties. It was also specifically stated in the said
letter that defendant No.1 was neither part of the
decision making process, nor was its approval taken
prior to termination of the music assignment
agreements. This Court is of the opinion that this
aspect of the matter raises a shadow of doubt on the
authority of defendant No.2 in terminating the LFA
and the assignment agreements, purportedly acting
under the special power of attorney on behalf of
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defendant No.1. This, in itself, helps the plaintiff in
demonstrating a strong prima facie case in its favour.
33. It can thus be seen from the above extracted paragraph
that the learned Single Judge had considered the letter dated 16th
June, 2022 addressed by the RBEP to Kamlakar Kesarkar and
Applicant / Plaintiff herein, wherein it was stated that under the
Special Power of Attorney, Kamlakar Kesarkar was authorised to act
with respect to the recovery under the MAAs only and the
Constituted Attorney was not given any power with respect to the
substantive agreement and / or the understanding governing the
relations between parties. The learned Single Judge further
considered that it has been specifically stated in the said letter that
RBEP was neither part of decision making process nor was its
approval taken prior to termination of the MAA. Accordingly, the
learned Single Judge was of the opinion that this aspect of the matter
raises shadow of doubt on the authority of Kamlakar Kesarkar
terminating the LFA and the consignment agreement, purportedly
acting under special Power of Attorney on behalf of RBEP. The
Plaintiff therein has been held to have demonstrated a strong prima
facie case in its favour.
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34. Further, in paragraph 38 of the said order the
learned Single Judge has held "... a perusal of the Special Power of
Attorney executed in favour of Defendant No.2 prima facie indicates
an authority given to Defendant No.2 to undertake actions for
recovery of amounts due from the Plaintiffs under the individual
assignment agreements."
35. In the present Interim Application, the Applicant /
Plaintiff in prayer Clause (d) of the Interim Application has sought
disclosures from T-Series with respect to recovering amounts under
the LFA and not under the separate MAAs (Individual Assignment
Agreement). The Applicant / Plaintiff is not a party to the LFA and
thus its rights are restricted to the MAAs. The reliance placed on
Clause 2(iv) (c) of the LFA by the Applicant / Plaintiff for justifying
the disclosures sought for in terms of prayer Clause (d) of the Interim
Application is misconceived. Presuming that the Applicant / Plaintiff
can at all rely upon clauses of the LFA, despite it not being a party to
the LFA, in my prima facie view, Clause 2(iv) (c) of the LFA only
requires T-Series to furnish statement of accounts to RBEP and
Hungama for exploitation of music rights and revenue received and
no where does it contemplate that T-Series has to provide to RBEP
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and Hungama supporting material.
36. I am not inclined to accept the submission on behalf of
the Applicant / Plaintiff that RBEP has assigned all its rights under
the LFA to Applicant / Plaintiff. The assignment of rights are
restricted to the MAAs as under Clause 42 of the Consent Terms
RBEP has assigned all its rights under each of the MAA's irrevocably,
unconditionally, absolutely and exclusively in the Applicant /
Plaintiff. In my prima facie view Clauses 40 to 46 of the Consent
Terms cannot be read in the manner in which it has been so read by
the Applicant / Plaintiff to contemplate a right to collect revenue
generated under the LFA as the LFA has not even be adverted to
under the Consent Terms.
37. Further, I am not inclined to accept the submission
on behalf for the Applicant / Plaintiff that the Applicant / Plaintiff by
virtue of the said Consent Terms was entitled to collect the entire
outstanding revenue i.e. from 2016 and / or seek disclosure in the
manner sought in prayer clause (d) of the Interim Application for a
period even prior to Consent terms. I am of the prima facie view that
RBEP has assigned its rights under the said MAA's only from 6th
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December, 2021 i.e. when the Consent Terms were entered into.
There is no retrospective assignment of rights by RBEP in favour of
the Applicant / Plaintiff.
38. Further, the Power of Attorney executed by RBEP in
favour of Kamlakar Kesarkar and the Applicant / Plaintiff did not
confer upon them the authority to collect revenue for a period prior
to the Consent Terms.
39. The decisions relied upon by Mr. Khambata in support of
his interpretation of Clause 2(iv) (c) of the LFA are to be read in the
context of the facts of those cases and are inapplicable in the present
case where in my prima facie view the Applicant / Plaintiff has not
been assigned the right to recover revenue under the LFA for clause
2(iv) (c) to apply.
40. I further find much merit in the submissions of Mr.
Chinoy that the parties under the LFA namely, T-Series, Hungama and
RBEP have mutually conducted themselves in a manner where they
have accepted that furnishing of statement of accounts by T-Series to
RBEP showing details of exploitation of music rights and revenue
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received which is in conformity with clause 2(iv) (c) of the LFA. This
provision does not require T-Series to provide supporting materials.
The conduct of the parties under the LFA would be the best guide to
interpret the said clause of the LFA. The decision of the Supreme
Court in Godhra Electricity (Supra) is apposite. Thus, having regard
to the conduct of these parties under the LFA which is for over a
period of 14 years, it is now not open for the Applicant / Plaintiff to
reinterpret Clause 2(iv) (c), presuming that it applies to the
Applicant / Plaintiff, by reading into such clause an obligation to
furnish the supporting material. The submissions on waiver on behalf
of RBEP and the Plaintiff does not merit acceptance in these
circumstances.
41. I further find the decision of the Supreme Court in
Chloro Controls India (Supra) relied upon by Mr. Khambata
inapplicable in the present case, particularly considering that the
MAAs are the only agreements which were contemplated by the
Consent Terms dated 6th December, 2021 under which RBEP had
assigned its rights in favour of the Applicant / Plaintiff. There is no
mention of the LFA under the Consent Terms. In my prima facie view,
the MAAs and LFA cannot be considered to be a composite
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transaction and / or the MAAs are not intrinsically intermingled with
the LFA such that only a composite performance of the same shall
discharge the parties of their obligations or performances.
42. In view of the above findings which are prima facie, the
relief sought for in prayer Clauses d(i) to d(iii) of the Interim
Application is not granted.
43. The Interim Application shall be placed on 8th January,
2024 for further consideration.
[ R.I. CHAGLA J. ]
