Film Producers Guild Of India Ltd. ... vs Motion Pictures Association And ...
2006 Latest Caselaw 583 Del

JUDGMENT

Madan B. Lokur, J.

Page 1400

1. These are two applications filed by the Plaintiffs for similar reliefs. It is prayed in the applications that an interim injunction be granted staying the ensuing practice of registration of a contract entered into between an individual producer and an individual distributor of a film with Defendant No. 1 and also prohibiting Defendant No. 1 from imposing any terms and conditions or levying any penalty in respect of contracts entered into between an individual producer and an individual distributor of a film.

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2. To demonstrate the grievance of the Plaintiffs, learned Counsel gave three illustrations of the practice followed by Defendant No. 1 in respect of registration of a contract for distribution rights of films and how that practice is onerous and contrary to public policy.

3. In respect of the film Hangama, an agreement was entered into between Venus Records and Tapes Private Ltd. (a member of Plaintiff No. 1) and Ginni Arts (a member of Defendant No. 1) on 19th June, 2003. In terms of this agreement, the distribution rights in the film were assured to Ginni (a distributor) by Venus (a producer) for a period of five years and it was also agreed that Venus would be free to telecast/broadcast the picture on Doordarshan, cable TV, pay TV or through any other satellite channel after three months from the date of release of the film. A detailed agreement was entered into between the parties in this regard on 20th June, 2003 incorporating the essential terms mentioned above.

4. On 3rd October, 2003, Defendant No. 1 issued a letter to both Venus and Ginni to the effect that M/s Zee Telefilms Ltd. have announced the telecast of the film Hangama during November/December, 2003 in violation of the rules and regulations and undertaking given by Venus and Ginni, the certificate of registration dated 20th June, 2003 as well as the affidavit dated 3rd July, 2003. It was stated in the letter that by allowing the said telecast, the undertaking is violated and the affidavit is not being adhered to, making both Venus and Ginni liable for action. Accordingly, both parties were asked to show cause why a penalty be not imposed upon them.

5. Venus responded to the show cause notice by a letter dated 9th October, 2003 in which it was stated, inter alia, that Ginni had consented to the release of the said film on satellite television. However, by a letter dated 11th February, 2004 addressed to Ginni, Defendant No. 1 imposed a penalty of Rs. 2 lakhs for the 'illegal' telecast of the film. Significantly, Defendant No. 1 imposed no penalty on Venus.

6. Learned counsel for the Plaintiffs then drew my attention to a similar situation in respect of the film Kaaboo produced by M/s Khushi Films and distributed by M/s Classic Vision. Finally, a similar reference was made to the film Saaya produced by M/s Vishesh Entertainment Ltd. and distributed by M/s Aabhi Films.

7. Based on these illustrations, the contention of learned Counsel for the Plaintiffs was that if the film distributors had no objection to the telecast of the film through satellite by the producers, there was no reason for Defendant No. 1 to raise any objection.

8. To understand whether the grievance of the Plaintiffs is justified or not, it is necessary to have a look at the Articles of Association of Defendant No. 1. Clause 16(i) thereof restrains a member of the Association from distributing any picture unless it is registered with the Association. This Clause reads as follows:

No member of the Association shall distribute/supply and/or screen any picture unless it is registered with the Association. No picture shall be obtained/supplied by the Members from/to a non-member. The Page 1402restrictions under these Articles will apply to all films in Hindi/Urdu/Punjabi/ Haryanvi/Brijbhasha/Awadhi.

9. There is no dispute that Ginni, Classic Vision and Aabhi Films are members of Defendant No. 1 Association and, therefore, bound by the provisions of Clause 16(i) of its Articles of Association.

10. What does registration of a film, mentioned in Clause 16(i), imply? Registration of a film implies that the producer and distributor of a film fill up something called an 'Acquiring Form' which gives important particulars of a film to be distributed. One such sample form with regard to the film Kaaboo is on record and one of its terms deals with commercial and non-commercial rights in a film as well as its telecast. The sum and substance of this is that all rights in a film are assigned to the distributor and vest with the distributor; the producer has a telecasting right but the film will not be telecast earlier than five years from the date of its release. The relevant portion of the Acquiring Form in this regard reads as follows:

All Commercial and Non-Commercial Rights of the picture in 35 m.m. and in all other sizes and formats including Copy Rights plus Commercial Video Rights through any media including Video Parlour Rights and Telecasting Rights have been assigned to the Distributor and vest with the Distributor.

Television: Telecasting of film vest with the producer but film will not be telecast earlier than 5 (five) years from the date of release of the picture. The Royalty received from the said telecast will be shared by the Distributor and Producers @ 10% of the total proceeds from Doordarshan. If, however, M.G. paid remains unrecouped the Distributor should be entitled to that entire Royalty amount for such telecast in proportion to his territory.

11. The Acquiring Form is accompanied by a declaration and undertaking given by the producer and distributor. Clause 7 of this undertaking is relevant and is reproduced hereinbelow:

It has been irrevocably agreed by and between the Producer and the Distributors, in terms of the decision, arrived at between the FMC and the FDC, that any letter or arrangement or understanding arrived at between the parties, in contravention or violation of the above Standard Terms and conditions, shall be deemed to be null and void and shall not be entertained at any stage by their Association and such acts, if any, may attract disciplinary actions, including the refusal of deregistration of the picture from the name of the Distributors, by the Distributors Association.

12. The Acquiring Form is required to be accompanied by an affidavit from the producer of the film in respect of video/cable TV/ TV rights of a picture. Clauses (iv) and (v) of this affidavit are of importance and they read as follows:

(iv) That I shall not give the aforesaid picture for telecast through Doordarshan or any other Satellite Network (including Zee TV) or any other Channel through Satellite, Compact Disc etc.) before FIVE YEARS from the date of premier release in the country, in terms of mutual decision between our Producers and the Distributor's Association.

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(v) That I have not entered into any arrangement or understanding with my distributor in Contravention of Violation of the above terms and conditions and even if there is any, shall be treated as null and void.

13. A perusal of the Acquiring Form, the undertaking and the affidavit indicate that a producer of a film, more or less gives away all his distribution rights in the film but can exploit the film at a subsequent period and in terms of the undertaking given by him.

14. Clause 7 of the declaration and undertaking (quoted above) mentions two organizations, namely, FMC and FDC. No reference to these organizations is made in the plaint and learned Counsel for the Defendants seriously objected this to this and argued that there was a material concealment of facts and for this reason alone, the injunction applications deserve to be dismissed.

15. FDC is the Film Distributors Council, which is an apex body of All India Film Distributors comprising of several associations including the Motion Pictures Association while FMC is an apex body of film producers comprising of several associations including the Indian Motion Picture Producers Association and the Association of Motion Pictures and TV Programme Producers. These two apex bodies had entered into an agreement dated 10th June, 1994. By this agreement, the two apex bodies tried to find out a solution to various problems that had arisen in the film trade including those relating to cable TV, satellite TV, etc. The agreement between the two apex bodies provided in Clause 3 with regard to exhibiting a film on satellite television as follows:

That the FMC will give directions to its Producer Members not to deliver or cause to be delivered and shall not give or cause to be given any of their picture to any channel of Doordarshan or Satellite TV directly or indirectly before the expiry of five years from the first theatrical release of the said film including earlier released films also as per prevalent past practice/settlement.

16. Similarly, in Clause 8 of the agreement, it has been stated that any arrangement in contravention of the terms and conditions thereof would be null and void. This Clause reads as follows:

It has been agreed that if any producer or distributor executes any document or letter of arrangement in contravention of the terms and conditions mentioned hereinabove the same will be deemed to be null and void and will not be entertained at any stage for any purpose whatsoever. The Execution of such letter will be deemed as derogatory to the interests of producers and distributors and the parties involved therein will also be liable for disciplinary action, besides penalties etc.

17. Learned counsel for the Plaintiffs submitted that the FMC had withdrawn from the agreement dated 10th June, 1994 as indicated in its letter dated 14th November, 1996 wherein it is mentioned that despite earlier requests for reconsideration of the said agreement, no steps had been taken by FDC in this regard. Accordingly, FMC was constrained to advise its members to ignore Page 1404 the agreement with immediate effect and rely upon the agreement entered into individually between a producer and a distributor. The Plaintiff on its part had passed a resolution on 25th September, 1999 in its 45th Annual General Meeting to the effect that it should immediately resign from the FMC. This was followed up by a letter dated 28th September, 1999 from the Plaintiff resigning its membership of the FMC meaning thereby that the Plaintiff was no longer associated with it.

18. On these broad facts, it was contended by learned Counsel for the Plaintiff that even though film producers and film distributors had voluntarily entered into a contract, Defendant No. 1 was exercising veto powers over that contract and penalizing film distributors for entering into such contracts. Defendant No. 1 being an outside party to such contracts, it cannot create hindrances in their execution. In fact, Defendant No. 1 had created some sort of a monopolistic situation which resulted in members of the Plaintiff and its own members being subjected to unfair conditions with regard to the distribution of films. It was contended that its conditions were extremely onerous and, therefore, in the nature of restraining free trade in film distribution and this was contrary to public policy. The viewers have a right to see a film on TV and producers and distributors have the freedom to contract with each other and this has been made impossible by Defendant No. 1. A ?take it or leave it? situation has been created by Defendant No. 1 to the prejudice of the Plaintiff.

19. It is not possible to agree with learned Counsel for the Plaintiff. In the first place, it must be appreciated that film distributors such as Ginni Arts, Classic Vision and Aabhi films are members of Defendant No. 1 and if they have any grievance against the functioning of that Defendant, they should approach this Court against that Defendant ? the Plaintiff cannot fight a battle on their behalf. There is no complaint from any of the film distributors that Defendant No. 1 is putting them to any inconvenience of any kind which prohibits them from entering into a free contract with the producer of a film. The distributors have all agreed to bind themselves to a particular code of conduct and if they decide that those who want to deal with them commercially must respect their code of conduct, then there is nothing wrong in that.

20. It may be true as contended by learned Counsel for the Plaintiff that most, if not all, film distributors are members of Defendant No. 1 and are, therefore, in a position to dictate terms but that is not unusual nor can it be helped. Associations are formed by individuals or groups of individuals to protect their interests and this is what the members of Defendant No. 1 have done. They cannot be faulted for that. If the members of the Plaintiff find the terms and conditions imposed by the members of Defendant No. 1 as too onerous or unreasonable, they should not deal with them.

21. Learned counsel for the Plaintiff relied on certain texts by Anson, Mulla and a decision of the Punjab High Court, L. Shiv Dayal v. Union of India AIR 1963 Punjab 538 to the effect that a third party (in this case Defendant No. 1) cannot impose liabilities or acquire any rights under a contract to which it is not a party. There is no difficulty in accepting this proposition. The fact of the Page 1405 matter is that Defendant No. 1 is not imposing any liabilities on the Plaintiff or any of its members ? it is casting a duty on its own members, which it can by virtue of Clause 16(i) of its Articles of Association. Only the members of Defendant No. 1 can make any grievance in this regard, and not the Plaintiff. Moreover, as mentioned above, Defendant No. 1 has imposed no penalty in the illustrative case of Venus, so the Plaintiff cannot complain about Defendant No. 1 exceeding its jurisdiction. The texts and decision relied upon by learned Counsel are not at all apposite to the present fact situation.

22. What is of significance is that despite the Plaintiff resigning from its membership of the FMC, and further, FMC withdrawing from the agreement dated 10th June, 1994 film producers (members of the Plaintiff) continue to deal with Defendant No. 1 and continue to accept the conditions laid down in the Acquiring Form, undertaking and affidavit. For example, in respect of the film Kaaboo, although the Acquiring Form and undertaking are not dated, the affidavit is dated 28th September, 2002 which is well after the alleged withdrawal of the Plaintiff from its membership of the FMC. Similarly for the film Saaya, the documentation is dated 25th February, 2003 while for the film Hangama the documentation is dated 20th June, 2003.

23. On these facts and a bare perusal of these documents, it is simply not possible to accept the contention of learned Counsel for the Plaintiff that it is not concerned with the agreement dated 10th June, 1994. That being so, it must also be held that the Plaintiff is guilty of serious concealment of facts, particularly regarding the agreement dated 10th June, 1994 - for which reason alone it does deserve any discretionary relief in its favor. (See S.P. Chengalvaraya Naidu v. Jagannath ).

24. If these film producers have chosen to be bound by terms and conditions that are in addition to those individually entered into with film distributors, they have to decide which contract has to be given primacy. The film producers cannot say that they should be bound only by the individual contracts disregarding the Acquiring Form, undertaking and affidavit submitted by them for the purposes of registration of their film. The film producers have voluntarily filled up the Acquiring Form, undertaking and affidavit, and so they are bound by its terms, which is what Defendant No. 1 is attempting to enforce of its own members. No blame can be placed on Defendant No. 1 in this respect.

25. Quite apart from this, learned Counsel for Defendant No. 1 brought out a rather interesting fact, namely, that in the Acquiring Form filled up by the film producers, they have indicated membership of an association other than the Plaintiff. For example, M/s Khushi Films (through Vicky Ranawat) producer of the film Kaaboo has indicated its membership of an association called IMPTTP (this is said to be a typo and should read AMPTPP, but it does not, in any case represent the Plaintiff). Similarly, in the Acquiring Form, M/s Vishesh Entertainment Ltd., producer of the film Saaya is said to be a member of the Association of Motion Pictures and TV Programmes Producers (AMPTPP). For the film Hangama, the producer is said to be a member of AMPTPP.

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26. What this suggests is that either the film producers whose cases have been cited as illustrations by learned Counsel for the Plaintiff are not its members, or if they are, they are shying away from disclosing their membership of the Plaintiff while dealing with film distributors and are, therefore, indirectly defeating the cause that the Plaintiff is fighting for, rather than supporting it. That being so, the Plaintiff has hardly made out any case for the grant of an ad interim injunction in its favor or in favor of its members, who seem to be working at cross-purposes.

27. Learned counsel for the Plaintiff contended that Defendant No. 1 is ensuring violation of the provisions of Sections 23 and 27 of the Indian Contract Act, 1872 in as much as, contrary to public policy, filmgoers are deprived of the opportunity to view films on television and members of the Plaintiff cannot exercise their freedom to contract. This argument is being mentioned only for summary rejection ? no one has compelled any member of the Plaintiff to contract with any film distributor on terms that are felt to be unreasonable. Also, on these facts, to place film viewership on the pedestal of ?public policy? is stretching matters a little too far.

28. In view of the above, I find no merit in the applications filed by the Plaintiff. They are dismissed with costs of Rs. 3,000/- payable to Defendant No. 1 within four weeks.

29. Needless to say, any finding given is only for the purposes of disposal of the applications and will not bind the parties in the trial of the case.