Reliance Big Entertainment Pvt. ... vs Percept Limited & Anr.
2009 Latest Caselaw 244 Del

*              HIGH COURT OF DELHI : NEW DELHI

+                 IA No.14113/2008 in CS (OS) No.2408/2008

                       Judgment Reserved on     :       12th January, 2009
%                      Judgment pronounced on :        23rd January,2009

Reliance Big Entertainment Pvt. Ltd.                 ...Plaintiff
                      Through: Dr. A.M. Singhvi, Sr. Adv. with Mr. Ameet
                                Dutta & Mr. Thomas George, Advocates

                       Vs.

Percept Limited & Anr.                             ....Defendants
                    Through: Mr. Rajiv Nayar, Sr. Adv. with Mr. Sandeep
                             Mittal, Advocate for Defendant No.1
                             Mr. Kamal Sawhney, Advocate for Defendant
                             No.2

Coram:

HON'BLE MR. JUSTICE MANMOHAN SINGH

1. Whether the Reporters of local papers may
   be allowed to see the judgment?                                 Yes

2. To be referred to Reporter or not?                              Yes

3. Whether the judgment should be reported
   in the Digest?                                                  Yes

MANMOHAN SINGH, J.

1. By this order, I shall dispose of the plaintiff‟s application

under Order 39 Rules 1 & 2 read with Section 151 CPC being I.A. No.

14113/2008 praying that the defendants by themselves, their officers,

servants and agents be restrained from dealing with either themselves or

through any third party from assigning, licensing or releasing of film

titled Aashayein and from issuing any order/letter allowing and

authorizing release of print of the film titled Aashayein in favour of any

third party.

2. The plaintiff has filed a suit for recovery, grant of permanent

injunction and decree for sale against the two defendants Percept Ltd,

Defendant No.1 and Super Cassettes Industries Ltd, Defendant No.2

who are co-producers of the film in question.

3. The plaintiff claims to be established in the year 2006 as a part

of Reliance Anil Dhirubhai Ambani Group, which is India‟s top 3

business houses on all major financial parameters and has net assets in

excess of Rs.1,34,000 crores and net worth to the tune of Rs.58,000

crores. The plaintiff claimed to have an extensive production partners

with its creative talents in India, namely Farhan Akhtar, Vidhu Vinod

Chopra, Rituparno Ghosh, Priyadarshan, Maniratnam, J.P. Dutta,

Madhur Bhandarkar, Shyam Benegal, Sudhir Mishra, Indra Kumar, AB

Corp. etc.

4. The controversy in the present case started with the plaintiff‟s

association with the defendants who are co-producers of the film

Aasheyein in relation to the project entered between the parties

involving acquisition of films, distribution rights etc around May, 2008.

It was agreed that the plaintiff will distribute rights of film Aashayein to

be directed by Nagesh Kukunoor starring John Abraham and others for

world-wide territories and for use of media platforms and formats.

5. The plaintiff alleges that in May, 2008 he was shown a one

minute teasor (short promotional clip) of the proposed film which

suggested the film to be a commercial film. The Plaintiff thereafter,

asked the Defendants to provide a written synopsis on the subject matter

and treatment note of the film.

6. By way of e-mail dated 21st May, 2008 Defendant No.2

forwarded a written synopsis on behalf of both the defendants detailing

the film‟s subject matter. The synopsis is detailed below:

"Aashayein is a story of a compulsive gambler who discovers new meanings of fortune and life through a dramatic turn of events. Aashayein is a tale of Rahul‟s journey from darkness to light. A journey about love, hate, life, death and above all hope.

The brilliant storytelling and simplistic direction style of Nagesh Kukunoor. The film is about the triumph of human spirit. John Abraham in his strongest performance yet, Aashayein is a shining example of commercial cinema that does not compromise on quality. An outstanding soundtrack by Salim-Sulaiman."

7. It is pleaded in the plaint that a perusal of synopsis shows

that the film was proposed to be a commercial film venture. It is further

contended that there was representation by the defendant to the plaintiff

that the price cost of the film shall be Rs. 18 crores and it was assured

that the defendants will not deviate from the story line.

8. The plaintiff further alleges that on the basis of the

representation made by the defendants, the plaintiff on 11th June, 2008

entered into a Distribution agreement (Term Sheet) with the defendants

for distribution of certain rights in the film such as theatrical and non-

theatrical rights, world satellite rights, television rights, overseas home

video rights etc. As per clause 32 of this agreement, the parties agree to

enter into the Long Form Agreement for the said film within 30 days of

this agreement and it shall be valid and binding on both the parties until

Long Form Agreement is signed. It is further submitted by the plaintiff

that on 13th June, 2008 the plaintiff made payment equivalent to 30% of

the total amount totaling to Rs.4,01,40,894/- including applicable value

added tax and after deduction of tax deducted at source payable under

the Term Sheet in equal proportion to the defendants.

9. The complete film was shown to the plaintiff‟s

representatives on 14th July, 2008 who discovered that the film does not

resemble in any way with what had been represented to the plaintiff and

the same is contrary of representation of 21st May, 2008 supplied to the

plaintiff. It is further pleaded that the film was not even commercial in

character and completely departed from what had been represented by

the defendants. This fact was conveyed to the defendants many a times

on phones and in meetings.

10. The plaintiff has also pleaded fraud and misrepresentation by

the defendants on the plaintiff on the following grounds :-

(i) the synopsis provided by the defendants was a way to

misrepresent and play a fraud on the plaintiff;

(ii) the production cost of the film did not appear to be more than

Rs. 5 crores as opposed to the claim of Rs. 18 crores and

(iii) the defendants have willfully and with fraudulent intent

misled the plaintiff to sell the film as commercial film and

also suppressed the fact that the protagonist of the film i.e.

the character played by John Abraham suffered from cancer

and the story of the film revolved around his subsequent zest

of his remaining life whereas the synopsis of the film sent to

the plaintiff laid great emphasis on weak character being a

compulsive gambler discovering new meaning of fortune

through dramatic turn of events.

11. The plaintiff has alleged in the plaint that defendants sent e-

mail dated 22nd July, 2008 and two letters dated 1st August, 2008 and

27th August, 2008 demanding payment of second installment as per

clause 7 of the Term Sheet but the plaintiff expressed its disappointment

during telephonic discussion with the defendants and in the meeting

held between Ms. Sweta Agnihotri and Ms.Neha Damani,

representatives of the plaintiff and Mr. Bhushan Kumar and Mr. Ajay

Kapoor, representatives of defendant No.2, explained the situation and

demanded refund of monies.

12. It is pleaded in the plaint that on 15th September, 2008 the

defendant No.2 agreed in its letter that the money paid by the plaintiff to

the defendants would be refunded by the 1st week of November, 2008 or

prior to the release of the film. It is submitted by the plaintiff that

during the third week of November, 2008 the plaintiff learnt that the

defendants have no intention of honouring the said undertaking of 15 th

September, 2008 and have come to know through trade channels that the

defendants are planning to release the film.

13. The plaintiff, thereafter sent a letter dated 17th November,

2008 calling upon the defendants to refund the money paid and also

explained various reasons about the contract being vitiated. One of

reasons is the interview of the lead character of the film, John Abraham

which was published in Mumbai edition dated 12th November, 2008 of

the English daily, namely, HT Café, Mumbai. Relevant portion is

extracted hereunder :-

"Will Aashayein be your next release?

I hope. It‟s one of my most honest films.

....

But it has no takers after Big Pictures reneged on the deal. Even before the global meltdown, Percept took the film back. I am happy because they know how to market such films. It‟s not a run-of-the-mill product that needs a carpet bomb release. It has to be nurtured. Hey, it cost just Rs.3 crore, they can get the money back from the sale of satellite rights alone...."

14. The plaintiff claimed in the plaint that in view of the fraud

and misrepresentation made by the defendant, the plaintiff continues to

exercise lien over the film and the defendants have no right to distribute

the film with the third parties for exploiting the distribution rights.

15. The present suit has been filed by the plaintiff on 20 th

November, 2008 which was listed on 21st November, 2008 when the

statement was made by defendants to the effect that they had no

intention for releasing the film Aashayein till 9th January, 2009.

16. Per contra, the contention of the defendants is that the

plaintiff has filed the suit for recovery of a definite sum of money and

has not even claimed specific performance of the Term Sheet and has

given up its right in the film, therefore, the plaintiff cannot claim any

interim orders restraining the release of the film. The plaintiff owes the

defendants the minimum guarantee amount of Rs.13,75,00,000/- as

contractually agreed between the parties as set out in clause 7 of the

Term Sheet and the present suit has been filed to wriggle out of the said

obligation.

17. It is further averred in the written statement that the entire

story was narrated to the plaintiff‟s representative by e-mail dated 21st

May, 2008 and many communications were exchanged between the

parties in this regard. It is contended that the entire story line was made

public on the website, "Bollywood Hungama" and journals as early as

February, 2008. On the website on 19th February, 2008, following

extract appeared :-

"By Bollywood Hungama News Network, February 19, 2008 -

11:45 IST

The story revolves around Rahul Singh (John Abraham), a compulsive gambler who wins Rs.20 million from a bet and throws a party to celebrate. Everyone has a good time drinking and partying till late night during which Rahul proposes to Nafisa (Sonal Sehgal). He announces their engagement to all present, then collapses on the floor.

In hospital, he learns that he has only 90 days to live. Wanting to make the most of his last days, he leaves everything behind and moves into a soothing hospice. The inmates he meets change his outlook on life. As his relationships grow with each one of them, Rahul tries to rise above his own needs and live life to the fullest, learning from the courage of those around him.

18. It was pleaded that when the said outlines were freely

available on the prominent website as early as on 19th February, 2008;

the allegation of the plaintiff about misrepresentation is not believable.

19. The defendants submitted that admittedly the plaintiff‟s

representatives saw the film on 14th July, 2008. However, the first

written communication about displeasure and dissatisfaction of the

script is received by the defendants from the plaintiff only on 17th

November, 2008. It is also averred that infact the plaintiff had second

thought about the film, therefore, the plaintiff is looking for excuses to

back track from his contractual obligations.

20. In the written statement and reply, the defendants have not

denied that during the first week of September, 2008 the representatives

of the plaintiff, Bhushan Kumar and defendant No.2 Ajay Kapur and

other representatives of defendant No.1 had a meeting wherein the

plaintiff expressed its desire to back out from the agreement/Term Sheet

but it was clarified in the meeting to the plaintiff that the defendants

would be compelled to impound the upfront consideration as per clause

20 of the Term Sheet.

21. As regards the first contention of the plaintiff is concerned

that the defendant has not spent more than Rs 5 crores on the film

although an assurance was given to the plaintiff that the total investment

of the film would be Rs.18 crores, no evidence in this regard has been

produced by either of the parties. There are three versions made by the

parties in this regard, the first one is that at the time of settlement of

terms, the plaintiff was intimated by the defendants that the investment

on the film shall be Rs. 18 crores, second version made by the plaintiff

is that after preview of the film, it appeared that investment on the film

is not more than Rs.5 crores and last one is of interview of film actor

John Abraham where he mentioned that the cost of the film is Rs. 3

crores. In view of the different statements made by the parties, I hold

that the budget of the film in question cannot be adjudicated at the prima

facie stage in the absence of any evidence or accounts showing the

actual expenses incurred on the film. All the three allegations and

counter allegation are necessarily to be tested during the stage of trial.

22. Second contention of the plaintiff is that the film made by

the defendants is not on the basis of written synopsis provided. The

plaintiff has argued that there was fraud and misrepresentation by the

defendants and thus, the agreement got vitiated as the nature of the

film was represented to be commercial venture which is contrary to the

written synopsis. On the other hand, it is pleaded by the defendants that

there is a very small part in the film where the film actor John Abraham

suffered from cancer, otherwise, it is commercial venture and at the time

of negotiation, the entire story of the film was narrated to the plaintiff. It

appears from pleadings and documents that after watching the complete

film on 14th July, 2008, there is no written communication by the

plaintiff to the defendant raising its allegations.

23. The misrepresentation about the commercial nature of the

film cannot be defined by anyone. The commercial nature can have a

very vast meaning which may be judged on the subjective satisfaction of

a person and it would vary from case to case. Without releasing a film,

one cannot expect to comment on the fact that the said film is

commercial in nature or not. The commercial success of any venture

would be contingent on the fact when it is put into the market.

Therefore, at this stage, no conclusion can be arrived and can only be

adjudged at the time of trial.

24. The next contention made by the plaintiff is on letter dated

15th September, 2008 written by the defendant No.2 to the plaintiff. The

contents of letter are reproduced herein below :-

"To,

M/s. Reliance Big Entertainment Private Limited Reliance Energy House, Santacruz (East), Mumbai-400 055

Sub : -Term Sheet dated 11th June, 2008 with regard to Distribution Rights of the film "AASHAYEIN"

Dear Sir, This has reference to the Term Sheet executed on 11.06.2008 amongst M/s Super Cassettes Industries Ltd. and M/s. Percept Pictures (Producer 1 and Producer 2) of one part and Reliance Big Entertainment Pvt. Ltd. (Distributor) of the other part. Pursuant to execution of the above Term Sheet, certain Rights regarding the above film were assigned in your favour against payment of consideration on terms and conditions as agreed in the Term Sheet. Subsequent to execution of the above referred Term Sheet, you also paid the advance amount as agreed.

However now you have expressed a desire to quit out of the above referred agreement. In view of the same it would be appropriate to have a joint meeting of all the three parties to above referred agreement in order to seek an amicable solution to the situation which may also include refund of the money in 1 st week of November, 2008 or before theatrical release of the captioned film.

               Thanking you,

               Yours faithfully,            We agree and confirm
               For Super Cassettes
               Industries Ltd.              For Reliance Big
                                            Entertainment Pvt. Ltd.

                     Sd/-                              Sd/-
               Managing Director/
               Authorised Signatory         Authorised Signatory"

25. Both the parties have put their heavy reliance on this letter

dated 15th September, 2008. The plaintiff tried to establish some

admissions on account of acknowledgment/assurance given by the

defendant about the refund of money in addition to resolving the matter

amicably. On the other hand, defendants have relied on the same letter

to evade the liabilities on the ground that a letter was merely a proposal

of settlement where it was alleged that the defendant may consider

various options which may also include return of money. But, not in

any way, leads to any assurance for refund of money. After hearing the

parties I find that law of admission is well settled that the judgments on

admissions are made where the admissions are unequivocal and

unambiguous in nature. At this prima facie stage when both the parties

are giving different interpretation to the letter, in the absence of clear

admission, I find it difficult to allow the arguments of admission at this

stage.

26. I have heard learned counsel for the parties and have given

my consideration on submissions of the parties.

27. The first and foremost question involved in this matter for

my consideration is as to whether the ad interim injunction prayed by

the plaintiff is to be granted or not and whether the plaintiff has made

out a prima facie case in his favour for grant of an injunction to release

the film and in case the injunction is not granted what irreparable loss

would be caused to the plaintiff.

28. No doubt, the injunction being an equitable remedy is

granted by the court in exercise of its judicial discretion and has to be

considered from various facets which arise in particular set of

circumstances in each matter. There may be cases in which grant of an

injunction (temporary or permanent) will only meet the ends of justice

and an alternative safeguard for the preservation of rights of the

challenging party cannot at all be thought of. There may also be cases

where the remedy of injunction has to be made flexible and adjustable to

the situations arising in each case. I feel that the present case is of such a

nature where during the pendency of the suit, balance between the

parties is to be maintained.

29. The principle of law relating to temporary injunction during

pendency of the suit is well recognized in the decision of the Supreme

Court in Dalpat Kumar vs. Prahlad Singh AIR 1993 SC 276. The

relevant portion of the observations of the Supreme Court in the said

case refers as under:-

".....It is settled law that the grant of injunction is a discretionary relief. The exercise thereof is subject to the Court satisfying that:

(1) there is a serious disputed question to be tried in the suit and that an act, on the facts before the court, there is probability of his being entitled to the relief asked for by the plaintiff/defendant. (2) The court‟s interference is necessary to protect the party from the species of injury. In other words, irreparable injury or damage would ensue before the legal right would be established at trial; and (3) That the comparative hardship or mischief or inconvenience which is likely to occur from withholding the injunction will be greater than that would be likely to arise from granting it.

The Supreme Court further held:

"......Prima facie case is not to be confused with prima facie title which has to be established, on evidence at the trial. Only prima facie case is a

substantial question raised, bona fide, which needs investigation and a decision on merits. Satisfaction that there is a prima facie case by itself is not sufficient to grant injunction. The court further has to satisfy that non-interference by the court would result in „irreparable injury‟ to the party seeking relief and that there is no other remedy available to the party except one to grant injunction and he needs protection from the consequence of apprehended injury or dispossession of apprehended injury or dispossession. Irreparable injury, however, does not mean that there must be no physical possibility of repairing the injury, but means only that the injury must be a material one, namely on that cannot be adequately compensated by way of damages. The third condition also is that „the balance of convenience‟ must be in favour of granting injunction. The court while granting or refusing to grant injunction should exercise sound judicial discretion to find the amount of substantial mischief or injury which is likely to be caused to the parties, if the injunction is refused and compare it with that it is likely to be caused to the other side if the injunction is granted. If on weighing competing possibility or probabilities of likelihood of injury and if the court considers that pending the suit, the subject matter should be maintained in status quo, an injunction would be issued. Thus the court has to exercise its sound judicial discretion in granting or refusing the relief of ad interim injunction pending the suit."

30. Learned senior counsel for the plaintiff, Dr. A. M. Singhvi has

argued that there is no delay on the part of the plaintiff as the film was

shown to the plaintiff on 14 th July, 2008. After that from time to time,

the plaintiff intimated to the representatives of the defendants

telephonically and by personal meetings and raised its grievances. On

15th September, 2008, the defendant no. 2 agreed to refund the money

by first week of November, 2008. Therefore, the legal action was not

initiated and it was only during the third week of November, 2008 when

the plaintiff came to know from the trade circle that the defendants are

planning to release the film in the month of December, 2008, the present

suit has been filed on 20th November, 2008.

31. Learned senior counsel for the defendants, Mr. Rajiv Nayyar

has argued that after watching the film on 14 th July, 2008, no

disappointment/misrepresentation or fraud as alleged of any kind was

made in writing in any communication by the plaintiff. His contention

is that if the plaintiff was not satisfied with the film made by the

defendants, why he has waited for more than two months to bring the

action.

32. In my view, there is a delay for bringing the action, as the

plaintiff, on 14th July, 2008 was aware that the film was not made as per

written synopsis. There is no communication in writing or evidence on

record to suggest any protest made by the plaintiff for two months

except oral statement made by the plaintiff. It is also not in dispute that

on receipt of letter dated 15th September, 2008 by the defendant No.2

when a proposal of settlement was offered, even thereafter, the plaintiff

did not either approach the defendants or has taken legal recourse. The

first communication in writing came into the picture only on 17th

November, 2008 when plaintiff issued notice.

33. The concept of fraud and misrepresentation is clearly laid

down in the contract and once the contract is vitiated by fraud or

misrepresentation, it is a settled law that the party may either rescind

the contract or recover damages or both. Even otherwise, in the present

case, the damages would be more appropriate remedy than passing

injunction because it would not only put the parties to the proceedings at

loss but also cause hardship and losses to the other persons whose

monies are invested in the film.

34. It is not disputed by any of the parties in this matter that the

film is complete and ready for release. The rights of the third parties i.e.

actors, investors, exhibitors etc are also involved. It would be harmful

for both the parties if at this stage, the court passes the orders stopping

the release of the film. It would not be even in equity to stop the

progress of such a commercial activity unless the court is satisfied that

there is no other way of granting justice to the parties except by a

preventive injunction.

35. In the recent order passed by the Division Bench of this Court

in FAO (OS) No. 464/2008 entitled Gaurav Duggal vs. Rabbi

Sheregil in similar circumstances, the Division Bench had refused the

interim injunction on the ground that the suit was filed two days prior to

the release of the film.

36. Prima facie, it cannot be said that the plaintiff‟s plea

regarding the misrepresentation are without any force. However, while

considering the grant of interim injunction, the court has to see the

prima facie position in the matter. The misrepresentation and fraud are

the prerequisites for vitiating the contract. The contract becomes

voidable at the option of the party. The plea of misrepresentation and

fraud has to be proved by way of documents which should also be

tested in view of the allegation and counter allegations of the parties at

the stage of trial.

37. In M/s. Gujarat Bottling Co. Ltd. and others Vs. Coca

Cola Company and others, AIR1995SC2372, it was observed as

under:-

"46....... The object of the interlocutory injunction is to protect the plaintiff against injury by violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial. The need for such protection has, however, to be weighed against the corresponding need of the defendant to be protected against injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately compensated. The court must weigh one need against another and determine where the 'balance of convenience' lies. See : Wander Ltd. and Anr. v. Antox India P. Ltd. [1990] Supp. SCC 727 at pp. 731-

32. In order to protect the defendant while granting an interlocutory injunction in his favour the Court can require the plaintiff to furnish an under taking so that the defendant can be adequately compensated if the uncertainty were resolved in his favour at the trail."

38. In Colgate Palmolive (India) Ltd. v. Hindustan Lever Ltd.,

(1999) 7 SCC 1, following observations are made by the Apex Court:-

"15. Lord Diplock in Cyanamid case2 laid down the following guiding principles for the grant of interlocutory injunction:

"(1) The plaintiff must first satisfy the court that there is a serious issue to decide and that if the defendants were not restrained and the plaintiff won the action, damages at common law would be inadequate compensation for the plaintiff‟s loss.

(2) The court, once satisfied of these matters will then consider whether the balance of convenience lies in favour of granting injunction or not, that is, whether justice would be best served by an order of injunction. (3) The court does not and cannot judge the merits of the parties‟ respective cases and that any decision of justice will be taken in a state of uncertainty about the parties‟ rights."

39. Again, in the case of S.K. Jain vs. P. Subba Rao, 33 (1987)

DLT 334 at page 337 para 6, it was opined that the court has to strike

the balance between the parties at the time of disposal of the injunction

application which reads as under:-

"6.....I am of the view that these assurances and undertakings given by the defendant no. 3, are by way of additional guarantee for the payment of the amount due from the defendants. She is the wife of defendant no. 1 and the mother of defendant no. 2. By virtue of this writing, she had undertaken to pay a sum of Rs. 3,50,000.00 before the release of picture "Jeete Hain Shan Se". She is under obligation to pay this amount to the plaintiff before she can be allowed to release the picture "Jeete Hain Shan Se". It is the admitted case of the parties that the picture "Jeete Hain Shan Se" is going to be released shortly. In case the picture is released by the defendants without payment of the amount specified in the writing dated 6.4.1986 to the plaintiff, the plaintiff is likely to suffer irreparable loss. The balance of convenience is also in favour of the plaintiff because defendant no. 3 had expressly agreed to pay a sum of Rs. 3,50,000.00 before release of the picture. In the circumstances, I direct that the defendants will be entitled to release the film Jeete Hain Shan Se only after depositing a sum of Rs. 3,50,000.00 in this Court. Application is disposed of."

40. Bearing in mind the settled principles of law, I may now

proceed for consideration regarding the balance of convenience

involved in the matter. It would be unjust and inequitable to deny the

interim injunction to the plaintiff without any term.

41. I hold that the plaintiff is not entitled for interim order

restraining the defendants to release the film. In my view, the relief

could be compensated for sufficiently in money and it is fit case, where

the balance between the parties is to be maintained. A just and proper

relief asked can be made by issuing the following directions :-

1. Both the defendants shall deposit 30% of total amount paid

by the plaintiff in equal proportion (15% each) before this

Court by way of FDR in the name of Registrar General, for

the period of 12 months within seven days. Subject to this

condition, the defendants shall be at liberty to release the

film.

2. The defendants shall file an account showing all the

dealings between themselves and their distributors and an

account to furnish all the moneys realized by the exhibition

of the film. Such filing of accounts should be done every

quarter thereafter. The first statement of account shall be

filed by 20th April, 2009.

42. The application is disposed of in the abovesaid directions.

Dasti to both the parties.

MANMOHAN SINGH, J.

January 23, 2009 SD/sa