M/S Bci Optical Disc. Ltd vs M/S M.R.S. Film Craft & ...
2009 Latest Caselaw 1871 Del

*IN THE HIGH COURT OF DELHI AT NEW DELHI

+                  CS(OS)2050/2008

%                                  Date of decision: 5th May,
2009

M/S BCI OPTICAL DISC. LTD.                  .......
Plaintiff
                        Through: Mr. S.K. Chawla, Advocate

                               Versus

M/S M.R.S. FILM CRAFT & ADVERTISING
PVT. LTD.                      ......
      Defendants
                        Through:     Mr.   Varun,    Advocate for
                                     defendant No.3.
                                     Defendants No.1&2 ex-parte
                                     vide order dated 17.02.2009.


CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1.    Whether reporters of Local papers may
      be allowed to see the judgment?   Yes

2.    To be referred to the reporter or not? Yes

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



RAJIV SAHAI ENDLAW, J.

1. The plaintiff has approached the court with a case that;

(i) It is engaged inter-alia in the business of

manufacturing and marketing Audio & Video,

CDs & DVDs;

(ii) That M/s Magnasound (India) Ltd., (hereinafter

called Magnasound) was also engaged in the

same trade and owned copyright of various Audio

& Video Albums;

(iii) Magnasound was being managed by Mr. Shashi

Gopal, his wife Ms. Kalpana Gopal and Mr.

Madhav Dass being the husband of Ms. Sudha

Dass sister of Mr. Shashi Gopal;

(iv) That Magnasound was facing financial crises and

owed monies to several creditors, one of which

filed a petition in the High Court of Bombay for

winding up of Magnasound;

(v) That the aforesaid persons in management of

Magnasound, on the verge of their removal and

appointment of the provisional liquidator wanted

to transfer the copyright of Music Videos, owned

by Magnasound and which was a valuable asset of

Magnasound;

(vi) They in furtherance of their misdeeds, involved

the defendant No.1 in their conspiracy and

manipulated a sham, bogus and back dated

agreement dated 20th September, 2002 of transfer

of copyright of Magnasound of the Albums, to the

defendant No.1 and to the detriment of

Magnasound.

(vii) However, since Mr. Shashi Gopal aforesaid could

not trust the defendant No.1, he also got an

agreement dated 25th October, 2003 of transfer of

the rights under the agreement dated 20th

September, 2002 by the defendant No.1 in favour

of the defendant No.3 being a proprietary

concern of Mrs. Sudha Dass aforesaid;

(viii) This was done because Magnasound could not

directly transfer the rights to the defendant No.3

owing to the relationship;

(ix) That the transfer of copyright in favour of the

defendant No.1 and then to the defendant No.3 is

a clear case of fraud, cheating, misrepresentation

and conspiracy.

(x) That Mr. Sashi Gopal however did not trust his

sister also and obtained a power of attorney from

her regarding the rights so created in favour of

defendant No.3; He acting under the said power

of attorney approached the plaintiff for

assignment of rights which were originally vested

with Magnasound to the plaintiff;

(xi) That since Mr. Shashi Gopal was incharge and

controlling authority of Magnasound, the plaintiff

did not doubt the transfer of rights by Shri Shashi

Gopal to the plaintiff even though through such

circuitous agreements;

(xii) That the plaintiff purchased the copyright for

consideration of Rs.2 lac paid to the defendant

No.3.

(xiii) That accordingly an agreement dated 17th June,

2004 with respect to the said copyright was

executed in favour of the plaintiff.

2. The case of the plaintiff is that even though the

agreement dated 20th September, 2002 which had been

executed in favour of the defendant No.1 was fraudulent as

aforesaid and even though the defendant No.1 had transferred

the rights acqired under the said agreement in favour of the

defendant No.3 vide agreement dated 25th October, 2003 but

the defendant No.1 on the basis of the agreement dated 20th

September, 2002 was interfering with the exercise of rights

under the agreement dated 17th June, 2004 by the plaintiff.

The plaintiff thus claimed the relief of permanent injunction

restraining the defendant No.1 from interfering with the

exercise of copyrights vested in favour of the plaintiff under

the agreement dated 17th June, 2004 and for restraining the

defendant No.1 from infringing the said copyright. The

defendant No.2 is one of the stockist of the plaintiff to whom

threats are alleged to have been meted out by the defendant

No.1.

The necessary reliefs of mandatory injunction, accounts,

delivery, and damages have also been claimed. On 5th

November, 2008 when this suit was listed before the court, the

plaintiff informed the court that the defendant No.1 had

instituted CS (OS) No.1187/2005 in this court against some

parties, in relation to the copyrights aforesaid. On that date the

statement of the representative of the plaintiff was also

recorded inter-alia to the effect that when the plaintiff had

entered into the agreement with the defendant No.3 the

plaintiff had not verified whether the defendant No.3 had any

rights over the songs/video recordings. The present suit was

as such ordered to be listed along with CS(OS) No.1187/2005.

3. On 20th January, 2009 both the suits were listed together.

The counsel for the plaintiff in CS(OS) No.1187/2005 and

which is the defendant No.1 in this suit was asked to take

instructions from the defendant No.1 and to inform the

defendant No.1 of the present suit. It was informed on the next

date i.e. 17th February, 2009 that though the counsel had

informed the defendant No.1 of this suit but the defendant

No.1 had neither instructed the counsel to appear for the

defendant No.1 in this suit nor the defendant No.1 was

otherwise represented. The defendant No.1 was as such

proceeded against ex-parte. The defendant No.2 also failed to

appear inspite of service and was proceeded against ex-parte.

The defendant No.3 has filed a written statement supporting

the plaintiff. The plaintiff has, in any case, not made any claim

against the defendant No.3.

4. The plaintiff has led ex-parte evidence and the counsel

for the plaintiff has also been heard.

5. The suit is for infringement of copyright. As per the

averments in the plaint, the owner of the copyright is

Magnasound which is now under liquidation. Magnasound has

not been impleaded as a party. Under Section 61 of the Copy

Right Act, 1957 in every civil suit or other proceedings

regarding infringement of copyright instituted by an exclusive

lincensee, as the plaintiff herein claims to be the owner of the

copyright shall, unless the court otherwise directs, is to be

made a defendant. Upon attention of the counsel for the

plaintiff being invited to the said provision, he first contended

that Magnasound being in liquidation was not made the

defendant. However, that is no ground; Magnasound can be

sued through the official liquidator. It was next contended that

under Section 61(1) the court is empowered to exempt

impleadment of the owner of the copyright. However, neither

any application in that regard was made nor any prayer to the

said effect made at any time.

6. Moreover, I find that the present suit from the averments

in the plaint itself is based on an illegality. The plaintiff

himself claims the transaction of which it claims to be the

ultimate beneficiary to be fraudulent, conspiratorial and

intended to defeat the rights of the creditors of a company in

liquidation. The plaintiff is admittedly in possession of

property of the said company in liquidation and which property

ought to have been placed at the disposal of the official

liquidator. Under Chapter 5 of the Companies Act, 1956, the

transactions pleaded are liable to be investigated and may

constitute an offence.

7. The question which arises is that should this court come

to the rescue of a plaintiff whose case is steeped in such

illegality. The answer necessarily has to be in negative. The

present is a case where the plaintiff as well as the defendant

against whom the relief has been claimed are both not entitled

to the property which is of a company in litigation. The witness

of the plaintiff in his affidavit by way of examination in chief

also supports the said view. From his affidavit, it is not borne

out and is not believable that the plaintiff at the time of

entering into the agreement was not aware of the illegality of

the transaction. The plaintiff as a trade person is presumed to

know of proceedings for winding up having been initiated

against Magnasound and it is unbelievable that the plaintiff

while acquiring the copyrights of Magnasound under the

agreement dated 17th June, 2004 but through the defendant

No.3 was not aware of the reason therefor.

8. I have recently in Alka Gupta Vs. Narender Kumar

Gupta CS (OS) 302/2007 decided on 13th March, 2009

discussed the principle of pari delicto potiar est conditio

defendants i.e. the courts will refuse to enforce an illegal

agreement at the instance of a person who is himself a party to

an illegality or fraud, in detail.

9. The plaintiff is thus not found entitled to the relief of

injunction which, in any case, is a discretionary relief. The suit

is also found to be barred by Section 61 of the Copy Right Act.

No ground is found to exempt the plaintiff from impleading the

owner of the copyright, particularly when the direct

consequences of such exemption would be to allow the plaintiff

and the defendants to continue profiteering from the

properties which in fact are of Magnasound. The suit is thus

liable to be dismissed with costs. Exemplary costs of

Rs.25,000/- are imposed on the plaintiff for making an attempt

for abusing the process of this court. The cost be paid to the

Delhi Legal Services Authority within four weeks and proof of

payment thereof be furnished to the Registry failing which the

Registry to put up the file before the court.

10. In the circumstances, of the case it is also deemed

expedient that Registry to forward a certified copy of this

judgment to the official liquidator attached to the High Court

of Bombay, with reference to the winding up proceedings

against Magnasound, for information and appropriate action.

RAJIV SAHAI ENDLAW (JUDGE) May 5 ,2009 PP