Delhi High Court

M/S. Pvr Pictures Ltd. vs M/S. Iglass Mediaworks & Anr. on 23 September, 2009

Author: Manmohan Singh

*          HIGH COURT OF DELHI : NEW DELHI

+                     C.S. [OS] No.329/2009


%                     Judgment Reserved on:         7th September, 2009

                      Judgment decided on :        23rd September, 2009

M/s. PVR Pictures Ltd.                             ...Plaintiff
                     Through : Mr. Harish Malhotra, Sr. Adv. with
                               Mr. Tanuj Khurana, Adv.

                      Versus

M/s. iGlass Mediaworks & Anr.                           ....Defendants
                    Through : None

Coram:

HON'BLE MR. JUSTICE MANMOHAN SINGH

1. Whether the Reporters of local papers may
   be allowed to see the judgment?                      No

2. To be referred to Reporter or not?                   No

3. Whether the judgment should be reported              No
   in the Digest?

MANMOHAN SINGH, J.

1. The plaintiff filed the present suit for permanent injunction

and for recovery of Rs. 64,02,000 with pendent lite and future interest.

The plaintiff M/s PVR Pictures Ltd. is a company incorporated under

the Companies Act, 1956, having its registered office at 61, Basant Lok,

Vasant Vihar, New Delhi-110057. The present suit is being filed

through Mr. Brijesh Arora, son of Shri Y.K. Arora, Company Secretary

who has been authorized to file and institute the present suit before this

court by virtue of a board resolution dated 12.2.2009 as passed by the

Board of Directors of the company in his favour.

2. The case of the plaintiff is that the defendants approached

the plaintiff for co-production of the feature film titled BINODINI

(hereinafter referred to as „said movie‟) in the month of May, 2007. The

plaintiff agreed to co-produce the movie BINODINI with the defendants

after thorough negotiations which lasted for several sessions.

3. The parties entered into an agreement on 16/5/07 reducing

the terms between them in a Memorandum of Understanding,

(hereinafter being referred as MOU) which was signed, and sealed.

4. It is stated that in terms of the said MOU, the movie had to

be co-produced by the parties to the suit, where the plaintiff had to fund

the entire budget of the movie and the defendants had to look after the

production activities. The said movie had to be written and directed by

defendant no. 2, Shri Bibhash Mukherjee. It was further mutually

agreed under the MOU dated 16.5.2007 that the plaintiff will be entitled

to charge an interest @ 16% per annum on the funds made available by

it for the production from the date of providing such funds till the same

are recouped from the collection of the movie. It was further agreed that

the distribution rights of the movie had to be taken and exhibited by the

plaintiff and the plaintiff for this had to charge a commission of 20% on

the net box office collection for such distribution of all rights.

5. It is stated that the plaintiff was to pay for print costs and

local publicity in its capacity as distributor and entire such costs had to

be recouped from the net box office collections.

6. It is alleged that the plaintiff gave an advance of Rs.

51,00,000/- vide cheque no. 201922 drawn on ICICI Bank Ltd. in

favour of defendant no. 1 towards signing fee for the movie. Upon

payment of the aforesaid amount to defendant no. 1, it was alleged that

the parties agreed that they will execute a final agreement incorporating

the terms and conditions and respective rights and obligations of the

parties for the co-production of the movie within 30 days of the

execution of the said MOU dated 16.5.2007. It was also agreed that in

case the final agreement is not executed within 30 days of the signing of

the said MOU, the MOU dated 16.5.2007 shall stand terminated and

defendant no. 1 shall refund the entire amount of Rs. 51 lakhs to the

plaintiff forthwith.

7. It is averred that the plaintiff made various requests and

telephonic calls to the defendants to execute the necessary final

agreement so as to capture the final terms and conditions and rights and

obligations for co-producing the movie but nothing was heard from the

defendants even after expiry of 30 days i.e. the time which was set out in

the MOU dated 16.5.2007 to execute a formal final agreement.

8. It is alleged that on 30.4.2008 i.e. almost on expiry of 10

months, the defendants approached the plaintiff showing their

inclination and intention to abide by their duties and obligations under

the MOU and expressed their desire to extend the terms and conditions,

rights, duties and obligations already mutually arrived at in the MOU

dated 16.5.2007. Accordingly, a letter of extension was executed

between the parties on 30.4.2008 acknowledging the mutually agreed

terms and conditions as already agreed between the parties under the

MOU dated 16.5.2007. Under the said letter of extension dated

30.4.2008, both the parties acknowledged and mutually agreed that

MOU will be a valid document and its terms and conditions will be

binding and enforceable upon the parties. It was further decided in the

letter of extension that both the parties shall execute a detailed

agreement incorporating the terms and conditions and respective rights

and obligations of the parties for co-production within 90 days from the

date of signing of the Letter of Extension i.e. within 90 days from

30.04.2008

9. It is submitted that even after expiry of 90 days from the date

of letter of extension dated 30.4.2008, the defendants once again

completely failed to abide by the terms and conditions of the MOU

dated 16.5.2007 and the letter of extension dated 30.4.2008. It is urged

that upon expiry of 90 days of the extension in terms of the letter of

extension dated 30.4.2008 i.e. on 29.7.2008, the MOU dated 16.5.2007

expired by efflux of time and all the terms and conditions as agreed

under the said MOU ceased to exist and ceased to bind the parties.

10. The plaintiff sent a legal notice through its advocate on

8.9.2008 to the defendants to remit and refund the entire signing amount

of Rs. 51 lakhs which was given to the defendants pursuant to the MOU

dated 16.5.2007 as signing fee for the co-production of the movie along

with interest @ 16% p.a. as was mutually agreed under the MOU dated

16.5.2007.

11. The defendants sent a reply by letter dated 16.9.2008,

wherein they admitted the liability and obligation to refund the signing

amount back to the plaintiff. By virtue of the said letter, the defendants

made a request to give 90 days to repay the signing amount to the

plaintiff. It was also promised in the said letter by the defendants that

the said amount will be paid on or before 15.12.2008.

12. The plaintiff acknowledged the abovesaid letter of the

defendants by sending a letter dated 31/10/08. However on 15.12.2008,

the plaintiff received an e-mail from the defendants no. 2 informing the

plaintiff that due to unexpected market meltdown and general recession,

the defendants could not arrange the funds. Therefore, the defendants

has not yet refunded the amount of Rs 51 lakhs to the plaintiff. Hence,

the present suit.

13. The plaintiff sought the following prayer in para 36 of the

plaint:-

"(a) pass decree for Rs64,02,000/- (sixty four lakh two thousand)in favour of the plaintiff and against the defendants .

(b) pass a decree of permanent injunction in favour of the plaintiff against the defendants thereby restraining the defendants their partners, agents, representatives and employees from in any manner initiating and dealing with any third party qua the movie BINODINI forming subject matter of the present suit till such time the advance signing amount of Rs.51,00,000/-(rupees fifty one lakhs) is remitted back to the plaintiff with interest @ 16% p.a.

(c) Pendent lite and future interest @ 18% may be allowed to the plaintiff against the defendants on the decreetal amount from the date of filing the suit.