Delhi High Court
Houghton Mifflin Company vs Rajinder Kumar Arya on 31 May, 2010
Author: S.Ravindra Bhat
$~4
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 31.05.2010
+ CS(OS) 1097/2006, C.C. 2147/2006
HOUGHTON MIFFLIN COMPANY ..... Plaintiff
Through : Ms. Jyoti Taneja, Advocate.
versus
RAJINDER KUMAR ARYA C+ ..... Defendant
Through : Sh. Anil Kumar Gupta and Sh. Nishat. A., Advocates.
CORAM:
MR. JUSTICE S. RAVINDRA BHAT
1.
Whether the Reporters of local papers Yes.
may be allowed to see the judgment?
2. To be referred to Reporter or not? Yes.
3. Whether the judgment should be Yes.
reported in the Digest?
MR. S.RAVINDRA BHAT, J. (OPEN COURT)
1. The plaintiff sues the defendant for permanent injunction and other consequential reliefs,
complaining copyright infringement.
2. The suit averments are that the plaintiff is the copyright proprietor of several publications
in respect of books. It is contended that the plaintiff has been in the publication business since
1908 as a successor to several firms that were originally formed in 1880. It submits that its
worldwide sales are to the tune of US $ 1 billion. It is contended in the suit that the plaintiff's
publications are known the world-over, particularly its educational and text books on specialized
subjects, such as Economics, Chemistry etc. According to the plaintiff, it makes available several
popular editions in Indian markets; some prominent titles among those are listed in para 5 of the
C.C. 2147/2006 in CS (OS) 1097/2006 , CS (OS) 1097/2006 Page 1
suit. According to the averments, Special editions are priced differently and adapted to cater to
Indian markets. The suit contends that the plaintiff granted time-bound permission to the
defendant to reprint and sell 24 titles in the Indian market. These permissions were in the form of
agreements entered into on various dates, each having a life-span of five years. It is submitted
that the time-period in all the cases expired exactly after five years and the last of such
agreements expired on 09.07.2003.
3. The suit refers to some correspondence between the parties where the defendant had
sought extension of time and additionally, permission for marketing the plaintiff's titles and re-
prints of other editions. The suit alleges that in December 2005, the plaintiff discovered that the
defendant was unauthorizedly offering its books and publications for sale on the Internet. It is
also alleged that in February 2006, the plaintiff discovered that the defendant was illegally re-
printing, selling, supplying and stocking re-prints of its (plaintiff's) works. In para 14, the
plaintiff has listed 19 of its publications (termed as "best sellers"), which were allegedly
unauthorisedly offered for sale. The plaintiff submits to having purchased such allegedly
infringing copies, and thereafter sought recourse to criminal proceedings, which led to Search
and Seizure by the police authorities, pursuant to proceedings arising out of FIR No. 140/2006.
The suit contends that the defendant had stocked a large number of such infringing goods,
including 900 copies of Introduction to Programming and Strategic Approach; 800 copies of
English online - Student's Guide to Internet & Worldwide Web; 500 copies of Lotus 123 for
Windows etc.
4. The plaintiff contends that a complaint was filed on 29.03.2006 before the Additional
Chief Metropolitan Magistrate, New Delhi, who had permitted Search and Seizure from the
C.C. 2147/2006 in CS (OS) 1097/2006 , CS (OS) 1097/2006 Page 2
defendant's premises. On this basis, it is alleged that all such acts of the defendant in continuing
to stock and offering for sale titles of various text books in which the plaintiff owns copyright
amounts to infringement and consequently, the defendant should be appropriately interdicted
with a decree for permanent injunction and also saddled with damages and a decree for rendition
of accounts.
5. The defendant resists the proceedings. The essential aspects pertaining to the plaintiff's
copyrights and the foundational facts pertaining to the license arrangement with the defendant
are not disputed. However, the defendant contends that the parties had entered into negotiations
which culminated in an assurance or understanding whereby he (the defendant) could market the
titles in question. The defendant further submits that out of the 24 titles, which he was licensed to
market and sell in India, despite considerable efforts, only 5 titles or text books could be
popularized, and to his dismay, it was discovered that the plaintiff had behind his back, entered
into arrangements with one M/s. Biztantra for sale of Indian editions and their reprints. The
defendant also reiterates the same submissions in the Counter-Claim where it is asserted that the
practice of the market is that in case of need, either time is extended or further right to re-print
the same and subsequent editions is granted to the same publisher licensee (in this case the
defendant). The defendant avers in this respect in para 3 of the counter-claim as follows:
"XXXXXX XXXXXX XXXXXX
.................In the instant case, the deliberations in this regard were on and a
considerable amount and good will of the defendant was at stake and by the time
the terms could have been finally negotiated, the plaintiff, in utter disregard of its
own commitments and assurances, granted reprint/publication right of the only
books which were made popular by the defendant to another Indian Firm -
M/s. Biztantra. The plaintiff, as such, was guilty of breach of Contract and
commitment, even though admittedly the Defendant has not violated the terms
of the Agreement. And by the time, the defendant could initiate necessary legal
C.C. 2147/2006 in CS (OS) 1097/2006 , CS (OS) 1097/2006 Page 3
action against committing wrong by the plaintiff, the plaintiff opted to file the
present suit, without any cause of action, just to cover up his breach of contract
and pressurize the defendant not to initiate any proceedings against the plaintiff.
XXXXXX XXXXXX XXXXXX"
6. The defendant also alleges in the counter-claim about suppression of material facts by the
plaintiff which disentitles it to any equitable relief; the said contentions are in the following
terms:
"XXXXXX XXXXXX XXXXXX
5. That the plaintiff has suppressed the material facts from this Hon'ble
Court and has not approached this Hon'ble Court with clean hands. Before filing
the present suit with some ulterior motive and malafide intentions best known to
the plaintiff, the plaintiff got the defendant also involved into a false criminal
case. Under the garb of the Court's Orders, the defendant was arrested and a
good number of books and his other material documents, which were not at all
required, were also got seized, without even giving an opportunity of Show
Cause (in case, the plaintiff had any grievances against the defendant), thereby
causing the mental tension, agony, considerable hardships and loss of goodwill
which cannot be valued or assessed not only to the defendant, but to all his family
members, relatives and friends. The prestige of the defendant was maligned under
a conspiracy hatched against the defendant, for which the defendant reserves his
right to take appropriate legal action - Civil or Criminal or both, against the
plaintiff and his Attorney etc. who are guilty of committing wrong with the
defendant. The defendant, therefore, got the plaintiff served with a Registered
Notice dated July 1st, 2006, through his Advocates - D.P. Gupta & Company.
Vide the said Notice, it was brought to the notice of the plaintiff that;
XXXXXX XXXXXX XXXXXX"
7. The defendant premises the counter-claim heavily on negotiations between him and the
plaintiff regarding extension of the copyright license for new editions and re-prints. It is alleged
that the plaintiff fraudulently claimed infringement knowingly that whatever titles were
possessed and found in its premises, (i.e. the defendant's) premises were within the plaintiff's
knowledge and consent and that there was no copyright infringement. The defendant, in the
counter-claim relies upon the following terms of the original license agreement between the
C.C. 2147/2006 in CS (OS) 1097/2006 , CS (OS) 1097/2006 Page 4
parties:
"XXXXXX XXXXXX XXXXXX
"If the Publisher believes that the Copyright in the reprinted work is being or
may be infringed, the publisher shall promptly notify the Proprietor of such
infringement. The Proprietor may, at its opinion, authorize to take legal action,
as may be required to restrain such infringement or to seek damages therefor.
The Proprietor reserves his right to take action on its own initiative or jointly
with the publisher to remedy any infringement of Copyright....."
XXXXXX XXXXXX XXXXXX"
8. The defendant claims that the cause of action for the counter-claim against the plaintiff
arose in April 2006 when consequent upon a "fraudulently obtained" order by the plaintiff's
representative, the defendant was put to irreparable loss, which is quantified at Rs. 50 lakhs, on
account of mental tension and if he had been not dealt with illegally and was permitted to sell the
stocks. The counter-claim had also sought for declaration that the plaintiff by filing a criminal
complaint without first offering an opportunity [acted wrongly ?? (SIC)] when the deliberations
regarding the contract were still continuing, and a consequent mandatory injunction, directing the
plaintiff to immediately withdraw the Agreement entered into with M/s. Biztantra.
9. The plaintiff submits in the application under Order 7 Rule 11 CPC that the counter-claim
does not disclose any cause of action and is at any rate untenable. It is submitted that having
conceded that the plaintiff is the sole and exclusive copyright proprietor, who had originally
entered into licensing arrangements with the defendant and that such license arrangements were
in writing, the tenure of which had lapsed, the defendant cannot now seek damages in respect of
what are untenable and specious claims of mental agony. It is argued that there is no question of
any practice of permitting an erstwhile licensee to continue to market or re-print publications or
text books in respect of which the original license agreements had been entered into sometime in
C.C. 2147/2006 in CS (OS) 1097/2006 , CS (OS) 1097/2006 Page 5
2002 and had ended. Learned counsel points-out that the plaintiff had to initiate criminal
proceedings in 2006, pursuant to which seizure of a large quantities of infringing materials were
found in the defendant's premises. It is argued that the law only recognizes written arrangements,
in terms of Section 19 of the the Copyright Act, 1957 which clearly states the terms upon which
a copyright proprietor can license or authorize the publication and dissemination of the rights in
respect of which the copyright proprietor is entitled under Section 14 are to be in writing. In the
absence of such written arrangements, any negotiations which do not culminate into a concluded
contract, expressed in written form, is unrecognized under law.
10. The plaintiff also submits that the claim for damages is, in any event, untenable because
it is premised upon the defendant being allegedly illegally dealt-with. Learned counsel contends
that the nature of seizures of the infringing material prima facie justified initiation of criminal
proceedings and there was no question of any written Show Cause Notice to the defendant. It is
submitted that in such circumstances, the Court should, having regard to the circumstance that
the counter-claim is but the defendant's assertion of what it perceives as a grievance because of
the occasion, applying the same rules for its maintainability, as in the case of an independent
suit. So viewed, submits the counsel, the counter-claim is bereft of any cause of action, and
requires to be rejected at the threshold.
11. The defendant, in his reply, (contents of which were reiterated by his counsel), submitted
that the suit is not maintainable for the reason that it was not filed by a duly authorized individual
or person. It is further argued that the plaintiff suppressed the circumstance that it being an
American company, which was, during the pendency of the proceedings, taken-over by a U.K.-
based company, known as Cengage Learning. It is emphasized that the plaintiff has not produced
any relevant material to rebut its arguments and that the application for rejection of the suit has
C.C. 2147/2006 in CS (OS) 1097/2006 , CS (OS) 1097/2006 Page 6
to fail as this question is an important one which requires a trial.
12. The defendant relies upon an e-mail dated 20.06.2003. The relevant portions of that
document (which has been denied by the plaintiff) are as follows:
"XXXXXX XXXXXX XXXXXX
20th June 2003
Dear Mr. Arya-
We have been looking into this matter for some time now. And I do apologize for
the delay since we met in Frankfurt. While I did agree in principle that we could
extend a few of the agreements, I believe I also indicated that it would need
review by our international sales group as well. In any case, these contracts will
not be sent.
Please understand that as a business we are looking to increase our worldwide
marketshare and revenue opportunities. Naturally this means selling our own
works, not those licensed to other publishers. There is no language in any
agreements that indicates we are giving you rights for future editions or for the
next 50 years. If we chose to license future reprints, we will offer them to you. But,
as I have explained, we are not offering these rights at this time or for the
foreseeable future.
As noted, the reprints you are selling contain material and research that is out of
date. Aside from that, with our logo printed on the spine and the implied
association therein, customers are contacting us about using password protected
web site materials relative to the newer editions of these works. Again, this
hampers our drive towards sales of our own current editions in the market.
XXXXXX XXXXXX XXXXXX"
13. The defendant also relies upon a letter written by the plaintiff on 31.05.2002; the relevant
extracts of the said letter are as follows:
"XXXXXX XXXXXX XXXXXX
May 31,2002
Via Federal Express
Mr. Rajender. K. Arya
Proprietor
C.C. 2147/2006 in CS (OS) 1097/2006 , CS (OS) 1097/2006 Page 7
All India Publishers & Distributors
920 Poonamallee High Road
Madras-600 084
India
Dear Mr. Arya:
I am assistant general counsel at Houghton Mifflin Company with responsibility
for matters involving international distribution of Houghton Mifflin products.
Your email to Tim Cullen, dated May 16, 2002, has been forwarded to me.
As Mr. Cullen mentioned in his letters of May 9, 2002, your company's contracts
with Houghton Mifflin for reprints of various Houghton Mifflin titles have either
expired or will soon expire, and we are not interested in renewing them. We are
sorry if this causes difficulties for your business, but the fixed-term nature of the
agreements are quite clear and unambiguous. As for subsequent editions, Section
14 of the agreements clearly obligates us to give your company a first option only
if Houghton Mifflin decides to offer Indian rights on those new editions, and we
have decided not to offer Indian reprint rights for the works.
For this reason, there is no reason to set up a meeting between you and a
representative of Houghton Mifflin.
XXXXXX XXXXXX XXXXXX"
14. The plaintiff, in reply to the defendant's contentions, points to the letter of 18.06.2003. It
is emphasized that this clearly clarifies that contract extension was never granted in respect of
three titles and that license in respect of four editions were to expire on 09.07.2003. Particular
emphasis is placed upon the following part of the said letter:
"XXXXXX XXXXXX XXXXXX
We will request that you refrain from any subsequent printings of these works.
Both of these works contain material/information that is out of date. Also, your
reprints do not have the relevant web resources to accompany them.
XXXXXX XXXXXX XXXXXX"
15. During the course of submissions, the defendant gave-up the claim for declaration and
mandatory injunction. However, it was submitted that the claim for damages is tenable and has
C.C. 2147/2006 in CS (OS) 1097/2006 , CS (OS) 1097/2006 Page 8
to be proceeded broadly since the plaintiff is guilty of suppression of facts and also pertaining to
change of its possession and ownership and not merely change of its name, as was suggested.
16. From the above discussion, it is evident that the Court is called-upon to decide whether
the cause of action urged by the defendant in its counter-claim is tenable. The plaintiff's
submission in this regard is that having conceded to all foundational aspects, that is its (the
plaintiff's) copyrights, the existence of license agreement for a specified period, i.e. 5-years
(which concededly lapsed), the defendant could not have sold the copies of text books and other
publications and that the plaintiff was within its rights in preferring a criminal complaint under
Section 63 of the Copyright Act, having regard to the seizures effected. It is submitted that the
entire edifice of the defendant's counter-claim is the alleged wrong-doing of plaintiff in
preferring criminal complaint, which resulted in so-called mental agony and consequential
damages.
17. The picture which emerges from the pleadings is that the plaintiff concededly is the
copyright owner in respect of various titles, copies of which were allegedly found in the
defendant's premises. The defendant's position is three-fold; one that a practice in the trade
exists whereby licenses - (something implied from the course of conduct of parties) are normally
and invariably granted to an existing licensee especially in respect of re-prints of publications.
The second is that the parties had agreed for extension of license in respect of a few titles, which
are subject matter of the suit. Here the defendant relies on some inter se correspondence in May
2002 and June 2003. The third aspect is that the suit is not maintainable as not having been filed
by a duly authorized person and the plaintiff being guilty of suppression of facts pertaining to its
re-organization and that the suit, thus is, liable to be rejected.
18. In the opinion of the Court, the argument of the plaintiff is that the counter-claim has to
C.C. 2147/2006 in CS (OS) 1097/2006 , CS (OS) 1097/2006 Page 9
be viewed from the same perspective as though an independent claim is made and as if the cause
of action and other requirements spelt-out by the Civil Procedure Code in respect of a suit are to
be adjudged is correct. This is because the law of pleadings pertaining to counter-claims refers to
the material provisions of CPC in respect of suits. Besides, it is settled that in the event of the
suit not succeeding or being withdrawn, the counter-claim would nevertheless proceed as it were
an independent claim. It hardly needs emphasis that counter-claims are subject to the same rules
as that of the plaint and also subject to provisions of Order 7 Rule 11, CPC.
19. In the present case, the defendant's counter-claim is premised upon alleged wrong-doing
of the plaintiff in filing criminal complaint which resulted in untold damages and mental agony.
The defendant does not anywhere dispute that the plaintiff is the copyright owner. In this regard,
Section 19 of the Copyright Act may be usefully noticed. The same is extracted below:
"XXXXXX XXXXXX XXXXXX
19. Mode of assignment - [(1)] No assignment of the copyright in any work shall
be valid unless it is in writing signed by the assignor or by his duly authorised
agent.
(2) The assignment of copyright in any work shall identify such work, and shall
specify the rights assigned and the duration and territorial extent of such
assignment.
(3) The assignment of copyright in any work shall also specify the amount of
royalty payable, if any, to the author or his legal heirs during the currency of the
assignment and the assignment shall be subject to revision, extension or
termination on terms mutually agreed upon by the parties.
(4) Where the assignee does not exercise the rights assigned to him under any of
the other sub-sections of this section within a period of one year from the date of
assignment, the assignment in respect of such rights shall be deemed to have
lapsed after the expiry of the said period unless otherwise specified in the
assignment.
C.C. 2147/2006 in CS (OS) 1097/2006 , CS (OS) 1097/2006 Page 10
(5) If the period of assignment is not stated, it shall be deemed to be five years
from the date of assignment.
(6) If the territorial extent of assignment of the rights is not specified, it shall be
presumed to extend within India.
(7) Nothing in sub-section (2) or sub-section (3) or sub-section (4) or sub- section
(5) or sub-section (6) shall be applicable to assignments made before the coming
into force of the Copyright (Amendment) Act, 1994.]
XXXXXX XXXXXX XXXXXX"
20. The provision pertaining to licensing applies, by reference Section 19 of the Act. It is
evident from the above provisions (which have received wide judicial recognition) that in order
to set-up a license successfully, the defendant in a suit has to rely upon a written document. That
the parties had entered into a written document or documents evidencing the plaintiff's
arrangement towards licensing of publications of its Indian re-prints to the defendant is not in
dispute. The plaintiff alleges (and the defendant does not deny) that 24 such Agreements existed
with a specified life period of 5 years. The plaintiff's contention that the tenure of the agreements
ended in July 2003 is not rebutted. The defendant, however, rests his case upon an implied
agreement whereby he was permitted (by way of practice in the trade) to continue to re-print and
offer for re-sale publications in which the plaintiff is undeniably the copyright owner. Now the
terms of Sections 19 and 19-A are specific. In the absence of a written agreement, authorizing
publication or doing of such things would otherwise amount to copyright infringement, under
Section 51, this cannot be a case of license. The matter can also be looked at from another
perspective. In order to successfully urge a license, the defendant here relies upon certain inter se
correspondence exchanged with the plaintiff between May 2003 and June 2003. The material
portions of such communications (the 20th June 2003 e-mail, denied by the plaintiff
significantly) would reveal, on an overall consideration that at best the defendant can urge that
C.C. 2147/2006 in CS (OS) 1097/2006 , CS (OS) 1097/2006 Page 11
the parties were negotiating for the possibility of an extension in respect of certain re-prints.
Undoubtedly, the documents of 20.06.2003 suggests that the e-mail had held-out some kind of an
assurance that in the event the plaintiff were to re-enter the Indian market in respect of certain re-
prints or publications, a first offer would be made to the defendant. But then, such a letter or
assurance is hardly enforceable. At best it could amount to an assurance that in the event of a
particular decision - (to enter or re-enter Indian market with special re-prints) - the defendant
could be granted a license. There is no firm assurance as is evident from absence of any
discussion regarding consideration to be paid by the defendant for the license or the tenure of
such agreement. In these circumstances, such assurance can at best amount to the possibility of a
future offer but certainly not a concluded contract. The defendant's contention in this regard has
to fail.
21. The other aspect is whether the defendant can at all set-up a counter-claim for damages
on account of so-called mental agony. Having conceded that the plaintiff is the copyright
proprietor and also that certain publications (allegedly infringing material) were found in his
premises, and also given the fact that criminal prosecution is pending and that the Court has
taken cognizance and in view of the fact that chargesheet has also been filed in such proceedings,
the claim for damages, to this Court's mind, is untenable. At best, it is pre-mature. It needs no
emphasis that any party's right to enforce its legal remedies - to wit in this case, allegations
pertaining to offences relating to Section 63 of the Copyright Act (for unauthorized sale of
Indian re-prints by the defendant) are legitimate and in fact a permissible course of action in law.
The tenability of such a complaint is an entirely different aspect which the Court should not in
fairness comment upon, while proceedings are pending. It is possible that the plaintiff could
succeed in such proceedings. Equally, it could be possible that the defendant may be held guilty
C.C. 2147/2006 in CS (OS) 1097/2006 , CS (OS) 1097/2006 Page 12
or may choose to compound the offence, if permitted in law. Yet, the fluidity of the circumstance
persuades this Court to conclude that the mere filing of a complaint cannot in any circumstances
be said to result in an actionable claim against the plaintiff. Any other opinion would virtually
amount to penalizing a litigant who seeks recourse to the law in the assertion of his legitimate
rights. On this ground too, the counter-claim, in the opinion of the Court, does not disclose any
cause of action.
22. So far as the third objection is concerned, it would be immediately apparent that the
defendant is asserting a technicality. Nevertheless, the Court has to deal with it as it may have
some bearing on the merits of the case. The first aspect pertains to the filing of the suit by an
authorized person. This issue does not in any way merit consideration at this stage because what
the Court is dealing with is the tenability of the counter-claim. The other aspect urged is that the
plaintiff suppressed material facts pertaining to its re-organization and take-over by another
company. On this aspect, the plaintiff has, in its reply, refuted the averments and filed certain
documents, saying that only a part of its shareholding has been acquired by another company
but that it (the plaintiff) continues to exist and is, therefore, entitled to maintain the suit. The
Court sees no reason to disbelieve this. In any event, any observations made in this regard would
amount to prejudging the issue if it were to fairly arise in the trial to the suit. This argument too
cannot be, therefore, accepted.
23. In view of the above conclusions, the Court is satisfied that the counter-claim is not
maintainable. As held in T. Arivandandam v. T.V. Satyapal 1977 (4) SCC 467, the Court is under
an obligation to ensure that where claims which are either barred in law or urges frivolous facts
are presented before it, the Court is under an obligation to reject them at the appropriate stage. In
these circumstances, the Court is satisfied that in the present case, the counter-claim is one such
C.C. 2147/2006 in CS (OS) 1097/2006 , CS (OS) 1097/2006 Page 13
instance. The Counter-Claim 2147/2006 is therefore, rejected. In the circumstances, the counter-
claimant/defendant shall pay the costs quantified at Rs. 50,000/- to the plaintiff within four
weeks from today.
CS (OS) 1097/2006
List on 02.11.2010.
S. RAVINDRA BHAT
(JUDGE)
MAY 31, 2010
'ajk'
C.C. 2147/2006 in CS (OS) 1097/2006 , CS (OS) 1097/2006 Page 14
