Sholay Media & Entertainment Pvt ... vs Vodafone Esssar Mobile Services ...
2011 Latest Caselaw 2451 Del

         THE HIGH COURT OF DELHI AT NEW DELHI

%                   Judgment Reserved on:   28.04.2011
                    Judgment Pronounced on: 09.05.2011

+           IA Nos.3258/2011 (O. 39 R. 1&2 CPC) &
            4504/2011 (O. 39 R. 4 CPC) in
            CS(OS) No. 490/2011

SHOLAY MEDIA & ENTERTAINMENT PVT LTD. & ANR.
                                .....Plaintiff

                          - versus -

VODAFONE ESSSAR MOBILE SERVICES LTD & ORS.
                                  .....Defendant

Advocates who appeared in this case:
For the Plaintiff: Mr. Sudhir Chandra, Sr. Adv. with
                   Mr. Jagdish Sagar and Mr. Rahul
                    Ajatshatru.
For the Defendant: Mr. Rajiv Nayyar, Sr. Adv. with
                    Ms. Prathiba M. Singh and Mr. Sudeep
                    Chatterjee for D-1 & 2.
                    Mr. Sandeep Sethi, Sr. Adv. with
                    Mr. Akshay Ringe for D-3 & 4.


CORAM:-
HON'BLE MR JUSTICE V.K. JAIN

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 Digest? Yes.

V.K. JAIN, J

1. The film Sholay was produced by Sippy Films, a

proprietorship concern of plaintiff No.2. Vide Gift Deed

dated 14th September, 2000, all rights in the film Sholay

were assigned/transferred by plaintiff No.2 to plaintiff No.1

and it is alleged in the plaint that plaintiff No.1 has been

exploiting those rights across various verticals such as

satellite broadcast, pay television, internet rights etc.

Defendant Nos. 1 and 2 are cellular service provider, which

are also offering various value added services such as

ringtones, true tunes, caller tunes internet radio etc. to their

subscribers. Ringtones are digitally created/recorded files

that work as incoming alerts, true tones are digital audio

files that act as incoming call alert where the subscriber

hears the portions of song/music instead of the default

ringing sound, caller tubes/ring back tunes are portions of

sound-recordings of songs/dialogues, which the subscriber

can choose for his caller to hear in lieu of the default ringing

sound whereas mobile radio/JukeBox are services where a

subscriber can dial in to listen to songs of his choice or the

genre of his choice. Vide deed of assignment dated 7th

August, 1978, the predecessor of the plaintiff granted

certain rights in the film Sholay to Polydor of India (now

rights acquired by M/s Univeral Music India Pvt. Ltd.). The

case of the plaintiff is that the assignment extended only to

(i) the right to make records for sale and distribution and (ii)

the right to communicate the sound-recordings by way of

radio broadcast, and the remaining rights were reserved by

the predecessor of the plaintiffs and they have continued to

exploit those remaining rights. This is also their case that

rights in respect of value added services for mobile phones

neither existed nor were in contemplation of parties at the

time of assignment. It is alleged that defendant Nos. 1 and

2 i.e. Vodafone Essar Mobile Services Ltd. and Vodafone

Essar Ltd. have been commercially exploiting the copyright

work of the film Sholay on mobile and digital platforms

without obtaining any license or permission from plaintiff

No.1 and are offering value added products in the form of

ringtones, truetones, callback/ringback/caller tunes etc.

created from the soundtrack of the film Sholay to their

subscribers, thereby infringing the copyright which the

plaintiff No.1 holds in the film Sholay. The plaintiffs have

sought injunction against infringement of their copyright in

the film Sholay by the defendants, by offering the above

referred value added services.

I.A. no.3258/2011 has been filed by them seeking

an interim injunction in this regard.

2. On an application filed by Universal Music India

Pvt. Ltd. and Phonographic Performance Pvt. Ltd., they were

impleaded as defendant Nos. 3 and 4 in the suit. The suit

has been contested by all the four defendants.

3. The case of defendant Nos. 3 and 4, however, is

that the plaintiffs have no title to the sound-recording of the

film Sholay since it stood assigned to defendant No.3 in the

year 1978. They have disputed that the rights to them were

confined to physical records and radio transmission. It is

also alleged that the rights assigned to defendant No.3 were

exploited by it in terms of the agreement and requisite

royalty was also paid to the plaintiffs. It is further alleged

that defendant No.3 executed a deed in title to defendant

No.4 Phonographic Performance Pvt. Ltd., which is a

company engaged in the business of carrying on copyright

business of its members in sound-recordings and under

that authorization defendant No.4 has been authorized to

administer recording and reproduction rights for ringtones

in respect of the music catalogue of defendant No.3.

Another authorization Agreement is alleged to have been

executed by defendant no.3 in favour of defendant No.4 in

respect of broadcast/telecast/public

performance/simulcast/webcast,true tones/master tones,

ring back tones etc. Defendant No. 4 has been authorized

by defendant No.3 to grant licences to make, market and

sell true tones/master tone/ring back tone etc, using

sound- recording of defendant No.3.

4. In their reply to the application of the plaintiffs for

grant of interim injunction, defendant Nos. 1 and 2 have

claimed that vide an agreement dated 15 th September, 2006

with defendant No.4 Phonographic Performance Pvt. Ltd.,

they have been granted all rights for exploitation of sound-

recording on mobile cellular service.

5. It would, thus, be seen that the main dispute

between the parties is as to whether an absolute right to use

the sound track, including songs and music by way of

ringtones, truetones, callback/ringback/caller tunes etc (for

the sake of convenience is hereinafter referred to as "digital

rights") were assigned to Polydor of India vide Assignment

Deed dated 7th August, 1978 or the right to use sound track

on digital and mobile platform continue to vest in the

plaintiff company.

6. Section 18 of the Copyright Act, 1957, which has

not been amended at any point of time, to the extent it is

relevant, provides that the owner of the copyright in the

work may assign, the copyright to any person, either wholly

or partially and either generally or subject to limitations and

either for the whole of the copyright or any part thereof. It

further provides that where the assignee of a copyright

becomes entitled to any rights comprised in any copyright,

he becomes the owner of the copyright so assigned and in

respect of the rights which are not assigned, the assignor is

treated as the owner of the copyright.

7. It would thus be seen that the producer of the film

Sholay could have assigned the copyright in the sound-

recording of the film either wholly or partially. The rights

could have been assigned for a particular duration or for a

particular territory. If the producer, while executing

Assignment Deed in favour of Polydor of India assigned all

its rights in sound-recording of the film Sholay to Polydor,

the defendants would have absolute right to enjoy all rights

to the extent they pertain to sound-recording of the film,

and that would include use of the sound-recording of the

film on digital and/or mobile platform. If on the other hand,

the assignment to Polydor of India did not extend to all the

rights in the sound-recording and the residual rights were

retained by the assigner, the assignee or any one claiming

under it would be entitled to exploit only those rights, which

were actually assigned. The question as to whether the

assignment to Polydor of India extended to all the rights in

the sound-recording or extended only to some of them

would depend solely on the construction of the terms of the

Assignment Deed.

8. The relevant clauses of the Assignment Deed dated

7th August, 1978 read as under:-

"(c) The Assignor has agreed to assign

to the Assignee the rights

hereinafter specified for the

consideration hereinafter

appearing:-

NOW THIS DEED WITNESSETH:-

1. (a)In this deed wherever the context

so admits the words and expression

shall have the meaning assigned to

them by or under the copyright Act

1957 and the several International

Conventions relating to copyrights

and rights similar thereto to which

the Union of India is a party or a

signatory;

(b) Without prejudice to the generality

of the foregoing sub-clause the

following words and expressions

shall also have the meaning set

forth against them:

(i) „Work‟ shall mean Cinematograph

Film entitled „Sholay‟ starring

sanjeev Kumar, Dharmendar,

Amitabh Bachchan, Hema Malini

and others, and directed by

Ramesh Sippy, in which copyrights

and other similar rights for the time

being subsist or are capable of

subsisting and of which the

Assignor is the owner and/or the

Author;

(ii) „Record‟ shall mean and include

disc, tapes, including magnetic tape

(whether reel to reel, endless loop in

cassette or cartridge form, or

otherwise howsoever) or any other

device of whatsoever nature in

which sounds are embodied so as

to be capable of being reproduced

therefrom and all such devices as

presently known or that may

hereafter be developed and known

but excluding the sound track

associated with a Cinematograph

Film.

2. In consideration of a sum of

Rs.10,000/- paid by the Assignee to the

Assignee on or before the execution

hereof (the receipt of which the Assignor

doth hereby admit and acknowledge)

and in consideration of the covenant on

the part of the Assignee to pay to the

Assignor the royalties as hereinafter

provided, the Assignor as beneficial

owner hereby assigns to the Assignee

the copyright in the work throughout

the world but limited to the right (i) to

make or authorize the making of

records embodying the recording in any

part of the sound track associated with

the work which shall include the right

to make records of all the dialogues of

the work or any part thereof either by

itself or in conjunction with the musical

portion of the work or any part thereof

(ii) to make any other Record embodying

the same recording (iii) to cause the

recording embodied in the record to be

heard in public and (iv) to communicate

the recording embodied in the Record by

radio diffusion. Save as aforesaid the

Assignor reserves to himself the

copyright in the said work.

5. The Assignee shall be the owner

of the original plate and any extensions

or modifications thereof which are made

under the provisions of this agreement.

6. The Assignee shall without

prejudice to the generality of the rights

that they may be entitled to as assignee

of the copyrights and other similar

rights as hereinbefore provided shall in

particular have the following rights, viz:-

(a) Right in any part of the world, to

make or cause to be made

Records of the work or any part

thereof; to distribute and sell

such records and expose or offer

for sale such Records for

performance in public or

otherwise, cause such Records to

be heard in public;

(b) the right to decide at what price

and under what labels the said

Records shall be sold;

(c) right to use the name of the

Assignor and/or Artistes and/or

musicians and/or other

personnel and photographs or

other likenesses of such artistes,

musicians or personnel for all

advertising and publicity matter

and for Record sleeves and for

any other matter connected with

the making distribution and sale

of the said Records;

(d) the right to assign or grant

licence to any person firm or

company in any part of the World

in respect of the aforesaid rights

or any of them upon such terms

and conditions as the Assignee

shall deem fit.

8. (a) In consideration hereof the

Assignee shall pay to the Assignor a

royalty at the rate of 10% (ten percent)

in respect of each of the Record sold in

any part of the world by the Assignee or

any other person, firm or company. For

the purpose of reckoning the aforesaid

percentage the price to be reckoned

shall be the net selling price at which

records are supplied by the Assignee to

the dealers in Bombay, exclusive of all

levies of excise and other taxes.

(e) The Assignee shall furnish to the

Assignor half yearly statement showing

the number of records sold and the

royalty which shall have become

payable as hereinbefore mentioned

during the previous half yearly period.

Such statement shall be accompanied

by the royalty payable by the Assignee

to the Assignor.

                (f)   It      is        hereby     agreed   that    a

                Certificate        of     the    Auditors   of     the

Assignee certifying the royalty due and

payable by the Assignee to the Assignor

hereunder shall be final and binding

upon the parties.

9. After considering the various Clauses contained in

the Assignment Deed, in the light of other facts and

circumstance of the case, I am of the view that at this stage,

it would be difficult to take a final view as regards the extent

of the rights assigned to Polydor of India, under the Deed of

Assignment dated 7th August 1978, the document being

capable of both the interpretations, one that all the rights in

the sound-recording, including the rights to exploit the

sound-recording through applications, which were neither

available nor in contemplation of the parties at the time of

execution of the Assignment Deed, were assigned to Polydor

and other being that the rights assigned by the producer

comprised only the right to make „record‟, as defined in the

agreement, for sale and distribution and the right to make

the sound-recording by way of broadcast, and the remaining

rights including the right to use the sound-recording

through applications which were known at the time of

execution of the Assignment Deed continued to remain with

the assignor.

10. The following terms of the Assignment Deed, in my

view, indicate that the rights to use the sound-recording of

the film Sholay on digital and/or mobile platform continued

to vest in the assignor:-

(a) The assignor, after assigning rights limited to making

or authorizing the making of records, to make any

other record embodying the same recording, to cause

the recording embodied in the record to be heard in

public and to communicate the same by radio

diffusion, has reserved the residual rights to himself.

The learned counsel for the defendants contended that

the residual rights envisaged in this Clause mean the

remaining rights in the film Sholay and not the

remaining rights in the sound-recording. This,

however, was vehemently contested by the learned

counsel for the plaintiffs, who contended that the

rights to exploit the film in any case were not the

subject matter of the assignment and, therefore, the

rights reserved under Clause 2 are those rights in the

sound-recording, which were not expressly assigned to

Polydor of India. If contention accepted by the learned

counsel for the plaintiffs is accepted, it would be

difficult to dispute that some rights in the sound-

recording of the film Sholay continued to vest in the

assignor even after execution of the Deed of

Assignment dated 7th August 1978. If this is so, it

would be difficult to dispute the claim of the plaintiffs

in respect of the use of the sound-recording through

digital and mobile media since no other residual right

in the sound-recording has been pointed out by the

defendants.

(b) The expression „record‟ has been defined to include

disc, tapes or any other device in which sounds are

embodied, so as to be capable of being reproduced

therefrom and all such devices as were known to the

parties at the time of the assignment or which could

thereafter be developed or known. The contention of

the learned counsel for the plaintiffs is that the general

expression „any other device‟ in Clause 1(b)(ii) of the

Assignment Deed has to be read ejusdem generis with

the words disc and tapes and if this is done it would

mean only a physical device and not a digital device.

In support of his contention he has relied upon

ejusdem generis rule which applies not only to

construction of statues, but also to construction of

contracts and lays down that where several words

preceding a general word point to a confined meaning,

the general word shall not extend beyond those

subjects. In other words, the general words following

specific words in a contract need to take their colour

from the specific words preceding them, since they are

intended only to guard some accidental omission while

meaning the specific words and are not intended to

extend to the object of a wholly different nature. If this

rule is applied, the word „record‟ would comprise

physical device and not a digital device

(c) Clause 8(a) of the Assignment Deed provides that for

the purpose of reckoning the royalty, the price of the

record shall be the net selling price at which the

records are supplied by the assignee to the dealers in

Bombay, exclusive of all levies and excise and other

taxes. This Clause in the Assignment Deed does tend

to indicate that the parties, at the time of executing the

Assignment Deed, had only physical device in mind

since it is physical device such as records, tapes and

CDs which are capable of being supplied to dealers

and are liable to levy all excise, etc.

11. The following terms of the Assignment Deed and

their possible interpretation, to my mind, indicate that the

intention of the parties was to assign all the rights in the

sound-recording of the film Sholay to Polydor of India:-

(a) Clause 5 of the Assignment Deed provides that

assignee shall be the owner of the original plate and

any extensions or modifications thereof made under

the agreement. This, according to the learned counsel

for the defendants, indicates that all the copyrights in

the sound-recording were to vest in the assignee,

though, it was contested by the learned counsel for the

plaintiffs, who stated that the plate is meant for the

purpose of making copies from it and ownership in the

plate would not mean ownership of all the copyrights

in the sound-recording.

(b) If, in the context of the scientific age we are in, the

word „device‟ used in Clause 1(b)(ii) of the Assignment

Deed is interpreted to include digital device

considering that it is only another facet of the physical

device and, therefore, should be included in the

definition of record as given in the Deed, that would

give right to the defendants to exploit the sound-

recording on digital as well as mobile platform.

(c) No specific right was retained by the assignor as far as

sound-recording of the film was concerned and,

therefore, the exclusive right to exploit the sound-

recording of the film in any manner came to be vested

in the licensee and, therefore, exploitation by use of

scientific and technological device developed after the

assignment can be done by the assignee and not by

the assigner. It can, if this argument is accepted, be

said that the assignment did not restrict the right of

the assignee to exploit the right by existing technology

but also covered the exploitation by the technology

which could be developed in future.

12. The documents filed by the parties show that vide

letter dated 21st September 2010 Universal Music India Pvt.

Ltd. sent a royalty statement from the period 1 st October

2011 to 30th March 2010 to Sippy Films and along with a

cheque of Rs.20,16,535/- towards royalty due, as per the

statement. The statement pertains to royalty of physical as

well as digital and other media. The plaintiffs vide their

letter dated 17th January 2011 accepted the aforesaid

cheque as part payment of royalty dues, but, did not claim

that Universal had no rights to exploit the sound-recording

through digital media. However, admittedly, royalty in

respect of the use of the sound-recording through digital

media was not remitted to the plaintiff company prior to 21 st

September 2010. Though it can be said against the plaintiff

that it accepted royalty in respect of digital media without

any protest, the defendants have also not explained why the

royalty payment was not made within the time stipulated in

the Deed of Assignment and why half yearly statement in

terms of Clause 8(e) of the Deed was not sent to the plaintiff.

It has also come in evidence that the plaintiff had earlier

permitted Mobile 2 Win to use the sound-recording of the

film Sholay through digital/mobile media, which made them

available, on the network of defendants No.1&2 and Others.

A perusal of the advertisement of Mobile 2 win dated 15 th

September 2004 would show that true tones/ringback tones

of the film Sholay were available on Hutch predecessor of

Vodafone, which shows that the plaintiff company had

exploited these rights through Mobile 2 Win at that time.

13. Admittedly, sound-recording of the film Sholay is

already being used by the defendants on digital/mobile

platforms. The Assignment Deed provides for payment of

specified royalty to the assigner. The amount of royalty is

10% of the net selling price, which goes up to 15% if the

sale touches 1 million units. As and when the sale reaches

1 million, an additional royalty of 10%, making an aggregate

of 20% is payable for every unit sold in excess of 1 million

units. If the plaintiffs assign right to use the sound-

recording through digital/mobile media to some other

person, they would be entitled only to royalty agreed with

the assignee. During the course of arguments, it was

informed by the learned counsel for the plaintiff that the

plaintiff company has been offered 25% of the sale price as

royalty for exploitation of the sound-recording through

digital/mobile media. Even the defendants did not dispute

the right of the plaintiff company to get royalty in terms of

the agreement between the plaintiffs and Ploydor of India.

In these circumstances, the balance of convenience is in

favour of allowing the defendants to continue to use the

sound-recording through digital/mobile media while

simultaneously safeguarding the financial interest of the

plaintiff company.

14. It was contended by the learned counsel for

defendants 3 and 4 that the plaintiff is guilty of latches as it

did not come to Court for more than six months after receipt

of letter dated 11th August 2010 from Universal wherein

Universal had asserted its right for exploitation of the

sound-recording of the film through digital media. A

perusal of the documents shows that an e-mail was sent by

the plaintiff company to IN.com on 10 th August 2010 stating

therein that Universal Music did not have right to stream

their music and their right under the agreement of 1978

was to manufacture and sell discs and transmit the sound

track over radio stations only. In reply, Universal

maintained that they had exclusive right to exploit the work

in any manner and their rights include the digital rights.

Since this is a case for infringement of the

copyright, a delay of about six months in approaching the

Court, in my mind, cannot be said to be so fatal to the

plaintiff as to disentitle it from seeking injunction against

the alleged infringement.

15. It was also contented by the learned counsel for

defendants 3 and 4 that the plaintiff is guilty of suppression

of material facts as it did not implead Universal as a

defendant while filing the suit. In this regard, I find that

though Universal was not impleaded as a defendant, the

plaintiff company had referred to the Deed of Assignment in

para 13 of the plaint and it was clearly stated that vide this

Deed certain rights were assigned to Polydor of India which

now stands acquired by Universal Music India. Some of the

salient features of the Assignment Deed were also

mentioned in the plaint and a copy of the Deed was filed

along with the plaint. In these circumstances, it is difficult

to say that the plaintiff company is guilty of suppression of

material facts.

16. The learned counsel for the plaintiff has referred to

Raj Audio Vision vs. K. Mohana Krishnan & Ors. AIR

1998 Mad 294, Herber L. Cohen dba Bizzare Music Co.

vs. Paramount Pictures Corp. 845 F.2d 851, Warber Bros.

Pictures vs. Coumbia Boradcasting Systems Inc. 216

F.2d 945 and International Film Distributors vs. Shri

Rishi Raj, FAO(OS) No. 81/2002, whereas the learned

counsel for defendants No.1 and 2 has referred to State of

A.P. vs. Nahoti Venkatramana (1996) 6 SCC 409, Video

Master vs. Nishi Production 1998 PTC (18) (Bom) and the

learned counsel for defendants No.3 and 4 has referred to

Indian Performing Right Society Ltd. vs. Eastern Indian

Motion Pictures Association & Ors. 1977 (2) SCC 820,

Entertainment Network (India) Ltd. Vs. Super Cassette

Industries Ltd. (2008) 13 SCC 30, Federation of Hotels &

Restaurant Association of India vs. Union of India, WP(C)

No. 452 of 1999, decided on April 7, 2011, M/s

International Film Distributors vs. Shri Rishi Raj, FAO

(OS) No. 81 of 2002, decided on 23rd October, 2008, Super

Cassette Industries Ltd. vs. Punit Goenka & Anr. 2009

(40) PTC (Del), M/s Phonographic Performance Ltd. vs.

Lizard Lounge, RFA(OS) No. 57 of 2008, decided on 03rd

November, 2008, AA Associates vs. Prem Goel, 94 (2001)

DLT, 671, Anand Virji Shah vs. Ritesh Sidhwani, Suit (L)

No. 2993 of 2006, decided by Bombay High Court on 17th

October, 2006, Shemaroo Video P. Ltd. vs. Movie Tee

Vee, Suit No. 1902/2005, decided by Bombay High Court on

06th October, 2005, Maganlal Savani vs. Rupam Pictures

(P) Ltd. Bombay High Court 2000 PTC 556, Entertaining

Enterprises Madras & Anrs. vs. State of Tamil Nadu AIR

1984 Mad 278, Dyson Holdings Ltd. vs. Fox (1976) 1 QB

503, Delhi Development Authority vs. Durga Chand

Kaushish AIR 1973 SC 2609, Padma Srinivasan vs.

Premier Insurance Co. Ltd. (1982) 1 SCC 613 (3 JJ),

Universal Petrochemicals Ltd. vs. Rajasthan State

Electricity Board, AIR 2001 Cal 102 DB.

In none of these cases, the terms of the agreement

between the parties were identical to the terms of the

Assignment Deed in the case before this Court. Hence, they

do not apply to the case before this Court, which has to be

decided on an interpretation of the terms and conditions

contained in the Deed of Assignment dated 7th August 1978.

17. For the reasons given in the preceding paragraphs,

it is directed that the defendants 1&2 can continue to use

the sound-recording of the film Sholay through digital and

mobile media subject to the following conditions:

(a) Defendant No.3 Universal Music India Pvt. Ltd. will

continue to pay royalty to the plaintiff company in

terms of Deed of Assignment dated 7 th August 1978

and this payment would also cover royalty for use of

the sound-recording through digital/mobile media on

the network of defendant Nos. 1&2. The arrears of the

royalty will be paid to the plaintiff within four weeks.

(b) The difference between the royalty paid to the plaintiff

in terms of (a) above and the royalty calculated at the

rate of 25% of the receipts of defendant Nos. 1&2 from

use of the sound-recording of the film Sholay through

digital/mobile media, will be deposited in this Court by

way of a demand draft in the name of the Registrar

General of this Court. The arrears of difference w.e.f.

the date defendant Nos. 3& 4 allowed the sound-

recordings to be exploited by defendant Nos. 1&2 on

digital/mobile platform, till the date of this order will

be calculated by the defendants and deposited within

four weeks.

(c) Henceforth, the royalty to the plaintiffs in terms of the

Deed of Assignment will be paid regularly within the

time stipulated in the Deed, whereas the amount of

difference calculated in terms of this order shall be

deposited in this Court on quarterly basis, within one

month from the close of each quarter.

(d) Defendant Nos. 3&4 shall not allow any other person

to use the sound track of the film Sholay, on

digital/mobile platform, except on the terms identical

to (a) to (c) above.

The IAs stand disposed of.

(V.K. JAIN) JUDGE MAY 09, 2011 AG/BG