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Magnum Films vs Motion Picture Association & Ors. on 26 March, 1999

Delhi High Court
Magnum Films vs Motion Picture Association & Ors. on 26 March, 1999
Equivalent citations: 1999 IIIAD Delhi 650
Author: K Gupta
Bench: D G Acj, K Gupta


ORDER

K.S. Gupta, J.

1. This appeal by M/s. Magnum Films, plaintiff-appellant is directed
against the order of learned single Judge dated 16th December, 1998 dismissing I.A. No. 7412/98 and allowing I.A. No. 8079/98 thereby vacating the ad interim injunction order dated 26th August, 1998.

2. Suit for declaration and permanent injunction was filed by the plaintiff, inter alia, alleging that it is a firm carrying on business of Film distribution, exhibition and exploitation of Cinematographic films in the territories of Delhi and U.P. Defendant No. 1 – Respondent No. 1 is an Association and as per the rules framed by it, no person can distribute films unless the same is got registered with it. Membership of defendant No. 1 is a must whosoever wants to carry on film trade in the territories of Delhi and UP. Defendant No. 2-respondent No. 2 is a film producer and
produced film titled RAJAJI. Defendant No. 3-Respondent No. 3 is also carrying on business of film distribution, exhibition and exploitation of cinematographic film in the territories of Delhi and UP. The plaintiff and defendant No. 3 are permanent members of defendant No. 1 Association and as such are bound by the Rules framed by Defendant No. 1 Association.

3. It is alleged by the plaintiff-appellant that under an agreement dated 27th July, 1998 entered into between the plaintiff and defendant No. 2, the later granted to the former sole and exclusive rights of said picture RAJAJI for the territories of Delhi and U.P. for a total consideration of Rs. 90 lakhs for a period of 10 years. As per the said agreement a sum of Rs. 5,01,000/- was to be paid by the plaintiff to defendant No. 2 immediately on signing the picture and Rs. 6 lakhs were to be deposited with defendant No. 1 at the time of registration of picture to settle the claim
of defendant No. 3. Accordingly, the plaintiff paid a sum of Rs. 5,01,000/-by means of cheque No. 0217771 dated 27th July, 1998 drawn on Vijaya Bank, Chandni Chowk, Delhi, to defendant No. 2 and the cheque was got encashed by defendant No. 2 through clearing on 31st July, 1998. Defendant No. 2 issued a letter dated 27th July, 1998 in favour of the plaintiff in the name of defendant No. 1 authorising defendant No. 1 to register the said picture in plaintiff’s favour for the territories of Delhi and U.P. Since the plaintiff was to pay the amount of Rs. 6 lakhs to defendant No. 3 for settling its claim under the said agreement, plaintiff through its partner Ramesh Jain had a talk on telephone with Matub Khan, partner of defendant No. 3 who confirmed that the agreement in between defendant No. 2 and 3 was cancelled and defendant No. 3 is only to recover the said amount from defendant No. 2. It is stated that in the meantime defendant No. 3 intimat-

ed the plaintiff that it is going to lodge its claim against the plaintiff in respect of the said picture. The plaintiff then enquired from defendant No. 2 as to how defendant No. 3 is now turning hostile. Thereupon defendant No. 2 got a notice dated 30th July, 1998 issued through Advocate to defendant No. 3. In the notice it was categorically averred that defendant No. 3 had already relinquished its rights and it is only thereafter that the rights of distribution etc. in the said film were entrusted to the plaintiff by defendant No. 2 under the aforesaid agreement dated 27th July, 1998. It is further stated that defendant No. 3 seems to have approached defendant No. 2 offering higher amount for the said picture, which has changed the intention of defendant No. 2. By letter dated 6th August, 1998 written by defendant No. 2 to defendant No. 3, for the first time defendant No. 2 alleged that the rights in the said picture were granted to the
plaintiff subject to clearance from defendant No. 3, which allegation is totally erroneous. It is also pleaded that the said letter dated 6th August, 1998 was ante-dated and was actually sent on 18th August, 1998 from Delhi itself. Defendants 2 and 3 having exercised their influence on the office bearers of defendant No. 1, have started threatening to register the said picture in favour of defendant No. 3.

4. In the suit aforesaid I.A. 7412/98 under Order 39 Rules 1 & 2 CPC was filed by the plaintiff and thereon ad interim injunction order was made on 26th August, 1998 restraining defendant No. 1 from registering said picture RAJAJI in favour of anyone except the plaintiff. Defendant No. 2 & 3 were further restrained from creating third party interest in the said picture in circuits of Delhi and U.P.

5. Defendant No. 2 & 3 filed aforesaid I.A. 8907/98 under Order 39 Rule 4 CPC seeking vacation of the ex parte injunction order dated 26th August, 1998. On 13th October, 1998 Sh. Ravi Gupta appearing for defendants No. 2 & 3 made a statement that said I.A. be treated as reply to I.A. No. 7412/98. In I.A. 8907/98 it is, inter alia, alleged that under the agreement arrived at between defendants 2 & 3 on 24th January, 1998 defendant No. 3 purchased the distribution and exhibition rights of picture RAJAJI from defendant No. 2 for a consideration of Rs. 85 lakhs for a period of 10 years. Pursuant to the said agreement defendant No. 3 made payment of Rs. 11 lakhs to defendant No. 2 from time to time. On 27th July, 1998 defendant No. 3 approached defendant No. 1 for getting the said picture registered in its name. However, on July 28, 1998 defendant No. 3 was shocked to see a circular issued by defendant No. 1 calling upon objections/claims against registration of said picture and registration application having been received by it from the plaintiff. On 3rd August, 1998 defendant No. 3 was further shocked to receive a notice dated 30th July, 1998 from M/s. R.K. Midha & Co.

Advocates, issued on behalf of defendant No. 2. In this notice defendant No. 2 contended that as defendant No. 3 failed to make payments under the agreement dated 24th January, 1998 the same stood cancelled. It was informed through the said notice that defendant No. 2 had entered into an agreement with plaintiff on 27th July, 1998 for distribution and xploitation of the picture in question. It is asserted that defendant No. 2 could not have unilaterally cancelled the said agreement dated 24th January, 1998. It is stated that on receipt of said notice Matub Khan, proprietor of defendant No. 3 had a telephonic conversation with Vimal Kumar, proprietor of defendant No. 2 and it was decided that the said notice may be treated as cancelled and defendant No. 3 would pay a sum of Rs. 5 lakhs, which was received by defendant No. 2 from the plaintiff, on defendant No. 2’s behalf. Defendant No. 2 tendered aforesaid amount to the plaintiff personally and also in proceedings held before defendant No. 1, but the plaintiff refused to receive the same. Since defendant No. 1 had the applications of both the plaintiff and defendant No. 3 for registration of the said picture in their respective names the dispute was referred to a Committee of defendant No. 1 for its decision as per Rules of respondent No. 1. By the letter dated 6th August, 1998 defendant No. 2 also confirmed that the agreement entered by it with the plaintiff was with a clear understanding that the same would be effective subject to the release of exhibition rights by defendant No. 3. Since defendant No. 3 refused to release its rights in the said picture, the agreement between the plaintiff and defendant No. 2 cannot become operative and the agreement dated 24th January, 1998 between defendant Nos. 2 & 3 still subsists. It is denied that defendant No. 3 agreed to release its rights in respect of said picture in favour of the plaintiff or that
there was any discussion in between Ramesh Chand and Matub Khan on telephone or otherwise, as alleged.

6. We have heard Sh. Harish Malhotra for the plaintiff and Sh. Ravi Gupta for defendants No. 2 & 3 and have also been taken through the record.

7. Submission advanced on behalf of plaintiff-appellant was that as defendant No. 3 was unable to make the payments under the agreement dated 24th January, 1998, same was mutually cancelled by defendant Nos. 2 & 3 before entering into agreement dated 27th July, 1998 by defendant No. 2 with plaintiff. Defendant Nos. 2 & 3 have now colluded with each other to defeat the claim of the plaintiff under said agreement dated 27th July, 1998 in regard to picture RAJAJI. Learned single Judge thus committed error by vacating the ex parte injunction order dated 26th August, 1998 by the order under appeal.

8. To decide the issue in hand reference to some of the documents placed by the parties has become necessary. Under the agreement dated 24th January, 1998 (at page 107 of the appeal paper book), out of the agreed amount of Rs. 85 lakhs, a sum of Rs. 1 lakh was to be paid by defendant No. 3 to defendant No. 2 on signing the agreement and Rs. 35 lakhs in monthly instalments on or before 10th of each succeeding month by 10th October, 1998. Balance sum of Rs. 50 lakhs was to be paid against the delivery of quota release prints. In the letter dated 27th July, 1998 sent by defendant No. 2 to defendant No. 1 it is stated that the distribution rights, as signed in picture RAJAJI for Delhi-U.P. circuit to defendant No. 3 has been cancelled mutually and the amount of Rs. 6 lakhs received from defendant No. 3, as per the mutual settlement will now be paid by plaintiff to defendant No. 3 at the time of registration of said picture. In terms of the circular dated
28th July, 1998 issued by defendant No. 1 the members of Association were informed about the applications received for registration of the pictures noted therein from 24th July, 1998 to 27th July, 1998. At serial No. 3 of this circular, name of the plaintiff is shown with the names of picture and producers as RAJAJI and Ms. Shivam Chitrya, Bombay (Defendant No. 2) respectively. In the notice dated 30th July, 1998 sent by defendant No. 2 to defendant No. 3 through M/s. R.K. Midha & Co., Advocates, it is, inter alia, stated that defendant No. 3 had agreed to relinquish its rights in respect of picture RAJAJI under the agreement dated 24th January, 1998 on receiving total sum of Rs. 6 lakhs, which was then found due and payable to defendant No. 3 and that defendant No. 2 has entrusted distribution and exhibition rights in said film in favour of the plaintiff under the agreement dated 27th July, 1998. A copy of this notice was also sent for information to the plaintiff and defendant No. 1 Association. Letter dated 27th July, 1998 (at page 123) delivered in the office of defendant No. 1 on same date shows that defendant No. 3 asserted therein that distribution, exhibition and exploitation rights in said picture RAJAJI for Delhi-UP circuit is still with defendant No. 3 under the agreement dated 24th January, 1998. In the letter dated 29th July, 1998 sent by defendant No. 3 to defendant No. 1, it is stated that in continuation of its letter dated 27th July, 1998 photostat copies of the agreement and receipt of Rs. 1 lakh paid towards the signing amount to defendant No. 2 were being forwarded therewith. In the letter dated 30th July, 1998 (at Page 129) sent by defendant No. 3 to defendant No. 2 it is asserted that it is the distributor of picture RAJAJI as per agreement dated 24th January, 1998. Defendant No. 2 was asked to approach defendant No. 1 to stop the registration of said film in the name
of the plaintiff. In a similar letter dated 30th July, 1998 sent by defendant No. 3 to defendant No. 1 it was impressed upon defendant No. 1 not to register said picture in favour of plaintiff. In terms of the letter dated 31st July, 1998 (at Page 133) sent by defendant No. 1 to the plaintiff it is stated that subsequent to the filing of application by it for registra-

tion of picture RAJAJI in its name defendant No. 3 has filed copies of the agreement and supporting receipt in respect of said picture for Delhi-U.P. circuit and the matter is, therefore, being placed for decision before the Acquiring Sub Committee on 3rd August, 1996 at 3 PM. Copy of this letter was sent to defendant No. 3 with advise to be present on that day alongwith the documents. In terms of the letter dated 5th August, 1998 (at page 139) sent by defendant No. 2 to defendant No. 3 it was desired that said film be registered in the name of defendant No. 3. Letter dated 6th August, 1998
sent by defendant No. 3 to defendant No. 1 withcopies endorsed to the plaintiff and defendant No. 3 which is relevant reads as under :-

“We hereby irrevocably confirm that the distribution, Exhibition and Exploitation Rights of our above picture RAJAJI vest exclu sively with M/s. Ekta Films, Delhi in terms of the Letter of Arrangement dated 24th January, 1998. The said M/s. Ekta Films, Delhi are given the Producers/Distributors certificate Application Form for getting the picture registered in their name.

As regards M/s. Magnum Films, Delhi we had entered into an agreement with them with the clear understanding and condition that it would become effective only subject to our getting the releasing letter from M/s. Ekta Films, Delhi. Since, M/s. Ekta Films, Delhi, are disinclined to leave the picture, the said Letter of Agreement dated 24th January, 1998 is legally valid and effective. We have also requested M/s. Ekta Films, Delhi, to refund a
sum of Rs. 5,01,000/- (Rupees Five Lacs One Thousand only) to M/s. Magnum Films, Delhi, on or before the registration of the picture in their favour.”

9. Through the letter dated 3rd September, 1998 sent by defendant No. 3 to defendant No. 2 it was complained that because of their non-appearing on the said date matter regarding registration of said picture in their favour was postponed for 4 weeks on 24th August, 1998 and now the plaintiffs have obtained ex parte order in their favour.

10. From the correspondence referred to above exchanged between the parties it is prima facie manifest that there was no collusion between defendant Nos. 2 & 3 upto 30th July, 1998. Even in the plaint no collusion till that date is pleaded. No document is stated to have been executed between defendant Nos. 2 & 3 regarding the alleged cancellation of said agreement dated 24th January, 1998. Taking note of the stand taken by defendant No. 3 in the letters exchanged upto 30th July, 1998 and absence of alleged cancellation of the aforesaid agreement, prima facie, would suggest that
agreement dated 24th January, 1998 still subsists. We are, therefore, in agreement with the conclusion arrived at by the learned Single Judge that the plaintiff has failed to make out a prima facie case for grant of the temporary injunction.

11. Developments subsequent to the passing of the impugned order and upto the date of filing of present appeal are worth mentioning. Through the letter dated 30th December, 1998 the contents of the resolution of Acquiring Sub-Committee meeting dated 21st December, 1998 were conveyed by defendant No. 1 to the plaintiff and defendant Nos. 2 & 3. In terms of that resolution said picture had been allowed to be registered in favour of defendant No. 3 subject to fulfillling of the conditions noted therein. By yet another letter dated 25th January, 1999 sent by defendant No. 1 to defendant No. 3 it was intimated that in view of the fulfillling of the conditions laid down by the said resolution picture RAJAJI stands registered in the name of defendant No. 3. However, as the plaintiff filed appeal against the decision of Acquiring Sub Committee the registration of picture was kept in abeyance till appeal is finally decided by the Executive Committee. Defendant No. 3 has placed on record copies of the agreement dated 21st December, 1998 and 16th December, 1998. In terms of the agreement dated 21st December, 1998. Sanjay Cinema, Agra has been allowed by defendant No. 3 to run the said picture for 6 weeks for Rs. 5 lakhs as fixed hire. By the agreement dated 16th December, 1998 Meghdoot Cinema, Meeruit, has been allowed to exhibit the said film for 5/6 weeks against a fixed hire of Rs. 4,75,000/- by defendant No. 3. The appeal filed by the plaintiff before the Executive Committee of defendant No. 1 is reported to have been dismissed and said picture now stands registered with defendant No. 1 in the name of defendant No. 3. Indisputably, defendant No. 3 has already deposited Rs. 5,01,000/- with defendant No. 1 for payment to the plaintiff on behalf of defendant No. 2. In the face of these subsequent developments also the balance of convenience in the matter lies in nongrant of the injunction prayed for. Further, the plaintiff is not likely to suffer any irreparable injury because of non grant of the ad interim injunction prayed for as it can be suitably compensated in terms of money for the alleged breach of the agreement dated 27th July, 1998. The appeal thus deserves to be dismissed being without merit.

12. Consequently, the appeal is dismissed. No order as to costs.

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