THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment Reserved on: 04.08.2011
Judgment Pronounced on: 08.08.2011
+ CS(OS) No. 2152/2010 & CS(OS) No. 973/2010
VITASTA PUBLISHING PRIVATE LTD .....Plaintiff
- versus -
GEORG THIEME VERLAG KG .....Defendant
Advocates who appeared in this case:
For the Plaintiff: Mr. Rahul Beruar, Mr. Adarsh Ramanujan
and Mr. Subhash Bhutoria
For the Defendant: Mr. Pramod B. Agarwala, Mr. Peeush
Sharma and Mr. Anuj P. Agarwal,
Advocates for D-1 & 2
Mr. Ram Watel, Advocate 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 Yes
in Digest?
V.K. JAIN, J.
IA No. 10286/2011 (u/O 7. R. 14 CPC) & IA No.
10287/2011 (u/S. 151 CPC) in CS(OS) No. 2152/2010
IA No. 6590/2010 (u/O 39 R. 1&2 CPC), IA No.
CS(OS) No. 2152/2010 & CS(OS) No. 973/2010 Page 1 of 17
11430/2010 (u/O 39 R. 4 CPC), IA No. 11431/2010 (u/O
39 R. 1 CPC) and IA No. 14337/2010 (u/O 39 R. 1&4
CPC) in CS(OS) No. 973/2010
1. The plaintiff and the defendant entered into a
Cooperation Agreement dated 19th December 2005, whereby
the plaintiff was granted exclusive rights to market and
promote, throughout the territory specified in the
agreement, the then current publishing programme
(excluding the on-line products) of the defendant to the
extent they were available for sale in the specified territory.
This was followed by a second Cooperation Agreement
effecting from 1st January 2008, for a fixed tenure of three
years.
2. The parties also entered into separate Exclusive
Reprint Agreements in respect of 27 titles mentioned in para
4.8 of the plaint. Under the agreements for reprint rights,
the plaintiff was required to pay an agreed sum, mentioned
in each agreement, to the defendant as licence fee, within
90 days from the date of the invoice. Para 12 of the
agreement provided that in the event of the publisher i.e.
the plaintiff failing to comply with any of the terms and
conditions of the agreement, and such breach or default
CS(OS) No. 2152/2010 & CS(OS) No. 973/2010 Page 2 of 17
remaining unremedied for a period of 30 days after notice
thereof by the defendant/owner to the plaintiff/publisher,
then, at the option of the defendant/owner to be exercised
in writing, the rights granted to the plaintiff/publisher were
to revert back to the owner/defendant without prejudice to
its rights to damages for such breach or breaches.
3. The case of the plaintiff is that being the exclusive
licencee for India it is the owner of copyright in those 27
titles, subject matter of the Reprint Agreements, and these
Reprint Agreements could be terminated only in the event of
plaintiff committing breach of any of their terms or
conditions and further on its failing to remedy the breach
within 30 days of the receipt of the written notice from the
defendant. This is also the case of the plaintiff that the
defendant was importing, printing, publishing, selling and
distributing the “Subject Works” without its permission
which amounts to infringement of its copyright in those
works.
4. Suit CS(OS) No. 973/2010 has been filed seeking
injunction against infringement of copyright of the plaintiff
and injunction against breach of the Cooperation Agreement
2008, besides seeking delivery up of all the infringing copies
CS(OS) No. 2152/2010 & CS(OS) No. 973/2010 Page 3 of 17
of publications that violate the right claimed by the plaintiff
in “Subject Works”. In particular, the plaintiff is seeking
injunction restraining the defendant from printing,
publishing, selling or importing any of the aforesaid 21 titles
in India.
The suit has been contested by the defendants.
With respect to licences for reprints, it is alleged that as per
arrangement between the parties, the plaintiff would secure
an order from a pharmaceutical company for customized
bulk supply, then obtain a quotation from a printer for
printing the specified quantities as per that order, and then
produce a profit and loss account as per a mutually agreed
format. On the basis of such accounting, an amount was
agreed and put into the Reprint Licence Agreement. This
amount was equivalent to the net sales proceeded, minus
printing cost and the plaintiff was paid 16.5 % commission
based on the amount arrived at and this amount was
included in the Reprint Licence Agreement. It was always
understood and agreed that such reprints were to be of a
onetime fixed quantity to a specified customer, within a
specified time and were not for sale in the open market. A
clause was accordingly inserted on the reprints stating
CS(OS) No. 2152/2010 & CS(OS) No. 973/2010 Page 4 of 17
therein that they were for pharmaceutical market and not
for resale in the trade market. It was also alleged in the
Written Statement that a sizeable amount was due to
defendant No.1 from the plaintiff towards licence fee as well
as towards unpaid invoices for the books which the plaintiff
had taken to resell on its own account. Vide interim order
dated 17th May, 2010 this Court restrained the defendants
from importing and/or selling directly or indirectly the
books covered in the agreement with the plaintiff.
5. Vide notice dated 22nd September 2010 sent to the
plaintiff through counsel, the defendant, referring to the
agreement for reprint, informed the plaintiff that it had not
paid the licence fee in respect of the agreements referred in
para 1 of the notice, despite more than 90 days having
expired from the invoice and thereby committed breach of
the terms of the agreements. The plaintiff was called upon
to comply with the terms of the agreements to pay the
invoiced amount in respect of each of the agreements
mentioned in para 1 of the notice, to the defendant, within
30 days of the receipt of the notice, failing which the rights
granted to the plaintiff under the aforesaid agreements were
to stand reverted to the defendant automatically without
CS(OS) No. 2152/2010 & CS(OS) No. 973/2010 Page 5 of 17
further notice and without prejudice to its rights to claim
damages for the breach alleged to have been committed by
it. As many as 21 titles were mentioned in para 1 of the
notice.
6. Suit CS(OS) No. 2152/2010 has been filed by the
plaintiff seeking declaration that notice dated 22 nd
September, 2010 is illegal and also seeking injunction
restraining the defendant from revoking exclusive rights
granted to the plaintiff under the Reprint Agreements
mentioned in the notice.
In the Written Statement the defendant has alleged
that a sum of Euro 73835 was due from the plaintiff
towards licence fees as claimed in the notice. It is further
alleged that out of 27 agreements between the parties, 21
have already been terminated by the notice dated
22nd September 2010, whereas the remaining 06
agreements are subject matter of dispute in CS(OS) No.
973/2010.
7. Vide interim order dated 25th October, 2010, this
Court directed that the plaintiff shall be entitled to sell or
distribute the books which it had already published and
printed under its agreement with the defendant company,
CS(OS) No. 2152/2010 & CS(OS) No. 973/2010 Page 6 of 17
subject to the condition that it shall maintain an
independent account in respect of the books which are
distributed and/or sold or on after 25th October, 2010. As
far as Cooperation Agreement is concerned, as noted by this
Court vide order dated 20th January, 2011 passed in CS(OS)
No. 2512/2010, its term having expired on 31st December,
2008, it does not subsist anymore and plaintiff has no legal
right to seek its continuance thereafter.
8. While dismissing IA No. 14182/2010 filed by the
plaintiff for grant of interim injunction in CS(OS) No.
2512/2010 and allowing IA No. 16463/2010 filed by the
defendant, under Order 39 Rule 4 CPC for vacating the
interim order passed by the Court in that Suit on 25 th
October, 2010, this Court inter alia observed as under:
The e-mail dated 25th September 2008
was replied by Mr. Sudesh on the same
day. Mr. Sudesh informed Mr. Malik that
he was trying to find out his resources to
give response to him. He also noted that
the plaintiff was being given only six
months’ time to pay and wind up
operations with Thieme and wanted to
know what would be the arrangement,
thereafter.
It is thus quite clear that the offer made
by the defendant vide e-mail dated 25th
September 2008 to the plaintiff company
was not accepted by the plaintiffCS(OS) No. 2152/2010 & CS(OS) No. 973/2010 Page 7 of 17
company. Hence, the plaintiff can take
no advantage from the terms contained in
this e-mail, including the offer to restrict
the previous debt to Euro 12000.
Assuming that offer made vide e-mail
dated 25th September 2008 sent by Mr.
Malik to Mr. Sudesh is still open for
acceptance by the plaintiff, this would
require not only payment of Euro 12000
by the plaintiff to the defendant, it would
also mean that the reprint agreement
between the parties would have come to
an end on 31st March 2009 and
consequently the plaintiff would have no
right to publish any of the titles, which
were subject matters of reprint
agreements, w.e.f. 1st April 2009.
The contention of the learned counsel for
the plaintiff is that the reprint
agreements between the parties were
open ended, without any time limit
having been fixed for publication of the
titles subject matters of the agreements.
Assuming this to be correct, the plaintiff
can publish those titles only subject to
payment of the licence fee fixed under
each agreement. Admittedly, the plaintiff
has not paid the agreed licence fee within
90 days from the date of the invoice, as
was stipulated in the reprint agreements.
In fact, even today the plaintiff is not
ready to pay the licence fee stipulated in
the reprint agreements executed between
the parties. What the plaintiff wants is to
take the advantage of the reprint
agreements in order to continue
publishing the titles subject matters of
the reprint agreements forever, while at
the same time take advantage of a part of
the offer made by Mr. Malik of the
defendant company to Mr. Sudesh of the
plaintiff company by offering to pay onlyCS(OS) No. 2152/2010 & CS(OS) No. 973/2010 Page 8 of 17
Euro 12000. This, to my mind is not
permissible in law and available to the
plaintiff company. Firstly, the offer made
vide e-mail dated 25th September 2009
was never accepted by the plaintiff
company. More importantly, under that
offer, the plaintiff has no right to publish
any title, subject matter of the reprint
agreement after 31st March 2009. In any
case, the plaintiff could not have accepted
and offer in part. It had/has to be either
accepted or rejected as a whole.
9. Vide IA No. 10286/2011, the plaintiff has sought
to file additional documents comprising exchange of
communication through e-mail, whereas vide IA No.
10287/2011, it has sought permission to reprint, distribute
and/or sell the 21 titles, subject matter of the Reprint
Agreements, which are covered by the notice of the
defendant dated 22nd September, 2010. IA No. 11430/2010
and IA No. 11431/2010 have been filed by defendants No. 1
& 2 in CS(OS) No. 973/2010 seeking vacation/modification
of interim order dated 17th May, 2010 and seeking
injunction against the plaintiff restraining it from
printing/selling the subject works. IA No. 6590/2010 has
been filed by the plaintiff for grant of injunction restraining
the defendants from reproducing the plaintiff’s “Subject
Works” in any manner. IA No. 11930/2010 and IA No.
CS(OS) No. 2152/2010 & CS(OS) No. 973/2010 Page 9 of 17
14337/2010 has been filed by defendant No. 1 & 2 seeking
vacation/modification of the interim order passed by this
Court on 17th May, 2010 and 6th September, 2010 in CS(OS)
No. 973/2010.
10. As noted earlier, it is an admitted position that the
plaintiff before this Court has not paid the agreed licence
fees in respect of 21 out of the 27 Reprint Agreements
between the parties. The case of the plaintiff during the
course of arguments before this Court was that the
defendant had agreed to accept a sum of Euro 12000 from
the plaintiff towards a composite licence fees in respect of
27 agreements; the plaintiff made payment of Euro 1987 to
the defendant on 19 th January, 2009 and the rest of the
payment was agreed to be made in installments. It was also
informed during arguments that the balance payment has
also been deposited by the plaintiff during pendency of the
suit.
11. I have carefully perused the exchange of e-mails
between the parties. I have also taken into consideration
the copies of e-mails which the plaintiff did not file initially
but has filed along with IA No. 10286/2011. Vide e-mail
dated 16th August, 2008 Mr. Malik of the defendant
CS(OS) No. 2152/2010 & CS(OS) No. 973/2010 Page 10 of 17
company, informed Mr. Sudesh of the plaintiff company that
as per their calculations, they were to receive approximately
Euro 51000 from the plaintiff and that he would try to get
the defendant to accept a onetime payment of Euro 15000
and close the books. He sought confirmation of the plaintiff
in this regard. Vide e-mail 18th August, 2000 Mr. Sudesh
informed Mr. Malik that plaintiff would be more confortable
paying Euro 10000 but asked him to negotiate this further.
Vide e-mail 24th September, 2008, Mr. Malik informed Mr.
Sudesh that he would go for payment of Euro 12000 in
installments and that around Euro 3, 5 or 4 could be paid
by the plaintiff to start with. There was no response from
the plaintiff company to the offer made by Mr. Malik to the
plaintiff company vide e-mail dated 24th September, 2008.
As already discussed by me in order dated 20 th January,
2011 vide e-mail dated 25th September 2008 sent by Mr.
Malik of the defendant company to Mr. Sudesh of the
plaintiff company, the defendant informed the plaintiff that
he had obtained official agreement from the Directorate at
Thieme to reduce the old business debt to Euro and had
also obtained the agreement that they would continue their
relationship between the parties until 31st March, 2009 after
CS(OS) No. 2152/2010 & CS(OS) No. 973/2010 Page 11 of 17
which they would stop the business relationship. The
plaintiff was requested to give suggestion as to how balance
payment could be made by 31st March, 2009. A written
agreement was also suggested so that the amount of Euro
35000 could be written off. In reply, Mr. Sudesh informed
that he was trying to find his resources to give response to
him. He also noted that the plaintiff was being given only
06 months time to wind up operations with the plaintiff and
sought to know what arrangement would thereafter be.
12. Vide e-mail dated 3rd December, 2008 Mr. Malik
informed Mr. Sudesh that the official take was that they
were going to cooperate until 31st March, 2009 and until
then, the plaintiff would pay Euro 12000 to the defendant.
He also informed that until that time, the defendant would
give full support to the plaintiff with samples and timely
delivery of orders etc. Again, there was no acceptance of
the offer made by Mr. Malik to the plaintiff company. No
reply was sent by the plaintiff to the defendant, agreeing to
pay Euro 12000 to the defendant and further agreeing to
stop cooperation between the parties after 31 st March, 2009.
Vide e-mail dated 12th January, 2009 Mr. Sudesh informed
Mr. Malik about transfer of Euro 1987 to the defendant on
CS(OS) No. 2152/2010 & CS(OS) No. 973/2010 Page 12 of 17
9th January, 2009 and stated that rest they could talk when
they meet. He further made it clear that the plaintiff was in
no position to pay what he had said, by March. Thus, the
plaintiff company clearly refused the offer of the defendant
to make payment of Euro 12000 and stop cooperation
between the parties by 31st March, 2009. Mr. Malik writing
to the plaintiff company that they were going to cooperate
only until 31st March, 2009 clearly implied that payment of
Euro 12000 was to be made by that date. Exactly same was
the understanding of the plaintiff with respect to the offer
made by Mr. Malik on behalf of the defendant company as is
evident from Mr. Sudesh saying “Vitasta is in no position to
pay what you said by March”. In view of this e-mail which
is a document relied upon by the plaintiff itself, it cannot be
disputed that the offer of the defendant to accept Euro
12000 in full and final settlement of the liability of the
plaintiff under the Licence Agreements by 31st March, 2009
was expressly rejected by the plaintiff company. There is
absolutely no material on record to indicate that the
defendant company had agreed to accept any part of the
payment beyond March, 2009. This is evident from the e-
mail dated 13th January, 2009 sent by Mr. Malik to Mr.
CS(OS) No. 2152/2010 & CS(OS) No. 973/2010 Page 13 of 17
Sudesh whereby he stated “if the full payment cannot be
made by March, I will have a serious problem”. He also
sought to know whether partial payment could be made if
so, to what amount. There was no response from the
plaintiff company to this e-mail from Mr. Malik meaning
thereby that the plaintiff company was not ready even to
commit a partial payment in reply to the e-mail dated 13th
January, 2009.
13. From the above referred exchange of e-mail
between the parties, it appears to me that the offer made by
the defendant company to accept a sum of Euro 12000 from
the plaintiff company by 31st March, 2009 was never
accepted by the plaintiff company and therefore it did not
result into a concluded contract between the parties for
payment of Euro 12000 in full and final settlement of all the
dues of the defendant company.
14. A perusal of the agreement for reprint rights would
show that the rights and licences granted by the defendant
to the plaintiff were subject to the terms stipulated therein
including payment of the same specified in the agreement as
licence fees and the due date for payment was 90 days from
the date of the invoice. Since the licence granted to the
CS(OS) No. 2152/2010 & CS(OS) No. 973/2010 Page 14 of 17
plaintiff company was conditional on payment of the licence
fees within 90 days from the date of invoice and admittedly
payment in terms of the agreement was not made, the
defendant was very much entitled in law to give a notice to
the plaintiff company requiring it to pay the amount of the
licence fees within 30 days of the receipt of the notice and
was also right in stating that in case of failing of the plaintiff
to make payment of the licence fees, the rights granted to it
under the agreements were to revert back to the defendant
automatically without further notice. Since the plaintiff had
not only committed breach of the terms of the licence by not
making payment of the licence fees within 90 days from the
date of the invoices, but had also failed to make the
aforesaid payment within the time stipulated in the notice
dated 22nd November, 2010, it is not entitled to exercise any
right under the 21 reprint agreements, licence fees for
which have not been paid to the defendant company. IA
10287/2011 is, therefore, liable to be dismissed.
15. As regards 06 licences, licence fees for which is
stated to have been paid to the defendant company, the
plaintiff can continue to exercise the rights which were
CS(OS) No. 2152/2010 & CS(OS) No. 973/2010 Page 15 of 17
granted to it under the licences subject matter of those 06
agreements.
16. A perusal of the documents filed by the parties
would show that the books reprinted by the plaintiff carried
the inscriptions “ISBN 3-13-139781-0(GTV) Indian Reprint
ISBN 81-8976612-0. This edition is licenced for distribution
in India only as pharmaceutical premium and its sale is
prohibited in the trade. Printed in India: Pocket Atlas of
Endodontics Published by Vitasta Publishing Private
Limited (Representing Thieme International for the South
Asia Region)”. The plaintiff company while reprinting 06
titles subject matter of licences fees for which stands paid to
the defendant would continue to carry the above referred
inscription and will sell the books only as pharmaceuticals
premium. The plaintiff company will not be entitled to sell
those books in the trade meaning thereby that the book can
be sold only to pharmaceuticals companies and nobody else.
The plaintiff company would keep true and faithful accounts
of the printing and distribution of these 06 titles including
the profits made by it from sale of the aforesaid 06 titles.
The interim orders stand modified and the
applications stand disposed of in terms of this order.
CS(OS) No. 2152/2010 & CS(OS) No. 973/2010 Page 16 of 17
CS(OS) No. 2152/2010 & CS(OS) No. 973/2010
List for framing of issues on 1st February, 2012.
(V.K. JAIN)
JUDGE
AUGUST 08, 2011
vn
CS(OS) No. 2152/2010 & CS(OS) No. 973/2010 Page 17 of 17