NARENDRA HIRAWAT Vs. SHOLAY MEDIA ENTERTAINMENT

JUDGEMENT

(1.) This notice of motion (Notice of Motion No.2591 of 2019) has been taken out in a commercial IP Suit in respect of distribution and Rajesh V.

(2.) The rights are claimed by virtue of a film licence agreement executed between the parties thereto on 9 September 2015 for the period between 1 April 2016 to 31 March 2022 ("first agreement") and a further agreement entered into between the parties on the same date, i.e. 9 September 2015, for the period between 1 April 2022 and 31 March 2027 ("second agreement"). The first agreement was for a total consideration of Rs.20 crores, whereas the second was for a total consideration of Rs.5 crores. The agreements covered exploitation rights, such as electronic media rights, television rights, satellite broadcasting rights, etc. on a sole and exclusive basis by the Plaintiff herein (described in the agreements as 'licensee', Defendant No.1 herein, the owner of copyright in the two suit films, being described as 'licensor'). It is not in dispute that consideration payable under the first agreement has been more or less paid. The dispute really pertains to payment of consideration under the second agreement. The agreements were followed by an addendum. Disputes arose between the parties and these were finally resolved by the parties entering into a deed of settlement on 3 December 2018. (This deed of settlement was preceded by a memorandum of settlement between the parties, the deed of settlement being a formal execution of the settlement.) Under this deed of settlement, the Plaintiff was to pay an aggregate sum of Rs.8.71 crores, along with GST, for the suit films for the second term, namely, the term commencing on 1 April 2022 and ending on 31 March 2027, and which was extended upto 30 September 2028. In pursuance of the settlement, Defendant No.1 raised its first invoice for a sum of Rs.1.25 crores on 5 November 2018, which, along with applicable GST (both CGST and SGST), worked out to Rs.1.40 crores. This amount was to be paid to the credit of Defendant No.1 partly to one HRVS Financial Consultants Private Limited and partly to Defendant No.1 itself. It is not in dispute that this amount was duly paid by the Plaintiff. This was followed by a second invoice raised by Defendant No.1 on the Plaintiff on 3 December 2018 for licence fees of Rs.2.46 crores, which, together with GST, worked out to about Rs.2.75 crores. It is also not in dispute that this amount was duly paid by the Plaintiff to Defendant No.1 or to its credit. Defendant No.1 then raised its third invoice for a sum of Rs.1.75 crores on 3 June 2019, which, together with applicable GST, worked out to Rs.1.96 crores. This amount was also paid by the Plaintiff to, or to the account of, Defendant No.1, albeit with a delay. The Plaintiff thus paid a total sum of about Rs.6.11 crores as against the total consideration of Rs.8.71 crores reserved under the deed of settlement. The dispute between the parties pertains to the balance amount.

(3.) According to Defendant No.1, the payment was not made in time, time being of essence, and Defendant No.1, accordingly, proceeded to terminate the films licence agreements between the parties by its letter dated 18 June 2019. Defendant No.1 claims to have entered into a separate film licence agreement with Defendant No.2 herein, creating same distribution rights in favour of the latter. (That is how Defendant No.2 has been arraigned as a party to the present suit.) On the other hand, it is the Plaintiff's case that Defendant No.1 was expected to issue invoice/s separately for licence fees to be charged from out of the total consideration reserved under the deed of settlement (i.e. Rs.8.71 crores) and applicable GST on that amount, and the Plaintiff was to make payment only according to such invoice/s. It is submitted that without raising such invoice/s, the Plaintiff could not have straightaway proceeded to terminate the suit film licence agreements including the memorandum and deed of settlement. The Plaintiff submits that there were discussions between the parties even after the purported termination, in which, the Plaintiff offered to pay the balance amount under the deed of settlement, subject to Defendant No.1 issuing an appropriate invoice. It is the grievance of the Plaintiff that despite these discussions, Defendant No.1 never submitted any invoice towards the balance payment and instead, insisted on going ahead with the film licence agreements entered into by it with Defendant No.2. That is how the battle lines have been drawn between the parties.