MURALIDHAR CHATTERJEE Vs. INTERNATIONAL FILM CO LTD

JUDGEMENT

(1.) This appeal raises an important question of commercial law under the Contract Act. It is brought by the plaintiff, who carries on business from Calcutta as a distributor of cinema films. The defendants are a limited company who import such films into India. The contract between the parties was expressed in a letter, dated 8 May 1936, sent by the defendants to the plaintiff, under which the plaintiff was to maintain at his own cost the defendants' office in Calcutta and handle their films in Bengal, Bihar, Orissa, Assam and Burma in conjunction with the defendants' head office at Cawnpore. The main stipulation was in the following terms: That we shall deliver you a brand new positive print of each picture approximately at the average of 1 picture a month and we shall pay for all the royalties to the producers for the exploitation of the pictures and in consideration of this, you will pay us a sum of Rs. 1750 towards the cost of each print supplied to you. Such payments to be made to us on demands and the prints to be delivered to you within four to five weeks from the date of the payment. The exact price of the print to be adjusted on the delivery of the print and to be reckoned by adding the actual duty as would be payable on the footage together with the costs of the positive print and other incidental charges (shippers, freights, etc.)

(2.) This was followed by a provision whereby the plaintiff was to retain 25 per cent of the revenue received on the exhibition of the film until he had recovered half of his "investment on the prints" or "print cost," the balance being divided between the parties equally: thereafter, the whole revenue was to be divided equally. The prints were to be returned to the defendants after the "exploitation" was over. The correspondence between the parties which followed upon the contract and continued until January 1937, need not here be described in detail, but it shows that two films only - Shipmates o' Mine and Annie Laurie - were offered to and accepted by the plaintiff. On 2 July, 1936, the plaintiff paid the defendants Rs. 2000 on account of the sum due or to become due under the contract. From a bill dated 30 September 1936, it appears that the full sum due for Shipmates o' Mine the first picture delivered was Rs. 2043-4-0 - which included the cost of making the positive print, customs duty, shipping charges, clearing charges, censor's fee, etc. The film was delivered by the defendants to the plaintiff on 5 October; but it would seem that the plaintiff had difficulty in getting it booked by cinema exhibitors, and on or about 4 December 1936, at the defendants' suggestion, he returned it to the defendants for a time so that the defendants might try to get it exhibited. Meanwhile on 7 November 1936, the plaintiff had likewise paid Rs. 2000 on account of the sum due or to become due for Annie Laurie under the contract; but this film had not been delivered by the defendants when on 1st December 1936, the plaintiff wrote to the defendants making various complaints of delay and breach of contract; and saying that in the circumstances which have happened we find you have no bona fide intention of carrying out the contract and we decline to have any business dealings with you.

(3.) This letter intimated a claim by the plaintiff for refund of the sum of Rs. 4000 already paid, for Rs. 908- 13-0 expenses incurred, and for Rs. 5000 damages. The defendants by letter of 3 December denied that they had committed any breach. The plaintiff on 12 December by letter and telegram, adhered to his letter of 1 December and refused to act as defendants' agent any further. The defendants on 14 December denied the plaintiff's allegations of breach of contract and refused his claims for refund and damages; finally by letter of 21 January 1937, they accepted the plaintiff's repudiation of the contract and said that they were taking the organisation of the contract territories under their own control and would claim against the plaintiff for all losses. The present suit was brought in the High Court at Calcutta on 25 January 1937. The plaint alleged that the defendants had failed and neglected to perform their part of the contract and to make over positive prints of a number of films therein specified by name. On this basis it claimed Rs. 3000 as general damages or loss of profit, refund of the Rs. 4000 paid on account, and Rs. 913-13-0 expenses incurred. The defendants by their written statement of 22 April, 1937, denied that they had committed any breach of contract, and averred that they had all along been ready and willing to perform their part. They alleged that the plaintiff had broken the contract and that they had suffered damages for which they were advised to bring a separate suit. As the plaintiff's whole case was that the defendants had broken the contract in essential particulars, the defendants could hardly be expected to plead by way of equitable set-off that they were entitled to recover damages by reason that they had rightly rescinded the contract on account of the plaintiff's breaches.