| SooperKanoon Citation | sooperkanoon.com/876851 |
| Subject | Intellectual Property Rights |
| Court | Kolkata High Court |
| Decided On | Aug-25-2006 |
| Case Number | G.A. No. 1756 of 2005 and C.S. No. 130 of 2005 |
| Judge | Soumitra Sen, J. |
| Reported in | AIR2006Cal340,2007(34)PTC522(Cal) |
| Acts | Copyright Act, 1957 - Sections 2, 2(5) 6, 7(A), 12(A), 13, 14, 17, 18, 19, 19(2), 19(3), 19(4), 19(5) and 19(6); ;Copyright (Amendment) Act. 1994 |
| Appellant | Saregama India Ltd. |
| Respondent | Suresh Jindal and ors. |
| Appellant Advocate | Sudipto Sarkar, Sr. Counsel and ;Sanjib Banerjee, Adv. |
| Respondent Advocate | Pratap Chatterjee, Sr. Counsel and ;Ranjan Bachawat, Avd. |
| Cases Referred | Gujarat Bottling Co. Ltd. v. Coca Cola Company |
Soumitra Sen, J.
1. This application has been taken out by the petitioner, inter alia, for restraining the respondents from selling any records or cassettes, discs or any other sound recordings in respect of the films produced by the respondent No. 1 during the currency of the agreements which are the subject-matter of the present proceeding.
2. The petitioner was earlier known as the Gramophone Company of India Limited. The present name has been adopted by and under a fresh certificates of incorporation dated 3rd November, 2000 due to change of name.
3. The main business of the petitioner is recording of film songs, music and dialogues.
4. The petitioner claims that such recording is carried on by and under several agreements entered into with the Film Producers.
5. Under the Copyright Act, 1957 (hereinafter referred to as 'the said Act'), the producers of the film is the first owner of the copyright in respect of all literary and musical works which includes songs, music and dialogues contained in the film. Such songs, music and dialogues are actually recorded in the sound-track of the film.
6. It is the contention of the petitioner that by reason of the said agreement entered into with the producers such copyright existing in favour of the producer has been duly assigned to the petitioner. The petitioner further contends that by reason of such assignment the right of recording and making records and/or cassettes and/or sound recordings of the literary, dramatic and musical works exclusively belongs to the petitioner and that the petitioner has become the owner of such copyright.
7. It is submitted that the petitioner is also the owner of the original plates of the records and/or cassettes and/or sound recordings under the provisions of the said Act and is, therefore, the first owner of the copyright in the records and/or cassettes and/or sound recordings.
8. The subject-matters of dispute in this proceeding are three agreements. The first agreement is with regard to the film 'Rajnigandha'. The second agreement is with regard to the film 'Shatranj Ke Khiladi' The third is with regard to the film 'Katha'.
9. It is the contention of the petitioner that as per usual practice in the music industry prevalent in this country the entirety of the rights in the literary, dramatic and musical works relating to the contents of a film song including the dramatic and musical work contained there used to be acquired by the music company. In the formative years of the Indian film music industry the petitioner was the only such company.
10. It is further submitted that even at present the general practice in the music industry continues to be, that the producer of a cinematographic film would be the owner of the copyright in the literary, dramatic and musical works relating to such films either as the first owner or as assignee. The producer, however, in turn, would assign all the right vested with the producer in relation to the literary, dramatic and musical works to the music company whereupon the music company would become the first owner of the copyright in the sound recordings as also the exclusive owner of the original plates from which sound recordings could be duplicated.
11. The object of retaining ownership in the original plates was to preserve the right of the music company in respect of the sound recordings and to prevent duplication thereof. With the advent of modern technology the duplicating methods have radically changed, therefore, retaining ownership of the original plates as it was understood earlier actually does not serve the real purpose as was intended.
12. The first agreement entered into by and between the parties is dated 24th February, 1973 (hereinafter referred to as the First Agreement). Film 'Rajnigandha' was produced during the currency of the said agreement. It is submitted on behalf of the petitioner that in terms of the First Agreement the producer assigned the literary, dramatic, artistic and musical works relating to any film produced by the respondent No. 1 during the period of 5 years commencing from 13th of February, 1973 to the petitioner absolutely and for ever for an unlimited duration. According to the petitioner, by and under the said First Agreement the copyright in respect of the literary, dramatic and musical film works relating to and/or embodied in the sound track of any film produced by the respondent No. 1 during the period of 5 years commencing from 13th of February, 1973, was also assigned absolutely for an unlimited duration.
13. The second agreement was entered into on 28th of December, 1976, according to the petitioner, in terms of the said agreement the respondent No. 1 assigned the literary, dramatic, artistic and musical works in relation to any film produced by the respondent No. 1 during the period of 3 years commencing from 3rd January, 1977, Such assignment is stated to be for art unlimited period. The petitioner1 further states that by reasons of the said agreement of assignment the respondent No. 1 had also assigned to the petitioner the copyright in the literary, dramatic and musical works relating to and/or embodied in the sound-track of any film produced by the respondent No. 1 during the said period of 3 years. It is an admitted position that during the pendency of the said agreement the film. 'Shatranj Ke Khiladi' was produced by the respondent No. 1.
14. The third agreement was entered into on 16th of November, 1982. According to the petitioner, under the said agreement the respondent No. 1 had assigned the literary, dramatic, artistic and musical works relating to any film produced by respondent No. 1 for the period of 3 years commencing from 29th July, 1982 for an unlimited period. It is an admitted position that during the pendency of the said agreement the film 'Katha' was produced by the respondent No. 1.
15. The basic subject-matter of controversy between the parties may be briefly summarized as follows:
(a) Whether the assignment under the agreements are for an unlimited period or for a limited period.
16. The petitioner contends that the assignment made under the agreement with regard to the literary, dramatic and musical works of the films produced during the duration as mentioned in the agreement as well as the copyright in respect of the literary, dramatic and musical works in any film songs of any film that was produced during the tenure of the agreement was for an unlimited during and/or the entire period of statutory duration.
17. It was also submitted that the first two agreements are little different from the third, which does not. contain any period in the agreement, therefore, it is undisputedly for an unlimited period.
18. Relying upon the various clauses in the agreements it was submitted that the copyright in respect of the music and other related works covered under the agreement were transferred and assigned without any reservation as to the period or territory, and, therefore, it was assigned and/or transferred for an unlimited period.
19.. In order to appreciate submissions made on behalf of the parties it would be relevant to examine the clauses of the agreement relied upon by the parties asfollows:
4. (A) The Company shall be the owner of the original plate within the meaning of the Copyright Act 1957 and any extensions or modifications thereof of any performance from which are made any records manufactured in pursuance of this Agreement recorded or re-recorded by the Company pursuant to Clause 2 or 3(A)(a) or 3(A)(b) hereof.
(B) The Producer hereby assigns and transfers and agrees to assign and transfer to the Company absolutely and beneficially for the world:
(i) the gramophone recording rights in all works the performances of which are made available to the Company under the terms of this Agreement and
(ii) the right to make or authorize the making of any record embodying the recordings in any part of the said sound-track(s) associated with the Producer's films.
The Producer undertakes to execute or obtain the execution of such further assignments or assurances as the Company may from time to time require.
(C) It is hereby declared that the rights In the recordings and works hereby assigned and transferred or agreed to be assigned and transferred and in the recordings of the performances referred to in Clause 2 or 3(A)(a) or 3(A)(b) include but are not limited to:
(i) the sole right of production reproduction sale (under such trademarks as the Company may select) use and performance (including broadcasting) throughout the world by any and every means whatsoever of records reproducing the said performance or any of them.
(ii) the sole right at the Company's discretion to decide whether and/or when to commence or discontinue or recommence the said production and sale of records reproducing the said performance or any of them and to fix and alter the prices of such records and the irrevocable right and licence at all times to sue and publish the said artiste(s) and musicians name(s) and photograph(s) for labelling cataloguing and exploiting the said records.
(iii) the right to grant non-exclusive licences for the mechanical reproduction of the works or any of them.
AND the Company shall have the irrevocable right to authorize any other person firm or corporation to do any and all such acts and things.
6. During the currency of his Agreement and any extension thereof and following the termination of this Agreement or any extension thereof during a period of twenty-five years from the first day of the month in which any record of the contract recordings is first offered to the public the Producer:
(a) Shall not directly or indirectly supply or make available to any individual firm company corporation or other person the whole or any part of the said sound-track(s) made or to be made available to the Company for the purposes of manufacturing and selling records hereunder and.
(b) Shall ensure that the said artistes and musicians shall not perform any of the works performances of which have been made available to the Company for the purposes of manufacturing and selling records hereunder on their own account or for any individual firm company corporation or other person other than the Company whereby such sound-track(s) and performances are or are intended to be recorded in any form from which a record may be offered to the public Provided That such sound-track(s) and performances by the said artistes and musicians for sound or television broadcasting or cinematograph films shall not be prohibited by this clause in cases in which (i) records thereof are not and are not intended to be offered to the public (ii) the Producer and the artistes and musicians (as the case may be) contract to make any such sound-track(s) available to or to render such performances for the person or persons who broadcast or produce such sound-track(s) or performances on the express written condition that no record thereof will be offered to the public except by or with the prior written consent of the Company.
7. (A) Subject as hereinafter mentioned the Producer shall be entitled in respect of all records of contract recordings made available hereunder by the Producer and sold by the Company or by any individual firm company or corporation or other person authorized by the Company to a royalty on net sales calculated on the retail price in the country of manufacture as follows:. (d) Royalty as above shall be payable during the currency of this Agreement and thereafter for 25 years.
7. (B) In addition to the royalty on contract recordings provided for in Clause 7(A) hereof the Company shall also pay to the Producer a copyright royalty in respect of sales of records containing performances of contract works. The provisions of Clause 7(A) shall apply to the calculation of the copyright royalty mutatis mutandis and in particular 'contract works' shall be deemed to be inserted instead of the words 'contract recordings' where such words appear; in Sub-clause 7(A)(a)(ii) and (ii) the rate 5% (five per cent) shall be deemed to be inserted instead of the rate therein mentioned.
12.(A) This Agreement shall be for an initial period of five year(s) commencing on the 13th day of February 1973.
(B) The Company shall be entitled to continue this Agreement for two successive periods of one year each on giving notice in writing to the Producer before the expiration of the Agreement or the relevant period in continuation thereof and all the provisions herein contained shall apply in their entirety in respect of each such period.
20. Relying upon Clause 4A and B of the first two agreements and Clause 8 of the third agreement which is similar in nature. It was submitted that the respondent No. 1 had transferred and assigned all the copyrights in respect of the music and related works without any conditions attached and for an unlimited period. With regard to the period mentioned in Clause 12A, it was submitted that the said period was to determine the tenure of the agreement during which period any films produced by the respondent No. 1, the entire literary, dramatic and musical works in connection with the film would be covered under the said agreement.
21. It was submitted that the period of 25 years mentioned in Clause 6 is a negative covenant, which cannot derogate from the grant and that the said period of 25 years has no connection with the period mentioned in Clause 7A(d). It was further submitted that at the material point of time there is no need under the Copyright Act of 1957 to specify any period under the agreement, which has been introduced by a subsequent amendment of 1994. But by reason of the expression 'absolutely' used in the agreement of assignment, it should mean that the grant made by the said agreements covers the entire period and is not limited.
22. On behalf of the petitioner it was submitted that the assignment of copyright is different from any other assignment as the assignment of copyright is arising out of a statute and is a statutory right vested with the assignee. Once an assignment of copyright is made the assignor does not retain any right in respect of the copyright so assigned. Non-payment of royalty under the agreement does not defeat the assignment of copyright. From the tenure of submissions made on behalf of the petitionen it appears to me that the petitioner wants to contend that once an agreement has been entered into between the parties for assignment of copyright, it is an absolute transfer and the assignor does not retain any right over it.
23. The petitioner has also tried to contend that committing any breach of the terms and conditions of the agreement by the petitioner would not disentitle them to utilize the grant made under the agreement, but would only create a right in favour of the respondent No. 1 to get damages. In other words, committing any breach of the terms and conditions of the agreement can only give rise to a money claim in favour of the respondent No. 1, but the agreement could not be terminated in any manner whatsoever until it expires by efflux of time.
24. On behalf of the respondent it was submitted that from Clauses 6 and 7(A)(d) it would clearly appear that the agreement at best could have continued 25 years. It was further submitted that in the agreement itself in particular Clause 6, extension or termination of the agreement has been contemplated. Therefore, to contend that this agreement is for an unlimited period is not correct. It was further submitted that in the agreement there is no clause whereby the copyright has been transferred and/or assigned.
25. It was further submitted that even under the agreement the respondent No. 1 had a right of assignment of all its rights and obligations under the agreement but not without the prior consent of the petitioner. It was, therefore, submitted that if the grant was absolute in nature there could not have been, any clause, incorporated in the agreement whereby the respondent No. 1 as the assignor retaining any power to assign its rights under the agreement to third parties other than the petitioner.
26. On behalf of the respondent it was argued with a great deal of emphasis that this application has been made by suppressing material facts. It was also pointed out that after the expiry of the period as contemplated under the agreement, the petitioner was asked to return the original plates. Further more, the petitioner has admittedly not paid the royalty in terms of the agreement and also has not complied with other terms and conditions of the agreement with regard to supplying of statements of royalty to the respondent No. 1.
27. From the submissions made on behalf of the parties and the point raised in this proceeding, the issues which are required to be adjudicated are as follows:
(1) Whether the agreements are the agreements of assignment of copyright;
(2) Whether in the facts of the case the assignment is for an unlimited period;
(3) Whether the agreement of assignment can be terminated for committing breach of the terms and conditions thereof by the assignee;
28. In order to appreciate the respective contentions of the parties, the said Act is required to be examined in some details.
29. With the advent of printing technology, which made reproduction of books possible in large numbers, the need for protection of the authors of the books arose and statute with regard to copyright was conceived. It became further necessary when the recording of sound became possible. The first legislation with regard to copyright in India was passed in 1914, which was based mainly on the English Copyright Act, 1911.
30. With the radical change in the technology with regard to copying, recording, broadcasting etc. it became necessary to revise the copyright law. With that object in view the said Act has been enacted.
31. Section 2 of the said Act contains various definitions. The definitions which are relevant for the instant proceeding are set out as under:
Sec. 2(d)(v)
in relation to a cinematograph film or sound recording, the producer,
Sec. 2(d)(f)
cinematography films 'means any work of visual recording on any medium produced through a process from which a moving image may be produced by any means and includes a sound recording accompanying such visual recording and 'cinematograph' shall be construed as including any work produced by any process analogous to cinematography including video films;
Sec. 2(uu)
producer', in relation to a cinematograph film or sound recording, means a person who takes the initiative and responsibility for making the work.
32. From the definitions as given above and the various other definitions contained in Section 2, it appears that in relation to a cinematograph film or some recording the producer is the author under the said Act and the cinematograph film means any work of visual recording which creates a moving image including a sound accompanying such visual recording.
33. Under Section 13 of the said Act a copyright subsists through out India in any cinematograph films and also sound recordings.
34. The expression 'copyright' has not been defined in Section 2 of the said Act but the meaning of the expression has been given in Section 14 of the said Act. The relevant provision of Section 14 which is applicable in the instant case is set out as under:
Sec. 14(d)
In the case of a cinematograph film,--
(i) to make a copy of the film including a photograph of any image forming part thereof;
(ii) to sell or give on hire or offer for sale or hire; any copy of the film, regardless of whether such copy has been sold or given on hire on earlier occasions;
(iii) to communicate the film to the public;
Sec. 14(e)
In the case of a sound recording:
(i) to make any other sound recording embodying it;
(ii) to sell or give on hire or offer for sale or hire, any copy of the sound recording, regardless of whether such copy has been sold or given on hire on earlier occasions;
(iii) to communicate the sound recording to the public;
35. If we analyse the meaning of copyright as given in Section 14, the expression 'copyright' means the right to copy and to commercially exploit the same.
36. In terms of the Section 17 of the said Act normally the author of a work shall be the first owner of the copyright therein. However, if any work is made at the instance of another upon receiving valuable consideration therefor the persons at whose instance the work is made will be the first owner of the copyright.
37. The right to assign copyright is contained in Section 18 which is set out as under:
Section 18. Assignment of copyright.--
(1) The owner of the copyright in an existing work or the prospective owner of the copyright in a future work may assign to any person the copyright either wholly or partially and either generally or subject to limitations and either for the whole of the copyright or any part thereof:
Provided that in the case of the assignment of copyright in any future work, the assignment shall take effect only when the work comes into existence.
(2) Where the assignee of a copyright becomes entitled to any right comprised in the copyright, the assignee as respects the rights so assigned, and the assignor as respects the rights not assigned, shall be treated for the purposes of this Act as the owner of copyright and the provisions of this Act shall have effect accordingly.
(3) In this section, the expression 'assignee' as respects the assignment of the copyright in any future work includes the legal representatives of the assignee, if the assignee ideas before the work comes into existence.
38. From the aforesaid, it appears that the owner of the copyright or the prospective owner of the copyright in a future work may assign the copyright to any person either wholly or partially for the whole of the copyright or any part thereof and once an assignment is made the assignee for the purposes of the said Act is treated as the owner of the copyright.
39. The mode of assignment is contained in Section 19 of the Act which is set out asunder:
Section 19. Mode of assignment.--
(1) No assignment of the copyright in any work shall be valid unless it is in writing signed by the assignor or by his duly authorised agent.
(2) The assignment of copyright in any work shall identify such work, and shall specify the rights assigned and the duration and territorial extent of such assignment.
(3) The assignment of copyright in any work shall also specify the amount of royalty payable, if any, to the author or his legal heirs during the currency of the assignment and the assignment shall be subject to revision, extension or termination on terms mutually agreed upon by the parties.
(4) Where the assignee does not exercise the right assigned to him under any of the other sub-sections of this section within period of one year from the date of assignment, the assignment in respect of such rights shall be deemed to have lapsed after the expiry of the said period unless otherwise specified in the assignment.
(5) If the period of assignment is not stated, it shall be deemed to be five years from the date of assignment.
(6) If the territorial extent of assignment of the rights is not specified, it shall be presumed to extend within India.
(7) Nothing in Sub-section (2) or Sub-section (3) or Sub-section (4) or Sub-section (5) or Sub-section (6) shall be applicable to assignments made before the coming into force of the Copyright (Amendment) Act. 1994.
40. From the aforesaid, it becomes clear that assignment of copyright can only be made in writing signed by the assignee and such agreement should specify the rights assigned and the duration and territorial extent of such assignment. Under Section 19, if the agreement of assignment does not contend any period it should be deemed to be five years from the date of assignment.
41. The statutory limit of period during which the copyright shall subsist in respect of cinematograph film is 60 years from the beginning of the calendar year next following the year in which the work is first published.
42. The picture, which emerges upon analysis of the various provisions of the said Act, is that the producer of the cinematograph film is the author on whom the right of copyright vests and the said author is the first owner of the copyright.
43. The expression 'dramatic work,' 'literary work,' 'musical work' all has different and distinct meaning and connotation under the said Act. From the definitions contained in Sections 2(h), 2(o) and 2(p) with regard to 'dramatic work,' 'literary work,' 'musical work' respectively, it clearly appears that 'dramatic work' is in the nature of physical manifestation of such recitation of choreographic work or entertainment but does not include a cinematograph film.
44. It would, therefore, mean that when someone does those acts as mentioned in Section 2(h) physically and live and is not a photographic imprint thereof it would mean dramatic work.
45. The meaning of the expression 'literary work' as in Section 2(o) is all encompassing and includes all kinds of literary work including computer programmes, tables and compilations including computer data base.
46. Section 2(p) makes it clear that musical work is the music itself and the graphical notation of such music but does not Include any words or any action intended to be sung, spoken and performed with the music. Therefore, the statute has made a distinction between musical work and a song may or may not be without music. But even a song is sung which has music it will not become a musical work under the said section.
47. Having regard to the facts as disclosed above and the law is discussed, the issues which have come up for adjudication are now dealt with as under.
1) Whether the agreements are the agreements of assignment of copyright:
On this issue the respondent has submitted that the agreement does not mention anywhere that the copyright in respect of the dramatic, literary and musical work in, the films has been assigned in favour of the petitioner. I am unable to accept the said contention. From the scheme of Copyright Act, it appears that if there is an assignment of dramatic, literary and musical work of the film including the sound recordings then it would amount to an assignment of copyright just because the agreement does not mention that the copyright has been assigned it would not cease to become an assignment of copyright, if otherwise the intention of the party to the agreement is expressly stated. The agreements in question clearly state that the assignment is in respect of all the works in relation to the film and the right to make any recordings of the sound-track and/or any part thereof.
48. If the intention of the parties under the agreement falls within the meaning of copyright under Section 14 of the said Act it would amount to an assignment of copyright. Though strictly speaking the intention of the parties in the agreements seems to lay emphasis on the sound recordings of the films, to what extent the copyright has been assigned is not really germane in the instant proceeding as the question of infringement of copyright is not an issue in this proceeding. Be it suffice to say that from the agreement it clearly appears that there has been an assignment of copyright.
2) Whether in the facts of the case the assignment is for an unlimited period:
49. The petitioner has sought to contend that once a grant is made under the Act and it is an assignment of copyright, the assignee becomes the absolute owner thereof and the grant, therefore, is an irrecoverable grant. I am unable to accept the said contention the petitioner is, however, correct in contending that the period mentioned in Clause 12(A) of the agreement is the period for which the agreement is to remain valid in order to fix the liability between the parties with regard to the productions to be made by the producer, that is, respondent No. 1 during such period. It is clear from the agreements that all productions by the respondent No. 1 during the period of five years would form a part of the agreement which could be extended for two successive period of one year each. The agreement did not intend to create a right in favour of the petitioner in respect of all films produced by the respondent No. 1 for an unlimited period. It is significant to mention here that as on the date of entering into the agreement the concerned film was not produced. However, it would be a misconception on the part of the petitioner to contend that the agreements are for an unlimited period. The intention to limit the agreement is clearly expressed in Clauses 6, 7-A(d), 14 of the agreement. The negative covenant contained in Clause 6 makes it clear that the respondent No. 1 shall not infringe the copyright assigned in favour of the petitioner for the period of twenty-five years. If the grant was intended to be for an unlimited period, there could not be any negative covenant for a limited period. Even the royalty as required to be paid under the agreement is limited till twenty-five years.
50. Further more, if the grant was intended to be absolute in favour of the petitioner, the respondent No. 1 could not have retained any right over what has already assigned. But, in Clause 14, it has been mentioned that the respondent No. 1 was not entitled to assign any of its rights and obligations whatsoever under the agreement without the prayer written consent of the petitioner. Therefore, under the agreement itself the parties knew that the respondent No. 1 retained its right and the grant is not absolute in nature. Therefore, in my opinion, the agreements cannot be termed to be an agreement for an unlimited period.
3) Whether the agreement of assignment can be terminated for committing breach of the terms and conditions thereof by the assignee:
The petitioner has contended that once an assignment of copyright has been made absolutely in favour of the assignee under the Act, the assignee acquires an irrecoverable right over the grant and it could not be terminated under any circumstances, and the assignee having committed breach can give rise only to a money claim in the nature of damages in favour of the assignor.
51. Under the Act a copyright may be assigned wholly or partially or either generally or subject to limitations and either for the whole of the copyright or any part thereof. The assignment under Section 19 is required to be in writing and is also required to specify the duration of such assignment. Therefore, from the scheme of the Act, it appears that the assignment can be a limited assignment both in content and period, therefore, a person intending to assign the copyright may decide to assign only a part of the copyright to be assigned and for an unlimited period or in other words, an assignment does not automatically mean it is an absolute assignment. The intention of the parties with regard to the nature the extent of assignment is required to be ascertained from the agreement itself. If upon proper construction of the agreement it means' that the assignment is for a limited period then it cannot be contended that simply because an assignment of copyright has been made given absolute ownership with regard to the copyright it has to be for an unlimited period.
52. However, the question here is whether the agreement can be terminated during its validity period if a breach of the terms and conditions of the agreement has been committed by the assignee. From the statutory requirement contained in Section 19 of the said Act for constituting a valid assignment, it appear to me that once the agreement contains the necessary specification required under the statute violation thereof may give rise to the right of termination on the part of the assignor. Under Section 19, the territorial extent of the assignment is required to be mentioned in the agreement. In the event, the assignee violates the said territorial limit, then the assignor would be perfectly within its right to terminate the agreement to contend otherwise would be to defeat the very purposes of the statute itself. The concept of the assignee being treated as the first owner of the copyright after assignment is to clothe the assignee with all the rights which would otherwise be normally available to the assignor. This does not mean that the assignee having been treated as the first owner would be entitled to commit a breach of the very agreement under which he has acquired the right to be treated as the first owner.
53. It is true that when the agreements which are the subject-matter of dispute were entered into the present Copyright Act in its present form was not in existence, but if we are to arrive a reasonable meaning to the agreement and give a reasonable conclusion to the different interpretation of the agreement given on behalf of the parties, the scheme of the Act must be looked into. Therefore, in my opinion, it would be incorrect to contend that the agreement cannot be terminated, if any breach of the terms and conditions has been committed.
54. On behalf of the petitioners the decision of Radha Sundar Dutta v. Mohd. Jahadur Rahim reported in : [1959]1SCR1309 was relied upon for the proposition that the true nature of a grant is to be derived from a construction of all the terms of the document and in the matter of construction of a document when there appears to be two possible constructions, then the clauses which gives effect to the grant should be accepted rather than the one which renders it nugatory on the principle 'ut res magis valeat quam pereat.'
55. The said decision of Radha Sundar Dutta : [1959]1SCR1309 (supra) is oft quoted to explain the principle of rule of construction. It has been held in the said decision that if there is a conflict between earlier clauses and later clauses and it is not possible to give effect to all of them then the rule of construction is well established that the earlier clauses must override the later clauses and not vice versa.
56. The principle laid down in the said decision is well established, but, in the instant case, the clauses in the agreement in question are not in conflict with each other. Each of the terms gives a different and distinct meaning of its own and can co-exist independently. The term of the contract as mentioned in the agreement itself as intended by the parties is clear that the agreement is to subsist for a period of 25 years and no more. In fact, the period mentioned in the agreement is in Clauses 6, 7(A)(d) and 12(A). If we are to accept the submission of the petitioner on the basis of the judgment of Radha Sundar Dutta AIR 1956 SC 24 (supra), then the period mentioned in the earlier clauses that is Sections 6, 7(a)(d) should be accepted. However, the petitioners themselves have explained the period mentioned in Section 12(a). It was submitted on behalf of the petitioners that this period is for fixing the liability upon the respondent for bringing into the purview of this agreement, the works produced for the said period mentioned in the said clause.
57. The decision of Gramophone Company of India Ltd. v. Shanti Films Corporation reported in : AIR1997Cal63 was strongly relied upon on behalf of the petitioners in support of the proposition that upon assignment of the copyright non-payment of royalty does not entitle the first owner to terminate the agreement. In the said decision of Gramophone Company (supra), it has been held that if the expression 'assignment' is used then assignment by itself should in the normal course be readily accepted. But whether or not there has been an assignment is to be inferred from the terms of the contract.
58. In the instant case, however, the clauses are different from the one that was under consideration in the case of Gramophone Company AIR 1997 Cal. 63 (supra). In fact the agreement which was the subject-matter of the said decision, did not contain any negative covenant as in the instant case.
59. Further more, the decision of Gramophone Company (supra) is not a decision for the proposition as to whether there can be a limited grant under the agreement. Therefore, I am of the opinion that the said decision of the Gramophone Company : AIR1997Cal63 (supra) is of no assistance to the petitioners.
60. The decision of Messenger and British Broadcasting Company Limited, reported in 1929 AC 151 was relied upon on behalf of the petitioners in support of the proposition that upon a proper construction the terms of the agreement in the instant case amounts to an absolute assignment. In the facts of the said case, the House Lords held that the agreement was not a mere licence, but was an assignment of the performing rights.
61. In the said decision of Messenger (supra) the House of Lords held that the expression 'licensors' or the 'licensee' contained in the agreement does not mean that the agreement is only an agreement of licence. It would appear to me that the said decision was not based upon any specific statutory provision. In the instant case, however, we are concerned with a statute and the provisions contained therein. Strictly speaking when there is a statute governing the rights and obligations of the parties, the common law principle cannot be taken recourse to for the purpose of judicial interpretation. The language of the statute is clear without any ambiguity. Therefore, in my opinion, the said decision does not apply in the facts and circumstances of the case.
62. On behalf of the respondents the decision of KPM Sundaram v. Ranjan Prakashan Mandir reported in AIR 1983 Del. 461 was relied upon in support of the proposition where an agreement provides for payment of royalty or share of profit instead of one time payment the same is indicative of the fact that the copyright is not assigned.
63. The decision of Mishra Bandhu Karyalaya v. S. Koshal reported in : AIR1970MP261 was relied upon on behalf of the respondents in support of the proposition that an agreement assigning copyright can be treated to be as discharged by reason of breach committed by the person in whose favour the copyright has been assigned. In the said decision of Mishra Bandhu (supra), it has been held that when a copyright is vested in the person in whose favour it is assigned that person will enjoy full legal title to the copyright and will alone be entitled to enforce the right against third parties, however, in case of a licence the grant is subject to certain conditions and on their non-fulfillment the licence is capable of bring revoked.
64. In the said case one Maniram Vishwakarma, was the author of a book on arithmetic who enjoyed the copyright in the same who made a outright sale of copyright in favour of his father -in-law Sheoratanlal Koshal upon receiving one time payment for such assignment. The said Sheoratanlal being the plaintiff entered into an agreement with the appellant being the defendant No. 1 in the suit for publishing the said book under certain terms and conditions. It was alleged by the plaintiff that the defendant had committed breach of the terms and conditions of the agreement. The defendant had contended that the plaintiff was only a benamidar of the original author, and, therefore, had no right to institute the suit. Construing the agreement entered into between the author and the plaintiff the Court held that it was a complete assignment of the copyright and construing the subsequent agreement between the plaintiff and the defendant was held that it was an agreement in the nature of a licence depending upon certain conditions. Therefore, it appears to me that the terms and conditions of the agreement is a matter of great significance. If the owner of the copyright retains some sort of right over the same it cannot be contended to be an absolute grant without any fixed period. The real intention of the parties can only be derived from the terms and conditions contained in the agreement.
65. Law recognizes copyright to be a property, which is capable of being assigned to an author once assigned it, becomes the property of the assignee. The question, however, is to what extent the assignor while making the assignment has retained any right over it. If the assignment of copyright is an absolute grant without retaining any right and/or control over it in any manner whatsoever, then perhaps any breach committed by the assignee, will not entitle the assignor who treat the agreement as discharged but will give rise to a cause of action for money claim for non-payment of royalty and/or for damages, if any. But, however, if the intention of the assignment is not to grant a complete and absolute assignment and to retain some sort of right over it, then commission of any breach by the assignee will entitle the assignor who treat the agreement of assignment as discharged.
66. The retaining of right in respect of an assignment of copyright can be taken on many counts. It may be in its content, period, area etc. In the instant case, the harmonious construction of the clauses leave no manner of doubt that the parties intended to limit the agreement for a period of 25 years at the most.
67. The decision of Schroeder Music Publishing Co. Ltd. v. Macaulay, reported in 1974 (3) All ER 616 was relied upon on behalf of the respondents in support of the proposition that a distinction has to be made between standard form contracts made freely between the parties bargaining on equal terms and a standard form contracts which has not been the subject of negotiation between the parties when one of the party is a weaker one and has been dictated by a party who enjoyed superior bargaining power. In the instant case, the petitioners themselves had contended that at the material point of time, the petitioner was the only music company operating in the field of recording music, and, therefore, it obviously enjoyed a monopolistic control over the market. It cannot be gainsaid that the petitioner did enjoy a superior bargaining power. The situation today is a little different from what it was in 1973 when the producers did not have any other recording company to choose from in the right of ratio of the decision of Schroeder (supra), the agreement which is the subject-matter of the instant proceeding requires to be strictly construed.
68. As I have already indicated that law recognises copyright to be a property capable of being assigned. In the commercial world the copyright in respect of musical work and other related works is of immense commercial value and the right in respect thereof is obviously assigned upon consideration and with the hope of getting financial benefit out of the same. In the instant case, there are prima facie evidence on record that the petitioners have completely disregarded the condition with regard to payment of royalty which was not paid over a long period of time. It was only when the respondents started demanding payment of royalty that subsequently payment has been forwarded that too without complying the terms and conditions of the agreement with regard to furnishing the statement of accounts showing the quantum of royalty receivable by the respondents.
69. Every agreement contains certain fundamental terms and certain ancillary terms in aid of the fundamental terms. Breach of such ancillary terms does not always create a right in favour of the assignor who treat the agreement as discharged. But, however, if fundamental terms are breached, in my opinion, it would create a right in favour of the assignor who treat the agreement as discharged. In the instant case, the payment of royalty and in the manner as contained in the agreement can without any doubt be construed as one of the fundamental terms of the agreement. The petitioners having committed breach of the same, in my opinion, have given rise to a right in favour of the respondents to treat the agreement as discharged.
70. The above proposition will, however, be read with the real intention of the parties as would appear from the terms and conditions of the agreement. If upon proper construction it appears that the assignors have not intended to keep any right on itself and have absolutely assigned the copyright, then breach of any terms will not give rise to a right who treat the agreement as discharged.
71. The decision of Gujarat Bottling Co. Ltd. v. Coca Cola Company reported in AIR 1995 SC 2375 was relied upon on behalf of the respondents in support of the proposition that the negative covenant in an agreement subsist during the period of the agreement and not afterwards. In the instant case, the negative covenant restraining the respondent from utilising to whole or any part of the sound-track or any works performance relating to the subject-matter of the agreement is restricted for a period of 25 years, therefore, after the period of 25 years the respondent would be free to do otherwise. This clearly suggests that the agreement was not intended to continue for the full statutory period as contended on behalf of the petitioner.
72. On facts the terms and conditions of the first two agreements are different from the third agreement which are in relation to the film 'Katha,' it was contended on behalf of the petitioners that in the third agreement, there is no negative covenant as was there in the first two agreement. From the terms and conditions contained in the third agreement, it does not appear that any period was fixed for the tenure of the agreement. The period mentioned in Clause 1 of the agreement is for the purpose of fixing the liability on the producer for the works produced in order to bring such works within the ambit of the agreement. Moreover, in Clause 3(A)(i), it clearly mentions that the producer has assigned the copyright for making the records of all contracts and also the copyright, performing right and by other right, title and interest to the literary, dramatic and musical works embodied in the producer films including all rights of publication, sound and television broadcasting, public performance and mechanical reproduction of the said works. The said clause is different from the relevant clause in the first two agreements. That the negative covenant is not limited for any period only fortifies the case of the petitioner that the relevant clause containing the negative covenant is in aid of enforcing the other clauses contained in the agreement. Therefore, in my opinion, it prima facie appears to me that the third agreement was intended to be an absolute assignment of copyright and the producer has not retained any right in respect thereof.
73. For the reasons as aforesaid, I dispose of this application by directing that the respondents will be restrained from selling and/or marketing and/or offering for sale and/or causing any advertisement to be issued with regard to sound recordings containing in literary, dramatic or musical works or including any songs, music or dialogues contained in the film 'Katha' which is the subject-matter of the third agreement dated 16th November, 1982. There will be, however, no interim order in respect of the films 'Rajnigandha,' 'Shatranj Ke Khiladi' which are the subject-matter of the first and the second agreement respectively.
74. This application is thus disposed of. No order as to costs.
75. In this matter, the Judgment was prepared and made ready for delivery today but before it would be formally delivered, the parties entered into a settlement. By the said settlement, the respondents had submitted to a decree.
76. It is submitted on behalf of the petitioner that since the parties have entered into a settlement, nothing remains in this matter and this Court should not deliver the Judgment.
77. I am unable to accept the said submission. Once a question of law has been raised, it is no longer an issue between the parties litigating but the points of law decided will assume an universal character. In fact, even before entering into the settlement, the parties are conclusion of hearing have also submitted their written notes of submissions. Be that as it may, since the parties have entered into a settlement, I make it clear that the operative portion of the judgment will not bind the parties to this proceeding and the settlement arrived at between the parties shall be given effect to.
78. Thus the suit being C.S. No. 130 of 2005 is treated as on day's list and the same is disposed of in terms of the settlement filed in Court. Let the decree be drawn up expedltiously.
79. Urgent xerox certified copy of this judgment be made available to the parties, if applied for.