Bombay High Court: The applicant, Goldmines Telefilms (P) Ltd. sought order of temporary injunction against the defendants in respect of 18 films concerning the Film Assignment Agreement dated 30-3-2016, and one film under the Film Assignment Agreement dated 6-11-2015 (‘the suit films’), on the basis that the agreements stood validly terminated in respect of such films for violation of certain clauses of the agreements. The applicant did not assert relief against the film “Mission Vande Mataram”.
A Single Judge Bench of Manish Pitale, J., after referring to various clauses of the agreements, opined that Defendant 1, Viacom 18 Media (P) Ltd. was entitled to have its own policy to earn maximum revenue by commercially exploiting the films that form subject matter of the agreements. The Court also opined that Defendant 1 had prima facie indicated that its act of carrying out deletions, edits and cuts in the films was covered under its absolute, complete, and unrestricted rights/power as per its internal standard practice and policy.
The Court rejected the interim application and stated that after the applicant agreed to such a wide right/power being available with the defendants, it could not claim that the actual deletions, edits and cuts carried out by the defendants violate the clause of the agreements, to justify the drastic step of terminating the agreements to the extent of licenses in respect of the suit films.
Background
The applicant and Defendant 1 entered into the agreements, whereby the applicant under the agreement dated 30-3-2016, licensed various rights, including the satellite broadcasting rights and non-inclusive on demand rights in 250 cinematograph films for a consideration of Rs 162 Crores and similarly under the agreement dated 6-11-2015, the applicant licensed the said rights in respect of the film “Power Unlimited” for consideration of Rs 2 Crores. The applicant stated that although the entire consideration was paid by Defendant 1 under the agreements and the rights had been licensed, it was found that in respect of the suit films, Defendant 1 had committed breach of certain clauses of the agreements, due to which, notices dated 22-7-2024, and 23-7-2024, were issued identifying the nature of breaches and calling upon Defendant 1 to desist from committing such breaches.
Defendant 1 failed to rectify the breaches and allegedly continued to commit the same, thus, by separate notice dated 22-8-2024, the agreements were terminated in respect of the suit films. Further, the applicant sent a demand draft towards pro rata refund of license fee for the unexpired license term in respect of the suit films. Thus, the present suit was filed praying for a declaration that the termination of the licenses regarding the suit films was valid, legal, and binding on the defendants, an order of injunction restraining the defendants from holding out themselves as assignees/licensees in respect of rights in the said films, and a direction to the defendants to render true and faithful accounts of all income earned from exploiting the suit films after termination of the licenses in the aforesaid manner.
The present interim application was filed to restrain the defendants during the pendency of the suit from holding out themselves as assignees/licensees of the rights in the suit films and from exploiting the same, and also a direction to Defendants 1 and 1A to disclose on oath the revenue generated by the suit films after the termination of licenses with effect from 22-8-2024.
Analysis, Law, and Decision
The Court opined that as the applicant under the agreements effectively assigned the copyright in each of the 250 films in Defendant 1’s favour, each license pertained to an individual film and had to be treated as a separate and distinct license. The Court stated that the applicant was justified in claiming that it could exercise its right to terminate the license pertaining to an individual film by relying upon the clause in the agreements permitting termination based on general law pertaining to breach of any clause concerning material obligations of the parties.
The Court referred to Clause 3.11 of the agreements which granted the defendants, a right to delete, edit, or cut the films in certain specific contingencies, including compliance with the internal standard policies and practices of Defendant 1 and whenever such deletions, editing, and cuts of any portion of an individual film was undertaken, which as per the applicant, did not fall within the contingencies given under Clause 3.11, the applicant was well within its right to terminate such individual license of the film which formed part of the agreement. Thus, the Court did not accept the contention of the defendants that the agreements could only be terminated in entirety and the applicant’s acts in issuing termination notices only in respect of the suit films was not justified.
The Court opined that in a commercial contract between private parties, if one of the parties terminated the contract and could justify it purely on the interpretation of the terms of the contract, then an allegation of mala fide and cherry-picking could not be the basis to doubt the validity of such termination of contract. The Court thus rejected the defendants’ contention that the termination notices pertaining only to the suit films could be said to be bad, only on the ground that specific number of films were subject matter of such termination, although the assignment agreements pertained to more number of films.
The Court opined that after paying consideration of Rs 162 Crores in respect of agreement dated 30-3-2016 and Rs 2 Crores in respect of agreement dated 6-11-2015, Defendant 1 prima facie could be said to be entitled to have its own internal standard practice or policy to earn maximum revenue by commercially exploiting the films that form subject matter of the agreements.
The Court stated the the applicant’s contention that it had an unqualified right from its assignors to edit films as per its convenience, while Defendant 1, had restricted rights, was not borne out by the language used in Clause 3.11 of the agreements, because the clause conferred absolute, complete, and unrestricted rights/power on Defendant 1 to delete, edit, or cut any portion of the films. The Court thus opined that Defendant 1 had prima facie indicated that its act of carrying out deletions, edits and cuts in the films was covered under its absolute, complete, and unrestricted rights/power as per its internal standard practice and policy.
The Court did not accept the applicant’s contention that the deletions, edits or cuts in the films could not have been carried out for broadcasting convenience by the defendants and after referring to Clause 2.18 of the agreements, opined that broadcasting of the films was for commercially exploiting the rights in the films, which was assigned to Defendant 1. The Court stated that Clause 2.18 specified that Defendant 1 had exclusive and unrestricted rights in the materials of the films and in respect to the exclusive assigned rights, it was specified that the same should be exercised by the defendant in any manner whatsoever as deemed fit. Thus, the Court opined that Defendant 1 and consequently Defendant 1A were entitled to undertake steps as necessary to fully commercially exploit the films that form subject matter of the agreements.
The Court opined that when the film was being broadcasted on different platforms, including satellite television channels, wherein limited time slots for advertisements might vary, the defendants would prima facie be entitled to carry out such deletions, edits, and cuts to the films and this might lead to “multiple versions” but that could not be said to be in breach of Clause 3.11 of the agreements. Thus, the Court stated that after the applicant agreed to such a wide right/power being available with the defendants, it could not claim that the actual deletions, edits, and cuts carried out by the defendants violate the clause to justify the drastic step of terminating the agreements to the extent of licenses in respect of the suit films.
The Court did not agree with the applicant that the alleged breach was of such a nature that it would justify the drastic step of termination of the contract itself, and that the defendants could at the most have made deletions, edits or cuts to the films only once and that doing it more than once, leading to “multiple versions” could be said to be in breach of Clause 3.11 of the agreements, which was so fundamental that it went to the root of the contract.
The Court noted that regarding Clause 3.15 of the agreements, after the cure notices were issued, the alleged breach was rectified and therefore opined that the applicant prima facie was not justified in taking the drastic step of issuing termination notices on 22-8-2024, even if Clause 3.15 of the agreements was considered. Thus, the Court stated that the defendants were justified in resisting the interim reliefs claimed in the present application.
The Court also noted that a specific statement was made on behalf of Defendants 1 and 1A that Clause 3.15 would be strictly adhered to by the defendants and that there would be no breach of the same in the future. The Court lastly stated that if the defendants were restrained from exploiting the suit films, during the pendency of the suit, they would suffer irreparable losses, if eventually the suit was dismissed.
The Court thus rejected the specific reliefs sought in the present interim application, disposed of the application and stated that if the suit was decreed in favour of the applicant for successfully pressing relief of seeking a decree against the defendants to render accounts of all income earned from exploitation of the suit films after termination of the licenses and thereupon be ordered to pay to the applicant such amount as might be found due, then the defendants should to be directed to maintain accounts regarding all the income earned from the date of termination i.e., 22-8-2024, in respect of the exploitation of the suit films except the film “Mission Vande Mataram”.
[Goldmines Telefilms (P) Ltd. v. Viacom 18 Media (P) Ltd., Interim Application (Lodging) No. 33559 of 2024, decided on 7-5-2025]
Advocates who appeared in this case :
For the Applicant/Plaintiff: Virendra Tulzapurkar, Senior Counsel a/w Aurup Dasgupta, Drshika Hemnani, and Prapti Bhadra i/b Jhangiani Narula and Associates for the Applicant/Plaintiff.
For the Defendants: Ashish Kamat Senior Counsel a/w Ameet Naik, Madhu Gadodia, Anand Mohan, Sujoy Mukherji and Ms. Deveesha Tudekar i/b Anand & Naik for the Defendant 1; Rashmin Khandekar, Aayush Tainwala i/b NDB Law for the Defendant 1A.
