Suit; Music Broadcast Limited Vs. Axis Bank [Delhi High Court, 28-07-2016]

Copyright Act, 1957 – Section 31(1)(b) – Code of Civil Procedure, 1908 – Order 7 Rule 10 – Return of the Plaint – Compulsory Licences – Cancellation of – Suit proceeds on the basis of an alleged infraction of a right under the compulsory licence – exclusive jurisdiction clause in the voluntary licence agreement – Held, the fact that the compulsory licences were granted / issued by the Registrar of Copyrights in Delhi is a material one for the purposes of considering the plea of territorial jurisdiction. It is material because the infraction of a right, coupled with the right itself constitutes a cause of action. The compulsory licences provided the rights and the action complained of, i.e., the cancellation of the compulsory licences relates to the infraction of that right. Therefore, both the issuance of the compulsory licences and the cancellation thereof constitute the bundle of facts, which, in turn, can be referred to as the ’cause of action’. Therefore, the fact that the compulsory licences were issued in Delhi necessarily entails that a part of the cause of action arose in Delhi. Once this is recognised, this court would certainly have territorial jurisdiction to entertain the suit. The exclusive jurisdiction clause in the voluntary licence agreement, does not come into play. Nor does the fact that the appellant / plaintiff has filed a suit being civil suit No.565/2011 before the High Court of Judicature at Bombay. The causes of action in the two suits are apparently different. The suit before the Bombay High Court pertains to adjustments under the voluntary licence agreements, whereas the present suit deals with the cancellation of the compulsory licences, which are independent statutory licences granted under Section 31(1)(b) of the Copyright Act, 1957. These licences do not contain any exclusive jurisdiction clause and, therefore, it has to be seen as to where the cause of action accrued. Part of the cause of action arose in Delhi and, therefore, this court would have territorial jurisdiction to entertain the suit. Consequently, the impugned judgment is set aside.

Suit for Cancellation


THE HIGH COURT OF DELHI AT NEW DELHI

CORAM: HON’BLE MR JUSTICE BADAR DURREZ AHMED AND HON’BLE MR JUSTICE SANJEEV SACHDEVA

Judgment delivered on: 28.07.2016

FAO (OS) 65/2016 & CM Nos.7679/2016, 9934/2016

MUSIC BROADCAST LIMITED … Appellant

versus

AXIS BANK & ANOTHER … Respondents

Advocates who appeared in this case:- For the Appellant : Dr A.M. Singhvi, Mr Rajiv Nayyar, Mr Abhinav Vashisht, Sr Advocates with Ms Meghna Mishra, Ms Manmeet Kaur, Mr Akhil Sachar, Mr Dheeraj P. Deo and Mr Manan Chadha For the Respondent No.2 : Mr P.V. Kapur, Sr Advocate and Mr Amit Sibal, Sr Advocate with Mr Jagdish Sagar, Mr V.K. Nagrath, Mr Tahir Ahmed Siddique, Mr Neeraj Gupta and Ms Nidhi Manocha.

JUDGMENT

BADAR DURREZ AHMED, J

1. This appeal is directed against the judgment dated 09.02.2016 delivered by a learned single Judge of this court, whereby he has taken the view that this court does not have territorial jurisdiction to entertain the suit [CS(OS) 2119/2013], which had been filed by the appellant / plaintiff. Consequently, the learned single Judge has directed the return of the plaint under

Order 7 Rule 10 of the Code of Civil Procedure, 1908

(hereinafter referred to as ‘CPC’) for presentation before the High Court of Judicature at Bombay, which, according to the learned single Judge, alone has territorial jurisdiction to entertain the suit. By virtue of the impugned judgment, the learned single Judge had, however, continued the interim order passed on 18.11.2013 for a period of four weeks and also noted that the transferee court would be at liberty to consider the matter and pass an order as to whether or not to continue the interim order. This interim order was continued by this Bench and is in operation.

2. The learned counsel for the appellant submitted that the view taken by the learned single Judge is erroneous. It was, first of all, submitted that the view of the learned single Judge is premised on the assumption that clause 33 of the voluntary licence agreements between the appellant and the respondent No.2, which gave exclusive jurisdiction to the High Court of Judicature at Bombay, was applicable insofar as the present suit was concerned. This assumption, according to the learned counsel for the appellant, is without any basis because the present suit has been filed in respect of the compulsory licences granted on 03.09.2010 by the Registrar of Copyrights at New Delhi pursuant to the order of the Copyright Board dated 25.08.2010. The learned counsel for the appellant submitted that the present suit has been filed, inter alia, being aggrieved by the cancellation notice dated 21.06.2013 issued by the respondent No.2, cancelling the compulsory licences. It is the infraction of the rights flowing from the compulsory licences, which is the subject matter of the present suit. The voluntary licence agreements, which contained the exclusive jurisdiction clause, are not in issue in the present suit. It is, therefore, contended on the part of the appellant that the assumption by the learned single Judge that clause 33 of the voluntary licence agreements would be operative is clearly misconceived. The learned counsel for the appellant also pointed out that another aspect on which the learned single Judge has gone wrong is that he was under the impression that the present suit is based on the same cause of action as civil suit No.565/2011, which has been filed by the appellant against, inter alia, the respondent No.2 in the High Court of Judicature at Bombay. The learned counsel for the appellant submitted that the present suit and the suit at Bombay were different and were not on the same cause of action. The Bombay suit pertained to adjustments under the voluntary licence agreements and related to the period prior to the compulsory licences, whereas the present suit was concerned with the compulsory licences and the alleged illegal conduct on the part of the respondent No.2 in cancelling the said compulsory licences by virtue of the impugned notice dated 21.06.2013.

3. On the other hand, the learned counsel for the respondents and, in particular, respondent No.2, supported the decision of the learned single Judge on both counts. It was contended that the compulsory licences were nothing but a continuation of the arrangement under the voluntary licence agreements and, therefore, the exclusive jurisdiction clause would apply to the compulsory licences also. It was also contended that no part of the cause of action, in any event, arose in Delhi, inasmuch as both the appellant and the respondent No.2 have their registered offices in Mumbai, the cancellation notice dated 21.06.2013 was issued by the respondent No.2 at Mumbai and the same was received by the appellant at its office in Mumbai. Therefore, according to the learned counsel for the respondent No.2, no part of the cause of action arose in Delhi. The learned counsel also reiterated the view of the learned single Judge that the civil suit No.565/2011, which has been filed by the appellant before the High Court of Judicature at Bombay, clearly indicated that the territorial jurisdiction was that of the High Court at Bombay because, according to the learned counsel for the respondent No.2, the cause of action of the present suit and that of the suit at Bombay was the same.

4. A few facts are necessary. Under the voluntary licence agreements, the respondent No.2 granted a non-exclusive, non-transferable licence to the appellant to broadcast the sound recordings controlled by the respondent No.2 through the appellants from radio stations in different cities. The voluntary licence agreements were entered into during the pendency of the matters before the Supreme Court and the Copyright Board on issues relating to payment of licence fees, which had been raised by various private radio stations. It was in the backdrop of the pending disputes that some of the private radio stations agreed to obtain voluntary licences from the respondent No.2 on the tariff which was broadly based on the orders passed by courts / Copyright Board, subject to adjustments as per the final orders which may be passed by the Board / Courts. It is in these circumstances that the voluntary licence agreements were entered into by and between the appellant and the respondent No.2 in respect of private radio stations in different cities. It may be relevant to note that clause 33 of the said voluntary licence agreements was as under:-

“This licence shall be governed by and construed in accordance with the laws of India and the High Court of Judicature at Bombay shall have exclusive jurisdiction.”

5. On 25.08.2010, the Copyright Board at New Delhi passed an order in exercise of the powers conferred under Section 31 (1) (b) of the Copyright Act, 1957 directing the Registrar of Copyrights to grant to the complainants (which includes the appellant herein) separate licences for communicating the work recorded in sound recordings in the repertoire, present and future, of the respondent No.2 to the public by broadcast on revenue sharing basis subject to certain terms and conditions. The relevant portion of the said order is set out hereinbelow:-

“30.27 Accordingly, in exercise of powers conferred under section 31(1).(b) of the Copyright Act, 1957, the’ Copyright Board hereby directs the Registrar of Copyrights to grant to the complainants separate licences for communicating the work recorded in sound recordings in the repertoire, present and .future, of the respondent to the public by broadcast on revenue sharing basis subject to the following terms and conditions:

a) 2% of net advertisement earnings of each FM radio station accruing from the radio business only for that radio station shall be set apart by each complainant for pro rata distribution of compensation to ail music providers including the respondent herein in proportion to the music provided by the respective music providers and broadcast by tile complainant. Complainant shall be deemed to be a music provider for the music provided by it or received by it free of cost and broadcast: For arriving at “net advertisement earnings”, all Government and municipal taxes paid, if any, and commission paid towards the procurement of such advertisements to the extent of 15% of such advertisement earnings shall be excluded;

b) Complainants shall furnish within a week of grant of licence by the Registrar of Copyrights a bank guarantee for Rs, 10,000 in favour of the respondent for each radio station. However, the sum of such bank guarantee shall be revised within two weeks after the close of every quarter of the year to such sum for which complainant was liable for payment of compensation for that quarter. Quarter of a year means a period of three months ending on the last day of March, June, September and December of the relevant year;

c) If the complainant fails to revise the bank guarantee in terms of clause (b), respondent shall be at liberty to cancel the licence without giving any notice and recover the remaining dues from the available bank guarantee;

d) Payment of compensation by the complainant to the respondent for a month shall be made by 7th day of the month following the month to which payment relates. Complainant shall also furnish along with the payment the date wise details of the periods for which the music relating to the respondent and all other music providers has been used for the month. However, payment for the period beginning with the grant of licence and ending on 30th September, 2010 shall be made in lump sum by 7th October, 2010;

e) For any delayed payment for a month beyond 7 th of 1he following month, interest at the rate of 1% per. month or a part of month shall be payable;

f) In case payment is not made by the complainant for a radio station for consecutive two months, respondent herein shall be entitled to cancel the licence by giving notice of one month and recover the remaining dues from the bank guarantee;

g) A complainant may for one or more radio stations, by giving notice of one month and after making payment of all sums due, cancel the licence;

h) The validity of the licence granted by the Registrar of Copyright shall come to end on 30th September, 2020.”

6. At this juncture itself, we may refer to