IN THE COURT OF THE XXV ADDL. CHIEF JUDGE:
CITY CIVIL COURT: HYD
MONDAY THE 23 rd DAY OF APRIL, 2015
PRESENT: SRI SAMBASIVA RAO NAIDU, B.Com, LL.M
XXV ADDITIONAL CHIEF JUDGE
A.O.P. No. 634 of 2015
Between:
1. M/s. Multidimension Entertainments Pvt. Ltd., Rep. by its Authorized Signatory – Mr. P. Ram Mohan Rao, Director, vide Company Resolution
dated 25-10-2011, Office at: 46, Avenue 4,
Street No. 1, Road No. 10, Banjara Hills,Hyderabad – 500034. . . . . Petitioners/Decree Holders AND
1. Bellamkonda Surendra Chowdary alias Bellamkonda Suresh Babu S/o. B. Saidulu Chowdary, Aged about 47 years, Occ: Film Producer, R/o. Plot No. 459, Road No. 86, Film Nagar, Jubilee Hills, Hyderabad.
2. M/s. Laxmi Narsimha Productions, Rep. by its sole Proprietor Bellamkonda Surendra Chowdary alias Bellamkonda Suresh Babu, Registered Office at Plot No. 16-B, Road No. 7, Film Nagar, Jubilee Hills, Hyderabad.
3. M/s. Sri Sai Ganesh Productions Private Ltd., Rep. by its Director Bellamkonda Surendra Chowdary alias Bellamkonda Suresh Babu, Registered Office at Plot No. 16-B, Road No. 7, Film Nagar, Jubilee Hills, Hyderabad.
4. M/s. Prasad Film Laboratories Rep. by its Manager, Office at Road No. 2, L.V. Prasad Marg, Banjara Hills, Hyderabad.
5.M/s. Prasad Group Rep. by its Manager, Office at 28, Arunachalam Road, Saligramam, Chennai – 600 093.
6. M/s. Gemini Colour Laboratories Rep. by its Manager, Office at Bangaru Colony West, K.K. Nagar, Chennai – 600 078. . . . Respondents 2 Arbtn.OP 634-14
This petition is coming on 21-04-2015 for final hearing
before me in the presence of Mr. U. Sravan Kumar, Advocate for
Petitioner, M.R.K. Chakravarthy, Advocate for the Respondent
Nos. 1 & 2, M. Shyamsunder Reddy, Advocate for the Respondent
No. 3 and Sri B. Nalinkumar, Advocate for the Respondent No. 4 and the matter having stood over for consideration till this day, this Court made the following:
O R D E R
1. This is a petition filed by the petitioner under Section 9 of the
Arbitration and Conciliation Act, 1996 (which hereinafter referred to as 'the Act' for convenience sake) read with Section 94 and
Order 38 Rule 5 of CPC, with a prayer to grant interim relief pending the final disposal of Arbitration proceedings by way of passing Ad-interim order restraining the Respondent Nos. 1 to 6 from releasing the movie titled 'Muni/Kanchana-2/Ganga' starring Mr. Raghava Lawrence in the lead role and also to restrain the Respondent from selling, transferring, assigning the theatrical rights, saleable rights, world satellite rights, audio rights, distribution, exhibition rights etc and in any form including digital release.In the first instance the petitioner stated that the Respondents wanted to release the movie in the name of Munni-3 or Kanchana-2 and an interim order was passed restraining its release. The learned counsel for the petitioner argued that the Respondents wanted to release the movie either by changing the name of producer or by changing the name of movie. Soon after passing the interim order the 3 Arbtn.OP 634-14 petitioner field a newspaper and stated that the respondent now wanted to release the movie in the name of Ganga ( Munni-3 ), therefore interim order was passed restraining the release of said film. Inf act there is no dispute about the identity of the film. It is not the case of respondent that there was no such movie. In the agreement itself there is a mention about the film which was produced with “Raghava Lawrence” in the lead. Therefore the petitioner sought for interim order restraining the release of said movie namely Ganga Munni-3
The Petitioner also sought for attachment of lab rights, world satellite rights, theatrical rights, audio rights, distribution rights, exhibition rights etc. of the above referred movie pending liability of Rs. 6.00 crores by the Respondents herein.
2. The following is the brief case of the petitioner as per the petition:
The petitioner is a Company incorporated under the companies Act, 1956 and its main object is to carry on the business as producers, distributors, exhibitors and exploiters, traders, exporters and importers of Motion Pictures and Feature
Films and it can also lend, give credit or invest moneys in movie productions as part of its business activity for lawful gains. The
Petitioner since from its incorporation has produced several movies and invested its monies in several movies for lawful gains which is part and parcel of its main business activity. In the said 4 Arbtn.OP 634-14 business, the Respondent No. 1 has approached the Petitioner
Company on several occasions requested it to invest in his movie productions. Accordingly, the petitioner company had on various occasions invested several crores of rupees in the Respondents movie productions, some on minimum guaranteed returns/appreciation of not less than 30% per annum and some on distributions rights and some on world satellite rights etc. On the said representations and assurances by the Respondents collectively, the Petitioner company invested several crores of rupees over a period of time and in this process, the
Respondents collectively owed an amount of Rs. 21,51,00,000/- as on 30-08-2014 to the Petitioner company, which was acknowledged by all the Respondents through Memorandum of
Agreement dated 26-11-2014.
3. The Petitioner further represented that, the Respondents ran into financial crisis due to box office failures of some of their productions and the above said huge investment made by the
Petitioner Company are not repaid according to the agreed terms from time to time. Therefore, the Respondents collectively approached the petitioner company and expressed their inability to continue to provide the assured returns on the investments made by the Petitioner Company beyond 30-08-2014 and thereby placed a request before the petitioner company that they they would be allowed to defer (i) the repayment of the 5 Arbtn.OP 634-14 investment amount of Rs. 21,51,00,0000/- and (ii) The payment of the appreciation amount accrued thereon till 30-08-2014 on certain terms and conditions of Memorandum of Agreement. As per one of the terms and conditions of the said Memorandum of
Agreement, the Respondents collectively agreed to repay partial investment amount of Rs. 6.00 crores on or before the release of movie titled 'Muni/Kanchana-2' starring Mr. Raghava Lawrence in the lead role. It is also categorically admitted by the
Respondents that the said movie is produced from out of the funds invested by the petitioner company.
4. The petitioner further stated that, the said Memorandum of Agreement dated 26-11-2014 superseded all other earlier agreements and MOUs and they are specifically admitted to have merged into the above said comprehensive Memorandum of
Agreement. Therefore, the said Memorandum of Agreement between the Petitioner and the Respondents became legally enforceable contract. The Respondent completed the production and post-production works of the said movie and is surreptitiously contemplating to release the said movie without repaying the above said Rs. 6.00 crores to the petitioner company and the Respondents are cleverly and conveniently avoiding the petitioner company. They are also not answering the phone calls of the petitioner company's representatives which clearly demonstrates that the Respondents are hell-bent 6 Arbtn.OP 634-14 upon to commit breach of contract as agreed by them under the
MOA dated 26-11-2014. Therefore, the petitioner company filed the present petition.
5. The petitioner further stated that, the Respondents with a view to avoid their contractual obligations are conceiving and hatching plans to change the name of the producer of the said movie by either assigning or conceiving any other modus- operandi to escape the contractual liability under the MOA in favour of the petitioner. If the Respondents succeed in successfully implementing the above modus-operandi in whatever manner it may be conceived, the petitioner company will be put to irreparable loss as such if the said movie gets released without repayment of the agreed Rs. 6.00 crores in favour of the petitioner company, the petitioner company has no other alternative recourse to recover the said amount from the
Respondents collectively, as such the Respondents financial wherewithal is admittedly in serious doldrums and the
Respondents admittedly have no other source to discharge their liability in favour of the petitioner company. The Petitioner company as a qua-timet measure is invoking the equitable discretionary jurisdiction of this court under Section 9 of the
Arbitration and Conciliation Act, 1996, whereunder the movie is a movable good which is subject matter of the main Arbitration
Agreement and therefore to preserve the same, as an interim 7 Arbtn.OP 634-14 measure, the Petitioner sought for protection of the subject goods by securing the amount of Rs. 6.00 crores as agreed and admitted b the Respondents under the above said MOU.
6. The Petitioner further states that, the Respondents have no other source to discharge the liability to the petitioner company herein, thereby the petitioner is also seeking attachment before judgment of the said movie to secure the repayment of the partial investment of the petitioner company to the tune of Rs. 6.00 crores, thereby they sought for a direction to the Respondents to deposit the said amount of Rs. 6.00 crores
before the release of the said movie in any form from the
Respondent Nos. 4 to 6 Film Labs or wherever the said movie is being processed. The Petitioner sought for restraining the
Respondent Nos. 4 to 6 from releasing the said movie and also restraining them from exercising theatrical rights, saleable rights, world satellite rights, audio rights, distribution, exhibition rights etc.
7. The petitioner further stated that, in view of the MOA wherein the Respondents have collectively admitted that the petitioner company is entitled to secure the said relief and in view of the failure of the Respondents, the petitioner got a right to claim injunctive relief against the Respondent Nos. 1 to 3 or any other third party whoever may be named as producer before the release of the said movie. There was a specific undertaking 8 Arbtn.OP 634-14 given by the Respondent Nos. 1 to 3 to avoid last minute surprises of change of name of the producer with a view to defeat the legitimate rights and claims of the petitioner company and therefore the petitioner company as a whole had got exclusive right vested in it in the said movie to recover the said invested amount irrespective of the fact whatever ways and means that may be contemplated to avoid the repayment of the petitioner company. The petitioner claims that if the Respondents are allowed to get the movie released without discharging the petitioner company's liablity and if they are allowed to collect monies from the distributors/exhibitors or any third parties, it will become impossible for the petitioner company to realize the said liability. If the third party rights are allowed to be created on the movie on which the petitioner company has a first lien and right, the petitioner will suffer irreparable loss. The petitioner company reliably learnt that the Respondent Nos. 1 to 6 are also contemplating to ante-date, back-date letters, agreements and understandings by concoction and fabrication with a sole view to defeat the legitimate / legal right of the petitioner company. Therefore, the petitioner claims that in view of the intention of the petitioner to revoke the arbitration proceedings, they are entitle to interim relief by way of restraining the Respondents from releasing the movie and by way of attaching the movie. The Petitioner states that, in view of 9 Arbtn.OP 634-14 the MOA dated 26-11-2014, the petitioner is entitled to obtain injunctive relief against the Respondents. The said MOA also mandates that the parties to the said MOV shall resolve any disputes initially by way of conciliation failing which the petitioner shall invoke the arbitration process vide covenant no.
7 & 8 of the MOA. The petitioner further states that, they have already tried the conciliation process by reminding the
Respondent Nos. 1 to 3 before the release of said movie, but the
Respondent Nos. 1 to 3 had deliberately committed the breach and are now hell-bent upon to proceed with the release of the said movie without repaying the agreed liability to the petitioner.
Therefore, the petitioner company has no other alternative remedy except to approach this Court.
8. While referring a Judgment reported in 2008 ALD (2) 693, the petitioner stated that the Hon'ble Division Bench of
High Court of Judicature at Hyderabad, was pleased observe that the Petition under Section 9 of the Act itself is an interim measure and there is no necessity to file a separate Interlocutory
Application, thereby the petitioner prayed for injunctive relief and also by way of attachment of the movable property namely 'Muni/Kanchana-2/Ganga
9. The Respondents have appeared before the Court. The
Respondents No. 2 filed the counter which was adopted by the 10 Arbtn.OP 634-14
Respondent Nos. 1 & 3. The remaining Respondents did not file any counter. According to the counter affidavit filed by the
Respondent No. 2 on behalf of the Respondent nos. 1 & 3, they have denied the main and material averments of the petition.
The Respondents have claimed that they were made to sign on dotted lines and the agreement is unilateral agreement. In Para
No. 4 of the counter affidavit, the Respondent No. 2 categorically stated that all the averments of the O.P. vide Para Nos. 4 to 7 of the petition are incorporated and created and thereby he is denying those averments. While disputing the averments vide
Para Nos. 8 to 10 of the main O.P., the Respondent No. 2 further pleaded that the Clause No. 4 of the Agreement dated 26-11- 2014 that the petitioner is claiming 30% of the share in the returns of the film, is possible only if the film is allowed to be release, otherwise the agreement will become usurious and unenforceable. According to these Respondents, there is no secrecy or suppression in the matter of the release of the film.
The release of the film is announced with full knowledge and consent of the petitioner much in advance. Unless such announcement and preparations for distribution are made in advance as per the practices and usages of the film business, no film can be released and no money can be generated. The petitioner company who has been in this business for a considerable period are aware of the same. The petitioner 11 Arbtn.OP 634-14 company is itself a film distributor. It is aware that the release of the film was announced and the agreements with third party distributors have been entered and the third party rights have already accrued and therefore no injunction can be sought to breach the third party rights. They have also claimed that the petitioner is aware that the timing of the release of a film has got lot of bearing on the success of the film and any obstruction for such release will damage the business of the film. The film business is in a close circle and nothing is secret in this close circle. The petitioner is aware that both Telugu and Tamil versions were scheduled to be released on 17-04-2015 and stalling of Telugu version will have adverse impact on the business of the Telugu version. There are absolutely no banafides on the part of the petitioner in seeking injunction.
10. The Respondents have further stated that, the petitioner has obtained exparte injunction on 10-04-2015 did not take steps to comply with the mandatory requirement of of Order
XXXIX Rule 3 and failed to sent the plaint and plaint documents to the Respondent, thereby the exparte injunction is liable to be vacated. The Respondents further stated that the petitioner has prevented the distributors who have entered into agreement with the Respondent from making payments as per the said 12 Arbtn.OP 634-14 distribution agreements by misusing the exparte injunction. It is clear that the Petitioner is acting against the spirit of the agreement and is trying to misuse the agreement as a proverbial money lender trying to extract his pound of flesh. If the injunction is continued, no business of the film is possible. On the other hand, if the injunction is vacated and the film is released, crores of rupees invested by the petitioner can be realized and the claims of the petitioner can be met. Therefore, according to the Respondents, there are no bonafides in the claim of the petitioner and the petitioner has no prima facie case and balance of convenience for grant of injunction is not in his favour. They have also claimed that the petitioner suppressed the material facts and approached this Court with unclean hands.
11. While disputing the averments vide Para Nos. 11 to 15 of the main O.P., these Respondents have further stated that, The petitioner never raised any dispute and never made any endeavour to settle such disputes by way of conciliation and mediation, which is a precondition under clause-7 for seeking reference to Arbitrator as per Clause -8. The petitioner has not taken any steps for commencement of the conciliation proceedings under Section 62 of the Arbitration and Conciliation
Act. The petitioner has not named the persons who acted as a 13 Arbtn.OP 634-14 conciliator or mediator, except making bald allegations that he tried for conciliation by reminding the Respondent Nos. 1 to 3 about their contractual obligations. The main O.P. is premature in view of non-compliance of Clause -7 of the Agreement and therefore not maintainable. The Respondent further claimed that the petitioner without raising any dispute, much less a notice to
Respondents rushed to this Court solely with a view to obtain exparte interim order and extract money by way of abusing the process of court. According to these Respondents, there is no cause of action to the petitioner for filing the main O..P. And they prayed for dismissal of the petition for and for vacation of the interim order.
12. The Petitioner having received the above said counter, filed their reply affidavit with the following averments:
The Respondents in their common counter affidavit went on to admit the crores of rupees liability in favour of the petitioner company at Para No. 5 in Page No. 4, thereby in view of the admission and some other admissions in the counter affidavit, petitioner's case stood proved and therefore the petitioner had made out a prima facie case for grant of interim order under Section 9 of the Act. The Respondent in their counter have also admitted that, they wanted to release the film without fulfilling the contractual obligation of discharging their admitted liability in favour of the petitioner company, thereby 14 Arbtn.OP 634-14 the above post haste attitude to release the movie and committing breach of contract, the petitioner company had made out its prima facie case and entitled to seek equitable interim orders. The Petitioner claimed that at one place at Page No. 4 of the counter, the Respondent Nos. 1 & 2 went on to make a statement that they had entered into agreements with third party distributors for release of the movie and that third party rights have been created. But in the same paragraph at a later portion, they have averred that the petitioner company had prevented the third party distributors from making payments by virtue of the interim orders of this Court. In fact, third party rights would be created only if payments are received, therefore the Respondents are blowing hot and cold alleging on one breath that third party rights have been created and on the other hand, they alleged that the petitioner prevented them from receiving the payments, which clearly goes to show that the Respondents are making mutually destructive pleadings which shows the malafide conduct of the Respondent to evade the legitimate dues of the petitioner company. From this, it is also clear that the
Respondents are making all efforts to release the movie by collecting the money from third parties without discharging the legally enforceable debt of the petitioner company, which itself entitles the petitioner company to obtain interim orders from this Court.
15 Arbtn.OP 634-14
13. The Petitioner further pleaded that, in Page No. 2 at Para
No. 4, the Respondent Nos. 1 & 2 have claimed that they were made to sign on dotted lines and that the agreement is unilateral and in later part of the same counter, the liability towards the petitioner company was admitted. From this conduct of the
Respondents, it is evidently clear that the Respondents conduct is not truthful. The said allegations whether the Respondents were made to sign on the dotted lines and whether the said agreement is unilateral or not are subject matter of the main arbitration which is yet to commence.
14. The Petitioner further stated that, in the Memorandum of
Agreement dated 26-11-2014, clause -4 of the agreement pertains to a totally different proposed transaction in the future which cannot disturb the present cause of action under Clause- 2 of the very same agreement. As per the said agreement, the
Respondents are bound to repay Rs. 6.00 crores before the release of the present movie, failing which the petitioner company is entitled to injunctive reliefs. Thereby the
Respondents cannot allege that the petitioner company is entitled to 30% returns. On the other hand, the Respondents are obligated to repay / discharge the partial liability of Rs. 6.00 crores before the release of the movie. The language used in the 16 Arbtn.OP 634-14 agreement is “shall repay rupees Six Crores on or before the release of the present movie” . It is very clear that the language employed is mandatory and that the Respondents cannot circumvent it and state that they can pay the money after the release. The Petitioner claims that the Respondent having not disputed the liability are making efforts to circumvent the mandatory obligation to gain sympathy of this Court. The plea taken by the Respodents viz. if the Respondents are allowed to release the movie, they can repay the liability of the petitioner company is completely a bait, if that statement is really true, this Court shall take judicial notice of the same and direct the
Respondent Nos. 1 & 2 to deposit the amount of Rs. 6.00 crores or provide a Bank Guarantee for the said amount before release of the movie by calling all the alleged distributors to deposit the said amount in this Court. The Petitioner has disputed other averments of the counter affidavit and stated in the above stated circumstances, the petitioner is entitled to interim reliefs, thereby payed for said relief.
15. I have heard both the parties.
16. Now the points for consideration before this Court are:
1) Whether the Petitioner is entitled to interim reliefs by way of restraining the Respondents from releasing the movie and to seek an attachment of the movable property namely 'Muni/Kanchana-2/Ganga' pending disposal of the Arbitration Proceedings ?
17 Arbtn.OP 634-14
2. To what relief?
17. POINT NO. 1:
Whether the Petitioner is entitled to interim reliefs by way of restraining the Respondents from releasing the movie and to seek an attachment of the movable property namely 'Muni/Kanchana-2/Ganga pending disposal of the Arbitration Proceedings ?
The learned counsel for the Petitioner while arguing the case, represented that even though the Respondents claimed that they were traced to sign on some dotted lines, the remaining portion of the counter speaks volumes and there is a clear admission by the Respondents about their liability towards the petitioner company. In the light of the above representation made by the Respondents that they can pay the amount if the movie is allowed to be release itself shows that they are admitting liability under the above referred Memorandum of
Agreement dated 26-11-2014, when there is a clear understanding and Agreement between the parties which prevent the Respondents from releasing the movie, they cannot claim its release and if the Respondents are allowed to release the movie, the question of their payment of huge amount of Rs.
6.00 crores to the petitioner company does not arise, as such it will result irreparable loss and injury to the petitioner company.
18. On the other hand, the counsel for the Respondent argued that, the Petitioner has violated the mandatory provisions under
Order 39 Rule 3-A of CPC by not complying with the said 18 Arbtn.OP 634-14 provision. The Petitioner has obtained an injunction from this court, but failed to serve the copy of the plaint and plaint documents filed along with the petition, thereby the exparte injunction is liable to be vacated. Even though, a formal denial is made in the counter affidavit filed by the Respondent No. 2, the averments of the entire counter affidavit and in the light of oral submissions advanced by the counsel for the Respondents made it clear that there was an agreement between the parties.
19. The counsel for the Respondents has represented that unless and until the movie is released it may not be possible for the Respondents to generate money and if the injunction is subsisting the Respondents cannot realize their amounts and if they are allowed to release the movie, there is every likelihood that the Respondents entering into third party agreements i.e.
Distributors and Exhibitors etc., so that they can generate money and pay the amounts to the petitioner herein. Thereby, he prayed for setting aside the exparty order.
20. As per the material averments of the affidavit filed on behalf of the petitioner as well as the counter affidavit filed by
Respondent No.2 and also in view of the reply affidavit filed by the petitioner herein, it shows that the petitioner is a company which used to deal with the production of movies and also in the business of investing money for the production of movie/films.
19 Arbtn.OP 634-14
The petitioner claims that the respondent No.2 herein approached the petitioner company and pursued the petitioner to invest funds in his pictures so that the petitioner will have 30% assured returns from the said investment. Thereby the petitioner said to have invested more than Rs.21.00 crores. The petitioner further claims that the respondents suffered huge losses in view of the failure of their Box Office Films, thereby the respondents are in financial crunch, Respondent No.1 Company is in doll drums.
21. The petitioner further claims that under those circumstances there was an understanding between both parties at the instance of respondents herein and a Memorandum of
Agreement said to have been executed on 26.11.2014.
According to the said understanding vide clause No.2 of the agreement, the respondent who has produced the movie with
Raghava Lawrence in the lead role under the title Ganga/Muni 3' agreed to pay Rs.6.00 crores before the release of the said movie but the respondents even after completion of the production and post production activities failed to respond to the petitioner herein. There was no response to the calls made by the petitioner herein and petitioner reliably came to know that the respondents are making hectic efforts to release the movie, thereby they want to invoke Arbitration clause in the agreement 20 Arbtn.OP 634-14 and present petition is filed with a request to grant interim relief by way of injunction order to restrain the respondents from releasing the movie and also attachment of the said film.
22. The Respondents even though disputed the agreement the entire counter affidavit categorically shows that there was an agreement between the parties. It is true in the beginning of the counter affidavit respondent No.2 claims that they were forced to sign on the dotted lines in the agreement unilaterally, but in the subsequent portion of the counter affidavit it was categorically stated that if they are allowed to release the movie the liability to pay crores of rupees in favour of petitioner company can be cleared. The respondents states that film production is not secret and unless they are allowed to give release date and publicity and unless they are allowed to enter into agreements with third parties they cannot generate money and they cannot clear the outstanding amount of the petitioner. From these averments, it is very clear that petitioner has invested huge amounts for the production of the above referred movie. The respondents being business men/production company cannot escape their liability by simply saying that they were made to sign on dotted lines as if the agreement is unilateral one. The respondents having signed the agreement with their eyes wide open, now cannot circumvent their legal obligation.
21 Arbtn.OP 634-14
23. As seen from the agreement dt. 26.11.2014 the respondents agreed to repay Rs.6.00 crores on or before the release of the movie. The other factors including the losses if any said to have been suffered by the respondents are immaterial. It is for the respondents to make necessary arrangements to comply their obligation under the agreement.
Therefore the contention raised by the respondents for relaxation of the injunction till they release the movie or to enter into agreement with third parties cannot be entertained.
24. The respondents have claimed that the petitioner who claims 30% of the share in the returns of the film cannot plead irreparable loss, and once the movie is released, the petitioner can get their amount, but I am unable to accept this contention.
Because the agreement which is binding on both parties itself categorically shows that the respondents have agreed to clear a portion of the outstanding liability to the tune of Rs.6.00 crores on or before the release of the movie. Therefore unless the respondents clear the liability/obligation cannot be permitted to release the movie. As rightly claimed by the petitioner if the respondents are allowed to release movie there is no likelihood of their payment of money and definitely it will cause irreparable loss cause to the petitioner company.
22 Arbtn.OP 634-14
25. The respondents have pleaded that unless and until arbitration proceedings are initiated the petitioner is not entitled to invoke the jurisdiction of this court and since there was no
Conciliation as required under Section 62 of the Act, the petition is premature. But this contention is also not maintainable, because Section '9' of the Arbitration Act categorically provides that any party who intends to invoke arbitration proceedings can move the court before the actual arbitration proceedings, during the arbitration proceedings and also after the conclusion of arbitration proceedings. The learned counsel for the petitioner represented that the respondents who have agreed to shell down
Rs.6.00 crores before the actual release of the movie started not responding to the request of the petitioner, there was no proper response to the calls made by the petitioner herein. Therefore the petitioner has no other option except to invoke the arbitration clause. This petition has been filed on 10th April 2015, and the respondents are served with the notices, they made their appearance and started contesting the petition on various grounds, and they have disputed the agreement itself.
There are no bonafidies in their contest. The later portion of their counter itself shows that they have agreed to pay Rs. 6 crores before the actual release of the movie, but now they claims they cannot pay the amount unless they are allowed to 23 Arbtn.OP 634-14 release the movie. In view of these circumstances if the petitioner invoke the arbitration proceedings it will take some time and in the mean while if the respondents are allowed to release the movie without making said payment the very purpose of invoking arbitration proceedings will be defeated. I found some force in the argument advanced by the counsel for petitioner. It is not the case of the respondents that they are ready to pay the amount even before the release of the movie. In fact in the counter affidavit, they have gone to the extent of saying that the agreement itself is unilateral and they were forced to sign on the dotted lines. However as rightly claimed by the petitioner the subsequent paragraphs of the counter affidavit clearly demonstrate the actual liability of the respondents towards the petitioner. At the end of 4th para in the counter at page number 2 the respondents have stated that they were made to sign on dotted lines and the agreement is unilateral. However in the 4th page at the end the respondents have stated as follows:
“It is clear that the petitioner is acting against the spirit of the agreement and is trying to misuse the agreement as proverbial money lender trying to extract his pound of flesh. If the injunction is continued, no business of the film is possible. On the other hand, if the injunction is vacated and the film is released, crores of rupees invested by the petitioner can be realized and the claims 24 Arbtn.OP 634-14 of the petitioner can be met.”
26. The above two contradicting versions of the respondents clearly shows that there was an agreement between the parties and the petitioner has agreed to pay the amount on or before the actual release of the movie, and it is also clear that the respondents are not intending to pay the amount before the release.
27. The next objection taken by the learned counsel for the respondents is with regard to the non compliance of Order 39
Rule-3(a) CPC. The counsel for the respondents states that since the petitioner obtained an injunction it is an obligation on the part of the petitioner to comply Order 39 Rule 3(a) CPC, but the petitioner did not supply copy of petition and other documents to the respondents. In fact the present petition is filed under
Section '9' of Arbitration and Conciliation Act but not under Order 39 Rule 1 and 2 CPC. There was no order by this court directing the petitioner herein to comply Order 39 Rule 3(a) CPC. Since the petition is filed under Section '9' of the Arbitration &
Conciliation Act the question of petitioner sending copies of plaint and other documents to the respondents does not arise.
28. The record placed before the court including the
Memorandum of Agreement dt. 26.11.2014 categorically shows 25 Arbtn.OP 634-14 that the petitioner has invested 21,51,00,000/- for the production of various films by the respondents herein. There was an understanding between the parties, according to which the respondents agreed to pay Rs.6.00 crores before the release of their movie. As seen from clause 2 of the said agreement the petitioner is entitled to obtain injunctive reliefs against the respondents herein until the liability of the respondents in payment of Rs 6.00 crores is fulfilled. As per the counter filed by the respondents it is very clear that the movie is ready for release but they are not ready and prepared to comply their obligation. Therefore the petitioner is entitled to injunctive relief to restrain the respondents from releasing the film. If the respondents are allowed to release the movie, there is no guarantee that they will clear the liability. In the reply affidavit filed by the petitioner they made a proposal to accept the Bank
Guarantee to be furnished by the respondents for the release of the film. In fact while advancing his oral arguments the counsel
for petitioner also expressed willingness of the petitioner to set
aside the injunction provided the respondents are ready to deposit the amount of Rs.6.00 crores or to furnish bank guarantee for the equal amount before this court. It may be a fact that the respondents cannot generate money unless they enter agreements with the distributors, however in page 4 of the counter the respondents have stated that they have announced 26 Arbtn.OP 634-14 the release date, they have entered agreements with third party distributors and created third party rights, therefore no injunction can be sought to breach the third party rights. I am unable to accept this contention. The respondents appears to have entered agreements with distributors and prepared to release the movie but they are not in a mood to clear the amount which they agreed to pay to the petitioner herein before the actual release of the movie. Therefore I am inclined to allow the petition and I answer the point in favour of the petitioner and against the respondents.
POINT No.2
To what relief ?
In the result, the petition is allowed. The earlier order restraining the respondents from releasing the movie till the payment of Rs.6.00 crores is made absolute. In view of the averments made in the reply affidavit filed by the petitioner and in the light of the representation made by the petitioner's counsel, the respondents are permitted to release the film by furnishing Bank Guarantee for a sum of Rs.6.00 crores to the satisfaction of this court.
Dictated to the Senior Assistant, transcribed by her
corrected and pronounced by me in the open Court, this the 23rd day of April 2015.
XXV Addl. Chief Judge, City Civil Court, Hyd.
27 Arbtn.OP 634-14
20. As per the material averments of the affidavit filed on behalf of the petitioner as well as the counter affidavit filed by Respondent No.2 and also in view of the reply affidavit filed by the petitioner herein, it shows that the petitioner is a company which used to deal with the production of movies and also in the business of investing money for the production of movie/films. The petitioner claims that the respondent No.2 herein approached the petitioner company and pursued the petitioner to invest funds in his pictures so that the petitioner will have 30% assured returns from the said investment. Thereby the petitioner said to have invested more than Rs.21,00 crores. The petitioner further claims that the respondents suffered huge losses in view of the failure of their Box Office
Films, thereby the respondents are in financial crunch, Respondent No.1 company is in doll drums.
21. The petitioner further claims that under those circumstances there was an understanding between both parties at the instance of respondents herein a Memorandum of Agreement said to have been executed on 26.11.2014. According to the said understanding vide clause No.2 of the agreement, the respondent who has produced the movie with Raghava
Lawrence in their lead role under the title Ganga/Muni 3' agreed to pay
Rs.6,00 crores before the release of the said movie but the respondents even after completion of the production of post production activities failed to respond to the petitioner herein. There was no response to the calls made by the petitioner herein and petitioner reliably came to know that the respondents are making hectic efforts to release the movie, thereby they want to invoke Arbitration clause in the agreement and present petition is filed with a request to grant interim relief by way of injunction order to restrain the respondents from releasing the movie and also attachment of the said film.
28 Arbtn.OP 634-14
22. The Respondents even though disputed the agreement the entire counter affidavit categorically shows that there was an agreement between the parties. It is true in the beginning of the counter affidavit respondent
No.2 claims that they were forced to sin on the dotted lines in the agreement unilaterally but in the subsequent portion of the counter affidavit it was categorically stated that if they are allowed to release the movie the liability to pay crores of rupees in favour of petitioner company can be cleared. The respondents states that film production is not secret and unless they are allowed to give release date and publicity and unless they are allowed to enter into agreements with third parties they cannot generate money and they cannot clear the outstanding amount of the petitioner.
From these avermetns, it is very clear that petitioner has invested huge amounts for the production of the above referred movie. The respondents being business men/production company cannot escape their liability by simply saying that they were made to sign on dotted lines as if the agreement is unilateral one. The respondents having signed the agreement with their rights open now cannot circumvent their legal obligation.
23. As seen from the agreement dt. 26.11.2014 the respondents agreed to repay Rs.6.00 crores on or before the release of the movie. The other factors including the losses if any said to have been suffered by the respondents are immaterial It is for the respondents to make necessary arrangements to comply their obligation under the agreement. Therefore the contention raised by the respondents for relaxation of the injunction till they release the movie or to enter into agreement with third parties cannot be entertained.
29 Arbtn.OP 634-14
24. The respondents have claimed that the petitioner who claims 30% of the share in the returns of the film cannot plead irreparable loss, but I am unable to to accept this contention. Because the agreement which is binding on both parties itself categorically shows that the respondents have agreed to clear portion of the outstanding liability to the tune of Rs.6.00 crores on or before the release of the movie. Therefore unless the respondents clear the liability/obligation cannot be permitted to release the movie.. As rightly claimed by the petitioner if the respondents are allowed to release movie there is no likelihood of their payment of money and definitely it will cause irreparable loss caused to the petitioner company.
25. The respondents have pleaded that unless and until arbitration proceedings are initiated the petitioner is not entitled to invoke the jurisdiction of this court and since there was no Conciliation as required under Section 63 of the Act, the petition is premature. But this contention is also not maintainable. Because Section '9' of the Arbitration Act categorically provides that any party who intends to invoke arbitration proceedings can move the court before the actual arbitration proceedings, during the arbitration proceedings an also after the conclusion of arbitration proceedings. The learned counsel for the petitioner represented that the respondents who have agreed to shall down Rs.6.00 crores before the actual release of the movie started not responding to the request of the petitioner, there was no proper response to the calls made by the petitioner herein. Therefore the petitioner has no other option except to invoke the arbitration clause. If the petitioner invoke the arbitration proceedings it will take some time and in the mean while if the respondents are allwoed to release the movie without making ssssaid payment the very purpose of invoking arbitration proceedings will be defeated. I found some force in the argument advanced by the counsel for petitioner. It is not the case of the 30 Arbtn.OP 634-14 respondents that they will ready to pay the amount even before the release of the movie. In fact in the counter affidavit, they have gone to the extent of saying that the agreement itself is unilateral and they were forced to sign on the dotted lines. However as rightly claimed by the petitioner the subsequent paragraphs of the counter affidavit clearly demonstrate the actual liability of the respondents towards the petitioner. The actual liability of the respondents towards the petitioner at one point of time the respondents states that they were made to sign document and another point they claims that unless they are allowed to release the movie, they cannot clear the liability of crores of rupees of the petitioner.
26. The next objection taken by the learned counsel for the respondents is with regard to the non compliance of Order 39 Rule-3(a) CPC. The counsel
for the respondents states that since the petitioner obtained an injunction
it is obligation on the part of the petitioner to comply Order 39 Rule 3(a)
CPC, but the petitioner did not comply copy of petition and other documents. With great respect to the above argument, I am of the opinion that the present petition is filed under Section '9' of Arbitration and
Conciliation Act but not under Order 39 Rule 3 (a) CPC. There was no order by this court directing the petitioner herein to comply Order 39 Rule 3(a)
CPC Since the petition is filed under Section '9' of the Arbitration &
Conciliation Act the question of petitioner sending copies of plaint and other documents to the respondents does not arise.
27. The record placed before the court including the Memorandum of
Agreement dt. 26.11.2014 categorically shows that the petitioner has invested 21,51,00,000/- for the production of various films by the respondents herein. There was an understanding between the parties, according to which the respondents agreed to pay Rs.6,00 crores before the release of their movie. Therefore the petitioner is entitled to injunctive 31 Arbtn.OP 634-14 relief to restrain the respondents from releasing the film. If the respondents are allowed to release the movie, there is no guarantee that they will clear the liability. In the reply affidavit filed by the petitioner they made a proposal to accept the Bank Guarantee to be furnished by the respondents for the release of the film. In fact while advancing his oral arguments the counsel or petitioner also expressed willingness of the petitioner to set aside the injunction or provided the respondents to deposit the amount of Rs.6.00 crores or by furnishing bank guarantee for the equal amount before this court. It may be a fact that the respondents cannot generate money but in the light of their own agreement, they are bound to pay the amount before the release of the movie and if the respondents having obtained permission for releasing the movie failed to clear the amount is impossible for the petitioner to release the money.
Therefore I am inclined to allow the petition and I answer the point in favour of the petitioner and against the respondents.
28. POINT No.2
To what relief ?
In the result, the petition is allowed. The earlier order restraining the respondents from releasing the movie till the payment of Rs.6.00 crores is made absolute. In view of the averments made in the reply affidavit filed by the petitioner and in the light of the representation made by the petitioner's counsel, the respondents are permitted to release the film by furnishing Bank Guarantee for a sum of Rs.6.00 crores to the satisfaction of this court.
Dictated to the Senior Assistant, transcribed by her
32 Arbtn.OP 634-14 corrected and pronounced by me in the open Court, this the 23rd day of April 2015.
XXV Addl.Chief Judge,
City Civil Court,Hyd.
33 Arbtn.OP 634-14
IN THE COURT OF THE XXV ADDL. CHIEF JUDGE:
CITY CIVIL COURT: HYDERABAD
WEDNESDAY THE 22ND DAY OF APRIL, 2015
PRESENT: SRI.SAMBASIVA RAO NAIDU, B.Com., L.L.M.,
XXV ADDL.CHIEF JUDGE.
Arbtn.O.P. No. 634 OF 2015
Between: M/s Multidimension Entertainments Pvt.Ltd. Rep.by its Authorized Signatory-Mr.P.Ram Mohan Rao Director, vide Company Resolution dt. 25.10.2011 Office at 46, avenue4,Street No.1, Road No.10
Banjara Hills, Hyderabad .. Petitioner
AND 1.Bellamkonda Surendra Chowdary Alias Bellamkonda Suresh Babu S/o B.Saidulu Chowdary a/a 47 yrs, Occ:Film Producer R/o Plot No.459, Road No.86, Film Nagar, Jubilee Hills, Hyd.
2. M/s Sri Laxmi Narsimha Productions 34 Arbtn.OP 634-14
Rep. by its sole Proprietor Bellamkonda Surendra Chowdary Alias Bellamkonda Suresh Babu Regd. Office at Plot No.16-B Road No.7, Film Nagar, jubilee Hills, Hyd.
3. M/s Sri Sai Ganesh Production Pvt.Ltd. Rep. by its Director Bellamkonda Surendra Chowdary Alias Bellamkonda Suresh Babu Regd. Office at Plot No.16-B Road No.7, Film Nagar, jubilee Hills, Hyd.
4. M/s Prasad Film Laboratories Rep. by its Manager, Office at Road No.2 L.V.Prasad Marg, Banjara Hills, Hyd.
5. M/s Prasad Group Rep. by its Manager Office at 28, Arunachalam Road, Saligramam, Chennai 600093
6. M/s Gemini Colour Laboratories Rep. by its Manager, Office at Bangaru Colony West K.K.Nagar, Chennai- 600078 .. Respondents/Respondents
POINT No.1:
As per the material averments of the affidavit filed on behalf of the petitioner as well as the counter affidavit filed by
Respondent No.2 and also in view of the reply affidavit filed by the petitioner herein, it shows that the petitioner is a company 35 Arbtn.OP 634-14 which used to deal with the production of movies and also in the business of investing money for the production of movie/films.
The petitioner claims that the respondent No.2 herein approached the petitioner company and pursued the petitioner to invest funds in his pictures so that the petitioner will have 30% assured returns from the said investment. Thereby the petitioner said to have invested more than Rs.21.00 crores. The petitioner further claims that the respondents suffered huge losses in view of the failure of their Box Office Films, thereby the respondents are in financial crunch, Respondent No.1 Company is in doll drums.
The petitioner further claims that under those circumstances there was an understanding between both parties at the instance of respondents herein and a Memorandum of
Agreement said to have been executed on 26.11.2014. According to the said understanding vide clause No.2 of the agreement, the respondent who has produced the movie with Raghava Lawrence in the lead role under the title Ganga/Muni 3 agreed to pay
Rs.6.00 crores before the release of the said movie but the respondents even after completion of the production and post production activities failed to respond to the petitioner herein.
There was no response to the calls made by the petitioner herein and petitioner reliably came to know that the respondents are 36 Arbtn.OP 634-14 making hectic efforts to release the movie, thereby they want to invoke Arbitration clause in the agreement and present petition is filed with a request to grant interim relief by way of injunction order to restrain the respondents from releasing the movie and also attachment of the said film.
The Respondents even though disputed the agreement the entire counter affidavit categorically shows that there was an agreement between the parties. It is true in the beginning of the counter affidavit respondent No.2 claims that they were forced to sign on the dotted lines in the agreement unilaterally, but in the subsequent portion of the counter affidavit it was categorically stated that if they are allowed to release the movie the liability to pay crores of rupees in favour of petitioner company can be cleared. The respondents states that film production is not secret and unless they are allowed to give release date and publicity and unless they are allowed to enter into agreements with third parties they cannot generate money and they cannot clear the outstanding amount of the petitioner. From these averments, it is very clear that petitioner has invested huge amounts for the production of the above referred movie.
The respondents being business men/production company cannot escape their liability by simply saying that they were made to sign on dotted lines as if the agreement is unilateral one. The respondents having signed the agreement with their 37 Arbtn.OP 634-14 eyes wide open, now cannot circumvent their legal obligation.
As seen from the agreement dt. 26.11.2014 the respondents agreed to repay Rs.6.00 crores on or before the release of the movie. The other factors including the losses if any said to have been suffered by the respondents are immaterial. It is for the respondents to make necessary arrangements to comply their obligation under the agreement.
Therefore the contention raised by the respondents for relaxation of the injunction till they release the movie or to enter into agreement with third parties cannot be entertained.
The respondents have claimed that the petitioner who claims 30% of the share in the returns of the film cannot plead irreparable loss, and once the movie is released, the petitioner can get their amount, but I am unable to accept this contention.
Because the agreement which is binding on both parties itself categorically shows that the respondents have agreed to clear a portion of the outstanding liability to the tune of Rs.6.00 crores on or before the release of the movie. Therefore unless the respondents clear the liability/obligation cannot be permitted to release the movie. As rightly claimed by the petitioner if the respondents are allowed to release movie there is no likelihood of their payment of money and definitely it will cause irreparable 38 Arbtn.OP 634-14 loss cause to the petitioner company.
The respondents have pleaded that unless and until arbitration proceedings are initiated the petitioner is not entitled to invoke the jurisdiction of this court and since there was no
Conciliation as required under Section 62 of the Act, the petition is premature. But this contention is also not maintainable, because Section '9' of the Arbitration Act categorically provides that any party who intends to invoke arbitration proceedings can move the court before the actual arbitration proceedings, during the arbitration proceedings and also after the conclusion of arbitration proceedings. The learned counsel for the petitioner represented that the respondents who have agreed to shell down
Rs.6.00 crores before the actual release of the movie started not responding to the request of the petitioner, there was no proper response to the calls made by the petitioner herein. Therefore the petitioner has no other option except to invoke the arbitration clause. This petition has been filed on 10th April 2015, and the respondents are served with the notices, they made their appearance and started contesting the petition on various grounds, and they have disputed the agreement itself.
There are no bonafidies in their contest. The later portion of their counter itself shows that they have agreed to pay
Rs. 6 crores before the actual release of the movie, but now they claims they cannot pay the amount unless they are allowed to 39 Arbtn.OP 634-14 release the movie. In view of these circumstances if the petitioner invoke the arbitration proceedings it will take some time and in the mean while if the respondents are allowed to release the movie without making said payment the very purpose of invoking arbitration proceedings will be defeated. I found some force in the argument advanced by the counsel for petitioner. It is not the case of the respondents that they are ready to pay the amount even before the release of the movie. In fact in the counter affidavit, they have gone to the extent of saying that the agreement itself is unilateral and they were forced to sign on the dotted lines. However as rightly claimed by the petitioner the subsequent paragraphs of the counter affidavit clearly demonstrate the actual liability of the respondents towards the petitioner. At the end of 4th para in the counter at page number 2 the respondents have stated that they were made to sign on dotted lines and the agreement is unilateral. However in the 4th page at the end the respondents have stated as follows:
“It is clear that the petitioner is acting against the spirit of the agreement and is trying to misuse the agreement as proverbial money lender trying to extract his pound of flesh. If the injunction is continued, no business of the film is possible.
On the other hand, if the injunction is vacated and the film is released, crores of rupees invested by the petitioner can be 40 Arbtn.OP 634-14 realized and the claims of the petitioner can be met.”
The above two contradicting versions of the respondents clearly shows that there was an agreement between the parties and the petitioner has agreed to pay the amount on or before the actual release of the movie, and it is also clear that the respondents are not intending to pay the amount before the release.
The next objection taken by the learned counsel for the respondents is with regard to the non compliance of Order 39
Rule-3(a) CPC. The counsel for the respondents states that since the petitioner obtained an injunction it is an obligation on the part of the petitioner to comply Order 39 Rule 3(a) CPC, but the petitioner did not supply copy of petition and other documents to the respondents. In fact the present petition is filed under
Section '9' of Arbitration and Conciliation Act but not under Order 39 Rule 1 and 2 CPC. There was no order by this court directing the petitioner herein to comply Order 39 Rule 3(a) CPC. Since the petition is filed under Section '9' of the Arbitration & Conciliation
Act the question of petitioner sending copies of plaint and other documents to the respondents does not arise.
The record placed before the court including the
Memorandum of Agreement dt. 26.11.2014 categorically shows that the petitioner has invested 21,51,00,000/- for the production of various films by the respondents herein. There was 41 Arbtn.OP 634-14 an understanding between the parties, according to which the respondents agreed to pay Rs.6.00 crores before the release of their movie. As seen from clause 2 of the said agreement the petitioner is entitled to obtain injunctive reliefs against the respondents herein until the liability of the respondents in payment of Rs 6.00 crores is fulfilled. As per the counter filed by the respondents it is very clear that the movie is ready for release but they are not ready and prepared to comply their obligation. Therefore the petitioner is entitled to injunctive relief to restrain the respondents from releasing the film. If the respondents are allowed to release the movie, there is no guarantee that they will clear the liability. In the reply affidavit filed by the petitioner they made a proposal to accept the Bank
Guarantee to be furnished by the respondents for the release of the film. In fact while advancing his oral arguments the counsel
for petitioner also expressed willingness of the petitioner to set
aside the injunction provided the respondents are ready to deposit the amount of Rs.6.00 crores or to furnish bank guarantee for the equal amount before this court. It may be a fact that the respondents cannot generate money unless they enter agreements with the distributors, however in page 4 of the counter the respondents have stated that they have announced the release date, they have entered agreements with third party distributors and created third party rights, therefore no 42 Arbtn.OP 634-14 injunction can be sought to breach the third party rights. I am unable to accept this contention. The respondents appears to have entered agreements with distributors and prepared to release the movie but they are not in a mood to clear the amount which they agreed to pay to the petitioner herein before the actual release of the movie. Therefore I am inclined to allow the petition and I answer the point in favour of the petitioner and against the respondents.
POINT No.2
To what relief?
In the result, the petition is allowed. The earlier order restraining the respondents from releasing the movie till the payment of Rs.6.00 crores is made absolute. In view of the averments made in the reply affidavit filed by the petitioner and in the light of the representation made by the petitioner's counsel, the respondents are permitted to release the film by furnishing Bank Guarantee for a sum of Rs.6.00 crores to the satisfaction of this court.
Dictated to the Senior Assistant, transcribed by her
corrected and pronounced by me in the open Court, this the 23rd day of April 2015.
XXV Addl.Chief Judge,
City Civil Court, Hyderabad 43 Arbtn.OP 634-14