Bombay High Court
Maurya Films And Entertainments vs Athaansh Communications on 31 August, 2021
Author: B.P.Colabawalla
Bench: B.P.Colabawalla
13-ARBP(L)-15483-21.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
ARBITRATION PETITION (L) NO.15483 OF 2021
Athaansh Communications .. Petitioner
Vs.
Maurya Films and Entertainment .. Respondent
WITH
ARBITRATION PETITION (L) NO.17465 OF 2021
M/s.Maurya Films & Entertainments .. Petitioner
Vs.
Athaansh Communications .. Respondent
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Mr.Mayur Khandeparkar a/w. Chaitanya Nikte, Nilesh Tribhuvann,
Bhagyashree Lembe, Kanan Chawda, Chirag Bhatia & Abha Patel i/b.
White & Brief Advocates for the Petitioner in ARBP(L)/15483/2021 &
for the Respondents in ARBP(L)/17465/2021.
Mr.Sachin Mandlik i/b. Dinesh Adsule & Vijaykumar Dhakane for the
Respondent in ARBP(L)/15483/2021 & for the Petitioner in
ARBP(L)/17465/2021.
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CORAM :- B.P.COLABAWALLA, J.
DATE :- 31st AUGUST, 2021.
Ganesh Lokhande 1/14
13-ARBP(L)-15483-21.doc P. C.:
1. Arbitration Petition Lodg No.15483 of 2021 is filed by Athaansh Communications (for short "Athaansh") under Section 9 of the Arbitration and Conciliation Act, 1996 (for short the "Arbitration Act") seeking the following reliefs:
"(a) Pass an order and injunction restraining the Respondent, its agents, servants, proprietor, representatives, executives, nominees, assignees, officers and/or any other person acting under, through or on behalf of it from in any manner directly or indirectly interfering with or obstructing the making of the said Film "Timepass 3" by the Petitioner including the raising of any finance for the said film or from exploitation of any rights in the said film or associated therewith including but not limited to issuing public notices, advertisements, notices to third parties, interviews, blogs, and/or in any other manner;
(b) Pass an order and injunction restraining the Respondent, its agents, servants, proprietor, representatives, executives, nominees, assignees, officers and/or any other person acting under, through or on behalf of it from holding themselves out to be the Producer or any right holder in the film.
(c) Pass an order and injunction restraining the Respondent its agents, servants, proprietor, representatives, executives, nominees, assigns, officers and/or any other person acting under, through or on behalf of it from in any manner creating/purporting to create any third party rights in or in relation to the said film "Timepass 3"."
2. Arbitration Petition Lodg No.17465 of 2021 is filed by Maurya Films and Entertainments (for short "Maurya Films") under Section 9 of the Arbitration Act seeking the following reliefs:
"(a) Pass an order and injunction restraining the Respondent, her agents, servants, nominees, assignees or any other person/s acting under, claiming through or on behalf of the Respondent, from selling, transferring or creating any third party rights in respect of the movie "Timepass-3" and it's intellectual work.Ganesh Lokhande 2/14
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(b) That the Respondent be directed to furnish all true and correct accounting details with original payment receipts, bank account entries and permit the Petitioner's appointed auditors to audit the expenses incurred by the Respondent for the movie "Timepass-3".
(c) That the Respondent be directed to give true and correct accounting details with the original receipts, bank account details to the Petitioner in respect of money as allegedly taken by the Respondent from third parties, if any, for the making of "Timepass-3" movie.
(d) This Hon'ble Court be pleased to direct to the Respondent to hand over all the final work of the movie "TIMEPASS -3" to the Petitioner in good conditions.
(e) That the Respondent be restrained from exhibiting the movie "Timepass-3" in the theatre, on screen, electronic media, social media, broadcasting / rebroadcasting through satellite, cable channels, or in any form In the Alternative:-
(f) This Hon'ble Court be pleased to appoint an Arbitrator in the present case to resolve the disputes between the Parties.
(g) This Hon'ble be pleased to appoint a Court Receiver to dealt with the third parties, in respect of rights, title and interest of the movie "Timepass-3" and deposit the sale proceeds in this Hon'ble Court till the Award is pass by the Ld. Arbitrator."
3. The disputes between the parties arise out of a Memorandum of Understanding ("MoU") dated 3rd November, 2020, which was entered into for the production of a Marathi feature Film titled "Timepass 3" (for short the "said movie"). The Arbitration Agreement can be found at clause (22) of the said MoU which reads thus:
"Clause 22. All disputes arising from the MOU will be governed by the Arbitration and Conciliation Act, 1996. The place of arbitration shall be Mumbai, India. The language to be used in the arbitration proceedings shall be English. The MOU shall be governed by and Ganesh Lokhande 3/14 13-ARBP(L)-15483-21.doc construed in accordance with the Laws of India with exclusive jurisdiction to Courts at Mumbai, India."
4. The other relevant clauses of the MoU are as under:
"A. COST OF PRODUCTION AND P & A :
1. The total Cost of Production (COP) for this Film shall be mutually decided by both the parties which comes around 3 Cr (GST will be extra). As per the attached COP in Annexure A. Plus 1.5 Cr. For Promotion & Advertising ("P & A"). (If any studio or banners joins for the project the cost may get divided or shared with mutual consent).
2. MAURYA FILMS AND ENTERTAINMENT shall invest 100% of the total Cost of Production (COP) And P & A (In case we mutually decide to produce and distribute the film).
3. MAURYA FILMS AND ENTERTAINMENT agrees to make the payment of COP as per the attached Cash schedule in Annexure B.
4. The cash schedule is break-up in preproduction, production, post production and final payment in the ratio of 20:20:20:20:20.
5. ATHAANSH agrees to deliver the work as per the Schedule decided and complete the shooting as per the schedule attached in Annexure C with responsibility of financial loss which will bear by ATHAANSH only.
6. ATHAANSH will be doing the complete line production of the film for which 10% production house fees as per the production association norms will be included in the COP.
7. Ravi Jadhav will be the director and creative head of the project.
His fees will be included in the COP.
8. MAURYA FILMS AND ENTERTAINMENT shall recover the COP on LAST IN FIRST OUT basis.
9. If any studio or Banners joins in the project the terms and conditions will be mutually agreed and changed accordingly.
B. REVENUE SHARING :
After the MAURYA FILMS AND ENTERTAINMENT recovers the whole Ganesh Lokhande 4/14 13-ARBP(L)-15483-21.doc COP and the P&A expenses, Net Profits to be shared on 50:50 basis including Theatrical Satellite, Distribution, all Electronics, Dubbing, Digital etc. (for all first sale of rights basis amount received by MAURYA FILMS AND ENTERTAINMENT or during the 1st year whichever is earlier).
1. Net Revenues to be computed post recovery of total cost i.e. COP + P & A Expenses or any other ancillary cost.
2. If any studio or distributor wants to be a part of the projects the terms and profit sharing ratio will be mutually decided by MAURYA FILMS AND ENTERTAINMENT, and ATHAANSH and the final agreement will be signed by the parties.
3. All the films are having commercial value and place for in film branding. Both the parties must mutually try and get suitable brands and better deals for in film branding to reduce the overhead cost. Such agreements will be entered mutually and complete transparency will be maintained. All the agreements related to the sale of rights, will be signed by both the parties. The net profit coming from such revenues will incurred by both the parties in their individual names. If not, the revenue will go to M/s. MAURYA FILMS AND ENTERTAINMENT and ATHAANSH will receive its share from MAURYA FILMS AND ENTERTAINMENT.
C. GENERAL UNDERSTANDING :
1. ATHAANSH AND Ravi Jadhav assures MAURYA FILMS AND ENTERTAINMENT to complete the project as per the schedule attached, in the said time.
2. The parties shall produce the film. It is agreed between the parties that any over budget shall be mutually discussed between the Parties and only agreed on a written consent (on mail).
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10. Total transparency will be maintained by both the parties and where over required accounting details will be shared.
11. Three Executives from MAURYA FILMS AND ENTERTAINMENT will work with production team of ATHAANSH. Their rights and duties will be decided by ATHAANSH & MAURYA FILMS AND ENTERTAINMENT mutually. Their remuneration will be incorporated in COP."
5. According to Athaansh, Maurya Films breached the aforesaid MoU by not making timely payments as per the cash flow Ganesh Lokhande 5/14 13-ARBP(L)-15483-21.doc schedule at Annexure B to the said MoU. It is not in dispute that Maurya Films has till date only made a payment of Rs.1.37 Crores and that too belatedly. No further payments have been made by Maurya Films to Athaansh under the said MoU.
6. It appears that thereafter correspondence has been exchanged between the parties, which would indicate that there is no trust between Athaansh and Maurya Films. This correspondence ranges from 12th February, 2021 to 25th March, 2021. Finally, on 2nd April, 2021, Athaansh sent a notice to Maurya Films terminating the aforesaid MoU on the grounds mentioned therein. In the said notice, it was contended by Athaansh that Maurya Films was not a producer of the said movie and Athaansh owned all the Intellectual Property Rights therein. Maurya Films was only a financier of the said movie, was the contention of Athaansh.
7. Maurya Films replied to the termination notice and demanded accounts. According to Maurya Films, the cost of the said movie was on the higher side. In the said reply, Athaansh's exclusive rights in the said movie were denied and Maurya Films claimed to be the owner of the said movie.
Ganesh Lokhande 6/14
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8. Thereafter, on 18th April, 2021, the advocate for Maurya Films published notices in the Newspapers claiming ownership of the Intellectual Property Rights in the said movie, its script and all other derivative rights. The aforesaid notices can be found at Exhibits P to R of the Petition. In turn, the advocates of Athaansh also issued a public notice on 20th April, 2021 stating that Athaansh was the owner of the copyright in the said movie and that they had terminated the abovementioned MoU with Maurya Films. On 29th June, 2021, the advocate of Maurya Films once again issued a public notice claiming Intellectual Property Rights in the said movie.
9. According to Athaansh, because of the public notices issued by Maurya Films, and which according to them, falsely claimed ownership of the Intellectual Property Rights in the said movie, Athaansh was finding it difficult to raise adequate funds for the completion of the said movie. It is in these circumstances that Athaansh has approached this Court under Section 9 of the Arbitration Act seeking the reliefs more particularly set out earlier.
10. After this matter was argued at great length on 25th August, 2021, I tried to impress upon the parties to try and work out some sort of a settlement to end the disputes between the parties. After Ganesh Lokhande 7/14 13-ARBP(L)-15483-21.doc considerable discussion in open court, and after taking instructions from the representatives of the parties who were present in Court, the advocates for Athaansh and Maurya Films agreed to put an end to the litigation. It was accordingly agreed that the termination notice is accepted by Maurya Films and Athaansh would, within a period of four weeks from 30th August, 2021 disburse a lumpsum amount of Rs.1.55 Crores in full and final settlement to Maurya Films. It was agreed that a post-dated cheque (of 24th September, 2021) would be issued by Athaansh to Maurya Films in the sum of Rs.1.55 Crores. This figure of Rs.1.55 Crores was agreed between the parties on the basis that Athaansh would return back the amounts already paid by Maurya Films to Athaansh (for financing the said movie) along with interest. In other words, parties agreed that Athaansh would return back/refund the amount of Rs.1,37,75,000/- together with interest, which figure came to Rs.1.55 Crores. The purpose of this settlement was that both parties could separate from each other and Maurya Films would no longer interfere in the making of the said movie or claim any rights therein.
11. To put this Agreement in writing and file it before the Court, the matter was adjourned to 30th August, 2021 and thereafter to today. However, today when the matter is called out, it is rather unfortunate and embarrassing for the advocates appearing for Maurya Ganesh Lokhande 8/14 13-ARBP(L)-15483-21.doc Films to state that they have instructions to renege on this Agreement. Looking to the conduct of Maurya Films and the fact that it now chooses to renege on the Agreement arrived at before the Court, I would be fully justified in granting the reliefs sought for by Athaansh. However, despite this, I have heard the learned advocate appearing on behalf of Maurya Films.
12. The learned advocate appearing on behalf of Maurya Films, relying upon some of the clauses in the MOU and more particularly the clauses regarding "REVENUE SHARING" and "GENERAL UNDERSTANDING" reproduced earlier, submitted that Maurya Films, if not the Producer of the said movie, is certainly a Co-Producer thereof and therefore has Intellectual Property Rights in the said movie. He submitted that Clause 2 under the heading "GENERAL UNDERSTANDING" clearly stipulates that "The parties shall produce the film.........". He submitted that it is for this reason that the parties agreed that there would be total transparency on the expenditure incurred on making the said movie and accounting details in that regard would be shared between the parties. He submitted that because Maurya Films was the Producer, or at least the Co-Producer of the said movie, that the parties also agreed that after the film was completed the net profits would be shared on a 50:50 basis for all theatrical, satellite, Ganesh Lokhande 9/14 13-ARBP(L)-15483-21.doc electronic and other digital distributions/releases of the said movie. He therefore submitted that prima-facie, from the terms of the MOU, it was clear that Maurya Films was at least a Co-Producer of the said movie and therefore could not be kept out from its production and/or its release after completion.
13. I have heard the learned advocate for Maurya Films on this aspect at quite some length. Looking at the averments in the Petition filed by Maurya Films (Arbitration Petition (L) No.17465 of 2021), it is apparent that Maurya Films wants to somehow stall the completion of the said movie. This is clear from prayer clause (a) of the Arbitration Petition (L) No.17465 of 2021. I fail to understand why Maurya Films wants to stall the completion of the said movie, when it itself claims to be a producer of the said movie. If the movie is completed expeditiously and released, the same would be to the benefit of both parties.
14. Be that as it may, after going through the clauses in the MoU dated 3rd November, 2020, prima-facie, I am not satisfied that Maurya Films can claim to be a producer of the said movie or claim any Intellectual Property Rights therein. The clauses reproduced above, would indicate that they would be termed as a producer of the said movie, on them financing the entire costs of the said movie, namely the Ganesh Lokhande 10/14 13-ARBP(L)-15483-21.doc Cost of Production as well as Promotion and Advertising costs as mentioned in the said MoU. Admittedly, that has not been done. In fact, less than 1/3rd of the amount has been financed by Maurya Films to Athaansh. This being the case, I am of the opinion, at least, prima-facie, that Maurya Films cannot claim any Intellectual Property Rights in the said movie. Once, I have come to this conclusion, then the reliefs sought for by Maurya Films in Arbitration Petition Lodg No.17465 of 2021 seeking to restrain Athaansh from completing or releasing the said movie on any platform, digital or otherwise, cannot be granted at this stage. On the other hand, to ensure completion of the said movie, it would be necessary to grant the reliefs sought for by Athaansh in Arbitration Petition Lodg No. 15483 of 2021 subject to certain terms and conditions.
15. In view of the foregoing discussion, Arbitration Petition Lodg No. 15483 of 2021 is allowed in terms of prayer clauses (a), (b) &
(c) reproduced herein above subject to Athaansh depositing in this Court a sum of Rs.1,37,75,000/- within a period of four weeks from today. If the said sum is deposited, the same shall be invested by the Prothonotary and Senior Master of this Court in any Nationalised Bank and shall abide by further orders passed in that regard either by the Arbitral Tribunal or by this Court. Arbitration Petition (L) No. 17465 of Ganesh Lokhande 11/14 13-ARBP(L)-15483-21.doc 2021 filed by Maurya Films herein, stands rejected insofar as it seeks reliefs in terms of prayer clauses (a), (d), (e) and (g). Maurya Films shall be at liberty to seek reliefs in terms of prayer clauses (b) & (c) before the Arbitral Tribunal by filing an application under section 17 of the Arbitration Act. If such an application is filed, the same shall be decided by the Arbitral Tribunal on its own merits and in accordance with law.
16. The learned advocate appearing on behalf of Maurya Films has stated before the Court that Maurya Films has no objection to the Arbitral Tribunal being constituted consisting of a Sole Arbitrator. He has further stated that Mr. Naushad Engineer, an advocate of this Court, be appointed as a Sole Arbitrator. He has tendered an email received from the proprietor of Maurya Films consenting to the appointment of Mr. Naushad Engineer to act as a Sole Arbitrator to decide the disputes and differences between Athaansh and Maurya Films arising out of and/or in connection with and/or incidental to the MoU dated 3rd November, 2020. The said email is taken on record and marked as 'X' for identification. Mr.Khandeparkar, the learned advocate appearing on behalf of Athaansh, on instructions, has also stated that Athaansh has no objection to the Arbitral Tribunal being constituted & that Mr. Naushad Engineer be appointed to act as a Sole Arbitrator to decide the disputes and differences between the parties.
Ganesh Lokhande 12/14
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17. In view of the aforesaid stand of the parties, the following order is passed:
(a) By consent, Mr. Naushad Engineer, an advocate of this Court, is hereby appointed to act as a Sole Arbitrator to decide the disputes and differences between Athaansh and Maurya Films arising out of and/or in connection with and/or in relation to the MoU dated 3rd November, 2020.
(b) A copy of this order will be communicated to the learned Sole Arbitrator by the advocates for Athaansh within a period of one week from today.
(c) The learned Sole Arbitrator is requested to forward a statement of disclosure under Section 11(8) read with Section 12 (1) of the Arbitration Act to the advocates for Athaansh so as to enable them to file the same in the Registry of this Court. The Registry of this Court shall retain the said statement on the file of both the above Petitions and a copy of the same shall be furnished by the advocates for Athaansh to the advocates for Maurya Films.
(d) The parties shall appear before the Sole Arbitrator on such date and such place as he nominates and obtain appropriate directions with regard to fixing a schedule for completing pleadings etc. The Arbitral Tribunal shall give all further directions with reference to the Arbitration and also as to how it is to proceed. The Claimant in the Arbitration will be Maurya Films.Ganesh Lokhande 13/14
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(e) The contact and communication particulars are to be provided by both sides to the Sole Arbitrator and this information shall also include a valid and functional email address and mobile numbers of the respective advocates.
(f) The Arbitral costs and fees of the Arbitrator will be borne by both sides equally and will be subject to the final Award that may be passed by the Arbitral Tribunal.
(g) The parties have also agreed that the venue and the seat of Arbitration will be in Mumbai.
18. It is needless to clarify that the observations made in this order, are only prima-facie and all rights and contentions of both sides are expressly kept open to be agitated before the Arbitral Tribunal.
19. All parties to act on an authenticated copy of this order digitally signed by the Personal Assistant /Private Secretary/Associate of this Court.
GANESH SUBHASH LOKHANDE Digitally signed by GANESH SUBHASH (B. P. COLABAWALLA, J.) LOKHANDE Date: 2021.09.03 13:19:08 +0530 Ganesh Lokhande 14/14