Delhi High Court
Music Broadcast Pvt. Ltd. vs Axis Bank & Ors. on 9 February, 2016
Author: Manmohan Singh
Bench: Manmohan Singh
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment pronounced on: 9th February, 2016
+ I.A. No. 20535/2015 & I.A. No.17621/2013
in CS(OS) 2119/2013
MUSIC BROADCAST PVT. LTD. ..... Plaintiff
Through Mr.Sandeep Sethi, Sr.Adv. with
Ms.Meghna Mishra, Adv. with
Mr.Akhil Sachar, Mr. Dheeraj P. Dev,
Mr. Manan Chadha and Ms.Manmeet
Kaur, Adv.
versus
AXIS BANK & ORS. ..... Defendants
Through Mr. Abhishek Anand, Adv. for D-1
Mr. Amit Sibal, Sr. Adv. with Mr.
Jagdish Sagar & Mr. Neeraj
Kumar Gupta, Adv. for D-2.
CORAM:
HON'BLE MR.JUSTICE MANMOHAN SINGH
MANMOHAN SINGH, J.
1. The plaintiff has filed a suit for declaration and permanent injunction.
2. The plaintiff is, inter alia, engaged in the business of running, operating and maintaining 20 FM Radio Broadcasting stations at the following places in India i.e. Mumbai, Bangalore, Delhi, Lucknow, Hyderabad, Chennai Ahmedabad, Pune, Nagpur, Jaipur, Surat, Jalgaon, Ahmednagar, Sangli, Vishakhapatnam, Coimbatore, Akola, CS(OS) No.2119/2013 Page 1 of 57 Solapur, Vadodara and Nanded. The plaintiff is seeking a decree of declaration that the Cancellation Notice dated 21st June, 2013 sent by the defendant No. 2 which was as per the plaintiff received on 24th June, 2013 (the first working day of receipt of the notice as the office of the plaintiff company was closed on 22nd June, 2013 being a Saturday) whereby defendant No. 2 had cancelled 20 Compulsory Licenses for Radio Broadcasting all dated 3rd September, 2010 issued in favour of the plaintiff pursuant to the order dated 25th August, 2010 of Copyright Board is null and void. The plaintiff also seeks a decree of permanent injunction restraining the defendants from in any manner acting upon the cancellation notice dated 21st June, 2013 and for permanent injunction restraining the defendant No.2 from invoking and encashing the bank guarantees issued by the plaintiff in compliance with the order dated 25th August, 2010 passed by the Copyright Board.
3. The defendant No. 1 Bank has been arrayed in the suit, as it has furnished the bank guarantees on the request of the plaintiff in favour of the defendant No. 2 i.e. Phonographic Performances Limited (hereinafter referred to as "PPL" or the "defendant No. 2"). Defendant No.2 is a copyright society registered under Section 33 of the Copyright Act, 1957 (hereinafter referred to as the 'Act') and is engaged in carrying on the copyright business of its members in sound recordings who administers the sound recordings of its members and further claims to charge and collect license fees from the said users of sound recordings.
CS(OS) No.2119/2013 Page 2 of 574. It is alleged in the plaint that the impugned Cancellation Notice interferes with due course of judicial proceedings pending in the High Court of Madras and High Court of Judicature at Bombay and also obstructs the administration of justice as the defendant No. 2 has no power or locus under the Copyright Act, 1957 read with the Copyright Rules, 2013 to cancel the compulsory licenses granted by the Copyright Board.
5. The suit along with interim application was listed before the Court on 18th November, 2013 when summon and notice were issued. The interim order was also passed against the defendant No.2 staying the operation of cancellation notice dated 21st June, 2013 while passing the detailed order.
6. The said order was challenged by the defendants in an appeal being FAO (OS) 561/2013 before the Division Bench, wherein the major issue of territorial jurisdiction of this Court was raised. The Division Bench observed that as the question of territorial jurisdiction is yet to be decided by the Single Judge, the Division Bench did not make any comments thereon and directed the parties to await the final decision on the subject by the Single Judge when the matter is taken up.
7. Both the parties have made their submissions on merit as well as on the question of territorial jurisdiction as the objection taken by the defendants. They agree that if the issue of territorial jurisdiction is decided against the plaintiff and in favour of defendant No.2, then there is no need to go into the merit of the case.
CS(OS) No.2119/2013 Page 3 of 578. It is necessary to refer the brief facts as mentioned in the plaint; the same are stated as under:-
(a) In or about October, 1999, the Government of India opened FM Radio Broadcasting, to private parties and issued tender documents to interested parties under the Indian Telegraph Act, 1885. The objective of the privatization of the FM Radio Broadcasting sector was to affect a rapid increase in the broadcast network within the country.
(b) The defendant No. 2 came out with the alleged rates of royalty payable by the FM radio broadcasters under the mandatory tariff scheme which any copyright society had to publish, and had fixed the rate of royalty at Rs. 2,400 per needle hour or 20% of the net advertisement revenue, whichever was higher. Aggrieved by this unilateral fixation of royalty, the plaintiff along with other broadcasters filed three complaints under Section 31 (1) (b) of the Copyright Act, 1957 before the Copyright Board in the year 2002 seeking compulsory licenses to play the music owned by PPL and its members.
(c) The Copyright Board by its interim order dated 19th November, 2002 in the compulsory licensing applications moved by different private FM broadcasters (including the plaintiff) against defendant No. 2, to finally decide the final rate of royalty/compensation payable to defendant No. 2, had fixed interim rates of royalty at Rs.1,200/- per needle hour during prime time i.e. from 8 a.m. to 10 a.m. and from 6 p.m. to 8 p.m CS(OS) No.2119/2013 Page 4 of 57 which were to remain in operation for a period of two years i.e. 2002 to 2004. A needle hour is internationally accepted as the term denoting the actual time for which music is played during an hour excluding the advertisements, promotional and the presentation time taken by the radio jockey. The Copyright Board also fixed the rate at 60% of this standard rate for the normal 12 hours i.e. from 6 a.m. to 8 a.m., 10 a.m. to 6 p.m. and 8 p.m. to 10 p.m. and 25% of the standard rate for the eight lean night hours i.e. from 10 p.m. to 6 a.m. as the royalty payable.
The average royalty rate worked out to Rs. 660/- per needle hour which was to come into effect from the 1st November, 2002 and to remain in operation till 31st October, 2004.
(d) The plaintiff along with other broadcasters, as well as defendant No. 2 filed appeals and cross-appeals (in total nine appeals) before the High Court of Bombay inter-alia assailing the order dated 19th November, 2002 passed by the Copyright Board. The Bombay High Court by a common judgment and order dated 13th April, 2004 in First Appeal Nos. 279-294 of 2003, 421 of 2003 and 1573 of 2003 reported as Phonographic Performance Ltd. v. Music Broadcast Pvt. Ltd., 2004 (29) PTC 282 (Bom) set aside the order dated 19th November, 2002 and remitted the matters back to the Copyright Board for reconsideration and for fixation of license fees.
(e) Thereafter, Special Leave Petitions were filed by the plaintiff and other broadcasters, before the Supreme Court, whereby CS(OS) No.2119/2013 Page 5 of 57 the Supreme Court vide its common judgment dated 16 th May 2008 reported in Entertainment Network (India) Ltd. v. Super Cassette Industries Ltd., reported in (2008) 13 SCC 30 allowed the appeal of another broadcaster i.e. Entertainment Network (India) Ltd. and simultaneously dismissed the Special Leave Petition of the defendant No. 2 thereby upholding the decision of the Bombay High Court. The Supreme Court, while concurring with the High Court of Bombay and also remanded the said matter to the Copyright Board for fresh consideration on merits.
(f) Pursuant to the order dated 16th May, 2008 passed by the Supreme Court, six fresh applications/ complaints were filed in the year 2008 before the Copyright Board under Section 31(1)(b) of the Copyright Act, 1957 by various other broadcasters apart from the three applications/complaints that were remanded by the Supreme Court.
(g) Thereafter, the trial before the Copyright Board commenced in July, 2008 and the examination of witnesses began on 28th July, 2009 and was followed up through subsequent sittings ending on 12th July, 2010.
(h) The common order dated 25th August, 2010 was passed by the Copyright Board in the various remanded matters as well as fresh filings done before the Copyright Board. The Copyright Board, in exercise of powers conferred under Section 31 (1) of the Copyright Act, 1957, directed the Registrar of Copyrights to CS(OS) No.2119/2013 Page 6 of 57 grant complainants i.e. the plaintiff separate licenses for communicating the work recorded in sound recordings in the repertoire, present and future, of the defendant No. 2 to the public, by broadcast on revenue sharing basis subject to certain terms and conditions as stated herein below:-
a. "2% of the net advertisement earnings of each FM radio station accruing from the radio business only for that radio station shall be set apart by each complaint for pro rata distribution of compensation to all music providers including the defendant No.2 herein in proportion to the music provided by the respective music providers and broadcast by the 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 musical 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 defendant 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 of which complainant was liable for payment of compensation for that quarter.CS(OS) No.2119/2013 Page 7 of 57
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), defendant shall be at liberty to cancel the license without giving any notice and recover the remaining dues from the available bank guarantee;
d. Payment of compensation by the complainant to the defendant for a month shall be made by 7th day of the month following the month to which payment relates. Complainant shall also furnish alongwith the payment the date wise details of the periods for which the music relating to the defendant 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 used in lump sum by 7th October, 2010;
e. For any delayed payment for a month beyond 7th of the following month, interest at the rate of 1% per month or a part of 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, defendant herein shall be entitled to cancel the licence by giving notice of one month and recover the remaining dues from the bank guarantee;CS(OS) No.2119/2013 Page 8 of 57
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."
(i) Being aggrieved by the order dated 25th August, 2010 passed by the Copyright Board, the defendant No. 2 had preferred an appeal dated 28th October, 2010 under Section 72 of the Copyright Act, 1957 before the High Court of Judicature at Madras. The High Court of Judicature at Madras vide its order dated 22nd December, 2010 in CMA No. 3382/2010 dismissed the application for interim relief seeking stay of the order dated 25th August, 2010. Thereafter the defendant No.2 filed a Special Leave Petition (Civil) No. 5727-
5735/2011 before the Supreme Court inter alia assailing the order dated 22nd December, 2010 passed by the High Court of Judicature at Madras. The Supreme Court vide order dated 5th April, 2011 dismissed the Special Leave Petition.
(j) In pursuance of the order dated 25 th August, 2010 passed in Case No.1 of 2002 titled as 'Music Broadcast Private Limited v. Phonographic Performance Limited' granted licenses to the plaintiff for communicating the work recorded in sound recordings in the repertoire, present and future of the defendant No. 2 to the public by broadcast on revenue sharing basis subject to the terms and conditions as adumbrated in the order dated 25 th August, 2010. These licenses were granted for all the 20 radio channels of the CS(OS) No.2119/2013 Page 9 of 57 plaintiff on 3rd September, 2010 and are valid up to 30th September 2020, i.e. for about 10 years.
9. The plaintiff accepted the Compulsory Licensing Order and never exercised its right of appeal against it under Section 72(2) of the Copyright Act. The said order, therefore, has attained finality qua the plaintiff. The defendant No.2 was unable to obtain interim stay of the said Compulsory Licensing Order in its pending appeal under Section 72(2) of the Copyright Act before the Madras High Court and on further appeal from the Supreme Court.
10. The defendant No. 2 filed a Writ Petition (Civil) No.8144 of 2011 titled as 'PPL v. Union of India and others' before this Court wherein the plaintiff was arrayed as respondent No.3. The relief sought in the said writ petition was the quashing of the Compulsory Licenses dated 3rd September 2010 granted by the Registrar, Copyright Board. This Court by order dated 18th January, 2011 refused to grant any interim order in favour of defendant No. 2 who by order dated 4th January, 2012 directed both the parties i.e. MBPL and PPL to comply with the directions issued by the Division Bench in L.P.A No. 1037/2011. It is submitted by the plaintiff that said order dated 4th January, 2012 passed by the Single Judge of this Court was being complied.
11. The defendant No. 2 also filed a Contempt Petition in the month of March, 2012 being Cont. Case No. 203/2012 in Writ Petition Civil No. 8144/2011 titled as 'Phonographic Performance Limited v. Union of India and Others' inter alia alleging non-compliance of the order CS(OS) No.2119/2013 Page 10 of 57 dated 4th January 2012 passed by this Court which mandated the compliance of the order dated 25th August, 2010 passed by the Copyright Board. The Contempt Petition was subsequently dismissed as not pressed by the defendant No.2 and order therein was passed on 19th February, 2013. The writ petition was dismissed. The LPA filed against the judgment has also been dismissed as informed by the parties.
12. The plaintiff in response to the letters dated 13th January, 2011 and 19th January, 2011 addressed a letter dated 24th January, 2011 to the defendant No. 2 wherein the plaintiff stated that it was complying and would continue to comply with the final order dated 25th August, 2010 passed by the Copyright Board and the terms of the Compulsory Licenses granted in pursuance thereto on 3 rd September, 2010. The compulsory licenses were valid and subsisting till date. The tariffs in terms of the License Agreements were broadly based on orders passed by Courts/Copyright Board and were subject to adjustments as per the final order which would be passed by appropriate Courts/Tribunal in due course. Therefore, the defendant No.2 says that 'unilateral adjustment' is not correct. The plaintiff reiterated that an amount of Rs.3,80,00,000/- which was deposited as security deposit in terms of the License Agreement was liable to be refunded and requested the defendant No. 2 to inspect the logs at a mutually convenient time and pointed out that it had been making the logs available throughout the CS(OS) No.2119/2013 Page 11 of 57 decade of its relationship with the defendant No. 2 by letter dated 14th February, 2011.
In order to adjust the excess amount in terms of Clause 6, 7 and 8 of the Voluntary License Agreements, the plaintiff in view of order dated 25th August 2010 passed by the Copyright Board, filed a suit being Suit No. 565/2011, in the month of February, 2011 before the High Court of Judicature at Bombay titled as 'Music Broadcast Private Limited v. Phonographic Performance Limited' inter-alia praying that the defendant No. 2 be restrained from terminating the Compulsory Licenses dated 3rd September, 2010 unless the excess amounts paid by the plaintiff has been adjusted and exhausted fully. The High Court of Judicature at Bombay by order dated 9th February 2011 had recorded that the defendant No. 2 would not terminate the voluntary licence agreements entered with the plaintiff. The said interim order remained operative till the filing of the present suit.
13. The defendant No. 2 sent a letter dated 17th June, 2013 in response to the letters dated 7th March, 2013, 5th April, 2013, 7th May, 2013 and 7th June, 2013 sent by the plaintiff whereby the defendant No. 2 averred that the plaintiff was not complying with the terms and conditions as envisaged in the order dated 25th August, 2010 passed by the Copyright Board. The adjustments made by the plaintiff were unilateral and without any legal foundation. It was further alleged that the plaintiff was in default of Para 30.27 (b) of the order dated 25th August, 2010 passed by the Copyright Board. The defendant No. 2 CS(OS) No.2119/2013 Page 12 of 57 had also alleged that the plaintiff had failed to keep the Bank Guarantees alive and subsisting even for a brief period.
14. The plaintiff replied to the letters dated 17th June, 2013 vide separate letters dated 28th June, 2013 specifically denying the contents thereof. The plaintiff stated that that it has been regularly revising the bank guarantee within two weeks of the close of every quarter of the year which rendered the contention of non-compliance of the order dated 25th August, 2010 passed by the Copyright Board as nugatory and otiose. The plaintiff by its letter dated January, 2013 bearing Reference Number BG/12/Mumbai/010 forwarded an extension of the Original Bank Guarantee issued by Axis Bank bearing number 00040100005214 dated 12th January, 2011. This extension of the Original Bank Guarantee remained valid till 31st March, 2013. Thereafter, the plaintiff's bankers namely Axis Bank by their Registered Notice dated 3rd April, 2013 notified the defendant No. 2 about the cancellation of the Original Bank Guarantee which expired on 31st March, 2013. Pursuant to the letter dated 3rd April, 2013, Axis Bank on instructions from the plaintiff Company had revised the Original Bank Guarantee bearing number 00040100005214 dated 12th January, 2011 with effect from 1st April, 2013 to 30th June, 2013. Therefore, the Bank Guarantee was extended by the plaintiff's bankers with effect from 1st April, 2013 and not 6th April, 2013 as falsely contended. Thereafter, in due compliance of the order dated 25th August, 2010 passed by the Copyright Board; the plaintiff vide letter dated 12th April, 2013 bearing Reference No. BG/12/Mumbai/011 (within two weeks of the close, of CS(OS) No.2119/2013 Page 13 of 57 the quarter ending 31st March, 2013 i.e. before 15th April, 2013) forwarded the extension of the Original Bank Guarantee.
15. On merit, it is alleged by the plaintiff that in compliance with the order dated 25th August, 2010 and the compulsory licenses granted by the Copyright Board the amount due from the plaintiff to the defendant No. 2 had to be adjusted against the excess payment of license fee. The computation of the same was also sent along with letter dated 5th October, 2010. The defendant No. 2 had in fact, without demur and protest had been accepting the said adjustments till the letters dated January 13th January 2011 and 19th January 2011 were written whereby for the first time the defendant No.2 raised a grievance about the said adjustments but the same was not acceptable to the plaintiff. The plaintiff by various letters including 8th September 2010, complied with the terms of the order of the Copyright Board dated 25th August, 2010 including enclosing bank guarantees of Rs.10,000/- for the respective radio stations (aggregating to Rs. 2,00,000/-). But the defendant No. 2 initially refused to accept the service of the said Bank Guarantees however thereafter has accepted the same. It is alleged by the plaintiff that the defendant No. 2 in violation of the order dated 25th August, 2010 failed to return the said bank guarantees after its expiry and it was only returned pursuant to the order dated 9th February, 2011 passed by the High Court of Judicature at Bombay in Civil Suit No. 565 of 2011. Prior to the date of said order, the defendant No. 2 sent a letter dated 13th January, 2011 to the plaintiff wherein the defendant No. 2 invoked clause 10 of the License Agreements and called upon the CS(OS) No.2119/2013 Page 14 of 57 plaintiff to provide the defendant No. 2 an inspection of the copies of the records of the sound recordings used by the plaintiff within 15 days from the date of receipt of the said notice and another letter dated 19th January 2011, to the plaintiff stating that the plaintiff had failed to pay any license fee for the period February, 2010 to August, 2010 and the outstanding license fees was to the tune of nearly Rs.2 crores, the adjustment of royalty could not be done unilaterally any adjustment sought to be made by the plaintiff was incorrect as it had preferred an appeal being CMA No. 3382/2010 assailing the order dated 25th August 2010 passed by the Copyright Board before the High Court of Judicature at Madras. Written statement (defence)
16. Written statement has been filed by the defendant No.2 who is the main contesting party in the suit and has raised various preliminary objections inter-alia stating that the present suit is an abuse of process whereby the plaintiff, having failed to obtain any relief on the same cause of action in the Court within whose jurisdiction the entire purported cause of action arose, being the Bombay High Court, which was also the Court of exclusive jurisdiction by express agreement between the plaintiff and the defendant No.2, has attempted to recycle the same cause of action by clever verbal jugglery in order to obtain relief in this Court which does not enjoy territorial jurisdiction in the matter.
17. The case of the defendant No.2 is that the present suit is an abuse of process of the court as the plaintiff in its own suit No.565/2011 which was pending in the Bombay High Court, the CS(OS) No.2119/2013 Page 15 of 57 plaintiff sought an injunction restraining the defendant No.2 from terminating the voluntary licence agreements (VLAs) and the compulsory licenses, but it could not obtain an order restraining defendant No.2 from cancelling the compulsory licenses. The plaintiff is now doing forum shopping, seeking to obtain orders from this Court that the plaintiff could not obtain on the same cause of action in the Bombay High Court.
18. It is stated that the plaintiff's entire cause of action is its claim, based on its own interpretation of the VLAs, of a purported right to adjust alleged overpayments made by the plaintiff under the VLAs against the Compulsory Licence compensation fixed by the Copyright Board in the order dated 25th August, 2010. The main lis between the parties comprises the plaintiff's interpretation of Clause 8 of each of the VLAs (a mixed question of fact and law) and the plaintiff's averments regarding the quantum of dues payable to defendant No. 2 under the VLAs. The dispute thus arises out of the VLAs. No fresh cause of action has been shown to exist or to have arisen independent of the VLA to enable the plaintiff to file this suit in Delhi. The said dispute could have been easily denied by the Bombay High Court. Therefore, the defendant No.2 has rightly challenged the question of territorial jurisdiction as it is settled law that each and every fact pleaded by a plaintiff does not give rise to a cause of action; rather the facts constituting the cause of action are only those having a nexus or relevance to the lis. Before exercising jurisdiction, the Court must be satisfied that all relevant facts which have a substantial nexus with the lis are located within its territorial CS(OS) No.2119/2013 Page 16 of 57 jurisdiction. The plaint must be read in a meaningful manner to find out the intention behind the suit. A mere insertion of extraneous matter in the present suit cannot change the substance of its cause of action. The only lis in the matter relates to the alleged rights arising out of VLA, and the same is subject to exclusive jurisdiction of Courts in Mumbai.
19. It is alleged by the defendant No.2 that admittedly on 25th August, 2010 the Copyright Board issued an order allowing the complaint filed by the plaintiff in 2002 and directed the Registrar of Copyrights to issue Compulsory Licenses to the plaintiff on the terms set out in the order itself. On 3rd September, 2010 the Registrar of Copyrights issued 20 compulsory licences on the same terms. The relevant condition of licence for the purposes of the present suit is clause (f) which reads: "In case payment is not made by the Licensee for consecutive two months PPL herein shall be entitled to cancel the licence by giving notice of one month and recover the remaining dues from the bank guarantee".
20. It was alleged that it was obligatory on the part of the plaintiff to comply with the terms of the compulsory licenses subject to which they were allowed to broadcast the repertoire of sound recording works administered by the defendant No.2. But the plaintiff admittedly never made any payment of compulsory licence compensation but, instead, raised a claim under the Voluntary Licence Agreements for adjustment of alleged excess payments made under the said VLAs against the compensation payable to the plaintiff under the terms of compulsory licence.
CS(OS) No.2119/2013 Page 17 of 5721. It is also submitted that the plaintiff has dishonestly suppressed the fact that the Cancellation notice took effect from 21st July, 2013. The plaintiff had made the same false averment in para 5 of its WP(C) No. 4533/2013 filed before this Court on 24th July, 2013 when the matter came up for hearing. On the said date, as recorded by the Court there was no time left for hearing, hence a temporary injunction was granted until the next date of hearing. The plaintiff thus obtained the said interim order whilst failing to disclose that the impugned cancellation notice had already taken effect, in order to obtain an order restoring the status quo ante rather than one merely maintaining the status quo.
22. The reliance on the VLAs is misplaced since the plaintiff itself had abandoned them from February, 2010 onwards by committing willful breaches of their essential terms, in particular by ceasing to pay any licence fee or submitting any logs of usage of the plaintiff's repertoire. The plaintiff has admitted the same in its replication however as an afterthought and in an attempt to cover up its breaches had stated that: "The plaintiff herein out of sheer inadvertence could not pay the royalty for a brief period of February 2010 to September, 2010." It is thus admitted that the plaintiff had abandoned the VLAs long before the Compulsory Licensing Order. The plaintiff's claim for an injunction based on the same agreements which the plaintiff itself has not performed is unlawful and without merit.
23. It is alleged by the defendant No.2 that the plaintiff deliberately is misinterpreting Clause 8 of the VLAs inspite of its clear language.
CS(OS) No.2119/2013 Page 18 of 57(i) The VLAs were not ad hoc or transitional agreements that were executed merely in relation to the expected orders of the Copyright Board. Rather, the VLAs were free standing negotiated agreements which merely took into consideration contingencies that might possibly arise during the terms of the different VLAs. The term of each VLA was only 12 months and defendant No. 2 was entirely at liberty to renew them or not.
(ii) It is the Licensor who is authorized to adjust the license fee payable under the VLA's and not the Licensee.
(iii) The plaintiff deducted IDS both from the payments made originally under the VLAs and again from the payments shown as compulsory licence compensation. This is an admission by the plaintiff that the two were separately payable.
24. On merit, defendant No.2 has submitted that the plaintiff's claim under VLAs not based on final order. The adjustment referred to in para 3 of Clause 8 of the VLA's arises only on "the final orders are passed in the pending proceedings". The clause does not refer to the orders to be passed by the Copyright Board but to the "final Orders". The Copyright Board's orders are appealable under Section 72 of the Copyright Act. An appeal is pending before the Madras High Court. Either party if aggrieved by the appellate order would have a further remedy before the Supreme Court under Article 136 of the Constitution. There can be no question of the parties making any adjustment under para 3 of Clause 8 of the VLAs. The plaintiff was bound to make payments to defendant No. 2 as required by the Compulsory Licensing order dated 25th August, 2010. As the plaintiff CS(OS) No.2119/2013 Page 19 of 57 failed to do so, it has to face the consequences envisaged in clause
(f) of the said order.
25. Defendant No.2 submits that the plaintiff's claim of the purported adjustments under the VLAs is admittedly pending in the Bombay High Court in Suit No.565/2011. The Bombay High Court has admittedly not granted any interim relief qua the termination of the Compulsory Licenses/adjustments.
26. As per defendant No.2 the outstanding as on 31st July, 2014 on account of compulsory licence compensation due from the plaintiff is Rs.9,71,89,343/- which includes the interest on outstanding from the plaintiff. The ad-interim order has also prevented defendant No.2 from encashing the Bank Guarantees which are unconditional which otherwise it is entitled to do. The amount secured under the Bank Guarantee is Rs.41,97,987/-. Even if the Bank Guarantees are allowed to be encashed the loss caused to defendant No.2 could only be offset marginally.
The licenses granted by the Central Government to the plaintiff for operating FM radio stations is only ten years and all licenses/permissions are due to expire in 2016. It will be impossible for defendant No.2 to recover the outstanding amount from the plaintiff thereafter if the plaintiff closes down its only business.
27. The Voluntary License Agreements discloses that "In case the rates are reduced by the final order then the Licensor shall adjust the difference from further usages by the Licensee." Further, in terms of Clause 8 of the Voluntary License Agreement the only 'pending proceeding' at the time of entering the Voluntary License Agreement CS(OS) No.2119/2013 Page 20 of 57 were the proceedings before the Copyright Board. The issue of adjustments being done by the plaintiff is already pending before the High Court of Judicature at Bombay in Civil Suit No. 565/2011 titled as 'Music Broadcast Private Limited v. Phonographic Performance Limited'.
28. Thus, the balance of convenience entirely favours defendant No. 2. There can be no balance of convenience in favour of a party which has not come to Court with clean hands. The plaintiff is in material breach of the essential terms of the VLAs which they base upon their purported claim and the same are in infringement of copyright as well as of the essential terms of the Compulsory Licenses. Secondly, the retroactive nature of the interim injunction in force deprives defendant No. 2 of its legitimate remedies for infringement by the plaintiff after cancellation of the compulsory licenses. Further, continuance of the interim order affects defendant No. 2's business rather than the plaintiffs. And finally any interim order in favour of the plaintiff in the present suit pre-judges defendant No. 2's pending WP(C) No. 8144 of 2011 wherein, if defendant No. 2 succeeds, die plaintiff will be entitled only to five compulsory licences, yet will have obtained additional benefit of fifteen such licences to which it is not entitled.
29. With regard to the other submission that the plaintiff failed to submit every month for each of its stations, complete and necessary declarations regarding its net advertising earnings and pro-rata distribution, the plaintiff has denied the same. It is alleged that the plaintiff is not obliged under the said order dated 25th August, 2010 CS(OS) No.2119/2013 Page 21 of 57 Compulsory Licenses dated 3rd September, 2010 to submit, every month for each of its stations, complete and necessary declarations regarding the net advertising earnings and pro-rata distribution. Further, the defendant No.2 in the impugned notice has for the first time raised the said issue as a ground for cancellation of the Compulsory Licenses. The defendant No.2 has since September, 2010 admittedly never raised the issue of lack of complete and necessary declarations regarding net advertising earnings and pro- rata distribution as a ground for Cancellation of Compulsory Licenses.
30. It is submitted by the plaintiff that the defendant No.2 in the impugned notice has raised the alleged issue of submission of log reports as a ground for cancellation of the compulsory licenses. The defendant No.2 has since September, 2010 admittedly never raised the issue of lack of submission of monthly usage log reports as a ground for Cancellation of Compulsory Licenses. It is specifically denied that the plaintiff has failed and neglected to submit monthly usage log reports. It is submitted that the plaintiff vide their letters dated 24th January, 2011 and 14th February, 2011 addressed to the defendant No.2 indicated that the logs were available at its office and the same may be inspected by a prior written notice. In fact, the same were enclosed vide letter dated 14th February, 2011 by way of abundant caution for its records as it chose not to inspect the same by visiting the office.
31. In the reply to the other allegation that the plaintiff has not reported its net advertisement revenue for the month of January, CS(OS) No.2119/2013 Page 22 of 57 2012 for its FM Radio Station located in the city of Ahmedabad, the plaintiff has denied the same. The plaintiff has also referred its letter dated 6th February 2012, whereby it has forwarded its net advertisement revenue for the month of January 2012 for its FM radio station located in the city of Ahmedabad. It is submitted by the plaintiff that the alleged grievance is only an afterthought and has been raised more than one year after the alleged default. The alleged grievance of the defendant No.2 was communicated to the plaintiff only by way of the Cancellation Notice dated 21st June, 2013. The defendant No.2 had never in any of its prior correspondence sought to terminate the Compulsory Licenses on the basis of the said grievance.
32. The other contention of the defendant No.2 is that the plaintiff has been making defaults in providing Bank Guarantees as per clause (b) of the compulsory license read with para 30.27(b) of the Copyright Board's order. However, it is submitted that it has been regularly revising the Bank Guarantee within two weeks of the close of every quarter of the year which renders the contention of non- compliance of Para 30.27 (b) of the order dated 25th August, 2010, passed by the Copyright Board as erroneous. The plaintiff vide its letter dated 11th January, 2013 bearing Reference Number BG/12/Mumbai/010, forwarded an extension of the Original Bank Guarantee issued by defendant No.1 bearing number 00040100005214 dated 12th January,2011. This extension of the Original Bank Guarantee remained valid till 31st March, 2013. Thereafter, the plaintiff's bankers namely defendant No.1 by their CS(OS) No.2119/2013 Page 23 of 57 Registered Notice dated 3rd April, 2013 notified the defendant No.2 about the cancellation of the Original Bank Guarantee which expired on 31st Match, 2013. Pursuant to the letter dated 3rd April, 2013 defendant No.1 on instructions from the plaintiff have revised the Original Bank Guarantee bearing number 00040100005214 dated 12th January, 2011 with effect from 1st April, 2013 to 30th June,2013. Therefore, the Bank Guarantee was extended by the plaintiff's bankers with effect from 1st April, 2013 and not 6th April, 2013 as falsely contended. Thereafter, in due compliance of the order dated 25th August, 2010 passed by the Copyright Board, the plaintiff has vide letter dated 12th April, 2013 bearing Reference No. BG/12/Mumbai/011 within two weeks of the close of the quarter ending 3rd March, 2013 (i.e. before 15th April, 2013) forwarded the extension of the Original Bank Guarantee. The said Bank Guarantees have been regularly revised/extended by the plaintiff till date in terms of the Compulsory License(s).
33. In rejoinder arguments, it is also submitted that the impugned cancellation notice is a ploy to circumvent the order dated 25th August, 2010 by the Copyright Board which has been upheld by various courts including the Supreme Court, as the defendant No.2 had assailed the said order before various Courts. Firstly the defendant No. 2 had preferred an appeal dated 28th October, 2010 under Section 72 of the Copyright Act, 1957 before the High Court of Judicature at Madras. The said Court by its order dated 22nd December, 2010 in CMA No. 3382/2010 dismissed the application for interim relief, seeking stay of the order dated 25th August 2010. The CS(OS) No.2119/2013 Page 24 of 57 above said order dated 22nd December, 2010 was challenged before Supreme Court in Special Leave Petition (Civil) No. 5727-5735/2011 which was also dismissed by order dated 5th April, 2011.
34. As the defendant No.2 has failed to get the orders of stay of operation of the order dated 25th August, 2010 passed by the Copyright Board, the defendant No. 2 by instituting a Writ Petition (Civil) No.8144 of 2011 titled as 'PPL v. Union of India and others' before this Court wherein the plaintiff was also arrayed as respondent 3rd No.3, sought quashing of the Compulsory Licenses dated September, 2010 granted by the Registrar of the Copyright Board. This Court vide order dated 18th November, 2011 refused to grant any interim order in favour of defendant No. 2. The Division Bench of this 4th Court vide order dated January 2012 directed both the parties i.e. plaintiff and defendant No.2 to comply with the directions issued by the Division Bench in LP.A No.1037/2011. It is submitted that the 4th plaintiff continues to comply with the order dated January, 2012 passed by the Single Judge of this Court.
This Court vide order dated 9th January, 2015 dismissed the W.P. (C) No. 8144 of 2011.The defendant No. 2 thereafter in a ploy to circumvent the order dated 25th August, 2010 passed by the Copyright Board filed a Contempt Petition in the month of March, 2012 being Cont. Cas No. 203/2012 in the above said writ petition Civil No. 8144/2011 ,inter alia, alleging non-compliance of the order dated 4th January 2012 passed by this Court which mandated the compliance of the order dated 25th August 2010 passed by the CS(OS) No.2119/2013 Page 25 of 57 Copyright Board. The petition was subsequently dismissed as not pressed, by this Court by its order dated 19th February, 2013.
35. The plaintiff admits that it had earlier filed a Writ Petition being W.P. (Civil) No. 4533 of 2013 inter-alia seeking a writ of certiorari for quashing the impugned notice dated 21st June, 2013. The plaintiff herein vide order dated 29th October, 2013 withdrew the Writ Petition with the liberty to agitate its grievance before a Civil Court.
36. It is also pointed out by the plaintiff that the defendant No.2 by relying upon the Cancellation Notice dated 21st June, 2013 filed a suit for infringement being Suit (Stamp) No. 626 of 2013 against the plaintiff filed a suit for infringement. Till date, the defendant No.2 has not been granted any relief in the said suit.
It is also stated that the plaintiff has received the Cancellation Notice dated 21st June, 2013 on 24th June, 2013. In fact, the plaintiff received this notice on 22nd June, 2013 as averred in the written statement of defendant No. 2 and proved by the Speed Post and courier delivery reports filed by defendant No. 2 at pp. 54 and 55 of its documents. In its replication the plaintiff has not denied and hence admitted the said delivery on 22nd June, 2013.
37. In view of rival submissions made by the parties and various documents referred by the parties, let me first deal with the issue of territorial jurisdiction. It is settled law that once the Court holds that it has no jurisdiction in the matter, it should not consider the merits of the matter. Reliance is placed on Jagraj Singh v. Birpal Kaur, (2007) 2 SCC 564 (para 27). Thus, as agreed by the parties also let me first deal with the issue of territorial jurisdiction.
CS(OS) No.2119/2013 Page 26 of 5738. On the issue of territorial jurisdiction arising from the location of a subordinate office, Mr. Amit Sibal, learned Senior counsel appearing on behalf of the defendant No.2 has referred the judgment of Patel Roadways Ltd. v Prasad Trading Co. AIR 1992 SC 1514 (paras 9-12) in which it has been explained the true import of Section 20(a) and the explanation to Section 20 CPC. The Supreme Court interpreted the explanation to Section 20 as an Explanation to Section 20(a), and the law is settled that a suit can be filed at a place where the branch/subordinate office of the defendant is located only if a part of cause of action has arisen at that place and not otherwise. This Court relied upon Patel Roadways (supra) in Anant Raj Industries Ltd v. Balmer Lawrie Co. Ltd., (2003)103 DLT 169, (para 10) and held as under:
"10...........When this decision is applied to the facts of the present case, it will appear that it may have been proper for the Plaintiff to file a suit in Calcutta where the principal office of the Defendant is located. It could also have been filed in Delhi where a subordinate office is located, provided the cause of action of which the Plaintiff is aggrieved, has had arisen in Delhi. In am of the view that despite the fact that the contract might have been entered into at Delhi and money is paid in Delhi, the cause of action on which the suit is predicated was unrelated to the agreement................... On an application of the ratio of Patel Roadways, there is no scope for Delhi Court to exercise jurisdiction." Please also see Kensoft Infotech Ltd. vs. Mr. R.S. Krishnaswami & Ors., ILR (2007) I Delhi 308 at para 61-62, pp 339-340."
39. It is submitted by the defendant No.2 that the contents of present plaint are similar as that of the plaint in Suit No. 565 of 2011 CS(OS) No.2119/2013 Page 27 of 57 filed by the plaintiff in the Bombay High Court and the cause of action is also similar viz. the plaintiff's claim under the Voluntary Licence Agreements. Thus, this Court has no jurisdiction to entertain the present suit. The plaint is liable to be returned to the plaintiff for presentation before the proper Court under Order 7 Rule 10 CPC.
It is argued by Mr. Amit Sibal, learned Senior Counsel that each and every fact pleaded by the plaintiff does not give rise to a cause of action creating territorial jurisdiction, rather the intention of the suit as a whole has to be considered, trivial aspects of the stated cause of action with no nexus to the lis between parties do not confer territorial jurisdiction. The facts constituting the "cause of action" are only those having a substantial nexus or relevance to the lis. Before exercising jurisdiction, the Court must be satisfied that all such facts arise within its territorial jurisdiction. The cause of action consists of bundle of facts which give cause to enforce the legal injury for redress in a court of law. In other words, it is those facts, which if taken with the law applicable to them, gives the plaintiff a right to claim against the defendant. The facts pleaded must be material, integral or essential to the lis between the parties which must be determined on a meaningful reading of the plaint.
40. Mr. Sibal has argued that the plaintiff has erroneously relied upon a suit filed by defendant No. 2 as plaintiff in this Court in Phonographic Performance Limited v Spring Club, 2014(209) DLT 584 to argue that defendant No. 2 itself avers that it has a branch office in Delhi from which it carries out the business of licensing of sound recordings. The said case is irrelevant for CS(OS) No.2119/2013 Page 28 of 57 determining whether "cause of action" has arisen within the territorial jurisdiction of this Court in the facts of the present case. In Phonographic Performance Limited (supra), defendant No. 2 had filed a suit for infringement of its copyright in sound recordings and averred that it has a branch office in Delhi from which it carries out the business of licensing sound recordings to maintain a suit as a plaintiff under Section 62(2) of the Copyright Act. Section 62(2) of the Copyright Act reads as under:
"For the purpose of sub-section (1), a "district court having jurisdiction" shall, notwithstanding anything contained in the Code of Civil Procedure, 1908 (5 of 1908), or any other law for the time being in force, include a district court within the local limits of whose jurisdiction, at the time of the institution of the suit or other proceeding, the person instituting the suit or other proceeding or, where there are more than one such persons, any of them actually and voluntarily resides or carries on business or personally works for gain."
Under Section 62(2) of the Copyright Act, it is not a sine qua non, for a copyright owner to maintain a suit for infringement, that the cause of action should arise at the place of suing. The situation is wholly different from Section 20(a) CPC read with the Explanation, which mandates that the 'cause of action' must have arisen at the place of a subordinate office of the defendant to create territorial jurisdiction at such place. The fact that defendant No. 2 has an office in Delhi and does licensing of sound recordings from such office does not give rise to any cause of action as it is immaterial to the lis between the parties in this suit, which relates to the entitlement of the CS(OS) No.2119/2013 Page 29 of 57 plaintiff to adjust the alleged excess payments made under VLAs.
It is submitted that mere location of a branch office of PPL in Delhi and the licensing of sound recordings from such office does not clothe this Court with territorial jurisdiction as no "cause of action" has arisen within the territorial jurisdiction of this Court.
41. It is relevant to mention here that after the order in the interim application was reserved on 10th August, 2015 and before pronouncement of the order, the plaintiff filed fresh application being I.A. No.20535/2015 under Section 151 CPC for placing on record certain further development and additional documents. The said applications were listed before Court on 29th September, 2015. The defendant No.2 sought time to file the reply. After filing the reply on 8th January, 2016, it was observed and agreed by the parties that the averments made in the application are linked with the interim injunction application thus the same be decided along with I.A. No.1762/2013.
42. It was alleged in the application that on 14th September, 2015 pending motion being No.654/2015 was taken by the Bombay High Court in C.S (O.S) 565/2011 and the same was disposed of after recording the statement on behalf of the plaintiff that the plaintiff has adjusted the amount permitted by the Copyright Board under the compulsory licenses in respect of voluntary licenses and no further amount remains to be adjusted. Counsel for defendant No.2 raised its objection that the adjustment was impermissible and Court had CS(OS) No.2119/2013 Page 30 of 57 observed that the objections be kept open to the final hearing of the suit, however the pending motion was disposed of.
43. It is evident from the said order that the issue of adjustment of the amount is kept alive which is to be decided at the final stage. The said amount is pertaining to voluntary licenses and the plaintiff has exercised its power to adjust the amount suo-motto in view of the clause 8 of the agreement.
44. Mr. Sibal has rightly argued that once the advantage has been taken by the plaintiff in clause 8 of the agreement, the clause 33 of the said agreement ipso facto would be attracted.
45. The plaintiff has invoked the territorial jurisdiction of this Court to entertain the present suit on the grounds that the defendant No.2 carries on business within the territorial jurisdiction of this Court at Delhi. The defendant No.2 in Writ Petition (Civil) No. 8144/2011 filed by it before this Court inter-alia seeking cancellation of 15 Compulsory Licenses granted by the Registrar of Copyrights has admitted in Writ Petition that the defendant No.2(petitioner therein) is carrying on business from its office in Delhi. The defendant No.2 in the said Writ Petition (Civil) No. 8144/2011 describing the jurisdiction of this Court to entertain the Writ Petition stated that the plaintiff (arrayed as respondent No.3 in the Writ Petition) is broadcasting the sound recordings of the defendant No.2 (petitioner in the writ petition) from one of its FM Radio Stations located at Delhi.
Writ petition (Civil) No.8144/2011 preferred by the defendant No.2 (Petitioner therein) has been dismissed vide judgment dated 9th January, 2015.
CS(OS) No.2119/2013 Page 31 of 5746. It is alleged by the plaintiff that the defendant No.2 has also filed a Civil Suit being CS (OS) No. 2749/2011 before this Court titled as 'Phonographic Performance Limited v. HT. Media', which also pertains to the order dated 25th August, 2010 passed by the Copyright Board wherein it has been stated that PPL is carrying its business of compulsory licensing from Delhi. The reliance is also placed on the order dated 18th November, 2013 passed by this Court in the present suit wherein this Court rejected the contention of the defendant No.2 qua the lack of territorial jurisdiction of this Court. Paragraph 14 of the impugned order is reproduced herein below:-
"Admittedly, the defendant's subsidiary office is at Delhi, part of cause of action has arisen at Delhi as the Compulsory Licenses were issued at Delhi, the breach whereof is alleged by the defendant and the right to cancel conferred on the plaintiff arises from the Compulsory Licenses issued at Delhi. Thus, it cannot be said that this Court has no territorial jurisdiction to try the present suit. It is further the contention of the defendant that since the plaintiff is relying upon voluntary agreements, as per Clause 33 of the voluntary license agreement the parties agreed to submit to the jurisdiction of High Court of Judicature at Bombay exclusively and thus this Court does not have the territorial jurisdiction to entertain the suit. In the present suit, the cause of action does not arise because of voluntary license agreement between the parties but relates to the Cancellation Notice dated 21st June, 2013 issued by the defendant citing. breaches of the Compulsory Licenses dated 3rd September, 2010, Hence the terms of the Voluntary License Agreements between the parties will not govern the present suit."
47. The contention of the defendant No.2 is that the suit could have only been filed in Bombay High Court and not in Delhi, if any fresh CS(OS) No.2119/2013 Page 32 of 57 cause of action has arisen. The filing of suit before this Court is an abuse of process of Court.
48. Mr. Sibal, learned Senior counsel contends that the presence in Delhi of one out of twenty of the plaintiff's radio stations has no substantial nexus or relevance to the lis. If the plaintiff could sue in any one of twenty places at its choice without the cause of action arising at the place where a radio station of the plaintiff is located. The averments in the plaint in the context of territorial jurisdiction of this Court are not integral, material and essential to the lis between the parties.
49. In any case, even assuming arguendo as argued by Mr. Sibal that part of cause of action has arisen both in Mumbai and Delhi, the exclusive jurisdiction clause in the VLAs cannot be derogated from and operates as a jurisdictional bar on this Court.
50. There are following admitted facts and circumstances which may be relevant for the purpose of deciding the issue of territorial jurisdiction as per the pleadings. The same are as under:-
a) All VLA's are made and executed at Mumbai. Clause 33 of each VLA is an exclusive jurisdiction clause of the Bombay High Court. Therefore, any dispute arising out of the VLAs has to be decided by the Bombay High Court. Such suit has already been filed by the plaintiff (Suit No.565/2011) before the Bombay High Court.
b) Both the plaintiff and defendant No. 2 have their registered offices in Mumbai. The plaintiff's various letters addressed to the defendant No.2 containing their alleged claim of CS(OS) No.2119/2013 Page 33 of 57 adjustment were sent by the plaintiff from their Mumbai office to the defendant No.2's Mumbai office.
c) Defendant No.1 (registered office is in Ahmedabad) issued the relevant bank guarantees from its Mumbai office and received instructions from defendant No. 2 invoking the same in its Mumbai office.
d) Defendant No. 2' s cancellation notice dated 21st June, 2013 is addressed and issued from the Registered office of the defendant No.2 in Mumbai and addressed to and received by the plaintiff at its registered office situated in Mumbai.
e) All other relevant correspondence between the parties also admittedly took place in Mumbai. In paragraph 11 of the plaint the plaintiff states that its cause of action arose from a series of acts of defendant No. 2 which took place only in Mumbai.
51. The cause of action to file the present suit arose on 21st June, 2013 when the defendant No. 2 issued the Cancellation Notice terminating the Compulsory Licenses dated 3rd September, 2010. Admittedly, the said cancellation notice was issued and received in Mumbai. The cause of action also arose on 22nd July, 2013 when the defendant No. 2 sought to invoke the Bank Guarantees in question by addressing a letter to the defendant No.1, admittedly this happened in Mumbai.
As per the plaintiff, the cause of action arose on 23 rd July, 2013 when the defendant No.2 filed the Suit (Stamp) No. 626 of 2013 CS(OS) No.2119/2013 Page 34 of 57 [now numbered as Suit No. 796 of 2013] inter-alia on the alleged plea of infringement by the plaintiff of the repertoire of the defendant No. 2. The said suit was admittedly filed in the Bombay High Court. Even in para 12 and 13 of Suit No.565/2011 filed by the plaintiff in the Bombay High Court, the plaintiff has itself averred that the cause of action regarding its claim of adjustment between the VLAs and the apprehension that the Compulsory licenses will be terminated by the defendant No.2 arose in Mumbai and accordingly claimed the jurisdiction of the Bombay High Court.
52. The plaintiff claimed jurisdiction in Delhi on the basis that defendant No. 2 has a branch office in Delhi, that the plaintiff has 1 out of 20 FM Radio Stations in Delhi, that the Copyright Board and the Registrar of Copyrights have respectively passed the Compulsory Licensing Order and issued the Compulsory Licenses from their offices in Delhi after proceedings conducted in Delhi is without any substance as none of these facts has any bearing on the plaintiff's actual cause of action. As per settled law that each and every fact pleaded by the plaintiff does not ipso facto give rise to a cause of action creating territorial jurisdiction, rather the intention of the suit as a whole has to be considered, trivial aspects of the cause of action do not confer territorial jurisdiction.
The argument of the plaintiff is that the claim of territorial jurisdiction in Delhi on the basis that the Copyright Board's order was passed in Delhi is irrelevant, since the plaintiff has not disputed the said order and in any case because the geographical location of a CS(OS) No.2119/2013 Page 35 of 57 tribunal is no basis for claiming territorial jurisdiction. Further, in A.B.C Laminart Pvt. Ltd. v. A.P. Agencies, 1989 (2) SCC 163 Supreme Court held that in cases of repudiation of contract, the jurisdiction will lie with Courts where the said repudiation was received.
53. Even some part of the cause of action arose in Delhi, the most essential and inseparable part of the plaintiff's cause of action indisputably rests on the plaintiff's above claims made on the basis of the VLAs. No event occurring in Delhi can derogate from the exclusive jurisdiction clause in the VLAs. This Court cannot dispose of the lis between the parties de hors the plaintiff's purported claim of adjustment under the VLAs against compulsory license compensation. Even assuming arguendo that this Court has territorial jurisdiction on the basis of any other elements of the cause of action, the jurisdiction of this Court remains barred by the exclusive jurisdiction clause in the VLAs. Reliance is placed on the following:
Begum Sahiba Sultan v Nawab Mohd. Mansur Ali (2007) 4 SCC 343 (para 10).
M/s Hanil Era Textiles Ltd. v M/s Puromatic Filters (P) Ltd. (2004) 4 SCC 671 (para 7).
54. The plaintiff has now averred that this Court has territorial jurisdiction as the plaintiff is operating one of their FM Radio Stations in Delhi. It is pertinent to note that the Compulsory Licenses or the Copyright Board's order is not under challenge in the present suit so as to confer territorial jurisdiction to this Court. The plaintiff is claiming compliance of the terms of the Compulsory Licenses by letter written CS(OS) No.2119/2013 Page 36 of 57 from its registered office in Mumbai to the defendant No.2 who also has its registered office in Mumbai. The plaintiff is submitting the usage reports (although incomplete and unsubstantiated) for all its 20 FM Radio stations from the registered office in Mumbai to the defendant No.2's registered office in Mumbai.
The plaintiff has addressed all its correspondence after the Copyright Board's order dated 25th August, 2010 referred to and relied upon in the present suit from their registered office in Mumbai. The plaintiffs have addressed all their letters claiming purported adjustments from their registered office in Mumbai to the defendant's registered office in Mumbai.
55. The Supreme Court in Union of India v. Adani Exports Ltd., (2002) 1 SCC 567 held as under:
"17........ It is clear from the above judgment that each and every fact pleaded by the respondents in their application does not ipso facto lead to the conclusion that those facts give rise to a cause of action within the courts territorial jurisdiction unless those facts pleaded are such which have a nexus or relevance with the lis that is involved in the case. Facts which have no bearing with the lis or the dispute involved in the case, do not give rise to a cause of action so as to confer territorial jurisdiction on the court concerned...."
(Emphasis supplied)
56. Another decision of the Supreme Court in Alchemist Ltd & Anr. v State Bank of Sikkim & Ors. (2007) 11 SCC 335, has been relied upon by the defendant No.2, in which after discussing a catena of judgments, it was held as under:
"25.The learned counsel for the respondents referred to several decisions of this Court and submitted that whether a particular CS(OS) No.2119/2013 Page 37 of 57 fact constitutes a cause of action or not must be decided on the basis of the facts and circumstances of each case. In our judgment, the test is whether a particular fact(s) is (are) of substance and can be said to be material, integral or essential part of the lis between the parties. If it is, it forms a part of cause of action. If it is not, it does not form a part of cause of action. It is also well settled that in determining the question, the substance of the matter and not the form thereof has to be considered."
57. Reliance is also placed on the following judgments in this regard. South East Asia Shipping Co. Ltd. v. Nav Bharat Enterprises Pvt Ltd & Ors., (1996) 3 SCC 443, (para 3); Kensoft Infotech Ltd. v. R.S. Krishnaswami & Ors. ILR (2007) I Delhi 308, (para 61); Rattan Singh Associates (P) Ltd. v. M/s Gill Power Generation Company Pvt. Ltd., ILR (2007) I Delhi 275 (paras 12, 18, 21, 22 and 31); Sector twenty-one Owners Welfare Association v Air Force Naval Housing Board & Ors., (1997) 65 DLT 81 (DB) (para 13.)
58. Admittedly, correspondences were exchanged between the parties in regard to the above from Mumbai i.e. from their offices. As a matter of fact the plaintiff itself has based its suit filed before the Bombay High Court on its repudiation of the defendant No.2 by letter dated 19th January, 2011 refusing to accept the purported adjustments sought to be made by the plaintiff.
59. The plaintiff admittedly instituted Suit No. 565 of 2011 in the Bombay High Court, seeking enforcement of its claim under the VLAs abandoned by them for adjustment of alleged excess payment thereunder against the compensation payable to the defendant No.2 CS(OS) No.2119/2013 Page 38 of 57 for compulsory licence, and seeking permanent and interim injunctions restraining the defendant No.2 from cancelling the compulsory licences for non payment of compensation. Prayers (b) and (e) in the said suit are reproduced below:-
"(b) That this Hon'ble Court be pleased to declare that the Defendant is bound to adjust and the plaintiff is not liable to pay any usage amount under the License Agreements and the Compulsory License Agreements dated 3rd September, 2010 until such time as the excess amount computed in terms of prayer (a) above to the extent of Rs.8,83,06,248/- or such sum that may remain after adjustment of amounts against future usage has been adjusted and exhausted fully...
(e) That the Court be pleased to pass a permanent order and injunction restraining the Defendant, its officers, servants.
directors, employees, authorized representatives and agents or any one from in any manner terminating or taking any coercive steps under the License Agreements and the Compulsory License Agreements dated 3rd September 2010 as long as (i) the excess amount is lying with the defendants and (ii) the monthly payments are made by the plaintiff in consonance with the order dated 25th August 2010 passed by the Copyright Board;
60. It is evident that the plaintiff's claim for enforcement of its interpretation of the VLAs and the same plaintiff's claim to be complying with the terms of the compulsory licences, are not merely indissolubly interlinked but in fact are one and the same plea as well as one and the same cause of action.
CS(OS) No.2119/2013 Page 39 of 5761. In the plaint in Suit No. 565 of 2011 filed by the plaintiff before the Bombay High Court set out the cause of action and the territorial jurisdiction for the said suit. The plaintiff has averred that the cause of action is the defendant No.2's letter dated 19th January, 2011. Further for territorial jurisdiction the plaintiffs have averred that all the VLA's are executed at Mumbai and the plaintiffs and the defendant No.2 have their registered offices (principle places of business) in Mumbai. The plaintiff carries on its business within the jurisdiction of the Mumbai High Court and therefore under Section 62 of the Copyright Act (which vests jurisdiction in case of suits under chapter XI of the Copyright Act to the District Court having jurisdiction). Section 62 (2) contains exclusive interpretation of the terms 'District Court having jurisdiction appearing in sub section (1) of Section 62'. It specifies the district court within whose jurisdiction the person instituting the suit actually and voluntarily reside or carry on business. The cause of action to file the suit in Mumbai and a fresh cause of action is sought to be made out by the plaintiff in the present suit. The subject matter of the Bombay suit is the 20 VLA's and the 20 Compulsory Licenses. The plaintiff has averred jurisdiction of Mumbai High Court (exclusive under Section 62) with respect to all the compulsory licenses pleading that it is carrying on business in Mumbai.
62. Thus, it appears to the Court very clearly that the lis between the parties arises entirely out of the VLAs. Both in the Bombay suit and in the present suit, the plaintiff is seeking to enforce its claims under the VLAs with a consequential injunction against cancellation (whether prospective or post facto) of its compulsory licences for non-
CS(OS) No.2119/2013 Page 40 of 57payment. These are not two lis, which might be adjudicated separately but only one, and there is no cause of action de hors the same.
63. No doubt after the Copyright Board's order dated 25th August, 2010 (also referred to as "Compulsory Licensing Order"), claiming the right to adjust under Clause 8 of the VLA's, the plaintiff sent notices to defendant No. 2 stating that it need not make payments under the compulsory licenses until alleged excess payments made under the VLAs are adjusted. Defendant No. 2 did not accept the said claim for adjustment.
64. Accordingly, defendant No. 2, by exercising its right under clause (f) of the compulsory licenses and Para 32.27(f) of Compulsory Licensing Order sent a notice of cancellation for 20 compulsory licenses to the plaintiff, which was served on 22nd June, 2013, and took effect on 21st July, 2013. In the present suit (as in the Bombay suit) the plaintiff assails defendant No. 2's right to cancel the licenses on the basis of its claim to adjust under VLAs.
65. The defendant No. 2 had issued the Cancellation Notice inter- alia on various grounds such as alleged non-payment of compensation by 7th day of each month on and from October, 2010 or any other date, for all the FM Radio Stations till date; alleged failure to submit monthly usage log reports; defaults in providing Bank Guarantees as per clause (b) of the Compulsory Licenses read with Para 30.27 (b) of the Copyright Board's order dated 25th August, 2010 etc. which are not the subject matter of the suit filed before the High Court of Bombay. The suit filed before the High Court of CS(OS) No.2119/2013 Page 41 of 57 Bombay seeks to restrain the defendant No. 2 from terminating the Compulsory Licenses dated 3rd September, 2010 as long as the excess amount is lying with the defendant No. 2 and the monthly payments are made in consonance with the order dated 25th August, 2010 passed by the Copyright Board. However, in the Cancellation Notice dated 21st June, 2013, the defendant No. 2 has sought to terminate the Compulsory Licenses on various other false and baseless grounds as detailed in the Cancellation Notice which constitute a fresh cause of action.
66. It is also the admitted position that the plaintiff in Bombay suit sought injunction restraining the defendant No.2 from terminating VLA's and compulsory licenses who could not get the injunction from cancelling the compulsory licenses. When the present suit was filed the suit in Bombay High Court was pending.
The case of the plaintiff is that the present suit arises out of a fresh cause of action that has arisen on 21st June, 2013 when the defendant No. 2 had issued the impugned Cancellation Notice dated 21st June, 2013 cancelling the Compulsory Licenses granted by the Registrar, Copyright Board. The cause of action also arose on 22nd July, 2013 when the defendant No. 2 sought to invoke the Bank Guarantees by addressing letter to the defendant No.1.
67. Counsel for the plaintiff argued that all the said VLAs have expired and therefore the exclusive jurisdiction clause cannot be enforced. The plaintiff cannot claim rights arising from the contract de hors the contract. If according to the plaintiff, Clause 33 cannot survive on the expiry of the agreement, then neither can the other CS(OS) No.2119/2013 Page 42 of 57 clauses. In that case the plaint is without any basis or cause of action, because the entire plea of right to adjust is based on Clause 8 of the VLAs. Moreover, this argument of learned counsel for the plaintiff contradicts the plaint, which asserts rights based on Clause 8 of VLA in which case other clauses also survive, including Clause 33 which bars the jurisdiction of this Court. If the plaintiff argues that there cannot be any reliance on the exclusive jurisdiction clause contained in Clause 33 of VLAs since they have expired, the same rationale will also be extended to the entire VLA, including Clause 8.
68. The contention of learned counsel for the plaintiff that the exclusive jurisdiction clause is not enforceable after expiry of an agreement is contrary to law and without any valid reason. The judgment of National Textile Corpn Ltd v. Ashval Vaderaa, 2009(107) DRJ 637, relied upon by the plaintiff, does not support his proposition, as it is inapplicable to the facts of the present case and completely distinguishable. In National Textile Corpn. Ltd. (supra), the rights of the petitioner neither flowed from the agreement dated 16th October, 1978 that had expired in 1980 (more than 25 years earlier) nor related to that period. During those 25 years, the expired agreement was succeeded by agreements whose terms kept on changing from time to time. A new month to month tenancy was in existence from 1st January, 2005 (with no arbitration clause) when the landlord filed a suit for possession in 2006. Thereafter in 2006/2007, the petitioner-tenant filed an application invoking the arbitration clause of the expired/exhausted 1978 agreement with which the controversy had no relation, and no rights from the earlier expired CS(OS) No.2119/2013 Page 43 of 57 agreement or for that period were in question. It is in this context that this Court held that that a party cannot resort to an arbitration clause in the exhausted/expired contract as the disputes were covered by a new contract, which had no arbitration clause.
69. This issue is no longer res integra as this Court, on facts and subject matter similar to the present suit, has held that an ouster clause (exclusive jurisdiction clause) will continue to be applicable for interpretation of the rights of the parties flowing from an agreement even after its tenure has come to an end. Reliance is placed on Nariman Films v. Dilip Mehta & Anr., 2005(31) PTC 571 (Del.), (para 19-21).
70. Once the advantage has been taken by the plaintiff in clause 8 of the agreement and the similar relief has also been sought by the plaintiff earlier in Bombay High Court then the clause 33 of the said agreement ipso facto would be attracted. Both clauses 8 and 33 of the agreement are reproduced herein below:-
"8. The Licensor hereby grants voluntary license for the existing and future works of Licensor's members upon following terms and conditions :
As per the standard terms and conditions of the voluntary license, the licensee, before the commencement of the broadcast was required to pay an advance payment of Rs.30,00,000/- (Rs. Thirty Lacs only) per station as an interest free security deposit.
However as the Licensee has commenced six stations and is obtaining voluntary License for Mumbai station, the Licensor as a special consideration agrees to Rs.20,00,000/- (Rupees Twenty Lacs only) as interest free security deposit. The deposit amount shall be paid back to the Licensee subject to deduction of dues if any, CS(OS) No.2119/2013 Page 44 of 57 in case the radio stations is closed or if the License is cancelled/terminated.
The Licensee before the commencement of the broadcast to make an adhoc advance payment of Rs.3,00,000/- (Rs. Three Lacs only). This amount shall be adjusted at the end of the month as per the following royalty rate :
o Rs.1200/- per needle hour during 8 a.m. to 10 a.m. & 6 p.m. to 8 p.m. o Rs.300/- per needle hour during 10 p.m. to 6 a.m. and o Rs.720 per needle hour during rest of the day. The licensee do hereby agree to pay arrears, if any, from the date of commencement of broadcast to Licensor in accordance with the final orders that may be passed in the pending proceedings. In case the rates are reduced by the final order then the Licensor shall adjust the difference from further usage by the Licensee. It is further agreed declared and confirmed that the rate of license fee payable by the Licensee to the Licensor under this agreement shall not be construed as a discount or rebate or concession granted by the Licensor to the Licensee and that the rate of Licensee fee shall be such as may be finally determined for Licensees operating at the city of operation by the Hon'ble Court and/or Tribunal. The Licence Fee is exclusive of any Sales Tax, Service Tax, Lease Tax and/or other such taxes as may be levied on the Licence Fee payable, by any government authority and regulations. All taxes, duties or other similar payments (including VAT) shall be borne by the Licensee.
33. This License shall be governed by and construed in accordance with the laws of India and the High Court of Judicature at Bombay shall have exclusives jurisdiction."
71. The plaintiff has admitted that the amount has been adjusted in view of the order passed by the Copyright Board under Clause 8 of CS(OS) No.2119/2013 Page 45 of 57 the VLA's. In view of admission, clause 33 of the same very VLA's would also get attracted wherein it has been stipulated that High Court of judicature at Bombay shall have exclusive jurisdiction.
72. On a meaningful reading of the plaint, it is clear that the entire lis between the parties is covered by Clause 33 of the VLAs. The plaintiff claims that the cancellation of compulsory licence is invalid because the plaintiff is entitled to adjust the amounts payable under the compulsory license from the amount already paid under VLAs, which is subject to the exclusive jurisdiction clause. An exclusive jurisdictional clause cannot be allowed to be circumvented by clever verbal jugglery and recycled cause of action (from C.S. No. 565 of 2011 in Bombay High Court) in order to obtain relief from this Court that it could not get from the Bombay High Court. It is settled law that even where courts in two places may have jurisdiction, an exclusive jurisdiction clause in favour of one of the two places ousts the jurisdiction of the other. Reliance is placed on Swastik Gases Pvt. Ltd. v Indian Oil Corporation Ltd. (2013) 9 SCC 32, (paras 31-33); ABC Laminart Pvt. Ltd. (supra) (paras 12, 15, 16 & 18); M/s Hanil Era Textiles Ltd. (supra). Since this suit seeks adjudication on rights of the plaintiff to adjust allegedly excess payments under VLAs, Clause 33 of VLA operates as a jurisdictional bar on all other courts other than the Bombay High Court, including this Court.
73. In view of the admitted facts referred above and as per clause 33, this Court has no jurisdiction to entertain the present suit as per following judgments :
CS(OS) No.2119/2013 Page 46 of 57(i) Balaji Coke Industry Private Limited v. Maa Bhagwati Coke Gujarat Private Limited, (2009) 9 SCC 403, (paras 24 to 30), which read as under:-
"24. The only question which falls for our consideration is whether, notwithstanding the mutual agreement to make the high-seas sale agreement subject to Kolkata jurisdiction, it would be open to the respondent Company to contend that since a part of the cause of action purportedly arose within the jurisdiction of the Bhavnagar Court, the application filed under Section 9 of the Arbitration and Conciliation Act, 1996, before the Principal Civil Judge (Senior Division), Bhavnagar (Gujarat), would still be maintainable.
25. The aforesaid question has often troubled the courts with one view being that since the parties to the agreement had agreed to a particular forum, they could no longer resile from the said position and claim that other courts, where a part of the cause of action may have arisen, would also have jurisdiction to entertain a suit or other proceeding. The other view has been that, if by the said agreement the rightful jurisdiction of a court was sought to be ousted and a court was vested with the jurisdiction to entertain a suit, which it did not have, the same would be contrary to the provisions of Section 28 of the Contract Act, 1872, being contrary to public policy. One of the earlier judgments on this dichotomy of views is that of this Court in Hakam Singh [(1971) 1 SCC 286 : AIR 1971 SC 740].
26. Faced with the question as to whether an agreement arrived at between two parties that one of the two courts having jurisdiction, would decide all the disputes relating to such agreement, was hit CS(OS) No.2119/2013 Page 47 of 57 by the provisions of Section 28 of the Contract Act, 1872, this Court in Hakam Singh case held that where two courts or more have the jurisdiction to try a suit or proceeding under the provisions of the Code of Civil Procedure, an agreement between the parties that one of such courts would have the jurisdiction to decide the disputes arising between the parties from such agreement would not be contrary to public policy and would not, therefore, be contrary to the provisions of Section 28 of the Contract Act, 1872.
27. The said question once again arose in A.B.C. Laminart (P) Ltd. [(1989) 2 SCC 163], wherein following the decision in Hakam Singh, but relying on the maxim ex dolo malo non oritur actio, this Court held that by an agreement which absolutely ousted the jurisdiction of a court having the jurisdiction to decide the matter, would be unlawful and void, being contrary to public policy under Section 28 of the Contract Act. But so long as the parties to a contract do not oust the jurisdiction of all the courts, which would otherwise have the jurisdiction to decide the cause of action under the law, it could not be said that the parties had by their contract ousted the jurisdiction of the court.
28. This Court in A.B.C. Laminart case went on to observe that where there may be two or more competent courts which can entertain a suit consequent upon a part of the cause of action having arisen therewithin, if the parties to the contract agree to vest jurisdiction in one such court to try the dispute which might arise between them, the agreement would be valid.
29. The question also arose in R.S.D.V. Finance Co. (P) Ltd. v. Shree Vallabh Glass Works CS(OS) No.2119/2013 Page 48 of 57 Ltd. [(1993) 2 SCC 130] , where an endorsement "subject to Anand (Gujarat) jurisdiction", was relied upon to contend that only the courts in Anand would have the jurisdiction to entertain any dispute relating to such jurisdiction and the suit filed in Bombay on the ground that the cause of action arose in Bombay was not maintainable. In the said case, this Court held that since apart from the endorsement on the deposit receipt, there was no formal agreement between the parties, the said endorsement would not divest the courts in Bombay of their jurisdiction to entertain the suit. As will be evident from the facts of the suit, the same stood on a different footing and does not advance the case of the respondent in any way.
30. In the instant case, the parties had knowingly and voluntarily agreed that the contract arising out of the high-seas sale agreement would be subject to Kolkata jurisdiction and even if the courts in Gujarat also had the jurisdiction to entertain any action arising out of the agreement, it has to be held that the agreement to have the disputes decided in Kolkata by an arbitrator in Kolkata, West Bengal, was valid and the respondent Company had wrongly chosen to file its application under Section 9 of the Arbitration and Conciliation Act before the Bhavnagar Court (Gujarat) in violation of such agreement. The decisions of this Court in A.B.C. Laminart (P) Ltd. as also Hakam Singh are very clear on the point."
(ii) Swastik Gases Private Limited (supra) paras 7, 28 & 57 which read as under:-
"7. We have heard Mr Uday Gupta, learned counsel for the appellant and Mr Sidharth Luthra, learned Additional Solicitor General for the CS(OS) No.2119/2013 Page 49 of 57 Company. The learned Additional Solicitor General and the learned counsel for the appellant have cited many decisions of this Court in support of their respective arguments. Before we refer to these decisions, it is apposite that we refer to the two clauses of the agreement which deal with arbitration and jurisdiction. Clause 17 of the agreement is an arbitration clause which reads as under:
17. Arbitration If any dispute or difference(s) of any kind whatsoever shall arise between the parties hereto in connection with or arising out of this agreement, the parties hereto shall in good faith negotiate with a view to arriving at an amicable resolution and settlement. In the event no settlement is reached within a period of 30 days from the date of arising of the dispute(s)/difference(s), such dispute(s)/ difference(s) shall be referred to 2 (two) arbitrators, appointed one each by the parties and the arbitrators, so appointed shall be entitled to appoint a third arbitrator who shall act as a presiding arbitrator and the proceedings thereof shall be in accordance with the Arbitration and Conciliation Act, 1996 or any statutory modification or re-enactment thereof in force. The existence of any dispute(s)/ difference(s) or initiation/continuation of arbitration proceedings shall not permit the parties to postpone or delay the performance of or to abstain from performing their obligations pursuant to this agreement.
8. The jurisdiction Clause 18 in the agreement is as follows:
18. Jurisdiction CS(OS) No.2119/2013 Page 50 of 57 The agreement shall be subject to jurisdiction of the courts at Kolkata.
9. The contention of the learned counsel for the appellant is that even though Clause 18 confers jurisdiction to entertain disputes inter se parties at Kolkata, it does not specifically bar jurisdiction of courts at Jaipur where also part of the cause of action has arisen. It is the submission of the learned counsel that except execution of the agreement, which was done at Kolkata, though it was signed at Jaipur, all other necessary bundle of facts forming "cause of action" have arisen at Jaipur. This is for the reason that:
(i) the regional office of the respondent Company is situate at Jaipur;
(ii) the agreement was signed at Jaipur;
(iii) the consignment agency functioned from Jaipur;
(iv) all stock of lubricants was delivered by the Company to the appellant at Jaipur;
(v) all sales transactions took place at Jaipur;
(vi) the godown, showroom and office of the appellant were all situated in Jaipur;
(vii) various meetings were held between the parties at Jaipur;
(viii) the Company agreed to lift the stock and make payment in lieu thereof at a meeting held at Jaipur, and
(ix) the disputes arose at Jaipur.CS(OS) No.2119/2013 Page 51 of 57
The learned counsel for the appellant would submit that since part of the cause of action has arisen within the jurisdiction of the courts at Jaipur and Clause 18 does not expressly oust the jurisdiction of other courts, the Rajasthan High Court had territorial jurisdiction to try and entertain the petition under Section 11 of the 1996 Act. He vehemently contended that Clause 18 of the agreement cannot be construed as an ouster clause because the words like "alone", "only", "exclusive" and "exclusive jurisdiction" have not been used in the clause.
29. When it comes to the question of territorial jurisdiction relating to the application under Section 11, besides the above legislative provisions, Section 20 of the Code is relevant. Section 20 of the Code states that subject to the limitations provided in Sections 15 to 19, every suit shall be instituted in a court within the local limits of whose jurisdiction:
(a) the defendant, or each of the defendants where there are more than one, at the time of commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or
(b) any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or
(c) the cause of action, wholly or in part arises.
30. The Explanation appended to Section 20 clarifies that a corporation shall be deemed to carry CS(OS) No.2119/2013 Page 52 of 57 on business at its sole or principal office in India or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place.
31. In the instant case, the appellant does not dispute that part of cause of action has arisen in Kolkata. What appellant says is that part of cause of action has also arisen in Jaipur and, therefore, the Chief Justice of the Rajasthan High Court or the designate Judge has jurisdiction to consider the application made by the appellant for the appointment of an arbitrator under Section 11.
Having regard to Section 11(12)(b) and Section 2(e) of the 1996 Act read with Section 20(c) of the Code, there remains no doubt that the Chief Justice or the designate Judge of the Rajasthan High Court has jurisdiction in the matter. The question is, whether parties by virtue of Clause 18 of the agreement have agreed to exclude the jurisdiction of the courts at Jaipur or, in other words, whether in view of Clause 18 of the agreement, the jurisdiction of the Chief Justice of the Rajasthan High Court has been excluded?
32. For answer to the above question, we have to see the effect of the jurisdiction clause in the agreement which provides that the agreement shall be subject to jurisdiction of the courts at Kolkata. It is a fact that whilst providing for jurisdiction clause in the agreement the words like "alone", "only", "exclusive" or "exclusive jurisdiction" have not been used but this, in our view, is not decisive and does not make any material difference. The intention of the parties by having Clause 18 in the agreement is clear and unambiguous that the courts at Kolkata shall have jurisdiction which means that the courts at Kolkata alone shall have jurisdiction. It is so because for construction of jurisdiction clause, like Clause 18 in the agreement, the maxim expressio CS(OS) No.2119/2013 Page 53 of 57 unius est exclusio alterius comes into play as there is nothing to indicate to the contrary. This legal maxim means that expression of one is the exclusion of another. By making a provision that the agreement is subject to the jurisdiction of the courts at Kolkata, the parties have impliedly excluded the jurisdiction of other courts. Where the contract specifies the jurisdiction of the courts at a particular place and such courts have jurisdiction to deal with the matter, we think that an inference may be drawn that parties intended to exclude all other courts. A clause like this is not hit by Section 23 of the Contract Act at all. Such clause is neither forbidden by law nor it is against the public policy. It does not offend Section 28 of the Contract Act in any manner."
57. For the reasons mentioned above, I agree with my learned Brother that in the jurisdiction clause of an agreement, the absence of words like "alone", "only", "exclusive" or "exclusive jurisdiction"
is neither decisive nor does it make any material difference in deciding the jurisdiction of a court. The very existence of a jurisdiction clause in an agreement makes the intention of the parties to an agreement quite clear and it is not advisable to read such a clause in the agreement like a statute. In the present case, only the courts in Kolkata had jurisdiction to entertain the disputes between the parties."
(iii) Jyothi Turbopower Services Pvt. Ltd., Biswajit Nath, J Nath v. Shenzhen Shandong Nuclear Power Construction Company Ltd., Deputy Project Manager, Liu Yan Zheng and Syndicate Bank, Branch Manager, CS(OS) No.2119/2013 Page 54 of 57 (2011) 3 Arb. LR 442 (DB), paras 17, 18, 30 & 31, which read as under:-
"17. Having regard to the contentions of the respective counsel, the points that arise for consideration in the present appeal are:
1) Whether the Court below has jurisdiction to entertain the present application filed by the appellant under Section 9 of the Act, for an interim measure, when the parties have designated the State of Orissa, as the place of arbitration?
2) Whether the Court below is justified in going into the merits of the matter and giving a finding that there is no prima facie case in favour the appellant, having held that it has no jurisdiction to entertain the present petition?
18. The learned counsel for the appellant submits that even a fraction of cause of action is enough and sufficient to decide the territorial jurisdiction of a Court for entertaining the petition under Section 9 of the Act. According to him, the registered office of the appellant company is situated at Hyderabad, the tender documents under Ex.A11 have been submitted from Hyderabad, agreement works are being monitored from Hyderabad and the bank guarantees have been drawn at the banks at Hyderabad, and thus cause of action having arisen within the jurisdiction of the Court below, in view of the provisions of Section 20 C.P.C., the Court below had the jurisdiction to entertain application under Section 9 of the Act. In support of this contention, he relied upon the decision of a Division Bench of this Court in INCOMM Tele Ltd. v. Bharat Sanchar Nigam Ltd (1 supra).
x x x x x CS(OS) No.2119/2013 Page 55 of 57
30. Though the learned counsel for the appellant contended that decisions of this Court in Salarjung Museum case and Paramita Constructions case, cannot be made applicable to the facts of the case on hand because the former dealt with an application filed under Section 34 of the Act, for setting aside the award passed by the Arbitrator, and the latter dealt with an application filed under Section 11 of the Act for appointment of Arbitrator, and not an application under Section 9 of the Act, but the fact remains, in the said two decisions, the Courts, though not directly, but incidentally, while considering the provisions of the law, held that when the parties have chosen a particular State/City, as the place of arbitration, the "Court" appearing in Sections 9 and 34 shall be the Courts situated in the said State/City alone, and not any other.
31. In the case on hand, as noted supra, the parties have specifically, in Article 10 of the agreement, have agreed to the place of arbitration as the State of Orissa. That being so, we are of the considered opinion that the appellant cannot be permitted to invoke the theory of cause of action by application of the provisions of the Code of Civil Procedure, so as to confer jurisdiction upon the Court at Hyderabad, for entertaining application under Section 9 of the Act, and if such argument of the appellant is accepted, then the very purpose of the parties agreeing to the place of arbitration as State of Orissa in Article 10 of the agreement, would be defeated."
74. In view of the above settled law, I am of the considered view that this Court has no jurisdiction to entertain the present petition. The plaint therefore is liable to be returned under Order 7 Rule 10 CPC for presentation before the appropriate Court i.e. High Court of CS(OS) No.2119/2013 Page 56 of 57 Judicature at Bombay who is only competent to have the territorial jurisdiction. In view of the peculiar facts of the present case wherein the plaintiff has alleged that the termination letter has been issued during the judicial proceedings pending in the High Court of Madras coupled with the fact that the interim order to stay the termination letter has been continued for the last more than 2 years, the interim order passed on 18th November, 2013 will continue for further period of four weeks. The Transferee Court would be at liberty to consider the matter and pass the order whether to continue or not the interim order as per the merit of the case. The Registry would return the plaint along with all the pleadings of the parties and documents to the plaintiff through counsel, against receipt as per procedure.
(MANMOHAN SINGH) JUDGE FEBRUARY 9, 2016 CS(OS) No.2119/2013 Page 57 of 57