Delhi High Court
Murli Projects Pvt Ltd vs Shree Naurang Godavari Entertainment ... on 13 May, 2013
Author: P.K.Bhasin
Bench: P.K.Bhasin
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% I.A.NO. 5427/2013 IN CS(OS) 3037/2012
+ Date of decision: 13th May, 2013
# MURLI PROJECTS PVT LTD ..... Plaintiff
! Through: Mr. Rishi Agrawala, Mr.Arnav
Kumar and Ms. Malvika Lal,Advocates
versus
$ SHREE NAURANG GODAVARI
ENTERTAINMENT LTD & ORS ..... Defendants
Through: Mr. Sanjeev Sindhwani, Senior
Advocate with Mr. Amol Sinha, Mr.
Anshuman Jain and Mr. Rahul
Kochar, Advocates
CORAM:
* HON'BLE MR. JUSTICE P.K.BHASIN
ORDER
P.K.BHASIN, J:
Defendant no.2, Raj Pal Navrang Yadav, who claims himself to be a bollywood actor of good repute having acted in good number of Hindi movies, mostly as a comedian, decided to produce movies himself and with that desire in view, brought into existence two Companies, defendant no.1 and 4 and made his wife, defendant no. 3, as the managing director of these Companies. A movie by the name of 'ATTA PATTA LAPATTA' was produced by defendant no.2 but it proved to be a big flop. Since for the production of a movie crores of rupees are required and the film to be produced by defendant no.2 was to cost him about fifteen crores of rupees which amount defendant no.2 did not have and so he had to seek the financial assistance from the plaintiff Company whose directors were CS(OS) 3037/2012 Page 1 of 14 known to him. He managed to get a loan of five crores of rupees from the plaintiff sometime in May, 2010 in the name of defendant no.1. The loan amount with interest was re-payable by 30.06.2011 and defendant nos. 2 and 3 gave their personal guarantees for the re-payment of the said loan amount and defendant no.4 company also became the guarantor.
However, when the time came for re-payment of the money to the plaintiff, defendant no.2 started playing a sad role before the plaintiff's directors claiming that his film had flopped and so he was in great financial crisis. The plaintiff's directors' hearts melted because of the sad acting done before them by defendant no.2 and so they restructured the payment schedule and extended the time for the re-payment of the loan amount. However, defendants did not honour their assurances but still the plaintiff further extended the re-payment time. Again the plaintiff extended the time for re-payment of loan amount at the request of the defendants. Every time the defendant no.2 had given post dated cheques to the plaintiff as security with the assurance that those cheques shall be duly honoured by his bankers as and when presented as per the understanding between the parties. Those post dated cheques, however, were not honoured when presented for encashment by the plaintiff to the bank of the defendants.
Having thus failed to get its money back in normal course, the plaintiff decided to have recourse to its legal remedy and accordingly filed the present suit for permanent and mandatory injunctions but when the suit and ad interim injunction application came up for ex parte consideration before this Court the relief of recovery of the principal loan amount of five crores as also interest thereon which amount as per the agreement between parties had become more than five crores, calculated at the contractual rate of 30% p.a., was also claimed.
On 3rd October, 2012 this court had while ordering issuance of CS(OS) 3037/2012 Page 2 of 14 summons to the defendants as also the notice on the stay application for 11 th October,2012 restrained the defendants from from creating any third party interest in the negative prints of the film 'Atta Patta Lapatta' and assigning music audio and video rights, satellite rights etc. to anyone without prior permission of the Court.
On 11th October, 2012 the defendants entered appearance in the matter and it appears now that defendant no.2 had by that time decided to start acting again, but not in the movies anymore but in this Court, which he thought could be easily converted into a studio for enacting some drama and by his sad acting he could succeed in deceiving the Court also. And that would become more than evident from the facts which are now going to be narrated hereinafter.
On 11th October, 2012 this court passed the following order:
"CS(OS) 3037/2012 and IA No.18374/2012 (under Order 39 Rule 1 and 2 CPC), IA No.18375/2012 (under Order 38 Rule 5 CPC), IA No.18376/2012 (under Order 2 Rule 2 CPC), IA No.18377/2012 (under Section 149 CPC), IA No.18725/2012 (under Order 6 Rule 17 CPC) and IA No.18726/2012 (under Order 2 Rule 2 CPC) The learned counsel for the defendants informs that the defendants have already entered into an agreement with PVR Pictures Limited on 5.9.2012 for exhibiting the film "Ata Pata Laapata". He undertakes on instructions that the amount which would payable to the defendants in terms of agreement with PVR Pictures Limited would be paid by PVR Pictures Limited directly by way of cheque/ pay order in the name of Registrar General of this Court and the defendants would take a letter to this effect from PVR Pictures Limited and file the same in the Court within a week. The remittance to this Court would stop, once the remitted amount becomes Rs.11 crores. If the defendants enter into an agreement with any distributor/ exhibitor other than PVR Pictures Limited for exhibiting the film "Ata Pata Laapata", the agreement would contain a stipulation that the entire amount payable to the defendants would be remitted to this Court by way of a pay order/ cheque in the name of Registrar General of this Court. The defendants would be relieved from this obligation the moment the amount remitted to this Court either by PVR Pictures Limited or by any other distributor/ exhibitor reaches the figure of Rs.11 crore. The defendants would file a copy of any such agreement with a distributor/ exhibitor other than the PVR Pictures Limited in the Court before CS(OS) 3037/2012 Page 3 of 14 releasing the blue prints of the film "Ata Pata Laapata" to that distributor/ exhibitor.
Subject to the defendants complying with this order, they would be at liberty to release the film "Ata Pata Laapata". It is, however, made clear that the film "Ata Pata Laapata" would not be released till the letter from PVR Pictures Limited is filed and the copies of the agreement, if any, with the distributor/ exhibitor other than the PVR Pictures Limited is filed in the Court in terms of this order. Written statement be filed within four weeks. Rejoinder thereto can be filed four weeks thereafter.
List before the Joint Registrar on 11.12.2012 for admission/denial of documents.
The matter be listed before the Court 10.04.2013 for framing of issues and disposal of IAs.
It is made clear that the above arrangement is without prejudice to the rights and contentions of the parties in the suit.
A copy of this order be provided dasti under the signatures of the Court Master to both the sides."
The defendants however did not honour the assurances which they gave to this Court on 11th October,2012 and so the plaintiff came out with an application(being IA.No.19802 /2012) under Order XXXIX Rule 2-A C.P.C. That application was taken up by the Court on 1 st November,2012 in the presence of the counsel for the defendants and the following order came to be passed with the consent from both the sides:
"After arguments, it has been agreed between the parties that the film ?Ata Pata Laapata? shall be released by the defendants only after giving an undertaking that the cheques which they have issued to the plaintiff, when presented to the Bank on due date, would be honoured to the extent of Rs.7 crores. The agreements which the defendant has executed with PVR Cinemas, Yellow and Red Music Movies Mobile Distribution and Phantom Films Pvt. Ltd. are taken on record. It has been agreed between the parties that if any amount is remitted to this Court by any of these three parties with whom the defendant has entered into agreements, that would be offset from the abovereferred amount of Rs.7 crores and the cheques presented to the Bank would be limited only to the balance amount. To illustrate, if an amount of Rs.1 crore is remitted to this Court by one or more these three parties, the defendant would be bound to get cheques only to the extent of Rs.6 crores honoured on being presented to the Bank. If defendants No.2 CS(OS) 3037/2012 Page 4 of 14 and/or 3 are Directors of defendant No.4, similar undertaking on behalf of defendant No.4 shall also be filed. Since the defendants are based in Bombay, the undertaking may be scanned and sent through e- mail to the counsel who will file the same before the Court at 10.30 AM tomorrow. The original undertaking would be filed within three working days."
The defendants, however, this time also did not honour the assurances/undertakings given by them to this Court and not only that the post dated cheques of the total value of seven crores of rupees, which they had given to the plaintiff, were also got dishonoured. That led to the filing of fresh application under Order XXXIX Rule 2-A C.P.C.(being I.A.No.5427/ 2013, which is now being disposed of by this order). On 5 th April,2013 that application was taken up by this Court and the following order was passed:-
"This is the second application filed by the plaintiff for punishing the defendants for having committed contempt of this Court. The present suit for permanent injunction was filed by the plaintiff on the allegations that it had advanced loan of crores of rupees to defendant no.1 and re-payment thereof was guaranteed by defendant nos. 2 to 4. The plaintiff had advanced the loan to the defendant no. 1 for producing a movie by the name of „Ata Pata Laapata‟, the defendant no. 1 had also undertaken to assign its music audio and video rights, CD/DVI/internet rights, satellite rights, channel rights, export/international rights in favour of the plaintiff as security and also not to create any encumbrance, lien, charge etc. on the aforesaid securities without the prior consent of the plaintiff. Having failed to get back the loan amount as per the loan agreement, the plaintiff filed the present suit for injunction in which one of the prayers made was for directing the defendants to deliver the laboratory letter, conveying the rights on the negative print(s) of the above named film in favour of the plaintiff. Along with the suit an application under Order 39 Rules 1 & 2 CPC was also filed in which injunction was sought against the release of the aforesaid film.
The defendants entered appearance and on 11th October, 2012, this Court passed the following order:-
"The learned counsel for the defendants informs that the defendants have already entered into an agreement with PVR Pictures Limited on 5.9.2012 for exhibiting the film „Ata Pata Laapata‟. He undertakes on instructions that the amount which would payable to the defendants in terms of agreement with PVR Pictures Limited would be paid by PVR Pictures Limited directly by way of cheque/pay order in the name of Registrar General of this CS(OS) 3037/2012 Page 5 of 14 Court and the defendants would take a letter to this effect from PVR Pictures Limited and file the same in the Court within a week. The remittance to this Court would stop, once the remitted amount becomes ` 11 crores. It the defendants enter into an agreement with any distributor/exhibitor other than PVR Pictures Limited for exhibiting the film „Ata Pata Laapata‟, the agreement would contain a stipulation that the entire amount payable to the defendants would be remitted to this Court by way of a pay order/cheque in the name of Registrar General of this Court. The defendants would be relieved from this obligation the moment the amount remitted to this Court either by PVR Pictures Limited or by any other distributor/exhibitor reaches the figure of ` 11 crore. The defendants would file a copy of any such agreement with a distributor/exhibitor other than the PVR Pictures Limited in the Court before releasing the blue prints of the film „Ata Pata Laapata‟ to that distributor/exhibitor.
Subject to the defendants complying with this order, they would be at liberty to release the film „Ata Pata Laapata‟. It is, however, made clear that the film „Ata Pata Laapata‟ would not be released till the letter from PVR Pictures Limited is filed and the copies of the agreement, if any, with the distributor/exhibitor other than the PVR Pictures Limited is filed in the Court in terms of this order.
Written statement be filed within four weeks. Rejoinder thereto can be filed four weeks thereafter.
List before the Joint Registrar on 11th December, 2012 for admission/denial of documents.
The matter be listed before the Court on 10.4.2013 for framing of issues and disposal of IAs.
It is made clear that the above arrangement is without prejudice to the rights and contentions of the parties in the suit.
A copy of this order be provided dasti under the signatures of the Court Master to both the sides."
Since the defendants did not honour the assurances/undertakings given by them before the Court, the plaintiff moved an application under Order 39 Rule 2A of the CPC, which came to be taken up for consideration on 1st November, 2012, when this Court passed the following order :-
"After arguments, it has been agreed between the parties that the film „Ata Pata Laapata‟ shall be released by the defendants only after giving an undertaking that the cheques which they have issued to the plaintiff, when presented to the Bank on due date, would be honoured to the extent of Rs. 7 crores. The agreements which the defendant has executed with PVR Cinemas, Yellow and Red Music Movies Mobile Distribution and Phantom Films Pvt. Ltd are taken on record. It has been agreed between the parties that if any amount is remitted to this Court by any of these three CS(OS) 3037/2012 Page 6 of 14 parties with whom the defendant has entered into agreements, that would be offset from the above referred amount of Rs. 7 crores and the cheques presented to the Bank would be limited only to the balance amount. To illustrate, if an amount of Rs. 1 crore is remitted to this Court by one or more these three parties, the defendant would be bound to get cheques only to the extent of Rs. 6 crores honoured on being presented to the Bank. If defendants no. 2 and/or 3 are Directors of defendant no.4, similar undertaking on behalf of defendant no.4 shall also be filed. Since the defendants are based in Bombay, the undertaking may be scanned and sent through e-mail to the counsel who will file the same before the Court at 10.30 A.M. tomorrow. The original undertaking would be filed within three working days.
IA 19802/2012 stands disposed of in terms of this consent order.
Dasti under the signatures of Court Master to both the parties."
It is now alleged by the plaintiff that the cheques given to the plaintiff on being presented have been dis-honoured and that necessitated filing of the second contempt application. On a prima facie view, it becomes clear that the defendants do not have any sanctity for the assurances and undertakings given by them to this Court in the present proceedings and that is also more evident from the fact that they had succeeded in setting adverse order against them when the first application under Order 39 Rule 2-A CPC was moved by the plaintiff. Thereafter, they have repeated violation of the undertakings given by them to this Court. This conduct of the defendants justifies requiring their personal presence in Court this time.
Let notice of this application be issued to the defendants, returnable for 10th April, 2013, the date already fixed in the matter. As far as defendant nos. 1 and 4 are concerned, they are Companies.
Issue bailable arrest warrants against defendant nos. 2, 3 and Managing Directors of defendant nos. 1 and 4, in the sum of `50,000/- each.
The plaintiff shall collect dasti warrants for execution through the concerned police station."
On 10th April, 2013 defendant no. 2 appeared in Court alongwith senior advocate Mr. Sanjiv Sindhwani who made his submissions and CS(OS) 3037/2012 Page 7 of 14 defendant no.1 also pleaded for mercy. On that date this court passed the following order:
"I.A. No. 5427/2013Defendant No.2, who happens to be the Director of two Companies impleaded as defendant Nos.1 and 4, is present today. His wife, defendant No.3, who happens to be the Managing Director of both the two defendant Companies, is however not present today though she has been served with the bailable arrest warrants, as submitted by her counsel. Mr. Sanjiv Sindhwani, learned senior counsel for the defendants has submitted that she could not come today as she is in family way. He has shown to me medical papers to that effect and, therefore, seeks exemption from her personal appearance today. This request is allowed.
Learned senior counsel for the defendants has submitted that there can be possibly no defence to the show cause notice issued to the defendants by this Court for their having violated the undertakings given to this Court not once but twice and by getting the cheques given to the plaintiff in terms of the undertakings dishonoured and so all the defendants are offering their unconditional and unqualified apology to this Court and they do not wish to file any reply to this contempt application and to contest it. It is also submitted that the dispute between the parties was purely of a commercial nature and the defendants have already suffered huge losses in their venture for producing a movie. The defendant No.2, who is present in person, also feels highly apologetic and personally also tenders his unconditional and unqualified apology as also on behalf of his wife. He makes a prayer that he will do genuine efforts to collect money from all possible sources to clear the dues of the plaintiff for which he as well as his counsel seek some time. Learned senior counsel has also submitted that the defendants have already submitted before this Court that they do not have wished to contest the suit also. He requests for accepting the apologies of the defendants.
Order reserved."
However, before the present application could be disposed of the plaintiff moved an application under section 151 C.P.C.(being I.A.No.6684/2013) informing the Court that there had been fresh settlement between the parties terms whereof had been incorporated in the settlement agreement annexed with the application as Annexure P-1 and so this court was requested not to pronounce any order on the application orders on which stood reserved on 5th April,2013. That application was taken up on CS(OS) 3037/2012 Page 8 of 14 26th April, 2013 when counsel for both the parties sought time to have some instructions from their respective clients and accordingly the hearing was adjourned to 29th April, 2013. On that, however, counsel for the plaintiff sought permission to withdraw I.A. No.6684/2013 and this Court passed the following order:
"Today counsel for plaintiff seeks permission to withdraw this application.
In this matter, earlier also one application was filed by the plaintiff for punishing the defendants for violating the undertakings given by them to this Court on 1st November, 2012 but on that occasion this Court had not taken any action against the defendants in view of some fresh assurances/undertakings given by the defendants to clear the dues of the plaintiff. In terms of the assurances given by the defendants certain cheques were also handed over to the plaintiff with the assurance that the same would be honoured as and when presented but all the cheques came to be dishonoured when presented by the plaintiff to defendants banks. That necessitated filing of second contempt application by the plaintiff and this Court after issuing notice to the defendants and hearing the parties had reserved the contempt application for orders on 10th April, 2013. Before the second contempt application could be disposed of the present application came to be filed by the plaintiff in which the plaintiff alleged that fresh settlement had been arrived at between the parties and defendants have once again undertaken to clear the plaintiff‟s dues in installments and in terms of the settlement defendants have already made a part payment of `40 lakhs to plaintiff and the balance amount of `10 crores has been agreed to be cleared by 30th September, 2014 and defendants have also handed over to the plaintiff some post dated cheques, details whereof are mentioned in this application.
When this application came up for consideration on 26th April, 2013, counsel for both the sides sought adjournment to have some instructions in the matter from their respective clients and case was adjourned for today.
Today, as noticed already, counsel for plaintiff has sought permission to withdraw this application in which one of the prayers made was to allow the defendants to purge the contempt and also to accept the fresh settlement arrived at between the parties. Though not specifically prayed in the application but the tenor of the averments made in this application shows that actual prayer which was being made to the Court on behalf of the plaintiff was not to pass any orders on the second contempt petition, orders on which already stand reserved and to revive the same to its original status in case defendants once again commit breach of the fresh undertakings being CS(OS) 3037/2012 Page 9 of 14 given in the form of an affidavit of defendant No.2 dated 23rd April, 2013.
So far as the permission being sought on behalf of the plaintiff for withdrawal of the present application is concerned, this Court is of the view that it is the plaintiff‟s right to pursue this application or not but considering the fact that after this Court had reserved orders on its application for initiating contempt proceedings and for punishing the defendants for having committed contempt of Court, filing of the present application for not disposing of the contempt application and to accept fresh undertakings of the defendants after they had failed to honour their earlier undertakings given to the Court on two occasions and now plaintiff deciding not to pursue the present application, this application is dismissed as withdrawn but plaintiff is burdened with cost of `25,000/- for abusing the process of Court. Costs shall be deposited in the Lawyers Welfare Account being maintained by Delhi High Court Bar Association within two weeks."
Counsel for the defendants, however, maintained that they would still stick to the fresh payment schedule agreed to between the parties.
Now is the time to pronounce whether the defendants are guilty of wilful breach of the assurances and undertakings given by them to this Court. As noticed already, it has been very fairly admitted on behalf of the defendants by their learned senior counsel Mr. Sanjiv Sindhwani that there has been breach of the undertakings and assurances given to this Court by the defendants but according to Mr. Sindhwani that breach of undertakings was not wilful and intentional but was due to adverse circumstances in which the defendants, particularly defendant no.2, got entangled because of their first venture in the field of production of movies landing in rough weather. Mr. Sindhwani further submitted that when the going is good people are with you but when someone is in problems all your near and dear ones also distance themselves and that is what has happened with the defendant no.2 also. Since the movie produced by the defendant no.1 and the production of which he took huge loan from the plaintiff failed to impress the public at large he has suffered huge losses and for that reason CS(OS) 3037/2012 Page 10 of 14 only he could not repay the loan amount to the plaintiff and the undertakings were given to this Court for the re-payment of money to the plaintiff only with a hope that defendant no.2 would be able to generate funds from his friends etc. but that is not happening. As also noticed already, unconditional apology was also tendered on behalf of all the defendants by Mr. Sindhwani and defendant no.2 had also tendered apology for himself and his wife who could not come to Court as she was in the family way and they had all told the Court on the first date itself that they had decided not to contest the present contempt application. Mr. Sindhwani simply made a fervent plea on behalf of the defendants for being merciful to them.
Now, whether the defendant no.2 suffered losses due to his movie not doing well commercially or not nobody knows. The defendants have not even filed any affidavit stating the losses suffered by them were so huge that they were not in a position to re-pay the loans taken from the market. In any event, their suffering losses might have been a justification for their delaying the re-payment of the loan amount to the plaintiff and in that regard they did get full co-operation from the plaintiff. Thrice, the plaintiff had re-structured the payment schedule on the request of the defendants. That fact was also admitted on their behalf during the course of hearing on this application by their senior counsel who had submitted, to gain sympathy of the Court, that because of that good and co-operative gesture on the part of the Directors of the plaintiff Company the defendants had decided not even to contest the suit claim. However, in my view, their decision not to contest the suit has nothing to do with their act of committing breach of undertakings given by them to this Court. The defendants could have very well contested the suit claim on any number of grounds. Nobody had forced them to give undertakings and assurances to this Court that they shall clear off their CS(OS) 3037/2012 Page 11 of 14 liability towards the plaintiff within a time frame and also to give post dated cheques to the plaintiff with the further assurance that those cheques shall by duly honoured if the need arose for their presentment to their bank for encashment upon the failure of the defendants to make the payments otherwise by the due dates of those cheques. After having given undertakings to the Court that the dues of the plaintiff shall be cleared within the agreed period and having assured the encashment of the cheques the defendants had no business to breach those undertakings and the assurances/undertakings and to get the cheques dishonoured on the ground of insufficiency of funds in their bank account. It is not even being put forth by the defendants that when they gave the post dated cheques to the plaintiff they were expecting some miracle to happen bringing crores of rupees in their bank account for the encashment of those cheques. And their cheques, which they gave to the plaintiff during the pendency of this suit, got dishonoured not once but twice. In these circumstances, the submission of the learned senior counsel for the defendants that there was no wilful and deliberate breach of the undertakings given to the Court cannot be accepted.
Even during the course of hearing the defendants did not come out with the money due to the plaintiff which might have indicated that they had the desire to purge the contempt. Of course, after hearing the counsel for the parties matter had been reserved for orders, plaintiff had moved an application, as noticed already, informing the Court that a fresh settlement had been arrived at between the parties and defendants had made a part payment for rupees forty lacs and rupees five crores was agreed to be paid by 31st July, 2013 and balance of five crores, out of total settled amount of ten crores and forty lacs, was agreed to be paid in some instalments. The plaintiff had requested the Court not to pass any orders in its contempt CS(OS) 3037/2012 Page 12 of 14 application and fresh undertaking of the defendants should be recorded and accepted. However, that application was subsequently not pressed. In any event, this Court cannot be persuaded again and again to record undertakings of defendants. That way there would be no end to recording of undertakings on behalf of defendants since they would get an impression that violation of undertaking given to Court carries no consequences and they can keep on giving the undertakings and committing breaches also.
As far as the apology tendered by the defendants is concerned, that can, in the facts and circumstances of the case, only be a factor for consideration by this Court while considering the question of punishment to be awarded to the defendants but they cannot get exoneration from being held guilty of committing wilful breach of the undertakings given by them and total discharge. That may be one of the mitigating circumstances, as held by a Full Bench of this Court in "State vs Bhavani Singh". AIR 1968 Delhi 208. If defendants are discharged, then they would succeed in getting premium for their acts of breach of solemn undertakings and assurances given to this Court and the plaintiff, in the process, will be left with unfulfilled promises of the defendants only and the money payable to it shall remain in the bank accounts of the defendants. That merciful and benevolent decision, if taken by this Court, would convey to the public at large that the Courts cannot ensure enforcement of the undertakings given to them by the litigants.
In the light of above discussion, I am of the view that the defendants are guilty of committing breach of the undertakings given to this Court. However, before awarding punishment to the defendants, I deem it appropriate to give them an opportunity of hearing and for that purpose list the matter on 17th May, 2013 when defendant no.2 shall appear in person as CS(OS) 3037/2012 Page 13 of 14 defendant no. 3 was already given exemption from personal appearance since she is in the family way.
P.K. BHASIN, J May 13, 2013 CS(OS) 3037/2012 Page 14 of 14