Before the Supreme Court of India 2007(34) PTC 522 Petitioner Saregama India Ltd. Respondent Suresh Jindal Date of Judgement 25 Aug. 2006 Bench Hon'ble Justice Soumen Sen
The case dwells upon the Copyright Act,1957, to determine whether the assignment of the copyright under the agreements between the parties are for an unlimited period or a limited period and breach in the conditions mentioned in the agreement would lead to termination of the agreement or not. The clauses pertinent to the agreement were referred and made the basis for the decision making of the issues. It was important to look into the various clauses mentioned in the agreement between parties to the contract. The was reference made to various sections of the Copyright Act. Furthermore, the mode of assignment and the facts clearly stated that the assignment of the copyright was complete and the agreement for the assignment of the copyright for the films “Rajnigandha” and “Shatranj ke Khiladi” was for a limited period and for the film “Katha” it was for an unlimited period.
The petitioner, earlier known as the Gramophone Company of India Limited, is involved in the business of recording of film songs, music and dialogues. The present name of the petitioner has been adopted by and under a fresh certificate of incorporation dated 3rd November, 2000. The applicant moved an application before Calcutta High Court for restraining the respondents from selling any records or cassettes, discs or any other sound recordings in respect of the films, namely “Rajnigandha”, “Shatranj Ke Khiladi” and “Katha”, produced by the respondent in pursuance of the three agreements entered into by and between the parties. The first agreement entered into by and between the parties is dated 24th February, 1973, the film “Rajnigandha” was produced during the currency of the first agreement and the producer assigned the literary, dramatic, artistic and musical works relating to any film produced during the period of 5 years commencing from 13th of February, 1973 to the petitioner. The second agreement was entered on 28th of December, 1976, producer assigned the literary, dramatic, artistic and musical works in relation to any film produced to the petitioner during the period of 3 years commencing from 3rd January, 1977, the film “Shatranj ke Khiladi” was produced during this duration. The third agreement was entered into on 16th of November, 1982, producer had assigned the literary, dramatic, artistic and musical works relating to any film produced by for the period of 3 years commencing from 29th July, 1982 for an unlimited period, during the pendency of the said agreement the film “Katha” was produced by the respondent.
In the present case, the petitioners had approached the court for restraining the respondents from selling any records or cassettes, discs or any other sound recordings in respect of the films produced by the respondent in the duration of the agreements which are the subject-matter of the present proceeding.
Statute and provisions discussed
a. Section 18 of the Copyright Act,1957.
b. Section 19 of the Copyright Act,1957.
a. Whether the agreements entered in were the agreements of assignment of the copyright?
b. Whether the assignment of the copyright is for an unlimited period as per the facts of the case?
c. Whether termination of the agreement for the assignment of copyright can be made for committing a breach in the conditions thereof by the assignee?
Arguments of the Petitioner:
The petitioners urged and contended that because of agreements entered into with the producers’ such copyright existing in favor of the producer has been duly assigned to the petitioner. They further contended that by reason of such assignment the right of recording and making records and/or cassettes and/or sound recordings of the literary, dramatic and musical works exclusively belonged to the petitioner and that the petitioner has now become the owner of such copyright, the assignment of the copyright made under the agreement with regard to the dramatic and musical works of the films produced during the duration as mentioned in the agreement and the copyright in respect of the literary, dramatic and musical works in any film songs of any film that was produced during the tenure of the agreement was for an unlimited period. It was further pleaded by the petitioners that the first two agreements are a bit different from the third one, which does not mention any period in the agreement, therefore, it is undisputedly for an unlimited period. Various clauses in the agreements mentioned no reservation as to the period or territory before the transfer of the copyright in respect of music and literary related works and were concluded that it was assigned for an unlimited period.
The petitioners submitted that once the copyright is assigned, the assignee holds no right over the copyright so assigned. Non-compliance with the conditions mentioned in the terms of the agreement and any breach in the present case non-payment of the royalty would not amount to defeat the assignment of the agreement. Hence, once the agreement of the assignment of copyright has been made it amounts to the absolute transfer of the copyright and the assignor retains no right over the same.
Arguments of the Respondents:
It was submitted on behalf of the respondents that the material facts pertaining to the dispute were suppressed by the petitioners. The petitioner did not comply with the terms and conditions of the agreement and did not even pay the royalty decided. The clause 6 of the agreement very clearly mentions that during the currency of the agreement and any further extension and following termination of the present agreement or any extension thereof during a period of 25 years from the first day of the month in which the contract recordings are first given to the producer and the producer is not entitled to sell directly or indirectly these recording to sell and manufacture any records. The abovementioned clause clearly states that the agreement at its best could have continued for 25 years, clause 6 talks about the extension and termination of the agreement. Therefore, the agreement is not for an unlimited period and to add to this there is no clause where it is explicitly mentioned that the copyright has been assigned or transferred. Clause 7 explicitly mentions that the producer is entitled in respect of all call recordings a royalty on net sales calculated on the retail price which further implies that the royalty was payable for the period of 25 years.
The court held that the agreements in question clearly mention the assignment of copyright in respect of the soundtrack recording and all the works related to the film. It is significant to notice that the concerned film was not produced on the day of entering into the agreement. The intention to limit the agreement was expressly mentioned in clause 6 and 14 of the agreement which clearly states that the agreements in question are not for an unlimited period. Violation of the necessary specifications mentioned in the agreement may lead to the termination of the agreement.
Section 18 of the Copyright Act 1957, talks about the assignment of the copyright by the owner of the copyright may assign the copyright to any person either wholly or partially and once an assignment is made the assignee is treated as the owner of the copyright. Section 19 of the Copyright Act mentions that assignment of copyright can only be made in writing which is to be signed by the assignee and such agreement should mention the rights assigned and the duration and territorial extent of such assignment and if the agreement of assignment does not mention any period it should be deemed to be five years from the date of assignment. The court stated that from the scheme of copyright if there is the assignment of literary, dramatic or musical works of the film then it would suffice to the transfer of the Copyright. Hence, from the agreement, the transfer of the copyright is clearly vigilant.
It was held that the agreements for productions by the respondent during the period of five years would form the agreement which could be extended for two successive years of one year each. The agreement did not intend to create a right in favor of the petitioner in respect of all films produced by the for an unlimited period. From the negative covenant mentioned in Clause 6, it is evident that the respondent shall not infringe the copyright assigned in favor of the petitioner for a period of twenty-five years. If the agreement was intended to be for an unlimited period, there could not be any negative covenant for a limited period. Even the royalty as required to be paid is limited to twenty-five years. Furthermore, if the agreement was intended to be for an unlimited period in favor of the petitioner, the respondent could not have retained any right over what has already assigned. But, in Clause 14, it is clearly mentioned that the respondent was not entitled to assign any of its rights and obligations whatsoever under the agreement without the prior written consent of the petitioner. Therefore, under the agreement itself, the parties knew that the respondent has retained its right and the agreement is not absolute in nature.
The decision of Gujarat Bottling Co. Ltd. v. Coca Cola Company, reported was relied upon on behalf of the respondents to support the proposition that the negative covenant in an agreement subsist during the period of the agreement and not after that. In the present case, the negative covenant restraining the respondent from utilizing any part of the sound-track or any works relating to the subject-matter of the agreement is restricted for a period of 25 years, after the period of 25 years the respondent would be free to do otherwise. This clearly suggests that the agreement did not intend to continue for the entire period as contended on behalf of the petitioner. Therefore, the court held that the agreements cannot be termed to be an agreement for an unlimited period.
It was held that each of the terms mentioned in the grant gives a different and distinct meaning of its own and co-exist independently. The terms and conditions of the contract as mentioned in the agreement itself as intended by the parties is clear that the agreement is to subsist for a period of 25 years and no more.
The decision of Gramophone Company of India Ltd. v. Shanti Films Corporation, was strongly contended on behalf of the petitioners to support the proposition that the non-payment of royalty does not entitle the owner to terminate the agreement. The court stated that it is not a decision as to whether there can be a limited grant under the agreement or not. Therefore, the court opined that the decision of the Gramophone Company was of no assistance to the petitioners. The decision of Mishra Bandhu Karyalaya v. S Koshal, was contended on behalf of the respondents to support the proposition that an agreement assigning copyright can be treated as discharged by reason that breach committed by the person in whose favor the copyright has been assigned. The application was disposed of by the court, restraining the respondents from selling or offering for sale any advertisement to be issued with regard to sound recordings containing in literary, dramatic or musical works or including any songs, music or dialogues contained in the film “Katha” which is the subject-matter of the third agreement.
The terms and conditions of the first and the second agreement are different from the third agreement which are in relation to the film “Katha”, from the terms and conditions mentioned in the third agreement, it does not appear that any period was fixed for the tenure of the agreement. The time period mentioned in Clause 1 of the agreement was for the purpose of fixing the liability on the producer for the works produced in order to bring the mentioned works within the ambit of the agreement. Moreover, in Clause 3 it clearly mentions that the producer has assigned the copyright and also the title and interest to the literary, dramatic and musical works embodied in the producer films including all rights of publication, sound and television broadcasting, public performance and mechanical reproduction of the said works. The said clause is different from the relevant clause in the first two agreements.
That the negative covenant is not limited for any period only fortifies the case of the petitioner that the relevant clause containing the negative covenant is in aid of enforcing the other clauses contained in the agreement. Therefore, it is prima facie that the third agreement was intended to be an absolute assignment of copyright and the producer has not retained any right in respect thereof.
To conclude, if there is an absolute assignment of copyright without retaining any right over the same and if the assignee commits any breach the assignor is only entitled to receive damages and the assignor has no right to discharge the agreement. In the present case the first two agreements were not absolute in nature i.e. there was no absolute assignment of copyright and in the third agreement there was an absolute assignment of copyright and hence, it was in the nature of the absolute transfer.
Edited by Parul Soni
Approved & Published – Sakshi Raje
 Gujarat Bottling Company Ltd. v Coca Cola Company (AIR 1995 SC 2375).