NON-REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.6438 OF 2005

M/s. Divya Exports … Appellant

Versus

M/s. Shalimar Video Company and others … Respondents

J U D G M E N T

G.S. Singhvi,  J.

1. This  appeal  is  directed  against  the  judgment  of  the  learned Single  

Judge of the Andhra Pradesh High Court whereby he allowed the appeal  

filed by respondent No.1 and decreed the suit filed by the said respondent  

for grant of a declaration that it is having exclusive worldwide video rights  

of VCD/DVD and other formats of video rights in respect of 15 Telugu films  

for  which  it  had  entered  into  an  agreement  dated  27.8.2001  with  M.  

Srinivasa Rao and also for restraining the appellant and respondent Nos.2  

and 3 from producing or selling VCDs/DVDs or any other video format of  

those films in any form of exploitation.

2. M/s. Vijaya Production Private Limited (hereinafter referred to as “the  

Producer”) produced 15 Telugu films.  By an agreement dated 28.9.1987,  

the Producer granted the sole and exclusive video rights of the films to M/s.  

Jyothi  Video  for  a  period  of  seven  years.   During  the  currency  of  that  

agreement,  the  Producer  gifted  the  films  to  M/s.  Nagireddy  Charities  

(respondent No.3) represented by its Managing Trustee, Shri B. Nagireddy.  

Respondent No.3 entered into an agreement of lease with respondent No.2-

M/s.  Vijaya  Pictures  whereby  the  rights  of  theatrical  and  non-theatrical  

distribution, exhibition and exploitation including video and TV rights were  

given to respondent No.2 for the areas of Andhra and Nizam for a period of  

20 years commencing from 1.1.1975 for a consideration of Rs.20 lakhs.  By  

another  agreement  dated  25.6.1990  (Exhibit  A-4)  the  term of  agreement  

dated 10.1.1975 was extended by 70 years with effect from 1.1.1995.  The  

relevant portions of that agreement are extracted below:

“Whereas the Lessors are the absolute owners in possession of  the negatives, holding the entire rights for the Indian Union of  the Telugu Talkie pictures produced by M/s Vijaya productions  Private Ltd., as specified hereunder, the rights of which have  been  assigned  absolutely  by  way  of  gift  by  the  said  Vijaya  Productions Private Ltd., in favour of the Lessors.

Whereas the Lessors have already granted to the Lessees, the  exclusive lease rights of exploitation of their several Black and  White  and  Colour  pictures  for  the  territory  of  Andhra  and  Nizam by  way  of  agreement  of  lease  dated  10.1.1975  for  a  

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period  of  20  years  from 1st of  January,  1975.   Whereas  the  Lesees  have  approached  the  Lessors  to  grant  unto  them the  exclusive  lease  rights  of  Theatrical  and  Non-theatrical  distribution, exhibition and exploitations of the several pictures  by way of lease, in respect of the areas of Andhra and Nizam as  known in the Film Trade, for a further period of 70 (seventy)  years from the date of expiry of the present lease agreement i.e.  from  1st January  1995  and  to  transfer  complete  pictures  negatives in favour of the Lesees herein.   

NOW THIS AGREEMENT WITNESSETH AS FOLLOWS:-

1.  The  Lessors  hereby  grant  us  the  Lessees  as  the  rights  of  Theatrical  and  Non-Theatrical  distribution,  exhibition  and  exploitation by way of lease of the following Black and White  Telugu Pictures produced by M/s Vijaya Productions Pvt. Ltd.  Madras 600 020 including the video and T.V. Rights thereof

1. Shavukaru 2. Pathala Bhairavi 3. Pellichehi Choodu 4. Chandraharam 5. Missamma 6. Maya Bazar 7. Appuchesi Pappukudu 8. Jagadekaveerunikatha 9. Gundamma Katha 10. C.I.D. 12. Umachandi Gowrishankula Katha 13. Rechukka Pagatichukka for  the  Areas  of  Andhra  and  Nizam,  and  to  appropriate  to  themselves the proceeds earned by them on the said pictures by  such exploitation for  a  period of  70 (seventy)  years  from 1st  January 1995.

4. The Lessees shall have the power to assign this agreement  either in part and/or whole to third parties at their discretion,  without in any manner affecting the rights of the Lessors under  this agreement.

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5. It is agreed that the Lessors shall not lease out, sell or exhibit  the pictures in the territories for which the rights of exploitation  are  herein  be granted,  till  the expiry  of  the  agreement.   The  Lessees also shall not exhibit the pictures in any station outside  the territory leased herein.

7.  It  is  understood  between  the  parties  herein  that  this  agreement is without prejudice to the 16mm rights;  T.V. and  Video rights  committed  by the  producers  Vijaya Productions  (P) Ltd for the various periods with the parties concerned and  the Lessees herein are entitled for the said rights after the expiry  of the periods committed thereunder.”

3. A third agreement dated 11.12.1995 (Exhibit A-5) was entered into  

between  respondent  Nos.3  and 2  whereby and whereunder  copyright  for  

broadcasting of films through satellites, cassettes, disc, cable, wire, wireless  

or any other system including its transmission through cable system without  

restriction of geographical areas was assigned to respondent No.2 for a sum  

of  Rs.8  lakhs.   The  relevant  portions  of  the  third  agreement  are  also  

extracted below:

“Now, This Agreement Witneseth:

1.  The  Assignors  irrevocably  assign  to  the  Assignees  the  copyright  for  broadcasting  the  said  films  through  satellite,  cassette,  disc,  cable,  wire,  wireless  or  any  other  system  including  its  transmission  through  cable  system  without  restriction  of  geographical  areas  and  for  this  purpose  the  assigners are authorized to make such copies of recordings on  film, taps, disc or such other media as may be required.

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2. The Assignors have already delivered to the Assigners the  concerned version of the picture and sound negatives of the said  films  as  per  the  Agreement  dated  25-6-1990  between  the  Assignors and Assignees.  

3. The Assignees shall have the full right to broadcast the said  Films  after  subtitling,  editing,  deleting  any  portion,  altering  colour or inserting advertisement, or broadcasting the excerpts,  or programme including the excerpts, or part of whole of the  sound track only, at their sole and absolute discretion.

4. The Assignees shall be entitled to assign their rights under  this  Agreement  in  part  or  in  full  to  any  other  party  and  to  broadcast  through any authority  or  agency,  at  their  sole  and  absolute  discretion  including  Doordharshan’s  Terrestrial  Primary Channels.”

4. After five years, respondent No.2 entered into an agreement of lease  

dated 30.7.2001 with M. Srinivasa Rao and granted him rights of theatrical  

and  non-theatrical  (excluding  satellite  rights)  exhibition  and  35  mm  

exploitation,  video,  VCD,  DVD,  Audio  and  16  mm by  way  of  lease  in  

respect of 14 films for the areas of Andhra and Nizam for a period of 60  

years for a consideration of Rs.10 lakhs.  Paragraphs 5 to 9 of that agreement  

read as under:

“5. The Lessees shall have the power to assign this agreement  either  in  part  or  whole  to  third  parties  at  their  discretion,  without any manner affecting the rights of the lessors under this  agreement.

6. The lessors hereby grant to the lessees the rights of theatrical  and  non-theatrical  (excluding  satellite  rights)  exhibition  and  

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35mm exploitation,  video, VCD, DVD, Audio and 16mm by  way of lease of the following.

7. It is agreed the lessors shall not lease out, sell or exhibit the  pictures in the territories for which the rights of exploitations  herein granted till the expiry of this agreement.

8. In case the original procedures M/s Vijaya Productions Pvt.  Ltd. or lessors herein require any prints of the pictures lease out  herein for any overseas exploitation the same share be delivered  by the lessees herein at cost.

9. It is understood between the parties herein that 16mm rights,  video  rights  committed  by  the  producers  Vijaya  Productions  Pvt. Ltd. with the parties concerned was expired.  The lessees  herein are entitled for the said rights.”

5. M. Srinivasa Rao executed an agreement dated 17.8.2001 in favour of  

respondent  No.1  and  granted  CDs,  VCDs,  DVDs,  copyrights  for  

transferring, processing, recording, duplication, copying, taping on to video  

grams, discs, CDs, VCDs, DVDs and the digital formats for commercial and  

private exhibition of the 15 films for the entire world.

6. Three  days  prior  to  the  execution  of  the  aforesaid  agreement,  

respondent  No.3  entered  into  an  agreement  dated  14.8.2001  with  the  

appellant  and assigned it  exclusive DVD rights,  VCD rights  and internet  

rights (worldwide web TV rights) by way of lease in respect of the 15 films  

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for the entire world including Indian Union Territory for a period of 60 years  

in lieu of a consolidated royalty amount of Rs.1,50,000/-.  

7. Within  8  days  of  the  execution  of  agreement  dated  17.8.2001,  

respondent No.1 got published a notice in the newspaper dated 25.8.2001  

declaring that it had purchased DVD and VCD rights for 15 Telugu films  

produced by M/s. Vijaya Production.  Thereupon, respondent No.3 issued  

telegram to respondent No.1 and called upon it to stop production of DVDs  

and  VCDs.   In  its  reply  dated  31.12.2001,  respondent  No.1  relied  upon  

agreement dated 17.8.2001 executed by M. Srinivasa Rao and claimed that it  

had purchased all the rights in respect of the 15 films.  By way of rejoinder,  

respondent No.3 informed respondent No.1 that it had not sold or assigned  

any rights to respondent No.2 or M. Srinivasa Rao to produce DVDs and  

VCDs.  

8. After  exchange  of  notices,  respondent  No.1  filed  suit  for  grant  of  

relief to which reference has been made in the opening paragraph of this  

judgment.  It also applied for and was granted ex parte injunction by the trial  

Court on 23.6.2003, which was vacated on 22.8.2003. The appeal preferred  

by respondent No.1 was dismissed by the Division Bench of the High Court.

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9. In the written statement filed by the appellant through its Managing  

Partner Bh. Sudhakar Reddy, which was adopted by respondent No.3, it was  

pleaded that the rights of VCDs/DVDs had not been assigned by respondent  

No.3 to respondent No.2 and, as such, M. Srinivasa Rao could not acquire  

any such rights from respondent No.2 and assign the same to respondent  

No.1.  In a separate written statement, respondent No.2 claimed that in terms  

of  agreement  dated  15.12.1995  executed  with  respondent  No.3,  it  had  

acquired  the  rights  for  future  technical  development  in  the  field  of  

cinematography.  Respondent No.2 pleaded that after accepting a sum of  

Rs.8  lakhs,  respondent  No.3  had  assigned  irrevocable  copyright  for  

broadcasting  the  said  films  through  satellite,  cassette,  disc,  cable,  wire,  

wireless or any other system including its transmission through cable system  

without restriction of geographical areas and for this purpose, the assignees  

were authorised to make copies of  recording of  films,  disc,  tape or  such  

other  media  as  may be  required.   Respondent  No.2  admitted  that  it  had  

entered  into  an  agreement  dated  30.7.2001  with  M.  Srinivas  Rao  for  

assignment of the rights acquired by it under agreements dated 25.6.1990  

and 15.12.1995.

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10. On the pleadings of the parties, the trial Court framed the following  

issues:

“1) Whether this court has territorial jurisdiction to maintain  the suit?

2) Whether  the  suit  is  bad  for  non  joinder  of  necessary  parties?

3) Whether  the  agreement  dt.  25.6.1990  will  include  VCD/DVD rights and whether the plaintiff is entitled to  claim the broadcasting rights thereunder coupled with the  agreement  dt.  15.2.2002  and  thereby  the  plaintiff  is  entitled for the manufacture and sale of the VCDs/DVDs  of the suit films?

4) Whether  the  plaintiff  is  entitled  for  the  relief  of  declaration and the injunction sought for?

5) To what relief?”

11. After considering the pleadings of the parties and evidence produced  

by them, the trial Court held that the suit was bad for non joinder of M.  

Srinivasa Rao, who is said to have assigned rights to respondent No.1.  This  

is evinced from the following observations made by the learned trial Court:   

“The plaintiff is claiming his right through M. Srinivasa Rao  from  whom  the  plaintiff  has  obtained  an  agreement  for  assignment of the rights over the suit schedule films.  When the  defendants  1  and  3  have  come  forward  with  a  specific  contention that  the  M. Srinivasa  Rao have no right  at  all  to  assign  the  VCD and DVD rights  the  plaintiff  ought  to  have  impleaded the said M. Srinivasa Rao as a party to the suit.  But  the plaintiff has not chosen to bring him on record and he has  

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deposed in his cross examination that he has no grievance at all  against M. Srinivas Rao and therefore he thought that it is not  necessary to bring him on record.  It is important to note that  the plaintiff is claiming right through M. Srinivas Rao.  He has  purchased the  rights  from the  2nd defendant  and because  the  dispute  is  that  he  has  conveyed  the  rights  which  was  not  covered by the agreement under which he got the assignment in  his  favour from the 2nd defendant  the plaintiff  ought to have  impleaded M. Srinivasa Rao as one of the parties and in spite of  the objection taken by the other side the plaintiff has not chosen  to  bring  the  Srinivasa  Rao  on  record  but  only  satisfied  by  saying  that  he  has  no  grievance  against  Srinivas  Rao.   This  issue  to  be  held  as  against  the  plaintiff  holding  that  the  necessary  party  Srinivas  Rao  is  not  brought  on  record  and  therefrom the suit is bad for non joinder of necessary party and  Issue No.2 is held accordingly.”   

12. The  trial  Court  then  referred  to  agreements  dated  25.6.1990  and  

15.12.1995  executed  between  respondent  Nos.2  and  3,  agreement  dated  

30.7.2001 entered into between respondent No.2 and M. Srinivasa Rao as  

also agreement dated 14.8.2001 executed by M. Srinivasa Rao in favour of  

respondent No.1, referred to the provisions of the Copyright Act, 1957, two  

judgments of the Madras High Court and concluded that the plaintiff has  

failed to make out a case for grant of declaration and injunction.

13. In  the  appeal  filed  by  respondent  No.1,  the  learned  Single  Judge  

framed the following questions:

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“1. Whether the assignment of copyrights made by the third  defendant in favour of first defendant is true and valid?

2. Whether the assignment of copyrights made by the third  defendant  in favour of second defendant  confers the right  of  manufacturing and selling VCDs/DVDs and whether the rights  assigned and conferred under Exs.A.4 and A.5 are only meant  for ‘broadcasting’  the suit  films and if  so,  what is  the effect  thereof?

3. Whether  the  non-joinder  of  the  person  by  name  Srinivasarao, who was allegedly the assignee from the second  defendant and assignor in favour of the plaintiff, would vitiate  the suit? or

Whether the plaintiff can be non-suited for non-joinder of one  Srinivasarao who was allegedly the assignee from the second  defendant and assignor of the plaintiff?”

14. Although, the trial Court had not framed any issue which could give  

rise  to  question  No.1 and in  the  appeal  filed  by  the  respondent  no such  

prayer was made, the learned Single Judge invoked Order XLI Rule 24 of  

the Code of Civil Procedure, 1908 (CPC) and justified the framing of first  

question by recording the following observations:

“The first point as formulated by this Court in this appeal was  not framed by the trial court as an issue in the suit.  But in my  considered view, the trial court ought to have framed this issue  also in the light of the specific averment made by the plaintiff  in the plaint that the acquisition of rights by the first defendant- M/s  Divya  Exports  from  the  3rd defendant-M/s  Nagireddy  Charities,  represented  by  its  Trustee-Venugopal  Reddy  was  totally false and baseless having regard to the fact that Sri B.  Nagireddy, the original Managing Trustee of the 3rd defendant-

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M/s  Nagireddy  Charities,  had  already  given  away  the  copyrights during the year 1995 itself in favour of the second  defendant.  Hence, having regard to the said specific averment  made by the plaintiff in the plaint and also in the light of the  specific ground taken by the plaintiff in this appeal with regard  to the application of Section 73 of the Indian Trusts Act 1881  (for short “the Trusts Act”), I deem it absolutely necessary to  formulate  the  first  point  for  consideration,  exercising  the  jurisdiction of this Court under Order 41, Rule 24 C.P.C.  For  this reason, this Court formulated the first point as stated supra.

From the submissions made at the Bar by the learned Counsel  appearing  for  the  parties,  it  could  be  seen  that  the  whole  controversy revolves around Exs.A.4 and A.5 and Ex.A.3 on  one side and Ex.A.3 on one side and Ex.B.1 on the other.”  

The learned Single Judge then referred to the pleadings and oral as  

well as documentary evidence produced by the parties, Sections 73 and 74 of  

the Trusts Act and held that Exhibit  B.1 executed by respondent No.3 in  

favour of the appellant was not valid.  Paragraphs 52 to 55 and 58 of the  

impugned  judgment,  which  contain  the  reasons  recorded  by  the  learned  

Single Judge for arriving at the said conclusion, are extracted below:

“52. What is more interesting to note is that no trust deed or  any  other  document  was  pressed  into  service  by  the  first  defendant while getting himself examined as D.W.1 to clarify  or explain that Mr. Venugopalreddy had acquired the status of a  trustee  of  M/s  Nagireddy  Charities  in  order  to  effectively  represent the trust and to execute Ex.B.1 document in favour of  the first defendant.  Interestingly, D.W.1 was the Special Power  of Attorney Holder also, representing M/s Nagireddy Charities.

53. In other words, totally an alien, not connected with the  affairs  of  M/s  Nagireddy  Charities,  but  a  beneficiary  under  

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Ex.B.1, was examined as D.W.1, representing both defendant  No.1  and  defendant  No.3.   No  document  relating  to  appointment of Venugopalreddy as a trustee of M/s Nagireddy  Charities,  authorizing  Venugopalreddy  to  represent  trust  has  been brought on record and no person directly connected with,  and having knowledge of the affairs of M/s Nagireddy Charities  had been examined on behalf of the defendants.

54. It is to be remembered that the suit was instituted in the  year 2003 and during the pendency of the suit Mr. B. Nagireddy  was  very  much  alive,  of  course,  totally  in  a  state  of  indisposition.  In such circumstances,  I am of the considered  view that the burden heavily lies on either the first defendant or  the third defendant to establish the change in trusteeship of M/s  Nagireddy Charities, in which case alone Ex.B.1 document can  be  called  as  a  validly  and  legally  executed  document  by  Venugopalreddy in the capacity of the trustee of M/s Nagireddy  Charities  in favour of  the first  defendant.   Unfortunately,  no  other witness, except D.W.1, was examined in this behalf.

55. It  is  well-known  principle  that  a  person  who  has  no  proper  authorization  to  represent  a  trust  cannot  enter  into  agreements with third parties in order to bind the trust – even if  such agreements are entered into, such agreements are not valid  in the eye of law.  In the instant case, the first defendant and the  third defendant – M/s Nagireddy Charities, represented by its  Power of Attorney Holder have utterly failed to establish the  capacity  of  Venugopalreddy  as  trustee  to  execute  Ex.B.1  agreement assigning the VCDs and DVDs copyrights in respect  of the suit schedule films in favour of the first defendant during  the  lifetime of  Sri  Nagireddy,  the  Managing  Trustee  of  M/s  Nagireddy  Charities.  This  is  a  strong  and  suspicious  circumstance,  which compels  this  Court,  to  hold that  Ex.B.1  was  not  executed  by  a  proper  and  authorized  person  representing the third defendant-trust, conveying the copyrights  of VCDs and DVDs in favour of the first defendant.  Further,  when  Mr.  Venugopalreddy’s  authority  as  trustee  to  execute  Ex.B.1  is  in  serious  doubt,  first  defendant,  who  is  the  beneficiary of the said document cannot be placed on a higher  and comfortable position that Mr. Venugopalreddy.

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58. From the perusal of the impugned judgment it could be  seen the court below while discussing issues 3 and 4, without  going to the aspect of validity or otherwise of the assignment of  copyright  in  favour  of  first  defendant  by  third  defendant,  incidentally recorded a finding basing on the Xerox copy of a  document Ex.A-12, that the plaintiff is estopped from raising a  plea  that  B.  Venugopal  Reddy  has  no  authority  to  represent  third defendant trust.  But a perusal of Ex.A-12 discloses that it  is  only  a  reiteration  of  assignment  of  broadcast  rights  under  Ex.A-5.  In this context it is to be noted that Ex.A-12 is only a  Xerox  copy  and  the  original  is  not  filed.  No  reasons  were  recorded by the trial court with regard to the admissibility of the  said  document.  Even  assuming  that  the  said  document  was  really  executed by B.  Venugopal Reddy in favour of  second  defendant,  as  already  noticed,  it  is  only  a  reiteration  or  confirmation of Ex.A-5. Further there is no cross-examination  by the defendants 1 and 3 on this aspect and there is also no  reference to this  document in the written statements  filed by  them. Therefore, so long as the execution of Ex.A-4 was agreed  to  have been in  subsistence by virtue  of  its  execution by B.  Nagi  Reddy,  Managing  Trustee  of  third  defendant  assigning  rights for a period of seventy years, Ex.A-12 does not gain any  significance. If Ex.A-12 is to be accepted, notwithstanding the  admissibility or otherwise of it, at best it has to be presumed  that B. Venugopal Reddy had become the Managing Trustee of  third defendant as on the date of execution of Ex.A-12 dated  15-2-2002. But in the present case, the whole dispute is with  regard to the authority of B. Venugopal Reddy to execute Ex.B- 1  document  in  the  capacity  of  trustee  of  third  defendant  in  favour of first defendant, which is a prior transaction. In other  words the genesis of the rights of assignment of broadcast is  Exs.A-4 and A-5, but not Ex.A-12. Furthermore, the reasons for  bringing  into  existence  of  the  controversial  Ex.A-12  is  not  explained  in  the  evidence  of  either  of  the  parties  and  as  its  execution is subsequent to the execution of Ex.B-1, on which  defendants 1 and 3 are mustering their claim of copyright of  VCDs and DVDs, the same is not relevant and inconsequential.  Hence, the finding of the trial court that the plaintiff is estopped  

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to question the validity  or  otherwise of the trusteeship of  B.  Venugopal Reddy for third defendant is not justifiable.”

15. Although,  learned  senior  counsel  appearing  for  the  parties  made  

elaborate arguments on the merits of the findings recorded by the learned  

Single  Judge  with  reference  to  questions  No.2  and  3  and  produced  

publications titled Copinger and Skone James on Copyright (15th Edition),  

Goldstein  on  Copyright  (3rd Edition)  Volume  1  and  the  judgments  of  

different High Courts, we do not consider it necessary to examine the same  

because  in  our  considered  view,  the  learned Single  Judge was not  at  all  

justified in non-suiting the appellant by recording a finding that Exhibit B.1  

was invalid.

16. Since  the  trial  Court  had  not  framed  specific  issue  touching  the  

validity  of  agreement  Exhibit  B.1,  the  parties  did  not  get  effective  

opportunity  to lead evidence in support  of  their  respective  cases.   In the  

absence of  any issue,  the trial  Court  did not  even advert  to the question  

whether or not agreement Exhibit B.1 was valid.  The evidence available on  

the record was not at all sufficient for deciding that question and yet the  

learned Single Judge decided that question by drawing inferences from the  

statements made by the witnesses examined by the parties with reference to  

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the issues framed by the trial Court and returned a negative finding on the  

validity of Exhibit B.1.

17. In our view, in the peculiar facts of this case, the learned Single Judge  

was not at all justified in invoking Order XLI Rule 24 CPC.  If at all the  

learned Single Judge felt  that the trial Court should have framed specific  

issue  on  the  validity  of  agreement  Exhibit  B.1,  then  he  should  have  

remanded the matter to the trial Court with a direction to frame such an issue  

and decide the suit afresh.  The omission on the part of the learned Single  

Judge to adopt that course has resulted in manifest injustice to the appellant.  

18. In the result, the appeal is allowed.  The impugned judgment is set  

aside and the case is remitted to the trial Court with the direction that it shall,  

after considering the pleadings of the parties, frame an additional issue on  

the validity of agreement Exhibit B.1 executed between respondent No.1 and  

respondent No.3, give opportunity to the parties to produce evidence and  

decide the suit afresh without being influenced by any of the observations  

made by the High Court and this Court.     

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19. Since the matter is sufficiently old, we direct the trial Court to dispose  

of the matter as early as possible but latest within nine months from the date  

of receipt/production of copy of this judgment.  The parties are directed to  

appear before the trial Court on 10.10.2011.

20. The  Registry  is  directed  to  send  a  copy  of  this  judgment  to  IX  

Additional Chief Judge, City Civil Court (Fast Track Court), Hyderabad by  

fax.

..……….………………….…J.  [G.S. Singhvi]

……..…..…..………… ……..J.

[Asok Kumar Ganguly] New Delhi; September 02, 2011.   

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