Delhi High Court
Azure Hospitality Private Limited vs Phonographic Performance Limited on 15 April, 2025
Author: C. Hari Shankar
Bench: C. Hari Shankar
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 8 April 2025
Pronounced on: 15 April 2025
+ FAO(OS) (COMM) 41/2025, CAV 106/2025, CM APPL.
16177/2025, CM APPL. 16178/2025 & CM APPL. 16179/2025
AZURE HOSPITALITY PRIVATE LIMITED .....Appellant
Through: Mr. Dayan Krishnan and Ms.
Swathi Sukumar, Sr. Advs. with Mr. S.
Santanam Swaminathan, Mr. Kartik
Malhotra, Mr. Anindit Mandal, Mr. Rishabh
Agarwal and Mr. Ritik Raghuvanshi, Advs.
versus
PHONOGRAPHIC PERFORMANCE LIMITED ...Respondent
Through: Mr. Rajiv Nayar and Mr. Akhil
Sibal, Sr. Advs. with Mr. Ankur Sangal, Mr.
Raghu Vinayak Sinha, Ms. Sucheta Roy,
Mr. Shaurya Pandey, Ms. Jahnavi Sindhu
and Ms. Sugandh Shahi, Advs.
CORAM:
HON'BLE MR. JUSTICE C. HARI SHANKAR
HON'BLE MR. JUSTICE AJAY DIGPAUL
JUDGMENT
% 15.04.2025
C. HARI SHANKAR, J.
1. The appellant, Azure Hospitality Private Limited1, is the
defendant before a learned Single Judge of this Court in CS (Comm)
714/20222. By judgment dated 3 March 2025, the learned Single
1 “Azure”, hereinafter
2 Phonographic Performance Limited v Azure Hospitality Private Limited
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Judge has allowed IA 16777/2022 preferred by the respondent –
plaintiff/ Phonographic Performance Limited3 and rejected IA
17272/2022 preferred by the appellant Azure under Order XXXIX
Rule 4 of the CPC.
2. The learned Single Judge, has pending disposal of CS (COMM)
714/2022 restrained Azure, its directors, partners, licensees, assignees,
officers and all others acting on its behalf from “doing any act
including exploitation / use of PPL’s copyrighted works in any of its
outlets till the final adjudication of the suit.
3. Aggrieved thereby, Azure has filed the present appeal.
4. We have heard Mr. Dayan Krishnan and Ms. Swathi Sukumar,
learned Senior Counsels for Azure and Mr. Akhil Sibal, learned
Senior Counsel for PPL, at length. Learned Senior Counsels have also
filed written submissions.
Facts
5. The facts are brief.
6. Various record labels which owned sound recordings and were
admitted the “first owners” of such recordings within the meaning of
Section 174 of the Copyright Act, 1957, have assigned the said
3 “PPL”, hereinafter
4 17. First owner of copyright. – Subject to the provisions of this Act, the author of a work shall be the
first owner of the copyright therein:
Provided that–
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recordings to PPL by virtue of assignment deeds executed under
Section 18(1)5 of the Copyright Act, 1957. There is no dispute that,
(a) in the case of a literary, dramatic or artistic work made by the author in the
course of his employment by the proprietor of a newspaper, magazine or similar
periodical under a contract of service or apprenticeship, for the purpose of publication in a
newspaper, magazine or similar periodical, the said proprietor shall, in the absence of any
agreement to the contrary, be the first owner of the copyright in the work, in so far as the
copyright relates to the publication of the work in any newspaper, magazine or similar
periodical, or to the reproduction of the work for the purpose of its being so published, but
in all other respects the author shall be the first owner of the copyright in the work;
(b) subject to the provisions of clause (a), in the case of a photograph taken, or a
painting or portrait drawn, or an engraving or a cinematograph film made, for valuable
consideration at the instance of any person, such person shall, in the absence of any
agreement to the contrary, be the first owner of the copyright therein;
(c) in the case of a work made in the course of the author’s employment under a
contract of service or apprenticeship, to which clause (a) or clause (b) does not apply, the
employer shall, in the absence of any agreement to the contrary, be the first owner of the
copyright therein;
(cc) in the case of any address or speech delivered in public, the person
who has delivered such address or speech or if such person has delivered such
address or speech on behalf of any other person, such other person shall be the
first owner of the copyright therein notwithstanding that the person who
delivers such address or speech, or, as the case may be, the person on whose
behalf such address or speech is delivered, is employed by any other person
who arranges such address or speech or on whose behalf or premises such
address or speech is delivered;
(d) in the case of a Government work, Government shall, in the absence of any
agreement to the contrary, be the first owner of the copyright therein;
(dd) in the case of a work made or first published by or under the direction
or control of any public undertaking, such public undertaking shall, in the
absence of any agreement to the contrary, be the first owner of the copyright
therein.
Explanation. – For the purposes of this clause and Section 28-A, “public
undertaking”, means –
(i) an undertaking owned or controlled by Government; or
(ii) a Government Company as defined in Section 617 of the Companies
Act, 1956 (1 of 1956); or
(iii) a body corporate established by or under any Central, Provincial or
State Act;]
(e) in the case of a work to which the provisions of Section 41 apply, the
international organisation concerned shall be the first owner of the copyright therein.
Provided that in case of any work incorporated in a cinematograph work,
nothing contained in clauses (b) and (c) shall affect the right of the author in the work
referred to in clause (a) of sub-section (1) of Section 13;
5 18. Assignment of copyright. –
(1) The owner of the copyright in an existing work or the prospective owner of the copyright
in a future work may assign to any person the copyright either wholly or partially and either
generally or subject to limitations and either for the whole term of the copyright or any part thereof:
Provided that in the case of the assignment of copyright in any future work, the
assignment shall take effect only when the work comes into existence:
Provided further that no such assignment shall be applied to any medium or mode of
exploitation of the work which did not exist or was not in commercial use at the time when the
assignment was made, unless the assignment specifically referred to such medium or mode of
exploitation of the work:
Provided also that the author of the literary or musical work included in a cinematograph
film shall not assign or waive the right to receive royalties to be shared on an equal basis with the
assignee of copyright for the utilisation of such work in any form other than for the communication
to the public of the work along with the cinematograph film in a cinema hall, except to the legal
heirs of the authors or to a copyright society for collection and distribution and any agreement to
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consequent on such assignment, PPL is entitled to be treated as the
owner of copyright in the assigned sound recordings for the purposes
of the Copyright Act by virtue of Section 18(2)6.
7. According to the assertions in the plaint before the learned
Single Judge, PPL has a monopoly in the sound recording market. It
owns and controls public performance rights of over 400 music labels
with 45 lakh international and domestic sound recordings. It also
admittedly owns 80 to 90% of all sound recordings ever created in the
country.
8. The assignment deeds executed by the original first owners of
the sound recordings in favour of PPL assigned, to PPL, the public
performance rights in respect of the sound recordings. This also
entitles PPL to grant licenses to others who desire to publicly perform
the said sound recordings.
9. Between 7 May 1996 and 21 June 2014, PPL was a copyright
society within the meaning of Section 33(1) and (3)7 read with Sectioncontrary shall be void:
Provided also that the author of the literary or musical work included in the sound
recording but not forming part of any cinematograph film shall not assign or waive the right to
receive royalties to be shared on an equal basis with the assignee of copyright for any utilisation of
such work except to the legal heirs of the authors or to a collecting society for collection and
distribution and any assignment to the contrary shall be void.
6
(2) Where the assignee of a copyright becomes entitled to any right comprised in the
copyright, the assignee as respects the rights so assigned, and the assignor as respects the rights not
assigned, shall be treated for the purposes of this Act as the owner of copyright and the provisions
of this Act shall have effect accordingly.
7 33. Registration of copyright society. –
(1) No person or association of persons shall, after coming into force of the Copyright
(Amendment) Act, 1994 commence or, carry on the business of issuing or granting licences in
respect of any work in which copyright subsists or in respect of any other rights conferred by this
Act except under or in accordance with the registration granted under sub-section (3):
Provided that an owner of copyright shall, in his individual capacity, continue to have the
right to grant licences in respect of his own works consistent with his obligations as a member of
the registered copyright society:
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2(ffd)8 of the Copyright Act. The Copyright (Amendment) Act, 20129
amended Section 33 of the Copyright Act by inserting therein sub-
Section (3A)10, the second proviso to which required every copyright
society already registered prior to the 2012 Amendment Act, to once
again get itself registered under Chapter VII of the Copyright Act
(which deals with copyrights societies) within a year of
commencement of the 2012 Amendment Act. It is not in dispute that
in view thereof, PPL surrendered its pre-existing registration as a
copyright society and applied for re-registration, which was rejected.
10. On coming to know that Azure was, in restaurants and other
outlets run by it, exploiting the sound recordings in which PPL held
copyright (as an assignee under Section 18) without obtaining any
license from it, PPL, on 20 July 2022 issued a notice to Azure calling
on it to cease and desist from continued exploitation of the said soundProvided further that the business of issuing or granting license in respect of literary,
dramatic, musical and artistic works incorporated in a cinematograph films or sound recordings
shall be carried out only through a copyright society duly registered under this Act:
Provided also that a performing rights society functioning in accordance with the
provisions of Section 33 on the date immediately before the coming into force of the Copyright
(Amendment) Act, 1994 (38 of 1994) shall be deemed to be a copyright society for the purposes of
this Chapter and every such society shall get itself registered within a period of one year from the
date of commencement of the Copyright (Amendment) Act, 1994.
*****
(3) The Central Government may, having regard to the interests of the authors and other
owners of rights under this Act, the interest and convenience of the public and in particular of the
groups of persons who are most likely to seek licences in respect of the relevant rights and the
ability and professional competence of the applicants, register such association of persons as a
copyright society subject to such conditions as may be prescribed:
Provided that the Central Government shall not ordinarily register more than one
copyright society to do business in respect of the same class of works.
8 (ffd) “copyright society” means a society registered under sub-section (3) of Section 33;
9 “the 2012 Amendment Act” hereinafter
10 (3-A) The registration granted to a copyright society under sub-section (3) shall be for a period of fiveyears and may be renewed from time to time before the end of every five years on a request in the prescribed
form and the Central Government may renew the registration after considering the report of Registrar of
Copyrights on the working of the copyright society under Section 36:
Provided that the renewal of the registration of a copyright society shall be subject to the continued
collective control of the copyright society being shared with the authors of works in their capacity as owners
of copyright or of the right to receive royalty:
Provided further that every copyright society already registered before the coming into force of the
Copyright (Amendment) Act, 2012 shall get itself registered under this Chapter within a period of one year
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recordings. On Azure failing to do so, PPL instituted CS (COMM)
714/2022 before this Court, seeking a decree of permanent injunction
restraining Azure as well as all others acting on its behalf from
exploiting or using the copyrighted works in respect of which PPL had
been granted license by the original owners of the sound recordings
under Section 18(1), the full repertoire of which is to be found at
https://www.pplindia.org/songs, apart from damages and costs. The
plaint was accompanied by IA 16777/2022 under Order XXXIX Rules
1 and 2 of the CPC, seeking an interlocutory injunction in the
following terms:
“It is therefore most respectfully prayed that this Hon’ble Court be
pleased to grant the following reliefs in favour of the Plaintiffs:
(a) A decree of interim injunction restraining the
Defendants, its directors, partners or proprietors, licensees,
assigns, officers, servants, agents, representatives,
contractors, sister concerns and any other person working
for and on behalf of the Defendants from doing any act
including exploitation/ use of the Plaintiff’s copyrighted
works in the repertoire available on Plaintiff’s website
https://www.pplindia.org/songs, in any of its outlets,
including the outlets mentioned Paragraph No. 14 of the
Application, which amounts to infringement of the
Plaintiff’s copyright;
(b) an order of ex-parte ad-interim injunction in terms of
prayer (a);
(c) pass such other order as this Hon’ble Court may deem fit
and proper in the facts and circumstances of this case.”
11. By order dated 14 October 2022, a learned Single Judge of this
Court issued summons in the aforesaid CS (COMM) 714/2022 as well
as notice in IA 16777/2022. Further observing that PPL had managed
from the date of commencement of the Copyright (Amendment) Act, 2012.
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to make out a prima facie case in its favour, the learned Single Judge
directed that there would be an ad interim ex parte order of injunction
restraining Azure in terms of prayer (a) in IA 16777/2022 till further
orders.
12. Azure, by way of response filed IA 17272/2022 under Order
XXXIX Rule 4 CPC, seeking vacation of the ex parte ad interim
injunctive order dated 14 October 2022.
13. By the impugned order, the learned Single Judge, as already
noted, has proceeded to allow IA 16777/2022 filed by PPL and
dismissed IA 17272/2022 filed by Azure.
The Impugned Judgment
14. The learned Single Judge has, in passing the impugned
judgment, relied on the orders of a learned Single Judge of this Court
in Novex Communication v Lemon Tree Hotels11, and of the High
Court of Bombay in Novex Communications v Trade Wings Hotel12.
Additionally, reliance has been placed on the judgment of the
Supreme Court in Entertainment Network India v Super Cassette
Industries13.
15. The findings of the learned Single Judge in the impugned
judgment may be enumerated thus:
11 2019 SCC OnLine Del 6568, referred to, hereinafter, as “Novex v Lemon Tree“
12 2024 SCC OnLine Bom 252, referred to, hereinafter, as “Novex v Trade Wings“
13 (2008) 13 SCC 30
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(i) From Novex v Lemon Tree, the learned Single Judge has
culled out the following propositions:
(a) Under the first proviso to Section 33(1) of the
Copyright Act, an owner of copyright in his individual
capacity, would continue to have the right to grant
licenses in respect of his own works.
(b) Grant of such licenses would, however, have to be
consistent with the obligation of the copyright owner as a
member of a registered copyright society, meaning that
the licenses could not be granted in respect of a right
already granted by the owner-licensor to a copyright
society.
(c) The second proviso to Section 33(1) conferred the
right to grant a license in respect of any literary,
dramatic, musical or artistic work, embedded in
cinematographic work or sound recording, only on a
registered copyright society.
(d) The second proviso did not, however, create a bar
to grant of a licence in respect of the sound recordings
itself, as distinguished from the literary, dramatic,
musical or artistic work embedded in the sound
recording.
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(e) Section 3414 sets out the rights of a copyright
society.
(f) Under Section 55(1)15 of the Copyright Act, an
infringement suit could be instituted only by the owner of
copyright. In other words, the copyright society could not
sue for infringement of the copyright. Ergo, the
independent right of the copyright owners to sue for
infringement subsisted.
(ii) The decision in Novex v Lemon Tree was followed by a
Single Bench of this Court [incidentally of one of us (C. Hari
Shankar, J.)] in Phonographic Performance Ltd. v Canvas
14 34. Administration of rights of owner by copyright society. –
(1) Subject to such conditions as may be prescribed,–
(a) a copyright society may accept from an author and other owners of right
exclusive authorisation to administer any right in any work by issue of licences or
collection of licence fees or both; and
(b) an author and other owners of right shall have the right to withdraw such
authorisation without prejudice to the rights of the copyright society under any contract.
(2) It shall be competent for a copyright society to enter into agreement with any foreign
society or organisation administering rights corresponding to rights under this Act, to entrust to
such foreign society or organisation the administration in any foreign country of rights administered
by the said copyright society in India, or for administering in India the rights administered in a
foreign country by such foreign society or organisation:
Provided that no such society or organisation shall permit any discrimination in regard to
the terms of licence or the distribution of fees collected between rights in Indian and other works.
(3) Subject to such conditions as may be prescribed, a copyright society may–
(i) issue licences under Section 30 in respect of any rights under this Act;
(ii) collect fees in pursuance of such licences;
(iii) distribute such fees among owners of rights after making deductions for its own
expenses;
(iv) perform any other functions consistent with the provisions of Section 35.
15 55. Civil remedies for infringement of copyright. –
(1) Where copyright in any work has been infringed, the owner of the copyright shall, except
as otherwise provided by this Act, be entitled to all such remedies by way of injunction, damages,
accounts and otherwise as are or may be conferred by law for the infringement of a right:
Provided that if the defendant proves that at the date of the infringement he was not aware
and had no reasonable ground for believing that copyright subsisted in the work, the plaintiff shall
not be entitled to any remedy other than an injunction in respect of the infringement and a decree
for the whole or part of the profits made by the defendant by the sale of the infringing copies as the
court may in the circumstances deem reasonable.
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Communication16.
(iii) Azure sought to distinguish the judgment in Novex v
Lemon Tree as having been rendered at a time when there was
no copyright society for sound recordings. In the present times,
such a copyright society in the form of Recorded Music
Performance Limited17 was in place. Azure therefore sought to
contend that the decision in Novex v Lemon Tree was not,
therefore, applicable. However, this argument was not
acceptable as the decision in Novex v Lemon Tree was not
based on the existence or non existence of a copyright society.
(iv) Similarly, in Novex v Trade Wings, the High Court of
Bombay held that
(a) under Section 18(2), PPL/Novex become the
copyright owners of the sound recording assigned to
them by the original owner,
(b) Section 3018 empowered the owner/assignee, who
became owner by assignment, to grant a license to exploit
the sound recordings in respect of which he had become
the owner, and16
Order dated 17th December, 2021 in CS (Comm) 671/2021
17 “RMPL”, hereinafter
18 30. Licences by owners of copyright. –
The owner of the copyright in any existing work or the prospective owner of the
copyright in any future work may grant any interest in the right by licence in writing by him or by
his duly authorised agent:
Provided that in the case of a licence relating to copyright in any future work, the licence
shall take effect only when the work comes into existence.
Explanation. – When a person to whom a licence relating to copyright in any future work
is granted under this section dies before the work comes into existence, his legal representatives
shall, in the absence of any provision to the contrary in the licence, be entitled to the benefit of the
licence.
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(c) Sections 34 and 35 distinguished between the right
of the owner/author and the right of the copyright society.
(v) The judgment of the Supreme Court in Entertainment
Network India v Super Cassette Industries held that the 1994
amendment of the Copyright Act did not take away the owner’s
rights but merely provided the owners with an opportunity to
exploit the copyright held by them either themselves or through
a copyright society. The copyright society did not, therefore,
take away the right of the owner of copyright to grant licenses
for exploiting of the recordings in respect of which ownership
was held.
(vi) Section 33(1) did not take away the right of the owners to
grant copyright by license under Section 30.
(vii) The second proviso to Section 33(1) dealt with authors of
underlying works, and was inapplicable to sound recordings.
(viii) The fact that PPL was earlier registered as a copyright
society would make no difference.
(ix) Following this, the learned Single Judge has reasoned
thus, in paras 34 to 39 of the impugned order:
“34. I have carefully examined the judgments passed by
the Bombay High Court and the Madras High Court. I
would respectfully beg to differ with the findings of the
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the Bombay High Court for the reasons set out hereinafter.
35. As per the scheme of the Copyright Act, Section 18
gives a copyright owner the right to assign the copyright
and upon such assignment, the assignee shall be deemed to
be the owner of the copyright in the same manner as the
owner. Section 30 of the Copyright Act gives the right to
an owner, which would also include an assignee, to grant a
licence in his works either by himself or through an agent.
36. Section 33 of the Copyright Act comes into play
only where owners, who are members of a copyright
society, have assigned the right to give licenses to a
copyright society. The expression “no person or
association of persons” occurring in Section 33(1) of the
Copyright Act would not include ‘owners’, who are not
members of a copyright society. Even in respect of owners,
who are members of a copyright society, the position is
clarified by the first proviso to Section 33 (1) that such an
owner shall be free to grant licenses in respect of his own
works in his individual capacity. The only limitation on
such an owner is that the licenses granted by him would
have to be consistent with his obligations as a member of a
registered copyright society i.e., an owner cannot grant a
license in his individual capacity, in respect of a work,
which he has already exclusively licensed to a copyright
society.
37. The right of giving a license in his works is an
inherent right of a copyright owner under Section 30 of the
Copyright Act. This right would necessarily include the
‘business of issuing or granting licence’, the expression
which occurs in Section 33 (1) and the second proviso
thereto. Therefore, the second proviso to Section 33 (1)
cannot put any fetters on the inherent right of a copyright
owner to grant licenses in respect of his works or engage in
the ‘business of issuing or granting licence’.
38. Further, the second proviso to Section 33 (1) makes
it clear that the ‘business of issuing or granting of licenses’
would vest with a copyright society, only with respect to a
‘literary work’, ‘dramatic work’, ‘musical work’ or ‘artistic
work’, as embedded in a ‘cinematographic work’ or a
‘sound recording’ and not in the ‘cinematographic work’ or
‘sound recording’ itself.
39. Therefore, in my considered view, Section 33
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cannot override the provisions of Section 30 of the
Copyright Act which gives an absolute right to an owner of
the copyright to grant any interest in the copyrighted work
by way of a license.”
(x) The learned Single Judge has thereafter, referred to
Section 34 of the Copyright Act. He holds that the use of the
word expression “may accept”, in Section 34 implies that the
copyright society also had a right not to accept authorisation
from the owner. Similarly, Section 34(b) empowered the owner
to withdraw the authorisation. It could not have been the
intention of the legislature that, if the owner retained the right to
license or withdrew the authorisation from the copyright
society, the copyrighted work could not be licensed by the
owner itself.
Following this line of reasoning, the learned Single Judge has, in the
judgment under challenge, allowed the IA 16777/2022 filed by the
PPL and dismissed the IA 17272/2022 filed by Azure.
Rival Submissions
16. Submissions of Mr. Dayan Krishnan and Ms. Swathi Sukumar
16.1 Mr. Dayan Krishnan and Ms. Swathi Sukumar, learned Senior
Counsels for Azure, submit that Section 33 of the Copyright Act was
essentially intended to pervert cartelization, whereby one person such
as PPL could, by obtaining licenses from the original first owners of
the sound recordings, acquire ownership of the bulk of the available
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sound recordings and, thereafter, allow their dissemination only by
providing licenses at exorbitant prices or as in the case of PPL,
requiring the person, who wish to play the sound recording, to take a
license for the entire repertoire of recordings even if he was interested
in only one, or a select few. Learned Senior Counsel rely on the words
“carrying on business of issuing or granting licenses” as contained in
Section 33(1). Once it is found that a particular entity is carrying on
the business of issuing or granting licenses in respect of the
copyrighted works, the contention is that Section 33(1) applies
straightaway, and there is a prohibition in such a person engaging in
such a business except in accordance with a copyright licence issued
under Section 33(3). It is pointed out that, in para 2.1 of the impugned
judgment, the learned Single Judge has noted the fact that, even in the
plaint, PPL has claimed to be “engaged in the business of issuing
licenses for public performance of sound recordings.”. It is submitted
that, while there is no absolute prohibition on engaging in such a
business, any person choosing to do so is subjected to the strict tariff
regime envisaged by Section 33A19 of the Copyright Act, which were
inserted in the Copyright Act by Section 20 of the 2012 Amendment
Act. Such a person, it is submitted, is required to register himself as a
copyright society and publish his tariff in the prescribed manner so
19 33-A. Tariff scheme by copyright societies. –
(1) Every copyright society shall publish its tariff scheme in such manner as may be
prescribed.
(2) Any person who is aggrieved by the tariff scheme may appeal to the Commercial Court
and the Board may, if satisfied after holding such inquiry as it may consider necessary, make such
orders as may be required to remove any unreasonable element, anomaly or inconsistency therein:
Provided that the aggrieved person shall pay to the copyright society any fee as may be
prescribed that has fallen due before making an appeal to the Commercial Court and shall continue
to pay such fee until the appeal is decided, and the Board shall not issue any order staying the
collection of such fee pending disposal of the appeal:
Provided further that the Commercial Court may after hearing the parties fix an interim
tariff and direct the aggrieved parties to make the payment accordingly pending disposal of the
appeal.
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that any person who wishes to exploit any recording or recordings in
which such person holds copyright is able to do so by making
payment on the basis of the published tariff. The entire effort in the
scheme envisaged by Section 33(1) read with Section 33A is, it is
submitted, regulation of the business of bulk copyright holders
granting licenses in respect of the sound recordings of the subject
matter in which they hold copyright. The idea is to prevent
cartelization, monopolization and syndicating. Such a bulk owner of
copyright forms a category sui generis, the regulation of which is
sought to be ensured by Section 33(1) read with Section 33A. The
interpretation placed by the learned Single Judge on the provision of
the Copyright Act, it is submitted, would defeat this purpose and in
effect reduce Section 33(1) to a dead letter.
16.2 Adverting to the proviso to Section 33(1), which
unquestionably forms the basis of the impugned judgment of the
learned Single Judge, the learned Senior Counsel submit that a proviso
cannot be so interpreted as to defeat the purpose of the main Section.
The proscription contained in the main Section 33(1) cannot,
therefore, be sought to be defeated by the proviso to the said sub-
Section. The words “consistent with his obligations as a member of
the registered copyright society” as contained in the proviso to Section
33(1), it is submitted, emphasises this. Any person who is a bulk
owner of copyrighted material and is engaged in the business of
licensing of granting license or exploitation of such material, in other
words, according to learned Senior Counsel, is firstly required to
register himself as a copyright society and, even if he grants licenses
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in respect of his own words in individual capacity, can do so only
consistent with his obligations as a member of the registered copyright
society. This is made clear by the use of the words “in his individual
capacity”.
16.3 What the impugned judgment of the learned Single Judge
effectively permits, it is submitted, is for an entity, such as PPL, to
circumvent the regulatory scheme put in place by Section 33(1) read
with Section 33A of the Copyright Act, by not registering itself as a
copyright society and becoming the owner within the meaning of
Section 18(2) of the Copyright Act in respect of a bulk of existing
sound recordings and thereafter issuing licenses to persons desirous of
playing the sound recording at exorbitant rates at their own
unreasonable terms. In this context, learned Senior Counsel
emphasises the fact that it is an admitted position that PPL
monopolises the bulk of sound recordings available for dissemination.
16.4 Learned Senior Counsel, therefore, seek to distinguish a bulk
owner of copyrighted material, who is in the business of issuing or
grant licenses in respect of copyrighted work within the meaning of
Section 33(1), from a person who is bona fide granting licenses in
respect of the copyrighted works without being exclusively engaged in
the business of doing so. Such a person, submit learned Senior
Counsel, would be entitled to the benefit of Section 30 of the
Copyright Act whereas a person who is in the business of issuing or
granting licenses in respect of the copyrighted work cannot claim that
benefit.
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16.5 Learned Senior Counsel have also placed reliance on the 227 th
Report of the Department-Related Parliamentary Standing Committee
on Human Resource Development20 with respect to the Copyright
(Amendment) Bill 201021, which consequent to grant of Presidential
assent, was enacted as the 2012 Amendment Act. They have
particularly emphasized paras 17.1, 17.3, 17.5 to 17.8 and 21.1 to 21.6
of the report of the PSC, which read thus:
“17.1 Clause 19 of the Bill seeks to insert a new section 33A in
the Act providing for Tariff Scheme by copyright societies. The
proposed section mandates that every copyright society shall
publish its tariff scheme in such manner as may be laid down by
rules. Any aggrieved person may appeal against the tariff scheme
to the Copyright Board which may, after holding enquiry, make
orders to remove any unreasonable element, anomaly or
inconsistency therein. The aggrieved person shall continue to pay
such fee that had fallen due before making the appeal until the
appeal is decided and the Board shall not stay the collection of
such fee pending disposal of the appeal. However, the Board may,
after hearing the parties, fix interim tariff to be paid by the
aggrieved party.
*****
17.3 Divergent views were expressed by the various
stakeholders on the proposed amendment. Its negative impact was
highlighted by organisations representing music industry like
South India Music Companies Association, Indian Music Industry
and copyright societies like Phonographic Performance Ltd. and
Indian Performing Right Society Ltd. in the following manner:
– this provision can result in unreasonable hindering
of the rights of producers / sound recording labels to enter
into private agreements with licensees wishing to exploit
the work.
– conditions imposed on the copyright societies would
be extremely burdensome. As the tariff would be20 “PSC”, hereinafter
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perennially open to challenge by any person anywhere in
the country, the owner of the copyright will be burdened
with litigations.
– it will encourage owners / authors not to join the
society and license their rights directly as their license fees
will not fall under the jurisdiction of the Copyright Board.
– insertion of Section 33A appears to be contrary to
the Amendment Act of 1994, whereunder copyright
societies were given a free hand to deal with and value the
work of owner of copyright.
*****
17.5 The Committee notes that various stakeholders including
the existing copyright societies had certain reservations against the
proposal. Committee’s attention has been particularly drawn by the
apprehension about copyright societies coming up with high tariff
schemes drawn up solely at their discretion. The Committee was
also given to understand that at present there was no check on the
formulation of tariff scheme but merely a requirement of
publication by the society. With the proposed amendment coming
into effect, the aggrieved person would have no alternative but to
pay the fee as per the tariff scheme and may face unnecessary
hardships before the appeal was decided and the relief, if any, at
the end of the appeal may not prove be sufficient for the loss
caused.
17.6 The Committee would like to point out that even during its
deliberations with the copyright societies especially the
Phonographic Performance Ltd (PPL) and the Indian Performing
Rights Society Limited (IPRS), it was felt that they were not very
forthcoming about their tariff schemes in spite of specific queries
in this regard. The only information which was shared with the
Committee was that tariff scheme was negotiated with the users
and the same was available not only on their respective websites
but published in the Official Gazette also. However, on being
asked, other stakeholders categorically pointed out that no tariff
scheme of these societies was put in the public domain either on
their website or in the Official Gazette.
17.7 The Committee, taking into account the viewpoint of both
the stakeholders i.e., the copyright societies and the users, observes
that there is no denying the fact that the process of fixing tariff by
the copyright societies is not transparent. As per the existing
system, the copyright societies are free to fix tariffs without any
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visible basis / criteria. There is no system of broad-based
consultations by these societies as is done in other sectors such as
telecom, insurance, broadcasting and electricity. The Committee
observes that in these sectors, stakeholders are consulted before
tariff is fixed and notified. However, such a system is completely
lacking in case of copyright societies. As a result, there are
instances of arbitrariness, arm twisting and negotiations by these
societies.
17.8 The Committee is of the firm view that the proposed
amendment will result in the introduction of a system of a
transparent formulation of tariff scheme by the collective
administrative copyright societies, which will be subject to scrutiny
by the Copyright Board on receipt of appeal by the aggrieved
party. At the same time, the Committee would like the Department
to take note of the concerns of the various stakeholders and provide
for a transparent process of tariff fixation by the copyright societies
with necessary changes in the relevant rules. The Committee would
also take the opportunity to observe that for putting in place a well-
defined and balanced tariff scheme, functioning of Copyright
Board as well as copyright societies also needs to be regulated,
strengthened and made foolproof so as ensure that all the
stakeholders are benefited. The Committee would be giving its
recommendations in this regard in the later part of the Report.
*****
21.1 A number of stakeholders who deposed before the
Committee were not satisfied with the functioning of the copyright
societies. Issues relating to the Societies membership,
administration, control, royalty distribution licensing and tariff
schemes came under a lot of criticism during the deliberations of
the Committee. It was emphasized again and again that the
copyright societies were not functioning in a transparent manner
and that there were no regulations to control their functioning.
21.2 To have a proper understanding about the functioning
Copyright Societies, the Committee sought details in this regard
from the Department. The Committee was informed that at present
there were four Copyright Societies registered under section 33 of
the Act, as follows:-
– Society of Copyright Regulation of India Producers
for Films and Television (SCRIPT) for managing rights of
Producers or Cinematograph Films and Television Works;
– Indian Performing Right Society Limited (IPRS),
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for managing rights of musical works created by authors
(lyricists), music composers and music publishers (Film
Publishers). Other rights owners such as music companies
owning rights are also members.
– Phonographic Performance Ltd (PPL)for managing
rights of Sound Recording. Music or recording companies
are members and
– Indian Reprographic Rights Organisation (IPRO)
for managing rights of Photocopy/reprographic rights.
Authors and publishers are its members.
21.3 On a specific query about the guidelines/norms or
rules/regulations governing the functioning of Copyright Societies,
the Committee was informed that a copyright society is a collective
administration Society formed by copyright owners registered
under section 33 of the Act. The minimum membership required
for registration of a society is seven. As provided in section 34 of
the Act, a copyright society has the power to issue license in
respect of rights administered by it, collect fees in pursuance of
such licenses, and distribute such fees among owners of copyright
after making deductions for the administrative expenses. The
Committee was also informed that every copyright society has to
submit to the Registrar of copyrights under section 36 such returns
as may be prescribed. The administration of Copyright Societies is
regulated by Rules 12 to 14 P of the Copyright Rules, 1958. Rule
14 P clearly lays down that every copyright society has to file an
annual return with the Registrar of Copyrights giving details of the
annual meeting of owners held immediately preceding the filing of
return, the up-to-date list of owners of rights, audited accounts.
Tariff scheme and the Distribution scheme etc.
*****
21.5 The Committee observes that inspite of there being
provisions in the Act and rules framed thereunder regulating the
copyright societies, over the years a disturbing trend in their
functioning has been developing which has led to disputes between
the major stakeholders and resultant court cases. The Department
has also admitted that the administration of copyright societies has
been taken over by the owners whose interest is different from that
of the authors and in many cases authors are being deprived of
their benefits. Another area of concern noticed by the Committee is
the Tariff Scheme for the Copyright Societies. Although as per
Rule 14J of the Copyright Rules, 1958, a Copyright Society has to
frame a Tariff Scheme setting out the nature and quantum of fees
or royalties, no provision is there for governing or regulating the
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system of fixation, collection and distribution of royalty under
section 33 of the Act. A system of formulation of a Tariff Scheme
by the Collective Administrative Societies has accordingly been
brought as section 33A under the proposed legislation. The
Committee feels that this is a step taken in the right direction and
will put on end to the arms-twisting negotiations of Copyright
Societies.
21.6 The Committee would like to draw the attention of the
Department to Section 33 of the Act which empowers the Central
Government to regulate the functioning of Copyright Societies. As
per this provision the registration of a Copyright Society can be
suspended for not more than one year or cancelled by the Central
Government after conducting an inquiry, in the event of it being
managed in a manner detrimental to the interests of owners of
rights. Not only this, Section 36 clearly provides that every
Copyright Society has to submit to the Registrar of Copyright
Society annual returns. Under this very section, any officer duly
authorized by the Central Government can call for any report or
records of any Copyright Society so as to injure that the fees
collected by it in respect of rights administered by it are being
utilized or distributed in accordance with the provisions the Act the
purpose for highlighting all these provisions is that had the Central
Government played a more pro-active role, perhaps things would
not have reached such an alarming level. The Committee can only
conclude that with the proposed provision relating to Tariff
Scheme and use of powers already there in the Act/rules by the
Central Government through its authorized officers, copyright
societies will be functioning as envisaged under the Copyright
Law.”
16.6 Learned Senior Counsel submits that Section 33 cannot be so
interpreted as to permit an entity such as PPL to bypass Section 33(1)
– which is intended to subserve a salutary purpose – by indirectly
obtaining ownership of copyrighted material as an assignee under
Section 18(2) and thereafter to capitalize on the proviso to Section
33(1). PPL, in other words, under the proviso of Section 33(1), cannot
be permitted to do indirectly what it cannot do directly under the main
Section 33(1) read with Section 33A.
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16.7 It is further submitted that it is not as though there is no
registered copyright society dealing in sound recordings. It is pointed
out RMPL is in fact an entity registered as a copyright society under
Section 33(3) for dealing in sound recordings. The menace of
cartelization has, however, so permeated the music Industry that few
original first owners of sound recordings give the license to a
copyright society such as RMPL, to further grant licenses for
exploitation of the sound recordings, and the bulk of the licenses in
respect of the sound recordings is monopolized by entities such as
PPL. Copyright, as a fundamental principle, is not intended to confer
unguided monopoly on persons. In case the interpretation placed by
the learned Single Judge on the first proviso to Section 33(1) is to be
accepted, it would not only efface the main part of Section 33(1) but
would entirely defeat Chapter VII of the Copyright Act and relegate
the statute to the position in which it was prior to 1994, when Chapter
VII was substituted. A person who desired to play copyrighted sound
recordings would not, in such a situation, have any remedy against
unreasonable tariffs put in place by an entity such as PPL.
16.8 Reliance is also placed by learned Senior Counsel for Azure on
paras 60, 87, 88 and 124 of the judgment of the Supreme Court in
Entertainment Network, which read thus:
“60. In Copinger and Skone James on Copyright (15th Edn.,
2005, Paras 2-5, p. 27, Vol. 1), it is stated:
“Finally, it is considered a social requirement in the public
interest that authors and other rights owners should be
encouraged to publish their work so as to permit the widest
possible dissemination of works to the public at large.
These four fundamental principles are cumulative and
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interdependent and are applied in the justification of
copyright in all countries, although different countries give
varying emphasis to each of them. To generalise, it is true
to say that in the development of modern copyright laws,
the economic and social arguments are given more weight
in Anglo-American laws of common law tradition, whereas,
in continental law countries with civil law systems, the
natural law argument and the protection of authors are
given first place.
… The protection of copyright, along with other
intellectual property rights, is considered as a form of
property worthy of special protection because it is seen as
benefiting society as a whole and stimulating further
creative activity and competition in the public interest.”
*****
87. The Act seeks to maintain a balance between the interest of
the owner of the copyright in protecting his works on the one hand
and the interest of the public to have access to the works on the
other. The extent to which the owner is entitled to protection in
regard to his work for which he has obtained copyright and the
interest of the public is a matter which would depend upon the
statutory provisions.
88. Whereas the Act provides for exclusive rights in favour of
owners of the copyright, there are provisions where it has been
recognised that public has also substantial interest in the
availability of the works. The provisions relating to grant of
compulsory licence must be viewed having regard to the
aforementioned competing rights wherefor an appropriate balance
has to be struck. For the said purpose, we may notice the broad
features of the Act.
*****
124. The right to property, therefore, is not dealt with its subject
to restrict when a right to property creates a monopoly to which
public must have access. Withholding the same from public may
amount to unfair trade practice. In our constitutional scheme of
statute monopoly is not encouraged. Knowledge must be allowed to
be disseminated. An artistic work if made public should be made
available subject of course to reasonable terms and grant of
reasonable compensation to the public at large.”
(Emphasis supplied)
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16.9 For all these reasons, learned Senior Counsel for Azure submit
that grant of interlocutory injunction by the learned Single Judge in
favour of PPL cannot sustain.
16.10 In the alternative and without prejudice to the aforesaid
submissions, learned Senior Counsel submit that, keeping in mind the
principles of balance of convenience and irreparable loss, the learned
Single Judge ought to have passed an order of deposit rather than an
order of injunction. To a query from the Court as to the rate at which
such deposit could have been directed, learned Senior Counsel submit
that the deposit could have been at the rate charged by a registered
copyright society such as RMPL.
17. Submissions of Mr. Akhil Sibal
17.1 Mr. Akhil Sibal, learned Senior Counsel for PPL, argued in
response to the submissions of Mr. Dayan Krishnan and Ms. Swathi
Sukumar, learned Senior Counsel.
17.2 Mr. Sibal prefaced his submissions by seeking to point out that
the appellant Azure is not as innocent, or woebegone, an entity as it
makes itself out to be, nor, in fact, can Azure claim to be placed in
unreasonably straitened financial circumstances as a result of the order
of injunction passed by the learned Single Judge. He submits that, in
fact Azure runs 86 high-end restaurants with an overall turnover of ₹
161 crores. With such a turnover, Mr. Sibal submits that, what Azure
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essentially seeks is to play the recordings, of which PPL is a bonafide
and genuine owner of copyright, free of cost, without paying a penny
to PPL. It is because of this, submits Mr. Sibal, that, as a fall-back
option, Azure is agreeable to make a deposit. That alternative
suggestion, advanced by learned Senior Counsel for Azure, submits
Mr. Sibal, is completely unacceptable.
17.3 Mr. Sibal submits that there are no equities in favour of Azure.
PPL is the bonafide owner of the sound recordings in respect of which
it holds copyright. There is no cardinal sin in PPL being the owner of
80% of the existing sound recordings. If it is, Mr. Sibal submits that
PPL is entitled, in law, to permit exploitation of the sound recordings,
of which it is the legitimate owner, on its own terms. If a person
desires to play any of the said sound recordings, Mr. Sibal submits
that payment would have to be made at the rate charged by PPL.
17.4 Mr. Sibal further submits that it is not as though PPL is the only
person engaged in such activities and that there are other players in the
market, notably Novex.
17.5 What Azure essentially seeks to obtain, by the stand it asserts
before the Court, submits Mr. Sibal, is to force PPL to obtain a
compulsory license for the sound recordings in which it holds
copyright. Mr. Sibal submits that the arguments of Azure completely
obfuscate the distinction between a compulsory licensee and a
voluntary licensee. In the case of a voluntary licensee, there is no
regulation. Para 88 of Entertainment Network, on which learned
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Senior Counsel for Azure had placed reliance, he submits, deals with a
case of a compulsory licensee. A voluntary licensee acts under Section
30, and there is no fetter on such a licencee providing licenses for the
work in which he holds copyright on its own, uncanalized, terms.
17.6 Mr. Sibal has, to support his submissions, placed reliance on
Section 17, 18(2), 30, 3122, 31D23, 33, 34 and 14 (e)24 of the Copyright
Act read with the definition of ‘author’ in Section 2(d)(v)25 of the
Copyright Act.
22 31. Compulsory licence in works withheld from public. –
(1) If at any time during the term of copyright in any work which has been published or
performed in public, a complaint is made to the Commercial Court that the owner of copyright in
the work –
(a) has refused to republish or allow the republication of the work or has refused to
allow the performance in public of the work, and by reason of such refusal the work is
withheld from the public; or
(b) has refused to allow communication to the public by broadcast of such work or
in the case of a sound recording the work recorded in such sound recording, on terms
which the complainant considers reasonable;
the Commercial Court, after giving to the owner of the copyright in the work a reasonable
opportunity of being heard and after holding such inquiry, as it may deemed necessary, may, if it is
satisfied that the grounds for such refusal are not reasonable, direct the Registrar of Copyrights to
grant to the complainant a licence to republish the work, perform the work in public or
communicate the work to the public by broadcast, as the case may be, subject to payment to the
owner of the copyright of such compensation and subject to such other terms and conditions as
the Commercial Court may determine; and thereupon the Registrar of Copyrights shall grant
the licence to such person or persons who, in the opinion of the Commercial Court, is or are
qualified to do so in accordance with the directions of the Commercial Court, on payment of such
fee, as may be prescribed.
23 31-D. Statutory licence for broadcasting of literary and musical works and sound recording. –
(1) Any broadcasting organisation desirous of communicating to the public by way of a
broadcast or by way of performance of a literary or musical work and sound recording which has
already been published may do so subject to the provisions of this section.
24
14. Meaning of copyright.–For the purposes of this Act, “copyright” means the exclusive right
subject to the provisions of this Act, to do or authorise the doing of any of the following acts in
respect of a work or any substantial part thereof, namely:–
*****
(e) in the case of a sound recording,–
(i) to make any other sound recording embodying it including storing of it in any
medium by electronic or other means;
(ii) to sell or give on commercial rental or offer for sale or for such rental, any copy
of the sound recording;
(iii) to communicate the sound recording to the public.
25 (d) “author” means,–
(v) in relation to a cinematograph film or sound-recording, the producer;
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Analysis
18. Having considered the submissions of learned Senior Counsel
for both sides, we are constrained to observe that negotiating the
labyrinths of the Copyright Act, particularly Section 33(1) read with
the proviso thereto, is an unenviable task.
19. An excursion through the Act
19.1 It would be useful to scan the provisions of the Copyright Act,
to the extent they concern the dispute at hand, before proceeding
further.
19.2 Section 13 sets out the categories of works in which copyright
can subsist. Sub-section (1), in clause (c)26, declares that copyright
shall subsist, throughout India, in sound recordings, subject to the
provisions of the Copyright Act. Sub-sections (2) and (3) are not of
particular relevance, for our purpose. Sub-section (4)27 preserves the
separate copyright in any work in respect of which, or a substantial
part of which – classically referred to as the “underlying work” – the
sound recording is made. Thus, the copyright in the sound recording
of a song by a noted composer would not affect the separate existing
copyright of the composer in the song, of which the sound recording is
26 13. Works in which copyright subsists. –
(1) Subject to the provisions of this section and the other provisions of this Act, copyright
shall subsist throughout India in the following classes of works, that is to say,–
*****
(c) sound recording.
27 (4) The copyright in a cinematograph film or a sound recording shall not affect the separate copyright
in any work in respect of which or a substantial part of which, the film, or as the case may be, the sound
recording is made.
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made. The first owner of the copyright in the sound recording would
be the producer, and the first owner of the copyright in the song of
which the sound recording is made would be the composer, by
operation of Section 17(1) read with Section 2(d)(ii)28.
19.3 Section 14 defines “copyright”. It states that “copyright” means
the exclusive right, subject to the provisions of the Act, to do or
authorize the doing of the acts enumerated under the various clauses
of the Section. In the case of a sound recording, clause (e) defines
“copyright” as being the right, inter alia, to communicate the sound
recording to the public. There is, in any event, no absolute right to
communicate sound recordings to the public, even if one is the
copyright owner. It is subject to the provisions of the Copyright Act.
This position is again underscored by Section 1629, which clarifies that
“no person shall be entitled to copyright or any similar right in any
work, whether published or unpublished, otherwise than under and in
accordance with the provisions of” the Copyright Act.
19.4 Section 17 identifies the “first owner of copyright”. It declares
that, subject to the provisions of the Copyright Act, the author of a
work shall be the first owner of copyright therein. “Author” is defined
in Section 2(d) which, in the case of a sound recording, declares the
producer of the sound recording to be its author, vide sub-clause (iv)
thereof. This provision does not really affect the controversy at hand,
28 (d) “author” means,–
*****
(ii) in relation to a musical work, the composer;
29 16. No copyright except as provided in this Act. – No person shall be entitled to copyright or any
similar right in any work, whether published or unpublished, otherwise than under and in accordance with the
provisions of this Act or of any other law for the time being in force, but nothing in this section shall be
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as there is no dispute that the original producers of the sound
recordings, which were assigned to PPL, were their first authors.
19.5 “Work” is defined in Section 2(y), which divides all works,
which can form subject matter of copyright into three categories,
enumerated in sub-clauses (i) to (iii) thereof, of which sub-clause (iii)
individually covers “a sound recording”. Thus, sound recordings
constitute an individual and distinct class/category of copyrightable
work under the Copyright Act. Sub-clauses (i) and (ii) cover literary,
dramatic, musical or artistic works, and cinematograph films,
respectively. Nothing, except the “works” identified in sub-clauses (i)
to (iii) of Section 2(y), is copyrightable under the Copyright Act.
19.6 Section 18 deals with assignment. Sub-section (1) generally
permits the owner of copyright in any existing work to assign the
copyright in the work to any person, either wholly or in part, and
conditionally or unconditionally. The provisos to Section 18(1) do not
concern us. Section 18(2), which forms, as it were, the cornerstone of
PPL’s case, and deems the assignee of copyright, under Section 18(1),
to be the owner of copyright in the assigned work, for the purposes of
the Copyright Act. Section 19(1) and 19(2)30 require the assignment to
be in writing, and to identify the work, and the extent of rights therein,
which have been assigned.
construed as abrogating any right or jurisdiction to restrain a breach of trust or confidence.
30 19. Mode of assignment. –
(1) No assignment of the copyright in any work shall be valid unless it is in writing signed by
the assignor or his duly authorised agent.
(2) The assignment of copyright in any work shall identify such work, and shall specify the
rights assigned and the duration and territorial extent of such assignment.
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19.7 There can, therefore, be no doubt that PPL was, in respect of the
sound recordings, in respect of which copyright was assigned to it by
the producers of the sound recordings, the owner of copyright therein,
for the purposes of the Copyright Act.
19.8 One may proceed, now, to Section 30, which permits the owner
of copyright in any work to licence the copyright owned by him in the
work. Mr Sibal lays great emphasis on this provision, and there is no
doubt that, if it is read in isolation, there appears to be no fetter on the
terms at which PPL could licence its copyright in the sound recordings
assigned to it by the producers thereof, under Section 18(1). There is
also no doubt that Section 18, as worded, is not statutorily rendered
subject to any other provision of the Copyright Act. This is, in fact,
one of the factors which appears to have weighed with the two Novex
decisions, on which the learned Single Judge relies, in holding that
Section 33(1) cannot derogate from the absolute right conferred by
Section 30 on PPL as the owner of copyright in the assigned works, to
licence the copyright therein, on such terms as it deems appropriate.
19.9 Sections 31A to 31D deal with certain circumstances in which
compulsory licensing can be resorted to, by the Commercial Court.
Mr Sibal has cited only Section 31A, and we do not deem it necessary,
therefore, to advert to Sections 31B to 31D. Section 31A applies
where there is a complaint, by any person, that the owner of copyright
in a copyrightable work has refused to allow republication of the
work, or its communication to the public. In such circumstances, the
Commercial Court can examine whether the ground for refusal is
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reasonable. If it is not, the Commercial Court may direct the Registrar
of Copyrights to grant, to the complainant, the licence to republish the
work or communicate it to the public subject to payment, by the
complainant, to the copyright owner, of compensation to be fixed by
the Commercial Court. Mr Sibal’s contention is that the attempt of
Azure, by means of the present appeal, is to indirectly coerce PPL to
compulsorily licence the sound recordings in which copyright stands
assigned to it, by obtaining such an order from this Court.
19.10 One reaches, now, Section 33, which is the cornerstone of
controversy.
19.11 Section 33 figures in Chapter VII, which deals with Copyright
Societies, and was entirely substituted by Section 11 of the Copyright
(Amendment) Act, 199431.
19.12 Section 33(1) is worded in proscriptive terms. It unequivocally
proscribes any person, or association of persons, from “carrying on the
business of issuing or granting licences in respect of any work in
which copyright subsists or in respect of any other rights conferred by
(the Copyright) Act“, except to, or in accordance with, registration
granted under Section 33(3). Section 33(3) deals with registration of
copyright societies.
19.13 The word “business” is a word of wide import. The expression
“carrying on business” has been defined by the Supreme Court in
31 “the 1994 Amendment Act” hereinafter
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Director of Supplies and Disposals v Member, Board of Revenue32,
thus:
“To regard an activity as business there must be a course of
dealings, either actually continued or contemplated to be continued
with a profit-motive; there must be some real and systematic or
organised course of activity or conduct with a set purpose of
making profit. To infer from a course of transactions that it is
intended thereby to carry on business, ordinarily there must exist
the characteristics of volume, frequency, continuity and system
indicating an intention to continue the activity of carrying on the
transactions for a profit.”
19.14 In Assistant Commissioner v Hindustan Urban Infrastructure
Ltd33, the Supreme Court held that the expression “carrying on
business” is to be understood in a wide sense, and not merely
restricted to the activity of buying and selling.
19.15 While these definitions may not be particularly enlightening, so
far as the dispute before us is concerned, the expression “business”
across statutes, has an extremely wide and elastic connotation.
19.16 In the Income Tax Act, 1961, “business” is defined as including
any trade, commerce or manufacture or any adventure or concerned in
the nature of trade, commerce or manufacture. This definition has
been adopted by the Supreme Court in Narain Swadeshi Weaving
Mills v Commissioner of Excess Profits Tax34, which alternatively
defines “business” as “some real, substantial and systematic or
organised course of activity or conduct with the said purpose”. P.
Ramanath Aiyar, in his Advanced Law Lexicon, observes that “the
32 AIR 1967 SC 1826
33 (2015) 3 SCC 745
34 AIR 1955 SC 176
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word ‘business’ is of large significance, and in its broadest sense
includes nearly all the affairs in which either an individual or a
corporation can be actors”. In Barendera Prasad v ITO35, the
Supreme Court held that the word “business” is one of wide import
and it means “an activity carried on continuously and systematically
by a person by the application of his labour or skill with a view to
earning an income”. In Management of Tata Iron and Steel
Company Ltd v Chief Inspecting Officer36, it was held that “the word
‘business’ means a commercial enterprise carried on for profit; a
particular occupation for employment habitually engaged in for
livelihood or gain”. State of MP v Mukesh37 proclaimed that “the
expression business implies continuity”.
19.17 Thus, it is clear that word “business” is a word of very wide
import. Any person who grants licenses to others to exploit sound
recordings in which such person holds a copyright can be said to be
carrying on the business of issuing and grating such license.
19.18 In any event, there can be no doubt whatsoever that PPL is most
certainly engaged in the business of issuing or granting licenses in
respect of copyrighted sound recordings. This position stands
recognized in para 2.1 of the impugned judgment itself, in the
following words:
“The plaintiff, Phonographic Performance Limited, (PPL) is a
company limited by guarantee, registered under the provisions of
the Companies Act, 2013, which is engaged in the business of35 AIR 1981 SC 1047
36 AIR 2005 SC 1433
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issuing licences for public performance of sound recordings on
the basis of the assignments granted to it by its various member
record labels.”
19.19 To further understand Section 33(1) and its scope and ambit, it
becomes immediately necessary to refer to Section 33(3), before
which one has to refer to Section 33(2)38.
19.20 Section 33(2) permits any association of persons to do the
business specified in Section 33(1) – meaning, the business of issuing
or granting licences in respect of copyrighted work or in respect of
any other rights conferred by the Copyright Act – to apply for being
registered as a copyright society. Admittedly, from 7 May 1996 to 21
June 2014, PPL was registered as a copyright society. It cannot,
therefore, lie in the mouth of PPL to contend that the requirement of
registration as a copyright society, envisaged by Section 33, did not
apply to it.
19.21 Sub-section (3A) was introduced by Section 19(ii) of the 2012
Amendment Act. The second proviso thereto required every copyright
society, already registered before the coming into force of the 2012
Amendment Act, to get itself registered under Chapter VII within a
period of one year from the date of commencement of the 2012
Amendment Act. It appears that, in accordance with the said
requirement, PPL applied for re-registration as a copyright society, but
that the application has not been granted. There is, however, no
dispute that, as on date, PPL is not a registered copyright society, or
38 (2) Any association of persons which fulfils such conditions as may be prescribed may apply for
permission to do the business specified in sub-section (1) to the Registrar of Copyrights who shall submit the
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the member of any registered copyright society.
19.22 Section 33(3) empowers the Central Government to register any
applicant, under Section 33(2), as a copyright society. The proviso to
Section 33(3), however, provides that, ordinarily, the Central
Government would not register more than one copyright society in
respect of the same class of works. As “sound recordings” constitute a
distinct class of works under Section 2(y)(iii), there would ordinarily
be only one copyright society for sound recordings, registered by the
Central Government under Section 33(3). At present, the only
registered copyright society for sound recordings is RMPL.
19.23 Reverting back, now, to Section 33(1), the main body of the
sub-section prohibits the carrying on of business of issuing or granting
licences in respect of (i) any copyrighted work or (ii) any other rights
conferred by the Copyright Act, except under or in accordance with
the registration granted under Section 33(3) to a copyright society.
19.24 It is important to understand this provision, and the best way to
do so would, perhaps, be to apply it to the facts before us. PPL is an
association of persons. It is, admittedly, carrying on the business of
granting licences in respect of the copyrighted works assigned to it
under Section 18(1) and forming its repertoire. The sub-section,
therefore, clearly applies to it. PPL is, therefore, proscribed from
granting any licence in respect of the said assigned work, or in respect
of the right to communicate it to the public, except under or in
application to the Central Government.
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accordance with the registration granted under Section 33(3). PPL
cannot possibly grant any licence under the registration granted under
Section 33(3), since it is not a registered copyright society under the
said provision. It has, nonetheless, to carry on the business in
accordance with the registration granted under Section 33(3). This can
only be done if PPL is itself a member of the registered copyright
society, i.e. RMPL. Viewed in isolation, however, this requirement, as
envisaged by Section 33(1), is absolute and non-negotiable.
19.25 What, then, is the effect of the proviso to Section 33(1)?
19.26 PPL’s contention is that the proviso to Section 33(1) preserves,
intact, its right to grant licences in respect of its own works. PPL is the
owner of the copyrighted sound recordings assigned to it under
Section 18(1), by operation of Section 18(2); ergo, the proviso to
Section 33(1) allows it to grant licences in respect of the said assigned
recordings, which are “its own works” under the proviso, as it is the
owner thereof.
19.27 PPL, thereby, seeks to interpret the proviso to Section 33(1) as
crafting out an exception from the rigour of Section 33(1).
19.28 With this, we come to the nub of the controversy, and may,
therefore, discontinue our journey through the statutory provisions.
20. Analysis of the impugned judgment, and the legal position
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20.1 The two Novex judgments on which the learned Single Judge
has placed reliance, clearly hold that registration as a copyright society
is not mandatory for a person to grant licenses for exploitation of
sound recordings in respect of which such person is the deemed owner
by virtue of Section 18(2) of the Copyright Act. In other words, these
decisions hold that the proviso to Section 33(1) grants a deemed
owner of copyright in sound recordings, within the meaning of
Section 18(2), the absolute right to grant licenses for exploitation of
such sound recordings on its own terms, unfettered by any restrictions
which may apply to copyright societies, which would include the tariff
envisaged by Section 33A. The proviso to Section 33(1), according to
these decisions, is, therefore, essentially aimed and intended at
preserving the right of the owner of copyrighted material to grant
licenses for exploitation of such material, otherwise conferred by
Section 30 of the Copyright Act. The right available under Section 30,
in other words, cannot be said to have been undone by Section 33.
20.2 The entire issue is thorny and, perhaps, legislative intervention
may lend greater clarity to the provisions involved. That said,
however, we are required to interpret the provisions as they exist
today.
20.3 The difficulty in accepting the interpretation of Section 33(1),
and the proviso thereto, as envisaged in the Novex decisions, relied
upon by the learned Single Judge, is, however, precisely the factor
underscored by Mr. Dayan Krishnan, which is that, if such an
interpretation is accepted, the main part of Section 33(1) may be
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reduced to redundancy.
20.4 This may be explained thus.
20.5 The Copyright Act does not envisage grant of license in respect
of copyrighted sound recordings by any person other than the first
owner of such copyrighted recordings, or the assignee thereof under
Section 18. PPL is, unquestionably, the owner of the sound
recordings in its repertoire, of which copyright stands assigned to it
under Section 18(1). To that extent, PPL’s stand is unassailable.
The two Novex decisions would, therefore, grant him an absolute right
to issue licenses in respect of such recordings, on its own terms.
20.6 Such an interpretation would, however, undisputedly render the
words “except under or in accordance with the registration granted
under sub-section (3)”, in Section 33(1), completely otiose. Indeed,
Section 33(1) would be rendered completely redundant, as it is
intended only to introduce this restriction, on persons who desire to
carry on the business of issuing or granting licenses in respect of
copyrighted work.
20.7 It is a cardinal principle of interpretation of statutes that the
Court must not adopt an interpretation which renders any part of the
statutory instrument redundant or otiose.39 Efforts must be made to
lend meaning and purpose to every word contained in a statute.
39 Refer Institute of Chartered Accountants of India v Price Waterhouse, (1997) 6 SCC 312 (para 15)
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20.8 The two Novex decisions, as well as the impugned judgment of
the learned Single Judge, do not specifically advert to this issue.
20.9 The fact that every association of persons which carries on the
business of granting licences in respect of copyrighted work has to do
so in accordance with the registration granted under Section 33(3) –
which would require it to either be a registered copyright society or a
member of a registered copyright society – also stands clearly
recognized by the first proviso to Section 33(1).
20.10 In our view, the first proviso to Section 33(1) proceeds on the
accepted premise that the owner of copyright, who carries on the
business of issuing or granting licences in respect of copyrighted
works, is a member of a registered copyright society. Any other
reading of the proviso would require according, to it, a strained,
unnatural and illogical connotation. The proviso, even while allowing
an owner of copyright to, in his individual capacity, retain the right to
grant licences in respect of his own works, clearly states that the
exercise of this right has to be consistent with his obligations as a
member of the registered copyright society. There is no escaping the
position, in our considered view, that the concerned copyright owner,
who desires to grant licences in respect of his own works, has, firstly,
to be a member of a registered copyright society, and, secondly, can
exercise the right to grant licences in respect of his own works only
consistent with its obligations as such member. The requirement of
being a member of a registered copyright society, whether under
Section 33(1) or under the first proviso thereto is, therefore, in our
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considered opinion, absolute and non-negotiable.
21. The sequitur
The position that ultimately obtains is, therefore, the following:
(i) The obligation under Section 33(1) is absolute. Section
33(1) requires any person, who carries on the business of
granting licenses in respect of copyrighted works, to do so in
accordance with the registration granted under Section 33(3).
(ii) Be it noted, this sub-section does not specifically state
that the person issuing or granting licenses must itself be
registered as copyright society under Section 33(3). The
issuance of granting of licenses has only to be in accordance
with the registration granted under Section 33(3).
(iii) This is also apparent from the proviso to Section 33(3),
which ordinarily permits the central government to register only
one copyright society in respect of one class of works. Sound
recordings constitute a distinct and individual class of works
under Section 2(y)(iii). Thus, ordinarily there would be only
one registered copyright society in respect of sound recordings.
Such a registered copyright society, we are informed, is already
in existence in the form of RMPL.
(iv) The word “carrying on the business of issuing or granting
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licenses” in Section 33(1) would envisage every commercial
activity in which licenses in respect of copyrighted works are
issued or granted. There is no legitimate basis to read down the
ambit of the expression “carry on the business”, particularly the
word “business”.
(v) In any event, it is an admitted position that PPL is
engaged in carrying on the business of issuing or granting of
licenses in respect of the sound recordings assigned to it by the
original copyright owners.
(vi) PPL can, therefore, issue or grant licenses in respect of
the sound recordings assigned to it, of which it can claim
ownership under Section 18(2), only in accordance with the
registration granted under Section 33(3).
(vii) The use of the words “consistent with his obligations as a
member of the registered copyright society”, contained in the
proviso to Section 33(1) are of great significance. They clearly
indicate that the legislature envisages any person who is
granting licenses in respect of copyrighted works as being a
member of a registered copyright society. It would be
unrealistic and strained to read the words “consistent with his
obligations as a member of the registered copyright society” as
contained in the proviso to Section 33(1) as applying only to a
situation in which the copyright owner happens to be such a
member. Clearly, at the cost of repetition, it is clear that Section
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33(1) envisages that the copyright owner, who is issuing or
granting licenses in respect of the copyrighted works of which
he is the owner, is a member of a registered copyright society.
(viii) This interpretation would also harmonise with the well-
settled principle that a proviso to a section cannot derogate or
detract from the ambit of the section itself. It has to be read
harmoniously with the main section, and cannot dilute its
efficacy.40 The requirement of any person engaged in the
business of issuing or granting licenses in respect of
copyrighted works, contained in Section 33(1) cannot,
therefore, be diluted, much less eviscerated, by the proviso
thereto.
(ix) Thus, what the proviso permits is that such a member of a
registered copyright society, who may also be holding copyright
in respect of his own works – which expression has necessarily
to be contradistinguished with the works of which he claims
ownership merely as an assignee under Section 18(2) – has the
right to grant licenses in respect of such works. Even so, such
grant of licenses has to be consistent with the obligations of
such a person as a member of the registered copyright society.
(x) Viewed any which way, therefore, there can be no
escaping the position that issuance or grant of licenses for
exploiting of works in respect of which a person claims
40 Refer Sales Tax Commissioner v B.G. Patal, 1995 Supp (1) SCC 429
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copyright can only be done if such person is a registered
copyright society or a member of a registered copyright society.
22. Re. the two Novex decisions
The judgments in the two Novex decisions, of the learned Single
Judge of this Court and the High Court of Bombay, have placed
reliance on Section 30 to except PPL from the requirement of being a
member of a registered copyright society. In para 31 of the impugned
judgment, learned Single Judge notes, as one of the principles
contained in Novex v Trade Wings, postulate that “Section 33(1) of
the Copyright Act does not curtail the power of the owner to grant any
interest in the copyright by license under Section 30 of the Copyright
Act and that Sections 30 and 33 operate in separate chapters of the
Copyright Act“. In arriving at these findings, we are of the opinion,
with great respect to the High Court of Bombay, that the High Court
has failed to notice the words “or in respect of any other rights
conferred by this Act” contained in Section 33(1). Thus, the right
conferred by Section 30 is also made subject to Section 33(1). The
requirement of acting in accordance with the registration granted
under Section 33(3), even while issuing or granting licenses in respect
of copyrighted works would, therefore, also cover the rights conferred
by Section 30. In other words, while exercising the right conferred by
Section 30, to issue licenses in respect of the works assigned to it, in
respect of which it claims ownership under Section 18(2), PPL has
still to act in accordance with the registration granted under Section
33(3).
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23. 227th report of the PSC
23.1 The 227th report of the PSC, on which Mr Dayan Krishnan
relies, supports the interpretation that we have adopted. The report
was tabled at a time when PPL was a registered copyright society.
One of the objections to the introduction of Section 33A in the
Copyright Act, as voiced before Parliament by, inter alia, PPL, was
that the provision would unreasonably hinder the rights of
producers/sound recording labels to enter into private agreements with
licencees. In other words, regulation of the tariff rates at which
exploitation of the copyrighted sound recordings could be allowed,
was strongly opposed. The PSC noted that, even during deliberations,
the copyright societies, including PPL, was not forthcoming about its
tariff schemes despite being specifically queried in that regard. Lack
of transparency in the matter of the tariffs at which exploitation of the
sound recordings was allowed, was also flagged as a cause of concern,
in para 17.7 of the report of the PSC. This resulted in “arbitrariness”
and “arm twisting”. The proposed Section 33A was, therefore, felt to
be serving a salutary purpose, of introducing transparency in the tariff
scheme, as well as a right of appeal, by aggrieved persons, before the
Copyright Board.
23.2 We, in the circumstances, find prima facie substance in Mr
Dayan Krishnan’s contention that PPL cannot be permitted to, without
registering itself as a copyright society or becoming a member of any
registered copyright society, issue or grant licences for the sound
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recordings in its repertoire at any rate palatable to it. The entire
purpose of introducing Section 33A in the Copyright Act would,
thereby, stand frustrated. Section 33(1) could plainly be avoided by
neither registering oneself as a copyright society, nor becoming a
member of any registered copyright society. This would, as Ms
Swathi Sukumar submitted, frustrate not only Section 33, but, in fact,
Chapter VII of the Copyright Act itself, in its entirety. The
requirement of being a member of a registered copyright society,
which is clearly intended by the legislature to be mandatory, would
become dispensable.
24. The corollary
24.1 We, therefore, are unable to accept the principle that PPL was
entitled, without either registering itself as a copyright society or
becoming a member of any registered copyright society, to issue
licenses in respect of the sound recordings assigned to it under Section
18(1) of the Copyright Act.
24.2 One of the contentions advanced in the written submissions
filed by Azure is that, not being a registered copyright society or a
member of a registered copyright society, PPL has no enforceable
legal right in respect of the sound recordings assigned to it, insofar as
their communication to the public by third parties is concerned, as
PPL cannot grant any licence for the said purpose in view of the
proscription contained in Section 33(1) of the Copyright Act. We have
found prima facie merit in this contention. The further issue that
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would arise would be whether, in such a situation, PPL can maintain
the suit at all. We refrain from returning any finding on this
contention, as it was not orally argued at the Bar. We, therefore, leave
this issue open.
25. The Result
25.1 We are left with the issue of the order that is to be passed in the
present case.
25.2 While we have expressed our view that PPL could not have
granted or issued licences for the exploitation of the sound recordings
assigned to it by the producers thereof under Section 18(1) of the
Copyright Act, we are conscious that we are adjudicating an appeal
against an order passed under Order XXXIX Rules 1 and 2 of the
CPC. Our findings, therefore, cannot be regarded as conclusive, or
dispositive of the dispute between PPL and Azure, pending before the
learned Single Judge in CS (Comm) 714/2022. They are necessarily
prima facie, and would remain subject to the outcome of the suit.
25.3 We cannot, therefore, be unmindful of the need to balance
equities at this stage, while passing our final order in the present
appeal.
25.4 We are not inclined, therefore, to outrightly reject IA
16777/2022 filed by PPL and adjudicated by the learned Single Judge
by the impugned judgment, though that might be the outcome were
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our view to be regarded as dispositive of the dispute. The result would
then be that Azure, and everyone else, would be entitled to play the
sound recordings assigned to PPL, and forming part of its repertoire
absolutely gratis, without paying a single farthing to PPL. We are not
inclined to permit this, at least at an interim stage when CS (Comm)
714/2022 is still pending before the learned Single Judge.
25.5 As we have held, there is no embargo on PPL licensing the
sound recordings assigned to it and forming part of its repertoire, but,
for that purpose, PPL would have either to be a registered copyright
society or a member of one. PPL is admittedly not a registered
copyright society, though it was one at an earlier point of time. It
could, however, still licence the subject sound recordings for playing
in the public, but in accordance with the terms of the copyright society
registration which, presently, vests only with RMPL. If PPL were to
be a member of RMPL – we note, from the website of RMPL that it
has nearly 700 members – it could grant licences to others, such as
Azure, to play the sound recordings in which copyright stands
assigned to it, but at the Tariff rates applicable to RMPL as per the
copyright society registration granted to it under Section 33(3). We
find, from the website of RMPL, that these rates are on a monthly
basis, and based on the nature of the establishment where the
recordings are to be played, apart from other incidental considerations.
25.6 We are, therefore, of the view that, pending disposal of CS
(Comm) 714/2022, Azure would be required to make payment, to
PPL, payment for playing the recordings on the basis of the Tariff
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Rate applicable to RMPL, as if PPL were a member of RMPL. We
deem this to be an equitable arrangement as, following on our prima
facie findings above, if PPL were to permit the sound recordings in its
repertoire to be licenced to others for being communicated to the
public, that can only be in terms of the registration granted to RMPL,
of which PPL would have to be a member. The licensing would, then,
have to be as per the Tariff rates charged by RMPL.
25.7 We are not inclined to agree to the suggestion of Azure that a
deposit should be directed, as it appears wholly inequitable, at an
interim stage, when the rival claims of the parties are yet to be finally
adjudicated, to allow Azure to exploit the sound recordings from
PPL’s repertoire without paying anything to PPL. The payment as
directed above would, however, be subject to the final outcome of CS
(Comm) 714/2022.
Conclusion
26. In view of the above discussion, we are unable to sustain the
impugned judgment of the learned Single Judge, which would,
instead, stand modified as directed hereinafter.
27. In accordance with our observations supra, therefore, IA
16777/2022 would stand disposed of with a direction to Azure to
make payment to PPL as per the Tariff of RMPL, as displayed on its
website, and in accordance with the terms thereof, in the event that
Azure intends to play any of the sound recordings forming part of
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PPL’s repertoire in any of its outlets. Azure and PPL would both
place on record before the learned Single Judge, a three-monthly
statement of the payments, if any, so made and received. The payment
would be strictly subject to the outcome of CS (Comm) 714/2022.
28. The appeal stands allowed to the aforesaid extent, with no
orders as to costs.
C. HARI SHANKAR, J.
AJAY DIGPAUL, J.
APRIL 15, 2025/aky/yg/ar
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