REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 5114 OF 2005

M/s Entertainment Network (India) Ltd. … Appellant

Versus

M/s Super Cassette Industries Ltd. … Respondent

WITH

CIVIL APPEAL NOS.5178-5180/2005,

Phonographic Performance Limited …Appellant

Versus

Millineum Chennai Broadcast (P) Ltd. etc. etc. ..Respondents

WITH

CIVIL APPEAL NO. 5181/2005,

Phonographic Performance Limited …Appellant

Versus

Entertainment Network (India) Pvt. Ltd. ..Respondents

WITH

CIVIL APPEAL No. 5182/2005

Phonographic Performance Limited …Appellant

Versus

Radio Mid-Day West (India) Ltd. ..Respondents

WITH

CIVIL APPEAL No. 5183/2005

Phonographic Performance Limited …Appellant

Versus

Music Broadcast Pvt. Ltd. ..Respondents

J U D G M E N T

S.B. Sinha, J.

Leave granted.

INTRODUCTION

Interpretation of Section 31 of the Copyright Act, 1957 (for the

sake of brevity, hereinafter referred to as, ‘the Act’) is involved in these

appeals.

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We may notice the factual matrix of the matter.

BACKGROUND FACTS

First respondent is one of the leading music companies engaged in

the production and/or acquisition of rights in sound recordings. It has

copyright over a series of cassettes and CDs commonly known as T-

series. It has copyrights in cinematographic films and sound recordings.

Appellant M/s. Entertainment Network (India) Ltd. (ENIL) broadcasts

under the brand name “Radio Mirchi”. It is a leading FM radio

broadcaster. Disputes and differences arose between Bennett Coleman &

Co. Ltd., the holding company of the first respondent and Phonographic

Performance Ltd. (PPL) as regards the playing of the songs of which

copyrights belongs to the first respondent in their FM radio network.

Appellant is a company which holds licence for running FM radio

stations in various cities across India.

Free-to-Air private FM Radio Broadcasting is a recent

phenomenon in India and the basic content of any radio station,

presently, is only sound recordings, i.e., songs.

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Disputes and differences having arisen between the parties in

regard to broadcast of the songs in respect whereof the first respondent

holds a copyright as owner thereof or by reason of purchase of the

copyright belonging to others.

BACKGROUND FACTS

The radio industry was revolutionized by the Government of India

as in October 1999 for its first phase of granting license for private FM,

broadcasting channel, tenders were invited.

Appellant herein was awarded the license for running a private FM

broadcasting service in 12 cities on payment of a hefty license fee.

Several other bidders were also granted licenses. Respondent, however,

was not a member of the appellant – society. It was found to have been

using the broadcasting songs in respect whereof Super Cassettes Industry

Limited (SCIL) had an ownership over the copyright. It was a member

of the copyright society being Phonographic Performance Ltd. (PPL).

Indisputably, there had been an infringement of the copyright of Super

Cassettes. Allegedly, appellant was under the belief that it was a part of

PPL and whereupon the music belonging to the repertoire of SCIL was

played during the period from October 2001 to May, 2002 in its stations

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at Indore and Ahmedabad. Royalty was paid by ENIL to PPL at the rate

of Rs.400/- per needle hour pursuant to the order passed by the Calcutta

High Court dated 28.9.2001. Attempts were made to obtain a licence

from SCIL when ENIL came to know that it was not a part of the

copyright society PPL. Negotiations failed between the parties.

A suit was filed before the Delhi High Court for restraining ENIL

from playing and broadcasting the music belonging to SCIL on any of

the Radio Stations belonging to ENIL.

COMMUNICATIONS BETWEEN THE PARTIES

We may notice relevant parts of some communications between

the parties. Super Cassettes through its lawyer by a notice dated

21.1.2002, in view of the said infringement of his copyright called upon

ENIL, inter alia, to give an undertaking that it shall not broadcast the

sound records of Super Cassettes through its Radio Station without a

valid licence and payment of royalty (the terms of which were mutually

arrived at). Super Cassettes again by a notice dated 2.4.2002 through its

Advocate called upon ENIL to: “a) immediately desist from broadcasting

Sound Recording(s) of Super Cassettes clients through its Radio Station;

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b) Tender an unconditional apology for the illegal broadcast of Sound

Recordings of Super Cassettes clients in past; c) give an undertaking that

it shall not broadcast the Sound Recordings of Super Cassettes clients

through its Radio Station without a valid licence and payment of royalty

(the terms of which can be mutually arrived at), and d) pay a sum of Rs.

50,00,000.00 (Fifty lacs only) as liquidated damages, for the illegal

broadcast and acts of infringements committed by it, to Super Cassettes

within 15 days of receipt hereof under intimation to Super Cassettes

failing which Super Cassettes have positive instruction of its clients to

initiate such legal actions both Civil and/or Criminal against you, your

directors, and all other persons responsible for the said infringement

without any further notice and in that case you shall be further liable for

all cost and consequences thereof which may please be noted very

carefully”.

In response to the said notice, ENIL stated:

“2. Since our clients intend to negotiate with your

clients, as was our clients intention from the

beginning we have approached your clients and have

offered payment of royalty, the price of which will be

mutually convenient to both the parties.

3.It is our clients’ contention that music is for

general benefit of society at large. Our clients

understand that your clients have entered into a

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contract/Agreement with Media Broadcast Indian

Ltd., broadcasting under the channel “Radio City”,

and our clients are also likewise prepared to

popularise your client’s music and add value to your

clients’ content by entering into Agreement/License

with your clients.

4.As we have already stated in the aforesaid para

music is for general enjoyment and a restrictive

practice of a tie up only with Media Broadcast India

Ltd. is not in public interest. We, therefore, do not

admit any of the allegations made by your clients in

your aforesaid letter and further suggest that your

clients resolve the issue by entering into a contract

beneficial to both parties.”

Super Cassettes, however, by another legal notice dated 1.6.2002

stated:

“My client has clearly indicated its willingness to

grant your client a public performance license.

However, without obtaining such license, your client

continues to broadcast songs of our clients.

In the circumstances, your client is once again

called upon to :

(a)First immediately cease and desist from such unauthorized

broadcast before a formal license agreement is drawn up.

(b)Pay my client a sum of Rs.1,00,00,000/- (Rupees one crore)

for past infringement by way of radio broadcast of my

client’s sound recordings through your client’s various FM

Radio Stations situated in various cities.”

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. PPL again to the Holding Company of ENIL, BCCL by a letter

dated 6.9.2000 stated:

“As you may be aware, it is a legal requirement to

obtain permission (Licence) from the copy-right

owners before you can broadcast the copyrighted

music (Sound Recordings). As you may further be

aware, Phonographic Performance Ltd. (PPL), is the

copyright society in respect of sound recordings and

is registered with Government of India. We have

about 50 member companies including HMV,

Universal, Tips, Venus, Sony Music (India), Virgin,

Milestone, Magnasound, BMG – Crescendo and

others. The broadcasting rights in the music

recordings – both of Indian and International music –

or our members are administered by us.

It will be essential for your to apply for our licence for

broadcasting of our members’ existing and future

sound recordings, subject to our tariff and terms and

conditions as applicable.

We shall appreciate if you kindly confirm to us the

centres where you will be setting up your F.M.

Broadcasting stations/transmitters, and the estimated

date/month from which the said stations/transmitters

will start operations.

On receipt of this information, we shall send you the

licence application form and the tariff details.”

It, however, appears that several broadcasters including ENIL by a

letter dated 17.4.2001 addressed to PPL stated as under:

“We acknowledge that you are constituted as the

body legally empowered to represent the interests of

the owners of music copyrights around the world

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when performances take place in India. We are,

therefore, approaching you to discuss arrangements

for the provisions of licensing the broadcast of

copyrighted music on our new stations.

We want to begin discussions immediately, since at

least some of our stations are all but ready to begin

broadcasts now.

We can begin with the agreement that owners of

copyrights deserve to be compensated for the use of

their music on radio stations. Radio stations play

copyrighted music because of its popularity because

the music helps build the audience that the stations

can offer to advertisers with eventual hope of making

an opening profit. We assume that copyright owners

desire exposure to their music that is as broad as

possible.

The expectations for the future of private radio

broadcasting in India are high, and we have the

ambition to develop private radio to a level of

popularity not unlike what achieves in most other

developed countries in the world. Whereas radio

currently attracts the average Indian for less than half

an hour a day, daily radio listenership in most

countries averages something over three hours a day.

Uniquely among the media, radio has the ability to

provide as entertainment and information services to

listerners who do not have to stop everything else

they may be doing to take full advantage of the

programming. We feel that while radio has been a

dismal failure at attracting listenership thus far in this

country, we can, with your expectation, build radio

listening to the point that music will begin to play a

much larger role in the lives of the Indian public than

is the case today.

We hope that we can meet at your earliest

convenience to begin to discuss a contractual business

arrangement, which will be beneficial to both the

society and to the new radio industry in India.

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We would appreciate if you can get in touch with Mr.

Prakash Iyer at 852-3880 extn. 3291 or Mobile : 982-

11-82869 in the next 7 days to set up a date and time

for the meeting.”

Indisputably, appellant, in the suit filed by the first respondent

having come to learn that it is outside PPL’s jurisdiction to give an

undertaking not to use the songs copyright whereof belongs to PPL,

Super Cassettes. The said suit admittedly has been withdrawn. It may

therefore not be necessary to refer thereto the proceedings before the

Board.

In a letter to the respondent, appellant stated, “We had no intention

to infringe your copyright as in fact we had been regularly paying royalty

to PPL including the T-Series needle time played on our station.”

The appellant thus contended that it had been all along

under a wrong impression that Super Cassettes was a member of PPL and

that it had no knowledge that the license was required to be obtained.

Super Cassettes, however, contend that such a stand was not correct as

would appear from its letter dated 28.5.2002, and that the appellant had

intended to negotiate with the respondent from the very beginning.

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PROCEEDINGS BEFORE THE COPYRIGHT BOARD –

FIRST LICENCE CASE

Various Radio Stations including the petitioner filed an application

before the Copyright Board at Hyderabad in terms of Section 31(1)(b) of

the Act on or about 19.11.2002 for grant of compulsory license to all the

radio stations.

The Copyright Board by a judgment and order dated 19.11.2002

fixed the standard rate of:

·Payment to be made at Rs.1200/needle hour during prime

time.

·For 12 normal hours = 60% of standard rate

·For 8 lean (night) hours = 25% of standard rate and

respondents also directed to furnish a security/bank

guarantee of Rs.20,00,000/- per radio station to PPL.

The Board also held that the same shall be operative for a period

of 2 years and the matter shall be reconsidered again in September-

October, 2004. Super Cassettes was not a party therein. The Board fixed

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royalties initially for a period of two years. An appeal thereagainst was

preferred before Bombay High Court and it is the subject matter of C.A.

No. 5181 of 2005.

Appeals were filed before the Bombay High Court by the radio

companies and PPL against the order dated 19.11.2002, details whereof

are as under:

“1.PPL V. Music Broadcast 279 of 2003

2.PPL V. ENIL 280 of 2003

3.PPL V. Miullennium Chennai281 of 2003

4.PPL V. Millennium Delhi 283 of 2003

5.ENIL V. PPL 288 of 2003

6.Millennium Chennai V. PPL291 of 2003

7.Millennium Delhi V. PPL 292 of 2003

8.Music Broadcast V. PPL 294 of 2003

9.Radio Midday V. PPL 421 of 2003

13 Appeals in total were filed before the Bombay High Court. The

Bombay High Court by a common judgment and order dated 13.4.2004

in First Appeal Nos. 279-294 of 2003, 421 of 2003 and 1573 of 2003

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remitted the matters back to the Copyright Board for reconsideration and

for fixation of license fees.

SECOND LICENSE CASE

On or about 28.1.2003, appellant filed an application before the

Copyright Board at Delhi, which was marked as Case No. 10 of 2003 for

grant of compulsory licence in terms of Section 31(1)(b) of the Act

against Super Cassettes praying, inter alia, for the following reliefs:

“Grant the applicant a compulsory license of the

complete repertoire (present and future) of SCIL on

the terms and conditions considered just and equitable

by this Hon’ble Copyright Board.”

On being noticed, respondents filed an objection contending that

as the suit for infringement was pending before the Delhi High Court, no

application for compulsory license could be entertained. The High

Court, on an application filed by the appellant, clarified that the

respondent was free to canvas its submissions before the Copyright

Board that the person infringing the Copyright should not be granted

compulsory license. The Board directed the parties to come with their

respective witnesses. However, when respondent intended to present

oral evidence, it was declined. Submissions were directed to be made on

13

or about 20.10.2003. Application No. 10 of 2003 was allowed granting a

compulsory license.

Appellant filed an appeal against the said order before the Bombay

High Court questioning the rates of compensation only. The said appeal

was tagged with various other appeals which had been filed before the

Bombay High Court against the order dated 19.11.2002 passed by the

Copyright Board at Hyderabad.

Respondents, however preferred two-fold appeals before the Delhi

High Court which were marked as RFA No. 848 of 2003. By reason of

the impugned judgment dated 30.6.2004, the respondent’s appeal has

been allowed remitting the matter back to the Copyright Board to

reconsider the application of the appellant for grant of compulsory

license under Section 31 of the Act after giving adequate opportunity to

the parties to adduce evidence and to dispose of the same by a reasoned

order. The High Court furthermore directed that the appellant must file

an undertaking that it would not broadcast the sound recordings of the

respondent. Appellant had filed Petition for Special Leave to Appeal

giving rise to Civil Appeal No. 5114 of 2005 in this Court.

PROCEEDING BEFORE US

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We have two judgments before us; one from the Bombay High

Court and another from the Delhi High Court. Whereas the Bombay

High Court opined that in terms of Section 31 of the Act, grant of

compulsory license on reasonable remuneration is permissible; the Delhi

High Court held otherwise.

Both the parties have preferred these appeals before us, the

particulars whereof are as under:

Case No. Parties

1.C.A. No.5114/05 ENIL Vs. SCIL

2.C.A. No.5178-80/05 PPL Vs. Millennium Chennai

3.C.A. No.5181/05 PPL Vs. ENIL

4.C.A. No.5182/05 PPL Vs. Radio Mid-day West

5.C.A. No.5183/05 PPL Vs. Music Broadcast Pvt. Ltd.

CONTENTIONS AND SUBMISSIONS

Mr. H.N. Salve, Dr. A.M. Singhvi and Mr. Sudhir Chandra,

learned Senior Counsel appearing on behalf of the appellant would

submit:

(i)The said provisions seek to strike a balance between

creation of monopoly which is generally considered opposed

15

to public interest and protecting intellectual property rights

as a measure to encourage creativity in the respective fields.

(ii)The selective refusal to sell ‘goods’ which is treated under

Indian Law to be an unfair trade practice is discouraged.

Copyright Board, therefore, in terms of Section 31 of the

Act must be held to be holding the power to grant a

compulsory licence provided the following conditions are

satisfied:

(a)the work in question should have been published or

performed in public.

(b)the owner of the copyright should have refused to re-

publish or allow re-publication or the performance in

public of the work by reason of which the work is

withheld from the public; or

(c)has refused to allow a communication by a broadcast

of such work on terms which the complainant

considers reasonable.

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(iii)The term ‘or’ used between clauses (a) and (b) of sub-

section (1) of Section 31 should be read disjunctively and

not conjunctively.

(iv)The language of clause (b) indicates that the same is focused

on a particular form of communication to the public- namely

“Broadcast”, which requires a proper construction having

regard to the fact that the said word has been brought about

by an amendment made by Act No. 23 of 1983. The words

used prior to its amendment were ‘radio diffusion’.

(v)Section 31(1)(b) was designed specifically to enable the

Board to intervene where the owner, particularly of a sound

recording did not allow its public broadcast.

(vi)The finding of the High Court that no compulsory licence

can be granted now would be conferred in the public

interest.

(vii)The words ‘such work’ occurring in clauses (a) and (b) do

not operate in the same field inasmuch as clause (a) refers to

publication or republication of the work in print media.

Clause (b) refers to the broadcast alone; the sound recording

being a part of it. And in that view of the matter, the finding

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of the High Court that clause (b) cannot apply so long as

somebody has allowed to broadcast it to the public is not

correct.

(viii)Properly construed, an owner of a copyright cannot make

any discrimination between one broadcaster and another and

what can be demanded is equitable remuneration for grant of

broadcasting right, as a refusal to grant such a licence may

even hit the Government owned free to air channels, which

would be manifestly opposed to public interest.

(ix)The Copyright Board not only have the requisite jurisdiction

to grant a compulsory licence but also determine the

quantum of remuneration payable to him for grant of such

licence.

(x)Subject of course to protection of the commercial rights of

the owner of the sound recording, no owner of a copyright

can refuse to allow broadcast of a sound recording, merely

on the ground that the same may affect the profit of the

owner inasmuch as the public interest in this behalf is

paramount.

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(xi)Section 31(1) must be construed having regard to the fact

that India is a signatory to various International conventions,

such as, Berne Convention, Rome Convention, etc. as would

appear from the International Copyright Order, 1999 issued

by the Central Government. Section 31(1) must also be

construed having regard to the laws indicted by other

countries in the light of the said convention. Sub-Section

(2) of Section 31, if given literal meaning, would lay to an

anomaly and thus its area of operation should be confined to

clause (a) of sub-Section (1) of Section 31 only.

(xii)It was urged that as the courts do not themselves lay down

the principles for grant of compensation, this Court may lay

down the same for further guidance of the same.

Mr. Shyam Divan, the learned Senior Counsel appearing on behalf

of the respondents, on the one hand, would submit:

(i)The importance of the Copyright protection for the owners of

the copyrights should be the prime consideration for

determining the issue. The object of the Copyright Act is to

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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

hand and, thus, it is imperative to keep in mind the broad

features of the Act which is the owner’s freedom to contract his

interest by the Act as would be evident from Sections 14, 16

and 30 of the Act.

(ii)The ownership of any copyright like ownership of any other

property must be considered having regard to the principles

contained in Article 19(1)(g) read with Article 300A of the

Constitution, besides, the human rights on property.

(iii)As the Act expressly recognizes the notion of an “exclusive

licence” as defined in Section 2(j), a specific right in terms

thereof can be conferred only on one person which would

include a right to have recourse to civil remedies in terms of

Section 55 of the Act, which enables the owner of a copyright

to enjoy the fruits of his work by earning an agreed fee or

royalty through the issuance of licence.

(iv)The Copyright Board unlike its counterparts of Australia,

England or Singapore have a limited jurisdiction and its

principal functions are:

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“(a)To decide whether a work has been published

or as to the date on which the work was

published for the purpose of determining the

term of copyright under Chapter V of the Act.

(Section 6);

(b)To decide whether the term of copyright or any

work is shorter in any other country than that

under the Act (Section 6);

(c)To settle disputes arising in respect of

assignment of copyright (Section 19A);

(d)To settle disputes arising in respect of a

voluntary license issued under Section 30 of the

Act (Section 30A);

(e)To grant compulsory licenses in respect of

Indian works withheld from the public (Section

31);

(f)To grant a compulsory license to public

unpublished Indian works (Section 31A);

(g)To grant a compulsory license to produce and

publish translation of literary and dramatic

works (Section 32);

(h)To grant a compulsory license to reproduce and

publish certain categories of liberary, scientific

or artistic works for certain purposes (Section

32A);

(i)To rectify the register of copyright on an

application of the Registrar of Copyrights or

any other person aggrieved (Section 50);

(j)To hear appeals from any decision or whatever

the decision of the Registrar of Copyright

[Section 72].

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(v)Section 31 of the Act must be given its literal meaning,

which would mean that the Board can exercise its

jurisdiction provided:

(i)There is a refusal by the owner and as a result of

which the work is “withheld from the public”, or

(ii)In the case of a broadcast, the work has not been

“allowed to be communicated to the public”

(vi)As in the instant case, the repertoire of SCIL and PPL are

available to the public inasmuch as these copyright owners

society have entered into voluntary licenses with All India

Radio and some other FM Radio Broadcasters, the

provisions of Section 31 of the Act were not applicable.

(vii)As both PPL and SCIL called upon the broadcaster to enter

into licenses and were willing to license their repertoire on

mutual agreed terms, it cannot be said that there has been a

refusal on their part to grant licenses. In the present case, no

occasion arose for grant of a compulsory licence inasmuch

as the only relief which could be granted by the Copyright

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Board was to direct the Registrar of Copyrights to grant to

the complainant a license to “communicate the work to the

public” by broadcast, which is already made available to the

public by broadcast through All India Radio and other radio

broadcasters.

(viii)The existence of license have been communicated to the

public. Section 31(1)(b) does not create any entitlement in

favour of an individual broadcaster, but merely provides a

mechanism by which an Indian work that has been withheld

from the public is made available to the public by broadcast.

(ix)The interests balanced in Section 31 are (i) the interest of

the copyright owners and (ii) the interest of the general

public. The narrow commercial interests of the broadcasters

are not to be reckoned under the scheme of Section 31.

(x)The relative merit and demerit of the complainants in any

event being imperative for the purpose of arriving at a

finding as to how the interests of the general public is to be

best served itself is a pointer to the fact that compulsory

license should not be granted to all the radio broadcasters.

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(xi)The Board is not expected unlike the statutes of other

countries to go into the reasonableness or otherwise of the

tariff fixed for grant of licenses.

(xii)The Copyright society not being the owner of copyright, in

any event, cannot be subjected to grant of a compulsory

license in terms of Section 31 of the Act.

(xiii)The Act, having used different words ‘compensation’ and

‘royalty’, Section 3 signifies a lump sum amount to be paid

to bring back the work into the pubic domain. It also goes

to show that it is a one time exercise.

CORE ISSUES

The core questions which, therefore, arise for consideration in

these appeals are:

(i)Whether the Copyright Board has jurisdiction under Section 31

(1)(b) of the Copyright Act, 1957 to direct the owner of a

copyright in any Indian work or a registered copyright society

to issue compulsory licences to broadcast such as works, where

such work is available to the public through radio broadcast?

(ii)Whether in any event such a compulsory license can be issued

to more than one complainant in the light of Section 31(2)?

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(iii)What would be the relevant considerations which the Copyright

Board must keep in view while deciding on;

(a) Whether to issue a compulsory license to a

particular person; and

(b) The terms on which the compulsory license

may be issued, including the compensation?

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STATUTORY PROVISIONS

In view of the fact that interpretation of Section 31 of the Act

would depend upon the Scheme of the Act, we may notice the relevant

provisions thereof. It is also necessary to have a broad overview.

The Copyright Act, 1957 was enacted to amend and consolidate

the law relating to copyright. Section 2(d) defines ‘author’, which reads

as under:

2(d) “author means, -

(i)in relation to a literary or dramatic work, the author of the

work;

(ii)in relation to a musical work, the composer;

(iii)in relation to an artistic work other than a photograph, the

artist;

(iv)in relation to a photograph, the person taking the photograph;

(v)in relation to a cinematograph film or

sound recording, the producer; and

(vi)in relation to any literary, dramatic,

musical or artistic work which is

computer-generated, the person who

causes the work to be created;”

Section 2(dd) defines ‘broadcast’ to mean communication to the

public-(i) by any means of wireless diffusion, whether in any one or more

26

of the forms of signs, sounds or visual images; or (ii) by wire, and

includes a re-broadcast.

Section 2(ff) defines ‘communication to the public’ to mean:

“making any work available for being seen or heard

or otherwise enjoyed by the public directly or by any

means of display or diffusion other than by issuing

copies of such work regardless of whether any

member of the public actually sees, hears or otherwise

enjoys the work so made available.

Explanation:- For the purposes of this clause,

communication through satellite or cable or any other

means of simultaneous communication to more than

one household or place of residence including

residential rooms of any hotel or hostel shall be

deemed to be communication to the public;”

Sections 2(ffd) defines ‘copyright society’ to mean a society

registered under sub-section (3) of Section 33. Section 2(j) defines

‘exclusive licence’ to mean a licence which confers on the licensee or on

the licensee and persons authorized by him, to the exclusion of all other

persons (including the owner of the copyright), any right comprised in

the copyright in a work, and “exclusive licensee” shall be construed

accordingly.

Section 2(l) defines ‘Indian work’ to mean a literary, dramatic or

musical work, - (i) the author of which is a citizen of India; or (ii) which

is first published in India; or (iii) the author of which, in the case of an

27

unpublished work, is, at the time of the making of the work, a citizen of

India.

Section 2(m) defines ‘infringing copy’ to mean (i) in relation to a

lilterary, dramatic, musical or artistic work, a reproduction thereof

otherwise than in the form of a cinematographic film; (ii) in relation to a

cinematograph film, a copy of the film made on any medium by any

means; (iii) in relation to a sound recording, any other recording

embodying the same sound recording, made by any means; (iv) in

relation to a programme or performance in which such a broadcast

reproduction right or a performer’s right subsists under the provisions of

this Act, the sound recording or a cinematographic film of such

programme or performance, if such reproduction, copy or sound

recording is made or imported in contravention of the provisions of the

Act. Section 2(xx) defines ‘sound recording’ to mean a record of sounds

from which such sounds may be produced regardless of the medium on

which such recording is made or the method by which the sounds are

produced. Section 2(y) defines ‘work’ to mean any of the following

works, namely:- (i) a literary, dramatic, musical or artistic work; (ii) a

cinematograph film; (iii) a sound recording.

28

Section 3 of the Act defines for meaning of publication. Section 4

deals with when ‘work’ would not be deemed to be published or

performed in public.

Chapter II of the Act deals with Copyright Office and Copyright

Board.

Section 11 provides for the provisions relating to ‘Copyright

Board’

Chapter III deals with ‘Copyright’.

Section 13 provides for subsistence of copyright throughout India

in the classes of works specified therein, which includes (a) original

literary, dramatic, musical and artistic works; (b) cinematograph films;

and (c) sound recording. Sub-section (4) of Section 13 provides that 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.

Section 14 of the Act provides for the meaning of copyright.

29

Clause (c) of sub-section (1) of Section 14 talks about artistic

work. For the purposes of the Act, ‘copyright’ means the exclusive right,

subject to the provisions of this Act, to do or authorize the doing of any

act. The acts specified therein in respect of a work or any substantial part

thereof and in the case of a sound recording, namely,

(i)to make any other sound recording embodying it;

(ii)to sell or give on hire, or offer for sale or hire, any copy of

the sound recording, regardless of whether such copy has

been sold or given on hire on earlier occasions;

(iii)to communicate the sound recording to the public.

Explanation: For the purposes of this Section, a copy which has

been sold once shall be deemed to be a copy already in circulation.

Section 16 mandates that no person shall be entitled to copyright

except as provided for under the Act.

Chapter IV provides for the ownership of copyright and the rights

of the owner. Section 17 states that subject to the provisions of this Act,

the author of a work shall be the first owner of the copyright therein.

Proviso (b) appended thereto reads as under:

“(b)subject to the provisions of clause (a), in the

case of a photograph taken, or a painting or portrait

30

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.”

.

Sections 18 and 19 relate to assignment of copyright and mode of

assignment respectively. Section 19 deals with disputes with respect to

assignment of copyright. Section 27 provides for the term of copyright

in sound recording in the following terms:

“27. Term of copyright in sound recording.- In the

case of a sound recording, copyright shall subsist until

sixty years from the beginning of the calendar year

next following the year in which the sound recording

is published.

However, only because the term for holding copyright under the

said provisions are different, the same would not mean that the right of

the copyright owner in sound recording is somewhat inferior.

Chapter VI of the Act deals with licences.

Section 30 provides for the licences by owners of copyright. It, in

other words, deals with a situation where licence is granted on a

voluntary basis. Section 30A provides for application of Sections 19 and

31

19A. Section 31A provides for compulsory licence in unpublished

Indian works, the relevant portions whereof are as under:

“(1)Where, in the case of an Indian work

referred to in sub-clause (iii) of clause (l) of

Section 2, the author is dead or unknown or

cannot be traced, or the owner of the copyright

in such work cannot be found, any person may

apply to the Copyright Board for a licence to

publish such work or a translation thereof in

any language.

(4)Where an application is made to the

Copyright Board under this section, it may,

after holding such inquiry as may be prescribed,

direct the Registrar of Copyrights to grant to

the applicant a licence to publish the work or a

translation thereof in the language mentioned in

the application subject to the payment of such

royalty and subject to such other terms

and conditions as the Copyright Board may

determine, and thereupon the Registrar of

Copyrights shall grant the licence to the

applicant in accordance with the direction of

the Copyright Board.”

Section 32 deals with the provisions relating to licence to produce

and publish translations. Section 32A deals with licence to reproduce

and publish works for certain purposes.

Chapter VII of the Act deals with copyright societies. Section 33

provides for registration of copyright society, relevant portion whereof

are as under:

32

“33. Registration of Copyright Society.-

(1) ……..

(2) Any association of persons who 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 application to the Central Government.

(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.

(4) The Central Government may, if it is satisfied that

a copyright society is being managed in a manner

detrimental to the interests of the owners of rights

concerned, cancel the registration of such society after

such inquiry as may be prescribed.”

Registration of such copyright society is mandatory in character.

Sub-Section (2) of Section 33 provides for that any association of

persons who 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 application to the Central

33

Government. Sub-Section (3) of Section 33 empowers the Central

Government to grant a licence having regard to the interest of the authors

and other owners of rights under the Act, the interest and convenience of

the public and in particular of the groups of persons who are most likely

to seek licenses in respect of the relevant rights and the ability and

professional competence of the applicants, register such association.

Section 34 provides for administration of rights of owner by copyright

society. The proviso appended thereto prohibit any discrimination in

regard to the terms of licence or the distribution of fees collected

between rights in Indian and other works. The concept of copyright

society appears to be that the interest of the copyright holder can be

protected by the said society while granting licence so as to enable all

players to have the benefit of a single window; as such a society is

entitled to:

(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;

34

(iv)perform any other functions consistent with the provisions

of Section 35.

Sections 34A, 35, 50 and 51 of the Act read as under:

“34A. Payment of remuneration by

copyright society.- (1) If the Central Government is

of the opinion that a copyright society for a class of

work is generally administering the rights of the

owners of rights in such work throughout India, it

shall appoint that society for the purpose of this

section.

(2) The copyright society shall, subject to such rules

as may be made in this behalf, frame a scheme for

determining the quantum of remuneration payable to

individual copyright owners having regard to the

number of copies of the work in circulation:

Provided that such scheme shall restrict payment to

the owners of rights whose works have attained a

level of circulation which the copyright society

considers reasonable.

35. Control over the copyright society by the

owner of rights.- (2) All fees distributed among the

owners of rights shall, as far as may be, be distributed

in proportion

to the actual use of their works.

50. Rectification of Register by Copyright Board.

-The Copyright Board, on application of the Registrar

of Copyrights or of any person aggrieved, shall order

the rectification of the Register of Copyrights by-

(a) the making of any entry wrongly omitted to be

made in the register, or

(b) the expunging of any entry wrongly made in, or

remaining on, the register, or

35

(c) the correction of any error or defect in the register.

51. When copyright infringed. -Copyright in a work

shall be deemed to be infringed-

(a) when any person, without a licence granted by the

owner of the copyright or the Registrar of Copyrights

under this Act or in contravention of the conditions of

a licence so granted or of any condition imposed by a

competent authority under this Act-

(i) does anything, the exclusive right to do

which is by this Act conferred upon the owner

of the copyright, or

(ii) permits for profit any place to be used for

the communication of the work to the public

where such communication constitutes an

infringement of the copyright in the work,

unless he was not aware and had no reasonable

ground for believing that such communication

to the public would be an infringement of

copyright; or

(b) when any person-

(i) makes for sale or hire, or sells or lets for

hire, or by way of trade displays or offers for sale or

hire, or

(ii) distributes either for the purpose of trade or

to such an extent as to affect prejudicially the owner

of the copyright, or

(iii) by way of trade exhibits in public, or

(iv) imports into India, any infringing copies of

the work :

Provided that nothing in sub-clause (iv) shall

apply to the import of one copy of any work for the

private and domestic use of the importer.

Explanation.- For the purposes of this section, the

reproduction of a literary, dramatic, musical or artistic

36

work in the form of a cinematograph film shall be

deemed to be an "infringing copy".

Section 63 of the Act provides for offence of infringement of

copyright or other rights conferred by the Act. Section 72 of the Act

provides for appeals against orders of Registrar of Copyrights and

Copyright Board. Section 74 empowers the Registrar of Copyrights and

Copyright Board to exercise certain powers of civil courts.

In view of the aforementioned statutory backdrop, we may notice

Section 31 of the Act.

“31.Compulsory licence in works withheld from

public.- (1) If at any time during the term of copyright

in any Indian work which has been published or

performed in public, a complaint is made to the

Copyright Board 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 Copyright Board, 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 deem necessary, may, if it is

satisfied that the grounds for such refusal are not

37

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 Copyright Board may determine;

and thereupon the Registrar of Copyrights shall grant

the licence to the complainant in accordance with the

directions of the Copyright Board, on payment of

such fee as may be prescribed.

Explanation.- In this sub-section, the

expression “Indian work” includes-

(i)an artistic work, the author of which is a

citizen of India; and

(ii)a cinematograph film or a sound

recording made or manufactured in India.

(2)Where two or more persons have made a

complaint under sub-section (1), the licence shall be

granted to the complainant who in the opinion of the

Copyright Board would best serve the interests of the

general public.”

RULES

Section 78 of the Act provides for power to make rules.

The Central Government in exercise of the said power framed

rules known as “The Copyright Rules, 1958” (for short “the Rules”).

Chapter V of the Rules deals with the provisions relating to

Cooperative Societies. Relevant clauses of which are quoted

hereinbelow:

38

“12. Conditions for submission of applications for

registration of copyright societies.

(1) Any association of persons, whether incorporated or

not, comprising seven or more owners of copyright

(hereinafter referred to as “the applicant”) formed for the

purpose of carrying on the business of issuing or granting

licences in respect of any class of works in which

copyright subsists or in respect of any other right

conferred by the Act may file with the Registrar of

Copyrights an application in Form II-C for submission to

the Central Government for grant of permission to carry

on such business and for its registration as a copyright

society.

(2) An application under sub-rule (1) shall be signed by

all the members of the governing body (by whatever

name called) and the chief executive of the applicant

(who need not be a member of the applicant).

14-G. Conditions subject to which a copyright may

accept authorization and an owner of rights may

withdraw such authorization- (1) A copyright society

may accept from an owner of rights or his duly

authorised agent, exclusive authorisation to administer

any right in a work if such owner or such agent enters

into an agreement, in writing, with the copyright society

specifying the rights to be administered, the duration for

which such rights are authorised to be administered, the

quantum of fees agreed to and the frequency at which

such fees shall be paid by the copyright society in

accordance with its Scheme of Tariff and Distribution.

(2) The owner of copyrights shall, without prejudice to

the rights under the agreement and subject to the

condition of a prior notice of sixty days, be free to

withdraw such authorisation in case the copyright society

fails to fulfil its commitments as laid down in the

agreement.

14-J. Tariff Scheme.- As soon as may be, but in no case

later than three months from the date on which a

39

copyright society has become entitled to commence its

copyright business, it shall frame a scheme of tariff to be

called the “Tariff Scheme” setting out the nature and

quantum of fees or royalities which it proposes to collect

in respect of such copyright or other rights administered

by it.

14-K. Distribution Scheme. - (1) As soon as may be, but

in no case later than three months from the date on which

a copyright society has become entitled to commence its

copyright business, it shall frame a scheme to be called

the “Distribution Scheme” setting out the procedure for

collection and distribution of the fees or royalities

specified in the Tariff Scheme among the owners of

copyright or other rights whose names are borne on its

Register of Owners [maintained under clause (i) of rule

14-I] for the approval of such owners.

(2) Any distribution under the Distribution Scheme shall,

as far as possible, be in proportion to the income of the

copyright society from actual use of the work or works of

each owner of rights.”

THE FORMS

In terms of the Rules, forms have also been prescribed. Relevant

clauses of Form IIA appended to First Schedule to the Copyright Rules,

1958 read as under:

“8. Estimated cost of the work to be published.

9. Proposed retail price per copy of the work.

10. Rate of royalty, which the applicant considers

reasonable, to be paid to the copyright owner.

11. Means of the applicant for payment of the royalty.

40

12. Whether the prescribed fee has been paid and, if so,

particulars of payment (give Postal Order/Bank

Draft/Treasury Challan number).

13.(a)Full name, address and nationality of the

person competent to issue a licence.

(b)Whether the applicant after due diligence on

his part was unable to find the owner.

(c)Whether the applicant has requested and had

been denied authorisation by the said person to

produce and publish the translation or reproduce the

work or publish the unpublished work.

(d)If the applicant was unable to find the owner,

whether he had sent a copy of the request by

registered air mail post to the publisher whose name

appears on the work. If so, the date on which the

copy was sent.”

CONVENTIONS

Before we embark upon respective contentions of the parties, we

may notice some International Conventions to which India is a signatory.

The Central Government issued the International Copyright order by a

notification published in the Gazette of India on 24.3.1999. It defines

‘Berne Convention Country’ to mean a country which is a member of the

Berne Copyright Union, and includes a country mentioned either in Part I

or in Part II of the Schedule. It defines ‘Phonograms Convention

Country’ to mean a country which has either ratified, or accepted, or

acceded to the Convention for the Protection of Producers of

Phonograms against Unauthorized Duplication of their Phonograms,

41

done at Geneva on the twenty-ninth day of October, one thousand nine

hundred and seventy-one, and includes a country mentioned in Part V of

the Schedule. It defines ‘Universal Copyright Convention Country’ to

mean a country which has either ratified or accepted, or acceded to the

Universal Copyright Convention, and includes a country mentioned

either in Part III or in Part IV of the Schedule. It defines ‘World Trade

Organization Country’ to mean a country which is a member of the

World Trade Organization and which has either ratified, or accepted, or

acceded to the Agreement on Trade Related Aspects of Intellectual

Property Right, 1994, and includes a country mentioned in Part VI of the

Schedule. The countries which have ratified/accepted/acceded to Berne

Convention are specified in Part I of the Schedule appended thereto. Part

II of the Schedule specifies those countries which are yet to

ratify/accept/accede to the 1971 Text of Berne Convention. Part III of the

Schedule specifies the countries which have ratified/accepted/acceded to

the 1971 Text of the Universal Copyright Convention. Part IV of the

Schedule specifies the countries which are yet to ratify/accept/accede to

the 1971 Text of Universal Copyright Convention. Part V of the

Schedule specifies Phonograms Conventions Countries and Part VI

specify the World Trade Organization Countries.

42

We would refer to only two Conventions, namely, Berne

Convention and Rome Convention. The later comes within the purview

of the World Trade Organization Convention. The Berne Convention

provides for the protection of literary and artistic works. The relevant

provisions whereof are Articles 11, 11bis, which reads as under:

“Article 11. (1) Authors of dramatic, dramatico-

musical and musical works shall enjoy the exclusive

right of authorizing:

(i) the public performance of their works, including

such public performance by any means or process;

(ii) any communication to the public of the

performance of their works.

(2) Authors of dramatic or dramatico-musical works

shall enjoy, during the full term of their rights in the

original works, the same rights with respect to

translations thereof.

Article 11bis. (1) Authors of literary and artistic

works shall enjoy the exclusive right of authorizing:

(i) the broadcasting of their works or the

communication thereof to the public by any other

means of wireless diffusion of signs, sounds or

images;

(ii) any communication to the public by wire or by

rebroadcasting of the broadcast of the work, when this

43

communication is made by an organization other than

the original one;

(iii) the public communication by loudspeaker or any

other analogous instrument transmitting, by signs,

sounds or images, the broadcast of the work.

(2) It shall be a matter for legislation in the countries

of the Union to determine the conditions under which

the rights mentioned in the preceding paragraph may

be exercised, but these conditions shall apply only in

the countries where they have been prescribed. They

shall not in any circumstances be prejudicial to the

moral rights of the author, nor to his right to obtain

equitable remuneration which, in the absence of

agreement, shall be fixed by competent authority.

(3) In the absence of any contrary stipulation,

permission granted in accordance with paragraph (1)

of this Article shall not imply permission to record, by

means of instruments recording sounds or images, the

work broadcast. It shall, however, be a matter for

legislation in the countries of the Union to determine

the regulations for ephemeral recordings made by a

broadcasting organization by means of its own

facilities and used for its own broadcasts. The

preservation of these recordings in official archives

may, on the ground of their exceptional documentary

character, be authorized by such legislation.”

Article 3(f) of the Rome Convention defines the term

‘broadcasting’ as under:

44

“3(f) ‘Broadcasting’ means the transmission by

wireless means for public reception of sounds or of

images and sounds.”

Article 12 of the Rome Convention reads as under:

“Article 12

If a phonogram published for commercial purposes, or

a reproduction of such phonogram, is used directly for

broadcasting or for any communication to the public,

a single equitable remuneration shall be paid by the

user to the performers, or to the producers of the

phonograms, or to both. Domestic law may, in the

absence of agreement between these parties, lay down

the conditions as to the sharing of this remuneration.”

GENERAL PRINCIPLES

There cannot be any doubt whatsoever that an artistic, literary or

musical work is the brain-child of an author, the fruit of his labour and,

so, considered to be his property. A copyright, however, unlike a trade

mark is a right created under the Act as is evident from Section 16

thereof. When an author of a copyright and other claims a copyright, it is

subjected to the provisions of the Act. The rights and obligations of the

author ought to be found out within the four corners of the Act. It is not

necessary to dilate more upon these aspects of the matter as the object

45

behind enacting the Act is absolutely clear and explicit. It creates a

monopoly in favour of the author. Copyright also creates a monopoly in

favour of the copyright society. What requires protection is unlawful

reproduction of the author’s work by others. It is the long period which

encourages the authors to create works of literature, music and art.

In Gramophone Company of India Ltd. v. D.B. Pandey [(1984) 2

SCC 534 at 549, this Court held:

“An artistic, literary or musical work is the brain-child

of an author, the fruit of his labour and, so, considered

to be his property. So highly is it prized by all

civilized nations that it is thought worthy of

protection by national laws and international

conventions relating to copyright.”

In Copinger and Skone James on Copyright (15

th

Ed. 2005, para 2-

05, page 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 inter-dependent and are applied in

the justification of copyright in all countries, although

different countries give varying emphasis to each of

them. To generalize, 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

46

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.”

INTERNATIONAL CONVENTIONS AND FOREIGN LAW

India is a Signatory to Berne Convention. It is also a signatory to

the Rome Convention.

The International Conventions provide for compulsory license.

Whereas U.K., Australia, Singapore, U.S.A. have framed laws for grant

of compulsory license and also constituted Tribunals for the purpose of

overseeing the tariff for licensing, stricto sensu the Indian Act does not

say so.

BROAD ANALYSIS OF THE PROVISIONS

A statute as is well known must be read in its entirety. It is

required to be read chapter by chapter, section by section and clause by

clause. The definitions of the term ‘broadcast’ as also ‘sound recording’

47

must be given a wide meaning. Clause (a) of Section 13 protects original

work whereas clauses (b) and (c) protect derivative works. It provides

for commercial manifestation of original work and the fields specified

therein. Clause (a) of sub-Section (1) of Section 14 deals with original

work. It is extremely broad. In contrast thereto, the copyright on films

or sound recording work operates in restrictive field; they provide for a

restrictive right as would appear from the provisions contained in Section

14 (1)(e) of the Act.

For a proper construction of the provisions, will it be necessary to

keep in mind the difference between the right of the original work and

right of sound recording? Should we also bear in mind that there are

various forms of intellectual property rights. Section 16 provides that a

right, inter alia, in respect of any work must be claimed only under and in

accordance with the provisions of the Act unlike Trade Mark and

‘passing off rights’ can be enforced even though they are not registered.

It must also be noticed that whereas the term of a copyright in original

literary, dramatic, musical and artistic works not only remains protected

in the entire life time of the author but also until 60 years from the

beginning of the calendar year next following the year in which the

author dies, the term of copyright in sound recording subsists only for 60

years, but as indicated hereinbefore, the same would not mean that the

48

right of an owner of sound recording is in any way inferior to that of

right of an owner of copyright on original literary work etc.

Chapter VI deals with licence. The statutory licences are required

to be granted having regard to the various factors stated therein.

Section 33 is a special provision which provides for registration of

a copyright society.

It may, however, be necessary to consider that unlike other

countries the broadcasting rights by themselves were introduced in India

for the first time by inserting Section 37 in the year 1994. It is true that

the rights of free-to-air broadcasters have not been dealt with in a

specific legislation unlike some other jurisdiction. It may, however, be

of some importance to note that Chapter VII deals with Copyright

society, the concept whereof was incorporated in the Act so as to enable

an author to commercially exploit his intellectual property by a

widespread dispersal in a regulated manner. It for all intent and purport

steps into the shoes of the author. The society grants license on behalf of

the author, it files litigation on his behalf, both for the purpose of

enforcement as also protection of the enforcement of his right. It not

only pays royalty to the author but is entitled to distribute the amount

collected by it amongst its members. Section 34 providing for

49

administration of rights of owners by a copyright society for all intent

and purport creates a virtual agency so as to enable the society to act on

behalf of the owner. The civil remedies for infringement of copyright as

envisaged under Section 55 of the Act can also be enforced by the

society. The Scheme of the statute governing the field in other countries

is vast and wide. The jurisdiction of the Tribunal is indisputably very

wide. No such legislative changes have been made in India presumably

because until recent times, the Copyright in musical work was owned by

a cooperative society, namely, IPRS and PPL.

The third party granting license on a prescribed fee of a musical

work was contemplated under the Act. As a general rule for

administering such copyrights, there are about 300 radio stations now.

Monopoly in respect of sound recording is, as it appears from the tariff

supplied to us by the respondent embrace within its field, Pop/Music

Quizzes, Mobile DJ, Jukeboxes, Dance Teachers, Dance Centre/Studio,

Exercise, Amateur Operatic & Dramatic Societies, Theatrical

Productions, Temporary Camps/Shacks, Banquet Halls, Background

Music- Guest Houses & Lodges, Hotels, Background Music- Public

Houses & Cafes & Non AC Restaurants, Bankground Music – AC

Restaurants, BARS, Background Music – Shops & Stores Premises,

50

Background Music – Hairdressing Salons & Beauty Parlours,

Background Music – Clinics, Background Music – Nursing Homes &

Hospitals, Background Music – Factories & Offices/Banks, Background

Music – Waiting Rooms/Reception Areas, Background Music-

Telephone Music on hold,Puppet/Magic Shows, Background Music-

Theatres, Background Music – Cinemas, Background Music- Museums

& Art Galleries, Background Music- Ten Pin Bowling Centres/Bowling

Alleys, Background Music- Amusement & Pleasure Parks, Background

Music – Amusement Arcades, Background Music – Casinos,

Background Music – Gymnasiums, Background Music – Swimming

Pools.

The right of the author of a copyright vis-à-vis the Society, thus,

may be exercised in almost all walks of life from the ‘Radio Stations’ to

a small ‘Hairdressing Salon’.

If the right of an author/society is so pervasive, is it necessary to

construe the provisions under Section 31 of the Act having regard to the

International Covenants and the laws operating in the other countries?

The answer to the said question must be rendered in affirmative.

Interpretation of a statute cannot remain static. Different canons and

principles are to be applied having regard to the purport and object of the

51

Act. What is essential therefor is to see that the expanding area in which

the copyright will have a role to play is covered. While India is a

signatory to the International Covenants, the law should have been

amended in terms thereof. Only because laws have not been amended,

the same would not by itself mean that the purport and object of the Act

would be allowed to be defeated. If the ground realities changed, the

interpretation should also change. Ground realities would not only

depend upon the new situations and changes in the societal conditions

vis-à-vis the use of sound recording extensively by a large public, but

also keeping in view of the fact that the Government with its eyes wide

open have become a signatory to International Conventions.

APPLICATION OF INTERNATIONAL CONVENTIONS IN INDIA

It is for the aforementioned limited purpose, a visit to the

provisions of International Conventions would be necessary.

In interpreting the domestic/municipal laws, this Court has

extensively made use of International law inter alia for the following

purposes:

(i)As a means of interpretation;

(ii)Justification or fortification of a stance taken;

52

(iii)To fulfill spirit of international obligation which India has

entered into, when they are not in conflict with the existing

domestic law;

(iv)To reflect international changes and reflect the wider

civilization;

(v)To provide a relief contained in a covenant, but not in a

national law;

(vi)To fill gaps in law.

Beginning from the decision of this court in Kesavananda Bharati

v. State of Kerala [(1973) 4 SCC 225], there is indeed no dearth of case

laws where this Court has applied the norms of international laws and in

particular the international covenants to interpret domestic legislation. In

all these cases, this court has categorically held that there would be no

inconsistency in the use of international norms to the domestic

legislation, if by reason thereof the tenor of domestic law is not breached

and in case of any such inconsistency, the domestic legislation should

prevail.

In Jagdish Saran and Ors. v. Union of India [(1980) 2 SCC 768], it

was observed:

53

“It is also well-settled that interpretation of the

Constitution of India or statutes would change from

time to time. Being a living organ, it is ongoing and

with the passage of time, law must change. New

rights may have to be found out within the

constitutional scheme. Horizons of constitutional law

are expanding."

In the aforementioned judgment, this Court referred to a large

number of decisions for the purpose of interpreting the constitutional

provisions in the light of the international treaties and conventions.

Yet again in Indian Handicrafts Emporium and Ors. v. Union of

India [( 2003 ) 7 SCC 589], this Court considered the Convention on

International Trade in Endangered Species (CITES) and applied the

principles of purposive constructions as also not only the Directive

Principles as contained in Part IV of the Constitution but also

Fundamental Duties as contained in Part IVA thereof.

Referring to Motor General Traders and Anr. v. State of Andhra

Pradesh and Ors. ( 1984 ) 1 SCC 222, Rattan Arya and Ors. v. State of

Tamil Nadu and Anr. ( 1986 ) 3 SCC 385 and Synthetics and Chemicals

Ltd. and Ors. v. State of U.P. and Ors. ( 1990 ) 1 SCC 109, this Court

held:

54

"There cannot be any doubt whatsoever that a law which

was at one point of time was constitutional may be rendered

unconstitutional because of passage of time. We may note

that apart from the decisions cited by Mr. Sanghi, recently a

similar view has been taken in Kapila Hingorani v. State of

Bihar (supra) and John Vallamattom and Anr. v. Union of

India(supra)."

These judgments were referred to in the decision of Liverpool and

London S.P. and I Asson. Ltd. v. M.V. Sea Success I and Anr . [(2004) 9

SCC 512], wherein this court observed that as no statutory law in India

operated in the field, interpretative changes, if any, must, thus be made

having regard to the ever changing global scenario.

Liverpool also referred to the decision of the court in M.V.

Elisabeth [1993 Supp. (2) SCC 433] as an authority for the proposition

that the changing global scenario should be kept in mind having regard

to the fact that there does not exist any primary act touching the subject

and in absence of any domestic legislation to the contrary.

Concurring with the said decisions, it was however opined that the

same could not mean that it restricted the jurisdiction of the Indian High

55

Courts to interpret the domestic legislation strictly according to the judge

made law.

Liverpool and London S.P. and I Asson. Ltd. (supra) has been

followed by the Supreme Court in a plethora of cases inter alia The State

of West Bengal v. Kesoram Industries Ltd. and Ors. [(2004) 10 SCC201].

In Pratap Singh v. State of Jharkhand and Anr. [(2005) 3 SCC 551]

wherein this court directed to interpret the Juvenile Justice Act in light of

the Constitutional as well as International Law operating in the field.

{See also Centrotrade Minerals and Metal Inc. v. Hindustan Copper

Limited [(2006) 11 SCC 245]; State of Punjab and Ors. v. Amritsar

Beverages Ltd. and Ors. [2006 (7) SCALE 587]; State of Punjab and

Anr. v. Devans Modern Brewaries Ltd. and Anr. [(2004) 11 SCC 26] and

Anuj Garg and Ors. v. Hotel Association of India and Ors. [(2008) 3 SCC

1]}.

However, applicability of the International Conventions and

Covenants, as also the resolutions, etc. for the purpose of interpreting

domestic statute will depend upon the acceptability of the Conventions in

question. If the country is a signatory thereto subject of course to the

provisions of the domestic law, the International Covenants can be

utilized. Where International Conventions are framed upon undertaking

56

a great deal of exercise upon giving an opportunity of hearing to both the

parties and filtered at several levels as also upon taking into

consideration the different societal conditions in different countries by

laying down the minimum norm, as for example, the ILO Conventions,

the court would freely avail the benefits thereof.

Those Conventions to which India may not be a signatory but have

been followed by way of enactment of new Parliamentary statute or

amendment to the existing enactment, recourse to International

Convention is permissible.

This kind of stance is reflected from the decisions in PUCL v.

Union of India, [(1997) 3 SCC 433], John Vallamattom v. Union of

India, [(2003) 6 SCC 611], Madhu Kishwar v. State of Bihar [(1996) 5

SCC 125], Kubic Darusz v. Union of India, [(1990) 1 SCC 568], Chameli

Singh v. State of U.P., [(1996) 2 SCC 549], C. Masilamani Mudaliar v.

Idol of Sri Swaminathaswami Thirukoil, [(1996) 8 SCC 525], Apparel

Export Promotion Council v. A.K. Chopra, [(1999) 1 SCC 759], Kapila

Hingorani Vs. State of Bihar [(2003) 6 SCC 1], State of Punjab & Anr.

Vs. M/s. Devans Modern Breweries & Anr. [2003 (10) SCALE 202] and

57

Liverpool & London S.P. & I Asson. Ltd. Vs. M.V. Sea Success I [2003

(10) SCALE 1].

Furthermore, as regards the question where the protection of

human rights, environment, ecology and other second-generation or

third-generation rights is involved, the courts should not be loathe to

refer to the International Conventions.

LAW IN OTHER COUNTRIES

Reference to laws to other jurisdictions stricto sensu may not be

apposite, where the scheme of the Act/Statute is different. Where the

statute is differently worded, same or similar interpretation may not be

possible.

We have noticed the laws operating in other countries only to

highlight that broadly it is in two forms, namely:

(a) free to air broadcasting does not require a copyright licence;

58

(b)a free to air broadcaster requires a licence – however to

commence broadcast all that he has to do is to give an

undertaking to pay a reasonable sum which in the event of

dispute will be decided by a competent tribunal.

Australian Law

Under Section 109 of the Australian Copyright Act, the form

adopted is in the same form as in (b) above. The additional feature of the

law is that the royalty for broadcasting of published sound recording is

frozen at a ceiling of 1% of the gross earnings of the broadcaster during

the specified period. There are also provisions for compulsory licensing.

China

China has the form (a) above for domestic recordings. They

however, follow the Berne Convention for International recordings.

These domestic recordings can be broadcasted on the radio or television

without any licence or payment. Even a commercial broadcast is in form

(b) above.

Japan

59

Japan has form (b) above. The Director General of the Cultural

Affairs Agency will determine the compensation required to be paid by a

Broadcaster. Non-profit transmission of works already made public is

exempted from paying any royalty.

United Kingdom

In U.K. statutory licensing and compulsory licensing exists.

Copinger & Skone James clearly says :

‘….In the case of a statutory licence the rate is fixed

by law, in the case of a compulsyr licence the rate is

left to be negotiated, but in neither case can use be

refused or prevented….’.”

[Emphasis supplied]

It is of some significance to note that although it has been

contended by Mr. Divan that the Scheme of English Statute is different,

reliance has been placed by him on some English decisions to which we

may refer to a little later.

ESSENTIAL FEATURES OF THE COPYRIGHT ACT

60

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.

Whereas the Act provides for exclusive rights in favour of owners

of the copyright, there are provisions where it has been recognized that

public has also substantial interest in the availability of the works. The

provisions relating to grant of compulsory license must be viewed having

regard to the aforementioned competing rights wherefor an appropriate

balance has to be stuck. For the said purpose, we may notice the broad

features of the Act.

Section 16 of the Act provides that no person shall be entitled to

copyright otherwise than under and in accordance with the provisions of

the Act. Section 14 defines the expression “copyright” to mean the

exclusive right to do or authorize the doing of specific things in respect

of a work, as detailed in that section.

61

The primary method that an owner of copyright employs to exploit

the copyright and to make this work available to the public is through the

vehicle of voluntary licenses in terms of Section 30 of the Act.

The freedom to contract is the foundation of economic activity and

an essential aspect of several Constitutional rights including the freedom

to carry on trade or business guaranteed under Article 19(1)(g) and the

right to property under Article 300A of the Constitution of India. But the

said right is not absolute. It is subject to reasonable restrictions.

Section 30 enables the owner of the copyright to grant any interest

in the copyright by a license in writing signed by him or by his duly

authorized agent.

The underlying philosophy of the Copyright Act is that the owner

of the copyright is free to enter into voluntary agreement or licenses on

terms mutually acceptable to him and the licensee. The Act confers on

the copyright owner the exclusive right to do the various acts enumerated

in Section 14. An infringement of copyright occurs if one of those acts is

done without the owner’s license. A license passes no interest, but

merely makes lawful that which would otherwise be unlawful. The Act

also expressly recognizes the notion of an “exclusive license” which is

62

defined in Section 2(j). But, that does not mean, as would be noticed

from the discussions made hereinafter, that it would apply in all

situations irrespective of the nature of right as also the rights of others. It

means a license which confers on the licensee, to the exclusion of all

other persons (including the owner of the copyright) any right comprised

in the copyright in a work. An exclusive licensee has specific rights

under the Act such as the right to have recourse to civil remedies under

Section 55 of the Act. This Scheme shows that a copyright owner has

complete freedom to enjoy the fruits of his labour by earning an agreed

fee or royalty through the issuance of licenses. Hence, the owner of a

copyright has full freedom to enjoy the fruits of his work by earning an

agreed fee or royalty through the issue of licenses. But, this right, to

repeat, is not absolute. It is subject to right of others to obtain

compulsory licence as also the terms on which such licence can be

granted.

COPYRIGHT SOCIETY

The provisions with respect to Copyright Societies are contained

in Chapter VII of the Act which in its present form was introduced by the

Copyright (Amendment) Act, 1994. Section 33 of the Act provides for

63

the registration of a Copyright Society. Section 34 of the Act empowers

a Copyright Society to accept from the owner exclusive authorization to

administer any rights in any work by issue of licenses or collection of

license fee or both. A Copyright Society may issue voluntary licenses

under Section 30, collect fees in pursuance of such licenses, distribute

such fees amongst owners of rights, and perform any other functions

consistent with the collective control of the owners whose rights it

administers.

The Copyright Society is required to frame a scheme to determine

the quantum of remuneration payable to individual copyright owners

having regard to the number of copies of the work in circulation.

[Section 34A(2)]

Chapter V of the Copyright Rules, 1958 makes detailed provisions

with respect to the conduct of business by Copyright Societies. Rule 14J

requires that a Copyright Society shall frame a scheme of tariff to be

called a “Tariff Scheme” setting out the nature and quantum of fees or

royalties which it proposes to collect in respect of such copyright or other

rights administered by it. Rule 14K requires a Copyright Society to

frame a “Distribution Scheme” setting out the procedure for collection

64

and distribution of royalty specified in the Tariff Scheme among the

owners of copyright. Any distribution under the Distribution Scheme is

required to be in the proportion to the income of the Copyright Society

from actual use of the work or works of each owner of rights.”

COMPULSORY LICENCE

The scheme of the Act affirms the freedom to contract as being the

primary machinery by which the copyright owner publishes his work

through a voluntary license regime in terms of Section 30. Compulsory

licenses are an exception to the general freedom of the copyright owner

to contract.

Section 31 deals with compulsory license in works withheld from

the public and the submissions relating to this provisions are set out in

detail in the next section of this outline of submissions.

Section 31A empowers the Copyright Board to issue a compulsory

license in respect of an unpublished Indian work or a translation thereof

in any language, whose author is dead or unknown or cannot be traced or

the owner of copyright in such work cannot be found. Section 31A(4)

65

empowers the Board to hold an enquiry and direct the Registrar of

Copyrights to grant to the applicant a license to publish the work or

translation, subject to the payment of such royalty and subject to such

other terms and conditions as the Copyright Board may determine.

Section 32 empowers the Copyright Board to issue a compulsory

license to produce and publish a translation of literary or a dramatic work

in any language after a period of 7 years from the first publication of the

work.

Section 32A empowers the Copyright Board to grant a compulsory

license where after the expiry of the relevant period from the date of the

first publication of an edition of a literary, scientific or artistic work,

copies of such edition are not made available in India.

Section 32B provides for the termination of a compulsory license

where it is issued under Section 32(1A) or Section 32A, on the

fulfillment of the conditions mentioned in that Section.

Rule 9 of the Copyright Rules prescribed the manner in which the

Copyright Board shall determine royalties payable to the owner with

66

respect to a compulsory license for a translation under Section 32. Rule

11D provides for the manner in which the Copyright Board shall

determine royalties payable to the owner of the copyright in respect of

compulsory licenses issued under Section 31A, Section 32 and Section

32A.

Rule 11C (4) provides that where there are more applicants than

one seeking a compulsory license for translation of a work or for

reproduction of the work or for publication of an unpublished work, then

the Copyright Board make grant the compulsory license to such one of

the applicants, as in the opinion of the Board, would best serve the

interest of the general public.

Chapter VI relate to grant of licence, which can be divided into

two parts; licences by owners of copyright and compulsory licenses.

Compulsory licences can be granted by the Copyright Board subject to

the limitations contained therein. It cannot be said to be an exception to

the general rule in the strict sense of the term as the provisions relating to

grant of license by owners of Copyright and compulsory licenses operate

in different fields. It may be true that while passing an order for grant of

compulsory licenses, the relevant factors as laid down therein must be

67

kept in mind which would include the right of the owner of the copyright

as a part of the right of property, but where a statute is to be construed as

a balancing statute, the situation may be different.

CONSTRUCTION OF SECTION 31 OF THE ACT

The broad requirements of Section 31 are as under:

“(a)The subject work must be an Indian work

whose term of copyright is subsisting;

(b)The Indian work must be one that has been

published or performed in public;

(c)The owner of the copyright in the work must

have

(i)refused to republish or allow republication of the work or

have refused to allow the performance of the work and by

reason of such refusal the work is withheld from the public;

or

(ii)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; and

(d)The Copyright Board is satisfied that the

grounds for refusal are not reasonable.”

Significantly, in between the clauses (a) and (b), the word ‘or’ has

been used. It must be read disjunctively and not conjunctively. Even

68

otherwise, reading the said provision, conjunctively is not possible.

Clause (a) refers to republication or allowing republication of the work,

etc. Clause (b) refers to refusal to allow communication to the public in

the case of a broadcast or in the case of the sound recording.

What is the meaning of the word ‘refusal’

The dictionary meaning of ‘refusal’ whereupon reliance has been

placed by Mr. Divan may, at the outset, be noticed.

“refusal. 1. The denial or rejection of something

offered or demanded< the lawyer’s refusal to answer

questions was based on the attorney-client privilege>.

2. an opportunity to accept or reject something before

it is offered to others; the right or privilege of having

this opportunity <she promised her friend the first

refusal on her house>

(See Black’s Law Dictionary, Seventh Edition)

The meaning of a word must be attributed to the context in which

it is used. For giving a contextual meaning, the text of the statute must

be kept in mind. An act of refusal depends upon the fact of each case.

Only because an offer is made for negotiation or an offer is made for

grant of license, the same per se may not be sufficient to arrive at a

conclusion that the owner of the copyright has not withheld its work

69

from public. When an offer is made on an unreasonable term or a stand

is taken which is otherwise arbitrary, it may amount to a refusal on the

part of the owner of a copyright.

When the owner of a copyright or the copyright society exercises

monopoly in it, then the bargaining power of an owner of a copyright and

the proposed licensee may not be same. When an offer is made by an

owner of a copyright for grant of license, the same may not have

anything to do with any term or condition which is wholly alien or

foreign therefor. An unreasonable demand if acceded to, becomes an

unconstitutional contract which for all intent and purport may amount to

refusal to allow communication to the public work recorded in sound

recording. A de jure offer may not be a de facto offer.

Although the term ‘work’ has been used both in clauses (a) and (b)

of sub-Section (1) of Section 31, the same has been used for different

purpose. The said term ‘work’ has been defined in Section 2(y) in

different contexts. It enumerates the works which are: (a) a literary,

dramatic, musical or artistic work; (b) a cinematograph film; (iii) a sound

recording. Thus, a literary work ex facie may not have anything to do

with sound recording.

70

There are indications in the Act particularly having regard to

Sections 14(1)(a) and 14(1)(e) thereof that they are meant to operate in

different fields. They in fact do not appear to be operating in the same

field. Clause (a) refers to publication or republication of the work. It

may be in print media or other medias. Clause (b), however, refers to

broadcast alone. Sound recording is a part of it. Sub-clauses (i) to (vii)

of sub-clauses (a) of sub-Section (1) of Section 14 and sub-clauses (i) to

(iii) of sub-clause (e) conferred different meanings of the word copyright.

Whereas clause (a) refers to work in general, clause (b) refers to work

recorded in such sound recording, which in turn means the recording of

sounds from which such sounds may be reproduced regardless of the

medium on which such recording is made or the method by which the

sounds are produced. Clause (b) ex facie does not fit in the scheme of

clause (a).

Interpretation of clause must be given effect to having regard to

the limitations contained therein, namely, unless context otherwise

requires.

71

Communication to the public is possible by way of diffusion.

Explanation appended to Section 2(ff) clearly shows the extensive

meaning of the said term. Publication and republication of a work in

general may be different from communication of a work recording in

sound recording. The use of words ‘such work’ also assumes

significance. The said words must be understood having regard to the

fact that the sound recording is also a work. If it is accepted that

voluntary licenses have been entered into by the owners with All India

Radio and some other Radio Broadcasters, then it is sufficient for closing

the doors on another person to approach the Copyright Board. One may

as well say that if it is provided to a satellite channel or a space radio, the

same also would subserve the purpose for refusing to grant an

application under Section 31 of the Act.

A contextual interpretation of the provisions would lead us to

consider the ground realities. F.M. radios are played for every city. The

word ‘work’ in the context of broadcast must be understood having

regard to the fact that there are 150 F.M. licenses out of which about 93

are working. There are 300 broadcasters working in almost all the big

cities in India. The word ‘public’ must be read to mean public of all

parts of India and not only a particular part thereof. If any other meaning

72

is assigned, the terms ‘on terms which the complaints considers

reasonable’ would lose all significance. The very fact that refusal to

allow communication on terms which the complainant considers

reasonable have been used by the Parliament indicate that unreasonable

terms would amount to refusal. It is in that sense the expression ‘has

refused’ cannot be given a meaning of outright rejection or denial by the

copyright owner.

PPL and SCIL might have been called upon the broadcasters to

enter into licenses and were willing to license their repertoire. But their

contention was that if such terms are unreasonable, it amounted to refusal

which would attract Section 31 of the Act. The word ‘communicate the

work to the public by broadcast” is of significance. It provides for a

mode of communication. Thus, only because a Registrar of a Copyright

would be directed to grant a licence to communicate the work to the

public by broadcast would not mean that only a single licence shall be

granted. The Board acting as a statutory authority can exercise its power

from time to time. It is therefore not correct to contend that having

regard to the provisions of sub-section (2) of Section 31, compulsory

licence can be granted only to one and not to more than one broadcaster.

We would deal with this provision at some details a little later. In

73

response to a query as to whether when an application for compulsory

licence is filed any publication thereof is made or not; we are informed

that no such rule or practice exists. Apart from the fact that application

for grant of compulsory licence in the matter of sound recording may be

by different persons; the wide range of it has been noticed by us

hereinbefore. It may for different parts of the country nay different

cities. If a compulsory licence is granted only once covering every single

part of the country, the same cannot be lead to a conclusion that no other

person can approach the Board.

Section 31(1)(b) in fact does not create an entitlement in favour of

an individual broadcaster. The right is to approach the Board when it

considers that the terms of offer for grant of license are unreasonable. It,

no doubt, provides for a mechanism but the mechanism is for the purpose

of determination of his right. When a claim is made in terms of the

provisions of a statute, the same has to be determined. All cases may not

involve narrow commercial interest. For the purpose of interpretation of

a statute, the court must take into consideration all situations including

the interest of the person who intends to have a licence for replay of the

sound recording in respect whereof another person has a copyright. It,

however, would not mean that all and sundry can file applications.

74

The mechanism to be adopted by the Board for determining the

right of a complainant has been provided under the Act.

Explanation appended to Section 31 also plays an important role as

it seeks to make a distinction between an artistic work on the one hand

and a cinematographic films or sound recording on the other. We are

not concerned therewith at this stage.

Admittedly in terms therof the principles of natural justice are

required to be complied with and an enquiry has to be held. The extent

of such enquiry will depend upon the facts and circumstances of the case.

A finding has to be arrived at that the grounds of refusal by an owner of a

copyright holder is not reasonable. Only upon arriving at the said

finding, the Registrar of copyright would be directed to grant a license

for the said purpose. The amount of compensation payable to the owner

of the copyright must also be determined. The Board would also be

entitled to determine such other terms and conditions as the Board may

think fit and proper. Registration is granted only on payment of such

fees and subject to compliance of the other directions.

75

RIGHT TO PROPERTY – IS THE CONCEPT APPLICABLE

An owner of a copyright indisputably has a right akin to the right

of property. It is also a human right. Now, human rights have started

gaining a multifaceted approach. Property rights vis-à-vis individuals are

also incorporated within the ‘multiversity’ of human rights. As, for

example, any claim of adverse possession has to be read in consonance

with human rights. The activist approach of the European Court of

Human Rights is quite visible from the judgment of Beaulane properties

Ltd. v. Palmer [2005 EWHC 817(Ch.)] and J. A. Pye (Oxford) Ltd. v.

Graham [(2002) 3 ALL ER 865].

This Court recognized need of incorporating the same principle for

invoking the rule of strict construction in such matters in P.T.

Munichikkanna Reddy and Ors. v. Revamma and Ors. [(2007) 6 SCC

59] stating:

" Adverse possession is a right which comes into play

not just because someone loses his right to reclaim the

property out of continuous and willful neglect but

also on account of possessor's positive intent to

dispossess. Intention to possess can not be substituted

for intention to dispossess. Mere possession for

howsoever length of time does not result in

converting the permissible possession into adverse

possession."

76

Further, in Peter Smith v. Kvaerner Cementation Foundations Ltd.

[[2006] EWCA Civ 242] the court allowed the appellant to reopen the

case despite a delay of four years as he had been denied the right to

which Article 6 of the European Convention on Human Rights ("the

Convention") entitled him – to a fair hearing before an independent and

impartial tribunal.

But the right of property is no longer a fundamental right. It will

be subject to reasonable restrictions. In terms of Article 300A of the

Constitution, it may be subject to the conditions laid down therein,

namely, it may be wholly or in part acquired in public interest and on

payment of reasonable compensation.

PUBLIC INTEREST – PUBLIC POLICY

What would be a public interest? Would it depend upon the facts

and circumstances of each case and the provisions of the statute?

77

General meaning of the word "public policy" has always been held

to be an unruly horse by this Court. [See Gherulal Parakh v. Mahadeodas

Maiya and Ors. [1959 Supp (2) SCR 406]. This case was referred to in

the recent decision of this court in Devinder Singh and Ors. Vs. State of

Punjab and Ors. [AIR 2008 SC 261]

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.

ROYALTY AND COMPENSATION

Are the terms “royalty” and “compensation” are not synonymous?

“Royalty” means the remuneration paid to an author in respect of the

78

exploitation of a work, usually referring to payment on a continuing basis

(e.g. 10 per cent of the sale price) rather than a payment consisting of a

lump sum in consideration of acquisition of rights. May also be applied

to payment to performers. (See ‘World Copyright Law’ (2

nd

Edn) by

J.A.L. Sterling).

The word ‘compensation’, however, must have been used keeping

in view the fact that if it is a statutory grant; it is a case of statutory

licence. We are not unmindful of the fact in cases of other statutory

licenses, the word ‘royalty’ has been used. Even the word ‘usually’ has

been used. Mr. Divan himself has referred to Rule 11A and Form IIA

appended to the Rules of 1958. Clauses (10) and (11) of the Form which

have validly been made used the word ‘royalty.

“10. Rate of royalty, which the applicant considers

reasonable, to be paid to the copyright owner.

11.Means of the applicant for payment of the

royalty”

The legislature therefore for all intent and purport equates

‘compensation’ with ‘royalty’. In the context of the Act, royalty is a

genus and compensation is a species. Where a licence has to be granted,

it has to be for a period. A ‘compensation’ may be paid by way of

79

annuity. A ‘compensation’ may be held to be payable on a periodical

basis, as apart from the compensation, other terms and conditions can

also be imposed. The compensation must be directed to be paid with

certain other terms and conditions which may be imposed.

MARGINAL NOTE

It was urged that for proper construction of Section 31 of the Act,

reference to marginal note is permissible. Strong reliance has been

placed by Mr. Divan on K.P. Varghese v. Income-tax Officer, Ernakulam

[(1981) 4 SCC 173] to contend that the marginal note to a section can be

relied upon for indicating the drift of the section or to show what the

section is dealing with. It is however, also well settled that where the

statute is clear, marginal note may not have any role to play. {See

Bhinka & ors. v. Charan Singh [1959 Supp. (2) SCR 798] .

PARLIAMENTARY INTENT

The intention of the Parliament, it is trite, must be ascertained from

the plain reading of the Section. The intention is to treat works, which

have been “withheld from the public” differently from the “right to

broadcast”. The right to broadcast is a ephemeral right. It requires

80

special treatment as it confers upon every person, who wishes to

broadcast a work or the work recorded in a sound recording, the right to

do so is either by entering into a voluntary agreement to obtain a licence

on such terms which appear to be reasonable to him or when the term

appears to be unreasonable to approach the Board.

We wish the statute would have been clear and explicit. But only

because it is not, the courts cannot fold its hands and express its

helplessness.

When such a complaint is made, it confers the jurisdiction upon

the Board. It may ultimately allow or reject the complaint but it cannot

be said that the complaint itself is not maintainable.

INTERPRETATION OF SECTION 31(2)

This takes us to the interpretation of Section 31(2). It is attracted

in a case where there are more than one applicants. The question of

considering the respective claim of the parties would arise if they tread

the same ground. The same, however, would not mean that only one

person is entitled to have a licence for all time to come or for an

indefinite term even in perpetuity. A licence may be granted for a

81

limited period; if that be so another person can make such an

applicatioin. Sub-section (2) of Section 31 would lead to an anomalous

position if it is read literally. It would defeat the purport and object of

the Act. It has, therefore, to be read down. P purposive construction

therefor may be resorted to.

In New India Assurance Company Ltd. v. Nusli Neville Wadia

and Anr. [2007 (14) SCALE 556, (2008) 3 SCC 279], this court opined:

“With a view to read the provisions of the Act in a

proper and effective manner, we are of the opinion

that literal interpretation, if given, may give rise to an

anomaly or absurdity which must be avoided. So as to

enable a superior court to interpret a statute in a

reasonable manner, the court must place itself in the

chair of a reasonable legislator/ author. So done, the

rules of purposive construction have to be resorted to

which would require the construction of the Act in

such a manner so as to see that the object of the Act

fulfilled; which in turn would lead the beneficiary

under the statutory scheme to fulfill its constitutional

obligations as held by the court inter alia in Ashoka

Marketing Ltd. (supra).”

Barak in his exhaustive work on ‘Purposive Construction’ explains

various meanings attributed to the term 'purpose'. It would be in the

fitness of discussion to refer to Purposive Construction in Barak's words:

82

“Hart and Sachs also appear to treat 'purpose' as a

subjective concept. I say 'appear' because, although

Hart and Sachs claim that the interpreter should

imagine himself or herself in the legislator's shoes,

they introduce two elements of objectivity: First, the

interpreter should assume that the legislature is

composed of reasonable people seeking to achieve

reasonable goals in a reasonable manner; and second,

the interpreter should accept the non-rebuttable

presumption that members Page 0184 of the

legislative body sought to fulfill their constitutional

duties in good faith. This formulation allows the

interpreter to inquire not into the subjective intent of

the author, but rather the intent the author would have

had, had he or she acted reasonably.”

(See Aharon Barak, Purposive Interpretation in Law (2007) at pg.

87)

In Bharat Petroleum Corporation Ltd. v. Maddula Ratnavalli and

Ors. [(2007) 6 SCC 81], this Court held:

“The Parliament moreover is presumed to have enacted a

reasonable statute (see Breyer, Stephen (2005): Active

Liberty: Interpreting Our Democratic Constitution, Knopf

(Chapter on Statutory Interpretation - pg. 99 for Reasonable

Legislator Presumption).”

The provisions of the Act and the Rules in this case, are, thus

required to be construed in the light of the action of the State as

envisaged under Article 14 of the Constitution of India. With a view to

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give effect thereto, the doctrine of purposive construction may have to be

taken recourse to. [See a;sp Oriental Insurance Co. Ltd. v. Brij Mohan

and Ors [(2007) 7 SCC 56]”

Furthermore, the court while interpreting a statute will put itself in

the armchair of the reasonable legislature, all statutes must be presumed

to be reasonable. It is now a trite law that literal interpretation should be

avoided when it leads to absurdity. If it is to be held that once the

compulsory licence is granted in respect of a sound recording, the Board

loses its jurisdiction for all time to come, it will lead to an absurdity. The

statute does not contemplate such a position. The statute on the one hand

not only in terms of General Clauses Act but also having regard to the

individual complaints which a person may have as regards the

unreasonableness of the terms impose upon him by the owner of the

copyright must be held to be entitled to approach the Board as and when

any cause of action arises therefor. It therefore must be held that sub-

Section (2) of Section 31 is relatively directed to clause (a) and not

clause (b).

Mr. Divan relied on Indian Administrative Services (SCS)

Association, U.P. & ORS. v. Union of India & ORS. [1993 Supp. (1)

SCC 730] wherein it has been held that:

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“9. Thus it is settled law that where the intention of

statutory amendment is clear and expressive, words

cannot be interpolated. In the first place they are not,

in the case, needed. If they should be added, the

statute would more than likely fail to carry out the

legislative intent. The words are the skin of the

language which the legislature intended to convey.

Where the meaning of the statute is clear and sensible,

either with or without omitting the words or adding

one, interpolation is improper, since the primary

purpose of the legislative intent is what the statute

says to be so. If the language is plain, clear and

explicit, it must be given effect and the question of

interpretation does not arise. If found ambiguous or

unintended, the court can at best iron out the creases.

Any wrong order or defective legislation cannot be

righted merely because it is wrong. At best the court

can quash it, if it violates the fundamental rights or is

ultra vires of the power or manifestly illegal vitiated

by fundamental laws or gross miscarriage of justice. It

could thus be held that the legislature intended that

the First Amendment Rules would operate

prospectively from February 3, 1989, the date of their

publication in the Gazette of India. Its policy is

explicit and unambiguous. Rule 3(3)(ii) intended to

remedy the imbalances while at the same time the

proviso intended to operate prospectively to avert

injustice to the officers recruited/promoted earlier

than the officer promoted later to that date. The

proviso carved out an exception to ward off injustice

to the officers that became members of I.A.S. earlier

to those dates.”

In this case, however, the meaning of the Statute is neither clear

nor sensible. It is a statute where a purposive construction is warranted.

It is a case where sub-Section (2) should be kept confined to clause (a)

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for that purpose. The statute has to be read down. It is not a case of

improper interpolation so as to take away a primary purpose of the

legislative intent. It is expedient to give effect to the intent of the statute.

This itself says that creases can be ironed out. While undertaking the

said exercise, the court’s endeavour would be to give a meaning to the

provisions and not render it otiose. We are, therefore, of the opinion that

Section 31(2) refers to case falling under clause (a) of Sub-section (1) of

Section 31 and not clause (b) thereof.

PRINCIPLES OF VALUATION

We have, moreover, been called upon to lay down the principles of

evaluation. We decline to do so. We have been taken through various

judgments of different jurisdictions. We have noticed hereinbefore that

the scheme therein is different. The Tribunal exercises a limited

jurisdiction in India. Different cases are required to be considered on its

own merits. What would be reasonable for one may not be held to be

reasonable for the other. The principles can be determined in a given

situation. The Bombay High Court has remitted the matter back to the

Board for the said purpose. We endorse the views of the Bombay High

Court.

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DISCRETIONARY JURISDICTION

The other question which arises is as to whether the discretionary

jurisdiction should have been exercised in favour of the appellant. It was

urged that keeping in view the fact that ENIL infringed the copyright, it

was not entitled to an injunction. Reliance has been on Phonographic

Performance Ltd. vs. Maitra [(1998) Fleet Street Reports 749 at 770-

773]. The general principle of grant of injunction came up for

consideration before the Court of Appeal. Therein, it was held that an

owner may exercise and exploit his proprietary right by licensing some

and not others. He may charge whatever he wishes. Such is not the

position in India. Therein, the defendant did not take part in the

proceedings. It was, inter alia, from that angle, held that the court could

still exercise discretion.

The court of appeal held:

“Use of an injunction by PPL to obtain money to

obtain money to which they are not entitled would be

an abuse, but there is no evidence that that ever

occurs. Where unauthorized use of PPL’s copyright

is taking place, we do not believe it is an abuse to

refuse to licence that copyright without an appropriate

payment for past use and an agreement for future use.

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Nor do we consider it an abuse for PPL to require

compliance with an injunction either by the person

refraining from using the repertoire or by payment for

such use that has taken place and will take place.”

Apart from the fact that we are not dealing with a case where an

order of injunction is required to be issued; as indicated hereinbefore, the

question before the Board was as to whether there was an abuse in the

sense that unreasonable amount was being claimed by way of royalty.

CONCLUSION

As it was a case of abuse, the Board had the jurisdiction to

entertain any application for grant of compulsory licence. How far and

to what extent appellant has infringed the right of the respondent is a

matter which may be taken into consideration by the Board. A suit was

filed and injunction was granted. Apart from the fact that the appellant

offered to take a license held negotiations with the respondents in the suit

as soon as it came to know that Super Cassettes is not a member of PPL,

it gave an undertaking. Each case must be considered on its own facts.

However, we do not approve the manner in which the Board has

dealt with the matter. It has refused to examine the witnesses. It took up

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the matter on a day for hearing which was fixed for production of

witnesses. We, therefore, are of the opinion that the order of the Board

should be set aside and the matter be remitted to the Board again for the

consideration of the matter afresh on merit.

These appeals are allowed with the aforementioned directions. In

the facts and circumstances of the case, the parties shall pay and bear

their own costs.

……………….…..………….J.

[S.B. Sinha]

..………………..…………

…J.

[Lokeshwar Singh Panta]

New Delhi;

May 16, 2008

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