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M/s. Madras Enterprises, Rep. by its Proprietor, S. Nanthagopal, Chennai v/s M/s. F.M. Finance & Investments, Rep., by its Partner, Praveen Kumar, Chennai & Another

    A. Nos. 2290 & 2291 of 2021 in C.S. No. 37 of 2020
    Decided On, 06 October 2021
    At, High Court of Judicature at Madras
    For the Applicant: S. Subbiah, Senior Counsel, G. Sumitra, Advocates. For the Respondents: PL. Narayanan, R. Vigneshkumar, Advocates.

Judgment Text
(Prayer in A.No.2290 of 2021 : Judge's Summons filed under Order XIV Rule 8 read within Order XXIII Rule 3 read with Section 151 of C.P.C.

(a). This application should not be treated as urgent?

(b). This Hon'ble Court should not pleased to set aside the compromise decree and the judgment dated 31.01.2020 made in C.S.(Commercial Division) No.37 of 2020, on the file of this Hon'ble Court and to restore the same to file and decide the same on merits and,

(c). Why this Hon'ble Court should not be pleased to pass such further or other orders as this Hon'ble Court deems fit and thus render justice.

A.No.2291 of 2021: Judge's Summons filed under Order XIV Rule 8 read with Section 151 of C.P.C.

(a). This application should not be treated the application as urgent?

(b). This Hon'ble Court should not pleased to stay all further proceedings pursuant to the judgment and compromise decree dated 31.01.2020 made in C.S.(Commercial Division)No.37 of 2020, pending disposal of the above Application and,

c). Why this Hon'ble Court should not be pleased to pass such further or other orders as this Hon'ble Court deems fit and thus render justice.)

1. Application No.2290 of 2021 is filed by the defendant/applicant in the suit C.S(Commerical Division) No.37 of 2020, to set aside the compromise decree passed by this Court on 31.01.2020. The subject suit was filed by the respondent herein, seeking declaration that he is the absolute Copyright Owner of the film “Naadodigal-2” for entire Tamil Nadu and Pondicherry, for a period of 5 years, from the date of release and for a permanent injunction not to issue the Key Delivery Message (KDM), to any one, except the respondent herein, who is the plaintiff in the suit C.S.(Comm.Div).No.37 of 2020.

2. The case of the plaintiff as found in the plaint is that, towards the assignment of distribution right of the film “Naadodigal-2” for a period of 5 years, the respondents as the producer of the film agreed to assign the right for a consideration of Rs.5,25,00,000/- as per schedule found in the agreement dated 16.05.2018. Totally a sum of Rs.3,50,00,000/- was paid during the production period. The balance sum of Rs.1,75,00,000/- has to be paid as final settlement at the time of release of the filim. However, contrary to the agreement, the applicant herein assigned the distribution right for the suit film to M/s.Linda Big Pictures in violation of agreement dated 16.05.2018. Hence, the suit.

3. This Court, on considering the facts, passed an exparte order of injunction holding that, the balance of convenience is stands in favour of the plaintiff and injunction was granted subject to the condition that, the plaintiff shall deposit a sum of Rs.1,75,00,000/- (i.e., the balance consideration agreed) in the credit of C.S.No.37 of 2020 within a period of two weeks, from 30.01.2020. On coming to know about the interim order, the applicant herein, on the very next day (i.e., 31.01.2020), approached the Court and filed petition for vacating the order of injunction. In the said application, it was submitted by applicant that, he has borrowed only a sum of Rs.1.50,00,000/- towards the movie “Naadodigal – 2” from the plaintiff and not a sum of Rs.3,50,00,000/-.

4. However, after making the above submission, the applicant herein had agreed to compromise the suit by transferring a sum of Rs.2,00,00,000/- in favour of the respondent/plaintiff by 6.00pm on that evening through RTGS or in any other mode and also pay balance sum of Rs.1,50,00,000/- within a period of 2 weeks, from 31.01.2020. He also agreed to file an affidavit of undertaking on 03.02.2020 to the said effect. With the said observation, the suit itself was disposed of and compromise decree was passed on 31.01.2020.

5. As per the direction of this Court, S.Nanthagopal also filed an affidavit of undertaking on 03.02.2020. Despite an undertaking, he did not paid the balance of Rs.1,50,00,000/- within a period of two weeks. A separate proceedings has been initiated for the breach of promise and in the said proceedings, it appears that, a sum of Rs.25,00,000/- already been deposited by the applicant.

6. Now in the present application, Mr.S.Nanthagopal has come out with the prayer that, the above said compromise decree was obtained under forged and coercion. The principle laid in Chengalvarayan case will squarely apply. The fraud vitiates entire proceedings.

7. In the affidavit filed in support of the petition to set aside the compromise decree dated 31.01.2020, Mr.S.Nanthagopal has pleaded that, he borrowed only Rs.1,00,00,000/- on 16.05.2018 and Rs.50,00,000/- on 21.05.2018 totally a sum of Rs.1,50,00,000/- from Mr.Praveen Kumar, Partner of M/s.F.M.Finance & Investments, for the production expenses of the movie “Naadodigal-2” starred by Mr.Sasi Kumar and executed the agreement on 16.05.2018 and letter to Gemini Lab. Whereas, Rs.2,00,00,000/- loan was borrowed from the father of Mr.Praveen Kumar towards the production of the M/s.United Film “Production No.10” starred by Mr.Vijaysethupathi. Both loan has been clubbed in this suit and by false representation as if, the plaintiff had lend Rs.3,50,00,000/- and same was due. Suit filed and exparte injunction obtained by fraud and misrepresentation. But, to avoid further loss under coercion agreed to pay Rs.2,00,00,000/- on 31.01.2020 by 6.00p.m and balance Rs.1,50,00,000/- within a period of two weeks thereon. The said consent was not free and voluntary, but under duress.

8. In support of his argument, the Learned Senior Counsel Mr.S.Subbiah for the applicant placed reliance on the following judgements.

(i). Gurpreeth Singh -vs- Chatur Bhuj Goel reported in (1988) 1 SCC 270.

(ii). Banwari Lal -vs- Chando Devi (Smt) (Through LRS) and another reported in (1993) 1 SCC 581.

(iii). S.P.Chengalvaraya Naidu (Dead) by LRS -vs- Jagannath (Dead) by LRS and others reported in (1994) 1 SCC 1.

(iv). Jineshwardas (D) by LRS and Others -vs- Jagrani (Smt) and another reported in 2003 (11) SCC 372.

(v). Panchanan Dhara and Others -vs- Monmatha Nath Maity (Dead) Through LRS and another reported in (2006) 5 SCC 340.

(vi). R.Rajanna -vs- S.R.Venkataswamy and others reported in (2014) 15 SCC 471.

(vii). Santosh -vs- Jagat Ram and another reported in (2010) 3 SCC 251.

(viii). State of Orissa and another -vs- Bibhisan Kanhar reported in (2017) 8 SCC 608.

9. Per contra, the Learned Counsel Mr.PL.Narayanan, appearing for the respondent/plaintiff submitted that, the defendant/applicant totally borrowed Rs.3,50,00,000/- from the plaintiff Mr.Praveen Kumar and his father Mr.Ramesh Kumar Jain. They are running finance business in the name of M/s.F.M. Finance and Investment and M/s.United F.M Foundation respectively and both are partnership firms run by the plaintiff's family members. The suit was filed for declaration of copyright ownership to distribute and exploit the movie “Naadodigal-2”. The defendant, who suffered interim injunction, volunteered to return the money received towards the assignment of copyright and paid Rs.2,00,00,000/- on 31.01.2020 to get the movie release in theatre and promised to pay the balance of Rs.1,50,00,000/- within a period of two weeks. The respondent herein (plaintiff in the suit) to buy peace agreed for the settlement and thus the compromise decree was passed recording the terms.

10. The defendant, on 03.02.2020, filed an affidavit of undertaking re-affirming the terms of compromise and promised to pay the balance within a period of two weeks. The defendant breached the said promise failed to pay the balance within a period of two weeks but had come with the present petition with imaginary reasons contrary to his own undertaking. Even now, the plaintiff as well, his father are ready to give full quit and satisfaction receipt if the applicant pay the balance amount as agreed in the compromise decree.

11. The following judgments are relied by the Learned Counsel for the respondents to emphasis that under Order XXIII Rule 3 of C.P.C. The Counsel on behalf of parties are not entitled to enter into a compromise without memo signed by the parties.

(i). Byram Pestonji Gariwala -vs- Union Bank of India and others reported in (1992) 1 SCC 31.

(ii). State Bank of Patiala and others -vs- S.K.Sharma reported in (1996) 3 SCC 364.

(iii). D.P.Chadha -vs- Triyugi Narain Mishra and others reported in (2001) 2 SCC 221.

(iv). Archies Greeting & Gifts Limited -vs- Garg Plastic reported in MANU/DE/0430/2003.

(v). Jineshwardas (D) by LRs and others -vs- Jagrani (Smt) and another reported in (2003) 11 SCC 372.

(vi). Pushpa Devi Bhagat (Dead) Through LR. Sadhna Rai (Smt) -vs- Rajinder Singh and others reported in (2006) 5 SCC 566.

12. The grounds raised by the applicant to set aside the compromise decree are as below:-

(i). The compromise memo signed by the parties to the suit is mandatory. The absence of joint memo duly signed will vitiate the compromise decree.

(ii). The Vakalat filed in Original Side of High Court does not authorise the Advocate to enter compromise on behalf of the parties.

(iii). The compromise decree should record satisfaction. In the instant case, satisfaction not recorded hence decree is liable to be set aside.

(iv). The suit for declaration of copyright is not maintainable since the agreement dated 16.05.2018 does not satisfy the definition of copyright.

(v). The suit for infringement of copyright to have been filed before District Court under Section 62 of Copyright's Act. The present suit filed before the High Court is not maintainable.

13. At the outset, this Court is forced to record that this application taken by the applicant/defendant to retract his promise, after enjoying the fruits of the compromise decree is abuse of law. The applicant agree that, he owe Rs.1,50,00,000/- to Mr.Praveen Kumar and Rs.2,00,00,000/- to Mr.Ramesh Kumar Jain, the father of Mr.Praveen Kumar. In the interim order dated 30.01.2020, the Learned Judge has recorded the said plea and thereafter, had proceed to pass the judgment in terms of the compromise arrived by the parties. After passing conditional order on 30.01.2020, the matter was taken up for hearing on the very next day (i.e., 31.01.2020), at the instance of the applicant/defendant. The applicant/defendant had voluntarily come forward to pay part of the amount on the same day and got the injunction order vacated. Thereafter, on 03.02.2020, he had also filed the affidavit of undertaking. When the affidavit of undertaking signed and filed on 03.02.2020, the applicant was free out of any threat, fear or coercion. While so, the affidavit is sufficient compliance of the requirement of filing signed memo.

14. The affidavit of Mr.Nanthagopal sworn on 03.02.2020 and filed on the same day, reads as below:-

“2.I respectfully submit that the 1st respondent/plaintiff has filed the above application against the us seeking relief of Interim stay in releasing the movie and obtained an order of Interim Injunction dated 30.01.2020 in O.A.No.66/2020 in C.S.No.37/2020. I further submit that aggrieved against the said order of Injunction we have filed an application to vacate stay in Application No.454/2020; wherein in the said application as per the direction of this Hon'ble Court in Application No.454/2020, we have paid a sum of Rs.2,00,00,000/- (Rupees Two Crores only) to the respondent/applicant/plaintiff M/s.F.M. Finance and Investments on 31.01.2020 and the Respondent/Plaintiff on receipt of the said amount also issued no objection for release of the film “Naadodigal-2”

3.I further submit that as per the direction of this Hon'ble Court, I hereby undertake to repay the balance amount a sum of Rs.1,50,00,000/- (Rupees One Crore and Fifty Lakhs only) within a per

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iod of two weeks on 14.02.2020 and the respondent/plaintiff has also acceded for the same. Hence, this affidavit.” 15. The applicant had approached the Court urgently to vacate the injunction order and had admitted the borrowing of Rs.3,50,00,000/- from the plaintiff and his father. Knowingly and voluntarily he had entered into compromise and availed the benefit of vacating the injunction. Thereafter, he is estopped from challenging the compromise decree, as void on a hyper technical ground. This petition is filed nearly two months after the compromise decree which means after fully exploiting the movie commercially for more than 50 days. Hence fraud, if at all any, it should be attributed only to the applicant and not to the any one else. 16. It is unfortunate that present Counsel has fallen prey to the dubious design of the applicant and had carried the brief though knowing well that the belated retraction of the sworn undertaking that too after enjoying the fruits of the compromise decree is abuse of law. 17. Therefore, while dismissing the applications, exemplary costs of Rs.1,00,000/- (One Lakh rupees) is imposed, payable to the Legal Service Authority, High Court, Madras on or before 10.11.2021. 18. In the result, the Application Nos.2290 & 2291 of 2021 are dismissed. With costs.