* IN THE HIGH COURT OF DELHI AT NEW DELHI I.A. No....

CS(OS) No.2119/2013 of 57

* IN THE HIGH COURT OF DELHI AT NEW DELHI % Judgment pronounced on: 9th February, 2016

+ I.A. No. 20535/2015 & I.A. No.17621/2013 in CS(OS) 2119/2013

MUSIC BROADCAST PVT. LTD. ..... Plaintiff Through Mr.Sandeep Sethi, Sr.Adv. with

Ms.Meghna Mishra, Adv. with Mr.Akhil Sachar, Mr. Dheeraj P. Dev, Mr. Manan Chadha and Ms.Manmeet Kaur, Adv.

versus AXIS BANK & ORS. ..... Defendants Through Mr. Abhishek Anand, Adv. for D-1

Mr. Amit Sibal, Sr. Adv. with Mr. Jagdish Sagar & Mr. Neeraj Kumar Gupta, Adv. for D-2.

CORAM: HON'BLE MR.JUSTICE MANMOHAN SINGH

MANMOHAN SINGH, J. 1. The plaintiff has filed a suit for declaration and permanent

injunction.

2. The plaintiff is, inter alia, engaged in the business of running,

operating and maintaining 20 FM Radio Broadcasting stations at the

following places in India i.e. Mumbai, Bangalore, Delhi, Lucknow,

Hyderabad, Chennai Ahmedabad, Pune, Nagpur, Jaipur, Surat,

Jalgaon, Ahmednagar, Sangli, Vishakhapatnam, Coimbatore, Akola,

CS(OS) No.2119/2013 of 57

Solapur, Vadodara and Nanded. The plaintiff is seeking a decree of

declaration that the Cancellation Notice dated 21st June, 2013 sent by

the defendant No. 2 which was as per the plaintiff received on 24th

June, 2013 (the first working day of receipt of the notice as the office

of the plaintiff company was closed on 22nd June, 2013 being a

Saturday) whereby defendant No. 2 had cancelled 20 Compulsory

Licenses for Radio Broadcasting all dated 3rd September, 2010

issued in favour of the plaintiff pursuant to the order dated 25th

August, 2010 of Copyright Board is null and void. The plaintiff also

seeks a decree of permanent injunction restraining the defendants

from in any manner acting upon the cancellation notice dated 21st

June, 2013 and for permanent injunction restraining the defendant

No.2 from invoking and encashing the bank guarantees issued by the

plaintiff in compliance with the order dated 25th August, 2010 passed

by the Copyright Board.

3. The defendant No. 1 Bank has been arrayed in the suit, as it

has furnished the bank guarantees on the request of the plaintiff in

favour of the defendant No. 2 i.e. Phonographic Performances

Limited (hereinafter referred to as "PPL" or the "defendant No. 2").

Defendant No.2 is a copyright society registered under Section 33 of

the Copyright Act, 1957 (hereinafter referred to as the ‘Act’) and is

engaged in carrying on the copyright business of its members in

sound recordings who administers the sound recordings of its

members and further claims to charge and collect license fees from

the said users of sound recordings.

CS(OS) No.2119/2013 of 57

4. It is alleged in the plaint that the impugned Cancellation Notice

interferes with due course of judicial proceedings pending in the High

Court of Madras and High Court of Judicature at Bombay and also

obstructs the administration of justice as the defendant No. 2 has no

power or locus under the Copyright Act, 1957 read with the Copyright

Rules, 2013 to cancel the compulsory licenses granted by the

Copyright Board.

5. The suit along with interim application was listed before the

Court on 18th November, 2013 when summon and notice were

issued. The interim order was also passed against the defendant

No.2 staying the operation of cancellation notice dated 21st June,

2013 while passing the detailed order.

6. The said order was challenged by the defendants in an appeal

being FAO (OS) 561/2013 before the Division Bench, wherein the

major issue of territorial jurisdiction of this Court was raised. The

Division Bench observed that as the question of territorial jurisdiction

is yet to be decided by the Single Judge, the Division Bench did not

make any comments thereon and directed the parties to await the

final decision on the subject by the Single Judge when the matter is

taken up.

7. Both the parties have made their submissions on merit as well

as on the question of territorial jurisdiction as the objection taken by

the defendants. They agree that if the issue of territorial jurisdiction

is decided against the plaintiff and in favour of defendant No.2, then

there is no need to go into the merit of the case.

CS(OS) No.2119/2013 of 57

8. It is necessary to refer the brief facts as mentioned in the

plaint; the same are stated as under:-

(a) In or about October, 1999, the Government of India opened FM

Radio Broadcasting, to private parties and issued tender

documents to interested parties under the Indian Telegraph Act,

1885. The objective of the privatization of the FM Radio

Broadcasting sector was to affect a rapid increase in the

broadcast network within the country.

(b) The defendant No. 2 came out with the alleged rates of royalty

payable by the FM radio broadcasters under the mandatory tariff

scheme which any copyright society had to publish, and had

fixed the rate of royalty at Rs. 2,400 per needle hour or 20% of

the net advertisement revenue, whichever was higher. Aggrieved

by this unilateral fixation of royalty, the plaintiff along with other

broadcasters filed three complaints under Section 31 (1) (b) of

the Copyright Act, 1957 before the Copyright Board in the year

2002 seeking compulsory licenses to play the music owned by

PPL and its members.

(c) The Copyright Board by its interim order dated 19th November,

2002 in the compulsory licensing applications moved by

different private FM broadcasters (including the plaintiff) against

defendant No. 2, to finally decide the final rate of

royalty/compensation payable to defendant No. 2, had fixed

interim rates of royalty at Rs.1,200/- per needle hour during

prime time i.e. from 8 a.m. to 10 a.m. and from 6 p.m. to 8 p.m

CS(OS) No.2119/2013 of 57

which were to remain in operation for a period of two years i.e.

2002 to 2004. A needle hour is internationally accepted as the

term denoting the actual time for which music is played during an

hour excluding the advertisements, promotional and the

presentation time taken by the radio jockey. The Copyright

Board also fixed the rate at 60% of this standard rate for the

normal 12 hours i.e. from 6 a.m. to 8 a.m., 10 a.m. to 6 p.m. and

8 p.m. to 10 p.m. and 25% of the standard rate for the eight lean

night hours i.e. from 10 p.m. to 6 a.m. as the royalty payable.

The average royalty rate worked out to Rs. 660/- per needle hour

which was to come into effect from the 1st November, 2002 and

to remain in operation till 31st October, 2004.

(d) The plaintiff along with other broadcasters, as well as defendant

No. 2 filed appeals and cross-appeals (in total nine appeals)

before the High Court of Bombay inter-alia assailing the order

dated 19th November, 2002 passed by the Copyright Board. The

Bombay High Court by a common judgment and order dated 13th

April, 2004 in First Appeal Nos. 279-294 of 2003, 421 of 2003

and 1573 of 2003 reported as Phonographic Performance Ltd.

v. Music Broadcast Pvt. Ltd., 2004 (29) PTC 282 (Bom) set

aside the order dated 19th November, 2002 and remitted the

matters back to the Copyright Board for reconsideration and for

fixation of license fees.

(e) Thereafter, Special Leave Petitions were filed by the plaintiff

and other broadcasters, before the Supreme Court, whereby

CS(OS) No.2119/2013 of 57

the Supreme Court vide its common judgment dated 16th May

2008 reported in Entertainment Network (India) Ltd. v. Super

Cassette Industries Ltd., reported in (2008) 13 SCC 30

allowed the appeal of another broadcaster i.e. Entertainment

Network (India) Ltd. and simultaneously dismissed the Special

Leave Petition of the defendant No. 2 thereby upholding the

decision of the Bombay High Court. The Supreme Court, while

concurring with the High Court of Bombay and also remanded

the said matter to the Copyright Board for fresh consideration

on merits.

(f) Pursuant to the order dated 16th May, 2008 passed by the

Supreme Court, six fresh applications/ complaints were filed in

the year 2008 before the Copyright Board under Section 31(1)(b)

of the Copyright Act, 1957 by various other broadcasters apart

from the three applications/complaints that were remanded by

the Supreme Court.

(g) Thereafter, the trial before the Copyright Board commenced in

July, 2008 and the examination of witnesses began on 28th July,

2009 and was followed up through subsequent sittings ending on

12th July, 2010.

(h) The common order dated 25th August, 2010 was passed by the

Copyright Board in the various remanded matters as well as

fresh filings done before the Copyright Board. The Copyright

Board, in exercise of powers conferred under Section 31 (1) of

the Copyright Act, 1957, directed the Registrar of Copyrights to

CS(OS) No.2119/2013 of 57

grant complainants i.e. the plaintiff separate licenses for

communicating the work recorded in sound recordings in the

repertoire, present and future, of the defendant No. 2 to the

public, by broadcast on revenue sharing basis subject to certain

terms and conditions as stated herein below:-

a. “2% of the net advertisement earnings of each FM radio

station accruing from the radio business only for that

radio station shall be set apart by each complaint for pro

rata distribution of compensation to all music providers

including the defendant No.2 herein in proportion to the

music provided by the respective music providers and

broadcast by the complainant. Complainant shall be

deemed to be a music provider for the music provided by

it or received by it free of cost and broadcast. For arriving

at “net advertisement earnings”, all Government and

musical taxes paid, if any, and commission paid towards

the procurement of such advertisements to the extent of

15% of such advertisement earnings shall be excluded;

b. Complainants shall furnish within a week of grant of

licence by the Registrar of Copyrights a bank guarantee

for Rs.10,000 in favour of the defendant for each radio

station. However, the sum of such bank guarantee shall

be revised within two weeks after the close of every

quarter of the year to such sum of which complainant was

liable for payment of compensation for that quarter.

CS(OS) No.2119/2013 of 57

Quarter of a year means a period of three months ending

on the last day of March, June, September and

December of the relevant year;

c. If the complainant fails to revise the bank guarantee in

terms of clause (b), defendant shall be at liberty to cancel

the license without giving any notice and recover the

remaining dues from the available bank guarantee;

d. Payment of compensation by the complainant to the

defendant for a month shall be made by 7th day of the

month following the month to which payment relates.

Complainant shall also furnish alongwith the payment the

date wise details of the periods for which the music

relating to the defendant and all other music providers

has been used for the month. However, payment for the

period beginning with the grant of licence and ending on

30th September, 2010 shall be used in lump sum by 7th

October, 2010;

e. For any delayed payment for a month beyond 7th of the

following month, interest at the rate of 1% per month or a

part of month or a part of month shall be payable;

f. In case payment is not made by the complainant for a

radio station for consecutive two months, defendant

herein shall be entitled to cancel the licence by giving

notice of one month and recover the remaining dues from

the bank guarantee;

CS(OS) No.2119/2013 of 57

g. A complainant may for one or more radio stations, by

giving notice of one month and after making payment of

all sums due, cancel the licence;

h. The validity of the licence granted by the Registrar of

Copyright shall come to end on 30th September, 2020.”

(i) Being aggrieved by the order dated 25th August, 2010 passed

by the Copyright Board, the defendant No. 2 had preferred an appeal

dated 28th October, 2010 under Section 72 of the Copyright Act, 1957

before the High Court of Judicature at Madras. The High Court of

Judicature at Madras vide its order dated 22nd December, 2010 in

CMA No. 3382/2010 dismissed the application for interim relief

seeking stay of the order dated 25th August, 2010. Thereafter the

defendant No.2 filed a Special Leave Petition (Civil) No. 5727-

5735/2011 before the Supreme Court inter alia assailing the order

dated 22nd December, 2010 passed by the High Court of Judicature

at Madras. The Supreme Court vide order dated 5th April, 2011

dismissed the Special Leave Petition.

(j) In pursuance of the order dated 25th August, 2010 passed in

Case No.1 of 2002 titled as 'Music Broadcast Private Limited v.

Phonographic Performance Limited' granted licenses to the plaintiff

for communicating the work recorded in sound recordings in the

repertoire, present and future of the defendant No. 2 to the public by

broadcast on revenue sharing basis subject to the terms and

conditions as adumbrated in the order dated 25th August, 2010.

These licenses were granted for all the 20 radio channels of the

CS(OS) No.2119/2013 of 57

plaintiff on 3rd September, 2010 and are valid up to 30th September

2020, i.e. for about 10 years.

9. The plaintiff accepted the Compulsory Licensing Order and

never exercised its right of appeal against it under Section 72(2) of

the Copyright Act. The said order, therefore, has attained finality qua

the plaintiff. The defendant No.2 was unable to obtain interim stay of

the said Compulsory Licensing Order in its pending appeal under

Section 72(2) of the Copyright Act before the Madras High Court and

on further appeal from the Supreme Court.

10. The defendant No. 2 filed a Writ Petition (Civil) No.8144 of

2011 titled as ‘PPL v. Union of India and others’ before this Court

wherein the plaintiff was arrayed as respondent No.3. The relief

sought in the said writ petition was the quashing of the Compulsory

Licenses dated 3rd September 2010 granted by the Registrar,

Copyright Board. This Court by order dated 18th January, 2011

refused to grant any interim order in favour of defendant No. 2 who

by order dated 4th January, 2012 directed both the parties i.e. MBPL

and PPL to comply with the directions issued by the Division Bench in

L.P.A No. 1037/2011. It is submitted by the plaintiff that said order

dated 4th January, 2012 passed by the Single Judge of this Court was

being complied.

11. The defendant No. 2 also filed a Contempt Petition in the month

of March, 2012 being Cont. Case No. 203/2012 in Writ Petition Civil

No. 8144/2011 titled as ‘Phonographic Performance Limited v. Union

of India and Others’ inter alia alleging non-compliance of the order

CS(OS) No.2119/2013 of 57

dated 4th January 2012 passed by this Court which mandated the

compliance of the order dated 25th August, 2010 passed by the

Copyright Board. The Contempt Petition was subsequently dismissed

as not pressed by the defendant No.2 and order therein was passed

on 19th February, 2013. The writ petition was dismissed. The LPA

filed against the judgment has also been dismissed as informed by

the parties.

12. The plaintiff in response to the letters dated 13th January, 2011

and 19th January, 2011 addressed a letter dated 24th January, 2011

to the defendant No. 2 wherein the plaintiff stated that it was

complying and would continue to comply with the final order dated

25th August, 2010 passed by the Copyright Board and the terms of

the Compulsory Licenses granted in pursuance thereto on 3 rd

September, 2010. The compulsory licenses were valid and

subsisting till date. The tariffs in terms of the License Agreements

were broadly based on orders passed by Courts/Copyright Board

and were subject to adjustments as per the final order which would

be passed by appropriate Courts/Tribunal in due course. Therefore,

the defendant No.2 says that 'unilateral adjustment' is not correct.

The plaintiff reiterated that an amount of Rs.3,80,00,000/- which

was deposited as security deposit in terms of the License

Agreement was liable to be refunded and requested the defendant

No. 2 to inspect the logs at a mutually convenient time and pointed

out that it had been making the logs available throughout the

CS(OS) No.2119/2013 of 57

decade of its relationship with the defendant No. 2 by letter dated

14th February, 2011.

In order to adjust the excess amount in terms of Clause 6, 7

and 8 of the Voluntary License Agreements, the plaintiff in view of

order dated 25th August 2010 passed by the Copyright Board, filed a

suit being Suit No. 565/2011, in the month of February, 2011 before

the High Court of Judicature at Bombay titled as ‘Music Broadcast

Private Limited v. Phonographic Performance Limited’ inter-alia

praying that the defendant No. 2 be restrained from terminating the

Compulsory Licenses dated 3rd September, 2010 unless the excess

amounts paid by the plaintiff has been adjusted and exhausted fully.

The High Court of Judicature at Bombay by order dated 9th February

2011 had recorded that the defendant No. 2 would not terminate the

voluntary licence agreements entered with the plaintiff. The said

interim order remained operative till the filing of the present suit.

13. The defendant No. 2 sent a letter dated 17th June, 2013 in

response to the letters dated 7th March, 2013, 5th April, 2013, 7th May,

2013 and 7th June, 2013 sent by the plaintiff whereby the defendant

No. 2 averred that the plaintiff was not complying with the terms and

conditions as envisaged in the order dated 25th August, 2010 passed

by the Copyright Board. The adjustments made by the plaintiff were

unilateral and without any legal foundation. It was further alleged that

the plaintiff was in default of Para 30.27 (b) of the order dated 25th

August, 2010 passed by the Copyright Board. The defendant No. 2

CS(OS) No.2119/2013 of 57

had also alleged that the plaintiff had failed to keep the Bank

Guarantees alive and subsisting even for a brief period.

14. The plaintiff replied to the letters dated 17th June, 2013 vide

separate letters dated 28th June, 2013 specifically denying the

contents thereof. The plaintiff stated that that it has been regularly

revising the bank guarantee within two weeks of the close of every

quarter of the year which rendered the contention of non-compliance

of the order dated 25th August, 2010 passed by the Copyright Board

as nugatory and otiose. The plaintiff by its letter dated January, 2013

bearing Reference Number BG/12/Mumbai/010 forwarded an

extension of the Original Bank Guarantee issued by Axis Bank

bearing number 00040100005214 dated 12th January, 2011. This

extension of the Original Bank Guarantee remained valid till 31st

March, 2013. Thereafter, the plaintiff’s bankers namely Axis Bank by

their Registered Notice dated 3rd April, 2013 notified the defendant

No. 2 about the cancellation of the Original Bank Guarantee which

expired on 31st March, 2013. Pursuant to the letter dated 3rd April,

2013, Axis Bank on instructions from the plaintiff Company had

revised the Original Bank Guarantee bearing number

00040100005214 dated 12th January, 2011 with effect from 1st April,

2013 to 30th June, 2013. Therefore, the Bank Guarantee was

extended by the plaintiff’s bankers with effect from 1st April, 2013 and

not 6th April, 2013 as falsely contended. Thereafter, in due

compliance of the order dated 25th August, 2010 passed by the

Copyright Board; the plaintiff vide letter dated 12th April, 2013 bearing

Reference No. BG/12/Mumbai/011 (within two weeks of the close, of

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the quarter ending 31st March, 2013 i.e. before 15th April, 2013)

forwarded the extension of the Original Bank Guarantee.

15. On merit, it is alleged by the plaintiff that in compliance with the

order dated 25th August, 2010 and the compulsory licenses granted

by the Copyright Board the amount due from the plaintiff to the

defendant No. 2 had to be adjusted against the excess payment of

license fee. The computation of the same was also sent along with

letter dated 5th October, 2010. The defendant No. 2 had in fact,

without demur and protest had been accepting the said adjustments

till the letters dated January 13th January 2011 and 19th January 2011

were written whereby for the first time the defendant No.2 raised a

grievance about the said adjustments but the same was not

acceptable to the plaintiff. The plaintiff by various letters including 8th

September 2010, complied with the terms of the order of the

Copyright Board dated 25th August, 2010 including enclosing bank

guarantees of Rs.10,000/- for the respective radio stations

(aggregating to Rs. 2,00,000/-). But the defendant No. 2 initially

refused to accept the service of the said Bank Guarantees however

thereafter has accepted the same. It is alleged by the plaintiff that

the defendant No. 2 in violation of the order dated 25th August, 2010

failed to return the said bank guarantees after its expiry and it was

only returned pursuant to the order dated 9th February, 2011 passed

by the High Court of Judicature at Bombay in Civil Suit No. 565 of

2011. Prior to the date of said order, the defendant No. 2 sent a letter

dated 13th January, 2011 to the plaintiff wherein the defendant No. 2

invoked clause 10 of the License Agreements and called upon the

CS(OS) No.2119/2013 of 57

plaintiff to provide the defendant No. 2 an inspection of the copies of

the records of the sound recordings used by the plaintiff within 15

days from the date of receipt of the said notice and another letter

dated 19th January 2011, to the plaintiff stating that the plaintiff had

failed to pay any license fee for the period February, 2010 to

August, 2010 and the outstanding license fees was to the tune of

nearly Rs.2 crores, the adjustment of royalty could not be done

unilaterally any adjustment sought to be made by the plaintiff was

incorrect as it had preferred an appeal being CMA No. 3382/2010

assailing the order dated 25th August 2010 passed by the Copyright

Board before the High Court of Judicature at Madras.

Written statement (defence)

16. Written statement has been filed by the defendant No.2 who is

the main contesting party in the suit and has raised various

preliminary objections inter-alia stating that the present suit is an

abuse of process whereby the plaintiff, having failed to obtain any

relief on the same cause of action in the Court within whose

jurisdiction the entire purported cause of action arose, being the

Bombay High Court, which was also the Court of exclusive

jurisdiction by express agreement between the plaintiff and the

defendant No.2, has attempted to recycle the same cause of action

by clever verbal jugglery in order to obtain relief in this Court which

does not enjoy territorial jurisdiction in the matter.

17. The case of the defendant No.2 is that the present suit is an

abuse of process of the court as the plaintiff in its own suit

No.565/2011 which was pending in the Bombay High Court, the

CS(OS) No.2119/2013 of 57

plaintiff sought an injunction restraining the defendant No.2 from

terminating the voluntary licence agreements (VLAs) and the

compulsory licenses, but it could not obtain an order restraining

defendant No.2 from cancelling the compulsory licenses. The plaintiff

is now doing forum shopping, seeking to obtain orders from this Court

that the plaintiff could not obtain on the same cause of action in the

Bombay High Court.

18. It is stated that the plaintiff’s entire cause of action is its claim,

based on its own interpretation of the VLAs, of a purported right to

adjust alleged overpayments made by the plaintiff under the VLAs

against the Compulsory Licence compensation fixed by the Copyright

Board in the order dated 25th August, 2010. The main lis between the

parties comprises the plaintiff’s interpretation of Clause 8 of each of

the VLAs (a mixed question of fact and law) and the plaintiff’s

averments regarding the quantum of dues payable to defendant No.

2 under the VLAs. The dispute thus arises out of the VLAs. No fresh

cause of action has been shown to exist or to have arisen

independent of the VLA to enable the plaintiff to file this suit in Delhi.

The said dispute could have been easily denied by the Bombay High

Court. Therefore, the defendant No.2 has rightly challenged the

question of territorial jurisdiction as it is settled law that each and

every fact pleaded by a plaintiff does not give rise to a cause of

action; rather the facts constituting the cause of action are only those

having a nexus or relevance to the lis. Before exercising jurisdiction,

the Court must be satisfied that all relevant facts which have a

substantial nexus with the lis are located within its territorial

CS(OS) No.2119/2013 of 57

jurisdiction. The plaint must be read in a meaningful manner to find

out the intention behind the suit. A mere insertion of extraneous

matter in the present suit cannot change the substance of its cause of

action. The only lis in the matter relates to the alleged rights arising

out of VLA, and the same is subject to exclusive jurisdiction of Courts

in Mumbai.

19. It is alleged by the defendant No.2 that admittedly on 25th

August, 2010 the Copyright Board issued an order allowing the

complaint filed by the plaintiff in 2002 and directed the Registrar of

Copyrights to issue Compulsory Licenses to the plaintiff on the terms

set out in the order itself. On 3rd September, 2010 the Registrar of

Copyrights issued 20 compulsory licences on the same terms. The

relevant condition of licence for the purposes of the present suit is

clause (f) which reads: "In case payment is not made by the Licensee

for consecutive two months PPL herein shall be entitled to cancel the

licence by giving notice of one month and recover the remaining dues

from the bank guarantee".

20. It was alleged that it was obligatory on the part of the plaintiff to

comply with the terms of the compulsory licenses subject to which

they were allowed to broadcast the repertoire of sound recording

works administered by the defendant No.2. But the plaintiff admittedly

never made any payment of compulsory licence compensation but,

instead, raised a claim under the Voluntary Licence Agreements for

adjustment of alleged excess payments made under the said VLAs

against the compensation payable to the plaintiff under the terms of

compulsory licence.

CS(OS) No.2119/2013 of 57

21. It is also submitted that the plaintiff has dishonestly suppressed

the fact that the Cancellation notice took effect from 21st July, 2013.

The plaintiff had made the same false averment in para 5 of its

WP(C) No. 4533/2013 filed before this Court on 24th July, 2013 when

the matter came up for hearing. On the said date, as recorded by the

Court there was no time left for hearing, hence a temporary injunction

was granted until the next date of hearing. The plaintiff thus obtained

the said interim order whilst failing to disclose that the impugned

cancellation notice had already taken effect, in order to obtain an

order restoring the status quo ante rather than one merely

maintaining the status quo.

22. The reliance on the VLAs is misplaced since the plaintiff itself

had abandoned them from February, 2010 onwards by committing

willful breaches of their essential terms, in particular by ceasing to

pay any licence fee or submitting any logs of usage of the plaintiff's

repertoire. The plaintiff has admitted the same in its replication

however as an afterthought and in an attempt to cover up its

breaches had stated that: "The plaintiff herein out of sheer

inadvertence could not pay the royalty for a brief period of February

2010 to September, 2010." It is thus admitted that the plaintiff had

abandoned the VLAs long before the Compulsory Licensing Order.

The plaintiff's claim for an injunction based on the same agreements

which the plaintiff itself has not performed is unlawful and without

merit.

23. It is alleged by the defendant No.2 that the plaintiff deliberately

is misinterpreting Clause 8 of the VLAs inspite of its clear language.

CS(OS) No.2119/2013 of 57

(i) The VLAs were not ad hoc or transitional agreements that were

executed merely in relation to the expected orders of the

Copyright Board. Rather, the VLAs were free standing

negotiated agreements which merely took into consideration

contingencies that might possibly arise during the terms of the

different VLAs. The term of each VLA was only 12 months and

defendant No. 2 was entirely at liberty to renew them or not.

(ii) It is the Licensor who is authorized to adjust the license fee

payable under the VLA's and not the Licensee.

(iii) The plaintiff deducted IDS both from the payments made

originally under the VLAs and again from the payments shown

as compulsory licence compensation. This is an admission by

the plaintiff that the two were separately payable.

24. On merit, defendant No.2 has submitted that the plaintiff's claim

under VLAs not based on final order. The adjustment referred to in

para 3 of Clause 8 of the VLA's arises only on "the final orders are

passed in the pending proceedings". The clause does not refer to the

orders to be passed by the Copyright Board but to the "final Orders".

The Copyright Board's orders are appealable under Section 72 of the

Copyright Act. An appeal is pending before the Madras High Court.

Either party if aggrieved by the appellate order would have a further

remedy before the Supreme Court under Article 136 of the

Constitution. There can be no question of the parties making any

adjustment under para 3 of Clause 8 of the VLAs. The plaintiff was

bound to make payments to defendant No. 2 as required by the

Compulsory Licensing order dated 25th August, 2010. As the plaintiff

CS(OS) No.2119/2013 of 57

failed to do so, it has to face the consequences envisaged in clause

(f) of the said order.

25. Defendant No.2 submits that the plaintiff’s claim of the

purported adjustments under the VLAs is admittedly pending in the

Bombay High Court in Suit No.565/2011. The Bombay High Court

has admittedly not granted any interim relief qua the termination of

the Compulsory Licenses/adjustments.

26. As per defendant No.2 the outstanding as on 31st July, 2014 on

account of compulsory licence compensation due from the plaintiff is

Rs.9,71,89,343/- which includes the interest on outstanding from the

plaintiff. The ad-interim order has also prevented defendant No.2

from encashing the Bank Guarantees which are unconditional which

otherwise it is entitled to do. The amount secured under the Bank

Guarantee is Rs.41,97,987/-. Even if the Bank Guarantees are

allowed to be encashed the loss caused to defendant No.2 could only

be offset marginally.

The licenses granted by the Central Government to the plaintiff

for operating FM radio stations is only ten years and all

licenses/permissions are due to expire in 2016. It will be impossible

for defendant No.2 to recover the outstanding amount from the

plaintiff thereafter if the plaintiff closes down its only business.

27. The Voluntary License Agreements discloses that "In case the

rates are reduced by the final order then the Licensor shall adjust the

difference from further usages by the Licensee." Further, in terms of

Clause 8 of the Voluntary License Agreement the only 'pending

proceeding' at the time of entering the Voluntary License Agreement

CS(OS) No.2119/2013 of 57

were the proceedings before the Copyright Board. The issue of

adjustments being done by the plaintiff is already pending before the

High Court of Judicature at Bombay in Civil Suit No. 565/2011 titled

as ‘Music Broadcast Private Limited v. Phonographic Performance

Limited’.

28. Thus, the balance of convenience entirely favours defendant

No. 2. There can be no balance of convenience in favour of a party

which has not come to Court with clean hands. The plaintiff is in

material breach of the essential terms of the VLAs which they base

upon their purported claim and the same are in infringement of

copyright as well as of the essential terms of the Compulsory

Licenses. Secondly, the retroactive nature of the interim injunction in

force deprives defendant No. 2 of its legitimate remedies for

infringement by the plaintiff after cancellation of the compulsory

licenses. Further, continuance of the interim order affects defendant

No. 2's business rather than the plaintiffs. And finally any interim

order in favour of the plaintiff in the present suit pre-judges defendant

No. 2's pending WP(C) No. 8144 of 2011 wherein, if defendant No. 2

succeeds, die plaintiff will be entitled only to five compulsory licences,

yet will have obtained additional benefit of fifteen such licences to

which it is not entitled.

29. With regard to the other submission that the plaintiff failed to

submit every month for each of its stations, complete and necessary

declarations regarding its net advertising earnings and pro-rata

distribution, the plaintiff has denied the same. It is alleged that the

plaintiff is not obliged under the said order dated 25th August, 2010

CS(OS) No.2119/2013 of 57

Compulsory Licenses dated 3rd September, 2010 to submit, every

month for each of its stations, complete and necessary declarations

regarding the net advertising earnings and pro-rata distribution.

Further, the defendant No.2 in the impugned notice has for the first

time raised the said issue as a ground for cancellation of the

Compulsory Licenses. The defendant No.2 has since September,

2010 admittedly never raised the issue of lack of complete and

necessary declarations regarding net advertising earnings and pro-

rata distribution as a ground for Cancellation of Compulsory

Licenses.

30. It is submitted by the plaintiff that the defendant No.2 in the

impugned notice has raised the alleged issue of submission of log

reports as a ground for cancellation of the compulsory licenses. The

defendant No.2 has since September, 2010 admittedly never raised

the issue of lack of submission of monthly usage log reports as a

ground for Cancellation of Compulsory Licenses. It is specifically

denied that the plaintiff has failed and neglected to submit monthly

usage log reports. It is submitted that the plaintiff vide their letters

dated 24th January, 2011 and 14th February, 2011 addressed to the

defendant No.2 indicated that the logs were available at its office and

the same may be inspected by a prior written notice. In fact, the same

were enclosed vide letter dated 14th February, 2011 by way of

abundant caution for its records as it chose not to inspect the same

by visiting the office.

31. In the reply to the other allegation that the plaintiff has not

reported its net advertisement revenue for the month of January,

CS(OS) No.2119/2013 of 57

2012 for its FM Radio Station located in the city of Ahmedabad, the

plaintiff has denied the same. The plaintiff has also referred its letter

dated 6th February 2012, whereby it has forwarded its net

advertisement revenue for the month of January 2012 for its FM radio

station located in the city of Ahmedabad. It is submitted by the

plaintiff that the alleged grievance is only an afterthought and has

been raised more than one year after the alleged default. The alleged

grievance of the defendant No.2 was communicated to the plaintiff

only by way of the Cancellation Notice dated 21st June, 2013. The

defendant No.2 had never in any of its prior correspondence sought

to terminate the Compulsory Licenses on the basis of the said

grievance.

32. The other contention of the defendant No.2 is that the plaintiff

has been making defaults in providing Bank Guarantees as per

clause (b) of the compulsory license read with para 30.27(b) of the

Copyright Board’s order. However, it is submitted that it has been

regularly revising the Bank Guarantee within two weeks of the close

of every quarter of the year which renders the contention of non-

compliance of Para 30.27 (b) of the order dated 25th August, 2010,

passed by the Copyright Board as erroneous. The plaintiff vide its

letter dated 11th January, 2013 bearing Reference Number

BG/12/Mumbai/010, forwarded an extension of the Original Bank

Guarantee issued by defendant No.1 bearing number

00040100005214 dated 12th January,2011. This extension of the

Original Bank Guarantee remained valid till 31st March, 2013.

Thereafter, the plaintiff's bankers namely defendant No.1 by their

CS(OS) No.2119/2013 of 57

Registered Notice dated 3rd April, 2013 notified the defendant No.2

about the cancellation of the Original Bank Guarantee which expired

on 31st Match, 2013. Pursuant to the letter dated 3rd April, 2013

defendant No.1 on instructions from the plaintiff have revised the

Original Bank Guarantee bearing number 00040100005214 dated

12th January, 2011 with effect from 1st April, 2013 to 30th June,2013.

Therefore, the Bank Guarantee was extended by the plaintiff's

bankers with effect from 1st April, 2013 and not 6th April, 2013 as

falsely contended. Thereafter, in due compliance of the order dated

25th August, 2010 passed by the Copyright Board, the plaintiff has

vide letter dated 12th April, 2013 bearing Reference No.

BG/12/Mumbai/011 within two weeks of the close of the quarter

ending 3rd March, 2013 (i.e. before 15th April, 2013) forwarded the

extension of the Original Bank Guarantee. The said Bank Guarantees

have been regularly revised/extended by the plaintiff till date in terms

of the Compulsory License(s).

33. In rejoinder arguments, it is also submitted that the impugned

cancellation notice is a ploy to circumvent the order dated 25th

August, 2010 by the Copyright Board which has been upheld by

various courts including the Supreme Court, as the defendant No.2

had assailed the said order before various Courts. Firstly the

defendant No. 2 had preferred an appeal dated 28th October, 2010

under Section 72 of the Copyright Act, 1957 before the High Court of

Judicature at Madras. The said Court by its order dated 22nd

December, 2010 in CMA No. 3382/2010 dismissed the application for

interim relief, seeking stay of the order dated 25th August 2010. The

CS(OS) No.2119/2013 of 57

above said order dated 22nd December, 2010 was challenged before

Supreme Court in Special Leave Petition (Civil) No. 5727-5735/2011

which was also dismissed by order dated 5th April, 2011.

34. As the defendant No.2 has failed to get the orders of stay of

operation of the order dated 25th August, 2010 passed by the

Copyright Board, the defendant No. 2 by instituting a Writ Petition

(Civil) No.8144 of 2011 titled as ‘PPL v. Union of India and others’

before this Court wherein the plaintiff was also arrayed as respondent

No.3, sought quashing of the Compulsory Licenses dated 3rd

September, 2010 granted by the Registrar of the Copyright Board.

This Court vide order dated 18th November, 2011 refused to grant any

interim order in favour of defendant No. 2. The Division Bench of this

Court vide order dated 4th January 2012 directed both the parties i.e.

plaintiff and defendant No.2 to comply with the directions issued by

the Division Bench in LP.A No.1037/2011. It is submitted that the

plaintiff continues to comply with the order dated 4th January, 2012

passed by the Single Judge of this Court.

This Court vide order dated 9th January, 2015 dismissed the

W.P. (C) No. 8144 of 2011.The defendant No. 2 thereafter in a ploy

to circumvent the order dated 25th August, 2010 passed by the

Copyright Board filed a Contempt Petition in the month of March,

2012 being Cont. Cas No. 203/2012 in the above said writ petition

Civil No. 8144/2011 ,inter alia, alleging non-compliance of the order

dated 4th January 2012 passed by this Court which mandated the

compliance of the order dated 25th August 2010 passed by the

CS(OS) No.2119/2013 of 57

Copyright Board. The petition was subsequently dismissed as not

pressed, by this Court by its order dated 19th February, 2013.

35. The plaintiff admits that it had earlier filed a Writ Petition being

W.P. (Civil) No. 4533 of 2013 inter-alia seeking a writ of certiorari for

quashing the impugned notice dated 21st June, 2013. The plaintiff

herein vide order dated 29th October, 2013 withdrew the Writ Petition

with the liberty to agitate its grievance before a Civil Court.

36. It is also pointed out by the plaintiff that the defendant No.2 by

relying upon the Cancellation Notice dated 21st June, 2013 filed a suit

for infringement being Suit (Stamp) No. 626 of 2013 against the

plaintiff filed a suit for infringement. Till date, the defendant No.2 has

not been granted any relief in the said suit.

It is also stated that the plaintiff has received the Cancellation

Notice dated 21st June, 2013 on 24th June, 2013. In fact, the plaintiff

received this notice on 22nd June, 2013 as averred in the written

statement of defendant No. 2 and proved by the Speed Post and

courier delivery reports filed by defendant No. 2 at pp. 54 and 55 of

its documents. In its replication the plaintiff has not denied and hence

admitted the said delivery on 22nd June, 2013.

37. In view of rival submissions made by the parties and various

documents referred by the parties, let me first deal with the issue of

territorial jurisdiction. It is settled law that once the Court holds that it

has no jurisdiction in the matter, it should not consider the merits of

the matter. Reliance is placed on Jagraj Singh v. Birpal Kaur,

(2007) 2 SCC 564 (para 27). Thus, as agreed by the parties also let

me first deal with the issue of territorial jurisdiction.

CS(OS) No.2119/2013 of 57

38. On the issue of territorial jurisdiction arising from the location of

a subordinate office, Mr. Amit Sibal, learned Senior counsel

appearing on behalf of the defendant No.2 has referred the judgment

of Patel Roadways Ltd. v Prasad Trading Co. AIR 1992 SC 1514

(paras 9-12) in which it has been explained the true import of Section

20(a) and the explanation to Section 20 CPC. The Supreme Court

interpreted the explanation to Section 20 as an Explanation to

Section 20(a), and the law is settled that a suit can be filed at a place

where the branch/subordinate office of the defendant is located only if

a part of cause of action has arisen at that place and not otherwise.

This Court relied upon Patel Roadways (supra) in Anant Raj

Industries Ltd v. Balmer Lawrie Co. Ltd., (2003)103 DLT 169,

(para 10) and held as under:

“10………..When this decision is applied to the facts of the present case, it will appear that it may have been proper for the Plaintiff to file a suit in Calcutta where the principal office of the Defendant is located. It could also have been filed in Delhi where a subordinate office is located, provided the cause of action of which the Plaintiff is aggrieved, has had arisen in Delhi. In am of the view that despite the fact that the contract might have been entered into at Delhi and money is paid in Delhi, the cause of action on which the suit is predicated was unrelated to the agreement………………. On an application of the ratio of Patel Roadways, there is no scope for Delhi Court to exercise jurisdiction.” Please also see Kensoft Infotech Ltd. vs. Mr. R.S. Krishnaswami & Ors., ILR (2007) I Delhi 308 at para 61-62, pp 339-340.”

39. It is submitted by the defendant No.2 that the contents of

present plaint are similar as that of the plaint in Suit No. 565 of 2011

CS(OS) No.2119/2013 of 57

filed by the plaintiff in the Bombay High Court and the cause of action

is also similar viz. the plaintiff’s claim under the Voluntary Licence

Agreements. Thus, this Court has no jurisdiction to entertain the

present suit. The plaint is liable to be returned to the plaintiff for

presentation before the proper Court under Order 7 Rule 10 CPC.

It is argued by Mr. Amit Sibal, learned Senior Counsel that each

and every fact pleaded by the plaintiff does not give rise to a cause of

action creating territorial jurisdiction, rather the intention of the suit as

a whole has to be considered, trivial aspects of the stated cause of

action with no nexus to the lis between parties do not confer territorial

jurisdiction. The facts constituting the “cause of action” are only those

having a substantial nexus or relevance to the lis. Before exercising

jurisdiction, the Court must be satisfied that all such facts arise within

its territorial jurisdiction. The cause of action consists of bundle of

facts which give cause to enforce the legal injury for redress in a

court of law. In other words, it is those facts, which if taken with the

law applicable to them, gives the plaintiff a right to claim against the

defendant. The facts pleaded must be material, integral or essential

to the lis between the parties which must be determined on a

meaningful reading of the plaint.

40. Mr. Sibal has argued that the plaintiff has erroneously relied

upon a suit filed by defendant No. 2 as plaintiff in this Court in

Phonographic Performance Limited v Spring Club, 2014(209)

DLT 584 to argue that defendant No. 2 itself avers that it has a

branch office in Delhi from which it carries out the business of

licensing of sound recordings. The said case is irrelevant for

CS(OS) No.2119/2013 of 57

determining whether “cause of action” has arisen within the territorial

jurisdiction of this Court in the facts of the present case. In

Phonographic Performance Limited (supra), defendant No. 2 had

filed a suit for infringement of its copyright in sound recordings and

averred that it has a branch office in Delhi from which it carries out

the business of licensing sound recordings to maintain a suit as a

plaintiff under Section 62(2) of the Copyright Act. Section 62(2) of the

Copyright Act reads as under:

“For the purpose of sub-section (1), a “district court having jurisdiction” shall, notwithstanding anything contained in the Code of Civil Procedure, 1908 (5 of 1908), or any other law for the time being in force, include a district court within the local limits of whose jurisdiction, at the time of the institution of the suit or other proceeding, the person instituting the suit or other proceeding or, where there are more than one such persons, any of them actually and voluntarily resides or carries on business or personally works for gain.” Under Section 62(2) of the Copyright Act, it is not a sine qua non,

for a copyright owner to maintain a suit for infringement, that the

cause of action should arise at the place of suing. The situation is

wholly different from Section 20(a) CPC read with the Explanation,

which mandates that the ‘cause of action’ must have arisen at the

place of a subordinate office of the defendant to create territorial

jurisdiction at such place. The fact that defendant No. 2 has an office

in Delhi and does licensing of sound recordings from such office does

not give rise to any cause of action as it is immaterial to the lis

between the parties in this suit, which relates to the entitlement of the

CS(OS) No.2119/2013 of 57

plaintiff to adjust the alleged excess payments made under

VLAs.

It is submitted that mere location of a branch office of PPL in

Delhi and the licensing of sound recordings from such office does not

clothe this Court with territorial jurisdiction as no “cause of action” has

arisen within the territorial jurisdiction of this Court.

41. It is relevant to mention here that after the order in the interim

application was reserved on 10th August, 2015 and before

pronouncement of the order, the plaintiff filed fresh application being

I.A. No.20535/2015 under Section 151 CPC for placing on record

certain further development and additional documents. The said

applications were listed before Court on 29th September, 2015. The

defendant No.2 sought time to file the reply. After filing the reply on

8th January, 2016, it was observed and agreed by the parties that the

averments made in the application are linked with the interim

injunction application thus the same be decided along with I.A.

No.1762/2013.

42. It was alleged in the application that on 14th September, 2015

pending motion being No.654/2015 was taken by the Bombay High

Court in C.S (O.S) 565/2011 and the same was disposed of after

recording the statement on behalf of the plaintiff that the plaintiff has

adjusted the amount permitted by the Copyright Board under the

compulsory licenses in respect of voluntary licenses and no further

amount remains to be adjusted. Counsel for defendant No.2 raised its

objection that the adjustment was impermissible and Court had

CS(OS) No.2119/2013 of 57

observed that the objections be kept open to the final hearing of the

suit, however the pending motion was disposed of.

43. It is evident from the said order that the issue of adjustment of

the amount is kept alive which is to be decided at the final stage. The

said amount is pertaining to voluntary licenses and the plaintiff has

exercised its power to adjust the amount suo-motto in view of the

clause 8 of the agreement.

44. Mr. Sibal has rightly argued that once the advantage has been

taken by the plaintiff in clause 8 of the agreement, the clause 33 of

the said agreement ipso facto would be attracted.

45. The plaintiff has invoked the territorial jurisdiction of this Court

to entertain the present suit on the grounds that the defendant No.2

carries on business within the territorial jurisdiction of this Court at

Delhi. The defendant No.2 in Writ Petition (Civil) No. 8144/2011 filed

by it before this Court inter-alia seeking cancellation of 15

Compulsory Licenses granted by the Registrar of Copyrights has

admitted in Writ Petition that the defendant No.2(petitioner therein) is

carrying on business from its office in Delhi. The defendant No.2 in

the said Writ Petition (Civil) No. 8144/2011 describing the jurisdiction

of this Court to entertain the Writ Petition stated that the plaintiff

(arrayed as respondent No.3 in the Writ Petition) is broadcasting the

sound recordings of the defendant No.2 (petitioner in the writ petition)

from one of its FM Radio Stations located at Delhi.

Writ petition (Civil) No.8144/2011 preferred by the defendant

No.2 (Petitioner therein) has been dismissed vide judgment dated 9th

January, 2015.

CS(OS) No.2119/2013 of 57

46. It is alleged by the plaintiff that the defendant No.2 has also

filed a Civil Suit being CS (OS) No. 2749/2011 before this Court titled

as ‘Phonographic Performance Limited v. HT. Media’, which also

pertains to the order dated 25th August, 2010 passed by the

Copyright Board wherein it has been stated that PPL is carrying its

business of compulsory licensing from Delhi. The reliance is also

placed on the order dated 18th November, 2013 passed by this Court

in the present suit wherein this Court rejected the contention of the

defendant No.2 qua the lack of territorial jurisdiction of this Court.

Paragraph 14 of the impugned order is reproduced herein below:-

“Admittedly, the defendant's subsidiary office is at Delhi, part of cause of action has arisen at Delhi as the Compulsory Licenses were issued at Delhi, the breach whereof is alleged by the defendant and the right to cancel conferred on the plaintiff arises from the Compulsory Licenses issued at Delhi. Thus, it cannot be said that this Court has no territorial jurisdiction to try the present suit. It is further the contention of the defendant that since the plaintiff is relying upon voluntary agreements, as per Clause 33 of the voluntary license agreement the parties agreed to submit to the jurisdiction of High Court of Judicature at Bombay exclusively and thus this Court does not have the territorial jurisdiction to entertain the suit. In the present suit, the cause of action does not arise because of voluntary license agreement between the parties but relates to the Cancellation Notice dated 21st June, 2013 issued by the defendant citing. breaches of the Compulsory Licenses dated 3rd September, 2010, Hence the terms of the Voluntary License Agreements between the parties will not govern the present suit."

47. The contention of the defendant No.2 is that the suit could have

only been filed in Bombay High Court and not in Delhi, if any fresh

CS(OS) No.2119/2013 of 57

cause of action has arisen. The filing of suit before this Court is an

abuse of process of Court.

48. Mr. Sibal, learned Senior counsel contends that the presence in

Delhi of one out of twenty of the plaintiff’s radio stations has no

substantial nexus or relevance to the lis. If the plaintiff could sue in

any one of twenty places at its choice without the cause of action

arising at the place where a radio station of the plaintiff is located.

The averments in the plaint in the context of territorial jurisdiction of

this Court are not integral, material and essential to the lis between

the parties.

49. In any case, even assuming arguendo as argued by Mr. Sibal

that part of cause of action has arisen both in Mumbai and Delhi, the

exclusive jurisdiction clause in the VLAs cannot be derogated from

and operates as a jurisdictional bar on this Court.

50. There are following admitted facts and circumstances which

may be relevant for the purpose of deciding the issue of territorial

jurisdiction as per the pleadings. The same are as under:-

a) All VLA’s are made and executed at Mumbai. Clause 33 of

each VLA is an exclusive jurisdiction clause of the Bombay

High Court. Therefore, any dispute arising out of the VLAs

has to be decided by the Bombay High Court. Such suit has

already been filed by the plaintiff (Suit No.565/2011) before

the Bombay High Court.

b) Both the plaintiff and defendant No. 2 have their registered

offices in Mumbai. The plaintiff’s various letters addressed to

the defendant No.2 containing their alleged claim of

CS(OS) No.2119/2013 of 57

adjustment were sent by the plaintiff from their Mumbai office

to the defendant No.2's Mumbai office.

c) Defendant No.1 (registered office is in Ahmedabad) issued

the relevant bank guarantees from its Mumbai office and

received instructions from defendant No. 2 invoking the same

in its Mumbai office.

d) Defendant No. 2' s cancellation notice dated 21st June, 2013

is addressed and issued from the Registered office of the

defendant No.2 in Mumbai and addressed to and received by

the plaintiff at its registered office situated in Mumbai.

e) All other relevant correspondence between the parties also

admittedly took place in Mumbai. In paragraph 11 of the

plaint the plaintiff states that its cause of action arose from a

series of acts of defendant No. 2 which took place only in

Mumbai.

51. The cause of action to file the present suit arose on 21st June,

2013 when the defendant No. 2 issued the Cancellation Notice

terminating the Compulsory Licenses dated 3rd September, 2010.

Admittedly, the said cancellation notice was issued and received in

Mumbai. The cause of action also arose on 22nd July, 2013 when the

defendant No. 2 sought to invoke the Bank Guarantees in question

by addressing a letter to the defendant No.1, admittedly this

happened in Mumbai.

As per the plaintiff, the cause of action arose on 23rd July, 2013

when the defendant No.2 filed the Suit (Stamp) No. 626 of 2013

CS(OS) No.2119/2013 of 57

[now numbered as Suit No. 796 of 2013] inter-alia on the alleged

plea of infringement by the plaintiff of the repertoire of the defendant

No. 2. The said suit was admittedly filed in the Bombay High Court.

Even in para 12 and 13 of Suit No.565/2011 filed by the plaintiff in

the Bombay High Court, the plaintiff has itself averred that the cause

of action regarding its claim of adjustment between the VLAs and the

apprehension that the Compulsory licenses will be terminated by the

defendant No.2 arose in Mumbai and accordingly claimed the

jurisdiction of the Bombay High Court.

52. The plaintiff claimed jurisdiction in Delhi on the basis that

defendant No. 2 has a branch office in Delhi, that the plaintiff has 1

out of 20 FM Radio Stations in Delhi, that the Copyright Board and

the Registrar of Copyrights have respectively passed the Compulsory

Licensing Order and issued the Compulsory Licenses from their

offices in Delhi after proceedings conducted in Delhi is without any

substance as none of these facts has any bearing on the plaintiff's

actual cause of action. As per settled law that each and every fact

pleaded by the plaintiff does not ipso facto give rise to a cause of

action creating territorial jurisdiction, rather the intention of the suit as

a whole has to be considered, trivial aspects of the cause of action do

not confer territorial jurisdiction.

The argument of the plaintiff is that the claim of territorial

jurisdiction in Delhi on the basis that the Copyright Board's order was

passed in Delhi is irrelevant, since the plaintiff has not disputed the

said order and in any case because the geographical location of a

CS(OS) No.2119/2013 of 57

tribunal is no basis for claiming territorial jurisdiction. Further, in

A.B.C Laminart Pvt. Ltd. v. A.P. Agencies, 1989 (2) SCC 163

Supreme Court held that in cases of repudiation of contract, the

jurisdiction will lie with Courts where the said repudiation was

received.

53. Even some part of the cause of action arose in Delhi, the most

essential and inseparable part of the plaintiff's cause of action

indisputably rests on the plaintiff's above claims made on the basis of

the VLAs. No event occurring in Delhi can derogate from the

exclusive jurisdiction clause in the VLAs. This Court cannot dispose

of the lis between the parties de hors the plaintiff's purported claim of

adjustment under the VLAs against compulsory license

compensation. Even assuming arguendo that this Court has territorial

jurisdiction on the basis of any other elements of the cause of action,

the jurisdiction of this Court remains barred by the exclusive

jurisdiction clause in the VLAs. Reliance is placed on the following:

Begum Sahiba Sultan v Nawab Mohd. Mansur Ali (2007) 4

SCC 343 (para 10).

M/s Hanil Era Textiles Ltd. v M/s Puromatic Filters (P) Ltd.

(2004) 4 SCC 671 (para 7).

54. The plaintiff has now averred that this Court has territorial

jurisdiction as the plaintiff is operating one of their FM Radio Stations

in Delhi. It is pertinent to note that the Compulsory Licenses or the

Copyright Board’s order is not under challenge in the present suit so

as to confer territorial jurisdiction to this Court. The plaintiff is claiming

compliance of the terms of the Compulsory Licenses by letter written

CS(OS) No.2119/2013 of 57

from its registered office in Mumbai to the defendant No.2 who also

has its registered office in Mumbai. The plaintiff is submitting the

usage reports (although incomplete and unsubstantiated) for all its 20

FM Radio stations from the registered office in Mumbai to the

defendant No.2‘s registered office in Mumbai.

The plaintiff has addressed all its correspondence after the

Copyright Board’s order dated 25th August, 2010 referred to and

relied upon in the present suit from their registered office in Mumbai.

The plaintiffs have addressed all their letters claiming purported

adjustments from their registered office in Mumbai to the defendant's

registered office in Mumbai.

55. The Supreme Court in Union of India v. Adani Exports Ltd.,

(2002) 1 SCC 567 held as under:

"17…….. It is clear from the above judgment that each and every fact pleaded by the respondents in their application does not ipso facto lead to the conclusion that those facts give rise to a cause of action within the courts territorial jurisdiction unless those facts pleaded are such which have a nexus or relevance with the lis that is involved in the case. Facts which have no bearing with the lis or the dispute involved in the case, do not give rise to a cause of action so as to confer territorial jurisdiction on the court concerned….” (Emphasis supplied)

56. Another decision of the Supreme Court in Alchemist Ltd &

Anr. v State Bank of Sikkim & Ors. (2007) 11 SCC 335, has been

relied upon by the defendant No.2, in which after discussing a

catena of judgments, it was held as under:

“25.The learned counsel for the respondents referred to several decisions of this Court and submitted that whether a particular

CS(OS) No.2119/2013 of 57

fact constitutes a cause of action or not must be decided on the basis of the facts and circumstances of each case. In our judgment, the test is whether a particular fact(s) is (are) of substance and can be said to be material, integral or essential part of the lis between the parties. If it is, it forms a part of cause of action. If it is not, it does not form a part of cause of action. It is also well settled that in determining the question, the substance of the matter and not the form thereof has to be considered.”

57. Reliance is also placed on the following judgments in this

regard. South East Asia Shipping Co. Ltd. v. Nav Bharat

Enterprises Pvt Ltd & Ors., (1996) 3 SCC 443, (para 3); Kensoft

Infotech Ltd. v. R.S. Krishnaswami & Ors. ILR (2007) I Delhi 308,

(para 61); Rattan Singh Associates (P) Ltd. v. M/s Gill Power

Generation Company Pvt. Ltd., ILR (2007) I Delhi 275 (paras 12,

18, 21, 22 and 31); Sector twenty-one Owners Welfare

Association v Air Force Naval Housing Board & Ors., (1997) 65

DLT 81 (DB) (para 13.)

58. Admittedly, correspondences were exchanged between the

parties in regard to the above from Mumbai i.e. from their offices. As

a matter of fact the plaintiff itself has based its suit filed before the

Bombay High Court on its repudiation of the defendant No.2 by letter

dated 19th January, 2011 refusing to accept the purported

adjustments sought to be made by the plaintiff.

59. The plaintiff admittedly instituted Suit No. 565 of 2011 in the

Bombay High Court, seeking enforcement of its claim under the VLAs

abandoned by them for adjustment of alleged excess payment

thereunder against the compensation payable to the defendant No.2

CS(OS) No.2119/2013 of 57

for compulsory licence, and seeking permanent and interim

injunctions restraining the defendant No.2 from cancelling the

compulsory licences for non payment of compensation. Prayers (b)

and (e) in the said suit are reproduced below:-

"(b) That this Hon'ble Court be pleased to declare that the Defendant

is bound to adjust and the plaintiff is not liable to pay any usage

amount under the License Agreements and the Compulsory

License Agreements dated 3rd September, 2010 until such time

as the excess amount computed in terms of prayer (a) above to

the extent of Rs.8,83,06,248/- or such sum that may remain after

adjustment of amounts against future usage has been adjusted

and exhausted fully...

(e) That the Court be pleased to pass a permanent order and

injunction restraining the Defendant, its officers, servants.

directors, employees, authorized representatives and agents or

any one from in any manner terminating or taking any coercive

steps under the License Agreements and the Compulsory

License Agreements dated 3rd September 2010 as long as (i) the

excess amount is lying with the defendants and (ii) the monthly

payments are made by the plaintiff in consonance with the order

dated 25th August 2010 passed by the Copyright Board;

60. It is evident that the plaintiff’s claim for enforcement of its

interpretation of the VLAs and the same plaintiff’s claim to be

complying with the terms of the compulsory licences, are not merely

indissolubly interlinked but in fact are one and the same plea as well

as one and the same cause of action.

CS(OS) No.2119/2013 of 57

61. In the plaint in Suit No. 565 of 2011 filed by the plaintiff before

the Bombay High Court set out the cause of action and the territorial

jurisdiction for the said suit. The plaintiff has averred that the cause of

action is the defendant No.2’s letter dated 19th January, 2011. Further

for territorial jurisdiction the plaintiffs have averred that all the VLA's

are executed at Mumbai and the plaintiffs and the defendant No.2

have their registered offices (principle places of business) in Mumbai.

The plaintiff carries on its business within the jurisdiction of the

Mumbai High Court and therefore under Section 62 of the Copyright

Act (which vests jurisdiction in case of suits under chapter XI of the

Copyright Act to the District Court having jurisdiction). Section 62 (2)

contains exclusive interpretation of the terms ‘District Court having

jurisdiction appearing in sub section (1) of Section 62’. It specifies the

district court within whose jurisdiction the person instituting the suit

actually and voluntarily reside or carry on business. The cause of

action to file the suit in Mumbai and a fresh cause of action is sought

to be made out by the plaintiff in the present suit. The subject matter

of the Bombay suit is the 20 VLA's and the 20 Compulsory Licenses.

The plaintiff has averred jurisdiction of Mumbai High Court (exclusive

under Section 62) with respect to all the compulsory licenses

pleading that it is carrying on business in Mumbai.

62. Thus, it appears to the Court very clearly that the lis between

the parties arises entirely out of the VLAs. Both in the Bombay suit

and in the present suit, the plaintiff is seeking to enforce its claims

under the VLAs with a consequential injunction against cancellation

(whether prospective or post facto) of its compulsory licences for non-

CS(OS) No.2119/2013 of 57

payment. These are not two lis, which might be adjudicated

separately but only one, and there is no cause of action de hors the

same.

63. No doubt after the Copyright Board’s order dated 25th August,

2010 (also referred to as “Compulsory Licensing Order”), claiming the

right to adjust under Clause 8 of the VLA’s, the plaintiff sent notices

to defendant No. 2 stating that it need not make payments under the

compulsory licenses until alleged excess payments made under the

VLAs are adjusted. Defendant No. 2 did not accept the said claim for

adjustment.

64. Accordingly, defendant No. 2, by exercising its right under

clause (f) of the compulsory licenses and Para 32.27(f) of

Compulsory Licensing Order sent a notice of cancellation for 20

compulsory licenses to the plaintiff, which was served on 22nd June,

2013, and took effect on 21st July, 2013. In the present suit (as in the

Bombay suit) the plaintiff assails defendant No. 2’s right to cancel the

licenses on the basis of its claim to adjust under VLAs.

65. The defendant No. 2 had issued the Cancellation Notice inter-

alia on various grounds such as alleged non-payment of

compensation by 7th day of each month on and from October, 2010

or any other date, for all the FM Radio Stations till date; alleged

failure to submit monthly usage log reports; defaults in providing

Bank Guarantees as per clause (b) of the Compulsory Licenses read

with Para 30.27 (b) of the Copyright Board’s order dated 25th August,

2010 etc. which are not the subject matter of the suit filed before the

High Court of Bombay. The suit filed before the High Court of

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Bombay seeks to restrain the defendant No. 2 from terminating the

Compulsory Licenses dated 3rd September, 2010 as long as the

excess amount is lying with the defendant No. 2 and the monthly

payments are made in consonance with the order dated 25th August,

2010 passed by the Copyright Board. However, in the Cancellation

Notice dated 21st June, 2013, the defendant No. 2 has sought to

terminate the Compulsory Licenses on various other false and

baseless grounds as detailed in the Cancellation Notice which

constitute a fresh cause of action.

66. It is also the admitted position that the plaintiff in Bombay suit

sought injunction restraining the defendant No.2 from terminating

VLA’s and compulsory licenses who could not get the injunction from

cancelling the compulsory licenses. When the present suit was filed

the suit in Bombay High Court was pending.

The case of the plaintiff is that the present suit arises out of a

fresh cause of action that has arisen on 21st June, 2013 when the

defendant No. 2 had issued the impugned Cancellation Notice dated

21st June, 2013 cancelling the Compulsory Licenses granted by the

Registrar, Copyright Board. The cause of action also arose on 22nd

July, 2013 when the defendant No. 2 sought to invoke the Bank

Guarantees by addressing letter to the defendant No.1.

67. Counsel for the plaintiff argued that all the said VLAs have

expired and therefore the exclusive jurisdiction clause cannot be

enforced. The plaintiff cannot claim rights arising from the contract de

hors the contract. If according to the plaintiff, Clause 33 cannot

survive on the expiry of the agreement, then neither can the other

CS(OS) No.2119/2013 of 57

clauses. In that case the plaint is without any basis or cause of

action, because the entire plea of right to adjust is based on Clause 8

of the VLAs. Moreover, this argument of learned counsel for the

plaintiff contradicts the plaint, which asserts rights based on Clause 8

of VLA in which case other clauses also survive, including Clause 33

which bars the jurisdiction of this Court. If the plaintiff argues that

there cannot be any reliance on the exclusive jurisdiction clause

contained in Clause 33 of VLAs since they have expired, the same

rationale will also be extended to the entire VLA, including Clause 8.

68. The contention of learned counsel for the plaintiff that the

exclusive jurisdiction clause is not enforceable after expiry of an

agreement is contrary to law and without any valid reason. The

judgment of National Textile Corpn Ltd v. Ashval Vaderaa,

2009(107) DRJ 637, relied upon by the plaintiff, does not support his

proposition, as it is inapplicable to the facts of the present case and

completely distinguishable. In National Textile Corpn. Ltd. (supra),

the rights of the petitioner neither flowed from the agreement dated

16th October, 1978 that had expired in 1980 (more than 25 years

earlier) nor related to that period. During those 25 years, the expired

agreement was succeeded by agreements whose terms kept on

changing from time to time. A new month to month tenancy was in

existence from 1st January, 2005 (with no arbitration clause) when the

landlord filed a suit for possession in 2006. Thereafter in 2006/2007,

the petitioner-tenant filed an application invoking the arbitration

clause of the expired/exhausted 1978 agreement with which the

controversy had no relation, and no rights from the earlier expired

CS(OS) No.2119/2013 of 57

agreement or for that period were in question. It is in this context that

this Court held that that a party cannot resort to an arbitration clause

in the exhausted/expired contract as the disputes were covered by a

new contract, which had no arbitration clause.

69. This issue is no longer res integra as this Court, on facts and

subject matter similar to the present suit, has held that an ouster

clause (exclusive jurisdiction clause) will continue to be applicable for

interpretation of the rights of the parties flowing from an agreement

even after its tenure has come to an end. Reliance is placed on

Nariman Films v. Dilip Mehta & Anr., 2005(31) PTC 571 (Del.),

(para 19-21).

70. Once the advantage has been taken by the plaintiff in clause 8

of the agreement and the similar relief has also been sought by the

plaintiff earlier in Bombay High Court then the clause 33 of the said

agreement ipso facto would be attracted. Both clauses 8 and 33 of

the agreement are reproduced herein below:-

“8. The Licensor hereby grants voluntary license for the existing and future works of Licensor’s members upon following terms and conditions :

As per the standard terms and conditions of the voluntary license, the licensee, before the commencement of the broadcast was required to pay an advance payment of Rs.30,00,000/- (Rs. Thirty Lacs only) per station as an interest free security deposit. However as the Licensee has commenced six stations and is obtaining voluntary License for Mumbai station, the Licensor as a special consideration agrees to Rs.20,00,000/- (Rupees Twenty Lacs only) as interest free security deposit. The deposit amount shall be paid back to the Licensee subject to deduction of dues if any,

CS(OS) No.2119/2013 of 57

in case the radio stations is closed or if the License is cancelled/terminated.

The Licensee before the commencement of the broadcast to make an adhoc advance payment of Rs.3,00,000/- (Rs. Three Lacs only). This amount shall be adjusted at the end of the month as per the following royalty rate :

o Rs.1200/- per needle hour during 8 a.m. to 10 a.m. & 6 p.m. to 8 p.m.

o Rs.300/- per needle hour during 10 p.m. to 6 a.m. and

o Rs.720 per needle hour during rest of the day.

The licensee do hereby agree to pay arrears, if any, from the date of commencement of broadcast to Licensor in accordance with the final orders that may be passed in the pending proceedings. In case the rates are reduced by the final order then the Licensor shall adjust the difference from further usage by the Licensee.

It is further agreed declared and confirmed that the rate of license fee payable by the Licensee to the Licensor under this agreement shall not be construed as a discount or rebate or concession granted by the Licensor to the Licensee and that the rate of Licensee fee shall be such as may be finally determined for Licensees operating at the city of operation by the Hon’ble Court and/or Tribunal. The Licence Fee is exclusive of any Sales Tax, Service Tax, Lease Tax and/or other such taxes as may be levied on the Licence Fee payable, by any government authority and regulations. All taxes, duties or other similar payments (including VAT) shall be borne by the Licensee.

33. This License shall be governed by and construed in accordance with the laws of India and the High Court of Judicature at Bombay shall have exclusives jurisdiction.”

71. The plaintiff has admitted that the amount has been adjusted in

view of the order passed by the Copyright Board under Clause 8 of

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the VLA’s. In view of admission, clause 33 of the same very VLA’s

would also get attracted wherein it has been stipulated that High

Court of judicature at Bombay shall have exclusive jurisdiction.

72. On a meaningful reading of the plaint, it is clear that the entire

lis between the parties is covered by Clause 33 of the VLAs. The

plaintiff claims that the cancellation of compulsory licence is invalid

because the plaintiff is entitled to adjust the amounts payable under

the compulsory license from the amount already paid under VLAs,

which is subject to the exclusive jurisdiction clause. An exclusive

jurisdictional clause cannot be allowed to be circumvented by clever

verbal jugglery and recycled cause of action (from C.S. No. 565 of

2011 in Bombay High Court) in order to obtain relief from this Court

that it could not get from the Bombay High Court. It is settled law that

even where courts in two places may have jurisdiction, an exclusive

jurisdiction clause in favour of one of the two places ousts the

jurisdiction of the other. Reliance is placed on Swastik Gases Pvt.

Ltd. v Indian Oil Corporation Ltd. (2013) 9 SCC 32, (paras 31-33);

ABC Laminart Pvt. Ltd. (supra) (paras 12, 15, 16 & 18); M/s Hanil

Era Textiles Ltd. (supra). Since this suit seeks adjudication on rights

of the plaintiff to adjust allegedly excess payments under VLAs,

Clause 33 of VLA operates as a jurisdictional bar on all other courts

other than the Bombay High Court, including this Court.

73. In view of the admitted facts referred above and as per clause

33, this Court has no jurisdiction to entertain the present suit as per

following judgments :

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(i) Balaji Coke Industry Private Limited v. Maa Bhagwati

Coke Gujarat Private Limited, (2009) 9 SCC 403, (paras

24 to 30), which read as under:-

“24. The only question which falls for our consideration is whether, notwithstanding the mutual agreement to make the high-seas sale agreement subject to Kolkata jurisdiction, it would be open to the respondent Company to contend that since a part of the cause of action purportedly arose within the jurisdiction of the Bhavnagar Court, the application filed under Section 9 of the Arbitration and Conciliation Act, 1996, before the Principal Civil Judge (Senior Division), Bhavnagar (Gujarat), would still be maintainable.

25. The aforesaid question has often troubled the courts with one view being that since the parties to the agreement had agreed to a particular forum, they could no longer resile from the said position and claim that other courts, where a part of the cause of action may have arisen, would also have jurisdiction to entertain a suit or other proceeding. The other view has been that, if by the said agreement the rightful jurisdiction of a court was sought to be ousted and a court was vested with the jurisdiction to entertain a suit, which it did not have, the same would be contrary to the provisions of Section 28 of the Contract Act, 1872, being contrary to public policy. One of the earlier judgments on this dichotomy of views is that of this Court in Hakam Singh [(1971) 1 SCC 286 : AIR 1971 SC 740]. 26. Faced with the question as to whether an agreement arrived at between two parties that one of the two courts having jurisdiction, would decide all the disputes relating to such agreement, was hit

CS(OS) No.2119/2013 of 57

by the provisions of Section 28 of the Contract Act, 1872, this Court in Hakam Singh case held that where two courts or more have the jurisdiction to try a suit or proceeding under the provisions of the Code of Civil Procedure, an agreement between the parties that one of such courts would have the jurisdiction to decide the disputes arising between the parties from such agreement would not be contrary to public policy and would not, therefore, be contrary to the provisions of Section 28 of the Contract Act, 1872. 27. The said question once again arose in A.B.C. Laminart (P) Ltd. [(1989) 2 SCC 163], wherein following the decision in Hakam Singh, but relying on the maxim ex dolo malo non oritur actio, this Court held that by an agreement which absolutely ousted the jurisdiction of a court having the jurisdiction to decide the matter, would be unlawful and void, being contrary to public policy under Section 28 of the Contract Act. But so long as the parties to a contract do not oust the jurisdiction of all the courts, which would otherwise have the jurisdiction to decide the cause of action under the law, it could not be said that the parties had by their contract ousted the jurisdiction of the court. 28. This Court in A.B.C. Laminart case went on to observe that where there may be two or more competent courts which can entertain a suit consequent upon a part of the cause of action having arisen therewithin, if the parties to the contract agree to vest jurisdiction in one such court to try the dispute which might arise between them, the agreement would be valid. 29. The question also arose in R.S.D.V. Finance Co. (P) Ltd. v. Shree Vallabh Glass Works

CS(OS) No.2119/2013 of 57

Ltd. [(1993) 2 SCC 130] , where an endorsement “subject to Anand (Gujarat) jurisdiction”, was relied upon to contend that only the courts in Anand would have the jurisdiction to entertain any dispute relating to such jurisdiction and the suit filed in Bombay on the ground that the cause of action arose in Bombay was not maintainable. In the said case, this Court held that since apart from the endorsement on the deposit receipt, there was no formal agreement between the parties, the said endorsement would not divest the courts in Bombay of their jurisdiction to entertain the suit. As will be evident from the facts of the suit, the same stood on a different footing and does not advance the case of the respondent in any way. 30. In the instant case, the parties had knowingly and voluntarily agreed that the contract arising out of the high-seas sale agreement would be subject to Kolkata jurisdiction and even if the courts in Gujarat also had the jurisdiction to entertain any action arising out of the agreement, it has to be held that the agreement to have the disputes decided in Kolkata by an arbitrator in Kolkata, West Bengal, was valid and the respondent Company had wrongly chosen to file its application under Section 9 of the Arbitration and Conciliation Act before the Bhavnagar Court (Gujarat) in violation of such agreement. The decisions of this Court in A.B.C. Laminart (P) Ltd. as also Hakam Singh are very clear on the point.”

(ii) Swastik Gases Private Limited (supra) paras 7, 28 & 57

which read as under:-

“7. We have heard Mr Uday Gupta, learned counsel for the appellant and Mr Sidharth Luthra, learned Additional Solicitor General for the

CS(OS) No.2119/2013 of 57

Company. The learned Additional Solicitor General and the learned counsel for the appellant have cited many decisions of this Court in support of their respective arguments. Before we refer to these decisions, it is apposite that we refer to the two clauses of the agreement which deal with arbitration and jurisdiction. Clause 17 of the agreement is an arbitration clause which reads as under:

17. Arbitration

If any dispute or difference(s) of any kind whatsoever shall arise between the parties hereto in connection with or arising out of this agreement, the parties hereto shall in good faith negotiate with a view to arriving at an amicable resolution and settlement. In the event no settlement is reached within a period of 30 days from the date of arising of the dispute(s)/difference(s), such dispute(s)/ difference(s) shall be referred to 2 (two) arbitrators, appointed one each by the parties and the arbitrators, so appointed shall be entitled to appoint a third arbitrator who shall act as a presiding arbitrator and the proceedings thereof shall be in accordance with the Arbitration and Conciliation Act, 1996 or any statutory modification or re-enactment thereof in force. The existence of any dispute(s)/ difference(s) or initiation/continuation of arbitration proceedings shall not permit the parties to postpone or delay the performance of or to abstain from performing their obligations pursuant to this agreement.

8. The jurisdiction Clause 18 in the agreement is as follows:

18. Jurisdiction

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The agreement shall be subject to jurisdiction of the courts at Kolkata.

9. The contention of the learned counsel for the appellant is that even though Clause 18 confers jurisdiction to entertain disputes inter se parties at Kolkata, it does not specifically bar jurisdiction of courts at Jaipur where also part of the cause of action has arisen. It is the submission of the learned counsel that except execution of the agreement, which was done at Kolkata, though it was signed at Jaipur, all other necessary bundle of facts forming “cause of action” have arisen at Jaipur. This is for the reason that:

(i) the regional office of the respondent Company is situate at Jaipur;

(ii) the agreement was signed at Jaipur;

(iii) the consignment agency functioned from Jaipur;

(iv) all stock of lubricants was delivered by the Company to the appellant at Jaipur;

(v) all sales transactions took place at Jaipur;

(vi) the godown, showroom and office of the appellant were all situated in Jaipur;

(vii) various meetings were held between the parties at Jaipur;

(viii) the Company agreed to lift the stock and make payment in lieu thereof at a meeting held at Jaipur, and

(ix) the disputes arose at Jaipur.

CS(OS) No.2119/2013 of 57

The learned counsel for the appellant would submit that since part of the cause of action has arisen within the jurisdiction of the courts at Jaipur and Clause 18 does not expressly oust the jurisdiction of other courts, the Rajasthan High Court had territorial jurisdiction to try and entertain the petition under Section 11 of the 1996 Act. He vehemently contended that Clause 18 of the agreement cannot be construed as an ouster clause because the words like “alone”, “only”, “exclusive” and “exclusive jurisdiction” have not been used in the clause.

29. When it comes to the question of territorial jurisdiction relating to the application under Section 11, besides the above legislative provisions, Section 20 of the Code is relevant. Section 20 of the Code states that subject to the limitations provided in Sections 15 to 19, every suit shall be instituted in a court within the local limits of whose jurisdiction:

(a) the defendant, or each of the defendants where there are more than one, at the time of commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or

(b) any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or

(c) the cause of action, wholly or in part arises.

30. The Explanation appended to Section 20 clarifies that a corporation shall be deemed to carry

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on business at its sole or principal office in India or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place.

31. In the instant case, the appellant does not dispute that part of cause of action has arisen in Kolkata. What appellant says is that part of cause of action has also arisen in Jaipur and, therefore, the Chief Justice of the Rajasthan High Court or the designate Judge has jurisdiction to consider the application made by the appellant for the appointment of an arbitrator under Section 11. Having regard to Section 11(12)(b) and Section 2(e) of the 1996 Act read with Section 20(c) of the Code, there remains no doubt that the Chief Justice or the designate Judge of the Rajasthan High Court has jurisdiction in the matter. The question is, whether parties by virtue of Clause 18 of the agreement have agreed to exclude the jurisdiction of the courts at Jaipur or, in other words, whether in view of Clause 18 of the agreement, the jurisdiction of the Chief Justice of the Rajasthan High Court has been excluded?

32. For answer to the above question, we have to see the effect of the jurisdiction clause in the agreement which provides that the agreement shall be subject to jurisdiction of the courts at Kolkata. It is a fact that whilst providing for jurisdiction clause in the agreement the words like “alone”, “only”, “exclusive” or “exclusive jurisdiction” have not been used but this, in our view, is not decisive and does not make any material difference. The intention of the parties by having Clause 18 in the agreement is clear and unambiguous that the courts at Kolkata shall have jurisdiction which means that the courts at Kolkata alone shall have jurisdiction. It is so because for construction of jurisdiction clause, like Clause 18 in the agreement, the maxim expressio

CS(OS) No.2119/2013 of 57

unius est exclusio alterius comes into play as there is nothing to indicate to the contrary. This legal maxim means that expression of one is the exclusion of another. By making a provision that the agreement is subject to the jurisdiction of the courts at Kolkata, the parties have impliedly excluded the jurisdiction of other courts. Where the contract specifies the jurisdiction of the courts at a particular place and such courts have jurisdiction to deal with the matter, we think that an inference may be drawn that parties intended to exclude all other courts. A clause like this is not hit by Section 23 of the Contract Act at all. Such clause is neither forbidden by law nor it is against the public policy. It does not offend Section 28 of the Contract Act in any manner.”

57. For the reasons mentioned above, I agree with my learned Brother that in the jurisdiction clause of an agreement, the absence of words like “alone”, “only”, “exclusive” or “exclusive jurisdiction” is neither decisive nor does it make any material difference in deciding the jurisdiction of a court. The very existence of a jurisdiction clause in an agreement makes the intention of the parties to an agreement quite clear and it is not advisable to read such a clause in the agreement like a statute. In the present case, only the courts in Kolkata had jurisdiction to entertain the disputes between the parties.”

(iii) Jyothi Turbopower Services Pvt. Ltd., Biswajit Nath, J

Nath v. Shenzhen Shandong Nuclear Power

Construction Company Ltd., Deputy Project Manager,

Liu Yan Zheng and Syndicate Bank, Branch Manager,

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(2011) 3 Arb. LR 442 (DB), paras 17, 18, 30 & 31, which

read as under:-

“17. Having regard to the contentions of the respective counsel, the points that arise for consideration in the present appeal are:

1) Whether the Court below has jurisdiction to entertain the present application filed by the appellant under Section 9 of the Act, for an interim measure, when the parties have designated the State of Orissa, as the place of arbitration?

2) Whether the Court below is justified in going into the merits of the matter and giving a finding that there is no prima facie case in favour the appellant, having held that it has no jurisdiction to entertain the present petition?

18. The learned counsel for the appellant submits that even a fraction of cause of action is enough and sufficient to decide the territorial jurisdiction of a Court for entertaining the petition under Section 9 of the Act. According to him, the registered office of the appellant company is situated at Hyderabad, the tender documents under Ex.A11 have been submitted from Hyderabad, agreement works are being monitored from Hyderabad and the bank guarantees have been drawn at the banks at Hyderabad, and thus cause of action having arisen within the jurisdiction of the Court below, in view of the provisions of Section 20 C.P.C., the Court below had the jurisdiction to entertain application under Section 9 of the Act. In support of this contention, he relied upon the decision of a Division Bench of this Court in INCOMM Tele Ltd. v. Bharat Sanchar Nigam Ltd (1 supra).

x x x x x

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30. Though the learned counsel for the appellant contended that decisions of this Court in Salarjung Museum case and Paramita Constructions case, cannot be made applicable to the facts of the case on hand because the former dealt with an application filed under Section 34 of the Act, for setting aside the award passed by the Arbitrator, and the latter dealt with an application filed under Section 11 of the Act for appointment of Arbitrator, and not an application under Section 9 of the Act, but the fact remains, in the said two decisions, the Courts, though not directly, but incidentally, while considering the provisions of the law, held that when the parties have chosen a particular State/City, as the place of arbitration, the “Court” appearing in Sections 9 and 34 shall be the Courts situated in the said State/City alone, and not any other.

31. In the case on hand, as noted supra, the parties have specifically, in Article 10 of the agreement, have agreed to the place of arbitration as the State of Orissa. That being so, we are of the considered opinion that the appellant cannot be permitted to invoke the theory of cause of action by application of the provisions of the Code of Civil Procedure, so as to confer jurisdiction upon the Court at Hyderabad, for entertaining application under Section 9 of the Act, and if such argument of the appellant is accepted, then the very purpose of the parties agreeing to the place of arbitration as State of Orissa in Article 10 of the agreement, would be defeated.”

74. In view of the above settled law, I am of the considered view

that this Court has no jurisdiction to entertain the present petition.

The plaint therefore is liable to be returned under Order 7 Rule 10

CPC for presentation before the appropriate Court i.e. High Court of

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Judicature at Bombay who is only competent to have the territorial

jurisdiction. In view of the peculiar facts of the present case wherein

the plaintiff has alleged that the termination letter has been issued

during the judicial proceedings pending in the High Court of Madras

coupled with the fact that the interim order to stay the termination

letter has been continued for the last more than 2 years, the interim

order passed on 18th November, 2013 will continue for further period

of four weeks. The Transferee Court would be at liberty to consider

the matter and pass the order whether to continue or not the interim

order as per the merit of the case. The Registry would return the

plaint along with all the pleadings of the parties and documents to the

plaintiff through counsel, against receipt as per procedure.

(MANMOHAN SINGH) JUDGE

FEBRUARY 9, 2016

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