JUDGMENT

A. C. GUPTA, J. :— The first appellant, Performing Right Society Limited. (hereinafter called the Society) is a company incorporated under the (English) Companies Acts, 1908 and 1913, having its registered office at Copyright House, 33, Margaret Street, Cavendish Square, London - a company limited by guarantee and having no share capital. The Society is an association of composers, authors and publishers of copyright musical works established to grant permission for the performing right in such works. Performing right means the right of performing in public, broadcasting and causing to be transmitted to subscribers to a diffusion service, in all parts of the world. The members of the Society are required to assign to the Society the performing right in their works, and the Society exercises and enforces on their behalf all rights and remedies in respect of any exploitation of such works. The Society collects royalties for the issue of licences granting such permission and distributes the royalties to the members of the Society, namely, the composers, authors, music publishers and other persons having an interest in the copyright in proportion to the extent to which a members work is publicly performed or broadcast after a pro-rate deduction of the expenses. Article 43 of the Articles of Association of the Society provides that the business and operations of the Society shall be conducted and managed by a General Council, and Article 48 authorises the General Council to apply the receipts also for certain other purposes. Article 48 reads as follows :

"48. The General Council may, before making any distribution among the Members :

(a) Apply out of the receipts such sums as it thinks proper or has agreed to contribute as :-

(i) Gratuities, donations, pensions and emoluments to any Member or ex-Member of the Society or any person at any time in the employment of the Society, or engaged in any business acquired by the Society, and the wives, widows, families and dependants of any such person;

(ii) Contributions to any benevolent, pension or similar fund which may be established for the benefit of Members, ex-Members or employees of the Society or their wives, widows, families or dependants.

(b) Set aside out of the receipts such sums as it thinks proper as subscriptions, donations, loans, gifts or other payments for any of the purposes for which power is given by paragraphs (iii) and (iv) of Clause 3 (f) of the Memorandum of Association, provided that without the assent of the Society in General Meeting the aggregate of all such payments shall not in any one year exceed the sum of one thousand pounds and four thousand pounds under the provisions of those paragraphs respectively,

(c) Set aside out of the receipts such sums as it thinks proper as a reserve fund to meet contingencies, or for future distribution, or for repairing, improving and maintaining any of the property or premises of the Society, and for such other purposes as the General Council shall in its absolute discretion think necessary or conducive to the interests of the Society, and may invest for the several sums so set aside in such investments as it may think fit, and from time to time deal with or vary, such investments and dispose of all or any part thereof for the benefit of the Society, and may divide the reserve fund into such special funds as it thinks fit, and employ the reserve fund or any part thereof for the general purposes of the Society, and that without being bound to keep the same separate from the other assets."

2. On December 13, 1953 the Society entered into an agreement with the President of India owning and controlling broadcasting stations in India and organizing and conducting the same under the name of All India Radio (hereinafter referred to as the licensee) whereby the Society granted to the licensee the authority, (a) to broadcast from the licensees sound broadcasting stations in India all musical works included in the repertoire of the