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2016 Supreme(Bom) 1127
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
R.D. DHANUKA, J.
The Indian Performing Right Society Ltd. - Petitioner
Versus
Entertainment Network (India) Ltd. - Respondent
ARBITRATION PETITION NO.341 OF 2012 ALONG WITH ARBITRATION PETITION NO.1017 OF 2012
Decided On : 31-08-2016
Advocate Appeared:
Mr.Ravi Kadam, Senior Advocate a/w Mr.Rohan Kadam i/by Mr.Sandeep V. Marne for the petitioner in Arbitration Petition No.341 of 2012 and for the respondent in Arbitration Petition No.1017 of 2012.
Mr.Pradeep Sancheti a/w Mr.Ashish Kamat a/w Ms.Smriti Jha a/w Mr.Subhradeep Banerjee i/by M/s.Mulla & Mulla & Craigie Blunt & Caroe for the respondent in Arbitration Petition No.341 of 2012 and for the petitioner in Arbitration Petition No.1017 of 2012
Headnote:
Whether the dispute between the parties was arbitrable or not and whether the award is liable to be set aside under Section 34(2)(b)(i).
Fact of the Case:
The claimant, a radio station operator, had obtained several licenses from the respondent, a copyright society, to broadcast musical and literary works from its FM radio stations. The claimant made a claim before the learned arbitrator for refund of royalty paid to the respondent, alleging that the respondent had no copyright in relation to pre-recorded sound recordings and had no right to collect any license fee or royalty in respect thereof. The respondent filed a counterclaim, seeking additional royalty payable for broadcast of musical and literary works beyond the city limits. The learned arbitrator held that the claimant was not required to obtain a license from the respondent for broadcasting the sound recordings, as the respondent had no copyright in the sound recordings. The respondent challenged the award, arguing that the dispute was not arbitrable and that the learned arbitrator had no jurisdiction to adjudicate upon the issue of copyright.
Finding of the Court:
The Court held that the dispute between the parties was not arbitrable, as it related to the title and infringement of copyright, which are actions in rem. The Court further held that the learned arbitrator had no jurisdiction to adjudicate upon the issue of copyright, as it was an action in rem and could only be decided by a Court of law. The Court set aside the impugned award in so far as it held that the claimant was not liable to obtain a license from the respondent for broadcasting the sound recording and was not liable to pay any royalty to the respondent.
Issues: 1. Whether the dispute between the parties was arbitrable or not. 2. Whether the award is liable to be set aside under Section 34(2)(b)(i).
Ratio Decidendi: 1. The Court held that the dispute between the parties was not arbitrable, as it related to the title and infringement of copyright, which are actions in rem. The Court relied on the judgment of the Supreme Court in Booz Allen and Hamilton Inc. v. SBI Home Finance Ltd. & Ors., which held that copyright action is an action in rem and is not capable of settlement through arbitration. 2. The Court further held that the learned arbitrator had no jurisdiction to adjudicate upon the issue of copyright, as it was an action in rem and could only be decided by a Court of law. The Court relied on the judgment of the Supreme Court in Vikas Sales Corporation and Anr. v. Commissioner of Commercial Taxes and Anr., which held that patents, copyrights and other rights in rem are included within the meaning of movable property.
Final Decision: The Court set aside the impugned award in so far as it held that the claimant was not liable to obtain a license from the respondent for broadcasting the sound recording and was not liable to pay any royalty to the respondent.
By these two petitions filed under Section 34 of the Arbitration and Conciliation Act, 1996 (for short “the said Act”), both the petitioners have impugned part of the arbitral award dated 6th December 2011. By consent of the parties, both the arbitration petitions were heard together and are being disposed of by a common judgment. Some of the relevant facts for the purpose of deciding these arbitration petitions are under:-
2. The petitioner in Arbitration Petition No.341 of 2012 was the original respondent in the arbitral proceedings whereas the petitioner in Arbitration Petition No.1017 of 2012 was the original claimant. For the sake of convenience, the parties to the aforesaid proceedings are described as they were described in the arbitral proceedings in the later part of this judgment as “the claimant” or “the original respondent” as the case may be.
3. The claimant is engaged in the business inter alia of operating private FM Radio Stations in various cities in pursuance of the license granted in its favour by the Government of India from time to time. The original respondent is a Copyright Society registered under Section 33 of the Copyright Act, 1957 and is a non-profit making body established on 23rd August 1969 to monitor, protect and enforce the rights, interests and privileges of its members comprising of Authors, Composers, Film Producers and Publishers/Music Companies. After the amendment to the Copyright Act, 1957 effected by the Amendment Act of 1994, the claimant-Society was registered as a Copyright Society under Section 33(3) of the Amended Act. On 27th March 1996, the Registrar of Copyrights (Government of India) granted Certificate of Registration to the original respondent authorising it to carry out copyright business in Literary and Musical works. The original respondent has 2500 members comprising of Authors, Composers, Film Producers and Publishers/Music Companies and owners of literary and musical works to the claimant.
4. It is the case of the original respondent that the Members of the original respondent had Copyrights in respect of more than 95% of the Indian works. The original respondent has International Reciprocal agreements with several International Copyright Societies of various countries like U.K., U.S., Malaysia, Australia, Germany, Singapore etc. It is the case of the original respondent that by virtue of such reciprocal agreement, the original respondent is authorised to control and administer the performing rights in respect of International/Foreign Musical and Literary works within India.
5. On or about 18th October 2000, the Government of India granted license to the claimant on non-exclusive basis for a period of 10 years to establish, maintain and operate FM Radio Stations within the municipal limits of 7 cities viz. Mumbai, Chennai, Kolkata, Delhi, Indore, Pune and Ahmedabad.
6. By the license agreement dated 3rd July 2001, the original respondent granted non-exclusive license to the claimant to communicate to the public/publicly perform the works from the repertoire of the original respondent from the said 7 FM Radio Stations. Under clause 6.5 of the license agreement, the claimant agreed to announce the names of Composers and Authors/Writers of each work at least once after the broadcast of such work or wherever possible. The term of the license granted by the original respondent to the claimant was for 10 years from the date of commencement of FM Radio Stations. The license was granted only for the territories of each of the 7 cities.
7. It is the case of the original respondent that pursuant to the said license agreement dated 3rd July 2001, the claimant publicly performed/communicated to the public Musical and Literary works from the repertoire of the original respondent on the said 7 Radio Stations by making advance payments of license fees before expiry of every 6 months period in regard to the terms of the License Agreement.
8. On 8th November 2004, the claimant addres
