Treating advance as loan.

The plaintiff in O.S. No. 86 of 1955 on the file of the Court of the Subordinate Judge of Madurai sued to recover a sum of Rs.15,869-11-0 from the four defendants in the suit.

The plaintiff is the registered firm of partnership styled as Sri Lakshmi Talkies, owning a cinema theatre at Madurai. The first defendant started on a venture of producing a talkie film called “Nam Kulandhai” at a studio in Madras with an ambitious programme of engaging star artists to act in the film. The first defendant could not find the entire capital necessary for producing the film and had therefore to enter into several contracts with exhibitors and distributors of the film after its production as a means for raising funds. He was also obliged to find a financier to aid him in this venture and the second defendant in the suit was the financier. The plaintiff entered into an agreement for exhibiting the film at its theatre at Madurai with the first defendant on certain terms and conditions, which will be referred to in detail hereinafter. As per such agreement the plaintiff advanced large sums of money to the first defendant. The third defendant in the suit was the agent of the first defendant undertaking distribution rights of the film within certain territorial limits. The fourth defendant was impleaded on the allegation that the third defendant obtained the distribution rights on behalf of the fourth defendant.

After this net work of agreements between the parties, the film, “Nam Kulandhai” was produced and released for exhibition at Madurai in the theatre of the plaintiff on 4th June, 1955. Prior to its release at Madurai it was released at Madras on 27th May, 1955. The hopes and expectations of the producer, the exhibitors and the distributors were belied and the picture was not given an enthusiastic reception by the cinema fans. The plaintiff screened the picture at its theatre for four weeks and found to its dismay that any further run of the picture in its theatre will cause it great financial loss. The net collections made by the plaintiff during the period of its run at its theatre came to Rs.12,485-5-0 out of which the share payable to the producer as per the terms of the exhibition agreement came to Rs.7,297-12-9. The plaintiff had advanced a sum of Rs.23,000 in all to defendants 1 and 2. The plaintiff did not-hand over the producer's share of Rs.7,297-12-9 to the first or the second defendant and adjusted it towards the amount due to him. The plaintiff handed over the film to the third defendant on and July, 1955 and the third defendant thereafter screened the picture at another talkie house at Madurai called Palani Talkies. According to the plaintiff its screening agreement with the first defendant was put an end to with the consent of the first defendant and the third defendant on 2nd July, 1955 and that the first defendant promised to re-pay the balance due to the plaintiff, after adjustment of the producer's share of the net collections of the film earned at the plaintiff's theatre. The plaintiff therefore claimed the sum of Rs.15,702-3-3 arrived at by deducting from the advance amount of Rs.23,000 the producer's share of Rs.7,297-12-9 from defendants 1 and 2 personally and from all the defendants jointly and severally out of the producer's share of the collections made and to be made by them in the screening of the film. The sum of Rs.23,000 paid by the plaintiff included a sum of Rs.3,000 paid into the hands of the third defendant for the re-payment of which however defendants 1 and 2 denied any liability. The plaintiff therefore prayed in the alternative that in any event defendants 3 and 4 must make good this sum of Rs.3,000 personally.

All the defendants resisted the suit and contended that the plaintiff was not entitled to any relief. The first defendant pleaded that under the terms of the exhibition agreement with the plaintiff, the advance made by the plaintiff could only be recouped by him by running the picture and