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2022 Supreme(Mad) 760
IN THE HIGH COURT OF JUDICATURE AT MADRAS
G.K. ILANTHIRAIYAN, J.
Narayanan Ramasamy & Others - Petitioners
Versus
M/s. Sun TV Network Ltd., Rep. by its authorized signatory, M. Jyothibasu - Respondent
Crl. O.P. Nos. 23500 of 2019 & 553 of 2020 & Crl. M.P. Nos. 12336, 12338 of 2019 & 322, 323 of 2020
Decided On : 15-07-2022
For the Petitioners: S. Karthikei Balan.
For the Respondent: Jose John & M. Narendran, M/s. King and Partridge.
Civil liability cannot be converted into criminal liability, and criminal proceedings should not be used as a shortcut for resolving commercial disputes.
Headnote:
Criminal Breach of Trust - Film Distribution Agreement - Sections 406 & 420 of IPC - 8(5) of the Arbitration and Conciliation Act - [SUMMARY]
Fact of the Case:
The respondent, a film production house, entered into a film distribution agreement with the first accused for the movie 'Sarkar'. The first accused failed to pay the minimum guarantee amount and share net profits as per the agreement. Disputes arose, leading to joint compromise memos and a memorandum of compromise. The respondent filed criminal complaints under Sections 406 & 420 of IPC, alleging breach of trust and cheating.
Finding of the Court:
The court found that the criminal complaint was an abuse of process, as the disputes were commercial in nature and should have been resolved through arbitration. The court quashed the criminal proceedings, citing the absence of criminal offence ingredients and the conversion of a civil dispute into a criminal case.
Issues: Abuse of process, Conversion of civil dispute into criminal case, Criminal liability for commercial disputes
Ratio Decidendi: The court held that the criminal complaint was an abuse of process and that civil liability cannot be converted into criminal liability. It emphasized the need for caution in exercising criminal jurisdiction and the importance of examining the ingredients necessary to constitute a criminal offence.
Final Decision: The court quashed the criminal proceedings, stating that the disputes were civil in nature and should have been resolved through arbitration.
JUDGMENT :
(Common Prayer: Criminal Original Petitions filed under Section 482 of Cr.P.C., praying to call for records relating to C.C.No.2645 of 2019 on the file of the learned XXII Metropolitan Magistrate, Saidapet, Chennai and quash the same.)
1. These petitions have been filed to quash the proceedings in C.C.No.2645 of 2019 on the file of the learned XXII Metropolitan Magistrate, Saidapet, Chennai, thereby taken cognizance for the offences under Sections 406 & 420 of I.P.C., as against the petitioners.
2. The respondent filed private complaint as against the petitioners and others alleging that the respondent has involved in various business including production and distribution of movies. In the field of production, the respondent is a reputed production house and film studio involved in the business of production, acquisition, co-production, promotion, marketing and distribution of various cinematographic films and audio-visual content in various Indian languages, in multiple formats worldwide including but not limited to theatrical, television syndication, digital and internet connected platform. While being so, in the year 2018, the respondent produced a film called “Sarkar” and the first accused being a proprietorship who is in the business of film distribution, approached for acquiring license for distributing the said film in theatres. Accordingly, the respondent entered into a theatrical distribution agreement dated 26.10.2018 with the first accused for exhibiting the said film in prominent and reputed theatres.
3. As per Clause 3.1.1 of the said agreement, in consideration of licence to exploit, exhibit the said film in prominent and reputed theatres, the first accused has to pay the respondent a sum of Rs.79,50,00,000/- as minimum guarantee exclusive of all applicable taxes and the revenue. As per the agreement, a sum of Rs.16,00,00,000/- has been paid as advance on 29.10.2018 and the balance amount of Rs.53,50,00,000/- to be paid five days prior to the release date viz., 06.11.2018.
4. The respondent also entered into assignment agreement for Telugu language dubbing rights for sole and exclusive theatrical exploitation in 35 mm format only for a period of one year, with respect to the said film on 29.10.2018 with the first accused for a consideration of Rs.50,00,000/-. Accordingly, the first accused is liable to pay total sum of Rs.80 crores/-. As per the agreement, if the net profit is generated over and above the minimum guarantee amount, the same shall be equally shared by the respondent and the first accused. But the first accused failed and neglected to keep up with the terms of the said agreement and not paid the minimum guarantee of Rs.80 crores to the respondent five days before the release of the said movie.
5. When the respondent refused to release the QUBE keys for the release of the said film, the accused pleaded with the respondent and promised to repay the same within three days of the release of the said film. The other accused had also given a written undertaking of guarantee that they would pay the balance amount and also issued six post dated cheques each for Rs.10 crores. Believing the said representation of the accused, the respondent provided with the QUBE keys and pursuant to the same, the first accused had released, exhibited and exploited the said film in all prominent theatres.
6. When the respondent approached the first accused for payment of balance minimum guarantee amount of Rs.51 crores, the second accused in his individual capacity and as the proprietor of the first accused had given a letter of undertaking dated 09.11.2018 accepting and admitting its liability and also had given by way of security certain properties for the admitted liability as per the said agreement. Since the second accused having failed to fulfil the terms of the agreement, the third and fourth accused viz., the petitioners in Crl.O.P.No.553 of 2020, had given a written undertaking of security of certain immovable pr
