Madras High Court Scrutinizes Arbitral Awards for Patent Illegality and Upholds Composer's Copyright

CHENNAI – In a series of significant pronouncements, the Madras High Court has delivered two critical rulings reinforcing fundamental principles in arbitration and intellectual property law. One decision saw an arbitral award set aside for being "patently illegal" and shocking the conscience of the court, while another extended protection to a legendary music composer, underscoring the inalienable right to royalties under the Copyright Act. These cases, though distinct in subject matter, highlight the judiciary's role in upholding procedural integrity and statutory rights.

Arbitral Award Annulled for "Mutually Contradictory" and Perverse Findings

In a stern rebuke of arbitral overreach and flawed reasoning, Justice N. Anand Venkatesh set aside a domestic arbitral award, citing multiple infirmities including patent illegality, violation of natural justice, and findings that were "more in the nature of giving premium for the illegality."

The case, TRULIV Properties and Services Private Limited v. C. Ravishankar , centered on a lease agreement for 20 flats. The petitioner, Truliv Properties, terminated the agreement and sought a refund after discovering the property owner had previously given an undertaking before another tribunal not to encumber the same properties. The owner refused the refund, and the dispute proceeded to arbitration, which culminated in a shocking award directing Truliv to pay ₹1.99 crore to the owner.

In a meticulous deconstruction of the arbitrator's decision, the High Court found the award untenable on several grounds. The most glaring flaw, as identified by Justice Venkatesh, was the arbitrator's contradictory reasoning between the interim and final stages of the proceedings.

"The finding that was rendered at the time of passing the interim order and the finding that was rendered at the time of passing the final award are mutually contradictory," the Court observed. "The above perverse finding is also irrational, since the same Arbitrator could not have rendered one finding at the time of passing the interim order and a completely conflicting finding at the time of passing the final award.”

Procedural Missteps and Violation of Natural Justice

The Court heavily criticized the arbitrator for delving into matters not pleaded by the parties. Specifically, the arbitrator suo motu declared the owner's prior undertaking in another tribunal as non est because it was not signed by all members. Justice Venkatesh noted that the respondent (owner) had never raised this argument. This judicial adventurism was held to be a clear violation of the principles of natural justice and fell foul of Section 34(2)(d)(iv) of the Arbitration and Conciliation Act, 1996.

Furthermore, the Court found the arbitrator's characterization of the prior undertaking proceedings as an "order" under Section 31 of the Act to be a "clearly a perverse finding," as the tribunal had merely recorded an undertaking.

"Re-writing the Contract": A Patent Illegality

The substantive reasoning of the award was also found to be deeply flawed. The arbitrator had concluded that since the lease deed was unregistered, it should be treated as an oral agreement governed by the Transfer of Property Act, 1882. The High Court dismantled this conclusion, stating it had "no legal basis."

"The Arbitrator has re-written the contract itself, which is a patent illegality falling foul of Section 34(2A) of the Act,” Justice Venkatesh held, emphasizing that a written, albeit unregistered, agreement existed between the parties, precluding the presumption of an oral one.

The final award, which directed Truliv to pay rent for a four-year period despite the project being halted, was deemed to shock the conscience of the court. The judgment noted this was tantamount to rewarding the respondent for his own illegal act of leasing an encumbered property. Consequently, the arbitral award was set aside in its entirety, with the Court also acknowledging the "mental agony" suffered by the petitioner and their entitlement to damages.

This ruling serves as a potent reminder of the limited but crucial scope of judicial review under Section 34, particularly where an award suffers from patent illegality and procedural impropriety that undermines the very foundation of justice.

Ilaiyaraaja's Copyright Battle: High Court Extends Injunction on Song Usage

In a case with significant implications for the music and film industries, the Madras High Court has extended an interim order restraining Mythri Movie Makers, the producers of the upcoming Tamil film Good Bad Ugly , from using three iconic songs composed by the legendary music maestro, Dr. Ilaiyaraaja.

Justice N Senthilkumar extended the injunction until October 23, 2025, after being informed that several music companies have filed petitions to implead themselves in the case. The court was not inclined to vacate the stay despite a plea from the defendants, who claimed they were being adversely affected.

The core of the dispute, detailed in the suit Dr Ilaiyaraja v. Mythri Movie Makers , is Ilaiyaraaja’s assertion of his statutory and moral rights over his compositions. He contends that the film used his songs—"Otha Rubayum Tharen," "Ilamai Idho Ido," and "En Jodi Manja Kuruvi"—without obtaining his express consent or paying him the royalties to which he is entitled as the composer.

Assertion of Moral and Statutory Rights

Ilaiyaraaja’s argument is rooted in a robust interpretation of the Copyright Act, 1957. His counsel argued that the use of the songs constituted "unauthorised use, appropriation, and a clear infringement of his copyright and moral rights." It was stressed that no permission, either express or implied, was granted for "using, altering, distorting, or changing the form of the songs."

The plea heavily relies on Sections 19(9) and 19(10) of the Act, which were introduced by the 2012 amendment to protect the rights of authors and composers. These provisions clarify that the assignment of copyright in a work to be used in a cinematograph film does not affect the author's right to receive royalties for any use of the work outside of the film's theatrical exhibition.

Ilaiyaraaja contends that as the composer, he is statutorily entitled to receive royalties for the use of his songs across any medium. The unauthorized inclusion in the new movie is presented as a direct infringement under Section 51 of the Act. His suit seeks comprehensive remedies, including an injunction, statutory damages, recovery of unpaid royalties, and action for the violation of his moral rights under Section 57, which protects an author against distortion or mutilation of their work.

This case is a crucial test of the 2012 amendments and reinforces the principle that a composer's rights are not extinguished upon the initial assignment to a film producer or music label. The ongoing injunction and the interest from other music companies signal the wide-ranging impact this case could have on copyright licensing and royalty distribution practices in India.