THE HIGHCOURT OF JUDICATURE AT MADRAS ( Ordinary Original Civil jurisdiction) O.A.No. 2022 In the matter of Arbitration and Conciliation Act, 1996. And In the matter of agreement dated 11.05.2020 along with addendum agreement dated 13.11.2020 between
IN THE HIGHCOURT OF JUDICATURE AT MADRAS
( Ordinary Original Civil jurisdiction)
O.A.No. 2022
In the matter of Arbitration and
Conciliation Act, 1996.
And
In the matter of agreement dated 11.05.2020 along with addendum agreement dated 13.11.2020 between
M/s. Flying Horse Pictures and M/s.Rock Fort Entertainment LLP
Chennai.
M/s Flying Horse Pictures
Rep. by its Managing partner
Mr.S.Hari Baskaran, M/48 years,
Care of Sampathkumar,
Flat no. S 403, 44 Metro Zone,
Pillayarkoil Street,
Anna Nagar,
Chennai-600 040 ….. Applicant
-Vs-
M/s Rockfort Entertainment LLP,
Rep. By its Designated Partner
Mr.T.Muruganantham
No.50,Ground Floor,
Shankara Krupa Flats,
Lakshmanasamy Salai,
KK Nagar,
Chennai-600078 ….. Respondent
AFFIDAVIT OF S.HARIBASKARAN
I, S.HariBaskaran, Care of Sampathkumar, Hindu, aged about 48 years, holding the post of Managing Partner of M/s Flying Horse Pictures, having its registered office at Flat no. S 403, 44 Metro Zone, Pillayarkoil Street, Anna Nagar, Chennai-600 040.
1. I am the applicant herein and I am competent to file this affidavit on behalf of the Applicant company and as such I am well acquainted with the facts and circumstances of this Case.
2. I state that the Respondent herein and M/s Rockfort Entertainment LLP, Rep. by its Designated Partner Mr.T.Muruganantham, having office at No.50, Ground Floor, Shankara Krupa Flats, Lakshmanasamy Salai, KK Nagar, Chennai-600078.
3. I state that it is a partnership firm constitute for producing the Tamil films and the plaintiff produced the Tamil Movie named as Irandam Kuthu and we are the sole copy right holder including Intellectual Property rights, exploitation rights and all other rights in all modes and mediums of the Tamil film Irandam Kuthu.
4. I further state that the Respondent had approached us for theatrical distribution and exhibition rights of the film in Tamil & Telugu languages for the Indian territory and VOD rights in Telugu languages, subsequently both of us entered in to an agreement on 11.05.2020 for the total consideration of Rs.4,85,00,000/- (Rupees four crores eighty five lakhs only) on outright basis plus GST 12% as per the agreement dated 11.05.2020 the Respondent herein agreed to pay an advance amount of Rs.25,00,000/- (Rupees twenty five lakhs only) on the execution of the agreement dated 11.05.2020 and Rs.1,00,00,000/- (Rupees one crore only) shall be paid on 10 days before the release of the film and Rs.3,60,00,000/- (Rupees three crores sixty lakhs only) shall be paid by the Respondent within 5 days before the release of the film.
5. I state that the Respondent had paid part of the consideration amount of Rs.2,85,00,000/-(Rupees two crores eighty five lakhs only) on the below mentioned manner
a. Rs.15,00,000/- (Rupees fifteen lakhs only) on 11.05.2020
b.Rs.10,00,000/-(Rupees ten lakhs only) on 16.05.2020
c.Rs.40,00,000/- (Rupees forty lakhs only) on 12.11.2020
d.Rs.85,00,000/- (Rupees eighty five lakhs only) on13.11.2020
e.Rs. 1,00,00,000/- (Rupees one crore only) on 13.11.2020
f. Rs.25,00,000/- (Rupees twenty five lakhs only) through RTGS
g.Rs.10,00,000/- (Rupees ten lakhs only) through RTGS on 13.11.2020
To the Respondent but he defaulted to pay the balance amount of Rs.2,00,00,000/- (Rupees two crores only) before 10.11.2020 as per the terms of the agreement dated 11.05.2020.
6. I further state that the Respondent herein failed to pay the balance debt amount Rs.2,00,00,000/- within the specified period of 10.11.2020 and the Respondent requested us not to exercise his right to terminate the agreement dated 11.05.2020 for the Respondent default, subsequently both of us entered in to an Addendum Agreement dated 13.11.2020 for the balance due payment of Rs.2,00,00,000/-(Rupees two crores only) and for the GST 12% amounting to Rs.34,20,000/- for the paid up amount Rs.2,85,00,000/- the Respondent agrees to pay with in a period of one week from the execution of the said Addendum Agreement.
7. I further state that the Respondent agrees to relinquished the distribution rights for the film to in favour of us as per clause K of the addendum agreement with condition that the surplus amount to be generated from the relinquished right shall be shared between the plaintiff and defendant in the ratio of 60:40 and if there is any shortfall in recouping the default amount then the defendant agreed to pay the deficit amount with interest.
8. I state that the collection of the revenue from the distribution rights as per clause K of the Addendum Agreement was only Rs.59,57,262/- (Rupees fifty nine lakhs fifty seven thousand two hundred and sixty two only) and we incurred loss up to Rs.1,40,42,738/- ( One Crore Forty lakhs forty two thousand seven hundred and thirty eight only) so, as per the Addendum Agreement dated 13.11.2020 there is a due payment of Rs.1,40,42,738/- ( One Crore forty lakhs forty two thousand seven hundred and thirty eight only) with interest from the Respondent.
9. I state that as per the clause ‘O’ of the Addendum agreement dated 13.11.2020 which is extract below,
“Further, If there is any short fall in recouping the default amount (Debt Due) of Rs.2,00,00,000/- (Rupees Two Crores only) by the producer, the distributor hereby irrevocably agrees and undertakes to repay the entire sum of Rs.2,00,00,000/- (Rupees Two Crores only) or the deficit amount to the producer with interest @ 36% per annum within a period of 30 days from the release of the said film or before the release /publishing/streaming of his next film either produced, co- produced, distributed by the Distributor, whichever is earlier.”
so as per the clause ‘O’ of the Addendum Agreement dated 13.11.2020, I should have claim the balance due amount of Rs. 1,40,42,738/- ( One Crore forty lakhs forty two thousand seven hundred and thirty eight only) with interest at the rate of 24% per annum.
10. I state that recently we came to know through the trailer and paper advertisements that the Respondent produced the film Manmadhaleelai casting Ashok Selvan and directed by Venkatprapu which is scheduled to be released on 01.04.2022, Friday.
11. I further state that as per the clause J of the Addendum Agreement dated 13.11.2020 the GST for the paid up amount Rs,2,85,00,000/- which was arrived at Rs.34,20,000/- ( Rupees thirty four lakhs twenty thousand only) but the Respondent had paid only 20,00,000/- and the balance amount Rs.14,20,000/- (Rupees fourteen lakhs twenty thousand only) which is still pending.
12. I state that we caused a legal notice dated 06.12.2021 to the Respondent, which was duly served on the Respondent on 08.12.2021, and the Respondent had also sent a reply notice dated 15.12.2021, with vague contentions and did not disputed the agreements dated 11.05.2020 and 13.11.2020 and also did not disputed the balance amount.
13. I further state that on 22.12.2021, when we about to know that the Respondent without settling the due amount to us had announced the release of his next movie KURUTHI AATTAM scheduled on 24.12.2021 and the bookings of tickets were open in online portal. Which is in violation of his own Addendum agreement dated 13.11.2020 and as on 21.12.2021 the Respondent had made compromise arrangements with us the and cunningly making arrangements to release the next movie in order to evade payment due to us.
14. I state that though the Applicant had clarified the due amount of Rs.2,02,21,570/- (Rupees One Crore Ninety Four Lakhs Eighty One Thousand Nine Hundred and Fifty Eight Only) together with interest 24% per annum from 11.05.2020 to till date of Principal amount Rs.1,40,42,738/- and the same is outstanding and is payable by the Respondent to the Applicant as on 22nd December, 2021. The Respondents are bound to pay the amount to the Applicant. To avoid the payment and the obligations to the Applicant / lender, the Respondent is trying to create chaos and attempted to release their next movie Kuruthi Aattam, scheduled on 24.12.2021 with mala fide intentions. The Applicant was awaiting the payment and he spent his all the cash flow and cost constraints and are also trying to pay off the debts. The release of the Respondent’s next movie Kuruthi Aattam would not benefit to the Applicant and the debts will get added up and would result in the Respondents wriggling out illegally.
15. I state that on 23.12.2021, the Arbitration Invocation notice dated 23.12.2021 was also sent to the Respondent and seeks their response or reply to commence arbitration proceedings to resolve the dispute with us and the Respondent and the same was served on them on 27.12.2021. Even after receipt of the said Arbitration Invocation notice the respondent neither suggested any Arbitrator nor issued a reply to the said notice dated 23.12.2021. We have also initiated separate applications to seek the leave of this Hon’ble Court to appoint an Arbitrator parallel.
16. I further state that having knowledge about his announcement of the above said movie Kuruthi aattam on 24.12.2021, but, the respondent had not released the movie on 24.12.2021. We have filed an application under Section 9 of the Arbitration and Conciliation Act, 1996 in O.A.No.847 of 2021 seeking for injunction against the Respondent from releasing the movie KURUTHI AATTAM and on 29.12.2021, when the above said case was heard, for admission, the Respondent through his counsel had represented before this Hon’ble Court and made an undertaking that they will not release the movie and recording their undertaking, an Interim Order dated 29.12.2021 was passed and periodically the same was extended on 03.01.2022 and 12.01.2022 and the above said O.A.No.847 of 2021 is still pending before this Hon’ble Court.
17. I state that while so, the Respondent herein had announced his next film namely MANMADHA LEELAI directed by Venkat Prabhu and the trailer of the movie was also released on 20.03.2022 the Respondent cunningly in violation of the Arbitration clause O of the Addendum Agreement dated 13.11.2020 and announced the release of movie on 01.04.2022. The above said Trailer was brought to our knowledge on 22.03.2022 which is perse illegal.
18. I further state that on the one end the respondent had given an undertaking that he will not release his the then movie KURUTHI AATTAM and the said application also still pending, and on the other hand the Respondent had announced the release of his next movie MANMADHALEELAI scheduled to be released on 01.04.2022, which in complete violation of the Clause O of the Addendum Agreement dated 13.11.2020.
19. Thus, if the Respondent herein are permitted to release their next movie MANMADHALEELAI on 01.04.2022, the Applicant would be put to irreparable injury and for this reason, I am advised that the balance of convenience is also in favour of the Applicant herein. Moreover, in light of the specific clause O in the Addendum Agreement dated 13.11.2020, it is clear that the Respondent will pay the balance amount within the period of 30 days from the release of the last film Irandam Kuthu or before the Release / publish/streaming of his next film either produced, co-produced by the Distributor, Whichever is earlier and now the said movie is MANMADHALEELAI scheduled to be released on 01.04.2022.
20. I state that as per the terms of the Agreement dated 11.05.2020 and addendum agreement dated 13.11.2020 entered between the Applicant and Respondent herein, if any dispute were to arise between the parties, the same shall be referred to arbitration to be conducted at Chennai. The courts in Chennai shall have exclusive jurisdiction. Clauses 11.3 of the agreement dated 11.05.2020 and clause O of the Addendum agreement dated 13.11.2020, which provide for the same are quoted below, for the sake of convenience:
11.2. Jurisdiction : The Parties irrevocably agree to submit any such dispute to the exclusive Jurisdiction of Civil Courts in Chennai to settle any dispute arising out of tor in connection with this agreement. The Parties agree that such Courts are the appropriate and convenient court to settle any dispute and accordingly no Party will argue to the Contrary.
11.3.2. in case the dispute has not been resolved by the Parties within fifteen (15) calendar days of the arising of a dispute by Conciliation and negotiation as mentioned above, the same shall be resolved by final and binding arbitration held in Chennai in accordance with the Indian Arbitration and Conciliation Act, 1996 and the rules made there under. The Arbitrator, as the case may be, shall be appointed in accordance with the rules under the Indian Arbitration and Conciliation Act, 1996. In connection with the arbitration proceedings, the disputed parties hereby agree to cooperate in good faith with each other and the arbitral tribunal and to use their respective best efforts to respond promptly to any reasonable discovery demand made by such party and the Arbitral Tribunal.
Addendum Agreement dated 13.11.2020
Clause Q. any and all disputes and differences that may arise between the parties, pursuant to the terms of this agreement, or its interpretation hereof, shall be referred to the Arbitration of a Sole Arbitrator to be appointed by the Producer hereto and the Distributor agrees and consents to the same. The said Arbitration shall be conducted in accordance with the rules under the Indian Arbitration and Conciliation Act, 1996. The award of the arbitration proceedings will be final and binding on both the parties to the agreement. The venue of the Arbitration shall be in Chennai. The Arbitration proceedings shall be conducted in English.
R. The competent courts in Chennai alone shall have exclusive jurisdiction.
21. I state that in light of the foregoing clause, the Applicant herein is approaching this Hon’ble Court under Section 9 of the Arbitration and Conciliation Act, 1996 (“the Act”) for urgent interim reliefs and as such, the Applicant herein undertakes to initiate arbitration at the earliest, as mandated by law.
22. I further state that the subject matter of the present petition falls under the purview of ‘Commercial Dispute’ as defined in Section 2(1)(c)(ix) and is of ‘Specified Value’ as defined in Section 2(1)(c)(i) read with Section 12 of The Commercial Courts, Commercial Division Of High Courts (Amendment) Act, 2018.
23. I state that the Applicant has made out a prima facie case for grant of Interim orders and the same is as follows:-
a. Breach of addendum agreement dated 13.11.2020
b. The act of the Respondent acting in a clandestine manner with malafide motives about to release his next movie, MANMADHALEELAI, without settling due amount to the applicant, as per clause O of the addendum Agreement, dated 13.11.2020 to the prejudice of the Applicant,
c. Preservation of the subject matter of the Arbitration Agreement is a key factor and if no injunction is granted, the Respondent will not settle the due amount to the Applicant and it would not only cause prejudice to Applicant, but, also the next movie Producer also,
d. The fact that the Applicant, having the due from the Respondent to the tune of Rs.2,02,21,570/-.
20. I state that the balance of convenience also in favour of the Applicant and the same is also as follows:-
a. The addendum agreement was entered into as much prior in time,
b. The Applicant had believed that the Respondent would settle the balance principal amount of Rs.1,40,42,738/- within 30 days from the earlier movie.
c. failure on the part of the respondent in not paying the due amount to the Applicant as per the clause O of the Addendum agreement dated 13.11.2020
e. Irreparable injury and harm would be caused to the Applicant,
24. I state that this Hon’ble Court has the jurisdiction to entertain the preset Application as the entire cause of action has taken place within the local jurisdictional limits of this Hon’ble Court and further clarify that clause 11.2, of the agreement dated 11.05.2020 and clause R, of the Addendum Agreement dated 13.11.2020 clearly states that courts in Chennai shall have exclusive jurisdiction.
25. The Applicant Therefore, the Commercial Division of the High Court is having jurisdiction to entertain the present Application under Section 10(2) of the Commercial Courts Act.
26. I state that the Applicant would also invoke the Arbitration clause within a reasonable period of time.
27. The Applicant had filed a court fee of Rs.1,00,000/- as the claim amount if Rs.2,02,21,570/- under Schedule II, Article 11 (r) of the Tamil Nadu Court Fees and Suit Valuation Act.
28. For the reasons set out above, it is most humbly prayed that this Hon’ble Court may be pleased to:
a. Pass an order of injunction restraining the Respondent herein from releasing the movie MANMADHALEELAI scheduled to be release on 01.04.2022, or in future, in theatres, OTT Platform, Web Etc., and any other movie till the respondent settling the due amount of Rs.2,02,21,570/- (Rupees Two Crore Two Lakhs Twenty One Thousand Five Hundred and Seventy Only) together with interest 24% per annum from 11.05.2020 to till date, of Principal amount Rs.1,40,42,738/- to the Applicant,
b. Pass such other orders as this Hon’ble Court may deem fit and proper in the circumstances of this case and thus render justice.
Solemnly affirmed and signed } BEFORE ME
His name in my presence at Chennai }
on this 23rd day of March, 2022 }
ADVOCATE: CHENNAI.
