IPRS tries to derail enquiry into its affairs, loses battle in Bombay High Court

The Indian Performing Rights Society (IPRS) continues on its litigation streak by challenging government orders and bothering parties with impunity (last heard, IPRS was demanding hefty royalties from the Indian railways). This time though IPRS was at the receiving end, when the Bombay High Court  rejected IPRS’ challenge to an enquiry instituted by the Department of Higher Education, Copyright Office into its allegedly dishonest practices. Not only did IPRS file writ petitions to quash the order instituting the enquiry, but also sought to restrain the Copyright Office in the future from making orders to investigate into IPRS’ affairs. The thrust of IPRS’ contention was that the Central government had no jurisdiction to make a prima facie opinion on IPRS’ conduct – a power conferred to it through the Copyright Act, since IPRS had de-registered itself as a copyright society.

Readers may recall that we’d earlier reported about this society being served with show cause notices from the central government to investigate its practices (to quickly skim through IPRS’ chequered history, you may read Prashant’s concise post here).

The Court found IPRS’ petitions to be premature and lacking in merit, and dismissed them. The judgment was passed by Justice Colabawala and Chief Justice C J Shah. You may read the judgment here.

Hat tip to Khimani and Associates for bringing the judgment to our attention. The law firm represented Javed Akhtar, Lalit Pandit (of the Jatin-Latin fame) and Milind Srivastava (of the Anand-Milind fame).

IPRS v. Union of India and Ors. & Hasan Kamal v. Union of India

(Writ Petition no. 2384/2014 with 2236/2014)

The Government order dated 27 February, 2014 observed that it was necessary to make an enquiry into the alleged irregularities of IPRS. The impugned government order was a consequence of two show cause notices issued to IPRS (which were presumed buried) based on  several complaints from composers, including prominent names like Javed Akhtar, Lalit Pandit and Milind Srivastava. The petition reveals that IPRS conveniently collected licensing fees from users, but denied composers their dues – a figure that ran into several hundred crore rupees.

The irregularities ranged from non-distribution of royalties, illegal sub-licensing of royalties, illegal transfer of mechanical rights and ring-tones royalties to another copyright society- PPL and lastly, forging signatures and misrepresentation to the Ministry of HRD. All these acts were violative of sections 33-35 of the Copyright Act, 1957.

Taking cognizance of these reported violations, the Government proceeded to appoint Justice Shri Mukul Mudgal as the enquiry officer, set out the terms of reference of the enquiry into the irregularities, and also asked for suggested measures to improve administration of IPRS.

Contentions of the parties

Firstly, IPRS argued that Rule 50 of Copyright Rule, 2013 provides for the appointment of an office above the rank of Deputy Secretary to the Government of India for the purposes of this enquiry. Therefore, IPRS contended that the appointment of a former Chief Justice of the Punjab and Haryana High Court was not in compliance with the provisions of the Act.

However, later in September 2014, the Justice resigned from the post of Enquiry officer as he did not want his qualifications to be a subject matter of litigation.

After the resignation, IPRS additionally contended that the order wrongly and illegally proceeded on the basis that IPRS was a registered copyright society. After the amendment to the copyright act in 2012, all copyright societies were required to re-register themselves within a period of one year of the notified date. While IPRS did apply for a fresh registration, it withdrew its application on 2nd June 2014 (note that the withdrawal occurred three months after the government’s enquiry order).

The respondents contended that the two show cause notices had been issued while IPRS was a copyright society, and that the irregularities had allegedly taken place during the same period. Therefore, IPRS could not evade accountability for mismanagement or illegalities during this period.

The respondents also drew the Court’s attention to IPRS’ dodgy behavior – on one hand it contended that it ceased to be a copyright society in 2013, on the other hand it had filed a suit in the Delhi High Court, verified on 23rd April 2014, stating that it was a copyright society. The petitioners failed to approach the Court with clean hands.

The decision

The Court agreed with the respondents and observed that IPRS was a copyright society during the occurrence of the alleged irregularities, as well as during the issuance of the two show cause notices and completely rejected IPRS’ contention of not being a copyright society. It held that the contention was devoid of any merit, and said that if such contentions were to be accepted, “it would be adding premium to dishonesty.” Given that IPRS was a registered copyright society from 1996-2013,  and recognizing the mischief being played deftly by IPRS, the Bench held IPRS’ conduct could not stop the Central government from exercising its jurisdiction to form a prima facie opinion. In this regard, the Court remarked:

“We do not think that the Legislature intended such an absurd result. We are, therefore, clearly of the view that the Central Government had jurisdiction to form a prima facie opinion that an enquiry is required to be conducted into the affairs of the petitioner society in respect of the alleged violations of the Act and the Rules.”

After upholding the prima facie satisfaction of the government to conduct an enquiry, the Court did not accede to IPRS’ demands that the government provide reasons for its opinion and an opportunity for a personal hearing. It held that such steps were not necessary, because the prima facie satisfaction was reached after having provided copies of the complaints filed by the composers along with the said show cause notices to IPRS and after considering the written statement submitted by IPRS in this regard.

Accordingly, the Bench held that IPRS’ petitions lacked merit and dismissed them, thereby, permitting the government to move ahead with the enquiry.

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