Copyright Board cannot pass Order of Interim Compulsory License

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Author: Varnika Singh*

The Copyright Board under the Copyright Act, 1957 [hereinafter referred as 'Act'] does not have power to grant an ad hoc compulsory license by way of interim order. On 3rd May 2012 the Full Bench of Supreme Court of India headed by Hon’ble Justice Mr. Altamas Kabir, Hon’ble Justice Mr. Surinder Singh Nijjar and Hon’ble Justice Mr. J. Chelameswar in the case of Super Cassettes Industries Ltd. v. Music Broadcast Pvt. Ltd [1] reached to the aforesaid finding. The substantial question of law in the present appeal was that

“whether on a complaint made to the Copyright Board under Section 31 of the Copyright Act, 1957, the said Board under Clause (b) of Sub-Section (1) can pass an interim order in the pending complaint”.

The section in question is reproduced below:

“31. Compulsory license in works withheld from public.-(1) If at any time during the term of copyright in any Indian work which has been published or performed in public, a complaint is made to the Copyright Board that the owner of copyright in the work-

(a) has refused to republish or allow the re-publication of the work or has refused to allow the performance in public of the work, and by reason of such refusal the work is withheld from the public; or

(b) has refused to allow communication to the public by [broadcast], of such work or in the case of a [sound recording] the work recorded in such [sound recording], on terms which the complainant considers reasonable, the Copyright Board, after giving to the owner of the copyright in the work a reasonable opportunity of being heard and after holding such inquiry as it may deem necessary, may, if it is satisfied that the grounds for such refusal are not reasonable, direct the Registrar of Copyrights to grant to the complainant a license to re-publish the work, perform the work in public or communicate the work to the public by [broadcast], as the case may be, subject to payment to the owner of the copyright of such compensation and subject to such other terms and conditions as the Copyright Board may determine; and thereupon the Registrar of Copyrights shall grant the license to the complainant in accordance with the directions of Copyright Board, on payment of such fee as may be prescribed.

Explanation.-In this sub-section, the expression & quot; Indian work” includes-

(i) an artistic work, the author of which is a citizen of India; and

(ii) a cinematograph film or a [sound recording] made or manufactured in India.

(2) Where two or more persons have made a complaint under sub-section (1), the license shall be granted to the complainant who in the opinion of the Copyright Board would best serve the interests of the general public.”

These appeals preferred by Super Cassettes Industries Ltd., were directed against the order dated 1st September, 2011, passed by the Delhi High Court whereby it reversed the order passed by the Copyright Board on 28th March, 2011, in which the Board held that it did not have the power to grant an interim compulsory license. Delhi High Court by its judgment and order dated 1st September, 2011 in R.F.A.No.250 of 2011 and C.M.No.8977 of 2011, reversed the finding of the Copyright Board upon holding that “even while the grant of compulsory license under Section 31 of the Copyright Act was under consideration, an interim compulsory license could be granted”. The High Court also held that where the dispute is over the quantum of license fee, an interim compulsory license had to be granted. The impugned order directs the Copyright Board to grant an interim compulsory license against Super Cassettes with the further direction to the Board to fix its own terms for such licenses, after hearing the parties.

The findings of the order of the High Court of Delhi were based on the principle that the power to grant interim relief is not dependent upon a specific statutory empowerment to this effect. The power is a common law principle and is not founded on any statute or legislation. The Delhi High Court further held that the refusal of the copyright holder to grant a license would, in effect, compel the broadcaster or any other party similarly placed, into succumbing to the demands of the owners and that since, litigation is protracted over years, a party would be unable to play or broadcast music, owned by the copyright holder, even though it was willing to pay a reasonable fee for making such broadcast and may also have to give up its action under Section 31 of the Act. Furthermore it was held that refusal to grant interim relief would frustrate the rights of a broadcaster under Section 31 of the Copyright Act, which would render the provisions of the statute futile and nugatory.

In the appeal to the Supreme Court the appellant submitted that the High Court had erred in law in holding that even in the absence of an express conferment by statute, the Copyright Board had the power to grant an interim compulsory license under Section 31 of the Copyright Act. It was urged that the Copyright Board is a Tribunal created under Section 11 of the Copyright Act, 1957, and being a creature of statute, its powers were confined to the powers given to it by the statute. It was argued by the ld counsel that while Section 12 of the Act vested the Copyright Board with the authority to regulate its own procedure and Section 74 conferred certain limited powers of a civil court on the Board, the same were procedural in nature and did not vest the Board with a substantive right to grant interim orders under Section 31 of the Act.

The Hon’ble Supreme Court based its finding on the following aspects

The core of Section 31 is that the owner of a copyright has;
(1) either refused to “republish” or “allow the republication” of his work or “refused to allow the performance in public” of the work;
(2) by reason of such refusal the work is withheld from the public; and
(3) the grounds for such refusal are not reasonable.

It is in the abovementioned circumstances, if the Copyright Board is satisfied that the grounds of refusal are not reasonable, the Copyright Board is authorised, by law, to take steps for the grant of a compulsory license.

Further the Apex court exemplified, that a tribunal is a creature of Statute and can exercise only such powers as are vested in it by the Statute. There is a second school of thought which propagates the view that since most Tribunals have the trappings of a Court, it would be deemed to have certain ancillary powers, though not provided by the Statute, to maintain the status-quo as prevailing at the time of filing of an application, so that the relief sought for by the Applicant is not ultimately rendered otiose.

While construing the provisions of Section 14 of the Consumer Protection Act, 1986, in the Morgan Stanley Mutual Fund’s case, this Court categorically held that in the absence of any specific vesting of power, no interim relief could be granted, not even of an ad-interim nature. The decision in the recent judgment of this Court in Rajeev Hitendra Pathak’s case, also supports the case to the extent that in the absence of any express power conferred on the District Forum and the State Commission under the Consumer Protection Act, they had no jurisdiction to exercise powers which had not been expressly given to them. Therefore, the jurisdiction and authority of not only the Tribunals, but also the Courts are structured by the statutory grants and limitations.

In deciding the question “whether the Copyright Board, exercising the jurisdiction under Section 31 of the Copyright Act, can grant ad hoc compulsory license by an interim order pending the adjudication of the issue”, was examined as below

Copyright in a “work”, undoubtedly, is a valuable legal right subsisting in the “owner” or somebody claiming through the owner. Such a right has more than one dimension. It may have a commercial value depending upon the quality, nature and the public demand of the work. It may also have aesthetic value. Whether such a right should be transferred or not is a matter, essentially, for the “owner” of the copyright to determine.

It is, further, the right of the owner to decide on what terms and conditions (which need not necessarily be related to money alone), he would part with the copyright of his work if ever he decides to part with it. However, Section 31 of the Act creates an exception to the above mentioned principle of the right of the owner of the copyright.

In substance the Section deprives the “copyright” of the “owner” against his volition. In other words, by Section 31, the State is authorised, by its coercive powers, to deprive the owner of his copyright in a work, which is his property and the right to enjoy such property in the manner as the owner of the property pleases. Necessarily, in view of the constitutional mandate under Article 300A of the Constitution of India, such a deprivation can only be by the authority of law and it is too well entrenched a principle on the constitutional law that such a law could be only for a public purpose.

In this case, the appellants are interested in the commercial exploitation of a work, of which they are not “owners” of the copyright. To succeed in their claim for a compulsory license in their favour, they must, firstly, establish that

• “the work is withheld from the public”, because of the “owner’s” refusal to republish the work, etc.;

• secondly, the owner’s refusal is on grounds, which are “not reasonable” in law.

Whether the owner is withholding the republication on grounds, which are unreasonable or not, is a question, which can only be decided upon affording a complete hearing to the owner of the work, as already indicated the reason for withholding need not only be monetary.

For example the case of a book or a cinematograph film, such as, Satanic Verses or Da Vinci Code, which have created quite some commotion in certain quarters including the security threat to the author or owner of the work. If the author, on realising that repeated publication of the work might endanger his security, declines or refuses republication of the work, it cannot be said that the author (owner) unreasonably withheld republication. Such a refusal has nothing to do with the monetary considerations. Therefore, by conceding a power to grant ad hoc compulsory license during the pendency of the proceeding, under Section 31, would not only render the final inquiry into the question, a futile exercise in a case where the owner has reasons other than inadequacy of monetory compensation.

To conclude the power under Section 31 of the Act, to grant a compulsory license meant for avoiding the withholding of the republication or refuse to allow the performance in pubic of some “work” – is, essentially, for the benefit of the public. Commercial benefit to “publisher” is incidental.

Therefore the Supreme Court held that unless, it is demonstrated that failure to imply such power to direct immediate republication or performance of a work in public would be detrimental to public interest, the power to grant ad hoc compulsory license, cannot be implied. No such detriment is demonstrated. In the absence of an express statutory grant, the court did not imply power to grant an ad hoc compulsory license by way of interim order by the Copyright Board.

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Author: Varnika Singh is an alumni of  National Law Institute University, Bhopal (LL.M ) and Agra University (B.A, LLB). Currently she is working as Law Researcher in Delhi High Court

[1] CIVIL APPEAL NOS.4196-4197 OF 2012 (Arising out of SLP(C)Nos.26581-26582 of 2011

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