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Petitioner: Aum Media Publisher, LLC through Authorized Officer and another VS Respondent: Mohib Mirza and 2 others
Court Name: Sindh High Court Judge(s): Syed Hassan Azhar Rizvi Title:Aum Media Publisher, LLC through Authorized Officer and another vs Mohib
Mirza and 2 others Case No.: Suit No.1048 and C.M.A. Nos. 7345, 7346 of 2020 Date of Judgment:2021-06-04 Reported As: 2022 CLC 585 Result: Order accordingly Judgment ORDER SYED HASAN AZHAR RIZVI, J.---- C.M.A. No.7345/2020 under Order XXXIX, Rules 1. and 2 read with Section 151, C.P.C., filed by the plaintif fs, seeking a restraint order against the defendants from promoting the motion picture 'Ishrat Baji Made in China' or 'Ishrat Made in China' or any motion picture with any other title on radio, television, social media, cinemas etc. and/or from releasing the same during pendency of the instant suit, while C.M.A. No.7346/2020 under Order XCIV read with section 151, C.P.C. seeking appointment of an independent chartered Accountant for forensic audit of the accounts, finances and expenses in respect of the Project/Subject Motion Picture 'Ishrat Baji Made in China' or 'Ishrat Made in China' or having any other name. As there are common questions of law and facts involved therein, both the above applications are being disposed of through the instant consolidated order . 2. Brief facts of the case are that plaintif f No.1 is a company incorporated in the United Arab Emirates and is engaged in the business of publishing and media management and plaintif f No.2 is a shareholder of the plaintif f No.1. The. defendant No.1 is an actor and producer of television serials, telefilms and films, whereas the for defendant No.2 is an entity owned by the defendant No.1 and is engaged in the business of film production. The defendants Nos. 1 and 2 approached the Plaintif fs for investment in a movie vide email dated 18.09.2017 and represented a time line for completion vide e-mail dated 23.02.2018. It is averred that the plaintif fs Nos.1 and 2 entered into an Agreement dated 11.06.2018 with the defendants Nos.1 and 2 to make and produce Urdu feature film titled as "Ishrat Baji Made in China". As per the Agreement, the plaintif fs had undertaken to carry out the role on an "Investor", whilst the defendants Nos.1 and 2 had undertaken to carry out the role as a "Produce" with the obligations of each party listed out in the Agreement. It is further averred that the plaintif fs had initiated payments in accordance with the agreement, and till date have paid a total of Rs.38,380,561/- which is an admitted fact. All
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payments have been released as per Clause 6(iv) of the agreement i.e. as per the need and requirements of the Project. The defendants Nos. 1 and 2 have never alleged any breach on the ground of "late payment" or non- payment. Admittedly not a single notice of breach was ever issued to the plaintif fs on this ground or any other ground till date. 3. Counter-af fidavits have been filed by the defendants Nos.l and 3 wherein categorically denied the contents of the applications under reply . It is submitted that that the plaintif fs failed to fulfill their obligations and never released any payments in accordance with the aforesaid arrangement provided in Schedule 2 of the Agreement. It is evident that the completion of the project was delayed due to the defaults made by the plaintif fs, and as a consequence thereof the cost of the project exorbitantly increased. Even otherwise, the plaintif fs have never shown willingness or commitment towards the payment of the remaining amount of more than Rs.25,000,000/-. Furthermore, any such statement showing willingness towards payment of the remaining amount is conspicuous by its absence in the plaint filed in the suit under reference. Therefore, the application for interim relief has been filed in violation of the settled principle of law that "the power conferred under Order XXXIX, Rules 1 and 2 of the Civil Procedure Code, 1908. is discretionary . The discretionary relief cannot be granted to parties approa ching Court with unclean hands and ulterior motives." Accordingly , the aforementioned conduct of the plaintif fs disentitles them from seeking injunctive relief in the present circumstances. 4. Plaintif fs filed affidavits-in-rejoinder to the counter-af fidavits and denied each and every averment made therein. It is stated that counter-af fidavit filed by Yasir Bajwa the personal assistant of the defendant No.1 therefore it is clear that the defendant No.3 is in fact an entity or front owned by the defendant No.1 himself and such entity has been created to show alleged third party investment to defeat the rights and to usurp the investment of the plaintif fs. It is denied that the applications under reply are frivolous, baseless, misconceived and non-maintainable. The instant suit as well as the applications under replies are not only maintainable but also liable to be allowed. The defendants Nos.1 and 2 clearly breached various clauses of the agreement dated 11.06.2018 whereas the defendant No.3 is a stranger hence the plaintif fs are entitled to relief as claimed. The agreement clearly set out the obligations of the parties and clearly provides restrictive covenants and this Court is empowered. to pass injunctive orders in respect thereof and in particular to protect the plaintif fs from the breaches and unlawful conduct of the defendants. 5. I have heard Mr. Ayan Mustafa Mem on, learned counsel for the plaintif fs, Mr. Abdul Sattar Pirzada, learned counsel for the defendant No.1 and Mr. Mamoon Chaudhry , learned counsel for the defendant No.3, so also perused the available record. 6. Learned counsel for the plaintif fs in support of the listed applications has argued that on 11.06.2018 plaintif fs and defendants Nos.1 and 2 entered into an agreement to make and produce Urdu feature film titled as "Ishrat Baji Made in China" . He has argued that as per agreement the plaintif fs had undertaken to carry out the role on an "Investor", whilst the defendants Nos.1 and 2 had undertaken to carry out the role as a "Producer" with the obligations of each party mentioned in the agreement. He has contended that the plaintif fs had initiated payments in accordance with the agreement, and till date have paid a total of Rs.38,380,561/- which is an admitted fact. He has further contended that all payments have been released as per Clause 6(iv) of the Agreement i.e. as per the need and requirements of the Project. The Defendants Nos. 1 and 2 have never alleged any breach on the ground of "late payment" or non-payment. He has urged that admittedly not a single notice of breath was ever issued to the plaintif fs on this ground or any other ground till date. He has also urged that the plea of the defendants Nos. 1 and 2 of delayed payment in their counter-af fidavit is nothing but a mere afterthought. He has contended that it is also an admitted fact that the defendants Nos. 1 and 2 have not disbursed the reciproca l 20% investment to be made by them, as to date the plaintif fs had neve r been provided with the financial statements and business reports as required under the agreement, and thus the plaintif fs were entitled to withhold any further payments until proper accounts were made available which is any case are to be disbursed as per need and requirement of the Project. 7. Learned counsel for the plaintif fs has further contended that on 15.02.2019 the defendants Nos. 1 and 2 issued an email to the plaintif fs and requested for balance payment. He has also contended that as per the defendants Nos. 1 and 2 during arguments the plaintif f disappeared after that e-mail. However , such assertion is factually
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incorrect as the plaintif fs made a payment of Rs.44 Lacs to the Defendants Nos. 1 and 2 on 15.03.2019, this payment was duly accepted by the Defendants Nos.1 and 2 and no notice of breach was ever issued. He has submitted that as a matter of law, this amounts to "Affirmation of the Agreement" as per Section 39 of the Contract Act. He has reiterated that the defendants Nos. 1 and 2 did not elect to exercise the termination clause at any stage which is also an admitted. He has submitted that insofar as the plaintif fs email dated 06.03.2020 is concerned, he has urged that the defendants No.1 had on 06.03.2020, via Skype informed the plaintif f No.2 that investment beyond the agreed amount is required and a few options were informally discussed amongst the parties, but never agreed upon, which were clearly stipulated in the email dated 06.03.2020 sent from the plaintif f No.1 to the defendant No.1. However , the defendant No.1 never responded to the said email and never agreed to any of the options. Thus, the plaintif f No.2 on 16.03.2020 sent another email to the defendant No.1 reminding him that the original Agreement dated 11.6.2018 stood intact. He has urged that subsequently to the shock and utter dismay of the plaintif fs, the defendants had unlawfully omitted the name of the plaintif fs from all the new promotional material in respect of the Project. He has vehemently contended that in glaring breach of clauses 8 and 9 of the Agreement as well as Clause I, Schedule II a 3rd party entity known as "EK ALIF FILM" ,.(Defe ndant No.3) was mentioned on every single promotional post, which prompted issuance of legal notice dated 11.07.2020 and filing of the instant Suit as before this the name of the plaintif fs appeared in the promotion material. He has further contended that the defendants Nos. 1 and 2 have always taken the Plaintif fs for granted which can be clearly seen from their conduct. He has further vehemently urged that the defendants Nos. 1 and 2 never responded to the e-mails dated 06.03.2020, 16.03.2020, legal notice dated 11.07.2020 and unilaterally decided to include a third party and remove the names of the plaintif fs from the promotional material. He has also vehemently contended that the defendants Nos. 1 and 2 never alleged breach and never invoked the termination clause which clearly goes to show that there has been no breach on the part of the plaintif fs. 8. Learned counsel for the plaintif fs on legal plane has argued that an injunct ion can be granted to restrain repetition or continuance of breach of the agreement by the defendants Nos.1 and 2 to the agreement, as stipulated under Order XXXIX, Rule 2 regardless of whether compensation in money is adequate relief. He has contended that the agreement dated 11.06.2018 is a continuing agreement and the defendants Nos.1 and 2 are continually breaching such agreement, hence this Court can prevent the breach through grant of injunction as per the clear provision of Rule 2 of Order XXXIX, C.P.C. regardless of Section 56 of the Specific Relief Act. He has urged that this Court can always issue an injunction to enforce a negative covenant as stipulated under Section 57 of the Specific Relief Act, 1877. He has submitted that the defendant No.1 is evidently breaching Clauses 8 and 9 as well as Clause I of Schedule II of the Agreement dated 11.06.2018 which are in the nature of negative covenants hence an injunction to prevent third party from participating in the project in any manner can be issued by this Court irrespective of Section 56(f). Learned counsel has further argued that plaintif f absolved from showing his willingness to perform when breaches of defendant Nos.1 and 2 are floating on the surface of the record whereas the plaintif fs have not committed any breach which is evident from the fact that no notice for breach was served upon the plaintif fs. Further , all payments have, been made by the plaintif fs as per the need and requirement of the Project in compliance with the agreement. He has submitted that in any event, it is settled law that in case breaches of defendants are pointed out, it is not incumbent on the Plaintif f to show his willingness to perform the Contract. Therefore, it is clear that the plaintif fs have remained and are still willing to perform all their obligations under the Contract as long as the reciprocal obligations of the defendant Nos. 1 and 2 are complied with. He has urged that the defendant No.1 by accepting-the payments and thereby deriving the benefit of such payments from the plaintif f No.2, has affirmed the Agreement dated 11.06.2018 thus the allegation of delayed payment leading to termination is merely an afterthought and of no effect. As a matter of fact, the defendants Nos. 1 and 2 never exercised Clause 21 of the Agreement. He has submitted that this is a termination clause however it required the defendants Nos. 1 and 2 to first give a notice of breach and allow 14 days for rectif ication of the alleged breach. He has vehemently urged that all payments were made as per Clause 6(iv) of the Agreement, however , in case the defendants Nos. 1 and 2 felt that paymen t was overdue a notice under Clause 21 could have been issued which
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would have enabled the plaintif fs to rectify any alleged breach. He has submitted that this right of the plaintif fs has been totally ignored by the defendants. He has drawn attention of this Court to paragraph 11 of the counter-af fidavit of defendant No.3, wherein it is alleged that due to breaches of plaintif fs the defendants Nos. 1 and 2 were compelled to explore other opportunities. He has submitted that there can be no allegation of breach without actually issuing a notice of breach which was never issued. He has submitted that as a matter of fact by accepting payments from plaintif fs, the Agreement stood af firmed thus the excuse of breach is untenable. 9. Learned counsel next contended that defendants Nos.1 and 2 never agreed to the proposal in the e-mail dated 06.03.2020, the excuse of being in Thailand is of no consequence as defendants No.1 and 2 had access to Internet. He has urged that even otherwise offer if any stood revoked vide email dated 16.3.2020 and then upon issuance of legal notice dated 11.07.2020 . He has submitted that Section 7 of the Contract Act provides essential ingredients of a contract which are missing from the e-mail dated 06.3.2020. He has, therefore, urged that the defendants Nos.1 and 2 not only have unclean hands but their, mala fide intentions are clear and apparent on the face of the record. He has submitted that after taking the seed money for the project they have unlawfully attempted to usurp the plaintif f's rights by systematically attempting to exclude the plaintif fs. He has, therefore, prayed for grant of applications for Injunction and Forensic Audit as the plaintif fs have made out a prima facie case, the balance of convenience lies in their favour and they will suffer irreparable loss in case the application is not granted. 10. In support of his submission, learned counsel has placed reliance upon the cases reported in PLD 1998 Karachi 277, 1993 CLC 2497 , 1980 SCMR 588, PLD 1983 Karachi 387, 1979 CLC 570, 2014 CLD 1583 , PLD 1981 Karachi 720, (1996) 1 CALL T 214 HC India, PLD 1973 SC 39, 2012 CLD 1225 , PLD 1991 Lahore 174, 1995 SCMR 1431 , 2002 CLD 218 , PLD 2006 Karachi 523 , PLD 1982 Karachi 76 . 11. Mr. Abdul Sattar Pirzada, learned counsel for the defendant No.1 has argued that the instant applications have been filed in complete disregard to the settled principle of law that the power conferred under Order XXXIX Rules 1 and 2, C.P.C., is discretionary , which cannot be granted to parties approaching Court with unclean hands and ulterior motives. He has argued that a bare perusal of the plaint shows that the sole purpose, aim and objective of the plaintif fs in filing the suit and the applications under reply is to coerce, extort, intimidate and unlawfully complete the defendants into surrendering to the unlawful, extortionate and ludicrous demands of the plaintif fs. He has further argued that it has been consistently held by the apex Courts that the plaintif fs cannot seek specific performance of an expired agreement and therefore if enforcement of the expired agreement cannot be sought, the necessary corollary is that no injunctive relief can be asked for. He has further argued that perusal of the Production Frame Work Agreement dated 11.06.2018 has expired after a period of twelve months pursuant to its execution and as a consequence thereof the agreement stood revoked after the said date hence no vested right has accrued in favour of the plaintif fs and accordingly no injunctive relief could be sought in the exigencies of the given circumstances. He has also urged that plaintif fs have failed to establish a prima face case; the balance of convenience is not in their favour and the plaintif fs will not suffer irreparable loss, if injunctive relief will not be granted to the plaintif fs as prayed. He has also argued that it is a well settled law that if the loss is measureable in terms of money , injunction cannot be granted. He has referred to Section 56(i) of the Specific Relief Act, 1877 that an injunction shall not be granted when equally efficacious relief can be obtained by any other usual mode of proceedings. He has urged that plaintif fs have prayed for rendition of accounts in respect of the agreement and therefore the breach, if any, can be measured in terms of money , as such, the question of irreparable loss caused to the plaintif fs does not arise. He has submitted that when a suit is non-maintainable the injunction can also not be granted.. He has therefore, urged that suit is barred under Sections 21 and 56 of the Specific Relief Act, 1877 as no cause of action has accrued to the plaintif fs to file the instant suit 12. Learned counsel for the defendants has argued that a production framework agreement was executed on 11.06.2018 inter se the plaintif fs and Defendants Nos. 1 and 2. He has made reference to the various clauses of the agreement, including clause 6(ix) which relates to commitment and timely provision and availability of funds by the Investor as detailed in approved budget shall be the essence of this agreem ent. He has submitted that the modalities in respect of profit sharing are expressly provided in. Clause 7 of the agreement, which reads as under:-
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i. The Investor shall invest an amount of PK.60,000,000/- which shall be disbursed as per the schedule attached herewith. ii. The profit shall be shared as per 75:25 ratio between the parties (Investor : Producer). iii. The net profit as defined in schedule shall be calculated and onward distribu ted between the Producer and Investor as per the following arrangement; Investment shall be recouped first; After recouping the investment amount , the net profit, as per its arrival, shall be distributed as per investment amount basis between the Procedure and Investor; iv. The Producer and Investor shall also share loss, if any , as per their respective share of investments; 13. He has also made reference to Clause 8 of the Agreement, which is provided that if further financing or investment is required, the parties with the mutual consent will decide to invest further or borrow from any bank or financial institutions or from such other persons or parties at such rates in the best interest of project. However , in case of third party investment, the Producer's profit sharing ratio shall not be changed and affected in any manner . He has further added that in terms of Clause 21 of the agreement, the parties have the right to terminate the agreement. He has further made refere nce to Clause 23 of the agreement which provides that all costs of production that have been mobilized and present on expense sheet till the date of termination will be compensated accordingly on immediate basis by the Investor . He has argued that the responsibilities of the Investor as per Schedule 1 of the Agreement, inter alia, includes provision of timely funds/investments as per the agreed schedule of production management. He has urged that it is categorically provided in Clause A(2) in Schedule 2 of the Agreement, that the amount of Rs.60,000,000/- shall be released by Investor to Producer as per the following arrangement:- (a) Rs. 12,500,000/- upon execution of the Agreement; (b) Rs. 17,500,000/- September 2018; (c) Rs. 15,000,000/- November 2018; (d) Rs. 15,000,000/ - January 2019; 14. Learned counsel for the defendants has urged that it is duly evidenced from a bare perusal of the documents annexed along with the plaint that the Plaintif fs failed to fulfill their obligations and never released any payments in accordance with the aforesaid arrangement provided in Schedule 2 of the Agreement. He has drawn attention of this Court to an email dated 15.02.2019 whereby a representative of defendants Nos. 1 and 2 informed the plaintif f about the default in making payments that the plaintif fs failed to fulfill their obligat ions towards defendants Nos. 1 and 2 in accordance with the payment mechanism stipulated in Schedule 2 of the Agreement and requested the plaintif fs to fulfill their obligations by paying the balance amount. He has urged that plaintif fs responded to the said email after a lapse of one year through email dated 23.02.2020, which reflects that even the first installment was not paid by the plaintif fs in accordance with the agreed payment mechanism provided in Schedule 2 of the agreement. He has urged that even then the plaintif fs failed to pay an amount of more than Rs.25,000,000/- out of the agreement amount. He has argued that the completion of the project was delayed due to the default made by the plaintif fs and as a consequence thereof the cost of the project exorbitantly increased. He has, therefore, urged that facing such situation, the defendants Nos.1 and 2 were constrained to seek other investment opportunities due to failure of the plaintif fs to fulfill their obligations under [he agreement, the defendant No.3 made investment in order to facilitate completion of the project. He has submitted that the details of investment made by the defendant No.3 reflects from the annexures attached with the counter-af fidavit filed by defendant No.3. 15. Learned counsel for the defendants Nos.1 and 2 has next argued that the involvement of the third party investor was well acknowledged by the plaintif fs in their email dated 06.03.2020. For ready reference the said email is reproduced hereunder:- "With reference to our discussion on Skype, I can understand that the film cann ot be completed in the initially estimated budget of Rs. 60 million. As per your recommendation there is an investor who is helping completing the film.
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Moving forward the total amount invested by you (Mohib Mirza), me (Syed Waqar. Haider Zaidi) and the investor can be totaled once the films get completed and all 3 parties can share holder according to the amount invested. The amount invested to be returned accordingly with the revenue starts coming in. The profit share can be mutually agreed once all the invested amount is returned to all parties. If agreed this is to be formalized as soon as possible. We can also work on complete buy out option, the difference will be a percentage of invested amount (at least 50 percent) to be settled right away remaining can be clone once the film releases on the formula mentioned above, the percentage of the amount will change accordingly , there will be no profit sharing in second option." 16. Learned counsel for the defendants has submitted that it is acknowledged by the Plaintif fs in the aforementioned email that the budget of the Project far exceeded the initial budget of Rs.60,000,000/-. He has drawn attention of this Court to the docum ents enclosed along with the counter-af fidavit of defendants Nos. 1 and 2 which shows that the amount of more than Rs.170,000,000/- (Rupees One Seventy Million) has already been invested in the Project. He has further argued that the expenditure in respect of the Project also increased as the team involved therein, was unfortunately stranded in Thailand due to the outbreak of COVID-19 coronavirus, which was widely disseminated in electronic and print media. He has urged that the documents produced on record by the plaintif fs clearly testify to the fact that the plaintif fs have never shown willingn ess or commitment towards the payment of the remaining amount of more than Rs.25,000,000/-. Furthermore, any such statement showing willingness towards payment of the rema ining amount is conspicuous by its absence in the plaint filed in the suit under reference. He has therefore argued that the plaintif fs instead of abiding by the terms and conditions of the Agreement, instituted the instant suit wherein essentially specific performance of the Agreement was sought, the plaintif fs also filed applications for forensic audit and injunction application and by misleading this Court procured an ad interim order dated 27.08.2020 against the defendants, who are restrained to release the television, social media, motion picture titled "Ishrat Baji Made in…
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