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Indian CasesSupreme Court of India

John Wiley & Sons Inc. & Ors. vs Prabhat Chander Kumar Jain & Ors. on 17 May, 2010

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Delhi High Court

John Wiley & Sons Inc. & Ors. vs Prabhat Chander Kumar Jain & Ors. on 17 May, 2010

Author: Manmohan Singh

*          HIGH COURT OF DELHI : NEW DELHI

+          IA No.11331/2008 in CS (OS) No.1960/2008

John Wiley & Sons Inc. & Ors.                      ......Plaintiffs
                    Through: Mr. Mukul Rohatgi, Sr. Adv. with
                              Ms. Jyoti Taneja, Mr. Shine Joy and
                              Ms. Urvashi Basak, Advs.

                       Versus

Prabhat Chander Kumar Jain & Ors.                   .....Defendants
                   Through: Mr. Rahul Gupta with Mr. Gaurav
                              Barati, Mr. S. Dasi, Mr. S. Gupta
                              and Mr. Rajnish Mishra, Advs.

Judgment decided on : May 17, 2010

Coram:
HON'BLE MR. JUSTICE MANMOHAN SINGH

1. Whether the Reporters of local papers may
   be allowed to see the judgment?                     Yes

2. To be referred to Reporter or not?                  Yes

3. Whether the judgment should be reported
   in the Digest?                                      Yes

MANMOHAN SINGH, J.

1. By this order, I shall dispose of IA No.11331/2008 filed under Order XXXIX Rule 1 and 2 read with Section 151 of the Code of Civil Procedure (‗CPC’ for brevity) seeking temporary injunction restraining the defendants from infringing the copyrights in the books as stated in the plaint and IA No.14897/2008 filed under Order XXXIX Rule 4 CPC by Defendants no. 1 and 3 seeking the vacation and modification of order dated 17.09.2008 passed by this Court.

2. The brief factual matrix of the matter can be enunciated as under:

a) The plaintiff no. 1 John Willey & Sons Inc., a corporation incorporated under the laws of New York in USA claims to be the owner of the copyrights in the books and plaintiff no. 2 Wiley India Pvt. Ltd is the exclusive licensee of the plaintiff no. 1 having its office at Delhi.

b) The plaintiff no. 3 Cengage Learning Inc., a corporation incorporated under the laws of State of Delaware in US is the owner of the copyrights in the books and the plaintiff no. 4 Cengage Learning India Pvt. Ltd is an affiliate and exclusive licencee of the plaintiff no. 3 which publishes the books of the plaintiff no. 3 in India.

c) The plaintiff no. 5 Pearson Education Inc. is a corporation incorporated and existing under the laws of the State of Delaware in USA.

d) The plaintiff No.6 Dorling Kindersley India Pvt. Ltd. is a company incorporated in India under the Companies Act having its registered office at New Delhi.

3. The plaintiffs (collectively) claim to be pioneers in their respective fields of publishing academic, scientific and other educational books which are circulated world wide. The plaintiffs claim to have a repertoire of the books which are published by them and are available globally at the prices settled by the plaintiffs.

4. It is averred in the plaint that the Indian market is quite significant for all the plaintiffs’ publishers and keeping in mind the requirement of the business, demand of the books and the economic viability of the purchasers, the plaintiffs decided to expand their operations in India by introducing Low Price Editions of their books so that the same international level books which are otherwise quite costly may be made available to Indian and other Asian students in a cost effective manner at the rates befitting the Asian markets.

5. In this spirit, the plaintiff no. 1 authorized plaintiff no. 2 to publish its works in Wiley Student Edition for distribution only in the territories of India, Bangladesh, Nepal, Pakistan, Sri Lanka, Indonesia, Myanmar, Phillipines and Vietnam. The books which are published are subject to territorial restrictions imposed by the plaintiff no. 1 and should contain the following notice:

― Wiley Student Edition Restricted for Sale only in Bangladesh, Myanmar, India, Indonesia, Nepal, Pakistan, Philippines, Sri Lanka and Vietnam.

The book for sale only in the country to which first consigned by Wiley India Pvt. Ltd and may not be re exported.

For sale only in : Bangladesh, Myanmar, India, Indonesia, Nepal, Pakistan, Phillippines, Sri Lanka and Vietnam ‖

6. The plaintiff no. 1 contends that in this manner, being the owner of the rights it has given exclusive license to plaintiff no. 2 to publish and print an English Language reprint edition only in the territories entailed in the agreement and not beyond that.

7. Likewise, the plaintiff no. 3 has given an exclusive license to the plaintiff no. 4 for printing, publishing, and distributing the books of plaintiff no. 3 in the territories of India, Pakistan, Bangladesh, Nepal and Sri Lanka. The plaintiff no. 4 is required to imprint the following notice on the books of plaintiff no. 3 :

―For Sale in India, Pakistan, Bangladesh, Nepal and Sri Lanka only. Circulation of this edition outside these countries is strictly prohibited.‖

8. The plaintiff no. 5 maintains the same situation by contending that the plaintiff no. 6 is authorized to publish and distribute the works of plaintiff no. 5 in India and its neighbouring states by printing the following notice :

― This edition is manufactured in India and is authorized for sale only in India, Bangladesh, Bhutan, Pakistan, Nepal, Sri Lanka and the Maldives. Circulation of this edition of this edition outside of these territories is unauthorized.‖ Additionally each book bears a yellow band at the top of the cover with the phrase ―Low Price Edition‖ prominently appearing on the front and back covers with the abbreviation ―LPE‖ on the spine of each book.

9. The plaintiffs contend that any attempt by anyone to sell, distribute or circulate the books outside the territories prescribed by the owners of the copyright shall cause infringement of the copyright. The said claim is averred in the plaint by stating that India is signatory to the Universal Copyright Convention and the Berne Convention and the rights of a copyright holder shall extend to the member countries by virtue of Section 40 of the Copyright Act.

10. It is further averred in the plaint that the said books are reprint editions which are first published in US and thereafter the reprints are effected by the licensees under the aforesaid arrangement by their respective licencees in India for sale in designated territories.

11. The grievance of the plaintiffs begins with the rampant problem of the export of books which are reprint editions meant for the Indian and neighbouring territories to the Western Countries which not only causes copyright infringement but also leads to royalty losses of the plaintiffs who are the owners of the respective copyrights. The plaintiffs claim in the suit to have taken suitable action by way of complaints before the custom officials and court actions filed earlier before this Court.

12. The plaintiffs state that their attention was drawn to Defendant No. 3 Technischer Overseas Pvt. Ltd., a bookseller in Delhi trading under the website ‗www.alibris.com’ was offering online sale and delivery worldwide of the Low Price Editions of the plaintiffs’ publications. As per plaintiffs, the defendant No.3 is owned and operated by defendant Nos.1 and 2 herein who are the Directors of defendant No.3 having their address at P-18, Green Park Extension, New Delhi. The plaintiffs have also described their predicament insofar as the defendants are attracting customers by misrepresenting that the books put up by them for sale are identical to those of the plaintiffs’. The said misrepresentation in the defendants’ own words as stated in the plaint can be described as under:

―It is an international edition in paperback. The contents are identical to the American Edition, word for word. The ISBN differs from the American Edition and the book is in black and white but the contents are completely same as the American Edition at a great price‖

13. Other websites ‗www.biblio.com’ and ‗www.biblion.co.uk’ also find mention of the plaintiffs’ books by defendant no. 3 and the defendants target customers by describing the reprint editions as “Brand New International Edition in soft cover and black and white. Content same as US Edition. Only ISBN differs from US Edition. Why pay more for the same book?”

14. The plaintiffs allege that these acts of the defendants of diverting the Low Price Edition books which are meant for sale in India and its neighbouring states to the USA, UK and other countries for which the books are not meant amounts to infringement of the plaintiffs copyright in the said books. It is submitted that the placing of the said books in circulation, that too in the countries for which the books are not meant, without the permission of the plaintiffs, is a clear infringement of the copyright of the plaintiffs.

15. The plaintiffs have also substantiated their cause of action by stating that in the month of July 2008, the plaintiffs’ representative in New York had placed an order for the purchase of two books titled ―Microwave Engineering 3/e‖ by David M. Pozar and ―Fundamentals of Fluid Mechanics 5/e‖ by Bruce R. Munson, Donald F. Young and Theodore H Okiishi for the price of US$ 16.60 and US$ 17.30 respectively. The plaintiffs state that the US editions of the above books are priced at US$ 149 and US$ 172.95 respectively. The plaintiffs representative received the said order by way of an India Speed Post sealed package and it was found that the said books are Wiley Student Editions which are restricted for sale in Bangladesh, Myanmar, India, Indonesia, Nepal, Pakistan, Philippines, Sri Lanka and Vietnam. Thus, the plaintiffs state that there is no reason to doubt that it is defendant no. 3 managed by Defendant no. 1 and 2 which is carrying out such activities of infringement of the plaintiffs’ rights.

16. In August 2008, the plaintiffs again repeated the exercise by ordering 5 titles from the defendants’ bookstore on the internet and recorded confirmation for multiple titles and receipt of US $ 152.80. Details of these titles are as under :

a. Calculus Early Transcendentals 5/e by James Stewart b. Advanced Engineering Mathematics 8/e by Erwin Kreyszig c. Fundamentals concepts of Bioinformatics by Dan E. Krane and Michael L. Raymer d. Churchill’s Pocketbook of Surgery, ISE 3/e by Raftery e. Basic Electrical Engineering 2/3 by V N Mittle and Arvind Mittal

17. The said books were received by the plaintiffs’ representative in USA and the same were also sent to the plaintiffs constituted attorney and the notarial certificate was also prepared certifying the contents of the parcel from the defendants. It is further submitted that the defendants are sending these posts by way of courier and speed posts by providing false and fictitious names and incomplete addresses of the sender which makes it clear that the defendants are conscious of their wrongful infringing acts.

18. Accordingly, the plaintiffs have filed this suit to restrain the defendants from infringing the copyright of the plaintiffs by exporting the books of the plaintiffs to the countries outside the territories prescribed on the publications of the plaintiffs. The plaintiffs have also filed an application seeking temporary injunction against the defendants being IA no. 11331/2008 which came up for hearing with the main suit on 17.09.2008 when this Court passed an ex parte order to the following effect:

―The plaintiffs have made out a prima facie case for the grant of ex-parte ad interim injunction. The Defendants and their agents and assigns and other sister concerns, till the disposal of this application, are restrained from advertising, offering for sale/exporting any publications of the plaintiffs to the countries outside territories specified on the books published by the plaintiffs.‖

20. Pursuant to notice, the defendants have appeared and filed an application being IA no. 14897/ 2008 for vacation of ex-parte injunction and also the written statement in the matter.

21. The defendants have raised manifold defences in the written statement and counter arguments which can be stated as under:

i) The nature of activities carried out by them i.e. export of the books does not tantamount to infringement of copyright. As per the defendants, there is no infringement of copyright in the act of export of the books.

ii) There is no act or overt act on their part which is actionable within the meaning of the Copyright Act, 1957 as the books once purchased are legally purchased in India and they leave the territory of India once they are exported. Thus, the defendants contend that no act of infringement is done within the territory of India and thereby the provisions of the Copyright Act are not attracted.

iii) There is no case made out as regards parallel imports where goods are brought into the territory of India and if the same are found to be infringing, they can be said to be infringement of the rights of the right holder. In contradistinction to this, the case which the plaintiffs are building is of export of the articles from India in which case there cannot be any infringement so far as the export of books from India is concerned and at best, the same may be infringement of the rights of the plaintiffs in the country where the said books are imported.

iv) The plaint does not disclose any cause of action qua infringement and same is liable to rejected under Order VII Rule 11 CPC as there is no case made out for infringement of copyright.

v) The defendants rely upon the rule of ‗exhaustion of rights’ enshrined in the copyright regime whereby the rights of the copyright holder are lost once the first sale of the article is effected i.e. the owner’s control over the article and the rights therein are exhausted on the first sale and he/she cannot control every subsequent sale by enforcing rights over the same. The said doctrine of first sale, according to the defendants operates in USA and is legally accepted. Thus, USA is the place where the plaintiffs ought to have sued the defendants. As the plaintiffs are conscious that their rights can be defeated in the USA because of first sale doctrine, the plaintiffs have filed this suit in India where there is no act of infringement.

vi) The plaintiffs have no privity of contract with the defendants and thus the defendants are not bound by the conditions mentioned on the books. The enforcement of such conditions on the books is untenable.

vii) The injunctory relief sought by the plaintiffs against the defendants raises the trade barriers and is an unfair trade practice and an anti competitive one.

viii) The suit for injunction filed by the plaintiffs is not maintainable in view of the provisions of the Specific Relief Act, 1963 as there is no right which entitles the plaintiffs to an injunction and no corresponding obligation upon the defendants thereon.

ix) The conduct of the plaintiffs is inequitable as the distributors of the plaintiffs themselves are exporting the books to various territories and are making illicit profits thereon. In these circumstances, the plaintiffs are debarred from attributing the said wrong to the defendants when they themselves are guilty of the same one.

21. After completion of pleadings, both the applications were listed before this Court and the same were heard at considerable length.

22. Mr. Mukul Rohatgi, Learned Senior counsel appearing on behalf of the plaintiffs has made his submissions which can be crystallized in the following manner:

a) Mr. Rohatgi submitted that the acts of the defendants of diverting the Low Price Editions of the books which are meant for Indian and the neighbouring territories to the territories outside the ones indicated on the books amounts to infringement of copyright.

b) To support his arguments, Mr. Rohatgi relied upon Section 14 of the Copyright Act which provides the meaning of ‗copyright’ which includes the right ‗to issue copies of the work to the public and not being copies already in circulation’. As per Mr. Rohatgi, it is the prerogative of the owner of the copyright to issue the copies of the work to the public if the same are not in circulation already and the defendants, by putting into circulation the copies of Low Price Editions meant for specific territories, are violating the right of owner of the copyright and thus causing infringement of the copyright.

c) The learned senior counsel has also referred to Section 51 of the Copyright Act to state that infringement is deemed to be done by a person who does without licence or permission any acts which are conferred on the owner of the work. Thus, as per the counsel for the plaintiffs, a clear cut case of infringement is made out.

d) The next submission of Mr. Rohatgi, Learned Senior counsel for the plaintiffs is that even the export of the goods is treated to be infringement within the meaning of the Copyright Act if it violates the rights of the owner. That being the situation, it makes no difference if the books meant for sale in India and neighbouring states are exported to other countries as that also constitutes infringement of the copyright held the owner.

23. To buttress his submission, Learned Senior Counsel relied upon the Judgment of a Division Bench of this Court in Penguin Books Ltd. Vs. India Book Distributors and Others; 26 (1984) DLT 316 (DB) wherein this Court has held that import of Britain published books from USA without seeking licence from exclusive licencee amounts to infringement of copyright. The reasoning which is relevant for the purposes of the present discussion is in paragraph 10 of the judgment which can be read as under :

―Copyright law is a territorial concept and each nation has its own laws. In America it may not be possible to place restrictions on the resale of books. But sale within the United States obviously cannot abrogate the effect of the laws of the particular place where they are imported. It appears to me that an importer would be subject to the law of the particular country to which he happens to take the books. The importer cannot disregard the laws of other countries. I would decide against the freedom (―liberty‖ as the learned Judge phrased it) from restriction claimed by India Distributors. The learned judge upheld this freedom. In my respectful opinion he was wrong. American books cannot be sold into India so as to defeat the rights of the exclusive licensee.‖

24. Likewise, as per the learned senior counsel for the plaintiffs the ratio of the judgment that the non control of the sale or resale in one country cannot abrogate the laws in another country can be conveniently applied to exports also. In other words, that the sale or resale of the Low Price Edition Books cannot be controlled in India is acceptable but the same by way of export cannot violate the international copyright of the plaintiffs in other countries. It is also submitted by the learned senior counsel for the plaintiffs that Penguin (supra) holds that the importer would be subject to the laws of the territory where he happens to import the books. Here, we are concerned with the exporter and not the importer and the exporter would be subject to the laws from where he is exporting the books.

25. Next submission of Mr. Rohatgi is that a meaningful reading of the words ―already in circulation‖ in Section 14 needs to be made in as much as the copies which are made available to the public in India may not be made available to the public in USA and UK so far as the Low Price Editions/ Student editions of the books are concerned.

26. This submission has been made to controvert the argument of first sale doctrine to demonstrate that the interpretation of first sale doctrine given by the defendants would mean that once the sale of the article has been effected in India, then the owner loses/exhausts all the rights to control the subsequent sale anywhere in the world which would be incongruous as the books which are in circulation in India may not be in circulation elsewhere in the world.

27. Hence, the submission of Learned Senior counsel for the plaintiffs is that once the export is effected to the territories beyond the ones indicated upon the books, then the books which are not in circulation in the public of that territory are made available to them, which would lead to infringement of the copyright of the plaintiffs.

28. Mr. Rohatgi countered the applicability of the first sale doctrine by stating that the same would be inapplicable in the present case in view of the preceding submission which is that the books so exported are not already in circulation in the territory where they are exported.

29. Further, it is strenuously argued by Mr. Rohatgi that the first sale doctrine is limited to the goods lawfully manufactured in USA only. The learned senior counsel sought to distinguish the decisions cited by the defendants which are primarily the decisions made by Courts in USA which include :

a) Quality King Distributors Inc. v. L’Anza Research International Inc Third 602 (a) applies to a category of copies that are neither piratical nor ―lawfully made under this title.‖ That category encompasses copies that were ―lawfully made‖ not under the United States Copyright Act, but instead, under the law of some other country.

The category of copies produced lawfully under a foreign copyright was expressly identified in the deliberations that led to the enactment of the 1976 Act. We mention one example of such a comment in 1961 simply to demonstrate that the category is not a merely hypothetical one. In a report to Congress, the Register of Copyrights stated, in part:

―When arrangements are made for both a US edition and a foreign edition of the same work, the publishers frequently agree to divide the international markets. The foreign publisher agrees not to sell his edition in the United States and the US publishers agree not to sell his edition in certain foreign countries. It has been suggested that the import ban on piratical copies should be extended to bar the importation of the foreign edition in contravention of such an agreement.‖

b) Omega SA. V. Costo Wholesale Corporation ―7 ….. Quality King involved ―round trip‖ importation: a product with a U.S. copyrighted label was manufactured inside the United States, exported to an authorized foreign distributor, sold to unidentified third parties overseas, shipped back into the United States without the copyright owner’s permission, and then sold in California by unauthorized retailers. 523 U.S. at 138-

39. The Court held that 109 (a) can provide a defense to an action under 602 (a) in this context. Ld. At 144-52. However, because the facts involved only domestically manufactured copies, the Court did not address the effect of 109 (a) on claims involving unauthorized importation of copies made abroad….

8 …..Quality King dismissed a similar concern that the triggering of 109 (a) by foreign sales would require an invalid extra territorial application of the Copyright Act, explaining that merely recognizing the occurrence of such sales ―does not require the extra territorial application of the Act any more than 602 (a)’s ‗acquired abroad’ language does.‖ 9 …..The common understanding of the presumption against extra territorial is that a U.S. statute applies only to conduct occurring within, or having effect within, the territory of the United States, unless the contrary is clearly indicated by the statute…….. Recognizing the importance of avoiding international conflicts of law in the area of intellectual property, however, we have applied a more robust version of this presumption to the Copyright Act, holding that the Act presumptively does not apply to conduct that occurs abroad even when that conduct produces harmful effects within the United States….

11 …..In short copies covered by the phrase ―lawfully made under [Title 17] in 109 (a) are not simply those which are lawfully made by the owner of a U.S. copyright. Something more is required. To us, that ―something‖ is the making of the copies within the United States where the Copyright Act applies….

`Gray-Market’ goods, or `parallel imports’ are genuine products possessing a brand name protected by a trademark or copyright. They are typically manufactured abroad, and purchased and imported into the United States by third parties, thereby bypassing the authorized U.S. Distribution channels.‖

c) Microsoft Corporation v. Big Boy Distribution LLC The rationale here is that the first sale doctrine protects only resales of works lawfully made ―under this title‖, a phrase which is generally interpreted to mean works legally made in the United States. That is, the first sale doctrine has no application to copyrighted works manufactured abroad because such works are not made under this title.

d) Pearson Education Inc. vs. Jun Liao ―….. In other words, ―once the copyright owner places a copyrighted item in the stream of commerce by selling it, he has exhausted his exclusive statutory right to control its distribution….

―However, the first sale doctrine does not necessarily protect persons who purchase copies of copyrighted works outside the United States and then import them into the United States for resale…. Section 602 (a) of Title 17 provides that `importation into the United States, without the authority of the owner of copyright… of copies…. of a work that have been acquired outside the United States is an infringement of the exclusive right to distribute copies…. under Section Recognizing that application of the first sale defense to all cases would vitiate Section 602 (a) courts have held that where the copy in question was manufactured abroad, Section 109 (a) does not provide a defense to a copyright infringement claim…‖

30. Relying upon these observations, it is contended by the learned senior counsel for the plaintiffs that the defendants’ defence of first sale doctrine is misplaced and the same is not applicable in the present case.

31. It is submitted by Mr. Rohatgi that if at all there is any exhaustion of rights, the same would be limited to the territories where the sales are effected by the owner/ authorized to be effected by the owner which means the territories indicated on the book and not beyond the same. Thus, the first sales doctrine has limited applicability to the extent of territorial limitation.

32. Learned senior counsel for the plaintiff stated that this Court is the appropriate forum to adjudicate the present dispute as the defendants are offering the books for sale from India, they are purchasing the same from India and thereafter exporting to other territories. The defendants are amenable to the jurisdiction of this court as they are carrying on such business and residing within territorial jurisdiction of this court. Section 19 of the Sales of Goods Act, 1930 is relied upon to support the submission that the property in the goods shall pass where the parties intend it to be transferred.

33. He argued that there is a consent decree which is passed against the Defendant no. 2 on 4.2.2008 by United States District Court Southern District, New York whereby the Defendant no. 2 has agreed to suffer a decree of permanent injunction amongst others in the said proceeding. Operative part of the decree reads as under :

……ORDERED, ADJUDGED and DECREED that defendants Amit Gupta, Subodh Jain, and HPC Publishers Distributors, each doing business as HPC Publishers and defendant Stream Dollar Store, and their agents, servants, and employees, and all those acting in concert with them, if any, are hereby PERMANENTLY ENJOINED, either directly or indirectly through a third party, from :-

(i) Infringing the registered copyrights and trademarks of plaintiff Person Education, Inc. (―Pearson‖), identified on Schedules A and E hereto, the registered copyrights and trademarks of plaintiff John Wiley and Sons, Inc. (―Wiley‖), identified on schedules B and F hereto, the registered copyrights and trademarks of plaintiff Cengage Learning Inc., formerly known as Thomson Learning Inc. (―Cengage‖), identified on schedules C and G hereto, and the registered copyrights and trademarks of plaintiff The McGraw-Hill Companies, Inc. (―McGraw-Hill‖), identified on schedules D and H hereto, in violation of 17 U.S.C. s 501 or 15 U.S.C. S 1114 (a)

(ii) infringing any other registered copyright or trademark of Pearson, Wiley, Cengage or McGraw-Hill in violation of 17 U.S.C. s 501 or 15 U.S.C.

s 1114 (a), including through the sale to any resident of the United States of any book marked to prohibit its resale in the United States; and

(iii) falsely designating the origin of their products or services in violation of the rights of Pearson, Wiley, Cengage and McGraw-Hill under 15 U.S.C. s 1125 (a); and it is further ORDERED, ADJUDGED and DECREED that defendants Amit Gupta, Subodh Jain, HPC Publishers Distributors, each doing business as HPC Publishers, and defendant Stream Dollar store shall, jointly and severally, pay Pearson, Wiley, Cengage, and McGraw-Hill damages in the amount of $ 9,000 payable to the order of Dunnegan LLC as attorneys for Plaintiffs forthwith by check delivered to their undersigned attorney, and it is further ……….

34. The learned counsel for the plaintiffs summed up his submissions by stating that in view of the foregoing submissions, there is a prima facie case in favour of the plaintiffs as the defendants are illegitimately exporting the Low Price Editions of the books to the territories outside the ones indicated on the books and causing infringement of copyright.

35. Further, the balance of convenience is in favour of the plaintiffs as it is plaintiffs’ rights which are being violated by reason of the defendants’ acts. It is also argued by him that similar rights have been protected by this Court in various cases and parties have suffered an injunction against them. The plaintiffs are likely to suffer irreparable damage if the defendants are not restrained by way of appropriate injunction orders by this Court. Thus, the present case warrants the grant and confirmation of interim orders granted on 17.9.2008 by this Court.

36. Per Contra the submissions of Mr. Rahul Gupta, learned counsel for the defendants can be summarized in the following manner:

a) Mr. Gupta firstly submitted that the present case of the plaintiffs does not fall under any of the provisions of the Copyright Act. Section 51 of the Act was read by Mr. Gupta to contend that there is no provision in the said Section and nor there is any provision under Section 14 of the Act whereby the export of the books would tantamount to infringement. Thus, learned counsel submitted that no provision of the Copyright Act, 1957 is attracted which can lead to infringement of copyright.

b) Mr. Gupta advanced the preceding argument by further contending that the analogy of import cannot be equated with the export of the article. Mr. Gupta has supported this argument by stating that so far as the import of the work is concerned, the Legislature has specifically included the same within the meaning of infringement by express inclusion of such import in Section 51 as well as Section 2 (m) which talks about infringing copies of an article.

c) Mr. Gupta submitted that by not including export of the work within the definition of ‗infringing copy’ or in the provision for infringement, the same cannot be read into it to make out a case of infringement when it is actually not so. Hence, the export of the books does not amount to infringement within the meaning of the Act.

37. It was argued by Mr. Gupta that the first sales doctrine is applicable to the present case and the plaintiffs have exhausted all their rights to control the subsequent sales of the books after effecting the first sale in India. It was argued that the first sale doctrine is applicable to the Indian Act as well. He argued that there is no case of infringement of any copyright in Indian jurisdiction and the sale of books in India is not in any manner illegal as per the provision of Section 2(m) read with Section 14 (a) (ii) read with explanation read with Section 51 of the Copyright Act where the rights of the owner have been limited to issuance of copies which are not already in circulation. Learned counsel for the defendant has read the explanation appended to the Section which reads

(a)…..

(i) …..

(ii) to issue copies of the work to the public not being copies already in circulation;

Explanation.–For the purposes of this section, a copy which has been sold once shall be deemed to be a copy already in circulation.

38. Mr. Gupta submitted that the words ―already in circulation‖ clearly recognize the first sales doctrine whereby once the owner of copyright has exercised his right to issue the copies, the owner loses all future rights to control the subsequent sales of the same work. He argued that the owner’s right is not absolute but is curtailed by the first sales doctrine.

39. Learned counsel for the defendants has relied upon the following decisions in order to strengthen his submission:

a) Bobbs Merrill Co. vs. Straus decided on 1.6.1908 by the US Supreme Court, 210 US 339 (1908)

b) Quality King Distributors, Inc. vs. L’ansa Research International, Inc. decided on 9.3.1998 by the US Supreme Court.

c) MIPR 2009 (2) 175 titled “Warner Bros Entertainment Inc. & Ors. vs. Santosh V.G. decided on 13.4.2009 by this Court.

42. Great stress has been laid to the decision of a learned Single Judge of this Court in Warner Bros Entertainment Inc & Others v. Santosh V.G. which according to learned counsel for the defendants recognizes the said doctrine of first sales in relation to the literary works. The relevant paragraphs relied upon by the defendants are paragraphs 58 and 63 of the judgment.

43. Mr. Gupta also submitted that the foreign judgment/consent decree passed in the US Court is not binding upon this Court and does not effect the case of the defendants. Lastly, it was argued by the learned counsel for the defendants that this Court does not have territorial jurisdiction to try the present matter as there is no cause of action which has occurred within the territorial jurisdiction of this court.

44. After hearing the submissions made by the parties, I feel it appropriate to divide my discussion on the subject into the following heads:

a) Infringement of copyright

b) Applicability of first sale doctrine and its probable impact.

c) Conclusion Infringement of copyright

45. Copyright is a bundle of rights which is meant for authors and creators so that they may reap the benefits of their creations. The said rights also enable the owners/right holders to exploit their work to the maximum by controlling the distribution of their work. This can be done through multiple licencing arrangements which can be further subjected to territory wise distribution.

46. Due to the advent of new and upgraded technology, copyright law has seen new dimensions and several branches of sub rights have emerged which have become ways of exploiting the creator’s works. These rights include licenses like distribution rights, cable rights, television rights, radio rights, cinematograph rights and all other multimedia rights which operate to the exclusion of each other. In this world of commerce, the primary aim of copyright which was meant for rewarding literary and artistic creativity and prowess seems to have been lost. In the present case also, this Court is faced with a situation wherein the defendants have found a way of doing business by taking orders online and thereafter exporting/ shipping the books published by the plaintiffs (exclusive licensees) whose sale and distribution is subject to territorial restriction to the territories where they are not intended to be distributed by the plaintiffs. This court is invited to answer the question as to whether the act amounts to infringement of copyright or not.

47. The rights of the owners of copyright are defined under Section 13 and 14 of the Copyright Act, 1957. Further, Section 51 provides what constitutes infringement. The Sections are reproduced hereinafter for the sake of discussion:

13. Works in which copyright subsists –

(1) Subject to the provisions of this Section and the other provisions of this Act, copyright shall subsist throughout India in the following classes of works, that is to say –

(a) Original, literary, dramatic, musical and artistic works,

(b) cinematograph films, and

(c) [sound recordings] (2) Copyright shall not subsist in any work specified in sub Section (1), other than a work to which the provisions of Section 40 or Section 41 apply, unless-

(i) In the case of published work, the work is first published in India, or where the work is first published outside India, the author is at the date of such publication, or in a case where the author was dead at that date, was at the time of his death, a citizen of India,

(ii) In the case of an unpublished work other than [work of architecture], the author is at the date of the making of the work a citizen of India or domiciled in India; and

(iii) In the case of [work of architecture], the work is located in India Explanation- In the case of a work of joint authorship, the conditions conferring copyright specified in this sub Section shall be satisfied by all the authors of the work.

(3) Copyright shall not subsist-

(a) In any cinematograph film if a substantial part of the film is an infringement of the copyright in any other work;

(b) In any [sound recording] made in respect of a literary, dramatic or musical work, it in making the [sound recording], copyright in such work has been infringed.

(4) The copyright in a cinematograph film or a [sound recording] shall not affect the separate copyright in any work in respect of which a substantial part of which, the film, or as the case may be, the [sound recording] is made.

(5) In the case of a work or architecture, copyright shall subsist only in the artistic character and design and shall not extend to processes or methods or construction.

14. Meaning of copyright- For the purposes of this Act, “copyright” means the exclusive right subject to the provisions of this Act, to do or authorise the doing of any of the following acts in respect of a work or any substantial part thereof, namely:

(a) In the case of a literary, dramatic or musical work not being a computer programme,-

(i) to reproduce the work in any material form including the storing of it in any medium by electronic means;

(ii) to issue copies of the work to the public not being copies already in circulation;

(iii) to perform the work in public, or communicate it to the public;

(iv) to make any cinematograph film or sound recording in respect of the work;

(v) to make any translation of the work;

(vi) to make any adaptation of the work;

(vii) to do, in relation to a translation or an adaptation of the work, any of the acts specified in relation to the work in sub Clauses (I) to (vi)

(b) In the case of a computer programme,-

(i) to do any of the acts specified in Clause (a)

(ii) to sell or give on commercial rental or offer for sale or for commercial rental any copy of the computer programme: Provided that such commercial rental does not apply in respect of computer programmes where the programme itself is not the essential object of the rental.]

(c) In the case of an artistic work,-

(i) to reproduce the work in any material form including depiction in three dimensions of a two dimensional work or in two dimensions of a three dimensional work;

(ii) to communicate the work to the public;

(iii) to issue copies of the work to the public not being copies already in circulation;

(iv) to include the work in any cinematograph film;

(v) to make any adaptation of the work;

(vi) to do in relation to an adaptation of the work any of the acts specified in relation to the work in sub Clauses (i) to

(iv);

(d) In the case of a cinematograph film-

(i) to make a copy of the film, including a photograph of any image forming part thereof;

(ii) to sell or give on hire, or offer for sale or hire, any copy of the film, regardless of whether such copy has been sold or given on hire on earlier occasions;

(iii) to communicate the film to the public

(e) In the case of a sound recording-

(i) to make any other sound recording embodying it;

(ii) to sell or give on hire, or offer for sale or hire, any copy of the sound recording regardless of whether such copy has been sold or given on hire on earlier occasions;

(iii) To communicate the sound recording to the public Explanation – For the purposes of this Section, a copy which has been sold once shall be deemed to be a copy already in circulation.]

51. When copyright infringed – Copyright in a work shall be deemed to be infringed –

(a) When any person, without a licence granted by the owner of the Copyright or the Registrar of Copyrights under this Act or in contravention of the conditions of a licence so granted or of any conditions imposed by a competent authority under this Act-

(i) does anything, the exclusive right to do which is by this Act conferred upon the owner of the copyright, or

(ii) permits for profit any place to be used for the communication of the work to the public where such communication constitutes an infringement of the copyright in the work, unless he was not aware and had no reasonable ground for believing that such communication to the public would be an infringement of copyright, or]

(b) When any person –

(i) makes for sale on hire, or sells or lets for hire, or by way of trade displays or offers for sale or hire, or

(ii) Distributes either for the purposes of trade or to such an extent as to affect prejudicially the owner of the copyright, or

(iii) By way of trade exhibits in public, or

(iv) Imports [***] into India, any infringing copies of the work:

[Provided that nothing in Sub-clause (iv) shall apply to the import of one copy of any work, for the private and domestic use of the importer.] Explanation – For the purposes of this Section, the reproduction of a literary, dramatic, musical or artistic work in the form of a cinematograph film shall be deemed to be an “infringing copy”.

46. A collective reading of the above Sections make it abundantly clear that copyright subsists in a literary work by virtue of Section 13 of the Act. Section 14 of the Act carves out the rights for the different copyright subjects which are subject to the other provisions of the Act. Section 51(a) defines the infringement of copyright which by basically outlining the primary acts of infringement by any person who does the acts which are conferred on the owner of the copyright without licence or in contravention of the conditions of the licence. The said rights are the rights which are provided under Section 14 of the Act.

47. The rights conferred under Section 14 of the Act are subject to the provisions of the Act. The said aspect needs consideration in the present case so as to demarcate the rights which are conferred upon the exclusive licencee which Section 14 provides for and meaning of the copyright in respect of the various subjects of the copyright and definition of the rights. Thus, the rights under Section 14 of the Act can be limited or circumscribed by the owner as per his/her desire in the manner provided in subsequent chapters relating to assignment and transmission.

48. Chapter VI of the Copyright Act deals with the aspect of licensing which is merely a permissive right and is a way of limiting the rights of the license by the owner of the copyright. Section 30 reads as under:

30. Licences by owners of copyright.- The owner of the copyright in any existing work or the prospective owner of the copyright in any future work may grant any interest in the right by licence in writing signed by him or by his duly authorised agent:

Provided that in the case of a licence relating to copyright in any future work, the licence shall take effect only when the work comes into existence.

Explanation.- Where a person to whom a licence relating to copyright in any future work is granted under this Section dies before the work comes into existence, his legal representatives shall, in the absence of any provision to the contrary in the licence, be entitled to the benefit of the licence.

49. Section 30 A provides the applicability of Section 19 and 19 A of the Act by way of necessary adaptation and modification. The said Section 19 and 19A reads :

19. Mode of assignment.- [(1)] No assignment of the copyright in any work shall be valid unless it is in writing signed by the assignor or by his duly authorised agent.

(2) The assignment of copyright in any work shall identify such work, and shall specify the rights assigned and the duration and territorial extent of such assignment.

(3) The assignment of copyright in any work shall also specify the amount of royalty payable, if any, to the author or his legal heirs during the currency of the assignment and the assignment shall be subject to revision, extension or termination on terms mutually agreed upon by the parties.

(4) Where the assignee does not exercise the right assigned to him under any of the other sub-Sections of this Section within a period of one year from the date of assignment, the assignment in respect of such rights shall be deemed to have lapsed after the expiry of the said period unless otherwise specified in the assignment.

(5) If the period of assignment is not stated, it shall be deemed to be five years from the date of assignment.

(6) If the territorial extent of assignment of the rights is not specified, it shall be presumed to extend within India.

(7) Nothing in sub-Section (2) or sub-Section (3) or sub- Section (4) or sub-Section (5) or sub-Section (6) shall be applicable to assignments made before the coming into force of the Copyright (Amendment) Act, 1994.

19A Disputes with respect to assignment of copyright.-(1) If an assignee fails to make sufficient exercise of the rights assigned to him, and such failure is not attributable to any act or omission of the assignor, then, the Copyright Board may, on receipt of a complaint from the assignor and after holding such inquiry as it may deem necessary, revoke such assignment.

(2) If any dispute arises with respect to the assignment of any copyright the Copyright Board may, on receipt of a complaint from the aggrieved party and after holding such inquiry as it considers necessary, pass such order as it may deem fit including an order for the recovery of any royalty payable:

Provided that the Copyright Board shall not pass any order under this sub-Section to revoke the assignment unless it is satisfied that the terms of assignment are harsh to the assignor in case the assignor is also the author :

Provided further that no order of revocation of assignment under this sub-section, shall be made within a period of five years from the date of such assignment.

50. A careful reading of the Section further makes it clear that the owner by exercising the right to licence further demarcates the rights and imposes conditions and limitations by way of a period wise licence or territory wise licence exclusive or non exclusive etc. Licencing is a mode of maximum exploitation of the rights under the Act by imposing conditions and limitations upon the rights.

51. In the present case, the plaintiff no. 1 has authorized the plaintiff no. 2 as an exclusive licencee to publish the books of the plaintiff no. 1 in India for the limited the territories. Likewise is the situation with plaintiff no. 3 and 4 and 5 and 6. The said licensing arrangement is done by the owners of the copyright by way of imposing the relevant territorial condition in the agreement of licencing.

52. The plaintiffs have filed their agreement of licensing wherein the necessary clauses are discussed hereinafter:

a) The agreement between plaintiff no. 1 and plaintiff no. 2 is dated March 30, 2007 which is effective from May 1, 2006 and the said agreement relates to permission to issue reprint editions of the books. The clauses of the agreement reads as under :

―The titles listed on the attached Schedule A are the subject of various reprint agreements between Willey & John Willey & Sons (Asia) Pvt. Ltd which granted English language reprint rights. All of the titles listed are published in print and for sale as English language reprint editions in the following territories : India, Bangladesh, Indonesia, Myanmmar, Nepal, Pakistan, Phillipines, Sri Lanka,, Vietnam. Whereas Wiley now wants such reprints to be transferred to Wiley India Pvt Ltd , all three parties agree that :

a) By Signature of an authorized officer on this agreement John Wiley & Sons (Asia) Pvt. Ltd agrees and affirms that all rights granted to them in the titles on the attached schedule A by Wiley are transferred to Wiley India Pvt. Ltd.

b) By signature of the authorized officer on this agreement, wiley hereby approves such transfer of the rights.

c) By signature of an authorized officer on this agreement, Wiley India Pvt Ltd hereby agrees to assume all rights previously granted to John Wiley & Sons (Asia) Pte Ltd in the titles listed on the attached Schedule A and all obligations therein.

Such titles are hereinafter referred to as ―works:. The reprint editions of the works prepared by Wiley India Pvt Ltd are hereinafter referred to collectively as ―The Reprints‖ .‖ The said agreement is the transfer of the licensing rights from previous licencee John Wiley & Sons (Asia) Pvt. Ltd to Wiley India Pvt. Ltd. Further, the agreement talks about the termination clause in case of failure of the licencee to perform its obligation. The said agreement is also subject to limitation of 5 years from the date of the execution. There is a royalty payable which is 10% of the publisher’s net receipt for each reprint. All these denote the intention of the parties to enter into the licensing arrangement.

Likewise the plaintiffs have filed in the list of documents the titles of the books wherein the relation between the plaintiff no. 3 and 4, and 5 and 6 are acknowledged on the titles itself. The said titles reads as under :

―Copyright © 2003 by Pearson Education Inc. This edition is published by arrangement which Pearson Education Inc, one lake street Upper Saddle river, NJ, 07458 USA and Dorling Kindersley Ltd…….

………

Published by Dorling Kindersley India Pvt Ltd, a Licensees of Pearson Education in South Asia………‖ Similar is the situation with the plaintiff no. 3 and 4. All these documents are prima-facie indications that the plaintiffs 1, 3, 5 are the owners and the plaintiffs no. 2, 4, 6 are licencees for the limited territories.

53. The above interplay of the provisions of the Act clarifies the position that the rights defined under Section 14 of the Act are subject to the provisions of assignment and licensing and their limitations thereof. Further, the rights of a licencee are not the same as those of the owner.

54. Coming back to Section 51(a) of the Copyright Act, 1957 which defines infringement under the Act, the Section provides that the copyright shall be deemed to be infringed by a person who without a licence granted by the owner of the copyright or in contravention to the conditions of a licence so granted does anything, the exclusive rights to do which is by this Act conferred upon the owner of the copyright.

55. The primary infringement of the copyright under Section 51

(a) of the Act is the violation of the rights conferred upon the owner of the copyright. Infringement of rights under the Act has thus to be seen from the perspective of the rights of the owner and not those of the licencee. There is fine distinction between the limited rights of the licencee and those of the owner.

56. It is an established principle of the law that when a plain and a natural reading and meaning of a Section is clear and unambiguous, then the court cannot insert or introduce any words to the Section and cannot depart from the plain reading principle or literal rule. In Association for Development versus Union of India & Others, 167 (2010) DLT 481 DB this court approved the literal rule and observed that ―it is not the duty of the court to enlarge the scope of the legislation when the language of the provision is plain and unambiguous. The court cannot recast or reframe the legislation for the very reason it has no power to legislate. The court cannot add words to a statute or reads words into it which are not there.”

57. Applying the plain rule and giving it its natural and existing meaning, Section 51 of the Copyright Act talks about infringement of the rights of the owner which are different from that of the licencee. It may be possible that the bundle of the rights of the owner may include the rights of the licencee, but the infringement of the rights has to be measured from the rights of the owner and not from the limited rights of the licencee.

58. The difference between the rights of the owner and exclusive licencee also becomes more apparent in view of Section 54(a) which is a defining Section, only applicable for the purposes of Chapter XII. The Section reads:

―54. Definition.–For the purposes of this Chapter, unless the context otherwise requires, the expression ―owner of copyright‖ shall include –

(a) an exclusive licensee;‖

59. The limited applicability of the present Section which defines the owner of the copyright which include the exclusive licensee only for the purposes of Chapter XII is indicative of the legislative intent which is that the Legislature intended to treat the owner of the copyright and exclusive licencee at parity only for the limited purpose of chapter XII and not for all other purposes.

60. The said Chapter XII under the Act deals with the civil remedies including civil remedies for infringement under Section 55 of the Act. The said Section 55 reads as under:

―55. Civil remedies for infringement of copyright.–(1) Where copyright in any work has been infringed, the owner of the copyright shall, except as otherwise provided by this Act, be entitled to all such remedies by way of injunction, damages, accounts and otherwise as are or may be conferred by law for the infringement of a right:

―Provided that if the defendant proves that at the date of the infringement he was not aware and had no reasonable ground for believing that copyright subsisted in the work, the plaintiff shall not be entitled to any remedy other than an injunction in respect of the infringement and a decree for the whole or part of the profits made by the defendant by the sale of the infringing copies as the court may in the circumstances deem reasonable.

(2) Where, in the case of a literary, dramatic, musical or artistic work, a name purporting to be that of the author or the publisher, as the case may be, appears on copies of the work published, or, in the case of an artistic work, appeared on the work when it was made, the person whose name so appears or appeared shall, in any proceeding in respect of infringement of copyright in such work, be presumed, unless the contrary is proved, to be the author or the publisher of the work, as the case may be.

(3) The costs of all parties in any proceedings in respect of the infringement of copyright shall be in the discretion of the court.‖

61. The limited applicability of definition of an owner of copyright to include exclusive licensee only for the purposes of Chapter XII indicates the legislative intent which is to give benefit to the copyright owner to have additional right to sue for the purposes of suing for infringement of copyright through the exclusive licensee clear. But for the purposes of the other chapters including the allocation of rights and defining the rights under the Act, the definition of the owner including exclusive licencee will not be applicable. This is a rather deliberate omission vis-à-vis the other chapters and a conscious insertion/exception by the Legislature only for Chapter XII to give additional right to sue to the copyright owner through its exclusive licensee.

62. A logical corollary drawn from above analysis which needs reiteration at this stage is that for the purposes of Section 51 which is in the preceding chapter, the term ―owner of the copyright‖ does not include exclusive licencee. Thus, the rights of the owner although may include rights of the exclusive licensee but the court cannot read the term ―owner of the copyright‖ as that of the exclusive licencee and their rights are different as per the allocation by the owner.

63. Once, the legal proposition is crystallized that the court will concern itself with the infringement of rights of the owner of the copyright and not that of the exclusive licencee, it becomes easier to understand the present discussion and also the meaning of the copyright under Section 14 of the Act.

64. In the present case, the plaintiff nos. 1, 3 and 5 are the owners of copyright in their respective literary works and they have licenced their rights subject to territorial restrictions as mentioned above to plaintiff nos. 2, 4 and 6. The rights of the owners of the copyright which are plaintiff nos. 1, 3, and 5 will be broader and will not be subject to any limitation as against the rights of exclusive licensees which are plaintiff nos. 2, 4 and 6.

65. The relevant excerpt of Section 14 of the Act states that the right of the owner of the copyright in the literary work will be

a) …..

b) to issue the copies of the work to the public and not being the copies already in circulation

c) …..

66. The right of the owner of the copyright to issue the copies of the work to the public will not be circumscribed by any territorial limitation. Thus, the owner of the copyright will have the right to issue the copies of the work not being the copies already in circulation worldwide. This proposition also gets amplified by reading subsequent sections in the Act relating to assignment and licensing. Section 19 which is also mutatis mutandis applicable to licensing by operation of section 30 A also talks about the mode of the covenant in assignment and licensing. Section 19 (6) postulates that if the covenant is silent about the territory, then said assignment/ or licensing by deeming fiction of law shall be limited to India. This is the statutory recognition of the principle that the owner’s right under the copyright Act is not circumscribed by the territorial limitation and rather the owner can assign or license its rights worldwide. This is also applicable to an Indian author or owner, for instance, if an Indian person is the author and the owner of the book, then the said person will have a copyright to issue the copies of his work to the public anywhere in the world. The right of the owner of the copyright to issue copies of the work to the public in the present case would be the rights of the plaintiff no. 1, 3, 5 to issue copies to the public worldwide including but not limiting to India or to any other territories.

67. On the other hand, the rights of the exclusive licensees which will be subject to conditions and limitations imposed by the owner of the copyright will flow from both the Statute as well as from the covenant entered between the parties. Thus, the rights of the plaintiff no. 2, 4 and 6 for the purposes of the Section 14 would be to issue copies of the work to the public of the territories authorized to be done by the owner of the copyright. In the present case, the rights of the plaintiff no. 2, 4, 6 would thus be fettered by the territorial restrictions imposed by the owner.

68. The legal propositions which emanate from this discussion are as under:

a) That the court will measure the infringement of the copyright from the rights of the owner of the copyright when the owner is before the court for violation of its rights.

b) That the rights of the owner may be broader than the limited rights of the exclusive licencee, although the exclusive licencee has the independent right to sue for infringement of the copyright.

c) The rights of the owner and exclusive licencee may not be the same and the rights of the exclusive licensee shall also be subject to the fetters imposed by the agreement between the licensor and licencee.

69. Applying these principles to the present case, it can be seen that the plaintiff no. 1, 3 and 5 are the worldwide owners of the books and their copyright as mentioned and averred in the plaint. The plaintiff nos. 2, 4 and 6 are the exclusive licensees licensed to publish the said books in India and other territories. The plaintiffs’ grievance is that Defendant no. 3 Technischer Overseas Pvt. Ltd. which is a bookseller in Delhi is purchasing the said Low Price Editions of the books meant for the Indian market and the territories defined from the plaintiffs no. 2, 4, 6 and is offering the said low prize books from the websites www.alibris.com, www.biblio.com to territories outside the prescribed ones on the book is infringing the copyright of the plaintiffs.

70. The said acts of the defendants of purchase of the books from the exclusive licensees/ licensees are legitimate in nature and do not hinder or take away anyone’s rights including the rights of exclusive licensees/ licensee. But once the said defendant no. 3 offers for sale the books or publications (which are fettered by territorial restrictions purchased from exclusive licensees) and puts them into circulation by selling or offering for sale or by taking orders for sale to the territories beyond the ones for which permission has been granted by the owners of the copyright, the said acts are prima facie tantamount to putting into circulation or issuance of copies not being in circulation in other territories where the right to do so is of the owner to exercise and violates the rights of the owner of the copyright under Section 14 read with Section 51 of the Act, if not the rights of the exclusive licensee. In other words, the said acts of selling the books from India or offering for sale from India through website and thereafter accepting the money and couriering the books to an unauthorized territory will violate the right of the owners of the copyright which are plaintiff no. 1, 3, 5 to issue the copies to the public not already in circulation (not of exclusive licensees) and thus will, prima facie, infringe their copyright.

71. It would also be an incongruous proposition to lay down that anyone who purchases the tangible or intangible, movable or immovable property from a licensee who has merely a permissive right which is also subject to restrictions is free to exercise the rights of the owner of the said property, who has wider rights than licensee. The said acts would be an infringement of the extent of the rights which are available with the owner. I will also discuss the impact of exhaustion theory on this in the later part of the discussion.

72. There is another reason for coming to this prima facie opinion. The acts of the defendants are infringing in character as they are not merely confined to doing the acts of the owner of the copyright without permission or license. The doing of unauthorized acts of the owner of the copyright is only one kind of infringement. The other kind of infringement would be to violate the conditions of the licensee and commission of acts going beyond the fetters imposed by the license. This can be better understood by perusing Section 51 which reads as under:

―51. When copyright infringed – Copyright in a work shall be deemed to be infringed –

(a) When any person, without a licence granted by the owner of the Copyright or the Registrar of Copyrights under this Act or in contravention of the conditions of a licence so granted or of any conditions imposed by a competent authority under this Act-

(i) does anything, the exclusive right to do which is by this Act conferred upon the owner of the copyright‖ The opening words of the Section 51 categorizes the prerequisites of the infringement which are:

a) without a licence granted by owner of the copyright or

b) without the license granted by the registrar of copyright or

c) in contravention of the conditions of a licence so granted or

d) any conditions imposed by a competent authority under the act.

73. In all these situations, the doing of the acts of the owner would be deemed to be an infringement under the Act. The said situations are disjunctive and not conjunctive in the sense that doing of the act even in one situation would be equally an infringement as in other one.

74. As per the preceding discussion, the rights of the owner of the copyright that is plaintiff nos. 1, 3, 5 are violated as the same are falling under a) being unlicensed acts from the owner and acts of the owner of the copyright within the meaning of Section 14 (1) (b) of the Act.

75. Another perspective would be that the acts of the defendants would also be in contravention to the conditions of a license so granted by the plaintiff nos. 1, 3 and 5 to plaintiff nos. 2, 4 and 6 which is also the grievance of the plaintiffs. This is due to the reason that the plaintiff nos. 1, 3 and 5 being the owners of the copyright have the right to exploit their copyright to issue licenses under Section 30 of the Act. By exercising the said right, licensees have been appointed to issue publications of the Low Price Edition books to the limited territories which are mentioned upon the books as well as on the covenant/ agreement between plaintiffs. The defendants by doing the acts of purchasing the books from the licensees which are subject to territorial restrictions and by selling the same to the outside territories are prima facie violating/ contravening the terms of the license which has been granted plaintiff nos.1, 3, 5 to them.

76. For better comprehension of the concept of violation of terms of license, the distinction between the assignment of rights and licensing of rights has been elucidated in Copinger & Skone James on Copyright (Fourteenth Edition by Kevin Garnett M.A., Jonathan R. James, MA. LLB, Gillian Davies, Ph.D., 1999 Edition, London, Sweet & Maxwell) which is an authority on the subject. The said author also discusses the consequences which flow from the said arrangements. The relevant extract is reproduced hereinafter:

―5-193 Position of the Licensee – A License granted by a copyright owner is binding on every successor in title to his interest in copyright, except a purchaser in good faith for valuable consideration and without notice (actual or constructive) of the license or a person deriving title from such purchaser‖

77. The above quote is also recognized as Section 173(2) of CDPA (Copyright Design and Patent Act, 1988) of England. The said rule is the basic principle of licensing of any property right which is the recognized rule of equity that the licensee cannot assign what is not available with him. Thus, the licensee who is the permissive right holder of the copyright which is subject to limitation can assign the said right only and nothing beyond that. The only exception to that would be a person who is a bona fide purchaser without having notice of the transaction.

78. In any case, a purchaser from the licensee of any licensed work having knowledge about the said licensee cannot get a better title than the licensee and will be bound by the said license as he is aware of the same at the time of making the said purchase and purchased the same while accepting it. To that extent, the position of a licensee will remain the same universally and the statutory recognition of the said rule, whether it exists or not, will only create the exception for the bona fide purchaser without notice.

79. The said position of the licensee is equally applicable in cases of computer software and is seen in normal course when anyone purchases the software. Computer software are mostly licensed and are sold and distributed with their own conditions and limitations. The purchasers of the said computer software either from the owner or from the licensee is aware of the arrangement or license agreement that the said computer software for instance is meant for single user or multiple usage. The said purchaser is within notice while making purchase of the said software and is thus bound by the said conditions of the license. Once the said purchaser violates the condition of the said license, he/she becomes liable for infringement of copyright of the owner.

80. Likewise is the case with the books in the present matter. Once the defendants purchase the Low Price Editions books of the plaintiffs from their exclusive licensee, they are conscious of the fact that the said editions are subject to territorial restrictions which are meant to be sold within the limited territories only. The notice on the book itself gives knowledge to the purchaser about the said territorial restriction. The said knowledge is also evident when the defendant themselves offer the same books to the customers outside the territories while representing that “it is an international edition in paperback. The contents are identical to the American Edition, word for word. The ISBN differs from the American Edition and the book is in black and white but the contents are completely same as the American Edition at a great price.”

81. The representation to the customers by the defendants that the books advertised by them are international editions with content identical to the US edition is itself evident of the fact that the defendants are aware that the books which are sold in US are not the same as those sold by them. The said acts of the defendants are also causing royalty losses to the plaintiffs. Thus, the said acts of the defendants are intentional acts and are prima facie infringing by way of contravention of the conditions of licensing rights which the defendants have attained by way of purchase with notice. Hence, either seen from the perspective of the rights of the owner or from the position of the licensee, the acts of the defendants are prima facie acts of infringement within the meaning of Section 51 (a) of the Copyright Act 1957.

82. I shall now discuss the submissions made at the bar by the parties in relation to the aspect of infringement of copyright.

83. The first submission of the parties with regard to the infringement of copyright stands answered in view of the above discussion resulting in the view that the acts of the defendants are infringing in nature. A related argument of the defendants was that there is no provision of the Copyright Act which makes the act of export an infringement. With respect to this argument, the defendants have cited various provisions including Section 2(m) of the Act which defines the expression ‗Infringing copy’ and thereafter Section 51 (b) wherein the import of the infringing copy of the work is recognized as secondary infringement. The argument of the defendants was that in the absence of exports being recognized as infringement, the same cannot become infringement under the Act.

84. I have examined the argument of the defendants carefully in relation to exports not being recognized expressly as infringement. The question in the present case is not merely as to whether exports should be recognized as infringement within the meaning of the Act, but rather, the question is whether the rights of the owner of the copyright can be circumvented by merely purchasing the work from the exclusive licensee having limited licence to distribute or publish within certain territories and selling the same to countries outside the territories prescribed by taking the orders in India, reaping the benefits of the said sale in India and causing contravention of the license granted by the owner of the copyright. If it violates the rights of the owner to put the work into circulation within the meaning of Section 14(1) (a) (ii) read with Section 51 (a), the same would amount to infringement within the Act and it may be incidental that the defendants are carrying out activities which lead to export.

85. Further, the argument relating to non-recognition of export as infringement is devoid of any merit due to the reason that this Court has prima facie come to the finding that the acts of the defendants are primary acts of the infringement within the meaning of Section 51 (a) of the Act as there is direct involvement of the defendants in violating the rights of the owner as well as the conditions of the license granted by the owner to their licencees. The said acts of primary infringement are distinct and independent from the infringements which are arising out of the indirect involvements of the defendants like selling, hiring, exhibiting, distributing or importation. The argument of export advanced by the defendants thus fails.

86. This Court has not drawn any analogy from the import of the article being recognized as infringement which is expressly recognized under Section 51 (b) of the Act and has rather come to independent finding of primary infringement. This argument of the defendants also fails on the same count.

87. The argument of the defendants that this Court will not have jurisdiction as there is no cause of action which has arisen in Delhi and therefore the matter will not be subject to provisions of the Copyright Act is also meritless and deserves to be rejected. This is for the simple reason that this Court has jurisdiction to entertain and try the present proceedings as the jurisdiction of this court to entertain the suit is governed by the ordinary civil law by way of Section 20 of the Code of Civil Procedure, 1908 which reads as under:

―Section 20. Other suits to be instituted where defendants reside or cause of action arises.–Subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction–

(a) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or

(b) any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or

(c) the cause of action, wholly or in part, arises.

88. By virtue of Section 20 of the Code of Civil Procedure, this court possesses the necessary jurisdiction required to entertain and try the present suit as the defendants are carrying on their business within the territorial jurisdiction of this court. The books are ordered online on the website which bears the address of the defendants carrying on business in Delhi. The orders are taken and executed in Delhi and the said Low Price Edition books are couriered/ speed posted from Delhi. Lastly, the profits arising of the said sales out of the books are realized by the defendants in Delhi. All these necessary and essential parts of the cause of action have arisen within the territorial jurisdiction of this Court. This Court will have jurisdiction to entertain the present suit by way Section 20 (a) as the defendants are carrying business in Delhi and Section 20 (c) as the part of the cause of action has arisen within the territorial jurisdiction of this Court.

89. A related argument of the defendants qua jurisdiction was that this Court cannot exercise jurisdiction as till the time the purchases are made the same are legitimate and only when they are exported do they become infringing articles. For the said reason, the argument was that this Court cannot exercise extra territorial effect and thus has no jurisdiction over subject matter.

90. The said argument fails as once this court has come to the conclusion that the defendants while purchasing the books from the licensee and taking the orders online, accepting the profits thereof, attempts to export the same, the said act is violative of the regional permission granted by the owner. The said civil wrong of violation/ infringement is committed in the region where the said violation has been made. The same is a primary act of infringement. It may be another thing that in the country where the said article is exported, the importer of that State shall also be liable for secondary infringement as per the same analogy and the similar provisions under the law. But that is the basic difference between primary infringement and secondary infringement and both can coexist simultaneously.

91. In the instant case, the defendants are directly involved in violating the rights of the owner and the permission granted by the licensor, thus the defendants acts are prima facie acts of primary infringement. The said defendants are amenable to the jurisdiction of this court. For the purposes of import, the importer shall be subject to the laws of the country where the articles are imported. There is no amount to extra territorial effect which has been given by this court while exercising the jurisdiction in the present case. This court will have jurisdiction to entertain the gamut of the dispute which has been presented before it in all senses.

92. Now I shall proceed with the second part of the discussion which is the applicability of first sales doctrine and its probable impact. First Sales Doctrine and its Impact

93. The Learned counsel for the defendant Mr. Gupta has made extensive arguments on the applicability of the doctrine of first sale in order to substantiate that the plaintiffs have lost the right to complain as the plaintiffs cannot control the subsequent sale of the article once the first sale of the same has been effected. Section 14 (a) (ii) of the Act was read where the rights have been limited to issuance of the copies which are not already in circulation. Mr. Gupta submitted that the words ― to issue copies of the work to the public not being copies already in circulation‖ clearly recognizes the first sales doctrine whereby once the owner of the copyright has exercised his right to issue to the copies, then the owner loses all future rights to control the subsequent sales on the same work.

94. Further, learned counsel for the defendants has read the explanation appended to the Section which reads ―explanation thereto for the purposes of this Section, a copy which has been sold once shall be deemed to be a copy already in circulation.‖

95. The owner’s right is not absolute but is curtailed by the first sales doctrine as per the submission of the learned counsel for the defendants.

96. Warner Bros. (supra) has been relied upon which according to learned counsel for the defendant recognizes the said doctrine of first sale in relation to literary works. Para 58 of the Judgment is reproduced hereinafter :

―58 Exhaustion of rights is linked to the distribution right. The right to distribute objects (making them available to the public) means that such objects (or the medium on which a work is fixed) are released by or with the consent of the owner as a result of the transfer of ownership. In this way, the owner is in control of the distribution of copies since he decides the time and the form in which copies are released to the public. Content-wise the distribution right are to be understood as an opportunity to provide the public with copies of a work and put them into circulation, as well as to control the way the copies are used. The exhaustion of rights principle thus limits the distribution right, by excluding control over the use of copies after they have been put into circulation for the first time.‖

97. Further, paragraph 63 of the judgment was relied upon to explain that in case of literary works, the exhaustion principle is applicable. The relevant paragraph is reproduced below:

―63. The defendant in this case, accepts that the renting/hiring of films carried on by it is without the plaintiffs’ license. The Plaintiffs urge that since the importation, for the purpose of renting of these cinematographic films has not been authorized by them in India, the copies are infringing copies. Hence their import would be barred under Section 51(b)(iv). The defendant’s argument, however, is that the copies were legitimately purchased in the course of trade; they are rental copies, and can be used for purpose of renting, in India. He says that the device of zoning, whereby the plaintiffs restrict the licensee owner to use it in territories other than what is indicated by them, is artificial, and unenforceable. Such “long arm” conditions are inapplicable. Particular reference is made to the explanation to Section 14, which describes the content of copyright; it clarifies that “For the purposes of this Section, a copy which has been sold once shall be deemed to be a copy already in circulation.+” Though attractive, this contention is unfeasible for more than one reason. The reference to copies in circulation is in the context of copyright in literary, artistic, dramatic or musical work, – not computer programme – (Section 14 (a); the statute enables the copyright owner to “issue copies of the work to the public not being copies already in circulation”. But for the explanation, it could arguably be said that the copyright owner lost his domain, or right to control the manner of further dealing in copies which were in circulation. Yet, a careful reading of Section 14 would reveal that the content of copyrights in respect of each nature of work (literary, dramatic, or musical work, on the one hand, computer programme, artistic work, cinematograph film, etc on the other) are distinct – evident from the listing out of such rights, separately, in Clauses (a) to (f) of the Section. The reference to “copies in circulation” has to be therefore, in the context; the phrase is used to limit the copyright owner’s right to dictate further use of a literary, musical and dramatic work (Section 14(a) (ii)). None of the owners of other classes of work are subject to that limitation. The restriction of one class of copyright owner, structured in the statute serves a dual purpose- it limits the owner of that class of copyright; and at the same time leaves it open to the copyright owner of other kinds of work, to place such restrictions.‖

98. Thus, as per the learned counsel for the defendants, by the applicability of the first sale doctrine alias the exhaustion principle, the plaintiffs have no right to complain against the defendants’ acts of exporting Low Price Edition books in the foreign market.

99. The genesis of the said principle of exhaustion of rights is based on theory that the right holder can only control the first sale of the article and exercise the rights on the same and cannot complain of the infringement on each and every subsequent sale of the same. The Learned counsel for the defendants has argued that in the present case, by virtue of the applicability of the doctrine of first sale, the plaintiffs have no grievance against the defendant left and thus cannot complain of the infringement.

100. I have examined this submission and feel that in the present case the doctrine of first sale even if it is applicable does not curtail the rights of the owner due to the following reasons:

a) At the outset, again, I would like to reiterate the three propositions a) the meaning of copyright has been defined under Section 14 of the Copyright Act as is clear from the opening words of the Section; b)The rights of the owner have to be looked into as per Section 51 of the Act while measuring infringement;

c) The rights of the owner may be broader than that of the licensee. In the present case, the first sale has been effected by the exclusive licensees plaintiff nos. 2 , 4, 6 and their rights are limited and are subject to the conditions and limitations imposed by the agreement. That being so, the applicability of the first sale doctrine qua the sales effected by the exclusive licensee to the defendants will at best exhaust the rights of the exclusive licensees to complain and not the rights of the owner. The right of the owner to complain for remaining infringement in unauthorised territories for violation of the permission granted and violation of the rights will remain intact. Thus, the applicability of first sale doctrine will partially exhaust the rights of the licencee and not of the owner of the copyright i.e. plaintiff nos. 1, 3 and 5.

b) The applicability of the principle of international exhaustion of rights is doubtful. The said reasoning is based on the argument of the defendants that the plaintiffs will lose all their rights after effecting the first sale to the defendants. To explain the said doctrine, the defendants have relied upon English case laws which are (1) Bobbs Merrill Co. Vs. Straus Date of decision 1.6.1908,US Supreme Court, 210 U.S. 339 (1908), (2) Quality King Distributors, Inc. V/s L’ansa Research International, Inc. dated 9.3.1998 by US Supreme Court, (3) Timothy S. Vernor V/s Autodesk, Inc. Decision dated 20.5.2008 by US District Court, Washington, (4) UMG Recordings, Inc. V/s Troy Augusto, et. Al., dated 10.6.2008, US District Court, California and also the latest judgment passed by the Learned Single Judge of this court in Warner Bros. (supra).

101. In this respect I would say that the English case laws relied upon by the defendant are the same which have been analyzed thoroughly by the Learned Single Judge of this court in Warner Bros (Supra) where the Learned Single Judge was concerned with the importation of the cinematograph works and came to the conclusion that the doctrine of exhaustion of rights will be confined to literary works only and will be inapplicable to the cinematograph works as the said explanation appended to Section 14 is confined to literary works only as has been discussed in paragraph 63 of that judgment which is afore-mentioned.

102. Thus, the learned Single Judge has merely came to the conclusion that the doctrine of the exhaustion/ first sale is applicable to literary works although the same has not been applied by the Learned Single Judge in Warner Bros (Supra).

103. Further, the Learned Single Judge in his judgment doubted the manner of the applicability of the doctrine of exhaustion as to whether the same shall be regional or international exhaustion of rights. This question was answered by expressing the opinion that the nature of exhaustion whether regional or international shall be dependant upon the scheme of the act and the provisions contained therein, like in the US where there are categorical provisions relating to international exhaustion, the same will be international exhaustion as against in UK, which follows the regional exhaustion policy. The discussion pertaining to same is in paragraph 59 of the judgment which is reproduced below :

―59. As seen in the earlier discussion, L’Anza was decided in the context of a “round trip” transaction of products, sold unauthorizedly after importation, although exported by legitimate means. The decision was premised on the interplay between Section 106(3); 109, 501 and 602 of the US Copyright Act. In the US, there is a clear provision embodying out the “exhaustion” principle. It is said that the US, by virtue of its laws, follows the “international exhaustion” principle, where once a copyright owner places his product in the market, he loses the right to restrict or exercise domain or control over that copy, anywhere, globally. The United Kingdom and European Union countries, on the other hand, follow the “regional exhaustion” principle, which means that once an intellectual property owner places his product in the market, in any EU country, he loses the right to exercise control within the EU markets. However, he preserves the right to place restrictions on the use and further commerce in the product, outside of EU countries.‖

104. The discussion makes it apparent that the learned single judge has doubted the mode of the applicability of the first sales doctrine in India as per the existing law. The same may lead to partial or regional exhaustion or international exhaustion. As per my opinion, as the express provision for international exhaustion is absent in our Indian law, it would be appropriate to confine the applicability of the same to regional exhaustion. Be that as it may, in the present case, the circumstances do not even otherwise warrant this discussion as the rights if at all are exhausted are to the extent to which they are available with the licensees as the books are purchased from the exclusive licensees who have limited rights and not from the owner. In these circumstances, the question of exhaustion of rights of owner in the copyright does not arise at all.

105. The learned Single Judge again in paragraph 65 of Warner Bros. (supra) doubted the application of international exhaustion and rather expressed his concerns about the illogical arguments and observed results arising out of the applicability in case of licenses. Para 65 reads as under :

―65. There is yet another reason why the defendant’s argument about exhaustion cannot be accepted in India. Now, a copyright owner has the right and authority to parcel out his right- which are essentially commercial in nature. A film producer, or owner of copyright in a sound recording, might for instance, decide to distribute his products, through licensees. These licensees can be limited, in terms of period; in terms of copies entitled to be sold, or hired, or in terms of number of performances and so on. They can also – by reason of Section 19, be limited geographically. If the defendants’ contentions were to be accepted, the moment such licensees gain copies, the copyright owners would exhaust their rights, enabling the licensees to exploit the copies uninhibitedly. Thus, for instance, if a distributor is given a copy to exhibit a film in territory A, or hire them in that territory; he could, by extension of the defendants’ logic, travel beyond that territory, or use a rental copy to exhibit the film, in another territory, where it has not been released, or even rent it in such territory, and so on. To give another instance- the purchase of a rental copy meant to be used in the southern region, in India, designated by the copyright owner, analogically, can according to the defendant, be rented out in other regions too, whether or not such films are released in those regions. Such renting out may have catastrophic commercial consequences: one of the hirers might well be a cinema theatre, which may exhibit it, in public. This would completely defeat the copyrights owner’s right to commercially exploit its rights, and for that purpose, partition the market at its convenience. The safeguard provided by Section 51 (b) (iv) proviso, in the case of importation of one infringing copy, amply testifies that if importation is for private use of the importer, which specifically alludes to the non-commercial use by such a person or individual, it is not deemed an infringement.‖

105. The above concerns of the learned Single Judge can be seen in the present case in light of the fact that the licensee after gaining the copies cannot exploit the rights world wide which is, in fact, the owner’s right. The same is the situation when the articles have been purchased from the licensee. Thus, Warner Bros. (supra) does not come to the aid of the defendants.

106. The defendants’ argument that the first sale doctrine will exhaust the rights of the plaintiffs internationally is incongruous and the same will lead to absurd results in as much as the defendants are the purchasers of the books with notice from the exclusive licensee and not from the owner of the copyright. Accepting the contention of the defendants would again be nugatory to the principle of the ownership and license. The owner has full right to enjoy the property and if the property is purchased from the owner only then will the owner lose his rights. The same is applicable in the present circumstances. The purchaser after purchasing from the exclusive licensee cannot by claiming the principle of exhaustion or extinguishment of rights defeat the rights of the owner. This is the only harmonious interpretation possible by invocation of doctrine of first sales in the present case.

107. In view of the aforementioned reasoning, the argument of applicability of first sale doctrine defeating the rights of the owner fails and the same cannot abridge the rights of the owner to complain of infringement in the present case even if it is applied. With this, I end the second part of my discussion.

108. The related arguments of the defendants about the Specific Relief Act fails as a prima facie right has been established in favour of the plaintiff. Further, there is no unfair competition or barrier to the trade which has been effected by the plaintiffs as the plaintiffs’ rights are emanating from the Statute and thus these aspects do not require discussion and the arguments are rejected as meritless.

109. I shall now proceed with the conclusion.

Conclusion

a) The combined reasoning given under the two heads leads to the conclusion that the defendants’ acts are prima facie infringing in nature. The defences put forth by the defendants to defend their usage are not tenable. Rather, the first sales doctrine if it is applied does not aid the case of the defendant. Thus, there is prima facie infringement of copyright which warrants the grant of temporary injunction till the disposal of the suit.

b) The parameters for the grant of injunction have been succinctly discussed in Dalpat Kumar vs. Prahlad Singh; AIR 1993 SC 276 which include prima facie case, balance of convenience and irreparable injury.

c) The plaintiffs have been prima facie successful in establishing that they are the owners of the copyright in the books and the same is being violated by the defendants by putting into circulation the Low Price Editions of the books into territories for which the books are not meant and violating the right of the owner under Section 14 (a) (ii) and also causing the conditions of the licence to be violated and there by causing the infringement of the copyright of the plaintiffs. The defendants have failed to show any prima facie tenable defence in support of their acts.

d) The balance of the convenience will lie in favour of the plaintiffs as the plaintiffs will be more inconvenienced if the ex parte injunction granted on 17.9.2008 is not confirmed and the defendants are not restrained from carrying out the infringing acts as against the defendant, who will be less inconvenienced. This is also more so when the defendants have already given an undertaking before US court to not indulge in infringing acts in future. The plaintiffs will suffer irreparable loss if the defendants are allowed to start carrying out their acts at this stage. The defendants will not suffer any such loss at this stage as is obvious by weighing the comparative hardship.

109. To sum up, the plaintiffs have made out a case for the grant of temporary injunction by satisfying the three essentials elements for the grant of injunction. Accordingly, IA No.11331/2008 is allowed and IA No.14897/2008 is dismissed. Consequently, the defendants and their agents, assigns and sister concerns, till the disposal of the suit, are restrained from advertising, offering for sale/exporting any publications of the plaintiffs to the countries outside the territories specified on the books published by the plaintiffs.

110. It is made clear that any observation made herein shall be treated as tentative in nature and shall not constitute any expression of final opinion on the issues involved and shall have no bearing on the final merit of case and submissions of the parties in the suit. CS (OS) No.1960/2008 List this matter on 2nd July, 2010 before the Roster Bench.

MANMOHAN SINGH, J.

MAY 17, 2010 sa