Copyright Ownership in Insolvency: How IP Rights Acquired Through Compromise Prevail Over Legal Heirs

Summary

The Madras High Court addressed a dispute over copyright ownership in insolvency involving four classic Tamil films originally owned by Mr. G.N. Velumani, who was declared insolvent. Through a court-sanctioned compromise, Devi Films Pvt. Ltd. acquired all rights to the films, which later vested in T.N.K. Govindaraju Chetty and Co. Pvt. Ltd. via amalgamation. Despite this, the legal heirs of Mr. Velumani asserted ownership, prompting the plaintiff to seek injunctive relief and damages. The court found in favour of the plaintiff, confirming rightful ownership and awarding a permanent injunction, accounting of profits, and costs, but declined compensatory damages due to lack of evidence for actual loss.

Facts / Background

The plaintiff, T.N.K. Govindaraju Chetty and Co. Pvt. Ltd., claimed copyright ownership in four classic Tamil cinematographic films: Padagotti, Paadha Kanikkai, Panathottam, and Gowri Kalyanam.

These films originally belonged to Mr. G.N. Velumani, who was later declared insolvent by a court. As part of a compromise sanctioned by the High Court in 1974, the Official Assignee transferred the entire world rights, including negative rights, in the four films to Devi Films Pvt. Ltd. in full settlement of dues.

Subsequently, by a sanctioned scheme of amalgamation, all assets and liabilities of Devi Films, including these copyrights, were vested in the plaintiff company with effect from 1 April 2001.

Despite this, the defendants, being legal heirs of Mr. Velumani (Defendants 1 and 2) and an associated entity Sudhakar Cine Arts (Defendant 3), began asserting ownership rights in these films. They issued public notices and circulated communications and WhatsApp messages claiming such rights. Consequently, the plaintiff filed this suit seeking injunctive reliefs, return of infringing materials, accounting of profits, and damages.

Defendants 1 and 3 were set ex parte after substituted service by publication; Defendant 2 was reported deceased and the suit as against her was not pressed.

Issues

1. 1. Whether the plaintiff was the lawful owner of the copyrights in the cinematographic films in question.
   2. Whether the defendants had infringed the plaintiff’s copyrights by asserting ownership and exploiting the films.
   3. Whether the plaintiff was entitled to damages and costs for such infringement.

Arguments

Plaintiff’s Contentions

• • Ownership of the copyright had vested in Devi Films Pvt. Ltd. by virtue of the compromise and order of the Official Assignee in 1974.
  • Through the 2002 amalgamation, these rights lawfully devolved upon the plaintiff company.
  • The defendants’ actions, including public notices (Exhibits P12 and P13) and digital communications (Exhibit P14), constituted false claims and copyright infringement.
  • The plaintiff sought:
    • Permanent injunction restraining infringement.
    • Mandatory injunction directing return of all infringing copies.
    • Accounts of profits earned by unlawful exploitation.
    • Damages of ₹5,00,000 for reputational injury.

Defendants’ Position

• • None of the defendants appeared or filed a written statement. The 1st and 3rd defendants were set ex parte. Hence, there was no rebuttal to the plaintiff’s claims or documentary evidence.

Court’s Analysis

Justice Senthilkumar Ramamoorthy analyzed the ex parte evidence presented by the plaintiff, including 23 exhibits.

The court noted:

• • The Official Assignee’s report (Ex.P19) and communication (Ex.P3) clearly established that Devi Films Pvt. Ltd. had obtained absolute world rights in the films as early as 1974.
  • The 2002 amalgamation order (Ex.P7) transferred these rights to the plaintiff.
  • There was no contrary evidence from the defendants.

Thus, the court found that the plaintiff was the rightful copyright owner of the four films.

Regarding damages, the court referred to P. Thulasidas v. K. Vasanthakumari cited by the plaintiff but held that no evidence of actual loss had been produced. Therefore, compensatory damages were not granted.

However, as the successful party, the plaintiff was entitled to costs, including court fees and reasonable legal expenses. The court quantified these at ₹3,00,000, payable by Defendants 1 and 3.

Conclusion / Final Order

The High Court decreed the suit ex parte in favour of the plaintiff:

1. 1. Permanent injunction granted restraining the 1st and 3rd defendants from infringing the plaintiff’s copyrights in the films Padagotti, Paadha Kanikkai, Panathottam, and Gowri Kalyanam.
   2. Mandatory injunction directing return of all infringing copies.
   3. Accounting of profits ordered.
   4. Costs of ₹3,00,000 awarded against Defendants 1 and 3.
   5. Plaintiff’s original documents (Ex.P1–P11) ordered to be returned.

Citation: T.N.K. Govindaraju Chetty and Co Private Limited vs. Buvana Saravanan on 30 June, 2025, Madras High Court. Available at: https://indiankanoon.org/doc/105834043/.

Authored by Ms. Ashwini Arun