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Narendra Hirawat and Co. vs Sholay Media Entertainment Pvt. Ltd. & Anr.

Civil Appeal · 2022 INSC 268Decided 7 Mar 2022
Civil Appeal Nos. 1867-1868 of 2022
Vineet Saran · Aniruddha Bose

Background

Narendra Hirawat and Co. (NHC) held licensing rights to exploit the films "Sholay" and "Sholay 3D" (and, in a connected case, 32 other films) under agreements with Sholay Media Entertainment Pvt. Ltd. (SME) and Generation Three Entertainment Pvt. Ltd., later modified by a 2018 Deed of Settlement requiring NHC to pay further instalments. After NHC failed to pay the final instalment - which NHC said was because SME never issued the required invoice - SME terminated the licence and re-licensed the same films to a third party, Goldmines Telefilms. NHC sued for an injunction to stop this, and a single judge of the Bombay High Court granted interim relief in NHC's favour, which the High Court's own Division Bench then reversed on appeal.

Decision Breakdown

The Supreme Court restored the single judge's injunction, holding that an appellate court should not readily overturn a trial judge's discretionary interim order unless it was shown to be perverse, arbitrary, or contrary to settled legal principles - which was not the case here. On the merits of the interim dispute, the Court found it undisputed that every previous instalment under the Deed of Settlement had been paid by NHC only after SME issued an invoice, so SME's sudden refusal to issue the final invoice (citing GST liability concerns) could not fairly be used as grounds to terminate the agreement for non-payment. Noting that NHC had already paid over 90% of the amount due and had deposited the remaining balance in court as directed, the Court held the balance of convenience and prima facie case favoured NHC, without deciding the final merits of the underlying contract dispute (which remains for trial). The third party's rights were also held bound by the injunction, since its agreement with SME was made while NHC's suit was already pending.

Lesson Learnt

In a contract requiring staged payments against invoices, a party cannot be blamed for non-payment - and have the whole contract terminated - if the other side itself stopped issuing the invoices needed to trigger that payment; and appellate courts should be slow to disturb a trial court's well-reasoned interim injunction.

Official source (sci.gov.in)View Judgment (PDF)

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