M/s Global Impex v. M/s Sipping Tea Cinemas LLP

14. Under Clause 8.4, a public notice is required to be issued about the lien and charge marked in favour of Global Impex in a designated trade magazine before May 9, 2025. This notice is a precondition to Global Impex providing the final tranche of Rs. 2 crores. Under Clause 8.5, in the credits section of the movie, Global Impex is required to be identified as “Associate Producers” along with the names of its team members. Conduct after the Agreement:

15. Against this contractual framework, the conduct of the parties that led to disputes and differences, must be noticed. It is apparent that Global Impex remitted the first two tranches of investments of Rs. 1.[5] crores each. However, before disbursing the final tranche of Rs. 2 crores, Global Impex kept following up and seeking an update on the establishment of the escrow account. The parties engaged with each other and indeed effected the publication of the public notice as contemplated in Clause 8.[4] of the Agreement. This was achieved on May 3, 2025.

16. However, cracks appear to have surfaced in the relationship between the parties immediately after signing. It appears that right after the Agreement was signed, differences arose between the parties about the arrangement between them. By an email dated April 25, 2025 i.e. one day after the execution of Agreement, Sipping Tea indicated that it would not sign off on any projection of income and as per industry practice, that was not required at all. It may be recalled that the recitals to the Agreement recorded that such a projection had already been shared. Sipping Tea indicated that a sealed and signed expenditure projection would be provided by Sipping Tea and that was all that Global Impex could seek. This appears to be the first element of difference of opinion and stress between the parties, which played out over the next several weeks.

17. The parties had a difference of opinion on the public notice that was published – the term “Foreign Rights” was not contained in the public notice and this was flagged off and highlighted by Global Impex, to which Sipping Tea appears to have replied that the notice indicated that “all rights including” the rights referred to in the notice stood charged to Global Impex. After the public notice was published, Sipping Tea expected that Global Impex would invest the last tranche of Rs. 2 crores. However, Sipping Tea simply did not open the escrow account required to be opened and established by May 1, 2025. Global Impex kept following up and Sipping Tea kept assuring Global Impex – on multiple occasions, that the opening of the account was just a day away, or just a signature away or just a visit of the bankers away.

18. The escrow account would not be opened even by June 15, 2025. On this date, Sipping Tea wrote to Global Impex stating that it could not have kept waiting for the final disbursement, which had been due on May 9, 2025. Sipping Tea offered to return the money invested until then by Global Impex, and clearly indicated that Sipping Tea had moved on due to Global Impex’s failure to fund the movie as contracted. Analysis and Findings:

19. I have heard Mr. Ashish Kamat, Learned Senior Advocate on behalf of Global Impex and Dr. Virendra Tulzapurkar, Learned Senior Advocate and Mr. Mandar Soman, Learned Advocate on behalf of Sipping Tea. I have had their assistance in examining the provisions of the Agreement, and the record. The key consideration at this stage is to examine what appropriate interim measure would best protect and preserve the subject matter of the Agreement before an arbitral tribunal could commence its work and adjudicate the position obtaining from the Agreement and the conduct of the parties.

20. It is common ground that the two alternate arbitrators named in the Agreement would potentially face a conflict of interest since both are lawyers having represented the respective parties. An attempt by this Court to get consensus among the parties to agree upon an arbitrator has failed. The facet of appointment of arbitrator is left for consideration of a companion application under Section 11 of the Act, which has not been listed yet.

21. Three facets emerge for consideration from the submissions made on behalf of the parties:

(i) whether the Agreement documents an assignment or documents an agreement to assign;

(ii) whether Global Impex’s expectation of having the escrow account opened before funding further was legitimate or whether Global Impex was not ready and willing to perform its bargain; and

(iii) whether a case has been made out for an intervention in the form of a restraint on the movie or if a direction to Sipping Tea to deposit funds would suffice. Section 30 of Copyright Act:

22. That the Subject Rights have not been assigned and that the parties have merely agreed to have them assigned is a significant element of the resistance to this Petition on behalf of Sipping Tea. According to Dr. Tulzapurkar, Learned Senior Counsel representing Sipping Tea, the agreement is nothing but an agreement to assign the rights in a future work since the movie had not come into existence when the Agreement was executed. He would point to Section 30 of the Copyright Act, which is extracted below:-

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 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.— ***** [Emphasis Supplied]

23. Sipping Tea would contend that the movie has not come into existence, and it can only be said to come into existence when the Central Board of Film Certification (“CBFC”) certifies that Charak may be publicly screened. In contrast, Global Impex would point out that the work in relation to which the Subject Rights are agreed upon is the movie, which has come into existence. The movie has even been screened at Cannes only because the work has come into existence. The Subject Rights having been granted in relation to the movie, since the proviso to Section 30 of the Copyright Act entails a license taking effect when the work comes into existence, even if one were to presume that the movie was still a future work when the Agreement was signed, since it has been capable of even being screened at an international platform, prima facie, it cannot be said that the work is not in existence. The movie being in existence, one must examine if the Agreement is merely an agreement to assign in future or an actual assignment “in praesenti” (in the present).

24. The allusion to CBFC does not have any basis either in the Agreement or in the Copyright Act. On the contrary, the “Territory” as defined in the Agreement entails the whole universe and is not confined to India. The CBFC’s role relates only to public screening in India. The assignment (or the agreement to assign) under the Agreement is not restricted only to India. That apart, in the email dated June 15, 2025 by which Mr. Sudipto Sen of Sipping Tea indicated that he has moved on without the need for the further Rs. 2 crores from Global Impex, the phrase used is: “as you know that Charak is now complete”2. Therefore, it would not lie in the mouth of Sipping Tea to claim that Chark has not Emphasis Supplied come into existence, when its maker has himself stated that the movie is complete at least as of June 15, 2025. Therefore, even if the movie were to be a future work as of April 24, 2025 (when the Agreement was executed), the movie has indeed been completed and the license would take effect when it was completed. Therefore, reliance on Section 30 would be of no assistance to Sipping Tea. Assignment or Agreement to Assign:

25. That would take one to the issue of whether the Agreement entails an actual assignment or only an agreement to assign at a future date. Each of Dr. Tulzapurkar and Mr. Kamath would point to various provisions in the Agreement that variously indicate an in praesenti assignment and an agreement to assign. Clause 2.1, the opening provision, uses the phrase “hereby agrees to assign”. That clause, coupled with Clause 2.1.7, which provides for execution of allied documents to perfect the rights of the parties, are strongly relied upon by Sipping Tea to indicate that the parties had agreed to execute an assignment but did not actually document an assignment.

26. I am afraid that while this may appear incisive at first blush, at this prima facie stage, it would not be possible to take a view that the Agreement is a mere agreement to agree and not an actual assignment. Whether the Agreement documents an assignment or merely is an agreement to assign at a future date is a matter of final determination by the arbitral tribunal. There are many pointers to the contrary – Clause 3.3, provides that “this assignment is only limited to” the Subject Rights; Clause 4.1.6, which provides for an indemnity from third party claims, provides that the indemnity coverage relates to claims “with respect to the rights assigned hereunder”. That apart, Clause 2.1.[7] appears to be a typical “Further Assurances” clause that is conventional in commercial contracts that require parties to execute other instruments to better perfect their entitlements. That provision enables execution of “allied documents” and that too “if required” to perfect the rights of either party. For instance, the allied documents could even be an instrument that better confirms the primary intellectual property in the movie in favour of Sipping Tea in terms of Clause 3.1, which indicates that Sipping Tea is the first and exclusive owner of the intellectual property to Charak regardless of the assignment of the Subject Rights to Global Impex. Likewise, one may have to execute a better confirmation that derivative rights belong to Sipping Tea regardless of the assignment of the Subject Rights, as contemplated in Clause 3.2.

27. In my opinion, it would be inappropriate for the Section 9 Court to firmly rule on the matter one way or the other – that has to necessarily be left to the arbitral tribunal. What is clear, however, is that prima facie, it cannot be conclusively said that the Agreement is not an assignment in the present and is only an agreement to assign at a future date. On the face of it, the Agreement entails an investment of Rs. 5 crores, for which there would be security interest created over the movie, towards which, Global Impex was given the Subject Rights universally. Prima Facie – Nature and Content of Agreement:

28. Therefore, one must next move to the conduct of the parties and their approach to adherence to the Agreement. It is apparent that the Agreement recorded that collections data has been provided, but one day after execution, the discomfort between the parties was apparent, with such data being refused by Sipping Tea. At first blush, it may appear that the Agreement entailed an investment of Rs.[5] crores for the period between end of April and end of October with a return of Rs. 1 crore i.e. 20% on the investment, as was canvassed by Dr. Tulzapurkar. However, on a closer examination of the Agreement, it is apparent that it was not a simple agreement to merely earn an assured return and have no further stake in the venture.

29. In financial investment parlance, the Agreement clearly entailed a “collar” but it did not entail a “cap”. It indeed provided for a minimum assured return but did not cap what Global Impex could have earned from the Subject Rights. Under Clause 2.1.[4] of the Agreement, Global Impex was entitled to 33.33% of all receipts from the Subject Rights. If the Subject Rights yielded more than the Rs. 1 crore returns, Global Impex would still get 33.33% of the receipts from the exploitation of the Subject Rights. In other words, while the downside for the investment was protected against, there was no limit on the upside for the investment.

30. The minimum guaranteed return primarily kicks in only in scenarios where the film is not released or is not monetized for any reason as of October 31, 2025. This is how that date gains significance. Under Clause 2.1.[2] the tenure of the assignment would continue until the entire consideration is received from all sources upon exploitation of the Subject Rights. If a variable income inflow is contracted, such assignment could last even beyond October 31, 2025. Even the termination clause kicks in only if there is a failure to release the film until October 31, 2025. If the film is indeed released, the Agreement would terminate only on “the completion of the terms hereof”, which would mean Clause 2.1.[2] running its course.

31. Therefore, it cannot be with the certitude that Sipping Tea would commend to the Court, that the Agreement purely entails an investment of Rs.[5] crores for a return of Rs.[1] crore in a six-month timeframe, with the assignment merely being a side show. A closer reading of the provisions would indicate that Global Impex agreed to future returns of 33.33% of the earnings for a present value of Rs. 5 crores, with an assurance of a return of Rs. 1 crore by October 31, 2025. To secure such investment transaction, the Subject Rights were charged to Global Impex.

32. Towards this end, an escrow account was to be opened within seven days of the execution of the Agreement. That date fell on May 1,

2025. The deadlines arrangement in the Agreement prima facie seems to have been carefully negotiated with intermediate sub-steps and milestones being agreed. First, an opening tranche of Rs. 1.[5] crores was to be invested, which Global Impex paid. Second, the account to which the investment was to be remitted was to be indicated for Global Impex to remit the next tranche of Rs. 1.[5] crores. While this was meant to be an account in ICICI Bank, Global Impex did remit the amount to the same account to which it remitted the first tranche. The idea of a designated account would have been to enable monitoring of expenditure of funds from that account, but that was for Global Impex to waive, and it appears to have done so. Third, the escrow account was to have been opened by May 1, 2025. Fourth, the public notice in the trade journal was to be published by May 3, 2025. Finally, the last tranche of Rs. 5 crores was to be invested on May 9, 2025, by which time, the public notice would have been published and the escrow account would have been opened.

33. It cannot be anybody’s reasonable case that without CBFC certification, contracts to exploit the Subject Rights could not be negotiated and executed. It is the Subject Rights over which Global Impex was given rights under the Agreement. As and when such deals are possible to be struck, the escrow agreement ought to have been in place to receive any payments under that head. Therefore, there is nothing unreasonable for Global Impex to have kept following up on the opening of the escrow account. Prima facie, I am not convinced that the investment of the balance Rs. 2 crores had no connection whatsoever with the opening of the escrow account – this is the prime contention on behalf Sipping Tea. The opening of the escrow account was an integral element and feature of a carefully interwoven bundle of steps that the parties had agreed upon.

34. To my mind, that the funding-related provisions in Clause 2.1.[1] did not specifically link the investment to the opening of the escrow account provided for in Clause 2.1.4, does not turn the needle. Both the provisions are sub-clauses in the same Clause 2.1, which stated that Sipping Tea was agreeing to assign rights on the terms and conditions set out in the sub-clauses. That apart, the very opening provision of the Agreement, after the recitals states the following: “NOW THEREFORE IN CONSIDERATION OF THE FOREGOING AND THE MUTUAL COVENANTS AND PROMISES CONTAINED HEREINAFTER AND OTHER GOOD AND VALUABLE CONSIDERATION, THE PARTIES, INTENDING TO BE BOUND LEGALLY, AGREE AS FOLLOWS:” [Emphasis Supplied]

35. Each of the promises in the Agreement across clauses, and without doubt, the promises within the sub-clauses of the same Clause 2.[1] were reciprocal promises and constitute the overall weave of the fabric of the Agreement. Conduct and Implications:

36. In this light, the conduct of Sipping Tea on the issue of opening of the escrow account is inexplicable and evidently slippery. When one looks at the correspondence between the parties whether by email or on instant messaging on WhatsApp, it is evident that Mr. Sudipto Sen has been evasive regularly postponed the commitment to opening the escrow account – never raising any point of principle that was a hurdle to the opening of such account but every single time stringing Global Impex along about the opening of the escrow account being imminent (almost every time, projected for completion on the next day). The record emphatically underlines the fact that Sipping Tea kept assuring Global Impex that the escrow account is on the verge of being opened and that too, invariably on the next date, whenever such assurance was given. Such assurance continued right from April 28, 2025 all the way through May 31, 2025 and onwards into June 2025. It is a matter record that even as of June 28, 2025, the escrow account had not been opened.

37. Prima facie, it would be apparent to any reasonable mind reading the correspondence that Mr. Sen perhaps did not intend to open the escrow account at all, but never stated what he truly desired. There was no protest about the delay in receipt of Rs. 2 crores leading to stress in completing the work, but suddenly on June 15, 2025, he would assert that he could not wait forever and that his production team “red lit” the need for funds. The Agreement could even be read to mean an investment in bridge financing in the release and distribution of the movie. It does not contain any restriction on the specific end use and only entails a reporting requirement of how the funds are used (Clause 4.1.7). Mr. Kamath is right in pointing to Clause 8.5, which requires the credits section of the movie to depict Global Impex as an “Associate Producer”, which would indicate that prima facie, Global Impex acquired a stake for the present value paid to Sipping Tea.

38. Prima facie, it appears that Sipping Tea may have had second thoughts about having sold the Subject Rights for just Rs. 5 crores (potentially going by changing perception about what more the Subject Rights could have fetched). The correspondence between the parties does not have any protest or whisper about the Rs. 2 crores holding things up in the making of the movie. It indeed contains repeated multiple assurances about the escrow account being ready to be signed. By all accounts the indication, prima facie, is that Sipping Tea’s intention to open the escrow account and the consequential accountability had faded, and it kept postponing the opening of the escrow account.

39. It is pertinent that the Agreement contains explicit provisions that there can be no agreement with any other third party which should conflict with the terms of the Agreement (Clause 4.1.5). That apart, Sipping Tea was to indemnify Global Impex from any third party claim in relation to the Subject Rights assigned under the Agreement (Clause 4.1.6). Therefore, it is evident that if Sipping Tea has entered into a conflicting deal with any other third party, it would have violated the Agreement. If Sipping Tea had decided to self-finance Charak without any third party deal, there would still remain the question of having agreed to charge the Subject Rights for an investment of Rs. 5 crores, promising a 33.33% return. Conclusions and Directions:

40. Based on the aforesaid analysis, one must consider what is the protective measure that would best preserve the subject matter of the Agreement. Considering the conduct of Sipping Tea, it is apparent that there appears to be an intention to breach the Agreement and resile from the committed terms of contract. Not protecting Global Impex would significantly erode its right to invest; to future earnings of 33.33% from the movie; and to protection of its exclusive interests contracted in the Agreement without any third party interest cannibalising its rights.

41. To a pointed query about whether any third party interests had been created so far, it was stated that no such interests had been created – more so, when according to Sipping Tea, the work has not come into existence. Whether Sipping Tea had any use for the remaining money is not an absolute question but whether Sipping Tea could renege from a contract to charge the Subject Rights to Global Impex for an investment amount of Rs. 5 crores for returns of 33.33% is the subject matter of the dispute. Taking these factors into account, a case has been made out for intervention in exercise of jurisdiction under Section 9 of the Act.

42. Sipping Tea’s proposal to return the money invested so far could at best be a proposal to renegotiate the Agreement. As stated earlier, all observations made in this judgement are purely prima facie in character, aimed at examining what appropriate measures would protect the subject matter of the arbitration agreement. Likewise, it is made clear that the intervention being made now is only an interim protective measure until the arbitral tribunal convenes to determine after examining the matter in more detail to then decide if such measure could be substituted, enhanced, diluted or vacated.

43. At this stage of the proceedings, it would not be possible to conclude that Global Impex has not been ready and willing to perform its part of the bargain by investing the last tranche of Rs. 2 crores, when Sipping Tea has simply failed to meet the obligation to open an escrow account at a time when the field would be ripe to negotiate contracts to exploit the movie and the Subject Rights.

44. The provisions of Clause 6.2.[4] were pressed into service by Dr. Tulzapurkar to indicate that Global Impex had contractually agreed not to seek injunctive relief on the production, marketing or distribution of the film against Sipping Tea or its assignee, or any production marketing or distribution of the film in any manner whatsoever. The clause was assailed by Mr. Kamath as being an agreement in restraint of legal proceedings. Neither facet is relevant for a protective measure pending commencement of arbitration under Section 9 of the Act. To begin with, Clause 6.2.[4] is explicitly agreed as a “consequence of termination”. Under Clause 6.1, termination could primarily take place when the Agreement has worked itself out. If the movie were not released until October 31, 2025 on any platform, Clause 6.[1] itself provides for a consequence – Global Impex would be entitled to exploit all the rights to the movie until it recovers its minimum assured return to which would be added a further return of 3% per month after October 31, 2025 until such amount is realised. Thereafter, all rights would vest back in Sipping Tea, and thereafter, no injunctive relief can be claimed. This is again a prima facie reading of the provision.

45. In these circumstances, not protecting Global Impex in respect of its rights to the completed work would be detrimental to its interests and would undermine the very foundation of the Agreement. This would cause irreparable damage to the subject matter of the arbitration agreement. In any case, the arbitral tribunal may substitute, dilute, enhance or modify the interlocutory arrangement made hereby once it is seized of the matter with enough material to take a decision on altering the position.

46. When dictation of this judgement was concluding, Mr. Soman on behalf of Sipping Tea would submit that Sipping Tea would be willing to deposit Rs. 3 crores by the end of August 2025, and Global Impex may make a claim for damages, with such deposit abiding by the outcome of the arbitration. He would submit that in any view of the matter, even if one were to consider the Agreement as an uncapped right to earn all the returns to the extent of 33.33% of the realisation from the movie, this would be a claim of a monetary amount, and that a restraint on the movie would hurt both parties.

47. It is left open to make this submission to the arbitral tribunal at the threshold when the arbitration proceedings commence. My attempts at getting the arbitration kickstarted having failed, taking into account the conduct of Sipping Tea as seen from the record, I am not convinced about the appropriateness of this suggestion even at this preliminary protective stage. Sipping Tea may make this suggestion to the arbitral tribunal, but if there is no protection until the arbitral tribunal has had a chance to be apprised of the matter, grave and irreparable injury to the subject matter of the Agreement would take place. It would also be more convenient to protect against further breach of the Agreement – if indeed third party rights are created, with a mere promise to deposit monies three weeks from now, it would cause irreversible injury to Global Impex. The conduct of Mr. Sen in stringing Global Impex along about the escrow account and the sudden declaration on June 15, 2025 that Sipping Tea has moved on, does not inspire confidence in this suggestion at this stage. Moulded Reliefs:

48. Therefore, in my opinion, interim protective measures in exercise of the jurisdiction under Section 9 of the Act would follow in terms of prayers clauses (a) and (b), which, upon moulding by this Court, would read thus:- (a) A temporary injunction shall apply, restraining the Respondent, Sipping Tea LLP, its Partners (including Designated Partners), employees, servants, nominees, agents, associates, etc. or any other person claiming through and under Sipping Tea from proceeding with any screening / showcase / premier of the movie Charak and/or proceeding with release of the movie Charak and / or from proceeding with any works relating to the release of the movie that is not in conformity with the obligations of Sipping Tea as contracted under the Agreement; (b) A temporary injunction shall apply, restraining the Respondent, Sipping Tea LLP, its Partners (including Designated Partners), employees, servants, nominees, agents, associates, etc. or any other person claiming through and under Sipping Tea LLP, from in any manner selling, dealing, transferring, alienating or creating any third party rights or creating any other interest in, all the rights of the said Film including Foreign Rights, OTT Rights, Satellite Rights, Music Rights, Theatrical Rights or any other rights of the movie Charak in the entire universe, including but not limited to any metaverse and / or any virtual worlds.

49. Such reliefs would continue until the Learned Arbitral Tribunal has had occasion to hear the parties and further consider whether any vacation, substitution, dilution or enhancement of such reliefs is warranted. The parties are at liberty to address the arbitral tribunal in this regard. The arbitral tribunal may determine the same, uninfluenced by the observations made in this order.

50. All actions required to be taken pursuant to this order, shall be taken upon receipt of a downloaded copy as available on this Court’s website. [SOMASEKHAR SUNDARESAN, J.]