Azure Hospitality Private Limited Vs Phonographic Performance Limited

The intersection of intellectual property law and commercial interests often gives rise to complex disputes, particularly in the realm of copyright law. The case of Azure Hospitality Private Limited versus Phonographic Performance Limited (PPL) before the High Court of Delhi is a landmark litigation that delves into the intricate provisions of the Copyright Act, 1957, specifically addressing the rights of copyright owners and the regulatory framework governing the licensing of sound recordings. This case study explores the nuances of the dispute, which centers on whether an assignee of copyrighted sound recordings, such as PPL, can issue licenses without being a registered copyright society or a member thereof, as mandated by Section 33 of the Copyright Act. The judgment, delivered on April 15, 2025, not only resolves the immediate conflict but also clarifies critical aspects of copyright law, balancing the rights of copyright owners with the public interest in preventing monopolistic practices.

Detailed Factual Background

Phonographic Performance Limited (PPL), a company registered under the Companies Act, 2013, operates as an assignee of copyrights in sound recordings, holding public performance rights for over 400 music labels and controlling 80 to 90% of all sound recordings in India. These rights were assigned to PPL by the original owners (producers) of the sound recordings under Section 18(1) of the Copyright Act, making PPL the deemed owner of the copyrights under Section 18(2). Azure Hospitality Private Limited, a company operating 86 high-end restaurants with a turnover of ₹161 crores, was found to be playing these copyrighted sound recordings in its outlets without obtaining a license from PPL. On July 20, 2022, PPL issued a cease-and-desist notice to Azure, demanding that it stop exploiting the sound recordings. Azure’s failure to comply prompted PPL to file a suit, CS (Comm) 714/2022, before the Delhi High Court, seeking a permanent injunction to restrain Azure from using PPL’s copyrighted works, along with damages and costs. PPL also filed an application (IA 16777/2022) under Order XXXIX Rules 1 and 2 of the Code of Civil Procedure (CPC) for an interim injunction, while Azure countered with an application (IA 17272/2022) under Order XXXIX Rule 4 to vacate the interim injunction granted on October 14, 2022. The Single Judge’s order on March 3, 2025, granting PPL’s application and dismissing Azure’s, led to the present appeal before the Division Bench of the Delhi High Court.

PPL’s dominance in the sound recording market stems from assignment deeds executed by original copyright owners, granting PPL the right to license public performances of these recordings. Notably, PPL was a registered copyright society from May 7, 1996, to June 21, 2014, under Section 33 of the Copyright Act. However, following the Copyright (Amendment) Act, 2012, which required re-registration of existing copyright societies within one year, PPL’s application for re-registration was rejected, leaving it unregistered as a copyright society at the time of the dispute. Azure argued that PPL’s lack of registration or membership in a registered copyright society, such as the Registered Music Performance Limited (RMPL), barred it from issuing licenses, rendering its suit and injunction application untenable.

Detailed Procedural Background

The procedural journey of this case began with PPL filing CS (Comm) 714/2022 before a Single Judge of the Delhi High Court, accompanied by IA 16777/2022 for an interim injunction to restrain Azure from using PPL’s copyrighted sound recordings. On October 14, 2022, the Single Judge issued summons in the suit and notice in the application, granting an ex parte ad interim injunction in favor of PPL, restraining Azure from exploiting PPL’s copyrighted works until further orders. Azure responded by filing IA 17272/2022 under Order XXXIX Rule 4 of the CPC, seeking to vacate the interim injunction. On March 3, 2025, the Single Judge pronounced a judgment allowing PPL’s application and dismissing Azure’s, thereby continuing the injunction pending the final adjudication of the suit. Aggrieved by this decision, Azure filed an appeal, FAO(OS) (Comm) 41/2025, before the Division Bench of the Delhi High Court, along with associated applications (CAV 106/2025, CM APPL. 16177/2025, CM APPL. 16178/2025, and CM APPL. 16179/2025). The Division Bench, comprising Justices C. Hari Shankar and Ajay Digpaul, reserved the judgment on April 8, 2025, and pronounced it on April 15, 2025, modifying the Single Judge’s order to balance the equities between the parties while addressing the core legal issue.

Issues Involved in the Case

The primary issue in this case was whether PPL, as an assignee of copyrights in sound recordings under Section 18 of the Copyright Act, could issue licenses for their public performance without being a registered copyright society or a member of one, as required by Section 33(1) of the Copyright Act? This issue necessitated an examination of the interplay between Sections 18, 30, and 33 of the Copyright Act, particularly the scope of the first proviso to Section 33(1), which allows a copyright owner to grant licenses in their individual capacity. A related question was whether PPL’s lack of registration or membership in a registered copyright society rendered it incapable of enforcing its copyright through an infringement suit or seeking an injunction. Additionally, the court had to consider whether the Single Judge’s grant of an interim injunction was justified, given the principles of prima facie case, balance of convenience, and irreparable loss, and whether an alternative equitable remedy, such as a deposit, could be imposed pending the suit’s final adjudication.

Detailed Submission of Parties

Azure argued that Section 33(1) of the Copyright Act was designed to prevent cartelization and monopolistic practices by entities like PPL, which control a significant portion of the sound recording market. They contended that the phrase “carrying on the business of issuing or granting licenses” in Section 33(1) applied to PPL, as acknowledged in the Single Judge’s judgment, which noted PPL’s engagement in such business. Azure emphasized that Section 33(1) prohibits any person or association from issuing licenses without registration as a copyright society under Section 33(3) or membership in one, subjecting them to the tariff regime under Section 33A. This regulatory framework, introduced by the Copyright (Amendment) Act, 2012, aims to ensure transparency and prevent exorbitant licensing fees. Azure argued that the first proviso to Section 33(1), which allows a copyright owner to grant licenses in their individual capacity, should not override the main section’s prohibition. The proviso’s requirement that such licenses be “consistent with obligations as a member of a registered copyright society” implies that the copyright owner must be a member of such a society, a condition PPL did not fulfill. Azure further relied on the 227th Report of the Parliamentary Standing Committee (PSC), which highlighted the need for transparency in tariff schemes to curb arbitrary pricing by copyright societies like PPL. Alternatively, Azure proposed that, if an injunction was deemed necessary, the court should direct a deposit based on RMPL’s tariff rates, balancing convenience and preventing irreparable loss.

PPL countered that PPL, as the assignee and deemed owner of copyrights under Section 18(2), had an absolute right under Section 30 to grant licenses on its own terms, unfettered by Section 33(1). He argued that the first proviso to Section 33(1) preserved this right, allowing PPL to license its “own works” without needing to be a registered copyright society or a member thereof. Sibal distinguished between compulsory and voluntary licensing, asserting that PPL’s voluntary licensing under Section 30 was not subject to the regulatory constraints applicable to copyright societies. He relied on precedents like Novex Communication v Lemon Tree Hotels and Novex Communications v Trade Wings Hotel, which held that Section 33(1) does not curtail a copyright owner’s licensing rights under Section 30. Sibal also challenged Azure’s portrayal as a financially strained entity, noting its substantial turnover and arguing that Azure sought to exploit PPL’s sound recordings without payment. He opposed Azure’s deposit proposal, asserting that it undermined PPL’s proprietary rights and that an injunction was the appropriate remedy to protect PPL’s interests pending the suit’s outcome.

Detailed Discussion on Judgments Cited by Parties and Their Context

The parties and the court relied on several judicial precedents to support their interpretations of the Copyright Act, each contributing to the legal discourse on copyright ownership and licensing.

1. Novex Communication v Lemon Tree Hotels, 2019 SCC OnLine Del 6568
   Cited by PPL and the Single Judge, this Delhi High Court decision held that an assignee of copyrights under Section 18, like Novex, could grant licenses under Section 30 without being a registered copyright society. The court reasoned that Section 33(1) does not restrict the owner’s inherent right to license their works, as preserved by the first proviso. In the Azure-PPL case, PPL relied on this precedent to argue that its status as an assignee under Section 18(2) entitled it to license its sound recordings independently of Section 33(1). However, the Division Bench found this interpretation problematic, as it rendered Section 33(1)’s registration requirement redundant, failing to harmonize the proviso with the main section.
2. Novex Communications v Trade Wings Hotel, 2024 SCC OnLine Bom 252
   This Bombay High Court judgment, also cited by PPL and the Single Judge, reinforced the Novex v Lemon Tree holding, stating that Section 33(1) does not curtail the copyright owner’s licensing power under Section 30. The court emphasized that Sections 30 and 33 operate in distinct chapters, with the former granting unfettered licensing rights to owners. PPL leveraged this decision to assert its right to license sound recordings without registration. The Division Bench, however, critiqued this view for overlooking the phrase “or in respect of any other rights conferred by this Act” in Section 33(1), which subjects Section 30 rights to the registration requirement.
3. Entertainment Network India v Super Cassette Industries, (2008) 13 SCC 30
   Cited by both parties, this Supreme Court judgment clarified that the 1994 amendment to the Copyright Act did not divest copyright owners of their licensing rights but provided an option to exploit copyrights through copyright societies. PPL used this to argue that its Section 30 rights remained intact, while Azure highlighted the court’s discussion on compulsory licensing to underscore the regulatory intent behind Section 33. The Division Bench noted that Azure’s reliance on paragraph 88, which dealt with compulsory licensing, was misplaced in the context of PPL’s voluntary licensing but affirmed that the judgment supported the owner’s licensing autonomy, subject to statutory constraints.
4. Phonographic Performance Ltd. v Canvas Communication, Citation Not Provided in Document
   Referenced by the Single Judge, this Delhi High Court decision followed Novex v Lemon Tree, affirming that an assignee could license copyrights without being a copyright society. PPL cited it to bolster its position, but the Division Bench did not engage extensively with this case, focusing instead on the broader statutory interpretation.
5. Director of Supplies and Disposals v Member, Board of Revenue, AIR 1967 SC 1826
   Cited by the Division Bench, this Supreme Court decision defined “carrying on business” as requiring a systematic, profit-motivated activity. The court used this to establish that PPL’s licensing activities constituted a “business” under Section 33(1), triggering the registration requirement.
6. Assistant Commissioner v Hindustan Urban Infrastructure Ltd., (2015) 3 SCC 745
   This Supreme Court case, referenced by the court, expanded the meaning of “carrying on business” to encompass a wide range of activities beyond buying and selling. It supported the court’s view that PPL’s licensing operations fell within Section 33(1)’s ambit.
7. Narain Swadeshi Weaving Mills v Commissioner of Excess Profits Tax, AIR 1955 SC 176
   Cited by the court, this Supreme Court decision defined “business” as a systematic activity with a profit motive, reinforcing PPL’s engagement in the business of licensing under Section 33(1).
8. Barendera Prasad v ITO, AIR 1981 SC 1047
   This Supreme Court case, used by the court, described “business” as a continuous, income-generating activity, further confirming PPL’s activities as a business subject to Section 33(1).
9. Management of Tata Iron and Steel Company Ltd v Chief Inspecting Officer, AIR 2005 SC 1433
   Cited by the court, this decision defined “business” as a commercial enterprise for profit, aligning with the court’s interpretation of PPL’s licensing operations.
10. State of MP v Mukesh, (2006) 13 SCC 197
    Referenced by the court, this Supreme Court case emphasized the continuity aspect of “business,” supporting the application of Section 33(1) to PPL’s ongoing licensing activities.
11. Institute of Chartered Accountants of India v Price Waterhouse, (1997) 6 SCC 312
    Cited by the court, this Supreme Court decision underscored the principle that statutory interpretations should avoid rendering provisions redundant, guiding the court’s rejection of the Novex decisions’ interpretation.
12. Sales Tax Commissioner v B.G. Putal, 1995 Supp (1) SCC 429
    Used by the court, this Supreme Court case held that a proviso cannot dilute the main section’s efficacy, supporting the court’s view that the first proviso to Section 33(1) does not override the registration requirement.

Detailed Reasoning and Analysis of Judge

The Division Bench embarked on a meticulous analysis of the Copyright Act, focusing on Sections 13, 14, 17, 18, 30, and 33, to resolve the central issue. The court began by affirming that sound recordings are a distinct category of copyrightable works under Section 13(1)(c), with the producer as the first owner under Section 17, read with Section 2(d)(v). Section 18(2) unequivocally deemed PPL, as an assignee, the owner of the copyrights in the assigned sound recordings, entitling it to license them under Section 30. However, the court emphasized that Section 16 subjects all copyright rights to the Act’s provisions, setting the stage for examining Section 33(1)’s impact.

Section 33(1) prohibits any person or association from carrying on the business of issuing or granting licenses in copyrighted works except under or in accordance with a registration granted under Section 33(3), which pertains to copyright societies. The court, drawing on Supreme Court precedents like Director of Supplies and Disposals and Narain Swadeshi Weaving Mills, interpreted “carrying on the business” broadly, encompassing PPL’s systematic licensing activities, as admitted in the Single Judge’s judgment. The court noted that PPL’s prior status as a registered copyright society (1996–2014) and its unsuccessful re-registration attempt post-2012 underscored its obligation to comply with Section 33(1).

The first proviso to Section 33(1), allowing a copyright owner to grant licenses in their individual capacity “consistent with obligations as a member of a registered copyright society,” was pivotal. The court rejected PPL’s contention, supported by the Novex decisions, that the proviso exempted it from registration requirements. Instead, it held that the proviso assumes the copyright owner is a member of a registered copyright society, as evidenced by the phrase “consistent with obligations.” This interpretation aligned with the principle that a proviso cannot negate the main section’s intent, as per Sales Tax Commissioner v B.G. Putal. The court found that accepting the Novex decisions’ view would render Section 33(1) and Section 33A’s tariff regime redundant, undermining the legislative intent to regulate bulk copyright holders and prevent monopolistic practices, as highlighted in the 227th PSC Report.

The court further noted that sound recordings constitute a distinct class under Section 2(y)(iii), with RMPL being the sole registered copyright society for such works. PPL, not being a registered society or a member of RMPL, could not issue licenses independently. The court distinguished between the owner’s works (those created by the owner) and assigned works, suggesting that the proviso’s licensing right applies to the former, not the latter, though it left this distinction open for final adjudication. The court also addressed Azure’s argument that PPL’s lack of registration barred it from maintaining the suit but refrained from a conclusive finding, as it was not orally argued.

Balancing equities at the interim stage, the court acknowledged that outright vacating the injunction would allow Azure to exploit PPL’s recordings gratis, which was inequitable. Conversely, upholding the injunction without conditions ignored PPL’s non-compliance with Section 33(1). The court crafted an equitable solution, directing Azure to pay PPL at RMPL’s tariff rates for using PPL’s recordings, as if PPL were a member of RMPL, pending the suit’s outcome. This ensured PPL received compensation while aligning with the regulatory framework, subject to final adjudication in CS (Comm) 714/2022.

Final Decision

The Division Bench allowed Azure’s appeal, modifying the Single Judge’s order. It disposed of IA 16777/2022 by directing Azure to pay PPL for using its sound recordings at RMPL’s tariff rates, as per RMPL’s website terms, with both parties required to submit three-monthly payment statements to the Single Judge. The arrangement was subject to the final outcome of CS (Comm) 714/2022, ensuring interim equity without prejudicing the suit’s merits.

Law Settled in This Case

This judgment clarified that any person or association engaged in the business of issuing or granting licenses for copyrighted sound recordings must comply with Section 33(1) of the Copyright Act by being a registered copyright society or a member thereof. The first proviso to Section 33(1) does not exempt assignees under Section 18(2) from this requirement, as it presupposes membership in a registered copyright society. The decision reinforces the regulatory intent of Sections 33 and 33A to prevent monopolistic practices and ensure transparency in licensing tariffs, harmonizing the owner’s licensing rights under Section 30 with the Act’s broader framework. It also underscores the judiciary’s role in balancing proprietary rights with public interest at the interim stage, pending final adjudication.

Case Title: Azure Hospitality Private Limited Vs Phonographic Performance Limited

Date of Order: April 15, 2025

Case No.: FAO(OS) (Comm) 41/2025

Neutral Citation: 2025:DHC:2562-DB

Name of Court: High Court of Delhi

Name of Judges: Justice C. Hari Shankar, Justice Ajay Digpaul

Disclaimer: The information shared here is intended to serve the public interest by offering insights and perspectives. However, readers are advised to exercise their own discretion when interpreting and applying this information. The content herein is subjective and may contain errors in perception, interpretation, and presentation.

Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi