[This post has been co-authored with Anjali Tripathi. Anjali is a fourth-year law student at JGLS with an interest in IP rights, access to education, and the creative arts. Her previous post can be accessed here.]
In a big relief to movie director Shankar, the Madras High Court today stayed the Enforcement Directorate (ED)’s decision to provisionally attach his assets worth ₹10.11 crore under the Prevention of Money Laundering Act (“PMLA”), 2002. On February 20, the ED released a press statement on its move to attach the director’s asset in light of the 15 year old copyright dispute between the director and writer Aarur Tamilnadan. Staying this move by the ED, as reported by Livelaw, the Court asked the authority why it didn’t wait for the outcome of the criminal complaint against the director. As a quick recap, the writer alleged that Shankar’s blockbuster flick “Enthiran” (Robot), featuring “Superstar” Rajnikanth, was plagiarised from his story Jugiba. Based on the above allegation he had filed a civil suit and a criminal case against the director in 2010. Interestingly, the civil suit has been disposed of by the Madras High Court, holding that there is no copyright infringement, and the proceedings in the criminal case have been stayed. So why is ED involved after these many years? This intervention has been justified based on the inclusion of Section 63 of the Copyright Act 1957 as a scheduled offence under the Prevention of Money Laundering Act (PMLA).
In this post, we will examine the foreseeable consequences of applying a money laundering law to a copyright dispute. We will also question the logic behind the continued criminal case and critique the ED’s role in this can of worms.
Recap!… 15 years ago
A quick flashback for setting the context of the case. Both, the civil suit and the criminal case were filed by Tamilnandan against Shankar in 2010. In the civil suit, the writer sought a declaration that he was the first author and owner of the “Enthiran”, a permanent injunction against the director, rendering the accounts of profit made by the film to Tamilnandan, and also damages worth INR 1 Crore. In the criminal complaint filed against Shankar and the producer of the film, he alleged that Enthiran is a “pirated story” of his work Jugiba through which the director has earned huge profits. Thus, it was alleged that Shankar has committed offences punishable under Section 63 of the Copyright Act (copyright infringement) and Section 420 of the Indian Penal Code (cheating and dishonestly inducing delivery of property.)
After 13 years, the Madras High Court in 2023 decided the civil suit in favour of Shankar. The Court was of the opinion that Tamilnadan failed to prove copyright infringement. The well-established principle from the R.G. Anand v. Deluxe Films (1978) was applied to highlight the idea-expression dichotomy and the Court found that while both the works Jugiba and Enthiran involved humanoid robots, their ways of carrying out the story were very different. The judge highlighted flaws in Tamilnadan’s submissions as he failed to prove literal imitation by providing sufficient evidence, nor did he have independent witnesses to rely on for his claims. The Court also found that the similarities may be considered generic and even inevitable in a sci-fi narrative of a robot film.
Now moving to the criminal case. Earlier, in 2019, the High Court quashed the criminal charge under Section 420, finding that the facts and circumstances of the case do not make a case for the offence. The Court also quashed the case against the producer but allowed it to continue vis a vis Sec. 63 against Shankar. However, in 2023, influenced by the civil suit finding in favour of Shankar, the Madras High Court stayed the proceedings in the criminal case.
Lo and Behold, Enters ED
2 years after the above order by the High Court in the criminal case, the ED jumped into the criminal prosecution against the director. Interestingly, the press release by the ED does not have any reference to the civil suit judgment. In contrast, the civil suit disposal was highlighted by the High Court in today’s proceedings on the criminal case. Instead, the ED relies on the ongoing criminal case and a study by the Film and Television Institute (FTII), a government funded body commissioned by it. It is also important to note that the ED press release does not mention anything about the stay in the criminal case. Reportedly, the FTII report, relied upon by the ED, has found “striking similarities” between the two films which is strange, considering the civil case has already looked into and dismissed the allegations of infringement using the RG Anand test. (we are unable to find the report and in case any reader has access to the same, please share it with us).
Another point that stands out here is that the authorities- both the Court hearing the criminal case and ED, have used the term “plagiarism” instead of copyright infringement. As explained here by Devika, plagiarism is using another’s work without attribution, presenting it as one’s own, whereas copyright infringement is unauthorized use of one’s work. Plagiarism is more of an ethical issue which may not always translate into an actionable case of copyright infringement. For instance, let’s say one uses a paragraph from a book, without attributing it to the author. In this case, this will amount to plagiarism. But it may not be copyright infringement. Under Section 63, it’s copyright infringement which is prohibited not plagiarism. In a similar vein, Paragraph 20 of Part A of the PMLA, which authorizes the ED to look into copyright infringements, making it a scheduled offence, talks about infringement and not plagiarism.
Does it Make Sense to Extend PMLA over Copyright Infringement Cases?
Since we are on the topic of PMLA and copyright infringement, the legislative intent behind the PMLA was to be used to combat serious criminal offence like drug trafficking, large-scale financial frauds, and organised crime when it came into effect in 2002. However, as time passes, we see its ambit expand to even copyright infringement now (through the 2012 Prevention of Money Laundering Amendment Act, which expanded the scheduled offences section to include Copyright, Trademark and other legislations within its ambit as well).
Under the PMLA, during its investigation, the ED is empowered to attach the property involved in money laundering. In this case, it would include the “proceeds of crime” i.e. property obtained directly or indirectly by any person as a result of the criminal activity. Such “proceeds” can be attached on the basis of vast discretion given to the officer under Section 5(1) where if he has a reason to believe that the concerned person is in the possession of any proceeds of crime and is likely to dispose them of, then it can order for such an attachment.
These broad powers are given to curb some serious financial crime and copyright infringement does not have the same criminal repercussions as these financial crimes would. So subjecting copyright infringement cases to such stringent provisions would be disproportional. Additionally, the severity of these laws would result in re-criminalisation of IP disputes which is directly against the recent legislative intent. The deterrent effects would suffocate innovation which is again, not something India advocates for and last but not the least, it would result in global misalignment considering that many nations consider copyright infringement as a civil wrong.
As seen in this post by Aditi Bansal, India has been trying to move towards decriminalising intellectual property violations with initiatives like the Jan Vishwas Act of 2023, to encourage a more business-friendly environment. Further, even the TRIPS agreement doesn’t insist on criminalising all copyright infringement. Unfortunately, allowing ED to investigate on matters of copyright infringement moves away from this goal of decriminalizing copyright infringement.
The broader concern remains: What will act as a check and balance on the ED’s power to intervene in any and every high-profile plagiarism case?
Repercussions of Allowing ED to Investigate Copyright Cases
Before this inclusion, a copyright owner could file a civil suit and/or explore remedies under criminal law, according to their circumstances. This allowed for out-of-court, simpler negotiations, settlements and other strategies to be played out. But now, due to the PMLA’s involvement, even if the parties settle, the money laundering investigations will continue. However, one argument could be that this may not eventually matter since the money laundering charges are dependent on whether the scheduled offences (i.e. copyright infringement) have been proved or not.
Theoretically, PMLA’s involvement even affects existing copyright remedies and makes them redundant. Taking Mareva injunctions as an example, these help the plaintiff in preventing an infringer from disposing of their assets so that damages can be recovered. But with PMLA in effect, these assets can be attached as proceeds of crime under the PMLA and be confiscated by the Government instead. While Section 64 already allowed for the seizure of infringing copies, the PMLA now adds another mechanism that can cause conflict. The main issue here is, therefore, that the Government’s ability to seize assets may have priority over the plaintiff’s right to recover damages. This situation begs the question of whether the PMLA will be considered to supersede the Copyright Act since it is a more recent enactment, too.
The application of PMLA to cases like these, where Shankar’s assets were being attached without a definitive judicial ruling, creates a chilling effect. Based on allegations alone, creative professionals may be faced with serious repercussions when people weaponise copyright disputes. The need for a clearer, more balanced approach to IP disputes in India has never been more highlighted. At this point, the Enthiran case seems to be a reflection of how due process and justice remain shadows in a dystopian criminal system.
Today’s order may offer some relief to the director, but it’s another twist in this real-life legal drama that complicates things further. We say this because as mentioned above, the criminal case seems to be on a stay. Thus, the High Court has stayed the ED’s decision contingent on the outcome of a stayed proceeding. So now what? Will the Court direct to complete the criminal case expeditiously? Or something else? We’ll have to wait till April 21 when the ED- Shankar matter is listed next and till then let’s keep our buckets of popcorn ready!
A big thanks to Swaraj for his suggestions and edits on the post!