1ST INTRA UNIVERSITY MEDIATION

TOURNAMENT CUM POOL SELECTIONS

Lights,
Camera,
Retraction
PRELIMINARY ROUND
PROBLEM
ORAL ROUNDS:
21-23 AUGUST, 2020

CREATED BY:
ADITYA WADHWA & PRATHAM MEHROTRA
 THE PARTIES:
Sharma Productions Pvt. Ltd. (the Calling Party) is one of the leading movie production and

distribution houses in the filmmaking industry. Specializing in dramas and comedies, over the

years Sharma Productions has released multiple blockbusters including hit films such as “Kuch Nhi

Hota Hai”, “Teacher of the Year” and “Wake Up Sameer!”. Rishi Sharma, CEO and Founder of

Sharma Productions Pvt. Ltd., is a flamboyant personality and one of the moguls of the Lollywood

Film Industry and movies released under his banner, made with his usual recipe of a cast launching

star kids, promotions by other A-list actors and songs appealing to today’s youth, are highly sought

after by movie exhibitors/Cineplex owners.

Pringle Cinemas Pvt. Ltd. (the Responding Party) is the juggernaut in the movie exhibition

industry, being the stand-out market leader in terms of the number of Movie Screens in the country.

They operate in 93 cities across India with an aggregate seating capacity of 2.89 lacs at a time. The

competitive advantage of Pringle Cinemas stems from their quality hospitality services and

cinematic experience. With their flexible approach to tickets and concession prices, they have also

strategically beaten their competitors by catering to diverse economic backgrounds all across the

nation. Mr. Pringle Singhvee, CEO and Founder of Pringle Cinemas Pvt. Ltd., prides himself for

the public outreach of its brand in India, with his Cinema Hall chain having popular Multiplexes in

all major cities and Single-screen Cineplex’s in around 80 smaller cities across the country.

BACKGROUND TO THE DISPUTE:

Both parties entered the film industry business together with Mr. Pringle responsible for

distribution of Mr. Rishi’s directional debut – “Masoom se Mausoom”. This lay foundation to their

longstanding bond that has now developed into an amicable and profitable relationship based on

trust and mutual respect over the past three decades. Movies made by Sharma Productions have

heavily profited from movies screened in the Pringles’ Cinema Halls, who have prioritized

screenings of several of such movies over other movies released simultaneously in its many Single-

screen Cineplexes in the smaller cities and towns. Pringle Cinemas has also collaborated with

Sharma Productions for Exclusive Movie Premiers and Media Partnerships on multiple occasions

which have augmented their brand value as a Premium Cineplex chain.

With a view to take their relationship forward and further gain advantage over their respective

industry competitors, both the parties entered into a Two-year Agreement in late September 2018.

The relevant provisions of the Agreement are reproduced in Annexure A.

The aforesaid Agreement was successfully and profitably executed by both the Parties for the first

18 months, a period during Sharma Productions released three movies namely, “3 States”,

“Laxmmi Bong” and “Ae Dimaag Hai Mushkil”, all of which were mega blockbusters and highly

profitable ventures. In early 2019, Pringle Cinemas also concluded a Concessionaire Agreement

with Global Fast Food chain Vicky’s Fried Chicken (VFC) for its Cineplexes, which incr eased the

average Annual footfall by 30% compared to the previous year. Both parties profited greatly from

their Agreement and recognised each other’s contributions and enterprise under same with high

regard and respect.

However, in the midst of such lucrative times, the outbreak of the Coronavirus pandemic, came as a

devastating shock to both parties. In response to the pandemic, the government of India ordered for

a nation-wide lockdown starting from 25th March, 2020 which prohibited all businesses and

enterprises from functioning except essential services. Pringle Cinemas incurred heavy losses

owing to shutting down of movie theaters across the nation for more than four months. Similarly,

Sharma Productions also suffered significant losses owing to stopping of shooting and editing work

of its upcoming projects: ‘Gujarati Medium’ (Scheduled Release date 25th September, 2020) and

‘Bad Newwz’ (Scheduled Release date 25th December, 2020).

THE DISPUTE:
The present dispute arises around the release of the final and fourth film under the Agreement

between the Parties i.e. ‘Gujarati Medium’ scheduled to release on 25th September, 2020. In terms

of the Agreement, the Loyalty Payment for the particular movie was to be deposited by 11th

August, 2020 (or by 18th August, 2020 with 5% penalty).

In regards to the payment, the following conversation ensued between Mr. Pringle & Mr. Rishi via

email:

From: Mr. Pringle Singhvee <pringle.singhvee@pcpl.com>

Sent: 6 August 2020, 10:04 a.m.

To: Mr. Rishi Sharma <rishi.sharma@sharmaproductions.com>

Re: Postponement of Gujarati Medium Release

 

Dear Mr. Rishi,

I trust you are doing well. As you are aware all theatres and cineplex’s in our country have been

temporarily shut down until further notice, it seems we may not be able to follow through on our

commitments of releasing “Gujarati Medium” as per schedule. I am sure you would understand that

such a “force majeure” event is completely out of our control and therefore, I request you to consider

postponement of the above-mentioned film to a future date when things start to get better. Our

company is also planning a new venture which may resolve all our problems and maybe we could

discuss the same in the coming week. As and when we finalize a release date, we could further fix the

date for payment of the “Loyalty Payment”.  

 Sincerely,

Pringle Singhvee
From: Mr. Rishi Sharma <rishi.sharma@sharmaproductions.com>

Sent: 8 August 2020, 5:31 p.m.

To: Mr. Pringle Singhvee <pringle.singhvee@pcpl.com>

Re: Postponement of Gujarati Medium Release

 

Dear Mr. Pringle,

I understand all your concerns and really hope that the situation gets better very soon as that would

provide relief to all of us. To avoid any further futile discussion on the issue, I would like to inform you

that Sharma Productions has an internal policy according to which we do not postpone any “Loyalty

Payment” due to us, owing to the huge finances involved in creating and releasing a film. Although

this circumstance poses a unique challenge, I am sure you shall adhere to the terms of the contract as

a failure on your part may attract a penalty and force us to look for other avenues.
 

Sincerely,

Rishi Sharma

The previous email received no response however, on 15th August, 2020, the Central Government

of India passed a Notification permitting the opening of Cinema Halls and other similar public

gatherings on and after 15th September, 2020. Relieved by the Notification and the idea of

resuming business, Mr. Pringle Singhvee sent the following imploring email to Mr. Rishi Sharma:

From: Mr. Pringle Singhvee <pringle.singhvee@pcpl.com>

Sent: 16 August 2020, 10:54 a.m.

To: Mr. Rishi Sharma <rishi.sharma@sharmaproductions.com>

Re: Release of Gujarati Medium as per Schedule

 

Dear Rishi,

It gives me utter joy that we will be able to continue our partnership in light of the reopening of

cinema halls by the Central Government. I am well aware that the last date for deposit of the Loyalty

Payment under the Agreement is 18th August, 2020 for Gujarati Medium. However, in light of the

Covid-19 situation and the sudden notification by the Government permitting reopening, we humbly

request you to grant us an extension of 7 days for payment.

The Covid-19 Lockdowns have caused heavy losses to us and the release of this movie is necessary for

us to stay in business. I beseech you to empathise with us and help us in our time of need.

Rest assured that Pringle Cinemas is committed to its brand ideology of providing the best services to

its customers. We also plan to take extensive sanitisation efforts as mandated by the Government and

will also be conducting an extensive campaign to regain public trust and confidence. I have further

sanctioned 2.5 lacs out of the 5 lac budget allocated to the release of “Gujarati Medium” and the

flexes, posters and the banners will be put across all our screen within the next five days.

Sincerely,

Pringle Singhvee
The aforementioned email was not replied to by Mr. Rishi Sharma or any representative of Sharma

Productions Pvt. Ltd. Nevertheless, the Loyalty Payment was deposited by Pringle Cinemas on

24th August, 2020. Much to their shock, the very next day, Sharma Production vide an extensive

media and advertisement campaign announced the release of Gujarati Medium on 15th September,

2020 on Netflix. Subsequently, Sharma Productions also refunded the Pringle Cinemas’ Loyalty

Payment on 27th August, 2020.

Infuriated by the apathetic and indifferent approach of Sharma Production, Mr. Singhvee called Mr.

Sharma, labeling their actions as a fundamental breach of contract and breach of trust between the

parties. Mr. Sharma responded calmly to the allegations, stating them to be baseless considering

that Pringle Cinemas had failed at its initial obligation to timely deposit the Loyalty Payment and

thereby Sharma Productions was well within its’ rights to proceed to find a buyer for the screening

rights of Gujarati Medium. More heated discussions ensued between the parties.

Seeing no respite from mutual discussion, Mr. Pringle Singhvee moved to the High Court seeking

injunction against the Netflix release of Gujarati Medium. However, fearing the negative publicity

and delay which might be caused by litigation, Mr. Rishi Sharma pleaded before the Court that the

matter be referred to Mediation for quick and amicable resolution of the dispute. The Court stayed

the proceeding and referred the parties to Mediation at National Law Institute University, Bhopal.
 Annexure A:
Excerpts of relevant provisions under Agreement dated 1st October, 2018

1. Parties:

This Agreement is entered into between M/S Sharma Productions Pvt. Ltd., as the First Party and

M/S Pringle Cinemas Pvt. Ltd., as the Second Party.

2. Commencement and Scope:

The terms of this Agreement will take effect from 1st October, 2018 and will cover all movies

released by the First Party on and before 30th September, 2020.

5. Obligations of the First Party:

1. The First Party shall grant screening rights for all its movies within the scope of the

Agreement to the Second Party.

2. The First Party shall grant the Second Party Exclusive Screening Rights to the Second Party

in 79 cities (as enumerated in Schedule B) where the Second Party operates Single-screen

Cineplexes

4. The First Party shall not grant screening rights to any other Cineplex in the cities enumerated

in Schedule B.

5. The First Party shall acknowledge and communicate the receipt of Loyalty Payment made by

the Second Party as under Clause 6.3, within 3 days of such receipt.

6.     Obligations of the Second Party

3. The Second Party shall deposit a Loyalty Payment of INR 1,50,00,000 to the First Party 45

days before the Release Date of every movie of the First Party within the scope of this

Agreement.

8. Liabilities for Breach

     …

3. In event of non-deposit of the Loyalty Payment as under Clause 6.3, the Second Party shall

deposit the payable amount within expiry of 7-days from the Due Date with an additional 5%

of the Loyalty Payment as a penalty.

4.  In event of the Loyalty Amount is not paid even within the expiry of the aforesaid 7-days

from the Due Date, the Second Party shall be liable for payment of damages to the tune of INR

75,00,000.

7. In event of breach of any obligations under Clause 5.1 – Clause 5.4, The First Party shall be

liable for payment of damages to the tune of INR 1,50,00,000 and refund of any Loyalty

Payment made by the Second Party for the concerned movie.