, Mumbai Mirror|
The case of missing royalties: Music companies hold copyrights to lakhs of songs. Every time a television channel, a radio show or any other entity uses a song commercially, it pays a certain amount. The amount, or royalty, is distributed among music companies, composers, lyricists, and singers. The Enforcement Directorate (ED) is investigating allegations that five major music labels did not pass on royalties they had collected to several composers and lyricists as mandated by the Copyright Act’s rules on equitable revenue sharing. The companies, the ED suspects, diverted and laundered the funds.
Two firms alone are believed to have earned Rs 2,500 crore between 2012 and 2017. Of this, they were supposed to share Rs 1,000 crore as royalties with artists, but they allegedly did not. Investigators filed an enforcement case information report (ECIR), the agency’s version of an FIR, in March. The size of the alleged scam could be bigger as the agency is still examining documents.
Companies facing the music: T-Series, Saregama, Sony Music Entertainment India Ltd, Universal Music India and Yash Raj Productions are facing scrutiny. Over the past week, the ED has quizzed Saregama managing director Vikram Mehra, T-Series boss Bhushan Kumar Dua, and Shridhar Subramaniam, president of Sony Music Entertainment India Ltd. They denied depriving music composers and lyricists of royalties. Aditya Chopra, chairman of Yash Raj Films, did not appear before the agency on November 9.
The probe trigger: In October 2016, singer Shubha Mudgal filed a complaint with the Delhi police alleging the five companies, the Phonographic Performance Limited, and the Indian Performing Rights Society robbed artists of music royalties. “Similar complaints were also filed by the Music Composers’ Association and Film Writers’ Association. Subsequently, an FIR was registered,” Mudgal told Mirror. Chitra Singh, wife of the late ghazal maestro Jagjit Singh, and Bhojpuri actor Manoj Tiwari are other complainants in the case. The ED, which exclusively investigates fund diversion and money laundering, took note of the allegations and launched an inquiry.
The real origins: The current probe has roots in a May 2014 case. One Surender Sathi filed a complaint at a police station in Agra alleging he had been denied music royalties of Rs 47,000. The ED stepped in following suspicion of money laundering and froze a Rs 70-crore deposit of the Indian Performing Right Society (IPRS). The ED lost the case in an appellate tribunal in June this year, but has filed a challenge in the Bombay High Court.
What is IPRS?: A non-profit society formed in 1969. Its members include composers, lyricists, music companies and publishers, among others. The IPRS is basically their representative body. It issues licences for the use of their songs and collects royalties on their behalf. The royalties are distributed among the stakeholders. The society protects the members’ rights and interests related to musical works.
Another organisation, Phonographic Performance Ltd (PPL), represents only music labels and manages public performance and radio broadcasting rights for over 7 lakh songs in various languages.
Did music labels exploit a loophole?: In 2012, a controversy arose over the registration and authority of IPRS after the Copyright Act was amended. It was claimed that the IPRS had lost its powers as it had failed to renew its registration. The ED believes the five music labels exploited this technical loophole and pocketed royalties without providing a share to composers and lyricists.
In 2015, the IPRS told the high court that since it had entered into deed of assignments with all stakeholders, it can administer copyrights in musical and literary works in its capacity as an owner. It is not necessary for the IPRS to register as a copyright society for issuing licences and collecting royalties.
Does money laundering theory hold water?: To register any case under the Prevention of Money Laundering Act, the ED has to show that “proceeds of crime” were disguised as legitimate funds. However, the agency can start a probe in any case where IPC sections of cheating and forgery are applied. The 2014 Agra case included the two sections. The appellate tribunal that ruled against the ED in the case made several important observations. On the attachment of the IPRS’s Rs 70-crore deposit, the tribunal said: “It is apparent that the assets attached have been generated from legal activities, namely licensing of copyrighted material. They have not been generated from any criminal activity. Therefore, they cannot be proceeds of crime with the meaning of the Act.”
It added: “If mere wrongful retention of money owed to another person was to be considered as proceeds of crime, every recovery suit or cheque bouncing case would fall within purview of the Act ,
What the companies say: Sony and Saregama told the ED they had been paying royalties arising from public performance of the songs lying with the IPRS. T-Series and Yash Raj Films have told the agency that they were not part of the IPRS umbrella, so were not bound by its rules. Vinod Bhanusali, president of marketing, media, publishing and music acquisition at T-Series, told Mirror: “As law abiding citizens, whatever documents were required from us were submitted to the ED. And ..
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