By Lucy Rana and Arpit Kalra
Can a claim for damages fail simply because the claimant cannot prove the exact rupee value of its loss? In a judgment pronounced by Arif S. Doctor, J. in Ultra Distributors Pvt. Ltd. v. M/s. Dhariwal Films Pvt. Ltd. & Ors., the Bombay High Court has conclusively answered No.
Where a breach is established and the fact of loss is clear, the Court held, a claim for damages cannot be defeated merely because the precise quantum cannot be proved. The Court can make a reasonable, evidence-based assessment on the material available to ascertain the quantum of damages. This decision can act as a boon for the film and entertainment business, and Intellectual Property Disputes as a whole, where rights are constantly bought, sold, financed, insured and administered, and where the loss from a breach of contract is real but the exact extent of the loss may be difficult to prove and value. This is more so the case as intellectual property is one of those rare breed of assets where the actual value of the rights, and the loss resulting from the violation of those rights, is difficult to establish due to the lack of any physical goods.
The dispute: One film, same rights, multiple competing claims
The case concerned the assignment of the video copyrights in the feature film “Nehle Pe Dehla”. The claim of the Plaintiff was that by an assignment dated March, 31 2005, the Defendant No. 1 i.e. Dhariwal Films, assigned the video rights in the film to the Plaintiff i.e. Ultra Distributors, for a period of eight years against a total consideration of Rs. 42,51,000 (~US$44,000), of which the plaintiff paid Rs. 10,01,000 (~US$10,400) to the Defendant No. 1 against due receipt. The Plaintiff claimed that Dhariwal Films then breached the agreement as it failed to deliver Digibeta master tapes of commercially exploitable quality within the stipulated time and instead allowed a third party (the Defendant No. 2) to exploit the very rights it had assigned to the Plaintiff. The Defendant No. 2 asserted a competing, prior title in the Copyright on account of an assignment deed dated May 30, 2002 executed by the Defendant No. 1 in its favor. The Plaintiff sought a declaration that its assignment was the valid instrument and further sought damages of Rs. 1,66,75,000 (~US$174,000) with interest, along with a decree of permanent injunction against the Defendants.
Court findings: A valid assignment and a breach
Upon considering the material on record, the Hon’ble Court opined that the assignment in favor of the Plaintiff’s was a valid assignment. The findings of the Hon’ble Court were grounded in the fact that not only did the Defendant No. 1 fail to dispute either the execution of the 31 March 2005 agreement or its receipt of Rs. 10,01,000 (~US$10,400), a series of its own contemporaneous statements made by the Defendant No. 1 in its response, which confirmed that the Plaintiff’s assignment was binding, valid and subsisting. The Hon’ble Court further observed that the defendant had taken mutually contradictory positions at different times about who held the rights, which it regarded as evidence of commercial dishonesty.
On the aspect of failure on the part of the Defendant No. 1 to perform their obligations under the Assignment Deed dated March 31, 2005, the Hon’ble Court held that the Defendant No. 1 had failed to deliver acceptable, commercially exploitable quality of the masters that the contract required. What is of particular interest are two evidentiary findings which led to the Hon’ble Court finding in favor of the Plaintiff. Firstly, the Plaintiff’s specific plea that exploitable-quality masters were never delivered had not been specifically denied in the written statement by the Defendant No. 1. Therefore, applying the provisions of Order VIII Rules 3 and 5 of the Civil Procedure Code, 1908 and the Supreme Court’s decision in Thangam v. Navamani Ammal[1], the Court held that a general or evasive denial is as good as no denial at all, and as such, the plea of the Plaintiff stood admitted. Secondly, the Court relied on a suggestion put to the Plaintiff’s witness during cross-examination to the effect that no delivery of the exploitable-quality masters had been effected, following Balu Sudam Khalde v. State of Maharashtra[2], was itself treated as an admission binding on the Defendant,.
The heart of the decision: Damages without proof of actual loss
The central question was whether the Plaintiff could recover damages which could not be quantified precisely, more so because the documents needed to compute the loss were in the custody of the Defendant’s hands and had not been produced. The Court held that once a breach and the fact of loss are established, the claim is not defeated because the exact quantum could not be proved. A reasonable assessment is permissible where the nature of the breach and the available evidence make precise computation difficult. The Court drew on the decisions in Koninklijke Philips N.V. v. Sukesh Behl, Mahanagar Gas Ltd. v. Babulal Uttamchand & Co. [3]and Board of Control for Cricket in India v. Kochi Cricket Pvt. Ltd.[4], holding that in such cases, the Court may resort to “rough and ready” methods to reach a fair estimate.
Two further factors shaped the eventual relief granted to the Plaintiff. Firstly, the Court drew an adverse inference against the Defendant No. 1 for withholding the records needed to quantify the loss. This serves as a reminder that a party who sits on the very documents that would prove or disprove their claim cannot expect that silence to work in its favour. Secondly, the Court used the consent terms which were undisputedly executed between the parties, as a yardstick to estimate damages. The terms recorded the value of the video rights at Rs. 82,51,000 (~US$86,000), which is a figure the Defendant No. 1 itself had placed on the rights. The Hon’ble Court treated this value as a legitimate anchor for assessing loss caused to the Plaintiff due to the failure of the Defendant No. 1 to fulfil its obligations under the assignment. The Court applied the concept of “Expectation Damages” which posits that the claimant must be restored to the position it would have occupied had the contract been performed, in order to assess damages. The Hon’ble Court also took into account the Plaintiff’s proven pre-release publicity expenditure and the loss of profit reasonably within the parties’ contemplation, to award the eventual compensatory damages of Rs. 1,66,75,000 (~US$174,000).
Punitive damages for commercial dishonesty
The Hon’ble Court went further than awarding only compensatory damages and also awarded Rs. 25,00,000 (~US$26,000) as punitive damages, not for the breach of the contract, but for conduct it characterized as misrepresentation and cheating. The Defendant No. 1 had expressly represented to the Plaintiff that the earlier assignment to the Defendant No. 2 stood cancelled, taken substantial part-consideration from the Plaintiff, confirmed the Plaintiff’s rights in the consent terms, questioned the Defendant No. 2’s title on oath in another proceeding, and then reversed course to support that very claim in order to avoid liability. Taking these factors into consideration, the Hon’ble Court held that such conduct warranted exemplary damages as a deterrent, even though punitive damages had not been specifically pleaded.
Final reliefs
The suit was decreed in favor of the Plaintiff and against the Defendants. The Hon’ble Court declared the Plaintiff the exclusive holder of the video and allied rights in the film and directed the Defendant No. 1 to pay Rs. 1,66,75,000 (~US$174,000) as compensatory damages, Rs. 25,00,000 (~US$26,000) as punitive damages and Rs. 15,00,000 (~US$15,600) as costs. The Hon’ble Court further directed that in case the sums were not paid within a period of eight weeks, the same would carry an interest @8% till the date actual payment is made. The second defendant’s competing claim failed: the Court found its chain of title unproven and its supporting documents riddled with inconsistencies.
What the decision means for the film and entertainment industry
For producers and rights holders
This Judgment is an important lesson for rights holder to not create overlapping rights, and take inconsistent stands. The Defendant No. 1’s final undoing was granting competing claims for the same rights and then changing its position repeatedly in order to avoid liability. This conduct of the Defendant resulted not only in grant of compensatory but also imposition of punitive damages for commercial dishonesty. A representation that an earlier assignment “stands cancelled” must be true and capable of proof. Equally, delivery of materials in the contractually required quality masters, DCPs and other deliverables is a substantive obligation and non-delivery of exploitable-quality materials is in itself a breach.
For distributors, exhibitors and OTT Platforms and other licensees
If an assignor/licensor fails to deliver usable materials under the agreement, or lets a rival exploit the rights that have been exclusively assigned/licensed, damages can be claimed and recovered even without proving the exact loss suffered, provided it is proved that loss itself was in fact suffered. What made the difference in this matter was that the Plaintiff was able to establish loss on the basis of material on record i.e. proven print, advertising and publicity expenditure, correspondence rejecting sub-standard masters, and a contemporaneous valuation of the rights. Where the counterparty holds the numbers that would fix the loss — a rival’s exploitation revenue, for instance press for them to be placed on record and ask the court to draw an adverse inference if they are withheld.
For film financiers, completion guarantors and insurers
Chain-of-title diligence is the whole game. Overlapping assignments, a signing amount that does not match the later consideration, missing seals and unexplained schedules were central to the dispute. These defects that surface in errors-and-omissions in title chains. The judgment also shows how a Court can value intellectual property rights (using a figure the party itself placed on them) and that exposure can extend to punitive damages and costs on top of compensatory damages. For those underwriting, guaranteeing completion or lending against a film, the lesson is to verify a clean, consistent chain before the money moves, not after a dispute erupts.
For collection societies and rights administrators
Entitlement to collect and distribute flows from a valid assignment and a clean chain of title. Competing or void assignments create real distribution risk, because a claimant asserting rights must be able to show a clear and consistent chain, which the second defendant here could not. Robust documentation at the time of assignment protects everyone downstream in the royalty chain.
For talent — directors, actors, writers and musicians
The commercial value of a creator’s rights are often proved by contemporaneous valuations and the surrounding terms. Clear and well-documented assignments protect both the creator’s bargaining position and the acquirer’s ability to enforce. It further reduces the risk of the kind of tangled, competing claims that led to this litigation.
[1] (2024) 4 SCC 247
[2] (2023) 13 SCC 365
[3] 2012 SCC OnLine Bom 1254
[4] 2025 SCC OnLine Bom 2378
Frequently Asked Questions
Film Rights and Copyright Damages FAQ
Yes. The Bombay High Court held that where breach and the fact of loss are established, a damages claim is not defeated merely because the precise quantum cannot be proved. The Court may make a reasonable assessment on the available evidence.
It held the plaintiff’s copyright assignment valid, found the producer in breach for failing to deliver exploitable-quality masters, and awarded compensatory damages of Rs. 1,66,75,000 (~US$174,000) and punitive damages of Rs. 25,00,000 (~US$26,000), despite the exact loss not being provable.
Because overlapping assignments and inconsistent documents were what defeated the competing claim here. Financiers, completion guarantors and errors-and-omissions or title insurers rely on a clean, consistent chain of title; defects in it drive both disputes and claims.
The High Court of Bombay (Commercial Division) at Mumbai, Arif S. Doctor, J., in a judgment pronounced on 29 August 2026; neutral citation 2026:BHC-OS:19463.
Preserve your own evidence of expenditure and correspondence, press for the counterparty’s records, and ask the Court to draw an adverse inference against a party that withholds the documents needed to quantify the loss.
Producers must not grant overlapping rights or misrepresent that earlier assignments are cancelled, and must deliver materials of the contracted quality. Distributors and licensees can recover for a breached rights deal on a reasonable estimate of loss, provided the fact of loss and supporting expenditure are proved.
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