Non-payment of Copyright royalties – raids on Indian music companies

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The Enforcement Directorate (ED) raided the Mumbai offices of major Indian music companies – Universal, T-series, Sa Re Ga Ma and YRF Music, on Friday the 3rd, for non-payment of royalties and laundering the royalty money into investments.

The raids were made in relation to a case against two entities that handle licenses in the Indian music industry, namely, the Indian Performing Right Society (IPRS) and the Phonographic Performance Limited (PPL). Chitra Singh, widow of ghazal singer Jagjit Singh, had filed an FIR with the ED naming IPRS and PPL. Script writer Javed Akhtar too had made a complaint about non-payment of royalties. The ED began investigations into allegations of money laundering derived from non-payment of license royalty.

IPRS is a copyright society that issues licenses for public performances, while PPL is a copyright society dealing with sound recordings. The two copyright societies are embroiled in various legal issues. One of them concerns the legality of these companies being allowed to issue licenses under the Indian Copyright Act. Another legal issue concerns the non-payment of royalty and subsequent money laundering. According to investigations made by the ED, IPRS had assigned their rights to issue licenses and collect royalties to PPL to share revenue. However, PPL allegedly indulged in fraudulent activities and did not pay IPRS their due royalty.

The ED is a specialized financial investigative agency that enforces the Prevention of Money Laundering Act, 2002 (PMLA). The music industry companies collected royalty from consumers and were entitled to pay 50% of the collected amount to music composers and lyricists. However, this money was supposedly used by different people in other investments. What makes the case noteworthy is that the fraudulent activities concerned are said to involve amounts up to Rs 1,500 – 2,00 crores (USD 230 million to 307 million).

The ED teams have apparently seized several incriminating documents pertaining to the records of royalty collections over the period and its fraudulent use. These documents will be gathered from Kolkata and Delhi to identify a money trail. It remains to be seen whether these companies will be allowed to continue issuing licenses, and what happens of the royalty that is rightfully owed to the composers and lyricists.

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