“Yeh Kya Ho Raha Hai?” –

In the confusing melee at the climactic Mahabharat scene in “Jaane Bhi Do Yaaro”, the exasperation expressed by the actor playing Dhritarashtra against the entire play going off-script, does indeed seem to fit the latest political issue that has arisen in the State of Maharashtra.

Strangely, this latest burning political issue regarding carrying of snacks in a multiplex, does not relate to any basic needs or plight of the residents, or the debt-ridden farmers of the State of Maharashtra. For a State that is plagued with water shortage at one end, and flooding in its urban centres at the other, collapsing bridges and caving roads, coupled with complete lack of infrastructure development across the state, it is almost comical to see all the three arms of the state, i.e. the judiciary, the executive and the legislature, presently expending time and resources tackling the issue of access to snacks in Multiplexes across the State as the issue of pivotal importance.

Scene 1: A PIL is Filed, Claiming something…

The evolution of this issue into one that resulted in the immediate intervention of the Government is interesting in itself.

A Mumbai based filmmaker Jainenedra Baxi, in August 2017 filed a petition in the Bombay High Court stating that it relates to “infringement of the “Right to Life” of medically vulnerable persons and senior citizens, who are not permitted to bring their own food articles and water inside the theatres, while at the same time, despite the restriction imposed under section 121 of the Maharashtra Cinemas (Regulation) Rules, 1966, fast food is served and also permitted to be consumed inside the theatres.”

The scope of the PIL as declared by itself is therefore clearly limited to seeking exemptions for: (i) senior citizens (who are more prone to having food restrictions) and (ii) medically vulnerable persons like diabetics and (iii) violation of Rule 121 of the Maharashtra Cinemas (Regulations) Rules, 1986.

The first two issues are questionable in law, as they are assuming that access to a multiplex is itself an integral part of the “Right to Life” enshrined in Article 21 of the Constitution, which is not the case. Even assuming for a moment that it is taken as being covered within Article 21, legally it would need to be determined what the specific scope of obligation on the owner of the multiplex should be, while having full regard to his fundamental right to carry on his trade.

The allegation that Multiplexes offering F&B services violate Rule 121 of Maharashtra Cinemas (Regulation) Rules, 1966 is legally without basis, since this rule prohibits “hawking” in a movie hall. A multiplex offering snacks and refreshments or operating a restaurant or giving popcorn is not engaging in “hawking”. When the owner of the movie hall offers F&B Services (either itself or through a franchise) it is legally not “hawking” but providing an additional service to enhance the experience within its own premises.

Scene 2: Something Happened in Court on the PIL

A review of the available orders of the Hon’ble High Court of Bombay in this case indicates an interesting story in itself.

Interestingly without first determining whether the petition meets the framework of the Bombay High Court Public Interest Litigation Rules, 2010, or the tests laid down by the Hon’ble Supreme Court for determining a valid PIL, the PIL was adjourned when it came up for the first time in December 2017, at the request of the Petitioner itself. At the second hearing in January 2018, the High Court of Bombay simply directed the Petitioner to put its suggestions in writing to the Secretary, Home Department without any decision or discussion on merits. Once that happened, the FICCI Multiplex Association sought to be impleaded and was allowed to do so, and was also asked to submit its suggestions to the State Government. The next substantive hearing occurred on 4th April 2018. The State Government, obviously not ready with its pleadings on the position of law and the various issues that the matter raises, simply made an oral statement through its advocate: (a) admitting that this is an issue of public interest, and (b) stating that it would resolve the issue being raised by the petitioner by framing a policy after taking into consideration various submissions.

Scene 3: A Little Ruckus as a result of the PIL proceedings

What followed can simply be surmised as the power of ‘fake news’. Newspapers across Maharashtra misreported the proceedings as a direction of the High Court of Bombay that outside foods and even home cooked food is to be allowed in multiplexes. These newspaper reports are then used by the political party MNS to justify “becoming aggressive” about the “rights of the people” and MNS members proceed to show the news reports to the staff of a Multiplex in Pune for demanding that they be allowed to carry their own food and they promptly proceed to rough up the staff of the Multiplex when informed that there was no official communication or order to that effect. The video clip of MNS workers roughing up staff of a multiplex in Pune circulate on social media, assumed a life of its own.

Scene 4: A Bit of Football in World Cup Season

To take the issue away from MNS, the BJP acting through Shree Ravindra Chavan, who is one of the Mega-Multi-Ministry Ministers holding the portfolios for: (a) Food and Civil Supplies, (b) Information and Technology, (c) Consumer Protection, (d) Medical Education and (e) Ports , in response to a query raised by NCP legislature on the Pune incident, made the announcement in the State Legislature that moviegoers in Maharashtra are now free to take their own food into multiplexes. Thereby dribbling with MNS and bringing BJP in possession of the metaphoric football.

Scene 5 Onwards…No Script. No Clue. “Yeh Kya Ho Raha Hai?”

Apart from causing massive confusion in the media as to in which ministerial avaatar was this announcement made (most favoured was as Minister of Food and Civil Supplies, even though this ministry deals with PDS and government schemes for food distribution); the more serious and immediate adverse impact of this announcement was the erosion of the share price of listed multiplex operators like PVR, INOX and Mundra by almost 14% to 7% in just one day.

On 12.07.2018 the share price of all listed multiplex chains took a hit with the largest hit being taken by PVR Ltd was Rs. 1397/- and on 13.07.2018 it fell by 13.24% to close at Rs. 1211/-.

This occurred because 25-30% of total revenue of a multiplex is based on F&B services and the scope of such order was not known, as allowing outside food and even home cooked food would not only dent F&B revenue but also dramatically increase the maintenance costs. As per the Annual Report for 2016-17 of PVR Ltd. 27% of its revenue was from F&B Sales. This is a very high overnight loss of value to businesses that are otherwise sound and in compliance with law with brand value that has taken over 20 years to build.

But what can be done?

It is the sudden uncertainty in the legal regime governing the business of multiplex operations, that caused the eradication of value. What is now certain is that there will be some executive order; but that order can take many forms. If the order is actually limited to the scope of the PIL i.e. senior citizens and “medicinally vulnerable”, the issue can arguably be resolved simply through provision of free water and light snacks, and wheelchair on request within the premises. However, if the scope is unbridled and home cooked food is also permitted, apart from obliterating the experience of every multiplex and thereby reducing footfalls), the maintenance costs of the multiplexes will be adversely hit.

The issue at hand is clearly the underlying economic rights of a multiplex operator, and one only hopes that the Bombay High Court will address that issue in a logical and just manner. The owner of a multiplex has the right to offer additional services to enhance the experience it offers to its customers. This includes the right to property, maintain orderliness, discipline and cleanliness in the property, and to correspondingly define and reserve rights of admission. The limitations on bringing in outside food, imposed by the owner of the premises are valid and reasonable conditions for admittance. It is also a reasonable business limitation as outside food increases maintenance costs of a multiplex (Poori-potato curry, chicken curry, paan stains, Chole Bhaturae, Daal, stains on a multiplex seat will not go easily, not to mention the olfactory after-effects, and pity the next show patron who gets the seat).

The Crucial Issue

At the heart of the matter is the issue whether India provides a stable predictable regulatory environment for capital intensive business operations. There is clearly a need for the legal framework to respond to such situations and assure investors that India has a stable regulatory framework for supporting capital intensive long gestation projects. Eradication of over 13% share value overnight and an impending removal of a revenue stream that constitutes 27% of the total revenue of a business, due to arbitrary changes, does not make for a stable business environment. This needs to be avoided and prevented.

Piyush Joshi, Partner, Clarus Law Associates, specialises in Energy, Infrastructure Projects and Project Financing.

First Published:Jul 16, 2018 3:25 PM IST