Institute of Legal and Management Studies

The Supreme Court stayed the order passed by the division bench of the Karnataka High Court directing the cinema multiplexes in the State to maintain auditable accounts of every ticket sold during the pendency of the challenge to the State Government fixing the ticket price at Rs 200.

A bench comprising Justices Vikram Nath and Sandeep Mehta passed the interim order while issuing notice on the petitions filed by Multiplex Association of India and other petitioners against the High Court's order.

The bench also clarified that the single bench of the High Court may proceed to decide the challenge to the price-cap imposed by the State. It may be recalled that the single bench had stayed the price-cap. The division bench, in State's appeal, did not lift the stay; however, the division bench issued certain directions to the multiplexes, such as keeping of accounts and records, filing of these records, verification of the records by a CA etc. The stay on the price-cap was made subject to compliance with these directions. Aggrieved by these directions, the multiplexes approached the Supreme Court.

Senior Advocate Mukul Rohatgi, appearing for some of the petitioners in the Supreme Court, submitted that it was not possible to keep track of the accounts and the identification of the buyers, as most tickets are booked through online intermediaries such as BookMyShow. "The learned judges think that tickets are sold through counter. Tickets are sold through BookMyShow. They will have the details. I don't keep any details or Ids. Nobody goes to the counter to buy a ticket," Rohatgi submitted, asserting that the High Court's directions were "unworkable." "Who carries an ID card to buy a ticket? The High Court says for every ticket purchased with cash, keep the ID card details," he added.

The State's counsel submitted that the division bench has only put in an interim arrangement to ensure that if ultimately the State succeeds, the parties get the refund of the excess price. "If your lordship is paying today Rs 1000, and tomorrow the State wins, your lordhsip will get the 800 back. That's all the division bench ordered," the State's counsel said.

Senior Advocate Shyam Divan, appearing for another petitioner, submitted that the State has no statutory power to fix the price. During the hearing, the bench also orally observed that the prices should be fixed, saying that exorbitant rates are being charged.

"You charge Rs.700 rs for ticket, 100 rs for water...it should be fixed. As it is, the cinema is declining. Make it more reasonable so that people can come and enjoy. Otherwise, the halls are empty,"Justice Nath observed. "Let it be empty. This price cap is only for the multiplex, you can go to the normal ones," Rohatgi said.

"There are no normal ones left," Justice Nath said.

"We are with the division bench, that it should be 200," Justice Nath added. "It is a matter of choice," Rohatgi said.

The Court was dealing with a challenge to the Karnataka High Court order dated September 30. This order, to protect the financial rights of all concerned, put in place an interim arrangement requiring inter-alia the Multiplex Association of India (and the multiplexes under it) to maintain auditable records of every ticket sold. It further provided that failure to comply with the directions would result in automatic application of the impugned Notification (capping ticket prices at Rs.200) to the defaulting multiplex.

Background

On September 23, while dealing with a plea moved by the Multiplex Association of India and other entities, a Single Bench of the High Court stayed (till further orders) the Karnataka Cinemas (Regulation) (Amendment) Rules 2025 which capped movie ticket prices at Rs. 200.

In an intra-Court appeal filed by the State, a Division Bench refused to lift the stay imposed by the Single Bench order. However, keeping in mind consumer rights and public interest, it put in place an interim arrangement (to apply until final adjudication of the matter). Under this arrangement, the petitioner-Association, and all multiplexes operating under it, were directed to maintain comprehensive and auditable records for every ticket sold, including: date and time of sale, mode of booking (online or at physical counters), mode of payment, amount collected and GST component.

It was further directed that digitally traceable receipts must be issued for all cash transactions, and daily cash registers must be countersigned by the manager-in-charge of the multiplex. For cash-based ticket sales, multiplexes must issue numbered, timestamped receipts to consumers. Also, the petitioner must propose a mechanism to facilitate voluntary refund claims for consumers who paid in cash, subject to Court approval upon final adjudication.

The High Court further ordered that the petitioner shall submit monthly consolidated reports of ticket sales and amounts collected (both electronic and cash), along with a summary of GST remitted, to the Licensing Authority by the 15th of each succeeding month. These reports shall be digitally signed and maintained for audit purposes.

The Court also provided for an oversight mechanism to audit the monthly compliance reports. In the event of any multiplex failing to comply with the directions, particularly with respect to record maintenance or timely reporting, the multiplex shall lose the benefit of the interim arrangement, it said. "The impugned Notification shall automatically apply to any multiplex failing to comply with the [Court's] directions". On cases of persistent or willful non-compliance, the Court added that actions including imposition of penalties and suspension of multiplex's license may be undertaken.

Besides the above, the petitioner was instructed to give publicity to a summary of the order in newspapers. It was also directed that the summary shall be displayed at ticket booking portals/booths and exhibited on-screen for atleast 30 seconds before each movie screening on multiplexes operating under the petitioner.

Aggrieved, the petitioner-Association approached the Supreme Court.

Case Title: MULTIPLEX ASSOCIATION OF INDIA AND ANR. Versus THE KARNATAKA STATE FILM CHAMBER OF COMMERCE AND ORS., SLP(C) No. 31267/2025 (and connected cases)