Under Section 12(4) of the Cinematograph Act, 1952and various state government legislative acts, the showing of scientific films, films intended for educational purposes, films dealing with news and current events, documentary films or indigenous films are bound to be shown by exhibitors as a condition of their licence to show entertainment films.

In the Union Territories the maximum period for which they can be required to be shown is 15 minutes in every show of the entertainment film. The exhibitors challenged this as an unconstitutional restriction on their fundamental right of free speech and expression and also on their fundamental right to carry on the business of exhibiting films. The Delhi high court simply did not hear them on the one first part. But it upheld their contention on the second score.

The Supreme Court combined two factors in examining the challenge to the charge of the rental on the ground of violation of the fundamental right of free speech. Firstly, it laid down the test of the nature of the speech. The apex court held that these"must carry" films were meant to further free speech and expression by enabling citizens to be informed. These were not films of propaganda or films conveying views to which the exhibitor objected. Hence given the nature of the films there was no need to examine whether they placed any restriction on any of the specific grounds mentioned in Article 19(2) of the Constitution. With this the apex court rejected the contention of the exhibitors that the "must carry" provision of the Cinematograph Act could not be justified on any one of the grounds which enable the implementation of reasonable restrictions on free speech. These grounds are: sovereignty or integrity of India; security of the state; friendly relations with foreign states; public order, decency or morality; contempt of court, defamation or incitement to an offence.

But a future window of litigation has been opened by the apex court even while upholding the "must carry" provisions of the Cinematograph Act. These relate to the exhibitor objecting tothe Films Division films on the ground that these are propaganda or contain something that is objectionable to him. This would be a way out for the exhibitors from the economic burden of the "must carry" provisions.

The second factor used by the apex court was the social context to justify the economic burden if any on the exhibitors of the "must carry" provisions. The court held that when a substantially significant population body is illiterate or does not have easy access to ideas or information, it is important that all available means of communication, particularly audio visual communication, are utilised not just for entertainment but also for education, information, propagation of scientific ideas and the like.

The best way by which ideas can reach this large body of uneducated people is through the entertainment channel. To earmark a short portion of time of the cinema for the purpose of showing scientific, educational, documentary or news films, has to be looked at in the context of enabling themasses to have informed debate on public issues.

In short, the exhibitor must carry the economic burden of mass education and the exhibitors had not put any facts before the court to show that this burden was onerous. But the court showed another way of short-circuiting the economic burden ... a protest by the uneducated viewers against the curtailment of their entertainment time.

The apex court then used this public purpose of such "must carry" films to reject the argument of the exhibitors that the 1 per cent rental charge was unbearable in view of the little custom for the cinema with the advent of television, video and the Internet. Faced with this the exhibitors pointed out that a "must carry" compulsion for which a rental is charged in the contract entered into with the Films Division amounts to the levy of a tax. This tax is without the authorisation of any law and so is unconstitutional and illegal. The apex court agreed that the Cinematograph Act, the rules, the notification and the licence donot carry any provision for the 1 per cent rental. The court pointed out that the Films Division produces, packs and delivers these films. Hence there is an element of quid pro quo and so the rental is a fee for the service given by the Films Division. For the first time the apex court has held that a compulsory act required by the state and the money charged in a contract for doing that act amounts to a fee even though that is not levied by the state. The court's mix up of statutory law and contracts becomes visible if the contract is with a private organisation for the supply of must carry films, since there is no requirement that the exhibitors procure the must carry films only from the Films Division.