The world’s third-largest music group, EMI, will have to go to court to face accusations by the Beatles that the company pocketed millions of pounds of excess royalties, said a judge in New York.

New York State Supreme Court Justice Karla Moskowitz denied EMI’s request that the suit for fraud and breach of contract be thrown out. The complaint seeks to reclaim rights to all the master recordings by the band, said Beatles lawyer Paul LiCalsi.

"It’s a great win for us," said LiCalsi, a lawyer with Sonnenschein Nath & Rosenthal in New York. "It’s been a very complicated and long-standing relationship between them," he told Bloomberg.

The dispute between the Beatles, EMI and its affiliate Capitol Records dates back three decades, said Judge Moskowitz in a ruling last week. The Beatles alleged in a 1979 suit that the companies underpaid the band by more than $20m (£10.5m). The Beatles’ company Apple Corps Ltd is also a plaintiff.

A settlement was reached in that case in 1989, LiCalsi said, granting the band and Apple increased royalty rates and requiring EMI and Capital to follow more stringent auditing requirements. The lawyer said a recent audit uncovered fraud, triggering the filing of the new lawsuit in December.

The Beatles claimed that EMI and Capitol wrongly classified copies of Beatles recordings as destroyed or damaged, and secretly sold them for $19m, pocketing the proceeds.

The suit also claimed the music company under-reported the number of units sold. The Beatles are seeking at least $25m in damages and unspecified punitive damages, LiCalsi said. The band’s representatives said the record companies had exercised a "half-century exclusive right to exploit commercially the Beatles’ recordings on a worldwide basis," Judge Moskowitz said.

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