For the purposes of seeking specific performance of a term of a licence, it is necessary that there should be an obligation on the defendants to renew the term of the licence under the agreement. Where there is no obligation on a party to do a particular act, the specific performance of such an obligation cannot be sought. The specific performance can be sought of an obligation which is mandatory. Where discretion is given to the party to perform or not to perform the obligation and the discretion is unfettered or absolute, specific performance cannot be granted.
Only if there was an obligation on the defendant to renew the term of the licence could the plaintiff seek specific performance of the said obligation and that also if the defendant had failed or refused to perform the said obligation of renewal. Where there is no obligation to renew the term of the licence and it lies in the sole discretion of the defendant to renew or not to renew the term of the licence, the plaintiff cannot seek a direction, thereby directing the defendant to renew the term of the licence.
Delhi High Court
M/S Gesture Hotels And Foods Pvt. ... vs New Delhi Municipal Council on 22 April, 2014
Citation;AIR 2014 Delhi 143CORAM:
HON'BLE MR. JUSTICE SANJEEV SACHDEVA
IA No. 11822/2012 (under Order 39 Rule 1 & 2 CPC)
1. On 6.3.2014, arguments on the above application under Order 39 rule 1 and 2 were heard and order was reserved. However, on account of a typographic al IA No. 11822/2012 in CS(OS) 1914/2012 Page 1 of 34 error, in the order sheet, IA No. was show n as 11823/2013.
2. The plaintiff has filed the present suit for specific performance and permanent injunction in respect of premises allotted to the plaintiff at Akbar Bhawan Annexe, Chanakya Puri, New Delhi. The case of the plaintiff is that the plaintiff was allotted the premises ground/lower ground floor at Akbar Bhawan Annexe, Chanakya Lane, New Delhi by the New Delhi Municipal Corporation (NDMC) for running a restaurant-cum-banquet hall and allied trade.
3. As per the plaintiff, on 30.05.2002 notice inviting tender was issued by NDM C for 9657 sq. ft. space under the category of office spaces/shops/stalls etc. Mr. Devraj, the erstwhile Director of the plaintiff company, offered a rate of Rs. 36.99 per sq. ft. for the purposes of restaurant-cum-banquet hall and allied trade.
IA No. 11822/2012 in CS(OS) 1914/2012 Page 2 of 34
4. The case of the plaintiff is that the offer made by the plaintiff was con sidered and put up before the Chairman, NDMC, who approved the offer on 25.2.2002 and on 3.07.2002 acceptance letter was issued by the NDM C to Mr. Devraj and he was asked to form a partnership/private limited company in whose name the licence deed was to be executed. Accordingly, the plaintiff company was incorporated.
5. On 24.9.2002, a licence deed was executed between the plaintiff and the defendant NDM C. The term of the licence stipulated a period of 10 years. As per the plaintiff, the premises were in a dilapidated state and, accordingly, the plaintiff invested a huge amount in renovation and repair of the premises a nd put the premises to use for commercial venture only in March, 2003. On 7.10.2002, an additional agreement was executed between the plaintiff and defendant in respect of adjacent area to the suit premises as "GRE EN PATCH" .
IA No. 11822/2012 in CS(OS) 1914/2012 Page 3 of 34
6. As per the plaintiff on 23.07 .2003 the plaintiff was intimated by the defendant that the plaintiff should pay the licence fee in accordance with the area under his occupation and also that the plaintiff had encroached upon open space measuring 24361 sq. ft.
7. On 25.7.2003, an FIR was allegedly registered against the Chairman and the other officials of the defendant alleging that the said Chairman and officers had conspired with the Directors of the plaintiff to create favourable conditions for the Plaintiff by changing land use and ignor ing and overriding other objections. On 12.08.2003, a show cause notice was issued to the plaintiff to show cause as to why the licence deed should not be cancelled or revoked. There was also a dispute pertaining to the area in occupation of the plaintiff and also the licence fee paid by the plaintiff. However, the said dispute is not germane for the purposes of deciding the present injunction application.
IA No. 11822/2012 in CS(OS) 1914/2012 Page 4 of 34
8. As per the plaintiff, the licence deed dated 24.09.2002 contains a renewal clause with the option (t o be exercised by the plaintiff for renewal/extension of the licence deed for another 10 years). In the plaint, the plaintiff has extracted only a part of the said renewal clause as under:
"...... it shall be renewed/extended for a further period as decided by the Licensor from the day following the date on which the term of the Licence expires..... provided Licencee exercises his option for renewal of Licence in writing for another term of 10 years within 60 days before the date of expiry in the present Licence and the Licencee completes all the required formalities for renewal of Licence within the stipulated period to the satisfaction of the Licensor, it shall be presumed that the Licensee is not interested in further extension/renewal of his/ her Licence beyond the date of expiry of the term of the Licence....."
9. As per the plaintiff, the plaintiff exercised its option for renewal/extension of the licence deed for another 10 IA No. 11822/2012 in CS(OS) 1914/2012 Page 5 of 34 years on 02.02.2012 which was followed by various reminders. As per the plaintiff, the defendant NDM C rejected the request of the plaintiff for renewal/extension.
10. Plaintiff has relied on a policy decision dated 18.03.1999 and 30.08.2000 of NDM C pertaining to renewal/extension of licence deeds to contend that the defendant is bound to renew the licence agreement. Further the plaintiff has contended that the defendant NDMC has accepted the licence fee after the period stipulated by the original licence deed expired thereby creating a promissory estoppel against them. The plaintiff has thus, sought a decree of specific performance directing the defendants to renew/extend the licence deed dated 24.09.2002 for another period of 10 years w.e.f. 12.07.2012 to 11.07.2022.
11. The plaintiff by the present application has sought a restraint against defendant from evicting the plaintiff from the suit premises and from disconnecting the IA No. 11822/2012 in CS(OS) 1914/2012 Page 6 of 34 electricity and water supply and from creating any hindrance in the peaceful enjoyment of the suit premises by the plaintiff.
12. The defendant has opposed the relief cl aimed by the plaintiff and has contended that the licence period expired by efflux of time on 11.07.2012. Further that the licence deed was extendable only at the option of the defendant by means of written intimation to the plaintiff. No such option was exercised by the defendants and, accordingly, the licence stood expired on the expiry of the term of the licence as stipulated by the original licence agreement. The defendant has disputed the contention of the plaintiff in respect of the area in occupation of the plaintiff and also the licence fee paid by the plaintiff. However, the same is not relevant for the purposes of disposal of the present interim application.
13. The stand of the defendant is that the plaintiff was allotted the said premises on licen ce basis for a fixed IA No. 11822/2012 in CS(OS) 1914/2012 Page 7 of 34 period of 10 years ending on 11.07.2012 and on account of the plaintiff having occupied an extra covered area and open space, case was registered by the CBI. As per the defendants, as per Clause (1) of the licence agreement, the licen ce was for a fixed period of 10 years only and it was in the entire discretion of the defendant to extend or not to extend the period of licence. Further, the plaintiff could not seek renewal of the agreement under any circumstances whatsoever.
14. As per the defendants, a committee was constituted comprising of three officials of the defendant to give recommendation with regard to the future course of action and the Committee vide its report dated 22.02.2012 recommended that the licence for the said premises should not be renewed in favour of the plaintiff and that the premises should be allotted to some Government department on a higher revenue. There were other reasons also mentioned by the IA No. 11822/2012 in CS(OS) 1914/2012 Page 8 of 34 Committee in not extending the licence. As per the defendants, the plaintiff was informed that the competent authority had not acceded to the request for renewal of the licence.
15. As per the defendants, the defendant NDM C is not under any contractual obligation to extend or renew the licence and keeping in view the phe nomenal increase in the prices, the NDMC has taken a decision not to renew the licence and the decision is a well thought about and deliberated upon executive decision by a Special Committee.
16. For grant of ad-interim injunction the plaintiff has to satisfy three requirements. Plaintiff has to show a strong prima -facie case for grant of an ad-interim injunction, the balance of convenience has to tilt in favour of the plaintiff and in favour of grant of ad - interim injunction and the plaintiff has to show that in case the ad -interim injunction is not granted the plaintiff shall suffer an irreparable loss and injury. IA No. 11822/2012 in CS(OS) 1914/2012 Page 9 of 34 Unless all the three requirements are satisfied the plaintiff is not entitled to the relief of injunction.
17. The plaintiff is seeking specific perfor mance of the licence deed dated 24.09.2002. Specific performance of a contract is permissible only where the contract stipulates a condition which needs to be performed by the defendants. The plaintiff in a suit for specific performance can seek a direction directing the defendants to perform its obligations under the contract. For the purposes of specific performance, the plaintiff has to show that the contract stipulates an obligation on the part of the defendant and the defendant is refusing to perform that obligation. Unless there is an obligation on the part of the defendant to perform a condition, there can be no direction to the defendant to perform the condition. Where there is no condition stipulated in the agreement, the defendant cannot be force d to perform that condition. Specific performance presupposes a condition that has to be IA No. 11822/2012 in CS(OS) 1914/2012 Page 10 of 34 performed by the defendant and a refusal on the part of the defendant to perform that condition.
18. Plaintiff in the plaint has extracted incomplete Clause (I) of the licence agreement and when the complete Clause (I) is compared with the extracted portion of Clause (I) of the licence agreement in the plaint, it is apparent why the plaintiff has extracted only a portion of the said Clause. The comparison between the clause quoted by the plaintiff and the actual clause (I) is as under:
Clause quoted by the Complete Clause(I) plaintiff
.................... it shall be That the licence shall be for renewed/extended for a a period of 10 years ending further period as decided by upto 11-7-2012 and the Licensor from the day thereafter it shall be the following the date on which entire discretion of the the term of the Licence licensor to extend or not to expires ............... provided extend the period of licence. Licencee exercises his option In case it is decided by the for renewal of Licence in licensor that the licence be writing for another term of renewed/extended, it shall 10 years within 60 days be renewed/extended for a before the date of expiry in further period as decided by the present Licence and the the Licensor from the day IA No. 11822/2012 in CS(OS) 1914/2012 Page 11 of 34 Licencee completes all the following the date on which required formalities for the term of the Licence renewal of Licence within the expires at a monthly licence stipulated period to the fee payable under the satisfaction of the Licensor, it present licence plus its 5% shall be presumed that the (or by the percentage as Licensee is not interested in applicable under the policy further extension/renewal of of the council for the time his/ her Licence beyond the being in for ce) as monthly date of expiry of the term of lice nce fee of the renewed the Licence ......... licence provided the licensee exercises his option
for renewal of Licence in
writing for another term of
10 years within 60 days
before the date of expiry in
the present Licence and the
Licencee completes all the
required formalities for
renewal of Licence within
the stipulated period of 60
days. In case the option for
renewal is not so exercised
and/or the formalities are
not completed within the
stipulated period to the
satisfaction of the Licensor,
it shall be presumed that
the Licensee is not
interested in further
extension/renewal of his/
her Licence beyond the date
of expiry of the term of the
Licence and in the even of
the licensee not
surrendering the vacant
IA No. 11822/2012 in CS(OS) 1914/2012 Page 12 of 34 possession of the shop
within the stipulated period
under this deed, the
licensee shall render
himself/herself liable for
action for eviction and
recovery of damages under
the Public Premises
(Eviction of Unauthorised
Occupants) Act, 1971.
(portion extracted by
plaintiff is underlined)
19. Perusal of Clause, as contained in licence deed dated 24.09.2002, clearly shows that the term of the licence is for a fixed period of 10 years ending with 11.07.2012 and further the said clause gives an absolute discretion to the officers of the Defendant to extend or not to extend the term of the licence. The discretion of the officers is absolute and unfettered. It is only where the licensor decides to exercise the discretion of exten ding the period of licence that the other formalities as stipulated by the said Clause are to be performed by the licensee.
IA No. 11822/2012 in CS(OS) 1914/2012 Page 13 of 34
20. Even the allotment letter dated 03.07.2002 relied upon by the Plaintiff stipulates only a term of 10 years. There is no stipulation or clause in the said allotment letter dated 03.07.2002 permitting an extension. The Clause (I) of the licence agreement stipulates an increase in licence fee by 5% (or by the percentage as applicable under the policy of the Council for the time being in force). The reference in the said Clause to the policy of the Council is only for the purposes of the percentage of increase in the licence fee.
21. By reference to the policy in the said Clause , all the policies of the NDMC are not ipso facto made applicable. The said Clause further stipulates that if the licensor decides not to extend the period of licence, the licencee shall be liable for action of eviction and recovery of damages under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971.
22. The policy dated 18.03.1999 relied upon by the IA No. 11822/2012 in CS(OS) 1914/2012 Page 14 of 34 plaintiff deals mainly with the issue relating to the increase in licence fee for rehabilitation of markets and other squatter units in NDM C markets which are governed under resolution 55 dated 07.07.1987 read with resolution No.1 dated 07.07.1978. The reference to renewal in the said policy is only for the purposes of the enhancement of the licence fee on unit basis.
23. The reliance of the counsel for the plaintiff on the policy/guideline dated 30.08.2000 is unfounded as the said policy refers to a decision that in case of renewal of shop/kiosk/thada/office unit/restaurant , the licence would be renewed for a period of 10 years on an year to year basis. The said Clause of the policy comes into play only in ca ses where there is a decision to renew the licence. Where a renewal is decided to be granted in those cases, the renewal shall be for a period of 10 years. This policy does not stipulate or lay down that in every case irrespective of its facts and circumstances renewal has to be granted. In case, IA No. 11822/2012 in CS(OS) 1914/2012 Page 15 of 34 where the defendant NDM C decides not to renew the licence, the said policy clearly would have no applicability.
24. Learned senior counsel for the plaintiff relied upon the response of the defendant dated 22.01.2012 to the RTI query dated on 08.12.2011 raised on behalf of the plaintiff to contend that the NDM C has conceded that priority is granted to existing licence holders, who were carrying out permitted business from the premises owned by NDM C, in matters of licence/renewal thereof, if such existing licencee did not have any outstanding against the NDM C at the time when such licence came up for renewal.
25. Reliance on the said response to the query would have no applicability in the facts of the present case as according priority to an existing licence holder is completely different from the renewal of the term of a licence.
IA No. 11822/2012 in CS(OS) 1914/2012 Page 16 of 34
26. For the purposes of seeking specific performance of a term of a licence, it is necessary that there should be an obligation on the defendants to renew the term of the licence under the agreement. Where there is no obligation on a party to do a particular act, the specific performance of such an obligation cannot be sought. The specific performance can be sought of an obligation which is mandato ry. Where discretion is given to the party to perform or not to perform the obligation and the discretion is unfettered or absolute, specific performance cannot be granted.
27. Only if there was an obligation on the defendant to renew the term of the licence could the plaintiff seek specific performance of the said obligation and that also if the defendant had failed or refused to perform the said obligation of renewal. Where there is no obligation to renew the term of the licen ce and it lies in the sole discr etion of the defendant to renew or not to renew the term of the licence, the plaintiff cannot seek IA No. 11822/2012 in CS(OS) 1914/2012 Page 17 of 34 a direction, thereby directing the defendant to renew the term of the licence.
28. The licence agreement stipulates that the allotment of the licensed premises in favour of the licensee was purely temporary which could be revoked at any point of time without assigning any reason and in the event of the revocation , the licencee was bound to evict the premises without any claim for compensation.
29. If the Defendants had not considered the request of the Plaintiff to consider the case of the Plaintiff for grant of an extension/renewal, the Plaintiff at best could have sought a direction for the Defendant to consider it's request. But in the present case, the Defendants have contended that a Sub-committee was appointed by the Chairman of the NDM C to consider the wrongful termination or otherwise extension of the licence agreement. The sub - committee by its report dated 22.02.2012 examine d the manner of allotment to the p laintiff in the very first IA No. 11822/2012 in CS(OS) 1914/2012 Page 18 of 34 instance. The committee found that an inquiry was conducted and a charge sheet had been registered against the then Chairman and other officials of NDM C for misusing their official position and acting in conspiracy with the Dire ctors of the plaintiff and on recommendations of the CBI, major penalty was recommended against the then Chairman and the then Director of the NDM C. The committee recommended not to extend the licence and, accordingly, the plaintiff was communicated the decision that the licence was not being extended.
30. Even otherwise in the light of section 141 (2) of the NDMC Act, 1994, it is lawful for the Defendants to try to get maximum profits from its properties as has been held by the Supreme Court of India in the case of A GGARWAL & M ODI E NTERPRISES (P) LTD . & A NOTHER V ERSUS N EW D ELHI M UNICIPA L C OUNCIL : (2007) 8 SCC 75
31. The decision of the Supreme Court of India in IA No. 11822/2012 in CS(OS) 1914/2012 Page 19 of 34 A GGARWAL & M ODI E NTERPRISES (S UPRA ) and the provision of section 141 (2) of the NDM C Act 1994, are a complete answer to the contention of the plaintiff that it were being clubbed with hotels and Cinema halls for the purposes of eviction whereas under the policy the plaintiff was to be clubbed with shops/kiosks/restaurants as the rental for shops/kiosks/r estaurant and office s were higher. Even otherwise the Plaintiff ha s not been able to point out any instance of a similarly shop, kiosk, restaurant or office with which it could claim parity.
32. Further there is no merit in the plea raised by the plaintiff of discrimination as there is no policy whereby a renewal was to be mandatorily granted. The policy relied upon, as held hereinabove, comes into play only in case of a favourable decision to renew and not otherwise.
33. There is no contractual terms between the parties that makes it obligatory for the defendants to renew the IA No. 11822/2012 in CS(OS) 1914/2012 Page 20 of 34 licence. On the contrary, the clauses give an absolute discretion to the defendants to renew or not to renew the terms of the licence.
34. The dispute between the parties is purely contractua l and the rights and obligations of the parties have to be determined in view of the terms of the licence and not on the principles of equality or public law. There is also no allegation of a personal bias against any of the officers of the Defendant.
35. The Supreme Court in the case of H A JEE S.V.M. M OHAMED J AMALUDDEN B ROS .& C O . V. GOVERNMENT OF TAMILNADU ; 1997 (3) SCC 466 has laid down as under:
9. Section 2 of the Grants Act insulates all grants and all transfers of land or any interest therein made by the Government from the checks of the provisions of Transfer of Property Act. Section 3 of the Grants Act protects the terms of such grant from the provisions of any other law. We extract the above two provisions hereunder:
IA No. 11822/2012 in CS(OS) 1914/2012 Page 21 of 34 "2. Transfer of Property Act, 1882, not to apply to Government grants.--Nothing in
the Transfer of Property Act, 1882, contained shall apply or be deemed ever
to have applied to any grant or other
transfer of land or of any interest therein heretofore made or hereafter to be
made by or on behalf of the Government
to, or in favour of, any person whomsoever; but every such grant and
transfer shall be construed and take
effect as if the said Act had not been
passed.
3. Government grants to take effect according to their tenor.--All provisions, restrictions, conditions and limitations over contained in any such grant or
transfer as aforesaid shall be valid and take effect according to their tenor, any rule of law, statute or enactment of the Legislature to the contrary notwithstanding."
IA No. 11822/2012 in CS(OS) 1914/2012 Page 22 of 34
10. The combined effect of the above two sections of the Grants Act is that terms of any grant or terms of any transfer of land made by a
Government would stand insulated from the tentacles of any statutory law. Section 3 places the terms of such grant beyond the reach of any restrictive provision contained in any enacted law or even the equitable principles of justice, equity and good conscience adumbrated by common law if such principles are inconsistent with such terms. The two provisions are so framed as to confer unfettered discretion on the Government to enforce any condition or limitation or restriction in all types of grants made by the Government to any person. In other words, the rights, privileges and obligations of any grantee of the Government would be completely regulated by the terms of the grant, even if such terms are inconsistent with the provisions of any other law.
11. The above legal position was recognised by the courts in India before the Constitution of India came into being. (Surja Kanta Roy IA No. 11822/2012 in CS(OS) 1914/2012 Page 23 of 34 Choudhury v. Secy. of State [AIR 1938 Cal 229 : 42 CWN 239] and Raza Husain Khan v. Saiyid Mohd. [AIR 1938 Oudh 175 : ILR 14 Luck 22] ) The position continued to be so even after the Constitution came into force (State of U.P. v. Zahoor Ahmad [(1973) 2 SCC 547 : (1974) 1 SCR 344] ).
12. An attempt was made to show that the transaction evidenced by the agreement was not a grant but a lease of land. Though it is not now open to the appellant to raise such a contention (in view of the clear finding of the learned Single Judge that it was not a lease but only a licence coupled with interest, which finding was not challenged by the appellant before the Division Bench) assuming that it was a lease of land, still the appellant cannot succeed because lease made by the Government is also covered by the protection envisaged in Sections 2 and 3 of the Act.
36. The Supreme Court of India in the case of H A JEE S.V.M. M OHAMED J AMALUDDEN B ROS .& C O . (S UPRA ) has laid down that Section 2 of the Government IA No. 11822/2012 in CS(OS) 1914/2012 Page 24 of 34 Grants Act insulates all grants and all transfers of land or any interest therein made by the government from the checks of the provisions of Transfer of Property Act. The terms of any grant or terms of any transfer of land made by a government stand insulated from the tentacles of any statutory law. The terms of such grant are beyond the reach of any restrictive provision contained in any enacted law or even the equitable principles of justice, equity and good conscience adumbrated by common law if such principles are inconsistent with such terms. The two provisions are so framed as to confer unfettered discretion on the government to enforce any condition or limitation or restriction in all types of grants made by the government to any person. In other words, the rights, privileges and obligations of any grantee of the government would be completely regulated by the terms of the grant, even if such terms are incon sistent with the provisions of any other law. The Supreme Court further in the facts of the said case, while IA No. 11822/2012 in CS(OS) 1914/2012 Page 25 of 34 interpreting a similar clause , held that the said clause adequately empowered the government to uniformly terminate the arrangement or revoke the grant without assigning any reason whatsoever and that the said clause was valid and could be enforced by the government at any time and hence the action of the government in rescinding that contract was held to be valid. The Supreme Court held that Grant included not only a licence but also a lease granted by the government.
37. Similarly, in the present case, the rights and obligations of the plaintiff would be governed by the licence granted to the plaintiff. The terms of the licence would be insulated from the tentacles of any statutory law or policy and would be beyond the reach of any restrictive provision contained i n the same. The licence confers unfettered discretion on the defendant to renew or not to renew the terms of the licence and any contrary provision of statute or policy would be IA No. 11822/2012 in CS(OS) 1914/2012 Page 26 of 34 overridden by the terms of the licence.
38. The Division Bench of this High Court in the case of R AJAS THAN B REWERIES LTD . V ERSUS THE S TROH B REWERY C O . AIR 2000 D ELH I 450 laid down as under:
13. .......... However, the principles of equity governing specific performance are almost same in Indian law and English law. The
discretion of the Courts of England while enforcing the specific performance of a contract is subject to the same constraints as are applicable in the Courts in India. Under the English law specific performance of contractual obligation is available only in equity and is subject to various restrictions, which have been explained by G.H. Treitel in his work "The Law of Contracts" 6th Edition pages 764 to 775 as follows:
(i) Specific performance will not be ordered where damages are adequate remedy.
(ii) If the party applying for relief is guilty of a breach of the contract or is guilty of wrongful conduct.
(iii) If the Contract involves personal service. IA No. 11822/2012 in CS(OS) 1914/2012 Page 27 of 34 (iv) If the contract requires constant supervision.
(v) If the party against whom specific performance is sought is entitled to
terminate the contract."
At page 775, it is stated in the aforementioned work:
"If the party against whom specific performance is sought, is entitled to
terminate the contract, the order will be refused as the defendant could render it nugatory by exercising his powers to
terminate. This principle - applies whether the contract is terminable under its express terms or on account of the
conduct of the party seeking specific
performance."
14. The effect of breach of a contract by a party seeking to specifically enforce the contract under the Indian law is enshrined in Section 16(c) read with Section 41(e) of the Specific Relief Act, 1963. Clause (e) of Section 41 of the Specific Relief Act provides that injunction IA No. 11822/2012 in CS(OS) 1914/2012 Page 28 of 34 cannot be granted to prevent the breach of contract, the performance of which would not be specifically enforced. Clause (c) of Section 41 enumerates the nature of contracts, which could not be specifically enforced. Clause (c) to sub-section (1) of Section 14 says that a contract which is in its nature determinable cannot be specifically enforced. Learned Single Judge thus was justified in saying that if it is found that a contract which by its very nature is determinable, the same not only cannot be enforced but in respect of such a contract no injunction could also be granted and this is mandate of law. This, however, is subject to an exception, as provided in Section 42 that where a contract comprises an affirmative agreement to do a certain act, coupled with a negative agreement, express or implied, not to do a certain act, the circumstances that the court is unable to compel specific performance of the affirmative agreement shall not preclude it from granting an injunction to perform the negative agreement.
........
IA No. 11822/2012 in CS(OS) 1914/2012 Page 29 of 34
19. Even in the absence of specific clause authorising and enabling either party to terminate the agreement in the event of
happening of the events specified therein, from the very nature of the agreement, which is private commercial transaction, the same could be terminated even without assigning any reason by serving a reasonable notice. At the most, in case ultimately it is found that termination was bad in law or contrary to the terms of the agreement or of any understanding between the parties or for any other reason, the remedy of the appellants would be to seek compensation for wrongful termination but not a claim for specific performance of the agreements and for that view of the matter learned Single Judge was justified in coming to the conclusion that the appellant had sought for an injunction seeking to specifically enforce the agreement. Such an injunction is statutorily prohibited with respect of a contract, which is determinable in nature. The application being under the provisions of Section 9(ii) (e) of the Arbitration and IA No. 11822/2012 in CS(OS) 1914/2012 Page 30 of 34 Conciliation Act, relief was not granted in view of Section 14(i) (c) read with Section 41 of the Specific Relief Act. It was rightly held that other clauses of Section 9 of the Act shall not apply to the contract, which is otherwise determinable in respect of which the prayer is made specifically to enforce the same.
39. The Division Bench in the case of R A JAS THAN B REWERIES L TD . (S UPRA ) has laid down that Specific performance will not be ordered where damages are adequate remedy or where the party applying for relief is guilty of a breach of the contract or is guilty of wrongful conduct or where the contract involves personal service or where the contract requires constant supervision or where the party against whom specific performance is sought is e ntitled to terminate the contract. If the party against whom specific performance is sought, is entitled to terminate the contract, the order will be refused as the defendant could render the direction to perform nugatory by IA No. 11822/2012 in CS(OS) 1914/2012 Page 31 of 34 exercising his powers to terminate. This principle has been held to be applicable whether the contract is terminable under its express terms or on account of the conduct of the party seeking specific performance. Further it has been laid down that clause (e) of Section 41 of the Specific Relief Act, 1963 lays down that injunction cannot be granted to prevent the breach of contract, the performance of which would not be specifically enforced. If it is found that a contract which by its very nature is determinable, the same not only cannot be enforced but in respect of such a contract no injunction could also be granted and this is mandate of law. This, however, has been held subject to the exception that where a contract comprises an affirmative agreement to do a certain act, coupled with a negative agreement, express or implied, not to do a certain act, the circumstances that the court is unable to compel specific performance of the affirmative agreement shall not preclude it from granting an injunction to perform the negative agreement. The IA No. 11822/2012 in CS(OS) 1914/2012 Page 32 of 34 Division Bench has further held that if it is ultimately found that termination was bad in law or contrary to the terms of the agreement or of any understanding between the parties or for any other reason, the remedy of the plaintiff would be to seek co mpensation for wrongful termination but not a claim for specific performance of the agreements.
40. In view of the above, prima facie I find that the rights and obligations of the plaintiff would be governed by the licence granted to the plaintiff. The terms of the licence would be insulated from the tentacles of any statutory law or policy and would be beyond the reach of any restrictive provision contained therein. The licence confers unfettered discretion on the defendant to renew or not to renew the terms of the licence and any contrary provision of statute or policy would be overridden by the terms of the licence. Since the Defendants additionally have the right to terminate the licence, no direction can be issued to the defendants IA No. 11822/2012 in CS(OS) 1914/2012 Page 33 of 34 to renew the licence. Even otherwise where compensation is an adequate remedy, specific performance cannot be granted. In case ultimately it is found that termination was bad in law or contrary to the terms of the agreement or of any understanding between the parties or for any o ther reason, the remedy of the plaintiff would be to seek compensation for wrongful termination but not a claim for specific performance of the agreement.
41. The Plaintiff has failed to show any prima facie case for grant of an ad -interim injunction. The application of the Plaintiff is accordingly dismissed.
SANJEEV SACHDEVA, J
April 22, 2014
sv
IA No. 11822/2012 in CS(OS) 1914/2012 Page 34 of 34
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