Bombay High Court
Stoughton Street Tech Labs Pvt. ... vs Godlike Esports Pvt. Ltd. And 2 ... on 6 December, 2022
Bench: R. I. Chagla
Jt.1.IAL.16493.22 in COMSL.16491.22.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
INTERIM APPLICATION (L) NO. 16493 OF 2022
IN
COMMERCIAL SUIT (L) NO. 16491 OF 2022
Stoughton Street Tech Labs Pvt. Ltd. ... Plaintiff
Versus
1. Godlike Esports Pvt. Ltd.
2. Cornerstone Sport LLP
3. Jonathan Amaral ... Defendants
Mr. Mustafa Doctor, Senior Advocate a/w Ashish Kamat, Nishant Sing and
Nikhil Bhat for the Plaintiff.
Mr. Atul Rajadhyaksha, Senior Advocate a/w Akhilelsh Dubey, Vagish
Mishra, Amit Dubey, Uttam Dubey, Rajuram Kuleriya, Varad Dubey, Ritika
Gupta and Ritesh Yadav i/b Law Counsellors for Defendant No.1.
Ms. Mahalakshmi G., a/w Savani Vaze for Defendant No.2.
Mr. Kevic Setalwad, Senior Advocate a/w Awais Ahmedji, Parag Joshi and
Dharmesh Joshi i/b T.D. Joshi and Associates for Defendant No.3.
CORAM : R.I. CHAGLA, J.
RESERVED ON : 19th OCTOBER, 2022
PRONOUNCED ON : 6th DECEMBER, 2022
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ORAL JUDGMENT :
1 By the present Interim Application the Plaintiff has inter alia
sought relief in terms of the negative covenants contained in the
Collaboration Agreement dated 15.12.2021 entered into between the
Plaintiff and Defendant Nos.1 and 2 and for restraining the Defendants
from acting contrary to the provisions of the Collaboration Agreement by
either directly or indirectly, endorsing, marketing, advertising, engaging
with or have any association with the "competing platforms" as defined
under Clause 1.1 of the Collaboration Agreement and from disclosing
confidential information as defined under Clause 9 of the Collaboration
Agreement.
2 The present Suit has been filed by the Plaintiff who is
described as a Company engaged in the business of operating LOCO, an
online live streaming and e-sports gaming Platform, which enables online
e-sports players/gamers to live stream their gaming matches seeks
enforcement of Collaboration Agreement dated 15.12.2021 and Tripartite
Agreement dated 15.12.2021 entered into between the Plaintiff and
Defendant Nos.1 and 3. The Defendant No.1 is a Private Limited
Company and corporate vehicle for an e-sports team known as "Godlike"
which participates in various online multiplayer games. Defendant No.2
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who together with Defendant No.1 had entered into the Collaboration
Agreement with the Plaintiff is engaged in the business of talent
representation and event management. Defendant No.3 is a popular and
leading e-sports live gamer and is part of the Godlike team.
3 The Plaintiff's contention in the Suit is that Defendant No.1
has wrongly terminated the Collaboration Agreement as well as Tripartite
Agreement by its termination letter dated 13.05.2022. The Defendant
No.1 has in the termination letter contended that there is no concluded
Agreement/contract between the Plaintiff and Defendant No.1 in any
form. However, the purported termination is made on the basis that a
contract exists.
4 The Plaintiff has dealt with the first contention in the
termination letter dated 13.05.2022 that there is no concluded Agreement
between the parties and, therefore, the question of enforcing any such
Agreement does not arise. The Plaintiff has referred to certain facts which
according to the Plaintiff are undisputed and which are as under :
i) On 25.08.2021, the Plaintiff and Defendant No.3
had executed a streaming services Agreement under which
Defendant No.3 agreed to be an exclusive live streamer with
the Plaintiff for a period of 24 months and to carry out live
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steaming for various games including online games, e-sports
competitions etc.
ii) Thereafter from about September, 2021 onwards, there
were negotiations held to enter into a fresh set of Agreements
with the Defendants whereby LOCO would have the exclusive
right to stream games or gaming-related content by steamers
from the Godlike's BGMI roster and the Godlike Freefire
roster, which included Defendant No.3. Godlike was
represented throughout these negotiations by Defendant
No.2. It is the Plaintiff's case that there is an admission that
Defendant No.2 was acting as the agent of Defendant No.1 in
negotiations and deliberations leading to the finalization of
the terms and conditions of the Agreements in question.
iii) Defendant No.1 has signed the Agreements in question
including the revised version of the Collaboration Agreement.
iv) Defendant No.1 raised invoices dated 14.12.2021,
16.12.2021, 14.02.2022 and 02.05.2022 and that all these
invoices bear the legend "as per Agreement".
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v) The Defendant No.1 has received an aggregate
payment of Rs.11,66,40,000/- pursuant to the aforesaid
invoices.
vi) An e-mail dated 27.12.2021 along with attached
signature pages signed by Defendant Nos.1 and 2 and seeking
payment was marked to Defendant No.1.
vii) By an e-mail dated 08.03.2022 the Plaintiff's Advocates
had again sent the final executed and stamped version of
both the Agreements viz. the Collaboration Agreement and
the Tripartite Agreement alongwith a third Agreement
(known as Master License Agreement) to Defendant No.2
who according to the Plaintiff was acting as agent of
Defendant No.1.
5 Apart from the above facts which the Plaintiff has claimed are
admitted, the Plaintiff has also relied upon a meeting held on 19.03.2022
at J.W. Marriott, Juhu, Mumbai when the Plaintiff's representatives viz.
Firasat Durani, Devansh and Joanesca met among others, Manoj George,
the Chief Business Officer of the Defendant No.2 along with Chetan
Chandgude, Director of Defendant No.1, to discuss the business plan,
fund raising plan, business strategy, strategy to deal with competition,
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talent acquisition strategy, etc. and at the said meeting the Plaintiff claims
to have handed over the executed copies of the Collaboration Agreement,
Tripartite Agreement and the Master License Agreement to Manoj George,
the representative of Defendant No.2. The Plaintiff has claimed that at
the said meeting, Manoj George stated that he will share photocopies of
the Collaboration Agreement, Tripartite Agreement and the Master
License Agreement to the relevant parties, viz. Defendant No.1, Defendant
No.3 and other members of Defendant No.1's team which are parties to
the Master License Agreement. The further event which the Plaintiff has
relied upon took place on 05.05.2022 when the Plaintiff circulated a copy
of the Collaboration Agreement, Tripartite Agreement and the Master
License Agreement with Defendant No.1. It is the Plaintiff's case that
inspite of the Defendant No.1 having been fully aware and also handed
over the executed Collaboration Agreement has neverthless
dishonestly purported to contend that there is no concluded contract
between the parties and that the parties had always remained at the stage
of negotiation.
6 The notice of termination issued by Defendant No.1 thus
proceeds on an incorrect premise. It has been the further contention of
Defendant No.1 that the final version of the signed Agreement was never
sent by the Plaintiff to Defendant No.1. There is a suggestion on the part
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of the Defendant No.1 that there were two Collaboration Agreements, one
that was executed on 15.12.2021 and subsequent Agreement which was
executed on 27.12.2021. That the Agreement was not signed in
accordance with the provisions of the Information Technology Act, 2000
and that the signature of the parties appeared on different pages of the
signature page of the Agreements.
7 The Plaintiff has stated that the final stamped and executed
copies of the Agreement in question was sent by the Plaintiff's Advocate
to Defendant No.2, admittedly representing Defendant No.1 in respect of
matters relating to execution of the Agreement. It is now not open for
Defendant No.1 to contend that it had not received the Agreements in
question. Further, the Defendant No.1 had not raised any protest of any
nature whatsoever, either with regard to the signature of the pages being
different, or otherwise. On the contrary, Defendant No.1 raised invoices
and received payments thereunder. There was awareness as to the
execution of the Collaboration Agreement and this is apparent from press
articles appearing which quoted Mr. Chetan Chandgude, the founder of
Godlike E-sports stating that the partnership with LOCO was an exciting
one for Godlike as it gets opportunity to work with LOCO as collaborators.
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8 The Plaintiff has explained that the Defendant No.1's
suggestion of there being two Agreements is an incorrect premise in view
of the fact that the Agreement which was concluded on 27.12.2021 is one
and the same as the Agreement dated 15.12.2021. This document was
shared in the e-mail dated 08.03.2022 by the Advocate of the Plaintiff.
The reason for the Agreement containing the date 15.12.2021 has been
set out in paragraph 5.19 of the affidavit in rejoinder. This explanation is
also found in the e-mail dated 22.12.2021 sent by the Petitioner's
Advocates to Defendant No.2 along with the executed version of the
Collaboration Agreement. The explanation is that "As discussed between
Firasat and Manoj due to the stamp duty payment date (which is 15th
December 2021) they have a back dated Agreement. Therefore, the
Agreement is dated 15th December 2021". It has been submitted by the
Plaintiff that in view of the admitted facts, the attempt to suggest that
there were two Agreements was intended to create confusion in this
regard.
9 The Plaintiff has stated that the entire attempt of Defendant
No.1 to contend that the Agreement in question was not a concluded
contract was an attempt on their part to take advantage of a judgment
dated 04.05.2022 passed by this Court in the case of the Plaintiff vs. Jet
Skysports Gaming Private Limited (Appeal No.16492 of 2022). The
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Plaintiff has stated that the judgment is irrelevant and based entirely on
the facts of that case. The facts of the present case are completely
different.
10 The Plaintiff has stated that the reference to the provisions of
the Information Technology Act are also completely misconceived. The
Agreements have admittedly been physically signed by the parties and it is
to be noted that as per the provisions of Clause 15.10 of the Collaboration
Agreement, it is specifically provided that the Agreement may be executed
in one or more counterparts, each of which will be deemed to be an
original, but all of which if taken together, constitute the same
Agreement. The clause further provides that if any signature is delivered
by facsimile transmission or by e-mail delivery of a PDF format data file,
such signature will be valid and binding on the parties.
11 The Plaintiff has accordingly answered the issue No.1 as to
whether there is a concluded contract between the parties.
12 The next issue raised by the Defendant No.1 is whether
Defendant No.1 is in breach of the Collaboration Agreement, either on
account of the alleged failure to pay Rs.5,00,000/- to Defendant No.1
and/or on account of the alleged attempt to poach and influence the
talent of Defendant No.1. It is the contention of Defendant No.1 that the
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Plaintiff is in breach of clause 10.3 (a) of the Collaboration Agreement by
failing to pay the sum of Rs.5,00,000/- to Defendant No.1. Further
reliance is placed on Clause 10.3 (b) of the Collaboration Agreement to
contend that the Plaintiff is in breach thereof by reason of having
attempted to poach the members of the first Defendant's team. Defendant
No.1 has contended that in view of these alleged breaches, by virtue of
the provisions of Clause 10.3 of the Collaboration Agreement, Defendant
No.1 was entitled to terminate the same.
13 The Plaintiff has submitted that these alleged breaches are by
way of an afterthought and made to somehow justify the illegal
termination of the Agreement by Defendant No.1 in order that it may
enter into an Agreement with a competitor of the Plaintiff. The Plaintiff
has stated that the Defendants' negotiations with the competing platform
began as far back as March, 2022. The Plaintiff further states that
immediately upon termination of the Agreement, Defendant No.1
purported to enter into an Agreement with the competitor of the Plaintiff
specifically named in the Collaboration Agreement. Accordingly, it is clear
that the allegations of breach are an afterthought to justify the illegal
attempt to terminate the Agreements so as to enter into an Agreement
with Plaintiff's competitor.
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14 The Plaintiff has dealt with the alleged breaches. Regarding
the alleged breach of non payment of Rs.5,00,000/- being a ground of
termination, the Plaintiff has stated that the alleged breach is not even
mentioned in the Termination letter. The Plaintiff has accordingly stated
that this is therefore ex-facie an afterthought. Further the Plaintiff states
that the Defendant No.1 has admittedly received a sum in excess of
Rs.11.66 crores under the terms of the Agreement and it is curious that
the Defendant No.1 should purport to terminate the Agreement on the
ground that Rs.5,00,000/- has remain unpaid, more so when not a single
communication has ever been addressed by it prior to the filing of the suit
making any grievance with regard to any such alleged non-payment. The
Plaintiff has denied that any amounts remained unpaid and the sum of
Rs.5,00,000/- which Defendant No.1 claims was deducted from the first
invoice dated 14.12.2021 was paid through the invoice dated 02.05.2022
wherein an additional sum of Rs.5,00,000/- over and above what was due
under the said invoice, after deduction of TDS, was paid to Defendant
No.1. Accordingly, no grievance has been made by Defendant No.1 in this
regard prior to the filing of the Suit.
15 The Plaintiff has filed a further affidavit dated 17.10.2022 in
view of the Defendant No.1, during the course of arguments, producing a
purported acknowledgment of liability note sent to it by the Plaintiff for
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amounts due as on 31.03.2022. The Plaintiff has explained in the said
affidavit the acknowledgment of liability and setting out in detail the
particulars of all payments made to Defendant No.1. The Plaintiff has
stated that there was no shortfall of Rs.5,00,000/- in payment and this is
apparent from the last invoice dated 02.05.2022, which clearly shows the
payment of the aforesaid amount to Defendant No.1.
16 The Plaintiff has then dealt with the second alleged breach of
the Collaboration Agreement being a reason for termination of the said
Agreement. The Plaintiff has stated that the allegation that there was an
attempt to approach a member of the Godlike team of Defendant No.1 is
misconceived. The Plaintiff has further stated that it is an admitted
position that the members of the Defendant No.1's team had started
discussion with the Plaintiff's competitor as far back as on March, 2022.
It is not denied that Defendant No.1's representative Mr. Chetan
Chandgude had asked Mr. Firasat Durani of the Plaintiff to speak directly
to Mr. Abhijit Andhare with regard to the offer being made to the team
members of Defendant No.1 by a competitor of the Plaintiff. This
conversation is captured in the transcript of Whats-App conversation,
annexed at page 505 of the Plaintiff's rejoinder to the affidavit of
Defendant No.1. The Defendant No.1 has responded to the conversation
by stating that instruction was given on 08.03.2022 and the same did not
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justify the meetings held subsequently. The Plaintiff has referred to the
affidavit of Mr. Firasat Durani of the Plaintiff which is at Exhibit-C to the
affidavit in rejoinder to the affidavit of Defendant No.1. Mr. Durani has
explained how the parties in question all knew one another for a long
time. In the affidavit in rejoinder, Mr. Durani has explained that the
meetings took place from March, 2022 onwards in an attempt to convince
the members of Godlike team not to succumb to a competitor's offer. Mr.
Durani has stated that once again on 20.03.2022 he was told by Mr.
Chetan Chandgude to talk to Mr. Abhijit Andhare. It is in these
circumstances that the meeting at Hotel Leela in Mumbai took place
which has been adverted to in the said affidavit. The Plaintiff has stated
that the discussion which has been itself set out by the Plaintiff as an
annexure to the affidavit was not in an attempt to poach any player, but
was held in an attempt to convince the members of Godlike Company
team not to succumb to the competitors offer. Most importantly, these
discussions were held under the instructions of Mr. Chetan Chandgude.
The discussions were not held with any members of the Godlike team as
alleged but was held with the coach of the team. The Plaintiff has
accordingly stated that there is no ground for termination of the
Collaboration Agreement made out by the Defendant No.1.
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17 The Plaintiff has stated that the Suit has been filed
immediately after the purported termination of the Collaboration
Agreement and the attempt on the part of Defendant No.1 to contend that
the Suit was belatedly filed is misconceived.
18 Mr. Mustafa Doctor, learned Senior Counsel appearing for the
Plaintiff has submitted that the Defendant No.1 has taken mutually
destructive pleas by on the one hand contending that there is no
concluded Agreement between the parties and on the other contending
that the Plaintiff is in breach of the terms of the Agreement. He has
submitted that the law entitles the Defendants to take mutually
inconsistent pleas but it is well settled that this does not entitle a party to
take mutually destructive pleas. He has relied on the following
judgments:
(a) Shiromani Gurdwara Committee v. Jaswant Singh (1996) 11
SCC 690 - paras 1 and 3;
(b) Shantabai Nivrutti Doke and others v. Chandrabhaga
Haribhau Parandwal and others (2017) SCC Online Bom
5456 - para 7;
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(c) Steel Authority of India and Another v. State of West Bengal
and Others (2008) 14 Supreme Court Cases 589 - para 28 at
page 594; and
(d) Devasahayam (Dead) BY LRS. v. P. Savithramma and
Others (2005) 7 SCC 653 - paras 12 and 29.
19 Mr. Doctor has accordingly submitted that in view of this
ground alone, the defence raised by the Defendant to the relief sought for
by the Interim Application requires to be struck off.
20 Mr. Doctor has submitted that from the documents on record
it is clear that the Collaboration Agreement was executed between the
Plaintiff and Defendant No.1 and concluded on 27.12.2021 and is one
and the same as the Agreement dated 15.12.2021. The Collaboration
Agreement duly executed has been made available as aforementioned to
the Defendant No.1 and/or to the Defendant No.2 acting as agent of
Defendant No.1. It is no longer open for Defendant No.1 to contend that
it had not received the final stamped and executed copies of the
Agreements which were sent by the Plaintiff's Advocate to Defendant
No.2 who was admittedly representing Defendant No.1 in respect of
matters relating to the execution of the Agreement and which is an
admitted fact. The Defendant No.2 was acting as agent of Defendant
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No.1 and he has in this context placed reliance upon Section 188 of the
Contract Act, 1872.
21 Mr. Doctor has also referred to the documents on record
including the invoices raised by Defendant No.1 and wherein all this
invoices bear the legend are "as per agreement". Thus, Defendant No.1
was well aware that there was a concluded Agreement/contract between
the Plaintiff and Defendant No.1. Mr. Doctor has submitted that
Defendant No.1 has admittedly received an aggregate payment of
Rs.11,66,40,000/- pursuant to the said invoices set out in Exhibit-NN to
the Plaint. Mr. Doctor has accordingly submitted that it is now not open
for Defendant No.1 to contend that there was no Agreement between the
Plaintiff and Defendant No.1.
22 Mr. Doctor has submitted that the alleged breach which has
been referred to in the notice of termination issued on 13.05.2022 is only
regarding the Plaintiff attempting to poach a member of the Godlike
team of Defendant No.1. This alleged breach is entirely misconceived as
can be seen from the conversation between Mr. Firasat Durani of the
Plaintiff and Mr. Abhijeet Andhare who is the coach of the Defendant No.1
team. He has submitted that the conversation which is by way of Whats-
App conversation shows that it is in fact the Defendant No.1 who had
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started the discussion with the Plaintiff's competitor as far back as March,
2022 and it is in this context that the Defendant No.1's representative Mr.
Chetan Chandgude had asked Mr. Firasat Durani of the Plaintiff to speak
directly to Mr. Abhijeet Andhare regarding the offer being made to the
team members of Defendant No.1 by the competitor of the Plaintiff. The
subsequent meeting between Mr. Durani and Mr. Abhijeet Andhare
towards the end of March, 2022 was also at the behest of Mr. Chetan
Chandgude of Defendant No.1 and in the context of the offer being made
to the team members of Defendant No.1 by the competitor of the Plaintiff.
From this whatsApp conversation it is clear that there is no attempt by the
Plaintiff to poach the member of the Godlike team of Defendant No.1 but
was in fact as aforementioned conversation between Mr. Durani of the
Plaintiff and Mr. Abhijeet Andhare who was the coach of the team
belonging to Defendant No.1 with regard to obviating any attempt being
made by Defendant No.1 to accept the offer being made by the competitor
of the Plaintiff. This was with an attempt to convince the members of the
Godlike Company not to succumb to the competitors offer.
23 Mr. Doctor has in this context has referred to certain clauses
in the Collaboration Agreement which are as under :
(i) Definition of Competing Platforms: Clause 1.1 (vi) - page no. 55
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of the Plaint;
""Competing Platforms" shall mean any other live streaming
platforms, which exist currently or may arise in the future, that
directly complete with Stoughton Street and the Platform,
including but not limited to Twitch, Facebook, Facebook Gaming,
Rooter, Rooter App, Mx Player, Instagram, Garena LIVE, Booyah,
Vidio - Nonton TV & Video, BIGO Live, Cube TV, Nonolive, KEWL,
Rheo, Here Live - Tambah & chat di live streaming GRATIS, 17,
GO Live, StreamCraft, Afreecatv, Winzo, MPL, TikTok, Nimo TV,
etc. as well as any similar platform which has been established or
is to be established (subject always to Clause 5.2)"
(ii) Purpose of Collaboration: Clause 2.1 - page no. 58 of the Plaint;
"2.1 Stoughton Street and GodLike shall collaborate pursuant to
the terms of this Agreement more specifically set out in Schedule
I for the purpose of:
(a) the exclusive collaboration for the streaming of Games
or gaming-related content on Loco by the Streamers
from the GodLike BGMI Roster and, GodLike FreeFire
Roster (as applicable);
(b) organizing of tournaments for broadcast on the
Stoughton Street Channels wherein the Streamers shall
play Games with and against other teams of repute
("Tournaments"). Stoughton Street shall in its sole-
discretion have all rights to syndicate all content in
relation to the Tournaments to third-parties;
(c) creation of non-fiction content pieces for Loco
incorporating the Streamers;
(d) the non-exclusive collaboration for procuring brand
engagements and other commercially beneficial
collaboration for the Streamers, the revenue sharing of
which shall be as per the provisions of Schedule I of this
Agreement; and
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(e) other initiatives as set out in detail in Schedule I of this
Agreement (together the "Collaboration")"
(iii) Inclusions in Streaming: Clause 4.1 and 4.2 - page nos. 59-60 of
the Plaint;
"4.1 GodLike shall ensure that the Streamers stream the Games
on the Stoughton Street Channels in a manner provided in
this Agreement and as per technical and content
specifications and guidelines approved by Stoughton Street
from time to time (in accordance with developments in best
practices in relation to streaming generally) and such
streaming on Stoughton Street Channel shall be exclusive
during the Term and the after that till perpetuity
("Streaming"). For further clarification, Streaming shall
include the broadcast on any of the Stoughton Street
Channels of:
(a) such novel content generated after the Effective Date for the
purposes of this Agreement by the Streamers, by Stoughton
Street of for GodLike (or by a combination of them)
(together the "Collaborative Content"), comprising:
(i) Loco Originals;
(ii) exclusive live streams in which the Streamers play or
commentate upon the Games ("Live Streaming");
(iii) broadcasts of the Tournaments;
(iv) social media engagement by the Streamers for Loco as
further specified in the provisions of Schedule I
herewith;
(v) any other novel content incorporating the Streamers as
may be acceptable to Stoughton Street; and
(vi) any rebroadcast of any of the foregoing (i) to (v).
4.2 GodLike shall ensure that:
(a) the Streamers create individual profiles and channels
on Loco;
(b) the LWH as under Schedule I are achieved;
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(c) the Streamers comply with the Content Schedule;
(d) image overlays of Loco are used by Streamers while
Streaming (and such image overlays and technical
requirements shall be communicated by Stoughton
Street to GodLike, either directly or through
Cornerstone, via email from time to time); and
(e) only image overlays of GodLike, Stoughton Street and
YouTube are used by the Streamers across all platforms
(including Competing Platforms) and while Streaming
on Stoughton Street Channels, provided however that,
while streaming on YouTube, there may be image
overlays or any other third-party entities/brands/
products so long as such third parties are not
Competing Platforms."
(iv) Non-Compete - Clause 5.2 and Clause 5.3 - page no. 62 of the
Plaint;
"5.2 From the Effective Date, GodLike shall give up, part with,
cease and refrain from directly or indirectly
streaming/broadcasting the Games on or having any association
wit a Competing Platform except as agreed under this Agreement;
5.3 GodLike or any of its Affiliate(s) shall not, and shall
ensure that the Streamers do not, directly or indirectly, either by
themselves or in association with or through any person, in any
manner whatsoever:
(a)endorse, market, advertise, engage with or have any
association with any of the Competing Platforms;
(b)on their own account or as an agent of any person canvass
or solicit for any Competing Platforms;
(c) solicit any customers, users, for the purpose of itself of any
Competing Platforms; or
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(d) solicit, canvas or entice away any employee of
Stoughton Street or its Affiliates."
(v) Term and Termination - Clause 10.1 - page no. 66 of the Plaint;
"10.1 This Agreement shall be valid for a period of 25
(twenty-five) months from the Effective Date, subject
to successful renegotiation within 13 (thirteen)
months from the Effective Date on the Consideration
unless this Agreement is terminated either pursuant to
the terms of this Agreement (the "Term"). The
circumstances enumerated under the provisions of
Clause 10.2 and 10.3 hereinbelow are each (or
cumulatively) referred to as a "Cause". The Party
terminating the Agreement in either case, shall be
referred to as the "Terminating Party". The Party who
is not the "Terminating Party" shall be referred to as
the "Breaching Party"."
and
(vi) Counterparts - Clause 15.10 - page no. 70 of the Plaint.
"15.10 Counterparts: This Agreement may be executed in one
or more counterparts, each of which shall be deemed
to be an original, but all of which, taken together, shall
constitute one and the same Agreement and, if any
signature page of the party is delivered by facsimile
transmission or by email delivery of a "pdf" format
data file, such signature shall be valid and binding on
the Parties."
24 Mr. Doctor has submitted that it is clear from the extracted
clauses of the Collaboration Agreement that there were negative
covenants contained therein and which restrained the Defendant No.1
including the streamers belonging to the team of Defendant No.1 from in
any manner streaming on a competing platform which competing
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platforms have been defined in Clause 1.1 (vi) of the Collaboration
Agreement. The term and termination have been provided for in Clause
10.1 of the Collaboration Agreement and though the Agreement is valid
for a period of 25 months from the effective date, this would be subject to
successful re-negotiation within 13 months from the effective date on the
consideration unless the Agreement is terminated either pursuant to the
terms of this Agreement or the circumstances enumerated under the
provisions of Clauses 10.2 and 10.3 which was with regard to the
payment of consideration as provided therein and the non-poaching by
the Plaintiff of any team member of Defendant No.1. Further, in the event
either of the events occurring, the Collaboration Agreement shall stand
terminated. Mr. Doctor has submitted that neither of these events
enumerated under Clauses 10.2 and 10.3 of the Collaboration Agreement
have occurred and hence there is no ground for termination of the
Collaboration Agreement. Further, the Collaboration Agreement including
the negative covenants is required to be specifically enforced and the
Defendants restrained from acting contrary to the provisions of the
Collaboration Agreement either by directly or indirectly endorsing,
marketing, advertising, engaging with or having any association with the
competing platforms as defined under Clause 1.1 of the Collaboration
Agreement and from disclosing any confidential information as defined
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under Clause 9 of the Collaboration Agreement.
25 Mr. Doctor has thereafter dealt with the contentions of
Defendant No.3 who has adopted the arguments made by Defendant No.1
and had further contended that Defendant No.3 is not a party to the
Collaboration Agreement and that the relief sought in respect of the
Collaboration Agreement will have a direct effect on Defendant No.3.
Mr. Doctor has submitted that Defendant No.3 has attempted to portray
himself as an innocent victim of the dispute between Defendant No.1 and
the Plaintiff which is completely misconceived. He has referred to the
original Agreement dated 25.08.2021 executed between the Plaintiff and
Defendant No.3. He has submitted that it is on the basis of this
Agreement that the subsequent Agreements were executed between
Defendant No.1 and the Plaintiff. The Tripartite Agreement to which
Defendant No.3 is admittedly a party in its recital contains reference to
the Collaboration Agreement. Defendant No.3 is therefore completely
cognizant of the terms of the Collaboration Agreement and the obligations
undertaken by Defendant No.1 in respect of the Godlike team of which
Defendant No.3 is a part. Thus, the injunction sought by the Plaintiff
against Defendant No.1 is also against its team and accordingly Defendant
No.3 is bound by such injunction as a member of the said team.
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26 Mr. Doctor has thereafter dealt with the contention of
Defendant No.1 and reliance placed on the decisions of this Court as well
as of the Supreme Court including the decision of this Court in Jet
Airways vs. Mr. Jan Peter Ravi Karnik 2000(4) BCR 487 relied upon on
behalf of the Defendant No.1 for contending that Defendant No.1 will be
driven to idleness in the event an injunction is granted and that no such
relief should be granted to the Plaintiff. Defendant No.1 has also
contended that the Plaintiff ought to be denied interim reliefs on account
of its conduct. Defendant No.1 has referred to paragraph 9 of the Plaint
containing an averment which according to Defendant No.1 was contrary
to the provisions of recital D of the Collaboration Agreement. Further,
reliance upon the affidavit of Mr. Ashwin Suresh at page 629 of the
Plaintiff's rejoinder to the affidavit of Defendant No.3 has been placed by
Defendant No.1 to contend that false statements were made therein.
Defendant No.1 has accordingly relied on authorities to the effect that the
Plaintiff's conduct must be blemish-less in order for it to be entitled to
interim reliefs.
27 Mr. Doctor has submitted that the contention of the
Defendant No.1 as to the Plaintiff's conduct is completely misconceived.
At the most they are a mere distraction and are liable only to be stated to
be rejected. He has submitted that the Plaintiff has not made any false
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statement as alleged by Defendant No.1. In the context of a concluded
Agreement, it is irrelevant as to which party originally approached the
other. However, a standard recital clause in an Agreement to the effect
that the Plaintiff desires to engage into an Agreement with the Defendant
which is recital D of the Collaboration Agreement cannot even be
suggested to be contrary to an averment that the Defendant had
approached the Plaintiff.
28 Mr. Doctor has thereafter dealt with the contention of
Defendant No.1 that a false statement was made in the affidavit of
Ashwin Suresh. He has submitted that this contention has been made
without reading the affidavit in response to which Mr. Ashwin Suresh had
made the averments in the said affidavit. The affidavit of Mr. Ashwin
Suresh has to be read in the context of the affidavit of Defendant No.1 in
regard to allegations of poaching and the affidavit of Mr. Abhijeet
Andhare to which he was responding. In the affidavit of Mr. Ashwin
Suresh, he has clearly stated that he is making the affidavit in response to
the aforementioned affidavits. Since Mr. Abhijeet Andhare had alleged in
his affidavit that he had a voice call on whatsApp with Mr. Ashwin Suresh.
Mr. Ashwin Suresh has denied that he had any voice call on whatsApp or
on any other communication means with Mr. Abhijeet Andhare, the
emphasis being on the words "voice call". He has not denied that there
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were other communications with Mr. Abhijeet Andhare as suggested by
Defendant No.1.
29 Mr. Doctor has accordingly submitted that there is no merit in
the contentions raised by Defendant No.1 as well as by Defendant No.3
opposing the grant of relief sought for in the Interim Application and that
in the interest of justice and as well as the law laid down in the Supreme
Court in case of Gujarat Bottling vs. Coca Cola Co. and Others, (1995) 5
SCC 545 injunction be granted in favour of the Plaintiff or else it would
have the effect of permitting the Defendant to walk out of and/or breach
its commercial contract with the Plaintiff with impunity and without
consequences and leave the Plaintiff helpless.
30 Mr. Rajadhyaksha, learned Senior Counsel appearing for
Defendant No.1 has submitted that in the present case the Plaintiff has
failed to meet the three tests set out in Order 39 Rule 1 of the Code of
Civil Procedure, 1908. The Plaintiff has failed to prove a strong prima
facie case. The execution of the Collaboration Agreement of which
specific performance has been sought, is not as per law. Further, without
prejudice to this submission, the Plaintiff has not shared a copy of the
signed Collaboration Agreement with Defendant No.1 rendering it
unenforceable. Thus, the Plaintiff has failed to prove that there exists a
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written agreement as alleged. It is well settled that in case of specific
performance it must be a strong prima facie case on admitted facts
leading to the existence of the agreements.
31 Mr. Rajadhyaksha has submitted that the balance of
convenience is also in favour of the Defendants as the Plaintiff seeks to
enforce at the interim stage the positive covenants upon the players, who
are not parties to the agreement, which cannot be permitted to be done in
law. Further, the Plaintiff demands at interim stage a situation that
Defendant No.1's players in the team perform on Plaintiff's platform or
alternatively remain ideal. The prayers pressed by the Plaintiff viz. prayer
clauses (h) and (i) seeks restrictions against all the players/members of
Defendant No.1's team who are not part of the alleged agreement. Thus,
the interim relief pressed goes far beyond a case of specific performance.
The players/members of Defendant No.1's team have limited shelf life of
3-4 years till the time they have their reflexes active and spontaneous,
therefore granting any interim injunction restricting them from
performing will cause irreparable loss to Defendant No.1 and its
members/players/ streamers which cannot be compensated in terms of
money. The Plaintiffs have claimed damages and have already quantified
their loss at the maximum. The Plaintiff can if it ultimately succeeds at
the final hearing of the Suit be suitably compensated if the Plaintiff is so
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entitled.
32 Mr. Rajadhyaksha has further submitted that in case an
injunction is granted, there would be no option to the players but to
stream on the Plaintiff's platform in order to remain active and able to
participate in tournaments, some of whom are international prayers and
therefore required a high level of performance. The Plaintiff is thus
seeking to enforce the positive covenants of an agreement at this stage,
which is not permissible in law. He has relied upon the following
judgments :
a. Jet Airways v Jan Peter Ravi Karnik 2000 (4) BCR
487 (Pg. 4, para 7/ pg. 10, para 15/ pg. 12/para
20, pg. 13/ para 21, pg. 14/para. 22 & 23, pg.
16/ para 26 & pg. 17/ para 27)
b. Page One Records Ltd. v Britton & Ors. [1968] 1
WLR 157 (Pg. 152 headnote, Pg. 166/ para 1)
c. Mark Percept v Zaheer Khan (2006) 4 SCC 227 .
(Pg. 247/ para 64(v))
d. Ambalal Sarabhai Enterprises v. KS Infraspace LLP
Limited (2020) 5 SCC 410: Stronger case
required for specific performance (Pg. 410
Headnote A, Pg. 415/ para 15, Pg. 417/ para 19,
21, Pg. 419/ para 24)
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33 Mr. Rajadhyaksha has thereafter referred to certain provisions
of the Specific Relief Act, 1963 viz. Sections 10, 14, 16, 41 and 42 in
support of his contention that the Plaintiff is not entitled to the relief of
specific performance. He has submitted that under Section 14(d) where
the contract is in its nature determinable, specific performance of the
contract cannot be granted. Further, under Section 16 (c) of the Specific
Relief Act it is provided that where the Plaintiff fails to prove that he has
performed or has always been ready and willing to perform the essential
terms of the contract which are to be performed by him, other than the
performance of which has been prevented or waived by the Defendant,
specific performance cannot be granted. Further under Section 41(e) of
the Specific Relief Act, an injunction will not be issued to prevent the
breach of a contract, the performance of which will not be specifically
enforced and Section 41 (i) thereof, when the conduct of the Plaintiff or
his agents has been such as to disentitle them to the assistance of the
Court. Injunction will not be granted. Thus, the conduct of the Plaintiff is
relevant in the grant of an injunction of specific performance.
34 Mr. Rajadhyaksha has submitted that there has been delay on
the part of the Plaintiff in approaching this Court and Relief ought to be
refused to the Plaintiff on the ground of delay. The Plaintiff has admitted
that it learnt of Defendant No.1 being in " active conversation" with a
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competing platform in March 2021 prior to filing of the Suit. However,
the present Suit has been filed only after the notice of termination i.e. on
15.05.2022.
35 Mr. Rajadhyaksha has submitted that the Plaintiff by the
present application of injunction is seeking an order from this Court
compelling Defendant No.1 to breach its prior to the suit contract with a
third party and interfere with third party interest. Mr. Rajadhyaksha has
submitted that the Court would take into consideration whether prejudice
is caused to a third party and if that be so, the Plaintiff would be refused
relief. The Court in normal course will not pass orders so as to compel
the Defendant to be in breach of his obligation under the contract with
the third party and would take into consideration the fact that the
Defendant upon termination of the contract has entered into another
contract with a third party. He has relied upon the decision of the Courts
in Warmington v. Miller (1973) 2 WLR 654 in this context.
36 Mr. Rajadhyaksha has submitted that where no final relief is
possible, no interim injunction will lie. He has in this context relied upon
the following decisions :
a) Cotton Corp v. United Bank of India AIR 1983
SC 1272; (Pg. 635/ para 10)
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b) Shri Cutchi Visa Oswal Derawasi Jain Pathshala
v. Cutchi Visha Oswal Derawasi Jain Mahajan
&. Ors. (2005) 1 Bom CR 105. (Pg. 9/ para 34,
Pg. 10/ para 39)
37 Mr. Rajadhyaksha submits that there have been breaches
committed by the Plaintiff of the Collaboration Agreement and which will
disentitle the Plaintiff to claim specific performance of the agreement
and/or injunction as has been sought for by the present Interim
Application. The Plaintiff has violated several essential terms of the
contract including terms which if breached enable Defendant No.1 to
terminate the Collaboration Agreement. There has been a breach of the
payment terms of the Collaboration Agreement. The payment terms are
set out at Clauses 2(a) and (b) and 3(a), (b), (c) and (d) of Schedule 1 of
the Collaboration Agreement. He has submitted that the payments of the
consideration mentioned in clause 2(a) and (b) was to be paid in the
manner provided in clause 3. Clause 3(c) provided that any amount due
to Godlike under the Agreement was to be paid within 15 business days of
Stoughton Street receiving a valid invoice from Godlike in relation to
such amount referred to as "Payment Date". Defendant No.1-Godlike has
a right to terminate if not paid within 45 days from the payment date
under clause 10.3(a) of the Collaboration Agreement.
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38 Mr. Rajadhyaksha has submitted that full payment has not
been made in time in respect of the Quarter-I- November to January.
Secondly, payment for the Quarter-II- February to April has not been
made in time. He has referred to a chart of all payment details which is at
Page 104 of the Affidavit in Reply of Defendant No.1 to the Interim
Application and from which he has submitted that the payment breaches
can be seen. Insofar as the Invoice of Quarter-1 which was raised on
14.12.2021, payment of the invoice was made on 31.12.2021. This is
beyond the 15 business days and thus in derogation of Clause 3(c) of the
Collaboration Agreement. He has further submitted that an amount of
Rs.5,00,000/- is not paid till date from Quarter-1, therefore, there is a
breach of Clause 10.3 (a) of the Collaboration Agreement as the same is
even beyond 45 days from the 15 business days, which entitles Defendant
No.1 to terminate the alleged Collaboration Agreement. Insofar as
Quarter-2 is concerned, for which invoice was raised on 14.02.2022, the
Plaintiff made part payment of Rs.1,00,00,000/- on 25.03.2022 and
balance payment on 31.03.2022 which is beyond 15 business days. Thus,
there is breach of Clause 3(c) of the Agreement whereby the Plaintiff has
to make payment within the 15 business days. He has submitted that
though this breach does not entitle Defendant No.1 to terminate the
Agreement at that stage, the same has to be taken into consideration as
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breach by the Plaintiff of an essential term and therefore, relevant for the
purpose of refusing equitable relief to the Plaintiff. The Plaintiff who is
seeking specific performance of the Collaboration Agreement is in
violation of essential term of payment of the Agreement as per the
admitted facts and thus, specific performance cannot be granted under
Section 16 of the Specific Relief Act.
39 Mr. Rajadhyaksha has submitted that the Plaintiff has falsely
emphasized that it has paid Defendant No.1 an amount of
Rs.11,66,40,000/- under the Collaboration Agreement, which is false and
misleading to the knowledge of the Plaintiff as only Rs.7,24,00,000/- is
received under the alleged arrangement.
40 Mr. Rajadhyaksha has taken this Court to the terms of the
Collaboration Agreement with regard to the payments of TDS as part of
the consideration, viz. Clause 3(d) of Schedule 1 of the Collaboration
Agreement. This clause provides that TDS is part of the consideration
and, therefore, has to be paid within 15 business days. Defendant No.1
has in their Reply have raised the issue of the TDS not paid till filing of
the Rejoinder, which is admitted by the Plaintiff. The Rejoinder was filed
on 08.06.2022 and Plaintiff immediately after filing the Rejoinder has
made complete payment of the TDS which is more than Rs.72 lakhs. The
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Plaintiff has thus not abided by the essential terms of the Collaboration
Agreement. The Plaintiff was never ready and willing to perform their
obligation as per the Collaboration Agreement.
41 Mr. Rajadhyaksha has referred to the other breach of the
essential terms of the Collaboration Agreement which entitles Defendant
No.1 upon occurrence of this breach to terminate the Collaboration
Agreement. This breach is in relation to the Plaintiff establishing direct
contact with the players/streamers of Defendant No.1. Mr. Rajadhyaksha
has referred to the conversation which is by way of whatsApp chat which
the Plaintiff has itself produced which reveals that Mr. Firasat Durani of
the Plaintiff was in league with one of Defendant No.1's players for
poaching prior to any discussions between the Plaintiff and Defendant
No.1 in September 2021 as well as after the alleged Collaboration
Agreement was executed. Though one of the key commercial
terms/conditions sought to be incorporated by Defendant No.1 in the
Agreement viz that contact with the players would be through Defendant
No.1 only, it initially did not find place in the first draft. Upon the
insistance of Defendant No.1 it was incorporated in clause 7.5 of the
alleged final Collaboration Agreement.
42 The whatsApp chat produced by the Plaintiff was between
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Mr. Firasat Durani of the Plaintiff and Mr. Abhijeet Andhare a.k.a.Ghatak,
Coach of Defendant No.1's team in relation to poaching players from a
competing Platform i.e. Rooter. There was no permission granted by
Defendant No.1-Mr. Chetan Chandgude to the Plaintiff to indulge in
commercial negotiations with any of its players directly. There are
admissions in the affidavit of Mr. Firasat Durani of the Plaintiff that the
Plaintiff was in active commercial discussions with Mr. Abhijeet Andhare
before the current deal with Defendant No.1 under the Collaboration
Agreement as well as after the current deal with Defendant No.1 under
the Collaboration Agreement.
43 Mr. Rajadhyaksha has thereafter referred to the other
breaches of the Collaboration Agreement which includes preventing the
players from participating in other tournaments, being breach of Clause
5.1 of the Collaboration Agreement as well breach by publishing material
of other players without authority in breach of Clause 2.8 of the Master
License Agreement. He has submitted that in order for the Plaintiff to
claim specific performance of the Agreement, the Plaintiff's conduct must
be blemishless which it is not. Moreover, if the enforcement of a negative
covenant amounts to a decree of specific performance of a positive
covenant and/or requires the Defendant to remain idle, the same will not
be enforced. He has in this context relied upon the decisions as under :
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a) Heritage Lifestyle & Developers Ltd., v Cool
Breeze CHSL MANU\MH\0044\2014; (Pg. 14/
para 12, Pg. 15/ para 23)
b) Pemmada Prabhakar & Ors. v. Young Men's
Vysya Association (2015) 5 SCC 355. (Pg. 364/
para 32 and 34)
44 Mr. Rajadhyaksha has submitted that it is misleading on the
part of the Plaintiff to contend that the termination of the contract is bad
in law because the grounds stated in the letter of termination are not
made out when the Termination Letter was issued. He has submitted that
it is settled law that if a party refuses to perform a contract giving a
wrong or inadequate reason or no reason at all, he may yet justify his
refusal if there were at the time facts in existence which have provided a
good reason, even if it did not know of them at the time of refusal. He
has in this context relied upon following judgments :
a) Chitty on Contract: 34 Edn. 2028\27-067
b) Nune Sivayya and anr. v. Maddu
Ranganayakulu [1935] P.C. Oudh Weekly Notes
496 (Pg. 502/ para 3)
c) Juggilal Kamlapat v Pratapmal Rameshwar
(1978) 1 SCC 69 (Pg. 83/ para 23)
d) MSEDC v Datar Switchgear Ltd. and anr
(2018) 3 SCC 133. (Pg. 134/ Head note E, Pg.
171/ para 55)
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45 Mr. Rajadhyaksha has made submissions on there being no
concluded contract as per law. He has submitted that the purported
written Agreement has not been executed as per the provisions of law. He
has thereafter referred to mode of execution of the agreements and in
that context submitted that mode of execution of the Collaboration
Agreement in the present case is contrary to the recognized the mode of
execution of the agreements. Defendant Nos.1 and 2 who are parties to
the Collaboration Agreement were made to execute the agreement at the
place shown on the page which was scanned and sent to them and the
page was a blank page. Each of the two Defendants on receipt of the e-
mail were then expected separately to take out printout and sign the page
and scan the page and after having scanned the signed page, e-mail it
back to the Plaintiff only. Thus, signature of each of the Defendants was
on separate page. The Plaintiff's signature was also on a separate page.
Mr. Rajadhyaksha has submitted that thus, there is no valid agreement
executed under either mode of execution known to the law viz. the
traditional method known as "wet signature method" using wet link and
the electronic method known as digitally signed with electronic signature
for execution of the agreement. Thus the Plaintiff has failed to
conclusively prove that there exists an agreement. The Plaintiff must fail
in the application especially bearing in mind that this is a suit for specific
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performance. In this context he has relied upon the judgments as
follows :
2. Mayawanti v Kaushalaya Devi (1990) 3 SCC 1
(Pg. 5/ para 8, Pg. 13/ para 22, Pg. 14/para 24)
3. Ganesh Shet v. Dr. Setty (1998) 5 SCC 381 (Pg.
388/ para 13, 14, 16, 17 and 18)
46 Mr. Rajadhyaksha has submitted that the alleged executed
the Agreements were not provided to Defendant No.1 and/or the final
version of the alleged executed Agreements were not provided by the
Plaintiff to Defendant No.1. He has referred to e-mails addressed in this
context which have been sent by the Plaintiff and in which though the
agreement was claimed to have been executed on 15.12.2021 by the
Plaintiff and Defendant Nos.1 and 2, e-mails were sent on 23.12.2021 by
the Plaintiff wherein the Plaintiff claims that it had circulated the
Agreement which incorporates all the "agreed key commercial terms" and
the same was accepted by Defendants on 27.12.2021. Thus, he has
submitted that the Collaboration Agreement on which the Plaintiff relies
has not been executed on 15.12.2021 but purportedly on 27.12.2021 and
which has not been provided to Defendant No.1 or produced before this
Court.
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47 Mr. Rajadhyaksha has refuted the contention of the Plaintiff
that the alleged executed Collaboration Agreement was made available to
Defendant No.1 on three occasions i.e. 08.03.2022, 19.03.2022 and
05.05.2022. He has submitted that the Plaintiff has alleged that it's
handing over of the executed Collaboration Agreement to Defendant No.2
would amount to handing it over to Defendant No.1 as Defendant No.2
was the agent of Defendant No.1. He has submitted that this contention
on behalf of the Plaintiff is entirely misconceived as the Collaboration
Agreement at clause 15.5 mentions that each party is an "Independent
Contractor" and the Agreement does not create the relationship of an
employer, employee or of a principal and agent between the Plaintiff,
Defendant No.1 and Defendant No.2.
48 Mr. Rajadhyaksha has submitted that the original of the
executed Collaboration Agreement has not been provided by the Plaintiff
though sought in Court and thus, under Section 114 of the Indian
Evidence Act, 1872 this Court may presume existence of certain facts and
under Section 114 (g) of the Indian Evidence Act that evidence which
could be and is not produced would, if produced, be unfavourable to the
person who withholds it. Thus, there is no concluded Agreement as per
law which is valid and adverse inference is required to be drawn for
withholding the original Agreements. In this context he has relied upon
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Union of India vs. Ibrahim Uddin and others, (2012) 8 SCC 148 at
paragraph 12.
49 Mr. Rajadhyaksha has accordingly submitted that there is no
merit in the case made out by the Plaintiff for claiming the injunction as
sought for in the Interim Application and for which prayer clauses (h) and
(i) of the Interim Application have been pressed.
50 Mr. Kevic Setalwad, learned Senior Counsel appearing for
Defendant No.3 has submitted that Defendant No.3 is neither a party nor
signatory to the Collaboration Agreement, thus the Plaintiff cannot claim
the relief sought for in terms of prayer clauses (h) and (i) of the Interim
Application against Defendant No.3. There is no privity of contract
between the Plaintiff and Defendant No.3. The negative covenants in the
Collaboration Agreement are not against Defendant No.3 and do not bind
Defendant No.3. However, the Plaintiff seeks to enforce the negative
covenants against Defendant No.3. It is settled law that the negative
covenants cannot be enforced against a party (Defendant No.3) who is
not a signatory to the contract (Collaboration Agreement). In this context
he has relied upon the following decisions :
a) Crompton Greaves Limited v. Hyundai Electronics Industries
Co. Limited 1999(48) DRJ 754 (relevant paragraphs
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2,4,5,7,9&10);
b) Dietrich Engineering Consultant Holdings v. Schist India and
Others 2009 SCC Online Bom 1520 (relevant paragraphs 102
&110) and
c) Taprogge Gesellschaft MBH v. IAEC India Ltd. AIR 1988 Bom
157 (relevant paragraph 30).
51 Mr. Setalwad has further submitted that it is settled law that
the Court cannot grant specific performance of a contract, the
performance of which is dependent upon the volition of a third party. He
has relied upon the decision of the Supreme Court in the matter of
Raman (Dead) by LR's vs. R. Natrajan (2022) SCC online SC 1212 at
paragraphs 2, 16, 17 and 18 in this context.
52 Mr. Setalwad has supported the submission of Mr.
Rajadhyaksha on behalf of Defendant No.1 that the Court ought not to
grant an injunction to restrain the breach of a negative stipulation in a
contract of personal service where the effect of doing so would be to
compel the Defendant No.3 to specifically perform the contract. This rule
is based upon the principle that the Court will not do indirectly that which
it cannot do directly. The Plaintiff may have a remedy in damages, if any.
He has relied upon the following judgments :
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a) Dietrich Engineering Consultant Holdings v. Schist India and
Others 2009 SCC Online Bom 1520 (relevant paragraphs 85
to 110) and
b) Delhi High Court in the matter of Independent News Service
Pvt. Ltd. v. Sucherita Kukreti 2019 SCC Online Del 6756
(relevant paragraphs 6, 9,10,11,12,13 &14).
53 Mr. Setalwad has submitted that in any event the
Collaboration Agreement cannot be specifically performed since the same
is a contract of determinable nature. The provisions of Section 14(d) of
the Specific Relief Act, 1963 expressly provides that the contracts which
are in its nature determinable cannot be specifically enforced. Clauses
10.2 and 10.7 r/w 10.3 make it clear and unambiguous that both the
Plaintiff and Defendant No.1 respectively are entitled to terminate the
purported Collaboration Agreement upon occurrence of events mentioned
under clause 10.2 and 10.3 of the Agreement. He has submitted that the
Collaboration Agreement is thus determinable in nature and Section
14(d) of the Specific Relief Act, 1963 is accordingly attracted. He has
relied upon the decision of the Supreme Court in Indian Oil Corporation
vs. Amritsar Gas services (1991) 1 SCC 533 at paragraphs 2, 3, 4 and 12
in this context.
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54 Mr. Setalwad has adopted the other submissions of Mr.
Rajadhyaksha and submitted that the Plaintiff has failed to prove prima
facie case in its favour. Further the balance convenience leans heavily on
the side of the Defendants and in the event this Court was to grant
injunctive reliefs against Defendant No.3, in view of the short shelf life, he
will lose his prime and will suffer irreparable injury or loss, which cannot
be compensated in terms of money.
55 Ms. Mahalakshmi, the learned Counsel for Defendant No.2
has submitted that the Plaintiff has not claimed any relief qua Defendant
No.2 as Defendant No.2 had a very limited role in the entire transaction,
which was to the extent that it had merely facilitated the execution of the
documents including the Collaboration Agreement. She has submitted
that the agreements were facilitated based on the Team Representation
Agreement which was entered into between Defendant No.1 and
Defendant No.2 dated 28.09.2021 wherein Defendant No.2 had been
conferred the exclusive management, licensing and marketing rights of
Defendant No.1 for a period of one year till 22.09.2022. Subsequently,
the Team Representation Agreement was terminated and termination was
known to the Plaintiff and accordingly the Plaintiff had sent e-mail dated
05.05.2022 to all the Defendants wherein the signed and executed copies
of the Agreements were annexed. Upon termination there existed no
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business relationship between the Plaintiff and Defendant No.2. He has
further submitted that Defendant Nos.1 and 2 are independent
contractors as provided in Recital 15.05 of the Collaboration Agreement.
56 Having considered the rival submissions in my prima facie
view the Collaboration Agreement dated 15.10.2022 in its nature is
determinable and thus cannot be specifically enforced. For that purpose
clause 10 which provides for termination and in particular termination on
the occurrence of the events mentioned in clauses 10.2 and 10.3 thereof
are required to be reproduced and which are as under :
10.1 This Agreement shall be valid for a period of 25 (Twenty-
five) months from the Effective Date, subject to
successful renegotiation within 13 (thirteen) months
from the Effective Date on the Consideration, unless this
Agreement is terminated earlier pursuant to the terms of
this Agreement (the "Term"). The circumstances
enumerated under the provisions of Clause 10.2 and 10.3
hereinbelow are each (or cumulatively) referred to as a
"Cause". The party terminating the Agreement in either
case, shall be referred to as the "Terminating Party". The
Party who is not the "Terminating Party" shall be referred
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to as the "Breaching Party".
10.2 Subject to Clause 10.4 and Clause 15, Stoughton Street
may terminate this Agreement following the occurrence
of any non-performance or breach of this Agreement by
GodLike.
10.3 GodLike itself or through Cornerstone may terminate
this Agreement upon occurrence of the following events:
a) any failure by Stoughton Street to pay the
Consideration as per this Agreement and Stoughton
Street failing to remedy such Cause within 45 (forty-five)
days from the Payment Date;
b) Stoughton and/or its Affiliates carrying ut any/all
commercial conversations/negotiations directly with the
Talent or their family members without the involvement
of and/or without routing the same through Godlike.
57 It is clear from these clauses that the Collaboration
Agreement which is valid for a period of 25 months from the effective
date, is subject to successful renegotiation within 13 months from the
effective date on the consideration, unless the Agreement is terminated
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earlier pursuant to the terms of this agreement. The circumstances
enumerated are under the provisions of Clause 10.2 and 10.3 which is
referred to as a "Cause" for termination. Clause 10.2 provides for the
Plaintiff to terminate the Agreement following the occurrence of any non
performance or breach of the Agreement by Defendant No.1 with which
the present case is not concerned with. What is material in the present
case is Clause 10.3 of the Agreement which has been invoked and which
provides that Defendant No.1 itself or through Defendant No.2 may
terminate the Agreement upon the occurrence of the events mentioned
thereunder. The first of the events is in relation to failure on the part of
the Plaintiff to pay the consideration as per the Agreement, namely
Clauses 2(a) & (b) read with payment under Clause 3 of Schedule-I.
Terms of the Collaboration Agreement. Under Clause 3(c) it is mentioned
that any amount due to Defendant No.1 under the Agreement shall be
paid within 15 business days of the Plaintiff receiving valid invoice from
Defendant No.1 in relation to such amount ("payment date"). Further,
under Clause 10.3 (a) of the Collaboration Agreement upon the Plaintiff
failing to remedy such cause of payment within 45 days from the payment
date and upon occurrence of such event, Defendant No.1 may terminate
the Agreement. The other event mentioned in Clause 10.3 (b) of the
Collaboration Agreement is the event of the Plaintiff and/or its Affiliates
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carrying out any/all commercial conversations/ negotiations directly with
the Talent or their family members without involvement of and/or
without routing the same through Defendant No.1 which upon its
occurrence Defendant No.1 may terminate the Agreement.
58 In the Indian Oil Corporation (supra) the Supreme Court has
considered such a clause which provides for termination of the Agreement
forthwith on the happening of certain specified events. In that case it was
clause 27 and the relevant events which form part thereof reads as
under :
"27. Notwithstanding anything to the contrary herein
contained, the Corporation shall also be at liberty at its
entire discretion to terminate this agreement forthwith
upon or at any time after the happening of any of the
following events, namely:
(h) If the distributor does not adhere to the
instructions issued from time to time by the Corporation
in connection with sale practices to be followed by him
in the supply and storage of the Corporation's products
or otherwise;
(i) If the distributor shall give out unauthorised
connections to any person without the Corporation
receipt/subscription voucher or otherwise howsoever;
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(n) If the distributor shall either by himself or by his
servants or agents commit or suffer to be committed any
act which, in the opinion of the Regional Manager of the
Corporation for the time being at New Delhi, whose
decision in that behalf shall be final, is prejudicial to the
interest or good name of the Corporation or its products;
the Regional Manager shall not be bound to give reasons
for such decision."
This clause was in the facts of that case held to permit the Corporation
therein to exercise the right of termination of the Distributorship
Agreement. The Supreme Court had considered that in view of the
Distributorship Agreement being revocable under Clauses 27 & 28 of the
Agreement, as per the finding in the award of the Arbitrator and
admittedly the Agreement was for tendering personal service, the relevant
provision viz. Sub Section (1) of Section 14 of the Specific Relief Act was
automatically attracted and which specified the contracts which cannot be
specifically enforced, one of which is a "contract" which is in its nature
determinable. Thus, clause (c) of Sub Section (1) of Section 14 of the
Specific Relief Act applied, the contract by its nature being determinable.
This being so it was held that granting the relief of restoration of the
distributorship even on the finding that the breach was committed by the
Appellant/Corporation was contrary to the mandate of Section 14 (1) of
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the Specific Relief Act and thus it was held that there was error of law
apparent on the face of the award. It was held in that case that the
Arbitrator had found that the termination of the distributorship was not
validly made under Clause 27 of the Agreement. In view of the Agreement
being revokable by either party in accordance with Clause 28 of the
Agreement by giving 30 days notice, the only relief that could be granted
was the award of compensation for the period of notice, that is 30 days
instead of restoration of the distributorship.
59 It has thus been held in the above decision that a clause such
as clause 10.3 of the Collaboration Agreement in the present case is a
clause which renders the Collaboration Agreement in its nature to be
determinable and thus, incapable of being specifically performed under
Clause (c) of Sub-section 1 of Section 14 of the Specific Relief Act. In that
view of the matter, no injunction can be granted as has been sought for by
the Plaintiff in terms of prayer clauses (h) and (i) of the Interim
Application which have been pressed.
60 Further, the contention of the Plaintiff that the Defendant has
taken mutually destructive pleas is misconceived. Defendant No.1 has not
denied the existence of an ad-hoc arrangement agreed upon between
Defendant No.1 and the Plaintiff but has contended that there is no
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formal agreement which has been executed between the Plaintiff and
Defendant No.1. Thus, it is the contention of Defendant No.1 that based
on such ad-hoc arrangement, Defendant No.1 has claimed that breaches
have been committed by the Plaintiff of the agreement between them. In
my prima facie view the pleas taken by Defendant No.1 cannot be
considered to be mutually destructive.
61 In considering whether there is a formal Collaboration
Agreement which has been executed between the Plaintiff and Defendant
No.1, it would be necessary to note that the Agreement has been
admittedly signed by the Plaintiff as well as by Defendant Nos.1 and 2.
The written Collaboration Agreement was exchanged between the
Plaintiff and Defendant Nos.1 and 2. This is borne out from e-mails
which are on record and though Defendant No.1 has contended that
merely by sending the Collaboration Agreement to Defendant No.2, this
cannot bind Defendant No.1 and/or be considered as Defendant No.1
having been sent the Collaboration Agreement. However, it is necessary
to note that by the e-mail dated 05.05.2022, the Collaboration Agreement
dated 15.12.2021 was sent by Ashwin Suresh of the Plaintiff to inter-alia
Firasat Durani of Defendant No.1. It has further been explained in the
affidavit in rejoinder of the Plaintiff, in paragraph 5.19 thereof, that
though the final version of the Collaboration Agreement was circulated
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on behalf of Plaintiff by e-mail dated 23.12.2021 and Defendant Nos.1
and 2 sent signatures on the pages of the Collaboration Agreement vide e-
mail dated 27.12.2021 whereby they executed and concluded the
Collaboration Agreement, the legal representative of the Plaintiff vide e-
mail dated 22.12.2021 has explained the reason for the Collaboration
Agreement being dated 15.12.2021. Due to the stamp duty payment date
(which is 15.12.2021) the Plaintiff could not have backdated the
Agreement. Further, the executed and stamped copy of the Collaboration
Agreement has been shared with Defendant Nos.1 and 2 vide e-mail dated
08.03.2022 addressed to Defendant No.2 as well as by e-mail dated
05.05.2022 which is addressed to both Defendant No.1 and Defendant
No.2. Thus, in my prima facie view I do not find any merit in the
contention on behalf of Defendant No.1 that the executed Collaboration
Agreement was never received by Defendant No.1. There are certain
disputes raised as to the events which took place at the meeting on
19.03.2022 and as to whether the Collaboration Agreement were handed
over at the said meeting, however, it is not necessary to consider this
dispute, in view of the subsequent e-mail dated 05.05.2022 wherein
Defendant No.1 was sent the executed Collaboration Agreement dated
15.12.2022. Further, the invoices which have been raised by Defendant
No.1 clearly mention that they are "as per the agreement" thus, Defendant
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No.1 had full knowledge of the executed Collaboration Agreement.
62 The execution of the Collaboration Agreement has been
contended by Defendant No.1 to be contrary to the recognized modes of
execution. In my prima facie view there is no substance to this contention
in view of the fact that Defendant No.1 has not disputed that it had signed
the execution page which had been sent to the Plaintiff and had not raised
any objection after having received the duly executed Collaboration
Agreement by e-mail dated 05.05.2022 till the Termination Letter was
sent and in the present proceedings. Thus, this is a mere afterthought
and accordingly I do not find any merit in the contention on behalf of
Defendant No.1 that there was no valid Collaboration Agreement
executed.
63 Considering the contentions of Defendant No.1 that there are
breaches of the Collaboration Agreement, in my prima facie view, there is
no doubt that the Plaintiff has committed breaches insofar as the payment
terms of the Collaboration Agreement are concerned as there has been
delay in payment of the invoice of Quarter No.1 beyond the 15 business
days (payment date) apart from the amount of Rs.5 lakhs having been
paid even beyond the 45 days from the payment date. The payments
made insofar as invoice of Quarter No.2 is concerned was also made
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beyond the payment date. Though the said breach of the payment terms
other than the payment of Rs.5 lakhs which was beyond 45 days from the
15 Business Days (payment date) does not entitle Defendant No.1 to
terminate the agreement, this would be required to be taken into
consideration as a failure on the part of the Plaintiff to comply with the
essential terms of the Collaboration Agreement for seeking specific
performance thereof. I find no merit in the contention of the Plaintiff that
Defendant No.1 has received an amount of Rs.11,66,45,000/- under the
Collaboration Agreement and, therefore, cannot be heard to contend that
the amount of Rs.5 lakhs was not paid as per the payment terms. The
payment of Rs. 5 lakhs was beyond 45 days from the payment terms and
hence is one of the events mentioned in Clause 10.3 of the Collaboration
Agreement, the occurrence of which entitles Defendant No.1 to terminate
the Collaboration Agreement. Further, there has been failure to pay TDS
amounts which was to be paid as per Clause 3(d) as part of the
consideration within the 15 business days and in fact was only paid by the
Plaintiff immediately after filing of the Rejoinder in the present
proceedings. Hence, in my prima facie view there has been breaches by
the Plaintiff of the essential terms of the Collaboration Agreement.
64 Under Section 16(b) of the Specific Relief Act it is provided
that where the Plaintiff violates any essential terms of the contract, this is
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one of the circumstances in which the Court cannot enforced specific
performance in favour of the Plaintiff. This apart from aforementioned
prima facie finding that the Collaboration Agreement itself is
determinable. Further, I find substance in the submission of Mr.
Rajadhyaksha on behalf of Defendant No.1 that though this breach by the
Plaintiff of the payment terms of the Collaboration Agreement was not
specifically mentioned in the notice of termination, this does not prevent
Defendant No.1 from justifying the ground of termination as raised in
defence to the injunction sought in aid of specific performance. The
authorities for this submission relied upon by Mr. Rajadhyaksha is
apposite.
65 With regard to the breaches of the Collaboration Agreement
mentioned in the Termination Letter of Defendant No.1 viz. poaching by
the Plaintiff establishing direct contact with the players/streamers of
Defendant No.1 in violation of Clause 7.5 of the Collaboration Agreement
is concerned, I am of the prima facie view that Defendant No.1 has not
been able to establish such breach. It is clear from the documents on
record including the whatsApp chat that Mr. Chetan Chandgude of
Defendant No.1 had consented to Mr. Firasat Durani of the Plaintiff to
enter into the discussions with Mr. Abhijeet Andhare, coach of the team of
Defendant No.1. Further, Mr. Firasat Durani has explained in his affidavit
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dated 08.06.2022 the reason for the meeting between him and Mr.
Abhijeet Andhare which was at the behest of Mr. Chetan Chandgude and
which was in relation to the current negotiations being carried out by
Defendant No.1 with a competing platform in March, 2022. This is borne
out from the whatsApp conversations between Mr. Abhijeet Andhare and
Mr. Firasat Durani. Further, the meeting between Mr. Firasat Durani and
Mr. Abhijeet Andhare on 21.03.2022 was in relation to the attempts made
on behalf of the Plaintiff to appeal to the Defendant No.1 to honour the
Collaboration Agreement. I accordingly do not find any substance in the
contention on behalf of Defendant No.1 that there was poaching of any of
the team members of Defendant No.1 by the Plaintiff.
66 In my prima facie view, the relief sought for by the Plaintiff
viz. prayer clauses (h) and (i) of the Interim Application would result in
enforcing a negative covenant against Defendant No.3 and other players
of the team of Defendant No.1 who are neither parties nor signatories to
the Collaboration Agreement and which would render them having no
option but to stream on the Plaintiff's platform in order to remain active
and able to participate in tournaments. This would be enforcement of the
positive covenant of an agreement against them which is not permissible
in law. The decision of this Court in Jet Airways (supra), Mark Percept
(supra) and Ambalal Sarabhai Enterprises (supra) as well as case of the
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English Courts in Page One Records Ltd. (supra) is apposite. Thus,
injunction cannot be granted in aid of the final relief of specific
performance which in my prima facie view cannot be granted on the
finding that the Collaboration Agreement is determinable. Further, this
Court cannot enforce specific performance in favour of a Plaintiff where it
is held that the Plaintiff has violated essential terms of the contract as I
have prima facie held in the present case. The Plaintiff has alternate
remedy of damages which have been quantified and thus, in my prima
facie view no case is made out for grant of injunction as has been sought
in prayer clauses (h) and (i) of the Interim Application which have been
pressed.
67 Though there have been issues raised by Defendant No.1 as
to the Plaintiff not approaching this Court with clean hands and seeking
to mislead this Court, in view of my prima facie findings that no relief as
sought for by the Plaintiff can be granted, it is not necessary to consider
these issues.
68 Interim Application is accordingly disposed of. There is no
order as to costs.
(R.I. CHAGLA, J.)
Digitally
signed by
WAISHALI
WAISHALI SUSHIL
SUSHIL WAGHMARE
WAGHMARE Date:
2022.12.06
17:00:33
Waghmare 56/56 +0530
