Bombay High Court
Schenker India Pvt Ltd vs Skaps Industries India Private Limited on 1 August, 2025
2025:BHC-OS:12401
Neeta Sawant COMAPL-11922-2025-FC
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMMERCIAL APPEAL (L) NO. 11922 OF 2025
IN
INTERIM APPLICATION (L.) No. 10415 OF 2024
IN
COMMERCIAL SUIT (L.) NO. 8875 OF 2024
Schenker India Pvt. Ltd. ....Appellant
(Original Plaintiff)
: Versus :
SKAPS Industries Pvt. Ltd. ....Respondent
(Original Respondent)
Mr. Virag Tulzapurkar, Senior Advocate with Ms. Naira Jeejebhoy,
Mr. Mohit Goel, Mr. Siddhant Goel, Ms. Aishna Jain, Ms. Karmanya Dev
Sharma, Mr. Ishaan Pratap Singh, Ms. Meghana Rao, and Ms. Mahek
Saudagar i/by. Mr. Yash J. Jariwala, for the Appellant.
Mr. Ashish Kamat, Senior Advocate, with Ms. Simantini Mohite,
Mr. Abhinav Mathur, Mr. Lokesh Pavaskar and Ms. Priyanka C. i/by. Chir
Amrit Legal LLP, for the Respondents.
CORAM : ALOK ARADHE, CJ. &
SANDEEP V. MARNE, J.
Reserved On : 25 July 2025.
Pronounced On : 1 August 2025.
Page No.1 of 29
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Neeta Sawant COMAPL-11922-2025-FC
JUDGMENT :
- (Per Sandeep V. Marne, J.)
1) This Appeal is filed under the provisions of Section 13
(1-A) of the Commercial Courts Act, 2015 challenging the order
dated 26 March 2025 passed in Interim Application (L.) No.
10415/2024 filed in Commercial Suit (L.) No. 8875/2024. By the
impugned order, the learned Single Judge of this Court has rejected
the prayer of the Appellant/Plaintiff for temporary injunction to
restrain the Defendant from exporting cargo through freight
forwarders (carriers) other than the Plaintiff and from breaching the
terms of or acting contrary to the Transportation Services Agreement
dated 5 January 2022. The Appellant had also sought a direction
against the Defendant to secure the amount of Compensatory Freight
Charges (CFC) claimed in the suit. Since the application for
temporary injunction filed under Order XXXIX Rules 1 and 2 of the
Code of Civil Procedure, 1908 (the Code) is rejected, the Appellant
has filed the present Appeal.
2) A brief factual narration of the case is stated thus:
Plaintiff claims to be one of the world's leading global logistic
providers. The Defendant is engaged in manufacture and
distribution of wide array of textile products, which are geosynthetic
products and technical textiles made from extruded materials (geo-
textiles). The Defendant desired to engage services of the Plaintiff for
exporting geo-textiles to USA. Parties executed Transportation
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Services Agreement (TSA) on 5 January 2022, under which Plaintiff
agreed to provide freight forwarding services to the Defendant for a
period of 3 years from 1 May 2022 to 30 April 2025. Clause-4.5 of the
TSA provides for guaranteed volume commitment throughout the
entire contract period as 10 containers of 40 feet high cube per
calendar week for the port pairs as captured in Exhibit-A to the TSA.
The clause further provided that in the event of Defendant not
providing the cargo for movement in accordance with the agreed
quantity, it shall be liable to pay CFC for the difference against
weekly continuation as specified in the said Clause. It appears that
from May 2022 till December 2022, parties performed their respective
obligations under the TSA. From December 2022, the Defendant
could not supply the agreed volume of cargo for transportation to
the Plaintiff. Plaintiff accordingly raised invoices for payment of
CFC. By letter dated 8 April 2023, Defendant invoked Clause-4.3 of
the TSA on the ground that by virtue of the Build America Buy
America Act (BABA Act), shipment of geo-textiles to USA by
Defendant had become impossible which constituted a force majure
event. Plaintiff responded vide letter dated 8 May 2023 and disputed
the claim of the Defendant. Defendant issued notice dated
27 June 2023 reiterating the contents of the first letter and in the
above background, Plaintiff has filed Commercial Suit (L.) No.
8875/2024 seeking specific performance of TSA dated 5 January 2022.
Plaintiff has also sought recovery of CFC from the Defendant. In the
suit, Plaintiff filed Interim Application (L.) No. 10415/2024 seeking
temporary injunction under Order XXXIX Rules 1 and 2 read with
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Section 151 of the Code and sought following prayers (a) restraining
the Defendant from exporting cargo through any other
carrier/transporter and from committing breach of TSA, (b) to render
accounts and (c) to secure amount of USD 3,445,470.00 as well as
monthly CFC from the date of filing of suit.
3) Defendant appeared in the suit and opposed the
application for temporary injunction by filing Affidavit-in-Reply.
After hearing both the sides, the learned Single Judge has proceeded
to dismiss Plaintiff's application for temporary injunction vide order
dated 26 March 2025, which is the subject matter of challenge in the
present Appeal.
4) Mr. Tulzapurkar, the learned Senior Advocate appearing
for the Appellant/Plaintiff would submit that the learned Single
Judge has grossly erred in rejecting Plaintiff's application for
temporary injunction. That the learned Single Judge has recorded
findings in favour of the Plaintiff in para-28 of the judgment holding
that clause-4.5 of the TSA is in the nature of 'take or pay' clause and
that a prima-facie case is made out by the Plaintiff of termination of
TSA being unjustified. That the learned Single Judge has also not
accepted Defendant's defence of invocation force majuere clause. That
on these findings, injunction in Plaintiff's favour ought to have been
granted.
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5) Mr. Tulzapurkar would further submit that the learned
Single Judge has grossly erred in holding that Plaintiff's suit is
essentially for recovery of liquidated damages. That the learned
Single Judge failed to appreciate the position that Plaintiff's claim for
recovery of CFC is actually towards specific performance of contract.
That payment of CFC is an alternate method of performance of
contract. That specific performance of contract is in two parts viz.
Defendant's obligation to pay CFC from December 2022 till the date
of filing of the suit and its continued obligation to pay CFC post
filing of the suit. That Plaintiff was therefore entitled to seek
injunction against the Defendant under Order XXXIX Rule 2 by
restraining it from committing breach of the contract by securing
amount of CFC payable towards performance of contract. That
therefore the learned Single Judge ought to have granted the relief of
provision of security by the Defendant for breach of contract
committed by it in not paying CFC to the Plaintiff. That Defendant
has contractually agreed to pay CFC to the Plaintiff in the event of its
failure to make available agreed volume of cargo for transportation.
That the law recognizes the principle that a clause providing for
payment of specified sum, in the event of inability to perform
contractual obligation, becomes alternate way of performance of
contract. In support, he would rely upon judgment of the Apex
Court in M. L. Devender Singh and others Versus. Syed Khaja 1. That
though the learned Single Judge has recognised the position that
Plaintiff is seeking specific performance of TSA from the date of
filing of the suit till the term of TSA, it has erroneously held that the
(1973) 2 SCC 515
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claim for recovery of CFC is by way of liquidated damages. That in
aid of Plaintiff's prayer for specific performance, the learned Single
Judge ought to have allowed the prayer of the Plaintiff for provision
of security by the Defendant for agreed amount of CFC under Rule 2
of Order XXXIX of the Code. It is submitted that the learned Single
Judge grossly erred in rejecting Plaintiff's prayer for temporary
injunction on the ground of delay without appreciating the position
that the Defendant had continuous obligation of payment of CFC
under the TSA as on the date of filing of the suit. That even if the
aspect of delay could be used for non-grant of injunction qua the
amount of CFC prior to the date of filing of the suit, the ground of
delay would not come in Plaintiff's way qua Defendant's continuous
obligation of payment of CFC after the date of filing of the suit.
6) Mr. Tulzapurkar would submit without prejudice that
even if Plaintiff's claim for recovery of CFC is treated as for damages,
the same can only be upto the date of institution of the suit. That post
institution of the suit, the claim is clearly for specific performance of
contractual obligation of payment of CFC. That claim for recovery of
CFC is not a claim for damages but a claim for specific performance.
It is not a consequence arising out of breach of contract but a specific
contractual term. That there is no delay on facts in respect of the
claim post institution of suit. Alternatively, even if any delay is to be
assumed, the same could have no consequence on Plaintiff's
entitlement for injunction as Defendant has not suffered any
prejudice on account of such delay. That the learned Single Judge has
grossly erred in relying on judgment of the Apex Court in Rajesh
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Kumar Versus. Anand Kumar and others2. That Plaintiff satisfied the
trinity test for grant of temporary injunction. In support of the
contention that the Court has broad discretion to issue necessary
orders to prevent breach of contract, as well as for deposit of security,
reliance is placed on judgment of Division Bench of Calcutta High
Court in Kailash Sadhu Versus. Sushil Kumar Agarwal3. That
Defendant has no possible defence and that therefore an order for
provision of security under Order XXXIX Rule 2 read with Section
151 of the Code ought to have been made and in support reliance is
placed on Valentine Maritime Ltd. Versus. Kreuz Subsea Pte
Limited and another4. That there is no impediment under the Code
from preventing the ends of justice being defeated by dishonest
parties and in support reliance is placed on Division Bench judgment
of this Court in Rajaram Chavan Real Estate Pvt. Ltd. Versus.
Mohammed Anwar Kutubuddin Siddiqui and others 5. Reliance is
also placed on judgments in Mahavir Khandsari Sugar Mill and
others Versus. Maharashtra State Electricity Board and others 6,
White and Carter (Councils) Ltd. Versus. McGregor 7, Amoco (U.K.)
Exploration Company (A Company incorporated in Delaware, USA)
and others Versus. Teesside Gas Transportation Limited 8 and
Maharashtra State Electricity Board Versus. Shashibala
Jagmohandas Saraf (L.R.)9. That the learned Single Judge has failed
to appreciate distinction between pre-suit period and post-suit
2024 SCC OnLine SC 981
2005 SCC OnLine Cal 101
2021 SCC OnLine Bom 75
2023 SCC OnLine Bom 1931
1993 Mh.L.J. 544
[1962] A.C. 413
[2001] UKHL 18
1981 SCC OnLine Bom 165
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period claims and has wrongly clubbed them together for damages.
In support, reliance is placed on judgments in the State of Kerala
Versus. Cochin Chemical Refineries Ltd.10 and P. R. & Co. Versus.
Bhagwandas Chaturbhuj11. On above broad submissions,
Mr. Tulzapurkar would pray for setting aside the order passed by the
learned Single Judge and for grant of relief of provision of security
by the Defendant for performance of contractual obligation of
payment of CFC.
7) The Appeal is opposed by Mr. Kamat, the learned Senior
Advocate appearing for the Respondent/Defendant. He would
submit that the bare reading of the plaint clearly indicates that
Plaintiff's claim is for recovery of liquidated damages. He would rely
upon the provisions of Sections 73 and 74 of the Indian Contract Act,
1872 (the Contract Act) in support of his contention that the figure
indicated in the TSA would, at the highest, constitute genuine pre-
estimate of damages under Section 74 of the Contract Act and that
the Plaintiff will have to prove sufferance of damages by leading
evidence as held by the Apex Court in Kailash Nath Associates
Versus. Delhi Development Authority and another 12. That the entire
claim of the Plaintiff upto 30 April 2025 is for liquidated damages as
specifically admitted in para-7(f) of the plaint. That the findings
recorded by the learned Single Judge in paragraph-28C about
specific performance of TSA from the date of filing of the suit till
term of the TSA is referable to grant of business of transportation and
1968 SCC OnLine SC 240
1909 SCC OnLine Bom 19
(2015) 4 SCC 136
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not to payment of CFC. That since specific performance of TSA for
grant of business of transportation can no longer be granted on
account of expiry of term of TSA, there is no question of granting any
direction for security for performance of the contract. That TSA
cannot otherwise be specifically enforced as it is in the nature of
personal service requiring continuous supervision of the Court and
is also determinable. Reliance is placed on judgments in Indian Oil
Corporation Ltd. Versus. Amritsar Gas Service and others 13 and
Government of Goa, Represented by the Director of Tourism Versus.
Jaisu Shipping Co. Pvt. Ltd.14 That since no final relief can be
granted, there is no question of grant of any temporary injunction
and in support, reliance is placed on Percept D'Mark (India) (P) Ltd
Versus. Zaheer Khan and another 15. That there are admissions in the
plaint about the claim being for liquidated damages which are
judicial admissions requiring waiver of proof. Reliance is placed on
Nagindas Ramdas Versus. Dalpatram Ichharam alias Brijram and
others16 and T. D. Vivek Kumar and another Versus. Ranbir
Chaudhary17. That even otherwise, Appellant's claim for CFC
constitutes a claim for damages as held in Maharashtra State
Electricity Board Versus. Shashibala Jagmohandas Saraf (L.R.) 18.
That claim for liquidated damages is not a debt unless decree is
passed as held in Union Of India Versus. Raman Iron Foundry 19.
That there can be no temporary injunction in aid of damages claimed
(1991) 1 SCC 533
(2010) 6 Mah LJ 612
(2006) 4 SCC 227
(1974) 1 SCC 242
2023 SCC OnLine SC 526
1981 SCC OnLine Bom 165
(1974) 2 SCC 231
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as held in Multichannel (India) Limited Versus. Kavitalaya
Productions Pvt. Limited20. That provisions of Order XXXIX Rule 2
cannot be relied upon to obviate requirements under Order XXXVIII
Rule 5. That power of the Court under Order XXXVIII Rule 5 is
drastic and extraordinary and must be used sparingly and strictly in
accordance with the Rules as held in Raman Tech. & Process Engg.
Co. and another Versus. Solanki Traders21 and Trent Limited Versus.
Mr. Nanasaheb Govindrao Aher & Ors. 22 That even otherwise the
trinity test is not satisfied in the present case. On above broad
submissions, Mr. Kamat would pray for dismissal of the Appeal.
8) Rival contentions of the parties now fall for our
consideration.
9) The Appeal is filed by the Plaintiff challenging the order
dated 26 March 2025 passed by the learned Single Judge of this Court
dismissing its application for temporary injunction during pendency
of the suit. The Interim Application was filed by the Plaintiff under
provisions of Order XXXIX Rules 1 and 2 of the Code. The prayers in
the Interim Application are extracted for facility of reference as
under :-
a) Pending the hearing and final disposal of the Suit, this Hon'ble Court be
pleased to restrain the Defendants and / or any associated/group/affiliate
companies of the Defendant including but not limited to the companies
mentioned in Exhibit C of the Agreement, and their principal officers,
directors, promoters, shareholders, managers, assigns, successors in interest,
1998-3-L.W.-613
(2008) 2 SCC 302
Arbitration Petition (L) No. 513 of 2017 decided on 1 August 2017. (OS)
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representatives, servants, agents, employees and / or any other person(s) on
their behalf from:
(i) Directly or indirectly exporting cargo through any freight-
forwarders/carriers other than the Plaintiff for the remaining term of
the Agreement; and
(ii) Directly or indirectly in any other manner breaching the terms of
or acting contrary to the Transportation Services Agreement dated 5
January 2022.
b) pending the hearing and final disposal of the Suit, this Hon'ble Court be
pleased to order and direct the Defendants to render accounts and disclose
on oath to the Plaintiff company:
(i) the names, shareholding and directorships of all
associated/group/affiliate companies of the Defendant including but
not limited to the companies mentioned in Exhibit C of the
Agreement, and their principal officers, directors, promoters,
shareholders, managers, assigns, successors in interest,
representatives, servants, agents, employees and / or any other
person(s) on their behalf through which the Defendant or any of them
are exporting geo-textiles to the United States of America;
(ii) the full particulars of all shipments of geo-textiles to the United
States made during the tenure of the Transportation Services
Agreement dated 5 January 2022 (i.e. from 1 May 2022 onwards) by
the Defendant and all associated/group/affiliate companies of the
Defendant including but not limited to the companies mentioned in
Exhibit C of the Agreement, and their principal officers, directors,
promoters, shareholders, managers, assigns, successors in interest,
representatives, servants, agents, employees and / or any other
person(s) on their behalf;
(iii) copies of all bills of lading or other documents evidencing the
contract of carriage pertaining to shipments of geo-textiles to the
United States made during the tenure of the Transportation Services
Agreement dated 5 January 2022 (i.e. from 1 May 2022 onwards) by
the Defendants and all associated/group/affiliate companies of the
Defendant including but not limited to the companies mentioned in
Exhibit C of the Agreement, and their principal officers, directors,
promoters, shareholders, managers, assigns, successors in interest,
representatives, servants, agents, employees and / or any other
person(s) on their behalf;
c) pending the hearing and final disposal of the Suit this Hon'ble Court be
pleased to order and direct the Defendant to jointly and severally secure the
Plaintiff by depositing before this Hon'ble Court or otherwise securing the
following amounts:
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(i) amount of USD 3,445,470.00 being the outstanding compensatory
charges payable for the months of December 2022 to February 2024
under the Transportation Services Agreement dated 5 January 2022
read with the Plaintiffs invoices (as exhibited 31 December 2022, 31
January 2023, 31 January 2023, 09 February 2023, 27 February 2023, 31
March 2023, 09 August 2023, 09 August 2023, 09 August 2023,09
August 2023, 09 August 2023, 16 August 2023, 26 September 2023, 05
October 2023, 31 October 2023, 30 November 2023, 26 December 2023,
01 February 2024 and 26 February 2024;
(ii) the compensatory charges payable on a monthly basis under the
Transportation Services Agreement dated 5 January 2022 from the
date of filing of the Suit till 30 April 2025;
10) It must be observed at the very outset that though the
Petitioner had sought interim injunction to restrain the Defendants
from exporting cargo through any other freight forwarder and/or
from committing breach of the TSA and for rendering of accounts,
what is mainly pressed before us is prayer clause (c) of the Interim
Application (L.) No. 10415/2024, in which the Appellant/Plaintiff had
sought a direction against the Defendant for securing of various
amounts during pendency of the suit. The reason why the Plaintiff
no longer presses for temporary injunction to restrain the Defendant
from exporting cargo or from breaching the terms and conditions of
the TSA is because the tenure of TSA has come to an end on
30 April 2025. The Plaintiff has accordingly pressed the present
Appeal only for the purpose of securing an order of temporary
injunction directing Defendants to provide for a security in respect of
the amounts due from the Plaintiff during pendency of the suit. This
relief is sought by the Plaintiff under the provisions of Rule 2 of
Order XXXIX of the Code.
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11) It must also be observed that the learned Single Judge
has made following prima-facie observations in favour of the Plaintiff
in the impugned order dated 26 March 2025 :-
28) After having considered the rival contentions as well as the
case law upon which reliance has been placed and the
pleadings, I find that I am unable to grant the Plaintiff interim
relief despite the fact that Mr. Tulzapurkar has made out a
compelling case that clause 4.5 of the TSA is in the nature of a
take or pay clause and that I am of the prima facie view that the
termination of the TSA is entirely unjustified. I say so because
while the Defendant's sole reason for invoking the force majeure
clause in the TSA was on account of the BABA Act, it is not in
dispute that (i) the BABA Act was enacted even before the TSA
was executed (ii) the BABA Act did not in any manner ban the
imports of Geo Textiles into the USA but only restricted the use
of imported Geo Textiles in federally funded infrastructure
projects in the USA; and (iii) the Defendant did not terminate
the TSA in November 2022 when the BABA Act come into force
but did so only in April 2023, which was 5 months thereafter. It
is thus that I prima facie find the termination of the TSA to be
entirely unjustified.
12) The learned Single Judge has thus held that Plaintiff has
made out a compelling case that clause-4.5 of the TSA is in the nature
of a 'take or pay' clause. The learned Single Judge has further held
that termination of the TSA is prima-facie unjustified. He has refused
to prima facie accept Defendant's pretext of coming into force of
BABA Act for discontinuance of cargo export to USA. However,
despite recording these prima-facie findings in favour of the
Appellant, the learned Single Judge has still proceeded to dismiss
Plaintiff's application for temporary injunction broadly on account of
the following factors :-
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(i) Plaintiff admissions in the Plaint that its claim is for
liquidated damages and impermissibility to take
inconsistent stand that the suit is for recovery of CFC as
debt in a suit for specific performance.
(ii) Nature of Plaintiff's claim for recovery of CFC as
liquidated damages, which is yet to crystalize into a debt.
(iii) Non-exclusivity of arrangement for transportation of
cargo between parties.
(iv) Pressing of application for injunction at the fag end of
TSA's tenure.
(v) Impermissibility to grant injunction on account of
alternate remedy of payment of compensation/damages.
(vi) Delay in seeking injunction as Plaintiff did not approach
the Court immediately after Defendant stopped
exporting the cargo.
13) It would be apposite to reproduce findings recorded by
the learned Single Judge for declining temporary injunction, which
read thus :-
A. First, while the Plaintiff's submissions were entirely premised on the
basis that clause 4.5 of the TSA was a take-or-pay clause breach of
which (by the Defendant) would entitle the Plaintiff to payment of the
compensatory freight charges (specified therein) as a debt, the Plaint is
entirely bereft of any such pleading. The case pleaded in the Plaint is
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infact to the contrary, as is evident from the following paragraphs of
the Plaint, viz.
i. In paragraph 3
"Cause of Action
............The Defendant's continuing failure and / or refusal to comply
with its obligation to provide a minimum guaranteed volume of
containers for transportation under the Agreement or, in the
alternative, to pay the compensatory charges due under the Agreement
is a breach of the Agreement. On account of the Defendant's breach of
the Agreement, the Plaintiff has and is continuing to suffer loss. The
total loss being suffered by the Plaintiff is not easily quantifiable.
Accordingly, the Plaintiff is claiming liquidated damages as set out in
the Agreement for the period of breach and, further, is seeking to
specifically enforce the Agreement against the Defendant for the
remainder of its term............."
ii. In paragraph 37
"............. The Plaintiff is entitled to recover dead freight charges from
the time that the Defendant began acting in breach of the Agreement,
and until the duration of the Agreement as that represents the genuine
pre-estimate of the damages which the Plaintiff would be incurred due
to the breach of the Agreement by the Defendants".
iii. In paragraph 38
".............. In any case, the Plaintiff has suffered actual, direct and
indirect damages, which are attributable to the Defendants but not
easily quantifiable, and therefore the Plaintiff is entitled to the
liquidated damages as set out in the Agreement."
B. Second, apart from clause 4.5, there is no other clause in the TSA
which mentions a liquidated amount to be paid by the Defendant to
the Plaintiff in case of breach of the TSA by the Defendant. Thus, given
the specific pleadings in the Plaint (reproduced above), it would, in my
view, therefore not be open for the Plaintiff to contend to the contrary
or take a stand which is inconsistent with what has been expressly
pleaded in the Plaint. Hence, I find the Defendant's reliance upon the
judgement of the Hon'ble Supreme Court in the case of Nagindas
Ramdas to be well founded. Given that the Plaintiff has not sought to
recover compensatory freight charges as a debt due in praesenti but
has in fact sought to recover the compensatory freight charges as
damages, the judgements in the case of White and Carter (Councils)
Ltd. as also in the case of Cochin Chemical Refineries Ltd and P. R. &
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Co. will be of no assistance to the Plaintiff. Equally, the judgements in
the case of Indiabulls Properties Ltd. Properties Ltd, Amoco (U.K.)
Exploration Co. Ltd. & Ors, La-Fin Financial Services Ltd., Adhunik
Steels Ltd., and Kalidas Sadhu would also be of no assistance to the
Plaintiff.
C. Third, The Plaintiff's reliance upon paragraphs 35 and 39 of the
Plaint read with Prayer clause 50 (b), (d) and (e) to contend that the
compensatory freight charges are sought to be recovered as a "debt"
since the Plaintiff has sought specific performance of the TSA, is also
entirely misplaced. Firstly, a conjoint reading of paragraphs 35 and 39
of the Plaint would make it clear that the Plaintiff is seeking specific
performance of the TSA only from the date of filing the Suit till the
term of the TSA and is seeking to recover the compensatory charges as
damages for the period prior to filing of the Suit. Secondly, this
contention is also contrary to what has been pleaded by the Plaintiff in
paragraph 37 and 38 of the Plaint (quoted above). A plain reading of
paragraphs 35 and 39 of the Plaint would therefore not, in my prima
facie view ipso facto make the Plaintiff's claim one which is for
enforcement of debt due under the TSA. A plain reading of the Plaint
as a whole clearly suggests that the Plaintiff has sought to recover
compensatory freight charges as damages and not as a debt which is
presently due. It is well settled that the claim for the damages does not
crystallise into a debt until such time that a decree is passed in favour
of the Plaintiff.
D. Fourth, insofar as prayer clauses (a) and (b) of Interim Application
are concerned, I find that the question of granting any interim relief
does not arise essentially for the following reasons. (i) the TSA did not
stipulate that the Defendant would exclusively ship Geo Textiles or, for
that matter, all cargo exported to the USA only through the Plaintiff,
(ii) the Plaintiff, who has admittedly not received any cargo since
December 2022, has only sought an injunction against the Defendant
shipping the Geo Textiles goods through a third party carrier at the fag
end of the TSA and, (iii) Section 41(h)28 of the Specific Relief Act, 1963
bars the grant of an injunction in cases when an equally efficacious
remedy is available. In the present case, admittedly, the Plaintiff has
quantified and claimed damages occassioned on account of breach of
the TSA. Thus, all these factors, even when considered individually,
would, in my view, disentitle the Plaintiff to interim relief in terms of
prayer clauses (a) and (b).
E. Fifth, on the aspect of delay, the judgment in Kewal Kiran Clothing
Ltd. would be of no assistance to the Plaintiff since it was rendered in
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the context of a trademark infringement Suit, wherein the cause of
action is of a continuous nature. Equally, the judgements in
Madamsetty Satyanarayana, Rajiv Sanghavi and Lindsay Petroleum
Co. would also be of no assistance to the Plaintiff since, the Plaintiff
having sought specific performance of the TSA, it was incumbent upon
the Plaintiff to have approached this Court with far greater dispatch, as
held by the Hon'ble Supreme Court in the case of Rajesh Kumar. The
Plaintiff has, in my view, not done so and hence is not entitled to
interim relief in terms of prayer clause (a) and (b).
14) So far as the reasons recorded by the learned Single
Judge in para 28-D of the Order are concerned, no serious grievance
is raised before us as Plaintiff is now not pressing for injunction in
terms of prayer clauses (a) and (b). Since TSA's tenure is over on
30 April 2025, Plaintiff cannot now seek injunction against Defendant
from transporting cargo through other carrier. Plaintiff's entire thrust
now is on seeking security from the Defendants to cover the claim
for recovery of CFC, in respect of which, the Plaintiff believes that
Defendant has no valid defence.
15) Mr. Tulzapurkar has clarified during the course of his
submissions that the relief of security during pendency of suit is not
sought by Plaintiff under provisions of Order XXXVIII Rule 5 of the
Code. He would submit that since Plaintiff's claim in the suit is for
specific performance of contract for payment of CFC, temporary
injunction for provision of security is sought under the provisions of
Order XXXIX Rule 2 of the Code. Therefore, for deciding Plaintiff's
entitlement for injunction in terms of prayer clause (c) of the
Application, it would be necessary to consider the provisions of
Order XXXIX Rule 2 of the Code, which provide thus :-
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2. Injunction to restrain repetition or continuance of breach.-
(1) In any suit for restraining the defendant from committing a
breach of contract or other injury of any kind, whether
compensation is claimed in the suit or not, the plaintiff may, at
any time after commencement of the suit, and either before or
after judgment, apply to the Court for a temporary injunction to
restrain the defendant from committing the breach of contract or
injury complained, of, or any breach of contract or injury of a
kind arising out of the same contract or relating to the same
property or right.
(2) The Court may by order grant such injunction, on such terms
as to the duration of the injunction, keeping an account, giving
security, or otherwise as the Court thinks fit.
16) Perusal of the provisions of Rule 2 of Order XXXIX
would indicate that the same empowers the Court to temporarily
restrain the Defendant from committing breach of contract or injury
complained of in a suit filed for restraining the Defendant from
committing breach of contract or other injury, whether or not
compensation is claimed in such suit. Sub-rule (2) of Rule 2
empowers the Court to grant injunction by imposing terms, inter-alia
of giving security. Thus, Court's power to direct a party to give
security under sub-Rule (2) of Order XXXIX Rule 2 is essentially to
be exercised only while granting injunction under sub-Rule (1). This
follows that in a case where the Court does not grant injunction
under sub-Rule (1), there is no question of making an order for
security under sub-Rule (2). This is because Court's power to direct a
party to give security under sub-Rule (2) is clearly dependent on an
order of injunction passed under sub-Rule (1). The condition of
provision for security can be imposed by the Court only in aid of
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grant of temporary injunction under sub-Rule (1). Therefore, in
absence of an order of injunction being made under sub-Rule (1),
there is no question of the Court independently exercising power
under sub-Rule (2) by directing the party to give security. In other
words, Court's power under sub-Rule (2) of Order XXXIX Rule 2 to
impose condition of provision of security is not an independent
standalone provision and the occasion for imposition of such
condition does not arise when Court does not grant injunction in
terms of sub-Rule (1). Sub-rule (2) is thus not an independent
provision to secure Plaintiff's claim for performance of contract
during pendency of the suit. An order directing provision of security
can only be made where the Court thinks it appropriate to pass an
order of injunction restraining the Defendant from committing
breach of contract or injury to the Plaintiff. In a case where the Court
either refuses to grant injunction or where there is no occasion for
grant of injunction under sub-Rule (1), the question of making an
order for grant of security under sub-Rule (2) would not arise.
17) As observed above, in the present case, the Defendant
has stopped exporting goods through the Plaintiff from December
2022. The suit was filed by the Plaintiff on/or about 11 March 2024
and by the time the Plaintiff's application for temporary injunction
was decided, the TSA's tenure was coming to an end by
30 April 2025. The impugned order has been passed on
26 March 2025 i.e. few days before the tenure of TSA was to come to
an end on 30 April 2025. Plaintiff's argued case before us is that the
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security was sought by the Plaintiff for ensuring performance of
contractual obligation of Defendant to pay CFC under the TSA.
However, even that alleged contractual obligation of the Defendant
came to an end on 30 April 2025. Therefore, after 30 April 2025, there
would have been no occasion for the Court to direct the Defendant to
continue performing alleged contractual obligation of payment of
CFC to the Plaintiff. Since application for temporary injunction was
pressed at the fag end of the TSA's tenure on 26 March 2025, the
question of grant of any injunction under sub-Rule (1) of Order
XXXIX Rule 2 did not arise. If there was no occasion for the Court to
grant of injunction in terms of sub-Rule (1) of Order XXXIX Rule 2, in
our view, there was no question of the Court even considering grant
of any order securing amount from the Defendants under sub-Rule
(2).
18) As observed above, sub-rule (2) of Order XXXIX Rule 2 is
not a standalone provision empowering the Court to direct provision
of security by the Defendant by way of temporary injunction. The
power under sub-Rule (2) of requiring Defendant to give security is
only in the aid of grant of injunction under sub-Rule (1). This is
because the relief which the Court can grant under sub-Rule (2) can
only be in the form of a condition while granting injunction under
sub-Rule (1). This is clear from use of the opening words of sub-Rule
(2) that 'The Court may by order grant such injunction, on such terms
....' 'Such injunction' means the injunction under sub-Rule (1).
Therefore 'such terms' can be imposed under sub-Rule (2) only when
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the Court grants 'such injunction' under sub-Rule (1). Grant of
injunction under sub-rule (1) is thus sine qua non for imposition of
condition of providing security under sub-Rule (2). If there is no
injunction under sub-Rule (1), there is no question of imposing any
condition under sub-Rule (2). This is the reason why sub-rule (2)
cannot be an independent standalone provision requiring the
Defendant to secure the amount payable to the Plaintiff. Such
standalone provision can be traced in the provisions of Order
XXXVIII Rule 5, under which the Court can direct the Defendant to
furnish security. The provision reads thus :-
5. Where defendant may be called upon to furnish security for production of
property--
(1) Where, at any stage of a suit, the Court is satisfied, by affidavit or
otherwise, that the defendant, with intent to obstruct or delay the execution
of any decree that may be passed against him,--
(a) is about to dispose of the whole or any part of his property, or
(b) is about to remove the whole or any part of his property from the local
limits of the jurisdiction of the Court,
the Court may direct the defendant, within a time to be fixed by it, either to
furnish security, in such sum as may be specified in the order, to produce and
place at the disposal of the Court, when required, the said property or the
value of the same, or such portion thereof as may be sufficient to satisfy the
decree, or to appear and show cause why he should not furnish security.
(2) The plaintiff shall, unless the court otherwise directs, specify the property
required to be attached and the estimated value thereof.
(3) The Court may also in the order direct the conditional attachment of the
whole or any portion of the property so specified.
(4) If an order of attachment is made without complying with the provisions
of sub-rule (1) of this rule such attachment shall be void.
Thus, Order XXXVIII Rule 5 is a provision under which a Plaintiff
can apply to the Court seeking direction against the Defendant inter
alia for provision of security. Such security under Order XXXVIII
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Rule 5 is not dependent on an order of temporary injunction, which
is the case under sub-Rule (2) of Order XXXIX Rule 2.
19) However, in the present case, the Plaintiff did not file
application under Order XXXVIII Rule 5 but merely sought security
in respect of its alleged claim for specific performance of TSA under
Order XXXIX Rule 2. We are therefore of the view that once the
occasion for grant of temporary injunction to restrain the Defendant
from committing breach of TSA (even for payment of CFC) had
almost elapsed as on the date of passing of impugned order, there
could have been no occasion for the learned Single Judge to either
consider or grant an order for providing security under sub-Rule (2)
of Order XXXIX Rule 2.
20) Even otherwise, we are in broad agreement with the
reasonings recorded by the learned Single Judge while rejecting
Plaintiff's application for temporary injunction. It is strenuously
submitted by Mr. Tulzapurkar that the learned Single Judge has
erred in understanding the exact frame of the suit by treating the
same as a claim for liquidated damages. It is contended before us
that the TSA provided for alternate manner of performance and that
therefore contractual obligation to pay CFC is just another form of
performance of the contract, rather than it being a penalty for failure
to export agreed volume of cargo. Reliance is placed on judgment of
the Apex Court in M.L. Devender Singh (supra) in support of the
contention that mere reflection of sum payable in the event of breach
of promise does not make such sum a penalty or liquidated damages
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and promise to pay such specified sum becomes an express contract
to be performed by the parties. It is held in para-13 of the judgment
as under :-
13. If the Legislative intent was that the mere proof that a sum is
specified as liquidated damages or penalty for a breach should be
enough to prove that a contract for the transfer of immovable property
could be adequately compensated by the specified damages or penalty,
Section 20 of the old Act will certainly become meaningless. It is true
that Section 20 of the old Act does not mention the case of an express
contract giving an option to a promisor to either carry out the contract
to convey, or, in the alternative, to pay the sum specified, in which case
the enforcement of the undertaking to make the payment would be an
enforcement of the contract itself and no occasion for rebutting the
presumption in the explanation to Section 21 would arise. In such cases
the contract itself is specifically enforced when payment is directed in
lieu of the conveyance to be made.
21) In the facts of some other case, what is sought to be
contended by Mr. Tulzapurkar may have been correct and it is
possible for a Court to hold that promise to pay CFC is an alternate
method of performance. In every case agreement to pay specified
sum upon failure to perform main contract, may not be in the nature
of damages and in a given case, such agreement can also be an
alternate form of performance of contract. However, in the facts of
the present case, we are prima facie unable to hold so, at least at this
stage. There is serious dispute amongst parties about the nature of
obligation to pay CFC, which is the hotbed of controversy. It is
Defendant's contention that contractual clause for payment of CFC is
nothing but penalty/liquidated damages payable under Section 74 of
the Contract Act. On the other hand, it is contended by the Plaintiff
that the said contractual obligation to pay CFC is a mere alternate
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method of performance of contract and that therefore Plaintiff's
claim to recover CFC from Defendant is nothing but a claim for
specific performance of TSA. In our view, however, it is not necessary
to delve deeper into this controversy on account of pleadings in the
Plaint. The learned Single Judge has already culled out averments of
para-3 of the plaint, in which it is specifically pleaded that
'Accordingly, the Plaintiff is claiming liquidated damages as set out in the
Agreement for the period of breach'. Similar pleadings are repeated in
paras-37 and 38 of the plaint where Plaintiff itself has given flavour
of liquidated damages to its claim. To make things worse, para-7(f) of
the plaint contains following pleadings :-
This would be calculated on the basis of the difference between the
minimum guaranteed cargo commitment and the actual cargo
supplied and in the following manner:
i) USD 6500 per 40 feet container for year 1 being 01 May 2022 to
30 April 2023;
ii) USD 6000 per 40 feet container for year 2 being 01 May 2023
to 30 April 2024; and
iii) USD 5500 per 40 feet container for year 3 being 01 May 2024
to 30 April 2025.
These dead freight charges were a genuine and reasonable pre-
estimate of the loss and damages that the Plaintiff would suffer in the
event of the Defendant breaching its minimum guaranteed
commitment under the Agreement, in light of the nature and structure
of the transaction including the further commitments with third parties
and other arrangements that the Plaintiff was making in order to
provide the Services under the Agreement for the agreed term.
(emphasis and underlining added)
22) Strenuous attempts are made before us to distinguish
Plaintiff's claim into two categories of (i) the pre-suit claim and (ii)
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post suit claim, by suggesting that the pre-suit claim could be treated
as claim for damages but claim post suit is for specific performance
of contractual obligation. However, the pleadings in para-7(f) contain
a clear admission that the entire claim comprising of 'These dead
freight charges' is towards 'genuine and reasonable pre-estimate of the loss
and damages'. The word 'these' is used in para 7(f) of the plaint to
describe whole of claim for the period from 1 May 2022 to 30 April
2025. Thus, what is sought to be argued before us is contrary to
pleadings in the Plaint.
23) In our view, Plaintiff has made judicial admissions in the
pleadings and the learned Single Judge has rightly relied upon the
judgment of the Apex Court in Nagindas Ramdas (supra), in which
it is held that judicial admissions, which are admissions given in
pleadings, stand on a higher footing than evidentiary admissions
and constitute waiver of proof. Plaintiff cannot now give a different
flavour to its claim, whole of which is admitted to be a claim for
liquidated damages in the plaint. Reliance in this regard by the
Defendant on the judgment of T. D. Vivek Kumar (supra) is also
apposite.
24) We are therefore of the prima-facie view that Plaintiff itself
has described its claim as the one for liquidated damages in the
plaint and cannot now take a volte face and contend that its claim post
institution of the suit is for specific performance of contractual
obligation to pay CFC. In our view, once it is held that the Plaintiff's
pleaded case in the plaint is not for specific performance of
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contractual obligation to pay CFC, but the same is for liquidated
damages, Plaintiff faces twin difficulties. Firstly, it's very prayer for
stopping Defendant from committing breach of the contract under
Order XXXIX Rule 2 loses the basis. If the claim is not for specific
performance of contractual obligations to pay CFC, there is no
question of restraining the Defendant from committing breach of
such contractual obligation by making an order under Order XXXIX
Rule 2. Since such an injunction cannot be granted in the first place
under sub-rule (1) of Order XXXIX Rule 2, the question of imposing
any condition for grant of such injunction under sub-rule (2) does
not even arise. Secondly, as rightly held by the learned Single Judge,
Plaintiff's claim for liquidated damages would crystallize into a debt
only when a decree is passed in its favour. Therefore, there is no
question of making any provision for security in favour of the
Plaintiff till its claim for liquidated damages is determined at the
time of final hearing of the suit.
25) Plaintiff itself has pleaded in para-7(f) of the plaint that
the freight charges are genuine and reasonable pre-estimate of loss
and damages that the Plaintiff has suffered. Therefore, the provisions
of Section 74 of the Contract Act would come into play and as held
by the Apex Court in Kailash Nath Associates (supra), the Plaintiff
will have to lead evidence to prove actual cause of loss. This is yet
another reason why no order of injunction can be made in favour of
the Plaintiff under sub-Rules 1 or 2 of Order XXXIX Rule 2.
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26) We are also in agreement with the reasonings adopted by
the learned Single Judge that Plaintiff did not approach the Court
with sufficient alacrity for seeking injunctive relief against the
Defendant. As pleaded in the Plaint, the Defendant stopped
exporting cargo through the Plaintiff from December 2022. In that
view of the matter, if Plaintiff really wanted to stop the Defendant
from exporting its cargo through third party transporters, it should
have applied for injunction immediately after December 2022.
27) Even if it is to be momentarily assumed that Plaintiff's
claim for recovery of CFC under TSA is a claim for specific
performance, Plaintiff has not shown urgency in approaching the
Court for grant of injunctive relief in the form of security in its
favour. It is only at the fag end of TSA that Plaintiff pressed its
application for temporary injunction. The tenure of TSA was coming
to an end on 30 April 2025 whereas order refusing injunction is
passed by the learned Single Judge on 26 March 2025. Plaintiff thus
whiled away time and did not file suit nor moved an application for
temporary injunction with requisite dispatch. The learned Single
Judge has rightly held the factor of delay against the Defendant.
Though strenuous efforts are made to distinguish the judgment of
the Apex Court in Rajesh Kumar (supra), in our view factor of delay
can be held against the Plaintiff without considering the ratio of the
judgment in Rajesh Kumar. Plaintiff contends that the factor of delay
needs to be ignored in absence of cause of any prejudice to the
Defendant and reliance in this regard is placed on the judgment of
the Apex Court in Madamsetty Satyanarayana Versus. G. Yellogi
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Rao23. In our view, the said judgment would have no application to
the peculiar facts of the present case, where the tenure of TSA was
coming to an end on 30 April 2025 and pressing the application for
temporary injunction at that point of time was itself a sufficient
reason for declining the injunctive relief.
28) After considering the overall conspectus of the case, we
are of the view that no case is made out for interference in a well-
considered decision of the learned Single Judge. The use of discretion
by the learned Single Judge in denying injunction in Plaintiff's favour
is not arbitrary, capricious or perverse nor has the learned Single
Judge ignored the settled law regulating grant or refusal of
temporary injunction. In Full Bench Judgment of this Court in UTO
Netherlands B.V. & Anr. Versus. Tilaknagar Industries Ltd .24
authored by one of us (The Chief Justice) it is held as under :-
The scope and ambit of an appeal from an order passed by the trial Judge has
already been delineated by the Supreme Court in WANDER LTD. (SUPRA),
SHYAM SEL AND POWER LIMITED (SUPRA) and RAMAKANT
AMBALAL CHOKSI (SUPRA). In view of aforesaid enunciation of law by
Supreme Court, it is evident that the appellate court will not interfere with
exercise of discretion of Court of first instance and substitute its own
discretion except where the discretion has been shown to have been exercised
arbitrarily or capriciously or perversely or where the Court had ignored the
settled principles of law regulating grant or refusal of interlocutory
injunctions. The Appellate Court while deciding an appeal, has to examine
whether the discretion exercised is not arbitrary, capricious or contrary to the
principles of law and the appellate Court may, in a given case, has to
adjudicate on facts even in such discretionary orders.
(emphasis added)
AIR 1965 SC 1405
2025 SCC Online BoM 2658
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Applying the settled principles of scope of Appellate Court deciding
an appeal against order granting or refusing to temporary injunction,
we see no reason to interfere in exercise of discretion by the learned
Single Judge.
29) We not only agree with the findings recorded by the
learned Single Judge while rejecting Plaintiff's application for
temporary injunction, but also have also added an additional reason
of sub-Rule (2) of Order XXXIX Rule 2 not being an independent
standalone provision for directing the Defendant to provide for
security to cover Plaintiff's claim. The additional reason is
necessitated in view of changed stance of the Plaintiff before us after
expiry of tenure of TSA, where the only relief for provision of
security by the Defendant is pressed before us. Both the sides have
relied on several judgments referred to supra. However, considering
the narrow scope involved in the appeal we find it unnecessary to
burden this judgment by discussing the ratio of every judgment
relied upon by them.
30) We accordingly find the impugned order passed by the
learned Single Judge to be unexceptional. The Appeal, being devoid
of merits, is accordingly dismissed.
[SANDEEP V. MARNE, J.] [CHIEF JUSTICE]
Digitally
signed by
NEETA
NEETA SHAILESH
SHAILESH SAWANT
SAWANT Date:
2025.08.01
20:51:45
1 August 2025
