Bombay High Court
Avanika Films Llp vs Abhay Verma on 15 September, 2025
2025:BHC-OS:15254
1/30 1509IAL-24289-25.odt
MANDIRA MILIND
SALGAONKAR
Digitally signed by MANDIRA
MILIND SALGAONKAR
Date: 2025.09.16 17:08:57 +0530 IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INTERIM APPLICATION (L) NO.24289 OF 2025
IN
COMMERCIAL SUIT (L) NO.24272 OF 2025
Avanika Films LLP .. Applicant
In the matter between :-
Avanika Films LLP .. Plaintiff
Versus
Abhay Verma .. Defendant
...
Dr.Birendra Saraf, Senior Counsel and Advocate General with
Mr.Rashmin Khandekar (through VC) and Mr.Anand Mohan
i/b Mr.Vikramaditya Vijay Chavan for the Applicant/Plaintiff.
Mr.Rohan Caama with Mr.Sunil Zalmi i/b De Zalmi &
Associates for the Respondent/Defendant.
CORAM : PRAFULLA S. KHUBALKAR, J.
RESERVED ON : 04th SEPTEMBER, 2025
PRONOUNCED ON : 15th SEPTEMBER, 2025
...
FINAL ORDER
Heard Dr.Birendra Saraf, learned Senior Counsel and
Advocate General along with Mr.Rashmin Khandekar and
Mr.Anand Mohan i/b Mr.Vikramaditya Vijay Chavan for the
Applicant/Plaintiff and learned counsel Mr.Rohan Caama along
with Mr.Sunil Zalmi i/b De Zalmi & Associates for the
Respondent/Defendant.
2/30 1509IAL-24289-25.odt
2. Instant Interim Application, filed by the plaintiff, seeks
enforcement of a negative covenant contained in the Artist
Agreement dated 15/06/2025 for restraining the Defendant from
engaging himself in any services similar to the services under the
Agreement in relation to any other feature film, programme,
play, television series, film etc. for any other person during the
shooting schedule mentioned in the Agreement for the period
from 05/09/2025 to 20/11/2025.
3. The Interim Application for injunction is moved in the
Commercial Suit filed by the Plaintiff, seeking permanent
injunction with respect to the negative covenant contained in
Clause 2.2.2 of the Agreement dated 15/06/2025 alongwith a
declaration of termination of the Agreement being null and void,
unlawful, non est and bad in law. The Plaintiff has also prayed for
damages/compensation in a sum of INR Rs.12,00,00,000/-
(Indian Rupees Twelve Crores only) with interest at the rate of
18% against the Defendant.
FACTUAL BACKGROUND
4. The factual setup in which the controversy arose is
succinctly stated below:
The Plaintiff, a producer of the film had entered into an
Artist Agreement with the Defendant on 15/06/2025. This
3/30 1509IAL-24289-25.odt
Agreement mentions elaborate terms and conditions, including
specific covenants about 'shooting schedule', which is subject
matter of controversy in the instant suit. It is the plaintiff's case
that after detailed deliberations and negotiations about the
project and about the schedule of dates, the parties have entered
into the Agreement specifically mentioning therein that the
Defendant shall perform lead role in the cinematographic film
named 'Prem Keetanu', to be produced by the Plaintiff. In
accordance with the terms of the Agreement, the shooting was
scheduled for the period from 05/09/2025 to 20/11/2025. It is
averred that in the month of July itself the defendant conveyed
his inability to abide by the shooting schedule on account of
overlapping of dates with his earlier assignments. It is averred
that instead of abiding by the commitments as incorporated in
the specific covenants, the Defendant has terminated the
Agreement by his communication dated 12/07/2025. The
Plaintiff has, therefore, lodged the instant suit on 03/08/2025
seeking permanent injunction to enforce the negative covenant
contained in the said Agreement. By way of an amendment to
the plaint, which was allowed on 14/08/2025, the Plaintiff
incorporated prayer clause (aa) and thereby sought a declaration
that termination of Agreement be held to be illegal.
4/30 1509IAL-24289-25.odt
In this backdrop, the Plaintiff has prayed for interim
injunction in the nature of enforcement of negative covenant to
restrain the Defendant from engaging himself in services similar
to the services in the Agreement.
5. In response to the Interim Application seeking temporary
injunction, the defendant has filed his reply affidavit dated 25-08-
2025 and in further response thereto the plaintiff has filed its
affidavit in rejoinder dated 26-08-2025. As such, on the basis of
their respective affidavits in support of the application and the
reply, both the parties have advanced submissions on the Interim
Application seeking injunction. Pertinently, although the matter
was listed under the caption of ad-interim, extensive submissions
are advanced by both the parties after the reply and the
rejoinder affidavits are filed and even both the parties have filed
their notes of submissions as such the case is considered at the
stage of Interim Injunction.
GIST OF SUBMISSIONS :
6. Dr. Saraf, learned Senior Counsel for the Plaintiff submitted
that the Defendant had voluntarily entered into the Artist
Agreement and the terms of the Agreement were incorporated
based on prior negotiations with the Defendant. The Agreement
was preceded by exchange of several emails from the month of
5/30 1509IAL-24289-25.odt
March 2025 and in view of the convenience of the Defendant, the
shooting schedule was finalized. He vehemently submitted as
follows:-
(i) The defendant was bound by the terms of the
agreement which were sacrosanct and the unilateral
breach of agreement by the defendant is illegal.
(ii) The negative covenant in the agreement is
enforceable u/s 42 of Specific Relief Act.
(iii) In view of the nature of the project and involvement
of number of agencies in the shooting of the film, the
Plaintiff has incurred huge expenditure for completing
the shooting within the scheduled dates. As such, in view
of the peculiar nature of the project, the Defendant, who
was to play the lead role in the film, was bound by the
shooting schedule, making himself exclusively available
for services to be rendered for the Plaintiff.
(iv) The Artist Agreement contained specific clauses,
containing positive as well as negative covenants, which
are in furtherance of the trade of production of the films
and having voluntarily entered into the Agreement,
none of the parties could unilaterally cancel the
Agreement.
6/30 1509IAL-24289-25.odt
(v) The Defendant was bound to act strictly in
accordance with terms of the Agreement and the
unilateral termination of the Agreement by the Defendant
vide communication dated 12/07/2025 is grossly illegal,
rendering the Defendant liable for damages.
(vi) By referring to various clauses in the Agreement,
particularly the negative covenant contained in Clause
2.2.2 of the Agreement and the emails exchanged
between the parties, learned Senior Counsel vehemently
submitted that the Plaintiff has demonstrated a prima
facie case to restrain the Defendant from engaging in any
similar services.
(vii) In view of the unilateral termination of the
Agreement by the Defendant, the Plaintiff is put into lot of
inconvenience and the Plaintiff would suffer huge
irreparable loss, which cannot be compensated in terms
of money.
7. To buttress his submissions, learned Senior Counsel for the
Plaintiff placed reliance on the following Judgments :-
1. Niranjan Shankar Golikari Vs. The Century
Spinning and Mfg.Co. Ltd.; AIR 1967 SC 1098;
2. Warner Brothers Pictures, Incorporated Vs.
Nelson; King's Division Bench 1936 W No.2785.
3. Gujarat Bottling Co. Ltd. & Ors. Vs. Coca Cola
Company & Ors.; AIR 1995 SC 2372;
7/30 1509IAL-24289-25.odt
4. Global Music Junction Pvt. Ltd. Vs. Shatrughan
Kumar & Ors. 2023 (96) PTC 324 (Del);
5. Lumley Vs. Wagner, (Decision by the Hon'ble Lord
Chancellor Lord St. Leonards dated 22, 26th May,
1852.
6. Balaji Telefilms Ltd. Vs. Salil Ankola (Arbitration
Petition (L) No.610 of 2006 dated 08/11/2006.
8. By referring to these judgments, learned Senior Counsel for
the Plaintiff vehemently submitted that the position of law is well
settled that the terms of an agreement are sacrosanct and in
view of the negative covenant voluntarily agreed upon by the
Defendant, binding effect of the negative covenant be given effect
to. By placing heavy reliance on the judgment in Niranjan
Golikari (supra), it is submitted that the negative covenants do
not fall under the purview of Section 27 of the Indian Contract
Act and cannot, therefore, be considered to be a restraint of
trade. By inviting attention of the Court to various paragraphs
from this Judgment, it is submitted that the position of law is
settled in the matter of Gujarat Bottling Co. Ltd. (supra) that
unilateral termination of an Agreement cannot nullify the effect
of negative covenant, thereby rendering Section 42 of the
Specific Relief Act nugatory. It is submitted that in the instant
case, the Defendant has, without any basis, unilaterally
terminated the Agreement and he cannot be allowed to take
advantage of his own wrong. It is submitted that the entire
8/30 1509IAL-24289-25.odt
conduct of the Defendant in terminating the Agreement with the
Plaintiff, only on account of failure to abide by the shooting
schedule in view of other prospective assignment, demonstrates
that the Defendant is attempting to avoid the effect of the
negative covenant. It is, therefore, submitted that the entire
conduct on part of the Defendant renders himself bound by the
effect of the negative covenant and entitles the Plaintiff for the
relief of interim injunction.
9. Per contra, Advocate Rohan Caama, learned counsel for
the defendant strenuously submitted that the Interim
Application seeking interim injunction against the Defendant is
liable to be rejected as the Plaintiff has failed to demonstrate
fulfillment of essential conditions for grant of temporary
injunction.
The submissions of the defendant are stated in nutshell, as
follows ;
(i) The Suit filed by the Plaintiff, essentially seeking
specific performance of contract of personal service is not
at all maintainable and the instant application seeking to
enforce the negative covenant thereby ultimately seeking
enforcement of specific performance of personal service, is
liable to be rejected.
9/30 1509IAL-24289-25.odt
(ii) The temporary injunction sought for is in effect
requiring the Plaintiff to sit idle for the period of shooting
schedule thereby depriving the Defendant from performing
the work in his profession which ultimately violates
Section 27 of the Contract Act as it amounts to restraint of
trade.
(iii) The Defendant had already conveyed his inability to
attend shooting schedule from 05/09/2025 and
accordingly the parties have deliberated to resolve the
issue of overlapping of shooting dates. He submitted that
in view of the prior commitments of the Defendant, which
were very well informed to the Plaintiff, it became out of
control for the Defendant to adjust the shooting schedule
and consequent upon the confrontations with the Plaintiff,
the Defendant was constrained to terminate the
Agreement.
(iv) Though the Plaintiff has filed instant application to
enforce the negative covenant, the Plaintiff has not at all
prayed for stay to the termination of the Agreement and as
such, since the Agreement stood terminated, the Defendant
is not entitled to seek enforcement of negative covenant
incorporated in the said Agreement.
10/30 1509IAL-24289-25.odt
(v) The Plaintiff has failed to demonstrate violation of its
rights and the instant application is for harassing and
pressurizing the Defendant.
(vi) The Plaintiff has failed to demonstrate any case to
protect the Plaintiffs proprietary interest or property
rights and hence he is not entitled to claim temporary
injunction.
(vii) The Plaintiff is not entitled for injunction in peculiar
facts of this case since the Plaintiff can be compensated in
terms of money by award of damages.
(viii) The temporary injunction claim is in the nature of
final relief as claimed in the suit.
(ix) The Plaintiff has failed to demonstrate the factors of
balance of convenience and irreparable loss and thus the
Plaintiff is not entitled for the discretionary relief of
temporary injunction.
10. In support of his submissions, the learned counsel for
the Defendant relied on following case laws:
i) Percept D'Mark (India) (P) Ltd. vs. Zaheer Khan &
Anr. (2006) 4 SCC 227;
ii) Jet Airways (I) Ltd. vs. Mr.Jan Peter Ravi Karnik,
2000 SCC OnLine 241;
iii) SVF Entertainment Pvt. Ltd. vs. Mr.Anupriyo
Sengupta, 2018 SCC OnLine Cal 4775;
11/30 1509IAL-24289-25.odt
iv) Pepsi Foods Ltd. & Others vs. Bharat Cola-Cola
Holdings Pvt. Ltd. & Ors., 1999 SCC OnLine Del
530.
11. By inviting my attention to the authoritative
pronouncement of Hon'ble Supreme Court in the matter of
Percept D'Mark (India)(P)Ltd. (supra), learned counsel for
Defendant submitted that the position of law is well settled that
in case the enforcement of negative covenant amounts to
ordering specific performance of a contract of personal service,
the Plaintiff is not entitled for claiming discretionary relief of
injunction. Further, my attention is adverted to the position of
law that the Plaintiff is not entitled for injunction when he can be
compensated in monetary terms. By placing heavy reliance on
the Judgment in Jet Airways (I) Ltd. and Pepsi Foods Ltd.
(supra), the learned counsel for the Defendant stressed on the
position of law that the relief of injunction can only be granted to
protect the proprietary interest of the Plaintiff. He thus
submitted that the interim injunction claimed is in the nature of
final relief and cannot be granted.
12. In the light of above mentioned submissions, the rival
contentions fall for my consideration.
12/30 1509IAL-24289-25.odt
RELEVANT CLAUSES OF ARTIST AGREEMENT :
13. Before dealing with the controversy, for the purpose
of deciding the application for interim relief, certain clauses of
the Artist Agreement dated 15-06-2025 need proper
consideration. The relevant clauses are reproduced below :-
"2.2.2. Shooting Schedule: The Artist shall render his
Services to Producer on an exclusive basis during the
Shooting Schedule as mentioned in Schedule A. The
Services during the Shooting Schedule shall include, but
not be limited to acting, dancing, delivering lines and such
other customary services as may be required by the
Producer (and/or any persons authorized by the
Producer) for the enactment of the Role in relation to the
Film. It is hereby clarified that the Shoot Days (defined in
Schedule A) would not include travel days, off days and
any other services during the Pre-Production Schedule,
Post-Production Schedule, and Promotion/Publicity
Period. The tentative Shooting Schedule of the Film has
been scheduled as per Schedule A, subject to any
revisions as may be required by the Producer in
consultation with the Artist. It is agreed between the
Parties that the Artist shall ensure his availability to
render his Services during the entire Shooting Schedule
and shall not enter into any arrangements/ agreements in
conflict hereof. The Artist shall not engage himself in any
services similar to the Services, in relation to any other
feature film, programme, play, television series, film etc.,
for any other person during the Shooting Schedule. A
complete shoot day consists of 13 (thirteen) hours of
shoot including hair, make-up from the Artist's on
location call time.
2.2.3. Post-Production Schedule: The Artist shall make
himself available to the Producer on a non-exclusive but
first priority basis during the Post-Production Schedule of
the Film on such dates as determined by the Producer
taking into account his prior professional commitments.
13/30 1509IAL-24289-25.odt
2.8 Artist's availability during the locked
Shooting Schedule : The Artist acknowledges that the
Producer and the Artist have arrived at the Shooting
Schedule after various discussions, which shall
include the availability of the director and other
artist and key technicians, based on the Artist's
confirmation the Producer shall be investing
substantial amounts of monies, time, efforts and
human resources ("Resources") for the Film based on the
Artist's confirmation of his availability during the
Shooting Schedule specified in the Schedule A i.e.
between 5th September, 2025 to mid November 2025
and other representations made herein and is likely to
employ more Resources. The Artist shall render the
services faithfully and shall not, under any
circumstances, deliberately and intentionally, delay,
not be available and neglect the performance of
his/her Services, withdraw his/her appearance in the
Film, before the expiry of the Term of this Agreement,
this being the essence of this Agreement. The Artist
understands that in the event the Artist, deliberately
and intentionally, delays or neglects the performance
of his/her Services, withdraws his/her appearance in
the Film, exits the Film midway, breaches the
exclusivity provisions, the same would cause irreparable
loss and damage to the Producer, both monetary and
otherwise, which would not be adequately compensable
in damages in an action at law, and therefore, in addition
to and without prejudice to the other remedies of the
Producer under this Agreement and under law, including
without limitation replacing the Artist, the Artist will be
liable to make payment of twice the amount of
Consideration as agreed herein as liquidated damages.
Notwithstanding the above, the Producer shall be entitled
to other appropriate remedies available to it under
applicable law."
14/30 1509IAL-24289-25.odt
14. Apart from these Clauses, it is also necessary to have a look
at Clauses 11.1 and 11.4 under caption, 'Remedies', which are
reproduced below :-
"11.1 The Artist hereby acknowledges and agrees that
this Agreement is a contract for personal services and
production of the Film is of a unique unusual and
extraordinary character and any disruption in the
performance of Services and obligations by the Artist
shall cause loss to the production of the Film, which loss
cannot be adequately compensated through damages at
law. However, since it is understood that the Artist's
Services are special, unique, unusual, extraordinary and
of an intellectual character, given them a peculiar value,
which cannot be compensated in monetary terms or
damages, the Producer who shall be entitled to seek
equitable relief against the Artist in respect of
performance of the Artist's obligations hereunder.
Further, the Producer shall also have the right to
approach and invoke the jurisdiction of any collective
bargaining organisation, or association or union or guild
in any territory throughout the world."
11.4 Notwithstanding contained under the Agreement,
if the Artist wilfully and intentionally refuses and/or fails
to render his Services as per the terms of the Agreement
and as per the Production Schedule, including or any
revised dates as may be required by the Producer, then
without prejudice to any right that the Producer may
have thereunder, and/or under law or in equity, upon a
written demand by the Producer the Artist shall be liable
to compensate the Producer with an amount equal to
twice the amount of the Consideration as and by way of
liquidated damages ("Damages") within a period of seven
(7) days from the date on which the Producer makes such
a demand."
15/30 1509IAL-24289-25.odt
CONSIDERATION OF THE CONTROVERSY:
15. The controversy involved in the matter is with respect to
the negative covenant incorporated in Clause 2.2.2 reproduced
above. A perusal of this Clause shows that this Clause contains a
positive covenant as well as a negative covenant. A perusal of
the Clauses of the Agreement clearly show that it is an
Agreement of rendering personal services by the Defendant. The
Plaintiff is seeking interim injunction to enforce this negative
covenant. It is pertinent to note that the plaintiff has harped on
this negative covenant which is to restrain the defendant to
render personal service to anybody during the said period.
Pertinently, the plaintiff's main thrust of arguments is to enforce
the mandate of the negative covenant and to stop the defendant
from engaging in any other assignment during the period of the
shooting schedule i.e. from 5th September 2025 to 20th November
2025 and it has to be noted that the plaintiff has not averred
violation of any right of the Plaintiff. The plaintiff has also
stressed on the illegality in the act of termination of the
agreement by the defendant, against which the relief of damages
is claimed in the suit.
16. It is pertinent to note that in the suit, the Plaintiff has
prayed for permanent injunction to enforce the negative
16/30 1509IAL-24289-25.odt
covenant along with the relief of declaration of termination of the
Agreement being illegal and claimed for damages of Rs.12 Crore
against the Defendant. It is crucial to note that the Plaintiff has
not sought any relief of specific performance of the Agreement
dated 15/06/2025 and also no prayer is made seeking stay to the
termination of the Agreement. As such, the controversy involved
in the suit is with respect to illegality of termination of the
Agreement and claim for permanent injunction alongwith
damages. In this backdrop, the Application for interim injunction
needs to be considered.
It has to be noted that in the suit, the plaintiff has prayed
for a permanent injunction restraining the defendant from acting
contrary to the negative covenant contained in clause 2.2.2 of
the agreement during the shooting schedule i.e. from 5 th
September 2025 to 20th November 2025. The relief claimed by
the temporary injunction application is also of the same nature.
17. The controversy involved in the Interim Injunction
application is about grant of ad-interim injunction to seek
enforcement of negative covenant. The prayer in the Interim
Application seeking temporary injunction is to restrain the
Defendant from engaging in any services similar to the services
under the Agreement in relation to any other feature film,
programme, play, television series, film etc. for any other person
17/30 1509IAL-24289-25.odt
during Shooting Schedule i.e. from 05/09/2025 to 20/11/2025.
As such, it is crucial to examine whether the Plaintiff has
demonstrated fulfillment of essential conditions seeking
discretionary relief of temporary injunction. It has to be noted
that although the Plaintiff has raised challenge to the
termination of the Contract by way of amendment in the Suit,
however, no stay is sought for to the decision of the Defendant to
terminate the Agreement. As such, the only prayer to be
considered at this stage is about enforcement of negative
covenant to restrain the Defendant from taking up any other
assignment to perform as an Actor.
18. The Plaintiff has primarily relied upon Clause 2.2.2 of the
Agreement which incorporates a positive as well as negative
covenant. A perusal of Clause 2.2.2 with the title 'Shooting
Schedule' shows that it categorically mentions a tentative
schedule of the film as per Schedule A, subject to any revision as
may be required by the Producer in consultation with the Artist.
It further states 'it is agreed between the Parties that the Artist
shall ensure his availability to render his Services during the
entire Shooting Schedule and shall not enter into any
arrangements/ agreements in conflict hereof'.
The entire thrust of the arguments of the Plaintiff is based
on this covenant and it is important to note that the Plaintiff is
18/30 1509IAL-24289-25.odt
seeking temporary injunction after the termination of the
Agreement by the Defendant. As such, the crucial issue which
needs to be focused is whether the negative covenant need to be
enforced after the termination of the Agreement . It, therefore,
becomes necessary to ascertain whether the Plaintiff has
demonstrated violation of his right necessitating entitlement of
discretionary relief of temporary injunction.
19. The Plaintiff's primary contention is illegal breach of
contract/agreement by the Defendant and resultant monetary
loss likely to be suffered by the Plaintiff. As regards the issue of
illegality of the termination of the Agreement by the Defendant
alleged to be unilateral and without any authority flowing from
terms of Agreement, the same will have to be decided on the
basis of evidence to be laid by the parties. The plaintiff has
attempted to demonstrate a prima facie case on the basis of
alleged illegal breach of Agreement by the Defendant. It is
pertinent to note that the Plaintiff is seeking to enforce a
negative covenant which eventually amounts to enforcing terms
of Contract which is undisputedly (as can be seen from clause
11.1 of the agreement) a contract of personal service. As such,
the interim relief prayed by the Plaintiff seeking enforcement of
negative covenant is in effect an attempt to enforce the Contract
of personal service which is prohibited in view of provisions of
19/30 1509IAL-24289-25.odt
Section 41(e) of the Specific Relief Act, 1963. Further,
considering the nature of the negative covenant, it is clear that
enforcing the same will have the effect of making the defendant
sit idle. Although the Plaintiff has relied on provisions of
Section 42 of Specific Relief Act for seeking performance of
negative covenant, in absence of demonstration of violation of
any rights of the Plaintiff, the enforcement of negative covenant
rendering the Defendant to sit idle appears to be clearly violative
of provisions of Section 27 of the Indian Contract Act. Thus, in
absence of any prayer seeking stay to the termination of
agreement, the claim for temporary injunction to enforce
negative covenant is of no avail.
20. Crucial to note, the agreement in between the plaintiff and
the defendant stands canceled and it is not in force, neither the
plaintiff has sought for stay to the act of termination and as such
there is no covenant in operation which could be enforced. In this
regard, even if the plaintiff's argument that the agreement still
subsists since the termination is under challenge is given due
consideration, still it has to be seen that enforcing the negative
covenant has the only effect of making the defendant sit idle and
in any case by enforcing the negative covenant the plaintiff is not
going to enjoy the fruits of the agreement in any manner nor is
20/30 1509IAL-24289-25.odt
going to be benefited in the three months period of the shooting
schedule.
21. Thus although the Plaintiff has made an attempt to
demonstrate existence of prima facie case in its favour alleging
unilateral breach of Agreement by the Defendant, for the purpose
of seeking interim injunction, the Plaintiff is also required to
establish the other factors particularly balance of convenience
and irreparable loss.
22. As regards balance of convenience is concerned, the
Plaintiff has vehemently submitted that the Defendant was
supposed to perform role of lead actor in the movie and based on
the shooting schedule, the Plaintiff has made all the
arrangements of engaging the services of co-actors, engagement
of other agencies for completing the shooting in pre-decided
schedule and on account of termination of agreement, it is stated
that the Plaintiff is put to lot of inconvenience. In this regard, it
is pertinent to note that in the month of July itself the Defendant
has conveyed his inability in view of conflict of dates for shooting.
The parties had thereafter negotiated and exchanged several
communications to adjust the shooting schedule and in view of
the overlapping of the dates of the previous shooting schedule,
the Defendant has conveyed his final unavailability. In this
21/30 1509IAL-24289-25.odt
background, the Defendant has terminated the Agreement by the
communication dated 12/07/2025. Although legality of the
termination of Agreement is a matter of evidence, it is clear that
the Plaintiff became aware about termination of the Agreement
on 12th July itself. The Plaintiff has filed the Suit in the first week
of August, without raising any challenge to the decision of the
termination of Agreement. Although the challenge to the
termination of Agreement is subsequently raised by way of
amendment, it is clear that the Defendant had explored the
possibility of resolving the issue of conflict in dates of shooting. It
is crucial to note that till today the Plaintiff has not sought for
any stay to the termination of the Agreement. It is pertinent to
note, by terminating the Agreement, the Defendant has also
deprived himself of an opportunity to execute the performance in
the film of the Plaintiff and there is nothing on record to show
that the defendant has earned any additional benefit/advantage.
As such, in view of the conduct of parties, it cannot be concluded
that the balance of convenience entirely lies in favour of the
Plaintiff to the extent of entitling it to enforce the negative
covenant with its full vigour.
23. As regards irreparable loss alleged to have been suffered by
the Plaintiff, it is crucial to note that the specific clauses of the
22/30 1509IAL-24289-25.odt
Agreement particularly Clause 2.8 and 11.4 (reproduced above)
clearly shows that in the event of willful and intentional refusal
and/or failure to render service as per the terms of Agreement,
the Artists shall be liable to compensate the Producer with an
amount equal to twice the amount of consideration as and by way
of liquidated damages. As such, the injury suffered by the
Plaintiff can be compensated in terms of money by invoking the
relevant clause of the Agreement. It has to be noted that the
Plaintiff has itself raised a claim for damages of Rs.12 Crore
alongwith interest at the rate of 18%, as claimed in the Suit. In
view of the peculiar circumstances of this case, the factor of
irreparable loss also does not weigh in favour of the Plaintiff.
It has to be noted that in view of the peculiar facts of this
case, injury suffered by the plaintiff on account of the breach of
agreement and alleged unilateral termination of the agreement
by the defendant, the plaintiff can be compensated by award of
damages. As such enforcing the negative covenant is not of
imminent necessity, much less to protect any rights of the
plaintiff at this stage.
24. As regards the legal position about enforceability of negative
covenant, the Plaintiff has heavily relied upon the Judgment in
Niranjan Golikari (supra). This Judgment of the Supreme Court
considers the position of law as laid down in Warner Brothers
23/30 1509IAL-24289-25.odt
Pictures (supra), a 1936 Judgment of King's Division Bench, which
has dealt with the similar fact situation, as can be seen from
paragraph 15 & 20 of the Judgment, which are reproduced below:
"15.On a contention that...........................
Applying these observations Branson, J., in Warner
Brothers Pictures v. Nelson [1937] 1 K.B. 209, held a
covenant of a similar nature not to be void. The defendant, a
film artist, entered into a contract with the plaintiffs, film
producers, for fifty-two weeks, renewable for a further period
of fifty-two weeks at the option of the plaintiffs, whereby she
agreed to render her exclusive service as such artist to the
plaintiffs, and by way of negative stipulation not to render,
during the period of the contract, such services to any other
person. In breach of the agreement she entered into a
contract to perform as a film artist for a third person. It was
held that in such a case an injunction would issue through it
might be limited to a period and in terms which the Court in
its discretion thought reasonable.
20. The result of the above discussion is that considerations
against restrictive covenants are different in cases where the
restriction is to apply during the period after the termination
of the contract than those in cases where it is to operate
during the period of the contract.
Negative covenants operative during the period of the
contract of employment when the employee is bound to serve
his employer exclusively are generally not regarded as
restraint of trade and therefore do not fall under section 27
of the Contract Act. A negative covenant that the employee
would not engage himself in a trade or business or would not
get himself employed by any other master for whom he
would perform similar or substantially similar duties is not
therefore a restraint of trade unless the contract as aforesaid
is unconscionable or excessively harsh or unreasonable or
one-sided as in the case of W. H. Milsted & Son, Ltd. [1927]
W.N. 233. ....."
Plaintiff's reliance on the judgment in Gujarat Bottling Co.
Ltd. (supra) is also on the same preposition of law. As such, it is
24/30 1509IAL-24289-25.odt
clear that these judgments deal with the situation about
enforcement of negative covenant during the period of contract.
However, in the instant case, the Plaintiff has sought to enforce
the negative covenant after termination of the Contract, that too
without seeking any stay to the termination of contract, and thus
the position of law laid down in Niranjan Golikari (supra) is not of
any assistance to the Plaintiff.
25. As regards the Judgment of the Delhi High Court in Global
Music Junction (supra), it has to be noted that the same was a
case of copyright infringement and was based on a different
factual set up. In the instant case the effect of negative covenant
sought to be enforced against the Defendant will render the
Defendant sit idle and prevent him from performing the work as
'Actor', which cannot be a comparable situation with the case of
infringement of copyright. As such, the position of law in this
matter is also of no assistance to the Plaintiff.
26. Even the Judgment in Balaji Telefilms Ltd. (supra) deals
with a situation of a negative covenant which was to operate
during the term of Agreement and the same cannot be of any
assistance in view of termination of Agreement in the instant
case.
25/30 1509IAL-24289-25.odt
27. In view of the controversy involved in the instant case, the
judgment in Percept D'mark India Limited (supra) and Judgment
of Co-ordinate Bench of this Court in Jet Airways(I) Limited
(supra) needs to be taken into consideration.
28. While dealing with the issue of enforceability of negative
covenant vis-a-vis provision of Section 27 of the Indian Contract
Act 1872, the Hon'ble Supreme Court has observed in Percept
D'mark India Limited (supra) as under :-
"56. The legal position with regard to post-contractual
covenants or restrictions has been consistent,
unchanging and completely settled in our country. The
legal position clearly crystallised in our country is that
while construing the provisions of Section 27 of the
Contract Act, neither the test of reasonableness nor the
principle of restraint being partial is applicable, unless it
falls within express exception engrafted in Section 27.
58. We have perused the relevant portions of Niranjan
Shankar Golikari, Superintendence Co. of India and
Gujarat Bottling which have been extracted by the
learned Judges of the Division Bench and quoted in
extenso. In the circumstances, there can be no manner of
doubt that the Division Bench was right in coming to the
prima facie conclusion drawn by it, and in setting aside
the Single Judge's order. No case was made out by the
appellant for compelling Respondent 1 to appoint the
appellant as his agent in perpetuity. In view of the
personal nature of the service and relationship between
the contracting parties, a contract of agency/
management such as the one entered into between the
appellant and Respondent 1 is incapable of specific
performance and to enforce the performance thereof
would be inequitable. Likewise, grant of injunction
restraining the first respondent would have the effect of
26/30 1509IAL-24289-25.odt
compelling the first respondent to be managed by the
appellant, in substance and effect a decree of specific
performance of an agreement of fiduciary or personal
character or service, which is dependent on mutual
trust, faith and confidence."
While elaborating the reasons for refusing specific performance
of the negative covenant, the Hon'ble Supreme Court has
observed in para 64 of this judgment that injunction resulting in
compelling specific performance of a contract of personal,
confidential and fiduciary service cannot be granted. In the
instant case enforcing negative covenant in effect amounts to
enforcing contract of personal service.
29. The position of law as considered in Jet Airways(I) Limited
(supra) which is delivered after considering, rather
distinguishing the judgment of Nirajan Golikari, also needs to be
taken note of. The relevant observations of the learned Single
Bench as reflected in para 20 are reproduced below :-
"20. ............Since the plaintiffs has no property/ proprietary
right in the skill acquired by the defendants, no protection
can be granted on the basis of the negative covenant. The
apprehension expressed by the learned Counsel for the
plaintiffs that if an injunction is not granted, then the pilots
are likely to leave and join the competitor is no ground for
granting the drastic relief of injunction against the
defendants. It is common ground between the parties that
earlier sixteen pilots had left Sahara Airlines and joined Jet
Airways. The plaintiffs did not see anything wrong in
poaching the pilots from Sahara Airlines. It is settled law
that the relief of injunction can only be granted to protect
27/30 1509IAL-24289-25.odt
the proprietary interest of the plaintiffs. To prevent the
pilots from leaving the plaintiffs and joining the competitor
would not be protection of any proprietary interest of the
plaintiffs. Such a protection could have been provided by
the plaintiffs themselves by offering better condition of
service than the competitor. It would clearly be against
public policy to compel the defendants to be forced to work
with the plaintiffs merely because of the covenant. It would
amount to compelling disgruntled employees to work for an
equally disgruntled employer. This would not be in the
interest of anyone. I am unable to agree with the
submissions of Mr. Chagla to the effect that if injunction is
not granted, then there would be no sanctity of contract."
In the case in hand the plaintiff has not at all claimed to have
contributed to the defendant in acquiring any skill of acting much
less involving proprietary interest and further the agreement in
question is clearly a contract to render personal service as can be
seen from clause 11.1 of the agreement and as such no injunction
can be claimed by invoking negative covenant.
30. In view of the position of law mentioned above, it is clear
that a negative covenant cannot be enforced for the purpose of
seeking performance of a contract of personal service. The
position of law is also fairly settled that an injunction can be
granted only for protecting rights of the Plaintiff but cannot be
granted to limit the legal rights of the Defendant. In the instant
case, the Plaintiff has failed to demonstrate violation of any of its
rights as basis for claim for interim injunction. The breach of
Agreement by the Defendant may entitle the Plaintiff for relief of
28/30 1509IAL-24289-25.odt
compensation, as claimed by it in the plaint, however, the same
cannot be a reason for seeking ad-interim injunction or interim
injunction for enforcement of negative covenant. In view of the
peculiar facts of this case, it is clear that enforcement of said
negative covenant will render the Defendant sit idle and in effect
amount to restraint of trade upon the Defendant. Further, in
view of the reliefs claimed in the suit seeking permanent
injunction to restrain the defendant from acting contrary to the
negative covenant for the period of the three months of the
shooting schedule, it is clear that interim relief claimed by way of
temporary injunction is in the nature of final relief.
31. I am unable to agree with the submissions of Senior
Counsel Mr. Saraf, firstly because the plaintiff has not
sought specific performance of the agreement; secondly, the
specific performance is sought for enforcement of negative
covenant which is with respect to rendering personal
service which cannot be enforced in view of the position of law
elaborated above; thirdly, because the plaintiff has not at all
sought any stay to termination of the agreement at the
interim stage; and fourthly because the interim relief claimed
is in the nature of final relief as after the expiry of the
period of three months there will be no question of enforcing
any negative covenant. On the contrary, I find force in the
29/30 1509IAL-24289-25.odt
submission of Adv. Caama that the enforcement of negative
covenant by way of interim injunction doesn't protect any kind of
interest of the plaintiff, much less proprietary interest and in
effect leads the defendant to sit idle.
32. Even by considering the aspect of conduct of parties and
the issue of comparative hardship, it is crucial to note that here
is no material to demonstrate that the Defendant has refused
performance of Agreement after the shooting was started. It is
also clear that the Plaintiff is not seeking specific performance of
the said Agreement, although it has alleged that the Agreement
still subsists. Pertinently, the prayer for interim injunction for
enfrocement of negative covenant is required to be considered in
view of the reliefs sought in the plaint and in the Application for
interim injunction.
33. In view of overall factual and legal aspects mentioned
above, I am of the considered view that the Plaintiff has failed to
make out a case for seeking interim injunction. The prayer for
ad-interim injunction and in effect interim injunction therefore
deserve to be rejected, particularly in view of the fact that the
Plaintiff is entitled to establish its claim for damages as claimed
in the suit.
30/30 1509IAL-24289-25.odt
34. The prayer for ad-interim relief is rejected. The Interim
Application for temporary injunction is hereby rejected.
(PRAFULLA S. KHUBALKAR, J.)
Salgaonkar/More
