G.D. Green Flora Resorts Pvt. ... vs M/S. Kuhn-Rikon Asia Pte. Ltd.
1999 Latest Caselaw 166 Del

ORDER

S.K. Mahajan, J.

1. The plaintiff has filed this suit for injunction, declaration and rendition of accounts on the allegations that by an agreement dated October 10, 1997 the plaintiff was appointed the sole, authorised sales and service representative for the Indian market of the Spring products of the defendant. The agreement was to commence from the 1st day of October, 1997 and was to continue until such time as either party gave three months notice in writing of its intention to cancel the agreement to the other. As per note to the agreement, it was stated that "at the moment, practically, only those hotels earning a lot of foreign currencies, can afford to buy Spring, let say 5 stars and 5 star deluxe. From the paper, we can forecast a possibility to work as a short-term (3 years, 1998-99-2000) on about 10 projects per year of this class plus obviously we can promote to all the existing hotels around India". Relying upon this note, it is the case of the plaintiff that the agreement was for a period of three years and as the defendant had by notice dated 24th November, 1998 expressed its intention to terminate the agreement by three months notice expiring on 28th February, 1999, the alleged termination was wholly illegal and the agreement could not be terminated before the expiry of the period of three years. The plaintiff, therefore, filed this suit claiming besides other relief, an injunction restraining the defendant from terminating this agreement.

2. Ms. Anand appearing for the plaintiff has not only relied upon the agreement dated 10th October, 1997 but also on the letters dated 31st July, 1997 and 28th July, 1997 written by the defendant to the plaintiff that it will be happy to work on a marketing plan with the plaintiff and what the defendant needed to know from the plaintiff was as to in how many projects the parties were going to work probably in 1998-99-2000 and the number and characteristics of those projects. Again in letter dated 31st July, 1997 the defendant while giving to the plaintiff the information about the average orders of 3, 4 and 5 star hotels with big banquets also projected to the plaintiff that first year was always difficult and a lot of energy was requested for positioning the brand in the market; second year people really look for the product and get excited about the same and some good orders are also expected; and third year is normally the very good year for sales volume and this could work obviously only if the market was prepared for the product; there was a good agent taking care of the market and principal performs for what it promises. Further it is stated that assuming that these three factors were there, the forecast for the first year 1998, there could be a total turn over of about US $ 2,00,000 and it was only on receipt of information from the plaintiff that the defendant would be able to be realistic not only for 1998 but until the year 2000.

3. The contention of the plaintiff, therefore, is that based on the aforesaid representation of the defendant the plaintiff was induced to spend considerable energy, time and money and promoted the goods of the defendant company on the assurance that the plaintiff would reap regular income from commissions to be earned over a span of at least three years. According to the plaintiff, by attempting to revoke the contract, the defendant was acting contrary to its representations and was estopped from doing the same as it would be to the irreparable detriment of the plaintiff company.

4. The question for consideration is as to whether the Court in such type of cases can grant an injunction against the party who is seeking to terminate the contract which power has been given to it under the terms of the agreement. Ms. Anand has relied upon the judgment of this Court in Old World Hospitality Pvt. Ltd. Vs. India Habitat Centre, 1996 IV A.D. (Delhi) 395. The Court in that case held that "the principles relating to the grant of injunction are well settled but in applying the principles to the facts of a given case the difficulty arises because the grant of interim relief depends on the facts, prima facie, established by the parties. I have considered all the facts and circumstances of this case. The main plank of the defendant's case is that what was agreed was only an ad-hoc arrangement. What the defendant says is true on the materials placed, I would have had no difficulty in rejecting the application for injunction. But I cannot shut my eyes to the realities and what has happened in this case. Here is a person who had bid pursuant to the tender. He was aware that he was dealing with Government officials. He trusted them and agreed to the contract, he had taken all steps pursuant to the contract. The Managing Director of the plaintiff Co. has been acting as per the directions issued by the defendant from time to time.

5. It was also held by the learned Judge in that case that "in view of the development in the society and the advancement in various fields of human endeavors, providing such services became necessary for the proper and efficient functioning of the various organisations housed in the Complex. Therefore, an innovative thinking is required to find out a solution which could be of help to both the parties. The defendant being a public authority has asserted that it can do no wrong and the complete answer to the plaintiff's case is Report by the Malhotra Committee. Yet another seemingly formidable argument according to the defendant is that the contract is not specifically enforceable and, therefore, I should not grant injunction. The plaintiff would be put to irreparable loss and hardship and as pointed out by Goddard Lord Justice in Borough of Hounslow Vs. Twickenham Garden Developments Ltd., (1970) 3 All E.R. 326, the status-quo to be preserved was not that which existed after the breach was committed but that which existed before the injury was caused to the plaintiff. Suppose, I grant the injunction, what is the effect on the defendant. The plaintiff would be doing the services and the defendant would be getting the amounts as mentioned in the contract. The volume of service to be done by the plaintiff would depend upon the co-operation or the discharge of obligation by the defendant as per the provisions of the contract. Can the defendant say whatever the orders of the Court the defendant cannot expand money because there is no return and the Court cannot sit in judgment over financial aspects which could be appreciated only by the defendant. As the well known saying goes `the wearer knows there the shoe pinches'. On the facts and circumstances of this case, such an argument is not available to the defendant because the property involved is the property of the Government. The defendant does not claim any title to the property. The defendant is holding the property in trust for the benefit of the public. The defendant had received money from the Govt. of India for putting up the Complex. The defendant had received monies from the allottees and the ultimate maintenance and the expenditure for performance of the services have to be made by those allottees and defendant is only a trustee for all these things. The Court is very much concerned with the property of the Government and how it is being managed by Officers like Mr. Bhatnagar, Mr. Pachauri and Mr. Dinesh Mehta, who had taken little care nor did they realise the responsibility of placing all the materials before Court. The Centre was intended to be a hive for bringing to the country the latest industrial and technological and information Honey and not for the Complex alone. In other words, the Centre is for the benefit of the entire country. If those entrusted with the task of implementing the project do not function properly, the object of the Government in having such a Complex for the improvement of the people would remain metaphorical. If the plaintiff does not perform its duties and obligations, it is always open to the defendant to exercise its rights under the contract and terminate the same. In a matter like this, when the citizens are to fight against the Government, the Court has to interdict and dispense justice as far as possible. From the conduct of the plaintiff, that could be seen from the materials placed before me, the defendant has not said anything which could persuade me to say that the continuance of the plaintiff in the Complex would affect the rendering of service to the persons coming to the Complex. Of course, in fiscal matters one has to be careful and in particular when one has to handle public money but that is no reason to deprive a citizen of his legitimate rights. The plaintiff had accepted the decision by the defendant that the income from the Fitness Centre should go to the defendant and as a matter of fact the plaintiff had not objected to anything that is directed to be done by the defendant. Having entered into a contract and having lulled the plaintiff into a sense of security and the guarantee of continuance of the contract and having stopped the work for nearly five months and having asked the plaintiff to resume work pursuant to the decision of the Governing Council on 10th of November, 1994 it is not open to the defendant to say "I do not want you. I will be incurring loss even though my Auditors or my lawyers may have different opinion. I go by my Malhotra Committee's Report". In my view, this can never by accepted. It is against all canons of principles of law besides being contrary to the principles of natural justice. It is also against the principles of fairness. Therefore, I find no difficulty in coming to the conclusion that the plaintiff has made out a, prima facie, strong case for the grant of injunction."

6. In my view, this judgment will not be of any assistance to the plaintiff inasmuch as the Court in that was mainly dealing with a contract which had been entered into by an individual with an agency of the Government and it was in these circumstances that the Court held "if those entrusted with the task of implementing the project do not function properly, the object of the Government in having such a Complex for the improvement of the people would remain metaphorical. If the plaintiff does not perform its duties and obligations, it is always open to the defendant to exercise its rights under the contract and terminate the same. In a matter like this, when the citizens are to fight against the Government, the Court has to interdict and dispense justice". In the present case, the defendant is not an agency of the Government and the observations made by the learned Judge in the aforesaid judgment will, therefore, not be applicable to the facts of this case.

7. In M/s. Pepsi Foods Limited Vs. Jai Drinks Private Limited, 1996 I A.D. (Delhi) 1097 while referring to the contentions of the counsel in that case that the contract being for a period of 10 years could not be terminated and the defendant was estopped from terminating it on account of the plaintiff having changed its stand by investing considerable amount for its bottling plant for manufacturing and marketing the products for which a license had been given by the defendant and that there being no complaint against the plaintiff, there was no occasion for the defendant to terminate the contract, this Court held that those were not the questions which had to be gone into at that stage of the suit and moreover, in case it was ultimately held that the termination of the agreement was wrongful, the only relief to which the defendant could be entitled was the damages for such wrongful termination. In such type of a contract, in case two parties have fallen out, it was within the right of one of the parties to terminate such type of contract. In case, the termination was wrongful, the party would be entitled to damages, however, the party cannot compel the other party to continue to act under the agreement as it would have amounted to specific performance of an agreement which under the law could not be specifically enforced. In a private commercial transaction, the party could terminate the contract even without assigning any reason with a reasonable period of notice in terms of clause under the agreement. I do not see any reason to deviate from the above observations made in Pepsi Foods Ltd. Vs. Jai Drinks Private Limited (supra).

8. In may view, therefore, the plaintiff does not have any prima facie case nor the balance of convenience is in favour of the plaintiff and the plaintiff has not been able to make out any case for the grant of an injunction restraining the defendant from terminating the contract. There are no merits in the application and the same is, accordingly, dismissed with no order as to costs.