M/S.Anukampa Solutions Private ... vs Uttar Pradesh State Road ...
2009 Latest Caselaw 4474 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELHI

+                                OMP No.601/2009

                                                              5th November, 2009
M/S.ANUKAMPA SOLUTIONS PRIVATE LIMITED                            ...Petitioner

                                 Through:        Mr. Akhil Sibal, Advocate with
                                                 Mr. Rohan Dheman, Advocate.

                           VERSUS

UTTAR PRADESH STATE ROAD TRANSPORT CORPORATION & ORS.

                                                             .....Respondents

                                 Through:        Mr. Neeraj Kishan Kaul, Senior
                                                 Advocate with Ms. Garima
                                                 Parshad, Advocate and Ms.
                                                 Neha Goyal, Advocate.
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA

     1. Whether the Reporters of local papers may be allowed to see
        the judgment?

     2. To be referred to the Reporter or not?

     3. Whether the judgment should be reported in the Digest?

%                                JUDGMENT (ORAL)

VALMIKI J. MEHTA, J.

1. This is a petition under Section 9 of the Arbitration and

Conciliation Act, 1996 whereby the petitioner has in effect prayed for the relief

that the respondents be restrained from in any manner interfering with its

operations of running a food plaza (single storeyd medium size structure as the

photographs shop) at Ajmeri Gate Inter State Bus Terminal, New Delhi. The

O.M.P. No.601/2009 Page 1 land on which the food plaza now exists belongs to the Uttar Pradesh State

Road Transport Corporation-the respondent No.1. The other respondents are

designated authorities of the respondent No.1.

2. The facts of the case are that an agreement dated 23.11.2006 was

entered into between the respondents and the petitioner whereby the petitioner

within a period of four months from the date of the agreement had to construct a

food plaza and run the same subject to various terms and conditions as set out in

the subject agreement. I may, at this stage, note certain important clauses of

this agreement and which are:

(i) Clause 2, which requires construction within a period of four

months subject to any extension which may be granted by the respondents if the

delay is found to be unavoidable.

(ii) Clause 6, pertaining to payment of licence fee @ Rs.17,500/- per

month after the expiry of the period of four months or completion of the facility

for operation, whichever is earlier. I may note that a conjoint reading of clauses

2 and 6 show that just because the extension is granted, will not mean that the

payment of licence fee will not commence after the original stipulated period of

four months.

(iii) Clause 16, as per which the title, interest and ownership with

respect to the food plaza and the land allotted shall always remain vested with

O.M.P. No.601/2009 Page 2 the respondents herein and the petitioner herein shall not be the owner of either

the land or the superstructure or the fixtures and fitting therein.

(iv) Clause 19, as per which power is vested with the respondents to

cancel/revoke/terminate the agreement on account of the breach of stipulated

terms and conditions by the petitioner herein,

(v) Clause 32, which requires that on completion of the licence period,

the petitioner shall hand over vacant possession of the food plaza so constructed

along with the fixtures and fitting as per the inventory within 24 hours.

(vi) Clauses 9, 10,11,15,23,28,29 are various clauses which show that

overall supervision and control with respect to the food plaza shall remain

vested with the respondents because by virtue of these clauses, the respondents

were entitled not only to fix the rate list with respect to certain food items, it

was also entitled to also see that the food plaza is not used for any undesirable

purpose, hygiene standards and so on are maintained, the waiters are in uniform

and are courteous, maintenance of general cleanliness and so on. These clauses

seem to have been incorporated as the food plaza was to cater to the general

public coming at the Inter State Bus Terminal and which required

reasonableness in running of the food plaza as the respondents are an arm of the

State Government and its actions were also to be guided by public interest

besides the profit motive.

O.M.P. No.601/2009 Page 3

3. A reading of the aforesaid clauses of the subject agreement makes

it more than amply clear that the relationship between the parties is one of the

petitioner as a licensee of the respondent- licensor. The petitioner had no right,

title and interest in the land or the constructed superstructure or the fixtures and

fittings therein, all of which always vested with the respondents. The agreement

was specifically terminable though of course on happening of contingencies of

breach of the stipulation provided under the contract. As already stated there is

no provision for any extension of time from payment of licence fee after the

initial period of four months. The intention as reflected by the relevant clauses

of the contract was that respondents would earn revenue by receiving licence

fee after about four months of entering into the subject contract.

4. Admittedly the petitioner could not complete the construction

within either the original period of four months which expired on 23.3.2007 and

even thereafter within the extended period of three months which expired on

23.6.2007. I may note that extension was requested by the petitioner because of

its own default in proceeding with construction activities without obtaining

approval of the plans. It has become clear from the record that since the

construction activities which were being undertaken by the petitioner were

without any sanction of the Municipal Authorities the same were therefore

objected to by the respondent who issued a notice dated 14.6.2007 for stopping

of the construction unless the necessary sanctioned plans are obtained from the

O.M.P. No.601/2009 Page 4 Municipal Authorities. The sanction is obtained in this case admittedly only on

26.12.2008 i.e. more than one and half year after the extension expired on

23.6.2007. Considering that the original period of completion was four months,

taking one and a half years for obtaining sanction is indeed a long delay. Thus,

the delays in construction well beyond the four months was for reasons solely

attributable to the petitioner.

5. At this stage, I may note two letters dated 15.6.2009 and 2.7.2009,

which have been written by the respondents to the petitioner whereby in terms

of the first letter temporary permission was granted to the petitioner to run the

food plaza and by the second letter a continued permission (not temporary) was

given to run the food plaza. The last line of the letter dated 2.7.2009 addressed

by the respondent to the petitioner makes it clear that the extension was not a

conditional one and the permission is a general permission.

6. Relying on the aforesaid two letters dated 15.6.2009 and

2.07.2009, the counsel for the petitioner Mr. Akhil Sibbal has very strenuously

and emphatically contended that, that by virtue of issue of these two letters, all

breaches of the petitioner prior thereto, whether they be with regard to the

period of construction or non-payment of license fee, or any other breaches in

terms of the agreement stood condoned by the respondents.

7. Mr. Sibbal has also canvassed that both in equity and in law, the

petitioner having constructed the food plaza and since the same is presently

O.M.P. No.601/2009 Page 5 running, even if may be only from last two months or so instead of from

23.6.2007, the reliefs which have been prayed in this petition may be granted to

the petitioner inasmuch as at this stage the court should not undertake a mini

trial by deciding whether or not the termination is justified. He further

contended that whether or not breaches have been committed and whether or

not termination is justified, would be issues which would be taken up in the

substantive arbitration proceedings which would be initiated between the

parties.

8. In response, Mr. Neeraj Kishan Kaul, Senior Advocate on behalf of

the respondents has urged the following contentions:-

(i) the letters dated 15.6.2009 and 2.7.2009 cannot be and should not

be interpreted to mean that each and every breach whether it is of payment of

license fee or submission of the rate list of the food items for approval or

submission of the list of fixture and fittings which ultimately were to fall to the

ownership of the respondents can be said to have been waived.

(ii) It was further contented on behalf of the respondents that the

contract in this case is determinable by virtue of Clause 19 on account of the

breaches committed by the petitioner. In this regard, Mr. Neeraj Kishan Kaul

has referred to Section 14(1) (c) of the Specific Relief Act, 1963 which says that

a contract which in its nature is determinable cannot be specifically enforced

and since such a contract cannot be specifically enforced then by virtue of

O.M.P. No.601/2009 Page 6 Section 41(e) of the Specific Relief Act, no injunction can be granted the effect

of which is to enforce specific performance. Reliance has been placed on

Rajasthan Brewaries Ltd vs. The Stroh Brewary Co. AIR 2000 Del 450 (DB)

and Indian Oil Corporation Ltd vs. Amritsar Gas Services, (1991) 1 SCC 533

to canvass that the determinable nature of the contract disentitles the relief of

specific performance or injunction even when the contract is determinable not

at all will but it encompasses determination on the contingencies of the breaches

having been committed.

(iii) Mr. Neeraj Kishan Kaul has further contended that, the fact that

overall control and supervision on day to day issues, in view of the public

interest element of the contract, being whether of hygiene or cleanliness,

whether or not carrying on undesirable activities or certain standards being

maintained or courteous behaviour to customers having to be maintained and all

other such clauses in the agreement would show that if injunction is granted and

specific performance is allowed, the contract would run into such numerous and

minute details which the Court will not be able to supervise on a day to day

basis and consequently in terms of Section 14(1)(b) of the Specific Relief Act

even assuming the respondents are guilty of breach of contract even then no

specific performance is allowable and consequently no injunction can be

granted and at best the entitlement of the petitioner is to claim damages. To

buttress this argument, Mr. Neeraj Kishan Kaul, relied upon Section 14(1)(a)

O.M.P. No.601/2009 Page 7 which says that where the breach can be compensated by damages, specific

performance and injunction ought not to be granted by the Courts.

(iv) Mr. Neeraj Kishan Kaul has finally relied upon the termination

letter dated 24.9.2009 issued by the respondents against the petitioner in which

three specific breaches have been stated viz of non-payment of licence fee, non

submission of the rate list of the food items for approval and not giving the

details of the fixtures and fittings in the food plaza. Mr. Neeraj KishanKaul has

very emphatically stated that the respondents have not received the two letters

dated 16.9.2009 and 19.9.2009 which the petitioner claims to have written to the

respondents. Mr. Akhil Sibbal on the contrary has stated that one letter dated

19.9.2009 was sent by speed post AD.

9. An application under Section 9 of the Arbitration and Conciliation

Act has to be disposed of on the principles of Order 39 Rules 1 and 2 of the

Code of Civil Procedure, 1908 (CPC). It is trite that for disposal of such an

application, the court has to see the existence of a prima facie case, balance of

convenience and irreparable injury which will be caused to either of the parties.

Keeping these principles in view and the law as applicable, I am of the opinion

that this petition is clearly liable to fail and cannot succeed. The reasons for the

same are :-

(i) A person who is himself guilty of breach of contract cannot approach

the court for any relief, much less for an equitable relief of injunction.

O.M.P. No.601/2009 Page 8 As per clause-6 of the agreement the licence fee became payable after

four months of execution of agreement on 23.11.2006 and admittedly

licence fee (that too just Rs.7000/-) was allegedly offered for the first

time as late as two and a half years later in September, 2009. Even

taking a benign interpretation of clause 6 in favour of the petitioner,

the payment of licence fee in any case became due from 23.06.2007

when the only extension granted expired. As stated above admittedly

no licence fee was paid till at least September, 2009 when Rs.7000/- is

offered by the letter dated 19.9.2009. There is thus a clear breach of

contract on the part of the petitioner and that too of a fundamental

term of the contract. Further I may add that assuming for the sake of

arguments if every breach committed earlier was condoned by the

letter dated 2.7.2009 of the respondents it cannot have condoned

future breaches. The licence fee therefore, became payable at least

from July, 2009 and which again was not offered till 19.9.2009 and

when a piffling figure of Rs.7000/- is alleged to be sent. In fact, the

petitioner ought to have sent the entire arrears with contractual interest

thereon. There can be thus no doubt that the petitioner was in breach.

(ii) In the present case, not only the contract runs into minute details

which the court cannot supervise on a day to day basis, the fact of the

matter is that in such commercial contracts at the very best, the

petitioner would have earned profits and which can surely can be

O.M.P. No.601/2009 Page 9 quantified in terms of money for which claims can be filed before the

Arbitrators assuming that the respondent is guilty of breach of contract

and not the petitioner. The petitioner can also quantify in money terms

the cost of construction of the single storeyed structure made by it.

(iii) The judgment of the Division Bench of this court in the case of

Rajasthan Brewaries Ltd. ( supra) is binding on me and clearly

provides that even if, the contract is determinable on account of breach

and the contract is not one which is determinable at will, even then,

the provision of Section 41(e) of the Specific Relief Act would apply

and injunction cannot be granted where a contract has been terminated

on account of breaches committed by the defaulting party. To the

same effect is the judgment in the case of Amritsar Gas Services

(supra).

(iv) I am of the opinion that once a licensee, always a licensee. This

principle has been clearly laid down in a Full Bench decision of this

court reported as Chandu Lal vs. MCD AIR 1978 Del 174 . In fact,

the Full Bench of this Court in this judgment has laid down that a

licensee after his licence is terminated is not entitled to any interim

injunction and in fact the licensor is entitled to use reasonable force to

throw out the licensee from the licenced premises. I may also note at

this stage that a Division Bench Judgement of this court in the

judgment reported as DTTDC Vs. D.R.Mehra & sons 62(1996) DLT

O.M.P. No.601/2009 Page 10 234 declined an injunction which was prayed for by a licensee by

stating that a licencee after termination of the licence is not entitled to

injunction and even if he is in possession such a relief cannot be

granted to him and the Division Bench clearly stated that a licencee

should not be allowed to urge the argument of due process of law

because such issue will not arise if the licencee himself acts fairly and

vacates the premises.

10. The issue of balance of convenience and irreparable injury in a

case like this has necessarily to be seen from the perspective of the legal bar

with respect to the grant of injunction because of Sections 14 (1),(a),(b) &

(c) read with Section 41(e) of the Specific Relief Act. If the law itself

disentitles any injunction, then equities cannot have any say. That being the

position and in view especially of the law with relation to termination of

license, the balance of convenience is not in favour of the petitioner but in

favour of the respondents as the petitioner will be compensated suitably by

damages in case the respondent is found guilty of committing breach of

contract. I may finally note that by looking at facts to arrive at a decision on

an application for injunction under Section 9, it cannot be said that a Court

conducts a mini trial. This Court is mandated to see the strength of the cases

of the respective parties to arrive at a decision by virtue of Colgate

Palmolive vs. Hindustan Liver Ltd. (1999) 7 SCC 1. Mini trial would only

O.M.P. No.601/2009 Page 11 be when highly disputed questions of facts are decided while deciding an

application under Order XXXIX CPC, and which is not so in the present

case in view of the basic facts as stated above being admitted or become

apparent from the record. The contention of the petitioner of "mini trial" is

thus not well founded.

11. In view of the aforesaid the present petition under Section 9 is

dismissed with costs which are quantified at Rs.1 lac and which shall be payable

within two weeks from today failing which the same will carry interest @ 18%

per annum. With the aforesaid observations, this petition is disposed of. The

imposition of costs is in terms of the judgment of the Supreme Court reported as

Salem Advocate Bar Association Vs. Union of India (2005) 6SCC 344, para 37

thereof, whereby the Supreme Court has said that it is high time that instead of

nominal costs, actual costs should be imposed. For awarding of costs, I have

noted the financial capacity of the parties in this case and the claims and issues

involved. AS per Section 35 and Order 20 A of the CPC costs have to

necessarily follow the event.

At this stage, Mr. Neeraj Kishan Kaul, very fairly waives the costs

subject to the condition that if the petitioner prefers an appeal such concession

would stand withdrawn.

NOVEMBER 5, 2009                                   VALMIKI J. MEHTA, J
Ne/ib


O.M.P. No.601/2009                                                          Page 12