Jindal Steel And Power Limited vs M/S. Sap India Pvt. Ltd.
2015 Latest Caselaw 4476 Del

*       IN THE HIGH COURT OF DELHI AT NEW DELHI
                                         Judgment reserved on May 25, 2015
                                         Judgment delivered on June 29, 2015
+                   OMP 119/2015 & IA 9264/2015

JINDAL STEEL AND POWER LIMITED                          ..... Petitioner

                          Through:     Mr.Dhruv Mehta, Sr. Adv. with
                                       Mr. Manish Sharma, Ms.Ranjana
                                       Roy Gawai, Mr.Krishna Keshav,
                                       Advs.

                          versus

M/S. SAP INDIA PVT. LTD.
                                                           ..... Respondent

                          Through:     Mr.Parag Tripathi, Sr. Adv. with
                                       Mr.Vikas Dutta, Mr.Siddharth
                                       Silwal, Mr.Nikhil Varshney,
                                       Ms.Mahima Gupta, Advs.

CORAM:
HON'BLE MR. JUSTICE V.KAMESWAR RAO
V.KAMESWAR RAO, J.

1. This petition under Section 9 of the Arbitration and Conciliation Act

has been filed by the petitioner initially seeking a restraint order against the

respondent from terminating the SAP Software End-User License Agreement

dated September 27, 2005 entered into between the parties.

2. This relief was in view of the legal notice issued by the respondent

dated December 30, 2014 threatening termination of the License. I may only

note here that during the pendency of the petition, the respondent has in fact,

terminated the License Agreement dated September 27, 2005, vide order

dated April 30, 2015, which compelled the petitioner to file an application

seeking the stay of the termination order. Suffice to state, this Court had not

stayed the termination of the License Agreement. Even though, the petitioner

has not amended the petition incorporating the challenge to order dated April

30, 2015, as the order dated April 30, 2015 has been placed on record and the

learned Senior Counsel for the respondent has no objection on this Court

proceeding on the premise that the present Petition lay a challenge to order

dated April 30, 2015, this Court has heard the arguments on the termination

order as well.

The Facts:

3. On September 27, 2005, the petitioner and the respondent entered into

a License Agreement whereby the petitioner was granted a non-exclusive

perpetual License to use the SAP software documentation and other SAP

proprietary information to run the petitioner‟s internal operation and to

provide internal training and testing. Clause 2.1 relates to the „License‟.

Clause 3 relates to „Verification‟. Clause 5.1 defines the „Term‟ and Clause

11 is the „Arbitration‟ clause. According to the petitioner, the total Licenses

available with the petitioner are 21,908 and it has made huge one time

investment of Rs. 13,86,57,580/- (approximately) and recurring payments of

Rs. 15,28,57,254/- (approximately) to procure the SAP Licenses and the

petitioner has been using the SAP applications for business computing, for

which the petitioner has been paying a recurring amount as per agreed terms.

It is the case of the petitioner that since the initial License of the year 2005,

the petitioner has been using the SAP Licenses and during all these years,

there has never been any complaint of excess usage or violation of the

License agreement, by the respondent. According to the petitioner, on

November 13/14, 2014, a team from the respondent‟s office of License had

visited the petitioner‟s facilities at Raigarh, Chattisgarh and conducted onsite

License audit. The petitioner‟s representatives/officials extended all

cooperation and assistance in the conduct of the audit by the respondent‟s

representatives. It is the case of the petitioner that the respondent‟s officers

were required to hold a closing meeting with the representatives of the

petitioner after the conduct of the License audit in order to explain the

methodology adopted by the respondent in conducting the License audit and

to discuss and explain the findings of the audit. However, after completing

the audit on November 14, 2014, the representatives of the respondent left the

site/facilities of the petitioner without holding any closing meeting or

submitting a draft report and without discussing or explaining the findings of

the audit with the representatives of the petitioner. The petitioner‟s case is

that on November 20, 2014, the petitioner was completely shocked and

surprised to receive an email from the respondent, wherein, for the first time,

it was alleged significant non-compliances/violation in the usage of SAP

License by the petitioner on the basis of the License audit conducted on

November 13/14, 2014. The respondent also raised a claim of Rs.

193,97,55,773/-. Immediately thereafter on November 20, 2014, the

petitioner replied vide an email pointing out that no closing meeting was

followed as a standard practice and sought an in-person meeting and

presentation from the respondent to explain the basis of audit findings.

Thereafter also, three emails were sent to the respondent. On November 25,

2014, the representatives of the respondent visited the Gurgaon office of the

petitioner and held a meeting with the representatives of the petitioner. It is

their case that the representatives of the respondent could not satisfactorily

explain all the queries raised by the petitioner as regards the abnormally high

deviation in License usage of the petitioner reported by the respondent. On

December 1, 2014, the respondent sought a written certification from the

petitioner by December 10, 2014 confirming regularization of use of SAP

proprietary information. The aforesaid communication was followed by letter

dated December 13, 2014, wherein, it was pointed out by the respondent, the

petitioner‟s failure to regularize the irregularities in usage of proprietary

information, which according to the petitioner, was ignoring the fact that all

this while, the petitioner was in constant touch with the respondent and

seeking clarification and negotiating to amicably resolve the issue. It has

been averred by the petitioner that the respondent realizing that the demand

of Rs. 193,97,55,773/- for regularization of the alleged compliance gap was

completely baseless, untenable and unjustified, offered a revised commercial

proposal of Rs. 17,32,09,613/- for regularization of SAP Licenses vide its

email dated December 23, 2014. Upon receiving the aforesaid

communication from the respondent, the petitioner on December 24, 2014

sent an email wherein, the petitioner, without prejudice to its earlier

contention as regards the completely baseless allegations of non compliance

and unjust and unfair claim, intimated the respondent that the unit price

indicated for additional SAP Licenses were much higher than the last

purchase order prices. The petitioner also indicated that it will check the

authenticity of the quantity of licenses as well as the classification proposed

by the respondent. It is the case of the petitioner that in one of the meetings

held at the petitioner‟s office in the last week of December 2014, the

respondent/SAP Account Manager had proposed a discount of more than

50% on its previous proposal of Rs. 17,32,09,613/-. It is the case of the

petitioner that while the discussions were on, it was shocked to receive the

notice dated December 30, 2014 from the respondent demanding a claim of

Rs. 193,97,55,773/- for regularizing the SAP Licenses by January 31, 2015,

failing which, it threatened to terminate the License agreement. In response

to the legal notice dated December 30, 2014, the petitioner on January 20,

2015 sent a reply to the notice wherein according to the petitioner, it had

pointed out in detail the contentions and allegations and demands raised by

the respondent are completely baseless, incorrect and smacks of apparent

malpractice. The respondent was called upon to withdraw the said notice.

The petitioner would state that the notice is vitiated on account of the

respondent‟s own subsequent proposal of Rs. 17,32,09,613/- and then by its

offer of 50% discount on Rs. 17,32,09,613/-. It is also stated by the petitioner

that the respondent has accepted from the petitioner an amount of Rs.3

Crores towards annual maintenance charges under the License agreement for

the period January 1, 2015 to December 31, 2015.

4. The respondent in its reply has stated that the petitioner has not come

with clean hands and suppressed material and relevant facts from this Court

and sought the dismissal of the petition. According to the respondent, the

petitioner has concealed the fact that the petitioner is a repeated defaulter and

even during the conduct of audit in year 2011, it was revealed that the

petitioner misused the License provided by the respondent and the petitioner

paid towards regularization of License. The respondent has taken a stand that

the present violation of the petitioner is of high magnitude and cannot be left

undealt. It is the case of the respondent that the over usage/excess usage of

License granted by the respondent as well as category mismatch/misuse is a

material breach of the terms of the License agreement. The respondent has

also pleaded that vide email dated November 20, 2014, the respondent

extensively dealt with the compliance gap on the part of the petitioner and the

email was concealed by the petitioner before this Court. The respondent

would also plead the power to audit the usage of SAP proprietary information

in terms of clause 3 relating to „verification‟ of the agreement and in the

event an audit reveals that Licensee underpaid License and/or Maintenance

Fees to SAP, Licensee shall pay such underpaid fees based on SAP's list of

prices and conditions in effect at the time of the audit. It is the case, the

petitioner has never categorically objected the contents of the audit report and

the compliance gap as stated in the audit report except in its response dated

January 20, 2015. In other words, the previous emails in the month of

November, 2014 only referred to unrealistic and illogical demand of the

closing meeting. That apart, the case of the respondent is that the petitioner

itself has admitted to the fact that there were compliance gaps on their part

which were revealed in the audit done by the independent licensed auditors

selected by the petitioner itself. According to the respondent, it is settled law

even if the contract does not incorporate a specific termination clause, all

commercial contracts except those involve sale of immovable properties are

contracts determinable by the very nature, therefore, no injunction can be

granted. The respondent has sought the dismissal of the petition.

The submissions:

5. Mr.Dhruv Mehta, learned Senior Counsel for the petitioner would

submit that there is no material breach which can entitle r e s p o n d e n t to

terminate the perpetual License Agreement. He would state, that, on

S e p t e mb e r 27, 2005, the Petitioner and the Respondent entered into a

License Agreement and in terms of Clause 2 thereof, the Petitioner

has been granted, upon payment of agreed consideration amount,

a non-exclusive perpetual license to use the SAP software to run the

Petitioner's internal business operations and to provide internal training

and testing. Further, in terms of Maintenance Schedule attached with

the License Agreement, the Respondent agreed to provide Standard

Support Services on the payment of Annual Maintenance Charges by

the Petitioner. According to Clause 5.1 of the License Agreement, the

Agreement can be terminated by the Respondent by giving 30 days

notice only in case of material breach of its provision and not

otherwise. It is submitted that the alleged non-compliance of the

License usage does not amount to material breach of the License

Agreement. In contract law, a "material" breach of contract is a breach

(a failure to perform the contract) that strikes so deeply at the heart of

the contract that it renders the agreement "irreparably broken" and

defeats the purpose of making the contract in the first place. The

essence is that the breach must go to the very root of the agreement

between the parties, which is not the case in the present dispute.

According to him, the respondent vide email dated November 20,

2014 and the Legal Notice dated December 30, 2014 made allegation

of over usage of software and called upon the Petitioner to

regularize the same. Further, the purported reason given for

termination of the License Agreement in the alleged Notice of Termination

dated April 30, 2015 is the alleged failure of the Petitioner to

regularize the irregularities mentioned in the purported Audit Report. The

alleged over usage of licensed software which is admittedly a mere

irregularity and can be easily regularized by payment of money cannot be

said to be a "material breach" in law or on facts situation obtaining in the

present case. He would also state that the allegation is not that of diversion

of licensed software or any third party use. He further states much after

the expiry of 30 days notice in terms of Legal Notice dated December 30,

2014, the Respondent has, on February 26, 2015, accepted payment of

Rs.3 Crores (approx.) from the Petitioner towards AMC for current year

2015 in advance and thus undertaken to continue to provide support

services for the licensed software in question. This clearly indicates that

the alleged over usage of licensed software cannot be a material

breach of the License Agreement. Fourthly According to Appendix 1,

Clause 3, the Petitioner is permitted to use software in excess to what it

has been authorised under the License Agreement, provided it makes

payment for additional usage of software by purchasing additional licenses

at current price and with increased maintenance fees. The notes

circulated by the Respondent during the proceedings before the Court

further reinforces the said proposition where it says there is no "No

Go" areas as far as the software is concerned. It is clear that doing

something that is permitted under the contract cannot amount to breach

much less a material breach. Further, non payment of the disputed amount

(i.e.Rs.193 C rores), which would become "due" only after adjudication by

the arbitral tribunal, cannot be said to have resulted in material breach

under the said Clause 5.1.

6. According to him, the alleged findings of the License Audit

conducted by Respondent in November 2014 and claim of Rs. 193 C rores

raised towards regularization of License is completely arbitrary, illegal

and unjustified.

7. He would state, the respondent has been conducting annual license

audits since the year 2006 in terms of Clause 3 of License Agreement.

All through these years uptil 2013 there has never been any

complaint of excess usage except for minor deviation in year 2011

for which no claim was made by the Respondent. On November 13-

14, 2014 Respondent again conducted annual onsite license audit and for

the first time, vide its email dated November 20, 2014, pointed out

abnormally high over usage of licensed software and raised an arbitrary

claim of Rs. I93,97,55,773/- for regularization of Licenses without

providing any basis or calculation for the same. The Petitioner replied

vide email dated November 20, 2014 and thereafter several emails

were exchanged but the Respondent failed to explain the abnormally

high deviation/excess usage recorded in its purported audit report.

The Respondent didn't follow the due procedure in conducting the said

audit in as much as; (a)The audit team of the Respondent did not hold

any closing meeting to explain the findings after conducting audit on

November 13-14, 2014 with the team assigned by Petitioner, which has

been the usual/standard practice in the previous years; (b)The Respondent

has not provided or explained the audit methodology applied by it in

arriving at the findings; (c)The Respondent has not even provided a

formal audit report for the audit conducted in November 2014 and; (d)

The Respondent did not conduct audit of the licenses by using Standard

License Audit (LA) Tool and instead conducted the audit by running

Scripps.

8. He would also submit that the Respondent having failed to provide

the calculation and basis for the demand of Rs.193,97,55,773 for

regularisation of the alleged compliance gap had offered a revised

commercial proposal of Rs. 17,32,09,613/- for regularisation of SAP

licenses vide its email dated December 23, 2014. It is completely

incomprehensible and defies all business logic that the Respondent within

a span of few days reduced its original claim by more than 90% for

regularization of licenses and had offered discount of 50% in that amount.

This raises a serious doubt about the audit methodology, audit findings

and the claims raised by the Respondent for the alleged over usage of

software and apparently indicates to a design to coerce and armtwist the

Petitioner to purchase extraordinarily high numbers of new software

licenses, which the Petitioner otherwise would not at all need to purchase

considering the sizable number of Licenses it already has which is

sufficient for its business requirement.

9. According to him, much after the expiry of the 30 days notice

period, respondent has first raised the invoices and then accepted the

payment of Rs 3 Crores (approx.) on February 26, 2015 towards

payment of Annual Maintenance Charges from January 01, 2015 to

December 31, 2015 in advance for providing technical support service to

the Licensed Software system in question. The Respondent, on the one

hand, by accepting the AMC has undertaken to provide technical support

to the Software for the current year and on the other issued the

purported Notice of Termination of software licenses on April 30, 2015.

Clearly, this is a classic case of "approbate and reprobate" by the

Respondent as per its convenience, which cannot be permitted by this Court.

10. It is his submission that in terms of the license Agreement, the

Petitioner has made huge One Time investments of Rs. 13,86,57,580/-

(approximately) to procure the SAP Licenses and payments of Rs.

15,28,57,254/- (approximately) towards Annual Maintenance Charges

(AMC) from year 2005 to year 2014. Additionally, Petitioner has paid

an amount of Rs. 3 Crores (Approx.) in advance as AMC for the

current year, 2015. As such the Petitioner has invested about Rs. 32

Crores for purchase of approximately 21908 numbers of SAP

Licenses and towards Annual Maintenance Charges. These integrated

ERP Software system is used to store, process, manage and access

data primarily related to sale, finance, inventory and personnel

department across its various locations, which is, admittedly, very

critical to run the entire business operations of the Petitioner.

Disbursement of salary of approx 25000 employees, employment of

about 90 SAP certified and trained employees working at remote

locations, inventory/stock movements at approx. 50 locations, purchase

of raw materials, manufacturing , sales, invoicing and collections

across various locations would be gravely impacted as a

consequence of termination. It follows that the software provided

under the License Agreement caters to specific business requirement

and critical for running the internal business operation of Petitioner and

thus has special value to the Petitioner, which cannot be easily

substituted by other software products.

11. Mr. Mehta, would deny the allegation of non-compliance in the year

2011. According to him, in the year 2011, the Petitioner's affiliate

company, Jindal Power Limited had set up a new power plant in

Chhattisgarh which gave rise to the need for purchase of additional

licenses by the Petitioner. Therefore, in view of the growing business

needs, the Petitioner purchased additional licenses on March 06, 2011

from the Respondent much prior to the alleged over usage pointed out by

the Respondent vide its email dated July 04, 2011. It clearly establishes

that the said purchase of additional licenses was not done to meet any

compliance gap or for regularisation as alleged by the Respondent. Even

otherwise, no non compliance report was issued and no claim was made

by the Respondent or paid by the Petitioner in connection with

the email dated J u l y 04, 2011.

12. Mr. Mehta states there is no concealment of any document as alleged

by the respondent. It is submitted that in the email dated November

20, 2014 there is no reference to any attachments/enclosures and

therefore it was an inadvertent error on the part of the Petitioner in not

filing the attachments along with the email dated Novembe r 20, 2014.

Even otherwise the minutes of meeting dated Nov e mbe r 13-14, 2014

attached with the said email cannot be relied upon as it is the case of

Petitioner that no closing meeting was held after the completion of the

audit on N o v e m b e r 14, 2014. The Respondent in its Reply has stated

that the Petitioner could not impose a unilateral closing meeting which

even could not have been conducted on November 13, 2014 and

November 14, 2014 as the data was not analysed and just collected. If

that is so, how did the said Minutes of Meeting dated November 13,

2014 and N o v e m b e r 14, 2014 come into existence. This is a clear

case of fabrication of document which is also borne out from the fact

that the said minutes of meeting filed by the Respondent is an unsigned

document.

13. He would also submit that this Court can stay the operation of the

notice of termination dated April 30, 2015 and preserve the subject matter

of dispute till the adjudication by the Arbitral Tribunal. According to him,

it has been held by the Supreme Court in the case of Adhunik Steels

Ltd. V Orissa Manganese and Minerals (P) Ltd. [2007(7) SCC 125],

that the principles of Order 39 R.1&2 Civil Procedure Code, 1908 are

applicable to petitions under Section 9 of the Arbitration and Conciliation

Act 1996. Further, it has been held that it is open to the Court to pass an

order by way of interim measure of protection that the existing

arrangement under the contract should be continued pending the resolution

of dispute by the arbitrator, provided the Petitioner satisfies well settled

principles for grant of interim injunction u n d e r O r d e r 39 Rule 1 & 2

of CPC. It is his submission that the Petitioner has established a prima

facie case and the balance of convenience is in its favour and that

irreparable harm/injury is likely to result if the interim injunction is not

granted. He would state that the merits of the claim for final relief have

limited relevance at the interim stage. According to Mr. Mehta

(i) The Petitioner has a prima facie case in its favour. This can

be seen from the following:

• The Petitioner has sought to terminate the License Agreement, when

no material breach of its provision has been committed by the

Petitioner. The alleged over usage of Licensed software cannot be said

to be a 'material breach' since even as per claim of Respondent, the

same can be regularised by payment for the excess usage by Petitioner.

• License regularization Claim of Rs. 193,97,55,773/- made by

Respondent is vitiated by its own subsequent revised written proposal

of Rs. 17,32,09,613/- and then by its offer of 50% discount thereon.

• The fact as to whether or not a compliance gap has occurred has

to be established upon leading evidence since the Petitioner has raised

serious doubt about the methodology of audit, audit findings and the

claim of Rs. 193 Crores (approx.) without providing any calculation till

date.

(ii) The balance of convenience is in favour of the Petitioner.

This can be established from the following:

• The Petitioner has been using the licensed SAP Software for the last

10 years since September 27, 2005 and there has never been issue of

excess usage of licensed software except for a minor deviation in year

2011 for which no compliance report was issued nor any regularization

claim was made by the Respondent.

• The Petitioner has 21 908 licenses subsisting in its favour

under the License Agreement which is very critical to run the

internal business operation of the Petitioner.

• The Petitioner has made huge investment of Rs. 32 crores

(approximately) towards purchase of SAP software licenses and

payment of AMC from year 2005 to 2015.

• T he Petitioner has already made a payment of Rs. 3 Crores

(approx.) for annual maintenance of the very licenses forming the

subject matter of the present dispute for the period from J a n u a r y 1 ,

2 0 1 5 to December 31, 2015.

• The Respondent itself had agreed to reduce its claim from 193

Crores to 17 C rores. Even assuming there was a compliance gap, the

extent thereof and the count of additional licenses required to be

purchased by the Petitioner can be decided only after ascertaining the

over usage which would require leading of evidence before the Arbitral

Tribunal.

(iii) Irreparable loss and injury is likely to be caused to the

Petitioner unless interim injunction is granted.

• It is the submission that the Petitioner's business operation across

various locations is totally dependant on the software licenses granted

by the Respondent. Termination of the License Agreement will throw

the Petitioner's business out of gear and completely paralyze the same

which will cause tremendous financial loss to it, which cannot be

reversed. Further, it will severely dent its, reputation, goodwill and

standing in the market which cannot be reversed and quantified. There

is a strong likelihood that the award which may be passed by the

Arbitrator in favour of the Petitioner would be rendered infructuous

unless interim protection as prayed for is granted by this Court.

14. He would also submit that the grant of injunction is not barred in

the facts of this case, for the following reasons:

(i) The software licenses in favour of the Petitioner are not ordinary

articles of commerce which are readily available in the market.

As per Explanation (ii)(a) to Section 10 of the Specific Relief Act, there

is a presumption in favour of grant of specific performance in case of

such goods. (reliance placed on Jabalpur Cable Network Pvt. Ltd. Vs.

E.S.P.N Software India Pvt. Ltd. & Ors. AIR 1999 MP 271 & UP

State Electricity Board vs. Ram Barai Prasad AIR 1985 All 26)

(ii) T he contract is not covered by Section I4(1) (a) to (d) of the

Specific Relief Act. It is his submission that none of the facts

necessary to attract these provisions have been established by the

Respondent in the present case. He would rely on the judgment of this

Court in KSL & Industries v. National Textile Corporation 2012

(3)ARB L R 470 Del.

(iii) He states, in the facts of the case, the contract is not by

its very nature determinable. As per Clause 5.1, while it is open to the

Petitioner to terminate the contract 'for any reason', it is not so for the

Respondent. Respondent may only terminate by giving 30 days notice

on occurrence of a 'material breach'.

15. His submission is also that petition is not rendered infructuous

by virtue of the letter dated April 30, 2015 as according to him, the

grant of a mandatory injunction so as to direct a party to continue

with the status quo obtaining before the termination is permissible in

law. The effect of such an order is that the operation of the

termination notice is not immediate and is suspended during the

pendency of the proceedings. It is submitted that this has been

recognised by the Supreme Court in Adhunik Steels [supra]. Similar

o r d e r o f injunction in a challenge to a termination order ha s also

been granted by this Court in KSL & Industries (supra) and Old

World Hospitality Pvt. Ltd.v. India Habitat Centre [73(1997)DLT

374].

16. Mr. Mehta would argue that the respondent by accepting

Rs. 3 Crores has waived its right of termination. A perusal of the

letter dated A p r i l 30, 2015 reveals that it is stated to be issued

pursuant to the notice dated December 30, 2014. It is submitted that

as per Clause 5.1 of the Agreement, the notice period expired on

the expiry of 30 days from the said notice. However, despite the same,

the Respondent has expressly waived the right to termination sought

to be exercised vide the notice. This is evident from the action of

the Respondent of executing an AMC and accepting payment of Rs. 3

Crores (approx.) from the Petitioner on February 26, 2015,

subsequent to expiry of 30 days from the notice dated December 30,

2014. He states, the Respondent cannot be permitted to approbate and

reprobate[Cauvery Coffee Traders v Hornor Resources

(International) Co. Ltd. 2011(10)SCC420)

17. In the last, it is his submission that the purported notice of

termination dated A p r i l 30, 2015 is not in conformity with the

Clause 5.1 of the License Agreement and hence illegal and void.

Merely stating that the termination is 'with immediate effect' will not

amount to compliance with the requirement of Clause 5.1, which

provides that in case of a failure of the Petitioner to cure a 'material

breach' within 30 days, the contract will stand terminated. In addition

to the submissions made hereinabove regarding 'material breach', it is

his submission that the letter dated April 30, 2015 is at best a notice

in terms of Clause 5.1 and the Petitioner has 30 days to cure the breach

alleged. He has sought the stay of the termination notice dated April

30, 2015.

18. On the other hand, Mr.Parag Tripathi, learned Senior Counsel

appearing for the respondent would at the outset challenge the

maintainability of this petition. According to him, in the petition, the

Petitioner has made for three Prayers essentially asking for the same

relief i.e., to restrain the Respondent from terminating SAP agreement

dated September 27, 2005 which was the subject matter of the notice

dated December 30, 2014. These prayers have become infructuous as the

said SAP agreement was terminated on April 30, 2015 and the said

termination has been given effect to.

19. According to him, in any event, even if the said SAP agreement

had not been terminated, the prayers sought for in the Section 9 petition

are contrary to law. This is so because the SAP agreement itself is

clearly a contract determinable from its very nature. He would state, it is

settled law that even if the contract does not include a specific

termination clause, all commercial contracts, except those which involve

sale of immovable property, are contracts determinable by their very

nature and therefore, no injunction can be given in such a case. He

states, the present SAP agreement has a specific termination clause,

namely clause 5.1. Such a contract in any case is determinable by its

very nature.

20. It is also his submission that Section 14 (1) of the Specific Relief

Act, 1963 specifically bars injunction sought for in the present case. The

bar under Section 14 of the Specific Relief Act, 1963 contains sub-

clauses (a), (b), (c) & (d) and each one of them apply to the present case.

21. The Section 14(1)(a) of the Specific Relief Act, 1963 is attracted,

as assuming without admitting in the present case, that the termination

by the Respondent is contrary to law, the present case would be the one

where for any alleged non-performance of the SAP agreement,

compensation of money would be adequate relief. According to him, it

has not even been pleaded in the petition that compensation in money

will not be adequate relief for non-performance of the SAP agreement.

22. He states, Section 14 (1) (b) of the Specific Relief Act, 1963 is

equally applicable, as the SAP agreement requires minute and numerous

details dependent on the personal qualifications principally of the

Respondent and also of the Petitioner. For the working of the said

agreement, there is an annual maintenance contract where an online

minute and numerous details of the performance of the contract is

monitored and helped by the dedicated staff of the Respondent. He

would state, the working of the software involves minute and numerous

details and the implementation and troubleshooting thereof are brought

about by the working and functional annual maintenance contract. He

would state, there is no pleading in the section 9 petition, which would

rule out the application under Section 14 (1) (b) of the Specific Relief

Act, 1963.

23. It is further submitted by him, that the contract by its very nature

is determinable. It is a commercial contract. It is a contract, which

additionally has a termination clause and lastly and significantly, it is not

even pleaded by the Petitioner that the contract in question is not one

which by its very nature is determinable. This being so, and in view of

the settled law, there is and can be no answer to the applicability of

Section 14 (1) (c) of the Specific Relief Act, 1963.

24. He states, for the same reasons, for which the specific

performance of the SAP agreement would be contrary to law in view of

the Section 14 (1) (b) of the Specific Relief Act, 1963, the prohibition of

Section 14 (i) (d) of the Specific Relief Act, 1963 would be applicable. It

is his submission that there is no pleading in Section 9 petition to shut

out the applicability of Section 14 (1)(d) of the Specific Relief Act,

1963.

25. It is his submission that the entirety of Section 14 (l) of the

Specific Relief Act, 1963 stands in the way, as law to the contrary,

which rules out the consideration, much less grant of any relief if the

performance of the contract itself cannot be specifically enforced. For,

on account of the applicability of each of the sub-clauses of 14(1) of the

Specific Relief Act, 1963, there can be no specific performance granted

of the SAP Agreement. Therefore, in that view of the matter, Section 41

(1)(e) of the Specific Relief Act, 1963 clearly applies by which there can

be no injunction which can be granted to prevent the breach of the

contract, the performance of which cannot be specifically enforced.

26. He also states that on the ground of concealment, this petition

need to be dismissed. According to him, the Petitioner in support of its

petition deliberately placed incomplete audit report on record and

concealed the attachments thereto despite the same being in its

knowledge and possession. The complete audit report together with the

attachments was placed by the Respondent. The minutes of meeting

dated November 13/14, 2014 clearly shows the admission of the

Petitioner to the use of multiple logons and generic id's. The said

minutes of meeting have never been denied by the Petitioner.

27. He also states that there is material and wilful breach of contract

inasmuch as under clause 5.1 (ii) of the EULA, SAP has a right to

terminate the EULA after giving 30 (thirty) days' notice to the Licensee

of Licensee's material breach of any of the provisions of the EULA

including more than thirty days delinquency or Licensee's payment of

any money due hereunder, unless Licensee has cured such breach during

such thirty days period. The said clause gives right to SAP to terminate

the license after giving thirty days' notice to the Petitioner. A material

breach is a breach that is fundamental to the contract's subject matter and

adversely affects the outcome of the contract. The consideration amount

paid under the License Agreement by Petitioner was towards license of

the software for exact and purchased quantity of Named Users and

Software Engines. As per the Use Restrictions provided under Clause 3

of Appendix 1, the quantity of Named Users, Software Engines, SAP

Industry Solutions and the content licensed have to be adhered to by the

Licensee or if there are any changes in the same, the Licensee has to

intimate the same to SAP and the License Agreement has to be modified

accordingly by the addition of such additional Named Users, Software

Engines, SAP Industry Solutions and the said content licensed at the

current pricing in effect. The maintenance charges will also have to be

modified and paid accordingly. The use of the software by the Petitioner

as appearing from the Audit Report either by over-usage/ excess usage

of the license granted as well as category mismatch/misuse constitutes a

material breach of the terms of the License Agreement and its appendix

and therefore entitles Respondent to terminate the License Agreement as

per Clause 5.1 of the License Agreement.

28. He states that there is no communication by the Petitioner in

which the audit report has ever been denied as incorrect.

29. He would submit that it is a settled principle of law that protection

u/S 9 of the Act cannot be granted in a contract determinable by its

nature. Section 14(1) of the Specific Relief Act, 1963 specifies that the

contracts which cannot be specifically enforced is a contract which in its

nature determinable. Further Section 41 (e) of the Specific Relief Act,

1963 categorically provides that an injunction cannot be granted to

prevent breach of a contract, the performance of which would not be

specifically enforced. He relies upon the following judgments:

(i) Indian Oil Corporation Ltd. v. Amritsar Gas Service and Others,

1991 (1) Arb. LR 97. (Para 12, 14)

(ii) Adhunik Steels Ltd. v. Orissa Manganese and Minerals Pvt. Ltd;

(2007) 7 SCC 125 (Para 16, 23 & 27)

(iii) Rajasthan Breweries Limited v. The Stroh Brewery Company,

2000 (55) DRJ 68 (DB) (Para 69, 73, 75 & 76)

(iv) MIC Electronics Ltd. & Anr. v. Municipal Corporation of Delhi &

Anr., 2011 (1) Arb LR 418 (Para 5, 6 & 12).

(v) D.R. Sondhi & Ors. v. Hella KG Hueck & Co. & Ors., (2001) ILR

(2) Delhi 679(Para 7 to 11 and 20)

30. He states, that, contract once terminated cannot be revived, on the

following grounds:

(i) The License Agreement between the Petitioner and the Respondent

has been terminated by Respondent‟s termination letter dated April 30,

2015. Therefore the License Agreement having being terminated cannot

be restored in the present proceedings or any directions can be passed to

make the Respondent comply with the terms of the License Agreement.

(ii) It is a principle of law that the scope and ambit of Section 9 is not to

restore the contract which has already been terminated and no interim

relief can be granted against termination. Further the court under Section

9 cannot give direction to a party for not terminating the contract or to

continue with the contract.

(i) Bharat Catering Corporation v. Indian Railway Catering &

Tourism Corp. Ltd., 2009(162) DLT 219

(ii) Bharat Catering Corporation v. Indian Railway Catering &

Tourism Corp. Ltd., 2009(164) DLT 530

(iii) VF Services (UK)Ltd. v. Union of India & Anr., 2011(10)AD269

(Delhi) (Para 7 & 8)

(iv) Progressive Constructions Ltd. v. Chairman, National Highways

Authority of India & Ors., 2009 (157) DLT 537 (Para 6)

He seeks dismissal of the petition.

31. Having heard the learned counsel for the parties and considered

the written submissions filed by them, this Court is of the view, the

following questions arise for its consideration:-

(i) Whether in view of the order dated April 30, 2015 the

petition under Section 9 of the Act, seeking relief of injunction

against notice dated December 30, 2014 has become

infructuous?

(ii) Whether in the facts of this case, the agreement in its very

nature determinable and no injunction of termination notice

dated April 30, 2015 can be granted?

(iii) Whether in the facts of this case, in view of the

Explanation (ii)(a) to Section 10 of the Specific Relief Act,

1963, the relief for specific performance can be granted?

(iv) Whether, in view of the agreement having been

terminated, an injunction can be granted to the termination

notice dated April 30, 2015?

Question No.1:

32. As pointed out in para 2 above that during the pendency of the petition,

the respondent has in fact terminated the License agreement dated September

27, 2005. This Court had not stayed the termination of the License

agreement. Even though the petitioner has not amended the petition,

incorporating the challenge to the order dated April 30, 2015, as the said

order has been placed on record by way of an IA and the learned Sr. Counsel

for the respondent has no objection on this Court proceeding on a premise

that this petition lay a challenge to the termination notice dated April 30,

2015, hence, suffice to state, the petition has not become infructuous.

33. The License agreement dated September 27, 2005 includes four

clauses which are relevant for the purpose of this case. They are Clause 2.1,

clause 3, clause 5.1 and clause 11, which are reproduced as under:-

"2.1 License:

(a) SAP grants a non-exclusive, perpetual (unless terminated in accordance with Section 5 herein) license to Use the Software, Documentation, other Sap Proprietary Information at specifies site(s) within the Territory to run Licensee s internal business operations and to provide internal training and testing for such materia business operators and as further set forth in Appendices hereto. This license does not permit Licensee to (i) sub-license or rent the Software Documentation or Third-Party Database or (ii) use the SAP Proprietary Information to provide services to third parties (e.g. business process outsourcing service bureau applications or third party training) Business Partners may have screen access to the Software solely in conjunction with Licensee's Use and may not Use the Software to run any of their business operations. "

"3. VERIFICATION: Sap shall be permitted to audit (at least once annually and in accordance with SAP standard procedures) the usage of the SAP Proprietary Information. In the event an audit reveals that Licensee underpaid License and / or Maintenance Fees to SAP Licensee shall pay such under paid fees based on SAP's list of prices and conditions in effect at the time of the

audit. "

"5.1 Term: This Agreement and the license granted hereunder shall become effective as of the date first set forth above an shall continue in effect thereafter unless terminated upon the earliest to occur of the following (i) thirty days after Licensee gives SAP written notice of Licensee's desire to terminate this Agreement for any reason but only after payment of all License and Maintenance Fees then due and owing (ii) thirty days after SAP gives Licensee notice of Licensee's material breach of any provision of the Agreement (other than Licensee's breach of its obligations under Sections G or 10 which breach shall result in immediate termination) including more than thirty days delinquency in Licensee's payment of any money due hereunder unless Licensee has cured such breach during such thirty day period (Hi) immediately if Licensee files for bankruptcy becomes insolvent or makes an assignment for the benefit of creditors. "

11. ARBITRATION Except for the right of either party to apply to a court of competent jurisdiction for an injunction or other equitable relief available under applicable law to preserve the status quo or prevent irreparable harm pending the selection and confirmation of a panel of

arbitrators and for the right of SAP to bring suit on an open account for any payments due SAP hereunder, any controversy or claim arising out of or relating to this Agreement or the breach thereof shall be settled by arbitration in New Delhi, India in accordance with the Rules of Conciliation and Arbitration of ICC and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. Arbitration shall be conducted in the English language by a panel of three (3) members, one member selected by SAP, one member selected by Licensee and the third member, who shall be chairman, selected by agreement between the other (2) members. The chairman shall be a solicitor, and the other arbitrators shall have a background or training in computer law, computer science or marketing of computer industry, products. The arbitrators shall have the authority to grant injunctive relief in a form substantially similar to that which would otherwise be granted by a court of law. The parties agree that the arbitration proceedings and the outcome shall be kept strictly confidential and that obligations under this Section 11 shall survive termination or expiration of this Agreement. "

34. A perusal of clause 5.1 of the license agreement, it is noted that the

agreement contemplates, the licensee, the petitioner herein gives the

respondent written notice of its desire to terminate the agreement for any

reason, whereas, for the respondent to terminate the agreement, it

contemplates, 30 days‟ notice of petitioner‟s material breach of any of the

provisions of the agreement. It is conceded by the counsel for the petitioner

that there is no negative covenant in the agreement which bars a termination.

His submission is that the Court can stay the operation of the notice of

termination dated April 30, 2015 to preserve the subject matter of the dispute

till the adjudication of the Arbitral Tribunal. In other words, it is his

submission, that on principle, the Courts recognize the stay of termination,

provided, the petitioner satisfies, the well recognised principles of grant of

interim relief in view of the judgment of the Supreme Court in Adhunik

Steels Ltd (supra). In Adhunik Steels Ltd (supra), the Supreme Court was

concerned with a case where the facts were, a company named OMM Pvt.

Ltd. obtained the mining lease from the government of Orissa for mining

manganese ore from certain extents of land situated in Sundergarh District in

the State of Orissa. The OMM Co. entered into an agreement dated May 14,

2003 with Adhunik Steels, the petitioner/appellant before the Supreme Court,

for raising the manganese ore on its behalf. The term of agreement was 10

years w.e.f. May 18, 2003. It conferred on Adhunik Steels an option to seek

a renewal for a further term. It was the case of the Adhunik Steels that

pursuant to this agreement, it had mobilized huge resources for carrying out

excavation and extraction of minerals by arranging necessary labour, staff,

equipment etc. On November 24, 2003, the OMM Co. issued a notice to

Adhunik Steels purporting to terminate the agreement. According to the

OMM Co. it had realized that the contract it had entered with Adhunik Steels

was one in violation of Rule 37 of the Mineral Concessions Rules, 1960 and

since there was danger of OMM Co. itself losing its rights as a lessee, the

contract had to be terminated. Adhunik Steels filed a petition before the

District Court at Sundergarh u/S 9 of the Act for an injunction restraining the

OMM Co. from terminating the contract and from dispossessing the Adhunik

Steels from the sites of mines and other consequential reliefs. The District

Court held that Rule 37 of the Mineral Concession Rules, 1960 cannot be

held to be applicable to the working arrangements between the parties which

has been termed a raising contract. It further held, the balance of

convenience was in favour of the grant of an injunction against OMM Co.

and if the injunction is granted, the very purpose of the arbitration

proceedings would be defeated.

35. Aggrieved by this order, OMM Co. filed an appeal before High Court

of Orissa. It was argued on behalf of OMM Co. that the contract between the

parties, was in violation of Rule 37 of the Mineral Concession Rules, 1960,

hence, the agreement itself was illegal and no right could be founded on such

an illegal agreement by Adhunik Steels. It was alternatively contended that in

terms of Section 41 of the Specific Relief Act, 1963, no injunction can be

granted for continuance of the contract and the working of the contract

involved intrinsic details in its performance extended over a period of 10

years and the Court could not be in a position to supervise the working of the

contract and in such a situation, an interim injunction ought not be granted. It

was also contended that in terms of Section 14 of the Specific Relief Act,

1963 the agreement was not specifically enforceable as it was terminable and

in any event, since Adhunik Steels could be compensated in terms of the

money, even if its claim was ultimately upheld, it was not a case for grant of

interim injunction.

36. The High Court came to a prima facie conclusion, Rule 37 of the

Mineral Concession Rules, 1960 has no application to the facts of the case. It

was held, in view of clause 8.2 of the agreement, Section 14(1)(c) of the

Specific Relief Act, 1963 was not attracted. But the High Court upheld the

contention on behalf of OMM Co. that the loss, if any, that may be sustained

by Adhunik Steels could be calculated in terms of money and in view of that

and in the light of Section 14 (3)(c) of the Specific Relief Act, an injunction

as prayed for by Adhunik Steels could not be granted.

37. Feeling aggrieved by the order of the High Court, the Adhunik Steels

approached the Supreme Court. The OMM Co. also approached Supreme

Court against a finding of the High Court that Rule 37 of the Mineral

Concession Rules, 1960 has no application. Before the Supreme Court, the

parties have argued on the scope of Section 9 of the Act. The Supreme Court

considering various judgements and commentaries on arbitration as relied

upon by the parties, was of view that the power of the Court under Section 9

of the Act is not totally independent of the well known principles governing

the grant of an interim injunction that generally governs the Court. In other

words, while considering an application u/S 9 of the Act, the Court will be

governed by the well known principles of grant of interim injunction by a

Civil Court. The question that was determined by the Supreme Court was,

whether in the circumstances, the order of injunction can be granted

restraining the OMM Co. from interfering with the Adhunik Steels‟ working

of the contract, which the OMM Co. has sought to terminate. In para 24,

Supreme Court noting the contention of Adhunik Steels that if OMM Co. is

permitted to enter into other contracts with others for the same purpose, it

would be unjust when the stand of OMM Co. is that it was cancelling the

agreement mainly because it was hit by Rule 37 of the Mineral Concession

Rules, 1960. The Supreme Court, going by the stand adopted by the OMM

Co. held that it was clear that OMM Co. cannot enter into a similar

transaction with any other entity since that would also entail the apprehended

violation of Rule 37 of the Mineral Concession Rules, 1960. In this

background, the Supreme Court has held that it would be just and proper to

direct the OMM Co. not to enter into a contract for mining and lifting of

minerals with any other entity until the conclusion of the arbitration

proceedings. The Supreme Court also observed, that it see no justification in

preventing OMM Co. from carrying on the mining operations by itself. The

Supreme Court also observed that if Adhunik Steels succeeds, would be

entitled to get if not the main relief, compensation for the termination of the

contract on the principles well settled in that behalf.

38. Suffice to state, it is clear from the above, the Supreme Court has not

injuncted the termination of agreement with Adhunik Steels. It had only

restrained the OMM Co. from entering into a contract for mining and lifting

of minerals with any other entity until the conclusion of the arbitral

proceedings. In other words, the Supreme Court had only restrained the

OMM Co. from entering into a contract with a third party. It is also noted that

the Supreme Court has approved that the agreement is liable to be terminated

for which compensation would be the remedy on the principles well settled in

that behalf. The reliance placed by Mr. Mehta on Adhunik Steels (supra) is

totally misplaced and would not be applicable in support of his contention

that the Supreme Court recognizes the stay of termination.

39. Insofar as the submission of Mr. Mehta that in terms of clause 5.1

which stipulates the petitioner to terminate the contract for any reason, it is

not so for the respondent as the respondent may only terminate the contract

by giving 30 days‟ notice on occurrence of material breach and the Contract

is not covered by Section 10 (1) (a) to (d) of the Specific Relief Act, 1963 by

relying on the judgment of this Court in KSL & Industries (supra) is

concerned, in that case, the reliefs claimed by three petitioners under Section

9 of the Act, were inter alia, for stay of letter dated September 14, 2010

issued by the respondent NTCL, terminating the MOU dated November 14,

2008 entered into with the three petitioners and with a further direction, not

to create any third party right/interest and not to dispose of any land,

machinery and fixed assets of the eleven textile mills covered by each of the

MOUs and for a direction to take such steps that are necessary to preserve the

value of textile mills and to discharge all the obligations under MOUs.

40. Clause 2.1 of the MOU stipulated that the MOU shall come into force

on the date of execution of the MOU and shall be valid for a term of 240 days

from the date of execution of the MOU unless mutually extended or till the

execution of definitive agreements, whichever is earlier. It is clarified that

the MOU shall be superseded by the definitive agreements.

41. Clause 5.1 of the MOU stipulated that the NTCL shall have the right to

terminate the MOU forthwith upon serving written notice on the strategic

partner in the event the definitive agreements are not executed to the full

satisfaction of NTCL within 240 days of the date of execution of the MOU.

Clause 5.2 of the MOU stipulated that either party shall have the right to

terminate the MOU upon the happening of the following events by giving the

other party 30 days‟ prior notice in writing; (i) should the other party become

insolvent or a Receiver is appointed in respect of its properties (ii) should the

other party commit a breach of any of the provisions of the MOU which is

not remedied with 30 days of the receipt of written notice in this respect from

the non-defaulting party.

42. The reasons for terminating the MOU were, that in terms of clauses 2.1

and 5.1 of the MOU as the definitive agreements were not executed by KSL

(Petitioner) NTCL had the right to terminate the MOU. Similarly, the MOUs

entered into by the other two petitioners were also terminated by NTCL.

43. It was contended on behalf of the respondent that being a pure

commercial transaction, money would be an adequate compensation in case

the petitioner is able to prove that the MOU was wrongly terminated. It was

also argued on behalf of the respondent NTCL that the MOU is determinable

as it provides for termination in clause 5.1, which confers unilateral rights

upon the respondent to terminate the MOU at any time after 240 days of the

signing of the same. Strong reliance was placed by the respondent on the

judgment of this Court in Rajasthan Breweries Ltd. (supra), which in turn,

relied upon the Supreme Court‟s judgment in the case of Indian Oil

Corporation Ltd. Vs. Amritsar Gas Service and Ors. (supra). This Court

had in para 75 posed itself a question whether or not in all cases, where a

contract is determinable specific performance shall not be ordered and

whether the present contract was determinable or that prima facie, it was not

legally determined. This Court, while, dealing with the aforesaid question

and referring to the judgment of the Supreme Court in Indian Oil

Corporation Ltd. Vs. Amritsar Gas Service (supra), was of the view that the

Supreme Court in para 12 of the decision noted that the award itself accepted

that the agreement could be terminated in accordance with clauses 27 and 28

and the same was revocable in accordance with the said clauses. This Court

had also observed that the Supreme Court did not go into the question of

validity of question of agreement where the power to terminate is contingent

and could not be exercised otherwise than on the happening of the

contingency. The Court was of the view that the facts before the Supreme

Court were that the agreement could be terminated by either of the parties by

simply giving a notice. Therefore, the ratio of the said judgment cannot be

extended to all cases where the contract could be determined only on the

happening of a particular contingency. In para 80 in KSL & Industries case

(supra), this Court had also observed that there is no provision akin to

clauses 27 & 28.

44. Before I deal with the facts of this case, I deem it appropriate to

consider here, the judgment of the Supreme Court in Indian Oil Corporation

Ltd. Vs. Amritsar Gas Service (supra). In the said case, the Supreme Court

was concerned with a termination of distributorship by the Indian Oil

Corporation. The terms and conditions vide clause 27 of the agreement

provided for termination of the agreement by the corporation forthwith on the

happening of any certain specified events. Clause 28 permitted either party

without prejudice to the foregoing provisions or anything to the contrary

contained in the agreement to terminate the agreement by 30 days‟ notice to

the other party without assigning any reason for such termination. An

argument was advanced on behalf of the Indian Oil Corporation that the relief

of restoration of the contract granted by the arbitrator is contrary to law being

against the express prohibition in Section 14 and 16 of the Specific Relief

Act, 1963. It was urged that the contention the contract being admittedly

revocable at the instance of either party in accordance with clause 28, the

only relief can be granted on the finding of breach of contract by the

appellant-corporation is damages for the notice period of 30 days and no

more. The Supreme Court was of the view that the finding of the Arbitrator

that the corporation is within its right to terminate the distributorship of the

plaintiff in accordance with the terms of the agreement if and when an

occasion arises along with the reasons given in the award clearly accepts, the

distributorship could be terminated in accordance with the terms of the

agreement which contain the aforesaid clauses 27 and 28. The Supreme

Court held that the finding in the award being that the distributorship

agreement was revocable and the same being admittedly for rendering

personal service, the relevant provisions of the Specific Relief Act were

automatically attracted.

45. I agree with the submission of Mr. Tripathi that in Indian Oil

Corporation Vs. Amritsar Gas Service (supra), the conclusion of the

Supreme Court that an agreement incorporating provisions akin to clauses 27

and 28, are necessarily in its nature determinable and in view of Sub-section

(1) of Section 14 of the Specific Relief Act, a contract cannot be specifically

enforced.

46. Similar is the provision in the case in hand. Since we are concerned

with (ii) of clause 5.1 (akin to clause 27) which contemplates 30 days notice

by the respondent to the licensee i.e. the petitioner herein, of material breach

of any provision of the agreement including more than 30 days delinquency

in licensee‟s payment of any money due under the agreement unless the

licensee, the petitioner herein, has cured such breach during such 30 days‟

period. That apart, para 80 of the judgment of this Court in KSL &

Industries (supra), wherein this Court has referred to the fact that in the said

case, there is no provision akin to clauses 27 & 28 as was in existence in

Indian Oil Corporation Ltd. Vs. Amritsar Gas Service (supra), the judgment

in KSL & Industries (supra), would not be applicable to the facts of this

case.

47. On the other hand, I note, in Rajasthan Breweries Ltd. (supra), this

Court was concerned with an appeal against the order of the learned Single

Judge of this Court dated March 23, 1997, dismissing the application filed by

the appellant under Section 9 of the Act, seeking ad interim temporary

injunction staying the two notices of termination dated January 19, 1999,

terminating the two agreements namely Technical knowhow and Technical

Assistance executed between the parties.

48. The learned Single Judge dismissed the appellant‟s application on the

ground that injunction prayed for was statutorily prohibited on conjoint

reading of Section 41 and Section 14(1)(c) of the Specific Relief Act, 1963

since the contract in question was determinable in nature. The appellant‟s

case was that the contract was not determinable in nature as contemplated by

Section 14(1)(c) of the Specific Relief Act, 1963 since there is no clause in

the agreement, which permits the respondent to terminate the agreement by

giving a notice of a few days. This Court has held, although the clause does

not add the word "by the parties or by the defendant" yet that is the sense in

which, it ought to be understood. The Court went on to hold that all revocable

deeds and voidable contracts may fall within "determinable" contracts and

the principles on which specific performance of such an agreement would not

be granted is that, the Court will not go through the idle ceremony of

ordering the execution of a deed or instrument which is revocable at will of

the executants. The Court also relied upon the judgment of the Supreme

Court in the case of Indian Oil Corporation Ltd. Vs. Amritsar Gas Service

(supra). This Court has also held that the facts in the case of Rajasthan

Breweries Ltd. (supra) are identical to those in the decision of the Supreme

Court in Indian Oil Corporation Ltd. Vs. Amritsar Gas Service (supra)

inasmuch as the agreements in Rajasthan Breweries Ltd. (supra) are also

terminable by the respondent on happening of certain events, which is also

the position in the agreement in the case in hand vide clause 5.1 (ii). This

case covers the case of the respondent inasmuch as the injunction as sought

for by the petitioner is statutorily prohibited with respect to a contract which

is determinable in nature. I note for benefit the judgment of this Court in the

case of MIC Electronics Ltd. and Anr. (supra), wherein, in para 12, this

Court has observed as under:

"12. The next question that needs to be considered is the

contention of the Respondent that the contract between the

parties was in its very nature determinable and

consequently could not be specifically enforced by way of

the present proceedings. In this behalf, it is observed that

the Appellant did not pay the agreed License fee in terms of

the License agreement. Consequently, after issuance of the

show cause notice and calling for a reply from the Appellant

the Respondent cancelled the License under the terms of the

agreement between the parties. Therefore, the License stood

terminated, as correctly observed by the learned Single

Judge, in the impugned order, and the legality or illegality

of termination would be a matter to be determined in

arbitration. Further, the justification given by the Appellant

for not paying the License fee will be examined in the

arbitral proceedings. The case of the Appellant that, owing

to the failure of the Respondent to perform obligations

under the agreement, and the latter‟s refusal to decrease

the number of LED screens in terms of clause 6 of the

agreement, would also be considered by the Arbitral

Tribunal. In this behalf, we, therefore, find considerable

merit in the submission made on behalf of the Respondent

that if the cancellation of the contract by the Respondent

constitutes a breach of contract on their part, the Appellant

would be entitled to damages. In other words, the questions

whether the termination is wrongful or not or whether the

Respondent was not justified in terminating the agreement,

are yet to be decided. However, from the facts of the case

there is no manner of doubt that the contract was by its very

nature terminable, in terms of the contract between the

parties themselves".

49. In D.R. Sondhi (supra), on which reliance was placed by Mr. Tripathi,

it is noted, that there is no provision of termination simplicitor yet the Court

found that the contract as determinable as the particular event, commission of

material breach as per clause 13.4 of the agreement, had happened.

50. In view of the aforesaid position, the answer to Question No. 2 must be

that the agreement in this case was determinable and the relief as sought for

by the petitioner cannot be granted in view of Section 14 (1)(c) read with

Section 41 of the Specific Relief Act, 1963.

51. That apart, the petitioner is also not entitled to the relief of Specific

Performance, the software licenses in favour of the petitioner are not ordinary

articles of commerce which are readily available in the market. The

reference made by Mr. Mehta to Explanation (ii) (a) to Section 10 of the

Specific Relief Act, 1963 is reproduced as under:

"10. Cases in which specific performance of contract

enforceable.--Except as otherwise provided in this

Chapter, the specific performance of any contract may,

in the discretion of the court, be enforced--

....................

(ii) that the breach of a contract to transfer movable

property can be so relieved except in the following

cases:--

(a) where the property is not an ordinary article of

commerce, or is of special value or interest to the

plaintiff, or consists of goods which are not easily

obtainable in the market".

52. Mr. Mehta would rely upon the aforesaid provision to contend that

there is a presumption for grant of specific performance in the case of

software licenses in favour of the petitioner as the licenses are not ordinary

articles of commerce which are readily available in the market. Such a

submission may not hold good in view of the stand of the petitioner in its

own pleadings wherein the petitioner has conceded in para 7 of the petition,

wherein, the petitioner has stated that the respondent is a third largest

enterprise software in India with 6.2% of total market share. In other words,

the software Licenses granted under the agreement is not unique to the

respondent. There are other vendors available who can also cater to the

needs of the petitioner with the same software and which makes such a

software as an ordinary article available in the market. Insofar as the reliance

placed by Mr. Mehta on the judgments of the Allahabad High Court in UP

Electricity Board, Lucknow (supra) and of the Madhya Pradesh High Court

in the case of Jabalpur Cable Network Pvt. Ltd. (supra) are concerned, in

UP Electricity Board, Lucknow (supra), the Court was concerned with coal

ash and wherein there is a finding that coal ash is a type of property which is

not easily available in the market, it is a waste product. Bulk supply of coal

ash is available only where, there is a thermal power station. Coal ash thus

comes within the term "where the property is not an ordinary article of

commerce". The Court was of the view, that if there is a breach of contract

to transfer coal ash, the plaintiff cannot be compensated in terms of the

money thereof and the money being not an adequate relief.

53. Similarly, in Jabalpur Cable Network Pvt. Ltd. (supra), the Court held

that the electronic TV signals to be supplied by the respondent to the

appellant under agreement were not ordinary articles of commerce and were

of special value to the appellant and they were the goods not easily

obtainable in markets and breach of contract to transfer these goods cannot be

relieved by payment of money in lieu thereof and it would be most

inequitable not to grant relief to appellant to transmit information which is of

great value when it is live and loses its importance after the telecast is over.

54. Suffice to state, the aforesaid judgments could not be made applicable

to the facts of the present case and the relief of specific performance cannot

be granted even on this ground.

55. Even the judgment of this Court in Old World Hospitality (supra),

relied upon by Mr. Mehta has no applicability in the facts of this case in as

much as, in the said case, this Court was dealing with an objection based on

Section 14 (1) (d) of the Specific Relief Act. Even otherwise, it is not the

case of the petitioner in its pleadings that damages are not an adequate

remedy so as to entitle the petitioner, the relief of specific performance.

56. Apart from my conclusion to Question Nos. 2 & 3, a further ground on

which the injunction of the termination order dated April 30, 2015 cannot be

granted, is that the termination having been effected and damages being an

adequate remedy, the agreement cannot be revived.

57. The rest of the submissions, including there is no material breach,

made by Mr. Mehta are on the merit of the termination, which need to be

urged before the appropriate forum i.e. the Arbitral Tribunal.

58. In view of the above discussion, no relief can be granted to the

petitioner and the petition is dismissed.

IA 9264/2015

59. In view of the order passed in the petition, the miscellaneous

application is dismissed.

(V.KAMESWAR RAO) JUDGE JUNE 29, 2015 akb