1. The respondent was appointed as an Anchor with the petitioner,
vide letter of appointment dated 28th April, 2021, at the salary of ₹
7,26,000/- per annum. The following clauses of the letter of
appointment, are relevant for adjudication of the issue in controversy:
5. Term:
5.1 You agree that your services with the Company shall
be for a fixed term of Thirty Six (36) months commencing
from the Date of Commencement, which may be further
renewed, on the basis of factors including but not limited to
your performance and requirements of the company
("Term").
7. Termination of Employment:
7.1 During the period of your employment, your services
are liable to be terminated by either party at any time, with
ninety days (90) prior written notice or payment of ninety
days basic salary for the notice period short for, in lieu
thereof.
7.2 It is agreed by you that serving notice period shall be
essential and mandatory, unless otherwise agreed by the
Company management, in view of the nature of your KRA
with the Company. In view thereof, you agree that the right
of finalizing your exit date, from the Company, shall solely
based with your reporting manager/management of the
Company, and the same shall be confirmed to you after
confirmation of your resignation/termination.
11. Engagement in other Business:
11.1 You acknowledge that the Company requires you to
devote your whole time and attention to the service of the
Company during the term of your employment with it.
Accordingly, you agree to be employed with the Company on
an exclusive basis.
11.2 For this reason, during the term of your employment,
you must not (without the Company's prior written consent)
directly or indirectly own, manage, control, participate in,
consult with, render Services to or engage in the business of
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any other business entity or other organisation (whether as an
employee, officer, director, agent, partner, consultant or
otherwise full time or part-time) including production of any
creative interest with any production house, whether for ready
commercial benefit or not.
12. Non-competition:
12.1 You acknowledge that during the term of your
employment with the Company, you will become familiar
with the Company's trade secrets and other confidential
information concerning the Company and its associates and
related companies and that your services will be of a special,
unique and extraordinary value to the Company.
12.2 It is further agreed by you that being an identity and
face of the Company, you shall not directly or indirectly own,
manage, control, participate in, consult with, render services
for, or engage in any business competing with the businesses
of the Company or its associates or related companies, such as
other news channel/web streaming platform/etc. whether by
appearing on such channels/platforms for the same region
(north/south/east/west) in India or in the same language and
time slot, for a period of at least six (06) months from the date
of your relieving from the Company."
Additionally, Clause 17.1 of the letter of appointment provided for
arbitration as the mode for resolving disputes, with Delhi as the
designated arbitral seat.
2. The respondent worked with the petitioner, uninterruptedly, till
3rd August, 2021, when she addressed the following email to the
petitioner:
"Dear Sir,
As discussed with you, I wish to resign from the post of
Anchor with ABP Network. Since I am still on probation,
would be grateful if I could be relieved by August 16th.
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Even though it has been a very short journey, my heartfelt
thanks to you for allowing me this opportunity.
Thank you so much.
Regards
Malika"
3. This was succeeded by the following email dated 12 th August,
2021:
"Dear Sir,
Dear Sir, as discussed, please relieve me on Monday, August
16th. I have cleared everything that had been pending on me.
Please let me know of any exit procedures.
Thank you.
Best regards,
Malika"
4. W.e.f. 18th August, 2021, the respondent stopped attending the
office of the petitioner. On 20th May, 2021, it came to the knowledge
of the petitioner that the respondent is anchoring a show of a rival
news channel (Aajtak).
5. The petitioner has, in the circumstances, sought to invoke the
jurisdiction of this Court, under Section 9 of the Arbitration and
Conciliation Act, 1996 ("the 1996 Act"), seeking a pre-arbitral
interlocutory order restraining the respondent from "directly or
indirectly, participating, consulting, rendering any services for, or
engaging in any business competing with the businesses of the
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Petitioner or performing any task or undertaking any assignment, with
or without remuneration, as being performed by the Respondent while
being in the services of the Petitioner".
6. This, then, is the limited controversy before me.
7. Opposing the petition, Mr. Hrishikesh Baruah has, patiently and
persuasively, urged the following preliminary contentions, without
prejudice to the defences to the allegations of the petitioner on merits.
The contentions of Mr. Baruah essentially question the entitlement, of
the petitioner, to the nature of the relief sought in the petition, in view
of the provisions of Specific Relief Act, 1963, read with judicial
pronouncements on the issue. In case, the submissions of Mr. Baruah
are found worthy of acceptance, no occasion would arise for this
Court to pronounce on the merits of the controversy between the
parties. The bulk of the argument before me, too, revolved, advisedly,
around the preliminary objections of Mr. Baruah. It would be
appropriate, therefore, to examine these objections at the outset.
8. The objections of Mr. Baruah, to grant of the relief claimed in
the petition, are interconnected. They may be enumerated thus:
(i) Clauses 12.1 and 12.2 of the letter of appointment are
void under Section 27 of the Indian Contract Act, 1872 ("the
Contract Act").
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(ii) Clauses (c) and (d) of Section 14, read with Section 41(e)
of the Specific Relief Act, 1963 bars the grant of the injunction,
as sought.
(iii) The right to such injunction is not saved by Section 42 of
the Specific Relief Act, 1963 as no injunction, even to enforce a
negative covenant in a contract which is, in its nature
determinable, can be granted in a contract of personal service, if
it would directly or indirectly compel the employee to idleness,
or to serve the employer against her, or his, will.
(iv) Clauses 11.1 and 11.2 of the letter of appointment are not
applicable, as they apply only during the currency of the
employment of the respondent with the petitioner. Besides,
enforcement of the said clauses would amount to enforcing a
contract of personal service, which is impermissible, in view of
Section 14(1)(c) of the Specific Relief Act, 1963.
(v) The considerations of balance of convenience and
irreparable loss would also militate against the grant of relief as
sought in the petition, as the petitioner could be equally
efficaciously be compensated in monetary terms. Section 41(h)
of the Specific Relief Act, 1963 has been pressed into service,
to support this contention.
9. While contentions (ii) to (v) are interconnected, and would have
to be examined accordingly, contention (i) is distinct therefrom.
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10. The Specific Relief Act, 1963 before and after amendment:
10.1 Before examining the contentions of learned Counsel, it is
necessary to survey the statutory position in the Specific Relief Act,
1963 before, and after, the amendments effected by the Specific Relief
(Amendment) Act, 2018 ("the 2018 Amendment Act").
10.2 Section 41 of the Specific Relief Act, 1963 enumerates
instances in which grant of injunction is completely proscribed. Of
these, clauses (e) and (h) are relevant. They read as under:
"41. Injunction when refused. - An injunction cannot be
granted -
*****
(e) to prevent the breach of a contract the performance of
which would not be specifically enforced;
*****
(h) when equally efficacious relief can certainly be
obtained by any other usual mode of proceeding except in
case of breach of trust;"
10.3 Section 42 is in effect an exception (more precisely, a proviso)
to Section 41(e), and reads thus:
"42. Injunction to perform negative agreement. -
Notwithstanding anything contained in clause (e) of section
41, where a contract comprises an affirmative agreement to
do a certain act, coupled with a negative agreement, express
or implied, not to do a certain act, the circumstances that the
Court is unable to compel specific performance of the
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affirmative agreement shall not preclude it from granting an
injunction to perform the negative agreement:
Provided that the plaintiff has not failed to perform the
contract so far as it is binding on him."
10.4 Sections 41 and 42, to the extent they are relevant, were
undisturbed by the 2018 Amendment Act.
10.5 Section 41(e) relates back to Section 14, which enumerates the
categories of contracts which cannot be specifically enforced, and the
relevant clauses thereof read thus:
"14. Contracts not specifically enforceable. - The
following contracts cannot be specifically enforced, namely:-
*****
(c) a contract which is so dependent on the personal
qualifications of the parties that the court cannot
enforce specific performance of its material terms; and
(d) a contract which is in its nature determinable."
10.6 Section 14 was entirely recast by Section 5 of the 2018
Amendment Act. Prior thereto, Section 14 contained three sub-
sections. Sub-sections (2) and (3) of the pre-amended Section 14 are
not relevant for our purpose. Sub-section (1) enumerated the
categories of contracts which could not be specifically enforced, in its
clauses (a) to (d). Clause (d) of the amended Section 14 existed, in
the same form, in the pre-amended Section 14(1) as clause (c). Clause
(c) of the amended Section 14 is, however, a modified version of the
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pre-amended Section 14(1)(b). Section 14(1), before the amendment
of Section 14, with its clauses (b) and (c), read as under:
"14. Contracts not specifically enforceable. -
(1) The following contracts cannot be specifically
enforced, namely: -
*****
(b) a contract which runs into such minute or
numerous details or which is so dependent on
the personal qualifications or volition of the
parties, or otherwise from its nature is such, that
the court cannot enforce specific performance
of its material terms;
(c) a contract which is in its nature
determinable;"
10.7 Section 10, which dealt with the duty of courts to specifically
enforce contracts capable of specific performance, too, underwent a
significant change with the 2018 Amendment Act, though the change
does not seriously impact the controversy in the present case. The
consequence of the change was that courts are now required
mandatorily to order specific performance of contracts which are
capable of specific performance. Prior to the amendment, Courts had
the discretion to enforce, or not to enforce, specific performance.
That discretion now stands eviscerated, with the amendment of
Section 10. Section 10, before and after amendment, reads thus:
Before amendment
"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 -
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(a) when there exists no standard for
ascertaining actual damage caused by the non-
performance of the act agreed to be done; or
(b) when the act agreed to be done is such
that compensation in money for its non-
performance would not afford adequate relief.
After amendment
"10.Specific performance in respect of contracts. -
The specific performance of the contract shall be enforced
by the court subject to the provisions contained in sub-
section (2) of section 11, section 14 and section 16."
Section 11(2) bars specific performance of a contract made by a
trustee in excess of his powers or in breach of the trust. Section 16
enumerates the cases in which personal bars operate to disentitle the
claimant to specific performance. These provisions are of no
relevance to the case before us.
10.8 While Section 14(1)(c), before amendment, continues as
Section 14(d) after amendment, there is a significant difference
between Section 14(1)(b) (before amendment) and Section 14(c) (after
amendment). The words "or volition", which existed in the erstwhile
Section 14(1)(b), do not find place in Section 14(c), as amended. This
distinction acquires additional significance when one refers to the
May 2016 Report of the Expert Committee constituted to examine
proposed amendments to the Specific Relief Act, 1963 ("the Expert
Committee Report"). Mr. Sandeep Sethi placed especial reliance on
this Report. Paras 11, 11.1(a), 11.3 (with its sub-clauses), 11.5 (with
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its sub-clauses), 11.7, 12.1, 12.1.1 and 12.1.2 of the Expert Committee
Report read thus:
"11. Changes in some provisions of the Specific Relief Act,
1963 will improve the ease of doing business, and will
encourage parties to perform their contracts. Primarily, the
recommendations enable any party to the contract to seek
whichever remedy he chooses. Hence specific performance or
injunction will be available by choice, and will no longer be
exceptional or discretionary. Courts will be able to refuse
these reliefs on specified grounds only. Secondly, a party to a
contract must have the right to complete performance by
himself or through a third party at the cost of the promisor,
and to claim the amount he spends for this purpose. Hence a
new relief is recommended. Thirdly, it is recommended that
relief under section 6 of the Act should also be available to
persons from whom those in immediate possession derive
their rights. Other recommendations relate to assessment of
compensation, enforcement by third parties. Amendments are
therefore recommended to sections 6 (Possession), sections
10, 14, 15, 16, 19, 20, 21, 23, 24 and 25 (Specific
Performance), 26 and 28 (Rescission), and sections 37 and 41
(Injunctions) of the Act.
11.1 Concerns and Issues
(i) Changing the approach from damages being the rule
and specific performance being the exception, to specific
performance being the rule, and damages being the alternate
remedy.
*****
11.3 Reliefs of specific performance and injunction
11.3.1 Currently under Indian law, compensation is the usual,
normal and natural remedy, and is provided under section 73
of the Indian Contract Act 1872. An order of compensation
must put the promisee in a position as if his contract is
performed. But such an order does not give to the promisee
the benefit of the promise. An award of compensation is
circumscribed by strict tests of foreseeability (contemplation)
and mitigation. A promise may not be able to prove all losses
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he has suffered by the breach, nor will such amounts claimed
be awarded to him. Proving losses with certainty is difficult.
A decree for compensation may not give to the promisee the
equivalent of the promise that is broken. A decree of specific
performance comes closest to protecting this interest: it gives
the promisee what was promised.
11.3.2 A promisee who wants to enforce performance by the
promisor through arbitration or civil courts seeks reliefs of
specific performance or injunction, which are extraordinary
remedies in Indian law, the Specific Relief Act, 1963. A
plaintiff must satisfy a threshold test, i.e. he must show that
compensation is either unascertainable or is inadequate. This
is the inadequacy test. It makes these remedies exceptional
and restricts the availability of specific relief. Also, these
remedies are not available as a matter of right, but their grant
is in the discretion of the Court. The inadequacy test is the
first hurdle any plaintiff must meet. The Act prescribes this
test in Section 10, which faithfully follows, with a small
change, the provisions of Section 12 of the repealed Specific
Relief Act, 1877.
11.3.3 The inadequacy test does not permit the remedy of
specific performance (or injunction) for every contract. By
operation of a presumption, it is in fact, and is considered to
be, generally available for contracts to transfer immovable
property. In the case of contracts to transfer movable
property, the presumption operates to cast contracts into types
or categories. Specific performance thus gets granted for
certain types or classes of contracts. In other classes, viz.,
contracts other than for transfer of property, a plaintiff has to
satisfy the inadequacy test. The origin of this test lies in the
history of English law. Equity courts could give these reliefs
only in those matters where compensation was not an
adequate remedy.
11.3.4 The proposed amendments seek to remove this
restriction and make specific performance and injunction as
general remedies available to a promisee who wishes to claim
them.
*****
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11.5 Exceptional nature of reliefs of Specific performance
and injunction: An evaluation
11.5.1 The exceptional nature of specific relief arises from the
inadequacy test. It is justified on many grounds. A strong
justification is made on the basis of economic analysis, which
recommends breach when it is efficient. When compensation
is the primary remedy and specific performance is
exceptional, the promisor is able to break the contract when it
is more beneficial for him than performing it. The promisee is
expected to get compensated for his loss, and get into the
same position as if the promise is performed. In this view,
specific performance is efficient only when the promisee
cannot find a substitute. This view assumes that the promisee
can calculate all his losses, and that a decree for compensation
will not fully compensate his losses. However, there is also
ample support in terms of economic analysis for routine
availability of specific performance.
11.5.2 Giving primacy to specific relief is based upon the
moral obligation to honour one's promises. It is a well-
accepted view that a regime that allows specific relief
encourages promisors to perform and deters breaches. This
enables parties to plan their activities and transactions.
11.5.3 Inadequacy, or lack of it, must be proved. It falls
naturally on the plaintiff seeking specific performance or
injunction to prove that compensation will be inadequate,
having first proved the contract, its terms, and its breach. If it
is a contract for transfer of immovable property, the
presumption assists him, shifting the burden on the defendant
to show adequacy of compensation. If it is a contract for
transfer of movable property, the plaintiff must show
circumstances that will satisfy the presumption of inadequacy,
i.e. that-the goods are unique, or have special value for him,
or are not an ordinary article of commerce, or are not
available in the market. In all other cases, he must show that
compensation would be inadequate. There are difficulties in
establishing this test. Inadequacy often gets decided as a
matter of inference, and depends on the individual perception
of the judge.
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11.5.4 A study about applying the inadequacy test (or its
relative - the irreparable loss test in interim matters)
concludes that the- test is applied without appropriate
analysis, and judgments deciding inadequacy without giving
reasons, and based on inferences rather than facts. The study
also concludes that the inadequacy test is granted in many
situations and cases for protection of monetary interests. If
specific performance and injunction are no longer
exceptional, courts can deal with such cases with a consistent
approach.
11.5.5 A decree for compensation does not compensate fully.
This is because compensation is calculated with reference to
date of breach. Interest on the amount of compensation is
rarely awarded. The decree does not take into account events
after breach until execution of the decree. Specific
performance can give the promisee the fullest relief possible.
11.5.6 Even if specific performance is a routine remedy,
parties would seek specific relief in the same type of cases in
which it is available under the present law. This is actually
also the strongest justification of relaxing the grant of specific
relief. If the promisee has the choice of his remedy, he will
choose compensation after obtaining substitutes. He will also
ask for compensation where he expects the promisor to be
reluctant or hostile, where the performance will require
supervision not available from the court, or where he cannot
suspend his affairs pending orders from the court. He will
choose specific performance only if there is no substitute,
either because the subject matter is not available, or is of
special value to him, and where he is willing to wait for relief
till execution of the decree. Hence there need not be any fear
of increase in litigation and administrative costs.
11.5.7 If the inadequacy test is removed, the promisee can
choose his own remedy. The promisee is the best judge of his
own interest, and whether substitutes satisfy his needs. He has
more information than the courts whether compensation is
adequate, what it would cost him to get specific performance,
and whether his promisor will obey the decree. He is unlikely
to sue for specific performance if he finds a substitute or
where compensation will be adequate.
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11.5.8 Such a regime will change contract behaviour,
encourage performance of contracts, and will deter breach. It
will ease the burden of proof that presently lies on the
promisee, who has already suffered by the breach. It will also
encourage parties to think en-ante about remedies, and make
appropriate provisions in their contracts choosing remedies.
*****
11.7 Amendments proposed
The amendments proposed are broadly as given below, and
are dealt with in detail later:
(i) Both remedies of specific performance and
injunction when sought for breach of contract, will no
longer be exceptional remedies. Section 10 to be
amended accordingly.
(ii) A court can refuse these remedies only on the
stated grounds. Such grounds in the current Sections
14 and 20 are merged into one section, i.e. Section 14.
It is expressly stated that these remedies shall not be
refused on any other grounds. These remedies shall no
longer be discretionary.
(iii) A new relief of 'compensation pursuant to
substituted performance' is created in new section
20A.
(iv) Title of Chapter II to be changed to 'Enforcement
of Contracts' to accommodate all these remedies, and
other consequential amendments.
*****
12.1 The Committee is of the view that availability of the
relief of specific performance should be routine. This means
courts should grant specific performance to the party who
asks for it, and can refuse the relief only in circumstances
specified, and in no others. Many grounds on which courts
could exercise discretion under section 20 of the Act are
incorporated as grounds on which the relief can be refused.
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12.1.1 Currently, Section 20 of the Act lays down that
specific performance is a discretionary remedy, and specifies
certain non-exhaustive situations in which specific
performance is not to be granted. While Courts have opined
that discretion is not to be exercised arbitrarily, and is to be
exercised only on the basis of sound judicial principles, the
scope of the discretion is considerably wide. The basic tenets
on the basis of which discretion is to be exercised are "justice,
equity, and good conscience". This leads to a lack of certainty
for those asking for this remedy, and creates the need for
limiting this discretion.
12.1.2 It is proposed that the grounds on which specific
performance may be withheld should be clearly delineated in
the statute, based on existing case law in India and
comparative practice. In other words, once the plaintiff
successfully meets the conditions for obtaining specific
performance, the relief must be granted unless the defendant
can prove that the case falls squarely within the negative
grounds or exceptions. This will have two benefits- first, it
will ensure that specific performance is not granted in cases
wherein it is impractical; second, it will make specific
performance a statutory, and not an equitable remedy, based
on clearly delineated grounds."
There can be no gainsaying, in the face of these observations of the
Expert Committee that the very intent of amending the Specific Relief
Act, 1963 was to make specific performance of contracts, the norm
and minimize exceptions thereto. Even so, Para 11.7 (ii) did
recognize the inability, of courts, to enforce specific performance in
cases which fell within the categories enumerated in Section 14.
10.9 Most significantly, in the amendments suggested by Para 18.13
of the Expert Committee Report to Section 14(1), clause (c) was to
read thus:
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"(c) where the contract runs into such minute or numerous
details, or its performance is so dependent on the personal
qualifications or volition of the parties, or otherwise from its
nature is such, that the Court cannot enforce specific
performance of its material terms;"
Section 14(c), as it finally emerged in its amended form did not,
however, contain the words "or volition". This indicates that the
legislature chose, consciously and deliberately, to exclude contracts
dependent on volition of parties from the categories of contracts
which were incapable of specific performance. This was a clear
departure from the position which existed under the erstwhile Section
14(1)(b). A contract of personal service, which is determinable on
volition of either of the parties, is no longer, therefore, incapable of
specific performance. The sequitur, by operation of Section 10, as
amended, would be that Courts are obligated to enforce specific
performance of such contracts, unless they are incapable of specific
performance for any other reason envisaged by the Specific Relief
Act, 1963.
10.10 A contract which is "in its nature determinable" was incapable
of specific performance by virtue of the erstwhile Section 14(1)(c),
and continues to remain incapable of specific performance by virtue
of the present Section 14(d).
11. Mr. Baruah has invoked clauses (c) and (d) of Section 14. He
has relied on decisions which, according to him, render a contract,
such as the present, incapable of specific performance, as being "in its
nature determinable". As this clause remains unchanged, even after
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the amendment of the Specific Relief Act, 1963 it would be
appropriate to, in the first instance, examine this contention of Mr.
Baruah, vis-à-vis, the response of Mr. Sandeep Sethi thereto.
12. Re. Section 14(d) of the Specific Relief Act, 1963
12.1 Mr. Baruah relies on Rajasthan Breweries Ltd v. Stroh
Brewery Co.1, Parsoli Motor Works v. B.M.W. India Pvt Ltd2,
Independent News Service v. Anuraag Muskan3, Ambiance India
Pvt Ltd v. Naveen Jain4, G.E. Capital Transportation Financial
Services Ltd v. Tarun Bhargava5 and L.M. Khosla v. Thai
Airways International Public Co. Ltd6. Mr. Sethi relies, per contra,
on Inter Ads Exhibition Pvt Ltd v. Busworld International
Corporate Venootschap Met Beperkte Anasprakelijkheid7, Tarun
Sawhney v. Uma Lal8 and the judgment of the Division Bench in the
appeal from the said decision, in Upma Khanna v. Tarun Sawhney9.
12.2 The expression "in its nature determinable" is, to say the least,
delightfully vague. The exact import of the words "in its nature" is
not easy to discern. Nor is it easy to distinguish a contract which is
"in its nature determinable", from a contract which is merely
"determinable".
1 AIR 2000 Del 450
2 247 (2018) DLT 52
3 199 (2013) DLT 300
4 122 (2005) DLT 421
5 190 (2012) DLT 185
6 2012 SCC OnLine Del 4019
7 2020 SCC OnLine Del 351
8 (2011) 125 DRJ 527
9 2012 SCC OnLine Del 2716
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12.3 An early decision which considered the issue of whether a
contract was "in its nature determinable" is to be found in Premier
Automobiles Ltd v. Kamlekar Shantaram Wadke10. The case
related to an agreement, dated 31st December, 1966, between Premier
Automobiles Ltd. (PAL) and the Sabha Union of its workmen, for
availing certain incentives. Subsequently, a settlement dated 9th
January, 1971 was executed between PAL and another Union of its
workmen, namely the Association Union. Certain members of the
Sabha Union, who were aggrieved by the settlement, instituted a suit
before the Bombay City Civil Court, for a declaration that the
settlement dated 9th January, 1971, was not binding on them and all
others who were not members of the Association Union.
Additionally, permanent injunction, restraining PAL from enforcing
or implementing the settlement dated 9th January, 1971, was also
sought.
12.4 Among other issues, the Supreme Court considered, in para 29
of the report, the question of whether perpetual injunction could be
granted in view of Section 14(1)(c) of the pre-amended Specific
Relief Act. Section 19(2) of the Industrial Disputes Act, 1947 ("the
ID Act") provided for termination of settlement between workmen
and the management, and read thus:
"19. Period of operation of settlements and awards. -
(1) A settlement shall come into operation on such
date as is agreed upon by the parties to the dispute, and
10 (1976) 1 SCC 496
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if no date is agreed upon, on the date on which the
memorandum of the settlement is signed by the parties
to the dispute.
(2) Such settlement shall be binding for such period
as is agreed upon by the parties, and if no such period
is agreed upon, for a period of six months from the
date on which the memorandum of settlement is signed
by the parties to the dispute, and shall continue to be
binding on the parties after the expiry of the period
aforesaid, until the expiry of two months from the date
on which a notice in writing of an intention to
terminate the settlement is given by one of the parties
to the other party or parties to the settlement."
The Supreme Court, in para 29 of the report, held that, by virtue of
Section 19(2) of the ID Act, the settlement, between the Association
Union and PAL was "in its nature determinable". Per corollary, it was
held, the settlement was not specifically enforceable by virtue of
Section 14(1)(c); consequently, injunction, restraining breach of the
settlement, could not be directed in view of the proscription contained
in Section 41(e) of the Specific Relief Act, 1963.
12.5 A contract which was otherwise stipulated as being valid for a
particular period of time, and was determinable prior thereto at the
option of either of the parties to the contract was, therefore, held to be
"in its nature determinable". No injunction, restraining breach of such
a contract could, therefore, be granted.
12.6 Having said that, it is important to note that, in para 29 of the
report in Premier Automobiles10, the Supreme Court noted the fact
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that Section 42, which provided an exception to Section 41(e), was
not applicable.
12.7 The expression "in its nature determinable" came up for
consideration, before the Supreme Court, again, in Indian Oil Co.
Ltd v. Amritsar Gas Service11. The Court was, in that case, seized
with a Distributorship Agreement between Indian Oil Co. Ltd (IOCL)
and Amritsar Gas Service (AGS). Clauses 27 and 28 of the
Distributorship Agreement envisaged termination thereof. Clause 27
contemplated termination of the Distribution Agreement contingent
on the happening of specified events, whereas Clause 28 permitted
either party "without prejudice to the foregoing provision or anything
to the contrary" contained in the agreement to terminate the agreement
by thirty days notice to the other party "without assigning any reason
for such termination"12. IOCL terminated the Distributorship
Agreement. The matter was carried, by AGS, to arbitration. The
arbitrator held the termination of AGS's distributorship, by IOCL, not
to have been validly effected. As a consequence, the arbitrator held
AGS to be entitled to compensation owing to breach of the contract by
IOCL, till the breach was remedied by restoration of the
distributorship of AGS. The quantum of compensation was worked
out as, the commission that AGS would have earned on supply of gas
cylinders to its customers, had its distributorship not been terminated.
The arbitrator found that, in the peculiar facts of the case, which were
exceptional, IOCL was liable to remedy the breach by restoration of
11 (1991) 1 SCC 533
12 (Reproduced from para 2 of the report)
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the distributorship. Inter alia, one of the "exceptional" facts,
justifying restoration of the distributorship, was the fact that the
termination of the distributorship was not in accordance with the
termination clause contained in the Distributorship Agreement. The
arbitrator, however, reserved, to IOCL, the right to terminate the
distributorship of AGS in accordance with the terms of the
Distributorship Agreement.
12.8 The Supreme Court held, in para 12 of the report, the decision
of the arbitrator to be unsustainable, as the Distributorship Agreement
was "in its nature determinable", thus:
"12. ... The award further says as under:
"This award will, however, not fetter the right of the
defendant Corporation to terminate the distributorship
of the plaintiff in accordance with the terms of the
agreement dated April 1, 1976, if and when an
occasion arises."
This finding read along with the reasons given in the award
clearly accepts that the distributorship could be terminated in
accordance with the terms of the agreement dated April 1,
1976, which contains the aforesaid clauses 27 and 28. Having
said so in the award itself, it is obvious that the arbitrator held
the distributorship to be revokable in accordance with clauses
27 and 28 of the agreement. It is in this sense that the award
describes the Distributorship Agreement as one for an
indefinite period, that is, till terminated in accordance with
clauses 27 and 28. The finding in the award being that the
Distributorship Agreement was revokable and the same being
admittedly for rendering personal service, the relevant
provisions of the Specific Relief Act were automatically
attracted. Sub-section (1) of Section 14 of the Specific Relief
Act specifies the contracts which cannot be specifically
enforced, one of which is 'a contract which is in its nature
determinable'. In the present case, it is not necessary to refer
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to the other clauses of sub-section (1) of Section 14, which
also may be attracted in the present case since clause (c)
clearly applies on the finding read with reasons given in the
award itself that the contract by its nature is determinable.
This being so granting the relief of restoration of the
distributorship even on the finding that the breach was
committed by the appellant-Corporation is contrary to the
mandate in Section 14(1) of the Specific Relief Act and there
is an error of law apparent on the face of the award which is
stated to be made according to 'the law governing such
cases'. The grant of this relief in the award cannot, therefore,
be sustained."
(Emphasis supplied)
12.9 Another case in point is Her Highness Maharani Shantidevi
P. Gaikwad v. Savjibhai Haribhai Patel13. An agreement was
executed, in that case, between Fatehsinhrao P. Gaekwad ("FPG", in
short) as the owner, and the respondent before the Supreme Court
("the respondent", in short) as the licensee, in respect of immovable
property, on which FPG desire to construct dwelling units. The
respondent cancelled the agreement by a notice dated 23rd February,
1980. FPG filed the suit against the respondent, seeking a declaration
that the cancellation of the agreement, by the respondent, was illegal
and for a decree of specific performance of the agreement, along with
injunction. The learned Trial Court decreed the suit as sought by
FPG. The agreement was declared as continuing to subsist, and a
decree of specific performance was also granted in favour of FPG.
The respondent was directed to specifically perform the agreement
and was restrained from committing breach thereof. The High Court
upheld the decision, and affirmed the enforceability of the agreement
13 (2001) 5 SCC 101
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by specific performance, subject to the condition of final declaration,
under Section 21 of the Urban Land (Ceiling and Regulation) Act,
1976 being issued with regard to the land in question in accordance
with law.
12.10 Among the many issues which arose before the Supreme Court
was the question of whether the agreement was capable of being
enforced by a decree of specific performance. The appellant before
the Supreme Court argued that, as the agreement was in its nature
determinable, a decree for specific performance of the agreement
could not be issued, in view of Section 14(1)(c) of the Specific Relief
Act, 1963. The respondent argued to the contrary. The clauses of the
agreement, around which the controversy revolved, were the
following:
"(4) On the competent authority making a declaration that
the land of the said property is not in excess of the ceiling
area and on his granting permission to the owner to continue
to hold the land of the said property for the purpose of the
Scheme above referred to be prepared by the licensee of the
second part, the owner of the first part shall deliver the
possession of the said property to the licensee of the second
part for the execution of the said Scheme and construction of
the buildings under the said Scheme.
*****
(17) This agreement shall not be unilaterally rescinded by
either party after the licensee of the second part has been put
in possession of the said property."
12.11 The Supreme Court held that Clause 17 of the agreement
unambiguously envisaged termination of the agreement before the
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delivery of possession of the license. The decisions of the courts
below, granting specific performance of the agreement was, therefore,
reversed.
12.12 The expression "in its nature determinable", used in the context
of the erstwhile Section 14(1)(c) of the Specific Relief Act, 1963 has
been considered by this Court on a number of occasions, of which
three decisions of Division Benches, may be cited. Chronologically,
the first decision - which was cited by both learned Counsel before
me - is Rajasthan Breweries1.
12.13 Rajasthan Breweries1 was an appeal against the rejection, by a
learned Single Judge, of an application, under Section 9 of the 1996
Act, seeking ad interim temporary injunction restraining the operation
of two notices of termination issued by Stroh Brewery Co ("SBC",
hereinafter) to the appellant Rajasthan Breweries Ltd ("RBL",
hereinafter). The learned Single Judge had rejected the applications
for interlocutory injunction on the ground that the contracts were
determinable, invoking Section 41 read with the erstwhile Section
14(1)(c) of the Specific Relief Act, 1963. RBL contended that a
determinable contract was one in which either party can terminate the
agreement by notice and that, as there was no such clause in the
agreements between RBL and SBC, they could not be regarded as
determinable. Rather, contended RBL, the contracts granted license
to RBL for 7 years, renewable successively for 3 years each.
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12.14 The learned Single Judge had held that the two agreements
contained clauses which permitted their termination at the occurrence
of any of the events envisaged thereby. It was further noted, by the
learned Single Judge, that there was no negative covenant in either of
the agreements. Resultantly, the occurrence of any of the envisaged
events entitled SBC to terminate the agreement. Accordingly, the
learned Single Judge held that the agreements were determinable at
the behest of SBC and were, therefore, in their nature determinable,
thereby attracting the bar contained in Section 14(1)(c) of the Specific
Relief Act, 1963.
12.15 RBL sought to contend, before the Division Bench, that an
agreement which was determinable at the instance of either of the
parties was not "in its nature determinable". The Division Bench
rejected the submission, relying on Indian Oil11. The findings of the
Division Bench in this regard read thus:
"The facts of the present case are identical to those in
aforementioned decision of the Supreme Court in as much as
the agreements in the instant case are also terminable by the
respondent on happening of certain events. In Indian Oil
Corporation's case (supra) also agreement was terminable
on happening of certain events. Question that whether
termination is wrongful or not; the events have happened or
not; the respondent is or is not justified in terminating the
agreement are yet to be decided. There is no manner of doubt
that the contracts by their nature determinable."
It was further held, by the Division Bench, that "even in the absence
of specific clause authorising and enabling either party to terminate
the agreement in the event of happening of the events specified
therein, from the very nature of the agreement, which is private
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commercial transaction, the same could be terminated even without
assigning any reason by serving a reasonable notice". The remedy
available with RBL, in the event of an illegal termination, it was
found, would only be compensation for wrongful termination. RBL
could not maintain a claim for specific performance of the
agreements. Any injunction against specific performance of the
agreements was, therefore, statutorily prohibited, as they were
determinable in nature. The decision of the learned Single Judge was,
therefore, upheld and the appeal was dismissed.
12.16 Mic Electronics Ltd v. M.C.D.14 was another decision, of a
Division Bench of this Court, which considered the applicability of
the erstwhile Section 14(1)(c) of the Specific Relief Act, 1963. This
decision, too, was by way of an appeal against an order, of a learned
Single Judge, rendered under Section 9 of the 1996 Act. The
appellant Mic Electronics Ltd ("MEL", hereinafter) had applied for an
injunction against the operation of a letter, issued by the Municipal
Corporation of Delhi (MCD), cancelling the contract awarded to MEL
for displaying advertisements at nine sites in the city of Delhi.
Though other issues were raised, with which we need not concern
ourselves, one of the submissions of MCD was that the contract was
in its nature determinable and could not, therefore, be specifically
enforced, as MEL desired. MCD contended that as MEL defaulted in
payment of the licence fees, a show cause notice was issued to MEL,
whereafter MCD cancelled the licence in accordance with the terms of
the agreement. In paras 12 to 14 of the report, the Division Bench
14 (2011) 1 Arb LR 418 (DB)
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upheld this submission of MCD and, consequently, dismissed MEL's
appeal, thus:
"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 licence fee in terms of the licence
agreement. Consequently, after issuance of the show cause
notice and calling for a reply from the Appellant the
Respondent cancelled the licence under the terms of the
agreement between the parties. Therefore, the licence 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 licence 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.
13. In Rajasthan Breweries Ltd. (supra), a Division
Bench of this Court observed that, at the most, in case
ultimately it is found that termination is bad in law or contrary
to the terms of agreement or of any understanding between
the parties or for any other reason, the remedy of the
Appellant was to seek compensation for wrongful termination
and not a claim for specific performance of the agreement.
Further, in this view of the matter, there was every reason to
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come to the conclusion that the relief sought by the Appellant
in terms of an injunction seeking to specifically enforce the
agreement, by permitting the Appellant to continue to operate
the 9 LED screens installed them, was statutorily prohibited
with respect to a contract which is determinable in nature.
14. Thus, the learned Single Judge correctly declined to
grant interim relief as sought for by the Appellant in view of
Section 14(1)(c) read in conjunction with Section 41(e) of the
Specific Relief Act, 1963."
12.17 A third Division Bench decision of this Court, on which Mr.
Sandeep Sethi, learned Senior Counsel for the petitioner, relied, is
Upma Khanna9, a characteristically brief order authored by Pradeep
Nandrajog, J. (as he then was). The respondent Tarun Sawhney
("Tarun", hereinafter) sought specific performance of two agreements
to sell, whereunder he claimed to have paid amounts to the defendants
(before the learned Single Judge). Clause 17 and Clause 20 in the two
agreements, which were identical, read thus:
"If this agreement is not implemented within the twelve
calendar months from the date hereof this agreement shall
stand terminated and extinguished automatically without
any further act of parties and vendors shall be at liberty to
sell the said property to any other person after refund of
earnest money, as also other lawful charges hereinafter
mentioned if paid by the vendee on behalf of the vendor;
the intention of the parties is that they all be resorted to
the same position as at the date hereof and as if this
agreement had not been executed."
The appellant before the Division Bench contended that, by operation
of this clause, the agreements between the appellant and the
respondent were rendered "in their nature determinable" and could
not, therefore, be specifically enforced, in view of the interdiction
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contained in Section 14(1)(c) of the Specific Relief Act, 1963. The
respondent contended, per contra, that an agreement could be
regarded as "in its nature determinable", only when it could be
terminated at the option of either of the parties, and not where it
contained a covenant envisaging its determination by efflux of time.
As pithily observed by the Division Bench, "in plain language, the
plaintiff drew a distinction between agreements being determinable at
the option of the parties and not agreements being determinable by
way of default". (The word "not" appears to be a typo.) Thereafter, on
the issue of the ambit of the expression "in its nature determinable",
the Division Bench observed as under, in paras 16 to 20 of the report:
"16. What is the meaning of the expression: a contract
which is in its nature determinable.
17. The New Shorter Oxford English Dictionary defines
'determinable' to mean, if used as an adjective, fixed,
definite. As a general meaning, to mean: 'liable to come to an
end'. The dictionary by Jowitt's, Second Edition explains
determinable: 'an interest is said to determine when it comes
to an end, whether by limitation, efflux of time, merger,
surrender or otherwise'. Thus, it is possible to argue that for
whatever reasons it may be the cause for, if an interest comes
to an end by efflux of time, a contract would be determinable
in nature. This would be an argument in support of the
appellants, and as urged.
18. But, the argument overlooks the concept of a fault
liability and a fault effect and a no fault liability and a no fault
effect. It overlooks the point that one should not rush to
conclusions. Clause (c) uses the expression 'in its nature
determinable' and does not throw any light whether the
determination contemplated embraces a fault effect
determination.
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19. If a defence by a contracting party that the sufferance
of the default and hence the determination of the contract is to
be accepted, it would amount to allowing the party
committing the wrong to take advance of its own neglect and
this would ex-facie not be acceptable to a court of equity.
20. We need not deal with the two decisions cited at the
bar before us, which have been considered by the learned
Single Judge, and the ratio extracted. We concur with the
same. We concur with the view taken by the learned Single
Judge."
12.18 From these passages, in my opinion, it is not possible to take
home a clearly discernible ratio, which would justify applying this
decision to the facts before us. In para 17, the Division Bench
recognized the apparent merit in the contention, of the appellant
before it, that, as generally understood, the agreement between the
appellant and the respondent could be treated as "determinable" in
nature. Para 18, however, sought to draw a distinction in view of the
facts before the Division Bench on the principle of the existence of "a
fault liability and the fault effect and that no fault liability and that no
fault effect". The Division Bench went on to observe - and, I confess,
I am constrained to entirely agree with the observation - that the
expression "in its nature determinable" does not throw any light on its
actual scope and effect and as to whether it would embrace fault-
effect determination. This finding is obviously returned in view of the
peculiar manner in which the termination clause in the agreements
(extracted supra) was worded. The clause, according to the Division
Bench, embraced a "fault liability" following the termination,
resulting in restoration of the parties to the status quo ante.
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12.19 No similar clause exists in the letter of appointment issued by
the petitioner to the respondent. Upma Khanna9 does not, therefore,
appears to be of particular relevance to the facts before us.
12.20 A contract which is determinable, whether by efflux of time or
at the option of either of, or both, the parties, and whether preceded by
the requirement of issuance of notice or any other pre-termination
formality, or not, ise, therefore, to be regarded as "in its nature
determinable", within the meaning of Section 14(d) of the Specific
Relief Act.
12.21 As this position is clear, from the judgments already discussed,
I do not deem it necessary to refer to other decisions of learned Single
Judges of this Court, cited by the parties, on the issue of the ambit of
the expression "in its nature determinable"
13. Re. Sections 41(e) and 42 of the Specific Relief Act, 1963
13.1 The consequence of the letter of appointment of the respondent,
by the petitioner, being a contract which is in its nature determinable,
within the meaning of Section 14 (d) of the Specific Relief Act, 1963
would, ordinarily, be that no injunction, against breach of the letter of
appointment, could be granted, in view of Section 41(e).
13.2 Mr. Sandeep Sethi does not dispute this position. He, however,
sought to invoke Section 42, as an exception to Section 41(e).
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13.3 Section 42 starts with a non obstante clause. If the injunction
sought, comes within the four corners of Section 42, therefore, its
grant cannot be inhibited by Section 41(e).
13.4 Section 42 applies "where a contract comprises of an
affirmative agreement to do a certain act, coupled with a negative
agreement, express or implied, not to do a certain act". In such a case,
Section 42 empowers the Court to, by injunction, compel the
performance of the negative agreement, even if the affirmative
agreement is incapable of specific performance.
13.5 Mr. Sethi places considerable reliance, in this context, on the
judgment of the Supreme Court in Niranjan Shankar Golikari v.
Century Spinning & Manufacturing Co. Ltd15. In order to
appreciate the contention, it is necessary to appreciate, in the first
instance, the exact controversy which arose before the Supreme Court
in case. The appellant, Niranjan Shankar Golikari ("Niranjan",
hereafter) was appointed as a shift supervisor with the respondent-
Company ("the Company"). Clause 17 of the contract between
Niranjan and the Company read thus:
"In the event of the employee leaving, abandoning or
resigning the service of the company in breach of the terms of
the agreement before the expiry of the said period of five
years he shall not directly or indirectly engage in or carry on
of his own accord or in partnership with others the business at
present being carried on by the company and he shall not
serve in any capacity, whatsoever or be associated with any
person, firm or company carrying on such business for the
remainder of the said period and in addition pay to the
AIR 1967 SC 1098
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company as liquidated damages an amount equal to the
salaries the employee would have received during the period
of six months thereafter and shall further reimburse to the
company any amount that the company may have spent on the
employee's training."
By a communication dated 7th November, 1964, Niranjan informed
the Company that he had resigned w.e.f. 31st October, 1964. The
Company, by its response dated 23rd October, 1964, directed Niranjan
to resume work, stating that his resignation had not been accepted.
Niranjan responded, informing that he had obtained another
employment. The Company, thereupon, filed a suit before the Kalyan
District Court, seeking an injunction restraining Niranjan from serving
in any capacity whatsoever or being associated with any person, firm
or company including Rajasthan Rayon, in which he claimed to have
obtained employment after resigning from the services of the
Company, till 15th March, 1968, being the terminus ad quem of the
tenure of Niranjan with the Company. Niranjan also pleaded that
Clause 17 was invalid, being violative of Section 27 of the Contract
Act.
13.6 The Courts below found Clause 17 to be in the nature of a
reasonable restriction to protect the interests of the Company and not,
therefore, illegal or unconscionable in any manner. It also found that
"there was no indication at all that if the appellant was prevented
from being employed in a similar capacity elsewhere he would be
forced to idleness or that such a restraint would compel the appellant
to go back to the Company which would indirectly result in specific
performance of the contract of personal service".
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13.7 On the sustainability of the decision, of the Courts below, to
grant an injunction, the Supreme Court held, in para 18 of the report,
thus:
"18. The next question is whether the injunction in the
terms in which it is framed should have been granted. There is
no doubt that the courts have a wide discretion to enforce by
injunction a negative covenant. Both the courts below have
concurrently found that the apprehension of the respondent
Company that information regarding the special processes
and the special machinery imparted to and acquired by the
appellant during the period of training and thereafter might
be divulged was justified; that the information and knowledge
disclosed to him during this period was different from the
general knowledge and experience that he might have gained
while in the service of the respondent Company and that it
was against his disclosing the former to the rival company
which required protection. It was argued however that the
terms of clause 17 were too wide and that the court cannot
sever the good from the bad and issue an injunction to the
extent that was good. But the rule against severance applies to
cases where the covenant is bad in law and it is in such cases
that the court is precluded from severing the good from the
bad. But there is nothing to prevent the court from granting a
limited injunction to the extent that is necessary to protect the
employer's interests where the negative stipulation is not
void. There is also nothing to show that if the negative
covenant is enforced the appellant would be driven to idleness
or would be compelled to go back to the respondent
Company. It may be that if he is not permitted to get himself
employed in another similar employment he might perhaps
get a lesser remuneration than the one agreed to by Rajasthan
Rayon. But that is no consideration against enforcing the
covenant. The evidence is clear that the appellant has torn the
agreement to pieces only because he was offered a higher
remuneration. Obviously he cannot be heard to say that no
injunction should be granted against him to enforce the
negative covenant which is not opposed to public policy. The
injunction issued against him is restricted as to time, the
nature of employment and as to area and cannot therefore be
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said to be too wide or unreasonable or unnecessary for the
protection of the interests of the respondent Company."
Mr. Baruah would submit that the decision in Niranjan Shankar
Golikari15 actually supports the case of his client, rather than that of
Mr. Sandeep Sethi's. He points out that the Supreme Court proceeded
on the premise that enforcement of the negative covenant against NSG
would not consign him to idleness or force him to work for the
Company. As against this, Mr. Baruah contends that, if the negative
covenant is, in the present case, enforced against the respondent, who
has already joined as an anchor with another news channel, she would
either be forced to idleness or would be compelled to rejoin the
petitioner. This, he submits, is entirely unconscionable in law. He
points out, in this regard, that, in fact, consequent to the ad interim
order passed by this Court, the respondent is, in fact, idle, as she is
unable to work for the Aajtak news channel, which she has joined.
That an Anchor, placed in such a situation is, in fact, consigned to
idleness, points out Mr. Baruah, stands acknowledged by the judgment
of a coordinate bench of this Court in Independent News Service P
Ltd v. Sucherita Kukreti16.
13.8 One may also refer, in this context, to the following enunciation
of the law, in para 42 of the report in Gujarat Bottling Co. Ltd v.
Coca Cola Co.17, on which Mr. Baruah places reliance:
"In India Section 42 of the Specific Relief Act, 1963
prescribes that notwithstanding anything contained in clause
(e) of Section 41, where a contract comprises an affirmative
16 257 (2019) DLT 426
17 (1995) 5 SCC 545
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agreement to do a certain act, coupled with a negative
agreement, express or implied, not to do a certain act, the
circumstance that the court is unable to compel specific
performance of the affirmative agreement shall not preclude it
from granting an injunction to perform the negative
agreement. This is subject to the proviso that the plaintiff has
not failed to perform the contract so far as it is binding on
him. The Court is, however, not bound to grant an injunction
in every case and an injunction to enforce a negative
covenant would be refused if it would indirectly compel the
employee either to idleness or to serve the employer. [See:
Ehrman v. Bartholomew18; N.S. Golikari15 at p. 389.]"
13.9 Niranjan Shankar Golikari15 and Gujarat Bottling17 are ad
idem, therefore, in holding that the availability of the benefit of
Section 42 of the Specific Relief Act, 1963 in a contract of
employment of personal service, would be subject to the consequence
of grant of such benefit not resulting in the employee being consigned
to idleness or being forced to work for the employer.
13.10 I am inclined, prima facie, to agree with the submission, of Mr.
Baruah, that grant of injunction, as sought by the petitioner, would
inevitably result in the respondent being either consigned to idleness,
or being compelled to work for the petitioner. This submission was,
in fact, not seriously traversed, to any convincing extent, by the
petitioner. Mr. Sethi, in fact, predicated his submission on the
premise that the respondent was welcome to join the petitioner, and
would continue to draw the emoluments to which her employment
with the petitioner entailed. This submission would support the
contention of Mr. Baruah, as it indicates that the only options
18 (1898) 1 Ch 671 : (1895-99) All ER Rep Ext 1680
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available to the respondent, were injunction as sought by the petitioner
be granted, would be either to join the petitioner or remain at home.
The position, in law, is settled, that Section 42 of the Specific Relief
Act, 1963 cannot be so pressed into service as would compel the
employee to join the employer whose services she has voluntarily left.
13.11 Specifically in the context of the duties of an Anchor, a
coordinate bench of this Court has examined the applicability of
Section 42, in facts which mirror those in the present case in
Independent News Service16. The respondent Sucherita Kukreti
("Sucherita", hereafter), in that case, was also working as an anchor
with the plaintiff Independent News Service P Ltd ("INS", hereafter),
a television news channel. The agreement between Sucherita and INS
contained a negative covenant, proscribing association of Sucherita,
with any other competing channel during the term of her agreement
with INS. Sucherita expressed her intention of leaving the services of
INS and joining a competing news channel, and in fact resigned on
13th December, 2018. She joined the competing news channel on 14 th
January, 2019. INS, in the circumstances, filed a suit before this Court
and prayed for an interlocutory injunction restraining Sucherita from
joining any other news channel, till the expiry of the tenure of her
contract with INS.
13.12 Para 14 of the report enumerates the considerations which
compelled this Court to refuse the prayer for injunction, as advanced
by INS. The following considerations would apply, mutatis mutandis,
to the present case:
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"(A) Granting any interim injunction would amount to
restraining the defendant from doing what she has been doing
for the last 14 years and what she is best known to do and has
skill to do. Ad-interim injunction if granted for the period till
30th November, 2019, would amount to killing the goodwill
acquired by the defendant in the last 14 years and which loss
cannot be monetarily compensated to the defendant in the
event of it being ultimately found in the suit that the plaintiff
was not entitled to such injunction. The Courts (see S.
Tamilselvan v. The Government of Tamil Nadu19,) have
leaned in favour of resurrecting rather than killing what a
person is best at. On the contrary, the plaintiff, in the event of
ultimately succeeding, can always be compensated monetarily
for the loss, if any suffered.
(B) Thus, neither the element of irreparable injury nor the
element of balance of convenience, on the anvil of which
grant of interim relief is to be tested, is in favour of the
plaintiff.
(C) Though Section 42 of the Specific Relief Act, 1963
empowers the Court to grant an injunction to perform a
negative agreement and the defendant in the present case did
agree with the plaintiff to, till the expiry of the term of her
agreement with the plaintiff, not be associated with any other
news channel, but this by no means entitles the plaintiff as a
matter of right to an injunction. Grant of injunction remains
discretionary and which discretion is to be exercised on the
well established anvils of prima facie case, irreparable injury,
balance of convenience and public interest.
*****
(G) Granting any such ad interim injunction would lead the
defendant to idleness and exception in which regard has been
consistently made by the Courts including in all the cited
judgments. The defendant cannot be asked to engage herself
in other, behind the scene activities as is suggested, even if
besides being in front of the camera for the last 14 years has
also been incidentally involved in behind the scene activities.
The averments in the plaint itself are guided by the acumen,
19 2016 SCC OnLine Mad 5960 (DB)
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training and skill of the defendant in front of rather than
behind the camera.
(H) Benching a professional for as long as 10 to 11 months
can be devastating, capable of inflicting permanent damage
affecting mental and physical health and future prospects of a
professional. This is more so in the case of Newscasters/News
Presenter to whom the adage "out of sight out of mind" would
also apply. The patrons of the defendant in the said 10 months
are likely to turn over to other Newscasters/News Presenter to
whom they would get habituated and not only is it doubtful
that the defendant, after 10-11 months, will retain the same
advantage owing whereto the plaintiff wants to restrain the
defendant but it is also highly unlikely that the defendant will
be able to win back the patrons so lost by her.
(I) The entire claim of the plaintiff is on the premise of the
agreement of the plaintiff with the defendant being in force. It
is not as if the defendant, while continuing with the
employment with the plaintiff is intending to render her
services to another as well. The defendant has terminated her
employment/agreement with the plaintiff and it is yet to be
determined, whether the defendant could have done so or
could not have done so. The senior counsel for the plaintiff
has fairly also agreed that the defendant cannot be compelled
to continue to render services to the plaintiff. The case at best
is thus of breach of agreement and which can ordinarily be
compensated with money."
13.13 I see no reason to take a view different from that taken by the
coordinate bench in Independent News Service16. Though the order
is interlocutory in nature, and cannot, therefore, strictly speaking,
constitute a binding precedent, it is well settled that, even at an
interlocutory stage, consistency is expected to be maintained by the
Court, and conflicting orders in cases involving similar circumstances
is to be avoided. Else, public faith in the administration of justice
would be severely eroded. Besides, the view adopted by the
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coordinate bench in Independent News Service16 is not discordant
with any decision of any superior judicial forum.
13.14 The matter may be viewed from another angle as well. The
contention, of Mr. Sethi, predicated on Section 42 of the Specific
Relief Act, 1963 that the inability to enforce specific performance of a
positive covenant in a determinable contract cannot inhibit specific
performance of a negative covenant, with which the positive covenant
may be coupled, can apply only if the extent of "coupling", between
the positive and negative covenant, is not such that enforcement of the
negative covenant would indirectly result in enforcement of the
positive covenant. This principle stands underscored by the following
words, in para 58 of the judgment of the Supreme Court in Percept
D'Mark (India) Ltd v. Zaheer Khan20 :
"Likewise, grant of injunction restraining the first respondent
would have the effect of compelling the first respondent to be
managed by the appellant, in substance in effect a decree of
specific performance of an agreement of my judiciary or
personal character of service, which is dependent on mutual
trust, faith and confidence."
The negative covenant, which the petitioner seeks to enforce in the
present case is contained in Clause 11.2 of the letter of appointment.
Clause 11.2 applies only during the currency of employment of the
respondent by the petitioner. Enforcement of the negative covenant in
Clause 11.2 would, therefore, require the respondent to be treated as
continuing to be in the petitioner's employment, which would amount
to indirectly enforcing the positive covenant. Though Section 42 of
20 (2006) 4 SCC 227
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the Specific Relief Act, 1963 commences with a non obstante clause
and appears, therefore, to be in the nature of an exception to Section
41(e), the exception is limited in nature, conditioned by the specific
terms of Section 42. What Section 42 ordains is that the power to
enforce the negative covenant would not be affected by the lack of
power to enforce the positive covenant. The non obstante nature of
Section 42, therefore, does not extend to rendering the positive
covenant enforceable, contrary to Section 41(e). To that extent,
therefore, it would probably be etymologically more appropriate to
treat Section 42 as a proviso to Section 41(e), rather than an exception
thereto. It is obvious that Section 42 does not, in any manner, reduce
the effect of Section 41(e). It merely clarifies that the inhibition,
against injuncting the breach of a contract, which cannot be
specifically enforced under Section 14, would not inhibit the Court
from enforcing the negative covenant in the contract. The positive
covenant remains, nonetheless, unenforceable. It is not possible,
therefore, to implement Section 42 in such a way as to indirectly result
in enforcement of the positive covenant.
13.15 That, however, would be the precise effect, if Mr. Sethi's
submission is accepted. Enforcement of the negative covenant
contained in Clause 11.2 of the letter of appointment would
necessarily entail, as a pre-requisite, treating the respondent to be
continuing to be in the employment of the petitioner, which would
amount to enforcing the positive covenant in the letter of appointment.
That cannot be done.
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The Outcome
14. The prayer in the petition cannot, therefore, be granted, by a
joint operation of Section 14(d) and Section 41(e) of the Specific
Relief Act, 1963. In the facts of the case, the petitioner cannot be
entitled to the benefit of Section 42.
15. It is not necessary, therefore, for me to enter into the other
aspects argued before me.
Conclusion
16. Resultantly, the petition is dismissed with no orders as to costs.
C. HARI SHANKAR, J.
OCTOBER 12, 2021
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