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2007 Supreme(Bom) 1682

IN THE HIGH COURT OF BOMBAY
Dr. D. Y. Chandrachud, J.
PERCEPT TALENT MANAGEMENT PVT. LTD. and another -Petitioners.
vs.
YUVRAJ SINGH and another - Respondents.
Arbitration Petition (LDG) No.698 of 2007
Decided On: 7-12-2007

Advocates Appeared:
For petitioners:Virag Tulzapurkar, Senior Advocate with Venkatesh Dhond, Amit Naik, Mrs. Madhu Chaudhary Gadodia and Ms. Hemangi Abhyankar instructed by Naik, Naik, Iyer and Co.
For respondent No.1:J. J. Bhatt, Senior Advocate with J. A. Shah instructed by A. Shah and Associates
For respondent No.2: Kamal Khata instructed by Daru Shah

Headnote:

Promotion Agreement - Arbitration and Conciliation Act, 1996 - Section 9

Fact of the Case:

The case involved a dispute over a Promotion Agreement between the petitioners and Yuvraj Singh, a cricketer, which contained an arbitration clause. The petitioners sought interlocutory relief to restrain Yuvraj Singh from entering into negotiations or agreements with third parties, and to provide detailed terms of any offers received from third parties. The court had to consider the enforceability of a negative covenant in the agreement.

Finding of the Court:

The court found that specific performance of the contract was barred by the Specific Relief Act, as it involved personal services. It also considered the balance of convenience, noting that the grant of an injunction would cause irreparable injury to Yuvraj Singh. The court held that the negative covenant in the agreement was void and unenforceable, and dismissed the petition.

Issues: The issues involved the enforceability of the negative covenant in the Promotion Agreement, the applicability of the Specific Relief Act, and the balance of convenience in granting interlocutory relief.

Ratio Decidendi: The court held that specific performance of a contract for personal services, such as the Promotion Agreement, was barred by the Specific Relief Act. It also found that the negative covenant in the agreement was void and unenforceable under section 27 of the Contract Act. The court considered the balance of convenience and concluded that granting the injunction would cause irreparable injury to Yuvraj Singh.

Final Decision: The petition seeking interlocutory relief was dismissed, and the court clarified that its observations were confined to the disposal of the application under section 9 and would not preclude parties from agitating their rights before the Arbitral Tribunal.

ORAL JUDGMENT :- Yuvraj Singh plays cricket for India. As the first respondent, he is arrayed as a party to this proceeding off the field of cricket. A thin end of the wedge divides what a sportsperson does on the field and off it. But, it is the law which addresses legal rights and duties. The law will govern this dispute.

The Agreement:

2. An agreement styled as a Promotion Agreement, was entered into between the Second petitioner and the first respondent purportedly on 12th December, 2003. By the agreement, the first respondent appointed the Second petitioner as his sole and exclusive agent inter alia to manage and market the services and day-to-day affairs of the first respondent in respect of media, advertisement and related activities. By a Deed of Assignment dated 1st April, 2007 all the rights and obligations of the Second petitioner under the first agreement were duly assigned in favour of the first petitioner. Clause 9 of the agreement provided that during the contractual term, the first respondent shall not engage any other person for or in relation to or in connection with the subject matter of the Agreement including the rights granted inter alia under clause 4.2. Clause 17 of the agreement defines the term of the Agreement. Under clause 17.1, the agreement came into force and effect on 16th October, 2003 and was to continue to remain in force for a period of four years from the date of the execution of the agreement or till the conclusion of the ICC World Cup 2007, whichever was later.

3. According to the petitioners, the agreement was executed on 12th December, 2003 and though it has come into force from an anterior date, agreement being valid for four years from the date of the execution would continue to subsist until 11th December, 2007. On the other hand, according to the first respondent, parties understood that the agreement has come into force from 16th October, 2003 since the Deed of Assignment between first and Second petitioners contains a specific recital to that effect. This, according to the first respondent is also evident by a letter written by the first petitioner to the first respondent on 23rd October, 2007. This difference between the parties will ultimately have no bearing little the conclusion of these proceedings which arise under section 9 of the Arbitration and Conciliation Act, 1996.

The Petition :

4. The Promotion Agreement contains an arbitration clause and in these proceedings under section 9, the relief that has been sought, pending the hearing and final disposal of the arbitral proceedings, is an order restraining the first respondent from entering into negotiations or an agreement with any other party in respect of the subject-matter of the Promotion Agreement without complying with the provisions of the agreement. The second relief that has been sought is that the first respondent should be injected from entering into an agreement with a third party without furnishing to the petitioners a right of first refusal to match any offer received by the first respondent from a third party. The third relief is a mandatory direction to the first respondent to provide to the petitioners a copy of the contract and the detailed terms and conditions of any offer received by the first respondent from any third party with which the first respondent proposes to enter into an agreement. The final relief that has been sought is an injunction restraining the first respondent from rendering services similar to the services contemplated under the Promotion Agreement to any other person or entity other than the first petitioner.

The Negative Covenant:

5. The dispute that arises in these proceedings essentially focuses upon the provisions of clause 19 of the Agreement of Promotion. In order to facilitate a degree of clarity, it would be appropriate to quote the provision as it stands:

"19.1 Negotiation:

Percept shall have the unconditional right to renew this Agreement for a further period of 4 (four) years in ac
































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