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1995 Supreme(Cal) 208

High Court Of Calcutta
S. K. SEN
VIJAYA MINERALS PVT.LTD. - Appellant
Versus
BIKASH CHANDRA DEB - Respondent
Suit 392  Of  1994
Decided On : 06/27/1995

Headnote:

SPECIFIC PERFORMANCE - NEGATIVE COVENANT - ENFORCEMENT - SALE OF MANGANESE AND IRON ORE - INJUNCTION - BALANCE OF CONVENIENCE - UNCONSCIONABLE BARGAIN - SPECIFIC RELIEF ACT, 1963, SECTIONS 10, 14, 20(2), 42, 58.

Fact of the Case:

Plaintiff instituted a suit for specific performance of an agreement dated 1st Oct. 1994 for sale and delivery of the entire Manganese ore and Iron ore from the mine at Ingani Jharan Village in the district of Keonjhar, Orissa. The agreement provided the price at which ores were to be sold by the defendant to the plaintiff and also recorded in Clause 6 (a) that the plaintiff has already paid an advance amount of Rs. 15,00,000-00 to the Defendant, the receipt whereof the Defendant acknowledged in the said Clause, which was to be treated as advance against purchase and to be adjusted from out of the sale price payable by the plaintiff to the Defendant. Clause 12 of the said Agreement provides that the first Party solemnly declares and agrees that he shall not sell or otherwise part with or dispose of any Manganese and Iron ore from the Mine and the Buyer shall be the sole and the only Buyer of all the Manganese and Iron ore from the Mine for and during the continuance of this Agreement.

Finding of the Court:

The Court held that the plaintiff was entitled to an injunction restraining the defendant from selling, raising, or disposing of the manganese and iron ore from the mine to any person other than the plaintiff during the continuance of the agreement. The Court found that there was a negative covenant in the agreement whereby the defendant agreed not to sell or otherwise part with or dispose of any Manganese and iron ore from the mine, and that the Plaintiff shall be the sole and only buyer of all the Manganese and iron ore for and during the continuance of the Agreement. The Court also found that the plaintiff had performed all its obligations under the agreement and was ready and willing to perform the remaining obligations. The Court further found that the balance of convenience was in favor of granting the injunction, as the plaintiff would suffer irreparable harm if the injunction was not granted.

Issues: 1. Whether the plaintiff is entitled to specific performance of the agreement dated 1st Oct. 1994 for sale and delivery of the entire Manganese ore and Iron ore from the mine at Ingani Jharan Village in the district of Keonjhar, Orissa? 2. Whether the plaintiff is entitled to an injunction restraining the defendant from selling, raising, or disposing of the manganese and iron ore from the mine to any person other than the plaintiff during the continuance of the agreement?

Ratio Decidendi: 1. A negative covenant in an agreement is specifically enforceable by injunction, even if damages would be an adequate remedy. 2. The balance of convenience is in favor of granting an injunction to enforce a negative covenant, as the plaintiff would suffer irreparable harm if the injunction was not granted.

Final Decision: The Court granted the plaintiff's application for an injunction restraining the defendant from selling, raising, or disposing of the manganese and iron ore from the mine to any person other than the plaintiff during the continuance of the agreement.

S. K. SEN, J.

( 1 ) THE Plaintiff instituted the suit for specific performance of an Agreement dated 1st Oct. 1994. The Agreement is for sale and delivery expit mouth of the entire Manganese ore and Iron ore from the mine at Ingani Jharan Village in the district of Keonjhar, Orissa.

( 2 ) THE aforesaid Agreement provides the price at which ores were to be sold by the defendant to the plaintiff and also records in Clause 6 (a) that the plaintiff has already paid an advance amount of Rs. 15,00,000-00 to the Defendant, the receipt whereof the Defendant acknowledged in the said Clause, which was to be treated as advance against purchase and to be adjusted from out of the sale price payable by the plaintiff to the Defendant. Clause 12 of the said Agreement provides as follows: "first Party solemnly declares and agrees that he shall not sell or otherwise part with or dispose of any Manganese and Iron ore from the Mine and the Buyer shall be the sole and the only Buyer of all the Manganese and Iron ore from the Mine for and during the continuance of this Agreement. "

( 3 ) MR. Jayanta Mitra, the learned Advocate on behalf of the Plaintiff has submitted that the aforesaid Clause 12 of the Agreement contains a negative covenant whereby the Defendant agreed not to sell or otherwise part with or dispose of any Manganese and iron ore from the mine, and that the Plaintiff shall be the sole and only buyer of all the Manganese and iron ore for and during the continuance of the Agreement. By and under Clause 13 of the Agreement, rights have been given to the parties to specifically enforce the terms and obligations of the said Agreement.

( 4 ) IT has been submitted on behalf of the Plaintiff that the Defendant after having entered into the said Agreement and after having received the sum of Rs. 15,00,000/ - wrongfully refuse to sell and deliver Manganese and iron ore raised from the said mines to the Plaintiff, and hence the suit.

( 5 ) IT has also been alleged in the petition that over and above the sum of Rs. 15 lakhs paid as and by way of advance under the Agreement, a further sum of Rs. 2,36 lakhs has been paid by the Plaintiff to the Defendant, and that after appropriating a total sum of Rs. 17. 36 lakhs, the Defendant was selling the ore, extracted from the said mines to persons other than the Plaintiff.

( 6 ) IN the premises, the Plaintiff has prayed for interlocutory relief for receiver and injunction. It has also been contended by the learned Advocate on behalf of the petitioner that there being a clause containing negative covenant in the said Agreement (Clause 12) and a provision giving rights to the parties to specifically enforce the same, a suit for specific performance and injunction is maintainable.

( 7 ) THE learned Advocate for the plaintiff has referred to Section 42 of the Specific Relief Act and in support of his contention he has also relied upon the following decisions:- (i) Richard Wheeler Doherty v. James Clagston Allman and W. C. Dowden, Reported in (1878) 3 AC 709; (ii) Jairam Valjee v. Indian Iron and Steel Co. Ltd. Reported in AIR 1940 Cal 466.

( 8 ) IT has been contended on behalf of the defendant on the other hand that the Defendant did not receive Rs. 15 lakhs as mentioned in the Agreement and no payment was actually made by the Plaintiff. It has also been contended on behalf of the Defendant that the Defendant has been forced to sign the Agreement under undue influence and pressure without realising the scope and effect of the Agreement. 9. It has also been submitted on behalf of the defendant that he was in urgent need of funds and otherwise in difficult financial circumstances.

( 9 ) IT has also been contended by Mr Anindya Mitra, learned Advocate for the Defendant that the suit is for specific performance of the agreement dated 1st Oct. 1994 for sale of Manganese Ore and Iron Ore for, us long as the Defendant runs the mine and permanent injunction restraining the defendant from selling, raising of th























































































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