Back
High Court Of Calcutta
S. K. SEN, BARIN GHOSH
DAEWOO MOTORS INDIA LTD - Appellant
Versus
GORODIA DISTRIBUTORS (P) LTD. - Respondent
P. M. A. T. 3937 Of 1998
Decided On : 12/01/1998
SPECIFIC RELIEF ACT, 1963 - SECTION 42 - NEGATIVE COVENANT - INJUNCTION - BREACH OF CONTRACT - BALANCE OF CONVENIENCE - PRIMA FACIE CASE - SPECIFIC PERFORMANCE - TEMPORARY INJUNCTION - TERMINABLE CONTRACT - MANDATORY INJUNCTION - STATEMENT OF ACCOUNTS
Fact of the Case:
Plaintiff, a car dealer, obtained a Letter of Intent from Defendant to sell and service Daewoo range of cars in Calcutta. Plaintiff made preparations accordingly. Later, Defendant informed Plaintiff that it should make trainees available for the sale of Matiz cars and also send trainees to New Delhi for sales training. Plaintiff was also informed that a Road show of Matiz would be held in its showroom. However, the Road show did not take place due to Plaintiff's defaults in fulfilling its obligations. Plaintiff paid only Rs. 5 lacs out of the Rs. 20 lacs security deposit required under the Letter of Intent. Plaintiff also failed to pay the outstanding amount of Rs. 33,88,525.50 for the sale of Cielo cars. Plaintiff filed a suit seeking a temporary injunction restraining Defendant from starting booking of Matiz cars for sale without allotting cars in favor of Plaintiff. The trial court granted the injunction.
Finding of the Court:
The High Court held that the Plaintiff had committed a breach of the terms and conditions of the Letter of Intent by failing to pay the security deposit and by failing to comply with the terms for the sale of Matiz cars. The court also held that the Plaintiff was not entitled to an injunction since it had not made out a prima facie case and the balance of convenience and inconvenience was against it. The court further held that a mandatory injunction could not be granted for the specific performance of a contract which was determinable at the will of the parties.
Issues: 1. Whether the Plaintiff was entitled to an injunction restraining the Defendant from starting booking of Matiz cars for sale without allotting cars in favor of the Plaintiff? 2. Whether the Plaintiff had committed a breach of the terms and conditions of the Letter of Intent? 3. Whether the Plaintiff had made out a prima facie case for the grant of an injunction? 4. Whether the balance of convenience and inconvenience was in favor of the Plaintiff?
Ratio Decidendi: 1. A party seeking a remedy must comply with all conditions of the agreement. 2. An injunction cannot be granted for the specific performance of a contract which is determinable at the will of the parties. 3. A mandatory injunction cannot be granted in aid of the main relief which cannot be granted. 4. The essential requirements for the grant of an injunction are that a prima facie case has to be made out and the question of balance of convenience and inconvenience has to be considered.
Final Decision: The High Court allowed the appeal and set aside the order of the trial court granting the injunction. The court also directed the Defendant to furnish quarterly statements of accounts in respect of sales of Matiz cars in Calcutta every quarterly in sealed cover in the court below for a period of six months.
( 1 ) THIS appeal is directed against the judgment and order passed by the learned 2nd Civil Judge, (Sr. Divn.)at Alipore in Title Suit No. 73 of 1998, being Order No. 9 dated 21. 11. 1998 whereby the learned 2nd Civil Judge, (Sr. Divn) has allowed the application for temporary injunction filed by the plaintiff/respondent herein on contest against the defendant No. I/appellant without any costs and made ad interim order of injunction dated 10. 11. 1998 absolute till the disposal of the suit. By the ad-interim order as also by the order under appeal the appellant has been restrained from starting booking of Matiz cars for sale without allotting cars in favour of the plaintiff. By the said order the learned 2nd Civil Judge, (Sr. Divn.) also dismissed the application filed by the defendant no. I/appellant seeking vacation of the ad-interim order. For the purpose of disposing of the appeal, which was by consent of the parties treated as on the day's list and heard along with the application for stay, it is necessary to set out the facts in short : -on 18 7. 1997. the Letter of Intent was issued by the appellant/defendant No. 1. On 7. 8. 1997, there were minutes of meeting between the appellant and the plaintiff/respondent No. 1 wherein it was agreed that the specifying action plan would be taken for activisation of dealership on 12. 9. 1997, the appdlant authorised respondent No. 1 to act as dealer to sell and service in the City of Calcutta. Pursuant thereto arrangements and preparations were made by the plaintiff/respondent No. 1 to act as dealer for Daewoo range of cars. On 3. 8. 1998. the appellant informed the respondent No. 1 that they should make available trainees for the purpose of sale of Matiz cars. It is also on record that on 18. 8. 1998 the plaintiff was informed that sales training programme for Mafiz would take place and it should sent its trainees at New Delhi. It appears that at one point of time on 25. 8. 1998 the appellant informed the plaintiff/respondent No. 1 that the plaintiff/respondent No. 1 has been selected for the purpose of Road show of Matiz and that the car would be on display in the show room of the plaintiff-respondent No 1 on 25th and 26th October 1998. Subsequently, however, the said Road show under the auspices of the respondent no. 1 did not take place as there were defaults on the part of the respondent No. 1 to carry out the obligations and conditions which were to be performed by the respondent No. 1. It may be noted that under the Letter of Intent the respondent No, 1 was to pay security deposit of Rs. 20 !acs. out of which only Rs. 5 lacs could be paid by the respondent No. 1, within 15 days from the date of the Letter of intent containing the terms and conditions of the dealership.
( 2 ) CLAUSE (9) of the said Letter of Intent provides as follows ;-"you shall deposit with the Company either a sum of Rs. 40 lacs as security deposit out of which Rs. 20 lacs is to be paid within fifteen days in form of Demand Draft favouring Daewoo Motors india Ltd. . and the balance of Rs. 20 lacs is to be paid whenever asked by the company or as on alternative Bank guarantee/mortgage to the tune of Rs 80 lacs You will be paid an interest on the deposit and the rate of the interest can be changed at the sole discretion of the Company. "
( 3 ) THE said clause specifically mention the amount which the respondent No. 1 was under an obligation to deposit as security deposit, cannot be disputed, Upto now only Rs. 5 lacs have been paid by way of security. The respondent No. 1 sought instalments to pay the arrear dues with regard to sale of Cielo cars effected by it to the extent of Rs. 33,88,525,50 p. It was outstanding for a considerable period of time. The respondent No. 1 paid such in stalments in time. The appellant then asked the respondent No. 1 to fill up the Letter of offer for the purpose of sale of Matiz cars and also to put in at least Rs. 15 lacs by way of security The respond
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
