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1987 Supreme(Del) 392

High Court Of Delhi
S.K.GUPTA - Appellant
Versus
HYDERABAD ALLYWN LIMITED - Respondent
Civil 516 of 1987
Decided On : 10/19/1987

Advocates Appeared:
Amit Khemka, B.D.SHARMA, D.K.KAPUR, R.K.Anand, RAMAN KAPOOR, S.P.SHARMA, Y.K.Kapur

The main legal point established in the judgment is the interpretation of contract termination under Section 14(1)(c) of the Specific Relief Act and the enforceability of negative covenants under Section 42, emphasizing the availability of alternative remedies and the bar on granting injunctions for non-specifically enforceable contracts.

Headnote:

Specific Relief Act - Contract Termination - Section 14(1)(c), Section 41(e), Section 42 - The court discussed the applicability of Section 14(1)(c) and Section 41(e) of the Specific Relief Act in the context of a contract termination and the grant of injunction. It highlighted the interpretation of negative covenants and their enforceability under Section 42 of the Act. The court emphasized that a contract which is in its nature determinable cannot be specifically enforced and that an injunction cannot be granted to prevent the breach of such a contract. It also clarified that the presence of a negative covenant in the agreement allows for the granting of an injunction to enforce the negative agreement, even if the affirmative agreement is not specifically enforceable.

Fact of the Case:

The petitioner was appointed as the exclusive stockist of the respondent for the sale of watches. The respondent terminated the agreement and started marketing products through other dealers. The petitioner filed a suit for permanent injunction, leading to a series of court orders and appeals.

Finding of the Court:

The court found that the contract was determinable and fell under Section 14(1)(c) of the Specific Relief Act, making it not specifically enforceable. It concluded that no injunction could be granted to prevent the breach of such a contract. The court also emphasized the absence of a negative covenant in the agreement and the availability of alternative remedies for the petitioner.

Issues: The issues revolved around the termination of the agreement, the grant of injunction, and the applicability of Sections 14(1)(c), 41(e), and 42 of the Specific Relief Act.

Ratio Decidendi: The court's decision was based on the interpretation of the contract's nature, the enforceability of negative covenants, and the availability of alternative remedies for the petitioner.

Final Decision: The petition was dismissed, and the lower appellate court's order was upheld, with the court emphasizing the absence of a prima facie case for a temporary injunction and the availability of alternative remedies for the petitioner.

Sananda Bhandare

( 1 ) THIS revision petition under Section 115 of the Code of Civil Procedure is directed against the order of the Senior Sub Judge. Delhi dated 30th June 1987 in R. C. A. No. 37/87.

( 2 ) THE petitioner M/s Rohini Times was appointed as exclusive stockist of the respondent for the Union Territory of Delhi for sale of watches by way of a memorandum of understanding between the respondent and the petitioner dated 1st August 1984. Clause I of the memorandum of understanding reads as follows:

1. This Memorandum of Understanding shall remain in force for a period of "six MONTHS" from the date of its execution. The principal reserves the right to terminate this understanding within this period with or without notice at any time, and without assigning any reason whatsoever. "the case of the petitioner is that this understanding continued till date and the appointment of the petitioner as a stockist was not terminated at any stage, however the respondent committed breach of terms of agency and started marketing their products through various dealers in contravention of the terms of the agency. The petitioner, therefore, on 20th April 1987 filed a suit for permanent injunction in the court Senior Sub Judge, Delhi being Suit No. 220/87. Alongwith the plaint, the petitioner also filed an application under Order 39 Rules 1and2 of the Code of Civil Procedure for an interim injuction restraining the respondent from supplying watches to any other dealer in Delhi except through the plaintiff firm. I By order dated 20th April 1987 the Sub Judge, 1st Class, Delhi granted the interim injunction against the respondent even before issuing notice to the respondent. The respondent therefore, moved this Court by way of a civil miscellaneous (main) petition under Article 227 of the Constitution of India. This Court by its order dated 24th April 1987 stayed this order dated 20th April 1987 passed by the Sub Judge, however at a subsequent stage directed the Sub Judge to decide the case according to law after hearing the respondent. Thereafter, the Sub Judge, 1st Class, Delhi by his order dated 8th May 1987 after hearing both the sides granted an injunction restraining the defendants from supplying watches directly or indirectly to other dealers in Delhi except through the plaintiff firm against cash receipts till the decision of the suit. The respondent felt aggrieved by this order and filed an appeal before the Senior Sub Judge, Delhi. The Senior Sub Judge, Delhi by his order dated 30th June 1987 allowed the appeal and reversed the order dated 8th May 1987 passed by the Sub Judge, 1st Class, Delhi.

( 3 ) IT was contended by the learned counsel fur the petitioner that the ( Senior Sub Judge, Delhi was not right in observing that since compensation in money is an adequate relief, a suit for permanent injunction was barred under Section 41 (e) of the Specific Relief Act 1963 ^ (hereinafter REFERRED TO to as the Act) and, therefore, it could not be held that a prima-facie case was made out for granting temporary injunction in a case like the present one. Learned counsel submitted that since there was a negative covenant in the agreement, though the contract was terminable as envisaged under Section 14 (l) (c ). Section 41 (e) of the Act was not applicable and Section 42 of the Act was applicable and / injunction could be granted^ Learned counsel relied on International Oil Co. v. Indian Oil Co. Ltd. , AIR 1969 Madras 423, Warner Brothers Pictures inc. v. Nelson, (1936) 3, All. E. R. 1963 and Marco Productions Ltd v. Pagola and Others, (1945) I, All. E. R, 155 in support of his contention. He further submit- ted that since the present case falls under Section 42 of the Act once the petitioner had made out a prima-facie case, the petitioner was entitled to get the interim injunction prayed for. Learned counsel submitted that the communi- cation terminating the arrangement alleged to have been sent by the respondent to the petitioner was not p



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