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2020 Supreme(Del) 64
IN THE HIGH COURT OF DELHI AT NEW DELHI
Jyoti Singh, J.
M/S Inter Ads Exhibition Pvt Ltd – Appellant
Versus
Busworld International Cooperatieve Vennootschap Met Beperkte Anasprakelijkheid – Respondent
Original Miscellaneous Petition (I) (Comm) No. 273 of 2019
Decided on : 13-01-2020
Advocate Appeared:
Siddharth Yadav, Advocate, Vijeta Mukherjee, Advocate, Malvika Trivedi, Advocate, Vasanth Rajasekaran, Advocate, Saurabh Babulkar, Advocate, Reshma Ravipati, Advocate, Shivani Garg, Advocate
Headnote:
ARBITRATION - Section 9 - Termination of Joint Venture Agreement - Interim relief - Specific performance of determinable contract - Not permissible - Injunction against operation of termination - Not permissible - Adequate remedy of damages.
Fact of the Case:
Petitioner and respondent entered into a Joint Venture Agreement (JVA) for organizing an event 'Busworld India'. The JVA was for four editions of the event and was to continue until terminated in accordance with the provisions of the JVA. The petitioner alleged that the respondent had wrongfully terminated the JVA and sought quashing of the termination notice and an injunction restraining the respondent from proceeding with the 2020 Event.
Finding of the Court:
The Court held that the JVA was a determinable contract and could be terminated by either party upon the occurrence of certain events, including breach of material obligations. The Court further held that specific performance of a determinable contract cannot be granted under Section 9 of the Arbitration and Conciliation Act, 1996, and that an injunction against the operation of termination would amount to enforcing the contract, which is not permissible. The Court also held that the petitioner had an adequate remedy of damages for any breach of contract by the respondent.
Issues: 1. Whether the JVA was a determinable contract? 2. Whether specific performance of a determinable contract can be granted under Section 9 of the Arbitration and Conciliation Act, 1996? 3. Whether an injunction against the operation of termination can be granted? 4. Whether the petitioner had an adequate remedy of damages?
Ratio Decidendi: 1. A determinable contract is a contract that can be terminated by either party upon the occurrence of certain events, including breach of material obligations. 2. Specific performance of a determinable contract cannot be granted under Section 9 of the Arbitration and Conciliation Act, 1996, as it would amount to enforcing the contract, which is not permissible. 3. An injunction against the operation of termination cannot be granted, as it would amount to enforcing the contract, which is not permissible. 4. The petitioner had an adequate remedy of damages for any breach of contract by the respondent.
Final Decision: The petition was dismissed.
JUDGMENT :
Jyoti Singh, J.
1. The present petition has been filed under Section 9 of the Arbitration and Conciliation Act, 1996 ('Act') pertaining to a dispute between the parties with regard to termination of Joint Venture Agreement dated 25.10.2011.
2. Brief facts necessary to adjudicate the present petition are that on 16.10.2003 a Joint Venture Agreement (JVA) was executed between InterAds limited (referred to as IAL hereinafter), an associate concern of the petitioner and the respondent to organize an event 'Busworld India', in India.
3. Petitioner along with IAL executed a Supplementary Agreement dated 24.07.2009. IAL and respondent organized three editions of events i.e. in 2005, 2007 and 2009 as per terms and conditions of the JVA-I. One edition of the event was organized in 2011. On 25.10.2011 the petitioner and respondent executed JVA-II in order to extend the Co-Operations for further editions of events of 'Busworld India'. Thereafter the parties together organized 2013, 2015, 2016 and 2018 edition of the event.
4. It is the case of the petitioner that all the events were successfully organized due to the hard work and dedication of the petitioner. Between 2005-2016 there was no investment made by the respondent and it neither provided a working capital nor made efforts to sell the event services to the clients within their assigned region as per Article 4.2 (f) of the JVA-II. After the 2016 edition of the event, the petitioner has to reimburse Euro 55,949.28 towards expenses to the respondent for the earlier editions of the events on market research, travelling etc.
5. As per the petitioner the respondent along with the petitioner launched the next edition of the event scheduled for August, 2018 at Bengaluru and the respondent for the first time agreed to pay Euro 67,000 towards working capital for the event, pursuant to Article 5.2 (b) of JVA-II. A Memorandum of Understanding was executed on 21.10.2017 and the respondent agreed to set of its dues of the earlier edition with 2018 edition and was to pay to the petitioner Euro 11,050.72. The petitioner was supposed to pay to the respondent Euro 67,000, one week before August, 2018, between 29.08.20190 and 31.08.2019.
6. The petitioner informed the respondent vide e-mail dated 20.08.2018 that it would pay Euro 67,000 in three installments one each in the month of September, 2018, October, 2018 and November, 2018 respectively. Petitioner paid two installments but due to a genuine difficulty, could not pay the third one and thus offered to compensate by paying interest at 12% per annum on the delayed payment, respondent agreed to the same.
7. After successful completion of the 2018 event, the 2020 edition was announced by the respondent in a press release dated 04.09.2018. The petitioner thus took up the matter of venue bookings with the respondent vide e-mails dated 12.10.2018 & 17.10.2018, which were never responded to. However, according to the petitioner, to his utter shock, it received a notice dated 15.03.2019 from the respondent stating that the JVA-II stood terminated and also making a claim of Euro 118,486,34 against the petitioner. This was despite the fact that just 10 days prior thereto, the respondent vide e-mail dated 05.03.2019 had agreed to receive the last installment with interest. Respondent also knew that disputes had arisen between BOCI & the petitioner which had delayed the settling of the accounts with the respondent.
8. The petitioner then replied to the notice dated 15.03.2019 by a letter dated 09.04.2019. Further correspondence was thereafter exchanged between the parties, wherein the petitioner pointed out that for many years there was no default and thus minor default should not result in termination.
9. The petitioner avers that this led to disputes arising between the parties pertaining to JVA-II. The said agreement has an Arbitration Clause which is reproduced hereinunder:-
"10.3 Both the Parties shall make their best endeavor in terms of Article 1
