A determinable contract cannot be subject to specific performance, and an Arbitral Tribunal cannot entertain stay applications on termination if it does not examine the validity of such termination.

JUDGMENT

Vibhu Bakhru, J. (ORAL)--The appellant has filed the present appeal under Section 37 (2) (b) of the Arbitration and Conciliation Act, 1996 (hereafter `the A&C Act') impugning an order dated 24.01.2021 passed by the Arbitral Tribunal. By the impugned order the Arbitral Tribunal has rejected the appellant's application under Section 17 of the A&C Act, inter alia, seeking that the termination of the Contract with the respondent be stayed.

2. The appellant was awarded the contract to install Water Vending Machines (101 in number) in four clusters by a letter dated 23.03.2017. The appellant claimed that it successfully installed the Water Vending Machine (WVMs) in terms of the Letter of Award and also paid licence fee amounting to Rs.65,42,319/-for the first year including the security deposit of Rs.13,32,762/-. There is some controversy whether the licence fee was payable from a fixed date or from the date of actual commissioning of each WVMs.

3. The respondent alleges that the appellant had failed to pay the licence fee in accordance with the terms of their Contract. The respondent had also suspended the Contract with the appellant. There is a dispute between the parties regarding the licence fee payable by the appellant as well as the action of the respondent in suspending the Contract in question. The appellant has raised claims in respect of the quantum of licence fee and has also raised claims on account of the alleged loss suffered by it as a consequence of the actions of the respondent. The Arbitral Tribunal has been constituted and is considering the said disputes.

4. During the pendency of the disputes before the Arbitral Tribunal, by a letter dated 23.11.2020, the respondent terminated the Contract with the petitioner in respect of all four clusters on account of the alleged failure on the part of the appellant in paying the licence fees.

5. In the aforesaid context the appellant had filed an application under Section 17 of the A&C Act praying that the termination order dated 23.11.2020 be stayed.

6. It is the appellant's case that the Contract, in question, is not in the nature of a determinable contract. The appellant contends that the question of default in payment of licence fees - the sole ground on which the respondent has terminated the Contract - is the subject matter of dispute and the Contract in question could not be terminated on that ground.

7. The Arbitral Tribunal heard the application and dismissed the same by the impugned order. The Arbitral Tribunal had reasoned that since the Contract was a determinable one, an application seeking stay of termination of the said Contract was not maintainable as that would amount to granting specific performance of a determinable Contract which is impermissible.

8. The learned counsel appearing for the appellant drew the attention of this Court to the Clause 8.2 of the General Conditions of Contract (GCC) as applicable to the Contract in question. The said clause reads as under:

8.2 Termination of Licence:

The licensor shall also be entitled at on any time forthwith to terminate the other events Licence without notice in any of the of default following events, that is to say(a) in the event of the Licensee being convicted by a court of law under the provisions of criminal procedure code or any other law (b) in the event of the Licensee being an individual or, if a firm, any partner in the Licensee firm being at any time be adjudged insolvent or a receiving order or order for administration of his estate made against him or shall take any proceeding for liquidation or composition under any insolvency Act for the time being in force or make any conveyance or assignment of his interest or enter into any agreement or composition with his creditors for suspended payment, or if the firm be dissolved under the partnership Act or, in the event of Licensee being a company, if the company shall pass any resolution to be wound up either compulsorily or vo