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IN THE HIGH COURT OF JAMMU AND KASHMIR AND LADAKH AT SRINAGAR
Moksha Khajuria Kazmi, J.
Food Corporation of India & Ors. – Petitioners
Versus
Iqbal Motors Transport Service (M/S) & Anr. – Respondents
FOA No. 23/2022
Decided On : 25-11-2022
CAVEAT - TERMINATION OF CONTRACT - Specific Relief Act, 1963 - Sections 14(d), 41(e) - The court discussed the provisions of the Specific Relief Act, particularly Sections 14(d) and 41(e), which state that contracts that are determinable cannot be specifically enforced and that injunctions cannot be granted to prevent breaches of such contracts. The court interpreted these sections to conclude that the trial court's injunction was legally unsound, as the contract in question was determinable and monetary compensation would suffice for any breach. This legal framework influenced the court's decision to set aside the trial court's order.
Fact of the Case:
The appellants terminated a transport contract with the respondent transport company, which led the respondent to file a suit challenging the termination and seeking an injunction against it. The trial court granted an interim injunction, staying the termination order, citing a lack of adherence to natural justice.
Finding of the Court:
The court found that the trial court had erred in granting the injunction without properly assessing the principles governing such relief, particularly the balance of convenience and irreparable loss. The court noted that the trial court's decision was based on assumptions rather than concrete findings.
Issues: Whether the trial court properly applied the principles for granting an interim injunction and whether the injunction was permissible under the Specific Relief Act given the nature of the contract.
Ratio Decidendi: The court held that the trial court failed to satisfy the necessary legal standards for granting an interim injunction, particularly regarding the principles of natural justice, balance of convenience, and irreparable loss. It emphasized that the Specific Relief Act prohibits injunctions for determinable contracts, reinforcing that monetary compensation is an adequate remedy.
Final Decision: The appeal was allowed, the trial court's order was set aside, and the suit was dismissed as barred by the provisions of the Specific Relief Act. The respondent was granted the liberty to seek appropriate remedies under the law.
JUDGMENT :
Moksha Khajuria Kazmi, J.
Caveat No. 1840/2022
1. Heard learned counsel for the caveator. Caveat discharged.
2. The appellants, through the medium of present appeal, seek setting aside of the order dated 08.09.2022, hereinafter for short as impugned order, passed by the learned 2nd Additional District Judge, Srinagar, for short trial court, in an appeal titled M/s Iqbal Motors Transport Service & Anr v. Food Corporation of India and others, on the grounds taken in the memo of appeal.
Brief Facts
3. The case of the appellants, precisely, is that pursuant to tender notice, No. Cont./32(3)/JK/Tender/2019-20, dated 10.06.2020, the respondent transport company was allotted the tender, after having been declared as successful bidder, on 24.02.2021. The respondent-transport company was required, in terms of the contract, to supply foodgrains from EX-FSD New Godown Jammu to FSD Budgam. During the currency of such contract, the appellants issued a termination and debarment order no. Cont 32 (3)/ (JK)/Tender/2019-20/NIT:20.11.2020/NG Jammu to PEG Budgam II dated 26.08.2022, by virtue of which the contract with the respondent-transport company was terminated with immediate effect. The operative portion of the termination order is, for facility of reference, taken note of herein, thus:
4. Feeling aggrieved of the termination/ debarment order supra, the respondent transport company challenged the same by filing a suit for declaration and mandatory injunction before the trial court. The suit was accompanied by an application for grant of ad-interim relief.
5. The trial court, upon consideration of the matter, stayed the operation of the termination/ debarment order in terms of the impugned order on the ground that the principles of natural justice have not been followed while passing the termination/ debarment order inasmuch as the respondent transport company/ plaintiff before the trial court, was not afforded an opportunity of hearing before the order of termination. The operative portion of the impugned order is reproduced hereinbelow, thus:
Injunctions cannot be granted to prevent breaches of determinable contracts under the Specific Relief Act, and the trial court must adhere to established principles when considering applications for ....
Statutory actions must be challenged under writ jurisdiction, not civil suits, and established conflict of interest justifies debarment from tenders.
A contract that is inherently terminable does not prevent the enforcement of specific performance claims if the termination is contested as being unjust or improper.
Absence of specific clause authorising and enabling either party to terminate the agreement in the event of happening of the events specified therein, from the very nature of agreement, which is priv....
The court upheld the rejection of an interim injunction under the Arbitration Act due to the appellant's failure to establish a prima facie case and balance of convenience.
The failure to record reasons for granting an ex-parte injunction without notice constitutes a jurisdictional error and renders such orders unsustainable.
A plaintiff alleging fraud must establish a prima facie case, balance of convenience, and potential irreparable harm to obtain an ad-interim injunction under the Code of Civil Procedure.
A contract that is determinable in nature cannot be specifically enforced, and no injunction against termination and enforcement of the contract can be issued.
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