1998 Supreme(Mad) 1193

High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE K. SAMPATH
Base International Holdings N. V. Hockenrode 6 - Appellant
Versus
Pallava Hotels Corporation Limited and Others - Respondents
C.S. No. 802 of 1996, Original Application Nos. 653 and 654 of 1996 and 104 of 1997 and Application No. 1464 of 1997
Decided On : 04 September 1998

Headnote:

The suit was filed by the plaintiff, a company incorporated under the laws of Netherlands, against the defendants, a public limited company incorporated under the Indian Companies Act, 1956 and its Chairman, for recovery of 616, 922.64 U.S. Dollars equivalent to approximately Rs. 2, 22, 10, 000/- calculated at the rate of 1 U.S. Dollar = Rs. 36/- on the date of the filing of the suit, for a permanent injunction restraining the defendants, their directors, partners, servants, agents, distributors, stockiest, representatives, assigns or any of them or by directly or indirectly entering into an agreement with any other hotel using the proprietary information and data, intellectual property, the Holiday Inn System and other inputs of the applicants, a decree for permanent prohibitory injunction restraining the defendants, their directors, partners, servants, agents, etc., or any of them from transferring, finalising, completing, furnishing and or operating any hotel other than the proposed hotel at Mount View, No. 1, G.S.T. Road, Guindy, Madras, a decree for permanent prohibitory injunction restraining the respondents jointly and severally, their directors, partners, servants agents, distributors, stockists, representatives, assigns or any of them from passing off and/or enabling others to pass off their business and or hotel as and for the applicant's business and hotel by use of the name/trading style of Holiday Inn Crowne Plaza or any other name or trading style similar thereto, for an award pendente lite and future interest to the applicant and against the respondents jointly and severally on the decreed amount at the rate of 1.5% per month being the agreed rate of interest and for the costs of the suit.

Fact of the Case:

The plaintiff provided defendants with various proprietary, confidential and commercially valuable information, know how, designs, details, standards, etc. The plaintiff also participated in various reviews at Madras and overseas of the proposed design, planning, layout, room, facilities, specifications, etc., of the proposed hotel. The same was recorded in a written agreement dated August 17, 1993 (hereinafter referred to as the agreement). Such information was all subject to the confidentiality obligations incorporated as a negative covenant. Time was agreed to be the essence of the new development agreement.

Finding of the Court:

The Court found that the termination notice dated 10-2-1996 (Ex. P. 4 issued by the second defendant in the name of the first defendant is invalid, illegal and bad in law since in a commercial contract for a fixed term like the agreement dated 17-8-1993, a party is entitled to terminate the contract only in strict compliance with the termination clause. The contractual obligations continued to subsist against the defendants.

Issues: Whether the plaintiff is entitled to the reliefs prayer for in the various injunction petitions.

Ratio Decidendi: The Court held that the plaintiff is entitled to the reliefs prayed for in the interlocutory applications. The Court observed that all the three prerequisites for grant of interim injunction, namely, prima facie case, balance of convenience, and irreparable loss or harm are present in the instant case. The Court further observed that the defendants had clandetinely attempted to bypass and give a go-bye to the agreement entered into with the plaintiff under Ex. P. 1 and had not acted in conformity with the terms in the said agreement. The defendant ought to have put the plaintiff on notice of their intention to get out of the agreement as per the terms reading notice provided under the agreement before calling it a day with them. Having regard to the facts and circumstances of the as, the Court was of the view that the plaintiff is entitled to an injunction in terms of the prayer.

Final Decision: The Court granted an interim prohibitory temporary injunction restraining the defendants from using or converting to use the proprietary information and technology of the applicant comprised in the Holiday Inn System; the hotel plans regarding outlay, facilities, planning, architectural and technical drawings; and any relevant recommendation, advice or information made available to the respondents including those regarding interior fit-out, hotel computer systems and information technology, room reservation technology and facilities, Standards Manual etc., pending disposal of the suit for finalizing, completing, furnishing and/or operating the hotel at Mount View, No. 1 G.S.T. Road, Guindy, Madras. The Court also granted an interim prohibitory temporary injunction restraining the respondents jointly and severally, their direction, partners servants agents, distributors, stockists, representatives, assigns or any of them from transferring alienating or creating any interest in favour of any third party directly or indirectly in the proposal hotel at Mount View, No. 1 G.S.T. Road, Gunidy, Madras. Further, the Court granted an interim prohibitory temporary injunction restraining the defendatns and Appu Hotels Ltd. jointly and severally, their directors/partners, servants, agents, distributors, stockists, representatives, assigns or any of them from commissioning and operating the hotel at the schedule mentioned property.