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1998 Supreme(Mad) 1173
MADRAS HIGH COURT
C Shivappa, K Natrajan
MULTICHANNEL (INDIA) LIMITED, REP. BY ITS DIRECTOR, MUMBAI - APPELLANT
v.
KAVITALAYA PRODUCTIONS PRIVATE LIMITED AND OTHERS – RESPONDENTS.
O.S.A. No. 109 of 1998 & C.M.P. No. 9036 of 1998
Decided on : September 2, 1998.
Sh. P. P. Rao, Senior Advocate, for the Appellant.
Sh. Mohan Parasaran, Advocate, for the Respondent Nos. 1 & 2, Sh. P. S. Raman, Advocate, for the Respondent No. 3.
Headnote:
CONTRACT - INJUNCTION - NEGATIVE COVENANT - ENFORCEMENT - BALANCE OF CONVENIENCE - IRREPARABLE LOSS - COMPARATIVE HARDSHIP - SPECIFIC RELIEF ACT, 1963 - SECTION 42.
Fact of the Case:
The appellant and respondent No. 2 entered into a Joint Venture Agreement on 30-5-1997 for the production and marketing of tele-serials. The agreement contained a negative covenant restraining the appellant from selling or otherwise parting with or disposing of any Manganese or Iron ore from the mines and the buyer shall be the sole and only buyer thereof during the continuance of the agreement. The appellant filed a suit seeking a declaration that the letter sent by the respondent No. 2, dated 4-5-1998, terminating the contract is illegal and void. The appellant also sought a consequential declaration that the agreement dated 30-5-1997 is valid and subsisting in respect of the above mentioned serial and further consequently that the appellant is exclusively entitled to sell the free commercial time allocated to the abovesaid Tele Serials on any Television Channel. The appellant also sought an interim injunction pending trial of the suit.
Finding of the Court:
The court held that the Joint Venture Agreement dated 30-5-1997 is not a concluded contract as there were several terms and functional methods yet to be worked out and annexed to the letter of intent. The court further held that the negative covenant in the agreement cannot be enforced by way of an injunction as the breach of contract can be compensated in money. The court also held that the appellant has not established a prima facie case and the balance of convenience lies in favour of the respondents.
Issues: 1. Whether the Joint Venture Agreement dated 30-5-1997 is a concluded contract? 2. Whether the negative covenant in the agreement can be enforced by way of an injunction? 3. Whether the appellant has established a prima facie case? 4. Whether the balance of convenience lies in favour of the appellant or the respondents?
Ratio Decidendi: 1. A contract is concluded when all the terms of the contract are settled and agreed upon by the parties. In the instant case, several terms and functional methods were yet to be worked out and annexed to the letter of intent, therefore, the Joint Venture Agreement dated 30-5-1997 cannot be said to be a concluded contract. 2. A negative covenant in a contract can be enforced by way of an injunction only if the breach of contract cannot be compensated in money. In the instant case, the breach of contract can be compensated in money, therefore, the negative covenant cannot be enforced by way of an injunction. 3. A prima facie case is a case which is based on strong evidence and which, if unrebutted, would entitle the plaintiff to succeed in the suit. In the instant case, the appellant has not produced any strong evidence to support his claim, therefore, he has not established a prima facie case. 4. The balance of convenience lies in favour of the party who will suffer greater hardship if the injunction is granted or refused. In the instant case, the respondents will suffer greater hardship if the injunction is granted, therefore, the balance of convenience lies in favour of the respondents.
Final Decision: The appeal is dismissed. Parties to bear their own costs in this proceedings.
C. Shivappa, J. - This appeal is directed against the order dated 23-6-1998 passed on O.A. No. 254 of 1998 in C.S. No. 375 of 1998, by the learned single Judge on the original jurisdiction of this Court.
2. The appellant as plaintiff has filed the suit seeking for a declaration that the letter sent by the respondent No. 2, dated 4-5-1998, terminating the contract (Contract for Time Sales) in respect of the telecast of two serials, namely, 'Balachander China Thirai' and 'Marmadesam', as illegal and void. The second relief which has been sought for is a consequential declaration that the agreement dated 30-5-1997 entered into between the appellant and the respondent No. 2 is valid and subsisting in respect of the above mentioned serial and further consequently that the appellant is exclusively entitled to sell the free commercial time allocated to the abovesaid Tele Serials on any Television Channel. In the light of the abovesaid prayers, consequential relief of permanent injunction has also been sought for and as an interim measure, prayed for an interim injunction pending trial of the suit.
3. On an earlier occasion, the appellant herein prayed for an order of interim injunction and the matter came up before this Court on 26-5-1998 and interim injunction was granted till 10-6-1998. Aggrieved against the said order, respondents 1 and 2 preferred an appeal before a Division Bench of this Court in O.S.A. No. 86 of 1998. Along with the said appeal, they filed C.M.P. No. 7295 of 1998 to suspend the interim injunction granted by the learned single Judge. The Division Bench, by an order dated 2-6-1998 suspended the interim injunction granted on condition that respondents Nos. 1 and 2 herein should deposit a sum of Rs. 10 lakhs to the credit of the suit and posted the appeal for hearing on 16-6-1998. Aggrieved against the said order, the appellant herein filed a special leave petition before the Supreme Court in S.L.P. No. 10225 of 1998. When the matter came up for hearing on 10-6-1998, the Apex Court observed that "this matter has now become infructuous because the order of injunction itself was made operative till 10-6-1998. Virtually the appeal filed before the Madras High Court has also become infructuous and it shall be treated as disposed of accordingly" and directed the learned single Judge to hear the application for injunction afresh and after hearing both the parties to decide the application on merits without being influenced by the order of the learned single Judge and also by the order of the Division Bench. The learned single Judge declined to grant the injunction and while dismissing the application, observed that the letter of intent dated 30-5-1997 prima facie appears to be a proposal and not a concluded contract and even otherwise, the comparative mischief or inconvenience which is like to arise from withholding the injunction will be greater than that which is likely to arise from granting it. Hence, this appeal is before us. Though there is an application in this appeal seeking for an interim injunction, this Court ordered on 14-7-1998 for hearing of the main appeal itself, since hearing of the application for interim order and hearing of the appeal consume more or less the same time. Hence, the appeal is taken up for final hearing.
4. The question for consideration in this appeal is whether the negative covenant or stipulations contained in the letter of intent dated 30-5-1997 can be enforced by grant of an interim injunction disregarding the balance of convenience, irreparable loss or comparative hardship ?
5. The learned senior counsel Mr. P. P. Rao, appearing on behalf of the appellant contended that although Clause (18) of the Joint Venture Agreement, dated 30th May, 1997 postulated a further agreement setting out details of procedural, functional and operational issues not later than 7-6-1997 and it was not admittedly executed, it did not stand in the way of operation of the Joint Venture Agreement w
