Delhi High Court
M/S Kashyap???S vs Bata India Ltd. on 5 July, 2013
Author: Rajiv Sahai Endlaw
Bench: Rajiv Sahai Endlaw
*IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 5th July, 2013
+ CS(OS) No.563/2012 & I.A. No.16518/2012 (of plaintiff u/O-12 R-6)
M/S KASHYAP'S ..... Plaintiff
Through: Mr. Sudhir K. Chandra, Sr. Advocate
with Mr. Pradeep K. Bakshi and Mr.
Rajat Navet, Advocates.
Versus
BATA INDIA LTD. ..... Defendant
Through: Mr. Raman Kapur, Sr. Advocate with
Mr. Aviral Tiwari, Advocate.
CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
RAJIV SAHAI ENDLAW,J
1. The plaintiff has instituted this suit for mandatory injunction directing
the defendant to remove itself and its products and to stop displaying and
selling its products from the basement, ground and first floors admeasuring
5900 sq. ft. in property No.E-16, South Extension Part-II, New Delhi and/or
from using the said property in any manner whatsoever and for damages/mesne
profits from the date of institution of the suit till the defendant uses the said
portion of the property, together with interest thereon, pleading:
CS(OS) No.563/2012 Page 1 of 21
(i) that the parties on 9th December, 1989 entered into a Joint Retail
Venture Agreement in terms of which the plaintiff had allowed the
defendant‟s products to be sold from the basement and ground floor of
the said property for a period of 15 years renewable for another 5 years
on mutually acceptable terms with either party being entitled to terminate
the Agreement by giving six months prior written notice;
(ii) that the terms and conditions were changed in terms of defendant‟s
letter dated 19th July, 1999 which inter alia extended the term of the
Agreement by 12 years with effect from 1 st October, 1999 and made the
Agreement terminable by a 12 months prior notice;
(iii) that the terms and conditions were again changed in terms of
defendant‟s letter dated 2 nd August, 1999;
(iv) that the plaintiff vide letter dated 27 th August, 2001 gave 12
months notice of termination;
(v) that fresh negotiations were held between the parties and a fresh
offer was made by the plaintiff to the defendant vide letter dated 14 th
January, 2003 and which was accepted by the defendant;
CS(OS) No.563/2012 Page 2 of 21
(vi) that again modifications were made in the terms and conditions
vide plaintiff‟s letter dated 31 st January, 2003 and which the defendant
accepted vide its reply dated 1st February, 2003;
(vii) that the defendant in its reply dated 1 st February, 2003 supra
suggested certain other changes qua termination but which were not
accepted by the plaintiff;
(viii) that the plaintiff gave six months notice dated 11th April, 2011 of
termination with effect from 31st October, 2011;
(ix) that the defendant vide its reply dated 27th May, 2011 inter alia
took a stand that only the defendant could terminate the Agreement by
one year notice and the plaintiff had no right to termination;
and hence this suit.
2. Summons of the suit and notice of the application for interim relief were
issued. The defendant has contested the suit filing a written statement pleading:
(a) that the defendant is in exclusive possession of the said 5900 sq. ft.
area in the basement, ground and first floors since 1 st February, 2003 and
the suit as framed is not maintainable;
(b) that the arrangement contained in the Agreement dated 9 th
December, 1989 continued till 14th January, 2003 when the plaintiff vide
CS(OS) No.563/2012 Page 3 of 21
letter dated 14th January, 2003 offered to enter into the Joint Retail
Venture Agreement for a period of 20 years effective from 1 st February,
2003 for the aforesaid area of 5900 sq. ft. with minimum guaranteed
commission of Rs.5,25,000/- per month or 5% of the turn over whichever
was higher with increment of guaranteed commission by 15% after every
5 years and with only the defendant having right of termination of the
Agreement; the defendant vide its reply dated 14 th January, 2003
accepted the said offer and a binding Agreement came into existence;
(c) that the plaintiff in consideration of enhanced commission and
huge advance/security deposit and other terms and conditions had given
up the right of termination;
(d) that certain other changes were made vide letter dated 31 st January,
2003;
(e) that a fire broke out in the basement on 12 th November, 2008 and
the plaintiff vide letter dated 14th November, 2008 threatened to wriggle
out of the Agreement which was binding for 20 years;
(f) that CS(OS) No.2426/2008 was filed by the defendant in this
Court in this regard and which was disposed of vide order dated 22 nd
CS(OS) No.563/2012 Page 4 of 21
May, 2009 after the plaintiff restored status quo ante as before the fire
and in terms of the Agreement;
(g) that the plaintiff agreed to the aforesaid being fully aware that it
had no right of termination of the Agreement under the garb of fire
incident;
(h) that thus the termination vide letter/notice dated 11 th April, 2011 is
bad as the plaintiff has no right of termination of the Agreement;
(i) that the plaintiff by its conduct has accepted the counter offer of
the defendant in the letter dated 1st February, 2003.
3. The plaintiff has filed replication controverting the contents of the
written statement and thereafter has filed application being I.A. No.
16518/2012 for decree insofar as for the relief of mandatory injunction on
admissions. The counsels have been heard.
4. As would be obvious from aforesaid, the only defense of the defendant
insofar as for the relief of mandatory injunction is that the agreement between
the parties is for a period of 20 years i.e. till 13 th January, 2023 and the plaintiff
has no right of termination.
5. The entire transaction between the parties is documented and qua which
there is no dispute and which is considered hereinbelow.
CS(OS) No.563/2012 Page 5 of 21
6. Clause 13 of the first Agreement, dated 9th December, 1989 between the
parties was as under:
"13) This arrangement may be terminated by either side at any
time by giving six months prior written notice in this behalf.
If the termination is by us that event the owner of the place
will not be liable to refund any amount paid under clause
(5). If the owner terminates this arrangement, then only
you will pay the amount referred to under clause (5)."
7. Clause 3 of the letter dated 19th July, 1999 of the defendant to the
plaintiff was as under:
"3) That, the J.R.V. Agreement in question may be terminated by
either side, at any time, giving 12 months' prior written
Notice, in this behalf."
8. The letters dated 2nd August, 1999 and 27 th August, 2001 are
not relevant for the present purposes.
9. Clauses 1, 7, 8 & 9 of the letter dated 14 th January, 2003 of the plaintiff
to the defendant were as under:
"1. The agreement would be a JRV as per the original
agreement dt. 9/12/1989 except clause No.2,3,5 and 6 will
no longer be applicable.
2......
.........
7. The JRV would be for a period of 20 years.
8. There will be no lock-in period except for the first year.
9. Bata India Limited can terminate the agreement by giving
one year notice."
CS(OS) No.563/2012 Page 6 of 21
10. The defendant by its letter dated 14th January, 2003 confirmed the
aforesaid terms.
11. The letter dated 31st January, 2003 of the plaintiff is again not relevant
for the present purposes.
12. The defendant vide its letter dated 1st February, 2003 intimated the
plaintiff as under:
"It has also been agreed upon between yourselves and
ourselves that the termination clause No.13 of the previous
agreement dated 09.12.89 will be replaced by Clause 9 of your
letter dated 14.01.2003."
13. No response was sent by the plaintiff thereto.
14. The counsels for the parties have argued on the aspect, whether in the
aforesaid state of correspondence, the agreement between the parties was of the
termination Clause 13 supra in Agreement dated 9th December, 1989 permitting
termination of the Agreement by either side at any time by giving six months
prior written notice to the other or not; with the senior counsel for the plaintiff
contending that the Agreement as contained in the letter dated 14th January,
2003 was the same as in the Agreement dated 9 th December, 1989 except
Clauses 2, 3, 5, & 6 and the senior counsel for the defendant contending that
the Clause 13 of the Agreement dated 9 th December, 1989 stood substituted by
CS(OS) No.563/2012 Page 7 of 21
Clause 9 of the letter dated 14th January, 2003 and as reiterated in the letter
dated 1st February, 2003 supra.
15. The senior counsel for the plaintiff contends that the right to terminate is
a valuable one and cannot be inferred to have been given up.
16. Per contra, the senior counsel for the defendant argued that the defendant
agreed to enhance the minimum guaranteed commission and the security
deposit for the reason of the plaintiff having given up the right of termination
and the same is also borne out from the parties having in the Agreement dated
14th January, 2003 agreed to there being no lock-in period. It is yet further
argued that out of the agreed security deposit under the Agreement of Rs.80
lakhs, defendant till 31 st January, 2003 had paid only Rs.40 lakhs and the
balance security deposit of Rs.40 lakhs was paid and accepted by the plaintiff
after 1st February, 2003 owing to the plaintiff having not controverted the
contents of the defendant‟s letter dated 1st February, 2003, of the plaintiff
having no right of termination. It is yet further argued that the plaintiff in the
written statement in CS(OS) No.2426/2008 filed by the defendant did not take
the stand of the Agreement dated 9 th December, 1989 providing for six months
notice to be still valid and rather pleaded the Agreement to be terminable by a
15 days notice only. Relying on Section 9 of the Indian Contract Act, 1872, it
CS(OS) No.563/2012 Page 8 of 21
is contended that the plaintiff by remaining quiet after the letter dated 1 st
February, 2003 of the defendant unequivocally asserting that the plaintiff had
no right of termination, impliedly accepted the same to be a part of the contract.
The senior counsel for the defendant in the alternative contends that evidence is
required to be led to determine the contract between the parties and the
application for decree on admissions is thus liable to be dismissed.
17. The senior counsel for the plaintiff in rejoinder drew attention to para 8
of the written statement of the plaintiff in CS(OS) No.2426/2008 pleading that
both the parties under the Agreement dated 14 th January, 2003 had a right to
terminate the Agreement with the obligation on the part of the plaintiff only
being to give one year notice. It is further argued that the defendant in that case
did not rely on the letter dated 1st February, 2003.
18. It was during the hearing enquired from the senior counsel for the
defendant whether not all agreements, irrespective of a clause therein of
termination, are terminable in nature unless specifically enforceable in law.
19. All that the senior counsel for the defendant could respond was that
neither any such plea nor any such argument has been raised by the plaintiff.
20. Even if it be so, the Court is to decide the lis as per the law and if it were
to be found that the Agreement is not specifically enforceable, in my view it
CS(OS) No.563/2012 Page 9 of 21
matters not, whether the clause about termination exists in the Agreement or
not.
21. As far as the contention of the defendant of the plaintiff having not taken
such plea is concerned, I am of the view that once the plaintiff has terminated
the Agreement and sought the relief of mandatory and permanent injunction on
the basis of such termination, it was for the defendant to in defense thereto
plead the Agreement being specifically enforceable and to claim the said relief
and which admittedly has not been done.
22. Chapter VI of the Contract Act deals with the consequences of breach of
contract and in Sections 73 to 75 thereof provides for the remedy of
compensation therefor. The same nowhere provides for specific performance
of the contract. The said subject is dealt with in the Specific Relief Act, 1963,
Chapter II whereof deals with specific performance of contracts. Section 10
thereunder prescribes specific performance of the contract, when there exists no
standard for ascertaining actual damage caused by the non-performance or
when the act agreed to be done is such that compensation in money for its non-
performance would not afford adequate relief. As aforesaid, no such defense
has been raised by the defendant. Though the explanation to Section 10
requires the Court to presume that the breach of a contract to transfer
CS(OS) No.563/2012 Page 10 of 21
immovable property cannot be adequately relieved by compensation in money
and though in law a lease is a transfer of immovable property but neither is the
Agreement between the parties of a lease nor is it the plea of the defendant that
the contract between the parties is of transfer of any immovable property.
Section 14 of the Specific Relief Act while describing the contracts which
cannot be specifically enforced provides that a contract, a) which runs into such
minute or numerous details; or, b) which is so dependent on the personal
qualifications or volition of the parties; or, c) which otherwise from its nature is
such, that the Court cannot enforce specific performance of its material terms;
or, d) which in its very nature is determinable; or, e) performance of which
involves a continuous duty which the Court cannot supervise, cannot be
specifically enforced.
23. The New Shorter Oxford English Dictionary defines determinable to
inter alia mean "liable to come to an end". Jowitt's Dictionary, Second Edition
explains determinable: "an interest is said to determine when it comes to an
end, whether by limitation, efflux of time, merger, surrender or otherwise". The
agreement between the parties, according to the defendant also is till 13th
January, 2023 only and is thus determinable in nature.
CS(OS) No.563/2012 Page 11 of 21
24. This Court in Classic Motors v. Maruti Udyog Ltd. 65 (1995) DLT 166
relying on Indian Oil Corporation Ltd. v. Amritsar Gas Company (1991) 1
SCC 533 held that in private commercial transaction the parties can terminate a
contract even without assigning any reasons and the argument that there could
be no termination of an agreement even in the realm of private law without
there being a cause was held to be fallacious and was rejected. The Division
Bench of this Court in Rajasthan Breweries Ltd. v. The Stroh Brewery
Company AIR 2000 Delhi 450 not only upheld the said view but further held
that even in the absence of a specific clause authorizing and enabling the party
to terminate the agreement, from the very nature of the agreement which is a
private commercial transaction, the same can be terminated and incase
ultimately it is found that termination was bad in law or contrary to the terms of
the agreement or any understanding between the parties, the remedy would be
to seek compensation for the wrongful termination and not a claim for specific
performance. A subsequent Division Bench in Indian Railways Catering &
Tourism Corp. Ltd. v. Cox & Kings India Ltd. 186 (2012) DLT 552 not only
followed the said view but further held the Joint Venture Agreement in that
case to be in the realm of contractual agreement with no statutory flavour and
no element of public law and not specifically enforceable. The Supreme Court
CS(OS) No.563/2012 Page 12 of 21
in the judgement thereagainst reported as Cox and Kings Ltd. v. Indian
Railway Catering and Tourism Corporation Ltd. (2012) 7 SCC 587 not only
dismissed the special leave petition but further held that the mere fact that the
party had invested large sums of money would not entitle it to claim injunction
in the nature of specific performance once the agreement had been terminated.
Yet another Division Bench of this Court in North Eastern Handloom and
Handicraft v. Sports Station India Pvt. Ltd. MANU/DE/8181/2007, also
referring to Amritsar Gas Company (supra) held that a remedy for breach of
termination of contract which is inherently and intrinsically terminable in
nature is not by way of its specific or continued enforcement but by an action
for damages.
25. Though there is no plea of the defendant in this regard but a perusal of
the agreement between the parties shows the agreement to be inter alia of, i)
the plaintiff agreeing not to display or sell from the said premises products
overlapping with the products marketed by the defendant; ii) proceeds of the
sale of the defendant‟s products being credited to the plaintiff‟s account and the
plaintiff crediting the defendant‟s account after deducting the minimum
commission to which the plaintiff is entitled; iii) the accounts being
reconciled/settled periodically; iv) the defendant indemnifying the plaintiff
CS(OS) No.563/2012 Page 13 of 21
sales tax, provident fund, ESI and other statutory liabilities; and, v) the plaintiff
providing access to the defendant and its products to the premises. Further, the
Agreement expressly provides that the defendant "shall not have any right, title
or interest as assignee, tenant, sub-tenant or otherwise of the said shop".
26. It cannot be lost sight of that the parties are commercial men who have
minutely negotiated the agreement amongst themselves and having expressly
agreed and declared to all authorities including the taxation authorities that the
relationship between them is not in relation to the premises or of transfer of
premises but of Joint Retail Venture Agreement, cannot here be permitted to
contend otherwise. Further, it is found that the functioning of the Agreement
by crediting of the sale proceeds directly in the account of the plaintiff and
thereafter being credited by the plaintiff to the account of the defendant on a
daily basis with accounts being required to be reconciled periodically is such
which falls in the trap of Section 14(1)(d) of Specific Relief Act i.e. being a
contract which involves continuous performance which cannot be supervised
by the Court.
27. Once it is found that the Agreement between the parties is not
specifically enforceable, the question of the terms agreed between the parties as
to termination thereof is irrelevant. To refuse the relief claimed by the plaintiff
CS(OS) No.563/2012 Page 14 of 21
of mandatory injunction would amount to specifically enforcing the agreement
which is neither pleaded to be specifically enforceable nor found to be
specifically enforceable.
28. However, it is expedient to, for the sake of completeness, also render
findings on the respective contentions of the parties.
29. The agreement between the parties, right since inception in 1989 till
2003 i.e. for nearly 14 years was terminable by either party, whether it be by a
six months‟ notice or a twelve months‟ notice. The agreement of the year 2003
reiterated the arrangement as commenced in the year 1989 except Clauses 2, 3,
5 and 6 of the Agreement dated 9th December, 1989 which did not deal with
termination. Termination as aforesaid was dealt with in the Clause 13 of the
Agreement dated 9th December, 1989 which was not excluded in the 2003
agreement. The parties thus in the agreement contained in the letters
exchanged on 14th January, 2003 incorporated by reference therein the
Agreement dated 9 th December, 1989 which in Clause 13 provided for
termination by either side by six months‟ notice. Notwithstanding the same,
Clause 9 of the letter dated 14th January, 2003 provided that the defendant can
terminate the Agreement by giving one year notice. What falls for adjudication
is whether Clause 9 of letter dated 14th January, 2003 providing for termination
CS(OS) No.563/2012 Page 15 of 21
only by the defendant and not by the plaintiff can be said to have
overridden/superseded Clause 13 of the 9th December, 1989 Agreement.
30. In my opinion, no. If the agreement between the parties were to be of the
plaintiff having waived the right of termination which it earlier had as
aforesaid, nothing prevented the parties from expressly providing so. This is
evident from the fact that though the agreement dated 14th January, 2003 was
agreed to be for a period of 20 years but the parties chose to expressly provide
that there would be no lock-in period except for the first year. The only
inference from the said term can be that it was only for the period of first year
that both the parties were prevented from terminating the agreement and there
was no such embargo thereafter, save that if the defendant were to terminate the
agreement, it was so required to give one year notice.
31. Judge Learned Hand as far back as in James Baird Co. v. Gimbel Bros.,
Inc. 64 F.2d 344, 346 said that in commercial transactions it does not in the end
promote justice to seek strained interpretations in aid of those who do not
protect themselves. The same sentiment was echoed in Allied Communications
Corporation Vs. Continental Cellular Corporation MANU/FEFC/0637/1987
where it was observed that when the transaction is commercial, the parties
CS(OS) No.563/2012 Page 16 of 21
sophisticated, and the contract itself detailed, it is wise for the Courts to rely on
express language than to imply a promise on their own.
32. As far as the plea of the defendant of implied agreement is concerned,
the defendant in its letter dated 1 st February, 2003 in response to the letter dated
31st January, 2003 of the plaintiff, no doubt stated the Agreement between the
parties to be of replacement of Clause 13 of the Agreement dated 9 th December,
1989 by Clause 9 of the letter dated 14 th January, 2003. The defendant even
then did not state that the right of termination prior to the expiry of the agreed
term was to be only of the defendant or that the plaintiff had given up such
right of termination. Clause 9 of the letter dated 14th January, 2003 also does
not use any word as „only‟ which would have been indicative of only the
defendant being entitled to terminate the Agreement by giving one year notice
and the plaintiff being not so entitled. Moreover, a concluded contract had
already come into being between the parties on 14th January, 2003. The letter
dated 31st January, 2003 of the plaintiff merely reworded the contents of the
letter dated 14th January, 2003. The defendant vide its letter dated 1 st February,
2003 while confirming the same did not refer to any discussion subsequent to
14th January, 2003 and in the earlier response dated 14 th January, 2003 had not
taken any such stand that Clause 13 of the Agreement dated 9 th December,
CS(OS) No.563/2012 Page 17 of 21
1989 would be replaced by Clause 9 of the letter dated 14 th January, 2003. The
defendant in the written statement also has not pleaded any subsequent
discussion. For this reason also I am unable to decipher from the documents
any agreement as pleaded by the defendant or from the pleadings any case for
leading of evidence on this aspect.
33. As far back as in S.M. Bholat v. Yokohama Specie Bank Ltd. AIR 1941
Rangoon 270 it was held that silence to a letter is not acceptance of the terms
proposed in it. Similarly the Bombay High Court in The Bank of India Ltd. v.
Rustom Fakirji Cowasjee AIR 1955 Bombay 419 held that mere silence cannot
amount to a representation unless there is a duty to make some statement or to
do some act and that mere silence cannot amount to any assent. This view of
the Bombay High Court was followed by this Court in Urmila and Co. Pvt.
Ltd. v. J.M. Baxi and Co. AIR 1986 Delhi 336. Recently a Division Bench of
this Court also in Zoom-Toshali Sands Consortium v. Indian Railway
Catering & Tourism Corporation Ltd. MANU/DE/1611/2013 held that a
request for new terms to be negotiated would not imply the party making the
request to be having a right to unilaterally change the terms of the contract
which had earlier been settled. Similarly in Gaddar Mal v. Tata Industrial
Bank Ltd. AIR 1927 All 407 it was held on an interpretation of Sections 7 to 9
CS(OS) No.563/2012 Page 18 of 21
of the Indian Contract Act, 1872 that the same do not permit import into Indian
law the English law as to acceptance by conduct.
34. As far as the plea of the defendant of the plaintiff having withdrawn the
termination effected earlier after the incident of fire is concerned, neither in the
proceedings in the suit instituted by the defendant at that stage is there any
finding to that effect nor can the withdrawal of a termination effected can imply
an admission of the party which had effected the termination having no right of
termination nor can such a party be thus precluded in the future from again
terminating the agreement.
35. Resultantly, the application succeeds. A decree is passed in favour of the
plaintiff and against the defendant, (i) for mandatory injunction directing the
defendant to remove itself and its products from the basement, ground and first
floors admeasuring 5900 sq. ft. of property No.E-16, South Extension Part-II,
New Delhi; and (ii) for permanent injunction restraining the defendant from
using the aforesaid property for any purpose whatsoever.
36. However, considering that the defendant has been in use of the said
property for over 20 years, it is deemed fit to grant time to the defendant of
three months to remove itself and to stop using the premises. The decree will
accordingly be executable after three months herefrom.
CS(OS) No.563/2012 Page 19 of 21
37. Decree sheet be drawn up.
38. As far as the claim of the plaintiff for mesne profits/damages for use and
occupation is concerned, an enquiry under Order XX Rule 12 of CPC is
ordered and the following issues are framed:
(i) To mesne profits from which date and at what rate is the plaintiff
entitled to from the defendant? OPP
(ii) If the plaintiff is found entitled to any mesne profits, whether the
plaintiff is entitled to any interest on arrears thereof and if so from which
date and at what rate? OPP
39. Ms. Manmeet Arora, Advocate (Mob. 9811333871) is appointed as the
Court Commissioner to hold the enquiry aforesaid. Her fee is fixed at Rs.1
lakh to be borne initially by the plaintiff and subject to final order as to costs.
40. The parties to file their list of witnesses within fifteen days.
41. The plaintiff to file affidavits by way of examination-in-chief of all its
witnesses within six weeks.
42. The parties to appear before the Court Commissioner on 2nd September,
2013 for fixing the dates of enquiry.
43. The Registry is directed to send the file of the suit at the place and time
fixed by the Court Commissioner for the enquiry aforesaid.
CS(OS) No.563/2012 Page 20 of 21
44. The Court Commissioner is requested to complete the enquiry on or
before 31st January, 2014.
45. List awaiting report on 25th February, 2014.
RAJIV SAHAI ENDLAW, J.
JULY 5, 2013 „bs‟ CS(OS) No.563/2012 Page 21 of 21