Delhi High Court
M/S. Paul Sales Pvt. Ltd. vs M/S. Hari Darshan Sevashram Pvt. Ltd. on 16 March, 2020
Equivalent citations: AIRONLINE 2020 DEL 548
Author: Mukta Gupta
Bench: Mukta Gupta
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Reserved on: 27th September, 2019
Decided on: 16th March, 2020
+ CS(COMM) 732/2017 & I.A.6858/2019 (under Order XIII-A CPC
by Defendant), I.A. 12365/2017 (u/O 39 R 1&2 CPC)
M/S. PAUL SALES PVT. LTD. ..... Plaintiff
Represented by: Mr.Sunil K. Mittal, Mr.Anshul Mittal
and Mr.Harshit Vashisht, Advocates.
versus
M/S. HARI DARSHAN SEVASHRAM PVT. LTD...... Defendant
Represented by: Mr.Sanjeev Mahajan, Advocate.
CORAM:
HON'BLE MS. JUSTICE MUKTA GUPTA
1. Plaintiff has filed the present suit with the following relief:
a) Decree of permanent injunction in favour of the plaintiff
company and against the Defendant Company, its officers,
representatives, agents, servants, attorneys etc. restraining
them from contacting, making supplies or collecting
payments from any third party other than the Plaintiff in
respect of supply, distribution and/or marketing of products
manufactured under the name & style of the Hari Darshan
Brand;
b) Pass a decree of mandatory injunction in favour of the
plaintiff company and against the Defendant Company, its
officers, representatives, agents, servants, attorneys etc.
directing the Defendant Company to restore and continue
the supply of products of Hari Darshan Brand including
Aggarbattis, Dhoops and other allied Pooja items as per the
CS(COMM) 732/2017 Page 1 of 10
purchase orders placed on record in favour of the plaintiff
company.
c) Costs of the suit be awarded in favour of the plaintiff
company.
2. Pleadings of the plaintiff in respect of his claims seeking the reliefs as
mentioned in para 4, 5 and 10 of the plaint are:
"4. It is submitted that since the year 2006, the plaintiff
company is the sole in-charge of the supply network of
the products manufactured by Hari Darshan brand on an
all India basis. The plaintiff company has established a
network of distributors and agents to whom varied
quantities of Aggarbatti and Dhoop products of Hari
Darshan Brand are supplied.
5. It is submitted that the modus of operations is as follows:
i) A particular distributor books a quantity of Aggarbatti
and Dhoop products etc., with the plaintiff company, and
in turn, the latter calls for the said quantity from the
Defendant Company usually by email. The plaintiff
company raises an invoice on the distributor.
ii) The said quantity is delivered directly to the said
distributor by the Defendant Company on the strength of
the purchase orders and instructions given by the plaintiff
company. For the quantity delivered, the Defendant
Company raise an invoice on the plaintiff company.
iii) It is submitted that the distributor make the payments
against the quantity delivered directly to the plaintiff
company.
iv) It is submitted that accounts were settled usually on a
monthly basis between the plaintiff company and the
Defendant Company and the payments released by the
plaintiff company to the defendant on a weekly basis on
CS(COMM) 732/2017 Page 2 of 10
the strength of the invoices raised by the Defendant
Company to the plaintiff company.
6. ...
7. ....
10. That from the aforesaid factual matrix, it is clear that the
plaintiff has been working on behalf of the defendant on the
following terms and conditions:
a. That the plaintiff exclusively deals with the Hari Darshan
Group for the purposes of Sales and Marketing of the
products of Hari Darshan Brand;
b. That the plaintiff has the sole prerogative of appointment
of the distributors for the sale of products of Hari
Darshan Brand throughout India without any
interference in this regard by the defendant company
herein or anyone else;
c. That the plaintiff would procure orders from the various
distributors so appointed by it. Thereafter the plaintiff
would pass on necessary details to the defendant
company for making necessary supplies in terms of the
orders procured by the plaintiff;
d. That the plaintiff would be exclusively entitled to receive
payments from the distributors against the supplies so
received by them.
e. That the plaintiff would be making payment to the
defendant company for those supplies. The agreement
between the plaintiff and defendant was that a discount of
20% to 25% would be offered to the plaintiff. It is
submitted that the margin of commission for the plaintiff
company comes out of the said discount margin given by
the defendant.
It is submitted that this agreement has been acted upon by the
parties since 2006 and the plaintiff company has continued to
exclusively work for the defendant under the same scheme and
arrangement."
CS(COMM) 732/2017 Page 3 of 10
3. Defendant filed I.A. No.6858/2019 under Order XIII-A stating that in
view of Section 14 of the Specific Relief Act no injunction can be granted
against the defendant for enforcing the contract and the plaintiff cannot seek
an injunction that it would be the exclusive dealer of the defendant. Learned
counsel for the defendant relies upon the decisions reported as 2015 (5) Arb.
LR 427 (Delhi) SICPA India Private Ltd. vs. Kapil Kumar & Ors., Swift
Initiative Pvt. Ltd. vs. Dilip Chhabria Design Pvt. Ltd. in O.M.P. (I)
No.454/2015 dated 19th October, 2015 and 163 (2009) DLT 482 Sunil
Chopra & Anr. vs. Zamil New Delhi Infrastructure Pvt. Ltd.
4. Section 14 of the Specific Relief Act, 1963 reads as under:
"14. Contracts not specifically enforceable.--(1) The following
contracts cannot be specifically enforced, namely:--
(a) a contract for the non-performance of which
compensation in money is an adequate relief;
(b) a contract which runs into such minute or
numerous details or which is so dependent on the
personal qualifications or volition of the parties, or
otherwise from its nature is such, that the court
cannot enforce specific performance of its material
terms;
(c) a contract which is in its nature determinable;
(d) a contract the performance of which involves the
performance of a continuous duty which the court
cannot supervise.
(2) Save as provided by the Arbitration Act, 1940 (10 of
1940), no contract to refer present or future differences to
arbitration shall be specifically enforced; but if any person who
has made such a contract (other than an arbitration agreement
to which the provisions of the said Act apply) and has refused to
perform it, sues in respect of any subject which he has
CS(COMM) 732/2017 Page 4 of 10
contracted to refer, the existence of such contract shall bar the
suit.
(3) Notwithstanding anything contained in clause (a) or
clause (c) or clause (d) of sub-section (1), the court may enforce
specific performance in the following cases:--
(a) where the suit is for the enforcement of a contract,--
(i) to execute a mortgage or furnish any other
security for securing the repayment of any loan
which the borrower is not willing to repay at
once: Provided that where only a part of the loan
has been advanced the lendor is willing to
advance the remaining part of the loan in terms of
the contract; or
(ii) to take up and pay for any debentures of a
company;
(b) where the suit is for,--
(i) the execution of a formal deed of partnership, the
parties having commenced to carry on the
business of the partnership; or
(ii) the purchase of a share of a partner in a firm;
(c) where the suit is for the enforcement of a contract for
the construction of any building or the execution of
any other work on land: Provided that the following
conditions are fulfilled, namely:--
(i) the building or other work is described in the
contract in terms sufficiently precise to enable the
court to determine the exact nature of the building
or work;
(ii) the plaintiff has a substantial interest in the
performance of the contract and the interest is of
such a nature that compensation in money for
non-performance of the contract is not an
adequate relief; and
(iii) the defendant has, in persuance of the contract,
obtained possession of the whole or any part of
CS(COMM) 732/2017 Page 5 of 10
the land on which the building is to be constructed
or other work is to be executed".
5. Thus a contract which is dependent on the personal qualification or
volition of the parties the material terms whereof cannot be specifically
enforced by the Court. The legal position in this regard is well settled.
6. In the decision reported as 82 (1999) DLT 137 Marriott International
Inc. & Ors. vs. Ansal Hotels & Anr. it was held:
"106. The main issue which arises for consideration is
whether the respondents are guilty of breach of contract and if
so, in the facts and circumstances of this case should be respondents be restrained by a court injunction or order of interim relief from carrying on their further arrangement with the ITC? Before deciding this issue, two questions which require urgent reply are: (1) Can the respondents be compelled to take the services from the petitioners particularly when they have lost faith, confidence and trust in each other? (2) The other question which also needs to be answered is can the petitioners be adequately compensated in terms of money when it is ultimately proved that the respondents are guilty of breach of contract?
107. I am of the view that it may not be possible to compel the respondents to discharge their obligation of the remaining contract with the petitioners. Distrust and loss of confidence has developed between the parties. In this view of the matter, it would hardly be proper now to compel them to work together".
7. In Swift Initiative Pvt. Ltd. (supra) it was held:
"5. Legal Position The law with respect to the grant of injunction in commercial contracts is well settled. Section 14 (1) (c) bars the specific performance of contracts in respect of which the compensation in money is an adequate relief for their non-CS(COMM) 732/2017 Page 6 of 10
performance. Section 14 (1)(c) bars the specific performance of contracts which are determinable in nature. Section 41(e) of the Specific Relief Act provides that no injunction can be granted in respect of the contracts which cannot be specifically enforced".
8. Case of the plaintiff is that the plaintiff is a distributor, pursuant to an oral agreement with one of the Directors of the defendant company. There is no written agreement between the parties providing for an exclusive right in the plaintiff to sell the products of the defendant. The oral agreement also being determinable, the same is also unenforceable under Section 14 (1) (c) of the Specific Relief Act, thus there is no likelihood of the suit succeeding and consequently is liable to be dismissed as provided under Order XIIIA Rule 3 CPC wherein the Court may pass a summary judgment against the plaintiff on a claim if it considers that the plaintiff has no real prospect of succeeding on the claim.
9. Dealing with the enforceability of a contract which is determinable in the nature this Court in Sunil Chopra (supra) held:
24. Dealing with the next submission of the defendant, it is well settled law that when a contract is determinable by the parties, the same cannot be treated as a contract as is referred in Clause (c) to Sub-section 1 of Section 14 of the Specific Relief Act which is by its nature determinable. Clause (c) of Sub-section 1 of Section 14 states that a contract which is by its nature determinable cannot be specifically enforced. If it is found that a contract is by its very nature determinable, the same is not only unenforceable, but in addition, in respect of such a contract no injunction can be granted in view of Section 41(h) of the Specific Relief Act. This is a mandate of law.
25. In the case of Techno Construction and Anr. v. Kunj Vihar Co-operative Group Housing Society Ltd.CS(COMM) 732/2017 Page 7 of 10
MANU/DE/0381/2005 : 2005 (81) DRJ 233 it was held as under:
9. ...The first question requiring consideration is, whether the contract for construction of building can be ordered to be specifically enforced? Section 14(1)(a) of the Specific Relief Act, 1963 provides that a contract for non-
performance, of which compensation in money is adequate relief, cannot be specifically enforced. In a suit for enforcement of contract for construction of a building, the party seeking specific performance of the contract has to satisfy three conditions, contained in proviso to Clause (c) of Sub-section (3) of Section 14. These are (i) the building or other work is described in the contract in sufficiently precise terms to enable the court to determine the exact nature of the building or work. (ii) the plaintiff has a substantial interest in the performance of the contract and the interest is of such a nature that compensation in money for non-performance of the contact is not an adequate relief; and (iii) the defendant has, in pursuance of the contract, obtained possession of the whole or any part of the land on which the building is to be constructed or other work is to be executed. In short, before a construction contract can be ordered to be enforced, it has to be held that compensation in money is not the adequate relief. It cannot be disputed that where a contract which cannot be enforced by a decree for specific performance, the same cannot be negatively enforced by issue of an injunction.
26. In the case of Usha Sales Ltd. v. Aruna Gupta MANU/DE/0416/1987 : ILR (1988) 1 Del 103 it was held as under:
The right of the statutory tenant flows not from a contract but from a statute. The question is not whether an injunction can be granted to specifically perform a term of a contract or not and the provisions of Sections 14, 16 CS(COMM) 732/2017 Page 8 of 10 and 41 of the Specific Relief Act have therefore no relevance of application. The statutory tenant enforces his right under the statute and not under the contract. Sections 14 and 16 of the Specific Relief Act, 1963 pertain to the specific enforceability of a contract and not of a statutory right. Section 41(e) on which reliance has been placed by the defendants also talks of a contract. There is no bar with regard to the enforcement of such right to property and, particularly, such right flowing from a statute. (Paras 14 & 15)
27. In the case of B.S.M. Contractors Pvt. Ltd. v. Rajasthan State Bridge & Construction Corporation Ltd. and Anr. MANU/DE/0372/1999 : AIR 1999 Delhi 117 it was held as under:
"9. On a consideration of the facts and circumstances of the case, I am of the opinion that a building contract of the instant nature cannot be specifically enforced by granting interim relief under Section 9 of the Act. If there is a breach of such a contract, the appropriate remedy is to compensate the party damnified in damages. That apart, the granting of an injunction in favour of the petitioner will further delay the construction work considered very urgent by the respondent No. 3. Thus, the balance of convenience also swings against the grant of injunction sought by the petitioner."
28. From the above discussion, it becomes clear that where a contract is not specifically enforceable as per the Clauses stipulated under Section 14 of the Specific Relief Act, an interim order in the form of injunction qua such a contract cannot be passed enforcing negatively".
10. Considering the fact that the prayers in the suit are unenforceable, I.A.6858/2019 under Order XIII-A CPC filed by Defendant is allowed and the suit filed by the plaintiff is dismissed.
CS(COMM) 732/2017 Page 9 of 1011. I.A. 12365/2017 (under Order XXXIX Rule 1 and 2 CPC) is also dismissed.
(MUKTA GUPTA) JUDGE MARCH 16, 2020 'vn' CS(COMM) 732/2017 Page 10 of 10