Delhi High Court
Infinity Optimal Solutions Pvt. Ltd. ... vs Vijender Singh & Ors. on 9 November, 2009
Author: Shiv Narayan Dhingra
Bench: Shiv Narayan Dhingra
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Reserve: October 30, 2009
Date of Order: November 09, 2009
+IA No.12369 of 2009 in CS(OS) 1807/2009
% 09.11.2009
Infinity Optimal Solutions Pvt. Ltd. (IOS) ...Plaintiff
Through: Mr. Rudra Kahion, Advocates
Versus
Vijender Singh & Ors. ...Defendants
Through: Mr. Rajiv Nayar, Sr. Advocate with Mr. Rishi Agarwal, Mr. Harsh Jha,
Mr. Ankur Shah and Ms. Shikha Sarin, Advocates for D-1
Mr. Sandeep Mittal, Advocate for D-2.
JUSTICE SHIV NARAYAN DHINGRA
1. Whether reporters of local papers may be allowed to see the judgment? Yes.
2. To be referred to the reporter or not? Yes.
3. Whether judgment should be reported in Digest? Yes.
ORDER
1. By this application under Order 39 Rules 1 & 2 CPC, plaintiff has sought an injunction restraining defendant no.1 Mr. Vijender Singh, a sportsperson in the field of boxing, from entering into any sports management agreement /contract with defendant no.2 or any other third party during subsistence of his agreement/ contract dated 15th September 2005 with plaintiff. It is also prayed that in case defendant no.1 had already entered into the agreement, then he should be restrained from acting upon or continuing with the contract with defendant no.2. A further prayer is made that defendant no.1 be directed to honour the deal plaintiff has already entered and are subsisting with various companies/organizations including Pepsi, Bajaj Allianz.
CS(OS) 1807/2009 Infinity Optimal Solutions Pvt. Ltd. (IOS) vs. Vijender Singh & Ors. Page 1 Of 7
2. Brief facts relevant for the purpose of deciding this application are that the plaintiff and defendant no.1 entered into a representation agreement dated 15th September 2005. As per this agreement, defendant no.1 granted exclusive rights to plaintiff to represent him in all commercial possibilities that could emanate from such a relationship. In turn, plaintiff was to pay a sum of Rs.5,000/- per month for the first year with 10% increase in subsequent years. The term of the agreement was for a period of ten years. The plaintiff was to get 50% of the price and other amount earned by defendant no.1 in Indian and International professional boxing and 60% of revenue generated on account of endorsements and other commercial possibilities. The agreement also provided that the agreement could be terminated by plaintiff after giving one month notice if the performance of defendant no.1 was below par or below standard. The agreement could also be terminated without the notice in case defendant no.1 got involved in some controversial issues that detracted him or affected his ability to perform.
3. It is contended by counsel for plaintiff that the contract which was entered into between plaintiff and defendant no.1 was a promotion and management contract which involves considerable risks to the plaintiff as agent since large amounts have to be guaranteed and invested for promoting a sportsperson and to convert him into a brand. Accordingly, plaintiff spent huge sums in promoting defendant no.1 and organizing different shows and events and other programmes to promote defendant no.1 and also organizing extensive media coverage for defendant no.1 which resulted into defendant no.1 becoming a celebrity. The details of different promotional activities done by plaintiff have been given in the plaint. It is also submitted that plaintiff put lot of efforts and hard work in securing deals with Pepsi and with some of the other big companies like Bajaj Allianz for defendant no.1. The performance of defendant no.1 has been guaranteed by CS(OS) 1807/2009 Infinity Optimal Solutions Pvt. Ltd. (IOS) vs. Vijender Singh & Ors. Page 2 Of 7 plaintiff to these companies. Plaintiff also worked for sanctioning of various brands for defendant no.1. Plaintiff organized media events and modeling assignments for defendant no.1. It is submitted that despite plaintiff's best efforts and relentless efforts to convert defendant no.1 into a world class champion and despite securing several prestigious media advertisement contracts for defendant no.1, plaintiff learnt via media reports that defendant no.1 had entered into an agreement/ contract with defendant no.2 giving rights to defendant no.2 to manage defendant no.1. It is contended that such an agreement was in contravention of the earlier agreement entered by defendant no.1 with plaintiff giving exclusive rights to plaintiff to manage him till 2015. Under these circumstances, plaintiff filed the present suit seeking a permanent injunction against defendant no.1 and defendant no.2 restraining them from entering into a contract inter se till 2015, i.e. till the contract of defendant no.1 with plaintiff is alive and seeking a restrain against defendant no.1 from entering into with similar contract with any third party. The present application has been filed seeking interim relief.
4. Notice of the application was served upon defendants. The learned Counsel for defendant no.1 did not deny the fact that defendant no.1 had entered into an agreement with defendant no.2. However, the contention of counsel for defendant no.1 is that the plaintiff was not entitled for the main relief sought in the suit and no restriction could be put on defendant no.1 in view of present legal position as laid down by the Supreme Court in Percent D'Mark (India) (P) Ltd. v Zaheer Khan & another (2006) 4 SCC 227. It is also submitted that defendant no.1 has terminated its agreement with plaintiff vide a notice dated 23rd September 2009 and was not bound by the agreement.
5. I have heard counsel for parties on the issue (i) whether the contract entered into CS(OS) 1807/2009 Infinity Optimal Solutions Pvt. Ltd. (IOS) vs. Vijender Singh & Ors. Page 3 Of 7 between plaintiff and defendant no.1 could not be terminated by defendant no.1 and (ii) whether such a contract was specifically enforceable.
6. A perusal of contract as entered into between plaintiff and defendant no.1 would show that it was a purely commercial contract. Plaintiff had taken sufficient care to see that it does not suffer losses on its investments and provided that if the performance of defendant no.1 was below the expectations of plaintiff so as to result into insufficient returns to the plaintiff on investments made for promoting defendant no.1, the contract could be terminated by plaintiff with defendant no.1 irrespective of the fact that the contract was for a period of ten years. Though there is no provision in the contract for defendant no.2 to terminate the contract but I consider that where a contract between the parties is entered into for mutual profits and gains and if running of the contract is found disadvantageous by either of the party, it can be terminated by either party irrespective of the fact whether there is a termination clause in the contract or not. The right of termination of contract cannot be restricted only to plaintiff. It may be that if the performance of defendant no.1, in the eyes of plaintiff fell below the mark, the contract could be terminated by plaintiff. Similarly, if defendant no.1 considers that the performance of plaintiff or the deal as entered by him with plaintiff was not advantageous, he could also terminate the contract. This can happen even if the perception of plaintiff or defendant no.1 about each other is factually incorrect but the contract can be terminated irrespective of such incorrect perception. Performance of such a contract of service or management cannot be specifically enforced and the only remedy is to claim damages, if it is considered that the termination of the contract by defendant no.1 with plaintiff has resulted into any loss or damages to the plaintiff. CS(OS) 1807/2009 Infinity Optimal Solutions Pvt. Ltd. (IOS) vs. Vijender Singh & Ors. Page 4 Of 7
7. The contract of representation and services is based on mutual trust and if the trust is lost between the parties, one party cannot be compelled by the Court to keep the contract alive. I also consider that in view of Section 27 of Indian Contract Act, the restrictions cannot be put on a player from terminating the contract of an agency of one company and giving it to some other company. Section 27 disapproves and negates the restrain or restriction on the trade and business or profession. In Rajasthan Breweries Limited v Stroh Brewery Company AIR 2000 Delhi 450, the Division Bench of this Court had observed that even in absence of specific clause authorizing and enabling either party to terminate an agreement in the event of happening of events specified therein, a commercial transaction could be terminated even without assigning a reason by serving a reasonable notice and ultimately if it is found that the termination was bad in law or contravening any terms or the agreement, the remedy of the appellant would be to seek a compensation for such wrongful termination but not claim for specific performance.
8. In a recent judgment rendered by the Supreme Court in Percent D'Mark (India) (P) Ltd. v Zaheer Khan & another (2006) 4 SCC 227, the Supreme Court consider the similar contract and specific enforceability of such a contract as observed as under:
64. Assuming without admitting that the negative covenant in Clause 31(b) is not void and is enforceable, it was nevertheless inappropriate, if not impermissible, for the Single Judge to grant an injunction to enforce it at the interim stage, for the following reasons:-
"(i) Firstly, grant of this injunction resulted in compelling specific performance of a contract of personal, confidential and fiduciary service, which is barred by Clauses (b) and (d) of Section 14(1) of the Specific Relief Act, 1963;
(ii) Secondly, it is not only barred by Clause (a) of Section 14(1) of the Specific Relief Act, but this Court has consistently held that there shall be CS(OS) 1807/2009 Infinity Optimal Solutions Pvt. Ltd. (IOS) vs. Vijender Singh & Ors. Page 5 Of 7 no specific performance of contracts for personal services;
(iii) Thirdly, this amounted to granting the whole or entire relief which may be claimed at the conclusion of trial, which is impermissible;
(iv) Fourthly, the Single Judge's order completely overlooked the principles of balance of convenience and irreparable injury. Whereas Percept could be fully compensated in monetary terms if they finally succeeded at trial, respondent No.1 could never be compensated for being forced to enter into a contract with a party he did not desire to deal with, if the trial results in rejection of Percept's claim.
(v) The principles which govern injunctive reliefs in such cases of contracts of a personal or fiduciary nature, such as management and agency contracts for sportsmen or performing artistes, are excellently summarised in a Judgment of the Chancery Division reported in Page Once Records vs. Britton, (1968) 1 W.L.R. 157. In this case it was held that, although the appellant had established a prima facie case of breach of contract entitling them to damages, it did not follow that entire of them was entitled to the injunction sought; that the totality of the obligations between the parties gave rise to the fiduciary relationship and the injunction would not be granted, first, because the performance of the duties imposed on the appellant could not be enforced at the instance of the defendants and, second, because enforcements of the negative covenants would be tantamount to ordering specific performance of this contract of personal services by the appellant on pain of the group remaining idle and it would be wrong to put pressure on the defendants to continue to employ in the fiduciary capacity of a manager and agent someone in whom he had lost confidence.
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68. In our view, no case is made out by the appellant for compelling respondent No.1 to appoint the appellant as his agent in perpetuity when the first respondent has no faith or trust in the appellant. The grant of injunction restraining respondent No.1 from acting upon the agreement entered into with the second respondent would have the effect of compelling the first respondent to be managed by the appellant, in substance and effect a decree of specific performance of an agreement of CS(OS) 1807/2009 Infinity Optimal Solutions Pvt. Ltd. (IOS) vs. Vijender Singh & Ors. Page 6 Of 7 personal service, which is dependant on mutual trust, faith and confidence which, in the present case, are eroded and non-existent. In our view, the appellant can be adequately compensated in terms of money if injunction is refused. Clause 31(b) contains a restrictive covenant in restraint of trade as it clearly restricts respondent No.1 from his future liberty to deal with the persons he choses for his endorsements, promotions, advertising or other affiliation and such a type of restriction extending beyond the tenure of the contract is clearly hit by Section 27 of the Contract Act and is void. The said covenant, as noticed earlier, curtails the liberty of respondent No.1 Zaheer Khan even though the contract has been completed to accept any offer for his endorsement, promotion etc even by dealing with any person of his own."
9. In view of above settled legal position, I consider that the present application of plaintiff/ applicant under Order 39 Rule 1 and 2 CPC restraining defendant no.1 from acting on a contract entered with defendant no.2 cannot be allowed. The same is hereby dismissed. However, defendant no.1 will be bound to honour those advertising contracts which were entered on his behalf by plaintiff before 23rd October, 2009.
November 09, 2009 SHIV NARAYAN DHINGRA J. rd
CS(OS) 1807/2009 Infinity Optimal Solutions Pvt. Ltd. (IOS) vs. Vijender Singh & Ors. Page 7 Of 7