Delhi High Court
M/S. Image Advertising & Anr. vs Anand Parkash on 23 November, 2010
Author: V.K. Jain
Bench: V.K. Jain
THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment Reserved on:11.11.2010
Judgment Pronounced on: 23.11.2010
+ CS(OS) No.1417/2010
M/S. IMAGE ADVERTISING & ANR. .....Plaintiffs
- versus -
ANAND PARKASH .....Defendant
Advocates who appeared in this case:
For the Plaintiff: Mr. Sanjiv Bahl and Mr. Dklavya
Bahl, Advocates.
For the Defendant: Mr. Jitendra Kumar for Ms. Mini
Pushkarna, Advocate.
CORAM:-
HON'BLE MR JUSTICE V.K. JAIN
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 the judgment should be reported Yes
in Digest?
V.K. JAIN, J
IAs 9140/2010 (O.XXXIX R.1 & 2 CPC), 10768/2010
(u/S.151 CPC), IA 12746/2010 (O.XXXIX R.4 CPC), IA
12747/2010 (O.VII R.11 CPC)
1. This is a suit for permanent injunction. The
plaintiff No.2 who is the sole proprietor of plaintiff No.1 is
CS(OS)NO.1417/2010 Page 1 of 22
engaged in the business of providing service relating to
display of advertisements of various products. It is alleged
in the plaint that defendant No.1 approached the plaintiffs
and offered space on the roof/wall of his property No.1A,
Lado Sarai, Near Petrol Pump, New Delhi, for Two Wall
Wrap on both sides of building of size measuring 40'X15'
each, for displaying advertisements for customers of the
plaintiffs. An Agreement dated 27.04.2010 was executed in
this behalf between the plaintiffs and defendant No.1.
Under the Agreement dated 27.04.2010, defendant No.1
allowed the plaintiff to put two wall on both sides of his
building on payments of rent of Rs.40,000/- per month and
the rent was to increase 10% every year for five years. The
Agreement was to remain in force was for a period of five
years and it was renewable by another five years, by mutual
consent of parties. It was further agreed that during
subsistence of the Agreement, defendant No.1 shall not
grant permission to any other person for installation of any
hoardings/neon sign and shall not allot hoardings/neon
sign at the roof top of 1A Lado Sarai, near Petrol Pump, New
Delhi. Since MCD allows wall wraps only on commercial
buildings or on notified roads where building commercial
CS(OS)NO.1417/2010 Page 2 of 22
tax/conversion charges are paid, conversion charges
amounting to Rs.9,918/- was deposited by the plaintiffs
with MCD, on behalf of defendant No.1. The plaintiffs also
applied to MCD on 30.04.2010 for grant of permission for
displaying advertisements, pursuant to the agreement
between him and defendant No.1. He also deposited
amounts of Rs.1,15,200/-, Rs.38,400/- and Rs.768/- with
MCD for this purpose and obtained NOC from it on
09.06.2010. A pay-order of Rs.40,000/- was then given by
the plaintiffs to defendant No.1 towards advance monthly
rental in terms of the agreement dated 27.04.2010.
However, when the display boards were sought to be
installed on the site, defendant No.1 refused to allow them
to be installed. It is alleged in the plaint that defendant
No.1 intends to issue no objection in favour of some other
person and wants to back out from the agreement executed
by him with the plaintiffs on 27.04.2010.
2. The plaintiffs have therefore sought injunction
restraining defendant No.1 from stopping him from
installing the boards in terms of the agreement dated
27.04.2010. He has also sought injunction against
defendant No.2 MCD, restraining it from cancelling the
CS(OS)NO.1417/2010 Page 3 of 22
permission granted to him for display of advertisements vide
its order dated 09.06.2010. He has also sought injunction
against defendant No.2 granting permission to any other
person to display advertisement on the space which is
subject matter of the agreement dated 27.04.2010.
3. The suit has been contested by the defendants.
Defendant No.1 has alleged that since the permission/NOC
granted by MCD has already been withdrawn by it, the suit
has become infructuous. It has also been alleged that the
agreement between the parties stood determined on
defendant No.1 withdrawing the no objection which he had
given to MCD. He has also taken a preliminary objection
that the relief sought by the plaintiffs being contrary to the
provisions contained in Section 14(1)(a)(c) & (d) read with
Section 41(e) of Specific Relief Act, cannot be granted. He
has also claimed that the contract between the parties is a
commercial contract which is determinable in nature. It
has also been claimed in the written statement of defendant
No.1 that the agreement dated 27.04.2010 was executed
under coercion and duress. It has also been claimed by
defendant No.1 that he is under no obligation to adhere to
the terms of the agreement dated 27.04.2010.
CS(OS)NO.1417/2010 Page 4 of 22
4. In its written statement, defendant No.2 MCD has
alleged that since the owner of property No.A-1, Khasra
No.169, Lado Sarai, had issued NOC in favour of the
plaintiffs, a letter was issued to the plaintiffs by MCD for
display of advertisements. However, since defendant No.1
who is the owner of the property withdrew the NOC granted
by him to the plaintiffs, it was decided by MCD to withdraw
the permission granted to the plaintiffs, to display
advertisements on property in question.
5. IA 9140/2010 was filed by the plaintiffs along with
the suit for grant of interim injunction. Vide an interim
order dated 16.08.2010, this Court directed defendant No.2
MCD not to grant any permission till 18.08.2010. IA
12746/2010 has been filed by defendant No.1 for vacating
the interim injunction granted by the Court. IA
10768/2010 has been filed by the plaintiffs under Section
151 of CPC seeking an order restraining the defendants
from granting NOC/permission to any party other than the
plaintiffs to display advertisements on the roof/wall of the
property of defendant No.1. IA 12747/2010 has been filed
by defendant No.1 under Order VII Rule 11 of CPC for
rejecting the plaint on the ground that since the permission
CS(OS)NO.1417/2010 Page 5 of 22
which MCD had granted to the plaintiffs has already been
cancelled by it, the suit has become infructuous and also on
the ground that the Agreement between the parties stood
determined on defendant No.1 withdrawing the no objection
which he had given to the plaintiffs. It has been further
alleged in the application that assuming that the Agreement
dated 27.04.2010 gave a licence to the plaintiffs, the licence
being revocable, the same has been revoked by defendant
No.1.
6. Admittedly, the permission which MCD had
granted to the plaintiffs to display advertisements on the
property of defendant No.1 has since been cancelled by it.
Hence, the plaintiffs cannot be allowed to put up
advertisements on the property of defendant No.1 till the
time requisite permission in this regard is granted by MCD.
7. The learned counsel for the plaintiffs, during the
course of arguments pressed only for grant of injunction
restraining defendant No.1 from allowing any other person
to put advertisements/hoardings on the property which was
subject matter of the agreement between him and the
plaintiffs and restraining defendant No.2 MCD from
granting permission to any other person, for installing any
CS(OS)NO.1417/2010 Page 6 of 22
hoarding/neon sign on the property of defendant No.1.
The learned counsel for defendant No.1, relying upon the
provisions contained in Section 14(1)(a)(c) & (d), however,
contended that since the contract dated 27.04.2010 cannot
be specifically enforced, no injunction against either of the
defendants can be granted by the Court.
8. Section 14(1)(a) of Specific Relief Act provides that
a contract for the non-performance of which compensation
in money is adequate relief cannot be specifically enforced.
The contract dated 27.04.2010 was for display of
advertisements of the products of various companies, which
are clients of the plaintiffs, on the site owned by defendant
No.1 at Lado Sarai, New Delhi. It is not possible to quantify,
in monetary terms, the loss which the plaintiffs would
sustain on a account of its not being able to display the
advertisement of its clients on the site owned by defendant
No.1. It is not known whether the plaintiffs had already
contracted with his clients or not for display of the
advertisements of their products on the site of defendant
No.1 and if he had already entered into such contract (s),
how much loss he would suffer not only in terms of loss of
the commission/profit but also in terms of loss of reputation
CS(OS)NO.1417/2010 Page 7 of 22
in the eyes of his client (s) on account of his inability to
perform his contract with them and on account of the
possible loss of other business with those clients on account
of his inability to perform his contract, if any, with them for
display of the advertisement of their products on the site of
defendant No.1. Hence, at this stage, it cannot be said that
compensation in money will be adequate relief for
non-performance of the contract between the plaintiffs and
defendant No.1.
9. Section 14(1)(c) of Specific Relief Act provides that
a contract which is in its nature determinable cannot be
specifically enforced, whereas clause (d) of sub-clause(1) of
Section 14 provides that a contract the performance of
which involves the performance of a continuous duty which
the court cannot supervise, cannot be specifically enforced.
The contention of defendant No.1 is that the contract dated
27.04.2010 at best grants licence to the plaintiffs to display
advertisements of various products on his site and a licence
can always be determined by the licensor. In my view, the
contract dated 27.04.2010 for display of advertisements on
the site of defendant No.1 can by no stretch be said to be a
contract performance of which involves the performance of a
CS(OS)NO.1417/2010 Page 8 of 22
continuous duty which the Court cannot supervise. If
defendant No.1 is restrained from interfering with
installation of advertisements on his site, it is very much
possible for the plaintiffs to install the advertisements of his
clients on that site without any necessity of supervision on
the part of the contract. Of course, the plaintiffs cannot be
allowed to put advertisements on the site of defendant No.1
unless requisite permission in this regard is given by MCD
and since MCD cannot grant the requisite permission
without NOC from the owner of the property, it cannot be
directed to grant the requisite permission to the plaintiffs
unless defendant No.1 is directed to issue a fresh NOC to
the plaintiffs or MCD is directed to consider grant of
permission on the assumption that the NOC which
defendant No.1 had issued to the plaintiffs did not stand
revoked by defendant No.1. However, I need not go further
into this aspect of the matter since the plaintiff himself did
not press for any such relief and his request during the
course of arguments was confined to an order restraining
defendant No.1 from allowing any other person to display
advertisements on the site which was subject matter of the
agreement dated 27.04.2010.
CS(OS)NO.1417/2010 Page 9 of 22
10. As regards the applicability of Section 14(1)(c) of
Specific Relief Act, the question which comes up for
consideration is as to whether the agreement dated
27.04.2010 between the plaintiff and defendant No.1 is of a
determinable nature. It is difficult to dispute that the
permission granted by defendant No.1 to the plaintiffs to
display advertisements on its site at Lado Sarai is in the
nature of a licence. Section 60 of the Indian Easements Act,
1882, which deals with revocation of a licence, provides that
a licence may be revoked by the grantor, unless it is coupled
with a transfer of property and such transfer is in force, or if
the licensee, acting upon the license, has executed a work of
a permanent character and incurred expenses in the
execution.
11. In the present case, the Agreement dated
27.04.2010 does not envisage any transfer of property of
defendant No.1 to the plaintiffs and no work of a permanent
character has been executed by the plaintiffs on the site of
defendant No.1. It is, therefore, difficult to dispute that the
licence granted by defendant No.1 to the plaintiffs under the
Agreement dated 27.04.2010 is revocable in nature.
Consequently, in view of the embargo placed by Section
CS(OS)NO.1417/2010 Page 10 of 22
14(1)(c) of Specific Relief Act read with Section 41(e) thereof
which provides that an injunction cannot be granted to
prevent the breach of a contract the performance of which
would not be specifically enforced, the Court cannot enforce
the agreement dated 27.04.2010 to the extent it pertains to
display of advertisements of the clients of the plaintiffs on
the site of defendant No.1.
12. However, Section 42 of Specific Relief Act which is
in the nature of a proviso to Section 41(e) of the Act provides
that where a Contract comprises an affirmative agreement
to do a certain act, coupled with a negative agreement,
express or compel specific performance of the affirmative
agreement shall not preclude it from granting an injunction
to perform the negative agreement provided that the plaintiff
has not failed to perform the contract so far as it is binding
on him. Therefore, even though the Court cannot direct
defendant No.1 to allow installation of advertisements of the
products of the clients of the plaintiff it can definitely
restrain him, during the period of five years envisaged in the
agreement dated 27.04.2010, from permitting any other
person to display advertisements on his site at Lado Sarai,
CS(OS)NO.1417/2010 Page 11 of 22
New Delhi.
13. In support of his contention that even a negative
covenant in a contract of this nature cannot be enforced,
the learned counsel for defendant No.1 has placed reliance
upon M/s.Gujarat Bottling Co. Ltd. and Others Vs. Coca
Cola Company & Ors., AIR 1995 SC 2372 and
Shubhmangal Mercantile (P) Ltd. Vs. Tricon
Restaurants(I) Pvt. Ltd., 79(1999)DLT 777.
14. In the case of Gujarat Bottling Company (supra);
Section 27 of Contract Act which provides that every
agreement by which anyone is restrained from exercising a
lawful profession or trade or business of any kind is to that
extent void, came up for consideration before the Supreme
Court in the context of an agreement between Coca Cola
and Indian Bottling Company. A clause in the agreement
prohibited transfer of shares in the franchisee company
without consent of the franchisor. The
share-holders of the franchisee were not party to the
agreement. Noticing that there was a growing trend to
regulate distribution of goods and services through
franchise agreements which often incorporate a condition
that franchisee shall not deal with competing goods,
CS(OS)NO.1417/2010 Page 12 of 22
Supreme Court observed that such a condition restricting
the rights of the franchisee to deal with competent goods is
for facilitating the distribution of the goods of the franchiser
and cannot be regarded as in restraint of trade.
15. In N.S.Golikari Vs. Century Spinning Co., AIR
1967 SC 1098, the Court inter alia, observed as under:-
"The result of the above discussion is that
considerations against restrictive
covenants are different in cases where the
restriction is to apply during the period
after the termination of the contract than
those in cases where it is to operate
during the period of the contract. Negative
covenants operative during the period of
the contract of employment when the
employee is bound to serve his employer
exclusively are generally not regarded as
restraint of trade, and therefore, do not fall
under Section 27 of the Contract Act. A
negative covenant that the employee
would not engage himself in a trade or
business or would not get himself
employed by any other master for whom
he would perform similar or substantially
similar duties is not, therefore, a restraint
of trade unless the contract as aforesaid is
unconscionable or excessively harsh or
unreasonable or one sided as in the case
of W.H.Milsted and Son Ltd. (1927
WN233)" (P.389)(of SCR) : (at Pp. 1104-05
of AIR)"
The Court also referred to its decision in the case
of Superintendence Company AIR 1980 SC 1717, where it
had said that the doctrine of restraint of trade never applies
CS(OS)NO.1417/2010 Page 13 of 22
during the continuance of a contract of employment; it
applies only when the contract comes to an end. The Court
observed that the underlying principle governing contracts
in restraint of trade is the same and as a matter of fact the
Courts take a more restricted and less favourable view in
respect of a covenant entered into between an employer and
an employee as compared to a covenant between a vendor
and a purchaser or partnership agreements.
It was also observed that the Court is not bound to
grant an injunction in every case and an injunction to
enforce a negative covenant would be refused if it would
indirectly compel an employee to either idleness or to serve
the employer. The reliance on this judgment is wholly
misplaced for the simple reason that this is not a case of a
contract of service between the employer and the employee.
The contract between the plaintiffs and defendant No.1 was
a contract for exploitation of the property of defendant No.1
for the mutual benefit of the parties by allowing the same to
be used for displaying hoardings/neon sign for advertising
the products of the clients of the plaintiffs.
16. In the case of Shubhmangal Mercantile(P) Ltd.'s
case (supra), which is a decision by a learned Single Judge
CS(OS)NO.1417/2010 Page 14 of 22
of this Court, it was observed that a negative covenant in
the contract and the restriction imposed therein was
operative only during subsistence of the main contract. In
that case, there were three agreements between the
petitioner and respondent No.1 whereunder the petitioner
was granted non-exclusive right to operate 25 pizza hut outlets. The agreement provided for termination of the contract by respondent No.1 on the happening of the any specified event. A notice was given by respondent No.1 to the petitioner terminating the contract, on the grounds specified therein. The petitioner alleged the termination of the contract to be illegal. It was in this context that the aforesaid observations were made by this Court in order to ascertain whether the petitioner before it had met out a prima facie case for grant of temporary injunction or not. Noticing that the agreements were no longer in operation since they had been terminated, it was held that question of enforcing alleged negative covenant did not arise. In the case before this Court, there is no provision in the agreement dated 27.04.2010 for its revocation. The term of the contract between the plaintiff and defendant No.1 was fixed at five years and since the term of the contract was to CS(OS)NO.1417/2010 Page 15 of 22 begin on receipt of permission from MCD or after 45 days of assigning of Agreement whichever be earlier, it cannot be said that the term of the Agreement having expired, the plaintiff is not entitled to an injunction enforcing the negative covenant contained in the Agreement. I just fail to appreciate how, in the face of the provisions contained in Section 42 of Specific Relief Act, injunction for enforcement of negative covenant contained in the agreement can be refused to the plaintiff.
17. The learned counsel for defendant No.1 has also referred to Rajasthan Breweries Limited Vs. Stroh Brewery Company, AIR 2000 Delhi 450, where noticing that the agreements in the case before the Court were terminable by the respondent on the happening of certain events, it was observed that even in the absence of specific clause authorizing and enabling either party to terminate the agreement in the event of happening of events specified therein, from the very nature of the agreement which was a private commercial transaction, the same could be terminated even without assigning any reason by serving a reasonable notice. In the case before this Court, no notice has been served by defendant No.1 on the plaintiffs CS(OS)NO.1417/2010 Page 16 of 22 conveying termination of the agreement dated 27.04.2010. More importantly, there was no negative covenant in the agreements which were subject matter of the case before the Division Bench of this Court. It was expressly observed in para 15 of the judgment that there was no negative covenant in the agreements in question. However, the agreement subject matter of the suit before this Court does contain a negative covenant and, therefore, it is permissible for this Court, in view of the provisions contained in Section 42 of Specific Relief Act, to grant injunction for enforcement of the negative covenant.
18. The learned counsel for the defendant No.1 has also referred to Vidya Securities Ltd. Vs. Comfort Living Hotels Pvt. Ltd., AIR 2003 Delhi 214 and Thomas Cook (India) Limited vs. Hotel Imperial & Ors. 2006(127) DLT
431. In the case of Vidya Securities Ltd. (supra), the petitioner had entered into an agreement with the landlord for running a bar in the premises. The petitioner had sought injunction against landlord entering into an agreement with anyone else. It was found that the landlord had already entered into an agreement with a third party and, therefore, the contract had stood determined. It was held that since CS(OS)NO.1417/2010 Page 17 of 22 the petitioner could be adequately compensated in terms of money on proving illegal termination, no interim relief could be granted to him. This judgment is of no help to defendant No. 1 since he has not entered into an agreement with a third party for displaying advertisement/neon signs/Display Boards on the premises subject matter of his agreement with the plaintiff. Moreover, as noted earlier, there is a negative covenant contained in the agreement which prohibits defendant No.1 from allowing any person to display hoarding/neon sign on the aforesaid site. Also as noted earlier, the loss which may be caused to the plaintiff before this Court on account of termination of the agreement cannot be computed in monetary terms. This judgment, therefore, does not apply to the facts of the case before this Court.
19. In the case of Thomas Cook (india) Ltd. (supra), the plaintiff was occupying rooms in the premises of defendant as a licensee and was obliged to leave the keys of the room with the defendant at the close of each day. The control and possession of the room was retained by the defendant. The licence was terminated by the defendant by issuing a legal notice. The plaintiff sought a declaration that CS(OS)NO.1417/2010 Page 18 of 22 he was in lawful possession of the rooms and also sought injunction against his dispossession. It was held that the plaintiff was not in possession of the said rooms and since he had a mere right to use which right was revocable and had been revoked, he was under an obligation to leave the premises within a reasonable time. During the course of judgment, referring to the provisions contained in Section 60 of the Easement Act, it was held that mere absence of termination clause or a specified period would not convert revocable licence into an irrevocable one. Again, this judgment has no applicability as far as enforcement of the negative covenant contained in the agreement dated 27th April, 2010 is concerned and, therefore, does not help defendant No. 1 in any manner.
20. For the reasons given in the preceding paragraphs, I am of the considered view that the plaintiff is entitled to an injunction restraining defendant No. 1 from granting permission to any person other than the plaintiff for installation of any hoarding/ neon sign and from allotting any hoarding / neon sign site at roof top of property No. 1/A Lado Saria, near petrol pump, New Delhi for five years from the commencement of the agreement CS(OS)NO.1417/2010 Page 19 of 22 dated 27th April, 2010 or during the pendency of the suit whichever is earlier. The plaintiff is also entitled to an injunction restraining defendant No.2 MCD from granting permission for displaying advertisements etc. on the site of defendant No.1, in favour of any person other than the plaintiff. Injunction is granted accordingly, subject to the plaintiff filing an undertaking that in the event of failing on merit, he will forthwith pay a sum calculated at the rate of Rs.40,000/- PM along with agreed increase in terms of the agreement dated 27th April, 2010, to defendant No.1.
21. Coming to the application of defendant No.1 for rejection of the plaint, Order 7 Rule 11 of the Code of Civil Procedure provides that the plaint shall be rejected in the following cases:
"(a) where it does not disclose a cause of action;
(b) where the relief claimed is undervalued, and the plaintiff, on being required by the Court to correct the valuation within a time to be fixed by the Court, fails to do so;
(c) where the relief claimed is properly valued but the plaint is written upon paper insufficiently stamped, and the plaintiff, on being required by the Court to supply the requisite stamp-CS(OS)NO.1417/2010 Page 20 of 22
paper within a time to be fixed by the Court, fails to do so ;
(d) where the suit appears from the statement in the plaint to be barred by any law:
(e) where it is not filed in duplicate;]
(f) where the plaintiff fails to comply sub- rule (2) of rule"
22. It is settled proposition of law that the Court while considering an application for rejection of the plaint can look into only the averments made in the plaint and the documents filed by the plaintiff. The defence taken by the defendant is not to be considered while examining such an application and validity of the documents filed by the plaintiff also cannot be examined at this stage. It cannot be said that the plaint will read along with documents filed by the plaintiff does not disclose a cause of action. Hence, clause (a) of the aforesaid rule does not apply. This is not a case of under valuation of relief or payment of insufficient Court fee. Clause (b) and (c) of the rule, therefore, are not attracted. Defendant No.1 has not alleged contravention of clause (e) or (f) of Rule 11 of CS(OS)NO.1417/2010 Page 21 of 22 Order 7 of the Code. Also, it cannot be said that the plaint, particularly with respect to an enforcement of the negative covenant contained in the agreement dated 27th April, 2010 is barred by the provisions of Specific Relief Act or any other law for the time being in force. Hence, clause (d) of the aforesaid rule also does not apply to the facts of this case. The application is, therefore, dismissed.
23. All the four applications stand disposed of. CS(OS) No1417/2010
1. Admission/denial of documents has already been carried out.
2. To come up for framing of issues before the Court on 13th January, 2011.
(V.K. JAIN) JUDGE NOVEMBER 23, 2010 'sn/'bg' CS(OS)NO.1417/2010 Page 22 of 22