Calcutta High Court (Appellete Side)
(Nusrat Jahan Ruhi vs Shyam Steel Industries Ltd. & Ors.) on 12 October, 2018
Author: Protik Prakash Banerjee
Bench: Protik Prakash Banerjee
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IN THE HIGH COURT AT CALCUTTA
CONSTITUIONAL WRIT JURISDICTION
APPELLATE SIDE
PRESENT : Hon'ble Justice Dipankar Datta
and
Hon'ble Justice Protik Prakash Banerjee
A.S.T 62 of 2018
with
A.S.T.A 19 of 2018
(Nusrat Jahan Ruhi Vs. Shyam Steel Industries Ltd. & Ors.)
With
A.S.T 63 of 2018
With
A.S.T.A 20 of 2018
(BMA Stainless Ltd. Vs. Shyam Steel Industries Ltd. & Ors.)
With
F.M.A.T. 1002 of 2018
&
F.M.A.T. 1001 of 2018
With
F.M.A.T. 1054 of 2018
With
C.A.N. 8308 of 2018
(BMA Stainless Ltd. Vs. Shyam Steel Industries Ltd. & Ors.)
With
F.M.A.T. 1055 of 2018
With
C.A.N. 8262 of 2018
(Nusrat Jahan Ruhi Vs. Shyam Steel Industries Ltd. & Ors.)
With
FMAT 1058 of 2018
With
CAN 8352 of 2018
(Shyam Steel Industries Ltd.--v--Nusrat Jahan Ruhi and Others)
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For the appellant in AST 62/18,
FMAT 1055/18 & respondent
no. 2 in AST 63/18 : Mr. Joydeep Kar, Senior Adv.
Mr. Srijib Chakraborty,
Mr. Rajdeep Majumder,
Ms. Urmila Chakraborty,
Mr. Mayukh Mukherjee
Mr. Souvik Das,
For the appellant in AST 63/18,
FMAT 1054/18 & respondent
no. 2 in AST 62/18 : Mr. Pratap Chatterjee, Senior,
Advocate,
Mr. Mainak Bose,
Mr. Paritash Sinha,
Mr. Amitava Mitra,
Ms. Soni Ojha,
Ms. Sweta Gandhi,
For the respondent no. 1 in
all the above appeals : Mr. Saktinath Mukherjee,
Senior Advocate,
Mr. Surajit Nath Mitra, Senior
Advocate,
Mr. Aniruddha Chatterjee,
Mr. Suddhasatva Banerjee,
Mr. Shounak Mitra,
Mr. Rishav Dutt,
Mr. Soumabho Ghose,
Mr. Zulfiqar Ali Alquaderi,
For the Appellant in FMAT
1058 of 2018 : Mr. Aniruddha Chatterjee.
Heard on : October 10, 2018
Judgment on : October 12, 2018
PROTIK PRAKASH BANERJEE, J:
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1. A steel manufacturer sued a celebrity, her management agency and a
competitor, for specific performance of a contract dated August 7, 2017 and also
for permanent and mandatory injunctions, which would, among other things,
have the effect of enforcing a negative covenant in the contract. The contract in
question, very common in these days, envisaged that for a certain consideration,
the celebrity would endorse or promote only the products of the plaintiff/steel
manufacturer for the period during which the agreement would subsist and
would not endorse or promote the products of any rival/competitor. The plaintiff
alleged breach on the part of the celebrity, induced among others, by the rival,
who was said to benefit from the breach.
2. The plaintiff sought interlocutory reliefs in its suit and an ex parte ad
interim order of injunction was passed on September 15, 2018, by the learned
Judge, VIth Bench, City Civil Court at Calcutta in Title Suit No.1215 of 2018
without prior service of any notice or copy of the petition on the defendants. The
celebrity and the rival preferred two several appeals against this ex parte ad
interim order, which were registered as AST Nos.62 and 63 of 2018 respectively.
While this court was hearing the applications in connection with the appeals to
consider the question of interim reliefs, the learned court below proceeded to
extend the original ad interim order. Against the extension of the ad-interim
orders, two further appeals being FMAT Nos.1001 and 1002 of 2018 were
preferred by the celebrity and the rival, respectively. During its pendency, the
rival had applied under order 39 Rule 4 of the Code of Civil Procedure. This court
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directed that the application for vacating the interim order taken out by the
celebrity be treated as a written objection to the application for interlocutory
reliefs in the court below and that such application be heard out alongwith the
injunction application, in the meanwhile. The learned court below did so, and
was pleased to make the original ad interim order, as extended, absolute till the
disposal of the appeal being AST No.62 of 2018 and the connected application
before this court, by an order dated October 3, 2018. This was further
challenged by the celebrity and the said rival by way of FMAT 1054 and 1055 of
2018 respectively. In each of these appeals, the respondent no. 1 is the plaintiff.
The plaintiff has also carried that part of the order dated October 3, 2018
aforesaid which directs the interim order to continue till the disposal of the
appeal (AST No.62 of 2018) and the connected application by this court. This
appeal, where the plaintiff is the appellant, has been registered as FMAT No.1058
of 2018. This court directed on October 12, 2018 that this last appeal at the
instance of the plaintiff would be disposed of together with the said three appeals
where the plaintiff was the respondent No. 1.
3. While hearing the parties on the application for stay, with the consent of
the parties this court heard the parties on the merits of the appeals themselves,
dispensing with all formalities, including notice since all parties who had
appeared in the court below were represented by learned counsel.
4. The appellant celebrity has alleged based on the pleadings of the
respondent no. 1 and the documents it had produced that it was the said
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respondent who was in breach of the contract and as a wrongdoer, it was
disentitled to claim an equitable relief such as an injunction at the interlocutory
stage. The appellant rival supports this contention in its independent appeals.
The respondent no. 1 on the other hand alleges that the documents including
digital evidence generated by the celebrity/appellant herself, show that she was
in breach. To understand the rival contentions, a brief summary of the
contractual terms of which the breach is complained, is to be noted.
5. The parties relied upon the following contractual clauses: -
"1. TERM
1.1 Unless terminated earlier this Agreement shall be valid for a period of 2 (two)
years, commencing on the Effective Date till 6 August 2019 (hereinafter referred
to as the "Term"). Upon expiry or earlier termination of this Agreement, the
Company shall remove the promotional and advertising materials bearing the
Celebrity, within a period of 90 days thereof.
1.2 This Agreement may be renewed at the option of the Company, on mutually
agreed terms and conditions.
2. ENDORSEMENT RIGHTS
2.1 In consideration of the retainer fees (as set out in Clause 3) and on the terms
and conditions herein mentioned, the parties hereby agree to the following:
2.1.1 Scope of services: During the Term, the Celebrity shall make himself
available for 3 (three) Days per year ("Committed Days"), on the dates as the
Company may require for shoot and promotional appearance for endorsing and
promoting the products, through photo-shoots, video-shoots, ad-campaign
shoots, retail and promotional appearances, dealer meets, voice over, signing
souvenirs and press and media appearances. Any unutilized Committed Days(s)
during a year shall be rolled over to consecutive year during the Term. The
Celebrity shall post, publish, share, comment and like the media contents or
advertising materials provided by the Company, from time to time, on various
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personal social media platforms of the Celebrity, including but not limited to,
Facebook, Twitter and Instagram.
It is hereby clarified that the Committed Days shall include such number of days
as mentioned in Clause 2.1.1 above, each constituting of an eight-hour shift
excluding any travel time ("Day").
2.1.2 Promotional Materials: The Company shall be entitled to sue the
promotional and advertising materials or any promotional activities featuring the
Celebrity, during the Term for the promotion of the products, in any manner,
including but not limited to, electronic, audio, visual, audio-visual, print and
digital media which includes, but not limited to, posters, banners, magazines,
newspapers, radio, cinema, outdoor advertising, company reports, publications,
television and such other ATL and BTL items.
2.1.3. Non-compete: Notwithstanding anything to the contrary, Celebrity hereby
undertakes that during the term, Celebrity shall not directly or indirectly,
promote, market and/or endorse any product and/or activity, which is or may be
construed to be similar, identical, deceptively similar or in competition with the
products
3. RETAINER FEES
3.1 In consideration of the services to be rendered by the Celebrity and the
obligations undertaken by the Celebrity under this Agreement the Company
agrees to pay to the Celebrity, annual retainer fees of Rs. 5,75,000/- (Rupees five
lacs seventy five thousand only) ("Retainer Fees") plus GST as may be applicable,
subject to the deduction of income tax under the applicable Law, payable in the
following manner.
(i) 50% of the Retainer Fees to be paid on the date of commencement of
first year and second year respectively;
(ii) 50% of the Retainer Fees to be paid within 15 days from the date of
commencement of first year and second year respectively.
6. TERMINATION
6.1 During the Term, the Company shall have the right to terminate this
Agreement with 30 (thirty) days' prior written notice to Celebrity, without
assigning any reason whatsoever."
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6. The case of the respondent no. 1 as made out in the plaint, is that it
entered into the above agreement on August 7, 2017, and thus the appellant
celebrity was bound by the terms of the agreement till August 6, 2019. Within
this period, even after it "duly performed" its part of the contract, the celebrity
chose to endorse the product of its rival in breach of the negative covenant as in
Clause 2.1.3 above, which the plaintiff came to know only on September 13,
2018. It has alleged that the celebrity treated the contract to be subsisting by
retweeting a product of the plaintiff on September 13, 2018 itself. This it says,
continues the endorsement of the products of the respondent no. 1 even while
the appellant celebrity was, without the consent of the respondent no. 1,
promoting the competing products of the appellant rival. What "endorsement"
means is defined as part of Clause 2.1.1 according to both the sides. Therefore,
the plaintiff has sued for specific performance, which would inter alia require the
strict compliance of the negative covenant during the subsistence of the
agreement.
7. The celebrity and the rival, the two appellants, on the other hand, allege
that the plaintiff is in breach of the contract so far as its most essential part is
concerned, being the payment of consideration, which appears from the case
made out in the plaint and the interlocutory application and the documents
annexed thereto, which are all part of the records before this court. For this, a
few dates, and facts, as appear from the plaint and the contract, are necessary to
be considered. Admittedly, the plaintiff tendered to the celebrity the amount
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mentioned in clause 3.1 (i) of the contract on August 7, 2017 which shows
making of consideration agreed to be fifty percent of the retainer fee for the first
year of the contract, but admittedly the plaintiff did not even send the cheque for
the said amount for the second year of the contract, before September 14, 2018,
whereas under the contract it was to send the said fifty percent of the retainer
fee, less income tax and with applicable GST, by the 7th day of August, 2018 (the
date of commencement of the second year of the contract). The fact that the
plaint was presented on the very day after the plaintiff posted the cheque for the
entire amount mentioned in clause 3.1., both sub clauses (i) and (ii) and not just
the fifty percent, by a cheque dated September 14, 2018, which the respondent
no. 1 has itself annexed to the plaint as Annexure "C", is submitted to be a
demonstration that this gesture was only for the purpose of filing the suit and
getting an interlocutory order and contradicted the allegation at paragraph 6 of
the plaint.The further case of the appellants is that the respondent no. 1 has
averred that the celebrity was to perform her part of the contract by endorsement
in the manner mentioned in paragraph 2.1.1 only when the respondent no. 1
shared the promotional material prepared by the respondent no. 1 on the social
networking platforms of the celebrity, and gave her instructions by electronic
mail as evinced from paragraphs 11 and 12 of the plaint, and the documents
annexed as Annexure "F" to the plaint, and admittedly there was no such
instruction by the respondent no. 1 to the celebrity after July 3, 2018, which too
was limited to the "post share schedule till" July 15, 2018. Therefore, when
neither payment was received by August 7, 2018 by the celebrity, nor any
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instruction given for further promotion, the celebrity was free to think that the
contract had been terminated or at least repudiated by the respondent no.1. The
celebrity explains the concerned re-tweet of September 13, 2018 as a voluntary
act, not done pursuant to the contract which she has alleged in her application
for vacating the ad interim order became null and void after August 7, 2018.
Moreover, the celebrity has relied upon Section 42 of the Specific Relief Act,
1963, more particularly its proviso, read with Section 41(e) thereof, to show that
no injunction can be granted in such a case, because the plaintiff is in breach.
The appellants have impeached the reliance by the learned court below on only
AIR 1996 Calcutta 67 while ignoring binding judgments of the Hon'ble Supreme
Court, to hold that the tests of balance of convenience and its preponderance and
whether damages would be adequate becomes immaterial in the case where
enforcement of a negative covenant is involved, and prima facie case is enough.
8. In answer to this case, the respondent no. 1 has pointed to the fact that
the interpretation of clause 2.1.1 of the contract offered by the appellants is not
the only reasonable one on the face of the plain meaning of the words in the
contract or in the circumstances of contracts of such nature. The respondent no.
1 urges that the words "on various personal social media platforms of the
Celebrity, including but not limited to, Facebook, Twitter and Instagram" in
clause 2.1.1 refer not to the place where the respondent no. 1 is to send the
instructions or share the promotional materials with the celebrity, but where the
celebrity is to inter alia perform her function of endorsement. The respondent
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no. 1 submits that the peculiar nature of the digital media where the
endorsement is to be done, allows the respondent no. 1 to share its materials on
its own account or page with the setting set to public, and the moment that the
celebrity likes it or re-tweets it, it becomes an endorsement, showing at the same
time two things: that the celebrity acted as if the contract was subsisting, and
that she was waiving the breach of the condition relating to payment of the
retainer fee after the due date. The respondent no. 1 argued, alternatively, that
this was a case where there was delayed payment but not default, and time was
not of the essence but payment was and payment at the times mentioned in
clause 3.1 (i) and (ii) was not an essential term of the contract. The respondent
no. 1 also tried to submit, that payment required an invoice to be raised by the
celebrity and in case of the first payment on August 7, 2017 though there was no
invoice raised by the celebrity, the second tranche of payment in terms of Clause
3.1. (ii) was not payable by the respondent no. 1 until the celebrity raised her
invoice which was done on September 15, 2017 only whereafter the payment was
done on September 22, 2017. In case of the second year, no invoice was raised
by the celebrity so no payment was made. However, the respondent no. 1 could
not explain the reason why it therefore issued a cheque dated September 11,
2018 without any invoice, for the whole amount payable for the second year, not
the fifty percent payable on August 7, 2018 or August 6, 2018 but the entire
amount, with the applicable GST, but posted it on September 14, 2018 just one
day before filing the suit. The respondent no. 1 has, however, pointed out that
though the celebrity appellant by a letter dated September 25, 2018 has returned
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the cheque to the office of the respondent no. 1, admittedly the celebrity had
received the cheque on September 17, 2018 and had not returned it immediately.
9. In reply the appellants have submitted that the respondent no. 1 has tried
to improve the case made out in the plaint by its affidavit-in-reply to the
application for vacating the interim order, treated as a written objection and
where the suit was itself barred by statute, as aforesaid, on the face of the
allegations contained in and documents annexed to the plaint, no such
injunction could be passed, either in the ex parte ad interim form, or by making
it absolute till the disposal of the appeal.
10. Both the parties have placed reliance, inter alia, on paragraphs 6, 8, 10, 11
and 12 of the plaint, in support of their respective contentions and relied upon
the documents annexed to the plaint. Paragraph 8 of the plaint reads as follows:
"...The retainer fees have been duly paid to the defendant no. 1 in
terms of the contract. For the first year period an invoice was raised
by the defendant No.1 and accordingly payment was made by way of
cheques drawn on UCO Bank, 2 India Exchange place, Kolkata
700001, within the jurisdiction of this Learned Court in the first
year. For the second year 92018-19) period even though no invoice
was submitted by the defendant no. 1, the plaintiff made payment by
way of a cheque drawn on State Bank of India, 24, Park Street,
Magma House Kolkata 700016 within the jurisdiction of this Learned
Court. Copy of the invoice along with the copies of the cheques
issued by the plaintiff in favour of the defendant no. 1 are annexed
with the plaint and marked with the letter "C"..."
11. At the time of hearing, however, based on the above facts as admitted on
the face of the records the learned Senior Counsel appearing for the first
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respondent conceded that there was a breach so far as the time of payment was
concerned but he contended that this was not essential term of the contract.
12. Learned arguments of law have flowed back and forth from the learned
Senior Counsel engaged in the matter, ably assisted by their learned juniors.
This court has heard arguments based on Fry on Specific Contract, 6th edition,
travelled to the Court of Appeals in the United Kingdom and also to the Chancery
and considered the learned treatise of Mullah on the law of contracts. The
parties relied upon several judgments most of which pertained to the
maintainability of the suit, the interpretation of Section 27 of the Indian
Contracts Act, 1872, the extent of enforceability of a negative covenant, where it
could not be enforced, the specific performance of contracts of service, and such
weighty matters which properly speaking out to be decided only when the suit is
finally heard.
13. Among these judgments, were Burn & Co. Ltd--v--Thakur Sahib Sree
Lokhdirji of Morvi Estate reported in AIR 1925 PC 188, where also a question
arose about whether time was of the essence of the contract. There, their
Lordships were pleased to opine that they would advise His Majesty to dismiss
the appeal. The ground was, that though the Division Bench in appeal from the
learned single Judge had held that "but for the conduct of the defendants I
should have thought that with regard to the payment of the second instalment,
time was of the essence of the contract". The conduct referred to was despite
there being a non- performance of the condition for payment of the second
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installment within time, the defendants delivered the wagons in question. It was
in respect of sale of goods, and there was a positive act clearly in terms of the
contract, which could be shown to constitute a waiver by the defendants. In fact,
the suit was decreed on such findings. In the present case relating to a contract
of personal service, there is no such conduct which can be shown as waiver,
without evidence being taken and the matter being decided finally. It therefore,
will not apply to the present case which relates to the interlocutory stage.
14. Another judgment cited by the learned Senior Counsel for the respondent
no. 1 was Gomathinayagam Pillai and Others--v--Palaniswami Nadar reported
in AIR 1967 SC 868. This judgment too, would not apply since it was given in
the backdrop of a final decision in respect of a contract for sale of immovable
property, where, the question of the plaintiff being disentitled to specific
performance on the ground of delayed performance was finally abandoned before
the Hon'ble Supreme Court. Therefore, with respect, I do not think it applies to
the present case, either.
15. Another judgment cited before this Hon'ble Court was American Pipe
Company--v--State of Uttar Pradesh reported in AIR 1983 Cal 186. Here too,
the suit was finally adjudicated and one of the issues which arose in this
contract for sale of goods was whether time was of the essence of the contract
and whether the exercise of option was under the contract. In this case, on
evidence, time was held to be not of the essence of the contract. I do not
understand how this can at all be applicable to the present case, where at the
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interlocutory stage, it is clear and admitted that the respondent no. 1 did not
make payment within the time stipulated in the contract of service and the
appellant who was the defendant no. 1, never got the money before the suit was
filed. This case clearly does not apply.
16. The judgment in the case of Board of Acting Governor of the La
Martirere and Others--v--National Engineering Industries Ltd. and Others
reported in (2005) 2 CHN 207, though in the context of rejection of an injunction
order at the interlocutory stage, arose out of a registered deed of lease and
covenants contained in it. It is on the general principle of enforcement of a
negative covenant under Section 42 of the Specific Relief Act, 1963. The
coordinate bench was not called upon to decide the effect of the proviso to
Section 42 of the Act of 1963, and nor did it relate to a contract of personal
service. It is not an authority for the question which arises in the present case,
relating to whether or not the interlocutory orders seeking to enforce a negative
covenant in the peculiar facts of this case, ought to be continued or set aside.
This too therefore, does not apply.
17. Therefore, with great respect to the forensic skills of the learned counsel,
this court feels that whether the plaintiff/respondent no. 1 will ultimately
succeed in the suit ought not to be decided at this stage when the appeal at best
survives as an appeal from an order of temporary injunction. If this court
decides to record findings on the questions of whether the suit is maintainable by
reason of the proviso to Section 42 of the Specific Relief Act, 1963, then nothing
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will remain in the suit. Even the questions of whether time was of the essence of
the contract and whether payment within the time stipulated in Clause 3.1 and
its sub-clauses was an essential term of the contract, and whether the
explanation offered by the respondent no. 1 for its delayed payment will have to
be considered for the limited purpose of defending or impeaching the
interlocutory order. It will naturally not bind the learned court below or
influence it while deciding the suit itself. Therefore, this court declines to decide
the other questions raised before it, including whether a contract of personal
service is enforceable specifically, whether a negative covenant can be enforced in
a suit, in restraint of trade or business, even if the restraint is partial, whether
the agreement could be held to be subsisting as on September 13, 2018, or stood
repudiated and/or terminated, or anything which, properly speaking has to be
decided while finally adjudicating the suit.
18. In fact, a judgment cited at the Bar, being the case of Percept D'Mark
(India) (P) Ltd.--v--Zaheer Khan and Another, reported in (2006) 4 SCC 227,
where too the appeal arose from a division bench of the High Court of Judicature
at Bombay reversing the decision of a learned single Judge granting an
interlocutory order of injunction in a proceeding under Section 9 of the
Arbitration and Conciliation Act, 1996, the Hon'ble Supreme Court was pleased
to observe at paragraph 44 of the report that such an exercise as to
interpretation whether the agreement was in restraint of trade or not was not to
be undertaken in the present interlocutory proceeding.
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19. As is clear, both the appellants and the respondent no. 1 spent the bulk of
their energy trying to impeach or defend the maintainability of the suit for
enforcement of the negative covenant in the facts of the case and the law
applicable as they appeared at this stage, until on query by the court as to how
the interlocutory order initially challenged as an ex parte ad interim order, and
thereafter as a temporary injunction, could be defended or impeached they were
prevailed upon to cite the authorities on this subject.
20. This court would rather travel to the first principles in India relating to
grant of temporary injunctions and the law laid down in this behalf, in the
specific context of enforcing negative covenants by interim reliefs and not as a
final adjudication. For that, we shall examine first, the provisions of the Specific
Relief Act, 1963, governing the grant of temporary injunctions.
"Section 37 - Temporary and perpetual injunctions: (1) Temporary injunctions
are such as are to continue until a specific time, or until the further order of the
court, and they may be granted at any stage of a suit, and are regulated by the
Code of Civil Procedure, 1908."
"Section 42 - Injunction to perform negative agreement: where a contract
comprises an affirmative agreement to do a certain act, coupled with a negative
agreement, express or implied, not to do a certain act, the circumstances that the
court is unable to 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."
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21. It has not been disputed at the Bar that the provisions which relate to the
grant of temporary injunction are regulated by Section 94 and the provisions of
Order 39 of the Code of Civil Procedure. The jurisdiction of this court as a court
of appeal to interfere with such an interim order which is an equitable relief, has
also been well settled as appears from the fact that both the adversarial sides
relied upon the same binding judgment of the Hon'ble Supreme Court which has
laid down the law in this behalf.
22. Both the parties have relied on the judgment in the case of Gujarat
Bottling Co. Ltd and Others--v--Coca Cola Co. and Others, reported in (1995)
5 SCC 545. So far as the principles governing the grant of interim orders and
the scope of this court's interference with it are concerned, the Hon'ble Supreme
Court laid down this law: -
"Paragraph 43. The grant of an interlocutory injunction during the pendency of
legal proceedings is a matter requiring the exercise of discretion of the court.
While exercising the discretion the court applies the following tests -- (i) whether
the plaintiff has a prima facie case; (ii) whether the balance of convenience is in
favour of the plaintiff; and (iii) whether the plaintiff would suffer an irreparable
injury if his prayer for interlocutory injunction is disallowed. The decision
whether or not to grant an interlocutory injunction has to be taken at a time
when the existence of the legal right assailed by the plaintiff and its alleged
violation are both contested and uncertain and remain uncertain till they are
established at the trial on evidence. Relief by way of interlocutory injunction is
granted to mitigate the risk of injustice to the plaintiff during the period before
that uncertainty could be resolved. The object of the interlocutory injunction is to
protect the plaintiff against injury by violation of his right for which he could not
be adequately compensated in damages recoverable in the action if the
uncertainty were resolved in his favour at the trial. The need for such protection
has, however, to be weighed against the corresponding need of the defendant to
be protected against injury resulting from his having been prevented from
exercising his own legal rights for which he could not be adequately
compensated. The court must weigh one need against another and determine
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where the "balance of convenience" lies. [See: Wander Ltd. v. Antox India (P)
Ltd. [1990 Supp SCC 727] , (SCC at pp. 731-32.] In order to protect the
defendant while granting an interlocutory injunction in his favour the court can
require the plaintiff to furnish an undertaking so that the defendant can be
adequately compensated if the uncertainty were resolved in his favour at the
trial."
"Paragraph 47. In this context, it would be relevant to mention that in the
instant case GBC had approached the High Court for the injunction order,
granted earlier, to be vacated. Under Order 39 of the Code of Civil Procedure,
jurisdiction of the Court to interfere with an order of interlocutory or temporary
injunction is purely equitable and, therefore, the Court, on being approached,
will, apart from other considerations, also look to the conduct of the party
invoking the jurisdiction of the Court, and may refuse to interfere unless his
conduct was free from blame. Since the relief is wholly equitable in nature, the
party invoking the jurisdiction of the Court has to show that he himself was not
at fault and that he himself was not responsible for bringing about the state of
things complained of and that he was not unfair or inequitable in his dealings
with the party against whom he was seeking relief. His conduct should be fair
and honest. These considerations will arise not only in respect of the person who
seeks an order of injunction under Order 39 Rule 1 or Rule 2 of the Code of Civil
Procedure, but also in respect of the party approaching the Court for vacating the
ad interim or temporary injunction order already granted in the pending suit or
proceedings."
23. Even though the original ex parte ad interim order has now merged with
the order dated October 3, 2018 by which the temporary injunction was passed,
since the appeals from the said order and its extension are being heard together
with the appeals from the order of temporary injunction, nothing prevents this
court from examining whether the tests laid down by the Hon'ble Supreme Court
in the case of Gujarat Bottling Co. Ltd (supra) were followed, at any of the
stages as aforesaid. On the face of the documents annexed to the plaint, the
conduct of the respondent no. 1 was not blameless when it approached the court.
It sought an equitable relief which would have the effect of at least partially
preventing the celebrity from earning a livelihood - from endorsements of
products - on the basis of documents which clearly showed that in order to allege
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that it had performed its part of the contract, it had tendered payment of
consideration for the second year of the contract just one day before it filed the
suit, and obtained the interim order. Prima facie, therefore, its conduct shows
that the contract was not performed within the time stipulated in it, and worse,
the affected appellant/defendant no. 1/celebrity had not even got the money
when the suit was filed. Therefore, prima facie, the motive for such payment was
not to perform the contract or comply with its contractual obligations, but only to
give the impression that the contract was subsisting. The respondent no. 1 did
not wait until the celebrity appellant, the defendant no.1 before the learned court
below, had received the said cheque by mail, before presenting the plaint in the
suit and seeking and obtaining an ex parte ad interim order without notice.
There is no explanation for such delayed tender which the celebrity appellant did
not even receive before the suit was filed. Therefore, a court considering grant of
an equitable relief ought not to have, on the face of such documents, passed
such an order, particularly when it never even considered the preponderance of
balance of convenience. If the order itself was bad, then its extensions without
independent reasons, are also bad. It is true that the weighty questions about the
validity of the agreement, its subsistence, whether it is in restraint of trade, the
interpretation of the contract are all of a nature which have to be decided on
evidence and hence there is a prima facie case to go to trial. However, these are
not the only factors which the learned court below ought to have considered in
view of the binding judgment of the Hon'ble Supreme Court. By relying on a
decision of this court, even a Bench decision, in preference to the law laid down
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by the Hon'ble Supreme Court which was cited before it, the learned court below
consciously ignored the question of balance of convenience and held it to be
immaterial. The learned court below, by doing so, not only erred in law but did
what even this court could not do - it acted contrary to judicial discipline and the
doctrine of stare decisis and precedents and made mincemeat out of the
hierarchy of courts and Article 141 of the Constitution of India. Therefore, even
the final order on the application for temporary injunction cannot be sustained
since it did not consider all the questions which the Hon'ble Supreme Court in
the case of Gujarat Bottling Co. Ltd (supra) held must be considered before
granting such an interlocutory relief. Such order must, therefore, be set aside.
24. To this Court, however, the greatest flaw in the case for the interim order
appears to be that a plaintiff claiming an equitable relief, has approached the
Civil Court without acting equitably. It did not disclose before the court the
material fact that even on September 15, 2018, the date of institution of the suit,
the defendant no. 1/appellant/celebrity had not received the amount that the
respondent no. 1 had been required to pay to her in two tranches - fifty percent
on August 6 or at the latest, August 7, 2018 and fifty percent on August 22,
2018. Instead it deliberately suggested that which was false, being that allegedly
the retainer fees were duly paid to the celebrity in terms of the contract. The
payment was clearly made merely to create an illusion of due payment (as in
Paragraph 8 of the plaint aforesaid) for getting the interim order. These are
examples of clever drafting which are deliberately made to create an illusion of
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that which the litigant knows clearly is not true. This should not be encouraged
by a court of equity because these illusions are no better than falsehoods,
disguised as the truth. The bona fides of the first respondent, at least prima
facie, are wholly demolished by these pleadings. Since temporary injunction is
also an equitable relief within the discretion of this court and in a case were such
sharp practice has not been explained properly, this court is not inclined to grant
any order of temporary injunction in favour of the first respondent.
25. This court however, would not like to send the matter back on remand for
the purpose of deciding the question of whether or not to grant temporary
injunction, now that it has already found that the conduct of the respondent no.
1 was not blameless and it made the payment of the said amount by the cheque
dated September 11, 2018, sent by it only on September 14, 2018, and when it
filed the suit even before the defendant no.1/appellant celebrity had received it,
without disclosing it and who has, thereafter, returned it to the respondent no. 1.
Rather, the court takes up the questions of balance of convenience and
inconvenience. No case has been made out that the services of the celebrity
appellant are so unique or she is so unique that deprivation of endorsement by
her, even if it is at the instance and to the benefit of the rival appellant, would
mean an end of the business of the respondent no. 1. The respondent no. 1
enjoys an enviable reputation as a manufacturer of TMT bars - which its rival
appellant also produces - and is endorsed by the likes of Virat Kohli, the captain
of the BCCI Team India in cricket. The documents annexed to the plaint, which
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were prepared by the respondent no.1, themselves show this. On the other hand,
the celebrity appellant, while a thespian of some note in regional films, depends
upon her income from her appearances and endorsements for her livelihood. If
she is restrained from making any endorsement of the products of the rival
appellant, when the respondent no. 1 admittedly has not issued any instruction
to the celebrity beyond July 15, 2018 for any performance which she is to record
or any material which she is to promote, especially during the festive season in
West Bengal which commences from October 14, 2018, she will be without a
substantial portion of her livelihood. Even assuming that the contract is
subsisting - without deciding this question - the injury which the respondent no.
1 will suffer by her endorsing the products of the rival appellant, can be cured
and compensated in money value. This is because it is not the case of the
plaintiff in the plaint that it is only the endorsement by the celebrity appellant
which has resulted in popularity of the product of the respondent no. 1, its
reputation and the increase in its sales and without her endorsement or with her
endorsing the rival's product, the business of the respondent no. 1 would come to
a stand-still. As such the balance of convenience and inconvenience is clearly
against grant of a temporary injunction as prayed for by the respondent no. 1.
The appellant rival and the appellant celebrity shall however, keep a separate
account of the money paid to the appellant celebrity for her promoting or
endorsing the products of the appellant rival, which shall be paid to the
respondent no. 1 as compensation in addition to the reliefs prayed for in the suit,
in the event that the suit succeeds. Naturally, this court desires that the suit is
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disposed of as expeditiously as possible, and subject to the convenience of the
learned court below, but preferably before August 6, 2019.
26. The impugned orders under appeal, at the instance of the celebrity
appellant and the rival appellant, in all the cases as above, are set aside with the
above directions. The applications are disposed of accordingly.
27. So far as the appeal preferred by the respondent no.1 is concerned, against
that part of the order dated October 3, 2018 which makes the interlocutory order
of injunction absolute till the disposal of AST No.62 of 2018, this court agrees
with Mr. Chatterjee that when an application for temporary injunction is being
disposed of, it can either be allowed, so that the interim order granted continues
till disposal of the suit or for a certain period, or it may be rejected, but making
the injunction "absolute" till the disposal of the appeal is a material irregularity.
Though this court appreciates the predicament of the learned court below, and
its desire not to overreach the process of the appellate court, the learned court
below ought to have appreciated that the desire of this court was that the learned
court below adjudicated and disposed of the application for temporary injunction
even during the pendency of AST No.62 of 2018 for which reason the hearing of
the said appeal had been adjourned.
28. Be that as it may, now that this court has set aside the impugned orders
dated September 15, 2018, its extension and the order dated October 3, 2018 in
their entirety and passed other directions on the application for temporary
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injunction disposing of it by reversing the said orders, as above, nothing remains
of the appeal preferred by the plaintiff, and therefore, without approving of the
said part of the order dated October 3, 2018 but strongly deprecating it, this
court dismisses FMAT No.1058 of 2018 and the connected application.
29. The parties shall bear their own costs.
30. Photocopy of this judgment and order, duly countersigned by the Assistant
Court Officer shall be retained with the records of all the appeals except A.S.T. 62
of 2018.
(Protik Prakash Banerjee, J.)
DIPANKAR DATTA, J.:
I agree.
(Dipankar Datta, J.) Later:
After pronouncement of the judgement and order, learned advocate on behalf of the plaintiff/respondent, prays for stay of operation of the said judgment and order.25
Such prayer is considered and refused.
(Dipankar Datta, J.) (Protik Prakash Banerjee, J.)