Andhra HC (Pre-Telangana)
Navayuga Engineering Company Ltd. vs Sanghi Industries Ltd. on 6 June, 2001
Equivalent citations: 2001(5)ALT249
Author: S.B. Sinha
Bench: S.B. Sinha
JUDGMENT S.B. Sinha, C.J.
1. These two appeals being inter-connected were taken up for hearing together and are being disposed of by this common judgment.
2. The plaintiff-Company is the appellant in these appeals. It filed an interlocutory application praying for a direction restraining the respondent-Company from proceeding further with construction either by themselves or through others without quantifying the work executed by it inclusive of claims and settling them. The learned Trial Judge by reason of the order impugned before us has rejected the said prayer.
3. Sri M.S.K. Sastry, the learned Counsel appearing on behalf of the appellant inter alia submitted that having regard to the provisions of Section 42 of the Specific Relief Act, 1963, (for short 'the Act') the learned Trial Judge ought to have granted injunction. In this connection our attention had been drawn to the letter dated 5-10-1998 by the respondent-Company to the appellant herein on the basis whereof it was submitted that as the contract had not been terminated the respondent could not hand over the work to any other person. . The learned Counsel would contend that payments have not been received nor any measurement of the work done by the appellant company had been taken and as such interest of justice demanded that an order of injunction should be issued. Strong reliance in this connection has been placed on Frank Simoes Advertising (P) Ltd. v. Hada Leasing and Industries Ltd. and Anr., AIR 1988 Del. 363 and Robert v. Roshini Enterprises and Anr, .
4. The fact of the matter is as follows: The respondent-Company called for tenders for design and construction of concrete jetty inside Kharo creek near Sanghipurani, Gujarat for export of cement and the appellant-company's tender was accepted. The appellant-company alleged that during the course of execution of the contract/it had to stop the work firstly because of dispute between the revenue and forest departments over the land and also because of delay on the part of the respondent-Company in laying the approach road. It is also alleged that as the respondent-Company did not obtain proper clearance from the Central Government before calling for tenders, the appellant had to suspend the work. Further, the respondent did not make intermittent payments as agreed to.
It appears that on 5-10-1998 the parties allegedly entered into a settlement which appears from minutes dated 5-10-1998 which is to the following effect:
The accounts for the work done, as certified by both the parties, after adjustment of all advances paid and SD recovered will be closed and the outstanding payments which amounts between Rs. 90 and 100 lakhs will be released as under:
15-10-1998 Rs. 25 lakhs 15-11-1998 Rs. 25 lakhs 01-12-1998 Rs. 25 lakhs 15-12-1998 balance amount
M/s. Navayuga Engineering should endeavour to complete the balance work by end of September, 1999 with a grace period of one month.
Regarding mobilization charges as per the contract, which have to be paid as per certain milestones will be paid and Sanghis will endeavour if there is any scope for improvement which will be discussed after the work has started.
The appellant would contend that the respondent had not complied with the Memorandum of Understanding dated 5-10-1998 and on the other hand it started negotiating with others with respect to the contract work.
5. Because a settlement had been arrived at, the same gives rise to a contract. If the respondent herein hag not adhered to the terms of settlement the appellant could have sued it for damages, However, only a suit for permanent injunction has been filed.
6. The learned Trial Judge held:
The quantification can be made by appointing an arbitrator or to ask the Court to appoint an arbitrator in pursuance of the general conditions of the contract and he can as well recover the amount which is due to the petitioner.
7. The memorandum dated 5-10-1998 ex facie does not contain any negative covenant. Section 42 of the Specific Relief Act reads thus:
Injunction to perform negative agreement:- Notwithstanding anything contained in Clause (e) of Section 41, 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.
8. The respondent alleged breaches of conditions of contract on the part of the appellant. It was alleged that the appellant had demobilized entire men and machinery and almost had abandoned the work. It was denied that commencement of work pursuant to the said understanding dated 5-10-1998 was contingent upon the releasing of the first instalment. According to the respondent, as the appellant failed to mobilise men and machinery by 15-10-1998, the question of payment did not arise. It was further alleged that the said understanding dated 5-10-1998 could not be materialized owing to failure on the part of the appellant herein to perform its obligations.
9. Having regard to the aforementioned disputed questions, in our opinion, the learned Trial Judge must be held to have arrived at a correct decision that an injunction as prayed for cannot be granted.
Section 14 (1) of the Act prohibits grant of even a decree for specific performance of certain contracts.
10. Section 41 (e) of the Act prohibits the Court from granting an injunction to prevent the breach of contract the performance of which could not be specifically enforced. A contract of the nature entered into by and between the parties hereto having regard to the provisions of Section 14 of the Act cannot be directed to be specifically enforced.
11. Section 42 of the Act which makes out an exception to Section 41 (e) thereof providing that where a contract comprises an affirmative agreement to do certain act coupled with negative agreement not to do certain act, the circumstances that the Court is unable to compel specific performance of the affirmative agreement does not preclude it from performing the negative agreement. The said provision contains a proviso to the effect that such injunction can be granted when the plaintiff has not failed to perform the contract so far as it is binding on him. Apart from the fact that the said memorandum does not contain any negative agreement, whether express or implied, in this case, a disputed question has been raised that the plaintiff has also failed to perform the contract.
12. No material has been placed before the learned trial Judge to prove contra.
13. Only because in the said memorandum dated 5-10-1998 the appellant was to entertain work as per the work schedule the same cannot be terminated as a result whereof the respondent had no power to entrust the work to anybody else. In the event of failure on the part of the appellant to perform its part of contract, the respondent was entitled to take work from anybody else.
14. Before the learned trial Judge even the general terms and conditions of the contract had not been filed.
15. In Frank Simoes Advertising (P). Ltd.'s case (1 supra) a learned Single Judge, in the fact of the case, clearly found that the agreement contained a negative covenant. The balance of convenience and irreparable injury was also found in favour of the plaintiff therein. In the aforementioned situation, it was held, that the plaintiff could enforce the negative covenant. In Robert's case (2 supra) a learned Single Judge of the Karnataka High Court, in the fact of the case, held that the contract shall not depend on personal volition and thus can be enforced. It is now well settled that whether an agreement is affirmative or negative is one of substance and not of mere form. A negative stipulation cannot be implied from an affirmative stipulation; For inferring that the contract contains a negative stipulation, it must be found out from the contract itself. In Lal Bhai Dalpatbhai & Co. v. Chittaranjan, a Division Bench of the Gujarat High Court held:
Now if Section 42 has not been enacted by reason of Section 41 Clause (e) it would not have been possible to grant an injunction to restrain the breach of the negative stipulation. The breach of a negative stipulation would have been a breach of the contract and an injunction though limited to preventing the breach of the negative stipulation would have been injunction to prevent the breach of the contract and the contract being one of which performance would not be specifically enforced. Section 41 (e) would have precluded the Court from granting an injunction to prevent the breach of the negative stipulation. Section 42 was therefore enacted and it provided that in such a case even though the contract cannot be specifically enforced the Court would still be entitled to grant an injunction restraining the breach of the negative stipulation if it otherwise thinks it fit and proper so to do. The bar created against the granting of such an injunction by Section 41 Clause (e) is thus removed by Section 42 but that does not mean that the Court must grant such an injunction even if the effect of doing so would be to compel the defendant to specifically perform the contract. The Court has a discretion whether or not to enforce the negative stipulation by grant of an injunction.
16. However, we may notice that in Nagappa v. State of Karnataka and Ors., it was held that enforceability of a contract depends upon its terms and nonavailability of any other remedy therefor.
17. In Cotton Corporation of India v. United Industrial Bank, the apex Court clearly held that an interim relief can be granted only in aid of and as an ancillary to the main relief which may be available to a party on final determination of his rights in a suit or proceedings.
18. Thus, we are prima facie of the opinion that, as a decree for permanent injunction cannot be granted in the suit, necessarily the prayer for temporary injunction shall also have to be refused. Furthermore, the learned trial Judge has exercised his discretion and normally this Court sitting in appeal would not interfere therewith. It is relevant to note that Venkataswami, J. (as his Lordship then was) in Rangamma v. Krishnappa, 1968 (1) Mys. L.J. 552 held:
In a decision of this Court in Lakshminarasimhiah v. Yalakki Cowda (1965) 1 Mys. L.J. 370, the relevant principles have been extracted and set out in the head note to that case. It is sufficient to set out the head note, which runs thus:
An appeal lies from the order of a trial Judge granting or refusing to grant an interim injunction but what the Court of appeal has to consider is simply whether or not the Judge who dealt with the matter has properly exercised the discretion which he undoubtedly possesses. The appellate Judge is not to approach the case as if he were the trial Judge. The granting or refusing of injunction is a matter resting in the sound discretion with the trial Court and consequently no injunction will be granted whenever it will operate oppressively, or inequitably or contrary to the real justice of the case. Besides, there are certain equitable principles also which govern the Courts in granting or withholding of the relief of injunction. One of the main considerations is the fairness or good conduct of the party invoking the aid of the Court. The Court denies the relief to a suitor who is himself guilty of misconduct in respect of the matter in controversy. The wrong conduct of the plaintiff in the particular matter or transaction with respect to which he seeks injunction relief precludes him from obtaining such relief. Injunction will not be granted in aid of possession secured by stratagem or trick.
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I am of the opinion, that the application of the principles enunciated in the decision extracted hereunder; could be made applicable in all cases where, the appellate Court is called upon to review an order made in the exercise of discretion by the lower Court. The decision in question is in U.P. Co-operative Federation Ltd. v. Sunder Bros. and the relevant passage which occurs at page 253, runs thus:
It is well established that where the discretion vested in the Court under Section 34 of the Indian Arbitration Act has been exercised by the lower Court, the Appellate Court should be slow to interfere with the exercise of that discretion. In dealing with the matter raised before, it at the appellate stage the appellate Court would normally not be justified in interfering with the exercise of the discretion under appeal solely on the ground that if it had considered the matter at the trial stage it may have come to a contrary conclusion. If the discretion has been exercised by the trial Court reasonably and in a judicial manner the fact that the appellate Court would have taken a different view may not justify interference with the trial Court's exercise of discretion. As is often said, it is ordinarily not open to the appellate Court to substitute its own exercise of discretion for that of the trial Judge; but if it appears to the appellate Court that in exercising its discretion the trial Court has acted unreasonably or capriciously or has ignored relevant facts then it would certainly be open to the appellate Court to interfere with the trial Court's exercise of discretion. This principle is well established; hut, as has been observed by Viscount Simon L.C., in Charles Osenton & Co. v. Johnston (1942 AC 130 at P. 138):
The law as to the reversal by a Court of appeal of an order made by a Judge below in the exercise of his discretion is well established, and any difficulty that arises is due only to the application of well settled principles in an individual case.
19. Further more, in Gujarat Steel Tubes Ltd. v. Its Mazdoor Sabha, it has clearly been held that the Court of Appeal would not interfere with an order when the order is not correct but would interfere only when it is clearly wrong.
20. Having regard to the facts and circumstances of the case we are of the opinion that even the factors relating to balance of convenience and inconvenience, lie in favour of maintaining the impugned order. We are further of the opinion that the plaintiff-appellant would not suffer irreparable damage if the order of injunction is not passed in its favour. Hence, the appeals are dismissed. No costs.