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In this application under Section 9 of the Arbitration and Conciliation Act, 1996 (in short, "the Act of 1996") the petitioner has prayed for orders of injunction against the respondent for enforcement of a negative covenant in the agreement dated July 01, 2013, as amended by the amendment agreement dated April 28, 2016, which also contains an arbitration agreement between the parties.

The petitioner carries on business, inter alia, of production of films. It is the case of the petitioner that on July 01, 2013 it entered into a Film Artist Agreement (hereinafter referred to as "the said agreement") with the respondent, an actor whereby the latter agreed to render his services as a part of the starcast on an exclusive basis to the petitioner as per the production schedule to be communicated to him from time to time for a premium remuneration. In this regard, the petitioner has disclosed a copy of the said agreement where the petitioner and the respondent have been described as "the producer" and "the artist", respectively. According to the petitioner, as per clauses 5.1.9 and 9.3 of the said agreement the respondent confirmed his engagement for providing services exclusively to the petitioner for the entire term of the said agreement and that during the term of the said agreement he shall not, without the written consent of the petitioner, create or participate in any manner in any other film, television serial, advertisement outside the banner of the petitioner. The said agreement was valid for a period of three years. On April 28, 2016 the parties herein executed an addendum agreement (hereinafter referred to as "the said addendum") extending the validity of the said agreement to a period of five years. The clauses pertaining to the remuneration to be paid by the petitioner to the respondent were also modified and clause 2A was inserted in the said agreement. The petitioner claims that by clause 2A of the agreement inserted by the said addendum, the respondent agreed to render his services to the petitioner on an exclusive basis for the extended term of the agreement till June 30, 2018 and thereafter for a period of three months, that is, up to September 13, 2018. The respondent signed with the petitioner for altogether five films out of which three films have already been released and the remaining two films are under production. Under the said agreement, the respondent agreed not to enter into any other arrangement and/or agreement and/or engagement and/or employment with any third party for providing any kind of service or performance in theatre, television for any other party relating to media and entertainment industry or otherwise, without obtaining a prior written approval from the petitioner. The petitioner claims that it never failed to perform its obligations under the agreement and it is also ready and willing to perform the said agreement. However, in early December 2017, the petitioner came to know that the respondent has engaged himself for providing film related services to a third party namely, Surinder Films for which he did not obtain any written consent from the petitioner. By a notice dated December 12, 2017 the petitioner called upon the respondent, inter alia, to cease from providing his services including any shooting, appearance or production related activity to any third party in breach of the said agreement as amended by the said addendum. The petitioner alleges that the conduct of the respondent has caused it to suffer irreparable damage, loss of business profits and has jeopardized its upcoming productions. In the said letter the petitioner further claimed that in the absence of an affirmative and timely action on the part of the respondent, it shall be bound to pursue every available remedy including injunction, specific performance, claim of damages against the respondent. In response to the said notice by an electronic message informed the petitioner that he does not have any copy of the said addendum. Thereafter, the petitioner forwarded a copy of the said addendum to the respondent. On December 26, 2017 when the representative of the petitioner met the respondent personally, the latter expressed his unwillingness to back out of the other film for which shooting has already started. The petitioner alleges to have made a considerable amount of investment on the respondent so as to make him a star from a non-entity. It has also developed the respondent's acting skill and spent enormous sums for building up his brand. The petitioner, therefore, seeks enforcement of the exclusivity term incorporated in the said agreement to recover its investment on the respondent, both direct and indirect, exceeding Rs. 1 crore. Any further breach of the said exclusivity term by the respondent would result in interference with the petitioner's existing and upcoming projects/production thereby causing irreparable harm and injury to itself. The petitioner further alleges that under the said agreement the respondent acknowledged the production of the film is an unique, unusual and extra ordinary character, the loss of which cannot be reasonably compensated by damages and, therefore, he agreed that the petitioner shall be entitled to seek specific performance of his services and obligations under the said agreement. Accordingly, the petitioner is entitled to seek specific performance of the said agreement by the respondent, not only in law but also under the specific terms of the said agreement. The petitioner asserts that even if specific performance of the said agreement cannot be granted, the respondent ought to be restrained from acting in breach of the negative covenant contained in clause 2A of the said agreement. The respondent is, however, not interested to perform his obligation under clause 2A of the said agreement giving rise to the disputes between the parties to be adjudicated as per the arbitration agreement contained in clause 15 of the said agreement. Thus, the petitioner is taking all necessary steps to refer the disputes to arbitration and filed this application under Section 9 of the Act of 1996 seeking for, inter alia, an order of injunction restraining the respondent from performing any arrangement and/or engagement and/or agreement with any other producer, director or other third party, in breach of the negative covenant in the said agreement.

Mr. Abhrajit Mitra, learned senior advocate appearing in support of the application submitted that in the present case, the petitioner has performed all its obligations to the respondent under the said agreement as amended by the said addendum. Although for the four films already completed the respondent was entitled to receive Rs. 16 lakhs but the petitioner has already paid Rs. 18.13 lakhs to the respondent out which Rs. 2.13 lakhs is on account of advance payment to be adjusted towards the fifth film for which shooting is yet to commence. It was further submitted that since the petitioner has not committed any breach of the said agreement the respondent has not terminated the agreement. It was contended that the respondent has on his own volition entered into the said agreement as well as the said addendum and he is bound by the negative covenant contained in clause 2A of the said agreement. By referring to the provisions of Section 42 of the Specific Relief Act, 1963 (in short, "the Act of 1963") the learned counsel for the petitioner submitted that in the instant case, the negative covenant contained in the said agreement is binding upon the respondent and the petitioner is entitled to enforce the negative covenant against the respondent. Pressing for the interim relief against the respondent for enforcement of the negative covenant contained in the said agreement Mr. Mitra relied on the decisions of the Supreme Court in the case of Gujarat Bottling Co. Ltd. & Anr.- vs.- Coca Cola Co. and Ors. reported in (1995) 5 SCC 545, Percept D'Mark (India) (P) Ltd.- vs.- Zaheer Khan & Anr. reported in (2006) 4 SCC 227, the Single Bench decisions of this Court in the cases of Vijaya Minerals Pvt. Ltd.- vs.- Bikash Chandra Deb reported in AIR 1996 Cal 67, Makhanlal Natta- vs.- Tridib Ghosh & Anr. reported AIR 1993 Cal 289 and in the case of Hi-Tech Systems & Services Ltd. -vs.- Suprabhat Ray & Ors. reported in AIR 2015 Cal 261. The petitioner also relied on the Division Bench decisions of this Court in the cases of Bikash Chandra Deb- vs.- Vijaya Minerals Pvt. Ltd. reported in (2005) 1 CHN 582 and Board of Acting Governor of the La Martienere & Ors.- vs.- National Engineering Industries Ltd. & Ors. reported in (2005) 2 CHN 207. Relying on the said decisions it was strenuously argued for the petitioner that in the present case, the negative covenant contained in the said agreement whereby the respondent agreed to exclusively provide his services to the petitioner does not amount to a contract in restraint of trade under Section 27 of the Contract Act, 1872. It was urged that the petitioner has fulfilled the three essential ingredients to obtain an order of injunction against the respondent for enforcement of the negative covenant entered into by the latter, first the petitioner has made out a prima facie case, secondly the balance of convenience wholly lies in favour of the petitioner and the third that the petitioner would suffer an irreparable injury if its prayer for injunction in this application is not allowed. It was suggested by the petitioner that not only the present petition for enforcement of the aforementioned negative covenant by the respondent is maintainable, the petitioner is also entitled to obtain the order of injunction restraining the respondent from committing any breach of the said negative covenant. Mr.Mitra strenuously prayed for extension of the interim order dated December 27, 2017 passed by a learned Single Judge of this Court in this application as mentioned above.

The above negative covenant contemplates that not only during the subsistence of the said agreement but, even beyond the expiry of the said agreement the respondent shall not enter into any arrangement for providing any services or performance on theatre, television, either directly or indirectly, express or implied, with any other party, unless, the same is approved by the respondent in writing. The respondent is further precluded, even after expiration of the said agreement, from engaging himself in any role which is similar to the contents of the character depicted by him in any film produced by the petitioner or a colorable variant of the same. It is trite law that negative covenant which operates beyond the expiry of the term of the contract is void on the ground of being a restraint on trade under section 27 of the Contract Act. In this regard ready reference may be made to the decisions of the Supreme Court in the cases of Niranjan Shankar Golikari -vs. - Century Spinning and Manufacturing Company Limited reported in AIR 1967 SC 1098, Gujarat Bottling Co. Ltd. (supra) and Zaheer Khan (supra). Therefore, it is clear that the negative covenant contained in clause 2A of the said agreement in so far as the same precludes the respondent from entering into any arrangement for providing services or performance on theatre or otherwise in favour of any third party without first obtaining the written approval of the petitioner and not to engage himself in any role similar to the content of the character depicted by himself in any film produced by the petitioner, even after expiry of the agreement is void under section 27 of the Contract Act and the petitioner cannot enforce the same.

Even the argument based on section 42 of the Act of 1963 does not advance the case of the petitioner. Section 41 of the Specific Relief Act, 1963 lays down circumstances when the Court cannot pass an order of injunction. Amongst others, clause (e) of section 41 of the Act of 1963 provides that an injunction cannot be granted to prevent breach of contract, the performance of which would not be specifically enforced. Section 42 of the Act of 1963 lays down that where the contract comprises affirmative agreement to do 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. The non-obstante clause contained in section 42 of the Act of 1963 lifts the bar under section 41(e) to the grant of an injunction to prevent breach of a contract the performance of which would not be specifically enforced. However, as held by the Supreme Court in the case of Gujarat Bottling Co. Ltd. (supra) while considering the prayer for an order of injunction against a party for performance of the negative covenant, the Court has to exercise its discretion by applying sound judicial principles to fulfil the three tests - (i) whether the plaintiff has a prima facie case; (ii) whether the balance of convenience is in favvour of the plaintiff; and (iii) whether the plaintiff would suffer irreparable injury if his prayer for interlocutory injunction is disallowed. In the said case the Supreme Court found that the plaintiff Coca Cola Co. Ltd. , the respondents in the special leave petition, had not only made out a prima facie case for enforcement of the negative covenant by the defendant no. 1 Gujarat Bottling Co. Ltd.(supra) the balance of convenience was also in favour of the plaintiff for enforcement of the said negative covenant against the defendant no. 1 Gujarat Bottling Co. Ltd.(supra). In paragraph 45 of the said judgement in the case of Gujarat Bottling Co. Ltd.(supra) the Supreme Court found that the refusal to pass an order of injunction for enforcement of a negative covenant in favour of the plaintiff Coca Cola Co. Ltd. would result in the latter suffering irreparable injury. On these grounds the Supreme Court upheld the order of injunction passed by the High Court against the defendant no.1 enforcing the negative covenant.