2001 (6) TMI 820 - HC - Indian Laws

Summary

Issues Involved:

1. Whether the learned Trial Judge erred in refusing to grant an injunction under Section 42 of the Specific Relief Act, 1963.
2. Whether the memorandum dated 5-10-1998 constitutes a negative covenant.
3. Whether the appellant performed its obligations under the contract.
4. Whether the balance of convenience and irreparable injury favor the appellant.

Issue-wise Detailed Analysis:

1. Refusal to Grant Injunction under Section 42 of the Specific Relief Act, 1963:

The appellant-company filed an interlocutory application for an injunction to restrain the respondent-company from proceeding with construction without settling the work executed by the appellant. The Trial Judge rejected this prayer. The appellant argued that under Section 42 of the Specific Relief Act, the Trial Judge should have granted an injunction, citing precedents like *Frank Simoes Advertising (P) Ltd. v. Hada Leasing and Industries Ltd.* and *Robert v. Roshini Enterprises*. However, the court noted that Section 14(1) of the Act prohibits specific performance of certain contracts, and Section 41(e) prohibits injunctions to prevent the breach of such contracts. The court concluded that the learned Trial Judge correctly decided that an injunction could not be granted.

2. Memorandum Dated 5-10-1998 and Negative Covenant:

The appellant contended that the memorandum dated 5-10-1998 implied a negative covenant, preventing the respondent from handing over the work to others. However, the court found that the memorandum did not explicitly or implicitly contain any negative covenant. Section 42 of the Act allows for injunctions to enforce negative agreements, provided the plaintiff has not failed to perform the contract. The court noted that the memorandum did not include a negative agreement, and the appellant also failed to demonstrate that it had performed its part of the contract.

3. Performance of Obligations by the Appellant:

The respondent alleged that the appellant breached the contract by demobilizing men and machinery and almost abandoning the work. The appellant argued that the respondent did not comply with the memorandum and started negotiating with others. The court observed that there were disputed questions regarding the appellant's performance and noted that no material evidence was presented to prove the appellant's compliance with the contract. The court held that the appellant's failure to perform its obligations justified the respondent's decision to entrust the work to another party.

4. Balance of Convenience and Irreparable Injury:

The court considered the principles of balance of convenience and irreparable injury, citing *Frank Simoes Advertising (P) Ltd.* and *Robert v. Roshini Enterprises*. The court noted that the balance of convenience and irreparable injury did not favor the appellant. The court emphasized that an interim relief could only be granted in aid of the main relief, referencing *Cotton Corporation of India v. United Industrial Bank*. The court concluded that the appellant would not suffer irreparable damage if the injunction was not granted and upheld the Trial Judge's exercise of discretion.

Conclusion:

The appeals were dismissed, and the court affirmed the Trial Judge's decision to refuse the injunction. The court held that the memorandum did not contain a negative covenant, the appellant failed to perform its obligations, and the balance of convenience and irreparable injury did not favor the appellant. The court emphasized the discretion of the Trial Judge and the principles governing the granting of injunctions, ultimately finding no grounds to interfere with the Trial Judge's decision.