TMI Blog2000 (7) TMI 986X X X X Extracts X X X X X X X X Extracts X X X X ..... the Specific Relief Act since the contracts in question were determinable in nature. 3. The appellant's case is that the contracts in question are not determinable in nature as contemplated by Section 14(i)(c) of the Specific Relief Act since there is no clause in the agreement, which permits the respondent to terminate the agreements by giving a notice of a few days. The contracts, which are determinable in nature have always been understood to mean those contracts, which can be put to an end to sending notice implicate of a few days. It was contended that contracts in question do not contain such a clause. To the contrary, the contracts in the present case specifically state and recognise that the respondent has granted to the appellant an exclusive license to produce Stroh Beer for a term of seven years. Which term was renewable successively for a period of three years at each time. It has also been contended that if the decision rendered by learned Single Judge is taken to be correct law, then in almost all commercial contracts the remedy of injunction would be barred. Another ground urged is that the arbitration proceedings in the present case have to be conducted in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference and adjudication in accordance with the terms of agreement. 7. The respondent opposed the petition on the ground that the Court has no jurisdiction to entertain the petition. It has also no jurisdiction and power to grant injunction, as sought for by the appellant. However, for the purpose of deciding the application filed by the appellant under Section 9 of the Act, it was stated by the respondent that it was not pressing the issue of lack of jurisdiction of this Court to entertain and decide the petition. Learned Single Judge considered the second preliminary objection raised on behalf of the respondent of the bar contained in Section 14(i)(c) read with Section 41(1) of the Specific Relief Act, which was upheld and on that basis application for interim relief was dismissed. 8. The appellant's case is that in 1991, Mr. Jain took over the Management of the appellant company. Between the years 1991-94, the appellant set up a state of art fully automated and computerised brewery, at a cost of more than 20 million dollars, in technical collaboration with internationally acclaimed and renowned companies. At the specific request of the respondent the appellant import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the supervision of the respondent's Technical Team. It was because of the quality of Stroh Beer produced and sold by the appellant that the respondent had taken the decision to further expand its business in India. Had the appellant's quality of Beer was poor, the respondent would never have allowed the appellant to dispose of the stock lying in appellant's possession. 10. The respondent's case on the other hand is that as per the amendment to the Technical Know-how Agreement, it was specifically agreed that respondent expected the appellant to meet not only production and sales of 1,00,000 hector liters of the respondent's product and in case the appellant be not able to produce or sell the expected quantity, the respondent would have right to grant Know-how license to other parties. The ongoing license granted under know-how license was also conditional upon the appellant's achieving the quality and production standards specified in report dated 25.6.1998. The appellant in a period of six months from 23.6.1998 to 28.2.1999 had produced only 8,000 hecto liters, which amount to 9% of the total quantity for the period and 16% of the target for six months i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nformation or evidence: (d) interim injunction or the appointment of a receiver: (e) such other interim measure of protection as may appear to the Court to be just and convenient. and the Court shall have the same power for making orders as if has for the purpose of, and in relation to, any proceedings before it. 13. As the application by the appellant was filed under Section 9 of the Act prior to commencement of the arbitration proceedings, it is not disputed that the Court is empowered to deal with the same and exercise such power for making orders as it has for the purposes of and in relation to any proceedings before it. The closing words of Section 9 of the Act empowering the Court to deal with such applications for interim measures have on the face of it to be dealt with in accordance with the law applicable to any proceedings taken out before such a Court. On the ratio of the decision of the Supreme Court in Sumitomo Heavy Industries Ltd. Vs. ONGC Ltd. MANU/SC/0834/1998MANU/SC/0834/1998 : AIR1998SC825 the application will be governed by the law of India and not by the governing law. However, the principles of equity governing specific performance are almost sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot 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. 15. Learned Single Judge considered various covenants of the agreement and referred to clause 8 of the Technical Assistance Agreement regarding termination saying that similar provision is incorporated in the Technical Know-how Agreement and both agreements provide that the same could be terminated even by the appellant at its option at the occurrence of any of the events, which are specifically mentioned in the agreement. Learned Single judge extracted clauses relating to Technical Assistance Agreement under which the respondent could terminate the contract and as the termination had to take place at the instance of the respondent Therefore, events under which the appellant could terminate are not extracted. We were taken through various clauses and it is not disputed and has also rightly been pointed out by learned Single Judge that there is no negative covenant in the agreements in question. As there was no negative covenant, it was observed by learned Single Judge th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of, under which termination had been made, the firm was entitled to continuance of distributorship in the special circumstances of the case, which contention was upheld by the Arbitrator. Supreme Court set aside the award of the arbitrator on the ground that there is error of law apparent on the face of the record and grant of relief in the award cannot be sustained. It was held:- The arbitrator recorded finding on issue No.1 that termination of distributorship by the appellant Corporation was not validly made under clause 27. Thereafter, he proceeded to record the finding on issue No.2 relating to grant of relief and held that the plaintiff-respondent 1 was entitled to compensation flowing from the breach of contract till the breach was remedied by restoration of distributorship. Restoration of distributorship was granted in view of the peculiar facts of the case on the basis of which it was treated to be an exceptional case for the reasons given. The reasons given state that the Distributorship Agreement was for an indefinite period till terminated in accordance with the terms of the agreement and, Therefore, the plain- tiff-respondent 1 was entitled to continuance of the dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nation is wrongful or not; the events have happened or not; the respondent is or is not justified in terminating the agreements are yet to be decided. There is no manner of doubt that the contracts by their nature determinable. In M/s. Classic Motors Ltd. Vs. M/s. Maruti Udyog Ltd., 65(1997)DLT166 relying upon number of decisions, learned Single Judge of this Court rightly observed:- In view of long catena of decisions and consistent view of the Supreme Court, I hold that in private commercial transaction the parties could terminate a contract even without assigning any reasons with a reasonable period of notice in terms of such a Clause in the agreement. The submission that there could be no termination of an agreement even in the realm of private law without there being a cause or the said cause has to be valid strong cause going to the root of the matter, Therefore, is apparently fallacious and is accordingly, rejected. 19. Even in the absence of specific clause authorising and enabling either party to terminate the agreement in the event of happening of the events specified therein, from the very nature of the agreement, which is private commercial transaction, the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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