TMI Blog1995 (6) TMI 199X X X X Extracts X X X X X X X X Extracts X X X X ..... the only Buyer of all the Manganese and Iron ore from the Mine for and during the continuance of this Agreement. 3. Mr. Jayanta Mitra, the learned Advocate on behalf of the Plaintiff has submitted that the aforesaid Clause 12 of the Agreement contains a negative covenant whereby the Defendant agreed not to sell or otherwise part with or dispose of any Manganese and iron ore from the mine, and that the Plaintiff shall be the sole and only buyer of all the Manganese and iron ore for and during the continuance of the Agreement. By and under Clause 13 of the Agreement, rights have been given to the parties to specifically enforce the terms and obligations of the said Agreement. 4. It has been submitted on behalf of the Plaintiff that the Defendant after having entered into the said Agreement and after having received the sum of ₹ 15,00,000/-wrongfully refuse to sell and deliver Manganese and iron ore raised from the said mines to the Plaintiff, and hence the suit. 5. It has also been alleged in the petition that over and above the sum of ₹ 15 lakhs paid as and by way of advance under the Agreement, a further sum of ₹ 2,36 lakhs has been paid by the Plaintiff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 and 14 of Specific Relief Act, 1963. It has also been contended on behalf of the defendant that damages for non-performance would be adequate relief and breach of contract to transfer moveable property can be relieved by awarding of compensation. 12. It has further been argued on behalf of the defendant that the contract also involves performance of continuous duty which 'the Court cannot supervise and also runs into minute details. 13. Mr. Anindya Mitra, learned Advocate has referred to Clauses 5,7,8 and 9 of the Agreement. Clause 5 refers to fortnightly bills and statement of quantity sold. Clause 7 provides for weighment on a mutual agreed weighbridge. Clause 8 provides for analysis by the representative of sampling Company to be suggested by the buyer and right of rejection of the buyer if the Ores fail short of the specification and compositions, Clause 9, provides for arrangement of permits, signing of declaration form return etc. by the seller. 14. It has been submitted on behalf of the defendant that even if the agreement is specifically enforceable the trial Court hearing the suit may in its discretion refuse to enforce the negative covenant provided the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... because his analysis report shall be acceptable to both parties and on that basis the buyer's right of rejection will arise. (iv) No averment that any request was made by the plaintiff to defendant for arrangement of delivery of geological permits or any other permits has been made. (v) No averment has been made in the plaint or petition that the plaintiff had ever made any approach for mutually setting the price of Iron Ore below 65% F.F. or Manganese ore of below 30% mn. although from the said mine substantial quantities of Iron ore below 65% F.F. and Manganese ores of below 30% mn. are extracted in regular course. 18. It has also been submitted on behalf of the defendant that the plaintiff has not taken any of the abovementioned steps which are pre-requisite for commencement of supply under the agreement for sale. Therefore, the plaintiff has been unable to show even prima facie that he has performed all its obligations under the agreement as required under provision of Section 42 of the Specific Relief Act. Thus the plaintiff is not at this stage entitled to ask for enforcement of negative covenant and has failed to make out prima facie case. 19. It has als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iffs grievances can be adequately remedied by award of damages if the agreement is held to be valid at the time of trial. On the other hand, if injunction is continued, the defendant would be unable to run the mine because of production cost being 1/5 th of market price. Further, the defendant would be at the complete mercy of the plaintiff who may reject ores on the ground of not being according to specifications or may demand further price on that ground. Agreement postulates fortnightly delivered, it is not possible to come and apply to the Court every fortnight as and when the disputes regarding the quality and quantity is raised by the plaintiff on the basis of Sampling agency to be appointed by the plaintiff itself. In the meantime, the bills for price will remain unpaid. 23. The learned Advocate for the defendant has contended that it is not the case of the plaintiff that the reserve of ores in these particular mines will be exhausted within a few years. No case of irreparable prejudice is made out as required for obtaining interim injunction, particular when interim injunction will have the effect of decreeing the suit. 24. It has also been contended by Mr. Anindya M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not at all been acted upon as yet and the argument of the plaintiff that the defendant has not cancelled the agreement is without any substance, because the question of formal cancellation of the agreement by letter, would have arisen if the plaintiff had applied for performance of the agreement and written a letter for delivery. By filing the suit the plaintiff has, for the first time, claimed performance of the agreement and in the reply the defendant has, on affidavit avoided the agreement. In this connection he has referred to the supplementary affidavit affirmed on 13 th Feb. 1995. Had the plaintiff written a letter demanding delivery soon after the agreement dated 1 st Oct. 1994, the defendant would certainly have stated in reply that the agreement is not valid or binding. 31. The learned Advocate for the defendant has further contended that in this suit itself, the defendant is entitled to file a counter claim praying for cancellation of the agreement. Time for filing of counter claim has not yet arisen because the writ of summons has not yet been served. The defendant has already by affidavit recorded avoidance of the agreement as mentioned hereinbefore. 32. It h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aining sale of the entire quantities of raising of this mine. (b) The letter dated 29 th Oct. 1994 written by the plaintiff to B.K. Mohanti disclosed in affidavit-in-opposition and dealt with in affidavit-in-reply. (c) No step preparatory to the commencement of supply had at all been taken by the plaintiff. (d) The plaintiff has got four other mines under its control and the plaintiff, as a trader, would be in a position to buy ores from other mines and sell it to its customers. In short, the plaintiff would be able to run its business as a trader of ore even if no injunction is granted but the defendant, having only one mine, would be totally unable to carry on its business. (e) That the price of different grades of ore, as mentioned in the agreement, were upon too below the market price and even much below the prices at which the plaintiff had sold similar Manganese ore in the year 1993. 35. The defendant therefore prays that Ad interim order should be vacated. 36. In support of the contention learned Advocate for the defendant has relied upon the following decisions:- (1) Modern Food Industries India Ltd. v. M/s. Shri Krishna Bottlers (P) Ltd. re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... causing an apparent waste of time and money. No doubt this aspect impressed the Court of Sessions but there is no equity which can assist the respondent. It is trite that equity will not rewrite an improvident contract where there is no disability on either side. There is no duly laid upon a party to a1 subsisting contract to vary it at the behest of the other party so as to deprive himself of the benefit given to him by the contract. To hold otherwise would be to introduced a novel equitable doctrine that a party would not to be held to his contract unless the court in a given instance thought it reasonable so to do. In this case, it would make an action for debt a claim for a discretionary remedy. This would introduce an uncertainty into the field of contract which appears to be unsupported by authority either in English or Scottish law save for the one case upon which the Court of Sessions founded its opinion and which must, in my judgment, be taken to have been wrongly decided. 43. Reliance was also placed upon the judgment and decision in the case of Mount-ford v. Scott reported in 1975 Ch 258. 44. In the aforesaid case, the defendant challenged an option agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of the agreement till today. (b) No police diary or FIR by the defendant that he has been cheated in having to sign the said agreement acknowledging receipt of a substantial amount without receiving the amount. (c) No letter by or on behalf of the defendant cancelling the agreement, since according to him, the consideration of the agreement did not pass. (d) No suit or proceedings initiated by the defendant challenging or praying for delivery up and cancellation of the said agreement or for an injunction restraining the plaintiff from giving effect thereto or acting in terms thereof. (e) No allegation anywhere in the affidavit that he did not receive independent legal advice before he put his signature to the said agreement. (f) It has not been stated anywhere in the said affidavit that he had no alternative means of obtaining the finance, and that the plaintiff was the only person who came forward at that time in his so-called distress. Non-availability of an alternative course of action is an important factor which is absent in the instant case. 48. It is not in dispute that the defendant is also a businessman. 49. The plaintiff and the defen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dship's view there is nothing contrary to principle in recognising economic duress as a factor which may render a contract voidable, provided always that the basis of such recognition is that it must amount to asercion of will, which vitiates consent. It must be shown that the payment made or the contract entered into was not a voluntary act. 51. The judgment and decision in the case of Alec Lobb (Garages( Ltd. v. Total Oil GB Ltd. (1985 (1) All ER 303) relied upon by Learned Advocate for the plaintiff may also be taken note of. In the aforesaid decision Lord Justice Dillion at page 313 of the said report observed and held as follows:- Inequality of bargaining power must any how be a relative concept. It is seldom in any negotiation that the bargaining powers of the parties are absolutely equal. Any individual wanting to borrow money from a bank, building society, or other financial institution in order to pay his liabilities or buy some property he urgently wants to acquire will have virtually no bargaining power. He will have to take or leave the terms offered to him. So, with house property in a seller's market, the purchaser will not have equal bargaining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Manganese and Iron Ores agreed to be sold to the plaintiff are those which are excavated and raised for delivery ex pit mouth. In other words, only such manganese and Iron Ores are to be sold and delivered to the plaintiff as has been excavated and raised and no sooner the same is done, they become both ascertained and specific goods. 58. In any event, there is a specific provision in the contract, viz. Clause 12 containing a negative covenant whereunder the defendant has agreed not to sell or otherwise part with or dispose of any Manganese or Iron Ore from the mines and has further agreed that the plaintiff shall be the sole and only buyer thereof during the continuance of the agreement. The negative covenant is aforesaid is in clear term and is binding on the defendant. 59. It has been argued on behalf of the defendant that Section 42 of the Specific Relief Act is applicable only at the time of final hearing of the suit, and that no interim order can be passed in pursuance thereof at the interlocutory stage. 60. I am however, unable to accept the said contention. 61. In the case of Donnell v. Bennet reported in (1883) 22 Ch. D. 835 the contract was for the sale o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court which, relying upon viz. Section 52 of English Sale of Goods Act a provision similar to Section 58 of the Sale of goods Act in India held that the Court has ample jurisdiction to grant injunction. The Court observed: Even if I thought that damages would be an adequate remedy for what they had suffered, I should feel it incumbent upon me, if I could, to assert the authority of the land by refusing to allow the defendant to retain the benefits he has attempted to gain by his highhanded and illegal action. 66. The Learned Advocate for the petitioner has also relied upon the judgment and decision in the case of Jairam Valjee v. Indian Iron Steel Co. Ltd., reported in AIR 1940 Cal 466. In the aforesaid Case, on an interlocutory application for injunction restraining the defendants, their servants and agents from purchasing dolomite and lime stone from any party or parties other the plaintiff, after holding that the defendants were guilty of breach of contract in taking lime stone and dolomite from other suppliers, the Court held that under Order 39, Rule 2 of the Civil Procedure Code, the plaintiff would be entitled to an interlocutory injunction, if he can make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th such manganese and Iron ore which would be raised by the defendant. The contract is one of sale and delivery of the materials, the operation of the mines remaining entirely in the control of the defendant. Therefore no supervision of the Court is necessary in the matter of operation of the mines. 71. Furthermore once the minerals have been raised, the contract contains procedure for taking delivery and payment of price, After the materials are raised, it is the duty of the defendant as the Seller to inform the plaintiff as the Buyer, whereupon the plaintiff is to appoint an Analyst and inform the defendant. The Analyst would draw sample in the presence of the representative of the plaintiff and the defendant. The samples so drawn shall be acceptable to both the parties. Once samples are accepted the analyst's analysis of the sample with regard to the manganese or Iron content would be binding on both parties. The materials would thereafter be weighed in a weigh-bridge mutually acceptable to both, and the price would be determined on the basis of such weighment multiplied by the agreed price. 72. The entire procedure is such that it will not require any supervision of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Court to implement the solemn agreement between the parties. It appears that the defendant has agreed to sell the entirety of the Manganese and Iron ore from his mines to the plaintiff. It will not be in accordance with equity and justice to allow the defendant to flout the agreement with the blessings of the Court during the pendency of the suit on the specious plea that damages would be an adequate remedy at the final hearing of the suit. 77. In any event, there is a negative covenant in the contract, and in such a case, the question of balance of convenience and whether damages would be adequate remedy or not becomes immaterial: 78. In this connection, I may refer to the observation of Lord Cairns L.C. and in the case of Richard Wheeler Doherty v. James Clagston Allman and W.C. Dowden, re- ported in (1878) 3 AC 709 All page 719-720. The said report Lord Cairns L.C . observed as follows: My Lords, if there had been a negative covenant, I apprehend, according to well settled practice, a Court of Equity would have had no discretion to exercise. If parties, for valuable consideration, with their eyes open, contract that particular thing shall not be done, all that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p. 449 of AIR) the Court formed the view that the long period of redemption, the provision for payment of interest at the rate of half per cent per annum payable on the principal amount at the end of the long period, the clause regarding the repairs, etc. in the Deed of Mortgage and the mortgager's financial condition, all these suggest that there was a clog on the equity. 83. This case has no application in the facts of our instant case, In case of money lent and advanced, the Court always zealously protects the interest of the borrower, particularly if the conditions of the agreement recording the advance are onerous, the Court presumes that the lender was in a position to dominate the will of the borrower, in view of the borrower's stringent financial condition. 84. Judgment and decision in the case of Nalini Kishore Choudhury v. Atul Chandra Chakraboarty Choudhury reported in (1936) 40 Cal WN 561 also cannot be of any assistance to the defendant. 85. The said decision, presumed the existence of fraud where the price was grossly inadequate. It is to be noted that at that time explanation Section 1 to Section 20 of the Specific Relief Act had not been incorp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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