Restricted termination clause supports interim injunction where no contractual default is shown and damages are inadequate.

A contract with a restricted termination clause limited termination to three consecutive defaults in license fee payment; because no such default was shown and the termination notice did not rely on that ground, interim protection was justified. The agreement was treated as containing a negative covenant and, for that reason, was not determinable in a way that barred injunctive relief under the Specific Relief Act, 1963. The respondent's investment and business goodwill also supported the view that damages would not be an adequate remedy, so the equitable injunction preserving the status quo was upheld and no interference was warranted.

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Issues: Whether the Arbitrator was justified in continuing interim protection in favour of the respondent by holding that the termination notice was not shown to be in accordance with the license agreement and that the agreement was not determinable so as to bar injunctive relief.

Analysis: The termination clause permitted termination by the appellant only on three consecutive defaults in payment of license fee. The record did not show any such default, and the notice of termination did not rest on that foundation. The Court held that alleged loss of revenue from non-installation of the diesel generator could not, at this stage, be treated as non-payment of license fee for the purpose of the termination clause. It further held that the contract contained a restricted termination provision amounting to a negative covenant, so the agreement could not be treated as determinable in its nature for the purposes of Section 14(1)(c) of the Specific Relief Act, 1963. The Court also accepted that the respondent's investment and business goodwill made damages an inadequate substitute and that the case fell within the equitable protection contemplated by Sections 14 and 42 of the Specific Relief Act, 1963.

Conclusion: The interim injunction was upheld and the appellant's challenge failed.

Final Conclusion: The appeal did not warrant interference because the respondent had established a prima facie entitlement to protect its possession under the restricted termination clause, and the Arbitrator's discretionary order was not shown to be arbitrary, capricious, or perverse.

Ratio Decidendi: Where termination of a contract is contractually restricted to specified defaults, the agreement is not determinable in a manner that bars interim injunctive relief, and a negative covenant may be enforced to preserve the status quo pending adjudication.

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