TaxTMI 
TaxTMI 
TaxTMI 
2018 (1) TMI 1673
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....6 (hereinafter referred to as "the 1996 Act"). 2. This matter was mentioned on 29th December 2017, and allowed for listing for the same date. In view of the volume of material involved, I had re-listed the matter for the next day, i.e. 30th December 2017, on which date I put it, to learned senior counsel for the petitioner, that the case could be re-listed before the regular roster bench after vacation on 2nd January 2018. Both counsel, however, submitted that, as the petitioner's dealership was coming to an end on 31st December 2017, the matter brooked no delay. With consent of learned counsel, therefore, I heard the matter at length, and proceeded to decide the same. 3. It is made clear, however, that the observations and findings in this judgement - which has, in dealing with the detailed submissions advanced by both sides before me, become prolix - are limited to the application, of the petitioner, under Section 9 of the 1996 Act, and are intended only towards decision thereon. They shall not, therefore, prejudice either party in any proceedings that may arise, between them, at any later point of time. 4. The facts are easily stated. In or around May 2008, the respondent....
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....rstanding", between the petitioner and the respondent, that the agreement would be renewed year to year, is not supported by any clause in the agreement, or any other material which is available on record in the present proceedings. 7. It appears that the dealership between the petitioner and the respondent was, in fact, renewed year to year. Having said that, extension of the dealership, for the period 2015-2016, was granted, to the appellant, by the respondent, not by a mere renewal of the earlier existing agreement, but by a fresh agreement, made on 14th January 2015. For all intents and purposes, the various clauses of the agreement dated 14th January 2015, were substantially similar to the corresponding clauses in the aforementioned agreement dated 5th January 2009. A few relevant clauses of the new Agreement may be reproduced, as under: 1. BASIS OF THE AGREEMENT "1.1 Distribution Rights for Contract Goods 1.1.1 Subject to the satisfaction of the condition precedent specified in Clause 1.1.2 below, BMW hereby appoints the Dealer to be a nonexclusive dealer in Contract Goods at the Authorized Premises in the Territory as hereinafter defined on the terms and conditions he....
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....e following events shall entitle BMW to terminate this Agreement forthwith: 11.2.1 the Dealer breaching any of its obligations in terms of this Agreement and failing to rectify the situation within 14 (FOURTEEN) days of notice in writing to do so, it being understood that a rectification shall only be possible if in BMW's sole and absolute opinion that rectification is able to fully reinstate its business interests; or 11.2.1 the Dealer defaulting or delaying in making any payment due, whether formally demanded or not or suspends or threatens to suspend making any payments (whether of principal or interest) with respect to all or any class of its debts; or 11.2.3 the Dealer having any financial facility, which has been arranged by BMW or the Dealer for the payment of Contract Goods, withdrawn for any reason whatsoever; or 11.2.4 BMW's brand products, services or personnel is brought into disrepute or are likely to on account of any act or omission on the part of the Dealer in BMW's opinion, which decision thereon will be final and binding; or 11.2.5 the Dealer fails to comply with BMW procedures or instructions in relation to Authorised Premises and/or setting....
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....jurisdiction is levied or issued against any of the properties of the Dealer and such distress or execution or other process as the case may be is not discharged, withdrawn stayed within 14 (FOURTEEN) days from the date thereof; or 11.2.12 if any event or events shall occur or a situation shall exist which could or might, in the reasonable opinion of BMW prejudice the ability of the Dealer to perform its obligations under this Agreement; or 11.2.13 if any material licence authorization approval or consent required by the Dealer to carry on its business is revoked or withheld or is otherwise not granted; or 11.2.14 it is or will become unlawful for the Dealer to perform or comply with any one or more of their respective obligations under this Agreement or this Agreement is or becomes, for any reason, invalid or unreasonable; or 11.2.15 the Dealer shall fail to satisfy any judgment passed against the Dealer by any court of competent jurisdiction and no stay of execution has been obtained and no notice of appeal against such judgement has been taken to any appropriate appellate court within the time prescribed by the relevant rules; or 11.2.16 anything analogous to any of th....
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....h Schedule to the Agreement read thus: "4. COMMENCEMENT DATE The Commencement Date in accordance with Clause 11.1 of this Agreement shall be 1st January 2015 and in deviation of Clause 11.1 this Agreement will continue thereafter (unless terminated or cancelled earlier in accordance with the provisions of this Agreement) until 31st December 2015, whereupon it shall automatically expire unless renewed in accordance with the provisions of Clause 11.1 of this Agreement". 9. The agreement, therefore, leaves no manner of doubt that its duration was from 01st January 2015 to 31st January 2015 and that it automatically came to an end on 31st December 2015, subject to the right, of the respondent, to renew it. The said right of renewal was also, specifically, limited to a period of one calendar year. 10. In exercise of the aforementioned right, the respondent wrote on 01st December 2015 to the petitioner, offering renewal of the aforementioned agreement dated 14th December 2015 from 01st January 2016 till 31st December 2016, clearly stating that the terms and conditions contained in the agreement dated 14th January 2015 would also apply to the said agreement. As if to leave no stone ....
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....le to do so in the years 2016 and 2017. It, however, attributes its failure to do so, to "territory infringement by dealers of BMW cars outside Gujarat selling to customers based in Gujarat". Such ex-Gujarat dealers, the petition contends, had an advantage, owing to a lower indirect tax regime outside Gujarat, which acted as an incentive for the respondent, to allow sale in Gujarat, by such ex-Gujarat dealers. The petitioner contends that it addressed several e-mails to the respondent, requesting that such "territory infringement" be stopped as the business of the petitioner was suffering as a result thereof. Despite such communications, it is contended that the respondent took no action to stop the territory infringement, resulting, as already noted above, in the petitioner failing to meet its sales targets in the years 2016 and 2017. 14. Para 13 of the petition further contends that, in order to ensure a "fair exit" for the petitioner, it was mutually agreed, between the petitioner and the respondent, that a valuer be appointed, who would value the business of the petitioner, which, then, could be sold to a third party. Pursuant to this understanding, the petition contends that ....
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....d ever taken place. It is emphatically contended, by the petitioner, that the letter dated 07th December 2017 was a bolt from the blue, which has thrown all its affairs into disarray, especially given the enormous expenditure incurred by the petitioner. Para 16 of the petition asserts that, in view of the fact that "the Petitioner has incurred significant expenditure, has set up various facilities and infrastructure, has in its possession large No. of demo vehicles (BMW cars), where the entire set up is specific to the sale and servicing of BMW cars, it is unreasonable that a contract which has been renewed for a period of nine years, each year, is suddenly being put to an end by about three weeks' notice, which evidently is an insufficient period to allow the petitioner to transition from this business to another business". 17. Having set out its grievance thus, the petitioner states in para 21 of the petition that there was an apparent dispute between the petitioner and the respondent which, by virtue of Clause 13.4 of the agreement dated 14th January 2015, read with letter dated 09th January 2017 (supra), was arbitrable. It is in these circumstances, that the present petiti....
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....ect to the right, of the respondent to terminate the agreement in case of breach. Para 28 of the judgment of this Court in Classic Motors Ltd. v Maruti Udyog Ltd., 1995 (57) DLT 677 was pressed into service, by Mr. Sharma, in this regard. (vi) The use of the words "ongoing discussion", in the letter dated 07th December 2017, was clearly indicative of arbitrariness on the part of the respondent. Mr. Sharma emphasized that no such discussion had taken place. (vii) Clause 11.1, as figuring in the agreement, could not be read in isolation but had to be understood in the conspectus of the entire agreement. (ix) The letter, dated 07th December 2017, had assigned no reason, whatsoever, to discontinue the petitioner's dealership. (x) The petitioner's sales, in 2016 and 2017, had fallen only because of the action, of the respondent, in allowing ex-Gujarat dealers to trade in BMW automobiles in Gujarat. Having thus prejudiced the petitioner's dealership, the respondent could not be allowed to use the fall in sales of the petitioner, as a justification to refuse to renew the petitioner's dealership, as that would amount to allowing the respondent to take advantage of i....
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....contract between the parties. It was not, therefore, as though the original agreement dated 5th January 2009 had continued till 2017. (iv) Clause 11.1 of the agreement dated 14th January 2015, specifically provided that the contract would expire at the end of one year by efflux of time, subject to the right, of the respondent, to renew the same, at its sole discretion, on mutually agreeable terms and conditions (as would be apparent from the use of the words "acceptable to BMW" used in the said clause). (v) The grievance, of the appellant, regarding sale, of BMW automobiles, in Gujarat, by ex-Gujarat dealers, was without substance, as it was made clear, in clause 1.1.1 of the agreement dated 14th January 2015, that the dealership given by the respondent was "non-exclusive" in nature. (vi) By efflux of time, therefore, the agreement dated 14th January 2015, as renewed thereafter, expired on 31st December 2017. Clause 11.1 made it absolutely clear that the appellant had no legal right to have the agreement renewed. Sans any legal right, there could be no enforceable right. Sans any enforceable right, there could be no question of grant of any injunction. Mr. Kathpalia drew my a....
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....t contained therein. There was no question, therefore, of reading, into the agreement between the petitioner and respondent, any unfettered tenure of dealership, in view of Clause 11.1. A written contract was conclusive, and exclusive, evidence of its terms. (xiv) The judgements relied upon by the petitioner were in the realm of public law. There was no question of applying the principle of legitimate expectation in the private law domain. (xv) Manjunath Anandappa (supra) was concerned with Article 54 of the Limitation Act, 1963, read with Section 16 of the Specific Relief Act. The issue in the present case was totally different. 22. Arguing in rejoinder, learned senior counsel for the petitioner reiterated that the doctrine of legitimate expectation was applicable as much in the private law, as in the public law domain. He also invited my attention to an e-mail, dated 21st August, 2015, from the respondent to the petitioner, which reads thus: "Hope you had sent all these retail claims earlier the infringing dealers? Rest assured that Parsoli Motors will get the count of all those cases as long as the documents are in place as per the Policy." This document, learned counsel....
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...."), for raising manganese ore on its behalf. The term of agreement was 10 years, w.e.f. 18th May 2003, with the option, to Adhunik, to seek renewal for a further term. Pursuant to the agreement, Adhunik mobilised huge resources, and incurred considerable expenditure. Just six months after entering into the agreement, on 24th November 2003, OMM issued a notice, to Adhunik, purporting to terminate the agreement. The justification, cited by OMM for doing so, what is that it had realised that the contract was in violation of Rule 37 of the Mineral Concession Rules, 1960, and that, therefore, OMM was in danger of losing its rights as a lessee, necessitating termination of the contract. As Adhunik had incurred considerable expenditure, as well as losses, it moved the District Court, under Section 9 of the 1996 Act, for an injunction, restraining OMM from terminating the contract and from dispossessing it from the site. Vide order dated 18th August, 2004, the District Court allowed the application and restrained OMM from acting on the letter of termination dated 24th November 2003, and from dispossessing Adhunik from the mines. In so holding, the District Court opined that Rule 37 of the ....
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....the concept of just and convenient while passing interim measures under Section 9 of the Act." (Emphasis supplied) Thereafter, paras 14 and 15 of the report proceeded to hold as under: "14. Professor Lew in his Commentary on Interim and Conservatory Measures in ICC Arbitration Cases, has indicated: "The demonstration of irreparable or perhaps substantial harm is also necessary for the grant of a measure. This is because it is not appropriate to grant a measure where no irreparable or substantial harm comes to the movant in the event the measure is not granted. The final award offers the means of remedying any harm, reparable or otherwise, once determined." 15. The question was considered in Channel Tunnel Group Ltd. v. Balfour Beatty Construction Ltd. [(1993) 2 WLR 262 : (1993) 1 All ER 664 (HL)] The trial Judge in that case took the view that he had the power to grant an interim mandatory injunction directing the continuance of the working of the contract pending the arbitration. The Court of Appeal thought that it was an appropriate case for an injunction but that it had no power to grant injunction because of the arbitration. In further appeal, the House of Lords held th....
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....ed, could be granted or not, would again lead the court to a consideration of the classical rules for the grant of such an interim measure. Whether an interim mandatory injunction could be granted directing the continuance of the working of the contract, had to be considered in the light of the well-settled principles in that behalf." (Emphasis supplied) 25. Having thus interpreted Section 9 of the 1996 Act, and the scope of the jurisdiction of the Court thereunder, the Supreme Court, adjudicating the controversy before it, set out the issue, for consideration, as being "whether in the circumstances, an order of injunction could be granted restraining OMM Private Ltd. from interfering with Adhunik Steels' working of the contract which OMM Private Ltd. has sought to terminate". Significantly, no injunction, restraining OMM from acting on its decision to terminate the contract with Adhunik, was granted. The only interim direction that was passed was in the form of restraint, against OMM, from entering into a similar contract with any other entity, till the conclusion of the arbitral proceedings. The raison d'etre for granting the said relief is also relevant. The Supreme Co....
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.... Act was reiterated in Arvind Constructions Ltd. v. Kalinga Mining Corporation (2007) 6 SCC 798. 27. In Firm Ashok Traders v Gurmukh Das Saluja, (2004) 3 SCC 155, the Supreme Court opined that "the court under Section 9 is only formulating interim measures so as to protect the right under adjudication before the Arbitral Tribunal from being frustrated". 28. Dalveer Bhandari, J. (as his Lordship then was) observed thus, regarding the power of the court to grant injunctions under Section 9 of the 1996 Act, in Olex Facas Pvt. Ltd. v Skoda Export Co. Ltd., AIR 2000 Del 161: "In my view, though the Court is vested with the powers to grant interim relief, but the Court's discretion must be exercised sparingly and only in appropriate cases. The Courts should be extremely cautious in granting interim relief in cases of this nature. The Court's discretion ought to be exercised in those exceptional cases when there is adequate material on record, leading to a definite conclusion that the respondent is likely to render the entire arbitration proceedings infructuous, by frittering away the properties or funds either before or during the pendency of arbitration proceedings or even d....
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....gainst the corresponding need of the defendant to be protected against injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately compensated. The Court must weigh one need against another and determine where the "balance of convenience" lies". 31. The above dictum was invoked, by the High Court of Bombay, in Percept Talent Management Pvt. Ltd. v. Yuvraj Singh 2008 (2) ARB LR 49 (Bom). Para 10 of the said report, which is relevant, reads as under: "10. Specific performance of such a contract would prima facie be barred by Clauses (a), (b) and (D) OF Sub-Section (1) of Section 14 of the Specific Relief Act, 1963. The Contract between the parties is essentially a contract for personal services of which specific performance cannot prima facie be granted. The balance of convenience would weigh against the grant of an injunction because whereas the Petitioners could be fully compensated in monetary terms if they finally succeed in the arbitral proceedings, the First Respondent would be irrevocably prejudiced by being compelled to enter into a contract with a party with whom he does not desire to deal. The Court, therefore....
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....interest of justice status quo as of that day would continue till the next date and on the next date i.e. 30th November 1994 the interim order was continued and finally by order dated 3.2.1995 this Court stayed the implementation of the show cause notice dated 31st August 1994 issued by the defendant. 10. Being aggrieved by the aforesaid order the defendant approached the Supreme Court through a Special Leave Petition which was registered as SLP(C) No. 4490/1995. By order dated 28.2.1995 the Supreme Court stayed the operation of the order dated 3.2.1995 passed by the High Court and also stayed the further trial of the present suit and to avoid any further confusion in the matter it was made clear that no order of any kind be passed by the High Court during the pendency of the matter in the Supreme court. The Supreme Court by order dated 3.11.1995 remanded the matter back to the High Court by setting aside the order of injunction granted by this Court on 3.2.1995 in the present suit leaving all questions of fact and law between the parties open for decision by this Court at the time of disposal of the suit itself." 35. On his attention being drawn to the fact that vide order date....
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....istributor of the former, for sale of IOCL's Liquefied Petroleum Gas cylinders. Clause 27 of the agreement provided for termination thereof by IOCL, on the happening of certain specified events. Clause 28 permitted either party to, without prejudice to clause 27, terminate the agreement by giving 30 days' notice to the other party, without assigning any reason. Clause 37 provided for arbitration of disputes. 39. Consequent to receipt, by it, of complaints regarding the working of the distributorship granted to AGS, IOCL invoked Clause 27 of the Distributorship Agreement and, vide letter dated 11th March 1983, terminated the distributorship, of AGS, forthwith. Aggrieved thereby, AGS filed a suit, before the learned Sub-Judge, for a declaration that the termination of its distributorship was illegal and void, and consequently, for continuance of the distributorship. 40. IOCL, thereupon, filed an application, under Section 34 of the Arbitration Act 1940, for stay of the suit. The said application was, rejected by the learned Sub Judge, whose order was affirmed, as already noted hereinabove, in revision by the learned ADJ and, further, in further revision by the High Court. I....
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...., that the court cannot enforce specific performance of its material terms; (c) a contract which is in its nature determinable; (d) a contract the performance of which involves the performance of a continuous duty which the court cannot supervise. (2) Save as provided by the Arbitration Act, 1940 (10 of 1940), no contract to refer present or future differences to arbitration shall be specifically enforced; but if any person who has made such a contract (other than an arbitration agreement to which the provisions of the said Act apply) and has refused to perform it, sues in respect of any subject which he has contracted to refer, the existence of such contract shall bar the suit. (3) Notwithstanding anything contained in clause (a) or clause (c) or clause (d) of sub-section (1), the court may enforce specific performance in the following cases:- (a) where the suit is for the enforcement of a contract, - (i) to execute a mortgage or furnish any other security for securing the repayment of any loan which the borrower is not willing to repay at once: Provided that where only a part of the loan has been advanced the lender is willing to advance the remaining part of the loan....
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....ose between the partners of Competent, as a result whereof they arrived at a settlement for availing the dealership of MUL by separating the assets between themselves. MUL, vide letter dated 9th January 1988, allowed the two partners to separate and establish independent dealerships. Consequent thereupon, on 20th January 1988, Competent surrendered its dealership, and separate dealerships were granted, by MUL, to the erstwhile partners of Competent, in the names of M/s. Competent Automobiles Pvt. Ltd. and M/s. Classic Motors (hereinafter referred to as "Classic"). Classic, too, made substantial investments, pursuant to the said dealership and incurred huge loans, by way of overdraft facilities, to fulfil the obligations cast by the agreement. 47. On 6th April 1991, a show cause notice was issued to Classic by MUL, alleging certain breaches. Classic filed a petition under Section 20 of the Arbitration Act 1940, which was registered on the original side of this Court as a suit, praying for reference of the disputes between it and MUL, to an arbitrator. On an application filed by Classic, this Court granted an ex parte injunction, restraining MUL from terminating the dealership of Cl....
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.... implementation of the show cause notice, dated 31st August 1994 (supra), issued by MUL. 53. This compelled MUL to approach the Supreme Court a third time, by way of SLP(C) 4490/1995, challenging the order dated 3rd February 1995. As in the case of the two earlier SLPs filed by MUL, SLP(C) 4490/1995 was also disposed of, by the Supreme Court, vide order dated 3rd November 1995, setting aside the order of this Court and remanding the matter to this Court leaving all questions of fact and law open for decision to this Court, at the time of disposal of this suit. 54. This Court, vide its judgment in Classic Motors (2), adjudicated the suit, finally dismissing it with costs. The ratio of the said decision is not of particular relevance to the present case. What is, however, important to note is that the Supreme Court, on three occasions, categorically observed that interim directions, restoring the dealership of Classic, ought not to have been passed by this Court. Other relevant judgments 55. In E. Venkatakrishna v. Indian Oil Corporation Ltd., 2007 SCC 764 the facts were similar to Indian Oil Corporation (supra). The appellant, in that case, was appointed as dealer of M/s. Indian....
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....y and standards of Stroh. Denying all allegations made against it, RBL moved a petition, under Section 9 of the 1996 Act, seeking temporary ad interim injunction, staying the termination notices dated 19th of January 1999, issued by Stroh. This writ petition was dismissed by the learned Single Judge of this court, on the ground that, as the contracts between RBL and Stroh were determinable in nature, injunction could not be granted, owing to the proscription contained in Section 14(1)(c) read with Section 41 of the Specific Relief Act. RBL appealed, there against, to the Division Bench, which led to the judgement under discussion. The Division Bench of this court ruled, in para 14 to 17 of the report, as under: "14. The effect of breach of a contract by a party seeking to specifically enforce the contract under the Indian law is enshrined in Section 16(c) read with Section 41(e) of the Specific Relief Act, 1963. Clause (e) of Section 41 of the Specific Relief Act provides that injunction cannot be granted to prevent the breach of contract, the performance of which would not be specifically enforced. Clause (c) of Section 41 enumerates the nature of contracts, which could not be s....
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.... to Sub-section (1) of Section 14 means that which can be put an end to. Determination is putting of a thing to an end. The clause enacts that a contract cannot be specifically enforced if it is, in its nature, determinable not by the parties but only by the defendant. Although clause does not add the word "by the parties or by the defendant" yet that is the sense in which it ought to be understood. Therefore, all revocable deeds and voidable contracts may fall within "determinable" contracts and the principle on which specific performance of such an agreement would not be granted is that the Court will not go through the idle ceremony of ordering the execution of a deed or instrument, which is revocable at the will of the executant. Specific performance cannot be granted of a terminable contract. 17. We are unable to persuade ourselves to accept the submissions put forth on behalf of the appellant that when a contract is determinable by the parties, the same cannot be treated as such a contract as is referred to in clause (c) to sub-section (1) of Section 14 in a contract, which in its nature is determinable." (Emphasis supplied) 57. This Court, thereafter, proceeded to rely o....
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....nafter referred to as "HAL"), for sale of watches, vide Memorandum of Understanding (hereinafter referred to as "MoU") dated first of August 1984. The said MoU was to remain in force for a period of 6 months, subject to the right, of HAL to terminate the same place or without notice, at any time and without assigning any reason. Alleging that HAL had committed breach of the terms of the agreement, by marketing its products through various other dealers, RT filed a suit for permanent injunction, before the learned Senior sub judge, Delhi, along with an application, under Order XXXIX Rules 1 and 2 of the CPC, for an interim injunction, restraining HAL from supplying watches to any other dealer in Delhi except through RT. Vide order dated 8th May, 1987, the Sub Judge granted an injunction, restraining HAL from supplying watches to other dealers in Delhi, except through RT, till the decision in the suit. This order was, however, reversed, by the Senior Sub Judge, vide order dated 30 of June 1987, on the ground that, as the petitioner could be adequately compensated by money, a suit for permanent injunction was barred under Section 41(e) of the Specific Relief Act. Consequently, the lea....
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....ms of the contract. Consequently, the primary relief sought, in these cases was, a declaration that the termination was illegal. Renewal/continuance of the contractual relationship, if at all, was claimed only as a consequence thereof. It was in these circumstances that the various benches of this court which deal with these matters, refused to grant the relief prayed for, citing Clause (e), of Section 41 of the Specific Relief Act, which, applies specifically to grant of injunction against a party committing breach of contract. The said clause states that, if the contract itself was not specifically enforceable, by virtue of Section 14 of the said Act, no injunction, restraining a party from committing breach thereof, could be granted. 60. In ITE India Pvt. Ltd. v. D. T. T.D. C, the petitioner (hereinafter referred to as "ITE") was awarded a 10 years-contract to operate and maintain the facility of the respondent (hereinafter referred to as "DTTDC"). Possession was, handed over, to ITE, on 23rd August 2015. Clause 1.4 of the agreement, which dealt with renewal of the contract, was worded thus: "1.4 Renewal of Contract. At the end of the stipulated contract period of 10 ....
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....er, no signature was appended thereon by the representative of DTTDC. ITE sought to allege that this inaction on the part of the DTTDC was because it was expecting illegal gratification from ITE. 62. The grievance of ITE, which persuaded it to knock at the doors on this Court again, stemmed from a communication, dated 04th August 2015, by DTTDC, whereby the earlier letters, dated 10th June 2015 (supra) and 12th June 2015 (supra) were withdrawn by it. Alongwith the said letter, the post-dated cheques issued by ITE were also returned. 63. This Court, when moved by ITE in the matter, relied, again on Indian Oil Corporation Ltd. (supra) and E. Venkatakrishna(supra) to hold that, in the light of Clauses (a) and (c) of Section 14 (1) of the Specific Relief Act, the contract between ITE and DTTDC was not specifically enforceable. It was also opined that in view of Section 41 (e) of the said Act, it was not permissible to grant injunction to prevent breach of a contract, the performance of which could not be specifically enforced. In these circumstances, this Court, speaking through the learned Single Judge, expressed its inability to grant any injunctive relief to ITE, holding that even....
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....ed to be violative of the terms of the contract itself. It was in these circumstances that, in the said decisions, clause (e) of Section 41 of the Specific Relief Act was pressed into service, by the courts, to hold that grant of injunctive relief was proscribed by statute. This was obviously because the termination of the contract was alleged, by the aggrieved party, to be violative - and, therefore, in breach - of the terms of the contract, and clause (e) of Section specifically bars grant of injunction "to prevent the breach of contract the performance of which could not be specifically enforced". The philosophy behind all these decisions is that the contract, being one which could not be specifically enforced by virtue of Section 14 of the Specific Relief Act, injunction, to restrain a party from breaching the said contract, was also incapable of being granted, because of clause (e) of Section 41 thereof. 66. ITE India Pvt. Ltd.(supra) was, however, a case in which the issue involved was whether, in view of the fact that the DTTDC had taken a decision not to renew the contract, before the expiry thereof, ITE could maintain a prayer for injunction against such non-renewal. The ....
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....rnport) Pty Ltd. v. Shire of Hastings (1977) 180 CLR 266, 282-283: "(1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying' (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract." 71. Applying the above principles, how does the agreement, dated 14th January 2015, between the rival parties, read? 72. Clause 1.1.1 of the agreement clearly states that the dealer appointed by BMW - i.e., in the present case, the petitioner - would be "a non-exclusive dealer". This matter is made more explicit by the immediately following para, in the same clause, which confers, on BMW, "the right to appoint, extend, terminate any dealer or in any territory or appoint any additional dealer on additional terms and conditions as it may impose in its commercial interest". Clause 11.1 is clear and unequivocal, and, read with the Eighth Schedule to the agreement, stipulates that the agreement would commence on 1st January 2015, and would continue thereafter till 31st D....
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....id period, the petitioner was neither entitled to a continuation of the business relationship, nor to compensation based upon or in connection with the Agreement. The petitioner was asked to confirm its consent, to the above terms, by countersigning and returning the copy of the said letter, which the petitioner duly did, under the signature and stamp of its Managing Director. No objection, to any term of the agreement, was ever voiced by the petitioner, at any point of time, starting from the first agreement in 2009. Learned senior counsel for the petitioner Mr. Chetan Sharma has drawn my attention to the fact that, though Clause 11.1 of the agreement required renewal to be effected not later than a month prior to the expiry of the agreement, renewal, for the period 1st January 2017 to 31st December 2017 was effected only on 9th January 2017. This may be true; however, the petitioner having relished the fruits of the dealership of BMW, for the entire calendar year of 2017, without demur, cannot seek to make capital out of the delay in issuance of the renewal letter, for the period 01st January 2017 to 31st December 2017. The petitioner cannot be allowed to run with the hare and hu....
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.... thereafter. Renewal had, therefore, to be a conscious act on the part of BMW, upon terms and conditions acceptable to BMW. It is not in dispute that, in the present case, the said power of renewal was not exercised. It is not possible, therefore, for this Court, at least at an ad interim stage in exercise of its power under Section 9 of the 1996 Act, to direct BMW mandatorily to renew the contract with the petitioner. 76. It is of fundamental importance, in this connection, to note, at the cost of reiteration, that the agreement between the parties came to an end on 31st December 2017 - or was on the threshold of coming to an end, when the matter was argued before me on 30th December 2017. There is no clause, in the agreement, which contemplates continuance of the agreement, beyond the date of its expiry, i.e. beyond 31st December 2017, in any circumstance whatsoever. The only manner in which a contractual relationship between the petitioner and respondent could continue to exist, after 31st December 2017, would be by way of a fresh renewal, by BMW, of the said relationship, in exercise of the power conferred, by clause 11.1, on it to do so. This Court cannot, quite obviously, cr....
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....to be fulfilled, they by themselves cannot amount to an assertable expectation and a mere disappointment does not attract legal consequences. A pious hope even leading to a moral obligation cannot amount to a legitimate expectation. The legitimacy of an expectation can be inferred only is it is founded on the sanction of law or custom or an established procedure followed in regular and natural sequence. Again it is distinguishable from a genuine expectation. Such expectation should be justifiably legitimate and protectable. Every such legitimate expectation does not by itself fructify into a right and therefore it does not amount to a right in the conventional sense." (Emphasis supplied) 79. Even more decisive is the following passage, from Ram Pravesh Singh v State of Bihar, (2006) 8 SCC 381: "What is legitimate expectation? Obviously, it is not a legal right. It is an expectation of a benefit, relief or remedy, that may ordinarily flow from a promise or established practice. The term "established practice" refers to a regular, consistent, predictable and certain conduct, process or activity of the decision-making authority. The expectation should be legitimate, that is, reaso....
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....as to be established. Bona fide justification, for the action impugned, is an absolute defence, to a plea of legitimate expectation. 80. In Jitender Kumar v. State of Haryana, (2008) 2 SCC 161, the Supreme Court observed thus, regarding the doctrine of legitimate expectation (in para 58 of the report): "A legitimate expectation is not the same thing as an anticipation. It is distinct and different from a desire and hope. It is based on a right. [See Chanchal Goyal (Dr.) v. State of Rajasthan [(2003) 3 SCC 485 : 2003 SCC (L&S) 322] and Union of India v. Hindustan Development Corpn. [(1993) 3 SCC 499] It is grounded in the rule of law as requiring regularity, predictability and certainty in the Government's dealings with the public. We have no doubt that the doctrine of legitimate expectation operates both in procedural and substantive matters." 81. S.B. Sinha, J, who authored the decision in Jitender Kumar (supra) also observed on the doctrine of legitimate expectation, while sitting singly on the bench of the Hon'ble Calcutta High Court, thus, in D. Wren International Limited v. Engineers India Ltd., AIR 1996 Cal 424: "The principles of legitimate expectation cannot a....
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.... so transparent, and unequivocal, that it is not necessary to dilate further on the applicability, to them, of the doctrine of legitimate expectation. The contract between the petitioner and respondent states, quite clearly that it would come to an end on 31st December, and that renewal thereof would be subject to a decision in that regard by the respondent, on terms and conditions acceptable to it. The mere fact that the respondent may have renewed the contract in the past, cannot justify entertainment, by the petitioner, of any expectation that the respondent would continue to renew the contract in perpetuity. Any such expectation, even if entertained, would not be "legitimate", especially, in view of the undisputable position that in the years 2016 and 2017, the petitioner was unable to meet the targets set by the respondent. Whether the said failure on the part of the petitioner, to do so, was attributable to the petitioner or the respondent, does not call for examination in the present case. The situation having radically changed in 2016, the petitioner could have no justification to continue to expect the respondent to renew its contract, year to year. Clause 11.1 of the agre....
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....ppel but is a doctrine evolved by equity in order to prevent injustice."[A.P. Transco v Sai Renewable Power (P) Ltd., (2011) 11 SCC 34] It is jurisprudentially sui generis, and does not depend, for its existence, on Section 115 of the Indian Evidence Act, 1962, which deals with the general principle of "estoppel", and stipulates that "when one person has, by his declaration, act or omission, intentionally caused or permitted another person to believe a thing to be true and to act upon such belief, neither he nor his representative shall be allowed, in any suit or proceeding between himself and such person or his representative, to deny the truth of that thing". 87. In Mohd. Jamal v U.O.I., (2014) 1 SCC 201, it was held that "the doctrine of promissory estoppel and legitimate expectation, as canvassed on behalf of the appellants and the petitioners, cannot be made applicable to these cases where the leases have been granted by the landowners on definite terms and conditions, without any indication that the same were being entered into on a mutual understanding between the parties that these would be temporary arrangements..." 88. Insofar as the doctrine of promissory estoppel is c....
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....Clause 25 thereof revocable at any time and did not vest a right even for a period of five years in favour of petitioner. Applying the principles of Specific Relief Act, 1963, the licence is not renewable/enforceable. A Division Bench of this Court recently in the Pradeshiya Industrial & Investment Corporation of U.P. Ltd. v. Pacquik Industries Ltd. reiterated that the doctrine of promissory estoppel being an equitable doctrine must yield when the equity so requires and the government should not be held bound by a promise not enforceable in law. Reference may also be made to the judgment of this Court in Kaveri Infrastructure P. Ltd. v. N.D.M.C. ILR (2007) I Delhi 1080 holding that for promissory estoppel, the petitioner has to demonstrate that there was a definite representation by the State agency which led the petitioner to alter his position by acting on such representation and suffer detriment; the principles of promissory estoppel were held not applicable merely from the unilateral act of the petitioner without any representation on the part of the respondent. 11. The actions of the respondent NDMC, to which attention is invited by the counsel for the petitioner, can at the....