TaxTMI 
TaxTMI 
2018 (1) TMI 1673
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the Arbitration & Conciliation Act, 1996 (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 eas....
X X X X Extracts X X X X
X X X X Extracts X X X X
....petitioner, in Para 7 of the petition, that there was an "understanding", 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 Autho....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erms and conditions acceptable to BMW) with the Dealer no later than 1 (ONE) month prior to the expiry of this Agreement. 11.2 Termination for cause by BMW The 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y BMW; or 11.2.10 if a receiver and/or manager over the Dealer's property assets or undertaking or any part thereof is appointed; or 11.2.11 if a distress or execution or other similar or equivalent process of a court of competent 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s noticed hereinabove, Clause 11.1 of the agreement deemed the agreement to have commenced on the commencement date shown in the Eighth Schedule and stipulated that it would continue thereafter, for a period of one year, unless terminated or cancelled earlier, subject to the right of the respondent to renew the agreement further. Clause 4 in the Eighth 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....igning and returning the enclosed copy to us. Yours sincerely, For BMW India Pvt. Ltd. -sd- Frank-Emanuel Schloeder President Agreed & Accepted for Parsoli Motor Works Pvt. Ltd. For, Parsoli Motor Works Pvt. Ltd. -sd- Mr. Talha Sareshwala Authorised Signatory/Director Managing Director (Sign and Stamp)" 13. The petitioner has candidly admitted, in para 12 of the present petition, that, though it had met the sales targets set by the respondent in earlier years, it was unable 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 there....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e wish to put this on record for not renewing the Dealer Agreement beyond 31st December, 2017. You are requested to kindly adhere to all the closure formalities, as agreed in our Dealer Agreement. Kindly acknowledge the receipt. Yours sincerely For BMW India Pvt. Ltd. -sd- Vikram Pawah Brenner -sd- Colin President Development Director-Sales Channel Agreed & Accepted For Parsoli Motor Works Pvt. Ltd. Mr. Talha Sareshwala Managing Director (Sign and Stamp)" 16. The present petition - as well as Mr. Chetan Sharma, learned senior counsel espousing the cause pleaded therein -objects strongly to the use of the words "ongoing discussions", asserting that no such discussion had 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 s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lishment, the appurtenances and fixtures thereto and therewith, and the service rendered by it, were BMW-specific. It was not, therefore, as though, consequent to severance of its relationship with the respondent, the petitioner could start dealership with some other automobile manufacturer. (iv) The provision, in Clause 11.1 of the contract, permitting breakage of relationship with the petitioner, on 21 days notice, was, ex facie, unreasonable, in the context of a contract of ten years' vintage. Mr. Sharma, relies for this proposition on Manjunath Anandappa v Tammanasa, (2003) 10 SCC 390, in particular, on paras 12 and 13 of the judgement in Veeravee Ammal v Seeni Ammal, AIR 2001 SC 2920, as quoted, and relied upon, in the said decision. (v) The year to year renewal clause was required, in law, to be treated as directory, and subject 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,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reme Court, by way of SLP (C) 4490/1995, which was decided, by the Supreme Court by an order dated 03rd November 1995, setting aside the interlocutory order dated 03rd February 1995, (supra) passed by this court (on which Mr. Sharma had placed reliance) and leaving all questions open to be decided at the time of disposal of the suit. (ii) The suit was finally disposed of, by this court, vide judgement dated 13th December 1996, reported as Classic Motors Ltd. v Maruti Udyog Ltd., 65 (1997) DLT 166 [hereinafter referred to as "Classic Motors (2)"]. A perusal of the said decision revealed that the dealership agreement, in that case, was, perpetual till termination, unlike the present case, in which the dealership was for a stipulated fixed term of one year, unless and until the respondent chose to renew it. (iii) The agreement, dated 14th January 2015, was a fresh agreement, constituting an entirely new 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....w contract. This was outside the province of jurisdiction of the civil court. (x) Grant of relief prayed for by the petitioner would amount to allowing the claim finally at the interim stage, as nothing would survive thereafter. It would be akin to decreeing the suit on day one. (xi) The petitioner having no prima facie case in its favour, no injunction could be sought by it. (xii) In view of the admission, by the petitioner, that it had failed to meet the targets, set by the respondent, during the years 2016 and 2017, the respondent could not be legally bound to continue with the petitioner any longer. Any such continuance was also deleterious to the respondent's reputation. On considerations of balance of convenience, too, therefore, no case for grant of injunction was made out. (xiii) Sections 91 and 92 of the Indian Evidence Act, 1872 (hereinafter referred to as "the Evidence Act") forebore the court from reading, into the contract, what was not 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 co....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and authorising for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorising any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information 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 it has for the purpose of, and in relation to, any proceedings before it." 24. The guiding principles, regarding exercise of jurisdiction, under Section 9 of the 1996 Act, in a case such as the present, stand well-delineated in the judgement of Supreme Court in Adhunik Steels Ltd. v Orissa Manganese and Minerals (P) Ltd., (2007) 7 SCC 125. In that case, M/s. Orissa Manganese and Minerals (P) Ltd. (hereinafter referred to as "OMM") entered into an agreement, dated 14th May 2003, with Adhunik Steels (hereinafter referred to as "Adhunik"), for raising manganese ore on its behalf. The term of agreement was 10 years, w.e.f. 18th May 2003,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es and it is difficult to imagine that the legislature while enacting Section 9 of the Act intended to make a provision which was dehors the accepted principles that governed the grant of an interim injunction. Same is the position regarding the appointment of a receiver since the section itself brings in the concept of "just and convenient" while speaking of passing any interim measure of protection. The concluding words of the section, "and the court shall have the same power for making orders as it has for the purpose and in relation to any proceedings before it" also suggest that the normal rules that govern the court in the grant of interim orders is not sought to be jettisoned by the provision. Moreover, when a party is given a right to approach an ordinary court of the country without providing a special procedure or a special set of rules in that behalf, the ordinary rules followed by that court would govern the exercise of power conferred by the Act. On that basis also, it is not possible to keep out the concept of balance of convenience, prima facie case, irreparable injury and the concept of just and convenient while passing interim measures under Section 9 of the Act." ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Act is the issuance of an order for preservation of the subject-matter of an arbitration agreement. According to learned counsel for Adhunik Steels, the subject-matter of the arbitration agreement in the case on hand, is the mining and lifting of ore by it from the mines leased to OMM Private Limited for a period of 10 years and its attempted abrupt termination by OMM Private Limited and the dispute before the arbitrator would be the effect of the agreement and the right of OMM Private Limited to terminate it prematurely in the circumstances of the case. So viewed, it was open to the court to pass an order by way of an interim measure of protection that the existing arrangement under the contract should be continued pending the resolution of the dispute by the arbitrator. May be, there is some force in this submission made on behalf of Adhunik Steels. But, at the same time, whether an interim measure permitting Adhunik Steels to carry on the mining operations, an extraordinary measure in itself in the face of the attempted termination of the contract by OMM Private Limited or the termination of the contract by OMM Private Limited, could be granted or not, would again lead the co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g the said direction, as contained in para 25 of the report, is also relevant: "At the same time, we see no justification in preventing OMM Private Limited from carrying on the mining operations by itself. It has got a mining lease and subject to any award that may be passed by the arbitrator on the effect of the contract it had entered into with Adhunik Steels, it has the right to mine and lift the minerals therefrom. The carrying on of that activity by OMM Private Limited cannot prejudice Adhunik Steels, since ultimately Adhunik Steels, if it succeeds, would be entitled to get, if not the main relief, compensation for the termination of the contract on the principles well settled in that behalf. Therefore, it is not possible to accede to the contention of learned counsel for Adhunik Steels that in any event OMM Private Limited must be restrained from carrying on any mining operation in the mines concerned pending the arbitral proceedings." (Emphasis supplied) 26. The proposition that the exercise of jurisdiction under Section 9 of the Arbitration Act is subject to the restrictions and limitations contained in the Specific Relief Act was reiterated in Arvind Constru....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e in amplitude, but must be exercised with restraint. Interim measures are to be granted by the Court so as to protect the right in adjudication before the arbitral tribunal from being frustrated. It does not allow the Court the discretion to exercise unrestrained powers and frustrate the very object of arbitration". 30. In Gujarat Bottling Company v Coca Cola AIR 1995 SC 2372, the Supreme Court held thus:- "The decision whether or not to grant an interlocutory injunction has to be taken at a time when the existence of the legal right assailed by the Plaintiff and its alleged violation are both contested and uncertain and remain uncertain till they are established at the trial on evidence. Relief by way of interlocutory injunction is granted to mitigate the risk of injustice to the Plaintiff during the period before that uncertainty could be resolved. The object of the interlocutory injunction is to protect the Plaintiff against injury by violation of his right for which he could not be adequately compensated in damages recoverable+ in the action if the uncertainty were resolved in his favour at the trial. The need for such protection has, however, to be weighed against....
X X X X Extracts X X X X
X X X X Extracts X X X X
....be granted only if the three pre-requisites, governing grant of injunctive relief, i.e. existence of a prima facie case, balance of convenience being in favour of the claimant and possibility of irreparable loss that would ensue to the claimant were such relief not granted, stand fully satisfied. Even in cases where a contract is being sought to be terminated, in violation of the terms thereof, if it appears that the party who suffers as a result of such termination could be adequately compensated in terms of money at the stage of final adjudication of the dispute, no injunctive relief, under Section 9 of the 1996 Act, would be granted. The judgment in Classic Motors (1): 34. I may, before proceeding further, make it clear that there can be no question of taking into consideration the order, of this Court, in Classic Motors (1) (supra). This Court, in Classic Motors (2), has recorded, as under, regarding Classic Motors Ltd. (1) and the litigation in the Supreme Court that resulted therefrom: "9. The plaintiff instituted the present suit where summons in the suit and notices on the application were directed to be issued. By order dated 29th November 1994 this Court or....
X X X X Extracts X X X X
X X X X Extracts X X X X
....placed by Mr. Kathpalia appearing for the respondent, on the judgment of the Supreme Court, in Indian Oil Corporation Ltd. (supra), it is thought expedient to deal with the said judgement, before proceeding to examine the contentions of the parties. 37. Indian Oil Corporation Ltd. (supra) arose from Suit No. 376/1983, filed by Amritsar Gas Service (hereinafter referred to as "AGS") against Indian Oil Corporation Ltd. (hereinafter referred to as "IOCL"). IOCL filed an application, under Section 34 of the Arbitration Act, 1940 (hereinafter referred to as "the 1940 Act"), for stay of the said suit. The application was dismissed, vide order dated 19th October 1983, of the learned Sub Judge. Revision there against, was dismissed by the learned ADJ, vide order dated 28th July 1984 and Civil Revision, preferred there against, was also dismissed by the High Court of Punjab & Haryana on 5th November, 1984. IOCL moved the Supreme Court. 38. The facts obtaining in Indian Oil Corporation Ltd. (supra), as set out in para 2 and the paragraphs that follow thereafter, in the judgment of the Supreme Court, reveal that an agreement, dated 1st April 1976, was entered into between IOCL and AGS w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....private law, governed by the general law relating to contract, with reference to the provisions of the Specific Relief Act, which proscribed enforceability of certain species thereof. (ii) Inasmuch as the agreement between IOCL and AGS provided for termination thereof, at the instance of IOCL, the contract was determinable in nature and, therefore, attracted Clause (c) of Section 14(1) of the Specific Relief Act. Consequently, no relief, for restoration of distributorship, could be granted, as grant of any such relief would be contrary to Section 14(1). The direction of the learned Arbitrator, to IOCL, to restore the distributorship of AGS was, therefore, held to suffer from an error of law apparent from the face of the award and consequently, unsustainable. For ready reference, Section 14 of the Specific Relief Act may be reproduced thus: "14. Contracts not specifically enforceable.- (1) The following contracts cannot be specifically enforced, namely:- (a) contract for the non-performance of which compensation in money is an adequate relief; (b) a contract which runs into such minute or numerous details or which is so dependent on the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uilding is to be constructed or other work is to be executed." (iii) The Supreme Court further went on to notice that the termination had been made because of complaints against the AGS, which affected the reputation of IOCL, and was, therefore, within the province of Clause 27 of the contract. However, in view of the finding, of the learned arbitrator, that Clause 27 was not available to IOCL, the Supreme Court proceeded to examine the relief that could be granted to AGS on that basis. If Clause 27 was not applicable, it was held that the agreement, being revocable by either party under Clause 28 by giving 30 days' notice, the only relief that could be granted to AGS was by way of compensation for the said notice period of 30 days. 44. Accordingly, the Supreme Court disposed of the miscellaneous petition and the objections of IOCL, by setting aside the award of the Arbitrator and directing compensation to be paid to AGS. The Judgment in Classic Motors (2): 45. The facts in Classic Motors (2) are interesting and instructive. 46. Vide agreement executed in 1985, M/s. Competent Motors (hereinafter referred to as "Competent") was granted dealership of the resp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ic filed another petition, before the original side of this Court, under Section 20 of the Arbitration Act 1940, which was registered as Suit No. 2005/1994. An interim application, under Section 41 of the said Act was also filed therewith, on which an interim order, dated 9th September 1994, was passed by this Court, permitting Classic to book vehicles upto 29th November 1994. 50. The said order dated 9th September 1994 was again challenged, by MUL, before the Supreme Court, by way of SLP(C) 15796/1994, which was disposed of, vide order dated 26th September 1994, which set aside the order dated 9th September 1994 passed by this Court, and directed that the matter be disposed of finally without any such interim orders being made in the suit. 51. Suit No. 2005/1994 was finally heard by this Court, and judgment was reserved thereon. The plaintiff, however, filed IA 10014/1994, seeking leave to withdraw the petition under Section 20 of the 1940 Act (i.e. Suit 2005/1994) as he had taken recourse to original proceedings by way of Suit No. 2544/1994, also filed on the original side by this Court. Vide order dated 22nd November 1994, IA 10014/1994 was allowed, and Classic was permitt....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sdiction to direct such restoration. The Supreme Court, in the appeal preferred by E. Venkatakrishna ruled, in para 6 of its judgment, thus: "In our view, the Division Bench was right. All that the arbitrator could do, if he found that the termination of the distributorship was unlawful, was to award damages, as any civil court would have done in a suit". 56. Rajasthan Breweries Ltd. v Stroh Brewery Company, AIR 2000 Del 450, authored by Devinder Gupta, J (as his Lordship then was), speaking for a Division Bench of this Court, was a case which, on facts, closely parallelizes the present. In expectation of entering into a distributorship agreement with Stroh Brewery Company (hereinafter referred to as "Stroh"), to distribute its brand of beer, M/s. Rajasthan Breweries Ltd. (hereinafter referred to as "RBL") made huge investments, over an extended period of time, following which, on 22nd July 1994 and 7th October 1994, two agreements were executed, by it, with Stroh, whereby and whereunder exclusive license, to produce Stroh Beer, was granted to RBL, for 9 years, renewable successively for 3 years at a time. It was an admitted position that RBL had successfully introduced....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce 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 that agreements could be terminated by the respondent on the happening of any of the events mentioned in clause 8 of the Technical Assistance Agreement and under similar corresponding clause in Technical Know-how Agreement. Accordingly, learned Single Judge held that since agreement was determinable at the behest of respondent Therefore....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... specified therein, from the very nature of the agreement, which is private commercial transaction, the same could be terminated even without assigning any reason by serving a reasonable notice. At the most, in case ultimately it is found that termination was bad in law or contrary to the terms of the agreement or of any understanding between the parties or for any other reason, the remedy of the appellants would be to seek compensation for wrongful termination but not a claim for specific performance of the agreements and for that view of the matter learned Single Judge was justified in coming to the conclusion that the appellant had sought for an injunction seeking to specifically enforce the agreement. Such an injunction is statutorily prohibited with respect of a contract, which is determinable in nature. The application being under the provisions of Section 9(ii)(e) of the Arbitration and Conciliation Act, relief was not granted in view of Section 14(i)(c) read with Section 41 of the Specific Relief Act. It was rightly held that other clauses of Section 9 of the Act shall not apply to the contract, which is otherwise determinable in respect of which the prayer is made specific....
X X X X Extracts X X X X
X X X X Extracts X X X X
....llant had sought for an injunction seeking to specifically enforce the agreement. Such an injunction is statutorily prohibited with respect of a contract, which is determinable in nature. The application being under the provisions of Section 9(ii)(e) of the Arbitration and Conciliation Act, relief was not granted in view of Section 14(i)(c) read with Section 41 of the Specific Relief Act. It was rightly held that other clauses of Section 9 of the Act shall not apply to the contract, which is otherwise determinable in respect of which the prayer is made specifically to enforce the same." It is relevant to note that, in the same para, this Court went on to observe that, even if a negative covenant were present in the agreement, "if remedy by way of damages is found to be efficacious the court should grant injunction only in exceptional cases". 59. There are several other decisions which proceed on similar lines, among which may be cited in Pepsi Foods v. Jai Drinks Pvt. Ltd., 1996 (36) DRJ 711, Shivansh Auto Zone Pvt. Ltd. v Honda Cars India Ltd., Interkardio Pvt. Ltd. v. Gyrus Group PLC, (2007) ILR 2 Delhi 1137 and ITE India Pvt. Ltd. v D.T.T.D.C,. It is important to note that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....requested that the tenure of the agreement be extended by four years, which was the time lost allegedly owing to non-grant of space of DTTDC. As per ITE, its request was placed, by DTTDC, before a committee of four of its senior officers which, after due deliberation, decided that ITE's contract be extended for a further period of five years. As per ITE, DTTDC further acted on the said decision, by providing water connection, lighting, hindrance-free movement and security, to facilitate ITE in discharging its obligations under the agreement. Reliance was also placed, by ITE, on a letter, dated 10th June 2015, issued by DTTDC to it, withdrawing its earlier letter dated 13th October 2011, whereby the contract between ITE and DTTDC had been terminated, and extending the contract for five more years w.e.f. 9th August 2015, subject to certain specified terms. The letter sought the consent of ITE, which was granted by ITE vide response dated 12th June 2015, along with an advance cheque, as required by the communication of DTTDC. The receipt of the advance cheque was also acknowledged by DTTDC, vide its letter dated 12th June 2015, which further confirmed extension of the contract bet....
X X X X Extracts X X X X
X X X X Extracts X X X X
....for further five years before the expiry of earlier contract and in the absence of the fresh execution, the arguments of the petitioner cannot be accepted. The petitioner is merely an agent. The only remedy lies with the petitioner is to claim damages or compensation, if any, as per law. The relief sought in the present petition cannot be granted while dealing with the application under Section 9 of the Act. None of the decisions referred to by the petitioner is applicable to the facts of the present case, as in those cases, the formal fresh agreement between the parties has not been executed". The resultant legal position qua the facts of the present case 64. As already noticed hereinabove, though the present petition prays for a number of reliefs, learned senior counsel appearing for the petitioner has, during arguments, confined his case to his client being granted a "window period" of 9 to 10 months, so that his client is able to make a "fair exit". Injunction, restraining the respondent from acting on its letter dated 17th December 2017, has also been sought, only toward the said end. I, therefore, propose to confine my consideration only to the aspect of whether the law....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the applicability of clause (e) of Section 41 of the Specific Relief Act appears, to my mind, to be excluded altogether. Section 14 of the said Act, however, still appears to be applicable, and would be addressed hereinafter. 68. I, therefore, proceed to examine the merits of the petitioner's case de hors Section 41 of the Specific Relief Act, and the judgements relying thereon, including Indian Oil Corporation Ltd. (supra) and Classic Motors (2) (supra). 69. While examining the rival claims the parties, this court is required to be guided by the following dictum, regarding the manner in which contracts are to be interpreted and applied, as laid down in para 74 of the recent judgement in Nabha Power Ltd. v Punjab State Power Corporation Ltd. : "We may, however, in the end, extend a word of caution. It should certainly not be an endeavour of commercial courts to look to implied terms of contract. In the current day and age, making of contracts is a matter of high technical expertise with legal brains from all sides involved in the process of drafting a contract. It is even preceded by opportunities of seeking clarifications and doubts so that the parties know wha....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 73. In exercise of the power conferred by Clause 11.1 supra, of the agreement dated 14th January 2015, BMW, vide letter dated 01st December 2015, addressed to the petitioner, offered to renew the agreement for a further period of one year, i.e. from 01st January 2015 till 31st December 2015, on the same terms and conditions as were contained in the agreement dated 14th January 2015. Though this stipulation - i.e., of the terms and conditions, contained in the agreement dated 14th January 2015, being mutatis mutandis applicable to the renewal dated 01st December 2015, was sufficient to subject the said renewal to all the rigour of Clause 11.1 of the Agreement dated 14th December 2015, any possible doubt, on this aspect, was set at rest, by the second para of the letter dated 1st December 2015, which stands reproduced in para 8 supra, and which clarified, in clear and unexceptionable terms, that expiration of the agreement dated 01st December 2015 would not entitle the petitioner to a continuation of the business relationship, or for any compensation in connection with such expiration. Renewal of the aforementioned agreement, for the period 01st January 2017 till 31st December 2017,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....agreement dated 14th January 2015 is clear and categorical in its terms. The clause makes it explicitly clear that the agreement would come to an end on the 31st December. Read in conjunction with the letter dated 9th January 2017, therefore, the agreement between the petitioner and respondent came to end on 31st December 2017. Clause 11.1 clearly indicates that there would be no automatic renewal of the agreement. This aspect was underscored, by BMW, in its letter dated 9th January 2017 (supra), by emphasizing that, on expiration of the period dated 1st January 2017 to 31st December 2017, the petitioner was neither entitled to continuation of the business relationship nor to any compensation. The said terms were accepted, without demur or objection, by the petitioner, by appending, on the body of the said communication, the signature and stamp of its Managing Director. It would be facile, therefore, for the petitioner to seek to submit that there was any ambiguity, in the agreement between it and the BMW, regarding the fact that the said agreement would come to an end on 31st December 2017, by efflux of time. Clause 11.1, as Mr. Kathpalia rightly submits, authorised BMW to renew t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eing so, there is no question of exercising any equitable jurisdiction, continuing the said relationship, by grant of injunctive relief under Section 9 of the 1996 Act. No such exercise of power is contemplated, expressly or by necessary implication, in Section 9. This Court would be wildly transgressing the boundaries of its jurisdiction under Section 9, if it attempts to grant any such relief. 77. Apparently aware of the legal position in this regard, learned senior counsel Mr. Chetan Sharma has chosen to pitch his case on the principles of promissory estoppel and legitimate expectation, also relying for the said purpose, of Section 115 of the Evidence Act. Re. the doctrine of legitimate expectation 78. Insofar as the principle of legitimate expectation is concerned, the judgment of the Supreme Court in U.O.I v Hindustan Development Corporation, (1993) 3 SCC 499 clearly enunciates that the doctrine of legitimate expectation is a creature of public law, and was aimed basically at combating arbitrariness in executive action by public authorities. The Supreme Court, in the said decision, further held as under: "Time is a three-fold present: the present as we experi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cacy of the doctrine is rather weak as its slot is just above "fairness in action" but far below "promissory estoppel". It may only entitle an expectant: (a) to an opportunity to show cause before the expectation is dashed; or (b) to an explanation as to the cause for denial. In appropriate cases, the courts may grant a direction requiring the authority to follow the promised procedure or established practice. A legitimate expectation, even when made out, does not always entitle the expectant to a relief. Public interest, change in policy, conduct of the expectant or any other valid or bona fide reason given by the decision-maker, may be sufficient to negative the "legitimate expectation". The doctrine of legitimate expectation based on established practice (as contrasted from legitimate expectation based on a promise), can be invoked only by someone who has dealings or transactions or negotiations with an authority, on which such established practice has a bearing, or by someone who has a recognised legal relationship with the authority. A total stranger unconnected with the authority or a person who had no previous dealings with the authority and who has not entered into any tran....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... thereof clearly states, inter alia, that "all agreements or contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void." "Consent" is defined, in Section 13, by stating that "two or more persons are set to consent when they agree upon the same thing in the same sense". "Free consent" is defined, in Section 14, thus: "Consent is said to be free when it is not caused by - (1) coercion, as defined in section 15, or (2) undue influence, as defined in section 16, or (3) fraud, as defined in section 17, or (4) misrepresentation, as defined in section 18, or (5) mistake, subject to the provisions of sections 20, 21 and 22." 83. Consensus ad idem is, therefore, the sine qua non of any valid contract. If there is consensus ad idem, obviously, there can be no question of "expectation", as the parties would be bound by the contract, and the terms thereof, to which they have mutually consented. Any right that is claimed has, therefore, to be claimed within the four corners of the contract, and its terms, and cannot....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion, being sought to be raised by the petitioner, applying Ram Pravesh Singh (supra). In view of the admitted position that, in 2016 and 2017, the petitioner was unable to meet the targets set by the respondent, in contradistinction to the position that existed prior thereto, it is impossible to comprehend how the petitioner can seek to contend that its "expectation", even after it had failed to meet the targets, to have its contract renewed, can be regarded as "legitimate". Any such expectation, on the petitioner's part, can only be regarded as thoroughly misguided. 85. Though I have examined the applicability of the principle of legitimate expectation on merits, I may reiterate that, in actual fact, the said principle applies only within the domain of public law. The decision in Central Inland Water Transport Corporation (supra) and Rajesh Maan (supra), operate within the realm of public law, and are clearly distinguishable on facts. Legitimate expectation, jurisprudentially, was a device created in order to maintain a check on arbitrariness in state action, and cannot govern operation of contracts between private parties. Even otherwise, as observed by Sinha, J. (as his L....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o how the principle of promissory estoppel is applicable to the present facts. Supreme Court in State of Himachal Pradesh v. Ganesh Wood Products (1995) 6 SCC 363 held that the doctrine of promissory estoppel was evolved to protect a promisee who acts on the faith of a promise/representation made by promisor and alters his position even though there is no consideration for the promise and even though the promise is not recorded in the form of a formal contract. It was further held that the doctrine of promissory estoppel cannot however be put on a higher pedestal than the written contract between the parties and a representation made or undertaking given in a formal contract is as good as, if not better than, a mere representation. It was yet further held that where there is a contract between the parties containing certain terms but the government resiled from the contract and terminated the same, the promisee will then have to file a suit for specific performance of the contract in which case the Court will decide, having regard to the facts and circumstances of the case and the provisions of the Specific Relief Act, whether the plaintiff should be granted specific performance of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vernment, on the basis whereof the petitioner had altered his position to his detriment. No such situation arises in the present case, as already noted hereinabove. Section 14 of the Specific Relief Act: 91. Yet another reason, why, in my opinion, no case for entertaining the present petition exists, is that, even assuming the decision of the respondent, not to renew the contract with the petitioner, suffers from any illegality, the petitioner could be adequately compensated by damages, should it choose to initiate any action in this regard. Applying clauses (a) and (c) of Section 14 of the Specific Relief Act, therefore, no case for injuncting the respondent, from acting on its decision not to renew the contract with the petitioner, is made out, as grant of any such relief would amount to specific enforcement, at the interim stage, of the agreement between the petitioner and respondent, which is determinable in nature; further, inasmuch as the case of the petitioner is that it had mobilised considerable resources, and incurred considerable expenditure, in setting up and operating its distributorship, the grievance of the petitioner could adequately be redressed by compensati....