TaxTMI 
TaxTMI 
2020 (5) TMI 712
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....perties across India i.e. where an agreement/arrangement for grant of property rights to the plaintiff has been executed but multiplex operations have not commenced; and, (iii) recovery of nominal damages of Rs. 2,25,00,000/-. 2. It is inter alia the case of the plaintiff, (i) that the plaintiff is engaged in the business of running and operating multiplex cinemas at various locations in India and the defendant is a competitor of the plaintiff; (ii) that the plaintiff has been expanding its footprint to new locations, where the market of multiplex cinema is maturing and is thus presenting viable business opportunities for the plaintiff; (iii) that the plaintiff, on learning of development underway of a property by the name of Suraj Chanda Tara Cinemas in Amritsar, undertook a feasibility study of running a multiplex in the said locality and found it to be a financially profitable business opportunity; (iv) accordingly in or about July, 2017, the plaintiff entered into negotiations with the developer of the said property at Amritsar, for a long term agreement with respect to the property and held various meetings with the said developer; (v) the defendant was also negotiating wit....
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.... learnt of the same from market sources much later; (xiii) that immediately after the plaintiff learnt of the agreement entered into by the developer at Amritsar with respect to the same property, with the defendant, the developer who had been remaining quite since the signing of the term sheet with the plaintiff, informed the plaintiff that the term sheet stood automatically terminated on account of plaintiff's failure to execute the main Transaction Document within the stipulated time; (xiv) the plaintiff believes that it was the defendant which illegally induced the developer at Amritsar to terminate the term sheet executed with the plaintiff; (xv) but for the defendant, the developer at Amritsar could not have terminated the term sheet with the plaintiff; (xvi) the defendant has thus interfered in the contractual relationship of the plaintiff with others, inspite of being aware of such contractual relationship; (xvii) the defendant is attempting to piggyback on the success of the plaintiff in identifying and procuring the agreements with respect to properties of others across India; (xviii) the conduct of the defendant has resulted in grave injury to the plaintiff, as a mul....
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....ducing a party to a contract to breach it vis-à-vis the other party thereto. 6. Though the plaintiff in the plaint, in addition to injunction, has also claimed the relief of recovery of damages but it appears that if the plaintiff were to have no right, the question of recovering damages would not arise. 7. Though the senior counsel for the plaintiff states that he has some other judgments vis-à-vis third parties but also states that since this issue had not arisen till now and this Court desires it to be addressed at this stage, the suit be posted for hearing on the said aspect. 8. List on 9th May, 2019." The senior counsel for the plaintiff and the senior counsel for the defendant were thereafter heard on 9th May, 2019 and 13th May, 2019 and orders as to the maintainability of the suit reserved. 6. This order/judgment being on the maintainability of the suit and which has to be judged as per averments contained in the plaint only and at which stage the defence of the defendant is not to be looked at, the need to record the same is not felt. 7. The senior counsel for the plaintiff, in his arguments took me through the contents of t....
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....td. supra dealt with in the order of that date reproduced above. 10. The senior counsel for the plaintiff thereafter, in support of maintainability of the suit, referred to:- A. Balailal Mookerjee & Co. (P) Ltd. Vs. Sea Traders Private Ltd. where at the stage of deciding an application under Order XXXIX Rules 1&2 of the Code of Civil Procedure, 1908 (CPC), it was held (i) in English Law, 'A' commits a tort, if without lawful justification, he intentionally interferes with the contract between 'B' and 'C', by persuading 'B' to break his contract with 'C' or by some other act prevents 'B' from performing its contract; and, (ii) though a member of the family carrying on business is entitled in law to, after leaving the family business, establish a rival business, but is not entitled to interfere in the family business or to procure a breach of agreements of the family business with others; B. "Tortious Interference with Contract: A Reassertion of Society's Interest in Commercial Stability and Contractual Integrity" authored by John Danforth, Colombia Law Review, Volume 81, No. 7 (1981) pp. 1491-1524 opining that ....
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....their future prospects and service conditions by changing their employment and that a situation of once a Pepsi employee always a Pepsi employee, of bonded labour, could not be created; F. Zimmerman Vs. Bank of America 191 Cal. App. 2d 55, where the Court of Appeal of California held that a tort of interference with an advantageous relationship or with a contract does not, however disintegrate because it relates to a contract not written or an advantageous relation not articulated in a contract; actionable wrong lies in the inducement to break the contract or to sever the relationship, not in the kind of contract or relationship so disrupted, whether it is written or oral, enforceable or not enforceable. 11. Per contra the senior counsel for the defendant contended, (i) that though the plaint contains averments qua the property at Juhu, Mumbai but no mention is made thereof in the cause of action paragraph of the plaint; thus the same is not to be considered; (ii) that the documents filed by the plaintiff itself show that the developer of the property at Amritsar, vide letter dated 31st January, 2018 to the plaintiff informed the plaintiff that the term sheet had automa....
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....ming Right Society Vs. Badal Dhar Chowdhry to contend that vague and general injunction of anticipatory nature cannot be granted; C. Mirabai Films Pvt. Ltd. Vs. Hathway Cable and Datacom Pvt. Ltd. (2003) 103 DLT 698 to contend that unfounded and baseless allegations cannot form the basis of claiming an equitable relief before a Court of Law; D. Pharmasivam Vs. T.N. Electricity Board to contend that injunctive relief cannot be granted merely on the basis of an apprehension; E. S.P. Chengalvaraya Naidu Vs. Jagannath (1994) 1 SCC 1 to contend that a person whose case is based on falsehood, has no right to approach the Court and his case is to be summarily thrown out; F. Speech and Software Technologies (India) Private Limited Vs. Neos Interactive Ltd. (2009) 1 SCC 475, Dresser Rand S.A. Vs. Bindal Agro Chem Ltd. (2006) 1 SCC 751 and Hansa V. Gandhi Vs. Deep Shankar Roy (2013) 12 SCC 776, to contend that an agreement to enter into an agreement is neither enforceable nor confers any right upon the parties, including the right to seek specific performance; G. Jagir Singh Vs. Ranbir Singh (1979) 1 SCC 560 to contend that what may not be done di....
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....s accepted. It was contended that for suing the defendant for the tort of interference with contract, impleadment of the developer of the property at Amritsar or the owner of the property at Juhu, Mumbai is not necessary and if at all necessary, the suit cannot be defeated for the said reason and the Court always as held in Yusuf Mohamed Lakdawala Vs. Sudhakar Kashinath Bokade has discretion to add any party to the lis. It was also informed that the defendant entered into the agreement with respect to the Amritsar property, within one month of the date of issuance of the termination notice to the plaintiff. Attention is invited to the documents filed by the defendant to contend that the same disclose the defendant to have also paid the same amount of security deposit to the developer of the property at Amritsar, as paid by the plaintiff. With respect to the contention of the senior counsel for the defendant, of freedom of contract, it is contended that after entering into a contract, there is no freedom left. It was informed that in Balailal Mookerjee & Co. (P) Ltd. Supra, injunction was granted inspite of termination having been effected and the plaintiff was not compelled to sue ....
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.... impleading such owners as parties to this suit. In fact this Court would not have territorial jurisdiction also over them. Reliance on Gujarat Bottling Co. Ltd. also is not apposite. The contention that the question as has been raised with respect to maintainability of the suit is subject matter of trial is also meritless. 15. The case of the plaintiff in a nutshell is, that it had binding contracts with the developer/owner of the properties at Amritsar and Juhu, Mumbai and which contracts were breached/broken or are threatened to breached/broken, by the developer/owner of the said properties, at the instance of the defendant. The defendant is sought to be restrained from doing so and also from doing so with respect to other properties with respect whereto the plaintiff has existing contracts or may have contracts in future. In my opinion the plaintiff even if believed to be having existing binding contracts and even if the defendant is indeed interfering therein or causing breach thereof, is not entitled to so restrain the defendant. No trial is required in this regard inasmuch as the same is purely a question of law. 16. The law with respect to contracts, immovable propert....
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....laintiff the plaintiff only had a promise from the developer/owner of the said properties to grant a license to the plaintiff of the said properties and the developer/owner were in violation thereof, the remedy of the plaintiff was to claim damages from them, as held by me in Keventer Agro Limited Vs. Kalyan Vyapar Pvt. Ltd., Gesture Hotels and Food Pvt. Limited Vs. The New Delhi Municipal Council AIR 2014 Del 143 (DB), Mohd. Haroon Vs. New Delhi Municipal Council and A.N. Kaul Vs. Neerja Kaul [SLP No. 13083/2019 preferred where against was dismissed vide order dated 2nd August, 2019]; (iv) the plaintiff did neither; (v) on the contrary the plaintiff, without any demur accepted refund of the security deposit paid with respect to the Amritsar property, signifying its acceptance of the termination of the arrangement, whatsoever it was with the developer of the said property; (vi) in the absence of the developer/owner of the properties at Amritsar and Juhu, Mumbai, it cannot also be determined whether it was the plaintiff who was in breach/violation of its obligations under the agreement entered into with respect to the said properties or it was the said developer/owner; (vii) the sai....
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....the said employee, while carrying on his competing business, would not be entitled to offer terms to other employees or the customers of the ex-employer which would attract him to enter into a contract with the employee and break the existing contracts with the ex-employer. The senior counsel therein was also reminded that Section 27 of the Indian Contract Act had been held to be within the domain of Article 21 of the Constitution of India and would thus have a better claim for enforcement than of a tort of interference with contractual relations. After hearing the counsels therein it was held: "29. Section 27 of the Contract Act makes void i.e. unenforceable, every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind. Thus, even if the defendants or any of them, under their agreement with the plaintiff, had undertaken not to carry on or be involved in any capacity in any business competing with the business of the plaintiff, even after leaving employment with/association of the plaintiff, the said agreement, owing to Section 27 supra, would be void and unenforceable and the plaintiff on the basis thereof could not have....
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....liament has codified the said principles in the Contract Act; it is the language of the statute which alone has to be considered to ascertain its true meaning and scope. 32. Section 27, contained in a legislation of the year 1872, on promulgation of the Constitution of India in the year 1950, conferring the right to practice any profession or to carry on any occupation, trade or business, the status of a Fundamental Right, under Article 19(1)(g) thereof, today has a different connotation. Article 19(6) only clarifies that nothing contained in Clause (g) shall affect the operation of any existing law or prevent the State from making any law, imposing in the interest of general public, reasonable restrictions on the exercise of right conferred by the said clause. Thus, restrictions, in the interest of general public and if reasonable, to the Fundamental Right to practice any profession or to carry on any occupation, trade or business, can be imposed only by law. The law of tort of unreasonable interference in carrying on business, in view of Section 27 of the Contract Act in force since 1872, was not the existing law within the meaning of Article 19(6) of the Constitution. ....
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....tise in that particular field. When launching the same product/service, the new entrant to the business cannot possibly create a new set of customers for that product or service. Thus, the consumers to be approached by the new entrant would be the same who were earlier having contractual relationships with the existing players. Similarly, a new entrant cannot possibly compete if does not have the requisite expertise/finesse, required for launching a particular product or service and to be able to provide the same class or quality of service, has to necessarily have with it, hands which have been making the subject product and/or providing the said service in the past, may be under contract with the existing players. In my view, it is practically impossible to draw a line between such persons, on their own approaching the new entrant, and the new entrant approaching them. The process is quite complex and no precise rules can be made with respect thereto. The Courts would not lay down the law in the name of being a matter of evidence, in respect of matters which are incapable of determination by Courts. 38. Attention of the senior counsel for the plaintiff has also been draw....
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....with his competitor, is not entitled to, in advancement of its own trade and business, not approach the prospective clients, customers and associates approached by the competitor. The tort recognized in England, of unlawful interference in contractual relationships would equally not be available in the present situation also. 20. The Division Bench of this Court in Akuate Internet Services Pvt. Ltd. Vs. Star India Pvt. Ltd. in the context of a claim for injunction restraining the defendants from disseminating contemporaneous match information in the form of ball by ball account or minute to minute score updates/match alerts, for a premium and without obtaining licence from plaintiff, rejected the argument, of defendants unfairly competing with the plaintiffs, holding (i) that in doing so, the Courts would be granting protection to certain intangibles not covered by the specific statutory regimes; (ii) the basic economic rule is that competition is not only lawful but a mainspring of the economy; (iii) the legislature has recognized that there should be exceptions-it has laid down the rules for these; the laws of patents, trademarks, copyrights and designs have all been fashioned....
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....pyright Act, the copying or reproduction of match information is permitted; to say that the doctrine of unfair competition prohibits the misappropriation of match information would either mean that misappropriation under common law can supplant the Copyright Act or that copying and misappropriation refer to two distinct acts, which would be a distinction without a difference; (xii) claims based on alternate common law remedies in respect of what is in the domain of a statute cannot be permitted; and, (xiii) claim on the basis of unjust enrichment is the same as a claim on basis of the doctrine of unfair competition. 21. Mention may also be made of another judgment of this Court in Emergent Genetics India Pvt. Ltd. Vs. Shailendra Shivam. Therein, in the context of a suit brought by the plaintiff against its ex-employees/ex-directors for permanent injunction to restrain them from selling similar seeds as the plaintiff was involved in breeding during the term of employment of the defendants, and after finding the invention claimed by the plaintiff to be not falling in the ambit of the Copyright Act, 1957 or Patents Act, 1970 or the Protection of Plant Varieties and Farmers' Rig....