Specific performance of a determinable contract cannot be granted nor can any injunction be issued to restrain the termination (Delhi High Court)

    Update by Amitabh Abhijit

      Inter Ads Exhibition Pvt. Ltd. v. Busworld International Cooperative Vennootschap Met Beperkte Anasprakelijkheid

Court: High Court of Delhi | Case Number: FAO(OS) (COMM) 23/2020 | Citation: Not currently available | Judges: Hima Kohli and Asha Menon JJ | Date: 01 May 2020 | Available athttps://indiankanoon.org/doc/15135917/

 

A 2-judge bench of the Delhi High Court has reiterated the scope of review under Section 37 ACA as well as the principle that if a party terminates a determinable agreement, an injunction will not lie to revive or specifically enforce it. The remedy of the aggrieved party is to seek damages if the termination was wrong in law.

A. THE BACKGROUND

Inter Ads Exhibition and Busworld International had a long-existing business relationship for organising in India, exhibitions and conferences known as “Busworld India”. Several editions of Busworld India had been held under various agreements from time to time.

The dispute in the case arose out of a joint venture agreement of 2011 (“JVA-II”). While setting off Busworld’s dues, Inter Ads defaulted on the last instalment and offered to compensate with interest.  Arguably, earlier agreeing to the arrangement, Busworld terminated the agreement.

Inter Ads applied to the court under Section 9 ACA for quashing of the termination notice. Jyoti Singh J, sitting singly, dismissed the petition (OMP (I) (Comm) 273/2019 decided on 13 January 2020). She examined the provisions of the agreement as well as the law on determinable contracts in detail. A reader interested in the issue of a determinable contract will find a reference to several relevant authorities in the judgement of Singh J.  She concluded that the agreement was determinable and it could not be specifically enforced.

Inter Ads appealed, but the 2-judge bench affirmed Singh J’s judgment:

B. The Court’s Decision

Firstly, the court noted that the “scope of an appeal under Section 37 of the Arbitration Act is fairly limited” and referred for this point to  Ministry of Youth Affairs & Sports v. Swiss Timing Ltd, 2019 SCC OnLine Del 10934[1].

The court then examined two clauses of the contract. It concluded that the agreement was terminable and “and therefore, the conclusion arrived at by the learned Single Judge that specific performance of the contract could not be granted and nor could any injunction be issued …”.

It noted (before recording the finding on termination later in that same passage) that the validity of the termination and whether it the procedure set out in the agreement was followed before terminating were not matters for the court (the court used the expression “this court”, which appears to be a reference to the appellate court).

Jyoti Singh J had relied on MIC Electronics Ltd. and Ors. v. Municipal Corporation of Delhi and others[2], MANU/DE/0354/2011 “to hold that legality of the termination and the justification of the appellant of not paying the balance due to the respondent would have to be examined by the learned Arbitrator”. The court approved of it noting “reliance was rightly placed on the following observations made in the captioned case”.

 

[1] This was a judgment by Hima Kohli and Asha Menon JJ, where they had affirmed the dismissal by a single-judge of a set-aside application. Referring to several decisions, the court had concluded, among others, that when it comes to setting aside an award under public policy grounds, it should mean that the award should shock the conscience of the court and would not include what the court thinks is unjust based on the facts.

[2] FAO (OS) 714/2010, decided by Vikramajit Sen and Siddharth Mridul JJ on 11 February 2011.

 

 

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Categories: Appealable orders |  Determinable contract |  Interim orders |  Section 37 |  Section 9 |  Termination of contract  

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