2000 (7) TMI 986 - HC - Indian Laws

Summary

Issues Involved:
1. Determinability of the contracts u/s 14(i)(c) of the Specific Relief Act.
2. Jurisdiction and power of the Court to grant injunction u/s 9 of the Arbitration and Conciliation Act, 1996.
3. Applicability of English law in arbitration proceedings.

Summary:

1. Determinability of the Contracts u/s 14(i)(c) of the Specific Relief Act:
The appellant contended that the contracts were not determinable in nature as there was no clause permitting termination by notice. The agreements granted an exclusive license to produce Stroh Beer for a term of seven years, renewable for three years successively. The appellant argued that if the learned Single Judge's decision was correct, injunctions would be barred in almost all commercial contracts. The respondent, however, terminated the agreements citing failure to meet quality standards, inconsistent production, late payments, and apparent insolvency. The Court upheld the learned Single Judge's view that the contracts were determinable in nature and thus not specifically enforceable, referencing Section 14(i)(c) and Section 41(e) of the Specific Relief Act.

2. Jurisdiction and Power of the Court to Grant Injunction u/s 9 of the Arbitration and Conciliation Act, 1996:
The appellant filed an application u/s 9 of the Act for an interim injunction against the termination notices. The Court noted that Section 9 allows for interim measures or protection, including injunctions, but these must be in accordance with the law applicable to any proceedings before the Court. The learned Single Judge dismissed the application, stating that injunctions could not be granted for contracts that are determinable in nature. The Court affirmed this decision, emphasizing that the agreements were terminable at the respondent's option, thus falling under the category of determinable contracts which cannot be specifically enforced.

3. Applicability of English Law in Arbitration Proceedings:
The appellant argued that the arbitration proceedings were to be conducted under English law, which allows for specific performance of contracts. However, the Court held that the application would be governed by Indian law, referencing the Supreme Court's decision in Sumitomo Heavy Industries Ltd. Vs. ONGC Ltd. The principles of equity governing specific performance are similar under both Indian and English law, and the discretion to enforce specific performance is subject to similar constraints.

Conclusion:
The Court dismissed the appeal, holding that the contracts were determinable in nature and thus not specifically enforceable. The application for an interim injunction was rightly dismissed by the learned Single Judge, as granting such relief is statutorily prohibited for determinable contracts. The appellant's remedy, if any, lies in seeking compensation for wrongful termination rather than specific performance of the agreements.