1969 (10) TMI 85 - HC - Indian Laws

Summary

Issues Involved:
1. Authority of Kamala Kanta Chatterjee to sign the contract.
2. Breach of negative covenant.
3. Adequacy of damages or compensation as a remedy.
4. Balance of convenience in granting the injunction.
5. Interpretation of the letter dated March 8, 1968.

Detailed Analysis:

1. Authority of Kamala Kanta Chatterjee to Sign the Contract:
The Plaintiff argued that Kamala Kanta Chatterjee, the manager of the Defendant company, had the authority to sign the contract, which was confirmed by a letter dated July 13, 1964. This letter stated that Chatterjee had the authority to sign 'booking slips' and 'contracts' on behalf of the Defendant company. The Defendant contended that Chatterjee was only authorized to sign Standard Film Contracts approved by the East India Motion Pictures Association (EIMPA). However, the court found that the Plaintiff had prima facie established that Chatterjee had the requisite authority to sign the contract, as the Defendant did not revoke this authority before Chatterjee's death.

2. Breach of Negative Covenant:
The Plaintiff claimed that the Defendant breached the negative covenant by exhibiting a film not supplied by the Plaintiff. The contract contained an express negative covenant prohibiting the Defendant from exhibiting films from other distributors. The court noted that the Defendant had adhered to this covenant from September 22, 1967, until July 1968, which supported the Plaintiff's claim. The court also referenced Clause II(j) of the Standard Film Contract, which entitled the distributor to an immediate injunction in case of a breach.

3. Adequacy of Damages or Compensation as a Remedy:
The Defendant argued that damages or compensation would be an adequate remedy, as the loss could be quantified. They cited Section 38(2)(b) & (c) of the Specific Relief Act, 1963, which states that perpetual injunctions are granted when there is no standard for ascertaining actual damage or when monetary compensation is inadequate. The Plaintiff countered that these considerations are irrelevant when enforcing a negative covenant, referencing Section 42 of the Specific Relief Act, 1963. The court agreed with the Plaintiff, stating that the adequacy of damages does not bar an injunction to enforce a negative covenant.

4. Balance of Convenience in Granting the Injunction:
The Defendant claimed that granting the injunction would force them to stop their business, potentially breaching their lease agreement. The Plaintiff argued that without an injunction, the Defendant might continue breaching the negative covenant, rendering the suit infructuous by the time of the final hearing. The Plaintiff also highlighted potential business losses and liability for breach of agreements with film producers. The court found the balance of convenience in favor of granting the injunction to preserve the Plaintiff's right to a permanent injunction at the final hearing.

5. Interpretation of the Letter Dated March 8, 1968:
The Defendant contended that the letter dated March 8, 1968, constituted a new, terminable contract. The Plaintiff argued that this letter was in continuation of a previous letter and intended to withdraw an earlier letter that conflicted with the existing agreement. The court accepted the Plaintiff's interpretation, concluding that the letter referred to the contract dated August 31, 1967.

Conclusion:
All contentions raised by the Defendant were rejected. The court confirmed the ad-interim injunction, granting the Plaintiff's application. Costs were to be in the cause.