2017 (8) TMI 1712 - HC - Indian Laws

Issuance of termination notice - Seeking Injunction restraining the respondent whether by itself or its men, agents, servants, assignees or otherwise howsoever from interfering with the peaceful exercise of the rights and discharge of obligation by the petitioner in accordance with the agreement - HELD THAT - In order to merit consideration for grant of an injunction the prima facie case of the petitioner has to be established. To a very large extent the strength and weaknesses of the case of the parties have to be assessed by the court on the available evidence to come to a provisional conclusion as to whether the petitioner, on a balance of probabilities, has a better case than that of the respondent. Once the petitioner has been able to establish a prima facie case the court proceeds to consider the balance of convenience and the irretrievable injury factor. This means that the balance of convenience must be in favour of an order being passed in favour of the petitioner and that irretrievable injury will be caused to him if the order is denied. It is settled law that in case where damages provide the remedy an interim order of injunction cannot be granted. Conversely in contractual matters only in a suit for specific performance of an agreement could the court grant an order of injunction. This common law principle is well spelt out in Section 41(e) of the Specific Relief Act, 1963. It is also trite that the court will not grant an order of injunction in a contract which is, by its nature determinable, and for breach of which damages are an adequate relief, or in a contract performance of which entails constant supervision by the court or one which runs into minute details. The termination notice dated 11th July, 2017 is set aside. Ordinarily, the petitioner ought to have been granted time upto 7th September, 2017 to complete the work. Since, this application has been pending in this court for nearly 45 days, the petitioner will get advantage of this period. The respondent is restrained by an order of injunction from terminating the contract till 7th September, 2017 and for a further period of 45 days thereafter. After this period the contract can only be terminated for any alleged breach of the petitioner after the date of this order. The petitioner will be entitled to resume the work forthwith - respondent is directed to co-operate with the petitioner. Application allowed.

Summary

Issues Involved:
1. Alleged breach of contract by the petitioner.
2. Termination of the contract by the respondent.
3. Environmental damage allegations.
4. Applicability of Section 14(3)(c) of the Specific Relief Act, 1963.
5. Grant of injunction and specific performance of the contract.

Detailed Analysis:

1. Alleged Breach of Contract by the Petitioner:
The respondent accused the petitioner of failing to start the work on time and delaying the project. A letter dated 8th March 2017 from the Principal Secretary of the Tourism Department granted the petitioner six months to complete specific components of the project. The petitioner committed to finishing the items by 31st August 2017 and provided progress reports. However, on 8th June 2017, a show cause notice was issued alleging defaults such as no plantation for soil erosion, lack of safety officers, and absence of noise level monitoring, among others. The petitioner responded on 30th June 2017, addressing each allegation and attributing some responsibilities to state instrumentalities.

2. Termination of the Contract by the Respondent:
On 11th July 2017, the Director of Tourism issued a termination notice citing environmental concerns and other breaches. The petitioner argued that the termination notice was issued to render their application in-fructuous, as it was awaiting court consideration. The court noted that there was no prior indication of dissatisfaction with the petitioner's work and found the sudden environmental damage allegations extraordinary and unsupported by evidence.

3. Environmental Damage Allegations:
The termination notice accused the petitioner of activities endangering the environment, such as soil erosion, cutting trees for firewood, and lack of solid waste management. The court found these allegations suspicious and unsupported by evidence. It noted that there were no prior complaints about environmental damage before June 2017, and the petitioner's detailed response on 30th June 2017 was not adequately addressed by the respondent.

4. Applicability of Section 14(3)(c) of the Specific Relief Act, 1963:
The petitioner argued that the contract fell within the scope of Section 14(3)(c) of the Specific Relief Act, which allows specific performance for construction or other work on land if certain conditions are met. The court agreed, noting that the petitioner had a substantial interest in the land and project, and compensation in money would not be adequate. The contract was for 32 years, renewable for another 32 years, granting the petitioner exclusive possession and control over the island.

5. Grant of Injunction and Specific Performance of the Contract:
The court considered the principles governing the grant of injunctions and specific performance. It found that the petitioner had established a prima facie case, with the balance of convenience and irretrievable injury factors in their favor. The court noted that the contract was not determinable by nature, and damages would not be an adequate remedy. The contract was definable and capable of specific performance under court supervision.

Summary of Findings:
a) The petitioner was in firm possession of the land for 32 years, renewable for another 32 years, with substantial construction work already started.
b) The Principal Secretary's letter dated 8th March 2017 extended the time for completing the work until 7th September 2017.
c) The petitioner kept the respondent informed of the progress, with no disagreement from the respondent.
d) There were no allegations of environmental damage until June 2017.
e) The show cause notice dated 8th June 2017 raised environmental damage allegations.
f) The petitioner's detailed response on 30th June 2017 was not adequately addressed.
g) The Director of Tourism terminated the contract without the Principal Secretary's concurrence.
h) The environmental damage allegations were unsupported by evidence.
i) The petitioner was performing the work as expected.
j) The contract was not determinable by nature.
k) Damages were not an adequate remedy for breach of the contract.
l) The contract was capable of specific performance under court supervision.
m) The respondent was in breach of the contract, not the petitioner.
n) The pending application hindered the petitioner's progress.
o) The termination of the contract on 11th July 2017 was wrongful and illegal.

Order:
The termination notice dated 11th July 2017 was set aside. The respondent was restrained from terminating the contract until 7th September 2017 and for a further 45 days thereafter. The petitioner was entitled to resume work immediately, and the respondent was directed to cooperate. The Principal Secretary was instructed to ensure proper handling of the contract. The application was allowed.