Page 1 Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL Nos. 4313-4314 OF 2012

(Arising out of SLP (C) Nos. 34627-34628 OF 2010)

M/s Best Sellers Retail (India) Pvt. Ltd. … Appellant

Versus

M/s Aditya Birla Nuvo Ltd. & Ors. … Respondents

WITH

CIVIL APPEAL No. 4315 OF 2012

(Arising out of SLP (C) No. 34839 OF 2010)

A.C. Thirumalaraj … Appellant

Versus

M/s Aditya Birla Nuvo Ltd. & Ors. … Respondents

J U D G M E N T

A. K. PATNAIK, J.

Leave granted.

2.These are appeals by way of special leave under Article

136 of the Constitution of India against the judgment and

order dated 25.08.2010 of the High Court of Karnataka in

MFA No.4060 of 2010 and in M.C. No12036 of 2010 and in

M.C. No.12036 of 2010.

Page 2 3.The relevant facts briefly are that Aditya Birla Nuvo

Ltd., respondent no.1 in both the appeals, filed a suit O.S.

No.1533 of 2010 against Liberty Agencies, a partnership

firm and its partners, in the Court of the City Civil Judge at

Bangalore. The case of the respondent no.1 in the plaint

was as follows: The respondent no.1 was engaged in the

business of readymade garments and accessories under

various reputed brand names and in the year 1995 had

appointed Liberty Agencies as an agent to conduct its

business of readymade garments and accessories with the

reputed brand name ‘Louis Philippe’. Thereafter, on

02.03.2005 respondent no.1 entered into a fresh agreement

with Liberty Agencies under which Liberty Agencies agreed

to sell the products of the respondent no.1 in the suit

schedule property and also agreed to retain the possession

of the suit schedule property until the expiry of the term of

agreement and Liberty Agencies was not to sell any other

articles or goods other than that supplied by the respondent

no.1. Under the agreement dated 02.03.2005 (for short ‘the

agreement’), Liberty Agencies was entitled to a fixed

commission of Rs.7,50,000/- per month and by an

addendum dated 01.07.2008 the fixed commission payable

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Page 3 to Liberty Agencies was increased to Rs.9,62,500/-.

Thereafter, the respondent no.1 notified to Liberty Agencies

various breaches of the terms and conditions of the

agreement but Liberty Agencies did not set right the

breaches. As a result, the respondent no.1 suffered huge

financial losses. The respondent no.1 issued a legal notice

on 06.02.2010 calling upon Liberty Agencies to comply with

the terms of the agreement. Liberty Agencies, however, sent

a letter dated 26.02.2010 claiming that the constitution of

the partnership firm has changed and that its partner A.C.

Thirumalaraj had retired and that A.C. Thirumalaraj as the

owner of the suit schedule property had terminated the

tenancy of the suit schedule property in favour of Liberty

Agencies and initiated a collusive eviction proceeding with

an intention to defeat the claim of the respondent no.1. The

respondent no.1 thus prayed for specific performance of the

agreement and in the alternative for damages for expenses

and losses amounting to Rs.20,12,44,398/- if the specific

performance of the agreement was refused by the Court.

4.Along with the suit, respondent no.1 also filed an

application under Order 39 Rules 1 and 2 read with Section

151 of the Code of Civil Procedure (for short ‘the CPC’)

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Page 4 praying for a temporary injunction restraining the

defendants from leasing, sub-leasing, alienating or

encumbering the suit schedule property in any manner

pending disposal of the suit. Liberty Agencies and A.C.

Thirumalaraj filed their objections to the application for

temporary injunction and stated, inter alia in their

objections that the possession of the suit schedule property

had been delivered to Best Sellers Retail (I) Pvt. Ltd. The

Additional City Civil Judge heard the parties and by order

dated 24.04.2010 allowed the application for temporary

injunction and restrained Liberty Agencies and its partners

including A.C. Thirumalaraj from leasing, sub-leasing,

alienating or encumbering the suit schedule property in any

manner pending disposal of the suit.

5.Aggrieved, A.C. Thirumalaraj filed a Miscellaneous

Appeal under Order 43 Rule 1 of the CPC against the order

of temporary injunction before the High Court. While the

Miscellaneous Appeal was pending, it was brought to the

notice of the High Court in I.A. No.1 of 2010 that in spite of

the temporary injunction granted in favour of the

respondent no.1, A.C. Thirumalaraj and Best Sellers Retail

(I) Pvt. Ltd., were opening a shop in the suit schedule

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Page 5 property in the name of ‘Jack & Jones’ and by an order

dated 16.07.2010 the High Court restrained Best Sellers (I)

Pvt. Ltd. from carrying on business in the suit schedule

property until further orders of the High Court. Best Sellers

Retail (I) Pvt. Ltd. then filed an application M.C. No.12036 of

2010 for vacating the interim order dated 16.07.2010. By

the impugned judgment, however, the High Court dismissed

the Miscellaneous Appeal and rejected the appeal for

vacating the interim order but directed the respondent no.1

to give an undertaking to the trial court that in case

respondent no.1 fails in the suit, it will compensate the loss

to A.C. Thirumalaraj and Best Sellers Retail (I) Pvt. Ltd. for

not using the suit schedule property. Aggrieved, A.C.

Thirumalaraj and Best Sellers (I) Pvt. Ltd. have filed these

Civil Appeals.

6.Mr. Altaf Ahmed and Mr. A.K. Ganguly, learned senior

counsel appearing for the two appellants, submitted relying

on the decision of this Court in Kishoresinh Ratansinh

Jadeja v. Maruti Corporation & Ors. [(2009) 11 SCC 229]

that while passing an order of temporary injunction under

Order 39 Rules 1 and 2 CPC, the Court is to consider (i)

whether the plaintiff has a prima facie case; (ii) whether

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Page 6 balance of convenience is in favour of the plaintiff; and (iii)

whether the plaintiff will suffer irreparable loss and injury if

an order of injunction was not passed. They submitted that

the respondent no.1 itself has claimed damages of

Rs.20,12,44,398/- as alternative relief in the event the suit

for specific performance of the contract is not decreed. They

argued that as the plaintiff itself had made a claim for

damages for the alleged breach of the agreement by the

defendants, the Court should not have granted the

temporary injunction in favour of the plaintiff.

7.Learned counsel for the appellants further submitted

that Section 14(1) of the Specific Relief Act, 1963 provides in

clause (b) that a contract which runs into such minute or

numerous details or which is so dependent on the personal

qualifications or volition of the parties, or otherwise from its

nature is such, that the court cannot enforce specific

performance of its material terms, such a contract cannot

be specifically enforced. They submitted that similarly

Section 14(1) in clause (d) provides that a contract, the

performance which involves the performance of a

continuous duty which the court cannot supervise, is a

contract which cannot be specifically enforced. They

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Page 7 submitted that the agreement between Liberty Agencies and

respondent no.1 is a contract of agency and is covered

under clauses (b) and (d) of Section 14(1) of the Specific

Relief Act, 1963 and is one which cannot be specifically

enforced. They submitted that Section 14(1) of the Specific

Relief Act, 1963 in clause (c) further provides that a contract

which is in its nature determinable cannot be specifically

enforced. They argued that on completion of six years from

the date of the agreement, Liberty Agencies could terminate

the agreement and the six years period had expired in the

year 2011 and hence the Court cannot specifically enforce

the contract. They submitted that Section 41 (e) of the

Specific Relief Act, 1963 clearly provides that an injunction

cannot be granted to prevent breach of a contract, the

performance of which would not be enforced.

8.Learned counsel for the appellants cited the decision

in Indian Oil Corporation Ltd. v. Amritsar Gas Service & Ors.

[(1991) 1 SCC 533] in which this Court has held that a

contract which is in its nature determinable cannot be

enforced by the Court. They also cited the decision in

Percept D’Mark (India) (P) Ltd. v. Zaheer Khan & Anr. [(2006)

4 SCC 227] in which this Court has held relying on the

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Page 8 judgment of the Chancery Division in Page One Records Ltd.

v. Britton [(1968) 1 WLR 157: (1967) 3 All ER 822], that

where the totality of the obligations between the parties give

rise to a fiduciary relationship injunction would not be

granted because the performance of the duties imposed on

the party in the fiduciary relationship could not be enforced

at the instance of the other party.

9. Learned counsel for the appellants further submitted

that the agreement between Liberty Agencies and the

respondent no.1 was an agency agreement and it did not

create any interest whatsoever in the suit schedule property

and, therefore, the respondent no.1 was not entitled to any

injunction restraining the owner of the suit schedule

property from dealing with the property in any manner with

a third party. They submitted that in any case since the

defendants had clearly stated in their objections to the

application for temporary injunction that possession of the

suit schedule property had already been delivered to a third

party, Best Sellers Retail (I) Pvt. Ltd., the trial court should

not have granted any injunction without the third party

being impleaded as a defendant. Learned counsel for the

appellants submitted that the interest of the third party has

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Page 9 been totally ignored by the trial court and the High Court

and this is a fit case in which the order of temporary

injunction should be set aside.

10.Mr. K. K. Venugopal, learned senior counsel appearing

for the respondent no.1, on other hand, submitted that

under clause B-2 of the agreement, Liberty Agencies had

given a warranty that the suit schedule property is owned

by it and that it will retain possession of the suit schedule

property until the expiry of the agreement. He submitted

that under clause D of the agreement the duration of the

agreement was for a period of twelve years from the date of

the agreement and this period was to expire in 2017 and,

therefore, it is not correct, as has been contended by the

learned counsel for the appellants, that the period of the

agreement has expired. He argued that under clause E-2 of

the agreement only the respondent no.1 company had the

right to terminate the agreement by giving a written notice

of not less than three months after the end of six years from

the date of the agreement and hence Liberty Agencies had

no right to terminate the agreement. He submitted that no

contention can, therefore, be raised on behalf of Liberty

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Page 10 Agencies that the contract was determinable in nature or

that the contract had expired.

11. In reply to the contention that under Section 14(1)(b)

and (d) of the Specific Relief Act, 1963 the agreement cannot

be specifically enforced, Mr. Venugopal cited Bowstead and

Reynolds on Agency for the proposition that in exceptional

cases specific performance of a contract of agency can also

be decreed by the Court. He argued that Section 42 of the

Specific Relief Act, 1963 makes it abundantly clear that

where a contract comprises an affirmative agreement to do a

certain act, coupled with a negative agreement, express or

implead, not to do a certain act, the circumstances that the

court is unable to compel specific performance of the

affirmative agreement shall not preclude it from granting an

injunction to perform the negative agreement. He also cited

the decision of the Chancery Division in Donnell v. Bennett

reported in 22 Ch.D. 835 where it has been held that where

there is a negative clause in the agreement, the Court has to

enforce it without regard to the question of whether specific

performance could be granted of the entire contract. He

referred to clause B-5 of the agreement which provides that

Liberty Agencies shall only sell the products supplied by the

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Page 11 respondent no.1 company and shall not sell any other

articles/products manufactured by any other

person/Company/Firm in the premises during the period of

the agreement unless approved by the respondent no.1

company. He submitted that this is not a case where the

appellants are entitled to any relief from this Court under

Article 136 of the Constitution of India.

12. It is not necessary for us to deal with the contentions

of learned counsel for the parties based on the provisions of

Sections 14, 41 and 42 of the Specific Relief Act, 1963

because Section 37 of the said Act makes it clear that

temporary injunctions are to be regulated by the CPC and

not by the provisions of the Specific Relief Act, 1963. In

fact, the application for temporary injunction of respondent

no.1 before the trial court is under the provisions of Order

39 Rules 1 and 2 read with Section 151 of the CPC. It has

been held by this Court in Kishoresinh Ratansinh Jadeja v.

Maruti Corporation & Ors. (supra) that it is well established

that while passing an interim order of injunction under

Order 39 Rules 1 and 2 CPC, the Court is required to

consider (i) whether there is a prima facie case in favour of

the plaintiff; (ii) whether the balance of convenience is in

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Page 12 favour of passing the order of injunction; and (iii) whether

the plaintiff will suffer irreparable injury if an order of

injunction would not be passed as prayed for. Hence, we

only have to consider whether these well-settled principles

relating to grant of temporary injunction have been kept in

mind by the trial court and the High Court.

13. On a reading of clause B-2 of the agreement, we find

that Liberty Agencies had given a warranty that the suit

schedule property was owned by it and that it will retain the

possession of the suit schedule property until the expiry of

the agreement. Clause D of the agreement clearly stipulated

that the duration of the agreement shall be for a period of

twelve years from the date of the agreement unless

terminated in accordance with the provisions of the

agreement. Clause E-2 further provides that respondent

no.1 and not Liberty Agencies could terminate the

agreement by giving a notice of not less than three months

after the end of six years from the date of the agreement and

respondent no.1 had not terminated the agreement under

this clause. Before the expiry of six years from the date of

the agreement, Liberty Agencies sent the letter dated

26.02.2010 to the respondent No.1 committing a breach of

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Page 13 clause B-2 of the agreement which provided that Liberty

Agencies will retain possession of the suit schedule property

until the expiry of the agreement. This was the breach of

the agreement which was sought to be prevented by the trial

court by an order of temporary injunction. The trial court

and the High Court were thus right in coming to the

conclusion that the respondent no.1 had a prima facie case.

14. Yet, the settled principle of law is that even where

prima facie case is in favour of the plaintiff, the Court will

refuse temporary injunction if the injury suffered by the

plaintiff on account of refusal of temporary injunction was

not irreparable. In Dalpat Kumar & Anr. v. Prahlad Singh &

Ors. [(1992) 1 SCC 719] this Court held:

“Satisfaction that there is a prima facie case by

itself is not sufficient to grant injunction. The

Court further has to satisfy that non-interference

by the Court would result in “irreparable injury” to

the party seeking relief and that there is no other

remedy available to the party except one to grant

injunction and he needs protection from the

consequences of apprehended injury or

dispossession. Irreparable injury, however, does

not mean that there must be no physical

possibility of repairing the injury, but means only

that the injury must be a material one, namely,

one that cannot be adequately compensated by

way of damages.”

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Page 14 15. In the present case, the respondent no.1 itself had

claimed in the plaint the alternative relief of damages to the

tune of Rs.20,12,44,398/- if the relief for specific

performance was to be refused by the Court and break-up of

the damages of Rs.20,12,44,398/- claimed in the plaint was

as follows:

“I. Net Book stock amount on 28.02.2010 is

Rs.1,15,97,638/-.

II.Loan amount due as on 27.01.2010 is

Rs.44,81,584/-.

III.Amount due as per Statement of Accounts

as on 28.02.2010 is Rs.20,65,176/-.

IV.Projected Loss of profit on sales, for the

balance 7 year term of the Agency

Agreement amounts to a sum of

Rs.10,31,00,000/-.

V.Loss of Goodwill, Reputation including

amount spent on advertisement

Rs.2,00,00,000/-.

VI.Loss of amount which Plaintiff would

incur for relocating the store to other place

in the Brigade Road, Bangalore and to

continue its business for rest of the term 7

years would amount to Rs.6,00,00,000/-

along with simple interest at the rate of

24% p.a. from the date of payment till

realization as the same being a

commercial transaction.”

16. Mr. Venugopal, learned counsel appearing for the

respondent no.1, however, submitted that future

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Page 15 profits and loss of goodwill of the respondent no.1

cannot be calculated in terms of the money, but the

aforesaid statement of damages claimed by the

respondent no.1 in the plaint would show that the

respondent no.1 has itself calculated a projected loss

of profit for the balance seven year term of the

agreement as Rs.10,31,00,000/- and has also

assessed loss of goodwill at Rs.2,00,00,000/- besides

the loss of Rs.6,00,00,000/- in relocating the store to

another place in Brigade Road, Bangalore.

17. Despite this claim towards damages made by the

respondent no.1 in the plaint, the trial court has

held that if the temporary injunction as sought for is

not granted, Liberty Agencies may lease or sub-lease

the suit schedule property or create third party

interest over the same and in such an event, there

will be multiplicity of proceedings and thereby the

respondent no.1 will be put to hardship and mental

agony, which cannot be compensated in terms of

money. Respondent no.1 is a limited company

carrying on the business of readymade garments and

we fail to appreciate what mental agony and

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Page 16 hardship it will suffer except financial losses. The

High Court has similarly held in the impugned

judgment that if the premises is let out, the

respondent no.1 will be put to hardship and the

relief claimed would be frustrated and, therefore, it is

proper to grant injunction and the trial court has

rightly granted injunction restraining the partners of

Liberty Agencies from alienating, leasing, sub-leasing

or encumbering the property till the disposal of the

suit. The High Court lost sight of the fact that if the

temporary injunction restraining Liberty Agencies

and its partners from allowing, leasing, sub-leasing

or encumbering the suit schedule property was not

granted, and the respondent no.1 ultimately

succeeded in the suit, it would be entitled to

damages claimed and proved before the court. In

other words, the respondent no.1 will not suffer

irreparable injury. To quote the words of Alderson,

B. in The Attorney-General vs. Hallett [153 ER 1316:

(1857) 16 M. & W.569]:

“I take the meaning of irreparable injury to be

that which, if not prevented by injunction, cannot

be afterwards compensated by any decree which

the Court can pronounce in the result of the

cause.”

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Page 17 18. For the aforesaid reasons, we set aside the order of

temporary injunction passed by the trial court as

well as the impugned judgment and the order dated

16.07.2010 of the High Court. The appeals are

allowed with no order as to costs.

.……………………… .J.

(A. K. Patnaik)

……………………… ..J.

(Swatanter Kumar)

New Delhi,

May 08, 2012.

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