Litigation News

Delhi High Court imposes Rs 5 lakh costs on INOX for indulging in judicial adventurism in suit against PVR

Aditi Singh

The Delhi High Court has imposed costs of Rs 5 lakh on INOX Leisure Limited for indulging in judicial adventurism in connection with a suit preferred by it against competitor, PVR.

The judgment was passed by a single Judge Bench of Justice Rajiv Sahai Endlaw.

According to INOX (Plaintiff), it had binding contracts with the developer/owner of the properties at Amritsar and Mumbai. These contracts were, however, breached/broken or were threatened to breached/broken, by the developer/owner of the properties, at the instance of PVR (Defendant), it was said.

In its suit before the Court, the Plaintiff thus sought a direction to restrain the Defendant from interfering with the contracts in connection with the abovementioned properties, as well as all other existing contracts and contracts in future.

The Defendant argued that the relief of injunction claimed in the suit was barred by Sections 41(e) and (j) of the Specific Relief Act.

It was, inter alia, also stated it was not in in any dominating position to indulge in any anti-competitive practices.

After hearing the parties, the Court opined that the Plaintiff, even if believed to be having existing binding contracts and the defendant was indeed interfering therein or causing breach thereof, was not entitled to restrain the Defendant.

No trial is required in this regard inasmuch as the same is purely a question of law, the Court said.

While applying the law with respect to contracts, immovable property and specific performance in India, the Court noted that in the present case,

- if according to the Plaintiff, it had a binding lease with the developer/owner of the properties at Amritsar and Mumbai but it had not been put into possession of the property, the remedy was to seek to be put into possession of the property;

- On the contrary, if according to the Plaintiff, it did not have a binding agreement or a lease but only an agreement to lease, the remedy was to sue for specific performance;

- Further, if according to the Plaintiff, there was only a promise from the developer/owner of the said properties to grant a license and there was a violation, the remedy was to claim damages from them.

Instead, the Plaintiff did neither, the Court remarked.

Amongst other things, the Court recorded that the Plaintiff did not implead the developer/owner of the properties to the suit, even though they were necessary parties.

“..the plaintiff cannot hide behind the plea of the Court being always entitled to implead any party; the Court once finds the necessary party and in whose absence there can be no adjudication, to have been not impleaded, is not required to do the work of the plaintiff and has no option but to dismiss the suit.”, the Court said.

Further holding that there could be no general injunction as sought by the Plaintiff, the Court observed,

“..the reliefs claimed with respect to other properties across India are indeed vague and there can be no general injunction as sought; though the Courts have recognized a quia timet action but against a specific party and with respect to specific facts and not in vacuum.”

As far as the claim of the Plaintiff on the basis of tort of 'liability for unlawful interference in business and contracts of others' was concerned, the Court analysed the law at hand, including Section 27 of the Contract Act and observed,

"..a person who does not have any contractual relationship with his competitor, is not entitled to, in advancement of its own trade and business, not approach the prospective clients, customers and associates approached by the competitor..

..The grant of injunction claimed by the Plaintiff on the premise of the actions of the defendant comprising a tortious act of interference with contractual relations of the Plaintiff, would be in violation of the fundamental right of the Defendant, its promoters and directors to carry on trade and business, without any law having been enacted by the State in this respect in the interest of general public, within the meaning of Article 19 (5) of the Constitution of India."

In view of the above, the Court held that there was no cause of action for the relief claimed against the Defendant and the relief claimed by the Plaintiff against the Defendant was barred by law.

It was ordered,

Axiomatically the suit is dismissed. The plaintiff having indulged in judicial adventurism, is also burdened with costs of Rs.5,00,000/-, payable to the defendant within 90 days hereof.
Delhi High Court

The Plaintiff was represented by Senior Advocate Amit Sibal with Advocates Saransh Kumar, Riddhi Jad, Sahil Narang, Ambar Bhushan.

The Defendant was represented by Senior Advocate Arvind K Nigam with Shardul Amarchand Mangaldas lawyers Ajit Warrier, Angad Kochhar, Abhishek Sharma, Pratishth Kaushal, Vaibhav Aggarwal, Mehtaab Singh Sandhu.

Read the Order:

INOX vs PVR.pdf
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