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Judgment
Arindam Sinha, J
Mr. Banerji, learned senior advocate appears on behalf of appellants. He submits, his client entered into Memorandum of Understanding dated 1st September, 2011 in respect of respondent infusing working capital for running appellants’ plant. The understanding was for three years starting 1st September, 2011 to 31st August, 2014. The factory could be run for only 59 days, after which it was stopped by the Pollution Control Board.
He submits, respondent filed for interim measure after expiry of the agreement. Impugned order dated 3rd September, 2018 was made restraining his clients from creating third party interest over their property and not to enter into any short of transaction in respect of the factory or from taking possession thereof. He submits, his clients are in possession of the factory.
He reiterates the understanding was for infusing working capital and nothing more. At best, according to him, the memorandum of understanding was a licence for respondents to enter into the factory. If it is deemed to be a contract, it was terminable under clause 5 and had tenure of three years under clause 4. The tenure was not extended. As such, the memorandum is covered by clause (d) in section 14 of Specific Relief Act, 1963. Clause (e) in section 41 clearly says that injunction cannot be granted to prevent breach of a contract, the performance of which cannot be specifically enforced. He relies on judgment of the Supreme Court in Indian Oil Corporation Ltd. vs Amritsar Gas Service, reported in (1991) 1 SCC 533 paragraph 12. A passage from said paragraph is reproduced below.
“12. ... ... ... Sub-section (1) of Section 14 of the Specific Relief Act specifies the contracts which cannot be specifically enforced, one of which is ‘a contract which is in its nature determinable’. In the present case, it is not necessary to refer to the other clauses of sub-section(1) of Section 14, which also may be attracted in the present case since clause(c) clearly applies on the finding read with reasons given in the award itself that the contract by its nature is determinable. ... ... ... ”
Mr. Kanungo, learned senior advocate appears on behalf of respondents. He submits, the memorandum being unregistered, there is a cloud regarding outcome of his clients’ request made to the High Court for appointment of arbitrator. The application has been adjourned sine die.
He submits, as would appear from impugned order, huge investment was made by his client in addition to depositing Rs.1.5 crores with appellant. He relies on following in impugned order, extracted and reproduced below.
“The closure of the Factory by the Pollution Board was informed to the OP No.1 through E-mail but as no step was taken, the Factory could not start and in the mean time, the petitioner already invested Rs.15 crores and procured raw materials of Rs.10 crores which was lying in the premises of the Factory. As the dispute arose between the parties and as the matter could not be subsided, the OP No.1 shown it’s interest to pay back the petitioner the entire expenses incurred and lastly it was decided that, the OP No.1 will pay Rs.13,48,84,282/- to the petitioner. It was also agreed that, if the amount is not fully paid, the OP no.1 cannot shift the raw materials purchased by the petitioner or to sale the same. The OP No.1 Company issued the cheques in favour of the petitioner and those were dishonoured by bounce. Thereafter, the petitioner came to know that, the OP No.1 Company would forcibly evict the petitioner from the Factory premises and is going to sale the raw materials, the petitioner moved an application before this court U/s 9 of the Arbitration and Conciliation Act for interim measures by directing the OP No.1 and 2 not to create any third party interest over the properties and not to create any sorts of nuisance till the application is disposed of.”
He submits, his client is in possession having put in the raw materials. The property of his client needs protection and as such interim measure was duly directed by the Court below. There be no interference in appeal. Mr. Banerji disputes Mr. Kanungo’s submission of respondent being in possession.
There appears to be existing disputes between the parties. Application for appointment of arbitrator is said to be pending adjudication. On the one hand, appellant relies on the law as the memorandum, if an agreement, not being specifically enforceable and therefore no injunction to be granted pursuant thereto. On the other hand, Court notices, prima facie appreciation of the Court below that appellants wanted but take over running of the factory and the raw materials, having issued cheques for the latter, which bounced. In the circumstances, there is requirement for inventory made of raw materials, claimed by respondent to be there in the factory and disputed by appellants. Mr. Sidharth Shankar Padhy, learned advocate (Mob: 9861314475 e.mail: [email protected] Address: Plot No.3/2106, Nuasahi, Bidanasi, Cuttack), is appointed as Special Officer, to visit the factory and make inventory of the raw materials. Respondent will furnish particulars of raw materials that they claim are in the factory, to the Special Officer on copy served to appellant/learned advocate. This must be done by 19th September, 2022. Respondent will then make proper arrangements to take the Special Officer to the factory for the inventory being made, upon notice to appellant. Representatives of both parties may be present at the time of inventory. Remuneration of Rs.40,000/- is to be paid to the Special Officer by respondent at first instance. The Special Officer will file report on adjourned date.
List on 26th September, 2022.
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