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Judgment
Arindam Sinha, J
Mr. Mahanta, learned advocate appears on behalf of appellants and submits, impugned judgment dated 10th November, 2021 is liable to and should be set aside in appeal. He submits, parties entered into a Memorandum of Understanding (MOU) dated 2nd February, 2018. His client is first party in the document while respondent is second party. Clause-8 in the MOU provides for termination. On his client having noticed breaches and irregularities committed by respondents, ultimately his client issued noticed dated 8th September, 2021 calling for mutual termination as on 30th September, 2021. Respondents issued notice dated 19th September, 2021 invoking arbitration clause in the MOU. Immediately subsequent thereto, respondents approached the District Judge and obtained ex parte order of status quo and by impugned judgment, confirmed the same.
He submits, the MOU is a contract, which cannot be said to be specifically enforceable. He relies on clause (d) in section 14 of Special Relief Act, 1963 to submit, the contract itself says it is terminable so it is one, in its nature determinable. Such a contract has been mandated by section 14 to be unenforceable. He then relies on clause (e) under section 41 to submit, the Court not have granted injunction and the prayer was to be refused. The injunction was granted purportedly to prevent breach of the termination clause in the contract but the contract not being specifically enforceable, respondents were not entitled to injunction.
Mr. Tripathy, learned advocate appears on behalf of respondents and submits with reference to the MOU clause 8 that six months notice was necessary to be given. Such notice could only be given if there was compliance of clause (b) under sub-clause (8.1) in clause 8. Said clause requires prior 90 days rectification notice to have been issued by appellants. Furthermore, within the notice period appellants were required to repay outstanding in the interest fee loan granted by his client. Since these requirements were not fulfilled by appellants, there should be no interference with impugned judgment.
On query from Court Mr. Mohanty draws attention to letter dated 15th April, 2019 issued by his client to respondents saying, inter alia, as follows.
“4. You are requested to clarify immediately as to what measures you are proposing to take to improve the situation. You may clearly say whether you are capable of fulfilling your financial commitments made in the MOU. You may also clarify why provisions of the clauses 8.1(a), (b), (c) of the MOU dated 2.2.2018 will not be invoked.”
Section 42 provides for injunction to perform negative agreement. The requirement in the MOU on termination by appellants, negative its right thereunder to immediately terminate. As such, impugned order granting the injunction of status quo cannot be faulted as offending provisions in section 14 or section 49. However, the termination, which appellants thought would be mutual, was interpreted by respondents to be unilateral, against which they were advised to and initiated litigation by seeking reference to arbitration and approach to Court. So it turns out that the termination must be read as w.e.f. 30th September, 2021. The direction for status quo therefore, can only survive upto 28th February, 2022. So far as respondents’ contention of 90 days notice prior to termination is concerned, that stands fulfilled by appellants having issued letter dated 15th April, 2019 and subsequent letters.
Impugned order is modified to extent that there will be termination of the MOU on the date when appellants repay entirely, the interest free loan granted to them by respondents. Appellants are directed to do so and thereupon approach the District Judge for recording compliance and order vacating the status quo.
The appeal is disposed of.
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